Medical Device Daily Contributing Writer

Epithelial stem cell specialist Epistem (Manchester, UK) agreed to a pact which will see partner Novartis (Basel, Switzerland) pay $45 million in milestones up to registration for each product emerging from the collection of 266 gene targets that is the subject of the R&D agreement.

In addition to funding all R&D for the next two years, Novartis is making a $4 million up-front payment. In addition, there will be tiered royalties on any products that get to market. Shares in Epistem rose 19% to an all-time high of £2.85 when the deal was announced earlier this week.

The agreement is significant in terms of pharma's engagement with stem cells in that rather than developing stem cells per se (of whatever variety) as therapies for injection or transplant, the aim is to develop biopharmaceuticals that modulate endogenous epithelial stem cells. The objective is to inhibit the processes that induce epithelial stem cells to form cancer stem cells, or otherwise go awry in gastro-intestinal and dermatological diseases.

"What we are talking about is the meat and drink of what [they] do in pharma," Epistem CEO Matthew Walls told Medical Device Daily's sister publication, BioWorld Today. "We will be looking at mechanism of action, proof of efficacy, safety and so on, as [they are traditionally] assessed."

Walls said there are two routes to translating fundamental understanding of stem cell biology into effective therapies. The first, administering stem cells to regenerate missing or damaged tissue is making headway, but with ethical, safety, immunological and manufacturing issues still to be overcome, is many years from leading to standardized, off-the-shelf products.

"There's no way that big pharma will engage in regenerative medicine until all the pitfalls are removed, and dealing with the quality issues behind doing that will take many years," said Walls.

The second avenue, which the Epistem/Novartis partnership will pursue, involves modulating and controlling existing stem cells within the body. "We are talking about understanding what makes stem cells tick and using that to control them," said Walls, adding that this second route will be the fastest way to develop regulated stem cell treatments.

As yet, Epistem has not identified any leads but over the last year has expressed the proteins generated by 30 of its gene targets, some of which could be therapies in their own right. The 30 proteins have been run back through Epistem's models, with as many as 50 percent showing good activity.

While Epistem has firm understanding of the biology of epithelial stem cells based on 30 years of research by founding scientist Chris Potten, Novartis brings in development capabilities and molecular pathway expertise. Epistem's existing team of 10 scientists working on the project will be boosted by a similar number of Novartis researchers based in Basel and Boston.

"We will now collaborate to develop treatments across cancer, gastrointestinal disorders and other epithelial diseases," said Walls. "This is a partnering model that is seldom seen – usually [deals] are associated with specific leads or candidate drugs."

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