Updates from BioTime CEO Michael D. West, Ph.D.

The Starbucks Effect, Aging Boomers, and Solving the Health Care Crisis

Conspicuously absent from the debate over the health care crisis is even a hint that modern science might actually come to the rescue. Perhaps everyone has already assumed that the problem is really just aging itself – and what can be done about that? While many of us baby boomers can remember the days of gathering in hamburger joints to brag about fixing up muscle cars, today we find ourselves sitting around in coffee shops lamenting that there’s nothing to be done about age-related macular degeneration and the like. At the national level, we’ve also observed a giant shoulder shrug: in his 2013 State of the Union Address, President Obama claimed that “the biggest driver of our long-term debt is the rising cost of healthcare for an aging population.” The fact that emerging medical innovations may offer some fixes for this crisis is all but missing from the current discourse.

Recently in the press was a scarcely noticed report about a team of researchers at the Oregon National Primate Research Center that, after over six years of work and over fifteen years of preparation in the field in general, has successfully generated stem cells by cloning. The promise of this technology unfortunately sounds alarms for some that mad scientists are about to regenerate a Hitler or a Stalin. In contrast, actual stem cell researchers see within the cloning process something almost magical in terms of its potential benefits for humankind. The novel methods we are witnessing emerge in our own time may provide pathways to a kind of cellular “time machine” that can generate young cells of any kind to replace diseased, aging cells. A sloughed skin cell, for example, could be provided at no harm by an older patient, and then the subsequent cloning process could be used to create young cells genetically identical to that patient’s own cells, thereby circumventing the risk of transplant rejection associated with the current standard of care. This novel means of treating and perhaps curing numerous age-related degenerative diseases has come to be known as “therapeutic cloning,” in order to distinguish it from “reproductive cloning,” which refers to the more controversial use of cloning techniques to create a baby.

The recent report outlines how the authors managed to produce long sought-after rejuvenated stem cells by adding none other than caffeine to the cloning mix, among other tweaks made to the already established protocol. This “Starbucks effect” led to microscopic clusters of “pluripotent” stem cells capable of differentiating into an unlimited number of cell types. As a result, it is possible to create young cells of all tissue types without forming an actual cloned baby. This is the basis for referring to the tissue-specific approach as “therapeutic cloning,” in order to distinguish the goal of the procedure from that of “reproductive cloning,” which would be to create a complete human.

This line of research began about 15 years ago with the first isolation of human embryonic stem cells, which for the first time in the history of medicine opened the door onto a means of manufacturing, on an industrial scale, all of the cellular components of the human body. Scientists saw within this discovery a potential pathway to numerous therapies and cures, for example, the regeneration of new heart muscle to strengthen a failing heart and the generation of new, healthily functioning brain cells needed to treat Parkinson’s disease. This emerging field of research and innovation has come to be known as regenerative medicine. With embryonic stem cell, nuclear transfer (cloning), and induced pluripotent stem cell technology all working, medical researchers now have multiple paths to designing these new therapies.

Among the many potential applications of regenerative medicine, likely the most important will be for treating age-related degenerative diseases. Cells throughout the body have tiny clocking mechanisms built into their DNA. As a result of this ticking-clock mechanism, cells gradually lose their ability to repair damage with the passage of time. One could argue that as our age expectancy has increased, so has the duration of our suffering: many people now experience years or even decades of chronic and debilitating disease. Consider also the financial stress when a family member is diagnosed with Alzheimer’s, or has a stroke, or becomes blind due to macular degeneration, or has heart failure. We urgently need novel strategies such as those announced today in order to increase the quality of care for those who are suffering. Parallel to this need is the necessity of reducing the high costs of treating these increasingly prevalent diseases.

Unknown to the public at large, scientists finally have some impressive new tools to address both the financial and physical issues associated with age-related degenerative disease. If we were to mobilize our scientific community by funding a national discovery program to find cost-effective cures, we could combine and apply the efforts of our best minds and hands working within the emerging field of regenerative medicine. With such a synergistic program in place, we could potentially save our nation trillions of dollars over the coming decades and alleviate human suffering on an unprecedented scale. These goals are not only awe-inspiring, they are also potentially within reach. We should be encouraged to use these new discoveries in an intelligent and compassionate manner to cure degenerative diseases that have, throughout history, been considered as unavoidable, as our collective fate. Some day in the not-too-distant future, our thinking about aging itself may change radically and positively. Meanwhile, the burden of health care costs that our generation leaves to following generations will be mitigated substantially by the amelioration, even curing, of those diseases before they become so financially and physically costly. We owe our fellow man exploration in regenerative medicine. Moreover, such a program of discovery will be necessary if the United States desires to retain its leadership role in the world community.

