By Randall Osborne

Aastrom Biosciences Inc., which has a system under development to grow human stem cells outside the bodies of patients, is cultivating its financial condition as well, raising $11 million with an offering of 2.2 million shares of 5 1/2 percent convertible preferred stock.

The shares are being offered on an all-or-none basis directly by Ann Arbor, Mich.-based Aastrom to selected institutional investors.

In July, the company was granted four U.S. patents that cover the ex vivo growth or genetic modification of human stem cells, positioning the company to forge ahead with commercialization of its Stem Cell Production System (CPS) and its Gene Loader. (See BioWorld Today, July 24, 1997, p. 1.)

Aastrom's lead product, CPS, is a desk-sized cell-culture system that uses disposable cassettes and reagents. Aastrom expects CPS to provide a cheaper, faster and less invasive alternative to stem-cell collection methods. This would be of particular benefit to patients who have undergone chemotherapy, which can destroy stem cells in bone marrow.

Stem cells can be restored by infusing other stem cells collected from the patient or donor before the cancer treatment begins, and stem-cell therapy now consists of bone marrow stem cell extraction and replacement. A quart of bone marrow, removed in separate procedures, is required for a transplant.

Cell Harvesting: An Ordeal

Currently, the cell-harvesting ordeal requires eight to 21 patient-care episodes and lasts up to 39 hours. By contrast, Aastrom's procedure, using as little as 10 ml of bone marrow to generate enough cells to rejuvenate a patient's blood and immune system, involves two patient-care episodes and takes less than three hours.

CPS may also allow higher, more frequent chemotherapy doses, since it can produce multiple batches of cells from patient samples procured at the first collection.

The company is conducting pre-pivotal trials at four U.S. sites on patients with Stages II, III and IV breast cancer who have received myeloablative chemotherapy. CPS may be modified to replicate other types of cells, such as T cells and solid tissue cell, and the technology may also be helpful in treatments using umbilical cells.

CPS would be marketed in the U.S. by Lakewood, Colo.-based Cobe BCT, a subsidiary of Sweden's Gambro AB and owner, after the offering, of 20.5 percent of Aastrom's outstanding stock.

In May, Aastrom and Cobe, which began their partnership in 1993, began a clinical trial of CPS in Marseille, France. In order to market CPS in Europe, the company must obtain a CE Mark registration, which Aastrom expects to support with results from the European study and ongoing U.S. trials.

Aastrom's Gene Loader is being developed as part of the company's ex vivo gene therapy program, and it is being designed to address the production of gene-modified cells.

Boston-based Cowen & Co. is the best-effort placement agent for the offering, after which Aastrom will have 15.66 million shares outstanding.

Aastrom went public in February, raising $21 million in its initial public offering. As of Sept. 30, Aastrom had $13.63 million in cash, with a net loss of $3.62 million for the three months ending on that date. *

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