November 15, 2005 (Vol. 25, No. 20)

Targets a Leading Position in Commercializing Advanced Research

Scotland-based Stem Cell Sciences (SCS; signed an exclusive agreement with Chemicon International ( last month for the manufacture and marketing of SCS’ embryonic stem (ES) cell growth media for the research and drug discovery market.

SCS will receive an upfront license fee, milestone payments related to technology transfer and scaleup, and trademark and royalty payments based on product sales. The total value of the deal is expected to deliver a multi-million dollar income stream to SCS in the coming three to five years, according to company officials.

The new ES cell culture media products offer substantial improvements over current animal-serum-based media available in the market, claims Peter Mountford, Ph.D., CEO of SCS.

“CultiCell will change the convenience and reproducibility of growing mouse embryonic stem cells. The media will facilitate large-scale cell production enabling the wider application of stem cells in the discovery of new medicines for central nervous system (CNS) diseases such as Parkinson’s and Alzheimer’s,” says Dr. Mountford.

Running a thriving whisky industry for many centuries, Scotland is no stranger to making money from biotechnology. However, as the SCS/Chemicon deal indicates, its aspirations now are to lead the way in commercializing stem cell research. Over the past decade, Scotland has been steadily building a strong life sciences industry to support this effort.

“Scotland has the second biggest life sciences cluster in the U.K., with over 560 organizations employing more than 28,000 staff. We think this is a great achievement for a country of just five million people,” states Neil Guthrie Ph.D., senior project executive at Scottish Enterprise (, Scotland’s main economic development agency.

“We can’t hope to compete with the U.S. in biotech, but we do aspire to overtake Cambridge in the U.K. and perhaps become as big as Medicon Valley, the Swedish/Danish network cluster,” Dr. Guthrie adds. “We believe that helping to commercialize areas where we currently have a major advantage, such as stem cell research, is going to be key to Scotland achieving this.”

Public and Government Mood

One of Scotland’s advantages is the public support that therapeutic cloning has. This means the U.K. government can provide funding for this type of work, without fear of public backlash.

“In the U.K., the weight of public opinion prevented the use of GM crops,” explains Mike Banner, director of the ESRC Genomics Policy and Research Forum ( “However, with stem cell research the U.K. public seems much more accepting; this work is perceived as being driven by academics and doctors rather than large corporations, of which the public here is generally suspicious.”

“Since the U.K. has a system of socialized medicine with its National Health Service the public believes this type of research will benefit mankind and there is some degree of control over it. If stem cell research had been publicized in the U.K. as coming from, or being backed by, a big company, it may have been a different story.”

Research Expertise

Researchers in Scotland are taking advantage of the U.K. government’s liberal position on stem cell research, and they now have 30% of the U.K. licenses to conduct embryonic stem cell research. One of these licenses is allowing researchers at Edinburgh University Medical School ( and the Roslin Institute to carry out ground-breaking research on bone-repair mechanisms.

According to Brendon Noble, Ph.D., lecturer at the Edinburgh University Medical School, “In the U.K., up to 20% of patients over 70 who suffer hip fractures die within one year, while in a large number of the others, fractures severely restrict their independence.”

Dr. Noble’s colleague, Professor Hamish Simpson Ph.D., head of Edinburgh University Medical School’s Orthopaedics and Trauma Department, adds, “In fact, there are more hip fracture-related deaths in this age group than those caused by breast, uterine, and ovarian cancer combined. If we can determine how to regenerate bone in these patients using stem cells, this will be a major triumph.”

“Mesenchymal cells taken from old folks can do everything that children’s cells will do in a dish. But put them back into a hostile environment, such as the body of a sick or aged individual, and they revert back to the original state they were before they were cultured,” Dr. Noble explains.

“One area we are working on is trying to fool cells into thinking they are in favorable surroundings by using supportive scaffolds to create a microenvironment that the cells like. We believe that by using scaffolds even mesenchymal cells can be tricked into contributing to the repair of fractures.”

As well as this applied research, Dr. Noble’s group is working on basic stem cell biology. “We are in a fortunate position in Scotland in that we have the expertise and are able to work with embryonic stem cells,” Dr. Noble says.

“We are studying some of the basic behaviors, such as at which points in their development do embryonic stem cells begin to differentiate into useful mesenchymal cell types. This kind of lineage study is vital research, which may show us some tricks that we can use in the manufacture of bone- and cartilage-forming cells.”

“Also at Edinburgh we are doing a head-to-head comparison of the embryonic and adult cell types in terms of reparative potential since on a world scale we believe this is urgently needed. On paper, embryonic stem cells hold considerable promise as therapeutics, but the jury is still out on whether adult or embryonic stem cell are best,” explains Dr. Simpson.

“Some of our preliminary findings from animal studies show that embryonic and mesenchymal stem cells behave in different ways,” Dr. Simpson concludes, “and I believe there is a role for both cell types as therapeutics.

“For example, with brittle bone disease in children, their own stem cells will still have the same inherent genetic problem, and while genetic modification of the cells is possible, one can envisage that by using embryonic stem cells with healthy genetic background we might overcome this problem.”


To exploit the stem cell expertise in Scotland, companies such as Geron ( and CXR Biosciences ( are collaborating with Dr. Noble’s group and other stem cell researchers at Scotland’s Roslin Institute (www.ri.bbsrc.

