California Okays $30 Million in Awards to Help Remove Stem Cell Roadblocks

Directors of the California stem cell agency today approved $30 million to help eliminate bottlenecks in turning stem cell research into cures.

The action gave the go-ahead to awards that were backed by either its blue-ribbon reviewers from outside of California or the agency’s own staff, plus three additional proposals moved forward by the board.  The agency has already spent $52 million to develop stem cell research tools. Today's round was originally budgeted for $35 million.

After a brief discussion, the 29-member board approved, 9-2, an award to UC Davis researchers who had appealed rejection of a $1.8 million proposal by the staff of the California Institute for Regenerative Medicine (CIRM), as the $3 billion agency is formally known.

The agency did not immediately release the names of the winners. It keeps the names of all applicants secret until after the board ratifies the actions of its reviewers, who make the de facto award decisions for the agency behind closed doors.  The agency is expected to issue a press release on the awards later today. (Here is the link to the press release. It does not include a list of recipients.)

The board did not vote on two applications on which appeals were filed involving material misstatement of facts. Those were deferred  until the March board meeting. The final four numbers of those applications are 7836 and 7678.

Here is a link to the document on this "tools and technology" round submitted to the board by its staff. Summaries of the reviews can be found with the document along with the scores on the winners.

California Stem Cell Appeal: $1.8 Million Needed for Removing Bone Replacement Bottleneck

A UC Davis researcher is making a strong pitch to the California stem cell agency to finance a $1.8 million effort to “resolve bottlenecks in engineering replacement bone and cartilage.”

J. Kent Leach, UC Davis photo

J. Kent Leach, an associate professor in the departments of biomedical engineering and orthopedic surgery, said his proposal addresses “a major hurdle in regenerative medicine of the musculoskeletal system (that) impairs the inherent personalized medicine component of stem cell-based methods.”

In a letter to the agency’s board for its meeting tomorrow, Leach said the research team involved is “arguably the most qualified team in the nation to conduct these studies.” 

Other scientists participating are Laura Marcu and Kyriacos Athanasiou.

Kyriacos Athanasiou
UC Davis photo

Reviewers for the $3 billion agency, who make the de facto decisions on awards, scored the application at 72 and did not approve it for funding. The agency’s staff also nixed the proposal, declaring,

“There is another application recommended for funding in Tier 1 that proposes to optimize and apply the same imaging technology platform to a different test system. In addition, the scientific leadership of the two applications is the same.”

Leach said,

“The co-PI (Dr. Marcu) of this proposal is also PI (principal investigator) on RT3-07879, which is focused on assessing stem cell repopulation and remodeling of engineered vascular tissue constructs. 

Laura Marcu, UC Davis photo

"However, the use of this technology for monitoring the maturation of engineered bone and cartilage, tissues composed of dense matrix reflective of the differentiation of contributing stem cell populations, is substantially different from cardiovascular applications. Of course, both applications involve instrumentation based on optical spectroscopy and ultrasound principles, but the implementation and subsequent commercial hurdles for this technology is very different.”

 (For the summary of reviewer and staff comments, see application RT3-07981 in this document.)

Leach noted that another competing application in the round received an identical 72 score and was approved by the agency’s staff.

The grant round was budgeted for as much as $35 million. Reviewers and CIRM staff recommended approval of awards totaling $29.2 million.

Scientists making appeals directly to the board have not been successful in the last 12 months or so. The board has been more reticent about overturning reviewer and staff recommendations since it changed review and appeal procedures in 2013.

California's Alpha Stem Cell Clinic Plan Hits Budget Buzz Saw

The $3 billion California stem cell agency today put the squeeze on applicants in its ambitious Alpha stem cell clinic round, which is aimed at helping to make the Golden State a global leader in stem cell treatment and research.

The action came as one rejected applicant, UC Davis, publicly appealed to the agency’s governing board to overturn tomorrow a negative decision by the agency’s out-of-state reviewers.  Cedar-Sinai in Los Angeles also filed a letter aimed at beefing up consideration of its application, which wound up on the reviewers’ funding fence.

                                                                                                                                                         

A proposal by Randy Mills, the agency’s new president, however, contained the most surprising news – a plan to cut millions from the budgets of the expected winning applicants – City of Hope (application AC1-07659), UC San Diego (AC1-07764) and UCLA (AC1-07675).

The cuts were specified in a slide presentation  posted  yesterday or today for the board meeting in Los Angeles tomorrow. The presentation recommended approval of the three applications but with revised budgets to hit a funding cap of $8 million each. The reviewers had recommended approval of the three with budgets ranging from about $11 million to $11.7 million. 

The presentation and another document based on the closed-door review indicated that reviewers were concerned about duplicative clinical trial costs and expenses associated with a proposed $10 million information center, which was trimmed earlier this year from $15 million. The request for applications to create the center is being rewritten to sharpen its focus.­­­

The other document from the review represented the first time that such a commentary has been prepared and released publicly. It was requested by an unidentified agency board member who was present at the review session.  (When queried, the agency later identified the member as Os Steward, director of the Reeve-Irvine Research Center at UC Irvine.)

