Stem Cell Network teaming with MaRs to accelerate commercialization efforts

The Stem Cell Network (SCN) has entered into a collaborative agreement with the MaRS Discovery District to transfer control of its nascent spin-off commercialization arm, Aggregate Therapeutics Inc (ATI). The agreement will see MaRS take immediate management responsibility for ATI, seek funding to operationalize the company and accelerate efforts to commercialize stem cell and regenerative medical research.

ATI has been hailed as a unique commercialization model which holds exclusive rights to stem cell technologies from 37 scientists at 16 universities and hospital research institutes. The intent is to bundle technologies and seek funding to bridge the gap between early-stage, start-ups and venture capital (VC) financing (R$, July 28/06).

"This is still early-stage technology not ready for prime time but there's a lot of interest from the investment community," says James Price, ATI's COO on secondment from SCN. "Management made the decision that we could raise money and get a lower valuation than we would like or we could partner with MaRS and secure funding in a different way."

new synergies

With the new partnership, ATI gaines access to the rapidly growing MaRS network of commercialization services ranging from mentoring and incubation to financing, intellectual property guidance and outreach. ATI's seed funding of $2.5 million got the organization off the ground but the $10-20 million in private financing it has been seeking for the past year has remained elusive, prompting a shift in strategy.

"ATI is a creation of SCN which is a federal Network of Centres of Excellence. SCN has a defined mandate in terms of funding and is not meant to be a permanent program," says Price. "We want to create a legacy and a long-term, permanent vehicle for commercializing stem cell technologies. We looked at several partners and MaRS is a win-win relationship. It has close ties with technology transfer offices and part of its mandate is to bring institutions and companies together."

MaRS has a growing venture group and has identified stem cell-based regenerative medicine as a priority area for investment. Shifting control of ATI is viewed as a positive development for moving Canadian stem cell research into the marketplace. Dr Annemarie Moseley, ATI's acting CEO, will continue in her current capacity and work with MaRS to identify promising technologies and potential funding sources. That includes developing a business case for Regium — ATI's first spin-off company (see article below).

"Aggregate is pretty much a virtual organization and it wasn't able to execute its strategy as vigorously as it would like … MaRS wants to expand Aggregate and create the greatest value we can from these inventions. We may add value to leverage investment," says Dr John McCulloch, a senior advisor to MaRS' venture group who was recently brought in to handle the ATI transfer. "Moseley was, and still is, a tremendous benefit because of her expertise. We're still in the transitional phase but I believe she will have a continuing role.

As part of the transfer, ATI will bring in a new board of directors with members from SCN, MaRS and ATI. An interim board has been appointed to carry it forward over the next several months. SCN has committed to fund ATI for the next 12 months and transfer its controlling share to MaRS, although MaRS will not take an ownership position.

"SCN has set up a partnership with MaRS to secure public and private financing for ATI," says Price. "There's a joint commitment to finance ATI and the ATI board will play a major role looking at financing options and setting up Regium."

Price says there hasn't been a huge reaction to ATI's transfer to MaRS from the scientific and tech transfer communities it represents. He asserts that there is still strong interest in the ATI model and there are plans to capture progress to date and lessons learned in a future report.

"ATI has been performing an important function to date (for stem cell research) and there's comfort in that," he says. "This is a good step forward (but) it's an unproven model."

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