Biotech and the Unintended Consequences of Moore’s Law

Biotech and the Unintended Consequences of Moore’s Law

By Pat Cox, Editor
Breakthrough Technology Alert

Transistor density doubles roughly every two years, as Moore’s law attests. Information technology therefore advances exponentially. You don’t even have to know what a transistor is to feel the impact of this extraordinary phenomenon. Mobile computing is an example. From new phone features and tablets to the bandwidth that connects them to the cloud, the innovation is dizzying.

Elsewhere, however, even greater advances are being enabled by exponential improvements in processor power. I’m referring to biotechnology but not just high-tech medical gadgets, though they do exist.

Echo Therapeutics is a great example, with a device on track for approval that will replace hypodermic needles in many medical applications. Smaller than an electric toothbrush, the transdermal skin permeation device utilizes integrated circuits and sensors to painlessly remove the top dead layer of skin using microdermabrasion. With direct access to the epidermis, drugs can be infused with absolutely no discomfort. Analytes such as glucose, lactic acid or drug levels can be measured and transmitted to anybody with a cell phone or mobile device.

Echo Therapeutics’ first customers will be hospital staff who will use the technology to quickly anesthetize needle sites in preparation for transfusion or blood extraction. Cosmetic surgeons, however, want this technology to quickly prepare patients for dermal filler and Botox procedures.

Combined with a dollar-sized sensing wafer that attaches to the skin, the technology can be used to provide continual needle-free glucose and other analyte monitoring. Real-time readings can be sent wirelessly to a medical display or phones belonging to doctors, nurses, parents or the users themselves. While this continual needle-free technology will make outpatients’ lives more pleasant and healthier, the biggest impact is likely to be on both the cost and quality of hospital care.

Continual glucose monitoring would cut hospital costs by freeing several hours of the average nurse’s day from tedious manual blood sugar testing. More importantly, studies indicate that close observation and control of glucose levels in hospitals improves every indicator, from costs, length of stay and mortality, by about a third. Given the serious need to manage health care expenditures, this cost-saving manifestation of Moore’s law will have a dramatic beneficial impact on health care.

Moore’s law is yielding far greater benefits in regenerative or stem cell medicine, the only technology capable of directly addressing age-related degenerative disease. Breathtaking advances are taking place daily in stem cell science thanks to advances in bioinformatics, the application of statistics and mathematics to cellular biology via information processing.

Ironically, however, almost no one knows about this accelerating revolution. Many, in fact, deny it. For that reason, I’m providing an update of the two stem cell companies I consider most important.

Outside of the biotech community, advances are consistently underestimated. Many factors contribute to this lack of public understanding. To begin with, the details of biotech are simply intimidating to most people. The basics of computing, by contrast, are actually quite simple. With a little effort, nearly anybody can grasp those basics. Since the first integrated circuits were created in the 1950s, most progress in computing has come from engineering smaller, faster components.

The complexity of the biological sciences, on the other hand, dwarfs computer science. This isn’t surprising. There are more switches in one human brain than all the computers in the world. The cells in only one person’s body contain more information, encoded in DNA, than all the information accessed by Google – by many orders of magnitude. No single scientist today is capable of staying current in the many esoteric areas of the biological sciences.

This complexity, however, contributes to a huge gap between the public’s understanding of biotech and the actual state of the science. There are other factors at work as well. Foremost are two enormous labyrinthine agencies, the FDA and the SEC. Both of these regulatory bodies monitor and restrict what biotech firms can tell the public. These limitations may be benign in intent but they impede the flow of information.

Typically, the public hears about new biotechnologies only when they achieve regulatory approval and come to market. Winning approval for a drug or device, however, is an enormously expensive and drawn out process.

As a result, most biotech products coming to market today are five to ten years old. Some are much older. If personal computing had to jump the same kind of preclinical and clinical hurdles as biotech companies, we would still be using computers the size of suitcases with cathode ray tube monitors. The latest phones would do little more than provide intermittent voice communication.

