Correction

The Semma-Melton diabetes item on Sept. 29, 2016, contained an inaccurate and incomplete description of the roles of institutions involved in the work being funded by the California stem cell agency. The item has been corrected. Here is the now accurate paragraph in question.

"Peter Butler, chief of Endocrinology, Diabetes and Hypertension at UCLA, will be dealing with patient selection. Dhruv Sareen of the Induced Pluripotent Stem Cell Core Facility at Cedars-Sinai will direct derivation and analysis of pluripotent stem cells from each patient’s blood. The cells will be transferred to the City of Hope for manufacture of products for clinical trials."

The $50 Million, Semma-Melton Quest: Looking for a Cure for Diabetes

An eminent Harvard stem cell researcher who is searching for a cure for an affliction that plagues 29 million Americans stood on a San Francisco stage this week and spoke of "things we don't understand."

Doug Melton, photo Harvard Gazette/B.D. Colen

The scientist is Doug Melton, who is on a deeply personal quest for a cure for diabetes. Both of his children have the disease. And the state of California is helping out on his search with $5 million.

The occasion for Melton's remarks was the presentation of the Ogawa-Yamanaka Stem Cell Prize, a $150,000 award for his work in cellular reprogramming.

Here is how Hannah Robbins of the Harvard Gazette described the results of Melton's research:

"As a pioneer in programming insulin-producing beta cells from stem cells, Melton’s lab can now generate therapeutic quantities of functional, stem cell-derived beta cells, which Melton hopes will someday soon replace the life-saving yet painful daily insulin injections for diabetics."

The $5 million from California is a grant made last March by the state's $3 billion stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM).

The cash is going to a firm in Cambridge, Ma., called Semma Therapeutics, Inc., which Melton co-founded and which is named after his two children, Sam and Emma. Melton now serves on the firm's board of directors. The business is only two years old, but has raised roughly $50 million to translate Melton's work into actual treatments.

His grant application to CIRM in March was titled simply "Personalized Cell Therapy for Diabetes." The proposal (application number TRAN1-08561) received a score of 90 out of 100 from the agency's scientific reviewers who are from out-of-state. A summary of the closed-door review said the proposal was "strong, well-­designed, feasible. and high impact." The research "has excellent product development plans and great regulatory support," reviewers said.

The stem cell agency is limited to funding only work that is done in California. Semma announced earlier this month that it has set up arrangements with UCLA, Cedars-Sinai and the City of Hope in the Los Angeles area to generate "suitable clinical grade" cells from patients and "to establish a path leading to the transplantation of these cells back into patients in a clinical trial."

Peter Butler, chief of Endocrinology, Diabetes and Hypertension at UCLA, will be dealing with patient selection. Dhruv Sareen of the Induced Pluripotent Stem Cell Core Facility at Cedars-Sinai will direct derivation and analysis of pluripotent stem cells from each patient’s blood. The cells will be transferred to the City of Hope for manufacture of products for clinical trials.

Overseeing the entire project is Felicia Pagliuca, principal investigator on the CIRM grant. She is also scientific co-founder of the firm, the vice president of Cell Biology Research and Development and a lead on the original research in Melton's lab.

Felicia Pagliuca and Robert Millman
 photo Boston Globe/Dina Rudick

The financial backers are led by MPM, a venture capital firm with offices in South San Francisco and Cambridge, Mass. Robert Millman, formerly of MPM, is CEO of Semma. Other investors include Medtronic, Novartis, Fidelity Biosciences, Arch Venture Partners and the Juvenile Diabetes Foundation.

Semma is still hiring and has openings listed for five positions on its web site, ranging from scientists to a director of device development and manufacturing.

Here is a video recording of the award ceremony in which Melton discusses his research and "the things we don't understand" in the science.

(Editor's note: An earlier version of this story contained an inaccurate description of the roles of Cedars-Sinai and the City of Hope involving the CIRM-funded work.) 

