'Paying for Miracles:' the Vatican and California's Stem Cell Research Program

California's $3 billion stem cell program owes its life to human embryonic stem cells. The state's research effort was created in 2004 to finance scientific inquiries involving such cells, long a matter a major controversy and banned at the time from federal funding by then President Bush.

Last week, Randy Mills, the president of the California agency, took part in a conference at the Vatican, which is adamantly opposed to hESC research as "gravely immoral" because it involves the destruction of embryos.

UC Davis stem cell researcher Paul Knoepfler wrote about the appearance on his Niche blog. He quoted Mills as saying,

“We are committed to accomplishing our mission of accelerating stem cell treatments to patients with unmet medical needs. We are encouraged that the Vatican is taking a leadership role by bringing together an outstanding collection of voices from the stem cell community to try to find common solutions to some very real problems. We are honored to participate.”

The California stem cell agency's position on adult stem cells has evolved over the years. In 2008, the agency fought an effort (see here and here) in the California legislature to make it easier for the agency to support adult stem cell research. The agency opposed the measure with Bob Klein, then chairman of the agency, indicating the move was attempt to sabotage the research program.

In 2010, an academic study showed that through 2009 only 18 percent of California's dollars went for grants that were "clearly" not eligible for federal funding under the Bush restrictions. In 2013, the agency's web site showed that that about 240 of the 595 awards that it had handed out went for hESC research. At the time, such funding amounted to $458 million out of the $1.8 billion it had awarded.

Updates to the 2013 figures could not be found on the agency's web site as of this writing. We are querying the agency for fresh figures.

The Vatican conference last week involved theology as well as science. The topic of Mills' panel, however, was "a look at who is paying for miracles."

Mills also often says he is "agnostic" about the sorts of cells to be used to develop therapies. But "agnostic" is probably not a word that he used last week at the Vatican.

Financial Terms Approved Today for California's $150 Million, Stem Cell Powerhouse.

Highlights
Likely a major legacy
$75 million loan, 50 percent to be repaid
Convertible notes could sold by CIRM
Changes in application review?

Directors of California's stem cell agency this morning approved financing terms for a proposed, $150 million, public-private company that the agency hopes will accelerate the creation of long-sought stem cell therapies.

The plan to create a stem cell "powerhouse" is likely to be one of the landmark legacies of the state's $3 billion research effort -- for better or worse. Such a partnership would be unique in California history and nationally.

The agency has yet to produce the cures promised to voters in 2004 when they created the research effort and provided the billions in bond funding. Total costs, including interest, will run about $6 billion..

Today's action set the terms for the $75 million in a loan that the agency -- formally known as the California Institute for Regenerative Medicine (CIRM) -- would hand out. The funds would go to a private partner that would also put up $75 million.

A joint committee of the directors approved the terms, with virtually no discussion, on an 8-0 vote during a meeting that lasted only 10 minutes.

The aim of the agency is to "de-risk" development of therapies in order to entice a well-financed and well-managed partner to take CIRM research into the marketplace and make it widely available to the public. The partner would be expected to pay back only 50 percent of the loan plus interest. The new company would also have the pick of the 94 percent of CIRM research that doesn't already have a business partner.

The agency plans to provide the $75 million in three different notes. CIRM would then be able to sell the notes to another investor at time when it would appear to be most profitable. Or the agency could simply hold onto the loans.

The loans would be convertible to stock in the company, although state agencies cannot legally own such stock. However, a possible buyer for the notes might see an opportunity for profit and would be willing to pay the agency more than the value of the loan.

If the company is successful, it could generate royalties to the state's general fund under the provisions of CIRM's rules. Cash from the sale of the loans, however, would go directly to CIRM. The agency has not yet earned any royalties from the research it has funded.

Directors of the agency approved the concept for the new company -- minus today's finance terms -- at a meeting in December. Maria Millan, senior director for medical affairs, told them that the goal is "to create a therapeutic powerhouse that increases the likelihood of getting stem cell therapeutics to the patients."

Today's action set the stage for final preparation of a request for interested parties to apply for the $75 million for what it calls ATP3 (short for Accelerating Therapeutics through Public-Private Partnerships). CIRM has said the partner could be an existing company, a new one or some sort of combination. The agency said it consulted with companies, lawyers and venture capitalists to prepare the financing terms.

