The California Stem Cell Agency Wants Help in Charting New Directions

How to spend $800 million?

Friday deadline for comments

Want to tell the $3 billion California stem cell agency where to go? Here’s your chance.

The agency said today it wants to hear from you. It is open to suggestions, rude and otherwise. But it really wants to hear constructive comments and critiques.

“No one has a monopoly on good ideas,” said Randy Mills, president of the agency, in a statement that unveiled the enterprise’s most recent effort to elicit proposals and thoughts from the public.

What this is all about is revision of the agency’s strategic plan, which is an indirect way of asking the question of “how are we going to spend our last $800 million.”

The agency has mounted an online questionnaire with plenty of room for comments beyond the formal structure of the survey. Thirteen questions are posed. They include such matters as how much risk the agency should take and just how it should be measured. The agency wants to know whether the top three measurements should include such things as the number of scientific articles published or the number of patients treated. It wants to know whether you think the agency is sufficiently focused on its mission.

Time is short for persons who want to weigh in on the survey, which is designed to be answered anonymously. It must be completed by this Friday.

Jonathan Thomas, chairman of the agency board, noted that the effort is part of the agency’s responsibility to the public. He said,  

“We are a state agency. We were created by the people of California, and we answer to the people of California.”

 Mills said,

“That’s why we want to hear from a diverse group of people, scientists and non-scientists alike, to learn what they think about how we should best use our money, resources, and expertise to reach our goal. This new strategic plan will help create a clear vision for how we move forward, one that sets priorities and an actionable approach to accomplish our mission.” 

At the end of July the board is scheduled to hear what Mills has prepared up to that point on the strategic plan for the next five years or so, which is about how long the agency's current funding will last. 

The Hard Business of Stem Cell Economics and Patient Needs

Premature clinical trial shutdown?

Implications for California stem cell agency

The vagaries of Big Pharma and development of stem cell therapies -- plus the frustrations of a prominent Stanford researcher -- were the topic this week in a major California newspaper.

Irv Weissman, Stanford photo

The researcher is Irv Weissman, head of the stem cell program at the Palo Alto university. The companies are Sandoz Pharma, Ciba-Geigy and Novartis. The story also includes a $392 million deal involving Weissman.

The basic storyline, as reported June 14 by Lisa Krieger of the San Jose Mercury News, is that years ago Weissman developed a “unique way to grow and deliver blood stem cells to desperate patients with aggressive cancers, boosting survival rates.”

According to Krieger, Weissman in effect sold the potential stem cell therapy to Sandoz in 1991 for $392 million in an effort to place “his innovation into the hands of a company large and prosperous enough to accelerate research.”

Sandoz then “merged with Ciba-Geigy and became Novartis, which bought the remainder of Weissman's company (Systemix) for $76 million in 1997 -- and, with it, all patents,” according to Krieger.

Novartis shut down the trials in 2000 along with Weissman’s company. Krieger reported that the firm “ended the program because it couldn't produce blood stem cells in large enough numbers to develop a commercial market -- and it was not in the business of producing personalized ‘custom-made’ therapies.”

Krieger continued,

Karuna Jaggar, BCA photo

"'Well before the launch of the War on Cancer, the corporate profit motive has driven the cancer research agenda,' said Karuna Jaggar, executive director of the Breast Cancer Action, a San Francisco-based patient advocacy group. 'Time and again, history has shown that it is not only the possibility of saving lives but the potential of making money that has steered the research agenda toward some areas -- and away from others.

"'As long we have a health care system that puts profits before patients we will always be at the mercy of corporations looking to make profits. Any new innovation needs to be evidence-based and proven safe and effective no matter what money is to or is not to be made,' she said.”

Krieger wrote,

“Now, a quarter-century after it was conceived, the technique is finally back in Weissman's hands at Stanford -- although Novartis still holds the patent.” 

She reported that Weissman hopes to take the potential therapy forward in a non-profit setting.

Krieger has much more in her story, which offers considerable food for thought, particularly in connection with California’s $3 billion effort to bring a stem cell therapy into widespread use. It has not done so yet after nearly 11 years of trying and the expenditure of roughly $1.9 billion.  The agency also suffered a significant blow at the hands of one company, Geron, that dropped -- for financial reasons -- the first-ever clinical trial  for a hESC stem cell therapy, which the agency had backed with a $25 millon loan. 

The agency is currently revising its strategic plan. Randy Mills, president of the agency, says he is serious about developing a solid plan that will be followed assiduously with measurable benchmarks along the way.  

Our view: One important element in the new plan should focus on avoiding situations such as those involving Geron (see here and here) and the morass that Weissman fell into.

Whether one likes it or not, the facts of life in the biomedical world – pleasant or unpleasant – mean that business must be firmly engaged if a stem cell therapy is to be widely available to the public. Government agencies, however, often fall short in their dealings with private firms. For the stem cell agency, that means it needs a keen eye and clear goals when it deals with Big Pharma and stem cell firms. And if the California’s stem cell agency is to deliver on the promises made to the people of California, it must be willing to walk away from a deal if the terms aren’t right.

California Hits Its Mark on Faster Delivery of Cash for Stem Cell Research

• Caladrius to get first installment on nearly $18 million 
• Agency President Randy Mills Pleased with CIRM 2.0 Overhaul

 SAN FRANCISCO -- The California stem cell agency may not be faster than a speeding bullet, but it is running way more quickly than it was a year ago.

