'Born in Hype:' The California Experiment and Stem Cell Research

A California newspaper with a daily readership of 1.5 million this week thrashed the field of stem cell science, declaring that it “is slathered with so much money that immoderate predictions of success are common.”

“Infected with hype” is the way the headline put it on the March 31 piece in the Los Angeles Times. The paper has the largest circulation in the state and is an agenda-setter for much of the state’s mainstream media.

The comments came in an article by Pulitzer Prize-winning columnist and author Michael Hiltzik, who holds the California stem cell agency in low regard.

Kalina Kamenova
 U. of Alberta photo

Timothy Caulfield
U. of Alberta photo

His starting point was a study in Science Translational Medicine by Timothy Caulfield and Kalina Kamenova of the University of Alberta law school.  Their content analysis research focused primarily on newspaper coverage of timelines for stem cell therapies before and after Geron bailed out of the first clinical trial for a human embryonic therapy in the United States. They did not have warm words for scientists as public communicators.

Neither did Hiltzik, but he also faulted the media. He wrote, 

“The authors mostly blame the scientists, who need to be more aware of ‘the importance of conveying realistic ... timelines to the popular press.’ We wouldn't give journalists this much of a pass; writers on scientific topics should understand that the development of drugs and therapies can take years and involve myriad dry holes and dead ends. They should be vigilant against gaudy promises.”

Hiltzik then took on the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is known.  He wrote about the cash that was "slathered" about. He said,

“The best illustration of that comes from California's stem cell program -- CIRM, or the California Institute for Regenerative Medicine -- a $6-billion public investment (including interest) that was born in hype. 

“The promoters of Proposition 71, the 2004 ballot initiative that created CIRM, filled the airwaves with ads implying that the only thing standing between Michael J. Fox being cured of Parkinson's or Christopher Reeve walking again was Prop. 71's money. They commissioned a study asserting that California might reap a windfall in taxes, royalties and healthcare savings up to seven times the size of its $6-billion investment. One wouldn't build a storage shed on foundations this soft, much less a $6-billion mansion.”

 He wrote about how CIRM played a dubious role in funding the Geron clinical trial only a couple of months before the company pulled the plug for financial reasons, something that the California Stem Cell Report has dealt with as well.  The $26 million loan to Geron involved a major departure from the agency’s normal procedures.  Abandonment of the trial also raised ethical questions that should be of continuing concern to the agency and its ethical advisors who are meeting today and tomorrow in Los Angeles.  

Caulfield’s views on stem cell hype are well-known in the small stem cell research community. But rarely does his sort of perspective, which is shared by others in the field, reach a mass audience such as the 1.5 million readers of the Los Angeles Times.

All of which poses a challenge for the California stem cell agency whose finite amount of cash is now expected to run out in 2020. As Hiltzik noted, the overblown expectations led voters to believe that miraculous cures were just around the corner.

Today, more than a decade after creation of the agency, the promised cures have not materialized and none are likely for some years. The agency has undoubtedly made a major contribution to stem cell science. But the unfulfilled promises of the campaign hype gave its foes the kind of tools they need to battle any efforts to provide more state funding for the agency.  How CIRM deals with that scientific and PR challenge will be one of the major tests for it over the next several years.

California's Stem Cell Trial for Spinal Cord Injury Moves Forward

A California firm, backed by $14.3 million in state cash, today announced that it has received a federal go-ahead to advance its clinical trial involving a human embryonic (hESC) therapy for cervical spinal cord injury.

Asterias Biotherapeutics, Inc., of Menlo Park, said in a press release that it is currently selecting clinical trial sites and expects to enroll patients beginning early next year. The trial is the continuation of an effort that Geron abandoned in 2011 for financial reasons.

Pedro Lichtinger, president and CEO of Asterias, said,

  “We are especially enthusiastic about working with our new partner, (the California Institute for Regenerative Medicine or CIRM), in executing this clinical trial. The FDA clearance provides Asterias with imminent access to the previously announced $14.3 million CIRM grant, which provides non-dilutive funding to support both the clinical trial and other product development activities for AST-OPC1.”

The phase 1/2a trial will involve doses of up to 10 times higher than what was used earlier. Up to 13 patients will be treated within 14 to 30 days after their injury occurred. The hope is that it will be easier to detect the efficacy of the treatment with such dosages.

As for the early stage trial involving five patients, the company said,

“These five patients were administered a low dose of two million AST-OPC1 cells and have been followed to date for 2 to 3 years. No serious adverse events were observed associated with the delivery of the cells, the cells themselves, or the short-course immunosuppression regimen used.  There was no evidence of expanding masses, expanding cysts, infections, cerebrospinal fluid leaks, increased inflammation, neural tissue deterioration or immune responses targeting AST-OPC1 in these patients.  In four of the five subjects, serial MRI scans performed throughout the 2 to 3 year follow-up period indicate that reduced spinal cord cavitation may have occurred and that AST-OPC1 may have had some positive effects in reducing spinal cord tissue deterioration.”

Asterias was awarded the cash by the California stem cell agency in May. (See here and here.)

Randy Mills, president of the stem cell agency, said today,

“This is exactly the type of treatment, focusing on an unmet medical need, that CIRM was created to address.”

Katie Sharify, one of the patients involved in the trial when it was started by Geron, said in the CIRM press release,

“A lot remains unknown about human embryonic stem cells and that's exactly why this research is so important. The scientific community is going to have a much greater understanding of these stem cells from the data that will be collected throughout the study and I'm glad to have been a part of this advancement."

