Business-friendly Changes Proposed for Revenue Sharing by Stem Cell Agency

The $3 billion California stem cell agency, which hopes to generate income for the state through the sale of stem cell therapies, is moving to make its profit-sharing rules more friendly to business.

The proposed changes will come up Monday morning before the Intellectual Property and Industry Subcommittee of the CIRM governing board.

No stem cell research funded by CIRM has yet been commercialized. Its intellectual property regulations, which determine payback criteria, were developed shortly after CIRM was created in 2004. Ed Penhoet, one of the founders of Chiron and now a venture capitalist, chaired the panel that worked out the rules. He has since left the CIRM board.

A CIRM staff memo described the payment rules in the case of a "blockbuster" therapy as "uneven" and "lumpy." The memo said they "could be a disincentive for the engagement of industry." Other rules were described as creating "administrative challenges and uncertainty." The proposed changes, the memo said, would address those issues and ensure a "comparable economic return to California."

Here are links to the specific changes -- see here and here.

Public sites where interested parties can take part in the discussion are located in San Francisco, La Jolla, Los Angeles and Irvine. Specific addresses can be found on themeeting agenda.

The proposed changes must go before the full governing board and then into the state's administrative law process before taking full effect.  

CIRM's Thomas Blogs on Geron and the Stem Cell Business

The chairman of the $3 billion California stem cell agency has made his second entry into the blogosphere, this time adding a bit more on Geron's abandonment of what would have been its historic hESC clinical trial.

Jonathan Thomas, a Los Angeles bond financier, wrote yesterday on the CIRM research blog, which has recently been the site of more spritely and relevant items.

Geron's action has particular relevance for CIRM, which awarded the company a $25 million loan last May to help with the clinical trial.

Thomas said CIRM's "immediate concern" when officials heard the surprise news was for the patients and the families involved in the trials. Thomas continued,

"However, Geron is a business. The company decided that their cancer therapies were farther along than the stem cell trial and when they held the stem cell program against the prism of economic reality they made a business decision to end the trial."

Thomas also minimized the importance of Geron to CIRM. He said,

"CIRM’s award to Geron was just one of the 44 projects in 26 disease areas that are in various stages of working toward clinical trials."

It was a somewhat different story last May when former stem cell agency chairman Robert Klein said in a widely distributed CIRM news release,

"Supporting the Geron trial is a landmark step for CIRM."

Regardless of the spin on Geron from either CIRM or others who are more skeptical, Thomas' entry into the world of electronic media is to be applauded as is what appears to be a new direction in the research blog.

The CIRM blog is now newsier, more lively with more variety and more voices. All of which should redound, albeit modestly, to CIRM efforts to improve its communications with the public and opinion makers. The difficult thing about blogs, however, is the time and effort required to sustain them, and the task could be something of a communications test for CIRM. Blogs constantly need to be fed. Indeed, blogs are voracious, sort of like the carnivorous plant called Seymour in "The Little Shop of Horrors." As many of you may recall, Seymour had a simple but insistent refrain, "Feed me, feed me, feed me."

California Stem Cell Agency Trying to Line Up Buyers for Geron hESC Business

The president of the $3 billion California stem cell agency, Alan Trounson, says it is in talks with at least three firms in an effort to salvage Geron's orphan stem cell business.

Andy Coghlan of New Scientist magazine reported Trounson's remarks in an article on Friday headlined, "Is there life for stem cells after Geron."

The Menlo Park, Ca., firm last Monday abandoned its stem cell therapy development program and terminated a much-heralded clinical trial that was the first-ever in the nation for an hESC therapy. The California stem cell agency loaned the firm $25 million just last May as part of its push towards bringing therapies to market. Geron last week paid back the $6 million of the loan that it had received up to that date.

Details were sketchy in New Scientist about CIRM's attempt to serve as a stem cell matchmaker. Coghlan had only this to say,

"Alan Trounson, the institute's president, told New Scientist that CIRM is now talking to at least three other possible backers to take over the spinal trial. 'We'll have to wait and see, but it's important that it happens in a short time [because] once it gets beyond a couple of months, it gets very difficult to hold people together,' he said."