BioTime Shareholder Letter

Dear Fellow Shareholders,

Every year we have the opportunity to write this letter accompanying the Annual Meeting of Shareholders of BioTime, Inc. As in years past, it is our pleasure to summarize some of the successful milestones from the past year, and to communicate our vision of where we plan to take the Company in the future. This past year, we’ve seen significant progress in validating the core technologies of the Company and transferring lab-bench science to a development track that may yield first-in-class therapies for unmet needs in medicine. To evaluate BioTime from the management perspective, let’s begin by examining the opportunity before us in light of the current state of the regenerative medicine industry.

Regenerative medicine: a revolutionary means of treating disease

The field of regenerative medicine began with the search for a means to rebuild tissues afflicted with chronic degenerative disease. Currently some 75% of health care costs are associated with chronic diseases, and those costs are expected to grow significantly in the coming years as a result of the approaching tsunami of aging baby boomers. Unlike mechanics who can repair a machine by replacing broken components, medical science never had an effective means of producing replacement tissues from the multitude of cell types in the human body, until now. Cells and tissues available from organ donation are often not suitable for use due to potential transplant rejection.

Given the large unmet need for cell and tissue replacement therapies to treat degenerative diseases, an effort was organized in 1995 to build a new class of medical therapies based on pluripotent stem cells capable of proliferating without limit. The discovery of these stem cells brought into focus the possibility of developing industrial-scale means of producing various cell types of the human body that could be used to replace tissues lost as a result of the onset of degenerative diseases. In the late 1990s, it also became clear that it was going to become possible to make such cells genetically identical to those of a patient on an affordable basis through what are called “reprogramming technologies”. These new technologies provide the opportunities of manufacturing all of the cell types of the human body on an industrial scale and matching those cells, when necessary, to the patient to eliminate transplant rejection. This new approach has the potential to provide therapies for some of the most significant unsolved problems in medicine, such as heart failure, in which the loss of heart muscle cells leads to a weakened heart. Many other age-related chronic degenerative diseases could potentially be treated with these novel technologies, including Parkinson’s disease, osteoarthritis, osteoporosis, age-related macular degeneration, and atherosclerosis, to name a few.

The stem cells that have caused this excitement are of two types: human embryonic stem (hES) cells and induced pluripotent stem (iPS) cells. hES cells are cultures of continuously proliferating cells (cell lines), and were originally derived from clusters of cells resulting from surplus fertilized egg cells produced through in vitro fertilization procedures and that were designated by the donors to be discarded. iPS cells are cells produced from a donated cell of the body, such as skin cells, and then coaxed back to an hES-like state by means of genetic modification. While hES cells are seen as an “off-the-shelf” approach to making all the cells of the body, iPS cells are seen as a means of making all of these cells genetically matched to a patient in cases in which transplant rejection would otherwise be a problem.

As revolutionary as hES and iPS cells are, it became clear during recent years that the promise of these cells is intimately linked to a significant hurdle. Put quite simply, these cells really do make all of the cells of the body, and they tend to display this immense power even when it is undesirable, such as when scientists are trying to generate only one cell type for therapeutic use. As a result, many different cell types that form a human being were arising in laboratory dishes, even when only one cell type was desired, and scientists had no effective means of sorting these cells in order to manufacture a medical-grade product of a single cell type. While scientists quickly published hundreds of scientific reports describing methods of making the many diverse cell types of the body—as you may have read—the biotechnology industry faced the tall hurdle of making cells in a purified and fully identified state, under Good Manufacturing Practices (GMP) standards, while simultaneously scaling cell production up to a volume sufficient to treat millions of patients. As the biotechnology industry and large pharmaceutical companies struggled with these issues, BioTime scientists were inventing entirely novel manufacturing technologies that we believe will redefine the industry. Let’s discuss some of those in turn.

