We moved administratively, three days before Christmas last year, with a removal van, in our jeans. The labs were kitted out during the spring really, and the scientists moved in July and August, and the building was opened in September.

D&MD: So you've actually only been operational here for a couple of months?

Edwards: Yes. All the scientists were actually in and working by August, and there were still a few bits and pieces with the building, as always is the case. The builders left the morning before the opening—I mean, that's typical.

D&MD: What sort of role do the founders play now in the company?

Edwards: Of the three academics partners, John Sinden is the head of science. So he's very much involved in the company. He came into the company almost immediately. It's always an issue when academics form a company, what's their relationship? Do they go into it, do they take consultancies from it, or do they take some shares and then go back to being academics? And I guess our founders simply exhibited all three behaviors, in the sense that John Sinden immediately came into the company. Helen Hodges decided that, at least at the time, she wanted to remain academic, and she remained an academic for three years, but has now joined the company, so she has come in. And Geoffrey was in his sixties, and he actually retired last year.

D&MD: What role does Helen Hodges play?

Edwards: Helen Hodges is heading the pharmacology group.

D&MD: Oh right, I'm afraid that was one of my questions later, because I'd picked up that you'd appointed a new head of pharmacology.

Edwards: Yes, but it's not that kind of pharmacology; it's a different kind of pharmacology.

D&MD: Can you explain the difference?

Edwards: Yes, in the sense that Helen is responsible for testing of the stem cells with pharmacology, whereas Kenny Collins is heading our efforts to try and find novel genes or novel proteins' responses.

D&MD: So what's the difference in their titles?

Edwards: Well, they're both heads of pharmacology. One's head of pharmacology; one's head of molecular pharmacology.

D&MD: The head of molecular pharmacology would be Kenny Collins, then. One of the things I was intrigued about was that I picked up that you'd been working for Novo Nordisk. That seemed a bit of strange move—for somebody who'd been working for quite a big company like that to be involved with a start-up.

Edwards: Yes, it was very strange, ha, ha.

D&MD: What motivated you?

Edwards: Well, I guess that it's not very typical motivation actually. What happened was I worked for Novo Nordisk for many, many years, and was very happy. I worked in the United States, worked in Japan, worked in Copenhagen. And I'd been out of the UK for 11 years. I hadn't worked in the UK since the late '80s. And I had a family problem, and basically I had to return to the UK is what it boiled down to. And so it wasn't sort of some great entrepreneurial urge that came to me in the middle of the night.

I just needed to find a job in the UK. I was very happy in what I was doing. I was sort of forced to do something else. It was very difficult actually to know what to do. And I decided, I could do what I did for Novo Nordisk for somebody else. But I was so attached to them I didn't want to do that. So I deliberately tried to do something completely different, and this opportunity came along and I fancied it, and that was about it. But I definitely won't appear in the textbook of entrepreneurship. It wasn't commercial—definitely not. Well, if I do, it will be purely post-hoc rationalization.

D&MD: I read through the results statement that came out last week and it mentioned there that there'd been a decision to review the strategic direction of the company, and I wondered what that involved? And why it was done?

Edwards: That's why I'm glad you came this week and not before the results, because I could not have talked about it then. The basic issue is that all our research is on stem cells, and most of that has been on human stem cells. But we've had a technical problem, as we announced to the market last week. And the basic problem is that, as we expand our cells up and up to obtain the large number of cells that we would need for transplantation, the cells become genetically unstable. And that is a real problem, in the sense that taking a cell line that is not stable through to clinical trials is probably not very sensible. And so we've had to overcome that cell stability problem. And so what it's done is to put back our cell transplantation program.

And the question then, managerially, is: 'What is a reasonable response to that?' We've had to try to turn the problem to our advantage as best we can. And, ironically, at the moment, the market, as you probably know, for biotechnology companies is not good, to be polite. What that's produced is a number of UK companies that are desperately short of cash. Suffice to say that several really quite good UK companies have suddenly found themselves in the embarrassing situation of being unable to raise money, or being unable to raise money at a reasonable price. And, despite our problem, because we're relatively close to it in location, we had some cash that we would have used for the cell transplantation program. So what we decided to do was to look for in-licensing opportunities, to take advantage of the fact that it was a real buyers' market, and that's what we've been doing, and that's what the board sanctioned.

The change of strategy, if you want to call it that, was to say: 'Yes but we're still in stem cells, we still believe in the long-term potential of stem cells, and we still think it's incredibly exciting, and will lead to a return for our investors. But we've had to acknowledge it's a problem, and, in order to diversify some of the risk, we need to look at some of the technologies—still to do with the brain, still to look for brain-repair mechanisms if we can find them.' And so we've been looking specifically within the last year at in-licensing deals.

