Solid Hook-Up: California Stem Cell Agency and Calibr Connection

Highlights

Creating pathway to clinic

The Calibr approach

Problematic pharma-academic ties

As of today, the California stem cell agency has a $4 million hook into a San Diego research enterprise that also has ties to a glittering array of partners, ranging from Merck to Bristol-Myers Squibb. 

The connections fit with the state stem cell agency’s new goal of creating a clear pathway from the basic research bench to the use of stem cell cures in clinics for millions of people.

The signal event came routinely and quickly this morning when directors of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, approved a $1.7 million award.

The cash is going to the California Institute for Biomedical Research (Calibr) and its director, Peter Schultz.

The funds will be used for pushing into clinical trials a treatment that would -- for the first time -- modify the progress of osteoarthritis, which afflicts 27 million Americans. The therapy could also be used to treat damaged cartilage in knees and elbows.

CIRM has now invested $10 million in Schultz, a reknown chemist and biotech entrepreneuer. Six million of that went for research that was performed at Scripps. All of the funds involve the proposed arthritis therapy. Including today’s award to Schultz and funds to other researchers, the agency has now handed out $19.5 million to find a therapy for arthritis.

Schultz founded Calibr three years ago with up to $90 million, promised over seven years by Merck. The Big Pharma firm has first refusal rights on treatments developed by Calibr. If Merck passes, then other enterprises can make an offer. Calibr has additional partnerships, including a $28.9 million, five-year relationship with the Gates Foundation.

Peter Schultz, catching a big one

Schultz says “our mission is a little bit arrogant.” In a lengthy piece in March by Bradley Fikes of San Diego Union-Tribune, Schultz said Calibr has “a very broad spectrum of interest and we hope to have a significant impact on a number of diseases."

Fikes wrote,  

"'There are a lot of discoveries being made in life science, and many of these discoveries are made in academic institutions and basic research institutions,’ Schultz said. ‘The process of translating those discoveries into new medicines has become somewhat difficult.’

“These institutions have trouble collaborating with big pharma because of differences in culture and regulatory challenges of for-profit and not-for-profit collaboration.

"'That's left the universities try to do drug discovery themselves,’ Schultz said. ‘The problem there is they don't have the knowledge, experience or even the processes to do drug discovery, which is a lot different than a cottage industry approach to basic research."

Fikes continued,

“Meanwhile, big pharma is becoming more risk-averse, looking for validated drug targets and in-licensing compounds. That makes pharma collaboration with basic research centers even more problematical, Schultz said.

"’We have to come up with other ways to really facilitate and accelerate the translation of new research into new medicines,’ Schultz said. ‘Universities are trying to set up their own drug discovery units. Scripps has done that in Florida, Vanderbilt, we see Cornell, Rockefeller and Sloan-Kettering teaming up to do that. They're building something from scratch, and usually without having the experience of having been there and done that. And in some cases what they wind up doing is hiring a lot of people from pharma industry and recreating a pharma-like process.’"

Calibr has 110 employees, Fikes reported, including 60 postdocs. Its annual operating budget for 50 projects totals $25 million. Calibr is still busy hiring with seven positions open on its Web site as of this afternoon.

California's Stem Cell Research Performance; Agency Schedules More Awards

Overview of applications and funding outcomes in CIRM 2.0 as of July 23 -- CIRM chart

Highlights

One contract signed

17 applications received

Demand leveling off

Mills says 'metrics' good

The governing board of the $3 billion California stem cell agency is scheduled to meet on Aug. 20 to give away more millions for late stage preclinical research as part of its ambitious and "radical" overhaul of its funding effort.

The one-hour teleconference meeting will have its­­­ main location in San Francisco. Seven other offsite locations are also available for the public, ranging from Napa to San Diego.

The only item on the agenda is consideration of an unspecified number applications for funding work leading up to a clinical trial. (See here for the request for proposals -- PA15-01.)

The number of applications to be considered and their review summaries are not yet available on the Web site of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. However, they are part of what CIRM President Randy Mills calls CIRM 2.0, what he terms a “radical” change in the way the agency handles applications.

Deadlines for applications in this late-stage research round, funded at $100 million for this fiscal year, come up at the end of every month. The goal is to generate better applications and speed the cash to researchers.

The program began Jan. 1. So far, only one contract has been signed for a research project, Mills reported to the CIRM governing board on July 23. ­­­ However, four have been approved by the CIRM governing board out of 17 that applied between January and June. 

Mills told the board last month,

“The demand is leveling down more closely to what we thought it would be. So in May we received three applications, in June we received two applications.

“The review team was very worried in April when we had five applications because that's more than we actually anticipated we would have, but it seems to be normalizing down around the two or three a month area which is closer to what we had predicted.

 “One other thing I want to point out here -- which was neat in April -- is we sent three programs for what we call budget review. And that's before we send these things to the grants working group for actual scientific adjudication, we send them for external budget review to make sure that the budgets are appropriate for the scope of work being offered.

“We actually had one fail. And I like that because that says that system is working. And if something is going to go through the process and have a budget that's not justifiable, we're able to catch it, and we're able to kick it out. In this case we made them go back and think through their budget a little more closely.

“With all that said, it seems to be working well from a metrics standpoint. We're very pleased. Only in January did we have the one delay, and we haven't had an off mark since.”

