Alan Trounson Named President of CIRM

California's $3 billion stem cell institute has found a new president, eminent Australian scientist Alan Trounson who is giving up his research to immigrate to California and oversee the world's largest single source of funding for embryonic stem cell research.

Reporter Sabin Russell of the San Francisco Chronicle quoted George Daley, president of the International Society for Stem Cell Research, as saying,

"It's a surprise move to have someone of his prominence in this role. This is a recognition of the incredible impact the California initiative has had. He's voting with his feet."

California stem cell chairman Robert Klein, who headed the presidential search, was obviously pleased by the move. He cited Trounson's "global vision."

The California Institute for Regenerative Medicine had been operating on lame duck status since last December, when former President Zach Hall announced he was going to retire. Early in August, the CIRM Oversight Committee named Richard Murphy, former president of the Salk Institute, as interim president.

Media reports indicated that Trounson hoped to begin work in San Francisco by the end of the year, but has not worked out all the visa requirements. Trounson will be paid either $490,000 or $475,000 annually depending on whether the state picks up his moving expenses. The salary is a substantial increase over the previous cap of $412,500 on the president's salary. Trounson is also giving up any investments in stem cell companies. Mary Engel of the Los Angeles Times said he will be able to work part-time on a pro-rated salary for up to six months as he closes his laboratory.

Reporter Terri Somers of the San Diego Union-Tribune wrote that the appointment is "viewed as a coup for California's ground-breaking institute because of his research resume, his entrepreneurial and management abilities and his experience navigating Australia's rocky political climate on human embryonic stem cell research."

Somers continued:

"'I have great respect for Alan as a scientific colleague and a deeply ethical and moral individual who will provide great leadership to the CIRM in coming years,' said Larry Goldstein, an embryonic stem cell researcher at the University of California San Diego who has collaborated with Trounson."

The Los Angeles Times' Engel quoted John Simpson of the Foundation for Taxpayer and Consumers Right as saying, "This is an excellent move. I am wonderfully impressed and completely surprised."

Somers also reported:

"As well as founding the Australian Stem Cell Centre at Monash University in 2003, Trounson has founded or co-founded eight companies. Among those companies is globally recognized Embryonic Stem Cells International in Singapore.
"Started in 2000 with angel investor money and investment from Singapore's research-loving government, Embryonic Stem Cells International holds the commercial rights and intellectual property to the initial six embryonic stem cell lines developed by the founders, who include Ariff Bongso, a Singapore IVF specialist considered to be a pioneer in deriving stem cells from human embryos."

Trounson told the Sydney Morning Herald:

"It's obviously a tremendous personal opportunity and honour, but it is also a sign of the high regard in which Australian research organisations and scientists are held internationally in stem cell research.

"This is a research field in which our achievements are world class - I see myself as an ambassador for all Australian medical researchers."

Trounson surfaced in American media earlier this year in support of challenges to stem cell patents held by the Wisconsin Alumni Research Organization.

The Los Angeles Times also reported:

"Trounson's career has not been free of controversy. He was criticized in 2002 after showing Australian legislators -- who were voting to legalize embryonic stem cell research -- a video of a rat that he said had been cured of paralysis using embryonic stem cells. It turned out that the rat had been given slightly older cells called foetal germ cells.

"Trounson said Friday that he had apologized to the parliament and learned "a very valuable lesson about ensuring precision in what you say to people."

Here are links to stories on the Trounson appointment. CIRM has not yet posted a news release. San Diego Union-Tribune, Los Angeles Times, San Francisco Chronicle, San Jose Mercury News , The Sydney Morning Telegraph, The Associated Press, Cellnews.

Alan Trounson, Former CEO of California Stem Cell Agency, Later Received $443,500 in Total Compensation from StemCells, Inc.

The Sacramento Bee this morning carried on its front page the following article about Alan Trounson and his relationship to StemCells, Inc. The piece was written by the producer of this blog. Following this item are the full texts of the comments made via email by Trounson and StemCells, Inc. (Irv Weissman of Stanford University submitted comments following the publication of this piece.) The complete text of comments from the state stem cell agency and Consumer Watchdog are contained within the article.
--------

By David Jensen
Special to The Bee

The former president of the $3 billion California stem cell agency received $443,500 in total compensation from the Bay Area stem cell company that appointed him to its board of directors only seven days after he left his state post.

The stock and cash were provided over a two-year period to Alan Trounson by Newark-based , a firm that was awarded more than $40 million in funding while Trounson headed the California Institute for Regenerative Medicine(CIRM), as the state stem cell agency is formally known.

Alan Trounson -- LATimes photo

StemCells Inc.

In 2014, when Trounson served less than six months on the StemCells, Inc.. board, his total compensation was more than double that of any other board member.

The surprise appointment of Trounson almost immediately after he left CIRM in 2014 generated allegations of conflict of interest. The size of Trounson’s total compensation, however, was not available at that time.

Conflict-of-interest allegations have dogged the agency since it was created in 2004 by California voters to use state bond proceeds to finance stem cell research.

In 2008, the respected scientific journal Nature warned about “cronyism” at the agency. In 2012, the Institute of Medicine, a division of the National Academies of Sciences, recommended in a $700,000 study commissioned by CIRM that the stem cell agency make sweeping changes to reduce the possibility of such conflicts.

Speaking about the agency’s board, Harold Shapiro, chairman of the Institute of Medicine team, told the Los Angeles Times,

“They make proposals to themselves, essentially, regarding what should be funded.”

The agency made some changes to deal with conflict questions but resisted the institute’s far-reaching proposals.

The latest news prompted John Simpson, who has followed the stem cell agency for Consumer Watchdog of Santa Monica, Ca., to say in an email,

 “Trounson’s joining the StemCells Inc. board a mere seven days after quitting as CIRM’s president at the time smacked of being a payback for a job well done on behalf of the company when he should have been looking out for the taxpayers’ money and interests. It was a blatant conflict that undermined the agency’s credibility. Now we know his price tag.”

In 2014, the stem cell agency said its “limited” investigation showed that no violation of law occurred. At the time, CIRM Chairman Jonathan Thomas described the issue as a “perception” problem.

The state’s Fair Political Practices Commission (FPPC) later investigated to determine whether Trounson “had made, participated in or influenced a governmental decision involving StemCells, Inc., after he began employment negotiations.”

A Feb. 6, 2015, letter to Trounson from the FPPC said there was “insufficient evidence to demonstrate” a legal violation.

Asked for comment, Robert Stern, the key author of the California Fair Political Practices Act and former president of the Center for Governmental Studies in Los Angeles, said in an email,

“It is an appearance problem when someone goes to work for a company that has benefited from huge contracts from the agency that he heads even if he had nothing to do with the decision to award the contract.”

The payments to Trounson were made in 2014 and 2015, according to Securities and Exchange Commission filings by StemCells, Inc. (See here and here.) The cash totaled $59,500 and the stock options totaled $384,000 for the two-year period. Trounson was appointed president of California’s stem cell agency in 2008. He was named to the StemCells, Inc., board July 7, 2014. The stock price has dropped precipitously since the award of Trounson’s stock options.

