Cascade LifeSciences Critiques CIRM Grant Review Process; Questions Raised about Fairness and Facts

Cascade LifeSciences of San Diego is one of the few companies to appear at a meeting of the board of directors of the $3 billion California stem cell agency in connection with rejection of its grant application.

Kenneth Woolcott, chief business officer of the firm, expressed dismay last Thursday night concerning CIRM's scientific grant review process. Among other things, he said that reviewers appeared not to have read the application very carefully.

Following the meeting, we emailed him and asked if he would like to comment further with an eye to making constructive suggestions for changes in the review process. We are asking CIRM if it has any comment on Woolcott's remarks, the text of which follows:

"We were disappointed by the CIRM review and discouraged by the process. I trust that the agency and the applicants will evolve favorably with experience. As our distinguished Gov would say..............'We'll be Back.'

"Our real hope is that through expressing our concerns we will be able to make industry (For Profit) a viable partner in the mission of Prop. 71.

"The mission statement of Prop. 71 makes very clear that although science is a laudable goal it is not the end game. Products that treat, cure, or enhance our lives are the end game. Fast forward 10 to 15 years and I would like to be so bold as to suggest that the ultimate arbiter of the success of CIRM or Prop 71 will be PRODUCTS. Not research achievements, not publications, not patents, not even Nobel Prizes. All of these will advance our efforts and are important metrics and may even contribute to the economy of California. But John Q. Public will only benefit directly by the development of innovative stem cell related PRODUCTS that I believe will change medical approaches to disease in fundamental ways.

"I am a lawyer and the CBO of Cascade LifeSciences, but I am also a taxpayer. I also have an industry bias cultivated over 20 years with two of the San Diego biotech pioneers, Hybritech and IDEC. What I know about stem cells I have learned, what I know about product development I have lived.

"I believe industry and CIRM share the goal of product development. Although cutting edge science and academic excellence are part of the goal, we believe that industry must be the conduit through which PRODUCT run the clinical, regulatory and marketplace gauntlet.

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(Editor's note: Here is a brief sketch of the firm provided by Woolcott.)

"Cascade LifeSciences

"Founded 2007
"San Diego, CA
"Howard Birndorf, Chairman
"Kenneth Woolcott, Chief Business Officer
"Sophia Khaldoyanidi, Ph.D, MD , Chief Scientific Officer
"Larry Respess, General Counsel
"Exclusive Licensee of Novel SCNT technology developed at Oregon Health Sciences University (OHSU) and published in Nature, Nov 2007. (First successfully SCNT in Primates)
"Dr. S. Mitalipov , inventor of SCNT patents and consultant on human SCNT effort.

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"Our Expectation

(Editor's note: Woolcott's detailed comments follow.)

"CIRM RFA 07-05: New Cell Line Awards

"Page 1, Program Objectives --'Somatic cell nuclear transfer (SCNT), a method for reprogramming that is well-established in several mammalian species, has not yet been achieved with human cells, but recent success has been reported in non-human primates.' [This is Dr. Mitalipov's work published in Nature and exclusively licensed by Cascade]

"Page 2. 'The needs may in the future be met by derivation of hESC following SCNT...'

"Page 2. 'CIRM proposes a new program to address the need for new types and sources of human pluripotent stem cell lines and for the optimization of existing methods for their derivation"

"Cascades Reasoned Expectation:

"Translation of our SCNT primate work into the SCNT generation of hESC is right in the 'strike zone' of the RFA. We were very pleased the CIRM had seen the wisdom of opening up the grant process to industry to help fund this critically important translational research that can neither be funded by the NIH nor is of interest to all but a very few private investors.

"Cascades Competitive Appreciation.

"iPS is a very important scientific avenue of research but SCNT is a very competitive alternative especially for PRODUCTS that are intended for human use.

"Cascades Experience with the Grant Review

"Grant review comments were factually incorrect. Not a matter of subjective scientific debate. Hence, the conclusions were fundamentally flawed. For example, reviewer #1 comment was 'lack of novelty, pure translation of the non-human primate work into humans.' This seems to defy logic and the mission of human therapeutics. Moreover, this does not seem to be consistent with the objectives published by CIRM in its RFA, which specifically calls out the 'hurdle' of human SCNT as a fundable goal.

"A second example of a reviewer's factual error is the comment 'The ability to generate individualized human embryonic stem cell lines using somatic cell nuclear transfer from either healthy individuals or patients with specific disease states is an exciting and yet technically demanding prospect. To date, no one has successfully cloned human embryonic stem cells, although recently, a group at University of Oregon Heath Sciences Center has successfully derived primate embryonic stem cells, with an efficiency of approximately 0.3[s1] %.' This is factually incorrect at two levels and we are unsure of where the reviewer got the 0.3% efficiency rate. Our November 2007 Nature paper calls out 0.66% efficiency at page 497. Our grant application (filed Jan 2008) describes in detail at page 8, Confidential, non-published information, 'These results represent a significant reduction in the number of oocytes required to produce a single ESC line over previously reported efficiency (from 152 to 30) providing the important foundation to conduct the proposed studies in humans.' One ESC out of 30 oocytes is actually 3.3%.

"As we all know development of therapeutics for the monkey population is a very low margin business. [Sorry could not resist]

"Moreover, at the CIRM IROC meeting Dr. Uta Grieshammer, specifically presented the review committees grant criteria and noted specifically that the review team was advise that 'novelty' was NOT a priority for these types of grants. Also at the meeting, Dr. Trounson announced that no SCNT grants had been made due to some sort of vague policy concern about access to human oocytes and the challenges this had created in other countries. First, this was 'moving the goal posts' after we had submitted our grant application. Second, we appreciate the challenge of securing oocytes but we at Cascade had been fortunate enough to secure commitment from LJ IVF clinic to supply all the oocytes we need to proceed with our effort. Moreover, if this was truly the reason for flagging our grant application as non fundable, CIRM should have just told us that in writing and explain how they were going to proceed, if at all, in the area of SCNT.

"We filed a formal request to rebut the conclusions and comments of the reviews but were told there was no such process. We now understand that after our departure on Thursday, Rusty Gage, one of our esteemed colleagues here in San Diego was allowed to rebut reviewer comments and did receive funding. We are unclear on how this rebuttal process works and why we were denied any opportunity to dialogue on the merits.

"We are now told that my discussion at CIRM was flawed because I did not address the mistake regarding efficiency of our SCNT. This is unfortunate, as we were told our request for rebuttal was rejected and that we were not allowed to discuss the merit or lack of merit of the specific review of our application but our 3 minutes was limited to expressing our concerns about the process and our suggestions for improvement from an industry perspective.

"How did this happen? Mistake? Miscommunication? Misunderstanding? Bias?

"Suggestions and Action Items for Consideration

"Industry representation on CIRM grant review teams

"Formal appeal process or ability to respond in writing to reviewer comments. See, SBIR, STTR, NIH funding for models of review cycles.

"Holding the review team to the published review criteria--e.g., in this RFA, novelty is not a priority criteria.

"One of the review criteria should always be the impact of the research on the advancement of human product development.

"If the Rusty Gage review reconsideration is as I understand it, it seems that there is one set of rules for a deservingly prominent scientist and a different set of rules for Cascade LifeSciences. We also filed a letter with CIRM asking for the opportunity to comment on our grant review and were denied. This seems, without more complete information, to be unfair.

"Perhaps separate academic/not-for-profit grant application review from for profit review. Comparing not-for-profit grants (institutions that are grant writing machines) with the grant applications of fledgling biotech companies is fundamentally unfair. Anyone who knows me will tell you I am a basketball fan. Using that sport as an analogy, this is like the USA basketball team of young college players competing against the Soviet National Team of grown men that had played together for four years. We all know how that worked out.

"Although I believe that industry is a key element of product development, and we desire to work with CIRM to advance the cause, if their funding criteria or standards are inconsistent with industry participation or pragmatic product development, we need to know that earlier rather than later.

"I am personally and professionally committed to assist CIRM in making industry an equal partner in achieving the mission of Prop. 71. I would look for guidance from the ICOC (CIRM's board of directors) on how we can work through some of these administrative and structural challenges.

"Hope this helps. It is a complex issue for industry as well as for CIRM."

Novocell First Business to Score CIRM Cash

The California stem cell agency chalked up a couple of firsts this past week.

