NeoStem last week said that it has acquired Stem Cell Technologies, a wholly owned subsidiary of UTEK Corporation that was established solely to facilitate the transfer of technology from the University of Louisville related to the isolation of adult stem cells.
The deal incorporates an ongoing research collaboration between the University of Louisville and NeoStem, and is the university’s first exclusive licensing agreement with a publicly traded company. The school and the technology’s inventor now hope to work with NeoStem to further develop the cells for regenerative medicine applications.
Meanwhile, the acquisition represents NeoStem’s first technology in-licensing deal as the company looks to bolster its IP portfolio in the area of adult stem cell collection and banking for future therapeutic use.
The company issued 400,000 unregistered shares of its stock to UTEK in exchange for all issued and outstanding shares of Stem Cell Technologies. Based on NeoStem’s closing stock price on Nov. 12, the day the acquisition was announced, the agreement has a value of as much as $1 million.
At the center of the transaction is a technology co-developed by Mariusz Ratajczak, head of the stem cell biology program at the University of Louisville’s James Graham Brown Cancer Center.
Ratajczak’s lab was able to identify and isolate rare stem cells called very small embryonic-like, or VSEL, stem cells from human bone marrow.
“This work is a result of the concept of stem cell plasticity,” Ratajczak told BTW last week. According to Ratajczak, the commonly held belief for many years was that stem cells could not change their fate; for example, that hematopoetic stem cells in the bone marrow could not become stem cells from other tissues.
Once the idea of stem cell plasticity gained traction in the research community, Ratajczak’s lab proposed that bone marrow contained some other type of non-hematopoetic stem cells in addition to the hematopoetic ones that were responsible for some positive research results in which bone marrow and purified bone marrow stem cells showed regenerative properties in myocardial infarction, liver injury, or stroke models.
“We came to this population of VSEL stem cells, which we have since purified from the bone marrow and shown at the single-cell level,” Ratajczak said.
The VESLs are related to epiblast stem cells, which are part of the developing embryo from which all three germ layers develop later, according to Ratajczak. “They have a very primitive morphology and are very small in size – approximately 3.5 micrometers in diameter – which makes them smaller than erythrocytes, but larger than platelets,” he said. “This is why these cells had been excluded from isolation procedures.”
Under the recommendation of Donald Miller, director of the James Graham Brown Cancer Center, Ratajczak worked with the university’s office of technology transfer to apply for a US patent covering the identification and isolation of the cells. The patent application has not yet been published in the USPTO database.
James Zanewicz, director of the university’s office of technology transfer, told BTW that the school began heavily marketing the intellectual property right around the same time that NeoStem called about the technology. “NeoStem had seen a publication of Dr. Ratajczak’s, so I think it was kind of serendipity,” Zanewicz said. “It was really good timing. His press was hitting at the same time we had something worth licensing out.”
NeoStem then retained UTEK, a tech-transfer service provider based in Tampa, Fla., to help it acquire a license to the IP and arrange an ongoing research collaboration with Ratajczak’s lab. To do so, UTEK created SCT last month for the sole purpose of facilitating the transfer of the University of Louisville technology to NeoStem, and NeoStem acquired SCT last week in a stock-swap transaction.
“There are many corporations out there that are unfamiliar with the process of in-licensing technologies from universities, and we have expertise in that area,” Jeff Bleil, CSO of UTEK, told BTW. “Companies hire us to be able to perform that function for them either because they have no experience in it, or they would rather outsource that activity. In the case of NeoStem, it was largely because they had no experience in licensing university technology.”
“There are many corporations out there that are unfamiliar with the process of in-licensing technologies from universities, and we have expertise in that area.”
Bundled into the SCT subsidiary is a license to the VSEL isolation technology as well as a funded research project to be performed in the Ratajczak lab. UTEK used an undisclosed sum of its cash to fund the upfront license fee and the sponsored research project.
UTEK, however, provides more than just capital, Robin Smith, NeoStem’s CEO, told BTW.
“There are two advantages,” Smith said. “UTEK can source deals, so they can bring opportunities. They have relationships with hundreds of universities, so part of the benefit is that they can bring interesting technologies to us. They also have the expertise and know-how to best align the incentives between companies and universities, so we found their input and insight very useful. Even though this was more direct with the university, we felt that we wanted to have their participation.”
From the University of Louisville’s perspective, UTEK was almost completely transparent. Although UTEK paid the university the final upfront licensing and research fees, the school negotiated the terms of the licensing agreement, such as future royalties and milestones, as well as the terms of the sponsored research, directly with NeoStem.
“The thing that stands out for us is that it is our first exclusive license with a publicly traded company” in NeoStem, Louisville’s Zanewicz said. “That’s very exciting for us. It is a higher-profile deal. We are very much focused on economic development, so we do a lot of local deals to try and start companies here as much as possible and wherever it makes sense for the technology. With this technology it made sense to go with someone more established.”
NeoStem’s business is focused primarily on the collection and storage of adult stem cells for future therapeutic use. “We feel we’re pretty well-positioned for the future wherever therapies go,” Smith said. “But we think it’s critical having the technology or the license to be able to determine what’s valuable in what we collect, and what can be used toward a therapeutic in the future.”
The ongoing sponsored research agreement between NeoStem and the University of Louisville has an initial term of two and a half years, and is entitled “A study to characterize and assess the functionality of VESLs for therapeutic application.” Ratajczak said that the work will specifically focus on applying the cells in regenerative medicine. “We envision that these could be used in regenerative medicine to treat heart infarction, stroke, and to make insulin-producing cells,” he said.
The VESL technology has a long way to go before it is transformed into a viable method for personalized regenerative medicine, but it does have the potential to overcome some of the hurdles that have slowed the development of stem cell therapies.
“If VESLs can be expanded from individual patients and their potential to develop into different types of tissue cells maintained, it would represent a significant step toward overcoming the two major limitations in the development of stem cell therapies today: the ethical dilemma that has given rise to debate over using human embryonic stem cells for research and the immunological problems associated with using stem cells from a donor other than one’s self,” Wayne Marasco, chairman of NeoStem’s scientific advisory board and associate professor of cancer immunology and AIDS at the Dana-Farber Cancer Institute, said in a statement.
NeoStem’s Smith told BTW that the company is “very anxious to help commercialize this in multiple fields.” In particular, she said, the company will start with cardiology and stroke as the first two clinical areas of interest. “But we need to start looking at these markers in adult stem cells, as well as determining not only how you mobilize these cells, but perhaps how you expand that and how they can be used to treat a variety of diseases,” Smith said.