Last month, Trounson resigned from the StemCells, Inc.,  board as part of a deal in which the financially troubled firm was acquired by Microbot Medical Ltd. of Israel. StemCells Inc. said in an Aug. 15 SEC filing that the resignations of Trounson and Stanford University researcher Irv Weissman were not “the result any disagreement with the company on any matter.”

Irv Weissman, Stanford photo

Weissman was a co-founder of the company and also served on its scientific advisory board. Trounson served on the company’s strategic transactions committee.

Connections between Trounson and Weissman surfaced well before Trounson’s appointment to the StemCells, Inc., board. In 2013, a $40 million CIRM funding application round involving Weissman was postponed after it was disclosed that one of the application reviewers had a legal conflict of interest. The case involved Lee Hood of Washington state, who owns property in Montana with Weissman. Hood acknowledged the conflict of interest and resigned as a reviewer. Trounson helped to recruit Hood as a CIRM reviewer, the agency said.

In 2012, StemCells, Inc., was awarded $40 million in a single funding round, the only applicant ever to reach that level of success. One of the two $20 million awards was approved by the stem cell agency’s board despite being rejected twice by its grant reviewers. It is the only time that an application has been rejected twice by reviewers and then approved by the governing board. (See here.)

In 2013, the company declined one of the awards, which required a matching amount. In December 2014, the second $20 million award was terminated early because of poor results. That left StemCells, Inc., receiving a net of $9 million from the agency.

Trounson, a pioneering researcher in the field of in vitro fertilization, returned to his home in Australia after leaving the agency. Contacted by email, he said,

 “I was cleared by independent legal advice by CIRM and no conflict was found by a Californian government investigation. ... The share values are unknown – perhaps worth nothing. I actually pay monthly fees to hold them.”

Weissman, who has received $30.5 million from the agency, did not respond to a request for comment. (Following the publication of this piece, Weissman said in an email that some time after Trounson "got settled into his position" at the agency, "he recused himself on all grants and CIRM-related activities that involved either my lab or StemCells, Inc.")

The Trounson controversy surfaced shortly after C. Randall Mills was named to replace Trounson as president of CIRM. Mills then signed a pledge that he would not accept employment with any award recipient for at least a year after he leaves the agency. However, the agency did not set restrictions on future employment by other agency employees.

Asked for comment, Thomas, chairman of the agency since 2011, said in an email,

“Dr. Trounson’s financial involvement with StemCells Inc. occurred after his separation from CIRM in June of 2014, and we have not been in contact with him since. Two years later, CIRM is a very different and vastly improved organization – we’ve reduced the time it takes to review applications by 80 percent, recaptured $75 million from programs not meeting performance standards, and reinvested that money, doubling the number of clinical trials in our portfolio.

“In addition we are doing all this with the good governance, transparency and accountability the citizens of California deserve.”

The agency has about $800 million in uncommitted funds. It expects to run out of cash for new awards in 2020 unless it finds fresh sources of funding.

Trounson's Business Activities

Alan Trounson, just named as president of the California stem cell, agency, has said he will divest any interests he has in stem cell companies. Here is a list of companies that Trounson founded. The list was provided by CIRM.

Abstracts of Companies Founded by Alan Trounson
1. Infertility Medical Centre/ Monash IVF Pty Ltd (http://www.monashivf.com )

- Established 1978 as a company providing services to infertile couples. In 1982 the original company was absorbed by Monash University as 51% ownership, with the majority other ownership by private gynaecologists who manage the patient treatments. The primary activity is now to service patients requiring IVF and related therapies and diagnosis of inheritable genetic diseases using preimplantation genetic diagnosis. Largest provider in Australia – New Zealand. Clinics in Victoria and Queensland. Presently in sale mode for $100mill+

2. Sydney IVF Pty Ltd (http://www.sydneyivf.com )

- Founded by Trounson and Dr R Jansen in 1986 for provision of infertility services in Sydney. Sydney IVF has international clinical and business relationships in infertility services and stem cell provider activities (eg. GMP embryonic stem cells to ESI Pte Ltd., Huntington’s Disease embryonic stem cell lines to US distributor)

3. Intergramed America Inc (http://www.intergramed.com )

- The company was founded by Robert Moses (foundation CEO), Vicki Baldwin, David Beams and Trounson in 1984 as IVF Australia Inc/ then IVF America Inc, initiating new IVF clinical services and for provision of services in women's health care and physician practice. The management company focuses on infertility and assisted reproductive technology. Raised $20mill as public float on NYSE. Present market cap ~ $80mill. Services provided to clinics nationally across the US and is one of the largest providers in the US.

4. Embryonic Stem Cells International (ESI) Pte (http://www.escellinternational.com )

- Founded by Trounson and Drs Pera, Reubinoff, Bongso in 2000 to support our research in embryonic stem cells (ESCs). Commercial rights and IP to the initial 6 ESC lines developed by the founders were transferred to ESI. These ESCs are part of the “NIH recognised” cell lines and were the subject of the change in ESC support by NIH when Trounson and colleagues applied for NIH funding under President Clinton’s administration. The initial investment was obtained equally from Business Angels associates from the Melbourne community and the Economic Development Board of Singapore. The company was registered in Singapore. Carl Strachan (Melbourne) chaired the Board and the foundation CEO was Robert Klupacs (previously Commercial Manager of Institute Reproduction and Development under Trounson’s directorship}. The company provided the initial financial support for


Trounson and Pera at Monash, Reubinoff at Hadassa Medical Center, Jerusalem and Bongso at National University of Singapore. The company focused their commercial interests under Alan Coleman (CEO) for ESCs and diabetes (funding Drs Elefanty and Stanley in Trounson’s Centre) and ESCs and cardiac therapy (funding Dr Christine Mummery, Utrecht, Holland).
Trounson and his wife exited all shareholdings in ESI Pte in 2002 to avoid conflict of interest of management with the award of the National Stem Cell Center.

5. Maccine Pte (http://www.maccine.com)
Maccine was founded by Trounson in 2002 with Australian investors to provide primate discovery support services to Pharmaceutical and Biotechnology companies worldwide. The initial facilities were based at the Primate Research Center in Bogor, Indonesia and was moved to Bin Tan Island under Singapore lease to develop a new state of the art primate center to service Singapore and world commercial interests. The Singapore Development Corporation now has the majority ownership and the Australian parent company (Trounson – Chairman of Board) is being dissolved. The business involves the development of primate efficacy models in various therapeutic areas (e.g. cognition, diabetes, cardiovascular, pain, oncology); pharmacokinetic screening and ranking; and early toxicokinetic evaluation of candidate drugs for use in human medicine.

