What if doctors could take a strand of your hair and use it to find out which drugs could best treat you for high cholesterol, for example, without giving you a bad reaction?

That may be just a few years away, says an official of Cellular Dynamics International (CDI), 525 Science Drive.

The Madison stem-cell company, founded by UW-Madison researcher James Thomson, has landed $18 million in financing that will help CDI expand operations and add staff, as it works to become a world leader in the field, said chief commercial officer Chris Kendrick-Parker.

"I'm confident because we have people that are at the forefront of this research as members of the company," he said. The funding was led by Tactics II Stem Cell Ventures in Milwaukee.

As part of its strategy, Cellular Dynamics, founded in 2004, has merged with two sister companies also started by Thomson: Stem Cell Products, founded in 2006, and iPS Cells, created in 2007.

Cellular Dynamics has focused on turning skin biopsies into stem cells and growing those into heart cells. Drug companies can use the heart cells to test potential drugs for toxicity.

"The cells have the full functionality of heart cells that animal models or cells from cadaver hearts don't have," said Kendrick-Parker. "They physically beat and contract ... . You can see that through a microscope." He said talks are under way with 20 top pharmaceutical companies and "a number of them" have signed contracts with CDI.

Stem Cell Products was turning the stem cells into blood products and other types of cells and iPS Cells developed a process for manufacturing large numbers of the new cells.

The merged CDI has more than 50 employees, up from 25 in the past four months, and the staff could hit 100 by mid-2010, Kendrick-Parker said.

CDI also wants to set up a stem-cell bio-bank to store lines of individual stem cells. They could be used for research and, eventually, for creating personalized medicine, Kendrick-Parker said.