The Business of Diabetes: Geron No Mo!

I hope you'll pardon my title (its supposed to be a pun meant to sound like "Geronimo!", an exclamation used by anyone about to jump from great heights, which I thought was fitting this case). The company conducting the first-ever FDA-sanctioned human clinical trial in the U.S. of a therapy using human embryonic stem cells said that it was stopping that trial and exiting the stem cell business (see http://nyti.ms/rTNktH for The New York Times article on this) altogether. Like many biotech startups, Geron Corp., a Menlo Park, California-based company, isn't yet profitable. While this company helped pay for the initial derivation of human embryonic stem cells at the University of Wisconsin in the late 1990s, which gives it access to some patent rights in the field, like all startups, venture capitalists and shareholders want to see concrete progress and be assured that their investments might actually yield something in the foreseeable future.

Hence, on Monday, November 14, 2011, Geron Corp. announced that, effective immediately, the company would focus on its oncology programs, and pull the plug on any further development of its stem cell programs. However, the company is now seeking partners for its novel stem cell assets. Of particular interest to the type 1 diabetes community is what Geron referred to as pancreatic islet cells (known as "GRNIC1") for diabetes. Geron was granted U.S. Patent No. 7,033,831 in April 2006 covering the production of insulin-secreting cells from hESCs as well as two U.K. patents covering similar production methods.  Geron also has a worldwide exclusive commercial license covering hESC-derived islets from the Wisconsin Alumni Research Foundation.

Geron once boasted that not only had it differentiated human embryonic stem cells into islet-like clusters ("ILCs"), but unlike many other previous efforts to culture islets in vitro, Geron also claimed that its (along with its collaborators at at the University of Alberta) ILCs actually secreted insulin in response to elevated glucose levels (meaning they were appropriately glucose-responsive). Many other similar efforts to differentiate stem cells into insulin (and amylin) producing pancreatic beta cells had failed to respond properly to blood glucose levels. The protocol Geron used to to produce the ILCs supposedly involved a series of different cell culture steps that were supposed to mimic the progressive differentiation stages during development of the pancreas in humans (described in the journal Stem Cells in May 2007, see HERE for the journal citation). Other pancreatic cell types resembling those of the exocrine pancreas were also observed during the differentiation process. Also of note is the fact that the protocol supposedly does not utilize serum or feeder cells of any kind. Many others have used feeder cells from mice or other animals, raising questions as to whether cells derived from those processes would cross the line into xenotransplantation, and how regulators might view them as a result.

Geron did NOT receive U.S. taxpayer dollars for its work (nor did it rely upon funding from nonprofit organizations like the JDRF), but the company did receive funding from the State of California for its stem-cell efforts. In May, the California Institute for Regenerative Medicine announced a $25 million loan to Geron to support the spinal-cord injury trial. However, on Monday, Geron reported that the company had repaid the $6.4 million it received for the loan, along with with accrued interest. My readers may recall that the California Institute for Regenerative Medicine was started, in large part, by families with type 1 diabetes. This was discussed in a chat I hosted with the former Vice Chair of the U.S. NIH Stem Cell Task Force Dr. James F. Battey, MD. You may catch the transcript HERE.

Getting back to the topic du jour, many Californians were fed up with the promising field of regenerative medicine research being held hostage by national politics, hence they helped push for the State of California to fund it since the research was being stymied at that time by the Federal government and President George W. Bush's decision to limit Federal funding for the research to a handful of stem cell lines developed by the arbitrary date of his announcement. Although President Obama has since lifted those restrictions, it remains controversial, but California can do what it wishes regardless of who's in the White House (and this was funded specifically by a voted-sponsored proposition hence it's not subject to state lawmakers' whims ... yet). Because of the controversy, it's likely to be funded inconsistently subject to the personal views of lawmakers, which does little to advance the field.

There remains some skepticism among many researchers on the credibility of Geron's lofty claims, in part, because the methods used by the company have not (to my knowledge) been widely replicated by other scientists. The reason for focusing on oncology was that the company concluded that its cancer treatments were the most likely to generate cash soon, and management also expressed concern that capital for its stem cell research would be harder to attain today, so the company is laying off 38% of its relatively small staff to conserve the capital it already has. The Wall Street Journal reported (see http://on.wsj.com/tCmef9) that Geron's decision to exit embryonic stem cell research was due more to financial constraints rather than any scientific setbacks in the emerging, yet still controversial research field.

Roth Capital Partners analysts wrote that it's difficult to predict whether Geron will be successful in finding a partner (or buyer) for the stem cell assets. However, the Wall Street Journal speculated that one potential corporate buyer might be drug giant Pfizer Inc., which in 2008 created a Regenerative Medicine research unit in Cambridge, UK, and earlier this year started a clinical study of a stem-cell therapy for ulcerative colitis (another autoimmune disease). A Pfizer spokeswoman was not available to comment for the Wall Street Journal.

In the Phase I clinical trial which Geron struggled to gain FDA approval for (but was ultimately successful in attaining last summer, see HERE for more), which was for nervous system cells derived from embryonic cells, the cells were being injected into people with severe spinal cord injuries. So far, just four patients have been treated with these stem cells. However, Geron's CEO Dr. John A. Scarlett said there were "no signs" that the treatment was yet helping patients, but he added that was not expected in the early-phase initial trial, which mainly focuses on safety. So far, he said there had been no sign of any safety problems.

Dr. Scarlett also said in the interview with the aforementioned New York Times reporter: "I deeply believe in the promise of stem cells. I don't think that promise [of stem cell therapies] is in any way, shape or form changed by what we're doing" adding that Geron was not divesting itself of the stem cell business because of trial results. Dr. Scarlett, who took over as chief executive less than 2 months ago, said with money scarce, the company decided to focus on its experimental cancer therapies, which are further along in development, adding that Geron needed to conserve resources at a time when it was difficult for small, unprofitable life science firms to raise capital. Geron currently has no products on the market, and would have spent $25 million per year to continue its stem cell program.

There are still a few companies pursuing this research. Another one I've mentioned before is also a California-based company in San Diego known as ViaCyte (formerly known as Novocell). But the soonest ViaCyte's technology would begin human trials would be 2013, which is optimistic.

Some respected diabetes researchers helpedput the status of this field of regenerative medical research into perspective:

Dr. Camillo Ricordi, an islet cell transplantation expert at the University of Miami Diabetes Research Institute told the Los Angeles Times "There was too much hype for this type of technology. There are no shortcuts in this kind of research." But he added "Next century, when you look back at it, two decades won't seem like much. But for those affected right now, every month is too long."

Dr. Gordon C. Weir, a diabetes researcher at the Joslin Diabetes Center in Boston seems to share both the researcher and patient perspective, saying "It's maddeningly simple as a concept. It's been incredibly frustrating that we can't bring this to the clinic more quickly."

Even though skepticism about Geron's technology remains, there also appears to be an opportunity for nonprofit organizations such as the Juvenile Diabetes Research Foundation, the Diabetes Research Institute Foundation where Dr. Ricordi works, and even the American Diabetes Association to license Geron's proprietary stem cell regeneration methods, test them and possibly bring them to trials, which might be preferable to a company like Pfizer buying the assets and keeping them sealed in a vault. I reached out to each of these nonprofit organizations, but none had responded to my inquiry at the time I prepared this posting. Stay tuned for more!