6. CopyRat/InjenKO Pty Ltd.
CopyRat is a spinout company from Monash University founded by Trounson in 2001 that was developing novel gene-targeting and stem cell technology in the rat in order to supply Knockout animals as models for human diseases.
IngenKO was a subsidiary of CopyRat Pty Ltd, a company formed in 2002 by Drs Hertzog and Trounson that aimed to become a world leading supplier of mouse and rat models of human disease to the biomedical industry. The investment was limited to $4mill by local Melbourne investors and despite limited cash flow from providing mouse Knockout and Knock in services to non-profit organizations and biotech companies, Monash University decided to close the merged company in 2005 because of the limited capital available.

7. National (Australian) Stem Cell Center (http:// www.nscc.edu.au/ascc)
- Trounson (with help of David de Kretser, Monash University, now Governor of Victoria), Dianna DeVore (US patent attorney), Bob Moses (biotechnology business leader) and colleagues won the national competitive grant for the first Australian Biotechnology Centre of Excellence, the National Stem Cell Center (now the Australian Stem Cell Centre - ASCC) in 2002. Funding was from the Australian Government to the tune of ~A$110 million over 10 years supplemented by other Federal and State funds, and provided support for a national endeavour for building strong platforms in adult and embryonic stem
cell research. The key scientists at the onset included Paul Simmons (adult mesenchymal stem cells), Peter Rathjen (mouse embryonic and neural stem cells), Martin Pera (human ES cells), Bernie Tuch (clinical diabetes research), Harvey (adult cardiac stem cells and heart repair), Mal Horne (neural stem cells and Neuro degeneration), Andrew Elefanty and Ed Stanley (embryonic stem cells differentiation into blood and pancreatic lineages), Richard Boyd (thymic immunology and stem cells) and Trounson (embryonic and adult stem cells and respiratory repair). A Board of Governors drawn from business, law, academia, ethics and politics heads the ASCC. A Stakeholders Committee represents the Research and Academic Institutions involved and reports to the Australian Government through a Deed of Agreement. The founding Chairman of the Board was R. Moses, CEO was Trounson, and COO was DeVore. Trounson stepped down to head a new research institute at Monash 2004 (Monash Immunology and Stem cell laboratories) and was made Deputy Chairman of the Board and Global International Strategic Advisor. These positions were concluded in 2006 and 2007, respectively.

Former CEO of California Stem Cell Agency Named to Board of Firm that Received $19 Million From the Agency

Alan Trounson, the former president of the $3 billion California stem cell agency, today was named to the board of a company that has received $19.4 million from the agency, raising fresh and serious questions about conflicts of interest at the state-funded research program.

Announcement of the appointment came only seven days after Trounson left state employment. Trounson has been dogged for some time with questions about his relationship to the company, StemCells, Inc., of Newark, Ca., and its co-founder, eminent Stanford researcher Irv Weissman, who sits on the company’s six-man board and is chairman of its scientific advisory board.

StemCells, Inc., announced Trounson’s appointment in a press release this morning. The publicly traded firm said it was “thrilled” to have Trounson on its board. The first sentence of its press release noted that he had served as head of “the largest scientific funding body for stem cell research in the world.”

Weissman is director of the Institute of Stem Cell Biology and Regenerative Medicine at Stanford. He has received $34.7 million from the agency. Stanford overall has received $281 million from the stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM). It is the No. 1 recipient of cash from the agency.

One California stem cell researcher, who asked to remain anonymous, said in an email,

“This looks like payback to Alan Trounson for all of the money that CIRM paid out to Irv Weissman (founder of StemCells, Inc.) and his friends at Stanford while Alan was president of CIRM.  Many people have pointed out that Alan seemed to be biased toward Stanford in his public and private comments. The facts bear that out: Stanford and StemCells, Inc., have had more than $300,000,000 of CIRM's $3 billion in funds awarded to them in grants.  Are they really more than twice as good as UCSF ($132,650,363), and three times better than USC ($104,858,348) and UC Irvine ($98,591,836)?”

As a member of the board of directors of StemCells, Inc., Trounson is expected to receive compensation including stock in the company. In 2013, members of the board received total compensation, including stock awards, ranging from $60,800 to $99,800, according to a Security and Exchange Commission filing.

StemCells, Inc., Weissman and the stem cell agency did not immediately respond to requests for comment. Trounson, who announced last fall he was leaving the agency to return to Australia, could not be reached. The California Stem Cell Report will carry the full text of their remarks when they are received.

Last year and earlier this year, conflict of interest questions concerning Trounson and Weissman came in a $40 million stem cell genomics award round that was won by a Stanford-led team last January. The round was marked by a conflict of interest connected to Trounson, CIRM grant reviewer Lee Hood of Seattle and Weissman. Hood and Weissman own a Montana ranch where Trounson has been a guest. Trounson recruited Hood to help review the stem cell genomics applications in 2013 in closed door meetings. Hood, however, failed to disclose his relationship with Weissman.  It only came to light after another reviewer pointed out the connections between the two men. The agency had failed to detect the conflict.

As the California Stem Cell Report has previously noted,,

“Prior to the genomics round Trounson had acknowledged he had a conflict-of-interest in connection with another Weissman-related proposal. In 2012 in a round not connected to genomics, Trounson, who has visited the Hood-Weissman ranch as Weissman's guest, recused himself from the board's public discussions of applications from StemCells, Inc., a company founded by Weissman.

“Under CIRM's procedures, Trounson does not vote on applications during the review process. But beginning last year the board gave him and his staff new authority to make recommendations on applications after they were acted on by reviewers.”

Trounson ultimately recommended board approval last January of the genomics application from Stanford after Weissman was removed from the proposal.

During last January’s meeting, Trounson touted the Stanford application and specifically mentioned Michael Clarke, who is the No. 2 person in Weissman’s stem cell institute at Stanford, and who was part of the Stanford application instead of Weissman.

According to the meeting transcript, Trounson said,

“I think he's (Clarke) an extraordinary good researcher, and I think the Stanford people are terrific at that.”

The agency said earlier this year it had begun an examination of the processes in the stem cell genomics round, which was criticized for irregularities,unfairness, score manipulation and Trounson’s role.   No results of that inquiry have been announced.

Since the agency's inception in 2004 questions have been raised about conflicts of interest at the agency, mainly due to the composition of its board. Roughly 90 percent of its grants have gone to institutions that have been linked to members of its board.  The Institute of Medicine, in a $700,000 study commissioned by the agency, said that the board members essentially make proposals to themselves about what should be funded. And in 2008 the journal Nature editorialized about "cronyism" at the agency.

California Stem Cell Agency Scores on Early Coverage of Today's Trounson Story

Two media outlets were quick today to write about the Trounson Affair and the reaction from the California stem cell agency, but did not note what the agency itself described as the limited nature of its investigation into the matter.

They focused on what Randy Mills, the new president of CIRM, promised regarding his future employment and acceptance of gifts and travel. The upshot was a PR plus for the agency, which has been caught in a “bit of stink” since Alan Trounson, its former president, was named to the board of directors of a firm that has received $19.4 million from the agency.

