Road to Commercialization: California Stem Cell Agency Seeking Top Level Product Development Execs

Looking for a good job at an enterprise that is on the cutting edge of biotechnology?

Nine positions are open at the $3 billion California stem cell agency, headquartered in San Francisco. Some of them could pay more than $200,000 a year.

Several of the new jobs are closely aligned with the agency's fresh focus on commercializing stem cell research and driving therapies into the clinic. Scientists and lawyers are being recruited along with a business development officer. For some of the positions, travel is required.

One new, high-level position is described as a senior development officer. The job posting calls for “expertise in product development for stem cell therapies.” The person would “directly interact with investigators on CIRM’s clinically applicable research programs to help provide product development guidance from preclinical, manufacturing, and first in human to early phase clinical regulatory perspectives.” An M.D. or Ph.D. degree in a biomedical science is required. Pay tops out at $232,891. This person would report to Ellen Feigal, senior vice president for research and development.

A second, high-level position reporting to Feigal is senior medical officer, who would manage the agency's portfolio aimed at commercialization of stem cell research, specifically “focused on IND enabling and clinical development projects.” This also requires an M.D. or Ph.D. and substantial professional experience in development of biomedical research and products. Pay also could run as high $232.891 annually.

A third new job at CIRM is business development officer. That person would help generate “outside investment in stem cell research in California for both CIRM-funded and not currently CIRM-funded programs by biopharmaceutical strategic partners; equity investors (venture capital and others); and disease foundations.” The salary range hits $216,270 annually. It wouldn't be surprising if the person in this job also became involved in developing a funding mechanism for CIRM after it runs out of state cash in 2017 or so. 

This position reports to Elona Baum, general counsel and vice president, business development.

And yet another new position is called director of alliance management. The job deals with the agency's extensive collaborative funding partnerships, many of which are abroad. CIRM wants somebody with a law degree, experience in intellectual property and business law along with strong negotiating skills. The pay range for the post tops out at $232,891 annually. This position reports to CIRM President Alan Trounson.

Other open positions include: deputy general counsel, two science officers and office manager.

StemCells, Inc., Discloses How it Will Generate $40 Million in Matching Funds

StemCells, Inc., said yesterday that it will come up with the $40 million needed to match loans from the California stem cell agency through “existing infrastructure and overhead” and will not be issuing stocks or warrants to the agency.

In a statement to shareholders, Martin McGlynn, CEO of the publicly traded firm, discussed the $40 million in loans awarded by agency this summer, including $20 million last week. The stem cell agency's governing board, after it emerged from an executive session on the matter, last Wednesday night adopted a motion requiring the company to demonstrate that it has the matching funds.

CIRM Chairman J.T. Thomas, a Los Angeles bond financier, said that concerns were expressed during the executive session that the agency “would account for such a large part of the assets of the company.” At his suggestion, the board approved the loan on the condition that “it show it has access” to the $20 million in matching funds that company offered during the application process. StemCells, Inc., also offered a $20 million match on another loan approved in July by CIRM.

The latest financial reports from StemCells, Inc., which is based in Newark, Ca., show that it had assets of $17 million as of June 30 and liabilities of $11.6 million. The company reported net income for the second quarter of $833,522 compared to a loss of $4 million for the same period a year ago.

In its filing with the SEC, the company said,

“We have incurred significant operating losses since inception. We expect to incur additional operating losses over the foreseeable future. We have very limited liquidity and capital resources and must obtain significant additional capital and other resources in order to provide funding for our product development efforts....”

In his statement yesterday, McGlynn said the California stem cell agency had “doubled down” on StemCells, Inc., in approving the two loans. He said the company is not concerned about meeting the matching requirements. McGlynn said, 

Martin McGlynn
StemCells, Inc., Photo

“To be clear, we do not interpret the diligence requirement as an obligation to raise a specific amount of money in a particular period of time, and we wish to correct the misstatements made by some uninformed third parties that the ICOC is requiring us to raise $20 million in matching funds. In point of fact, we expect that a substantial amount of our contribution towards these projects will come from existing infrastructure and overhead, salaries for our existing personnel, and other contributions in kind. Furthermore, we will soon be reviewing the budgets for both projects in detail with CIRM staff. Because each disease team budget was prepared on a stand-alone basis, we expect to see significant economies and efficiencies now that the company has in fact been awarded funding for both.”

McGlynn also said,

"Under this particular CIRM program (RFA 10-05), funding for companies will be in the form of unsecured, non-recourse, interest-bearing, term loans, which will be forgivable in the event the funded research fails to result in a commercialized product. On the other hand, should the product be successfully commercialized, CIRM would earn milestone payments depending on how successful the product becomes. Because CIRM shares the downside risk, and could participate handsomely on the upside, the structure makes the loan about as close to 'equity' as one could, without having to dilute existing shareholders in order to gain access to significant amounts of capital.  The company will not issue stock, warrants or other equity to CIRM in connection with these awards. 

"Of course, we realize that CIRM prefers that applicants from industry provide evidence of their ability to secure whatever additional funds may be needed to complete any CIRM-funded project, in this case the filing of an IND for each indication. This is stated in the text of RFA 10-05 itself and was repeated in various comments by CIRM staff during the application process. When making the second award on September 5, the ICOC naturally recognized the sizeable commitment it was making to StemCells, so it instructed CIRM staff to satisfy themselves of the company's ability to access the capital needed to fund the project, namely the Alzheimer's program through to the filing of the IND.”

McGlynn also said firm's bid for another $10 million from CIRM could come in the form of a grant instead of a loan. He said,

"Finally, I can confirm that in June of this year the Company applied for up to $10 million under CIRM's Strategic Partnership I program (RFA 12-05). Unlike the disease team awards under RFA 10-05, if companies are approved for funding under RFA 12-05, they may elect to take such funding in the form of a grant, not a loan. Our application under RFA 12-05 is for a controlled Phase II clinical trial of HuCNS-SC cells in Pelizaeus-Merzbacher disease (PMD), a rare myelination disorder. StemCells completed a Phase I study in PMD in February 2012 and in April announced that all of the patients from that study showed evidence of cell-derived myelination and three of the four patients in the study showed measurable gains in motor and/or cognitive function.”

According to CIRM, the awards in the strategic partner round will be approved either next month or in December. 

StemCells, Inc. stock was trading at $1.85 at the time of this writing. Last week, it rose to $2.43. During the last 12 months, its high was $2.67 and its low was 59 cents.

California Stem Cell Firsts: From Emotional Appeals to $40 Million Awards

During the last few months, the $3 billion California stem cell agency, which is approaching its eight-year anniversary, has chalked up a number of important firsts.

Most of them came during the July and September meetings of its 29-member governing board and were related to strenuous efforts by researchers to win approval of awards of up to $20 million each. Several firsts involved the agency's former chairman, Robert Klein, who could be considered the father of the state's stem cell research effort.