Additionally, companies such as Stem Cell Sciences, originally based in Australia, have settled and even set up their corporate headquarters in Edinburgh. “The good thing about Scotland is that there is a significant number of stem cell experts located within an hour’s drive,” Dr. Mountford explains. “We came here to have access to the Institute for Stem Cell Biology and especially Professor Austin Smith’s expertise.

“Since the regulatory environment in the U.K. is much more predictable and secure in relation to stem cell work, we can be assured of being able to carry on our working partnerships with stem cell experts. It is this consistency that makes it favorable for us to maintain our headquarters in the U.K.,” Dr Mountford continues.

Who is Paying?

Academic stem cell research is being funded by U.K. government granting bodies such as the Medical Research Council and the Wellcome Trust. However, for start-ups in Scotland involved in stem cell research, funding is more difficult to obtain.

“There is a clear gap in commercializing stem cell science in Scotland. But it is a gap that is unlikely to be filled by private equity as most venture capitalists perceive this research as risky, ethically challenging, and too far away from clinical development,” says David Macauley, CEO of the U.K. Stem Cell Foundation.

“Venture capitalists often focus purely on cell therapy outcomes, which are, of course, longer term and understandably generate concerns that a return on investment is too far away,” Dr. Mountford agrees, adding, “Yet the reality does not match the perception. In fact, my company alone has already seen more than $10 million in revenues from these business opportunitiesstem cell culture media, technologies for purifying stem cells, and, most importantly, cells and technologies for biopharmaceutical use in gene and drug discovery and development.”

Since Scotland has recognized this funding problem, a proportion of government capital has been made available for stem cell start-ups from a number of dedicated life science funds.

One source is the Scottish Executive’s proof-of-concept fund. This is a 33 million fund that aims to cover the pre-seed funding gap that can sometimes restrict the flow of technology from the laboratories to the marketplace.

There is also funding via the Intermediary Technology Institute, which has 400 million to spend on precompetitive research over the next 10 years. “Scotland has some good initiatives, and they are investing heavily in life sciences generally,” Dr. Mountford comments. “Often a contribution of 1 million will help keep a stem cell company afloat, as this kind of funding level is hard to come by. For a nation that is not large, I think it is investing in a clever and gutsy way.”

Many believe that this level of funding is not sufficient to secure Scotland a lasting place on the stem cell leader board. In an attempt to rectify this, the U.K. Stem Cell Foundation was established.

This foundation is headed by Sir Chris Evans, one of Europe’s top biosciences venture capitalists, and has a board of high-profile trustees including Virgin Group chairman Sir Richard Branson; fertility expert Lord Robert Winston; and Sir Richard Sykes, the former chairman of GlaxoSmithKline.

The foundation hopes to help raise 100 million specifically for translational stem cell research in the U.K. “A significant proportion of our funds will be invested in Scottish projects because the stem cell research and clinical base is advanced,” Macauley states.

What’s Needed Now

“The success of stem cell research in 25 years time will not solely be affected by government policy but by the social context into which it is launched. Since the Scottish public has welcomed stem cell research in a way that the U.S. public has not, researchers here can take a leading role,” comments Banner.

Commercializing this research is another matter, and many involved believe that Scottish stem cell science has a number of significant difficulties to overcome before it can meet the clinical manufacturing practices mandated by the European Cells and Tissues Directive and Clinical Trials Directive.

According to Marc Turner, Ph.D., a clinical director at the Scottish National Blood Transfusion Service (, the problem is a lack of facilities capable of generating human embryonic stem cells under GMP conditions.

“We are in need of some additional specialist GMP facilities in Scotland where we can gain more experience in culturing human embryonic stem cells for use in the clinic. This kind of infrastructure requires a heavy fixed cost investment, which U.K. granting bodies, such as the Medical Research Council, will not provide as they tend to award money for research only,” says Dr. Turner.

However, Dr. Guthrie believes this obstacle can be overcome. “Scotland has approximately 50 percent of the U.K.’s GMP general biomanufacturing facilities. There is a plan to spend x1 billion building the Centre for Biomedical Research Commercial Park in Edinburgh. This will provide over 80,000 square meters of commercial research and development space and will be similar in size to the U.K.’s Cambridge Science Park. It will have the potential to house more than 60 companies and specialist GMP facilities, so Scotland will not only have capability for manufacturing clinical-grade embryonic stem cell, but it could have the capacity too.”

There may be sufficient GMP capacity, but since Scotland is a small country, what could be missing is enough expertise to help make the transition from the lab to the clinic. “Scotland needs more translational scientists, and we need to draw more clinicians into research and particularly the translational cycle too, so we must have the backing of the clinicians and the policy makers within the National Health Service to carry out the necessary clinical trials,” Macauley states.

“There is a now a race in Scotland to get everything in place; the new center for biomedical research in Edinburgh could help bring the key research, manufacturing, and clinical elements together. It is fortunate that the U.K. government has created a solid regulatory framework, which allows the use of embryonic stem cells for therapeutic cloning so it would be nave not to follow this advantage with money,” Macauley continues.

“If Scotland is serious about competing, it needs to put its money where its mouth is and invest wisely in attracting more of the right people and building the proper infrastructure.

“In twenty years, products derived from stem cell research could be the single biggest medical breakthrough in the 21st century. If Scotland does not push home its research advantage in this field now by funding the means of commercializing its discoveries, it is going to lose out to Korea, Singapore, and China where the competition to do this is mounting,” warns Macauley.

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