The Californa Stem Cell Agency: A Blueprint for Living Without $300 Million a Year

The likely future of the $3 billion California stem cell agency was unveiled this week, and it envisions an enterprise no longer tied to state funding and much more closely linked with industry as a collaborator and “bundler” of resources.

Gone would be the $300 million a year in cash that the state borrows so that agency can award grants to academics and occasionally to business. Likely to be missing are faculty recruitment awards, non- business training programs and perhaps most of the agency's basic research effort.

Instead, the California Institute for Regenerative Medicine(CIRM), as the agency is formally known, would build a relatively small number public-private partnerships to back projects close to turning out commercial therapies. It would ally itself with the Alliance for Regenerative Medicine, a national lobbying and industry group in Washington, D.C. And the agency's funds would come possibly from foundations, philanthropists, investors, biopharma, the health insurance industry and federal agencies such as the NIH and Medicare.

That is part of the scenario painted in a $150,000, 69-page report by consultant James Gollub of Tiburon, Ca. CIRM earlier this year commissioned the report because the agency will run out of state funds for new grants in 2017.

The governing board of the stem cell agency will hear a report on the Gollub's recommendations at its Dec. 11 and Dec. 12 meeting in Los Angeles. The report will come as part of consideration of proposals by the agency's new Scientific Advisory Board that the agency should sharpen its focus on six to eight projects to push them closer to bearing commercial fruit. The proposed “strategic roadmap” also comes as the agency is looking for a new president to replace Alan Trounson, who is leaving to rejoin his family in Australia.

Trounson has prepared an outline of a plan on how to start implementing the proposals.

Gollub made three major recommendations, one of which would require a $50 million investment from CIRM with another $50 million to $100 million coming from other sources, including wealthy individuals such as businessman Denny Sanford who recently gave UC San Diego $100 million for stem cell research.

The report said additional costs, including those for outside consultants, could be absorbed by CIRM or funded through awards on a charge-back basis. In others words, a grant would include funds that a researcher would have to pay to the agency for its “internal program management services.” CIRM is limited by law to an operating budget that can total only 6 percent of its $3 billion, which keeps its overhead quite lean.

Gollub noted that that CIRM has already moved partially into the areas of his three proposals, all of which would begin in the next year or so. They are:

• Create public-private partnerships to move projects into early clinical trials, focusing on specific disease areas. Co-funders providing at least $50 million would screen and select the projects from those presented by CIRM. This could be scaled up from a pilot project next year and possibly involve creation of a nonprofit group by CIRM.
• Create a “regenerative medicine accelerator” to provide “commercial readiness services” to each(Gollub's italics) grant recipient whether academic or business. The accelerator effort would be linked to agency's proposed $70 million Alpha Clinic plan. The accelerator also would assure that the “clinical trials structure meets pharmaceutical industry expectations.”
• Create a pre-competitive regenerative medicine R&D program that would organize collaborative efforts to break through barriers to development of therapies. This would involve production but also what the biotech industry calls “reimbursement,” which is a catch word for making a profit from development of a therapy. One of the issues in the industry is the expense of some medical treatments, and stem cell therapies are expected to be very high. The idea is to work with the insurance industry and the federal government to be sure the appropriate cost is supported by Medicare and insurance programs. Partnering with the Alliance for Regenerative Medicine would enter into this effort, which would be ultimately funded by both CIRM, the new non-profit and other partners.

The general direction of the recommendations is to “de-risk” stem cell therapy development and provide a focal point for overcoming many of the regulatory and manufacturing obstacles facing a new medical technology.

The report said CIRM has as a “strong innovation feedstock” of more than 90 projects that are close to moving into clinical trials. Some of those projects are likely to appeal to Big Pharma, which has been increasingly looking outside of its own companies for R&D.

For donors willing to pay for the privilege, Gollub's “strategic roadmap” recommended that CIRM create a group that would have “'a seat at the table' to see early stage  research, discoveries and clinical performance.”

The report said the CIRM's new world would require a “robust, dedicated fundraising group” within the agency, which now has minimal capacity in that area. However, the study envisions members of the governing board, many of whom are top notch fundraisers, as making a major effort to raise cash.

Scaling up the initial public-private partnerships, accelerators, etc., would also require additional staff. Gollub's report did not present costs beyond the initial pilot project stage.