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JE: How did you come to be involved first as chief scientific officer, then as director, and now as chairman at IMUC?

Dr. Yu: Well, the company that I founded with a colleague of mine — I was originally attracted toward commercializing our therapy because of some of the frustrations I felt as an academic investigator in terms of being able to develop therapies for our patients, and that was essentially a therapy did not have a strong commercial backing and a clear pathway toward commercialization.  It was something that was very difficult to take past the phase one clinical trial, meaning the small clinical trial testing a few patients.  If you wanted to develop a therapy that would be applicable to the population of patients out there, it had to be strategically developed with an eye toward commercialization from the start. Let me give you an example of this.

One of the therapies that we had developed was a vaccine that could not be patented because it used similar types of strategies that were developed elsewhere.  Well, you know, this might be fine for an academic trial that we’d do in a small number of patients, but because of the inability to patent it, it was something that no pharmaceutical company would take past a small phase one trial.  Even if we wanted to test whether that therapy had legs and whether it would be something that could make an impact in patients with brain cancer, it was something that we really could not take any further.  So understanding that type of frustration and what it would take to overcome that type of frustration, we were careful from the get go to patent our technology and then to develop a commercialization strategy in which we would have a significant intellectual input into the company, so that it could be developed right, so that the trials could be done correctly. For the development of the drug to be done correctly with an eye toward regulatory approval, for all of these sort of factors from the intellectual property to the regulatory approval to the generation of a therapy to be commercialized and be relevant for the treatment of our patients, it really had to be done right from the start.  And in order to be able to do it right we felt that starting a small start up in which we could control how the trial was done, and how the drug was developed would be the most favorable way to go.

JE: And that is how IMUC was founded?

Dr. Yu: Yes that’s how I ended up at IMUC, and that’s why we founded this company.

JE: I’d like to talk about ICT107, your cancer vaccine treatment for Glioblastoma multiforme (GBM). That is the most common, most aggressive brain tumor, the primary brain tumor at this point in humans.

Dr. Yu: Yes.  Glioblastoma is the most common.  It accounts for about half of all primary gliomas, and also the most malignant with the survival measured in months, and at this point in the history measured in 14.6 months is the median survival.  So clearly a novel way of treating this therapy is really needed for this disease.  So we developed ICT107, (as a vaccine 201) that from our experience really targeted some of those Achilles heel of the cancer . We used several peptides or antigens that we knew were relevant on glioblastoma that were highly expressed on the cancer cells.  And we used several of them together knowing that by targeting several at once we could really make an impact on the tumor before the tumor has a chance to make variants that have lost a single or two antigens, and so by virtue of targeting several antigens we got several shots at our goal and prevented an escape variant which would no longer make the antigen that was targeted.

JE: And these are dendronic cell-based.  The therapy is the dendronic cell-based?

Dr Yu: Yes, Dendritic cell-based therapies.  We chose the dendritic cells because these are the most potent antigen presenting cells in the immune system.  So what that means is that the antigen presenting cells are the first responders in an immune response.  They’re the cells that take up the abnormal proteins that have infected a cell through a virus, or a cell that is abnormal because it’s a cancer cell, and it takes up those proteins from dead tumor cells, processes it, and cuts them up into small pieces, namely nine amino-acid pieces, and places them on MHC molecules or major histocompatibility molecules on their cell surface.  Then they present these pieces of protein to T-cells which can then recognize these proteins and will target cancer cells that bear these proteins on their cell surface in association with their MHC molecules.

JE: And these are the most potent first responders for an immune system?

Dr Yu: Yes, the dendritic cells are the most potent first responders to an immune response so we put together dendritic cells with antigens that are known to target cancer cells.  We later found out that these antigens are highly expressed or highly made on cancer stem cells, and we were one of the first groups to identify cancer stem cells in glioblastoma, –the most virulent or most aggressive cells of the cancer.

You see, before cancer researchers thought that all cancer cells were similar to each other, but more recently we’ve found that cancers are very heterogeneous with very different types of cancer cells within them. And only a few of them, between one to five percent, have the sole ability to self-renew or to make perfect copies of themselves ad nauseum and to make more differentiated cells which are astrocytes, oligodendrocytes and neurons in the brain. This is very parallel to normal stem cells that make these cells even through adulthood in the brain.  But cancer stem cells no longer have the ability to regulate their growth, and so instead of stopping when they should, they continue to grow and they continue to make more cancer cells.So we and others have found that in order to kill the cancer you have to really get at its root.  You have to really target the cancer stem cells.  What we subsequently found were that the antigens that we’re targeting with ICT107, made a lot more of the cancer stem cells than our normal cells, and so this provided an avenue to target the cancer stem cells of the tumor preferentially.

JE: And GBM when treated conventionally with chemotherapy and radiation — it doesn’t seem to be affected with that type of brain cancer. It’s resistant?

Dr. Yu: Yes.  And that’s really because cancer stem cells have the ability to be resistant to radiation and chemotherapy, and this is very much parallel with normal stem cells.  Normal stem cells in order to be able to withstand all the toxins that we face in life, and still be able to regenerate the cells and neurons that we need to retain our memory, have the ability to withstand radiation like that from the atmosphere, and withstand toxins like chemotherapies with genes that allow them to be resistant to these drugs.  Well, the cancer stem cells are resistant to all of these types of therapies including radiation,  and chemotherapy, and so whereas the daughter cells can die off, the root of these cancers remained and then will cause a recurrence of the tumor.  So the idea is to really target the cancer stem cells so the tumor no longer has the ability to re-grow after treatment.

JE: So with other therapies, immunotherapies under development for cancer, how is ICT107, how is it distinguished or how does it differ from other?

Dr Yu: Okay.  So for one thing, we have the only drug that’s targeting the cancer stem cells immunologically and preferentially trying to kill the cancer stem cell which is the root of cancer.  Number two, by using several antigens we’re preventing antigen escape variants from growing out from the tumor so that we can really kill off the tumor before it has the potential of growing back again, and by using dendritic cells which are the most potent and professional antigen presenting cells in the body and using the body’s own dendritic cells at that, we hope to generate the most potent immune response possible.  So that combination, together with the strategies that we’ve learned historically from our previous trials using our previous generation of vaccines, we feel like we can make the biggest impact on patients with cancer.

JE: So the phase one data that’s available indicates there was significant progress in survival improvement by more than a 150 percent, and that seems to be very encouraging. Do you expect validation of that result as you move into further trials?

Dr. Yu: Well, so, our initial indications are that the survival that we’ve seen is not a fluke when we look at the patients that we’ve treated so far.  So we think it’s a real phenomenon, but really the only way to test it is within a randomized trial.  When we look at other patients on other vaccine trials that are not ICT107, that were done concurrently at the same time, we find that the survival of patients on ICT107, is significantly longer than those patients on the other trials, suggesting that it’s not the choice of the patients on the trial, but rather the therapy itself.  And so we feel confident that the improvement in survival that we’ve seen will be carried through in larger trials at different institutions.

JE: And the next trial is a phase two upcoming?

Dr Yu: Yes.  So the current trial is a multi-institutional randomized phase two trial which is blinded both to investigators as well as to patients; however, the patients have a two to one likelihood of getting the real vaccine rather than the placebo vaccine, and so we’ve seen enrollment numbers that are quite robust, and you know, patients seem to want to get on this trial with the hopes of getting a vaccine that will improve their outcome.

JE: IMUC has recently formed an agreement with Progenitor Cell Therapy (PCT) a cell therapy services company to qualify the cGMP manufacturing process for ICT-107

Dr. Yu: Yes.

JE: Why PCT?  What value do they bring to the table for IMUC?  How are they going to help IMUC in this situation?

Dr Yu: Well, they’re a company that’s well-versed at commercialization of cell therapies, and that’s wherein their expertise lies.  By working with PCT it’ll improve any potential bottle neck that may occur in terms of patient enrollment by having a site of manufacturing besides the U. Penn. site where it’s presently being manufactured.  Also, because they’re a facility that commercializes their cell products, we feel we can move quickly into commercialization if and when we achieve FDA approval for this treatment.

JE: They worked with Dendreon Corp. on multiple phases of their products, which actually brought a therapy to market.

Dr Yu: Yes, absolutely.  They’re quite professional and quite good at generating these products in a very efficient manner. We’ve searched high and low and clearly they were the front runner for this type of cell therapy.

