CIRM's Latest on Navigating the Financial 'Valley of Death'

Coming up on Tuesday is a three-hour meeting involving the California stem cell agency's ambitious proposal for a biotech loan program that could pump as much as $750 million into the state's stem cell business.

The session is scheduled for San Diego with two teleconference locations in San Francisco. It is a must if you are associated with an enterprise interested in the loans or want to shape policy concerning them. And that includes nonprofit organizations, as well as businesses. The Biotech Loan Task Force seems to be heading in the direction of making the loans available to nonprofits as well as private enterprise. Additionally, funds would probably be available to out-of-state companies, so long as the loans were going to California operations.

The idea behind the effort is to leverage the cash available to CIRM and to help organizations bridge what is called the "valley of death" – an economic gap between research funding and traditional financing.

The plan – brainchild of California stem cell chairman Robert Klein – received a major airing last month. Generally the reception was cordial. Few want to rain on a $500 to $750 million parade, the range of amounts that Klein has discussed offering as loans.

At the invitation of CIRM, Gregory Bonfiglio(see photo), managing partner of Proteus Venture Partners of Palo Alto, Ca., laid the groundwork during the hearing. His firm, which has offices in Boston and Cambridge in the UK, is devoted to developing the business of regenerative medicine.

He told the loan task force last month that currently 300 companies exist that are "pure play regenerative." He said 800 clinical trials are underway in the US involving stem cells and regenerative medicine.

Gone are the bad old days – the "trough of disillusionment" – and, he said, "We're now on our way out."

Bonfiglio said,

"How do I know that? What is the current market dynamic? Well, the current market dynamic, triggered again in part to respond to Prop 71, is that you are seeing an incredible amount of activity at the university level. this technology is so compelling that it has captured the imagination of the best and brightest at our major universities. every major university in the United States now with a medical school has a dedicated regenerative medicine program. There are 65 of them in the US alone. There are another ten to twelve in the UK, and there is also very, very promising research going on in Singapore, in Australia, in China, in India."

He also cited additional changing market forces that have created a more favorable economic climate.

One of the caveats to the program was voiced by Richard Murphy, interim president of CIRM. Jeff Sheehy, a member of the CIRM Oversight Committee, echoed some of Murphy's concerns. Murphy said,

"I think the notion that all of this would be evaluated by CIRM staff is really overshooting. As you know, we're limited to 50 people in the organization. We would need to have real partnerships somewhere to be able to do this in a way that these guys would buy into as partners. I suspect that cannot be done in-house, at least with our present structure."

Klein said,

"We could have a delegated underwriting group that becomes the coordinating officer or the coordinating firm that, just as in the real estate field, the delegated underwriters evaluate the appraisals, the market studies, the toxicity reports, etc. In this field the delegated underwriter, a bank, for example, Silicon Valley Bank, could be a delegated underwriter who could agree to service this for us."

In addition to Bonfiglio, industry was represented at the January meeting by Burrill & Co., Advanced Cell Technology, Invitrogen, Silicon Valley Bank, Bay City Capital and Cooley Godward.

While we are not particularly fond of Powerpoint presentations without additional elaboration, Bonfiglio's is available on the CIRM site along with the transcript of his remarks. Combined, they provide a useful perspective on state of the regenerative and stem cell medicine business.

Day-long CIRM Meeting: No Topic Disclosed

The Standards Working Group for the California stem cell agency is holding a mystery meeting on Feb. 28 from 9 a.m. to 5 p.m. at the Kabuki Hotel in San Francisco.

We can't tell you anything about it. All we know is that the meeting has been scheduled. The agenda contains nothing more than the date and location. A few days ago, we asked CIRM about the nature of the meeting. So far, we have received no response.

Stem Cell Mischief and 'Research Sites'

For the first time in the brief life of the California stem cell agency, businesses based throughout the United States or elsewhere have had a chance to bid for some of the $3 billion in research funds being given out by the Golden State.

There is one catch. The firms must have established a "research site" in California by Feb. 5 of this year, which was the deadline for applications in the $25 million new cell lines program. If applicants did not have a site already in California, they had only about two months to set up one after the request for applications went out in late November.

CIRM reports that 12 businesses have applied, but provides little other information. Nor is the agency checking any time soon to see whether the business applicants, in fact, have "research sites" in California. That will come months from now, after CIRM directors approve the grants, which is scheduled for June. Following approval the CIRM staff will begin an administrative review, which in the past has taken additional months.

Perhaps we are overly suspicious, but given the tight timetable for creating a "research site," it seems that now is the time to check on the existence of these sites. Attempting to do so six months from now is problematic at best and is certainly not a good example of what might be called "due diligence." If there is a difference of opinion next summer between CIRM and an applicant about the existence of the site in February, the evidence trail could be cold and murky.

CIRM cannot tell us whether any firms headquartered outside of California have applied. Ellen Rose, a spokeswoman for CIRM, said the application does not ask for that information.

The application forms, in fact, do not even ask for a specific street address of the "research site," a term which is undefined in the CIRM documents we examined. The application asks only for the institutional mailing address of the organization for purposes of receiving the grant.

Rose said,

"Confirmation of applicant research sites in California is not something we do before accepting the application for review. This is a long technical process, which we will embark on only if the grants are recommended for funding during further administrative review."

She also said,

"The burden is always on the applicant to demonstrate eligibility. If a company can't demonstrate evidence of a California site on Feb. 5, then it is not eligible - this was the same for applicants that were new (either new to California or just new) non-profits, that have applied for grants going back to the first SEED and comprehensive grants."

Perhaps all the business applications come from well-established California firms. (The public cannot know because their names are deemed to be secret by CIRM decree.)

But it would seem to be in CIRM's own best interests to scan the applications within the next few days to sniff out any likely attempts at deception. If mischief is afoot, detecting it six months from now could be an ugly and unproductive business.

PR Laundering Update: Subcontracting Unusual, Says Industry Publication

Marc Longpre of PR Week wrote a piece on Thursday concerning the flap over the Rubenstein PR contract involving CIRM and charges of "laundering."

The article contained the following paragraph:

"Several PR pros told PRWeek that while being subcontracted through a law firm happens on occasion in the private sector, they had never heard of such an instance with a taxpayer-funded organization. Still, one source said that because of the small amount of money involved, the urgency of the matter, and the short-term nature of the arrangement, it did not seem to be a 'big deal.'"

California Governor Says Invitrogen and Biotech Leading The Way

California Gov. Arnold Schwarzenegger was out plumping for the biotech industry this week during a visit to Invitrogen, a stem cell firm located near San Diego.

The firm was Arnold's poster child Monday for growth in a time of increasing talk about recession and lack of jobs. Invitrogen has added 200 new employees to its staff of 4,300 at a time when economists worry about rising unemployment in the Golden State

In some ways, the Schwarzenegger appearance is the flip side of the piece on Monday in the Boston Globe that offered a more jaundiced view of stem cell economic activity in California.

The governor cited the $3 billion stem cell agency and its three-year-old grant program, the largest research effort for human embryonic stem cell research in the world.

"The rest of the world is somewhat jealous," he said.

Schwarzenegger added, "It's all about job creation."

His office mounted an impressive array of biotech industry statistics on the governor's web site, along with a video of a portion of his Invitrogen visit.

Missing, however, from the statistics is an important figure: the size of the California workforce, 18.4 million persons. Adding a relative handful of jobs here and here is going to do little to ease immediately the problems of a lack of economic growth. Even the total biotech workforce – 235,000 – is relatively small potatoes. That said, building economic growth is a brick-by-brick endeavor. No magic solutions exist. But hyping the stem or biotech industry can backfire, as CIRM well knows. California's stem cell agency is still feeling the blowback from the excessive rhetoric of the Prop. 71 campaign.

