Excerpts from the IOM Report on the California Stem Cell agency

Here are excerpts from the $700,000 Institute of Medicine (IOM) report on the $3 billion California stem cell agency -- the California Institute of Regenerative Medicine (CIRM).

Overall Comments

“Improvements to CIRM’s governance structure, scientific program, and policies are critical to bet­ter serving California taxpayers who elected to devote funding to promote stem cell research in the state. The necessary changes outlined by the IOM committee, if enacted by the state and/or the institute, would help to instill confidence among the scientific community and California residents in the vital work that CIRM is accomplishing.”

“It is the committee’s judgment that overall, CIRM has done a very good job of initially establishing and then updating the strategic plans that have set priorities for and guided its programs, and of taking advantage of its guaranteed flow of $300 million a year for 10 years to establish a sustainable position in regenerative medicine for California. The challenge of moving its research programs closer to the clinic and California’s large biotechnology sector is certainly on CIRM’s agenda, but substantial achievements in this arena remain to be made.

“Despite its demonstrable achievements to date, as well as the largely positive independent reports covering various aspects of its operations, no one would claim that CIRM is a perfect organization or that it should adhere slavishly to its initial form of organization, set of regulations, or pattern of priorities. The field of regenerative medicine has advanced rapidly since November 2004, and CIRM itself has seen the need to alter its activities and approaches in some areas. The committee believes the same should be true of its governance structure, some of its administrative practices, and its use of external perspectives on strategic scientific priorities and on the evaluation of other key policies, such as intellectual property, to ensure that they continue to encourage the development and deployment of new treatments.”

“While the restrictions on amending the administrative structure of CIRM established in Proposition 71 had the advantage of protecting the institute’s ongoing operations from outside interference in an ethically controversial arena, they also made it difficult to modify the organization’s structure in response to experience and/or changing circumstances. Moreover, these protections, whatever their benefits, appear to some to shield CIRM from the normal accountability mechanisms in place for state agencies.”

Conflicts of Interest

“Far too many board mem­bers represent organizations that receive CIRM funding or benefit from that funding. These com­peting personal and professional interests com­promise the perceived independence of the ICOC, introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board. Neither the board chair nor board members should serve on any working group. The board itself should include representatives of the diverse constituencies that have an interest in stem cell research, but no institution or organiza­tion should be guaranteed a seat.”

“The problematic perception of conflicts of interest has persisted for as long as CIRM has existed. The IOM committee would be less concerned about individual board members with actual or perceived conflicts of interest if the board membership included more truly independent members. The majority of board members should be independent, with no competing or conflicting personal or professional interest. Broader representation from a wider variety of stakeholders will inject new perspectives into the panel and will help to dispel the perception of conflicts of interest.

“CIRM also should revise its conflict of interest definitions to include non-financial interests, such as the potential for personal conflicts of interest to arise from one’s own affliction with a disease or personal advocacy on behalf of that disease. CIRM policies for managing conflicts of interest should apply to that broader definition.”

Structure and Governance

“Currently, the ICOC (the agency's governing board) functions both as an executor and as an overseer—competing duties that compromise the ICOC’s critical role of pro­viding independent oversight and strategic direc­tion. The IOM committee recommends that CIRM’s operations be separated from its over­sight. The board should delegate more author­ity and responsibility for day-to-day affairs to the president and senior management, and the ICOC’s three working groups should report to senior management within CIRM, rather than to the ICOC. The moves would permit the board to better focus its energy and collective talent on strategic planning, overseeing financial perfor­mance, ensuring legal compliance, assessing the president’s performance, and devising a plan for preserving and expanding its considerable assets to permit the institute to continue its important work after the bond measures end.”

Unrealistic Goals

“While the latest round of awards challenge teams to have filed a request to begin clinical trials or to have completed early-stage trials in patients within four years, the committee feels these ambi­tious goals are unrealistic. New therapies take more time to progress to federal approval, and early-stage clinical trials are beset by a stagger­ingly high failure rate. Rather than judging suc­cess by simply tallying the number of active clini­cal trials, the IOM committee suggests that CIRM also continue its focus on underlying biological mechanisms that drive the success or failure of a promising therapy and on careful design of clini­cal trials. Advances in these areas will help the entire field progress, even if a specific drug candi­date is not approved." 

Economic Impact

“In the short term, CIRM’s expenditures are supporting approximately 3,400 jobs and their innovative efforts have also attracted substantial additional private and institutional resources to this research arena in California CIRM’s long-term impact on such critical aspects of the California economy as state tax revenues and health care costs beyond the shorter-term and temporary impact of its direct expenditures cannot be reliably estimated at this point in CIRM’s history.... (T)he estimate of the Analysis Group (2008) that the CIRM program alone would support about 3,400 jobs as long as it was allocating about $300 million per year in research and development grants appears quite reasonable to the committee. To put this estimate in context, however, total employment in California is roughly 16 million, and NIH alone provides more than $3.5 billion per year to California research institutions.”

Intellectual Property

“CIRM should propose regulations that specify who will have the power and authority to assert and enforce in the future rights retained by the state in CIRM-funded intellectual property. CIRM should seek to clarify which state agencies and actors will be responsible for the exercise of discretion currently allocated to CIRM and the ICOC (the CIRM governing board) over future determinations on issues regarding march-in rights, access plans, and revenue-sharing rights that might arise years after CIRM's initial funding period has passed.... (T)he ICOC should reconsider whether its goal of developing cures would be better served by harmonizing CIRM’s IP policies wherever possible with the more familiar policies of the Bayh-Dole Act(federal IP law).

Upcoming Tomorrow Morning: IOM Performance Review of the California Stem Cell

The $700,000 Institute of Medicine study of the California stem cell agency is scheduled to be released tomorrow at 10:30 a.m. Pacific Standard Time. The California Stem Cell Report will have full coverage of the 17-month study, including reaction from the stem cell agency and excerpts. Look for the stories here tomorrow morning.

Collapse of Big Pharma Deal Involving California Stem Cell Agency

A ballyhooed deal has blown apart that would have hooked up – for the first time – Big Pharma and the $3 billion California stem cell agency.

The breakdown of the arrangement was quietly disclosed yesterday in background material prepared for the Dec. 12 meeting of the stem cell agency's governing board.

The deal was first announced Oct. 25 when Viacyte, Inc., of San Diego, received a $10.1 million award to help finance a clinical trial for a diabetes treatment involving Viacyte and GlaxoSmithKline.

The CIRM background memo said this week, however,

“We have recently been informed that GSK was not able to obtain the final approval required due to business reasons in the context of GSK's overall research and development portfolio and investment needs and not as a result of any scientific or technical assessment of ViaCyte's program.”

The memo gave no further details about the Glaxo decision.

CIRM staff proposed that Viacyte, which has received $36 million from CIRM, be given another $3 million because Glaxo has exited the trial.

The arrangement involving Glaxo, Viacyte and CIRM was trumpeted in October, when Viacyte was awarded the $10 million. Officials of the stem cell agency said the award was a “watershed” for CIRM. Jason Gardner, head of the Glaxo stem cell unit and who attended the meeting, told the California Stem Cell Report that the arrangement was a partnership and that the company intended to develop a sustainable pipeline.

