Canadian Money and Gladstone/Yamanaka Research

SAN DIEGO – Robert Klein, chairman of the California stem cell agency, and Alan Trounson, its president, are in San Diego for the mammoth biotech industry conference -- BIO -- that has attracted about 20,000 persons.
They are scheduled to hold a news conference later today to announce more developments in the California/Canadian stem cell research partnership. Their event appears to be tied to Ontario Premier Dalton McGuinty's announcement Tuesday that his province will pony up $1 million for new stem cell research linked to California. That's on top of $30 million announced a year ago.

According to CBC News, the research will be conducted by Shinya Yamanaka of the Gladstone Institute in San Francisco. Also part of the research effort are the University of Toronto and the Hospital for Sick Children in Canada.

Rob Ferguson of the Toronto Star reported:

"'Both centers will be collecting patients with various diseases and making (ips) cells,' said Dr. Deepak Srivastava, director of Gladstone and a pediatric cardiologist."

We will have more on the Klein/Trounson news conference later today as well as a report on the biotech industry outlook by Steve Burrill, head of the Burrill & Co. biotech investment firm in San Francisco.

CIRM to Dish Up Millions for New Cell Line Research

The California stem cell agency next week is scheduled to hand out $25 million in grants for development of new cell lines and $1 million to help institutions that plan to apply later for $122 million in disease team planning grants.

The new cell line round is the first to be open to businesses based throughout the United States, although they must have a "research site" in California as of Feb. 5 of this year. Twelve firms have applied for funding. Fifty applications in all were received for 16 grants.

Fifty-nine applications were received for the 20 disease team planning grants, including nine businesses.

Also on the agenda for June 26 and June 27 in Burlingame, Ca., is the budget for CIRM for the financial year beginning July 1, CIRM's positions on stem cell legislation in California and Washington, D.C., a report on gifts to CIRM, consideration of a new round of grants for translational grants, "consideration of issues affecting" the $271 million lab grant programs and much more.

The agenda lists 28 items but, as usual at this point, does not contain any background material on any of them, including the decisions made by grant review committee on the new cell line and disease team planning applications. Some material is likely to be posted before the actual meeting.

Link to IP Law & Business Story

The item below originally omitted the link to the story about CIRM and IP. You can find the story here if you use the magazine's free registration.

California Stem Cell Cash – Last Resort for Business?

Revolutionaries, uncertainties and big California bucks are all part of a piece in IP Law & Business magazine this month dealing with the state's $3 billion stem cell research agency.

Written by Joe Mullin, the cover piece explored the world of IP at CIRM, including comments from Robert Klein, chairman of the agency, and concerns from biotech businesses.

Klein was described as maintaining "the rhetoric and stance of a combative underdog." Mullin wrote that Klein spoke to a group of stem cell activists last spring, firing them up for the fray.

"'How many people do you think it takes to start a revolution?' he asked the crowd. 'I can tell you, it's many less than the people in this room.'"

Mullin noted the importance of California's $3 billion for research at both academic institutions and businesses. But he said that the fact that California has called for payback on some of its investment is troubling to some in industry. He wrote:

"...(If) California is any guide, state funding may usher in long periods of uncertainty, and new demands for a much larger share of the proceeds from any discoveries than what the life science industry has seen before."

Mullin continued:

"By contrast (to the federal government), California's stem cell agency is still an unknown quantity, and that spooks the biotech industry. 'There is an oft-repeated concern that IP will need to be shared with competitors,' says (Paul) De Stefano(a Fish & Richardson partner and former chief corporate counsel for Genentech Inc.). 'Whether that's a legitimate fear or not, I've heard literally dozens of investors talk about it,' he adds.

"BioTime Inc., for instance, had considered applying for a small CIRM grant-only about $300,000-but has decided to look elsewhere for now. The company's CEO, Michael West, says he still might apply for a CIRM grant, but he'll keep the money away from BioTime's core business so as not to burden the company with what he calls 'completely unrealistic' state royalty rates."