A Nearly Three-Decade-Long Stem Cell Tale in California

Kris Boesen, patient in Asterias trial -- photo from CIRM

One could say that the latest news involving human embryonic stem cell research and the California stem cell agency stretches back nearly 27 years. 

It was then -- in 1990 -- that Geron, Inc., was incorporated by Michael West who began what eventually turned into a quest for a stem cell therapy for treatment of spinal cord injury.

Yesterday, the Golden State's stem cell research effort carried an item on its blog, The Stem Cellar, dealing with the latest chapter in that quest. The headline said,

"Full Steam Ahead: First Patient is Dosed in Expanded CIRM Spinal Cord Injury Trial"

In the piece, Karen Ring, website manager for the stem cell agency, celebrated the latest patient news concerning the trial which is backed by a Menlo Park, Ca., company called Asterias Biotherapeutics.  Ring said,  

"Inspiring stories like that of Kris Boesen, who was the first AIS-A patient to get 10 million cells in the Asterias trial and now has regained the use of his arms and legs, are the reason why CIRM exists and why we are working so hard to fund promising clinical trials. If we can develop even one stem cell therapy that gives patients back their life, then our efforts here at CIRM will be worthwhile."

Michael West, Biotime photo

The tale of  Michael West, his research and his companies is long and convoluted. The short version is that he is now co-CEO of Biotime, Inc., of Alameda, Ca., which spawned in 2012 Asterias Biotherapeutics, Inc., of  Menlo Park, Ca. 

Geron is out of the business of human embryonic stem cell research. In 2011, it abandoned the nation's first-ever hESC trial for financial reasons. The effort was sold to Asterias in 2013. In 2014, the $3 billion California stem cell agency jumped in with $14.3 million for Asterias. 

 Asterias' stock closed at $4.56 yesterday. Its 52-week high stood at $5.75. Its 52-week low was $2.30. 

A Look at Stem Cell Treatments in Mexico with Ties to California

First part of KBPS' stem cell treatment series

A San Diego television station this week aired a solid series exploring the world of unproven stem cell treatments, including therapies in Mexico and involving a California company.

The work was produced on KBPS by David Wagner and ran as a two-part series(see image above). UC Davis researcher Paul Knoepfler, who earlier this year documented the existent of 570 unregulated stem cell clinics nationally, described Wagner's work as "an important new piece...on for-profit investigational stem cell treatments."

Companies mentioned by Wagner included Stemedica Cell Technologies, Inc., Global Stem Cell Health, Inc., both in the San Diego area, and Hospital Angeles in Tijuana, just south of San Diego in Mexico.

Stemedica is the firm connected to nationally reported treatments of the late hockey great Gordie Howe and former professional quarterbacks John Brodie and Bart Starr. (See here and here.)

California Stem Cell Research: $639 Million Left in the Golden State's "Big Bucket"

Randy Mills, head of the California stem cell agency, calls the cash
available for research awards "the big bucket." CIRM graphic

California's ambitious stem cell research agency has $639 million remaining in uncommitted cash as it continues to seek therapies and perhaps cures for afflictions ranging from spinal injury to diabetes.

Randy Mills, president of the 12-year-old program, announced the figure today at a San Diego meeting of the agency's governing board. He also said the program, formally known as the California Institute for Regenerative Medicine (CIRM), is expected to run out of funds in June 2020.

CIRM is financed by money that the state borrows -- $3 billion in bonds approved by California voters in 2004. Using borrowed money also leads to interest costs, increasing the ultimate taxpayer expense to roughly $6 billion. However, that estimate dates back to 2004 and no fresher figure has been produced by the state.

Mills reminded his directors that the agency is allowed only $180 million for operational expenses over the life of the program. About $61 million remains for those expenses.The current annual operational budget of $16 million pays for the roughly 55-person staff  to oversee $900 million in active awards and to make new awards.

