Stem Cell Agency Strikes New Financial Deal with State of California

The $3 billion California stem cell agency has worked out a creative, new financial arrangement with the Brown Administration and the state treasurer that assures the agency of cash at least until 2013.

CIRM was on track to run out of funds late next spring because of the earlier suspension of the sale of state bonds, the agency's only real source of money. When the sales resumed last week, it received only $50.8 million, which is well short of meeting CIRM's obligations to grant and loan recipients.

But new CIRM Chairman Jonathan Thomas said late Friday that CIRM now has what amounts to a $225 million line of credit with the state and assurances of a loan should additional cash be needed. In a telephone interview with the California Stem Cell Report, he said,

"We are in really good shape."

The arrangement appears to eliminate the likelihood that CIRM could run out of funds if the financially troubled state of California suspends bond sales again early next year. The state's current budget is built on optimistic revenue projections, which are not being met. If those fall short, severe, automatic budget cuts will be triggered in January. Under less dire conditions last year, the state suspended bond sales. Gov. Jerry Brown, who last week touted the $50.7 million in stem cell borrowing, has also deplored the state's debt load. Bond interest costs have risen from 3.4 percent of the state budget in 2003-04 to nearly 8 percent this year. That amounts to $2,542 per person, compared with the national median of $1,066, according to The Sacramento Bee.

CIRM's new deal with the state minimizes interest costs through the possible use of commercial paper, which is a form of very short term borrowing with low interest rates.

Here is how the new arrangement works, according to Thomas, who is a Los Angeles bond financier. Currently CIRM has $190 million on hand. The addition of the $50.8 million will carry it through June, which is the end of the current fiscal year. If CIRM has additional financial needs, the treasurer's office will provide up to $75 million through the use of commercial paper, which CIRM would ultimately have to repay.

If the state sells more bonds in the first part of 2012, CIRM will receive an additional allotment that will carry it into the 2012-13 fiscal year. If no bond sales occur, the treasurer's office will provide an additional $150 million via commercial paper over a six-month period. Should CIRM need cash beyond that, the state would provide a loan in much the same way that former Gov. Arnold Schwarzenegger did during CIRM's early days. The chief advantage to the state is that the arrangement helps to avoid the issuance of more bonds this year with their ongoing interest costs. The financial arrangement is subject to a review every six months.

Thomas, who was nominated for his post by both Brown and state Treasurer Bill Lockyer, said the arrangement makes it clear that the California stem cell agency is one of the state's priorities. He said,

"We got everything we want."

We asked Thomas who came up with the idea for the use of commercial paper. He said he could not remember specifically but said it popped up during discussions with the state Department of Finance staff, himself and CIRM co-vice chair Art Torres, a former state legislator and former head of the state Democratic Party. Ultimately the plan was approved in a meeting with Thomas, Torres, CIRM's outside counsel James Harrison and state Finance Director Ana Matosantos.

CIRM's cash needs are increasing as it more aggressively pursues development of clinical therapies. Next spring it is slated to mount a $240 million grant round. The agency has roughly $1.4 billion left, but a good chunk of that will go for operational costs, which are currently $18.5 million a year and are likely to increase. CIRM has projected that it will run out of its bond funding in about 2017.

Gov. Jerry Brown on Borrowing to Finance Stem Cell Research

Here is what California Gov. Jerry Brown had to say yesterday about the $50.8 million in taxable bond proceeds that are going to the $3 billion California stem cell agency. It was a part of a press release touting the virtues of the financially troubled state's most recent borrowing.

Much of the language in Brown's statement appears to have originated with the stem cell agency, which campaigned with the Brown administration for a share of the bond proceeds.

The stem cell agency has not yet responded to our inquiries concerning the amount of money that was provided.

Brown's statement follows:

"CIRM’s approximately $190 million in existing proceeds, plus the additional $50 million, will be used to fund the following program activities:

"• The first Food and Drug Administration-approved clinical trial for a human embryonic stem cell therapy (for spinal cord injury). CIRM’s $25 million commitment to this project has been matched by a $29 million commitment of private funds.
"• 14 Disease Research Teams that are proceeding towards clinical trials of therapies to treat diseases ranging from HIV/AIDS to dry macular degeneration (a common cause of blindness) to neurological diseases such as ALS. One of these awards is a $20 million loan which has generated approximately $20 million in additional funds by the company receiving the CIRM award.
"• Training and internship awards to fund the training of almost 900 promising new scientists and technical staff at the University of California, California State University, California Community Colleges and other institutions in California.
"• CIRM-funded research and related matching funds are expected to create or retain approximately 5,000 jobs per year and more than $60 million in new state and local tax revenues.
"• The current portfolio of stem cell research at CIRM, including the grant programs scheduled through June 2012, have resulted in over 100 scientists and 1,000 other highly-trained researchers being recruited to the state. The Stanford Stem Cell Institute estimates that each of these researchers will bring an average of $1.5 million in research funding to California, for a total of $150 million of additional research funding and associated jobs."

Stem Cell Agency To Receive $50.8 Million in Additional Funding

The California stem cell agency, which was slated to run out of cash next June, will receive $50.8 million from yesterday's sale of state bonds, the state treasurer's office said today.

Under normal circumstances, the agency could be entitled to as much as $350 million annually in bond proceeds. We have queried CIRM concerning its perspective on the impact of this week's funding.

The state of California is in the midst of a severe budget crunch. In January, California is likely to be hit by a wave of automatic, severe budget cuts. They will be triggered if the revenue projections for the current fiscal year (2011-12) are not met. Currently the state is falling short of the projections.

The state is not scheduling any further bond sales this calendar year. It is unclear whether bond sales will resume in 2012. At the beginning of 2011, the state suspended bond sales because of budgetary concerns.

More on CIRM's Restriction of Info on Biotech Applicants

The California stem cell agency says its brief statement this week on restriction of information involving biotech companies was generated in an effort to offer a public explanation of its policy.

In response to a query about what led to the statement, Maria Bonneville, executive director of the CIRM board, said,

"In light of CIRM's efforts to work with companies to develop new therapies, we felt it was important to offer a public explanation regarding CIRM's efforts to balance its obligation to provide information to the public with the need to protect the proprietary information of applicants for therapy development projects."

The California Stem Cell Report will have more on this subject in the next week, including a discussion of how it relates to the state's constitution, which states that the public has as "broadly construed" right to information about state government activities.

California Stem Cell Agency on its Need to Advance Biotech Industry and Restrict Information

The California stem cell agency yesterday posted a 245-word statement justifying its efforts to protect what it calls the "confidential" information of business applicants seeking some of the state's $3 billion in research funds.

The statement appeared on the agenda for next Wednesday's CIRM board meeting under a section dealing with material to be presented by President Alan Trounson. The agency posted no explanation about what led to creation of the document or why it was needed. We have queried CIRM concerning the circumstances surrounding the statement.

In the document, CIRM said its aggressive push into therapy development and closer ties to the biotech industry presents "special challenges." The agency said it must "protect the companies’ proprietary information and their ability to obtain follow-on financing." CIRM also justified its position based on CIRM's need to "advance the biotech industry in California to world leadership."

