iPierian, With Harvard Science and Kleiner Perkins Cash, Pursues Stem Cells to Make Drugs

6/17/10Follow @xconomy

Stem cells captivated the broad public imagination more than a decade ago, and despite all the hyperbole about creating Lazarus-like regenerative medicines, nobody has built a powerhouse business on this technology. Now a little company in South San Francisco, iPierian has a vision for using stem cells in a way that may not generate magazine covers, but which could enable it to do a better job of discovering more conventional drugs.

That’s the idea anyway, and it’s being pushed by some big-name scientists and venture capitalists who are gathering today in San Francisco for an international stem cell meeting. The story actually began two companies. One, in Boston, was called Pierian, co-founded by George Daley, Doug Melton and Lee Rubin, a trio of stars from the Harvard Stem Cell Institute. The other, iZumi Bio, in Mountain View, CA, had the entrepreneurial leadership of Corey Goodman as chairman, and John Walker, a longtime director of stem cell pioneer Geron, as CEO. The merged operation boasts a blue chip crew of backers—Kleiner Perkins Caufield & Byers, Highland Capital, MPM Capital, and FinTech Global Capital, who have pumped in a combined $31.5 million.

Impressive as the names are, their ambition isn’t what most people think, to create some Lazarus-like regenerative medicine. It’s more about using the power of stem cells to discover new drugs, so that iPierian can find treatments that no one ever could before because they were constrained by limited tools. iPierian has set its sights from the start on neurodegenerative diseases that really have no good treatments—like Lou Gehrig’s disease, Huntington’s disease, and eventually Parkinson’s and Alzheimer’s. The cells, with all their talent to morph into any kind of adult cell scientists want, won’t get injected into the patient to replace missing or damaged tissue. Instead, they could help the scientists gather new insights into these intractable diseases, speed up the development process, and save time. Then iPierian will use all of this information to make conventional small molecule pills, or injectable protein drugs. If it is successful, the patients wouldn’t even know it was because of stem cells.

John Walker

John Walker

“The long term perspective here is to be a drug company,” says Walker, the CEO, who previously ran a publicly traded drug company called Novacea. “We’ll be discovering therapeutics, based on cell reprogramming and differentiated cells.”

A lot, and I really mean a lot, needs to happen before iPierian gets to that point. But the company has made some intriguing progress to date. It has set a goal of creating an “industrialized” process of taking adult skin cells from a human, and re-programming them into what are called “induced pluripotent stem cells.” These cells, which are thought to have potential of embryonic cells to differentiate into all 200 cell types of the body, are then coaxed to differentiate into a certain adult cell of interest in the lab.

It’s no small thing to do this work on an industrial scale. iPierian estimates that more than a year ago, it cost about $30,000 to generate a single line of induced pluripotent stem cells (IPSCs). Scientists have not even shown they can make these cells differentiate into every kind of cell type, much less done it on a consistent, large scale. But iPierian has brought the cost down 15-fold in the past year alone, Walker says. It has 200 different “lines” of induced pluripotent stem cells from different individuals socked away in the freezer, from patients with neurodegenerative diseases like Spinal Muscular Atrophy, Huntington’s, Parkinson’s, Alzheimer’s, from prople with Type 2 diabetes, and cells from healthy relatives to use for comparison to better home in on what might be going awry.

The cells, iPierian hopes, will provide the basis for a new way of discovering drugs, which Big Pharma companies will pay big money for the right to use in-house. If iPierian plays its cards right, the Big Pharma cash, some more venture capital, and support from the California Institute for Regenerative Medicine and private disease foundation, will provide enough cash for this 50-person operation to discover its own drugs that it can take all the way through to FDA approval and the marketplace, Walker says.

Before settling in on what iPierian wanted to do, it was useful to find out what it didn’t want to do. The company chose not to try to make stem cell-based therapies, at least not in the beginning. One problem is that viruses are needed to induce the adult cells into a pluripotent state, which isn’t really something you want to inject in people as a therapy. Then there’s bound to be battles over who really owns the intellectual property. And blazing the first regulatory trail through the FDA is going to be tough.

One idea was that iPierian could create induced stem cells, and differentiate them into banks of heart cells, or liver cells. Those cells could be particularly useful to big drugmakers, so that they could test experimental compounds to see if they would likely be too toxic for the heart or liver—a couple places that often trip up drug candidates after years of work are wasted. Madison, WI-based Cellular Dynamics, co-founded by stem cell researcher James Thomson, has chosen to go this route.

