Stem Cells: Identifying Commercial Opportunities

Stem Cells: Identifying Commercial Opportunities

Publisher:	Business Insights Ltd (Reuters)
Year of publication:	2006
Type of publication:	Management report
Publisher's reference (if any):	In Press
Author(s):	Sreten Bogdanovic and Beata Langlands
Approximate page count:	200
Price when published:	$2,875
Remarks: Page numbers, where given, refer to the draft manuscript (which may differ from the published version). The copyright in this report is owned by the publisher, to whom any requests for copies should be addressed. The price shown is for a single copy of the print version. Multiple copies and electronic copies usually have different prices.
STEM CELLS: Identifying Commercial Opportunities TABLE OF CONTENTS Author Details Executive Summary Chapter 1 Introduction to stem cells 1.0 Summary 1.1 Introduction 1.1.1 Stem cell types 1.1.2 Differentiated cell types 1.2 Major milestones in stem cell research 1.3 Characteristics of embryonic and adult stem cells 1.4 Current uses of stem cells 1.5 Potential uses of stem cells Chapter 2 Regulatory and ethical issues 2.0 Summary 2.1 Introduction 2.2 Regulation of cell and tissue therapies (USA) 2.3 Ethical issues in embryonic stem cell research 2.4. Global embryonic stem cell policies 2.4.1 USA 2.4.2 Europe 2.4.3 Israel, Russian Federation and Asian nations 2.4.4 Canada and Australia Chapter 3 Technologies and strategies 3.0 Summary 3.1 Introduction 3.2 Culture of adult stem cells 3.2.1 Isolation and identification of stem cells 3.2.2 Ex vivo expansion 3.2.3 Prevention of differentiation in culture 3.2.4 Preservation and scale-up 3.3 Examples of adult stem cell cultures 3.3.1 Hematopoietic stem cells 3.3.2 Mesenchymal stem cells 3.3.3 Neural stem cells 3.4 Culture of mouse ESCs 3.5 Culture of human ESCs 3.5.1 Single cell cloning 3.5.2 Challenges 3.6 Tissue engineering Chapter 4 Market analysis 4.0 Summary 4.1 Introduction 4.2 The regulation of cellular therapy 4.3 Human embryonic stem cells (hESCs) 4.4 Human mesenchymal stem cells (MSCs) 4.5 Human hematopoietic stem cells (HSCs) 4.6 Stem cell mobilisation 4.7 Stem cell expansion 4.8 Stem cell therapy and tissue engineering products 4.9 Commercial applications 4.9.1 Bone/cartilage regeneration 4.9.2 Myocardial and vascular regeneration 4.9.3 Pancreatic beta-cell regeneration 4.9.4 Neuronal regeneration 4.9.5 Skin replacement and wound healing 4.9.6 Drug screening 4.10 Embryonic and fetal stem cell programs 4.11 Potential Markets 4.12 Overview of Stem Cell Market Forecasts 4.13 The Stem Cell Market, 2005-2010 4.13.1 Preliminary observations 4.13.2 Quantitative forecasts 4.14 Stem cell companies Chapter 5 Adult stem cell programs 5.0 Summary 5.1 Introduction 5.2 Hematopoietic stem cell (HSC) transplantation 5.2.1 Established clinical applications 5.2.1.1 HSC mobilization products 5.2.2 Emerging clinical applications 5.2.3 Purification of HSCs for transplantation 5.2.4 Harvesting of HSCs from cord blood 5.2.5 HSC-based gene therapy 5.2.6 Ex vivo expansion systems 5.3 Mesenchymal stem cells for GvHD 5.4 In vivo stem cell activation 5.5 Stem cells for tissue repair/regeneration 5.5.1 Tissue repair products 5.5.1.1 Bone/cartilage regeneration 5.5.1.2 Myocardial and vascular regeneration 5.5.1.3 Beta-cell regeneration 5.5.1.4 Neuronal regeneration 5.5.1.5 Skin replacement and wound healing 5.5.1.6 Other applications 5.5.1.7 Novel approaches 5.6 Stem cells for drug testing applications Chapter 6 Embryonic and fetal stem cell programs 6.0 Summary 6.1 Introduction 6.2 Human embryonic stem cell (hESC) lines 6.2.1 hESC lines derived from blastocyst embryos 6.2.2 Other approaches to derivation of hESC lines 6.2.2.1 Somatic cell nuclear transfer 6.2.2.2 Fusion technologies 6.2.2.3 Single-cell embryo biopsy 6.2.2.4 Other approaches 6.3 Harnessing the power of ESCs 6.3.1 Tissue repair/regeneration 6.3.1.1 Initial challenges 6.3.1.2 Directed differentiation of ESCs 6.3.1.3 Nascent therapies 6.3.2 Drug screening and discovery 6.3.3 Miscellaneous applications 6.4 Human fetal stem cell therapies Chapter 7 Patents in stem cell research 7.0 Summary 7.1 Introduction 7.2 Patent systems in Europe and the US 7.2.1 Overview 7.2.2 Post-issue challenges to patent validity 7.2.3 Patent litigation 7.3 Patenting of stem cells 7.4 Survey of US stem cell patents 7.4.1 Methodology 7.4.2 Patent activity analysis 7.4.3 Competitive analysis 7.4.3.1 Most frequently cited patents 7.4.3.2 Most prolific patent assignees Chapter 8 Trends and opportunities 8.0 Summary 8.1 Slow beginnings, big promise 8.2 Ensuring a strong proprietary position 8.3 Exploiting accessible sources of adult stem cells 8.4 