The agency approved its first grant to a California business and its first grants for research into the area of reprogramming adult stem cells.

Novocell of San Diego, Ca., won the business grant. The amount was small -- $48,950. It went for a disease team planning effort.

Reporter Terri Somers of the San Diego Union-Tribune wrote:

"Novocell's Chief Science Officer Edward Baetge will lead a team that will receive a $48,950 planning grant to chart a course for tackling diabetes. The company has shown it can coax stem cells to develop into insulin-producing pancreatic beta cells. The team will seek a larger grant to purify the cells and scale up production of them so they can be moved into clinical trials."

Some of the folks at CIRM and on its board of directors had to be disappointed that more companies did not receive positive funding decisions from the Grants Working Group. Twelve companies had applied for the new cell grants and nine for the disease team grants.

Several directors have noted in the past that it is companies that most directly bring therapies to the marketplace – not academic institutions.

Coming up, however, are other rounds of grants where businesses can compete against nonprofit and academic institutions for California cash. They include the $20 million tools and technology round. CIRM received 140 letters of intent to apply for those grants, including 50 from businesses.

Earlier this year, news of successful research involving reprogramming adult stem cells triggered questions about whether CIRM could or would fund grants in that area. Prop. 71 tilts CIRM's priorities heavily towards hESC research, but it has always had the capability of funding stem cell research in whatever area it desires.

Proof that came on Thursday when CIRM's board of directors ratified decisions to fund a number applications involving reprograming.

Meager Coverage of CIRM Meeting

News coverage appeared light this morning of the two-day meeting of the California stem cell agency and its approval of $24 million in research grants.

We detected only four stories, two in daily newspapers and two in business journals. All were written by reporters who did not attend the meeting Thursday and Friday in Burlingame, Ca., which is located souith of San Francisco.

Given the largely routine nature of meeting, the scope of the coverage was not surprising. Mainstream media are also facing an economic squeeze that has resulted in coverage cutbacks.

Terri Somers of the San Diego Union-Tribune had the lengthiest piece, which focused on the $5 million in grants to enterprises in her area in Southern California. She wrote that Novocell of San Diego was the first company to receive research funds from CIRM.

Steve Johnson had a brief piece in the San Jose Mercury News that said that slightly more than half the grants went to San Francisco Bay area institutions.

The other stories appeared in the East Bay Business Times (San Francisco Bay area publication) and the San Diego Business Journal.

Correction

The "CIRM News Release" item below incorrectly stated that no companies were announced as being funded in the news release from CIRM on its awards for new cell lines and disease team planning grants. The item should have said no companies were awarded new cell line grants.

CIRM Hires John Robson from McGill as Vice President

BURLINGAME, Ca. -- The California stem cell agency has hired John A. Robson, associate dean of faculty affairs at McGill University in Montreal, as vice president for operations at the $3 billion state enterprise.

CIRM President Alan Trounson said Robson will be his top aide. Robson will be responsible for all administrative and operational aspects of the institute and support the work of the Facilities Working Group.

The appointment will free Trounson to get out more often into the stem cell community, confer with scientific and biotech researchers, track research and build collaborative efforts.

The appointment required approval of salary and other employment terms by CIRM's board of directors. The panel approved annual compensation of $310,000 with relocation expenses of $60,000 paid out over five years. It also provided for a payment of $150,000 if Robson is terminated without cause within five years. CIRM also agreed to pay for moving 23,000 pounds of household goods from Montreal to California.

At McGill, Robson's responsibilities included strategic planning, capital campaign planning and recruiting and administrative policy development. Prior to joining McGill, Robson was a faculty member and neuroscientist at the State University of New York, Upstate Medical University in Syracuse.

More details are available in CIRM's press release.

CIRM News Release on Grants.

BURLINGAME, Ca. -- Here is a quick link to the news release by CIRM on approval of $24 million in grants Thursday night. It contains the identities of the winners. One company received a disease team planning grant, but no company received a new cell line grant.

(Editor's note: An earlier version of this item stated incorrectly that the news release did not report any company as receiving a grant.)

More California Dough -- $23 Million -- Rolls Out the Door for Stem Cell Research

BURLINGAME, Ca. -- Directors of the California stem cell agency Thursday night approved $23 million for research grants to develop new cell lines, including reprogramming efforts.

However, they put off until today approval of about $1 million in disease planning grants.

The agency did not announce the names of the 16 winners out of the 50 applicants for new cell line grants. But all of those recommended for funding by scientific reviewers were routinely ratified. Another two grants that reviewers did not think warranted approval for scientific reasons were also approved.

The directors of the $3 billion agency decided to give cash to the two on the basis of "programmatic" and other reasons.

All of the recipients and their grant reviews can be found here, minus their names. The approved applications are color-coded with either white or grey.

The new stem cell round of grants was the first opportunity for businesses to receive research cash from CIRM. Twelve firms applied. But scuttlebutt at the meeting was that none of the businesses won grants. CIRM Chairman Robert Klein declined even to say whether any businesses were in the "recommended for funding" category, when asked by John M. Simpson, stem cell project director for the Consumer Watchdog group.

Ken Woolcott, chief business officer of Cascade Life Sciences of San Diego, Ca., appeared before CIRM directors to express dismay about the grant process. His firm was not recommended for funding. While he did not ask for reconsideration, he said "reviewers simply did not read our application (No. 656) very carefully." He said that with NIH grants, applicants get a chance to respond to reviewers' comments prior to final action – something that CIRM does not formally provide. Woolcott said the firm's "experience was very different from our expectations."

The public review of the Cascade application said the research was "based on a collaboration between the applicant and the only group known to have successfully cloned primate cells." Reviewers expressed concerns that the firm could not get enough human eggs for its work, among other comments.

The two "programmatic" grants won approval after two unusual pitches were made on their behalf. One emotional appeal came from Judy Robertson of Sacramento, Ca., a Huntington's Disease advocate. She has lost four members of her family, including her husband to the disease. The family has donated $500,000 to UC Davis for a Huntington's clinic.

She complained that the review was "factually incorrect." The board discussed the assertion at some length, including comments from audience and staff, without reaching a conclusion on the accuracy of the information. Ultimately, the board approved the grant because it appeared to want to include Huntington's in CIRM's "program."

CIRM Director Jeff Sheehy made an appeal for funding the other of the two "programmatic" proposals. He read a letter from Fred Gage of the Salk Institute, stoutly defending the application. Directors had the letter before them but it was not available to the public, which Klein said was a mistake. Sheehy carried the day, and the Gage grant was approved on a 9-7 vote with one abstention. (The committee officially has 29 members, but only 17 were present and qualified to vote Thursday night.)

Sheehy's reading triggered a discussion not only of the merits of the application but of the sanctity of the review process, which was reminiscent of the flap in January when Childrens Hospital of Oakland Research Institute was the first applicant to publicly appeal a negative decision by scientific reviewers. Childrens was ultimately unsuccessful in that effort

By law, directors have the right to make the final decision on grants. However, they have approved 168 grants since 2004 and rejected only one recommended by scientific reviewers. Any applicant may appear before directors or write an appeal, a fact not well known to applicants. Few have appealed. Presumably they have not done so either out of ignorance or because they do not want to offend an agency which holds the key to their professional lives.

Some CIRM directors were uncomfortable with the Childrens Hospital appeal, and some were still uncomfortable Thursday night.

Oswald Steward, a CIRM director and chairman of the Reeve, Irvine, Resarch Center, UC Irvine, raised the issue of fairness in connection with Sheehy's reading of the Gage letter. Steward said other rejected applicants may not have understood that they could also seek to overturn a negative decision by scientific reviewers.

Marcy Feit, a CIRM director, president of ValleyCare Health Systems of Livermore, Ca.,and a member of the Grants Working Group, said she would "hate to see us redo those reviews." She said was against an "extensive rebuttal process" because it would "undermine" reviewers.

CIRM President Alan Trounson told directors they should accept that reviewers do a "reasonable job" and that disappointed applicants will naturally find fault with the system, which may sometimes include incorrect information. He warned that overturning scientific reviewers decisions could mean the loss of the reviewers, who are already being worked hard.

In January, directors seemed to be looking to CIRM staff for a proposal on how to deal with appeals from applicants. However, other chores, including a $1.1 billion lab building effort, have consumed a great deal of time. We suspect the appeal process may gain more attention in the very near future.

