Stem Cell Research Initiative Would Bring Benefits to L.A.

Staff Reporter

Think aid, not cure-all.

That's the potential benefit to the lagging L.A.-area biotech industry should a proposed $3 billion ballot initiative that would fund embryonic stem cell research be approved by state voters in November.

The initiative, which would annually disburse $250 million or more over 12 years, could make California a world leader in one of the most promising new fields of medical research, with potential therapeutic applications in heart and brain diseases, paralysis and other conditions.

Locally, it would be expected to fund ongoing stem cell research at the City of Hope, USC and other leading area institutions, and encourage additional efforts. The initiative also sets aside funding for "translational" research work that might be done by private companies seeking to bring a therapy to market.

However, Los Angeles biotech researchers in other disciplines already receive lots of funding and the new dollars would have to be shared with the rest of the state.

"The issue here in Los Angeles is that the science is excellent, but it does not find its way to the marketplace," said Ahmed Enany, executive director of the Southern California Biomedical Council. "The devil is in the details how the money will be spent, where these centers will be located."

Aside from Amgen Inc., the nation's largest biotech firm that's located just over the border in Ventura County, most of L.A.'s biotech companies are startups, aside from some medical device companies.

While Southern California overall receives $1.4 billion annually in biomedical research funding from the National Institutes of Health, a recent study by the Milken Institute placed the county's biotech industry behind San Diego, San Jose, San Francisco and Oakland.

However, the stem cell initiative includes some fine print that might be advantageous to Los Angeles.

The money will be disbursed by a 29-member oversight committee that could have a good share of representatives from the Los Angeles area, though members cannot vote on proposed funding for the institutions they represent, said initiative co-chair Robert Klein, a Palo Alto real estate developer.

UCLA has a designated slot on the committee as one of five University of California campuses with a medical school. There also would be specific slots for other universities, as well as independent hospitals where stem cell research is under way.

USC, Caltech, City of Hope, Childrens Hospital Los Angeles and Cedars-Sinai Medical Center are likely candidates for these other slots.

"Fifty percent of all the biotech research capacity in the world is in California, which is more biotech capacity than any other country in the world," said Klein, who donated $1.5 million to the campaign and whose son has juvenile diabetes, a potential target of stem cell therapies.

There is also language that calls for 10 percent of the funding to go toward building non-profit research institutes. That's funding USC is already eyeing as it moves forward with plans to build additional research capacity at its medical school, including a stem cell research center in a planned Institute for Integrated Biology and Medicine.

"We hope the initiative will allow us to get some help," said Dr. Zach Hall, senior associate dean for research at USC's Keck School of Medicine.

Less clear is whether any money might be available for the university's stalled proposal for a biotech park next to the medical school, a place where startups would seek to commercialize basic science.

The $300 million in the initiative is for bricks and mortar non-profits would use to build basic research facilities. But the initiative also calls for providing money to commercial startups seeking to create therapies they can bring to market, so some funds could be used toward the park.

Venture capitalist Michael Gordon, a managing partner at Meritech Capital Patners in Palo Alto who donated $250,000 to the initiative, said he believes the money will be a shot in the arm to stem cell startups, whose formation has been hindered by restrictions President Bush signed into law in August 2001.

(Those restrictions limited not only federal funding but also, due to religious concerns, the number of embryonic stem cells available for research.)

"No venture capital firm in their right mind will invest in stem cells when you have this federal funding prohibition, but now the state could provide enough money to get research off the ground and the venture firms would come in," said Gordon, a Type 1 diabetic since childhood.

It's expected that the earliest therapies from embryonic stem cell research are likely 10 years away.

Trickle-Down Effect

While not everyone agrees on the degree, San Diego's research institutions and biotechnology companies could benefit if California voters approve a $3 billion bond measure to fund embryonic stem cell research.

The expenditure of $295 million a year over 10 years has the potential to attract top-notch researchers to San Diego and encourage companies to establish stem cell programs. It also would prompt venture capitalists to fund more programs in the controversial area.

"This would be an enormous boon to San Diego," said Evan Snyder, director of stem cell research at the Burnham Institute in La Jolla. Snyder sits on the scientific advisory board of the initiative's planned institute, which would make grants and loans available for research.

If approved, the initiative would dwarf federal grants, which have been stalled at about $17 million a year for embryonic stem cell research since President Bush, citing ethical considerations, signed an executive order in August 2001 to limit funding.

Snyder touts the measure as empowering the state by floating a tax-exempt, low-interest bond to fund the California Institute for Regenerative Medicine, which will create regulatory standards and oversight bodies for research and facilities development.

Snyder sees San Diego as highly competitive given the large concentration of research institutions that include the Salk Institute, the Scripps Research Institute and the University of California San Diego.

But Joel Martin, a partner with Forward Ventures, a La Jolla-based venture capital firm focusing on life sciences investments, remains skeptical. "I don't think it would be a transforming event," said Martin about the initiative's claims to fuel economic growth. "It's currently not viewed as a particularly opportune commercial endeavor."

Martin says the measure while helpful to academic researchers has little to offer to investors who expect a foreseeable return on their multimillion-dollar investments. It will take years of basic science to gain investors' confidence, he said.

"There needs to be a lot more basic research done before we will see a product," Martin said. "The political environment put a chill on the research but (the initiative) will not open the floodgates in venture capital investments at least not in the short term."

Marion Webb, San Diego Business Journal

For reprint and licensing requests for this article, CLICK HERE.