Regenerative medicine takes shape 8.5 Commercialising stem cells for drug screening 8.6 Embracing embryonic stem cell research Tables and Exhibits Table 4.1 Potential US Patient Populations for Cell-Based Therapies Table 4.2 Annual Direct Expenditures in the US for Selected Diseases Table 4.3 Stem Cell Market Forecasts by Technology and Product Type, 2005-2010 Table 4.4 Stem Cell Market Forecasts by Region, 2005-2010 Table 4.5 Specialist stem cell companies Table 5.1 Commercial exploitation of adult stem cells Table 5.2 Cord blood banks Table 6.1 Commercial exploitation of embryonic and fetal stem cells Table 7.1 Top 30 Stem Cell Patents by Forward Citations Table 7.2 Top 30 Assignees for US Stem Cell Patents Exhibit 7.1 US Stem Cell Patents, Filed 1980-2005 Exhibit 7.2 US Stem Cell Patents, Filed 1980-1999 Only Exhibit 7.3 US Stem Cell Patents, Filed 2000-2003 Only Exhibit 7.4 US Stem Cell Patents, Filed 2004-2005 Only Exhibit 7.5 Patent activity analysis for Stem Cells (Filed 1980-2005) Exhibit 7.6 Patent activity analysis for Stem Cells (Filed 1980-1999) Exhibit 7.7 Patent activity analysis for Stem Cells (Filed 2000-2003) Exhibit 7.8 Patent activity analysis for Stem Cells (Filed 2004-2005) Exhibit 7.9 Activity analysis for Top 30 US Stem Cell Patents by FCNs Exhibit 7.10 Top 30 US Stem Cell Patents by FCNs, Filed 1980-2005 Abbreviations Abbreviations (Regulatory terms) Index EXECUTIVE SUMMARY Chapter 1 Introduction to stem cells Stem cells have both the capacity to self-renew and differentiate into mature, specialized cells. Depending on their origin, human stem cell preparations are called embryonic stem cells, fetal stem cells, or adult stem cells. Human embryonic stem cells (ESCs) were first derived from human blastocysts in 1998. They are pluripotent, meaning they can become any of the more than 200 known differentiated cell types. Adult stem cells exist in many tissues of the human body, although they are quite rare. Adult stem cells are predominantly multipotent cells capable of giving rise to specific cell lineages. ESCs can renew themselves indefinitely in the undifferentiated state in culture. Unlike ESCs, adult stem cells have a limited ability to proliferate in culture and at the same time retain the capacity to differentiate into functionally useful cells. Controversy surrounds the phenomenon of plasticity, which describes adult stem cells' putative ability to contribute to unrelated lineages. They may instead fuse with somatic cells of regenerating tissues. Proven and potential clinical benefit underpins interest in stem cells. In 1968, adult bone marrow was first used as source hematopoietic stem cells (HSCs) for transplantation to regenerate the recipient's blood and immune system. Various types of adult stem cells are showing promise for therapeutic use in tissue regeneration. Chapter 2 Regulatory and ethical issues Different regulations exist in different countries, but the US policy is regarded as the most comprehensive regulatory approach. Human cells or tissue intended for transplantation into a human recipient is regulated as Human Cellular and Tissue-based Products. FDA regulations address the extent of acceptable cell/tissue manipulation. The use of human embryos has mired the field in controversy and posed particularly difficult questions for legislators around the world. Nevertheless, most countries allow some form of embryonic stem cell research. An increasing number of countries (including US) permit research on donated surplus IVF embryos. Most controversial is the notion that human clones may one day be created using somatic cell nuclear transfer (SCNT) technology. If it proved possible to produce human ESCs in this way, they could be used to develop human therapies (therapeutic cloning). The US federal government does not explicitly prohibit SCNT. However, SCNT cannot be undertaken using federal funds. Fourteen US states have laws pertaining to human cloning. Four states - California, New Jersey, Rhode Island, and Massachusetts expressly permit SCNT for therapeutic purposes. In Europe, UK, Belgium, and Sweden are firmly in favour of therapeutic cloning. Israel, many Asian nations (Japan, Singapore, South Korea, China, India) and the Russian Federation are also in favour of therapeutic cloning. Some nations (Canada, France) and some US states not only refuse financial support for therapeutic cloning, they have outlawed the practice. Chapter 3 Technologies and strategies Procedures for isolation of adult stem cells from source tissues often yield a heterogeneous cell preparation. Methods have been developed for expanding hematopoietic stem cells (HSCs) ex vivo using