Economics, not science, thwarts embryonic stem cell therapy

For patients paralyzed by spinal cord injuries, Geron Corp.'s stem cell research was the shining hope.

The biotech firm showered scientists with millions of dollars to develop a treatment to reverse spinal damage. The therapy was the first treatment derived from embryonic stem cells to be cleared by the Food and Drug Administration for testing in humans.

But last week, Geron abruptly pulled the plug on its pioneering trial and the rest of its stem cell business, including early work on treatments for heart ailments, diabetes and other diseases. Pursuing futuristic cures through regenerative medicine was financially riskier than focusing on the company’s two cancer drugs, which were further along in development, company executives said.

People who had pinned their hopes on stem cells reacted with dismay.

“It was like someone ripped my heart out,” said Sabrina Cohen, who was paralyzed in a car accident in 1992 and runs a research foundation in Miami.


At first blush, Geron’s decision called into question the plausibility of curing diseases with embryonic stem cells. They have the ability to grow into any kind of cell in the body, and laboratories around the world have spent hundreds of millions of dollars trying to turn them into replacement parts such as insulin-secreting islet cells for people with diabetes.

Industry watchers say the science of stem cell medicine remains sound. It’s just the economics that are shaky.

Geron, based in Menlo Park, Calif., was always fighting an uphill battle, seeking funding for a venture fraught with medical and regulatory obstacles at a time when skittish investors wanted certainty. Faced with dwindling resources, Geron had a safer option and ran with it.

“Companies are looking to double down on their most promising programs,” said Dr. George Q. Daley, director of the stem cell transplantation program at Children’s Hospital Boston.

Geron made history in January 2009, when the FDA allowed it to test the safety of a stem-cell-based product known as GRNOPC1. Scientists hoped the therapy would help rebuild fragile neurons in the spinal cord that were damaged in car crashes, falls and other accidents, restoring sensation and mobility to paralyzed patients. The first of five patients to participate in the Phase 1 safety trial got an injection in October 2010.

Everything seemed to be proceeding smoothly. In May, the California Institute for Regenerative Medicine granted Geron a $25-million loan to support the trial. In October, Geron reported that four patients who had received doses of GRNOPC1 tolerated the treatment well. (Stanford announced Friday that its doctors had treated a fifth patient on Wednesday, even though the trial had been suspended.)

But Geron’s funds were running low. Rather than try to raise money in a tight market, the company decided to devote the roughly $150 million it had left to push its two cancer drugs through ongoing clinical trials.

Geron announced last Monday that it would eliminate 66 jobs — almost 40% of its workforce — and seek “partners” to take over its stem cell business. It repaid the $6.4 million it had thus far borrowed from the California institute, plus interest.

That the decision apparently had everything to do with money and nothing to do with the science frustrated patients like Cohen. “We have all the ingredients to cook the omelet, but we don’t have the pan,” she said.

Others noted that Geron faced special obstacles in getting GRNOPC1 off the ground.

For starters, the company had to invest a great deal of money and effort to figure out how to shepherd a new class of drug through the FDA approval process, said Jonathan Thomas, chairman of the California institute.

What’s more, the ethical problems of using cells that were created by destroying embryos compounded the company’s difficulties raising capital.

Many biotech start-ups benefit from hefty grants from the National Institutes of Health, but until 2009 the agency largely remained on the sidelines of embryonic stem cell research. Political concerns “certainly dissuaded wider involvement by pharmaceutical and biotech companies,” Daley said.

The emergence of an alternative type of flexible cell that isn’t made from embryos may have diverted funding and attention from trials like Geron’s, he said.

Some pointed to other challenges: Perhaps reversing spinal cord injuries was an overambitious goal for medicine’s first embryonic stem cell therapy.

“They selected something at the beginning that may have been very sexy — making Christopher Reeve walk — but the problem is, you have to take reality into account,” said Dr. Robert Lanza, chief scientific officer for Santa Monica-based Advanced Cell Technology, the only other company with a clinical trial of a therapy based on embryonic stem cells.

Advanced Cell Technology grows the stem cells into a type of retinal cell that was lost in patients with eye diseases like dry age-related macular degeneration. The replacement cells are meant to pick up where the old ones left off.

“Our cells don’t have to do anything spectacular,” Lanza said — unlike Geron’s therapy, which to get dramatic results would have to rehabilitate neurons that extend from the spine to the brain, he said.

Geron will continue to monitor the five patients who received GRNOPC1 for 15 years. Whether another company will come forward to take over Geron’s stem cell business is unclear.

Nessan Bermingham, a managing director of investment firm Bio Equity Capital in Boston, said he thought “a number of key players” in the pharmaceutical industry would at least enter discussions with Geron. Thomas said his agency would welcome any potential buyer with a California presence to apply for a loan “of similar magnitude to what we gave Geron.”

Even if economic and scientific barriers ultimately doom GRNOPC1, it would not be a death knell for embryonic stem cell medicine.

Geron may not benefit from its years of investment and trailblazing on the regulatory front, Thomas said, but companies that carry the work forward will reap the rewards.