EMBRYONIC STEM CELLS IN DRUG
                                       John McNeish
                                       The completed sequencing of the human genome has identified numerous potential drug
                                       targets, which are expected to deliver the next generation of new medicines. However, for drug
                                       companies to realize this opportunity, they must rely on improved prognostic applications of high-
                                       throughput technologies, from target identification to preclinical compound evaluation. Reducing
                                       the timelines and attrition rate of new therapeutics for clinical evaluation requires cell-based
                                       methods for testing the efficacy and safety of new compounds. Drug discoverers are beginning
                                       to use stem cells as a new resource for increasing confidence in the mechanism of action of
                                       new targets and the safety of modulating their activity.

TARGET                                The application of mammalian stem-cell technology to           Drug discovery investigators worldwide have used
Gene product that therapeutic         drug discovery has afforded new opportunities for              genetic engineering in mES cells to derive highly sophis-
approaches are directed against       evaluating TARGETS and novel therapeutics in relevant          ticated GeMM to evaluate potential targets. The ability
in the search for new medicines.
                                      cell-based assays. The recent identification and isolation     to inactivate genes in vivo has become a central tool in
                                      of human stem cells might offer superior methods to            determining target function, selectivity and toxicity1,2;
(ES). Undifferentiated cells          format predictive, high-throughput assays that shorten         as a result, researchers in drug discovery have gained
typically derived from the inner      the timelines for the identification of new therapeutics       access to, and characterized, GeMM through both
cell mass of a blastocyst-stage       and reduce the amount of in vivo testing. The potential        internal and external resources.
embryo. In culture, these cells can
self-renew in the undifferentiated
                                      impact of these cellular systems is broad, and processes           Before the demonstration of the ability to engineer
state or reveal their pluripotentcy   that could be affected include target identification and       genetic modifications in mice, the species was rarely
on differentiation into cell types    validation, chemical screening, secondary assays for drug      used as either an in vivo clinical or physiological
of the three embryonic germ           efficacy, metabolism and safety studies, compound eval-        model. Therefore the challenge of applying technol-
lineages. Mouse ES cells readily
                                      uation for human genetic variants and the identification       ogies in GeMM required the miniaturization of estab-
differentiate into all somatic and
germ lineages when incorporated       of clinically relevant biomarkers (FIG. 1). This review will   lished in vivo assays, including behavioural tests for
into chimeric offspring through       describe the current application of stem cells in drug         clinical conditions of the central nervous system3,4,
blastocyst microinjection or          discovery and the advantages that these technologies           blood pressure monitors for cardiovascular diseases5,
morula aggregation.                   have compared with other cell systems. The focus will          and sophisticated micro computed tomography imaging
                                      be the use of murine EMBRYONIC STEM (ES) CELLS, including      equipment for the in vivo evaluation of tumours or
                                      the development of genetically modified mice, but the          metabolic changes in muscle, fat and bone6,7. These
                                      emphasis will be on the application of ES cells for in vitro   shifts in technology allowed GeMM to become a crucial
                                      methodologies. This review will also provide a forward-        factor in making decisions on the utility of established
                                      looking description of the potential applications and          and novel targets. The strength of this approach was
Genetic Technologies,                 contributions that advancements with human ES (hES)            demonstrated in an excellent review of KNOCKOUT (KO)
Pfizer Global Research and            cells could deliver to drug discovery.                         MOUSE phenotypes for targets for the top 100 best-sell-
Development, Groton                                                                                  ing drugs, which reported that the phenotypes of
06340, Connecticut, USA.
e-mail: mcneishjd@groton.
                                      Murine ES cells and genetically modified mice                  mouse KOs correlate well with the therapeutic effects in
pfizer.com                            The most expansive use for murine ES (mES) cells is the        humans of antagonists of the pathways modulated
doi:10.1038/nrd1281                   development of genetically modified mice (GeMM).               in the KO mice8.

70   | JANUARY 2004 | VOLUME 3                                                                                               www.nature.com/reviews/drugdisc

a                                                                                                        specific catalytic domains or the alteration of drug-
                                                                                                         binding sites in a target protein. In addition, single-base
                                                                                                         changes allow the expression of conserved human muta-
                                                                                                         tions, notably the presenilin 1 allelic variants associated
                                                                                                         with early onset Alzheimer’s disease12,13. In 1995, Jaenisch
                                                                                                         and colleagues14 demonstrated that replacement of the
                                                                                                         entire murine Myf5 gene into the murine myostatin
Drug safety

