Will stem cell clinic Celltex reinvent itself after game-changing FDA warning letter?

The FDA warning letter that Celltex received in late September (but that just went public yesterday–see my initial reaction here) is a possible game-changer for that company in my opinion.


The letter outlined in great detail the FDA’s concerns with how Celltex manufactures its stem cell product ranging from lack of documentation to concerns about aseptic/sterile technique issues to failure to control temperature.

The FDA list goes on and on…and on….and almost every item starts with the word “Failure”.

However, in addition, the FDA unambiguously says that Celltex is violating federal regulations in a number of ways because the Celltex stem cell product is a drug.

Not only is the product a drug, says the FDA, but also Celltex does not have the appropriate legally required licensing to produce and sell a biological drug.

For example the FDA says:

The CellTex AdMSC product is not the subject of an approved biologics license application (BLA) nor is there an IND in effect. Based on this information, your product violates the FDC Act and the PHS Act. 

The FDA saying that you have violated both the FDC Act and PHS Act is not trivial.

As if this wasn’t bad enough, the separate firm, Texas Applied Biomedical Services, running the IRB overseeing the Celltex patient trial also got a warning letter from the FDA as well and the FDA suspended enrollment of new patients.

Celltex warning letter

The FDA letter to Celltex (see snapshot of the top above) requires a response from Celltex within 15 business days to the issues outlined by the FDA, which is just about today. In that regard, the FDA says:

You should take prompt action to correct these deviations. Failure to promptly correct these deviations may result in regulatory action without further notice. Such actions include seizure and/or injunction.

I think the FDA is sending the message that they mean business.

So what’s next for Celltex?

Given  the warning letter, I think one possibility is that Celltex will re-invent itself on some level.

One option is that Celltex could take its business outside the U.S. rather than deal with trying to fully resolve so many issues with the FDA. Given geography, it could “simply” move across the border into Mexico.  I’m not entirely sure what would be involved in that process. In my opinion such a move would be unwise for the company and its patients.

Another related option is that Celltex could move its grown stem cell business outside the states, but market a new, non-amplified stem cell product within the U.S. too.

Alternatively, Celltex and the FDA could end up in a court battle over the existing business model, but given the recent legal precedent of Regenerative Sciences Inc (RSI) losing their legal battle with the FDA over pretty much the same issue (i.e. grown stem cells being a drug), the odds of prevailing in such a case could be low. It is also possible that RSI could win in the future against the FDA on appeal. One never knows how court cases will go and Celltex could challenge the FDA and roll the dice, but having legal precedent against you from day 1 in a legal case seems risky.

In another approach, related to the one immediately above, Celltex could basically stall, hoping that Mitt Romney wins the Presidential election and that the Romney administration would pressure the FDA to back off.

Finally, Celltex could work very hard to address all the FDA issues, get an IND and a BLA, and fix up the laboratory practices issues, while their IRB company could resolve FDA concerns about the IRB or Celltex could find a new IRB that satisfies the FDA. Then Celltex could resume their business having dotted all the i’s and crossed all the t’s for the FDA. This seems like the best outcome for patients, but would take a lot of time and money for Celltex. In the long run, to me this seems like the wisest approach.

It will be fascinating to see how this story continues to unfold.