California's Stem Cell Progress Revisited

San Jose Mercury News, January 28, 2009

Known as Proposition 71 and voted into California state law in 2004, the $3 billion stem cell initiative which created the California Institute for Regenerative Medicine is now being reexamined.

After encountering setbacks from a variety of sources which have included legal, economic and scientific challenges, a number of scientists are taking a second look at the embryonic stem cell initiative which was supposed to have accomplished so much but which instead has accomplished so little. As the result of a growing lack of investor confidence in embryonic stem cells, not only as a consequence of the ongoing ethical debate that surrounds embryos but also due to caution regarding the inherent medical risks that are unique to embryonic stem cells, only a small handful of companies in California are actually experimenting with embryonic stem cells. Despite predictions that Proposition 71 would create a job boom in the stem cell field which in turn would stimulate greater economic prosperity throughout the state, as well as medical cures for disease and injury, in fact the exact opposite has proven to be true, and currently the California Institute for Regenerative Medicine has even put a freeze on the distribution of its scheduled funding. Additionally, the promise of a clinical therapy ever actually being developed from embryonic stem cells seems to be an unrealistic dream that is retreating further and further away with each passing day.

According to Alan Trounson, president of the California Institute for Regenerative Medicine, "I would have expected there to be more interest."

In 2004, proponents of Proposition 71 predicted that the new law would generate more than 2,000 jobs per year during the first 5 years, but in fact there is no demand for such jobs due to a scarcity of companies that are willing to work with embryonic stem cells. Although Geron of Menlo Park has been predominantly in the news lately, with their FDA approval for the first clinical trial ever to be conducted with human embryonic stem cells, in actuality Geron is not as large an organization as people might think, with only 140 employees according to its latest annual report. Furthermore, Geron invested more than $150 million over 13 years in preliminary research in order to win FDA approval just to begin clinical trials with embryonic stem cells, and many more years of expensive clinical trials will be required before the FDA can even consider approving the marketing of an actual therapy. Since most of Geron's preclinical research was conducted prior to Proposition 71 and therefore prior to the creation of the California Institute for Regenerative Medicine, most of Geron's funding came from alternate sources that were unrelated to the Institute. Even if Geron is successful in bringing a new stem cell product to market, years from now, companies such as Geron and Advanced Cell Technology hold the patents for their proprietary technology, which is a disincentive to other biotech entrepreneurs who would be at a competitive disadvantage if they were to try to enter the field. In fact, most of the $635 million distributed thus far by the California Institute for Regenerative Medicine has been awarded to university laboratories or to other nonprofit organizations for basic research on embryonic stem cells, and not to biotech companies, which have received less than $6 million from the Institute. There have also been lawsuits challenging the constitutionality of the Institute, which resulted in a further restriction on the distribution of grant money until the Supreme Court dismissed the lawsuits in May of 2007. Additionally, there remain a number of safety concerns about embryonic stem cells, especially in regard to teratomas, which are a specific type of tumor that embryonic stem cells must, by definition, form, and such concerns have cast serious doubt on the safety and efficacy of embryonic stem cells as a clinical therapy. For those few businesses which are willing to delve into embryonic stem cell research, they have found even fewer investors who are actually willing to back them, due to the unknown timeline at which a profit might ever be attainable.

According to Robert Lanza, chief scientific officer of the Los Angeles-based stem cell company Advanced Cell Technology, "Raising money has been almost impossible." In 2006, Advanced Cell Technology relocated its headquarters from Worcester, Massachusetts to Los Angeles in order to take advantage of the state funding for embryonic stem cell research that was enacted into state law with the passing of Proposition 71. Since then, Advanced Cell Technology had been working toward the development of an embryonic stem cell therapy for diseases of the eye, but was forced to halt its research when the company encountered financial problems and adequate funding was not forthcoming.

Meanwhile, in sharp contrast to embryonic stem cells, adult stem cells are already being used as real therapies in real clinics around the world, treating real human patients with real diseases and injuries - while also paying a hefty dividend to investors. Consequently, an increasing number of scientists, investors and patients alike are turning their attention to adult stem cell therapies, since embryonic stem cells have yet to prove any therapeutic viability. Even if restrictions on federal funds are lifted by the new administration, the ethical controversies and the medical dangers, especially that of tumor formation, which are inherently problematic in embryonic stem cells, are enough to dissuade many biotech entrepreneurs from having anything to do with embryonic stem cells.

Ethics and politics aside, embryonic stem cell research is a lengthy and risky process, which thus far has been frought with dangers, scientifically as well as financially.