Scripps-USC Update: $21 Million Scripps Deficit, Talks at Standstill

The San Diego U-T today reported that The Scripps Research Institute is running a $21 million annual deficit, a key reason that it is discussing a partnership with USC although those talks have apparently hit a wall.

“Deep freeze” is the term quoted by Bradley Fikes and Gary Robbins in their latest article concerning a possible hookup between the two institutions.

Michael Marletta
Scripps photo

Robbins and Fikes quoted from the minutes of a meeting Monday involving a handful of faculty and administrators at Scripps, which is located in La Jolla, Ca.. They also carried remarks from an email today from Michael Marletta, who became president of Scripps in 2011.  Marletta said,

"The institute has on hand enough funds to continue operating with no changes in its operations and without disposing of any real estate or other property for the foreseeable future. We are, however, being proactive about the future economic environment with a process in place and commitment to addressing the operating deficit — this financial picture would be the envy of many biomedical institutes."

Marletta continued,

"The market forces affecting The Scripps Research Institute are being felt by all independent biomedical research institutes, universities and medical schools across the country. Specifically, these include declines in National Institutes of Health funding and a downturn in basic research support from the pharmaceutical and biotechnology industries."

USC, which is located in Los Angeles, has sent a nonbinding letter to Scripps stating that it would pay $600 million over a 40 year period to take over Scripps. Fikes and Robbins wrote,

“USC is trying to improve its modest standing in chemistry and biology, areas where Scripps Research is a world leader.”

The Fikes-Robbins story carries the full text of two Q&A email exchanges between Marletta, Scripps and the two reporters.  At one point, Marletta said,

“We are in no danger of financial collapse. If we did nothing we would likely reach a tenuous point in about five years. However, doing nothing is not an option and not our plan. There are both short-term and long-term options to consider that will keep Scripps and its outstanding scientific programs here for a very long time.”

The text of the minutes of Monday’s meeting is also carried on the San Diego U-T site. The meeting was of a group of faculty and administrators recently formed to improve communications about Scripps’ status and to build support for changes.

Richard Gephardt
Gephardt Government Affairs photo

The group is chaired by Richard Gephardt, the former House majority leader who twice unsuccessfully sought the Democratic nomination for president. He now runs a Washington lobbying firm bearing his name and is chairman of the Scripps board.

Wikipedia reports,

“Gephardt has also been significantly involved with the pharmaceutical industry. In addition to a large lobbying contract with the Medicines Company,^[30] Gephardt serves as chair of the Council for American Medical Innovation (CAMI), formed by and affiliated with PhRMA. In this capacity he hired his own firm to lobby for the organization, to push to extend patents and block generic drugs from the market.^[31]”

Expectations, Ballyhoo and Stem Cell Research

Two seemingly unrelated biotech stories popped up this morning on the news.  One involved an international stem cell research brouhaha. The other involved what could amount to a nearly $2 billion biotech deal for a California firm.  

What brings them together is the diaphanous nature of some of the work in these much ballyhooed fields. But first, let’s look at the latest reports about the STAP stem cell flap concerning research in Japan and Massachusetts that seemed to promise a fast and easy way to make pluripotent stem cells.

After five months and major questions, the journal Nature has decided to retract the STAP paper despite the fact that the journal had it vetted by some of the best scientists in the world. Even with the review, Nature said “extensive” errors have surfaced along with “inexplicable discrepancies.”

It is fair to say that 20 years ago, that paper would still be widely accepted and remain firmly entrenched in Nature’s archive as reliable. What has changed is the Internet and impact of social media on evaluation of research. That has given researchers the unfettered ability to discuss and publish their findings dealing with replication of results and other issues.  At the same time, the speed in which this cyber review takes place is remarkable.  The change from 20 years ago is the equivalent of the move from hand-cranked printing presses to the high-speed presses of today that can spit out thousands of pages an hour.

(We should note that California stem cell researcher Paul Knoepfler of UC Davis played an important role in probing the scientific reliability of the STAP research with responsible reporting and commentary on his blog, ipscell.com.)

Now, about that nearly $2 billion deal, Wall Street Journal columnist Helen Thomas this morning wrote about the acquisition of Seragon Pharmaceutical by Roche, describing it as “disconcerting.” She said it could be a case of shelling   “out vast sums for assets that could quite possibly amount to nothing.”  San Diego-based Seragon “was formed only last year and has one breast cancer drug in early stage trials,” Thomas wrote.

She continued,

“The global pharma sector's forward earnings multiple has expanded to almost 16 times, up from less than 11 times two years' ago, in part because investors believe the (biotech) industry's R&D machine is again producing the goods.”

Thomas noted, however, that only one in 10 potential therapies entering clinical trials reaches the marketplace. “The risks are substantial,” she said. Those same risks apply as well to the 10 clinical trials that the California’s $3 billion stem cell agency has been involved in.

Earlier this year, noted bioethicist Art Caplan wrote about what he called the “off-the-rails syndrome” in stem cell research. The STAP article was his starting point.  Stem cell research is a field that has had more than its share of hype. Well-respected scientists routinely refer to its revolutionary potential. Little public attention is paid to the obstacles and the lengthy and often unsuccessful process of developing a truly usable product.  Expectations of desperate patients are raised. Many of them wind up paying for expensive, untested and perhaps unsafe treatments.

The Seragon-Roche deal is also a reflection of the hype that can arise in biotech/stem cell research. It can be so powerful that the supposedly “rational” economic markets are swept up in the exuberance of a nifty research story.  Ultimately the deal may pan out for Roche, although Roche can afford to take a big loss. But stories are stories.

What does all this mean for the California stem cell agency? Good reasons exist to manage expectations so that the public and potential sources of funding are surprised by successes rather than being surprised by the agency’s failures.  No one wants to see a story like the Solyndra scandal emerge from the California stem cell agency.

