Investors to Bush: We Like hESC

While the current president is reiterating his opposition to human embryonic stem cell research, investors are beginning to look to the future.

We have reported previously that the prospect of a favorable presidential change has eased some of the fears of stem cell investors. One further sign is the announcement today that UBS Investment Research upgraded Geron Corp. of Menlo Park, Ca., from neutral to a buy recommendation on its stock.

Thomson Financial reported the move and said,

"'We think Geron could be an attractive U.S. presidential election year play, given that any change in the current administration is likely to create a more favorable environment overall for stem cell research efforts and funding,' said analyst Graig Suvannavejh.

"Suvannavejh also pointed to positive near-term catalysts such the filing of an investigational new drug application for Geron's stem cell therapy for spinal cord injury and an update on the company's partnership with Merck for telomerase-based vaccines."

Geron hit a 52-week high of $9.85 last May and a low of $4.40 last week. At the time of this writing, it was trading at $5.16.

Coverage of the Cloning of the Cells of Sam Wood

While CIRM was advancing its $262 million lab grant program this week in Burlingame, about 490 miles to the south in La Jolla, a tiny firm called Stemagen was making international headlines with its news about cloning human embryos.

Terri Somers of the San Diego Union-Tribune had one of the first stories on the matter. The paper also had a piece by Sandi Dolbee on the ethics of the issue. The blog of the American Journal of Bioethics has a roundup of links to coverage elsewhere.

The Center for Genetics and Society in Oakland also raised questions about the propriety of the research, which involved the cells (see Stemagen photo on right) of Stemagen's president, Samuel Wood (see Stemagen photo on left) and an anonymous investor in the firm.

Whatever your take on this, along with all the other news on stem cell research in the last few months, it will generate substantially more attention on the field from investors, scientists, supporters and foes.

Two San Diego Area Firms Seeking Cash From CIRM

Novocell and International Stem Cell Corp. are among the first 10 companies seeking grants from California's $3 billion stem cell agency.

Reporter Terri Somers of the San Diego Union-Tribune wrote Sunday about their plans as part of a story on CIRM's efforts to pump money into the stem cell business.

Somers' story was the first to disclose the names of any applicants for disease team planning grants. CIRM has refused to disclose the names of organizations seeking millions of dollars in public funds on grounds that they would be embarrassed if they were not awarded a grant. However, last month CIRM reversed itself on the names of 12 applicants for $263 million in lab construction grants, identifying them in order to give them a leg up on raising matching funds to help their applications.

Somers wrote,

"Novocell (a privately held company in San Diego) is developing a diabetes treatment that would create insulin-producing islet cells from human embryonic stem cells. It then would coat those islet cells in a polymer to make the cells invisible to the body's immune system, so they would not be rejected or require the patient to take immune-suppression drugs.

"The company plans to be part of two disease teams, Alan Lewis, chief executive, said.

"One team, which Novocell would lead, would include scientists from academia as well as a company from outside San Diego, Lewis said. That company, which he declined to name, has more expertise in development than Novocell, which is focused on research. He wouldn't name the academic part of the team."

As for International Stem Cell, a publicly traded firm in Oceanside, Ca., Somers reported that it "has created corneas using embryonic-like human stem cells derived from an unfertilized egg."

She continued:

"The company would have liked to create teams for several diseases, but for this planning grant the stem cell institute limited companies to being the lead investigator on only one team, said Jeff Krstich, chief executive.

"Nonprofit institutes, including universities, which generally have researchers with expertise in more areas than a company, can apply to lead four disease teams.

"International Stem Cell's team is all internal, and plans to focus first on corneal implants, Krstich said. Last year the company published a scientific journal article showing that it can create corneas from embryonic-like stem cells it created from a process known as parthenogenesis, which involves using an unfertilized egg rather than an embryo."

Somers also had an interesting comment from Lewis concerning the ongoing and contentious debate about sharing revenues that might result from CIRM-funded inventions. Some who claim to represent industry seem to balk at such requirements. But Somers wrote,

"'We weren't expecting free money from CIRM,' said Lewis of Novocell. 'Obviously there needs to be a benefit to the California taxpayers down the road, when a product is approved.'"

