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Novocell, a San Diego embryonic stem-cell company, raised $25 million in a third round of funding. That’s presumably a bit of a letdown for the company, which had previously hoped to pull in as much as $35 million in the round. I wrote earlier about Novocell’s fundraising here.

The round was led by Johnson & Johnson Development, the venture arm of J&J itself, joined by Sanderling Ventures, Asset Management Company and Pacific Horizon Ventures.

In my earlier piece, I explored whether J&J’s involvement marked the first time that Big Pharma had directly funded an embryonic stem-cell company. It turns out that’s probably true, although J&J’s investment in Novocell dates back to at least 2005, a fact I didn’t learn until a few days after I wrote that post. (I had updated the previous item with that acknowledgement, but the update somehow got lost in WordPress, so I’ll just make the point again here.)

I’ve also heard from some sources that J&J’s interest isn’t so much in stem cells as in a separate Novocell technology for “encapsulating” cells to protect them from immune-system rejection after a transplant. Although that sort of technology might be useful for protecting stem-cell transplants, it’s also got potential utility outside the stem-cell field. For instance, if transplants of insulin-producing pancreatic islet cells ever became feasible as a diabetes treatment, encapsulation might be one way to ensure that the cell transplants “take” without forcing patients onto immunosuppressive drugs for the rest of their lives. (Exactly how to procure a reliable supply of islet cells is a separate problem, since donors and cadavers tend to be in short supply — and that’s where stem cells are likely to enter the picture.)

Novocell, in fact, is currently performing early-stage trials of exactly that sort of therapy, using islet cells procured from cadavers. The encapsulated cells are injected into “tissue pockets” just under the skin of the thighs or the lower abdomen. Last year, the company presented preliminary data from the study in which the cells transplanted into the first two treated diabetics appeared to show early signs of functioning without triggering an immune-rejection response.

Since the study was supposed to include 12 patients who would be monitored for 12 months, new data from that study might not be too far off, which probably helps explain J&J’s interest in leading this new round.

(Note: This item has been copied over to the Life Sciences page from its original location on the VentureBeat main page. To view it in its original context, with comments, click here.)
For what appears to be the first time, a major drug company has plunked down a significant equity investment in embryonic stem cells.

Earlier today, VentureWire reported (sub required) that Novocell, an early-stage San Diego biotech that aims to treat diabetes with the embryonic cells, is hoping to raise $35 million in a third round of funding. The interesting thing, however, isn’t so much the money as the identity of the lead investor: Johnson & Johnson Development Corp., the venture arm of pharmaceutical giant J&J.

The news grabbed my attention because to date, Big Pharma has shown relatively little interest in the smaller biotechs working on embryonic stem-cell therapeutics, with the standard explanation that the field is too young and in need of some solid clinical success before the big guys can get involved. Political controversy over the destruction of embryos — necessary to derive the stem cells — probably also inclines the naturally cautious pharmas to move even more carefully. (Novacell intends to make new insulin-producing islet cells from embryonic cells, then transplant them into diabetics.)

Here are some snippets from the VentureWire piece:

The funding, which the company revealed in a Form D filing with the Securities and Exchange commission, came into the company last month. Johnson & Johnson Development Corp. led the funding, alongside the participation of Asset Management Partners and Sanderling Venture Partners. [...]

The investment from Johnson & Johnson’s venture capital arm brings the company on as a strategic investor, [Novocell Chief Executive Alan] Lewis said, giving them “a major ownership in the company.”

As it turns out, I’m not aware of any other Big Pharma equity investment or development partnership involving embryonic stem cells. Jennifer Van Brunt, a biotech-data maven and editor of Recombinant Capital’s Signals Magazine, says her databases don’t show any, either. The only remotely similar deal I was able to turn up after some searching was another J&J venture investment in Tengion, a Pennsylvania biotech that wants to grow new organs such as bladders. Tengion’s technology, however, would use a patient’s own stem cells, not ones derived from embryos.

