Wednesday, June 13, 2012

$30 Million Round Attracts Strong Industry Interest; More Cash Coming?

The California stem cell agency is considering adding more cash to its upcoming $30 million award round aimed at aiding projects that can complete – within the next four years – a clinical trial for a therapy.

CIRM Chairman J.T. Thomas, a Los Angeles bond financier, last month told agency directors that there is "some real quality in the mix" among the firms that have expressed initial interest. Depending on the judgment of CIRM award reviewers later this year, Thomas said the board could well be asked to increase the funding.

The "strategic partnership" round has already exceeded expectations in terms of volume. CIRM told the California Stem Cell Report that the agency has received letters of intent from 37 enterprises, including 29 biotech companies.

The round is an outgrowth of recommendations two years ago from an "external review" panel that said that CIRM needed to do a better job of engaging the biotech industry. The RFA for the round said the agency's intent is to "enhance the likelihood that CIRM-funded projects will obtain funding for phase III clinical trials" and attract additional financing.

Elona Baum, the agency's general counsel and vice president for business development,, said in a news release earlier this spring,
“The Strategic Partnership Funding Program represents a new era for CIRM, one that is increasingly focused on moving therapies from the lab to the clinic, while still recognizing the importance of maintaining investments in early stage science,”
As the RFA is currently configured, CIRM will provide grants or loans of up to $10 million to three recipients. Applicants will have to match the size of the award. For the first time, CIRM will also require applicants to demonstrate the financial ability to carry the project forward.

In response to a query, CIRM spokesman Kevin McCormack said,
"We received 37 letters of intent (LOIs), including 8 from non-profits and 29 from biotech companies.  Based on the information in the LOIs, and on discussions with applicants, we were able to determine that some of the proposals were for projects that were outside the scientific scope of the RFA and that some of the applicants did not meet the minimum specified criteria in the RFA for 'Commercial Validation.' We currently expect to receive 10-15 applications for projects that appear to be eligible."
A "commercial validation" review is scheduled for this fall by the directors' Intellectual Property and Industry Subcommittee, which is co-chaired by Stephen Juelsgaard, former executive vice president of Genentech, and Duane Roth, CEO of CONNECT, a San Diego nonprofit that supports technology and life sciences business development. The others on the six-member panel are Chairman Thomas, Michael Goldberg, a general partner at the MDV venture capital firm, and two academics, Os Steward, chair and director of the Reeve-Irvine Research Center for Spinal Cord Injury at UC Irvine, and Susan Bryant, former vice chancellor for research, also at UC Irvine.

CIRM's short version of commercial validation says that applications must have "the financial capacity to move the project through development or of being able to attract the capital to do so. This may be evidenced by, for example, (i) significant investment by venture capital firms, large biotechnology or pharmaceutical companies and/or disease foundations; (ii) a licensing and development agreement with a large biotechnology or pharmaceutical company, or a commitment to enter into such an agreement executed prior to the disbursement of CIRM funding; and/or (iii) financial statements evidencing significant liquid assets."

Applications are due June 26 with reviews in September. The directors' Industry Subcommittee will meet following the reviews. CIRM said funding would come no earlier than January of next year.
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