Somers' article and the willingness of the two companies to discuss their plans add useful information to the dialog about stem cell research in California. She also indirectly exposed some of the silliness in CIRM's refusal to disclose information about how it is going about the public's business. In this case, she said that CIRM would not provide a breakdown of the diseases targeted by those intending to seek planning grants. No reason was given in Somers' story, and it is hard to imagine how CIRM could concoct one that could be construed to be in the public's interest.

Businesses Give Mixed Response to CIRM Overtures

The San Jose Mercury News has taken a brief look at the reception that business is giving plans by the California stem cell agency to provide millions of dollars for research in the private sector.

Based on a small sampling, the response is mixed. StemLifeLine of San Carlos says it is not planning to apply because of requirements that the state receive a payback on any revenues that may result, according to reporter Steve Johnson.

Advanced Cell Technology of Los Angeles, on the other hand, is interested. It moved its headquarters to California last year because of the possibility of securing funding from CIRM.

Geron of Menlo Park says it is not applying because its technology has advanced beyond the levels funded by the institute.

WaferGen Bio-systems of Fremont is considering applying but is concerned about the revenue sharing.

StemCyte of Arcadia said that it has filed a letter of intent to apply for a disease-team planning grant. The deadline for those letters came Thursday. CIRM , however, that it is not sure that it will be able to supply figures today on the number of applications, including those from business.

CIRM Chairman Robert Klein said,

"We will try to work with industry to find how we can further the interests of California patients and the biotech sector."

StemLifeLine: No to Third Party, Spare Embryo Decisions

Ana Krtolica, chief executive officer of StemLifeLine Inc. of San Carlos, Ca., offers the following on our item concerning the story in the San Francisco Chronicle about her firm. Among other things, the story said the company had triggered protests from both supporters and opponents of embryonic stem cell research.

"StemLifeLine is a life sciences company that offers individuals who have undergone in vitro fertilization, a unique option to develop stem cell lines from their surplus stored embryos.

"As former academic stem cell researchers, we learned that IVF patients who donated embryos for research often inquired about the possibility to access the stem cells derived from their embryos. This inspired us to develop the novel StemLifeLine service - the first of its kind in the world - for IVF patients who wish to develop their own stem cell lines.

"At StemLifeLine, we believe that it is up to IVF patients and not any third party to decide what should be done with their spare embryos. These patients invested financially, emotionally and physically into embryo generation and it is their choice, their genetic material and their responsibility to make the best decision for themselves and their families.

"It is also important to note that clients that choose to use our service may still benefit research while developing their own stem cell lines. The two options are not mutually exclusive. As researchers, the founders and staff at StemLifeLine are personally committed to supporting biomedical research and stem cell research, in particular. Therefore, we provide an option for clients to donate an additional portion of their stem cell lines to any non-profit research facility of their choice at no charge. However, this decision is left entirely up to each patient.

"Finally, there has been speculation about our pricing. Stem cell derivation is an expensive process that requires a high level of scientific expertise, state-of-the-art equipment and significant time investment. Nevertheless, we are able to provide this service for a price comparable to cord blood stem cell banking.

"To conclude, without having personal experience with the IVF process, none of us can fully understand how difficult it is to make a decision regarding the allocation of surplus embryos. Our goal at StemLifeLine is to offer an additional option to IVF patients and it is up to these patients and their families to make the best decision based on their individual needs and priorities."

Stem Cell Freeze Flap: Ethics, UC San Francisco, Stanford Involved

"Modern day frankenstein story," "undeniably creepy," "trying to improve the quality of life." Some of the comments on a story in the San Francisco Chronicle involving a firm that offers "to create 'personalized' stem cells from the spare embryos of fertility clinic clients."

The article Monday by Bernadette Tansey said the idea is to freeze the stem cells for possible later use – "insurance for the future" – in the event that medical breakthroughs could make use of them.

The company is StemLifeLine Inc. of San Carlos, which is located south of San Francisco. It charges as much as $7,000 to create and freeze the stem cells with storage costs of $350 currently. Additional fees of up to $2,000 could be charged.

Tansey said the firm's proposal has set off a "flash fire of protest" from both supporters and foes of stem cell research.

Forty-seven comments were filed by the public on the story(they can be read at the end of the Chronicle story). The wide range offers some insight into the magnitude of the public education challenges that stem cell research still faces. Particularly since the Chronicle audience presumably consists largely of stem cell supporters.