Four foundational cornerstones in this emerging industry

1. Clinical-grade master cell banks of stem cells

For certain clinical applications, replacement cells will likely be manufactured for all people from a single line of hES cells, without risking transplant rejection. These are highly coveted “off-the-shelf” product opportunities and are therefore widely considered low-hanging fruit in the industry. These cells are the focus of most of our development efforts. For procedures that involve transplanting new healthy cells into the retina of the eye, into the brain, or into the joints, or in cases in which specially designed cells are used to target tumors to destroy them, the cells will ideally be manufactured from a source of hES cells produced under GMP standards, including a complete sequence of their DNA to insure the manufacture of reliable and safe products. BioTime maintains a bank of six GMP hES cell lines acquired with our purchase of the Singapore-based company ES Cell International Pte. Ltd. (ESI). ESI previously developed the cell bank with approximately $30 million of funding, provided in part by the Government of Singapore. We have signed agreements with the California Institute for Regenerative Medicine (CIRM) and the University of California system to distribute five of those research-grade and GMP-compliant hES cell lines to numerous California-based researchers. Should the research using BioTime’s cell lines result in successful products, BioTime will enjoy a royalty on sales without additional expenditures on our part. To make our GMP cell lines more attractive to researchers, we obtained approval from the National Institutes of Health for the use of our cell lines in federal funded research, and we have published the first complete DNA sequencing of these cell lines, demonstrating their normality and likely suitability for the manufacture of a wide array of new medical products.

2. Purity and identity: the sine qua non

Beginning in 2005, several of the scientists who are now at BioTime began to develop an entirely novel approach for the manufacture of products from hES and iPS cells. Called ACTCellerate™, this technique allows scientists to expand the lineages of cell types downstream of hES and iPS cells from a single cell already committed to making a specific cell type. These new proliferating lines of cells are no longer hES or iPS cells, but instead are all “monoclonal embryonic progenitor” cells committed to producing distinct and identified cell types. Since millions of these cells can be propagated in the laboratory, they are very scalable to potentially meet the needs of many hundreds of thousands of patients, and because they are all derived from one cell type, we believe we have simultaneously solved the problem of making the cells pure. In addition to clearing the most significant hurdles for the industrial scale-up of over 200 cell types in the human body, this technique has allowed us to capture the gene expression fingerprint of essentially all human genes, and file numerous patent applications on the cell lines, claiming compositions of matter, methods of expansion, and uses in the treatment of a wide array of diseases. Much of the validation of the ACTCellerate™ technology has been undertaken by means of a generous $4.7 million grant from CIRM.

3. A robust technology for the manufacture of patient-specific cells through reprogramming

For those cases in which an off-the-shelf product would likely be rejected by a patient’s immune system, BioTime scientists have invented a proprietary reprogramming technology called ReCyteTM, which is designed to reprogram a patient’s cells, such as skin cells, back to hES-like stem cells so that all the cell types in the body, identical to the patient, can be produced for a wide array of potential clinical applications. Our ReCyteTM technology is a proprietary method that differs from most other published iPS techniques, and may have distinct advantages over the competing approaches. One such advantage is the addition of a novel mechanism, identified at the prestigious Wistar Institute in Philadelphia, for regulating the reprogramming of cells. Licensed by BioTime, we believe this technology is very important in both the stem cell field and in the development of new cancer therapeutic strategies. We currently have a research program underway at our subsidiary ReCyte Therapeutics, Inc. in collaboration with Wistar Institute scientists to advance this exciting breakthrough.

4. Focusing on near- and intermediate-term commercialization

A major challenge of biotechnology in general, and of stem cell companies in particular, is the relatively long timelines to commercial viability of their products, especially when novel therapeutic strategies are involved. Despite a supportive approach from the Food and Drug Administration, those biotech companies in the sector that have focused only on long-term product development programs have often suffered from dwindling market capitalization and difficulties raising the needed capital to bridge the gap between preclinical development and late-stage clinical trials where large pharmaceutical companies may be willing to provide funding for the completion of product development in exchange for marketing rights. To address these issues, we have implemented a commercial model with near-term and intermediate-term commercialization strategies, and we have formed a corporate partnership with large pharma for the leading cell-based therapy of one of our subsidiaries. Near-term revenues are being generated by our current royalties from the sale of our plasma volume expander product Hextend® in the United States and South Korea, and from the sale of research products, including our current line of ACTCellerate™ cell lines and associated ESpan™ culture media, HyStem® hydrogels, human embryonic stem cell lines, and revenues being generated by the recent acquisition of worldwide marketing rights to the online database GeneCards® by our subsidiary LifeMap Sciences, Inc. Intermediate revenues are anticipated from the planned launch of ReneviaTM as a cell delivery device expected in late 2013, and the planned launch of PanC-Dx™ as a novel blood-based cancer screen in 2014.

We believe our choice of HyStem® hydrogels like ReneviaTM, as an extracellular matrix for the propagation of human stem cells and as a means of cell delivery for human clinical applications, is a strategic choice of a near-term product. While many types of matrices have been developed, there are numerous reasons why few are as likely as our hydrogel technology to be commercialized. Our hydrogels fulfill the necessary biological criteria—they are resorbable, biocompatible, and benefit from their ability to be injected with cells into the body through a syringe and then polymerize within the body without the release of inflammatory toxic byproducts. They also have been demonstrated to possess the proper physical and chemical properties for cellular attachment, which is needed for the survival and repopulation of stem cells in vivo. We therefore plan to utilize HyStem® in a number of our future products in combination with our cell lines, and we also sell HyStem® products now in the research product markets through a global distribution network.