For researchers and patients, that means the agency’s millions are moving more rapidly into development of therapies and cures with the goal of beginning to save lives sooner rather than later.

The signal event came last week when the agency, formally known as the California Institute for Regenerative Medicine(CIRM), signed off on a contract with Caladrius Biosciences, Inc., of New York.

As soon as Caladrius signs the agreement, it will receive a check for $3 million, the first installment on a nearly $18 million award that was approved by directors less than a month ago. 

Randy Mills

CIRM President Randy Mills was delighted last Friday when he told the California Stem Cell Report about the action on the Caladrius award. (Caladrius was formerly known as NeoStem.)

Mills, who has been head of the agency for only a little over a year, mentioned the news during a 45-minute conversation in his office at CIRM headquarters.

It was the first award paid out under Mills’ new, CIRM 2.0 program, an effort designed to speed cash to researchers and improve the quality of applications. It is also the first CIRM award in a stage three trial, the last step in the process of winning government approval for widespread public use of a therapy.

The agency approved the actual Caladrius contract last Thursday, 21 days after the directors’ approval. Mills’ goal was to act on the contract within 45 days.

CIRM’s 2.0 clock shows Caladrius’ application for the melanoma therapy coming in at the end of February, 113 days ago. Mills’ goal is to have action completed on an application within 120 days from the time it officially enters the 2.0 system -- instead of up to two years as in the past. 

The firm offered its initial application at the end of January, but it was sent back for improvement. 

Next up in the first round of CIRM 2.0 awards is final action on a $5 million award to Shaomei Wang of Cedars-Sinai that was also approved on May 21 by CIRM directors.

Mills said last Friday that CIRM 2.0 has not been perfect and that in some cases implementation required "brute force." But he is pleased overall. Later this year, Mills and his team plan to apply CIRM 2.0 to basic and translational awards, all of which will mean significant changes for hundreds of California scientists. 

California Stem Cell Agency Symposium: 'Vague Fears' vs. Potential Genetic Alteration of Human Race

California’s $3 billion stem cell agency has called a high-level meeting for next fall to examine a
"red-hot" issue that many prominent researchers say could lead ultimately to alteration of the human race.

The topic is a technique that makes it much easier to alter the genetic make-up of individuals in a way that can be inherited by their offspring.

In April, scientists in China reported genetically modifying human embryos in what was regarded as a “world first.” (See here and here.)

That came after a group of leading scientists in March called for a global moratorium on the genome-editing practice, stating that the therapeutic benefits were tenuous.

More recently Marcy Darnovsky, executive director of the Center for Genetics and Society in Berkeley, wrote on May 28 about how the subject was viewed at a meeting called, “Biotech and the Ethical Imagination: A Global Summit.”

Steven Pinker

“The far end of techno-enthusiastic perspectives, both on human germline modification specifically and on biotech in general, was represented by Harvard experimental psychologist and popular science writer Steven Pinker. In his opening remarks, Pinker counseled bioethicists to ‘stay out of the way of progress.’ In his closing comments, he cast ‘vague fears’ as standing in the way of saving millions of lives. In between, he epitomized the ‘bad boy scientism’ that too frequently characterizes the biotech field.” 

Jonathan Thomas, chairman of the stem cell agency, and Geoff Lomax, the agency’s main person on bioethics, wrote on June 1 about the matter and the upcoming meeting. In an item on the agency’s Stem Cellar blog, they said,

“Given CIRM’s support for research activities where genome editing may be employed, we believe it is important to have effective policies to guide our future funding decisions. Therefore, we have charged the CIRM Medical and Ethical Standards Working Group with convening a public workshop to elucidate the scientific and policy considerations surrounding genome editing in the context of CIRM supported research. This workshop is a first step in evaluating whether CIRM should make changes to its existing policies governing stem cell research.”

 CIRM’s standards group consists of some of the top bioethicists in the country. Early on, they developed the agency’s rules for research on stem cells, which were the most advanced in the country at the time. The chairman of the group is Bernie Lo of UC San Francisco.

The genome-editing issue to be discussed in November was originally scheduled to be brought up at an April meeting of the standards group. However, it was put off for a variety of reasons. Thomas subsequently called the meeting for next fall.

At the April meeting, Ted Peters of the Pacific Lutheran Theological Seminary and a member of the stem cell standards group, said the issue was “red hot.”  Jeff Sheehy, a member of the agency board and a communications manager at UC San Francisco, said the agency needed to clarify where it stood.  

Robert Taylor of the Emory School of Medicine and also a member of the standards group, said,

“There are companies that are offering to do this for your cell line, so it's really out there.”

Lo said,

“I think Jeff has raised a really important, complex and breaking topic. I think the idea of having a symposium to deal with both the science, and the ethics policy could be a really important thing to do.” 

 Suggestions regarding the meeting can be sent to Lomax at glomax@cirm.ca.gov. 

NeoStem's New Name, Backed by $29 Million in New Cash

The caladrius at work

Say hello to the latest recipient of nearly $18 million from the California stem cell agency -- Caladrius Biosciences, Inc.

It is also a firm that is $29 million richer -- on top of the $18 million -- than it was when the $3 billion state research enterprise awarded the firm the money on May 21.

Caladrius is the new name for NeoStem, Inc., of New York, N.Y.  It is also the name of a video game once described by the Giantbomb web site as a “A 2013 bullet hell shooter from Moss.”

