Analysts: Change in U.S. stem cell policy could create half-billion-dollar market
Obama's executive order could create 'best-case scenario' for stem cell market growth
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NEW YORK—There could be a $500 million dollar world market for stem cell therapies by 2013 now that President Barack Obama has lifted the federal funding restrictions on stem cell research and the world's largest healthcare economy can participate in stem cell development, according to analysts at Kalorama Information.
The life science market research publisher noted in its recent report, Stem Cell Therapeutics Markets, that under a best-case scenario where therapies are successful, regulatory acceptance is expedient and insurers cover new therapies, the market could grow over 30 times its estimated size of $16.4 million in 2008.
"Since there are just a few products in this area now, our analysts have used a bottom-up model to make forecasts, based on disease incidence and a gradual replacement of current therapies," says Bruce Carlson, publisher for Kalorama. "In the past, analysts have utilized models like this to predict monoclonal antibody and cancer vaccine markets, before viable products appeared."
Kalorama estimates that half of stem cell therapeutics' revenue will be in cardiovascular disease, with lung disease, cancer and diabetes treatments making up the lion's share of the rest.
The previous lack of funding for basic research, compared with the technological challenges that must be overcome, has resulted in very limited approvals of new drug therapies that involve stem cells, despite strong potential. As of the end of 2007, there were no approved treatments or human trials using embryonic stem cells in the United States. Any existing therapies were typically in the form of stem cell transplants using either bone marrow or blood stem cells for oncological conditions.
"This situation has allowed other countries to take the lead," Carlson notes. "The U.K. is responsible for many of the advances in stem cell technology, and both China and Singapore, with some of the most unrestrictive embryonic stem cell research policies in the world, have emerged in this area."
But things should change with the new federal policies and America's gain may be Europe and Asia's loss, since money from American companies has been funding many projects abroad, some of which will likely relocate. Still, despite a short drop in European and Asian projects, the U.S. is the world's largest healthcare market, which should alleviate any loss in global revenues, Kalorama said.
The executive order signed by the president allows the National Institutes of Health (NIH) to fund research using embryonic stem cells and issue new guidelines consistent with the order within 120 days. The NIH was previously able to fund research only on a very limited number of stem cell lines.
The order could have a wide-reaching impact on drug researchers and manufacturers, and could spark plenty of growth throughout the industry.
A market-research report, Stem Cell Technology: Current Application and Future Directions from BCC Research in Wellesley, Mass., expects the domestic market for stem-cell technology to increase from $112 million in 2007 to $423.1 million in 2012, a compound annual growth rate of 30.5 percent.
The market divides into cellular therapeutics and therapeutic-banking categories. Therapeutic banking has the larger market share, worth $65.9 million in 2007. It's expected to increase to $155.7 million in 2012.
Cellular therapeutics should be the faster-growing segment. The research area generated $46.1 million last year and is expected to earn $267.4 million in 2012. The report cautions that although stem-cell-based treatments hold great promise, the delivery of readily available treatments is still projected at least five to 10 or more years away.
Venture capitalist Steve Burrill said recently that the current market for stem cell therapies in the United States currently runs around $100 million, but is expected shoot up to $710 million in three years.
According to Burrill, by 2016, the market could hit $8.5 billion. He made his comments at The Stem Cell Meeting at the University of California, San Francisco Mission Bay complex.
Access to capital for fledgling stem firms was the topic of one panel Monday morning. Speakers from stem cell-focused companies indicated that funds are still tight, but that some loosening seemed to be occurring that was related to the more favorable political climate in Washington, D.C.
In the wake of Obama's executive order, several states are pursuing legislation that would be more restrictive on stem cell research. Scientists and citizens in those states might be missing out on a potential lucrative source of research funds and medical benefits because of the state's strict limits on embryonic stem-cell research, a top biotechnology official said.
According to James Greenwood, president of the Washington, D.C.-based Biotechnology Industry Organization (BIO), said that Arizona and other states that limit such research methods may not realize the benefits from President Barack Obama's move earlier this month to reverse a ban on federal funding of the controversial research.
"That seems to be a no-brainer," Greenwood told the Arizona Republic of allowing research of stem cells that are harvested from embryos discarded by fertility clinics. "They are going to be destroyed one way or another."
Anticipating changes under the Obama administration, stem cell researchers have been lining up research funding to ensure a quick burst out of the gate once new guidelines are in place.
Cambridge, Mass.-based Stemgent Inc. raised a $14 million Series A round this month, just as President Obama has reversed the federal government's restrictions on embryonic stem cell funding.
Stemgent plans to use the money to build up a business selling supplies to stem cell researchers.
Stemgent CEO Ian Ratcliffe says he's "cautiously optimistic" that the Obama administration's policy directive will boost research budgets.