As for the names of the grant recipients and CIRM's take on Thursday night's soirée(It was a thrill a minute!), look for a press release on the CIRM website later today.

The Multi-Million Supplier Debate: CIRM's Current Definition

The California stem cell agency today posted its latest crack at defining which California businesses receive a preference in terms of purchases by recipients of the agency's roughly $3 billion in grants.

Discussion of the definition will come up at tomorrow's meeting of the CIRM board of directors but do not expect any final resolution. California lawmakers have their own thoughts about the matter. Their decision will take precedent over the wishes of CIRM if the legislators have enough votes.

Here is the key portion of the latest CIRM definition of California supplier, which says that it means

"...any sole proprietorship, partnership, joint venture, corporation, or other business entity::

(1) whose permanent, principal office or place of business from which the supplier’s trade is directed or managed is located in California; or
(2) that includes a business unit, division or subsidiary whose permanent principal office or place of business from which the unit, division or subsidiary’s trade is directed or managed is located in California, for the specific product or products that are sold by the unit, division or subsidiary to CIRM grantees; or (3) that employs at least one-third of its total employees in California; or
(4) that produces, builds, or manufactures a product or products in California for the specific product or products that are sold to CIRM grantees; or
(5)that sells a product or products in California, for the specific product or products that are sold to CIRM grantees, so long as the supplier certifies that at least 50% of the cost of the product is attributable to activity undertaken in California."

The material on the CIRM site also shows what language has been changed.

Consumer Watchdog: CIRM Budget Needs More Explanation

Consumer Watchdog's John M. Simpson says a deeper explanation is needed of the proposed operational budget for California's $3 billion stem cell research agency.

The organization is set to routinely approve this week a 46 percent increase in spending to a total of $13 million, all of which is probably justified. But Simpson says CIRM has failed to provide sufficient details, and a clearer explanation is needed.

He cited the "other travel" budget item, which is up 287 percent from the current fiscal year – from $144,000 to $558,000. Simpson said on his organization's blog,

"If the average trip costs $3,000 they've got a budget budget for 185 trips or 4 trips per employee for the year. CIRM would average more than three people on the road every week of the year and that doesn't include travel to ICOC meetings."

Simpson wrote,

"I'm not saying the increases are unjustified; I just don't know."

Simpson also noted CIRM's recurring failure to post background information in a timely fashion in advance of its meetings. Regarding tomorrow's meeting of CIRM's board of directors, he noted that as of 4 p.m. Tuesday, "at least ten agenda items that reasonably would require a written explanation lacked documents."

Simpson pointed to the state controller's office as example to emulate. Controller John Chiang is chairman of a committee that has financial oversight responsibilities for CIRM. Simpson wrote,

"The board's next meeting is at 1 p.m., July 7, in San Diego. Since last week the agenda, with all relevant documents, has been available on the controller's website.

"That's how good, open government works."

More Info Disclosed For CIRM Meeting Thursday, Friday

The California stem cell agency has begun posting background information for its meeting at the end of this week, including scores and review summaries of applications for $26 million in grants.

As usual, the names of the applicants are hidden by CIRM until after the board of directors formally ratifies the decisions of the review panel. Only once has the board rejected a positive recommendation by its reviewers.

The agency is also posting other information for its meeting in two days. Topics with support material include: the proposed 2008-09 budget, changes in the grants administration policy, small gifts to CIRM and changes in the bylaws of the Grants Working Group.

Here are links to the new cell line scores and the disease planning team scores.

Klein's Lobbying Group Opposes Affordable Access Bill

The private stem cell lobbying group run by Robert Klein, who also serves as chairman of the $3 billion state stem cell agency, is formally opposing legislation aimed at ensuring that state-financed therapies are affordable and accessible to Californians.

The opposition of Americans for Cures was noted today in the legislative staff analysis of SB1565 by Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Antelope Valley.

The legislation cleared the Assembly Judiciary Committee today on a unanimous vote. No lawmaker has voted against the proposal in either house. It now goes to the Assembly Appropriations Committee and from there to the Assembly floor. It has already passed the state Senate.

The staff analysis said that Klein's group, Americans for Cures,

"...believe that access and affordability are best addressed by creating larger pools of affordable healthcare insurance, and that policies should accelerate cures, rather than discourage them. It is important to note that the intellectual property provisions in this bill that the opposition contend will create disincentives to commercialize drugs and therapies are very similar to the current and proposed regulations promulgated by the ICOC."

Klein is president of Americans for Cures, which shares the same address as his real estate investment banking firm in Palo Alto, Ca. It is extremely unusual for the head of a state government agency to also lead an advocacy group whose interests are in the same arena as the agency's. Americans for Cures has denied that it is a lobbying group, although it attempts to influence legislation and government decision-makers.

Klein told the Legislative Subcommittee of CIRM's board of directors last week that patient advocacy groups nationwide would be lobbying California legislators on SB1565. It is our recollection that he did not mention the role of his own group, which has nationwide ties with advocacy groups.

The staff analysis also added more information about an independent state body, the Little Hoover Commission, that would be requested under the bill to examine CIRM with an eye to coming up with recommendations, particularly in relationship to the built-in conflicts of interest on its board. The analysis said,

"The Little Hoover Commission is uniquely positioned to review conflicts and make recommendations for improved governance.

"An independent state oversight agency established in 1962, the Little Hoover Commission's role differs in three distinct ways from other state and private-sector bodies that analyze state programs. Unlike fiscal or performance audits, the Little Hoover Commission's studies look beyond whether programs comply with existing requirements, instead exploring how programs could and should function in today's world. The Little Hoover Commission produces reports that serve as a factual basis for crafting effective reform legislation and follows through with legislation or administrative changes to implement its recommendations.

"In addition to the public hearings the Little Hoover Commission holds to develop findings and recommendations, hearings are held and progress reports are issued in the years following the initial report until the Little Hoover Commission's recommendations have been enacted or its concerns have been addressed. These processes uniquely position the Little Hoover Commission to review possible conflicts and make recommendations for improved governance of CIRM and the ICOC, thus helping ensure better accountability to Californians for their $6 billion investment."

At its meeting Thursday and Friday, the board of directors of CIRM is expected to formally oppose SB1565.

Defining Which Businesses Get an Edge in CIRM Research Purchases

The "five-year threshold" language in the California supplier bill dealing with CIRM-funded research is now available online.

For those of you who don't want to click through, here is the text in question:

"'California supplier' means any sole proprietorship, partnership, joint venture, corporation, or other business entity that meets any of the following criteria:
"(A) The owners or policymaking officers are domiciled in California and the permanent, principal office or place of business from which the supplier's trade is directed or managed is located in California.
"(B) A business or corporation, including those owned by, or under common control of, a corporation, that meets all of the following criteria:
"(i) Has owned and operated a manufacturing facility or research facility located in California that researches, develops, builds, or manufactures products for life sciences research, continuously during the five years prior to submitting a bid or proposal to provide supplies to a California Institute of Regenerative Medicine (CIRM) grantee.
"(ii) Has been licensed by the state on a continuous basis to conduct business within the state during the five years prior to submitting a bid or proposal to provide supplies to a CIRM grantee.
"(iii) Has continuously employed California residents for work within the state during the five years prior to submitting a bid or proposal to provide supplies to a CIRM grantee.
"(C) The entity produces, builds, or manufactures a product or products in California and for the specific product or products that are used by CIRM grantees.
"(2) For purposes of qualifying as a California supplier, a distribution or sales management office or facility does not qualify as a manufacturing or research facility."

For more on this see this item.

CIRM Directors to Give Away Millions, No Details Available

With only two days left before the board of directors meeting of the $3 billion California stem cell agency, its public agenda is nearly bereft of any significant information for the public, other than cryptic references.

It is not a trivial matter. CIRM directors plan to give away $26 million at the end of the week and authorize another $60 million in grant programs. Neither of those figures can be detected, however, by examining the "topline" of the directors' agenda.

Indeed, the fact that CIRM's board of directors is meeting is not even of enough significance to be posted on CIRM's home page – although the directors will also be dealing with FDA concerns about hESC clinical trials, how California businesses could benefit to the tune of hundreds of millions of dollar from CIRM research as well as the agency's 46 percent increase in its operating budget.