The governor is a powerful media draw. He noted that six cameras filmed his visit, although he attributed that to interest in Invitrogen and stem cell research. Reporter Terri Somers of the San Diego Union-Tribune was also there. You can read her report here.

Readers from overseas and out-of-state may well learn something from watching the Arnold video. It conveys some of the enthusiasm, energy and commitment to California's stem cell research effort.

Some CIRM Grant Applicants Disqualified

A number of organizations fell by the wayside in bids for CIRM millions in the new cell line and disease team planning grant programs.

CIRM reported 123 enterprises submitted letters-of-intent to apply for the grants. But only 109 applications were later accepted by the stem cell agency.

We asked CIRM whether it had disqualified any of the applications. Apparently so. Here is the response from Ellen Rose, interim communications officer for CIRM.

"There is typically a drop in numbers from letters of intent and applications. In some cases people don't follow up their LOI's and in others, applications were not submitted correctly or on time."

Secret PR for Legal Proceedings? A Comment

Last week, the California stem cell agency was lambasted for "laundering" public relations activities through its outside attorneys.

We called the item to the attention of Jeff Raimundo, a partner in Townsend Raimundo Besler & Usher of Sacramento. Raimundo is a former political reporter and longtime PR practitioner whose operations have spanned California.

Here is his comment:

"This one is not an easy question, in my view. At some point you have to take them at their word, because it does make a difference in how I would see this. Ordinarily, I would agree that PR contracts, products, etc. should be part of the public record and available for scrutiny. Even in those situations, I believe, 'drafts' of documents are exempt from disclosure under the California Public Records Act, so they probably don't need to worry about some 24-year-old junior account executive's ruminations being mistaken for some sort of sage advice or policy recommendation (which is exactly what happens too often with premature disclosure).

"In the case of PR around legitimate, legal proceedings, however, I think it should be kept secret. When we've done this in the past, the lawyers really have been our clients. They want to be able to deal with the trial lawyers' very well-honed and experienced PR apparatus in the case of liability lawsuits and with the prosecutors' (especially federal) equally professional PR operations in the case of criminal actions. Again, I would limit that PR counsel to legal issues only and not include peripheral issues like CIRM board actions or such PR activities as the announcement of new research grants."

Last week, we also reported about an indication that the governor's office may have been involved in the matter. Ellen Rose, a spokeswoman for CIRM, said, however,

"The governor's office was not involved in formulating strategy or in hiring Rubenstein."

The governor's office has not responded to our query.

More Than 100 Requests for CIRM Millions

California's stem cell agency and its dauntless grant reviewers have more than their share of work cut out for them this spring.

More than 100 new applications for some of CIRM's swag have arrived at its headquarters in San Francisco. They include the first ever applications from private businesses.

The applications come on top of the ambitious $262 million in lab grants, which are scheduled to be awarded this spring and which are the largest single round of grants in CIRM history.

Fifty fresh applications, including 12 from business, have been received for the $25 million new cell line program. Only 16 are scheduled to be awarded so the competition will be tough. The number of applicants is down from those announced for letters of intent. Fifty-seven organizations, including 15 businesses, wrote intent letters.

Alan Trounson, president of CIRM, said in a news release,

"We are pleased to have received applications to support research across the spectrum of approaches used to derive pluripotent stem cell lines. Advances in new technologies such as induced pluripotency, while promising, are in their infancy in terms of being able to drive therapies and cures for disease and injury. Therefore, to ensure that research moves forward in all of the areas that have potential to deliver medical advances to patients, these grants will fund the derivation of new cell lies from both the well-established means of human embryonic stem cells, which remain the gold standard for research into pluripotent cells, as well as new technologies."

Another 59 applications were received for 20 disease team planning grants of up to $55,000 each in a program totaling only $1 million. However, the planning grants are prelude to $122 million in disease team grants. Sixty-six organizations sent letters of intent for the planning phase. Nine businesses actually applied, although 10 earlier sent letters of intent to apply..

Trounson said,

"Our ultimate goal is to fund research that will deliver stem cell therapies and cures to patients. By funding this innovative disease team approach that encourages early collaboration among experts in the many disciplines and functions involved in moving a concept from preclinical research into the clinic, we hope to facilitate rapid advances across a broad spectrum of diseases. A key objective of the subsequent Disease Team Research Award will be for teams to produce an approvable regulatory filing enabling human clinical testing within four years after the award."

The scientific members of the group that reviews the grant applications in private come from outside California to avoid possible conflicts of interest. However, their statements of economic interests are not made public by CIRM. The other members of the panel are patient advocates who sit on CIRM's board of directors.

The group's recommendations go to CIRM's board of directors (the Oversight Committee), which has final authority. However, it has never rejected a recommendation for funding from the grant review group, as far as we can remember.

Bean Town Perspective: California Still Waiting for Stem Cell Results

The Boston Globe looked at California this morning and said the $3 billion stem cell research effort in the Golden State is a "lesson" and a "reality check" for Massachusetts.

Reporter Tod Wallack wrote that three years after the creation of CIRM, "Californians are still waiting for some results."

He continued,

"'It's too early,' said Alan Trounson, president of the California Institute for Regenerative Medicine, the agency charged with administering the stem cell funds. 'There are very few substantial developments [in medical science] that have happened in less than 25 years. There have been some, but they tend to be rare.'"

Wallack also noted the conflict of interest problems at CIRM, although he mistakenly reported:

"The stem cell agency rejected several applications for grants because they contained letters of support from advisory board members."

Those letters were written by members of CIRM's board of directors (medical school deans) who are prohibited by CIRM policy from writing such letters. The board is far from an advisory group. It makes the decisions on who receives grants.

The Boston piece downplayed the impact of CIRM's efforts, perhaps a reflection of a parochial East Coast perspective. Pumping money into stem cell research at the rate of $20,000-plus an hour, however, is no small achievement, even though it does not measure up to the perceptions created by the campaign rhetoric surrounding Prop. 71 more than three years ago.

Margolis: Beware the Embryonic Cheerleaders

The Stem Cell Blog run by Stanford's Chris Scott carried an interested commentary the other day from Don Margolis, founder of the adult stem cell company, VesCell, who tackles some of the issues related to reprogramming of adult stem cells.

Among other things, Margolis invokes cancer, criticizes "embryonic cheerleaders" (presumably not unborn pom-pom girls) and attacks "censorship" of those who differ with the heralds of hESC.

Margolis also hails the "refreshing" honesty of such folks as Jamie Thomson, George Daley, Doug Melton and Shinya Yamanaka. You can find the piece here.

Tackling Stem Cell Collaboration

Last week, the Mission Bay conference center at UC San Francisco was the scene of a meeting to discuss issues related to stem cell research. We asked one of those involved in organizing the event, Krishanu Saha, to give us a summary of the session. Here is Saha's report.

"In a successful workshop on Feb. 6 organized by the Berkeley Stem Cell Center and the Berkeley Science, Technology and Society Center, scientists, lawyers, ethicists, academic leaders, and patient advocates across California and the US gathered in San Francisco to discuss collaboration in stem cell research (see the "research roadblocks" item on Feb. 2).

"The morning consisted of three panels that described the problems in three interacting domains - the technical, proprietary, & ethical - of California's stem cell research climate. The need for sharing data on stem cell lines themselves was raised by a panel of practicing scientists, and later echoed by panels of intellectual property experts and ethicists.

"Intellectual property in stem cell tools was debated by both members of academia and industry, especially in regard to CIRM's policy. Legal experts and ethicists detailed the challenges of practicing within a patchwork of regulations across states and with tissue/cell donors.