In addition to San Francisco, Napa and San Diego, locations where the public can participate in the meeting and lobby for or against a specific research application can be found in Irvine, Redwood City, Sacramento and Los Gatos. Specific addresses can be found on the agenda.

California Ready to Approve $243 Million for New Stem Cell Research

CIRM President Randy Mills uses a railroad analogy for therapy development

The California stem cell agency Thursday is set to approve $243 million to finance everything from testing therapies on patients to exposing high school students to research.

The multi-faceted effort will come before the 29 directors of the agency at their meeting on Thursday at the Oakland Marriot City Center. The initiatives have already cleared the directors’ Scientific Subcommittee.

The effort is the second installment in the CIRM 2.0 program begun earlier this year by the agency’s president Randy Mills. He assumed his post in May 2014 at the California Institute of Regenerative Medicine or CIRM, as the $3 billion agency is formally known.

Mills has described his changes as radical. He says they are aimed at improving the quality of applications and speeding development of therapies. He also has called for deeper involvement by the agency in the direction and work of researchers.

Mills, who has made his entire career in the biotech business, says he wants to provide a relatively smooth track, a “continuous, predictable pathway” from basic research to clinical applications. He uses a railroad analogy to illustrate the desired progression of research(see graphic above).

The $243 million up for approval this week is about 30 percent of the agency's remaining $800 million. However, the money will be spent over the next several years -- not just this year. Under Mills' spending projections, the agency will not run out of cash until 2020. 

The largest program coming before CIRM directors this week is $100 million during 2015-16 for more advanced research related to clinical development. Directors earlier approved $50 million for the effort for the first six months of this year. However, they have awarded only $25 million as of the end of June.

Another $53 million is set for a variety of mostly basic research, which Mills calls “discovery.” Requests for applications are scheduled to begin late this summer or fall. Some of the rounds will have application openings twice a year.  Cash is scheduled to flow to researchers within about 10 months of application.

Mills is also asking the board for substantial delegation of authority to him during the reviews and is calling for an “optimized review process” because of a high anticipated volume of applications in discovery.

Under the $40 million translation research round, Mills would also be delegated authority in the grant review process to pluck out applications and advance them even if reviewers disagreed. Applications will be accepted in September and March. Cash will flow to researchers about nine months after applications are submitted.

Both the discovery and translation rounds are open to both businesses and nonprofit enterprises.

A revised training program called “Bridges 2.0” for college level students is budgeted for $46 million over a five-year period. A training program for high school students, changed and rebranded as “Spark,” will receive $4 million over five years. Applications for that program are due Oct. 1. It is open to colleges, universities and non-profit academic institutions. 

Applications for the Bridges program are also due Oct. 1. They will be limited to “California public universities or colleges or private, nonprofit academic institutions, which did not receive a CIRM-funded Major Facility or Shared Research Laboratory Award (and, hence, do not have a major stem cell research program or a critical mass of stem cell researchers).”

In addition to the Oakland location of the directors' meeting, the public can participate at teleconference locations in San Diego, South San Francisco, Stanford and two in La Jolla. Addresses can be found on the agenda, which includes directions for listening to the Internet audiocast of the meeting.

Email comments for the CIRM directors on items on the agenda may be sent to mbonneville@cirm.ca.gov.

California to Hand Out $16 Million for Stem Cell Research This Week

The California stem cell agency this Thursday is scheduled to give away nearly $16 million for clinical trials for possible therapies connected to AIDs and a rare genetic affliction involving immune deficiencies.

The larger of the two awards -- $8.5 million -- will go to an unidentified recipient for an early stage trial involving AIDS-lymphoma patients.

The agency’s blue-ribbon reviewers earlier voted 10-0 behind closed doors to approve the application. On Thursday, the full board of the agency will ratify the vote in public. The board has almost never overturned a decision by reviewers to fund an award.

The summary of the review of the application, which was not disclosed, said that the proposed therapy “would be a significant improvement over standard of care in the proposed AIDS lymphoma patient population. 

“With the proposed patient population (AIDS lymphoma patients), impact will be somewhat limited. However, demonstration of success in this limited context would serve as an impetus to solve additional problems such as non-ablative conditioning to achieve engraftment in the larger HIV patient population.” 

Despite another “paucity of patients,” the stem cell agency is also expected to approve $7.4 million for an early stage trial involving X-linked chronic granulomatous disease.

Reviewers voted 5-1-4 to approve the application. The voting translates to five for the application, one indicating it needs improvement and four indicating that it is “sufficiently flawed that it does not warrant funding, and the same project should not be resubmitted for review.” 

The review summary said,

“Reviewers were…divided as to the feasibility. Some reviewers did not think that there are sufficient patients afflicted with this disease who also meet the enrollment criteria to allow for completion of the trial with enough patients to yield meaningful outcomes. Other reviewers were optimistic that, given the track record of this team and the willingness of patients with intractable orphan diseases to participate clinical trials, the trial could be fully enrolled and yield results to potentially support moving the therapeutic toward approval by the FDA and/or advance the field.” 

The target of the potential therapy is an inherited condition that weakens the immune system. According to the Rare Disease Network, it occurs in only one out of every 250,000 persons. Only 20 new cases a year are reported in the United States, according to Wikipedia. The review summary used the expression “paucity of patients.”