It was the second significant business-connected deal that has collapsed for the $3 billion agency within the last 13 months. In November 2011, Geron abandoned its clinical trial for spinal injuries. CIRM had loaned Geron $25 million for the trial just three months earlier. The company paid the money back with interest.

CIRM staff said that advisors to the agency remain “extremely positive” about the Viacyte research and “strongly recommended” that the company receive the additional $3 million. The memo said that trial has a “strong potential” to be commercialized.

Extra, Extra! CIRM Staffers Blog the World Stem Cell Summit

Years ago, I worked with an editor who used to advise his lagging scribes to put their noses in their typewriters and peck.

Well, the folks at the California stem cell agency have their noses in what passes today for typewriters and are pecking away furiously. Their subject is the World Stem Cell Summit, which has received only slight coverage in the mainstream media.

Today, the stem “cellists” from San Francisco's King Street filed -- on the agency's blog -- three fulsome items on doings at the summit, which is taking place in West Palm Beach, Fla. Yesterday they filed four. Photos and charts were included. More coverage is expected tomorrow.

CIRM staffers blogging the World Stem Cell Summit
covered UC Davis researcher Paul Knoepfler discussing
patient advocacy and its role in funding stem cell research. 

The CIRM writers are doing double-duty in at least one case. Geoff Lomax, the agency's senior officer for its standards group, is additionally speaking on a panel at the session. A handful of other CIRM officials are also appearing at the conference, which ends tomorrow.

The primary purpose, we presume, of sending state employees across the country is to gather the latest information on stem cell science and issues and to make contacts. It is a bit of a bonus for the public to have the CIRM attendees also file stories on the sessions.

A couple of the items caught my attention. One dealt with patient advocates and their role in energizing and helping to drive funding for research. Another item discussed what appear to be growing issues with dubious stem cell treatments and the damage they can do to the field in general.

Lomax summarized the signs of a stem cell scam like this:

• “Claims of miracle cures for diseases
• “Single treatments or cells that can treat any type of disease
• “Lack of objective information, evidence (such as published medical reports) that a treatment is effective
• “Treatment by a doctor who is not trained or certified to treat the specific disease
• “No system exists to collect information and follow up with patients”

$80 Million in Grants, Money for Viacyte and Blue-Ribbon Report on California Stem Cell Agency

Directors of the California stem cell agency are expected to give away $80 million next week to 20 fortunate researchers in addition to exploring a “commercialization and industry engagement plan.”

The subjects are on tap for the Dec. 12 meeting in Los Angeles of the governing board of the $3 billion research effort.

The $80 million grant round is aimed at “career development of physician scientists working in translational stem cell research.”

The RFA said

“This award will fund promising physician scientists in the critical early stages of their careers as independent investigators and faculty members establishing their own laboratories and programs.” 

Summaries of the grant reviewers comments and application scores should be available sometime this week. The bare-bones agenda lacked elaboration on the commercialization plan.

Directors are additionally scheduled to hear a presentation on the blue-ribbon report by the Institute of Medicine for which the agency is paying $700,000. The report has been 17 months in the making and is scheduled to be released this Thursday.

Other interesting matters are on the table, although the agency has yet to produce background material laying out any details. The subjects include:

• More money – no amount yet specified – for Viacyte, Inc, of San Diego, which has received more than $36 million from CIRM.
• An update of the agency's response to the only performance audit conducted at the agency. The audit identified 27 areas where improvement is needed, but the governing board has not discussed the results publicly since they were disclosed last May.
• Approval of the concept plan for another round of basic biology grants and adoption of conflict of interest code changes.

Interested parties will be able to take part at the meeting location in Los Angeles and teleconference locations in La Jolla, Oakland and UCSF. If you are interested in the teleconference locations, you will need to contact the agency for more specific directions than are provided on the agenda.

Update on Move To Curb Researcher Appeals at California Stem Cell Agency

Directors of the $3 billion California stem cell agency are still mulling details of changes in their free-wheeling and sometimes emotional appeals process for grant applications that are rejected by the agency's reviewers.

A special task force of directors met last week for the second time to discuss the likely alterations. Kevin McCormack, spokesman for the agency, said the group made no decisions. Another meeting will be held later at a date to be determined. The task force's recommendations will then go before the full board, probably in late January.

McCormack said members of the panel have asked for “more details regarding the process that would be employed if the appeals and extraordinary petition processes were merged.”

The agency has an odd, bifurcated appeals process. Early in its existence, the agency said appeals of reviewer decisions could be based only on conflicts of interest. However, researchers have a right under state law to speak to the governing board in public on any issue whatsoever. As some researchers began to use that avenue to ask for reconsideration of their applications, the CIRM board created what it called “extraordinary petitions” in an effort to control the process and limit appeals. Both the “appeals” and “extraordinary petitions” are, in fact, appeals but on different grounds and employing different mechanisms.

The task force was created in September after directors complained about “arm-twisting” and “emotionally charged presentations” in connection with a record number of appeals earlier this year.

Here is a link to an item about the task force's first meeting. Here is a link to an agency summary of the task force's deliberations prior to last week's meeting. The transcript of the session should be available on the CIRM web site within the next two weeks. It will be found under the meetings section of the web and then under the heading for the task force's November session.

Stem Cell Board Members Lubin and Sheehy Honored

A couple of members of the governing board of the $3 billion California stem cell agency were honored for their work this month.

Jeff Sheehy
UCSF Photo

One is Jeff Sheehy, a UCSF communications manager and nationally known HIV/AIDS advocate, who has served on the CIRM board since its inception. He was named by POZ magazine as one of the top 100 “soldiers” in the fight against HIV/AIDS.

CIRM's Amy Adams filed an item on Sheehy on the agency's blog yesterday. She said, 

“Jeff once told me that when he joined CIRM’s board eight years ago, he didn’t see a role for stem cells in an HIV/AIDS treatment. Now, CIRM has committed $40 million toward HIV/AIDS projects and two teams of researchers from City of Hope and UCLA are working toward clinical trials.”

Sheehy was also invited to the White House to commemorate World AIDs day Dec. 1.

Bert Lubin
Childrens Hospital Photo

Also honored was Bert Lubin, CEO of Childrens Hospital in Oakland, where he has worked since 1973, a remarkable achievement in today's world of transitory employment. The San Francisco Business Times named Lubin as the “most admiredCEO” in the San Francisco Bay Area. The newspaper said that since he took charge at Childrens in 2009,

“He recruited a new senior management team, chopped away at the pediatric hospital’s operating deficit and worked to heal relationships with the local community and governmental and political leaders that were deeply frayed...”

On a personal note, a friend who has long volunteered at Childrens gives him high marks as well, citing several encounters where he exceeded the usual CEO effort.

Correction

The Diane Winokur appointment item yesterday incorrectly stated that she is a current member of the governing board of the Sanford-Burnham Institute. That statement was based on information provided by the California stem cell agency and Golden West ALS chapter. Sanford-Burnham today said, however, that Winokur has not been on the board since last year. She served from 2005 to 2011.