                                                                                                         locus resulted in functional redundancy in the develop-
                                                                                                         ing mouse. Drug companies have used this approach to
                                                                                                         replace entire murine genes with the orthologous human
                                                                                                         target gene. Specific examples of human target KIs have
                                                                                                         been reported for chemokine receptor-2 (CCR2) (REF. 15)
                                                                                                         and glucagon receptor16 by GlaxoSmithKline and Merck,
                                                                                                         respectively. These humanized mice could serve as
                                                                                                         important in vivo models for screening lead compounds
                                                  Drug efficacy                                          and are especially valuable when the lead chemical
                                                                                                         material is highly species selective.
                                                                                                            Random-mutagenesis strategies are also readily
                                                                                                         applicable to ES cells using gene trapping (reviewed in
                                                                                                         REF. 2) and chemical mutagens (for example, N-ethyl-N-
                                                                                                         nitrosourea (ENU)). These strategies have generated
b Idea                              Lead                          Candidate                  Clinic      important observations in GeMM. For example, gene
                                                                                                         trapping has recently corroborated human genetic
                                                                                                         studies on WNK1 kinase in the regulation of blood
                                                                                                         pressure17. The ENU-induced chemical mutagenesis
       Target                              Secondary                          Human
                        HTS                                 ADME                           Toxicology    approach has resulted in the rapid identification of a
       validation                          assays                             variant
                                                                                                         specific allelic series of genes in the transforming
Figure 1 | Applications of stem-cell technology in drug discovery. a | Numerous                          growth factor-β (TGF-β) signalling pathway in ES cells,
genomics-based technologies are now routinely applied to drug discovery. A central role for              which allows functional evaluation in GeMM18.
these technologies is validating the next generation of therapeutics from novel targets identified
through genomics. The aim of these technologies is to accurately identify the next generation
of targets that demonstrate therapeutic efficacy and safety. b | Embryonic stem cells have
                                                                                                         In vitro differentiation: induction
unique attributes that can be applied in drug discovery, from initial target ideas to clinical trials.   Since the isolation of mES cells in the early 1980s, inves-
The specific applications listed here are not necessarily listed in order of application. ADME,          tigators have come to recognize the intrinsic tendency of
absorption, distribution, metabolism and excretion; HTS, high-throughput screening.                      these cells to spontaneously DIFFERENTIATE into numerous
                                                                                                         cell types in a pattern reminiscent of the developing
                                                                                                         mouse embryo. Doetschmann and colleagues19 reported
                                                                                                         that altering the culture conditions resulted in develop-
                                           The pharmaceutical industry has wide reliance on              ment of EMBRYOID BODIES, structures similar to the embry-
                                       KO mice in applications associated with drug discov-              onic yolk sac, with differentiated cells for the three
                                       ery, varying from target validation to toxicity deter-            principal germ layers of the developing embryo: ecto-
                                       mination1. KO mice are valuable for understanding the             derm, endoderm and mesoderm (FIG. 2). Early studies of
                                       validity and safety of novel targets and are crucial in the       the in vitro differentiation (IVD) of ES cells lacked the
KNOCKOUT MICE                          advancement or withdrawal of new initiatives. The KO              ability to consistently derive purified populations of
Mice derived from gene-                mouse results in 100% antagonism in vivo and can dis-             specific cells types, and research on in vitro differentia-
targeting experiments in ES cells
                                       tinguish differences in selectivity between genetic and           tion technology was limited. In fact, with the rapid
with mutations in selected genes
that result in the complete            pharmacological inactivation or the presence of sec-              interest in gene targeting for the development of
ablation of gene expression.           ondary pharmacology. Important models of clinical                 GeMM, most of the effort directed towards ES cells was
These induced mutations are            conditions have been developed using KO mice,                     in the consistent maintenance of ES cells in an undiffer-
passed through the germline,           including the robust atherosclerosis model generated by           entiated state. This includes the identification of
allowing the derivation of novel
lines of gene KO mice for
                                       the inactivation of apolipoprotein E9,10. In addition, KO         leukaemia inhibitory factor (LIF) for the sustained
functional evaluation in vivo.         mice illuminate the mechanisms of drug metabolism                 culture of ES cells in an undifferentiated state without
                                       and toxicity. The use of 5-lipoxygenase KO mice                   feeder fibroblast co-cultures20. Although research on
HOMOLOGOUS                             demonstrated that the induction of hepatic enzymes                in vitro differentiation of ES cells was limited, investiga-
                                       was related to a specific chemical series of leukotriene          tors demonstrated a greater understanding of the differ-
Genetic recombination between
identical (or nearly identical)        B4 antagonists, and was not due to the pharmacology               entiated cells and the methods that are required to
double-stranded DNA                    associated with leukotriene depletion11.                          derive specific cell populations. It is noteworthy that
sequences. This process occurs             The precision of genetic modifications that can               Wobus et al.21 demonstrated that introducing nerve
at a relatively high frequency in      achieved by HOMOLOGOUS RECOMBINATION in ES cells allows           growth factor to embryoid bodies accelerated the devel-
ES cells, allowing the
engineering of gene-targeting
                                       the pre-planned replacement of mutations in endo-                 opment of neuronal cell populations. Further studies
vectors to direct pre-planned          genous murine alleles, which have been coined knock-ins           demonstrated that the spontaneously derived contrac-
mutagenesis in ES cells.               (KIs). Single-base changes allow the inactivation of              tile myogenic cells from embryoid bodies express genes

NATURE REVIEWS | DRUG DISCOVERY                                                                                                    VOLUME 3 | JANUARY 2004 | 7 1

                                               Zygote                                                                   Cell type          References: Murine       Human

                                                                                                                        Neurons                        28,38,48     104, 105
                                                                                                                        Glia                           29,35,36     105
                                                    Mouse 3.5 days                       Ectoderm                       Keratinocytes                  51
                                                    Human 7 days                                                        Dendritic cells                52


                                                                                                                        Cardiomyocytes                 19,22,23,34,43     103
                                                                                                                        Haematopoietic                 24,25,26,27
                                                                                                                        Adipocytes                     31
                                                                                                                        Chondrocytes                   32, 33
                                               ES cells                                  Mesoderm                       Osteocytes                     39,56
                                                                                                                        Erythryocytes                  53
                                                                                                                        Vasculature                    54                 107
                                                                                                                        Skeletal muscle                55

                                                    ~1 year

                                                                                                                        Pancreatic cells               37,50
                                               GeMM                                      Endoderm                       Hepatocytes                    57                 106
                                                                                                                        Pneumocytes                    58

                                      Figure 2 | ES cell differentiation potential. This figure demonstrates the pluripotential capacity of ES cells to deliver differentiated
                                      cells types from the ectodermal, mesodermal and endodermal lineages. The figure is presented with an axis to demonstrate the
                                      advantage in time to delivery of in vitro differentiated ES cells have compared with genetically modified mice (GeMM). Selected cell
                                      types of therapeutic relevance and the alignment with the germ lineage derivation for both murine and human ES cells are listed
                                      with the corresponding reference. ES cell, embryonic stem cell.