defined cytokine cocktails with and without cell feeder layers and with and without animal-derived serum. Efforts continue to develop methods for efficient culture and expansion of HSCs under controlled conditions that will yield suitable numbers of hematopoietic stem and progenitor cells for clinical use. Mesenchymal stem cells (MSCs) can be reproducibly isolated, expanded and quantified in vitro. Human MSC preparations isolated in different laboratories by different methods appear to have similar but not identical properties. Neural stem cells (NSCs) grow in suspension culture when maintained in a mitogen-containing and serum-free culture medium, but there remains a need to increase the rate of their proliferation in culture. ESC lines can be established in which cells are maintained and grown in culture and display an immortal or indefinite life span. Both mouse and human ESCs are cultivated on feeder layers of mouse embryonic fibroblasts, in media supplemented with fetal calf serum. However, contrary to what is seen with mouse ESCs, use of the cytokine LIF does not prevent the spontaneous differentiation of human ESCs in culture. It is also possible to grow human ESCs on feeder layers of human fibroblasts, or without any feeder cell layer at all. Most recently, a system free of all animal products has been developed. Preparations of human ESCs growing in vitro can be single cell cloned to obtain a genetically homogeneous population. However, human ESCs which are passaged in culture many times are at risk of the possible loss of genetic homogeneity and monitoring the karyotype of an ESC line is critical. In tissue engineering, the engineered tissue, or construct, usually consists of biodegradable or non-biodegradable three-dimensional biocompatible scaffold-implants containing living cells with the desired structure and functionality. Stem cells may need to be differentiated in suitable bioreactors prior to use. Chapter 4 Market analysis This chapter covers the current (in 2005) market for stem cell related products and services, together with forecasts for the same through to 2010. There are at least 300 million people in the US, EU, and Japan who could potentially benefit from stem cell therapeutics now in development. These persons incur around $480 billion dollars in annual direct healthcare costs. The stem cell market, which we predict will grow at a compound annual rate of 22.6% from $28.6 billion to $68.9 billion, is dominated by cytokines such as EPO and GM-CSF which are used in vivo mainly to stimulate hematopoietic stem cells in cancer patients. No human embryonic stem cell (hESC) therapies have entered clinical trials yet (at least not in the US or Europe), and these products are not expected to appear during the forecast period. Moreover they are highly controversial. A few products based on fetal stem cells (hFSCs) are entering clinical trials. Mesenchymal stem cells are pluripotent progenitor cells found in adults with the ability to generate many tissues, including cartilage, bone, muscle, tendon, ligament and fat. Several hMSCs are in clinical trials. Hematopoietic stem cells (hHSCs) give rise to blood and immune cells. Human HSCs occur in adults, and in umbilical cord blood. Currently they are the most intensively exploited stem cells, particularly (via transplantation) in the treatment of cancer and immune disorders. In the last few years, a new industry has evolved for the collection and storage of cord blood HSCs and the number of cord blood (CB) banks has been rapidly increasing. Cord blood banks may be public or commercial. Since CB banks and other institutions that work with human stem cells are commonly short of material, there is much interest in the expansion and directed differentiation of hHSC stocks. Another approach to HSCs is to try and activate endogenous cells by mobilisation and stimulation, rather than by adding new ones via transplantation. This is how cytokines such as EPO and G-CSF work. Applications of adult stem cells include bone/cartilage regeneration, myocardial and vascular regeneration, pancreatic beta-cell regeneration, neuronal regeneration, skin replacement and wound healing, and drug screening. Drug screening is an in vitro application based on specific technologies, which we treat separately from the clinical applications. Apart from bone/cartilage regeneration and skin/wound healing, all clinical applications of adult non-hHSCs are at an early stage. The US and EU are, and will remain, the largest world markets. Regulatory constraints are expected to affect the US more than Europe, closing the gap between them in relative terms as new stem cell