Caladrius has a longer history, however, than the video game. According to The Medieval Bestiary web site, the caladrius is an all-white bird – sort of a mythological diagnostic tool – that would refuse to look into the face of patients who were going to die. But the caladrius could also draw out the disease from the sick person and fly away with it.

David Mazzo, president of the firm, said yesterday,

“With the same objective of patient recovery, we, now as Caladrius Biosciences, are committed to bringing significant life-improving therapies to market, driving the evolution of the cell therapy industry and generating industry-leading growth through our innovation and executional excellence.” 

Caladrius sold more than 14 million shares of its stock earlier this month, raising nearly $29 million to help pay for the third stage clinical trial that has been backed by the stem cell agency. The firm is using the proceeds for, among other things, to meet the required match of the California state funding. The four-year trial is aimed at metastatic skin cancer. 

In his letter to shareholders yesterday, Mazzo laid out the future direction of the firm. He also cited the acquisition of an “asset” a year ago that provided the therapy now being funded by California. Mazzo said,

“Given that we acquired this asset approximately one year ago and, in the ensuing months, much of the external focus on our company was on our ischemic repair Phase 2 program, we believe that the market has not yet integrated the full potential of this mature immuno-therapy asset into the value of our company.”

Mazzo referred to the $124 million acquisition of California Stem Cell, Inc., of Irvine, Ca. Hans Keirstead, the president of that firm, is now senior vice president, research, and chief science officer of Caladrius.

Caladrius’ stock closed at $2.21 a share today, down from $2.30 on May 20, the day before it was awarded the California money. The stock has ranged from $2.03 to $7.23 over the last 52 weeks, but it jumped dramatically the day following the award and then fell back.

The Caladrius video game figure is markedly different than the bird depicted by medievalists(see below). For a review of the game, see here.  

Caladrius Blaze, the video game figure

NeoStem Stock Price Falls 22 Percent as It Seeks to Match California Stem Cell Grant

NeoStem, Inc., has had a wild financial ride this past week with its stock price soaring and then plummeting in the wake of a nearly $18 million award last Thursday from the California stem cell agency.

The share price of the New York firm dropped 22 percent today after it announced that it was seeking to raise $25 million by selling 12.5 million shares. The move is aimed at helping to finance its stage three melanoma trial. Terms of the California award require a dollar-for-dollar match of the agency’s funds for the trial.

The market was not happy with the company’s plans to sell more of its stock at a possible price of $2.00 share. The stock today closed at $2.06. Last Thursday it closed at $2.95, up 28 percent for the day. Its 52-week performance has ranged from a low of $2.03 to a high of $7.23.

The Street web site today was critical of the firm, giving its stock a D-minus rating and recommended selling it.  The Street said,

“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 and generally disappointing historical performance in the stock itself."

Last week, some stem cell agency board members raised questions about the financing of the trial. Steve Juelsgaard, former executive vice president of Genentech, asked about the company’s “plan B.”

David Mazzo, NeoStem photo

David Mazzo, CEO of NeoStem, responded by mentioning a possible stock sale and also said the firm had a $30 million equity line of credit.

The company plans to conclude its stock sale on June 2. The stem cell award is on a fast-track to deliver cash to the company within 45 days of approval of the grant. But that requires evidence of the matching funds.

The prospectus for the offering says the four-year trial will cost $25 million, but one analyst says it could cost as up $51 million.  The prospectus also indicated some of the money raised next week could go for purposes other than the melanoma trial.

$15 Million for Calimmune and California Stem Cell HIV Trial

Calimmune, Inc., which has received $8.3 million from the California stem cell agency, today announced it has rustled up another $15 million to help out with the work that the agency is backing.

Calimmune of Tucson, Ariz., was co-founded by a former agency board member and Nobel Prize winner David Baltimore. It is currently engaged in a clinical trial in Los Angeles and San Francisco involving a treatment for HIV.

John Carroll, writing on Fierce Biotech, said,

“Calimmune hasn't had much of a profile outside of the HIV world, but (CEO Louis) Breton is looking to change that. The company has a staff of 40 now, he says, and is looking to expand and possibly strike a partnership deal with a Big Pharma in the space. And unlike some of the leading gene therapy companies in the industry which are targeting tiny populations, Calimmune is tackling a treatment for a disease with a huge, global population of patients. Discussions about million-dollar therapies, he says, won't work for something like HIV. 

"‘Our mission,’ says Breton, ‘is to provide broad capacity; democratize gene therapy for the masses.’"

Calimmune said the latest investors include a “large pharmaceutical company” and Alexandria Venture Investments of Pasadena, Ca. They are in addition to original investors, RA Capital Healthcare Fund LP and Translational Accelerator LLC.

Carroll is right about Calimmune’s low profile. From its earliest days, it has declined to disclose such things as the number of employees. The figure of 40 that was cited by Carroll was the first time it has been disclosed.

(See here, here and here for more information on Calimmune.)

Cedars-Sinai Researcher Snags $5 Million for Stem Cell Eye Research

Another winner in last week's California stem cell awards was scientist Shaomei Wang of Cedars-Sinai, who will receive nearly $5 million for her work to find a treatment for retinitis pigmentosa. 

Shaomei Wang, Cedars photo

The board last Thursday ratified the decision of 15 reviewers who unanimously approved the Wang application. It was one of two awards approved in the first round of CIRM 2.0, the new effort by the agency to speed cash to researchers. It was the first agency award to Wang.