Patient advocates and industrial leaders stressed their involvement in developing better healthcare during lunch, and in the afternoon, discussion shifted to how institutions could collaborate to deal with the problems laid out earlier. Both within stem cell research and other life sciences, several models of collaboration across states, academic institutions, and hospitals were discussed in an open forum.

"Participants agreed that there was a clear need for collaboration among stem cell research institutions and that California institutions will likely be intensely involved. Creating a database among institutions was seen as a potentially feasible first step, however further conversations will be necessary to determine the membership, costs, incentives, and types of data to include.

More information, including an important policy paper regarding this issue and a summary of the workshop, can be found at http://stsc.berkeley.edu/Events/2008StemCellResearchFeb6.htm.

Arnold Involved in CIRM Legal/PR Strategy?

CIRM documents in the Remcho/Rubenstein PR "laundering" affair suggest that the office of California governor Arnold Schwarzenegger may have been involved at one point – or that somebody connected to either the agency or Rubenstein wanted to engage the governor's aides.

An Oct. 15, 2006, email from Patrick Smith, executive vice president of Rubenstein Associates, to Richard Murphy, interim CIRM president, concerning a conference call about the Monash investigation in Australia contained this sentence:

"Do you (Murphy) want to include someone from the governor's office?"

It was not clear from the 54 pages of documents concerning Rubenstein's business with CIRM what generated that reference. Normally the governor's office does not become engaged in legal or PR strategy sessions of state agencies unless something exceptional is taking place.

It also was not clear from the documents whether gubernatorial aides actually did assist in CIRM's discussions.

We asked Smith what generated the mention of the governor's office in his email and whether the governor's aides became involved. Here is Smith's response verbatim:

"We do not discuss client matters."

We are querying CIRM and the governor's office about the matter.

New Comment

"Anonymous" has spanked yours truly in a fresh comment on the "laundering PR advice" item below. You can read it by clicking on the word "comments" at the end of the item.

Rubenstein Responds to 'Laundering' Charges

We asked Patrick Smith, executive vice president of Rubenstein Associates, for a response on "laundering" charges made below by the Foundation for Consumer and Taxpayers Rights. Following are the questions and his verbatim response.

"Do you think it is appropriate for your firm to 'launder' its advice to governmental agencies through the agency's attorneys? Is this common practice for your firm? Is it a good PR strategy for your client to engage in such surreptitious maneuvers? What is the nature of the contract that CIRM reports it is negotiating with your firm? Does your firm have any links with Rubenstein Public Relations? Please feel free to add any additional information that you think is appropriate."

Smith's response:

"Given the tone of your questions, which assume a negative before you have determined the fact, one wonders if this is a wasted effort. It is not uncommon in situations such as this for law firms to retain p.r. Counsel to ensure that any public statement or action is coordinated with the legal strategy, especially when a confidential investigation is involved."

"Laundering" PR Advice at $3 Billion California State Agency

The California stem cell agency has hired a prestigious New York City PR agency and, according to one watchdog group, has "laundered" its PR advice through lawyers in order to avoid public scrutiny.

The firm is Rubenstein Associates, whose founder, Howard Rubenstein (see photo from the firm) has been described as the "godfather of New York PR." The firm's clients include Super Bowl Champions New York Giants, the New York Yankees, Bloomberg LP and Pfizer.

The Foundation for Taxpayer and Consumers Rights disclosed on Thursday the $10,000 contract with CIRM's outside counsel. The FTCR said that some of the details of Rubenstein's work can be found in 54 pages of CIRM records that the FTCR secured as a result of a public records act request.

The group said,

"The stem cell agency used the tactic (of routing the contract through an attorney) to claim legal 'confidentiality' on public relations strategies...."

The watchdog group said,

"Eight of the 54 pages, which seem to be about specific advice on handling the news media, were redacted because they are 'documents exempt from disclosure on the grounds of attorney-client privilege and attorney work product,' according to Tamar Pachter, general counsel for the stem cell agency."

John M. Simpson, FTCR stem cell director, said,

"'What they've done is launder the public relations advice to a state agency through their outside attorney, Remcho, Johansen & Purcell. Once again the leadership of the California Institute for Regenerative Medicine has shown concern about image, rather than substance, and a continued commitment to secrecy."

Ellen Rose, a spokeswoman for CIRM, said,

"Rubinstein's advice was sought in relation to the news items that appeared in the Australian Herald-Sun about a researcher under investigation for improprieties who worked in the stem cell laboratory run by CIRM's incoming President Dr. Alan Trounson. There was no suggestion that Dr. Trounson was under investigation or involved in any wrongdoing.

"Rubenstein was hired because at the time, CIRM had no communications officer to provide advice and research on the Australian articles and related legal matters. They were hired via our outside attorney because the confidential investigation taking place in Australia may have had legal ramifications for CIRM and knowledge about what was taking place in this area was important for CIRM legal counsel to understand."

The initial, documented overture to Rubenstein came on Oct. 12 last year. However, Bob Klein, chairman of CIRM, has been quoted as saying the Australian investigation was known to CIRM as early as sometime in September or perhaps even August, long before CIRM's former communications director had left.

The practice of using attorneys to cloak certain matters is not entirely uncommon, at least with Rubenstein. Howard Rubenstein told the New York Times in 2006, in connection with celebrity scandals, that if they involve any sort of illegality, he advised "hiring a lawyer who could sit in on meetings, thus giving both star and publicist the benefit of attorney-client confidentiality."

However, this a matter involving a public agency, public dollars and public trust – not some troubled Hollywood personality. The amount is picayune compared to CIRM's overall spending; it gave out grants last year at a rate exceeding $20,000 an hour. But concealing relatively innocuous PR advice can only lead to speculation about what other, more important matters are being hidden because of CIRM's unnecessary desire for secrecy.

Also an issue for concern is the FTCR disclosure that CIRM is currently negotiating another PR contract with Rubenstein. Rose says, however, that it would be with CIRM directly. But given the dubious nature of the Remcho/Rubenstein arrangement, any further dealings with the New York firm would seem to require special scrutiny.

We have queried Rubenstein concerning their views on concealing PR advice to government agencies behind a legal veil. We will carry their comments when we receive them.

You can read reporter Steve Johnson's story in the San Jose Mercury News on the contract here.

Correction

In the "research roadblocks" item on Feb. 2, we incorrectly described one of the sponsoring groups as the UC Berkeley Stem Cell Center. It is correctly called the Berkeley Stem Cell Center, which is a collaboration of UC Berkeley, Lawrence Berkeley National Laboratory and Children's Hospital Oakland Research Institute. Thanks to Lily Mirels for pointing this out.

Klein's Role in Raising Matching Lab Grant Funds

Attention lab grant applicants: Bob Klein wants to give you a hand in raising matching funds to help you secure millions of dollars for your project. Just give him a call.

Klein, as most of you know, is chairman of the agency that this spring will be giving away $262 million for new stem cell lab construction. He is also one of the 29 members of the CIRM Oversight Committee that will ultimately decide which of the lab grant applicants will receive cash to build their projects.

One of the criteria for receiving a multimillion dollar grant from CIRM is a requirement for matching funds – the more dough you can bring to the table, the more competitive will be your application.

Last month we asked Klein about scuttlebutt that he was assisting some applicants in raising matching funds. Basically he said yes, but noted that he is not dealing with any of the specifics of the applications – just helping to raise funds.

He said that one of his roles as chairman of CIRM is to raise funds for stem cell research. He said that if potential donors for a lab grant project call him concerning matters of public record, he has been willing to speak with them. Of course, he noted he is prohibited from discussing the application itself.

We asked him if all applicants knew that he was available to help in raising matching funds. He pointed to the transcript of the Facilities Working Group in November in which he indicated he was willing to assist. He said all applicants have been told to read the transcripts of the facilities group.