                                      of the α- and β-cardiac myosin isoforms characteristic of                cells in vitamin D and dexamethasone produces
                                      cardiomyocyte development in vivo22,23. The two-step                     osteoclasts cells39; similarly, co-culture of murine stromal
                                      method of generating cells committed to haematopoi-                      cells with haematopoietic growth factors produces
                                      etic lineages was developed using embryoid bodies that                   megakaryocytes40.
                                      were disaggregated and plated in methylcellulose24,25,                      A well-established inductive method to evaluate
                                      which resulted in haematopoietic progenitor cells of the                 PLURIPOTENCY, which dates back to 1970 (REF. 41), is ectopic
                                      various lineages. These haematopoietic cells26,27 tempo-                 implantation into syngenic or immune-compromised
                                      rally expressed cell-specific transcripts that mimicked                  mice. This method has been applied to test the pluri-
                                      the embryonic expression patterns and functional char-                   potency of ES cells42. Although a powerful approach,
                                      acteristics associated with terminally differentiated cell               this is not a practical method for deriving cells to be
                                      types. Of particular excitement was the ability to repro-                evaluated in drug discovery, because this method
                                      ducibly develop populations of neurogenic lineages                       requires manipulations of the cells in animals, results in
                                      and glial cells from embryoid bodies in response to the                  multiple cell types and the populations of cells generated
                                      morphogen retinoic acid28,29.                                            cannot be developed at scale.
Process in which a cell                   The differentiation of ES cells in suspension culture
progresses in a linear manner to      results in the emergence of various cell types and gene-                 In vitro differentiation: selection
a specialized state. Stem cells can   expression patterns resembling the normal developing                     Although inductive procedures have resulted in many cell
develop into any specialized cell     mammalian embryo25,30. An understanding of cellular                      types, to further enrich in vitro differentiation popula-
type – for example, neuronal,
muscle, hepatic and
                                      differentiation during embryogenesis has led to methods                  tions, investigators have developed selective methods that
haematopoietic cells.                 for enriching populations of specific cell types using                   are based on the expression of marker proteins. These
                                      culture conditions supplemented with established                         selective markers can include the expression of an anti-
EMBRYOID BODIES                       growth factors. Several examples of pharmacologically                    biotic-resistance gene, colorimetric markers or cell-
Spherical cell clusters observed
                                      relevant, specialized cell types derived by inductive                    surface markers. For example, highly purified cell
after spontaneous or induced
differentiation of ES cells in        differentiation protocols include adipocytes31, chondro-                 populations (>99%) have been generated through the
culture: Embryoid bodies show         cytes32,33, atrial and ventricular cardiomyocytes34, micro               use of antibiotic-resistance genes, transgenes and gene
differentiation that recapitulates    and macroglial cells35,36, pancreatic islet cells37 and                  targeting to insert a selectable marker directly into an
the early stages of mammalian         motor neurons38. Co-culture conditions have been                         endogenous cell-specific promoter. A transgenic
embryonic development,
including cell types derived from
                                      described that improve inductive differentiation methods                 approach resulted in the selective differentiation and
endoderm, mesoderm and                for specific cell populations. For example, the co-culture               purification of cardiomyocytes using a neomycin-
ectodermal lineages.                  of undifferentiated mouse ES cells with ST2 stromal                      resistance marker under the control of the α-cardiac

72   | JANUARY 2004 | VOLUME 3                                                                                                              www.nature.com/reviews/drugdisc

                                    myosin heavy-chain promoter43. In addition , a gene-              OCT4) and NANOG61,62,63, will most likely aid the identi-
                                    targeting approach in ES cells — which directs cell-              fication of PLURIPOTENT cell lines. In addition, determining
                                    type-specific expression of the selectable marker either          the biochemical differences between pluripotent embry-
                                    through introduction into the coding sequence or                  onic and precursor stem cells — or ‘stemness’64,65,66 —
                                    without disrupting the coding sequence using a                    will allow clonal isolates of precise populations of clini-
                                    dicistronic vector — has been reported44. This                    cally relevant cellular reagents to be derived. Molecular
                                    approach led to the purification of neuronal cells                profiling using array-based genome-expression profiling
                                    through the precise introduction of a neomycin-                   with reproducible methods of ES cell in vitro differentia-
                                    resistance marker into the murine Sox1 locus45. The               tion will result in an improved understanding of the
                                    incorporation of colorimetric markers, such as β-galac-           genetic hierarchy operating in the development of
                                    tosidase and enhanced green fluorescent protein                   normal mammalian cell types67. Molecular profiling, in
                                    (eGFP), into gene-targeting vectors has resulted in selec-        concert with genetic and pharmacological manipula-
                                    tive protocols that have been successfully applied to the         tion, will also prove enlightening in the functional
                                    isolation of purified cardiac precursors46. Fluorescence-         evaluation of therapeutically relevant pathways in vitro.
                                    activated cell sorting (FACS) has been applied to cell-
                                    specific surface markers of ES cell derivatives, such as the      Stem cell advantages
                                    isolation and purification of macrophage by sorting for           Because all therapies are directed against targets of
                                    the interleukin-1 (IL-1) receptor47.                              normal or pathological cells, the availability of reliable
                                        Investigators have also expressed specific genes to           cell types is essential for their successful application in
                                    influence the in vitro differentiation of ES cells. For           the drug discovery process. Cells for drug discovery
                                    example, dopaminergic neurons are a target cell for               research have typically been obtained from primary
                                    psychiatric diseases; however, in vitro methods for this          tissue, immortalized tumour cells or genetically trans-
                                    specialized cell type are limited. The overexpression of          formed cells. Primary mammalian cells are genetically
                                    rat Nurr1 complementary DNA in ES cells, combined                 normal (that is, diploid), yet have very limited survival
                                    with a specific inductive protocol for mid- and hindbrain         times in culture, which affects the applicability of primary
                                    neurons, resulted in a greater than tenfold enrichment of         explants in screening technology. Also, the inconsistent
                                    dopaminergic neurons48,49. These cells demonstrated               availability, and the inherent donor variation, of human
                                    molecular and functional properties associated with               primary cells types restricts opportunities for the use
                                    dopaminergic neurons, including selective secretion of            of primary cells in drug discovery. Immortalized cells
                                    dopamine in vitro and electrophysiological characteris-           derived from tumours or oncogenic transformation
                                    tics and behavioural improvements when engrafted into             offer more consistent sources of cellular reagents, which
                                    a rat model of Parkinson’s disease. Constitutive overex-          makes them suitable for use in high-throughput screen-
                                    pression of murine Pax4 in ES cells, combined with an             ing (HTS) and secondary assays. Immortalized cells can
                                    inductive protocol for pancreatic cells, resulted in an           be maintained indefinitely and transfected with DNA
                                    enrichment of nestin-positive progenitor and insulin-             constructs that express target proteins or reporters.
                                    producing β-cells versus other cells producing hormones           However, these cells are typically genetically abnormal
                                    (for example, glucagon) found in pancreatic islets50. The         (ANEUPLOID), and conclusions based on gene function
                                    Pax4 protocol resulted in functional cells that secrete           could be limiting. Stem cells offer considerable advan-
                                    insulin in response to glucose or sulphonylurea and               tages, compared with primary or immortalized cells, in
                                    which have improved glucose homeostasis after trans-              that these cells are genetically normal, demonstrate uni-
                                    plantation into streptozotocin-induced diabetic rats.             form physiological responses, are maintained in culture
                                                                                                      for long periods of time and are grown at scale, all of
                                    In vitro differentiation: summary                                 which enhances their usefulness in screening processes.
                                    Various methods for directing the in vitro differentiation        Furthermore, the unique strength of ES cells is their
                                    of mES cells can efficiently deliver cells of all three germ      ability to undergo homologous recombination at a rela-
                                    lineages (that is, endoderm, mesoderm and ectoderm).              tively high frequency, which enables the selection of
                                    In fact, the differentiation of mES cells has recently been       reproducible and precise genetic modifications of the
                                    shown to form germ cells, including mature oocytes59              endogenous genome. However, it should be noted that
                                    and spermatocytes60. A list of various murine cell types          homologous recombination has been demonstrated at
                                    reported by inductive and selective methods from mES              very low frequency in other cell types, including trans-
                                    cells is provided in FIG. 2. For completeness, in vitro differ-   formed cells68 and haematopoietic stem cells69.
                                    entiated cell types from hES cells are included. In the               In summary, mES cells offer several important
                                    near future, it is likely that consistent and reproducible        advantages over primary or immortalized cells in drug
                                    in vitro differentiation protocols for purified cells of all      discovery applications (TABLE 1). This results in more
The ability to differentiate into
all cell types derived from the     germ lineages will be available to drug discoverers.              reproducible and accurate evaluations of targets in func-
three embryonic germ lineages:      FIGURE 3 summarizes the inductive and selective differ-           tional and screening paradigms. It is likely that as tech-
ectoderm, mesoderm and              entiation methods investigators have used to derive               nology advances with regard to stem cells derived from
endoderm.                           populations of pharmacologically relevant cell types.             other sources and species, the same level of precise
                                    Furthermore, the recently improved understanding of               genetic modifications could be available to investigators
Cells with abnormal number of       the transcriptional machinery associated with stem-cell           and result in improved applications in basic biology and
chromosome sets.                    potency, including the roles of POUSF1 (also known as             drug discovery.