Salient milestones from the past year

In the past year we announced numerous strategic advances in building the foundation of our company, including the following achievements.

Advanced near- and intermediate-term product development

• We successfully completed ISO 10993 biocompatibility studies for ReneviaTM (previously known as HyStem®-Rx). The results of these preclinical studies demonstrated the safety and biocompatibility of ReneviaTM. The first clinical application of ReneviaTM will be for use with autologous adipose cells to restore subcutaneous tissue lost as a result of injury, oncologic resection, or congenital defects. Our goals for the launch of ReneviaTM include obtaining the CE mark necessary for marketing ReneviaTM in European Union countries by year-end 2013.

• We made several key advances in the development of PanC-DxTM, OncoCyte Corporation's novel diagnostic device to detect the presence of various human cancers. We evaluated more than 50 potential cancer biomarkers that we discovered using antibody-based technology on blood samples from a proprietary sample bank derived from over 600 donors, including patients with cancers of the breast, colon, and pancreas, as well as healthy volunteers. We have selected seven of those serum markers for monoclonal antibody production.

• We entered into agreements with USCN Life Science, Inc. of Wuhan, China, granting BioTime an option to license USCN’s antibody-producing cell lines and certain related technology for potential use in manufacturing PanC-Dx™ and also a distribution agreement allowing us to market USCN’s assay kit products for the research market.

Progress in building upon our intellectual property base

• We announced the issuance of United States patent number 7,928,069 covering certain aspects of the composition of HyStem® hydrogels and patent number 7,981,871, titled “Modified Macromolecules and Associated Methods of Synthesis and Use”, covering additional aspects of the composition of HyStem® hydrogels. The patents and related patent family members, held by the University of Utah, are licensed to BioTime and its subsidiaries for the manufacture of research products and for therapeutic uses when combined with human cells. These patents are of significant strategic value to BioTime and its family of disease-focused subsidiaries.

• In January 2012, we announced that we had obtained an exclusive license from The Wistar Institute in Philadelphia, PA for technology related to a gene designated as SP100. Wistar Institute researchers have demonstrated pivotal roles for this gene in both cancer and stem cell biology. Scientists at BioTime’s subsidiaries OncoCyte Corporation and ReCyte Therapeutics, Inc. plan to apply the discovery in their product development.

• BioTime entered into an exclusive license agreement with Cornell University for the worldwide development and commercialization of technology developed at Weill Cornell Medical College for the differentiation of human embryonic stem cells into vascular endothelial cells. This technology is being used by our subsidiaries OncoCyte Corporation and ReCyte Therapeutics, Inc.

Expanded research product offerings

• In May 2012, LifeMap Sciences, Inc. completed the acquisition of XenneX, Inc. As a result, LifeMap Sciences now holds the exclusive, worldwide licenses from Yeda Research and Development Company Ltd. (Yeda), the technology transfer arm of the Weizmann Institute of Science, to market the online databases GeneCards® and PanDaTox.

• LifeMap Sciences, Inc. also entered into a license agreement with Yeda to market a new database called MalaCards, a database of human diseases that is based on the GeneCards® platform. The GeneCards® and MalaCards databases will be available as part of an integrated database suite with LifeMap Sciences’ own LifeMap stem cell database.

• We have elected to market progenitors of muscle stem cells bearing hereditary diseases. BioTime will produce the products from five human embryonic stem cell lines acquired from Reproductive Genetics Institute. The muscle cell lines display the genes for Duchenne muscular dystrophy, Emery-Dreifuss muscular dystrophy, spinal muscular atrophy Type I, facioscapulohumeral muscular dystrophy 1A, and Becker muscular dystrophy. When developed, the progenitor cell lines will be marketed to researchers seeking new treatment modalities for these diseases.

Advanced R&D collaborations

• In conjunction with our license agreement with The Wistar Institute, BioTime agreed to fund research at the Institute to advance SP100 gene-related technology, and will have certain rights to negotiate additional licenses for any technologies invented as a result of the research.

• We similarly entered into a sponsored research agreement with Weill Cornell Medical College for collaborative research on the differentiation of human embryonic stem cells into vascular endothelial cells. The technology may provide an improved means of generating vascular endothelial cells on an industrial scale, and may be utilized by BioTime and its subsidiaries in a diverse array of products, including products under development at ReCyte Therapeutics, Inc. to treat age-related vascular disease, as well as products being developed at OncoCyte Corporation targeting the delivery of toxic payloads to the developing blood vessels of tumors.

