ACT Seeks hESC Clinical Trial

Advanced Cell Technology has become the second U.S. company to seek permission to begin clinical trials for a therapy based on human embryonic stem cells.

The Santa Monica, Ca., firm said yesterday that it has applied to the FDA to start trials aimed at reversing vision loss with retinal cells created from the stem cells.

The firm, which has labs in Massachusetts, is only the second business to seek to perform clinical trials involving hESC. Geron, another California company, was the first, but its efforts are now on hold until late next year because of FDA safety concerns.

Neither of the firms has received funding from the California stem cell agency. ACT, however, moved its headquarters to California, partly to seek funding from CIRM.

The firm's announcement received modest news coverage. Steve Connor of the Independent in Great Britain quoted Robert Lanza, ACT's chief scientific officer as saying,

"'We've seen absolutely no adverse effects whatsoever in any of the preclinical experiments and our cells are more than 99.9 per cent pure. We certainly expect them [the FDA] to come back with comments and questions but our hope is that we will start sometime early next year. We're optimistic and certainly confident in our own data. We've been in dialogue [with the FDA] and we know what was on their mind and what they wanted us to do. We're hoping, assuming no hitches, to begin early next year, perhaps March."

Here are links to additional coverage: Los Angeles Times, Science, Nature, MassHighTech.

Scripps' Loring Teams with International Stem Cell Corp.

The Scripps Research Institute and scientist Jeanne Loring are collaborating with International Stem Cell Corp. of Oceanside, Ca., to study parthenogenic stem cells and their potential therapeutic use, it was announced today.

In a news release from the company, Loring, director of the Center for Regenerative Medicine at Scripps, said,

“"Parthenogenetic cell lines are uniquely valuable for our quest to understand the genetic and epigenetic processes that control stem cells. We are excited about the opportunity to collaborate with scientists at ISCO."

International Stem Cell said its scientists have derived a type of cell found in the human eye from parthenogenetic stem cells that may have application in treatment of macular degeneration. The company said it and Loring and will study these cells as part of the collaboration.

Kenneth Aldrich, chairman of International Stem Cell said,

“Our intent is to begin to provide these parthenogenetic stem cell lines to advance the field of regenerative medicine, as well as to commercialize our cells for cell transplant therapies.”

The firm has applied for grants from the California stem cell agency, but so far has not been successful. CIRM, however, is currently trying to link more closely with industry.

Biotech Firms: The Undead of Capitalism?

The Wall Street Journal today did not describe biotech companies as zombies but it might as well have.

That, despite an increasingly brighter financial picture for the biotech business.

All this was contained in a piece by Brett Arends. He said the good news – the brighter picture – is the bad news. He wrote that the biotech industry, which includes stem cells, is “incredibly popular with many private investors,” but is a “risky area with very mixed results.”

Arends said,

“It's hard enough to value a profitable company that makes widgets or coffee. How do you value a speculative science project that may not come to fruition for years, if ever? ...(A)nalysts in the sector sometimes talk about 'the probability-adjusted net present value of peak sales,' essentially guessing how much a company might make off a drug at peak sales, lowering that value to reflect how long it will take to get there, and then calculating the probability that a drug will make it through clinical trials and win approval.”

He continued,

“And then there's the dormancy risk—few biotech companies go bankrupt....Many of them just go nowhere.”

Sort of like zombie enterprises, the undead of capitalism.

Arends quoted Don Collins of Ironwood Capital Management as saying,

"They don't have any debt, so there is no one to force them out of business. So as the cash dwindles, the companies just shrink and shrink and shrink, until they have three guys working there and a business development manager going out looking for money.. They can stay like that for a long time.'

“Old biotechs, in other words, never die.”

The WSJ article pointed out that the average retiurn on a biotech IPO since 2001 has been minus 18 percent. Between 1995 and 2000, it was a meager 8.44 percent. You could have earned more investing in plain old bonds or cash.

Arends concluded,

“Capitalism famously depends on 'creative destruction,' in which bad or weak companies get weeded out. The strong survive. The best industries in which to invest are often those which have been starved of capital for a generation—think gold and oil. The worst, in turn, are often those like biotech, where it's all too easy to get capital without showing results.”