Information about new biotechnologies is further limited by researchers themselves. Those working on emerging technologies may not want to attract competitors by trumpeting accomplishments.

Even when private sector and academic researchers want to get word out about a new technology, they often cannot find journalists capable of understanding and telling their stories. Financial distress in the publishing business has exacerbated this problem.

The bottom line is that widely-held opinions about biotech are often very wrong. These misconceptions, in turn, often have serious consequences. I’ll give you several examples involving the two stem cell companies I referred to before, BioTime, Inc. and International Stem Cell Corporation as well as a nanomedicine firm, NanoViricides, Inc.

The Case of the Missing Parthenogenetic Stem Cells

When discussing stem cells, most commentators talk about three stem cell types. The first is adult stem cells, which have proven disappointing to researchers. Their potential to become different cell types is limited and they are as old as the donor. The other two stem cell types commonly discussed are both pluripotent stem cells, meaning they do not age and are capable of becoming any cell type. These are embryonic stem cells (heSCs) and induced pluripotent stem cells (iPSCs). There is, in fact, an extremely important third form of pluripotent stem cell.

These are human parthenogenetic stem cells (hpSCs). International Stem Cell Corporation, usually referred to by its acronym ISCO, pretty much has this stem cell type to themselves because they developed the technique for creating parthenogenetic stem cell lines and own the intellectual property governing those processes. This is a very good position to be in because hpSCs have distinct advantages in many medical procedures.

Parthenogenetic stem cells are derived from unfertilized human oocytes (eggs). This negates the concerns of those who believe that the use of embryonic stem cells is unethical. There is no shortage of oocytes because they are collected and discarded routinely in normal fertilization procedures.

Among the leading scientists who have studied and validated the therapeutic potential of hpSCs is George Daley, MD, PhD. Daley is Professor of Biological Chemistry and Molecular Pharmacology at Harvard and Director of the Stem Cell Transplantation Program at Children’s Hospital Boston.

His journal article, “Histocompatible Embryonic Stem Cells by Parthenogenesis,” describes another reason researchers are interested in hpSCs. Histocompatability refers to ability to avoid immune rejection. Immune rejection is, in fact, the biggest obstacle in regenerative medicine. It is also why embryonic stems are unlikely to be useful in all but a few therapeutic applications. A transplanted eSC is, after all, foreign to the recipient and, in many instances, would be rejected.

HpSCs, however, come from parthenotes, cells of the ovum that have shed half their DNA in preparation for fertilization. With only half the HLA matching points, they are orders of magnitude easier to immune match than heSCs. Daley himself has speculated that as few as ten hpSC lines could immune match most of the population.

Even high estimates are that 50 hpSC lines will provide rejection-free stem cell therapies for the vast majority of humans. This will dramatically lower the cost of certain types of critical stem cell therapies. In animal studies, hpSCs have already demonstrated the ability to “engraft” with their transplant host. This means they were not rejected and became part of the living animal.

ISCO has advanced programs in several areas, notably various tissues of the eyes. These eye tissues, by the way, are also suitable for chemical sensitivity tests. ISCO is now working to replace the unpopular and expensive Draize testing procedure with its hpSC corneal spheres. These beautiful little globes react to irritants as human eyes do, but do not experience pain.

Draize testing, as you may know, requires the application of potentially irritating substances into the eyes of rabbits and other animals. No one, including the companies required to perform Draize tests, like the procedure. I expect the ISCO product to be an international blockbuster.

Recently, International Stem Cell Corporation announced, in conjunction with ViaCyte (formerly Novocell) the successful derivation from hpSCs of enriched cultures of definitive endoderm (DE). DE can be further developed into pancreas or liver cells to treat or cure liver disease and diabetes.

Banks of hpSC cells, capable of restoring liver and pancreas function with simple injections, will be created. A patient’s cells would be analyzed using a simple test to find the matching hpSC line, much as we test for blood types. That line’s cells, potentiated to become functioning livers or islets of Langerhans, would be ordered online and delivered to a clinic for the therapy. Even severe diabetes and liver disease could be cured with off-the-shelf hpSCs.

