The stem cell scandal
On Tuesday, September 8, the Securities and Exchange Commission charged CellCyte, as well as its former chief executive officer and former head of the scientific department, involved in fraud.
According to Steven Buchholz, a staff lawyer at the Securities and Exchange Commission, in fact, the company was trying to "skim the cream" from the hype created around stem cells. To do this, CellCyte's management in various ways created the false impression that the company was about to start clinical trials, while years of research and testing were required to complete the project.
According to a statement from the Securities and Exchange Commission, in October 2005 CellCyte licensed several compounds designed to deliver stem cells to various organs. Then representatives of the company said that the start of the first clinical trials for organ restoration is scheduled for 2008. Several subsequent statements, as well as a report requested by the Securities and Exchange Commission after the company went public in 2007, contained falsified data on progress in the development of therapy, including an application for approval by the U.S. Food and Drug Administration to conduct clinical trials.
In reality, according to the statement of the Securities and Exchange Commission, the company's employees do not have the skills to work with stem cells, have never conducted experiments to restore organs and are not able to meet any of the requirements set by the U.S. Food and Drug Administration when requesting permission to conduct clinical trials.
In addition, CellCyte entered into a deal with a specialized Canadian firm that launched a promotion campaign, which included sending millions of spam messages, faxes and informational letters that contained false information about CellCyte's successes in the field of cell therapy. During the campaign, the price of CellCyte's assets soared to 7.5 US dollars per share, resulting in the total market value of the company's issued shares amounting to about 459 million US dollars. After the termination, the share price plummeted and in January 2008 was $1 per share. Now the CellCyte stock is worth less than 5 cents.
The Securities Commission entered into an agreement with the former head of CellCyte's scientific department, Ronald Berninger, who did not admit or deny the charges, but agreed to pay a fine of $ 50,000. He is also prohibited from holding senior positions in open-type joint-stock companies for 5 years. The decision on the case of the former chief executive officer of CellCyte, Gary Reys, has not yet been made.
In 2005, in a press release dedicated to licensing treatment, CellCyte is presented as a "company conducting the last stages of clinical development", working on methods of using cord blood, adult and peripheral stem cells in bone marrow transplantation, restoration of heart tissue, as well as in the treatment of other diseases.
Ronald Berninger is a chemist by training, and received his doctorate from the University of Pittsburgh in 1972. Prior to joining CellCyte in 2007, he worked for several biotech companies, including Genespan Corporation, Cennapharm Corporation and CellPro.
Gary Race studied finance and accounting at the University of Washington and has worked in the pharmaceutical, biotechnology and medical fields for more than 30 years. In addition to disclosing false information about CellCyte, he is accused of providing incorrect data about the positions he previously held. A monetary fine was imposed on him, and a court order was announced banning him from working in open-type joint-stock companies as a senior person.
On September 9, CellCyte's acting CFO Randy Lieber, in response to a request from The Scientist to comment on the situation, said that the company's statements under discussion were based on information it received from the Office of Ex-Servicemen of the United States, from which CellCyte received a license for the technique. According to him, after it became clear that the information provided by the Department for Ex-Servicemen's Affairs did not correspond to reality, the company stopped working on the methodology. Currently, CellCyte is exclusively engaged in cell cultivation in bioreactors patented by the company.
Evgenia Ryabtseva, Alexander Chubenko
Portal "Eternal youth" http://vechnayamolodost.ru based on the materials of The Scientist11.09.2009