Could be boon for Bay Area biotech

Could be boon for Bay Area biotech
By David Morrill/Contra Costa Times
Posted: 03/10/2009

Bay Area biotech companies sat frustrated for eight years as a cloud of politics generated by the Bush administration hovered over the stem cell industry.

But with a stroke of President Barack Obama's pen Monday, suddenly the sky has begun to clear as federal restrictions on the funding for embryonic stem cells were removed.

"We are now back at the starting line where we should have been long ago," said Michael West, president and chief executive of Alameda-based BioTime. "The political football has been taken off the field, and now we can focus on scientific collaborations that have been long delayed."

Although financially this will benefit academic institutions and not companies, the acceptance of the field will have an impact on everyone, West said.

Stock prices for stem cell-related companies saw the impact immediately. Shares of nearly every company focused on stem cells surged dramatically. BioTime closed up 26 percent, or 45 cents, to $2.15. Menlo Park-based Geron closed up 16 percent, or 64 cents, to $4.51.

Embryonic stem cells are early stage cells capable of being grown into hundreds of cell types used in the human body. Stem cells created before 2001 were not restricted by research funding, but only about 21 of those lines are currently available.

Geron, the pioneer of the embryonic stem cell industry, hasn't been affected much in the past years because it has been able to work with what the company already had, said David Greenwood, its chief financial officer. But the possibilities for the industry's future excite the company, he said.

"It takes the (National Institutes of Health) off the sideline and puts them into the game in funding research in academia," Greenwood said. "Having been closed out for the last years, having university researchers involved will have a general impact that will be broadly and widely felt."

Greenwood doesn't think venture capitalists were swayed by the political ruckus over embryonic stem cells, but others disagree.

West remembers meeting with one venture capitalist who told him, "I'm afraid not to do this, and I'm afraid to do this, so it's hard to decide."

"Now, the politics aren't an issue," West said.

Stephen Thau, co-head of life science practice at Morrison & Foerster, says he expects that there will be more startup companies emerging in the embryonic stem cell arena.

"This move has helped de-risk a lot of the field, and now people will have more confidence that if they put money behind a project that it will have a chance to make it through to therapy," Thau said.

Additionally, large pharmaceutical companies in the Bay Area and across the country are taking notice of the renewed interest in embryonic stem cell therapies, Greenwood said.

Pfizer, the world's largest drugmaker, opened a stem cell research center to treat nervous system disorders. GlaxoSmithKline, the second largest drugmaker, has put money into stem cell development, as well.

West, who is considered a pioneer in the field, remembers a conversation he had in the mid-1990s with Robert Swanson, the founder of South San Francisco-based Genentech. Genentech had long battled Congress on ethics of scientists being able to make synthetic DNA and Swanson found himself in front of Congress quite a bit.

"I remember he pulled me aside and told me that stem cell research is going to be just like recombinant DNA was for the industry," West said. "Once the political cloud was lifted, the industry just exploded."