Sacramento Bee: California Stem Cell Agency Betting Big on Genomics

The Sacramento Bee today published an article by yours truly on this week's $40 million genomics round and its significance.

It was a freelance piece that was aimed at a general audience. The article also had an early deadline – last Wednesday. After it was submitted, additional developments popped up, some of which made it into the article. However, the piece was actually in print by the time of the most recent developments related to researchers' serious complaints about the genomics review process. So those elements did not make it into the story .

Here is the article. See here for how it looked on The Bee's Web site.

California’s stem cell agency poised to bet big on genomics research

By David Jensen
Special to The Bee

The state of California is preparing to make a bet of up to $40 million on a fast-moving field that promises to revolutionize medicine and ultimately lead to personalized stem cell treatments that can be tailored for a patient’s genetic makeup.

Directors of the California stem cell agency are meeting in Berkeley on Wednesday to create one or two stem cell genomic centers that they predict will make the state a world leader in the new field. Scientists and businesses from biotech centers in the Bay Area, San Diego and elsewhere are competing for the money.

The move into genomics comes as the $3 billion agency struggles to fulfill the promises of the ballot initiative campaign of 2004, when voters approved its creation with a total of $6 billion in state spending, including the interest on bonds sold to finance the endeavor. So far, no therapies or cures have emerged from the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. It will run out of cash for new awards in less than three years and needs some high-profile results to raise more money.

Scientists and biotech businesses say they hope that genomics, the study of genes and their relationships, can lead to a catalog of disease genes and pave the way for new therapies that are tailored to individual needs. Linking stem cell treatments, which also promise extraordinary results, could provide even more effective treatments. UC Davis stem cell researcher and blogger Paul Knoepfler describes the stem cell genome effort as part of a “revolution.”

“Genomics is going to become a key part of all of our lives whether you like it to be or not,” he says on his blog.

“Right now, in a lot of ways, doctors are making educated guesses as to how to treat us patients more generally,” Knoepfler says. “By knowing our genomic information, our genotype – the information tucked away in our genomes –they could be making far more educated choices about treatments, and we could be making far more informed decisions about our health.”

The National Institutes of Health says that genes play a role in nine out of the 10 leading causes of death in this country. “Genomics is helping researchers discover why some people get sick from certain infections, environmental factors and behaviors, while others do not,” the institute says.

The nascent field is not without controversy. The U.S. Food and Drug Administration recently cracked down on the Google-backed genetics firm 23andMe of Mountain View, saying that it had failed to show that its testing produced accurate results. The company last month said it would stop providing health information with its tests. The danger to the public, say some medical experts, is that people might act on inaccurate or poorly understood genetic information and unnecessarily undergo drastic or harmful procedures intended to ward off future disease.

Such concerns haven’t slowed growth in the genomics industry, however. Various studies say that the current annual sales of genomic products exceed $3 billion and peg the annual growth rate at anywhere from 10 percent to 17 percent.

The stem cell agency two years ago this month sized up the situation and decided it was time to jump in. The agency’s governing board gave the go-ahead – on a voice vote with virtually no discussion – to the concept behind this week’s awards. CIRM directors had already been primed at the time by a presentation by Craig Venter, head of the La Jolla Institute bearing his name and internationally famed for his genomics work. Venter told the CIRM board that “there will not be any clinical stem cell applications without understanding genomics.”

Venter said genomics is needed to tell whether a particular stem cell therapy will cause more harm than good. Venter also told the board that he already had embarked on a stem cell genome effort. He is believed to be competing for the CIRM funding, and his talk raised eyebrows among some researchers because it was so closely tied to the board action.

The agency opened the door to applications from researchers and institutions in October 2012, eight months after the talk by Venter, who appeared at the agency’s invitation. The review of those applications and the identities of the applicants are cloaked in secrecy, which is the traditional way scientific grants are awarded in this country even when they involve public funds.

A combination of out-of-state scientists and six CIRM board members scores the grants and makes its decisions. The full, 29-member CIRM board will have the final say in a public meeting in Berkeley on Wednesday, but it almost never departs from the recommendations for approval by its reviewers. CIRM announces only the names of the winners and does not release the names of rejected applicants because it might embarrass them.

Last week, CIRM President Alan Trounson and his staff recommended funding only one of the applications – for $33 million – although reviewers had approved four, according to documents at the CIRM website. No public explanation was immediately provided, except that CIRM spokesman Kevin McCormack said the reviewers actually “did not recommend funding all of the applications,” although that was clearly stated on the website, as has been the practice on the review of thousands of previous applications.

The funding round is budgeted for $40 million, but could be more or less depending on the wishes of the board.

A number of the major educational institutions in the state are likely to be involved in this week’s awards. Stanford University’s name surfaced last year when a conflict-of-interest violation in the initial grant review was reported by the California Stem Cell Report. CIRM grant reviewer Lee Hood of Seattle, renowned internationally for his genomics work, acknowledged that he had failed to disclose his conflict in connection with a $24 million application involving Irv Weissman, director of Stanford’s Institute for Stem Cell Biology and Regenerative Medicine.  Weissman and Hood are longtime friends and own property together in Montana.

The closed-door review also marked the first time in CIRM’s history that reviewers, all from out of state, failed to finish with a decision supporting any of the proposals, according to CIRM. Reviewers’ comments were sent back to applicants, who resubmitted their proposals for review in November in another closed-door session. This time, Hood did not participate.

In addition to Stanford, California enterprises that have a strong interest in genomics and that are possibly involved in the competition include: Illumina and Sequenom of San Diego, Life Technologies of Carlsbad, CombiMatrix of Irvine, Pacific Biosciences of Menlo Park and Complete Genomics of Mountain View, which is owned by BGI, a Chinese business that is the largest genomics sequencing firm in the world. Others include Scripps, the San Diego Supercomputer Center at UC San Diego, the Novartis Genomics Institute and Fate Therapeutics, both of San Diego, and UC Santa Cruz.

UC Davis has just begun an $18 million genome operation in partnership with BGI, but Richard Michelmore, director of the Davis Genome Center, said it was not involved in any of the CIRM applications. (Ken Burtis, who is a member of the faculty of the Davis Genome Center, is a member of the CIRM governing board.)

The expected winner of the $33 million award is a group headed by Stanford University’s Michael Snyder, director of its Center for Genomics and Personalized Medicine, based on documents posted Friday on the stem cell agency’s website.

