A post by David Jensen in californiastemcellreport on April 25 had some quotes relevant to CIRM's IP (intellectual property) Task Force meeting in March 2006 and to a meeting schedulued for San Diego on Thursday, April 27.

--> Ed Penhoet, chair of the task force, said last month's hearing raised some fundamental questions.

"What are we really attempting to do? Are we trying to drive therapies as rapidly as possible? Are we trying to stimulate business in California? Do we want to grow small companies? There (is) a whole set of potentially conflicting aims," Penhoet said.

As a comment, one notes the CIRM people need to get their act together to spend their money in a coherent manner, and not have conflicting aims. It's one thing if this is a WPA project for biologists; it's another thing if one is trying to get royalties from patents, and it's still another thing to focus on getting a useful product to market. The WPA project model is the easiest to accomplish ("we spent a lot of money in an important area and employed lots of scientists") but is most likely to lead to disappointment.

--> Brad Margus, CEO of Perlegen Sciences of Mountain View, Ca., told the task force that if CIRM wants to be an agent that produces the next big thing in stem cells, it needs to minimize nonfinancial restrictions and heavy royalties.

"I'd like California to try to do it differently ....and think a little smarter. If there really is a company out there that has the next thing that you need in stem cell research to happen, and your objective scientific advisors say this is what we want, you should be really, really aggressive in getting it. And I'm concerned that some of these things that we're throwing out there, like revenue sharing or the capping what a company (can earn), will only defeat that purpose."

As a comment, one "next big thing in embryonic stem cells" is to do what Hwang Woo-Suk claimed to have done in 2005: create patient specific embryonic stem cell lines. All the "objective science advisors" in the world failed to counsel anyone that Hwang's work was fraudulent, so one has to take advice in this area with a grain of salt. Beyond doing patient-specific stem cells, one still needs to use such things in some beneficial way to actually help human beings. That objective may be more than 10 years in the future. Most venture capitalists seem to think the time line for a real product is long.

--> One executive from Genentech, which has only a peripheral stem cell interest, told the task force that it takes something like $1 billion to push a product to market. He said that for every dollar in research, another $5 is need for development. And the odds of developing a successful product once it starts clinical testing on humans range from one in three to one in five.

As a comment, one has to be careful to note that an effective business model for patient-specific stem cells (geared to INDIVIDUALS) is apt to be different from a business model for blockbuster drugs (geared to MANY PEOPLE taking the SAME drug).

As some guidance, one can contemplate the basic composition of matter claims of the Thomson/WARF patents, recently strongly criticized by Washburn in the Los Angeles Times.

First claim of US 5,843,780:

A purified preparation of primate embryonic stem cells which

(i) is capable of proliferation in an in vitro culture for over one year, (ii) maintains a karyotype in which all the chromosomes characteristic of the primate species are present and not noticeably altered through prolonged culture, (iii) maintains the potential to differentiate into derivatives of endoderm, mesoderm, and ectoderm tissues throughout the culture, and (iv) will not differentiate when cultured on a fibroblast feeder layer.

First claim of US 6,200,806 (the application leading to the '806 patent was a divisional of the application leading to the '780 patent) :

A purified preparation of pluripotent human embryonic stem cells which

(i) will proliferate in an in vitro culture for over one year, (ii) maintains a karyotype in which the chromosomes are euploid and not altered through prolonged culture, (iii) maintains the potential to differentiate to derivatives of endoderm, mesoderm, and ectoderm tissues throughout the culture, and (iv) is inhibited from differentiation when cultured on a fibroblast feeder layer.

Looking carefully, one will note that the basic preparation (first line) and all elements (i-iv) are different between the basic claims of the two patents. For someone to get the type of patent protection to encourage the investment to bring a product to market, the person will need to get a broad claim, one that is not limited to the specific patient who will be the recipient of the "patient-specific" stem cells. This need is apt to foster a patent-thicket problem.

Geron has exclusive rights in the Thomson patents in certain areas. For investment, Geron has sought private investors, largely ignoring the Congressional debates over expanding federal research dollars and the vast bureaucracy that has held up state funding in California. "Given their financial acumen, they are pretty much self-sustaining for the foreseeable future," says Steve Brozak, an analyst at WBB Securities, a brokerage based in San Diego. "They've managed that by tapping into the capital markets. These folks have learned very well; they don't want to be caught at the mercy of anybody." Geron has spent about $100 million in stem cell research over the last 10 years, small in comparison to California's potential of $3 billion over the next 10 years. Geron announced it expects to file for permission from the Food and Drug Administration [FDA] to begin trials for an embryonic-stem-cell-based therapy for spinal-chord injuries this year. [information and quote from smartmoney.com] Keep in mind, under 35 USC 271(e)(1) as interpreted in the Merck v. Integra case, anyone is pretty much free to infringe anyone else's patents for purposes of obtaining information needed by the FDA.

The Washburn article was discussed in a previous ezine piece: Ebert, Lawrence. (2006, April 12). Los Angeles Times Article Way Off Base on Stem Cell Issues. EzineArticles. Retrieved April 27, 2006, from http://www.ezinearticles.com/?Los-Angeles-Times-Article-Way-Off-Base-on-Stem-Cell-Issues&id=178050.

The reluctance of venture capitalists to invest in stem cell research is discussed in an ezine piece: Ebert, Lawrence. (2006, April 24). MIT Technology Review Concern Over WARF Patent Royalty Demand To CIRM Over Stem Cells Is Misguided. EzineArticles. Retrieved April 27, 2006, from http://www.ezinearticles.com/?MIT-Technology-Review-Concern-Over-WARF-Patent-Royalty-Demand-To-CIRM-Over-Stem-Cells-Is-Misguided&id=184620

Lawrence B. Ebert is a registered patent attorney located in central New Jersey. He holds a Ph.D. from Stanford, a J.D. from the University of Chicago, maintains a blog at IPBiz.blogspot.com, and is the author of LESSONS TO BE LEARNED FROM THE HWANG MATTER: ANALYZING INNOVATION THE RIGHT WAY, published in the Journal of the Patent & Trademark Office Society [88 JPTOS 239 (March 2006)]. Ebert is listed in Marquis Who's Who in America, Diamond Edition, 2005. Ezine draft submitted April 27, 2006.