By Terence Chea
Washington Post Staff Writer
Friday, October 13, 2000; Page E05
Inside the laboratories of a Maryland biotechnology start-up, scientists are growing cells that may one day let doctors treat brain and spinal-cord diseases that have baffled medical science for decades.
Researchers at NeuralStem Biopharmaceuticals Inc. of College Park have developed a method to grow "master" cells, known as neural stem cells, that can grow into any cell in the human brain or spinal cord.
This technology could offer treatment for some of the world's most damaging and difficult diseases--Parkinson's, Alzheimer's, stroke, multiple sclerosis and other neurological ailments--by replacing damaged tissue with healthy cells grown in a laboratory.
"We will grow up neurons in a dish and transplant them back into a person to replace the dead or diseased cells," said Richard Garr, NeuralStem's chief executive, referring the type of brain cell often damaged by disease.
NeuralStem's treatment is far from medical reality, however. It is still in research and has yet to be tested in humans. In the meantime, the company has other ways to generate revenue using its patented technique for isolating and reproducing neural stem cells.
It is, for instance, licensing the cells to pharmaceutical companies for use in testing potential new drugs aimed at brain and spinal-cord disease. And it is using them to study the function of genes in the central nervous system and hopes to secure patents on its discoveries.
Now, four years after it was founded by a government brain scientist and a Washington real estate lawyer, the fledging biotech company is beginning to convince investors that its technology has not only medical promise but also profit potential.
NeuralStem has raised about $14 million in private equity funding so far this year and plans to double its staff of 18 scientists in the next two months, then double it again by March.
"It's a promising technology, developed in Maryland, by people we have confidence in after watching them for a couple years," said Richard C. Mike Lewin, secretary of Maryland's Department of Business and Economic Development, which last month invested $500,000 in NeuralStem through the state's Enterprise Investment Fund.
In May, the company got a crucial stamp of approval from Gene Logic Inc., when the Gaithersburg genomic information company invested an undisclosed sum in the College Park firm.
That was followed by a $5 million injection of funds by an investment company led by Jeong H. Kim, the former CEO of Landover-based Yurie Systems Inc., which Lucent Technologies Inc. bought for $1 billion in 1998.
NeuralStem is hoping to raise another $40 million to $50 million from institutional investors this winter to build up its genomic research capabilities, Garr said, and to go public within the next two years.
NeuralStem was founded in November 1996 by Karl Johe, a researcher who developed the technology at the National Institutes of Health, and Garr, a lawyer whose son Matthew had a large tumor removed from his brain several years earlier.
Matthew recovered, but the experience sparked in Garr an intense interest in brain-disease research. A few years later, Garr met Johe when their sons were classmates, and the two decided to take Johe's discovery into the private sector.
NeuralStem's patented technology enables scientists to isolate stem cells of the central nervous system, grow billions of copies and control the cells' growth into the three common cells found in the brain.
Scientists have implanted brain tissue from aborted human fetuses into Parkinson's patients, with positive results. But such treatment requires several fetuses for each patient, too many to treat all of the estimated 1 million Parkinson's patients in the United States.
Stem-cell research has been a politically delicate issue that has pitted antiabortion activists against medical researchers. New federal guidelines forbid the use of federal funds to destroy human embryos directly, but they permit federal research on stem cells taken from embryos by privately financed researchers.
NeuralStem is not the only company developing stem cells to treat neurological disorders. Stem Cells Inc. of Sunnyvale, Calif., and Layton Bioscience Inc. in Atherton, Calif., are developing similar techniques.
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