Stem-cell proponents have long complained that Big Pharma and venture capitalists alike have failed to step up to the plate with support for embryonic stem-cell work, effectively slowing scientific and commercial progress in the field. If J&J’s investment is a sign that regenerative medicine is quickening pulses in at the big drug companies, things could get interesting.

Unfortunately, that’s mostly just speculation at this point. A J&J spokesman confirmed the investment, which is part of $20 million Novocell has raised so far in this round, but had no comment about the company’s strategic plans. If anyone knows of other pharmas who have dipped their toes into the embryonic stem-cell field in a similar fashion, I’m all ears. Tell us about it in comments and I’ll update as necessary.

[Editor's note: David Hamilton is a contributing author on VentureBeat. If you have a biotech story tip for him, let us know via the "story tip" link above.]

For what appears to be the first time, a major drug company has plunked down a significant equity investment in embryonic stem cells.

Earlier today, VentureWire reported (sub required) that Novocell, an early-stage San Diego biotech that aims to treat diabetes with the embryonic cells, is hoping to raise $35 million in a third round of funding. The interesting thing, however, isn’t so much the money as the identity of the lead investor: Johnson & Johnson Development Corp., the venture arm of pharmaceutical giant J&J.

The news grabbed my attention because to date, Big Pharma has shown relatively little interest in the smaller biotechs working on embryonic stem-cell therapeutics, with the standard explanation that the field is too young and in need of some solid clinical success before the big guys can get involved. Political controversy over the destruction of embryos — necessary to derive the stem cells — probably also inclines the naturally cautious pharmas to move even more carefully. (Novacell intends to make new insulin-producing islet cells from embryonic cells, then transplant them into diabetics.)

Here are some snippets from the VentureWire piece:

The funding, which the company revealed in a Form D filing with the Securities and Exchange commission, came into the company last month. Johnson & Johnson Development Corp. led the funding, alongside the participation of Asset Management Partners and Sanderling Venture Partners. [...]

The investment from Johnson & Johnson’s venture capital arm brings the company on as a strategic investor, [Novocell Chief Executive Alan] Lewis said, giving them “a major ownership in the company.”

As it turns out, I’m not aware of any other Big Pharma equity investment or development partnership involving embryonic stem cells. Jennifer Van Brunt, a biotech-data maven and editor of Recombinant Capital’s Signals Magazine, says her databases don’t show any, either. The only remotely similar deal I was able to turn up after some searching was another J&J venture investment in Tengion, a Pennsylvania biotech that wants to grow new organs such as bladders. Tengion’s technology, however, would use a patient’s own stem cells, not ones derived from embryos.

Stem-cell proponents have long complained that Big Pharma and venture capitalists alike have failed to step up to the plate with support for embryonic stem-cell work, effectively slowing scientific and commercial progress in the field. If J&J’s investment is a sign that regenerative medicine is quickening pulses in at the big drug companies, things could get interesting.

Unfortunately, that’s mostly just speculation at this point. A J&J spokesman confirmed the investment, which is part of $20 million Novocell has raised so far in this round, but had no comment about the company’s strategic plans. If anyone knows of other pharmas who have dipped their toes into the embryonic stem-cell field in a similar fashion, I’m all ears. Tell us about it in comments and I’ll update as necessary.

[Editor's note: David Hamilton is a contributing author on VentureBeat. If you have a biotech story tip for him, let us know via the "story tip" link above.]

The U.S. patent office has invalidated some key stem-cell patents, a significant move that could shake up a potentially huge market for embryonic stem-cell therapies that may one day restore all kinds of body parts for the sick and injured.

Yesterday, the U.S. Patent and Trademark Office announced a preliminary decision to invalidate three fundamental stem-cell patents held by the Wisconsin Alumni Research Foundation (WARF), the technology-transfer arm of the University of Wisconsin. Last year, two public-interest groups asked the patent office to re-examine those patents, arguing that they should never have been issued because their descriptions of human embryonic stem cells and the process for deriving them weren’t new. The patent office effectively agreed, finding that previous scientific publications and patents undermined WARF’s claimed innovations (decisions here, here and here (PDF), courtesy of the Foundation for Taxpayer and Consumer Rights).