JE: So with the next stage that you’re going into with the clinical trials, what would you say are the biggest milestones that you’re looking for there?

Dr. Yu: Well, we’d like to see a survival benefit with our randomized phase two trial.  Clearly we’ve shown that we can handle the complexity of the technical manufacturing of the cells, the complexity of randomization, and of managing clinical sites.  With our CRO (Clinical Research Organization)  we’ve been rolling this out to more than 20 academic medical centers throughout the United States.  We’ve been enrolling ahead of schedule, and so what we consider to be our greatest technical challenges, I believe we’ve overcome already.  I think our next challenge is to get our data and to analyze and report it well, and then based on the data to efficiently make our next steps in terms of how we’ll develop this technology.

JE: And enrollment for the phase two trial has already begun?

Dr Yu: We’ve already begun enrollment, and we’ve enrolled more than 65 patients already.

JE: Okay.  I want to go back to phase one for a moment.  The data and the results from the phase one trial, is that viewed in the scientific community and maybe in the investment community as valid data, a controlled setting?

Dr Yu: Well, it’s a one center, phase one clinical trial with limited numbers.  I think what we were surprised with and what I believe a lot of investors are surprised with is how well the patients are doing.  You know, for the highly educated investor, they were always critical of whether we tried to load the patients on the trial with, you know, patients that have potentially good outcomes, but we really enrolled all comers in which we could surgically resect the tumor, and so we’ve shown our pre- and post- operative MRI’s to some people that were wondering whether these were all patients with tiny tumors, and they were really surprised to see the dramatic nature of the size of some of these tumors. So clearly, you know, there’s no loading of the trial in one way or another.  So I think what we’re seeing is really some pretty amazing outcomes, and we’ve tried to compare the patients with other patients on historic trials, but the only way you’ll convince people is with a large randomized clinical trial – which essentially we’re starting to do now.

JE: So, this cancer vaccine, what value does this represent?  Let’s say if this is successful, these trials come out with positive data and you move into the next phase, when the best case situation happens, what value is this going to bring – in your mind – to the company, to the industry?  Does this, its success, does this have the potential to become a mainstream therapy?

Dr Yu: Well, absolutely.  So the idea is to bring this to mainstream therapy.  I think the idea of cancer vaccines being part of the armor for mainstream therapy is really grabbing hold recently with the approval of Provenge and recent large trials with melanoma and lymphoma, so that the clinical efficacy of vaccines is becoming more and more of a reality.  We think that for brain cancers this will represent the biggest impact in being able to affect the patient’s outcome, and so clearly there’s commercial aspects of an efficacious agent, but what I think we as investigators in this field would be most proud of is the ability to impact the patient’s outcome with a low degree of morbidity, unlike the poisons that we normally give patients right now with radiation, chemotherapy.  This is really a therapy that capitalizes on the patient’s own immune system and ability to mount their own immune response against a cancer, so by doing that I think we’ll make a paradigm shift in how brain cancer is treated and hopefully make a dramatic impact on patients’ lives and their families’ lives.

JE: And as this would become a mainstream therapy and subsequently this would represent a revenue streams, would this be done via licensing of this therapy by other firms?

Dr Yu: Well, I would defer to the future in how we develop this therapy so I wouldn’t hazard a guess on how we’ll strategically develop this, but certainly that’s one of several possibilities.

JE: Are you looking for any of the pharmaceutical companies to joint venture with this or invest in ICT107?

Dr Yu:  Not necessarily, but certainly from a business standpoint I’m sure we would entertain any offers, but we’re really focused right now in developing this therapy and really rolling out this clinical trial which appears to be successful so far.

JE: If these therapies are successful, and in particular this one, if we could move ahead, how will these therapies be prescribed?  How will they be delivered and administered to a patient?

Dr Yu: Well, essentially in a very similar way that a patient would receive a prescription to receive this therapy.  Clearly it’s more than receiving the prescription for antibiotics.  I mean, it’s an involved therapy that they’ll have to go to a large medical center in order to get their blood cells out, and then to generate a vaccine at one of our vaccine centers, but it’s something I believe that patients will be very willing to do if we show a significant improvement in their outcome.

JE: So if you are diagnosed with let’s say GBM, the process is or will be that you would go to a center; you would have your stem cells extracted.

Dr Yu: Your white blood cells would be removed.  Mainly monocytes removed.  They would be sent to a cell therapy center where we would generate the vaccine.  It would be mailed back within a week or two, and then the patients would start getting their vaccine doses.

JE: And how long right now, based on the first trial data, how long after you receive the vaccine can you tell that there’s progress?

Dr Yu: Well, I mean, no news is good news.  If we see the vaccine and the patient has no progression then that’s good news.  The bad news is if and when a patient has a recurrence of the tumor.  So we follow quite closely every two months with MRIs, and then we follow any evidence of toxicity with blood tests and other exams.

JE: So stopping the advancement of the cancer once it’s diagnosed is essentially the proving ground.

Dr Yu: Yes.  Exactly.

JE: So with IMUC’s therapies in development and there are several other companies that are working on various types of development, when is the day when this is common day treatment, when this is the standard of care?

Dr Yu: Well, you know, if and when we finish our phase three trial and we receive the BLA (Biologics License Application) or approval from the FDA is when we’ll be able to roll it out to all patients.

JE: On the business side, IMUC in terms of number of people is actually very small.  Correct?

Dr Yu: Yes.  In fact basically all of the officers (5) in addition to our CFO David Fractor.

JE: Is this one of the reasons why it’s so efficient to do this, that your investment and so, say, the burn rate is lower, and the efficiency that these trials are carried out in.

Dr Yu: Yes.  Manish Singh (CEO) has been able to run this company as a bare bones company very, very efficiently with only the talent that we need, but the talent that we have is really second to none in terms of meeting all the requirements to execute a very efficient trial.

JE: What kind of funding does it take to bring a therapy —to get through phase two, phase three, where you have a sustainable inflection point?

Dr Yu: Well, the funding that we would need to finish a phase two trial is somewhere on the order of ten million or so.

JE: Okay.  So we’re in phase two with ICT107, is there anything that you see that could be extremely problematic coming up with the development of this particular therapy?

Dr Yu: Well, I think we’ve overcome all the technical hurdles that we can imagine.  We’ve shown that we can do it efficiently.  We’ve shown that we’ve done it cost effectively, that we’ve overcome the technical barriers to generate a viable clinical product.  So, I don’t really see any barriers to developing this therapy.  I think the main hurdle that we have to overcome is to show its efficacy, which is exactly what we’re doing.

JE: In our pre discussion, we were speaking of the human side of the disease (GBM).

Dr Yu: Yes, to add one more point to humanize this disease.  The reason that I was really drawn towards a career in the treatment and research of brain cancer is that, unlike other cancers where the cancer can be separated from yourself, really the brain cancer has the ability to take over all of that which makes us human, and that’s from our intellect to our ability to have emotions, to speak and to move. So it’s a cancer that not only takes our ability to be conscious of our own cancer, but it also takes away our ability to be conscious of ourselves. Really it’s a very debilitating and devastating disorder that really hits at the heart of our humanness, and the patients that have this disease are beyond brave in being able to fight off this disease as it eats away at their humanity, and so whatever impact that we can make as an investigator, as a company, and as fellow human beings to really make an impact in this disease will all be a life well spent.

JE: That’s very clear.  When you read some of the impacts that the therapies developed so far have had, it’s very moving.  To even extend someone’s life by several months seems to be a heroic feat.

Dr Yu: Yes, and when you’re looking at 14 months of survival ahead of you, I tell you, even two or three months makes a big difference.  That can be a whole lifetime in somebody’s life, and so, I certainly don’t downgrade any improvement in survival by any type of medication, but certainly we’d like to make a more significant impact than what’s been made in the past.

JE: Well, it seems as though if this is successful, that because of the less amount of toxins being injected into the body – in this case the brain as well – the quality of life once you undergo treatment is going to be much more improved as well.

Dr Yu: Absolutely, and that’s really the beauty of this therapy is that it uses your own drug, your own cells.  You’re just helping yourself fight off your own cancer.  You’re not adding any poisons or any kinds of toxins to your body.  You’re just helping the body fight off the cancer, so that’s really a big paradigm shift in cancer therapy which I think will be attractive to more physicians and patients in the future.