Earlier this year, CIRM embarked on its first-ever involvement in a clinical trial – Geron's historic trial of an hESC therapy. The $25 million loan was handled in a unique and unusual manner that deviated sharply from other grant rounds. CIRM failed to provide a scientific score on Geron's application, which has been standard practice on more than 1,000 other applications, including other businesses. CIRM failed to provide the usual summary of grant reviewer comments that were also provided on all previous business and academic applicants. The three other applicants in the $50 million round all withdrew prior to presentation to the CIRM board – another first in CIRM's grant program. And no public explanation was provided at the time for the departures from long-established procedures used for more than 400 other approved grants and loans.

The California Stem Cell Report subsequently reported the score – 66 out of a possible 100 – which is a public record. The CSCR also wrote in August about the unusual procedures and the 16-1 vote for Geron funding.

CIRM director Joan Samuelson, a patient advocate who has pressed hard for development of therapies, cast the lone vote in May against the Geron application. She said the trial was not ready, and CIRM was not ready. According to the transcript of the meeting, Samuelson said,

"There were lots of -- this is based on the peer review and the comments by the scientist members of the Grants Working Group. There were many concerns that many of the scientist members felt should be satisfied before embarking on a clinical trial and they weren't."

In August, James Harrison, outside counsel to the CIRM board, also invoked the need to protect business information in the case of the Geron application. In many ways, the most recent statement appears to be a summary of Harrison's earlier remarks to the California Stem Cell Report.

Here is the full text of yesterday's statement from CIRM.

"CIRM has historically balanced its obligation to provide information to the public with its responsibility to protect the proprietary information of applicants. With applications for basic research, for example, CIRM has provided detailed information regarding the applications and the recommendation of the Grants Working Group. Applications for awards involving therapy development, however, present special challenges. In order to succeed in its mission to provide therapies and cures for the millions of patients who suffer from chronic disease and injury and to 'advance the biotech industry in California to world leadership, as an economic engine for California’s future,' it is critical that CIRM work closely with the biotech and pharmaceutical sectors.

"Engaging industry requires that CIRM assure the companies with which it works of CIRM’s capacity to protect the companies’ proprietary information and their ability to obtain follow-on financing. This is particularly true for companies involved in clinical research. At this stage of commercial product development, many things are proprietary (e.g., FDA communications, data, clinical plans, etc.); therefore, CIRM has a significant challenge and responsibility to protect the confidentiality of the companies’ submissions as any violation could have adverse consequences for the companies, including a material disclosure, particularly for those companies that are publicly traded. Consistent with this responsibility and its over-arching mission, CIRM has taken what we think are reasonable and rational steps to protect confidential information while providing the public with critical information regarding therapy development projects and the Grant Working Group’s recommendation."

California Stem Cell Agency Blogs on European Ban on hESC Patents

The California stem cell agency today posted a blog item on the European court decision outlawing patents on products created from human embryonic stem cells that basically painted a bleak picture for the field.

The item, written by Geoff Lomax, senior officer for CIRM's Standards Working Group, quoted James Lawford-Davies, a British lawyer, as saying the decision is regarded as "victory by those opposed to the use of embryos for research in the EU."

CIRM did not release a statement on the decision, but pointed to the Lomax item when asked for comment.

New Scientist magazine reported that the decision was based on section of law that banned patents "contrary to public order and morality." The magazine quoted British researcher Peter Coffey, who is moving to UC Santa Barbara assisted by a $4.9 million recruiting grant from CIRM.

Reporter Andy Coghlan wrote,

"'This is a devastating decision which will stop stem cell therapies used in medicine,' said Pete Coffey of University College London.

"Coffey said that the ruling would not jeopardise or delay planned trials of a tiny eye patch to prevent age-related macular degeneration that he helped develop using stem cells. But he said the ruling could jeopardise other treatments. 'This decision will be a major barrier to patients actually receiving these [types of] treatments,' he said. 'I've just won an international prize from the New York Stem Cell Foundation for translating stem-cell research into clinical practice, yet I now find that Europe, the continent in which I'm doing this research, is basically calling me immoral.'

"In a letter to Nature in April protesting at an earlier prior opinion from the court's advocate general, Yves Bot, Coffey and other researchers warned that a ban would drive research outside Europe and obstruct the development of treatments."

CIRM's blog item triggered two comments from readers, who discussed the impact on Advanced Cell Technology of Santa Monica, Ca., which has a technique that does not destroy embryos.

CIRM Improves Openness, Provides More Timely, Significant Information for Directors Meeting

For the second time in a row, the California stem cell agency is providing the public -- in a timely fashion -- with substantial background information on matters to be decided at an upcoming meeting of its board of directors.

The latest session comes next week (Oct. 26). Among other things, directors are scheduled to approve a $30 million, business-friendly financing program and two new grant rounds totalling $37 million.

For several years, CIRM has failed to provide the public and interested parties ample notice on major and minor proposed programs, effectively barring them from making thoughtful comments or suggestions. Directors also received information late and have sometimes complained in public. The latest agenda represents a marked improvement although information is currently lacking on what appear to be two significant items dealing with CIRM's strategic plan and beefed up PR efforts.

Next week's meeting also shows fewer major items on the agenda than those prepared by former Chairman Robert Klein, which allows more time for discussion of often far-reaching proposals. Additionally, the scaled-down agenda helps to avoid unseemly, late-meeting scrambling to maintain the super-quorum requirements needed for board action. In the past, directors have sometimes left hastily towards the end of meetings in order to catch flights home.

Jonathan Thomas, who was elected chairman in June, prepared a similar agenda for his first board meeting in August. At the end of the meeting, CIRM directors expressed delight at the way the proceedings were handled.

Director Claire Pomeroy, dean of the UC Davis medical school, said,

"I just wanted to congratulate and thank Jon Thomas for a great meeting. It was well organized. It was mission-critical, mission-focused and an impressive debut. So we're awfully glad you're here."

"I second that," said director Sherry Lansing, who is chair of the University of California regents and former head of a Hollywood studio, to applause from other directors.

At the meeting next week, directors will be asked to approve a $35 million proposal for another basic biology grant round. The proposal is aimed at fostering "cutting-edge research tackling significant, unresolved issues in human stem cell biology."

A CIRM staff document said,

"Studies should focus on elucidating basic molecular and cellular mechanisms and should utilize pluripotent stem cells, adult stem cells, and/or their differentiated derivatives."

A separate  $2.2 million "creativity awards" program would fund up to 10 high school students for three years for internships in stem cell research labs. The funding would go to institutions to operate the programs.

The $30 million business-oriented program is a response to findings last year by CIRM's external review panel that the organization needed to be more responsive to industry needs. The biotech industry has been less than happy for some time with its 7 percent share of the $1.3 billion that the agency has handed out so far.

Also coming before directors is a new communications plan, which is not yet available on the CIRM web site. The agency is in the process of hiring a public relations person to work in the chairman's office at a salary of up to $200,000. It has also hired the Sacramento political consulting and PR firm of Townsend Raimundo Besler and Usher to analyze its PR needs and to make recommendations.

Thomas told directors earlier this year that the agency was in a "communications war." In an interview a few weeks ago with the California Stem Cell Report, Thomas said one of his main goals is to generate more favorable media coverage of the agency, which is largely invisible to the public.

Some of the agency's PR expenses can be found on a list of outside contracts that is being presented to directors next week. The list is for the past fiscal year (ending June 30). At a total of $3.3 million, the contracts are the second largest item in CIRM's operational budget, following only salaries and benefits.

The communications plan and changes in the job description of the new PR person will also come before the directors' communications subcommittee one week from today.

