Inside the Business in California's $70 Million Alpha Stem Cell Clinic Proposal

Want to know more about the business aspects of a $70 million proposal to create a chain of “Alpha” stem cell clinics in California?

More details can be found in a report from the California stem cell agency titled “Alpha Stem Cell Clinics: Delivering a New Kind of Medicine.”

Among other things, the 23-page report discusses how the plan would guide efforts to build profits into stem cell therapies and to develop strategies to attract investors and philanthropists. Not all of the business questions are answered. However, the report does paint a more complete picture of how the clinics would lead to actual production and marketing of a therapy. Overall, the proposal is aimed at creating a sturdy foundation for the stem cell industry in California, one that surpasses anything found elsewhere in the world.

The stem cell agency's governing board is set to move forward on the Alpha clinics at its meeting on Thursday. This week's action involves approval of the concept with an RFA coming in October. Awards to six recipients could be made as early as July of next year.

The business aspects of the proposal are critical because without a clear pathway to profits no stem cell therapies will be available on anything approaching a significant scale. 

CIRM President Alan Trounson first advanced the Alpha concept two years ago. Last fall the $3 billion agency brought together 70 folks from the stem cell world to ponder the idea and to make suggestions. CIRM's report on the discussions at the workshop served as the basis for the proposal to be considered by its governing board this week. Here are excerpts from the report.

“Workshop participants...emphasized the need for engaged experts who can consider and implement strategies for reimbursement (i.e.generating profits) for stem cell therapies, and to gather evidence for their value and effectiveness that will be important for coverage by payers. Having clear pathways in place will help in building financially sustainable clinics as stem cell therapies gain approval and are implemented as standard medical practice. The Alpha Coordinating Center (funded at $15 million) would work with Accountable Care Organizations (funding gouprs that tie performance to payment) and multi-stakeholder collaborations to generate evidence for informing coverage and payment policies.”

“Incentivizing company sponsors of clinical trials to participate in data sharing will be challenging, and it will be important to protect their interests as appropriate, by respecting confidentiality of proprietary information, while at the same time requiring an appropriate degree of data sharing to advance the mission of the Alpha Stem Cell Clinics Network(five clinics funded at $11 million each). It is interesting to note that at this time, the landscape of disclosing clinical trial results is in flux, and there is increasing international pressure for companies to disclose information on safety and efficacy to the research and medical communities.”

“Alpha Stem Cell Clinics will create unique models for assessing the financial viability of stem cell therapies in a clinical setting. Cost and revenue data may serve as the basis for developing reimbursement options among the public and private sector as therapies accumulate. Identification of reimbursement options can reduce investor uncertainties and encourage further investment by pharmaceutical companies, investors, funding agencies and philanthropists.
“The elements of the Alpha Stem Cell Clinics Network, namely the clinical sites and central coordinating center, will interact with external entities to generate revenue streams that would ultimately ensure financial sustainability independent of CIRM funding (Figure 3).”

“The Coordinating and Information Management Center could develop a fee for service model for its consulting services, and operate like a CRO. Sponsors could choose whether to use the consulting services and whether to use the Alpha Stem Cell Clinics Sites. The Alpha Stem Cell Clinics Sites would generate operating revenue by running the clinical trials and could perhaps support the Center with revenues, as the volume of trials grows and the Network builds steam.

“In a second model, clinical trial sponsors would all contract with the Coordinating and Information Management Center, which would then set prices according to services needed. From this revenue, the Center would pay the Alpha Stem Cell Clinics Sites for costs associated with the clinical trials.

“By the time the CIRM seed money is depleted, the clinics should have established a strong track record and brand for excellence in conducting clinical trials in stem cell therapies, which would attract more clinical trial sponsors, including companies. To have the largest possible impact on healthcare, it will be desirable to increase industry involvement for cell therapies. However engaging corporate involvement could be challenging, given that many cell therapies are not considered patentable, and many of the ongoing trials are conducted in academic settings. It was suggested that the Alpha Stem Cell Clinics Network align as much as possible with corporate “mentality” to maximize corporate participation.

“Overall, the Alpha Stem Cell Clinics Network will help companies increase their 'bandwidth' and run stem cell therapy clinical trials more effectively and successfully. Many companies will already have sufficient in-house expertise for administration and regulatory guidance, and may not need to engage the Center’s consulting services. They would be attracted to the Alpha Stem Cell Clinics Network because of advantages for clinical trials such as benefiting from the collective databases, know-how and experience of the 'brain trust,' positive interactions and lines of communication with the FDA and regulatory experts, positive branding, quality control, accreditation for their trials, access to patient registries for outreach and patient recruitment and, through its clinical trial management resources, help with enrollment.

“Workshop participants also emphasized that attaining reimbursement for stem cell therapies will be necessary for delivering approved therapies into medical practice. It is likely that the business models for at least some of the clinics will resemble bone marrow/HSC transplant clinics, where for stem cell therapies that are proven superior to the standard of care, the clinic will directly receive reimbursement from insurers for the procedure and follow-up care.

“Reaching this point will require advance advocacy and preparation, and the engagement with the CMS at an early stage of product development. It was recommended that the Alpha Stem Cell Clinics Coordinating and Information Management Center should employ experts in reimbursement methodologies to facilitate entry of approved products into healthcare delivery. One workshop participant, Jeff Sheehy(a stem cell agency board member), suggested that early engagement with Accountable Care Organizations (ACOs) could be helpful, given that stem cell therapies offer the promise of cures, which in the long run will offer high value and effectiveness, albeit with ' high front end costs and the necessity of developing the appropriate infrastructure for delivering complex cell based procedures.' Consortiums such as the Green Park Collaborative are being established to develop methodological standards to demonstrate the effectiveness and value of new technologies. These data could be used to inform healthcare payers of the overall benefits of cell therapies and their long-term value, as compared with existing therapies."

