Budget Scrutiny and Background Checks: Big Changes for California Stem Cell Researchers

From cash payments to conflicts of interest, the $3 billion California stem cell agency this week is set to ratify a radical change in how it awards its largess and oversees the research it funds.

Coming up for approval today by a key panel of the agency’s directors are new rules governing how scientists apply for millions of dollars and how they will receive payments.

Instead of checks rolling in primarily on a calendar basis, for example, they will reach researchers only if they meet milestones approved by the agency, formally known as the California Institute for Regenerative Medicine (CIRM).

The proposals are part of CIRM 2.0, a label coined by UC Davis researcher Paul Knoepfler and adopted by Randy Mills, who has been president of the agency since last May.

With CIRM 2.0, Mills hopes to generate faster and better results than in the past. The main, direct impact will fall on the hundreds of California researchers who will have future agency funding. But if Mills is successful, it will also pay off for California citizens who are financing the agency with borrowed money at a total cost of $6 billion including interest.

The rules will apply immediately only to three clinical stage rounds, but Mills expects to extend them to all future rounds. Officially they are called interim and are subject to additional vetting through the state’s official rule-making process.

Here is a brief look at some of the key features of the new rules, based on a memo prepared by Mills and his team. The rules were first considered in January but final approval was put off until this month.

Payments: Made only on completion of successful milestones. A CIRM memo said, “Additionally, in many circumstances the grantee will be allowed to keep unspent CIRM funds upon successful completion of the project, to be spent on any other project of the grantee’s that is consistent with advancing CIRM’s mission. This new process will incentivize grantees to advance the project in the most efficient and shortest time possible, fulfilling CIRM’s goal to accelerate such projects.”

Background check: Applicants will “undergo a background check to ensure no prior or pending records of fraud or misuse of funds”

External budget review: As soon as an application is received, it will scrutinized by an external contractor “to identify where proposed costs diverge from established market rates and where opportunities for budget tightening may be found.” This is in addition to budget reviews by staff, the grant review group and the board.

Severe appeal restrictions:  Appeals by applicants will be restricted to “a demonstrable financial, professional, or personal conflict of interest, as defined in the (agency’s) conflict of interest policy, (that) had a negative impact on the review process and resulted in a flawed review. Differences of scientific opinion between or among PIs (principal investigators) and reviewers are not grounds for appeal.” State law, however, permits researchers to communicate directly with the CIRM board on any matter. It is almost impossible for applicants to identify conflicts of interests because the names of persons who review their applications are withheld by the agency. Plus reviewers’ professional and financial interests are withheld by the agency.

Clinical advisory panels (CAPs): These new panels “will provide real-time course correction and will focus more on acceleration opportunities than pure evaluation. CAPs will be tailored for the needs of each project and will consist of CIRM and external members, more nimbly sized than prior (advisory) panels. CAPs will meet on a quarterly basis (instead of annually…) and examine all relevant information regarding project progression, possible roadblocks and avenues for progression.”

Elimination of documentation: Instead of requiring awardees to produce many documents, the agency “will rely on certification of compliance by the applicant, with the ability for CIRM to request supporting documentation if cause to do so arises”

The proposed rules are expected to be approved today at the 2:30 p.m. PDT meeting of the Science Subcommittee of the CIRM board and ratified on Thursday by the full board at its meeting in Berkeley. The public can address the subcommittee at meeting locations in Washington, D.C., two in the Los Angeles area and one each in San Francisco, San Jose, Irvine, Oakland and La Jolla.  Specific addresses can be found on the agenda.

Effort to End $500 Million California Stem Cell Research Loan Program Stalls Again

The California stem cell agency has postponed action on a proposal that would have all but eliminated its $500 million loan program, which has been deemed less than worthy.

A subcommittee of the agency’s board had been scheduled to act on the new plan last Thursday. However, the meeting was postponed at the last minute with no public explanation.

In response to a question, Kevin McCormack, senior director for communications, said last week,

“The meeting was postponed so we could work on the proposal some more before bringing it to the subcommittee. The document was removed from the website because it was actually the wrong document. It was an earlier, outdated version of the proposal and didn't reflect many of the changes that were made.” 

However, the plan (dated March 13) remains on the agenda for the full board meeting on this Thursday. Presumably, failure to remove it as well was an oversight. 

(On Monday March 23, the loan item was re-labelled as postponed on the full board meeting agenda. The plan was still available online via the link above as of this writing.)

This is the second postponement on the loan overhaul. The first came in January and also was cancelled late with no public explanation.

Randy Mills, who was named president of the agency about 11 months ago, said in the March 13 memo to the board that the existing loan effort was “overly complex, administratively burdensome, and, as reflected in the number of loans issued, it does not appear to be attractive to industry.”

Only five loans have been made since the program was begun in 2008.  Only two loans are currently active.

The agency has not responded to a March 18 query concerning whether any businesses provided direct input into the loan changes proposed by Mills. 

The existing loan program was the brainchild of Robert Klein, a real estate investment banker who was the agency’s first chairman.

Mills plans to replace the loan program as part of his efforts to speed development of stem cell therapies. No awards have yet been approved under that effort, which began only on Jan. 1. 

California to Spend Nearly $16 Million More for Preclinical Stem Cell Research

The California stem cell agency next Thursday is expected to award $15.8 million to five scientists to help push their research into clinical use for afflictions ranging from arthritis to the “bubble boy” syndrome.

Another five researchers have been told that they need to improve their proposals and can bring them back to the agency in July. They will then be considered under the agency’s new, aggressive CIRM 2.0 program to speed action on development of stem cell therapies.

CIRM is the abbreviation for the California Institute for Regenerative Medicine, the official name of the $3 billion agency. Its president, Randy Mills, who has been in place since last May, is overhauling the agency’s grant process with sharp eye on faster development and calls the effort CIRM 2.0.

The applications scheduled to be acted by the CIRM board on March 26 in Berkeley are for early preclinical research that is ready for transition to the next preclinical stage. CIRM originally budgeted $40 million for this round.

The top five applications received scores ranging from 90 to 75 and covered possible therapies involving spina bifida, arthritis, Huntington’s Disease, diabetic wounds and SCID-X1(bubble boy syndrome).