Something for the California stem cell agency to think about as it kicks off its unprecedented, $500 million biotech loan program, which optimistically projects “profits” of $100 million despite default rates of up 50 percent.

(The WSJ may have restricted the Arends article to subscribers. If you cannot access it, send an email to djensen@californiastemcellreport.com, and we will send the article to you.)

A Look at Tucson's Calimmune and $20 Milllion

The global headquarters of Calimmune, Inc., which shares in a $20 million grant from the California stem cell agency, stands on one of the more unlovely thoroughfares in Arizona.

The three-year-old firm is only a short walk on East Broadway in Tucson from O'Reilly Chevrolet and a Burger King. While Calimmune's address may not electrify folks on Wall Street, it has a pedigree that it is hard to quibble with.

By one account, Calimmune was founded by David Baltimore (see photo), a former member of the board of directors of the $3 billion California stem cell agency. Baltimore also is a Nobel Prize winner and former president of Caltech. Other accounts state that Irvin Chen, director of the UCLA AIDS Institute, was a co-founder.

Late last month, California's stem cell agency approved a $20 million grant to Chen and Geoff Symonds, chief scientific officer of Calimmune, a little-known company with no Web site but a laboratory in Australia, lab space in Pasadena, Ca., and more facilities soon to come at UCLA.

CIRM said the grant was aimed at generating an FDA application in four years for a clinical trial “to treat HIV/AIDS using an RNA interference approach to modify the patient’s blood-forming stem cells. When transplanted back, those cells will produce T cells that are resistant to HIV infection.”

The proposal echoes Calimmune goals articulated earlier on the Web site of Grayhawk Capital, a private equity investment company in Phoenix, Az., that has cash in Calimunne. Some initial research involving Symonds and UCLA was published last February with partial funding from Johnson & Johnson in Australia.

In response to email queries, Calimmune's CEO, Louis Breton, told the California Stem Cell Report that Symonds will perform his CIRM-funded work in California. He said the closely held firm is aware that CIRM is barred from funding out-of-state grants. Breton did not respond to questions about the number of Calimmune employees and their locations, although he said he anticipated more hiring for the CIRM grant. He said the Tucson location houses a small administrative staff. The company is incorporated in Delaware.

As for Calimmune's funding, we asked Breton whether any originated with Johnson & Johnson. Until the last year or so, Symonds was senior research director at Johnson & Johnson Research Pty Ltd. in Sydney, Australia, where the Calimmune lab is located. According to one report earlier this year, he holds more than $10,000 in Johnson & Johnson stock. At least one of the other Calimmune scientists in Australia worked as well for Johnson & Johnson until February. Breton, however, said none of the company's funding originated with Johnson & Johnson. Grayhawk did not respond our email query.

A Johnson & Johnson company document said in 2008 that the purpose of the Johnson & Johnson research operation involving Symonds was “to identify new medical discoveries in Australia and facilitate their commercial development into new products for Johnson & Johnson.”

CIRM reviewers were enthusiastic about Chen and Symonds disease team project. A CIRM summary of the application said,

“Reviewers stated that the resources and investigators are outstanding and the team is superb, both scientifically and in therapy development. The Disease Team comprises a collaboration between two complementary groups, one academic and one corporate. Each brings unique expertise to the project, with the academic group providing scientific know-how and proof of concept and the corporate group providing expertise in biologics development and commercialization. The team leaders are accomplished, highly productive investigators with a demonstrated track record in the field of HIV research, gene therapy, and/or clinical drug development. Key members of this team made the initial scientific observations leading to their hypothesis and demonstrated proof of concept in tissue culture and relevant models. A subset of the team has direct experience with a gene therapy trial in humans.”

CIRM Scrutinizes Grantee Performance: The Tale of Three Terminations

Playing the rich uncle to California stem cell researchers is unquestionably satisfying, but the folks at the state's $3 billion stem cell agency sometimes bear messages for scientists that may be less than warmly received.

That's when they become regulators and stewards of the public's money. Particularly when they exercise that responsibility in a more rigorous way than is the practice at the NIH.