Hype and Hope: Illuminating the Reality of Stem Cell Treatments

“Selling Stem Cells Honestly” is the headline this week over at the Biopolitical Times, which also says “it’s about time.”

The article appeared on the Internet site that is produced by the Center for Genetics and Society of Berkeley. The piece cites several recent efforts from within the stem cell community to highlight the risks of dubious, expensive stem cell treatments that are being offered domestically and internationally.

Pete Shanks
CGS photo

The article was written by Pete Shanks, who said the warnings are welcome. But Shanks, author of a book on human genetic engineering, added,

“A little perspective is called for, however: CIRM (the California stem cell agency) was sold to the public in 2004 with the strong implication that cures were imminent. The Proposition 71 Voters Guide argument in favor was presented by Cures for California, and the initiative was presented as ‘Proposition 71, the California Stem Cell Research and Cures Initiative.’ (It was also going to be an economic miracle.)

“Scientists led the way in talking about ‘life-saving cures’ and advocates campaigned under the slogan ‘Countdown to Cures.’  Professor and entrepreneur Irv Weissman (of Stanford) donned a white coat for commercials, presented himself as a doctor, and assured the TV audience: 

“’The chances for diseases to be cured from stem-cell research are high…. If the promise of stem-cell research comes true, we can hope for a single treatment with the right stem cells to cure diseases every family has.’”

Shanks continued,

“Of course, the claims of cures around the corner carefully avoided including a timetable. But in a report published two days after the election, Weissman told the San Francisco Chronicle:

“’If somebody comes up with a saleable product in five years, I'll be shocked. If we don't have lots of therapies in 20 years, I'll be even more shocked.’

“Right. There has been a decade of hype about the potential of stem cells. CIRM is approaching the end of its mandate — and money — and looking for more. All of a sudden, they are taking a more … realistic … line. But is it really any surprise than some patients are, well, impatient?” 

Shanks concluded,

 “It's excellent that more scientists are now publicly calling for oversight. Perhaps they will learn a broader lesson: Do not over-promise ‘cures’ in an effort to raise money. Or, as (Paolo) Bianco and Douglas Sipp, another long-time monitor of the field, argued in Nature last week:

“Sell help not hope.”

One final note: Shanks did praise a couple of scientists by name for their clear-eyed view of the stem cell treatments, including Paul Knoepfler of UC Davis. He blogs on the subject often and has authored a book aimed at the public that informs about stem cells in general an gives good advice about how to judge stem cell treatments. Additionally we should mention that when Weissman was head of the International Society for Stem Cell Research a few years back, it began an effort to inform the public about dubious stem cell treatments. The move ran afoul of companies that threatened legal action, and it was substantially toned down. Even if such efforts to inform the public are accurate and well-justified, the legal costs of defending them can run quite high. 

Hillary Backs California Stem Cell Agency

Hilary Clinton at BIO2014
San Diego U-T,  John Gastaldo photo

Hillary Clinton today endorsed California’s nearly 10-year-old, $3 billion effort to create stem cell therapies for everything from cancer to urinary incontinence.

Speaking to the world’s largest annual biotech gathering, BIO2014, she said,

"California (undertook) a very important task in creating a funding stream for stem cell research. Other states have followed suit, when it looked as though the federal government would not be doing that. States have a role to play, but we need a national framework."

Her remarks were reported by Bradley Fikes in the San Diego U-T, who was covering the convention, which has attracted 15,000 attendees.

Fikes’ piece covered her general comments on biotech and such things as genetically modified organisms. He also wrote,

“State support, along with a ‘national framework’ including provisions to help patients who can't afford biotech therapies, are part of a rational policy, said Clinton.” 

Fikes reported that California Gov. Jerry Brown made an appearance at the gathering. Fikes said Brown “gave a brief endorsement of California biotech.”

Fikes did not report on whether Brown endorsed more funding for the Golden State’s stem cell agency. It will run out of cash for new awards in 2017 and is looking for more financial support.

The agency is likely to find to some politic way to incorporate Clinton’s statement into their fundraising efforts. 

California Stem Cell Agency Cites "Real Progress" on Calimmune's HIV Clinical Trial

The California stem cell agency this morning announced that one of its early stage clinical trials has produced “encouraging safety data” in its search for a therapy that could eradicate AIDS.

The agency said in a press release the trial will now move forward to its next stage which will focus on efficacy. The gene-based therapy, dubbed Cal-1, was developed by Calimmune of Tucson, Az.

Randy Mills, president of the stem cell agency, said,

“While still early in clinical development this announcement demonstrates real progress towards this mission. The accomplishments of Calimmune’s team is a great example of how CIRM partnerships are working to impact patient’s lives today.”

Louis Breton, CEO of Calimmune, said that the safety benchmark achievement “is an important step in bringing this potential one-time therapy to the patients, and takes us closer to our ultimate goal of eradicating AIDS." (Here is the company press release.)

Kevin McCormack, senior director for public communications for the agency, said in an agency blog item that the therapy “takes blood stem cells from people who are HIV-positive, genetically modifies them so they carry a gene that blocks the AIDS virus from infecting cells, and then re-introduces the modified cells to the patient. The hope is that those stem cells will then create a new blood system that is resistant to HIV.”

Calimmune has a powerful scientific pedigree. Nobel Laureate David Baltimore, one of the firm’s founders, is chairman of the Calimmune board. He also once served on the governing board of the stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM).

The Calimmune Web site says that the company was formed in 2007 around stem cell technology discovered in the labs of Baltimore, while he was at Caltech, and Irvin Chen at the UCLA AIDS Institute in early 2000.  Delaware state records show that the firm was incorporated in 2006.

Baltimore served on the CIRM board from 2004 until June 6, 2007. He resigned from the agency board about 18 months before the application process began for the grant round that ultimately funded Calimmune. 