John M. Simpson of Consumer Watchdog of Santa Monica, Ca., who has been sharply critical of the Trounson appointment, released a statement, declaring,

"CIRM President Randy Mills clearly recognizes the importance of ethics and personal integrity.  His formal agreement to refuse employment with a company CIRM has funded for at least a year after his departure proves he understands the potential for conflict and is committed to maintaining a high standard of integrity.   

"His action helps correct the damage  done to CIRM’s standing by former President Alan Trounson rashly and inappropriately joining the board of StemCells Inc, a mere week after leaving the agency.

 "Meanwhile, CIRM should make public all emails and letters between Trounson, StemCells Inc, and its employees and directors.” 

Ron Luety of the San Francisco  Business Times wrote that Mills’ action stopped short of rebuking Trounson.  Luety also said that Mills’ response seemed like a “no-brainer” but appeared necessary.  Simpson was quoted along with Mills.

Bradley Fikes of the San Diego U-T also quoted Simpson. Fikes additionally wrote,

“Mills made the right decision, said Jeanne Loring, a CIRM-funded stem cell researcher at The Scripps Research Institute.

"’There's a difference between what is legal and what is ethical,’ said Loring, who attended the meeting. ‘And he's going to be pushing the needle a lot more toward the ethical side without worrying whether he can get away with stuff.’"

It was Kevin McCormack, senior director of public communications for the agency, who told CIRM directors late in the meeting that the agency had been caught in a “bit of a stink” this past month as a result of the coverage. 

California Stem Cell Agency and the Revolving Door: A Need for More Safeguards

The revolving door and related conflict of interest issues remain open at the $3 billion California stem cell agency despite the pledge by its new president, Randy Mills, to refrain from taking a job with a recipient of the agency’s largess for at least a year after he leaves.  

Mills’ action last week came in response to the controversial appointment of the agency’s previous president, Alan Trounson, to the board of StemCells, Inc.(SCI),  just seven days after he left the agency.  The firm was awarded $19.3 million while Trounson was its top executive.  Last year, members of the SCI board received as much as $99,000 in stock and cash. 

Mills’ move applied only to himself and excluded other members of the agency’s staff. He said they should not be denied the ability to seek employment with businesses or research organizations that the agency has funded.

John M. Simpson of Consumer Watchdog of Santa Monica, Ca., said, 

"The high profile Trounson Affair  focuses attention on CIRM’s potential revolving door problem that the agency needs to deal with.  Randy Mills' pledge not to take a job with a company funded by the agency for at least a year after leaving is a good step.  There  should be such a formal policy covering all employees. “Serious thought should also be given to the implications of employees leaving for jobs with non-profit entities that CIRM has funded and what safeguards are necessary.”

State laws do exist to deal with revolving door situations, but some consider them weak. (See here for an explanation of the laws.) Trounson’s appointment is an example of the circumscribed nature of the laws. Mills said the agency's “severely” limited investigation into the appointment did not show any illegal activities. Simpson said a more rigorous, independent investigation was needed. 

Mills’ move did send a clear message about his own views on some ethical matters and set a tone that should be helpful at the agency. Some employees might also view it as an example to emulate.

Playing a role in the revolving door concerns is the financial future of the agency. It is facing its effective financial demise in 2017 when funds for new awards are scheduled to run out, according to longstanding calculations by the agency itself. Last week Mills cast that financial picture in a more optimistic light. (The California Stem Cell Report will have more on his analysis in the next few days.)

Nonetheless, as the money runs out and there is no assured refinancing in sight, some employees are naturally going to be considering other employment. Three employees have departed or announced they are leaving since Mills was named. The move of Natalie DeWitt, who was a top aide to Trounson, was already reported by the California Stem Cell Report. DeWitt went to work for researchers at Stanford who have received about $5 million from the stem cell agency.

Elona Baum, general counsel and vice president for business development , this month left her $298,000-a-year job to take a position at Coherus Biosciences of Redwood City. The company yesterday refused to disclose her job title or whether she had already started work. Kevin McCormack, senior director for public communication for the agency, said he did not know her job title. He said the company “has no funding from us or any other business with us.”

The Coherus Web site says the company was founded in 2010 and is “the leading biologics platform company developing biosimilar(generic) therapeutics for global markets.”

The third employee scheduled to leave is Celeste Heidler, financial services officer. McCormack said she is retiring. The agency has posted an opening for her position.

McCormack said it has not been determined whether Baum’s position will be filled.  In addition to legal matters, she played an important role in relations with the biotech and stem cell industry.

Consumer Watchdog’s Simpson said more needs to be done to clear the air concerning the Trounson appointment.

In response to a query, he said,

“There must also be a deeper probe into Trounson’s relationship with StemCells Inc, and it its executives and directors.  Margaret Prinzing’s report, a small step in the right direction, only looked back as far as May 1.  Trounson’s relationship with StemCells Inc. since at least the beginning of 2012 should be examined and the investigation should be conducted by an entity not as closely tied to the agency as the Remcho, Johansen & Purcell firm.  I think the Citizens Financial Accountability Oversight Committee, chaired by the state controller would do a good job."

The committee is the only state entity charged with oversight of the stem cell agency. The governor and legislature have no legal ability to control its operations since it was created by a ballot initiative that specifically spelled out that they had no role.

California's $40 Million Stem Cell Genomics Award: Irregularities, Complaints and Integrity

A number of firsts were recorded last month as the California stem cell agency gave $40 million to a Stanford-led consortium to put California in the global forefront of stem cell genomics.

Not all of those firsts necessarily enhanced the reputation of the California Institute of Regenerative Medicine (CIRM), as the $3 billion agency is formally known.

The unusual events and irregularities surrounding the award, CIRM's largest research grant, merit additional attention, given their implications about the integrity of the agency's grant review process and how the agency does its business.

The California Stem Cell Report recently asked a number of persons connected with the round and other knowledgeable individuals about the process. Their comments included a judgment that the agency staff “took a lot of liberties behind closed doors.” One of the rejected applicants "unequivocally" disputed assertions by CIRM President Alan Trounson that all applicants were informed by him about the need for matching funds, a key criteria for grant reviewers. The request for applications did not contain such a requirement.

The comments came in addition to earlier complaints by rejected applicants that scores had been manipulated in an “appalling” fashion and that scientific merit was not the first order of business in assessing the top four applications.

Also surfacing was a problem generated by Proposition 71, the ballot initiative that created the stem cell agency in 2004. The measure set up a 29-member governing board, including deans of medical schools and others with ties to research organizations. The board was supposed to exercise its expertise on funding decisions. However, only seven members of the board actually voted in the genomics round. Most of the rest had legal conflicts of interest and were not allowed to even participate in the discussion. It is not unusual for that sort of situation to arise during funding decisions by the board.

The CIRM stem cell genomics story began publicly in a scientifically big way with an article in the journal Nature Biotechnology in January 2012  by Trounson and two members of his staff. In it, Trounson said his proposal was needed so that the agency could take a "firm and lasting grip" on stem cell leadership.