The five in tier two total $27.3 million. A memo to the CIRM board from Mills said,

“While CIRM recognizes that some applications not in Tier 1 do have the potential to positively impact the field, none was without flaw and all could be improved with further refinement. Unfortunately, the application and review system for this RFA does not accommodate iterative refinement and resubmission, a key feature of CIRM 2.0. As a result, CIRM recommends that interested applicants consider improving their submission and reapplying under the CIRM 2.0 Translational program that will be brought to the ICOC (the CIRM board) in July.”

Mills also said the researchers may be able to resubmit their proposals under the current CIRM 2.0 process which is accepting applications at the end of each month.

The scores on each application in the two top tiers can be found on this 90-page document, which also includes summaries of the comments made during the closed-door grant review process. 

The names of the applicants have been withheld by the agency, although they can often be deduced by discerning readers. The names of the scientific reviewers are also not released. Scores on the rejected applications were not posted by the agency.

$500 Million Stem Cell Loan Effort: Klein Legacy Plan Receiving Heave-Ho

The California stem cell agency tomorrow is expected to all but bury a $500 million loan plan pushed by its first chairman, Robert Klein, and replace it with something exceedingly more modest.

The current loan effort is “overly complex, administratively burdensome, and, as reflected in the number of loans issued, it does not appear to be attractive to industry,” said agency President Randy Mills in a forthright memo to the agency board. 

Robert Klein, CIRM photo

Klein’s dream was that loans would generate revenue through interest payments and help to ensure the $3 billion agency’s existence. The agency’s board paid $50,000 for a PricewaterhouseCoopers study that said $500 million in loans could generate a major return.

As the California Stem Cell Report wrote on May 14, 2008,

“How do you turn $500 million into as much as $1 billion over 10 years? Loan it to struggling biotech companies that could default on the loans at a rate of up to 50 percent. 

“Sound too good to be true? Maybe, but that's what the California stem cell agency is projecting….” 

In 2007 and 2008, Klein, a real estate investment banker, bandied about a variety of numbers that ranged up to $1 billion. The agency finally settled in 2008 on $500 million to commit to loans. The concept had a special allure because biotech companies are perennially cash-starved. But only five companies ultimately received loans, two of which are outstanding.  The agency has made 666 research awards, including the five loans.

Mills plans to replace the existing loan effort in his first foray into CIRM 2.0, a radical move to speed funds to researchers that he intends to extend to all awards made by the California Institute for Regenerative Medicine (CIRM), as the agency is formally known.

In his loan memo, also authored by two CIRM attorneys and the agency’s business development officer, Mills said the initial recipients in the CIRM 2.0 launch would

“…have the option to elect to convert their award from a grant to a loan within a specified period of time from the effective date of the award, e.g., seven years.  Unless the parties agreed to different terms, the awardee would be required to repay the loan balance within ten days of making the election to convert from a grant to a loan at an interest rate that would escalate based on the date of repayment.  For example, an awardee that repaid CIRM within three years of the effective date of the award would pay a lower interest rate than an awardee that elected to convert to a loan six years after the effective date."

Mills said his plan is simpler, more realistic and compelling to recipients than the agency’s current loan effort.

The  board’s Intellectual Property Subcommittee is expected to back Mills’ changes at its 10 a.m. meeting tomorrow with full  board ratification on March 26.  The public and potential recipients of CIRM loans can speak to the matter at two public locations in San Francisco, one each in Hawaii, Irvine, San Diego, Los Angeles and Redwood City.   Complete addresses are available on the agenda.

Proposed changes in the loan program were initially scheduled to be approved in January, but that attempt was suspended with no public explanation.

(Editor's note: The meeting was postponed on March 19. No explanation was posted on the CIRM Web site. The link to the memo from Mills was removed from the IP agenda, but a copy still could be found (as of this writing on March 19) on the March 26 agenda for the board meeting.)

Chairman of $3 Billion California Stem Cell Effort Up for Evaluation Next Week

One week from today, a select panel of the directors of the $3 billion California stem cell agency will meet for the first time to assess the performance of its chairman, Jonathan Thomas, during his nearly four years in office.

Thomas, a Los Angeles bond financier, was elected as chairman of the agency in June 2011 on a 14-11 vote of the 29-member agency board. (See here and here.) He is paid $400,000 annually for his part-time work (80 percent), according to a Sacramento Bee database. His salary has remained unchanged since he took office.

Left to right, Robert Klein, Art Torres and Jonathan Thomas (2009 photo)

Thomas succeeded Robert Klein as chairman of the agency. Klein was elected in December 2004 after shepherding the ballot campaign that year to pass Proposition 71, which created the agency and funded it with state government borrowing.

The agenda for next week’s meeting gave no clue to the reason for calling this particular evaluation session. But good personnel practices would seem to require regular evaluations, perhaps even more often than every four years.

In 2012, then outside counsel to the board, James Harrison, prepared a memo for the subcommittee discussing evaluation procedures. In the memo, Harrison, now general counsel to the agency but still an independent contractor, summarized procedures that called for Thomas to submit his job goals for 2012-13.

Also to be evaluated, according to the memo,  was Art Torres, vice chairman of the board. Torres was also elected by the board and works part-time (80 percent) at an annual salary of $225,000. The subcommittee has not scheduled a meeting to evaluate Torres’ performance. Torres has been paid $225,000 annually during the last two years. However, his pay ran up to $247,000 in 2012, $239,000 in 2011 and $230,000 in 2010, according to The Bee database, which is drawn from public records.

(In response to a question, the stem cell agency said later today that the money paid to Torres in those three years was for unused vacation time. Earlier versions of this item did not contain that response.)

The Evaluation Subcommittee has six members, including Thomas and Torres. However, Thomas is not likely to be sitting in on his own evaluation next week. Chairman of the panel is Francisco Prieto, a Sacramento physician. The others are Stephen Juelsgaard, former executive vice president of Genentech; Sherry Lansing, former head of a Hollywood studio and a University of California regent, and Jeff Sheehy, a communications manager at UC San Francisco.

The subcommittee has met six times since Thomas was elected. All of those meetings dealt with assessment of Alan Trounson, former president of the stem cell agency, according to agendas.

Next Friday’s meeting will be almost entirely behind closed doors, but the public does have an opportunity to comment.  Two locations for the public exist in San Francisco and one each in Los Angeles, Calistoga and Napa. Specific addresses can be found on the agenda.

