Pivot of Nasdaq-traded Celularity highlights tensions & risks from Florida stem cell law

Robert Hariri has been a familiar face in the biotech field, including as CEO of Celgene, but one of his newer companies, Celularity, has been in the news lately. He also co-founded a firm called Fountain Life that has recently partnered with Celularity.

I’ve been following these firms for years and was struck by a recent big pivot by Celularity based on the new Florida stem cell law that allows non-FDA-approved cells to be used clinically in that state. The Florida law seems to conflict with aspects of FDA regulations based on federal law so it’s unclear how that will play out.

Hariri also just did an interview on Fox News about stem cells and his firms, which was interesting.

Let’s walk through what’s going on here and what it might signal for our field.

What is Celularity?

Celularity, which Hariri co-founded with Peter Diamandis, is a publicly-traded biotech (CELU) focused primarily on placental tissue and cell therapy development.

The Celularity placental tissue products seem to be 361 (non-drugs) that can be marketed without clinical trials, INDs, etc.

In contrast, the firm’s investigational placental cell therapies appear to me to probably be biological drugs (351s) requiring extensive engagement with the FDA and premarket approval. Of course, only the FDA decides how to define a product as a drug or not. However, Celularity has gotten a few INDs in the past, which is consistent with placental cells being a biological drug.

Unfortunately, the firm is facing potential Nasdaq delisting due in part to financial issues but potentially could resolve these issues. (As a side note, many other cell therapy biotechs have also been facing struggles lately. For example, BrainStorm Cell Therapeutics was just delisted from Nasdaq.)

As I’ve written before, within the cell therapy area, Celularity’s aim to develop cancer immunotherapies looks particularly interesting to me.

Placental cells for orthopedic conditions, wound care, and pain management?

However, I’m less bullish about the idea of using placental cells more broadly as therapies. Again, as allogeneic cell therapies they appear to most likely be biological drugs. In addition, the specific potential uses under the Florida law for orthopedic conditions, wound care, and pain management would seem to be non-homologous, which also can trigger a drug classification.

More broadly, as I said the Florida law seems to conflict with federal law and FDA regulations. Since federal law has supremacy, it might seem at first that the stem cell law in Florida (and other states with similar laws challenging the FDA) are not going to be valid for long, but it might not be that simple.

Before we dig into that some more, what about Fountain Life?

What is Fountain Life?

Hariri, Diamandis, and William Kapp more recently founded Fountain Life, a wellness firm. Life coach Tony Robbins is a partner.

As indicated in the interview on Fox, Fountain Life focuses in part on doing regular scans of the body to look for early signs of disease, like cancer.

For a few years, as I’ve written here on The Niche, I couldn’t clarify whether Fountain Life offered unproven stem cell procedures. For a time perhaps they didn’t.

Now the Fountain Life clinic websites market stem cells in Florida.

You can find the video of the Hariri interview here on Brian Kilmeade’s show One Nation. Try to start watching about the 33:30 mark, which is when Hariri comes on the show. The interview touched on several key recent developments in stem cell oversight. It emphasized longevity as a target for stem cells.

Kilmeade also seemed upbeat about regularly screening, perhaps meaning regular whole-body scans, which I’m skeptical about at this point.

The new Florida stem cell law came up too.

The big pivot for Celularity via new opportunities in Florida

As you can imagine, with the new Florida law, there are possible opportunities for many firms to sell non-FDA-approved cells there. More specifically, there’s also potential for some synergy between Fountain Life and Celularity.

Celularity might also be hoping to supply cellular products to other Florida clinic firms wanting to do stem cell procedures based on the new law too. The firm’s statements on the new law suggest they want to be a stem cell supplier. For example, Hariri is quoted:

“Celularity is fully prepared to supply the ethically sourced stem cells which enable these treatments, and we look forward to working with Florida physicians to make these innovative therapies available to patients.”

As many of you know, I’m no fan of the idea of clinics selling unproven cells. I believe that solid clinical trial data are needed for such potential applications. Some clinics use autologous cells from their customers, but an increasing number are first buying off-the-shelf allogeneic cells from supplier firms, which they then sell to customers.

Over the past decade, the actual Florida stem cell clinics injecting patients generally haven’t had a good reputation for safety and positive outcomes. Hopefully Celularity will be appropriately careful about which clinics or doctors it sells its placental cells to in Florida.

I should note, despite the apparent pivot by Celularity to apparently market as-yet unproven and non-FDA-approved placental cells in Florida, I hope that the firm will continue pursuing some of its IND-based work too.

Reasons why placental and other perinatal cells should remain defined as drugs

Why does it matter if the FDA regulates perinatal cells as drugs? Let’s go through it.

In my view, the FDA and its CBER branch should not allow use of such cells without approval, even in states that have laws saying that’s okay in their view. There are common sense reasons for this view.

First, there are just aren’t compelling data that placental or umbilical cord cells are effective for conditions such as for orthopedic issues.

Also, such perinatal cells pose real risks including especially from contamination during the birthing process or in subsequent processing.  We saw that with Liveyon sending dozens of people to the hospital and some to the ICU.

The paradox here is that careful sterilization of primary perinatal cells might kill them and make them even less likely to be helpful. If you first grow the cells in a lab before packaging them for clinical use, you might be more confident of sterility (e.g., you can carefully test them for pathogens), but that lab growth would seem to make them even more likely to be classified as a a drug based on the U.S. vs. Regenerative Sciences case that the FDA won. Growing cells in a lab also risks new mutations arising in them.

The FDA and Florida law on stem cells

With all of this in mind, what about the FDA and federal law?

Say Celularity or some other supplier firm sells placental cells to a clinic doctor in Florida and that doctor then, under that state’s law, uses the product to try to treat orthopedic conditions. At the federal level, would that be use of an unapproved drug? Would the FDA do anything or see it as permissible?

It’s relevant here that the FDA specifically has been very active on marketing of unapproved perinatal products in the last 5-6 years including placental cells, issuing quite a few warnings. The agency has consistently said perinatal cells are drugs.

Still, we’re not in a typical regulatory environment anymore. Today’s FDA may opt to exercise enforcement discretion and so do nothing in some cases or places like Florida. It might even align some of its views and actions with state laws like Florida’s. It’s an odd situation. Firms seeking to sell or use non-FDA-approved stem cells or other cell therapies in Florida may be betting on big changes in oversight at the agency.

Looking ahead

It’s not just Florida. A bunch of red states now have stem cell or related laws that seek to weaken the FDA. So, moving forward, how will the agency handle all these state versus federal stem cell regulations, laws, and oversight? It’s hard to predict.

With Vinay Prasad now out as CBER Director, there’s even more uncertainty. I feel like some weakening of FDA oversight of cell therapies is likely though. Note by way of an update, Prasad is now apparently back as CBER directly. Things are chaotic at the FDA these days.

It’s going to be interesting to see what happens in Florida based on the law there and the possible tension with the FDA’s past policies and oversight activity based on federal law. Activities in other states like Utah, Nevada, and so forth that have laws okaying non-FDA-approved cell or other biological therapies could spark agency activity too. Or things might remain very quiet.