Cal­i­for­nia stem cell clin­ic to pay out $3.65M set­tle­ment to for­mer pa­tients for in­ef­fec­tive treat­ments

Four years af­ter the FDA ad­mon­ished stem cell clin­ic Stem­Genex for mak­ing du­bi­ous claims about its ser­vices in treat­ing in­cur­able dis­eases, and 3 years af­ter the com­pa­ny first filed for bank­rupt­cy, the clin­ic and its for­mer CMO seem to have reached their fi­nal des­ti­na­tion: a $3.65 mil­lion bill in a class ac­tion set­tle­ment.

An­dre Lal­lande

Fed­er­al judge An­tho­ny Battaglia in San Diego gave fi­nal ap­proval to the deal in late Feb­ru­ary, with the in­sur­ance car­ri­ers for the now-dead clin­ic along with Stem­Genex’s for­mer CMO and os­teopath An­dre Lal­lande foot­ing the bill and pay­ing 1,063 for­mer clients. The in­sur­ance for the clin­ic will pay $1.15 mil­lion, and the in­sur­er for Lal­lande, a rheuma­tol­o­gist, will pay $2.5 mil­lion.

“It’s been a roller­coast­er ride watch­ing this clin­ic for many years. From the start, what Stem­Genex was sell­ing didn’t make much sense to me as a stem cell bi­ol­o­gist. Now in the end, what’s sur­pris­ing is that they got held ac­count­able at all. Most stem cell clin­ics don’t,” Paul Knoepfler, a pro­fes­sor at UC Davis who wrote about the de­ci­sion on his blog, told End­points News.

Paul Knoepfler

In ex­change for the pay­ments, charges against the clin­ic, the own­er, and plas­tic sur­geon Scott Ses­sions, who worked at Stem­Genex, were dis­missed with prej­u­dice.

The clients were plain­tiffs in a class-ac­tion law­suit orig­i­nal­ly filed in 2016, al­leg­ing that they were mis­in­formed by Stem­Genex ad­ver­tis­ing and pro­mo­tion­al ma­te­r­i­al.

Ac­cord­ing to the LA Times, the clin­ic had claimed its treat­ment was ef­fec­tive against nu­mer­ous med­ical con­di­tions, in­clud­ing some hard-to-treat ones like Alzheimer’s and Parkin­son’s.

The treat­ment, which in­volved re­mov­ing fat from clients by li­po­suc­tion, “treat­ing” it to al­leged­ly con­cen­trate stem cells from the tis­sue, and then in­ject­ing the cells back in­to the clients, of­fered no sig­nif­i­cant ben­e­fit to the plain­tiffs, ac­cord­ing to the suit. The named plain­tiffs had sought treat­ment for a mul­ti­tude of dif­fer­ent is­sues, such as lu­pus and mul­ti­ple scle­ro­sis.

“Un­for­tu­nate­ly, it’s not quite a sim­ple hap­py end­ing and it’s not clear if it’ll be much of a de­ter­rent to oth­er sim­i­lar clin­ics. In­sur­ance cov­ered a good part of the set­tle­ment, and each clin­ic cus­tomer didn’t get much back,” Knoepfler added.

Leigh Turn­er

Leigh Turn­er, the ex­ec­u­tive di­rec­tor at UC Irvine’s bioethics cen­ter who has stud­ied the pro­lif­er­a­tion of these clin­ics — and had been pub­licly crit­i­cal of Stem­Genex for years, not­ed that the pa­tients were not re­im­bursed for what they paid for their sham treat­ments.

“I’m glad to see Stem­Genex’s for­mer pa­tients re­ceive some mon­ey from this set­tle­ment. They’ll re­ceive about $1,935 per per­son. That sum is bet­ter than noth­ing, of course, but it’s im­por­tant to put it in per­spec­tive and un­der­stand that each class mem­ber will re­ceive just a small amount — an es­ti­mat­ed 13% — of what they paid Stem­Genex,” Turn­er said to End­points. “Like­wise, when Stem­Genex went through bank­rupt­cy pro­ceed­ings, there was lit­tle left for cred­i­tors at the end of this process.”

Ad­di­tion­al­ly, Turn­er not­ed that the set­tle­ment in­cludes no ad­mis­sion of wrong­do­ing or li­a­bil­i­ty — and that leaves a gap, in his mind. He added:

How­ev­er, giv­en how much mon­ey Stem­Genex charged pa­tients for pur­port­ed stem cell treat­ments that were un­proven and un­ap­proved by the FDA, it does not seem to me that all wrongs have been right­ed and jus­tice has been served. The case does show it is pos­si­ble to bring class ac­tion law­suits against such busi­ness­es and gen­er­ate re­sults for for­mer pa­tients. It al­so re­veals how dif­fi­cult it is to — ac­tu­al pun­ish­ment aside — sim­ply make pa­tients whole and pay them back af­ter they spend large sums of mon­ey for sup­posed stem cell prod­ucts that had nev­er been ap­proved by the FDA and should nev­er have been sold in the U.S. mar­ket­place.

The FDA has warned that stem cell ther­a­py treat­ments, a form of “re­gen­er­a­tive med­i­cine ther­a­pies,” have not been ap­proved for a whole host of ail­ments, such as all neu­ro­log­i­cal dis­or­ders, lung dis­eases, and or­tho­pe­dic con­di­tions such as os­teoarthri­tis.

