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Corzine to ‘Revisit’ Stem-Cell Referendum As Calif. Company Expands to New Jersey

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PISCATAWAY, NJ — New Jersey Gov. Jon Corzine last week vowed to try a second time to promote the use of state money to fund stem-cell research, but stopped short of saying when that would happen, or whether that effort would take the form of another referendum.
 
“I intend to revisit this issue. We haven’t crossed that bridge yet,” Corzine said during a May 1 news conference held to trumpet the expansion of a California stem-cell research company into the Garden State.
 
At the news conference, held at Rutgers University’s WH Keck Center for Collaborative Neuroscience here, Corzine said his timing for revisiting the thorny stem-cell issue would hinge on the outcome of talks with legislative leaders toward a state budget for the fiscal year 2008, which starts July 1.
 
“It is in an overall context that we have to look at where we are with regard to revenue growth, and the comfort with which we can address additional debt,” Corzine said. “And I don’t think that’s going to be so long.
 
“There is a need for restructuring the finances of the state,” he added. ”We’re committed to moving forward with that, to give us the resources we need” for stem-cell research.
 
At the moment, New Jersey faces a budget shortfall whose size ranges from Corzine’s estimate of $1.7 billion to as high as $3.5 billion. The governor has said  he plans to fill that hole with $2.7 billion in cuts that include eliminating around 3,000 state jobs, scuttling the state departments of agriculture and personnel, enacting additional cutbacks in all other government departments, and raising tolls by 800 percent over 14 years. Receipts from the toll hike, which are hotly opposed, would pay for a new quasi-public agency that would borrow $38 billion from private investors, of which $20 billion would fund transportation programs and pay off state debt.
 
The governor’s resulting $33 billion budget for fiscal 2009 would trim state spending by $500 million. The one-two punch of budget cuts and toll hike has made Corzine a popular target of criticism and has eaten into his political capital.
 
An early sign of Corzine’s political weakness emerged last November when the $450 million stem-cell referendum he championed lost unexpectedly. The governor and life-sciences industry leaders were stunned after a coalition of anti-tax advocates, Roman Catholic leaders, and other so-called moral opponents of embryonic stem-cell research defeated the ballot by 53-47 percent, defying the victory predicted by two university opinion polls [BRN, Nov. 12, 2007]
 
Soon after that defeat, Corzine and other stem-cell research advocates talked of holding a second referendum. If he does, the governor can expect the same kind of resistance, the leader of a key opposition group told BRN last week.
 
“The first thing we’ll do is stop them from getting on the ballot by working on legislators. And if they do, we’ll beat it again,” said Steve Lonegan, executive director of the New Jersey chapter of Americans for Prosperity, a group instrumental in defeating the original stem-cell referendum.
 
“The New Jersey government can’t manage their way out of a paper bag. They’ve proven over and over again that they can’t control their spending, whether it’s through waste, or fraud, or abuse. So to expect this entity to pour money into stem-cell research programs is utterly absurd,” Lonegan said.
 
Lonegan cited election returns showing that counties with the highest voter turnouts also registered the strongest opposition to the stem-cell ballot question. While pro-referendum counties saw turnouts ranging from 10 percent to under 30 percent, turnout in opposing counties mostly surpassed the 30-percent mark.
 
At the news conference at the Stem Cell Research Center, Corzine told reporters the state has spent $10 million over the past year in science and technology funds on various stem-cell projects.
 

“The New Jersey government can’t manage their way out of a paper bag.”

He said the state would continue to spend on science and technology “with great emphasis on the biotech field. We’re working very closely with Rutgers to try and pull together in a comprehensive way research capacity, which is extraordinary here at Rutgers and several of our universities around the state, [to address] their desire to co-invest with private investors, and to work through our medical facilities for clinical trials.
 
“Toward the near term, that’s where we have to give emphasis, in telling people about, and show the public that [spending tax dollars on stem-cell research] is financially sound [and a] high-rate-of-return investment,” Corzine said.
 
Last week the state said it added to its stem-cell spending a $589,000, 10-year Business Employment Incentive Program grant approved by the New Jersey Economic Development Authority. That cash will go to StemCyte, the California stem cell-research company that will use it to open a new East Coast office in Ewing Township, NJ, for coordinating future clinical trials for a research project currently under way with Rutgers.
 
Among opponents of the grant was a liberal coalition of 21 labor and public-policy groups, Better Choices for New Jersey.
 
“It’s not any negative feelings about stem cell research, which we think is a good idea,” Jon Shure, president of one group within the coalition, New Jersey Policy Perspective, told BRN last week. “We question the economic-development strategy of writing checks to companies, as opposed to investing in higher education and transportation. A, there’s a lot of reason to think they’d come here anyway. And B, we don’t think that’s the best use of tax dollars.”
 
According to Shure, “New Jersey, like a lot of other states, is involved in this arms-race mentality where we’re going to bid against each other to make a better offer to a company,” Shure said. “Unfortunately, the companies have gotten very skilled at playing states off against each other and claiming their location decisions are made on getting the best offer, because they know the states will fall over themselves to make that offer.”
 
