California Stem Cell Agency Beefing Up Ties to Industry

The $3 billion California stem cell agency will press forward next week with its efforts to become more industry-friendly, including creation of a $30 million program catering specifically to biotech.

The initiatives will be considered next Tuesday at a teleconference meeting with remote locations in both Northern and Southern California, presenting an opportunity for industry representatives to weigh in with comments or suggestions for changes in the proposed programs.

It will be only the second session of a new subcommittee of CIRM directors. It is expected to be renamed the Intellectual Property and Industry Engagement Subcommittee. The change reflects a refocusing of the panel's efforts and the appointment of Duane Roth, a San Diego businessman as co-chairman. Roth will specifically deal with industry matters.

The subcommittee is expected to "engage industry as a partner" and work to ensure that therapy development is not "unreasonably hindered," according to a CIRM document. The panel is also slated to develop policies to encourage "participation by industry representatives as scientific members" of the CIRM grant review group, which makes the de facto decisions on grants. The subcommittee is additionally expected to deal with industry financing issues.

In addition to discussion of its mission, the panel is scheduled to act on a "strategic partnership funding program" that could hand out awards of $10 million or possibly more twice a year. The initiative, which would initially be funded at $30 million, is part of CIRM's response to the findings of a blue-ribbon commission last year that determined that the agency needed to provide more support for industry.

The funds would be limited to projects that have "third party commercial validation." A staff document said that could mean "a term sheet or letter of intent with a pharmaceutical or large biotechnology company (provided a binding agreement is entered into prior to the disbursement of CIRM funds), and/or significant investment from venture capital, disease foundation funding or other sources of third party or government funding, including SBIR funding."

Remote locations where the public and industry can participate in the meeting are in San Francisco (2), Irvine (2), Los Angeles, Woodside and La Jolla. Addresses can be found on the agenda. 

We should note that the background material on the issues to be considered is now available on the CIRM website, a posting that is much more timely than in the past. Consistent early postings of such material will help make it easier for industry and interested parties to follow the agency's activities and enable them to respond appropriately.

Initial membership of the committee, which is also co-chaired by Stephen Juelsgaard, formerly executive vice president of Genentech, can be found here. A transcript of the panel's first meeting last month, which involved a discussion of industry-friendly initiatives, can be found here.

Biotech Industry Scores in Stem Cell Agency Grant Round: Beginning of a Trend?

Proposal by Tim Hoey
of OncoMed outscored
leading research institutions. 

In what is a first for the $3 billion California stem cell agency, biotech firms have snagged 20 percent of the cash in a grant round offered by the state's research enterprise.

The industry has long been unhappy with its picayune share of the $1.3 billion that CIRM has given away so far. The agency has talked about moving towards a more business-friendly position, but last week's awards were the first hard-cash demonstration – albeit a tiny one – of CIRM's commitment.

The round totalled only $1.8 million. Four biotech businesses were awarded $368,519. However, the awards are for planning for applications for a whopping $240 million disease team round next year. It is all part of a CIRM's aggressive push for clinical therapies.

The success rate for the business applicants was also high – 50 percent. Eight firms applied, CIRM told the California Stem Cell Report. In all, 36 applications were received and 19 approved.

Since CIRM began approving awards in late 2005, only 7 percent of all grants have gone to businesses -- that in a state that is one of the hotbeds globally of the biotech industry.

Scoring the highest in last week's round with an 87 was the application , for $65,120 from Tim Hoey, a senior vice president at OncoMed Pharmaceuticals, Inc., of Redwood City, Ca.  The score topped applicants from Stanford, UCLA and other vaunted stem cell research institutions. OncoMed is looking at developing a new anti-cancer drug.

The winning businesses included two publicly traded firms, Geron Corp. of Menlo Park, Ca., and Stem Cells Inc., of Newark, Ca. It was the second CIRM award for Geron, which won a $25 million loan last May for help with its spinal injury clinical trial.