Mullin wrote:

"The fact that CIRM is considering changes to the IP policies is 'disquieting, to say the least,' says Palo Alto-based StemCells, Inc. general counsel Kenneth Stratton. His company, which along with Geron is well-established by industry standards, won't say whether it is applying for a CIRM grant. But like West at BioTime, Stratton says that the requirements make CIRM money expensive and less attractive than other options. The agency is at risk of becoming a 'funder of last resort,' says Stratton."

However, Mullin quoted CIRM officials as saying it is currently processing 50 grant applications from businesses. That number undoubtedly will rise as more requests for applications are forthcoming from CIRM.

Our comment: Klein is inclined to flourishes that are keyed to his different audiences. On one hand, he fires up activists with rhetoric unsettling to businesses. On the other hand, he assuages industry anxiety at sessions involving his generous $500 million biotech loan proposal. Business concerns about uncertainty are financially quite legitimate and to be expected. However, those concerns will never be completely alleviated, and California has a big bundle of cash previously unavailable to industry. CIRM has an obligation to cut the best deal possible for the people of California.

(Access to the IP Law & Business article requires free registration, although it calls the process a "subscription.")

CIRM Directors To Take Crack at Budget and Stem Cell Legislation

Next week, the $3 billion California stem cell agency will air for the first time the proposed spending plan for its upcoming fiscal year, which begins only 11 days following the budget session.

A draft of the proposed budget has not yet been posted on the agency's website for next Thursday's meeting of the Finance Subcommittee of CIRM's directors. The panel has also scheduled an informational presentation on the proposed $500 million biotech loan program, including discussion of "portfolio policies" and use of consultants. Background information on that presentation is also not yet available.

In another meeting next week, the directors' Legislative Subcommittee is scheduled on Friday to consider state legislation aimed at ensuring affordable access to CIRM-financed therapies. That measure, SB1565 by Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Apple Valley, has passed the state Senate and is now before the Assembly Health Committee.

The bill would also require an outside study of CIRM to completed by about this time next year, with recommendations for changes in the agency's structure and procedures.

CIRM has not yet taken a position on the bill, but has opposed similar legislation in the past.

Also up for consideration by CIRM directors is other state legislation (AB2381) aimed at compelling CIRM to follow through on a Prop. 71 requirement to give preferential treatment to California businesses. The bill by Assemblyman Gene Mullin, D-San Mateo, has passed the Assembly and is scheduled to be heard June 25 in the Senate Health Committee, chaired by Kuehl.

CIRM is moving on its own to deal with legislative concerns about failure to comply with Prop. 71, but CIRM's proposal seems to leave the door open to more competition from businesses from out-of-state than Mullin's measure.

Other legislation scheduled to be considered by CIRM directors is AB2663 by Assemblyman Mervyn Dymally, D-Compton, and AB2296, another Mullin bill. The Dymally measure, now in the Assembly Health Committee, would provide for Medi-Cal coverage of stem cell clinical trial expenses, under certain conditions. Mullin's 2296, which passed the Assembly 76-0 and is now before the Senate Judiciary Committee, seeks to deter what its backers believe is an alarming increase in attacks on scientists who use animals in research. The measure is sponsored by the University of California.

CIRM has not posted any proposed positions or analysis of any of the measures. But you can find the latest legislative staff analysis on the bills on the following links: SB1565, AB2381, AB2663, AB2296.

The CIRM committee has also scheduled a "consideration of status" of federal stem cell legislation, including the stem cell bill vetoed by President Bush nearly a year ago.

The main meeting locations of both CIRM committees is San Francisco, but remote teleconference locations are available. For the legislative group, they include Sacramento, Irvine and Elk Grove. For the finance group, they include Pleasanton, Irvine, Berkeley and Carlsbad. The specific addresses can be found via the agenda links in the second and third paragraphs of this item.

CIRM Proposal to End Peer Review Requirement

The Consumer Watchdog group has detected a proposed, far-reaching change in how grants could be awarded by the $3 billion California stem cell agency.

John M. Simpson, stem cell project director for the Santa Monica group, reported on his blog Wednesday that CIRM is proposed to eliminate language that requires peer review of grant applications. Instead, the CIRM president, currently Alan Trounson, would review the applications.

