This government-backed startup is growing blood to help fight shortages

Last month, the American Red Cross declared an emergency blood shortage after its national supply fell by more than 25% in July. One startup’s solution: Lab-grown blood.

Shortages can be dire for patients since doctors have to make tough decisions about who needs blood transfusions the most. The American Red Cross collects and distributes about 40% of the U.S.’ blood supply, per its website, and the organization is imploring more people to donate. 

But if Doug McConnell has his way, hospitals and clinics won’t have to rely on donations forever. McConnell is CEO of a four-year-old startup called Safi Biotherapeutics, which is working to manufacture inexpensive red blood cells at scale. 

Scientists have already discovered how to grow red blood cells from stem cells, but it’s a costly and complex process that typically yields small amounts at a time. In November 2022, for instance, researchers in the U.K. successfully transfused about one or two teaspoons of manufactured blood into people as part of a clinical trial. 

Safi’s goal is to build on these advancements and produce large quantities of blood that could eventually be used commercially to help care for patients and avoid blood shortages. 

“People have tried, but the technology has evolved and we see this path now,” McConnell told CNBC in an interview. “I do think it goes from science fiction to science, but still a lot of work ahead. No question about that.” 

Safi has received more than $16 million to date from the U.S. Department of Defense, and that total could exceed $20 million by the end of the year thanks to an additional in-process grant. The company also recently announced an additional $5 million in seed funding led by J2 Ventures. McConnell said this combined financing will help support the company as it begins to work with regulators from the U.S. Food and Drug Administration.

The FDA has not cleared Safi’s technology for use, and the company has years of rigorous testing ahead in order to prove its red blood cells to be both functional and safe. The company will also have to demonstrate that its manufacturing process is up to par with the agency’s standards. 

“We need to show these are safe, we need to show they’re effective, that they’re doing their job: They deliver oxygen, they circulate in a way that’s comparable to a donor red blood cell,” McConnell said. 

Earlier this month, Safi began working with a manufacturer in Manchester, New Hampshire, called the Advanced Regenerative Manufacturing Institute (ARMI) to fine-tune its production process. McConnell said ARMI is part of an ecosystem that’s been receiving government funding to build out biomanufacturing capabilities in the U.S. 

Safi kicks off its production process with a “progenitor” cell, meaning an adaptable cell that can grow into different types. Progenitor cells come from stem cells inside bone marrow, and Safi turns them into red blood cells.

McConnell said growing red blood cells is almost like preparing a stew because it requires lots of different ingredients — the challenge, though, is figuring out the cheapest and most efficient recipe possible, as well as when to stir or agitate the stew and which ingredients can be substituted for less-costly alternatives.

The company is also engineering special recipes for specific patient populations, as some chronic transfusion patients need blood that is free from certain antigens. 

The cells grow by dividing or “doubling” when they are put through a bioreactor. McConnell said Safi spends a lot of time focusing on how many doublings it achieves during bioreactor runs because it’s a good indication of how efficiently it’s producing cells. The cells are filtered, and Safi is left with units, or bags, of blood that look the same as what would be collected from a donor. 

Safi projects it is currently able to produce one unit of blood for under $2,000. The company’s ultimate goal is to get costs down to under $500 or even $300 per unit, which is comparable to the price of donor blood, McConnell said. 

The median amount that U.S. hospitals paid for a unit of donated red blood cells was $214 in 2021, according to a report from the analytics firm Statista.

McConnell said Safi is currently able to use a 10-liter bioreactor that produces about one unit of blood per run. In eight or nine years, he said the company is hoping to use much larger tanks that will be able to generate around 100 units per run. This means just one stem cell donation could help produce hundreds of bags of blood.  

“It’s more than one person could donate in their lifetime,” McConnell said.

To make large-scale production a reality, Safi has a long road ahead. McConnell said the company’s first launch is likely six or seven years away, in part because it is targeting production of around 100,000 units of blood during its initial launch year. Safi plans to continue to scale until it’s manufacturing more than 1 million units annually, he added. 

McConnell said he doesn’t want doctors or patients to worry about access to blood, and he believes Safi can help fill those gaps. 

“It’s kind of crazy that we’re still tolerating this,” he said. “Honestly, one of the solutions is… to build our own supply chain.”