Also not available on the CIRM web site are unspecified, proposed changes in CIRM's strategic plan, which could be linked to its push for tangible results that will aid in securing voter approval of more multibillion bond funding of the agency.

Next week's meeting will be at UC Irvine with remote locations where the public can participate in Pleasanton, Sacramento and La Jolla. The meeting will be audiocast on the Internet, but that service will not allow for public participation. More details on the audiocast and addresses of the remote locations can be found on the agenda.

Stem Cell Agency Slated for Share of California Bond Sale This Week

The California stem cell agency, which faces a cash crunch next spring, is scheduled to receive additional funding as the result of a $2 billion state bond sale this week.

The exact amount is not yet set. Tom Dresslar, a spokesman for state Treasurer Bill Lockyer, said,

"The amount will not be known until after the sale is completed on Wednesday."

The stem cell funds will come from the taxable bond portion of the sale, which totals $200 million. Individual investors can still participate in the bond sales today(see here).

Earlier this year, the state suspended bond sales, which are the only significant source of CIRM funding, because of the state's financial crisis. California has the lowest credit rating of any state in the nation. CIRM earlier said it had sufficient funds to operate until June of next year.

It is not clear whether the state will continue bond sales after the beginning of the year, when it will face more financial difficulties. Massive, automatic cuts are expected since the state is not meeting its current revenue projections.

As originally conceived by backers, Prop. 71, approved by voters in 2004, was to have ensured steady funding for stem cell research through the use of bonds, which flow directly to the agency – skipping the normal state budget process.

Reliance on bond funding, however, is expensive, effectively doubling the cost of CIRM research because of interest costs on the borrowed money.

IOM Update: Trounson's Absence Tomorrow Due to Prior Speaking Engagement

The president of the $3 billion California stem cell agency, Alan Trounson, is skipping the opening meeting tomorrow of a sweeping, blue-ribbon review of the research effort because of a prior speaking engagement.

In response to a question, Maria Bonneville, executive director of the CIRM board, said,

"Alan had already committed to speak at the Cerebal Palsy Prevention and
Cure Summit on October 19th when we learned of the first (Institute of Medicine) meeting date. However, the IOM plans to hold two meetings in California, so we expect that Alan will have another opportunity to meet with the IOM committee."

Three other CIRM executives will address the IOM review panel tomorrow in the first public meeting of its inquiry. CIRM is paying the IOM $700,000 to examine its operations to determine whether it is functioning at "peak performance."

IOM Begins 'Peak Performance' Review of California Stem Cell Agency

The $700,000, Institute of Medicine study of the California stem cell agency kicks off Wednesday with a two-day public meeting in Washington, D.C., but the IOM will deal with its conflict of interest concerns behind closed doors.

The blue-ribbon review is expected to play a key role in public perceptions of the $3 billion agency and whether California voters are likely to approve another multibillion bond measure for the unprecedented state effort.

According to the IOM,

"The principal objective of this review is to ensure that all aspects of CIRM's operations are functioning at peak performance."

Harold Shapiro, chairman of IOM
review panel -- Princeton photo

The study, which is funded by CIRM, will be conducted by a 13-member committee chaired by Harold Shapiro, a professor of economics and former president of Princeton University, that is supported by IOM staff. None of the members of the committee are from California.

The session on Wednesday will be devoted to briefings by three top CIRM officials and former CIRM chairman Robert Klein. He will provide a one-hour overview including the agency's funding model and management systems. Jonathan Thomas, the new chairman of CIRM, will provide a 15-minute "charge" to the committee.

Also briefing the panel will be Ellen Feigal, CIRM's senior vice president for research and development, and Elona Baum, general counsel and vice president for business development. Absent from the IOM meeting will be Alan Trounson, president of CIRM. The IOM said the CIRM witnesses were selected by the agency. We have queried CIRM about Trounson's absence.

No time has been allotted specifically on the IOM agenda for public comment.

The IOM report is expected to be released in November 2012 as major financing issues face CIRM. The agency is expected to run out of funds in about 2017, although it will have to scale back its multi-year grant programs sooner if it does not have a guaranteed stream of cash.

On Oct. 3, the California Stem Cell Report queried Adrienne Stith Butler, senior program officer for the study, concerning the meeting. She replied,

"As is typical for a first committee meeting, the committee will meet in closed session for its orientation and the bias and conflict of interest discussion. The sponsor will deliver the charge to the committee in open session. The open session agenda will be posted 10 days in advance of the meeting and a closed session summary (general topics discussed) will be posted within 10 days after the meeting."

We asked Stith Butler why bias and conflict of interest matters are being discussed privately and commented,

"One would think that openness and transparency are paramount in such issues."

She replied by citing a document that spelled out the IOM conflict of interest policy but which did not provide a justification for it. The policy says, in part,

"Access to such information within the institution will be limited to those offices whose proper business requires access to such information."

Our take? It is indeed the "proper business" of the people of California to be informed about bias and conflicts in connection with an investigation of an enterprise that is costing them $6 billion(including interest). Much of the conflict and bias discussion could easily be conducted in public without infringing on the privacy of panel members. Doing so would help to remove questions that are certain to be raised, particularly in the context of an electoral campaign.

It would behoove the panel to move to conduct its initial conflict and bias discussion in public and then go into a private session, if one is actually necessary. A lack of transparency will damage the study group's credibility, particularly in the context of a statewide electoral campaign for continued funding of CIRM's efforts.

In addition to Shapiro, the other members of the IOM committee are Terry Magnuson, vice dean of the medical school at the University of North Carolina; Richard Berhringer, professor at the University of Texas cancer center; Rebecca Eisenberg, professor of law at the University of Michigan; Insoo Hyun, associate professor of bioethics at Case Western Reserve medical school; Gary Koretzky, vice chair for research at the University of Pennsylvania department of medicine; Cato Laurencin, a professor at the University of Connecticut and CEO of the school's Institute for Clinical and Translational Science; Aaron Levine, assistant professor of public policy at Georgia Tech; Michael May, CEO of the Centre for Commercialization of Regenerative Medicine, hosted by the University of Toronto; Cheryl Moore, executive vice president of the Howard Hughes Medical Institute; David Scadden, co-director of the Harvard Stem Cells Institute, Allen Spiegel, dean of the college of medicine at Yeshiva University, and Sharon Terry, CEO of Genetic Alliance, a nonprofit health advocacy organization.

Coming Soon: Fresh Reports from the Stem Cell World

The California Stem Cell Report will be back online with more exciting installments in the next few days.

We have been occupied in the last week or so with air travel to Panama from the Old Country and making repairs to our sailboat/home here in the waters off the isthmus. Electrical power has been restored since we have installed a new voltage regulator and alternator.

Look for more thrilling stem cell tales soon.

Correction

The stem cell summit item earlier today incorrectly identified the writer of the Pasadena newspaper story. The reporter was actually Beige Luciano-Adams.

Stem Cell Confab Attracts Modest Media Attention

The World Stem Cell Summit generated light news coverage on the first day of its meeting in Pasadena, Ca., while the California stem cell agency posted on the Internet six videos filmed during the three-day conference.

Our search turned up only three news stories this morning on the meeting: One in the Pasadena Star News, one on the Chinese news agency Xinhua and one on radio station KPCC. The first two focused largely on efforts to turn research into cures.

Beige Luciano-Adams of the Pasadena paper wrote,

"Hundreds of pioneers and leaders in stem cell research are in Pasadena this week for the World Stem Cell Summit. They're discussing stem cell breakthroughs – and roadblocks."

