January 13, 2006

In the Wake of a Scandal

Advanced Cell Technology CEO Bill Caldwell talks to Gelf about the future of human stem-cell cloning.

David Goldenberg

After Dr. Hwang Woo Suk was found to have faked data and falsified his claims to have cloned human stem cells (International Herald Tribune), the formerly-most-feted man in Korea has become a cancer, poisoning the careers of his colleagues, the pride of his country, and the hopes of millions of people around the globe who thought his research would someday cure everything from paralysis to blindness. (And why shouldn't they hope? Take a look at this Korean stamp issued soon after Hwang's landmark Science papers came out.)

Cloned Human Morula
Courtesy ACT
Human cloning gets back to its roots.
As the scientific community recovers from the scandal, Hwang's former competitors in the race to clone human stem cells are starting to re-emerge. Among them: Advanced Cell Technology (ACT), a Massachusetts-based biotech company that specializes in developing products in the field of regenerative medicine and at one point was considered to be the leader in the race to clone human stem cells (MSNBC). Even after Hwang's initial breakthrough, ACT continued to focus on human cloning—its employees have written a letter to Nature decrying the US government's stem-cell policies and last year the company set up a research branch in California in hopes of snagging some of the $3 billion the state committed to its Stem Cell Initiative (Wikipedia).

ACT employees also have been outspoken about Hwang's fraudulent research and its aftershocks. Vice President Robert Lanza told the New York Times that the company's funding disappeared after Hwang announced his claims in 2004, and was quoted by the Los Angeles Times as saying he was suspicious of Hwang's research from the start. "I called for a third-party investigation right after that paper, but it fell on deaf ears," he said.

Gelf talked with ACT chief executive Bill Caldwell about the effects of the Hwang scandal on his business, on the future of cloning research, and on the scientific community in general. Caldwell also explained to Gelf why he thinks the US is starting to loosen its ethical standards and why he thinks the country will continue to be the standard-bearer for technological excellence. Here's the interview, edited for clarity:

Gelf Magazine: In a couple of articles that have come out recently, some ACT employees have claimed that they suspected that Dr. Hwang's claims were false to begin with. Why did nothing ever happen?

Bill Caldwell: I think that what was requested was a third-party DNA test and that's basically what Bob [Lanza] and I put out there. It was a couple years ago. But other than that, it is difficult for a competitor to start probing in on someone's work that has been peer-reviewed and has the prestige of the authors that it had.

GM: Do you think there's anything inherently wrong with the peer-review process that would let something like this go through?

BC: I really don't. If you had to go back and sum up—it's still to early to really give a postmortem on it—but I'd say from where we stand right now you could define the situation in several different categories. The first is, what was the tragedy? The tragedy of course is that an individual, for whatever motivations, took advantage of a university and his colleagues in trying to promote himself ahead of what was the basic research that most likely could have been done. I don't think that anyone feels that the research that he did isn't something that's going to be done. It's just that he perceived himself to be in a race. And he, for whatever reason, took a shortcut.

GM: Do you not think that race exists? At least the way that the press covered it, it seemed like it was very much a race.

BC: Clearly there were several different groups, including ourselves at the time—this was before I was at the company—but our scientists were very much in the heat of it. They had already done work at a four-cell level and were working very hard to get it to where Hwang claimed that he had achieved. I think the tragedy there, though, is focused on what he did for his employees. It's just tragic that they're associated with such a terrible situation. I think beyond that, though, because of the nature of what he did, the government saw an opportunity to change national policy, national interest, and take advantage of what they thought was valid research to reposition the country as a leader in biotechnology. The tragedy is that it was all based upon a fraud. He's really let down his fellow countrymen as well—leading them down a path knowing full-well he was doing it.

But there are checks and balances. As I'm sure you discovered, his own countrymen questioned eventually what he was doing. It's like everything else. You can't fool everybody. There are systems and checks and balances within the system that eventually catch this kind of thing.

GM: Eventually is the key word here, though, isn't it? It's been a year and a half, and all of that funding that you guys could have gotten, for instance, didn;t exist because of it.

BC: No question about it. And there's no question about the fact that maybe it has an impact on furthering the science in that particular area. People accepted that the science was done so they started moving towards indications that could help define products and therapies. That's exactly what our company did.

GM: How far back are we? Are we back at square one in terms of the research?

BC: Not at all. Many of us have gotten way down the line. Remember, this has all been done in animals, so it's a question of going back to the experiments that were done back in '03 by some of us. And others, I'm sure, are going to go back to their research to reconstruct where they were at that point in time and to finish their experiments.

GM: Is the race back on?

BC: I think that there will be a thrust for groups throughout the world to do what Hwang claimed to have done.

GM: Is ACT one of those groups?

BC: We're taking a hard look at it, though I'm not saying we're doing it. We clearly have a focus on creating products, so this is a little more rudimentary. This is research.

Advanced Cell Technology
GM: What products in particular are you guys working on?

BC: We have stated specifically that we are interested in the retina. Another area is in the blood—we've identified a cell that we're very excited about. We're taking a hard look at the impact of the cell on different areas of the body and what the impact could be. We've also said that the skin or the derm area is something that interests us as well. Those are three primary areas of research that we're looking at. We haven't made any product announcements yet.

GM: When do you expect to be able to start making these product announcements?

BC: That's a forward-looking statement that you probably couldn't understand and the SEC would not want me to say anything about, based upon the Enron and WorldCom situations.

GM: From a funding standpoint, though, wouldn't you stand to get a lot more money if you were the first to clone human stem cells? Wouldn't investors be a lot more interested if you guys were the ones that came up with this?

