Trump, Fetal Tissue Restrictions and California's Stem Cell Agency

The $5.5 billion ballot proposal to save California's stem cell agency from financial extinction popped up this week in a discussion of the Trump administration's looming restrictions on the use of fetal tissue.  

The proposed ballot initiative surfaced in a lengthy piece in "The Scientist" magazine, which said, 

"The Trump administration’s changes to policy involving material donated from abortions have led scientists to adjust their research projects or seek alternative sources of funding."

The author of the article, Diana Kwon, interviewed researchers around the country, who spoke of how they were dealing with the new reality. One of them was Andrew McMahon of the University of Southern California, who was recruited to the Golden State with the help of a $5.5 million award from the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is known. 

Kwon said that McMahon "still has about a year left before he needs to apply for more funding, and he’s started looking into potential alternatives to NIH." 

She noted that the NIH restrictions are yet to be fleshed out and continued with comments from McMahon,

"'My understanding is that it’s not entirely clear at the moment what that process is going to be,' McMahon says. 'I’ve been using the time to obtain non-NIH funding to support aspects of the research that I would have tried to get NIH funding [for] in the future.'"

Also quoted was Larry Goldstein, director of the UC San Diego stem cell program. Kwon wrote, 

"In California, the state’s stem cell agency, the California Institute for Regenerative Medicine (CIRM) has provided funding for stem cell studies using fetal tissue since it was founded in 2004. That fund is about to run out, but (a proposed ballot initiative) that would provide $5.5 billion in funding to CIRM (is expected to) come before voters in November.

"'That will hopefully provide funding for areas of fetal tissue research that involves stem cells,' Goldstein says. 'But . . . it’s ridiculous to rely on one or two states to self-fund, because we don’t have all of the best and brightest [scientists], and it means lots of students and postdocs will train in areas where federal training support will be unavailable to them.'"

Need More on Gilead/Forty Seven? See Xconomy's Piece

If you are looking for the most complete story on the $4.9 billion, Forty Seven/Gilead deal, take a look at the article on the news service, Xconomy. 

Frank Vinluan put together a dandy piece that covers a lot of business, ranging from the science to finance. Here is one tidbit that I have not seen elsewhere:

"Forty Seven has agreed to a “no shop” provision that bars the company from pursuing another offer, according to a securities filing. But under certain circumstances, Forty Seven may provide information to and speak with another party that has submitted an acquisition proposal that its board deems a superior offer, according to the merger agreement. These steps would be taken to comply with the board’s fiduciary duty to shareholders. If Forty Seven accepts a better offer, the merger agreement with Gilead requires it pay the larger company a $160 million termination fee."

Whoopee Time at the California Stem Cell Agency: Celebrating a $4.9 Billion Deal

The California stem cell agency this afternoon burst out with an exuberant cheer, declaring that a huge financial deal announced just yesterday gave its research program a $4.9 billion seal of approval. 

If you missed it, the deal involves the $4.9 billion purchase of Forty Seven, Inc., by Gilead Sciences, Inc., two companies nestled only 20 minutes apart on the San Francisco Bay peninsula. 

Writing on its blog, The Stem Cellar, the agency all but said, "WHOOPEE!"  Not that that would have been inappropriate. The agency declared, 

"It’s not every day that a company and a concept that you helped support from the very beginning gets snapped up for $4.9 billion...CIRM has supported this program from its very earliest stages, back in 2013, when it was a promising idea in need of funding."

CIRM, of course, is the official name of agency, the California Institute for Regenerative Medicine. 

Maria Millan, CIRM photo

The blog item continued with this from Maria Millan, CEO of CIRM:

“To say this is incredible would be an understatement! Words cannot describe how excited we are that this novel approach to battling currently untreatable malignancies has the prospect of making it to patients in need and this is a major step. Speaking on behalf of CIRM, we are very honored to have been a partner with Forty Seven, Inc., from the very beginning."

The Forty Seven tale originated in the Stanford University lab of Irv Weissman. CIRM quoted him as saying,

Irv Weissman, Stanford photo

"The story of the funding of this work all of the way to its commercialization and the clinical trials reported in the New England Journal of Medicine is simply this: CIRM funding of a competitive grant took a mouse discovery of the CD47 ‘don’t eat me’ signal through all preclinical work to and through a phase 1 IND with the FDA (Food and Drug Administration). Our National Institutes of Health (NIH) did not fund any part of the clinical trial or preclinical run up to the trial, so it is fortunate for those patients and those that will follow, if the treatment continues its success in larger trials, that California voters took the state’s right action to fund research not funded by the federal government.”