 The unusual document said, among other things,

“Some reviewers had questions regarding the wording of the RFA and the potential for duplication of costs. Specifically, there was confusion over the portion of the RFA that listed ‘Clinical Trial Costs’ as specifically being outside the scope of the RFA, while simultaneously permitting  a funded Alpha Clinic to ‘defray some costs, such as clinical operations.’”

As originally proposed, the Alpha plan would have hit $70 million with up to five clinics, although there was no requirement to fund that many. It is now down to something around $40 million if four applications are approved tomorrow at $8 million each, and the information center moves forward with $10 million.

The four-page letter from the Cedars-Sinai Medical Center in Los Angeles to the directors of the stem cell agency was signed by Timothy Henry, director of the division of cardiology.  Reviewers gave the $11 million application (AC1-07650) a scientific score of 68 and said,

“Given the large expansion into regenerative medicine that the institution has undertaken, many of the activities described as elements of the (Alpha clinic) have already been initiated or will soon be put in place. Some reviewers questioned whether the additional resources provided by (Alpha) funding would substantially supplement ongoing activities and if the (Alpha clinic) would add significant value." 

Henry’s letter did not appear to break new ground but emphasized the strengths of Cedars-Sinai, declaring that one of the clinical trials proposed is “the furthest advanced of any CIRM-funded trials.”

The score for the UC Davis’ $10.8 million application (AC1-07637) was not released by the agency.  Reviewers said,

 “While some reviewers felt that the large number of trials ongoing or planned would clearly benefit from additional resources, others questioned the added value of establishing a (an Alpha clinic) at this site and did not think the application clearly conveyed how CIRM funds would be used to leverage and enhance the already ongoing activities.”

The three-page Davis appeal letter was signed by Ted Wun,  chief of hematology oncology, Jan Nolta, director of the UC Davis stem cell program, and Frederick Meyers, vice dean of the UC Davis School of Medicine.

The letter said that since the review of its application, it has received a favorable FDA judgment on a proposed clinical trial for HIV that would begin in 2015.  In an attempt to deal with concerns about personnel, Davis said the Alpha clinic would pull over the most experienced researchers with their old positions being “backfilled.”

The letter also noted Davis’ location in Northern California. All of the top-ranked applications are situated in Southern California, presenting a scientific-geopolitical issue for the statewide stem cell agency.

(The stem cell agency does not release the names of winning applicants prior to board action. However, they were derived by the California Stem Cell Report from a variety of sources.  All of the reviews can be found on this document.) 

California's $40 Million Alpha Clinic Round: Appeals Filed by Two Rejected Applicants

Two of the three rejected applicants in California’s $40 million-plus Alpha Stem Cell Clinic competition are seeking to overturn the decisions, but none of the cases is expected to be made public.

The appeals are being considered behind closed doors by the staff of the $3 billion state stem cell agency, which will make decisions on whether to proceed further. Directors of the agency are not expected to see the appeals at their public meeting on Thursday in Los Angeles.

Up until last year, appeals were considered in public by the board. The process was altered in the wake of often emotional outpourings involving patient advocates and the public. However, scientists and others can appear before the board on any matter, including applications. Researchers can also choose to disclose publicly their appeals.

The governing board is scheduled to ratify three awards in the Alpha round, which is designed to make the stem cell agency a one-stop, global center for stem cell treatments. The Alpha effort also will help to fund additional clinical trials aimed at afflictions ranging from cancer to heart disease.

The expected winners are the City of Hope, UC San Diego and UCLA, based on an analysis by the California Stem Cell Report. A fourth applicant is on the fence. The agency declines to reveal the names of applicants for fear of embarrassing rejected institutions and researchers. In response to a query, Don Gibbons, a spokesman for the agency, Monday said two applicants had filed appeals.

The agency’s blue-ribbon, out-of-state scientific reviewers make the de facto decisions on funding of applications during closed-door meetings. The agency’s governing  board almost never overturns the reviewers’ positive decision for funding. Occasionally, the board will approve funding for a rejected application.

Summaries of the reviews can be found here.

No Appeals Filed Yet in California's $44 Million Alpha Stem Cell Clinic Round

None of the rejected California universities seeking multimillion dollar grants to join the Golden State’s new, ambitious network of Alpha Stem Cell Clinics has yet filed an appeal of the decisions, the state stem cell agency said today.

That word comes from Don Gibbons, a spokesman for the $3 billion enterprise. In response to a query from the California Stem Cell Report, he said, however, the deadline for appeals is Friday.

If appeals are filed as expected, they will handled behind closed doors by the agency’s staff. Under state law, the applicants can also appear publicly before the agency’s governing board on Oct. 23 in Los Angeles to make their case. The board, however, has not responded favorably to most such pitches in the last year or so.

The Oct. 23 meeting will be the first public vetting of the proposals, which are outlined briefly in review summaries. The summaries were prepared by the agency's staff following closed-door meetings in which out-of-state scientific reviewers voted the applications up or down. The board almost never rejects a positive decision by its reviewers. Occasionally, it will approve an application that is rejected by reviewers.