On December 21, 2009, Athersys entered into a global agreement with Pfizer to develop and market its stem cell therapy MultiStem which is used to treat Inflammatory Bowl Disease. Athersys’ proprietary MultiStem therapy is currently undergoing clinical trials for several other conditions, including the treatment of cardiovascular disease in Phase I and neurological problems which are in Phase II trials. Athersys displays an open door policy with outside collaboration, stating that one of its business strategies is to partner with other groups, including leading research centers, clinical institutions, and commercial partners to accelerate and enhance our development efforts, and enable us to do things more cost effectively (as opposed to trying to do everything ourselves).

This strategy makes Pfizer a good fit for partnership. With Pfizer’s global resources and large cap. (153.39 billion) financial assets, Athersys gained access to a farther reaching platform for its MultiStem therapy. In this agreement, Pfizer offered $6 million in initial research funding with eligibility for up to $105 million for MultiStem reaching a commercial milestone. This announcement caused a notable surge of over 150% increase in ATHX’s shares. On the 18th of December 2009, ATHX closed at $1.00 with a volume of 67.15k, compared with the 24th of December after the announcement, closing at $5.52 with a volume of 113.83 million.

On March 14, 2011 ATHX announced its enrollment of patients for Phase II of its MultiStem therapy collaboration with Pfizer with an estimated date of completion around May 2013. Pending results, which many seem optimistic about, successful completion of this Phase II trial could be the milestone that Pfizer and investors are waiting for. Currently, Athersys has a 52 week range of 1.00-3.14 with a market cap of 33.03 million and last traded at 1.39. Almost a year later, Cephalon (now Teva (NASDAQ: TEVA)) made a deal to acquire a 20 percent stake in the Australian company Mesoblast. Mesoblast is a leading developer of biological products used in regenerative medicine. Currently in phase II trials of its leading cardiovascular treatment product, Revascor has shown positive interim results. The alliance between Mesoblast and Cephalon focuses on commercializing the adult stem cell products used to treat degenerative central nervous system and cardiovascular conditions. Obtaining worldwide rights for specific Mesoblast products, Cephalon fronted $130 million, with another $220 million to follow. Mesoblast’s 52 week range is 2.69 to 10.04 with its market cap at 2.23 billion and a 1 year target estimate at 8.00. This deal sparked a nice boost in Mesoblast stock, which has continued an overall incline.

Advanced Cell Technology is a company which could greatly benefit with investments from big pharma. One of ACT’s leading stem cell based platforms is its Retinal Pigment Epithelial (RPE) therapy used to treat Stargardt’s Macular Dystrophy, a retinal disease that affects one out of every 10,000 children, and age-related macular degeneration (AMD), which affects 25 million people worldwide according to the American Optometric Association. With no currently approved treatments, dry AMD, the most common form of AMD, could represent a $10 billion market by some estimates.

Currently, this therapy is in phase I/II of clinical trials. With this large market potential and pending positive clinical trial results, investment from a deep pocked pharmaceutical company could not only impact ACT’s progress, but hopefully advance the slow moving trend of big pharma’s support. This would be a move that benefits patients, investors, and stem cell based therapies.

Although big pharma’s move towards investing in stem cell technologies has been a slow and conservative one, encouraging clinical trial results and the large market for these treatments are keeping big pharmaceutical companies interested. With the impact from these investments, hopefully these treatments and therapies will one day become the standard of care for many of these elusive diseases that our current drugs cannot remedy.

Increased capital spending directly affects job creation in many instances. But the job statistics have been disappointing of late. Unemployment is up to 9.1%, and Washington has been talking stimulus for more rapid job creation. The discussion of raising the debt ceiling is making everyone nervous and possibly reluctant to target a stimulus package anywhere, including towards faster job creation.  The voices of the survey members are important as, on average, their economic clout is valued at about $3 trillion in revenues annually. Essentially – their pulse matters.

Sickly Employment status

Unemployment is like the Intensive Care of economic indicators. It scares nearly everyone, it’s a grave situation and everything seems to be on hold until clear signs of recovery are established. In this case, everything is capital spending, and positive outlook by consumers which leads to consumer spending.  Inflation is not really on the minds of many, as its outweighed by efforts at survival and looking for jobs.  Payrolls (non-farm) increased only a third of what economists had predicted last month, to approximately 54,000. Government payrolls fell for a seventh straight month. Payrolls need to growth above 300,000 a month to make significant progress.

Not spoken aloud but whispered about is the infamous double dip – the economy being in a recession, temporarily coming out of recession for a few slow growth quarters, then contracting again into negative growth.  This possibility is not often spoken, but still on the minds of many.  Tentative, or perhaps skeptical, may be good terms to describe the state of the business CEO at this point.

Oil is a factor, Oil is factor and lastly, Oil is a factor.

High gasoline costs at the pump and the slow upward spiral in the first quarter set everyone back on their heels, mostly hurting consumer spending.  The affluent, non-affluent middle, and hourly worker struggling to get by, all pause in discretionary spending when it takes nearly $100.00 to fill up your gas tank just to get to work and go grocery shopping.  At the end of 2010, economic growth was charted at 3.1 percent and looking up. First quarter numbers figure in at 1.8. Thus the evidence of living from check to check to survive is apparent.

A game with Chinese debt holders

If employment numbers are the intensive care-like economic factor, than the nation’s massive and growing debt, and discussions of raising the debt ceiling, are outright Code Red. Ratings agency Moody’s said that it would consider cutting the nation’s credit rating if progress is not made by mid-July in talks to raise the $14.3 trillion debt ceiling. It seems that the Federal Reserve is frozen in its long shadow of analysis and decision making process. Its Fed Funds discount interest rates are still near 0. One wonders where that can go from here. Treasure debt prices and interest rate futures rose, generally a sign of economic weakness, furthering the pressure on the Fed to keep rates falsely low.

In the news are discussions of Republican lawmakers entertaining a technical default on interest loan payments in order to make a point:  cut spending or else.  The problem is that the “or else” involves someone else – Chinese Debt holders –who could have a very negative reaction. China’s bankers are reportedly glued to their terminals awaiting the situation. A reaction by the Chinese could cause a crisis, in which the U.S. cannot go to the Chinese for more debt to bail them out.  A destabilization of the markets (not just in the U.S.), the undermining of the U.S. Dollar, and extreme tense relations could incur. China is the largest foreign creditor to the United States, holding more than $1 trillion in Treasury debt as of March, so its concerns equal a large and significant weight in Washington.

Congress has balked at increasing a statutory limit on government spending as lawmakers argue over how to curb a deficit which is projected to reach $1.4 trillion this fiscal year. The U.S. Treasury Department has said it will run out of borrowing room by August 2 of this year. A possible global economic panic could ensue, but many in the economic world believe the default would never happen.

A backdrop of overvalued IPO’s generate press

Amidst the uncertainty, we hear of social media valuations of $100 Billion for Facebook in early 2012, $25 Billion for Groupon, and LinkedIn’s IPO skyrocket price a few weeks ago.  They seem to be in outright defiance of the economic climate surrounding them, driven by the likes of investment bankers.  (Unreal, overvalued, 100 times revenue, “not in touch with reality” has been said about these).  Many in the investment community are expecting a bubble like never before to happen. But investors are lining up to profit short term on the offerings, regardless of the basic underlying information regarding revenue, profits, diversity of the company, or management history.  At the core, these companies manufacture nothing, and sell advertising based on the billions in Internet traffic that they drive, albeit they do contribute to employment of the nations workers.

What to do?

So in these extreme uncertain economic times, what is the strategy of CEO’s, Institutional investors, and individual investors?

What does the U.S. Gov do?

Back to the CEO roundtable survey for a thought.  Perhaps you voice a slight public optimistic approach, you ready your capital obtained from prior belt-tightening for investment if the light turns green or at least flashes green in the remainder of the year.

You invest in your own company, perhaps buyback shares, perhaps increase capacity with equipment improvements, but you add employees slowly and grow conservatively.

Perhaps institutional investors support their careful CEO plans and invest conservatively at firms that have solid business plans, are engraved in their industry, have a past track record of revenue streams, and net profits, dividends, and decent share price growth. Biotechs seem to be on a roll with potential cures for cancer and extended life periods.

Individual investors can take note of long strategies if they are patient. Assuming a series of domino-like catastrophic events does not transpire, conservative is the word to follow.

And the U.S. Gov?   How are those IPO’s looking to you Mr. Bernanke?