For those of you not totally familiar with CIRM, it is an arm of the state of California – not a "quasi-public" agency as it has sometimes been described. It is enshrined in the state Constitution. It is subject to the public records and open meetings laws of the state, which declare that the public has a "broadly construed" right to access to information about state governmental matters.

However, CIRM is denying the public and interested parties any timely, specific knowledge of the matters to be decided this Thursday and Friday in Burlingame, Ca., a longstanding CIRM practice for directors meetings, with a few exceptions. Nor will the public have a chance to listen in or participate in the actual meeting via the Internet or teleconferencing, technologies easily accessible to CIRM.

Meetings of the full board of directors of the agency have never been broadcast via the Internet or via teleconferencing. However, directors subcommittees are widely available via teleconferencing in many specific locations in California and even a couple of times in Australia. But those have been a matter of convenience for directors – not the public.

Twenty-eight items are on the agenda this week. As of Tuesday, only one item has an Internet link to background information. Bob Klein, chairman of CIRM, has repeatedly pledged to comply with the highest standards of openness and transparency. Nonetheless, the agency has been generally plagued with a failure to post background material sufficiently in advance of meetings to give the public or interested parties a chance to decide whether to attend the directors' meeting or even formulate a cogent response. At several points, even CIRM directors complained about the not getting material in time.

Our understanding is that the responsibility for the board of directors' agenda lies with Chairman Klein. We are asking Klein for comment on this state of affairs.

(If you want information about the $26 million grant programs mentioned in the second paragraph of this item, you can find it on the California Stem Cell Report – not on CIRM's agenda. The $60 million proposed grant program is the only item that is linked via the agenda. You can find information on that program here.)

Will CIRM Directors Fulfill Prop. 71 Promises?

SAN FRANCISCO -- The California stem cell agency is maintaining a "watch" position on legislation aimed at pushing it into compliance with a state law that could mean hundreds of millions of dollars for California businesses.

At issue is a requirement in Prop. 71 – ballyhooed during the 2004 campaign – that CIRM set standards to ensure that the recipients of nearly $3 billion in grants purchase goods and services from California suppliers "to the extent reasonably possible."

Those standards still have not been set, nearly four years after creation of the stem cell agency. Because of the delay, some biotech companies and lawmakers pressured the agency earlier this year to move more rapidly. To make it clear that they were serious, legislation was introduced setting the standards in state law in the absence of CIRM setting its own standards through regulation.

That bill, AB 2381 by Assemblyman Gene Mullin, D-San Mateo, has easily passed the Assembly and is now before the Senate Health Committee on Wednesday, where it is virtually certain to pass.

On Friday, the Legislative Subcommittee of the CIRM board of directors discussed Mullin's bill, ultimately deciding to continue to watch its progress. The discussion was a bit muddled because Mullin proposed changes in the legislation only a few days before the Friday meeting. They involve a "five-year threshold" for suppliers, but no text of the proposed changes was available at the San Francisco CIRM headquarters. One Sacramento-area teleconference location, however, seemed to have a copy of the latest proposal. No members of the public had access to the Mullin changes.

CIRM Chairman Robert Klein said a five-year threshold for suppliers would discourage companies from moving to California as well as putting new companies at a disadvantage.

CIRM director Susan Bryant, from a teleconference location at UC Irvine, read other suggested "supplier" language from the University of California system. Again, no text was available at the meeting site at CIRM headquarters.

Meanwhile, it was disclosed during the meeting that James Harrison, outside attorney for CIRM, has begun work on separate standards for suppliers and grant recipients involved in the agency's $1.1 billion lab construction effort. Speed is critical in that effort because recipients are required to complete their lab buildings in two years or face penalties.

Later this week, CIRM directors will address the supplier questions during their meeting in Burlingame, Ca. No background information or text of what they are to consider is yet available to the public on the agenda for the meeting, which begins in two days.

California's Big Biotech Loan Program Headed for Approval in August?

SAN FRANCISCO -- The California stem cell agency's proposed $500 million biotech loan program seems to be headed for August action by the agency's board of directors, but not before size of the program, conflict of interest questions and underwriting issues are resolved.

The Finance Subcommittee of CIRM's board of directors discussed the proposal briefly on Friday, identifying policy questions that remain to addressed by the subcommittee. CIRM Chairman Robert Klein, who originated the plan, said the size of the program was critical. Without sufficient bulk, the size of individual loans would be limited. Klein said that clinical trials involve "very large loans."

CIRM Director Duane Roth said that directors also have to address potential conflict of interest questions that might arise during the loan-making process, a concern echoed by John M. Simpson, stem cell project director of the Consumer Watchdog group.

Klein also said that CIRM does not a large enough staff or expertise to handle a loan program. He said it would have to involve some sort of financial underwriting, similar to the type of underwriting practices at Fannie Mae, the housing loan organization.

No documents from CIRM about the program were available at the meeting or before it.

CIRM Directors Nix Kuehl Legislation

SAN FRANCISCO -- The California stem cell agency is preparing to oppose legislation designed to ensure that Californians have affordable access to therapies developed with taxpayer funds.

Too restrictive and premature. That was the sentiment at today's meeting of the Legislative Subcommittee of the board of the directors.

They were talking about SB1565 by Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Antelope Valley. The measure has passed the Senate and faces a hearing in the Assembly Judiciary Committee. No lawmaker has voted against the bill.

Directors pointed out that they already have an affordable access plan in place in their regulations for CIRM-financed therapies. They argued that the legislation would require each product to go before the legislature to determine a price.

Kuehl's measure is a response in part to widespread consumer unhappiness with the high cost of health care and industry pricing of therapies. But Claire Pomeroy, a CIRM director and dean of the UC Davis School of Medicine, said that CIRM's policy "cannot overcome the dysfunction" of the healthcare system. She said the legislature should give CIRM "the opportunity to do the right thing."

CIRM President Alan Trounson said that locking affordability provisions into state law would cripple CIRM's ability to negotiate prices and drive the industry away from developing therapies for diseases with small numbers of patients.

CIRM directors also reacted sharply to a provision in the Kuehl/Runner bill that would make it easier for CIRM to finance research that does not use human embryonic stem cells. The provision seems to play into the hESC vs. adult stem cell debate. CIRM Chairman Robert Klein said that Runner said the change was "very important" to Republican members of the state Senate.

Presumably, recent research developments that demonstrated that adult stem cells can be reprogrammed to take on the pluripotent characteristics of hESC lie behind the proposed change. However, directors said much more work needs to be done before that method can be shown to provide cells that truly match the characteristics and usefulness of embryonic stem cells.

Kuehl's bill also would request a study of CIRM by an independent body that would report back to the legislature next year at this time with recommendations for changes, including dealing with the built-in conflicts of interest at CIRM. One CIRM director is currently under investigation for violating the state's conflict of interest laws. And the board of directors is dominated by members from institutions that are benefiting to the tune of hundreds of millions of dollars in research grants.

Directors said that they understood that the state's Little Hoover Commission has already indicated it is going to perform the inquiry, regardless of the fate of the Kuehl bill.

Directors did not have a quorum at today's meeting and thus could not vote on a position on the legislation. However, their sentiments will come before the full board of directors next week, which is certain to oppose the Kuehl measure.

Here is the latest legislative staff analysis of the measure and the CIRM staff analysis, which we should note was well done.

We will have more later on other legislation discussed today by the Legislative Subcommittee.

Half-Million Salary for Klein?

SAN FRANCISCO -- Back in the early days of the California stem cell research effort, its newly elected chairman – millionaire real estate investment banker Robert Klein -- said he would not accept a salary for his work.

Now that is changing. He could be drawing a salary as high as $508,750, perhaps as early as this year. But the money may not come from state coffers.

The question of salaries for both the chairman of CIRM and the vice chairman came up during Thursday's hearing on the agency's budget for 2008-09.

John M. Simpson, stem cell project director for the Consumer Watchdog group of Santa Monica, Ca., asked whether the budget included salaries for the chairman and the vice chair.

The answer was no. But Klein, who has held his post since December 2005, said, "It's true at some point this issue needs to be addressed."

He said that personally he would like to see "non-taxpayer dollars" used for salaries for the chairman and vice chairman rather than using funds that could be used for research. He indicated that he would not be averse to raising private funds for salary purposes.

The vice chairman of CIRM is Ed Penhoet, also a multimillionaire. He does not accept a salary. We are querying him on his position on salaries.

