StemCells, Inc., and California Stem Cell Agency Remain Stalled over $40 Million

The California stem cell agency and StemCells, Inc., are still stalled in negotiations over how the firm will become eligible for $40 million from the state research effort – three months after the agency's governing board approved the awards.

The key issue is whether the agency is satisfied that the Newark, Ca., firm can provide $40 million in matching funds that it promised under the terms of two $20 million awards approved in late July and early September. The September award was approved on a 7-5 vote by agency directors after it was rejected twice by CIRM reviewers.

In response to a query by the California Stem Cell Report, Kevin McCormack, an agency spokesman, yesterday said the company and CIRM have not reached agreement.

CIRM directors okayed the September award in an appeals process that used a mechanism called “extraordinary petitions.” Last week, a blue-ribbon, Institute of Medicine study of the agency said the petitions should be abolished because they damage the integrity of the grant review process.

The September approval was the first time that agency directors approved an application that was rejected twice by reviewers. The action followed two appearances by the former chairman of the agency, Robert Klein, on behalf of StemCells, Inc. It was his first such appearance on behalf of an applicant.

The StemCells, Inc., award also triggered a column in the Los Angeles Times by Pulitzer Prize-winning columnst Michael Hiltzik. He wrote that the process was “redolent of cronyism” and said a “charmed relationship” existed among StemCells, Inc., its “powerful friends” and the stem cell agency.

StemCells, Inc., stock price reached a 52-week high on Sept. 4 of $2.67, well up from its 52-week low of 59 cents June 4. The stock was trading at $1.78 at the time of this writing.   

IOM-Stem Cell Agency Coverage Planned for Tomorrow

The California Stem Cell Report tomorrow will provide complete, live coverage of the Institute of Medicine (IOM) presentation to the directors of the $3 billion California stem cell agency. The IOM last week recommended sweeping changes at the agency, but this is the first chance for the agency governing board to hear directly from the panel.

Harold Shapiro, chairman of the IOM study committee and former president of Princeton University, and Terry Magnuson, vice chairman of the panel and vice dean of research at the University of North Carolina, will perform the briefing for the 29 members of the CIRM governing board.

The meeting is scheduled to begin in Los Angeles at 9 a.m. PST. Our best guess is that the IOM presentation will come up shortly after the meeting starts.

Those who would like to listen live to the meeting can dial 866-254-5937 and use the code 274426 to hear the meeting on a one-way connection. The stem cell agency is no longer providing an Internet audiocast.

In California, teleconference locations that permit comment and participation in the meeting are available in San Francisco, Pleasanton and La Jolla. A previous location in Oakland is no longer available. Persons interested in those locations should check with CIRM for more details on the specific locations than is provided on the agenda.

The agency has also published its Power Point presentations dealing with the initiation of a $40 million basic biology round, the proposed awards of more than $36 million for translational research and the agency's industry engagement plan. Four rejected applicants have appealed in translational research round, which was budgeted for $80 million.

You can read more about the IOM report here, here, here and here.

Four Researchers File Appeals with Stem Cell Board for Millions of Dollars

Two more scientists are seeking to overturn rejection by reviewers of their applications for millions of dollars from the California stem cell agency, bringing to four the number of appeals in the award round to be considered Wednesday by agency directors.

The latest two are Sanaz Memarzadeh of UCLA and Eugenio Cingolani of Cedars Sinai in Los Angeles. Memarzadeh is seeking $3.1 million for research into the causes of endometriosis. Cingolani is seeking $2.8 million to research the possibility of a stem-cell based heart pacemaker.

Both have filed “extraordinary petitions” with CIRM, an appeals process that the Institute of Medicine last week said should be jettisoned by the agency. The IOM said the petitions undercut the integrity of the grant review process. At the same time, directors of the agency are mulling changes in the appeals process, which has seen a record number of appeals, including emotional presentations by patients at board meetings. Both petitions were written prior to the release of the IOM report.

In her petition, Memarzadeh said,

Sanaz Memorzadeh
UCLA photo

“Endometriosis is the third most common non-lethal chronic disease in California affecting 1 in 10 reproductive age women and costing the state $25 billion annually.”

Endometriosis occurs when cells from the uterus grow in other areas of the body often causing debilitating pain and sometimes pelvic cysts, according to the NIH, and the best chance for a cure is removal of reproductive organs.

Memarzadeh said the cause is unknown as are the best ways to treat the affliction. She wrote,

“To our knowledge CIRM has not funded any work related to women’s gynecologic diseases. Funding work related to endometriosis through this proposal is an opportunity for CIRM to fill a critical gap and make a major impact in this understudied field of research.”

Eugenio Cingolani
Cedars Sinai photo

Cingolani also said his research is not represented in the CIRM portfolio. He said,

“While CIRM has laudably invested in ischemic heart disease studies, no grants have been awarded in the area of heart rhythm disorders. This is a huge area of public health need. The current application has the potential to fill an important gap in the current CIRM translational research portfolio, expanding the focus to treat heart rhythm disorders.”

In this round, which was budgeted at $80 million, 12 grants were approved by reviewers. Fifteen were rejected. The amount required for the 12 grants is $36.2 million.

The stem cell agency did not release the scores of the grants that were rejected. They are likely to be disclosed at the Wednesday meeting.

IOM Report: Chronicle Says Prompt and Major Changes Needed at Stem Cell Agency

The San Francisco Chronicle today said the $3 billion California stem cell agency needs to make major changes “to avoid conflicts of interest and retain its credibility with the public, and it needs to do so sooner rather than later.”

In an editorial that came in response to the sweeping recommendations of the Institute of Medicine last week, the Chronicle declared,

“The California Institute for Regenerative Medicine (CIRM), the stem cell funding agency that state voters approved in 2004, has been an 'innovative initiative' that's strengthened California's biotechnology industry and furthered the cause of basic stem cell research, according to a new independent review by the Institute of Medicine (IOM). But the agency needs to make some major structural changes in order to avoid conflicts of interest and retain its credibility with the public, and it needs to do so sooner rather than later.”