Simpson quotes a CIRM spokesman as saying that the language is intended to apply in the cases of applications for small grants for conferences and workshops. However, Simpson notes that the proposed language goes well beyond that.

He said that the language in the grants administration policy that would be eliminated is:

"'All research proposals will be peer reviewed so that the most promising scientific proposals are funded.'

"The reason given:

"'This is a substantive change to allow for the possibility of Program Announcements under which the President, rather than the GWG(Grants Working Group), will review applications.'"

The change comes up at a June 20 meeting on the grants administration policy. Simpson said he will suggest modification of the proposal so that it would not strike the peer review requirement. Instead Simpson would add the following:

"Proposals to fund conferences, symposia, workshops or similar events will be reviewed by the President."

CIRM Dredging Up Old Economic Controversy

Four years ago, supporters of California stem cell research ballyhooed the economic impact of the Prop. 71, the ballot measure that created the state's $3 billion inquiry into human embryonic stem cells.

A $200,000 study commissioned by the Prop. 71 campaign predicted healthcare savings of as much as $12.6 billion over 30 years and a net state government profit of at least $1 billion. The study was instantly a bone of contention during the campaign and long after and held up as an example of stem cell hype.

"Hopelessly optimistic" was how one reasonably detached writer, David Hamilton, described the campaign analysis in a "biotech bubble" story for Slate.com.

The study was ordered up by then Prop. 71 campaign chief Robert Klein. Now chairman of the California stem cell agency, Klein has commissioned another economic impact report by the same organization, Analysis Group of Palo Alto, Ca. This time the study will cost only $49,900 but it comes at the expense of taxpayers – not campaign donors. It also diverts funds from other activities of the stem cell agency. The question is why?

With few exceptions, no one is likely to deny that California's stem cell research can benefit the state economically. The principal dispute is about the magnitude of the impact. However, this latest study suffers from the same problem as the first. It is not likely to produce a finding that runs contrary to the beliefs of Chairman Klein and other supporters of the stem cell research. That leaves CIRM open to credibility challenges.

The study is also not necessary to convince true believers. And adamant opponents will never believe it. That leaves only a tiny segment of the population as a propaganda target, if one is to believe Klein. He has repeatedly minimized the size of that group, citing overwhelming support for hESC research among the general population.

The study will certainly generate several results – none of which is favorable for CIRM. It will raise questions about unnecessary spending of taxpayer money. It will rekindle a debate about the true economic impact of CIRM, stirring up controversies better left dormant. And it will feed concerns about stem cell hype on the part of the agency and raise questions about its credibility.

Here are samples from the David Hamilton's piece Feb. 6, 2007, in which the former Wall Street Journal reporter wrote that the campaign study appeared "hopelessly optimistic."

"To begin with, they assume that stem-cell treatments will work in the first place. Many of the most hyped biotechnology innovations of the last 25 years have yet to live up to their early promise. And when they do work, they often tend to improve medical care at the margins instead of revolutionizing it."

"What about the potential of stem-cell research to spur economic development—can a state that sponsors stem-cell research hope to attract cool scientists who will then draw others, plus a coterie of entrepreneurs and venture capitalists? Biotech companies do tend to cluster in places like San Francisco and Boston, but their overall impact on regional economies tends to be limited. While they often pay high salaries, the vast majority of these companies are tiny, unprofitable startups with fewer than 100 employees. They frequently collapse well before they earn a dollar in sales. Even successful biotech ventures are often bought out by distant drug companies, which sometimes shut down the acquired company while transferring its research activities and any products elsewhere."

Hamilton also cited a study by Richard Gilbert, a UC Berkeley economist, who estimated California's potential royalty income from CIRM research could be as low as $18 million compared to $1.1 billion suggested by the 2004 study by the Analysis Group.

We could be wrong about all this. Perhaps the Analysis Group will produce a study that is hailed as balanced, objective and useful. CIRM tells us to look for the report, originally scheduled for January, to appear later this month.

Stem Cell Research, Money and State Efforts

The United States is lagging behind other countries in terms of its global share of human embryonic stem cell research, but that could change as more states pump dollars into the effort.

That's the upshot of a report by Aaron Levine(pictured), assistant professor of public policy at Georgia Tech, in the online publication Cell Stem Cell.

