Stem Cell Monopoly Illicit, Scientist Says

BALTIMORE (CN) - StemCells Inc., of Palo Alto, has publicly, and illegitimately, threatened to sue for patent infringement each and every company engaged in neural stem-cell research with therapeutic applications, regardless of how they obtain the cells, claims Neuralstem Inc., a Rockville, Md., company that has been engaged in such research since 1996.

Neuralstem, a publicly traded biotherapeutics company founded by Dr. Karl Johe, claims it was the first to produce neural stem cells from the brain and spinal cord in significant quantities. It sells no commercial products yet as it is still gathering data.

Neuralstem claims StemCells and its partner and co-defendant, Neurospheres, a Canadian holding company, have a history of aggressive litigation.

On April 23, the day after it was granted a U.S. patent for "multipotent neural stem cell compositions," Neurospheres and StemCells issued a press release threatening to sue anyone that engaged in related research without a license from them, the complaint states. "In that press release, StemCells' President and CEO Martin McGlynn stated: 'We are confident that any third party wishing to commercialize neural stem calls as potential therapeutics or use them as drug screening tools will have to seek a license from us irrespective of how they derive the cells."

Neuralstem claims that threat, and the promised action, injured it: "Through its overarching threats of litigation against all neural stem cell researchers, StemCells had knowingly and willfully engaged in a course of conduct designed to improperly obtain monopoly power in the neural stem cell market and the market for innovation in the field of neural stem cell technology in the United States.

"StemCells' threats of infringement are designed to prevent Neuralstem from obtaining research funding and/or adversely affect Neuralstem's financial position. On the day of Stem Cells' April 23, 2008 press release, Neuralstem's stock price dropped 10 percent."

Neuralstem demands declaratory judgment of non-infringement and unenforceability of StemCells' patent No. 7,361,505.

It is represented in Federal Court by Michael Murphy with Bell, Boyd & Lloyd of Washington, D.C.

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