California Stem Cell Agency Examining Lawsuit Alleging Patient Endangerment and 'False Certification'

The California stem cell agency today said it is reviewing a lawsuit involving the recipient of a $19.4 million award that alleges the firm is manufacturing human cells in a process that puts “patients at risk of infection or death.”

The most serious allegations against StemCells, Inc., of Newark, Ca., involve its clinical trials. The stem cell agency’s $19.4 million research award to StemCells, Inc., does not involve human beings, only initial development of a possible therapy for Alzheimer’s over the next three years. Both the clinical trials and the Alzheimer’s research use the same proprietary cells, HuCNS-SC.

The company said in a 2013 press release,

"We know from the preclinical work that our proprietary HuCNS-SC cells survive in the toxic environment of the Alzheimer's disease brain and restore memory under the regulation of the host." 

The lawsuit was filed by a former senior manager, Rob Williams, of the publicly traded StemCells, Inc. He alleged he was fired after complaining about the cell problem to senior management.

In addition to possible injury, the lawsuit said that “the use of adulterated stem cells lots could skew patient test results, effectively jeopardizing data behind years of clinical trials and research.”  

The lawsuit said that StemCells, Inc., receives

“…millions of dollars in government funding, including grants from the California Institute for Regenerative Medicine (CIRM). As part of certifications that Defendants made and, on information and belief, continue to make, to the State of California in order to obtain such funding, Defendants represent that their manufacturing processes yield stem cells that are ‘safe for human stem cell transplantation.’ Additionally, in order to secure CIRM funding, Defendants represented and represent that the company follows current Good Manufacturing Practices (cGMPs) promulgated by the U.S. Food and Drug Administration (FDA), a set of standards designed to protect the public from dangers to consumer/patient health and safety. Plaintiffs protected activity, as described above, included efforts to stop, complaints about and refusal to engage in or cover up violations of these standards, and by extension the false certifications submitted to the government, certifications that the company used and uses in order to secure substantial funding.”

The lawsuit also alleged that StemCells, Inc., violated FDA standards and provided false information to the FDA, which has not yet responded to queries from the California Stem Cell Report.

In response to a query, Kevin McCormack, spokesman for the $3 billion stem cell agency, said the agency was carefully reviewing the lawsuit.

Williams attorney, Daniel Velton, has not responded to queries about whether he or Williams informed the FDA of the issues raised in the lawsuit.

StemCells, Inc., did not respond to queries about the matter. (Late yesterday, the firm said the allegations have no merit. See full text here.)

The company was founded by Stanford researcher, Irv Weissman, who sits on its board and is chairman of its scientific advisory board. His wife, Ann Tsukamoto, is executive vice president. Last week the stem cell agency announced that it was conducting a full review of its activities with the firm after it appointed the agency's former president, Alan Trounson, to its board seven days after he left the agency. 

Here is a copy of the lawsuit, which was first reported by Elizabeth Warmerdam of Courthouse News Service.