In addition to Baltimore, another member of the the Calimmune board is Harry George, managing general partner of Solstice Capital, whose Tuscon’s office shares the same address as Calimmune.

The trial, which is taking place in San Francisco and Los Angeles, is partly funded by CIRM, which has awarded Calimmune $8.3 million. Originally, the Calimmune research was part of a $20 million disease team grant involving UCLA. That was split, however. CIRM now lists the original award as a closed, $9.9 million grant shared by Calimmune  and UCLA.

Calimmune and the stem cell agency discussed the therapy at today's session of BIO2014 in San Diego, which is attended by about 15,000 persons in the biotech industry.

Here is a copy of the Calimmune contract with the stem cell agency. 

   California Stem Cell Agency Contract with Calimmune

Safety, Safety, Safety Should be No. 1 Job in Research Labs

Working in a research lab doesn’t even come close to the risk involved in being a logger, which ranks as the most deadly occupation in America.

Nonetheless, handling a variety of risky substances and chemicals does involve significant hazards. We were reminded of that in the last few days in the wake of a tragic case at UCLA and the anthrax exposure flap at the CDC.

According to a report yesterday, as many as 84 persons were potentially exposed to live anthrax at CDC laboratories in Atlanta.  The details of how the exposure came about are still being investigated, but it is clear that it involved a breach of safety standards.

Anthrax, of course, can cause death.  Along the way, the inhalation form of the disease “progresses rapidly with high fever, severe shortness of breath, rapid breathing, bluish color to the skin, a great deal of sweating, vomiting blood and chest pain that may be so severe as to seem like a heart attack,” according to emedicineheath.com.

Sheri Sangji
Sangji family photo

At UCLA, the case involves the horrible burning death of a lab worker, Sheri Sangji, in 2008. The University of California once said the charges that it was at fault were "outrageous."  It took four years for the University of California to accept responsibility for the conditions that led to her death.  The school has agreed to follow safety procedures and create a $500,000 scholarship in Sangji’s name.

The researcher involved, Patrick Harran, became the first professor in the United States to be

charged with a felony in the death of a worker.  Last Friday a judge approved a deal in which Harran admitted no wrongdoing.  According to an article by Kim Christensen in the Los Angeles Times, he agreed to “develop and teach an organic chemistry course for college-bound inner-city students for five summers, perform 800 hours of non-teaching community service in the UCLA Hospital system, and pay $10,000 to the Grossman Burn Center in lieu of restitution to Sangji's family.”

In return, he will serve no jail time.

Her family was bitter about both settlements.  The family said in a statement,

"This settlement, like the previous one with UCLA, is barely a slap on the wrist for the responsible individual." 

What does all this have to do with stem cell research in California? Thousands of persons work in labs linked to such research in the Golden State. Sometimes they deal with dangerous substances.  It behooves the scientists in charge to ensure that none of their workers suffer because of a failure to adhere to safety standards. Moreover, safety at state-funded labs should be a matter of utmost concern for the folks at the California stem cell agency who have more than $1 billion in experiments under their oversight.  It wouldn’t hurt to remind recipients of state largess of the need for making safety their No. 1 task.

For other pieces and commentary on the UCLA case, see OSHA faults UCLA, pervasive problems in labs, and UCLA response.

USC Dangling $600 Million Lure for Scripps

Fresh information is emerging on the USC-Scripps deal, including the loss of two scientists to the Los Angeles school. And from Florida is coming news that Scripps would receive $15 million a year for 40 years under the terms of some sort of merger. 

The departing Scripps scientists are biochemist Ray Stevens and biologist Peter Kuhn, according to a piece by Gary Robbins in the San Diego U-T.  The move, which does not appear to be directly connected to the deal, is being hailed on USC social media sites (See here and here.) 

Jeff Ostrowski of the Palm Beach Post wrote about the possible USC-Scripps deal, which has rankled some in Florida. The state houses a 624-employee branch of Scripps. He said that Scripps would receive $15 million a year for 40 years under the terms of the deal. Ostrowski continued,

 “While the sum of $600 million sounds large, applying even a rock-bottom interest rate of 2.2 percent to the 40-year payment schedule reduces the present value of the deal to $250 million.

“Scripps reported net assets of $728 million — including investments worth $459 million and land, buildings and equipment valued at $372 million — as of Sept. 30, 2012. The gap between Scripps’ fortune and USC’s $15 million-a-year offer led one critic to dismiss the deal as ‘a joke.’”

No further details of the possible arrangement were reported in the Florida newspaper.

Ostrowski, however, also wrote,

“When (former Gov. Jeb) Bush announced The Scripps Research Institute’s expansion to Palm Beach County in October 2003, he touted an economic impact study that said the investment in Scripps would spawn 6,500 spinoff jobs and create as many as 50,000 high-paying jobs statewide in 15 years.

“Scripps Florida had 634 employees as of March, and private-sector biotech jobs have yet to appear. The lab’s arrival sparked a $1.5 billion spree of public subsidies for research labs from Miami to St. Petersburg. The goal was to turn around Florida’s notoriously low-wage economy, but the state continues to lag in most measures of biotech prowess.”

Nothing new has surfaced on the interest expressed by UC San Diego in Scripps, which is located nearby. USC is about 130 miles north of Scripps.

Burrill's Appearance Scrubbed at Big Biotech Convention

The keynote appearance this afternoon by California biotech maven Steve Burrill has been cancelled at the BIO convention in San Diego in the wake of allegations of mismanagement and inappropriate diversion of $19 million.

Ron Leuty of the San Francisco Business Times reported in a brief piece late yesterday that the 90-minute talk was scrubbed.

A lawsuit filed last month by Ann Hanham, a former managing director of Burrill & Co., said that $19 million was diverted by Burrill at the firm. The suit also said that Burrill was removed from control of a $283 million venture capital fund.