NATURE REVIEWS | DRUG DISCOVERY                                                                                                 VOLUME 3 | JANUARY 2004 | 7 3

                                 Embryonic stem cells                                                                    Target evaluation: undifferentiated ES cells
                                 Spontaneous:         Growth factors                                                     The understanding of gene function in drug discovery is
                                 LIF negative         Morphogens
                                 Feeder-less          Co-culture
                                                                                                                         fundamental to the successful management of target
                                                      Serum-free media                                                   portfolios. The use of undifferentiated ES cells to gain
                                                                                                                         functional information rapidly and without the costs
                                                                                                                         required to generate and evaluate KO mice has proven
                                                                                                                         to be effective. The first reported example of this
                                 Embryoid bodies, stem, precursor and                                                    approach by a pharmaceutical company was the devel-
Differentiation of ES cells

                                 differentiated cells                                                                    opment and evaluation of nuclear factor-κB (NF-κB)
                                 Genetic modification:     Growth factors                                                precursor p105 in ES cells at Bristol-Myers Squibb73.
                                 Antibiotic resistance     Cell-surface proteins
                                 Gene overexpression                                                                     The genetically modified ES cells had specific deletions
                                 Fluorescence marker                                                                     in the C-terminal region of the p105 gene, which
                                                                                                                         encodes the ankyrin-containing domains, but yet main-
                                                                                                                         tained the N-terminal coding region for a functional
                                               Selection                Cell sorting
                                                                                                                         p50 protein that associates with RelA and complexes
                                  Fully differentiated cells — enriched populations
                                                                                                                         with inhibitor of NF-κB-α (IκB-α). These cells
                                                                                                                         demonstrated that p105 was important in the control
                                                                                                                         of p50 dimerization and the regulation of NF-κB-
                                                                                                                         binding activity of p50-RelA complex, detailing the role
                                                                                                                         of NF-κB in inflammatory responses.
                                                                                                                            An important application of mES cells has been to
                                                                                                                         the evaluation of target genes that result in embryonic
                                                                                                                         lethality in KO mice74, because if gene-deficient
Figure 3 | Strategies to derive purified populations of in vitro differentiated ES cells.                                embryos die in early development then evaluation is
This figure summarizes the methods presently used to first differentiate ES cell populations,                            limited. Investigators have used ES cells deficient in
and second to purify these populations for use in applied or basic research programs. The
                                                                                                                         target genes in the undifferentiated state to evaluate the
approaches are considered general methods, and specific examples of these methods are
included in the text and references. The specific differentiated cell populations shown here were
                                                                                                                         gene function in vitro. ES cells deficient for the gene
selected based on clear differences in cellular morphology. The examples are hepatocytes,                                encoding the tumour suppressor BRCA1 have increased
neurons and glial cells from left to right. ES cell, embryonic stem cell.                                                sensitivity to DNA-damaging agents with DNA-repair
                                                                                                                         insufficiency75 and reduced rates of homologous recom-
                                                                                                                         bination compared with wild-type ES cells76. These
                                                                                                                         observations, and the association with RAD51, indicate
                                                           Derivation of gene null ES cells                              a key role for BRCA1 in double-strand DNA repair.
                                                           To facilitate the functional evaluation by mutagenesis
                                                           in ES cells, methods have been described for the inacti-      Target evaluation: differentiated ES cells
                                                           vation of both target alleles in undifferentiated ES cells.   Investigators have demonstrated that cells derived from
                                                           This requires developing two unique targeting vectors         ES cells differentiate in vitro reflecting the cellular physiol-
                                                           that take advantage of selection protocols using antibi-      ogy of clinically relevant primary cells (BOX 1). Gene
                                                           otic-resistance genes (for example, neomycin, hygro-          inactivation can be applied to IVD systems directly to
                                                           mycin and puromycin) or purine metabolism in                  evaluate complex molecular events in signalling path-
                                                           hypoxanthine phosphoribosyl transferase-negative ES           ways that could be relevant to decisions on target
                                                           cell lines (HAT selection). Alternatively, after initial      advancement. For example, Minamino et al.77 evaluated
                                                           gene targeting in ES cells, site-specific recombination       the role of mitogen-activated protein kinase kinase
                                                           using the Cre/lox or Flp/frt system can be used to excise     kinase-1 (MEKK1) in a cellular model of post-
                                                           the selectable marker, followed by repeated targeting         ischaemic reperfusion injury in ES cell-derived car-
                                                           using the original vector to inactivate the second            diomyocytes. The MEKK1-deficient cardiomyocytes
                                                           allele70. These methods although effective have limita-       were significantly more sensitive to apoptosis induced
                                                           tions, including the need to generate multiple targeting      by reactive oxygen species, which resulted from
                                                           vectors and reduced efficiency in the second targeting        increased expression of tumour-necrosis factor-α
                                                           reaction. An alternative approach demonstrated that           (TNF-α) by the cardiomyocytes. This was the result of
                                                           increased selection pressure with G418, an aminglyco-         the specific inhibition of stress-induced signalling via the
                                                           side antibiotic that is structurally related to gentamycin,   c-Jun kinase (JNK) pathway. This direct approach
                                                           in +/– ES cells targeted with a neomycin-resistance           clearly allows time-saving evaluation of targets relative
                                                           gene could gene convert the + allele resulting in null        to KO mice and can guide decisions on resources allo-
                                                           –/– ES cells71. This method does not result in –/– ES         cated to the generation of the KO mice.
                                                           cells lines for all targeted cells and might be a conse-         Alternatively, ES cells deficient in target genes have
                                                           quence of gene targeting with a neomycin-resistance           been evaluated following in vitro differentiation into
                                                           gene that is less resistant to G418 selection. Finally,       specific cell types. The mitogen-activated protein kinase
                                                           investigators have derived –/– ES cells from blastocysts      p38-α is a key component of the novel class of com-
                                                           derived from targeted mouse lines when wishing to             pounds known as cytokine suppressor anti-inflam-
                                                           perform in vitro analysis72.                                  matory drugs (CSAIDS). Allen et al.45 produced p38α