“In 2016 and beyond, CIRM will initiate the 'Delivery' phase, in which priorities will be 'facilitating commercialization (and non-commercial adoption, where appropriate) of therapies, advancing therapies to patients, and enabling business models for stem cell-based therapies.' Connecting this network to other networks and centers with a similar mission outside of California will further accelerate the development and delivery of stem cell therapies, through the global exchange of information and expertise. International testing of experimental therapies developed in California will be essential for ensuring their sustainability, as regulatory approval and widespread delivery of these products in major markets throughout the world will ensure commercial viability and sustainability of companies and universities that produce them, which will in turn help deliver returns to investors. Ultimately, establishing a solid foundation for investor engagement will ensure the viability of stem cell therapies as they move into clinical practice.'”

Paying for Human Eggs, Ivan Illich and Jerry Brown

California's pay-for-eggs bill is stalled in a technical parliamentary process as opponents continue to wage their campaign urging Gov. Jerry Brown to veto the proposal, which swept easily through the legislature.

The latest volley against the industry-sponsored measure appeared this week as an op-ed in The Sacramento Bee. The legislation would allow women to be paid for eggs for scientific research. The op-ed piece invoked the philosopher Ivan Illich, a longtime friend of Jerry Brown and much respected by him.

The July 16 article was written by Diane Tober of the Center for Genetics and Society of Berkeley and Nancy Scheper-Hughes, a professor of medical anthropology at UC Berkeley and director of Organs Watch, a medical human rights documentation project.The piece said, 

“The late historian of science and technology, Ivan Illich, warned against the processes of medical industries which 'create new needs and control their satisfaction and turn human beings and their creativity into objects.'"

The op-ed said,

“Women's research eggs (have) become the hot new bio-product, increasing the profits of the multibillion-dollar-per-year infertility industry at the expense of women's health, safety and possibly, their future fertility. Is this the 'equity' we want for ourselves, our sisters and our daughters?”

In 2003, Brown wrote a remembrance of Illich, whom he first met in 1976. Brown said that Illich

“...bore witness to the destructive power of modern institutions that 'create needs faster than they can create satisfaction, and in the process of trying to meet the needs they generate, they consume the earth.'”

The egg compensation bill (AB926 by Assemblywoman Susan Bonilla, D-Concord) would remove a ban in California on paying women who provide their eggs for scientific research. Currently women who provide eggs for fertility purposes can be paid, sometimes as much as $50,000, depending on the characteristics of the woman providing the eggs. The bill would not alter the ban on using research funds from the California stem cell agency to pay for eggs. However, the agency next week will consider a proposal to allow use of agency funds to purchase stem cell lines derived from eggs through compensation. (For more information on the bill, see here, here and here.)

The egg bill received final legislative approval on July 1. The governor has 12 days to act on the measure once it actually reaches his desk. However, as of this morning, the legislation remained in what is known as the “engrossing and enrolling” process. It could be a routine delay but the process can also be used to manage the flow of legislation to the governor. Brown is currently on a two-week trip to Germany and Ireland and is not expected to return until near the first of August.

(An earlier version of this item incorrectly identified Nancy Scheper-Hughes as with the Center for Genetics and Society.)

California Stem Cell Agency to Commit 20 Percent of Remaining Cash

The California stem cell agency next Thursday is expected to move forward with plans to give away $128 million, roughly 20 percent of its remaining funds.

The programs include the $70 million Alpha clinic plan, an ambitious five-year project that would be one of the $3 billion agency's hallmark efforts. The other “concept” rounds up next week include a $35 million “tools and technology”RFA and $23 million to recruit four more star, stem cell scientists to California.

The agency has committed about $1.8 billion of its $3 billion so far with about $700 million available for future spending. The remainder is going for the agency's administrative expenses. Cash for new grants is expected to run out sometime in 2017. Total cost of the agency's efforts run to about $6 billion because it operates with money borrowed by the state and must pay interest.

The agency is currently engaged in developing a plan to develop new sources of funding with an eye on some sort of public-private model. It solicited proposals in May for help with the effort, with the goal of completing a plan by this fall. At last report, however, the contract with the consultant had not been let.

The “strategic roadmap,” as it is called, is likely to come up at next week's governing board meeting along with a review of agency goals for the 2013-14 fiscal year.

On the agenda is a proposal to modify the agency's ban on use of its funds to purchase stem cell lines derived from human eggs supplied by women who have been paid. That proposal will also be heard by the agency's standards group next Wednesday.

The agency has additionally been busy implementing recommendations from a performance audit in May 2012. The audit said the agency was laboring under a range of problems that include protection of its intellectual property and management of its nearly 500 grants plus an inadequate ability to track its own performance. A staff Power Point presentation seems to indicate that it is making substantial progress in solving the problems identified by the audit.

Next week's meeting will be in Burlingame near the San Francisco Airport. Two remote locations where the public can participate are also available in Los Angeles. Addresses can be found on the agenda.

The California Stem Cell Report will provide live coverage of the meeting based on the Internet audiocast with stories filed as warranted.  

California's $70 Million 'Alpha' Stem Cell Clinic Plan Headed for Approval Next Week

Alpha clinic organizational diagram
Graphic by CIRM

California's stem cell agency next week is likely to approve a $70 million plan to build a taxpayer-financed chain of  “Alpha” stem cell clinics in what could be a major step towards making California the stem cell capital of the world,

The proposal would create five centers at existing institutions or businesses to be funded at up to $11 million each over five years. Also proposed is a coordination and information center that would receive $15 million over five years.

A story in Nature Medicine said that the Alpha clinics would be the first-ever “clinical trials network focused around a broad therapeutic platform.”

The clinics are expected to draw stem cell projects from the around the world as well as those funded by the $3 billion California stem cell agency. The proposal would be one of the largest single research efforts funded by the agency, formally known as the California Institute for Regenerative Medicine (CIRM) and use about 10 percent of its remaining cash.

The Alpha clinics are aimed at creation of a sturdy foundation for the stem cell industry in California, capitalizing on the burgeoning, international lure of stem cell treatments. Indeed, one of the objectives of the information center is to divert people from dubious treatments elsewhere.

