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International Stem Cell Corporation Secures Approval for Core Technology Patents in European Union

CARLSBAD, CA--(Marketwired - July 22, 2014) - International Stem Cell Corporation (OTCQB: ISCO) (www.internationalstemcell.com) ("ISCO" or "the Company"), a California-based biotechnology company developing novel stem cell based therapies and biomedical products, received formal opinion from the Advocate General for the European Union Court of Justice (CJEU) in favor of the Company's pending core technology patents.

Dr. Andrey Semechkin, the Company's Co-Chairman and CEO commented: "A favorable ruling by the CJEU in this case would give ISCO a unique advantage. Having the ability to seek patent protection in all 28 counties of the EU would not only enhance our ability to attract partners to develop stem cell therapies, but could also stimulate further investment by pharmaceutical companies who up to this point have been somewhat on the sidelines in part because of the intellectual property risks."

The European Union's highest court was asked to clarify whether its interpretation of the EU Directive on Legal Protection of Biotechnological Inventions ("Biotech Directive") in the 2011 Brüstle vs. Greenpeace case excluded ISCO's core technology -- parthenogenetic stem cells -- from patentability under the EU law. According to the Advocate General's interpretation, the Biotechnology Directive should not prohibit patenting of parthenogenetic stem cells.

Background
At issue in this case are two patent applications (covering production of stem cell lines and corneal tissue from parthenogenetically activated oocytes) that were initially filed by ISCO in the United Kingdom. The UK Intellectual Property Office rejected both applications on the grounds that the disclosed technology, namely parthenogenetic stem cells and methods of making these stem cells, involved the use and destruction of human embryos within the meaning of the Biotechnology Directive and was, therefore, excluded from patentability under the Court of Justice decision in Brüstle v. Greenpeace.

Technology covered by the German patent in the Brüstle case concerned the use of pluripotent embryonic stem cells for producing isolated and purified neural precursor cells which could be used to treat neurological diseases. Greenpeace challenged the patent, citing the Biotechnology Directive that expressly disallowed patent protection for inventions that used human embryos for industrial and commercial purposes. Faced with ambiguities in the language of the Directive, the German court referred the question of what constitutes a 'human embryo' to CJEU. Choosing to interpret the Directive broadly, the EU Court defined 'human embryo' as an organism that is capable of commencing the process of developing into a human being, including within the meaning of the term, an ovum that has been fertilized by sperm, a non-fertilized ovum subjected to somatic-cell nuclear transfer, and, notably, a non-fertilized ovum activated through parthenogenesis.

ISCO appealed the UK IPO's rejection, arguing that CJEU's ruling in Brüstle was incorrect as a matter of scientific fact with respect to parthenogenetic stem cells. In contrast to a fertilized human ovum, which gives rise to totipotent cells and possesses the inherent capacity to develop into human beings given the right environment, chemically activated oocytes or "parthenotes" are pluripotent and, therefore, incapable of ultimately developing into human beings. ISCO maintained further that since the ruling in Brüstle was only intended to ban patents on the use of organisms that could ultimately develop into human beings, parthenotes, which lacked such capacity, should not be regarded as human embryos for purposes of the Biotechnology Directive and should be patentable under the EU law.

Conceding that the Company's position with respect to parthenotes was well supported by scientific evidence, the UK court referred the question of whether parthenotes were 'human embryos' within the meaning of the Biotechnology Directive to the CJEU.

In his opinion, the EU Court's Advocate General concluded that with one technical caveat the question should be answered in the negative. According to the top advisor's reading of the ruling in Brüstle, the key criterion for determining whether an unfertilized ovum is a human embryo is whether the ovum possesses the inherent capacity to develop into a human being. Parthenotes, in the Advocate General's view, cannot be said to possess such inherent capacity given the current scientific knowledge, and as such should not be considered 'human beings' within the meaning of the Biotechnology Directive.

A confirmation of the Advocate General's opinion from the CJEU is expected within the coming months.

About International Stem Cell Corporation
International Stem Cell Corporation is focused on the therapeutic applications of human parthenogenetic stem cells (hpSCs) and the development and commercialization of cell-based research and cosmetic products. ISCO's core technology, parthenogenesis, results in the creation of pluripotent human stem cells from unfertilized oocytes (eggs). hpSCs avoid ethical issues associated with the use or destruction of viable human embryos. ISCO scientists have created the first parthenogenic, homozygous stem cell line that can be a source of therapeutic cells for hundreds of millions of individuals of differing genders, ages and racial background with minimal immune rejection after transplantation. hpSCs offer the potential to create the first true stem cell bank, UniStemCell™. ISCO also produces and markets specialized cells and growth media for therapeutic research worldwide through its subsidiary Lifeline Cell Technology (www.lifelinecelltech.com), and stem cell-based skin care products through its subsidiary Lifeline Skin Care (www.lifelineskincare.com). More information is available at www.internationalstemcell.com or follow us on Twitter @intlstemcell.

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Forward-looking Statements
Statements pertaining to anticipated developments, the potential benefits of research programs and products, and other opportunities for the company and its subsidiaries, along with other statements about the future expectations, beliefs, goals, plans, or prospects expressed by management constitute forward-looking statements. Any statements that are not historical fact (including, but not limited to statements that contain words such as "will," "believes," "plans," "anticipates," "expects," "estimates,") should also be considered to be forward-looking statements. Forward-looking statements involve risks and uncertainties, including, without limitation, risks inherent in the development and/or commercialization of potential products, regulatory approvals, need and ability to obtain future capital, application of capital resources among competing uses, and maintenance of intellectual property rights. Actual results may differ materially from the results anticipated in these forward-looking statements and as such should be evaluated together with the many uncertainties that affect the company's business, particularly those mentioned in the cautionary statements found in the company's Securities and Exchange Commission filings. The company disclaims any intent or obligation to update forward-looking statements.

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