We've in-licensed from the University of Bristol and from Enact Pharma two soluble receptors. Not that many people know that much about soluble receptors, because there are not that many soluble receptors on the market. But, when I say that Enbrel (manufactured by Immunex) is a soluble receptor, everyone gets interested, because Enbrel is phenomenally successful as a pharmaceutical.

But the basic sort of scientific idea is that, if you have a receptor and it's natural ligand—the thing that binds to the receptor—usually when the ligand binds to the receptor—it's like a key going in to a lock—and it brings about some changes in the cell. And if you find out the structure of that receptor, and find out exactly where the key fits in the lock, you can clone just that bit of a lock where the key binds. What the University did was to find out a specific part of the receptor, called the TrkA receptor, and find out where it was binding into that receptor, in order to clone it and make it as a recombinant protein, and then to show that that receptor—that small bit of receptor—had full biological activity. And the impact of that is that, when you inject the receptor, it binds to the natural ligand. So, in this case, the lock is the NGF (nerve growth factor) receptor, and the key NGF. So what we've in-licensed is an antagonist nerve growth factor. They then found at the university that, if they made a minor change to the structure of the soluble receptor, they could get protein that would bind, not just nerve growth factor, but the whole family of proteins, which are called neurotrophins.

That includes nerve growth factor, brain-derived neurotrophic factor, neurotrophin-3, and neurotrophin-4, all of which are structurally related. So what that gives you now is two possible development programs, one being the soluble receptor to NGF, and the other being the soluble receptor to the neurotrophin family.

There are several good aspects—as well as being good science and good patents round it—the protein is relatively easy to make, and has been made already in commercial yield, and purified sufficiently to get a crystal structure, meaning that it's fair to describe it as being in pre-development. So it's beyond the research stage and going into development. And that gives us a completely new technology to work with and to try to add some value for investors. So that's what we've done, and we're ever much trying to find more, because then we'll have a reasonable portfolio of technology within a small company, and hopefully diversify away some of the risk.

D&MD: Going back to the issue of the stem cells for implantation, what was the actual barrier to progress?

Edwards: We had been successful to a point, by which I mean we'd got large numbers of human neural stem cell lines, and from several different regions of the brain. We'd been successful in deriving the lines, getting the cells to grow, and we'd made large numbers of cells. But then the wall we hit was that, when we'd got so many cell doublings, the cells became genetically unstable. Because they are genetically unstable, we don't think that they're suitable for transplantation, and we have to find a way of solving that.

D&MD: Is this a problem that has occurred in other research that people have found a way of overcoming so that you do not have to find a whole new way of overcoming this problem?

Edwards: The difficulty is that, although there's a lot of literature on ways to immortalize cells, so that cells live forever, most of that literature has been developed on mature cells.

We're working with a very special type of stem cell, so a lot of the lessons are not relevant to the project. And, as a result, we are having to find some quite novel approaches to deal with this. We announced at the interims that we'd licensed a novel technology from the US. Now whether that would work or not, I don't know. But we're trying several strategies in parallel to overcome the problem. But it has to be said that it basically kicks back the program to where it was and so we have to go back to research.

D&MD: Who was that license with then?

Edwards: We didn't disclose that.

D&MD: So at the moment you can't really say when you hope to move forward on the clinical phase because you're still involved in the research?

Edwards: No, I wish we could. What I think we can say is that it's going to take us a year form where we are now to know if we can tackle the problem successfully.

The other aspect, the other response to the problem, is that we're trying to take forward to regulatory development the murine cells. We wouldn't have done this if human cells had been all we'd hoped for. But, ironically, the data we've had for the murine cells is really extremely good.

But there's more of a psychological issue—can we really implant mouse cells in human heads? As you may know, people are currently researching pig cells. At the end of the day, a brain stem cell is a brain stem cell, and, at least in our hands, we've shown that the murine cells are able to repair damage to the brain, both in rodents, but also in non-rodents, indicating that the cells tend to cross the species barrier.

D&MD: Is there any concern about issues such as bovine spongiform encephalopathy (BSE) or variant Creutzfeldt-Jakob disease (vCJD)?

