By Tom Still

MADISON – It didn’t capture banner headlines, but a news story that broke in mid-November suggests why private equity investors may finally be paying attention to companies working with human stems cells.

The Lancet, a leading medical journal, reported that doctors in Europe have given a 30-year-old woman a new windpipe with tissue grown from her own stem cells, eliminating the need for anti-rejection drugs. The procedure involved researchers and doctors in Spain, Italy and England, who stripped the cells from a donor windpipe and used the woman’s own stem cells to create millions of cartilage and tissue cells to cover and line it.

The transplant took place in June. So far, the woman has shown no signs of rejection and is not taking any immune-suppressing drugs, which can cause side effects such as high blood pressure, kidney failure and cancer.

The stem cells used in this procedure were adult stem cells, taken from the woman’s bone marrow. But hardly a week passes, it seems, in which there isn’t at least one report published on breakthroughs involving human embryonic stem cells or “induced pluripotent” cells – stem cells that appear to act like embryonic cells but which are produced by reversing skin cells.

Ten years after UW-Madison Professor James Thomson published his findings that human embryonic stem cells could be indefinitely suspended from developing to the next stage, the science of regenerative medicine has hit a promising track. That’s good news for people who are hoping for cures, treatments or even better diagnosis and drugs – and it also explains why investors are finally taking notice.

When Thomson announced in November 1998 that he had effectively immortalized stem cells and successfully grown them in lines that could be useful to researchers like himself, investors were immediately captivated. But Thomson figured, correctly, that years of research would be necessary before even the most basic biological facts could be established – let alone talk about cures and treatments.

Thomson and others discouraged those investors, at least initially, because he thought it was too early. They quickly reached the same conclusions themselves – and it was reinforced in August 2001 when President Bush issued a federal order restricting basic federal research spending to about 20 stem cell lines that had been developed at the time.

Today, the picture has changed. President-elect Barack Obama is all but certain to repeal Bush’s order once he moves into the White House in January. That will make it possible for the National Institutes of Health and other federal agencies to fund merit-based research involving stem cells produced from new lines or techniques. That will enable U.S. researchers to begin the job of catching up to their colleagues around the world, who are surging ahead in nations ranging from the United Kingdom to South Korea, and from Australia to Singapore.

Against that backdrop comes the announcement that a company founded by Thomson and others, Cellular Dynamics International LLC, has attracted $18 million from investors to bolster its goal of becoming a world leader in this emerging industry.

CDI raised the money from Wisconsin investors who believe the company will be able to use the state’s cutting-edge stem cell technologies to build a global hub for supplying large quantities of personalized stem cells. The company is initially providing stem cell-derived heart cells to pharmaceutical companies to help them test the toxicity of possible drugs.

The $18 million investment, which closed in October, will help CDI develop an infrastructure for industrializing production of human cell types for research and for creating a repository of stem cells. That bio-bank would be where people could store stem cells engineered from their DNA for use as part of personalized therapies or for testing reactions to drugs.

Wisconsin and Madison, home to CDI, are among a relative handful of places in the world that stand a chance to be leaders in an industry that may revolutionize the practice of medicine. Even with a recent decline in other biotech investments, stem cells and regenerative medicine are positioned for growth. Analysts predict a $10 billion market by 2016 – and Wisconsin stands to capture a significant slice of that.  

Investors are taking notice because the science has advanced and the political and ethical challenges associated with stem cell research in its early days are receding, thanks in part to advances in the science itself. It took time, but the 10th anniversary of human embryonic stem cell research is bringing with it renewed optimism about its long-term value to the world.

Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.