Randy Mills: Stepping into a $3 Billion California Adventure

SAN FRANCISCO – A 42-year-old former business executive from Maryland is expected to slip his spanking new card key into a slot this morning outside of the third-floor offices here of the California stem cell agency.

It will open the door to a $3 billion adventure into scientific research, California politics and government and one of the riskier areas of the biotech industry – one that is also filled with visions of nearly miraculous cures and revolutionary changes in medicine.

Randy Mills
Osiris photo

C. Randal Mills, more commonly known as Randy, begins his first day on the job today as CEO of the state's nearly 10-year-old stem cell research effort, the California Institute for Regenerative Medicine (CIRM). It is an enterprise that has been praised for its contributions to science but now

faces financial extinction unless it develops new sources of funding. The borrowed money that finances the agency's new grants will run out in 2017, leaving CIRM with only the task of winding down existing research.

Mills, the former CEO of Osiris Therapeutics of Maryland, embodies changes already underway at the agency, which is pushing hard to commercialize stem cell research. With the arrival of Mills, the three top executives are all more tied to industry than academia. Ellen Feigal, the No. 2 person at the agency, was with Amgen prior to joining CIRM. Elona Baum, general counsel and vice president for development, was with Genentech.

Mills has given no public clue about whether he is planning major changes at the agency. In a very brief comment April 30, when he was named to the post, he said only that patients were his top priority. In announcing the appointment, CIRM Chairman Jonathan Thomas said Mills will take a “fresh look” at the agency and will “evaluate what we are doing right and what we can do better.”

It is clear that Mills, who has a Ph.D. in drug development from the University of Florida, will bring a definite business mindset to CIRM, which has been dominated by a culture closer to academia than industry. In 2009, he told PharmExec.com,

“When I came to Osiris in 2004, Osiris was what I called Osiris University. It was highly academic, brilliant people doing great science, but there was no commercial focus. That's changed nicely over the last four years....”

The previous two presidents of CIRM, Zach Hall and Alan Trounson, came from largely academic and non-business backgrounds. Mills' career has been spent in business, including an eight-year slog to drive the stem cell product Prochymal into the market. In 2012, Prochymal became the world's first government-approved stem cell drug approved for use on an off-the-shelf basis. That occurred in Canada. However, the drug is currently only available in the United States under special, limited access standards set by the FDA. Prochymal was sold last fall to Mesoblast of Australia in deal that could reach $100 million.

Mills, as might be expected, has remained mum on any personnel changes he may have in mind. He may have something to say about the five positions that were eliminated by Trounson in his proposed budget, which is due to be presented to the CIRM board May 29.

The elimination of the positions did not involve firing any employees. They involved jobs vacated by departures or ones that had not been filled. Nonetheless, the five slots represent nearly 10 percent of the existing 56 employees. Mills may want to have the ability to hire some additional staff on his own in an effort to implement matters he considers important. But any action he might take would be limited by the budget cap imposed by state law on CIRM.

Decisions are likely to come faster under Mills. Trounson was almost fabled for his globe-trotting absences which tended to delay things at CIRM. Under his tenure, CIRM had a host of lingering management problems that were cited in a 2012 performance audit that was required by state law. The agency says it is addressing those deficiencies. Along with faster decisions may come a turn away from consensus-driven action, a slow and cumbersome process that many business executives avoid, believing it is impossible to make everyone happy.

Some of the decisions for Mills could involve as much as $400 million. CIRM has only about $600 million in uncommitted funds. However, that figure does not include board-approved conceptual plans for handing out the $400 million. No RFAs have yet been posted for those rounds. If Mills is looking for new directions or would like to pour more money into an existing effort, such as those aimed at later stage clinical trials with businesses, he could either slow the release of specific RFAs or go back to the board to ask it to reconsider the efforts.

The 29-member board is unlikely to turn down requests from their new CEO. Rejection of a Mills' proposal would be interpreted as a sign of a lack of confidence in him.

At least initially, Mills is also likely to have a smooth road in connection with the controversial and much criticized dual executive arrangement at the agency. Under Proposition 71, which created the $3 billion agency in 2004, the chairman and the president have overlapping responsibilities. That has led to public tensions in the past, particularly with the first agency chairman, Robert Klein. However, under Trounson, public airing of those problems has subsided. Plus current chairman Thomas has a much different management style than Klein.

Thomas has main responsibility for finding new sources of funding for the agency and is talking about some sort of private-public partnership. Mills' role in the fund-raising is not publicly well defined. But Thomas has praised Mills' ability in raising $160 million for Osiris. Thomas may want to harness Mills' presentation and persuasion talents.

As CEO of CIRM, Mills will be the person responsible for generating the type of research results that will resonate with potential private investors as well as the public. One advantage he has is that the agency is little known to the vast majority of the California population. In such situations, public opinion is more easily shaped.

Nonetheless, the San Francisco Chronicle recently took the occasion of Mills appointment to say that CIRM has not lived up to its hype. The newspaper's editorial said the agency should not expect more public funding.

The biotech industry is likely to be pleased with the appointment of one of their fellows as president of CIRM. The industry has been critical of the agency in the past, although it is currently dancing closer to business. The key issue has been the meager amount of awards to industry. According to CIRM calculations, only about 7 percent of the $1.7 billion in awards has gone to business, up from about 4 percent calculated by the California Stem Cell Report a few years ago. More cash has trickled down via subcontractors hired by grant recipients.

The increasing coziness with industry is necessary to develop an actual FDA-certified product that can be used to treat patients. But ties to industry also raise conflict-of-interest issues. CIRM has been dogged by conflict questions since its inception because of the nature of its board, which was dictated by Proposition 71. Roughly 90 percent of dollar value of the awards has gone to institutions with links to past and present members of CIRM's governing board, according to calculations by the California Stem Cell Report. (See here and here.)

In 2010 in the New England Journal of Medicine, Bernie Lo of UC San Francisco, chairman of the CIRM Standards Group and who also led an Institute of Medicine(IOM) study on conflicts of interest, warned that "irreconcilable differences" exist involving medical research and the private sector because of sharply divergent priorities.

The IOM study said,

"Despite their benefits, relationships with industry create conflicts of interest that can undermine the primary goals of medical research. Where there are conflicts, legitimate and serious concerns can be raised about the openness of research and potential bias in the design, conduct, and reporting of research "

Mills' left Osiris in December of last year for what were reported as “personal reasons.” At 42, he has a long career ahead of him. Carrying on well at CIRM, which is facing its financial demise, could be a springboard to a large leap forward for Mills in a few years into another position in the biotech industry, as well elsewhere.