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Biotech execs: No sharing of stem-cell research

by Steve JohnsonSan Jose Mercury News
June 30th, 2006

A proposal that would let the state share in any profits that result from its $3 billion stem-cell research grants and force researchers to freely disseminate their discoveries has riled biotech executives, who say it could deter them from working on stem-cell therapies.

Several biotech companies and business groups have lodged formal objections to the policy, tentatively adopted in February by the California Institute for Regenerative Medicine, which oversees the stem-cell research effort created in 2004 by Proposition 71.

``These provisions substantially reduce or eliminate the incentives to commercialize patented stem cell-related technologies and products even in spite of the generous funding provided by Proposition 71,'' the Washington-based Biotech Industry Organization complained in a letter to the institute.

In addition, the California Healthcare Institute, which represents biotech firms across the state, warned that deterring companies from participating in stem-cell research could have dire consequences for people suffering from a variety of ailments.

``Without private sector investment in research innovations, stem cell research and the development of resulting new treatments and therapies will be constrained,'' it said.

The comments, which were obtained by the Mercury News under the state's public records act, are being reviewed by the institute and may result in the proposed policy being amended.

``It's impossible to make everyone happy,'' said Ed Penhoet, the institute's vice chairman. But he added that the agency is confident ``we will end up with a good policy with a fair balance of the issues.''

The state's ability to issue stem-cell grants has been severely crimped by two lawsuits, which have delayed the sale of bonds needed to finance the research program. But consumer advocates and some lawmakers have argued that once the grants start flowing, the state needs to be assured of a financial return on its sizable investment.

The stem-cell institute is just beginning the process of drafting a revenue-sharing policy for businesses, which it hopes to complete this year. But the policy adopted in February for universities and other non-profit institutions includes a number of provisions that already have sparked objections from corporate executives.

The policy would insist that the state receive a 25 percent royalty on any revenue exceeding $500,000 that was generated from the institute's grants. To avoid price gouging, it also would require that drugs or other products developed from the grants be made available to Californians at prices set by the federal Medicare program.

And to help speed development of stem-cell based treatments, the policy would force researchers who get grants to share their discoveries at no charge with other scientists.

Some consumer advocates contend those provisions don't go far enough, arguing, for example, that the state ought to get a share of revenues as low as $100,000.

``What good will the investment of our tax money do if the ultimate benefit eludes the taxpayers who financed and backed all the capital investment?'' asked the California Council of Churches in a letter in response to the policy.

But business executives have a different view.

Although Proposition 71 envisioned companies commercializing stem-cell research done at universities, that would be unlikely if the proposed policy is put into effect, according to a letter from several biotech firms, including Applied Biosystems of Foster City.

``It is very unlikely that any for-profit entity would license a research-related invention that cannot be protected in the research environment and that must, in all circumstances, be provided to all California researchers for free,'' the businesses said.

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