Watchdog Says Trounson-StemCells, Inc., Connection Casts 'Shadow' Over California Stem Cell Agency

The San Francisco Chronicle today carried a story on the appointment of Alan Trounson, former president of the $3 billion California stem cell agency, to the board of  StemCells, Inc., which has received $19.4 million from the research program.

Trounson’s appointment came only seven days after he left state employment. Last year, members of the firm's board received as much as $99,800 in cash and company stock, as reported by the California Stem Cell Report yesterday.

Chronicle reporter Stephanie Lee today wrote that the agency's funding was "pivotal" for StemCells, Inc. On Saturday, in an overview of the stem cell agency, she quoted Martin McGlynn, CEO of the publicly traded company, as saying,

 “We would not have been able undertake another program, and certainly one as challenging and as risky as Alzheimer’s, were it not for the fact that (the agency) was willing to provide funding for us.”

Lee also quoted John Simpson of Consumer Watchdog of Santa Monica, Ca., a longtime observer of the agency, on the matter. Simpson said that Trounson’s joining of the board “calls into question not only his ethics, but unfortunately casts a shadow over CIRM and its award process as well.”

Simpson continued,

“Whether it’s true or not, this has every appearance of being a payback for the money CIRM paid out to Irv Weissman (an eminent Stanford researcher and founder of StemCells, Inc.) and Stanford University. StemCells Inc. and Stanford have received more than $300 million from CIRM — more than any other researchers.”

Simpson said that Trounson should have waited two years before joining a company that had received funds from the stem cell agency.

Lee said that StemCells, Inc., filed a document with the federal Security and Exchange Commission that said said,

 “There was no arrangement or understanding between the Company and Dr. Trounson pursuant to which he was selected as a director of the Company.”

Lee said the Newark, Ca., company declined to comment. The California Stem Cell Report yesterday asked StemCells, Inc., Weissman and Trounson for comment as well as the stem cell agency.  Their remarks will be carried verbatim when they are received.

Ron Leuty of the San Francisco Business Times also wrote a piece on the matter yesterday.

Conflict of Interest Alleged: Cedars-Sinai Scientist Appeals Rejection of $13 Million for Heart Research

The director of the Cedars-Sinai Heart Institute today asked the governing board of the California stem cell agency to approve his application for $13 million for heart research, declaring that the agency's review of the proposal was tainted by a conflict of interest.

Eduardo Marban
Cedars-Sinai photo

In a letter, Eduardo Marban contested the findings of a CIRM staff review of the conflict allegations. He said,

“The initial review was tainted by conflict of interest concerns. The re-review was conducted by staff in a peremptory manner without the usual CIRM due process: no patient advocates were involved, no comparator grants were evaluated, and no formal review reports have been provided. Only a pithy, dismissive summary by CIRM staff has appeared, and that only yesterday.”

Marban's application was the subject of an article on the California Stem Cell Report yesterday, which discussed the lack of transparency in the agency's grant review process, particularly in relationship to conflicts of interest. The application was quietly removed from CIRM board consideration in December and has been placed on the board's agenda for action tomorrow in Burlingame, Ca.

The agency withheld Marban's name, the names of reviewers and the nature of the conflict charges. Marban did not go into specifics concerning the conflict in his letter today. We have emailed him, seeking details.

Marban has previously received $7 million for research from the agency. Capricor, a company he founded, has received $20 million. The company is scheduled to be highlighted in tomorrow's CIRM governing board meeting as one of its success stories.

In his letter, Marban noted his previous research along with the latest proposal and its clinical potential, an increasingly important consideration for the CIRM board. Marban wrote,

“The commercial potential of (the earlier funded product) has been validated by a collaborative/option agreement between Capricor (the company I founded to develop regenerative therapeutics) and Janssen, an arm of the pharmaceutical giant Johnson and Johnson. This represents the first time that 'big pharma' has partnered with a regenerative medicine biotech to develop a product.”

Marban also said,

“The present proposal (DYNAMIC) is ready to go into patients immediately; it is FDA and IRB approved. In fact, we have a list of 30+ patients who are waiting to be screened for enrollment, as soon as funds are available. These patients are ill, with a mortality exceeding that of many cancers. Indeed, several eligible patients have died in the interlude between the last ICOC meeting, when this proposal might have been funded, and the present.

“DYNAMIC would be the first study in the CIRM portfolio to target hard clinical endpoints (mortality and re-hospitalization) in a very high-risk population (that of advanced heart failure). The population to be studied is very different, and much sicker, than in the ALLSTAR trial.”

CIRM Director Prieto on Disclosure of Reviewer Financial Interests

A member of the governing board of the $3 billion California stem cell agency is weighing in on an item on the California Stem Cell Report that called for public disclosure of the financial interests of the scientific reviewers, who make 98 percent of the decisions on awards by the agency.