And back in 2018, the FDA made that clear for Stem­Genex, fol­low­ing up on a 2017 promise to crack down on the stem cell clin­ic in­dus­try — es­pe­cial­ly the non-le­git side hawk­ing treat­ments for ALS and oth­er dis­eases that don’t have treat­ments.

The agency is­sued the com­pa­ny a Form 483 at the time, point­ing out nu­mer­ous vi­o­la­tions in a let­ter to the clin­ic.

Pi­o­neer­ing Click Chem­istry in Hu­mans

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Justin Klee (L) and Joshua Cohen, Amylyx co-CEOs (Cody O'Loughlin/The New York Times; courtesy Amylyx)

Ad­vo­cates, ex­perts cry foul over Amy­lyx's new ALS drug, cit­ing is­sues with price, PhI­II com­mit­ment

Not 24 hours after earning the first ALS drug approval in five years, Amylyx Pharmaceuticals’ Relyvrio is already drawing scrutiny. And it’s coming from multiple fronts.

In an investor call Friday morning, Amylyx revealed that it would charge about $158,000 per year, a price point that immediately drew backlash from ALS advocates and some outside observers. The cost reveal had been highly anticipated in the immediate hours after Thursday evening’s approval, though Amylyx only teased Relyvrio would cost less than previously approved drugs.

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Land­mark Amy­lyx OK spurs de­bate; Some... pos­i­tive? Alzheimer's da­ta; Can­cer tri­al bot­tle­neck; Sanofi's CRISPR bet; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

After brief stops in Paris and Boston, John Carroll and the Endpoints crew are staying on the road in October with their return for a live/streaming EUBIO22 in London. The hybrid event fireside chats and panels on mRNA, oncology and the crazy public market. We hope you can join him there.

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Joshua Cohen (L) and Justin Klee, Amylyx co-CEOs

Up­dat­ed: Af­ter long and wind­ing road, FDA ap­proves Amy­lyx's ALS drug in vic­to­ry for pa­tients and ad­vo­ca­cy groups

For just the third time in its 116-year history, the FDA has approved a new treatment for Lou Gehrig’s disease, or ALS.

US regulators gave the thumbs-up to the drug, known as Relyvrio, in a massive win for patients and their families. The approval, given to Boston-area biotech Amylyx Pharmaceuticals, comes after two years of long and contentious debates over the drug’s effectiveness between advocacy groups and FDA scientists, following the readout of a mid-stage clinical trial in September 2020.

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Nooman Haque, head of life sciences and healthcare at Silicon Valley Bank, and John Carroll

I’m head­ed to Lon­don soon for #EU­BIO22. Care to join me?

It was great getting back to a live ESMO conference/webinar in Paris followed by a live pop-up event for the Endpoints 11 in Boston. We’re staying on the road in October with our return for a live/streaming EUBIO22 in London.

Silicon Valley Bank’s Nooman Haque and I are once again jumping back into the thick of it with a slate of virtual and live events on October 12. I’ll get the ball rolling with a virtual fireside chat with Novo Nordisk R&D chief Marcus Schindler, covering their pipeline plans and BD work.

Gilead names 'k­ing­pin­s' in coun­ter­feit HIV med law­suit

Gilead is mounting its counterfeit drug lawsuit, naming two “kingpins” and a complex network of conspirators who allegedly sold imitation bottles of its HIV meds, some of which ended up in US pharmacies.

The pharma giant on Wednesday provided an update on what it called a “large-scale, sophisticated counterfeiting conspiracy,” accusing two new defendants of “leading and orchestrating” a scheme to sell hundreds of millions of dollars in illegitimate drugs posing as meds such as Biktarvy and Descovy.

#AAO22: J&J’s first look at com­mon eye dis­ease port­fo­lio pads the case for PhII of gene ther­a­py

CHICAGO — While the later-stage drug developers in the geographic atrophy field are near the finish line, Johnson & Johnson’s Janssen is taking a more deliberate route, with a treatment that it hopes to be a one-time fix.

The Big Pharma will take its Hemera Biosciences-acquired gene therapy into a Phase II study later this year in patients with GA, a common form of age-related macular degeneration that impacts about five million people worldwide. To get there, Janssen touted early-stage safety data at the American Academy of Ophthalmology annual conference Saturday morning, half a day after competitors Apellis and Iveric Bio revealed their own more-detailed Phase III analyses.

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Up­dat­ed: Al­ny­lam re­in­forces APOL­LO-B patisir­an da­ta be­fore head­ing to the FDA

Weeks after uncorking some mostly positive data for patisiran in transthyretin-mediated (ATTR) amyloidosis with cardiomyopathy, Alnylam is bolstering its package with new exploratory and subgroup data before shipping it off to regulators.

The RNAi drug maintained “generally consistent” benefits in efficacy and quality of life across several prespecified subgroups at month 12, Alnylam announced on Friday afternoon, including age, baseline tafamidis use, ATTR amyloidosis type, baseline six-minute walk test score and others.

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New in­fla­tion-linked drug re­bates go in­to ef­fect on Sat­ur­day

Beginning tomorrow, biopharma companies can be charged rebates for any new drug price increases rising faster than the rate of inflation.

The new rebates are part of the newly signed Inflation Reduction Act, which introduces this new requirement that manufacturers pay rebates to Medicare for Part D drugs whose price increases exceed inflation, and in January 2023, the same will occur with Part B drugs.