Klein said his goal is to raise as much money as possible so that all the applications can be approved. He also said that some applicants with large amounts of resources may be asked to reduce the amount of money they are seeking so that all applicants can be funded.

Obviously, Klein's assistance raises questions about fairness. Are all applicants aware that he is available to assist? He said he may notify them. Is it appropriate for a member of the Oversight Committee to be so directly involved with applicants that he must later sit in judgment on? Klein said his overriding concern is to raise funds for stem cell research and help develop cures for millions.

Here is the text of the November transcript that Klein cited. It came during an exchange with a CIRM attorney, who affirmed that Klein's comments below were correct.

"I previously talked to various members of this, chairman and vice chairman, I think, and/or other members, to make sure that we were considering the fact that there may be donations from donors who come to us. And those donors who are related to some applicant who has publicly on file an application, while we can't talk to the donor about the application, the donor can ask us to see the history, which is a public record, of what grants have been approved for that institution or other historical information related to that institution.

"So the point is we can't talk to the institutions about their applications, but it's my understanding that doesn't mean we can't answer questions as to publicly available information of donors who want to know about the particular institution where we have a public history of making grants that we can point them to."

Biotech Loans: Industry Reaction, 30-40 Percent Failures, IP Qualms

The California stem cell agency's ambitious program to loan as much as $750 million to stem cell companies is the subject of a lengthy feature today by Terri Somers in the San Diego Union-Tribune.

The story is new to her readers so she covered a lot of ground familiar to readers of this blog, but she reported some additional details and comments from several biotech executives. Her story also carried some caveats from one watchdog and a member of the CIRM Oversight Committee.

Comments from industry were generally favorable. William Adams, chief financial officer of International Stem Cells in Oceanside, said,

"From our perspective, if we can pick up a loan for $2 million to $5 million, that helps us get a product into (clinical trials) and helps push us along to commercialization."

Also quoted were Samuel Woods, president of Stemagen in La Jolla, Alan Lewis, chief executive of Novocell, a San Diego-based embryonic stem cell company, and William Caldwell, chief executive of Advanced Cell Technology, now headquartered in Los Angeles.

John M. Simpson of the Foundation for Taxpayer and Consumers Rights, however, was critical of initial suggestions that loans would not carry the same affordability and access requirements as grants.

He said,

"This is an end run around that carefully deliberated policy and that is outrageous."

Jeff Sheehy, a member of the CIRM Oversight Committee, said he was concerned about the ability of the 26-person CIRM staff to administer a loan program.

"I don't think we have the capacity to evaluate and manage these kinds of things."

The loan program is the brainchild of Robert Klein, chairman of the agency. He downplayed concerns about administering the program.

"So we could do the scientific review, but have a delegated underwriter who essentially can, in fact, be in a risk sharing position. Under a risk sharing agreement, for example, that delegated underwriter might get a part of the upside on the repayment of the loan, including a part of the interest revenues."

Somers' report on the Internet carried one skeptical comment from a reader, "Gary63," who wondered about predicted loan failure rates of 30 to 40 percent. He said,

"Stay glued to this story...and follow the taxpayers' money."

More on Wednesday's session on Stem Cell Research

If you are interested in attending the session noted below on stem cell research issues, the organizers are asking you to preregister. You can do that by emailing Joe Tayag at jtayag@berkeley.edu.

Exploring Research Roadblocks and Cooperation

Intellectual property bottlenecks, data withholding and regulatory complexity involving embryonic stem cell research – all are part of a daylong meeting next Wednesday at the Mission Bay Conference Center of UC San Francisco.

Speakers include Bob Klein, chairman of the California stem cell agency, and its new president, Alan Trounson. Others include Jeanne Loring, director of the Center for Regenerative Medicine at the Scripps Institute; Jonathan Auerbach(see photo), president of GlobalStem in Maryland, and Michael West, CEO of Biotime in California, plus a host of academics.

The session is aimed at exploring a collaboration among various institutions to improve research sharing and cooperation.

Here is an an excerpt from a paper prepared in advance of the meeting. The authors are Krishanu Saha, Gregory Graff and David Winickoff, all of UC Berkeley.

"The technical, proprietary, and regulatory conditions currently giving shape to stem cell R&D are far from ideal: closed information, congested entitlements, and regulatory uncertainty present formidable challenges for the conduct of research and its translation into practical applications. Such an environment is likely to slow the pace of innovation, skew the distribution of health benefits towards the wealthy, and force ethical decision-making that lacks public accountability.

"Here we propose an institutional mechanism to coordinate the conduct and governance of human stem cell R&D: a collaboration among academic institutions to collect and make available information detailing the technical, proprietary, and ethical characteristics of cell lines and research tools developed at participating institutions. Centralization would help promote more efficient transfer and use of available and ethically preferential technologies. The coalition could also leverage the collected information to assemble and disseminate complex enabling research tools under common material transfer agreements or patent pools in those cases where multiple patents are necessary but are fractionated across multiple owners."

The session, which is sponsored by the UC Berkeley Stem Cell Center and the Science, Technology and Society Center, also at UC Berkeley, appears to be open to the public with no admission charge.

'California Has Changed Everything'

Christine Vestal at Stateline.org has prepared an excellent and timely overview of funding for human embryonic stem cell research, which was obviously in the works prior to the president's speech earlier this week.

California receives a fair amount of attention, but she provides a good update on efforts in other states and at the national level as well.

Here is an excerpt dealing with the Golden State:

"'California changed everything,' said Bernard Siegel, founder of the Genetics Policy Institute, a non-profit stem cell advocacy group. 'No state wanted to see their best scientists pick up and move to California,' he said. As Gov. Arnold Schwarzenegger (R) predicted when California voters approved their landmark 2004 ballot measure authorizing the stem-cell investment, the message has gone out to 'the world’s scientific elite and aspiring students that, in California, you will find the resources and the freedom to expand the frontiers of science.'

"Now that grant money is flowing, the California Institute of Regenerative Medicine (CIRM) reports it has wooed more than two dozen of the world’s top stem-cell scientists, including Japanese scientist Shinya Yamanaka, who lead the most recent skin-cell discoveries at the University of Kyoto. Yamanaka accepted a state grant in August 2007 and began working part-time in San Francisco to avoid stem-cell restrictions in Japan."

Snippets: Stem Cell Lending to Pizzo Profile

Biotech Loan Program – Coming up Feb. 19 is another CIRM hearing on its ambitious plans for a biotech loan program. This session will be in La Jolla with a teleconference link to San Francisco. If you want to take part in developing the criteria for the effort, which is the brainchild of California stem cell chairman Robert Klein, you should plan on attending or at least sending comments to CIRM. The program could total as much as $750 million, according to Klein, and is aimed at financing development of stem cell therapies in cases where conventional financing is not available. The schedule also calls for a presentation on the plan to the Oversight Committee at its March meeting.

Bush v. CIRM -- The California stem cell agency's statement concerning President Bush and his comments this week regarding stem cell research stirred a mini-debate on a bioethics blog run by Los Angeles physician Maurice Bernstein. You can find the exchange here.

Pizzo Profile – The Fordham alumni magazine carried a nice profile of Philip Pizzo written by Carl Hall, who has covered stem cell issues for the San Francisco Chronicle. Pizzo (see photo from Stanford) serves on the CIRM Oversight Committee and is dean of the Stanford School of Medicine. Among other things, the piece says:

"Even some of the most persistent critics of the California stem cell enterprise credit the value of Pizzo’s steady ethical compass during debate over public oversight and financial standards. While other members of the stem cell governing board filed lengthy financial disclosures, including a fair share of monetary ties to biomedical concerns, Pizzo’s declaration was essentially a blank slate: He steers well clear of any entangling investments, a pattern that can be traced back to his days at the National Institutes of Health (NIH), where he was head of the infectious disease section of the National Cancer Institute from 1980 to 1996."

