Fleshing Out the Details: Inside the California Stem Cell Agency's Fledgling Industry Partnership Program

 California's $3 billion stem cell agency has released details on just what is involved in its new collaboration with industry, giving select companies "direct access" to the hundreds of millions of dollars in research that the state has financed. 

The effort involves creation of "robust data rooms," nondisclosure agreements and licensing templates, among other things, and owes a debt to the agency's moribund, $150 million public-private partnership proposal (ATP3).  The new program is aimed at speeding development of stem cell therapies as the agency faces its possible demise in the next couple of years. 

The California Institute for Regenerative Medicine (CIRM), as the agency is formally known, has dubbed the collaboration as the Industry Alliance Program (IAP). It  already has two partners from the private sector, BlueRock Therapeutics of Cambridge, Mass., and Vivo Capital of Palo Alto, and the agency is looking for more. 

Q & A: Data Rooms and More

Neil Littman, CIRM photo

CIRM disclosed more information about the program in response to questions from the California Stem Cell Report (CSCR). Here is the agency's reply from Neil Littman, CIRM's business development officer. It includes a response to a comment filed last week on the original article by an anonymous reader concerning access to research.

CSCR: "What does 'direct access' to CIRM’s growing stem cell portfolio' mean? Will grantees be asked to share their results with these companies....or will CIRM just give out grantees' proprietary information to these companies?"

Littman:  "CIRM will never share proprietary information without the consent of the awardee and the awardee’s institution. In addition, in order to access non-public information, IAP partners (just like everyone else) will need to execute a confidentiality agreement with the awardee’s institution. 'Direct access' implies CIRM’s role in helping IAP partners navigate CIRM’s large and growing portfolio and facilitating introductions when it is mutually agreed upon by the awardee and IAP partner."

CSCR: "It would be useful to discuss with more specificity this language from the IAP agreements: "...diligence process through template legal agreements, such as non-disclosure agreements and licensing templates, and robust data rooms."

Littman: "What does CIRM mean by diligence process? The term due diligence refers to the process of how a company evaluates technology before making an investment. This is often a lengthy review process where the company evaluates items such as preclinical clinical and clinical data, CMC information, and regulatory correspondence. CIRM will help streamline this process by working with the awardee and awardee’s institution to gather all the information in one place for the collaborator to review (this is commonly referred to as a 'data room').

"Why are template agreements useful to collaborators? The template legal agreements provide standardized language which help save time for both the collaborator and the awardee institution. Many features of the agreements will still need to be negotiated, such as the economics of a specific deal, but the templates serve as a starting point."

Son of ATP3

CSCR: These arrangements appear to be descended from CIRM's ATP3 proposal. How did the partnership program emerge? How did those two companies come to be the first to be involved? 

Littman: "Yes, the IAP is descended from ATP3 and is meant to achieve the same goal: increasing the pull from industry in order to increase the number of partnerships. BlueRock and Vivo Capital were selected for a variety of reasons, including: 1) Demonstrated commitment to advancing stem cell treatments to patients (i.e. they have already made investments in the space) 2) Continued commitment to investing in stem cell programs in the future, 3) They are well capitalized with the ability to invest in CIRM-funded programs."

Text of IAP Agreement

Here is the text of the signed agreement with BlueRock, which was requested by the California Stem Cell Report. The agreement with Vivo is identical.

   California stem cell agency agreement with BlueRock Therapeutics by DavidJensen on Scribd

'Pressure testing' a $150 Million California Plan to Lure Business into Development of Stem Cell Therapies

The California stem cell agency's far-reaching plan to crate a $150 million, public-private partnership to speed development of stem cell therapies remains on hold as the agency looks for ways to lure in private enterprises.

In an interview last week with the California Stem Cell Report, Randy Mills, president of the $3 billion agency, said he had nothing fresh to report on the project, which did not draw any eligible applicants last fall.

Mills said his team is "pressure testing (the project) to make sure people really understand the terms."

In December, Mills said that the firms that responded to the request for applications in October were seeking to make a "better deal" than the agency had offered. Under the proposal, a new company would be created to develop therapies. It would be backed by a $75 million state loan (discounted to 50 percent payback)  with a matching $75 million coming from a successful applicant. The company would have the pick of agency research that did not already have a commercial partner.

Mills said that the unusual nature of the proposal posed challenges for the company and the agency.

In the interview last week, Mills said the agency is seeking to determine if having more time to prepare proposals will trigger more applications. Another factor is whether the terms do not meet the needs of potential applicants.

California Stem Cell Agency Says Companies Seeking "Better Deal" in Unique, $150 Million Plan

Highlights
Five responses to plan
Application process is not a negotiation
Protection of state taxpayers paramount
More talks with companies planned

The president of the California stem cell agency, Randy Mills, yesterday said that the firms that responded to an ambitious proposal to create a $150 million public/private partnership were seeking to make a "better deal" than the agency had offered.