Reviewers said, however, the approach has “potential value in a number of other diseases.”

The application carried with it $4.6 million in co-funding promised in a publicly unspecified form via the applicant.

Both the applications had been reworked and resubmitted to the agency under its new CIRM 2.0 award process. However, this week is the first time the board has considered them.

(Please note that the agency has cobbled together the review summaries for both applications. That means that some readers seeking the summary related to the $8.5 million award could be misled when the immune deficiency award turns up at the top of the document. The full application is also never disclosed by the agency, only the summary.) 

Rejected by reviewers was a $2.9 million application from another unidentified group. The vote was 2-6-3, meaning that the proposal can be reworked and resubmitted.

The board’s meeting will be in Oakland at the Marriott City Center. Public teleconference locations will be in San Diego, Stanford, South San Francisco and two in La Jolla. The public, including scientists, can participate from those locations as well as in Oakland.

An audiocast is also available. Full details can be found on the agenda.

New 'Railroad' Coming to the $3 Billion California Stem Cell Agency; Basic Research Financing to Get New Ticket

"If you want a bike, don't ask for a toy"
Scientists welcome to comment

Directors of the $3 billion California stem cell agency this month will take a crack at building a new, basic research “railroad” with the hope of creating a “predictable path” to development of therapies and cures.

The move will involve funding for basic and translational research, the initial steps that lead to producing therapies that can be widely used by the public.

The effort is scheduled for approval at a meeting July 15 of the agency directors’ Science Subcommittee. The agenda for the meeting was posted last week minus details of the “concept plan” for the move. However, the changes are part of the CIRM 2.0 effort initiated by Randy Mills, president of the California Institute of Regenerative Medicine (CIRM), as the agency is formally known.

Mills kicked off CIRM 2.0 in January. His initial foray involved the more advanced research efforts that are engaged in testing treatments on human beings. Mills described the CIRM 2.0 program as “radical.”

In May, Mills sketched out the thinking behind extension of the CIRM 2.0 approach to basic research.

He told directors at their meeting that month,

“The first thing is we need is a continuous predictable path from discovery to clinical. So if we have a discovery program (basic and translational research), the purpose of that discovery program ought to be to deliver something downstream to where it ultimately impacts patients. That kind of makes sense.”

Mills quoted CIRM senior science officer Lila Collins as saying about the approach,

“If you want a bike, don’t ask for a toy.”

Under past procedures, Mills said basic research findings financed by CIRM only advanced 5 percent of the time. He acknowledged that it is “really difficult” to foresee where basic research is headed. But he said an analysis of the CIRM grants showed that when the agency specified that it wanted the research to progress, it advanced 30 percent of the time instead of 5 percent. 

Using primarily a railroad analogy, Mills said,

“We need to put intent into the RFA that says we want you to be creating something, and we want you to be thinking forward ….Maybe you don't take it there, but how is it going to move ultimately downstream? We want you to be thinking about that at the time you apply because if you do, we know it has a much better chance of going to thenext station.” 

Mills said,

“We need to have track that's continuous….We need to make sure thetrains run on time. We need to have predictable progression. We call this baton passing. We want the cargo on the train to proceed down the track. And we need to be really creative on how we're going to do that.
 “We need to be responsive to new developments and downstream bottlenecks. And then, lastly, we need to have multiple development pathways so we basically serve all of the destinations we want to serve.”

Even if scientists are not entirely pleased with the new approach, they are likely to climb aboard. Research funds nationally are scarce. CIRM itself has not offered a basic biology grant round since March 2013.

However, Mills’ latest proposal is still subject to modification. The Science Subcommittee may ask for changes before sending it to the full board for approval on July 23 at a session in Berkeley. Researchers and the public are welcome to comment and make suggestions.

Details of the concept plan are likely to be posted at least a few days before the Science Subcommittee meeting July 15. The meeting is open to the public with sites available in San Francisco, Cedars-Sinai in Los Angeles, UC Irvine, Pasadena and San Diego. See the agenda for addresses.

Written comments can be emailed to CIRM directors via mbonneville@cirm.ca.gov. 

Three Top Execs Named Today at $3 Billion California Stem Cell Agency

The California stem cell agency today marked the completion of a year-long reorganization with the appointment of three top executives, including a veteran of Genentech.

Randy Mills, who became president of the $3 billion agency in May 2014, said the appointments represent a “significant inflection point.”

Mills said in a press release,

“People are everything when it comes to the potential and performance of an organization.  With the appointment of these three exceptionally talented individuals to the leadership team, CIRM is now better positioned to achieve its mission and forever change the practice of medicine.”

The trio consists of Ramona Doyle, vice president of therapeutics; Maria Millan, senior director of medical affairs and stem cell centers, and Maria Bonneville, director of administration. Millan and Bonneville both were promoted from within the organization.

Ramona Doyle, Rhodes Project photo

Doyle comes from Genentech. She was senior group medical director for respiratory product development at the South San Francisco business, where she has worked since 2009. She worked for Gilead Sciences for two years. Doyle has also taught at UC San Francisco and at the Stanford Medical School, where she worked with Millan.