Later that month, the governing board of the agency approved the concept for one or two genomics award. In February 2013, grant reviewers for CIRM, whose identities are withheld by the agency, took a crack at the applications. However, they declined to send any applications forward to the board for final action. It was the first time in the agency's nine-year history that has occurred. The reviewers offered no public explanation for the move.

The closed-door review session was marked by a conflict-of-interest violation by Lee Hood of Seattle, Wash., an internationally known genomics specialist, who was recruited by Trounson to be a reviewer in the round. Hood is a close friend of Irv Weissman, who heads Stanford University's stem cell institute. Weissman was named in Stanford's then $24 million application. Hood and Weissman also own a ranch together in Montana.

Trounson has been a guest at the ranch. In 2012, he recused himself during CIRM board discussions of two applications involving Weissman. The applications were from StemCells, Inc., of Newark, Ca., for $20 million each. StemCells, Inc., was founded by Weissman, who still holds a large amount of stock in the firm and serves on its board of directors.

Following the unsuccessful genomics review in February 2013, the applications were sent back to researchers with reviewer comments. The proposals could be retooled for a re-review in the fall, they were told.

After the fall review, the reviewers – minus Hood -- sent the applications to the board with recommendations to fund all four despite the fact that they would cost $146 million, well above the $40 million budgeted for the round. It was the first time that reviewers had made such a decision. Normally they stay within the budget, but they offered no public explanation for their actions in the genomics round.

At that point the CIRM staff, headed by Trounson, became more involved. Under new procedures, the staff may make recommendations concerning applications. In this case, they recommended that only the Stanford application be funded, but only after restoring a provision eliminated by reviewers. Trounson also recommended no funding for the three other top applications in the round. It was the first such major intervention by Trounson and the most aggressive staff move on grant applications.

Trounson offered only a 23-word phrase for recommending the Stanford application and no explanation for rejecting the other three. Stripped from the public review summaries for the three competing applications were the dollar amounts that they had requested. It has been the longstanding practice of the agency to include those figures. The amounts ultimately were made available to the board at its Jan. 29 meeting.

At that meeting, Trounson strongly backed retention of funding in the Stanford application for a project led by Michael Clarke, associate director of Weissman's stem cell institute at Stanford. Following the 2013 conflict violation involving Hood and Weissman, Weissman was removed from Stanford's application. Clarke was included, however. No questions were raised at last month's board meeting about whether Clarke could be regarded as a surrogate for Weissman's interests and whether that would involve a conflict of interest for Trounson.

Late in the meeting, Trounson also said that he had personally told all the applicants, with the exception of Stanford, that matching funds were expected as part of the applications, an assertion disputed following the meeting by Jeanne Loring of the Scripps Research Institute, whose rejected proposal contained no matching funds.

She said in an email,

"During the ICOC (governing board) meeting, Alan Trounson said that he had told us during his visit to all of the first round grantees that it would be important provide money for 'matching' funds. I state unequivocally that he did not tell me or anyone in my lab about this."   (Loring's boldface)

Stanford said its application contained $7 million in matching funds. The agency withheld the figures when they were requested by the California Stem Cell Report prior to the Jan. 29 board meeting, although it has released the figures in at least one other grant round.

Complaints about manipulation of the scores were raised prior to the board meeting by Pui-Yan Kwok,  leader for an application from UC San Francisco and UC Berkeley. He said that the scores of the top to applications were “based on the reviewers removing from consideration the poorest performing center-initiated projects.” He described the situation as appalling.

The agency defended its practices at the board meeting and in response to questions. It said the scoring procedures were permitted under the RFA. It said that while the procedures may be different than those of the NIH so is the stem cell agency. It said that all persons involved had been screened for conflicts of interest under CIRM rules and state law. 

In response to a query by the California Stem Cell Report concerning the process and the questions that needed to be addressed, Loring replied,

“I am concerned about the interference of the CIRM president in influencing the ICOC decisions. He has de facto power to promote or defeat specific applications, and he often wins by promoting one applicant over another. Stanford and Stanford faculty-founded companies such as Stem Cells. Inc., should not be so blatantly promoted over others. The relationship between the president and the head of the stem cell program at Stanford involves personal favors which make him conflicted and he should at the very least recuse himself from any discussion or recommendation of Stanford faculty's applications.”

Loring continued,

“The 29-member board is difficult enough to deal with, but now that most of the members are considered to be conflicted and are not allowed to even discuss the applications, we are left with a small number of non-scientists making decisions about scientific merit.

“I know that at least 5 members of the ICOC were very upset that they were unable to voice their opinions about what should be their mission- to guide CIRM's policies and choices for funding so that they are in the best interest of the voters.”

(For the full text of Loring's remarks see here.)

Other critical comments came from a longtime observer of the agency, who asked not to be identified, and who said,

“It appears that CIRM staff took a lot of liberties behind closed doors in driving this initiative to its final outcome. For example, what happened to require a resubmission and re-review etc. Did they change anything about this initiative in the process?  Were certain criteria shared with some but not all applicants?

“It also appears that the board was taken by surprise and not prepared to deal with the complexities in this initiative.  Clearly staff has not kept them in the loop and they had little access to the details of the process and how reviewers were managed.  They have always funded the vast majority of what the reviewers scored highly, and still did not break the bank.  This is a brand new situation where the reviewers recommended more grants than they could afford to fund.  This happens a lot in the NIH (especially today with severe budget cuts), so NIH has developed many processes to deal with this.  CIRM has not seen anything like this before.”

During the board meeting, some board members questioned parts of the grant review process. The anonymous observer said, 

“The questions (all legitimate) raised by the certain members of the board were by and large not understood or picked up by the other voting members, so they went nowhere. 

“Too many thoughtful board members were conflicted out, leaving the decision-making to a handful who are not prepared to deal with this complex situation.  I blame the IOM (Institute of Medicine) report in giving too much power, without the appropriate process, to staff.  Staff can recommend, but if the board has no information other than what staff provides, then they are acting in the dark.”

(For the full text of those remarks see here.)

In response to the same query, Michael Snyder of Stanford and Joe Ecker of the Salk Institute in La Jolla, co-leaders of the Stanford-led effort, did not raise any questions about the CIRM review process. They said,

“The net result (of their proposal) is that this center will help bring cutting edge technologies to all stem cell researchers in California and along with the funded projects will help keep California at the leading edge of two important fields: stem cell research and genomics, and thereby help accelerate both the science and therapeutics treatments possible in this field, and spur industry and economic development. questions.”

(For the full text of their remarks see here.)

(Editor's note: An earlier version of this item incorrectly said the first name of Michael Clark was William.)

Trounson Named as Advisor to California Cord Blood Firm

A California cord blood firm yesterday appointed Alan Trounson, the former president of the $3 billion California stem cell agency, to its newly formed scientific advisory board.

Cord Blood Registry of San Bruno, which says it is the largest “family bank” in the world, announced yesterday that Trounson is one of four members of its science board. It said the panel would help expand the scope of therapies that it is developing.

