Cellartis: Scotland Moves Another Step Closer to Global Leadership in Stem Cell Research.

ITI Life Sciences Initiates [pounds sterling]9.5 million R&D Programme to Develop Human Stem Cells for Pharmaceutical Research with University of Glasgow and Swedish Biotech Company Cellartis AB

STOCKHOLM, Sweden -- Scotland today took another step closer to global leadership in stem cell research with the launch of a new [pounds sterling]9.5 million R&D programme by ITI Life Sciences (Dundee, Scotland) to develop an automated process to produce high-quality human stem cells. This capability does not exist anywhere in the world and its development will put Scotland at the forefront of stem cell research as well as bringing closer the use of stem cells as therapeutics.

As part of this three-year programme, Swedish biotech company Cellartis AB, one of the world's most advanced stem cell companies and the world's largest provider of ethically-derived human embryonic stem cell ("hES") lines (i.e. cells with the potential to become any type of cell), is setting up an R&D and manufacturing facility in Dundee.

The ITI programme will also involve the University of Glasgow, which brings world-class expertise in the molecular mechanisms that control cell signalling and development. The work will be carried out by the University's Faculty of Medicine and Faculty of Biomedical and Life Sciences.

In bringing together this programme, ITI Life Science hopes to solve some of the main problems associated with producing high volumes of quality stem cells.

Stem cell research offers huge potential for the life science sector in Scotland. Scottish academic studies in this field, as well as the location of a number of international stem cell players here means it is viewed as one of the country's major strengths. The ITI programme and its focus on collaborative research will accelerate Scottish activity in this area and provide an endorsement of Scotland's prominence. Dr Eleanor Mitchell, ITI Life Sciences' acting CEO, said: "I am delighted to make this announcement today. We have been carefully considering how best ITI Life Sciences can contribute to the development of further expertise in stem cell technologies in Scotland. We believe this area to have vast potential both for improving the drug development process, and longer term, for enabling the development of effective cell therapies and regenerative medicine. As such, this programme is highly complementary to work planned at the new Centre for Regenerative Medicine, launched last week in Edinburgh. This programme is therefore very important for the ITI and we have engaged excellent participants whose capabilities give us the best chance of success. This first phase will, we hope, result in a robust and scaleable technology for producing human stem cells and we have the opportunity to further expand the programme should certain milestones be achieved. Furthermore, the launch of this exciting programme represents a positive example of the cooperation between ITI Life Sciences, Scottish Development International and Scottish Enterprise Tayside."

Mats Lundwall, CEO of Cellartis, said: "This is a very exciting programme and, on behalf of Cellartis, I am looking forward very much to participating in it. This very important collaboration is in line with our strategic goal of scaling up our human embryonic stem cell technology. Life sciences research in Scotland, particularly in the stem cell area, is recognised internationally and by establishing a research base in Scotland we hope to contribute to the growth of this sector while expanding our own business and operations in Scotland." Professor Steve Beaumont, Vice Principal, Research & Enterprise at Glasgow University, said: "There are essentially two key technical hurdles to be overcome before stem cells can be used extensively for drug discovery and therapies: you need a robust process to produce large numbers of stable cells to work with; and you need to control the way in which a stem cell changes into, say, a liver cell or a heart cell. Neither of these problems has been cracked yet, and it is these key technical hurdles that the ITI programme hopes to overcome. We are very pleased that Glasgow University has the opportunity to play a key part in what could be a highly significant advance."

Professor Ian Wilmut, who will be advising ITI Life Sciences on the Stem Cell Technologies programme, today said: "This is a very exciting announcement and I welcome the commitment of ITI Life Sciences, Cellartis and Glasgow University to the production of high quality stem cells for drug discovery. In the haste to use stem cells for cellular therapy, people often overlook their immense potential to provide the tools to study human disease."

Martin Togneri, Chief Executive of Scottish Development International, said: "Over the past year SDI has worked closely with Cellartis and we are extremely happy to welcome the company as the latest part of Scotland's Stem Cell research and development community. Cellartis is exactly the type of cutting-edge, knowledge-driven company Scotland needs to maintain its leading global position in this exciting field.

"Stem cell research can only be commercially successful if it is conducted on a global platform, in an open and collaborative environment. Scotland has worked extremely hard to create these conditions and Cellartis' decision to invest in Scottish operations once again validates our approach. The future development and promotion of Scotland's stem cell research community is a priority for the Enterprise Network and we look forward to maintaining its tremendous growth."

Further details of ITI programme

The ITI programme will use pre-existing hES cell lines (meaning that no new hES cells will need to be collected). This phase of the programme will be deemed a success if it results in a robust and standardised procedure for generating multiple human cell lines of interest to the pharmaceutical industry from undifferentiated hES cells.

