Hey, Fools, it's Friday! Have fun this weekend. Go to the beach. Ride your bike in the park. Supplement your Sunday morning New York Times with our Rule Breaker crossword puzzle. Before you get on with that, though, let's finish the discussion we started yesterday about the tissue engineering industry.

The first criterion for a Rule Breaker is to be the top dog and first-mover in an important, emerging industry. Tissue engineering is clearly important -- and maybe even emerging. Biotechnology businesses have responded to the shortage of replacement organs by advancing biotechnologies to make and repair human tissue.

As I said yesterday, researchers are seeking to generate human organs in animals (xenotransplantation), in the laboratory, and in humans themselves. Here are some companies working in these three areas, with market cap and revenue numbers. This list is to start discussion and further research. Many of them are not pure plays either: They may have research in two or more of these areas and devote significant resources to other biotechnology industries. Keep in mind that biotechnology changes faster than teen fashions.

                                    CAP   REVENUE
                                   (in millions) 
Alexion Pharm. (Nasdaq: ALXN)     1,650    23.3
BioTransplant (Nasdaq: BTRN)        145     9.2 
Diacrin (Nasdaq: DCRN)              137     4.2

Adv. Tissue Sci. (Nasdaq: ATIS)     478    33.4 
Biomatrix (NYSE: BXM)               481    81.8
Curis (Nasdaq: CRIS)                715     3.5
Genzyme Tissue Rep. (Nasdaq: GZTR)  142    23.8
Integra LifeSciences (Nasdaq: IART) 192    56.2
LifeCell (Nasdaq: LIFC)              64    17.3
Organogenesis (AMEX: ORG)           482     8.3 
Geron Corp. (Nasdaq: GERN)          636     5.5
Guilford Pharm. (Nasdaq: GLFD)      541    20.6 
*StemCells (Nasdaq: STEM)           132     5.0

*StemCells was named CytoTherapeutics before 5/00.
These companies focus on genetically engineering pigs to provide organs that humans are less likely to reject. While early research suggests that there is no risk of viral transfer from pigs to humans, the FDA is sure to watch this carefully. Xenotransplantation research has reduced the tissue rejection problem somewhat, allowing pig organs in short-term "bridge" transplants. This interim step helps the patient either wait for a human donor organ or some other therapy.

While at first glance Alexion is the top dog on market cap alone, xenotransplantation is not its main business. Procter & Gamble's (NYSE: PG) pharmaceutical division gave the company a big financial boost to cooperate in cardiovascular research -- and may be responsible for the market cap.

Human tissue engineering
The obvious advantages to growing human tissue from a patient's own cells and then transplanting it is that you don't reject your own tissue.

Human tissue grown outside the body involves placing human cells on degradable polymer scaffolding inside a bioreactor -- a device to replicate the human body. The cells grow, secrete growth factors, and form a living tissue. Though the hope is for all sorts of complex organs, the current action is in the skin department -- with products for wounds, burns, and ulcers. Early products include Organogenesis' Apligraft, Advanced Tissue Sciences' Dermagraft (awaiting FDA action on its U.S. use for diabetic foot ulcers), and Genzyme Tissue Repair's Carticel.

Two developments are worth watching: Genzyme Corp. (Nasdaq: GENZ) and Biomatrix have proposed a merger between Genzyme Tissue Repair, Biomatrix, and Genzyme Surgical Products (Nasdaq: GZSP) into Genzyme Biosurgery. And, Curis is the newly public merger of Creative BioMolecules, a public tissue engineering company, and Ontogeny and Reprogenesis, two private tissue engineering and cell therapy companies. These mergers could provide a critical boost for the resulting companies.

Fool ElricSeven, a.k.a. Greg Carlin, posted these cautionary comments on the ElricSeven Research Corner discussion board. He thinks that it's one thing to produce effective living skin tissue, but that current techniques aren't going to cut it with the more complex liver, kidney, heart, and pancreas. That says to me that we're still talking science fiction.

[Greg and other biotech Fools will be leading The Motley Fool's Biotech Investing Online Seminar starting October 16. The five-week seminar can help you uncover and evaluate emerging biotech companies, while minimizing your investment risks in this exciting industry. For more information, click the link.]

Stem cells
We've recently covered Geron's stem cell business and related government funding of embryonic stem cell research. Human stem cells differentiate into all the cells in the body. Geron research recognizes that harnessing stem cells could mean growing unlimited supplies of organs. Standing in the way are obstacles to harvesting the stem cells, growing them in sufficient quantities, urging their differentiation into the cells for tissue you want, and making them work in the body. Also, Geron has no products in clinical trials.

Is tissue engineering a revolution worthy of your investing dollars?
Leaders in the field Joseph Vacanti and Robert Langer warn that we're only at the start of a 30-year process to replace and repair human organs effectively. In the meantime, it's possible for any of these companies to generate an exciting return for investors: Any breakthroughs will be rewarded with alliance dollars, easier access to financing, and higher stock prices.

Is there a top dog? I think two candidates stick out:

  1. Curis promises synergies. Its merger leverages strengths in several tissue replacement and repair biotechnologies. With a solid pipeline of product candidates, it's less dependent on the success of one technique than the companies specializing in xenotransplantation, human tissue, or stem cells. The Biomatrix/ Genzyme Tissue Repar/ Genzyme Surgical Products merger could provide similar synergies and benefits to the investor.

  2. A wild card? Everything I read stresses the importance of human protein growth factors to tissue engineering. Where have I heard this? Who has the key patents on growth proteins? Who is testing Repifermin, KGF-2, for wound repair? None other than Human Genome Sciences (Nasdaq: HGSI), the Rule Breaker Portfolio's newest addition. Maybe we've got the top dog there and didn't even know it!
What do you think -- is there a tissue engineering top dog and first-mover? Please take this poll and share your thoughts on the Rule Breaker Strategies discussion board.

Keep in mind that this is just the start: There are other criteria to determine Rule Breaking companies. If we find a top dog and first-mover -- and if the Breaker Team ever tells me the location of its secret clubhouse (sniff... brings up all those childhood memories of being ditched) -- we'll see how a tissue engineering first-mover stacks up.

Onward Fool!
--Tom Jacobs, TMF Tom9 on the discussion boards

Related Links:
  • The Transplantation Xeno-Derby, Signals Magazine, 7/20/00
  • ElricSeven's Research Corner
  • Biotechnology discussion board
  • Biotech Reports from Soapbox.com