Advanced Cell Technology announces technique to generate embryonic stems cells without harming fetus

By Jennifer Lanning Drey

Eugene, Ore., Aug. 25 - Advanced Cell Technology, Inc. announced that its scientists have successfully generated human embryonic stem cells using an approach that does not harm embryos, according to a company news release.

The company said the cell lines produced using the technology appear to be identical to the human embryonic cells derived from later stage embryos using techniques that destroy the embryo's development potential.

"Inventors and medical researchers now have a canvas in front of them - a two-dimensional canvas - that provides the ability to make any kind of cell in the human body genetically modified in any way. We're very excited about the potential to address diseases we've never been able to address before," said Dr. Michael D. West, president and chef scientific officer of Advanced Cell Technology, during a company conference call held Friday.

The company's technology generates human embryonic stem cells from a single cell as opposed to from the inner cell mass of later stage embryos, researchers said.

Nineteen stem cell outgrowths and two stable human embryonic stem cell lines were obtained in the company's research. The cell lines developed were genetically normal and retained their potential to form all of the cells in the human body, according to the release.

Advanced Cell Technology created the technique in order to address ethical issues related to destroying human embryos, which have prevented significant government funding from being available for stem cell research, West said.

"We felt that these cells, if we could point to a live child that obviously was not harmed and an embryonic stem cell line, we thought it might speed the day that the [National Institutes of Health] would fund adequately regenerative medicine and help the United States take a leadership role and speed the day when these new therapies were possible," said West.

In addition, the company hopes to garner the attention of larger pharmaceutical companies that might be interested in helping to fund further development of the technology, according to William M. Caldwell IV, chief executive officer of the company, during Friday's call.

At the start of the year, Advanced Cell Technology established a goal of developing at least one corporate partnership in 2006, Caldwell said.

"We are not naïve in the fact that we will never be able to move this technology platform that we have on to and through the clinic by ourselves. We have to have partners," he said.

Advanced Cell Technology's technique for developing embryonic stem cells was reported in the journal Nature.

The company believes the technique is independently patentable.

Advanced Cell Technology currently has more than 300 patents issued or pending in regenerative medicine, West said.

Debt converted, financing cancelled

Advanced Cell Technology also said Friday that it no longer plans to pursue the $11.3 million private placement financing it announced on Aug. 22, according to a separate news release.

Instead, the company expects to generate approximately $8.5 million in new capital following the exercise of an additional investment option by current investors.

According to the release, all of the holders of the company's currently outstanding amortizing convertible debentures and common stock purchase warrants issued in September 2005 have exercised their option to purchase additional debentures and warrants.

In addition, the company has agreed to reduce the exercise price of its currently outstanding $2.53 warrants and $1.27 warrants to $0.95 per share, provided that a minimum of 85% of holders exercise the warrants as repriced.

In connection with the repricing, the company will issue a replacement warrant to each warrant holder exercising the repriced warrant on the same terms and conditions as the existing warrant at a price of $1.60.

The company expects to receive $5 million in funds from the exercise of repriced warrants, according to the release.

Advanced Cell Technology is a biotechnology company based in Alameda, Calif., and Worcester, Mass.

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