Thursday, September 4, 2003

Session 4: Stem Cells: Moving Research from the Bench Toward the Bedside: The Role of Nongovernmental Activity

Thomas Okarma, President and CEO, Geron Corporation

Theo Palmer, Michael J. Fox Foundation for Parkinson’s Research

William Pursley, President and CEO, Osiris Therapeutics, Inc.

Robert Goldstein, Juvenile Diabetes Research Foundation International

CHAIRMAN KASS:  Could we get started, please?

Our fourth session of the day is on stem cells, moving research from the bench to the bedside, the role of non-governmental activity.

Progress in stem cell research proceeds not only with government support, important though such support surely is.  Biotech companies are vigorously active in the field both with embryonic and non-embryonic cells, and disease related and other philanthropic foundations are actively supporting such research.

Our monitoring of stem cell research would not be complete without some review of what is going on under these auspices.  This afternoon we are fortunate to have with us representatives from two leading biotech companies very active in stem cell research and from two leading private philanthropic research foundations who will tell us something about the strategies they are pursuing to develop stem cell based experimental therapies, how close they are to developing such therapies, and what obstacles currently stand in the way.

As they have all been asked to avoid commercial pitches, criticisms of competitors, or advocacy for or against legislation currently pending before Congress, I would ask Council members to refrain from prodding them to do otherwise or to ask them for investment tips or other privileged information.

(Laughter.)

CHAIRMAN KASS:  Our guests in order of presentation are Dr. Thomas Okarma, who is the President and CEO of Geron Corporation, a company that emphasizes embryonic stem cell research and formerly supported the work, among others, of John Gearhart and James Thomson, and that has solid patent positions in this field.

Second, Dr. Theo Palmer, who is an assistant professor in the Department of Neurosurgery at Stanford, a stem cell researcher working on nervous system applications, and today representing the Michael J. Fox Foundation for Parkinson Research on whose scientific advisory board he serves.

Third, William Pursley, President and CEO of Osiris Therapeutics, Inc., a company in the forefront especially of mesenchymal stem cell research, with many strong patents in this area and exploring clinical applications for cardiac therapy, immunomodulation, among others.

Finally Dr. Robert Goldstein, who is the Chief Scientific Officer of the Juvenile Diabetes Research Foundation International, an organization with extensive activities, including a recently announced program of training grants to draw top young researchers into the stem cell field.

Gentlemen, thank you very much for taking time from your busy lives to travel here and to give us the benefit of your knowledge.

We'll start with Dr. Okarma.

DR. OKARMA:  Thank you, Dr. Kass, for the opportunity to spend some time with you today.  It's a visit that's probably overdue.

You asked me to address three topics:  our progress in the development of products based on embryonic stem cells; our thoughts about immune tolerance and immune rejection of the transplanted cells; and, lastly, impacts of various policies on our progress in the private sector in 15 minutes.  So I will be terse and not do justice to either question, but try to give you an overall picture.

By way of background and the take-home point, clearly human embryonic stem cells are a special case, and this Council has certainly debated the issue of the moral status element of that specialness.  But I would argue that there are two other elements to its specialness.

First, the biology which is unique amongst all the cells in the universe and its promise for medical therapeutics.

And thirdly and not well understood, this paradigm is in the industrial sector, not in the academic sector, and that has some very important implications to the development of this technology, and I'll try to make those points as I go through.

Geron, as you may know, has been at the forefront of human embryonic stem cell research since 1995 when we first entered the field.  We funded the work done in Jamie Thomson's lab, John Gearhart's lab, and Dr. Pedersen's lab at UC-San Francisco, and as such, we're the movers technically, technologically and proprietarily in this entire field.

We have spent over $70 million on this technology, most of it since 1999 after the cells were derived.  That's a number against which the NIH disbursements pale by both absolute and relative terms, and there are some reasons for that that I will touch on.

So let me move first then into our development plans and our developmental progress.  First, let me talk a bit about some of the infrastructure basic science components that we've established.

You've heard a lot of discussion about how these cells are grown on mouse feeder cells.  We've established a scalable way to grow these cells not only off of feeder cells, but now with a fully qualified set of reagents.  These can be scaled virtually limitlessly.

We've established ways to scalably produce seven different differentiated cell types from each of the lines that we have.  So one line now makes seven different kinds of cells that we'll describe in a moment.

We have verified the stability of the embryonic stem cell line in culture.  Some of the lines have been grown continuously for over three years, more than 600 population doublings, and there's a manuscript in press now describing four lines studied over that period of time that demonstrates that the karyotype, surface marker, differentiation potential, and gene expression level, the stability of these undifferentiated cell lines grown under our culture conditions.

We have had a preliminary meeting with FDA, and we have now qualified two of our cell lines for human use.  They have passed every assay the FDA has asked us to submit them to, even though they are appropriately classified as xenogeneic.  I will return to that later.

In collaboration with Celera, we've established an annotated genomic database of undifferentiated embryonic stem cells.  One hundred fifty thousand EST sequences have been sequenced, and the physical clones are deposited in Menlo Park.

This is fully annotated.  We can query this database.  We understand what the gene expression pattern of stemness really is and what genes are up and down-regulated as these cells differentiate.  That has been a crucial foundation for our ability to learn how to produce differentiated cell types.

And lastly, we, too, have developed methods to genetically modify these cells.

Now, the cells that we have learned how to make are characterized by their normalcy.  Virtually every cell that we have made, without exception, expresses completely normal cell biology.  So the islet cells we have derived express insulin, and they express insulin in a dose-dependent fashion as a function of glucose concentration in the media.

The oligodendrocytes we have made myelinate spinal cord cells in animals.

The dopaminergic neurons we have made secrete dopamine.

The cardiomyocytes that we have made express all of the molecular markers consistent with their being human cardiomyocytes.  They respond in appropriate dose response fashion to cardioactive drugs.

The bone cells that we have made in  Roslin have absolutely normal biology.  The techniques to look at the bone formation these cells make in vitro by X-ray diffraction are absolutely spot-on normal.

We are close, but have not yet derived chondrocytes.  That is also a project funded at the Roslin Institute.

And lastly, bone marrow cells, hematopoietic progenitors, which again are absolutely normal in their cell biology, producing all three cell lines normally.

Now, some of these cells have progressed into animal studies, and I'll detail those in a moment.  The first take-home point to make is that we have never ever seen in any single animal the formation of a tumor.  That is because we only put in differentiated cells.

The issue about growing the cells in the undifferentiated state is to keep them from differentiating.  So when we remove them from the undifferentiated culture conditions, these cells want to differentiate, and we have molecular markers to prove that they are differentiated.

We also have cytotoxic technology capable of detecting one out of ten million cells that are undifferentiated should we need to apply that later on in scale-up.

So which cells are in animal models?  Well, first the hematopoietic cells are in Canada, and we've demonstrated now engraftment of these human embryonic stem cell derived hematopoietic cells in the appropriate nude mouse model, which repopulates the animal's peripheral blood.  That has important implications not only for an alternative source of cells for bone marrow transplantation, but for the second question regarding immune rejection.

We've made dopaminergic cells which are engrafting robustly in animal models of Parkinson's disease.  This is a huge tissue engineering challenge where these cells must penetrate to the cortex of the animal to completely correct the Parkinsonian defect.

We have not yet demonstrated significant behavioral improvement in the animals.  We are still working on that, but the cells engraft robustly and, again, without tumors.

The cell type that is most advanced is the oligodendrocyte, and there will be a very exciting manuscript later this year from our collaborator at UC-Irvine, Hans Keirsted, in which we have transplanted the human oligodendrocytes into a model of spinal cord injury and not only show statistically significant functional improvement of the animal, but we have shown at the histologic level that the animal cells are remyelinated by the cells that we have injected.

Lastly, we are now in animal studies in three different labs with cardiomyocytes injected into animal models of heart failure and myocardial infarction.  Again, no tumors; again, the cells engraft, and we have histologic evidence that these cells begin now to communicate  with the animal cell in situ in the heart.

So the work is early.  There is much more to do, but we are quite pleased with the progress that we've made thus far and would predict that the oligodendrocyte will be the first cell to enter the clinical environment, and that an IND, if all goes well, could be submitted in late '04 or early '05, which is quite a bit ahead of most people's expectations.