Coming Up

Directors of the California stem cell agency later today will consider state legislation affecting CIRM. We will have a report on that meeting late this afternoon Pacific Daylight Time.

$13 Million Approved for CIRM Operations

SAN FRANCISCO -- The Finance Subcommittee of the California stem cell agency Thursday approved a 46 percent increase in its 2008-09 budget, which will total $13 million and push staffing close to the legal limit of 50.

The panel of CIRM directors made no changes in the budget that was presented by CIRM staff. Their questions largely centered on clarifying line items in the budget.

CIRM Chairman Robert Klein and director Jeff Sheehy both defended an increase in travel that seems to be up at least 287 percent from the current year, for a total of $558,000. However, that figure is for "other travel." Travel expenditures are also lodged in other budget areas, but were not broken out for Thursday's meeting.

Citing this week's agreements with Canada and the Australian state of Victoria, Klein said more collaboration is expected internationally. He indicated that travel is expected to both Great Britain and Washington, D.C. -- this to deal with federal stem cell legislation and regulation.

Klein said the agency "really needs to have our science teams to have access to leading-edge research." He said meetings with other scientists help CIRM prepare grant proposals that effectively target the most promising areas of research. Sheehy said that while some persons tend to regard travel as something of a boondoggle, "The conferences are very important. This is really work."

John M. Simpson, stem cell project director for the Consumer Watchdog group of Santa Monica, Ca., praised the budget generally but said more detail was needed for it to be fully understood.

The budget is well within Prop. 71 limits, according to CIRM, based on average allowable allocations. Those allocations showed that CIRM will be spending $1.8 million next year on legal expenses, up from $1.2 million this year. That includes its own legal staff and outside legal contracts.

The budget goes to the full board of directors next week, where it is expected to be approved.

We have asked CIRM to provide a breakdown of travel expenses in all categories and a breakdown on external contracts. We will carry that information when we receive it. We also asked Klein to clarify the organizational changes noted in the budget. He said he would get back to us on the language in the spending plan.

Differences in Old, New Versions of Budget Appear Minor

A quick, line-by-line examination of the old and new proposed budgets for CIRM for 2008-09 (see item below) shows only tiny differences in the two documents.

We could be wrong, but none of the major figures appears changed. In fact, the only change we could detect is under the "accomplishments" section.

The old document (posted a couple of days ago) said CIRM "awarded" $167 million in facilities grants to eight institutions. The new document says CIRM "awarded" $195.8 million in grants to eight institutions.

All of which raises a probably picayune question concerning the figures. Why are they different from those announced in May when a CIRM press release said its directors "voted to distribute" $271 million to 12 institutions. Our assumption is that the figures in the budget document actually represent checks going out to the institutions, and that four still have not been actually funded. But we could be wrong, and we have asked CIRM about the numbers.

CIRM Changes Budget Plan for This Afternoon's Meeting

The California stem cell agency has posted a revised operating budget for the fiscal year beginning July 1. The spending plan will be discussed at its directors' Finance Subcommittee meeting this afternoon along with CIRM's proposed $500 million biotech loan program.

The new budget document does not show what changes have been made from the one posted earlier this week nor does it indicate that it has been changed. The agenda as well does not indicate the presence of a revised document. No reason was given for posting the revisions.

Also added for today's meeting are additional teleconference locations where the public can listen to the discussion and comment as well. Those locations include: La Jolla, Los Angeles, San Diego, San Francisco, Pleasanton, Berkeley, Irvine, Carlsbad and Palo Alto.

No background documents have yet been posted on the biotech bank proposal for today's meeting which begins 5 ½ hours from now at 3:30 p.m. PDT.

Deep Yogurt, Biotech and the Anguish of Big Pharma

SAN DIEGO -- Biotech investment guru Steve Burrill Wednesday took hundreds of BIO attendees on a warp speed overview of the state of the industry now and in 2020.

His flight was fast and furious, and he may have caught some sign of skepticism in the crowd. Undeterred he told them he may be off on the timing of his predictions, but they were coming -- probably sooner rather than later.

Some of his observations may have been unsettling to some. Babies will have chips inserted into them at birth to track their health. Walmart will be the model for the delivery of health care. Healthcare seekers will wear T-shirts embedded with technology that will touch their heart, among other things. Self-care will be the order of the day.

Say goodbye to those blockbuster, high-margin drugs. Hello to even more generics. Consumers will drive the market. Big Pharma, already suffering the anguish of expiring patents, will suffer more. Can you spell patent devaluation, he basically asked his audience. The biopharmaceutical industry will have to be re-invented. He said:

"Our friends in Pharma are in deep yogurt."

Research and development will migrate overseas. Pricing will be set on a global basis. Burrill declared,

"Every company is global from Day One."

The average age of death, now about 80, will climb to 100. No longer will health care providers wait for the disease and then try to ambush it with low chances of success. Instead, providers and consumers will be out front, moving to prevent those nasty germs and tumors from even getting a start.

As for financing biotech business, things will pick up later this year. And in 2009, industry will start to roll. "It will be a very good year, a year from now," he said.

Burrill's comments were based on one of his firm's latest studies: "Biotech 2008: a 20/20 Vision to 2020." The report can be purchased online for $295, or $430 if you want bound copy.

Not Coming Up

We are going to hold Steve Burrill's comments today on the future of biotech for later dissemination. It seems there is a surfeit of stem cell news.

CIRM Legislation on Affordable Access Moves Forward

Legislation aimed at ensuring affordable access to California-financed stem cell therapies easily cleared the Assembly Health Committee on Tuesday and is headed for a hearing next week in the Assembly Judiciary Committee.

Meanwhile the California stem cell agency has posted its own analysis of the bill, SB 1565 by Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Antelope Valley, setting the stage for CIRM directors to take a position on the proposal.

The vote Tuesday on the bill was 16-0. No lawmaker has voted against the bill as it has moved through the Senate and now in the Assembly. If it clears the next committee, it will go to the Assembly floor, but it will have to return to the Senate for concurrence in Assembly amendments.

The CIRM analysis of the measure did not make a recommendation on approval or support. But it said, among other things,

"SB 1565 appears to tie the price for any and all commercialized products to the lowest pricing based on the current benchmarks of the CalRx program in effect at this time. Any change to that price over time, given any new circumstances, need for flexibility in order to leverage commercialization on products for “orphan diseases” or even for time itself would require a change in statute with more than 70 percent vote of both houses of the Legislature as well as approval by the governor. Any change would further be delayed by a minimum of one year in order to enact authorizing statute."

The analysis also took note of another change in the bill since it cleared the Senate. That amendment would delete a Prop. 71 provision that requires a two-thirds vote of the CIRM grants working group to fund research that does not involve pluripotent or progenitor cells. The Prop. 71 provision is aimed at giving a priority to hESC research.

The bill has also been altered to request, instead of mandate, a study of CIRM by an independent commission with an eye to preparing recommendations for changes in its structure, including its built-in conflicts of interest on its board of directors (ICOC).

According to the Assembly staff analysis of the legislation, its authors believe that "given the ICOC/CIRM's unique formation as a public entity, the public's investment of $3 billion in bond funds, and the close-knit nature of the scientific community, the ICOC and CIRM warrant a high level of scrutiny by an independent body...to ensure public trust and confidence and protect the integrity of the ICOC and CIRM from real or perceived conflicts of interest."

The CIRM Legislative Subcommittee will discuss the bill at its meeting on Friday. Its analysis also discusses two other state measures and links to their text and analysis. However, the CIRM link to the analysis for SB1565 is for an older version of the bill. Here is the link to the latest analysis.

Stem Cell Watchdog Warns of the Lure of the World Stage

San Diego – The Consumer Watchdog group today sounded a cautionary note on the international agreements involving CIRM (see item below) and warned that they "should be supported so long as they are based on scientific merit, not merely the glamor and glitz of playing on the world stage."

John M. Simpson, stem cell project director for the watchdog group, noted that California law requires that CIRM-funded research be conducted within the state. Prop. 71 also requires that California suppliers be given preference, an issue that is now before the California legislature.

Simpson said in a statement,

"If the collaborations are driven by the science, that’s great. If it’s a matter of saying let’s go international, just to play on the world stage, I would be dubious."

He continued,

"It’s important that applicants for the disease team grants be judged completely on the scientific merit of their proposals,. Decisions cannot be twisted for geographic equity. I would hope that international collaborative efforts would rise to the top, but if they don’t, so be it."

