The Harsh Message at the California Stem Cell Agency

Grant reviewers have delivered a harsh message in the latest $243 million research round at the California stem cell agency – at least that is one way to look at it.

In effect, they told the governing board of the $3 billion enterprise that the overwhelming majority of applicants in its signature disease team round do not measure up, despite the fact that CIRM had early on partially vetted their efforts. Indeed, the reviewers said that the researchers deserve only $113 million instead of the full $243 million that was budgeted.

Obviously the results of the review can be interpreted in other ways as well. But the review outcome should raise some flags within the stem cell agency and its 29-member board, which meets tomorrow in Burlingame. It may not auger well for future rounds that also involve CIRM's newly energized drive to push research into the clinic.   

One interpretation of the review results could well be that CIRM's goals are unrealistic, that the agency is trying to move too fast for the normally glacial pace of research and development. Another interpretation is that the science is not good enough in California to accomplish what the agency is seeking to do, a view expressed by some in the early days of the nearly 9-year-old program. Another is that the reviewers themselves don't know enough or have failed to do their homework, which some of the rejected applicants have argued in their appeals. Yet another is that the CIRM review process is inadequate to the task of meeting CIRM's goals. And still another interpretation is that the normal peer review process on which CIRM's procedures are based is mightily flawed, a general contention argued by some(See here, here and here.)

Or quite possibly the result of the disease team reviews could reflect a combination of all of the above, to one degree or another.

Little is known about the substance of what goes on during the grant review process, aside from the staff-written review summaries. Even CIRM board members, who see only the summaries, have complained from time to time about not having enough information to make a good judgment on an application. Reviews are conducted behind closed doors. Information about the economic and professional interests of reviewers is withheld from the public by the stem cell agency.  

Here is a look, however, at what we do know. Initially the universe of applicants in this round totalled 36. That was the number that applied for planning grants for this round. Without a planning grant, they could not apply for a full $20 million award, with some exceptions. The exception process was controlled by CIRM President Alan Trounson, not reviewers. CIRM used the planning grants and the exception process not only to assist applicants but to winnow out weak applications.

Nineteen researchers won planning awards. With exceptions included and minus dropouts, 22 applied later for the big money. Out of the 22, only six were recommended for funding by reviewers, who are known more or less formally as the Grants Working Group. (See the four items at the end of this piece for a list of reviewers involved.)

In the past, reviewers have sometimes not approved sufficient applications to consume the entire amount budgeted for a round. But they have never produced a shortfall as great as in this case. It is all the more dramatic since this round carries a lot of weight for CIRM, which is pushing hard to commercialize research and fulfill at least part of the promises that were made to California voters in 2004 to win approval of creation of the stem cell agency.

One reflection of the unusual nature of the round is the record pace of researchers' appeals of negative decisions by reviewers. At least nine of the 15 rejected scientists are willing to say publicly that something is is not quite right in the review process, ranging from missing facts to inconsistencies in CIRM's endorsement of particular paths of research.

It is safe to say that CIRM directors tomorrow will pluck some applications out of the reject bin and increase the total awarded. But they should also examine the process to determine what generated this particular outcome. The Institute of Medicine, which is currently engaged in a $700,000 examination of CIRM, also might scrutinize this round with some care, given its size and importance to the California stem cell research effort.

10-05 Roster Specialists DTTD II

10-05 Roster GWG and PAs

10-05 ROSTER & SPECIALIST BIOS.docx

10-05 Roster - GRWG

Riding the Stem Cell Financial Wave in Newark

The stock price of StemCells, Inc., of Newark, Ca., has more than doubled this month following the publication of several “good news” stories about the company, including the virtual certainty that it will receive a $20 million loan tomorrow from the state of California.

The company also could well receive $20 million more if its appeal on another award from the California stem cell agency is successful.

StemCells, Inc., founded by Stanford researcher Irv Weissman, has seen its stock plummet as low as 59 cents during the last 12 months. On July 16, its price stood at 88 cents. On July 17, it jumped to $1.80. Today it is running about $2.28 at the time of this writing. (The latest stock price can be found here.)

All of which is to the benefit of Weissman, who acquired 15,433 shares of StemCells, Inc., on July 2 at no cost. According to SEC filings, the stock was given by the company to Weissman as a quarterly retainer for his services on the firm's scientific advisory board. Weissman also serves on the board of directors and currently holds 88,612 shares of the company.

Most of the good news about the company focused on its research into an Alzheimer's therapy. The California Stem Cell Report also reported on July 18 that the company was in line for a $20 million award from CIRM for its spinal cord injury therapy. CIRM's grant reviewers rejected the company's bid for $20 million for an Alzheimer's treatment but the firm is appealing that decision to the full board. (See here and here.)

Here are links to recent stories on StemCells, Inc.

Seeking Alpha by Chris Katje – July 17

California Stem Cell Report by David Jensen – July 18

First public report that StemCells, Inc. was in line for a $20 million loan from CIRM development of human neural stem cells to treat chronic cervical spinal cord injury

Technology Review by Susan Young – July 24

Tech24 – July 24

StreetInsider.com -- July 24

Live Coverage for Tomorrow's Board Meeting of the California Stem Cell Agency

The California Stem Cell Report will provide gavel-to-gavel coverage of tomorrow's meeting of the governing board of the $3 billion California stem cell agency. Among other things, the board is scheduled to give away anywhere from $113 million to $243 million to help push research into the clinic. Stories will be filed as warranted, based on the Internet audiocast.  Instructions for listening directly to the audiocast can be found on the agenda. The meeting is scheduled to begin at 9 a.m. PDT in Burlingame, Ca., with remote teleconference locations in Los Angeles, La Jolla and Pleasanton. The public can participate and comment from those locations. Addresses can be found on the agenda.

