Intellectual Property And The Future Of Stem Cell Research

As stem cell research in private and publicly traded companies moves toward therapeutic applications, the defense of intellectual property covering broad paths of research and application becomes more important to individual business plans.  At least one of our Sector Companies, StemCells, Inc., has carried out a business plan of patenting very basic cells and processes which it clearly intends to defend in order to protect what it sees as lucrative future license fees. One result is an ongoing patent infringement action between StemCells, Inc. (STEM) and Neuralstem (CUR).

According to Neuralstem, another of our Sector Companies, its patented technology enables the ability to produce neural stem cells of the human brain and spinal cord in commercial quantities, and the ability to control the differentiation of these cells into mature, physiologically relevant human neurons and glia.

StemCells Inc., on the other hand, says this about its intellectual property: "StemCells believes that its patent portfolio gives it the dominant intellectual property position in the neural, tissue-derived stem cell field. StemCells has an aggressive program of protecting its intellectual property. The Company also believes that its know-how will provide a significant competitive advantage, and intends to continue to develop and protect its proprietary tools, methods, and trade secrets."  StemCells sued Neuralstem in July 2006 and at this point several other lawsuits have been filed between the parties with the various legal issues remaining to date unresolved.

May 25th's Los Angeles Times raised the issue of StemCells Inc.'s intellectual property in a piece titled, "Investor-funded research could bring march of science to a standstill."

Here are the first few paragraphs from the Times story:

"Dr. Philip H. Schwartz spent six years providing university researchers with neural stem cells cultured by a method he had helped invent at the Salk Institute in La Jolla.

He figured this was a win-win. His technique provided biomedical scientists with live tissue, an improvement over the dead cells, harvested from the brains of deceased patients, that had been the standard fare. Science marched ahead, bringing novel neurological applications closer to reality. The principles of wide dissemination of knowledge and scientific collaboration were served.

Then his employer, Children’s Hospital of Orange County, got a letter from Palo Alto-based StemCells Inc. The firm warned that Schwartz's program infringed its patents in the neural stem cell field and it wished to, er, discuss a licensing arrangement.

The hospital's lawyers advised Schwartz to stop sending out cells until they could make a deal with the company.

That was two years ago. There's still no licensing deal, and there haven't even been talks for more than a year."

We expect this is but the tip of the iceberg.  And, as you might expect in a rapidly developing research area that has had only eleven years since James Thomson's first embryonic stem cell lines marked its broad research beginnings, the individual protection of very broadly defined intellectual property isn't the only issue.  The following recently appeared in a story entitled, "At BIO Convention, it's patents, not stem cells, which provoke debate," published in Southern Political Report.

"Biotech is a catch-phrase which encompasses vast new areas of research in energy, medicine and agriculture. Considered as part of this broad new area of research, the controversy over embryonic stem cells is “a bit of a red herring,” said Yali Friedman, who directed a worldwide survey of “bio-innovation” for Scientific American magazine. No matter what governments do about the that issue, he said, “there are still lots of things to produce” as the pace of research in the life sciences quickens.

As confident as they are in the march if science, all does not rest easy in the high-capital companies, heavily affected by the worldwide recession, which are at the core of the BIO convention.

“This convention is taking place at an historic moment for the biotech industry,” John Lechleiter, CEO of Eli Lilly and Co., said at the beginning of one of the most packed sessions of the day on Monday.

The issue he and a panel of legal and business experts discussed wasn’t stem cell research but patent law, which could be in for the biggest revamp by Congress in over half a century.  (underlining is ours) Of particular interest to this audience was an issue which stirs none of the religious and social passions as stem cell research, but which is in a distant, lawyerly way its cousin: Follow-on biologics.

Biologics, unlike drugs like aspirin, are made from living organisms. Vaccines for infectious diseases were an early form of biologics, but it has only been in the past couple of decades that medical science has begun to explore the full range of possibilities for using biologics to battle some of our most difficult health problems.

There exists no clear pathway for determining what happens when the patent on a biologic runs out, as there is with the rules for generic drugs, and the first generation of biologics is reaching that age. The Obama administration has pinned much of its hopes for increased health care savings on streamlining the development of cheaper follow-on biologics, and the battle lines are being drawn between those who want a fast-track and those concerned about protecting their investments in first-generation biologics."

The economic, legal and political future of regenerative medicine will be as important as the basic research itself, at least in their impact on the timing with which therapies become regularly applied in the market place.