The editorial continued,

“The institute also needs to respond to the criticisms in the report, and to do so as quickly as possible. In particular, the institute needs to reform its management if it's to continue its mission after state funding runs out, as it appears the institute's chairman would like to do. Its governing board is too involved in day-to-day management. Nearly all the 29 members of that same board are on the payroll of institutions that have won grants - a serious conflict of interest.”

The Chronicle editorial was the first that we have seen on the subject, but additional comments from individuals have come the way of the California Stem Cell Report.

In an email, Tom Hall, a retired history professor in Berkeley, said,

“At the risk of being too cynical, it seems to me that those who expect the agency to implement the proposals are being more than a bit naïve. The proposals amount to asking people to commit suicide. Those presently involved have too much self-interest at stake to voluntarily drop out. Some kind of pressure will have to be applied.”

Hall referred to IOM recommendations that the 29-member CIRM governing board be barred from voting on individual grant applications and its members be removed from the grant review process. The IOM also said that the majority on the board should consist of “independent” members, which would likely mean that some current board members would lose their seats.

Another email from a person with close knowledge of the stem cell agency, but who must remain anonymous, said,

“I worry that CIRM (governing board) will once again circle the wagons and construct elaborate excuses for inaction and preserving the status quo. It's really terrible because you could make incredible advances if only the energy and dollars were directed properly.”

The Sacramento Bee ran a related editorial yesterday that called for “putting the brakes” on "the initiative machine," which was the process used to create the stem cell agency in 2004. The Bee said that initiatives are “driven by special interests and buttressed by a business network of signature gatherers, legal services and campaign consulting.”

The stem cell initiative, Proposition 71, also has become a two-edged sword for the agency, locking in management minutia and making it nearly impossible to make needed changes, such as those recommended last week by the blue-ribbon Institute of Medicine panel.

Among other things, The Bee indicates that it would support “a sunset of 10 to 15 years for laws passed by voters – or automatically putting such laws back on the ballot for voters to reject or affirm.”

The Bee has yet to editorialize directly on the IOM report.

California Stem Cell Agency: Two Researchers Seek to Overturn Grant Review Rejection

Two University of California scientists whose applications for millions of dollars were turned down by reviewers at the California stem cell agency are asking its governing board this Wednesday to overturn the rejections.

They are Jonathan Lin of UC San Diego and Sophie Deng of UCLA, who are seeking $3.1 million and $3 million respectively.

They have filed appeals using a process known as extraordinary petitions, which a blue-ribbon report by the Institute of Medicine last week said should be abandoned. The study on the performance of the $3 billion agency said the petitions “undermine the credibility and independent work” of grant reviewers.  However, under state law stem cell researchers and the public have the right to address the CIRM board on any issue whatsoever.

In recommending abolition of the petitions, the IOM cited the flap in Texas concerning its $3 billion cancer research program. Reviewers there resigned en masse to protest what they considered abuse of the grant review process.

Lin and Deng's petitions were written prior to the release of the IOM report.  But they come as the agency is already examining ways to tighten up its free-wheeling appeal process, which this year has seen a record number of appeals, backed by emotional presentations from patients and lobbying by the former chairman of the agency, Bob Klein.

In the grant round to be considered Wednesday, reviewers have approved 12 applications out of 27 generated by the “New Faculty Physician Scientist Translational Research” RFA. The approved grants have scientific scores ranging from 87 to 65. Positive decisions by reviewers are almost never overturned by the CIRM board. The approved applications total $36.2 million, according to California Stem Cell Report calculations. The agency budgeted $80 million for the round. One application, the proposal that scored 65, was approved for what CIRM calls “programmatic” reasons, which have been defined as “issues beyond scientific merit, such as disease representation and societal impact.”

In her petition, Deng challenged the reviewers' remarks that her proposal was not worthy of funding because it is “not exceptionally novel.”

Sophie Deng
UCLA photo

She wrote,

“This comment reflects a misunderstanding of translational research. There is a huge gap between a novel discovery and delivering a new therapy to the clinic; translational research is about bridging this gap, not the novelty of the discovery. If the discovery is not translatable, it is meaningless for patient care....Our approach might not be the most novel, but it has the highest potential to bring a new therapy to the clinic.”

Deng also said that “multiple criticisms” in her review “reflected flawed understanding” of its clinical aspects.

Lin's petiton was briefer. He said an attempt to approve the application for programmatic reasons during the review failed because “CIRM was already funding AMD (age-related macular degeneration), and that significant progress was being made elsewhere in the world.”

Lin said,

Jonathan Lin
UCSD photo

“I contest these claims because CIRM has not funded AMD-related research in prior New Faculty Physician Scientist Translational Research RFAs. Furthermore, stem cell research to treat AMD remains in basic science, preclinical research, and clinical safety phases in California. Significant research and clinical studies are still ahead before stem cells can be approved for therapeutic use in patients with AMD.”

CIRM did not disclose the scores of either Lin or Deng. Only the scores of approved applications were listed for this meeting. In some cases in the past, scores of some rejected grants have been listed on the CIRM web site. The agency did not disclose the names of the other applicants or their institutions. 

$40 Million High-Risk Stem Cell Research; IOM and CIRM on Engaging Biotech Biz

Directors of the California stem cell agency this Wednesday will be asked to approve initiation of a $40 million, high-risk research program aimed at filling “key gaps” in knowledge about human stem cell behavior.

The concept plan for the round – called Basic Biology V – will come up for approval at the governing board meeting in Los Angeles.  Pre-applications are expected to be due in March.