Mills said that the agency was "not going to give away something that is not in the best interests of the people of California."

Randy Mills, FDA photo

Mills was responding to questions raised earlier this week as a result of a report on this web site that
the proposal has hit a significant snag. The plan is aimed at creating a unique enterprise to speed development of stem cell therapies and to help establish California as a global stem cell powerhouse. The new company would be backed by a $75 million state loan (discounted to 50 percent payback)  with a matching $75 million coming from a successful applicant. The company would have the pick of agency research that did not already have a commercial partner.

The deadline for applications was Oct. 31. Up until yesterday, the agency had not even disclosed the number of responses to the request for applications(RFA). Nor had it gone beyond vague expressions of the issues troubling the proposal.

In a telephone interview with the California Stem Cell Report, Mills said that five responses were received on Oct. 31. But he said none were eligible for consideration because they did not meet the requirements of the RFA. He said the responses indicated that the companies viewed the application process as a "negotiation." Mills said "all kinds of terms" were proposed that were "different than in the RFA." He said,

"We put forward what we thought was a very good deal. The heads of the companies wanted to make a better deal."

Mills added,

"The deal is as good as the deal is going to get."

He said the $3 billion agency, known formally as the California Institute for Regenerative Medicine (CIRM), has to be willing to walk away if the deal is not appropriate.  He said the agency had a fiscal responsibility to taxpayers. "My investors are the people of California," Mills said.

Mills said, however, he was going to discuss the proposal further with those who responded to determine whether it was a matter of "terms or time." He said the proposal was innovative and unusual, posing challenges for both the companies and the agency.

Mills comments came as he was responding to questions raised by a reader of the California Stem Cell Report, Ed Snively, of El Centro, Ca. Snively is a longtime participant in local affairs in his area in Imperial County and has long followed stem cell agency matters.

He wrote in an email to California Stem Cell Report,

"Thank you, David, for this interesting observation on selective transparency by the agency. The comments by Mills regarding state regulatory compliance and taxpayer procedure acceptance were curious to me. I think Mills owes an explanation of his remarks to taxpayers. If this 'bold' plan violates the terms of the agency contract with the state and stakeholder/taxpayers then Mills needs to explain why that is. What he has done is make me think that something right on the legal edge is going on behind closed doors. I hate that in public agencies."

The California Stem Cell Report emailed the comments to the agency, asking if it would like to respond.

In the subsequent telephone interview, Mills said that he did not want the agency to be perceived as selectively transparent and that he had "no problem" in answering any questions.  He said that if his earlier comments were not clear that it was his fault, and he elaborated on the issues involved.

But under the agency's longstanding rules, it does not disclose the names of applicants nor does it disclose their applications -- only a review summary when they come before the agency's governing board for final action.  However, the terms of contracts with successful applicants are a public record.

Ambitious, $150 Million, California Plan for Stem Cell 'Powerhouse' Stalls

Highlights

$75 million state loan

Pick of stem cell research

Agency vague on problems

The California stem cell agency's bold plan to create a unique, $150 million, public-private company to speed development of stem cell therapies has hit a significant snag, stalling its progress indefinitely.

The agency, however, says it hasn't given up and will try to find solutions to the undisclosed problems.

Under the proposal -- first advanced a year ago -- California would provide a $75 million loan to a partner that would also provide $75 million. The goal would be to create a "powerhouse" that would likely be one of the landmark legacies of the $3 billion agency. The partner would be expected to pay back only 50 percent of the loan plus interest. The new company would also have the pick of the 94 percent of the agency research that doesn't already have a business partner. 

The public-private biotech partnership  -- dubbed ATP3 -- would be the first in state history and the first of such magnitude nationally.

The agency has been working for much of 2016 to recruit applicants and to address potential concerns. The difficulties began to surface last fall at the Oct. 31 deadline for applications. The agency declined to disclose to the California Stem Cell Report even the number of applications it had received. A spokesman said only that the agency was checking to see if they were "eligible."

The chairman of the agency, Jonathan Thomas, went public with slightly more information at last week's meeting of the agency's governing board.

He referred to a "number of applicants" that were involved. He said that issues still exist and that the application(s) that were submitted to the agency will not be given to the agency's reviewers as scheduled. Thomas said the request for applications may extended and some criteria adjusted.

Randy Mills, president of the agency, said later in the meeting that an effort would be made to make the plan "compliant with state requirements and palatable to taxpayers." He described it as an "ongoing challenge."

Mills said,

"We haven’t given up but we haven’t nailed it yet."

No public questions were raised at the meeting by 29-directors of the agency, which is officially known as the California Institute for Regenerative Medicine (CIRM).

It was created 12 years ago by a ballot initiative approved by voters and relies on money borrowed by the state(bonds). The ballot campaign indicated that stem cell therapies were close on the horizon. However, the agency has not developed a therapy for widespread use.