At this point our second cell type into the clinic would probably be cardiomyocytes, based on the data set we have today.

As part of that first question, you asked about obstacles.  There are clearly many, many technical and scale-up obstacles that we yet have to traverse, but those we think are fungible.  Our major problem is funding.  We have done two reductions in force in the company since a year ago.  We are one third of our former size.

The political uncertainty of this field not only turns off investors, but also turns off the other source of funding for biotech, which are pharmaceutical partners, who at this point in time are completely uninterested in this field.

Turning to the issue of immune rejection, first, there are a number of very exciting, new immunosuppressive drugs in clinical development.  So I think the field of immune suppression through pharmacology  will dramatically advance, and we hope to take advantage of that.

Secondly, it's now known that pure effector cell transplants, in other words, not organs that are contaminated by the donor's immune system, are much less immunogenic in animal models and in a few cases in human than is an entire organ transplant, again, auguring well for the size of the problem of immune tolerance.

Thirdly, there is some very exciting work that we are doing not yet published, so I can only hint at it, that establishes the human embryonic stem cell as being unusually unique in its immunologic properties.  It has inherited some of the immunosuppressive properties that are existent in the blastocyst.

Why is it that the mothers never immunologically reject what is an allograft, the blastocyst?  Well, there are specific reasons for that, and those reasons are, in fact, inherent in the undifferentiated embryonic stem cell.

But in terms of our strategy, notwithstanding the prior points of how to control immune rejection, we have one that makes a lot of sense, and that is hematopoietic chimerism.  We know from the bone marrow transplantation work that if a patient who gets a bone marrow donation from me will be completely tolerant to receiving a kidney allograft or a heart allograft from me.  The prior bone marrow transplant has tolerized the patient to the antigens in my tissues.

We also know now from work done at Stanford that patients who are status post whole organ transplant patients can be completely weaned off of immunosuppressive drugs by giving them a mini bone marrow transplant taken from a donor with the same tissue type as the prior kidney donor.

This is the strategy we plan to use out of the box in our clinical program, having now established that we can derive hematopoietic progenitors from one of the lines.   A dose of those cells should tolerize the patient to any effector cell transplanted into that individual derived from the same stem cell line.  So that is my answer to Question  2.

Lastly, you asked me to address issues of policy that affect our ability to develop the programs.  Certainly the fact that this is primarily an industrial paradigm helps with regard to FDA.  I've worked with Kathryn Zoon and Phil Noguchi since the mid-'80s in my prior company in cell therapies.  Many of the points to consider that are now published came from our mutual collaboration in the early work in the '80s and '90s in cell transplantation.

The pathway to regulatory testing and commercialization with this technology is clear.  There are some idiosyncracies, it is true, but we understand the pathway, and we have thus far been very pleased with our early interactions with the agency.

The NIH has a different issue:  to recognize the primary role in this field that has been played by industry.  That is not their fault.  They were prohibited by law from funding this arena.  That is how we got into it.  That is how we got ahead of everyone.

But that has some special implications.  For us, as I manage Geron, we have two platforms:  the stem cells that we're talking about today and a cancer program based on telomerase.  And the management and depth of technology in both of those platforms is hugely different with, I think, important consequences both for patients and for policy makers.

On the cancer side, we have sent the telomerase gene to hundreds of laboratories all around the world.  We have many, many collaborators.  Many people have worked independently of us on telomerase.  So as we move into the clinic with our anti-cancer platform, our scientific understanding of how to use telomerase as a vaccine, how to develop drugs that inhibit telomerase, how to use the promoter of telomerase to drive oncolytic viruses is very, very deep.

That reduces risks to patients and increases the likelihood that our first entré into the clinics will be successful, as we are, in fact, seeing with our telomerase vaccine program in the clinic at Duke.

That is to be contrasted with our program in embryonic stem cells, where we have a small number of collaborators, the bulk of which are frankly either in California funded by us and the State of California, or in other countries, the U.K. and in Canada.

So there's no question that when we think we are ready to move into the clinic expeditiously and cautiously, having checked all of the appropriate boxes the FDA wants us to check, we will still be skating on relative thin ice in terms of the science behind the product that we are testing in people.

So the narrower science base in embryonic stem cell research increases risk of technical failure and exposes patients to greater risk from the experiment.

The second point under policy I would make sort of illustrates a problem that's about to happen.  We've heard a lot about the issue of are the old existing lines okay.  What about new lines?  Will they be different?  Will they be better?

Well, the existing lines, as you've heard today, can be used in human clinical trials, but they will not last forever, we don't think.  There's no reason to assume that.  And these current lines, all of them, were derived on mouse embryonic layers and, as such, are appropriately classified as xenogeneic transplants with increased risk to patients and a much increased burden on the sponsor to follow these patients for life after they receive these cells.  That's appropriate.

So the FDA is urging us appropriately to derive new lines that not only have not seen mouse feeders, but whose entire pedigree is from reagents that are qualified for human use and that the entire process of derivation be under GMP, good manufacturing practices.

We will be successful in doing this.  We will generate such a line very quickly, very soon, and then the implication of the current policy, however, is that arguably this would be the best line to use and to qualify and to share, but because it was derived after 2001 in August, the NIH will be prohibited from studying it.

And what are the implications for when we take that cell line into the clinic?  Will we be unable to share that cell line either from a funding or a technology perspective with the NIH?

So those are my brief comments on the three questions.  We are unquestionably the leader in the field because of circumstances that enabled us the freedom to operate, and in some ways, particularly with regard to FDA and scale-up and GMP, that's good for the field.

But in terms of getting this technology embedded rapidly in the most sophisticated biomedical community in the world, we are amiss.

Thank you.

CHAIRMAN KASS:  Thank you very much.

I think we should hear from all four people together and then have questions.

Dr. Palmer, please.

DR. PALMER:  Thank you, Chairman Kass, members of the Council.

I'm here on behalf of the Michael J. Fox Foundation, and I was asked by the foundation and by the Council to give a little bit of an overview of the foundation's efforts in targeting Parkinson's disease.  So I'll talk to you a little bit about Parkinson's disease, or PD, and then also the role of stem cells in our portfolio; finally, a little bit about what we've learned in three years of trying to use stem cells in this very targeted application.

The foundation is relatively new.  As you know, it started in late winter of 2000.  The goal of the foundation is to match funding to scientists who are pursuing every avenue of research to find a cure for Parkinson's disease.

Our secondary goal and my primary goal as an advisory board member is to make sure that this funding reaches the investigator with speed, and one of the things that we've found that has really speeded the research is to short circuit some of the delay in an investigator coming up with a good idea and then getting the funding to that research.

So we're targeting Parkinson's disease, and our efforts in stem cells are quite narrow compared to many of the applications that you'll hear today.  But Parkinson's disease is the accelerated loss of a dopamine neuron in the adult brain.  These neurons control movement, and the loss of the neuron does not allow the brain to initiate movement.

So one of the strategies, of course, is to replace those neurons with a stem cell derived dopamine neuron population.  This is part of our research effort.

The other part, and in fact, a larger part, is to understand the disease itself and then prevent or augment the remaining system, prevent degeneration.

So the brain doesn't replace these neurons, and the stem cell biology really comes into play when you've got a patient who's missing a substantial portion and is now dysfunctional in terms of their ability to move.

It's a slow disease.  It progresses over years, often decades.  There's a declining quality of life, and the disease is lethal.  It affects more than a million people in the U.S. alone, and there's no cure.

In the context of PD, stem cell technology has promised two significant advances that are not available in any other context or form.  A single culture can create enough dopamine neurons to cure the entire population of PD patients if we can get the technology to work.

This may not necessarily be true in practice, and we heard one reason why this might not be true, if there are limits to the ability to expand the culture.  But a second reason and perhaps one that's not very well explored by the Council is the ability to use ES cell lines as a tool for research and particularly as a way of making authentic human dopamine neuron for drug screening or high throughput assays of some sort or another.

Now, this is a very important point I'll come back to later.

I'd like to go over the portfolio of the Fox Foundation and just give you a picture of the research that's being funded in PD by a private sponsor of research.  To date the foundation has funded 28 million in Parkinson's related research overall.  This is since our inception in late 2000.