Sweeping Cancer Fight Launched by CIRM and Canada

SAN DIEGO -- Backed by $100 million in Canadian cash, the Canadian government and the California stem cell agency today announced a three-year effort to probe the role of cancer stem cells in developing the disease.

California Gov. Arnold Schwarzenegger said in a statement:

"Entering into collaborations such as this, which bring together leading medical research capabilities, have great potential in improving the lives of not only Californians, but people around the world."

Canadian Minister of Health Tony Clement said his government will contribute more than $100 million to the Cancer Stem Cell Consortium, which will work with CIRM on the effort.

A statement from CIRM said,

"The first potential area for collaboration under consideration is the upcoming CIRM Disease Team grants. These grants will provide an opportunity for researchers in California and Canada to collaborate, broadening the potential pool of expertise that can be applied toward research in a specific area."

CIRM's board of directors next week is scheduled to approve $1 million in planning grants for the disease program, which will run about $122 million. Those grants are expected to be awarded this time next year.

CIRM President Alan Trounson said,

"One of CIRM’s primary goals is to accelerate the field of stem cell research as a whole. In some instances we can do this more effectively through collaborations that involve the best scientific endeavors, regardless of geography. Through this relationship, CIRM money will continue to be earmarked only for research that takes place within California, but our funding can be significantly leveraged to accelerate the clinical benefits for patients. Coordinating our joint efforts in cancer stem cell research through collaborative programs with our colleagues in Canada will enhance the opportunities to contain and to prevent recurrence of certain cancers."

The Canadian/California announcement said the the Canadian partners in stem cell consortium are the Canada Foundation for Innovation, Canadian Institutes of Health Research, Stem Cell Network, Ontario Institute for Cancer Research and Genome Canada. The news release said they "are expected to make an initial investment of more than $100 million Canadian dollars in the collaboration, with Genome Canada, the Canadian Institutes of Health Research and the Ontario Government through the Ontario Institute for Cancer Research, having already confirmed commitments of up to $30 million each for cancer stem cell research. CIRM will support the collaboration through its existing programs."

CIRM also announced another collaborative agreement between the Australian state of Victoria, also utilizing the disease team grant program. The announcement said CIRM and Victoria are "laying the foundation for an arrangement under which they will jointly seek grant applications, evaluate them, and make recommendations for funding research activities." (Trounson is from Australia, moving to California to take the presidency of CIRM in January.)

The announcement did not indicate any funding beyond the $122 million from CIRM.

Both announcements were made at the BIO conference here, which has attracted an estimated 20,000 persons from throughout the world.

Schwarzenegger made a luncheon speech at the conference. Video clips are expected to be mounted on his web site later today. His office also prepared a California biotech fact sheet that highlight CIRM's $1.1 billion lab construction effort and its $530 million in research grants.

CIRM Budget to Jump Nearly 50 Percent

The California stem cell agency has proposed a $13 million operating budget for its next fiscal year, up 46 percent from this year's spending plan.

The proposal's biggest increases are for salaries and benefits -- $6.7 million, up 39 percent – and external contracts – $2.7 million, up 50 percent. The agency is proposing to increase its staff from 37 to about 45. Prop. 71 caps staff size at 50.

The "other travel" category is scheduled to jump 287 percent, to $558,000. CIRM said the increase will allow the scientific staff to attend meetings that will enable CIRM "to have an integrated picture of state of the art and forward-looking research agendas."

The spending plan also seems to shift more responsibilities to CIRM Chairman Robert Klein. The document said,

"The proposed budget reflects the redirection of legal and communication staff and contracts, as appropriate, from the Office of the President to the Office of Administration and the Office of the Chair. It also reflects the creation of the new Office of the Vice-Chair/President which is focused on intellectual property issues."

No further explanation was offered.

The budget for the $3 billion agency will be taken up tomorrow at a meeting of the Finance Subcommittee of CIRM's board of directors. It will then go to the full board at its meeting June 26 and 27.

The budget presentation is lucid and reasonably complete but was posted yesterday, only two days before it is scheduled to be discussed publicly.

Canadian Money and Gladstone/Yamanaka Research

SAN DIEGO – Robert Klein, chairman of the California stem cell agency, and Alan Trounson, its president, are in San Diego for the mammoth biotech industry conference -- BIO -- that has attracted about 20,000 persons.
They are scheduled to hold a news conference later today to announce more developments in the California/Canadian stem cell research partnership. Their event appears to be tied to Ontario Premier Dalton McGuinty's announcement Tuesday that his province will pony up $1 million for new stem cell research linked to California. That's on top of $30 million announced a year ago.

According to CBC News, the research will be conducted by Shinya Yamanaka of the Gladstone Institute in San Francisco. Also part of the research effort are the University of Toronto and the Hospital for Sick Children in Canada.

Rob Ferguson of the Toronto Star reported:

"'Both centers will be collecting patients with various diseases and making (ips) cells,' said Dr. Deepak Srivastava, director of Gladstone and a pediatric cardiologist."

We will have more on the Klein/Trounson news conference later today as well as a report on the biotech industry outlook by Steve Burrill, head of the Burrill & Co. biotech investment firm in San Francisco.

CIRM to Dish Up Millions for New Cell Line Research

The California stem cell agency next week is scheduled to hand out $25 million in grants for development of new cell lines and $1 million to help institutions that plan to apply later for $122 million in disease team planning grants.

The new cell line round is the first to be open to businesses based throughout the United States, although they must have a "research site" in California as of Feb. 5 of this year. Twelve firms have applied for funding. Fifty applications in all were received for 16 grants.

Fifty-nine applications were received for the 20 disease team planning grants, including nine businesses.

Also on the agenda for June 26 and June 27 in Burlingame, Ca., is the budget for CIRM for the financial year beginning July 1, CIRM's positions on stem cell legislation in California and Washington, D.C., a report on gifts to CIRM, consideration of a new round of grants for translational grants, "consideration of issues affecting" the $271 million lab grant programs and much more.

The agenda lists 28 items but, as usual at this point, does not contain any background material on any of them, including the decisions made by grant review committee on the new cell line and disease team planning applications. Some material is likely to be posted before the actual meeting.

Link to IP Law & Business Story

The item below originally omitted the link to the story about CIRM and IP. You can find the story here if you use the magazine's free registration.

California Stem Cell Cash – Last Resort for Business?

Revolutionaries, uncertainties and big California bucks are all part of a piece in IP Law & Business magazine this month dealing with the state's $3 billion stem cell research agency.

Written by Joe Mullin, the cover piece explored the world of IP at CIRM, including comments from Robert Klein, chairman of the agency, and concerns from biotech businesses.

Klein was described as maintaining "the rhetoric and stance of a combative underdog." Mullin wrote that Klein spoke to a group of stem cell activists last spring, firing them up for the fray.

"'How many people do you think it takes to start a revolution?' he asked the crowd. 'I can tell you, it's many less than the people in this room.'"

Mullin noted the importance of California's $3 billion for research at both academic institutions and businesses. But he said that the fact that California has called for payback on some of its investment is troubling to some in industry. He wrote:

"...(If) California is any guide, state funding may usher in long periods of uncertainty, and new demands for a much larger share of the proceeds from any discoveries than what the life science industry has seen before."

Mullin continued:

"By contrast (to the federal government), California's stem cell agency is still an unknown quantity, and that spooks the biotech industry. 'There is an oft-repeated concern that IP will need to be shared with competitors,' says (Paul) De Stefano(a Fish & Richardson partner and former chief corporate counsel for Genentech Inc.). 'Whether that's a legitimate fear or not, I've heard literally dozens of investors talk about it,' he adds.

"BioTime Inc., for instance, had considered applying for a small CIRM grant-only about $300,000-but has decided to look elsewhere for now. The company's CEO, Michael West, says he still might apply for a CIRM grant, but he'll keep the money away from BioTime's core business so as not to burden the company with what he calls 'completely unrealistic' state royalty rates."

Mullin wrote:

"The fact that CIRM is considering changes to the IP policies is 'disquieting, to say the least,' says Palo Alto-based StemCells, Inc. general counsel Kenneth Stratton. His company, which along with Geron is well-established by industry standards, won't say whether it is applying for a CIRM grant. But like West at BioTime, Stratton says that the requirements make CIRM money expensive and less attractive than other options. The agency is at risk of becoming a 'funder of last resort,' says Stratton."