Under the current timetable, the application request would be posted in the third quarter of this year, according to Kevin McCormack, senior director for CIRM communications. The proposals would be reviewed the agency's grant reviewers behind closed doors during the first quarter of next year. In nearly all cases over the last 11 years, favorable decisions by the reviewers are routinely ratified by CIRM directors. The directors are expected to take their formal vote in early summer of 2017.

The blue ribbon reviewers come from out-of-state. The identities of reviewers on specific applications are withheld by the agency. Their professional and economic interests are not publicly disclosed, although agency asks for the information and asks the reviewers to recuse themselves if they (the reviewers) see a conflict.

CIRM Director Steve Juelsgaard, former executive vice president of Genentech, said the award is more about business than science and needs reviewers who understand what makes a business successful. CIRM officials said they would brief the joint committee on review procedures for the award when they are more developed.

McCormack confirmed to the California Stem Cell Report that proposal is unique. He said,

"CIRM diligently scoured the landscape for inspiration for its ATP3 model. This effort confirmed that ATP3 is a novel response to a unique set of challenges not commonly encountered in CIRM’s field. A given component of the program may be inspired by one example or another, but the design of ATP3 as a whole is custom tailored to CIRM’s environment."

McCormack also said that the state governor's, treasurer's and controller's offices have all been briefed on the plan. However, under the ballot initiative that created the agency, no state officials, including the legislature, have legal control of the agency policies or research funding.

Here are links to the presentation today, a CIRM staff memo on the loan terms and the term sheet. Here is a look at the risk-benefit analysis by CIRM, and a look at how the intellectual and royalty rights would work. Other background can be found here and here.

Risk and Reward from California's $150 Million Plan to Create a Stem Cell Company

The California stem cell agency has identified a number of risks and benefits that are associated with its $150 million plan to create a public-private company to advance stem cell therapies. 

Risks and rewards were laid out in its spending/strategic plan for the next five years, which was approved by directors last December. The discussion of risks in the plan and other proposals as well is a hallmark of the administration of CIRM CEO Randy Mills, who joined the agency about two years ago. Prior to his arrival, the agency's staff did not formally offer risk assessments for its proposals. 

The $150 million proposal has been dubbed ATP3 -- short for Accelerating Therapeutics through Public-Private Partnerships. The financing for the deal is up for approval tomorrow by CIRM directors. 

CIRM's List of Benefits From ATP3

"The aggregation of a basket of otherwise unpartnered CIRM projects offers the successful applicant 'multiple shots on goal.' This increases the probability of successfully developing and commercializing a stem cell treatment and makes significant industry investment in stem cell technology more attractive."  

Benefits to researchers: "continued funding for the advancement of their CIRM
project"

Benefits to universities: "demand creation for the out-licensing of CIRM-funded
technologies with a greater opportunity to achieve a financial return due to the aggregation of risk"

Benefits to citizens of California: "the creation of an industrial stem cell treatment powerhouse that expands the tax base, adds high quality jobs, and increases the likelihood of the commercialization of stem cell treatments for patients with unmet needs"

A CIRM memo last week also identified possible financial benefits to the state or CIRM via royalties and/or sale of the state's interest in the company. 

CIRM's Evaluation of Risk

"Investors may be uninterested in stem cell treatments" is what the agency's strategic plan said in December 2015.

It continued:

"To date, venture capital and the pharma and biotech sectors have been unwilling
to make substantial investments in stem cell research. The lack of a track record of
success, coupled with the regulatory uncertainty discussed above, have dissuaded
them from making a substantial commitment to the field. This has exacerbated the
challenges posed by the so-called 'valley of death' between discovery and clinical
translation where funding has traditionally been scarce.

"Although California voters made a substantial investment in CIRM when they approved Prop. 71, CIRM, by itself, does not have the funding necessary to translate the many discoveries made
by researchers it has funded into treatments. Indeed, the costs of developing a single drug are estimated to be $2.6 billion.

"For CIRM to succeed in its mission, CIRM must partner with other investors to bring treatments to market and deliver them to patients. CIRM plans to address this concern by continuing to champion CIRM - funded project to potential partners and investors and by creating a demand for CIRM -funded projects through public-private partnership designed to accelerate treatment development, described in section 7 of this plan."

Other general risks are identified in three pages of risk laid out in the strategic plan, including insufficient "meritorious treatments," safety concerns, FDA reluctance and inadequate health benefits from stem cell treatments.

The Royalty/IP Angle on California's Proposed $150 Million Stem Cell Powerhouse

California's stem cell agency was born in 2004 with promises to voters of up $1.1 billion in royalties from new, effective and lucrative therapies. At the time, however, creation of a unique, $150 million, public-private stem cell company was not even a gleam in anybody's eye.

