Why Isn't Cytori's Biotech Breakthrough Being Developed in the U.S.?

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An academic researcher discovers a new way to access a powerful medical tool and partners with a businessman to start a new medical company. Fifteen years and $300 million later, Cytori Therapeutics is manufacturing a medical device that gives physicians access to stem cells that can be used for reconstructive surgery and is in trials to treat heart disease.

The only problem? None of those physicians are in the United States, because Cytori’s technology has yet to meet regulatory approval here; it is currently used only in Europe and Japan.

The primary regulator for drugs and medical devices in the United States is the Food and Drug Administration. Many in the pharmaceutical and biotech industry say the FDA moves too slowly to adopt new tools and techniques, leaving the United States behind in the health care sector and hurting the country’s medical industry.

“Biotech innovation starts in Europe and heads west,” one Cytori staffer told me when I visited their headquarters this summer.

Yet the FDA’s job is to protect citizens against faulty medical technology. The agency’s defining moment came when it refused to approve the anti-morning sickness drug Thalidomide; other countries allowed sales of the drug, which caused serious birth defects.

Today, with the FDA seemingly unable to control food contamination issues, and increasing concern about contamination resulting from overseas production of American drugs, it’s not clear that the FDA needs to be less hands-on, but it does need to change its approach.

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Cytori’s technology is based on research performed in company president Marc Hedrick’s UCLA research lab. His team found that certain fat cells are a rich source of stem cells, which can grow into all kinds of new tissue. Up to that point, stem cells had only been available from bone marrow, requiring a painful, inefficient removal process, or, controversially, from embryos. Hedrick's team's discovery opened up the potential to apply cell therapy to a wide range of problems.

“[Marc] came in and kind of discovered the holy grail of stem cells,” Cytori CEO Chris Calhoun says. “Not being a scientist and not bogged down in all of this dogma, I could look at this pretty simply: We’ll make a tool, we’ll get it to the point of care, it changes the whole way that cell therapy can be delivered.”

Cytori create a system that allowed physicians to use liposuction to remove stem cells from a patient’s own fat, then use them in a variety of treatments. The company could have conducted clinical trials in the United States, but found the FDA’s requirements to costly in terms of both time and money. By beginning initial trials in Europe and Japan, the researchers were able to test their technology in the field before bringing it back to the United States.

Emerson Perin, a cardiologist and the medical director of the Stem Cell Center at the Texas Heart Institute, led a clinical trial that used Cytori’s product to treat heart failure in 27 patients in Europe by using stem cells to repair damaged heart tissue. The trial is currently moving through the peer review process in advance of publication in a medical journal, but Perin told me that the patients had no ill affects in the 18 months after the treatment, and their heart functions increased.

While Perin cautions that this relatively small trial will need to be replicated on a larger scale, the result is a positive step. He says that the running the trial in Europe allowed it to happen faster than would have been possible in the United States, and gave the physicians access to more advanced technology.

“A very practical example: Here in the U.S., we have three stents [tools used in heart surgery] in this country that we can put in,” Perin says. “If I go into the cath lab in Europe, they have a whole row full of at least 20 different kinds of stents. Some of these are better designed, they’re slicker, they’re easier to deliver, they have different drugs on them than we have on.”

But, he says, “I don’t want to villainize the FDA. You want to regulate things and make things safe for the population, [and] there’s a very difficult balance to maintain between protecting everybody and letting new technology in.”

But the staus quo slows down innovation in the United States, producers of new medical technologies say, and limits both the economic and health benefits of a successful biotech business.

“It’s frustrating to have most of our patients being non-Americans,” Hedrick says. "All the basic scientific work, all the development, most of the investment was all here from the U.S., and very few of the patients who have been treated are U.S. patients. I think you could lay some of the blame at the foot of the FDA."

Part of the challenge to approve Cytori’s product is that the agency isn’t structured to deal with the company's business model. The FDA divides the medical world into three departments: Drugs, devices and biologics (medicinal products made from biological processes). While Cytori’s treatment output is a biologic and that department is the company's main partner, Cytori doesn’t actually market a biologic—it sells the device and techniques needed for physicians to produce usable stem cells themselves from a patient’s own fat.

“There’s no nice clear box at FDA,” Hedric says. “A lot of what we’re doing is setting a regulatory path through an agency that’s not really geared to regulate exactly what we do.”

Cytori executives are quick to argue that their company can hit all the sweet spots on the Obama administration’s priority list: Creating jobs, increasing exports, and lowering medical costs.

“If this technology were approved in the U.S. and available, we would see enormous growth in our country,” Hedrick says. “And if it’s approved in the U.S., that opens up a lot of international markets that if you’re not approved in your home country, you don’t have access to.”

Company officials says their treatment of heart disease could nip an expensive health problem in the bud. “If you can restore it at the time of the heart attack, downstream, patients don’t advance into heart failure,” Calhoun says.

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So how do you get from here to there? Cytori is working closely with the FDA to plan the U.S. trials needed to bring their product to market, but some lessons from their experience stand out as a potential reform agenda. The FDA is already working on improvements to speed progress from “microscope to market,” in the words of Health and Human Services Secretary Kathleen Sebelius.

To increase the agency’s ability to keep up with scientific advances, it has adopted a new multimillion dollar regime to bulk up “regulatory science,” so that FDA officials “have the knowledge and tools to help translate discovery, innovation, and promise into real world products for those who need them,” FDA Commissioner Margaret Hamburg says.

But other critics say that the FDA needs to shift its focus away from early-stage clinical trials and emphasize monitoring approved drugs and their manufacturing processes. “The issue is not too much bureaucracy and too much red tape, but a strategy of safety that puts the emphasis in the wrong place—early, not late—and then uses techniques that by themselves cannot ensure safety for real people in the long run,” Arthur Caplan, director of the Center for Bioethics at the University of Pennsylvania, wrote last year.

Another issue is FDA financing, which prevents it from fully staffing the approval process: Not only does it not get as much money as it needs to keep the nation’s food and medicine safe (about 25 percent of consumer spending), the agency increasingly relies on fees to make up budget shortfalls, often from companies who want the FDA to approve their products—another roadblock on the way to innovation.

Reforms at the FDA could be key to ramping up U.S. medical innovation and ameliorating a host of public policy problems, but while Washington is in a deadlock, Cytori will continue to pursue its hope of putting cell therapy in every doctor’s kit.

“It takes longer, it costs more, it never happens as fast as you want even if ‘Ramming Speed’ is number nine on your list of corporate values,” Calhoun says.

Perin, the Texas cardiologist who is helping test Cytori’s approach, makes clear the work is worth it.

“Regnerative medicine works, period, end of statement,” he says. “When will we be able to apply to it people? That’s what I’m working at. It may sound naïve, but my ambition is to cure heart disease.”