Fundraising activity nets $8m for Stem Cell Sciences

Melbourne company Stem Cell Sciences has emerged from recent capital-raising activities AUD$8 million better off.

The largest investment came from Sydney-based pooled development fund BioTech Capital, which invested AUD$3 million into Stem Cell Sciences (SCS), giving it a 14.6 per cent stake in the company and a seat on the board.

Other investors were Edinburgh-based Archangels Informal Investments and the Scottish Enterprise Co-investment Fund, which put $2.8 million into the company for a 13.7 per cent stake.

CEO Peter Mountford said funds raised came to about $8 million recently, after a $1.6 million bridging round, raised from existing and new shareholders.

Mountford said he was pleased with the investments, noting that it was a good result given the current state of the investment market for biotechnology.

"This multinational investment is consistent with the global nature of our company and also reflects the growing sophistication of the private equity markets. We're delighted to have BioTech Capital and the Archangel-led investor group adding their significant talents to our endeavour," he said.

BioTech Capital director Harry Karelis said that he had been following the company closely since late 2000, and was impressed by its strong science and IP, and its position as a global player in stem cell R&D.

"We are attracted by the high calibre of the proven management and scientific team, the strength of their global relationships and the very strong technical knowledge the group possesses. We believe SCS offers investors some of the best exposure globally to the exciting area of regenerative medicine technologies," Karelis said.

SCS has independent operations in three locations -- Melbourne, Edinburgh and Kobe in Japan -- with each SCS company closely affiliated to an academic centre of excellence in stem cell research -- Monash University and the National Stem Cell Centre in Melbourne, the Institute for Stem Cell Research at the University of Edinburgh and the RIKEN Centre for Developmental Biology in Kobe.

The funds will be used to expand operations in both Melbourne and Edinburgh, Mountford said. In addition, the company is planning to strengthen its activities through a new UK-based company, SCS Holdings, to be chaired by former Wellcome Trust director Dr Michael Dexter.

Among the plans for SCS in Australia is a joint project currently in discussion with the National Stem Cell Centre to develop human embryonic stem cell (hESC) lines for research purposes. The plan is for the hESC lines to be made available to researchers in an unencumbered fashion, preferably through a stem cell bank, as has been set up in the UK. Mountford has been a champion of this idea in Australia, and said that there was growing support for the concept.

The company is already working with Melbourne IVF to develop hESC lines under the legislation passed by the Commonwealth government late last year.

"The idea behind the collaboration with Melbourne IVF was to work with a high calibre IVF clinic with world-leading research efforts, to ensure that the minimum number of embryos is used to develop stem cell lines," Mountford said.

SCS plans to develop around six cell lines in the first instance, and Mountford said he expects that it would take up to two years to develop and characterise the cells.

Meanwhile, SCS will continue to develop stem-cell-based gene and drug discovery systems for the pharmaceutical sector, as well as applying it to core technologies in stem cell culture and differentiation to develop cell-based regenerative therapies for diseases including Parkinson's disease and diabetes.

The company has already made alliances with a number of biotechnology and pharmaceutical companies including Aventis and GlaxoSmithKline, and has derived more than $12 million in revenues over its nine years of existence.