The staff proposal calls for as many as 30 awards, but did not specify a limit on the total dollars for each award. The competition is open to both business and academics and non-profit organizations.

The proposal said that the round is targeting “high-risk, exploratory pursuits.” The goal is to fill “key gaps in our understanding of fundamental human stem cell behaviors that hinder the pace of discovery, and ultimately prevent the potential of this research from being fully realized.”

Additionally up for consideration at this week's meeting is a “blueprint” for “engaging industry and supporting commercialization” of CIRM research. A blue-ribbon study by the Institute of Medicine last week also recommended that CIRM engage industry more warmly. However, there were striking differences between what the IOM recommended and what CIRM proposed. The CIRM plan was prepared prior to the release of the IOM report. 

The CIRM proposal laid out the following objectives that were prompted by an “external review” two years ago.

•  “Attract Follow-On Financing and Co-funding of CIRM Funded Research
•  “Support of Company Creation/Growth/Relocation
• “Early Engagement of Top Tier Biopharmaceutical Companies in Order to Access Critical Expertise
• “Assume a Leadership Role in Business Related Areas the are Critical for Supporting the Field”

The CIRM memo listed a number of initiatives that the agency has already started and said more are expected to come. They include the already enacted, new business-friendly award program, the recent hire of an unidentified business development officer, designation of industry “collaborators,” relocation support for high impact companies and participation with industry in developing “reimbursement pathways” that will benefit the regenerative medicine industry.

“Reimbursement” is the euphemistic term that industry prefers instead of saying “beefing up profits.”

Last week, the report by the Institute of Medicine, which cost CIRM $700,000,  noted that biotech firms have received only about 6 percent of the $1.7 billion handed out by CIRM, a figure not mentioned by the eight-year-old agency's industry engagement plan.

The IOM said that industry representation on the agency's critical, decision-making boards (the governing board and standards and grant reveiew groups) should be enhanced. Additionally, a new scientific advisory board with substantial industry presence should be created to replace existing advisory groups. All of which would be aimed at enhancing and leveraging industry “expertise and resources in product development, manufacturing, and regulatory approval in support of the ultimate goal of bringing therapies to patients,” according to the IOM.  

Stem Cell Agency Chairman Says IOM Report 'Quite Complimentary'

Jonathan Thomas
CIRM Photo

Jonathan Thomas, the Los Angeles bond financier who is chairman of the $3 billion California stem cell agency, has weighed in at more length on the sweeping recommendations from the Institute of Medicine for changes at the agency.

He wrote a piece for the agency's blog that said the 124-page report was “quite complimentary.” Thomas' article carried forward the theme of the stem cell agency's press release yesterday that said the IOM “praises the agency as a 'bold social innovation.'”

Thomas did acknowledge that the report “highlighted some areas and made some recommendations about where and how we might improve our performance.” 

Thomas concluded by saying the agency takes the report seriously and will, over the next few months, consider how best to respond.

Nearly needless to say, other observers of the agency differ with Thomas' characterization of the report as “quite complimentary.(See here and here.)

IOM Proposals for Overhaul at CIRM Win High Marks

The Institute of Medicine's recommendations for major changes at the California stem cell agency today received generally high marks from independent observers and critics.

Many of the proposals echoed suggestions from California's Little Hoover Commission, the state's good government agency. Asked for comment, Stuart Drown, the commission's executive director, said,

“The institute’s recommendations for much-needed changes to CIRM’s governance structure to provide greater efficiency, clarity and accountability reinforce the recommendations the Little Hoover Commission made in 2009."

He continued,

“Then and now, the Commission’s recommendations are aimed at improving CIRM’s ability to meet its goals for the good of all who can benefit from stem cell research, and to ensure that California taxpayers’ dollars are put to their most efficient use to that end.”

The California Stem Cell Report also asked the agency's first president, Zach Hall, for his thoughts. Here is the full text of what Hall, who was one of the peer reviewers on the IOM study, had to say,

“The IOM Committee and its staff have done an impressive job.  The report recognizes the scientific value and achievements of the CIRM and, at the same time, makes cogent recommendations that, if taken seriously, will further improve the quality and the public credibility of the Institute. The committee and staff deserve the thanks of the scientific community and all California citizens for their careful and thoughtful work.” 

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., said,

“It's long past time to make the changes the report calls for, but given the spin the agency put on its response -- saying the report praises the 'agency as a bold innovation' -- shows it's business as usual. This sort of behavior will only ensure that CIRM doesn't get another round of public funding,” 

Marcy Darnovsky, associate executive director of the Center for Genetics and Society of Berkeley, Ca., welcomed the recommendations. But she said,

“Given the agency’s shortcomings and the state’s budgetary problems, it would be wrong to ask Californians to give it more public money. If the agency acquires new funds from industry sources or venture firms, it must recognize that it has ongoing obligations to the people of California.” 

She continued,

 “CIRM has not responded in a meaningful way to many previous public interest suggestions or to independent reviews, including the one in 2009 by the state’s Little Hoover Commission. We hope the agency will not continue that pattern.” 

The California Stem Cell Report also queried most of the 10 patient advocates on the agency's governing board for comment. Their roles could be altered in a major way by the IOM recommendations. None of the advocates have yet responded.

(The full text or nearly full text of all the above comments is available here.)  

Text of Comments Reacting to IOM Report on California Stem Cell Agency

Here is the full text or the essential elements of comments sought by the California Stem Cell Report on the Institute of Medicine report that recommended sweeping changes at the California stem cell agency. Consumer Watchdog and the Center for Genetics and Society put their comments in the form of news releases, which contained redundant material.

From Stuart Drown, executive director of California's Little Hoover Commission:

“CIRM initiated the Institute of Medicine review, which is to its credit.  The Institute of Medicine took a scrupulous and rigorous approach to its review of the California Institute of Regenerative Medicine and in its report, notes CIRM’s many achievements and accomplishments.

