Stem Cell Research Firm Aldagen Lands $17M in New Financing

Durham, N.C. — With three clinical trials under way, stem cell research firm Aldagen has closed on $17.3 million in new financing that the firm is banking on to carry it to product launch.

“We are at a crucial stage,” said Ed Field, Aldagen’s president and chief operating officer. “Much is riding on the trials.”

Aldagen, which used to be known as Stemco, raised some $14 million in venture funding, Local firms Intersouth, Aurora Funds and Trelys participated in the round, along with Harbor Ventures, an Alabama firm.

And in another sign of credibility for Aldagen, Square 1 Bank in Durham provided $3 million in debt financing.

Aldagen has now raised $30 million.

The fact Aldagen was able to raise the money is proof investors like what they are seeing as data begins to flow in from the clinical field. Aldagen has developed proprietary technology that enables the isolation and purification of stem cells that are then implanted in people suffering from a variety of illnesses. The body uses the stem cells to regenerate tissue, such as blood vessels.

The company is also establishing itself as the leader in stem cell research field, Field added.
“In terms of our space, we have three active clinical programs. There’s only one other company in the stem cell regenerative space, Osiris Therapeutics, which recently went public and has a $600 million market cap. They have one product,” he explained.

“I think we have done a remarkable job,” Field added. “Based on those [clinical trial] metrics, we are a leader.”

Aldagen, which licensed its technology from Duke University and Johns Hopkins University, uses stem cells from cord blood taken from umbilical cords and placentas or from adults, not the controversial type of stem cells taken from embryos.

Initial data on the cord blood transplantation study “is very positive,” Field said. “We’re hopeful to win approval in the 2008, 2009 timeframe.”

Trials for use of Aldagen technology to treat heart failure and critical limb disease are just getting underway.

“We’re just at the beginning of a four- to five-year time frame for those,” Field said, “but one never knows. We have to see the data.”

So far, however, it appears Aldagen’s technology can be used to safely infuse patients with the stem cells.

“A lot of validation points have come in,” Field explained. “What we have been able to show is that we can isolate stem cells with our technology, transfer that to other universities, and we’ve been able to infuse into humans safely. That’s a major hurdle to put behind us.”

The fact that the cord blood stem cells have also shown benefit to the patients receiving them is something “that makes the investors happy,” he added.

Aldagen recently presented data about its stem cell cord blood project at the American Society of Hematology.

A Duke University physician, Joanne Kurtzberg, is working to determine if the stem cells can be transplanted safely. Kurtzberg has used umbilical cord blood in the past to treat childhood cancers and genetic diseases.

In trials involving 11 pediatric patients with cancer or genetic diseases, the children showed an increased survival rate and improvement in the immune system.

"The findings of this study once again show the promise of transplanting stem cells from umbilical cord blood to treat children with resistant cancers and genetic diseases," Kurtzberg said in a statement.

Aldagen’s Aldesort technology isolates stem cells from cord blood as well as human bone marrow and other blood. The stem cells are then modified with an enzyme. Aldagen wants to use the modified stem cells to regenerate tissue to combat heart failure and limb disease known as critical limb ischemia.

The Texas Heart Institute is the first place where the stem cells will be used on a trial basis to treat limb disease. Stem cells will be taken from a patient’s own blood with the desired result being the building of new blood vessels. In the Texas trial, endpoints include the safety of the process, the ability of it to reduce pain and improve ulcer healing.

As many as 12 million Americans suffer with peripheral vascular disease that can lead to critical limb ischemia. If Aldagen’s technology proves successful, the stem cell treatment could offer an alternative to invasive surgery.