$4.9 Billion Dollar Buyout of Firm Backed by California's Stem Cell Program; Good News for Agency Supporters

California's "eat-me," cancer-fighting firm Forty Seven, Inc., is being purchased in a $4.9 billion deal this morning that appears to validate the state's multimillion-dollar investment in the enterprise.

Forty Seven has received $15 million directly from the California stem cell agency. One of Forty Seven's co-founders, Irv Weissman of Stanford University, has received an additional $30 million for research, much of which underpins the company's approach. 

Gilead Sciences, Inc., of Foster City, Ca., is purchasing Forty Seven for $95.50 a share. Just last October, Forty Seven's stock was cratering at $5.53 a share. 

California will not benefit directly from the huge jump in the stock price. The state Constitution bars state agencies from holding stock in companies. However, if CIRM funded-research helps to create a profitable therapy, the state could receive royalties. See here for a look at the agency's intellectual property regulations.  

The purchase is good news for supporters of a proposed ballot initiative to give the agency an additional $5.5 billion, which would save CIRM from financial extinction. The backers of the proposal are currently gathering 600,000-plus signatures to place it on the Nov. 3 ballot. 

The agency was created in 2004 in a ballot campaign that provided $3 billion in state bond funding to help stimulate creation of stem cell therapies. So far the agency has not backed a stem cell therapy that is approved for use by the general public. But the Gilead purchase is a strong indicator that such a treatment is getting much closer. 

In its news release, Gilead highlighted Forty Seven's lead product candidate, magrolimab, and said, 

"The acquisition will strengthen Gilead’s immuno-oncology research and development portfolio. Magrolimab is a monoclonal antibody in clinical development for the treatment of several cancers for which new, transformative medicines are urgently needed, including myelodysplastic syndrome (MDS), acute myeloid leukemia (AML) and diffuse large B-cell lymphoma (DLBCL).

The stem cell agency, known formally as the California Institute for Regenerative Medicine(CIRM), has backed part of the work on magrolimab.  Last fall, Mark Chao, vice president of clinical development at Forty Seven, said, 

“CIRM’s support has been instrumental to our early successes and our ability to rapidly progress Forty Seven’s CD47 antibody targeting approach with magrolimab. CIRM was an early collaborator in our clinical programs, and will continue to be a valued partner as we move forward with our MDS/AML clinical trials.”

At the time, CIRM said the awards to Forty Seven and several other companies amounted to important deal-flow funding. CIRM quoted a USC study of the agency as saying, 

 “Deal-flow funding usually involves several waves or rounds of capital infusion over many years, and thus is it expected that CIRM’s past and current funding will attract increasing amounts of industry investment and lead to additional spending injections into the California economy in the years to come.”

Forty Seven's "eat me" expression involves enabling a person's immune system to overcome and devour cancer stem cells. The company's web site says, 

"Blocking CD47 'don’t eat me' signals while releasing and boosting 'eat me' signals is the core focus of our research to enable the patient’s own immune system to attack and destroy their cancer."

Mom to California: Thanks for 'Keeping My Family Complete' with Life-Saving Stem Cell Therapy

CIRM graphic

In an emotion-choked session this morning, the mother of a four-year-old girl thanked California's stem cell agency for saving the life of her daughter.

"Thank you for keeping my family complete," said Alysia Padilla-Vaccaro, her voice cracking as she spoke to the governing board of the $3 billion California Institute for Regenerative Medicine (CIRM), as the agency is formally known.

Her daughter, Evangelina, also whispered a soft "thank you"to the board and CIRM staff at the Oakland meeting. She had suffered from what is known as the "bubble baby syndrome."

Evangelina was one of two persons cured by treatments developed with the help of financing from the stem cell agency, created by voters in 2004 and supported by state bonds.

Brenden Whittaker, 22, was the second person. He was near death twice and lost parts of his lungs and liver as the result of another, rare, immune deficiency disease. He said,

"My experience has truly been life-changing...I hope you continue to push the boundaries and help as many people as you can."

Randy Mills, president of the agency, presented Whittaker and Evangelina to the board during a review of the progress of the agency. He said they were "the first two patients to be cured by CIRM programs."  Mills also introduced two other patients who have been helped by the agency's research: Jake Javier, who suffered a paralyzing spinal cord injury, and Karl Trede, a cancer patient. The agency has not developed a therapy for widespread use.

Mills hailed their courage and the courage of their families for taking part in the risky clinical trials. Mills told the 29-member CIRM board that in pursuit of stem cell cures that the agency had to be "Jake-strong," a term originating with Javier's mother after his injury.

The stem cell agency estimates it has $692 million left for new awards between now and 2020, when it expects to run out of cash. The research budget for next year was approved at $328 million with most of it going for clinical programs. Clinical trials represent the last stage for a proposed therapy before it reaches the market.

The CIRM board has approved a goal of 40 more clinical trials between now and 2020. Currently it has 22 underway. Only one out of 10 conventional treatments that begin trials wind up as commercial products. Often the trial process can take many years even with conventional therapies. No stem cell treatments have yet been approved by the Food and Drug Administration in this country.

Here is more on the patients featured at today's meeting:

Evangelina, of Corona, Ca., was diagnosed shortly after birth with "bubble baby" disease and no functioning immune system. Her blood cells were genetically altered to create a new blood and immune system. The therapy was developed by Donald Kohn of UCLA. CIRM has backed his work, which goes beyond the bubble baby affliction, with nearly $52 million. (See here, here and here.)

CIRM graphic

Whittaker, of Columbus, Ohio, almost died twice as a result of a rare immune system disease. Parts of his lung and liver were removed due to repeated infection. His blood stem cells were genetically modified to create a new blood system and a healthy immune system. The treatment was also developed by Kohn at UCLA.