The Obama administration is trying to develop policy to sort this issue out and have a rapid response to it that is not over reaching but is as effective as more traditional attack and war responses. Possible responses include economic sanctions, reduced trade and supply chain cutoff measures, U.N National Security sanctions, a counter retaliatory cyber attack or even perhaps a military strike.

Defining exactly what to attack, dependent on the involved parties, may also be a key policy consideration. For instance, if a foreign country defined as a terrorist state by the U.S. set off explosives in a public arena and injured U.S. citizens it which may be considered an act of war, (declared or not by the terrorist country), a U.S. military response would be likely. But if that act of war were staged against a U.S. company, a large power grid supplier for instance, in the form of a cyber attack, would the U.S. response be different? In another scenario, what would be the response if the attack were against the Pentagon’s computer systems?

The U.S. Pentagon is reportedly trying to create these formal strategies, and the Obama administration the appropriate policies, to address these form of adverse actions by parties opposing the U.S. At the heart of the issue is essentially: can a cyber attack from a foreign nation can be considered an act of war, and should that result in a U.S. military response? If traditional war situation and policies apply the Pentagon may declare that any computer attack that threatens the U.S. civilian population or major environmental disruption would be treated as an act of war. This would include those acts that attack power grids, emergency responder networks, medical facilities, water dams, or even oil supply. Yet another could be actions that disrupt communication systems themselves such as cell phone and data networks.

What is likely at the early stage of a Pentagon policy and response plan is that a first level of policies may be developed that establishes the definition of a Cyber attack in terms of determining whether it is an act of aggression against the country or a business-oriented attack for competitive purposes, as the attack performed by a government or by hackers from the population.

A logical policy that would follow could be assessing what types of measured responses are appropriate. For instance, it would be within a normal response to bomb a terrorist camp if that group had detonated explosives in a U.S. city. But would the U.S. bomb China if a cyber attack against a U.S. company originated from there?

In traditional war settings of the past, these issues were much more clearly defined. An act of war was declared by a country and the Pentagon could readily define where that act was coming from. But definition is now often a blur as acts from terrorist groups, non-state sponsored strikes, and the use of technology has made confirmation difficult at best. Corporate sophistication in technology has also heightened in terms of competitive measures taken against each other through the use of bloggers, social media sites that attempt to control the content of discussion about their company or issue off the record statements about others. Many companies work under the radar in numerous ways just to fend off rumors about them made available on the web by bloggers.

Attack on Google (GOOG)

One notable cyber attack against Google in 2010 was found to have originated in China but never confirmed to be state sponsored or the work of private hackers. Since disrupting Google would seriously affect U.S and world commerce, could the U.S. government have considered that to be an act of war? Note that recent cyber attacks have also targeted defense contractor Lockheed Martin (LMT) and another Sony Corp. (SNE).

Considering the Obama Administration’s careful diplomatic approach to foreign matters, it would seem far-fetched that a traditional military response would be the response to a cyber attack against the U.S government, citizens, or corporate entity. But a “heavy stick” of rigid and strong policies could surface nonetheless for cyber attacks.

Two weeks ago, the administration‘s approach called for international cooperation on halting potential attacks, improving computer security, in addition to possibly neutralizing cyber attacks.

White House Attack

In the past seven days, White House employees and senior administration officials were the target of “phishing” attacks on hundreds of users of their Gmail service. Apparently the attack originated in China by hackers looking for administration business data in the personal Gmail accounts of officials. The Obama administration reiterated Thursday that no official messages were compromised. An FBI and Homeland Security investigation is underway with Google participating. The Obama administration isn’t going to raise the matter with the Chinese government until the facts about the attack become more clear according to government officials. The Chinese government has denied any involvement in hacking of U.S. officials’ emails.

A cyber attack strategy and policy could be a boon for some U.S. firms as federal agencies such as the National Security Agency, the Central Intelligence Agency and the Department of Homeland Security are developing cyber-warfare plans and responses. Billions of dollars are expected to be allocated to the effort, and private concerns with specific expertise likely will be retained to contribute.

Who do the Cyber attacks benefit?

The majority of big names in military contractors are working on cyber-warfare products and services with the likes of Northrop Grumman (NOC), General Dynamics (GD), Lockheed Martin, and Raytheon (RTN). All are expected to have major cyber contracts with military and intelligence agencies, with a federal budget of an estimated $10 billion for cyber-warfare systems alone.

Limited experts

Considering the relatively young nature of the problem, a limited number of experts exist in the field. With a focus on preventative measures, blocking attacks initially, and subsequently designing countermeasures, experts are ramping up their skills sets and resources in order to deliver. In some instances, larger concerns have been on an acquisition trail in purchasing smaller firms with expertise.

Long term players in the Pentagon’s security units such as Northrop Grumman and General Dynamics, are in an envious position in developing offensive cyber-warfare products and systems. Efforts are often focused on finding vulnerabilities in other countries’ mainframe and network systems and subsequently developing software tools to exploit such vulnerabilities or to steal sensitive information or disable the networks. These firms may be companies to watch as the Cyberwar and frequent attacks in the news daily continue:

Companies to watch

General Dynamics Corporation Co.  Just recently they won a $876 million contract (if all options are executed) with the U.S. Department of Homeland Security to relocate its headquarters. They will be providing a new IT infrastructure and are seen as one of the few firms who have the expertise to execute a project of this scale.

Lockheed Martin Corporation Right now, Lockheed is viewed with some skepticism due to the recent attack on their systems, but daily attacks being reported in the news will help their situation memories fade fast.

Northrop Grumman Corporation. Northrop Grumman has been shy of controversy and has recently completed milestone – SRR systems requirement review, to design and build a new spacecraft bus to reduce space operations, but they may not be seen as real mover.

Raytheon Company  Its been reported that the firm is six months behind schedule delivering its advanced air-to-air missile to the Air Force and Navy prompting the U.S. House of Representatives defense appropriations subcommittee to reduce by $435 million from a combined $498 million Air Force and Navy procurement request.

Approximately 200,000 people have been evacuated from around the plant, some injured from radiation burns, others developing radiation sickness from poisoning quickly thereafter. Potentially a great number of people could be sickened or their death caused by Acute Radiation Syndrome (ARS). This is especially apparent in the event of a nuclear plant explosion.

In instances where individuals have moderate to high levels of radiation exposure there may not be hope for survival. Many victims will have received enough radiation to injure but not kill their bone marrow. They can possibly recover from their initial injuries but are impacted by the reality of a 30–60 day period during which they cannot fight infections. During this stage, they are prone to uncontrolled bleeding and anemia. Their immediate need is to receive supportive care until their hematopoietic system recovers. This is a challenge as environmental factors and the nature of the disaster itself poses treatment issues. Potassium Iodide may be used for the prevention of thyroid cancer from radioactive iodine, and antimicrobials may be used to prevent infection due to the degradation of the immune system. In past nuclear disaster situations, such as in Chernobyl, such care was not possible in the field.

The human hematopoietic (blood-forming) system is especially susceptible to radiation injury. As a result of radiation injury to the blood forming system, victims suffer from a lack of the cells that deliver oxygen (red blood cells), cells that detect and eliminate infectious agents (white blood cells), and cell components that promote blood clot formation (platelets). This set of symptoms is generally referred to as Acute Radiation Syndrome (ARS) which is both dose and time dependent in the sub-syndromes and complications that can occur.

Minimal treatments are available to help people with radiation poisoning but this landscape is changing due to biotech companies that are developing solutions. There are multiple approaches to therapy and treatments, and as research progresses, more possibilities are underway.

The U.S. government has been investing in treatment options to assist in the development of anti-radiation treatments. The Biomedical Advanced Research and Development Authority (BARDA), NIH (National Institute of Health, and Department of Defense (DoD) have all played key roles to the tune nearly $500 million (U.S.).

A possible treatment for the loss of white blood cell production is the use of the growth factor Neupogen to boost their numbers. A quite unique approach is stem cell transplantation.

If the transplant is performed within 7-10 days of exposure, cure rates can be high for this procedure. Stem cell transplantation has been used successfully in Japan following the Tokaimura nuclear reactor accident in 1999. Stem cell transplantation has improved since then with the advent of autologous engraftments. In the past, therapies required donation of stem cells from family or close relatives to assure a close match. In many instances, grafts were rejected. Autologous transplants take stem cells from the patient, ensuring a perfect match. This procedure only works if you have cells of your own to work with. In cases of severe ARS, patients may have much of their stem cells destroyed.

