West Coast Editor

To the surprise of very few, the state Supreme Court declined to take a look at the court ruling that cleared as legal the California Institute for Regenerative Medicine (CIRM), set up after voters in 2004 approved a $4 billion ballot measure for stem cell research known as Proposition 71, and the dispute apparently is dead.

"Both parties had agreed not to appeal into the federal courts, so there's no [further] option" for those against Prop 71 and CIRM, noted John Wetherell, an intellectual property lawyer in the San Diego office of Pillsbury Winthrop Shaw Pittman LLP, which was not directly involved in the case.

Prop 71 let California taxpayers get around federal guidelines blocking funds for human embryonic stem cell (hESC) research, but opponents challenged its constitutionality. "Everyone seemed to think [the final court victory for stem cell research] was a done deal," and the decision Wednesday was "a bit anti-climactic," Wetherell said. (See BioWorld Today, Nov. 4, 2004.)

"Ostensibly, the basis of the lawsuit was that these were state funds and the legislature was not going to be sufficiently involved," he added, but that argument belongs in state court, which already had ruled, and so the Supreme Court turned the case away. "Many of these organizations are against abortion, and there's a common thread of relationship between the plaintiffs," which included the California Family Bioethics Council and others, Wetherell pointed out.

Prop 71, approved by almost 60 percent of California voters, lets the state treasurer sell up to $350 million in bonds per year to fund the institute, and money not used in a given year can be transferred to the next. Bonds worth $250 million now can go up for authorized sale as a result of the Supreme Court's action, but much of that money will repay loans related to starting up the institute and keeping it going while the court fight went on. The institute has rubber-stamped more than $158 million in grants so far, though most of the money has not yet gone out the door.

CIRM's opponents might "always file another lawsuit based on another issue, if they can find one," but it's hard to say if they'll be able to come up with one, Wetherell said. "There have been some organizations - not parties to this litigation - who have raised the issue of potential conflict of interest, since some of the people who sit on CIRM are also from agencies that might receive that funding." But that problem seems fairly simple to solve, by leaving those CIRM members out of discussions on a case-by-case basis.

"Another important issue that needs to be resolved, and we're still waiting on this, is how much licensing royalty should flow back to the state off any technology that comes about" as a result of CIRM funding, Wetherell said. "There's a tension between the legislature and CIRM over how the state would get a piece of the action," but the situation might be resolved easily without more lawsuits, he said.

Within his firm, Wetherell heads a group called SCOPE (Stem Cell Outlook and Planning Effort), established when the debates over Prop 71 began to heat up. "It's a sort of SWAT team, if you will," he said, calling himself "the geek-on-call for the science" of stem cells - where much research is "basic, platform-type," far from marketed drugs. Scientists still are figuring out how to increase and differentiate stem cells for therapeutic benefit.

Geron Corp., the Menlo Park, Calif.-based stem-cell firm, said Thursday that its researchers and collaborators at the University of Alberta have differentiated hESCs into islet-like clusters that secrete insulin in response to elevated glucose levels - a finding that shows the feasibility of making hESCs for diabetes. The work will be published in the August issue of the journal Stem Cells, and already online at http://stemcells.alphamedpress.org/papbyrecent.dtl.

Wall Street boosted Geron's shares (NASDAQ:GERN) by 15.1 percent on the news, and shares closed at $9.48, up $1.24.

"This is an exciting time for [California]," Wetherell said, and the benefit of the Supreme Court's final word goes beyond the direct beneficiaries of funding from Prop 71 to "create, perhaps, a motivation or reignites the motivation that we saw earlier, of companies wanting to be in California, or fund research here."