(The other award last week was for nearly $18 million to NeoStem, Inc., of  New York.)

CIRM, as the agency is known, said in a press release that the funds will go for "the late-stage research needed to apply to the Food and Drug Administration for approval for a clinical trial in people. The therapy will involve injecting neural progenitor cells under the retina at the back of the eye. The hope is that this will slow or even halt the progress of the disease."

The press release oddly, however, did not identify Wang as the recipient, only mentioning that the award went to Cedars. In the past, the agency has identified researchers by name in award press releases and has provided information that has included links to summary information about the research.  

Cedars has been awarded $43 million by the agency, not including the latest $5 million. It has had a representative on the CIRM governing board since its inception as do nearly all of the recipients of funds from the $3 billion state program.

Here is a link to a summary of the review of Wang's proposal. Here is Cedars' press release on the award. 

Texas Scientist to Lead Melanoma Study Backed by $18 Million from California

NeoStem, Inc., yes­­­terday announced that University of Texas researcher Merrick Ross will lead the skin cancer clinical trial that California has backed with nearly$18 million.

Ross is a professor of surgery and chief of the Melanoma Section, Department of Surgical Oncology at the University of Texas MD Anderson Cancer Center. Ross also has a California tie. He held a research fellowship in 1984 at the Scripps Research Institute in La Jolla, but virtually all of his career has been in Texas.

NeoStem says the stage three clinical trial will have seven sites in California. It is currently recruiting patients for the 4-year effort for a treatment for metastatic melanoma. It is calling the program the “Intus Study.” 

The firm says patients must be 18 or over have “recurrent metastatic melanoma (Stage III) or distant metastases (Stage IV).” Other requirements must be met. Initial outcomes are scheduled to be reported in January 2017.

Interested persons can find more information here and here.

NeoStem Sees Whopping Jump in Stock Price on $18 Million Backing from California

A graphic depiction of trading on NeoStem stock last week.
Google chart

The stock price of NeoStem, Inc., shot up 28 percent in one day last week after the California stem cell agency approved a nearly $18 million grant to the firm for a potential therapy that “teaches the immune system which cells to attack and kill.”

The governing board of the state research effort awarded the funds on Thursday May 21. The grant is to assist in a third stage clinical trial involving a treatment for metastatic melanoma, the most deadly form of skin cancer. Following the approval, NeoStem’s stock soared from $2.30 to close at $2.95.

The California Stem Cell Report first disclosed the agency’s virtually certain action on Tuesday May 19.

It was an obvious boon for the New York-based company whose CEO, David Mazzo, told the board that the award would help to raise more cash to finance the trial which is expected to cost $45 million to $51 million, according to analyst Yi Chen of H.C. Wainwright.

For the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known, it will be the first time that it has plunged into a stage three trial and the closest it has come to actually bringing a therapy to market.

Jonathan Thomas, chairman of the $3 billion agency, told the board on Thursday that the NeoStem project has “the greatest chance of success for the people of California that we have funded.”

The agency was created in 2004 when voters approved a ballot initiative whose backers raised expectations of quick development of stem cell therapies. The agency has committed more than $1.9 billion for research. Its money for new awards is expected to run out in 2020.

NeoStem, which has operations in Mountain View and Irvine in California, issued a press release hailing the award. The company called the action a “significant endorsement” of its approach which it said has potential application in other types of cancer.

  

The release quoted Randy Mills, president of the agency and former head of Osiris Therapeutics of Maryland, as saying cash would start flowing to NeoStem in 45 days. He continued,

“But that's just the start. We are not just providing financial support; we are also partnering with these groups to provide expertise, guidance and other kinds of support that these teams need to help them be successful.”

Under a new scoring system introduced by Mills, the agency’s blue-ribbon reviewers voted 6-3-5 to fund the program with the three saying the application needed improvement. That action occurred behind closed doors weeks before last Thursday’s meeting when the board ratified the reviewers’ decision on an 11-0 vote. One CIRM board member, Leon Fine of Cedars Sinai, said that one perspective on the reviewers’ voting could be that eight persons thought the application needed more work or should be rejected.

Board member Steven Juelsgaard, former executive vice president of Genentech, raised questions about what might happen if the board rejected the NeoStem application, given that it has only $19 million on hand at last report. Juelsgaard said that was not sufficient to complete the trial.

Mills declined to speculate on what the company might do.

Juelsgaard returned to the subject a few minutes later when Mazzo addressed the board and asked Mazzo about the company’s “Plan B.” Mazzo said the company could go to the “capital markets.” He also said the company had recently negotiated a $30 million equity line of credit.

Mazzo said that the firm is constantly looking for funds and that the CIRM grant would go “a long ways to advancing the trial.”

The vagaries of the marketplace do, however, play a role in the investment community’s view of the company. After the stock jumped 28 percent on Thursday, it dropped 2 percent on Friday.

The 52-week low for the stock is $2.15 and the high is $7.23.

The trial is currently seeking enrollees worldwide, including at seven sites in California. 

UC Davis Stem Cell Program Cited in Sacramento Bee

Here is one of the photos run by The Bee today with a story
about the UC Davis stem cell program.

The Sacramento Bee today published an article on the rise of UC Davis as a major stem cell research center, largely with a $130 million assist from California’s stem cell agency.

The news article was written by the editor of this blog, David Jensen, on a freelance basis. At the time of this writing, the article ranked No. 1 out of 81,000 results on a Google news search using the term “California stem cell.” 