Sparse News Coverage This Morning of California Stem Cell Agency Action

LA JOLLA, Ca. -- Media coverage of the resurrection of the Geron's landmark human embryonic stem cell trial was light today in the wake of a $14.3 million award by the California stem cell agency to support its continuation.

The San Diego U-T and the San Francisco Business Times both carried stories but none others appeared this morning in a Google search.

Bradley Fikes of the San Diego newspaper attended yesterday's CIRM board meeting here. He wrote,

"A potentially groundbreaking trial to treat spinal cord injuries with tissue grown from human embryonic stem cells will resume, after being funded by the California's stem cell agency."

Both he and Ron Leuty of the San Francisco Business Times also noted the award to Sangamo BioSciences of Richmond, Ca. Leuty wrote,

"Sangamo BioSciences Inc. (NASDAQ: SGMO) of Richmond will split a $5.6 million California Institute for Regenerative Medicine award with Dr. John Zaia of the Beckman Research Institute at the City of Hope near Los Angeles to take blood stem cells from HIV patients and cut and replace a gene that is key to the spread of the AIDS virus."

Asteris issued a press release this morning that said,

“We are preparing to initiate the dose escalation Phase 1/2a clinical trial of AST-OPC1 in patients with cervical injuries in 6-9 months subject to FDA clearance,” stated Edward Wirth III M.D., Ph.D., Asterias’ Chief Translational Officer. “Achievements in this CIRM-supported program could also help accelerate further development of AST-OPC1 in other neurodegenerative diseases such as stroke and multiple sclerosis. We are currently evaluating the function of AST-OPC1 in nonclinical models of these diseases.”

“This award provides significant non-dilutive funding to accelerate the development of AST-OPC1 for patients with spinal cord injury. Given the lack of any approved therapies for spinal cord injury and the high level of disability, substantial costs of care, and shorter life expectancy of injured individuals, AST-OPC1 has the potential to address a substantial unmet medical need in this condition,” stated Katharine Spink, Ph.D., Asterias’ Chief Operating Officer."

BioTime's stock price was up 22 cents this morning at the time of this writing to $2.95. It has risen from $2.42 on May 22 when the California Stem Cell Report first carriednews of the California stem cell agency award.

Sangamo has not yet issued a press release, but its stock price was at $13.68 this morning, up 16 cents.

California Stem Cell Agency Approves $14 Million for Landmark hESC Clinical Trial

Above is a CIRM video involving one of the participants in the original Geron trial.

LA JOLLA, Ca.  – The state of California today pumped $14.3 million into an historic clinical trial for a stem cell therapy that was once abandoned because it was deemed too risky financially by the firm that devised the treatment.

The action came when the governing board of the California Institute for Regenerative Medicine (CIRM) approved the award to Asterias Therapeutics of Menlo Park, Ca., a subsidiary of BioTime, Inc., of Alameda, Ca. The firms purchased the spinal cord injury treatment along with the human embryonic stem cell assets of Geron Corp., also of Menlo Park, in 2013.

The scientists who reviewed the Asterias application said the therapy could have a “highly significant impact” on the spinal cord injury, which afflicts more than 200,000 people nationwide. According to a CIRM review summary, the reviewers said a successful result from the trial would be a “high visibility achievement for the entire field of stem cell-based/regenerative medicine.”

The Geron clinical trial was the first ever in the United States for a therapy based on human embryonic stem cells, an area of research roiled by controversy. Some persons believe that deriving such cells is tantamount to killing a human being.

Geron submitted nearly 28,000 pages of material to the FDA in its years-long bid to start the trial, which began in 2010. However, in November 2011, the company stunned the stem cell world by giving up on the trial, citing business reasons.

The action also shocked the stem cell agency, which less than four months earlier had signed an agreement loaning the company $25 million. The agency's governing board gave the go-ahead on the loan during a process that involved major departures from its normal procedures. Geron repaid the loan with interest.

Approval of the funds for Asterias was not unexpected. The California Stem Cell Report carried an item on the matter May 22.

Today, Jonathan Thomas, chairman of the CIRM board, said in a statement,

“This new investment means we have a chance to build on the lessons we learned first time around. If this therapy can achieve even very modest improvements for patients, it could have an enormous impact on the quality of their life, and the lives of their families."

CIRM's scientific grant reviewers, all of whom are from out-of-state, gave the Asteria application a score of 76 out of 100 during their closed-door review of the proposal. Asterias, which currently has 17 employees including some from Geron, said in its application,

“Initial clinical safety testing was conducted in five subjects with neurologically complete thoracic injuries. No safety concerns have been observed after following these five subjects for more than two years. The current project proposes to extend testing to subjects with neurologically complete cervical injuries, the intended population for further clinical development, and the population considered most likely to benefit from the therapy.

“Initial safety testing will be performed in three subjects at a low dose level, with subsequent groups of five subjects at higher doses bracketing the range believed most likely to result in functional improvements. Subjects will be monitored both for evidence of safety issues and for signs of neurological improvement using a variety of neurological, imaging and laboratory assessments.”

Asterias' application continued,

“By completion of the (Phase 1/2a) project, we expect to have accumulated sufficient safety and dosing data to support initiation of an expanded efficacy study of a single selected dose in the intended clinical target population.”

The complete application is not available. CIRM released only selected excerpts on its Web site. See here for the text of the CIRM review summary.

While reviewers praised the bulk of the proposal they also raised concerns. They “questioned the strength of the preclinical efficacy data.” They “expressed concern regarding the manufacturing plan and strategy to support future development, which they viewed as risky.” They also said the budget “may be high.”

BioTime, which is headed by the founder of Geron, Michael West, is a publicly traded firm. Its stock price closed at $2.73 yesterday. Its 52-week price range runs from $2.21 to $4.82.