Coghlan noted that Geron, in addition to the spinal therapy clinical trial, had three other hESC possible trials lined up for diabetes, heart disease and arthritis.

Last week, several names surfaced in the media of a number of possible buyer/partners/backers for Geron's stem cell business. They included Pfizer, which is involved with Peter Coffey of UC Santa Barbara in another possible hESC trial; BioTime of Alameda, Ca., which has a number of Geron alums, and Teva Pharamaceutical of Israel. UC Irvine researcher Hans Kierstead, whose work led to the Geron spinal trial, was also in the mix, according to a report in the Orange County Register. Pat Brennan, who interviewed Kierstead, wrote that the researcher said "he is exploring alternative funding to continue the trials." Keirstead, who is on the scientific advisory board of California Stem Cell of Irvine, Ca., also said the trial may well go overseas.

The California Stem Cell Report queried the firms identified last week concerning their intentions towards Geron. All declined to comment specifically. Michael West, CEO of BioTime, also said,

"I think the commentary you heard was a deduction based on my prior role at Geron, our being so geographically close to Geron, and, of course, our entire focus on hES cells and reprogramming. I will only add that I continue to believe passionately in the cause. More than ever, we have an historic opportunity to impact the practice of medicine. That is about as far as I can go."

West founded Geron and has served as president of Advanced Cell Technology of Santa Monica, Ca., which is conducting an hESC trial at UCLA involving eye disease.

Brokering a deal for Geron's stem cell business places the California stem cell agency in a novel position and will test its business skills. CIRM's activities have been largely devoted to awarding grants and loans. Its loan to Geron was only approved by directors just six months ago. The loan agreement was not actually signed until August.

Under CIRM's procedures, companies receiving loans are supposed to be vetted during a private due diligence process. However, one might question the quality of that due diligence given Geron's withdrawal from the business only three months after the loan was finalized.

The key question, in trying to attract buyers for Geron's orphan stem cell project, will be not so much about whether it is good science but whether it is a good business.

Okarma's Departure, Pfizer and More

Looking for a roundup on stem cell firms and their activities? You can find a brief one on the blog of a stem cell scientist at UC Davis.

In a piece called "stem cell biotech updates," Paul Knoepfler mentions the surprise departure of Tom Okarma as president of Geron Corp. of Menlo Park, Ca., declaring that it means a "fundamental change" at the firm.

On the same subject elsewhere, Rob Waters and Elizabeth Lopatto of Bloomberg News quoted one stock analyst, Ren Benjamin of Rodman & Renshaw about the move.

"'Clearly there was a difference of opinion as to how the company should move forward,' between Okarma and the board, Benjamin said in a telephone interview today. 'The board wants to take a more strategic focus on partnerships with a keen eye on the cash spend and position.'"

Knoepfler also brings up an article involving Pfizer's plunge into stem cells. The piece on Motley Fool said, among other things,

"Insiders see Pfizer's change of heart as a tipping point that will lead to many industry partnerships with holders of stem cell patents."

Minority Report Filed on Business Application Rejected by Reviewers

Some  CIRM grant reviewers have filed a minority report on a tools-and-technology grant rejected by the agency's grant reviewers.  The application was submitted by a business. The biotech industry has complained about the paucity of CIRM grants to business. The review summary said, 

 "Three elements were cited by the minority group in support of moving the application up to Tier 1: 1) the proposal was submitted by a "for profit" applicant; 2) the project uses bioinformatics approaches; 3) the proposed research expands a global capacity to assess safety of cell therapy products derived from embryonic stem cells that have been expanded in culture. Also, the proposal supports efforts to characterize 10 cell lines that are being derived as part of a previously funded CIRM award."

The identity of the applicant was not disclosed.

Biotech Exec Says CIRM Review Misguided, Biased and Disservice to Public

Last week the blue-ribbon panel reviewing the programs at the $3 billion California stem cell agency released its report. We carried an item on the group's recommendations and asked for comment from our readers, promising to carry them verbatim. The following was submitted by an exective/scientist from a California biotech firm who must remain anonymous.

