WIKIMEDIA, LD711The Massachusetts-based firm Advanced Cell Technology has been leading the way in the somewhat fraught pursuit of developing therapies using human embryonic stem cells. After the 2010 failure of the stem cell company Geron, subsequent progress in clinical studies from Advanced Cell Technology offered a glimmer of hope. But a news report from Nature this week tossed cold water on any excitement—apparently, the company is in trouble with the U.S. Securities and Exchange Commission (SEC) and is running out of money.

“This is a very painful time for them,” Gregory Bonfiglio, a venture capitalist with Proteus Venture Partners in Portola Valley, California, told Nature.

Advanced Cell Technology is currently running three Phase I clinical trials for degenerative eye diseases. Although the company intends to start the next round of clinical trials later this year, Nature pointed out that the firm’s most recent quarterly report revealed that the...

Late in 2013, the company paid out $4 million to settle an SEC charge of selling stocks without registering them. Last week, Advanced Cell Technology’s CEO, Gary Rabin, stepped down. Rabin is the subject of an ongoing SEC investigation. And to make matters worse, the Wisconsin Alumni Research Foundation is suing Advanced Cell Technology for breach of contract.

Rabin’s interim replacement, Edward Myles, the company’s chief financial officer and executive vice president of corporate development, said in a press release that the clinical trials will proceed. “Our core programs, the ongoing Phase I clinical trials for dry-age related macular degeneration (AMD) and Stargardt’s macular degeneration (SMD), continue to progress according to plan and we expect to release interim, top line data from the trials in the very near future.”

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