June 1, 2011 (Vol. 31, No. 11)
Lisa A. A. Haile J.D., Ph.D. Partner, DLA Piper Co-Chair, Global Life Sciences Sector
Window for Investment in Sector Thrown Open by Recent Lifting of Stem Cell Research Injunction
The stem cell research community has been in a state of limbo since August 2010 when a court ruling resulted in the issuance of an injunction blocking the use of federal funds for embryonic stem cell (ESC) research. This hold on federal funding for certain stem cell related projects slowed the progress and momentum of the last decade so much that investors became reticent to invest in the sector.
Almost one year ago, Federal District Court judge Royce Lamberth shocked the academic, research, and medical communities by issuing a preliminary injunction against further federal funding of ESC research, saying it was in violation of the Dickey-Wicker amendment.
Judge Lamberth’s injunction was lifted on April 29 by a U.S. Appeals Court. The injunction was specifically against the NIH’s revised policy on the funding of stem cell research. The NIH policy, which would open up research funding to many more human embryonic stem cell lines (hESCs), resulted in a lawsuit from two researchers whose studies use adult stem cells. They believed that their chances of obtaining grants would be lower if they were competing for grants with ESC researchers.
In the recent opinion lifting the injunction, the judges noted that “the plaintiffs are unlikely to prevail because Dickey-Wicker is ambiguous and the NIH seems reasonably to have concluded that, although Dickey-Wicker bars funding for the destructive act of deriving an ESC from an embryo, it does not prohibit funding a research project in which an ESC will be used.”
They went on to conclude that “…the balance of equities tilts against granting a preliminary injunction. That, combined with our conclusion the plaintiffs have not shown they are likely to succeed on the merits, leads us to hold the District Court abused its discretion in awarding preliminary injunctive relief.”
The judges took into account the “unambiguously expressed intent of Congress” and whether the NIH interpreted that intent reasonably. The key issue at hand was whether Congress meant to ban all research involving hESC lines created through the destruction of an embryo, or to just ban the destruction of an embryo.
While Judge Lamberth determined that Congress intended to ban all hESC research, the majority in the appeal felt that the Dickey-Wicker amendment is ambiguous and that the NIH was reasonable in its conclusion that funding for the destruction of embryos, and not further research in which an ESC will be used, was intended to be banned.
Many states now have agencies that provide grants to stem cell researchers such as the California Institute for Regenerative Medicine, which will grant $3 billion over ten years. While the dispute over federal funding restrictions does not apply to state funding of stem cell research, most researchers today have grants providing both state as well as NIH funding.
Ever since the initial ruling imposing restrictions on federal funding, researchers with dual state and federal grants were required to strictly separate workspace, reagents, and salaries for lab technicians or post-doctoral fellows based on the source of the funding. For now, this will no longer be necessary, which should make research in their labs more efficient.
Analysis & Insight: Patent Uncertainty and Political Flux Keeping hESC Investors from Seeing Returns
Funding for hESC research is also impacted by the confusion around patentability of products based on hESCs. Read all about it here.
With the current ruling in place, it is expected that some of the uncertainty regarding the future of government funding for ESC research is gone. As with most science at the basic research level, stem cell research has flourished within nonprofit research institutes (e.g., Sanford-Burnham Institute for Medical Research, The Scripps Research Institute) and universities (e.g., The Regents of the University of California, Harvard, Johns Hopkins) that rely primarily on government-funded research grants.
It is critical that federal funding continue for laboratories where early research occurs in order to provide initial proof of concept before private investors step onto the playing field to move science toward development and ultimately commercialization of products to treat spinal cord injuries, Parkinson disease, cardiovascular disease, and diabetes.
Not all investment in regenerative medicine has come from traditional private sources or venture capital firms. Last year Google Ventures announced that it was planning to invest in regenerative medicine. While traditional venture capitalists remain hesitant to back stem cell technologies in any significant way, Google’s move indicates that strategic investors finally have regenerative medicine in their sights.
In addition, many large pharmaceutical companies are developing internal and external regenerative medicine programs, including Pfizer, Johnson & Johnson, and GlaxoSmithKline.
Advanced Cell Technology (ACT) and Roslin Cells recently agreed to collaborate to establish a bank of GMP-grade hESC lines using ACT’s single-ceblastomere technique for deriving embryonic stem cells without damage to the embryo. The collaboration intends for the hESC lines to be created and stored using protocols that meet the regulatory standards of the European Medicines Agency (EMA) and U.S. FDA.
Roslin Cells, which is an offshoot of the Roslin Institute, will be responsible for maintaining the banked hESC lines, which will be made available for both research and commercial purposes. In addition, ACT and Roslin Cells will provide a commercialization license so that third parties will have a predictable path for commercialization of products made using the hESC lines.
According to International Stem Cell (ISCO), it has made significant progress toward creating the first bank of immune-matched human parthenogenetic stem cells (hpSCs). Parthenogenetic stem cells are a unique type of stem cell that are created from unfertilized eggs (oocytes). They have been shown to be pluripotent, i.e., they have the capacity to become almost any cell type in the body, yet they avoid ethical issues associated with use or destruction of viable human embryos.
Unlike other pluripotent stem cell types, such as embryonic stem cells for example, they can be created in a genetically homozygous form. In such a form, homozygous hpSCs can be immunologically matched to millions of individuals. This makes possible, for the first time, the establishment of a bank (UniStemCell™) containing stem cell lines that are immune matched to a large patient population. Cell lines from the UniStemCell bank will be made available to government, academic, and corporate researchers worldwide.
Currently, there are only a limited number of companies that are true stem cell players. However, if the April decision holds and government funding increases allowing private research to thrive, there will be breakthroughs in all areas of stem cell research including hESCs, adult stem cells, parthenogenesis, and iPSCs, and the industry could grow exponentially over the next decade.
At present, there are a number of companies involved in regenerative medicine—some of which have been around for years. Such companies include Aastrom Biosciences, developing cell products for the regeneration or repair of human tissues; Advanced Cell Technology; Geron, which has received approveal for clinical trials with hESCs; Invitrogen, which sells products and services that support research; MultiCell Technologies, which is focused on MS-related chronic fatigue, infectious disease, cancer, and autoimmune disease; StemCells, which is developing adult stem cell therapeutics for treating damage to the CNS, liver, and pancreas; ViaCell, which sells ViaCord, a product that is used to preserve a baby’s umbilical cord blood; and ViaCyte, which is dedicated to creating and commercializing cell therapies to treat diabetes.
The outlook for the future of regenerative medicine is clearer today than ever. Companies are poised to replenish their technology pipelines with nascent and developing stem cell science from leading research institutes and universities, now that some of the political and legal risk has been reduced.
Lisa A. Haile, J.D., Ph.D. (firstname.lastname@example.org), is a partner at DLA Piper U.S. and co-chair of the firm’s global life sciences sector group..