“The review by the external panel is nothing short of froth and it is disingenuous in its honesty towards Californian citizens, who are funding CIRM. The review board was composed of academics and lacked industry experts. The review board continued to suggest focusing on basic research, which is what led to CIRM's current disastrous state in the first place. If the architects of CIRM initially sold the public on the idea that stem cells will deliver products that reduce the healthcare burden within 10 years, and the average drug development process from entry into IND-enabling phase to completion of phase III takes 10 years, then the focus on CIRM from the start should have been on funding game changing translational projects as well as programs that are entering the IND phase. The board is completely misguided in its recommendations and this is not at all a surprise considering its bias. Moreover the board is asking CIRM to fund outside of California research, and this is ridiculous. CIRM is not NIH, and even NIH is perceived to mismanage public dollars and has been scrutinized for its extremely poor translational output to date. Why would we the public of California wish to adopt a broken model and subsidize non-California research with California dollars?

“The external review board should be filled with industry leaders, all of which should come from within the state. California is the birthplace of the greatest biotechs in the world (Amgen, Genentech, Gilead, amongst many others), and yet CIRM refuses to leverage this asset and instead recruits unqualified (in the business realm) academics who have generated very few if any commercial products in their lifetime of work. This is disgraceful and has been a complete waste of $3B of taxpayer dollars. If CIRM was to hold true to its promise to deliver products in 10 years, then it needed to start translational activities immediately and not building infrastructure for already rich universities like Stanford, who enjoy $10B plus endowments. Let Stanford spend from their endowment to build its infrastructure goals, not California's public dollars. This is a complete fraud architected by CIRM insiders, and it will all implode under this failed strategy of making CIRM serve as a funding buffer for drying NIH dollars.

“CIRM’s job is not become a global stem cell leader. Its job is to fund commercialization of stem cell-based technologies that can reduce suffering of Californians. Its job is not to fund basic science. Its job is to focus on translation. Its job is not look to fund research outside of California, as this is 100% California dollars.

“Moreover, the board told an executive attending the meeting during an exchange, that CIRM will not be able to deliver on its promises and it is in trouble. The board shared that it should forget about ever reaching that goal, as there will not be any products coming in 5 years as originally promised to California citizens. Yet, this alarming reality is not reflected in the comments, showing how dishonest and filtered this review report truly is. It is a disservice to the public to lie to them. I am appalled and disgusted by the whole thing to be quite frank, and feel the entire CIRM body needs to be completely overhauled.

“The public would better be served if we treated CIRM as an early stage regenerative medicine focused venture capital firm, since the limited partners (LPs) are the public citizens, and they expect the same return on investment in the same horizon (10 yrs) as what is expected by LPs that invest in venture capital, and have to endure the same risks. Life science VCs do not invest in infrastructure, they do not invest in university programs at the clip of 97%, if at all. They invest in people within corporate structures that have the intellect and talent and experience to bring products to market that solve unmet medical needs, and deliver value over current products. This is not rocket science.”

The Biotech Industry and the California Stem Cell Agency: An Unhappy Relationship

Late last June, the chairman of the California stem cell agency, Robert Klein, dismissed concerns that biotech firms are not getting a fair shake at the agency's $3 billion in research awards. That's not what he has heard, he told CIRM directors. In fact, Klein said, he had just received an award from a national industry group.

Two months later, leaders of the Northern California biotech industry sat down with Klein at private dinner at a tony San Francisco peninsula restaurant and told him that he was simply wrong.

They showed him the numbers. In the five years that CIRM has been operational, businesses have received only 3 percent of the more than $1 billion awarded so far. If CIRM really wants to produce therapies that can be used, Klein was told, it can only do so by helping to finance enterprises that actually create medical products.

One executive in attendance at the Aug. 25 dinner at the Marche restaurant in Menlo Park had harsh words for the agency. He later told the California Stem Cell Report that CIRM is “completely misaligned and mismanaged.” He said the agency is dominated by the academics on its board, whose institutions have received nearly all of the funding. The executive said the academic institutions are not going to deliver on CIRM's mission of “turning stem cells into cures.”

