Mixed Feelings on State Funding for Stem Cells

6/8/07

A month after Gov. Deval Patrick announced a planned billion-dollar funding initiative to bolster stem cell research in Massachusetts, the local research community is still awaiting details. But a representative of the governor’s office stopped by a symposium today at the law firm of Nixon Peabody today to give some hints. Jon Mahoney, industry director of life sciences for the commonwealth, said that the legislation will include gap funding for pre-profitable companies, tax credits, and expedited permitting for new facilities. And he noted that the $1 billion was intended not just for stem cell research but also for regenerative medicine and gene therapy. The aim of the legislation, which Mahoney said he hoped would be passed by the end of the month, is to make Massachusetts “the most business-friendly, research-friendly state in the country.” (Mahoney also singled out Kendall Square as “the greatest two square miles of life sciences companies in the world.” We at Xconomy think he’s on to something there.)

While some in the room, including Xconomist and Children’s Hospital researcher Willy Lensch, seemed eager to hear how they could get their hands on a cut of the cash, others were less sanguine about the prospect of states stepping in where the federal government has feared to tread. Ronald Eisenstein, a partner at Nixon Peabody, warned that taking state money is “very much like going to a loan shark instead of your local bank. The state, in giving you this money, wants to be your partner.” Joseph Hammang, senior director of science policy and public affairs for Pfizer, said that sate funding initiatives will be a threat to innovation so long as state legislators try to “stick their hands in the till” with claw-back clauses and other conditions. “They will kill innovation before they even get it funded if they can’t make the investment and stand back and let it happen,” Hammang said.

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  • Willy Lensch

    I found the Nixon/Peabody meeting to be very interesting. V/C has been circling stem cells for a while and it looks like they’ll continue to simply peek in from beyond the campfire, at least for now. Paydays in the near term will likely involve established companies that can cash-in on basic stem cell research (like lab supply houses) but I don’t think that it’s much of a new market. The use of human embryonic stem cells for screening large libraries of compounds generates buzz, including from Pfizer, but as yet, there is no “killer application” (at least that I have seen). There are some kinks to work out, it’s still early for a lot of this, but keep watching.

    Do I think that state money is going to be the kiss of death here? No, I don’t think so. The Devil is in the details and while the various states interested in funding research all appear to have an element of “economic stimulus” including a return on their investment, thoughtful strategies for dealing with any resulting IP can work out provided they are not heavy handed (limited or no march-in rights, reasonable royalty sharing…). Without investing in “R” there will be no “D”. State funding can go a long way towards seeding innovative research. When the feds finally figure out a way to change their restrictive policy regarding embryonic stem cells, the leaders within the field will no doubt include players who got their stake from state’s initiatives, commercial entities included.