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Revenues From Stem Cell Therapies to Double in 2007, Predicts Expert

Industry leaders say most commercial uses of stem cells today is in the orthopedics sector, but that’s changing.

Local stem cell firms gave updates at the second annual Stem Cell Summit held in San Diego last week, where highly regarded medical industry analyst Robin Young spoke about the changing market.

According to his research and consulting firm, RRY Publications, sales of stem cell products in the United States reached $16.4 million in 2006 and will more than double to $35 million in 2007.

Young expects stem cell therapies for cardiovascular and anti-inflammatory indications to gain ground in the next few years.

While San Diego’s Cytori Therapeutics Inc. is testing stem cells’ efficacy in heart patients, it also recently received regulatory approval in Europe for injecting stem cells extracted from fat tissue for reconstructive surgery for breast cancer patients following partial mastectomies.

Cytori plans to commercialize its Cellulation System, a machine it uses to separate stem cells from fat, in Europe early next year.

Cytori received sooner than expected approval from the European governing authority on medical devices. Chief Executive Officer Chris Calhoun said Cytori’s acceleration was propelled by clinical results showing efficacy and safety and a facilities expansion that doubled Cytori’s space.

The firm will continue to collect data on use of the Cellulation System and attempt to get health insurance to cover the technique.

Young said Cytori was one of the most promising firms to present at the conference. Around 30 companies attended from across the globe.

“They really stood out with a lot of patient data,” he said, adding they were the only firm focused on using fat tissue to extract stem cells.

Cytori has been educating doctors across Europe on the Cellulation System’s use in reconstructive surgery. Calhoun said one educational session led to a Japanese doctor using the treatment for breast enhancements.

BBC News ran a story last week about the use of the technique, and some British doctors quoted in the story indicated caution about the procedure until further testing is done.

“They just called random doctors who weren’t familiar with our technology,” Calhoun said.

Dr. Mark Dobke, head of the Division of Plastic Surgery at UC San Diego, who has worked with Cytori through a research partnership, said, “I am not aware of any complications related to stem cells (being used for breast reconstructive surgery).”

Calhoun said Cytori could eventually focus on use of the Cellulation System for cosmetic surgeries, but that Cytori first wants to solidify its reputation as a “serious medical company.”

Dobke said skepticism regarding stem cells reminds him of when gene therapy was first introduced several years ago.

“This has tremendous potential,” he said. “Probably we can not even imagine how. People thought (gene therapy) was a waste of money, too, but the same (promise) will happen with stem cells.”

More than 200 companies are preparing stem cell products for market, Young’s research shows. He says many of the products to likely enter the market within three years will be stem cell therapies for repairing joint and cartilage. Other treatments might be farther off.

Young has been an analyst for 23 years, and has been named one of the Wall Street Journal’s “Best on the Street,” as well as ranked among the top 10 analysts in the country by Institutional Investor. His firm, based in Wayne, Penn., produced the Stem Cell Summit held here Feb. 12-13.

Another local company that presented at last week’s gathering, which organizers said had nearly 300 attendees, was Novocell Inc.

Novocell is developing insulin-producing cells derived from human embryonic stem cells to help diabetes patients. The product, if it works, could take a slice of a $2 billion-plus market opportunity, according to Novocell and RRY Publications.

Novocell is testing part of the technology in mid-stage clinical trials. Patients enrolled have been able to lessen the doses of insulin they take, said CEO Alan Lewis.

The reason Novocell uses human embryonic stem cells, which must be derived from human embryos, is because of the large number of stem cells needed to treat diabetes, Lewis said. He said Novocell obtains the stem cells from donors at fertility clinics.

The company has venture backing from Sanderling Ventures and support from Johnson & Johnson. Novocell expects to be done with clinical trials by 2015.

Cytori’s Calhoun said that at the conference, the questions of market and money were the “elephant in the room.”

“The time to market is a long time away, and the expenses? , Don’t even ask,” Calhoun said, referring to most stem cell companies, which tend to be conceptual or early stage startups.

While Cytori has 110 employees, Novocell has 35. Like most life science firms, the companies are not yet profitable. Cytori estimates profitability by 2010.

Lewis said a cloud of skepticism around the stem cell industry has pushed away some investors who think the payoff is far too distant. But he is optimistic.

Young said about 30 percent of the attendees at the conference were corporate investors, while 10 percent were private investors.

“Don’t assume patients are going to have to wait,” Novocell’s Lewis said. “There are many companies already testing patients or with products already on the market. It is taking awhile to embrace, but it was the same with biologics and antibodies. It’s going to happen earlier than people think.”

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