Thursday, June 5, 2008

Stem cell firms shift from treatments to tools

By Ryan McBride

A group of biotech scientists and entrepreneurs from the Boston area and the West Coast have quietly formed a life sciences startup to sell consumable materials and tools based on stem cell science.  

Slow to be developed into viable treatments, stem cells have generated recent interest from investors as tools used in experiments to discover new drugs. Stemgent Inc., a startup based in Cambridge, has attracted blue-chip investors to back its plans to capitalize on the growing demand for reagents and other products that use stem cells.  

HealthCare Ventures, a top life sciences investor in Massachusetts and elsewhere, is expected to be the lead backer of a large, yet unspecified, amount of Series B venture capital for Stemgent, according to company CEO Ian Ratcliffe. He said the startup, which has operations in Cambridge and San Diego, plans to launch publicly during the annual meeting of the International Society for Stem Cell Research in Philadelphia next week.

“We are taking established technologies out of labs, which in many cases have already been published, and we are optimizing them (for the market),” said Ratcliffe. He noted that his startup has obtained licenses related to stem cell reagents from top research institutions such as MIT, Harvard University and The Scripps Research Institute in La Jolla, Calif.

Ratcliffe declined to describe the company’s products in detail, wishing to wait until the firm’s coming-out party in Philadelphia. Yet he revealed that the firm would begin shipping its research products after next week’s meeting.

Stem cells have commanded attention for their ability to grow into a variety of cell types, making them the basis for potential therapies to regenerate human tissue. But after more than a decade of research, no such treatments have reached the market, and some say that the most viable market for stem cells now lies in the research products industry.

Don O’Neil, director of marketing for stem cells and cell biology at Billerica-based life sciences products provider Millipore Corp., said the immediate market for stem cells in the next five to 10 years is to use them to create models of human systems that simulate responses to drugs before treatments are tested in patients. He estimated that the annual global market for stem cell-related research products is $100 million to $200 million and is growing by 35 percent per year.

A former venture capitalist, O’Neil said the VC funding in Stemgent is indicative of a shift in life sciences investing. “I would say that five or six years ago it was virtually impossible to get a tool or reagent company financed from traditional venture capital,” he said, “and that’s not the case today.”

For Stemgent, Ratcliffe has also attracted such top scientists as MIT professor Robert Langer, Sheng Ding of the Scripps Research Institute and MIT researcher Dan Anderson to serve on Stemgent’s scientific advisory board. Ratcliffe had prior links to HealthCare Ventures because the VC firm invested in Upstate Group Inc., a reagents company where he served as president.

Upstate was acquired by research products firm Serologicals Corp. of Atlanta in 2004 for $205 million and later became part of Millipore through Millipore’s $1.4 billion buyout of Serologicals two years ago. Ratcliffe said he is also a co-founder and chairman of Beverly research reagents startup Enzymatics Inc.