The agency has handed out $2.1 billion over its life but many of those research efforts are finished. No therapies have been developed for widespread use.

The agency also has a "return rate" of 3 percent to 5 percent on awards.  The "return" is cash that is left over from an award or that is returned to the agency when a researcher does not meet research milestones, and the award is cancelled.  The returned cash is running at about $40 million annually.

Just what will happen to the agency come 2020 is unclear. Mills today said he and his team are monitoring the funds carefully so that awards and the operational funds run out at the same time.

The agency also may begin lose key staff as time passes and no plan for 2020 emerges, a possibility that Mills has publicly discussed, albeit briefly.

As for future funding, thoughts about another bond issue, public-private partnerships and more legislative funding have been bandied about. But nothing concrete has yet emerged.

Operational funds are described as "the little bucket" by Mills. CIRM graphic

Time to Crank Up the Stem Cell Comment Machine and Weigh in on Proposed Federal Regulation

Folks interested in seeing more or less or different federal regulation of stem cell treatments and research have until Sept. 27 to file their arguments with the Food and Drug Administration (FDA) following two days of public hearings earlier this week. 

Patients, researchers and representatives of regulated and unregulated companies turned out personally Monday and Tuesday for FDA hearings on its new proposals. Witnesses included Randy Mills, president of the California stem cell agency. Questions were asked by an FDA panel but no conclusions reached. 

For those who missed the marathon sessions, they are recorded and are available online. One big advantage of watching them in a recorded format is the ability to skip through the content rapidly instead of having to sit and wait for the whole process to unwind. The first day can be found here and the second here. 

The live, online Internet broadcast chalked up about 770 views on the first day. On the second day, only about 550 were reported.  The numbers seem low to this writer based on the intense, emotional interest on the part of many patients. Industry also does not seem overly interested despite forecasts of the billions of dollars to be made from regenerative medicine, which may say something about the likelihood of handsome profits.

Only 15 written comments have been filed so far, mostly from patients. That number is likely to increase as industry and academia weigh in with more details. 

The FDA has not released a timetable for action which could affect many of the 570 unregulated stem cell clinics operating across the country. 

The hearings generated almost no media coverage. However, the Washington Post and Stat published good pieces (see here and here) that provided an overview of the issues ahead of this week's hearing. You can find coverage by the California Stem Cell Report here, here, here and here.

California Healthline carried a piece Monday with comments from Mills that basically summarized his presentation to the FDA. Today, the agency's blog carried an item with the text of the Healthline comments. The item by Kevin McCormack, senior director of communications, also said that Mills believes that "the rules the FDA is proposing will not fix the problem, and may even make it worse."

UC Davis stem cell researcher Paul Knoepfler summed up the second day of the hearings in a blog item yesterday. He quoted Leigh Turner, a University of Minnesota bioethicist, as saying, 

“The out-of-control marketplace for stem cell interventions needs effective regulatory oversight. I therefore hope the draft guidances are more than stage props and this hearing is more than public theater. When patient safety and public health are at stake, the FDA must do more than function as a paper tiger. It is time for action.”

Here is a link to the key Federal Register document laying out the process. Here is a link to the site for filing a comment electronically.

The Wright Brothers, the Blind and Stem Cells: A Different Look at the FDA Hearing on More Regulation

A California stem cell researcher has filed a report that chronicles some of the details that help to provide a sharper picture of the events yesterday and today at 9000 Rockville Pike in Bethesda, Maryland.

Writing on The Niche blog, Jeanne Loring, head of the stem cell program at the Scripps Insitute, covered matters -- ranging from aircraft flight to the blind -- that came up at the Food and Drug Administration hearing into new regulation of stem cell therapies. .

Loring is at the hearing, which is underway again this morning, and will testify later today. Her item noted that the marathon yesterday included 42 presentations of five minutes each.

She wrote,

"The question asked by the FDA is 'what should we regulate?' and the answer from the majority of speakers was 'don’t regulate the things that we’re doing!'"