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David Jensen publishes the California Stem Cell Report – californiastemcellreport.blogspot.com --and has followed the stem cell agency since 2005.

California's $40 Million Genomics Round: Charges of Unfairness, Factual Error and More

Scientists at two major California research institutions have leveled charges that the state stem cell agency's $40 million genomics round is tainted with unfair and non-scientific considerations along with factual errors, manipulation of scores and apparent preferential treatment.

The statements were contained in letters (see here and below) to the governing board of the state agency from researchers at UC San Francisco and the Scripps Research Institute in La Jolla, who were competing in the round. The allegations involve the agency's closed-door grant review process in which a seven-member consortium led by Stanford University appears the likely winner.

CIRM President Alan Trounson has recommended approval of Stanford's $33 million bid. It was the only application that he supported out of four recommended for funding by CIRM's prestigious grant reviewers. Trounson also specifically recommended not funding the three other applications, including those from UCSF and Scripps. The board's longstanding practice has been to fund all awards recommended by reviewers.

Pui-Yan Kwok
UCSF photo

Pui-Yan Kwok, leader of the UCSF bid, and Jeanne Loring, who heads Scripps effort, have taken their complaints about the process to the agency's 29-member board which meets Wednesday in Berkeley to act on the applications to create one or two stem cell genomics centers in California.

In an e-mail to the California Stem Cell Report today, Kwok said his team has examined the summaries of the grant reviews posted on the CIRM Web site. He said,

“We were surprised to see that the genomic center scores of the top two applications were based on the reviewers removing from consideration the poorest performing center-initiated projects.  The fact that the reviewers could propose removal of individual center-initiated projects was never mentioned in the RFA. 

“Even more appalling is that this was applied only to the two applications (that) ended up with the highest scores.  The end result is that two centers' scores were artificially inflated to 88 and 82, respectively.  Despite this uneven application of the review process, two other applications received Tier 1 (recommended for funding) scores.  This appearance of preferential treatment makes the process suspect."

In his letter late yesterday to the board, Kwok said such actions are “inconsistent” with practices of the National Institutes of Health, whose standards are the norm for virtually all scientific grant reviews. The stem cell agency's review practices are patterned after those of the NIH.

Jeanne Loring
Scripps photo

In her letters to the board and the CIRM staff, Loring addressed four major factual errors that she said were made by reviewers. They ranged from a belief by reviewers that the RFA sought a matching financial commitment from applicants to a belief that Loring's partner in the project, Illumina, Inc., of San Diego, would not make its scientific tools easily available to researchers.

Loring said, however, the only “serious concern” expressed by reviewers in the CIRM review summary was the “lack of material commitment” from the applicants.

Loring said,

“This comment...suggests that other applications did offer to provide extra money for their (genomic) centers. Since there was no written request for additional funds, and we were not informed that contributions would be expected or considered as a measure of scientific merit, we were put at a significant disadvantage.”

(Reviewers praised the Stanford application for its “very substantial matching funds from multiple participating institutions.”)

Loring also stressed the benefits of the partnership with Illumina, a world leader in genomics. The firm recently announced a device that can sequence a human genome for $1,000, which sent its stock jumping this month. She said that Illumina's sequencer is the only one approved by the FDA for clinical diagnostics. She said that partnering with Illumina will give researchers access to tools that can have an “immediate impact” on their clinical studies on cancer, heart disease and inherited diseases.

(On Jan. 27, the agency released a statement defending its procedures. An item dealing with that can be found here.)

The stem cell agency has long come under fire from the biotech community because of the tiny percentage of its funding that goes to industry. Loring noted that last week that the only body charged with overseeing the finances of the agency, the Citizens Financial and Oversight Committee, stressed that it was necessary to form partnerships with industry.

In addition to Illumina, Loring is working with researcher Nicholas Schork, who this month joined Craig Venter's institute in the San Diego area. Venter is internationally famed for his genomics work. She said that the linkage with the institute will provide her project with “even broader access to genomic expertise.” The Venter Institute is involved with the Stanford application as is UC Santa Cruz.

Illumina also sent a letter to the CIRM written by Mostafa Ronaghi, the company's senior vice president and co-project director on the Loring application. Ronaghi said that Illumina makes affordable research tools and will help with planning experiments and analysis. Also involved in the Scripps-Illumina bid is co-investigator Jian-Bing Fan of Illumina.

Kowk said Ophir Klein of UCSF and Steven Brenner of UC Berkeley are co-directors of their effort. Other researchers involved are Michael McManus, Joe Costello, Susan Fisher, Neil Risch and Arnold Kriegstein, all of UCSF; Lin He and Dan Rokhsar, both of UC Berkeley, and Amander Clark of UCLA.

The California Stem Cell Report has queried Stanford concerning a list of its participants.

The names of the other applicants in genomics round are not known. The stem cell agency will not release the names of winning applicants until after the board acts and never releases the names of rejected applicants. The agency also withholds the names of applicants from the board prior to its action on them unless the applicants “self-identify,” usually in the form of letters to the board, which are a public record. Board members also do not have access to the actual application nor does the public. Some board members have complained in the past about not having enough information to act when applicants appear directly before the board.

Directors have final legal say on all applications. They do not, however, have to act on any of them. They can increase funding beyond the $40 million originally budgeted for this round or lower it. They can also send the applications back to reviewers for reconsideration or approve them with conditions.

Here is a copy of Kwok's letter, which the stem cell agency has not yet posted.

  UCSF letter re $40 Million California Genomics Round by DavidJensen

Stanford Genomics Consortium Likely Winner in $33 Million Stem Cell Agency Project

A seven-member consortium led by Stanford University's Center for Genomics and Personalized Medicine is expected next week to win a $33 million award from the California stem cell agency to create a stem cell genomics center.

Michael Snyder
Stanford photo

Information confirming the identity of the likely winner was posted on the CIRM Web site today. It came in the form of a letter from Michael Snyder, director of the Stanford genomics center.  In the document, Snyder told stem cell agency directors that his group is “very pleased with the overall enthusiasm” for its
application.

CIRM's reviewers gave the proposal an overall scientific score of 88 and recommended it for funding. It was the only application in the genomics round that was also supported by CIRM President Alan Trounson and his staff.

Trounson recommended no funding for the three other applications that the agency's prestigious reviewers had approved for cash.