“The Institute’s recommendations for much-needed changes to CIRM’s governance structure to provide greater efficiency, clarity and accountability reinforce the recommendations the Little Hoover Commission made in 2009. The institute graciously acknowledged the commission’s work, which clearly is as relevant now as it was in 2009.

“Then and now, the Commission’s recommendations are aimed at improving CIRM’s ability to meet its goals for the good of all who can benefit from stem cell research, and to ensure that California taxpayers’ dollars are put to their most efficient use to that end.”

From John M. Simpson, stem cell project director at Consumer Watchdog of Santa Monica, Ca.(full press release here):

“Consumer Watchdog Thursday welcomed a report from the prestigious Institute of Medicine (IOM) calling for sweeping reforms in governance at California’s stem cell agency and an end to the board’s built-in conflicts of interest. 

“The report said that 'far too many board members represent organizations' that receive funding or benefit from the stem cell agency. The IOM said that the board’s oversight function should be separated from the day-to-day management of the California Institute for Regenerative Medicine (CIRM). 

“'The IOM's critical report echoes what every independent evaluator has said in the past,' said John M. Simpson, Consumer Watchdog’s Stem Cell Project director. 'As we have repeated from the beginning, CIRM suffers from built-in conflicts of interest and needs to separate the board's oversight function from day-to-day management.'

“'It's long past time to make the changes the report calls for, but given the spin the agency put on its response -- saying the report praises the 'agency as a bold innovation' -- shows it's business as usual. This sort of behavior will only ensure that CIRM doesn't get another round of public funding,' Simpson said.”

From Marcy Darnovsky, associate executive director of the Center for Genetics and Society in Berkeley, Ca.(full press release here):

“The Center for Genetics and Society, a nonprofit policy research and advocacy organization, welcomed the report on the California stem cell agency released today by the Institute of Medicine and called for stronger protections for  the interests of Californians as the agency continues its disbursement of public funds.

“CIRM is nearing the end of the billions of dollars of public funding allocated to it in 2004. The agency is currently considering how to extend its operations after the money runs out. CGS Associate Executive Director Marcy Darnovskysaid, “Given the agency’s shortcomings and the state’s budgetary problems, it would be wrong to ask Californians to give it more public money. If the agency acquires new funds from industry sources or venture firms, it must recognize that it has ongoing obligations to the people of California.”

“She continued, 'CIRM has not responded in a meaningful way to many previous public interest suggestions or to independent reviews, including the one in 2008 by the state’s Little Hoover Commission. We hope the agency will not continue that pattern.' 

“'Today’s report from the IOM reaffirms the significance of the conflicts of interest and structural flaws that were built into the stem cell program from the beginning, and that continue to threaten its credibility and effectiveness. These are serious problems that the Center for Genetics and Society and other public interest voices pointed out even before the agency was approved by the 2004 ballot measure on which backers spent some $35 million. 

“'Many aspects of these early concerns remain directly relevant,' Darnovsky said. 'There is still no way for elected officials to provide oversight because the measure that created CIRM requires a 70% vote by both houses – more than a supermajority. The agency’s governing board is still tainted by its built-in conflicts of interest, and still includes no representation of the public beyond disease advocates. Members of the agency’s powerful Working Groups, including the one that reviews grant applications, are still not required to publicly disclose their individual financial interests.'”

More IOM-CIRM Coverage: One Story Notes Major 2007 Conflict Flaps at Stem Cell Agency

Additional coverage emerged this morning, including stories in the Los Angeles Times, the Nature web site and Businessweek. on a blue-ribbon report that recommended sweeping changes at the the $3 billion California stem cell agency

In the Times, California's largest circulation newspaper, Eryn Brown's story was headlined,

"Stem cell agency board criticized for conflicts of interest."

The article began,

"The board of California's stem cell funding agency is rife with conflicts of interest and should be restructured to improve the integrity of its grant-making process, according to a new report from independent experts convened by the national Institute of Medicine."“

In the San Diego U-T, reporter Bradley Fikes' article was the only piece in all the coverage to mention two major conflict-of-interest flaps at the agency in 2007.

One involved then CIRM board member John Reed, head of Sanford-Burnham in La Jolla, who tried to influence CIRM staff in connection with a grant to his organization, triggering an investigation by the state's political ethics commission. (Reed's actions were first disclosed by the California Stem Cell Report.) The other case involved inappropriate actions by four members of the 29-member board in an $85 million round. Ten applications were dumped from the round because of the directors' actions. The conflict issues were so rampant that only eight of the directors present at a December 2007 meeting could discuss the issues.

(See here, here and here.)

On the Nature news blog, Monya Baker had a thorough piece that said the agency “received a mixture of praise and hard-to-enact recommendations from an august scientific body.” She also wrote,

“It’s unclear what effect the report will have. Many of these recommendations run counter to requirements enshrined in the legislation that created CIRM, and the board of CIRM has heard similar recommendations before and failed to act on them.”

On the web site of the journal Science, Greg Miller wrote that IOM report "praises the California Institute for Regenerative Medicine (CIRM) as a 'bold social innovation' that provided a creative new source of funding that has turned the state into an international hub of stem cell research. But the IOM panel authoring the report also concluded that the funding agency’s organization and governance is not optimal."

Businessweek carried the AP story by Alicia Chang mentioned yesterday. The AP story also appeared on the San Francisco Chronicle and Sacramento Bee web sites and was also carried internationally on other web sites.  The Chronicle also had a staff story by Erin Allday.  
(An earlier version of this item did not contain the last sentence regarding the Allday story.)

Coverage of the IOM Report: Light but a Column with a Cutting Edge

News coverage has been light so far today of the Institute of Medicine's recommendations for an overhaul at the $3 billion California stem cell agency. But a Pulitzer Prize-winning columnist from the Los Angeles Times took a sharp knife to the agency's press release on the IOM report.