So here is the California Stem Cell Report's list of firsts at the California Institute of Regenerative Medicine (as CIRM, the stem cell agency, is formally known) for the summer of 2012.

It was the first time that a single company – in this case, StemCells, Inc. , of Newark, Ca. – received two awards in the same round.

It was the first time any company has been awarded as much as $40 million. Again, StemCells, Inc.

It was the first time that Klein has lobbied his former board (see here and here) on behalf of a particular grant application. That occurred in both July and September with one of StemCells, Inc.'s application.

It was the first time that the board has approved an application that has been rejected twice by reviewers, again the StemCells, Inc., proposal backed by Klein.

It was the first time that board has received such a large outpouring of appeals by rejected applicants.

It was the first time that the board has received such lengthy presentations of emotional appeals by patient advocates on behalf of rejected applicants.

It was the first time that action on a grant round has been extended over three months(see here and here). The disease team round began in July. Action will not be completed until the end of October.

It was the first time that the governing board has sent so many applications back for re-review – five, six if the one to be acted on in October is included.

It was also the first time that the board has ordered a full-blown review of its grant appeal process with an eye to making making major changes in it.

Several reasons exist for the number of firsts racked up by CIRM. One is the high stakes involved in the disease team round that began in July and the low number approved by reviewers – six compared to the 12 approved by the board, as of today, out of 21 applications. Another reason involves the increasing understanding on the part of many scientists that they can appeal directly to the board when reviewers reject their applications. However, it is also clear that not all applicants grasp the full range of appeal possibilities. A third reason involves the agency's muddled appeal process, which has been a problem for years. And a fourth reason involves the board's push to drive research into the clinic and commercialization, which applicants are quickly learning how to exploit.

Readers should feel free to add their own firsts to this list. They can do so – even, anonymously – by clicking on the word “comments” at the end of this item.

StemCells, Inc., Gunning for Another $10 Million from California Stem Cell Agency

Fresh from winning $40 million from the California stem cell agency, StemCells, Inc., is shooting for another, $10 million award from the state research effort.

The latest proposal comes as the publicly traded firm also faces the task of raising $40 million that it has promised the agency to match the earlier awards. That figure could well rise to $50 million given the new application.

Martin McGlynn, CEO of the well-connected Newark, Ca., firm, disclosed StemCells, Inc.'s, latest proposal in an article by Catherine Shaffer in BioWorld. She wrote,

“Already looking ahead, StemCells has set its sights on one more CIRM initiative designed to fund early stage clinical trials over a four-year period. StemCells has applied for that grant, worth up to $10 million, to fund a Phase II trial in PMD(Pelizaeus-Merzbacher disease).”

The article did not disclose the timing on the new application.

StemCells, Inc.'s lobbying efforts with the stem cell agency were vigorously aided by the former chairman of the $3 billion California stem cell agency, Robert Klein (see here and here). And Wednesday evening, the company convinced the state agency's board to overturn two successive reviewer rejections of a $20 million proposal for Alzheimer's research. The vote was 7-5.

Klein's efforts came in a record-breaking round of appeals and emotional presentations by patient advocates, which triggered complaints from the board this week about "arm-twisting" and politicking. 

StemCells, Inc., was founded by the eminent Stanford stem cell researcher Irv Weissman, who helped to raise millions for the ballot initiative that created the stem cell agency. He additionally appeared in in the campaign's TV advertising. The campaign was headed by Klein, who ultimately raised $35 million to convince voters to create the agency. Weissman is currently on the board of the StemCells, Inc. His wife is executive vice president.

In July, the stem cell agency board approved the first $20 million award to the firm for research involving spinal injury.

McGlynn told BioWorld,

"We're the only company that has programs going on in all three regions of the central nervous system: the brain, the spinal cord and the eye."

Not discussed in the BioWorld article was a requirement, imposed by the CIRM board, that StemCells, Inc., show it can deliver $20 million in matching funds on the Alzheimer's award before receiving any state funds. CIRM said no such board requirement existed on the spinal award, but the firm has promised to match the $20 million on that award as well.

BioWorld described the awards as grants. In fact, they are loans. But under the terms of the loans, if the research is not successfully commercialized, it will be forgiven.  

Arm-twisting and Emotion: Stem Cell Directors Move to Reform Appeals on Multimillon Dollar Grants

Frustrated with politicking, “arm-twisting,” lobbying and “emotionally charged presentations,” the governing board of the $3 billion California stem cell agency today approved short-term changes in its grant appeal process and ordered up a study to prepare long-term reforms.

The moves followed a prolonged series of appeals on grant applications that began in July and continued through today, setting records for the number of appeals and generating hours of sometimes tearful and emotion-laden presentations from members of the public.

The board adopted changes in the appeal process for its next few meetings that are aimed at curbing its free-wheeling nature and making it more understandable to the public and applicants. The board also directed creation of a panel to make recommendations by the end of the year for more wide-ranging reforms.

Directors of the agency were clearly not happy with the appeal process this summer. However, it has been a problem since 2008 when Bert Lubin, now a director of the stem cell agency and CEO of Childrens Hospital of Oakland, Ca., was the first applicant to make a public pitch before the board to overturn reviewer rejection of his application.

One director, UCLA medical school dean, Gerald Levey, said at the time,

"I don't think we can run a board this way. If we do, it would be chaos." 

Today, CIRM Director Carmen Puliafito, dean of the USC School of Medicine, said that “lots of lobbying” was going over the last couple of months. He predicted there will more lobbying and “more politicking.” Puliafito said,

“On big money grants, people will be calling their friends.”

The name of former board chairman, Robert Klein, was not mentioned during this afternoon's discussion. But Klein vigorously and successfully backed an appeal (see here, here and here) by StemCells, Inc., of Newark, Ca., for a $20 million application that had been rejected twice by reviewers. Last night the board approved the award on a 7-5 vote. It was the first time the board has approved an award that was rejected twice by its reviewers.

Director Jeff Sheehy, co-vice chairman of the review group and a communications manager at UC San Francisco, said the agency is dealing with “big money grants” that are “incredibly complex.” He also referred to “certain arm-twisting by certain individuals.”

Several board members made references to appearances by persons who have diseases or conditions that might be affected by CIRM-financed research. Director Duane Roth, head of CONNECT, a San Diego business development organization, said the board is making decisions in “an emotionally charged setting.”

Other issues cited by directors include the integrity of review process, fairness, consistency, shifting appeals procedures, transparency and board discipline on appeals.

James Harrison, outside counsel to the board, said the board's action today includes "eliminating the reference to unpublished data in the discussion of 'material new information," imposing a 3-page limit on other correspondence, explaining that applicants should have seven business days from the time the (grants review group) recommendation is made available to them to file an (extraordinary petition), and posting all of the information regarding these policies in one place on CIRM’s website."