Record Appeals by Researchers in Huge California Stem Cell Agency Round

The California stem cell agency's latest grant round – which is budgeted for $243 million – has drawn an extraordinary and record outpouring of appeals from more than half of the scientists rejected by the grant reviewers.

Nine of the 15 applicants who were turned down have filed appeals to the governing board for its meeting Thursday in Burlingame. No other CIRM grant round has drawn as high a percentage of appeals, formally known as extraordinary petitions. (See here for a story on the previous record for percentage of appeals.)

Only six applicants were approved for funding in the second of the agency's signature disease team rounds. Their applications totaled $113 million, although $243 million was allotted by the board, which would make it the largest in the agency's history. The round is aimed at bringing proposed clinical trials to the FDA for approval or possibly starting trials within four years.

The rejected applicants come from both biotech firms and nonprofit institutions, including at least two that are ready to begin clinical trials next year, a much-sought goal of the stem cell agency.

The appeals, posted late yesterday on the CIRM web site, deal mainly with the details of the research although they also say, in some cases, that reviewers did not grasp the facts or were dealing with information that is now outdated. Here are some samples of what the applicants had to say in their petitions.

Linda Marban, CEO of Capricor, Inc., said her firm's heart disease therapy proposal, which was rejected by reviewers, is set for a clinical trial beginning next year. She said that since the time of the review last April the firm has “made major advances in both our clinical development program and our management and operational team.”

Marban noted that Frank Litvack, former CEO of Conor Medsystems Inc. of Menlo Park, Ca., is now executive chairman of the Capricor and will provide “experienced operational leadership.” In June 2011, Litvack was nominated to chair the CIRM board. However, directors chose J.T. Thomas, a Los Angeles bond financier who has filled that post since then.

In another appeal, researcher Stuart Lipton of Sanford-Burnham said,

 “Some reviewers were concerned about the PI's (principal investigator's) lack of experience in developing a cell therapy for clinical transplantation. Reply: Since there is currently no FDA-approved stem cell product for transplantation therapy for (the) brain, no PI could possibly have the experience requested here.”

Alexandra Capela of StemCells, Inc. said reviewer comments on her application “were inconsistent with previous guidance provided by CIRM.” She said reviewers “objected to a clinical approach that was already supported by the CIRM in a successful early translational research grant and the planning grant(for her application).” Capela said this “contradicts previous acceptance of this strategy by CIRM and constitutes a central reason for our appeal to the (CIRM board).”

Henry Klassen of UC Irvine said reviewers “overlooked facts” in his application and “had no real way of gauging the extraordinary rate of our progress.” He said trials are already scheduled for next year, far earlier than time frames set up in the RFA for this round.

In addition to the written appeals, scientists can appear before the full board at its meeting and often have. Sometimes they bring patients, who make emotional presentations. The board does not have to discuss any of the appeals. Unless a board member makes a motion on an appeal, it does not even come up for a vote.  Directors are generally reluctant to approve an appeal. Here is a link to a CIRM description of the petition process.

Here is a list of researchers appealing their rejections along with links to their appeals. The list is in the order in which CIRM posted them on the board agenda. The review summaries for all the grants can be found here.

Stuart Lipton – Sanford Burnham

Dan Gazit of Cedars Sinai

Clive Svendsen of Cedars Sinai

letter of support

Timothy Hoey of OncoMed Pharmaceuticals

Judith Shizuru of Stanford University

letters of support

Alexandra Capela, Ann Tsukamoto, andFrank LaFerla of Stem Cells Inc. andUniversity of California Irvine

Stanley F. Nelson and M. Carrie Miceliof UCLA

Linda Marban of Capricor, Inc

Henry Klassen of University ofCalifornia Irvine

For more on the CIRM grant appeal process, see here.

California Stem Cell Agency Shy This Week on Openness

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

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

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

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

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

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

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

From Patient Advocates to Presidents: Decision-making Roles on Billions in Research

Directors of the California stem cell agency are moving to spell out the roles of the players who make the de facto decisions on its $3 billion in research funding.

This Wednesday evening in Burlingame, Ca., the directors' Science Subcommittee is scheduled to consider delineating the functions of members of the grant review group, also known as the Grants Working Group, along with CIRM staff in connection with grant reviews. Although the full CIRM board has legal authority to approve or reject grants, it almost never overturns a positive decision by the Grants Working Group on an application.

The agenda for Wednesay's meeting contains the full text of the addition to the working group's bylaws, but it does not say why changes are needed in the reviewers' closed-door procedures. However, from time to time, CIRM directors have commented during their public meetings that it is not always clear to the scientific reviewers what the full process entails.

Among other things, the bylaws addition spells out the role of the CIRM president, Alan Trounson, and other CIRM staff. It says the president can participate in discussions but cannot assign scores or vote. The president, however, has the top decision authority on grant pre-applications, which are a separate process. 

The new language makes it clear that the high-powered scientific reviewers can be expected, from time to time, to be asked by staff to explain themselves, or as the new bylaw phrases it, to “clarify their views or address specific issues in order to present a complete and useful” public review summary report to the CIRM governing board.

Also added to thebylaws would be this language,

“Prior to governing board consideration of GWG recommendations, the president and scientific staff should consider whether there are applications which they believe warrant particularly close review by the board, or whether specific modifications may be needed to successfully execute a particular proposal.”

The bylaw change also deals the roles of the eight patient advocates on the grant review group -- all of whom are also members of the CIRM governing board. They play a key role during “programmatic review,” an extremely broad-ranging process.