Last month, by the way, ISCO enrolled the first U.S.-based donor in its program to establish a bank of clinical-grade hpSCs. Internationally, clinics are coming on line to provide donor oocytes so that ISCO can develop stem cell therapies for all ethnicities. The pace of this progress continues to accelerate, driven by increasingly sophisticated scientific tools – supplied via Moore’s law.

Let me return then to the subject of public ignorance of science. Specifically, I would like to highlight this ignorance regarding parthenogenetic stem cells at the highest levels – the committee that wrote the president’s stem cell funding policy change.

I’m sure you remember during the campaign when President Obama promised to rescind limits on stem cell research. In fact, the NIH specifically emphasized restrictions on hpSC research while lifting restrictions on less promising embryonic SC research. An uninformed media missed the story almost completely. Only a few scientific publications noted and criticized the bizarre policy move. http://stemcells.nih.gov/policy/2009guidelines.htm

Ken Aldrich, the biotech entrepreneur who co-founded International Stem Cell Corporation, characterized the ruling as, “a scientific tragedy,” Also, he said, “It is important to note that the oocytes from which hpSCs are derived are obtained via procedures approved by hospital review boards and ethics committees. All donors voluntarily consent to the use of their eggs after very complete disclosure of how they will be used. Nor do we ever use a fertilized egg, so there is never an ethical risk that a human life might be destroyed.”

The hpSC funding restrictions are not, incidentally, stopping ISCO. They are, however, moving many of its programs offshore to more scientifically hospitable countries. Scientists and a leading ophthalmological company in India, for example, have embarked with ISCO to commercialize hpSC retinal and corneal tissue products internationally. While I’m pleased for ISCO and bear no grudge to Indian scientists, American scientists could use those high-paying scientific jobs. American universities could use the income that comes from collaborations with biotech firms.

[John here – this tragedy is quite common in my research. Our regulatory rules are way behind the technology. Guys like Mike West (below) and ISCO simply are not going to wait around. The US is losing the very jobs that are in fact the best and newest tech. So sad. And angering.]

ISCO appears to be on track to becoming the first profitable stem cell company, largely because of its subsidiaries Lifeline Cell Technology and Lifeline Skin Care. Lifeline’s key players were part of the core team of skin cell scientists that built the leading skin cell product supplier, Clonetics. Clonetics’ early breakthroughs in the growth of skin cells for burn victims led the way for technologies now used to grow stem cells.

Lifeline has played a key role in another product that is doing increasingly well for ISCO – Lifeline Skin Care. This product was discovered originally when researchers applied leftover growth medium, containing messaging molecules expressed by hpSC skin cells, to their own faces. They noticed that the appearance of their skin improved, ISCO’s therapeutic scientists got involved, and one thing led to another. My wife tried an early version with amazing results. The result is that a “cosmeceutical” skin cream product called Lifeline Skin Care is now sold. Extracts of human parthenogenetic stem cells are encapsulated into nano-spheres to preserve their potency and enhance bio-delivery to the user.

Full disclosure: I’m proud to have played a minor role in convincing ISCO to market the product. I also helped establish an independent company, helmed by our host John Mauldin, to market and sell that product. Revenues are assisting ISCO research in far more important areas, including hpSC liver and retinal cells. If trends continue, ISCO will be cash-flow positive in the near future.

My involvement helping launch the company that markets ISCO skin care products eventually led to the decision to stop covering ISCO in my official capacity at Agora Financial. Out of concern that it would be seen as a conflict of interest, I no longer write about the company for my subscribers. I’m writing today about the state of regenerative medicine, however. Unlike most of the media, which is ignoring this important technology, I believe it’s impossible to describe stem cell science without including hpSC science.

If you are interested in learning more about the skin care product (and you probably should be if you are of a “certain age” and like to keep appearances up, so to speak), you can go to www.lifelineskincare.com/antiagingbreakthrough to learn about the products that these scientists in pursuit of curing diseases discovered to rejuvenate your skin) or directly to the website at www.lifelinskincare.com to learn more about the science. Use product code “life4” to get a discount.