However, Mullin quoted CIRM officials as saying it is currently processing 50 grant applications from businesses. That number undoubtedly will rise as more requests for applications are forthcoming from CIRM.

Our comment: Klein is inclined to flourishes that are keyed to his different audiences. On one hand, he fires up activists with rhetoric unsettling to businesses. On the other hand, he assuages industry anxiety at sessions involving his generous $500 million biotech loan proposal. Business concerns about uncertainty are financially quite legitimate and to be expected. However, those concerns will never be completely alleviated, and California has a big bundle of cash previously unavailable to industry. CIRM has an obligation to cut the best deal possible for the people of California.

(Access to the IP Law & Business article requires free registration, although it calls the process a "subscription.")

CIRM Directors To Take Crack at Budget and Stem Cell Legislation

Next week, the $3 billion California stem cell agency will air for the first time the proposed spending plan for its upcoming fiscal year, which begins only 11 days following the budget session.

A draft of the proposed budget has not yet been posted on the agency's website for next Thursday's meeting of the Finance Subcommittee of CIRM's directors. The panel has also scheduled an informational presentation on the proposed $500 million biotech loan program, including discussion of "portfolio policies" and use of consultants. Background information on that presentation is also not yet available.

In another meeting next week, the directors' Legislative Subcommittee is scheduled on Friday to consider state legislation aimed at ensuring affordable access to CIRM-financed therapies. That measure, SB1565 by Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Apple Valley, has passed the state Senate and is now before the Assembly Health Committee.

The bill would also require an outside study of CIRM to completed by about this time next year, with recommendations for changes in the agency's structure and procedures.

CIRM has not yet taken a position on the bill, but has opposed similar legislation in the past.

Also up for consideration by CIRM directors is other state legislation (AB2381) aimed at compelling CIRM to follow through on a Prop. 71 requirement to give preferential treatment to California businesses. The bill by Assemblyman Gene Mullin, D-San Mateo, has passed the Assembly and is scheduled to be heard June 25 in the Senate Health Committee, chaired by Kuehl.

CIRM is moving on its own to deal with legislative concerns about failure to comply with Prop. 71, but CIRM's proposal seems to leave the door open to more competition from businesses from out-of-state than Mullin's measure.

Other legislation scheduled to be considered by CIRM directors is AB2663 by Assemblyman Mervyn Dymally, D-Compton, and AB2296, another Mullin bill. The Dymally measure, now in the Assembly Health Committee, would provide for Medi-Cal coverage of stem cell clinical trial expenses, under certain conditions. Mullin's 2296, which passed the Assembly 76-0 and is now before the Senate Judiciary Committee, seeks to deter what its backers believe is an alarming increase in attacks on scientists who use animals in research. The measure is sponsored by the University of California.

CIRM has not posted any proposed positions or analysis of any of the measures. But you can find the latest legislative staff analysis on the bills on the following links: SB1565, AB2381, AB2663, AB2296.

The CIRM committee has also scheduled a "consideration of status" of federal stem cell legislation, including the stem cell bill vetoed by President Bush nearly a year ago.

The main meeting locations of both CIRM committees is San Francisco, but remote teleconference locations are available. For the legislative group, they include Sacramento, Irvine and Elk Grove. For the finance group, they include Pleasanton, Irvine, Berkeley and Carlsbad. The specific addresses can be found via the agenda links in the second and third paragraphs of this item.

CIRM Proposal to End Peer Review Requirement

The Consumer Watchdog group has detected a proposed, far-reaching change in how grants could be awarded by the $3 billion California stem cell agency.

John M. Simpson, stem cell project director for the Santa Monica group, reported on his blog Wednesday that CIRM is proposed to eliminate language that requires peer review of grant applications. Instead, the CIRM president, currently Alan Trounson, would review the applications.

Simpson quotes a CIRM spokesman as saying that the language is intended to apply in the cases of applications for small grants for conferences and workshops. However, Simpson notes that the proposed language goes well beyond that.

He said that the language in the grants administration policy that would be eliminated is:

"'All research proposals will be peer reviewed so that the most promising scientific proposals are funded.'

"The reason given:

"'This is a substantive change to allow for the possibility of Program Announcements under which the President, rather than the GWG(Grants Working Group), will review applications.'"

The change comes up at a June 20 meeting on the grants administration policy. Simpson said he will suggest modification of the proposal so that it would not strike the peer review requirement. Instead Simpson would add the following:

"Proposals to fund conferences, symposia, workshops or similar events will be reviewed by the President."

CIRM Dredging Up Old Economic Controversy

Four years ago, supporters of California stem cell research ballyhooed the economic impact of the Prop. 71, the ballot measure that created the state's $3 billion inquiry into human embryonic stem cells.

A $200,000 study commissioned by the Prop. 71 campaign predicted healthcare savings of as much as $12.6 billion over 30 years and a net state government profit of at least $1 billion. The study was instantly a bone of contention during the campaign and long after and held up as an example of stem cell hype.

"Hopelessly optimistic" was how one reasonably detached writer, David Hamilton, described the campaign analysis in a "biotech bubble" story for Slate.com.

The study was ordered up by then Prop. 71 campaign chief Robert Klein. Now chairman of the California stem cell agency, Klein has commissioned another economic impact report by the same organization, Analysis Group of Palo Alto, Ca. This time the study will cost only $49,900 but it comes at the expense of taxpayers – not campaign donors. It also diverts funds from other activities of the stem cell agency. The question is why?

With few exceptions, no one is likely to deny that California's stem cell research can benefit the state economically. The principal dispute is about the magnitude of the impact. However, this latest study suffers from the same problem as the first. It is not likely to produce a finding that runs contrary to the beliefs of Chairman Klein and other supporters of the stem cell research. That leaves CIRM open to credibility challenges.

The study is also not necessary to convince true believers. And adamant opponents will never believe it. That leaves only a tiny segment of the population as a propaganda target, if one is to believe Klein. He has repeatedly minimized the size of that group, citing overwhelming support for hESC research among the general population.

The study will certainly generate several results – none of which is favorable for CIRM. It will raise questions about unnecessary spending of taxpayer money. It will rekindle a debate about the true economic impact of CIRM, stirring up controversies better left dormant. And it will feed concerns about stem cell hype on the part of the agency and raise questions about its credibility.

Here are samples from the David Hamilton's piece Feb. 6, 2007, in which the former Wall Street Journal reporter wrote that the campaign study appeared "hopelessly optimistic."

"To begin with, they assume that stem-cell treatments will work in the first place. Many of the most hyped biotechnology innovations of the last 25 years have yet to live up to their early promise. And when they do work, they often tend to improve medical care at the margins instead of revolutionizing it."

"What about the potential of stem-cell research to spur economic development—can a state that sponsors stem-cell research hope to attract cool scientists who will then draw others, plus a coterie of entrepreneurs and venture capitalists? Biotech companies do tend to cluster in places like San Francisco and Boston, but their overall impact on regional economies tends to be limited. While they often pay high salaries, the vast majority of these companies are tiny, unprofitable startups with fewer than 100 employees. They frequently collapse well before they earn a dollar in sales. Even successful biotech ventures are often bought out by distant drug companies, which sometimes shut down the acquired company while transferring its research activities and any products elsewhere."

Hamilton also cited a study by Richard Gilbert, a UC Berkeley economist, who estimated California's potential royalty income from CIRM research could be as low as $18 million compared to $1.1 billion suggested by the 2004 study by the Analysis Group.

We could be wrong about all this. Perhaps the Analysis Group will produce a study that is hailed as balanced, objective and useful. CIRM tells us to look for the report, originally scheduled for January, to appear later this month.

Stem Cell Research, Money and State Efforts

The United States is lagging behind other countries in terms of its global share of human embryonic stem cell research, but that could change as more states pump dollars into the effort.

That's the upshot of a report by Aaron Levine(pictured), assistant professor of public policy at Georgia Tech, in the online publication Cell Stem Cell.

He said supportive policies and public research dollars in the United Kingdom, Israel, China, Singapore and Australia are producing unusually large shares of published hESC research.

However, the Georgia Tech press release on Levine's work says,

"Venturing where the federal government fears to tread, states like California, New York, Connecticut and Maryland are becoming places researchers can turn to for human embryonic stem cell funding. But Levine thinks that development may complicate matters.

