StemCells, Inc., Sued by Former Employee Who Says Their Stem Cell Treatment is Unsafe


A California stem cell company, StemCells, Inc., that is developing cell-based therapies for several different neurological and eye conditions, is being sued by a former employee (whistleblower) who claims that the company did not follow proper protocols in the preparation of their treatments. Rob Williams, who was once a senior manager at StemCells, Inc., has alleged that the company fired him after he brought these problems to the attention of senior management.

According to the Courthouse New Service, Williams in the lawsuit stated that he “noted poor sterile technique, failure to adhere to current Good Manufacturing Practices in the company’s manufacturing process, and substantial deficiencies in the company’s Manual Aseptic Processing of HuCNS-SC (Human Central Nervous System Stem Cells) cell lines—failure and deficiencies that put patients at risk of infection or death during ongoing clinical trials.”

Ken Stratton, who serves as the general counsel for StemCells, Inc., has told the California Stem Cell Report that Williams’s employment “was terminated for performance deficiencies, and [the company] finds no merit to the allegations.” Stratton also said that “the elements of manufacturing practices that concerned Mr. Williams were immediately and carefully reviewed by the company.”

It might be worth noting that this lawsuit coincides with the departure this past April or May of StemCells, Inc.’s Executive VP of Manufacturing Operations and Regulatory Affairs, Stewart Craig, who took a position at Sangamo Biosciences.

Unfortunately for StemCells, Inc., this particular lawsuit comes soon after a second bit of bad press. Embryologist Alan Trounson led the California Institute for Regenerative Medicine (CIRM) until June of this year, but has joined the board of StemCells, Inc., shortly after leaving the state stem cell research funding agency. According to an opinion article written by Ron Leuty, who is a reporter for the San Francisco Business Times, Trounson has recused himself from discussions regarding a loan StemCells, Inc., received from CIRM in 2012 because of his close relationship with the company’s founder. “But the speed of his appointment to the StemCells board has raised questions” about a possible conflict of interest, Leuty wrote.

CIRM has been marred by conflicts of interest accusations since California voters in 2004 birthed CIRM through Proposition 71 and the subsequent sale of $3 billion in state bonds. Now it has one more strike against it.

Leuty called the situation an embarrassment for CIRM. “If the public perceives that individuals—researchers or CIRM employees or company executives—are feeding at the trough of the semiautonomous public agency, it isn’t going to help CIRM get more cash from that very same public that foots the bill.”

StemCells, Inc. Presents Two-Year Pelizaeus-Merzbacher Disease Data Suggesting Increased Myelination of Nerves


StemCells, Inc. has presented data of their two-year follow-up of patients with Pelizaeus-Merzbacher disease (PMD) who were treated with the Company’s proprietary HuCNS-SC cells. HuCNS-SC is a purified human neural stem cell line, and these neural stem cells can differentiate into a very wide variety of cell types of the nervous system, including different types of neurons and glial cells.

PMD is an inherited condition that involves the central nervous system. It is one of a group of genetic disorders called “leukodystrophies,” which all have in common degeneration of myelin. Myelin covers nerves and protects them, and promotes the efficient transmission of nerve impulses. PMD is caused by an inability to synthesize myelin (dysmyelination). Consequently, PMD individuals have impaired language and memory abilities, and poor coordination. Typically, motor skills are more severely affected than intellectual function; motor skills development tends to occur more slowly and usually stops in a person’s teens, followed by gradual deterioration.

Since PMD is an X-linked genetic disease, it is far more prevalent in males, and an estimated 1 in 200,000 to 500,000 males in the United States have PMD, but it rarely affects females.

Mutations in the PLP1 gene usually cause PMD. The PLP1 gene encodes proteolipid protein 1 and a modified version (isoform) of proteolipid protein 1, called DM20. Proteolipid protein 1 and DM20 are primarily in the central nervous system and are the main proteins found in myelin. The absence of proteolipid protein 1 and DM20 can cause dysmyelination, which impairs nervous system function and causes the signs and symptoms of Pelizaeus-Merzbacher disease.

In this trial, PMD patients were injected with HuCNS-SC cells. In this report, magnetic resonance imaging (MRI) studies were used to determine the amount of myelin that insulated particular nerves in the central nervous system. MRI examination of the patients revealed evidence of myelination that is more pronounced that what was seen in the one year post-transplantation exams. The gains in neurological function reported after one year were maintained, and there were no safety concerns.

Patients with PMD have insufficient myelin in the brain and their prognosis is very poor, usually resulting in progressive loss of neurological function and death. The neurological and MRI changes suggest a departure from the natural history of the disease and may represent signals of a positive clinical effect. These data were presented by Stephen Huhn, MD, FACS, FAAP, Vice President, CNS Clinical Research at StemCells, Inc., at the 2013 Pelizaeus-Merzbacher Disease Symposium and Health Fair being held at Nemours/Alfred I. duPont Children’s Hospital in Wilmington, Delaware.

“We are encouraged that the MRI data continue to indicate new and durable myelination related to the transplanted cells and that the data is even stronger after two years compared to one year,” said Dr. Huhn. “Even in the context of a small open-label study, these MRI results, measured at time points long after transplantation, make an even more convincing case that the HuCNS-SC cells are biologically active and that their effect is measurable, sustainable, and progressive. Our challenge now is to reach agreement with the FDA on how best to correlate changes in MRI with meaningful clinical benefit, as this will be a critical step in determining a viable registration pathway for PMD.”

The Company’s Phase I trial was conducted at the University of California, San Francisco, and enrolled four patients with “connatal” PMD, which is the most severe form of PMD. All four patients were transplanted with HuCNS-SC cells, and followed for twelve months after transplantation. During the year of post-transplantation observation, the patients underwent intensive neurological and MRI assessments at regular intervals. Since none of the patients experienced any serious or long-lasting side effects from the transplantation, the results of this Phase I trial indicate a favorable safety profile for the HuCNS-SC cells and the transplantation procedure.

Data from MRI analyses showed changes consistent with increased myelination in the region of the transplantation. This increased myelination progressed over time and persisted after the withdrawal of immunosuppressive drugs nine months after transplantation. These results support the conclusion of durable cell engraftment and donor cell-derived myelin in the transplanted patients’ brains. Also, routine neurological exams revealed small but consistent and measurable gains in motor and/or cognitive function in three of the four patients. The fourth patient remained clinically stable. These Phase I trial results were published in October 2012 in Science Translational Medicine, the peer review journal of the American Association for the Advancement of Science. Upon completion of the Phase I trial, all four patients were enrolled into a long-term follow-up study, which is designed to follow the patients for four more years.