Investing in stem cells, the building blocks of the body

Stem cells have always been tomorrow’s technology. But it looks as though their time has finally come – and they will transform the treatment of disease and drug development, says Matthew Partridge

Imagine being able to reverse blindness, cure multiple sclerosis (MS), or rebuild your heart muscles after a heart attack. For the past few decades, research into stem cells, the building blocks of tissues and organs, has raised the prospect of medical advances of this kind – yet it has produced relatively few approved treatments.

But that could be about to change, says Robin Ali, professor of human molecular genetics of King’s College London. “Just as gene therapy went from being a fantasy with little practical value to becoming a major area of treatment,” stem cells are “within a few years of reaching the medical mainstream.” What’s more, developments in synthetic biology, the process of engineering and re-engineering cells, could make stem cells even more effective.

How stem cells can regenerate the body

Stem cells are essentially the body’s raw material: basic cells from which all other cells with particular functions are generated. They are found in various organs and tissues, including the brain, blood, bone marrow and skin. The primary promise of adult stem cells lies in regenerative medicine, says Professor Ali. 

Stem cells go through several rounds of division in order to produce specialist cells; “a blood stem cell can be used to produce blood cells and skin stem cells can be used to produce skin cells”. So in theory you can take adult stem cells from one person and transplant them into another person in order to promote the growth of new cells and tissue.

In practice, however, things have proved more complicated, since the number of stem cells in a person’s body is relatively limited and they are hard to access. Scientists were also previously restricted by the fact that adult stem cells could only produce one specific type of cell (so blood stem cells couldn’t produce skin cells, for instance). 

In their quest for a universal stem cell, some scientists initially focused on stem cells from human embryos, but that remains a controversial method, not only because harvesting stem cells involves destroying the embryo, but also because there is a much higher risk of rejection of embryonic stem cells by the recipient’s immune system.

The breakthrough

The good news is that in 2006 Japanese scientist Shinya Yamanaka of Kyoto University and his team discovered a technique for creating what they call induced pluripotent stem cells (iPSC). The research, for which they won a Nobel Prize in 2012, showed that you can rewind adult stem cells’ development process so that they became embryo-like stem cells. These cells can then be repurposed into any type of stem cells. So you could turn skin stem cells into iPSCs, which could in turn be turned into blood stem cells.

This major breakthrough has two main benefits. Firstly, because iPSCs are derived from adults, they don’t come with the ethical problems associated with embryonic stem cells. What’s more, the risk of the body rejecting the cells is much lower as they come from another adult or are produced by the patient. In recent years scientists have refined this technique to the extent that “we now have a recipe for making all types of cells”, as well as a growing ability to multiply the number of stem cells, says Professor Ali.

Several remaining obstacles

Having the blueprint for manufacturing stem cells isn’t quite enough on its own and several barriers remain, admits Professor Ali. For example, we still need to be able to manufacture large numbers of stem cells at a reasonable cost. Ensuring that the stem cells, once they are in the recipient, carry out their function of making new cells and tissue remains a work in progress. Finally, regulators are currently taking a hard line towards the technology, insisting on exhaustive testing and slowing research down.

The good news, Professor Ali believes, is that all these problems are not insurmountable as scientists get better at re-engineering adult cells (a process known as synthetic biology). The costs of manufacturing large numbers of stem cells are falling and this can only speed up as more companies invest in the area. There are also a finite number of different human antigens (the parts of the immune system that lead a body to reject a cell), so “it should be possible to produce a bank of iPSC cells for the most popular antigen types”.

While the attitude of regulators is harder to predict, Professor Ali is confident that it needs only one major breakthrough for the entire sector to secure a large amount of research from the top drug and biotech firms. Indeed, he believes that effective applications are likely in the next few years in areas “where there are already established transplant procedures”, such as “blood transfusion, cartilage and corneas”. The breakthrough may come in ophthalmology (the treatment of eye disorders) as “you only need to stimulate the development of a relatively small number of cells to restore someone’s eyesight”.

Delivering proteins and molecules

In addition to helping the body repair its own tissues and organs by creating new cells, adult stem cells can also indirectly aid regeneration by delivering other molecules and proteins to parts of the body where they are needed, says Ralph Kern, president and chief medical officer of biotechnology company BrainStorm Cell Therapeutics. 

