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Those Stem Cells Can Really Add Up

HOUSTON (CN) - A Texas lab operator claims the company that handled stem cells for Gov. Rick Perry's controversial back surgery owes it more than $1 million in stem cell processing and storage fees.

Human Biostar sued Celltex Therapeutics Corp. in Harris County Court.

Celltex Therapeutics co-founder Stanley Jones, a Houston surgeon, performed spinal fusion surgery on Perry in July 2011, according to contemporary reports.

Jones said he extracted stem cells from fat in Perry's hip, put them in a culture to expand for several weeks at a Celltex lab, then re-injected them into Perry to try to help tissue regenerate, according to an Aug. 3, 2011 report in the Texas Tribune.

Perry has advocated for adult stem cell research in Texas, awarding a $5 million grant to Texas A&M Health Science Center Institute of Regenerative Medicine and a $2.5 million grant to America Stem Cell, based in Helotes, Texas.

The U.S. Food and Drug Administration, however, has not approved the use of adult stem cells for anything but bone marrow transplants, which have been used for years to treat cancer patients.

In its lawsuit, Human Biostar claims it "owns and operates a laboratory facility where it derives and prepares clinical grade, isolated and expanded stem cell products from unprocessed adipose (fat) materials, typically extracted at the direction of a plastic surgeon.

"Human Biostar also maintains a specialized cryogenic facility and equipment for storage of the tissue samples and stem cell products. This facility is registered with the FDA as suitable for storage of human tissues.

"To the knowledge and belief of Human Biostar, Celltex contracted with various patients and physicians to have extracted adipose (fat) tissue material from patients in exchange for a fee. ...

"Celltex also contracted with the individual patients to have the extracted adipose (fat) tissue processed in such a way that the adipose (fat) tissue would be transformed into a clinical grade, isolated and expanded human stem cell product, and that this product would include many human stem cells.

"In addition, the expanded human stem cell product was to be stored under specialized and appropriate conditions that would maintain the integrity of the stem cell product and guard against any degradation." (Parentheses in complaint.)

Human Biostar claims that Celltex hired it to convert the fat into stem cells, and store them for Celltex patients.

"Celltex charged each patient a fee of at least $25,000 up front for all services. ... No fees received by Celltex from each patient were paid or shared with Human Biostar," the complaint states.

Human Biostar says Celltex paid for the services for a while with no objections.

"However, Celltex now refuses to pay over one million dollars owed to Human Biostar for the performance of these services, as well as the ongoing storage of the processed human tissue materials, which costs Human Biostar thousands of dollars per day," the complaint states.

"Celltex has demanded immediate possession of the isolated expanded human stem cell products that Human Biostar has created as a new product from the raw adipose tissue, and Celltex refuses to pay Human Biostar's outstanding invoices for these services.

"Human Biostar reasonably believes that Celltex's demand for possession of the human stem cell products poses a significant and immediate risk of damaging and contaminating the products.

"To Human Biostar's knowledge, Celltex has no facility and has no immediate access to any facility certified by the FDA for the storage of human tissue."

In addition, Biostar claims, "Celltex has retained Human Biostar's former director of operations, in contravention of his employment contract with Human Biostar, in an effort to establish such a facility.

"However ... Celltex has not to date succeeded in establishing such a facility."

Biostar claims that Celltex refuses to prove that its patients consent to having their stem cells moved.

Human Biostar seeks declaratory judgment that it may keep Celltex's stem cells in storage until Celltex pays its more than $1 million bill, or Celltex provides written consent from its patients authorizing Human Biostar to release the stem cells.

Human Biostar also wants damages for breach of contract.

It is represented by Lee Kaplan with Smyser Kaplan & Veselka in Houston.

Celltex came to the public's attention again in June this year when, after an inspection of a Celltex lab, an FDA report was released to the Houston Chronicle and a University of Minnesota bioethicist, who rang alarm bells about the procedures Celltex used.

"In a report one expert called a blow to the entire adult stem-cell industry, the FDA found that Celltex Therapeutics Corp. cannot guarantee the sterility, uniformity and integrity of stem cells it takes from people and then stores and grows for eventual therapeutic reinjection," the Chronicle reported on June 12.

The FDA sent a letter to Celltex in September, according to a statement on Celltex's website. "The letter stated the agency's opinion that the process Celltex uses to multiply adult stem cells is subject to FDA regulation as biological drug manufacturing," Celltex stated.

Celltex said it responded to the FDA by stating, inter alia: "In summary, Celltex stated: While Celltex respectfully disagrees with the positions outlined in the September 24 letter, Celltex believes that this technology's therapeutic potential can be brought to fruition as a biological drug as the agency states. Although the regulatory requirements for a biological drug are excessive for an autologous mesenchymal stem cell therapy such as Celltex's, Celltex will follow the agency's request to treat the Mesenchymal Stem Cell (MSC) product as a biological drug and develop Investigational New Drug (IND) submissions for clinical trials."

Celltex is preparing clinical trials to test adult stem cells efficacy on multiple sclerosis, arthritis and macular degeneration, CEO David Eller said in a statement.

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