Javier, 19, of San Ramon, Ca., was paralyzed as the result of a swimming pool accident. He received 10 million stem cells,the first person to have such an injection, and has since regained the use of his arms. His treatment grew out of the trial that Geron Corp. abandoned in 2011. Asterias Therapeutics of Menlo Park, Ca., has continued the work. Between the two companies, CIRM has invested nearly $21 million in the project. Jane Lebkowski has led the research at both companies.

Karl Trede, CIRM graphic

Trede, 70, of San Jose, Ca., lost his vocal cords, removed because of cancer of the throat.  The cancer nonetheless spread but was treated with the "eat me" protein therapy fromStanford University. As a result, his cancer has stopped growing. CIRM invested $40 million in the project, initiated by Irv Weissman of Stanford, who developed the CD47 treatment. It has led to the formation of a new company in Palo Alto called Forty Seven, Inc. (See here for a CIRM item on Trede.)
(For the text of CIRM summaries on the four, see here.)

(Editor's note: The earlier graphics in this item were replaced later with the ones that actually were displayed the day of the meeting. An earlier version also misstated Evangelina's age.)

The California Stem Cell Four: Text of Short Bios

Here is the text of the information provided by the California stem cell agency on the individual patients featured at today's meeting of its governing board. 

Brenden Whittaker 

Diagnosed with X-linked chronic granulomatous disease (X-CGD), a rare disease that causes the immune system to malfunction leaving it unable to fight off certain bacterial and fungal infections which, over time, can be life-threatening. Hospitalized hundreds of times over the years Brenden almost died on a couple of occasions and had part of his lung and liver removed due to repeated infection.
Brenden was cured thanks to an experimental procedure, developed by Dr. Don Kohn, that removed some of his own blood stem cells; they were then genetically modified to remove the gene that causes the problem, and then re-infused to him. The modified blood stem cells created a new blood system and a healthy immune system capable of fighting off infections. 

Evangelina Padilla-Vaccaro 

Evangelina was diagnosed shortly after birth with severe combined immunodeficiency (SCID); it’s also known as “bubble baby” disease because in the past children were kept in a sterile plastic bubble to protect them. It’s a rare – and often deadly -- genetic disorder that meant she had no functioning immune system, leaving her vulnerable to infections. Many children with this condition die within the first year of life.
Evangelina was cured as part of a clinical trial at UCLA run by Dr. Don Kohn. She underwent a stem cell transplant that took her own blood stem cells, genetically re-engineered them, and returned them to her body.  These re-engineered stem cells created a new blood and immune system.
(Evangelina’s parents are Alysia and Christian, her twin sister is Annabella) 

Jake Javier
An accident at a friend’s pool party on the eve of Jake’s high school graduation left him paralyzed from the chest down with no ability to use either his arms or hands.
On Thursday, July 7th, Jake Javier became a member of a very select group. Jake underwent a stem cell transplant, getting 10 million stem cells transplanted into his neck at Santa Clara Valley Medical Center in San Jose. Since then Jake has regained use of his arms and is working hard to regain even more use.

Karl Trede 

In 2006 Karl was diagnosed with cancer of the throat, he had the tumor and his vocal cords removed. Several years later they found the cancer had spread to his lungs so Karl became patient #1 in a clinical trial at Stanford.
The trial used a monoclonal antibody to target a specific protein on a cancer cell called CD47. This protein tricks the immune system into not attacking the cancer, earning CD47 the nickname from the Stanford researchers as the “don’t eat me” protein. The monoclonal antibody disables CD47, leaving the cancer vulnerable to being attacked by the patient’s own immune system. The therapy stopped Karl’s cancer from growing. 

California's Stem Cell Year: 70 New Projects, 10 New Clinical Trials Plus a 'Stem Cell Pitching Machine'

The California stem cell agency weighed in today with an upbeat prelude to a review of its performance in 2016, declaring it a "very productive year" that is counting 10 new clinical trials.

And Gov. Jerry Brown, in a short note to the agency, said that he looked "forward to its continuing success."

Brown, who is famously careful with words, made his very brief comment in a letter renominating Jonathan Thomas as chairman of the $3 billion agency, formally known as the California Institute for Regenerative Medicine or CIRM.

Karen Ring, website and social media manager for CIRM, had a little more to say in a piece today on the agency's blog, The Stem Cellar. Her comments came on the eve of the CIRM board meeting in Oakland tomorrow, which includes a self-assessment of the state of the 12-year-old research effort. 

Ring noted that the agency is on target to meet its ambitious goal of helping to fund 50 new clinical trials through 2020. The board has backed eight trials so far this year and is virtually certain to add two more tomorrow at a cost of $14.9 million. In all, the agency is currently supporting 22 clinical trials, which are the last stage of research prior to bringing a therapy to market. Trials, however, can take years.

Declaring 2016 a "very productive year," Ring wrote that this year CIRM funded "70 promising stem cell projects ranging from education to discovery, translational and clinical projects."  She said that the eight board-approved trials include potential therapies for muscular dystrophy, kidney disease, primary immune diseases, and multiple types of cancer and blood disorders.

She also singled out a $30 million effort this year that Randy Mills, president of the agency, believes could be its most significant achievement. Mills sometimes calls it a stem cell "pitching machine."

Ring said,

"Collectively called The Stem Cell Center, the goal of this new infrastructure is to increase efficiency and shorten the time it takes to get human stem cell trials up and running."

No other state has mounted such an effort. The agency predicts that it could make California the world leader in the stem cell field, which is predicted to generate hundreds of billions of dollars globally by 2020 by some, perhaps optimistic accounts.

