End of line for StemCells Inc., pioneering & controversial stem cell biotech

A sad, but not surprising day for the stem cell field as the biotech StemCells, Inc. announced that it is winding down its operations after terminating its spinal cord injury trial called the Pathway Study. The data generated so far did not justify continuing the trial.stemcellsinc-logo

StemCells, Inc. (stock symbol STEM) has struggled financially for quite some time. In February of this year I asked if the company could cheat death given how bad things were looking and what I was hearing through the stem cell grapevine. Unfortunately the answer appears to be “no”.

I interviewed the leadership of the company two years and they were optimistic about the company’s outlook at that point. However, STEM CEO Marty McGlynn departed earlier this year and that was seen as another sign of things not looking bright.

Dr. Stephen Huhn, Chief Medical Officer and VP of Clinical Research was quoted in the press release today that the scientists felt there was some signal of efficacy and they were encouraged by the safety profile:

“Data from earlier clinical trials involving the Company’s proprietary HuCNS-SC® human neural stem cells have demonstrated an early signal of biological activity in multiple disease indications. Our earlier Phase I/II clinical trial in chronic thoracic spinal cord injury showed measureable gains, while the Phase I/II clinical trial in geographic atrophy showed a positive safety profile and favorable preliminary efficacy. Additionally, a Phase I study in children with Batten’s disease showed that transplantation of the cells into the brain was safe and resulted in long term survival of the cells.”

The company has been somewhat controversial on a number of levels as I posted about previously including concerns over the funding ($20 million at one time) it received from CIRM, former CIRM President Alan Trounson joining the leadership of STEM shortly after leaving the agency, and other issues.

The hope is that despite the company ultimately closing that this kind of stem cell clinical science can continue as there is a huge need for new therapies for a variety of conditions including spinal cord injury and paralysis. Perhaps another company will purchase the IP here and build on some of the earlier work.

I’m planning to post more of a kind of thorough post-mortem for the company later this week. There’s a lot to think about here. For instance, a fair question today is how we should now process CIRM’s sizable investment in STEM. Is there anything that can be learned from it for the agency and the field?

10 thoughts on “End of line for StemCells Inc., pioneering & controversial stem cell biotech”

  1. I’m not entirely in agreement that commercial companies in the stem sector have to be limited to one type of cell source. The “art” of the talent in the scientific area relates to process differentiation protocols (methods) and as pointed out those are valuable IP or in many cases know how skills that are the proprietary assets (people being fundamentally first in that balance sheet calculation). Where IMO commercial ventures fail is in the fixed notion that at all costs they will stick to a given route to market at the expense of developing multiple programs and always having new technologies-in-play given the multitude of possible solutions to effect an outcome in the biology arena.

    In regard to academia being the more flexible and a pure play solution for stem cell research – that may be true but the timelines seem to drift in many cases from my viewpoint as research without the balance of commercial agendas has had some issues with efficient translation. I believe there is and can be a healthy collaborative relationship between early stage research and commercial enterprise, especially when it comes to proof of concept stage. There is a sensible rational for having a profit motive where market dynamics propels science forward – notwithstanding the important and necessary hurdles.

    Back to the diversity of the route – the breakthrough in the field IMO isn’t so much the individual program possibilities but the realization now that no matter what cell you have it can perform with applied technology. The issue then becomes commercial viability and market access – something which brings forward other issues rather than it works or doesn’t PR.

    Btw ReNeuron and Neuralstem as still in the hunt as fetal source players – with Exosomes and Small Molecules being developed within their respective pipes.


  2. Paul- According to CIRM’s website (https://www.cirm.ca.gov/our-funding/funded-institutions), StemCells was awarded 3 grants for a total of $40,098,050. However, if you look further you’ll see that they “only” got $8,991,742.

    That was because they turned down the award for spinal cord injury and the award for Alzheimer disease was only half spent because their cells failed in animal models (or, as StemCells put it, the animal models failed, not the cells).

    It would be hard to argue that this was a good use of CIRM’s funds. But remember, those awards were made when Alan Trounson was CIRM’s president.


  3. Deepa Bhartiya

    I completely agree with Dr Loring that once you float a company you are stuck to a particular stem cell type. It is always safe to work in an academic environment. Stem cells are not yet ready for the clinics. More research is required. We do not need fetal stem cells – all our adult body organs harbor stem cells which can produce large number of tissue specific progenitors under disease condition. We need to understand this biology to ensure endogenous regeneration.

  4. Anonymous Stem Cell Repairman

    My take is: Of course CIRM wasn’t wise to sink that money into StemCells Inc. That could have been better spent on funding other proposals in academia. However, I think if CIRM revisited that decision, they would still think that it was the right choice under their mission.

    My understanding is they really, really want a therapy and want it fast, all so they can show it to the voters in 2-3 years (maybe sooner, I can’t remember when the funding issue is on the ballot again, if it even is anymore).

  5. With the implosion (SC Inc, Tengion, etc.), or lack of financial performance (Ocata) of so many well capitalized stem cell based companies, do you ever get worried that investor interest in the stem cell segment may go the way of many previously hot biotech niches that entered the “forgotten” realm (anti-sense, ribozymes, etc.)

  6. I’m annoyed that CIRM didn’t give that money to companies I have invested in. My stock picks look like losers – and its CIRM’s fault! Trounson has made me look foolish.

  7. @Jeanne, Your approach sounds like it makes good common sense. An edgier question some are asking today is whether CIRM was wise to sink $20 million or whatever it did into STEM?

  8. Anonymous Stem Cell Repairman

    I seem to remember a presentation of theirs where they claimed that the fact that the cells couldn’t be found at the injection site at a later date was clear evidence that it was working. That…that is not most obvious interpretation.

    I think they were also particularly hamstrung in their choice of cells due to not being able to license the best non-iPS/ES technology when they started for personnel-related reasons.

  9. Paul- as you know, I’ve been in biotech as well as academia.

    One of the fundamental differences is that for-profits are constrained by their intellectual property. StemCells, Inc holds patents on fetal neural stem cells – which would give them a monopoly on their use in therapy…if the therapy worked.

    In an academic environment, I have no such constraints- if I discover that one cell type works better than another for a therapy, I can switch to the more effective cells- no board of directors, investors, or IP lawyers are going to tell me that I can’t do that. Academic institutions can tolerate more risk- they aren’t going to close down if their faculty’s drug or therapy fails.

    Down the road, of course, if my therapy works, I will probably seek investment to expand it to more people. At that time, but not before, we’ll examine the intellectual property issues and license the patents that we actually need for moving forward.

    U Penn and CAR-T therapy is the model I want to follow. They first developed the therapy, showed that it worked, and only then started companies. I know it’s not that simple, but I like the principle.

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