The story also reported that the firm's business has triggered something of a tussle involving folks from UC San Francisco and Stanford.

The head of StemLifeLine is Ana Krtolica(see photo), a former researcher at UC San Francisco. On the firm's advisory board is Susan Fisher, who heads the UC San Francisco stem cell program. Olga Genbacev, a member of the firm's board, is a scientist in Fisher's lab. Tansey also reported that "the company's staff and boards include present and former research collaborators of Fisher's."

One of the folks from Stanford arrayed against the firm's proposal was David Magnus, director of that university's Center for Biomedical Ethics. He told Tansey,

"These companies are essentially taking advantage of people's ignorance and fears to make a buck,"

Also commenting negatively from Stanford were Rene Reijo Pera, director of Stanford's stem cell program and formerly of UC San Francisco, and Chris Scott, director of the Stanford program on Stem Cells in Society.

In addition to the comments on the Chronicle site, Monya Baker in Nature's stem cell blog, The Niche, said that it is "troubling" that the company has failed to make any of its customers available for interviews and refuses to provide a copy of the contract that customers sign.

San Diego Wildfires and the Biotech Business

San Diego is one of the global centers for stem cell research. This week it was also the scene of disastrous wildfires that destroyed 2,000 homes and left $1 billion damage.

The fires meant personal tragedies for some, closures of businesses and loss of some research. The fires also served notice once again to businesses and researchers of the impact that natural disasters can suddenly have and the importance of emergency planning, especially in Southern California which is also in an earthquake zone.

Stem cell research and businesses are just one component of a large life science industry in the San Diego -- one that encompasses 500 firms and 36,000 employees.

In an effort to provide a partial view of the fire's impact, The California Stem Cell Report queried a handful of folks in the stem cell business in fire area.

In the case of Richard Murphy, interim president of the California stem cell agency, he was in San Francisco working as the fire advanced towards his home in Rancho Santa Fe. Murphy said the home was being rented while he worked in Northern California, and reported on Thursday that the house was safe.

Researcher Jeanne Loring of the Burnham Institute in La Jolla was in Maine at a stem cell meeting. She said via email that her house in Del Mar had been on the mandatory evacuation list but that it was safe. "I took a break from following the fires on the Internet to give a seminar to a class of a human ESC training course here in Bar Harbor."

She said that at one point both Burnham and neighboring Scripps were closed, but power remained on and the cell banks were okay. Salk and UC San Diego were also partially or completely closed at times.

Loring continued,

"Some experiments were lost just because the researchers were evacuated. Some people who were evacuated were staying at the labs. I offered my office couch, but I don't know if anyone took me up on it....One unexpected benefit was that the NIH gave grant applicants a grace period. We have a few more days to work on one stem cell grant from the Burnham that was due on Tuesday!"

Floyd Bloom, a member of the CIRM Oversight Committee and executive director for science communications at Scripps, said, "I've been hunkering down, trying to keep my mind off the tragedies by working."

Jay Blankenbeckler, a biotech manager at Invitrogen in Carlsbad in northern San Diego County, awoke early one morning in his Rancho Bernardo home to find high winds and approaching blazes. Time magazine quoted him as saying that mature palm trees in his yard were bent over.

He said,

"They were doing this swirling thing. My palm trees, 35 to 45 feet of palm tree, almost looked like a swizzle stick in a drink, moving around in a big circle."

He and his family evacuated, and at last report his home was still okay.

Bioworld Today reported that at one point half of the staff of BIOCOM, the Southern California industry association, was evacuated from their homes. The online publication reported that many biotech businesses had to close during the fire.

Invitrogen at one point sent most workers home from its main production facility. But it said shipments won't be affected, according to an article by Mike Nagle on us-pharmatechnologist.com. It has another distribution site in Maryland.

Nagle also reported that some biotech businesses at one point were in risk of losing buildings. He said,

"This poses several problems, not least of which is how to care for any animals kept at the facility and where to take them should they need to be evacuated. A further problem is what to with the, often very expensive, compounds used at each facility, many of which require special storage conditions, or are still being used in active experiments or haven't yet been fully analyzed.

"Notwithstanding the fact that much of these materials may intrinsically be commercially sensitive, this is where nearby but not at risk life sciences companies come into the equation, which obviously have the facilities to look after both research animals and chemicals.

