What's a biotech therapy and what's not?

In no areas does the question become more open to debate, perhaps, then when concerning tissue engineering and regenerative medicine. The question of whether products from such research fall into what generally is understood as "biotechnology" tends to be argued on a case-by-case basis. Undisputed, though - at least by Frost & Sullivan in a new report - is that treatments developed in those fields will "soon revolutionize modern medicine."

Katherine Austin, the analyst who wrote the report, said she would call the work "biotech for the most part; you're engineering cells to do certain things and working with growth factors. Certainly I would call joint implants, where you have a scaffolding that cells are grown into, a device. It's kind of a gray area."

The markets, anyway, are tantalizing. Revenues for the U.S. tissue-engineering market are expected to hit $1.3 billion by 2007, probably led by bone-regeneration products (which make up about 50 percent of the total), followed by skin-engineering and wound-repair products (about 35 percent) and cartilage-repair products (15 percent), Frost & Sullivan said.

Even bigger money is in bone and cartilage regeneration and other connective structural treatments worldwide, where that market is about $15 billion. Wound repair is a broad area with much promise, too. In venous-ulcer treatments alone, the annual cost is estimated between $1.9 billion and $2.5 billion.

Spinal therapy also might be lucrative. The potential market for treatment or replacement of spinal discs will surpass $1 billion by 2007, by Frost & Sullivan's estimate - and treatment of spinal-cord injury could reach $4 billion in costs during the next few years, so a new approach could mean major revenues.

Austin is particularly enthusiastic about the Biological Assembly Tool devised by Sciperio Inc., with Stuart Williams at the University of Arizona. The BAT is a digital printing machine that incorporates cell biology to create living tissue layer by layer, deploying the same computer-aided design and manufacturing used by automakers. Some 3-dimensional tissue constructs have survived in culture and even grew their own vasculature.

More familiar to biotechnology observers are the embryonic stem cell (ESC) work by Geron Corp., and the research by Osiris Therapeutics Inc. with adult stem cells, as well as Advanced Cell Technology Inc. (ACT).

ESCs express foreign antigens and are rejected by the body unless the immune system is suppressed, a problem Geron claims to have found a way around. Austin called Geron "far and away the top company" in tissue regeneration and repair. "They're already doing things in mice and rats like curing spinal defects and injuries," she said.

Companies with ESCs "don't know if they're going to be outlawed at any minute," she allowed. "They certainly could be, if the conservatives get their way," although Austin said Geron is "golden" since its lines are among those approved by presidential decree.

Adult stem cells don't grow for as long and can't differentiate into as many different cells types as ESCs can, but Osiris is working on that. Osiris' technology "will do great on the market," even if their approach is "fairly specialized. They take [the cells] from the particular tissues they want to treat."

Acorda Has Spinal-Injury Product In Phase III

Even better than Osiris is Athersys Inc., Austin said. Based on research from the University of Minnesota, Athersys is developing a subset of stem cells "that are completely pluripotent and really long-lived" - thus offering the benefits of ESCs without the political or religious complications.

Meanwhile, ACT - formed in 1994 as a subsidiary of a poultry genetics company - has shifted from its agricultural focus to autologous regenerative medicine, outlicensing all non-core application areas, and has been divesting itself of its agricultural cloning subsidiary in order to focus on human cell therapy. ACT works with stem cells cloned directly from the patient's own cells to come up with totipotent stem cells not rejected by the patient.

Each of the stem cell firms, Austin notes, claims its approach is best and most likely to advance in the marketplace - and each company brings a strong patent estate to the table, making entry by others difficult. Already some of the existing firms have had patent disputes.

Most other groups pursuing what Austin characterized as groundbreaking work in the field are academic, except for Wyeth in bone and cartilage repair. Wyeth's InductOs delivers recombinant human bone morphogenetic protein-2 by way of an absorbable collagen sponge. The technology was licensed to Medtronic Inc. for use in its approved InFuse/LT Cage product for spinal fusion.