While the piece focuses on UC Davis, a similar impact has been felt at UC Santa Barbara, whose stem cell program has also benefited greatly from CIRM largess.

CIRM Directors Coverage Delayed

Today's meeting of the directors of the $3 billion California stem cell agency will not be covered live by the California Stem Cell Report. Look for a reprise of the session in the coming weeks.

NeoStem Up For $18 Million Melanoma Award from California

California's stem cell agency is expected to make an $18 million bet this week on a treatment by NeoStem, Inc., for a skin cancer that kills 10,000 persons a year in the United States alone.

Up for approval on Thursday is the company's application for an award to assist in a late stage trial that could produce a commercial product before the agency is expected to run out of money in 2020.

NeoStem is based in New York city but has operations in Irvine and Mountain View in California. It acquired California Stem Cell, Inc., in Irvine in April of 2014 for $124 million. California Stem Cell was founded by Hans Kierstead of UC Irvine, who is now president of NeoStem Oncology.

The $3 billion agency did not disclose the name of the company in keeping with its longstanding practice of concealing the identity of applicants.

However, company documents and SEC filings indicated that NeoStem was the applicant. It would be the first award by the agency to Neostem, which is a publicly traded firm.  

The summary of the agency's review posted on its Web site said the funds would go for completion of a stage three trial for a tumor stem cell-targeted immunotherapy for metastatic melanoma, which accounts for 20,000 new cases annually.

The review cited "compelling results" from the phase two stage of the trial. NeoStem has reported separately that its stage two trial had a 72 percent survival rate after two years compared to 31 percent for the control group.

NeoStem said in SEC filings that the treatment is for the most lethal form of skin cancer and has estimated market size of $1 billion.

Helping to develop a marketable product would be a big score for the agency, which has yet to fund a commerical therapy after 10 years and $1.9 billion.

Its money for new awards will run out in 2020 at its current spending rate. No additional funding sources for the agency have surfaced at this point. Being able to cite development of a commercial therapy would be likely to generate considerable enthusiasm for the agency's continued work.

Both reviewers and the CIRM staff recommended approval of the NeoStem application at the CIRM governing board meeting on Thursday.

The action came on a split vote among reviewers, 6-3-5, with six recommending funding and five against funding, according to a CIRM document.. Three reviewers said the application needed improvement.

The CIRM summary of the review said,

"Reviewers considered the lack of mechanistic data and inadequate plan to gain understanding of therapeutic mechanism of action to be a major weakness and expressed concern regarding the ability of the applicant to enrol the proposal pivotal Ph3 (phase three) study as projected."

CIRM said, however, the vote and staff recommendation to fund the research "reflects both the high risk and the clear potential to impact unmet medical need."

The CIRM governing board almost never overturns approval of an award by its reviewers and staff.

The award would be one of the two first approved in CIRM's 2.0 program to fast-track cash to researchers, speed development of therapies and improve the quality of grant applications. The second award  -- $5 million -- is for work immediately leading up to a clinical trial for a therapy for retinitis pigmentosa. Shaomei Wang and Clive Svendsen at Cedars-Sinai in Los Angeles are the likely key figures in that research. Reviewers voted 15-0 to fund the work.   

California Stem Cell Audit: Praise for Mills but More Work Needed on IP, Conflicts of Interest

The California stem cell agency this week received good marks for changes made by its new president, but it is also being told that it needs to improve how it tracks potential royalties and how it prevents grant reviewer conflicts of interest.

A "performance audit" by Moss-Adams, a Seattle business consulting firm, made 12 recommendations for the $3 billion research enterprise. One of the 12 was to implement the unfulfilled recommendations made by Moss-Adams three years ago.  Seven of the 24 from that audit still need more action, the firm said.

On Thursday, the agency's governing board is scheduled to discuss the latest audit at a meeting in Berkeley.  The study is required by state law every three years. The agency's scientific performance, however,  is specifically excluded from being examined. Moss-Adams is scheduled to receive $230,000 from the agency for the audit, which was for the 2013-14 year.

On Sunday, the California Stem Cell Report covered the deficiencies involving disclosures of the financial interests of grant reviewers.

Other areas of concern included the need for better tracking of intellectual property that could mean royalties for the state, more timely review of progress reports from grantees, more timely, formal evaluation of employees and keeping up-to-date on technology related to grant management and agency efficiency.

Under the subject of "commendations," Moss-Adams said that CIRM had "many strengths."  The consultant said the agency has made "significant strides" in three areas: the grant management system, grants process improvements and "organizational culture."

The grants process comment referred to CIRM 2.0, the fast-track funding program initiated by Randy Mills since he became president a year ago. The organizational culture commendation also involved Mills' efforts, but touched indirectly and delicately on the resignation of Robert Klein as chairman and the election of Jonathan Thomas to replace him in June of 2011. 

Moss-Adams reported "enhanced seamlessness" between the president's and chairman's offices. Proposition 71, which created the agency, dictated a controversial dual executive situation that has troubled the agency since its inception.

The audit found significant deficiencies involving the treatment of CIRM employees, some of which have been addressed in a positive way already by Mills. One example cited by the audit involved performance evaluations that are tied to pay increases. It said that evaluations that were scheduled to occur in 2013-14 did not actually take place until January of this year.  