This Friday, the agency is scheduled to act on details of the financing structure for such a company with the hope of luring industry into a deal with the Oakland-based agency. The bold and risky proposal -- dubbed ATP3 -- has raised questions, including some from readers of this report, about how the intellectual property (IP) and royalty provisions would work.

The California Stem Cell Report last week queried the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, and again this week about the matter, which is a tad complicated but very important indeed. To be clear from the start, CIRM does not own any IP, just the rights to some royalties which would flow to the state's overall budget.

Here is what Kevin McCormick, senior director of communications, told us today via email:

"It is very complex as its something completely new.  

"For the royalties that the (research) grantees negotiate with ATP3, the (state's) general fund will take a percentage of the licensing revenue that the grantees received.  All revenue-sharing fees go to the general fund. 

"If the ATP3 Newco (the hypothetical company) “takes over” a current CIRM grant and becomes the grantee of record, it has the same rights as any other grantee.  For CIRM 2.0 awards, there is an option right to convert the grant to a loan.  Under a loan, the payback of the loan returns to CIRM.  For CIRM 1.0 awards, no such conversion right exists.
If the ATP3 convertible note is sold, the proceeds of such sale will return to CIRM. (The agency plans to use $75 million in convertible notes to help finance the company). In such a case, the grantees’ revenue-sharing obligations will still exist.

"Here is an example:

"Grantee X has a cell therapy which was developed under a closed Disease Team 1 grant and is in Phase I clinical trial under a current CIRM 2.0 CLINI grant.  NEWCO licenses the cell therapy IP and data from Grantee X.

"A)  If Newco decides to take over the current CLINI grant, it will become the Grantee of record for the CLINI grant and have revenue-sharing obligations to the General Fund for that grant (which may be converted to a loan).  Grantee X will have a separate revenue-sharing obligation to the General Fund for the closed Disease Team 1 grant.  In this scenario, the General Fund may have two sources of revenue from the two different grants.

"B)  If Newco decides not to take over the current grant, then Grantee X will have revenue sharing obligations under both of the grants back to the general fund."

Last week McCormick also addressed some of the issues involving what might be considered the "yield" on the state's proposed $75 million investment with a partner that would also put up $75 million to create the company. He said,

"In addition to the state general fund, David, we would also identify CIRM, potential grantee/researchers and developers, academic institutions in the state, and more broadly the citizens of California.  CIRM will benefit in the event the program is successful, ensuring additional funds are available to CIRM to leverage CIRM research programs across the spectrum.  Existing and future grantees, researchers and institutions will benefit by opening up commercialization opportunities and providing a path forward for development of CIRM-funded research. As for the general fund, by providing an avenue for commercial exploitation of existing CIRM-funded IP (which are subject to existing revenue sharing rules under CIRM’s IP policies), the general fund will benefit by the commercial success of these projects that might not otherwise occur."

Excerpts from the Birth of ATP3: California's $150 Million Plan for a Stem Cell Company

Here are excerpts from the transcript of the California stem cell agency meeting Dec. 17, 2015, at which its directors approved the concept for a $150 million public-private partnership. The concept was part of the agency's spending plan for the next five years. Details of the financing and term sheet were disclosed last week and are scheduled to be approved a meeting on Friday.

Randy Mills, president of California Institute for Regenerative Medicine (CIRM), as the agency is formally known:

"We have a lot of things in this (strategic) plan that are new for a funding agency to attempt, but this one (ATP3) stands out even for this plan. Here the concept is that we have a whole bunch of technology. We have 300 or so different programs at CIRM. As we said, only 8 percent of our academic programs currently have industry partners. So how do we fix that? 

"We thought about a number of different ways, but one of the ways is just to go directly and do it. We thought, well, what would happen if we put out a call for basically the creation of a new entity or a new company that would be a California-based company that could take these technologies and aggregate them and focus on developing and commercializing stem cell-specific technologies?

"So the idea is here we would put out a call that would require a successful applicant to put together a business plan that would describe what types of technologies from our portfolio that they would like to aggregate and the synergies associated with those, a great management team that could actually make that happen in a successful way, and then, very importantly, a tremendous amount of upfront capital that they're going to commit.  