Alex Lash of Xconomy wrote, 

"A spokeswoman for the San Francisco-based financier told Xconomy that Burrill made the decision Friday and has decided to keep a low profile. Burrill has not made a statement since news of the lawsuit broke last week.

"The spokeswoman said his lawyers should file a response to the lawsuit by the end of July." 

(Editor's note: The information from Alex Lash was added after this item was originally posted.)

UC San Diego Says Alliance with Scripps is Not Out of the Question

The University of California at San Diego is emerging as a suitor for The Scripps Research Institute as its top faculty say a merger with USC would “destroy” much of the institute.

According to an article by Bradley Fikes and Gary Robbins of the San Diego U-T, the only major daily newspaper in the area, the chancellor of UC San Diego thinks an arrangement with Scripps is worth exploring.  

Both institutions are located near each other in the La Jolla area north of the City of San Diego proper. USC(the University of Southern California) is about 130 miles farther north in central Los Angeles. All three are biomedical research powerhouses.

Pradeep Khosla (left) and David Brenner, dean of the UC
 San Diego Medical School and a member of the state
 stem cell agency governing board. UCSD photo

Fikes and Robbins wrote,

“UC San Diego Chancellor Pradeep Khosla said in an interview: 'I would certainly listen' if the institute proposed a merger or some other alliance. 'I would talk to my colleagues, talk to my faculty, talk to my regents. ... There’s enough in there for me to say, ‘We need to talk a bit more.’”

His comments came as all of the active faculty chairs at Scripps delivered a note to the Scripps president and the board chairman declaring,

“We believe that the proposed path with USC would destroy much of what has been built and what we and others in the community value so much. We understand that institutions like Scripps face serious financial challenges and have to face up to that reality. Under the right terms, and being fully protective of the ‘TSRI Brand’ and culture, merger with USC or another institution could be an option for TSRI. From the information disseminated so far, the terms of the proposed merger with USC are not even close to what it would take to build faculty support.”

The note also said that the faculty was prepared "to make personal sacrifices to work for and maintain independence.”

The “information” mentioned in the faculty note is not yet available. 

Fikes and Robbins broke the story about a possible hookup between Scripps and USC. Scripps is wrestling with financial problems. Fikes reported today that Scripps' expansion into Florida is part of its economic travails. USC is better off financially and has its eyes on Scripps' prestigious researchers.

Stem cell research is no minor matter at all three institutions. UC San Diego has received $146 million from the state stem cell agency, USC $105 million and Scripps $45 million. All three have representatives on the agency's governing board. 

Tweeting the Elusive Stem Cell: A Canadian Study

Julie Robillard, CIRM photo

Twitter used to mean chirping. The word conjured up images of sparrows fluttering and warbling under the eaves. Today, it more likely evokes images of lightning-like communications and billion-dollar businesses.

Twitter – the non-chirping variety -- drew attention this week from Kevin McCormack, the majordomo of communications at California’s $3 billion stem cell agency. His job is to tell the story of the agency and build public support.

McCormack was at the annual meeting of the International Society for Stem Cell Research in Vancouver in Canada where he ran across Julie Robillard, a neuroscientist who is looking into how social media – blogging, Twitter, etc. – are shaping how science is communicated.

Robillard, who writes a blog on neuroscience, had a poster presentation at the meeting dealing with the public policy implications of the use of social media related to stem cell research.  McCormack discussed her work yesterday on the stem cell agency’s blog.

“She says this is clear evidence there is worldwide interest in stem cell research. The problem, however, is that the quality of many of the tweets was also widely varied. Some came from researchers and were thoughtful and trying to raise awareness about new research or important questions, but others—many others—were more interested in promoting stem cells as cures for everything from sagging skin or acne to severed spinal cords.”

“She says social media is reshaping how conversations take place between people who are interested in stem cells: anyone from a scientist to a patient to a provider of sham therapies. She says there is a lot of information out there about stem cells but the quality is not always great and in some cases it’s downright questionable.”

McCormack continued,

“News reports, stories in newspapers, on the radio and TV or online are the single biggest drivers of traffic on Twitter and are a reminder of the importance of good journalism when covering these issues. A poorly written or researched story that makes inflated claims about a treatment, or fails to mention that the research was done in mice not people, can get huge play on social media and mislead many people. This is a little worrying when fewer and fewer mainstream media outlets have a dedicated science journalist on staff.”

McCormack concluded,

 “She also says it’s a reminder to those of us trying to inform the public about all the progress being made with stem cell research that we need to be more engaged and more active, so that our voices can help drown out those with bad information or shoddy products to sell.”

California Biotech Guru Steven Burrill in 'Deep Yogurt'

Steve Burrill is perhaps the leading maven on biotech in California as well as nationally. 

He has raised more than $1 billion for life sciences financing via his investment banking firm. He publishes an annual state-of-the-industry study that is something of a bible.

He is an omnipresent speaker at major biotech conferences. In 2006, his firm organized a stem cell conference that was partly a celebration of the California stem cell agency. Next week he is scheduled to be a keynote speaker at the huge BIO2014 industry conference in San Diego, which is expected to be attended by 16,000 persons.

Today, however, the Web site for his investment firm is shut down. The headlines about him on the Internet are less than pleasant. To use an expression that Burrill sometimes utters, he is in “deep yogurt.”

Nathan Vardi broke the story yesterday on Forbes. The piece was headlined 

"Steven Burrill Removed From Control Of Venture Fund For Unauthorized Payments”

Other stories used terms like “disbelief,” “fraud allegations,” “ousted” and "dumped."

Vardi’s snynopsis of the allegations said,

"G. Steven Burrill, the CEO and founder of Burrill & Co., a San Francisco financial firm specializing in biotechnology and life sciences investing, was ousted from control of a $283 million venture capital fund earlier this year by big institutional investors that cited willful or reckless misconduct related to unauthorized payments, according to documents recently filed in California State court in San Francisco." 

