Controversial or not, big pharma sees big potential in stem cells. And so a Johnson & Johnson venture capital unit has become the lead investor in Novocell, an early-stage biotech that hopes to treat diabetes with embyronic cells and is trying to raise $35 million in third-round financing.

“This appears to be the first time that a major drug company has plunked down a significant equity investment in embryonic stem cells,” writes Dave Hamilton at VentureBeat. To date, he notes, big pharma has shown relatively little interest in companies working on embryonic stem-cell therapeutics. The explanation: the field is too young and still needs solid clinical success.

Stem-cell advocates have long complained that big pharma’s failure to provide more support has effectively slowed scientific and commerical progress, Hamilton notes. No doubt the political controversy over destroying embryos has kept big drugmakers on the sidelines. Whether J&J’s investment is a harbinger of a larger shift remains to be seen, though.

Interestingly, the investment comes amid mounting criticism of the pharmaceutical industry over safety and pricing, issues that have put drugmakers on a collision course with the Democratic congress. By embracing stem cells, however, big pharma would likely face an equal amount of scorn from social conservatives. If that happens, who would be left to defend them?

The Novocell web site.

Hat tip to VentureBeat.[tags]J&J, Stem Cells, Venture Capital[/tags]