[John here: let me echo my enthusiasm for Lifeline Skin Care. We have had so many excellent responses and feedback from people who have used it!]

Induced Pluripotent Stem Cells and Moore’s Law

The other type of pluripotent stem cells that I mentioned above is iPS or induced pluripotent stem cells. When discussing iPS cells, you have to talk about Dr. Michael West, widely regarded as the father of regenerative medicine.

West founded Geron but moved on when the company focused on spinal cord injuries. Intent on developing stem cell therapies for cardiovascular disease, which he saw as both easier and more important, he turned Advanced Cell Technology into a major stem cell company. He did not, however, manage the company following its IPO. Once again, differences regarding company goals led him eventually to move on to continue pursuing cardiovascular regeneration.

After buying rights to important IP he created at Advanced Cell Technology, he turned blood products company BioTime Inc. into the leader in iPS cell technology. Already, BioTime has a quiver of accomplishments, including the first stem cell company agreement with big pharma, Israel’s Teva. He acquired the world’s first bank of clinical grade human embryonic stem cells created by the government of Singapore and has put in place dozens of collaborations in California with researchers funded by California’s $3 billion stem cell program.

Subsidiaries exist in Singapore, China and Israel with focuses on various fields, including orthopedics, cancer and ophthalmology. A particular coup was the defection of Arnold Caplan, Ph.D., a founder of Osiris Therapeutics and BioMimetics Pharmaceuticals to West’s point-of-view on pluripotent stem cells. Widely considered the father of adult stem cell medicine, Caplan is now the chief scientific officer of subsidiary OrthoCyte Corporation.

OrthoCyte’s first product to market will probably be a device for reconstructive surgery, HyStem-Rx. This is an implantable cell matrix technology in which stem cells engraft to form 3-dimensional tissues. The company is going for Europe’s CE Mark for medical devices, which can be attained in far less time than FDA approval.

By far the most interesting of BioTime’s subsidiaries, however, is ReCyte Therapeutics. The current culmination of West’s career, ReCyte is located in BioTime’s northern California headquarters so West can be personally involved developing iPS therapy for large-scale cardiovascular and immune system regeneration.

The company’s clearly stated mission statement is to “reverse the developmental aging of human cells” for “age-related cardiovascular and blood disorders.” This market approaches $1 trillion world-wide as it is the leading cause of death in most industrialized countries. It is amazing that with all the interest regenerative medicine has attracted in the medical community that the disproportionate size of this application wasn’t more appreciated by BioTime’s competition.

No one suffers more from the lack of accurate public knowledge than West. The best example of this knowledge gap is in the routine misreporting about the origins of iPS technology.

Professor Shinya Yamanaka is usually given credit for discovering that the introduction of certain genes into a cell will initiate a transformation of that cell into an iPS cell. While Yamanaka’s work demonstrating this effect is certainly important, West applied for a patent on the process before Yamanaka. He did so in August 2005 while he was chief scientist at ACT and has bought rights to the technology since moving to BioTime.

I’ve asked West why he has never challenged accounts of the iPS discovery but he’s expressed only an interest in maintaining rights to perform the process for therapeutic processes. There are several aspects to West’s discovery of the iPS transformation process that we need to understand, however. The first is that his understanding came about not through the exhaustive experimentation that Yamanaka and his team performed. Rather, it was a realization based on his profound understanding of human cells.

More importantly, West explained to me several years ago that the Yamanaka procedure, using viruses to deliver genes, is a medical nonstarter. Researchers using the technique have assumed that, once viruses have altered the host cell’s DNA, they would be inactive. This was a dubious assumption for several reasons that are now becoming clear to everyone. BioTime’s technology circumvents these problems and was designed to be utilized on an industrial scale.