Edwards: I don't believe there's any concern about those two diseases with mouse cells. The concern, actually, in those diseases would be human cells. As you may know, there have been cases of new variant CJD in corneal grafts—human to human. And mice don't have CJD, that's for sure. So there's nothing to worry about with those specific diseases. But there is an infectious disease risk, or theoretical risk—and that is that there could theoretically be viruses in the mouse side of the link, if you like, which could be activated upon implantation into humans. The risk is small; it's hard to get your hands on how big it is. There is exactly the same issue with pig cells.

The basic idea is 'Are these cells harboring some virus, which is sleeping in mice, but, if you poke it in somebody's head, it could ignite the problem?' And of course it is a theoretical risk. On the other hand, if you're a sufferer from Huntington's disease . . . if you had a treatment that was effective, I think you might accept the theoretical risk of some obscure virus.

D&MD: Yes, that's right.

Edwards: So it depends, to some extent, on the clinical implications for what you are trying to treat and, provided the disease is bad enough, it might be reasonable. Anyway, at the end of the day, I guess I have my opinion about it, but it's much more important what the FDA think about it. And the plan is to talk to the FDA in the first quarter of next year (2002), with a plan about how we can take the murine cells, and see what (the FDA) say. I hope they're going to say: 'OK, we've got these issues and we'd like to see you address them, but the principle's OK.' On the other hand, of course, they might say: 'Yes, well, we're not happy about this,' in which case it's a non-starter. But we're optimistic. But the only way to be sure is to take the meeting and get the facts before the agency.

D&MD: What sort of success have you had with the murine stem cells so far—in comparison with the human stem cell work?

Edwards: The simple answer is a lot, ironically, for two reasons. Firstly, because that's where we started with mouse cells, so we've got far more data on mouse cells than we ever had on human cells. Secondly, the genetic instability that we see with human stem cells we don't find with our mouse cells. What we've been able to show is that the mouse cell has a number of really quite remarkable properties, all of which we've been able to reproduce and publish, and most of the publications are on our Web site. But the basic idea is that you can take these mouse stem cells and can plant them into the damaged brain and the cells will migrate into the area of damage and, once there, they mature from being a stem cell into a mature neuron. And that's what all the excitement is about stem cells—the idea that you can put cells into an area that's damaged and get those cells to do the work of those cells that are damaged. And we've been able to show with this particular cell lines that we've worked with, MHP36 cells, really quite good restoration of function. So that's what the excitement is about for science. And, having shown that it will repair in rodent and in non-rodent brains, we don't see any reason, a priori, why it wouldn't do the same for humans.

D&MD: Another element of your program is the use of stem cells in drug discovery. How did that come about?

Edwards: The basic idea here is very straightforward. The idea is that human fetal stem cells are a very novel source of genetic material, because the genes that would be switched on at the stem cell stage are not necessarily the same genes that would be switched on in mature somatic cell. So what we're interested in knowing is: 'Do stem cells switch on genes that have previously not been identified?' In other words: 'Are stem cells potentially a completely novel source of genes?' And, similarly: 'If they really are switching on genes, are those genes translated into novel proteins?' And what we're doing through collaborations, including Psychiatric Genomics and VistaGen, in collaboration with previous results is to try and use the cells as a drug discovery tool to find a completely novel gene or a completely novel protein, or as a way of looking to see whether a chemical compound will influence cell maturation. A lot of people are looking into the factors that would make the stem cell mature. For example, you can take a brain stem cell and make that mature into the right type of cell you need for a certain disease, and you might use the cells to screen a library of compounds.

D&MD: How do the collaborations work with Psychiatric Genomics and VistaGen?

Edwards: It's really a case of each company doing what it does best, and, in our case, that means the ability to harvest and grow new stem cells. And in the other two companies this involves the ability to do genomics.

D&MD: Does it matter whether these are human stem cells or mouse stem cells?

Edwards: We're using human cells only. And that's because, by and large, we're interested in the humans really, as opposed to the mouse.

D&MD: Does it not matter about immortalizing the cells?

Edwards: No, we're not too concerned about it at this stage.

D&MD: I came across a reference to progress on work with neurines, for which you've in-licensed some rights from Novo Nordisk. How does that work?

Edwards: We in-licensed the rights to a family of compounds in May last year (2000) from my old company. The compounds were originally discovered as derivatives of an anti-epileptic drug, which Novo's researchers in the CNS area were very excited about. And then Novo actually decided not to work with CNS any more.

At the time they decided to do that, there were two or three compounds which were going in to development and which were effectively stopped by that decision. I knew about this particular family of compounds and thought they were interesting, and that's how we licensed them. What we've done is to progress them through Phase I. We've run five Phase I studies and we're now in Phase II trials for neuropathic pain, which is the type of pain you get when you've got shingles, neuralgia, and diabetes.