Expanded and strengthened management team and Board of Directors

• Andrew C. von Eschenbach, M.D. has joined the Boards of Directors of BioTime and OncoCyte Corporation. Dr. von Eschenbach is the President of Samaritan Health Initiatives, Inc., a health care policy consultancy, and is an Adjunct Professor at University of Texas MD Anderson Cancer Center. Dr. von Eschenbach served as Commissioner of the Food and Drug Administration from September 2005 to January 2009, after serving as Director of the National Cancer Institute at the National Institutes of Health.

• In October 2011, we appointed Peter S. Garcia as BioTime's Chief Financial Officer. Mr. Garcia served as Chief Financial Officer of six biotech and high-tech companies over the past 16 years, and was instrumental in leading multiple merger and acquisition transactions for those companies.

• This year, our Board of Directors formed a three-member Science and Technology Committee, chaired by Dr. von Eschenbach, to oversee the development and commercialization of BioTime's technology and products in regenerative medicine and oncology.

Key research publications and presentations

• BioTime and its subsidiaries presented updates on their operations, objectives, recent developments, and strategies at a BioTime-sponsored Investor Day in New York City on April 23, 2012. Presentations as well as videos of the event, including presentations by Dr. West and the principals of the Company’s subsidiaries, are available for viewing on BioTime's website at www.biotimeinc.com.

• We published in the peer-reviewed journal Stem Cell Research the complete genome sequence analysis of five clinical-grade human embryonic stem cell lines. “Evaluating the genomic and sequence integrity of human ES cell lines: comparison to normal genomes” is the first such analysis of the entire genome of human embryonic stem cell lines and further establishes BioTime's lead in developing fully characterized cell lines intended for use in the manufacture of therapeutics.

• We published in the peer-reviewed journal Regenerative Medicine a paper detailing a study which characterized a progenitor cell line produced from hES cells using proprietary ACTCellerateTM technology and demonstrated a scalable source of highly purified and identified progenitor cells capable of making definitive (non-hypertrophic) cartilage. The report notes that the cells are capable of regenerating cartilage with long sought-after markers indicating that the cells may be useful in the treatment of osteoarthritis, which currently afflicts over 26 million people in the United States. The study also revealed that these cells can be directly expanded on a scale needed for industrial manufacture, which will be necessary in order to make transplantable cells available in commercial quantities.

• We announced the publication of a scientific paper, “Functional performance of human cardiosphere-derived cells delivered in an in situ polymerizable hyaluronan-gelatin hydrogel”, in which we discuss the demonstrated effectiveness of HyStem®C in the transplantation of human heart muscle-derived cells in an animal model of heart disease.

• We made presentations of our products, technologies, and business strategies at the following scientific and investor meetings: 7th Annual New York Stem Cell Summit; ROTH 24th Annual Growth Stock Conference; 2012 Maxim Group Growth Conference; 8th GTC Stem Cell Summit 2012; BioCentury Future Leaders in the Biotech Industry Conference; and the GTC 2011 5th Advances in Stem Cell Discovery & Development Conference.

Implementing our business strategy: strength in diversification

We have grown to become an international organization that includes seven subsidiaries, each focused on a particular field or market area within regenerative medicine. In building these companies, our business strategy has been to utilize a broad technology platform to create the greatest possible value for our shareholders. Four of these companies have already raised outside capital, although BioTime remains the majority owner of all seven. Each company is developing its business in various ways, including activities such as hiring key personnel, conducting preclinical research, developing products, and establishing important customer relationships. These efforts are intended, over time, to lead each subsidiary to become self-sustaining. For BioTime, the result should be substantial value creation through our ownership of equity in each company. Recent videos of presentations from the principals of these subsidiaries are available online at www.biotimeinc.com.

Increasing shareholder value

In summary, we believe that by accumulating some of the most advanced manufacturing technologies for developing products from hES and iPS cells, combined with strategic near-term revenue-generating products, we have the opportunity to establish BioTime as the leader in the emerging field of regenerative medicine. Our future success will now depend on our skills in executing this strategic plan. Key milestones for the next 12 months include the completion of the ReneviaTM clinical trial; the filing by our subsidiary CellCure Neurosciences, Ltd. of an investigational new drug (IND) application for OpRegen® to treat dry age-related macular degeneration of the retina; and the initiation of OncoCyte Corporation’s PanC-DxTM patient study. We will also be actively seeking to acquire new technologies and expand our corporate partnerships and collaborations. We also anticipate growing revenues from the sales of research products through the LifeMap Sciences integrated database suite.