The plan would fill a “profound gap” in quality information about stem cell treatments, according to a CIRM document, which said,

“By providing this resource, the public and potential patients would be better educated and informed, whether or not they should opt to enroll in clinical trials or approved treatments at any of the Alpha clinics.”

The Alpha concept was first broached two years ago publicly by CIRM President Alan Trounson, a pioneer in IVF research and the IVF business. His proposal has received early and heavy attention on the CIRM website with a video, blog items and a white paper.

The plan has received little critical attention although a researcher from an institution that could be a candidate for an Alpha clinic commented harshly in May on the California Stem Cell Report, calling the proposal “an irresponsible waste”and a “boondoggle for some medical schools.” The researcher, who asked that he/she not be identified, said,

“CIRM will pay for an unneeded infrastructure that will be empty space and staff sitting on their hands 99 percent of the time.  Or worse yet, CIRM will pay but the space will be used for other things, other clinic procedures paid for by insurance.”  

Elie Dolgin's July 8 piece in Nature Medicine quoted Mahendra Rao, director of the Center for Regenerative Medicine at the US National Institutes of Health (NIH), as applauding the concept. However, Rao said he doesn't anticipate the approach being tried nationally soon.

Dolgin wrote,

“Rao regularly asks researchers hoping to advance promising stem cell therapies whether they require additional clinical infrastructure. 'So far, what they've told us is they'll let us know if they need anything more than (the) programs that we have already established,' he says.”

The question of the size of the demand for Alpha clinics is not addressed in the CIRM concept plan. Also absent is much discussion of the business aspects of the proposal. It does mention “corporate sponsors” in passing. In a CIRM blog item yesterday, Natalie DeWitt, special project director at the agency, touched on business elements, declaring,

“(The proprosal) will yield better clinical trial design, accelerated approval of high quality treatments, and data and know-how to inform regulatory and reimbursement decisions.”

Reimbursement is the industry euphemism for creating ways to generate profits for stem cell firms.

The proposal said applicants would have to bring substantial support from their own institutions and “demonstrate the potential to bring in a pipeline of additional stem cell-based therapeutic trials as well as future funding streams to sustain the clinic.” Applicants would also be “evaluated in their ability to create a positive 'brand' that would attract clinical trials.”

Also up in the air was whether grant reviewers, all of whom come from out-of-state, would have special expertise to evaluate the business aspects of each applicant's proposal along with their business track record.

What is before the CIRM directors July 25 at their meeting in Burlingame, Ca., is a request for approval of the concept, which would be fleshed out for the RFA. The governing board almost always approves staff concepts, although they may modify them slightly. A number of directors come from institutions that are likely to be applicants in the program. They can participate in voting on the concept plan but would be barred from voting on any applications that come in later. The two RFAs could go out as early as October with approval of funding of applications one year from now.

In addition to the Burlingame meeting site, members of the public can participate from two teleconference locations in the Los Angeles area. The specific locations can be found on the meeting agenda.

The California Stem Cell Report will provide live coverage of the entire meeting, filing reports as warranted based on the Internet audiocast.

Here are excerpts from CIRM's staff document on the plan.

“To accelerate therapeutic development and delivery of stem cell therapies, CIRM proposes establishing the CIRM Alpha Stem Cell Clinics Network (CASC Network). The network will be designed to support projects emanating from CIRM’s funding pipeline, as well as scientifically outstanding stem cell products being developed worldwide and brought to California. Conceptually, the CASC Network is intended to be a sustainable infrastructure designed to support academic- and industry-initiated clinical trials, and delivery of therapies proven safe and effective.”

“The major thrusts (of the overall plan) will be:
• Development of clinical capacity and associated resources designed to support the effective implementation and execution of clinical trials and delivery of registered stem cell therapies
• Compilation of data and information concerning clinical trial experience and therapy outcomes to further inform the research, regulatory, and general community about the status of investigational stem cell interventions and long-term outcomes
• Dissemination of information to the public and counseling of patients and potential trial subjects about therapeutic options and clinical trials involving stem cells in the network and elsewhere.”

“The long-term vision is for the Alpha Clinics to expand and accommodate a broad array of stem cell-based clinical trials, where the trial meets the scientific, clinical trial design and ethical standards set forth by the Alpha Clinics Network, as well as FDA approved treatments.”

The coordinating and information center would be expected to :
“Build relationships with Accountable Care Organizations, and participate in initiatives for informing coverage and payment decisions
“Design strategies to attract investors and philanthropists to CASC network
“Create business plans, and marketing and branding strategies for financial sustainability of the Alpha Clinics Sites and (the coordination/information center)”.

Shestack Resignation Letter: Heartfelt and Eloquent

Jon Shestack(l) with J.T. Thomas, chairman of
CIRM, at a 2012 board meeting
California Stem Cell Report photo

Patient advocate Jon Shestack , who resigned this week as a director of the California stem cell agency, was on board on Day One in December 2004 when the agency's work began with no offices, no desks, no chairs, no phones and no ability to even write checks.

Shestack's appointment came as a result of his work in the autism community. He and his wife, Portia Iversen, founded Cure Autism Now in 1995. A Hollywood film producer, Shestack rattled cages at CIRM from time to time during his eight years of service. And earlier this week, he wrote a heartfelt, eloquent resignation letter, which he provided to the California Stem Cell Report. The full text can be found below. Here are some excerpts.

“Over eight years there were moments that were inspiring, some were contentious, and there was a bruising number of meetings but through it all, the board was involved, passionate and, will forever be for me, the gold standard when it comes to integrity.
“The same goes double for the staff – truly the most excellent, devoted, committed group of people I have ever had the pleasure of working with.”

“When I started at CIRM, my sweet son with autism was 12. Now he is 21. Over eight years our family has learned more about how many are the challenges that await him and how few the opportunities he has to look forward to. We have seen his world get smaller and smaller. While my son is special to me. He is not unique. There are thousands and thousands affected by mental illness who need a better life.
“Sometimes feel that I have failed these people, in particular those affected by autism or cerebral palsy. Though CIRM ran first-rate workshops on these disorders, we did not do all we could to follow up, put out disease-specific RFAs and get in proposals that addressed the workshop recommendations. I wish I had been more persuasive."