The bylaws addition states:

“Programmatic review is led by one of the GWG (Grants Working Group) vice chairs, who is a patient advocate, or a patient advocate member designated by the vice chairs. During programmatic review, patient advocate members of the GWG join the scientist members to make and vote on programmatic motions and funding recommendations to the gtoverning board. Programmatic review is intended to allow consideration of issues beyond scientific merit, such as disease representation and societal impact. In making funding recommendations to the governing board, GWG members consider the scientific merit of each application, as reflected in the scientific score, as well as any programmatic issues raised.”

The chairman of the CIRM Scientific Subcommittee is a patient advocate, Jeff Sheehy, who is also vice chair of the review group and plays the leading patient advocate role in the CIRM working group. Additionally, Sheehy, a communications manager at UCSF and nationally known HIV/AIDs advocate, almost invariably leads the full board discussion prior to action on grant applications.

In addition to the meeting location, the public can participate in the session at a teleconference site at UC Irvine. The address can be found on the agenda.

$70 Million Translational Round Proposed by California Stem Cell Agency

The latest California stem cell research round is expected to commit $70 million to advance “promising stem cell discoveries toward clinical development.”

The concept proposal, expected to be approved at Thursday's CIRM board meeting, would fund as many as 20 grants and loans. Grants would go to nonprofit entities. Businesses would have a choice of a loan or grant, which carry different rules regarding intellectual property.

The translational grant proposal said two categories would be funded:

“Research that results in a stem cell-derived development candidate (DC) to treat an unmet medical need where all necessary activities to move into IND-enabling preclinical development have been completed.
OR
“Research conducted to identify and/or establish the feasibility of a potential stem cell-derived development candidate. The goal of these development candidate feasibility (DCF) awards is to achieve preclinical (in vitro/in vivo) proof of concept. CIRM is particularly interested in proposals for DCF awards that address unique new opportunities for regenerative medicine that are potentially transformative therapeutic approaches to unmet medical needs (e.g. direct reprogramming).”

The RFA is expected to be posted in September with funding in the summer of next year.

Researcher Alert: Grant Rule Changes at Stem Cell Agency

The $3 billion California stem cell agency is changing the rules for how it handles its grants, ranging from research milestones and budgets to training programs and unspent funds.

A CIRM staff memo, prepared for this Thursday's CIRM board meeting, said,

“Some of the proposed amendments are clarifying amendments and others are more substantive.”

The memo said that the changes are intended to improve the 45-page grant administration policy and remove provisions that are hard for the staff or grantees to “understand and follow.” The memo said the changes were developed after input from grantees and others.

Grant recipients and others seeking CIRM cash would be well-advised to examine the proposed changes, which are scheduled to be approved on Thursday at the board meeting in Burlingame.

The modifications will then go into the state's administrative law process and are scheduled to go into effect in October.

Royalty Rules at the California Stem Cell Agency: Business Friendly Changes Proposed

If you are looking to follow the money trail at the $3 billion California stem cell agency, next Thursday's meeting of its 29-member board of directors is a good place to start.

On the agenda are revisions in its intellectual property rules, which are all about who gets paid and how much and when – should an agency-financed product generate significant cash.
The key question about the proposed changes is whether they will generate an appropriate return for the state, given its $6 billion investment, including interest on the bonds that finance CIRM. The impact of the changes is not crystal clear. And the staff memo does not mention two important definition changes that appear to be quite business friendly.

During the 2004 ballot campaign that created the stem cell agency, California voters were told that the state would share as much as $1 billion or more in royalties. Eight years later, no royalties have materialized since CIRM research has not yet resulted in a commercial therapy. 

At next week's meeting in Burlingame, directors will be asked to modify CIRM rules for royalties that CIRM staff said "could be a disincentive" for business. A staff memo said the proposals would alter provisions that create "administrative challenges and uncertainty." The memo asserted the proposed changes would ensure "a comparable economic return to California" equal to the existing provisions. However, the memo provided no explanation or evidence for how that result would come about. The proposed changes could also be applied retroactively with the agreement of CIRM and the grantee.

Currently CIRM grantees and collaborators must share as much as 25 percent of their licensing revenue in excess of $500,000, depending on the proportion of agency funding for the product. The IP rules also contain a provision for payments in the event of development of a "blockbuster" therapy. The staff memo described how that would work.

“It provides that grantees and collaborators must share revenues resulting from CIRM funded research as follows: after revenues exceed $500,000, three times the grant award, paid at a rate of 3% per year, plus upon earning $250M(million) in a single calendar year, a onetime payment of three times the award, plus upon earning revenues of $500M in a single calendar year, an additional onetime payment of three times the award and, finally, in the instance where a patented CIRM funded invention or CIRM funded technology contributed to the creation of net commercial revenue greater than $500M in a single calendar year, and where CIRM awarded $5 million or more, an additional 1% royalty on revenues in excess of $500 million annually over the life of the patents.”

The proposed changes would exempt "pre-commercial revenues" from the state's revenue sharing, the memo said, in order to maximize the amount businesses can "re-invest in product development." The proportionality payment provision would be changed to require only 15 percent of licensing revenues if CIRM's investment is less than 50 percent and 25 percent if it is more than 50 percent. Revenue sharing would be extended to "commercializing entities." No definition of "commercializing entities" was provided in the board agenda material, but a June version of the changes defined them as "A For-Profit Grantee and its Collaborator or Licensee that sells, offers for sale or transfers a Drug, product(s) or services resulting in whole or in part from CIRM-Funded Research."