Three applications survived the private review and total about $33.6 million. A fourth is on the fence for $11 million more. The agency refuses most of the time to disclose the names of applicants. But based on the review summaries and other information, the City of Hope, UC San Diego and UCLA appear to be the top-ranked applications. 

$40 Million California Stem Cell Genomics Agreement Signed; A Checkered Past

The California stem cell agency and a Stanford-led consortium have reached agreement on a $40 million stem cell genomics project that triggered complaints about irregularities, unfairness, score manipulation and the role of its then president, Alan Trounson.

The agreement was concluded last month with Stanford, UC Santa Cruz and the Salk Institute in La Jolla, five months after the award was approved by the governing board of the $3 billion agency, which is known as CIRM. The final signature came July 2 when Santa Cruz signed. Salk signed on June 26 and Stanford June 18, according to Kevin McCormack, a spokesman for the agency.

The effort is aimed at paving the way for therapies tailored to a patient’s genetic make-up and positioning California as a world leader in stem cell genomics.

Trounson’s role came under fire when he recommended approval of the Stanford application. The agency’s blue-ribbon grant reviewers, whose advice is rarely rejected by the CIRM board, also recommended funding three competitors. 

The round had a checkered history as a result of a conflict of interest involving scientist Irv Weissman of Stanford and scientist Lee Hood of Seattle, who own a ranch together in Montana. Trounson, who has visited the ranch as Weissman’s guest, recruited Hood to review the applications, including Stanford’s proposal which then specifically included Weissman.

The Stanford application that was ultimately approved did not include Weissman.  Michael Clarke, the No. 2 person in Weissman’s stem cell program at Stanford, was included, however, and was praised by name by Trounson during board consideration of the Stanford application. (See here for discussion of conflicts preceding the board action.)

Seven days after leaving CIRM at the end of June, Trounson was named to the board of directors of StemCells, Inc., of Newark, Ca., which holds $19.4 million in awards from the agency. The firm was co-founded by Weissman, who now sits on its board.  The Trounson appointment surprised the agency and triggered a rash of bad publicity for CIRM. (See here and here.)

The agency’s new president, Randy Mills, banned CIRM employees from communicating with Trounson about StemCells, Inc., matters and announced that he would not accept employment from CIRM grantees until one year after he leaves the agency.

A USC Researcher's Perspective on the Grant Round Involving StemCells, Inc.

A USC scientist late today sent an email that dealt with the 2012 decisions that resulted in the award of $19.3 million to StemCells, Inc., by the California stem cell agency. The award was made on a close vote (7-5) despite being rejected twice by the agency’s reviewers.

It was the first time that the agency’s 29-member board had approved an application that was turned down twice by its respected reviewers. 

The circumstances surrounding the award were unusual in other respects, and we are providing links to stories carried by the California Stem Cell Report at the time to provide additional context. The links are at end of the scientist’s email.

The author of the note is Lon S. Schneider, a professor of psychiatry, neurology and gerontology at the Keck School of Medicine at USC.  He was co-PI on an application in the same round as the StemCells, Inc., proposal. His application was rejected by the CIRM board despite having a higher score than the StemCells, Inc., application. 

Then-CIRM President Alan Trounson recused himself from the public discussion of the proposal by StemCells, Inc., because of his relationship with Stanford researcher Irv Weissman, who sits on the company’s board.  This month, Trounson was named to the StemCells, Inc., board seven days after leaving the stem cell agency, triggering a flap over conflicts of interest.

Here is Schneider’s note:

“In view of the CIRM’s comment today that they commissioned their own lawyers to investigate and find no conflicts, I thought that I’d share some thoughts with your readers based on my experiences with CIRM.  An investigation of CIRM’s actions during the last month or so would – almost by definition – not reveal a serious conflict because the alleged conflicting behavior would have occurred at the time that the StemCells, Inc. contracts were awarded, if it happened at all.  Bending milestones after a contract is awarded and when one’s foot is out the door is of little concern and can be corrected.

“My interest in Mr. Trounson’s alleged actions is that my colleague and I submitted an Alzheimer's disease grant that was scored higher than StemCells’ Alzheimer’s grant in the same funding cycle. Yet, StemCells’ appeal was funded, while our appeal was not even accepted as an appeal application.  Our recourse was to protest during the public comments part of the CIRM board meeting at which StemCells’ was awarded their contract.  In my opinion, Mr. Trounson and the CIRM staff were clearly antagonistic to us and strongly supportive of StemCells.  Board members were not aware of our appeal.  Indeed, the Alzheimer’s disease advocate on the CIRM board, Leeza Gibbons, who was well-rehearsed in her advocacy for StemCells, Inc, had to be informed during a break on what our grant was about so that she could support it as well.