Loring continued,

"The clinics, in general, wanted the FDA to define the fat as having non-structural as well as structural functions. This would allow them to isolate cells from fat and inject them into the bloodstream, a popular treatment at many clinics, without FDA oversight.

"There were amusing incidents, such as when Randy Mills (president of the California stem cell agency)  used a metaphor to describe the FDA regulating rapidly developing stem cell therapies; it was, he said, as if the Wright brothers had just gotten their plane off the ground, and returned to find an FAA official who explained that he was going to regulate their planes. I also liked Arnold Caplan’s 'apology' for naming the stromal cells he extracted from bone marrow 40 years ago 'mesenchymal stem cells.' They aren’t stem cells, he said, but rather cells that secrete factors that may be useful for healing in some cases.

"At the periphery there were the victims of reckless stem cell clinics. A man wore a sign that said he was blinded by a stem cell procedure. A woman I met while standing in line for the bathroom told me that her husband and 6 others had been blinded at a Florida clinic. In his case, she said, he did not sign the paperwork that would prevent him from suing the clinic, so they’ve found a lawyer."

Loring predicted that today's session will include much from unregulated clinics. She said,

"From the applause (yesterday) whenever a speaker said they should not be regulated, I expect that most will be glowing. But I hope, for balance, that a few will report negative experiences. I haven’t decided what to say when my time comes (this) afternoon."

California's Randy Mills: Flood of Demand for Stem Cell Therapies Requires New Development Pathways

The president of the $3 billion California stem cell agency today told federal regulators that patient demand is "very real" for stem cell therapies and called for "alternative" pathways for development.

Randy Mills at FDA hearing

Randy Mills said patients are "really suffering and their needs are not being met." He said the demand is like a flood of water and will find its way around any blockages that rise up.

Mills spoke during the first day of a two-day hearing by the Food and Drug Administration(FDA) into possible new regulation of the stem cell field.

The session came as the Washington Post published online a lengthy piece about unregulated stem cell therapies and the increasing scrutiny they are facing from regulators. Reporter Laurie McGinley wrote about a clinic in Beverly Hills with a self-described "Time Machine" box.

Mark Berman, who was described as the co-founder of the "biggest network of commercial stem cell clinics" in the country, processes stems cell through the box for a procedure that he says doesn't require FDA approval.

McGinley wrote,

"In mini-liposuction procedures, Berman extracts fat tissue from patients and puts it into the Time Machine box, where a centrifuge separates stem cells from fat. The cells are then injected back into the patients to supposedly treat a variety of health problems, such as arthritic knees, heart disease, amyotrophic lateral sclerosis and even autism."

The treatments run about $8,900 each. Berman said his network has treated about 5,000 persons, McGinley reported.

The Post piece said that such treatments and their regulation or lack of regulation has "ignited a fierce debate among physicians, patients, scientists and politicians about whether the (FDA) should crack down on therapies that critics deride as snake oil but that some patients swear by. And it is fueling a broader, longer-term debate over how cellular therapies should be regulated."

Stem cell researcher Paul Knoepfler of UC Davis , who is quoted in the Washington Post article, took in today's FDA hearing from his lab in California. Writing on his blog, he delivered some "take-homes" after the session concluded. Here are a few excerpts from what Knoepfler wrote.

• "Some speakers advocated for a 'middle ground' between 'nothing' in the way of regulation for instance of the dubious clinics and the perceived 'mountainous' extreme of the current FDA oversight system. The middle ground was, for example, argued for by Janet Marchibroda of the BPC and then also in the next talk by CIRM President Randy Mills. Mills, who is a very powerful speaker, argued that there is a harmful binary system now and we need a middle ground between the extremes of little-to-no regulation and the current in his view constricted pathway."
• "Several speakers invoked patient autonomy and patient rights, and argued that they are doing what they are doing as practitioners of stem cell therapies simply for the betterment of patients. There’s the pesky problem there with this argument of probably millions of dollars in profit being made from the patients by some clinics though. If it’s all about patients, I challenge the clinics to do the transplants strictly 'at cost' with no profit margin."
• "Many parties asked the FDA for more clarity and consistency on oversight. Also, a number of speakers asked for concrete, real world examples of how definitions would apply.  I’ve been pushing the FDA for increased clarity for years including lay abstract summaries of their main guidelines and statements of current thinking. I really like the idea of flowcharts."

