BioWorld International Correspondent

LONDON - Overall investment in stem cell technology is continuing to grow, but private investment has been hit by increasing controversy and legal and regulatory barriers, patenting activity in the field shows.

The past year has witnessed a marked shift in the pattern of patent filings in the area with almost one-quarter of all patents worldwide now held by just three public sector organizations, according to the study by Marks and Clerk, a firm of patent and trademark attorneys based in London. In contrast, biotech companies and venture capitalists appear nervous, with uncertainties surrounding public reception of such research taking its toll.

"While the hostile research environment and controversies that continue to blight stem cell research are not affecting overall investment, or the number of patents filed worldwide, industry has become far more cautious," said Gareth Williams, partner at Marks and Clerk and a co-author of the report. "As a result, government and academic bodies make up a higher proportion of patent activity than would be expected of a comparably aged technology."

Williams suggested that legal clarification is needed to bring private investors back into the game. He said confidence will be boosted by the progress being made by a couple of key companies: Athersys Inc. and Stem Cell Therapeutics Inc.

"Fortunately, thanks to academia and government taking the slack, growth in the sector shows no signs of stalling. We may therefore see private investors drawn back in," he said.

More than 2,000 patents relating to stem cell technology have been granted since 2000, with a steady growth in the number of patents granted each year. Patent activity was 41 percent higher in 2004 than in 2000, and figures available at present for 2005 suggest the growth trend is continuing.

The University of California and the Japan Science and Technology Agency each have 50 patent families, while the U.S. government is in fourth place with 43 patent families. Biotechs in the top 10 are Isis Pharmaceuticals Inc. with 45 patent families, Lexicon Genetics Inc. with 35, Osiris Therapeutics Inc. with 31 and Medtronic Inc. with 31. Pfizer Inc. is the only pharmaceutical company in the top 10 with 29 patent families.

In Europe, the UK is the leading player, with 35 percent of priority filings. This is a third more than those filed in second-place Germany.

Williams says the European Patent Office (EPO) is seriously behind the U.S. Patent and Trademark Office: For every one stem cell patent granted by EPO, the U.S. PTO has granted 13. Within Europe, there is no single view of whether inventions based on human embryonic stem cells are patentable, and the scientific community is continuing to call for more clarity and consistency in the legal status of stem cell research.

"Europe's prolonged uncertainty has meant that its academic institutions, governments and industries are effectively forced to file at EPO without knowing whether their invention is patentable - even in principle," Williams said. "Until this is resolved, Europe is in a situation where it is at a serious disadvantage to the U.S. and Asia-Pacific."

Confirming that, the study found a massive increase in priority stem cell patents filed by China, with Chinese filings equaling those for the whole of Europe between 2003 and 2005.

"Stem cell research in China has exploded over the last three years, both in terms of filings originating in China, but filed elsewhere and those filed on domestic soil," Williams said. That is due to a benign regulatory regime and the significant capital that has been invested in stem cell research in China in recent years.