She quoted Andy Grove, former CEO of Intel and now a patient advocate, as saying,

"'Today patents are used to keep products off the market. This is lethal. This is not what the founders of the (U.S.) patent office envisioned."

Xinhua wrote,

"How do you take the phenomenal scientific research going on in labs and translate it into medical treatments?' said Bernie Siegel, the founder and co-chair of the summit and executive director of the Genetic Policy Institute, which organized the event."

CIRM's communications manager, Amy Adams, posted six videos of interviews with attendees at the conference. One 2-minute, 30-second spot featured Jonathan Thomas, chairman of the California stem cell agency.

He said the single thing he hoped attendees would take away from the conference was the "grand scale of things we currently have in the pipeline." He said the agency has funded research on 26 different diseases. Overall, CIRM has given away $1.3 billion to 453 recipients since 2005.

More videos are likely to be posted in the next two days by CIRM, which has a booth at the meeting and provided $175,000 to support the conference, including funding to send as many 125 persons to the affair.

(Editor's note: An earlier version of this item carried an incorrect identification of the Pasadena Star News reporter.)

Andy Grove: More on Speeding Cures

Recently we carried an item on Andy Grove's views on translational medicine, a subject that now deeply engages the California stem cell community. Today, the San Jose Mercury News ran an interview with Grove, a Silicon Valley pioneer, former CEO of Intel and currently a patient advocate. The piece dealt with his campaign to generate therapies more quickly as well providing a glimpse into his current life.

The article by Lisa Krieger is well worth reading. Here are some excerpts.

"He handles (Parkinson's) disease the way he handles everything else: open and direct. He adopts none of the common tricks employed by sufferers -- clutching a pen, or stuffing hands into pockets -- often used to minimize its visibility. His torso keels with each step, a distorted but determined gait. His arms bob; his fingers fidget.

"Underneath is keen intellect and a growing sense of frustration that medical science has offered him and other patients so little after decades of experimentation."

Krieger continued,

"'He's turned his own encounters into problems to be solved,' said Robert A. Burgelman, professor of management at the Stanford University Graduate School of Business. "He takes a strategic approach.

"'He's an extraordinary man, one of the most focused persons I have every come across. Once he comes to an insight, he follows through on it, turning it into action,' he said. 'And he has an ability to reflect on his own experience and draw insights from that, which is an unusual and powerful thing for leaders to have.'"

Implications of a Solar Power Debacle for the California Stem Cell Effort

What can the $3 billion California stem cell agency learn from Solyndra?

The topic came up at a staff meeting on Monday at the San Francisco headquarters of the agency that has pumped $1.3 billion so far into stem cell endeavors in the Golden State.

For those who have not followed the Solyndra debacle (see here, here and here), it involves the abrupt shutdown of the solar power enterprise in Fremont, Ca., and shuttering of a new, state-of-art manufacturing facility. It appears that the federal government has lost a $535 million loan to the company. The FBI is conducting an investigation along with Congress. Executives of the firm have refused to testify before Congress, citing their constitutional rights. Approximately 1,100 people have lost their jobs.

Where do CIRM and Solyndra converge? Both are involved in cutting edge technology. Both are engaged in financially risky areas of business. The stem cell agency, however, is on the funding side, as is the federal government in the case of Solyndra, which is/was engaged in development and production, much as are CIRM grant recipients.

In an interview Monday with the California Stem Cell Report, CIRM Chairman Jonathan Thomas said a staff member brought up Solyndra at the Monday meeting. The subject is increasingly important to CIRM as it engages the biotech industry more aggressively with grants and loans in a push to actually move research into the marketplace.

During the discussion, Thomas said he stressed the need for the agency to be "totally realistic" and "completely factual" about company plans. He said CIRM must have "excellent procedures" when evaluating stem cell enterprises. "Deep due diligence" is necessary, he said.

The stem cell agency has provided only 7 percent of its largess to business, but is likely to boost that amount by many tens of millions of dollars – if not hundreds of millions – in the next year or two. CIRM's funding will run out around 2017. It is seeking to come up with tangible results that will resonate with voters should it decide to ask for more multibillion dollar infusions of cash.

All that is occurring within the biotech industry, which has a business failure rate of 90 percent. Only a handful of biotech firms turn a profit.

But without taking risks that are nearly certain to make elected officials and policy makers uneasy(probably after the fact), CIRM is unlikely to spur the development that fulfills its mission. And that is not to mention the exceedingly high expectations fostered by the 2004 ballot campaign that created CIRM. How the tiny agency balances risk and research will be a key ingredient in how it is perceived by voters and whether they will give thumbs up to its continued existence.

UCSB Reports Peter Coffey's Move from the UK

The news that eminent British stem cell researcher Peter Coffey has found a new home on the seaside campus of UC Santa Barbara was officially released today.

As the California Stem Cell Report first disclosed on Aug. 25, Coffey will begin work in November. UCSB was aided in recruiting Coffey with a $4.9 million grant from the California stem cell agency.

Coffey's move from the University of London represents a significant addition to California's stem cell community, which has been well nurtured with $1.3 billion from CIRM since 2005.

In the school's press release, Coffey said,

"I appreciate being part of a thriving community backed by CIRM, which now allows opportunities that until now were not possible. To work with the UC Santa Barbara group –– the stem cell and macular degeneration centers –– is truly exciting."

Coffey will direct UCSB's Center for the Study of Macular Degeneration. The news release said,

"The long-term goal of Coffey's research is regeneration of the diseased eye. Age-related macular degeneration, diabetic retinopathy, and retinitis pigmentosa are leading causes of blindness for which there are no effective treatments in the majority of cases. Loss of vision is due to progressive degeneration of the photoreceptor cells, or loss of cells that support the photoreceptors, such as retinal pigment epithelial (RPE) cells or cells in the retinal vasculature."

$30 Million Industry-friendly Plan Moves Forward at California Stem Cell Agency

SAN FRANCISCO – A key panel of directors of the $3 billion California stem cell agency this morning approved a $30 million effort to speed development of therapies and to reach out to the biotech industry.

The new initiative was approved with little discussion at a brief teleconference meeting of the new Intellectual Property Subcommittee. The proposal will now go to the directors' Science Subcommittee and the full board, probably late next month. Approval is expected.

Under the plan, companies could receive awards of up to $10 million. The funds would be offered in a twice-a-year round. The projects would be required to have "third party commercial validation." A CIRM staff document prepared by its general counsel, Elona Baum, said,

"Forms of such validation may include a term sheet or letter of intent with a pharmaceutical or large biotechnology company (provided a binding agreement is entered into prior to the disbursement of CIRM funds), and/or significant investment from venture capital, disease foundation funding or other sources of third party or government funding, including SBIR funding."

Paul Hastings, CEO of OncoMed Pharmaceuticals of Redwood City, Ca., and chairman of BayBio, the Northern California industry group, recommended a slight modification in the proposal, which was adopted by the CIRM panel. Hastings' suggestion stipulates that a collaborative agreement would serve as third party validation.

CIRM's proposal came in response to last year's recommendations from a blue-ribbon panel that CIRM should be far more active in engaging the biotech industry, which has been less than pleased with its tiny share of the $1.3 billion in funds handed out so far by CIRM.

At the end of the session today, Hastings said he was "very encouraged." He said he was "looking forward to working with CIRM in a more proactive way." The session may have been the first ever public CIRM meeting attended by a chairman of the BayBio, which represents more than 450 life science enterprises.