Alex Nash at Xconomy wrote,

“Burrill, known for his natty suits and pink shirts, is being sued for fraud by a former colleague for allegedly taking cash meant for investment and diverting it to his own 'designees and affiliates.'”

Burrill has not yet responded to requests for comments from the media covering the situation. And it is not clear whether he will still appear for his scheduled 90-minute talk next Tuesday in San Diego.

All of this involves allegations and contentions in lawsuits. But the perception is not good. Burrill himself knows the importance of perceptions. A few years back he spoke to a group at Stanford about making money in biotech and said,

 “Perceived value is more important than real value.”

 (See embedded video at the top of this article.)

And in February in comments to the Tampa Bay Business Journal about California’s success in life sciences, he said,

“Culture is a big part of it. People want to be part of a culture that tolerates failure.”

New California Stem Cell CEO and his Criteria for Handing Out Cash

The new president of the $3 billion California stem cell agency, Randy Mills, will bring his stump speech to San Diego next week where more than 10,000 biotech business types are expected to gather in perhaps the largest such meeting in the nation.

Randy Mills

Mills has scheduled a public appearance, with questions from the audience, for next Tuesday at the Manchester Grand Hyatt hotel. He will also moderate a panel at the BIO 2014 convention on commercializing stem cell therapies, a subject with which he is intimately familiar. Mills was head of Osiris Therapeutics as it slogged its way to approval of a stem cell therapy.  Linda Marban, CEO of the CIRM-funded and publicly traded Capricor, will be one of the speakers on the panel.

Mills has been on the job fulltime only since June 1. He has made two public appearances this month, one in San Francisco, where the agency is based, and one in Los Angeles. Kevin McCormack, senior director of public communications for the agency, wrote about one session last week. 

“Randy began by saying that he has a simple guiding principle; that everything we do at the agency should be ‘all about the patients.’ In fleshing that out, he identified four criteria that he will use in making any decision:

“1. Will it speed up the development of treatments for patients?

“2. Will it increase the likelihood of developing a successful treatment for patients?

“3. Will it meet an unmet medical need?

“4. Is it efficient?

“He says those criteria will help make sure that everything we do at the stem cell agency is in alignment with our goals; that we aren’t funding work that could easily attract funding from other agencies or even the pharmaceutical industry.”

McCormack continued,

“For the scientists, Randy said his goal was to give them as much support as they needed, particularly in the areas where they may not be very experienced – such as moving products into clinical trials, getting approval from regulatory agencies such as the Food and Drug Administration (FDA) and commercializing a potential therapy.” 

 The San Diego public meeting next Tuesday will be from 6 p.m. to 7 p.m. at the  Grand Hyatt, 1 Market Place, in the Gas Lamp rooms, A & B.

Other top stem cell agency officials scheduled to be at the BIO convention, which could hit 16,000 attendees, include Chairman Jonathan Thomas, former President Alan Trounson and senior vice president Ellen Feigal.

Here is the list of events for the Regenerative Medicine Day, which the stem cell agency is co-sponsoring, at  BIO next Wednesday, including speakers.

California's Trounson Wants to 'Shame' the 'Malefactors' of Stem Cell Medicine

Alan Trounson at Cornell
Cornell photo

The former president of the California stem cell agency, Alan Trounson, has kept busy since leaving his post last month. Just this week he authored an opinion piece in The Scientist. Earlier this month he was at Cornell decrying the lack of federal funding for research.

In his article in The Scientist, Trounson called for the outing of stem cell clinics that sell untested and expensive treatments to desperate people.  “Malefactors” is what he called them.

He wrote,

 “It is time that a ‘shame file’ of unregistered and unscientific treatment centers is constructed and widely communicated to warn patients of the dangers of these unregulated and inadequately managed therapies being offered internationally.”

Trounson suggested that the Institute of Medicine could host such a file and help protect uninformed patients. But he also said Alliance for Regenerative Medicine, an industry group that is also engaged in lobbying, could do better in helping to expose dubious stem cell clinics.

He said,

“While this organization and its members do not approve of unregistered clinical trials, they ought to be more active in ensuring the scientific integrity of all studies going forward.”

Trounson said that the $70 million Alpha clinic effort that he championed at the California stem cell agency is also aimed at tackling the problem. Grant applications in that program are due to be reviewed this fall. 

Trounson warned that fringe stem cell clinics damage the entire field.

“The activities of these medical tourism centers are a major barrier to the delivery of genuine cell therapeutic clinical trials by bringing the whole field of cell-based therapies into disrepute.”

At Cornell on June 6, Trounson, who is a senior scientific advisor at CIRM until the end of this month, was the keynote speaker for a symposium on stem cells that also featured broadcast journalist Charlie Rose.

The university put out an item on the appearance. Trounson was quoted as saying,

"The [federal] government looks handicapped in this area. You've got a budget situation where you cannot seem to put more money into research — in fact, less money is going into research. We have to convince the people elected to government that this is an incredible revolution and that we need to keep funding the science."

That could be a pitch for the California stem cell agency as well. It is scheduled to run out of money for new grants in less than three years and is currently looking at ways to develop new funding sources.

USC and Scripps: A Looming Scientific Hookup?

The University of Southern California (USC) and the Scripps Research Institute are engaged in talks that could involve a merger of their enterprises, a move apparently triggered by economic pressures and a desire for more scientific clout.

The institutions released a statement on the discussions today in the wake of the first report on the move, which was published on the San Diego U-T Web site yesterday. According to the Los Angeles Times this afternoon, the institutions did not specify their final goal or lay out a timetable.

A statement from both said that Scripps and USC are “discussing the possibility of a relationship that would enhance the missions of both institutions. TSRI(Scripps) and USC have a shared commitment to academic excellence that will result in meaningful breakthroughs to improve health and well-being.” 