Not mentioned in the CIRM staff memo were two new provisions in the rules involving the definition of licensing revenue and the sale of a therapy. Both could be construed as quite favorable to businesses. According to the June version of the changes, licensing revenues are defined as a figure minus "a proportion of expenses reasonably incurred in prosecuting, defending and enforcing related patent rights equal to CIRM’s percentage of support for development."  The sale provision says that royalties on "net commercial revenue" are not due until received from sales in the United States or Europe. That provision would appear to exclude California from receiving royalties on product sales in most of the world, where it is easier to receive regulatory approval for sale of new therapies and drugs. (See here -- page 2 -- for royalty provision and here for definition of "first commercial sale"-- page 3.)

The existing IP regulations are enshrined in a 2011 state law. However, the law also provided that they can be altered by the agency, the CIRM memo said, “if it determined that it was necessary to do so either to ensure that research and therapy development are not unreasonably hindered as a result of CIRM’s regulations or to ensure that the State of California has an opportunity to share in the revenues derived from such research and therapy development.”

The memo continued,

"The proposed amendments re-strike the balance both to ensure that industry will partner with CIRM and to ensure that the State has the opportunity to benefit from successful therapy development."

Board action next week will give the go-ahead for posting the proposals as part of the official state administrative rules process. They are subject to additional changes in that process. 

The agenda originally contained the full text of the changes. However, that material has been dropped from the board agenda. An earlier version can be found here and here. We have queried the agency about the reason for dropping the text in the board agenda.

(Editor's note: The agency has now reposted the version of the text of the changes that was on the agenda earlier, saying that it was having problems with its web site. For the definitions of terms, however, it is still necessary to refer to the June documents.)

Correction

The stem cell lure item today incorrectly said the total of the two grants was $13.4 million. The correct figure is $12.4 million.

California's $12.4 Million Stem Cell Recruitment Lure

Directors of the California stem cell agency next Thursday are likely to approve spending $12.4 million to lure a couple of stem cell stars to the Golden State.

It is part of a $44 million recruitment program that has brought three highly regarded scientists to three California research institutions, all of which have representatives on the CIRM board. (See here, here and here.)

As usual, the $3 billion stem cell agency does not identify the potential recipients in advance of the meeting or the institutions that are recruiting them. However, if you have a modicum of knowledge about the specific fields involved, it is likely that you can identify them based on the information in CIRM's review summaries and some Internet searching.

One of the proposed research grants–a $5.7 million award--would go a scientist who won raves from CIRM's reviewers. The researcher was described as an “exceptional scientist and one of the leading young developmental biologists.” Reviewers gave his proposal a score of 90 and, in summary, said,

“Major strengths include the candidate's exceptional productivity and contributions to the fields of mammalian embryology and kidney development, the significance and potential of the research program, the PI's proven leadership capabilities, and the outstanding institutional commitment.”

 The other grant was larger–$6.7 million–but reviewers raised a number of questions about the candidate although they recommended it for funding. The review summary ranked the application at 57 and said,

“In summary, this is an application from an established leader in NSC biology to pursue research focused on disease mechanisms in PD. Strengths of the proposal include the quality of the PI, the focus of the project on an interesting hypothesis, and the leadership in basic science that the candidate would bring to the applicant institution. Weaknesses included deficiencies in the research plan, the limited track-record of the PI in PD research and an institutional environment lacking adequate support for basic science investigations.“

Last January, in a rare move, CIRM directors rejected a $6.3 million recruitment grant with a score of 76 sought by the Buck Institute, which is not represented on the board.

The proposals are scheduled to be acted on at a public CIRM board meeting in Burlingame, Ca.

(Editor's note: an earlier version of this item incorrectly said the total of both grants was $13.4 million.)

UC Davis Researchers Score Big in $113 Million Stem Cell Award Round

Scientists at the University of California at Davis are set to win nearly half of $113 million expected to be awarded next week by the California stem cell agency as it pushes aggressively to turn research into marketplace cures.

Directors of the $3 billion agency are virtually certain to approve awards to three researchers at UC Davis, which operates its medical school and other research facilities in nearby Sacramento. The other three expected winners are from UCLA, Stanford and StemCells, Inc., of Newark, Ca., a publicly traded firm.

The $113 million round is the second largest research round in CIRM's history, surpassed only by an another, earlier $211 million “disease team” round. The latest effort is aimed at bringing proposed clinical trials to the FDA for approval or possibly starting trials within four years. That deadline is close to the time when CIRM is scheduled to run out of cash unless new funding sources are developed.

CIRM is currently exploring seeking private financing. It could also ask voters to approve another state bond issue. (Bonds currently provide the only real source of cash for CIRM.)  In either case, the agency needs strong, positive results from its grantees to support a bid for continued funding.

The CIRM board is scheduled to approve the latest awards one week from tomorrow at a public meeting in Burlingame in the San Francisco area. The agency's policy is to withhold the identities of applicants and winners until after formal board action. The California Stem Cell Report, however, has pieced together their identities from public records.

Here are the winners and links to the grant review summaries, listed in order of the CIRM scientific scores:

• Vicki Wheelock, UC Davis, $19 million, for development of a genetically modified cell therapy for Huntington's disease, an inherited neurodegenerative disorder. Scientific score 87.
• Antoni Ribas, UCLA, $20 million, for genetic reprogramming of cells to fight cancer. Scientific score 84.
• Nancy Lane, UC Davis, $20 million, for development of a small molecule to promote bone growth for the treatment of osteoporosis. Scientific score 80.
• John Laird, UC Davis, $14.2 million, for development of mesenchymal stem cells genetically modified for treatment of critical limb ischemia, which restricts blood flow in the lower leg and can lead to amputation. Scientific score 79.
• StemCells, Inc., (principal investigator not yet known), $20 million, for development of human neural stem cells to treat chronic cervical spinal cord injury. The company, founded by Stanford scientist Irv Weissman, who serves on its board, said earlier this year that it had filed two applications in this round, one of which dealt with cervical cord spinal injury. No other applicants filed a proposal for such research. Scientific score 79.
• Robert Robbins, Stanford, $20 million, development of a human embryonic stem cell treatment for end-stage heart failure. Scientific score 68.