"I think we had in this concept $75 million in upfront capital that they're going to commit into taking these technologies and driving them forward. Then we would then partner with them on actually a very efficient basis to help fund some of that research going forward. Again, the idea being what we would have at the end is an entity, basically a powerhouse in the state of California that have these technologies that they're actively commercializing. It would be an outflow for new technologies that are coming out of CIRM that need an industry home and obviously create jobs and expand the tax base for California. And then, lastly, but most importantly, be a vehicle for getting the final span of this bridge where we go from late stage research actually through commercialization so patients can benefit from them. Again, Dr. Millan is going to talk more about this. I don't want to completely steal her thunder, but it's a cool part.”

Maria Millan, senior director of medical affairs, who spoke later:

“We have identified and we know as a field that there is a lack of industry pull for stem cell therapeutics. Although CIRM has invested approximately $2 billion so far in developing a portfolio of approximately 300 technologies, we know that only 6 percent of CIRM's academic projects have been licensed by industry. And in discussions with the University of California system, we know that of the 3,400 technologies being marketed, we're not even talking about all technologies, but just those that are being actively marketed, less than 2 percent of those are stem cell programs.

"So we are proposing to the board today an initiative, the ATP3 initiative, as a means of engaging industry by creating an opportunity for top-tiered leadership and management teams to come in and competitively be evaluated in their ability to form an entity which would aggregate CIRM's most promising technologies. By aggregation, it would offer multiple shots on goal on these product development candidates which increases the probability of success, so called de-risking the proposition. And what we anticipate is this would make it more significantly palatable and actually incentivize industry to come in in partnership. In addition, what's baked into this initiative is that CIRM would leverage its capacities in terms of administrative review structure and advisors to help this entity come up with the best possible portfolio. And CIRM would continue to be involved by funding the development of these in-licensed technologies.

"So as a general structure, the accelerating therapies to public private partnership, ATP3, the major goal of this is to get the CIRM-funded stem cell technology candidates to the patients, get the technologies to the patients, and how do we do that? We pull industry in, we get a private partner through this competitive process who will in-license, develop and drive toward commercialization the aggregated portfolio. And as I just stated, CIRM will be actively involved in this and choosing and enabling the licensing and in helping to fund these program's developments.

"In addition, the researchers would have continued funding for the advancements of their project. just to back up a bit, when these in-licensed programs come in, they come in with current funding for these programs to go to a certain value inflection point. if they're chosen by CIRM and by the ATP3 awardee to come into their portfolio, then the project would get additional funding. For universities, by design of this initiative, there would be a demand creation for out-licensing cirm-funded technologies and, therefore, a greater opportunity for financial return which then could go on to fund future projects and efforts. And for citizens of California, as Dr. Mills stated, this is an opportunity to create a therapeutic powerhouse that increases the likelihood of getting stem cell therapeutics to the patients.

"The private partner or the awardee, the applicant, could be an established company, a spin-off, or a new company altogether that's formed by a team of professionals that have come out of either pharma, biotech, or could be investors. They will be judged on and will propose an exceptional business plan to aggregate these technologies, give the rationale for this, propose how this will create value and bring return to the stakeholders. And they would come in with a leadership team that would be judged on their track record and their strength that they bring to the initiative and the likelihood they'll be able to execute on the business plan and bring about the goals of this initiative. The entity will be required to come in with significant investment upfront and utilize this to execute on the business plan while CIRM will fund the support of the development of the in-licensed projects.

"The CIRM award is anticipated to be approximately $75 million of funding over a five-year period. It could be in the form of a loan, but the applicant, the awardee, would be required to match the total award amount, regardless of how much of the loan they take on, dollar for dollar upfront. The awardee would also be required to comply with the pricing access and march-in provisions of CIRM's IP regulations and to provide the licensor of the CIRM projects with the right of first refusal should they decide to shelf or cease development of that particular technology." 

Plug Pulled on Cancer Clinical Trial: Sudden End for $18 Million Push by California Stem Cell Agency

Caladrius stock price plummets -- Google graphic

California’s ambitious, $18 million effort to develop -- in relatively short order -- a stem cell therapy for a deadly form of skin cancer collapsed abruptly last week, apparently the victim of “excessively long development timelines.”

Caladrius Biosciences, Inc., the recipient of the California funding, terminated the late stage clinical trial, declaring that other treatments have outpaced its approach and that it is no longer “optimally leverage(d).”

The award last May marked a big advance for California’s $3 billion stem cell research program. It was the first phase three clinical trial for the agency, known formally as the California Institute for Regenerative Medicine(CIRM).  A phase three clinical trial is the last step needed before federal approval for widespread use of a treatment. The award came as the agency is entering what could be the last years of its life and is pushing hard to fulfill the promises of the 2004 ballot initiative campaign that led to its creation.

