Next step in stem cells: Human tests

PITTSBURGH (CNNMoney.com) -- Companies that develop drugs using embryonic stem cell research could soon enter a bold new phase: human testing.

Geron Corp. and Advanced Cell Technology Inc. are preparing Food and Drug Administration applications to begin human testing of experimental treatments that are based on embryonic stem cells. If the companies get the go-ahead, they could begin tests as soon as next year.

"What we're seeing now in the stem cell field is like a chess match," said Stephen Brozak, analyst for WBB Securities. "The early moves will ultimately dictate who succeeds in the stem cell space."

In the past, the FDA has approved human tests of products based on stem cells taken from adult tissue. But Geron and Advanced Cell Technologies could be the first to begin human testing of treatments based on the more controversial research using stem cells derived from embryos.

Human tests are the most advanced form of testing and one of the final hurdles before the FDA approves a drug.

Geron (Charts), based in Menlo Park, Calif., has been using rats in its experiments of a potential treatment for spinal cord injuries. Geron has already met with the FDA and will submit its plans for human testing to the agency by the end of this year, according to Sion Rogers, a spokesman for the company.

"We expect to be in the clinic [for human testing] next year," said Rogers.

Advanced Cell Technology (Charts) plans to submit its application for human testing to the FDA by the middle of next year, said Chief Executive Robert Lanza, who spoke at the 7th International Stem Cell Conference on Tuesday.

His company is developing potential treatments for vision loss diseases, including macular degeneration and Stargardt's, based on studies involving monkeys. If the treatment is successful, it would most likely compete with Genentech Inc.'s (Charts) vision loss treatment Lucentis, a fast-growing drug that had $600 million in sales during the first nine months of 2007.

Geron and Advanced Cell Technology are unlikely to compete with each other because their potential products are unrelated, said Ren Benjamin, analyst for Rodman & Renshaw.

"We think that it doesn't matter who gets to the clinic first, because the entire stem cell space will benefit when someone gets there," said Benjamin. "It will create a lot of excitement in investors, because it's a big milestone for the embryonic stem cell space."

The process of testing drugs on humans can take years to complete - in the case of drugs developed with human embryonic stem cells, a minimum of five years, said Lanza of Advanced Cell Technology. Typically, after studies are completed, an experimental drug is submitted to the FDA for review, a step that can take a minimum of six months to finish.

Small-scale biotech companies and universities have spearheaded embryonic stem-cell research in developing treatments for heart disease, diabetes, Parkinson's and injuries to the spine and brain.

Novocell Inc. also uses stem cells from human embryos for research, while other biotechs like Cytori Therapeutics (Charts) and Osiris Therapeutics, Inc. (Charts) use adult human tissue as a source.

Osiris, based in Columbia, Md., has the only stem cell-based product that has been approved by the FDA. The treatment, Osteocel, stimulates bone growth and is considered an implant, rather than a drug or device. The product was launched in 2005 and totaled about $5 million in sales during the first half of 2007, accounting for most of the company's revenue.

Companies that work with stem cells derived from adult tissue are insulated from the controversy surrounding embryonic stem cells. Many researchers prefer the use of human embryonic stem cells because they can rapidly reproduce themselves for years at a time in a lab environment.

But the use of embryonic stem cells, which are obtained through in vitro fertilization, is opposed by the pro-life contingent, including President George W. Bush. Bush has said that he opposes "the creation, destruction, or harming of living human embryos." Proponents of embryonic stem cells research dispute this notion, saying that the blastocysts used as sources for stem cells would otherwise be discarded as medical waste.

In 2001, Bush restricted federal funding for embryonic stem cell research to the stem cell lines that existed at the time, and in June 2007 vetoed a Congressional bill to lift these restrictions. The presidential lines, as they are called, represent only about 5 percent of the stem cells available in the world today, according to Dr. James Battey Jr., co-chair of the stem cell task force for the National Institutes of Health.

Novocell, a privately-held biotech based in San Diego, uses embryonic stem cell research in developing treatments for diabetes. Chief Executive Alan Lewis said that he is a couple of years behind Geron and Advanced Cell Technologies, and he is yet to finish studies using mice.

"The study needs to be completed before we got out and bang a drum and talk about curing diabetes," said Lewis.

The analysts interview for this story do not own stock in the companies mentioned here, and their firms have not conducted business with the companies within the last 12 months.