BioWorld International Correspondent

LONDON - Stem Cell Sciences (SCS) Group plc is closing its Edinburgh headquarters, in a blow to Scotland's ambitions to be a leading center for research, development and commercialization in the stem cell field.

The office is moving to the company's facility in Cambridge, UK, as part of a restructuring initiated by Alistair Riddell, who took over the position of CEO from founder Peter Mountford in November 2007.

At that point, Mountford went to work as chief technology officer at SCS's research facility in his native Melbourne, Australia. Now he is leaving the company, along with fellow Australian Hugh Ilyine, chief operating officer, and Finance Director Sue Furber. Mountford will act as nonexecutive director and consultant.

The research facility in Melbourne will be maintained, but is to be streamlined.

"For such a small company, it is crazy having two sites in the UK," Riddell told BioWorld International. "There are 35 staff in total. Apart from two UK sites, there is R&D in Melbourne and a sales office in California. It's a complete mess and needs to be rationalized."

While Riddell acknowledged the move is seen as damaging to Edinburgh's stem cell community, he also noted, "There are only 14 people there, so I can't see what the blow is."

But although not significant in terms of employment, SCS stands next to Dolly, the cloned sheep, as the twin totem of Scotland's claim to be an international leader in stem cells.

The company was founded in 1994 to commercialize work carried out at Edinburgh University by Mountford and Austin Smith. The two were the inventors on the infamous Edinburgh patent, relating to methods of selecting and isolating stem cells, which was contested in Europe for 14 years.

Smith himself moved from Edinburgh University's Institute for Stem Cell Research in 2006 to head the Wellcome Trust Centre for Stem Cell Research at Cambridge University. Riddell noted that was another reason why it made sense for SCS to move. More prosaically, the company's landlord in Edinburgh was about raise the rent by almost 50 percent.

Riddell said the offices were "cramped, tired and old." In contrast, the company will move into a new facility on the Babraham Campus in Cambridge at a rent 25 percent lower. Riddell added that as Cambridge is the largest biotech cluster in Europe, it will be easier to recruit staff.

Alongside the move, SCS will step up its business development efforts, to bring in more revenue in the short term from the sale of its differentiated cell lines for use in drug discovery. Currently, the company has less than 12 months' cash.

In addition, SCS will be looking for a specialist partner to take on the commercialization of its animal-free cell culture media. "Media is becoming more and more important, as specialized cell lines are adapted for drug screening. Riddell said, "We are not a manufacturing and distribution company, so we will find a [partner] to take it off our hands."

Riddell also is looking to extract immediate commercial returns from SCS's extensive intellectual property portfolio. "The company is 14 years old, and has been in stem cells since the beginning. "While the IP is high quality, the company has not pursued the value in the portfolio," Riddell said.

SCS is starting a program to pursue patent infringers. "We'll start out sending friendly letters suggesting they pay," said Riddell. A U.S. legal firm has been retained to pursue those who do not take out licenses voluntarily.

The company has a U.S patent on stem cell purification, which it said is an essential step in preparing stem cells for use in almost all drug discovery and cell therapy applications.

Despite being so short of cash, SCS will retain an interest in possible therapeutic applications of stem cells.

The company has a collaboration with an unnamed pharmaceutical company in diabetes and with the U.S. Myelin Repair Foundation in neurological research.