Francisco Prieto, a Sacramento physician and a patient advocate member of the board, said in an email:

“ It seems to me there's a bit of 'damned if we do and damned if we don't' here. If the ICOC (the agency governing board) decides to listen to some of the members of the public who come to our meetings and overrule a recommendation of the Grants Working Group(GWG), we're slammed for letting emotion trump science, or bowing to special interests. If we just accept the rankings of the GWG and approve all their recommendations, we're criticized for not being truly independent.  I think we don't do it often (for good reason) but should and do retain the right to look at other factors besides those our scientific reviewers do, and make our own decisions about funding. We are ultimately responsible, not the scientific reviewers. 

“As for the issue of their disclosure of personal conflicts of interest, from what I've read of the NIH processes, ours are no less strict. The NIH requires that reviewers disclose any conflicts to their institutions which I believe must disclose them to the NIH, but I have not seen anything requiring them to disclose all their personal financial & other interests publicly, as we (ICOC members) have to.  When we were assembling our group of reviewers initially, the fear was that many of the best scientists would turn us down if we required them to make the kind of personal disclosures we have to. I don't know how many we might actually lose if that were the case, but as you know we do require them to disclose to CIRM, and they have to leave the room when any application for which they have a conflict is discussed.”

Our take: Prieto is right about the board being perched on the horns of a dilemma, which has a lot to do with Proposition 71, which created the agency, and American scientific traditions, which place an extraordinary value on the “integrity” of the review process. In this case, integrity refers to adherence to reviewers' scientific judgments.

Proposition 71 placed the legal authority for grant approvals in the hands of the CIRM board, which has overridden decisions by reviewers in only 2 percent of the cases since 2005. However, that was enough, with at least one high profile case coupled with public appeals, to cause the Institute of Medicine to raise concerns about the integrity of the CIRM grant review process. Traditionally, peer reviewers are deemed to be the most capable of making the scientific decisions about grant applications, rather than a board appointed by University of California chancellors and elected state officials.

Yet, if the board concedes the decisions to the grant reviewers, state law is likely to require public disclosure of their financial interests, a move that the board has opposed for years. Former CIRM Chairman Robert Klein repeatedly advised the board during its public grant approval processes that reviewers' actions were only ”recommendations” and that the board was actually making the decisions. However, it has long been apparent that the reviewers were making the de facto decisions. A CIRM memo in January confirmed that, producing the 98 percent figure.

The issues involving disclosure by reviewers, integrity of peer reviews, the language of Proposition 71 and state law are difficult and may, in some cases, be at odds.

However, it makes little difference what the NIH is doing. It is a much different organization and has had a history of conflict of interest problems that it has been trying to work through.

The trend in the academic and scientific research community has been towards more public disclosure rather than less because of many well-documented instances of problems. What is at stake is the public's faith in scientific research and the integrity of public institutions.

Our thanks to Prieto for his comments on this important subject.  

Reader Wants More Positive Slant From California Stem Cell Report

An anonymous reader has posted a thoughtful comment admonishing this writer to be more positive about the $3 billion California stem cell agency.

We recommend the comment to the readers of this blog. The remarks can be found by clicking on the word comment at the end of the “no improper influence” item. We will have more to say on the subject in the next few days.

StemCells, Inc., Still Looking for $40 Million from California Stem Cell Agency

Remember StemCells, Inc., and the $40 million it was awarded by the California stem cell agency.

The Newark, Ca., firm, founded by eminent Stanford researcher Irv Weissman, received an award of $20 million last July and then again in September. Nearly five months later, however, the stem cell agency has yet to cut a check for the company, a spokesman for the agency told the California Stem Cell Report in response to a query.

The hang-up is the $40 million in matching funds that the company promised the agency. The stem cell agency has yet to be satisfied that StemCells, Inc., can actually produce the match, although the spokesman did not offer details.

The StemCells, Inc., awards were unusual in a number of ways. It was the first time that former CIRM Chairman Robert Klein lobbied the CIRM governing board on behalf of a company(see here and here). It was the first time that the governing board approved an application that had been rejected twice by grant reviewers. It was the first time that the board said explicitly in a public session that it wanted proof of the matching funds as a condition of the award.

It was the first time that a CIRM award to a company received a careful and critical scrutiny from a major California newspaper. Michael Hiltzik, a Pulitzer Prize-winning business columnist and author, wrote in October in the Los Angeles Times that the award was “redolent of cronyism.” He referred particularly to longstanding ties between Klein and Weissman.

The CIRM board vote on the StemCells, Inc., grant in September was 7-5, which amounted to 12 out of 29 members of the board.

In December, a blue-ribbon panel of the Institute of Medicine (IOM) recommended that the agency tighten its conflict of interest standards to avoid such perceptions as have been generated by the StemCells, Inc., awards. The IOM said,

“(C)om­peting personal and professional interests com­promise the perceived independence of the (governing board), introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board.”

Concerns about conflicts of interest have long been of concern to observers of the stem cell agency for years. Indeed, the prestigious journal Nature in 2008 warned of "cronyism" at the $3 billion research enterprise.