Twenty percent of that fund has gone to stem cell research of one sort or another, and it's a carefully chosen array of stem cell strategies in mouse, non-human primate, and human embryonic stem cell systems.

At the time the grants were funded, so beginning in 2000, very few investigators had either the ability or access to human lines, and by default rather than by design, at this point except for one study, all of the studies that we fund use approved lines.

Now, this will change in the near future, and we anticipate in the next rounds that we may see a significant increase in the request for funding on non-approved lines.  And in part, we feel this is driven by the FDA and the requirement for lack of adventitious agents and just the ease at getting a cell line product through the approval process if it has been isolated without the use of the animal cell lines or animal products that were not characterized.

So we have seen in the past several years a significant increase in requests for stem cell funding in the review of our funding portfolio and our upcoming funding efforts so that we're attracting new scientists, people who have not really used stem cell technology in their research into the area of Parkinson's disease.

So as a tool, it's an attractive tool for a scientist who knows Parkinson's as a model, but now wants to expand their repertoire to use a tool that seems to have much higher promise than the current strategies they're using.  So we're seeing an increase in new researchers in the field. 

In our annual fast track funding, this is an independent, investigator-initiated pilot study where investigators send in unsolicited proposals.  In 2001, we had roughly 200 applications in Parkinson's in general.  Ten of these were stem cell applications.  The total request at that point was just a little over a million dollars.

In 2002, we had a similar number of total applications, and our requests went up.  We had 12 requests.  Two and a half million dollars would have funded all of those stem cell requests.

And in our pending round in 2003, we have over 200 total applications that we're anticipating, and more than 20 of these are stem cell related.  And over time, we're seeing a significant increase in both the application of stem cells to cell replacement in Parkinson's, but more interestingly, a recognition of their utility as an in vitro source of authentic human neurons, where people can study drug effects or the genetics of Parkinson's disease itself.  And these are studies that are not necessarily targeted at replacement, but more at understanding the disease and then coming up with a non-stem cell basis for treatment.

So the foundation's experience has given us some insights into what a moratorium would mean in terms of research on stem cells and also what the current policy on federal funding is.  We have a diverse portfolio.  We have studies on embryonic stem cells as well as fetal stem cells and adult stem cells.  Many of these projects were funded early in our round because the advisory board felt that stem cell strategies had very high merit, and one of our first efforts was in creating cell lines that could be used for transplantation.

So we have now and unusual point of view where we can actually compare the preliminary results from a variety of efforts.  After two years of focused research, we can see that if this was a foot race and we were comparing adult stem cells to fetal stem cells, there's no competition.  There really is no race involved at all.

We have data generated from our funded research that shows that the adult tissues are not presently a robust source of cells, particularly when it comes to creating dopamine neurons in our focused effort to treat Parkinson's disease.

Optimists would say that there's still potential, and there is still potential in leveraging the adult stem cell to our goals as a Parkinson's research foundation.

But to contrast the progress made in the same time frame with embryonic stem cells, it's a fragile hope at best to say that in the immediate future the adult cells hold the promise that we had hoped two or three years ago that we would see in the research.

So it is now clearly demonstrated in vitro, and when we started this was still an unknown, but now quite well established in several of our funded laboratories that the human embryonic stem cells can make authentic dopamine neurons.  What's left now is the practical application of making this work in a transplant, and these are ongoing studies.

So I mentioned a moment ago the proliferative potential provides a means to treat many individuals from a single isolate.  Unfortunately our research experience is now encompassing a number of cell transplant strategies.  The farthest along of these is fetal tissue transplantation where you harvest from the fetal tissue an authentic dopamine neuron and transplant that into a Parkinson's patient.

One of the key observations now that we have had blinded clinical trials tell us that there may be additional problems that were unforeseen, a key point is the presence of a fairly robust immune response in many of these patients, and this is something that cannot really be ignored.

I have to take my hat off right now and put on my own personal hat so that I'm no longer a foundation representative here.  I work in adult stem cell biology, and it's my hope that we can make endogenous neural progenitors do the job of an embryonic stem cell, but in studying the behavior of newborn neurons from endogenous precursors, we have just run into a very serious impediment that involves the immune system.

The immune system, if activated in the context of a developing neuron, essentially shuts off this early progenitor's ability to make a functioning neuron, and if we're looking at cell transplantation as a way to cure Parkinson's disease and the cell transplants are not well matched to the host or if there isn't a strategy for making the host tolerant, then having just a few lines is going to be a very serious impediment to applying the existing lines to clinical research.

So getting back to the foundation portfolio, there is another benefit to looking at additional lines of ES cells.  Putting cell replacement aside and now looking at the technology that stem cells in the culture dish provides, there's a body of research that has been going on for nearly 20 years or more, and that's the technology of transgenic animals and, more recently, the use of embryonic stem cells in creating mice that carry very discrete genetic mutations.

Now, one of the strategies that we as a foundation trying to cure Parkinson's disease contemplate is the value of having embryonic stem cells that actually carry the genetic profile of a Parkinson's patient, and although we're not talking today necessarily about nuclear transfer technologies, this clearly pops into mind as a strategy for making an in vitro authentic dopamine neuron population that is identical to a class of patients that are presenting a certain disease phenotype.

So the disease is diverse.  It presents early and progresses rapidly or it can present very late in life when a tottering gait is really  commonplace in that age bracket and, therefore, it's not as big of an effect.

But this variability is really as variable as human life itself, and so having 11 or 12 lines from normal individuals does not allow us to access to that technology, and the creation of drugs that would more readily target a type of dopamine neuron depletion or a disease context.

So the targeted manipulation of genes in an embryonic stem cell is another aspect of this that is now just entering science, and the ability to introduce genes into human ES cells or to target mutations to an individual cell population obviously gives you a potential way around this, but this is a technology that's novel.

Nuclear transfer technology would circumvent that.  It gives us the baseline from which to understand how to create ES cells through a non-embryonic process, but there has to be a way to get from Point A to Point B, and this is where the additional lines and the exploration of new technologies comes into play.

I'd like to finalize or just summarize here with an overview of current research concerns.  In the near term, human ES cells are already undergoing efficacy trials in preclinical models.  So human ES cells, as we heard earlier, are in animals, and there's great hope that we'll see that they're at least as effective, if not more so, if the immune complications can be overcome than the fetal tissue transplants that are so commonplace now.

To move forward with these lines, there are several limitations with current policy that seem to inhibit our progress as a foundation that's trying to promote cure or intervention in stem cells.  The first is what I've targeted mostly in my presentation, and that's the heterogeneity of these current cell lines and limited numbers.

So if you start with a few lines and the cell lines are heterogeneous, some will make, in our experience, a lot of dopamine neurons, and others really seem to be impeded in their ability to respond to the same cues provided in the same dish.

So in this preliminary data that we see presented in summarizing our funded work, we're observing that one line will work beautifully well in a paradigm.  Another line is basically eliminated from the study because it has an inability to make enough dopamine neurons to be useful.

So heterogeneity in the performance of an individual line may limit what can be done with the existing lines, and of course, the absence of genetic diversity within the existing lines, the absence of a representation of disease genotype is limiting in what can be done at the research bench in understanding the disease process, and of course, heterogeneity in HLA matching may be a very serious concern, and it will require additional complexity and treatment if we don't have a matched donor and host or fairly stringent strategies for tolerizing the host to the incoming cells.

Finally, I think there is this question that's been touched upon quite broadly today, and that's the presence of adventitious agents in the existing lines and whether or not the foundation's research can transition quickly to clinic really depends on how well an existing line can meet FDA requirements.

And I've heard that this is possible, but it also places an extreme burden of follow-up on a funded project that makes it difficult for a private foundation to fund.

So in the absence of federal funding, is private support really up to the task?  And I think really to summarize this, the private foundation's focus is to pilot research, to find very good strategies or promising strategies, and that's where our funding really runs out.  The NIH has typically stepped in at that point, after the pilot study stage, and proceeded with the larger experiments, the validation, the expansion.

If the foundation funds unapproved lines, that has nowhere to go at this point.  So there is a serious concern that though we may be able to use private funding to our benefit, that there will be a stall or serious delay in getting this to clinic.

