More California Stem Cell Cash Likely for UC Irvine and UCLA

Two researchers at different University of California campuses look to be slated next week for additional cash for their research into Huntington’s Disease and corneal problems.

Applications for more cash are scheduled to be acted on July 24 at the CIRM board meeting in Millbrae in the San Francisco Bay area.

Leslie Thompson (left) and patient advocate Frances Saldana
Gene Veritas photo

Leslie Thompson of UC Irvine is up for additional “bridge” funding for her efforts to develop an hESC therapy for Huntington’s Disease. She received $3.5 million in 2010.  Amount of the bridge funding was not specified in the material posted online today.

Her latest progress report said,

“We have now selected a GMP grade hNSC line that will be carried forward for further testing in both rapidly progressing and slower progressing HD mice, as well as in mouse preclinical dosing studies. Taken as a whole, progress supports the feasibility of the CIRM-funded studies to transplant differentiated hESCs into HD mice for preclinical development with the ultimate goal on initiating IND-enabling activities for HD clinical trials.”

Sophie Deng
UCLA photo

Patient advocates for Huntington’s Disease have been particularly active at CIRM board meetings and at UC Davis, which has developed a major research effort dealing with the affliction.

Sophie Deng of UCLA is up for additional funding to take her research involving corneal disease to another stage. She received $1.5 million in 2010 for her translational research. Amount of the additional funding also was not specified today by the agency. The amounts for both researchers is likely to surface later this week.

San Francisco Business Times: California's Trounson Affair Damages Likelihood of Future Stem Cell Funding

The San Francisco Business Times yesterday said the Trounson Affair is the “latest embarrassment” for the $3 billion California stem cell agency and threatens its attempts at securing additional funding.

In an opinion piece, reporter Ron Leuty wrote,

“California's stem cell research funding agency needs a home run to score more public funding. Instead, a conflict-of-interest problem is giving it the wrong kind of attention.”

Leuty was referring to the appointment of Alan Trounson, the former president of the agency, to the board of StemCells, Inc., of Newark, Ca., which holds a $19.4 million award from the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. The appointment came just seven days after Trounson left the agency.

Randy Mills, the new president of the agency, has ordered a full review of agency activities involving the publicly traded StemCells, Inc. Agency employees have been barred from discussing StemCells, Inc., matters with Trounson.

Trounson and the company gave no notice to the agency about the pending appointment. Leuty wrote, 

“He apparently never discussed the move, CIRM spokesman Kevin McCormack said, even as an agency attorney briefed him before his departure on what he could and could not do after leaving CIRM.”

Leuty continued,

“CIRM spokesman McCormack said Trounson's decision ‘had nothing to do with us. The conflict wasn't started by us.’ 

“That may indeed be the case, but religious and financial opponents of CIRM won't let voters see it that way. Despite the progress of various research programs but CIRM grant winners, that combination may force the Democratic Party and Gov. Jerry Brown not to support a 2016 ballot measure to re-fund the agency. 

“The Trounson Affair is yet another strike that deepens a perception problem that threatens to distract voters from the win CIRM desperately needs.”

The Business Times story comes as StemCells, Inc., this morning announced it planned to raise $20 million by selling more than 11 million shares to two "well-recognized biotechnology investors." The company's stock price dropped nearly 8 percent in trading this morning and stood at $1.86 at about 7:30 a.m. Pacific Daylight Time. The share price was at $2.31 last Monday when Trounson's appointment was announced.

The Trounson Affair and its Financial Fallout

 StemCells, Inc., the California business founded by Stanford scientist Irv Weismann, seems almost certainly to have done a serious financial disservice to itself and its shareholders.

Alan Trounson
San Francisco Business Times photo

One week ago today, the publicly traded Newark, Ca., firm cast a dark shadow over its dealings with a $19-million benefactor, the California stem cell agency. The issue arose when the company appointed the former president of the research effort, Alan Trounson, to its board of directors, only seven days after the Trounson left the agency's employment.

Trounson earned $490,008 annually at the agency. Last year, directors of StemCells, Inc., received up to $99,800 each for their part-time efforts.