California's Stem Cell Agency Needs New Home by This Fall; Faces $1 Million in New Costs

The California stem cell agency isn’t quite at the stage of “Ain’t Got No Home,” the title of the immortal hit song from 1956.  But the search for a new roost for the research effort is intensifying.

And it will likely add another $1 million or so to the agency’s annual operating costs. 

The $3 billion agency now operates out of free digs in San Francisco in a gentrified neighborhood that was a tad gritty back when the agency moved in a decade ago. Today the area is much tonier. Even the Happy Donuts shop down the street (open 24 hours) has cleaned up its signage, and a chichi pizza parlor is located on the ground floor of the stem cell agency’s building.

Come next fall the agency will be moving out of its roomy offices that were built to its custom orders. No more free rent – a benefit valued at about $1 million annually by the agency’s auditor. Gone will be the free parking, a matter of great import in San Francisco.

The free office space came as the result of a $17-$18 million package put together by San Francisco to entice the agency to the city. 

The California Institute for Regenerative Medicine (CIRM), as the agency is formally known, is looking for about 12,000 to 18,000 square feet(see specifications list below). On Nov. 14, 2005, when the agency moved into its current space, it had about 20,000 square feet with 18 window offices, 17 internal offices and 19 cubicles, according to a CIRM document.  That was for about 25 to 30 employees. Those employees currently number in the mid-50s, not a large number to be handling $3 billion.

In December, the governing board’s Governance Subcommittee briefly discussed what the agency is seeking. The specifications call for a facility that could accommodate the meetings of its board of directors, which would be a major change. CIRM would like a room that could handle 50 to 75 people. Twenty-nine persons sit on the board. The space would appear to be large enough to handle normal public and staff attendance but fall short of the space needed for the few occasions when large crowds appear. 

Board meetings have generally involved rented conference rooms at hotels. The hope is that a meeting room within CIRM offices could defray meeting costs.

Office space costs have skyrocketed in San Francisco over the last several years, pushed upward by the booming tech industry. According to one office space expert, 12,000 square feet of Class A office space in the city of San Francisco could run as much $900,000 a year with additional parking costs of up to $450 a month per stall. If the agency wants 18,000 feet, the cost climbs to roughly $1.4 million.

Given that situation, CIRM has expanded its search to include cheaper locations across the bay from San Francisco, including Oakland, where California Gov. Jerry Brown has a home, and Emeryville, a city once known as Butchertown because of its slaughterhouses. Today Emeryville businesses include the Pixar Studios. CIRM was also housed in Emeryville in 2005 while it waited for its offices in San Francisco.

At the December governance meeting, Art Torres, vice chairman of the agency, said that the city of South San Francisco is also on the list of possible locations. Genentech has its headquarters there and sponsored a sign declaring the city as the “Birthplace of Biotechnology.”

During the Governance Subcommittee meeting, one board member, Al Rowlett of Sacramento, pressed for consideration of other cities. Torres, who was leading the discussion, rebuffed him, according to the transcript of the meeting. Torres said that the four locations are being considered because the staff lives in them or nearby. He continued,

“I would just hate to move to an entirely different new city and then people have to make very difficult decisions on whether they could do so or just leave CIRM. At this critical stage of our development, I would feel that would be a burden that would be very heavy for us.”

Torres also said he is working with the city of San Francisco to see if it can persuade landlords to ease rent or provide some other kind of support.

Randy Mills, CEO of CIRM, told directors in January that the office move could lead to some disruptions in its activities. The agency last week reported no major new developments in the office space search. In 2009, the agency considered the possibility of use of a nonprofit to own the office space, given the legal cap on CIRM's operational budget. However, that possibility has not surfaced publicly in recent years. 

For those who want to know more about the inimitable Clarence "Frogman" Henry, who wrote and sang "Ain't Got No Home," here is a link to his Web site.

Here is the list of specifications discussed by directors in December.

   CIRM Office Space Specifications December 2014 by DavidJensen

Scrum or Duel? Canadian Researcher Prefers Broader Perspective on Diabetes Research

A Canadian scientist this week took issue with treatment on this Web site of stem cell diabetes research as a Massachusetts-California duel.

James Johnson, a primary member of the Diabetes Research Group at the University of British Columbia, referred to an item yesterday on the California Stem Cell Report.

James Johnson, UBC photo

In an exchange of emails this week with this writer, Johnson said “there are at least 25 large groups working in this sphere, not two.”

One of those groups is the Diabetes Research Group in British Columbia, whose research is backed by a subsidiary of Johnson & Johnson.

In a follow-up email, Johnson said, 

“My point was that I think portraying it as a race between 2-3 groups misrepresents what is a global effort.” 

He added,

 “Personally I doubt Harvard or ViaCyte (a San Diego firm) will be the first to market such a therapy.” 

Johnson makes a good point concerning the worldwide effort on diabetes. The search for a stem cell cure or therapy for diabetes goes well beyond California and Massachusetts.

A “duel” existed, nonetheless, between them as the result of an article in the MIT Technology Review and an item on the blog of UC Davis stem cell researcher Paul Knoepfler.  In the MIT piece, Harvard researcher Doug Melton commented critically on the ViaCyte effort. Paul Laikind, CEO of the San Diego firm, defended his project on the Knoepfler blog.

The California Stem Cell Report, which focuses almost entirely on California stem cell matters and the $3 billion state stem cell agency, was particularly interested in all this because the agency has pumped $55 million into ViaCyte. It is the largest amount that the state has invested in a single company.

Additionally, ViaCyte’s clinical trial is also the only diabetes clinical trial in the United States based on human embryonic stem cells, which, of course, generate far more controversy than adult stem cells.

As for the worldwide state of diabetes stem cell research, perhaps it could be described as a global scrum, the grunting and heaving moment in rugby when multiple players tussle to control the ball.

Transcontinental Diabetes Duel: The Search for a Stem Cell 'Cure'

Paul Laikind

Doug Melton,

One might call it a California-Massachusetts stem cell face-off. The tussle is over a stem cell cure of sorts for diabetes.

The players are Doug Melton of Harvard and Paul Laikind, CEO of ViaCyte in San Diego.  

Recently in separate forums, the men critiqued each other’s approaches to diabetes.

