“Comfort News” for California’s Stem Cell Research Effort

The California stem cell agency has
enjoyed a spate of good financial and scientific news this week from
the biotech industry as the research effort pushes on with its
mission of turning stem cells into cures.

The $3 billion agency is
scheduled to make its last grants in less than three years and, given
the glacial pace of medical research, needs all the help it can get
by then to bring a stem cell therapy close to the marketplace – the
promise it made to voters when the agency was created nine years ago.

CIRM, as the agency is known, requires
not only steady scientific progress but also a rosy outlook for the
industry, which has languished in past years as major investors
shunned the field. This week, CIRM garnered good news on both fronts.

There was enough so that the agency
even touted it on the agency's research blog in an item by
Neil Littman, CIRM's business development officer. He said it all
helps to leverage CIRM investments and create a favorable investment climate. The good news included yesterday's announcement that
Viacyte, Inc., of San Diego, Ca., has come up with $10.6
million needed to match a $10.1 million, much-ballyhooed award from CIRM last fall. The Viacyte financing
includes important support from Big Pharma, in the form of Johnson &
Johnson. CIRM has pumped a total of $39.4 million into Viacyte.

Another CIRM award winner,
Cellular Dynamics International, Inc., of Madison, Wisc., yesterday
announced its price on its upcoming stock offering to raise up to $53
million. Cellular Dynamics scored $16 million from the agency last
March.

The “comfort news” for CIRM also included Monday's announcement that Capricor, Inc., a private Beverly Hills company benefiting from $27 million from the California stem cell agency, is merging with publicly traded Niles Therapeutic, Inc., of San Mateo. The merger is aimed at providing better access to capital.

And then there was Tuesday's news that a $20 million CIRM disease team award is paying off with the beginning of a clinical trial by Calimmune of Tucson, Az. for an HIV treatment.

All on top of the news in June when bluebird bio of Masschusetts brought in $101 million on its stock offering. Bluebird is the recipient of a $9.4 million CIRM award.

The rosy news comes amid a generally
better outlook for biotech in general. John Carroll, editor of Fierce
Biotech, this week noted that there were only 11 biotech stock offerings last
year. He wrote,

Carroll's comments were echoed in a
piece by Peter Winter on Bioworld headlined “Bubbleology and Biotech's Bull Run.”

All of this plays into what some might
call the “everybody's-doing-it dance" or the “lemming
syndrome,” depending on your point of view. The reality is that
big investors and venture capitalists are timid souls and need the
comfort of companionship-in-risk as they fork over tens or hundreds
of millions of dollars on something that may not pay off for a decade
or more. No one wants to be the out-front pioneer who winds up with
financial arrows in his or her back. Being in a crowd provides an
illusion of safety.

Of course, there is always the caveat
about how markets and investors are fickle. A piece of bad news can
translate quickly into major reversals as Apple has learned over the
last year. Nonetheless, the folks at the stem cell agency have to  be feeling good today.