"Of course, this is ignoring the more simple fact that a fire at a facility that contains vast amounts of chemicals could be an environmental disaster. However, the companies in the area will, of course, have made contingency plans for emergencies such as this - especially since this is not the first time California has been devastated by wildfires: four years ago, wildfires swept through Southern California, killing over 20 people."

Nagle said that the daily production of the life sciences companies in San Diego runs about $23 million a day.

Here is a link to a regularly updated map by the San Diego Union-Tribune of the fire zones in San Diego.

California Stem Cell Companies Not Too Displeased with CIRM Rules

Sometimes directors of the $3 billion California stem cell agency worry that they are imposing too many restrictions on future grants to the biotech companies that will be the key to turning research into therapies.

Now comes a report that a number of companies "seem willing to do whatever they must to qualify for state grants." They, in fact, are not looking down their noses at the largess to be disbursed from CIRM.

Reporter Terri Somers of the San Diego Union-Tribune reported on the business response that came out of a CIRM informational meeting Friday that was designed to shape state policy on the qualifications and criteria for companies that receive stem cell grants from the state.

She wrote,

"The response yesterday to the institute's questions was a surprise to the institute staff.

"Representatives from the biotechnology industry said they only need to tweak the (intellectual property) policy to make it work for companies.

"For instance, the companies don't want to publicly disclose competitive information, such as what percentage of royalties they receive for licensing out their discoveries or the amount of their product sales.

"Industry representatives said they also are concerned about how the state defines money for research and money for goods and services. Currently, Proposition 71, the voter initiative that created the stem cell institute, requires all the research it funds to be conducted in California. Goods and services bought with state funds do not necessarily have to come from California.

"If clinical trials are defined as a 'research' expense, rather than 'goods and services,' it could be a problem, company executives said.

"For speed, efficacy and even savings, companies often conduct clinical trials worldwide in order to get quick enrollment and a diversity of participants."

The response from the companies seems strikingly different than earlier, more hostile reactions from the California Healthcare Institute, which says it represents the biomedical industry in California. However, the reaction was not too surprising to those who attended the Burrill stem cell meeting in San Francisco last spring. A CHI representative appeared on a panel with several representatives of stem cell companies, who did not echo the lobbying group's more strident position.

Somers appears to be the only reporter who covered the teleconference meeting on Friday.

A Commercial Perspective on Resetting Stem Cell Clocks

Andrew Pollack of the New York Times wrote a piece Thursday that contained some interesting comments from California folks on mice and resetting their stem cell clocks.

Some excerpts:

"'Once you muck around with the genome, all bets are off,' said Dr. Thomas B. Okarma, chief executive of Geron, a company trying to develop medical treatments from human embryonic stem cells. Dr. Okarma said getting approval from the Food and Drug Administration would become 'enormously more complicated.'"

Pollack continued:

"Joydeep Goswami, vice president for stem cells and regenerative medicine at Invitrogen, a company that sells tools for stem cell research, said the new technique could get more companies interested in stem cells.

"Not only does it eliminate the ethical issues, he said, but it also might provide a way around stem cell patents held by the University of Wisconsin that some scientists and corporate executives say have hindered work in the field.

"Still, an even bigger hurdle for investors has been the uncertainty of whether stem cells can be turned into lucrative medical treatments. Some experts say this might take a decade or more, too long for many investors to wait."

More from Pollack:

"Dr. Okarma of Geron pointed out that after mouse embryonic cells were first isolated, it took about 18 years before human embryonic cells were similarly derived. Geron, based in Menlo Park, Calif., paid for the work with human cells at the University of Wisconsin and has exclusive commercial rights to certain types of tissues created from human embryonic stem cells.

"Dr. Okarma also said it might not be desirable to use skin cells as a starting material because they might have been genetically mutated by exposure to ultraviolet radiation."

Pollack continued:

"William M. Caldwell IV, chief executive of Advanced Cell Technology, said his company had not been able to obtain enough human eggs needed for therapeutic cloning. So the new approach, Mr. Caldwell said, is 'a technology that everyone should take a hard look at.'"

