Los Angeles, California—(BUSINESS WIRE)—Advanced Cell Technology, Inc. (OTCBB: ACTC – News) announced today that it has issued a letter to its investors from William M. Caldwell, IV, Chairman and CEO, updating the company’s progress year-to-date.
The text of the letter is available on the company’s website at www.advancedcell.com and is included in this press release below:
Dear Stockholders,
As we move through 2007’s holiday season and approach year end, I wanted to update all of you about the events that took place for our company this year. 2007 has been a year of significant scientific accomplishment and positive transformation for Advanced Cell Technology as well as one of great change for the regenerative medicine industry. I have broken this letter into four components. First and foremost, I would like to discuss our research, development, and clinical progress, as this is clearly the most important facet of our company. Second, I will discuss Advanced Cell Technology’s transformation from a research and development organization into a biotechnology company with novel therapies in clinical trials for currently difficult or impossible to treat indications. Third, I will outline our interpretation of the state of the stem cell industry. And finally, I will discuss what our hopes and expectations are for 2008 and beyond.
Advanced Cell Technology has three primary therapeutic programs:
1. Our Myoblast Program, an autologous adult stem cell therapy for the treatment of heart failure;
2. Our Retinal Pigmented Epithelial (or RPE) cell Program, an embryonic stem cell therapy for the treatment of degenerative retinal disorders; and
3. Our Hemangioblast (or HG) cell Program, an embryonic stem cell therapy for the treatment of blood and cardiovascular indications.
We have made progress in each of these programs this year and will exit 2007 with the Myoblast Program preparing to enter Phase II human clinical trials and our RPE and HG Programs in preclinical trials. In addition, our company has a number of proprietary technology platforms, including our single cell biopsy technique for creating embryonic stem cell lines without destroying embryos.
Milestones:
We acquired our Myoblast Program in connection with our acquisition of privately-held Mytogen, Inc., which closed in September 2007. The myoblast therapy involves transplantation of expanded autologous myoblasts derived from a small biopsy of skeletal muscle from a patient’s leg. The myoblasts are expanded into hundreds of millions of cells over a period of three weeks and then transplanted back into the patient’s scarred heart tissue via a catheter-based procedure. The Myoblast Program to date has successfully completed four Phase I human clinical trials utilizing the therapy safely in over 40 patients. While the successful Phase I human clinical trials were focused on the safety of the therapy, the clinical data from those trials suggested that the myoblasts can improve heart function that leads to an improved quality of life for the patient.
In October and November of this year, Dr. Nabil Dib, one of the principal investigators for our Myoblast Program, presented 6-month and 12-month data for the program at TCT 2007, a leading interventional cardiology conference, and at the American Heart Association’s annual meeting in Orlando, Florida, respectively. The two sets of data: 1) demonstrated myoblast safety with no evidence for increased risk of arrhythmia; 2) distinguished the ACT Myoblast Program as the leader in the industry as it is the only program not required to use anti-arrhythmia medications and/or an implanted defibrillator device; 3) showed that the effects of ACT’s myoblast therapy persisted for an extended period of time, an effect that has not been demonstrated by any other cellular therapy for heart disease; 4) provided evidence that the hearts of the patients that received the therapy showed less cardiac remodeling in comparison to controls, remodeling being a progressive enlargement of the heart that signifies worsening of function; and 5) that by using the ACT technology doctors have for the first time the opportunity to successfully replace scarred heart tissue with healthy muscle via intracardiac injections of autologous skeletal myoblasts.
We are on schedule to begin the Phase II human clinical trial for the treatment of heart failure in approximately 160 patients. In that light, we entered into a letter of intent with Catholic Healthcare West, America’s eighth largest hospital system, for a proposed exclusive business arrangement to establish a clinical trial research site and a North American regenerative medicine interventional cardiology training center for our Phase II Myoblast clinical trial. In addition, we are actively pursuing international partnerships to investigate our Myoblast Program and to commence international Phase II human clinical trials for the novel therapy. If the Phase II trials prove successful, we will proceed with a pivotal Phase III trial.