“In the movies, the third act is where the hero takes stock of all the previous wins and losses, all the hardships and lessons learned, and she puts all that knowledge together in new, and surprising ways until victory is within reach! As CIRM enters its third act, I hope it will do the same. I hope it will challenge itself, always put the urgency of the mission ahead of everything else and be willing to question the policies that have been so successful in the past, and consider that new ones may be needed for the future.
“And this is the future as I see it for CIRM. We will have faith, but we will continue to earn our miracles We will use our hearts and our minds to rip those miracles out of the dreamy future and make them real today. We will seek out the best scientists and encourage them to use all their wisdom, art and discernment to bring us cures. And when we have done that, we will do it again the next day. We will be optimistic, but not satisfied. We will question authority, despise complacency and above all love those among us in need of healing--this is the obligation without end, whose reward is also without end.”

Shestack Resignation Letter

TV News Piece on Pay-for-Eggs Airs in Los Angeles, San Francisco

The California pay-for-eggs legislation yesterday picked up some mainstream media coverage, including a two-minute, 24-second segment on two major television stations in Los Angeles and San Francisco.

The piece stands out because the mainstream media has largely ignored the bill, with a couple of exceptions. The piece is also exceptional because it appeared on TV news, which reaches many more people than print media.

Nannette Miranda, Sacramento bureau chief for KABC-TV in Los Angeles, KGTV in San Diego, KGO-TV in San Francisco and KFSN-TV in Fresno, prepared the segment, which included on-camera interviews with both supporters and opponents. The video appeared on KGO and KABC and may well appear later on the other stations. It can be seen at the end of this item.

The legislation, AB926 by Susan Bonilla, D-Concord, would remove the ban in California on paying women for their eggs for stem cell and other scientific research. Women can already be paid for their eggs for fertility purposes.

Another piece on the bill appeared in another mainstream media outlet this morning, the San Diego U-T. Writing in an op-ed column, Leah Campbell said she sold her eggs at age 25 and has since become infertile as the result of problems her doctors believe involved the process of providing the eggs.

“Six months (after providing the eggs) my body began to fail me. I had always been a healthy and active woman, but suddenly I was crippled by pain and unable to live the life I had once enjoyed. I was soon diagnosed with stage IV endometriosis, a disease my doctors now believe was pushed into overdrive as a result of the potent hormones involved in my egg donation protocols.”

Campbell continued,

“AB 926 may open the doors for increased fertility research, but the potential costs for women’s lives and health far outweigh any compensation that could ever be offered.”

Sacramento Mental Health Advocate Appointed to Stem Cell Agency Board

Al Rowlett
Turning Point photo

Sacramento mental health advocate Al Rowlett has been named to the governing board of the $3 billion California stem cell agency, it was announced today.

Rowlett replaces Jonathan Shestack on the 29-member panel. Shestack had served on the board since 2004, when the agency was created by the Proposition 71 ballot initiative.

Rowlett is chief operating officer of Turning Point Community Programs in Sacramento. He was appointed to the CIRM board by California Assembly Speaker John Perez, D-Los Angeles. Rowlett will fill one of the 10 patient advocate slots on the board. He will be only African-American on the panel. The board had also included one African-American, Ted Love, from 2004 to April 2012, when Love resigned.

Rowlett is no stranger to public and governmental service. He is in his second term as a member of the Elk Grove school board, the fifth largest school district in California. He has worked for Turning Point since 1981.

CIRM's press release said Rowlett also serves on several other boards including Child Abuse Prevention Center, California Institute of Mental Health and is a commissioner for the United States Psychiatric Rehabilitation Association Certification Program. In 2007, Rowlett won the National Association of Social Work- California and California State University – Heart of Social Work Award and the Asian Pacific Community Counseling – Inspirational Mental Health Leadership Award.

Veto Campaign Launched on California Pay-For-Eggs Bill

Opponents of the California pay-for-eggs bill have kicked off a campaign to urge Gov. Jerry Brown to veto the industry-backed legislation.

The Center for Genetics and Society of Berkeley yesterday posted a pitch on its website urging readers to contact the governor's office by email, fax, phone or letter. The target is a bill that would remove the ban in California on paying women for their eggs for stem cell and other scientific research. Women can already be paid for their eggs for fertility purposes.

Diane Tober, associate executive director of the center, wrote,

“If you agree that more research on short- and long-term risks is needed before expanding the market for women’s eggs, please act quickly. Contact Governor Brown and ask him to veto AB926.”

Also making the same pitch is the Alliance for Humane Biology, another San Francisco Bay area organization.

The bill, AB926 by Assemblywoman Susan Bonilla, D-Concord, has literally been cloaked in motherhood/reproductive issues. The measure has easily swept through the legislature and is now on its way to the governor. The bill is sponsored by the AssociationFew if any stem cell or other research organizations have been heard from during hearings on the bill. (For more information, see here, here and here.)

However, stem cell scientists have complained in past years about the lack of eggs for research, declaring that women want to be paid.

The measure would not affect the ban on compensation for eggs in research funded by the $3 billion California stem cell agency. However, the agency on July 24 will consider providing exceptions for stem cell lines derived from eggs that involve compensation for women.

"Comfort News" for California's Stem Cell Research Effort

The California stem cell agency has enjoyed a spate of good financial and scientific news this week from the biotech industry as the research effort pushes on with its mission of turning stem cells into cures.

The $3 billion agency is scheduled to make its last grants in less than three years and, given the glacial pace of medical research, needs all the help it can get by then to bring a stem cell therapy close to the marketplace – the promise it made to voters when the agency was created nine years ago.

CIRM, as the agency is known, requires not only steady scientific progress but also a rosy outlook for the industry, which has languished in past years as major investors shunned the field. This week, CIRM garnered good news on both fronts.