74                            | JANUARY 2004 | VOLUME 3                                                                                             www.nature.com/reviews/drugdisc

                                     Table 1 | Characteristics of commonly used cell types in drug discovery
                                     Cell types              Genetic stability Growth                   Quantity     Cellular variability         Gene targeting
                                     Tumour or              Aneuploid             Abnormal              Unlimited    Change over time             Very limited
                                     transformed cell lines                                                          in culture
                                     Primary cells           Diploid              Do not proliferate    Restricted   Highly donor-dependent       No
                                     Embryonic stem cells    Diploid              Normal                Unlimited    Uniform                      Yes

                                    –/– ES cells that were differentiated and FACS sorted to           cells deficient in the murine orthologue. An important
                                    isolate IL-1-receptor-positive macrophages. The p38α-              feature of cell-based reporter screens is that they require
                                    deficient macrophage had reduced response to the                   fewer cells than cell-based functional screens, which
                                    cytokine IL-1, when assayed for IL-6 production, estab-            allows formatting in ultra-HTS or miniaturized HTS.
                                    lishing a mechanism of action of p38-α in the IL-1
                                    signalling pathway. In addition, results from KO cells             Teratology/toxicity screening
                                    derived from ES cells can provide clues as to the devel-           A leading cause of drug candidate attrition is reproduc-
                                    opmental cause of embryonic lethality. KO mice for the             tive toxicity. As stated previously, the cellular and tissue
                                    ryanodine receptor (RyR2) are embryonic lethal78.                  differentiation that generates the three germ lineages
                                    Cardiomyocytes derived from RyR2 –/– ES cells demon-               (ectoderm, endoderm and mesoderm), and the tempo-
                                    strated that the release of Ca2+ from the sarcomplasmic            ral expression of genes, in ES cell IVD parallels the
                                    reticulum of normal cardiomyocytes occurs exclusively              pattern seen in the normal developing mammalian
                                    through RyR2 and is crucial for modulation of the beat-            embryo. This led to the hypothesis that ES cells could be
                                    ing rate of the myocardium79. These results indicated to           applied to in vitro teratology or toxicity assays83. The use
                                    the authors that the RyR2 effect on Ca2+ homeostasis               of ES cells to evaluate teratogens has been championed
                                    and beating rate probably accounts for the lethality               at the European Center for the Validation of Alternative
                                    observed in RyR2 KO mice.                                          Methods (ECVAM). In 2001, the ECVAM Scientific
                                        The implantation of undifferentiated ES cells into             Advisory Board approved an embryonic stem cell test
                                    ectopic sites in mice results in TERATOMAS , which comprise        (EST) as a scientifically validated test for embryotoxicity
                                    cells from all three embryonic germ lineages and there-            in vitro84,85. This group recommended that although the
                                    fore demonstrate the potential for differentiation of new          EST could not replace current evaluation in vivo, this
                                    ES cells. Investigators have applied this technique to eval-       method could reduce or refine the use of animal pro-
                                    uate the role of target gene expression on the cell prolifer-      cedures. The EST is based on the effects that known
                                    ation and differentiation of the resulting teratoma. This          compounds have on mES cell differentiation of car-
                                    type of analysis has demonstrated a reduced proliferative          diomyocytes in hanging drop cultures86. The EST was
                                    capacity of ES cells null for cyclooxygenase 2 (COX2)              used to test 20 coded compounds87 that were blindly
                                    compared with COX1-deficient or wild-type ES cells80.              distributed to four European testing laboratories. The
                                    Altered differentiation potential in ES cell that were             participation by Novartis and Schering as test sites
                                    null for N- and P-cadherin has been reported81. This               reflects the positive attributes this assay could have on
                                    approach could result in an effective strategy to evaluate         preclinical teratology evaluation. These groups’ results
                                    the role of potential cancer targets on cell proliferation.        were 100% predictive for strongly embryotoxic com-
                                                                                                       pounds, and 70% and 72% predictive for compounds
                                    Screening applications for stem cells                              of weak embryotoxicity or non-embryotoxic, respec-
                                    Innovative approaches in HTS technology have increased             tively88; furthermore, there was a 78% correlation
                                    the scope of applications for cell-based methods in drug           between in vivo and in vitro data. Accordingly, the
                                    discovery. These technologies, and developments in                 Scientific Advisory Board for ECVAM unanimously
                                    automation, have resulted in the emergence of cell-based           endorsed the EST as a scientifically validated test,
                                    assays, which were previously evaluated in single                  which is ready to be considered for regulatory purposes.
                                    cuvettes, that can be used in 96, 384 and 1,586 well               The next hurdle for alternative screening technology
                                    formats82. The ability to precisely modify the murine              will be the reception this approach receives from regu-
                                    genome using gene targeting in ES cells with or without            latory agencies in the United States or Europe during
                                    differentiation of the genetically modified cells into var-        drug approval.
TERATOMA                            ious cell types allows the application of this technology              To further explore the evaluation of alternative cell-
A rare tumour type that             to the identification of novel drugs through HTS. mES              based assays for developmental toxicity, investigators
typically arises in the gonads
                                    cells can be modified to incorporate reporter genes                developed ES cells lines that express reporters when they
and demonstrates mixed cellular
populations of all three            directly into a gene promoter or as a dicistronic fusion           differentiate into specific cell lineages. The aim is to over-
embryonic germ layers.              gene such that agonists or antagonist compounds that               come the limitation in quantitative assessment of drug
Investigators can assess the        interact with the gene product can be readily identified in        actions by focusing the evaluation of toxicity in selective
differentiation capacity of stem    HTS methods. The human target gene or human gene-                  cell and tissue types, rather than the heterogeneous cell
cells by injection of pluripotent
cells into laboratory animals
                                    reporter fusion products can be expressed through the              populations observed during spontaneous in vitro differ-
and inducing the formation of       replacement of the murine endogenous orthologue                    entiation of ES cells. Cell lines that express GFP selec-
teratomas in situ.                  directly as a knock-in or through complementation in ES            tively in cardiomyocytes89 and endodermal lineages90

