San Diego Session On Sharing Stem Cell Swag

After hearing some cold economic realities last month, officials of the California stem cell move to San Diego Thursday to advance their attempts to formulate an intellectual property policy for businesses that receive CIRM funding.

The agenda posted on the Web by the IP Task Force is vague with no indication of who is going to testify or exactly what is expected to be accomplished. But the group is still digging into the basics and is not likely to come up with recommendations until next fall. At least one more meeting is in the works, this one probably in Sacramento.

It's an appropriate location, given that lawmakers are considering legislation to require as much as 50 percent royalties from businesses, under certain circumstances. By contrast, testimony at last month's hearing indicated that such a requirement is a non-starter for most businesses.

The March IP session triggered as many questions as answers. It led to requests to hear directly from stem cell companies and venture capitalists, none of whom appeared in March. Task force members wanted to know more about policies in other states and Singapore. And they wanted to hear from Big Pharma and the California Healthcare Institute, which represents the biomedical industry.

Ed Penhoet, chair of the task force, said last month's hearing raised some fundamental questions.

"What are we really attempting to do? Are we trying to drive therapies as rapidly as possible? Are we trying to stimulate business in California? Do we want to grow small companies? There (is) a whole set of potentially conflicting aims," Penhoet said.

The message from business is not likely to change much during this week's session.

One executive from Genentech, which has only a peripheral stem cell interest, told the task force that it takes something like $1 billion to push a product to market. He said that for every dollar in research, another $5 is need for development. And the odds of developing a successful product once it starts clinical testing on humans range from one in three to one in five.

According to the transcript of the session, Stephen Juelsgaard, executive vice president of Genentech(who noted that he was not speaking on behalf of his company), said,

"Biology is hard, and it's getting harder. I think we've got most of the easy biology out of the way. and so the new problems that we're dealing with are ones that really require a fair amount of effort and just a lot of hard work. And so the idea that there are going to be quick, easy fixes that come out of this, I hope people understand (is) not likely to be true.

"There are going to be a lot of failures along the way. There are going to be some very long times involved in bringing new therapies to the marketplace, and it's going to be a very expensive proposition....The amount of support that this organization might provide along the way is probably going to be, as I put it, the proverbial drop in the bucket, compared to all the costs that have to be identified, to really be successful."

His point has a certain validity. If it takes $1 billion to create a product, CIRM could fund only three if it cannot leverage its investments. Of course, it has never considered completely funding a product to market. And one of the points of the IP hearings is to find ways to build CIRM funding leverage.

Brad Margus, CEO of Perlegen Sciences of Mountain View, Ca., told the task force that if CIRM wants to be an agent that produces the next big thing in stem cells, it needs to minimize nonfinancial restrictions and heavy royalties.

"When you ask what is the primary purpose of this shot in the arm of the $3 billion," he said, "other than what it does for California and all that, I would hope that it's to make something happen that otherwise wouldn't happen....(Y)ou want to encourage the best-in-class participators to participate, not just the needy ones. When it comes to your own kids, it's perfectly fine if the one kid isn't quite that sharp; you want to help him out, equalize things, that's fine. But when we're talking about this life or death matter and really making a difference, I think you should only go with the companies that can make it happen the fastest.....

"I'd like California to try to do it differently ....and think a little smarter. If there really is a company out there that has the next thing that you need in stem cell research to happen, and your objective scientific advisors say this is what we want, you should be really, really aggressive in getting it. And I'm concerned that some of these things that we're throwing out there, like revenue sharing or the capping what a company (can earn), will only defeat that purpose."

The California stem cell agency is in a difficult place on IP issues, which really boil down to who gets the money. But the money is not there yet. No one knows how much will be there, if any, and how soon. The agency needs to make reasonable efforts to satisfy its public interest constituencies, such as the legislature and watchdog groups. If not, they can make considerable mischief for CIRM and stem cell research in general. At the same time, to be successful in bringing therapies to patients, CIRM must assist in finding alluring opportunities for businesses and research. CIRM is aided by the paucity of funding for embryonic stem cell research, but its munificence can carry it only so far.

At this stage, the main actor in this juggling act is Ed Penhoet, businessman, academician and philanthropist. The role will require all of his considerable skills.
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Thursday's session can be heard remotely at locations in Chico, Irvine, Los Angeles and San Carlos. See the agenda for details.