Industry Seeks More Clarity on Proposed Federal Stem Cell Research Rules

The nation's leading industry group for regenerative medicine today called for a clearer federal pathway to help bring stem cell products to the marketplace. 

The Alliance for Regenerative Medicine (ARM), which has 240 business, academic and patient advocacy members, testified today at a Food and Drug Administration hearing into proposals for more regulation of the stem cell industry. Randy Mills, president of the California stem cell agency, is scheduled to speak later today.

In remarks prepared for delivery, Michael Werner, executive director of the group, said,

"What all manufacturers have in common...is that they seek a clear and predictable regulatory pathway to market. In general, ARM believes that while the draft guidances are a positive step forward, they still leave some questions unanswered regarding interpretation of regulations . Consequently, ARM believes that when FDA finalizes these guidances, it should take actions to provide even more clarity."

Werner went on to make specific suggestions for more explanation on  requirements for product characterization and associated claims for each type of product.

The full text of his remarks can be found here.  You can find additional information in the texts of the group's comments that were submitted in writing  on "minimal manipulation" here and and on "homologous use" here.

The two-day hearing is being broadcast live on the Internet.

Live on the Internet: Today's FDA Hearing on Stem Cell Regulation, Preview of California's Comments

The FDA's two-day hearing into stem cell treatments is underway this morning and can be seen live on the Internet, including a presentation this afternoon by the California stem cell agency, which is seeking to ease FDA regulation of stem cell clinical trials.

A likely preview of the comments from the agency popped up this morning on California Healthline in a piece by Emily Bazar. She carried the brief text of an interview with Randy Mills, president of the $3 billion California agency.

He said,

"The problem with (the FDA's current) strategy is twofold. It doesn’t address the patients, or the need side of the equation. And I don’t think it has a chance of actually working because the FDA will acknowledge that they do not have the resources to enforce these types of regulations at the clinic level.

"They would have to be essentially regulating the practice of physicians, which is well beyond their capabilities. Even if they were able to enforce it, it would just drive these patients somewhere else.

"We’re advocating for the creation of some middle pathway that would bring essentially unregulated therapies into the regulatory fold, but in a manner which could be complied with.

"I would rather know these clinics are being regulated and collecting data than have them operating under the radar screen of the FDA. I would like there to be a formal pre-market review of these therapies before they’re put on the market. I would like there to be safety and efficacy data.

"I’m going to try hard to get the FDA to see that just plugging this hole won’t make the problem go away."

Bazar's piece also contained the text of comments from Jeanne Loring, head of the stem cell research program at the Scripps Institute in La Jolla. She said,

"There’s no scientific evidence that the fat cells (unregulated) clinics are using are going to do the patient any good. And there’s no evidence that shows they are safe.

"I’m a stem cell scientist. I need scientific evidence before I will believe anything. Regulation will help determine the efficacy and safety of those fat cells.

"There are several lawsuits or potential lawsuits brewing over these stem cell treatments. People were promised they would get improvements and didn’t. And there are cases where people were actually harmed by stem cells.

"Some people truly believe they have been helped by the stem cell injections. I’m not going to argue with them. It’s a very personal and emotional response. It’s not something that can be scientifically validated. People are really desperate, especially really sick people and their families.

"That means patients are at risk. That’s what bothers me a lot. There’s nothing we can do to talk somebody out of going to a clinic if they feel that’s the only option they have. We just want to make sure nobody gets hurt. We also don’t want people to go broke. These treatments are not covered by insurance and they cost tens of thousands of dollars."