“StemCell’s sinecure for Mr. Trounson reinforces my opinion that the StemCell/CIRM arrangement was – let’s say -- interesting.  No doubt, others will disagree and point out why our proposal – although rated higher than StemCells – was deficient and should not have been funded while StemCells’ should have been and was.  They, of course, may have a point, and I will continue to believe that the StemCell contract was awarded in no other way than with probity. I thought I would nevertheless share these observations.”

Here are links and excerpts from the 2012 articles.

StemCells, Inc., Wins Another $20 Million From California Stem Cell Agency

Following a second impassioned pitch by its former chairman, Robert Klein, the governing board of the California stem cell agency approved a $20 million award to a financially strapped biotech firm, StemCells, Inc., of Newark, Ca.

An Unseemly Performance: Former Chair of Stem Cell Agency Promotes $20 Million Research Proposal

Bob Klein is nearly an icon in the history of the $3 billion California stem cell agency. And when he appeared before its governing board last month and aggressively touted a $20 million grant proposal already rejected by agency reviewers, his actions raised eyebrows.

Arm-twisting and Emotion: Stem Cell Directors Move to Reform Appeals on Multimillon Dollar Grants

Frustrated with politicking, “arm-twisting,” lobbying and “emotionally charged presentations,” the governing board of the $3 billion California stem cell agency today approved short-term changes in its grant appeal process and ordered up a study to prepare long-term reforms.

California Stem Cell Firsts: From Emotional Appeals to $40 Million Awards

During the last few months, the $3 billion California stem cell agency, which is approaching its eight-year anniversary, has chalked up a number of important firsts.

Verastem Bid for Nearly $10 Million from California Nixed

A Massachusetts firm called Verastem, Inc., heard some bad news recently about its pitch for $9.9 million from the $3 billion California stem cell agency.

The Cambridge firm sought the cash from the agency to help out with a clinical trial dealing with breast cancer.

However, the agency’s directors were told in a memo on the CIRM Web site, 

“Weaknesses in the scientific merit of the proposal combined with portfolio considerations led to a staff recommendation NOT to fund.“

By portfolio considerations, the staff seemed to mean that the agency had already awarded funds in the same scientific area.

The agency’s reviewers, who come from outside California, gave the application of score of 74. Formal action will be taken on the application at Thursday’sboard meeting in the San Francisco Bay Area.

Researchers Seek to Overturn Negative Decisions by California Stem Cell Agency

LA JOLLA, Ca. -- Three rejected applicants for millions of dollars from the California stem cell agency have appealed negative reviewer decisions in the agency's business-friendly strategic partner program.

The agency's staff rejected two of the appeals but is sending one back to reviewers.

Names of the applicants and the amounts sought were withheld by the agency. The agency also withheld the contents of the appeal letters, material that was, until recently, was routinely disclosed.

UC San Francisco and UC Davis Seek Millions for Recruitment of Scientists

LA JOLLA, Ca. -- The University of California at Davis and the University of California at San Francisco are both appealing rejection of multimillion dollar proposals that would help them recruit highly regarded scientists to California.

The proposals were turned down by reviewers for the California stem cell agency.  However, appeal letters were submitted to the board by Arnold Kriegstein, director of the stem cell program at UC San Francisco, and Thomas Vail, chairman of the Department of Orthopedic Surgery at the same institution.

The appeal letter from UC Davis was signed by Frederick Meyers, vice dean of its medical school; Jan Nolta, head of the school's stem cell program, and Diana Farmer, chair of the Department of Surgery.

The letters were not available online at the time of this writing.

California Stem Cell Directors Reject Conflict Charge on $13 Million Heart Research Proposal

Directors of the California stem cell agency today rejected a $13 million application for heart research despite allegations that the agency's review involved a conflict of interest.

The vote was 3-8 on the proposal by Eduardo Marban, director of the Cedars-Sinai Heart Institute, who complained that a conflict existed during the review of the application.

The agency said it conducted an "extensive" examination of Marban's charges and determined that no legal violation of the agency's conflict of interest rules had taken place.

Appearing before the board, Marban said that the review was a "white-wash." He also said the CIRM staff's re-examination of the scientific issues was inadequate.

Marban did not disclose specifics of his complaints about the nature of the conflict. Nor did the agency. But he referred to unspecified actions by a "venture capitalist." CIRM said no venture capitalists were involved in the review.

CIRM Director Jeff Sheehy asked CIRM staff whether any California residents were among the reviewers during the grant round involving Marban. Gil Sambrano, CIRM's associate director, review, said there were and indicated they served as "specialists." Sambrano also said one of  the reviewers in the round had a conflict because he was involved in one of the grant applications being reviewed.

CIRM has long contended that to avoid conflicts of interest no persons from California served as grant reviewers. However, Sambrano said that provision applied legally only to members of the grant review group, formally known as the Grant Working Group, and did not apply to the use of specialists. Sambrano said the specialists do not participate in the actual act of scoring during the closed-door reviews of grant applications.

Marban's application received a score of 48 out of 100 with a range of  20 to 74, CIRM disclosed today.

Several members of the board, including Chairman Jonathan Thomas, said it was necessary for the board to respect the opinions of grant reviewers and the conclusions of its staff.