Ingrid Caras, CIRM photo

Ingrid Caras, CIRM senior science officer, who was on the agency team that provided assistance to the academic researchers, said,

“I had the pleasure of working with and helping the Stanford team since CIRM provided the initial funding to translate the idea of developing CD47 blockade as a therapeutic approach. This was a team of superb scientists who we were fortunate to work closely with them to navigate the Regulatory environment and develop a therapeutic product. We were able to provide guidance as well as funding and assist in the ultimate success of this project.”

McCormack concluded, 

"Forty Seven Inc. is far from the only example of this kind of support and collaboration. We have always seen ourselves as far more than just a funding agency. Money is important, absolutely. But so too is bringing the experience and expertise of our team to help academic scientists take a promising idea and turn it into a successful therapy."

CIRM did not mention the amount of money provided to support the research. But it has awarded $15 million directly to Forty Seven. Weissman has received $30 million, much of which has played a role in Forty Seven's products.  

'Perfect Example' and 'Broader Utility:' Pieces of the Forty Seven-Gilead-California Stem Cell Story

The history of the stock price of Forty
Seven, Inc., since it went public in 2018.
Google graphic

The stock price of Forty Seven, Inc., California's "don't eat me," cancer therapy firm, today closed at $$93.91 as the state's stem cell agency hailed the firm's performance as "perfect example" of the agency's value to the field and to the people of California. 

The closing price represented a stunning increase over the firm's record low of $5.53 last October. It came as Gilead Sciences, Inc., and Forty Seven announced this morning that the firm would be purchased by Gilead for $4.9 billion. 

Maria Bonneville, a spokeswoman for the agency, said, 

"Forty Seven, Inc., is the perfect example of CIRM’s value to the field of regenerative medicine.  We take pride in our ability to work with our grantees to make them as successful as possible and get them ready to partner in order to fulfill our mission."

Mathew Herper of Stat news interviewed Daniel O'Day, CEO of Gilead, today about the deal. Here is what Herper wrote, 

"So why purchase Forty Seven?

"'Because it’s novel,' O’Day said, referring to the company’s lead medicine, magrolimab, an antibody against CD47, a protein that cancer cells use to tell white blood cells 'don’t eat me.' The idea is that blocking this protein will allow the body’s immune system to attack cancer cells.

"'We had our eyes on Forty Seven for a while,' O’Day said. Data presented in two malignancies, myelodysplastic syndrome and acute myeloid leukemia, at last year’s annual meeting of the American Society of Hematology showed that the drug was doing 'some pretty special things,' he said. He said Gilead scientists believe that magrolimab could have 'broader utility' because it could be relatively safe and could be combined with other medicines relatively easily." 

The stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM), publishes anonymized summaries of what grant reviewers have to say about the applications from researchers. Here is the review summary for one application for $5 million in 2017. Here is the summary for a $10.2 million application in 2016.

$4.9 Billion Dollar Buyout of Firm Backed by California's Stem Cell Program; Good News for Agency Supporters

California's "eat-me," cancer-fighting firm Forty Seven, Inc., is being purchased in a $4.9 billion deal this morning that appears to validate the state's multimillion-dollar investment in the enterprise.

Forty Seven has received $15 million directly from the California stem cell agency. One of Forty Seven's co-founders, Irv Weissman of Stanford University, has received an additional $30 million for research, much of which underpins the company's approach. 

Gilead Sciences, Inc., of Foster City, Ca., is purchasing Forty Seven for $95.50 a share. Just last October, Forty Seven's stock was cratering at $5.53 a share. 

California will not benefit directly from the huge jump in the stock price. The state Constitution bars state agencies from holding stock in companies. However, if CIRM funded-research helps to create a profitable therapy, the state could receive royalties. See here for a look at the agency's intellectual property regulations.  

The purchase is good news for supporters of a proposed ballot initiative to give the agency an additional $5.5 billion, which would save CIRM from financial extinction. The backers of the proposal are currently gathering 600,000-plus signatures to place it on the Nov. 3 ballot. 

The agency was created in 2004 in a ballot campaign that provided $3 billion in state bond funding to help stimulate creation of stem cell therapies. So far the agency has not backed a stem cell therapy that is approved for use by the general public. But the Gilead purchase is a strong indicator that such a treatment is getting much closer. 