We would like to thank you and all of our fellow shareholders for your support as we continue our work to turn the vast potential of regenerative medicine into a source of new medical products to improve the length and quality of life of millions of people around the world. We welcome you to join us again in New York City on June 26, 2012 for our Annual Meeting of Shareholders and look forward to meeting all who are able to attend.


Michael D. West, Ph.D.
President & CEO

Alfred D. Kingsley
Chairman of the Board

May 18, 2012.

8 Years After Prop 71: Industry Perspectives On CIRM

Earlier this week I had the opportunity to testify before a Review of the California Institute for Regenerative Medicine (CIRM) at the Institute of Medicine, to provide some perspective on the team at CIRM, their diligent efforts to advance the cause of stem cell research, and some of the 'blind spots,' from an industry standpoint, of CIRM's strategic plan. Below is the text of my statement to the committee:

April 10, 2012

Testimony of Michael D. West, Ph.D.
President & CEO BioTime, Inc.
Before the Institute of Medicine, Committee on a Review of the California Institute for Regenerative Medicine (CIRM)

Mr. Chairman and members of the Committee, my name is Michael D. West and I am the President and Chief Executive Officer of BioTime, Inc., a biotechnology company based in Alameda, California. A copy of my curriculum vitae is presented in attached Appendix A. I have been asked to comment on the effectiveness of CIRM, in particular to offer constructive criticisms from the perspective of industry. Let me begin by thanking you for the opportunity to speak on the subject of regenerative medicine. There are few areas of human endeavor with the potential to improve human health than this emerging field of medicine. And California’s leadership role as a means of accelerating the development of new cures is a model for the world. Therefore, given the importance of the effort in California, I will not hesitate to offer criticism in the confidence that it will be viewed in a constructive manner.

First, I must state unequivocally that I and many other scientists in the field of stem cell research are great admirers of the team at CIRM and its diligent efforts to advance the cause. Managing the shear volume of their workload is nothing less than heroic. Nevertheless, there is always room for improvement, and I would like to point out what in my opinion are blind spots in CIRMs strategic plan, that could use improvement.

The first blind spot relates to the manner in which new human therapeutic products are developed in the United States. To put it simply, stem cell research by itself will not lead to cures. Research and DEVELOPMENT leads to cures. In my opinion, if CIRM fails to deliver on its goal to deliver cures, it will not be a result of internal governance issues. Instead, it will be a result of inefficient capital allocation. A graphic way of visualizing my point is to say that CIRM has historically funded primarily research, and little product development, i.e. large “R” little “d”. Approximately 5% of CIRM’s expenditures have been allocated to biotechnology and health science entities whose expertise is product development, and 95% has been allocated to nonprofit institutions in the state for basic research. Human therapeutic product development in the United States requires a very intense and expensive process for approval that is primarily focused on development side of the equation. In this respect, therapeutic approvals differ significantly from the discovery and development of silicon-based technologies that have been so successfully commercialized in California.

Sometimes analogies help clarify an otherwise abstract considerations. So let me offer one. Imagine that instead of being a proposition to promote stem cell product development, Proposition 71 was instituted to promote computer technology, e.g. new laptops and smartphones where none previously existed. In the event that 95% of the funds were allocated to prestigious microelectronics research facilities such as the Paul Allen Center at Stanford University, and only 5% of the funds allocated to commercial entities such as Apple Computer and Microsoft, we might easily imagine that Steve Jobs would shut down his computer business shifting to his Pixar investment, and Bill Gates would move to Seattle. This helps us understand the reasons for Geron, the pioneer in commercializing embryonic stem cell-based therapies, shutting down its stem cell business, and Advanced Cell Technology shutting down its California operations moving all operations to Massachusetts. Let me add that these latter real-world events not only represented lost opportunity, but a loss of jobs in California (a net decrease in commercial employees) and a tragic loss of science from discarded programs, reagents, and knowhow.