The IP subcommittee also approved a change in its name and focus to emphasize that the agency will be moving more aggressively to engage the industry. Its co-chair, Duane Roth, a San Diego businessman, is being charged with fostering better industry ties.

The panel's new name will be the Intellectual Property and Industry Engagement Subcommittee. The group is expected to "engage industry as a partner" and work to ensure that therapy development is not "unreasonably hindered." The panel is also slated to develop policies to encourage "participation by industry representatives as scientific members" of the CIRM grant review group, which makes the de facto decisions on grants. The subcommittee is additionally expected to deal with industry financing issues.

Andy Grove on Medical Research's Great Pyramid of Egypt

Andy Grove and the $3 billion California stem cell agency need to talk.

Both have the same matter at the top of their minds – turning research into cures.

Grove, as many readers know, is the almost legendary former CEO of Intel whose interests have long spanned a wider arena than microchips.

Andy Grove

Currently, Grove is keenly focused on an area of science that he sometimes discusses in the context of a question: "key to progress or bridge to nowhere?"

It is an apt question for the California Institute for Regenerative Medicine, which will run out of funds by around 2017 unless it can come up with convincing evidence to persuade state voters that it deserves another multibillion dollar injection of cash. And that is not to mention the hopes and expectations of the millions of voters who approved creation of CIRM seven years ago.

What this is all about is translational medicine, an ill-defined term that generally means taking basic research, refining it, testing it further and developing a means to actually use it on people in clinics. Someplace in all that is the economic necessity to develop a plan that will generate profits for the enterprise that ultimately produces the therapy.

What nags at Grove is the egregiously slow pace of turning out new cures and treatments. He told a UCSF audience last month that 800,000 scientific papers related to new drugs are published annually, but only 20 new drugs come to market each year, according to a blog posting by Adam Mann of the California Institute of Quantitative Bioscience.

Grove said that the time and investment currently needed to create a new drug is about what it took, adjusted for time and inflation, to build the Great Pyramid of Egypt -- 20 years and $1.5 billion.

Grove's message is not new. In a Forbes magazine article in 2008, Kerry Dolan reported that in a speech at a neuroscience conference,

"Grove roundly criticized research funding at the National Institutes of Health, the unwillingness of researchers to share data and the lack of urgency in translating basic science into treatments that can help people. 'What is needed is a cultural revolution that values curiosity, follow-through and a problem-solving orientation and also puts the data being generated in full view, scrutinizable by all.'"

Heretical is what some might call his views, particularly regarding intellectual property. He says "trivial and obvious 'inventions'" are overwhelming the patent system. Overzealous pursuit of IP rights, which are ostensibly given out by the federal government for society's benefit, are keeping products off the market. The result is crippling innovation.

Grove's efforts go beyond rhetoric. He has pumped tens of millions of dollars into medical research in recent years, including stem cells. In 2010, he funded a $1.5 million program at UCSF and UC Berkeley to create a master's degree in translational medicine.

Currently, the California stem cell agency is acutely aware of the need to at least partially fulfill the promises of the 2004 ballot campaign that led to its creation. It has a new chairman, Jonathan Thomas, who is focusing on closer ties to industry in hopes that faster progress can be made. It is altering its grant review review process on its big-ticket rounds in hopes of generating better results. That includes its disease team rounds, which are designed to bring together a broad array of expertise in hopes of moving into clinical trials more quickly.

Grove's proposals are wide-ranging, including changes at the federal level, and not all possible to implement in a short timeframe. But fresh and innovative thinking is what any organization should be seeking. Grove's suggestions could well be of major benefit to California's unique experiment in stem cell research.

Some in the medical research establishment do not take kindly to Grove's suggestions. One writer a few years ago titled his commentary on the former CEO's proposals "Rich, Famous, Smart and Wrong." But clearly not all is well with the progress of drug development.

We do know that Grove, who had prostate cancer and has Parkinson's, is not going to drop his effort any time soon. Today, the latest edition of Science magazine published an article by Grove in which he makes specific recommendations for changes in the Byzantine clinical trial system. Fifty billion dollars a year for biomedical research to produce only 20 new drugs is not good enough. Grove is also to be a keynote speaker at next month's World Stem Cell Summit in Pasadena. The title of his speech? 
"Translational Medicine: Key to Progress or Bridge to Nowhere?"

(An earlier version of this item said that Science would publish the Grove piece tomorrow. The piece is behind a pay wall. If you would like a copy of it, please email a request to me at djensen@californiastemcellreport.com.)

Here is a copy of the slides that Grove used in his presentation at UCSF.

Andy Grove's Slides on Translational Medicine

Modest Coverage This Morning of Geron's California Patient

The San Jose Mercury News and the San Francisco Chronicle this morning picked up on the enrollment of the first Californian in Geron's historic clinical trial for a human embryonic stem cell therapy.

The role of the $3 billion California stem cell agency in the trial was noted in the Chronicle piece by Erin Allday but was ignored in thearticle by Lisa Krieger in the San Jose paper. Investorstemcell.com also carried a piece that mentioned CIRM's $25 million loan to Geron.

The three stories were all that turned up this morning in our searches, beyond the coverage reported yesterday.

The stories were heavy on the science on the clinical trial, which is designed to test the safety of the Geron therapy. Allday quoted Arnold Kriegstein, director of stem cell research at UCSF, as saying,

"The public needs to understand that no one expects these spinal-injured patients to get up and start walking. It's not likely to cause any dramatic improvement or any improvement at all."

California Stem Cell Agency Beefing Up Ties to Industry

The $3 billion California stem cell agency will press forward next week with its efforts to become more industry-friendly, including creation of a $30 million program catering specifically to biotech.

The initiatives will be considered next Tuesday at a teleconference meeting with remote locations in both Northern and Southern California, presenting an opportunity for industry representatives to weigh in with comments or suggestions for changes in the proposed programs.

It will be only the second session of a new subcommittee of CIRM directors. It is expected to be renamed the Intellectual Property and Industry Engagement Subcommittee. The change reflects a refocusing of the panel's efforts and the appointment of Duane Roth, a San Diego businessman as co-chairman. Roth will specifically deal with industry matters.

The subcommittee is expected to "engage industry as a partner" and work to ensure that therapy development is not "unreasonably hindered," according to a CIRM document. The panel is also slated to develop policies to encourage "participation by industry representatives as scientific members" of the CIRM grant review group, which makes the de facto decisions on grants. The subcommittee is additionally expected to deal with industry financing issues.

In addition to discussion of its mission, the panel is scheduled to act on a "strategic partnership funding program" that could hand out awards of $10 million or possibly more twice a year. The initiative, which would initially be funded at $30 million, is part of CIRM's response to the findings of a blue-ribbon commission last year that determined that the agency needed to provide more support for industry.

The funds would be limited to projects that have "third party commercial validation." A staff document said that could mean "a term sheet or letter of intent with a pharmaceutical or large biotechnology company (provided a binding agreement is entered into prior to the disbursement of CIRM funds), and/or significant investment from venture capital, disease foundation funding or other sources of third party or government funding, including SBIR funding."

Remote locations where the public and industry can participate in the meeting are in San Francisco (2), Irvine (2), Los Angeles, Woodside and La Jolla. Addresses can be found on the agenda. 