The Trounson announcement caught the agency by surprise, as it pointedly noted last week in a statement. Randy Mills, the agency's new president, expressed concern about a possible conflict of interest and ordered a “full review” of activities involving StemCells, Inc. Staffers and board members were banned from communicating with Trounson regarding StemCells, Inc.

Like most small biotech firms, StemCells, Inc., is in perennial need of cash. The firm has no products that generate significant income. Rather, it is in an almost constant fund-raising mode, either by selling stock, borrowing or securing awards, such as the $19.4 million “forgivable loan” from the $3 billion stem cell agency, formally known as the California Institute for Regenerative Medicine(CIRM). The award is basically a grant because it does not have to be repaid unless a product derived from the research reaches certain income thresholds.

But now StemCells, Inc., has damaged its relationship, probably irreparably, with the agency. The firm's chances of securing additional funding have to be rated nearly non-existent.  Putting aside purely business issues for the moment, the primary question for the agency now is whether it can trust StemCells, Inc. The company could not bring itself to notify – in advance – an enterprise with which it has a $19-million relationship about an event of importance to that enterprise. CIRM is likely to be wondering whether StemCells, Inc., can now be trusted to be forthright about other matters, such as results of its research or difficult problems that it faces in reaching the benchmarks laid out in its agreement with the agency.

Even prior to the Trounson announcement, StemCells, Inc., had a checkered history with the agency. The $19.4 million award  for Alzheimer’s research was rejected twice by CIRM’s prestigious reviewers. The 29-member CIRM board approved it on only a 7-5 vote in 2012 after heavy lobbying by the agency’s first chairman, Robert Klein. It was the first case of such public lobbying by Klein after he left the board.

It was also the first time the board had approved an application rejected twice by its reviewers. Almost universally, the board goes along with negative recommendations from its reviewers, saying it does not have enough information to override their decisions.

Pulitzer Prize-winning business columnist Michael Hiltzik of the Los Angeles Times later said the award was “redolent of cronyism.”

Approval of the award came during a grant round in 2012 that also saw StemCells, Inc., receive  another big award from the CIRM board -- $20 million. But that research received a high score from reviewers and was recommended by them.  Both awards required equal matching funds from the StemCells, Inc. – a total of about $40 million from a business that at the time was burning through $5 million a quarter and had only $10.4 million in liquid assets.   The financial capabilities of the firm were not discussed in public by the CIRM board. 

After eight months of negotiations with CIRM, the firm decided to take only the money for the project twice rejected by reviewers,  CIRM had no choice about whether it could fund the higher rated project, which is now in a clinical trial. That development came as the agency was urgently pushing to participate in clinical trials that would fulfill the promises to voters who created the agency in 2004 and help boost its drive for financing beyond 2017, when money for new awards runs out.

Trounson recused himself from the 2012 public discussions of the StemCells, Inc., applications because of his relationship with Weissman, who is a member of the company's board and chairman of its scientific advisory panel. Last January, Trounson strongly backed a $40 million award to a Stanford-led consortium that also involved one of Weissman's top associates. 

Beyond CIRM, the Trounson affair will also raise questions for StemCells, Inc.,’s efforts at private financing. The firm will now have to answer difficult questions about the appointment as it seeks loans or stock sales. The appointment could also play a role in the possible sale of the firm’s research to a Big Pharma company. One of the hopes of small biotech companies is that they will be purchased by a larger enterprise that wants to acquire their research. That is a common way for early investors to reap their profits.  But those big companies do not want unnecessary baggage in the deal.

The stock price of StemCells, Inc., last Monday hit $2.31. It dropped to $2.05 by the end of the week. The price has ranged from $1.15 to $2.43 over the last 52 weeks.

The company lists five analysts that follow its activities. Last week one recommended a buy and the others rated the stock as“outperforming.” Two of the analysts’ companies have financial relations with StemCells, Inc. The others may as well but that could not be immediately determined.

On July 2, prior to the Trounson announcement, The Street.com, which is not listed by the company as an analyst, said,

“TheStreet Ratings team rates STEMCELLS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate STEMCELLS INC (STEM) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and generally high debt management risk."

The California Stem Cell Report last Monday asked StemCells, Inc., and Trounson for comments on the controversy about his appointment. They will carried verbatim when they are received. 