The board is certain to hear presentations at its meeting next Wednesday from one or more of the applicants that were rejected by Trounson and his staff. The board has final say on all applications and can add or subtract money for the genomics round, which is budgeted for $40 million.

The nine-year-old practice of the board has been to fund virtually all of the applications backed by its scientific reviewers, all of whom come from out of state. Trounson's recommendations would represent a sharp departure from that practice.

Earlier this week the agency offered no public rationale on its Web site for its recommendations to reject the reviewer-backed applications. However, either late yesterday or early today, a CIRM document dated Jan. 15 was posted by the agency that provided more information. The terse statement said that the Stanford proposal – with the changes recommended by the CIRM staff –  “will fulfill all of the aims of the RFA and provide an excellent, responsive and comprehensive genomics resource for California stem cell researchers.”

Snyder's letter to the CIRM board asked it to approve Stanford's entire application and rebuff staff recommendations for changes. He said that some of the grant reviewer objections were “based on material errors of fact or scientific details that were not explicitly addressed in the proposal due to space limits.”

Stephen Quake
Stanford photo

Michael Clarke
Stanford photo

Snyder's letter also identified two other Stanford researchers involved in the project:  Stephen Quake, a professor of bioengineering, and Michael Clarke, associate director of the Stanford stem cell institute headed by noted stem cell scientist Irv Weissman. Clarke was identified as a “collaborator” and Quake as a principal investigator on one of the consortium's projects.

None of the other competing institutions was identified by CIRM. The stem cell agency does not release the names of winners until after the board acts on their applications. The agency never releases the names of rejected applicants for fear of embarrassing them.

CIRM's summary of the grant review said the Stanford proposal involves seven major academic and nonprofit institutions that are providing “very substantial matching funds.”

The summary continued,

“Although some reviewers expressed minor concerns that the multiple, geographically separated components of this large and interdependent program could pose an administrative challenge, overall, reviewers expressed much confidence in the demonstrated abilities and collaborative experience of the program leaders for achieving a shared vision.”

Reviewers cited as a “major strength” the ability of applicants to handle the processing of massive amounts of data needed for genomics research. The summary said,

“The leader of this center component is a pioneer in the field and has an outstanding track record in the proposed activities.”

California's Stem Cell Genomics Awards: An Untidy Affair

The California stem cell agency's $40 million genomics round seems to be turning into a bit of a muddle.

The agency's Web site said this week that four applications were approved for funding by CIRM's prestigious grant reviewers, whose recommendations go to the agency's governing board next week. However, CIRM President Alan Trounson and his staff are recommending that only one of those applications, a $33 million proposal, be approved by the board. Those other recommendations from reviewers, the agency said today, are not really recommendations.

Alan Trounson
CIRM photo

The move by Trounson, who announced last fall that he is leaving the agency, reflects the most aggressive action taken by the staff on grant applications since they began making recommendations on them last year. 

As of this writing, the CIRM Web site has yet to offer a rationale for the staff's recommendations. The review summaries of the applications said simply, 

"CIRM Staff Recommendation: Do not fund"  

So the California Stem Cell Report queried the agency this morning about the matter.

Kevin McCormack, CIRM's senior director for communications, replied that the reviewers actually “did not recommend funding” the three out of the four applications despite what the agency officially says on its Web site. The language and graphic on the Web site, however, conform to the agency's practice involving thousands of applications over the last nine years. Its governing board has been exquisitely careful to heed the positive recommendations of its reviewers. 

The unusual situation – not to mention the dollars at stake -- seems certain to trigger public presentations by rejected applicants at the governing board's meeting next Wednesday in Berkeley. The board can override both staff and reviewer recommendations as well as increase or decrease the money available for the genomics round.

To fully understand the muddle, it is necessary to understand some details of the CIRM grant review process. The CIRM Grants Working Group -- composed of six voting CIRM board members, and a long list of out-of-state scientists plus other experts from time to time, or some subset of the group -- examines the applications behind closed doors. The scientific members score the grants and then they are voted on by the full panel. The results of the reviewer decisions are presented to the public in tiers. Tier one is invariably funded by the board with no discussion at the later public board meetings. In the history of CIRM, only one or two applications have been downgraded from tier one. The definition of tier two has varied, but these basically are wobblers – applications with some merit but not quite enough to win approval from reviewers. Occasionally the board reaches into tier two to approve an application. Tier three applications are not recommended for funding by reviewers.

Four applications for funding to create stem cell genomics centers were placed in tier one, according to documents on the CIRM Web site this week. Their scientific scores range from 88 to 75. A fifth application was scored at 70 and placed in tier two. The names of the applicants were withheld in keeping with CIRM's practice. The agency only announces the names of winners. CIRM says it withholds the names of rejected applicants to avoid embarrassing them.

Here is McCormack's full explanation for the variation between the longstanding practice of the agency and what has happened in the genomics round.

“Tier 1 in this case really means 'fundable' as in adequate for funding.  Assignment to this tier was based solely on scores from scientific review.  Reviewers understood that only one or possibly two centers would be funded (that was clearly stated in the RFA) and did not recommend funding all of the applications.”

McCormack is correct that the RFA said one or two. Most CIRM RFAs have similar language. The RFA for the basic biology round, also to be considered on Wednesday, for example, says that as many as 30 grants may be awarded. It could be less, and it could be more depending on the board's druthers.

In the past, CIRM staff has offered the board a brief written statement supporting their recommendations on applications. Presumably that will be posted on the CIRM Web site soon.

Craig Venter
Venter Institute photo

The latest situation is not the first unusual event in the genomics round, which began publicly two years ago this month at a CIRM board meeting in San Diego. It was then that the board approved the concept for the $40 million round on a voice vote with almost no debate. The CIRM directors had already been primed by 30-minute presentation by Craig Venter, the famed genomics expert who heads the San Diego area institute bearing his name. Venter, who was invited to appear by the agency, built a case for the importance of genomics and said he had already begun a stem cell genomics effort. He is believed to be one of the competitors for next week's funding for CIRM. His presentation raised eyebrows among some scientists because of its close tie to the board vote on the plan.

The genomics round was also marked by a conflict-of-interest violation last year involving eminent Stanford stem cell researcher Irv Weissman and Lee Hood of Seattle, renowned internationally for his genomics work. Hood had been recruited by Trounson to be a reviewer in the round. However, at the review session, Hood failed to disclose his relationship to Weissman, who was involved in a $24 million application from Stanford. They are longtime friends and own property together in Montana.