According to the National Heart, Lung, and Blood Institute (NHLBI), a division of the National Institutes of Health (NIH), approximately 5 million people in the United States have congestive heart failure (CHF) and an estimated 400,000 new cases are diagnosed each year. Roughly 50% of CHF patients die within 5 years. The annual number of deaths directly from CHF increased from 10,000 in 1968 to 42,000 in 1993, with another 219,000 related to the condition. CHF is the first-listed diagnosis in 875,000 hospitalizations, and the most common diagnosis in hospital patients 65 years and older. Consequently, we are excited by both the market opportunity for our Myoblast Program as well as the potential to help the growing number of patients suffering from heart failure in the United States and abroad.
Milestones
Studies of our proprietary RPE cells have shown that the therapy may ultimately provide effective treatment of degenerative retinal disorders, including macular degeneration, which represents a $28 billion dollar market. Age-related macular degeneration (AMD) affects more than 30 million people worldwide and is the leading cause of blindness in people over 60 in the United States. The prevalence of AMD begins to increase after the age of 50. Approximately 15% of people over 75 have the condition. To date, AMD patients have had few if any effective therapies for treatment; thus, the need for novel therapies that we are developing is clear.
In 2006, we demonstrated visual function rescue in rat models using our RPE therapy. In February of this year, we entered into a research services agreement with Oregon Health and Science University (OHSU). Under the terms of the research agreement, we have been collaborating with Dr. Raymond Lund, Dr. Richard Weleber, and Dr. Peter Francis at the Casey Eye Institute at OHSU to conduct preclinical studies for the program. Specifically, the research team has been conducting dosage studies utilizing our RPE cells in the RCS rat model and plans to conduct similar studies in other rodent models of retinal degenerative disease. We are also in discussions with the OHSU team regarding future plans for a Phase I human clinical trial.
In November of this year at Neuroscience 2007, researchers at OHSU presented results of the study, which used ACT RPE cells that were manufactured under GMP compliant conditions (21CFR211) at our facility in Worcester, Massachusetts. The RPE cells were thoroughly characterized and cryo-preserved and shipped to researchers at OHSU for transplantation. The transplanted rats were given a range of doses of the RPE cells and monitored and evaluated at multiple time points. The results of the study showed that the RPE cells demonstrated a statistically significant therapeutic effect compared to controls with a maximum efficacious effect at an intermediate dose level. Histological assessment showed integration of the human RPE cells into the rodent’s RPE layer without migration into the retina. The conclusions drawn by researchers were that visual function can be rescued and preserved in this animal model of disease utilizing GMP-compliant human ES-derived RPE cells with a functional dose threshold and that these cells may provide an effective donor cell source to rescue photoreceptors in conditions like AMD, where RPE function is compromised. We plan to present this data to the FDA when we file an IND for the therapy.
As we move closer to filing an IND for our RPE therapy, we decided to initiate preliminary discussions with staff from the Office of Cellular, Tissue, and Gene Therapies within the Center for Biologics Evaluation and Research at FDA. These discussions took place earlier this year. In addition, we contracted with a leading contract research organization to begin work on an extensive preclinical program. Furthermore, MPI Research, located in Mattawan, Michigan, initiated pilot studies under Good Laboratory Practices (GLP) for the ongoing RPE Program. We are hopeful that we can file an IND for the RPE therapy next year and begin human clinical trials soon thereafter.
Milestones
We continue to investigate the possibility of using our proprietary hemangioblast cells to treat blood and cardiovascular diseases, stroke and cancer. In May of this year, research conducted by our team of scientists and our collaborators from the University of Florida at Gainesville and the Memorial Sloan-Kettering Cancer Center in New York City was published in the journal Nature Methods. The research described an efficient method for generating large numbers of hemangioblasts derived from human embryonic stem cells that were capable of differentiating into blood vessels as well as into all blood and immune cell lineages. When the cells were injected into animals that had retinal damage from diabetes or ischemia-reperfusion injury (lack of adequate blood flow) of the retina, the cells homed to the site of injury and showed robust reparative function of the entire damaged vasculature within 24 to 48 hours. The cells showed a similar regenerative capacity in animal models of both myocardial infarction (50% reduction in mortality rate) and hind limb ischemia, with restoration of blood flow to near normal levels.
We are actively seeking international partnerships for our HG Program to assist with our preclinical research and, ultimately, human clinical trials. We are hopeful that we can file an IND next year for the program and move forward with human clinical trials.