So these burdens loom particularly large to us as a foundation as the Baby Boomers age, and the number of Parkinson's patients increases.  The social and economic costs go well beyond just the Parkinson's community, and I think the economic costs in terms of the cost of clinical care is just one part of it.  The economic cost in delayed development of drugs because we cannot use in the public sector privately funded ES lines for drug screening or nuclear transfer lines for screening, lines that carry a disease phenotype.

I think this is an economic burden that our society has to face and one that should be very carefully weighed in the Council's discussion.

I think the foundation very much appreciates the ability and the invitation here to give our experiences, and we understand that you have a very difficult task ahead of you as counsel to the President, and we thank you for this opportunity.

CHAIRMAN KASS:  Thank you very much, Dr. Palmer.

Mr. Pursley, please.

MR. PURSLEY:  Yes.  Thank you.

Thank you for having Osiris here.  We've been involved in mesenchymal stem cell, adult stem cell research for about 11 years now.  Our technology came out of Arnie Kaplan's lab and was acquired from Case Western at that time, and we've been solely focused in that area since on several applications.

Our development strategy is very straightforward.  It's tissue engraftment and regeneration without immune suppression. 

Let me back up a moment, too, to set the record straight.  In some of the earlier media documents, it has me as a Ph.D.  I'm not a scientist or a physician.  I'm a businessman, and if my technical explanations aren't satisfactory, most of what I'm going to report on is published or we believe will be published in acceptable peer review journals, and in fact, correct me if I'm wrong.  This panel should have been provided privately an embargoed manuscript that will be submitted.

Okay.  Our technology is the universal application, and I'll explain that term in a moment, of adult MSCs, or mesenchymal stem cells, with no in vitro manipulation.  In other words, if you will, these very smart cells do what they do in vivo.  We simply put them in there and let them go, so to speak.  And I'll define that in some of our programs.

What I mean by universal application, we started out as an autologous cell company and later found out that we can provide from any donor, unrelated, HLA unmatched, any donor these cells to any recipient without immune rejection.

And in fact, what you'll see in our first program, we found them to be immune selective, T cell-suppressive in some instances.  So we are now working on what would be literally an off-the-shelf product for whatever the indication may be.

The process we use under anappropriate IRB protocol, again, we take an unrelated, unmatched, volunteer adult donor.  We take a bone marrow aspirate, a whole marrow aspirate from the iliac crest, bring that back to our manufacturing, and then we will culture and expand that currently to about 1,000 doses from one donor.

We are going through an expansion now that's not a change in process.  It's an expansion of process.  We will ultimately get that to about 10,000 doses per single donor.

A very nice advantage of this is that we don't have to expand cells indefinitely.  We can go back to new donors.  Currently one donor can provide bone marrow six times in their lifetime.  These are usually younger people because the younger you are, the more MSCs you have.

We will then cryopreserve the finished product in liquid nitrogen, and at that point it is ready to go to clinic for use.  We also now have done stability and potency testing to have that stored at a lesser temperature over X period of time in certain containers so that it's easier for the hospitals to use.

The safety of these cells in the universal application has been proven now.  Allogenic MSCs have been given to 56 human beings.  Thousands of various animals models have been used, rats, mice, goats, dogs, pigs, and baboons.

This has been done in conjunction with the NIH, Hopkins, Cedar-Sinai, Texas Heart, et cetera.  And at this point, over several years now, there has been no possibly or probably related serious adverse events associated with MSCs.  This includes no infusion or direct administrative toxicity.  There's no ectopic tissue formation.  In other words, they aren't differentiating in cartilage  in the heart, on the knee, et cetera, and there is no tumor formation at this time.

And, in fact, we have two lead programs in Phase 2, which by definition from the agency standards, the FDA, means we have met their safety standards for biologic in order to move into Phase 2.  So we are very happy to report we see and now the agency sees these cells as safe, allowing us to move into Phase 2.

Now, the precise mechanism of action regarding this universal application is not known.  All we do know is apparently there are certain cell surface characteristics of the MSC that do not elicit an immune response, and in fact, as I said, as you'll see in our first indication, are actually immune suppressive.

As far as how close are we to developing therapies, our first two programs are in Phase 2.  The first is peripheral blood stem cell transplant support for patients with hematologic malignancies, and again, forgive me if you're very familiar with this pathology, but basically if you have a leukemia, a myeloma, a lymphoma, et cetera, a blood cancer, you receive total body irradiation and/or chemotherapy, with the goal of obliterating the bone marrow because that's the source of the cancered blood.

These patients then need to receive a transplant.  They receive a peripheral blood transplant of hematopoietic stem cells so they can produce enough platelets to clot and white cells to fight infection and red blood cells for volume, and gain a natural state of hematopoiesis.

And those cells usually come from a sibling or a parent.  The problem is for these patients who have no choice but to go through this, ten percent and up to 20 percent can actually die from this procedure, with the vast majority of graft versus host disease, and that means the hematopoietic stem cells are rejecting the recipient.

And so what we did in a Phase 1, in a multi-center Phase 1, is provide MSCs, mesenchymal stem cells approximately four hours prior to the transplantation with, first of all, in a Phase 1, the primary goal for a biologic is always safety, and you look for secondary efficacy trends, which are great if you reach them, and we did in a very big way.

What we did is reduce significantly graft versus host disease.  So we believe there was a T cell suppressive effect in working with the patient or with the hematopoietic stem cells not to reject the patient, if you will.

Now, the reason we say selective T cells suppressive, these Phase 1 patients are now out three years.  They have also had a significant reduction in return of the cancer, which means we did not suppress the T cells fighting GVL, graft versus leukemia.

This was a very big concern.  If these are immune suppressive, are we going to hurt the patient's own ability to fight the cancer coming back?  And what we've seen at three years out is this is not only not the case.  They have a less incidence of return of the cancer.

So with those data we are in Phase 2. This is an IV preparation.  The status is we should have Phase 2 data reportable in time Q3 of '04.

If that goes well, we will go into a Phase 3, and this should be available to the hematologic malignancy population if things go as planned, and Murphy has a way of raising his head in this business and always will, but even with some of those considerations, we would hope to be commercially available to humans by 2007 with this.

Just after that program, a very similar situation but a different mechanism of action, which is the amazing thing about these cells.  That was a T cell suppression effect to reduced GVHD.  In a similar sense there are infants to adolescents primarily who don't have matched donors who will receive cord blood transplants, and their problem is not GVHD because there are so few hematopoietic stem cells in the  cord blood transplants.  Their problem is establishing a natural hematopoiesis.

So some of these kids will lay in the hospital an average of about 90 days.  It's fairly replete in the literature, and they aren't released from the hospital until they produce enough platelets to get out, and so they can sit for 90 days in a subacute state with bleeds and infections, et cetera.

This is a tiny population.  It's an orphan indication, but there's nothing that can be done for these, and in  a Phase 1 study with an admittedly retrospective comparison to that database.  All of these kids are in a single database in the U.S.

Our primary goal was to decrease the time to platelet engraftment, to get these kids out of the hospital and establish a natural hematopoiesis, and the kids that received MSCs got out in an average of about 38 days compared to retrospective control, historical control of 90.

And so that program is in Phase 2, and we hope it would be available also to humans in the '07 time frame.

The very large and much more talked about program, our cardiac program for acute MI, will be in humans this December in conjunction with Boston Scientific.  Most of this preclinical work was done in swine models at Cedar-Sinai and Hopkins, and the primary goal here is for these cells to reshape the baseline morphology, the heart, and regain the baseline function of the heart pre-MI.

It is fantastic preclinical data, and I say that with humility after looking at preclinical data for 24 years in this business.  After you see so many pig hearts grow back and get back to normal function, you start to believe it.

And the IND has been filed, and the FDA will allow us to go into clinic at the NIH and Duke this December.

The idea here, too, in this indication, something we just found out in '99 in rats, this will be an IV administration.  It is not a direct injection or catheter application to the heart.  Apparently these very smart cells - and I can call them that because I'm not a scientist - find their way to an inflammatory site. 