For a list of articles and CIRM documents dealing with the appeal process, see here.

California Stem Cell Board Adjourns

The governing board of the California stem cell agency adjourned its meeting about 3 p.m. PDT today.  It approved changes in its appeal process that will take effect immediately and ordered a study to completed by the end of the year for a full-blown overhaul. We will have an item on that shortly.

CIRM Posts Press Release on Board Actions

Here is a link to the official press release on actions by the board of the California stem cell agency so far today and last night. The release identifies grant recipients by name.  

California Stem Cell Agency Okays $38 Million for Basic Research

Directors of the California stem cell agency today approved about $38 million for research into basic biology, including two appeals by researchers on applications initially rejected by reviewers.

The governing board turned down five appeals in the round, which attracted 357 applications in its "pre-app" process, 64 of which were invited to apply. Reviewers approved 25 applications.

The following appeals in the biology round were approved:

• $1.3 million, Deborah Lieu of UC Davis. (Review summary here, appeal here.) 764
• $1.4 million, Yanhong Shi  of the City of Hope. (See review summary here and appeal here.)

The board also approved another application that was rejected by reviewers based on a recommendation by CIRM President Alan Trounson.  It is very unusual for the board to approve rejected applications based on staff recommendations following a review. Trounson described the grant addressed a major bottleneck in stem cell science.

 The California stem cell agency is expected to post a press release shortly with the names of all recipients. The agency usually withholds names of applicants until the the board formally acts.
(An earlier version of this item reported that the board approved $37 million in grants.)

Florida Researcher Wins $6.7 Million Grant to Come to Golden State

Dennis Steindler
UF Photo

The governing board of the California stem cell agency this morning approved a $6.7 million grant to recruit Dennis Steindler of the University of Florida to the Parkinson's Institute in Sunnyvale, Ca.

The grant was approved immediately following a 45-minute executive session with no further debate. (For more on this, see here, here and here.)

Steindler later told the California Stem Cell Report he would begin work in California as soon as possible.

Board Concludes Private Session on Recruitment Grant

The governing board of the California stem cell agency has just concluded a 45 minute executive session on a $6.7 million grant to recruit a Florida scientist to the Parkinson's Institute in Sunnyvale, Ca.

It was the longest executive session ever on a recruitment grant, which are usually approved routinely with little serious discussion.

The board is now resuming discussion of the matter(see here and here.)

Dennis Steindler Application: Excerpt from Review Summary

The CIRM summary of the review on the $6.7 million grant to recruit Florida scientist Dennis Steindler to the Parkinson's Institute in California carried a strong minority report. However, the review itself drew fire this morning from some CIRM board members.

They included patient advocate Jeff Sheehy, co-vice chair of the grant review group, who supported approval of the grant. He noted that the low score reflected two extreme opinions. He said some of the reviewers were doing their research on the Parkinson's Institute on the Internet during the actual review.  Sheehy said that was not a "good way" to perform a review and reflected a "major short-coming." 

Here is an excerpt from the review.

"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."

The summary continued, 

"During programmatic discussion some GWG (grant review group) members cited a need to broaden stem cell leadership not only at the large universities but also at the smaller institutions as well. They felt that the candidate's recruitment would strengthen the applicant institution and provide leadership and strength in basic research. The need for increased research focused on Parkinson's Disease was also cited by some reviewers. A motion to recommend the application for funding carried with a majority vote. Because more than 35% of GWG members opposed the motion, opponents have exercised their right to have that position reported to the ICOC. The consensus statement from this group is as follows: 'Despite the facts that the applicant has many excellent attributes, that Parkinson's disease is a key area of interest, and that the applicant institution may deserve additional consideration, our opinion is that the application clearly falls short in several critical scientific areas that outweigh the programmatic concerns and do not justify a recommendation for funding. We believe that the people of California depend upon us to make recommendations based on our scientific expertise, for outcomes that are most likely to impact medicine and the health and treatment of their citizens. We believe that their money can be better spent.'"

CIRM Board Eyes Florida Researcher for $6.7 Million Grant

The board of the California stem cell agency is discussing a proposal to award $6.7 million to recruit a Florida scientist to the Parkinson's Institute in Sunnyvale, Ca.

The scientist is Dennis Steindler of the University of Florida. The recruitment award received a score of 57, although the scores ranged from 30 to 75.  Jeff Sheehy, a member of the grant review group and CIRM board member, said the score reflected two extremely divergent positions by two reviewers.

The board has awarded four grants in its recruitment round over the past couple of years, but this is the first extended discussion of an award recommended by reviewers. It is also the first to have a representative of the applicant institution speaking publicly for the grant.

CIRM directors have now moved into executive session to discuss matters they prefer to air in private.

Two Additional Appeals Rejected in Disease Team Round

The governing board of the California stem cell agency last night rejected appeals by two applicants -- OncoMed Pharmaceuticals of Redwood City and Albert Wong of Stanford -- in the $200 million disease team round.

Both petitions generated little discussion. You can find more on their petitions here and here.

The board also approved changes in its intellectual property and grant administration rules. Both proposals will now enter the state's official administrative law process for more comment and possible change.

Operator Error by Blog ! CIRM Audiocast Up

The audiocast for the meeting this morning of the governing board of the California stem cell agency is now up. Be sure to use the correct code to sign in(there are two different ones). This writer did not and initially received yesterday's audiocast.

The board is currently discussing the "bolt-on" changes re grants.

CIRM Governing Board Meeting: Audiocast Problems

Today's meeting of the governing board of the $3 billion California stem cell agency should be getting underway shortly. For those of you interested in the live Internet audiocast, the voice you are now hearing on that service is that of CIRM President Alan Trounson. The audiocast is a repeat from the beginning of yesterday's session. We have queried the agency about the status of the audiocast, which is performed by ATT.

StemCells, Inc., Hails $40 Million in Awards from California Stem Cell Agency

StemCells, Inc., was quick this morning with a press release about winning a $20 million award last night from the California stem cell agency.

The publicly traded, Newark, Ca., firm also pointed out that the CIRM board in July awarded another $20 million to the business.

The news release hailed the awards as validating its science and business. Martin McGlynn, who personally appeared before the CIRM board last night, said,

 "CIRM's approval of two awards to StemCells illustrates the tremendous promise of our neural stem cell technology and the high degree of confidence in the world class team of scientists and clinicians who will be working to translate this technology into potential treatments and cures for these devastating diseases." 

On the Alzheimer's award last night, McGlynn said,

 "With the recent spate of late-stage clinical failures in Alzheimer's disease, it is clear that the field could benefit from alternative approaches to lessen the huge burden on families, caregivers and our healthcare system.