Another potential blind spot relates to the research side of the equation. Human embryonic stem cells and related induced pluripotent stem cells are promising because to their ability to differentiate into all of the complex cell types in the human body. However, this is also their greatest challenge. They make ALL of the cell types in the human body. This logically leads to the manufacturing conundrum of how do we manufacture purified and identified cell types when thousands of diverse cell types emerge from these cultures. BioTime has benefitted from a $4.7 million grant from CIRM to further the development of ACTCellerate(TM), a novel manufacturing technology allowing the scalable manufacture of over 200 diverse highly purified cell types. This advance has highlighted the urgent need for a “Rand McNally road atlas” for this complex branching tree from pluripotent stem cells. Currently, for all the thousands of cell types that emerge from pluripotent stem cells, little to no information is available in an organized form for the scientific community to help identify the cells (i.e. where the scientist is on the road from pluripotent stem cells to the final desired cell type). As a result, to meet the rigorous standards of the FDA in regard to purity and identity, companies have found themselves paddling upstream against the very difficult challenge of identifying the cells contaminating their potential products. CIRM could provide a critically valuable research function by building an online database that for the first time laid out a roadmap of the cells of human development, their molecular markers, CD antigens, and other markers. Similar to the foundational impact that the mapping of the genome had on science and medicine, the mapping of the “embryome” would lay a broad and effective foundation for subsequent product development worldwide for decades to come (Regen. Med. 2007, 2(4):329-333).

Lastly, a third potential blind spot relates to a possible scenario where CIRM eventually ceases to fund programs in the State. In anticipation of the possibility of this event, there should be plan of transition to avert the possibility of a massive loss of effort, reagents, and trained personnel. Again, a logical solution would be expanded funding in the latter years of CIRM to support the California regenerative medicine industry with the goal of building an “economic engine” to continue the translation of CIRM-funded research into the clinic. In summary, I believe the citizens of the State of California as well as local biotechnology companies appreciate the dedication of the CIRM team, and look forward to finding a path to accelerate these new life-saving therapies to the people in need and thereby fulfill the historic mission of the California Institute for Regenerative Medicine.

Michael West Full Testimony – CIRM – Apr 10 2012.

Cellular Purity: Key to the Stem Cell Race

“Rare is the union of beauty and purity”

The confluence of supply and demand is the engine of commerce. Today, the aging U.S. baby boom population is creating one of the fastest growing sectors for new product demand in our history. This 76 million-person strong segment of our population is facing a surge of degenerative diseases, many having no known cure. Examples would be Parkinson’s disease, osteoarthritis, heart failure, macular degeneration, and so on. On the supply side of the equation is the emerging field called “regenerative medicine.” Regenerative medicine was a term coined to refer to medicine’s new-found ability to manufacture any cell type in the human body, based on embryonic stem (ES) cells. Normally, the confluence of such powerful economic forces would generate enormous new industries to connect the tides of supply and demand. And yet, in the United States today, the industry of regenerative medicine is still in its infancy, and we are hearing about the difficulties some companies face in commercializing the new products. This leads us to ask, “Where are the bottlenecks, and how will industry rise to the occasion to deliver on these desperately-needed new products?”

The problems facing our nation in regard to an aging population and the rising national health care bill have received high visibility in the media. Less well known, perhaps, is the daily struggle behind the scenes, as scientists seek to bring the promise of regenerative medicine to the marketplace. As we have said, ES cells, and their related cells called induced pluripotent stem (iPS) cells, have the impressive ability to become all the cell types in the human body. What is not as well appreciated is that this protean power resident in the cells is also an enormous hurdle for people working in biotechnology who wish to actually produce these products on an industrial scale. The challenge is one of purity. How do we consistently manufacture only the cell type of interest when there are hundreds of cell types in the body? If we do not solve these technical challenges, preclinical development costs can rise into the hundreds of millions of dollars, squelching product development.

These difficulties in the first decade of regenerative medicine will likely be addressed in the second decade by new methods to completely isolate and scale up defined lineages from ES or iPS cells. BioTime is using a proprietary approach we call ACTCellerate™ which has already resulted in the isolation of >200 different cell types of the human body. The use of these purified cell types is expected to simplify the manufacturing process and ease the concern of regulators over product safety. BioTime’s announcement of a partnership with GeneCards is the beginning of our effort to steer regenerative medicine into a new era wherein many new human cell types can be manufactured to scale at an unprecedented level of purity and identity. This new generation of manufacturing technologies, or as we say Manufacturing 2.0, is expected to simplify product development and speed the transfer of supply to demand.

But for the research scientist, accessing for the first time the purified cellular building blocks of the human body, and being able to map out their gene expression profiles, is as much an appreciation of the beauty of human development as it is a quest for cures and products. Seeing for the first time in the laboratory dish the cellular components of the human body, and being able to map out the genes that cause the cells to weave themselves into human tissues, gives the bench scientist a vision of what life could be, how medicine could fashion new life-saving therapies. Our nation cannot afford to lag behind in the commercialization of regenerative medicine in such a critical time in our nation’s history. Never before have we faced such opportunity in medical research, and never before has it mattered so much for so many people.


An Update on iPS Cell Technology

“Look here,” said the Medical Man, “are you perfectly serious? Or is this a trick – like that ghost you showed us last Christmas?”