In its news release, Gilead highlighted Forty Seven's lead product candidate, magrolimab, and said, 

"The acquisition will strengthen Gilead’s immuno-oncology research and development portfolio. Magrolimab is a monoclonal antibody in clinical development for the treatment of several cancers for which new, transformative medicines are urgently needed, including myelodysplastic syndrome (MDS), acute myeloid leukemia (AML) and diffuse large B-cell lymphoma (DLBCL).

The stem cell agency, known formally as the California Institute for Regenerative Medicine(CIRM), has backed part of the work on magrolimab.  Last fall, Mark Chao, vice president of clinical development at Forty Seven, said, 

“CIRM’s support has been instrumental to our early successes and our ability to rapidly progress Forty Seven’s CD47 antibody targeting approach with magrolimab. CIRM was an early collaborator in our clinical programs, and will continue to be a valued partner as we move forward with our MDS/AML clinical trials.”

At the time, CIRM said the awards to Forty Seven and several other companies amounted to important deal-flow funding. CIRM quoted a USC study of the agency as saying, 

 “Deal-flow funding usually involves several waves or rounds of capital infusion over many years, and thus is it expected that CIRM’s past and current funding will attract increasing amounts of industry investment and lead to additional spending injections into the California economy in the years to come.”

Forty Seven's "eat me" expression involves enabling a person's immune system to overcome and devour cancer stem cells. The company's web site says, 

"Blocking CD47 'don’t eat me' signals while releasing and boosting 'eat me' signals is the core focus of our research to enable the patient’s own immune system to attack and destroy their cancer."

Tentacles, Railroads and California Stem Cell Finances: Looking for Greater Returns

The tentacles of railroad greed were the subject of many a political
cartoon in 19th and early 20th century California. 

California's $3 billion stem cell agency owes a "debt," you might say, to the Golden State's railroad, robber barons of the 19th century. 

The railroads were regarded as an evil "octopus," preying on helpless Californians. And the long-ago, railroad power over the state and its economy was a key reason behind a provision in the state Constitution that bars the state and its stem cell agency from owning stock in companies. 

The rationale was that buying railroad stock with taxpayer dollars amounted to unnecessary and most likely corrupt financial assistance to the "octopus" -- the old quid-pro-quo thing. 

Today the prohibition on owning stock in companies rankles some directors of the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known.

The matter revolves around the desire to secure a better financial return on CIRM's investment in companies such as Forty Seven, Inc., whose stock has skyrocketed in the last four months. 

The agency has pumped many millions into Forty Seven, which is testing an "eat me" immune therapy aimed at destroying cancer cells. The state could realize a return on royalties at some point --  if an "eat me" treatment ever makes a profit. But meanwhile, other private investors in the company are enjoying a handsome return, if they bought Forty Seven stock at the right time and sell at the right time. 

CIRM Director Jeff Sheehy has long been concerned about finding a way to generate better financial returns on CIRM's financial support of stem cell companies, along with the basic research that that the agency backs. 

In response to a query last week, Sheehy said in an email to the California Stem Cell Report, 

"You're asking the right question...and a central one as voters consider more funding for CIRM. Clearly in this instance (Forty Seven's stock price hike), a lot of money will be made off research funded by CIRM. 

"What exactly is the state's cut?  Will the state see any money if (the purchase of Forty Seven by) Gilead goes through and if not, why?

 "If the problem is the inability of the state via CIRM to hold equity, why doesn't the new measure fix this so that the investment by state realizes a fair return to our taxpayers? 

"I note that Stanford will make out like a bandit on this deal, and it's ironic that the (stem cell agency) board had to force Stanford to fulfill its commitment to co-fund another project with a similar product, that btw, is also licensed to Forty Seven.  

"Stanford has received about 12.5% of CIRM's funds. With the next measure, the same percentage going to this institution will mean that Stanford will have received over $1 billion from the state.  Should we not guarantee that the state receives its full share so it can fund healthcare, schools, teachers, community colleges, mental health needs, ending homelessness etc?"

The new measure that Sheehy refers to is a proposed ballot initiative to give the agency an additional $5.5 billion. CIRM is running out of money and will begin closing its doors if voters do not approve the proposal next November. 

While the complex measure significantly broadens the scope of CIRM operations, it does not alter the state Constitution. Doing so would require more signatures to qualify the measure for the ballot (meaning more cost to the initiative backers). 

A major constitutional change could also open a significant, new opportunity to attack the stem cell program and imperil passage of the current proposal.

During its 15-year history, CIRM has not conducted a major public examination of removing the ban to generate a better payoff for the state. The fact that the ban has been around for a century may testify to the political difficulties of such a task.