"'There are a variety of funding sources out there now, but it makes the field more complicated for scientists to follow the various rules set forth by the states and foundations,' said Levine. 'I think scientists would prefer clear oversight from a federal government that’s supportive of their research.'

"Levine plans to follow up this current work with a look at how collaboration is affected by these different state policies."

Monya Baker of Nature's Niche stem cell blog also wrote about the study.

She reported,

"'The study chips away at the question but doesn't necessarily take into account a number of other factors,' says Stanford University’s Jennifer McCormick, whose work has also found that the rate of the US publications in human ES cell research was lagging relative to other countries. For example, the study does not control for the fact that some countries invest more in commercial than academic research or that some countries recognize patents covering human ES cell research and others do not. "

Andrea Gawrylewski of The Scientist had this:

Brian Salter, professor of politics and biomedicine at King's College London, said the Levine study does not take into account the hierarchy of journals and journal impact factors. She quoted Salter as saying,

"Underperforming countries may have scientists who go for the higher status journals."

Fresh Human Eggs and Stem Cell Economics

The price of human eggs and their scarcity, at least for stem cell research, once again have risen as topics, but this time in New York.

The events in the Empire State, however, dovetail nicely with a similar, ongoing issue at the Golden State's $3 billion stem cell agency.

Hawk-eyed Jesse Reynolds of the Center for Genetics and Society in Oakland, Ca., spotted the New York egg issue and reported on it on the Biopolitical Times.

He wrote on June 3,

"One aspect that caught my eye, not surprisingly, concerns the sourcing of fresh human eggs for cloning-based stem cell research (a.k.a. somatic cell nuclear transfer, or SCNT). Although NYSTEM's brief authorizing law is silent on this and related issues, such matters have been deliberated by NYSTEM's Ethics Committee. The draft strategic plan reveals the Committee and the program's governing board are considering offering compensation for women to provide eggs. (pages 26-27)

"This would be an unfortunate deviation to the generally agreed-upon practice of only reimbursing for expenses. I am aware of no ethics committee that has endorsed payments,* and of only one research team which offered them (and that was before the consensus against compensation crystallized in 2004). The good news is that there is still time for input: NYSTEM has not explored the issue in depth, and the Ethics Committee will discuss the topic at its next meeting."

Earlier this year, we reported that the California stem cell agency has embarked on a review of the human egg market and the needs of researchers, some of whom are complaining that they do not have enough raw material.

The study was set in motion after Harvard scientist Kevin Eggan told the CIRM Standards Working Group that he and his colleagues had spent $100,000 advertising for donors and "pursued every option" for collecting eggs with little success.

CIRM President Alan Trounson said "accessing those eggs is no trivial matter." He said scientists are seeking grants from CIRM for research that may not be feasible because of the lack of human eggs.

A wide-ranging review of the issue and related topics is expected to surface publicly at CIRM sometime this year. Issues that may be aired include: availability of eggs and their numbers, researchers' perceptions of the problem, possible reimbursement of IVF treatment, use of eggs by CIRM researchers from other areas where compensation restrictions are not so tight (such as possibly New York) and the grandfathering of cell lines that were derived before CIRM regulations were adopted.

The subject comes under the Standards Working Group, which has a July 25 meeting scheduled in Los Angeles. However, no topic for that session has been announced. We are asking CIRM when the egg issue will come up.

On other related notes:

The Feb. 28 meeting of the Standards Working Group on eggs and other matters carried a reference by CIRM Chairman Robert Klein to an "opinion" by CIRM outside counsel. We queried CIRM about the opinion. Here is the agency's response:

"There is no email or other written legal opinion from James Harrison regarding reimbursements for IVF costs. The transcript from the working group reflects that Bob did query Harrison during the meeting asking him to send a copy of law 1260 (SB1260 by Sen. Deborah Ortiz), which deals with payments for eggs. Harrison did send the bill in an email and that is what is referenced in the transcript. Bob requested that so that he could show a section toward the end of the bill that explicitly states nothing in 1260 is designed to change anything in Prop. 71."

Marcy Darnovsky of the Center for Genetics and Society also has a rundown on writings by feminist scholars on eggs and cloning-based stem cell research. You can find the citations and links to the articles here.

San Francisco Business Times Surveys CIRM

Reporter Ron Leuty of the San Francisco Business Times put together a wide-ranging series of articles this week on the state of California's stem cell agency.

The six pieces cover everything from CIRM's proposed $18 million training program and $500 million biotech bank to its lab construction grants and CIRM-connected research results. Leuty wrote:

"Nary a segment isn’t touched in CIRM’s strategy: companies, newly minted researchers, community college biology students, cutting-edge investigators, small labs, shared labs and big buildings. Likewise, (CIRM Chairman Robert) Klein said CIRM’s portfolio of funded technologies, products and disease targets will be broad. At the very least, stem cells could offer the pharmaceutical industry a more accurate and more animal friendly way of testing the toxicity of drugs. At most, they could change the medical treatments forever."

Much of the ground is familiar to our readers, but Leuty brings a fresh look and interviews with businessmen, scientists and others that are worth reading. Unfortunately the articles are locked behind a subscription only web site. But our bet is that Leuty will ship you copies if you send him an email. He can be contacted through the Business Times website.

It is also a likely bet that CIRM has ordered up some reprints as well. If not, they should.

Fresh Comment

Larry Ebert of the IPBiz blog has posted a comment on the Koch/Murphy item below.

Koch's Experience

An attorney, who must remain anonymous but who is familiar with intellectual property law, sent the following re Nancy Koch in the item below:

"Chiron's chief IP attorney, under whom she worked, was a strong and insightful patent portfolio strategist, so she probably has good experience from working with him."

Murphy and Koch: IP and Presidential Consulting

The California stem cell agency has picked up a couple of consultants – one for intellectual property and one to advise its president – with contracts totalling $230,000.

Nancy Koch (see photo) has been hired part-time for six months through Oct. 7 on a $150,000 contract to deal with IP matters. Richard Murphy snagged an $80,000, four-month contract to assist CIRM President Alan Trounson. It is Murphy's third tour of duty at the $3 billion agency.

Murphy first served on CIRM's board of directors and then as the $300,000, six-month interim president at CIRM. His latest contract runs through July 31.

In response to a query, CIRM reported that Koch was deputy general counsel of Chiron Corp. and its successor Novartis Vaccines and Diagnostics, Inc. During 11 years at Chiron/Novartis, Koch was responsible for a wide range of intellectual property matters including litigation and licensing. Between 1983 and 1995, Ms. Koch worked at the Farella, Braun and Martel law firm in San Francisco.

CIRM Looking for More Help

The California stem cell agency is continuing to hire, currently listing eight openings ranging from a public relations staffer to an intellectual property lawyer.

If it fills the positions, staffing at CIRM will hit about 39 persons, creeping up on its legal limit of 50.

Recently, CIRM posted an opening for an attorney (salary up to $165,000) to deal with legislative matters and provide legal support to CIRM Chairman Robert Klein. The position would also assist outside counsel on conflicts of interest, deal with agency regulations, the biotech loan program and bond financing for CIRM as well as "finalizing" intellectual property regulations. The agency has also been seeking a staff IP attorney for some time at a salary of up $277,500.

Another recent posting is for a science writer/multimedia editor with a salary of up to $75,000. The position would be in CIRM's public relations department with responsibilities for creating videos, writing research summaries and developing pitches for the media.

Other job openings at CIRM include scientific officer, grants management specialist, grants review specialist and two administrative coordinators.

CIRM To Update Goals; Watchdog Urges Openness

The California stem cell agency is moving to revise its strategic plan, as well it should as the field has changed and the ambitious, original goals have not been met.

Just how the changes will be made is unclear. But John M. Simpson of Consumer Watchdog is urging an open process that reflects the spirit of the original proposal. Simpson wrote on his blog:

"...(I)t is essential that the the methodology in developing the plan not be scrapped.

"Key to the plan was the open and transparent way it was developed. Hearings were held around the state. Seventy interviews with 73 individuals were conducted. The interview team even asked me what I thought. Strategic Plan Advisory Committee meetings were public.

"I'm not saying the update needs to take as much, time but certainly it must have the same inclusive approach if it is to win the same broad-based support from all stakeholders that the original plan enjoyed."