products are developed, but we also expect a significant shift in stem cell R&D towards Australasia, where such constraints are less prominent. Chapter 5 Adult stem cell programs Transplantation of enriched but impure populations of hematopoietic stem cells (HSCs) is routinely used for restoring blood cell production in patients with cancers and other disorders of the blood and the immune system and is being evaluated in a wide range of diseases. HSC transplantation can be either autologous or allogeneic. Originally bone marrow was used as source of HSCs, but HSCs are now commonly harvested from peripheral blood after they have been induced to migrate there from bone marrow. The market for stem cell mobilization is currently served by only a few cytokine products, but new drugs are in clinical trials. New approaches to prevention of Graft-versus-Host disease (GvHD), a common complication after allogeneic transplants, include purification of HSCs and the use of immunosuppressive mesenchymal stem cells (MSCs). In recent years, a competitive industry has evolved for the collection and storage of cord blood. The use of cord blood-derived stem cells has also reduced the risk of GvHD. More efficient expansion of HSCs in culture would allow more HSC transplants to be undertaken. Various proprietary expansion technologies are under investigation, some of which also enable stem cells to maintain their three-dimensional geometry. Approximately 30% of cell-based gene therapy clinical trials conducted in the US have used HSCs. In recent years the use of selectable marker genes has brought modest improvements in the numbers of gene-corrected HSCs observed following transplantation. In September 2005, the first allogeneic bone matrix containing viable MSCs, Osiris Therapeutics' Osteocel, was launched on the US market. In addition to MSCs, various proprietary adult stem cells, stem cell combinations, and stem cell isolation methods are being assessed for potential use in tissue repair/regeneration. Some of the stem cells under investigation are believed to be pluripotent. Stem cells will need to be expanded ex vivo and induced to differentiate, providing opportunities for companies with proprietary technologies in these areas. Several compounds for in vivo stem cell activation are also under investigation. Readily available sources of potentially useful stem cells for use in tissue repair/regeneration include cord blood, adipose tissue, dermal tissue, and mucosal tissue lining the nose. Initial applications are likely to be in cell therapies for bone/cartilage, cardiac, pancreatic, neuronal, and skin regeneration. Stem cells are also being developed for use in synthetic organs (liver, bladder). Stem cells which can be expanded ex vivo and differentiated into specialized cell types when needed show potential for drug testing applications. Chapter 6 Embryonic and fetal stem cell programs For therapeutic use, pluripotent embryonic stem cells offer a number of potential advantages. ESCs have an unlimited ability to proliferate in vitro, and are more likely that adult stem cells to generate a broad range of cell types through directed differentiation. Currently available human ESC lines have been derived from day-5 human blastocysts. There are currently more than 200 reported human ESC lines worldwide, but very little is known about their individual characteristics. Differentiated cells produced from existing human ESC lines may be unsafe for implantation into humans. They are likely to be contaminated with animal products such as N-glycolylneuraminic acid. Recent work has also shown that over time, cultured human ESC lines acquire genetic and epigenetic alterations. In the US, no ESC-derived cell replacement therapies have advanced beyond preclinical studies. Control of differentiation of ESCs will be key to developing well characterised cell populations for future use in tissue regeneration/repair. Several companies are developing directed differentiation technologies for murine and human ESCs. Because human ESCs maintained in vitro have a tendency to differentiate spontaneously, methods have been devised that allow undifferentiated ESCs to be selected from a culture prior to directed differentiation. Approaches to derivation of human ESC lines which would avoid destruction of viable human embryos include somatic cell nuclear transfer (SCNT), the technique successfully used for reproductive cloning in animals, but not in nonhuman primates. Other options include fusion technologies, single-cell embryo biopsy, altered nuclear transfer and parthenogenesis. Directed differentiation of mouse ESCs into a variety of tissues