By Brady Huggett

ViaCell Inc. acquired its Boston neighbor Cerebrotec, taking in all its employees, and will form the ViaCell Neuroscience Division.

The new division will combine Cerebrotec¿s stem cell and neurotrophic growth factor research for the treatment of stroke and ViaCell¿s Selective Amplification technology. The idea behind the division creation is to develop new cellular and molecular medicines for neurological diseases, in particular, stroke recovery.

The division also gets Seth Finklestein, president and founder of Cerebrotec, as well as intellectual property. Finklestein will become the vice president of ViaCell and head of the Neuroscience Division.

¿Eighteen months ago we came together with Finklestein, [Massachusetts General Hospital] and Cerebrotec to run functional studies on the best methods for neuronal repair,¿ said Marc Beer, CEO of ViaCell. ¿We demonstrated tremendous functional repair in rat models. We have repeated the study several times since to show the robustness of the studies.¿ Those studies paved the way for the acquisition, he said.

Financial terms were not released, but Beer said it was ¿a complete equity acquisition¿ and ¿is what [Finklestein] wanted and is in the best interest of us for our capital.¿

With Cerebrotec and Finklestein comes a five-patent portfolio ¿ three pending ¿ licensed from Massachusetts General Hospital. Although the division will turn its efforts firstly to stroke recovery, it also has initiatives for muscular dystrophy and Lou Gehrig¿s disease.

ViaCell, with locations in Boston and Worcester, Mass., has taken over an additional floor in the Worcester Biotech Park to accommodate the new arrivals ¿ giving ViaCell 115 employees in all ¿ and the move should be completed by the end of next month. ViaCell was formed by the merger of umbilical cord-blood banking business ViaCord Inc. and the biotech company t. Breeders Inc. in the spring of 2000. Beer said it¿s that mixing of the two companies that makes ViaCell different from other biotechnology companies. (See BioWorld Today, May 11, 2000.)

¿We are in a good position now because we have a rapidly growing commercial division in our ViaCord division,¿ he said. ¿That gives us financial stability and staying power.¿

The company has raised about $70 million to date, and Beer doesn¿t see the need for anything else financially but an initial public offering, when the time is right.

¿We have a low burn rate and a lot of capital,¿ he said. ¿There is no sense of urgency to go public so we will wait for the markets. I don¿t envision the organization needing to raise more capital to go public. If [the market] turned in Q3 or Q4, we would be ready to go out.¿

The cord blood stem cell area offers benefits that embryonic or adult stem cells do not, Beers said ¿ adult stem cells are too committed; embryonic stem cells carry the burden of ethical and political strife.

¿It¿s one of the best alternatives,¿ Beer said.

ViaCell plans to use those cord blood stem cells in its Selective Amplification technology.

¿It¿s a marriage of biology and engineering,¿ Beer said of the technology. ¿It is a process that incorporates growth factors and antibodies to expand the stem cells to a 40-fold level. I believe it¿s possible to someday reach 1,000-fold expansion. With the maturation of our science, we will reach far greater numbers in the future.¿

With that technology, ViaCell is looking toward its first Phase I trial. It is now in the process of filing the investigational new drug application and waiting for the green light.

¿We¿ll be in clinical trials by the end of the year,¿ Beer said. ¿Our first trial will be in a set of patients who will demonstrate a genetic disease or a hematological malignancy and are in need of a transplant.¿

Until those trials start, ViaCell can spend the time settling in its new division. The acquisition is key, Beer said, but the real feather in ViaCell¿s cap is the progression it has seen since it was founded through that merger some 15 months ago.

¿Our biggest accomplishment is putting together a fully integrated cell therapy company that is a combination of the best people and the best technology and the appropriate capital to enable cell therapy to make an impact in a lot of areas that currently can¿t be treated.¿

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