Novocell Forms Deal with Pfizer to Research Stem Cells for Diabetes

12/19/08Follow @xconomy

The world’s largest drugmaker is turning to a San Diego-based biotech company to jumpstart its foray into the world of stem cell research. Pfizer (NYSE: PFE) has agreed to form a two-year collaboration with Novocell to advance the biotech’s work, which concentrates on turning human embryonic stem cells into pancreas cells that might one day help treat diabetes.

Under the deal, Novocell will get an upfront fee, research funding to pay the salaries of “a few” of its 40 employees, and potential milestone payments if the collaboration reaches certain goals, said Liz Bui, Novocell’s director of intellectual property. Novocell will also receive payments from Pfizer if any moneymaking product emerges from the collaboration.

Novocell formed a high-profile scientific collaboration last week with Japanese researcher Shinya Yamanaka, who has shown how to “reprogram” adult skin cells so they can turn into any other cell type in the body, the same characteristic of stem cells. But this is the first time Novocell has formed a collaboration with a Big Pharma company, Bui says. It’s an intriguing sign, because Pfizer and other major drugmakers have been slow to embrace human embryonic stem cells, which have sparked intense interest in academic labs, but haven’t yet advanced to their first human clinical trial. Last month, Pfizer opened a new center for regenerative medicine, and Novocell hopes that other Big Pharma companies will come knocking to learn more about how to do it themselves, Bui says.

“For Pfizer, this will help them stay on the edge of science,” Bui says.

Novocell, like other biotech companies pursing stem cells, has a long road ahead before it can enter clinical trials. It has shown an ability to coax human embryonic stem cells to become fully functioning pancreatic beta cells that secrete insulin in mice. It’s an effect that mimics what the pancreas normally does, said Ed Baetge, the company’s chief scientific officer, in a company profile I did last month.

The catch is that about 15 percent of the animals got teratomas, a type of tumor, which the company will have to prevent in its future work. For now, Novocell can take some comfort knowing that some of the deepest pockets in the pharmaceutical industry are shelling out at least a little spare change to help it crack daunting challenges like that.

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