Obama policy a lift for stem cell researchers President-elect has indicated he'll remove Bush's restrictions on federal funding

Dr Arnold Kriegstein director of the UCSF Institute for Regeneration Medicine at the construction site of the new building that will be part of UCSF�s Parnassus campus. on Friday Nov 21 2008 in San Francisco, Calif less Dr Arnold Kriegstein director of the UCSF Institute for Regeneration Medicine at the construction site of the new building that will be part of UCSF�s Parnassus campus. on Friday Nov 21 2008 in San ... more Photo: Kurt Rogers, The Chronicle Photo: Kurt Rogers, The Chronicle Image 1 of / 1 Caption Close Obama policy a lift for stem cell researchers 1 / 1 Back to Gallery

Stem cell research advocates have waited nearly eight years for the policy change President-elect Barack Obama has signaled he'll make in the early days of his administration: lifting the restrictions imposed by President Bush on federal funding for research on human embryonic stem cells.

Those limits, and earlier laws, have left stem cell labs hungering for support since the versatile human stem cells were first derived in 1998.

Such cells, often taken from extra embryos created by in vitro fertilization clinics, can morph into the specialized cells found in skin, nerves and many other tissues. Bush shared the moral objections of some religious groups and political conservatives to research on human embryos. However, the prospect of a powerful new cell replacement technology that could some day cure injury and disease has now shifted many Republicans as well as Democrats toward support for federal funding of the work.

But Obama, even if he changes the policy, may still be powerless to send much more money to stem cell researchers anytime soon because he will be taking office amid a historic global financial crisis. The U.S. government already will have committed a stunning $8 trillion to rescue the financial system.

Still, biotechnology groups are hoping Obama can increase government research funding from the National Institutes of Health as part of his mammoth stimulus plan for the economy.

In another big obstacle to stem cell work, the economic crisis has strangled the flow of private investment to high-risk biotech startups such as stem cell companies.

Research costs likely to drop

In spite of all that, many in the stem cell field have a buoyant air these days. For one thing, the reversal of the Bush policy may quickly lower the cost of research.

Dr. Arnold Kriegstein, director of the Institute for Regeneration Medicine at UCSF, is watching a new building rise where his institute will expand its stem cell studies.

Under the Bush policy, researchers had to painstakingly separate their NIH-funded projects from human embryonic stem cell work funded by other sources. If Obama removes the NIH limits, work in the new UCSF building will be much cheaper because scientists will no longer have to create duplicate labs and buy extra sets of equipment. The same labs and tools will be available for use on adult stem cells, the partially mature cells that replenish organs, and the more versatile embryonic stem cells that are seen as the standard for understanding the entire field of cell therapy.

"Labs all over the country could start using these cells side by side," Kriegstein said. "A lot of resources were spent complying with the restrictions as they exist."

Prop. 71 funding

In fact, the new UCSF building might not have existed if not for the Bush restrictions. It's one of 12 new facilities financed in part by California's $3 billion stem cell funding agency, established by a 2004 voter initiative, Proposition 71, which was designed to thwart the Bush limits on embryonic stem cell funding. In addition to financing separate buildings where the work could take place, the California Institute for Regenerative Medicine has awarded 229 research grants of more than $614 million since it began operating in 2005.

That taxpayer-supported institute has made California one of the world leaders in stem cell research funding, and inspired other states to set up their own programs. The NIH, by comparison, devoted $655 million of its $20.3 billion in research grants in 2008 to stem cell projects. They encompassed adult cells, embryonic stem cells from animals and other cell categories. Of that $655 million, $42 million was given for work on human embryonic stem cell lines that had been created before Bush set up federal funding restrictions in August 2001.

Now that a federal policy shift seems imminent, however, watchdog groups are questioning whether California taxpayers should be laying out millions of dollars for stem cell research every year while the state's budget deficit - as much as $28 billion over the next two years - is forcing painful spending cutbacks.

"The original argument for Proposition 71 - that the state should fund research that the federal government would not - is fading," said Jesse Reynolds of the nonprofit Center for Genetics and Society in Oakland in written testimony to the Little Hoover Commission. The commission is reviewing the stem cell funding agency's governance structure at the request of members of the Legislature.

Institute's budget questioned

Reynolds said the stem cell institute's budget should be subject to the same annual review process undergone by other state agencies. But Prop. 71 insulated the institute from full state control and accountability, he said. "The large, untouchable set-aside for stem cell research is out of place during these difficult fiscal times," Reynolds wrote to the commission.

State Treasurer Bill Lockyer, however, has discretion over the issuance of the general obligation bonds that provide revenue for the stem cell institute, said Lockyer spokesman Tom Dresslar. For the time being, state bond issues in general have been suspended because of the upheaval in the financial system.

The stem cell institute has enough money to meet its grant commitments through July and to fund its operations until the end of 2009, said Don Gibbons, a spokesman for the agency. But some uncertainty surrounds grant outlays during the second half of 2009, he said.

Dr. Alan Trounson, the president of the California institute, said the state's support of stem cell research is money well spent. It has positioned the state to capture a major share of the NIH grants awarded under the new rules expected from the Obama administration. "The top-line scientists will be congregated in California," he said. "They'll receive the bulk of the grants."

In the meantime, some business observers say the stem cell field is poised to charge ahead once the economic gloom clears. Rapid advances in stem cell technology from many nations are sparking interest among business sectors, such as big pharmaceutical companies and venture capital firms, whose past support of the field has been spotty. Greg Bonfiglio of Proteus Venture Partners in Palo Alto said he expects to close the first phase of a $300 million fund dedicated to regenerative medicine in January.

"The technology has advanced at an unprecedented rate," he said. "There are new breakthroughs all the time."

Skin cells to stem cells

Among the outstanding achievements was the discovery by two scientific teams in 2007 that they could convert human skin cells into stem cells. These "induced pluripotent cells" created another possible avenue for making replacement tissues to treat illness or injury.

Pfizer, the world's largest drug company, announced Nov. 14 that it has established an in-house regenerative medicine unit to explore the use of stem cell therapies and medicines that can stimulate stem cells in the body. Corey Goodman, the president of Pfizer's year-old Biotherapeutics and Bioinnovation Center, said he helped persuade the big drugmaker to revise its stem cell policy, which had been similar to the Bush guidelines.

Goodman, who will help supervise Pfizer's new stem cell unit, said it's not clear yet which types of stem cells are most likely to succeed as therapies in people. Probably a mixture of tactics will be needed to address different human ailments, he said.

"I suspect five to 10 years from now, in the therapeutic toolbox, we're going to find cell-based therapies," Goodman said.

But the Bay Area company that funded some of the earliest work on embryonic stem cells is betting that those cells will be the keys to a transformation in medicine. Thomas Okarma, the chief executive of Geron Corp. of Menlo Park, said the company hopes to begin the first clinical trial of embryonic stem cells by next year. The aim is to regenerate injured spinal nerves. For Okarma, the federal policy change signaled by Obama will be perfectly timed.

"You can bet I'll be banging on the NIH's door for funding for our spinal cord injury trial," he said.