He continued,

"Our recently reported preclinical data, which showed that our neural stem cells restored memory and enhanced synaptic function in two animal models relevant to Alzheimer's disease, shows our approach has promise. We greatly appreciate the support from CIRM, which should help us accelerate our efforts to test our HuCNS-SC cells in Alzheimer's disease."

The news release did not note that the board has required that the firm must show proof that it has access to $20 million in matching funds prior to receiving cash from the agency on the Alzheimer's grant. The California Stem Cell Report is asking CIRM whether that requirement extends to the earlier grant as well.

One of the analysts who follows the company released a special report on the firm this morning. Stephen Dunn of LifeTech Capital said,

 “We are reiterating our strong speculative buy with a price target of $4.50 as StemCells Inc. continues to distinguishing themselves as one of the most advanced players in the stem cell space.”

At the time of this writing, the firm's stock was trading at $2.20 up seven cents. Its 52 week high is $2.67 and its 52 week low is 59 cents.  

CIRM Board Adjourns

The governing board of the California stem cell agency adjourned at 9:56 p.m. PDT today and will reconvene tomorrow morning at 9 a.m. PDT. The California Stem Cell Report will provide coverage of the daylong meeting then. No further items are expected this evening.

StemCells, Inc., Wins Another $20 Million From California Stem Cell Agency

Following a second impassioned pitch by its former chairman, Robert Klein, the governing board of the California stem cell agency approved a $20 million award to a financially strapped biotech firm, StemCells, Inc., of Newark, Ca.

Approval came on a 7-5 vote with the condition that the company demonstrate it has access to $20 million in matching funds prior to funding.  It is the second $20 million award that the company has received in the disease team round, which now totals $214 million. Another disease team application has been tabled and will not be considered until October.

The current CIRM chairman, J.T. Thomas, a Los Angeles bond financier, asked for the financial proof because he said some concerns were expressed during an executive session that CIRM would now "account for such a large part of the assets of the company." Martin McGlynn, CEO of StemCells, Inc., also told the board that the company might have to drop its Alzheimer's research if it did not receive the CIRM award.

The StemCells, Inc., application was rejected twice by reviewers. The original rejection came before the July meeting at which Klein first appeared (see here and here). The proposal was then sent back for re-review, during which it was rejected again.

However, the 29-member board narrowly approved the application following discussion tonight and following its rejection of another Alzheimer's research proposal from USC. Both applicants produced a number of witnesses, including patients, on behalf of their appeals.

The re-review on the StemCells, Inc., application said in reference to a statement by Klein to board in July,

“The reviewers did not feel there was compelling data for neuron migration in the submitted manuscript. This is the manuscript specifically referenced at the ICOC (CIRM governing board) meeting (in July) that prompted the call for additional analysis. The manuscript is not yet accepted, it is 'potentially acceptable' but requires 'major revisions' according to the journal editor note. In addition, however, the studies in this manuscript used mouse NSCs, not the human NSCs proposed for the disease team award....”

In July, Klein said, “....(W)e have brand-new data that demonstrates and totally contradicts the key weakness on which it was downgraded.” 

A footnote: The CIRM staff said that as a result of two StemCells application, a proposal is being prepared to limit applications to one per entity in later rounds.

CIRM Executive Session on StemCells, Inc., Appeal

The governing board of the California stem cell agency is meeting in executive session to consider proprietary information on an appeal by StemCells, Inc., following a second public pitch by the agency's former chairman, Robert Klein, on behalf of the financially strapped business.

Martin McGlynn, CEO of the publicly traded firm, indicated to the board that it may have to drop its Alzheimer's research program if it does not receive the $20 million from CIRM.

 The board's executive session followed rejection of another Alzheimer's related application, this one from researchers at USC.

USC Loses Appeal on $20 Million Proposal

Directors of the California stem cell agency this evening rejected an application for a $20 million research grant to a team at the University of the Southern California. 

The team, led by Roberta Diaz Brinton, filed an appeal last month in the $200 million disease team round, which first came up for consideration in July. CIRM staff pointed out that normally such appeals are considered at the time the round is first considered by the board.

The vote was split on the application, but actual tally was not announced by the agency following the vote. (Later, at the request of the California Stem Cell Report, a board spokesman said the vote was 4-10 on the 29-member board.)

Brinton and other investigators spoke to the board along with several patient advocates.

(An earlier version of this item did not contain the 4-10 vote.)

UCLA's Nelson and Miceli Win $6 Million from California Stem Cell Agency

Directors of the California stem cell agency today approved a $6 million research grant for Stanley F. Nelson and M. Carrie Miceli  of UCLA, who appealed a negative decision  by grant reviewers on its earlier $20 million request.

Following a re-review of the proposal, a special CIRM panel recommended the lower amount and conversion of the proposal to an early translational grant instead of a disease team. The UCLA team will be asked to send a revised proposal to CIRM prior to funding.

Nelson told the board that he was "okay" with the revision and said his team would be back later for more funding for a larger project.

UC Irvine's Klassen Wins $17.3 Million from California Stem Cell Agency

Directors of the California stem cell agency this evening approved a $17.3 million grant to Henry Klassen of UC Irvine following a re-review of the application in the agency's disease team round. The action came with no debate.

Capricor Wins $20 Million from California Stem Cell Agency

Directors of the California stem cell agency this evening approved an award of up to $20 million to Capricor, Inc., of Los Angeles, rejecting a negative decision on the application by agency reviewers.

Approval of the application came after a re-review triggered by Capricor's appeal in July. The governing board also declined to impose a staff-recommended condition dealing with the patient cohort.

Discussion of Disease Team Appeals Begins

The CIRM board is beginning the discussion of the appeals on disease team appeals. Thomas is reviewing the procedure for re-reviews of the applications.

Busy Agenda Tonight for CIRM Directors

CIRM Chairman J.T. Thomas just announced that he is going to try act tonight on most of the items on the agenda. Exceptions will be the basic biology grant, recruitment grant and resolutions, which will be taken up tomorrow. Discussion is now underway on the grants administration policy changes.

Routine Reports Being Heard at CIRM Directors Meeting

CIRM directors are now hearing routine financial and other reports from CIRM staff, including President Alan Trounson. The grant appeals have not yet been taken up.

CIRM Directors Meeting Begins

Directors of the $3 billion California stem cell agency have begun their meeting. However, the audiocast was down until just 20 minutes after the hour.

Upcoming Coverage of Action on $243 Million Disease Grants

The California Stem Cell Report will bring you gavel-to-gavel coverage this afternoon and evening of the meeting of the governing board of the $3 billion California stem cell agency. A spokesman says the primary order of business tonight will be finishing action on appeals in the $243 million disease team round and approval of changes in the grants administration policy. The meeting begins at 4 p.m. PDT. It resumes tomorrow at 9 a.m. PDT and is scheduled to go all day.