West told me once, in fact, that it’s always been clear that genes produce RNA, which produce proteins so any of the three can be used to reprogram cells. Clear to him, I suppose. The important point is that he launched ReCyte to commercialize the process of creating endothelial precursor stem cells from a donor’s own iPS cells. Those endothelial precursors will reverse the telomere clock of cellular aging in the recipients cardiovascular and eventually immune system. This will not just prevent heart disease, it will extend your cardiac warranty by as much as a hundred years. For most people, who are more likely to die of heart disease than any other cause, this will translate into decades of additional healthy life.

If this seems startling to you, I’ll tell you again how it has come to pass. Think back to the year 2000. It doesn’t seem that long ago but in scientific terms, it is ancient history thanks to Moore’s law. West said recently that, thanks to exponentially increasing computer power, his research is now progressing 1,000 times faster than it did only ten or fifteen years ago.

I asked him to elucidate and he wrote in an e-mail, “One example is the power of Microarrays. Inspired by the miniaturization in electronic microchips (really amazing advance compared to the electronics I played with as a boy), researchers put thousands of DNA sequences on chips. Since the most important way human biology is regulated is at the level of gene expression, (i.e. A gene is on when it makes RNA) and this process of regulating gene expression controls all of development, aging, and disease like cancer.

“This microarray technology allows us to look at virtually every gene and read off whether it is on or off in every cell type in the body. With ACTCellerate, and using the chips we use at BioTime, it allows us to quickly do 47,329 different probes for expressed genes and determine conditions to turn say primitive cells that form the lower jaw into cartilage, bone, or the dentin of the tooth, or map out the complete profile of the cells of the developing brain. Just studying one gene would have taken a week 15 years ago.

“Now we can easily do a dozen experiments x 47,329 = >500,000 data points. This combined with computer programs that go though this data to capture important intellectual property for patent filings, means a flood of new patent claims pending for hundreds of diagnostics and therapeutics. Again, 15 years ago this could be done but >1,000 times slower and therefore at much greater cost. BioTime can therefore do all this with powerful computers and a small staff.

“Also, it is now possible to sequence the entire DNA for a few thousand dollars. Over 1,000 human genomes have already been sequenced. This will allow scientists to correlate these complete sequences with all the traits of disease and dramatically expand our understanding of the causes of disease. While not every disease has a genetic cause, many do, and at minimum, genetics plays some role in virtually every disease.

“This has led to a Niagara Falls of data. That is why people should not judge the future of medicine by the past. You haven’t seen anything yet.”

Unfortunately, many people are still stuck in the 20th Century. A few weeks ago, a UCSD study published in the journal Nature cast serious doubt on the usefulness of iPS cells created using the “Yamanaka technique.” Specifically, the study showed that some Yamanaka iPS cells do not “engraft.” That means simply that they were rejected by the host animals. An uninformed press, both scientific and financial, declared a virtual end to iPS science.

Worse, though BioTime has never relied on Yamanaka’s virus technology, the UCSD study was exploited by short attackers who have been trying to force down BioTime stock prices. BioTime is currently trading at about half of its recent highs.

Biotechs are a particularly attractive target for short attacks precisely because so few people actually understand the science behind them and it is an easy shot to point out their lack of revenues. Biotech companies are typically not valued on current revenues given the timelines of FDA approvals, but rather on the value of the technology and the demonstration that the management team are able to meet their developmental milestones.

With a few well-placed rumors, it is often possible to drive down the stock of a scientifically complicated company, which is how short sellers make their money. These attacks are often well-orchestrated, especially if a company’s stock rises more than expected. Then we can see all-out-war as a short squeeze nears. http://www.businessdictionary.com/definition/short-squeeze.html

The attack on BioTime was, in fact, somewhat successful. Some of the float panicked though institutional investors have not. It was ironic because only one day before the Nature iPS article was published, a study performed by Johns Hopkins scientists that proved successful engrafting of iPS cells was published by GEN: Genetic Engineering & Biotechnology News. It doesn’t say so in the GEN article, but the Johns Hopkins iPS cells were also created using viruses.