Such cells will be extremely valuable tools for pharmaceutical companies, enabling them to test new drug candidates for activity (efficacy) and toxicity in biologically and disease-relevant human cells. For example, human heart cells may be used to test drug candidates designed for treating heart diseases, or human liver cells may be used to assess drug toxicity.

ITI Life Sciences will own all intellectual property generated by the programme. The market for cell-based tools within the pharmaceutical industry is large and rapidly growing: according to ITI Life Sciences' foresighting analysis, it was worth US$1.4 billion in 2001 and has grown at a considerable rate ever since. Rapid growth is expected to continue in the future and stem cell based tools are forecast to capture a significant share of this market.

As part of this programme SDI will be supporting Cellartis with a [pounds sterling]1.2 million Regional Selective Assistance grant. -ends-

Contacts For ITI Life Sciences Gordon Struthers Tel: [phone] Mob: [phone] [e-mail]

For International Trade and Scientific Media enquiries Mark Swallow / Chris Gardner Tel: [phone] [e-mail] Citigate Dewe Rogerson For Cellartis AB Mats Lundwall, CEO Tel: [phone] [e-mail] For Glasgow University Raymond Mc Hugh Tel: + 44 (0) 141 330 3535 [e-mail]

Notes to Editors

About ITI Life Sciences

ITI Life Sciences is a unique and entrepreneurial organisation contributing to Scotland's economical growth in life sciences; it aims to leverage Scotland's research excellence to develop new technologies targeting future market needs.

Publicly funded, but commercially driven, ITI Life Sciences funds and manages early stage technology research and development programmes in the life sciences arena. It selects programmes based on assessing future market needs, identifying technology opportunities, and responding to ideas, initiatives and proposals from the research and business communities. ITI Life Sciences works in collaboration with partners from industry, academia and the financial community.

ITI Life Sciences is one of three Intermediary Technology Institutes (ITIs) focused on important areas where Scotland has strong economic and business potential; the other areas are Techmedia and Energy.

ITI Life Sciences commenced full operations in April 2004. It plays a key part of Smart Successful Scotland, the Scottish Executive's strategy for economic growth. ITI Life Sciences is based in Dundee, Scotland.

For more information, see www.itilifesciences.com

About Cellartis AB

Cellartis AB is a Swedish biotechnology company focused on human embryonic stem (hES) cells for drug discovery, toxicity testing and regenerative medicine with the main objective to develop hepatocytes and cardiomocytes from these cells. The company is the world's largest single source of defined hES cell lines, and has developed more than 30 well documented cell lines. Two cell lines are listed on the NIH Stem Cell Registry and 20 in the UK Stem Cell Bank. In addition, Cellartis has successfully established and characterised the first truly xeno-free hES cell line, an important step towards the clinical use of hES cells. The company's strategy is to accelerate product development by working in partnership with academia and industry. Cellartis focuses on quality and scale-up cell production which are crucial factors for future growth. The company was founded in 2001, has 35 employees and is headquartered in Gothenburg, Sweden. For more information, please visit www.cellartis.com

About the University of Glasgow

The University of Glasgow is one of the UK's leading universities with an international reputation for its research and teaching and an important role in the cultural and commercial life of the country. The Faculty of Biomedical and Life Sciences (IBLS) is an internationally recognised centre for research and teaching in the biological sciences. With 140 permanent academic staff, 200 contract workers and almost 300 research students, IBLS is one of the largest centres for biological research in Europe.

With almost 800 staff, the Faculty of Medicine is among the largest in the UK and is at the forefront of leading-edge clinical interventions and discovery.

For more information, please visit www.gla.ac.uk

About Scottish Development International

Scottish Development International works to attract inward investment and knowledge to Scotland in order to help the economy grow. SDI also works to help Scottish companies do more business overseas and to promote Scotland as a good place to live, work and do business. It is jointly operated by the Scottish Executive and Scottish Enterprise. Its work is guided by the global connections theme of the Scottish Executive's Smart Successful Scotland strategy for economic development in Scotland. www.scottishdevelopmentinternational.com

About Regional Selective Assistance

Regional Selective Assistance (RSA) is the main national scheme of financial assistance to industry. It provides discretionary grants for investment projects that will create or safeguard jobs in Assisted Areas - areas designated for regional aid under European community law. The scheme is administered by the RSA Scotland unit of the Scottish Executive. Payment of RSA is made in instalments, typically over several years, provided that job and project expenditure targets are met. The amount quoted above represent the maximum grant potentially payable if the project is satisfactorily completed. Job numbers are based on the firms' forecast at the time a grant is offered, and are subject to change depending on future economic conditions and other factors affecting the business concerned. For further information on the scheme, go to www.rsascotland.gov.uk

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