San Diego-based Fate Therapeutics, probably the best known stem cell startup in the country, has a lead drug candidate in clinical trials that essentially is a conventional molecule that seeks to induce adult stem cells in the body. One of its scientific co-founders said he has found a way to use cheap, simple small molecules to induce cells into a pluripotent state, which is thought to be a key step in the industrialization of stem cells for drug discovery, Walker says.

iPierian says it doesn’t see Fate as an obvious rival, although it certainly competes for venture money and attention. Although Walker didn’t say it in quite so many words, he clearly doubts that Fate can do as much as people think.

“When you read papers about new methods development, there are issues like how long will it take to actually see the re-programming? What types of throughput did they get? How resilient were these lines for future manipulation and differentiation?” Walker says. “That becomes a very important consideration. How robust are the lines actually created.”

Those, anyway, are some of the questions Big Pharma companies ask when they mull over whether to jump on the stem cell wagon.

iPierian hopes that by gathering all these cells, with the genetics that are unique to each individual, they will provide a more reliable guide in the lab for drug testing. Neurodegenerative diseases seemed like a perfect place to start, because it’s sort of hard to get good tissue samples (who really wants to do brain biopsies on a large scale?). By taking adult cells, and making induced pluripotent cells, iPierian can make all the heart cells and liver cells they want to see if a given drug might be too toxic, but also make the motor neurons and brain glial cells that would suggest whether a given drug hits its target and might actually work.

If you could bank enough cells from enough individuals with a neurodegenerative disease, it’s possible you could use all that data from the lab dish to predict which individual patients might respond to a drug in a clinical trial. By doing all this testing on effectiveness in human cells upfront, it’s possible that drugmakers will be able to eliminate the need for testing drug efficacy in animals, Walker says. Instead, researchers might just test whether a given drug candidate is too toxic in animals before it leaps into clinical trials. Given that only about one out of 10 drugs that enter clinical trials ever make it through the FDA approval process, and big pharma spends an estimated $1 billion on every drug candidate, it sure sounds appealing.

The drugmakers are certainly kicking the tires, but none of them have struck a big partnership yet with iPierian, Fate, or anybody else yet. Walker predicts that he’ll close at least one deal, and maybe more, before the end of 2010.

Selling Big Pharma on this idea is important, but so is developing drugs in house. iPierian’s management and board figured they’d never really get rewarded by investors just for providing technology to others, but only if they developed their own drugs.

So, partly because neurodegenerative diseases are such big markets, and scientists think they have gotten pretty good at creating differentiated neurons from induced pluripotent stem cells, this is the place iPierian is going. It has moved first into spinal muscular atrophy, a rare disease in which a single gene is malfunctioning. There are no effective therapies now, it’s a serious disease, and a small enough patient population that a small company like iPierian could probably commercialize a drug for this group on its own, Walker says. The company hopes to use its stem cell platform to help it pick a drug candidate by the first half of 2011, and then dash off an application to the FDA to start its first clinical trial in early 2012, Walker says.

Spinal muscular atrophy was thought to be ideal, partly because it’s a single gene disorder, which reduces the number of variables that scientists have to deal with, Walker says. The next program, amyetrophic lateral sclerosis, can’t be traced to a single gene defect, and neither can Parkinson’s or Alzheimer’s. So the sledding will only likely get harder.

Walker knows how hard drug development can be, and how long the odds are. His last company, Novacea, stumbled with a prostate cancer drug that failed in the third and final stage of clinical trials after all kinds of positive signals for years.

But biotech is infused with can-do optimism by its nature. When I asked him about what’s in store for the next 12 months, he wasn’t afraid to say he said he expects to close a Series B venture financing before the end of year. And this wasn’t by making some headline-grabbing claim about miracles of regenerative medicine—just about creating a reliable, informative tool that can help researchers increase their odds of success by learning more of the basic human biology of an individual’s cells before ever trying to give that patient a new pill or injectable drug.

“If we are able to use this new technology in a way that provides better insights, and a truly does provide approach to identifying therapeutics that people haven’t been able to use to date, then we feel we have a leg up,” Walker says.

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