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                                                                                                 mice produced from mES cells up to 140 passages92. We
 Box 1 | ES cells in defining gene function: the erythropoiesis example
                                                                                                 have recently developed protocols to significantly
 A robust readout in a cell-based assay is required to define gene function, whether using       increase the scale of mES cell-derived embryoid bodies
 genetic, biological or chemical tools. Colorimetric reporters are commonly introduced           through bioreactor culture methods. These embryoid
 to monitor changes in gene expression in cell-based assays. A naturally occurring               bodies can undergo cryopreservation and reproducible
                                                                                                 thawing to derive differentiated cell types with expan-
 colorimetric reporter is the expression of haemoglobin in erythrocytes. In order to
                                                                                                 sion and inductive protocols (J. McNeish, unpublished
 evaluate genes that regulate erythropoiesis, potential targets can be inactivated by
                                                                                                 data). This embryoid bodies protocol allows for the
 homologous recombination in undifferentiated ES cells which are then differentiated             rapid delivery of differentiated cells, with or without
 into red blood cells. The dual-specificity tyrosine-regulated kinase (DYRK) family are          genetic modifications, for analysis. Protocols are also
 conserved protein kinases implicated as regulators of cellular growth and development.          being developed for the expansion and cryopreserva-
 A member of the DYRK family that is principally expressed in erythroid progenitor cells         tion of specific ES cell-derived precursor or terminally
 is the regulatory erythroid kinase (REDK). To understand the functional role of REDK            differentiated lines (FIG. 4). Some cells cannot be cryo-
 in the development of mature red blood cells, REDK –/– ES cells were derived and                preserved and recovered in the differentiated state (for
 differentiated according to established erythropoiesis protocols51. As demonstrated in the      example, neurons). However, protocols have been estab-
 figure, with in vitro differentiation a significant increase in the number of erythrocytes is   lished that enable the production of functional neurons
 consistently observed in the REDK –/– ES cells compared with wild-type control ES cells.        from thawed progenitors93. Compared with undifferen-
                                                                                                 tiated ES cells, the delivery of embryoid bodies, pre-
 This indicates that the expression of REDK is important in the early stages of
                                                                                                 cursor or progenitor cells is preferred by cell-culture
 erythropoiesis and functions as a lineage-restricted, stage-specific suppressor of the
                                                                                                 experts in various disease areas, which therefore
 development of red blood cells. This example demonstrates the advantages stem cells can         increases the opportunities to use these reagents in drug
 bring to functional genomic approaches, including a reliable cell-based assay that allows       discovery programmes.
 the modification of gene expression or protein function using various methods in a rapid
 and potentially high-throughput manner118.                                                      Human gene variant screening
                                                                                                 The tremendous progress in human genomics has
     Wild type                                   REDK knockout                                   resulted in the identification of variants of target genes
                                                                                                 from ethnic populations around the world; however, in
                                                                                                 most instances little is known about the function of
                                                                                                 these gene variants. Knowledge of the effects of single
                                                                                                 nucleotide polymorphisms (SNP) is required to deter-
                                                                                                 mine whether genetic variants result in altered expres-
                                                                                                 sion of the target gene, or alters the response of the gene
                                                                                                 product to therapeutic compunds. An improved under-
                                                                                                 standing of functional human variants could facilitate
                                                                                                 several aspects of the drug discovery process, from
                                                                                                 target validation, understanding pharmacokinetic dif-
                                                                                                 ferences and improving drug safety, to identifying those
                                                                                                 subjects to include/exclude in clinical trials. Functional
                                have been reported. To facilitate this assessment, specific      pharmacogenomics approaches to determine the rele-
                                approaches were developed, including FACS for car-               vance of DNA variation could become a specific area of
                                diomyocytes and a fluorescence microscope image                  drug discovery in which ES cells become widely used.
                                analysis for endodermal cells within embryoid bodies.                The ability to precisely modify target sequences in
                                Compared with immunological or molecular readouts,               mES cells has enabled the development of GeMM with
                                fluorescence-based approaches allow the quantifiable             engineered variations in conserved DNA codons in the
                                measurement of dose-dependency in toxicity assays and            endogenous murine genome (knock-in), as well as
                                development of high-throughput methods. A limitation             the generation of transgenic mice in which murine
                                of in vitro teratology assays is the absence of maternal         genes have been replaced with human paralogues con-
                                metabolism enzymes in the system, as evidenced by the            taining specific SNPs. An in vivo approach to a target
                                inability of the EST to identify cyclophosphamide, a             gene of interest with multiple GeMM lines for specific
                                strong pro-teratogen that forms the active metabolite on         human variants has limitations including the time to
                                first-pass metabolism89,91.                                      deliver the variant GeMM, the cost of maintaining
                                                                                                 several GeMM lines and the chemical requirements for
                                Scaling up growth of ES cells                                    the in vivo validation of potential drugs. Therefore, an ES
                                For stem cells to be applied to drug discovery, methods          cell-based in vitro approach to evaluate multiple human
                                will need to be developed that facilitate the operational        variants is a preferred strategy and hastens the under-
                                use of these reagents. Specifically, this will require the       standing of variant function in drug discovery processes.
                                ability to stably expand and preserve undifferentiated ES            Of course, the use of murine cells to understand
                                cells, or ES cell-derived cells, at a scale required for cell-   human gene function by complementation must be rig-
                                based screening. Undifferentiated mES cells can be               orously scrutinized. Although the completion of the
                                grown almost indefinitely and maintain pluripotentcy,            sequencing of the human and mouse genomes has
                                as demonstrated by germline competency in chimeric               demonstrated robust synteny between these two