There was enough so that the agency even touted it on the agency's research blog in an item by Neil Littman, CIRM's business development officer. He said it all helps to leverage CIRM investments and create a favorable investment climate. The good news included yesterday's announcement that Viacyte, Inc., of San Diego, Ca., has come up with $10.6 million needed to match a $10.1 million, much-ballyhooed award from CIRM last fall. The Viacyte financing includes important support from Big Pharma, in the form of Johnson & Johnson. CIRM has pumped a total of $39.4 million into Viacyte.

Another CIRM award winner, Cellular Dynamics International, Inc., of Madison, Wisc., yesterday announced its price on its upcoming stock offering to raise up to $53 million. Cellular Dynamics scored $16 million from the agency last March.

The “comfort news” for CIRM also included Monday's announcement that Capricor, Inc., a private Beverly Hills company benefiting from $27 million from the California stem cell agency, is merging with publicly traded Niles Therapeutic, Inc., of San Mateo. The merger is aimed at providing better access to capital.

And then there was Tuesday's news that a $20 million CIRM disease team award is paying off with the beginning of a clinical trial by Calimmune of Tucson, Az. for an HIV treatment.

All on top of the news in June when bluebird bio of Masschusetts brought in $101 million on its stock offering. Bluebird is the recipient of a $9.4 million CIRM award.

The rosy news comes amid a generally better outlook for biotech in general. John Carroll, editor of Fierce Biotech, this week noted that there were only 11 biotech stock offerings last year. He wrote,

“In the last 6 months, though, the industry has seen a tremendous rebound, with almost twice that number of IPOs in half the time. And there's no sign that the great leap into the public market is waning, with 10 more IPOs in the queue.”

Carroll's comments were echoed in a piece by Peter Winter on Bioworld headlined “Bubbleology and Biotech's Bull Run.”

All of this plays into what some might call the “everybody's-doing-it dance" or the “lemming syndrome,” depending on your point of view. The reality is that big investors and venture capitalists are timid souls and need the comfort of companionship-in-risk as they fork over tens or hundreds of millions of dollars on something that may not pay off for a decade or more. No one wants to be the out-front pioneer who winds up with financial arrows in his or her back. Being in a crowd provides an illusion of safety.

Of course, there is always the caveat about how markets and investors are fickle. A piece of bad news can translate quickly into major reversals as Apple has learned over the last year. Nonetheless, the folks at the stem cell agency have to  be feeling good today.

Pay-for-Eggs Legislation: Strange Bedfellows and Existential Questions

 The California pay-for-eggs bill today generated a feature article that said the legislation has “sparked an unusual lineup of partisans on both sides and resonates far beyond” the Golden State.

The piece by Alex Mathews on Capitol Weekly, a news service specializing in California government and political coverage, said,

“(C)omplicating the issue is California’s role as a national leader in stem cell research, the existential question of who or what constitutes a research subject, and finally, the fact that compensation for fertility purposes is and has been legal for years in California.”

Mathews was writing about the measure (AB926) by Assemblywoman Susan Bonilla, D-Concord, that removes a ban in California on paying women for eggs for scientific research. Currently women can be paid in California for providing eggs for IVF. The measure would not alter a ban on compensation for eggs in research financed by the $3 billion California stem cell agency. However, later this month, the agency will consider modifying its position somewhat.

The bill has passed the legislature and is on its way to Gov. Jerry Brown. The industry association sponsoring the bill expects the governor to sign it later this month although the governor, as a general rule, does not make public commitments on legislation.

Mathews' article covered the background and arguments on the bill and noted that it has received little mainstream media attention.

Lisa Ikemoto
UC Davis photo

She also quoted Lisa Ikemoto, a law professor and bioethicist at UC Davis, on the sensitive nature of the issue. Ikemoto said,

“On the fertility side, it’s politically hard to touch because it’s all around family formation. Nobody wants to restrict family formation. On the research side, when the issue of payment for eggs came up, it was connected with human embryonic stem cell research, and human embryonic stem cell research was politicized from the outset.”

Mathews also wrote about the strange bedfellows opposing the bill. She said,

“Groups that fundamentally oppose stem cell research such as the California Catholic Conference and other pro-life groups are natural opponents of the bill, but they are joined by a number of pro-choice groups who expressed concerns over the limited research on the effects of egg donation on women’s health.”

California Stem Cell Merger: Capricor and Niles Therapeutics

Capricor, Inc., a Beverly Hills company benefiting from $27 million from the California stem cell agency, this week announced that it is merging with Niles Therapeutic, Inc., of San Mateo.

Linda Marban
Capricor photo

The Capricor story and its treatment for heart disease have been highlighted (see here and here) by the $3 billion state research agency, which is partially funding a clinical trial for the firm. The firm sprang from work by Eduardo Marban of Cedars-Sinai in Los Angeles, one of Capricor's founders. He received $6.9 million for his early and current work. Capricor was awarded $19.8 million more.

Capricor, a privately held firm, and the publicly traded Niles announced on Monday that they were merging. The new company will be known as Capricor Therapeutics, Inc., and will be based in San Mateo.

The new firm will be publicly traded with Capricor CEO Linda Marban as the new CEO.

The new board of directors will have two members from Niles and seven from Capricor, including its executive chairman, Frank Litvack, who was an unsuccessful candidate for chairman of the stem cell agency board in 2011.

The merger press release said that the new company “should have better access to capital, more potential for steady pipeline development and more risk diversification."

On completion of the merger, a joint press release said,

“Nile will issue to Capricor stockholders shares of Nile common stock such that Capricor stockholders will own approximately 90% of the combined company's outstanding shares, and Nile stockholders will own approximately 10%, calculated in each case on a fully-diluted basis assuming the issuance of shares underlying options and warrants. Options of Capricor will be assumed by Nile and become options to acquire stock of Nile.”

Linda Marban said,

"Capricor's and Nile's product portfolios complement each other well, as our therapies will address both the underlying causes and debilitating effects of heart disease. Capricor's CDCs are allogeneic cardiac derived stem cells that aim to attenuate and potentially improve damage to the heart that can result in heart failure, while Nile's cenderitide is intended to treat patients following hospital discharge from an acute episode of heart failure."