For example, BrainStorm has developed NurOwn, a cellular technology using people’s own cells to deliver neurotrophic factors (NTFs), proteins that can promote the repair of tissue in the nervous system. NurOwn works by modifying so-called Mesenchymal stem cells (MSCs) from a person’s bone marrow. The re-transplanted mesenchymal stem cells can then deliver higher quantities of NTFs and other repair molecules.

At present BrainStorm is using its stem-cell therapy to focus on diseases of the brain and nervous system, such as amyotrophic lateral sclerosis (ALS, also known as Lou Gehrig’s disease), MS and Huntington’s disease. The data from a recent final-stage trial suggests that the treatment may be able to slow the progression of ALS in those who have the early stage of the disease. Phase-two trial (the second of three stages of clinical trials) of the technique in MS patients also showed that those who underwent the treatment experienced an improvement in the functioning of their body.

Kern notes that MSCs are a particularly promising area of research. They are considered relatively safe, with few side effects, and can be frozen, which improves efficiency and “drastically cuts down the amount of bone marrow that needs to be extracted from each patient”. 

Because the manufacture of MSC cells has become “so efficient”, NurOwn can be used to “get years of therapy in one blood draw”. What’s more, the cells can be reintroduced into patients’ bodies via a simple lumbar puncture into the spine, which can be done as an outpatient procedure, with no need for an overnight stay in hospital.

Advances in synthetic biology are helping 

Kern emphasises that the rapid progress in our ability to modify cells is opening up new opportunities for using stem cells as a molecular delivery platform. Through taking advantage of the latest advances in the science of cellular therapies, BrainStorm is developing a technique to vary the molecules that its stem cells deliver so they can be more closely targeted to the particular condition being treated. BrainStorm is also trying to use smaller fragments of the modified cells, known as exosomes, in the hope that these can be more easily delivered and absorbed by the body and further improve its ability to avoid immune-system reactions to unrelated donors.

One of BrainStorm’s most interesting projects is to use exosomes to repair the long-term lung damage from Covid-19, a particular problem for those with “long Covid-19”. Early preclinical trials show that modified exosomes delivered into the lungs of animals led to “remarkable improvements” in their condition. This included increasing the lung’s oxygen capacity, reducing inflammation, and decreasing clotting.

Overall, while Kern admits that “you can’t say that stem cells are a cure for every condition”, there is a “lot of evidence that in many specific cases” they “have the potential to be the best option”, with fewer side effects. With America’s Food and Drug Administration recently deciding to approve Biogen’s Alzheimer’s drug, Kern thinks that they have become much more open to approving products in diseases that are currently considered untreatable. As a result, he thinks that a significant number of adult stem-cell treatments will be approved within the next five to ten years.

Accelerating drug development

Adult stem cells and synthetic biology aren’t just useful in treatments, says Dr Mark Kotter, CEO and founder of Bit Bio, a company spun out of Cambridge University. They are also set to “revolutionise drug discovery”. At present, companies start out by testing large numbers of different drug combinations in animals, before finding one that seems to be most effective. They then start a process of clinical trials with humans to test whether the drug is safe, followed by an analysis to see whether it has any effects.

Not only is this process extremely lengthy, but it is also inefficient, because human and animal biology, while similar in many respects, can differ greatly for many conditions. Many drugs that seem promising in animals end up being rejected when they are used on humans. This leads to a high failure rate. Indeed, when you take the failures into account, it has been estimated that “it may cost as much to around $2bn to develop the typical drug”. 

Supplying human tissue earlier in drug trials

As a result, pharma companies are now realising that “you have to insert the human element at a pre-clinical stage” by at least using human tissues, says Kotter. The problem is that until recently such tissues were scarce, since they were only available from biopsies or surgery. However, by using synthetic biology to transform adult stem cells from the skin or other parts of the body into other types of stem cells, researchers can potentially grow their own cells, or even whole tissues, in the laboratory, allowing them to integrate the human element at a much earlier stage.

Kotter has direct experience of this himself. He originally spent several decades studying the brain. However, because he had to rely on animal tissue for much of his research he became frustrated that he “was turning into a rat doctor”. 