Here is a key paragraph from the article: “Researchers have demonstrated that mature and immature liver cells generated from induced pluripotent stem cells (iPSCs) derived from multiple adult cell types are as effective as both embryonic stem cell (ESC)-derived hepatocytes and primary human hepatocytes at engrafting and functioning in the livers of experimental mice. The Johns Hopkins University School of Medicine team that carried out the studies say iPSC-derived cells were equivalent to the ESC-derived cells and primary hepatocytes in terms of their capacity to regenerate damaged livers and with respect to the levels of human-specific liver proteins they secreted into the animals’ bloodstreams.

No one, however, was talking the good news up on the bulletin board rumor mills. I am beginning to agree with Cramer that unscrupulous short attacks need to be punished. At the very least, they should be prohibited from ever using the technologies of the companies they attack.

Fighting the “Stupid Virus” Pandemic

The chasm between the actual state of the science and the public’s perception of science puts more than money at risk. Lives are endangered by the inability of public institutions to deal with the new pace of scientific progress.

A prime example can be found in the anti-virus arena. We know another influenza pandemic will emerge in the next few years. Massive resources are therefore being spent to prepare for this inevitability. Scientists are trying now to predict which flu strains are likely to hit. Companies are preparing to manufacture enormous quantities of vaccines as quickly as possible.

Vaccinating for rapidly mutating viruses is, however, a fundamentally irrelevant technology. Unfortunately, few seem to know that there is a far cheaper and more effective solution to influenza.

This technology has come out of advances in nanotechnology and has been enabled by supercomputers. I’m not speaking theoretically, by the way. The solution for rapidly mutating viruses exists now. The company that developed it, however, has garnered only a fraction of the attention it deserves.

NanoViricides Inc. creates nanotech constructs made of submicroscopic polymers and biological ligands. They are called, not coincidentally, nanoviricides. The polymer portion of these constructs are approximately spherical virus traps. If you can think of a virus as a key that cracks the cellular safe, imagine ligands as the locks. A biologist would probably prefer “biological signaling molecules.”

Regardless, ligands that match specific virus families are identified using supercomputer simulations. When attached to the polymers and introduced into the blood stream, these nanoviricides are more attractive to viruses than actual cells. Viruses enter into the nanoviricides and are dismantled harmlessly.

If this technology sounds to you like something out of Isaac Asimov’s Fantastic Voyage, you’re not alone. When I first began writing about NanoViricides, the top Google search results were organized attacks on the company. A cottage industry existed that sold so-called reports that offered “the truth” about the company. Often, I was personally accused by those attacking NanoViricides of helping perpetrate a scam.

Fortunately, recent collaborations with world-renowned virus researchers has largely ended such attacks. Already, the company has demonstrated nanoviricides that lure and kill herpes, dengue and influenza viruses. In the last weeks, animal tests proved an effectiveness at killing influenza viruses that is orders of magnitude greater than Tamiflu.

All of the most infamous and scary strains of influenza were destroyed by NanoViricides’ FluCide. Any future mutation of these viruses will also be destroyed. This technology, if it were approved and distributed widely, would allow us to stop worrying about influenza. At the first indication of the flu, a nanoviricide injection, skin patch or nasal spray would end flu symptoms within a few hours, no matter how lethal the virus is in nature.

Because nanoviricides operate in a biological/mechanical fashion, we don’t need to worry that they will not work in humans. They work anywhere they are encountered by their target viruses. They have virtually no toxicity. They are cheap and have enormously long shelf lives. I would not hesitate to accept an injection right now. When the next pandemic inevitably arrives, I hope to do just that.

Nevertheless, I often read articles in the popular press about some new discovery that “will one day make nanotech medicine a reality.” On the contrary. It is a reality now, though we have not yet as a society understood and implemented this nanotechnology.

This is the unintended consequence of Moore’s law. Science is advancing so fast that hundreds of thousands will probably die unnecessarily before we make the transition from influenza vaccines to nanoviricides. There is a very real war being fought right now between ignorance and science. Science will win but it would be nice if it won sooner than later.