In the case of businesses, the awards come in the form of loans. Grants go to nonprofits. One of the reasons behind the varying mechanisms is the difference in CIRM's intellectual property rules for businesses and nonprofits.

CIRM's Grant Working Group earlier this year approved the applications during closed door sessions. The full CIRM board has ultimate authority on the applications, but it has almost never rejected a positive action by the grant reviewers.

The board originally allotted $243 million for this round. Directors could reach into the 15 applications rejected by reviewers and approve any of them, which the board has done in other rounds. In this round, three rejected applications scored within seven points of the lowest rated application approved by reviewers, which could lead some directors to argue that the scores are not significantly different. One of the three came from Alexandra Capela of StemCells, Inc., and was scored at 61. The other two and their scores are Clive Svendsen of Cedars-Sinai, score 64, for ALS research, and Roberta Brinton of USC, score 63, for an Alzheimer's project.

Rejected applicants also can appeal reviewer decisions to the full CIRM board in writing and in public appearances before directors.

Twenty-three researchers were eligible to apply for funding, CIRM told the California Stem Cell Report. Applicants qualified by either winning a related planning grant from CIRM last year or by being granted an exception to that requirement by CIRM staff. Of the 22 researchers who ultimately applied(one nonprofit dropped out), six came from biotech businesses. Three of those qualified through exceptions. Three other businesses won planning grants last year out of the eight businesses that applied.

CIRM has come under fire for its negligible funding of stem cell firms and is moving to embrace industry more warmly.

Only one of the grants approved by reviewers involves research with human embryonic stem cells, which was the critical key to creation of the California stem cell agency. California voters established the agency in 2004 on the basis that it was needed because the Bush Administration had restricted federal funding of human embryonic stem cell research.  

California Stem Cell Report Going Dark for a Few Weeks

The California Stem Cell Report will be offline for the most part until about the middle of July. Its editor and publisher, David Jensen, is sailing off to the Perlas Islands south of Panama.

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

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

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

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

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

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

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

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

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

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

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

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

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

The California Stem Cell Agency and an HIV Cure: Pushing for a Clinical Trial in 2014

The California stem cell agency's leading efforts to find a cure for HIV – one tied to the famous "Berlin Patient" – received a plug today in a piece in the state capital's largest circulation newspaper, The Sacramento Bee.

The article by David Lesher focused on a $14 million CIRM grant to the City of Hope in Los Angeles that also involves Sangamo BioSciences of Richmond, Ca. The team hopes to launch a clinical trial by the end of next year.

The Berlin Patient is Timothy Brown, now of San Francisco, who is the only person in the world known to have been cured of HIV/AIDs. It came about as a side effect of a blood transfusion carrying a rare mutation of a gene found almost entirely among northern Europeans. Lesher, director of governmental affairs for the Public Policy Institute in Sacramento, wrote,

"The possibility of curing a global pandemic like AIDS with funding from the California bond is exactly the kind of exciting potential that inspired voters to approve Proposition 71 by a wide margin. But the HIV research is also a good example of the challenge facing the state's stem cell agency as it tries to show voters that they made a good investment. 

“None of the research under way will reach patients until long after the 10 years of funding by the ballot measure runs out. With the HIV project, researchers hope to be in human trials by 2014, but it is likely to be at least 10 years before they can show it might work in humans. And in the case of a stem cell cure for AIDS, it would be many years after that before a treatment is widely available.”

Jeff Sheehy, a prominent AIDS activist and a board member at the stem cell agency, described the effort as "the global home run. That's not in 10 years. … But this could be the beginning of something really amazing."

Lesher also wrote,

"Nobody thought stem cells might be used to cure HIV when the bond (funding for the stem cell agency) passed. Far from the embryonic stem cell treatments that inspired the ballot measure, the HIV research involves a new and growing integration of stem cell and genetic science."

Indeed, the ballot initiative that created the $3 billion California stem cell agency trumpeted its devotion to human embryonic stem cell research, which had been throttled by the Bush Administration. The agency has veered away from hESC research, which now amounts to less than $450 million out of the $1.4 billion in grants approved since 2004. 

$30 Million Round Attracts Strong Industry Interest; More Cash Coming?

The California stem cell agency is considering adding more cash to its upcoming $30 million award round aimed at aiding projects that can complete – within the next four years – a clinical trial for a therapy.

CIRM Chairman J.T. Thomas, a Los Angeles bond financier, last month told agency directors that there is "some real quality in the mix" among the firms that have expressed initial interest. Depending on the judgment of CIRM award reviewers later this year, Thomas said the board could well be asked to increase the funding.

The "strategic partnership" round has already exceeded expectations in terms of volume. CIRM told the California Stem Cell Report that the agency has received letters of intent from 37 enterprises, including 29 biotech companies.

The round is an outgrowth of recommendations two years ago from an "external review" panel that said that CIRM needed to do a better job of engaging the biotech industry. The RFA for the round said the agency's intent is to "enhance the likelihood that CIRM-funded projects will obtain funding for phase III clinical trials" and attract additional financing.

