In laboratories across California, scientists are racing to turn stem cells into therapies for some of the world's most debilitating illnesses from cancer to Alzheimer's.
Many of those researchers have received funding from a unique source: California's stem cell agency. Created by voters a decade ago, the California Institute for Regenerative Medicine is authorized to spend $3 billion in taxpayer money on stem cell research and has so far doled out more than half of that in grants and loans.
Scientists have deepened their understanding of stem cells' novel potential to develop into different cell types in the body. But the clock is ticking: the agency must spend what remains of its state bonds by 2017.
Fund recipients are under pressure to show results – commercially viable therapies, ideally. Universities and other nonprofit groups have received most of the money, but the pressure is especially heavy on biotechnology companies that have staked their livelihoods on such therapies.
What the stem cell agency has done, companies and analysts say, is help fund the crucial early research – the work that indicates, not guarantees, that a therapy might be effective and safe in humans. But these discoveries are still years from clearing regulatory approvals and reaching consumers.
Critics say this process has been too slow. Researchers argue that scientific breakthroughs don't happen on a pre-determined schedule or budget.
Larger studies
"The biggest challenge for most of them has been simply moving the scientific process far enough along so that we're able to demonstrate the results in larger types of studies," said Keay Nakae, a senior research analyst with Ascendiant Capital, an investment banking and financial advisory company.
California voters approved creation of the agency in 2004, three years after President George W. Bush banned the use of federal funds on research with embryonic stem cells, which can turn into virtually any type of tissue in the body.
Since then, scientists have learned more about stem cells, which in many tissues can serve as an internal repair system. They can divide endlessly to replenish other cells and can be induced to become tissue- or organ-specific cells, such as muscle or red blood cells.
Manipulated the right way, these cells could generate replacements for cells lost through injuries and diseases, scientists believe. That ability could change treatments for debilitating diseases that have no known cures.
The agency has spent $1.8 billion so far, and most has gone to universities and nonprofit institutes. About $143 million has gone to companies, either to pay for research projects in full or supplement research funded through other means.
In small clinical trials, Newark company StemCells Inc. is testing stem cell therapies for spinal cord injuries, a rare central nervous system disorder, and the eye disease called dry age-related macular degeneration. The stem cell agency is giving it a $19 million forgivable loan to study how stem cells might treat Alzheimer's disease.
"We're a publicly traded company, and the marketplace has funded our efforts to date through the sale of stock in the company," said Martin McGlynn, StemCells' president and CEO. "But we would not have been able to undertake another program, and certainly one as challenging and as risky as Alzheimer's, were it not for the fact that (the California Institute for Regenerative Medicine) was willing to provide funding to us."
Funding for trials
Stem cells are new and challenging territory, as Geron in Menlo Park learned in 2011. The company was running the world's first clinical trial of a therapy using human embryonic stem cells to treat spinal cord injuries when it halted the trial, citing a lack of funding. The stem cell agency had given Geron a $25 million loan for the trial, which the company has since repaid with interest.
That trial is now coming back to life under Asterias Biotherapeutics in Menlo Park, which bought Geron's program. In late May, Asterias won $14 million from the stem cell agency to help relaunch the trial. The company said its therapy appeared to be safe in a tiny initial trial of five patients.
Other companies have reported positive results from early trials in animals or humans. ViaCyte in San Diego, which has received almost $40 million from the stem cell agency, is seeking to test a therapy for Type 1 diabetes in humans. Capricor in Los Angeles is starting to test therapeutics to prevent and treat heart disease. And CalImmune in San Diego is testing a gene-based stem cell therapy to help cure HIV patients.
In 2009, the stem cell agency set out to speed up the development of stem cell therapies by awarding more than $250 million to 14 teams of researchers from both companies and non-profits. Nine are now in clinical trials or getting federal approval to start them, the agency says.
"We actually think that we are really moving along at a very good clip," said Jonathan Thomas, chairman of the agency's board. "As we sit here today, nobody can predict which of the trials will ultimately lead to a product. Having said that, we feel that we are very strongly proceeding here and getting some very good results to this point."
As trials add more patients, they become more expensive. The challenge in the future will be to find money to keep these trials going when the stem cell agency runs out of money.
"It's certainly not going to make life easier," said McGlynn of StemCells, which reported a $28 million operating loss last year.
"To their credit, the California voters stepped up to the plate, and $3 billion is a lot of money," he said. "But an awful lot more is going to be needed to finish the job."
McGlynn is open to the idea of another state bond. Others say investors, not taxpayers, should start to foot the bill.
'Training wheels'
"It does seem to me that at a certain point, the government research and funding got things going, got the infrastructure in place, and it's about time to take the training wheels off," said John Simpson, stem cell project director at Consumer Watchdog in Santa Monica.
It is not realistic to expect a stem cell therapy to reach consumers in five years, especially when the field is so young, said Enal Razvi, managing director at Select Biosciences, a life sciences market research company.
Even so, by 2017, "if they don't have products already on the marketplace, they should not be expecting public money to fill their portfolio," he said. "Apple doesn't go to California and keep asking for money to build their own iPhone."
Thomas said he is looking into potential sources of alternative funding, such as philanthropy or company partnerships.
He wasn't ready to discuss details, he said, but acknowledged: "2017 will be here before you know it."
Stephanie M. Lee is a San Francisco Chronicle staff writer. E-mail: [email protected] Twitter: @stephaniemlee