The piece appeared in the summer issue but we ran across it only recently.

A View from the East

For another perspective on the California Stem Cell Report and whether it follows the party line of the California stem cell agency, curious readers can take a look at the Ipbiz blog produced by Larry Ebert in New Jersey.

On Tuesday, Ebert described this report as a "fantasyland." Today he suggested the report was something of a tool of California's stem cell agency.

California patient advocate Don Reed also weighed in. His comments are contained at the end of the Tuesday item.

Investors to Bush: We Like hESC

While the current president is reiterating his opposition to human embryonic stem cell research, investors are beginning to look to the future.

We have reported previously that the prospect of a favorable presidential change has eased some of the fears of stem cell investors. One further sign is the announcement today that UBS Investment Research upgraded Geron Corp. of Menlo Park, Ca., from neutral to a buy recommendation on its stock.

Thomson Financial reported the move and said,

"'We think Geron could be an attractive U.S. presidential election year play, given that any change in the current administration is likely to create a more favorable environment overall for stem cell research efforts and funding,' said analyst Graig Suvannavejh.

"Suvannavejh also pointed to positive near-term catalysts such the filing of an investigational new drug application for Geron's stem cell therapy for spinal cord injury and an update on the company's partnership with Merck for telomerase-based vaccines."

Geron hit a 52-week high of $9.85 last May and a low of $4.40 last week. At the time of this writing, it was trading at $5.16.

Hawgood Joins CIRM Directors

The California stem cell agency has its second Aussie on board, Sam Hawgood, who joined CIRM's Oversight Committee at its meeting in Burlingame earlier this month.

Hawgood (see photo) replaces David Kessler, the former dean of medicine at UC San Francisco, on the Oversight Committee. Kessler was fired as dean in December and could no longer serve on the Oversight Committee. California law states that the Hawgood/Kessler position must be filled by an executive officer from a UC campus with a medical school. The appointment is made by the chancellor at UC San Francisco.

Hawgood emigrated from Australia in 1982. Another Australian, Alan Trounson, was named last year as president of CIRM. Here is part of what UCSF had to say about Hawgood at the time Kessler was fired.

"Hawgood was named chair of pediatrics in 2004 and physician in chief of UCSF Children’s Hospital, one of the nation’s top children’s hospitals. He also has been instrumental in laying plans for construction of a new children’s hospital at UCSF Mission Bay. He is currently president of the UCSF Medical Group, which represents more than 900 physicians at UCSF."

Neither CIRM nor UCSF issued a news release on Hawgood's appointment nor does the CIRM website yet contain any biographical material on Hawgood.

CIRM To Bush: Harmful and Wrong

The California stem cell agency is accusing President Bush of distorting facts and performing a disservice to millions of Americans who suffer from chronic diseases and injuries.

The agency said Bush intends to "further limit" research into human embryonic stem cells.

The CIRM statement is contained in a press release on its web site that concerned Bush's speech Tuesday night. Interestingly, the CIRM statement is not attributed to either Bob Klein, chairman of the agency, or its new president, Australian stem cell researcher Alan Trounson. In the past, statements such as this have been linked to either the president or chairman.

Here are excerpts from the release followed by the two paragraphs from the president's speech.

"President Bush distorted the scientific facts on stem cell research and did a disservice to the millions of patients suffering from chronic disease and injury for whom stem cell research holds great promise for future therapies and cures."

"The President’s proposals to further limit medical research in this area fail to take into account the intricate realities of the state of stem cell research. Indeed, the recent advances in which skin cells were induced to become pluripotent would not have been possible without research involving human embryonic stem cells."

"Therefore it is critical that all avenues of stem cell research be aggressively advanced. To do otherwise would increase the already devastating restrictions that have burdened Federal support of stem cell research and patients who are depending upon it. This Administration’s position on stem cell research has already cost years in lost research productivity. Further restrictions would result in more lost time in developing stem cell based therapies and cures that hold great promise to alleviate suffering for the most destructive and costly diseases such as spinal injury, loss of sight, heart muscle injury, Parkinson’s Disease, ALS and diabetes."

Bush's comments:

"On matters of life and science, we must trust in the innovative spirit of medical researchers and empower them to discover new treatments while respecting moral boundaries. In November, we witnessed a landmark achievement when scientists discovered a way to reprogram adult skin cells to act like embryonic stem cells. This breakthrough has the potential to move us beyond the divisive debates of the past by extending the frontiers of medicine without the destruction of human life.

"So we're expanding funding for this type of ethical medical research. And as we explore promising avenues of research, we must also ensure that all life is treated with the dignity it deserves. And so I call on Congress to pass legislation that bans unethical practices such as the buying, selling, patenting, or cloning of human life."

Coming Up

After a brief hiatus traveling through Arizona and New Mexico, we are back in Romantic Old Mexico where we are performing romantic boat chores (fiberglass work, installing 400 pounds of batteries and repairing a diesel engine). All of which is preparation for dropping the boat back in the water(currently she is on jackstands in a boatyard, which has four huge, red silos of fish oil as its centerpiece). Later today we will be posting some fresh items on this site. We hope all of you can withstand the suspense.

Coverage of the Cloning of the Cells of Sam Wood

While CIRM was advancing its $262 million lab grant program this week in Burlingame, about 490 miles to the south in La Jolla, a tiny firm called Stemagen was making international headlines with its news about cloning human embryos.

Terri Somers of the San Diego Union-Tribune had one of the first stories on the matter. The paper also had a piece by Sandi Dolbee on the ethics of the issue. The blog of the American Journal of Bioethics has a roundup of links to coverage elsewhere.

The Center for Genetics and Society in Oakland also raised questions about the propriety of the research, which involved the cells (see Stemagen photo on right) of Stemagen's president, Samuel Wood (see Stemagen photo on left) and an anonymous investor in the firm.

Whatever your take on this, along with all the other news on stem cell research in the last few months, it will generate substantially more attention on the field from investors, scientists, supporters and foes.

Meager News Coverage of Stem Cell Lab Grants

News coverage of this week's $262 million stem cell lab jackpot was very light with only three articles appearing in what is generally considered to be the mainstream media.

One of the pieces was written by yours truly for Wired News (although it may not be considered "mainstream"). Terri Somers of the San Diego Union-Tribune focused on the $50 million bid by the San Diego stem cell consortium, which consists of UC San Diego and the Scripps, Salk and Burnham institutes. The San Jose Business Journal carried a brief item that was a rewrite of the CIRM news release.

No reporters from the mainstream media appeared to be present for the Burlingame meeting of the CIRM Oversight Committee at which the lab grant applications were considered, a coverage trend that is likely to continue this year.

That's a mixed blessing for CIRM. Excessive media attention can lead to stories about the agency's warts. On the other hand, not enough makes it difficult for CIRM to deliver its message and build support for stem cell research.

Declining and meager coverage reflects several realities. The novelty of Prop. 71 has virtually vanished in the eyes of most editors and reporters, who generally don't cover most state agencies with any regularity. Newspapers are also laying off staff. Their budgets are hard-pressed because of declining advertising revenue and the need this year to finance coverage, at least at larger papers, of the presidential campaign and the Olympics in China.

Barring a major scandal, we are likely to see minimal coverage of CIRM this year with a minor blip for the awarding of the lab grants, which will come this spring. That event was scheduled for April 23-24 but CIRM is now considering moving it to May because of the crunch of meetings scheduled for April.

Childrens Hospital Loses Bid for Lab Grant; 12 Survive

In their most heated public session in their short history, directors of the California stem cell agency Wednesday night rejected a bid by Childrens Hospital Oakland Research Institute to overturn a negative recommendation on a grant to build a lab to fight sickle cell anemia.