And an acute MI is a very strong inflammatory event, and an inflammatory cascade that probably lasts in a strong manner for seven or eight days.  And basically these are given IV.  They swim to the heart.  They regenerate the infarcted area of the heart, which the heart doesn't then respond with a compensatory thickening like normal, and that happens in about four to six weeks, and in about six months the heart gets very close back to pre-MI function.

And if that gets in the clinic in December as planned, and it should, these are going to be much larger trials because of acute MI.  We would like to think that this product could be available to the public commercially in 2009 or 2010.

The next product which we have an IND filed for and will be in humans before the end of '04 is meniscal repair in the knee.  This is the most common knee injury at least in this country.  There's about 850,000 meniscal tears, from the Weekend Warriors.  This will be a high regulatory bar.  It should be.  These are healthy young people normally, and so the safety is going to be critical.

Preclinical work has been done in 72 goats, and basically what we do is do a partial to full meniscectomy as is done with the patients.  There's nothing you can do for this today but take out part or all of the meniscectomy to ease the pain.  After whole or partial meniscectomy, it is replete in the literature that one goes on to develop osteoarthritis.

And what we do is give about 150 million cells directly into the knee, and it grows back the meniscus in about six weeks time, and hopefully then it will obviate any progression to osteoarthritis, and we hope to be in the clinic with that as well in, again, '04 and, again, should be commercially available to humans in a similar time as the acute MI product in '09 or '10.

The last advanced program, also in concert with Boston Scientific, is maybe the largest unmet definitive therapy  in terms of societal cost, and that's congestive heart failure or, maybe more appropriately, chronic ischemia leading to congestive heart failure.  At Texas Heart, in the canine model, we put an amaroid occluder in place in these dogs to mimic chronic ischemia.  Basically you do that for about 30 days until you create an ischemic model.

About 30 days later you give the MSCs.  The ejection fraction in the amaroid occluded non-treated dogs, once it drops below 17 percent, they die.  The ejection fraction in the treated dogs with the occluded, LAD still in place, the occlusion remaining in place, goes back to normal function in about six months.

So basically we've restored the heart morphology and the baseline heart function pre-ischemic model with the amaroid occluder in place, and there is possibly some form of angiogenesis going on here.

So those are the advanced programs, and in all of these programs and all of the animal models to this date, there have been no serious adverse events associated with MSCs, again, neither infusional toxicity, ectopic foci, or tumor formation.

Finally, we have many, many orthopedic models in a preclinical area where we will or will not use a scaffolding or a matrix for these cells in some of those applications.

And finally, we are involved in grants from DARPA and NIST looking at wound healing and CNS repair, respectively.

As far as what obstacles stand in the way, the usual.  One is enough money, especially in today's very tight private equity market, and it's probably going to stay that way until the IPO lid comes off.

Cell biology talent.  We will be forever understanding what goes on with these, which leads to another point I'll get to in a moment.

And then one, to put into an equal bag where we can all take an equal share of guilt, and that's politics, corporate greed, and academic ego, which is a bane always in the development of any of these, and I don't say this lightly.  Again, as a personal comment after being involved in this 24 years and being fortunate enough to be at Genentech when they grew up and then at Genzyme when they grew up and at TKT with maybe the most elegant protein technology I've ever seen.  Have never seen anything like this.

The hardest thing about managing this company is keeping it focused.  There is no application that can't be brought up that we can deny the possibility of the use of these cells or cells like this. 

Bill Krivits up at Minnesota has given these to kids with lysosomal storage diseases and they are not transduced.  They just start secreting the enzyme they're missing.

The immune modulation possibility now that we found out almost serendipitously with our first program, that's a whole new area of arthritis, et cetera.  It literally is limited by our imagination, and it's bigger than any of those entities I mentioned by far.  It is the closest thing - and I'm sorry for the drama - of a human health care miracle that I've seen in a quarter century.

And I just hope somehow those entities can synergize to bring this as quickly as possible and as safely as possible to the millions and millions of people.

As far as approaches to overcome immune reaction, we don't have any.  We have found that there is no immune reaction against these cells, and not only that.  We have found them to be immune suppressive selectively in appropriate situations.

As far as the federal policy impact, depending on what your patent portfolio is, that drives your answer on this.  Right now we think from the Patent Office's perspective it's a very good thing.  We have had senior scientists that have stuck with this from the beginning because they believe with this their inventions have been protected, and it is allowed to go on in a protected manner to develop those.

As far as the NIH, again, anything that can be done by that institution to further synergize itself with commercial endeavors without feeling it is bastardizing its academic purity, and exactly what that means and how that is getting done we don't have an answer, and I don't know who does, but it certainly could help all efforts.

And the FDA, first of all, I want to say, again, in a long experience over several technologies, they have been a very good partner with us in this, and we appreciate that.  We're a tiny company.  We need a lot of guidance, and it hasn't been an adversarial situation.   It has been a partnership situation, and anything to continue to increase that.

We are in the good fortune of being by far the most advanced company in the world in adult stem cell research, and so it has got to be in partnership with the FDA that we understand how these are to be regulated because I think that will set the bar for how it is done from this point on.

I think one of the things that will be looked at, and we have to understand where we draw the line to accept, is especially in the technology where everything is happening in vivo, basically from a cell that's the same ex vivo.  Without all of the black box answers for mechanism of action, why, how, where, how long known is how that will be weighed against the actual clinical outcomes of safety and efficacy and how that regulatory guide pole is looked at is critical.

Thank you very much.

CHAIRMAN KASS:  Thank you very much.

Dr. Goldstein, please.

DR. GOLDSTEIN:  Chairman Kass and members of the President's Council on Bioethics, thank you very much for inviting me to testify today.

I'm the Chief Scientific Officer for the Juvenile Diabetes Research Foundation.

JDRF was founded in 1970 by parents of children with juvenile diabetes to find a cure for diabetes and its complications through the support of research, and this year we expect to fund approximately $90 million worth of research.

Since its inception JDRF has funded diabetes research all over the world, and it turns out it's the world's leading nonprofit, non-governmental funder of diabetes research.

At your July 25th meeting, you heard from Charles Queenan, a JDRF volunteer, who spoke about the advances in islet cell transplantation that are showing dramatic results in people with Type I diabetes.  I'd like to briefly summarize.

As of April 2003, more than 250 patients worldwide had received islets infusions using the so-called Edmondton protocol.  About half of these patients received islets alone.  The other half received islets in conjunction with or after a kidney transplant.

Most patients have enjoyed insulin independence, reduced hypoglycemic episodes, and improved quality of life.

Despite this success, there are too few insulin producing cells available from organ donors that at its max could help perhaps five, six, 700 people a year.  JDRF, therefore, believes that embryonic stem cell research could lead to the discovery of new ways to develop additional and unlimited supplies of insulin producing beta cells with the hope that everyone with the disease can be treated and cured.

With this background, I want to cover some of the activities that JDRF is engaged in over the past several years in the United States and abroad to help advance the embryonic stem cell research agenda.

In the spring of 2000, we announced our intention to support embryonic stem cell research.  We began to build a research portfolio that promoted human and animal stem cell research.

To insure the ethical conduct of this research we formed a stem cell oversight committee consisting of leading researchers, policy makers, ethicists, and lay volunteers who were charged with providing a second level of review in addition to the usual scientific peer review for all human stem cell research applications that we received and considered.

We recognize that stem cell research may require innovative and novel public/private partnerships, and we included in our request or solicitation the notation that we would support the derivation of human embryonic stem cell lines.

The scientific principles that form the basis for stem cell research funding program is as follows.  We recognize the need to support research using human stem cells from all sources and that  very basic research is the necessary precursor for the development of cell based therapies; that adult stem cell research is a complementary approach.  We have long supported efforts in both adult stem cell research, as well as more recently human embryonic stem cell research.

JDRF believes in providing a collaborative environment that will encourage or maximize the opportunity and promise of this research, and we work to insure easy and public dissemination  of embryonic stem cell lines without major restrictions as to the usage, and we're committed to sharing information and data as they become available.

We also participate in forums for public dialogue and dissemination information.

JDRF embryonic stem cell research activities today include everything that I mentioned, cells from all sources.  This year we have applied approximately $6 million in support of stem cell research with out-year commitments of about $16 million over the next four years.  Of the $6 million this year, about three million is for research to direct the differentiation into glucose-responsive, insulin- producing cells using human embryonic stem cells as starting material.  About two million is for research using human stem cells from other sources, and one million for animal work.

