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Stem cells test drugs in a dish, may speed tests and save millions in cost

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Six months ago, Roche Holding AG scientists disrupted the rhythmic beating of heart muscle made from stem cells by adding a cancer drug to it, duplicating in the laboratory a side effect previously only seen in patients.

The experiment showed that human tissue grown from stem cells can mimic side effects of medicines seen in people. Pfizer Inc. (NYSE: PFE), the world’s biggest drugmaker, and GlaxoSmithKline Plc (NYSE: GSK) also are testing the method to see if it can weed out dangerous products years before human trials start and save billions of development dollars, Bloomberg Businessweek reported in its Sept. 27 issue.

Critical to the study were stem cells, which scientists have touted for more than a decade as potential treatments for Parkinson’s disease, spinal cord injuries and diabetes. While these advances are years away, companies have begun using stem cells to test experimental drugs in an effort to slash hundreds of millions of dollars from a discovery process that can reach $4 billion to produce just one new medicine.

“This is a transformative technology that puts human disease in a dish,” said Christopher Scott, director of the Stem Cells in Society program at Stanford University School of Medicine near Palo Alto, Calif. “It can help companies see the drugs that work and also the ones that are toxic.”

The stem cells being employed by drugmakers don’t come from embryos, thereby avoiding controversy that has swirled around the technology. Instead, the stem cells were created using a method invented four years ago that allows scientists to transform ordinary skin cells into a multipurpose state, much like those of embryonic stem cells, that can grow into any tissue in the body.

Sparing embryos

This versatile material is what scientists call induced pluripotent stem, or IPS, cells. They don’t provoke the ethical debate surrounding stem cells that led last month to a halt in federal research funding because their creation doesn’t involve destruction of embryos. A U.S. judge last month barred continued government support for embryonic stem-cell research, imperiling about $90 million that was to be awarded to researchers this year. The ban was later suspended pending appeals.

More evidence that IPS cells can create heart cells for short-cut drug testing came when the Roche team used them to confirm cardiac toxicity from an antiviral medication it had been developing, said Kyle Kolaja, global head of predictive toxicology screens and emerging technologies for Basel, Switzerland-based Roche. The company had already abandoned the drug two years ago after tests in rodents and rabbits showed it caused side effects in the heart, he said.

Saving millions

Had stem cell-derived heart tissue been available then, the company could have pulled the plug early, saving two years of work and millions of dollars, Kolaja said.

Making stem cells from the skin of adults rather than embryos also makes it much easier to create cell lines that are ethnically diverse, letting researchers better judge the safety and effectiveness of drugs on a wide range of people.

Human heart cells that beat in a dish have never before been available in large quantity and consistent quality, said Jason Gardner, a vice president and head of the stem cell drug performance unit at London-based Glaxo. Because they are functional human cells, they may provide a more accurate way of testing drugs than using rodents or the preserved human cells that have been available for lab research in the past, he said.

“The current animal models and human cell lines are inadequate,” he said. “There is a real need to more accurately model human physiology.”

$3 million mouse test

Pharmaceutical companies are attracted by the predictive lab tests because a drug study in mice alone may cost about $3 million, said Michael Venuti, chief executive officer at IPierian Inc., a closely held South San Francisco, Calif., company that makes IPS cells. A drug that’s found to cause cardiac damage only after it has advanced to large, late-stage human studies may cost a company $1 billion or more, said Glaxo’s Gardner.

Such failures have pushed the average cost of developing a drug to about $4 billion, according to an analysis published in December in the journal Drug Discovery.

Cellular Dynamics International, a closely held company founded in 2004 by James Thomson, the University of Wisconsin scientist who first isolated human embryonic stem cells in 1998, made the heart cells used by Roche and the other drugmakers.

The company is now producing more than 7 billion heart cells a month made from skin and blood from people of different ethnic backgrounds, says Robert Palay, CDI’s chief executive officer. Next year, the company plans to start selling liver and nerve cells, he said.

‘Delivering today’

“Others are talking about the promise of stem cells, we are delivering today to companies using the product,” Palay says.

Cellular Dynamics International is backed by $70 million from private equity groups including Sam Zell’s Equity Investments LLC and Palay’s Tactics II Stem Cell Partners.

IPierian is making cells from people with heart disorders, diabetes and neurological disorders in order to develop drugs that may help them.

The company was built on the work of Shinya Yamanaka of Kyoto University in Japan. In 2006, Yamanaka announced that he’d turned skin cells into IPS cells, the equivalent of embryonic stem cells, by adding four genes.

The next year, venture capitalists at Kleiner Perkins Caufield & Byers in Menlo Park, Calif., founded a company based on Yamanaka’s technique -- IZumi Inc., which later became IPierian. IPierian has raised $60 million including money most recently from the venture arms of Google (Nasdaq: GOOG), GlaxoSmithKline and Cambridge, Mass.-based Biogen Idec Inc. (Nasdaq: BIIB).

Deadly disease

IPierian has made IPS cells from the skin of children with spinal muscular atrophy, a deadly muscle-wasting condition. Morphing the stem cells into neurons that carry the disease, they’ve identified drug candidates that boost levels of a protein crucial to allowing motor neurons to survive, said Venuti, IPierian’s CEO. The company also used the neurons to test 15 drugs that have failed in clinical trials, said Corey Goodman, IPierian’s chairman. The signs of failure were evident in each case, he said.

“IPS technology gives you the opportunity to screen out a lot of things that are going to fail,” said Goodman, who is the former head of New York-based Pfizer’s biotechnology unit. “That saves money, emotion and testing.”

For Goodman, IPS technology is one way to address the critical problems facing the industry. A scientist and entrepreneur who started three companies before going to Pfizer in 2007, he has an insider’s view of the issues.

“Big pharma is in trouble,” he said. “The pipelines are in terrible shape. We’re spending way too much money and we have terrible attrition rates.”

The use of stem cells may provide part of the solution, Goodman says.

“We need a paradigm shift to discover new drugs,” he says. “I think this is going to be one of the key ones.”

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