Reviewers at that session were unable to come up with recommendations for funding. It was the first time in CIRM history that has occurred. The reviewer comments were subsequently sent back to applicants who resubmitted their proposals for review last November.

As for the $33 million proposal recommended by Trounson and his staff, the review summary says it involves seven major academic and nonprofit institutions. The review said the applicants are offering “very substantial matching funds.”

The institutions are also widely scattered. The review summary said,

“Although some reviewers expressed minor concerns that the multiple, geographically separated components of this large and interdependent program could pose an administrative challenge, overall, reviewers expressed much confidence in the demonstrated abilities and collaborative experience of the program leaders for achieving a shared vision.”

The study of genomics also requires manipulation of massive amounts of data, a matter of importance to reviewers. The review summary said that aspect of the proposal was a “major strength.” The summary said,

“The leader of this center component is a pioneer in the field and has an outstanding track record in the proposed activities.”

During its public discussion of grant proposals, the CIRM board is not told the name of the applicants. It only works from the public summary of the proposal and does not see the actual application. Board members with conflicts of interest are prohibited from engaging in the discussion or voting.

Jerry Brown: California Leads the Way on Stem Cell Research

Governor's office photo

California Gov. Jerry Brown this week praised the state's biotech industry, specifically mentioning stem cell research as example of leadership in medicine.

While he did not mention the stem cell agency by name in his state of the state speech yesterday, it was clear that he thought highly of its efforts. Here is what he said, which BayBio, an industry group, highlighted on its Web site.

“California is the nation’s leader in developing medical and scientific advances that will cure diseases and lower costs. We have six of America’s twelve top-performing metropolitan areas in biotechnology: San Diego, San Jose, San Francisco, Oakland, Los Angeles and Orange County. Last year, we created a tax credit to help innovators, in these regions and beyond, hire and expand in California. Four out of the world’s twenty leading academic bioscience institutions are located here in California: UCSF and Berkeley, UCLA, Stanford and UC San Diego. Just as California has led the way with stem cell research, so too can we pioneer the new field of precision medicine which uses genomics, medical devices, computer sciences and other fields to treat individual patients, instead of broad populations.”  

California Stem Cell Agency to Hand Out $80 Million for Stem Cell, Genomics Research

Directors of the California stem cell agency are set to give away up to $80 million late this month as they pursue their efforts to turn research into cures.

The most attention-getting award round would create one or two stem cell-genome centers in California that the agency says will advance medicine and make the Golden State a world leader in stem cell genomics. Cost of the effort could run as high as $40 million.

The initial review of the applications last year was marked by a conflict of interest involving reviewer Lee Hood of Seattle, Wash., an internationally known genomics researcher, and Irv Weissman of Stanford, who was involved in one of the applications. The conflict was first reported by the California Stem Cell Report and subsequently received attention in international scientific publications. 

The other $40 million round (possibly 30 awards) is a continuation of the agency's basic biology funding. CIRM, however, is increasingly turning towards research that is either in a clinical trial or close to one. It is seeking to fulfill the promises of the 2004 ballot campaign that created the agency and also to create some excitement that will lead to more funding of the agency, which is scheduled to run out of cash in less than three years.

Also on the agenda for the Jan. 29 meeting in Berkeley is the search for a new president and unspecified changes in CIRM rules that deal with research involving human eggs. More details are expected to appear on the agenda in the coming week along with summaries of the grant review applications and scores.

The California Stem Cell Report will have more on the genomics round also in the coming week.

CEO Search at California Stem Cell Agency: Board Discussions Set for Late This Month

Directors of the $3 billion California stem cell agency late this month will act on what it calls a “candidate position statement” in its search for a new president for the research effort.

The agency scheduled a meeting Jan. 28 of its Presidential Search Subcommittee to consider the document, which was not available on the CIRM Web site as of this writing. On Jan. 29, the full CIRM board is expected to act on the document at its meeting in Berkeley.

The agency's agenda material did not specify what it means by a “candidate position statement.” In normal parlance, a candidate position statement is offered by a person seeking a position. Our best guess is that what CIRM is considering is a document that would specify the positions that it would like a candidate for president to address. The board last month approved a statement of criteria that implied that candidates should address certain questions. We are querying CIRM concerning the matter.

Both the subcommittee meeting and the full board meeting include closed-door sessions during which the search for a new president will be discussed. The current president, Alan Trounson, has announced that he is resigning to return to Australia. Directors of the agency have said they are emphasizing speed in selection of a replacement. Trounson announced his departure more than three months ago.

Teleconference locations for the subcommittee meeting Jan. 28 where the public can participate are located in La Jolla, San Francisco and Costa Mesa. The base for the meeting is at the Claremont Hotel in Oakland. Specific addresses can be found on the agenda. 

Big Sangamo Deal for California Stem Cell Agency with an Asterisk

It was a $20 million deal -- possibly as much as $300 million --for Sangamo BioSciences, and its president told the California stem cell agency,

“We wouldn't be where we are today without you.”

The $3 billion agency has pumped $5.4 million into the publicly traded Richmond, Ca., firm for HIV/AIDS research and another $6.4 million last May for a phase one clinical trial dealing with beta-thalassemia, a genetic blood disease.

Last week Sangamo announced that Biogen Idec of Cambridge, Mass., would buy into its research related to beta-thalassemia as well as sickle cell anemia. The announcement said Biogen Idec will also reimburse Sangamo for “its internal and external research and development program-related costs.” Payments of up to another $300 million could come Sangamo's way if it meets certain goals.

Kevin McCormack, CIRM's senior director of public communications,wrote on the agency's blog that it has been “a very good start” in 2014 for CIRM. He noted that the Sangamo announcement followed similar good news from Capricor, another CIRM grant recipient that has announced funding from Big Pharma.

He quoted Ellen Feigal, senior vice president at the agency, as showing how “important the funding we provide is in helping companies like Sangamo get their research to a point where big pharmaceutical companies stand up and take notice, and invest.” 

McCormack wrote that Edward Lanphier, president of Sangamo, sent an email to CIRM in connection with the announcement that said,

"Thank you for ALL of your support over the past several years. We wouldn't be where we are today without you."