Regarding the two new clinical trials, already approved by the agency's reviewers, Ring said,

"The first trial is testing a stem cell treatment that could improve the outcome of kidney transplants. For normal kidney transplants, the recipient is required to take immunosuppressive drugs to prevent their body from rejecting the donated organ. This clinical trial aims to bypass the need for these drugs, which carry an increased risk of cancer, infection and heart disease, by injecting blood stem cells and other immune cells from the kidney donor into the patient receiving the kidney. You can read more about this proposed trial here.

"The second clinical trial is a stem cell derived therapy to improve vision in patients with a degenerative eye disease called retinitis pigmentosa. This disease destroys the light sensing cells at the back of the eye and has no cure. The trial hopes that by transplanting stem cell derived retinal progenitor cells into the back of the eye, these injected cells will secrete factors that will keep the cells in the eye healthy and possibly improve a patient’s vision. You can read more about this proposed trial here."

Names of the recipient researchers have been withheld by the agency until the board tomorrow ratifies the decisions by its reviewers.

A Half Full Stem Cell Cocktail on Twitter

From a Twitter feed today

It was an interesting juxtaposition today on Twitter -- a vision of stem cell hope vs. a reality check.
The apparent contradiction is not uncommon in health science news.

It is a variation of the glass half-full or half-empty expression. But the stakes are not trivial. They involve deep emotions and the finances of the patients who face decades of impairment and death.

The perspectives also involve the mindsets of researchers and entities such as the $3 billion California stem cell agency. It has been wrestling for 12 years with the problem of producing a viable stem cell therapy for any sort of affliction. Its funds could well run out -- as expected in about three years -- with no cure to demonstrate for California voters who created the program in 2004.

Should the agency and researchers surrender because the task is enormous and is likely not to bear real fruit during their lifetimes? Should they move on -- if they could -- to something that would provide a more immediate, major public health benefit.

Can or should taxpayers support what some might call dreamy scientific aspirations while the state could use the billions to improve education and daily medical care for the poor?

Some may be able to come up with firm, black-and-white answers to these sort of policy and personal -- at least for researchers -- questions. This writer cannot.

As for the agency, its funds are legally locked for stem cell research or something akin to it. All the agency can do is spend the money well in that area -- a restriction approved by voters in the ballot initiative process.

Meantime, the public is hit with contradictory messages, becomes cynical and less ready to back research. All part of the challenge that faces patient advocates, researchers and drug companies today.

From Royalties to Real Products: The Journal Science Looks at the Prospects for the California Stem Cell Agency

The headlines last week in the journal Science spoke of California’s stem cell “end game,” its “a race to the clinic” and its “prospects for new money.”

The article by Kelly Servick provided a quick status report on the Golden State’s $3 billion stem cell agency. The research effort last month approved a plan for spending its last $800 million in an attempt to fulfill the promises of the 2004 ballot campaign that created the research effort.

Servick wrote that the new plan could be critical to survival of the agency. She said,

“(W)hether there will be enough believers in CIRM to keep the agency afloat may depend on how well it can build—and publicize—a track record for moving stem cell discoveries to the clinic.”

The agency has been largely ignored for the last several years by the mainstream media, but its fresh, five-year plan has attracted some modest attention, including  Servick’s piece in Science Jan. 1.

The article largely sprang out of the December meeting at which the board of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, approved its strategy for the next five years.

Servick also quoted Robert Klein, the former chairman of the agency, as saying he hopes to spearhead a new ballot initiative in 2018 to fund the agency beyond 2020, when its cash is expected to run out. At the December meeting, the board specifically avoided approval of a ballot effort and referred the question of future funding to a board subcommittee. No public meetings of that panel have been announced.

Servick began her story like this:

“Born out of discontent with the federal restrictions on research with cells from human embryos, California’s stem cell agency is at a key juncture: Over the past decade, it’s spent a large portion of its $3 billion budget nurturing fledgling disease therapies, but that state money may run out before most ments are ready for the clinic.”

She continued,

“Even if all goes according to plan, however, most CIRM-funded projects will not finish phase II trials in the next 5 years, and may not be ready for an industry partner, (Chairman Jonathan) Thomas told the board. ‘If [CIRM doesn’t] have additional funding at that point, we will have only partially met our obligation to develop therapies and cures.’”

She noted that one funding possibility is “large royalty payments” from CIRM-related research, something that was promised by backers of the stem cell ballot initiative in 2004. However, if any royalties do surface, they will go to the state general fund -- not to the stem cell agency. Lawmakers would have to approve an appropriation for the agency -- one that would also have to be approved by the governor. Currently, the agency is financed by money that the state borrows and which flows directly to the agency without the need for legislative or gubernatorial approval.

At the December meeting, Art Torres, vice chairman of the board and a former, longtime state lawmaker, expressed reservations about dealing with the Legislature.

Servick wrote,

“There are ‘people that don’t believe in what we do, who are members of the legislature,’ Torres warned, and they ‘could invariably impact any [CIRM funding] proposal.’”

The Science article is behind a paywall. If you would like a copy, please email me at djensen@californiastemcellreport.com.

Prowess and Conflicts: A Media Primer on the California Stem Cell Agency

The major daily newspaper in the San Diego area, a hotbed of biotech and stem cell research, is carrying a lengthy piece on the status of the California stem cell agency.

The article was written by Bradley Fikes. The headline on the article on the Web site of the San Diego UT said,

 “Stem cell program is making progress.” 

Fikes said that “CIRM’s scientific prowess is generally acknowledged by its critics” and cited nine early stage clinical trials that have received some agency funding for research along the way. But he also wrote,

“It’s clear that treatments haven’t come as fast as optimists had hoped. No therapies funded by the agency have been approved.”