Here is a link to the CIRM press release on the grant. 

Asterias-Geron hESC Trial and Funding Reported in The Scientist

The Scientist magazine today picked up on the item on the California Stem Cell Report that said that Asterias Therapeutics would receive $14.3 million to continue the human embryonic stem cell trial that was abandoned by Geron.

The Scientist article by Jef Akst was headlined, “Geron hESC Trial to Resume? Nearly three years after Geron shuttered its stem cell program, BioTime receives funding to relaunch a Phase 1 trial for spinal cord injury.”

The brief piece largely cited information contained in our May 22 item. Akst also said that Asterias, a subsidiary of Biotime, and the California stem cell agency, which is expected to provide the cash, declined to comment.

Asterias also has reported successful results from the first phase of the trial. 

$37 Million Slated for California Stem Cell Research

Directors of the California stem cell agency this week are expected to hand out $37 million to businesses and scientists for projects involving human embryonic stem cells(hESC), spinal injury and urinary incontinence.

About $20 million will go to enterprises involved in later stage research. A $14.3 million award is expected to go to Asterias Therapeutics of Menlo Park, Ca., which has purchased the stem cell program that originated with Geron Corp. Asterias plans to move forward with the hESC clinical trial that Geron began amid much ballyhoo. However, Geron abandoned the effort in 2011 for financial reasons. (See here and here.)

A $5.6 million award is expected to go a previous but unidentified grant recipient for work involving HIV/AIDS. (Late today, an anonymous reader said in a comment at the end of this item that the award is for Sangamo Biosciences in Richmond, Ca.)

At their meeting Thursday in San Diego, directors of the agency are also expected to approve $16.2 million to help recruit three out-of-state scientists. The academic recruitment program was created to help California lure star scientists to the Golden State. The awards range from $6.4 million to $4.6 million. Two additional applicants were classified as by reviewers as additional possibilities for funding depending on the druthers of the board. The names of the applicants are being withheld by the agency

The recruitment program was originally budgeted some years ago for $44 million. Twenty-three million dollars was added in 2013. Prior to this week, the awards helped to finance the recruitment of seven scientists.

Information about the $900,000 urinary incontinence award can be found here. 

Major Step Forward on hESC Stem Cell Treatment for Spinal Cord Injury

The “first-in-man” clinical trial of a human embryonic stem cell therapy has cleared its first safety hurdle, Asterias Biotherapeutics, Inc., reported yesterday.

The Menlo Park, Ca., firm said the spinal cord injury treatment caused “no serious adverse” events in its phase one safety trial. The therapy was originally developed by Geron Corp., which abandoned the trial in 2011 and sold its stem cell business to Asterias, which is a subsidiary of Biotime, Inc., of Alameda, Ca.

Asterias also said in a press release, 

“In four of the five subjects, serial MRI scans performed throughout the 2-3 year follow-up period indicate that reduced spinal cord cavitation may have occurred and that AST-OPC1 may have had some positive effects in reducing spinal cord tissue deterioration. This effect was seen in the animal model testing of AST-OPC1.”

Jane Lebkowski
Asterias photo

Jane Lebkowski, president of research and development at Asterias, said,

“The safety demonstrated in this trial positions Asterias to start a new phase 1/2a clinical trial in 2014, subject to clearance from the FDA .”

The California stem cell agency appears ready to award $14.3 million to Asterias to assist in that new clinical trial, as reported yesterday by the California Stem Cell Report. The agency also had loaned Geron $25 million for its clinical trial. The money has since been repaid.

(Asked to clarify the genealogy of the Asterias clinical trial, Katy Spink, vice president of Asterias, said in an email,
"AST-OPC1 is the former GRNOPC1.  The results presented by Jane Lebkowski at ASGCT and referred to in (the) press release are from the clinical trial that was started by Geron in 2010.  Slides from that presentation are on our website.  We are unfortunately not at liberty to comment on the question of potential CIRM funding, or on details of our future development plans beyond what is described on our website and in our SEC filings.")

Stephen McKenna, director of the Rehabilitation Trauma Center at the Santa Clara Valley Medical Center, said,

“Spinal cord injury represents a tremendous unmet medical need that not only results in severe disability, but can also significantly shorten the projected lifespan of affected individuals. There are no approved therapies that can repair spinal cord injuries.”

Asterias said 12,000 persons suffer a spinal cord injury each year in the United States and about 1.3 million Americans are estimated to be living with a spinal cord injury.

(An earlier version of this item incorrectly said that Asterias announced the results in a press release today. The press release was dated yesterday. An earlier version also carried an incorrect first name for Jane Lebkowski. The material about the genealogy of the treatment was added shortly after the original version of this item was posted.)

California Stem Cell Agency Expected to Pump $14 Million into Revival of hESC Clinical Trial Dropped by Geron

Geron's abandoned clinical trial for a spinal cord therapy based on human embryonic stem cells appears to be back on again but at a different company and with $14.3 million in help from the California stem cell agency.

An eagle-eyed anonymous reader of the California Stem Cell Report pointed out the upcoming award to Asterias Biotherapeutics/Biotime, which purchased the stem cell operations of Geron Corp. Geron ditched the trial in November 2011 for what it said were financial reasons.

Here is what the reader said in a comment posted on the “Trounson" item that appeared recently on this blog.

“The Strategic Partnership III Award reviews are in: Asterias Biotherapeutics / BioTime will get $14 million to restart spinal cord injury trial with GRNOPC1.”

The reference is to an item on the agenda for the May 29 meeting of the governing board of the $3 billion agency.