The Stem Cell Take on the World Cup: Chalk Up One for California

Angel Di Maria
Photo Franny Schertzer

The $3 billion California stem cell agency scored big in this week’s coverage of what is one of the biggest sporting events on Earth – the World Cup.

One would not think soccer and stem cells are a natural combination. But an internationally celebrated player for Argentina, Angel Di Maria, pulled them together. He got banged up a bit and is trying a stem cell treatment so he can bounce back for tomorrow’s final match between Argentina and Germany, which is expected to be viewed by more than 3.2 billion people.(Yes, billion is correct.)

Kevin McCormack
Photo Fog City Journal

Yesterday, California’s much less well known stem cell agency got into the game, so to speak. Kevin McCormack, the agency's lead PR “striker” – that's a soccer term – wrote about Di Maria on the agency’s blog.  McCormack sounded a warning about the coverage of the Di Maria treatment as well as lowering expectations that Di Maria’s stem cell treatment might do any good.

McCormack’s item is what led to the big mainstream media score. Lenny Bernstein of the Washington Post saw McCormack’s item on the Internet  (score one for the impact of social media on stem cell PR) and contacted McCormack, who has  played soccer himself as well as engaging in a little boxing and squash.

The result was a nicely done story in the Washington Post that had a strong emphasis on what the stem cell agency had to say about dubious stem cell treatments along with a mention of the California agency's size and reach.

Bernstein also wrote,

“McCormack and others express concern that when pro athletes and other celebrities have unproven treatments, it sends the rest of us weekend warriors out in search of the same. Here a good bit of blame goes to us in the media. A 2012 analysis conducted for the journal Molecular Therapy showed that 72.7 percent of the media coverage of athletes and stem cell therapy didn’t address whether the treatment works, and 42 percent referred to alleged benefits. Only 5.7 percent of the stories brought up possible safety issues and risks.”

Why does all this accrue to the agency’s benefit?  Number one is that it portrays the agency in a favorable light. Number two: it makes more people aware of what the agency does. Number three: the Post syndicates its stories and Bernstein piece is likely to get play in other papers. Four, the article will turn up for years in future searches by writers looking at the use of stem cell therapies by athletes. Five, it is a rare case of coverage involving the agency by a major and respected East Coast newspaper. Six, because the article deals with sports, it will reach a large audience that normally would avoid stem cell news.

California’s stem cell research effort is well-known among certain tiny, insular circles. But it is all but invisible to the public at large in California. If the agency is to secure additional funding (money runs out in less than three years), it needs to be known widely and favorably for good work. The Washington Post is an example of the type of recognition that needs to be replicated many times if the agency wants to secure a new future. 

California Stem Cell Conflict Case Covered by Los Angeles Times

The Los Angeles Times today published a brief story on the Trounson-StemCells, Inc., affair, declaring that the California stem cell agency was taking steps deal with a “risk of conflict of interest.”

Amina Khan wrote the piece, which included quotes from John M. Simpson of Consumer Watchdog of Santa Monica, Ca., who said,

“The thing smacks as if this is StemCells, Inc., giving a payback to (Alan) Trounson(former president of the agency) after the agency awarded $19 million to StemCells Inc. That’s just the way it looks. And I think they have to explain quite clearly why that is not the case.”

Trounson was appointed to the board of StemCells, Inc., of Newark, Ca., last Monday.  StemCells, Inc.’s directors received as much as $99,000 in 2013.

Khan carried little new on the situation, although the issue was undoubtedly new to virtually all of 1.4 million readers of the Times, the state’s largest circulation newspaper.

Biopolitical Times: Trounson-Weissman-StemCells, Inc., Affair is 'Shameful'

The headline on the Biopolitical Times story said it all: “Shameful Conflicts of Interest Involving California’s Stem Cell Agency.”

The piece by Pete Shanks of the Center for Genetics and Society in Berkeley, Ca., dealt with the former president of the agency, Alan Trounson, and StemCells, Inc., which holds a $19.4 million award from the agency, along with Irv Weissman, the Stanford researcher who founded the firm and who now sits on its board.