has led to the development of a market for mouse cell-based drug screening assays. Drug screening assays also represent a major potential use for human ESCs, in particular predictive toxicology testing. The potential uses of human ESCs extend beyond tissue regeneration and drug screening to areas such as ex vivo production of therapeutic compounds normally secreted by stem cells in vivo and production of blood for transfusion to alleviate current shortages. Fetal stem cells have been isolated from a wide range of developing organs and from maternal circulation, and may also give rise to some therapies although this approach is limited by the ethical issues influencing the availability of human fetuses. In October 2005, the FDA granted the first approval for the transplant of fetal-derived neural stem cells into human brains. Chapter 7 Patents in stem cell research For most companies, successful exploitation of stem cell research is likely to require a strong proprietary position. Patenting may involve either stem cells themselves (products) or processes involved in their isolation, culture or modification. For a stem-cell related patent to be granted it must be novel, inventive and capable of use in industry. Obtaining patent protection for adult stem cells presents no special problems. It is much easier to obtain patent protection for embryonic stem cells in the US than in Europe, where the Biotech Directive prohibits the patenting of "uses of human embryos for industrial or commercial purposes". Third parties can oppose issued patents. The adversarial nature of the EPO opposition system is more likely to lead to outcomes unfavorable to the patent holder. Patent litigation affecting EPO patents is conducted at the national level. In the US, unlike the re-examination procedure at the PTO, litigation is an adversarial proceeding. We undertook a survey of US patents published between 1 January 1980 and 30 November 2005 claiming stem cell technologies and therapeutic applications. The search was performed using Thompson Delphion, a subscription-based service. The Delphion search produced 2,041 published patents: 40% were granted patents and 60% were published applications. The annual numbers of patents published accelerated sharply in 2002 and subsequently reached a plateau or may still be increasing. Most patents produced by the search described adult stem cells, although patents claiming embryonic stem cells have continued to be filed at a steady rate throughout the study period. Within the technology category, most patents claimed methods of stem cell isolation and culture. Of those patents that claimed a specific therapy area, the majority claimed applications in hematology. The proportion of patents claiming applications in hematology decreased following the early period (1980-1999), while the proportion of patents claiming applications in neurology, type 1 diabetes, cardiology and drug screening increased. Measurements of patent quality rely predominantly on patent citation analysis. In our survey, for-profit biotechnology companies formed the majority of assignees of the most frequently cited stem cell patents. The majority of the most prolific assignees in our survey were universities and non-profit research organizations. Chapter 8 Trends and opportunities Technologies in the stem cell field have been developing and diversifying since the filing of the first patents in the early 1980s. There are now many proprietary technologies and many opportunities to form partnerships in this area. The key to commercial success in the stem cell area will be a strong proprietary position. To build an extensive portfolio, companies can patent innovations that are incremental improvements of various stem cell technologies. A new industry has grown around storage and preservation of cord blood. There are now opportunities for further exploitation of cord blood and other accessible sources of adult stem cells. The focus of investigations has moved from HSCs to other types of adult stem cells. Companies with proprietary adult stem cells or technologies for isolating such cells can carve a niche in the future tissue regeneration market. Human adult, fetal and embryonic stem cells are all showing potential for drug testing applications. Companies seeking early stage commercial exploitation of stem cells can focus on their use in drug discovery and development. Several multinational corporations have recently announced the initiation of embryonic stem cell programs. It is anticipated that this development will lead to wider acceptance for embryonic stem cell research and enable more companies to become involved.