And when it came to the brain, “the differences between human and rat biology were particularly stark”. In fact, some human conditions, such as Alzheimer’s, don’t even naturally appear in rodents, so researchers typically use mice and rats engineered “to develop something that looks like Alzheimer’s”. But even this isn’t a completely accurate representation of what happens in humans. 

As a result of his frustration, Kotter sought a way to create human tissues. It initially took six months. However, his company, Bit Bio, managed to cut costs and greatly accelerate the process. The company’s technology now allows it to grow tissues in the laboratory “in a matter of days, on an industrial scale”. What’s more, the tissues can also be designed not just for particular conditions, such as dementia and Huntingdon’s disease, but also for particular sub-types of diseases.

Kotter and Bit Bio are currently working with Charles River Laboratories, a global company that has been involved in around 80% of drugs approved by the US Food and Drug Administration over the last three years, to commercialise this product. They have already attracted interest “from some of the ten largest drug companies in the world”, who believe that it will not only reduce the chances of failure, but also speed up development. Early estimates suggest that the process “could double the chance of a successful trial”, effectively cutting the cost of each approved drug by around 50% – from $2bn to just $1bn. This in turn could increase the number of successful drugs on the market.

The best bets in the sector

Two years ago my colleague Dr Mike Tubbs tipped Fate Therapeutics (Nasdaq: FATE). Since then, the share price has soared by 280%, thanks to growing interest from other drug companies (such as Janssen Biotech and ONO Pharmaceutical) in its cancer treatments involving genetically modified iPSCs. 

Fate has no fewer than seven iPSC-derived treatments undergoing trials, with several more in the pre-clinical stage. While it is still losing money, it has over $790m cash on hand, which should be more than enough to support it while it develops its drugs.

As mentioned in the main story, the American-Israeli biotechnology company BrainStorm Cell Therapeutics (Nasdaq: BCLI) is developing treatments that aim to use stem cells as a delivery mechanism for proteins. While the phase-three trial (the final stage of clinical trials) of its proprietary NurOwn system for treatment of Amyotrophic lateral sclerosis (ALS, or Lou Gehrig’s disease) did not fully succeed, promising results for those in the early stages of the disease mean that the company is thinking about running a new trial aimed at those patients. It also has an ongoing phase-two trial for those with MS, a phase-one trial in Alzheimer’s patients, as well as various preclinical programmes aimed at Parkinson’s, Huntington’s, autistic spectrum disorder and peripheral nerve injury. Like Fate Therapeutics, BrainStorm is currently unprofitable. 

Australian biotechnology company Mesoblast (Nasdaq: MESO) takes mesenchymal stem cells from the patient and modifies them so that they can absorb proteins that promote tissue repair and regeneration. At present Mesoblast is working with larger drug and biotech companies, including Novartis, to develop this technique for conditions ranging from heart disease to Covid-19. Several of these projects are close to being completed. 

While the US Food and Drug Administration (FDA) controversially rejected Mesoblast’s treatment remestemcel-L for use in children who have suffered from reactions to bone-marrow transplants – against the advice of the Food and Drug Administration’s own advisory committee – the firm is confident that the FDA will eventually change its mind.

One stem-cell company that has already reached profitability is Vericel (Nasdaq: VCEL). Vericel’s flagship MACI products use adult stem cells taken from the patient to grow replacement cartilage, which can then be re-transplanted into the patient, speeding up their recovery from knee injuries. It has also developed a skin replacement based on skin stem cells. 

While earnings remain relatively small, Vericel expects profitability to soar fivefold over the next year alone as the company starts to benefit from economies of scale and runs further trials to expand the range of patients who can benefit.

British micro-cap biotech ReNeuron (Aim: RENE) is developing adult stem-cell treatments for several conditions. It is currently carrying out clinical trials for patients with retinal degeneration and those recovering from the effects of having a stroke. ReNeuron has also developed its own induced pluripotent stem cell (iPSC) platform for research purposes and is seeking collaborations with other drug and biotech companies. 

Like other small biotech firms in this area, it is not making any money, so it is an extremely risky investment – although the rewards could be huge if any of its treatments show positive results from their clinical trials. 

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