As for Stanford, it is the No. 1 recipient of CIRM awards with a total of $338 million and has had a representative on the CIRM board since its inception, a situation not uncommon with other recipient institutions. The agency has rules in place to prevent legal conflicts of interest. But about 90 percent of CIRM funding has gone to institutions with board representation, according to an accounting by the California Stem Cell Report. 

Leland Stanford, Wikipedia image

A final note of irony: Stanford University was founded by Leland Stanford, one of the four robber barons of California. He and his colleagues initially earned their reputation by building the western half of the transcontinental railroad with government funding. They were paid for each mile of track they laid, generating a hasty process that did not encourage quality work. 

Wikipedia adds,

"In 1975 the student body of Stanford University voted to use 'Robber Barons' as the nickname for their sports teams. However, school administrators disallowed it, saying it was disrespectful to the school's founder."

Rich Day on the Stock Market for California "Eat Me" Cancer Therapy Firm

Forty Seven went public in June 2018. Here is how its stock has performed.
Google graphic

The stock price of Forty Seven, Inc., the high-flying company with a $15 million link to the California stem cell agency, today closed nine times higher than its all-time low just last October. 

The stock hit $50.00, 19 percent above its close yesterday. Its low last fall was $5.53. The stock took off this morning on the basis of news reports that Gilead Sciences, Inc., was in talks with the company about a possible purchase. Forty Seven is one of the few companies showing gains today as the stock market continued to plummet. 

Forty Seven was identified as "pivotal" investment earlier this month by the stem cell agency. It is one of 60 companies whose clinical trials the $3 billion agency is supporting. Forty Seven aims at fighting cancer by triggering the body's immune system and is known for its "eat me" therapeutic approach.  

The company's web site says, 

"The therapeutic potential of the innate immune system, the first line of defense against cancer, was not well understood and appreciated when Irv Weissman and his colleagues at Stanford University identified CD47-SIRP-alpha as a novel immune pathway. This discovery has the potential to lead to new therapies and empower patients to fight cancer with their own immune cells, in the hopes of one day saving lives."

No new details have emerged as of this writing on a possible Gilead-Forty Seven deal. 

CIRM, as a state agency, cannot profit directly from an increase in the company's stock price. California's state constitution bars the state from owning stocks. However, the state could benefit from royalties from Forty Seven if the company's CIRM-financed work results in profits. 

So far, CIRM-backed investments have generated few royalties despite expectations raised by agency supporters. During the 2004 ballot campaign that created the agency a potential of more than $1 billion in royalties was bandied about. 

The stem cell agency, known formally as the California Institute for Regenerative Medicine (CIRM), declined to comment on the Forty Seven news. But the agency has previously touted the significance of its role in funding the firm with $15.2 million and also backing underlying research by Weissman, who has received $30 million from CIRM. Weissman sits on the company board. 

Also not commenting was Forty Seven and the campaign organization pushing a November ballot proposal that would give financially strapped CIRM an additional $5.5 billion. CIRM is running out of cash and will begin to shut down if the measure fails to make the ballot or win voter approval.  

CIRM points to companies like Forty Seven as evidence of the value that the agency has provided for the people of California and the state's business climate. Forty Seven and other CIRM success stories are likely be ballyhooed often in the upcoming campaign.  

Readers who are not familiar with northern California may be interested in how the stem cell geography works in the Golden State. 

• CIRM is headquartered in Oakland, It is only 42 driving minutes away from Gilead.
• Gilead is located in Foster City, only 20 minutes from Forty Seven.
• Forty Seven is located in Menlo Park, only 19 minutes from Irv Weissman's office at Stanford. 

One caveat on those times and distances: They are only good when the traffic is not too bad.  But the physical proximity does have something to do with the building of a "critical mass" of stem cell enterprises in the Golden State, something that researchers and CIRM find valuable. 

Here is a Forty Seven video discussing the company's "eat me" approach.

Booming Stock Price This Morning for Firm Backed by California Stem Cell Agency

Google chart

California's more than $15 million investment in a San Francisco Bay area company could be paying off more than handsomely this morning -- for the company.

The firm is called Forty Seven, Inc. Its stock skyrocketed overnight and was up 24 percent this morning at the time of this writing.  The jump occurred as the rest of the market continued its deep slump.

The trigger for Forty Seven was a report from Bloomberg News that Gilead Sciences, Inc., had approached the Menlo Park, Ca., company with a takeover bid.

This morning's stock price of $60,34, however, was still below the company's 52-week high of $65. That compares to the 52-week low of $5.53.