However, June's message of concern came from an unlikely, non-industry source. John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., called for a major effort by CIRM to deal with the matter. The issues he addressed have been simmering for some time, largely in private because of CIRM's enormous funding clout. No one wants to be on the agency's bad side.

In a statement to CIRM directors, Simpson said,

“When Consumer Watchdog began its stem cell project almost five years ago, I naïvely expressed concerns that the program would be hijacked by the biotech industry. That has -- at least so far -- not happened; rather, it has been dominated by academic research institutions, whose representatives hold the largest number of seats on the board.”

He recommended that CIRM take a number of steps, including a public task force, to remedy the situation.

According to the meeting transcript, Klein replied in part,

“I don't think the biotech industry at large has feelings that are reflected in that statement. As some of you may know, I received a reward from biointernational conference (BIO) this year, their humanitarian award.”

The August meeting, however, that Klein attended included top executives from Geron, iPierian, Vistagen, StemCells, Inc., Cellerant and others. “All the major players,” we were told. The dinner was organized with the support of BayBio, the biotech industry organization in Northern California, and the Orrick law firm of San Francisco, which serves as bond counsel to the state of Californa. From CIRM came – in addition to Klein – Director Ted Love and Patricia Olson, the agency's executive director of scientific activities . Missing was CIRM President Alan Trounson. No reason was given for his absence.

A BayBio briefing paper for the meeting, said,

“CIRM has a perception of not being friendly to industry. Private companies with strong track records of receiving NIH funding are frequently unsuccessful in getting grant funding from CIRM. Conversely, in comparison to CIRM for-profit companies have sporadic success rate at best with CIRM grants. CIRM’s contention on this is that the non-profit applicants that are received they tend to come from well-established and research –intensive institutions, as opposed to the less known and established for-profit companies.”

The paper said,

“CIRM’s current grant review policies and practices do not track with the stated goals of RFAs and favor funding academic applications thus reducing funding opportunities for industry and discouraging future company participation.”

CIRM's leadership, including Klein, also came under criticism for a lack of understanding about what is needed bring a stem cell therapy to the clinic. “Everybody is enamored of Klein,” said the source at the meeting. The deans on the board have no knowledge of product development, he continued.

CIRM directors are not unaware of business concerns, but the situation has remained nearly unchanged over the years. Only on rare occasions has a biotech executive publicly voiced concern. One of the issues that has been raised involves the lack of grant reviewers with business backgrounds, a situation that has existed since CIRM's inception. Directors have discussed the need for improvement. Some  have said there is tilt towards basic science among reviewers that manifests itself in a lack of interest in the relatively more pedestrian research needed to produce a product.

The BayBio paper said,

“Currently there are no scientific experts from industry on the grants review group and only six (out of 89) are alternates.”

The briefing paper made three recommendations:

“BayBio and industry need clarification on CIRM IP and public access requirements to increase private sector comfort with CIRM programs and encourage more companies to participate in the program.
“Changes are needed to the grants application and approval process to increase the success rate of companies applying for CIRM funding.
“There needs to be more transparency all around with respect to the process and final decision making.”

The CIRM officials took notes on the August discussion and said they would get back to the participants.

Next week, the stem cell agency will hold a two-day, closed-door review – with the exception of one hour -- of its strategic plan. The “external review” is the most comprehensive examination ever of CIRM's direction. However, the fair treatment of business grant applications is not one of the specific subjects listed on the agenda for the blue-ribbon, international panel.

Tracking CIRM Grants: "Thin Ice" Lurking?

Directors of the California stem cell agency today approved a $15.7 million operating budget for next fiscal year – 28 percent higher than this year's spending – and requested a report from its staff concerning its critical grants management system.

The report was sought after CIRM Director Michael Friedman, CEO of the City of Hope, said he wanted to “express in the strongest possible terms my discomfort” with the decision by CIRM staff to build a custom grants management system.