Here is a link to the actual broadcast, which is being watched by about 300 persons at this moment. An overview of the audience seems to indicate that it is being lightly attended. Mills is scheduled to speak at 4:23 p.m. EDT.

Here is a link to the agenda including a list of speakers and schedule. The broadcast also has closed caption capability.

Center for Genetics and Society Calls Trounson Affair Scandalous

The Center for Genetics and Society, a longtime critic of the California stem cell agency, yesterday described the Trounson-StemCells, Inc., affair as "scandalous" and part of an "object lesson" in how not to set up a state agency.

Writing on center's blog, Pete Shanks referred to the disclosure that Alan Trounson, former president of the $3 billion research effort, had received $443,500 in total compensation from StemCells, Inc., of Newark, Ca., for his work on the company's board over a two-year period. Trounson was appointed seven days after leaving the agency, which came as an unpleasant surprise to the stem cell agency's governing board.

StemCells, Inc., was awarded $40 million while Trounson was president of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known.

Shanks, an author and consultant to the Berkeley-based center, said,

"Did Trounson or StemCells Inc. do anything illegal? Quite likely not. Was this transaction appropriate? Absolutely not! It’s scandalous, but it’s the kind of scandal that was built into CIRM from its very inception."

Shanks recounted the conflict-of-interest issues that have troubled the agency even prior to voter approval of the program. He concluded,

"CIRM is now slowly running out of the $3 billion of public funds allocated to it in 2004, and is expected to wind up in 2020. It has provided an object lesson in how not to set up and run an independent public-funded agency. These latest revelations should end any speculation about extending its charter."

Text of Irv Weissman's Comments Re Trounson Compensation

Stanford University stem cell researcher Irv Weissman has sent along the following comment in the wake of the publication of the Sept. 2, 2016, story concerning Alan Trounson's compensation from StemCells, Inc., a company co-founded by Weissman, who also served on its board of directors.

"I would like to correct some information that can be verified by CIRM officials and employees. I have known Alan Trounson for years before he came to CIRM both as a scientist and once on a fishing trip. After he got settled into his position at CIRM we met socially, and agreed to go on another fishing trip together. From that time forward he recused himself on all grants and CIRM related activities that involved either my lab or Stem Cells Inc. This was unfortunate for me, as there were times when he was the field expert and could have suggested appropriate reviewers, or mistakes in review, for grants coming from me at Stanford or Stem Cells, Inc. Although you mention the many successes we have had with CIRM grants, there were many more times when I failed to reach a funding score that was sufficient, sometimes with what I thought were inaccurate reviews,and sometimes with reviewers that I would have asked to be removed for conflicts outside of scientific expertise. I am happy to answer any questions on these issues for all grants on which I am a principal investigator, or as on the stem cell genomics grant, a participating but minor investigator who was the only person with purified stem and progenitor cells.

"I hope you dig into the actual current value of his or my stock, so that the public will know the real numbers. At least up to the wind-down of the company I believe I have never sold stock I hold, as I felt I always could have had information not generally available to the public, even when it was legal by SEC standards. In the early days of the company I contributed personal money to the company for stock so that the company could meet its payroll, and also I never sold those stocks. All of my SCI stocks are worth no more than and probably much less than 10% of that single contribution."

Alan Trounson, Former CEO of California Stem Cell Agency, Later Received $443,500 in Total Compensation from StemCells, Inc.

The Sacramento Bee this morning carried on its front page the following article about Alan Trounson and his relationship to StemCells, Inc. The piece was written by the producer of this blog. Following this item are the full texts of the comments made via email by Trounson and StemCells, Inc. (Irv Weissman of Stanford University submitted comments following the publication of this piece.) The complete text of comments from the state stem cell agency and Consumer Watchdog are contained within the article.
--------

By David Jensen
Special to The Bee

The former president of the $3 billion California stem cell agency received $443,500 in total compensation from the Bay Area stem cell company that appointed him to its board of directors only seven days after he left his state post.

