A small firm in Menlo Park is probably the only company in the nation that is named after the number of a particular human protein. It is a small number too, only 47. But it has large implications for California’s financially strapped state stem cell agency.
Forty Seven, Inc., was gobbled up last week for $4.9 billion by its neighbor, Gilead Sciences, Inc., in Foster City. The figure represents a 1,600 percent increase in Forty Seven’s stock price since last October.
CIRM is running out of money and sorely needs some hefty results to convince California voters next November to give the agency $5.5 billion more
“To say this is incredible would be an understatement!” said Maria Millan, president and CEO of the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known. She had good reason for her enthusiasm.
The agency wrote on its blog, The Stem Cellar:
“It’s not every day that a company and a concept that you helped support from the very beginning gets snapped up for $4.9 billion….CIRM has supported this program from its very earliest stages, back in 2013, when it was a promising idea in need of funding.”
CIRM has pumped $15 million directly into the firm. It provided another $30 million earlier to noted Stanford University researcher Irv Weissman for much of the basic work that led to the formation of Forty Seven. Weissman co-founded the company and sits on its governing board.
Today, CIRM is running out of money and sorely needs some hefty results to convince California voters next November to give the agency $5.5 billion more.
California voters created the stem cell agency through a ballot initiative, Proposition 71 of 2004, and gave it $3 billion.
Millan and CIRM supporters think that the Gilead purchase of Forty Seven represents a strong validation of the importance of the agency’s work as it seeks to bring to market stem cell therapies for afflictions ranging from cancer to incontinence. While stem cell therapies have great promise, without the backing of powerhouses like Gilead, a potential treatment may well linger on the back shelf of some lab.
Weissman says, “The story of the funding of this work all of the way to its commercialization and the clinical trials reported in the New England Journal of Medicine is simply this: CIRM funding of a competitive grant took a mouse discovery of the CD47 ‘don’t eat me’ signal through all preclinical work to and (nearly) through (clinical trials).
“Our National Institutes of Health did not fund any part of the clinical trial or preclinical run up to the trial, so it is fortunate for those patients and those that will follow — if the treatment continues its success in larger trials — that California voters took the right action in 2004 to fund research not funded by the federal government.”
As for Forty Seven and its unusual name, it comes from CD47, the protein.
That was the year that California voters created the stem cell agency through a ballot initiative, Proposition 71, and gave it $3 billion. Another initiative, this time for $5.5 billion, is in the works for next fall. It needs 623,212 signatures to qualify for the ballot.
The campaign has gathered more than 25 percent of the signatures.. Robert Klein, who is leading the campaign, told Capitol Weekly that he expects to submit the necessary signatures needed towards the end of April.
Klein, a Palo Alto, Ca., real estate investor, is not new to the stem cell or initiative game. He led the stem cell campaign in 2004, an effort that cost $34 million. In 2017, he told the California Stem Cell Report that the latest campaign would cost about $50 million. More recently, he has declined to provide a fresh estimate. Klein was the first chairman of the CIRM governing board and has been called the father of the state stem cell program, which is one of the larger sources of stem cell research funding in the world.
As for Forty Seven and its unusual name, it comes from CD47, the protein that Weissman mentioned. It is found on normal cells and tells “circulating immune cells called macrophages not to eat these cells,” a Stanford research document says. “The body uses the CD47 protein to protect cells that should be protected and to help dispose of cells that are aged or diseased.”
Gilead, which holds more than $20 billion in cash reserves, has ample resources to finish Forty Seven’s clinical trials and market the produc
Stanford researchers discovered that cancer cells also have a CD47 component that tells the immune system “don’t eat me.” The Forty Seven treatment neutralizes that response and instead creates an “eat me” situation, resulting in the loss or diminishment of the cancer cells.
The company is only five years old. Initially private, it went public in 2018. Its share price opened at $16.00 on the first day of the initial offering, but fell to $5.53 Oct. 23, 2019. Gilead’s purchase is valued at $95.50 a share.
Gilead, which holds more than $20 billion in cash reserves, has ample resources to finish Forty Seven’s clinical trials and market the product.
The stem cell agency does not benefit directly from the sharp run-up in the Forty Seven’s stock price. California’s state constitution bars the state from owning stock. The ban was an anti-corruption measure that originated more than 100 years ago because of concerns about the role railroad companies played in California during the late 1800s.
CIRM could possibly see royalties if a product emerges that is available to the general public and also makes a profit. At the same time, of course, it would be saving lives.
CIRM is not the only financial backer of Forty Seven. At least nine more are mentioned in Security and Exchange Commission documents filed by Forty Seven. Any royalties would be based on the financial significance of CIRM’s role. Any overall profits would have to be shared with other entities.
The ballot campaign of 2004 that created CIRM was fueled by expectations that stem cell therapies were just around the corner.
Forty Seven was identified by Millan last month as a “pivotal” company for CIRM. It is engaged in one of 60 clinical trials that CIRM is helping to finance. However, only one out of 10 potential conventional therapies emerge from trials as a product. Forty’s Seven’s treatment is midway through clinical trials, but it is not “conventional” and could hit roadblocks.
The ballot campaign of 2004 that created CIRM was fueled by expectations that stem cell therapies were just around the corner. So far, the agency, which is unique in California history, has not helped to finance a stem cell treatment that is available for widespread use.
CIRM is hoping that Forty Seven/Gilead will not be alone over the next eight months among CIRM’s other 59 trials. More high profile results would bolster voter support for $5.5 billion more in cash and avoid a CIRM shut down beginning next fall.
Editor’s Note: David Jensen is a retired newsman who has followed the affairs of the $3 billion California stem cell agency since 2005 via his blog, the California Stem Cell Report. He has published more than 4,000 items on California stem cell matters in the past 15 years.