He said that “unless you are prepared to spend enormous amounts of money, you are stepping on some very thin ice.”

“Everybody has seen horrible examples of custom-designed system that go bad.”

Friedman asked if any subcommittee of directors had approved the decision to go forward with a custom system. The answer was no, but that the decision had been carefully considered by CIRM staff.

At that point in the meeting, we lost the Internet connection to the CIRM audiocast. By the time it was restored , the budget discussion had concluded with approval of the spending plan. Don Gibbons, chief communicastions officer for CIRM, told us by email that the report had been requested. (We will revisit the budget discussion after the agency posts a transcript of the meeting.)

On Monday, when we reported some of the details of the budget, we noted that spending on information technology is scheduled to jump 53 percent from $817,000 to $1.2 million, an increase of about $433,000. Most of that goes for the grant system.

CIRM is trying to oversee more than $1 billion in grants to more than 300 recipients and, at the same time, hand out many hundreds of millions more in the next year or so. It is building custom programs for entire process, from applications to oversight. Currently, CIRM has a $125,000 RFP out for “systems analysis and software development services” and hopes to have a company on board next month.

The board also discussed the strategic financing report(see here and here), which will be wrapped into an external review of CIRM's strategic plan next fall. There appeared to be no clear consensus at this point whether the agency should make grants as speedily as possible or husband its resources to deal with unexpected opportunities in the fast-moving stem cell field. Related to that was a discussion of the CIRM grant portfolio. No action was needed on either item.

Comments by John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., were discussed briefly after they were read into the record. Simpson said he was “troubled” by what appears to be a lack of a level playing field for grant applicants from business and the dominance of academic institutions, who constitute a plurality on  the board.

CIRM Chairman Robert Klein said he did not think that the biotech industry agreed with Simpson's concerns about whether business grant applications were being treated fairly. Klein noted that BIO, a national biotech industry group, recently recognized him with a national award, indicating that the group valued CIRM's contributions. But Klein said more progress was needed.

Vice Chairman Art Torres indicated that he took Simpson's concerns about the seriously but said the public does not understand just how stringent are the conflict of interest standards at the agency.

Directors also approved the a concept proposal for a $45 million round of grants for basic biology research.

You can find slides from the report by CIRM President Alan Trounson here. He discussed recent stem cell research, a proposal for a CIRM online journal and upcoming CIRM workshops. The slides also include those used for the budget presentation.

Stem Cell Patent Flap Gains Wide Media Exposure

Three of the top names in California stem cell research – not to mention the world – surfaced during the weekend in a piece in the Los Angeles Times about a matter that is at the heart of the field – money.

Michael Hiltzik, a columnist at California's largest newspaper, brought up the scientists in connection with a patent imbroglio in Orange County that reaches into Stanford, the Salk Institute and Caltech via the researchers, who are Irv Weismann, Fred Gage and David Anderson, respectively of the three institutions.

Generally, such disputes put the general public to sleep. But Hiltzik wrote today,

"...(T)he penetration of private investment concerns into what used to be largely academic pastures threatens to hobble, rather than hasten, the march of science. The harvest may be secrecy, delay and the directing of research only toward developments that promise quick financial returns."

The matter pits researcher Philip Schwartz of the Children's Hospital of Orange County against StemCells, Inc., of Palo Alto, Ca., which was founded by Weissman, Gage and Anderson. Schwartz has spent six years providing academic researchers with neural stem cells cultured by a method he helped to invent at Salk, Hiltzik wrote.

But StemCells Inc. has effectively put a halt to Schwartz' distribution. That occurred after the firm wrote a letter to Children's Hospital warning that Schwartz' efforts infringed on its patents in the neural stem cell field and that it wanted to discuss a licensing arrangement.

This all started two years ago, but nothing has been resolved, although little apparent conflict exists between the “core clienteles” of StemCells Inc. and Children's Hospital. Hiltzik said,

"...(I)n the biotech world, where millions or even billions of dollars in profits beckon to those who can assert ownership of important discoveries, good intentions and purely scientific goals don't matter like they used to. Access by basic researchers to the essential building blocks of biomedical advances has been shrinking for years, thanks to a land rush by entrepreneurs wielding patent portfolios."

