BioWorld International Correspondent

LONDON - Stem Cell Sciences plc has agreed on a technology swap and buy-back deal with its investee company Stem Cell Sciences KK, of Kobe, Japan, to simplify their respective portfolios and allow each to concentrate on particular areas.

"The real push is simplification in terms of focus and effort," Hugh Ilyine, chief operating officer, told BioWorld International. "When we set up [Stem Cell Sciences KK] in 2002, we couldn't imagine where it would take us, and how the companies would develop. They are now creating their own destiny."

Stem Cell Sciences plc seed funded formation of the Japanese operation in collaboration with the Ministry of Health, the City of Kobe and the Riken Institute, and currently owns 23.9 percent of the company.

"Small-scale collaborations with academic partners that carry the bulk of the risk are one thing. But as you move into INDs and building a position in the U.S., the cost profile rises enormously," Ilyine said. "The complications of joint ventures or shared ownership status can create uncertainty over who funds what aspect of what project, and can be complicated for investors."

Under the previous arrangement, both companies owned 50 percent of the U.S. rights to neural stem cell-based therapeutics and adipose-derived stem (hMADS) cell therapies. Under the new deal, Edinburgh, Scotland-based SCS plc assumes global rights, including 100 percent of the U.S. market, for all products based on neural stem cells and SCS KK gets global rights for hMADS.

In addition, SCS plc regains global rights for all other SCS plc cell therapies, including therapies based on embryonic stem cells, and will assume worldwide commercialization rights to all products and technologies for use in basic and applied research. The UK parent is paying an undisclosed fee for the return of those rights.

The move enables SCS plc to build a single global operation around stem cells for use in research and drug discovery, simplifying the revenue-generating side of the business, while protecting its interest in cell-based therapies for treating central nervous system diseases.

Ilyine said SCS plc will maintain relations with its Japanese academic collaborators at the Riken Institute, noting that last month the company in-licensed new technology from the Institute. He emphasized also that the move to focus on drug discovery services does not mean SCS plc no longer has ambitions to develop stem cell therapeutics, but said, "That play is longer term."

In terms of the overall division of technology, Ilyine commented, "You can take a view on who got the short or the long end of the stick. It's not clear which area will break through. But we are confident of our understanding of neuronal cells."

In a boost to SCS plc's ambitions to develop its drug discovery services arm, the company last week was awarded a U.S. patent on its stem cell selection technology. That patent covers all methods of purifying any type of mammalian stem cell via any introduced gene and all stem cells purified by the method.

All adult human stem cells and all human embryonic stem cells are covered by the claims, further extending the protection already secured for stem cell selection using cell surface antigens, fluorescent markers and antibiotic resistance. Purification is an essential step in removing non-stem cells and preparing stem cells for use in almost all drug discovery and cell therapy applications.