One of the state’s largest stem cell research companies, founded in part by stem cell pioneer James Thomson, announced a merger with two other Madison-based corporations, finalizing $18 million in funding.

Cellular Dynamics International will merge with its partner companies Stem Cell Products Inc. and iPS Cells Inc.

UW cardiology professor Tim Kamp, a co-founder of CDI, said the newly formed 50-employee company will be more streamlined under one name.

“It’ll make things more efficient to allow the company to be a little bigger, so we’ll have more people working together on these problems,” Kamp said. “Obviously we were already related in our interest in stem cells, so it just allows things to be more efficient.”

The $18 million, originally announced last month, was funded in part by the Wisconsin Alumni Research Foundation.

“That’s being used to help set up our infrastructure as we plan to grow,” said CDI spokesperson Joleen Rau.

Other contributors included two Wisconsin-based venture capital firms.

In a statement Monday, CDI Chief Financial Officer David Snyder said the funding from these companies was “remarkable” given the current economic crisis, and is a prime example of the support the stem cell industry receives from the state.

“We believe that if Wisconsin can continue to attract investment in stem cell commercial infrastructure, we have the opportunity to be the major hub of the emerging stem cell industry,” Snyder said.

CDI was founded in 2004 by Thomson, a UW anatomy professor, Kamp, UW cardiology professor Craig January and UW assistant professor of anatomic pathology Igor Slukvin.

The company develops stem cell technologies and also works to personalize the field to individual patients.

Kamp said CDI is currently working with induced pluripotent stem cells, or iPS cells, which were developed in Thomson’s lab in 2007.

Preliminary research shows these man-made cells can behave just like embryonic stem cells.

Kamp said the new CDI company will develop them and makes them readily accessible to pharmaceutical companies.

“iPS cells are so new — it’s only been a year now — so we’ve just gradually been putting more and more efforts toward them,” Kamp said. “They are becoming an increasing focus, but not an exclusive focus.”

Gov. Jim Doyle, a staunch supporter of stem cell research, said in a statement Monday he sees the merger as “great news for the entire state of Wisconsin” since it will improve a field that can lead to job growth.

“Despite our national economic downturn, I am pleased that our business leaders are continuing to invest in innovative companies like Cellular Dynamics which will provide the high-end jobs of the future,” Doyle said.

Madison has become a mecca for stem cell research and development. Thomson first isolated human embryonic stem cells at UW in 1998 before developing iPS cells last year.

The city is also home to two large stem cell banks: WiCell, which opened in August, and the National Stem Cell Bank, which opened in 2005.