As there are multiple therapy tracts, some initiated before, during or after radiation poisoning, others more on the preemptive side. There are various biotech firms posing solutions:

NeoStem Inc. (NBS) has a unique approach in that they prepare for use in the future by individuals their stem cells until they are needed. Its core business is the collection and storage of stem cells for those who want such an insurance plan. NeoStem has facilities across the U.S. to collect the cells, and its recent acquisition of Progenitor Cell Therapy has further enlarged its business, giving it additional scale. The company is conducting additional research on what are termed Very Small Embryonic Like (VSEL) stem cells that may have the potential to be used in bone marrow rescue through an autologous stem cell transplant. With the spotlight on potential nuclear disasters, NeoStem’s multi-solution approach and business plan for stem cell transplantation – accompanied with housing of individuals cells – positions them in a very positive way.

Osiris Therapeutics (OSIR) has a product which is currently being developed, called Prochymal. It is currently in FDA Phase III clinical trials for two diseases with clinical manifestations similar to acute radiation syndrome (ARS). These indications have Fast Track status by the FDA. Prochymal therapy could be administered post exposure or at the onset of symptoms, eliminating the need for a predefined treatment. Osiris’ stem cells are derived from human bone marrow. The long-term storage capability of Prochymal makes stockpiling for a mass-health event feasible.

Cleveland BioLabs (CBLI) has based its focus on molecular mechanisms by which radiation induces cell death to develop pharmaceuticals that address this need. The firm’s Protectan compounds reportedly rescues mammals from lethal doses of radiation by suppressing apoptotic cell death in critical hematopoietic (HP) and/or gastrointestinal (GI) tract cells. The company is currently developing derivatives of microbial factors that are natural regulators of apoptosis as Protectans, molecules that prevent death of normal cells in the face of stresses such as radiation. The lead Protectan compounds CBLB502 and CBLB600 series have significant activity as both radioprotectants (injected prior to radiation exposure) and mitigators of radiation damage (injected after radiation exposure). The underlying principle of radioprotection by Protectans, and their structures and uses, represent the intellectual property of CBLI developed in collaboration with the Cleveland Clinic.

The future of applications built upon this technology is encouraging and could lead to a boon of revenue streams for early-in companies.  Think outdoor billboards and posters, mobile ticketing in movie theaters, airports, and of course, debit-credit payment card systems at retail environments.  No more magnetic card swipes, license ID’s etc. NFC can be used to configure and initiate other wireless network connections such as Bluetooth, Wi-Fi or Ultra-wideband. Your smart mobile phone can sync directly with the merchants system using NCF technology.

More than one method

As with the current multiple credit card systems, there will most likely be multiple payment method devices offered.  Big players include EBay Inc.’s PayPal, and the ISIS system, which is managed by AT&T and Verizon Wireless. ISIS will process payments via Discover Financial Services.

Enter Google. (Nasdaq GS: GOOG )  Their plan is to start testing a mobile-payment service at stores within the 2011 year using its Android mobile phone operating system as a basis.  Rumored target areas are NYC, and perhaps San Francisco. The testing will reportedly enable consumers to pay for their purchases with mobile phones equipped with NCF technology using specially-configured cash-register systems from VeriFone Systems Inc. (PAY) at merchant locations. A host of database information including financial account information, coupons, store discount cards etc. is also reportedly going to being offered.

So what technology firms may benefit the most from the adaptation of NCF technology?

Some companies (mentioned may develop a transaction-based business model in which they receive a percentage or fee from each transaction, such as that with a merchant credit card processing account.   Other potential beneficiaries are the equipment suppliers for the merchant’s cash registers, and phone manufacturers as each unit will have to incorporate the new technology into them. This is seen as a must-do in order to just stay competitive with other phone makers.

Samsung Electronics currently markets their Nexus S phone, that allows for NFC capabilities and transactions.   Nokia Oyj (NOK) and Research In Motion Ltd. reportedly have products in the pipeline with NFC-enabled technology.

On the patent side of things, Via Licensing Corporation, an independent subsidiary of Dolby Laboratories is developing a patent licensing program for NFC technology.

Google (NasdaqGS: GOOG ) is currently trading at 561.00 range with a 52wk Range of 433.63 – 642.96. Their revenue stream is so vast that their involvement in the NCF technology may not even register a blip on their revenues for some time, but a long position on them could benefit an investor.

AT&T(NYSE: T ) is a long shot.  Currently trading at nearly 28.00 it’s typically not a real mover. With a 52wk Range of 23.78 – 30.10, short term gains are not likely, even with a news disclosure of significant payment processing deal with RCF technology. Their loss of an exclusive arrangement with Apple for the iPhone was a blow, despite AT&T CEO Randall Stephenson’s comments  on the industry is better off with more than one supplier involved. Given that they have one of the lowest approval ratings of cellular service in the U.S., many think they are in denial.

Verizon Communications Inc. Com (NYSE: VZ ) could be a long term beneficiary of implementation of this technology. At 35.00 at current, and a 52wk Range of 25.99 – 37.70 an argument could be made that they are heading in the right direction on many fronts and long-term results could be positive.

Nokia Corporation (NYSE: NOK ) could be positioned in a very positive way to benefit if their product materializes. Currently at 8.00, on the low end of a 52wk Range of 7.73 – 15.89, ground can easily be made up and investors can profit accordingly.

Boston-based Strategy Analytics is reporting that Apple (Nasdaq: AAPL), Nokia (NYSE: NOK) and RIM (Nasdaq: RIMM) together generated 64 percent of the revenue in the popular and ever-growing smart phone market. The report by Strategy Analytics indicates that Apple Inc. (NasdaqGS: AAPL ) had 16 percent of smart phone market volume in 2010, but a 29 percent share of revenue. Nokia was second with 20 percent of market volume and RIM third with 15 percent value share.  With such a considerable market share in the cell phone market, a readily adaptable device, and an easy road to application development for programmers, one would expect that Apple would have a presence in the NCF world.

It may take 12 months or so before NCF technology greets the customer and merchants on a daily basis, but looking carefully at the early-in market players could net positive results for an investor.

In some instances, a small capitalized (small cap) firm, with enough boot-strap funds to fund laboratory development, is successful enough to capture initial investor interest and involvement. However, they may have no long-term plan for the much needed funding to bring a product to market, let alone for expensive clinical trials and retooling if applicable. A well-funded firm with at least a path established to investors with big pockets or institutional funds is a rarity but notable if you can spot one.

Commonly, the stock swings of these small cap firms put most investors into potential cardiac arrest. The perplexing problem is essentially that big money investors, from funds to institutional investors, do not believe in them until the risks are depleted or substantial progress is accomplished, and big money is needed for successfully bringing a product to market. There are many possible starts and stops along the way as well. A biotech R&D firm that has miraculously negotiated their way through an FDA clinical approval process in a reasonable amount of time (average time from conception to market is 10 years) can run into a brick wall unexpected negative clinical trial results, or delay in FDA final approval. This prompts wild swings in stock performance sending investors without steel nerves running.

For most small cap startups, the initial investor base is not nearly enough to fund operations into the marketplace.  Often, if a significant amount of shares is issued, a diluted share ownership exists—not an attractive situation for future investors. The negative situation is that early investors do not have deep pockets—needed to bring product to market.  Thus, the “old investors” become a drag on the company if too many shares are sold.  A market CAP value, divided by an unusual high amount of outstanding shares spells trouble for institutional “new money” to move forward. For many firms, the stock flat-lines for months, perhaps even years, at a time as a result.

If promising developments that require significant funds to materialize are in the pipeline, the company may begin to court big institutional investors to fund such developments and not pay too much attention to existing investor sell-offs. They attempt to raise their “radar factor” with investment funds, movers and shakers via marketing and PR efforts.  If they are lucky, some early investors hold significant positions of stocks and can function as market makers, albeit not a publicly disclosed effort.

Since investors, initial (old) and institutional (new) are essentially after the same thing– extraordinary investment gains, the attraction is still viable. The view is that an investment and profit in a biotech company is not impossible or doomed.

Is there a winnable game or strategy for profiting in biotechs?

For long term investors, patience is the practice.  If your an early-in investor and you truly believe in the company, management, R&D efforts, science etc. and are comfortable with the market cap and number of shares issued to date, you patiently sit through the swings, but most importantly, you have patience during the flat-line period.  Your trust in the company’s management team sustains you during this long period and perhaps a joint venture, acquisition, or payoff comes with a riveting shot of the company’s stock upon success.