Moss-Adams said the agency also needs to do better in monitoring and protecting its intellectual property (IP), which could generate royalties. Without tight tracking of the IP and inventions funded by CIRM research, the state could lose out on revenue. Backers of Proposition 71 told voters in 2004 that the state could receive more than $1 billion in royalties from CIRM research. So far, none has resulted. 

Moss-Adams said that royalties are now more possible because the agency is backing late stage research that is more likely to make it into the market place. 

Moss-Adams said more work was needed on implementing the seven recommendations from three years ago, including those involving IP, the transition plan to deal with the possible demise of the agency and a grants outcome database. 

Five Public Sites Set for Thursday's Board Meeting of the California Stem Cell Agency

For those who want to participate in this Thursday's meeting of the governing board of the California stem cell agency, five public locations are available.

The actual meeting will be in Berkeley beginning at 9 a.m. PDT. Oher public locations will be in San Diego and Danbury, Conn., and at UC Irvine and Cedars-Sinai in Los Angeles.

Specific addresses can be found on the agenda for the meeting along with instructions on how to listen in on an audiocast. However, the audiocast does not provide the opportunity to comment.

Written comments to the board for the meeting can be emailed to mbonneville@cirm.ca.gov.

Conflict-of-Interest Failings Reported in Application Reviews at California Stem Cell Agency

Conflict-of-interest issues have dogged the $3 billion California stem cell agency since its inception, and they are surfacing once again this week in a report commissioned by the agency itself.

This time the matter is being brought up by Moss-Adams, LLP, of Seattle, a business consulting firm that is being paid $230,000 by the agency to conduct a "performance audit."

In a report to be discussed at a CIRM governing board meeting on Thursday, the firm said it discovered serious problems dealing with the reporting of the interests of the agency's blue-ribbon reviewers.

The reviewers make the de facto decisions on the applications from researchers for millions of dollars from California taxpayers.  Their reviews are conducted behind closed doors. The identities of the specific reviewers and applicants are not publicly disclosed.

The California Institute for Regenerative Medicine (CIRM), as the agency is formally known, requires the reviewers to fill out forms about their financial and professional interests as part of the review process.

However, those disclosures are withheld from the public and from applicants whose proposals are being assessed.  The agency's basic position has been to say "trust us" to monitor the conflicts.

Moss-Adams said, however, it "found that CIRM did not fully meet its compliance requirements regarding financial disclosures" during 2013-14. It also said that it could not verify that CIRM staff had actually checked for unreported conflicts.

Moss-Adams examined 40 applications and pre-applications and did not mention specific instances, such as the 2013 case involving a reknown scientist from Washington state, Lee Hood, and Stanford researcher Irv Weissman.  The matter was first reported by the California Stem Cell Report.

The audit said,

"Specifically, we found that of the 25 pre-applications we tested, three reviewers were missing Financial Interest Disclosure Forms in connection with the review of applications submitted in response to a particular RFA. These three reviewers participated in the review of four of the 25 pre-applications. Similarly, for the 15 applications we tested, which related to five different RFAs, we found that Financial Disclosure Forms were missing for eight different reviewers. For each of the 15 applications, we found that CIRM was missing a Financial Disclosure form for one or more reviewers who participated in the application review process for a particular RFA. In each of these cases, however, the reviewers completed their Conflict of Interest Form for that review."

The audit, which is required by state law, continued,

"Unlike the Conflict of Interest Form, which had already become an integrated element in the GMS (grant management system) in fiscal year 2013-14, no system restrictions were in place to prevent participation in reviews prior to the receipt of Financial Interest Disclosure Forms. Without these system restrictions, compliance with this requirement lapsed and reviewers with missing Financial Interest Disclosure Forms were allowed to review and score pre-applications and applications."

Moss-Adams said the agency took steps to correct the situation in July of last year. However, it told CIRM that  it should continue those procedures to ensure compliance on conflict of interest matters.

The audit also said it could not verify that CIRM had actually followed its process for determining whether unreported conflict of interests existed on the part of reviewers.

The audit said,

"Currently, there are no written policies or procedures outlining this process. While CIRM regulations define what constitutes a financial conflict of interest, the Grants Review Staff does
not have additional written guidance to follow when performing these reviews. Moreover, because the Grants Review Staff does not document the performance of these reviews, we could
not verify that these reviews were performed or assess the manner in which they were performed. Without procedures that formalize this process or internal records that document
the performance of these reviews, CIRM cannot fully demonstrate its performance of due diligence to ensure the financial independence of reviewers."

Moss-Adams told the agency that it should develop detailed procedures for examining the disclosure forms and document the work via the automated grants management system.

The agency's response to the concerns raised in the audit, which covered a wide range of issues beyond conflicts, did not specifically mention the disclosure and conflict matters.

The California Stem Cell Report will have more on the findings of the audit during the next few days. Specifically excluded from the audit is the performance of the agency's scientific portfolio.

California Stem Cell Agency to Hire Top VP

Randy Mills, who enters his second year this week as president of the California stem cell agency, is looking for a vice president for the $3 billion research enterprise. 

The salary for the new executive ranges up to $375,524. He or she would be the only vice president in the organization.  

The new position oversees three key areas of research with a budget of more than $600 million and 75 active programs at the California Institute for Regenerative Medicine, as the agency is formally known. 

Mills this month added the VP position to his official organization chart. In a memo to the governing board of the agency, he noted that some members of the board had expressed concern about the number of persons reporting directly to him.  Mills said that "upon further reflection" he determined that adding a VP would mean more efficiency and effectiveness. 