The hike in Forty Seven's stock price will not necessarily directly benefit the stem cell agency, which is formally known as the California Institute for Regenerative Medicine (CIRM).  The California state constitution bars the state from holding stock in companies, which has rankled some of CIRM's top officials.

Any financial return on the two CIRM awards made directly to Forty Seven would come through possible royalties from use of research that the agency has helped to finance. 

CIRM's support for the firm's research actually exceeds the $15.2 million in direct awards. The $3 billion agency, which is running out of cash, has financed other awards that laid the ground work for Forty Seven. They  went to Irv Weissman at Stanford University, who is on the company's board of directors and a co-founder of the firm. Weissman has received $30 million from CIRM.  

Last October the agency cited its investment with Forty Seven as part of the economic benefits chalked up by CIRM and provided this quote from the company.

"'CIRM’s support has been instrumental to our early successes and our ability to rapidly progress Forty Seven’s CD47 antibody targeting approach with magrolimab,” says Mark Chao, M.D., Ph.D., Founder and Vice President of Clinical Development at Forty Seven Inc. 'CIRM was an early collaborator in our clinical programs, and will continue to be a valued partner as we move forward with our MDS/AML clinical trials.'"

Earlier this month, CIRM President Maria Millan highlighted Forty Seven as a "pivotal" clinical trial in a briefing for CIRM directors, producing the slide below. 

Look for more coverage involving the Forty Seven-Gilead news later today right here on the California Stem Cell Report. 

California's Go-Slow Action on Rogue Stem Cell Clinics: No Regulation or Legislation in Sight

In 2016, the scope of  clinics selling unproven stem cell
treatments was first documented. This 2016 map shows their
 spread.  Since then the number is estimated to have grown
 from about 600 to more than 1,000.

Californians should not count -- any time soon -- on a state crackdown on rogue "stem cell" clinics that peddle treatments that have harmed desperate people and cost them many thousands of dollars.

The state Medical Board, which regulates physicians, last week told the California Stem Cell Report that its response to the clinics will be limited to "guidelines," which have not yet been drafted. The guidelines, if eventually approved, would not have the power of legal regulations. (See the board's full statement at the end of this item.) 

More than 1,000 clinics are estimated to be operating in the United States with the highest percentage of them in California.  Injuries involving fecal contamination and deaths have been reported. At least 20,000 persons are estimated to have been treated.

Nearly two years ago, the Medical Board first took up the issue and created a two-person "task force" to look into possible regulation. State legislation aimed at establishing regulations died quietly last year.  

The Medical Board's update on its activities came as officials of the state's stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM), called for stepped-up action against what some describe as  "snake oil" peddlers. 

The agency's appeal came in an article this month in the scientific journal Stem Cells Translational Medicine. Authored by Geoffrey Lomax, CIRM's senior officer for therapeutics, strategic infrastructure and public policy; Art Torres, vice chairman of the agency's board, and Maria Millan, president of the agency, the article cited reports of injuries and deaths caused by treatments "often administered by clinicians practicing outside their medical training." 

The trio called for "regulated, reliable and reputable" standards for stem cell treatment in California as well as nationally. The Food and Drug Administration (FDA), however, has been attempting for a number of years to deal with the problem with mixed success. In a warning to consumers, it said, 

"(D)on’t believe the hype. Some unscrupulous providers offer stem cell products that are both unapproved and unproven. So beware of potentially dangerous procedures—and confirm what’s really being offered before you consider any treatment."

Currently persons seeking the unproven treatments have no legal assurance that they are actually receiving stem cells. 

Not all states are as passive as California in regulation of the clinics and employees. Last month, the Minneapolis Star Tribune reported that the Minnesota State Medical Practice Board disciplined a physician for making claims that haven't been proven in medical research. 

Last April, the state of New York sued one clinic, declaring that the rogue clinics "shamelessly add to the suffering of these consumers by charging them thousands of dollars for treatments that they know are ineffective.”

The clinics operated generally unnoticed until Paul Knoepfler, a UC Davis stem cell researcher, and Leigh Turner, a bioethicist at the University of Minnesota, published an article in 2016 a scientific journal that laid out the size of the business. 

The two have also noted the too-good-to-be-true pitches of the clinics. The officials of the California stem cell agency cited the case of a single product that was purported to treat  "Parkinson's disease, multiple sclerosis, cerebral palsy, macular degeneration, osteoarthritis, strokes, heart attacks, and chronic kidney disease."

