Thursday, July 24, 2014

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.

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.

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.

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.

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.


  1. Anonymous5:31 PM

    To be fair, the USC grant scored 2 points out of 100 higher, kinda splitting hairs here!
    Also when I listened to the meeting, my impression was that CIRM staff were equally antagonistic to both grants!

  2. Anonymous12:28 AM

    Silly and petulant. First of all, there were grants funded that were scored much lower than USC-Keck. The CIRM Board approved all grants that were recommended for funding by the independent reviewers, and quite a few of the ones that were not recommended for funding - but not only Stem Cells Inc, a bunch of others too.

    I'm not sure when being a director of a public company was ever properly called a sinecure - there's significant work spent in these roles, and significant legal risk taken on from shareholder lawsuits as well. Trounson nobly persevered despite silliness of public scrutiny, and he bore risk as well - but a public director likely has more.

  3. Anonymous3:46 PM

    Stem cell Inc got 2 proposal funded in the same 2012 round

  4. Anonymous1:28 PM

    Schneider's complaints that staff was supportive of Stem Cells Inc and "antagonistic" to the USC proposal are not consistent with the record. Anyone can read the transcript (see and see that staff (Ellen Feigal because Trounson was recused) presented flaws of Stem Cells Inc proposal (ie that the cells are not likely to migrate sufficiently from one injection site) and did not seem supportive of all. In contrast, it was members of the ICOC who were strongly supportive in their remarks. In contrast, Trounson spent some time explaining how for the USC grant, the small molecule could in fact be acting on stem cells or progenitors-- it just wasn't definitely known yet-- whereas members of the ICOC seemed antagonist (is it working on stem cells?) Schneider should go back and read the transcript.

  5. Anonymous8:11 PM

    Let's not forget that the ICOC's management and CIRM's management are not isolated from each other. There have been situations in ICOC meetings in which both were clearly reading from the same script…they didn't want to disagree with Alan in public.


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