California institute doles out first grants

The California Institute for Regenerative Medicine (CIRM) issued its first grants, worth US$12.1m, to 16 Californian non-profit institutions for the training of the next generation of stem cell researchers.

Scientific progress in the field of stem cell technology has met with opposition on moral and ethical grounds. The destruction of embryos left over from fertility treatments for the creation of embryonic stem cells has upset anti-abortion and religious groups, while the idea of cloning embryos specifically for the production of stem cells has sparked fears of potentially eugenic human cloning.

However, according to patent and trade mark attorneys Marks & Clerk's "Biotechnology Report 2006", the biggest obstacles facing stem cell and genetic diagnostic testing researchers are the lack of "a robust patent system" and various other legal and regulatory uncertainties, all of which "can only serve to undermine investment into drug development", according to Dr David Chigwell, chairman of international pharmaceutical company Sosei.

uncertain stance

In Europe, the Oviedo Convention on Human Rights and Biomedicine prohibits "the creation of human embryos for research purposes". However, the UK and Belgium have not acceded to the convention, and in the UK the Human Fertilisation and Embryology Authority (HFEA) is granting licences for the creation of cloned human embryos and the derivation of stem cell lines from these embryos, while the Government is reviewing its laws in this area.

Furthermore, the European Patent Office is so uncertain over its stance on the stem cell issue that industry and academia are filing patent applications without knowing whether their invention is patentable. Meanwhile the UK Patent Office's more concrete stance - it is willing to grant patents on pluripotent human stem cells - has likely contributed to the UK's position as Europe's leading player in terms of stem cell-related patents, accounting for 35% of filings in the region.

Outside Europe, countries such as India, Japan and South Korea have more permissive cloning laws while the US Patent Office has established guidelines allowing the patenting of human stem cells but not of human embryos. This, along with the fact that for every five applications made in Europe only one patent is granted and for every patent granted in Europe 13 are granted in the US, is leading to many non-US companies initially filing applications in the US, which thus accounted for 51% of all applications filed between 2000 and 2005. China, which equalled the number of application in the whole of Europe from 2003 to 2005, ranks second with 16%.

"Stem cell research in China has exploded over the last three years," says Dr Gareth Williams, a partner at Marks & Clerk and co-author of the biotechnology report. "This is due to a benign regulatory environment and the significant capital that has been invested in China in recent years."

In turn Europe's fragmented stance on human embryonic stem cells means, according to the UK Stem Cell Initiative, that "investment from the venture capitalist and major pharmaceutical healthcare companies will not be readily forthcoming", because a return on an investment cannot be guaranteed. Consequently, public bodies and universities have "taken the slack", filing more patents than private companies between 2000 and 2005 and ensuring continued growth in the sector.

However, some private companies are beginning to make progress - notably US-based Athersys, which is expecting to file "multiple INDs" in 2006 as a result of its investigations into cardiovascular conditions, and Canadian company Stem Cell Therapeutics, which is planning phase II clinical trials on a compound for the treatment of neurodegenerative conditions. Marks & Clerk believes that such developments are likely to eventually boost private investors" confidence in the sector, which it estimates to be worth around $11bn.

A notable trend in the sector is the development of "hubs" where stem cell experts are tending to congregate. California is developing into the US hub: companies such as Advanced Cell Technology are relocating to the area, which hosts a $3bn/year state-funded stem cell institute that recently handed out its first grants, and the University of California holds the joint-top number of patent applications (50). In the UK Cambridge is home to the Cambridge Stem Cell Institute, the UK Stem Cell Bank and Bourn Hall Clinic, a centre for infertility treatment.

Other key areas of biotech development are genetic diagnostic testing and RNAi: the former a method of enabling early-diagnosis and tailoring therapeutic interventions through examination of genetic information; the latter a method of "silencing" gene expression through the use of short interfering molecules of RNA (siRNA).

gene ownership

Following in the footsteps of the Human Genome Project, genetic diagnostic testing applies knowledge of the human genome to procuring more effective ways of tackling disease. However, as private companies try to get in on the act, concerns over ownership of genes mean that they face problems on the patenting front, while early speculative DNA filings and too-broad patent claims have also hindered the environment, giving rise to concerns over the freedom of academic researchers.

IP originating in the US dominates the environment - figures from the National Academy of Sciences in the US show that around 20% (4,382 of 23,685) of human genes are currently the subject of US patent claims - exhibiting 14 times the number of applications compared with its nearest rivals, the UK and Japan.

The key players in terms of number of patents are US-based Genaissance Pharmaceuticals and, again, the University of California. But unlike in the stem cell arena, specialist genomics companies rather than public bodies make up a significant number of the top 10, with Millennium, Avalon, Genset and Curagen all featuring. Bayer's appearance at number 10 "reflects [the fact] that major pharmaceutical companies are acquiring relevant IP both internally and through alliances", says Marks & Clerk, while the relatively prolific recent filings of two European specialist genomics companies, Germany's Epigenomics and France's Genodyssee, "indicates that Europe is not being left behind".

The number of published patent applications peaked in 2002, although the dip in 2003 was fairly insubstantial (from 653 to 616), and while complete 2004-5 figures are not yet available, Marks & Clerk states that "they can be anticipated to reflect a continuing active area of innovation".

Signs for the future point to detection methodology as the identification of predominant gene mutations is seen as an accessible route to IP. Identification of ethnic differences in genetic variation could also provide a source of IP, or at least IP disputes.

There are a relatively small number of patent applications filed in RNAi, yet it is a rapidly growing field - the number of patent applications has increased from seven in 1999 to 718 in 2003. The number of patents granted stood at six in 2003 and 11 in 2005, although Marks & Clerk expects more activity in 2006, both in terms of patents granted and "patent wars".

Indeed, so-called "patent wars" have already begun, with seven opponents contesting a patent held by US-based Alnylam; a decision in the case is expected by the European Patent Office in June.

"There is huge optimism that efficacious siRNA molecules will be marketed as therapeutics in the medium or even short term," says Marks & Clerk. The company believes that thousands of patent applications will arise in the coming years, but says that the rush to file first could lead to speculative filings, which in the long run will only hinder progress.

"The patent system is a key driver for innovation," states Marks & Clerk. "The interests of industry, academia, and most importantly the public are not served by lack of clarity over ethical and regulatory issues, nor by a lack of openness such as would result from a drive away from patent protection.

"It is therefore essential that investment and the ethical debate move forward together, and that a strong and open patent system exists. However, until the EPO issues its ruling on the patentability of human embryonic stem cells, uncertainty will persist."