The exact title of the application is “A Phase I/IIa Dose Escalation Safety Study of [REDACTED] in Patients with Cervical Sensorimotor Complete Spinal Cord Injury.”

The information provided by the anonymous reader goes beyond what is currently available on the CIRM Web site, and he or she seems to have special knowledge of the nature of the application. That includes the names of the applicants, normally kept secret by CIRM, and the nature of the material involved in the proposal, GRNOPC1.

The staff recommendation is virtually certain to be approved by the CIRM governing board, which rarely rejects such positions.

Another $9.8 million proposal for a spinal cord therapy project was rejected by the staff. The applicants, however, may make an appeal directly to the board on May 29.

CIRM was also involved with the original Geron proposal, which was the first clinical trial for a therapy based on human embryonic stem cells. The stem cell agency loaned the company $25 million only three months before Geron bailed out on the project. It was an unpleasant surprise for the agency and shock to many patients. Geron paid back the loan with interest.

Asterias was headed by Tom Okarma, once the CEO of Geron, and BioTime is headed by Michael West, who founded Geron many years ago.

Our thanks to the anonymous reader for pointing out the information on the award.

(The day following publication of this item, Asterias reported clearing the first safety hurdle on the trial.)

(Okarma left Asterias in April. An earlier version of this item said Okarma was still head of the company.)

Groundbreaking Ahead? Geron's Stem Cell Program Officially Goes to Biotime/Asteria

Geron's once-heralded stem cell therapy program -- financed at one point with $25 million from the California stem cell agency – has officially landed in the hands of an Alameda, Ca., enterprise involving two former CEOs of Geron.

Completion of the transaction was announced Tuesday by BioTime, which acquired the Geron assets. The move “could jump start groundbreaking but not yet clinically successful stem cell programs,” according to an article by Ron Leuty of the San Francisco Business Times. Leuty also outlined the complicated financial terms.

Geron, based in Menlo Park, Ca., was the first in the nation to launch a clinical trial for a human embryonic stem cell therapy. In 2011, in a major departure from its usual procedures, the stem cell agency loaned Geron $25 million to help with the trial. About three months after the loan agreement was signed on Aug 1, 2011, Geron announced it was abandoning the trial for financial reasons. Four patients had been enrolled in the trial.

Geron repaid the loan with $36,732.33 in interest, laid off 38 percent of its staff (66 persons connected to the stem cell program) and began an effort to sell off the stem cell effort.

About a year later, BioTime, which is headed by Michael West, who founded Geron, began expressing an interest. Tom Okarma, another Geron CEO, hooked up with West on the effort and is now head of Asteria Biotherapeutics, a BioTime subsidiary that is taking control of the old Geron stem cell program.

Geron let Okarma go in February 2011. He was head of the company as it plowed through the arduous FDA process to begin the clinical trial of the stem cell treatment for spinal injuries.

The stem cell agency has said that the loan to Geron is not transferable automatically to BioTime. The firm will have to compete for funding under the agency's established rules.

Both Geron and BioTime are publicly traded. In the last 12 months, Geron stock has traded at a range from 91 cents to $3.95, closing at $3.40 yesterday. BioTime has traded in a range from $2.67 to $5.02, closing at $3.88 yesterday.

As part of the deal with Geron, the stem cell agency received 537,893 warrants to buy Geron stock at $3.98 each. The warrants expire in 2021.

Here are other news articles on completion of the transaction, which was announced earlier this year: by Jef Akst at The Scientist, by Damian Garde at Fierce Biotech.

BioTime Buys Geron's Stem Cell Assets, Including hESC Clinical Trial

Geron Corp., which pioneered the first clinical trial of an hESC therapy, today sold its stem cell business to another San Francisco Bay Area firm whose two top executives were once CEOs at Geron.

Michael West
BioTime photo

The total value of the complex deal was not clear from the public statements released by Geron and the acquiring firm, BioTime, Inc., of Alameda, but an unidentified outside investor is adding $10 million to transaction.

In a telephone interview this evening, Michael West, CEO of BioTime, said that as a result of the deal his firm will hold 600 patents and patent applications involving stem cells. He said the aggregation should help in attracting financial interest in the firm and its efforts.

West founded Geron in 1990. BioTime Acquistion Corp., the BioTime subsidiary that is picking up the Geron assets, is headed by Tom Okarma, who was Geron's CEO from 1999 to 2011.

After Okarma left the firm in 2011, Geron abruptly jettisoned its stem cell business along with the clinical trial. Geron has been looking since then for a buyer for the assets.

Tom Okarma
Geron photo

Only a few months prior to the Geron decision in 2011, the California stem cell agency had signed a $25 million loan agreement with Geron to support the clinical trial. The company paid back with interest the amount of the loan that it had received.

Information from the two companies did not specify whether BioTime will begin seeking additional participants in the clinical trial. Nor did BioTime indicate whether it would seek additional funding from the state stem cell agency.

However, West said during the telephone interview that he has an “open mind” about working with CIRM. Last year, agency officials indicated an interest in continuing to support the clinical trial. West said BioTime had already hired some employees that were laid off by Geron, including its patent attorney. He said that he hoped to reassemble at least part of Geron's now scattered stem cell team.

According to the Geron press release, when the deal is officially concluded in September, “it is anticipated that Geron stockholders would own approximately 21% of BAC, BioTime would own approximately 72%, and a private investor would own approximately 7% after an additional $5 million investment in BAC.”

For its new operations, BioTime has leased space in Menlo Park that Geron once used for its stem cell business.

Both firms are publicy traded. BioTime's stock price closed at $3.45 today and had a 52-week high of $6.35 and a low of $2.67. Geron closed at $1.60 and had a 52-week high of $2.99 and a low of 91 cents.