However, it's unclear when federal funding will make its way to labs, he says, noting: "There was no accompanying, 'Oh, by the way, we're putting $1 billion or $5 billion into stem cell research.'"
Stemgent's latest investment round, funded by HealthCare Ventures and Morgenthaler Ventures, isn't the largest venture round in recent months for a stem cell startup.
Redwood City, Calif.-based OncoMed Pharmaceuticals, a developer of treatments to destroy cancer stem cells, raised $46 million late last year, bringing its total funding to date to more than $170 million. Backers of the Redwood City, Calif.-based company include Morgenthaler, De Novo Ventures, Bay Partners, Adams Street Partners, U.S. Venture Partners, The Vertical Group, Latterell Venture Partners and GSK Ventures.
Also late last year, Madison, Wisc.-based Cellular Dynamics International, a developer of stem cell technologies for drug development and personalized medicines, raised $18 million in a round led by Tactics II Stem Cell Ventures with participation from the Wisconsin Alumni Research Foundation.
A handful of other stem cell research startups have raised smaller rounds. Linkage Biosciences, based in San Francisco, raised $2 million in February from Greenhouse Capital Partners, to develop diagnostic products for solid organ and marrow-derived stem cell transplantation. Malvern, Pa.-based Neoronyx, which develops medicines using adult bone marrow-derived stem cells, raised $3.74 million in January from Safeguard Scientifics, Alliance Technology Ventures and SCP Private Equity Partners.
Companies that provide equipment utilized in stem cell research also stand to benefit. Some, like Thermo Fisher Scientific Inc., are ramping up their efforts.
Thermo Fisher Scientific has expanded its stem cell research offering with the introduction of four new cell culture products: Thermo Scientific HyClone HyStem Hydrogels, HyStem Hydrogel, HyStem-C and HyStem-HP.
The executive order also gives a boost to companies that don't even work with embryonic stem cells, such as International Stem Cell Corp.
The company produces its stem cells from unfertilized, or parthenogenic, human egg cells, which were not banned under the Bush administration regulations.
Jeffrey Janus, president of International Stem Cell, is expanding its parthenogenic stem cell program at its Oceanside, Calif., headquarters.
Embryonic stem cells are the "ancestral" cells that turn into the hundreds of kinds of tissues and organs in the human body when an embryo develops into a baby. Other stem cells, found in adults and umbilical cord blood, have similar, but lesser, abilities.
Scientists are examining the various kinds of stem cells for disease treatments, such as growing replacement organs, or to screen potential drugs.
"We believe our parthenogenic stem cells are for all practical purposes the same as embryonic stem cells," Janus said.
The life science market research publisher noted in its recent report, Stem Cell Therapeutics Markets, that under a best-case scenario where therapies are successful, regulatory acceptance is expedient and insurers cover new therapies, the market could grow over 30 times its estimated size of $16.4 million in 2008.
"Since there are just a few products in this area now, our analysts have used a bottom-up model to make forecasts, based on disease incidence and a gradual replacement of current therapies," says Bruce Carlson, publisher for Kalorama. "In the past, analysts have utilized models like this to predict monoclonal antibody and cancer vaccine markets, before viable products appeared."
Kalorama estimates that half of stem cell therapeutics' revenue will be in cardiovascular disease, with lung disease, cancer and diabetes treatments making up the lion's share of the rest.
The previous lack of funding for basic research, compared with the technological challenges that must be overcome, has resulted in very limited approvals of new drug therapies that involve stem cells, despite strong potential. As of the end of 2007, there were no approved treatments or human trials using embryonic stem cells in the United States. Any existing therapies were typically in the form of stem cell transplants using either bone marrow or blood stem cells for oncological conditions.
"This situation has allowed other countries to take the lead," Carlson notes. "The U.K. is responsible for many of the advances in stem cell technology, and both China and Singapore, with some of the most unrestrictive embryonic stem cell research policies in the world, have emerged in this area."
But things should change with the new federal policies and America's gain may be Europe and Asia's loss, since money from American companies has been funding many projects abroad, some of which will likely relocate. Still, despite a short drop in European and Asian projects, the U.S. is the world's largest healthcare market, which should alleviate any loss in global revenues, Kalorama said.
The executive order signed by the president allows the National Institutes of Health (NIH) to fund research using embryonic stem cells and issue new guidelines consistent with the order within 120 days. The NIH was previously able to fund research only on a very limited number of stem cell lines.
The order could have a wide-reaching impact on drug researchers and manufacturers, and could spark plenty of growth throughout the industry.
A market-research report, Stem Cell Technology: Current Application and Future Directions from BCC Research in Wellesley, Mass., expects the domestic market for stem-cell technology to increase from $112 million in 2007 to $423.1 million in 2012, a compound annual growth rate of 30.5 percent.
