CRAIN’S NEW YORK BUSINESS: In blow to health care’s innovation economy, state cancels funding for stem cell research


May 5, 2021

The state is planning to dissolve a program funding stem cell research, a move that scientists warn will deal a blow to New York’s health and science startup economy.

Lawmakers eliminated the New York State Stem Cell Science program, or NYSTEM, as part of the budget approved last month. The budget bill halts new NYSTEM funding and schedules the program to terminate in 2025, once existing contracts expire.

NYSTEM launched in 2007 and has since devoted an estimated $490 million in funding to stem cell research. Last year the program opened applications for an additional $50 million in grants—enough for about 70 awards—but never gave out the money, researchers said.

Researchers often use stem cells, which have the power to develop into almost any kind of cell in the body, to better understand diseases and how to treat them. Findings can lead to the creation of drugs or other health care innovations.

NYSTEM-funded research has spawned multiple startups, including BlueRock Therapeutics, which formed in 2016 to expand on stem cell research by Memorial Sloan Kettering Cancer Center. Pharmaceutical company Bayer bought the company for $600 million in 2019, in a deal that valued BlueRock at about $1 billion.

Researchers working on NYSTEM-funded projects have also used their grants to pivot to studying Covid-19 during the pandemic.

Weill Cornell Medicine researcher Todd Evans, who was using stem cells to study heart disease, has since pivoted to examining Covid-19’s effect on the heart. He is also using stem cells to test whether drugs already approved by the U.S. Food and Drug Administration can be used to combat Covid-19.

“Without NYSTEM, this work would not have gotten done,” said Jonathan Teyan, chief operating officer at the Associated Medical Schools of New York, a consortium of the state’s 17 public and private medical schools.

The state Department of Health declined to answer questions about the decision to eliminate NYSTEM, instead referring them to the state budget office.

“The expectation is that this research continues to advance within academic and private research communities rather than the Department of Health, which is focused on its core mission of delivering direct services and achieving positive health outcomes for all New Yorkers,” Freeman Klopott, a spokesman for the state Division of the Budget, said in a statement.

But Evans and Teyan said NYSTEM often funded experimental research that other institutions, like the National Institutes of Health, rarely do. Both said the program’s elimination leaves a funding gap that federal grants or philanthropy may not fill, especially given how expensive stem cell research can be.

“NYSTEM allowed us to be pretty creative,” Evans said.

The state appears to have instead shifted its focus to the life sciences, which often entails commercializing scientific research. Gov. Andrew Cuomo announced a $650 million life sciences initiative in 2016. More recently, a Partnership Fund for New York City report named the life science industry as key to the city’s economic recovery.

Teyan said New York would be better off following in the footsteps of states like California and Massachusetts, which have found success investing in the entire research pipeline, from the basics to the later stages, aimed at turning those findings into new companies and drugs. “This really should be part of the conversation about building back our economy,” he said.