Here is a link to an article in the San Francisco Business Times about the deal. Here are links to the BioTime press release, a BioTime FAQ and the Geron press release.

Geron Weighs Biotime Bid for hESC Biz

Geron, Inc., of Menlo Park, Ca., said today it is assessing an offer by two of its former executives to buy the human embryonic stem cell program that it abandoned nearly a year ago.

Geron startled the stem cell world, including the $3 billion California stem cell agency, when it jettisoned the first clinical trial of an hESC therapy for financial reasons. The agency had loaned the company $25 million just a few months earlier. Geron repaid the loan with interest.

Geron has been mum until today about the Oct. 18 offer by Biotime, Inc., of Alameda, Ca., which is headed by Michael West, who founded Geron in 1990. Tom Okarma, president of Geron from 1999 to 2011, is involved with West on the deal and is now working at Biotime.

Geron's remarks came during a conference call on its third quarter earnings. A spokesman said the company is working with Biotime to “assess the feasibility” of the proposal. He said the proposed transaction is complex and the company is seeking “additional important details.”

The spokesman declined to offer any additional comments on the Biotime proposal when questioned following his initial statement.  

See here and here for earlier stories on the California Stem Cell Report on the Biotime offer. 

Biotime-Geron Deal Attracts Interest from Brit Investor

A British investment trust that has invested in Geron says it is going to take an advantage of an offer by an Alameda firm that is seeking to acquire Geron's human embryonic stem cell assets.

Jonathan C. Woolf, managing director of British & American Investment Trust PLC, said last week in a letter to its shareholders that it is disappointed in Geron's performance and the abandonment of its hESC program last November. The sudden halt to the program and its historic clinical trial also surprised the California stem cell agency, which had loaned Geron $25 million just a few months earlier. The agency has expressed an interest in continuing the trial.

Woolf said,

“We have been highly critical of Geron management's decisions and strategy over the past 20 months, in particular the decision in November 2011 to abruptly exit Geron's regenerative medicine (stem cell) business in which it was the acknowledged world leader. Since that time, Geron management has attempted to sell or partner this business but to date has been unable to announce any progress on this.”

Woolf's trust is not listed as a major Geron shareholder by Morningstar, but Woolf said 17 percent of his firm's investments are in the Menlo Park, Ca., company. The specific size of the trust's holdings in Geron was not immediately known.

Woolf pointed to the offer by Biotime, Inc., of Alameda, Ca., as a way for Geron shareholders to benefit. On Oct. 18, Biotime proposed a complicated deal in which it would acquire Geron's hESC program. Biotime's president, Michael West, founded Geron in 1990. The head of the Biotime subsidiary that would acquire the Geron assets is Tom Okarma, who was CEO of Geron from 1999 to 2011. (Here are links to brief stories on the offer: Fiercebiotech, New Scientist.)

In his letter, Woolf noted Geron's declining stock performance. He said he is “seriously concerned” that Geron has failed to find a buyer for the assets. Woolf said,

“These now dormant and untended assets are inevitably losing value as competitors make progress in Geron's absence from the field and patent protection periods decline.”

Woolf continued,

“We believe BioTime's proposals would make Geron's stem cell assets in combination with those of BioTime once again the world's leading stem cell business with sufficient resources to recommence the discontinued programmes and develop the business further into the medium term.”

Woolf urged Geron directors and other Geron shareholders to work with Biotime to complete the deal. Geron has not commented on the offer.

BioTime Makes Bid for Geron's Stem Cell Assets

Biotime, Inc., and two men who were leading players in history of Geron Corp. today made a surprise, public bid for the stem cell assets of their former firm.

Michael West
West photo

Tom Okarma
AP file photo

The men are Michael West and Thomas Okarma. West founded Geron in 1990 and was its first CEO. West is now CEO of Biotime. Okarma was CEO of Geron from 1999 to 2011. Okarma joined Biotime on Sept. 28 to lead its acquistion efforts. Both Geron, based in Menlo Park, Ca., and Biotime, based in Alameda, Ca., are publicly traded.

West and Okarma sent an open letter this morning to Geron shareholders and issued a press release making a pitch for the Geron's stem cell assets. Geron jettisoned its hESC program nearly a year ago and closed its clinical trial program for spinal injuries. The move shocked the California stem cell agency, which just a few months earlier had signed an agreement to loan the firm $25 million to help fund the clinical trial. The portion of the loan that was distributed was repaid with interest.

At the time, Geron said it would try to sell off the hESC program, but no buyers have surfaced publicly. Personnel in the program have been laid off or found employment elsewhere.

The West-Okarma letter to shareholders said that under the deal,

“Geron would transfer its stem cell assets to BAC(a new subsidiary of Biotime headed by Okarma), in exchange for which you along with the other Geron shareholders would receive shares of BAC common stock representing approximately 21.4% of the outstanding BAC capital stock. BioTime would contribute to BAC the following assets in exchange for the balance of outstanding BAC capital stock:

• “$40 million in BioTime common shares;
• “Warrants to purchase BioTime common shares (“BioTime Warrants”);
• “Rights to certain stem cell assets of BioTime, and shares of two BioTime subsidiaries engaged in the development of therapeutic products from stem cells.”

The letter asked Geron shareholders to write the firm's board of directors to urge them to approve the offer.

Geron had no immediate response to the proposal. Asked for comment, Kevin McCormack, spokesman for the California stem cell agency, said the deal “had nothing to do with us.” However, in the past, CIRM has indicated that it could find a way to transfer the loan to an entity that would continue spinal injury clinical trial. CIRM President Alan Trounson was also involved at one point in trying to assist in a deal.