We should note that the background material on the issues to be considered is now available on the CIRM website, a posting that is much more timely than in the past. Consistent early postings of such material will help make it easier for industry and interested parties to follow the agency's activities and enable them to respond appropriately.

Initial membership of the committee, which is also co-chaired by Stephen Juelsgaard, formerly executive vice president of Genentech, can be found here. A transcript of the panel's first meeting last month, which involved a discussion of industry-friendly initiatives, can be found here.

Stem Cell Agency Scores in Coverage of Geron Clinical Trial

One of the goals of the new chairman of the $3 billion California stem cell agency is to raise its visibility in a significant way with positive portrayals of results of its work.

 Today, CIRM chalked up a plus in that column.

 Jonathan Thomas, the Los Angeles bond financier who is CIRM's new chairman, was quoted this morning in a several accounts dealing with Geron's first-ever clinical trial of its hESC therapy for spinal cord injuries.

The stories – with at least a few more likely to come today and tomorrow – reported the first Californian to be treated in the high-profile project. They were based on news releases from Stanford(see here) and CIRM(see here). The stories were the type of coverage that has minimal negative content and reflect positively on the stem cell agency.

Two articles surfaced in Northern California in the San Francisco Business Times and Palo Alto Online. Ron Leuty's story in the Business Times included a photo of Thomas (which helps attract readers) and a partial quote in the caption which highlighted CIRM. Both stories noted the agency's $25 million loan to Geron, a Menlo Park, Ca., firm to help out in the trial.

Here is what Thomas said in the press releases and what the Palo Alto story by Sue Dremann picked up verbatim:

"'When the people of California voted in favor of Proposition 71, they did so with the hope of seeing stem-cell-based therapies for chronic disease and injuries. This first California patient to participate in Geron's landmark spinal cord injury trial is a major step toward fulfilling that hope,' said Jonathan Thomas, chair of the California Institute of Regenerative Medicine governing board.

"'We are proud to be providing funding for this first safety trial, which is a critical step toward making safe and effective stem-cell-based therapies available to patients.'"

In San Diego County, the first paragraph of a story in the North County Times by Bradley Fikes said,

"The first Californian to receive stem cell therapy funded by the California Institute for Regenerative Medicine (CIRM), began clinical trials Sept. 17, the institute said Monday. The treatment is for patients with spinal cord injuries."

Obviously organizations prefer positive news coverage if they receive any at all. But for CIRM, the importance of its image rises to a higher level and will affect its survival. The agency will run out of cash around 2017 and will need to go back to voters for another multi-billion dollar bond measure before that date. Lots and lots of good news from CIRM is the only way that the California public is likely to buy into such a proposal.

New Yorker Examines Stem Cell Architecture at UCSF

UCSF stem cell research building
UCSF photo

It has been six years, 10 months and 27 days since the New Yorker visited the California stem cell scene.

But stem cell research in the Golden State is making the magazine again in the Sept. 19 issue, but not for what might be strictly called research. Instead it is for a striking building housing stem cell research at UC San Francisco.

Amy Adams, communications manager at CIRM, pointed out the article in a CIRM blog posting yesterday. She wrote,

 "(A)rchitecture critic Paul Goldberger features UCSF’s Ray and Dagmar Dolby Regeneration Medicine as one of three new science buildings in the United States 'crafted with the specific intention of fostering interaction and connections, as a means of generating ideas.'"

UCSF stem cell research building
on right, UCSF hospital on left
UCSF photo

CIRM helped to finance the structure in a $271 million laboratory construction round in 2008 that included most of the stem cell research institutions in the state. The San Francisco building cost $123 million. CIRM pumped in $35 million with matching requirements. Ray and Dagmar Dolby contributed $36 million. Eli and Edythe Broad, contributors also to stem cell research at UCLA and USC, added $25 million. UCSF still has to raise $12 million to pay off the building.

The construction site is much steeper than it appears in
these UCSF photos.

Unfortunately, the article is behind a pay wall on the New Yorker site so we can't provide additional snippets from the article. But we have seen the building in recent weeks. It is indeed impressive and built on a very tight site on a steep hillside that provided a significant challenge to its designers and builders. Not to mention that it needed to meet stiff earthquake standards.

High Level Changes at iPierian, a Firm With Deep Roots in California Stem Cell Effort

The South San Francisco stem cell firm, iPierian, which has a special and early connection to the California stem cell agency, has been undergoing major changes in the past few months.

 The latest came last week when it announced it has hired a new CEO, Nancy Stagliano, who was replaced Aug. 11 as CEO at another South San Francisco firm, CytomX Therapeutics.

Luke Timmerman of the Xconomy website wrote on Sept. 7 that Stagliano was named to the iPierian post after the firm "prioritized the company’s efforts over the past several months toward using its (ips) stem cell technology to help discover drugs for neurodegenerative disorders like Alzheimer’s, amyotrophic lateral sclerosis (ALS), and spinal muscular atrophy."

 Last May,  iPierian unloaded most of its executive team. A few weeks later, the board chairman, Corey Goodman, quit. With Stagliano's arrival, interim CEO Peter Van Vlasselaer will become executive chairman of the board.

Major investors in iPierian, including John Doerr of Kleiner Perkins Caufield & Byers of Menlo Park, contributed nearly $6 million to the 2004 campaign for Prop. 71. The figure was 25 percent of the total contributed to the campaign, which was run by former CIRM Chairman Robert Klein, a real estate investment banker. As far as we know, no other biotech firm can claim to have that sort of early linkage to the $3 billion California stem cell agency.

CIRM has awarded $7.2 million to iPierian. One grant amounted to about $1.5 million with Berta Strulovici as the principal investigator. The other was for about $5.7 million with Michael Venuti as the PI.

The firm has a cast of stem cell luminaries associated with it, including Shinya Yamanaka of Kyoto University and the Gladstone Institute, along with  George Daley of Harvard University. Daley is a co-founder of iPierian. He also was a member of the blue-ribbon review panel that analyzed CIRM's activities last fall and is a current member of the CIRM grants review group.

Deepak Srivastava of UC San Francisco and Gladstone is also a co-founder and scientific adviser to the firm. He holds $6.6 million in CIRM grants. Other scientific advisers include CIRM grant recipients Benoit Bruneau, UCSF-Gladstone, $2.8 million, and Bruce Conklin, UCSF-Gladstone, $1.7 million.

Kevin Eggan, Amy Wagers and Chad Cowan, all of Harvard, are scientific advisers to iPierian as well as members of the CIRM grant review group.

Members of the CIRM grant review group are barred from taking part in the discussions or voting on grants on which they have conflicts of interests. Reviews are conducted behind closed doors.

Yamanaka said in an iPierian news release earlier this year,

“Many of my colleagues at The Gladstone Institute, UCSF and Harvard are already actively involved with iPierian, and I am delighted to join them in guiding iPierian’s industrialization of iPSC technology for drug discovery and development.”

Here is a link to the iPierian press release on the new CEO and a related story in the San Francisco Business Times.

StemCells Inc. to Sell Real Estate to Raise Cash

StemCells Inc.'s impending bid for $20 million from the California stem cell agency is taking on greater weight as the company battles to keep its finances flowing.

Esha Day of Reuters reported today that the Newark, Ca., company, co-founded by Stanford researcher Irv Weissman and two other well-known scientists, is hoping to raise $2 million to $3 million by selling "some of its real estate and other non-core assets to buy time until it has more conclusive data from initial trials of its innovative therapy."