In both Type I and Type II diabetes, there are complications, called painful diabetic neuropathy, which is a painful disorder, typically of the lower legs, and you get a very unpleasant pain. You can't bear the bedclothes on your feet. Even a light stimulus is perceived as being painful. So it's not specifically Type I or Type II diabetes.

D&MD: If that was successful after Phase II trials, would you go back to Novo or would you look elsewhere after that?

Edwards: Our plan is not to go to Phase III ourselves. Our plan is to hopefully get some good results. If the results are good, I dare say there will be some interest from Novo. They have no buy-back rights, but relationships are still good of course, and, if they were really interested, I dare say they would communicate that.

D&MD: I came across a comment that the UK is a center of excellence of stem cell research. How are you positioned within that, would you say?

Edwards: I guess what I can say is that the UK, politically, is a good place to be doing stem cell research, because the attitude, generally speaking, among the government, the population, and scientists is quite favorable towards developing stem cells from therapeutic treatments.

As you may know, the US is in a situation that is slightly more confused. It's difficult there, and there has been talk about a reverse brain drain—about Americans wanting to come and really working stem cell research in the UK. I think there's an element of truth in that, but I really don't suppose there's more than one American who's come. But no matter how big the brain, one doesn't constitute a brain drain.

It is true that UK is a big center of stem cell research, and we are the only public stem cell company in the UK. As a result, we're pretty well connected to the people in the stem cell area. So I think there is a real prospect that the UK could become an area of stem cell excellence, and we will have a significant role to play in it. I would like to think that we could test ideas for stem cell therapeutics that might come to us preferentially because of that.

D&MD: Given your comments earlier about how tight finances are in all biotech, how good are ReNeuron's finances at this stage of development?

Edwards: The situation is that, when we announced our results, we had between 18 and 20 months of finance, and everybody would like more, but it's not bad. Compared to many other companies in the UK, it's quite good. We're looking to make sufficient progress so as to have a good story for our next financing round.

D&MD: So presumably you would have to be looking at that next year?

Edwards: Yes.

D&MD: I was wondering about the possible impacts of President Bush's announcement about embryo stem cell research on a company like yours?

Edwards: The issue that President Bush spoke to was embryonic stem cells only, and these are cells from the human embryo, but we don't do that.

In a way, I could say: 'Well we don't do that, therefore it doesn't affect is.' The reality is it does affect us because it's very difficult for people to understand the distinction between all these terms that are flying around about stem cells—whether you're talking about embryo, the fetus, or whether you're talking about therapeutic cloning or reproductive cloning. It's difficult for people who are not experts in the field to get their head round, and, as a result, I am frequently asked, you know, whether President Bush's announcement is bad for ReNeuron, because we do stem cell research, because people know it's stem cell research, but they don't really distinguish type. I guess, on balance, we can conquer it, largely because it would seem that being a stem cell company in the US would be difficult, whereas a stem cell company in the UK will do better. And, if you look at it on that simple level, it's been beneficial to us. But, in reality, it's not made any difference.

D&MD: There has been a lot of fuss over the issue of what happens with fetal remains at Alder Hey Hospital in Liverpool. How does ReNeuron view this in relation to its use of fetal brain cells?

Edwards: We access human fetal brain material from terminated pregnancies. They're typically about eight-to-ten-week fetuses.

And the situation is very different from Alder Hey. The situation at Alder Hey was that people were having stillbirths, or children (who) die shortly after birth, and having body parts removed from those children without consent.

In our case, we're talking about people making the decision not to have a child and, having made that decision, then being asked to give us full consent that any tissue that can be salvaged from the terminated pregnancy can be used in this way. So all that was really seen was donated to us with fully informed consent.

Also, the protocols that we use to do this are approved by the ethics committees of the hospitals that work with us. And the whole of this area in the UK is determined by something called the Polkinghorne Report. The Reverend John Polkinghorne, in 1989, was an Oxford theologian, who was asking questions like: 'If you are to do stem cell research at all, how could you do it in a way that was acceptable?' And his report has become the UK way of doing this.

We follow very closely the requirements to make sure that we are above board in what we do. Of course that doesn't mean that because you have a policy everybody likes it. You know I'm not saying: 'Oh, we follow the Polkinghorne Report,' because, you know, there will always be groups of people who don't like the use of fetal material, no matter what guidelines are set out. What I can say, unreservedly, is that we follow all of the legal regulatory requirements in the UK and the Polkinghorne Report, because that's guidance, although it's not law, and we're very meticulous in that.