Also unfilled are the high-level slots for senior directors of the areas that the new VP would oversee: organ systems, neuro/ocular therapies and blood and cancer. 

The three senior director openings were first posted in January, reflecting Mills' new structure at the San Francisco agency and his emphasis on speeding development of therapies.

They are among seven job openings at the agency including project manager for clinical advisory panels, web and social media manager and grants management specialist.

The media manager position came open this month when Anne Holden left after about a year on the job and completing an overhaul of the agency web site. 

See here for access to all the job postings. 

Business-friendly Changes in California's $500 Million Stem Cell Loan Program

The California stem cell agency is set to overhaul its $500 million loan program, acknowledging that it has been far less than successful.

The change would allow companies to accept a multimillion dollar grant and then convert it to a loan. The process would enable a firm to escape paying royalties on a lucrative product that might be developed partially as a result of CIRM funding. Royalties are required under the terms of a grant but not on a loan.

Backers of Proposition 71, the ballot measure that created the Callifornia stem cell program, touted the promise of royalties to help convince voters to approve the measure.

A memo by James Harrison, general counsel to the agency, said the loan program failed to meet its objectives. Only two loans are currently outstanding. They are to Viacyte of San Diego and Capricor of Beverly Hills.

The original intent of the 2008 program was to generate additional cash through interest on the loans to help with research funding.

Harrison said,
"Under this proposal, recipients of CIRM’s clinical stage project awards (PA 15-01, 15-02 and 15-03) would have the option to elect to convert their award from a grant to a loan within the earlier of marketing approval by the Food and Drug Administration or seven years from the effective date of the award. 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 a rate that would escalate based on the date of repayment. Conversion from a grant to a loan would become final only after the awardee has satisfied the terms of the conversion."

The proposal is scheduled to be heard Monday by the agency's intellectual property subcommittee and finalized May 21 by its full board.

Here is the link to the subcommittee agenda where Harrison's full memo can be found. It also shows locations in San Francisco, San Diego, Irvine, Napa and Redwood City where interested parties can listen in and participate in the proceedings. https://www.cirm.ca.gov/agendas/05082015/ip-subcommittee-meeting

Here is a link to an item about the history of the program, which was originally scheduled for change in March. http://californiastemcellreport.blogspot.com.es/2015/03/500-million-stem-cell-loan-effort-klein.html

Fast-Track Stem Cell Grants and Big Boost in California Stem Cell Agency Budget

Directors of the California stem cell agency will meet May 21 to make their first award under the agency's new, fast-track grant program and to approve an $18.7 million operational budget, up $2.8 million from this year's estimated spending.

The award will come in Randy Mills' CIRM 2.0 program as he begins his second year as president of the $3 billion state research effort. He initiated the program with intention of dramatically speeding cash to researchers.

The agenda for the directors' meeting in Berkeley does not specify how many awards are likely to be considered, but the number is expected to be very small. More details are likely to be posted on the agenda prior to the meeting.

Mills plans to extend the CIRM 2.0 speed-up to all of CIRM's award cycles, including basic research.

Also expected to be approved is the operational  budget proposed by Mills for the fiscal year that begins July 1. The spending plan is up substantially from actual spending for the current fiscal year largely because of increases in personnel costs. Mills expects to fill a number of high-level slots in the organization that will help boost employee costs from $11.3 million this year to $12.7 million. The agency is expected to be $815,000 under budget for employee expenses for the current fiscal year because positions were not filled.

Mills also plans to update the agency's strategic plan during the next few months. A discussion of that effort is on the meeting agenda. Such matters as spending on basic research vs. clinical funding are the sort of topic for strategic planning. A few years ago, a shift away from basic research triggered some public concerns among researchers, who said the field was too young to push heavily on the more costly clinical funding.

The agency has committed $1.9 billion so far and estimates it will run out of cash in 2020 for new awards.

No plans for public input concerning the strategic plan have been announced, but they have been a component of previous efforts.

Directors are additionally expected to hear a report on a "performance audit" of the agency. The agency commissioned the $230,000 audit, which is required by state law. The last such audit in 2013 made 27 recommendations for improvements at the agency. An evaluation of the agency´s scientific portfolio was specifically not included in the audit.

Look for more details on matters to be considered by the agency on the California Stem Cell Report over the next 10 days as more information becomes available.

jCyte to Conduct Clinical Trial on Stem Cell Therapy for Retinitis Pigmentosa

More information is emerging today on the clinical trial for a retinal eye disease supported by the California stem cell agency, which has already committed $20 million or so to the project.

Henry Klassen and Jing Yang

The trial will be conducted by jCyte, Inc., of Newport Beach, Ca., close to UC Irvine where the principal investigator, Henry Klassen, works. The firm was founded by Klassen and Jing Yang, also of UC Irvine.

The jCyte Web site is a bit thin, but it did say it hopes to "leverage national qnd international partnerships."

Klassen wrote on the site;

"Please bear in mind that this is just the beginning. Not the beginning of our labors, certainly (which go back decades), but the beginning of the clinical undertaking. The whole project remains experimental, yet all of our hopes are running high. So, while this does not translate immediately into a treatment, it opens the door to that possibility." 

The CIRM Web site also has a progress report from Klassen on his research plus more details of the science.

