A taxpayer-funded program capable of lending money to cash-starved California biotechnology companies has caught the attention of local stem cell industry executives who say they’re struggling to attract traditional investors and can’t qualify for federal money.
For the first time in its three-year history, the San Francisco-based California Institute for Regenerative Medicine is considering lending a portion of its $3 billion in available state funds to biotechnology companies. The so-called “biotech bank” would provide low interest loans to companies that qualify.
The stem cell agency’s governing board has approved 156 research grants totaling almost $260 million to universities, nonprofit agencies and individual scientists.
The agency, established in early 2005 after California voters passed Proposition 71 in November 2004, is the largest source of funding for human embryonic stem cell research in the world. The California Stem Cell Research and Cures Initiative allows the institute to grant or loan money for stem cell research and other biomedical research.
Local industry leaders, who met with members of the stem cell agency’s oversight committee in San Diego last week as part of a biotech loan task force, expressed interest in obtaining loans through the program, but questioned the qualifications and restrictions involved.
Local representatives from the California Healthcare Institute, International Stem Cell Corp., Invitrogen Corp. and Novocell Inc. joined a panel also comprised of representatives from Los Angeles-based Advanced Cell Technology Inc., Menlo Park-based Geron Corp. and StemCells Inc. of Palo Alto.
Local Interest
“As a for-profit company, I believe the program makes a lot of sense,” said William Adams, co-founder and chief financial officer of International Stem Cell Corp. in Oceanside. The company announced last year that it had developed cell lines capable of avoiding immune system rejection, a common dilemma facing stem cell researchers.
Joydeep Goswami, vice president of stem cells and regenerative medicine at Invitrogen, says the Carlsbad-based company is also interested in applying.
“As any large company or small company knows, we have more ideas that merit funding than we can fund internally,” he said.
Multimillionaire real estate investment banker Robert Klein, who serves as the institute’s unpaid chairman, has proposed the loan program as a means of filling the funding gap between scientific research and commercial development. Researchers refer to the gap as the “valley of death,” or the area where funding dries up, leaving some scientific ideas dead.
Klein has suggested offering between $500 million and $750 million in loans to companies that qualify for the program, which he estimated could “recycle” $1.5 billion back to the state agency.
Some say the program could offer support during a time when investors have shied away from funding embryonic stem cell companies because of the risk involved.
San Diego Business Journal Staff
HEATHER CHAMBERS
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