Gary Robbins and Bradley Fikes broke the story late yesterday in the San Diego newspaper. They wrote that Scripps, which is based in La Jolla, Ca., has heavy reliance on federal research funding, which is stagnant and under great pressure. At the same time, USC, located roughly 130 miles north in Los Angeles, is eyeing the research capabilities of Scripps, which counts two Nobel Prize winners on its staff. 

Both enterprises have large stem cell research efforts. The California stem cell agency has given USC $105 million in 26 awards. Scripps has received $45 million in 19 awards. As expected in the early stages of such discussions, it is not clear how the two stem cell research efforts would be affected. 

Fikes at the U-T is blogging live about the latest reaction, comments and information on the talks.

Scientific Journals: A Case of 21st Century Dinosaurs?

Out of California's Silicon Valley comes a stout prediction this month that a $10 billion business that feeds off government-financed research has entered its terminal stages.

The forecast was made by Dylan Tweney, editor-in-chief of Venture Beat, a technology news operation that not-so-coincidentally has no print arm.

He wrote on June 6,

“Imagine an industry where a few companies make billions of dollars by exerting strict control over valuable information — while paying the people who produce that information nothing at all.

"That’s the state of academic, scientific publishing today. And it’s about to be blown wide open by much more open, Internet-based publishers.”

He said that the leading companies in the field, Elsevier and Springer, have margins in excess of 35 percent. They subsist off research that is almost totally financed by public money while, at the same time, they do not pay scientists to review the research prior to publication.

Tweney noted that the industry's relatively new competitors, including Plos, Academia and Arxiv, offer free access compared to pricey journal subscriptions that cost Harvard University $3.75 million in 2012.

“Taken together, these online publishers represent a significant threat to traditional journal publishers like Elsevier because they reach more people and cost nothing. The only remaining value that traditional publishers offer is the imprimatur they provide: The articles they publish have been peer-reviewed and are thus presumably more reliable.

“But even that imprimatur is under attack. The 'reproducibility crisis' in academic publishing refers to the fact that a huge proportion of published research, particularly in medical fields, is based on results that cannot be reproduced by other researchers. In one study, a tiny 6 percent of scientific findings in cancer research were reproducible.”

Scientific publishing has also lured the California stem cell agency, which financed to the tune of $600,000 the start-up of a journal in North Carolina.

As Tweney alludes, the situation is not much different than that of the newspaper and magazine industries a few years back. For the most part, those businesses blundered along in a very profitable mode, ignoring the Internet until it was too late to do anything other than scramble for survival. It is possible that the academic journal business can find a new model. But given organizational inertia and the unwillingness to cannibalize an existing and still profitable business, it is unlikely.

(Disclosure: Tweney is this writer's son-in-law. He did not consult me prior to writing his June 6 piece.)

California Stem Cell Directors Okay Tight, $17 Million Budget

Directors of the California stem cell agency today approved a $17.3 million, hold-the-line budget for the fiscal year that begins July 1, cutting $573,000 from a spending plan that was proposed in early May.

The vote was 17-0 during a special teleconference meeting that also saw a proposed $900,424 grant sent back for a special examination by the agency's reviewers, said a CIRM spokesman via email.

Presentation slides prepared for the meeting indicated that the new president of the $3 billion agency, Randy Mills, is still evaluating the agency. The documents said,

“If significant changes to the structure are needed, a proposal to the board along with the associated budgetary implications will be made at that time.”

Directors were also told that without a $250,000, legally required performance audit this coming year, the operational budget would be $400,000 under the estimated current spending of $17.4 million.

The spending plan reflects initial parsimony on the part of Mills, who made a career in business prior to coming to the agency. The previous CIRM CEOs have all come from academia.

In other business, Kevin McCormack, senior director for public communications, said that the $900,424 proposed award to Helen Blau of Stanford was sent back for re-review by a subset of the agency's grant review group, also on a 17-0 vote. At the agency's board meeting May 29, some directors said the initial review was flawed and voted for a re-review by the full review group. However, re-reviews usually are undertaken by a smaller panel.

The action on Blau award came as one high-level CIRM staffer, Natalie DeWitt, began work this week at Blau's Stanford lab. Both DeWitt and the agency told the California Stem Cell Report that she had no role in the review of the Blau application.

A Nearly $1 Million Award, the California Stem Cell Agency and the Revolving Door

Directors of the California stem cell agency tomorrow are scheduled to deal once again with a $900,424 proposed award to a Stanford researcher who recently hired a top staffer from the state research effort.

The award would go to Helen Blau, one of the leaders of Baxter Laboratory at Stanford. On Monday, Natalie DeWitt, who was special projects officer for former CIRM President Alan Trounson, went to work for Baxter as director of research development.

The award first came up at the directors' meeting May 29. It was recommended for board approval by Trounson and unidentified CIRM staff.

During that meeting, CIRM Director Jeff Sheehy, who is also a member of the grant review group, said that a copy of the application and the scientific critique was not provided to him at the March 24 review session. The application was submitted by Blau in January.

Sheehy and another director said the review was flawed. Sheehy noted that the Blau proposal was not approved for funding by the agency's out-of-state scientific reviewers. He said that during the closed-door review session several negative comments were made about the proposal during oral discussion. The application received a scientific score of 73, two points below the cut-off for funding. CIRM staff said, however, the proposal had merit and should be funded.

Director Sherry Lansing said it was important for the board to be open and transparent and suggested that the application be sent back to the full review group for further consideration. The 29-member board did so on a 9-0 vote. Members not voting either had conflicts of interest or were not present.

At the time of the meeting, DeWitt's then future employment by Baxter was not widely known and was not mentioned during the discussion.

Asked for comment today by the California Stem Cell Report, DeWitt said in a telephone interview that she was not involved in any way with the application. She also said she has not been involved with any of Blau's applications to CIRM or those from Garry Nolan or Peter Jackson, the other two leaders of the Baxter lab. Blau has been awarded $2.8 million by CIRM and Nolan $1.3 million. He is also a leader on a $20 million CIRM grant.