He continued with a mention of the 2004 ballot campaign that created the agency, an effort that was criticized for hyping stem cell research. Fikes wrote,

“As it turned out, researchers simply didn’t know enough about stem cells to rush them into clinical trials. So the agency, the California Institute for Regenerative Medicine, or CIRM, stuck to the basics.”

The piece is something of a primer on the agency, which is appropriate for the general readership of the newspaper. Even with San Diego's strong stem cell presence, the overwhelming majority of readers of the paper are unlikely to know much about the research or the agency.

Fikes also mentioned the longstanding conflict of interest issues at the agency. The California Stem Cell Report has calculated that about 90 percent of the $1.9 billion awarded by the agency's directors has gone to institutions linked to directors. Fikes wrote,

“'From the very beginning, it was clear that CIRM fundamentally was composed of people who decided to give out the money who, by and large, represented the people who receiving the money,' said John Simpson of Santa Monica-based Consumer Watchdog.”

As of this writing, no readers of the newspaper had filed comments on the article.

Consumer Watchdog Says 'Serious Consideration' Needed on Continued Cash for State Stem Cell Agency

IRVINE, Ca. – The Consumer Watchdog organization says that serious consideration should be given to whether the state should halt borrowing money to finance the $3 billion California stem cell agency.

The statement was prepared for delivery tomorrow here to a blue-ribbon Institute of Medicine panel evaluating the performance of the research effort, which was created by a ballot initiative in 2004. The agency's only real source of cash is bonds issued by the state, which means the agency will cost $6 billion including interest by end of its grant-making life in about 2017.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., said that the political and scientific environment has changed substantially since 2004. The Bush Administration had restricted federal funding of hESC research then, causing an uproar in the scientific community. Funding has since been restored.

Simpson said the stem cell measure "made sense" seven years ago. He said the stem cell agency and its governing board "must recognize that the political, scientific and economic environment have dramatically altered since the passage of Proposition 71."

His statement continued,

"It is also appropriate to consider seriously whether issuing all $3 billion in authorized bonds is the correct policy in light of the new environment and economic realties facing the state."

Simpson was invited make his statement to the IOM panel, which is midway through its public process of looking into CIRM's operations. It is doing so at the behest of CIRM, which is paying the prestigious organization $700,000 to perform the work.

Simpson also made a number of recommendations for changes at CIRM, many of which would require a change in state law or passage of another ballot measure. Proposition 71, which created CIRM and altered the state Constitution, requires a super, super-majority vote (70 percent) by the legislature to make changes at CIRM.

The Consumer Watchdog proposals (full text below) include reducing the size of the 29-member board to 15, including public members on the board, reducing the super-majority requirement on board quorums to a majority, eliminating the controversial dual executive arrangement at CIRM, conducting grant reviews in public and publicly disclosing the financial interests of reviewers.Consumer Watchdog Statement to IOM-CIRM Panel April 9, 2012

The AP on the California Stem Cell Agency: No Cures, Hazy Future

The Associated Press news service, whose reports circulate worldwide, has taken the measure of the $3 billion California stem cell agency, declaring that it has produced no cures and that it "faces an uncertain future."

The piece by science writer Alicia Chang asked whether the agency is "still relevant" nearly eight years after it was created by California voters and whether it will exist after the money for new grants runs out in about five years.

She wrote,

"Midway through its mission, with several high-tech labs constructed, but little to show on the medicine front beyond basic research, the California Institute for Regenerative Medicine faces an uncertain future."

Chang's piece carries more weight than those in most publications. The AP is the backbone of news coverage in the United States. Its news feeds appear automatically on hundreds, perhaps thousands of web sites in this country. Her article will also serve as a baseline in the future as other reporters examine the stem cell agency.

Here are excerpts from the piece:

"So what have Californians received for their money so far?

"The most visible investment is the opening of sleek buildings and gleaming labs at a dozen private and public universities built with matching funds. Two years ago, Stanford University unveiled the nation's largest space dedicated to stem cell research - 200,000 square feet that can hold 550 researchers.

"There are no cures yet in the pipeline and CIRM has shifted focus, channeling money to projects with the most promise of yielding near-term results."

Chang wrote,

"Several camps that support stem cell research think taxpayers should not pay another cent given the state's budget woes.

"'It would be so wrong to ask Californians to pony up more money,' said Marcy Darnovsky of the Center for Genetics and Society, a pro-stem cell research group that opposed Proposition 71, the state ballot initiative that formed CIRM."

The article quoted UC Davis stem cell researcher Paul Knoepfler as favoring another bond measure to keep CIRM afloat, although he said he recognizes the average Californian may disagree.

Roger Noll, professor emeritus of economics at Stanford, was quoted as saying that "CIRM's legacy has yet to be written."

"'CIRM spent a lot of money and there's a lot of stuff going on, but it's too early to know whether it was worth it,' Noll said."

Chang concluded with these four paragraphs:

"David Jensen, who runs the blog California Stem Cell Report, said Californians have benefited, but whether it will be worth the $6 billion the state has to pay back remains unclear.

"'The agency's responsibility is now to get the biggest bang for the buck, which is no easy task given the tentative nature of much of the science involved,'" he said in an email.

"Some think CIRM has left a mark whether or not it will exist in the future.

Its 'legacy will be felt in part by the stimulus that it has had on stem cell' research in California, said Fred Gage of the Salk Institute for Biological Studies."

The Afterlife of the California Stem Cell Agency: Venture Philanthropy and Big Pharma

The $3 billion California stem cell agency, which is facing its possible demise in five years, is exploring an afterlife that dips into "venture philanthropy" on a national level as well as investment ties with Big Pharma.