CIRM said in its press release yesterday that the agency had provided $21 million for Klassen's research. However, its Web site today shows only $19 million, We are asking CIRM about the difference,

The jCyte team, photo from jCyte

12th Clinical Trial For California's Stem Cell Agency

The California stem cell agency today announced its 12th clinical trial, one that deals with retinal eye problems and and research that has already seen $21 million in state funding. 

The trial involves work by Henry Klassen of UC Irvine, where the treatments will be carried out pending final approval by the school's insitutional review board. Today's announcement came as the result of FDA approval. 

The agency said in a press release that Klassen and his colleagues "have developed the therapy to treat retinitis pigmentosa (RP), which erodes the cells in the retina, the light sensitive area in the back of the eye that is crucial for vision."

The agency continued, "The clinical trial will involve enrolling up to 16 patients who will get a single injection in the eye of stem cells known as retinal progenitors. It’s hoped these will help protect photoreceptors that are not yet damaged by the disease, and even replace those that are already lost."

Jonathan Thomas, chairman of the agency's governing board, said, "RP affects about 1.5 million people worldwide and is the leading cause of inherited blindness in the developed world. Having an effective treatment for it would transform people’s lives in extraordinary ways.”

The goal of the initial trial is to test the safety of the treatment.

California's 'Incredible' Stem Cell Invention

C. Randal Mills - CIRM 2.0. Building a better stem cell agency (Part 2) from MCC Industry Relations on Vimeo.

Randy Mills, the president of the $3 billion California stem cell agency, was selling hard a couple of months ago in San Diego.

Animated and gesticulating, Mills said,

"There's nothing like CIRM.  It's an incredible invention that probably only could have taken place in California."

But he said the agency was on its way to being better and faster, delivering cash to researchers in 120 days instead of the previous average of 22 months.

"We are an accelerating agency. We are in the time business. So we can't be slow...Urgency matters."

Mills' comments were made to a symposium at the Moores Cancer Center in San Diego Feb. 19. But his full remarks surfaced recently in a video posted on Vimeo(see above).

Mills took only a little more five minutes in his presentation about CIRM 2.0, his radical overhaul of the agency's grant-making process. He is seeking higher quality applications, higher success ratios and stronger partnerships with researchers and patient advocates.

CIRM  2.0 is still in the process of being fully implemented in all of the agency's award efforts. Mills said there will be bumps.
"Buckle up. It's going to be a wild ride."

'Born in Hype:' The California Experiment and Stem Cell Research

A California newspaper with a daily readership of 1.5 million this week thrashed the field of stem cell science, declaring that it “is slathered with so much money that immoderate predictions of success are common.”

“Infected with hype” is the way the headline put it on the March 31 piece in the Los Angeles Times. The paper has the largest circulation in the state and is an agenda-setter for much of the state’s mainstream media.

The comments came in an article by Pulitzer Prize-winning columnist and author Michael Hiltzik, who holds the California stem cell agency in low regard.

Kalina Kamenova
 U. of Alberta photo

Timothy Caulfield
U. of Alberta photo

His starting point was a study in Science Translational Medicine by Timothy Caulfield and Kalina Kamenova of the University of Alberta law school.  Their content analysis research focused primarily on newspaper coverage of timelines for stem cell therapies before and after Geron bailed out of the first clinical trial for a human embryonic therapy in the United States. They did not have warm words for scientists as public communicators.

Neither did Hiltzik, but he also faulted the media. He wrote, 

“The authors mostly blame the scientists, who need to be more aware of ‘the importance of conveying realistic ... timelines to the popular press.’ We wouldn't give journalists this much of a pass; writers on scientific topics should understand that the development of drugs and therapies can take years and involve myriad dry holes and dead ends. They should be vigilant against gaudy promises.”

Hiltzik then took on the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is known.  He wrote about the cash that was "slathered" about. He said,

“The best illustration of that comes from California's stem cell program -- CIRM, or the California Institute for Regenerative Medicine -- a $6-billion public investment (including interest) that was born in hype. 

“The promoters of Proposition 71, the 2004 ballot initiative that created CIRM, filled the airwaves with ads implying that the only thing standing between Michael J. Fox being cured of Parkinson's or Christopher Reeve walking again was Prop. 71's money. They commissioned a study asserting that California might reap a windfall in taxes, royalties and healthcare savings up to seven times the size of its $6-billion investment. One wouldn't build a storage shed on foundations this soft, much less a $6-billion mansion.”

 He wrote about how CIRM played a dubious role in funding the Geron clinical trial only a couple of months before the company pulled the plug for financial reasons, something that the California Stem Cell Report has dealt with as well.  The $26 million loan to Geron involved a major departure from the agency’s normal procedures.  Abandonment of the trial also raised ethical questions that should be of continuing concern to the agency and its ethical advisors who are meeting today and tomorrow in Los Angeles.  

Caulfield’s views on stem cell hype are well-known in the small stem cell research community. But rarely does his sort of perspective, which is shared by others in the field, reach a mass audience such as the 1.5 million readers of the Los Angeles Times.

All of which poses a challenge for the California stem cell agency whose finite amount of cash is now expected to run out in 2020. As Hiltzik noted, the overblown expectations led voters to believe that miraculous cures were just around the corner.

Today, more than a decade after creation of the agency, the promised cures have not materialized and none are likely for some years. The agency has undoubtedly made a major contribution to stem cell science. But the unfulfilled promises of the campaign hype gave its foes the kind of tools they need to battle any efforts to provide more state funding for the agency.  How CIRM deals with that scientific and PR challenge will be one of the major tests for it over the next several years.