Hiltzik reported that the conflict between research and business has gone beyond biotech. He noted that Andy Grove, the fabled former CEO of Intel, this month warned of the evil effects of over zealous protection of IP.

The problem has become more serious, however, in stem cell science, according to Gregory Graff, a patent expert at Colorado State University.

According to Hiltzik,

"Graff says this phenomenon is becoming especially pronounced in stem cell science, which is especially dependent on collaboration but is already being cordoned off by commercial entities claiming property rights to essential research. The best solution, he says, may be for academic institutions -- where 45 percent of all stem cell research is performed -- to create collaborative patent pools so they can more freely disseminate information and technology without giving up all their potentially lucrative patent rights."

The issues raised by the Children's Hospital-StemCells, Inc., flap were first publicly reported April 15 by John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca. We carried a follow-up on April 16, noting that Harvard business professor and biotech industry consultant Gary Pisano warned in 2006 about the harmful impact of the "monetization of IP" on the biotech business. Our item triggered a robust exchange of comments that are attached at the end of the piece.

We asked Weissman, Gage and Anderson for comment a couple of times over the last several weeks. They did not respond to our queries. Nor they did respond to Hiltzik.

Burrill Says Biotech Industry Profitable for First Time in History

The big headline from the influential Burrill & Company merchant bank is "Biotech Scores Black Ink" for the first time ever.

According to Peter Winter(see photo), editor of the Burrill Report, the biotech industry turned profitable in 2008. Winter made this "startling discovery" after analyzing the numbers for 360 publicly traded biotech companies. Presumably the conclusion might change if private firms were included.

The Burrill finding is another piece to consider in the case for and against the $10 billion biotech federal assistance package championed by CIRM Chairman Robert Klein.

However, Winter also said that only 67 of the 360 companies were profitable with the largest sums coming from only three companies: Genentech, Amgen and Gilead.

He said the have-not companies are struggling, and he predicted that a year from now, perhaps only 200 of the 360 companies will survive.

Burrill did not offer a text version of Winter's findings -- only a podcast. We respect Burrill and the authoritative information it provides, but we regard podcasts and recorded videos as a cyberspace abomination when it comes to dispensing information. When recordings replace carefully crafted, written analysis, they are an inefficient, inadequate and miserable substitute.

Just consider the numbers: Normal speech runs about 150 words a minute. Question-and-answer interviews, including trivial remarks, take longer. Downloading and listening to the Q&A with Winter took about 9-10 minutes. In that time, we could have read about 6,000 or 7,000 words or more. We also assume that nearly all the readers of this blog and the Burrill website can handle written information much more rapidly than listening to oral presentations, which often miss important details and nuances. The discipline of writing almost forces the inclusion of those elements.

Recordings on the Internet have their place and can communicate certain kinds of emphasis and emotion better than text. But for the most part, they are used on the Internet like some new gadget, whose novelty is more alluring than its effectiveness.

Serious enterprises that deal with hard facts and numbers should avoid them. That's the conclusion from the California Stem Cell Report in our cyberspace rant of the day.

Online Poll Says Nyet to Biotech Bailout; Results Subject to Instant Change

Does the biotech industry deserve a bailout? No, according to the current results of an online poll being conducted today by Fierce Biotech, which calls itself "The Biotech Industry's Daily Monitor."

At least that was the conclusion at the time of this writing. It was a "finding" that might give minor pause to those pushing the $10 billion assistance package championed by the chairman of the $3 billion California stem cell agency, Robert Klein.

Here is what the poll showed at 3:33 p.m. MST today. Forty-nine percent answered negatively to the bailout question. Forty-three percent said yes. Eight percent were not sure.

We were surprised by the numbers because the Fierce Biotech audience presumably consists of folks inclined to support the industry wholeheartedly. But some poll respondents may have been taken aback by the avaricious clamor to climb aboard the already stressed bailout wagon in Washington.