Milestones
Our single cell biopsy technique for creating human embryonic stem cell lines without damaging embryos continues to attract a significant amount of attention. Recall that in August of last year we announced that our scientists had published a paper in the journal Nature explaining how they had generated human embryonic stem cells using this approach. The method derives the cells from human blastomeres with a single-cell biopsy technique called Preimplantation Genetic Diagnosis (PGD). This technique is used by in vitro fertilization clinics to assess the genetic health of preimplantation embryos. The cell lines produced using this technique appeared to be identical to human embryonic stem cell lines derived from later stage embryos using techniques that destroy the embryo’s developmental potential. A significant amount of controversy ensued after our announcement challenging the validity of the results, but we were pleased to report in June of this year that we had successfully produced a human embryonic stem cell line without destroying an embryo at our lab in Worcester, Massachusetts. Dr. Robert Lanza, M.D., our Chief Scientific Officer, definitively announced that he and his team had reproduced the work of removing a single cell blastomere from a human embryo with the surviving embryo cryo-preserved, quelling much of the initial controversy.
The technique is also beginning to attract the attention of our federal government. In June of this year, President Bush issued an Executive Order requiring that “The Secretary of Health and Human Services … conduct and support research on the isolation, derivation, production, and testing of stem cells that are capable of producing all or almost all of the cell types of the developing body and may result in improved understanding of or treatments for diseases and other adverse health conditions, but are derived without creating a human embryo for research purposes or destroying, discarding, or subjecting to harm a human embryo or fetus.” Roughly three months later, the NIH announced that it would begin implementing President Bush’s Executive Order. Our single cell biopsy technique was cited by the NIH as an alternative method in its implementation plan. The NIH plan calls for “aggressively pursuing an assessment of the potential of alternative sources of pluripotent stem cell lines, including altered nuclear transfer; single cell embryo biopsy, and reprogramming, or dedifferentiation of somatic cells, such as skin cells.”
We believe our single cell blastomere technology directly addresses the President’s ethical concerns and, unlike the other potential solutions described in the order, is available today. We are encouraged by the NIH’s willingness to explore ways to increase the federally approved stem cell lines available and hope they will consider our technique for federal funding. We believe that such consideration reflects the will of the American people to bring novel therapies derived from stem cell research to patients with few or no alternatives.
Milestones
Earlier this year, our company was presented with a unique opportunity that culminated in a merger with Mytogen, Inc. We entered into a letter of intent to acquire Mytogen in May, signed a definitive merger agreement in July, and closed the acquisition in September. The Mytogen transaction was transformational for Advanced Cell Technology for several reasons. First, Mytogen helped us broaden our regenerative medicine technology platform from exclusively focused on embryonic stem cell therapies to research programs and therapies based on both embryonic and adult stem cell technology. This technology platform expansion has allowed us to not only investigate more new therapies for a larger set of indications, but it has also provided access to opportunities largely unavailable to companies focused exclusively on embryonic stem cell science. Second, what with the Myoblast Program having successfully completed Phase I human clinical trials and poised to begin Phase II human clinical trials shortly, the Mytogen acquisition immediately transformed ACT from a development stage to a clinical stage company.
With the merger closed and the Mytogen team fully integrated into the Advanced Cell Technology family, we solidified our management team. While I remain Chairman and CEO, we named Dr. Robert Lanza, M.D., our Chief Scientific Officer; Dr. Jonathan Dinsmore, Ph.D., our Senior VP – Regulatory and Clinical; and Ivan Wolkind our Senior VP – Finance, Administration & Chief Accounting Officer. Dr. Lanza has over 25 years of relevant research and industrial experience, including his position as Director of Transplantation Biology at BioHybrid Technologies, Inc. He is currently an Adjunct Professor at the Institute for Regenerative Medicine, Wake Forest University School of Medicine, and has several hundred scientific publications and patents and has authored and/or edited 16 books. Dr. Dinsmore was formerly responsible for all aspects of Mytogen’s cell production operations, basic science program, and research and development efforts, and directed both clinical and preclinical research programs at Diacrin and GenVec. Mr. Wolkind joined ACT in March 2005 after serving as the Executive Vice President of Finance and CFO for Eyematic. Mr. Wolkind previously held senior financial positions at a number of large companies and worked in the financial services and banking audit group at KPMG.