Michael Hiltzik, who is a regular critic of the agency, asked,

 "So how did CIRM react to the report? Even before the review panel's conference call with the press was completed, the agency issued a news release stating that the panel had 'praised' the agency 'for its ground breaking work in helping advance the science of stem cell research.'"If you wanted to know about the committee's criticisms, the first mention of those was in paragraph 9 of the news release. It quoted board Chairman Jonathan Thomas as promising to 'work on establishing a process to enable us to consider how best to proceed with reviewing the recommendations.' 

"By my count, that's seven steps it will take before actually acting on the recommendations. 

"As it happens, the panel's recommendations, which include creating a majority of independent board members without any potential conflicts of interest, track very closely to recommendations made by several previous outside reviews of CIRM, especially a 2009 study by the state's Little Hoover Commission.

"CIRM rejected almost every one, and it looks to be preparing to circle the wagons again against sensible improvements in the way it does business."

The Associated Press story by Alicia Chang popped up in two different forms on the Washington Post web site and in Ottowa and Spokane, among other places. Chang was on board for the IOM news conference and had this to say about CIRM from one of the IOM study group members.

“'They’re not broken but they’re bent,' said Sharon Terry, president of the nonprofit Genetic Alliance who was part of the panel. 'They need some correction.'”

Chang's story originally began,

“California has transformed into a powerhouse player in stem cell research, but the taxpayer-funded institute responsible for that needs an overhaul, a report released Thursday found.”

Another version, that appeared in Ottowa and Spokane and beyond, started this way,

“A report says California’s stem cell agency needs more independent oversight and recommends a restructuring to avoid the appearance of conflict of interest.”

Ron Leuty of the San Francisco Business, who is one of perhaps two reporters who regularly cover the stem cell agency, wrote,

“A review of California's stem cell research funding agency proposed changes to the agency's governing structure and commercial goals while praising its results so far. The 124-page report from the Institute of Medicine recycles many conflict of interest and intellectual property concerns that have dogged the San Francisco-based” agency.

Stephanie O'Neill at KPCC radio in Los Angeles also had a story.

The IOM and the CIRM Point of View

The California stem cell agency today looked at the study that it paid $700,000 for and decided the glass was half full.

The agency's press release on the 124-page report by the prestigious Institute of Medicine was headlined, “Institute of Medicine Report Praises Stem Cell Agency as a 'Bold Social Innovation.'”

The report also recommended sweeping changes at the agency, including stripping its governing board of the power to approve individual grants, overhauling the board to install a majority of independent directors and fundamentally altering the role of the 10 patient advocates on the 29-member board.  

IOM Recommends Sweeping Changes at California Stem Cell Agency

A blue-ribbon study of the $3 billionCalifornia stem cell agency today said the program has “achieved many notable results,” but recommended sweeping changes to remove conflict of interest problems, clean up a troubling dual-executive arrangement and fundamentally change the nature of the governing board.

The recommendations from the 17-month study by the Institute of Medicine (IOM) would strip the board of its ability to approve individual grants, greatly strengthen the role of the agency's president, significantly alter the role of patient advocates on the governing board and engage the biotech industry more vigorously.

Harold Shapiro, chairman of
IOM-CIRM  panel
Princeton University Photo

Harold Shapiro, former president of Princeton University and chairman of the IOM study panel, said, “Overall, CIRM (the California Institute for Regenerative Medicine) has done a remarkably good job” in giving the state a prominent position in regenerative medicine. But he said the stem cell field has “evolved”and CIRM needs to change with it.

As for turning research into cures, the report said,

 “The challenge of moving its research programs closer to the clinic and California’s large biotechnology sector is certainly on CIRM’s agenda, but substantial achievements in this arena remain to be made.”

Asked for comment, J.T. Thomas, chairman of the CIRM governing board, said it was premature to offer an opinion on the report, which will be presented to directors Dec. 12 at their Los Angeles meeting. (See here for the full text of Thomas' remarks.)

The study was conducted at the behest of CIRM, which paid the IOM $700,000. The IOM is a prestigious non-profit organization that was created in 1970 to provide authoritative advice to policy makers and the public.

In 2010, when directors authorized the study, Robert Klein, then chairman of the CIRM board, and other board members said that they hoped the study would lead to another multibillion dollar state bond issue to support the agency(see here and here). Duane Roth, a San Diego businessman and co-vice chairman of the CIRM governing board, was the lone no vote on the study. He warned directors that that they could not “go in just sort of blind trust that (the IOM is) going to reach the conclusion you want them to reach.”

The agency will run out cash for new grants in four years. Currently California remains in the throes of state budgetary problems, and the agency has put on hold talk of another bond election. It has also broached the possibility of seeking private funding.

The IOM report said the agency should develop a full-blown “sustainability platform” and plans that would spell out its likely financial structure and future rules on grants and their administration, including intellectual property.

The study echoed concerns and complaints about CIRM's operation that were aired even before the agency was officially created by voters in 2004. One of those involves the built-in conflicts of interests on the CIRM governing board. As of September, 92 percent of the $1.7 billion handed out by the agency had gone to institutions linked to persons serving on the 29-member board.

The report said,

“Far too many board mem­bers represent organizations that receive CIRM funding or benefit from that funding. These com­peting personal and professional interests com­promise the perceived independence of the ICOC(the CIRM governing board), introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board.”

The IOM cited an ongoing scandal in Texas dealing with that state's $3 billion cancer agency. The flap has led to mass resignations of the agency's grant reviewers. The IOM said,

“Recent controversy surrounding the Cancer Prevention and Research Institute of Texas grants process illustrates the importance of rigorous scientific review free from inherent or perceived conflict and the consequences when these boundaries appear to be breached.”