For those without the time or funds for the patience plan, trying to capitalize on the run-up to an FDA approval is one alternative plan. Investors purchase stocks, closely monitor the news and developments of the firm and wait for the run up of the stock associated with a major Intellectual Property – patent, or FDA trial announcement or rejection.  A “biorun up” strategy calls for the investor to capitalize on the run up itself, selling right before the announcement.  Why sell then?  If a run up exists, the profit is already established for the investor and the strategy avoids the possible stock price drop (the run down) if the results are not positive and bad news follows.  Essentially the investor is buying the anticipation factor of the company development, not the actual results or value of their product or scientific development. Pre-FDA approval is sometimes predictable if you have the time to monitor for it.  This investment can also be for bio-med clinical trial periods.  A run up often exists between the long period (months) of when a clinical trial is announced and when it actually occurs. Anticipated positive results generally causes a run up. Buying at the announcement stage, and selling during the trial period, can be a profitable situation for an investor.

Still another approach for an investor is to not invest until the R&D firm receives bad news from a clinical trial, typically sending the stock plummeting.  Investors need much confidence and a greater in the company to use this type of strategy. When the price falls investors purchase shares cheap and wait until another run up opportunity presents itself, with that particular trial or another of the company’s.  Again, a strong belief and confidence is needed – in the company, its management, and its science.

Some firms that have drugs or therapies in the pipeline include; Spectrum Pharmaceuticals   (NasdaqGS: SPPI ) Fusilev, already approved for a treatment for a rare form of colon cancer has an upcoming decision date in late April of this year. This is the second review for Fusilev in colon cancer, a good sign for subsequent approval. Spectrum’s 52wk Range is 3.67 – 7.25 (current trading at $6.76 on volume of 541,247) and its market cap is roughly 341M.

Human Genome Sciences Inc. (NasdaqGS: HGSI ) Benlysta for lupus would be the first new drug for Lupus in nearly 50 years, a significant milestone. Human Genome Sciences will partner with GlaxoSmithKline (NYSE: GSK ) for co-marketing, again a positive factor for sales growth. With a 52 week range of 20.56–$34.49, the last trade was at $25.74, on the lower end of that range. A market cap of nearly 5 Billion may leave room for growth and position Human Genome as a significant player in treatment for Lupus, a tricky, often under reported autoimmune disease.

Bristol-Myers Squibb (NYSE: BMY ) is seeking approval for Yervoy (ipilimumab) for melanoma. Bristol-Myers Squibb’s 52wk Range is 22.24 – 28.00 and is currently hovering around $26.00. It’s market cap is nearly $45B. “Ipi,” the investor street name for the drug, is designed to treat lung cancer and melanoma. The FDA “second-line” review, is expected March 26. It could be a good time to reign in while on the sidelines waiting for what could be a significant approval for the firm.

Note:   This report is also published on www.seekingalpha.com

First some clarity about the best health care in the world – and it’s not here.  In 2000 the World Health Organization ranked U.S. health care 37^th in the world (behind Chile, Morocco, and significantly behind Singapore).  Although WHO no longer tries to rank the health care systems globally, there is plenty of data about actual health status (much easier to measure) among citizens of the world.  In 2010, out of 153 countries rated, Americans were the 19^th most obese in the world.  Who says we can’t compete internationally? Out of 223 countries rated, Americans ranked 29^th highest in rates of diabetes.   And yet, the U.S. spends the highest percentage of its GDP on health care of any nation in the world.  But understand, we are free to choose our super sized meals, two liter bottles of soda and prepackaged lunches – that is the beauty of choice!  And for that matter we are also free to choose to light up  – well, at least some things – no matter that lung cancer kills more Americans than nearly all other forms of cancer combined.  Freedom baby!

Of course, if you exercise that freedom then we hold that you are solely responsible for the results – heart disease, diabetes, obesity, lung cancer.  You are also for the accompanying costs to society for your medical care – especially if you have chosen to not be able to afford health insurance.

Let’s look at three sources of irony in this system of individual freedom and responsibility as they relate to health:  high fructose corn syrup (coming soon to you re-dressed as ‘corn sugar’, but with the same toxic personality), fast food and couch potatoes.

Parents have the freedom and responsibility to choose for their children and themselves a wide variety of foods.  High fructose corn syrup is in just about everything today – not just the baked goods and sodas that you might expect, but innumerable commercial food from cereals and lunch “kits” to ketchup, to half of what you order at “family style” restaurants.  Why? It’s super sweet, and thanks to government subsidies, it is super cheap.  Is there any societal or governmental responsibility to have school systems that teach about this type of “nutrition”?  About how to read labels in a meaningful way?  Explore real world examples of processed food content?  What about getting really crazy and teaching critical analysis of food commercials?  This is hard to do in a system that has fast food chains sponsoring school lunch menus or given a place in the cafeteria, or where the food “choices” are processed, prepackaged and shipped nationally.   [As for the sodas, “sports” drinks, and “juice” punch targeting the young ones and their parents – the impact of this is not only weight gain, but higher cavity rates as well – already five times more common in children than asthma.  And in rural areas there is a widely recognized, severe shortage of dentists.]

But let us get back to fast food in general.  Obviously any “good” parent knows to limit the amount of fast food that their children get – regardless of how overscheduled their children’s week may be, or how late they have to work.  Is there any concordant obligation (of anyone -  schools, press, legislators?) to ensure a community has access to healthy food (never mind affordable, healthy food)?  City development grants, tax incentives and creative leveraging can promote building of grocery stores in urban environments that are otherwise “food deserts”.  But cautious politicians need public support, feedback that this is of value.  Unfortunately, the most vulnerable urban environments include disenfranchised citizens the least likely to vote or have political connections.  Which means that other folks would have to care about this issue also, in order for there to be a push for change.  One of the most successful moves (if embarrassing for the FDA) at a national scale however, supported by tax payer dollars, was support of a private chain’s effort to make bad pizza better (and worse) by tripling the amount of cheese on top.  Sales are up and stomachs are bigger.

But surely exercise is an area that we can all agree is no one’s responsibility but each individual’s!  So is there any responsibility for cities to ensure neighborhoods have safe lighting, sidewalks and low street crime to allow for walking, running and cycling?  Public pools or parks?  Do school systems (and the bodies that legislate their funding and priorities) have any obligation to ensure schools maintain physical education programs?  These have been cut mercilessly across school districts in response to the academic demands of No Child Left Behind.  Is there an outcry for suburban models that allow for children to easily walk or bicycle the short distance to school rather than bus a labyrinth of cul-de-sacs?

Should we blame corporate America for any of these systemic challenges to our health? Builders or food manufacturers or producers?   They are doing exactly what they are supposed to be doing to please their shareholders – and remember these shareholders are a combination of institutional , and private investors like you and me: working hard to keep costs down, demand and profits up.

If each of our individual freedom of choice and responsibilities have to contend with these challenges solo – without an education system or a critical press or a legislative body encouraging a broader societal sense of obligation – well, we still have 18 countries to beat to get to be the heaviest in the world!

What does that Janis Joplin song say?  Freedom’s just another word for …  another pound to lose?

Through it all we have witnessed again the unflappable Barrack Obama. Not even Republican public comments promising to dismantle his prize legislation on national health care has provided a glimpse of his frustration.  Perhaps he is smoking more in private, behind closed doors, as opposed to releasing tension in the public light. Perhaps the intensity of the basketball games has heightened.

Some Americans, myself included, like this about our president. Others understandably do not. We typically don’t like a loose cannon – especially regarding foreign affairs.  We don’t like a leader ranting and raving, or threatening another country or leader publicly. We like to see cool, calm, diplomatic and very intelligent efforts towards problem solving that does not blow up in our face like IEDs in Iraq. We want to see a strength and toughness, but a controlled and intelligent and classy one at that.

But, domestically, we want a tough president too.  Right now, that message of toughness is not getting out.  Obama’s recent losses on domestic fronts, combined with his unemotional cool demeanor, is leaving the American public (Democrats included) in a state not unlike that of treading water. Perhaps it is America’s obsession with everything too big, loud, and abundant, that is showing its face, but the public wants more from our president:  more emotion, perhaps a bit of public anger, a glimpse of “let’s take this outside.”