It estimates that it has about $692 million left for awards. The agency's funds are projected to run out in 2020. No additional funding is in sight.

California's $150 Million Public/Private Plan to Commercialize Stem Cell Therapies: An Update

California's plan to create an ambitious, $150 million public/private partnership to commercialize state-funded stem cell research edged forward this week as the deadline for applications closed on Monday afternoon.

Little is known about the nature of the applications -- not even the number received. The state's stem cell agency yesterday declined to reveal the figure, declaring that the proposals needed to be examined to determine eligibility.

Traditionally the $3 billion agency does not disclose the names of applicants for its funding or details of their applications, although there have been exceptions. Their proposals are reviewed behind closed doors by scientific grant reviewers whose names are not disclosed. Nor are the reviewers' statements of economic interest publicly revealed.

A CIRM document calls for the proposal to be evaluated by reviewers during the first quarter of next year with final board action also coming during that period. The recommendations of reviewers are almost never overturned by the board.

The public/private partnership could well be one of the landmark legacies of the stem cell agency, formally known as the California Institute for Regenerative Medicine(CIRM). The project would be unique in California history and nationally.

The eligibility requirements include the following:

• A California location for the work
• Documentation of an "upfront financial commitment" of $75 million(no in-kind services)
• Readiness to begin work as required by CIRM
• Incorporation by the date of the application

The recipient must begin work on the project within 45 days of the award, which translates to before the middle of next year.

More Than a Minor Headache: The Stem Cell Snake Oil Problem vs. Legitimate Research

Just two weeks ago, the headlines from Bloomberg News offered a glowing view of the prospects for stem cell therapies and the industry. The story in the online publication, which counts nearly 9 million readers monthly, said,

"Stem cell crusader sparks new hope....Regenerative medicine could be a $120 billion industry by 2030"

But only three days later, that article was overwhelmed by a wave of stories with a much different flavor. They carried reports of unproven therapies, possibilities of fraud, lack of regulation and fearful, expensive consequences for desperate patients.

That theme continued even as recently as this past weekend as The Economist carried a piece headlined,

"A dish called hope: The flourishing, unregulated industry in expensive, experimental treatments"

So which is it? Hope for legitimate cures and oodles of cash for stem cell companies? Or "hope" for treatments that do not work and have sometimes damaged both the bodies and wallets of the patients?

The situation is more than a minor public relations headache for the supporters of stem cell research, be they patients, stem cell companies or the $3 billion California stem cell agency, which is on a campaign to ease federal regulation of stem cell clinical trials.

For all practical purposes, the public generally does not make much of distinction between the legitimate research conducted by institutions such as Stanford and the so-called "miracles" reported about the late hockey great Gordie Howe and others. It all goes into the same cognitive bag. The stories about mysterious and fearsome tumors found in little-known patients attract little widespread attention.

But UC Davis scientist Paul Knoepfler and bioethicist Leigh Turner of the University of Minnesota ripped open that bag with their study last month that reported for the first time that nearly 600 dubious stem cell clinics are peddling their unproven therapies across the country.  Their report supported the view that the stem cell field is rife with snake oil merchants. For the general public, which does not delve deeply into medical research, the perspective could well be described as, "You seen one stem cell therapy, you seen 'em all."

Does this mean that these clinics should be ignored and shoved quietly off into a corner in order to avoid besmirching legitimate efforts? Of course not. It certainly appears that the FDA and other  state regulatory bodies can do a better job. But stiffer regulations are not going to come anytime soon, despite an FDA hearing on the topic in September.

However, the situation DOES mean that folks like Knoepfler and Turner should continue to speak out along with many other scientists who do not want their efforts blackened by the snake oil men. Researchers can work with their institutions' PR departments to place op-ed pieces, find speaking engagements and gin up TV and radio interviews. Blogs, like the one produced by Knoepfler, can be started. The International Society for Stem Cell Research should revive its public education efforts to help patients and the general public understand the facts about stem cell research. It should also reinvigorate its warnings about dubious therapies, which were throttled back a few years ago, reportedly after legal threats were made.

California's stem cell agency has a special concern. It is trying to "de-risk" development of therapies  by a variety of means and lure biotech and Big Pharma into the stem cell game in a bigger way. This summer the agency is offering $75 million to entice a private partner into the state's first-ever, public-private partnership to create a stem cell cure.

The private sector has shied away from the stem cell business, as the stem cell agency's CEO, Randy Mills, has remarked on multiple occasions. One of the reasons involves the public climate and perception of the field. It is hard for companies to invest hundreds of millions of dollars or billions when the stem cell field is burdened with public perception and regulatory obstacles.

Selling the stem cell story in a realistic way is not necessarily an easy task. Nuances must be respected, but excitement is also needed. Balancing it all is a challenge for the men and women in the trenches. But without a good push, development of therapies will be slower, and, as Mills has noted, people will undoubtedly die who likely would have benefited from a more timely treatment.