The Golden State's unprecedented research program laid out those possibilities in a "transition plan" sent this week to Gov. Jerry Brown and the state legislature. The plan was required under a law passed two years ago. The agency's future direction was also aired at a meeting last month in Los Angeles.

The California Institute for Regenerative Medicine(CIRM) will run out of funds for new grants in 2017. Its only real source of funding is cash that the state borrows (bonds). CIRM says that only $864 million remains for new research awards, and some of its recent grant rounds exceed $200 million. The current position of the agency is that it is "premature" to consider asking voters in financially strapped California to approve another multi-billion dollar bond measure.

The venture philanthropy effort involves creation of a nonprofit organization. CIRM Chairman Jonathan Thomas said in January that he is "test-driving (the proposal) with some high net worth donors we know to be interested in the stem cell space." Thomas was addressing the Citizens Financial Accountability and Oversight Committee, the only state entity specified charged with overseeing the agency and its directors. He said,

"We're busily putting together in conjunction with a national organization called the Alliance for Regenerative Medicine the plans for a nonprofit venture philanthropy fund."

He said it would "would accept applications for awards from researchers and companies all over the country, not just those funded by CIRM, but those funded by NIH or the New York Stem Cell Foundation or the state of Maryland or whatever."

The Alliance for Regenerative Medicine is an industry-dominated lobbying group, based in Washington, D.C.  The group's executive director and co-founder is Michael Werner, a longtime pharma and health industry lobbyist, who is also a partner in the influential Washington law firm of Holland and Knight.

The "biopharma investment fund" proposed by CIRM is less well developed. CIRM said it plans to explore opportunities with companies to fund stem cell research in California. The transition document uses as an example an $85 million deal between Pfizer and UC San Francisco, which gives the company special access to biomedical research.

The transition plan also touches on other issues such as winding down grants after its new grant money runs out, along with protecting intellectual property.

The plan could be considered a marketing tool for the agency's afterlife efforts. The document devotes a good portion of its nine pages to recounting the history of CIRM and touting its accomplishments.

Thomas used the occasion of the submission of the plan as a springboard for a piece yesterday on the CIRM research blog.He concluded his item by quoting from the plan itself. CIRM's achievements during the past seven years, he wrote, "will allow California to continue world (stem cell) leadership in the coming decades."

The California Stem Cell Agency and the ACT Opportunity

A promising, positive story on stem cell research in California popped up in the news this week, involving improvements in vision as the result of the only hESC clinical trial in the nation.

The story came after Jonathan Thomas, chairman of the $3 billion California stem cell agency, said in the San Francisco Business Times that what he likes least about his job is that "the coverage in the press chooses to focus on items besides the extraordinary work that our scientists are doing."

The good news about the eye research appeared in the New York Times, Los Angeles Times and across the nation. However, it did not involve work at the stem cell agency, probably for reasons that likely have to do in good part with CIRM. The research involves a firm headquartered in Santa Monica, Ca., Advanced Cell Technology, that moved its base to the Golden State in hopes of securing CIRM funding. ACT has applied more than once for CIRM cash but has never received a grant. And it is one of the rare companies that has complained publicly to the CIRM governing board about a conflict of interest on the part of a CIRM reviewer. In ACT's case, its complaints received a public brushoff at a CIRM board meeting in 2008.

ACT's results in its clinical trial are quite tentative. They involve only two persons. One of the UCLA scientists involved said part of the results could have been the result of a placebo effect. Nonetheless, the reports carried the kind of story line that CIRM yearns for. Indeed, Thomas stressed the need for positive news when he told CIRM directors last June that the agency is in a "communications war" that is tied to its ultimate fate. (The agency runs out of cash in 2017.)

The New York Times' Andy Pollock wrote,

"Both patients, who were legally blind, said in interviews that they had gains in eyesight that were meaningful for them. One said she could see colors better and was able to thread a needle and sew on a button for the first time in years. The other said she was able to navigate a shopping mall by herself."

On its research blog, CIRM described the ACT results as a "milestone." CIRM's Amy Adams wrote,

"It’s the first published paper showing that—at least in this small number of patients for the first few months—the cells are safe."

She quoted Hank Greely of Stanford as saying that the news from ACT is "at least, a little exciting – and in a field that saw its first approved clinical trial stopped two months ago, even a little exciting news is very welcome."

Greely's reference, of course, was to Geron's sudden abandonment in November of its hESC trial, only three months after CIRM gave the firm a $25 million loan. It was widely believed that ACT was one of the initial applicants in the round that provided funding for Geron, although CIRM does not release the names of non-funded applicants.

Last week, CIRM directors spent a fair amount of time discussing the agency's future. The talk was of priorities, hard choices and generating results that would resonate with the people of California.

This week's news from a company that was not funded by CIRM will give them more to ponder.

Golden State Stem Cell Agency to Give Away $42,237 an Hour This Year

The California stem cell agency plans to hand out $370 million this year, including a whopping $240 million in what it calls its disease team round.

That amounts to $42,237 every hour of every day of 2012.

Amy Adams, CIRM's communications manager, reported the $370 million figure in the CIRM research blog, which she edits. The other rounds of funding for 2012, Adams wrote, include $95 million for early translational research, $35 million for basic biology and $2.2 million for stem cell research by high school students. Those funds would be routed through universities.

So far CIRM has handed out $1.2 billion to 454 recipients in the seven years it has been in business. It is expected to run out of its $3 billion in about 2017 unless it secures voter approval of more bond funding or some other source of revenue.

Adams' item on the funding expected to be approved this year is part of CIRM's efforts to make its research blog more lively and newsy. Indeed, unless we are mistaken, it is the first time in the history of the agency that it has laid out its funding plans for a forthcoming year in a single public document.

