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| StemCells, Inc. stock price performance -- Google chart |
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
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
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
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.
In response to "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."
ReplyDeleteAcademic Institutions have endowments (sometimes enormous, e.g. Stanford has ~$22 billion, UCSF has ~$2 billion, and UCSD has ~$1 billion) which can be tapped to bridge gaps in funding, companies do not have this luxury.
Grant money goes much farther in academic institutions again because of institutional “support”: many PIs have hard money support for their salaries, many of the workers are supported from training grants or fellowships outside of the grant, and the wage level per amount of work expected from graduate students and post docs is much lower than what would be possible in industry (graduate student and post doc stipends are far below industry wage scales, and these workers probably spend much more time on projects than their percent effort would indicate: after all they are “being trained” which is purported to be a form of compensation).