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The announcement last week of Advanced Cell Technology's imminent closure is evidence that embryonic stem cell technology may be too nascent for fruitful biotech innovation, according to some industry analysts.

For the past 10 years Advanced Cell Technology (ACT) has been a spotlight company for endeavors in embryonic stem cell research and cloning. But in a Securities and Exchange Commission filing last Tuesday (July 15), the company said it was out of money and would likely be closing shop by the end of this month.

So what happened? Investment in embryonic stem cell research was at its peak when states including California and Massachusetts pointedly secured billions of dollars for the research, Stephen Dunn, director of research at Dawson James, told The Scientist. In response to such governmental enthusiasm, investors put money into stem cell companies such as ACT, Osiris, and Bioheart. But with almost no therapeutic advances to show for the cash, the hype has died down. Recent advances in adult stem cells, Dunn added, such as last year's reprogramming studies, have redirected investor focus. "We've had advances in adult stem cells and [FDA] approvals. Where do you think Wall Street money is going to go?" Dunn asked.

One company's troubles don't necessarily spell the end of embryonic stem cell research in biotech, Ren Benjamin, senior biotech analyst at Rodman and Renshaw, told The Scientist. "The reality of the situation is not that [embryonic stem cell] therapies don't work or have potential, but rather there is a relatively long road ahead of us to prove and develop these therapeutics." And companies will have to work harder to secure funding whenever they can, not just when they need it, he added.

But Dunn believes that ACT's recent trouble is not a sign of things to come, but rather a symptom of a current dearth of funding for this type of research. "The science is good," he said. But "there are a lot of hurdles to making a commercial success out of a company" focusing on embryonic stem cells. "They are still in the basic science stage. In reality, from a commercialization standpoint, they are far behind other companies."

ACT declined to comment on the current state of its research programs, but a statement from company CEO William Caldwell sent to The Scientist said: "Yes the company is suffering severely under the prolonged and worsening capital markets. So are GM and other auto manufacturers, most major retailers, airlines, oil services industry and almost all micro cap and emerging growth biotech firms. We are hunkering down to survive an environment which we believe is only going to get worse."

"We are killing ourselves to secure funding" to stay in business, a spokesperson for ACT told The Scientist.



Correction: In the original version of this article the company name Bioheart was misspelled. The Scientist has corrected the spelling and regrets the error.