76   | JANUARY 2004 | VOLUME 3                                                                                            www.nature.com/reviews/drugdisc

                                                                                                          numerous passages and population doublings without
                                                                                                          affecting their genetic stability97. An evaluation of hES
                                                                                                          cells, in comparison with mES cells, demonstrated
Undifferentiated ES cells                                                                                 similar expression of POUSF1 and telomerase94,97.
                                                                                                          However, hES cells differ from mES cell lines in their
                                                                                                          expression of cell-surface markers98, and the rate of
                                                                                                          growth of hES cells is slower, with reported doubling
                                                                                                          times approximately threefold longer than for mES
                                                                                                          cells99. Unlike mES cells, hES cells do not maintain an
   Embryoid bodies                                                                                        undifferentiated state and proliferate in the presence of
                                                                                                          LIF. This limitation was overcome when investigators at
                                                                                                          Geron97 reported the development of feeder-independent
                                                                                                          methods for growing hES cells that use mES cell-con-
                                                                                                          ditioned media. These methods will facilitate the
                                                                                                          scaled-up growth of hES cells that is required for their
       Precursors                                                                                         use in drug discovery, and regenerative or transplanta-
                                                                                                          tion applications.
                                                                                                              hES cells have demonstrated in vitro differentiation
                                                                                                          into functionally relevant derivatives of the three
                                                                                                          embryonic germ layers100,101. Inductive in vitro differenti-
                                                                                                          ation of hES cells using eight different growth factors
   Differentiated cells                                                                                   followed by expression profiling for 24 different cell-
                                                                                                          specific transcripts has been evaluated102. This compre-
                                                                                                          hensive analysis indicated that the human cells have a
Figure 4 | Growth and delivery of ES cells and derivatives for use in drug discovery                      broad capacity for enrichment into numerous cell types.
applications. The figure illustrates a typical ES cell differentiation from undifferentiated ES cells     Cardiomyocytes derived from spontaneous differentia-
(a) to embryoid bodies (b), followed by precursor cells (c), and fully differentiated and purified cell   tion have functional characteristics, including subcellular
populations (d). The ES cell differentiation used in this figure as an example is a macrophage.           structures, cell-specific protein expression, Ca2+ flux
Methods have been developed to scale the growth at each level of the differentiation protocol.
                                                                                                          with electrical activation and appropriate pharmaco-
Additionally, cryopreservation and thawing techniques at each specific stage of the
differentiation process enable rapid utilization of these reagents by drug discovery investigators.
                                                                                                          logical responses; furthermore, these cells show positive
Many cell types — for example neuronal cell-types — cannot be cryopreserved and thawed at                 and negative chronotropic responses with β-agonists and
the fully differentiated state.                                                                           muscarinic agonists, respectively103. Inductive proto-
                                                                                                          cols to identify enriched populations of neuronal cells
                                                                                                          and precursors have been reported104,105. The neuronal
                                    species, there are hundreds of genes that are not found               precursors, when transplanted to the ventricles of
                                    in both species and significant differences in the expres-            neonatal mice, resulted in widespread migration and
                                    sion pattern of many genes. The use of hES cells or adult             differentiation into mature neuronal and glial cells in vivo,
                                    stem cells that are engineered to express specific variants,          without the formation of teratomas105. The generation
                                    or which are isolated from individuals or ethnic popula-              of human hepatocyte-like cells from hES cells has been
                                    tions harbouring specific variants, will be invaluable in             reported using inductive procedures106. This result
                                    overcoming this limitation.                                           might lead to reproducible populations of human hepa-
                                                                                                          tocytes for crucial metabolic studies in drug discovery.
                                    hES cells                                                             hES-cell-derived endothelial cells were isolated from
                                    This review has focused primarily on the opportunities                embryoid bodies using antibodies to PECAM1 (REF. 107).
                                    for mES cells to contribute to human drug discovery.                  These cells were transplanted to severe combined
                                    Indeed, an interpretation of the relevance of findings in             immunodeficiency mice in biodegradable polymer scaf-
                                    murine physiology and the human situation is required                 folds and removed after one-week, which resulted in the
                                    in the application of mES cells; however, the scientific              in vivo formation of functional human microvessels
                                    power of mES cells make them a welcome resource in                    containing murine blood after anastamosis with the
                                    drug discovery. In the future, investigators might gain               murine vasculature.
                                    the ultimate in predictive cellular systems, hES cells. In                The discoveries and technical breakthroughs that are
                                    1998, Thompson and colleagues94 reported the estab-                   being made with hES cells in culture conditions, and the
                                    lishment of an hES cell line derived from explanted                   establishment of protocols to derive essentially all cell
                                    human blastocysts that were donated from in vitro fertil-             types through in vitro differentiation, hold promise for
                                    ization clinics with informed consent and approval by                 the eventual use of hES cells in regenerative medicine.
                                    the associated university’s institutional review board.               However, the application of hES cells in drug discovery
                                    Additional hES cell lines have been reported from blasto-             will be greatly facilitated by the ability to overexpress or
                                    cysts95 and from primordial germ cells96. Undiffer-                   modify endogenous target genes of interest in these cells.
                                    entiated hES cells demonstrate many characteristics                   Eiges et al.108 evaluated the stable transfection efficiency
                                    similar to well-established murine cells. The hES cells               of various conditions of a murine Rex1 promoter–eGFP
                                    have been maintained in an undifferentiated state for                 fusion transgene. The authors determined that hES cells

NATURE REVIEWS | DRUG DISCOVERY                                                                                                     VOLUME 3 | JANUARY 2004 | 7 7