Trounson was named to the StemCells, Inc., board on Monday, seven days after he left the agency. Yesterday the agency, formally known as the California Institute for Regenerative Medicine(CIRM), launched a “full review” of all activities involving StemCells, Inc. The agency also banned its staff and board fromcommunicating with Trounson about matters involving the publicly traded firm.  

Shanks wrote,

“Let's be blunt: This looks like a pay-off. Technically, what Trounson and Weissman and StemCells, Inc., just did may not be illegal. But it's shameless.”

Shanks pointed out that the problems with conflicts of interest at the agency are nothing new. As far back as 2004, they were noted prior to passage of the measure that created the state research effort. Their importance was noted by major supporters of the measure, including Weissman.

Weissman was quoted in Nature in September 2004 as saying,

“We want to avoid even the appearance of a conflict.”

Shanks concluded,

“CIRM should take a long look at its practices and procedures, which have never served the agency well — and especially should consider its obligations to the public, who fund it. There can be practical difficulties in balancing expertise and objectivity; the best scientists in any field do tend to know each other well. All the more reason to be especially careful. This kind of obviously problematic conflict of interest can and should easily be avoided.”

Scripps-USC Deal is Dead; Cash Problems Remain

The $600 million merger of The Scripps Research Institute with the University of Southern California has been quietly put to rest, but the issues behind it – money, money and money -- are still very much alive.

Scripps announced the termination of the proposed deal yesterday in a three-paragraph statement. Bradley Fikes and Gary Robbins of the San Diego U-T, who have been on this story like a dog on a bone, wrote,

“James Paulson, who chairs the Department of Cell and Molecular Biology, praised the decision in an email to U-T San Diego.

“'This is a very positive step taken by the board and Dr. (Michael) Marletta(president of Scripps),’ Paulson wrote. ‘It clears the slate to look at all possible options to secure the future of TSRI, and will undoubtedly be welcomed by the faculty.’”

Faculty leaders had called for the removal of Marletta, declaring that they lack confidence in him. Scripps is running a $21 million deficit for the fiscal year ending Sept. 30. It also has come up short in philanthropic contributions while federal funding for research has shrunk.

UC San Diego earlier expressed an interest in some sort of arrangement with Scripps, which is reknown for its biomedical research. But little information has surfaced on whether that possibility has advanced. 

California Stem Cell Agency Bans Some Communications with its Former President; Conflict of Interest Feared

The California stem cell agency today banned its employees and governing board from communicating with its former president, Alan Trounson, about matters involving StemCells, Inc., which holds a $19.4 million award from the state program.

Citing the need to protects its integrity and prevent conflicts of interest, the agency also ordered a full review of all agency activities linked to the publicly traded,  Newark, Ca., firm.

Today’s action followed Monday’s appointment of Trounson to StemCells, Inc.’s, board of directors. The announcement came only seven days after Trounson’s departure from the agency.  Members of the StemCells board received as much as $99,800 in total compensation in 2013.

Trounson’s relationship with StemCells, Inc., and its founder, Stanford researcher Irv Weissman, has come under sharp criticism. John Simpson of Consumer Watchdog of Santa Monica, Ca., a longtime observer of California stem cell affairs, said this week that Trounson’s appointment “calls into question not only his ethics, but unfortunately casts a shadow over CIRM and its award process as well.” 

Simpson said,

“Whether it’s true or not, this has every appearance of being a payback for the money CIRM paid out to Irv Weissman and Stanford University. StemCells Inc. and Stanford have received more than $300 million from CIRM — more than any other researchers.”

Weissman has received $34.7 million in grants from the stem cell agency, which is formally known as the California Institute of Regenerative Medicine (CIRM). Stanford has received $281 million.

In its announcement today, Randy Mills, the agency's new president, said,

“CIRM was created by the people of California to help accelerate stem cell treatments to patients with unmet medical needs.  Our responsibility is to them. So it is essential that we conduct these efforts with fairness and integrity. We take even the appearance of conflicts of interest very seriously.”

The agency also said that it was sending a letter to Trounson and StemCells, Inc.,  “reminding them of the legal limitations that apply to Dr. Trounson under state law.

