10 companies, 56 groups apply for grants to get stem cell products to trial

San Diego Union-Tribune

For the first time in its three-year existence, the state taxpayer-funded stem cell institute is offering grant money to biotechnology companies.

Ten companies, including at least two in San Diego, said they plan to apply for money for so-called disease teams, a cutting-edge concept of bringing academia and industry together to share expertise and perhaps speed the lengthy and expensive process of getting new therapies and diagnostics to market.

The 10 companies, as well as 56 teams from universities and nonprofit research institutes, have sent letters to the California Institute for Regenerative Medicine, stating they intend to apply for grants of up to $55,000. The deadline for applications is the end of this month.

The stem cell institute wants to issue up to 20 planning grants to allow prospective disease-team members to hold teleconferences and travel to meetings around the state with potential collaborators to work out the details of how their group would function.

The idea is to form a team whose members have expertise in all areas of developing a drug or diagnostic — from the initial idea to testing it on animal models, producing enough of it for experiments and figuring out how it meets the needs of patients.

The planning grants are expected to be awarded in June.

In the second half of 2008, the stem cell institute will offer large, multiyear grants to disease teams for product development, said Patricia Olson, the institute’s director of scientific activities.

The size of the research grants has not been determined. However, the teams will not receive a lump sum. Funding will be spaced over several years, and vary depending upon the expense for that phase of research.

The teams will be required to meet certain milestones before they receive each funding installment.

“This is a new and exciting era for CIRM,” Olson said. “We are talking about creating potential therapies and diagnostics that will go into the clinic.”

Novocell, a privately held company in San Diego, and International Stem Cell Corp., a publicly traded company in Oceanside, said they have applied for the planning grants.

Novocell 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.

“Obviously we wanted to put the team together on capabilities, so we didn’t choose a company we felt would be a direct competitor or that could do what we do,” Lewis said.

Novocell also plans to be part of a second team that will focus on a delivery system for stem cell therapies that would avoid immune-response problems caused by injecting foreign cells into a patient, Lewis said. The company’s encapsulation technology and the research that led to it is of particular interest to this team, which would be led by the academic researchers, he said.

“It’s very early days in this process, but we feel we could benefit from both of these teams,” Lewis said.

Oceanside-based International Stem Cell Corp. has created corneas using embryonic-like human stem cells derived from an unfertilized egg.

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.

Parthenogenesis is attractive to some in the scientific community because it avoids the destruction of an embryo, which makes embryonic stem cell research contentious.

Moving forward, the company would like to team with scientists from the University of California system, including UC Irvine‘s Hans Keirstead, who is receiving financial support from the company for research, Krstich said.

Stem cell institute leaders would not reveal the other companies or the academic teams that want the grants. The institute also would not provide a breakdown of the diseases that the teams plan to tackle.

The concept of funding disease teams began during the stem cell institute’s process of writing its long-term strategic plan.

A core mission of the institute is to bring new therapies and diagnostics to market. Its staff and leaders are seeking to do that through proven development processes, as well as innovative ones.

The disease-team approach seemed like an effective way to create synergies between companies and academic teams with complimentary expertise, Olson said.

The disease-team funding does not seek to support basic research, said Bettina Steffan, a scientific officer at the institute, but rather aims to help develop existing discoveries to the point of clinical trials.

Generally, academia makes the initial discoveries and industry has more expertise in mass-producing drugs for clinical trials, and getting regulatory approvals for trials.

Private investment, such as venture capital funding, is more likely to become available in these later stages, when a therapy is ready for clinical trials.

The goal of the disease-team grants is to get therapies to that point.

Knowing that the stem cell institute has made a long-term commitment to fund the work should build team loyalty and determination to stick with it, Steffan said.

Biotechnology companies, which spend enormous amounts of money, are happy to finally have the institute as a potential funding source.

Novocell‘s Lewis said Proposition 71, the voter bond initiative that created the $3 billion stem cell institute, had generated lots of attention in the state.

“It would have been a huge disappointment if companies could not be grant recipients and participants in these program,” he said. “Obviously the likelihood of an academic group developing a therapy is not high without commercial enterprise behind it.”

Before it could begin offering funding to companies, the institute had to work out its policy for the ownership of discoveries made with its money. Biotechnology executives from around the state attended many meetings to discuss how the institute could get some profit. But the executives were also concerned with not having to pay so much to the state, that it would not be worth the companies’ investment in a risky drug discovery process.

To have 10 companies from around the state say that they are interested in seeking funding is validation that they can live with the institute’s policies, said John Simpson of the Foundation for Taxpayer and Consumer Rights.

“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.”
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Contact the author Terri Somers at: (619) 293-2028;[email protected].