The session is being audiocast on the Internet. It is also accessible via an 800 number. Interested parties can participate from teleconference locations in La Jolla, Los Angeles and Pleasanton. Details are on the agenda.

Appeals in $243 Million Stem Cell Round Climb to a Record 11

A Stanford researcher is seeking to overturn reviewer rejection of his application for $20 million in the California stem cell agency's largest ever research round and bringing to a record 11 the number of appeals in the round.

The previous record number of appeals in a round was nine in 2010. In the current $243 million disease team round, 11 of 15 applicants rejected by reviewers filed appeals, nine in July and two since then, including the Stanford researcher. Two of the appeals were successful in July. And it appears that three more appeals will be approved, albeit with conditions, later today. 

In his petition to the agency's governing board, Albert Wong of Stanford said,

“This science has been favorably reviewed by CIRM in the past and was on the cusp of funding. Moreover, three recent publications support our approach.”

He said that his team can “refute nearly every negative comment made either through referencing available scientific information or our application.”  Additionally he indicated that his team did not fully understand the opportunities for appeals during the application review process.

Wong and CIRM did not disclose the score on the application (5373), but it was listed next to last on the CIRM list of reviewer summaries.  Generally, those summaries are listed in order of their scientific score ranking.

Wong's appeal is on the agenda for today's meeting of the CIRM governing board, which is expected to act tonight on all the appeals filed in the $243 million disease team round. The $35 million basic biology round is expected to be acted on tomorrow.

Good News on Three Appeals; Not-so-Good News for StemCells Inc. and Klein

A Los Angeles biotech firm, Capricor, Inc., and a UC Irvine researcher, Henry Klassen, appear to be assured tonight of winning their appeals for nearly $20 million each from the California stem cell agency.

A research team at UCLA – Stanley F. Nelson and M. Carrie Miceli – also apparently won its appeal on its application but only on a substantially revised basis, according to a CIRM document. The agency indicated it would fund the grant but at reduced scope and cost – $6 million instead of $20 million.

However, StemCells, Inc., which was publicly supported by the former chairman of the stem cell agency, Robert Klein, lost its appeal for $20 million. The CIRM document said research cited by Klein as contradicting what reviewers identified as a key weakness did not contain “compelling data.”

A fifth applicant who appealed, Tim Hoey of OncoMed Pharmaceutical of Redwod City, Ca., was also rejected during the re-review process on a $20 million application.

The CIRM governing board, in July, sent all five applications back for reconsideration as a result of appeals of negative decisions by reviewers. The move followed a record-breaking level of appeals by researchers during an emotional meeting filled with testimony from patient advocates. The appeals came in a round that was budgeted originally for $243 million and that represents one of the agency's key efforts to commercialize stem cell research.

It was also the first time the agency's governing board has engaged in such an extensive re-review process on applications.

The revised recommendations for funding are scheduled to be acted on tonight at a meeting of the CIRM board in Burlingame, Ca. The panel has almost never rejected positive decisions by its review group and is likely to accept the latest recommendations. The board is deeply concerned about maintaining the integrity of the review process and not rejecting reviewer decisions without ample consideration.

The recommendations for funding on Capricor's application by Linda Marban, CEO of the firm, and the one from UC Irvine by Henry Klassen both contain conditions, but those probably will not stand in the way of acceptance by the applicants. (The executive chairman of Capricor is Frank Litvack, who last year was a candidate for chairman of the California stem cell agency.)

StemCells, Inc., of Newark, Ca., which is a publicly traded firm, had two applications in the disease team round. One dealing with spinal injuries was approved. However, the agency in its re-review of the second, dealing with Alzheimer's, said,

“The reviewers did not feel there was compelling data for neuron migration in the submitted manuscript. This is the manuscript specifically referenced at the ICOC (CIRM governing board) meeting (in July) that prompted the call for additional analysis. The manuscript is not yet accepted, it is 'potentially acceptable' but requires 'major revisions' according to the journal editor note. In addition, however, the studies in this manuscript used mouse NSCs, not the human NSCs proposed for the disease team award....”

In his pitch to the CIRM board, Klein said, “....(W)e have brand-new data that demonstrates and totally contradicts the key weakness on which it was downgraded.”

In the document prepared for the CIRM board, Ellen Feigal, senior vice president for research and development, discussed the re-review process and gave more details on the decisions. She said,

“In consultation with the Chair of the ICOC and CIRM scientific staff, the President and the Co-Vice Chair determined that the additional analysis should be conducted by the Review Chair of the GWG(grant review group), another scientific member of the review panel, and a patient advocate member of the GWG. The additional scientist reviewer was selected based on the expertise necessary to assess the new information. Each of the 3 individuals (chair, scientist, and patient advocate) voted on whether the information changed the funding recommendation by the GWG. A new score was not assigned."

Feigal continued,

“For each application, the information provided or referenced at the board meeting, and associated specific additional material were requested from the applicant. The new information was evaluated in all cases by the GWG Review Chair as well as one of the originally assigned reviewers and a patient advocate.”

Feigal's report does not identify the applicants by name – only by application number. Here is the number and name for those who do not want to wade through the CIRM web site to determine who is who: 5735 Capricor, 5739 Klassen, 5426 UCLA, 5352 Oncomed, 5416 StemCells, Inc.

The California Stem Cell Report will provide gavel-to-gavel coverage of tonight's and tomorrow's meeting of the CIRM board. The session will be audiocast live on the Internet. Interested parties can participate in the meeting at teleconference locations in Pleasanton, Los Angeles and La Jolla. The agency has added another way of listening to the proceedings -- a dial-in method using an 800 number. Details are on the agenda. 

Seven Researchers Appeal in $35 Million California Stem Cell Round

Three more researchers are attempting to overturn rejection of their applications for millions from the $3 billion California stem cell agency, including one who reported detecting an "evil" stem cell earlier this year.

They are competing in the $35 million basic biology grant round to be acted on tomorrow and Thursday by the governing board of the agency. They join four other scientists who are also asking the board to overturn reviewer rejection of their applications.

The latest three appellants are Song Li of UC Berkeley, who is seeking $1.3 million: Yanhong Shi of the City of Hope, who is asking for $1.4 million, and Wange Lu of USC, who is seeking $1.3 million..

Of the total of seven researchers appealing decisions, five received higher scientific scores on their applications than the lowest approved by reviewers.

Of the latest three appellants, Shi received a scientific score of 70, ranking above three grants approved by reviewers. Li's application received a scientific score of 67, ranking above two grants approved by reviewers. Li received international attention last June with published research that identified an “evil” stem cell involving heart disease. CIRM did not release a score for Lu's application but its review summary was listed below that of the lowest scoring application that was approved.