Most recently it was Laikind three days ago on the blog, ipscell.com, of UC Davis researcher Paul Knoepfler. Laikind was responding in a Q&A carried by Knoepfler.

Knoepfler asked about Melton’s comments in the MIT Technology Review last month. Melton was described in an article as being “worried” that ViaCyte’s technology, now in a first stage clinical trial, would not work. The California stem cell agency has invested $55 million in the firm's approach.

Knoepfler continued,

“(Melton) raised concerns more specifically about the Encaptra capsule, for example, functionally becoming fibrotic and mentioned worries about your cells being immature and taking a long time to mature. Any response on capsule and cells? He also has suggested that his beta cells will be a better option.” 

Laikind replied,  

“Dr. Melton’s work on the beta cell is very interesting. As to the cells, we made the choice to use the pancreatic progenitor cells. An important consideration is that when you first put in cells, they are in a hypoxic environment. Beta cells are sensitive to low oxygen levels, which can negatively affect their survival and function. Beta cells typically exist in a mature highly vascularized organ. The pancreatic progenitor cells that we use undergo an organogenesis-like process, more similar to how they behave in nature, and thus we believe they should be better able to handle low oxygen. They also are believed to release angiogenic and other factors to promote vascularization.

“In regards to the capsule, we do expect there to be a foreign body reaction in patients after implantation, which will generate a fibrotic capsule. In fact, we see a thin fibrotic capsule around the device in mice. But in the mouse model this capsule around the device is very well vascularized. The vasculature is right up against the device membrane on the outside, allowing for oxygen and nutrient diffusion to the cells inside.”

Knoepfler also asked about the diabetes effort in Canada involving BetaLogics Venture, a subsidiary of Johnson & Johnson, which also made a $20 million investment in ViaCyte last summer.

Laikind said situation involving Melton and BetaLogic was “healthy competition.”

He continued,

“There’s room in this area for multiple efforts and we aren’t especially concerned with competition. Yet we do feel we are ahead of others and we have substantial intellectual property that they will need to navigate (~50 patents issued in the United States, and a couple hundred pending patent applications, including international). At ViaCyte we view the real competition as the biology rather than with the efforts of others as we seek to cure this devastating disease.” 

Laikin had more to say about his firm’s product and Melton’s comments.  He also discussed ViaCyte’s clinical trial, which now has four patients with a goal of 40. He said the initial evaluation of efficacy could occur by late 2016. Within five years, he hopes to see “success” with the product and “be moving to market.”

Responding to a question about “product placement,” Laikin said the firm is currently inserting its tiny device in the lower back of patients. Laikin said,

“The reason for that placement is that while the device can withstand the impact of a 60 mph baseball (based on cadaver testing), a needle could go right through it, so we want to put it where patients don’t typically inject insulin.” 

Concerning Melton’s views on ViaCyte, the Feb. 12 MIT Technology Review piece said,

“Douglas Melton, a biologist at Harvard University who has two children with type 1 diabetes, worries that the ViaCyte system may not work. He thinks deposits of fibrotic, scarlike tissue will glom onto the capsules, starving the cells inside of oxygen and blocking their ability to sense sugar and release insulin. Melton also thinks it might take immature cells up to three months to become fully functional. And many won’t become beta cells, winding up as other types of pancreatic cells instead.

“Melton says the ‘inefficiency’ of the system means the company ‘would need a device about the size of a DVD player’ to have enough beta cells to effectively treat diabetes. ViaCyte says it thinks 300 million of its cells, or about eight of its capsules, would be enough. (Each capsule holds a volume of cells smaller than one M&M candy.)    Last October, Melton’s group announced it had managed to grow fully mature, functional beta cells in the lab, a scientific first that took more than 10 years of trial-and-error research. Melton thinks implanting mature cells would allow a bioartificial pancreas to start working right away.”

The Web site, diaTribe, last fall carried an analysis of all three approaches.

$28 Million California Search for HIV/AIDS Stem Cell Cure Advancing to Clinical Trial

The California stem cell agency today announced that one of its multimillion dollar efforts to come up with a cure for HIV/AIDS is moving into the first stage of clinical trials involving human beings.

The effort includes the City of Hope in Duarte, Ca., the University of Southern California and Sangamo BioSciences, Inc., of Richmond, Ca.

John Zaia
City of Hope photo 

The $3 billion agency is pumping $5.6 million into the clinical trial. Overall, the agency has awarded the lead scientist in the project, John Zaia of the City of Hope, $28.2 million for work involving HIV/AIDS. 

The agency, formally known as the California Institute for Regenerative Medicine (CIRM), said the FDA had approved the initial trial to determine the safety of the treatment.

CIRM’s press release said that the plan is to “take blood stem cells from HIV infected individuals, then treat them with zinc finger nucleases (ZFNs), a kind of molecular scissors, to disrupt the CCR5 gene in those cells. The hope is that this will make those stem cells, and their progeny, resistant to HIV. The modified cells will then be reintroduced into the patient with the hope that they will create a new, AIDS-resistant immune system.”

The effort is intended to replicate what occurred with the “Berlin Patient,” a man who has apparently been cured of AIDS as the result of a mutation.

Jeff Sheehy, a longtime CIRM board member and HIV/AIDS advocate, said in the press release,

“This trial is enrolling HIV patients whose immune cells have not returned to normal levels even after success in suppressing the virus with antiretroviral therapy, and even if it doesn’t lead to a cure it could still result in a therapy that offers clinical benefit to patients at risk for opportunistic infections.”

(Here is a link to how Sangamo describes its ZFN pipeline.)

Zaia said,

‘While we have a number of drugs that are effective in holding HIV at bay, we have nothing that cures it. In addition, for many patients, these medications come with significant long-term problems so there is a real need for a therapy that can help eradicate the virus from a patient completely. That is where our work is focused.”  

The agency is also funding a clinical trial involving an alternative approach to HIV/AIDS. That effort includes UCLA and an Arizona company, Calimmune, Inc., co-founded by a former member of the CIRM governing board, David Baltimore. Calimmune also has an address near UCLA in Los Angeles.

CIRM said,

“Calimmune, an HIV gene medicines company focused on developing cell-based therapies for HIV, began its human clinical trial in July 2013 and has already shown that the first group of patients treated did well enough for the company to start treating a second group more intensively.” 