In her item, Adams also pointed to various locations on the CIRM web site where interested parties can track the agency's affairs.

The changes in the blog are a step in the right direction, laying out not only more information but also racheting up the interest level.

San Jose Mercury News: California Stem Cell Agency Eyeing More Bonds but Has No Treatments

In an overview of the $3 billion California stem cell agency, the San Jose Mercury News says that CIRM "still has no treatments on the market and is at a critical juncture that could determine how much longer it stays in operation. "

The story is the second significant piece about CIRM this week in a major California newspaper, which has not received much coverage in the mainstream media in the state in the last year or so. The Los Angeles Times earlier this week carried a column that raised questions about the "Geron fiasco" involving CIRM and the conduct of the agency's business.

The San Jose article yesterday by Steve Johnson said that voters "may not be as enthusiastic" about providing several billion dollars more to finance the agency as they were when they created it seven years ago.

The newspaper, located in the heart of California's Silicon Valley, quoted John Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., as saying,

"I think it's crazy. The state's economy is in a far different position now. We're not even able to provide adequate funding for education."

Johnson also reported that former CIRM Chairman Robert Klein, who led the 2004 Prop. 71 campaign, is raising or intends to raise funds for another bond issue, perhaps in 2014. The agency will run out of cash in about 2017, according to its projections.

The article noted that CIRM has awarded only $83.4 million to 15 businesses, which are the key to pushing research into the clinic,  out of the $1.3 billion it has handed out. Johnson wrote,

"Many businesses have been deterred from even trying to make stem-cell treatments because of how long it might take.

"'It's a challenge,' said Rodney Young, chief financial officer at Newark-based StemCells, which hopes early next year to obtain a $20 million institute grant to determine if a type of adult stem cell can slow the loss of cognitive function in Alzheimer's patients. 'It's an expensive, uncertain and long process.'"

Johnson additionally noted that CIRM has received criticism for the high salaries it pays its top executives and for conflicts of interests.

California Stem Cell Agency Takes Initiative in PR 'War'

Jonathan Thomas, chairman of the $3 billion California stem cell agency, took to the blogosphere today with an item promoting CIRM's progress, declaring that it is a record of which Californians can be proud.

In his debut performance as a blogger, Thomas declared that the agency has 43 research projects that are in various stages of moving towards clinical trials. He wrote on CIRM's research blog,

"Given that it normally takes a decade or longer for a basic science discovery to reach clinical trials, 43 projects seemed to me like quite an achievement – an achievement that the people of California should take pride in supporting. Not only is CIRM driving stem cell science in our state, but through our national and international collaborations California has become a stem cell hub that accelerates stem cell progress worldwide."

Thomas, a Los Angeles bond financier, pointed to a new document from CIRM, titled "Funding therapies: Fueling Hope." It summarizes some of the agency's work and touts the "incredible potential" of stem cells.

The document also explains the laborious process for creating a therapy before it can be brought to market and actually used to treat patients. The document said,

"Altogether, carrying out the basic research, translational work and preclinical data leading up to a clinical trial can take a decade or longer, and that's just to start the clinical trial. CIRM’s funding approach speeds that timeline by providing stable funding that eliminates pauses in the research to raise new funds, by strategically funding areas thought to be barriers to the clinic and by forming teams of researchers who work in parallel rather than sequentially to reach clinical trials faster."

When Thomas was elected chairman of the agency last June, he told directors that the agency was in a "communications war" in which its record was not fully appreciated by the public. He made telling the CIRM story one of his top priorities.

Today's blog posting by Thomas and, more particularly the "Fueling Hope" document, will be useful to CIRM in dealing with the overblown expectations of rapid cures that were generated by the hype of the 2004 ballot initiative campaign that created the stem cell research program.

The campaign generated impressions among voters that cures – specifically human embryonic stem cell cures – were just around the corner and that the Bush Administration, with its restrictions on hESC research, was the only thing standing in the way. Indeed, without George Bush, there would be no state stem cell agency  since his stand against hESC created an apparent need for alternative funding. For voters who expected instant cures, however, CIRM must be a sad disappointment since it has developed no therapy that is being used to treat people.

Managing expectations is a critical task for CIRM, which will run out of funds in 2017 and which is expected to be asking voters for another multibillion dollar bond measure sometime in the next few years.

Implications of a Solar Power Debacle for the California Stem Cell Effort

What can the $3 billion California stem cell agency learn from Solyndra?

The topic came up at a staff meeting on Monday at the San Francisco headquarters of the agency that has pumped $1.3 billion so far into stem cell endeavors in the Golden State.

For those who have not followed the Solyndra debacle (see here, here and here), it involves the abrupt shutdown of the solar power enterprise in Fremont, Ca., and shuttering of a new, state-of-art manufacturing facility. It appears that the federal government has lost a $535 million loan to the company. The FBI is conducting an investigation along with Congress. Executives of the firm have refused to testify before Congress, citing their constitutional rights. Approximately 1,100 people have lost their jobs.

Where do CIRM and Solyndra converge? Both are involved in cutting edge technology. Both are engaged in financially risky areas of business. The stem cell agency, however, is on the funding side, as is the federal government in the case of Solyndra, which is/was engaged in development and production, much as are CIRM grant recipients.

In an interview Monday with the California Stem Cell Report, CIRM Chairman Jonathan Thomas said a staff member brought up Solyndra at the Monday meeting. The subject is increasingly important to CIRM as it engages the biotech industry more aggressively with grants and loans in a push to actually move research into the marketplace.

During the discussion, Thomas said he stressed the need for the agency to be "totally realistic" and "completely factual" about company plans. He said CIRM must have "excellent procedures" when evaluating stem cell enterprises. "Deep due diligence" is necessary, he said.