Childrens' request failed on a 5-10 vote despite an impassioned plea by CIRM director Jeff Sheehy.

"This is a no-brainer," said Sheehy. "This is a very promising area of research."

Other board members argued that Childrens' public appeal, the first ever directed to the Oversight Committee, violated the agency's processes, was unfair to other rejected applicants and needed consideration in some future round of grants.

Sheehy didn't buy the arguments. "Let us study it," he said caustically. "Let another person die."

The board's action came during a session that resulted in the relatively routine approval of 12 institutions to advance to the next round of the $262 million stem cell lab grant program, which will judge the actual building plans. Today's review focused on the research proposed for the facilities. All 12 approved Wednesday night were identified earlier as being recommended for funding following a closed-door session involving scientific reviewers who are not required to disclose publicly their financial interests.

Childrens Hospital received a "do-not-fund" decision by the reviewers. Bertram Lubin, president of the hospital, appeared before the Oversight Committee Wednesday night after sending three letters to the members of the panel. (Two of have appeared on this web site.)

He told directors that the grant reviewers did not appreciate the type of research proposed by Childrens. Sheehy, who participates in the closed-door review sessions, concurred.

Lubin also told directors, "When you report on what CIRM has done, this (funding his program)would be a major accomplishment." He said it could result in actual treatments in a year or two, which is a far cry from almost all of the research financed by CIRM.

Some directors, including Chairman Robert Klein, have pushed aggressively for faster work on therapies. Ironically, earlier in the day, a CIRM Task Force explored details of how it could launch a massive loan program, totaling as much as $750 million, to speed development of therapies.

Gerald Levey, dean of the UCLA School of Medicine, did not agree with Childrens' appeal. "I don't think we can run a board this way. If we do, it would be chaos." He was responding to a request by Lubin for a 10 minute presentation Thursday of Childrens' case. Levey warned that allowing the presentation would lead to 50 other rejected applicants coming to the board.

Director Joan Samuelson said that even 100 persons would be okay with her. She provoked laughter when she declared that would show more interest than at any other board meeting.

CIRM's new president, Alan Trounson, who was attending his first board meeting, expressed concern about whether allowing Lubin to make a 10 minute presentation on Thursday would be fair to the five other rejected applicants. He suggested that they might need to be notified and allowed to make a similar pitch, perhaps by phone.

Ted Love, another director, said, "We can't fund everything. He said that if Childrens' research is "really good," they will find funding elsewhere. Both Klein and Trounson indicated that Childrens research might find favor in another round of grants.

However, the board rejected, on a 3-10 vote with one abstention, Samuelson's motion to permit a 10 minute presentation. Lubin was allowed to make his appeal during the comment period alloted to the general public. Speakers are supposed to be limited to three minute presentations, but enforcement of is sometimes lax.

While Childrens was frustrated in its bid on Wednesday, other applicants are going to be disappointed this spring in the second round of the competition. CIRM staff said that if all 12 were funded at the midrange of the amounts alloted in each category of competition, $320 million would be required. The board has already said it will only spend $262 million.

Following the meeting, CIRM released the following statements:

Klein said,

"Investment in facilities to extend California’s state-of-the art research capacity is a critical part of CIRM’s Scientific Strategic Plan to sustain and build California’s global leadership in stem cell research. Through the Major Facilities Grants we are leveraging the impact of Proposition 71 funds with contributions from donors and non-profit research institutions. Our goal is to exceed $550,000,000 in research facility investments that will advance critical stem cell research. Achieving this goal would mean that every one dollar of State funding from Proposition 71 would deliver two dollars in research facility investment."

Trounson said,

"The facility investments CIRM will make through these grants will continue to propel California as a leader in stem cell research. Providing the necessary infrastructure for research is a critical step in laying the foundation for eventual therapies and cures."

The Oversight Committee meeting will continue today with an appeal by the Human BioMolecular Research Institute San Diego of reviewer rejection of its grant application.

The 12 institutions that survived Wednesday night's judgments are Buck Institute, the San Diego Consortium for Regenerative Medicine, Stanford, UC campuses in Berkeley, Davis, Irvine, San Francisco, Merced, Santa Barbara, Los Angeles and Santa Cruz and the University of Southern California.

The agency's press release is not likely to be available on its web site until sometime Thursday morning.

Fresh Comment

"Anonymous" has posted a new comment on the "seeking summaries" item on Tuesday. We would encourage the commentator to share some of his perspectives on the content of the summaries with readers of this blog. They can be filed anonymously via the comment function.

CHORI Lab Grant Bid Gets Help

The bid by Childrens Hospital Oakland Research Institute today received added support in its effort to reverse a negative decision on its application for a CIRM grant to build a stem cell facility that could help sickle cell anemia research.

The support came in the form of a letter from the Greenlining Institute of Berkeley, which has lobbied CIRM on minority issues in the past.

Here is the text of the missive to the Oversight Committee:

January 15, 2008

Dear Members of the ICOC,

The Greenlining Institute is a multi-ethnic public policy and advocacy organization that is dedicated to improving health outcomes for low-income communities of color in California. Our coalition includes civil rights, health, business, and faith-based organizations such as the First AME Church, the California Black Chamber of Commerce, the California Hispanic Chamber of Commerce, the Asian Business Association, the Mexican American Political Association, the Southeast Asian Center, and the La Maestra Community Health Center.

We are disappointed that the application submitted by Children’s Hospital Oakland Research Institute (CHORI) to CIRM for a Facilities Grant was not approved by the CIRM Working Group Committee. As advocates for minority health and the elimination of health disparities, we do not believe that the working group appreciated that a proportion of CIRM funds provided by the vote of citizens of this State should be used to support programs that address the needs of underserved communities. We believe that the work CHORI proposes is likely to benefit a disproportionate number of citizens as a result of the ethnic diversity in this State. We understand that you have the authority to make the final decision on CHORI’s application and encourage you to approve it.

CHORI’s application included a plan to construct a new GMP cellular facility which would perform clinical and translational research using adult stem cells obtained from cord blood and from placenta. CHORI is recognized as a national resource for cord blood and placental cell studies, and in addition to basic research studies, it serves as a core resource for other investigators. CHORI staff have reported that 92% of children with sickle cell anemia have been cured following an HLA matched sibling cord blood stem cell transplantation. This information has previously been presented to ICOC and was enthusiastically supported. As less than 25% of patients with sickle cell anemia have a suitable donor for a stem cell transplant, the research proposed at CHORI has the potential to expand current transplantation practice in our State and throughout the nation. Not only will this impact health and quality of life, it will have an enormous beneficial economic effect. It appears that the working group did not appreciate the need for CHORI’s GMP facility to successfully carry out clinical trials that would benefit our State.

In light of the state’s swelling budget deficit, we cannot afford to ignore any portion of the state’s population—especially its most underserved. To better ensure that California’s diverse communities be included in the implementation of Proposition 71, we urge you to consider applicants for stem cell research grants who have demonstrated a historical commitment to serve the state’s diverse public. The Children’s Hospital of Oakland Research Institute is one such institution. Thus, we urge you to approve the application submitted by the Children’s Hospital Oakland Research Institute at your meeting on
January 16 and 17, 2008.

Respectfully,
Héctor Javier Preciado
Health Policy Director

Joe Araya Tayag
Program Manager, Health

Business Wants CIRM Millions

Fifteen businesses – perhaps some from outside of California – intend to seek grants from the California stem cell agency, a response that one agency watchdog says demonstrates that the private sector is "comfortable" with sharing stem cell wealth with the state.

The agency today announced that 57 organizations filed letters of intent last Thursday stating that they expect to apply for the $25 million effort to develop new lines of pluripotent cells, including research into reprograming adult cells.