 StemCells Inc. is in a much different situation than its early days. Reuters said that the company is burning cash at a rate of $1.5 million a month and will run out in April without a fresh infusion. The company's stock closed at $2.52 today, a far cry from a high of $188 in 1992. The company's shares have lost nearly 80 percent of their value since the beginning of this year, Reuters said, because of skepticism about its ability to raise cash. 

Last month, the board of the $3 billion California stem cell agency awarded a $100,000 planning grant to StemCells in the first stage of the competition in a $240 million disease team round. Winners could receive up to $20 million, most likely in the case of businesses in the form of loans. (A summary of reviewer comments on the StemCells' application can be found here. The name of the firm is typically withheld by CIRM in such summaries.)

Weissman sits on the board of directors of the firm. He is also a scientific advisor to the business, along with Fred Gage of the Salk Institute and David Anderson of Caltech. Gage and Anderson were also co-founders of the firm.

Here is another take on the firm from SmallCapNetwork.

Little Noticed Stem Cell News

In the wake of the president's job speech last week, up popped this comment from writer Matthew Yglesias , author of "Heads in the Sands."

"I can’t help but think that the American economy has performed sluggishly ever since George W. Bush gave a speech to Congress successfully calling for a ban on human-animal hybrids. Clearly we need to deregulate this vital sector and win the future with chimera stimulus."

A tip of the hat to Pete Shanks at the Center for Genetics and Society in Berkeley for flagging the item, which is, we think, tongue in cheek.

Calimmune, the Berlin Patient and $20 Million from California Stem Cell Agency

UCLA Photo

An obscure Arizona company that is sharing in a $20 million HIV/AIDS research grant from the California stem cell agency has posted more details on the Internet about its origins and plans, which include a tie to the famous Berlin Patient.

The firm, Calimmune, Inc., disclosed that its chairman is David Baltimore, former president of Caltech, Nobel Laureate and former member of the stem cell agency's governing board. One of Calimmune's advisors is the German physician, Gero Hutter, who successfully treated the Berlin Patient, Timothy Ray Brown, the only person in the world who has been cured of HIV and AIDs and who now lives in San Francisco.

 In 2009, CIRM's governing board awarded a $20 million disease team grant to UCLA researcher Irvin Chen and Geoff Symonds, an Australian who is chief scientific officer of Calimmune of Tucson, Ariz. Earlier information on the Internet reported that Chen and Baltimore were co-founders of Calimmune.

Baltimore was not on the CIRM governing board at the time the grant was awarded. He resigned June 6, 2007.

Calimmune said on its website that its "singular purpose" is to bring "a one-time, cost effective therapy to the HIV community." According to the website, the firm was established "to develop innovative cell-based therapies for HIV" based on work from Chen's and Baltimore's labs.

Delaware state records show that Calimmune was incorporated in that state in 2006 although the company's website reports that it was founded in 2007. We have queried the company concerning the discrepancy.

Calimmune said it is seeking "to provide HIV-positive patients with a similar type of genetic resistance to HIV that occurs naturally in 1% of the European population.  By treating a patient's own stem cells and T cells (cells specifically targeted by HIV), we aim to protect patients from the ravages of AIDS and eliminate the need for daily medication." Essentially, that would replicate the case of the Berlin Patient.

The company appears to have strong ties to Johnson&Johnson, or at least its executives have had in the past. Symonds worked in Australia for the firm from 1992 to 2009. Calimmune's chief financial officer, Bhavin Raval, was finance director for J&J Research in Australia from 2002 to 2009. Louis Breton, CEO of Calimmune, told the California Stem Cell Report in 2009 that none of the firm's funding originated with Johnson&Johnson.

Breton has not responded to queries from the California Stem Cell Report since 2009 including queries during the past week. The unanswered questions involve the number of its employees, whether the firm has any business beyond the CIRM grant activities and the address of the location where the CIRM work is actually performed. CIRM cannot fund work that is performed out-of-state.

Melissa King, executive director of the CIRM governing board, told the California Stem Cell Report that the firm "conducts its laboratory research at leased lab space on UCLA's campus." It also has laboratories in Australia, according to documents on the Internet. King said Calimmune's "corporate address" is on Wilshire Boulevard near UCLA. The Wilshire address appears to be only an address for service of process, according to California state records. Calimmune's Tucson address is the location of an investment firm, based on a visit by the California Stem Cell Report to the location last fall. We were told at the time that Calimmune rents space in the office.

In 2009, CIRM's grant reviewers scored the Chen-Symonds application at 79. They had high praise for the research team, but one reviewer expressed reservations. The summary of reviewer comments said,

"….the resources and investigators are outstanding and the team is superb, both scientifically and in therapy development. The Disease Team comprises a collaboration between two complementary groups, one academic and one corporate. Each brings unique expertise to the project, with the academic group providing scientific know-how and proof of concept and the corporate group providing expertise in biologics development and commercialization. The team leaders are accomplished, highly productive investigators with a demonstrated track record in the field of HIV research, gene therapy, and/or clinical drug development. Key members of this team made the initial scientific observations leading to their hypothesis and demonstrated proof of concept in tissue culture and relevant models....The principal investigator has built up a rich and well-considered network of collaborations and resources and there is no doubt that the environment will be sufficient for this task."

CIRM also said,

"Another reviewer expressed the view that although the treatment will likely find a significant niche, the complexity, cost and potential toxicity of the approach will likely limit its use, even if successful."

CIRM Pay: Learning From the Internet's Viral Force

The viral nature of cyberspace and its impact on the California stem cell agency was demonstrated again this week in an item on the Business Law Daily Internet site in Sacramento.

 The subject was CIRM salaries. Writer Chriz Rizo of the Business Law Daily picked up our item earlier this week on the salary issue along with information from the Sunday article by Ramon Solis at the Orange County Register.

 Rizo's piece brought the salary matter to a new set of readers. The article was a clear demonstration of how media has been altered in the last 20 years. In that long past era, Solis' piece would have started and stopped in Orange County. Now it is accessible to widely separated audiences and additional Internet editors and writers globally, who are always hungry for something fresh. And in the future, Solis' piece and related articles will invariably turn up as reporters – not to mention the general public – google CIRM's activities.

That can be a plus and a minus for CIRM. The pieces on salaries are not a positive for CIRM. But if the agency learns to exploit the viral energy of the Internet with favorable stories, the power of cyberspace could turn to CIRM's favor.

High Salary Stories Hound State Stem Cell Agency

In most states, it is probably illegal nowadays to tie a can to a dog's tail. But that doesn't much help the $3 billion California stem cell agency.

 It has a can on its tail, and nobody seems likely to come to its rescue.

 The nagging irritation trailing CIRM comes in the form of repeated news stories about salaries at its executive levels. Just a few weeks ago, a round of pieces surfaced concerning pay at CIRM. The touchy subject popped up again this past weekend.

 The Orange County Register carried a page-one story on Sunday with the headline "'Special fund' salaries fall off the radar." The fourth paragraph of the piece by Ramon Solis said,

"Alan Trounson, president of the California Institute for Regenerative Medicine, the state stem-cell research agency, is the highest-paid nonacademic employee in the state, making an annualized salary of $490,008 as of June 2011. His salary is paid by bond funds."

Solis continued,

"The regenerative medicine institute is a prime example of a well-funded state agency operating outside of the constraints of the General Fund. 

"On average, institute employees made $103,435.08 in 2010, according to 2010 salary data from the State Controller’s Office – the most of any department in state government. 