EXECUTIVE SUMMARY
Chapter 1 Introduction to stem cells

Stem cells have both the capacity to self-renew and differentiate into mature, specialized cells. Depending on their origin, human stem cell preparations are called embryonic stem cells, fetal stem cells, or adult stem cells.

Human embryonic stem cells (ESCs) were first derived from human blastocysts in 1998. They are pluripotent, meaning they can become any of the more than 200 known differentiated cell types.

Adult stem cells exist in many tissues of the human body, although they are quite rare. Adult stem cells are predominantly multipotent cells capable of giving rise to specific cell lineages.

ESCs can renew themselves indefinitely in the undifferentiated state in culture. Unlike ESCs, adult stem cells have a limited ability to proliferate in culture and at the same time retain the capacity to differentiate into functionally useful cells.

Controversy surrounds the phenomenon of plasticity, which describes adult stem cells' putative ability to contribute to unrelated lineages. They may instead fuse with somatic cells of regenerating tissues.

Proven and potential clinical benefit underpins interest in stem cells. In 1968, adult bone marrow was first used as source hematopoietic stem cells (HSCs) for transplantation to regenerate the recipient's blood and immune system. Various types of adult stem cells are showing promise for therapeutic use in tissue regeneration.
Chapter 2 Regulatory and ethical issues

Different regulations exist in different countries, but the US policy is regarded as the most comprehensive regulatory approach.

Human cells or tissue intended for transplantation into a human recipient is regulated as Human Cellular and Tissue-based Products. FDA regulations address the extent of acceptable cell/tissue manipulation.

The use of human embryos has mired the field in controversy and posed particularly difficult questions for legislators around the world. Nevertheless, most countries allow some form of embryonic stem cell research.

An increasing number of countries (including US) permit research on donated surplus IVF embryos.

Most controversial is the notion that human clones may one day be created using somatic cell nuclear transfer (SCNT) technology. If it proved possible to produce human ESCs in this way, they could be used to develop human therapies (therapeutic cloning).

The US federal government does not explicitly prohibit SCNT. However, SCNT cannot be undertaken using federal funds. Fourteen US states have laws pertaining to human cloning. Four states - California, New Jersey, Rhode Island, and Massachusetts expressly permit SCNT for therapeutic purposes.

In Europe, UK, Belgium, and Sweden are firmly in favour of therapeutic cloning. Israel, many Asian nations (Japan, Singapore, South Korea, China, India) and the Russian Federation are also in favour of therapeutic cloning.

Some nations (Canada, France) and some US states not only refuse financial support for therapeutic cloning, they have outlawed the practice.
Chapter 3 Technologies and strategies

Procedures for isolation of adult stem cells from source tissues often yield a heterogeneous cell preparation.

Methods have been developed for expanding hematopoietic stem cells (HSCs) ex vivo using defined cytokine cocktails with and without cell feeder layers and with and without animal-derived serum. Efforts continue to develop methods for efficient culture and expansion of HSCs under controlled conditions that will yield suitable numbers of hematopoietic stem and progenitor cells for clinical use.

Mesenchymal stem cells (MSCs) can be reproducibly isolated, expanded and quantified in vitro. Human MSC preparations isolated in different laboratories by different methods appear to have similar but not identical properties.

Neural stem cells (NSCs) grow in suspension culture when maintained in a mitogen-containing and serum-free culture medium, but there remains a need to increase the rate of their proliferation in culture.

ESC lines can be established in which cells are maintained and grown in culture and display an immortal or indefinite life span. Both mouse and human ESCs are cultivated on feeder layers of mouse embryonic fibroblasts, in media supplemented with fetal calf serum. However, contrary to what is seen with mouse ESCs, use of the cytokine LIF does not prevent the spontaneous differentiation of human ESCs in culture.

It is also possible to grow human ESCs on feeder layers of human fibroblasts, or without any feeder cell layer at all. Most recently, a system free of all animal products has been developed.

Preparations of human ESCs growing in vitro can be single cell cloned to obtain a genetically homogeneous population. However, human ESCs which are passaged in culture many times are at risk of the possible loss of genetic homogeneity and monitoring the karyotype of an ESC line is critical.

In tissue engineering, the engineered tissue, or construct, usually consists of biodegradable or non-biodegradable three-dimensional biocompatible scaffold-implants containing living cells with the desired structure and functionality. Stem cells may need to be differentiated in suitable bioreactors prior to use.
Chapter 4 Market analysis

This chapter covers the current (in 2005) market for stem cell related products and services, together with forecasts for the same through to 2010.

There are at least 300 million people in the US, EU, and Japan who could potentially benefit from stem cell therapeutics now in development. These persons incur around $480 billion dollars in annual direct healthcare costs.

The stem cell market, which we predict will grow at a compound annual rate of 22.6% from $28.6 billion to $68.9 billion, is dominated by cytokines such as EPO and GM-CSF which are used in vivo mainly to stimulate hematopoietic stem cells in cancer patients.

No human embryonic stem cell (hESC) therapies have entered clinical trials yet (at least not in the US or Europe), and these products are not expected to appear during the forecast period. Moreover they are highly controversial. A few products based on fetal stem cells (hFSCs) are entering clinical trials.