Marban has been highly regarded by the agency, which cited his research during a review earlier today of CIRM's accomplishment. He has received $7 million in grants and a company he founded, Capricor, has received $20 million.

CIRM has long cloaked its grant review process in secrecy, in keeping with the traditions of scientific peer review, even though the awards involve public money. The reviews are conducted in private. The names of the applicants are not disclosed. The names of reviewers are not disclosed. The reviewers' economic, personal and professional interests are not disclosed. Scores on rejected grants are not disclosed, unless the applicant appears publicly before the board. Names of applicants appealing reviewer decisions are not disclosed unless they also communicate publicly with the board. That provision was put in place last year by the board.

The total number of directors voting on the application was only 11 compared to 29 on the board. The number is small because of conflict of interest rules at the agency.

For more on the Marban story, see here and here.

Cedar-Sinai's Marban Files Appeal on $13 Million Heart Research Application

Eduardo Marban of Cedars-Sinai today filed a public appeal on his application for $13 million for heart research from the California stem cell agency. The application is the subject of an investigation by the agency into allegations by Marban of a conflict of interest involving the grant review. We will have more details shortly.

The $13 Million Matter of DR3-07201: Allegations of Conflict of Interest at the California Stem Cell Agency

In an unusual move last December, the California stem cell agency removed – with no public explanation – an application for $13 million from consideration by its governing board.

That application is now back before the board on Thursday and is almost certain to be rejected.

What is missing, however, are important specifics about the matter. They are cloaked by the agency's rules that conceal most of the CIRM grant review process, including the names of applicants along with the identities of reviewers and their economic and professional interests. Also shrouded are the details of any complaints about conflicts of interest as well as any other appeals.

Nonetheless, since the proposal was listed on the agenda of a public meeting of a state agency, it is known that it involves application DR3-07201. The unidentified applicant, according to a CIRM summary, sought $13 million for research into a treatment for heart failure, a therapy that is labeled by the applicant in all capital letters as “DYNAMIC.”

The agency's scientific reviewers last year recommended rejection of the request for funding. The agency's review summary said,

“The major serious criticism and flaw stems from the fact that the applicant is currently evaluating the same cellular product in a Phase 1/2 trial in a different subgroup of cardiac patients. Since the objectives of the proposed and currently enrolling trials are similar, reviewers agreed that the proposed Phase 1 trial does not add value and should be re-evaluated after completion and analysis of data from the current trial .”

No scientific score was released for the review but it was last on the list of all applications in this particular round. The agency usually lists the applications in order of their scores.

Following the removal of the application from the board agenda, the California Stem Cell Report in December inquired about the reason. Kevin McCormack, senior director of communications, replied via email,

“We received a last-minute appeal based on an alleged conflict of interest.  In order to allow time to review the claim, we deferred action.  We have done this previously, though I don’t have an exact count.”

When the application popped up on the agenda for this week's meeting, we inquired again, seeking more information. That was seven days ago.

The answer came in the form of a posting yesterday on the CIRM Web site of a one-page memo dated March 7 from Gil Sambrano, CIRM's associate director, review. In the note to the CIRM board, Sambrano said a conflict of interest allegation was raised by the applicant on the morning of Dec. 12, 2013, the day on which the application was to be considered. Sambrano said,

“The applicant alleged that the GWG (grant working group) review of the proposed project may have been 'tainted' by the 'perceived lack of objectivity' of one member of the GWG. There was no specific basis to support a financial, professional or personal conflict as defined in the GWG conflict of interest policy.”

Sambrano said the investigation into the complaint determined there was no violation of the agency's conflict of interest rules. He said,

“We found no evidence that the reviewer had any significant influence on the score or the recommendation. The reviewer was not an assigned reviewer and therefore did not contribute a written critique to the panel. Consistent with the recollection of the review chair and CIRM science officers in attendance, the discussion notes suggest that this reviewer did not provide any comment either in favor or against the proposal. The individual score given by the reviewer was very close to the mean score and thus did not contribute to the broad standard deviation.”

Sambrano continued,

“The applicant also submitted a request for reconsideration based on material new information. Although the applicant provided some information that is new, it did not directly address the main concern of reviewers and therefore did not provide adequate grounds for reconsideration. The request was denied.”

Sambrano said the agency took an additional step of seeking the opinion of two new expert reviewers and the chair of the grant review group. He said they did not find the new information “compelling.”

Reviewer Joyce Frey-Vasconcells was barred from participating in the review of the application, according to its CIRM review summary. Other reviewers in the round who could participate in assessing the application included Joy Cavagnaro, Raj Chopra, Derek J. Hei, Hassan Movahhed and Andrew Balber. Their names were listed on review summaries on other applications in the round where they had conflicts of interest, either professional or economic.

The applicant's appeal does not necessarily end with the CIRM staff decision. The applicant can appear before the board in public on Thursday and seek to overturn the action or ask for further investigation. It can also send material to the agency for delivery to all board members. 