Niles' stock price stood at $0.04 recently. Its 52 week high was $0.20 and the 52-week low was $0.02.

HIV Clinical Trial Hailed by California Stem Cell Agency

The California stem cell agency today scored what it called an “important milestone” with the announcement of the start of a clinical trial involving a therapy to help protect persons infected with HIV from the effects of the virus.

The trial is partially funded from a $20 million award from the stem cell agency, which is known as CIRM, to researchers at UCLA and Calimmune, a Tucson, Az., company. Calimmune's share of the award was $8.2 million.

Alan Trounson, president of the $3 billion state agency, said in a statement,

“CIRM funding of this Phase l/ll trial is an important milestone for us. One of our goals is to support research that moves the most promising science out of the lab and into clinical trials in people. To be able to do that with a disease as devastating as HIV/AIDS highlights the importance of our funding and the potential impact it could have on the health of people around the world.”

The trial was announced by Calimmune this morning. The company said,

“The first patient has begun treatment in a Phase I/II clinical trial designed to determine whether a pioneering genetic medicine approach can help to protect individuals infected with HIV from the effects of the virus. The study, “Safety Study of a Dual Anti-HIV Gene Transfer Construct to Treat HIV-1 Infection,” utilizes a gene medicine called Cal-1, developed in the lab of Nobel Laureate Dr. David Baltimore and by Calimmune.”

Baltimore served on the CIRM board from 2004 until June 6, 2007. He resigned from the board about 18 months before the application process began for the grant round that ultimately funded Calimmune, a company he helped to found. He is currently chairman of the Calimmune board. 

Asked for comment, Jeff Sheehy, a member of the CIRM governing board and communications director for AIDS research at UC San Francisco, said,

"This trial will hopefully offer several important insights into the safety and feasibility of genetically modifying blood forming stem cells in an HIV patient as a potential therapy.  We are very early in this research, and with this Phase I trial's goal of establishing safety and the risks involved, I applaud the courage and altruism demonstrated by the patients who are willing to participate in this study."

The Calimmune press release said the principal investigators on the clinical trial are Ron Mitsayasu of UCLA and Jacob P. Lalezari of Quest Clinical Research of San Francisco. Quest is currently soliciting patients for the clinical trial as well as UCLA. (Persons interested in participating in the trial can find email contacts at this website. Twelve are needed.)

The principal investigators on the CIRM award are Irvin Chen of UCLA and Geoff Symonds of Calimmune.  

Here are links to the CIRM press release on the subject and the agency's blog item.

(An earlier version of this story did not include the fact that Calimmune's share of the CIRM award was $8.2 million or the links to the agency press release and blog.)

Eggs and Cash: Stem Cell Agency Considering Easing Restrictions on Stem Cell Lines Derived Using Payments

The California stem cell agency is moving to remove an absolute ban on use of stem cell lines derived from eggs from women who have been paid to provide them.

The action comes as state legislation is headed for Gov. Jerry Brown's desk that would permit payments for eggs to be used in research that is not funded by the agency. The measure (AB926) would not alter the separate ban on egg payments involving research funded by the $3 billion stem cell agency.

Under a proposal that will come before the agency's standards group July 24, CIRM's governing board could approve the use of stem cell lines derived as a result of payment to women. Board action would be based on whether stem cell lines would “advance CIRM's mission” and would follow a staff evaluation involving scientific and ethical issues.

Over recent years, stem cell researchers around the country have reported that they are not able to obtain sufficient eggs without payment. And earlier this year, paid egg providers were used in research in Oregon that cloned human stem cells, a feat that researchers have struggled with for years.

A CIRM staff report said that the Oregon research has “generated scientific interest among CIRM grantees and the desire to utilize derived SCNT lines. CIRM’s current policy prohibits the use of the (Oregon) SCNT lines because oocyte donors were financially compensated. CIRM requests the Medical and Ethical Standards Working Group (SWG) revaluate this prohibition with regard to CIRM grantees ability to utilize the resulting lines in light of recent scientific and policy developments.”

Last month, the California Stem Cell Report queried the agency concerning earlier, sketchy information onthe CIRM blog about a possible change in its compensation rules. We asked whether the agency was considering “sidestepping” the ban on compensation. Kevin McCormack, a CIRM spokesman, said, “No, not at all.” He said it would be premature to elaborate until a firm proposal was ready.

The staff proposal to be considered on July 24 said,

“Proposition 71’s 'prohibition on compensation' compels the ICOC(the agency's governing board) to adopt standards 'prohibiting compensation to research donors.' This requirement has been consistently interpreted to prohibit the use of CIRM funds to financially compensate oocyte (or other cell or tissue) donors. In 2006, this interpretation was extended to exclude from use, in CIRM-funded research, any stem cell line where research donors were financially compensated, even if the derivation was done without the use of CIRM funds. Proposition 71, however, does not compel the ICOC (the agency's governing board) to prohibit the use of stem cell lines where financial compensation is provided to the oocyte donors, provided that CIRM funds are not used to compensate the donors or derive the lines.”

The July 24 meeting will be held in San Francisco. No remote teleconference locations have been announced.  If approved, the changes would likely be considered July 25 by the full agency board.

California Legislation Removing Ban on Payments for Eggs for Research Heads to Governor

Legislation to allow women in California to be paid for their eggs for scientific research is on its way to Gov. Jerry Brown following final legislative approval last week.

Sponsors of the bill, a national fertility industry organization, expect the governor later this month to sign the measure, which would go into effect next year.

The measure, AB 926 by Assemblywoman Susan Bonilla, D-Concord, would repeal a ban on payments to women who provide eggs for scientific research. However, the measure would not affect the ban on payments to egg providers in research funded by the $3 billion California stem cell agency. That ban is covered by a separate legal provision. Stem cell researchers around the country have complained that they they cannot get eggs without payment.

Women in California can be paid for providing eggs for reproductive purposes. According to a legislative analysis, payments can run as high as $50,000 for women with special characteristics but average around $9,000 for each session, which can generate more than one egg.