Considering the very public statements of Republican leaders towards dismantling the health care bill, President Obama should be enraged. He campaigned hard on this issue, fought like mad to get it into law, and then its implementation has been quite silent. Now the entire accomplishment may be on its death bed.  Where is a bit of anger or a tough stance on this?  Yes, we may want to hear “….over my dead body” will you repeal the health care legislation.

Now consider the deficit. For the past 18 months, the deficit was not on the short list of public discussion. Bank bailouts, the anemic economy, and unemployment were front and center.  Enter the Republican strategy for staging a big political comeback:  let’s table the deficit and blame the Obama administration for it.  The Republicans have successfully changed the game on this to such an extent that the president now has to consider slashing programs and costs to appease all.  They are now considering tax cuts as well. This does not solve unemployment, or raise the GDP growth rate, or strengthen the country. We need to hear a forceful statement or two that Obama’s long-term plan is on track and that he inherited the disaster of an economy from the past administration.   A forceful “I inherited this mess from you know who, I’m working it out and making progress, and by the way – I don’t appreciate Republicans efforts to characterize me or my administration in a derogatory and blaming way. This is the result of eight years of idiotic mismanagement. I’ve been here two years and am dealing with two wars, a financial crisis, and a very sick economy in recession.”

Yes, I am mad as hell and I’m not going to take it anymore.  Pound the table if you have to Barack, raise your voice indeed.  Cool is cool, calm is attractive, but a flow of energy up from the gut every now and then may get your groove – and the country’s – back.  You have the biggest bully pulpit in the world at your disposal, Republican controlled House or not. Where is the Barack Obama charisma we elected?

You’re the chief scientific officer at Advance Cell Technology (ACT), which is, by industry standards, a small research and development firm.  Why have you decided to conduct your research there?

DR ROBERT LANZA:  I’ve been at ACT for a decade.  I had many decades of experience doing transplant medicine, and the problem in the past has always been the same:  rejection, rejection, rejection.  So I started out in my early days in medical school doing heart transplants, actually with Christian Barnard in Cape Town South Africa and we had to use these heavy immunosuppressant drugs.  At that time there was a new drug called cyclosporin and everyone said ‘ah, in the next coming years we’re going to have new drugs with no side effects, that have immune tolerance.  We’re going to have universal cells’.  Well, here we are several decades later, and the drugs of choice are still the same drugs.  So along the way, I was at UCLA trying other strategies to prevent immune rejection. The two main hurdles of regenerative medicine or transplant medicine have been – one) a serious shortage of cells and tissues, and two) the problem of immune-rejection.  Then, while I was at a company about ten or fifteen years ago that was trying to solve that problem, along comes Dolly the sheep and cloning.  And at that point, I realized this is a strategy.  If we could do the equivalent of somatic cell nuclear transfer, then not only could we create an unlimited number of cells, and through tissue engineering reconstitute them into more complex tissues and structures, but we could make them patient specific.  So that way you not only solve the problem of limited numbers of cells and tissues, but also the problem of immune rejection.  And it turns out that the only other major cloning company was literally right up the street.  It was Advanced Cell Technology, and Michael West had just recently come on board as the president, and at the time they had not yet discovered the embryonic stem cell, but I knew that this was the way to go. So I went up and I spoke with Michael West.  At that time ACT was an agricultural company, it was a subsidiary of Avian farms which was a chicken/poultry genetics company. They were in the process of cloning cattle; it was purely agricultural.  So, given my medical degree, we talked and decided that if I came on board we could take this in the direction of medicine.  Of course we knew that this was very controversial – not only nuclear transfer or cloning, but also embryonic stem cell research.

Harold Varmus was the head of the NIH, and I was tasked to get all the Nobel laureates’ signatures supporting embryonic stem cell research, which I did.  I don’t know the exact number, but it was 60-70 Nobel laureates signed the letter.  So then they hired me.  And then we moved, slowly, in the direction of human therapy and eventually, we split off the agricultural branch and are now exclusively working on human therapies.

Your research at ACT has led to a patent being awarded for treating certain degenerative disorders of the retina?

DR ROBERT LANZA:  Yes – I believe we have several patents, at least two that were just recently awarded.

And for Stargardt’s disease and macular degeneration, my understanding is that these diseases affect about 30-40 million people world wide?

DR ROBERT LANZA:  Yes, age-related macular degeneration alone affects about 30 million people world-wide.  Stargardt’s, which has orphan status with the FDA, is a much smaller group.  It actually affects one out of every 8-10,000 patients, so about 30,000 Americans have it.  But it is one of the leading causes of juvenile diabetes in the world, and it is a terrifying, a horrific disease.  It affects children as young as six years of age, and when they’re teenagers they are often blind.  So we obviously filed our first IND to treat Stargardt’s and hopefully in the coming weeks we’ll be filing one to also treat macular degeneration.  But of course there are many dozens of retinal degenerative diseases, for instance retinitis pigmentosa which Steve Winn, for instance, has.  Most of these diseases have one thing in common, which is that the retinal pigment epithelial (RPE) layer degenerates.  And when that degenerates, you lose your cones and rods, which are the photoreceptors we see with.  So the hope is, that by putting in new RPE, we can prevent that from occurring.

And there are no known treatments for these types of diseases?

DR ROBERT LANZA:  Well, there are some treatments.  [But] there is currently no treatment for Stargardt’s.  We are hoping that this cell approach has a number of advantages.  We are certainly seeing some amazing results in animals, and we are hopeful that this will translate into the clinic.

This will be the first treatment from stem cell research though?

DR ROBERT LANZA:  This would be the first using embryonic stem cell-derived replacement cells.  There’s only been one other FDA approval, and that is Geron for spinal injury.  This would be the second.  So we would be the first in the world to be treating eye disease using cells derived from human embryonic stem cells.

And the FDA approval is, would you say, imminent for human testing?  Is it right around the corner?

(Note:  Citing nondisclosure reasons, Dr Lanza could not discuss this specifically.  The approval by the FDA was made Monday Nov 22, 2010.)

So how will these therapies affect people who currently have these diseases?  Are we talking about improvement of eyesight?  Are we talking about perfect eyesight?

DR ROBERT LANZA:  There are two ways of looking at this – the main goal is that we replace the RPE so that we prevent further progression of the disease, and so obviously in the early patients, the patients who have advanced disease – [the goal] is to show they are safe and tolerated well.  And of course, at any stage in this disease, these are progressive diseases, not only have you already lost photoreceptors, there are obviously many cells that are not in very good shape, they’re not very happy – to put it in generic, broader terms.  So by putting in new healthy RPE we are hopefully going to improve the environment of photoreceptors, so that those photoreceptors that may not be in optimal shape can recover. And we may actually see an improvement in vision, just for that reason.  But eventually, if everything goes as hoped for, and as planned, we would move to younger patients with earlier disease so we could prevent onset of blindness all together.

Why did you choose this disease as a focus?

DR ROBERT LANZA:  Well, there are multiple reasons.  One is that in the early days of embryonic stem cells, these cells have minds of their own – you have cells that differentiate in a petri-dish that can become every type of cell in the body.   So the first hurdle, is [determining] how to get the cells to do what you want them to do.  How do you get them to turn into some cell that is of medical importance?  And it turns out that one of the defaults for cells is the neuroepidermal pathway, which includes the RPE.  So  spontaneously on their own, [they develop] these little freckles in the petri-dish that are pigmented.  So they’re very easy to spot, and we were able to identify those, then they were able to expand as they normally would if they were damaged.   In other words, they go through a differentiation, dedifferentiation phase.  So once you have these retinal cells, [and] scrape them, they will dedifferentiate and fill the void, expand to confluence – and then reestablish their pigmented cobblestone morphology.  And they can go through this cycle over and over and over so that you can generate very large numbers of cells.  So that was the first hurdle – to have a population that grows robustly, that you can generate in very high numbers and in pure form, because to go into patients, you need to get these with high purity.

