StemCyte Inc., which banks newborn cord blood, signed a university licensing agreement last week that could speed commercialization of a new spinal cord injury therapy.


In the process, it might help polish the reputation of the often-maligned cord blood industry.

The Arcadia-based company will help fund clinical trials for a therapy being developed by Dr. Wise Young at Rutgers University's W.M. Keck Center for Collaborative Neuroscience. Young is studying whether giving patients lithium salt, after they've received an injection of stem cells extracted from umbilical cord blood, can boost stem cell production to heal the spinal injury.

Umbilical cord blood is rich in stem cells that are capable of growing into a variety of human cells and organs. StemCyte has a proprietary process for extracting and preserving the cells after the blood is harvested following birth.

If the product or other assets resulting from the collaboration are successfully commercialized by StemCyte, Rutgers will receive royalties. A second of four planned trials is expected to launch within a week or two.

The deal with Rutgers is expected to be the first of several for StemCyte, according to David Carmel, vice president for business development. Three years ago the company began to identify top researchers whose work might create a market for its cord blood inventory.

StemCyte, like other private cord blood banks, offers mothers the opportunity to pay for storage of their infant's umbilical cord blood for future use by the child or its family. Private banking is criticized by medical experts who contend few families will ever need it, or even be able to use it.

But StemCyte, like non-profit banks, also offers families the ability to contribute for free to a separate donor bank for use by the general public. That blood can be used for research like Dr. Young's or in current treatments of diseases like leukemia.

RadNet Acquisitions

In a tough commercial credit market it can be hard for businesses to get the cash to jump on an opportunity quickly. But RadNet Inc. was able to swing a term loan to help fund several local acquisitions last month.

Los Angeles-based RadNet, considered the nation's largest owner and operator of fixed diagnostic imaging centers, signed a definitive agreement to purchase imaging centers in Simi Valley, Thousand Oaks, Westlake, Encino, Van Nuys and Valencia from InSight Health Corp. for $8.5 million.

Earlier in the month RadNet bought two Rolling Oaks Radiology imaging centers in Thousand Oaks area for $5.9 million in cash and the assumption of approximately $5.9 million of debt.

RadNet expects the InSight centers will add approximately $10 million in annual revenue once the deal closes later this month. The Rolling Oaks centers are expected to add another $9 million in revenue. RadNet has 143 centers, with its core markets being California, Maryland, New York and Florida.

GE Healthcare Financial Services agreed to a $35 million increase in RadNet's existing credit facilities, with the ability to increase it by another $65 million for future acquisitions and general purposes. The amount is slightly lower than the $110 million the company had hoped to arrange when it announced in January it was seeking financing for acquisition and general purposes.

"We are very pleased to have completed this financing transaction in one of the most challenging credit markets in recent history," said Chief Executive Howard Berger in a statement.

Health Net Censured

Health Net Inc. received bad news recently on two fronts over its past practices in cancelling members' policies while in the middle of treatment.

A breast cancer patient whose medical coverage was canceled by the Woodland Hills-based health insurer was awarded more than $9 million by an arbitration judge on Feb. 22. Two days earlier, Los Angeles City Atty. Rocky Delgadillo filed suit against Health Net in connection with its policy recission practices.

Delgadillo also launched a criminal investigation into a past company practice of paying employee bonuses based in part on the number of individual policies they cancelled of members who knowingly had pre-existing conditions that would have disqualified them for coverage. Patsy Bates, the patient in the arbitration case, contended the incentive program unfairly led to her policy's cancellation.

Health Net was fined $1 million in November by the state Department of Managed Health Care for not disclosing the bonus program to its investigators, even though the company claimed the program already had been cancelled by the time of the probe.

Health Net has since announced that it will not rescind policies without a binding external, third-party review. It also is reviewing its application and underwriting process, plus how it trains insurance brokers who sell individual policies. Those policies are different from those employees have thorough company group coverage.

Staff Reporter Deborah Crowe can be reached at (323) 549-5225, ext. 232, or at dcrowe@labusinessjournal.com .

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