By Elie Dolgin
Cross-posted from The Great Beyond
US regulators accused a stem cell biotech company on Tuesday of inflating claims about an early stage cell therapy.
The US Securities and Exchange Commission (SEC) charged Bothell, Washington-based CellCyte Genetics Corporation, along with its former chief executive and former chief scientific officer, with duping investors into believing that its experimental stem cell technology was nearing human trials.
“CellCyte and its senior officers knew that it would take years of research to determine whether the stem cell discovery could be developed into a viable product,” said Marc Fagel, director of the SEC’s San Francisco office, in a statement. “In their rush to cash in on the promise of stem cell research, they concealed the true facts from investors.”
In 2005, CellCyte licensed a compound that had been shown in preliminary animal studies to help stem cells migrate to specific organs of the body. Cellcyte’s own experiments failed to replicate these findings, according to the SEC’s complaint. Nonetheless, the company claimed in 2007 that it had received U.S. Food and Drug Administration (FDA) approval to begin human clinical trials to repair heart damage even though CellCyte had never filed an investigational new drug application. The company also falsely claimed that its drugs improved bone marrow engraftment, the SEC charged.
In truth, the SEC alleges, “CellCyte did not know how to properly formulate the stem cell compound, had never attempted experiments with the compound to repair organs, and had not satisfied any of the FDA requirements to begin human clinical trials.”
In autumn 2007, CellCyte partnered with a stock promoter to nearly double its share price from $4.00 to $7.50 over the span of four months. The stock now trades for about a nickel.
CellCyte blamed the mix-up on the US Department of Veterans Affairs (VA), from whom the company licensed the stem cell technology. “Once we realized the technology didn’t do what the VA told us it would do, we discontinued working on that technology,” Randy Lieber, CellCyte’s acting chief financial officer, told The Scientist.