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February 10, 2006
Diversified Risk Important To
Investors In Stem Cells
By Randall Osborne
West Coast Editor
"Externalities, which have to do with
society" - as Anula Jayasuriya, a venture capitalist from India,
called the still-raging controversy over stem cell research - became
a topic of much talk at this week's International Symposium on Stem
Cell Collaboration.
But there was more. Attendees wanting to hear about the practical
aspects of working in a climate in which the mainstream media and
those opposed can whip the already-suspicious public into a near
frenzy got what they came for, too.
"People are investing in stem cell companies," said Jayasuriya,
founding partner of Draper Fisher Jurvetson Life Sciences India,
which backs U.S. firms that leverage "core strategic functions" in
that country.
"That being said, there are many restraints," she added, pointing to
parallels with gene therapy, though in a more acute form.
"There is a perception that venture capitalists are risk takers, but
they're not," Jayasuriya said, and put academia in that role
instead.
"Venture capitalists are actually quite conservative" - which makes
the funding picture for stem cells even trickier, she said.
"The big issue is time and cost to development," Jayasuriya said.
"We think that for stem cells in general, it's a 10-year time frame.
I don't have a crystal ball, but I'm throwing out that number.
That's my working figure."
Venture investors, though, want liquidity in a five-year to
seven-year time frame, she said, so stem cell efforts might be
explored in areas other than therapeutics, such as tools - that is,
artificial tissues made for the purpose of testing drugs.
"That is an area where the returns are not as high as having a
therapy," Jayasuriya allowed, but the risks are reduced, as in
research related to chemicals or proteins that turn on and turn off
stem cells.
"It's not that we say. 'Stem cells, no,'" she said. "We try to see
where in the picture can it fit."
Jayasuriya cited ViaCell Inc., of Cambridge, Mass., as a stem cell
firm that has diversified risk into research and a stem cell bank
that represents another part of the business, generating "most of
their revenue. It's important to break it down into different
areas."
ViaCell made news in December when the FDA lifted its clinical hold
on the company's Phase I study evaluating CB001, a cord blood stem
cell product for hematopoietic stem cell transplantation in cancer
patients.
The company said it would submit information to the investigational
review boards at each study site to request immediate resumption of
Phase I enrollment. Last fall, with two cases of Grade IV graft-vs.-host-disease
in cancer patients, ViaCell suspended enrollment in the trial. (See
BioWorld Today, Sept. 20, 2005.)
First established in 1994 under the name t. Breeders Inc., ViaCell
changed its name in April 2000 after acquiring Viacord Inc., the
private umbilical cord blood-banking business, and went public early
last year, raising $52.5 million in January by selling 7.5 million
shares at $7 apiece. (See BioWorld Today, Jan. 24, 2005.)
"What investors like is clarity - a path," along which results are
achievable. Jayasuriya said. "If you do this, you get this. It's
very scary to invest in something and the world changes, all the
rules change, and you're stuck. That is something we can't afford to
do."
The stem cell conference, held on the University of California at
San Francisco campus and organized by the Women's Technology
Cluster, started and ended Tuesday.
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