John M. Simpson, stem cell project director of the Foundation for Taxpayer and Consumers Rights, said,

"This demonstrates clearly that responsible California companies are comfortable with the the public interest provisions in the stem cell agency’s intellectual property rules. There were those who claimed to speak for the industry, such as the California Healthcare Institute, who warned the regulations would dampen corporate interest. Clearly that’s not the case. This is an endorsement of the sometimes arduous public process that developed the IP rules. I only wish the agency would be as open and transparent in other aspects of its operation. That’s how you build public trust and support.”

Alan Trounson, the new president of CIRM, said,

"We are particularly excited to note that based on the letters of intent we have received there is a good balance between research that derives pluripotent stem cell lines from human embryonic stem cell lines as well as new, highly novel methods such as iPS."

Firms located out-of-state are eligible to compete for the funds if they have a "research site" located in California by the Feb. 5, the application deadline. CIRM did not specify whether any of the letters of intent came under that category.

Details Emerging on Possible Shape of Big Biotech Loan Program

The California stem cell agency today served up a tasty, albeit late morsel to chew on prior to Wednesday's session on the proposed biotech loan program, which could total as much as $750 million.

The document outlined CIRM's basic thinking at this stage, which includes a staff review of loan applications to see whether they merit further review by scientists.

The document seeks input concerning which of the intellectual policy rules for nonprofits should be used in the loan program. It also asks for comment on the following:

Debt Structure/Terms: E.g., five to seven years?

Interest Rates: Adjusted per risk analysis and/or balancing feasibility and program goals?

Subordination: Should CIRM loan be subordinate to bank, working capital lines, venture loans, et cetera?

Security: What would be appropriate?

Milestones: Appropriate benchmarks for payments over five to seven year term?

The hearing begins at 11 a.m. in Burlingame, Ca.

Rejected Grant Applicant Steps Up its Bid for Approval

The Childrens Hospital Oakland Research Institute has beefed up its effort to overturn the initial rejection of its bid for a multimillion dollar stem cell lab construction grant with a second letter that amounts to a "peer review" of the "peer review" of its plan.

The effort by the institute is believed to be the first such appeal by a rejected applicant, although CIRM refuses to confirm that. It also refused to release the letter, saying such an action would be inappropriate. Earlier today, we filed a formal request for the letter under California's public records law. Later, the letter came to us from a source that asked not to be identified (it was not the Oakland institute).

Both letters were sent Monday to all members of the CIRM Oversight Committee, which meets Wednesday to consider the scientific segment of the lab grant proposals.

Grants not approved on Wednesday and Thursday will be knocked out of the running for the second stage of the grant review, which will focus on the building plan. The current stage focuses on the science that is being proposed.

Last fall the CIRM Grants Working Group conducted a "peer review" of all 17 applications. The review was performed behind closed doors with scientists who did not disclose publicly their financial interests -- standard policy for CIRM. Twelve applicants were recommended for funding. Five were rejected, including Childrens Hospital, the University of California at Riverside and Cedars Sinai.

CIRM has identified the 12, in "violation" of its own policy of confidentiality on the names of applicants. UC Riverside and Cedars Sinai confirmed to the California Stem Cell Report that they were rejected. But they have not responded to questions about whether they are appealing the decisions.

The text of the Childrens letter is below.

Childrens Hospital's Second Letter

Here is the text of the latest appeal letter from Childrens Hospital Oakland Research Institute. The boldface indicates the criticism of the Oakland proposal. CIRM refuses to release the actual report by CIRM reviewers, who performed their review behind closed doors.

January 14, 2008

Dear Members of the ICOC:

The critique of the Grants Working Group indicates clearly that the intent and aims of our proposal were misunderstood. We think that the reviewers might have overlooked that the goal of Proposition 71 was to cure disease by the innovative use of stem cells, not simply to explore the possibility of curing disease with ES-derived cells. The reviewers imply that we have requested a facility that will be used simply to process and store blood stem cells for conventional transplant procedures. This is not the case: we have proposed to explore the use of a new type of blood stem cell, discovered here, that has the potential to transform blood stem cell transplantation and make it available to far larger numbers of patients.

Achievement of this goal will however require rigorous research. The research must be very strongly clinically oriented if our discovery is to be translated into something that can be used to cure disease. We should also note that the cost of our facility is relatively modest, particularly in light of the probable direct and near-term benefit to the citizens of California.

We would like to respond to the principal criticisms of the application:

1. No collaboration with established stem cell lab/groups to help characterize novel cellular populations; absence of hESC studies. The focus of our research and the purpose of the application is to benefit California citizens affected by hemoglobin disorders, which afflict a disproportionate number of citizens as a result of the ethnic diversity in this State, through innovative applications of stem cell therapy. We are committed to accomplishing these aims in the near-term, and more important, to apply our research in the clinic by using the safest and most reliable methods. Currently, there is a great deal of uncertainty surrounding the clinical applicability of hESC, and their clinical safety has not been sufficiently well characterized to support clinical trials with these cells in the near-term. Thus, we have elected to apply other methods of regenerative cellular therapy, in part because the safety, efficacy, and availability of other sources of cells are better developed, and we have considerable experience with conducting these trials.

2. Institutional collaborations were not carefully described, and corporate partnerships to develop the products were not included in the application. While we have established institutional collaborations with UCSF, UC Berkeley, and UC Davis, and share CIRM funding with UC Berkeley to conduct stem cell biology training for our clinical fellows, none of these institutions has developed expertise in characterizing placental stem cell populations, which are the focus of this application. Thus, we are uncertain about how collaboration on this subject outside our group would be practical or useful. It should be evident that we have extensive established collaborations relating to hematopoietic stem cell transplantation and cord blood collection, processing, and storage.

3. Poor interdisciplinary collaboration of pre-clinical and clinical research projects, with a lack of track record by some PIs. This criticism ignores information that was clearly presented in the proposal: in fact we have an extremely well integrated program of research. Our proposals were prepared as a result of ongoing interactions by laboratory-and clinical-based investigative teams to 1) collect stem cell populations from placenta to investigate a new source of stem cells that might augment and expand the applicability of cord blood transplantation; 2) overcome barriers to histocompatibility by using photochemical treatment of donor lymphocytes before hematopoietic cell transplantation with mismatched donors. These projects were initiated, and are undergoing further development, as collaborations between basic and clinical investigators devoted to discovering medical therapies for hemoglobin disorders. The goal of these interactions is to translate these ideas into readily available applications of cellular therapy, something we believe is strengthened by our strong track record of conducting successful stem cell transplantation clinical trials for hemoglobin disorders.

4. Clinical research/cores proposed were not innovative and were perceived as currently supported by HRSA/Bill Young stem cell bill. Pre-clinical proposals were nnovative but not sufficiently well developed to proceed to a clinical trial in the near future; perhaps more appropriate in an Element Y application. We propose to construct a facility devoted to novel applications of stem cell transplantation for
hemoglobin disorders, not simply to construct a duplicate facility for housing cord blood collections from California families. This research would involve the collection of placentas for cryopreservation, analysis and mobilization of stem cell populations from placenta, and then processing these cells for use in a clinical transplantation trial that will be initiated in the next 1-2 years. We are currently preparing an IND with the FDA for this purpose. It is important to point out that the placenta-derived hematopoietic stem cells are the first new type of stem cell used in this field since the 1970’s, when cord blood was first used. Federal regulations governing this research have changed dramatically since that time, and are now far more complex. This project is thus truly innovative, and it will serve as a model for other attempts to use stem cells clinically. If proof of principle were provided by this initial clinical trial, the technology then would be applied to existing transplantation efforts, with the goal of expanding and improving outcomes after cord blood transplantation, particularly after unrelated donor transplantation. The proposed research is not supported by HRSA or the C. W. Young bill. The primary purpose of this bill is to establish cord blood banks and develop an inventory of 150,000 units for public use. It is not to perform clinical/translational research like that we have proposed. While a small amount of funds are allocated to support sibling banking ($250,000) by the funded cord blood banks, there are none in California who elected to participate in this sibling effort. It is critical that we have a facility for developing, characterizing, and distributing these cells for clinical transplantation trials. Thus, a GMP/GLP cell processing laboratory and a HLA laboratory are key components in support of the proposed clinical and pre-clinical investigations. This work cannot move forward without a facility.