Writing earlier this month on his blog, The Niche, Knoepfler said that federal efforts have had some impact on the clinics.  But he said, 

"The bottom line though is that it’s not clear if all these state and federal actions are going to make a meaningful dent in the massive marketing of unproven stem cells in the U.S. Some kind of more assertive action seems necessary by regulators in the most extreme cases where, for example, the product in question is clearly a drug and has harmed patients."

California stem cell officials said, 

"(I)t is vital to  (support) the continued development of promising regenerative medicine products while protecting patients from the risks posed by unproven interventions."

Here is the full text of the statement that the California's Medical Board  made to the California Stem Cell Report:

"The Board is continuing to work toward the goal of providing recommendations on stem cell and regenerative therapies and developing some guidelines that California physicians and patients can follow. Board staff is working on compiling the information discussed at the interested parties meeting into a document to be reviewed by the Task Force.  The Task Force will then work with staff on developing a guidance document for physicians regarding stem cell and regenerative treatment that will include a sample informed consent document and educational materials for the public to present to the Board for review and final approval. The Board does not have a timeline to share at this time."

California's $250 Million Stem Cell 'Claw Back:' Recycling Research Cash

CIRM's recovery of cash is not common practice in government research
iStock image

California's stem cell agency, which critics have sometimes labelled a boondoggle, has managed to "claw back" $250 million during its 15-year life, an achievement that it attributes to diligent financial stewardship.

The cash includes $30.3 million last year with a high of $41.9 million in 2017.

The funds were recovered through a number of means including the cancellation of research awards when they failed to meet milestones. The terminations have left some scientists less than happy.

Termination of awards is not common in the world of government-funded science. In contrast to California, the National Institutes of the Health (NIH) do not generally engage in the practice, according to The Scientist magazine.   

The size of the two organizations, however, is much different. The NIH makes about 50,000 awards a year. The California Institute for Regenerative Medicine (CIRM), as the agency is formally known, has made only 1,031 awards during its lifetime. Its awards now total $2.7 billion for research into everything from cancer to incontinence. 

CIRM compiled its cash recovery figures in response to a request by the California Stem Cell Report. The request for the figures was prompted by CIRM board action this month to recycle $1.8 million in recovered funds into more research. The recovery practice is akin to what is known in Wall Street parlance as a "claw back."

Kevin McCormack, senior director of communications, said in a statement,

"The total amount of recovered funds collected since 2005 is $250 million which averages to an estimated $16.6 million per year. Although we cannot break this number down by year, recovered funds were significantly smaller in the early days of CIRM as we began launching awards and then increased over time as the portfolio grew.  Since implementation of operational milestones in 2016, recovered funds have totaled to the following:

• "2016 - $30 million

• "2017 - $41.9 million

• "2018 - $25.85 million

• "2019 - $30.3 million

"The number of awards cancelled is 32 and the total amount for that category is $122.3 million."

The financial stewardship of the California stem cell agency is a matter that has come under intermittent scrutiny during CIRM's short life. Its performance, however, will draw considerably more attention from its foes during the next eight months as CIRM backers seek to win voter approval of a ballot initiative for $5.5 billion more.

One of the agency's opponents is Republican state Sen. John Moorlach of Costa Mesa, Ca., who produced a video in 2017 denouncing CIRM as a boondoggle, ineffective and unaccountable. 

Termination of awards by CIRM began in 2009 and was first reported by the California Stem Cell Report. At the time, the cancellations led to some ill will in segments of the scientific community more comfortable with the easy ways of the NIH.

But one of the researchers who lost an award said at the time:

“I think that it is very important for CIRM to closely monitor its grantees. As a California taxpayer, I want to know that state revenues supporting the CIRM effort are well utilized. Furthermore, CIRM (and its grantees) need to make good on the promise of translating the science of stem cell biology into novel therapies.”

It was a statement that agreed with the agency's position. McCormack said, 

"Right from the very beginning CIRM has always tried to be good stewards of taxpayer’s dollars so we have always had processes and policies in place that ensured we were closely managing our awards which has resulted in recovered funds."  

Not all of the "claw back" came from failure to meet milestones. McCormack said, 

"Cancelled awards are a portion of the funds returned, but recovered funds also include unspent funds at the end of an award; reductions during contracting due to rebudgeting, unallowable costs, or inaccurate facilities rates; or a failure to meet a particular a condition of the milestones such as target patient enrollment which results in an award reduction.

"Awards can be canceled for not meeting milestones, changing the scope approved by the GWG, or other non-compliance issues."

(The full text of McCormack's comments can be found here.)