Jonathan Thomas, chairman of the CIRM board, said,

“This kind of work is too important to just try one method at a time and sit back and wait to see if it is effective.”

California's Consumer Watchdog Loses U.S. Supreme Court Challege to WARF Stem Cell Patents

The U.S. Supreme Court yesterday appeared to have put an end to a California’s group nine-year effort to overturn patents on human embryonic stem cells held by the Wisconsin Alumni Research Foundation (WARF).

The court refused to hear the case that was brought by Consumer Watchdog of Santa Monica, Ca., and Jeanne Loring, head of the stem cell program at Scripps. The court issued its decision with no comment.

An article by Lisa Shuchman in The Litigation Daily said,

“The high court's denial leaves in place a ruling last year by the U.S. Court of Appeals for the Federal Circuit, which found that Consumer Watchdog lacked standing to appeal the findings of the PTO's (Patent and Trademark Office) administrative patent review board.” 

While today’s ruling involved relatively technical legal matters, the heart of the challenge to WARF’s patents involves who profits from stem cell research along with whether its patents have or will stifle scientific research.

Royalties from WARF patents in California alone generated an estimated $200 million in 2006 for the foundation. Executives of biotech firms in California have complained that WARF’s restrictions have posed a significant barrier to private investment. 

Asked for comment, Loring said,

"This doesn't mean they believe that human cells can or cannot be patented, but only that they decided that we had not been sufficiently harmed by the patent for them to become involved.

"Even without a Supreme Court decision, we have succeeded.  WARF wanted their patents to include iPS cells as well as ES cells, but they had to narrow their claims as a result of our challenge, and they cannot claim ownership of iPSCs."  

Doing the legal lifting in the WARF challenge was Dan Ravicher, executive director of the Public Patent Foundation of New York. Shuchman carried a comment from Ravicher on yesterday’s ruling. She wrote, 

“Ravicher said Monday that the Supreme Court's decision could impact many would-be patent challengers. ‘This case could have severe consequences for other third parties that challenge patents with IPRs or the other proceedings created under the America Invents Act,’ Ravicher said. ‘Now they will have no right to appeal an adverse decision.’

“But he also said the decision wouldn't preclude individuals who can claim direct harm, such as stem cell research scientists, from challenging WARF's patent—much the same way doctors successfully challenged the Myriad patents.

“Under the America Invents Act, third parties, such as nonprofits, public interest groups and industry organizations, have the right to challenge patents at the PTAB (Patent Trial and Appeal Board). But under the Federal Circuit’s ruling that now stands, they don't have the right to appeal a PTAB decision.”

Shuchman also recounted briefly some unusual history on the federal appellate ruling that declared Consumer Watchdog had no standing to sue. A more detailed account of that hearing can be found here.

The California Stem Cell Report has asked Consumer Watchdog and WARF for comments. We will carry them when we receive them. Here is the full text of what Loring had to say.

"Being involved for nearly 9 years in the challenge of WARF's patent on human ES cells has given me a fascinating glimpse into our legal system. I hoped that the Supreme Court would decide on the patentability of human embryonic stem cells. But ultimately, the Court decided not to take our case.  This doesn't mean they believe that human cells can or cannot be patented, but only that they decided that we had not been sufficiently harmed by the patent for them to become involved. Even without a Supreme Court decision, we have succeeded.  WARF wanted their patents to include iPS cells as well as ES cells, but they had to narrow their claims as a result of our challenge, and they cannot claim ownership of iPSCs.  

"I've learned that the law is every bit as complex as scientific research, and have gained great admiration for people like our attorney, Dan Ravicher, who relentlessly pursue the question of patent ethics - what should and should not be patented in the public interest.  Dan brought the issue of patenting the human genome to the Court, and won (the Myriad Genetics case).  Working on this challenge with Dan and John Simpson (of Consumer Watchdog) has been a joy, and if they ever want my help in the future, I'd agree in a second."

A Critical Perspective: Klein's $100 Billion Stem Cell/Genomics Plan 'Boggles the Mind'

The San Diego U-T newspaper today reported the first criticism of the $100 billion stem cell/genomics research plan being floated by the former chairman of the California stem cell agency, Bob Klein.

The challenge to the proposal came from John Simpson of Consumer Watchdog of Santa Monica, Ca., in an article by reporter Bradley Fikes.

Simpson, a longtime observer of the agency and once heavily involved in formulation of its intellectual property rules, said the proposal for the international consortium “boggles the mind.”

Fikes reported that Simpson found the international plan flawed on several counts: It would lock money into specific areas of research regardless of the state of the science; it would be cumbersome to run, and it would be expensive because it would use borrowed money.

Fikes wrote,  

"’I don't understand how this could possibly work,’ Simpson said in a Monday interview. ‘The logistics of getting together such a (15 nation) coalition boggles the mind.’”

Simpson said Klein, a real estate investment banker who left the agency in 2011, was peddling illusory benefits. Fikes reported,

"'That's the same premise as he's tried to argue with Prop. 71, and I don't think that's been true at all,’ Simpson said. While the (California stem cell) program has resulted in some major research advances, it hasn't yet generated enough of an economic return and proven treatments to justify it, he said.

"'Pay as you can afford to pay,’ Simpson said. ‘I think that's a better approach to research, generally. That's what democratically elected governments are supposed to do, is come up with appropriate funding for the various things they're faced with. If you had this kind of money to throw at certain problems, it's not entirely clear to me, by any means, that stem cells would have the biggest impact. You might do a hell of a lot more with simple things like malaria eradication.’" 

Fikes wrapped Simpson’s critique into the earlier version of his article on Klein’s plan.

$100 Billion Stem/Genomics Plan: Borrowing on an International Scale

Bob Klein at UC San Diego last week
Bradley Fikes/San Diego U-T photo

More details are emerging on the $100 billion, international stem cell/genomics research proposal being offered up by Bob Klein, the first chairman of California’s stem cell agency.

Klein’s plan was discussed in a piece by Bradley Fikes of the San Diego U-T, the only daily newspaper in California’s second largest city. The article yesterday also carried videos of Klein pitching his plan.