CIRM, which is based in Oakland, Ca., is scheduled to run out of cash for new awards in 2020. The agency expects to intensify its efforts this year at developing a plan to replace the state bonds that it has used since 2004.

The $18 million award to Caladrius was made last spring with considerable ballyhoo. Jonathan Thomas, chairman of the agency’s governing board, said at the time that the  treatment had “the greatest chance of success for the people of California that we have funded.”

After the Caladrius announcement, Randy Mills, president of the agency, said in a news release,

“Ultimately this program suffered from the excessively long development timelines common in cell therapy, a fact that further underscores the need for CIRM to work hard to create faster development pathways as called for in our new strategic plan.”

CIRM’s statement also said,

“Only $3 million of the $17.7 million awarded by our governing board had been distributed to Caladrius, which matched that money with $3 million of its own. CIRM will now make the unused $14.7 million portion available to other applicants for investment into projects that accelerate stem cell therapies to patients with unmet medical needs.”

In a document filed with the Securities and Exchange Commission, Caladrius, formerly known as NeoStem, said the end of the trial would lead to layoffs for about 40 employees in Irvine, Ca., the home of what once was California Stem Cell, Inc. That firm was acquired by Caladrius in 2014 for $124 million. It  was founded by Hans Kierstead of UC Irvine, who is senior vice president for research and chief science officer of Caladrius.

The company’s SEC filing said,

“The treatment paradigm in metastatic melanoma was transformed during the course of 2015 by the accelerating adoption of multiple immune checkpoint inhibitors used as monotherapy and in combination treatments. These new drugs have significantly improved outcomes in metastatic melanoma and therefore have altered the opportunity for a monotherapy such as CLBS20 in a landscape that is quickly converting to combination therapies. Therefore, we have concluded that, as designed, our current program in metastatic melanoma will not optimally leverage this asset..."

Cancellation of the phase three trial led to a sharp drop in Caladrius’ stock price. It closed at $1.08 on Jan. 6, the day prior to the announcement. Today, the stock closed at 65 cents. The 52 week high for the stock was $4.26 and the low 40 cents. The chair of Caladrius, Robin Smith, resigned on Dec. 23.

California’s stem cell agency is now participating in only one phase three trial, which is not yet recruiting patients. That effort involves a brain tumor program with ImmunoCellular of Calabasas, Ca. The agency is currently participating in a total of  15 clinical trials at various stages.

Fifty New Clinical Trials, a $150 Million Partnership and Much More: California's Coming Stem Cell 'Powerhouse'

Highlights

50 new clinical trials

$150 million public-private partnership

"Long overdue," says venture capitalist
$30 million end plan

LOS ANGELES -- Directors of the California stem cell agency this morning approved an $890 million plan for the next five years as it surges forward with a risky and ambitious effort to build an “industrial stem cell therapeutic powerhouse” in the Golden State.

The agency proposes 50 new clinical trials on top of 15 already underway. Next year it expects to set up a $150 million partnership with private investors to turn research into cures. Investors would have first pick of the best research that CIRM has to offer that currently lacks a partner. 

Other ventures and goals for what could be the agency's last five years of life include:

• Introduction of 50 new therapeutic or device candidates into development
• Working to create a more favorable federal regulatory environment
• Reduction by 50 percent the time it takes basic research to move into a clinical trial
• Creation of two centers at $15 million each to assist in much of the "backroom" work needed for clinical trials
• Creation of an online, hook-up center for researchers looking for collaborators to advance their work

Directors of the agency, formally known as the California Institute 71 for Regenerative Medicine (CIRM), approved the plan unanimously at a meeting here. (Here is a link to its press release.)

Arlene Chiu, former director of CIRM's scientific programs and now with the City of Hope, told the agency board that the plan was audacious and bold. CIRM board member Sherry Lansing, former chair of the UC board of regents, praised the plan's "sense of urgency."  Another board member, Steve Juelsgaard, former executive vice president of Genentech, said the plan contained projects that he had never seen before in the biotech industry.

Asked for comment, CIRM board member Al Rowlett, who is chief executive officer of the Turning Point mental health program in Sacramento, said,

“It’s ambitious, but then isn’t that what the people of California were when they approved Proposition 71. They wanted to create something that was going to change the face of medicine. That’s what we hope to do….”

Proposition 71 was the ballot initiative that created the $3 billion agency in 2004. The campaign led voters to believe stem cell therapies were close on the horizon. None has been produced, and the agency's state bond funding is expected to run out in 2020.