The poll is totally unscientific. No total numbers are offered. You just go to the site and vote. It is even possible to vote twice, if you are crafty. (We did, once yes and once no, to assure complete balance.) Earlier in the day, something like 53 percent supported a bailout, but that changed as the day wore on, Even that number was surprising, however, given the nature of Fierce's audience.

The poll was also linked to an opinion piece by Daniel Nevrivy of the Nevrivy Patent Law Group in Washington, which argued for a bailout. He wrote,

"At a recent healthcare conference, the notion that the biotech industry receive government help was ridiculed by a well-known financial executive. Doing 'something stupid' over there--a reference to the U.S. auto industry bailout - doesn't mean you should do something stupid over here, remarked the executive. The remark is reflective of the evolving attitudes of Congress and the U.S. taxpayer over industry bailouts. Support for U.S. automakers, who regularly get beat by the foreign competition--even on their home turf--may have poisoned the well for other, more worthy industries like biotech that are now struggling."

Nevrivy argued that it is wrong to equate the two. He said US biotech is stronger than its foreign competitors, although it is suffering from a current cash crunch.

He wrote,

"Economists generally disfavor government support and subsidies; however, we are living in a world where the government is an active player, as well as a referee, and is picking winners and losers. If we have to pick winners and losers, doesn't it make a certain amount of economic sense to favor industries in which we have an advantage? If that is the case, it is wrong to equate support for the U.S. auto and biotech industries as equally bad ideas."

Fast-Tracking CIRM Cash for Business

Biotech businesses could get a hefty financial helping hand under a plan coming up early next week before the directors of California's $3 billion stem cell agency.

The proposal would dramatically accelerate funding of grants to the private sector, delivering cash immediately on approval of the grants, as opposed to months later.

CIRM said,

"The biotechnology sector in California faces significant challenges arising from the credit crisis and economic downturn. Press reports suggest that venture capitalists have advised their biotechnology clients to cut costs in order to survive current economic conditions, which are expected to persist for at least the next 12 months. In order to achieve its mission, it is critical that CIRM partner with biotechnology companies in translational research, preclinical development and clinical programs. The financial stability of the industry therefore is essential to CIRM’s success."

Businesses would have to choose the fast-track financing to be eligible, but there seems to be no reason they wouldn't.

Generally speaking, however, fast-tracking can create a climate in which speed is favored over quality and thoroughness. CIRM's proposal could pose similar risks.

That said, if CIRM can do this for business, why shouldn't it be done for all grants. Time is money even in academia. Advancing the onset of research in universities also advances the results, which is what CIRM is all about.

The fast-track proposal is part of additional background information that is appearing on the CIRM web site as part of the directors' meeting agenda.

Here are links to other background material to be considered next Tuesday and Wednesday in Irvine.

Grant Review Group decisions on the $20 million tools and technology round and summaries of the proposals.

The latest draft of the CIRM grants administration policy for academic and non-profit institutions.

Three new alternate members of the grant review group: Andrew Barber, Richard Harvey and Steven Sheridan.

Still missing is background information on the salary request by CIRM Chairman Robert Klein, a proposal to triage proposals for grants and the application by the International Society for Stem Cell Research for funding of a conference.

Two business days remain before the CIRM board meeting begins on Tuesday.

Klein: Federal Backing Could Lead to $1 Billion CIRM Loan Effort

Chairman Robert Klein of the California stem cell agency is proposing that the Obama administration provide loan guarantees that he projects would allow the Golden State to mount an ambitious $1 billion lending program for the biotech industry.

He broached the proposal at a Nov. 19 meeting of the Finance Subcommittee of the CIRM board of directors and plans to bring it up at a special teleconference meeting of the full board on Monday.

Klein's plan would double the size of the proposed $500 million CIRM loan program that is his brainchild. The board of directors is yet to sign off on details of the plan, which have not yet been fully worked out.

The $3 billion state stem cell agency itself has no apparent financial problems, although the state is in the midst of a $28 billion budget crisis. The voter-approved law that created the agency guarantees a steady stream of cash that cannot be touched by either the governor or the legislature. But Klein believes that the federal guarantees would help the lending effort.