As mentioned previously, the name of the applicant was withheld by the stem cell agency. But it could likely be discerned by a knowledgeable stem cell researcher based on information contained in the review summary. If the applicant would like to send both of its appeals to the California Stem Cell Report, we would be glad to carry their full text and any additional commentary that the applicant would like to make. Other applicants have done so in the past. The agency has no prohibition against such an action and actually has a term for it – self-disclosure.

Our take: The stem cell agency's appeal process ill serves the California public, grant applicants and CIRM itself. The $3 billion agency's reliance on secrecy only raises more questions about cronyism and unfairness, some of which have dogged CIRM since its inception. The recent flap over the $40 million genomics round is only the most recent example. Roughly 90 percent of all the cash handed out by CIRM has gone to institutions that are represented on its governing board, which sets the rules for the grant-making process and determines the nature of the grants. The board's conflicts are built in by Prop. 71, the measure that created the agency in 2004. The only genuine way to ameliorate the issue is with more transparency.

CIRM Directors Reject $16 Million Eye Research Application

Directors of the California stem cell agency today rejected a $16 million application from Cedars-Sinai for research involving retinitis pigmentosa.

The action came on a split vote despite a personal appearance by the principal investigator, Kent Small, and a patient advocate.

CIRM staff had recommended rejecting the grant because the agency is funding a number of other eye research projects. The vote was 7-4 to approve the staff recommendation.

Small and Clive Svendsen, also of Cedars-Sinai, noted that other diseases have many grants from CIRM and have not been subjected to the same sort of objection. They noted that the eye is a particularly good target for stem cell therapy compared to other areas of the body.

Disease Team Applications Under Discussion

The $100 million disease team round applications are under discussion currently at today's meeting of the governing board of the California stem cell agency.

CIRM Chairman Jonathan Thomas outlined the appeal process prior to the discussion and cautioned rejected applicants in the audience that the board is not the first avenue of appeals.

The board has revised its appeal process in the last year to discourage appeals directly to the board.  Over the last couple of years, the appeals have often involved emotional presentations by patient advocates seeking to support applications.

Nonetheless, under state law, any person has a right to address the board on any subject.

$41 Million in California Stem Cell Grants Virtually Approved

Directors of the California stem cell agency today all but approved about $41 million in early translational grants, rejecting all appeals by applicants and accepting staff recommendations on marginal grants.

The roll call vote was held open this morning to record a vote by one board member who was not present at the time. It is virtually certain that the member will vote in favor of affirmative action on the applications in question.

One member of the board, Joan Samuelson, abstained from voting on any of the applications. She said she did not think the board had adequate information on its total grant portfolio, particularly in view of the declining amount of money available.

The agency has about $600 million in uncommitted funds and is scheduled to run out of cash for new grants in 2017.

The research acted on today is aimed at “proof of concept for development of a therapy candidate and/or studies to select a development candidate. The approved grants can be found on this CIRM website page and are listed in tier one and tier two.  Identities of the applicants are withheld by CIRM to avoid embarrassing rejected candidates and to avoid disclosing the names of applicants to board members before they vote. However, applicants often appear before the board, as they did today, and identify themselves.

Five applicants appealed negative decisions on their applications by grant reviewers. The agency declined to disclose the appeal letters or identify the applicants, information that was a public record under the previous appeal procedures. New processes were put in place this spring that moved the appeals behind closed doors and made them subject to staff instead of board review. Nonetheless, rejected researchers have a legal right to address the board on appeals or any other matters.

At the request of the California Stem Cell Report, the agency provided the numbers of the grants on which appeals were filed. They are: 06787, 06888, 06761, 06793 and 06830. Review summaries on the applications can be found here. 

We have asked the agency to provide its legal and policy justification for now withholding information that was once a public record.

New Procedures at CIRM: California Stem Cell Agency Staff Nixes Grant Application

For the first time in its nine-year history, the staff of the $3 billion California stem cell agency this week  formally and publicly weighed in on grant approval actions by its prestigious reviewers, recommending that one application be rejected and another approved with conditions.

The staff, led by CIRM President Alan Trounson and Patricia Olson, the agency’s executive director of scientific activities, made recommendations to the agency governing board on three applications that can be described as “wobblers.” In other words, the board could go either way on the proposals when it considers them at its meeting in La Jolla on Wednesday.

Trounson recommended that the governing board reject one of the wobblers  (No. 6666),  a $2.0 million proposal, even though it received a higher scientific score – 70 – than the other two applications. Trounson recommended approval of two $1.8 million projects (Nos. 6831 with a scientific score of 66 and 6832 with a scientific score of 69), with staff-imposed conditions on one.

 Trounson said the agency is or 

 "will be funding 2 similar approaches to address photoreceptor degenerative disorders so addi-tional investment in an earlier stage project is harder to justify.”

All three fall into a newly defined category, called tier 2, for ranking of applications. The CIRM web site said tier 2 proposals are now ones that possess “moderate scientific quality, or consensus on scientific merit cannot be reached and may be suitable for programmatic consideration by the ICOC(the governing board).”