Elona Baum, the agency's general counsel and vice president for business development,, said in a news release earlier this spring,

“The Strategic Partnership Funding Program represents a new era for CIRM, one that is increasingly focused on moving therapies from the lab to the clinic, while still recognizing the importance of maintaining investments in early stage science,”

As the RFA is currently configured, CIRM will provide grants or loans of up to $10 million to three recipients. Applicants will have to match the size of the award. For the first time, CIRM will also require applicants to demonstrate the financial ability to carry the project forward.

In response to a query, CIRM spokesman Kevin McCormack said,

"We received 37 letters of intent (LOIs), including 8 from non-profits and 29 from biotech companies.  Based on the information in the LOIs, and on discussions with applicants, we were able to determine that some of the proposals were for projects that were outside the scientific scope of the RFA and that some of the applicants did not meet the minimum specified criteria in the RFA for 'Commercial Validation.' We currently expect to receive 10-15 applications for projects that appear to be eligible."

A "commercial validation" review is scheduled for this fall by the directors' Intellectual Property and Industry Subcommittee, which is co-chaired by Stephen Juelsgaard, former executive vice president of Genentech, and Duane Roth, CEO of CONNECT, a San Diego nonprofit that supports technology and life sciences business development. The others on the six-member panel are Chairman Thomas, Michael Goldberg, a general partner at the MDV venture capital firm, and two academics, Os Steward, chair and director of the Reeve-Irvine Research Center for Spinal Cord Injury at UC Irvine, and Susan Bryant, former vice chancellor for research, also at UC Irvine.

CIRM's short version of commercial validation says that applications must have "the financial capacity to move the project through development or of being able to attract the capital to do so. This may be evidenced by, for example, (i) significant investment by venture capital firms, large biotechnology or pharmaceutical companies and/or disease foundations; (ii) a licensing and development agreement with a large biotechnology or pharmaceutical company, or a commitment to enter into such an agreement executed prior to the disbursement of CIRM funding; and/or (iii) financial statements evidencing significant liquid assets."

Applications are due June 26 with reviews in September. The directors' Industry Subcommittee will meet following the reviews. CIRM said funding would come no earlier than January of next year.

Stem Cell Agency and its $2.4 Million Legal Costs: Proposal to Add Staff Lawyer Slips Away

The California stem cell agency has dropped a plan to add an additional lawyer to its staff on top of its $2.4 million yearly legal budget.

The proposal was eliminated from the agency's spending plan for the fiscal year beginning in July after it ran afoul of complaints in April from Art Torres, co-vice chairman of the agency, that legal spending was "awfully bloated."

At the time, CIRM's President Alan Trounson and general counsel Elona Baum argued, however, that the position was needed to protect CIRM's intellectual property. They said that grantee institutions were failing to take necessary steps to protect the IP and were putting CIRM "at risk."

The discussion occurred during a public meeting, but was settled behind the scenes before last month's approval of the budget by the CIRM board of directors. Instead of containing $221,000 for salary and benefits for another lawyer, the budget contained $203,000 for an external contract for the IP legal work.

The issue of hiring additional staff has implications beyond the most obvious. CIRM is laboring under a legal budget cap that hampers its operational flexibility. Plus the agency will move into a shutdown mode in about five years unless it derives a new source of financing.

During the April discussion, Baum cited a "very in-depth memo" justifying the addition of an attorney but did not present it at the time. The California Stem Cell Report subsequently asked the agency for a copy. The first version that CIRM supplied consisted of a single page and was mostly a list of tasks. It was also heavily expurgated by CIRM, although the agency did not initially disclose that information had been removed. The actual document turned out to be two pages long but still was something less than in-depth.

CIRM said the information was removed under attorney-client privilege. CIRM spokesman Kevin McCormack said it contained "reflections and advice about particular legal issues" from Baum to Trounson.

Our take: It is poor management to place privileged information in what should be a routine budget justification for adding staff. The result is a breakdown in openness on the part of the California stem cell agency. It is not the first time that CIRM has hidden information under attorney-client privilege. In 2008, the agency concealed public relations advice from a New York firm using that rationale. The matter involved an Australian researcher "under investigation for improprieties who worked in the stem cell laboratory run by CIRM's incoming President Dr. Alan Trounson," CIRM said at the time.

A final note on budget matters at the May board meeting: With little discussion, the board approved an overall budget of $17.9 million for coming fiscal year, an 8.5 percent increase over the estimated $16.5 million spending for the current fiscal year. The budget calls for a handful of new hires, raising the size of the staff of the $3 billion agency to the equivalent of 59.

CIRM Chairman J.T. Thomas also told the board the agency is assured of cash for its operations and research funding through the end of this year. CIRM relies on money borrowed by the state – general obligation bonds. However, under an arrangementarrived at last year, the funding is being provided through short-term borrowing – commercial paper. The state expects to offer another round of bonds this fall, but it is not clear whether CIRM bonds will be included. Gov. Jerry Brown is adamant about reducing the cost of state borrowing, which has skyrocketed in recent years.

Here is a copy of Baum's memo.

CIRM IP attorney job description

Finding on 'Evil' Stem Cells Boosts Stem Cell Agency PR

The California stem cell agency, which is struggling to spread the word about its good deeds, made a bit of progress last week when it was praised – not once but three times – on a widely followed national media outlet.

Jill Helms, Stanford photo

The PR bonus occurred on Science Friday, the NPR program that is a favorite on PBS radio stations around the country. It has 1.4 million listeners and 600,000 podcast downloads each week.

Jill Helms, a surgery professor at Stanford and a specialist in regenerative medicine, was the guest last Friday. She talked about what Science Friday host Ira Flatow called a "paradigm-shifting" finding that cholestrol and fat are not the likely villains in clogging arteries. Instead the villain is a stem cell – an evil one.

