How much money and how many patients do stem cell clinics like San Diego’s StemGenex make each year? A new court document has some insights from an unexpected angle.
I’ve been following StemGenex for years here on The Niche. It’s been a rollercoaster ride. Things hit a new low today, perhaps marking the operational end of the company, but we’ll see.
StemGenex has marketed non-FDA approved fat stem cells for a variety of health conditions. Their marketing is central to a patient class action lawsuit against them. Only a couple months ago it seemed the company was trying to possibly reinvent itself under a new name, Advanced Cell Medicine. They also received an FDA warning letter late last year.
Now StemGenex has filed for bankruptcy.
A hat tip to Leigh Turner for publicly posting the filing, which is a very unusual document with a number of surprises. It’s not clear what this filing means for the patients in the class-action suit against the firm, but it can’t be good.
Here are some of the nuggets from the bankruptcy filing.
- The firm’s gross revenue for the two years prior to 2019 was on average approached $4 million/year. That’s a lot money. In 2019 they’ve brought in relatively little suggesting some big changes. If you figure a cost per patient of about $15K, then they may have had hundreds of customers per year in the two years of 2017 and 2018, although this is just a “back of the napkin” kind of rough calculation.
- Attorney Richard Jaffe, who has represented stem cell clinics, is amongst the creditors listed by StemGenex, being owed more than $7K. Probably he did legal work for them and wasn’t paid. Other lawyers/law firms are listed and they owe one law firm about $95K.
- An IRB called Advarra is another creditor.
- They owe money to a number of former employees.
- StemGenex appears to only have $300 in cash in the bank. It does have other assets too though, some potentially worth thousands of dollars. Total assets including equipment may be worth as much as $155K.
- It seems they owe a landlord more than $300K.
- They owe $12K on another lawsuit settlement.
There’s a lot more in this filing too.
In my view it’s likely we’ll see other clinic firms and maybe suppliers too declare bankruptcy in the coming year or two. The financial pressure is especially high on fat stem cell clinics since they are generally now by definition selling unapproved drug products, which isn’t legal. However, the FDA is also making it clearer (e.g. see my post on this new warning letter) that many perinatal “stem cell” products are drugs as well, requiring premarket approval.