Yesterday, October 27th, the Feds filed a notice of appeal of Judge Jesus Bernal’s decision awarding Cell Surgical Network and their founders, the late Mark Berman and Eliot Lander, judgment in the FDA’s attempt to shut them down for their SVF (stromal vascular fraction) stem cell treatment.

Of course, the feds were going to appeal. Contrary to the Florida district court and the Eleventh Circuit in the US Stem Cell case, Judge Bernal found that SVF was not more than minimally manipulated and that it was the same thing as what was removed from the patient. I guess he also found that the use (or regardless of the actual use) was homologous.

Even more surprising (and just as pleasing to me and many others) Judge Bernal found that expanding stem cells is not more than minimal manipulation, which is contrary to the DC Circuit’s opinion in the Regenerative Science case, and which has been settled law for about a decade. The DC circuit is first among technical equals when it comes to interpreting federal administrative law because of its location, as many federal administrative cases are brought in DC.

I like and personally agree that Judge Bernal’s decision should end up being the law. However, I doubt it will be the law after the Ninth Circuit completes its review. The heretofore successful defense lawyers have their work cut out for them. If there was a vegas book on it, I’d call it 20-1 against them, but I am probably widely optimistic for the defense.

But in the meantime, SVF and expanded cells are perfectly legal in California, I would assume, but don’t count on the FDA agreeing with me on that. It is for sure illegal in the Eleventh Circuit (Florida and Georgia). As to the rest of the country, it’s anyone’s guess, but I wouldn’t be spending big money upfront to open up new clinics providing SVF.

This is probably mostly moot because as I have repeatedly said, the private stem cell clinics space has moved on to different products like bone marrow and exosomes. I don’t see any real future for SVF because of its probable illegality outside of FDA-approved clinical trials. I don’t see clinical trials happening on SVF because of the cost of the studies and the little fact that the product is not patentable. Though there is or could be possible patent protection relating to some distinct processes, I don’t see that as a sufficient incentive to dump tens of millions of dollars into the FDA approval process.

I feel about the same about pretty much any autologous use HCT/P product, but I hope I am wrong.

So, except for perhaps some holdout clinics that are trying to stay low profile, and despite Judge Bernal’s brave decision, I don’t see a long-term future for the SVF part of the private stem cell clinic story. The smarter play is the newer products, until the cycle begins anew with the FDA, and on it goes.

Rick Jaffe, Esq.