While evil stem cells are not a matter that is pushed by the California stem cell agency, Helms said her collaboration began as a result of a CIRM-sponsored meeting in Japan. Although she and lead researcher Song Li, an associate professor of bioengineering at UC Berkeley, work nearly within shouting distance, they had never met. She said,

Zhenyu Tang (at microscope) examines vascular stem
cells in culture along with Aijun Wang (left) and Song Li.
UC Berkeley/Zoey Huang photo

"Even though he works just across the (San Francisco) Bay from me - I met him at a meeting in Japan that was sponsored by the California Institute for Regenerative Medicine, or CIRM, and they fund a lot of stem cell research in California."

Later she said,

"I will tell you that cancer is certainly a disease that looks very much like a stem cell gone out of control. And so if we understand what normally regulates a stem cell's behavior, then we gain some crucial insights into what regulates maybe a cancer cell's behavior. It's that kind of approach that I think that CIRM is largely funding initiatives to try to target human diseases, the big ones, and the ones that make us all sort of quake in our shoes, and attempt to come up with new therapies."

And then still later, she said,

"Most basic scientists that work in stem cells and in the area of stem cell are trying as hard as possible to move this into translational therapies, things that can be used in humans. And, of course, CIRM, our funding institution, is very adamant about this being the trajectory. So, you know, I'll be taking a stab at it about five to seven years. I think that the ability to rapidly screen existing drugs for their ability to target this cell population is why we think that it might have a shorter course to getting into humans."

We should note that Helms has not received a grant from the stem cell agency nor is she even one of the featured players in CIRM's many videos. Song Li does have a $1.3million grant from the agency.

The three-pronged push by Helms is just what the agency needs if it is to sell its efforts, which are almost totally ignored by the mainstream media. However, the Science Friday audience consists almost entirely of "true believers" in the virtues of science and research. If CIRM is to accomplish its PR-communications-marketing goals it also has to reach the unwashed heathens, who are, however, unlikely converts. But most importantly, CIRM needs to persuade fence-sitters. All of which will require a long, hard and sometimes frustrating campaign.

One final note: The UC Berkley press release on the research said it was supported by cash from CIRM, the NIH and the United States Army.  According to CIRM's research blog post on Li's work, his team included two researchers who were part of Berkeley’s CIRM-funded training program.

Business-friendly Changes Proposed for Revenue Sharing by Stem Cell Agency

The $3 billion California stem cell agency, which hopes to generate income for the state through the sale of stem cell therapies, is moving to make its profit-sharing rules more friendly to business.

The proposed changes will come up Monday morning before the Intellectual Property and Industry Subcommittee of the CIRM governing board.

No stem cell research funded by CIRM has yet been commercialized. Its intellectual property regulations, which determine payback criteria, were developed shortly after CIRM was created in 2004. Ed Penhoet, one of the founders of Chiron and now a venture capitalist, chaired the panel that worked out the rules. He has since left the CIRM board.

A CIRM staff memo described the payment rules in the case of a "blockbuster" therapy as "uneven" and "lumpy." The memo said they "could be a disincentive for the engagement of industry." Other rules were described as creating "administrative challenges and uncertainty." The proposed changes, the memo said, would address those issues and ensure a "comparable economic return to California."

Here are links to the specific changes -- see here and here.

Public sites where interested parties can take part in the discussion are located in San Francisco, La Jolla, Los Angeles and Irvine. Specific addresses can be found on themeeting agenda.

The proposed changes must go before the full governing board and then into the state's administrative law process before taking full effect.  

Business Success Rate at Stem Cell Agency: Zero in Latest Round After 14 Fail

California biotech companies chalked up a zero in the latest funding round by the state's $3 billion stem cell agency, although 14 tried to run a gauntlet that industry has complained about for years.

All $69 million in last month's translational research round went to 21 academic and nonprofit insitutions. No business received an award. One firm, Eclipse Therapeutics of San Diego, appealed to the agency's governing board but was not successful despite having a higher scientific score than at least two winners.

The miniscule amount of funding for commercial enterprises – less than 4 percent of $1.4 billion handed out so far – has been a matter of concern for some time for both industry and some members of the CIRM governing board. Most recently, industry executives complained at an April hearing of the Institute of Medicine panel looking into CIRM's operations. Even a 2010 review commissioned by CIRM said the agency needed to do better by business.

The question of funding goes beyond a simple matter of fairness or "good science," as CIRM describes its funding goal. Without efforts by industry to turn research into cures, CIRM will not be able to fulfill promises to voters in 2004 when they approved creation of the stem cell agency. CIRM last month approved a set of five-year goals that push more aggressively for development of commercial products, but the goals lacked such things as a financing round devoted solely to business applicants.

In last month's translational round, applicants went through a three-step process, which is conducted primarily behind closed doors. First came what CIRM calls pre-applications. Those were reviewed by CIRM staff with the help of outside advisors if necessary. Applicants who cleared that hurdle were allowed to apply for the full, peer-reviewed round. During that process, the CIRM Grants Working Group reviews applications, makes decisions and sends them to the full CIRM board for ratification and possible changes. The board almost never has rejected a grant approved by reviewers. But the board has ultimate authority and sometimes funds applications that reviewers have rejected. The applicants' names are withheld from the board and the public during the process, although some of the board discussion and the final vote is conducted in public. CIRM does not release the names of rejected applicants unless they appeal.