He said supportive policies and public research dollars in the United Kingdom, Israel, China, Singapore and Australia are producing unusually large shares of published hESC research.

However, the Georgia Tech press release on Levine's work says,

"Venturing where the federal government fears to tread, states like California, New York, Connecticut and Maryland are becoming places researchers can turn to for human embryonic stem cell funding. But Levine thinks that development may complicate matters.

"'There are a variety of funding sources out there now, but it makes the field more complicated for scientists to follow the various rules set forth by the states and foundations,' said Levine. 'I think scientists would prefer clear oversight from a federal government that’s supportive of their research.'

"Levine plans to follow up this current work with a look at how collaboration is affected by these different state policies."

Monya Baker of Nature's Niche stem cell blog also wrote about the study.

She reported,

"'The study chips away at the question but doesn't necessarily take into account a number of other factors,' says Stanford University’s Jennifer McCormick, whose work has also found that the rate of the US publications in human ES cell research was lagging relative to other countries. For example, the study does not control for the fact that some countries invest more in commercial than academic research or that some countries recognize patents covering human ES cell research and others do not. "

Andrea Gawrylewski of The Scientist had this:

Brian Salter, professor of politics and biomedicine at King's College London, said the Levine study does not take into account the hierarchy of journals and journal impact factors. She quoted Salter as saying,

"Underperforming countries may have scientists who go for the higher status journals."

Fresh Human Eggs and Stem Cell Economics

The price of human eggs and their scarcity, at least for stem cell research, once again have risen as topics, but this time in New York.

The events in the Empire State, however, dovetail nicely with a similar, ongoing issue at the Golden State's $3 billion stem cell agency.

Hawk-eyed Jesse Reynolds of the Center for Genetics and Society in Oakland, Ca., spotted the New York egg issue and reported on it on the Biopolitical Times.

He wrote on June 3,

"One aspect that caught my eye, not surprisingly, concerns the sourcing of fresh human eggs for cloning-based stem cell research (a.k.a. somatic cell nuclear transfer, or SCNT). Although NYSTEM's brief authorizing law is silent on this and related issues, such matters have been deliberated by NYSTEM's Ethics Committee. The draft strategic plan reveals the Committee and the program's governing board are considering offering compensation for women to provide eggs. (pages 26-27)

"This would be an unfortunate deviation to the generally agreed-upon practice of only reimbursing for expenses. I am aware of no ethics committee that has endorsed payments,* and of only one research team which offered them (and that was before the consensus against compensation crystallized in 2004). The good news is that there is still time for input: NYSTEM has not explored the issue in depth, and the Ethics Committee will discuss the topic at its next meeting."

Earlier this year, we reported that the California stem cell agency has embarked on a review of the human egg market and the needs of researchers, some of whom are complaining that they do not have enough raw material.

The study was set in motion after Harvard scientist Kevin Eggan told the CIRM Standards Working Group that he and his colleagues had spent $100,000 advertising for donors and "pursued every option" for collecting eggs with little success.

CIRM President Alan Trounson said "accessing those eggs is no trivial matter." He said scientists are seeking grants from CIRM for research that may not be feasible because of the lack of human eggs.

A wide-ranging review of the issue and related topics is expected to surface publicly at CIRM sometime this year. Issues that may be aired include: availability of eggs and their numbers, researchers' perceptions of the problem, possible reimbursement of IVF treatment, use of eggs by CIRM researchers from other areas where compensation restrictions are not so tight (such as possibly New York) and the grandfathering of cell lines that were derived before CIRM regulations were adopted.

The subject comes under the Standards Working Group, which has a July 25 meeting scheduled in Los Angeles. However, no topic for that session has been announced. We are asking CIRM when the egg issue will come up.

On other related notes:

The Feb. 28 meeting of the Standards Working Group on eggs and other matters carried a reference by CIRM Chairman Robert Klein to an "opinion" by CIRM outside counsel. We queried CIRM about the opinion. Here is the agency's response:

"There is no email or other written legal opinion from James Harrison regarding reimbursements for IVF costs. The transcript from the working group reflects that Bob did query Harrison during the meeting asking him to send a copy of law 1260 (SB1260 by Sen. Deborah Ortiz), which deals with payments for eggs. Harrison did send the bill in an email and that is what is referenced in the transcript. Bob requested that so that he could show a section toward the end of the bill that explicitly states nothing in 1260 is designed to change anything in Prop. 71."