Klein, a real estate investment banker, cited California’s $3 billion stem cell agency as an example to be emulated internationally. It operates on money that the state borrows (bonds), which roughly doubles the cost of the research because of the interest expense.

He said an international research organization could be supported by bonds which are backed by pledges from 15 countries, including the United States.

Fikes quoted Klein, who left the California agency three years ago, as saying,

"Because the borrowing is so much cheaper than anything a country can do, from the surplus funds we raise, which are about 35 percent to 40 percent more than most countries can raise from the same amount of money, we can have an international pool, where we can collaborate and compete through peer review." 

Fikes continued,

“Klein pointed to the International Finance Facility for Immunization as an international public-private partnership as a financial model. Using long-term government pledges as collateral, the agency can raise capital as needed from the bond markets.” 

Neither the Fikes piece nor an earlier article from the San Diego Daily Transcript carried any indication that Klein’s proposal had the support of major research organizations or governmental agencies.  

Neither article also carried any reference to Klein’s earlier proposal for another $5 billion bond issue to continue the operations of the California stem cell agency, which will run out of money in 2020 based on current spending rates.

Klein and U.S. Rep. Scott Peters, D-San Diego, shared an appearance at a cancer conference last week at UC San Diego. Both extolled the power of using patient advocates as the leading edge of lobbying for research funds.

Fikes wrote,

“Peters…said scientists must broaden their political base beyond their traditional bastions if they wish to become more influential. Patient advocates are key.

"'When we're fighting for NIH funding, a lot of the voices for that come from people who are in universities and in areas of science, and a fairly narrow political spectrum,’ Peters said. ‘Frankly, they tend to be people from Boston, and San Francisco and San Diego, who don't always vote the same way that people from West Texas, or Kansas or rural Wisconsin vote. So patient advocates provide a huge imput for folks from all across the country."

“Klein recounted an example of how that coalition succeeded in keeping diabetes research money flowing in 2002 when that funding was threatened with interruption. He said the bill, which required unanimous consent, got through the House with the support of then-House Speaker Denny Hastert, an Illinois Republican, who had a staff member with Type 1 diabetes."

Fikes continued,

"'Oklahoma is not a hotbed of scientific support, but through a weekend effort, JDRF (Juvenile Diabetes Research Foundation) was able to get 25,000 emails generated,' Klein said. ‘But more importantly, the patient advocates working as informed advocates with the scientists from the Type 1 research and clinical areas got to enough chairmen of the boards and board members and CEOS of major corporations in Oklahoma that they shut down the switchboards of Sen. Nickles' offices in Oklahoma and Washington D.C. with calls.’"

“Nickles released his hold on the bill.

"'We had unanimous consent of the U.S. Senate, two hours before the end of the special session, because scientists informed and teamed up with patient advocates ... ' Klein said."

Prodigious Pricing and Stem Cell Treatments: Implications for the California Stem Cell Agency

The most widely read item in the last 10 years on the California Stem Cell Report is one that deals with the cost of a possible stem cell treatment.

Newscom image

The piece contains a $512,000 figure and has chalked up 10,714 page views as of this evening. It deals only with a potential treatment in a fully legal and medically acceptable situation. The item is also nearly two years old. The $512,000 number is likely to have been modified by the researchers involved.

Now comes an item by UC Davis stem cell researcher Paul Knoepfler, who has put together a survey of prices of stem cell “treatments” that are being offered around the world. The costs are for procedures available largely outside established medicine with its accompanying government certification and testing.

Knoepfler reported today on his blog that American clinics – non-FDA approved – run about $10,000 per procedure, with more than one treatment usually described as necessary. Outside of the United States, the procedures run up to $100,000.

Knoepfler wrote,

“Whether inside or outside the US, insurance does not cover the costs of these potentially dangerous, unproven treatments.”

He noted that high profits are associated with the procedures. He said,  

“Part of the way that clinics cut corners to boost their profits is by not following FDA regulations, putting patients in danger. Clinics typically do not do pre-clinical studies to get evidence of safety and efficacy before starting to sell their offerings to patients. Clinics also do not include sufficient follow up in the cost of the treatments. They do not publish their data to get peer review and feedback. They often do not have GMP compliant facilities or devices.”

Knoepfler concluded,

“Of course other costs to patients going to dubious clinics, sometimes not considered, include the price of false hope, potential injury due to dangerous stem cell ‘treatments,’ possibly being excluded from a real clinical trial in the future and injury from deferring other arguably more real treatments.”

The high readership on the 2013 cost item on the California Stem Cell Report is likely due to readers who are considering some sort of stem cell procedure.  Knoepfler will also likely see a similar trend.

The strong interest in stem cell costs is something for the California stem cell agency to consider as it invests in clinical trials. Obviously the expense is of considerable concern to those not ensconced within the stem cell community, where the focus is on a euphemism called "reimbursement," shorthand for making a handsome profit.  Stem cell insiders sometimes shrug off the possibility of a severe, negative kickback on prices. 

But it has already happened in other areas of medicine. A physician protest involving the cost of a particular cancer treatment received national attention in 2013. The article about it in the New York Times received 500 reader comments.  

Obviously no stem cell therapies will reach the marketplace if they do not offer the potential for profit. Nonetheless, if one of the California agency's trials is successful but also carries a prodigious pricetag, California taxpayers who have financed the agency are likely to look askance at the agency’s work.

California's Bob Klein Proposes $100 Billion, International Stem Cell/Genomics Venture

The man some consider the father of the California stem cell agency has come up with another grand research plan – a $100 billion, 14-nation effort plus California, along with creation of a federal research “trust.”

The proposal comes from Robert Klein, who led the 2004 ballot campaign to create the $3 billion state stem cell agency. He was also its first chairman and a figure revered by some.

Katherine Connor of the San Diego Transcript reported today on Klein’s quest for a “new paradigm in funding scientific research.” During remarks at an oncology symposium yesterday at UC San Diego, Klein said his collaborative venture is needed given the current state of federal research funding. 

Connor wrote,

Robert Klein

“Klein is working on spearheading such a collaboration, where 22 different partners -- including 14 nations, the NIH and the state of California -- commit to long-term funding of scientific research on stem cells and genomics via a World Bank bond. The money invested by each partner would be used to fund work by that entity." 