“Although it is permissible for Dr. Trounson to accept employment with a CIRM-funded company, state law prohibits him from:

“1.  Communicating with Board members and CIRM employees on behalf of Stem Cells, Inc. for the purposes of influencing any administrative action, including the award or revocation of a grant or loan, involving Stem Cells, Inc. for one year following the termination of his employment with CIRM; and
“2. Assisting Stem Cells, Inc. in responding to a Request for Applications in which Dr. Trounson was involved as a CIRM employee or assisting Stem Cells Inc. with its existing loan.”

The agency said that it did not know that Trounson was going to be appointed to the StemCells board and only learned about it through the press release Monday morning.

The $19.4 million award to StemCells, Inc., occurred under unusual circumstances.  Robert Klein, the first chairman of CIRM, lobbied on behalf of the award, which was rejected twice by the agency’s respected reviewers.  Despite reviewer actions, the board approved the award on a 7-5 vote. (See here, here and here.)

Trounson’s relationship Weissman came under question also in the $40 million stem cell genomics award earlier this year. The No. 2 person in Weissman’s Stanford stem cell institute was involved in that award. However, the agency has not yet signed a final agreement involving that proposal.

The agency did not mention any awards beyond those involving StemCells, Inc., in its review.

The San Francisco Chronicle carried a story this afternoon on the agency's ban regarding Trounson.

Stephanie Lee wrote in the Chron,

“'It’s a pity that Trounson and StemCells Inc. simply don’t get it,' Simpson said. 'A full review of CIRM activities relating to StemCells Inc.,  as Mills pledged, is absolutely essential and the results must be made public as soon as available.'”

Bradley Fikes of the San Diego U-T quoted CIRM Chairman Jonathan Thomas as telling his board members,

"The announcement (by StemCells, Inc.)raises serious and obvious concerns on a number of fronts." 

Watchdog Says Trounson-StemCells, Inc., Connection Casts 'Shadow' Over California Stem Cell Agency

The San Francisco Chronicle today carried a story on the appointment of Alan Trounson, former president of the $3 billion California stem cell agency, to the board of  StemCells, Inc., which has received $19.4 million from the research program.

Trounson’s appointment came only seven days after he left state employment. Last year, members of the firm's board received as much as $99,800 in cash and company stock, as reported by the California Stem Cell Report yesterday.

Chronicle reporter Stephanie Lee today wrote that the agency's funding was "pivotal" for StemCells, Inc. On Saturday, in an overview of the stem cell agency, she quoted Martin McGlynn, CEO of the publicly traded company, as saying,

 “We would not have been able undertake another program, and certainly one as challenging and as risky as Alzheimer’s, were it not for the fact that (the agency) was willing to provide funding for us.”

Lee also quoted John Simpson of Consumer Watchdog of Santa Monica, Ca., a longtime observer of the agency, on the matter. Simpson said that Trounson’s joining of the board “calls into question not only his ethics, but unfortunately casts a shadow over CIRM and its award process as well.”

Simpson continued,

“Whether it’s true or not, this has every appearance of being a payback for the money CIRM paid out to Irv Weissman (an eminent Stanford researcher and founder of StemCells, Inc.) and Stanford University. StemCells Inc. and Stanford have received more than $300 million from CIRM — more than any other researchers.”

Simpson said that Trounson should have waited two years before joining a company that had received funds from the stem cell agency.

Lee said that StemCells, Inc., filed a document with the federal Security and Exchange Commission that said said,

 “There was no arrangement or understanding between the Company and Dr. Trounson pursuant to which he was selected as a director of the Company.”

Lee said the Newark, Ca., company declined to comment. The California Stem Cell Report yesterday asked StemCells, Inc., Weissman and Trounson for comment as well as the stem cell agency.  Their remarks will be carried verbatim when they are received.

Ron Leuty of the San Francisco Business Times also wrote a piece on the matter yesterday.

Former CEO of California Stem Cell Agency Named to Board of Firm that Received $19 Million From the Agency

Alan Trounson, the former president of the $3 billion California stem cell agency, today was named to the board of a company that has received $19.4 million from the agency, raising fresh and serious questions about conflicts of interest at the state-funded research program.

