After 13 years, California Receives Its First Stem Cell Royalty Check

California's $3 billion stem cell agency this morning reported the first royalty check resulting from its 13-year-old research program -- a payment of nearly $200,000 from the City of Hope.

The money, however, did not go to the agency, which is scheduled to run out of cash by 2020. It went to the state's general fund and can be used for anything from smog prevention to patching up the state's freeways. 

The royalties resulted from a $5.2 million grant in 2012 to Stephen Forman at the City of Hope in the Los Angeles area. The research, now overseen by Christine Brown, involved the use of genetically modified CAR-T cells to improve cure rates of patients with "high-grade" malignant glioma, an aggressive type of brain cancer.

In an email today, Kevin McCormack, senior director of communications for the agency, described the $190,345.87 royalty check as a "little bit of history."

It was a "bit of history" that goes back to the ballot initiative campaign of 2004 that created the California Institute of Regenerative Medicine or CIRM as the agency is formally known.  Backers of the measure created what some say were unrealistic expectations that the agency would generate $1.1 billion in royalties. 

The royalty payment resulted from an agreement by the City of Hope to license the technology to Mustang, Bio, Inc., of New York City. It is a subsidiary of Fortress Biotech, Inc. Both are publicly traded firms.

The San Francisco Chronicle first reported the size of the payment, although the fact that a royalty check was coming was disclosed last summer. Joaquin Palomino wrote in the Chronicle this morning, 

"'This is an initial payment for the recognition of the potential of this therapy,' Brown said. 'If it’s ultimately approved by the FDA as a commercial product, this could be a continued revenue source' for California."

The Chronicle article also said, 

"'In order to prove that it was a good investment for California taxpayers, we are going to need to see returns in the tens or hundreds of millions of dollars, not in the hundreds of thousands,' said Bernard Munos, a senior fellow at the medical think tank FasterCures and a close observer of CIRM. 'It’s too early to claim victory, or to claim this was a great deal for the taxpayers of California."

Here is a link to CIRM's blog item on the payment. Below is a letter from the City of Hope to CIRM about how the royalty payment was calculated.

   First Royalty Payment Generated by California  State Stem Cell Agency by DavidJensen on Scribd