Diane Winokur, Veteran ALS Patient Advocate, Named to California Stem Cell Agency Board

Longtime ALS patient advocate Diane Winokur of San Francisco, who has lost two sons to the disease, has been appointed to the governing board of the $3 billion California stem cell agency.

She fills the vacancy left by David Serrano Sewell, who resigned from the 29-member panel earlier this year after serving since the agency's inception. CIRM has 10 patient advocates on its board.

Diane Winokur
Photo -- Legal Momentum

Winokur is well-known in ALS circles. She sat for five years on the governing board of the national ALS advocacy group and currently serves on the board for the California state group, the Golden West chapter. She also served for six years on the board of trustees for the Sanford- Burnham Institute in La Jolla, which has received $37 million from the stem cell agency. She left Sanford in 2011.

Last summer Winokur appeared before the CIRM board to successfully seek approval of an $18 million ALS grant that was rejected by the agency's reviewers. Researcher Clive Svendsen of Cedars-Sinai in Los Angeles appealed the denial to the full board and was supported in emotional testimony by other patient advocates as well, including persons with the affliction.(See here for video of some of the testimony.)

The agency has awarded about $30.6 million, including the Svendsen grant, for research directly related to ALS.

Golden West issued a press release Nov. 21, lauding the Winokur appointment by California Lt. Gov. Gavin Newsom. The release quoted Lucie Bruijn, chief scientist of The ALS Association, as saying,

"Her contributions have been invaluable and she will be a tremendous asset in moving the ALS research field forward through CIRM funding."

The stem cell agency posted a blog item on Winokur's appointment in addition to a press release. CIRM Chairman J.T. Thomas said,

“Her knowledge, expertise and leadership will be a tremendous addition to the ICOC (the stem cell agency governing board) and help guide us in our work.”

Patient advocate Don Reed of Fremont, Ca., described Winokur in a 2008 blog item as “small, elegant, full of energy, an exclamation point of a person.”

(Editor's note: Based on information from CIRM and Golden West, an earlier version of this item incorrectly stated that Winokur is a current member of the Sanford-Burnham board.

Knoepfler Award Update: More than a Baker's Dozen Nominated

As of this week, 14 persons have been recommended for the Knoepfler “Stem Cell Person of the Year” Award.

The total was reported by Paul Knoepfler, the UC Davis stem cell scientist and blogger, who is putting up $1,000 for the winner of the honor.

Knoepfler announced his award plans earlier this month, declaring that he wanted to recognize scientists or others who “truly made a difference” in the stem field. Risk-taking is one important criteria.

Knoepfler said,

“It’s something that I’m hoping I can do every year. It would also be a reward for risk taking, creativity and be breaking with tradition and be something new in that regard.” 

The award has drawn some modest attention outside of Knoepfler's blog. A few days after he introduced the award on his blog, UC Davis decided to put out a press release and video on it. The California Stem Cell Report followed with an item. Then CIRM blogged it as well.

So far we have not detected any stories about the award in the mainstream media, but things could change.

Deadline for entries is Dec. 17.

California Stem Cell Agency Still in Talks on $40 Million for StemCells, Inc.

The California stem cell agency and StemCells, Inc., are still trying to reach agreement on a deal in which the company would receive $40 million from the state's taxpayer-funded research effort.

The sticking point is the $40 million in matching funds required from the Newark, Ca., firm under the terms of the two awards approved in July and September. The latter award was okayed on a 7-5 vote by the governing board after it was rejected twice by the agency's reviewers.

On Monday the California Stem Cell Report queried the agency about the status of the awards. Kevin McCormack, the agency's spokesman, replied,

“We are still in talks with them over the terms of the funding. Hopefully, we'll have an agreement soon.”

He did not elaborate further.

CIRM staff normally reviews applications after they are approved by the agency's governing board to be sure that all conditions are being met. However, in the case of the September award to StemCells, Inc., CIRM's governing board took the unusual step of publicly stating that the firm must demonstrate it has the $20 million in matching funds before it receives any payments from CIRM. The board did not take that sort of public position on the $20 million grant approved earlier in the summer, although matching funds are required in that case as well.

The former chairman of the $3 billion stem cell agency, Robert Klein, appeared twice before the board to lobby for approval of the second award to StemCells, Inc., which is a publicly traded firm.. It was the first such appearance by Klein before his former colleagues since leaving the agency in June 2011.

Action on the StemCells, Inc., awards attracted attention from the Los Angeles Times last month. Pulitzer Prize-winning columnist Michael Hiltzik wrote that the process was “redolent of cronyism.” He said a “charmed relationship” existed among StemCells, Inc., its “powerful friends” and the stem cell agency.

Texas Flap Looms Over California Stem Cell Agency's Grant Appeals

In nine days, the California stem cell agency plans to take another crack at finding ways to curb its free-wheeling appeal process involving scientists whose applications for millions have been rejected by reviewers.

It is a matter of considerable interest to researchers who need the cash to keep their labs running and remain in good standing with their host institutions.

The stem cell agency's governing board this fall created a task force to deal with the appeals issue after a record-breaking number of researchers made public appeals featuring emotional patient advocates. Even the former chairman of the agency, Robert Klein, made a two-time pitch for one applicant. Board members later complained publicly about “arm-twisting,” lobbying and“emotionally charged presentations.”

The agenda for the Nov. 30 task force meeting in Oakland -- with teleconferencing sites in San Francisco, Irvine, Palo Alto, Seattle and Rochester, N.Y. -- contains few clues on what the panel is hoping to specifically accomplish in next week's 90-minute session.

But interested researchers can check the transcript from the Oct. 24 meeting, during which CIRM President Alan Trounson described the problem as “very critical.” He said,

“I think this is a very serious matter that could really bite us very hard in a similar way to what's happened in Texas. Unless we come up with some kind of process that really addresses the science, it's a very large concern.”

Trounson's Texas reference was to the mass resignations of reviewers at that state's $3 billion cancer research effort. Questions have been raised about integrity of its grant review process and the program's political and biotech industry relationships. James Drew of the Dallas Morning News produced a bit of an overview this week. In another piece, Eric Berger of the Houston Chronicle provided quotes from emails from the infighting on a controversial $18 million grant.

Changes in California's grant appeal process may well be also discussed at the agency's board meeting Dec. 12 in Los Angeles. The board hopes to wrap up its action by late January.

Here is a link to an item with more specifics on material presented to the task force in October. Here is a link to an August 2012 list of articles and documents related to the CIRM appeals process.

Interested parties can address comments to the agency at info@cirm.ca.gov.   

Pomeroy Moving On, Will Leave Stem Cell Board

Claire Pomeroy, one of the longtime members of the governing board of the $3 billion California stem cell agency, will be leaving her position at UC Davis and the stem cell board next June.

Pomeroy yesterday announced her departure from Davis as vice chancellor for human health services and dean of the medical school. In a telephone interview, she told the California Stem Cell Report that she is examining a “few select opportunities” to work at a national level on health reform and health policy issues.

Claire Pomeroy
UC Davis photo

Pomeroy, 57, will be spending time in Washington, D.C., working on health issues on behalf of the University of California during the transition period before she leaves her position in California.