Announcement of the appointment came only seven days after Trounson left state employment. Trounson has been dogged for some time with questions about his relationship to the company, StemCells, Inc., of Newark, Ca., and its co-founder, eminent Stanford researcher Irv Weissman, who sits on the company’s six-man board and is chairman of its scientific advisory board.

StemCells, Inc., announced Trounson’s appointment in a press release this morning. The publicly traded firm said it was “thrilled” to have Trounson on its board. The first sentence of its press release noted that he had served as head of “the largest scientific funding body for stem cell research in the world.”

Weissman is director of the Institute of Stem Cell Biology and Regenerative Medicine at Stanford. He has received $34.7 million from the agency. Stanford overall has received $281 million from the stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM). It is the No. 1 recipient of cash from the agency.

One California stem cell researcher, who asked to remain anonymous, said in an email,

“This looks like payback to Alan Trounson for all of the money that CIRM paid out to Irv Weissman (founder of StemCells, Inc.) and his friends at Stanford while Alan was president of CIRM.  Many people have pointed out that Alan seemed to be biased toward Stanford in his public and private comments. The facts bear that out: Stanford and StemCells, Inc., have had more than $300,000,000 of CIRM's $3 billion in funds awarded to them in grants.  Are they really more than twice as good as UCSF ($132,650,363), and three times better than USC ($104,858,348) and UC Irvine ($98,591,836)?”

As a member of the board of directors of StemCells, Inc., Trounson is expected to receive compensation including stock in the company. In 2013, members of the board received total compensation, including stock awards, ranging from $60,800 to $99,800, according to a Security and Exchange Commission filing.

StemCells, Inc., Weissman and the stem cell agency did not immediately respond to requests for comment. Trounson, who announced last fall he was leaving the agency to return to Australia, could not be reached. The California Stem Cell Report will carry the full text of their remarks when they are received.

Last year and earlier this year, conflict of interest questions concerning Trounson and Weissman came in a $40 million stem cell genomics award round that was won by a Stanford-led team last January. The round was marked by a conflict of interest connected to Trounson, CIRM grant reviewer Lee Hood of Seattle and Weissman. Hood and Weissman own a Montana ranch where Trounson has been a guest. Trounson recruited Hood to help review the stem cell genomics applications in 2013 in closed door meetings. Hood, however, failed to disclose his relationship with Weissman.  It only came to light after another reviewer pointed out the connections between the two men. The agency had failed to detect the conflict.

As the California Stem Cell Report has previously noted,,

“Prior to the genomics round Trounson had acknowledged he had a conflict-of-interest in connection with another Weissman-related proposal. In 2012 in a round not connected to genomics, Trounson, who has visited the Hood-Weissman ranch as Weissman's guest, recused himself from the board's public discussions of applications from StemCells, Inc., a company founded by Weissman.

“Under CIRM's procedures, Trounson does not vote on applications during the review process. But beginning last year the board gave him and his staff new authority to make recommendations on applications after they were acted on by reviewers.”

Trounson ultimately recommended board approval last January of the genomics application from Stanford after Weissman was removed from the proposal.

During last January’s meeting, Trounson touted the Stanford application and specifically mentioned Michael Clarke, who is the No. 2 person in Weissman’s stem cell institute at Stanford, and who was part of the Stanford application instead of Weissman.

According to the meeting transcript, Trounson said,

“I think he's (Clarke) an extraordinary good researcher, and I think the Stanford people are terrific at that.”

The agency said earlier this year it had begun an examination of the processes in the stem cell genomics round, which was criticized for irregularities,unfairness, score manipulation and Trounson’s role.   No results of that inquiry have been announced.

Since the agency's inception in 2004 questions have been raised about conflicts of interest at the agency, mainly due to the composition of its board. Roughly 90 percent of its grants have gone to institutions that have been linked to members of its board.  The Institute of Medicine, in a $700,000 study commissioned by the agency, said that the board members essentially make proposals to themselves about what should be funded. And in 2008 the journal Nature editorialized about "cronyism" at the agency.

Hope and Home Runs: Nature and the Chron on the California Stem Effort

It wasn’t exactly a stem cell tag team, but both the journal Nature and the San Francisco Chronicle this past week carried lengthy pieces examining the state of affairs at California’s $3 billion stem cell agency.