The agency is now down to its last $27 million for awards. Come the morning of Wednesday Nov. 4 the day after the election, CIRM will either start to shutter its operations at its Oakland headquarters or gear up for even more extensive forays into biomedicine.

Text of CIRM Statement on $250 Million in Recovered Funds

In response to questions from the California Stem Cell Report, the state's $3 billion stem cell agency prepared the following information on the amount of cash it has recovered from awards over the last 15 years. 

The money has helped to fund more research sponsored by the agency, which is currently running out of money.  (See here for an article on the practice.)

The practice of recovering funds from awards is not common with the National Institutes of Health, which is the largest funding organization in the United States.

Here is the text of what Kevin McCormack, senior director of communications for the agency sent along in response to our questions.  

"Right from the very beginning CIRM has always tried to be good stewards of taxpayer’s dollars so we have always had processes and policies in place that ensured we were closely managing our awards which has resulted in recovered funds.  

"Cancelled awards are a portion of the funds returned but recovered funds also includes unspent funds at the end of an award; reductions during contracting due to rebudgeting, unallowable costs, or inaccurate facilities rates; or a failure to meet a particular a condition of the milestones such as target patient enrollment which results in an award reduction.

"Awards can be canceled for not meeting milestones, changing the scope approved by the GWG, or other non-compliance issues.

"The total amount of recovered funds collected since 2005 is $250M which averages to an estimated $16.6M per year. Although we cannot break this number down by year, recovered funds were significantly smaller in the early days of CIRM as we began launching awards and then increased overtime as the portfolio grew.  Since implementation of operational milestones in 2016, recovered funds have totaled to the following:

2016 - $30M

2017 - $41.9M

2018 - $25.85M

2019 - $30.3M

"The number of awards cancelled is 32 and the total amount for that category is $122.3M.

  

"I think it is worth highlighting the key role that our Grants Management Team play in recovered funds as they work closely with our grantees to help them administer the funds they have been awarded. They monitor projects closely, including analyzing budgets, examining financial expenditures, and conducting financial compliance site visits, to ensure that the funds awarded are being spent in an appropriate manner and the Grantee is properly accounting for the use of CIRM funds. The goal of the GM team is always to try and help each project succeed and they are always working to provide guidance to our Grantees. However, if it becomes clear that the project is cannot meet its milestones or is not complying with the rules of our agreement then the GM team will take the necessary actions to correct the situation."  

California, Stem Cells and the Future of Human Suffering

Has California's $3 billion stem cell research agency "change(d) the future of medicine and human suffering?" 

It's a question and contention indirectly raised very briefly in a news article earlier this week published in the Long Beach Business Journal. 

While the Long Beach weekly does not have the reach of such other Southern California outlets as the Los Angeles Times, the question may well be at the heart of campaign to convince voters to approve an additional $5.5 billion for the California Institute for Regenerative Medicine (CIRM), as the agency is formally  known.  

Robert Klein

CIRM, created in 2004 by voters, is down to its last $27 million. It will begin to  shut down next fall if voters fail to approve the $5.5 billion measure in November. The proposed initiative will labor under a burden created by the ballot initiative campaign 15 years ago that raised expectations that stem cell cures were just around the corner. CIRM, however, has yet to finance a stem cell therapy that is approved by the federal government for widespread use. 

The Long Beach article by Alena Maschke provided a brief overview of the agency and its programs. Right at the top was a quote from Robert Klein, the Palo Alto real estate developer who is leading this year's ballot initiative campaign. He also led the effort in 2004 and was the first chairman of the agency.

Klein was also quoted as saying,

“The scientists and patient advocates in California have proven through the California stem cell initiative funding that they can change the future of medicine and human suffering. California funding has filled the gap of the federal government’s failure to fund this revolution in medicine.”

Mascke's article said Klein's efforts for stem cell research were initially triggered years ago by his concern for his son, Jordan, who had Type 1 diabetes.  The piece said, 

"In 2016, 26-year-old Jordan Klein died of complications related to the disease, two years after scientists first made significant progress on finding a treatment developed with the help of human embryonic stem cells. 

"Klein blames the federal government’s resistance to embracing stem cell research for the lack of adequate treatment options that lead to his son’s death. 'My youngest son died. If they hadn’t held it up in D.C., he would be alive,' he said. 'How many children, how many adults are going to die before they create enough stability to advance therapies that mitigate or cure these chronic diseases?'"