At the Finance Subcommittee meeting earlier this month, Klein noted the trillion-dollar bailout figures floating around in the nation's capital. According to the transcript, he said,

"In terms of our financial interest, the loan guarantees that are being considered for a number of sectors of the economy could include the biotech sector.

"And here, if there were a 50-percent loan guarantee provision for governmental loan biotech programs, it would mean that if we had allocated conceptually, and only conceptually, because it's subject to approval of every loan at that time at the board level, but if we conceptually approved a $500 million allocation for a loan program and there were a government program for 50-percent guarantee, we'd have the possibility, subject to a lot of detailed work and legal review, to create a billion dollar program with that. So it would substantially expand our capacity for funding."

Klein brought up the proposal to seek "early input" from CIRM board members. However, the Finance Subcommittee ran out of time and adjourned without discussing the matter. He asked board members and the biotech community to send comments to him.

Klein is also seeking to lobby the Obama administration on other biotech industry matters. They include removing unspecified small business loan restrictions, expanding the FDA staff and substantially increasing funding for NIH grants.

On the restriction issue, he said,

"I believe it would be beneficial if some of those restrictions were changed to make it more possible for companies that have received venture capital funding in the past to get SBIC (Small Business Investment Corporation) loans because with falling stock prices, doing another round of stock offerings is not feasible unless you're going to hedge funds, which are extraordinarily difficult to deal with and create tremendous pressure on these small companies to the extent hedge fund money is available at all."

Klein said a substantial increase in FDA staff is needed to avoid a "choke point" on moving stem cell therapies into the clinic. He said,

"Everyone is going to need expert advice on exactly what kind of data and what kind of preclinical work is going to be required for an IND to be approved for a phase I human trial. That advice is required three years or more in advance because this is an innovative area. And so it's going to be an early priority with a lot of lead-time importance to get FDA expansion that can deal with cellular therapies as they advance."

CIRM has not yet provided written background on Klein's proposal on its Monday agenda, which also includes a plan to help ease the problem of absenteeism at board of directors meetings.

The public can listen in and participate during the teleconference meeting from locations in San Francisco (2), Los Angeles (5), La Jolla (3), Elk Grove, Sacramento, Pleasanton, Berkeley, Menlo Park, Healdsburg, San Carlos, San Diego, Irvine (2) and Duarte. You can find the specific addresses on the agenda.

Deep Yogurt, Biotech and the Anguish of Big Pharma

SAN DIEGO -- Biotech investment guru Steve Burrill Wednesday took hundreds of BIO attendees on a warp speed overview of the state of the industry now and in 2020.

His flight was fast and furious, and he may have caught some sign of skepticism in the crowd. Undeterred he told them he may be off on the timing of his predictions, but they were coming -- probably sooner rather than later.

Some of his observations may have been unsettling to some. Babies will have chips inserted into them at birth to track their health. Walmart will be the model for the delivery of health care. Healthcare seekers will wear T-shirts embedded with technology that will touch their heart, among other things. Self-care will be the order of the day.

Say goodbye to those blockbuster, high-margin drugs. Hello to even more generics. Consumers will drive the market. Big Pharma, already suffering the anguish of expiring patents, will suffer more. Can you spell patent devaluation, he basically asked his audience. The biopharmaceutical industry will have to be re-invented. He said:

"Our friends in Pharma are in deep yogurt."

Research and development will migrate overseas. Pricing will be set on a global basis. Burrill declared,

"Every company is global from Day One."

The average age of death, now about 80, will climb to 100. No longer will health care providers wait for the disease and then try to ambush it with low chances of success. Instead, providers and consumers will be out front, moving to prevent those nasty germs and tumors from even getting a start.

As for financing biotech business, things will pick up later this year. And in 2009, industry will start to roll. "It will be a very good year, a year from now," he said.

Burrill's comments were based on one of his firm's latest studies: "Biotech 2008: a 20/20 Vision to 2020." The report can be purchased online for $295, or $430 if you want bound copy.