                            differed from mES cells with respect to the efficiency of     Pharmaceutical and biotechnology companies rely on
                            the methods for the delivery of DNA to the two cell           information gained from GeMM to contribute to var-
                            types. Specifically, the cationic liposome ExGen 500          ious aspects in the drug discovery pipeline; however,
                            (Fermentas) demonstrated an approximately tenfold             increased throughput and reduced time periods for
                            increase in transfection efficiency compared with             target analysis and evaluation are preferred. In-
                            other chemical reagents or electroporation. The pre-          creasingly, investigators are demanding precise tempo-
                            ferred method for transfection in mES cells is electro-       ral and spatial control of the modification of the
                            poration; however, the authors reported that hES cells        murine target gene using inducible and conditional
                            did not survive these conditions well. Rex1 is expressed      technologies to mimic drug-like effects in vivo. This tech-
                            in murine pre-implantation embryos and ES cells,              nology is very powerful; however, the time and cost of
                            and is downregulated with ES cell differentiation.            delivering the specific GeMM required make this
                            Therefore Rex1–eGFP expression can serve as a marker          approach limiting. Consequently, in vitro differentia-
                            for purified populations or for identifying isolates of       tion of ES cells could enhance the throughput of tar-
                            pluripotent ES cells.                                         gets, and reduce the time required to deliver the
                                In addition, hES cells demonstrated the ability to        assessment of a gene product’s mechanism of action
                            stably express gain-of-function transgenes using self-        and safety as a novel therapeutic target.
                            inactivating human lentiviral vectors109. These lentiviral        ES-cell-based approaches are aligned with advances
                            vectors, which carry an eGFP reporter driven by the           in molecular biology, including bacterial artificial
                            ubiquitous human elongation factor-1α promoter                chromosome expression, RNA interference, inducible
                            (EF1α–eGFP) resulted in high-level and sustained (>60         systems and so on. In addition, the use of cell-based
                            days) transgene expression in hES cells. The reporter         methods have overcome issues related to developmental
                            expression was not compromised by IVD into CD34+              consequences associated with genetic modifications in
                            haematopoietic cells, which demonstrates that the             some GeMM, and can now be applied directly to HTS
                            lentiviral transfection did not affect hES differentiation    paradigms. Therefore, the application of ES cells and
                            capacity. Notably, the high transfection efficiency will      IVD could eventually replace many current applications
                            allow expression cloning with complex cDNA libraries          of the more time-consuming and cost-prohibitive uses
                            to identify specific genes that result in cell-based pheno-   of GeMM. The crucial issues that are presently faced in
                            typic selection methods, which is a promising approach        the industrial application of ES cell IVD are consistent
                            in functional genomics using human cells.                     and reproducible delivery of relatively pure populations
                                Recently, Zwaka and Thomson110 demonstrated that          of specific differentiated cell types, phenotypic and
                            gene targeting by homologous recombination can be             pharmacological evaluation of cell types, and the delivery
                            applied to hES cells. These investigators established new     of cells at the scale needed for drug discovery applica-
                            electroporation protocols for hES cells on the basis of       tions in screening. With the increased focus on stem-cell
                            the increased size of human cells compared with mouse         applications, optimized protocols for differentiation
                            cells, and the observation that human cells cannot be         and scaling should overcome these limitations and
                            efficiently cloned from single cells107. Therefore, the hES   deliver benefits to drug discovery in terms of cost, time
                            cells were electroporated in clumps and plated at high        and capacity.
                            density, in contrast to single cells when using mES cells.        Drug discovery has relied on numerous methods
                            Using this electroporation procedure, HPRT and                to identify novel therapeutics; undoubtedly the
                            POU5F1 were successfully targeted in the hES cells. The       opportunity to utilize homogeneous human reagents
                            POU5F1-targeting vector used a construction that              will affect the drug discovery process. The ability to
                            inserted an eGFP reporter. POU5F1 is expressed specifi-       precisely modify endogenous loci in hES cells will
                            cally in undifferentiated ES cells and the GFP KI hES         lead to an improved understanding of gene function
                            cells express the reporter only in the undifferentiated       and, when applied to druggable genes, could demon-
                            state and are turned off after differentiation. As with the   strate the clinical significance of targets for novel
                            rex1–eGFP transgenic hES cells108, the POU5F1–eGFP            therapeutics. Genetically stable human cellular reagents
                            KI cell line will be important in optimizing the hES cell     will improve the attrition rate of drug candidate
                            culture conditions. As stated previously, mES cells are       compounds, and result in new and improved oppor-
                            readily manipulated using virally mediated gene trap-         tunities to identify safe and efficacious new medi-
                            ping and chemical mutagenesis. In the future, these           cines. At present, established hES cell lines are used
                            random approaches could play an important role in             for all federally sponsored research with these cells;
                            the application of human stem cells to drug discovery         however, these cells are scarce and therefore availabil-
                            and development.                                              ity to them is low113. Although human, pluripotent
                                                                                          adult stem-cell lines are being identified from bone
                            A forward-looking view                                        marrow 114,115, cord blood 116, adipose tissue 117 and
                            Although, the sequencing of the human genome has              other sources, it is questionable whether these cells
                            been essentially completed, the promise of the informa-       will have the broad differentiation capacity and
                            tion contained in this mass of data for delivering new        growth potential of ES cells. Although stem cells offer
                            therapeutics is years away. The race now is to understand     great promise for regenerative medicine, the near-
                            the chemically druggable target space of the human            term applications of stem cells will probably be in
                            genome, which is apparently shrinking rapidly111,112.         drug discovery. Drug companies have begun to

78   | JANUARY 2004 | VOLUME 3                                                                                     www.nature.com/reviews/drugdisc

                                             develop policies to work with human pluripotent                                       store of stem cells lines derived from human popula-
                                             stem cells and will begin applying these cells to specific                            tions of numerous ethnic populations and human
                                             programmes that can affect the discovery of the next                                  gene variations. These cells will provide a qualitative
                                             generation of medicines. The recent demonstration                                     advantage to investigators that previously used aneu-
                                             that gene targeting has proven successful for two                                     ploid human cells or animal models in discovery
                                             genes in hES cells is encouraging and investigators                                   research. These advantages will probably result in
                                             could soon be creating KO cell lines for functional                                   stem cells becoming invaluable in high-throughput
                                             evaluation and KI cells lines for screening applica-                                  drug discovery and the development of effective and
                                             tions. In the future, drug discoverers might have a                                   safe new therapeutics.

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