Beginning Monday, Doyle will oversee projects involving neurological and ocular, cancer and blood related and cardiovascular, lung, liver and other organ system-related conditions. She is also the only person designated as vice president within the agency, formally known as the California Institute for Regenerative Medicine (CIRM).

Doyle received her M.D. from Emory University and was a Rhodes Scholar after receiving an undergraduate degree in English and literature from Sewanee: The University of the South. When she was at Sewanee, she was editor of the Mountain Goat literary magazine and wrote prize-winning poetry.

Also named today as senior director of medical affairs was Maria Millan, who formerly was a

Maria Millan

medical officer at CIRM, which she joined in 2012. Prior to that, she was vice president and chief medical officer at StemCells, Inc., and director of the pediatric liver and kidney transplant program at Stanford, where was also an associate professor. Millan, a surgeon, is overseeing the agency's $34 million Alpha stem cell clinic program. 

Prior to Bonneville's appointment today as director of administration, she was executive director of the CIRM board. She will have oversight over the agency’s board relation, human resources, communications and information technology departments. Before joining CIRM, she was a consultant with Tramultola LLC and worked for former state Treasurer Bill Lockyer as finance director for Northern California.

Other members of the agency’s “leadership team” are Chila Silva-Martin, finance director, Gil Sambrano, director of review; James Harrison, general counsel; Gabe Thompson, director of grants management, and Patricia Olson, executive director of discovery(basic research).

All have been with the agency for some time. Harrison is an outside contractor.

Not including Mills, the 8-member leadership team at CIRM now consists of five women and three men. 

California Hits Its Mark on Faster Delivery of Cash for Stem Cell Research

• Caladrius to get first installment on nearly $18 million 
• Agency President Randy Mills Pleased with CIRM 2.0 Overhaul

 SAN FRANCISCO -- The California stem cell agency may not be faster than a speeding bullet, but it is running way more quickly than it was a year ago.

For researchers and patients, that means the agency’s millions are moving more rapidly into development of therapies and cures with the goal of beginning to save lives sooner rather than later.

The signal event came last week when the agency, formally known as the California Institute for Regenerative Medicine(CIRM), signed off on a contract with Caladrius Biosciences, Inc., of New York.

As soon as Caladrius signs the agreement, it will receive a check for $3 million, the first installment on a nearly $18 million award that was approved by directors less than a month ago. 

Randy Mills

CIRM President Randy Mills was delighted last Friday when he told the California Stem Cell Report about the action on the Caladrius award. (Caladrius was formerly known as NeoStem.)

Mills, who has been head of the agency for only a little over a year, mentioned the news during a 45-minute conversation in his office at CIRM headquarters.

It was the first award paid out under Mills’ new, CIRM 2.0 program, an effort designed to speed cash to researchers and improve the quality of applications. It is also the first CIRM award in a stage three trial, the last step in the process of winning government approval for widespread public use of a therapy.

The agency approved the actual Caladrius contract last Thursday, 21 days after the directors’ approval. Mills’ goal was to act on the contract within 45 days.

CIRM’s 2.0 clock shows Caladrius’ application for the melanoma therapy coming in at the end of February, 113 days ago. Mills’ goal is to have action completed on an application within 120 days from the time it officially enters the 2.0 system -- instead of up to two years as in the past. 

The firm offered its initial application at the end of January, but it was sent back for improvement. 

Next up in the first round of CIRM 2.0 awards is final action on a $5 million award to Shaomei Wang of Cedars-Sinai that was also approved on May 21 by CIRM directors.

Mills said last Friday that CIRM 2.0 has not been perfect and that in some cases implementation required "brute force." But he is pleased overall. Later this year, Mills and his team plan to apply CIRM 2.0 to basic and translational awards, all of which will mean significant changes for hundreds of California scientists. 

NeoStem's New Name, Backed by $29 Million in New Cash

The caladrius at work

Say hello to the latest recipient of nearly $18 million from the California stem cell agency -- Caladrius Biosciences, Inc.

It is also a firm that is $29 million richer -- on top of the $18 million -- than it was when the $3 billion state research enterprise awarded the firm the money on May 21.

Caladrius is the new name for NeoStem, Inc., of New York, N.Y.  It is also the name of a video game once described by the Giantbomb web site as a “A 2013 bullet hell shooter from Moss.”

Caladrius has a longer history, however, than the video game. According to The Medieval Bestiary web site, the caladrius is an all-white bird – sort of a mythological diagnostic tool – that would refuse to look into the face of patients who were going to die. But the caladrius could also draw out the disease from the sick person and fly away with it.

David Mazzo, president of the firm, said yesterday,

“With the same objective of patient recovery, we, now as Caladrius Biosciences, are committed to bringing significant life-improving therapies to market, driving the evolution of the cell therapy industry and generating industry-leading growth through our innovation and executional excellence.” 

Caladrius sold more than 14 million shares of its stock earlier this month, raising nearly $29 million to help pay for the third stage clinical trial that has been backed by the stem cell agency. The firm is using the proceeds for, among other things, to meet the required match of the California state funding. The four-year trial is aimed at metastatic skin cancer. 

In his letter to shareholders yesterday, Mazzo laid out the future direction of the firm. He also cited the acquisition of an “asset” a year ago that provided the therapy now being funded by California. Mazzo said,

“Given that we acquired this asset approximately one year ago and, in the ensuing months, much of the external focus on our company was on our ischemic repair Phase 2 program, we believe that the market has not yet integrated the full potential of this mature immuno-therapy asset into the value of our company.”