Geron's shares rose 12 cents to $1.54 today while Biotime's shares lost four cents to $3.95.

Here are links to the two news stories that have appeared so far on the proposed deal: Associated Press, Marketwatch.

California Stem Cell Agency Shy This Week on Openness

In the past year, since J.T. Thomas has served as chairman of the California stem cell agency, the $3 billion enterprise has done well in providing the public with important information about matters that come before its governing board – a welcome change from the grievously deficient past performance.

However, that new, high standard for openness and transparency is coming up short this month.

With less than three days remaining before Thursday's meeting of the governing board, important information remains missing on significant matters scheduled to be discussed later this week in Burlingame.

At the top of the list is the response by CIRM President Alan Trounson to the first-ever performance audit of the nearly eight-year-old agency. The $234,944 study said the agency is laboring under a host of problems, ranging from protection of its intellectual property and management of its nearly 500 grants to an inadequate ability to track its own performance. Trounson's response could have come much earlier than this week, even last May when the results were unveiled publicly, although the agency had been briefed privately on them still earlier.

Also missing from the agenda is an important update on what Thomas has called a “communications war” – shorthand for the efforts by CIRM to generate more and favorable news coverage of the agency along with solidifying support among its constituent groups. The agency's weak PR effort, which is now improving, has troubled many directors for some time. The CIRM story is critical to the agency's financial future as it looks to private funding to continue its life beyond 2017 when its money runs out.

Also not be found is an explanation of an item before the directors' Science Subcommittee on Wednesday evening that appears to have interesting implications, given CIRM efforts to embrace the biotech industry more warmly. The proposal calls for  establishing “responsible budgeting as a criterion for evaluating applications for funding.” No further information is available. But one wonders whether the proposal could reflect CIRM's unfortunate experience with Geron, which signed a $25 million loan agreement with CIRM last summer only to dump its hESC program a little more than three months later. Geron cited financial reasons. One also wonders whether the need to focus on “responsible budgeting” reflects problems with some researchers or whether it is intended to help businesses pick up a larger share of awards.

Posting details on issues to be decided by directors -- in a timely fashion -- should be a routine matter for the agency. It is also key to engaging the public, industry and researchers – not to mention that it is good policy, good management and good government. Without adequate notice, it is impossible for interested parties to comment on proposals or make well-considered suggestions. Given the agency's improved performance during the past year, this month's slippage may only be an aberration. We hope so.

Parsing Geron's Stem Cell Foray: A Nature Journal Commentary

Why did Geron "fail" in its much ballyhooed pursuit of the first-ever human embryonic stem cell therapy?

Christopher Scott, senior research scholar at Stanford, and Brady Huggett, business editor of the journal Nature, took a crack at answering that question in a commentary in the June edition of Nature.

Following the sudden abandonment last fall by Geron of its hESC business and the first-ever clinical trial of an hESC therapy, Scott and Huggett scrutinized the history of the company. The financial numbers were impressive. They wrote,

"How did Geron’s R&D program meet such a demise? After all, the company raised more than $583 million through 23 financings, including two venture rounds, and plowed more than half a billion dollars into R&D (about half of that into hESC work) through 2010. 

"There are problems with being at the forefront of unknown territory. Of Geron’s development efforts, the hESC trial was the most prominent, and fraught. Therapies based on hESCs were new territory for the US Food and Drug Administration (FDA), and it eyed Geron warily. The investigational new drug application (IND), filed in 2008, was twice put on clinical hold while more animal data were collected among fears that nonmalignant tumors would result from stray hESCs that escaped the purification process. Geron says it spent $45 million on the application, and at 22,000 pages, it was reportedly the largest the agency had ever received."

The California stem cell agency also bet $25 million on the company just a few months before it pulled the plug. Geron repaid all the CIRM money that it had used up to that point.

Geron suffered from a lack of revenue despite its vaunted stem cell patent portfolio. Scott and Huggett reported that Geron received only $69 million from 1992 to 2010 from collaborations, license and royalties. At the same time losses were huge – $111 million in 2010.

The Nature article noted all of that was occurring while other biotech companies – such as Isis and Alnylam – found ample financial support, revenue and success.

Scott's and Huggett's directed their final comment to Advanced Cell Technology, now the only company in the United States with a clinical trial involving a human embryonic stem cell therapy.

"Your technology may be revolutionary, your team may be dedicated and you may believe. But it does not matter if no one else will stand at your side."

Our take: The California stem cell agency obviously has learned something from its dealings with Geron. The company's hESC announcement was an unpleasant surprise, to put it mildly, coming only about three months after CIRM signed the Geron loan agreement. Today, however, the agency has embarked on more, equally risky ventures with other biotech enterprises. Indeed, CIRM is forging into areas that conventional investment shuns. It is all part of mission approved by California voters in 2004.

The dream of cures from human embryonic stem cells or even adult stem cells is alluring. And CIRM is feeling much justifiable pressure to engage industry more closely. All the more reason for CIRM's executives and directors to maintain a steely determination to terminate research programs that are spinning their wheels and instead pursue efforts that are making significant progress in commercializing research and attracting other investors.  

Biotech Biz Alert: California Stem Cell Agency Altering Loan Policies

The California stem cell agency is in the midst of making significant changes in its lending regulations, but says it is not part of an effort to transfer a $25 million loan to Geron to another company.

That does not mean, however, that the agency is not going to transfer the loan at some point. CIRM says it already has the authority to do so.

