Staff Writer

Cellerant Therapeutics Inc. might not fit the everyday profile of a biotechnology firm raising its first venture capital dollars.

Although in operation for only about a year, the Palo Alto, Calif.-based company already possesses clinical-stage technology courtesy of its founder, longtime stem cell researcher Irving Weissman. With a new business in place, Cellerant plans to use the $10 million raised in its first financing round to advance its hematopoietic stem cell-based therapies.

"We essentially acquired the rights to work that was done by a predecessor company," Cellerant President and CEO Bruce Cohen explained to BioWorld Today. "The investors saw a company that was acquiring assets that were reflective of more than a decade worth of work."

In the late 1980s, Weissman founded a company named SyStemix Inc. that explored stem cell therapies. In 1991 SyStemix sold 60 percent of the company to Sandoz Ltd. (which later merged with fellow Basel, Switzerland-based Ciba-Geigy Ltd. to become Novartis AG) for $392 million, and in 1997 Novartis paid $76 million for the remaining 27 percent of SyStemix it didn't own. In 2000, the pharmaceutical firm spun the business back out to Weissman, who eventually created Cellerant to combine the stem cell purification technology developed at SyStemix with stem cell expansion technology he developed at Stanford University.

A director at privately held Cellerant and the co-chair of its scientific advisory board, Weissman remains the director of Stanford's Institute for Cancer/Stem Cell Biology and Medicine.

Cellerant owns an exclusive license to stem cell expansion technology from the Palo Alto-based school. Its core technology is based on purifying blood-forming hematopoietic stem cells (HSCs). Cellerant acquired such intellectual property rights and assets from Novartis, as well as data generated from three Phase I/II trials using highly purified HSCs to treat metastatic breast cancer, non-Hodgkin's lymphoma and multiple myeloma.

HSCs are used to help cancer patients recover from intense chemotherapy and radiation dosing, as they are harvested from the patient before cancer therapy and later transplanted to regenerate the body's blood-forming system. While such an autologous transplantation strategy has been limited, Cellerant is banking on its technology overcoming such boundaries.

"You have to do two things, we believe, and the first is to have a pure population of stem cells so you don't transplant the cancer back into the patient," Cohen said. "Secondly, in order to both make that therapy more widely available and to expand it into allogeneic transplants, you need to be able to expand those stem cells without having them differentiate into their progeny."

Cellerant's early focus centers on advancing its HSC purification technology for cancer treatment toward regulatory approval. The company plans to use the funding proceeds over the next two years to move into Phase III trials that confirm prior clinical findings - that its purification technology reduces the number of cancer cells to below-detectable levels. Cellerant's purification process involves the selection of cells that express two markers, CD34 and Thy-1, which are exclusively co-expressed on HSCs.

While stem cell therapy continues without mass production of the cells, Cellerant is eyeing the upside of its stem cell expansion program. Further development of that program also is of paramount importance to the company.

"If you can expand stem cells ex vivo, it becomes a lot less expensive both for the company and the health care provider to get a patient to generate enough cells to be safe," Cohen said. "We think the two technologies together will make it practical to do more patients and expand from strictly autologous therapy into allogeneic therapy."

Early data published by Weissman and other colleagues in Nature pointed to laboratory proof of concept, showing that a protein called Wnt induces the proliferation of highly purified HSCs without having them differentiate into specialized cell types. In vitro expansion of HSCs using Wnt or a downstream protein called beta catenin was shown to increase the number of transplantable stem cells more than 100 times.

Cellerant plans to evaluate such findings in animal studies next, followed eventually by clinical trials.

Given its early work to date, the seven-employee company said it has built a foundation to expand its technology's commercial potential. Cellerant, which expects to hire additional research and clinical personnel in the coming year, said its HSC technology is the basis for future commercial applications in allogeneic transplantation, stem cell expansion, protein pharmaceuticals and T-cell therapy.

"Outside the U.S., there is a potential for us to enter partnerships with people who can provide this service-based business locally," Cohen said. "Secondly, an ex vivo stem cell growth factor is a more drug-like product that people interested in supporting the cell therapy business would be interested as partners."

He added that intellectual property related to the stem cell differentiation process could be partnered in drug discovery efforts.

The initial investment group includes New York-based Allen & Co. LLC, Boston-based MPM Capital and company founders. Novartis also owns an equity stake in Cellerant, and is due royalties on revenue related to its intellectual property.