Mazzo referred to the $124 million acquisition of California Stem Cell, Inc., of Irvine, Ca. Hans Keirstead, the president of that firm, is now senior vice president, research, and chief science officer of Caladrius.

Caladrius’ stock closed at $2.21 a share today, down from $2.30 on May 20, the day before it was awarded the California money. The stock has ranged from $2.03 to $7.23 over the last 52 weeks, but it jumped dramatically the day following the award and then fell back.

The Caladrius video game figure is markedly different than the bird depicted by medievalists(see below). For a review of the game, see here.  

Caladrius Blaze, the video game figure

NeoStem Stock Price Falls 22 Percent as It Seeks to Match California Stem Cell Grant

NeoStem, Inc., has had a wild financial ride this past week with its stock price soaring and then plummeting in the wake of a nearly $18 million award last Thursday from the California stem cell agency.

The share price of the New York firm dropped 22 percent today after it announced that it was seeking to raise $25 million by selling 12.5 million shares. The move is aimed at helping to finance its stage three melanoma trial. Terms of the California award require a dollar-for-dollar match of the agency’s funds for the trial.

The market was not happy with the company’s plans to sell more of its stock at a possible price of $2.00 share. The stock today closed at $2.06. Last Thursday it closed at $2.95, up 28 percent for the day. Its 52-week performance has ranged from a low of $2.03 to a high of $7.23.

The Street web site today was critical of the firm, giving its stock a D-minus rating and recommended selling it.  The Street said,

“This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and generally disappointing historical performance in the stock itself."

Last week, some stem cell agency board members raised questions about the financing of the trial. Steve Juelsgaard, former executive vice president of Genentech, asked about the company’s “plan B.”

David Mazzo, NeoStem photo

David Mazzo, CEO of NeoStem, responded by mentioning a possible stock sale and also said the firm had a $30 million equity line of credit.

The company plans to conclude its stock sale on June 2. The stem cell award is on a fast-track to deliver cash to the company within 45 days of approval of the grant. But that requires evidence of the matching funds.

The prospectus for the offering says the four-year trial will cost $25 million, but one analyst says it could cost as up $51 million.  The prospectus also indicated some of the money raised next week could go for purposes other than the melanoma trial.

Cedars-Sinai Researcher Snags $5 Million for Stem Cell Eye Research

Another winner in last week's California stem cell awards was scientist Shaomei Wang of Cedars-Sinai, who will receive nearly $5 million for her work to find a treatment for retinitis pigmentosa. 

Shaomei Wang, Cedars photo

The board last Thursday ratified the decision of 15 reviewers who unanimously approved the Wang application. It was one of two awards approved in the first round of CIRM 2.0, the new effort by the agency to speed cash to researchers. It was the first agency award to Wang.

(The other award last week was for nearly $18 million to NeoStem, Inc., of  New York.)

CIRM, as the agency is known, said in a press release that the funds will go for "the late-stage research needed to apply to the Food and Drug Administration for approval for a clinical trial in people. The therapy will involve injecting neural progenitor cells under the retina at the back of the eye. The hope is that this will slow or even halt the progress of the disease."

The press release oddly, however, did not identify Wang as the recipient, only mentioning that the award went to Cedars. In the past, the agency has identified researchers by name in award press releases and has provided information that has included links to summary information about the research.  

Cedars has been awarded $43 million by the agency, not including the latest $5 million. It has had a representative on the CIRM governing board since its inception as do nearly all of the recipients of funds from the $3 billion state program.

Here is a link to a summary of the review of Wang's proposal. Here is Cedars' press release on the award. 

NeoStem Sees Whopping Jump in Stock Price on $18 Million Backing from California

A graphic depiction of trading on NeoStem stock last week.
Google chart

The stock price of NeoStem, Inc., shot up 28 percent in one day last week after the California stem cell agency approved a nearly $18 million grant to the firm for a potential therapy that “teaches the immune system which cells to attack and kill.”

The governing board of the state research effort awarded the funds on Thursday May 21. The grant is to assist in a third stage clinical trial involving a treatment for metastatic melanoma, the most deadly form of skin cancer. Following the approval, NeoStem’s stock soared from $2.30 to close at $2.95.

The California Stem Cell Report first disclosed the agency’s virtually certain action on Tuesday May 19.

It was an obvious boon for the New York-based company whose CEO, David Mazzo, told the board that the award would help to raise more cash to finance the trial which is expected to cost $45 million to $51 million, according to analyst Yi Chen of H.C. Wainwright.

For the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known, it will be the first time that it has plunged into a stage three trial and the closest it has come to actually bringing a therapy to market.

Jonathan Thomas, chairman of the $3 billion agency, told the board on Thursday that the NeoStem project has “the greatest chance of success for the people of California that we have funded.”

The agency was created in 2004 when voters approved a ballot initiative whose backers raised expectations of quick development of stem cell therapies. The agency has committed more than $1.9 billion for research. Its money for new awards is expected to run out in 2020.

NeoStem, which has operations in Mountain View and Irvine in California, issued a press release hailing the award. The company called the action a “significant endorsement” of its approach which it said has potential application in other types of cancer.