WARF and its primary stem-cell business partner, Geron, have long used these patents to claim a monopoly of sorts over just about any therapy or diagnostic test that might emerge from stem-cell work. (WARF and Geron even tussled briefly in an acrimonious legal spat five years ago that ultimately led to a dramatic narrowing of Geron’s exclusive commercial rights over the cells.) Many academic researchers argue that the patents have had a chilling effect on stem-cell research, and some companies have complained about the cost of licensing them as well. Invitrogen, for instance, said it moved its stem-cell work overseas where the WARF patents don’t apply.

So the invalidation of the WARF patents could have a significant, albeit unpredictable, effect on the nascent science of stem cells. Some academic research might move ahead more quickly, although the relative paucity of major support from government or Big Pharma has so far presented a much bigger impediment to the work. On the commercial side, Geron could lose its remaining exclusive rights to derived neural, pancreatic and heart cells, leaving would-be competitors such as Novocell free to forge ahead — although David Greenwood, Geron’s chief financial officer, says the company’s own patent estate should shield it in that respect.

In fact, though, it may be years before anyone knows how this will all turn out. WARF said it will defend its patent claims “vigorously,” and has Geron’s support. The foundation will first argue its case directly with the patent examiner, and if that fails, will likely take its argument to a patent-appeal board. Even that board’s decision won’t be final, though, since WARF can always turn to the courts. At least by the time the process plays out, stem-cell science may have progressed far enough for us to know if all this arguing was really worth it in the first place.

The NYT has more info here.

(Note: This item has been copied over to the Life Sciences page from its original location on the VentureBeat main page. To view it in its original context, with comments, click here.)
The U.S. patent office has invalidated some key stem-cell patents, a significant move that could shake up a potentially huge market for embryonic stem-cell therapies that may one day restore all kinds of body parts for the sick and injured.

Yesterday, the U.S. Patent and Trademark Office announced a preliminary decision to invalidate three fundamental stem-cell patents held by the Wisconsin Alumni Research Foundation (WARF), the technology-transfer arm of the University of Wisconsin. Last year, two public-interest groups asked the patent office to re-examine those patents, arguing that they should never have been issued because their descriptions of human embryonic stem cells and the process for deriving them weren’t new. The patent office effectively agreed, finding that previous scientific publications and patents undermined WARF’s claimed innovations (decisions here, here and here (PDF), courtesy of the Foundation for Taxpayer and Consumer Rights).

WARF and its primary stem-cell business partner, Geron, have long used these patents to claim a monopoly of sorts over just about any therapy or diagnostic test that might emerge from stem-cell work. (WARF and Geron even tussled briefly in an acrimonious legal spat five years ago that ultimately led to a dramatic narrowing of Geron’s exclusive commercial rights over the cells.) Many academic researchers argue that the patents have had a chilling effect on stem-cell research, and some companies have complained about the cost of licensing them as well. Invitrogen, for instance, said it moved its stem-cell work overseas where the WARF patents don’t apply.

So the invalidation of the WARF patents could have a significant, albeit unpredictable, effect on the nascent science of stem cells. Some academic research might move ahead more quickly, although the relative paucity of major support from government or Big Pharma has so far presented a much bigger impediment to the work. On the commercial side, Geron could lose its remaining exclusive rights to derived neural, pancreatic and heart cells, leaving would-be competitors such as Novocell free to forge ahead — although David Greenwood, Geron’s chief financial officer, says the company’s own patent estate should shield it in that respect.

In fact, though, it may be years before anyone knows how this will all turn out. WARF said it will defend its patent claims “vigorously,” and has Geron’s support. The foundation will first argue its case directly with the patent examiner, and if that fails, will likely take its argument to a patent-appeal board. Even that board’s decision won’t be final, though, since WARF can always turn to the courts. At least by the time the process plays out, stem-cell science may have progressed far enough for us to know if all this arguing was really worth it in the first place.

The NYT has more info here.