CIRM directors later today will be briefed on a $30 million “wind-down” plan that has attracted $7 million in private donations. More funding is being sought. One source may be the state legislature.

The agency’s plan for the next five years says it would benefit the people of California by creating  “an industrial stem cell therapeutic powerhouse that expands the tax base, adds high quality jobs and increases the likelihood of the commercialization of stem cell treatments for patients with unmet needs.”

Randy Mills, CEO of the agency since May 2014, said the plan was devised to have "the greatest possible impact for our patients. We didn’t want something ‘good enough.’ We wanted something transformational."

He acknowledged the risk and size of the task, which he said is aimed at transforming regenerative medicine. But he remains optimistic that the agency’s tiny team of about 55 persons can pull it off. He gave his team full credit for developing the spending proposal. 

The CIRM plan calls for spending $620 million on clinical work and “translational” research, which is aimed at taking basic discoveries beyond the most preliminary stage. Basic research would receive $170 million. Educational programs total $50 million. Another $50 million would go for “infrastructure.” 

One of the riskier elements of the proposal may be the agency’s plan to offer $75 million to private investors to begin a partnership in which they would have access to the best of the CIRM-funded research that doesn’t already have a private partner. 

The investors, who could be a Big Pharma firm, an existing smaller company or venture capitalists, would have to add $75 million of their own money. The agency would also continue to support the selected research, thus minimizing the risk to the private investors.

For months, Mills has been commenting on the reluctance of private investors to engage in stem cell therapy development, which is expensive and novel. “De-risking” is important in attracting business interest, Mills says.

Competition for the $75 million is scheduled to begin behind closed doors early next year. But questions have been raised about the risk that no private investors would find any CIRM research attractive.

Gregory Bonfiglio, managing partner of Proteus Regenerative Medicine, a Portola Valley, Ca., a venture capital firm, said in an interview, however, such efforts by the agency are long overdue.

He said, 

“There are risks inherent in the development of new, disruptive technology. The bigger risk is failing to deliver on their underlying promise to bring new regenerative therapies to patients…. The bigger risk is not doing anything.”

Another important element of the plan involves creation of accelerating and “translating” centers, funded at $15 million each, beginning next year. The agency is also likely to expand its Alpha Clinic effort, which is aimed at providing one-stop treatment centers.

The translating and accelerating centers would work with the Alpha clinics and other researcher to provide much of the “backroom” work needed to negotiate federal rules and regulations and win ultimate approval of a therapy. 

The Klein Legacy: Vestiges of California's Stem Cell Past to be Scrubbed This Week

No doubt exists that Bob Klein left his mark on the $3 billion California stem cell agency. Sometimes he is described as the father of the agency. He was its first chairman and led the drive to win voter approval of the research effort in 2004.

Bob Klein, Elie Dolgin photo

The agency has been under new leadership since 2011. And this Thursday some of the marks left by Klein are going to be erased.

Minor stuff now, but they recall some of the issues that rumbled through the agency in earlier days.

For example, the agency’s rules currently restrict to 12 the number of employees in the chairman’s office out of an agency total now of 55-56. The restriction is almost certainly to be removed on Thursday by the agency’s governing board. A memo by agency general counsel James Harrison said mildly that “disagreements” existed during the Klein regime about staff resources, leading to the limitation.

Those disagreements were actually sufficiently harsh that the stem cell board at one point in 2007 felt compelled to strip six employees from Klein’s office of chair, limiting him to four.

During Klein’s tenure, he also scheduled board meetings with jam-packed agendas that often took two days. The lengthy sessions tested the patience of board members, some of whom fled for the doors in an effort to catch their flights home as the hours wore on. The result was that the supermajority, legally required quorums required to do business were lost.. (See here and here for
more on quorum problems at the agency.)

To help avoid those unseemly situations, rules allowing telephonic attendance by key members of the board were enacted. Nowadays, the meetings proceed with dispatch, often ending early, much to the satisfaction of board.

So the board on Thursday plans to expand the use of telephonic meetings, which could well be a plus and a minus. The move will increase the number of offsite locations where members of the public and researchers can weigh in remotely with comments during meetings, a feature that has been lightly used. On the other hand, there will be less face-to-face contact between members of the board, something that is an important aid in finding solutions to touchy problems.