The lower scoring but successful applications were all given the go-ahead on the basis of “programmatic” reasons, which one CIRM document says is designed to allow “consideration of issues beyond scientific merit, such as disease representation and societal impact.” 

Shi defended her application on what CIRM might call programmatic grounds. She also pointed to new developments in her research. Li pointed to his “ground-breaking” findings in June to support his application, research, in this case, that was published. (Li's research on "evil" stem cells was reported early in June, more than two weeks prior to the review of his application. It is unclear whether the research was part of the discussion about his application.)  Lu said that reviewer comments on her application were “biased away from the current state of the art.”

The seven appeals follow a record outpouring in July. During this week's week meeting, the CIRM governing board is expected to move to curb researcher appeals. More are likely be heard in the future as the reviewers diverge from scientific scores as they make their decisions.

(Editor's note: The information on the timing of Li's research on "evil" stem cells and review of his application was not included last night in the original version of this item.)

Serrano Sewell Confirms Departure from Stem Cell Agency

David Serrano Sewell has confirmed that he has resigned as a director of the $3 billion California stem cell agency.

In an email to the California Stem Cell Report, he said he is “excited and honored about the new assignment” on the California state board that regulates physicians. Gov. Jerry Brown appointed Sewell, who is a deputy city attorney for the city of San Francisco, to the board last week.

We reported Sewell's departure from the stem cell agency on Saturday. In his Aug. 30 letter of resignation, he said:

“As a founding ICOC (CIRM governing board) member, it was a privilege to work with Robert Klein, his drive to fulfill our mission – fudning the best science to discover cures – is inspiring. Collectively, our innovative approach has made California the world leader in stem cell research.”

A Business Perspective on Stem Cell Grant Appeals

A stem cell company business executive sent the following comment via email concerning the item on the four appeals that have been filed on grant applications to be considered by the board of the California stem cell agency Wednesday and Thursday:

“I find it very interesting that the academics have found a way to appeal decisions that they do not agree with.  Outstanding for-profit company grant applications have been denied any right of appeal for years. In my discussions with some of the school who are appealing, their common complaint is that the reviewers did not read their applications, must have been someone else’s!  WOW!  Ninety-seven percent of funds to date have gone to the academics. Of the 3 percent, most of it went to three handpicked companies.  Looks like the status quo is not changing.  I predict that a year from now the percentages will be about the same.”

California Stem Cell Agency: A New Board Member and a New Vacancy

The chairs are shifting a tad on the governing board of the $3 billion California stem cell agency as a French immigrant is added, a Latino leaves and a veteran patient advocate is reappointed.

Coming on board for next week's meeting is Anne-Marie Duliege, chief medical officer of Affymax Inc., of Palo Alto, a publicly traded biopharmaceutical company that deals with kidney disease. Leaving is David Serrano Sewell, who has been named to the state Medical Board by Gov. Jerry Brown. Reappointed is Jeff Sheehy, an HIV/AIDs patient advocate who may be the most public face of patient advocates on the stem cell agency.

Anne-Marie Duliege
Affymax Photo

State Controller John Chiang appointed Duliege to the CIRM post, saying, 

“Dr. Duliege brings first-hand knowledge of what is required to take a drug from research phase through FDA approval.”

In May, Duliege made a presentation to the Bioscience Forum in South San Francisco called “Beating the Odds,” a discussion of Affymax's first commercial product. According to information posted by the group, Duliege led the way by shepherding it through a 10-month gauntlet at the FDA.

Duliege has been with Affymax since 2007. Her prior positions included time at Chiron and Genentech. She is a practicing physician, working part-time, and received her medical degree from Paris Medical School.

Affymax has had a previous tie to the stem cell agency. Ted Love, one of the initial members of the CIRM board, also sits on the Affymax board of directors. Indeed, Duliege fills the seat vacated by Love when he resigned from the CIRM board. The position must be filled by an officer of a California life science company.  

David Serrano Sewell
CIRM Photo

Serrano Sewell, who has also served on the CIRM board since its inception, is apparently resigning to accept an appointment to the board that regulates California physicians. Apparently – because the stem cell agency has not confirmed that he is leaving, although this morning it placed a resolution honoring him on the agenda for next week's meeting.  That almost invariably means a board member is departing.

Serrano Sewell, an attorney for the city of San Francisco, was one of 10 patient advocate members on the 29-member board. Sewell was apppointed by the California lieutenant governor. His seat will remain vacant until the current lieutenant governor, Gavin Newsom, makes an appointment, who must also be a patient advocate.

Jeff Sheehy
CIRM Photo

Sheehy was reappointed recently by state Senate President Pro Tem Darrell Steinberg. Sheehy is a communications manager at UC San Francisco and a nationally known HIV/AIDS advocate. He is co-chairman of CIRM's Science Subcommittee and vice chairman of the grants review group. Sheehy leads the discussion of grant applications when they come before the full board in public session.

With the latest shuffling, the board has essentially lost its only African-American member – Ted Love. Eugene Washington, dean of the UCLA medical school, is a member of the board but never attends the meetings. Instead he sends a surrogate. Serrano Sewell's departure brings the number of Hispanics to three, co-vice chairman Art Torres, Francisco Prieto and Marcy Feit. No Asians sit on the board.

Bob Klein, "Lobbying" and Reader Reaction

A robust discussion has arisen concerning Bob Klein and his appearance last month before the governing board of the $3 billion California stem cell agency, a body that he once chaired and an enterprise that he once oversaw.

The comments were triggered by the original "unseemly performance" item on the California Stem Cell Report and a subsequent comment by Francisco Prieto, a longtime member of the board.

The comments discussed whether Klein was manipulated and whether he was engaged in so-called “revolving door” activity – the practice of former government officials, such as Klein, becoming paid representatives of enterprises that were involved with their former agency.

The comments raise a number of interesting questions that we will discuss on the California Stem Cell Report during the next few days.

You can read the remarks by going to this item and scrolling down to the end of the piece.

(Editor's note: Our apologies to some of those who commented for the delay in posting their remarks.)

Nearly $6 Million Sought: Four Scientists Seek to Overturn Rejection by CIRM Reviewers

Four researchers are appealing rejection of their proposals to win millions of dollars from the California stem cell agency just as the agency is moving to curb such reconsideration efforts by scientists.

The latest appeals come in what the agency calls its basic biology round. The agency's governing board meets next Wednesday and Thursday to hand out as much as $35 million to as many as 25 scientists competing for the research dollars.

The four appeals follow a record outpouring last month of attempts at reconsideration in another round. One upshot has been a proposal that would tighten the review process. That plan also comes before directors next week.

In three of the latest appeals, the applications were given scientific scores that exceeded those of some proposals that were approved by reviewers. The lower scoring proposals were given the go-ahead on the basis of “programmatic review,” which one CIRM document says is designed to allow “consideration of issues beyond scientific merit, such as disease representation and societal impact.” 