 Neither of the articles was a valentine, but overall the agency should be satisfied with them -- if only for the reason that they will make more people aware of what the agency is doing. The agency received something of a cyber bonus with a video on the Nature Web site that accompanied its online article(see video above). Coverage of the agency, especially in the mainstream media, has been minimal over the last several years.

 Meanwhile the agency has been trying to spread the word as it tries to fend off its financial demise in less than three years, when funds for new research awards run out. 

Both pieces covered familiar ground for readers of this Web site. And both emphasized the looming financial crunch for the agency, which is examining the possibility of some sort of private-public financing arrangement. The agency has not ruled out another bond measure to secure voter approval for as much $5 billion in additional financing. Neither article discussed the likelihood of voter approval, which is problematic. 

Both pieces took a run at providing summaries of the work that the agency has financed and its contributions. Both noted that the agency has yet to produce a stem cell therapy despite the apparent promises of the ballot campaign 10 years ago that created the agency. 

Erika Check Hayden, who wrote a Nature overview of the agency in 2008, was the reporter again on the latest article on July 2.  It was headlined, 

"Stem cells: Hope on the line"

The subhead said,

“A decade ago, voters in California changed the biomedical research landscape by directly funding embryonic stem-cell research. Now the organization they created needs a hit to survive.”

Hayden wrote,

“The institute has navigated a difficult path, however. CIRM had to revamp its structure and practices in response to complaints about inefficiency and potential conflicts of interest. It has also had to adapt its mission to seismic shifts in stem-cell science.

A "home run" is now in order in the words of agency board member Sherry Lansing, the Nature article said.

Hayden interviewed former agency chairman Robert Klein about his plan for a $5 billion bond measure, perhaps in 2016. She quoted Klein as warning that the nation and California could see a “theocratic government” in the near future that would endanger research. Hayden wrote that Klein said,

“We have to protect science's access to the full range of cellular types now. And in doing that, we will protect the freedom of science to ethically pursue knowledge in this country outside of religious ideology.”

Klein also said,

“If we don't take a position now the next ten years may see a theocratic government at the state and federal level that restricts scientific research in this country for the next 50–100 years.”

As for the agency’s accomplishments, Hayden wrote,

“(I)n California, researchers are making nerve, heart, eye and skin cells from iPS cells and embryonic stem cells — a range of work rare for a single state — and they aim to test many of these in humans. They are developing drugs against cancer stem cells, which are thought to perpetuate the disease. And they are leading the world's only two trials of treatments that combine gene editing and cell therapy to treat HIV. They are doing all this with an unmatched infrastructure, including a network of 12 new or newly renovated facilities, and a funding pipeline that acts as a beacon to young scientists.

“Almost every country would be jealous of what they've got in California,” says Christine Mummery of the Leiden University Medical Center in the Netherlands.”

Mummery is a member of the agency's scientific advisory board.

Stephanie Lee was the writer on the San Francisco Chronicle story that was on the first page of the business section on July 5.

It was headlined,

“Stem cell researchers under pressure to produce”

The headline was drawn from this paragraph by Lee,

“Fund recipients are under pressure to show results - commercially viable therapies, ideally. Universities and other nonprofit groups have received most of the money, but the pressure is especially heavy on biotechnology companies that have staked their livelihoods on such therapies."

Lee mentioned StemCells, Inc., (along with photos at the company’s lab), Asterias, Capricor, Calimmune and ViaCyte as companies that are making progress.

 She continued,

“As (clinical) trials add more patients, they become more expensive. The challenge in the future will be to find money to keep these trials going when the stem cell agency runs out of money.

"’It's certainly not going to make life easier,’ said (Martin) McGlynn (CEO) of StemCells, which reported a $28 million operating loss last year."’To their credit, the California voters stepped up to the plate, and $3 billion is a lot of money,’ he said. ‘But an awful lot more is going to be needed to finish the job.’"

Lee continued,

“It is not realistic to expect a stem cell therapy to reach consumers in five years, especially when the field is so young, said Enal Razvi, managing director at Select Biosciences, a life sciences market research company.

