In mid-2008, when every headline was screaming market meltdown and the end of financial life as the world knew it, Hiromitsu Nakauchi spotted an old friend at a school reunion.
Dr Nakauchi, professor of stem cell therapy at the Tokyo University Institute of Medical Science, had not seen much of Genjiro Miwa since the two left Azabu High decades earlier. But he knew his old friend’s career had something to do with investment. “Look at what is happening! You finance people have done so many terrible things,” the regenerative medicine pioneer told him. “It’s time you finally did something to make the world better.”
Almost a decade later, the company that the two men agreed to set up just a few weeks after that conversation is claiming a breakthrough that could transform the lives of millions across the world who have no access to reliable supplies of blood platelets — an essential treatment for some cancer patients and accident victims. It could also rescue Japan from a health crisis as it runs out of younger blood donors.
Megakaryon, the company that they formally founded in 2011, sits at the heart of a spiralling Japanese obsession with stem-cell based regenerative medicine. Almost 12 per cent, and rising, of the state’s ¥126bn ($1.15bn) discretionary medical research budget is now channelled into the area amid fears that the country could lose its leading edge to the US or another rival.
There is particular excitement about induced pluripotent stem cells, or iPS cells, which are created by removing mature cells from an individual — typically from the skin — and biochemically reprogramming them back to an embryo-like state. They can then be transformed into any type of cell needed to treat diseases. Early clinical applications range from making neurons to replace failing brain cells in Parkinson’s disease patients, to retinal cells to rescue the sight of people going blind.
The invention of iPS cells in Japan 10 years ago caused a scientific sensation, because it offered several advantages over the embryonic stem cells then being developed for regenerative medicine. For instance, they do not require the creation and destruction of human embryos, which some find ethically troublesome, and iPS cells made from a patient’s own cells are a perfect genetic match to his or her immune system, ensuring a higher success rate.
Last month, Megakaryon provided details of what it says is the world’s first process for mass-producing clotting platelets from iPS cells — essentially a blueprint for artificial blood factories. Clinical trials are due to begin in Japan and the US next year, in Europe the year after, and if all goes well the products may be routinely flowing in patients’ arteries by 2020.
The Kyoto-based company has not blazed this trail alone. In a country that is often described as difficult for entrepreneurs, dozens of iPS-related start-ups have exploded from the Kyoto hub, stimulated partly by state money. “There is a belief that stretches from basic researchers to government ministries that Japan is leading the world in creating a new industry around iPS,” says Mr Miwa.
Megakaryon is technically a private company. But one of its largest investors is the Innovation Network Corporation of Japan, a state-backed promoter of industries that the powerful trade ministry (METI) regards as important — and so the sense of national mission is everywhere. One bureaucrat involved in funding iPS projects describes Japan’s love affair with the field as the country’s own “Apollo moonshot”.
For all that iPS has re-ignited Japan’s fervour for cutting-edge scientific adventure and global competition, many scientists fear it could still become a victim of familiar failings: burdensome regulation, excessive government interference and a lack of nimble thinking from big business.
Looming over that are the broader risks that accompany any pioneering scientific endeavour: expensive cul-de-sacs, ferocious global competition, the threat of “leapfrogging” by a rival and, more fundamentally, whether you are backing the right horse.
Dr Nakauchi’s original plea to his old school friend, recalls Mr Miwa, was borne out of a fear that if he did not secure investment and create a business, Japan would fall behind foreign rivals in iPS despite discovering the technology.
By 2013, when Dr Nakauchi opened a laboratory in Stanford to conduct experiments not possible under domestic law, Japanese media turned on their hero and accused him of “making off” with the nation’s iPS treasure. Four years later, despite repeated claims that regulatory loosening was coming, Dr Nakauchi conducts his interview with the Financial Times from a lab in Stanford as new avenues of regenerative medicine and experiments on larger animals are still not permitted in Japan.
What started in 2007 as Japan’s cautious excitement over the human iPS cells as both a “made in Japan” source of new therapies and a powerful accelerant for drug development has been transformed into an article of national faith. The discovery, say trade ministry officials, was the antidote to a feeling that Japan was losing ground to China and its broader technological edge in areas from science to consumer electronics.