That’s a similar argument to Lonegan, a conservative, who said the debate ”isn’t a right vs. left issue. This is a common-sense issue.”
 
Corzine said the StemCyte grant is essential for ensuring that New Jersey continues to maintain a strong biopharmaceutical cluster even as the nation’s biggest pharmas continue cutting back. Schering Plough CEO Fred Hassan has warned that the firm’s Kenilworth, NJ, headquarters will not be spared from a $1 billion cost-cutting plan, announced in April, expected to shed 5,500 jobs.
 
Also that month, Johnson & Johnson confirmed it would eliminate 150 jobs at the Bridgewater, NJ, headquarters of its Ortho Biotech Products unit, out of a total 400 jobs nationwide, according to local news reports.
 
“We are committed to making sure New Jersey remains the medicine chest of the world, and that means that we have to take strong steps to move forward, even in difficult financial times,” said Corzine.
 
NJEDA’s grant is tied to a StemCyte commitment to employ at least 12 new staffers at the new 3,000-square-foot offices, at 850 Bear Tavern Road. To date, StemCyte has five professionals based in Ewing Township, including the company’s chief financial officer, chief science officer, and head of business development.
 
Kenneth Giacin, chairman, CEO, and president of StemCyte, told BRN that the company plans to hire “at least two or three people” before the end of this year — “likely one in finance, one and maybe two in the technical area.” Asked how soon the company would ramp up to 12 New Jersey staffers, he replied: “It really depends on how quickly we grow some of these programs.”
 
Giacin said StemCyte’s expansion was an outgrowth of a collaboration announced Feb. 26 at the Third Annual Stem Cell Summit in New York. The company said it had entered into a research and licensing agreement for a spinal cord injury therapy being developed by Wise Young, Richard H. Shendell chair in neuroscience at Rutgers.
 
StemCyte has agreed to provide an undisclosed amount of financial sponsorship in return for exclusive commercialization rights to the therapy, which uses StemCyte’s proprietary human umbilical cord blood stem cells in conjunction with lithium.
 
The therapy is now undergoing a double-blind randomized trial in Beijing to study the effects of lithium versus placebo in 40 patients with spinal cord injury.
 
”We hope to finish the Chinese process two years from now” and are “hoping to bring these same clinical trials to New Jersey, and the main obstacle right now is money,” said Young. “We need to get some funding for this. I had hoped that the New Jersey stem cell bond would help fund our research.”
 
He said about $5 million would be needed to study the therapy in about 50 patients.
 
Should clinical trials occur in New Jersey, they would take place through the University of Medicine and Dentistry of New Jersey. UMDNJ’s Robert Wood Johnson Medical School and Rutgers have established the Stem Cell Institute of New Jersey to carry out research, training, and clinical studies on applying stem cells to treatments and cures for human disease.
 
StemCyte is the developer of a UCB stem-cell product that has been used to treat 35 types of diseases in patients across 32 countries.
 
The company is one of a handful of stem cell research businesses in New Jersey. The largest is Celgene, a biopharma based in Summit. On May 2, Celgene announced it successfully completed the first transplant of human placenta-derived stem cells in a patient with cancer of the bone marrow and blood. Celgene’s products also include cord blood stem cells.
 
Three pharma giants with large presences in New Jersey have taken interest in stem cell work. J&J’s venture arm last year led a $35 million third investment round in Novocell, a San Diego developer of a diabetes treatment that uses embryonic stem cells; Bristol-Myers Squibb is collaborating on a project with Young’s lab involving such cells; and Pfizer last year developed a stem-cell research policy, available here.
 
StemCyte’s New Jersey expansion, Giacin said, will not affect its headquarters, which he said would remain in Covina, Calif., where the company has more than 20,000 cord blood units in storage.
 
“I would say California is the center for us, in terms of our medical, regulatory, storage, and standard operating procedures,” he said. “Many of our clinical operating procedures are developed there. Our base product is there, and our founder is there,” referring to Robert Chow, inventor of StemCyte’s cord blood technologies and the company’s vice chairman and global medical director.
 
Also unaffected, Giacin added, are the company’s operations in Taiwan, as well as its planned operations in India — where it announced in March a joint venture with Apollo Hospitals and Cadila Pharmaceuticals to set up a public and private UCB bank.
 
While privately held StemCyte does not disclose revenues, it did tell Deloitte & Touche USA its revenues grew by 1,888 percent during the five years from 2002 through 2006, good enough for number six on the professional services firm’s Technology Fast 50 list of growing companies in the Los Angeles region.
 
Giacin told BRN StemCyte’s expansion plans do not hinge on New Jersey winning voter approval for a stem-cell bond.
 
“We’d love to see it happen. We think it’s important for it to happen. But we will be here whether it happens or doesn’t happen,” Giacin said.

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