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The Future of Stem Cells
There has been no shortage of hype regarding the possible therapeutic uses of stem cells. To date, though, there has been a lot more hope than clinical results, no doubt in part to research restrictions imposed by the prior U.S.
That does not mean, however, that stem cells may not have a major role in medicine and drug development long before then. One of the more interesting concepts in development right now concerns the use of stem cells in the drug design, validation and testing process. If successful, stem cells could significantly alter the preclinical drug development process and lead companies to more successful clinical trials and more productive drug development.
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The Problem
Companies like Charles River Labs (NYSE:CRL) have built good businesses by supplying animal testing models to the scientific research and drug development communities. Unfortunately, mice and rats have their limitations. They are expensive to maintain, they are generally biologically homogeneous and, last I checked, rats and mice are not people. Consequently, many promising therapeutic compounds are laid low in clinical trials by idiosyncratic safety problems (often cardiovascular or hepatic) that did not show up in animal testing because of those biological differences.
Human stem cells, though, offer the potential of testing compounds on actual human cells. These tests will not replicate actual whole organs or the whole human biological system (at least not for a very long time), but it is not hard to see how testing drugs on a series of human liver cell lines might be more predictive of liver toxicity than tests in mice. (For more, see Stocks On Drugs: What It Takes To Get High)
The Players
Not surprisingly, it is some of the larger drug companies that have shown the most interest in developing stem cell panels and models for drug testing. Astra Zeneca (NYSE:AZN), Glaxo (NYSE:GSK), and Roche all have long-standing interest in this notion, with Roche forming a partnership with Harvard andMassachusetts General Hospital
Apart from that, Geron (Nasdaq:GERN) and General Electric have an ongoing partnership where GE is attempting to develop and commercialize assays using Geron's human embryonic stem cells for use in drug discovery and toxicity testing. Life Technologies (Nasdaq:LIFE), too, is looking to develop stem cell-based assays, with a particular focus here on neurodegenerative diseases like ALS.
The Payoff
Given the relatively lower costs involved in developing research diagnostic panels, drug screening and toxicity testing could be an attractive market for any would-be stem cell companies that have real technology. After all, the costs of developing biological test panels is usually measured in the tens of millions as opposed to the hundreds of millions that it takes to develop drugs for human use. Add to that the years of rigorous clinical trials and the necessity to deal with the FDA, and suddenly research-use panels seem like a pretty good business niche.
Bottom Line
Perhaps a small biotech like Osiris can crack the code and develop therapeutics for humans based upon stem cells. It will take a long time and a lot of money, and most of those who try will fail. While that goes on, the major pharmaceuticals may just find that they can leverage this technology to improve their own drug development process and in so doing, stem cells may help sick people much sooner than anyone really thought. (For related reading, check out Measuring The Medicine Makers)
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That does not mean, however, that stem cells may not have a major role in medicine and drug development long before then. One of the more interesting concepts in development right now concerns the use of stem cells in the drug design, validation and testing process. If successful, stem cells could significantly alter the preclinical drug development process and lead companies to more successful clinical trials and more productive drug development.
IN PICTURES: 20 Tools For Building Up Your Portfolio
The Problem
Companies like Charles River Labs (NYSE:CRL) have built good businesses by supplying animal testing models to the scientific research and drug development communities. Unfortunately, mice and rats have their limitations. They are expensive to maintain, they are generally biologically homogeneous and, last I checked, rats and mice are not people. Consequently, many promising therapeutic compounds are laid low in clinical trials by idiosyncratic safety problems (often cardiovascular or hepatic) that did not show up in animal testing because of those biological differences.
Human stem cells, though, offer the potential of testing compounds on actual human cells. These tests will not replicate actual whole organs or the whole human biological system (at least not for a very long time), but it is not hard to see how testing drugs on a series of human liver cell lines might be more predictive of liver toxicity than tests in mice. (For more, see Stocks On Drugs: What It Takes To Get High)
Not surprisingly, it is some of the larger drug companies that have shown the most interest in developing stem cell panels and models for drug testing. Astra Zeneca (NYSE:AZN), Glaxo (NYSE:GSK), and Roche all have long-standing interest in this notion, with Roche forming a partnership with Harvard and
Apart from that, Geron (Nasdaq:GERN) and General Electric have an ongoing partnership where GE is attempting to develop and commercialize assays using Geron's human embryonic stem cells for use in drug discovery and toxicity testing. Life Technologies (Nasdaq:LIFE), too, is looking to develop stem cell-based assays, with a particular focus here on neurodegenerative diseases like ALS.
The Payoff
Given the relatively lower costs involved in developing research diagnostic panels, drug screening and toxicity testing could be an attractive market for any would-be stem cell companies that have real technology. After all, the costs of developing biological test panels is usually measured in the tens of millions as opposed to the hundreds of millions that it takes to develop drugs for human use. Add to that the years of rigorous clinical trials and the necessity to deal with the FDA, and suddenly research-use panels seem like a pretty good business niche.
Bottom Line
Perhaps a small biotech like Osiris can crack the code and develop therapeutics for humans based upon stem cells. It will take a long time and a lot of money, and most of those who try will fail. While that goes on, the major pharmaceuticals may just find that they can leverage this technology to improve their own drug development process and in so doing, stem cells may help sick people much sooner than anyone really thought. (For related reading, check out Measuring The Medicine Makers)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Stephen D. Simpson, CFA
Stephen D. Simpson, CFA, is a freelance financial writer, investor, and consultant. He has worked as an equity analyst for both sell-side and buy-side investment companies in both equities and fixed income. Stephen's consulting work has focused primarily upon the healthcare sector, while he has also written extensively for publication on topics pertaining to investments, security analysis, and healthcare. Simpson operates the Kratisto Investing blog, and can be reached there.
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