Alan Trounson, UCSD photo

Trounson last year left his post as president of the agency, formally known as the California Institute for Regenerative Medicine(CIRM). Seven days later, he joined the governing board of StemCells, Inc., a firm that had received $19.3 million in funding from CIRM. The move surprised the agency and generated a flap over revolving-door conflicts of interest.

Cord Blood Registry has not received any funding from the stem cell agency. In response to a question, Kevin McCormack, senior director for CIRM communications, said today the firm has “no connections whatsoever” with the agency.

It is not clear whether the firm plans to seek financing from CIRM in the future. Cord Blood announced last month that it is involved in an effort with a CIRM-funded, Cellular Dynamics International of Madison, Wisc., to reprogram cord blood and umbilical tissue into reprogrammed pluripotent cells.

Cellular Dynamics, founded by famed researcher Jamie Thomson, has a a facility in Novato, Ca., and was awarded more than $16 million from CIRM in 2013.

Heather Brown, vice president of scientific and medical affairs at Cord Blood (CBR), said in a press release,

"The (scientific board) will provide strategic guidance on current issues that will contribute greatly to CBR's continued progress in research and clinical development."

The company’s press release said,

“CBR is dedicated to advancing the clinical application of newborn stem cells by partnering with leading research institutions to establish FDA-regulated clinical trials, requiring CBR processed cord blood….” 

The company has been in business since 1992 but yesterday’s announcement marked the formation of its first scientific advisory board. It is headquartered in the San Francisco Bay Area, but it stores its cord blood in an 80,000-square-foot facility in Arizona.

Last month, Geoffrey Crouse, CEO of the firm, told Karen Garloch of the Charlotte Observer that some private cord blood banks have“overstated the state of the research” involving cord blood.

He made the comment in connection with the formation of the national Cord Blood Association. He said that he expects the association to “bring the industry to a higher standard.”

According to an April 25, 2014, article in the Wall Street Journal, the blood cord banking business globally runs about $4 billion a year and has had its share of problems. The piece by Dionne Searcy and Christopher Stewart said,

“A Wall Street Journal analysis of government inspections and a review of lawsuits in the U.S. found problems in the loosely regulated cord-blood-banking business, including dirty storage conditions, leaky blood samples and firms going out of business. 

“Some private cord-blood banks are essentially marketing websites that lure customers, collect fees, then outsource the processing and storage of what is touted as biological life insurance for children.”

Amgen Exec Named to New VP Post at California Stem Cell Agency

The California stem cell agency today named Ellen Feigal, an executive at Amgen, Inc., to the new position of vice president for research and development.

Feigal(left) with Claire Pomeroy, dean of
 the  UC Davis School of Medicine in 2007
 at an awards ceremony involving Feigal.
 Pomeroy is also a member of the
CIRM board of directors.

She will begin work at the $3 billion research enterprise Jan. 31, leaving her current post as executive medical director for global development at Amgen, which is based in Thousand Oaks, Ca., north of Los Angeles.

Feigal will fill a position that has been vacant since the summer of 2009, basically the No. 2 spot at CIRM. CIRM President Alan Trounson created the post in the wake of the departure of Marie Csete as chief scientific officer. The VP position replaces the chief scientific officer position.

The vice president's position has a salary range that runs from $286,000 to $529,100. It is the same range as for chairman or president of CIRM. In response to a query, Don Gibbons, the agency's chief of communications, said Feigal would be paid $332.000.

CIRM's press release said,

"Feigal will report to Trounson and will work closely with other CIRM executives to build and manage the pre-clinical and clinical programs, both within California and with CIRM’s international collaborators, as well as interactions with the NIH, FDA and other regulatory bodies. She will also manage the assembly and oversight of CIRM’s clinical advisory committee that will assess project progress, milestones and go/no-go decisions. A key aspect of her portfolio will be working with the biotechnology, pharmaceutical and investment sectors as well as academia to enable and enhance development of clinical applications from CIRM’s science portfolio."

Trounson said,

“As CIRM matured and moved more of its resources into translational and clinical science, we saw the need to formalize a role for a vice president for research and development, and Ellen’s career trajectory and experience fill our vision for that role perfectly."

The CIRM press release said,

"Feigal distinguished herself in many positions in academia, the federal government, non-profit research organizations, small pharma and large biotech companies. She has focused on assessing novel therapies, training young investigators in how to assess novel therapies, and in building partnerships and coalitions to enhance translational research. In her position at Amgen she also led the scientific/clinical interface with patient advocacy organizations and formalized the company’s policy on expanded access to therapies for those with limited or no treatment options."

The news release continued,

"In addition to her work at Amgen, Feigal currently serves as Adjunct Professor and Director of the American Course on Drug Development and Regulatory Sciences at the University of California, San Francisco. The course, developed under her leadership in collaboration with the FDA, UCSF’s Department of Bioengineering and Therapeutic Sciences, its Center for Drug Development Sciences and the European Center of Pharmaceutical Medicine at the University of Basel, was launched in 2007. It is taught over two years, with six sessions, each four days in length in Washington, D.C. and a separate parallel course in San Francisco. Feigal will step down as course director and adjunct professor as she takes on this new position at CIRM."

In 2007, Feigal received UC Davis Health System's first-ever "Transformational Leadership Award," which honors someone who has “enhanced the profession, improved the welfare of the general public, provided for personal distinction and brought honor to our university.”

UC Davis said,

"Her collaborative work with organizations such as the Food and Drug Administration, National Cancer Institute, Translational Genomics Institute and Critical Path Institute are helping to cut through red tape and bring life-saving drugs to patients as quickly and safely as possible."

$40 Million California Stem Cell Genomics Agreement Signed; A Checkered Past

The California stem cell agency and a Stanford-led consortium have reached agreement on a $40 million stem cell genomics project that triggered complaints about irregularities, unfairness, score manipulation and the role of its then president, Alan Trounson.

The agreement was concluded last month with Stanford, UC Santa Cruz and the Salk Institute in La Jolla, five months after the award was approved by the governing board of the $3 billion agency, which is known as CIRM. The final signature came July 2 when Santa Cruz signed. Salk signed on June 26 and Stanford June 18, according to Kevin McCormack, a spokesman for the agency.

The effort is aimed at paving the way for therapies tailored to a patient’s genetic make-up and positioning California as a world leader in stem cell genomics.

Trounson’s role came under fire when he recommended approval of the Stanford application. The agency’s blue-ribbon grant reviewers, whose advice is rarely rejected by the CIRM board, also recommended funding three competitors. 

The round had a checkered history as a result of a conflict of interest involving scientist Irv Weissman of Stanford and scientist Lee Hood of Seattle, who own a ranch together in Montana. Trounson, who has visited the ranch as Weissman’s guest, recruited Hood to review the applications, including Stanford’s proposal which then specifically included Weissman.

