Pfizer Branches Out with Stem Cell Therapy Investment

With each passing day, old-line drug company Pfizer (PFE), the name behind cholesterol-lowering drug Lipitor and erectile-dysfunction treatment Viagra, is acting increasingly like a young biotech firm. The latest development? New York-based Pfizer is licensing a new stem cell therapy for inflammatory bowel disease biotech firm Athersys (ATHX), the Cleveland, Ohio-based company said.Athersys' MultiStem is a therapy that consists of a special class of stem cells obtained from the bone marrow of healthy, adult donors. These have the ability to form multiple cell types that can replace damaged ones in the body. MultiStem appears to promote tissue repair and healing in multiple ways, Athersys says, including responding to signals of inflammation and tissue damage.

Inflammatory bowel disease is a group of conditions that affect the colon and small intestine, typically resulting in severe abdominal pain, weight loss, vomiting and diarrhea. The most common forms of the disease include Ulcerative Colitis and Crohn's disease, which are estimated to affect more than 2 million people in the U.S., major European countries and Japan.

Athersys says MultiStem represents a unique, "off-the-shelf" stem cell product. It is also being investigated for other indications, all in early stages of development.

As part of the deal with Pfizer, Athersys will receive an up-front cash payment of $6 million as well as research funding and support during the initial phase of the collaboration. Athersys is also eligible to receive additional payments of up to $105 million if it meets certain development goals. Pfizer will pay royalties to Athersys if MultiStem is approved for sale. Athersys retains the rights to develop MultiStem in various other indications.

"Pfizer is committed to the development of new medicines that have the potential to fundamentally improve the quality of clinical care in areas of need," Ruth McKernan, the head of Pfizer Regenerative Medicine, said in a statement. "We are delighted to work with Athersys to develop MultiStem for inflammatory bowel disease." She told the New York Times that the relatively small payment reflects that "it's really early for cell therapy and there's more research to be done."

Pfizer has been cautiously expanding into the area of stem cell therapy as have other large pharmas. Back in November 2008, Pfizer launched the independent Pfizer Regenerative Medicine unit to research and develop new medicines based on stem cell biology. In May of this year, it announced a licensing agreement with the University of Wisconsin-Madison for human embryonic stem cell patents to develop new drug therapies, pumping $100 million into the unit.

Embryonic stem cells have been looked to as a source of potential treatments because they are pluripotent, or potentially have the ability to develop into any type of cell in the human body. Such an ability might give scientists the ability in the future to replace damaged heart cells, say, or develop new treatments. But because these cells come from human embryos, their use has been quite controversial.

Using adult stem cells has prompted less debate but some believe they may not be as pluripotent. In March, the stem cell research field was encouraged when President Obama reversed Bush's policy that limited federal tax dollars for embryonic stem cell research.

It's just natural, then, that pharmas are taking interest in this yet young area, albeit carefully. Investors likely think this trend will continue as Geron (GERN) and StemCells (STEM), two companies in that space, have also seen their shares rise on Monday.

Pfizer closed up 1.7%, while Athersys shares skyrocketed 140% to closed at $2.40 Monday. Athersys closed at $1 on Friday.
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