The Sangamo deal, however, has an asterisk. In May 2012, a “special advisor” to the stem cell agency, Saira Ramasastry, was nominated to the seven-member Sangamo board of directors. Following an item in the California StemCell Report, the agency announced that her contract was not being renewed. CIRM said she was not involved in a decision-making role and was not required to file a statement of economic interests with the agency. Ramasastry subsequently was elected to the Sangamo board where she still holds a seat.

Sangamo's stock closed at $19.84 today, up 46 cents. Its 52 week high is $20.33 and its low $6.86.

Our take: The investment in Sangamo is a healthy sign of expanding interest from larger firms in stem cell therapies. However, it is darkened by the "revolving door" situation involving Ramasastry. CIRM does not require public disclosures of the financial interests of its consultants. Nor does it restrict revolving door arrangements with them that permit later employment at CIRM-connected firms. At the same time, the agency is moving aggressively to engage industry ever more closely and to generate results that will resonate with the public. The agency would do well to heed the conflict-of-interest study from the prestigious Institute of Medicine in 2009. Bernie Lo of UCSF was one of the editors of the study. He wrote that medical research and the private sector have sharply divergent priorities and sometimes irreconcilable differences. The stem cell agency should act to ensure that both the appearance and reality of cronyism, insider dealings and conflicts-of-interest do not blemish its scientific track record.

Changes Made in Tobacco Tax/Stem Cell Proposed Ballot Measure

The proposed tobacco tax initiative that could provide roughly $200 million a year to the California stem cell agency has been revised by its backers, although the changes initially appear not to affect the potential cash for the research effort.

Backers of the effort reported the changes today after the original version of the proposal dropped off the state attorney general's Web site this week, its first stop on the way to qualifying for the ballot.

In response to a query from the California Stem Cell Report, attorney Phil Kohn of the Rutan & Tucker law firm of Costa Mesa said the measure had been altered and was being resubmitted. We asked him to indicate the nature of the changes and their location in the document. He replied,

"There is a language change in Section 3(a) of the 'Purpose and intent' portion.  In addition, the following sections of the Act were modified (in minor part):  130161, subdivisions (e)(1), (e)(2) and (e)(3); 130163, subdivision (d)(2); 130164, subdivisions (c)(2) and new (c)(4); and 130165, subdivisions (b)(2) and new (b)(4)."

He also said that the Frank Barbaro of Santa Ana, the man responsible for the initiative, is a litigation lawyer and is currently deeply involved in a trial matter. He said Barbaro, who is also the former chairman of the Orange County Democratic Party, will elaborate on the initiative once he is free of his pressing professional obligations.

Here is the initial version of the ballot measure.

  Tobacco Tax Stem Cell Initiative Version 1 -- 2014

Here is the latest version of the ballot measure as provided by Kohn.

  Tobacco Tax Stem Cell Initiative Version 2  --2014

Text of Tobacco Tax Initiative to be Posted on this Web Site

The text of the proposed tobacco tax initiative that would fund the California stem cell agency has vanished from its location last week on the attorney general's Web site. We are attempting to query the attorney general's office about the matter. We will also post the full text on this Web site shortly. 

Tobacco Taxes and Stem Cells: Backers Still Not Talking, Questions Raised

Backers of a proposal that could rescue the $3 billion California stem cell agency from financial oblivion remained mum today as questions arose about the viability of the possible ballot measure.

The plan would raise roughly $700 million annually by increasing tobacco taxes, channeling about $200 million to the stem cell agency through a ballot initiative that would have to be approved California voters. The stem cell agency is scheduled to run out of cash for new awards in 2017 and is casting about for new sources of funding.

However, CIRM, as the agency is known, was largely caught by surprise last week by the release of the details of the proposal, which was filed by prominent Orange County attorney Frank Barbaro, former chairman of the county's Democratic Party.

Barbaro has not responded to email requests for more information about the backers of the plan and their financial commitment to an electoral campaign. Backers of a similar proposal that was narrowly defeated in 2012, Prop. 29, said they knew nothing about the effort.

The latest measure could go on the November ballot this year or the general election ballot in 2016 if it qualifies. The timeline for November is daunting. Responding to a query from the California Stem Cell Report, Sacramento political consultant Jeff Raimundo said in an email,

“Sounds like most people didn’t know this was coming. An Orange County attorney filing an initiative with no known backers?  Hmmm…formula for failure? 

“If stem cell agency folks didn’t know about it (and there’s no real reason to believe they did) and the cancer-fighting community had no knowledge, it’s hard to figure out how proponents are going to muster support from voters who only two years ago rejected a similar proposal from a more transparent and credible group. Prop. 29 barely failed, but it had a big push from advocacy organizations. 

“Too many questions right now to get a good handle on how effective such a campaign might be  -- who the REAL sponsors are, who would put up the money for the campaign, whether the OC attorney is a shill for someone else, whether those who back CIRM and its research role can be persuaded to back a new proposition. Many more initiative proposals are filed than are ever circulated. And many more are circulated than ever actually make the ballot in Californa. They’ve got a long way to go and not a lot of time to get there.”

The agency said last week that it has not endorsed the plan. Directors have not yet had a chance to consider it during a public meeting.

But CIRM Director Francisco Prieto, a Sacramento physician, told the California Stem Cell Report,

“I wasn’t aware of the tie-in to CIRM funding before (Friday). I don’t think they asked us first, but I’d be happy to see it pass, of course. I’m in favor of so-called 'sin taxes' – including those I pay when I support California’s wine industry. Raising the price of tobacco is one of the single most effective things that we can do to reduce smoking rates, especially among young people who are the most price sensitive. As the guy who has to sign the death certificates, I’m in favor of anything we can do to reduce smoking.”

Another CIRM director who responded to our queries, Jeff Sheehy, a communications manager at UC San Francisco, said that conceptually the proposal could make sense.

 "It's a better source of funds.  However, it does create a well-funded opposition campaign.  Still trying to  figure out if this is a good thing or not," Sheehy said.

Other board members as well said they had no advance knowledge of details of the measure.

Robert Klein, the former chairman of the agency, also responded, saying that that he was not involved in the proposal. He said he questioned the structure and funding approach but declined to elaborate.

Earlier last month we asked Klein about talk in the California stem cell community that he was involved in another bond measure effort for CIRM. Bonds are the current source of funding for the agency.