A fourth application  (No. 6648) for $4.3 million that scored below all three at 64 was approved, however, by reviewers after they imposed a condition on the proposal.  CIRM staff did not publicly address that application. The application review summary said that the researcher – who was not identified – must “demonstrate, within 12 months, the ability to make the hESC–derived 3-D sheets. This is a go no/go milestone for the project.”

The agency’s standard practice is withhold the identities of applicants prior to board action because they might be embarrassed.

In the other instance where conditions are to be imposed, they appeared to deal with an in-kind contribution of “essential services, technology and expertise.”

The new process for evaluating marginal or wobbler applications was established last March in response to an Institute of Medicine study last year that made a host of recommendations for improvements at the stem cell agency.

The staff recommendations on applications came in a $70 million early translational round that is aimed at “proof of concept for development of a therapy candidate and/or studies to select a development candidate.

In all, including staff and reviewer actions, 13 applications were recommended for funding, although the board has almost never rejected reviewer decisions. The 11 grants initially approved by reviewers total $37 million. With the two more recommended by staff, the figure would be about $41 million. A total of 39 applications were considered for funding.

Five applicants filed appeals of reviewer rejections, a CIRM spokesman said today. The  California Stem Cell Report has asked for copies of those appeals and CIRM staff action on them. Appeals are also being conducted under a new staff-dominated procedure, although all applicants have the right under state law to appear before the board to address any subject.

Budgeted grant funds that are unused are available to the board for future grant rounds in any area they so desire.

(An earlier version of this item incorrectly said six applicants had filed appeals, based on information from the agency. The correct figure is five.)

(Editor's note: Kevin McCormick, CIRM's spokesman, later commented on the agency's practice of withholding the identities of applicants to avoid embarrassment to applicants who are not approved. He said,  "Actually they are withheld so that the board doesn't know the identities of the researchers or the institutions whose applications they are voting on." 
(We should note that official CIRM policy is to withhold all applicant names until board action, but it does not release any of the names of denied applicants even after board action. However, it has in the past released in advance of board action the names of applicants when it suits its purposes . Also, the names of many applicants can be discerned based on information provided in the review summaries of the applications. The identities of applicant institutions can also be determined based on which board members are allowed to participate in discussion of specific applications as well as being allowed to vote. For more on the practice of withholding names, see here, here, here and here. )

The Klein Donation: Top Stem Cell Agency Execs, Lawyers Aware of Gift but Fail to Report It

A number of top level executives, in addition to six lawyers, at the California stem cell agency knew of Robert Klein's $21,630 donation in May of last year although they failed to report it to the agency's board as required by agency regulations.

As a result, the 29 directors were not aware of the gift when Klein, former chairman of the agency, appeared before them two months later and successfully asked them to override a grant reviewer decision rejecting a $20 million award to StemCells, Inc., of  Newark, Ca. It was the first time in the eight year history of the agency that its board had approved an application rejected twice by its scientific reviewers. The proposal had been given a score of 61 out of 100. The board rejected higher scoring applications in that particular round.

According to a person familiar with the agency, members of its executive committee, some of whom are lawyers, were aware of the Klein donation in May. Other lawyers not on the executive committee knew as well. Previously, it was not known that the donation was known so widely among CIRM executives and lawyers. It also was not clear that they knew that Klein intended to appear before the board in July. At the time of his donation, reviewers had already rejected the StemCells, Inc., application but it was not supposed to be publicly known.

Most of the CIRM executives and lawyers aware of the gift were also present at a public meeting of the CIRM board in May as well as July but did not alert the board to board to the donation.

Last week, an agency spokesman said the failure to report the Klein gift was  “due to the lack of additional donations, a transition in CIRM’s finance office and an oversight."

The board will be formally told of the gift at next week's board meeting, more than a year after it was made.

The donation by Klein, a Palo Alto, Ca., real estate investment banker, financed a trip by six CIRM science officers to Japan for an international stem cell conference. CIRM President Alan Trounson subsequently directed the officers to give special access to Klein, among other favors Trounson granted Klein. Two of the officers were heavily involved in the grant round that included the StemCells, Inc., application. The science officers participate in the application of the closed-door review process but do not vote on proposals. Trounson excused himself from participation in public discussion of the StemCells, Inc., application because of his relationship with the company's founder, researcher Irv Weissman of Stanford University. 

The board vote approving the application was a narrow 7-5. It is not clear whether the vote would have changed if the board had been informed publicly about Klein's gift. But it would have heightened concerns that Klein was using his six-year service as chairman of the agency plus the donation to sway the board, which rarely overturns the decisions of its scientific reviewers. CIRM directors go along with reviewer decisions on 98 percent of applications, according to agency calculations.

One of the votes in favor of Klein's position came from Art Torres, one of two vice chairman of the agency. Torres' state-required economic disclosure statements show that he received at least $31,000 from firms controlled by Klein during 2012 and 2011. Torres works four days a week for the agency, earning an annual salary of $225,000. Torres told the California Stem Cell Report that his vote had no connection to the consulting work he did for Klein's real estate firms.