"In addition to employing the state’s highest-salaried nonacademic employee, Trounson, the institute also employees the state’s highest-paid part-time employee, Art Torres, the former chairman of the state Democratic Party, who made $230,000 last year as the institute’s co-vice chairman. Institute staff members, however, say Torres handles the responsibilities of two people. Staff maintain that the institute would have to spend more money on two separate employees if not for Torres. 

"'Given the fact CIRM is a research funding institution, it is critical that CIRM have the ability to competitively recruit and retain employees who have the skills and backgrounds necessary for these positions,' said Melissa King, the institute’s executive director of the governing board, when asked about Torres’ and Trounson’s salaries. 

"The institute has one of the smallest payrolls in state government, with just 46 employees who account for around 1 percent of the agency’s $3 billion budget, King said. Unlike other agencies in state government, the institute’s payroll and administrative overhead is capped at 6 percent of its budget, to ensure that most of its money goes to stem-cell research. The institute also has an added protection in that an independent committee composed of leaders in the biotech and medical industry as well as patient advocates set the salaries of its employees."

It could be said that CIRM fared better in the Orange County Register story than many of the others in the past about its salaries. The piece noted that CIRM has a tight operational budget. The article also cited as "an added protection" an "independent committee" that sets CIRM salaries. The committee is the CIRM board of directors. The story also did not report that, with interest on the borrowed funds for Trounson's salary, its actual cost is around $1 million.

 Nonetheless, the issue of high salaries will dog the agency as long as they exist. CIRM pay is also likely to surface in a much more visible way in the event that the agency goes to the voters for another multibillion bond issue in a few years.

 The agency's new chairman, Jonathan Thomas, has said that the agency is in a communications war. As part of its arsenal, it needs to devise strong counter measures to deflect what will be a continuing assault tied to its high salaries.

Mentoring and the High Priest Syndrome

UC Davis stem cell researcher Paul Knoepfler recently took up on his blog the topic of mentoring younger scientists. He wrote,

"No one becomes a successful scientist on their own. I’m not going to channel Hillary Clinton and say it takes a village to make a scientist, but how does one avoid having the village idiot or worse as one’s mentor?"

Knoepfler reflected on his mentoring experiences and also queried Irv Weissman of Stanford about his experiences. Weissman responded with a fulsome email that mentioned Ernst Eichwald, who Weissman said was "a pathologist who was tired of academia and moved to run a path lab practice at Montana Deaconess Hospital in Great Falls Montana." Weissman, a descendant of fur traders and junk dealers, said he was "amazingly lucky" to find people like Eichwald.

Weissman's remarks recalled a piece in 2008 in the now sadly defunct "Nature Reports Stem Cells." In it, he obliquely referred to what I like to call the High Priest Syndrome, which is found in science and many other areas of work. One aspect of the syndrome is to create jargon that makes it difficult for outsiders to understand a speciality and thus enhance the reputation of its practitioners. Weissman told Nature:

“I realized that the language of science substitutes Greek and Latin terms for plain English, that it was a way to keep people out of the field. He didn't need to say histocompatibility. He could say "tissue-transplantation compatibility", but I also realized I could understand it. Thanks to the freedom Dr. Eichwald gave me, I began designing my own experiments at 16.”

Here are links to Knoepfler's Weissman item and the earlier mentoring piece. Here is a link to an item about Weissman's comments in 2008.

Stem Cells Inc. Joining with LaFerla on Alzheimer's Effort

Stem Cells Inc. of Newark, Ca., this morning touted its research award from the California stem cell agency as an "encouraging vote of confidence" for its plans to develop a stem cell-based therapy for Alzheimer's disease.

 In a widely distributed news release, Ann Tsukamoto, executive vice president of the publicly traded company said,

"Our research, and that of our collaborators, provides a strong rationale for developing our HuCNS-SC neural stem cells as a potential treatment for Alzheimer's disease."

Frank LaFerla of UC Irvine
UCI photo

She also disclosed that Stem Cells Inc. is collaborating on the project with Frank LaFerla,director of the Institute for Memory Impairments and Neurological Disorders at UC Irvine. Tsukamoto said that La Ferla

"...has shown that mouse neural stem cells enhance memory in a mouse model of Alzheimer's disease, and we have previously shown that our human neural stem cells can survive in the hostile environment reflective of an Alzheimer's brain. This award is an encouraging vote of confidence, and with CIRM's help, we will be better able to pursue our aim of developing a stem cell-based therapy for Alzheimer's disease."

Last week, the company was one of four firms to receive a planning award -- $98,050 in the case of the Stem Cells Inc. -- for the upcoming $240 million disease team round in 2012. Stem Cells Inc. could be eligible for a CIRM grant of up to $20 million in the summer of next year.

Stem Cells Inc.was trading at $2.43 this morning, down five cents from its close yesterday. Its low during the last 12 months was $2.02 and its high $12.70.

(Editor's note: An earlier version of this item had an incorrect figure for the amount of the Stem Cells Inc. planning grant.)

Biotech Industry Scores in Stem Cell Agency Grant Round: Beginning of a Trend?

Proposal by Tim Hoey
of OncoMed outscored
leading research institutions. 

In what is a first for the $3 billion California stem cell agency, biotech firms have snagged 20 percent of the cash in a grant round offered by the state's research enterprise.

The industry has long been unhappy with its picayune share of the $1.3 billion that CIRM has given away so far. The agency has talked about moving towards a more business-friendly position, but last week's awards were the first hard-cash demonstration – albeit a tiny one – of CIRM's commitment.

The round totalled only $1.8 million. Four biotech businesses were awarded $368,519. However, the awards are for planning for applications for a whopping $240 million disease team round next year. It is all part of a CIRM's aggressive push for clinical therapies.

The success rate for the business applicants was also high – 50 percent. Eight firms applied, CIRM told the California Stem Cell Report. In all, 36 applications were received and 19 approved.

Since CIRM began approving awards in late 2005, only 7 percent of all grants have gone to businesses -- that in a state that is one of the hotbeds globally of the biotech industry.

Scoring the highest in last week's round with an 87 was the application , for $65,120 from Tim Hoey, a senior vice president at OncoMed Pharmaceuticals, Inc., of Redwood City, Ca.  The score topped applicants from Stanford, UCLA and other vaunted stem cell research institutions. OncoMed is looking at developing a new anti-cancer drug.

The winning businesses included two publicly traded firms, Geron Corp. of Menlo Park, Ca., and Stem Cells Inc., of Newark, Ca. It was the second CIRM award for Geron, which won a $25 million loan last May for help with its spinal injury clinical trial.

Geron's $106,239 planning grant (scored at 79) involves an hESC treatment for heart failure. Jane Lebkowski, senior vice president and chief scientific officer, is the principal investigator on the project. Stem Cells Inc. received $98,050 for a look at an Alzheimer's treatment. Its proposal also scored 79. Alexandra Capela is taking the lead on the project.

The fourth winning business was Wintherix, LLC, San Diego, Ca., which scored 69 on its $99,110 application. John Hood, chief scientific officer and a co-founder of the firm will lead the research into a therapy for osteoporosis-related fractures.

Only one of the applications – the one from Geron – appears to involve research using human embryonic stem cells,  the raison d'etre for voter approval of the California stem cell agency in 2004. The ballot measure that created CIRM was justified by backers because former President Bush had restricted federal funding of hESC research, a ban that has since been lifted by President Obama.