CIRM is not making much of the fact that it has revoked three grants because of a lack of progress. It took us more than a month to secure the identities of the researchers who fell under CIRM's scrutiny. The agency, however, should take pride in its oversight. It enhances the credibility of the $3 billion agency and serves notice to all grantees that CIRM is more than a sugar daddy and takes its responsibilities seriously.

Only four months ago, CIRM directors heard a report on monitoring of grants that merits attention following approval of the largest research grant round in the agency's five-year history. The $230 million in disease team grants pose special challenges for the tiny agency. Its staff, currently without a chief scientific officer, will be called on to make go, no-go decisions on continued funding as researchers hit or miss bench marks in projects involving as much as $20 million.

One can only imagine the ruckus if CIRM staff recommends that funding be halted on a $20 million, four-year grant involving such high-profile and respected institutions as UC San Francisco, UCLA, Stanford, Salk and City of Hope, among others.

CIRM opened the window a bit on its oversight of grants at the board meeting in San Diego last June. Marie Csete, then chief scientific officer for CIRM, described in a positive fashion her office's monitoring of the $45 million SEED program, the first ever research grants by CIRM. She said CIRM's efforts saved some grants that would have perished. But it took a question from director Ricardo Azziz, chairman of the Department of Obstetrics and Gynecology at Cedars-Sinai Medicial Center, to bring out the information that three grants had been terminated.

As for the issues raised during the monitoring, Csete said,

“In general, I have to say it was slow progress. It wasn't bad progress. And it allowed us to identify some issues that are, I think, endemic with a new agency and new ideas. Institutions had trouble getting lines for their investigators. People had trouble hiring post docs who were able to do the work. We had trouble getting some of the (grants) out the door for various reasons.”

CIRM director Floyd Bloom, former editor of Science magazine and executive director, science communication, at Scripps, praised Csete and her staff's work. He said,

“This kind of nurturing, interactive relationship with the PIs's is absolutely unique in the grant world. And so I think it's a wonderful thing that you've instituted. It's going to be a tremendous amount of additional work on your staff to be able to do that, but it's highly commendable, and it's going to make the difference between success or failure, particularly for these intermediate level of successful early experiments where they have to be encouraged to go on and push.”

We spoke by telephone with two scientists whose grants were revoked and exchanged email with the third, who was out of the country. None are particularly pleased about losing their grants, but their comments offer insight into the process. We are not identifying them in this piece. To do so would place an unnecessary onus on them, given the current practices in the scientific grant community and the different monitoring procedures at the NIH. None of the issues with the grants appear to involve malfeasance.

One of the researchers said he was “bitter” about CIRM's action, declaring it caused a “huge uproar” at his institution. (Prior to our conversation, we had heard unconfirmed reports about significant unhappiness on the part of recipient institutions.) This researcher said CIRM's monitoring practices were a departure from those of the NIH, which allows “the liberty to take the research where it leads you.” Nonetheless, he continues to support CIRM.

Another scientist said he parted “amicably” with CIRM but confirmed that its practices are different than the those of the NIH. (The NIH has not responded to our queries concerning how many grants it has revoked for lack of progress.)

This researcher told us,

“I think that it is very important for CIRM to closely monitor its grantees. As a California taxpayer, I want to know that state revenues supporting the CIRM effort are well utilized. Furthermore, CIRM (and its grantees) need to make good on the promise of translating the science of stem cell biology into novel therapies.”

The third told us in an email that his grant had been “prematurely terminated.” He said the work has been completed without the CIRM support and the research accepted for publication in a prestigious journal next year. He also called CIRM a “great organization” and expressed the hope that it will lead to “great cures.”

The round of grants that Csete reported on involved only $45 million, substantially less than the $230 million in the disease team round. The stakes are now much larger. Powerful teams, some international, will be at work. Impending clinical trials will also create a vision of handsome profits, in addition to hoped-for prestige and accolades. CIRM directors have indicated they expect some of the disease team grants to fail. But revoking funds for one of those grants or loans will require a lot of steel on the part of the CIRM staff.

Csete abruptly resigned from CIRM after the June meeting. Her departure and the workload at CIRM likely meant that some of the monitoring efforts were pushed back. Most of the work is done by science officers, but at crucial points, it requires the intervention of CIRM's highest level scientist.