Connor continued,

“He said if Congress would appropriate a long-term commitment to support this international bond, the research community could leverage it up to a $100 billion program with surplus funds around 35 to 40 percent more than what each individual country or partner could raise from the same amount of money.” 

Klein is a California real estate investment banker who works closely with bond financing. He said his proposed research venture “would go a long way in diffusing the ingrained competitive attitude toward funding.”

Connor continued,

“'The fundamental problem here is that, long term, we have difficulty holding these interest groups together,' Klein said. ‘In California, with Prop. 71, the way it approached that was if you have a unitary decision, you’re either for the bond or against the bond. You can’t go and say 'I want my appropriation,' you have a unitary decision -- it brings all those groups together as a coalition, they have to work together.’”

The ViaCyte Diabetes Trial: Clarifying a Patient Matter

The ViaCyte clinical trial is aimed at producing a “virtual” cure for Type 1 diabetes among children, but the first implantation of the device involved an adult man.

That information was reported by the MIT Technology Review and raised a question about whether the article was in error or whether something else was involved.

The California Stem Cell Report queried Paul Laikind, CEO of ViaCyte, which is based in San Diego, about the matter.

Laikind replied,

“This first clinical trial of VC-01, called STEP ONE*, requires patients to be 18 to 55 years old (see https://clinicaltrials.gov/ct2/show/NCT02239354?term=viacyte&rank=1).  Once we have gained experience with VC-01 and assuming that it is shown to be safe and effective in the adult population we would expect a follow up protocol to include children with T1D.”  

The Sagan Effect and Public Support for Research

The media chief at the $3 billion California stem cell agency yesterday put together a first-rate piece that invoked Meryl Streep, Carl Sagan and Lindsay Lohan and said that scientists can learn something from them.  

The item by Kevin McCormack, senior director of communications for the stem cell agency, dealt with telling the story of the facts and the romance of science. Not to be too crass about it, but his item piece also dealt with generating the public enthusiasm that will lead to more cash for researchers’ labs. Maybe even do some public good.

McCormack, who has labored both in public relations and in the grimy trenches of journalism, wrote about the American Association for the Advancement of Science conference last week in San Jose on science communications. The session explored ways to get the public to both understand and care more about science and technology and to get scientists to do a better job of explaining both to them.

A number of problems have plagued science communications for decades. One is that science is sometimes difficult for the general public and reporters to understand. It is also difficult to find researchers who can “speak English” – explain what they are doing and why it is important in ways that resonate with the media and their readers and viewers.

Another problem is that sometimes scientists who are good at explaining are dismissed by their colleagues as less than professional or as not really good scientists.

One rendering of invidia at work

McCormack said there is a risk. He wrote,

“Some scientists reported facing a backlash from colleagues who felt they were trying to hog the limelight. They fell victim to what is called the ‘Carl Sagan’ effect, which holds that if someone is spending that much time and effort communicating science to the public they must not be a very good scientist to start with.” 

From what I have seen over the last decade of watching the stem cell agency, such a reaction also often seems a case of invidia at work. Seeing another researcher’s name in print can trigger a serious case of irritation.

McCormack quoted Stanford’s Noah Diffenbaugh on reasons for taking his science to the public.

“I feel it is my responsibility to answer questions from the public when asked, because my research group is publicly funded by taxpayer dollars through agencies like the NSF. And as a public citizen I feel responsible that if we are having a public dialogue about climate change that I should be part of that dialogue.” 

McCormack’s piece on the stem cell agency’s blog, The Stem Cellar, is a good reminder that the science community cannot take for granted public support for science and research funding. Most people are heavily focused on other matters that they believe are more relevant to their lives, such as their jobs and getting their children off to school.

It is up to researchers to make building support and educating the public and the media about the benefits of their efforts a regular part of their profession. Perhaps the stem cell agency could even encourage it by adding a communications component to their awards.

As for Meryl Streep and Lindsay Lohan, it is best to go directly to McCormack’s piece to see how their communication works. It could be inspirational.

ViaCyte's hESC Diabetes Effort Examined, Critiqued in MIT Publication

The ViaCyte device -- photo San Diego U-T

The state of California has invested $55 million in a San Diego firm that last week attracted some East Coast attention for its efforts to develop a “virtual” cure involving Type 1 diabetes.

The firm is Viacyte, which is in a stage one clinical trial involving its therapy. The MIT Technology Review looked at the potential product on Feb. 12.

In a piece headlined “A Pancreas in a Capsule,” writer Brian Alexander said,

“In October, a San Diego man had two pouches of lab-grown pancreas cells, derived from human embryonic stem cells, inserted into his body through incisions in his back. Two other patients have since received the stand-in pancreas, engineered by a small San Diego company called ViaCyte.

“It’s a significant step, partly because the ViaCyte study is only the third in the United States of any treatment based on embryonic stem cells.” 

All three of those trials involve California. A spinal cord injury treatment is being tested by Asterias Biotherapeutics of Menlo Park, Ca. It has received $14.3 million from the California stem cell agency. The other trial is for macular degeneration and is being conducted at UCLA by Steven Schwartz for Ocata Therapeutics of Massachusetts, formerly known as Advanced Cell Technology. The firm applied multiple times for California funding but was rejected.

Viacyte, which has received more funding from the stem cell agency than any other company, began its efforts optimistically years ago. Alexander wrote,  

“'When I first came to ViaCyte 12 years ago, cell replacement through stem cells was so obvious. We all said, ‘Oh, that’s the low-hanging fruit,’” says Kevin D’Amour, the company’s chief scientific officer. 'But it turned out to be a coconut, not an apple.'” 

 (Robert Henry at UC San Diego is conducting the  trial on behalf of ViaCyte.)

  

Alexander continued, 

“Douglas Melton, a biologist at Harvard University who has two children with type 1 diabetes, worries that the ViaCyte system may not work. He thinks deposits of fibrotic, scarlike tissue will glom onto the capsules, starving the cells inside of oxygen and blocking their ability to sense sugar and release insulin. Melton also thinks it might take immature cells up to three months to become fully functional. And many won’t become beta cells, winding up as other types of pancreatic cells instead. 