The latest appeals – formally known as extraordinary petitions – were filed by Michael Teitell of UCLA, Deborah Lieu of UC Davis, Tony Hunter of Salk and Hanna Mikkola, also of UCLA. In all, their applications seek nearly $6 million from CIRM.

Hunter's $1.8 million application had the highest scientific score, 70,  of the four appeals. It ranked above three grants approved by reviewers. 

In his appeal, Hunter said “no major scientific issues were found” by reviewers concerning his application. He also reported new data involving a “major concern” of reviewers. Hunter said the information was developed after the application was submitted April 25.

In the case of Lieu, reviewers said she was “relatively inexperienced.” Lieu's appeal said she has “24 publications with over 6 years of experience in the differentiation of cardiac muscle cells from human pluripotent stem cells, 12 publications (3 co-corresponding author) on human pluripotent stem cells and their cardiac derivatives, and 3 publications on the engineering of pacemaker cells” in addition to other related professional experience.

She is seeking $1.3 million. Her application received a score of 68, ranking it above two other grants approved by reviewers and equal to a third also approved by reviewers.

Mikkola said her application built on work previously funded by CIRM. She also cited new data that the reviewers did not have access to. Mikkola's application for $1.4 million received a score of 65, which ranks it above one grant approved by reviewers.

Teitell's letter to the board also cited new data that is scheduled to published in November that deals with one of the concerns of reviewers. Teitell additionally disputed some of the critical information in the summary of reviewer comments.

He is seeking $1.4 million. CIRM did not release a score on his application, although it appears to be below 63, the lowest score disclosed publicly by the agency.

Stem Cell Agency Moving to Curb Free-Wheeling Appeals by Researchers

The $3 billion California stem cell agency on Tuesday released details of proposed, major changes in how scientists are allowed to appeal decisions when their applications for millions of dollars are rejected by grant reviewers.

The agency posted on its web site a 4 ½ page plan to curb the free-wheeling pitches that reached a record level at last month's governing board meeting. Some of the changes would formalize ad hoc procedures that have emerged over the last several years. The plan would also make it clearer exactly what can and cannot be done or expected under the agency's appeal process, which is poorly understood by at least some researchers.

The agency's proposal, due to be acted on at the CIRM board meeting next Wednesday and Tuesday, is heavily nuanced, dealing with such matters as “supplemental information,” an “additional analysis option,” “criteria for material dispute of fact,” “criteria for material new information” – not to mention the old standby – “extraordinary petition.”

CIRM also reiterates in a footnote its distinction between an “appeal” and an “extraordinary petition.” However, it is a distinction without a difference except to those in thrall of bureaucratic jargon. Both are appeals. Their purpose is to provide a method for overturning reviewers' decision under certain conditions.

Details on CIRM's proposed changes came only four business days prior to next week's governing board meeting – a little late to generate thoughtful comment and constructive suggestions from those most likely to be affected by the changes – the 500 or so recipients of $1.6 billion in CIRM funding. Before final action on the changes, the board may well want to send out the proposal to all of its grant recipients and ask them for written comment that could then be considered at a public meeting of its Science Subcommittee.

The CIRM board has been bedeviled by the appeal process for more than four years, including the presentations at its public meetings by scientists. Ironically, the first such public appearance was made by Bert Lubin, who is now a member of the CIRM board  and CEO of Childrens Hospital in Oakland, Ca..

As the California Stem Cell Report wrote at the time, the pitch by Lubin, who was unsuccessful, disturbed some board members. Gerald Levey, then dean of the UCLA medical school and a member of the board, said,

"I don't think we can run a board this way. If we do, it would be chaos." 

Lubin was later quoted in the journal Nature as saying that his rejected application did not come from “the in crowd” of stem cell researchers or organization.

“So a project that was really going to go into patients was essentially triaged.”

A final note: CIRM's proposal for changes in the appeal process also uses language that obfuscates exactly what researchers can do under state law. The document says that scientists “may” make oral and written comments to the board, which is a state government entity. In fact, state law makes it clear that researchers as well as any member of the public have the “right” to comment. The board legally cannot prevent them from speaking or making comments. And the board, to its credit, has always allowed ample public comment even when it slows the board's work.  

USC Researchers Appeal Rejection of $20 Million Proposal

Researchers from the University of Southern California are making a pitch to overturn rejection of their $20 million grant application by reviewers in one of the signature commercialization rounds of the California stem cell agency.

The appeal by Roberta Diaz Brinton and Lon Schneider will be taken up one week from tomorrow by the governing board of the $3 billion state enterprise.

The USC application deals with Alzheimer's. It came in the $243 million disease team round that was considered last month during a record-breaking outpouring of appeals and a day of emotion-filled appearances by patients. CIRM directors adjourned their meeting without completing action on a number of items, leaving open the possibility of additional appeals such as the one from USC.

The Brinton-Schneider application received a score of 63 from reviewers. They said in a letter to the board,

“We are submitting the petition at this time as we are new to the CIRM ICOC(governing board) process and after listening to the July 26 ICOC meeting deliberations now understand that the petition process allows the ICOC to further consider our proposal. We noted that the proposal scored one point above ours and another two points below ours, each utilized the extraordinary petition strategy to gain ICOC review which resulted in funding approval in the former, and reconsideration in the latter instance.”

Their statement reinforced a concern expressed by CIRM Director Oswald Steward, director of the Reeve Center at UC Irvine,  at last month's board meeting about fairness in the grant process. He said,

“I'm not really quire sure that all of the applicants clearly understood that they could come back to us to address the criticisms(of reviewers).”

Concerns about whether all applicants fully understand the appeal process have surfaced on a number of occasions over the last several years. The CIRM board, however, is generally reluctant to overturn negative recommendations by reviewers. It also almost never reverses positive recommendations.

Next week the board is scheduled to make unspecified changes in the appeal process. No further details on those changes have yet been released by the agency although the meeting is just four business days away.

In the Brinton-Schneider letter to the CIRM board, the scientists defended their scientific approach and responded to criticism by reviewers, especially those related to sedation. Reviewers expressed reservations about over-sedation, which the researchers said were erroneous.

It is not clear whether other scientists will be making appeals during next week's board meeting.

Researcher Alert: Troubling CIRM Grant Appeal Process Up for Revision

Directors of the California stem cell agency next week are expected to make unspecified changes in how scientists can appeal denials of their applications for millions of dollars in research grants.

The move follows a jam-packed and emotional meeting last month in which the CIRM governing board faced a record outpouring of appeals of negative decisions by grant reviewers. The board is the ultimate arbiter on applications. While it almost never overturns positive decisions by reviewers, it sometimes approves applications that they have rejected. 