Klein has denied any impropriety in connection with his donation. He has not responded to questions involving Torres.

StemCells, Inc., Rejects $20 Million from California Stem Cell Agency

When does a financially struggling biotech company turn down a $20 million “forgivable loan?”

When it is StemCells, Inc., of Newark, Ca., and the cash is being offered by the $3 billion California stem cell agency. The research program has handed out nearly 600 awards, and it is the first time that a recipient has rejected funding.

That's the latest development in a stem cell saga that began publicly last July and that involved unusual personal lobbying by the former chairman of the Golden State's stem cell research agency. The high point of the saga may have come in September when the agency's governing board finished awarding StemCells, Inc., $40 million in two different awards. But there was a catch. StemCells Inc., had to match that figure with $40 million of its own.

Late last month, StemCells, Inc., threw in the towel on the $20 million awarded on its cervical spinal cord injury application. In comments to analysts March 21, Rodney Young, chief financial officer of the publicly traded company, said:

“The funding would have been in the form of a forgivable loan, however, we have elected not to borrow these funds from CIRM(the stem cell agency).”

According to the Seeking Alpha transcript of the conference call with analysts, Young said,

“You may also recall that last September, CIRM approved a separate application under the same disease team program for Alzheimer's disease, which was also for up to $20 million in the form of a loan. We remain in confidential negotiations with CIRM regarding the terms and conditions that would attach to this loan.”

The company provided no explanation for rejecting the cash, either in the conference call transcript or in its press release.

During the conference call, StemCells, Inc., reported continuing losses. For 2012, net losses totaled $28.5 million compared to $21.3 million in 2011. Revenue for 2012 was $1.4 million compared to $1.2 million in the previous year.

The awards last year to StemCells, Inc., founded by Stanford's eminent researcher Irv Weissman, stirred up a bit of a ruckus. The spinal injury award was handed out routinely in July. Scientific reviewers gave it a score of 79 and recommended funding. It was another matter on the Alzheimer's application. It was scored at 61. Reviewers said it did not merit funding. But the company publicly appealed to the full board, which sent the application back for more examination. It was rejected again. Nonetheless, in September, the 29-member board approved the award on a 7-5 vote, bypassing a rival Alzheimer's application scored at 63. It was the first time in the eight-year-history of the agency that its board approved an application that was rejected twice by reviewers.

Approval came only after strong lobbying by Robert Klein, former chairman of the board. Klein was also chairman of the ballot campaign that created the agency, and Weissman, who holds stock in StemCells, Inc., and sits on its board, was a major fundraiser for the campaign. 

The Los Angeles Times' Pulitzer Prize-winning columnist, Michael Hiltzik, wrote in October that  the process was “redolent of cronyism.” He said a “charmed relationship” existed among StemCells, Inc., its “powerful friends” and the stem cell agency.

As for the remaining $20 million award, Martin McGlynn, CEO of StemCells, Inc., expects “quick” action on finally securing the cash.

Here is an exchange that came during the March conference call between McGlynn and analyst Kaey Nakae of Ascendiant Capital Markets.

Nakae: “Okay. Just 2 more questions. I guess the first one, as it relates to CIRM. In deciding to decline the funding for spinal cord yet continuing to pursue the funding for Alzheimer's, is there a difference in what you're getting from them in terms of potential terms and conditions that allow you to proceed on one and not the other, or is it the fact that you're already in human with -- in spine, and still very preclinical with Alzheimer's?”

McGlynn: :”I think you're very definitely -- you're getting at some important criteria when one considers how to fund programs whether you use debt or equity, etcetera. So I wouldn't disagree with anything that you've outlined or surmised. But I just would pray your indulgence until we're finished, the negotiations with CIRM, which are coming to a close and we expect those to resolve pretty quickly with regards to the Alzheimer's program. And then quite frankly, we can be way more forthcoming and way more disclosive with regards not only to our decisions, but to our thinking.”

StemCells, Inc., was trading at about $1.65 at the time of this writing, down slightly from the previous day. Its 52-week high is $2.67 and its 52-week low $0.59.

CIRM Board Member Cites Valuable Role of Patient Advocates

Jeff Sheehy, a patient advocate member of the governing board of the California stem cell agency, last month said the Institute of Medicine was recommending what amounted to "defenestration" of the 10 patient advocate members on the board.

Following a staff presentation this morning on the scientific progress of the agency, Sheehy took the opportunity to point out that several of the programs highlighted were only underway because of efforts patient advocates or appeals by rejected applicants.

Sheehy, who is vice chairman of the CIRM grant review group, said "programmatic" reasons advanced by patient adovocates led to the group's approval of two of the programs. Two more of the highlighted awards were rejected by grant reviewers but only approved by the full board after the applicants appealed using the agency's extraordinary petition process.

The IOM has recommended that the petitions be eliminated because of the threat they pose to the scientific peer review process. It has also recommended that the board not vote on individual grants -- only a slate approved by reviewers. The IOM additionally has recommended major changes in the role of patient advocates on the board.