  

The release quoted Randy Mills, president of the agency and former head of Osiris Therapeutics of Maryland, as saying cash would start flowing to NeoStem in 45 days. He continued,

“But that's just the start. We are not just providing financial support; we are also partnering with these groups to provide expertise, guidance and other kinds of support that these teams need to help them be successful.”

Under a new scoring system introduced by Mills, the agency’s blue-ribbon reviewers voted 6-3-5 to fund the program with the three saying the application needed improvement. That action occurred behind closed doors weeks before last Thursday’s meeting when the board ratified the reviewers’ decision on an 11-0 vote. One CIRM board member, Leon Fine of Cedars Sinai, said that one perspective on the reviewers’ voting could be that eight persons thought the application needed more work or should be rejected.

Board member Steven Juelsgaard, former executive vice president of Genentech, raised questions about what might happen if the board rejected the NeoStem application, given that it has only $19 million on hand at last report. Juelsgaard said that was not sufficient to complete the trial.

Mills declined to speculate on what the company might do.

Juelsgaard returned to the subject a few minutes later when Mazzo addressed the board and asked Mazzo about the company’s “Plan B.” Mazzo said the company could go to the “capital markets.” He also said the company had recently negotiated a $30 million equity line of credit.

Mazzo said that the firm is constantly looking for funds and that the CIRM grant would go “a long ways to advancing the trial.”

The vagaries of the marketplace do, however, play a role in the investment community’s view of the company. After the stock jumped 28 percent on Thursday, it dropped 2 percent on Friday.

The 52-week low for the stock is $2.15 and the high is $7.23.

The trial is currently seeking enrollees worldwide, including at seven sites in California. 

NeoStem Up For $18 Million Melanoma Award from California

California's stem cell agency is expected to make an $18 million bet this week on a treatment by NeoStem, Inc., for a skin cancer that kills 10,000 persons a year in the United States alone.

Up for approval on Thursday is the company's application for an award to assist in a late stage trial that could produce a commercial product before the agency is expected to run out of money in 2020.

NeoStem is based in New York city but has operations in Irvine and Mountain View in California. It acquired California Stem Cell, Inc., in Irvine in April of 2014 for $124 million. California Stem Cell was founded by Hans Kierstead of UC Irvine, who is now president of NeoStem Oncology.

The $3 billion agency did not disclose the name of the company in keeping with its longstanding practice of concealing the identity of applicants.

However, company documents and SEC filings indicated that NeoStem was the applicant. It would be the first award by the agency to Neostem, which is a publicly traded firm.  

The summary of the agency's review posted on its Web site said the funds would go for completion of a stage three trial for a tumor stem cell-targeted immunotherapy for metastatic melanoma, which accounts for 20,000 new cases annually.

The review cited "compelling results" from the phase two stage of the trial. NeoStem has reported separately that its stage two trial had a 72 percent survival rate after two years compared to 31 percent for the control group.

NeoStem said in SEC filings that the treatment is for the most lethal form of skin cancer and has estimated market size of $1 billion.

Helping to develop a marketable product would be a big score for the agency, which has yet to fund a commerical therapy after 10 years and $1.9 billion.

Its money for new awards will run out in 2020 at its current spending rate. No additional funding sources for the agency have surfaced at this point. Being able to cite development of a commercial therapy would be likely to generate considerable enthusiasm for the agency's continued work.

Both reviewers and the CIRM staff recommended approval of the NeoStem application at the CIRM governing board meeting on Thursday.

The action came on a split vote among reviewers, 6-3-5, with six recommending funding and five against funding, according to a CIRM document.. Three reviewers said the application needed improvement.

The CIRM summary of the review said,

"Reviewers considered the lack of mechanistic data and inadequate plan to gain understanding of therapeutic mechanism of action to be a major weakness and expressed concern regarding the ability of the applicant to enrol the proposal pivotal Ph3 (phase three) study as projected."

CIRM said, however, the vote and staff recommendation to fund the research "reflects both the high risk and the clear potential to impact unmet medical need."

The CIRM governing board almost never overturns approval of an award by its reviewers and staff.

The award would be one of the two first approved in CIRM's 2.0 program to fast-track cash to researchers, speed development of therapies and improve the quality of grant applications. The second award  -- $5 million -- is for work immediately leading up to a clinical trial for a therapy for retinitis pigmentosa. Shaomei Wang and Clive Svendsen at Cedars-Sinai in Los Angeles are the likely key figures in that research. Reviewers voted 15-0 to fund the work.   

California Stem Cell Audit: Praise for Mills but More Work Needed on IP, Conflicts of Interest

The California stem cell agency this week received good marks for changes made by its new president, but it is also being told that it needs to improve how it tracks potential royalties and how it prevents grant reviewer conflicts of interest.

A "performance audit" by Moss-Adams, a Seattle business consulting firm, made 12 recommendations for the $3 billion research enterprise. One of the 12 was to implement the unfulfilled recommendations made by Moss-Adams three years ago.  Seven of the 24 from that audit still need more action, the firm said.

On Thursday, the agency's governing board is scheduled to discuss the latest audit at a meeting in Berkeley.  The study is required by state law every three years. The agency's scientific performance, however,  is specifically excluded from being examined. Moss-Adams is scheduled to receive $230,000 from the agency for the audit, which was for the 2013-14 year.