About one third of JDRF's funding for human embryonic stem cell research supports work done in the United States.  The rest supports research outside the United States where in many cases investigators work in more favorable environments, often with special government programs that provide extra resources for human embryonic stem cell research efforts, for example, Sweden, the United Kingdom, Australia, and Singapore.

We initially received very few applications from U.S. based investigators, perhaps related to concerns over policies and restrictions.  We have received consistent feedback from U.S. investigators that they are wary of entering this field even with private funding due to the limitations imposed by the federal policy.

They, in addition, mentioned a limited number of federally approved lines, the lack of genetic diversity among the lines, insufficient characterization, variability in the developmental capacities of the lines, difficulties in distribution, as well as the ubiquitous presence of the mass feeder layers which we've been discussing which make the development of clinically useful cell therapies not impossible, but more difficult as has been mentioned.

These barriers we feel need to be removed to increase the value of using the approved stem cell lines for research and then for the development of therapies.  We acknowledge and recognize the efforts of the NIH, particularly the NIH stem cell task force, and we are working closely with NIH on this.

But I think that it's our international partnerships that are pertinent to the conversation this afternoon.

JDRF's international efforts have continued and been expanded in the area of stem cell research both through independent funding of investigators, as well as through partnerships directly with other governments.  We have established a series of co-funding partnerships with government research agencies in the United Kingdom, Sweden, Canada, Australia, France and Singapore, and we have ongoing discussions with others.

In some of these partnerships, local foundations within those countries also provide support.

In addition, in many of those countries, we have provided funding for very basic embryonic stem cell research that was not necessarily connected to diabetes in any particular way since the research was at the earliest stage.

Because of our extensive international work and leadership, JDRF was invited in January 2003 to be a founding member of the International Stem Cell Forum established by the Medical Research Council of the United Kingdom under the leadership of Professor Sir George Radda.

This group currently includes representatives from government agencies in the United Kingdom, Australia, Canada, Finland, France, Germany, Israel, Japan, Singapore, Sweden, and the Netherlands, as well as the NIH.

The objectives of the forum are to encourage collaborative research across nations, boundaries, and disciplines; to encourage sharing of resources and data; to fully capitalize on the existing available human stem cell lines; to identify key research gaps and address these by capitalizing on national strength; and to identify funding schemes that actually facilitate transnational collaborations.

In specific terms, this group has agreed to develop a set of criteria that could be adopted globally for optimizing the derivation characterization and maintenance of human stem cell lines from all sources; identify a small number of international laboratories that would commit to using the agreed criteria to characterize existing human embryonic stem cell lines; and to identify opportunities for sharing resources, cell lines, data protocols, and guidance documents on an international basis; to coordinate or make an attempt to coordinate national stem cell banking activities.

This group has already convened a working group to characterize stem cell lines with a series of recommendations.

The United Kingdom has one of the more progressive environments for stem cell research as a consequence of the British government providing strong political, regulatory, and funding support in this area.  The recent establishment of the U.K. Stem Cell Bank is one example.  This will provide access to existing and new quality controlled adult, fetal, and embryonic stem cell lines.  It will have a good manufacturing practice arm for research leading to clinical applications.

Academic researchers and companies from the U.K. and elsewhere will be eligible to deposit and to access lines according to a code of practice developed by interested parties.

This bank will serve as an outstanding example of how to foster and enhance the research needed to develop therapies from stem cells of all kinds.

Other countries are working toward the development of similar resources, and it is envisioned that the International Stem Cell Forum may serve to coordinate such activities in order to enhance the exchange of information and to provide complementary efforts in this burgeoning field of research.

Examples of activities under consideration include the establishment of a registry posted on an international Web site that would provide appropriate scientific information about lines not listed in the current NIH registry; characterization of non-NIH registry lines, and comparison with NIH lines; in addition, joint training programs to assist new investigators.

Organizing and coordinating these international research activities in order to better serve research efforts everywhere provides a model that is highly likely to bring results to the clinic much sooner.

Well, this summarizes research activities to date.  I do not want to provide the impression that these international activities, for example, can replace the resources which the federal government and United States could provide for this research.

The limitations imposed by the current policy raise questions and provoke uncertainties about the future  of human embryonic stem cell research in the United States.  We think that one result is fewer scientists working, fewer graduate students, postdocs, et cetera, and universities who have less than an active willingness to invest in facilities, a comment that was made earlier in the afternoon.

These resources could make a significant difference to research progress in the development of insulin producing beta cells for the cure of diabetes, and in this area, they need to establish and nurture collaborations between the world's experts in beta cell biology and the world's experts in stem cell biology so they can collectively conduct the necessary research.  It remains a critical event.

Expanded federal embryonic stem cell policy would make an important difference in helping promote this research.

Much of the current knowledge of beta cell development comes from studies using mass embryonic stem cells that is not always easily translatable into human work.  Several protocols, however, have been reported that direct mass embryonic stem cells to becoming functioning islet cells.  Early studies in human embryonic stem cells suggest that they could be coached, though at the moment inefficiently to insulin secreting cells, and this work has gone a little more slowly than we would like.

We do continue to support research on the differentiation of adult precursor cells into beta cells, but that's a severely limited field in terms of how successful it has been.

Progress to date does underscore the need for continued investment in research in this area, including the creation of an environment in the United States that encourages and supports scientific discovery.

The potential for this research to have a positive impact on the maybe 100 million Americans who suffer from a wide variety of diseases and injuries who might benefit is just too great to be ignored.

Thank you for your invitation, your time, and your consideration.

CHAIRMAN KASS:  Thank you, Dr. Goldstein.

Thank all of your for your fine presentations. 

Let me just throw the floor open.  Let me, so that everybody knows where we are, we started late.  We were originally scheduled to go to 5:15.  Let's go to at least 5:25 and get people's questions out so that we take advantage of our guests who traveled so far to be with us.

So, please, Jim Wilson.

PROF. WILSON:  Several of you referred to the political uncertainty of stem cell research in the United States, and in the course of making these remarks, you listed many possibilities.  I would like to know from you as briefly as possible what you think is the chief political uncertainty.

Is it money?  Is it stem cell lines?  Is it the number of researchers or what?  What is the political uncertainty that you're concerned about?

DR. OKARMA:  Well, the quick answer is all of the above that you just mentioned.  If I were to prioritize them, it is the pure political process of taking scientific inquiry out of the hands and hearts of the scientists and into the halls of Congress.

Can the environment worsen with a different administration or with the same administration?  These are exactly the things that our investors tell us that they are concerned about.

But the fact that there is a very thin infrastructure to complement what we are doing at Geron, what other folks that you've heard are doing here makes the risk higher to achieve a commercialable and safe and effective product.  They are intimately intertwined.

PROF. WILSON:  That is true, but Congress has always, since 1938, placed under legislation by its action important therapeutic regimes that might affect the safety or health of other people.  Is this supposed to be exempt from that?

DR. OKARMA:  I'd like to hear an example of that that compares to the -

PROF. WILSON:  Well, the FDA constantly regulates.

DR. OKARMA:  That's not political; that's not congressional.  This is different.

PROF. WILSON:  Oh, there's a difference between the FDA and Congress?  You'll have to explain that to me.

DR. OKARMA:  I think there certainly is.

PROF. WILSON:  Anyone else have a response?

DR. GOLDSTEIN:  The universities during the past two years-plus, since the administration's policy, have had a variety of information coming.  As Dr. Zerhouni told you, it has only been since his arrival that the stem cell task force was created.  So some time was lost.

The most simplest example that I can give you is the confusion over the application of federal policy to indirect cost of university researchers, and it has only been in the past four to six months where people have accepted the notion that they can do federally funded research next door to privately funded research without getting in trouble.

The clarification of that was painfully slow, and people just didn't hop on the bandwagon immediately.

The second part, I think, has to do with what investigators tell us, is it takes me six to eight months to work through my research office to get a material transfer agreement to get one cell line at $5,000.  I'm hardly likely to be interested in studying two, three, or more at that pace and would prefer some more economical and more free distribution of more well characterized material.