BC: I don't know that. I think investors are fairly sophisticated in the biotechnology area. There's no misunderstanding that this is a huge platform. That's where we sometimes lose sight of what's happened here. This is about the character of a man. It's not about the character of a technology.

GM: So you don't think that investors in general are going to be more wary of fraud and less likely to put money into this?

BC: I think it's the same situation you found with the Enron and the WorldCom scandals whereby you had individuals that took advantage of their fellow workers, as well as the assets of their company, to perpetuate a fraud not only on a company and its shareholders, but also on the industry and indirectly on the form of capitalism that allowed that thing to happen. In the final analysis, though, you don't throw the baby out with the bathwater. While you have some initial reaction, the markets bounce back pretty quickly. People who invest in biotechnology for the most part are pretty savvy investors. They understand the science. There will be some that will be cautious and there will be some that want to check it out.

This is a geopolitical race. This is in essence a science Olympics in terms of countries trying to get in position to take advantage of a new industry opportunity. You've got people in Great Britain and Australia and Singapore and Israel and in the mainland of Europe as well as here in the United States all vying to figure out what the opportunity here is to advance science. Just like recombinant DNA was such an Earth-shattering platform, many feel that this is a similar type of platform to attack disease. I think you're going to find that the race is going to be very much hot and heavy. The United States has historically been a leader in all phases of technology, whether it be in medicine or other areas.

GM: But people at ACT have said in the past that the United States government has handicapped your efforts.

BC: I think that's true. There are a couple of issues related to that. Ordinarily, basic science in this country is by the National Institutes of Health, and when President Bush curtailed the development of new stem-cell lines back in 2001, that pretty much put a halt to the basic science research in this area. The research was pretty much done either by entities that were not getting funded by the NIH or private enterprise in some fashion. Many of those companies did not make it. It was a real struggle for a lot of those companies, because the venture capitalists that ordinarily go to the various universities to pluck out the nuggets and incubate them—those guys will take risks as it related to technology—they understand technology—they'll take marketplace risks, they'll even take the management risks. The risk that they generally shy away from is political risk, because they don't know how to manage it and they know that there are a lot of X-factors that they can't begin to understand. In essence that's what happened when Bush made his announcement. He pretty much dried up the funding for this type of technology in the United States. That allowed other countries to take advantage and usurp the United States' position in this technology.

Now, we have an environment—it hasn't really emanated from Washington as much as it's been grassroots—but at the state level we have an environment that's encouraging companies to get back in the game.

GM: Do you think that the legal landscape for using fetal tissue will be changing soon? Does the fact that the Supreme Court is going more toward the right affect your work?

BC: I'm hard-pressed to understand how the law of the land will change in terms of court interpretations. But I do believe that there's a very strong and growing sentiment in the legislature on a congressional level favorable to this technology. You have people like [Sen.] Orrin Hatch and [Sen.] Arlen Specter and Nancy Reagan all coming out avidly in favor of this type of research. They're throwing their support with the very strong patient-advocacy groups as well as getting a lot of local and national support. You see surveys out of Kansas and Texas and Florida all indicating popular support for the technologies. I think you're seeing a major swing that suggests we're going to be seeing some major legislative changes. You've already seen at the close of the last Congress some legislation in the core blood area. The House has passed legislation prior to the close of the last session for increased cell lines, and the Senate has actively got a commitment from [Senate Majority Leader Bill] Frist who actually came out in favor of this legislation that is before Specter's appropriation subcommittee. I believe that the Senate will vote on that in the first part of this year and my anticipation suggests that this will pass as well. That will a lot more pressure on the administration to take a hard look at the policy they currently have and maybe modify it to get more in step with what the country is asking them to do.

GM: Has this Hwang scandal had any other effects on the way you guys are doing business?

BC: The sophisticated biotechnology investor is not going to be shaken by this. I think, interestingly enough, that the group that has been shaken the most has been the scientific community, because it's almost a violation of their code of conduct. You do see scientists do things that are not in the standard of ethics in their research, but in general there is an implied trust within the scientific community. They are very hard on one another, they critique one another very well, but I think when push comes to shove, there is an integrity factor that is there and that has been shaken by this. That's a tragedy. That's not going to have a lasting impact, but I do believe it's going to make people a little bit more skeptical—as scientists generally are—and not get necessarily caught up right away in the implications of the research, but really look hard to make sure the research can be replicated.

I think in part Hwang's miscalculation was that he knew that he was in a race, but he felt others would do and verify the research. Everyone knew that what he was trying to do could be accomplished in some fashion, they just weren't sure of all the techniques. When he had done it, he was rest assured that probably someone else would verify the fact that it could be done and therefore he would not have been as exposed as he was. That's my guess. That's pure speculation on my part.

GM: Why don't you think anyone ever did verify this? Is it that much harder or more sophisticated than he thought?

BC: You've got to remember one of the things about the United States. Not only did the legislation to limit stem cell lines curtail the development of the platform, but getting material is very difficult because of the high standards we impose on researchers to ensure that the concerns of human donors are appropriately addressed. At ACT, we implemented an ethics advisory board very early in the game that worked with us for several years to develop the appropriate informed consent and to verify and watch and evaluate whatever clinic we were dealing with to try to get material to work on our science. It's a very difficult and tough process—appropriately so—and that's why you find there's a litany of standards that the United States employs with respect to technology, that one may perceive as barriers but basically are standards of excellence that when we do achieve our technology become very high standards for others to accomplish.

Post a comment

Comment Rules

The following HTML is allowed in comments:
Bold: <b>Text</b>
Italic: <i>Text</i>
<a href="URL">Text</a>


Article by David Goldenberg

Contact this author