Marcy Darnovsky of the Center for Genetics and Society also has a rundown on writings by feminist scholars on eggs and cloning-based stem cell research. You can find the citations and links to the articles here.

San Francisco Business Times Surveys CIRM

Reporter Ron Leuty of the San Francisco Business Times put together a wide-ranging series of articles this week on the state of California's stem cell agency.

The six pieces cover everything from CIRM's proposed $18 million training program and $500 million biotech bank to its lab construction grants and CIRM-connected research results. Leuty wrote:

"Nary a segment isn’t touched in CIRM’s strategy: companies, newly minted researchers, community college biology students, cutting-edge investigators, small labs, shared labs and big buildings. Likewise, (CIRM Chairman Robert) Klein said CIRM’s portfolio of funded technologies, products and disease targets will be broad. At the very least, stem cells could offer the pharmaceutical industry a more accurate and more animal friendly way of testing the toxicity of drugs. At most, they could change the medical treatments forever."

Much of the ground is familiar to our readers, but Leuty brings a fresh look and interviews with businessmen, scientists and others that are worth reading. Unfortunately the articles are locked behind a subscription only web site. But our bet is that Leuty will ship you copies if you send him an email. He can be contacted through the Business Times website.

It is also a likely bet that CIRM has ordered up some reprints as well. If not, they should.

Fresh Comment

Larry Ebert of the IPBiz blog has posted a comment on the Koch/Murphy item below.

Koch's Experience

An attorney, who must remain anonymous but who is familiar with intellectual property law, sent the following re Nancy Koch in the item below:

"Chiron's chief IP attorney, under whom she worked, was a strong and insightful patent portfolio strategist, so she probably has good experience from working with him."

Murphy and Koch: IP and Presidential Consulting

The California stem cell agency has picked up a couple of consultants – one for intellectual property and one to advise its president – with contracts totalling $230,000.

Nancy Koch (see photo) has been hired part-time for six months through Oct. 7 on a $150,000 contract to deal with IP matters. Richard Murphy snagged an $80,000, four-month contract to assist CIRM President Alan Trounson. It is Murphy's third tour of duty at the $3 billion agency.

Murphy first served on CIRM's board of directors and then as the $300,000, six-month interim president at CIRM. His latest contract runs through July 31.

In response to a query, CIRM reported that Koch was deputy general counsel of Chiron Corp. and its successor Novartis Vaccines and Diagnostics, Inc. During 11 years at Chiron/Novartis, Koch was responsible for a wide range of intellectual property matters including litigation and licensing. Between 1983 and 1995, Ms. Koch worked at the Farella, Braun and Martel law firm in San Francisco.

CIRM Looking for More Help

The California stem cell agency is continuing to hire, currently listing eight openings ranging from a public relations staffer to an intellectual property lawyer.

If it fills the positions, staffing at CIRM will hit about 39 persons, creeping up on its legal limit of 50.

Recently, CIRM posted an opening for an attorney (salary up to $165,000) to deal with legislative matters and provide legal support to CIRM Chairman Robert Klein. The position would also assist outside counsel on conflicts of interest, deal with agency regulations, the biotech loan program and bond financing for CIRM as well as "finalizing" intellectual property regulations. The agency has also been seeking a staff IP attorney for some time at a salary of up $277,500.

Another recent posting is for a science writer/multimedia editor with a salary of up to $75,000. The position would be in CIRM's public relations department with responsibilities for creating videos, writing research summaries and developing pitches for the media.

Other job openings at CIRM include scientific officer, grants management specialist, grants review specialist and two administrative coordinators.

CIRM To Update Goals; Watchdog Urges Openness

The California stem cell agency is moving to revise its strategic plan, as well it should as the field has changed and the ambitious, original goals have not been met.