So that inherent slowness is not exactly a terrific ingredient for promoting and expediting research in a new area.  It's one reason why the international community, for example, has taken a very strong position to complement the NIH activity and make materials, information available on a more free exchange environment.

And you know, it's in a time when budgets for funding research worldwide seem to be down.  I would point out that the U.K., Japan have put special extra money at this topic because they view it as an opportunity.  That coincident with decreases in their regular research budgets.

So people see this as a major opportunity.

PROF. WILSON:  Thank you.

CHAIRMAN KASS:  Alfonso.

DR. FOSTER:  Jim, were you through?

PROF. WILSON:  Yes.

DR. FOSTER:  Dr. Okarma, I wanted to ask one question that I wasn't sure about.  You emphasized the oligodendrocyte as one of your chief cells that was moving on.  You said you were working on this in spinal cord injury, but I presume this would be some myelinating agent in something like MS or multiple sclerosis or something as well.  I don't know that, but the question would be if you put in a differentiated cell and let's say you have a balance between, you know, some autoimmune disease that's demyelinating and an oligodendrocyte that's myelinating, the question I was going to ask is that apparently a lot of times there's a block in the oligodendrocyte capacity to myelinate because there's a block in the movement from the pre-oligodendrocyte to the oligodendrocyte by, you know, a jagged notch interaction or something like that.

So I guess the question I'm asking:  is this differentiated cell going to be - we've talked about the problem of immune rejection and things like that - but is there another problem in certain diseases of differentiated cells that they might not work because of the primary disease that's present?

DR. OKARMA:  That's precisely correct, and we have yet done no work on systemic autoimmune based demyelinating diseases, although to your point, they could potentially be subject to - we have only worked on oligodendrocyte precursors in acute spinal cord injury.

DR. FOSTER:  Thank you very much.

CHAIRMAN KASS:  Alfonso Gomez-Lobo.

DR. GÓMEZ-LOBO:  I don't know who this question is going to go to.  Probably Dr. Okarma.

I understand my charge here in this Council primarily as a duty to worry about bioethics.  I mean this is a Council on Bioethics, and that's the way I see my social role in this context.

And one of the things that worries me is that in these presentations, in these wonderful presentations you have made, I don't see that dimension.  For instance, it's one thing for there to be political problems and perhaps concentrated on Congress, but I think that there's the larger context of the whole nation and there's the larger context of our lives and of the respect we owe to each other, et cetera.

And then the question arises:   shouldn't we see a problem in the fact that a blastocyst that we know could be implanted and continue its journey towards being like one of us, if that's destroyed to extract the embryonic stem cells, whether we should not worry at all about that?  Is that a reason why some people may have serious doubts not about the benefits, but about the means to obtain these benefits?

DR. OKARMA:  Well, first, sir, I was specifically asked not to address those concerns, but let me assure you that they are very prominent in the culture of our company.  Approximately six months after I arrived at Geron in December of '97, I formed an ethics advisory board to discuss precisely those issues both for my own uncertainties, to more vigorously and rigorously dissect the issues as viewed by different Western religious traditions, as well as secular perspectives, and to expose the workers in the company to this body and have them ask their own questions of it, which has helped us enormously and has informed us about the issues of moral status and has comforted us in our position that this is not an ends justifies the means argument, but that the special circumstances, the scalability, the biological diversity, the normalness of the cells that we're able to manufacture from a single stem cell line made from a single embryo destined for destruction tilts the moral seesaw in our direction.

And we are intellectually and emotionally convinced of that point.

DR. GÓMEZ-LOBO:  May I?

CHAIRMAN KASS:  Do you want to respond?

DR. GÓMEZ-LOBO:  Fair enough.  Now, that's a straightforward utilitarian argument, and someone may say that, you know, even one adult could be sacrificed for many.  So there are serious problems with that argument.

Let me leave it at that.

CHAIRMAN KASS:  Does someone else want to respond to the question as put before I call on someone else?

Dr. Goldstein.

DR. GOLDSTEIN:  I would like to make a general comment that we took the issue so seriously that we added an additional layer of oversight, and the charge to the committee was to provide and consider and revisit issues as they come up.

We assumed this was going to be a dynamic field, and this committee developed guidelines.  It watches over and it considers many aspects that we don't consider with typical research grants, with typical research grants that the IRB approves and you have all of the signatures on.

So I think it has been taken in extremely serious ways.  I don't have a specific response about, yes, this is the correct or incorrect or that kind of thing, but we made this effort because we saw this as an issue, and we decided we needed a serious way to deal with it.

And this committee reports directly to our board.

CHAIRMAN KASS:  Janet, Janet Rowley.

DR. ROWLEY:  I'd like further discussion in two areas, and I suspect  that maybe it's both Dr. Okarma and Dr. Palmer who might respond to this.

First, I was surprised at your discussion of your funding problems at Geron and the fact that you're only a third of the size of a year ago because implicit in much of what has been written and discussed earlier this morning, the assumption was that the federal funding wasn't going to be important because private funding was so robust and we could sit back and let the private sector take care of it.

And you've raised some question about that more rosy view.

I have another question though about the role of nonapproved cell lines.  So in a sense, both of you are counting on these nonapproved cell lines because they will obviate the need for feeder cell layers and things of that sort.  But how do you view these being used in the future or being of benefit or are they only going to be of use outside of the United States and not be available for use for American citizens?

DR. OKARMA:  Well, first, let me clarify the premise of your question.  There's no uncertainty that the current lines in Menlo Park that we have qualified for human use can go forward into early stage human trials.  They are robust.  They are clean.  They differentiate repeatedly in the directions that we want them to go.

But they are xenogeneic, and they will eventually die off, we think.  We have no evidence for that yet, but we think it's the conservative and appropriate assumption to make, that these cells, despite their telomerase expression will not be immortal, as is a tumor cell.

So for those two reasons, their natural life span and the desire to improve by taking advantage of what we've learned from the existing derivation protocols and improving them, putting those derivation procedures under GMP with completely qualified and pedigreed reagents so that even the antibody used to purify the growth factor has never seen a murine antibody; that's what we're talking about about GMP cell lines.

And that is a normal progression within the entire field of cell therapy, and we think we are ahead of everyone in the restricted arena of embryonic stem cells.  So stay tuned for that announcement.

The issue, as you correctly point out, is that those cells by definition of the current government policy will not be available for study by U.S. government funded entities, and there's no question, as you correctly imply, that the international community will be very anxious to get their hands on those cell lines.

DR. PALMER:  I'd like to add then to that the idea of heterogeneity.  If you're a publicly funded entity and would like to explore the utility of these cells and you find that only a few will perform the way that you are interested in and then only a few of those will work in a portion of the patients that you are interested in treating, then the new lines become absolutely critical; that you could not cure Parkinson's.  You could treat a few people.  If the cell lines run out, then you're done.

So it is a critical aspect of expanding the research to a level where it's self-sustaining.

CHAIRMAN KASS:  Bill Hurlbut.  I'm sorry.  Excuse me.  Michael and then Bill.

PROF. SANDEL:  This is a question for Dr. Palmer, and it goes back to something that Paul McHugh said in this morning's discussion.  He was giving an interpretation, a sympathetic interpretation, of the President's current policy allowing the use of private funds but not public funds for new embryonic stem cell lines and limiting public funding to the preexisting.

And the way that Paul interpreted that was as a challenge to scientists to say, "All right.  Within this limited area, show us what you can do.  Show us that there's not just speculative promise, but that there's genuine progress.  Show us.  Let the burden be on you scientists to show us not only that, but also that redeeming that progress depends on going beyond the 12 approved stem lines that are currently available for distribution, and show us also that redeeming that genuine progress requires federal funding for more than the existing approved cell lines."

Now, much as I heard your comment, you were speaking in that spirit, addressing that kind of challenge with respect very concretely to Parkinson's, but I wonder if you could just, taking that challenge directly of Paul, address to him in a summary way the answer.

As I understood your testimony just now, you in effect think you already now have the answer for Paul, and then I'd be interested to hear Paul's response.

DR. PALMER:  Let me speak about data that I have seen, but it's still proprietary and confidential in a general sense.  In funding stem cell research, about half of our stem cell effort is in embryonic stem cells, and the remainder divided between adult stem cells and fetal stem cells.