Geron's $106,239 planning grant (scored at 79) involves an hESC treatment for heart failure. Jane Lebkowski, senior vice president and chief scientific officer, is the principal investigator on the project. Stem Cells Inc. received $98,050 for a look at an Alzheimer's treatment. Its proposal also scored 79. Alexandra Capela is taking the lead on the project.

The fourth winning business was Wintherix, LLC, San Diego, Ca., which scored 69 on its $99,110 application. John Hood, chief scientific officer and a co-founder of the firm will lead the research into a therapy for osteoporosis-related fractures.

Only one of the applications – the one from Geron – appears to involve research using human embryonic stem cells,  the raison d'etre for voter approval of the California stem cell agency in 2004. The ballot measure that created CIRM was justified by backers because former President Bush had restricted federal funding of hESC research, a ban that has since been lifted by President Obama.

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.

Late Info Posted for Stem Cell Agency Directors Meeting

The California stem cell agency today posted additional material for its directors meeting Thursday dealing with loan payback changes in its biotech loan program along with an update on its operational budget.

You can find a memo summarizing the loan changes here and the proposed regulations here. Obviously these come much too late – less than two days before the meeting – to expect thoughtful comment from most industry executives. The summary also did not provide an explanation of the reasons for the changes.

The budget figures can be found here.

Parsing Statistics vs. the Reality of Biotech Concerns About CIRM

The California stem cell agency is missing the essential point of complaints from the biotech industry concerning CIRM's record on funding commercial research.

In its response to the biotech concerns, CIRM parsed statistics compiled by BayBio, the biotech industry group in Northern California, but ignored the reason for the private dinner meeting in August between top executives of the $3 billion agency and the area's stem cell firms.

Industry is less than happy with the California Institute of Regenerative Medicine. BayBio and the Orrick law firm did not bring together all those CEOs in August to pat CIRM on the back.

The industry concerns are not new. They have been around for several years. They have been acknowledged more than once by CIRM directors, some of whom have spoken pointedly about the need to funnel more cash to stem cell businesses. It is not just a matter of spreading money around equally. It is a matter of actually creating usable medical products, something that Stanford, the University of California and nonprofits are not going to do.

Director Jeff Sheehy, a patient advocate member of the CIRM board who works at UC San Francisco, said at the August CIRM board meeting,

“From the minute I've been on this agency I've heard...(at)all the industry meetings -- I've heard (that) we've got products waiting for money.”

According to the transcript of the meeting, CIRM Chairman Robert Klein, a real estate investment banker, acknowledged that CIRM does not have a “big supply” of grant reviewers with industry expenence – one of the problems cited by BayBio for the lack of grants to business. Finding them is “difficult,” Klein said.

Director Philip Pizzo, dean of the Stanford School of Medicine, additionally raised a question about CIRM's outreach to business.

“If industry has got things in the pipeline...are there ways that we could seed this to happen in more novel manners?

“Have we had, for example, as part of our strategic planning effort, an off-the-record kind of think tank between industry leaders, academic, venture capitalists in the same room at the same time, not separate -- would you buy into this ...approach -- but really coming together and say if we could create the world differently, how might we think about novel ways of approaching these kinds of both research and translation efforts?”

The question went unanswered at the board meeting. The strategic plan, however, comes up next week at CIRM headquarters in San Francisco when a blue-ribbon panel of external reviewers will conduct a closed-door examination of CIRM and its performance. The meeting's agenda, however, does not mention the stem cell industry's concerns.

Industry executives have been reluctant to go public with their issues, understandably wary of offending a financially powerful organization. Privately, they are more frank. We have heard bitterness and frustration from a number of them.

The industry found an unusual ally, at least on this issue, in Consumer Watchdog's John M. Simpson, who worked closely with some firms during CIRM hearings on its IP policy. He came up with a constructive proposal in June to deal with business issues that was brushed off by Klein.

But, as on any matter, there is not complete unanimity within the industry about CIRM. Funded firms are not likely to complain much.