Pomeroy came to UC Davis 10 years ago, shortly before the Golden State's stem cell agency was created in 2004. At that time, UC Davis had what she called a “fledgling” stem cell research effort. Today the school has chalked up $128 million in grants from the stem cell agency, ranking fifth among institutions funded by the agency.

She said that creation of the stem cell agency “catalyzed development of our program,” which she said has risen to “national prominence.”

Pomeroy's service on the stem cell agency board was also instrumental in attracting a $100 million grant from the Moore Foundation to start a new school of nursing at UC Davis in 2009. Through her service on the board, she met Ed Penhoet, who also served on the board and was one of the co-founders of Chiron and then president of the Moore Foundation. Subsequently, Penhoet called her for lunch to discuss her thoughts on nursing education, and developments moved on from there.

The $100 million commitment was the nation's largest grant for nursing education, according to the Moore Foundation.

'The Knoepfler Award:' Recognizing Risk and Those Who Make a Difference

A UC Davis stem cell researcher-blogger has announced a “stem cell person of the year” award complete with a $1,000 cash prize that he is putting up himself.

Paul Knoepfler, who may be the only stem cell scientist in the U.S. actively blogging on the subject, said he has decided to put his money where his mouth is. 

Since announcing the contest in a Nov.13 blog item, Knoepfler has already received eight nominations, including one for a scientist. Three days after the item aappeared, UC Davis featured Knoepfler in a press release that included a video of Knoepfler explaining the effort.

Paul Knoepfler
UC Davis photo

He said he wanted to go beyond “old fashioned awards” given by “stodgy committees.” Knoepfler said he is seeking to recognize that stem cell research is “transcending the lab.”

The goal of the award, Knoepfler said, is “to advance the stem cell field and give credit to those who make a real difference.”

Knoepfler wrote,

“The criteria are that the person made a truly outstanding difference in the stem cell field for 2012. The winner could be a scientist, a patient advocate, someone in industry, a student, a physician…really anyone who has made the field better. For non-scientist nominees I’m particularly interested in those who took personal risks or gave of themselves to help others. For scientists I am looking for outstanding scientific achievement and in particular out-of-the-box thinking. Folks in any country are eligible.”

Deadline for nominations is Dec. 17. Self-nominations are permissible. Knoepfler plans to pick five finalists and interview them by phone. He also plans an online vote that he said  “may” influence his decision.

Complete details are available on Knoepfler's blog. 

California Stem Cell Agency Blogs on Geron Clinical Trial

The California stem cell agency published an article online last week concerning the hESC clinical trial that Geron abandoned last year, dealing mainly with one of the participants in the program.

The piece was studiously non-committal about whether the $3 billion research program is likely to fund the trial once again, should BioTime, Inc., of Alameda, Ca., be successful in acquiring the assets of once was the first hESC clinical trial in the United States. The agency loaned Geron $25 million a few months before the company cancelled the trial.

Amy Adams, CIRM's communications manager, simply wrote,

“They (BioTime) would need to apply for a loan if they want CIRM to financially support the continued trial.”

The latest round of funding that BioTime could apply for has a deadline of Dec. 18 for letters of intent. In addition to a loan, a grant is also a possibility.

Adams focused on Katie Sharify, who was enrolled in the clinical trial shortly before Geron said it was dropping the effort for financial reasons. Adams interviewed Sharify before an audience of scientists.

Adams wrote,

“Katie told me that it would be impossible not to hope that a trial would help her, but that by the time she made the decision to participate she knew she was doing it to further science, not necessarily to further her own recovery. She told the audience, 'I was part of something that was bigger than me, and bigger than all of you.'”

Stem cell scientist Paul Knoepfler of UC Davis also wrote about the BioTime-Geron deal last week. Noting that Geron's decision a year ago left many “upset to put it mildly,” Knoepfler said the “idea of BioTime buying the Geron stem cell program is a great one that provides new hope on many levels.”

Researcher Alert: Keeping Tabs on the Stem Cell Exchequer

The California stem cell agency has posted the dates for meetings of its board of directors for 2013 with most of the sessions scheduled for the San Francisco Bay Area.

One is expected to take place in San Diego in August, and another in Los Angeles 13 months from now. The other five are in Northern California. Not yet on the schedule is a board workshop in early January that will be open to the public.

Why is this of interest to researchers and others? The  board controls the purse strings to $3 billion for research grants and determines what areas are to be funded. Astute scientists would do well to take in the sessions. They offer insights into board thinking and opportunities to deal with the agency staff and directors on an informal basis. Only a handful of researchers – or less – attend the meetings on a regular basis, but have been well-served by the time spent. 

BioTime Will Have to Compete for California Cash for Geron's Dormant Clinical Trial

The California stem cell agency said today it does not plan to reactivate the $25 million loan to assist in Geron's spinal injury clinical trial despite an impending deal that would turn the effort over to BioTime, Inc.

Kevin McCormack, senior director for public communications for the agency, said BioTime will have to compete in an upcoming award round if it wants to win California dollars.

Responding to a question from the California Stem Cell Report, McCormack said,

“That (earlier) loan was specific to Geron and when the trial was ended the loan ended too. Of course if Biotime and Geron do complete their deal then Biotime would be free to apply to us for a new disease team grant.”

McCormack later added that BioTime could also compete in other appropriate rounds, including the strategic partnership round just posted by CIRM. It provides for four awards of up to $15 million. Funding could come as early as October of next year. The strategic partnership round is a business-friendly effort that is aimed at attracting “industry engagement and investment.” The deadline for letters of intent is Dec. 18.

The stem cell agency made its $25 million loan to Geron in 2011 just a few months before the Menlo Park firm abandoned its human embryonic stem cell trial for financial reasons. (The full text of the loan agreement can be found here.) The company has repaid the loan with interest.

The company has tried to sell the assets associated with the clinical trial since last November. The only public interest that has surfaced has come from BioTime, Inc., of Alameda, Ca. Michael West, founder of Geron, is the CEO of BioTime. Tom Okarma, CEO of Geron from 1999 to 2011, is CEO of the BioTime subsidiary that would assume the clinical trial.

News from clinical trial is expected to be published soon, according to a story in the San Francisco Business Times by Ron Leuty. He quoted CIRM President Alan Trounson as saying that “some findings” from the trial would be published next month in a medical journal.

Geron's stock traded at $1.24 at the time of this writing today, up from $1.21 yesterday. BioTime's stock stood at $2.99, up from $2.97.

Geron, BioTime Deal Moves Forward with Letter of Intent

Geron Corp., which once pioneered human embryonic stem cell research, is close to selling off its hESC business in a complicated deal involving two former CEOs of the company and BioTime, Inc., of Alameda, Ca.

The two publicly traded firms yesterday announced a “letter of intent” involving a transaction in which BioTime would acquire the assets of Geron's hESC clinical trial that the company suddenly abandoned last year. The firm also laid off 66 people, about 40 percent of its staff.

Abandonment of the program came only a few months after the $3 billion California stem cell agency loaned Geron $25 million to assist in the trial. The agency could restore the loan for the trial, but the Geron-BioTime announcement did not mention that possibility. The California Stem Cell Report has asked the agency for comment.