The stem cell agency has provided only 7 percent of its largess to business, but is likely to boost that amount by many tens of millions of dollars – if not hundreds of millions – in the next year or two. CIRM's funding will run out around 2017. It is seeking to come up with tangible results that will resonate with voters should it decide to ask for more multibillion dollar infusions of cash.

All that is occurring within the biotech industry, which has a business failure rate of 90 percent. Only a handful of biotech firms turn a profit.

But without taking risks that are nearly certain to make elected officials and policy makers uneasy(probably after the fact), CIRM is unlikely to spur the development that fulfills its mission. And that is not to mention the exceedingly high expectations fostered by the 2004 ballot campaign that created CIRM. How the tiny agency balances risk and research will be a key ingredient in how it is perceived by voters and whether they will give thumbs up to its continued existence.

Britain's Peter Coffey to Join UC Santa Barbara Stem Cell Team

STANFORD, Ca. – The seaside campus of UC Santa Barbara has scored a major coup in the world of stem cell science, successfully recruiting internationally reknown scientist Peter Coffey of the UK into its research program.

Peter Coffey
University College, London, photo

Coffey's decision to leave England emerged during a meeting here today of the governing board of the California stem cell agency, which awarded a $4.9 million recruitment grant to Coffey last fall. Coffey's name came up today during a discussion about extending the agency's $44 million recruitment effort.

CIRM President Alan Trounson said that Coffey had made a final decision about coming to California. CIRM directors were told that Coffey would be at work in November in Santa Barbara. Coffey is known for his work in eye disease and is readying a clinical trial on a therapy.

The growth of stem cell research at UCSB is one of the more dramatic stories to come out of passage of Prop. 71 in 2004, which created California's $3 billion research effort. The campus had virtually no stem cell program at the time. Its grants currently from CIRM run only to $13.5 million, but it has made the most of its research talent and added more.

UCSB campus -- UCSB photo

Coffey is not the first world reknown stem cell scientist to be lured to the beachfront campus nestled below the Santa Ynez mountains. Jamie Thomson of the University of Wisconsin is co-director of the stem cell center at UCSB and an adjunct professor at the school. Thomson was the first researcher to isolate human embryonic stem cells.

In 2007, UC Santa Barbara's growing work in stem cells attracted a $3 million gift from one of the founders of Amgen, William Bowes. The addition of Coffey to its staff is certain to draw the attention of potential future donors along with such firms as Pfizer, which is a partner in Coffey's work in the UK and which has committed $100 million for stem cell research in that country.

Dennis Clegg, co-director UCSB
 stem cell program -- UCSB photo

Coffey has been collaborating with researchers at UC Santa Barbara, including Dennis Clegg,  co-director of the UCSB Center for Stem Cell Biology and Engineering, for several years. Clegg was also instrumental in recruiting Thomson. The campus is involved in a $20 million, multi-institution grant from CIRM targeting macular degeneration, the major cause of blindness among the elderly. The California school has also established a center for the study of macular degeneration.

Coffey, UCSB, USC, Caltech, the City of Hope and University College, London, Coffey's former employer, are tied together in The California Project to Cure Blindness, which is seeking to "prevent the loss of vision and improve the quality of life for those suffering from age-related macular degeneration by 2015." 

UCSB has not yet made an official announcement of Coffey's decision, but the California Stem Cell Report is querying the school.

California Stem Cell Achievements: The Perspective from Robert Klein

The former chairman of the $3 billion California stem cell agency -- Robert Klein -- last week fired off an email touting the accomplishments of his tenure in a statement that had many of the earmarks of an election campaign document.

The 3,770-word missive was emailed under the auspices of Americans for Cures, Klein's stem cell lobbying group which has the same address as his Palo Alto real estate investment banking firm. Presumably the email went to a national audience.

Americans for Cures said in an introduction to the statement that Klein is now preparing "for the next installment of this magnificent effort," which could well be another statewide bond election seeking additional billions for stem cell research. Klein directed the 2004 ballot campaign that created CIRM.

CIRM will run out of cash in about 2017. It relies on borrowed money – state bonds – for its operations and grants. Interest costs double the real expenses of the program, making what appears to be a $20 million grant actually cost around $40 million.

Another stem cell bond measure is not likely to be attempted until 2014 or later. California's current financial crisis makes it unlikely that a bond measure would win voter approval any time soon.

In his statement, Klein soft-peddled the state's current economic downturn, declaring that California was under "maximum financial stress" also in 2004. (Editors note: Unemployment in California was 6 percent just before the Proposition 71 election that created CIRM. In contrast, joblessness stood at 12.1 percent in June of this year.)

Titled "Bob Klein's last words as chair of the stem cell board," the document clearly reflects Klein's view of the California stem cell world. Almost needless to say is that there are other, more measured perspectives.

Here is the email from Americans for Cures and Klein.Statement by Robert Klein, Aug. 4, 2011, on his term as chairman of the California stem cell agency

Public, Researchers, Industry Left in Dark on CIRM Chair Selection Criteria

The California stem cell agency was admonished in December by the state's top fiscal officer concerning its performance in attempting to elect a new chair to head the $3 billion enterprise.

More transparency and openness are needed, said State Controller John Chiang, chair of the only state panel specifically charged with overseeing CIRM finances.

That advice is going unheeded this week. With only two days left before a key meeting concerning selection of a new chair, left in the dark is the California public – not to mention biotech companies, researchers, patient advocates and state policy makers, and all of the stakeholders in stem cell research.

The agenda for Thursday's meeting of the directors' Governance Subcommittee contains little more than hints at what it is to be considered. The lack of information makes it difficult – to put it mildly – for interested parties who have other business on their plates besides CIRM to come up with thoughtful and constructive comments.

