Editor

The phrase "stem cells" can still bring a shudder to some investors, wisely shy about the riotous debate the field of research sparked last year between fervent camps of various persuasions some concerned more with religious and ethical matters than the advance of biotechnology.

Not everyone understood what they were talking about, but this hardly mattered. When "stem cells" was spoken, "unborn babies" often got mentioned, even in cases where no aborted embryo was involved.

The skirmishing was loud, and reached Washington quickly. Only after a period of months did battlers sort out the types of stem cells available for experiments. Objectors cooled somewhat, when they learned there is not always the danger of pregnant women marketing their fetuses to science.

In the case of umbilical cord (UC) stem cells, parents could show their concern for children by having the cells harvested and stored at birth, for an illness that might arise later.

In the hysteria surrounding embryonic stem cells, the field of UC stem cell work didn't get much press. When it did, people (especially among the general public) still were likely to misunderstand believing the cells to have come from the umbilical cords of embryos, rather than newborn children.

The highest profile UC stem cell company is ViaCell Inc., which last month filed for an initial public offering that it hopes will raise $115 million.

ViaCell's Selective Amplification technology uses growth-stimulating factors and removal of differentiated cells to make what the firm says is an expanded, fairly pure product. Hematopoietic, or blood-producing, stem cell populations have been increased up to 150-fold, averaging 40-fold in a two-week period. The company's lead product, CB001 (made of purified hematopoietic stem cells), is in a Phase I trial for use in transplants of the cells for cancer and other diseases.

Already public in the UC stem cell area is Cryo-Cell International Inc. which, like ViaCell, is named in a patent-infringement suit from yet another UC stem cell company: PharmaStem Inc., which claims one patent issued in 1991 and another issued in 1993 have been violated by those competitors and no less than six others.

The field is innocent seeming in terms of involvement with any abortion controversy as well as overall. What could provide better feeling, after all, than a company dedicated to saving cord blood for the benefit of children in later life, or other family members, or any match to the human leukocyte antigen type of the cord blood's donor?

Cryo-Cell's website features a baby peeping from beneath a sheet. The caption above the photo reads, "Cord blood preservation: a security blanket for your family."

Yet, even here is strife, albeit of the courtroom type, and not on the national scale that plagues embryonic stem cells.

PharmaStem's patents, issued to its previous incarnation, BioCyte Corp., cover "pioneering and fundamental inventions in the collection, preservation and growth of umbilical cord and placental blood for future therapeutic use," PharmaStem said. Cryo-Cell last week said the lawsuit is "without merit," but even if the patents were valid, its methods don't trespass on those protected by PharmaStem.

It's not the first go-around for the latter and Cryo-Cell, which challenged the 1991 patent two years after its issuance, but the U.S. Patent and Trademark Office didn't make a decision in PharmaStem's favor until April 2000.

"In the meantime, BioCyte was unable to get further funding, because of the uncertainty regarding their patent position," said Steven Reich, president and CEO of PharmaStem. "They were sued for trademark infringement, which they lost."

BioCyte had been the first UC stem cell firm, followed closely by ViaCell and Cryo-Cell. But, while BioCyte was awaiting word from the patent office, and dwindling, other companies sprang up. Cryo-Cell, in an unrelated matter, also is being sued by its former president and chief operating officer, who alleges a breach of agreement when the board of directors terminated her employment Dec. 19 of last year.

BioCyte won a patent in Europe in 1996 a patent challenged by activists and competitors, and rejected on the grounds of lack of novelty in 1999, by which time there wasn't any BioCyte or PharmaStem, Reich told BioWorld Financial Watch.

"Greenpeace didn't want any human cells patented," he said, noting that, "in the U.S., we're not patenting the cells themselves, but therapeutic compositions." The revocation of the European patent, to which Thermogenesis Inc. and Astra Pharmaceuticals Inc. also objected, is under appeal.

"If [PharmaStem's technology] is not novel, how come people were throwing away umbilical cords?" said Reich, who joined the company (restarted under its new name by the original BioCyte investors) in May 2001.

"I contacted all the cord blood banks I was aware of, those for family and for unrelated use, to let them know we were back," he said. "Basically, no one wanted to take out the license."

As long ago as 1994, the first transplant of cord blood from Biocyte Corp.'s Cord Blood Stem Cell Storage Services made news. The procedure took place at Children's Hospital in Pittsburgh and used blood collected from the placenta and umbilical cord of a newborn. Frozen and stored by Biocyte, it was transplanted into the donor's 4-year-old sister, afflicted with aplastic anemia.

The complexity and duration of patent-lawsuit trials tend to belie what filing parties often insist is the clarity of the issues. Reich, though, said the case ought to be straightforward.

"It's the fact that they are storing enough stem cells to transplant," he said, adding that, "if somebody took a cord, grabbed a bunch of stem cells and wanted to use it for research, that's not a problem. It wouldn't be a 'therapeutic composition.' If they were using some kind of amplification technique, we believe they are infringing."

Last week, PharmaStem was waiting for a judge to set the date by which the defendant companies must respond to the lawsuit. Reich said he recognized that such battles often are waiting games that drain resources, and the bigger party sometimes wins purely by endurance.

ViaCell subsidiary Viacord Inc., which does the collecting, testing, processing and freezing of cord blood for the firm, brought in revenues last year of $7.1 million.

Cryo-Cell, late last month, filed with the Securities and Exchange Commission for a late submission of its operating results for the year, but reported at the first of the month that it achieved record sales of $974,508 year to date, compared to $491,275 for the same period last year. January's revenues of $500,968 compared to $473,540 in December 2001 and $259,851 for January 2001.

Said Reich: "We recognize this [lawsuit] can be expensive and long term, and we've geared up for that."