In response to questions, CIRM spokesman Kevin McCormack today said in an email that DeWitt was not involved with the $900,424 application by Blau. He said DeWitt served notice May 19. DeWitt said that sometime in late April or May that she “let a few key people (at the agency) know” that she was looking for work elsewhere and “spoke with the (CIRM) lawyers.”

DeWitt said her work at CIRM involved the $70 million Alpha Clinic proposal and the $40 million stem cell genomics award that went to a Stanford-led consortium. She said Baxter's Peter Jackson, who has some expertise in human genetic disease, is not involved in the genomics proposal. The CIRM contract on the award is yet to be signed.

DeWitt was mentioned yesterday in an article on the California Stem Cell Report dealing with “revolving door” issues involving government employees who go to work for enterprises that are linked to their former agency. The issues are likely to become of more concern to the stem cell agency in the next couple of years. The agency is scheduled to run out of money for new grants in 2017, and some employees are likely to be looking for work in the stem cell field in California, which only involves a small number of private and public enterprises.

CIRM employees are briefed on conflict-of-interest and revolving door issues, according to the agency. Its employee handbook also contains information on the subject along with a link to a state Fair Political Practices Commission document further explaining revolving door rules.

It says state officials are barred from taking part in decisions that directly relate to a prospective employer. The document says,

“The ban of influencing prospective employment prohibits any public official from making, participating in making, or influencing a governmental decision that directly relates to a prospective employer while negotiating or after reaching an employment arrangement.”

It continues,

 “The ban on influencing prospective employment is triggered by negotiating or having an arrangement regarding prospective employment. While submitting a résumé or an application to a prospective employer does not trigger the ban, the following contacts will trigger the ban:

• “An interview with an employer or his or her agent.

• “Discussing an offer of employment with an employer or his or her agent.

• “Accepting an offer of employment

In response to a question, McCormack said,

“Very few people, Natalie included, tell their employer that they are looking for work so I have no idea when she started looking.”

McCormack did not respond to a request for the names of the CIRM staff involved in making the recommendation to approve the $900,424 Blau award.

At tomorrow's teleconference meeting, the CIRM board is scheduled to act on a proposal to have the Blau application re-examined by a subset of the grant review group -- not the full group. Interested parties can either take part in the meeting or listen in from a number of sites in Northern and Southern California and elsewhere. Specific locations can be found on the agenda. 

Stem Cells and Revolving Doors: The California Experience

The phrase “revolving door” is not one that rolls off the tongues of most Americans. But it is shorthand for an issue that concerns both Elon Musk of Tesla and SpaceX fame as well as taxi drivers in New York City.

It is also a matter of importance to the $3 billion California Institute for Regenerative Medicine (CIRM) and other state agencies.

Natalie DeWitt
CIRM photo

The issue surfaced this week with the departure of a high level staffer at the San Francisco-based agency -- Natalie DeWitt, special projects officer for its former president, Alan Trounson. DeWitt's final day at the agency was last Friday. She began her new job on Monday at Baxter Laboratory at Stanford University.

Garry Nolan, Helen Blau, Peter Jackson
Baxter Laboratory photo

Baxter is run by Stanford scientists Helen Blau, Garry Nolan and Peter Jackson. Blau has received $2.8 million from the stem cell agency. Nolan has received $1.3 million. He is also a leader (co-PI) on a $20 million award in the agency's signature disease team effort.

No one is alleging that DeWitt or others have done anything wrong. She has a fulsome resume and a record of accomplishment.

Her departure from CIRM and employment at Baxter, nonetheless, does bring to the fore revolving door employment issues that now are a matter of greater concern for the agency than they were five years ago. The agency is scheduled to run out of funds for new awards in less than three years. Some of its employees are undoubtedly going to be looking for future employment in California's small, stem cell research community. It would be natural for agency employees to want to capitalize on their unique experience at CIRM. That is what gaining professional experience is all about.

But there are legal and ethical constraints. To prevent improper influence on governmental actions, the state of California has laws dealing with revolving door employment. Briefly summarized, state law says that certain former state employees and consultants can be banned from attempting to influence their former agency, either for one year or permanently. Current state officials also can be barred from taking part in decisions that directly relate to a prospective employer.

The California Stem Cell Report this week queried CIRM about its revolving door policies. Kevin McCormack, senior director of public communications, replied,

“These are issues that we are encouraged to be mindful of from the day we are hired to the day we leave. Once we accept the job we are given an 'employee handbook' (see below) which includes information about the state policy on what is appropriate behavior. As state employees, we have to periodically go through ethics training, and this covers what is and is not acceptable behavior in these instances. We are also encouraged to consult our in-house lawyers for guidance or to get advice from the state ethics agency on how the rules might apply to a particular situation.”

Revolving door problems are not new to either state or national government. They have long dogged such agencies as the Department of Defense. That's what Musk complained about via Twitter in a matter involving his space exploration firm, SpaceX. According to Bloomberg News, Musk tweeted last month about how competitors of his space company hired an Air Force official allegedly as part of a move to secure a chunk of a $68 billion Pentagon satellite project. And in New York City, questions also rose last month concerning the employment of a former top city taxi regulator by the noted ride-sharing company Uber, a competitor in the city's big taxi business.

DeWitt, who was paid $199,000 in 2013, worked for the stem cell agency from September 2011 until this month.  She played a key role in the $70 million Alpha Clinic proposal championed by Trounson. She was also deeply involved in the $40 million stem cell genomics award that went to a Stanford consortium last January following a controversial review process. She and Trounson co-authored an article in Nature Biotechnology promoting the genomics plan.

DeWitt, who has a Ph.D. in cell and molecular biology from the University of Wisconsin, was a senior editor at Nature from 2001 to 2010. Seven months after joining CIRM, she co-founded a firm called AccendoEditing. According to her Linked In profile, the firm works with clients to “to present scientific manuscripts and grants in a clear and engaging fashion.” It also “provides insights into the review process.”