California's New $105 Million Stem Cell Surge: The Creation of an Industrial Powerhouse

Highlights

National biotech interest likely

$75 million alone for public-private effort

High risk, high reward

More support for Alpha clinics

California is hoping to fire up the state’s stem cell industry this month with $105 million aimed at creation of an unprecedented, “industrial stem cell therapeutic powerhouse” on the nation’s West Coast. 

The money is coming from the state’s stem cell agency, which has already spent $2 billion on stem cell research in the last decade. The agency is now on its last $900 million and pushing hard to translate stem cells into therapies and cures. It is expected to run out of money for new awards in 2020.

Earlier this week, a key panel of the agency’s governing board approved the $105 million surge, a decision that is certain to be ratified by the full board at a meeting Dec. 17 in Los Angeles. The action will initiate a 2016 competition for the cash, which is likely to draw national interest, although the money can be spent only within the state.

The largest component of the $105 million is $75 million for a program that the agency has dubbed the “Accelerating Therapies through Public-Private Partnership” or ATP3. The award would be one of the largest ever made by the agency, which is formally known as the California Institute for Regenerative Medicine (CIRM).

Also approved was a $15 million round for an "accelerating center" and another $15 million round for a "translating center." All of the awards are scheduled to be made by late 2016. 

Under the ATP3 public-private round, the recipient would be required to match the $75 million from California taxpayers. The program would bundle together for continued CIRM funding the most promising current CIRM projects. Those projects -- a “portfolio of  ‘high risk’ but high reward projects” -- would be selected by the recipient for development for commercialization, the agency said in a memo.

CIRM’s plan for the project said,

“The aggregation of a basket of otherwise unpartnered CIRM projects offers the successful applicant ‘multiple shots on goal.’ This increases the probability of successfully developing and commercializing a stem cell treatment and makes significant industry investment in stem cell technology more attractive.”

The agency said in a presentation that industry is “beginning to show interest” in stem cell therapies but only 8 percent of CIRM’s 71 active therapeutic programs have industry partners.

CIRM’s presentation said the awardee must have a “top-tier” track record and “could be an established company, a spin-off or a new company with a team formed by Pharma, biotechnology or by an investor.”

CIRM said Californians would benefit from "creation of an industrial stem cell therapeutic powerhouse that increases the likelihood of the commercialization of stem cell treatments for patients with unmet medical needs."

The other CIRM award rounds that are up for ratification later this month aim also at bringing stem cell therapies into widespread use.

The $15 million accelerating center round, which is open to non-California-based organizations, would fund the following activities:

• “Regulatory management services (including IND preparation and submission)
• “Clinical trial planning and management, including site selection, contracting, and clinical site management (e.g., patient recruitment and operational and logistical support)
• “ Data management, biostatical and analytical services
• “Provision of services to (CIRM’s) Alpha Clinics Network, CIRM-funded investigators and sponsors with translational and clinical stage projects, and clinical sites seeking to join the Alpha Clinics Network”

The translating center would fund the following activities:

• “Project planning in coordination with CIRM and the Accelerating Center.
• “Project management for pre-clinical IND-enabling development programs, including pivotal pharmacology and toxicology studies.
• “Process development and product manufacturing activities suitable for production of cell products under good manufacturing practices (GMP).
• “Assembly and authorship of documents to support IND submissions and FDA interactions.
• “Development and execution of a business plan to sustain operations beyond CIRM funding.”

Less Than $1 Billion Left: California Stem Cell Agency Lays Out its Five-Year Bucket List

CIRM's spending plans by area -- CIRM graphic

Highlights

Three pages on risk of research

Funding ends in 2020

Two new centers proposed, up to $15 million each

Clear pathways to commercialization

The California stem cell agency today unveiled its plan for spending its last $900 million, calling for 50 new clinical trials and an increasingly hard-eyed focus on turning earlier stage research into therapies.

Between now and 2020, the agency’s strategic plan budgeted $620 million for clinical and translational research compared to $170 million for more basic efforts.   

The proposal builds on “radical” changes already underway at the agency and is not without risk. Indeed, the 45-page page plan devotes three pages to the subject of “risk.” Sherry Lansing, a longtime board member and former chair of the University of California regents, said in a press release,

“It’s an ambitious plan, but you never achieve anything worthwhile by playing it safe.”

Jonathan Thomas, chair of the agency’s governing board, said the strategic plan “began with us throwing out all our preconceived notions of what we do, and instead focused on what was possible with the time and money we have left.”