In the wake of Csete's departure, CIRM President Alan Trounson created a new position, vice president for research and development. A search firm has been hired for $100,000 to help recruit a candidate who will make go, no-go decisions on the disease team round along with other grants. Trounson is hoping to find someone with substantial experience in the biotech industry.

Whoever fills the job should not only be something of a scientific diplomat but also be able to face the big dogs of stem cell science and tell them no. CIRM's first responsibility is to generate results for the people of California and to serve as ardent stewards of the public's money.

(Below is a transcript of the entire discussion by the CIRM board in June concerning Csete's monitoring effort. Also below is a piece concerning our decision not to publish the names of the scientists whose grants were revoked as well as another item dealing with CIRM's efforts to ensure compliance with its ethical and research standards.)

Editor's note: The California Stem Cell Report first published an item on the termination of CIRM grants last April. Here is a rundown on all the stories published on this site as of Nov. 9, 2009, concerning grant termination.

Research VP Slot Posted at California Stem Cell Agency

The California stem cell agency has posted its opening for the newly created position of vice president, research and development, with a salary range that tops out at $332,000 annually.

The person who fills the slot is likely to be the key staff person as CIRM moves more closely to the biotech industry as the agency speeds its drive to produce something that can be used to treat patients.

Here is part of the job description:

“Oversee the preclinical and clinical development phases of CIRM's programs and projects involving not-for-profit and for-profit teams, including assembling and working closely with CIRM advisory committees to provide oversight of these programs and make go/no go recommendations to the President for continuation of CIRM support.

“Works closely with biotechnology, pharmaceutical and investment sectors to enable and enhance the development of clinical applications in CIRM's scientific portfolio.

“Oversees the CIRM research and development program in close collaboration with the Executive Director of Scientific Activities”

Earlier, CIRM President Alan Trounson indicated he was looking for someone with considerable commercial experience, especially related to clinical trials.

Interested parties might also examine the transcript of the CIRM directors meeting Aug. 6, during which Trounson discussed the position.

No deadline was set for applications. The posting said the position will remain open until it is filled.

Good Faith, Loopholes and CIRM

SAN FRANCISCO – The $3 billion California stem cell agency says a headline carried last week by the California Stem Cell Report is “damagingly misleading” and would like a correction.

We disagree and will tell you why. But the matter goes beyond a mere eight words. It deals with trust, good faith and more.

The headline in question is: “CIRM Rolls Back Effort to Undercut Affordable Access.”

The subject involves a proposed – but now retracted – major change in CIRM intellectual property regulations. The revision was quietly fast-tracked for what would have been final approval last Thursday by the CIRM board at its two-day meeting here. Fortunately, the loophole was caught the day before the meeting by John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca. He wrote a letter challenging the revision. We published an item on his comments along with the text of his letter. As a result, the proposal was pulled back.

Simpson has been deeply involved in the CIRM proceedings that hammered out the IP rules and their provisions for affordable access. The process took place over several years, and CIRM directors have repeatedly reaffirmed their commitment to affordable access to any taxpayer-financed therapies. Affordability is also part of the promise of Prop. 71, the ballot initiative that created CIRM. Simpson has publicly praised the CIRM IP process for its openness and diligence and has expressed great respect for IP Task Force Chairman Ed Penhoet.

On Wednesday, the day after Simpson discovered the loophole, Chairman Robert Klein called Simpson to tell him that the offending provision was being dropped. Klein also mentioned it to us at the meeting here later that day. But loophole did not come before the full board until late in the meeting the next day.

No one at the session disputed Simpson's conclusion that the change in wording was a “tremendous loophole” that would endanger affordable access and also could prove to be a major benefit to the biotech industry.

Rather CIRM's question concerning our headline involves the intent of changing previously agreed upon language. The matter also involves whether CIRM was honoring its principles by advancing the proposed change in a manner that appeared surreptitious, at the least. The revision was buried in 491 lines of prolix regulatory language that was described on the board's agenda as merely a “consolidation” of previous regulations.

The loophole – which involved only a few words – was also proposed at a time when CIRM is aggressively moving to embrace the biotech industry. According to its strategic plan, it will take a leading role – at taxpayer expense – to lobby nationally to remove barriers facing the industry. All with the good intent, we should add, of speeding cures.

