Friday, July 31, 2015

'Best of Times, Worst of Times' -- A Tale for Stem Cell Fans

Sinking stock prices vs. $40 billion market
Profits drive therapies
Test for the California stem cell agency

During the past week, followers of the stem cell world have been treated to sharply contrasting perspectives on the likely success of therapies involving regenerative medicine.

One perspective was bleak; the other robustly optimistic.

One borrowed slightly from the “Tale of Two Cities,” with a headline that said “Tale of seven stem cell stock woes….”

The other carried a headline that said “global stem cell market predicted to reach $40 billion in five years….”

One was a story about hard-eyed investors backing away from stem cell research. The other was about a bright, near-term future for the field.

Don Gibbons, chief communications officer at California’s stem cell agency, wrote about that bright global market on his agency’s blog. He said that the $40 billion figure was generated by the worldwide consulting firm Frost and Sullivan, which was promoting its study of the field. The 2014 report is going for as much as $7,500, a price tag that helps illustrate one of the features of the stem cell field: It needs a lot of cash.

Indeed, Gibbons noted that Frost and Sullivan cautioned that funding for early stage, clinical stem cell work is not abundant.

Which brings us to Paul Knoepfler’s tale of stem cell stock “woe.” He is a stem cell researcher and blogger at UC Davis, which has benefited mightily from cash from the $3 billion California stem cell agency.

He wrote,
“Lately, stem cell companies have not been doing so well financially to put it mildly and their stock prices have generally been going down, down, and down further. A lower stock price and market capitalization are not just a headache for investors and bad for the companies, but they also strongly interfere with the progress of the clinical science.”
And he asked,
“To be blunt, why are their stocks doing so miserably?”
Knoepfler did not really attempt to answer that question. However, it is clear that stem cell stock prices are down because nobody wants to buy them. The reason? Investors do not expect to make money any time soon by purchasing shares in those firms, which struggle perennially to raise cash.

That is a financial reality that the $3 billion California stem cell agency needs to fully integrate into its plans for spending its last $800 million, which is slated to run out in less than five years.

The agency’s goal is to produce a stem cell therapy as promised to California voters 11 years ago when they approved creation of the agency, which will cost the state about $6 billion, including interest, before the effort expires.

Without backing of industry, there will be no therapies. But the priorities of a business are not necessarily the same as the agency’s. Profits necessarily come first with a business. Otherwise it will vanish into a financial abyss. Witness the dumping of the nation’s first hESC clinical trial by Geron, in which the agency invested $24 million only three months before the trial was summarily terminated by the company for financial reasons. 

The California stem cell agency’s president, Randy Mills, should understand the vagaries of all this better than most. He made his career as a biotech business executive, not as a researcher. Over the last year, he has done much to sharpen the focus of the agency and begin to create a clear path for emergence of a therapy, a “radical” change he has dubbed CIRM 2.0.

Whether he can successfully put together the needs of business and the needs of science and medicine is perhaps the key question for the California stem cell agency between now and 2020. 
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