Palo Alto biotech company StemCells has approved the research use for free of its patented technology by a children’s research hospital, clearing the way for greater study of conditions such as autism, brain cancer and neurological disease.

The conclusion of three years of negotiations between the company and Children’s Hospital of Orange County comes one month after a Mercury News article described the frustration of researcher Philip H. Schwartz, who was unable to study the
donated brains of dead children.

The agreement "reconfirms the common purpose and hope we share of improving human health by unlocking the power of stem cells," said Schwartz, director of the hospital’s National Human Neural Stem Cell Resource. "I am very pleased with
this agreement, as I can now continue with my research on human neural stem cells."

StemCells’ attorney Ken Stratton called the agreement, announced Tuesday, "a ‘win-win’ solution with CHOC Children’s."

Neural stem cells, the immature precursors to brain cells, offer huge insights into brain disease. They allow researchers to re-create disease and test ways to interrupt its progression.

In January 2007, StemCells sent the hospital a letter saying it owned rights to the technology Schwartz used to extract the cells. Hospital attorneys told Schwartz to halt his research and stop giving away the cells to dozens of other academic scientists also conducting brain research.

The company was concerned that the hospital might sell the cells, Stratton said.

It took time for the company and the hospital to agree on the terms of the so-called research license, he said. The company denied that it sought payment for the hospital’s use of the technology.

Under the terms of the license, the hospital can extract, grow and use the neural stem cells for noncommercial purposes.

Critics of StemCells’ delay, including John Simpson of the Los Angeles-based Consumer Watchdog, wondered what took so long.

"There’s something wrong with our patent system when significant academic research can be stalled for three years while corporate lawyers haggle about dotting I’s and crossing T’s, but the important thing is that an agreement has finally been reached," Simpson said. "I am delighted Dr. Phillip Schwartz and his academic colleagues can resume their important work."

Contact Lisa M. Krieger at 408-920-5565 or [email protected]