CIRM has an additional $5 billion reason to move concretely to deal with biotech's concerns. Klein is touting for the ballot a CIRM bond measure of that magnitude, possibly in two years. The electoral campaign that created CIRM six years ago cost $30 million. Another ballot measure will run upwards of that amount, which means raising buckets of cash. And the only likely major donors will come from the biotech industry and its investors.

(A footnote: CIRM disputes statistics produced by BayBio on the percentage of awards given to business. We suspect the industry's figures were based on earlier grant numbers published by CIRM. The agency's totals change each time it approves another grant round every month or so. The presumably old percentages probably indicate that BayBio has been stewing over this issue for quite some time. BayBio has also filed a comment on an earlier item on this subject. Its carefully worded remarks said the August meeting created “a renewed sense of collaboration and areas to address.” BayBio did not speak to CIRM's criticism of its statistics.)

Stem Cell Agency Says It Is "Not Biased Against Industry"

The California stem cell agency responded today to an item reporting dissatisfaction on the part of the biotech industry concerning its meager share of the $1 billion that CIRM has awarded so far.

Don Gibbons, chief communications officer for the agency, filed his remarks earlier today as a comment on the second piece we wrote on the subject. (Here is a link to the first.) Because of the important nature of the controversy, we are reprinting his statement verbatim below to give it greater visibility. We are sure it is not the last to be heard on the subject from either the agency or industry.

Here is what Gibbons wrote as a comment on the item on the California Stem Cell Report.

“Your post distorts the facts. The document you quote from BayBio is not a 'report' it was a letter written to highlight issues and get the group’s membership excited about attending the session. It was not intended to be a document of record regarding the organization’s stance on CIRM.

“You did not check the facts in the letter. You could quickly tally the for-profit grants on our web site and see that the $45 million awarded to industry is 4.5 percent of the amount awarded not the 3 percent cited. But you know that even this number is not a good comparative number. Anyone who follows CIRM knows we are working from a 'pipeline' strategy moving from basic research and infrastructure to clinical application. Industry was not, and should not have been, eligible for the early rounds of grants. I do not believe the taxpayers wanted us building facilities for for-profit entities. Also companies would not have been appropriate recipients for our training grants. So, if you look at only research dollars, the pie shrinks to $628 million and industry’s share is 7 percent.

“However, that is still not an appropriate number to use. The first two research awards, the SEED and Comprehensive grants, were called the Jumpstart program designed to get this new field launched. They were issued before we had an intellectual property (IP) policy in place and therefore could not be offered to industry. (And don’t suggest we should have had an IP policy in place by then given the vast number of new systems the agency was developing simultaneously.) If you subtract those dollars the pie shrinks to $511 million and industry’s share rises to almost 9 percent.

“Given our pipeline strategy and our stated intent to start out more focused on basic science and move into the translational and clinical arenas when the science matured, this is a respectable percentage. As you well know we have a $50 million Targeted Clinical Development Request For Applications active now and that could double industry’s share in one grant round.

“If you look at the industry partnerships our academic grantees have formed, the dollar amount committed to industry is already probably double actual grant total. While only one disease team Principal Investigator was from industry, a second team had a co-PI from industry and another eight have major contracted relationships with industry.

“CIRM’s management team is certainly not biased against industry. Seven of 12 science officers came to us from industry, and there is frequent discussion in the office about ways to bring industry more firmly on board with our mission and to clear misconceptions on our policy.  This is the reason we developed a webinar on grant writing that is now on our website http://www.cirm.ca.gov/GrantWritingWebinar030310

“Also, a little fact checking would have revealed that the number of industry reviewers on our grants working group was wrong in the BayBio letter. Thirteen members are currently employed by industry and another 13 have strong ties to industry as former industry employees or having been involved in founding a company. So, that is 26 out of 136 reviewers, not the six suggested.

“Your posting did not represent the over all tone of the BayBio meeting. It was generally a very constructive session. One executive present noted that when our regulations were explained, his company was comfortable enough to apply.

“Distortions relying heavily on a single disgruntled source do not do a service for the stem cell field or help the reputation of the blogosphere.”

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.