Local stem cell firm Cellular Dynamics receives $18M in funds
The economy might be mired in a prolonged downturn, but that hasn't kept one local biotech company from raising some much-needed funds.
Cellular Dynamics International -- which is housed at University Research Park and is co-founded by stem cell pioneer Jamie Thomson and three other University of Wisconsin-Madison scientists -- announced Monday it received $18 million in a financing round led by Tactics II Stem Cell Ventures.
"I think CDI is something that investors can see the potential in, even in the current economic crisis that we're in," Chris Kendrick-Parker, chief commercial officer of Cellular Dynamics, said in a phone interview.
Kendrick-Parker said the financing will be used to help transfer the technology CDI has garnered during research into the product development and production phases.
Cellular Dynamics also announced it has merged with a pair of sister companies founded by Thomson -- Stem Cell Products, Inc., and iPS Cells, Inc. The new firm, which will retain the name of Cellular Dynamics International, now has more than 50 employees, according to Kendrick-Parker.
CDI currently is commercializing pluripotent stem cells -- which have the ability to transform into any cell in the body -- for use by the pharmaceutical industry as a superior way to test drugs for toxicity prior to reaching market. For example, one of the products Cellular Dynamics is marketing is heart cells derived from stem cells called human cardiomyocytes, or CMs. These could be used by drugmakers as a way to test medication on human heart cells before they are tried on real people.
Cellular Dynamics closed on its $18 million Series A financing round in early October. Tactics II Stem Cell Ventures LP led the round, with participation from Tactics II Ventures LP -- a Wisconsin-based venture capital firm -- and the Wisconsin Alumni Research Foundation, which is UW-Madison's patent and licensing arm.
Bob Palay, who serves as chairman and CEO of Cellular Dynamics, also is a principal in Tactics II Ventures.
"The Palays have been very aggressive raising this money and somehow being able to do it in this economic environment," said Tim Kamp, co-director of UW-Madison's Stem Cell and Regenerative Medicine Center and co-founder of CDI along with UW-Madison's Craig January, Igor Slukvin and Thomson. "I'm hopeful that means that we've got some promising technology coming down the road."
Tom Still, president of the Wisconsin Technology Council, said he wasn't surprised that Cellular Dynamics was able to secure such a large amount of funding in this tough economic climate.
"Good deals are still getting done," said Still. "And CDI is a superb company led by a world-renowned scientist. As stem cell technologies continue to advance, it's not surprising that they would draw later rounds of financing."
Still noted a number of factors that may make CDI, which was formed in 2004, look like a good investment.
First, he noted that President-elect Barack Obama will likely roll back -- at least in part, and maybe entirely -- the stem cell policy President Bush put in place seven years ago. That current policy only allows federal funding on embryonic stem-cell lines created before Aug. 9, 2001, preventing any further destruction of embryos using federal money.
"So investors are sensing that the handcuffs are coming off, per se, at least in federal support for stem cell lines," said Still.
Still also said initial research on Thomson's breakthrough discovery of induced pluripotent stem cells (iPS cells) in November 2007 has been "quite good." Last fall, Thomson showed adult stem cells could be reprogrammed to become any cell in the body, thus resembling the abilities of embryonic stem cells.
Although many stem cell researchers stress that studies on stem cells from human embryos must continue while the new technique is tested and perfected, last fall's groundbreaking find by Thomson allowed Cellular Dynamics to produce these pluripotent stem cell-derived heart cells and make them available to the research community while avoiding past ethical and political constraints.
"I think the progress reports on those pluripotent cells have been quite good, so I think that's another reason for investors to be emboldened," said Still.
Finally, Still noted how surgeons overseas recently carried out the world's first tissue-engineered whole organ transplant, using a windpipe made with the patient's own stem cells.
According to a report in The Lancet, the surgery was performed in Spain. Among other things, the groundbreaking surgery meant that, for the first time, a tissue transplant could be carried out without the need for anti-rejection drugs because the wind pipe was derived from the patient's own cells. Five months after the transplant, The Lancet reports that the 30-year-old patient, a mother of two, is in perfect health.
"I think people have been waiting for results like that," said Still. "So I think it's a combination of things that have come together to loosen up this particular market."
Of the companies that merged with Cellular Dynamics, iPS Cells, Inc., was formed to industrialize the reprogramming of human skin cells into pluripotent stem cells. Stem Cell Products, Inc., meanwhile, was working on a processes to make blood products from human embryonic stem cells.
Cellular Dynamics is now putting together the base infrastructure needed to industrialize the production of human cell types for research and to create a repository of individual stem cells. This biorepository, or stem cell biobank, will use the core technology of stem cell reprogramming to demonstrate the utility of banking individual stem cell lines for future use.
The hopes are that the merger and these new biorepository developments will allow CDI to become a leader in stem cell research tools and the personalized biobanking industries by placing the intellectual property and commercial, research and production capabilities of the previous organizations under one management team.
In addition to the new $18 million financing deal and merger, CDI also recently received a Small Business Innovation Research grant of nearly $500,000 from the National Institutes of Health to produce heart cells derived from stem cells for clinical studies.
"This is great news for the entire state of Wisconsin," Gov. Jim Doyle said in a statement. "Stem cell research represents the promise to not only save lives, but also to create economic opportunity for innovation and job growth as well.
"Despite our national economic downturn, I am pleased that our business leaders are continuing to invest in innovative companies like Cellular Dynamics, which will provide the high-end jobs of the future."
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Cellular Dynamics International, a local biotechnology company co-founded by UW-Madison stem cell guru Jamie Thomson, announced it recently raised $18 million in financing.