Just how the changes will be made is unclear. But John M. Simpson of Consumer Watchdog is urging an open process that reflects the spirit of the original proposal. Simpson wrote on his blog:

"...(I)t is essential that the the methodology in developing the plan not be scrapped.

"Key to the plan was the open and transparent way it was developed. Hearings were held around the state. Seventy interviews with 73 individuals were conducted. The interview team even asked me what I thought. Strategic Plan Advisory Committee meetings were public.

"I'm not saying the update needs to take as much, time but certainly it must have the same inclusive approach if it is to win the same broad-based support from all stakeholders that the original plan enjoyed."

Trounson and Clues to CIRM's Scientific Interests

Want to track the latest scientific thinking at the $3 billion California stem cell agency? What research looks promising to the folks at CIRM? And does it mean possibilities for future funding?

CIRM President Alan Trounson is now offering some clues. He has begun a practice of discussing what he considers interesting research at the beginning of meetings of the CIRM board of directors. He also touches on issues of the day in stem cell research during the presentations.

His observations are tucked away in two different places on the CIRM web site. They can be found in the transcripts of the meetings of the board of directors, which is known as the Oversight Committee, as well as on the online agendas of the meetings, but only after the meetings take place – at least so far.

In May, Trounson discussed a report in Nature in April involving the McEwen Center for Regenerative Medcine (Gordon Keller's group) and research by Lei Yang. VistaGen Therapeutics of South San Francisco was also involved. Trounson's slides from the agenda can be found here.

Among other things, Trounson said he anticipated "that there will be a proposal coming downstream for clinical trials." He said,

"Interestingly, in these studies there was not any observation of teratomas or unwanted cell types."

Other topics for Trounson in May:

-- The Catriona Jameson work at UC San Diego involving TargeGen of San Diego, Ca., and the work, also reported in Nature April 2008 involving Michael Clarke's lab, Stanford and the University of Michigan.

-- Work involving Lorenz Studer, Sloan Kettering and Wakayama Riken, published in Nature Medicine March 2008.

Here are links to the transcript and slides in March and the transcript in January, where he also discussed recent stem cell research. No slides were posted in January.

(A tip of the hat to John M. Simpson of Consumer Watchdog who pointed out the usefulness of Trounson's briefings.)

Fresh Comment

"Anonymous" has posted a comment on the "Cost Overruns" item.

CIRM View on Remcho Fees

Don Gibbons, chief communications officer for CIRM, sent the following comment on the item below concerning the contract with its outside lawyers:

"You state the board approved a '$165,000 retroactive payment.' That is not what occurred. The board approved an increase in the total amount billable during the life of the contract which runs through June 30. CIRM also made it clear that it did not expect to need the full amount. The only retroactive piece is for the hours billed in April and May, which while not yet invoiced, are expected to be under $60,000, and again this occurred because of a cancelled committee meeting in April."

Correction

The "Cost Overruns" item below incorrectly reported that CIRM has "roughly 26" employees. CIRM today reported that it has 31 employees.

CIRM's Outside Lawyers Win Retroactive, 66 Percent Pay Hike

A key panel of CIRM directors has approved a $165,000, retroactive payment to its outside attorneys, Remcho, Johansen and Purcell of San Leandro, Ca. Details of the proposed action were never disclosed to the public in advance of approval.

John M. Simpson of Consumer Watchdog reported the approval on his blog, saying,

"Stem Cell Agency Chairman Bob Klein said Remcho billed the additional hours because of (James) Harrison's work on the agency's first bond sale, efforts to negotiate discounts in the grant awards to build research facilities and added involvement in vetting Requests for Applications (RFAs) for grants."

Simpson, who attended the Governance Subcommittee meeting Wednesday and made comments during the session, wrote,

"I suggested that retroactively approving the increase was bad policy. Klein said the item was on the agenda for an earlier planned governance committee meeting, but the session was canceled.

"He said that Harrison ran up the additional billable hours at the law firm's risk, though I can't imagine the agency would have refused to pay."

Well prior to the meeting, the California Stem Cell Report asked for more information on the cryptic Remcho agenda item, but CIRM repeatedly refused to disclose what was being considered despite the fact that the information is certainly a public record.