A spokeswoman for Klein replied,

“There is no campaign. We have done a single one scientific briefing on the progress of Proposition 71(the measure that created CIRM in 2004). It is strictly informational and does not constitute a campaign. We will decide in late 2015 what the next steps will be based on the scientific research at that time.”

Our take: In terms of the financial structure, Barbaro's tobacco tax proposal has at least one downside for CIRM. If the measure is successful in its goal of reducing smoking, the amount of money it raises from tobacco consumption will decrease. That, of course, would mean a dwindling amount of cash for the agency.

Launching a campaign for next fall's ballot would require a prodigious effort at this late stage even if some of the millions needed are already nailed down. The groups that backed the measure in 2012 are not likely to jump aboard immediately given their surprise at the latest proposal. They also may have other priorities as well at this point. Organizationally, work would have to begin now even though there is the possibility that not enough signatures could be gathered by the end of May to qualify for the fall ballot.

Opposition from the tobacco industry would be fierce. It raised $47 million in 2012 for its campaign compared to $12.3 million from the backers of the tobacco tax.

Nine Years on the California Stem Trail: A Look Behind the Curtain

Back in November 2004, the re-election of President George Bush dominated the news throughout the nation. But out in California, there was talk of a new gold rush, triggered by a measure buried deep on the ballot that month.

The latter-day argonauts were not expected, however, to be scratching out nuggets. Instead they would be fiddling with stem cells, particularly human embryonic stem cells. It all looked like big bucks for the biotech industry -- $3 billion from a new state agency.

That was when the idea for this blog began to percolate. A few weeks later -- nine years ago this month  -- the first item appeared on the California Stem Cell Report. It now seems a likely occasion to reflect on the scope and purpose of what appears here and to discuss readership and other matters.

David Jensen
Editor California Stem Cell Report

First, to answer an oft-heard question: Why am I am writing about this particular agency, formally known as the California Institute for Regenerative Medicine(CIRM)? The simple answer is that it is interesting, at least to some, and important. The agency – created by Proposition 71 of 2004 – is an exceptional and unprecedented state effort. Nothing like it has existed in
California history. It operates with unusual autonomy. The governor and the legislature cannot touch its funding or direct its research. It survives on $3 billion borrowed by the state, which will roughly double the cost of the research to $6 billion or so because of the interest on the borrowing. It also marks another first with its use of California state debt to pay for scientific research.

At one point, CIRM was the world's largest single source of funding for human embryonic stem cell research. The agency has lured top researchers from other states and countries. And it represents a unique mash-up of government, politics, big business, big science, big academia, morality, ethics, life and death and even sex.

Since 2005, the California Stem Cell Report has been read by researchers, policy makers and other interested parties around the world. They log in from Singapore and Great Britain, Canada and Korea as well as institutions ranging from the NIH and Harvard to Stanford, UC San Francisco, Scripps and Sanford Burnham and more.

I estimate that only a few thousand persons around the world are deeply interested on a regular basis in stem cell research, making the potential audience for this Web site rather small. But Google reports that as of today 729,841 page views have been registered during the life of the blog. (I have posted 3,608 items.) Last month, which was slow because of the holiday, the California Stem Cell Report chalked up 16,878 page views, which are the basic Internet standard for measuring readership.

The items that seem to grab the most attention involve individuals as opposed to the nuts and bolts of either science or policy. When CIRM directors considered election of a new chairman in 2011, readership jumped. Machinations involving selection of new presidents at the agency draw readers. Of course, reports about dubious activities or problems also are of significant interest. The lure of stories about people nonetheless is not much different than seen in the mainstream media, based on my 35 or so years in the news business.

Another matter that has drawn an extraordinary amount of interest involves money: specifically the expected cost of stem cell therapies. In 2010, I posted on Scribd a study financed by CIRM -- one that the agency was not trumpeting -- that examined the issue of costs. Since then, it has been read 14,096 times, the most of any document that I have posted on the Scribd service, which provides a way to mount documents and link to them via the blog.

In its initial years, the blog primarily surveyed California media reporting on the stem cell agency, providing links and commentary with some original reporting. But today the focus is mostly on original reporting with analysis and commentary. The agency and its doings have slipped off the radar of the mainstream media, where they probably will remain short of a major scandal or a massive PR effort by the agency.

One of my goals was to provide detailed information, news and analysis about California's unusual research effort – far more than could be done by print media. The idea was to exploit one of the unique characteristics of the Internet-- the capability of publishing nearly unlimited amounts of information. Newspapers constantly cut, squeeze and trim stories because of both cost and their desire to publish a large number of articles about many different subjects. With the Internet, there is virtually no limit on the amount of content, a feature that is both good and not-so-good. Another goal was to go beyond the official handouts and to provide a guide to where useful information can be found.

The California Stem Cell Report differs from the mainstream media in another regard. The blog carries the remarks of representatives of the agency and other interested parties VERBATIM, even when they sometimes involve harsh attacks on the conduct of the blog. Major media almost never allow such access.

I have a couple of biases that underpin what I do. One is the assumption that it is beneficial generally for the government to fund scientific research. The other and more important principle is that government agencies should operate with maximum openness and transparency and that their first obligation is to the people – not the researchers that they fund or the institutions that have something at stake.

While readers can judge for themselves the success of the blog, the scope of the readership from the NIH to California's biotech hot spots suggests it is well-received. Mainstream media reporters as well as science writers often use the California Stem Cell Report as a reference and starting point. The blog has also served as a springboard for acceptance of my own occasional freelance articles in such places as The Sacramento Bee and Wired News. And in 2012, I testified before the Institute of Medicine, at its invitation, during preparation of its $700,000 report on the stem cell agency.

As for how the work is done, the writing and reporting are performed largely from a sailboat in Mexico and Central America, on which my wife and I live full-time. Sometimes that has presented difficulties, but as cellphone and Internet service has improved over the years, the task has become easier. We make visits back to California regularly during which I meet with agency officials and others and attend CIRM's public meetings.

I have focused largely on the policy and business aspects of the agency because that is where my knowledge and background lies. During my career, I have covered and edited stories from the state Capitol for United Press International and spent 10 years as the business editor of The Sacramento Bee along with editing prize-winning investigative projects, including the 1992 Pulitzer Prize-winning series, “The Monkey Wars,” by Deborah Blum, who now teaches at the University of Wisconsin. I also served two years and one week with Jerry Brown during his 1974 campaign for governor and into his first term.

