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The dog's owners say they are delighted with their pet's recovery.
Dr Geoff Woodhouse, of Remarkable Vets Arrowtown, worked for four hours in a laboratory to identify and harvest cells from 20g of fat tissue, which was taken from the chest of Gypsy, a 3-year-old Japanese Akita dog, suffering from arthritis.
Dr Woodhouse reimplanted by injection millions of cells into Gypsy's rear right leg on April 26.
He described the day-long procedure as an exciting clinical development and "cutting edge" for New Zealand.
"It potentially will redefine the way we address chronic pain for a lot of our patients and, as the field evolves and the applications grow, then we're in a better position to improve qualities of life on many fronts."
Dr Woodhouse said he developed a relationship with a veterinary team in Sydney, who have performed the procedures since 2009 and are helping its introduction into New Zealand.
Two Australian veterinarian surgeons and one laboratory technician assisted Dr Woodhouse during the process on April 26.
Dr Woodhouse said while the harvesting of the fat was "reasonably straightforward", the insertion could be challenging, depending on which joint was involved.
It was one of the most exciting stages in his 23-year career.
"It was great to feel we were groundbreaking and entering a new era."
Arthur's Point residents Deborah and Peter Deacon have owned Gypsy since October last year, after she was rescued by animal trainer Gary Wulff, of Alexandra.
Mrs Deacon said Gypsy had "just bounced" since the procedure and was not lame any more.
While they had decided not to push her exercise, they were amazed with the results.
"She's a pretty happy dog anyway with a nice personality and she's taken everything in her stride.
"She's become used to being the centre of attention."
When asked how much the procedure would cost a pet owner, Dr Woodhouse said it depended on the patient and the application.
However, it was in the range of $2000.
"Cost would always be an issue [for pet owners], but what price for your pet?" Mrs Deacon asked.
"We would have paid anything to have her lead a normal life," she said.
Dr Woodhouse emphasised the dog had surgery on its knee before the stem cell treatment.
The procedure came in as an option to improve the prognosis for a severely damaged joint and acted as a replacement for medical managements of joint disease, he said.
"Stem cells are a massively growing area of research and their application is huge, but it's very complicated," Dr Woodhouse said.
- Basic precursor cells which have the ability to differentiate into a multitude of tissue types.
- Have anti-inflammatory activity.
- Found in the fat of all animals, including humans.
- Pet Doctors announced in April it would start treating dogs with stem-cell technology, making New Zealand the third country in the world to offer this type of therapy for dogs.