The letter of intent came one year and one day after Geron announced that it was giving up the hESC spinal injury trial because of financial reasons. The Menlo Park, Ca., firm has been trying to sell its hESC assets since then. BioTime has been the only firm to express public interest. The Geron trial was the first hESC trial approved by the FDA.

The proposed deal involves Michael West, who founded Geron and is now head of Biotime, and Tom Okarma, who was CEO of Geron from 1999 to 2011. Okarma is now head of BioTime Acquisition Corp.,(BAC) a subsidiary of BioTime.

Also involved is an unnamed private investor who would provide $10 million.

Here is how yesterday's press release described the deal in which BioTime would acquire Geron's “intellectual property and other assets related to Geron’s discontinued human embryonic stem cell programs.”

“ BioTime would contribute to BAC $5 million in cash, $30 million of BioTime common shares, warrants to purchase eight (8) million common shares of BioTime at a pre-specified price, rights to use certain human embryonic stem cell lines, and minority stakes in two of BioTime’s subsidiaries. In addition, a private investor would invest $5 million in cash in BAC. 

“Following consummation of the potential transaction, Geron stockholders would receive shares representing 21.4% of the common stock of BAC as well as warrants to purchase 8 million shares of BioTime common stock at a pre-specified price. BioTime would own approximately 71.6%, and a private investor would own approximately 7.0% of the outstanding BAC common stock for their $5 million investment. BioTime would also receive warrants that would enable it to increase its ownership in BAC by approximately 2%, which would reduce the Geron stockholders’ ownership in BAC to 19.2%. BAC would also be committed to pay to Geron royalties on the sale of products that are commercialized in reliance upon Geron patents acquired by BAC.”

Prior to release of the letter of intent, an article earlier this week by Vickie Brower in The Scientist said,

“The offer couldn’t come at a better time for Geron, which in recent months has started to feel pressure from its shareholders to boost its stock price and move products through the pipeline. Since last November, when the company announced its decision to shutter its hESC and regenerative medicine business and funnel its resources into developing telomerase-related treatments for cancer, the stock price has dropped more than 50 percent to $1.30 a share. Geron claimed the move was simply to save money, but many took the decision—which effectively terminated a clinical trial of an hESC treatment for spinal cord injury—as a setback for the entire field." 

News coverage of yesterday's announcement was light. Here is a link to a piece by Ryan McBride on Fierce Biotech.

Geron's stock price closed at $1.21 yesterday and rose to $1.24 in after hours trading. BioTime closed at $2.97. No after hours trading was reported for BioTime.

Study of California Stem Agency Likely to be Released in About a Month

The $700,000, Institute of Medicine performance study of the $3 billion California stem cell agency is expected to be released in late November or early December, the IOM said today.

In response to a question last week from the California Stem Cell Report, Christine Stencel, senior media relations officer for the IOM in Washington, D.C., briefly discussed the release plans and the impact of the East Coast super-storm.

Here is the text of her response:

“The DC area escaped the worst of Sandy’s thumping but nonetheless our schedules and planning have been somewhat thrown off as we’re playing catch up after two days of being shut down and some of our committee members and reviewers are in the areas that got the brunt of the storm. We’re not sure whether the storm will cause any delays in peer review, but we’re working toward the goal of publicly releasing the report in late November or early December. The study staff is working with committee members to determine the best release format but I anticipate there will be a press briefing. I’ll send a media advisory when we’ve got all the details worked out.”

The stem cell agency is paying for the report, which is examining the performance of the agency. The IOM began its work in the summer of 2011.

Geron Weighs Biotime Bid for hESC Biz

Geron, Inc., of Menlo Park, Ca., said today it is assessing an offer by two of its former executives to buy the human embryonic stem cell program that it abandoned nearly a year ago.

Geron startled the stem cell world, including the $3 billion California stem cell agency, when it jettisoned the first clinical trial of an hESC therapy for financial reasons. The agency had loaned the company $25 million just a few months earlier. Geron repaid the loan with interest.

Geron has been mum until today about the Oct. 18 offer by Biotime, Inc., of Alameda, Ca., which is headed by Michael West, who founded Geron in 1990. Tom Okarma, president of Geron from 1999 to 2011, is involved with West on the deal and is now working at Biotime.

Geron's remarks came during a conference call on its third quarter earnings. A spokesman said the company is working with Biotime to “assess the feasibility” of the proposal. He said the proposed transaction is complex and the company is seeking “additional important details.”

The spokesman declined to offer any additional comments on the Biotime proposal when questioned following his initial statement.  

See here and here for earlier stories on the California Stem Cell Report on the Biotime offer. 

Biotime-Geron Deal Attracts Interest from Brit Investor

A British investment trust that has invested in Geron says it is going to take an advantage of an offer by an Alameda firm that is seeking to acquire Geron's human embryonic stem cell assets.

Jonathan C. Woolf, managing director of British & American Investment Trust PLC, said last week in a letter to its shareholders that it is disappointed in Geron's performance and the abandonment of its hESC program last November. The sudden halt to the program and its historic clinical trial also surprised the California stem cell agency, which had loaned Geron $25 million just a few months earlier. The agency has expressed an interest in continuing the trial.

Woolf said,

“We have been highly critical of Geron management's decisions and strategy over the past 20 months, in particular the decision in November 2011 to abruptly exit Geron's regenerative medicine (stem cell) business in which it was the acknowledged world leader. Since that time, Geron management has attempted to sell or partner this business but to date has been unable to announce any progress on this.”

Woolf's trust is not listed as a major Geron shareholder by Morningstar, but Woolf said 17 percent of his firm's investments are in the Menlo Park, Ca., company. The specific size of the trust's holdings in Geron was not immediately known.

Woolf pointed to the offer by Biotime, Inc., of Alameda, Ca., as a way for Geron shareholders to benefit. On Oct. 18, Biotime proposed a complicated deal in which it would acquire Geron's hESC program. Biotime's president, Michael West, founded Geron in 1990. The head of the Biotime subsidiary that would acquire the Geron assets is Tom Okarma, who was CEO of Geron from 1999 to 2011. (Here are links to brief stories on the offer: Fiercebiotech, New Scientist.)

In his letter, Woolf noted Geron's declining stock performance. He said he is “seriously concerned” that Geron has failed to find a buyer for the assets. Woolf said,

“These now dormant and untended assets are inevitably losing value as competitors make progress in Geron's absence from the field and patent protection periods decline.”

Woolf continued,

“We believe BioTime's proposals would make Geron's stem cell assets in combination with those of BioTime once again the world's leading stem cell business with sufficient resources to recommence the discontinued programmes and develop the business further into the medium term.”

Woolf urged Geron directors and other Geron shareholders to work with Biotime to complete the deal. Geron has not commented on the offer.

California Stem Cell Agency First: Big Pharma Hook Up

BURLINGAME, Ca. – For the first time, a Big Pharma company has hooked into the $3 billion California stem cell agency, a move that the agency described as a “watershed” in its efforts to commercialize stem cell research.