Mesenchymal stem cells are pluripotent progenitor cells found in adults with the ability to generate many tissues, including cartilage, bone, muscle, tendon, ligament and fat. Several hMSCs are in clinical trials.

Hematopoietic stem cells (hHSCs) give rise to blood and immune cells. Human HSCs occur in adults, and in umbilical cord blood. Currently they are the most intensively exploited stem cells, particularly (via transplantation) in the treatment of cancer and immune disorders.

In the last few years, a new industry has evolved for the collection and storage of cord blood HSCs and the number of cord blood (CB) banks has been rapidly increasing. Cord blood banks may be public or commercial.

Since CB banks and other institutions that work with human stem cells are commonly short of material, there is much interest in the expansion and directed differentiation of hHSC stocks.

Another approach to HSCs is to try and activate endogenous cells by mobilisation and stimulation, rather than by adding new ones via transplantation. This is how cytokines such as EPO and G-CSF work.

Applications of adult stem cells include bone/cartilage regeneration, myocardial and vascular regeneration, pancreatic beta-cell regeneration, neuronal regeneration, skin replacement and wound healing, and drug screening.

Drug screening is an in vitro application based on specific technologies, which we treat separately from the clinical applications. Apart from bone/cartilage regeneration and skin/wound healing, all clinical applications of adult non-hHSCs are at an early stage.

The US and EU are, and will remain, the largest world markets. Regulatory constraints are expected to affect the US more than Europe, closing the gap between them in relative terms as new stem cell products are developed, but we also expect a significant shift in stem cell R&D towards Australasia, where such constraints are less prominent.
Chapter 5 Adult stem cell programs

Transplantation of enriched but impure populations of hematopoietic stem cells (HSCs) is routinely used for restoring blood cell production in patients with cancers and other disorders of the blood and the immune system and is being evaluated in a wide range of diseases. HSC transplantation can be either autologous or allogeneic.

Originally bone marrow was used as source of HSCs, but HSCs are now commonly harvested from peripheral blood after they have been induced to migrate there from bone marrow. The market for stem cell mobilization is currently served by only a few cytokine products, but new drugs are in clinical trials.

New approaches to prevention of Graft-versus-Host disease (GvHD), a common complication after allogeneic transplants, include purification of HSCs and the use of immunosuppressive mesenchymal stem cells (MSCs). In recent years, a competitive industry has evolved for the collection and storage of cord blood. The use of cord blood-derived stem cells has also reduced the risk of GvHD.

More efficient expansion of HSCs in culture would allow more HSC transplants to be undertaken. Various proprietary expansion technologies are under investigation, some of which also enable stem cells to maintain their three-dimensional geometry.

Approximately 30% of cell-based gene therapy clinical trials conducted in the US have used HSCs. In recent years the use of selectable marker genes has brought modest improvements in the numbers of gene-corrected HSCs observed following transplantation.

In September 2005, the first allogeneic bone matrix containing viable MSCs, Osiris Therapeutics' Osteocel, was launched on the US market.

In addition to MSCs, various proprietary adult stem cells, stem cell combinations, and stem cell isolation methods are being assessed for potential use in tissue repair/regeneration. Some of the stem cells under investigation are believed to be pluripotent.

Stem cells will need to be expanded ex vivo and induced to differentiate, providing opportunities for companies with proprietary technologies in these areas. Several compounds for in vivo stem cell activation are also under investigation.

Readily available sources of potentially useful stem cells for use in tissue repair/regeneration include cord blood, adipose tissue, dermal tissue, and mucosal tissue lining the nose.

Initial applications are likely to be in cell therapies for bone/cartilage, cardiac, pancreatic, neuronal, and skin regeneration. Stem cells are also being developed for use in synthetic organs (liver, bladder).

Stem cells which can be expanded ex vivo and differentiated into specialized cell types when needed show potential for drug testing applications.
Chapter 6 Embryonic and fetal stem cell programs

For therapeutic use, pluripotent embryonic stem cells offer a number of potential advantages. ESCs have an unlimited ability to proliferate in vitro, and are more likely that adult stem cells to generate a broad range of cell types through directed differentiation.

Currently available human ESC lines have been derived from day-5 human blastocysts. There are currently more than 200 reported human ESC lines worldwide, but very little is known about their individual characteristics.