On Sunday, the California Stem Cell Report covered the deficiencies involving disclosures of the financial interests of grant reviewers.

Other areas of concern included the need for better tracking of intellectual property that could mean royalties for the state, more timely review of progress reports from grantees, more timely, formal evaluation of employees and keeping up-to-date on technology related to grant management and agency efficiency.

Under the subject of "commendations," Moss-Adams said that CIRM had "many strengths."  The consultant said the agency has made "significant strides" in three areas: the grant management system, grants process improvements and "organizational culture."

The grants process comment referred to CIRM 2.0, the fast-track funding program initiated by Randy Mills since he became president a year ago. The organizational culture commendation also involved Mills' efforts, but touched indirectly and delicately on the resignation of Robert Klein as chairman and the election of Jonathan Thomas to replace him in June of 2011. 

Moss-Adams reported "enhanced seamlessness" between the president's and chairman's offices. Proposition 71, which created the agency, dictated a controversial dual executive situation that has troubled the agency since its inception.

The audit found significant deficiencies involving the treatment of CIRM employees, some of which have been addressed in a positive way already by Mills. One example cited by the audit involved performance evaluations that are tied to pay increases. It said that evaluations that were scheduled to occur in 2013-14 did not actually take place until January of this year.  

Moss-Adams said the agency also needs to do better in monitoring and protecting its intellectual property (IP), which could generate royalties. Without tight tracking of the IP and inventions funded by CIRM research, the state could lose out on revenue. Backers of Proposition 71 told voters in 2004 that the state could receive more than $1 billion in royalties from CIRM research. So far, none has resulted. 

Moss-Adams said that royalties are now more possible because the agency is backing late stage research that is more likely to make it into the market place. 

Moss-Adams said more work was needed on implementing the seven recommendations from three years ago, including those involving IP, the transition plan to deal with the possible demise of the agency and a grants outcome database. 

California Stem Cell Agency to Hire Top VP

Randy Mills, who enters his second year this week as president of the California stem cell agency, is looking for a vice president for the $3 billion research enterprise. 

The salary for the new executive ranges up to $375,524. He or she would be the only vice president in the organization.  

The new position oversees three key areas of research with a budget of more than $600 million and 75 active programs at the California Institute for Regenerative Medicine, as the agency is formally known. 

Mills this month added the VP position to his official organization chart. In a memo to the governing board of the agency, he noted that some members of the board had expressed concern about the number of persons reporting directly to him.  Mills said that "upon further reflection" he determined that adding a VP would mean more efficiency and effectiveness. 

Also unfilled are the high-level slots for senior directors of the areas that the new VP would oversee: organ systems, neuro/ocular therapies and blood and cancer. 

The three senior director openings were first posted in January, reflecting Mills' new structure at the San Francisco agency and his emphasis on speeding development of therapies.

They are among seven job openings at the agency including project manager for clinical advisory panels, web and social media manager and grants management specialist.

The media manager position came open this month when Anne Holden left after about a year on the job and completing an overhaul of the agency web site. 

See here for access to all the job postings. 

Fast-Track Stem Cell Grants and Big Boost in California Stem Cell Agency Budget

Directors of the California stem cell agency will meet May 21 to make their first award under the agency's new, fast-track grant program and to approve an $18.7 million operational budget, up $2.8 million from this year's estimated spending.

The award will come in Randy Mills' CIRM 2.0 program as he begins his second year as president of the $3 billion state research effort. He initiated the program with intention of dramatically speeding cash to researchers.

The agenda for the directors' meeting in Berkeley does not specify how many awards are likely to be considered, but the number is expected to be very small. More details are likely to be posted on the agenda prior to the meeting.

Mills plans to extend the CIRM 2.0 speed-up to all of CIRM's award cycles, including basic research.

Also expected to be approved is the operational  budget proposed by Mills for the fiscal year that begins July 1. The spending plan is up substantially from actual spending for the current fiscal year largely because of increases in personnel costs. Mills expects to fill a number of high-level slots in the organization that will help boost employee costs from $11.3 million this year to $12.7 million. The agency is expected to be $815,000 under budget for employee expenses for the current fiscal year because positions were not filled.

Mills also plans to update the agency's strategic plan during the next few months. A discussion of that effort is on the meeting agenda. Such matters as spending on basic research vs. clinical funding are the sort of topic for strategic planning. A few years ago, a shift away from basic research triggered some public concerns among researchers, who said the field was too young to push heavily on the more costly clinical funding.

The agency has committed $1.9 billion so far and estimates it will run out of cash in 2020 for new awards.

No plans for public input concerning the strategic plan have been announced, but they have been a component of previous efforts.

Directors are additionally expected to hear a report on a "performance audit" of the agency. The agency commissioned the $230,000 audit, which is required by state law. The last such audit in 2013 made 27 recommendations for improvements at the agency. An evaluation of the agency´s scientific portfolio was specifically not included in the audit.

Look for more details on matters to be considered by the agency on the California Stem Cell Report over the next 10 days as more information becomes available.

California's 'Incredible' Stem Cell Invention

C. Randal Mills - CIRM 2.0. Building a better stem cell agency (Part 2) from MCC Industry Relations on Vimeo.

Randy Mills, the president of the $3 billion California stem cell agency, was selling hard a couple of months ago in San Diego.