In the translational round, a total of 42 pre-applications out of 167 were approved by staff, according to CIRM. Thirty-eight came from nonprofits and academics out of the 153 such institutions that applied. Four out of 14 business pre-applications advanced to full applications but none made the final cut. All of the winning applications were linked to institutions that have representatives on the CIRM governing board. Those representatives are not allowed to vote on or take part in discussion involving applications to their institutions.

The primary decision tool used by the grant review group is a scientific score. In last month's round, scores of approved grants ranged from 88 to 53. However, eight grants that were ranked above 53 were rejected by the board. One of those higher-ranking applications came from San Diego's Eclipse Therapeutics, which scored 58. The low-ranking grants were approved for what CIRM describes as "programmatic" reasons.

More than three weeks ago, the California Stem Cell Report asked CIRM for figures on the numbers of applications in the translational round, including those for business. CIRM said the figures had not been compiled and would not be available until after the awards were made on May 24. The numbers were finally supplied yesterday.

Our take: The number of applicants, and their breakdown, is basic information that should be part of board's decision-making process. The statistics should be routinely available well in advance of the board's meeting. Indeed, the agency in its earlier days used to routinely publish the figures. It may be now that generating them is more time-consuming than necessary. The recent performance evaluation of the agency said CIRM needs to make major improvements in how it handles critical information needed for its top management and board.

Whatever the reason, given CIRM's poor track record with business, the agency's directors should diligently track industry's success rate on applications. If proposals ranked as low as 53 are approved while higher ranking applications from business are bypassed, it warrants more than cursory examination.

'Ugly' Stem Cell Headlines and a Stem Cell Essay Contest

California stem cell researcher Paul Knoepfler has been busy recently pumping out a plethora of items on his blog, including his own stem cell essay contest and a summary of "ugly" stem cell headlines.

He also rails, albeit briefly, against the Los Angeles Times "hate fest" against the California stem cell agency and offers some advice on developments involving prostate cancer, an affliction that he suffered from a few years ago.

Knoepfler, a UC Davis scientist, puts some cash on the line in his essay contest, with a prize of a $50 iTunes card plus publication of the winning piece. He is looking for a "convincing, non-fiction essay on stem cells thinking entirely outside the box." No more than 500 words. He has two categories, one for persons under 18 and one for persons over that age. June 30 is the deadline for submissions.

Knoepfler also wrote about Twitter and how it can be used by scientists in a useful item called "The scientist's top 10 guide to Twitter." We recommend it.

Two California Stem Cell Agency Directors Plump for Proposition 29

Two directors of the $3 billion California stem cell agency have popped up in the battle over the anti-tobacco initiative on tomorrow's ballot in the Golden State.

They are Sherry Lansing and Kristiina Vuori, who were the subjects of a column by Michael Hiltzik of the Los Angeles Times dealing with Proposition 29, the "Son of CIRM" measure that would raise $800 million for research by increasing the price of cigarettes by $1 a pack. In addition to serving on the CIRM board, Lansing heads her own anti-cancer foundation and is chair of the board of the UC regents. Vuori is head of the Sanford-Burnham Institute in La Jolla.

Proposition 29 is patterned after the measure that created the stem cell agency. The organization established by Proposition 29 would also be governed by a board that is run by representatives of organizations almost certain to receive the bulk of the funding, as is the case with CIRM.

In an op-ed piece on Friday, Lansing and Vuori said the Times and Hiltzik had fallen for "a smokescreen" put up by tobacco companies which are spending something in the neighborhood of $40 million to defeat the initiative. Lansing and Vuori said the measure is needed to stop smoking by young people as well as providing cash for research for tobacco-related diseases. Young people are more sensitive to price increases of cigarettes than adults, according to research.

Lansing and Vuori referred to a column in which Hiltzik opposed the measure because it would divert money from more immediate state needs, including health and welfare programs for children, education and the poor. (See here for thecolumn and here, here and here for related items.)

In his most recent column, Hiltzik said,

"The...problem with Proposition 29 is its pigeonholing of the money for cancer research rather than for immediate needs here in California that are absolutely dire. It’s all well and good to say that cancer research benefits everyone, but the real question is whether it should be the absolute top priority for a state that can’t afford to keep its children fed or offer them medical care in the here and now. 

"Lansing and Vuori say the fact that Prop. 29 'fails to provide funding for schools, roads or affordable housing' is irrelevant, because it was 'was never intended to solve these problems.'

"In the context of the state’s needs, this is a rather callous approach to take. Let’s spell out why, so Lansing and Vuori won’t be so inclined to dismiss these necessities of life so casually."

Hiltzik cited a list of state government cuts that have meant the loss of health coverage for 400,000 California children, eliminated welfare benefits for 578,000 poor California families and would mean an end to state college student aid for 72,000 young people from less affluent families.

Hiltzik continued,

"That’s just the beginning of what might be cut because the state needs money—and won’t be able to lay its hands on the hundreds of millions of dollars that Lansing, Vuori, and their research colleagues are angling for. They don’t want voters to be reminded that there are competing demands for the tobacco money, and they do so by failing to mention that they exist, and also by presenting the spending on cancer research as the voters’ only choice. 

"It’s the only choice because the promoters of Proposition 29 designed it that way. Advocates of programs like this love to pass them in via voter initiatives because they leave no room to measure them against alternative needs."

 A final note: The New York Times carried a piece yesterday on Proposition 29 that drew 481 comments. The article said, 

"Organizers argued that the tax would have less chance of passing if voters thought it would go into the state coffers, and said that their only goal here was cutting down on smoking."

 Also yesterday, Willie Brown, the former mayor of San Francisco and a keen observer of California politics, predicted voter approval of the measure along with an increase in cigarette smuggling from adjacent states and the sale of discount smokes at the 58 Indian casino sites in the state.