Talk has surfaced from time to time at CIRM meetings about the likelihood of helping to continue with the hESC clinical trial that Geron abruptly abandoned last fall. The surprise termination of Geron's hESC program came only a few months after CIRM and Geron signed a $25 million loan agreement in August. Geron is trying to sell off its hESC business, although Geron's hESC team has already left the company, according to industry reports.

Modification of the CIRM loan regulations has been underway for some time. Tomorrow the CIRM directors' Intellectual Property and Industry Subcommittee will consider the latest proposals.

Some of the changes deal with relinquishment and transfer of loans. The modifications explicitly give CIRM President Alan Trounson the ability to transfer a loan without having to go through additional reviews or seek board approval. Other changes are also designed to clarify and remove ambiguities in the transfer arrangement, which may well be necessary in order to make a transfer acceptable to a buyer of the Geron assets.

Geron paid off the loan last fall but it is not clear whether that action would preclude a transfer. At one point earlier this year, Trounson said he was involved in helping to find a buyer, but it is not clear whether any CIRM official is currently involved. Geron has hired  Stifel Nicolaus & Co. to help peddle the hESC business.

CIRM's loan changes are complex. The agency has not yet put together in one place a straightforward rationale and explanation of all the modifications. Nonetheless, biotech and stem cell firms should pay close attention to the proposals. They could mean the difference between the infusion or loss of millions for a company's research.

The proposals are expected to go before the full CIRM board later this month. Then they will be subject to the state's administrative law process, including a period for public comment.

Tomorrow's meeting has public teleconference locations in San Francisco, Los Angeles, La Jolla and two in Irvine. Specific addresses can be found on the agenda.

A $25 Million 'Cautionary Tale': CIRM and Geron

California's $25 million venture into the financing of what once was the first hESC clinical trial in the nation serves as a "cautionary tale" for states that use taxpayer dollars to boost technology, according to a New York public policy expert.

The comments by James W. Fossett, who directs the Rockefeller Institute of Government health, Medicaid studies and bioethics research programs, come midway through an Institute of Medicine examination of the performance of the $3 billion California stem cell agency. Its directors are also currently involved in a revision of of the agency's strategic plan.

Writing on the Rockefeller Institute's web site, Fossett analyzed the fallout from Geron's decision last fall to abandon its clinical trial after it determined the effort was too costly. Just three months earlier, the California stem cell agency had signed a $25 million loan agreement with Geron.

Fossett said,

"For the many states using taxpayer dollars to stimulate jobs in a wide range of technologies, this is a cautionary tale."

He wrote,

"(Geron's) decision has attracted widespread opprobrium from bloggers, stem cell advocacy groups, bioethicists and more than a few newspaper columnists — one blogger called it the 'stem cell misstep of the year.'

"This disapproval has also spilled over onto the California Institute for Regenerative Medicine (CIRM) — the state agency that operates the $3 billion California stem cell research program."

He continued,

"CIRM is coming under considerable political pressure to produce viable therapies to justify the large amount of money it’s been spending, and some have interpreted its hasty involvement with Geron as motivated by the desire to have something concrete to brag about."

Fossett said, however,

"There may be less here, however, than all the rhetoric would suggest. While Geron’s trial had acquired a lot of symbolic baggage because of its status as a 'first,' the decision to pull the plug only reflects one decision by one company about one therapy. The company was looking at having to spend a lot more money over a long period to get the therapy through the clinical trials process for what would likely be a small return.

"The political difficulties that Geron’s withdrawal have caused CIRM, however, have lessons for states proposing to spend significant amounts on biotechnology and other research in hopes of stimulating economic growth. Spending money on research intended to develop new therapies is highly risky. The science is difficult, expensive and evolves at a rapid pace that is difficult to integrate with earlier understandings. There are considerable cultural, political and financial obstacles to getting new products out of the lab and into the clinic."

Fossett suggested several approaches that might ease some of the risks. He cited the 2010 CIRM external review report that recommended adjusting priorities. Fossett said,

"States might experiment with providing more support to biotech companies and entrepreneurs with successful track records and less to basic research, which could increase the odds of short-term success."

At last month's CIRM board meeting, directors engaged in what CIRM is inclined to call a robust discussion of priorities for basic research vs. more focused funding for driving therapies into the clinic.

Fossett cited another external review recommendation that CIRM seek out research with a "high probability of clinical success that could 'come from either inside or outside CIRM-funded research, perhaps out of industry and even from outside of California.'" 

Fossett additionally mentioned the use of venture capital techniques that would give states "a chance to participate in the (financial) benefits of successful therapies."

Nonetheless, he wrote,

"Most products and most companies will likely continue to fail."

Two Potential Buyers Eyeing Geron's hESC Business

Geron has two interested potential buyers for its human embryonic stem cell business, the president of the California stem cell agency said today.

Alan Trounson told CIRM directors that at one point four parties had expressed interest  but two have backed out. He did not disclose the names of any of the parties.

Last fall, Geron announced it was giving up its hESC work because of financial concerns about what once was the first clinical trial of a human embryonic stem therapy. Last summer CIRM loaned Geron $25 million for the trial, which has been repaid with interest.  Following Geron's announcement, Trounson said he was working to help find a buyer for Geron's hESC business.

However, today he said he was "suddenly distanced" from the process a few days ago. CIRM director Sherry Lansing, who once headed a Hollywood film studio, asked Trounson whether there was anything that directors could do to help find a buyer for Geron's hESC business. She asked about the amount of money needed by Geron and whether patient advocates could help generate other momentum.

Trounson suggested that the discussion should  be continued privately. He did say that CIRM has prepared a document that outlines what would  be necessary for the agency to resume funding of the hESC trial.