No details of the proposed changes in the appeal process are yet available for the meeting Sept. 5-6 in Burlingame, Ca. All that is known at this point is the following item from the board agenda: “consideration of modifications to the extraordinary petition policy and adoption of additional information policy.” Extraordinary petitions are the key vehicle for appeals.

The appeals process has long troubled the CIRM board. It has made changes in the procedures, but last month's high stakes, $243 million round posed new challenges and consumed so much time that the board was unable to complete action on several items.

As a result of the July appeals, the board sent five applications back for re-review. (See here, here and here.) Some of those are expected to come up next week and others at the end of October. The board agenda, however, did not specify which applications would be considered next week. Nor did it specify how many additional appeals have been filed in the round that was up for approval in July.

CIRM Board Member Prieto Defends Klein's Right to Appear Before Board

A member of the governing board of the California stem cell agency, Francisco Prieto, has commented in an email about the “unseemly performance” item concerning the agency's former chairman, Robert Klein. Prieto is a Sacramento physician who serves as a patient advocate member of the board. He has been on the board since its inception. Here are his remarks.

“I wanted to comment on this piece from the perspective of another patient advocate.  While I think you know that I did not always agree with Bob Klein during his tenure on the ICOC(the agency's governing board), I would strongly defend his right to appear and give his opinions to the Board.  He is a private citizen now, albeit one with considerable experience and expertise, and I think his greatest vested interest in this case stems (you should pardon the expression) from being the child of a parent with Alzheimers.  As you point out, some eyebrows may be raised, and I can imagine that some board members might be swayed in either direction by his testimony, but  he is a passionate and committed advocate, and he has the right to advocate before us.”

An Unseemly Performance: Former Chair of Stem Cell Agency Promotes $20 Million Research Proposal

Bob Klein is nearly an icon in the history of the $3 billion California stem cell agency. And when he appeared before its governing board last month and aggressively touted a $20 million grant proposal already rejected by agency reviewers, his actions raised eyebrows.

Robert Klein
Elie Dolgin/Nature photo

Klein's comments carried unusual weight, given that they were supported by his unique and influential relationship with the California Institute for Regenerative Medicine(CIRM). He and his associates wrote the 10,000-word ballot initiative that created the stem cell agency in 2004. He ran the $35 million electoral campaign that convinced voters to buy into the idea. Klein raised millions on behalf of the effort. He personally provided the campaign $3 million. And he was the first chairman of the agency, leaving that office only 13 months ago, when he was designated chairman emeritus.

The meeting last month marked Klein's first public appearance before the board on behalf of a specific application.. He heralded the applicant, StemCells, Inc., as unique and the “best” in United States with a “huge body of experience.”
(The full text of his testimony can be found here.)

Irv Weissman
Stanford Photo

StemCells Inc. is a publicly traded company based in Newark, Ca., that was founded by renown Stanford scientist Irv Weissman, who sits on its board. Weissman also played an important role in the Prop. 71 ballot campaign that created the stem cell agency. StemCells, Inc.'s application was turned down by CIRM reviewers who gave it a score of 61, but the company appealed the action to the agency's governing board. Following the appearance by Klein, Weissman and others, the CIRM board sent the application back for more review. The board will reconsider it next month or in October.

One California stem cell researcher, who requested anonymity, said it is “highly inappropriate for Bob Klein to be advocating for any grant application from a public company.”

The scientist said,

 “He has considerable influence with the ICOC(the CIRM governing board), and is closely associated with biotech in the Bay Area. Even if he doesn't make a lot of money himself from this, then he certainly has friends who will.  Irv Weissman would be one of those friends."

In response to questions asked on Aug. 7 by the California Stem Cell Report, Klein today defended his actions.  He was asked if he had “any sort of financial ties” to firms or individuals that would benefit from approval of the award. Klein, who is a real estate investment banker and also an attorney, said he has “no financial interest” in the firm or individuals that might benefit.

Klein also indicated his appearance was entirely appropriate. He defined his role as a patient advocate – not as a lobbyist who is paid for advocating on behalf of a company. Klein said he had “a particular responsibility to contribute my background knowledge and experience.”

Klein said he hoped other former board members would follow his example. He said,

“(I)t would be a tragedy if the expertise of board members built up over six or more years is lost.”

(The full text of his response can be found here.)

Klein's appearance came at a propitious time for financially strapped StemCells, Inc. The company's financial information shows that it is losing $5.4 million a quarter as of the end of June and had only $9 million in cash on hand. It also had liabilities of $11.6 million, up substantially from $8.5 million in September of last year.

The researcher who criticized Klein's efforts as inappropriate also said,

"StemCells Inc has been on the stock market for 20 years, without producing anything of value for the investors.  The stock price has been sinking fast:  it was 60 cents this June; last year at this time, it was around $5 a share.   

“On July 17, when the CIRM Disease Team Award review results became available, the stock rose from 87 cents to $1.80 – a person who could anticipate the outcome of the CIRM applications could have made considerable money in that 24 hour period.”

Weissman's role with the StemCells, Inc., is more than scientific. According to the company's financial statements, he holds 88,612 shares. His wife, Ann Tsukamoto, is executive vice president of the firm. She holds 185,209 shares in the firm.

Weissman played a significant role in the Prop. 71 campaign. He did the “billionaire circuit,” raising money for the initiative, according to an article by Diana Kapp in San Francisco magazine. Among other things, Weissman worked the exclusive Bohemian Grove in Northern California and “pitched” Bill Bowes, a co-founder of Amgen, who, along with his wife, gave $1.3 million to the campaign. Weissman was the key to securing a $400,000 contribution from Microsoft's Bill Gates. Weissman also plumped for Prop. 71 in a TV campaign ad.

In addition to StemCells, Inc., Klein and Weissman supported a successful attempt last month to overturn reviewers' rejection of another $20 million application by Judith Shizuru of Stanford. The application received a score of 53 from reviewers.

One of the application's problems cited by reviewers was the availability of antibodies for the study. The antibodies were developed by Systemix, a company founded by Weissman. Systemix was acquired by Novartis in 1997 for about $70 million. Weissman said he has “negotiated back” rights to key antibodies, which he said are now held by Stanford.

Klein said that reviewers believed the research was “a showstopper” but did not think the documentation was adequate. He told the CIRM directors that they now have a letter with proprietary information that supports the grant application.

Our take: The stem cell agency has long labored under the perception that it is something of an insiders' club. Even the prestigious journal Nature warned in 2008 about what it called “cronyism” at CIRM. If anything, the situation is worse today,  four years later. Enterprises associated with persons on the CIRM board of directors have received more than 90 percent of the funds handed out by the agency. Klein's efforts last month reinforce the not-so-pleasant image of the stem cell agency as an old boy's club and create an impression – at the very least – of unseemly insider influence.

(See here for an April 2013 update on the StemCells, Inc., awards.)