The Stanford application that was ultimately approved did not include Weissman.  Michael Clarke, the No. 2 person in Weissman’s stem cell program at Stanford, was included, however, and was praised by name by Trounson during board consideration of the Stanford application. (See here for discussion of conflicts preceding the board action.)

Seven days after leaving CIRM at the end of June, Trounson was named to the board of directors of StemCells, Inc., of Newark, Ca., which holds $19.4 million in awards from the agency. The firm was co-founded by Weissman, who now sits on its board.  The Trounson appointment surprised the agency and triggered a rash of bad publicity for CIRM. (See here and here.)

The agency’s new president, Randy Mills, banned CIRM employees from communicating with Trounson about StemCells, Inc., matters and announced that he would not accept employment from CIRM grantees until one year after he leaves the agency.

California's StemCells, Inc., Flatlines; A Look at the Implications

StemCells, Inc. stock price performance -- Google chart

Highlights
Layoffs, clinical trial closed
Conflicts of interest
Implications for CIRM
Risk and stem cell research
Twenty years ago, StemCells, Inc., was more than riding high. Its stock price (split adjusted) had skyrocketed to $2,160 in January of 1996. Its outlook was ebullient. But times have changed. Today the company's stock plummeted as low as 51 cents after it announced that it was closing its doors.

The company said yesterday that it is possible that its shareholders will wind up with nothing. Its 50 employees will lose their jobs this summer. And its latest clinical trial for spinal cord injury has been cancelled because the results do not merit spending any more money.

The company's sudden shutdown surprised and shocked some, but it also demonstrated the level of risk in stem cell research and offered implications for California's $3 billion stem cell agency, which is pushing aggressively to bring a stem cell therapy to market.

StemCells, Inc., was co-founded by two respected academic stem cell researchers, Irv Weissman of Stanford, and Fred Gage of the Scripps Institute. The Newark, Ca., firm, however, has a checkered history, particularly involving the $3 billion California stem cell agency, which once awarded StemCells, Inc., a record $40 million in 2012.

Conflict-of-interest controversies involving the business and the agency's former president, Alan Trounson, and its first chairman, Robert Klein, have surfaced in past years. Trounson was named to the StemCells, Inc., board seven days after he left the agency. In his first and only lobbying appearance before his former board, Klein was successful in winning approval of a $20 million award to the firm despite the fact that it was rejected twice by the blue-ribbon reviewers of the California Institute for Regenerative Medicine(CIRM), as the agency is formally known. It was the only time that the CIRM board has overridden its reviewers in such a fashion. (For more on Trounson and Klein, see the links at the end of this item.)

In its final days, StemCells, Inc., no longer enjoyed financing from the agency. The last award was terminated in 2014 because of poor results. But the outlook for the firm appeared brighter during the past 12 months when its stock climbed to $9.19 and stock analysts were bullish. So how did the company slip into liquidation?

The headline on an item on Barron's by Ben Levisohn said it was a "lesson in biotech risk."

Sam Maddox, writing on the blog on the Web site of the Christopher and Dana Reeve Foundation, which has a special interest in spinal cord injury, commented on the firm's final clinical trial,

"So what happened? You can read the full, depressing press release here. The gist of it is that yes, there was a measured effect of the stem cell injections but the 'magnitude' of effect over time did not trend well enough to spend more money running the trial." 

Larry Goldstein of UC San Diego told STAT reporter Meghana Keshavan,

“Biotech is like prospecting for gold — only a small fraction of companies make it through the gauntlet. Disappointing clinical trial results happen all the time. … You can’t get too alarmed when one thing, such as StemCells Inc., fails.”

One longtime observer of the stem cell world said the company's failure indicated that the state stem cell agency should be wary of  cozy engagement with industry, citing the profit imperatives that drive companies. The observer, who must remain anonymous, told the California Stem Cell Report,

"Academic institutions at least do not exist at the whims of investors, they can manage risk of failure (it happens all the time), and grant money goes much further."

UC Davis stem cell scientist Paul Knoepfler, writing on his blog The Niche, said the company's demise was "sad." He added,

 "A fair question today is how we should now process (the agency's) sizable investment in (the firm). Is there anything that can be learned from it for the agency and the field?"

Irv Weissman, who was on the StemCells, Inc., board at the end, said in a statement reported by the San Francisco Chronicle by Victoria Colliver,

“Given the collective strength of past data with these cells, we sincerely hope others will pick up the many questions we have about the variability of results seen in the Pathway Study (dealing with spinal cord injury).” 

And the California stem cell agency released this comment from Kevin McCormack, its senior director of communications:

"It’s always disappointing when a company that has been trying to pioneer treatments for diseases such as Alzheimer’s or conditions like spinal cord injury fails. We know how hard everyone at the company worked to develop treatments addressing conditions that right now have no viable alternatives. It is the nature of science that not every experiment will work yet even in failure we can learn a lot, and it’s our hope that the lessons learned from StemCells, Inc.'s work will help inform other researchers and ultimately lead to effective therapies." 

Here are excerpts and links to some previous articles dealing with StemCells, Inc., and the California stem cell agency.

Wednesday, September 05, 2012

StemCells, Inc., Wins Another $20 Million From California Stem Cell Agency

Following a second impassioned pitch by its former chairman, Robert Klein, the governing board of the California stem cell agency approved a $20 million award to a financially strapped biotech firm, StemCells, Inc., of Newark, Ca.

Thursday, September 06, 2012

Arm-twisting and Emotion: Stem Cell Directors Move to Reform Appeals on Multimillon Dollar Grants

Frustrated with politicking, “arm-twisting,” lobbying and “emotionally charged presentations,” the governing board of the $3 billion California stem cell agency today approved short-term changes in its grant appeal process and ordered up a study to prepare long-term reforms.

Monday, September 10, 2012

California Stem Cell Firsts: From Emotional Appeals to $40 Million Awards

During the last few months, the $3 billion California stem cell agency, which is approaching its eight-year anniversary, has chalked up a number of important firsts.

Wednesday, October 17, 2012

Los Angeles Times: StemCells, Inc., Award 'Redolent of Cronyism'

The Los Angeles Times this morning carried a column about the “charmed relationship” between StemCells, Inc., its “powerful friends” and the $3 billion California stem cell agency.

Friday, April 05, 2013

StemCells, Inc., Rejects $20 Million from California Stem Cell Agency

When does a financially struggling biotech company turn down a $20 million forgiveable loan?

Thursday, April 11, 2013

StemCells, Inc., Nails Down Controversial, $19 Million Award from California Stem Cell Agency

The stock price of StemCells, Inc., price today jumped as much as 9 percent after the company disclosed it had finally concluded an agreement with the California stem cell agency for a $19.3 million forgivable loan for research twice rejected by the agency's scientific reviewers.

Sunday, May 05, 2013

Cash and Favors: Robert Klein Gives $21,630 to the California Stem Cell Agency

A seemingly innocuous $21,630 gift to the California stem cell agency has kicked up new questions about a controversial $20 million research award and generated a wave of special favors for the donor that stretched out to include a gold mining multimillionaire from Canada.