Within the embryonic stem cell projects, several of these proposals, their specific aim was to contrast and compare cell lines that were available to them, and what we have seen in the data that they present is that there is beyond a shadow of a doubt huge potential to create authentic dopamine neurons from human ES cells.

That's good.  The problem is that within the limited number of cell lines that they have tested that potential is hugely variable.  These are cell lines that are theoretically pluripotent, and they should be equivalent embryonic lines.  If you look at a picture of them in the dish, they look strikingly different from line to line, which has the stamp of their history, which cell lines they have been exposed to, which sera they had applied to them, which growth factors were used in their preparation in isolation.

And this history of experience from these ES cells then imprints them to behave a certain way when their context is suddenly if they're asked to produce a dopamine neuron.

So the heterogeneity tells me as a scientist that we have a problem, that some of these lines may work some of the time for some of the applications, but they will not all work for all applications.

And this is a very strong argument for expanding the variety and the heterogeneity of the lines that we currently have access to.  Eleven or 12 is not enough.

DR. McHUGH:  Yes, thank you very much, Michael, for asking that question because it was rather what I wanted to ask.  But I have two responses to that.

First of all, the heterogeneity that you mentioned may or may not be so compelling as to not allow you to find, after all, these are immortal cells, and if you get one or two or three lines from the 12 and the expansion of things that are going, you may well be able to tell us that you're already achieving with what we have in front of us adequate things for the future.  That's the first thing.

But more importantly to me, anyway, was what you said about the issues of the autoimmune problem and how you thought that the autoimmune problem was going to be the telling one as you have seen the cells die in the process when they're exposed in this way in a foreign turf and you looked forward to the opportunity perhaps of using somatic cell nuclear transplantation to develop dopamine cells that were, in fact, from the person themselves.

And I wanted to say that I, of course, have spoken in this conference that I think that that is going to be the way in which embryonic cells ultimately will - as one of the ways that will get to this source of cells in ways that we will have to look more closely at its ethical basis and I see as distinct from the ethical source that comes from the zygote and the embryonic stem cells that the President was talking about in his August 9 speech.

So, Michael, now to return to you, I just think that we've seen today from these wonderful four presenters just the kinds of things that I would like to see to enhance our conversation to get us to a place where we will talk about the direction science will go and the promise that it will take.

And let's just finish off by a very small question that I wanted to ask you, Dr. Palmer, since I've got the floor, and that was aspects of the biology of Parkinsonism itself and the concern that I have that perhaps the disorder - are you sure that the disorder will not in itself being directed against dopamine cells, might not kill off the stem cells that are being produced and kill them more quickly than even the endogenous cells?

So where is the understanding of the pathogenesis of Parkinsonism in relationship to this transplantation treatment?

DR. PALMER:  Let me turn this around maybe and expand your horizon in thinking about ES cells, embryonic stem cells, and again stepping one more step into the nuclear transfer arena or into the area where you can engineer, genetically modify a traditional embryonic stem cell.

So there is no guarantee that making a pure population of dopamine neurons will cure Parkinson's disease.  There is very good evidence that under some circumstances dopamine neurons from fetal tissue do help in Parkinson's disease, and what we would be striving for is a population that is renewable that would not require the use of fetuses for curing individuals.

So in that sense, there is a gold standard that is working relatively well, but has problems to overcome to which ES cell strategies can aspire to, and that does work.  And so I am optimistic that the stem cell strategy will also work, if not better, if we can eliminate the aspects of the fetal tissue transplant that may be giving us trouble in that particular clinical paradigm.

Now, flip-flopping this a little bit, you brought up the idea that Parkinson's disease is a disease, and putting healthy cells into the diseased brain may be a bad idea and may not make it work.  How would you understand the complexities of that disease?

The way one might approach this is to use ES cells that harbor all of that genetic complexity of that disease and model it in a tissue culture dish.  Try your drug screening strategies.  See if you can't find mechanisms that are not possible to even understand in a whole organism by recreating the system in the dish.

This is the real power of ES cell technology.

CHAIRMAN KASS:  Bill - sorry.  Paul, did you want to just every quickly?

DR. McHUGH:  No.  Thank you very much for that.

CHAIRMAN KASS:  Bill Hurlbut, the last question and then we'll stop.

DR. HURLBUT:  Well, thank you for your presentations and the very exciting prospects of going forward with the existing cell lines and the others that you suggest.  The future looks like it has real possibilities.

What I want to explore for a second is beyond the therapeutic potential.  You've mentioned amazing possibilities for scientific research and drug testing and so forth.  So even if this technology doesn't end up making its way into the clinics, it obviously is going to be very, very important for the whole future of biomedical science.

So what I want to ask you is this.  Given this amazing foundational, early stage of this new medicine, kind of a whole new wing on the mansion of medicine, and yet given the conflict that is going on within our culture where, depending on who you believe, which survey you believe, maybe half the population has problems about the moral grounding of this future of medicine, here's my question.

I was speaking with a pediatrician recently, and she told me that it's not uncommon to have parents whose children are going to be vaccinated ask her was this vaccine grown on fetal tissues.

So the problem is that even if the individual patient doesn't choose to employ the therapy that they have an ethical problem with, the whole foundation of medicine is going to be built on this technology, and so it's not just a vaccine that somebody can say, "Well, I don't want it."  It's just sort of like everything will be built on this, right?

And beyond the question of whether or not the President could change his policies, there is the Dickey amendment, and I think we heard this morning that to a very large extent his decision was an interpretation of the Dickey amendment itself.

So given half the population roughly has ethical problems, given that this is going to be the future foundation of medicine, are there ways in the kind of research you're doing; do you see any hopeful ways that we can do this in a way that bypasses the moral problems?

And as a part of that question, I'd like to ask you:  how important do you think cloning for biomedical research is, so-called therapeutic cloning?

And recently the work of Gurdon at Cambridge suggested that maybe you can find the cytoplasmic factors that can down-regulate or reprogram the nucleus of a somatic cell.  Do you see any hopeful ways out of this?

And are there ways we could fund this current research such that the  moral impasse would be temporary if we could just get it launched with a good deal of support?

DR. PALMER:  I do agree with the sentiment entirely.  So the real issue is how.  Let's take two hypotheticals.

One is that the U.S. is restricted in its ability to pursue these technologies on ethical grounds, on moral grounds, yet other countries are not.  The moral question becomes can you then use the information and technology that was developed offshore morally.  And that's something that would have to be discussed.

We would be far behind in our technologies, in our drug development, in our ability to provide health care to our constituents.  If we had the ability to temporarily recognize the value of the lines of research with the full intent that we need to understand what these cytoplasmic factors are, nuclear transfer technology is the prototype.  It is the first working example of taking a genome, which is totipotent.  So a cell's genome has all of the information that you need to make an individual.

My cheek cell, if it has all of its genes, is totipotent, given the right cytoplasmic factors to program it.  How will you circumvent this moral problem unless there is a decision or an understanding that the morality is a combination of concepts and beliefs?

This is a very difficult question, and I don't envy your task as Council.  If you were to take a fertilized egg and reprogram a nucleus, create an embryo out of that to make stem cells, that's not so technically different than just simply programming the nucleus to go through all of those steps to create stem cells, and it's one of an intellectual process coming to grips with a moral stance, a belief.  It's going to be difficult to separate those two, I think.

So technically I think there's great hope to program the genome in a way that would lead to an embryonic stem cell that's pluripotent.  The prototype of that is nuclear transfer technology, and that is the technology that's going to give you those steps to get from Point A to Point B without creating the embryo.

DR. HURLBUT:  Within the constraints of existing policy, do you think we could if we funded it properly find a way to do that?

DR. PALMER:  It could happen tomorrow or it could be years.  It will happen offshore regardless.

CHAIRMAN KASS:  Thanks to our four panelists for your presentations, your forthcomingness.  Thanks to the Council members for enduring a long, but very interesting day.

We meet again tomorrow morning at 8:30, and we meet again at 6:30 for convivial repast.

The meeting is adjourned.

(Whereupon, at 5:40 p.m., the meeting in the above-entitled matter was adjourned, to reconvene at 8:30 a.m., Friday, September 5, 2003.)