As for my financial interests, my wife and I have never had any investments in any enterprise that could benefit financially from the activities of the stem cell agency except for possibly through index-based mutual funds over which I have no control. But like most of world, my family has suffered from conditions that theoretically could benefit from development of stem cell therapies. 

I am always interested in thoughts and comments from readers, critical or otherwise. My skin is reasonably thick. I have always told reporters who have worked for me that if you perform your act in a public place you should be prepared for any sort of reaction. I welcome suggestions for stories and improvements.

Feel free to contact me at djensen@californiastemcell.com. Or if you prefer to withhold your identity, you can leave a comment anonymously via the “comment” function at the end of each item.  

Irv Weissman and Reader Comment

Stanford researcher Irv Weissman was mentioned in a comment on Jan. 3 on the California Stem Cell Report on the "Growing Stem Cells..." item.

It is the practice of this Web site to inform people who are mentioned in comments that something has been said about them and making it clear that they have an opportunity to add to the dialogue.

In this case, Weissman had difficulty in filing his comment directly via the “comment” function on the blog, so we are filing it here.

Among other things, the anonymous reader said, “Is it not clear that Irv Weissman is CIRM's puppet master?”

Weissman's response via email: “Anonymous need not remain anonymous.”

Stem Cell Agency Financing Proposal a Mystery to Some

A proposed ballot measure that could mean the financial survival of the $3 billion California stem cell agency was little known to the agency itself until early this week and is a mystery to backers of a similar tobacco tax proposal in 2012.

Kevin McCormack, senior director for communications at the agency, said,

“Individuals at CIRM did hear about the possibility of another tobacco tax measure but did not know any of the details, including the 30 percent provision for us, until the initiative was filed on Tuesday.” 

He told the California Stem Cell Report in an email, 

“As for being in support of the plan, the board has not yet had a chance to consider this measure and therefore we do not have any position on it.”

Some of the agency's board members also indicated that they were not involved with the proposal and learned of it only today.

Jim Knox, vice president for advocacy of the American Cancer Society Cancer Action Network in Sacramento, said in a telephone interview that none of the groups that backed the unsuccessful Prop. 29 in 2012 was involved in the latest effort.

The proposed initiative was filed Monday by Santa Ana attorney Frank Barbaro, the former chairman of the Orange County Democratic Party. It would impose a $1.00-a-pack tax on cigarettes to fund brain research and related illnesses, raising roughly $700 million annually. Thirty percent would be routed directly to the stem cell agency, which will run out of money for new grants in 2017.

Barbaro has not yet responded to a request for comment. 

Knox, who was involved in the 2012 campaign, described the situation involving the latest initiative as bit of a mystery and “strange.” He said “no one has heard” about the proposal. He said the language, however, was clearly adopted from the Prop. 29 initiative. "They stole all our language," he said.

Knox said the proposal was filed very late to qualify for the November 2014 ballot. He said Barbaro will not get his proposal back from the attorney general's office until February sometime, leaving him a very short period to gather signatures by the end of May. That is the usual deadline for qualifying measures for the November ballot.

Knox said it is possible that signatures could be gathered in time but that it would be expensive. Roughly one million signatures are needed at a cost that could run as high as $5 or so.

Knox said the Barbaro initiative could be held until the November 2016 general election.

Tobacco Tax Looms as Financial Rescue for California Stem Cell Agency

California's stem cell agency, which is facing near financial death in 2017, could be rescued by a proposed ballot initiative that could channel roughly $200 million a year to the research effort.

Frank Barbaro
OC Register photo

The measure was filed this week with state officials by attorney Frank Barbaro of Santa Ana, a major figure in Orange County Democratic politics. It appeared to be modeled after a 2012 ballot initiative to raise tobacco taxes to fund cancer research that was very narrowly defeated.

The latest proposal would increase taxes on cigarettes by about $1 a pack and raise roughly $700 million a year, based on estimates for the 2012 initiative, Prop. 29. Barbaro's proposal would set aside 30 percent of that revenue to flow directly to the stem cell agency for research into a wide range of brain disorders and “dysfunctional conditions,” including spinal cord injury, heart disease, stroke, autism, cancer and much more.

Fifty percent of the funds would go to a new California Brain Research Citizen's Oversight Committee (CBRCOC), which would consist of 11 members, of whom four would be appointed by the governor. The others would be top executives of the University of California and its campuses. The new brain research operation would be similar to that of the state stem cell agency and would be able to award grants and loans and fund buildings and equipment.

Barbaro submitted the 14-page initiative to the state attorney general's office on Monday for preparation of a title and summary. The immediate hurdle for the measure is to collect roughly 1 million signatures to qualify it for the ballot, presumably November of this year. In 2012, hiring persons to collect signatures cost anywhere from $1 for each signature to as much as $5 to $6.

The California Stem Cell Report has queried Barbaro via email for additional comment on the measure, its backers and sources of funding. We will carry his comments when they are received.

The $3 billion California stem cell agency, which subsists on money borrowed by the state, is slated to run out of cash in 2017 for new awards. It has been considering some sort of public-private effort to generate additional funding.

The 2012 tobacco tax initiative was rejected by voters by an exceedingly slim margin, 50.3 percent to 49.7 percent, a difference of less than 30,000 votes. Political gamblers are likely to bet that the latest measure would win approval next fall, although the tobacco industry is likely to mount a tough fight.

California Gov. Brown's State Stem Cell Spending Figures

California Gov. Jerry Brown's proposed budget contains numbers for the state's stem cell agency although he can do nothing legally about its spending, even if he wanted to.

That's because the agency was created in such a manner that neither the governor or the legislature can get their fingers on stem cell research dollars. The idea was to protect research from politics. So Prop. 71, the 10,000-word ballot initiative that created the agency, made changes in both the state constitution and state law that gave the California Institute for Regenerative Medicine (CIRM) unique autonomy.

Brown's proposed budget does cast CIRM spending in a different light than seen in the agency's budget presentations. It shows that CIRM spending is expected to rise from $213 million in 2012-13 to $293 million in 2014-15, nearly all of which goes for research awards. The agency has legal authority to tap $300 million a year from money that the state borrows and that goes directly to the agency.

The proposed budget also projects 59.5 employees at the San Francisco-based agency in 2014-15 compared to 56.7 in 2012-13. Projected operating expenses amount to $15.6 million for 2014-15, compared to a $13.8 million in 2012-13. 