However, the IOM press release said,

“Because the committee was not charged with reviewing CIRM's past funding decisions, it did not identify any specific cases of conflict.”

The IOM surveyed members of the board (ICOC) about conflicts of interest. The report said,

 "While a majority of respondents stated that personal interests did not play a role in their work on the ICOC, some responses were more equivocal. One respondent replied that it was 'hard to tell' given that 'so many decisions take place off camera in secret meetings,' while another acknowledged that ICOC members are human, and of course their decisions are influenced by personal beliefs and interests."

To help deal with conflicts of interest, the IOM recommended that the CIRM governing board not be allowed to approve individual grants. Instead, the board would be given a slate of applications that would be approved as a block. All CIRM board members would be removed from the grant review committee and the grant review process would be turned over to the president of the agency, currently Alan Trounson.

The IOM recommended that a majority of the board consist of “independent” members and said that the board should not be increased beyond its current 29 members, although it could be shrunk.

Conflict of interest rules should be revised to deal with personal conflicts, which could have a major impact on the 10 patient advocate members of the board but also other directors and possibly staff who have family members with health issues. The report said,

“California law focuses primarily on financial conflicts of interest, but the committee believes that personal conflicts of interest arising from one’s own or a family member’s affliction with a particular disease or advocacy on behalf of a particular disease also can create bias for board members. Studies in psychology and behavioral economics show that conflict of interest leads to unconscious and unintentional 'self-serving bias' and to a 'bias blind spot' that prevents recognition of one’s own bias. Bias distorts evaluation of evidence and assessment of what is fair.”

The IOM said that the board is much too involved in operational matters, including the chair and the two vice-chairs. The report said,

“The board should transfer management responsibilities to management so it can provide truly independent oversight and evaluation of management, strategic planning, and broad direction for resource allocation.”

The IOM repeatedly and favorably cited a 2009 study by California's Little Hoover Commission, the state's good government agency. It noted that CIRM rejected most of the commission's recommendations. The IOM also cited recommendations by the agency's own “external review” panel in 2010 and suggestions this year from the first performance audit of the agency, which cost CIRM $234,944.

Many of the IOM's recommendations would require either legislative approval or another ballot initiative. However, changes in the Prop. 71, the ballot initiative that created CIRM, require a politically difficult super, supermajority vote (70 percent) of the both houses of the legislature and the signature of the governor. The requirement was written into the 10,000-word initiative and has been used by CIRM to block legislation that it did not favor.

Here is brief rundown on some of the other IOM recommendations:

• Greater engagement with industry to commercialize stem cell research. Noting that industry has received only 6 percent of the agency grants, the report said business representation on CIRM working groups and other committees “should be enhanced to leverage industry’s expertise and resources in product development, manufacturing, and regulatory approval in support of the ultimate goal of bringing therapies to patients.”
• Elimination of the current process in which applicants rejected by reviewers appeal publicly to the governing board. Noting that 32 percent of “extraordinary petitions” have been successful, the report said they “undermine the credibility and independent work” of grant reviewers. Instead appeals would heard only by staff behind closed doors.
• Creation of a new scientific advisory board, appointed by the CIRM president with a majority from outside of California, instead of multiple advisory groups. The report said,“Such an external board would be invaluable in vetting ideas for new RFAs, suggesting RFAs that otherwise would not have been considered, and helping CIRM maintain an appropriate balance in its research portfolio. Input from this board would help CIRM make fundamental decisions about dealing with challenges that cut across particular diseases, decide which discoveries should progress toward the clinic, and determine how best to engage industry partners in developing new therapies.”
• Funding of programs on bioethics and regulatory problems. The report said,“It is difficult for researchers to find appropriate funding for stem cell-specific ethics and policy work, and filling this funding gap is well within CIRM’s budget.”

One final note: As mentioned earlier, Duane Roth, co-vice chairman of the agency, was the only no vote on the board when it authorized the IOM study in 2010. The IOM today said,

“The critical tasks performed by the vice chairs should be reassigned to management. In particular, the important tasks of government relations and corporate relations both should be carried out by staff reporting to the president rather than by the vice chairs of the board.”

For more excerpts from the report, see this item.

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Text of CIRM Chairman's Comments on the IOM Report

Here is the text of comments on the IOM study of CIRM from J.T. Thomas, chairman of the agency. 

"We deeply appreciate all the hard work of the IOM committee in compiling  long and detailed report and the IOM clearly put considerable thought into compiling it. This has just been released so our Board and our staff has not had a chance to look at it yet, let alone digest its findings and recommendations, so it’s premature for us to offer any opinions. We are looking forward to the IOM presentation at the next meeting of our board, the Independent Citizens Oversight Committee (ICOC) where we’ll have a chance to talk with the IOM directly about the report. After that we’ll put together a process on how best to proceed so that we can respond in as thoughtful a manner to the recommendations as the IOM did in making them."

Excerpts from the IOM Report on the California Stem Cell agency

Here are excerpts from the $700,000 Institute of Medicine (IOM) report on the $3 billion California stem cell agency -- the California Institute of Regenerative Medicine (CIRM).

Overall Comments

“Improvements to CIRM’s governance structure, scientific program, and policies are critical to bet­ter serving California taxpayers who elected to devote funding to promote stem cell research in the state. The necessary changes outlined by the IOM committee, if enacted by the state and/or the institute, would help to instill confidence among the scientific community and California residents in the vital work that CIRM is accomplishing.”

“It is the committee’s judgment that overall, CIRM has done a very good job of initially establishing and then updating the strategic plans that have set priorities for and guided its programs, and of taking advantage of its guaranteed flow of $300 million a year for 10 years to establish a sustainable position in regenerative medicine for California. The challenge of moving its research programs closer to the clinic and California’s large biotechnology sector is certainly on CIRM’s agenda, but substantial achievements in this arena remain to be made.