Our corporate transformation also allowed us to consolidate and improve our patent portfolio. In February, we acquired the intellectual property assets of Infigen, Inc. relating to parthenogenesis, oocyte activation and other related technologies. We acquired a total of 26 issued patents and numerous pending patent applications for a combination of cash and shares of common stock. Three months later in May we announced an expanded, non-exclusive commercialization agreement with Wisconsin Alumni Research Foundation (WARF) that granted us rights to the commercial use of human embryonic stem cells to develop human therapies (with the exception of neuronal, pancreatic beta cells, and cardiac applications) and enabled the marketing of a broad array of research products. The agreement granted us commercial access to an additional 150 important stem cell technology patents and patent applications. As a result of the Infigen, WARF, and Mytogen deals, we now own or license over 380 patents and patent applications.
2007 was another challenging year for financing companies in our space, what with difficult public markets (especially in biotechnology) and the ban on federal funding for many areas of stem cell research. Nevertheless, we successfully exploited a handful of alternative financing opportunities. In January, our company was awarded a research grant from the NIH in conjunction with a research project currently underway with The Burnham Institute of Medical Research, one of our academic partners. The grant, titled “Directed Differentiation of Embryonic Stem Cells using Phage Displayed Ligands,” further funds research by ACT and The Burnham Institute aimed at obtaining specialized cells of therapeutic interest from human embryonic stem cells using NIH-approved stem cell lines. Furthermore, as the $3 billion in funding to be distributed by CIRM (the California Institute for Regenerative Medicine) over 10 years from California’s Proposition 71 begins to trickle out, we have seen some early positive developments including the use of ACT’s human embryonic stem cells in a study to determine if the cells are safe and effective in animal models for heart attacks and heart failure.
Our most substantial capital raise this year came from the completion of a private placement of senior secured convertible debentures that closed in August resulting in gross proceeds of $10 million. The cash infusion provided us with capital necessary to continue our promising research and development platforms and has brought us closer to both additional clinical trials and, ultimately, to commercializing our therapies in the marketplace.
Politics
The legislative environment for stem cell research is complex and largely misunderstood; consequently, I’d like to outline for you the facts as well as how we see the legislative landscape unfolding going forward. In August 2001, President Bush enacted a ban on federal funding for deriving new embryonic stem cells from fertilized embryos. This does not mean that embryonic stem cell research is “illegal,” rather that federally collected tax dollars cannot be used to fund the research. Unfortunately, however, because of the federal funding ban, research institutions (be they public, private, academic, etc.) have been forced to build entirely “clean” facilities to be used exclusively for such research. This has resulted in a significant (financial) barrier to research progress. Furthermore, while President Bush did allow research to continue on the embryonic stem cell lines existing at that time – often referred to as the “Presidential Lines” – (unbeknownst to the President) the lines are contaminated and largely unusable. Despite the challenging environment, we, as a company, have made the progress I’ve outlined in this letter.
Still, there have been a number of initiatives aimed at improving the landscape to further research in this field at both the federal and state levels. In July 2006, the Senate voted 63-37 in favor of a bill that passed in the House of Representatives to lift the ban on federal funding of stem cell research, but the bill did not have enough support to override the President’s inevitable veto. In January and April of this year, the House and the Senate, respectively, passed the Stem Cell Research Enhancement Act of 2007. Once again, however, in each vote the bill came just a few “ayes” shy of a veto-proof majority. Despite these (largely expected) legislative defeats, we believe it is becoming increasingly clear that it is a matter of when, not if, federal support of embryonic stem cell research will become reality. According to some polls, roughly two thirds of the American populous is in favor of lifting the restrictions and with the 2008 Presidential election approaching swiftly we believe that change for the better is very near, especially considering the pro-embryonic stem cell research stance of a large number of the leading Presidential candidates. Should the election bring a change in the position of the executive branch, it would remove the last impediment to opening up the floodgate of billions of dollars in federal support for companies like ours.
While a lift on the federal funding ban would certainly benefit our company, our success does not rely solely on such change. In addition to the progress we’ve made in the current less-favorable environment, there are additional initiatives at the federal level that may benefit Advanced Cell Technology. Most specifically, as discussed above, the NIH announced this year that it would begin implementing President Bush’s Executive Order to seek alternative sources of pluripotent stem cell lines, including lines created using our single cell blastomere technology. We are encouraged that our government is seriously considering our technology for funding.