The sponsor of the legislation is the American Society for Reproductive Medicine of Alabama, whose members represent a wide swath of the $5 billion-a-year fertility business. The measure would open new business avenues for the industry.

Bonilla argues that the measure allows women to be treated on the same footing as men who provide sperm for research and would encourage more research into reproductive health issues.

Opponents argue that the safety of the egg production procedures has not been well-established including their long-term impact. They also argue that allowing payment would lead to exploitation of poor and minority women.

The bill received its final legislative approval on July 1 when the Senate passed it on a 24-9 vote.

Challenge to WARF hESC Patents Cites Recent U.S. Supreme Court Decision

Patents on human embryonic stem cells are being challenged in a new legal filing that cites the recent U.S. Supreme Court decision that barred the patenting of human genes.

The stem cell case involves the Wisconsin Alumni Research Foundation (WARF), which holds the patents on the much-heralded work performed by Jamie Thomson  at the University of Wisconsin. The lawsuit was filed by the Public Patent Foundation of New York City on behalf of Consumer Watchdog, a nonprofit group in Santa Monica, Ca. Jeanne Loring, director of the Center for Regenerative Medicine at the Scripps Research Institute, is also involved along with Alan Trounson, president of the California stem cell agency. The agency itself is not a party.

This week's filing follows the so-called Myriad decision last month by the nation's highest court which said,

“Myriad did not create anything. To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.”

This week's stem cell suit said,

"WARF did not create or alter the properties inherent in stem cells any more than Myriad created or altered the genetic information encoded in the DNA it claimed.” 

The legal filing came in an appeal of an earlier decision by the U.S. Patent Office. The Public Patent Foundation, which was a successful party in the Myriad case, did the earlier legal work on the challenge to the WARF patents as well as this week's appeal.

The appeal, prepared by Dan Ravicher, said the WARF patents have "put a severe burden on taxpayer-funded research in California.”

Trounson released a statement saying,

“We don't want to do anything that gets in the way of finding treatments for some of the biggest killers today, so we feel that all patients with all kinds of diseases deserve to have access to these kinds of cells.”

Loring was quoted in a Consumer Watchdog press release as saying,

"Human embryonic stem cells hold great promise for advancing human health, and no one has the ethical right to own them.”

John M. Simpson of Consumer Watchdog said,

 “The best course if WARF truly cares about scientific advancement would be to simply abandon these over-reaching patent claims.”

A story by Bradley Fikes in the San Diego U-T cited intellectual property attorney Lisa Haile of DLA Piper as saying,

“A successful use of the Myriad case as a precedent for throwing out the foundation’s patent would open the door to similar challenges in just about any biotech product using material derived from life.”

WARF made no immediate comment.

Other stories on the WARF challenge appeared in the Milwaukee Journal, Genomeweb and the LaCross Tribune. 

California Legislation, Human Egg Sales and Profits

California legislation to allow women to be paid for their eggs for scientific research is sailing toward final passage literally swaddled in motherhood and apple pie arguments. Missing from the debate is a key reason behind the bill – building profits for what some call the “baby business.”

The legislation is touted as providing equal treatment for women, permitting them to be paid for supplying eggs for stem cell and other research, much as men are paid for sperm. It also would put women who sell their eggs for research on an equal economic footing with women who sell their eggs for fertility treatments, which is currently permitted under state law. Payments to those women range from an average of $9,000 to as much as $50,000, according to a legislative analysis of the bill.

 Assemblywoman Susan Bonillla, D-Concord, author of the bill(AB926), says,

“It is time to let women, just as any other research subject, make an informed decision as to participation, and justly compensate them for doing so.”

She also says that the ban on payments has had serious impact on fertility research. In a legislative bill analysis, she says,

“It has led to a de facto prohibition on women’s reproductive research in California, adversely impacting the same women that the ban intended to protect. With few oocytes donated, fertility research and fertility preservation research has been at a standstill. This greatly affects women suffering from fertility issues and women facing cancer who would like to preserve their oocytes.”

Bonilla is carrying the measure on behalf of an industry group, the American Society for Reproductive Medicine of Alabama. The fertility or baby business, which is largely unregulated, brings in about $5 billion annually in the United States from something like 500 clinics. It has grown rapidly over the last couple of decades, but is likely heading for a soft spot.

Little public information is available on the Internet discussing the industry's economic challenges. However, demographic studies show that the size of the key market for fertility services is stagnating. A 2012 report by the federal government projects that the number of women in the 35 to 44 age group, prime consumers of fertility services, is likely to grow only 0.5 percent from 2010 to 2020. And since that forecast was made, the Census Bureau has downgraded its projections for total population growth.

Bonilla's legislation effectively adds a new, potential revenue stream for the industry. Fertility clinics would be able to buy the eggs and then resell them to researchers, adding premiums for eggs from women with special characteristics. The bill would also add a tool for bringing down the cost of fertility treatments, which can run as much as $12,000 to $17,000 a round or more and require several rounds, according to the NIH. Clinics could discount those prices for some women, bringing in new customers, if they agree to authorize the use of excess eggs for scientific research.

None of this appears necessarily pernicious. What is pernicious is the absence of discussion of the economics of the legislation. Without a full understanding of all that is at stake, including economic issues and motivations, legislators, the governor and the public are hard-pressed to make good decisions about a significant change in California law.

Opponents of the legislation have raised serious questions about the treatment of women by fertility clinics, noting that the bill would turn egg providers into “vendors” – not patients of the clinics. The Center for Genetics and Society in Berkeley has captured the arguments in opposition including testimony before a Senate committee hearing early in June.

Jennifer Schneider, a physician who lost a 31-year-old daughter to cancer seven years after the younger woman sold her eggs three times, told lawmakers,

“Unlike infertile women who are considered patients, egg donors are treated as vendors( (her italics). When they walk out of the IVF clinic, no one keeps track of them.  My daughter’s death was not reported. The long-term risks of egg donation are unknown."