The subcommittee is scheduled to consider a survey of directors' preferences on recommended criteria for the person who is to replace outgoing chairman Robert Klein next June. It is also scheduled to consider changes in the agency's internal governance policies. That's all the information available this morning to the public on the CIRM web site, although the agenda does not even actually mention the survey. No results of the survey, no recommended criteria, no proposed course of action, no language on on the changes in governance -- much less a justification -- are available to the taxpayers of California, who are paying for CIRM's operations.

Unfortunately, CIRM's performance this week on this matter is no exception. The agency has a dismal record when it comes to providing the public with access to information on what its directors are to consider. It comes late or not at all. Often no justification is presented for proposed actions. The issues are not minor. They involve the agency's most important actions and determine its current and future direction.

In six years, CIRM has never offered an explanation for what is a de facto of policy of secrecy. But the agency has laid down a record on openness and transparency that is nearly impossible to defend when CIRM goes to the people again and asks for another $3 billion.

California Stem Cell Agency Says It Unaffected by Suspension of State Bond Sales

Suspension of California bond sales because of the state's budget crisis will not have an “immediate impact” on the state's stem cell agency, whose only real source of cash is state bonds.

James Harrison, outside counsel for the CIRM board, said that the agency “has cash reserves to cover its current needs and it does not need to issue bonds in the spring.” As recently as December, other CIRM staff members had also said that the agency had funding to cover its programs to about June 2012.

However, on Dec. 14, CIRM Chairman Robert Klein told agency directors that the reliability of the agency's funding needed “immediate attention” because of a notice that his office had “just” received from the state treasurer. Klein also said that “our collaborative funding partner nations” early this year will require “assurances of our future performance.” His warning came on the eve of his successful bid for re-election as chair and was much different than a rosy assessment he offered 12 days earlier. .

Here is the text of Harrison's response to our query to Don Gibbons, CIRM's communications chief, concerning the impact of the bond sale delay on CIRM. In his comment, Harrison refers to earlier items on the California Stem Cell Report about Klein's changing positions on the state of CIRM's bond financing. Some of those items can be found here, here and here.

Harrison's statement:

“As we have stated in the past, we disagree with your characterization of Chairman Klein's comments to the Board.  At the time of the Treasurer's request, CIRM had no authority for the Treasurer to issue bonds on CIRM's behalf.  The Chairman therefore considered it a priority to respond to the Treasurer's request in light of CIRM's projected need for additional bond funding for the 2011/2012 fiscal year.  You are confusing the Chairman’s desire to get a required authorization approved (before he left the agency) that could cover any bonds sold in 2011 or 2012.  As the Chairman previously reported, the agency has cash reserves to cover its current needs and it does not need to issue bonds in the spring. CIRM therefore did not request bond funding as part of a Spring 2011 bond sale, and as a result, the Treasurer's decision not to go to the market in Spring 2011 does not have an immediate impact on CIRM.”

For those interested in more details about CIRM's borrowing, as of last November, the state owed about $2 billion on stem cell bonds, including $1 billion in principal and about the same amount in interest, according to the state treasurer's office. Payments on the interest come out of the state budget each year and affect the amount of cash available for other state expenses, ranging from education to health services for the poor.

Prop. 71, which created CIRM in 2004, authorized $3 billion in bonds that flow directly to CIRM and cannot be touched by the governor or the legislature. The borrowing is expected to cost another $3 billion to $4 billion over the lifetime of the bonds.

A special, six-person committee, the California Stem Cell Research and Cures Finance Committee, is charged with determining by majority vote whether it is “necessary or desirable” to issue bonds for stem cell research. Three members of the CIRM board of directors, including Klein, sit on the committee. The other three members are the state treasurer(who is the chairman), the state controller and the state finance director.

California Suspends Bond Sales: Potential Impact on Stem Cell Agency

The state of California, dogged by a mammoth financial crisis, is postponing the sale of state bonds this year, raising questions about the move's impact on the state's stem cell research effort, which is funded solely through the borrowed money.

State Treasurer Bill Lockyer said yesterday the delay in selling state bonds until later this year would save the state $248 million. It would be the first time that the state has not sold bonds in the first half of the year since 1988, according to Bloomberg News. Lockyer's action came as part of the stringent state budget proposed yesterday by Gov. Jerry Brown.

On Dec. 14, Robert Klein, chairman of the $3 billion California stem cell agency, told its directors that the reliability of the agency's funding needed “immediate attention” because of a notice that his office had “just” received from the state treasurer. Klein declared,

“Recent applications for clinical trial rounds and the acceleration of our funding commitments on our other programs require an immediate focus on this issue, given there may not be another opportunity until late 2011 to authorize additional bond funding.”

Klein also said that early this year “our collaborative funding partner nations” will require “assurances of our future performance.”

Klein's warning came on the eve of his successful bid to be re-elected as chairman of the agency. The notice from the treasurer did not carry the urgency that Klein indicated and was nearly two weeks old by the time he told directors about it. It also arrived in Klein's office the day before he gave a rosy financial assessment to the directors' Finance Subcommittee and said no problems existed with its bond financing.

We have queried CIRM concerning its view of the impact of the suspension of state bond sales. In the past, CIRM officials have said it has enough cash on hand to operate and award grants to about June 2012.

According to the Bloomberg article by Michael Marois and Alison Vekshin, California has about $69 billion in securities outstanding as of the end of June. Another $100 billion in debt has been authorized by voters but has not been issued.

The article said that debt service, including the interest on stem cell bonds, will cost the state nearly $5 billion in the next fiscal year, even after the moratorium.