The Significance of NIH Approval of Human Embryonic Stem Cell Lines to the Biotechnology Industry

From the beginning of human embryonic stem (hES) cell research, work was performed with private corporate funds to avoid issues relating to federal funding from the National Institutes of Health (NIH). The NIH has from time to time changed their position on funding relating to different hES cell lines, but these regulations related primarily to universities and other non-profit institutes that rely on such federal funds. There have never been any restrictions on any product development funded within companies. Nevertheless, when this or that cell line is approved or not approved, investors frequently ask what impact all this has on biotech companies. The answer, in short, is: none.

It is important to distinguish the previously-mentioned federal approval from the approval of cells for therapeutic use, which is an entirely different process regulated instead by the Food and Drug Administration (FDA) based on safety and efficacy in curing disease. There are no restrictions on what hES cell lines are “approved” by the NIH for the manufacture of therapeutics.

In the case of BioTime, a company developing near-term cell lines and other products for the researchers, many having federal grants, the question is even more poignant. At the recent BioTime Annual Meeting of Shareholders, we described our aggressive plans to roll out many near-term research products during calendar year 2010. This presentation is available for viewing on our web site athttps://www.biotimeinc.com/btvideo4.htm and is linked on our web site’s front page. All of these nearly 200 anticipated research products use genetically normal human ES cell lines to produce embryonic progenitors of more than 140 different types of cells in the human body. We anticipate that these diverse cell lines will be used in biological research and drug discovery. These ACTCellerate lines are no longer hES cells and therefore are not subject to federal hES cell restrictions on federal funding regardless of the status of the hES cells they were derived from. Therefore, for such products, issues of federal restrictions on hES cell lines is moot.

The media recently carried the story of certain unique hES cell lines produced by the Reproductive Genetics Institute of Chicago carrying genes for certain inherited diseases such as muscular dystrophy and cystic fibrosis. Due some language in RGI’s consent forms, the NIH denied the eligibility of these hES cell lines for federally funded research. BioTime plans on developing a small number of useful research products from these cell lines, but most of these products are expected again to be ACTCellerate lines, such as muscle progenitors carrying the disease gene for muscular dystrophy. Since most of these products will not be hES cells, there are currently no federal restrictions relating to these future products.

Lastly, it is important to note that even with hES cell lines, researchers are not banned from using the RGI hES cell lines, they just cannot use federal funds to perform research on them. California-funded researchers can still use their state monies to study them and companies can always perform research on them with their private funds, and we believe a large percentage of such sales will be to companies.

While decisions about the eligibility of hES cell lines for federal funding has been a contentious issue portrayed visibly in the media, there is little if any impact on the business plans of most biotech companies. The visible advocacy of many industry leaders for relaxed standards of federal funding on cell lines reflects less issues of corporate profitability than the passionate belief of these individuals that any restrictions that slow basic research in medical research institutions is not in the best interests of the people of the United States. The genetic diseases captured in the RGI hES cell lines could be an important avenue for the discovery of novel therapeutics for such devastating diseases as Huntington’s disease, cystic fibrosis, and muscular dystrophy. We believe that approval of these hES cell lines was in the best interest of the people of the United States and BioTime is committed to making ACTCellerate progenitor lines that will be eligible for federal funding.

In summary, the approval or lack of approval of various hES cell lines for federal funding have about as much to do with the business of biotech as the outcome of the World Series, entertaining conflict perhaps, but not measurably impacting the bottom line of most American companies.
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