“Despite its demonstrable achievements to date, as well as the largely positive independent reports covering various aspects of its operations, no one would claim that CIRM is a perfect organization or that it should adhere slavishly to its initial form of organization, set of regulations, or pattern of priorities. The field of regenerative medicine has advanced rapidly since November 2004, and CIRM itself has seen the need to alter its activities and approaches in some areas. The committee believes the same should be true of its governance structure, some of its administrative practices, and its use of external perspectives on strategic scientific priorities and on the evaluation of other key policies, such as intellectual property, to ensure that they continue to encourage the development and deployment of new treatments.”

“While the restrictions on amending the administrative structure of CIRM established in Proposition 71 had the advantage of protecting the institute’s ongoing operations from outside interference in an ethically controversial arena, they also made it difficult to modify the organization’s structure in response to experience and/or changing circumstances. Moreover, these protections, whatever their benefits, appear to some to shield CIRM from the normal accountability mechanisms in place for state agencies.”

Conflicts of Interest

“Far too many board mem­bers represent organizations that receive CIRM funding or benefit from that funding. These com­peting personal and professional interests com­promise the perceived independence of the ICOC, introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board. Neither the board chair nor board members should serve on any working group. The board itself should include representatives of the diverse constituencies that have an interest in stem cell research, but no institution or organiza­tion should be guaranteed a seat.”

“The problematic perception of conflicts of interest has persisted for as long as CIRM has existed. The IOM committee would be less concerned about individual board members with actual or perceived conflicts of interest if the board membership included more truly independent members. The majority of board members should be independent, with no competing or conflicting personal or professional interest. Broader representation from a wider variety of stakeholders will inject new perspectives into the panel and will help to dispel the perception of conflicts of interest.

“CIRM also should revise its conflict of interest definitions to include non-financial interests, such as the potential for personal conflicts of interest to arise from one’s own affliction with a disease or personal advocacy on behalf of that disease. CIRM policies for managing conflicts of interest should apply to that broader definition.”

Structure and Governance

“Currently, the ICOC (the agency's governing board) functions both as an executor and as an overseer—competing duties that compromise the ICOC’s critical role of pro­viding independent oversight and strategic direc­tion. The IOM committee recommends that CIRM’s operations be separated from its over­sight. The board should delegate more author­ity and responsibility for day-to-day affairs to the president and senior management, and the ICOC’s three working groups should report to senior management within CIRM, rather than to the ICOC. The moves would permit the board to better focus its energy and collective talent on strategic planning, overseeing financial perfor­mance, ensuring legal compliance, assessing the president’s performance, and devising a plan for preserving and expanding its considerable assets to permit the institute to continue its important work after the bond measures end.”

Unrealistic Goals

“While the latest round of awards challenge teams to have filed a request to begin clinical trials or to have completed early-stage trials in patients within four years, the committee feels these ambi­tious goals are unrealistic. New therapies take more time to progress to federal approval, and early-stage clinical trials are beset by a stagger­ingly high failure rate. Rather than judging suc­cess by simply tallying the number of active clini­cal trials, the IOM committee suggests that CIRM also continue its focus on underlying biological mechanisms that drive the success or failure of a promising therapy and on careful design of clini­cal trials. Advances in these areas will help the entire field progress, even if a specific drug candi­date is not approved." 

Economic Impact

“In the short term, CIRM’s expenditures are supporting approximately 3,400 jobs and their innovative efforts have also attracted substantial additional private and institutional resources to this research arena in California CIRM’s long-term impact on such critical aspects of the California economy as state tax revenues and health care costs beyond the shorter-term and temporary impact of its direct expenditures cannot be reliably estimated at this point in CIRM’s history.... (T)he estimate of the Analysis Group (2008) that the CIRM program alone would support about 3,400 jobs as long as it was allocating about $300 million per year in research and development grants appears quite reasonable to the committee. To put this estimate in context, however, total employment in California is roughly 16 million, and NIH alone provides more than $3.5 billion per year to California research institutions.”

Intellectual Property

“CIRM should propose regulations that specify who will have the power and authority to assert and enforce in the future rights retained by the state in CIRM-funded intellectual property. CIRM should seek to clarify which state agencies and actors will be responsible for the exercise of discretion currently allocated to CIRM and the ICOC (the CIRM governing board) over future determinations on issues regarding march-in rights, access plans, and revenue-sharing rights that might arise years after CIRM's initial funding period has passed.... (T)he ICOC should reconsider whether its goal of developing cures would be better served by harmonizing CIRM’s IP policies wherever possible with the more familiar policies of the Bayh-Dole Act(federal IP law).

Upcoming Tomorrow Morning: IOM Performance Review of the California Stem Cell

The $700,000 Institute of Medicine study of the California stem cell agency is scheduled to be released tomorrow at 10:30 a.m. Pacific Standard Time. The California Stem Cell Report will have full coverage of the 17-month study, including reaction from the stem cell agency and excerpts. Look for the stories here tomorrow morning.

Collapse of Big Pharma Deal Involving California Stem Cell Agency

A ballyhooed deal has blown apart that would have hooked up – for the first time – Big Pharma and the $3 billion California stem cell agency.

The breakdown of the arrangement was quietly disclosed yesterday in background material prepared for the Dec. 12 meeting of the stem cell agency's governing board.

The deal was first announced Oct. 25 when Viacyte, Inc., of San Diego, received a $10.1 million award to help finance a clinical trial for a diabetes treatment involving Viacyte and GlaxoSmithKline.

The CIRM background memo said this week, however,

“We have recently been informed that GSK was not able to obtain the final approval required due to business reasons in the context of GSK's overall research and development portfolio and investment needs and not as a result of any scientific or technical assessment of ViaCyte's program.”