The involvement of GlaxoSmithKline comes via a partnership with ViaCyte, Inc., of San Diego, Ca., in a clinical trial, partially financed with a $10.1 million grant today from the stem cell agency. The trial involves a human embryonic stem cell product that has “the potential to essentially cure patients with type 1 diabetes and provide a powerful new treatment for those with type 2 disease,” ViaCyte said. Scientific reviewers for the agency, formally known as the California Institute for Regenerative Medicine(CIRM),  “characterized the goal of the proposed therapy as as the 'holy grail' of diabetes treatments.”

CIRM Director Jeff Sheehy, who is co vice chair of the agency's grant review group, said the ViaCyte product could be manufactured on a large scale and basically involves “taking (small) pouches and popping them into patients.”

The stem cell agency's award triggered arrangements between ViaCyte and Glaxo that will bring in financial and other support from Glaxo. The exact amount of cash was not disclosed. CIRM said Glaxo will “co-fund and, assuming success, conduct the pivotal trial and commercialize the product.” Under the terms of the grant, Glaxo and ViaCyte will have to meet CIRM milestones in order to secure continued funding. 

Following board approval, Jason Gardner, head of the Glaxo stem cell unit, characterized the arrangement as a partnership. He told the board that the company intends to develop a “sustainable pipeline.”

Gardner credited CIRM President Alan Trounson with being instrumental in helping to put the arrangement together, beginning with their first meeting three years ago. Trounson said the deal will resonate not only in California but throughout the world.

Paul Laikind, president of ViaCyte, also addressed the board, stressing the importance of CIRM's financial support for his company over past years. It has received $26.3 million (not including the latest grant) from California taxpayers at a time when stem cell funding was nearly dried up. He noted that small companies such as ViaCyte do not have the resources to carry a product through the final stages of clinical trials and subsequent production. Gardner also said,

“When the commercial funding avenues have become much more risk averse, CIRM support (has ensured) that promising, innovative cell therapy technologies are fully explored.”

In comments to the California Stem Cell Report, Elona Baum, CIRM's general counsel and vice president for business development, described the award as a “watershed” for the eight-year-old agency, linking the agency with Big Phama for the first time. Much of CIRM's current efforts are aimed at stimulating financial commitments from large companies, which are necessary to commercialize stem cell research.

Arrangements between Big Pharma and small companies are not unusual and can vanish quickly. However, the CIRM-ViaCyte-Glaxo deal sends a message to other Big Pharma companies and smaller ones, perhaps clearing away concerns that have hindered other deals that could involve the stem cell agency.

The stem cell agency is pushing hard to fulfill the promises of the 2004 ballot campaign that created CIRM. Voters were led to believe that stem cell cures were virtually around the corner. None have been developed to date.

Viacyte, bluebirdbio Win About $10 Million Each from California stem cell agency

BURLINGAME, Ca – Directors of the California stem cell agency this morning approved $19.5 million in awards to two companies for research aimed at completing an early stage clinical trial within four years.

The cash went to Viacyte, Inc., of San Diego, Ca., slightly more than $10.1 million for a diabetes project, and to bluebirdbio of Cambridge, Mass , $9.4 million for a B-thalassemia effort. CIRM directors approved the awards with virtually no discussion. The agency is limited to funding research by the companies that is performed in California

The awards are part of the agency's push to commercialize stem cell research and engage industry more closely. All of the six applicants came from industry. However, the firms that were turned down were not identified with the exception of Athersys, Inc., of Cleveland, Ohio.

CIRM Director Steve Juelsgaard asked for a discussion of an appeal by Athersys, Inc., of Cleveland, Ohio, whose application was rejected by reviewers who scored it at 60 out of 100. The two winners had scores of 88 and 73. .However, following a brief look at the application, the board rejected Athersys' application along with other proposals turned down by reviewers. .

Click on this link for the CIRM press release on the awards.  

Trounson Going Halftime in January and February

BURLINGAME, Ca. -- The president of the $3 billion California stem cell agency, Alan Trounson, will be working half-time while living in Australia during January and February of next year.

Trounson told the governing board of the agency of his plans at the beginning of its meeting here morning. He said he needs to spend more time with his family, which lives in Melbourne.

Trounson has an 11-year-old son with whom Trounson said he hasn't spend much time in the last 18 months.  Trounson said he intends to teach his son to surf. Trounson's daughter also will be getting married in February.

Meanwhile, directors are currently discussing approval of grants in its $20 million-plus strategic partnership round.

Athersys Appeals California Rejection of $8 Million Proposal

One of the co-founders of Athersys, Inc., of Cleveland, Ohio, is attempting to overturn reviewer rejection of his company's application for an $8.3 million award from the California stem cell agency to assist in a clinical trial for a therapy for stroke victims.

The application by Robert Mays, who co-founded Athersys in 1995 and is head of neuroscience at the publicly traded firm, was turned down by reviewers who gave it a scientific score of 60 out of 100. Reviewers expressed “concerns related to limited preclinical data, lack of evidence that this therapeutic approach will benefit stroke, and concerns regarding manufacturing within the proposed timeline.”

A document from Mays that CIRM released said reviewers' objections could be addressed by “information that may not have been adequately conveyed at the time or with new information that has since become available.” The document laid out several “recent” studies that it said supported its pitch for funding in a phase two clinical trial.

CIRM's review summary also raised the question of how much of the work would be done in California. The stem cell agency is limited to funding research in California.

May's appeal said,

“We are conducting the phase 2 clinical study at many high volume clinical sites across the U.S., including in California. With respect to the process development work intended to support scaled-up / optimized manufacturing for subsequent phase 3 studies and commercialization, we plan to complete key elements of this work in California, with collaborators such as UC-Davis. We are in the process of building up our California beachhead, and plan that several California-based employees will manage the clinical study, as well as the process development work. Ultimately, success in the phase 2 clinical study and in the process development work would lead to the establishment of a manufacturing plant in California to support later stage development and commercialization in the western half of the U.S. and Asia.”

The Athersys application came in CIRM's first strategic partnership round. Two out of six applications were approved by reviewers. The winners, whose identities are being withheld until tomorrow by the stem cell agency, received scores of 88 and 73. The scores of the other applicants and their identities were also withheld by the agency.

The Athersys appeal will come before the CIRM governing board at its meeting tomorrow in Burlingame, Ca.

Texas Science Flap Cited as California Stem Cell Agency Eyes its Own Processes

OAKLAND, Ca. – Meeting against a backdrop from Texas that involves conflicts of interest and mass resignations of grant reviewers, a task force of the $3 billion California stem cell agency today began a partial examination of its own grant approval process, specifically focusing on appeals by rejected applicants.

The president of the California organization, Alan Trounson, told the task force that it was dealing with a “very serious matter” that in some ways is similar to what happened in Texas. He said the science community is “very much concerned.”

The situation in Texas involves the five-year-old Cancer Prevention and Research Institute, which like the California stem cell agency, formally known as the California Institute of Regenerative Medicine (CIRM), has $3 billion of borrowed money to use to finance research.

The chief scientific officer of the Texas organization, Nobel laureate Alfred Gilman, resigned Oct. 12 during a flap about its attempts “to simultaneously support basic research and nurture companies.”

