Judge Rules You Can't Patent Life: What about Cytori?

Last week, in a ruling with great implications for the biotech industry. the District Court for the Southern District of New York ruled that patents on two human genes held by Myriad Genetics are invalid. In layman's terms, my interpretation is that the judge essentially ruled that "you can't patent life". While the ruling will certainly be appealed and and may eventually end up in the Supreme Court, the importance of this issue cannot be over emphasized by investors. Without patent protection, the billions of dollars being invested by the private sector in areas of genomics and stem cells will likely slow down dramatically as revenue and profit projections needed to justify research and development investments could be thrown out the window. The issue of patenting life was tackled by 60 minutes last night.

Interestingly, the path chosen by Cytori would not be affected this ruling, should it be upheld. Unlike many other companies in the regenerative medicine field, Cytori does not hold patents on stem cells or any other form of life. For those new to Cytori, its main technology is a medical device called the Celution, that efficiently and economically extracts adipose derived regenerative cells (ADRCs) from a patient's own fat. The ADRC's which include stem cells, are not owned by Cytori, they are owned by the patient and are reinserted back into the patient in a concentrated therapeutic dosage. These cells are not cultured and reproduced like other leading stem cell technologies such as those used by Osiris Therapeutics or Geron Corp. The business plan for these companies involves the extraction and mass reproduction of a donor stem cells that are cultured to provide thousands of doses of what is basically a "living pharmaceutical". Whether this ruling holds and how it applies to stem cells is still to be determined. However, while the issues of autologous cells (the use of one's own cells) versus allogenic cells (donor extracted cells) are many, at least with regard to this issue, autologous cells certainly seem have the clear advantage.

How big pharma views this ruling when evaluating potential joint ventures and/or acquisitions of small stem cells companies has yet to be determined. However, logic would indicate that the uncertainty surrounding this ruling puts Cytori and its patented medical device in a relative advantage to stem cell companies that have taken the allogenic path, all other things being equal.

Do your own due diligence.