Animated and gesticulating, Mills said,

"There's nothing like CIRM.  It's an incredible invention that probably only could have taken place in California."

But he said the agency was on its way to being better and faster, delivering cash to researchers in 120 days instead of the previous average of 22 months.

"We are an accelerating agency. We are in the time business. So we can't be slow...Urgency matters."

Mills' comments were made to a symposium at the Moores Cancer Center in San Diego Feb. 19. But his full remarks surfaced recently in a video posted on Vimeo(see above).

Mills took only a little more five minutes in his presentation about CIRM 2.0, his radical overhaul of the agency's grant-making process. He is seeking higher quality applications, higher success ratios and stronger partnerships with researchers and patient advocates.

CIRM  2.0 is still in the process of being fully implemented in all of the agency's award efforts. Mills said there will be bumps.
"Buckle up. It's going to be a wild ride."

Three-Month Birthday: California Dances Forward With its Fast Track Stem Cell Plan

Randy Mills' chart last week on changes coming as a result of CIRM 2.0

On New Year’s Eve, the California stem cell agency and its relatively new president, Randy Mills, kicked off a radical and fresh way to hand out money to researchers and speed development of therapies.

Today, nearly three months later, the agency is still wrestling with some key issues, including virtual termination of its old, $500 million loan program.

Nonetheless, at a meeting last week in Berkeley, the governing board of the agency did put behind it many aspects of implementation of what it calls CIRM 2.0, a term drawn from its official name, the California Institute for Regenerative Medicine(CIRM).

Approved were new rules involving administration of grants and beefed up oversight of the research -- with the agency as an ever more engaged partner with researchers, some of whom may not care for more suggestions from the back seat.

Background checks will be required on recipients. Budgets that are out of whack will not even be submitted to agency’s application reviewers. Much paperwork will be eliminated. The out-of-state researchers who approve the grants will now also scrutinize progress and make recommendations. That’s on top of clinical advisory panels that will be created to monitor research progress on a quarterly basis.  Researchers will be encouraged to save money and will have more freedom to spend surplus cash. (For more details, see here and here.)

The goal says Mills, who has been in place only since last May, is to send checks to researcher 120 days after they submit an application instead of the previous average of 22 months. New clinical stage projects are now being accepted every month instead of only once or twice a year.

Most of the CIRM 2.0 matters are much too granular to impress the public, which really only cares about production of useful therapies. But if Mills is successful, it will likely mean speedier development of the treatments that were promised 10 years ago ago when voters created the stem cell agency. Researchers and stem cell firms, as opposed to the general public, need to pay close attention, however, to the details, which can mean millions of dollars for them.

Another stem cell filip is coming up this spring: the agency's strategic plan, which appears ready to be revised as a CIRM 2.0 document. Mills avows his continued support for basic research, strongly favored by board members from academia and research institutions. But heavy pressure exists to bring a product to market quickly or much closer to market. Without such a demonstration, the agency will find it tough to secure additional funding after 2020, the latest estimate when its cash will run out. 

Still hanging out there are the details of what will be left of the agency’s once ambitious, seven-year-old loan program, which was a favorite of the agency’s first chairman, Robert Klein.

Only five loans were made. Only two are still active. In a memo to the board, Mills said the program was “overly complex, administratively burdensome, and, as reflected in the number of loans issued, it does not appear to be attractive to industry.”  He told the board last week that small companies balk at the loans because they do not want the debt on their balance sheets. Grants, however, carry royalty requirements that companies also dislike.

Mills said,

"If we can't make it better, maybe it shouldn't exist."

The board’s intellectual property committee was scheduled to act on a new loan policy in January but that meeting was cancelled with no public explanation. Again this month, a meeting was scheduled but postponed with no immediate explanation. The link to the proposed policy was removed from the CIRM Web site, although the document can be found here. 

 CIRM spokesman Kevin McCormack, in response to a question from the California Stem Cell Report, said,

“The meeting was postponed so we could work on the proposal some more before bringing it to the subcommittee. The document was removed from the Web site because it was actually the wrong document. It was an earlier, outdated version of the proposal and didn't reflect many of the changes that were made.”  

Last week's action directly involved only the first stage of CIRM 2.0, but Mills plans to extend the process to the entire portfolio, making adjustments as necessary. The rules are officially interim. The state’s official regulation adoption process is much lengthier and will provide more opportunity for the public to comment.

Mills has told the board that implementation of his changes will not necessarily be smooth. He also said the effort is likely to be modified as CIRM 2.0 progresses.

CIRM chart on status of CIRM 2.0 applications

Mills has now scheduled the first, closed-door review session for a CIRM 2.0 application, one of two received in January. The 90-minute telephonic meeting is set for tomorrow. The second application from January was sent back to the applicant for re-working. The agency received two CIRM 2.0 applications in February. One was sent back to the applicant. The other is expected to be reviewed and scored April 27.

More CIRM 2.0 applications are expected at the end of this month, next Tuesday.

The public can address tomorrow's meeting from CIRM's headquarters in San Francisco during the public portion of the session.  As usual, however, the name of the researcher and the target of the research are being withheld from the public.

See here, here and here for the text of key documents on CIRM 2.0 approved at last week's meeting.