Trounson told directors that Geron's departure from hESC research has had "a very strong negative influence internationally."

Geron, which is based in Menlo Park in California, said last week it has hired Stifel Nicolaus & Co. to help sell the hESC business. . 

ACT and CIRM: Fresh Life in a Troubled California Stem Cell Courtship?

Advanced Cell Technology, which has unsuccessfully sought funding several times from the $3 billion California stem cell agency, drew some attention today in a piece in a Massachusetts newspaper.

The Worcester Telegram took a look at the firm, headquartered in Santa Monica, Ca., with labs in Marlboro, Mass., in the wake of Geron's departure from hESC research. The move left ACT as the only firm in the country with an hESC trial and perhaps with a better shot at CIRM funding.

Reporter Lisa Eckelbecker wrote,

"Advanced Cell, publicly traded since 2005, has spent years developing its technologies. The company brings in little revenue and has an accumulated deficit of $180.9 million. About 1.6 billion shares of Advanced Cell common stock is outstanding, a result of numerous financings over the years. It trades for about 10 cents a share on the Over-the-Counter Bulletin Board, an electronic exchange for small companies. No analysts from major Wall Street banks report on the company.

"The company's treatment for Stargardt's macular dystrophy and dry age-related macular degeneration — the treatment that required (a) mountain of paperwork before the FDA — first went into the eyes of patients in July in Los Angeles. The retinal pigment epithelial cells, generated from embryonic stem cells, were developed to slow the progression of the eye disorders, which can lead to blindness."

ACT moved its headquarters to California following the passage of Prop. 71 in 2004, the ballot initiative that created the California stem cell agency. The company said at the time it expected to "gain significant momentum by being able to take advantage of a favorable environment for funding."

ACT initially landed in Alameda, Ca., but has since moved to Southern California. Its official opening in 2006 in Alameda was attended by the state treasurer and at least one CIRM official, according to the company. The firm has never secured funding from the stem cell agency, which does not release the names of rejected applicants. However, the California Stem Cell Report carried an item in 2008 that pointed out that a researcher for ACT complained publicly about a reviewer's conflict of interest in connection with an ACT application(see here and here). At the time, Robert Klein, then CIRM chairman, brushed off the complaint. The journal Nature has also reported that ACT has applied unsuccessfully several times for CIRM awards.

It is a fair bet that ACT was an initial applicant in the round that provided funding to Geron last spring. However, by the time Geron's application went to the full CIRM board, the other applicants had withdrawn – the first time such an event had occurred at CIRM.

Since Geron pulled out of the hESC business last month, it is likely that ACT and CIRM have opened fresh discussions, given their mutual interest in producing a stem cell therapy. CIRM also has a new chairman who is familiar with ACT. After Geron was awarded its $25 million loan from CIRM last May, the agency's board elected as chairman a Los Angeles bond financier, Jonathan Thomas, who led an early round of financing for ACT in 2000. Thomas last summer sold his remaining 17,046 shares in ACT for $3,239. Thomas said he had a "significant loss" on the sale but did not disclose the amount.

Geron's flight from hESC and ACT's perserverance come as the stem cell agency is pushing aggressively to drive research into the clinic. Plus CIRM needs tangible results that voters can understand if CIRM is win ballot-box approval for continued funding in the next few years. The agency will run out of cash in about 2017 and is considering mounting a campaign for another multibillion bond issue.

Stem Cell Awards of the Year: From Geron to iPS 'Warts'

The end of the year is a traditional time for the media to come up with lists of both the dubious and meritorious events and personages of the year. This year's nominations from a California stem cell researcher include Geron, Roman Reed and the new chairman of the California stem cell agency.

Paul Knoepfler, a stem cell scientist at UC Davis and one of the few stem cell scientists who blogs regularly, today revealed his awards for 2011. They ranged from the political cartoon of the year to the stem cell scientific issue of the year.

Geron was named in the "misstep of the year." Knoepfler wrote,

"You guys really screwed up by dropping your stem cell program in this manner. I believe this bordered on the unethical. I commend the actual stem cell scientists at Geron, but the person(s) who as leaders pulled the trigger on killing the stem cell program did wrong."

Roman Reed was named "stem cell activist of the year." Reed is the man who came up with the CIRM motto several years ago, "Turning stem cells into cures." He has long been active on stem cell issues, along with his equally hard-working father, Don Reed.

Jonathan Thomas, the relatively new chairman of the stem cell agency, was named "stem cell leader of the year." Thomas was elected chairman of the agency in June, replacing Bob Klein, who stepped down. Knoepfler wrote that Thomas "has impressed the stem cell community and made some very positive changes at CIRM to make an awesome organization even better."

Knoepfler has much more,  including the stem cell biotech of the year –
Advanced Cell Technology of Santa Monica, Ca. – which Knoepfler said has two hESC trials on track and an "impressive scientific leadership." Not to be overlooked is the stem cell scientific issue of the year – "warts" or genetic changes -- at least possible ones involving iPS cells. Knoepfler points out that the subject has drawn a vast number of citations in journal articles.

We should not forget the stem cell blog of the year, which came in as a tie between Stem Cell Network of Canada and Stem Cell Assays by William Gunn of San Diego and Alexey Berseney of Philadelphia. Knoepfler also mentioned the CIRM Research Blog, overseen by Amy Adams, and the California Stem Cell Report. Knoepfler said the California Stem Cell Report "is read by a who’s who of the stem cell world, and is a source of important information about CIRM," although Knoepfler said he wished the blog was more balanced "in terms of positive and critical stories." However, Knoepfler did note that several more positive items have appeared recently, but this analyst warns of the perils of excessive exuberance.