The Long Beach paper also tapped Aaron Levine, an associate professor at the

Aaron Levine, Georgia Tech photo

School of Public Policy at Georgia Tech. Levine was a member of the blue ribbon group that conducted a $700,000 study of the agency's work, an effort that was paid for by CIRM. 

"'CIRM stepped in to fill a gap when the National Institutes of Health was restricting its funding in this space,' Levine said. 'The research that CIRM has supported, as well as the training programs, has had quite a big impact on the field.'"

The article continued, 

"Levine also noted that the program has yet to resolve one crucial question: Who will pay for patients’ treatment with costly stem cell therapies once they’re ready to hit the market? Per-patient costs for stem cell therapies can easily reach several hundred thousand dollars and as research advances, more patients are expected to qualify.

 "'Suddenly, that’s just such a substantial sum of money that it becomes a fundamental challenge to how we pay for healthcare, how we pay for medicine in the United States,' Levine said. Subsidies for California residents, whose taxes helped pay for the research necessary to bring these cures and therapies to market, would be one option, Levine noted.

"Despite these concerns, Levine said he supports the measure to extend the program. 'Even though this is not the perfect measure, I think there’s a lot of value in CIRM and it makes sense to continue it,' he said. In the end, it will be up to California voters to decide. 

"'It largely will rise and fall on whether there’s a motivated campaign for and against it and what people who’ve never really thought about stem cell research as a state ballot issue are going to think about this particular initiative when it comes in the fall,' Levine said."

As for whether CIRM has changed the future of medicine and human suffering, some might argue that it alone has not, that other stem cell researchers around the world have been as instrumental. Others would argue that if revolutionary change has occurred, CIRM has fulfilled its mission and the people of California no longer need to fund it. 

As Levine points out, the voters of California will make the judgment in November. Their decision will come during an election that will focus intensely on presidential politics and much, much less so on the performance of the stem cell agency.  

The California Stem Cell Campaign for $5.5 Billion More Mounts a Web Site, Hires PR firm

The ballot campaign to pump an additional $5.5 billion into California's stem cell stem cell agency is now moving briskly and has a web site plus a well-known public relations firm that has handled more than 20 other ballot measures in the Golden State. 

The campaign has also spent $1 million, which is a tiny amount given that the campaign could cost upwards of $50 million, give or take some millions. The latest campaign disclosure statement shows that it had a zero balance as of Dec. 31 last year. 

The state stem cell agency is running out of the $3 billion originally approved by voters via a 2004 ballot measure. If the new ballot initiative is not approved in November, the agency is expected to whither and die. Its only significant source of cash has been the $3 billion in state bonds. 

The campaign web site is called "Californians for Stem Cell Research, Treatments and Cures." It carries a list of 43 organizations that it says support the ballot initiative, which has not yet qualified for the ballot. 

The groups range from the Alliance for Regenerative Medicine, an industry lobbying group in Washington, D.C., and the Loving Mind Institute, which deals with mental and addiction issues,  to the Arthritis Foundation and the International Society for Stem Cell Research, the largest organization of stem cell researchers in the world. 

Also listed as supporters are patient advocates, scientists and private parties. They include luminaries such as Nobel Prize winner David Baltimore. He served on the board of the stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM) from 2004 until June 6, 2007. 

Baltimore was also a co-founder and chairman of the board of a firm backed with millions by the stem cell agency. The firm, Calimmune, was incorporated March 23, 2006, in Delaware.  The firm has received $8.3 million from CIRM. Calimmune's initial award came as part of a $20 million award on Oct. 28, 2009.   Calimmune was sold to CSL Behring in 2017 for $91 million. 

(See here, here and here for more on Calimmune.)

A number of current board members of the stem cell agency are also listed by the campaign as supporters. The board has not yet taken a formal position on the initiative, but there is little doubt that it will support the proposal. Other supporters include a number of researchers who have received CIRM funding. 

The campaign web site features "success stories" in CIRM program, all of which have been carried earlier on the official CIRM web site. The campaign site asks for donations as low as $5 via credit cards. It contains a list of five stories and columns that are favorable to the agency, covering the period from 2016 to last month.

The campaign has also hired a well-known California public relations firm, Fiona Hutton and Associates, which has offices in Los Angeles and Sacramento. Hutton was involved in the 2004 stem cell campaign as well. 

Hutton's main web page promises "communications that shake up things and move mountains."

The American Association of Political Consultants says that Hutton is "one of only two women-owned businesses ranked in the Top 10 of national public affairs agencies and the Top 10 Los Angeles-based firms by leading PR trade publication O’Dwyer’s."