When the proposed revision came up during Thursday's board session, Elona Baum, CIRM's new general counsel who joined the agency in April after 12 years with Genentech, said that questions had been been raised about “sublicensing.” She said, “In the interests of clarity, the language was inserted.”

CIRM directors then formally acted to remove the offending language, which will go out for a 15-day public comment period before becoming official.

Shortly after Baum offered her comments, Don Gibbons, chief communications officer, sent me the following email about the headline in question.

“Having heard this discussion, I would hope you feel it is appropriate to self correct this damagingly misleading headline. It should have been clear this was never CIRM’s intent.”

The CIRM board, which is the ultimate authority at the stem cell agency, is to be commended for removing the loophole. But how and why the language was inserted is a matter in dispute.

Gibbons is paid $190,00 a year to polish CIRM's image. We understand why he does not care for our wording. However, both Simpson and I have been given to understand that the loophole did not result from merely a lack of legal felicity.

We asked Simpson for a comment on Gibbons' opinion concerning the headline. Here is what Simpson said,

“Either the lawyer responsible for the proposed change in the definition didn’t understand its implications, which implies incompetence or the lawyer completely understood, which implies deliberate intent to make substantive policy changes and subvert the process. Neither choice is pleasant, so I’ll simply celebrate the fact that when the ICOC (the CIRM board), particularly the members of the IP Task Force, was made aware of the situation, it was immediately rectified.”

Last Tuesday, we asked Gibbons for a comment on behalf of CIRM concerning the loophole. He never responded. We are asking him if CIRM has any comments on this item. We will carry any response verbatim.

Geron Travails a Reminder of Height of Stem Cell Hurdles

For those you who haven't seen the latest news on Geron, their latest hiccup -- if that is what it is -- demonstrates the arduous and tedious nature of bringing new stem cell therapies into the market.

Geron's plan to run a modest clinical trial on its spinal cord injury therapy has been suspended – before one person could be enrolled – as the result of FDA action. If it ever gets underway, it would be the first human trial using embryonic stem cells.

The company, which is based in Menlo Park, Ca., gave no reasons nor did the FDA, but one analyst cited possible safety concerns.

Geron has been in existence since 1990. It has never made a profit. It has no commercial products. And it has spent more than $150 million developing its spinal cord therapy, according to Steve Johnson of the San Jose Mercury News.

Geron has benefited from favorable coverage since announcing eight months ago it would start the trial. Adam Feurstein of TheStreet.com has a much more jaundiced view. However, he downplays the safety issue.

Sizzling Month for Biotech; More on Patent Protection for Biotech

Good news is surfacing in the biotech industry. One industry watcher on Monday reported that the sector was “hot” during July, but warned that challenges remain including the fate of patent protection for biotech drugs – a matter also of concern to the California stem cell agency.

Burrill & Co., the San Francisco life sciences merchant bank, said the sector was propelled by “drug data, positive drug sales/earnings and partnering and M&A deals.”

But Steven Burrill, CEO of the company bearing his name, also said,

“We don’t yet believe biotech is fully back on track as many companies are still struggling to find the necessary funding to maintain their operations, almost half of US public biotechs have market caps below $100 million and we are seeing companies still consistently turning off their lights for the last time. It is important to remind ourselves that the biotech industry is undergoing a major transition, a process that will likely continue for many months yet.

“This is because we do not know how President Barack Obama’s proposal for health care reform will fully impact the biotechnology industry and the status of biosimiliar legislation (follow-on biologics) is also still unresolved and there are fears that these issues will drive the prices of innovative drugs lower and eat away at biotech company profits.”

CIRM, a taxpayer-funded organization, is lobbying Congress on the biosimilar patent protection legislation. Last month it sent a letter to to U.S. Sen. Diane Feinstein, D-California, backing lengthy, 12 to 14 year patent protection periods, also an industry-supported position.

Without that protection, CIRM said “patient access to this promising technology will de delayed or eliminated and California's biotechnology sector will suffer.” Feinstein sent the letter along to the key Democratic negotiators on the health care reform legislation, urging support of the CIRM position. You can a find copy of both letters here.