5. A plan to utilize national networks in order to conduct a clinical trial was not detailed. It should be very clear from Dr. Walters’ track record that he is able to utilize, indeed currently is utilizing, such national networks in a highly productive fashion. The proposed pre-clinical investigations will be transitioned to phase I clinical trials in the very near term, responsive to the Element Z category we employed for this application. By providing proof of principle, this research has the potential to expand current clinical transplantation practice that will utilize HLA – mismatched and unrelated stem cell donors for hemoglobin disorders, a practice that is not routinely available. These will be conducted using multi-center networks that we can access for completing these clinical trials and which were detailed in the application. These include the Center for International Blood and Transplantation Research (IBMTR), the Sickle Cell Disease Clinical Research Network (SCD-CRN), and the Blood and Marrow Transplantation Clinical Trials Network. Our investigative team has leadership positions in these organizations and a successful track record of carrying out similar translational clinical trials in human hematopoietic cell transplantation.

We appreciate the opportunity to present our responses to critiques of our application and hope that the ICOC might look favorably on this and future applications to CIRM that we submit for consideration.

Respectfully,

Bertram H. Lubin, MD
President, Director of Medical Research
5700 Martin Luther King Jr. Way
Oakland, CA 94609

Mark Walters, MD
Director, Blood and Marrow Transplant Program
Children's Hospital & Research Center, Oakland
747 -52nd Street
Oakland, CA 94609

Coming Up

We have been tied up this afternoon with an interview with the new president of the California stem cell agency so we have fallen behind on some interesting events. However, we will post later this afternoon a copy of another letter from Childrens Hospital Oakland Research Institute seeking to reverse an unfavorable recommendation on its bid for a multimillion dollar lab construction grant. The letter is something that CIRM has refused to release. Also upcoming is an item on the 57 letters of intent, including 15 from business, for new cell line grants as well as a post on background information on the biotech loan program hearing tomorrow. For those of you who can't wait, just click on the links in the previous sentence to go straight to the CIRM documents.

Seeking Summaries: The Hunt for How $263 Million Will Be Spent

If you are looking for the public summaries of the applications for $263 million in stem cell lab construction grants scheduled to be considered tomorrow by the California stem cell agency, you will not find them on the meeting's agenda.

Instead they are tucked away under the category of "funding opportunities," although the opportunity to apply has long since passed.

Normally, the agenda for the Oversight Committee contains a link -- at some point prior to the actual meeting -- to the summaries of applications for grants. However, as of this writing, no link was posted on the CIRM website.

When we inquired early today, we were told that they can be found at the "funding opportunities" location. It wasn't clear when the summaries were posted at that location – perhaps Friday, perhaps Monday, we were told by the agency. A spokeswoman for the CIRM said she was going to ask about the reasons for failure to link the summaries to the agenda.

The simplest explanation is that there was a foul-up. Some might conjure up wilder reasons.

Whatever the reason, posting the summaries as late as Monday does not well serve the agency, the public or interested parties. State law requires ample notice in advance of public meetings because some governmental agencies in the past were not notifying the public about matters they were entitled to know. To serve the intent of law well, the agenda must also provide more than cryptic statements. Failure to provide background material well prior to meetings only leads to cynical speculation and creates an atmosphere of distrust.

CIRM had considerable problems in the past posting background material sufficiently in advance of meetings. Even Oversight Committee members complained. The problem seemed to ease a while back. But slippage, including the lab grants matter and also involving the biotech task force, has occurred recently. One would hope the problem will be resolved as the new president, Alan Trounson, settles in.

Zipped Lips and CIRM's $263 Million

A glittering array of 29 scientists and executives rule California's prodigious $3 billion stem cell research effort. In many ways, they constitute some of the finest minds in the business and have even included Nobel Prize winners.

The thinking was that this elite panel of experts could bring their knowledge and wisdom to bear on the world's largest funding effort for human embryonic stem cell research. But this week, many of them will remain mum as $263 million worth of decisions are made.

The group is formally known as the Independent Citizens Oversight Committee(ICOC). More commonly, it would be described as a board of directors for the California Institute for Regenerative Medicine(CIRM). On Wednesday and Thursday, the committee will make critical, initial decisions on handing out $263 million for lab construction at the Golden State's finest research institutions. But only about one out of three of the directors will be able to vote on or even discuss some of the key issues in what is the largest round of grants ever made by CIRM.

The reason? They are associated with institutions that are seeking big chunks of the $263 million jackpot. In many cases they have conflicts of interests that CIRM's attorneys say make it illegal for them to vote or even participate in debate.

The impact goes well beyond silencing most of the board on some matters. It could also create a "quartet majority" in which the votes of four persons could be all that is needed to take some actions. Here is how it could happen, based on Prop. 71, which created CIRM, and an explanation last August from Tamar Pachter, CIRM general counsel.

The strange situation stems from the requirement that many of the Oversight Committee members -- by Prop. 71 decree -- must come from institutions that stand to benefit from CIRM's largess. They include deans of medical schools and executives at the University of California and other academic and research institutions. In fact, of the 12 lab grant applicants that CIRM has publicly identified, 11 have one or more members on the ICOC.

Last summer Pachter told board members that when the time comes to allocate the $263 million into various "buckets" – parcelled out, in other words, into such categories of competition such as "CIRM institutes" and "CIRM centers of exellence" – only about 10 members of the ICOC would not have conflicts of interest. She said,

"They are members who work for for-profits, patient advocates who are unaffiliated with institutions who will be applying for funds. That's it."

She did not spell out the ultimate implications. But Prop. 71 uses the number of ICOC members eligible to vote as the basis for a quorum, rather than the total number of persons on the ICOC. Prop. 71 also states that a quorum is 65 percent of those eligible to vote. Action can be taken by a majority of a quorum. So when 10 persons are eligible to vote, the quorum is seven. A majority would be only four – a fact not directly discussed at the August ICOC meeting.

But Oswald Steward(see photo), chairman of the Reeve, Irvine Research Center at UC Irvine, is one ICOC member who was disturbed by impact of what Pachter had to say. He acknowledged the importance of the conflict of interest rules. But he added,

"A lot of us are going to be left out...It's not just the case we can't vote; we also can't even participate in the discussions. And I think that narrows the field of expertise in a way that is unfortunate."

The ICOC ran afoul of this problem in December when it approved adding $35 million to the lab grant program. Only eight persons on the board were permitted to participate in the debate on that proposal.

The "quartet majority" problem also leads to some interesting speculation about whether it could come into play in connection with the attempt by Childrens Hospital Oakland Research Institute to overturn an unfavorable decision by the Grants Working Group on its lab grant application.

Could the Oakland hospital's bid be approved by only four members of the ICOC? One could argue that ICOC members associated with institutions with competing grants could not vote on Oakland's request because it could affect the amount of funding available for their institutions. But before the Oakland bid can come to a vote, a member of the ICOC has to make a motion to approve it. Then Oakland has to line up three other sympathetic board members.

But it certainly is something that folks in Oakland could be thinking about as well as at the University of California at Riverside and Cedars-Sinai in Los Angeles, two other rejected applicants.