The market divides into cellular therapeutics and therapeutic-banking categories. Therapeutic banking has the larger market share, worth $65.9 million in 2007. It's expected to increase to $155.7 million in 2012.
Cellular therapeutics should be the faster-growing segment. The research area generated $46.1 million last year and is expected to earn $267.4 million in 2012. The report cautions that although stem-cell-based treatments hold great promise, the delivery of readily available treatments is still projected at least five to 10 or more years away.
Venture capitalist Steve Burrill said recently that the current market for stem cell therapies in the United States currently runs around $100 million, but is expected shoot up to $710 million in three years.
According to Burrill, by 2016, the market could hit $8.5 billion. He made his comments at The Stem Cell Meeting at the University of California, San Francisco Mission Bay complex.
Access to capital for fledgling stem firms was the topic of one panel Monday morning. Speakers from stem cell-focused companies indicated that funds are still tight, but that some loosening seemed to be occurring that was related to the more favorable political climate in Washington, D.C.
In the wake of Obama's executive order, several states are pursuing legislation that would be more restrictive on stem cell research. Scientists and citizens in those states might be missing out on a potential lucrative source of research funds and medical benefits because of the state's strict limits on embryonic stem-cell research, a top biotechnology official said.
According to James Greenwood, president of the Washington, D.C.-based Biotechnology Industry Organization (BIO), said that Arizona and other states that limit such research methods may not realize the benefits from President Barack Obama's move earlier this month to reverse a ban on federal funding of the controversial research.
"That seems to be a no-brainer," Greenwood told the Arizona Republic of allowing research of stem cells that are harvested from embryos discarded by fertility clinics. "They are going to be destroyed one way or another."
Anticipating changes under the Obama administration, stem cell researchers have been lining up research funding to ensure a quick burst out of the gate once new guidelines are in place.
Cambridge, Mass.-based Stemgent Inc. raised a $14 million Series A round this month, just as President Obama has reversed the federal government's restrictions on embryonic stem cell funding.
Stemgent plans to use the money to build up a business selling supplies to stem cell researchers.
Stemgent CEO Ian Ratcliffe says he's "cautiously optimistic" that the Obama administration's policy directive will boost research budgets.
However, it's unclear when federal funding will make its way to labs, he says, noting: "There was no accompanying, 'Oh, by the way, we're putting $1 billion or $5 billion into stem cell research.'"
Stemgent's latest investment round, funded by HealthCare Ventures and Morgenthaler Ventures, isn't the largest venture round in recent months for a stem cell startup.
Redwood City, Calif.-based OncoMed Pharmaceuticals, a developer of treatments to destroy cancer stem cells, raised $46 million late last year, bringing its total funding to date to more than $170 million. Backers of the Redwood City, Calif.-based company include Morgenthaler, De Novo Ventures, Bay Partners, Adams Street Partners, U.S. Venture Partners, The Vertical Group, Latterell Venture Partners and GSK Ventures.
Also late last year, Madison, Wisc.-based Cellular Dynamics International, a developer of stem cell technologies for drug development and personalized medicines, raised $18 million in a round led by Tactics II Stem Cell Ventures with participation from the Wisconsin Alumni Research Foundation.
A handful of other stem cell research startups have raised smaller rounds. Linkage Biosciences, based in San Francisco, raised $2 million in February from Greenhouse Capital Partners, to develop diagnostic products for solid organ and marrow-derived stem cell transplantation. Malvern, Pa.-based Neoronyx, which develops medicines using adult bone marrow-derived stem cells, raised $3.74 million in January from Safeguard Scientifics, Alliance Technology Ventures and SCP Private Equity Partners.
Companies that provide equipment utilized in stem cell research also stand to benefit. Some, like Thermo Fisher Scientific Inc., are ramping up their efforts.
Thermo Fisher Scientific has expanded its stem cell research offering with the introduction of four new cell culture products: Thermo Scientific HyClone HyStem Hydrogels, HyStem Hydrogel, HyStem-C and HyStem-HP.
The executive order also gives a boost to companies that don't even work with embryonic stem cells, such as International Stem Cell Corp.
The company produces its stem cells from unfertilized, or parthenogenic, human egg cells, which were not banned under the Bush administration regulations.
Jeffrey Janus, president of International Stem Cell, is expanding its parthenogenic stem cell program at its Oceanside, Calif., headquarters.
Embryonic stem cells are the "ancestral" cells that turn into the hundreds of kinds of tissues and organs in the human body when an embryo develops into a baby. Other stem cells, found in adults and umbilical cord blood, have similar, but lesser, abilities.
Scientists are examining the various kinds of stem cells for disease treatments, such as growing replacement organs, or to screen potential drugs.
"We believe our parthenogenic stem cells are for all practical purposes the same as embryonic stem cells," Janus said.