As with stem cells, growth factors are more easily identified as biotechnology. One success story dating back to 1998, when it was approved in the U.S., is Regranex (becaplermin), a genetically engineered platelet-derived growth factor from Ortho-McNeil Pharmaceuticals Inc. that stimulates the body to grow new tissue into diabetic foot ulcers. The gel is for ulcers that extend into the subcutaneous tissue or beyond and have an adequate blood supply.

Another, earlier-stage compound getting some attention is Chrysalin, for which OrthoLogic Corp. has licensed rights from Chrysalis BioTechnology Inc. A 23-amino-acid peptide that mimics thrombin, Chrysalin is said to "jump-start" the healing cascade within the first two days after a bone injury is sustained. It's in Phase III trials for accelerating fracture repair and in Phase I/II studies for spinal fusion. Last week, OrthoLogic decided to take the whole company, signing a definitive agreement to acquire Chrysalis for up to $34.5 million in cash and stock.

Farther back in the development stage is Acorda Therapeutics Inc.'s tenascin-C, one of the glycoproteins in the matrix that acts as scaffolding for nerve cells, for promoting repair of damaged nerves. Acorda was awarded a Phase I Small Business Innovation Research grant to forge ahead with its research.

Meanwhile, Acorda's most advanced product candidate, Fampridine-SR (4-aminopyridine) is in Phase III trials to restore some neurological function to spinal-cord injury patients. Fampridine-SR, licensed from Elan Corp. plc, compensates for myelin loss by blocking potassium ion channels, ending the "short circuit" effect suffered by those cells.

Development Risks Abound In Field

Another cause for optimism is the Hedgehog proteins owned by Curis Inc., which are known to play a role in directing differentiation and growth of tissues during development of the fetus and might boost regeneration of tissues. The Hedgehog program garnered a potential $170 million deal with Wyeth in January, and Curis retained development and licensing options for certain therapeutic applications of the Hedgehog activator technologies. Included are those that qualify as orphan drug indications, topical use for hair growth, local delivery applications for cardiovascular disease and use of the technology with stem cells. Wyeth has an option to acquire the orphan drug indications and the cardiovascular applications, pending certain success criteria.

Boston Life Sciences Inc. has the nucleoside inosine and axogenesis factor (AF-1) to promote axon outgrowth in spinal-cord injury, optic-cord injury, traumatic brain injury, stroke and other central nervous system disorders. Inosine controls a specific axon-growth process within nerve cells, and animals treated with it developed up to 2,500 newly grown axons, while untreated controls developed only 175. What's more, animals treated with inosine recovered more than 90 percent of motor function. Researchers believe AF-1 stimulates the regrowth of severed optic nerves in mice.

But venture capitalists, Austin said, "are very cautious these days. They know things that work great in mice or rats often don't work in humans."

But the road to success in this market is hardly without casualties, Austin pointed out. Despite regulatory approval and "decent" sales figures, two of the first companies to launch tissue-engineered products in the 1990s filed for bankruptcy within weeks of each other at the end of 2002, Austin said. Both firms - Organogenesis Inc. and Advanced Tissue Sciences Inc. - marketed skin-replacement products engineered for treatment of burns and diabetic skin ulcers. ATS dissolved, and Organogenesis was taken private by investors in August, directing its efforts at the signature product Apligraf, a living skin substitute.

ATS "basically just fell down in the marketing department," Austin said. "It's a huge problem when you have to try and convince surgeons to adopt your product. They're very conservative. They want it to be established as a standard of practice before they will even consider it."

Tissue regeneration and repair "make people nervous," she said. Investors might be shy, and not only because of the stem cell controversy.

"There will probably be trouble getting insurers to reimburse for these products," Austin said, which anyway are in "a sort of regulatory limbo right now. The agencies don't quite know how to classify them."

Austin, for her part, is sold on ESCs, adult stem cells and growth factors as treatments. She uses words like "incredibly cool" and "amazing" to describe them.

"There's no question in my mind they will become absolutely standard in the next 10 years," she said. "Definitely the adult stem cell therapies will. I think they all will. It really is like science fiction come true."