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Friday, January 2, 2009

Cell Therapy Industry HiLites 2009-01-02

Happy new year everyone.

2009 feels like it has the potential to be the somewhat overlooked precursor to the 2010 milestone - not that that's bad just perhaps a "building" year rather than a champagne-popper. Whatever it turns out to be I wish you all a happy and prosperous year.

Based on how slow this week was, I fear next week. I predict a killer backlog of pent-up news on its way. In any event, here's what trickled out this week...

Last week Medistem announced it had filed an IND for use of their new endometrial regenerative cells (ERC) for treatment of critical limb ischemia.

ACT & CHA Biotech have rethought the name for their new joint venture (formerly announced as "Allied Cell Technology" the acronym for which is also 'ACT') - opting instead for the more distinct but lengthy, "Stem Cell & Regenerative Medicine International".

Stem Cell Sciences plc, which is listed in Australia and the United Kingdom announced that it had received a GPB200,000 ($A426,348) loan to use for working capital. In return, the third-party lender has been granted an exclusive period to conduct further due diligence in relation to Stem Cell Science's business and assets. Stem Cell Sciences said it was not in talks with any third parties that might lead to an offer for the issued share capital of the company. Stem Cell Sciences, whose shares have been suspended from quotation since November 26 pending a review of the company's financial position and strategic options, last traded at 15 cents.

Wading now into deep speculation, this tickles the senses like a move Stem Cells Inc might make (I have no information upon which to base this except their past actions) though the SCS assets would not seem to fit with STEM's portfolio. In that respect, this would seem like more of a natural acquisition by Pfizer which did a 5-year deal with SCS in November. I suspect we shall soon see...

Just to make things a little more curious, SCS later announced publication in Cell of a pioneering technique for creating authentic ES cells from rats. They believe the publication to be the first in which germ-line transmission from rat ES cells has been definitively demonstrated. It uses technology licensed exclusively to SCS from the University of Edinburgh and developed by Professor Austin Smith and his team, now at Cambridge University.

Alright this isn't a business item but it has business ramifications and I've discussed this issue in my blog a number of times. "Definite and measurable neurological and ophthalmological improvement." That was the clinical observation of ophthalmologist, Dr. Jack Guggino, in comparing 5-year old Xavier's post stem cell treatment exam results with those of a pre-treatment baseline exam. Xavier, diagnosed at age 2 with optic nerve hypoplasia, was flown to China for a controversial stem cell treatment from the sort of clinic that is drawing much criticism from the global scientific community. These clinics are criticized for, among other things, lack of transparency, formal clinical trials, peer-reviewed publications, and patient follow-up to track long-term clinical results. Recent criticism has suggested results are exaggerated and risks downplayed. Nevertheless, if Xavier were my child what would I do? Ok perhaps it would take something terminal and I'm not saying I would, I'm just sayin'...

Just to polish off the year with a little more successful fundraising news, International Stem Cell Corporation (OTCBB:ISCO) announced it has received the first $1 million tranche of an anticipated private equity financing of up to $5 million to be funded over the next several months. The total amount of the financing is intended to allow the Company to retire its existing secured debt and fund operations of the Company as it moves forward with planned pre-clinical trials in the first quarter of 2009.

Watch for a blog coming soon adding up my totals for how much was raised this year by companies in the space.

In a curious case of the company vs the newspaper, the Seattle Times reported on Dec. 24 that CellCyte Genetics had shut down and was unable to pay rent on its Bothell headquarters citing the company's delayed SEC filing. The company, whose shares trade over-the-counter and in the Frankfurt Stock Exchange, saw its value soar past $400 million last year but since plummeted in the midst of questionable activity currently under investigation and the subject of litigation. CellCyte's shares plummeted in January after The Seattle Times published stories describing the stock-promotion efforts and inconsistencies in the résumé of CellCyte Chief Executive Gary Reys. Clearly the Times and CellCyte are not on talking terms because on Dec. 29 Cell Cyte issued a press release saying the Times had it all wrong citing an Aug. 14 press release in which the Company reported progress in its bioreactor business segment and generally described its development plan to commercialize its bioreactor product line. CellCyte reiterated its intent to execute this development plan in 2009.

The company's Form 10-Q, filed Dec. 22, states:
"As of September 30, 2008, the Company had a working capital deficit of $897,402, and an accumulated deficit of $9,890,982 incurred through September 30, 2008. The Company has no revenues. Management forecasts operations during the coming year will need approximately $2,500,000 in additional working capital, which is expected to come from issuance of convertible notes and private placements of stock."

The filing laid out detailed plans for the company over the next 12 months but also stated the following: "As of September 30, 2008, we had cash in the amount of $5,734 and a working capital deficit of $897,402. Our planned expenditures over the next 12 months are expected to amount to approximately $2,500,000 and will exceed our cash reserves and working capital. We presently do not have sufficient cash to fund our operations and have curtailed significantly all activities. We anticipate that we will require additional financing in order to pursue our plan of operations for the next 12 months. There can be no assurance that we will obtain any additional financing in the amounts required or on terms favorable to us. If we are unable to obtain additional financing, we may have to abandon our business activities and plan of operations."

The Seattle Times may be guilty of a little prognostic reporting here but it certainly does seem like CellCyte will have to pull a wee little rabbit out of the hat to keep things going. Having said that, I've certainly heard the premature predictions of the imminent demise of many a cell therapy company before only to watch them 'pull a phoenix'. I like it when that happens.

I don't pretend to fully understand the Cytori patent portfolio and after the legal wrangling settled who ended up with what for what but Cytori announed the issuance of U.S. patent # 7,470,537 (the ‘537 patent) covering adipose-derived stem and progenitor cells to the University of California. The patent application containing these claims is jointly owned by the University of California and the University of Pittsburgh. The composition of matter patent is licensed to Cytori through its agreement with the University of California. The cells covered by the issued claims are believed to encompass a clinically important subpopulation of cells within adipose tissue.

BIO says one in four of the 370 publicly traded U.S. biotech companies have less than six months of cash on hand. But it's not just industry that's impacted by the economic crunch. The global financial crisis may do what opponents of California’s $3 billion state-sponsored stem cell research experiment could not: dry up funding. To keep the money flowing, later this month CIRM will weigh a contingency financing plan that could include bond anticipation notes and a private placement with major philanthropic backers.

And that brings me to my challenge to you all. I know money is tight but it is even more important in times like this that we remember to support the non-profits that support life as we know it for so many. This is true in your local community, on a global scale and it is also true in the industry in which you work. The non-profit organizations that provide critical support to the cell therapy industry need your financial support and your volunteer contributions. This week I announced that I've committed the Cell Therapy Group to supporting ISCT by way of a 2009 corporate membership. Please consider doing the same.

And that, my dear readers, polishes off 2008 and the first couple days of 2009. That's the cell therapy industry the way I saw it over the holiday season.

As Robert A. Preti is fond of saying... "Be careful out there".

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