Wednesday, May 15, 2013

Klein, StemCells, Inc., and $31,000 in Consulting Fees for Torres

The Robert Klein-StemCells, Inc., affair has taken another turn with the disclosure that a vice chairman of the California stem cell agency was paid at least $31,000 over a two-year period by Klein and also voted on behalf of Klein's effort to win approval of a $20 million award for StemCells, Inc.

Monday, July 07, 2014

Former CEO of California Stem Cell Agency Named to Board of Firm that Received $19 Million From the Agency

Alan Trounson, the former president of the $3 billion California stem cell agency, today was named to the board of a company that has received $19.4 million from the agency, raising fresh and serious questions about conflicts of interest at the state-funded research program.

Wednesday, July 09, 2014

California Stem Cell Agency Bans Some Communications with its Former President; Conflict of Interest Feared

The California stem cell agency today banned its employees and governing board from communicating with its former president, Alan Trounson, about matters involving StemCells, Inc., which holds a $19.4 million award from the state program.

Friday, July 25, 2014

Los Angeles Times: Flawed Investigation Magnifies California Stem Cell Scandal

The Los Angeles Times is carrying another column excoriating the $3 billion California stem cell agency, and it involves the same set of players, the agency’s former president and a San Francisco area stem cell company.

Biopolitical Times: Trounson-Weissman-StemCells, Inc., Affair is 'Shameful'

The headline on the Biopolitical Times story said it all: “Shameful Conflicts of Interest Involving California’s Stem Cell Agency.”

The piece by Pete Shanks of the Center for Genetics and Society in Berkeley, Ca., dealt with the former president of the agency, Alan Trounson, and StemCells, Inc., which holds a $19.4 million award from the agency, along with Irv Weissman, the Stanford researcher who founded the firm and who now sits on its board.

Trounson was named to the StemCells, Inc., board on Monday, seven days after he left the agency. Yesterday the agency, formally known as the California Institute for Regenerative Medicine(CIRM), launched a “full review” of all activities involving StemCells, Inc. The agency also banned its staff and board fromcommunicating with Trounson about matters involving the publicly traded firm.  

Shanks wrote,

“Let's be blunt: This looks like a pay-off. Technically, what Trounson and Weissman and StemCells, Inc., just did may not be illegal. But it's shameless.”

Shanks pointed out that the problems with conflicts of interest at the agency are nothing new. As far back as 2004, they were noted prior to passage of the measure that created the state research effort. Their importance was noted by major supporters of the measure, including Weissman.

Weissman was quoted in Nature in September 2004 as saying,

“We want to avoid even the appearance of a conflict.”

Shanks concluded,

“CIRM should take a long look at its practices and procedures, which have never served the agency well — and especially should consider its obligations to the public, who fund it. There can be practical difficulties in balancing expertise and objectivity; the best scientists in any field do tend to know each other well. All the more reason to be especially careful. This kind of obviously problematic conflict of interest can and should easily be avoided.”

A USC Researcher's Perspective on the Grant Round Involving StemCells, Inc.

A USC scientist late today sent an email that dealt with the 2012 decisions that resulted in the award of $19.3 million to StemCells, Inc., by the California stem cell agency. The award was made on a close vote (7-5) despite being rejected twice by the agency’s reviewers.

It was the first time that the agency’s 29-member board had approved an application that was turned down twice by its respected reviewers. 

The circumstances surrounding the award were unusual in other respects, and we are providing links to stories carried by the California Stem Cell Report at the time to provide additional context. The links are at end of the scientist’s email.

The author of the note is Lon S. Schneider, a professor of psychiatry, neurology and gerontology at the Keck School of Medicine at USC.  He was co-PI on an application in the same round as the StemCells, Inc., proposal. His application was rejected by the CIRM board despite having a higher score than the StemCells, Inc., application. 

Then-CIRM President Alan Trounson recused himself from the public discussion of the proposal by StemCells, Inc., because of his relationship with Stanford researcher Irv Weissman, who sits on the company’s board.  This month, Trounson was named to the StemCells, Inc., board seven days after leaving the stem cell agency, triggering a flap over conflicts of interest.

Here is Schneider’s note:

“In view of the CIRM’s comment today that they commissioned their own lawyers to investigate and find no conflicts, I thought that I’d share some thoughts with your readers based on my experiences with CIRM.  An investigation of CIRM’s actions during the last month or so would – almost by definition – not reveal a serious conflict because the alleged conflicting behavior would have occurred at the time that the StemCells, Inc. contracts were awarded, if it happened at all.  Bending milestones after a contract is awarded and when one’s foot is out the door is of little concern and can be corrected.

“My interest in Mr. Trounson’s alleged actions is that my colleague and I submitted an Alzheimer's disease grant that was scored higher than StemCells’ Alzheimer’s grant in the same funding cycle. Yet, StemCells’ appeal was funded, while our appeal was not even accepted as an appeal application.  Our recourse was to protest during the public comments part of the CIRM board meeting at which StemCells’ was awarded their contract.  In my opinion, Mr. Trounson and the CIRM staff were clearly antagonistic to us and strongly supportive of StemCells.  Board members were not aware of our appeal.  Indeed, the Alzheimer’s disease advocate on the CIRM board, Leeza Gibbons, who was well-rehearsed in her advocacy for StemCells, Inc, had to be informed during a break on what our grant was about so that she could support it as well.

“StemCell’s sinecure for Mr. Trounson reinforces my opinion that the StemCell/CIRM arrangement was – let’s say -- interesting.  No doubt, others will disagree and point out why our proposal – although rated higher than StemCells – was deficient and should not have been funded while StemCells’ should have been and was.  They, of course, may have a point, and I will continue to believe that the StemCell contract was awarded in no other way than with probity. I thought I would nevertheless share these observations.”

Here are links and excerpts from the 2012 articles.

StemCells, Inc., Wins Another $20 Million From California Stem Cell Agency

Following a second impassioned pitch by its former chairman, Robert Klein, the governing board of the California stem cell agency approved a $20 million award to a financially strapped biotech firm, StemCells, Inc., of Newark, Ca.

An Unseemly Performance: Former Chair of Stem Cell Agency Promotes $20 Million Research Proposal

Bob Klein is nearly an icon in the history of the $3 billion California stem cell agency. And when he appeared before its governing board last month and aggressively touted a $20 million grant proposal already rejected by agency reviewers, his actions raised eyebrows.

Arm-twisting and Emotion: Stem Cell Directors Move to Reform Appeals on Multimillon Dollar Grants

Frustrated with politicking, “arm-twisting,” lobbying and “emotionally charged presentations,” the governing board of the $3 billion California stem cell agency today approved short-term changes in its grant appeal process and ordered up a study to prepare long-term reforms.

California Stem Cell Firsts: From Emotional Appeals to $40 Million Awards

During the last few months, the $3 billion California stem cell agency, which is approaching its eight-year anniversary, has chalked up a number of important firsts.