Both figures are interesting in light of CIRM's figures that show that its operational budget for the current fiscal year exceeds $17 million. No reason for the discrepancy was immediately available, but we suspect it is probably a case of different methods of accounting or perhaps off-the-mark figures from the stem cell agency to the state Department of Finance, which compiles the state spending plan.

The agency operates under a spending cap of 6 percent of its total expenditures, also imposed by Prop. 71. It will run out of cash for awards in 2017 and is currently trying to devise a way to finance its future operations. Another bond issue, which requires voter approval, has not been ruled out, but most of the discussion focuses on some sort of public-private partnership at a level much diminished from $300 million annually.

While Brown cannot chip away at CIRM spending by the usual state process, the agency does take notice of his desire for sharp-eyed budgeting. A few years ago, the agency cut back on out-of-state travel after Brown announced restrictions for other state agencies.

Knoepfler and Capricor Score Big This Week

Capricor's stock price has soared since Monday.
Chart from Google Finance

With the new year hardly begun, UC Davis stem cell researcher and blogger Paul Knoepfler has fulfilled one of his 10 predictions for the stem cell world in 2014.

On Dec. 29, Knoepfler predicted a “big announcement from Big Pharma” in 2014. He did not have to wait long to add some shine to his crystal ball.

On Monday, he wrote about the news that Johnson&Johnson was pumping $12.5 million into Capricor Therapeutics' stem cell therapy for heart disease. Capricor could see another $325 million from J&J if all goes well in its stage two clinical trial, which is being supported by $20 million from the California stem cell agency.

“I'd call that big money,” Knoepfler wrote. He also noted in his blog he has no financial interest in either company.

Investors liked the news as well. Capricor's stock closed at $7.05 today, more than double its $3.40 close on Friday, the business day just prior to J&J announcement. 

Big Pharma's J&J Buys Into California Stem Cell Therapy Research for Heart Disease

California's $27 million investment involving a Beverly Hills stem cell firm is paying off once again as the business attracted a major, financial vote of confidence from Big Pharma's Johnson&Johnson.

The firm, Capricor Therapeutics, last month received approval for a phase two clinical trial for its heart disease therapy. Yesterday, it announced that the Janssen Biotech arm of Johnson&Johnson was immediately pumping $12.5 million into the product with the potential of $325 million more, depending on the outcome of the phase two trial.

Linda Marban
Capricor photo

John Carroll of Fierce Biotech wrote that the move marked a “rare Big Pharma gamble on a field that is trying hard to mount a comeback.” The California stem cell agency, which is funding the phase two trial, said the news was “heartening”and a represented a “very good start” to the year for Capricor.

Linda Marban, CEO of Capricor, told Fierce Biotech that J&J had been probing Capricor for a year. She said, 

“One of the reasons why I was motivated to work on this deal is because of the statement it makes in the field. It says, OK, somebody very large and powerful is taking a look at this technology and saying there's something there, and that's the most exciting thing for me."

Interest from the “large and powerful” is of major importance not only to Capricor but to the stem cell agency, which runs out of state money for new research grants in 2017. It is slowly trying to develop other sources of revenue, and it has yet to bring a therapy to market despite promises to voters during the 2004 ballot campaign that created the agency. Votes of confidence from Big Pharma will go a long way in encouraging investment in the agency and the stem cell field generally.

Investors indeed were more than encouraged by the yesterday's news, which sent Capricor's stock soaring 48 percent. It closed at $5.06 yesterday, up from $3.40 on Friday. Marban has said the firm hopes to be profitable by 2018.

Johnson&Johnson's investment is not the first tied to a key executive at Capricor, Frank Litvack, who is executive chairman of the firm. Litvack, who unsuccessfully ran in 2011 against Jonathan Thomas for the chairmanship of the stem cell agency, sold Conor MedSystems to J&J for $1.6 billion in 2006.

Bradley Fikes of the San Diego U-T discussed the Capricor research late last month in some detail. One of the phase one trial sites was at Scripps Health. Fikes wrote,

“Mark Athens received Capricor’s treatment on Sept. 25, about a month after having a moderate heart attack. The Encinitas resident was the last treated under Phase 1, said Scripps cardiologist Richard Schatz, who performed the procedure. It will take about six months to know whether the treatment worked, Schatz said.”

Fikes continued,

“'All their previous work showed that the scar got smaller and the muscle tissue around it got more robust,' Schatz said. 'So two things happened: The viable tissue got bigger and the scar got smaller. And that should translate into some sort of clinical benefit down the road.'”

Here are links to the press release from Capricor and other stories in story Genetic Engineering and Biotechnology News and PharmaTimes.

Bloomberg Reports on the WARF hESC Patent Challenge

The California-based challenge to the WARF patents involving hESC research drew national media coverage this week on Bloomberg News.

Susan Decker of Bloomberg described the heart of the matter as a dispute over who profits from stem cell research. She wrote,

“'What we’re asking the government to do is say WARF has no right' to the patent, said Dan Ravicher, executive director Public Patent Foundation in New York, which is handling the challenge for Consumer Watchdog(of Santa Monica, Ca.) 'It’s like the government sent a check to WARF they didn’t deserve.'”

Dan Ravicher and Jeanne Loring at Post Office
when they filed the patent challenge July 17,
2006.  The photo was taken by an anonymous
 woman at the Post Office with Loring's camera. 

The challenge to the patents was filed by Consumer Watchdog and researcher Jeanne Loring of Scripps seven years ago. They contend that the patents are “too similar to earlier research” to be valid and that they hinder scientific research. They also contend that the Myriad decision by the U.S. Supreme Court that limits the right of ownership of human genes should also apply to stem cells. Ravicher successfully argued the Myriad case before the high court.

Decker said the issue is no small matter and involves major developments in medicine. She reported,

“'The next paradigm shift in medicine will be advances in cell therapy -- it’s under way,' said Jason Kolbert, senior biotechnology analyst with Maxim Group LLC in New York. He said pharmaceutical makers such as Teva Pharmaceutical Industries Ltd. (TEVA) of Petach Tikva, Israel, and Pfizer (PFE) Inc. of New York are working with stem-cell researchers on new therapies.”

Decker reported that written arguments from the U.S. Patent Office are scheduled to be delivered Jan. 17 to the federal district court of appeals in Washington, D.C.