We have also seen continued developments at the state level. Our experiences in California, where our headquarters is located, thus far have been positive including being named this year on a CIRM grant whose recipient will use ACT’s human embryonic stem cells to determine if the cells are safe and effective in animal models for heart attacks and heart failure. CIRM funds are finally beginning to get distributed to grant winners. Furthermore, this year CIRM is beginning to award grants to for-profit organizations (like our own) – prior, all of the grants announced had been for non-profit organizations (who can subcontract as much as 50% of the grant to for-profit organizations). New Jersey had proposed a $450 million bond to fund stem cell research that, unfortunately, was defeated; however, we believe the vote was more a reflection of the voters’ dissatisfaction with state government spending (New Jersey has a $3 billion budget deficit) rather than a referendum on the ethics and feasibility of stem cell science. In November of this year in Massachusetts, where in 2005 the state’s congress overrode and passed a bill, which former-Governor Romney had vetoed, supporting embryonic stem cell research, Governor Deval Patrick proposed a $1 billion stem cell research funding initiative. Also, states including Connecticut, Florida, Illinois, Maryland, New York, and Missouri have passed or proposed similar initiatives. Again, it is our belief that we are nearing the moment when funding for stem cell research will begin to expand. We expect to be a direct beneficiary of the improving climate.
This year, scientists including our own as well as researchers outside our company announced a number of regenerative medicine breakthroughs. In addition to our single cell biopsy embryonic stem cell development technique, researchers around the world announced advances such as deriving stem cells from amniotic fluid and skin cells. In January of this year, scientists at Wake Forest University and Harvard University reported that stem cells from amniotic fluid donated by pregnant women may hold promise for pluripotency. We believe the cells may generate a broad range of important cell types, though they may not do as many tricks as embryonic cells. In addition, in November researchers in Japan and the United States announced that they had reprogrammed skin cells to behave like embryonic stem cells. Generating stem cells in this manner has several obstacles to overcome, including dealing with a carcinogenic effect, and likely will not be viable for years to come. Regardless, all of these scientific breakthroughs represent a giant steps forward for stem cell research.
We expect to enter 2008 on solid footing and look forward to an exciting year. We remain on schedule to begin Phase II human clinical trials for our myoblast adult stem cell therapy for heart failure and are working diligently in preparation for IND filings for our RPE and HG embryonic stem cell therapies for retinal degenerative disorders and heart, blood, and cardiovascular indications, respectively. We are also excited to be seeking international partnerships for each of our clinical and preclinical programs to tap into global market prospects, international scientific expertise, and worldwide non-dilutive financing opportunities. We remain committed, determined, and focused on bringing novel treatments for difficult and impossible to treat indications from the lab to the bedside as well as on returning value to our shareholders.
Wishing you the best for the holiday season and the new year,
William M. Caldwell, IV
Chairman and CEO
Advanced Cell Technology, Inc. is a biotechnology company applying cellular technology in the emerging field of regenerative medicine. The company operates facilities in California and Massachusetts.
For more information, visit www.advancedcell.com
Statements in this news release regarding future financial and operating results, future growth in research and development programs, potential applications of our technology, opportunities for the company and any other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that are not statements of historical fact (including statements containing the words “will,” “believes,” “plans,” “anticipates,” “expects,” “estimates,” and similar expressions) should also be considered to be forward-looking statements. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including: limited operating history, need for future capital, risks inherent in the development and commercialization of potential products, protection of our intellectual property, and economic conditions generally. Additional information on potential factors that could affect our results and other risks and uncertainties are detailed from time to time in the company’s periodic reports, including the report on Form 10-QSB for the quarter ended September 30, 2007. Forward-looking statements are based on the beliefs, opinions, and expectations of the company’s management at the time they are made, and the company does not assume any obligation to update its forward-looking statements if those beliefs, opinions, expectations, or other circumstances should change.
Forward-looking statements are based on the beliefs, opinions, and expectations of the company’s management at the time they are made, and the company does not assume any obligation to update its forward-looking statements if those beliefs, opinions, expectations, or other circumstances should change.
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