Gilman's departure was triggered by a $20 million award made without scientific review. Reviewer resignations followed with letters that accused the Texas group of “hucksterism” and dishonoring the peer review process. (Writer Monya Baker has a good overview today in Nature.)

The situation in Texas came to a head AFTER the governing board of the California research group created its task force. The problems in Texas are bigger and not identical to those in California, which mainly involve the free-wheeling nature of the appeal process, not an entire lack of scientific review. Nonetheless, this past summer, directors of the California agency for the first time approved an award that was rejected twice by reviewers. The award went to StemCells, Inc., of Newark, Ca., which now has won $40 million, ranking the company No. 1 in awards to business from CIRM.

Earlier this month, Los Angeles Times business columnist Michael Hiltzik characterized the StemCells, Inc., award as “redolent of cronyism.”

Today's session of the CIRM task force focused primarily on an aspect of the agency's appeals process that CIRM labels as “extraordinary petitions.” They are letters which rejected applicants use to challenge decisions by grant reviewers. The researchers follow up with public appearances before the governing board, often trailing squads of patients making emotional appeals.

Both researchers and patients have a right under state law to appear before the CIRM board to discuss any matter. CIRM, however, is trying to come up with changes in the appeal process that will make it clear to researchers on what the grounds the board might overturn reviewers' decisions. The agency is also defining those grounds narrowly and aiming at eliminating appeals based on differences in scientific opinion.

At today's meeting, CIRM Director Jeff Sheehy, a patient advocate and co-vice chair of the grants review group, said peer review is an “extraordinary way of analyzing science, but it is not always perfect.” However, he also said that “as a board we are not respecting input” from scientists and thus allow the perception that we can be “persuaded against the judgment of scientists.”

CIRM Director Oswald Steward, director of the Reeve-Irvine Research Center at UC Irvine, agreed with a suggestion by Sheehy that board must act with “discipline” when faced with appeals by rejected applicants. Steward said, 

“The process has gotten a little out of hand.”

It was a sentiment that drew no dissent at today's 90-minute meeting.

Missing from today's meeting, which had teleconference locations in San Francisco, Irvine, La Jolla and Palo Alto, were any of the hundreds of California scientists whose livelihoods are likely to be affected by changes in the grant approval process. Also absent were California biotech businesses, along with the only representative on the task force from CIRM's scientific reviewers.

Our comment? When researchers and businesses that have millions at stake fail to show up for key sessions that set the terms on how they can get the money, it is a sad commentary on their professional and business acumen.

Bert Lubin, a CIRM director and chairman of the task force, indicated he would like to have two more meetings of the task force prior to making recommendations to a full board workshop in January with possible final action later that month. Lubin, CEO of Children's Hospital in Oakland, said the matter is “really important for the credibility of our whole organization.”

BioTime Makes Bid for Geron's Stem Cell Assets

Biotime, Inc., and two men who were leading players in history of Geron Corp. today made a surprise, public bid for the stem cell assets of their former firm.

Michael West
West photo

Tom Okarma
AP file photo

The men are Michael West and Thomas Okarma. West founded Geron in 1990 and was its first CEO. West is now CEO of Biotime. Okarma was CEO of Geron from 1999 to 2011. Okarma joined Biotime on Sept. 28 to lead its acquistion efforts. Both Geron, based in Menlo Park, Ca., and Biotime, based in Alameda, Ca., are publicly traded.

West and Okarma sent an open letter this morning to Geron shareholders and issued a press release making a pitch for the Geron's stem cell assets. Geron jettisoned its hESC program nearly a year ago and closed its clinical trial program for spinal injuries. The move shocked the California stem cell agency, which just a few months earlier had signed an agreement to loan the firm $25 million to help fund the clinical trial. The portion of the loan that was distributed was repaid with interest.

At the time, Geron said it would try to sell off the hESC program, but no buyers have surfaced publicly. Personnel in the program have been laid off or found employment elsewhere.

The West-Okarma letter to shareholders said that under the deal,

“Geron would transfer its stem cell assets to BAC(a new subsidiary of Biotime headed by Okarma), in exchange for which you along with the other Geron shareholders would receive shares of BAC common stock representing approximately 21.4% of the outstanding BAC capital stock. BioTime would contribute to BAC the following assets in exchange for the balance of outstanding BAC capital stock:

• “$40 million in BioTime common shares;
• “Warrants to purchase BioTime common shares (“BioTime Warrants”);
• “Rights to certain stem cell assets of BioTime, and shares of two BioTime subsidiaries engaged in the development of therapeutic products from stem cells.”

The letter asked Geron shareholders to write the firm's board of directors to urge them to approve the offer.

Geron had no immediate response to the proposal. Asked for comment, Kevin McCormack, spokesman for the California stem cell agency, said the deal “had nothing to do with us.” However, in the past, CIRM has indicated that it could find a way to transfer the loan to an entity that would continue spinal injury clinical trial. CIRM President Alan Trounson was also involved at one point in trying to assist in a deal.

Geron's shares rose 12 cents to $1.54 today while Biotime's shares lost four cents to $3.95.

Here are links to the two news stories that have appeared so far on the proposed deal: Associated Press, Marketwatch.

California Stem Cell Agency Boosting Disease Team Program to $543 Million

Directors of the California stem cell agency are set to give away $20 million next Thursday and authorize a handsome addition to their signature disease team effort, bringing its total to $543 million.

It is all part of the $3 billion agency's push to develop therapies prior to running out of money for new grants in 2017.

The $20 million is expected to go to the first two winners in the agency's new strategic partnership program. CIRM says the effort is aimed at creating “incentives and processes that will: (i) enhance the likelihood that CIRM funded projects will obtain funding for Phase III clinical trials (e.g. follow-on financing), (ii) provide a source of co-funding in the earlier stages of clinical development, and (iii) enable CIRM funded projects to access expertise within pharmaceutical and large biotechnology partners in the areas of discovery, preclinical, regulatory, clinical trial design and manufacturing process development.”

CIRM reviewed six applications with two winning approval. The agency's governing board is expected to ratify the decision next week. None of the applicants have been identified by the agency, which routinely withholds that information prior to board action even when applicants have identified themselves.

Addition of a new $100 million disease team round will come on top of the second, $213 million disease team awards approved last this summer. The first round, awarded in 2009, totaled $230 million.  The size of the new round could be altered by CIRM directors prior to approval. Also before the board is a $40 million proposal to expand the industry-friendly strategic partnership effort into a second round.

The thrust of the disease team effort is to speed the process of establishing clinical trials and to finance efforts that might founder in what the biotech industry calls a valley of death – a high risk financial location, so to speak, where conventional financiers fear to tread.

The new disease team round will require “co-funding” from applicants but the agency did not specify what it means by the term. The matter of matching funds has become an issue in awards to StemCells, Inc., of Newark, Ca., in this summer's disease team round.

Next week's agenda additionally contains a plan to tighten review of proposed research budgets in grant applications, making it clear that CIRM staff will be negotiating such matters even after the board approves grants and loans.

So far no researchers have testified in public on the budget plan although it could well have a significant impact on their future efforts.