"Even so, by 2017, ‘if they don't have products already on the marketplace, they should not be expecting public money to fill their portfolio,’ he said. ‘Apple doesn't go to California and keep asking for money to build their own iPhone.’"

Disillusionment Cited by Scripps Researchers: No on Marletta and USC

Unhappy scientists at the Scripps Research Institute are trying to broaden support for ousting its president and avoiding a merger with USC. 

Scripps is suffering from financial difficulties, including a $21 million deficit in the fiscal year ending Sept. 30. Bradley Fikes and Gary Robbins reported in the San Diego U-T Saturday on the latest developments. They wrote,

“Chemist Donna Blackmond proposed in a Friday email that faculty who are members of the elite National Academies send the board a letter 'indicating no confidence in the leadership at Scripps.’ Such a move would show that the faculty’s disillusionment isn’t limited to a few allegedly rogue professors, she said.

“Blackmond added: ‘I can inform you that the 50+ women faculty are currently in the process of drafting such a letter.’”

The top faculty leaders have already called for the removal of Michael Marletta as president of Scripps, a job he assumed in January 2012. 

Scripps' Top Faculty Wants Marletta Removed as President

The turmoil at the highly regarded Scripps Research Institute today intensified as its top faculty called for the removal of its president, Michael Marletta, who is involved in an effort to merge the organization with the University of Southern California (USC).

The demand was reported today in the San Diego U-T by Bradley Fikes and Gary Robbins. They wrote that the faculty leaders “have lost confidence” in Marletta, who assumed his position in January 2102.  

 Scripps is running a $21 million deficit for the fiscal year ending Sept. 30. Grants for biomedical research are tight and donations to Scripps are not meeting the institute’s long-term needs. Scripps derives more than 86 percent of its funding from the NIH, which is under stringent federal budget constraints.  The negotiations with USC are now in a “deep freeze,”  Fikes and Robbins reported yesterday.

 The faculty made the call for his removal in an email last night to Scripps Board Chairman Richard Gephardt, the former majority leader of the House of Representatives and now a Washington lobbyist.  He told Fikes and Robbins in an email today that the board understands a “variety of perspectives” exist concerning the future of Scripps. The San Diego newspaper did not immediately carry a response from Marletta.

Peter Farrell, another Scripps board member and executive chairman of ResMed, did not welcome the call for Marletta’s removal. He told the San Diego U-T,

 “If you’re on the board, you say, ‘Who’s running this ship, guys? You can make suggestions, but you cannot demand action. In other words, the board’s being told what it’s got to do, and if you don’t do this, we’re going to take our bat and ball and go home.”

Fikes and Robbins wrote,

“Farrell expressed sympathy for the faculty, but said Marletta is working with the best interests of Scripps Research at heart.”

In an online comment on the U-T Web site, Jeanne Loring, director of the Scripps Center for Regenerative Medicine,  said,

"Why would a board member of an organization 'feel sorry' for a group that brings in 86 percent of the funding for that organization? That makes no sense. Is he suggesting that we take our money elsewhere?"

Regarding Loring's comment concerning funding, for those unfamiliar with the way many nonprofit research organizations operate, it is on the same principle as a beauty parlor. In a beauty parlor, a beautician rents a chair and shares his/her income with the owner of the business. If the beautician’s income drops off, he or she is out the door. Likewise, scientists receive space and support at facilities like Scripps. Their obligation is to keep the grant money rolling in the door. The research organization then takes a healthy cut.

Fikes and Robbins wrote that Scripps has been a pillar of “biomedical brain power.”  But they said the scientific achievement has not been matched by fundraising since Marletta was named as president.  They wrote,

“During that time, Salk and Sanford-Burnham (both located near Scripps) have raised great sums of money. In January alone, Sanford-Burnham received an anonymous $275 million donation in January, to be given over 10 years.

“During the last couple of years, the Salk Institute has raised $275 million in a capital campaign, although Salk has far fewer faculty than does Scripps Research.”

Scripps has declined to disclose its fundraising figures, the U-T reported.

So far the Scripps-USC negotiations and turmoil have attracted little attention in the scientific media. However, that is likely to change this month in the wake of the increasing turbulence. 

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.