As reported by the Hartford Business Journal, July 26, 2010.

Stem Cell Payoff

UConn Spinoff Closing in on Osteoarthritis Therapy

By Greg Bordonaro

The state’s $100 million investment in stem cell research could be on the verge of one its biggest breakthroughs yet.

Caroline Dealy, a developmental biologist and professor at the University of Connecticut Health Center, and her former colleague, Robert Kosher, have developed a technique that converts human embryonic stem cells into cartilage cells.

It’s an advance that is making waves in the scientific community because it could eventually lead to a therapeutic remedy to osteoarthritis, the degenerative disease caused by cartilage deterioration in joints that affects millions of people.

Dealy is testing the cells to determine if they can repair damaged tissue on live animals.

If successful, her work could eventually lead to a major business opportunity. With approximately 25 million Americans suffering from osteoarthritis, there are few if any long-term fixes to the disease, creating a huge potential market.

"There really needs to be a new source that will make cell cartilage repair available to the masses who need it, because that crutch really isn’t available to everyone right now," Dealy said.

Dealy’s work has already led to the birth of a new bioscience startup — Chondrogenics Inc. — which is one of Connecticut’s first commercial spin offs from research funded by its $100 million stem cell research initiative established in 2005.

But officials caution that any potential treatment option is years away and will have to overcome many hurdles to become a reality.

Therapeutic development is a high-risk industry. Moving Dealy’s research from the petri dish to the market will be time consuming and capital intensive, taking at least four more years of experiments and regulatory review, and tens of millions of dollars — or more — in investments.

"It’s early-stage science, so it’s a highly risky investment because a lot of this kind of research doesn’t pay off," said Mark Van Allen, who is president of the UConn R&D Corp., a for-profit organization that creates new business start-ups based on technologies developed by UConn faculty and staff, including Chondrogenics.

For now, Dealy is taking it one step at a time and focusing on advancing her findings.

Her research centers on converting human embryonic stem cells, which have the ability to become any cell type in the body, into cartilage cells.

Cartilage is the tough elastic tissue that provides a smooth gliding surface for joints. As it breaks down over time, cartilage doesn’t have the ability to repair itself, leading to painful conditions like osteoarthritis.

Researchers have tried to engineer replacement cartilage tissue using various techniques, Dealy said, but most are costly and may not provide a long-term fix.

Using stem cells to repair damaged cartilage is seen as an ideal method because the cells have an unlimited capacity for self renewal.

To use them, however, Dealy and Kosher, a retired UConn Health Center professor, had to develop a technique that replicates the signals and conditions that cause stem cells to become, or “differentiate” into, articular chondrocytes — which are cells that make up cartilage present at the surface of joints.

They’ve successfully done that in a petri-dish setting, and their patented method was recently peer reviewed and published in the Journal of Cell Physiology, a key step to gaining credibility in the scientific community.

Dealy has also successfully used the technique on induced pluripotent stem cells, which are adult cells procured from skin. That is another significant development because those cells are obtainable through less invasive procedures and avoid the ethical issues surrounding the use of human embryonic stem cells.

The next step is to determine if the cells can repair damaged cartilage in a living joint. Dealy is in the middle of a proof-of-concept experiment, where she will inject the cells into the joints of mice with osteoarthritis to see if they have a healing affect.

If successful, the methodology would have to be tested on larger animals. Eventually, it would need to get the okay from the Food and Drug Administration for preclinical and clinical trials on humans.

But commercializing Dealy’s research, and eventually creating a treatment option, is in many ways as complex as the science she’s attempting to develop.

Testing research on animals and then eventually getting regulatory approval for clinical trials can cost tens or even hundreds of millions of dollars and take years to come to fruition.

At the same time, attracting private capital is nearly impossible until there is tangible evidence that the technology works on living animals.

UConn’s Research & Development Corp. has helped Dealy form Chondrogenics Inc., a company whose main goal is to raise capital — from government and/or private sources — to develop and advance the research.

Chondrogenics has already secured a $75,000 grant from UConn’s Center for Science and Technology Commercialization, the university’s economic develop arm that attempts to translate faculty research into real-world business opportunities.

The funding comes from royalties generated by other UConn inventions, and will be used for Dealy’s prototype research on mice.

If that research proves successful, the next step would be to test the cells on larger animals, research that will likely cost an additional $1 million to $2 million, Van Allen said.

If the research eventually gets to the clinical trials stage, it could require tens of millions of dollars to advance, likely forcing Dealy and Chondrogenics to strike a deal with big pharma, Van Allen said.

James Heym, the senior director of life science ventures for the UConn R&D Corp., said there are a growing number of pharmaceutical companies, like Pfizer and GlaxoSmithKline, that are interested in investing in stem cell therapy treatments.

By partnering with larger companies, Chondrogenics would be able to leverage their partner’s deep pockets and scientific expertise, two key elements in eventually being able to commercialize Dealy’s research, said Heym who has 25 years experience in pharmaceutical R&D at Pfizer, and has been involved with the successful discovery and development of several drugs.

"This is one of those areas that if it works, and if it works well, it has the potential to offer an advance over anything that is currently on the market," Heym said. "That will make it an attractive investment, especially since there is a large patient population that could use it."

Connecticut’s 10-year, $100 million stem cell initiative is making the state a major player in the industry, helping to attract top scientists who are pursuing treatments for various diseases including cancer and Parkinson’s.

To date $50 million has been disbursed, which has provided the resources to support 128 full-or part-time positions at Yale University and 40 full-time positions at UConn. Wesleyan University is also a player.

Dealy said the state’s backing, along with UConn’s commercialization efforts have been key to getting her research where it is now.

"It’s a long process and we know there’s a lot of work to be done," Dealy said. "We are pushing the door open a little bit, but it’s still only open a crack."