StemGenex, the operator of a La Jolla clinic that drew a warning from the Food and Drug Administration that its purported stem cell treatments were illegal, has filed for bankruptcy.
The clinic also is facing a class-action lawsuit in San Diego federal court brought by several former customers who say they were misled by its advertising and marketing.
The firm’s bankruptcy filing, made on Sept. 5, lists more than $1 million in liabilities and $155,788 in assets — including a Tesla Model X electric car on which it still owes $54,000.
The filing opens a window into the scale of StemGenex’s business. It discloses revenues of more than $8.2 million dating back to Jan. 2, 2017. Based on the firm’s standard fee of about $14,900 per treatment, the revenue figure suggests StemGenex may have had as many as 550 customers over that period; some have said they had more than one treatment, for which they were charged separate fees.
Neither StemGenex nor its founder and president, Rita Alexander, could be reached Thursday. The firm’s bankruptcy attorney did not respond to a request for comment. The StemGenex website, through which prospective customers could arrange treatment or appointments, no longer lists a telephone number and now identifies the firm as an “educational stem cell resource.”
We’ve reported previously that StemGenex operated one of the hundreds of clinics sprawled across the U.S. offering treatments for a host of medical conditions purportedly by using stem cells. Its procedure involved extracting fat from a customer’s body by liposuction, processing the tissue ostensibly to concentrate its stem cells, and injecting the resulting fluid into the same customer.
As the FDA asserted in a warning letter it issued to StemGenex in November, the firm said it could “treat a variety of serious diseases and life-threatening conditions, including Alzheimer’s disease, Crohn’s disease, Type I and Type II diabetes, fibromyalgia, spinal cord injury, chronic obstructive pulmonary disease, multiple sclerosis, muscular dystrophy, Parkinson’s disease, peripheral neuropathy and rheumatoid arthritis.”
No scientific evidence exists validating the claim that the treatment StemGenex offered has proven medical utility in humans. Patients treated at other unrelated clinics offering similar procedures have suffered serious medical consequences, including blindness. The FDA informed StemGenex that its marketing of the purported stem cell treatment was illegal and could be “putting patients at risk.”
The procedure has come under attack by the FDA, which has mounted a campaign to warn prospective patients and has brought legal action against several such firms. In June, a federal judge in Miami issued an injunction effectively shutting down Florida-based U.S. Stem Cell clinic. A similar FDA lawsuit against Rancho Mirage-based Cell Surgical Network is pending in federal court in Riverside.
The class-action lawsuit against StemGenex was brought by former patients who say they were induced by the firm’s “false and misleading advertisements” to pay for treatments that have no basis in scientific fact. StemGenex has denied that it made any misrepresentations to customers or that it offers patients “any promises or guarantees of results.”
Customers said in depositions filed in the lawsuit that they were told the clinic had a 90% “success rate” in treating its patients. Indeed, as they could tell from the StemGenex website or from promotional material sent to them, the clinic had a 100% patient satisfaction rating.
As it turned out, however, the success rate the firm’s agents cited was inaccurate, according to former executives. The “patient satisfaction rating” had nothing to do with whether the treatments worked medically, Alexander acknowledged in a deposition, but referred only to features such as the hotel accommodations the patients received. The “rating” was the product of a questionnaire filled out by patients the day after their procedures, typically while they were still recovering from surgery and while a clinic employee stood by.
In fact, a former StemGenex executive, asked by a plaintiff’s lawyer if there was any scientific basis to make the claim, answered: “There is none.”
The firm’s bankruptcy filing automatically places the class-action case on hold. But Timothy Williams, an attorney for the plaintiffs, said they intend “to pursue the case, whether in bankruptcy court or district court.” He said that even if StemGenex is found to have few assets, the plaintiffs will proceed against the firm’s insurers and other named defendants, including Alexander and former physicians associated with StemGenex.