The California Institute for Regenerative Medicine (CIRM), as the $3 billion agency is formally known, is projected to run out of funds for new awards in 2020. It is unclear what if any cash can be raised from either public or private sources. However, Thomas is scheduled to discuss future funding prospects at the board’s Dec. 17 meeting in Los Angeles.

Much of the plan has been revealed in the past six months as Randy Mills, CEO of CIRM, briefed the governing board on its developing direction. Mills joined the agency in May 2014 after a career in the biotech business. The thrust of the strategic plan reflects his business background and a strong emphasis on measurable benchmarks and organizational clarity.  He launched an effort called CIRM 2.0 earlier this year in an effort to speed funds to clinical efforts and improve the quality of applications. (See here and here for earlier stories on the strategic plan.)

New to the spending plan -- at least in any kind of detail -- were two proposals slated for $12 million to $15 million each. One was dubbed a “translating center.” The other was called an “accelerating center.”

The translating center will be located at a single enterprise and be charged with development of cGMP compliant cell manufacturing processes, providing “core services” leading to FDA investigational new drug applications and coordinating with the FDA and the accelerating center.

The accelerating center will also be located a single enterprise that has stem cell-specific regulatory expertise. It will provide support for clinical trials in an effort to accelerate the regulatory process and conduct of clinical trials.

Over the past six months or so, Mill has repeatedly made the case for capturing promising early research and ensuring that it has a clear pathway to clinical trials and ultimately into the market.  

Under his strategic plan, “every program will be integrated into and coordinated with the overall effort” to fulfill the CIRM mission: “To accelerate stem cell therapies to patients with unmet needs.”

The plan additionally sets concrete standards for measuring the agency’s performance as well as each team’s performance within the agency, including such specifics as the percent of application reviews held as scheduled and percent of projects that advance to the next stage.

The proposal is set for discussion and action at the directors’ Science Subcommittee meeting next Monday and goes to the full board on Dec. 17 for final approval. The meeting will be based at CIRM's new headquarters in Oakland with remote, teleconference locations for the public in San Diego and Los Angeles. Specific addresses are on the agenda.

While the plan is called a draft, it is not likely to undergo significant changes. However, interested parties can weigh in with comments by emailing them to CIRM at this email address kmccormack@cirm.ca.gov by 5 p.m. Dec. 3.

CIRM's goals for the next five years -- CIRM graphic

Multimillion Dollar Clinical Trial Proposal Hits Roadblock at California Stem Cell Agency

In a refreshing bit of candor, a California regenerative medicine firm yesterday said it was having little luck with its funding pitch to the state’s $3 billion stem cell agency and was withdrawing its proposal.

The firm is Cesca Therapeutics, which is based in the Sacramento suburb of Rancho Cordova and also has offices in India. The publicly traded enterprise researches and develops cell-based therapeutics.

In a press release today, the firm reported the bad news about its application for funding

“aimed at supporting implementation of its FDA approved Phase III pivotal clinical trial for critical limb ischemia.”

The announcement said,

“The company anticipated CIRM's evaluation of its application to be concluded during the second half of the month of November. However, preliminary feedback provided in advance of a formal funding decision has cast significant doubt over the prospects for a positive outcome and, as a result, the company has withdrawn its current application.”

Robin Stracey, Cesca photo

Robin Stracey, Cesca’s CEO, said,

"We feel compelled to revisit those elements of our plan that appear to have given CIRM reviewers cause for concern.

"Given that we are in the process of gearing up a significant number of sites to begin enrolling patients in a trial that would cost over $20 million to conduct, we need to quickly digest the feedback and address the questions raised. We expect to spend the next several weeks re-validating and/or amending select elements of our plan, with a particular focus on the anticipated rate of patient enrollment, the overall timetable and the design of the statistical plan. Having said that, we remain very excited by the prospects for our program. We believe the science to be sound and the clinical results so far very compelling. Nevertheless, there may be opportunities to refine our approach. It is imperative that we get it right."

The decision by Cesca fits with the CIRM 2.0 effort launched by Randy Mills, president of the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known.  Mills initiated the program in an effort to speed money to researchers and to boost the quality of applications. That means that applications are examined rigorously early on and often sent back for more work, a significant departure from past practices.

It is unusual for publicly traded companies to announce financial difficulties involving their projects, even though federal law says public firms must disclose major financial events that investors should know about.

The review process at CIRM is conducted behind closed doors. The agency does not release information about issues raised at this stage and also withholds the names of applicants for taxpayer cash.

The firm’s stock price closed at 59 cents today, up six cents. The 52-week range runs from 48 cents to $1.24.