Sindy Wei, a former egg provider and now a physician with a Ph.D. in biology, testified that she wound up in an intensive care unit after 60 eggs were extracted from her in 2001. She said,

“I fear that cases like mine are buried deep by fertility centers concerned about their image. An industry thriving on profits and reputation has little incentive to report adverse events, or protect the health and medical rights of donors.”

Where is the $3 billion California stem cell agency on all this? The agency has not taken a position on the bill nor have any major research organizations. The measure does not change the law affecting agency-funded research, which bans the use of compensation for eggs in its research. Enactment of the law, however, would create a two-tier stem cell research standard in California, one for scientists not constrained by the payment ban and another for those who could use the full range of research tools. Some stem cell researchers may well think that they have become disadvantaged as a result.

(Editor's note: An earlier version of this article said the IVF business generated $4 billion in revenues annually. More recent estimates place it at $5 billion.)

Cost of a Stem Cell Therapy? An Estimated $512,000

(Editor's note: Updated figures on costs can be found in this 2017 item.)

The likely costs of potential stem cell therapies and cures receive almost no attention in the media as well as publicly from scientists and the biotech firms.

Usually any public discussion is obliquely framed in the context of “reimbursement,” as if industry is owed something instead of making a business decision about what will make a profit. Euphemisms and jargon cloak unpleasant realities such as astronomical patient costs. But what reimbursement really involves are, in fact, pricing decisions and profit margins along with lobbying campaigns for inclusion of therapies in normal coverage of health insurance and Medicare. 

And today a singular figure – $512,000 for one stem cell treatment – appeared in the Wall Street Journal . The story by Kosaku Narioka and Phred Dvorak dealt with what would be the first-ever human study of a treatment that uses reprogrammed adult stem cells.

They reported that the study received preliminary approval on Wednesday from a key panel of the Japan Health Ministry. The treatment involves a form of age-related macular degeneration, which has also been targeted by the California stem cell agency with different approaches.

Buried deep in the Wall Street Journal article, with little other discussion, was this sentence:

“One eventual obstacle, even if tests go well, could be cost: (Masayuki) Yamato (of Tokyo Women's Medical University) says initial estimates for the treatment run around ¥50 million ($512,000) per person."

The subject of costs for potential stem cell treatments has rattled around in the background for years without much deep public discussion. One reason is that high costs of treatments are controversial and can trigger emotional debate. Another reason is that it is very early in the therapy development process and estimates are not likely to be entirely reliable.

A few years ago, however, the California stem cell agency commissioned a study involving costs of stem cell therapies. The UC Berkeley report said,

“The cost impact of the therapy is likely to be high, because of a therapy’s high cost per patient, and the potentially large number of individuals who might benefit from the therapy. This expense would put additional stress on the Medicare and Medicaid budgets, cause private insurance health premiums to increase, and create an incentive for private plans to avoid covering individuals eligible for a therapy.”

The findings did not seem to be exactly welcomed. The agency sat on the 2009 study for seven months until it was uncovered by the California Stem Cell Report in April 2010. Then the agency was careful to say that the study did not reflect the view of CIRM management or board leadership.

Their wariness of being out in front on the issue could be well-advised. The pharmaceutical industry received some unpleasant attention this spring when more than 100 influential cancer specialists from more than 15 countries publicly denounced the cost of cancer drugs that exceed more than $100,000 a year.

Nonetheless pricing is critical to both patient accessibility and therapy development. If companies cannot make a profit on a possible therapy, it is virtually certain not to appear in the marketplace.

While the subject remains in the background, it does not mean there is a lack of interest. The copy of the Berkeley stem cell cost study that was posted online by the California Stem Cell Report has been read 11,701 times since it was made available in April 2010 on scribd.com.

(For a 2015 look at costs for non-government approved procedures, see this item.)

A copy of the Berkeley study can be found below.

Stem Cell Therapy Costs by DavidJensen

Bluebird and Banking: Media Pluses for California Stem Cell Agency

The California stem cell agency scored a couple of favorable publicity points last week as the result of a successful stock offering by an award recipient and another piece about creation of a stem cell bank in Northern California.

The IPO by bluebird bio (the company's preferred spelling) of Massachusetts was a big winner for the company, raising millions of dollars more than anticipated.

The Boston Globe wrote,

“Shares of the Cambridge life sciences company bluebird bio Inc. soared almost 60 percent on their first day of trading (last) Wednesday, an impressive debut for a business that endured years of stagnation and another encouraging sign for the biotechnology industry.

“The local gene therapy company raised $101 million in an initial public offering priced at $17 per share, higher than the $14 to $16 estimated by investment bankers. Bluebird shares closed at $26.91 per share on Wednesday.”

The stock continues to trade around $25 a share at the time of this writing, which is good news generally for the biotech industry.

The company received a $9.4 million award last fall from the $3 billion stem cell agency. The company has yet to receive any actual cash from the agency as both parties work out final details of an agreement, a spokesman for the agency said last week.

The stem cell agency touted the successful IPO in a blog item by  that said,

“Bluebird Bio, one of the oldest companies in the struggling gene therapy field, is having an outstanding first day in the stock market today, and largely by marrying its gene therapy technology with stem cell science. The company’s financial milestone brings hope and excitement to both fields.”

However, the news stories about the IPO failed to mention the stem cell agency's involvement, which would have been nice for the agency but was to be expected given the way news is covered.

The story about the stem cell bank appeared on Xconomy, an Internet news service dealing with technology. Written by Bernadette Tansey, a former San Francisco Chronicle reporter, the piece dealt with the both business and science of stem cell banking. She wrote,

“One of the main goals of California’s $3 billion stem cell research agency is to draw companies into the state so they can vie for a share of the funding.

"With a recently funded $32 million initiative, the California Institute for Regenerative Medicine(CIRM) has attracted two of the biggest US players in stem cell banking to Novato, CA, to form one of the largest biobanks of induced pluripotent stem cells (iPS cells) in the world.”

The stem cell bank effort has become a minor staple in recent news coverage of CIRM, surfacing in a number of articles since the awards were approved. One of the reasons for that is that the project has a relatively straight-forward story line compared to many research efforts and the concept of "banking" is familiar to editors, writers and readers.