The stock and cash were provided over a two-year period to Alan Trounson by Newark-based , a firm that was awarded more than $40 million in funding while Trounson headed the California Institute for Regenerative Medicine(CIRM), as the state stem cell agency is formally known.

Alan Trounson -- LATimes photo

StemCells Inc.

In 2014, when Trounson served less than six months on the StemCells, Inc.. board, his total compensation was more than double that of any other board member.

The surprise appointment of Trounson almost immediately after he left CIRM in 2014 generated allegations of conflict of interest. The size of Trounson’s total compensation, however, was not available at that time.

Conflict-of-interest allegations have dogged the agency since it was created in 2004 by California voters to use state bond proceeds to finance stem cell research.

In 2008, the respected scientific journal Nature warned about “cronyism” at the agency. In 2012, the Institute of Medicine, a division of the National Academies of Sciences, recommended in a $700,000 study commissioned by CIRM that the stem cell agency make sweeping changes to reduce the possibility of such conflicts.

Speaking about the agency’s board, Harold Shapiro, chairman of the Institute of Medicine team, told the Los Angeles Times,

“They make proposals to themselves, essentially, regarding what should be funded.”

The agency made some changes to deal with conflict questions but resisted the institute’s far-reaching proposals.

The latest news prompted John Simpson, who has followed the stem cell agency for Consumer Watchdog of Santa Monica, Ca., to say in an email,

 “Trounson’s joining the StemCells Inc. board a mere seven days after quitting as CIRM’s president at the time smacked of being a payback for a job well done on behalf of the company when he should have been looking out for the taxpayers’ money and interests. It was a blatant conflict that undermined the agency’s credibility. Now we know his price tag.”

In 2014, the stem cell agency said its “limited” investigation showed that no violation of law occurred. At the time, CIRM Chairman Jonathan Thomas described the issue as a “perception” problem.

The state’s Fair Political Practices Commission (FPPC) later investigated to determine whether Trounson “had made, participated in or influenced a governmental decision involving StemCells, Inc., after he began employment negotiations.”

A Feb. 6, 2015, letter to Trounson from the FPPC said there was “insufficient evidence to demonstrate” a legal violation.

Asked for comment, Robert Stern, the key author of the California Fair Political Practices Act and former president of the Center for Governmental Studies in Los Angeles, said in an email,

“It is an appearance problem when someone goes to work for a company that has benefited from huge contracts from the agency that he heads even if he had nothing to do with the decision to award the contract.”

The payments to Trounson were made in 2014 and 2015, according to Securities and Exchange Commission filings by StemCells, Inc. (See here and here.) The cash totaled $59,500 and the stock options totaled $384,000 for the two-year period. Trounson was appointed president of California’s stem cell agency in 2008. He was named to the StemCells, Inc., board July 7, 2014. The stock price has dropped precipitously since the award of Trounson’s stock options.

Last month, Trounson resigned from the StemCells, Inc.,  board as part of a deal in which the financially troubled firm was acquired by Microbot Medical Ltd. of Israel. StemCells Inc. said in an Aug. 15 SEC filing that the resignations of Trounson and Stanford University researcher Irv Weissman were not “the result any disagreement with the company on any matter.”

Irv Weissman, Stanford photo

Weissman was a co-founder of the company and also served on its scientific advisory board. Trounson served on the company’s strategic transactions committee.

Connections between Trounson and Weissman surfaced well before Trounson’s appointment to the StemCells, Inc., board. In 2013, a $40 million CIRM funding application round involving Weissman was postponed after it was disclosed that one of the application reviewers had a legal conflict of interest. The case involved Lee Hood of Washington state, who owns property in Montana with Weissman. Hood acknowledged the conflict of interest and resigned as a reviewer. Trounson helped to recruit Hood as a CIRM reviewer, the agency said.