DeWitt was one of the organizers of a conference last September at the University of Oxford dealing with cancer and stem cells. Her new bosses, Blau and Nolan, were scheduled speakers along with Stanford's noted stem cell scientist Irv Weissman.

At the Baxter Laboratory, DeWitt is its director of research development. Asked last Friday about leaving CIRM, she replied via email,

“The reason I'm moving on is simply that what I consider a fantastic opportunity presented itself to me.”

She has not responded to a query Monday about her views on the subject of revolving door issues.

  California Stem Cell Agency on Revolving Door Issues

Stanford's $40 Million Stem Cell Genomics Award Still Hanging Fire

More than four months after a Stanford-led consortium won a $40 million stem cell genomics award, the California stem cell agency has not yet concluded a formal contract with the researchers.

The award was approved Jan. 29 by the agency's board following a process that Stanford's competitors said was marred by unfairness, apparent preferential treatment and manipulation of scientific scores.

The award is aimed at creating medical treatments tailored to a patient's genetic makeup and making the state a world leader in stem cell genomics.

In response to a query from the California Stem Cell Report, Kevin McCormack, senior director for communications, said that the contract with the consortium remains unsigned. He said, however, that the agency is hopeful that final details will be worked out soon.

WARF Triumphs in Latest Chapter of hESC Patent Challenge

A California-based effort to ease patent restrictions on the research use of human embryonic stem cells last week suffered a severe blow when a federal court of appeals ruled in favor of a Wisconsin organization known as WARF.

At the heart of the matter is the question of who profits from stem cell research along with whether the patents stifle scientific research.

The ruling came Wednesday in a legal action brought by Consumer Watchdog of Santa Monica. The effort was supported by the former president of California stem cell agency, Alan Trounson, and Jeanne Loring, head of the stem cell program at Scripps in La Jolla, Ca. Doug Melton and Chad Cowan, both of Harvard, also backed the challenge.

The lawsuit was filed in a case involving the Wisconsin Alumni Research Foundation (WARF) and involved work by Jamie Thomson of the University of Wisconsin and of UC Santa Barbara. Consumer Watchdog said that Thomson deserved credit for being first to isolate and maintain human embryonic stem cells. But the organization said that “his achievement was not the result of his having created a patentable invention.” Consumer Watchdog's brief said that the work involved was “obvious.” One of the main reasons for Thomson’s achievement, the organization said was that “he had access to human embryos and financial support that other researchers did not have.”

A federal court of appeals in Washington, D.C., said Consumer Watchdog had no standing to sue to overturn WARF patents.

The court said that because Consumer Watchdog “has not identified a particularized, concrete interest in the patentability" of the work or shown “any injury in fact...it lacks standing to appeal” earlier decisions in favor of WARF.

It is unclear what the next step is in the eight-year-old dispute. John M. Simpson, the stem cell spokesman for the Consumer Watchdog, said,

"We are reviewing the decision and considering our options.  It's important to remember that because of our challenge WARF's claims were substantially narrowed as the patent went through the PTO (patent office) process."

WARF has not responded to a request for comment from the California Stem Cell Report.

Consumer Watchdog is represented in the matter by the Public Patent Foundation of New York, which successfully argued before the U.S. Supreme Court last year that genes cannot be patented because they occur naturally in nature.  

Here is a link to legal documents and other material in the case.  Last week's decision can be found below. 

  Appellate Court Decision Involving Consumer Watchdog and WARF

California's $70 Million Alpha Stem Cell Clinic Project Runs Into Roadblock

The California stem cell agency's $70 million Alpha Clinic plan has hit a stumbling block in the drive to make the Golden State the“go-to” location worldwide for stem cell treatments.

The agency reported today that it has encountered difficulties in lining up the necessary expertise to make the decisions on the complex applications, which are now awaiting judgment. The closed-door review session was originally scheduled for this month.

The delay surfaced when the California Stem Cell Report asked the agency about the reviews of the applications. In a brief response, Kevin McCormack, senior director for communications for the California Institute for Regenerative Medicine (CIRM), said,

“It's being rescheduled because it is just taking a little longer than anticipated to get the caliber of experts needed to review something as complex as this.”

McCormack said the new review session would probably be held in the fall. The agency expects to have 15 experts from outside of the state to examine the applications in addition to eight members of the agency board. 

The Alpha clinic proposal attracted applications from eight, unidentified, major California institutions earlier this year. The intention is to create one-stop locations for stem cell treatments that would lure patients and scientists from around the world.

The plan is a much-touted initiative by former CIRM President Alan Trounson, who resigned to rejoin his family in Australia. Randy Mills, the former CEO of Osiris Therapeutics, replaced Trounson six days ago. Trounson has been pushing Alpha Clinics since 2011. Just last month, he extolled the proposal before hundreds of regenerative medicine specialists at a Berkeley conference sponsored by the Regenerative Medicine Foundation.

Trounson said that the clinics would serve as a “proving ground” to develop business models, to build and share data and to create a strategy that would help convince insurance companies and Medicare to pay for the treatments.

He said that existing clinical research centers are not able to provide all the resources necessary for development and application of stem cell treatments. He said developing clinical expertise in a “random, spontaneous way doesn't work in the best interests of the patient.”

Trounson, who is renown for his IVF work, said the existing structure of the IVF industry in the United States is evidence of the weakness of an unstructured approach.

Agency spokesman McCormack did not answer a question about whether applicants would be given a chance to modify their proposals in the wake of the delay. One of the aspects of the RFA involves applicants providing some sort of matching funds or equivalent support to leverage the funds provided by the state of California. More time could mean that applicants could round up more matching cash.

The delay also could possibly endanger existing commitments of support and affect employment arrangements as well as building schedules.