H.G Wells
The Time Machine

Most people in touch with current events, in particular, developments relating to science and medicine, have observed the growth of the industry called regenerative medicine. The field was born with the first isolation of human embryonic stem cells in 1998. These cells when propagated under laboratory conditions have the potential for the first time in history of being transformed into all the cell types of the human body. Therefore, the vision of this emerging industry is to invent a new field of medicine wherein the hundreds of cell types of the human body are manufactured to repair or regenerate tissues worn out from aging, trauma, or disease. Some salient examples would be cells that have the potential to regenerate heart muscle after a heart attack (something the heart cannot do on its own), or cells capable of rebuilding the brain destroyed in a stroke, or skin cells lost in a body burn, pancreatic cells missing in diabetes, retinal cells for macular degeneration, and so on.

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Mr. Monk, Stem Cells, and Cancer

“It’s a jungle out there
Disorder and confusion everywhere…
You better pay attention
or the world we love so much
might just kill you.” (Monk theme song)

The lead character in the television program “Monk” is a detective named Adrian with obsessive-compulsive disorder who vainly attempts to organize the world around him, lining up bullet casings in a row as he explains the details of the murder plot.

The cells in our bodies, like Mr. Monk, hate disorder and confusion. And there is a very good reason for this. Packed away inside the trillions of cells in our body is a set of each and every human gene, highly organized in a row along the string of DNA. This genetic blueprint contains all the information to make us who we are. These genes even direct human development (the amazing process that allows us to live even while we are being formed from a single cell). If this precise organization of DNA becomes disordered, powerful and deadly changes can be unleashed. Some deleterious changes have an effect similar to a stuck accelerator in a car, causing the cells to divide rapidly. Other genes, if broken, function like a defective brake, eliminating the normal mechanisms that regulate tissue size. Lastly, the inappropriate expression of the immortalizing gene called telomerase can give cells an infinite fuel supply, i.e. an unnatural ability to replicate without limit. These disorderly events, if they occur together in one cell, can lead to the disastrous outcome similar to a car with a stuck accelerator, a broken brake, and an infinite fuel supply all at the same time. This would be a very dangerous result indeed – somebody is going to die as a result. And they do die, because this cellular calamity is known as cancer.

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Banking on the Future of Regenerative Medicine

Human embryonic stem (hES) cells are widely known for their capacity to branch into all of the cell types in the human body. This unprecedented potentiality has spurred a new industry called “regenerative medicine” in anticipation of a time when medicine can offer many therapies not possible today. Many have also heard that these cells also have the unusual property of being able to proliferate without limit (without aging), though perhaps most people have not quite known what that really means or its implications for this emerging industry. It is my view that these twin properties of hES cells (i.e. their pluripotentiality and their ability to replicate without limit) will make it possible to standardize foundational master cell banks of these cells that could be a continuous source of a wide array of human clinical grade products around the globe and for many years to come. For industry, the remaining question is: “What is the best strategic business model for a company to take given the unprecedented potential of these cells?”

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The Cyclic Nature of Biotech Revolutions

We all can probably remember a time when we met someone who indelibly impacted our lives. In the mid 1990s my life was influenced by a series of meetings I had with Bob Swanson, one of the founders of Genentech. Bob was a man with extraordinary vision, a near clairvoyant ability to sense business trends. Upon being briefed on the then-confidential project to isolate human embryonic stem cells, he pulled me aside and whispered something like the following:

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A 2020 Vision for Health Care Priorities in the United States

On August 23, 2010, Judge Royce C. Lamberth of the United States District Court for the District of Columbia opined on the case of Drs. James L. Sherley and Theresa Deisher, Nightlight Christian Adoptions (“Nightlight”), Embryos, Shayne and Tina Nelson, William and Patricia Flynn, and Christian Medical Association (“CMA”) who brought a suit for declaratory and injunctive relief to prevent the National Institutes of Health from funding human embryonic stem (hES) cell research under their “Guidelines for Human Stem Cell Research.” One question that comes up in all this is what is the impact of these federal policy reversals on biotechnology companies.

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ES and iPS Cells: Which Holds the Future of Biotechnology?

New developments in stem cell technology offer significant promise for the future of medicine. Human embryonic stem (ES) cells and induced pluripotent stem (iPS) cells are the two sides of the coin of regenerative medicine. Many people ask, “Which of these are the most important, and which holds the future of lifesaving medical therapies?” I believe both will be critical in the coming years. To see why, let me share some of our thoughts in the early years of this technology. By tracing the flow of this history I think it will be possible to bring into focus the big picture.

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