The awarding of the 2012 Nobel medicine prize to Shinya Yamanaka, who invented iPS cells a few miles away from Megakaryon’s labs, has redoubled Japan’s determination to mark this territory as its own. Prof Yamanaka suspects that the “home advantage” of inventing iPS does not in itself give Japanese researchers an edge over US and European rivals, yet he is satisfied the country is currently in the lead on regenerative medicine using iPS cells.
To bolster that position hefty public and corporate research budgets have been funnelled towards iPS projects. Megakaryon is now working with a consortium of 15 Japanese industrial groups including Otsuka Pharmaceutical and Nissan Chemical Industries. A government agency has been created, in part to marshal the bureaucratic might of the state into regenerative medicine.
The rewards, too, are starting to flow as pressure builds from cash-conscious Japanese universities to convert years of generously funded science into commercial products. In March, Masayo Takahashi, a central figure in Japan’s tight group of iPS pioneers, successfully transplanted iPS-derived retinal cells into the eye of a patient suffering from macular degeneration.
“iPS was invented in Japan. The government loves them. Researchers love them. Everyone wants to promote that, and the ministries are trying to make regulation easier,” she says. “Research budgets in Japan may have declined in general over the past 10 years, but funding for iPS has been strong.”
Two weeks ago, another Kyoto-based team led by Professor Junya Toguchida unveiled a schedule of clinical trials of the world’s first drug developed through testing on human iPS cells to treat a rare bone disease. “The key for Japan to keep its leadership position in drug discovery is to form effective collaboration between researchers and pharmaceutical companies,” Prof Toguchida says, adding that even he could not believe how significantly iPS technology was accelerating drug discovery processes.
Last week, another team at Kyoto University, led by Jun Takahashi, published research in Nature demonstrating that neurons derived from human iPS cells relieved symptoms of Parkinson’s when transplanted into monkeys’ brains — a vital step in using stem-cell technology to fight the disease.
Japan’s leadership in the field depends partly on the government’s continued financial support but also on its future interaction with other fields like robotics in which Japan excels.
Megakaryon was founded to address a problem faced by the world in general and in particular by Japan, which has the world’s fastest-ageing population. In 10 years, says Dr Nakauchi, the country will run short of blood platelets because there will be fewer donors and more cancer patients.
Unlike other resources where Japan has faced shortages, from oil to lithium, platelets cannot be imported or stored for long. The iPS cell, he says, is a beautiful solution. With the clinical challenges now solved, the next step is mass production — an engineering and industrial issue where the government has pulled together a consortium of companies.
Other regenerative medicine developments arising from the platelet work, such as using iPS cells to generate human organ factories, have hit against Japanese regulation.
“We have proof of principle in rats and mice but now we need to test it in larger animals like pigs. I’ve been asking Japan to amend the guidelines for six years and the committee at the highest level agreed [to do that] three years ago but there has still not been a change,” says Dr Nakauchi.
Education ministry officials directly involved in promoting the field warn that regulation represents one of the biggest hurdles to Japan maintaining its lead in the field. Yet observers overseas see no cause for Japanese concern.
“It is not just about money,” says Keith Thompson, chief executive of the UK Cell and Gene Therapy Catapult, an initiative to promote human cell manufacturing. “They have a good position in intellectual property, and they have shaken up their regulatory system to make it easier to get stem cell products into the clinic.”
An expert panel on bioethics has been convened under the Cabinet Office of Shinzo Abe to examine ways of bending guidelines to the benefit of Megakaryon and others, but concerns have been raised about how committed the prime minister is to the scheme. “It’s not that Abe is totally unaware of the issue but we don’t see he has shown high interest,” says one closely involved official.
But Makoto Suematsu, president of the Japan Agency for Medical Research and Development (AMED), disagrees. AMED, created on the instructions of Mr Abe in late 2014, is tasked with tackling the biggest systemic constraint on Japanese regenerative medicine: the lack of co-operation between the three key ministries, education, health and trade, involved in research funding.
By directing its own $500m budget, AMED has been asked to tackle the dramatic imbalance that means that the ministry of education funds 70 per cent of research while the health ministry funds just 30 per cent, skewing the finances towards basic research rather than the now more important task of producing clinical outcomes.
Yet seen from outside, Japan has an enviable lead in the race to commercialise iPS cells. Dusko Ilic, a stem cell scientist at King’s College London, says the country has no need to worry. “There is no doubting Japanese dominance of the field. The cutting-edge science is there and so is the corporate activity. No one else is even close.”