The second [hurdle] is that once you have these cells, there is a major medical need.  There are more than 30 million people with macular degeneration, it is billions and billions in dollars of cost to the economy.  And the other thing here is, is that they eye is privileged, so until we are able to produce patient-specific (cells) which is very, very labor intensive, going into an immune privileged site means that you have an attenuated response to the tissue, so that you can create a master bank that, hopefully, can be used for everybody.  So there are a couple of these immune privileged sites that are the main sites – one is the brain, the central nervous system and the other is the eye.  We have that advantage as well as a very small number of cells going into a very local area.  So we’re putting these into an area, we know where they are, and we know they’ll stay there, and, equally as important, we have instruments that enable us to look into the eye and actually see the retinal cells.  So we can actually monitor, in real time, what’s going on in these patients.  If there is any infiltrate or any adverse affects, we would hopefully be able to see it directly.  So there are many, many advantages, and like I said, we have been fortunate that this potential therapy is ideal in all of those respects.  And also, importantly too, when we tested it in animals, we saw very significant improvement.  We saw, for instance, in the Royal College of Rats study (the RCS rat), at 100 days, these rats were essentially blind, and the ones that were treated with the RPE cells – which again are the same human cells we would be using in patients – we saw that in the one layer that was left, in the treated animals there was a very robust 5-7  layers thick in the photo receptors.  If we saw this kind of photoreceptor rescue in patients we would have a home run.  We also were able to do a number of tests, [including] a visual acuity test – we were able to show there was a 100% improvement over the controls in their visual acuity.  We studied the Stargardt’s mouse model over the first 60 days and saw that in the untreated animals they started to develop Stargardt’s, and lost some of their visual acuity while those that received the transplanted cells continued to have normal vision.  So we’re seeing very significant results in these various animal models.

What was the time frame, would you say, in which you were working on this particular therapy?

DR ROBERT LANZA:  To give you a sense of some ideas of the time frame, we published our original paper showing that we could, for the very first time, create RPE cells from human embryonic stem cells back in 2004, and then we followed up with a couple of papers in 2006 and after, showing that we could actually impact the disease process, so those were functional studies.  So it’s been many years in the works here.  A lot of companies didn’t make it, but fortunately thanks to an incredible team, we hung in there, and now here we are, with approval.

I want to talk for a moment about the blastomere technique.  My understanding is that this is technology that isolates the human embryonic stem cells and doesn’t require destruction of the embryo – in effect, these are embryo-safe stem cells.   Considering the political and court controversies banning stem cell funding – this doesn’t affect you or ACT, correct?

DR ROBERT LANZA:  Well the single cell blastomere obviously allows us to remove a single cell to create a line, without destroying the embryo, and we’ve published on that.  How this all settles out in the courts, I really couldn’t speak to. The reason we initiated that research is that there were many objections – even president Bush had said in his state of the union address that he was against destroying one life to save another.  And what we do is a technique that is routinely done in IVF clinics, [which] is simply to remove a single cell to test before they implant the embryo, [for] a couple that wants to have children.  We’ve been able to replicate that, and indeed we were able to publish showing that we can create stem cell lines without destroying the embryo, so in theory this should solve the problem.  But with politics, it’s hard to know how all of this is going to be interpreted, but in theory, this does not obviously harm the embryo.

Your results have been reproduced, peer reviewed several times. Yes?

DR ROBERT LANZA:  Yes, there is a group from UCLA that put out a paper not long ago showing that they had derived a number of lines of cells from the single blastomere technology, yes.

And independent reviews are determining the same results?

DR ROBERT LANZA:  Yes, they actually did that work without our knowledge.  We worked with them early on, on an earlier paper, but this follow-up paper that just came out not too long ago, and they were able to derive multiple lines independently, yes.

Is the climate in the US more difficult than in other countries and regions, such as maybe Europe, for getting FDA-type approval – for human clinical testing?

DR ROBERT LANZA:  I think there is the complete spectrum.  There are countries that are more restrictive and countries that are more permissive.  They run the whole gamut. I think there are a number of countries that aren’t caught up in abortion politics.  So there are definitely countries where they are less restrictive and countries where they are more restrictive.

Given the time frame you mentioned, it is a long time between when a therapy is developed until a tangible product or cure is perfected.  How do you keep your enthusiasm, your focus on the project when this can take years and sometimes positive results never materialize?

DR ROBERT LANZA:  That’s a good question.  And of course, this has taken years. We have a very excited, enthusiastic team of scientists, who truly believe in this, and this is what we’re here for.  We’re in the lab, we’re in the trenches, and we’ve seen what these cells can do.  And we’ve done research with some other cells that can cut the death rate after a heart attack in half.  So as we speak, there are folks in the hospital getting limbs amputated, and some time in the future people are going to say “can you believe once upon a time people used to have their limbs cut off?” And the doctor is simply give them a simple injection of these cells and restores blood flow to their limb.  So we see this – we are doing these experiments and we have the good fortune to know about them, and the rest of the world doesn’t have that first hand experience.  We have our team of very dedicated excited scientists, that are incredibly talented, and they want to make a difference, and that’s what this is all about.

Move ahead ten, maybe twenty years from now, political and governmental issues aside, where are we with cures for major diseases as a result of embryonic stem cell research?  Do you see a particular focus?

DR ROBERT LANZA:  I think we are making enormous strides.  We’re moving far more rapidly than even I thought possible, and I’ve always been accused of being an optimist.  Clearly, we already know how to reengineer cells to make the equivalent of embryonic stem cells.  So I don’t think it will be at all unreasonable to think that we would be able to replace virtually any worn out or damaged tissue in the body.  With these stem cells we can create a virtually unlimited supply of these cells.  And with the reprogramming technology and/or banking of cells, we should be in a position to solve the issue of rejection.  So when you combine that with the area known as tissue reengineering, we can reconstitute the cells into more complex tissues and structures, and eventually create entire organs, such as an entire heart or kidney or liver. I think some day, in two decades certainly, [if] you get into a car accident and lose a kidney, you’ll go into the doctor, they’ll scrape some skin cells and grow you up a new kidney. I don’t think this is science fiction, I think this is happening at a very rapid pace. I published a paper with Anthony Atala’s group a few years back, where we actually created miniature kidneys from clone cells that worked in cows, and removed toxic materials from the blood.  His group for instance has tissue engineered entire organs, entire bladders, that have gone into patients, now for many years.  So – this is going to revolutionize medicine.

Do you see the direction heading towards treating diseases which are already underway or do you see the direction going towards prevention of diseases?

DR ROBERT LANZA:  I think there are applications for all those scenarios.  Certainly, we’re talking about our RPE cells as preventative, and we know for a fact that we can create all of these various replacement cell types to replace damaged organs and tissues.  So I think you’re not going to have just one application.  There are literally hundreds and hundreds of diseases that the stem cell technology has applications for – some of them will be preventative, some will be to repair these damaged tissues, and others will be to actually incite and repair tissues.  These are smart cells, they know what to do.  So that the same thing would apply to, there is data that these kinds of cells could also prevent damaged heart tissue. The goal is that, there are over 80 autoimmune disorders in humans, [such as] lupus, MS, rheumatoid arthritis, Crohn’s disease, the list goes on and on.  So, using that strategy, the hope is that we could treat many of these diseases. a very, very long list of things that, soon, this technology could be applied to.

What’s next in the pipeline from ACT that the public or investors, would want to know about – that you are allowed to tell me about?

DR ROBERT LANZA:  Well, the only one I can tell you in this time frame right now is that we are [submitting] a new Investigational New Drug Application (IND) to go beyond Stargardt’s to treat age related macular degeneration which of course affects millions – so that will be filed in the coming weeks. There are obviously quite a few other things in the pipeline that I really can’t discuss.

I understand.

DR ROBERT LANZA:  I can tell you we are doing work with our joint venture so that we are able to generate entire tubes of red blood cells from scratch, and we’ve been able to now create platelets that are actually functional in animals, so there are a lot of exciting things like that which are underway.

Is ACT is going to be able to partner with other firms for further research and maybe pharma firms  for development of new technology and distribution of drugs?

DR ROBERT LANZA:  Absolutely – of course, we’re a small company.  We can’t develop all of the potential applications.  So clearly we have certain in-house expertise, but there are many, many applications that we would want to work with groups that already have established technologies to move that forward.  In general we carry out collaborations, we work with teams who have been in this area for decades.  We join forces, we furnish what we have expertise in and they contribute their expertise, so that we can move ahead very quickly and efficiently.  Of course, as we hopefully will succeed with our clinical trials and move into phase three intervention, and hopefully phase four – manufacturing and very, very large numbers of patients – obviously that is not our area of expertise, so we’d be partnering with other groups and companies.

Dr. Lanza, thank you very much for your time and contributions.

DR ROBERT LANZA:  Thank you

Books by Dr. Robert Lanza

Facts about Dr. Robert Lanza

Dr. Robert Lanza on The Huffington Post

Dr. Robert Lanza, Chief Scientific Officer at Advanced Cell Technology