In 2012, StemCells, Inc., was awarded $40 million in a single funding round, the only applicant ever to reach that level of success. One of the two $20 million awards was approved by the stem cell agency’s board despite being rejected twice by its grant reviewers. It is the only time that an application has been rejected twice by reviewers and then approved by the governing board. (See here.)

In 2013, the company declined one of the awards, which required a matching amount. In December 2014, the second $20 million award was terminated early because of poor results. That left StemCells, Inc., receiving a net of $9 million from the agency.

Trounson, a pioneering researcher in the field of in vitro fertilization, returned to his home in Australia after leaving the agency. Contacted by email, he said,

 “I was cleared by independent legal advice by CIRM and no conflict was found by a Californian government investigation. ... The share values are unknown – perhaps worth nothing. I actually pay monthly fees to hold them.”

Weissman, who has received $30.5 million from the agency, did not respond to a request for comment. (Following the publication of this piece, Weissman said in an email that some time after Trounson "got settled into his position" at the agency, "he recused himself on all grants and CIRM-related activities that involved either my lab or StemCells, Inc.")

The Trounson controversy surfaced shortly after C. Randall Mills was named to replace Trounson as president of CIRM. Mills then signed a pledge that he would not accept employment with any award recipient for at least a year after he leaves the agency. However, the agency did not set restrictions on future employment by other agency employees.

Asked for comment, Thomas, chairman of the agency since 2011, said in an email,

“Dr. Trounson’s financial involvement with StemCells Inc. occurred after his separation from CIRM in June of 2014, and we have not been in contact with him since. Two years later, CIRM is a very different and vastly improved organization – we’ve reduced the time it takes to review applications by 80 percent, recaptured $75 million from programs not meeting performance standards, and reinvested that money, doubling the number of clinical trials in our portfolio.

“In addition we are doing all this with the good governance, transparency and accountability the citizens of California deserve.”

The agency has about $800 million in uncommitted funds. It expects to run out of cash for new awards in 2020 unless it finds fresh sources of funding.

Text of Trounson Comments Re Compensation from StemCells, Inc.

Here is the text of Alan Trounson's email comments concerning the total compensation he received from StemCells, Inc., for service on its board. Trounson made the comments in response to an inquiry by the California Stem Cell Report regarding the matter and conflict of interest issues. The query did not involve reimbursement of travel expenses.

" I don't know what you think the conflict of interest is - I was cleared by independent legal advice by CIRM and no conflict was found by a Californian Government investigation. I was paid Directors fees and travel expenses to attend Board meetings. Do you expect me not to be reimbursed for travel and sitting as a Board Director? The share values are unknown - perhaps worth nothing. I actually pay monthly fees to hold them. I am no longer a Director of Stem Cells Inc and do not know what will happen to the shares. Stem Cells Inc has advised you the $ you quote for my reimbursement is inaccurate.
"Alan Trounson PhD
"Emeritus Professor"

The California Stem Cell Report followed up with an additional question regarding the matter and the state investigation. Trounson replied,

"Stem Cells Inc has told you exactly what I was paid and the state of the shareholding. You ought to do your own investigations into the Cal Government investigations and report like any reasonable journalist. The CIRM review was not 'limited' - external legal advice confirmed internal advice." 

Text of StemCells, Inc., Comments on Trounson Compensation

Here is the text of remarks from Ken Stratton, president of StemCells, Inc., concerning the $443,500 in total compensation from the company to Alan Trounson.

"As stated in our SEC filings, Dr. Trounson was paid total cash compensation of $59,550 for the years 2014 and 2015, consistent with board practice. He has also been provided stock awards which were to vest over time. Dr. Trounson currently owns fewer than 20,000 shares of our common stock and to my knowledge, he has never sold any of his shares. His unvested equity awards will not continue to vest now that he has resigned from the board in connection with the Microbot deal."