Additional matters will discussed as well at the meeting in Burlingame, which also has a teleconference location in La Jolla that will be open to the public. The address and additional material can be found on the agenda.  

Los Angeles Times: StemCells, Inc., Award 'Redolent of Cronyism'

The Los Angeles Times this morning carried a column about the “charmed relationship” between StemCells, Inc., its “powerful friends” and the $3 billion California stem cell agency.

The article was written by Pulitzer prize winner and author Michael Hiltzik, who has been critical of the agency in the past. The piece was the first in the major mainstream media about a $20 million award to StemCells, Inc., that was approved in September by the agency's board. The bottom line of the article? The award was “redolent of cronyism.”

Hiltzik noted that StemCells, Inc., now ranks as the leading corporate recipient of cash from the agency with $40 million approved during the last few months.

But he focused primarily on September's $20 million award, which was approved despite being rejected twice by grant reviewers – “a particularly impressive” performance, according to Hiltzik. It was the first time that the board has approved an award that was rejected twice by reviewers.

Hiltzik wrote,

“What was the company's secret? StemCells says it's addressing 'a serious unmet medical need' in Alzheimer's research. But it doesn't hurt that the company also had powerful friends going to bat for it, including two guys who were instrumental in getting CIRM off the ground in the first place.”

The two are Robert Klein, who led the ballot campaign that created the agency and became its first chairman, and Irv Weissman of Stanford, who co-founded StemCells, Inc., and sits on its board. Weissman, an internationally known stem cell researcher, also was an important supporter of the campaign, raising millions of dollars and appearing in TV ads. Klein, who left the agency last year, appeared twice before the CIRM board this summer to lobby his former colleagues on behalf of Weissman's company. It was Klein's first appearance before the board on behalf of a specific application.

The Times piece continued,

“But private enterprise is new territory for CIRM, which has steered almost all its grants thus far to nonprofit institutions. Those efforts haven't been trouble-free: With some 90% of the agency's grants having gone to institutions with representatives on its board, the agency has long been vulnerable to charges of conflicts of interest. The last thing it needed was to show a similar flaw in its dealings with private companies too.”

Hiltzik wrote,

“(Weissman) has also been a leading beneficiary of CIRM funding, listed as the principal researcher on three grants worth a total of $24.5 million. The agency also contributed $43.6 million toward the construction of his institute's glittering $200-million research building on the Stanford campus.”

CIRM board approval of the $20 million for StemCells, Inc., came on 7-5 vote that also required the firm to prove that it had a promised $20 million in matching funds prior to distribution of state cash.

Hiltzik continued,

“The problem is that StemCells doesn't have $20 million in spare funds. Its quarterly report for the period ended June 30 listed about $10.4 million in liquid assets, and shows it's burning about $5 million per quarter. Its prospects of raising significant cash from investors are, shall we say, conjectural.

“As it happens, within days of the board's vote, the firm downplayed any pledge 'to raise a specific amount of money in a particular period of time.' The idea that CIRM 'is requiring us to raise $20 million in matching funds' is a 'misimpression,' it said. Indeed, it suggested that it might count its existing spending on salaries and other 'infrastructure and overhead' as part of the match. StemCells declined my request that it expand on its statement. 

“CIRM spokesman Kevin McCormack says the agency is currently scrutinizing StemCells' finances 'to see what it is they have and whether it meets the requirements and expectations of the board.' The goal is to set 'terms and conditions that provide maximum protection for taxpayer dollars.' He says, 'If we can't agree on a plan, the award will not be funded.'"

Hiltzik wrote,

“The agency shouldn't be deciding on the spot what does or doesn't qualify as matching funds. It should have clear guidelines in advance.

“Nor should the board overturn the judgment of its scientific review panels without clear-cut reasons....The record suggests that the handling of the StemCells appeal was at best haphazard and at worst redolent of cronyism.” 

Researcher Alert: Stem Cell Agency to Take Up Grant Appeal Restrictions

The move by the $3 billion California stem cell agency to curtail its free-wheeling grant appeal process will undergo its first public hearing next week.

The proposals will mean that scientists whose applications are rejected by reviewers will have fewer avenues to pursue to overturn those decisions. The changes could take effect as early as next year.

The move comes in the wake of a record number of appeals this summer that left the board complaining about “arm-twisting,” lobbying and “emotionally charged presentations.”

Among other things, the new "guidelines" attempt to define criteria for re-review – “additional analysis” – of applications involved in appeals, also called “extraordinary petitions.” The plan states that re-review should occur only in the case of a material dispute of fact or material new information. (See the end of this item for agency's proposed definitions.)

In addition to alterations in the appeal process, the CIRM directors' Application Review Task Force will take up questions involving “ex parte communications.” The agenda for the Oct. 24 meeting did not contain any additional information on the issue but it likely deals with lobbying efforts on grants outside of public meetings of the agency. We understand that such efforts surfaced last summer involving the $$214 million disease team round and Robert Klein, the former chairman of the stem cell agency.

Klein appeared twice publicly before the board on one, $20 million application by StemCells, Inc., the first time a former governing board member has publicly lobbied his former colleagues on an application. The application was rejected twice by reviewers – once on the initial review and again later on a re-review – but it was ultimately approved by directors in September on a 7-5 vote.

The board has long been troubled with its appeal process but last summer's events brought the matter to a new head. The issue is difficult to deal with because state law allows anyone to address the CIRM governing board on any subject when it meets. That includes applicants who can ask the board to approve grants for any reason whatsoever, not withstanding CIRM rules. The board can also approve a grant for virtually any reason although it has generally relied on scientific scores from reviewers.

The proposals to restrict appeals are designed to make it clear to scientists whose applications are rejected by reviewers that the board is not going to look with favor on those who depart from the normal appeals procedure.

While the board almost never has overturned a positive decision by reviewers, in nearly every round it  approves some applications that have been rejected by reviewers. That has occurred as the result of appeals and as the result of motions by board members that did not result from public appeals.

Ten of the 29 board members are classified as patient advocates and often feel they must advance the cause of the diseases that they have been involved with. Sometimes that means seeking approval of applications with low scientific scores.

Here is how agency proposes to define “material dispute of fact:”

“A material dispute of fact should meet five criteria:(1) An applicant disputes the accuracy of a statement in the review summary;(2) the disputed fact was significant in the scoring or recommendation of the GWG(grant review group); (3) the dispute pertains to an objectively verifiable fact, rather than a matter of scientific judgment or opinion;(4) the discrepancy was not addressed through the Supplemental Information Process and cannot be resolved at the meeting at which the application is being considered; and (5) resolution of the dispute could affect the outcome of the board’s funding decision."

Here is how the agency proposes to define “material new information:”

“New information should: (1)be verifiable through external sources; (2) have arisen since the Grants Working Group(grant review group) meeting at which the application was considered; (3) respond directly to a specific criticism or question identified in the Grants Working Group’s review; and (4) be submitted as part of an extraordinary petition filed five business days before the board meeting at which the application is being considered."

Next week's hearing is scheduled for Children's Hospital in Oakland with a teleconference location at UC Irvine. Addresses can be found on the agenda.