The memo gave no further details about the Glaxo decision.

CIRM staff proposed that Viacyte, which has received $36 million from CIRM, be given another $3 million because Glaxo has exited the trial.

The arrangement involving Glaxo, Viacyte and CIRM was trumpeted in October, when Viacyte was awarded the $10 million. Officials of the stem cell agency said the award was a “watershed” for CIRM. Jason Gardner, head of the Glaxo stem cell unit and who attended the meeting, told the California Stem Cell Report that the arrangement was a partnership and that the company intended to develop a sustainable pipeline.

It was the second significant business-connected deal that has collapsed for the $3 billion agency within the last 13 months. In November 2011, Geron abandoned its clinical trial for spinal injuries. CIRM had loaned Geron $25 million for the trial just three months earlier. The company paid the money back with interest.

CIRM staff said that advisors to the agency remain “extremely positive” about the Viacyte research and “strongly recommended” that the company receive the additional $3 million. The memo said that trial has a “strong potential” to be commercialized.

Extra, Extra! CIRM Staffers Blog the World Stem Cell Summit

Years ago, I worked with an editor who used to advise his lagging scribes to put their noses in their typewriters and peck.

Well, the folks at the California stem cell agency have their noses in what passes today for typewriters and are pecking away furiously. Their subject is the World Stem Cell Summit, which has received only slight coverage in the mainstream media.

Today, the stem “cellists” from San Francisco's King Street filed -- on the agency's blog -- three fulsome items on doings at the summit, which is taking place in West Palm Beach, Fla. Yesterday they filed four. Photos and charts were included. More coverage is expected tomorrow.

CIRM staffers blogging the World Stem Cell Summit
covered UC Davis researcher Paul Knoepfler discussing
patient advocacy and its role in funding stem cell research. 

The CIRM writers are doing double-duty in at least one case. Geoff Lomax, the agency's senior officer for its standards group, is additionally speaking on a panel at the session. A handful of other CIRM officials are also appearing at the conference, which ends tomorrow.

The primary purpose, we presume, of sending state employees across the country is to gather the latest information on stem cell science and issues and to make contacts. It is a bit of a bonus for the public to have the CIRM attendees also file stories on the sessions.

A couple of the items caught my attention. One dealt with patient advocates and their role in energizing and helping to drive funding for research. Another item discussed what appear to be growing issues with dubious stem cell treatments and the damage they can do to the field in general.

Lomax summarized the signs of a stem cell scam like this:

• “Claims of miracle cures for diseases
• “Single treatments or cells that can treat any type of disease
• “Lack of objective information, evidence (such as published medical reports) that a treatment is effective
• “Treatment by a doctor who is not trained or certified to treat the specific disease
• “No system exists to collect information and follow up with patients”

$80 Million in Grants, Money for Viacyte and Blue-Ribbon Report on California Stem Cell Agency

Directors of the California stem cell agency are expected to give away $80 million next week to 20 fortunate researchers in addition to exploring a “commercialization and industry engagement plan.”

The subjects are on tap for the Dec. 12 meeting in Los Angeles of the governing board of the $3 billion research effort.

The $80 million grant round is aimed at “career development of physician scientists working in translational stem cell research.”

The RFA said

“This award will fund promising physician scientists in the critical early stages of their careers as independent investigators and faculty members establishing their own laboratories and programs.” 

Summaries of the grant reviewers comments and application scores should be available sometime this week. The bare-bones agenda lacked elaboration on the commercialization plan.

Directors are additionally scheduled to hear a presentation on the blue-ribbon report by the Institute of Medicine for which the agency is paying $700,000. The report has been 17 months in the making and is scheduled to be released this Thursday.

Other interesting matters are on the table, although the agency has yet to produce background material laying out any details. The subjects include:

• More money – no amount yet specified – for Viacyte, Inc, of San Diego, which has received more than $36 million from CIRM.
• An update of the agency's response to the only performance audit conducted at the agency. The audit identified 27 areas where improvement is needed, but the governing board has not discussed the results publicly since they were disclosed last May.
• Approval of the concept plan for another round of basic biology grants and adoption of conflict of interest code changes.

Interested parties will be able to take part at the meeting location in Los Angeles and teleconference locations in La Jolla, Oakland and UCSF. If you are interested in the teleconference locations, you will need to contact the agency for more specific directions than are provided on the agenda.

Update on Move To Curb Researcher Appeals at California Stem Cell Agency

Directors of the $3 billion California stem cell agency are still mulling details of changes in their free-wheeling and sometimes emotional appeals process for grant applications that are rejected by the agency's reviewers.

A special task force of directors met last week for the second time to discuss the likely alterations. Kevin McCormack, spokesman for the agency, said the group made no decisions. Another meeting will be held later at a date to be determined. The task force's recommendations will then go before the full board, probably in late January.

McCormack said members of the panel have asked for “more details regarding the process that would be employed if the appeals and extraordinary petition processes were merged.”

The agency has an odd, bifurcated appeals process. Early in its existence, the agency said appeals of reviewer decisions could be based only on conflicts of interest. However, researchers have a right under state law to speak to the governing board in public on any issue whatsoever. As some researchers began to use that avenue to ask for reconsideration of their applications, the CIRM board created what it called “extraordinary petitions” in an effort to control the process and limit appeals. Both the “appeals” and “extraordinary petitions” are, in fact, appeals but on different grounds and employing different mechanisms.

The task force was created in September after directors complained about “arm-twisting” and “emotionally charged presentations” in connection with a record number of appeals earlier this year.

Here is a link to an item about the task force's first meeting. Here is a link to an agency summary of the task force's deliberations prior to last week's meeting. The transcript of the session should be available on the CIRM web site within the next two weeks. It will be found under the meetings section of the web and then under the heading for the task force's November session.