Differentiated cells produced from existing human ESC lines may be unsafe for implantation into humans. They are likely to be contaminated with animal products such as N-glycolylneuraminic acid. Recent work has also shown that over time, cultured human ESC lines acquire genetic and epigenetic alterations. In the US, no ESC-derived cell replacement therapies have advanced beyond preclinical studies.

Control of differentiation of ESCs will be key to developing well characterised cell populations for future use in tissue regeneration/repair. Several companies are developing directed differentiation technologies for murine and human ESCs. Because human ESCs maintained in vitro have a tendency to differentiate spontaneously, methods have been devised that allow undifferentiated ESCs to be selected from a culture prior to directed differentiation.

Approaches to derivation of human ESC lines which would avoid destruction of viable human embryos include somatic cell nuclear transfer (SCNT), the technique successfully used for reproductive cloning in animals, but not in nonhuman primates. Other options include fusion technologies, single-cell embryo biopsy, altered nuclear transfer and parthenogenesis.

Directed differentiation of mouse ESCs into a variety of tissues has led to the development of a market for mouse cell-based drug screening assays. Drug screening assays also represent a major potential use for human ESCs, in particular predictive toxicology testing.

The potential uses of human ESCs extend beyond tissue regeneration and drug screening to areas such as ex vivo production of therapeutic compounds normally secreted by stem cells in vivo and production of blood for transfusion to alleviate current shortages.

Fetal stem cells have been isolated from a wide range of developing organs and from maternal circulation, and may also give rise to some therapies although this approach is limited by the ethical issues influencing the availability of human fetuses. In October 2005, the FDA granted the first approval for the transplant of fetal-derived neural stem cells into human brains.
Chapter 7 Patents in stem cell research

For most companies, successful exploitation of stem cell research is likely to require a strong proprietary position. Patenting may involve either stem cells themselves (products) or processes involved in their isolation, culture or modification. For a stem-cell related patent to be granted it must be novel, inventive and capable of use in industry.

Obtaining patent protection for adult stem cells presents no special problems. It is much easier to obtain patent protection for embryonic stem cells in the US than in Europe, where the Biotech Directive prohibits the patenting of "uses of human embryos for industrial or commercial purposes".

Third parties can oppose issued patents. The adversarial nature of the EPO opposition system is more likely to lead to outcomes unfavorable to the patent holder. Patent litigation affecting EPO patents is conducted at the national level. In the US, unlike the re-examination procedure at the PTO, litigation is an adversarial proceeding.

We undertook a survey of US patents published between 1 January 1980 and 30 November 2005 claiming stem cell technologies and therapeutic applications. The search was performed using Thompson Delphion, a subscription-based service.

The Delphion search produced 2,041 published patents: 40% were granted patents and 60% were published applications. The annual numbers of patents published accelerated sharply in 2002 and subsequently reached a plateau or may still be increasing.

Most patents produced by the search described adult stem cells, although patents claiming embryonic stem cells have continued to be filed at a steady rate throughout the study period.

Within the technology category, most patents claimed methods of stem cell isolation and culture. Of those patents that claimed a specific therapy area, the majority claimed applications in hematology.

The proportion of patents claiming applications in hematology decreased following the early period (1980-1999), while the proportion of patents claiming applications in neurology, type 1 diabetes, cardiology and drug screening increased.

Measurements of patent quality rely predominantly on patent citation analysis. In our survey, for-profit biotechnology companies formed the majority of assignees of the most frequently cited stem cell patents.

The majority of the most prolific assignees in our survey were universities and non-profit research organizations.
Chapter 8 Trends and opportunities

Technologies in the stem cell field have been developing and diversifying since the filing of the first patents in the early 1980s. There are now many proprietary technologies and many opportunities to form partnerships in this area.

The key to commercial success in the stem cell area will be a strong proprietary position. To build an extensive portfolio, companies can patent innovations that are incremental improvements of various stem cell technologies.

A new industry has grown around storage and preservation of cord blood. There are now opportunities for further exploitation of cord blood and other accessible sources of adult stem cells.

The focus of investigations has moved from HSCs to other types of adult stem cells. Companies with proprietary adult stem cells or technologies for isolating such cells can carve a niche in the future tissue regeneration market.

Human adult, fetal and embryonic stem cells are all showing potential for drug testing applications. Companies seeking early stage commercial exploitation of stem cells can focus on their use in drug discovery and development.

Several multinational corporations have recently announced the initiation of embryonic stem cell programs. It is anticipated that this development will lead to wider acceptance for embryonic stem cell research and enable more companies to become involved.