Kudos to CIRM: Stem Cell Agency Sticks with Full Financial Disclosure

A key panel of directors of the $3 billion California stem cell agency yesterday voted unanimously to retain full public disclosure of the financial interests of its directors and top executives.

The director's Governance Subcommittee bypassed a proposal that would have substantially weakened disclosure at a time when the agency is moving closer to industry in an effort to develop cures.

"Because of CIRM's unique mission and the agency's longstanding commitment to transparency," said Kevin McCormack, the agency's spokesman, "they believed that CIRM should continue to set an example by requiring the broadest disclosure of members of the board and high level staff."

Currently CIRM board members and top executives must disclose all their investments and income – in a general way – along with California real property that they hold. Under the rejected changes, disclosures would have instead been required only "if the business entity or source of income is of the type to receive grants or other monies from or through the California Institute for Regenerative Medicine." 

The proposed changes would also have relieved CIRM officials of reporting investment in or income from venture capital or other firms that may be engaged in financing biotech or stem cell enterprises, since the firms do not receive cash from CIRM or engage in biomedical research.

The subcommittee's action will go before the full CIRM board later this month, where it is expected to be ratified. 

Our take? The Governance Subcommittee took the right action and is to be commended for going beyond the letter of the law. The integrity and credibility of CIRM are paramount. As the California Stem Cell Report wrote last week, narrowing disclosure would only have engendered suspicion and unnecessarily raised questions about the conduct of the agency as it embarks on an aggressive push for stem cell cures.

Stem Cell Chairmanship Flap Draws Major Media Coverage

The ruckus over selection of a new chairman for the California stem cell agency this morning drew the rare attention of the Los Angeles Times, the state's largest circulation newspaper.

And it wasn't the kind of attention that CIRM is looking for.

Reporter Jack Dolan mentioned a “possible conflict of interest” involving Alan Bernstein, a candidate backed by outgoing chairman Robert Klein, and said Bernstein could become “one of the highest paid employees in state government.” The position of CIRM chairman carries a salary with a top range of $529,000.

Dolan reported that state Treasurer Bill Lockyer, a longtime colleague and friend of another candidate for chair, Art Torres, has decided not to nominate anyone because of misgivings about Bernstein.

Dolan quoted Tom Dresslar, Lockyer's spokesman, as saying,

"He just doesn't have enough information to alleviate his concern about Mr. Bernstein's role in crafting the (recent external review) report.”

Dolan's article raised the conflict question in connection with completion of the report, which Dolan described as “glowing.” Bernstein chaired the panel, which included seven other persons. Presumably the conflict would arise if some sort of quid pro quo existed for generating a favorable report.

Dolan quoted Klein, a strong supporter of Bernstein, as saying,

"It would be quite a compliment to the agency if someone who has done such a thorough review of the agency, and has talked to everyone involved, would accept the nomination to be chair."

Dolan did not include in his story Klein's Portola Valley plan to install Bernstein as an executive chair.

The board is expected to take up the chairmanship election later this month, although it doesn't have to vote on any of the candidates. It has a variety of options: One would be to pass on all the candidates, choose an interim chairman, let the dust settle and make a final choice in a month or two.

The Los Angeles Times has rarely reported about activities of the California stem cell agency over the last six years. Dolan recently wrote an overview assessment of the agency that has attracted national attention. His article has ricocheted around the Internet as fodder for critics of hESC research and persons concerned about what they perceive to be unnecessary government spending.

Reed Ethics Case Receives Modest Coverage

The ethics warning by California regulators involving a director of the state's $3 billion stem cell agency drew light news coverage today.

The conflict-of-interest incident received the most fulsome attention in two San Diego area newspapers, the Union-Tribune (Terri Somers writing) and the North County Times(Bradley Fikes writing). That's because the case involves John Reed, head of the Burnham Institute in La Jolla, Ca.

Erika Check, writing on the blog of Nature magazine, carried the following statement from Robert Klein, chairman of CIRM.

"We are delighted that with the completion of the review by the Fair Political Practices Commission. Dr. John Reed will reengage in his role as an ICOC [board] member. As CIRM matures, we continue to review and enhance our policies and procedures to avoid potential problems in the future."

It was Klein, an attorney who drafted much of Prop. 71, who advised Reed to write a letter lobbying the CIRM staff to reverse an unfavorable decision involving a $638,000 grant to Burnham. The letter prompted the state ethics investigation.

The Associated Press also wrote a brief story that appeared on various websites, including those of the San Francisco Chronicle, The Sacramento Bee and the San Jose Mercury News.

None of the stories carried a response from Reed, who Somers reported is traveling.

(An earlier version of this item did not contain the information from the Nature blog.)

CIRM Response on Audit

Earlier this afternoon we asked Don Gibbons, chief communications officer for CIRM, if the agency had any comment on the state controller's audit(see item below). Here is his response.

"We are thrilled that the auditor found that our policies and procedures are working. The one minor issue related to specialists who call in to assist in grant review and signed conflict forms prior to the call, but not afterward, and that fix was put in place already at the April 9-11 grant review session."