The Multibillion Dollar Stem Cell Market and Its Challenges

Today's market for stem cell therapies in the United States currently runs around $100 million but is expected shoot up to $710 million in three years, venture capitalist Steve Burrill said Monday.

By 2016, the market could hit $8.5 billion, he told about 500 persons attending The Stem Cell Meeting at the UC San Francisco Mission Bay complex.

The event, sponsored by Burrill & Company and which drew attendees from throughout the world, focused on both the science and business of stem cells.

Access to capital for fledgling stem firms was the topic of one panel Monday morning. Speakers from stem cell company indicated that funds are still tight, but that some loosening seemed to be occurring that was related to the more favorable political climate in Washington, D.C.

Burrill said a "reasonable amount of money" is available around the world, but different investors have different appetites, depending on the perspective from their countries.

He asked a panel of stem cell business executives about the biggest challenges for the stem cell business. One replied that predictable manufacturing processes were needed. Another said bigger companies with larger resources were necessary. William Caldwell, head of Advanced Cell Technology of Alameda, Ca., said the key was "curing the first patient."

Zach Hall, president of the California stem cell agency, echoed Caldwell during his overview of the status of the state's $3 billion research effort. To do that, Hall said CIRM expected ultimately to partner with the private sector.

Hall said the agency will have awarded about $190 million in grants to nonprofit agencies by sometime this summer with research being financed in about 100 labs throughout the state. Hall said CIRM hopes to build a "very strong pipeline" for research. That's because of the high disappointment rate involved in research. Hall noted that only one out of every eight to 10 clinical trials results in a viable product. And those trials occur at an advanced stage in the development of a therapy or cure.

We will have continuing coverage of the Burrill stem cell conference today and Tuesday.

The Riddle of the Stem Cell Trinity

Can science, business and government work together in a win-win combination in a unique endeavor involving arguably the most controversial research in the world and billions of dollars in funding?

That is the key question ultimately for the California stem cell agency. Now we have some help in seeking answers to at least two-thirds of the riddle.

The aid comes from an analysis by Harvard business professor Gary Pisano in his new book: "Science Business: The Promise the Reality and the Future of Biotech." Pisano examines the sometimes difficult mix of business and science and their conflicting cultures. He omits the hefty government component represented by an agency such as CIRM, which has deeper hooks into science and business than the NIH.

Pisano, who has a Ph.D. from UC Berkeley, has studied the biotech business for years and has served as a consultant to some biotech companies.

We ran across his book as the result of a review in the Wall Street Journal by Andy Kessler, author of "The End of Medicine." Kessler wrote:

"Can science and business mix? ...The problem, according to the Harvard Business School professor, is that today's corporate structures are allergic to the uncertainty and risk inherent in science."

Kessler noted:

"Cumulative profits for the entire biotech industry are meager. The whole lot of them probably drip red ink if you take out Amgen, a 26-year-old company with $14 billion in annual sales and -- like Genentech and just a handful of others -- real profits."

Kessler continued:

"Mr. Pisano notes that 'drug R&D is a highly complex process; it is expensive, time consuming, and fraught with risk. In these respects, drug R&D is not too different from, say, the development of a new airliner, a new microprocessor, or even an epic movie.' The key word is risk. While an Airbus plane, Intel's Core Duo or 'Apocalypto' may have market risk, their development is undertaken with confidence that the products will at least make it to market; drug companies begin work on a new product with no idea whether it will even make it out of the lab, much less progress through clinical trials and onto drugstore shelves. A new drug might have the potential to be a blockbuster, but, then again, only one drug out of 6,000 newly developed compounds actually goes on sale. 'Productivity' is not a word used often in the drug business.

"'Drug development is a gamble in itself simply because of the hit-or-miss nature of the science -- or the 'profound and persistent uncertainty,' as Mr. Pisano calls it, 'rooted in our current limited knowledge of human biological systems.' But it becomes a staggeringly expensive gamble -- like playing blackjack at a table with a billion-dollar minimum -- because of the facilities required and the legions of experts in chemistry, biology, genomics and other fields who pour their time and energy into research. The 'nature of this process is integral,' Mr. Pisano points out. 'It cannot be broken neatly into different pieces.'"

Kessler's review prompted us to purchase the book, which appears to be very much worth reading. You can find a lengthy excerpt here or purchase it by clicking on one of the Amazon ads at the top of this blog.