Doug Melton -- Harvard photo

“Melton says the ‘inefficiency’ of the system means the company ‘would need a device about the size of a DVD player’ to have enough beta cells to effectively treat diabetes. ViaCyte says it thinks 300 million of its cells, or about eight of its capsules, would be enough. (Each capsule holds a volume of cells smaller than one M&M candy.)  Last October, Melton’s group announced it had managed to grow fully mature, functional beta cells in the lab, a scientific first that took more than 10 years of trial-and-error research. Melton thinks implanting mature cells would allow a bioartificial pancreas to start working right away.”

The piece in the MIT Technology Review is a plus for the California stem cell agency, which is seeking to raise its profile.  The agency's president, Randy Mills, is making a push to draw interest from non-California enterprises that might find funding from California attractive even with restrictions that it be used in the Golden State.

Stem Cell Ethics: An Overview from UC Davis Event

Alison Sorkin -- Knoepfler photo

California scientist Paul Knoepfler yesterday posted a synopsis of the recent stem cell ethics session at UC Davis that touched on topics ranging from Right to Try laws to hype about hype in stem cell research. 

Writing on his blog, Knoepfler estimated the attendance at 70 to 80 persons including patient advocates as well as scientists, attorneys and institutional compliance officers.

One presenter was Alison Sorkin, deputy general counsel for University of Colorado Health, who dealt with her state’s Right to Try law. Knoepfler wrote that she said that the law is actually quite limited. Knoepfler wrote,

“She also discussed problematic issues with the specifics of the law such as that patients would be responsible for paying for all of their own healthcare for 6 months after treatment under Right To Try as insurers would be exempt from having to provide ANY coverage. There seems to be a growing sense that Right To Try in Colorado may not actually lead to any patients getting non-FDA approved drugs.” 

Tim Caulfield, a professor, Faculty of Law and School of Public Health at the University of Alberta, dealt with hype. Knoepfler wrote,

“Tim focused on hype in the stem cell field and in particular hype involving scientific publications. He even talked about hype about hype. In the current environment there are strong pressures for scientists to hype their work, including in particular in abstracts. What is the relationship between hype in science articles and in the media?” 

The session was the second annual such event for UC Davis, which will presumably stage another next year.

Stem Cell Researchers Face Tighter Scrutiny in Quest for California Millions

Attention stem cell scientists: Want to know who is going to be scrutinizing your budget in your next application for financing from the $3 billion California stem cell agency?

The California Institute for Regenerative Medicine (CIRM), the formal name for the agency, is hiring outside firms to examine the budgets currently being submitted in a $50 million clinical stage award round.  

The two firms that are  being considered have a host of other clients, some of whom might be competitors with California scientists applying for state funding.  CIRM plans to require the experts to self-report any conflicts of interest, basically excusing themselves if such a situation occurs during their work.

It is all part of CIRM 2.0, a radical and ambitious plan to speed funds to researchers and improve quality of applications.  The budget review is a new and critical step for researchers. If their financial plans, including a new financing contingency requirement, do not pass muster, the applications will not even be sent to the agency’s blue-ribbon reviewers.

Here is what the agency says about the budget review,

“An external team of budget professionals will review the proposed budget to provide information to CIRM regarding how the proposed costs compare with established market rates for similar activities (or how well the costs are justified when market rates are not established).

 “When a proposed budget differs significantly from market rates, adjustments to the budget will be required by CIRM prior to further review of the application. Applicants will be notified of the specific discrepancies and applications will not be forwarded for scientific review until an amended budget has been submitted and approved by CIRM.” 

Last month the agency posted a 37-page request for proposals on its Web site. It contained details of how the work is to be performed, budget templates and much more material that offers insights into the agency’s new, CIRM 2.0 thinking. 

The firms that responded to the RFP are Amarex Clinical Research of Germantown, Md., and Integrium Clinical Research of Tustin, Ca.

Integrium said in its proposal,

“Integrium does not have experience in providing the type of service required in the RFP. However, we have many years of experience in which we have internally reviewed budgets that we prepared for our clients.”

 It appears to have offered to review each application’s budget for $2,740 each.­­­­­­­­­

Amarex said,

“Amarex has experience in conducting budget negotiations for services across all types of clinical sites, and knows what appropriate market rates are.  Our clients are both privately funded, and government funded, so we are also aware of the difference in budgeting requirements for both types of clients.”

The Amarex proposal appears to have a cost of $703 for each budget, with expenses such as travel billed to CIRM plus a 10 percent fee.

The agency’s RFP said,

“CIRM anticipates selecting multiple budget review firms pursuant to this RFP and will alternate work among them based on relative expertise in specific areas, timelines, and the avoidance of potential conflicts of interest.”

Both of the firms are well-established organizations and have a considerable history of work with a variety of clinical trials. Their clients are not identified but could be competitors with the organizations that apply for California funding.

The RFP does not speak directly to those sorts of conflicts although it is more specific about financial ties with CIRM employees.  Regarding the budget review consultants, the proposed CIRM contract said,

“The (budget review) firm must be free from actual conflicts of interest not only at the time of selection, but also throughout the term of the contract.”

The agency has a substantial number of outside contractors. On at least one occasion, a conflict has arisen in public. The case was first reported by the California Stem Cell Report in 2012 and involved a “special advisor” to CIRM who was elected to the board of directors of Sangamo, Inc. At the time, Sangamo was the recipient of $5.4 million from the agency as a co-participant on an award. In 2013, the Richmond, Ca., firm received another $6.4 million directly from CIRM. (See here and here for details.)  In January 2014, the firm’s president told CIRM,

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

The RFP requires that the firms sign a contract that states, 

“The consultant affirms that to the best of his/her knowledge there exists no actual or potential conflict between the consultant's family, business or financial interest and the services provided under this Agreement, and in the event of change in either private interests or service under this Agreement, any question regarding possible conflict of interest which may arise as a result of such change will be raised with CIRM.”

The RFP also states that the firms may be required to “execute” a form 700, a state document that is aimed at disclosing financial conflicts of interest. However, the form is most commonly filed by individuals -- not commercial interests -- and has major limitations in providing full disclosure.

The RFP does not make it clear whether the form 700s would be publicly disclosed or simply held privately by CIRM. However, the agency has never disclosed any reports involving conflicts of interests of its consultants.

Here are the proposals, which are public records, from the two companies.

   Amarex CIRM Budget Prep Proposal January 2015

  

   Integrium Budget Review Proposal for CIRM January 2015