Ephemeral $9.4 Million Stem Cell Deal: Bluebird Bio and California Stem Cell Agency

A $9.4 million deal between a Massachusetts biotech firm and the California stem cell agency has quietly collapsed, raising questions about whether the firm will fulfill its promise to open facilities and hire people in the Golden State.

The company is bluebird bio (the company prefers the lower case spelling) of Cambridge, Mass., which was acclaimed for the success of its initial stock offering last June that ultimately raised $116 million.

One year ago this month, the governing board of the $3 billion stem cell agency awarded bluebird $9.4 million with little public discussion. The stem cell agency, which is known as CIRM, said the money would help create “a stem cell and gene therapy approach to correct a genetic disease in young patients with B-thalassemia, an inherited blood disorder that can cause widespread organ damage and premature death.”

In addition to the funds, the action also provided a “Good Housekeeping Seal of Approval” for bluebird from a major and well-respected funding organization. Bluebird said at the time it was “delighted.” Both the “seal” and the ostensible cash proved to be valuable later when generating investor interest in bluebird's stock offering.

Nick Leschly, CEO of bluebird bio, calls himself "chief bluebird"

The award was one of the first in the agency's business-friendly strategic partnership program. However, as months passed, negotiations continued fruitlessly between the CIRM staff and the company, which is 28 percent owned by the storied Boston biotech venture capital firm, Third Rock. 

When asked today about the discussions, Kevin McCormack, CIRM's senior director of public communications, said,

“They decided not to take the money.”

Bluebird, with no fanfare, had already disclosed the breakdown of the deal as part of a routine SEC filing on Aug. 14. The company said,

“The award was conditioned upon terms and conditions by CIRM generally applicable to its grant recipients and the negotiation of a grant agreement with CIRM. No amounts have been received under this award. The company no longer expects it will accept the CIRM award. The company is currently exploring other opportunities to engage in CIRM programs.”

The California Stem Cell Report has queried the company for further explanation and will carry its response verbatim when it is received. The company, however, has not yet even responded to a query from last May.

One of the questions involves statements by bluebird that it planned a substantial expansion in California.

According to the CIRM summary of the review of the bluebird application, the company said,

“We will have at least two clinical sites in California, and more likely up to 4 sites, 2) our viral vector manufacturing will occur in California, 3) our cell processing will occur in California, 4) we will hire several consultants and full-time employees within California to support the program. Overall, several million dollars will be spent employing the services of people, academic institutions, and other companies within the state of California.”

The company has said that it is working with Donald Kohn at UCLA and Elliot Vichinsky at Oakland's Children's Hospital.

The NIH clinical trials Web site shows that bluebird is recruiting patients for a beta-thalassemia
trial at an unspecified location in Oakland.

Last spring, the bluebird Web site listed a California location at 1001 Bayhill Dr, Suite 200, in San Bruno, which is south of San Francisco. An Internet search last spring indicated, however, that is a generic address for a number of business including a realty firm, a roof repair business and a family law attorney. Today bluebird's Web site no longer lists a California location.

Like most biotech companies, bluebird is losing money. According to an article Aug. 15 in the Boston Business Journal by Don Seiffert, bluebird's first quarterly report since going public also showed that the firm “lost share value on a per share net loss that was six times worse than analysts were expecting.”

Stories are important for any company, particularly one that is involved with an initial stock offering. Ben Fidler of Xconomy wrote about the bluebird story just last week. He said,

“Given the failures of gene therapy in the past, how was Bluebird able to raise so much money from both public and private investors? (Nick) Leschly (the company CEO) notes that bluebird had to be careful in the way it told its story to generate excitement rather than fear. To do so, it started with the rare disease it was going after, rather than the method it was using to do it.

“'We needed to retrain peoples’ receptors from not running to the [other] side of the room when you heard the words gene therapy to, ‘just hold on, let us tell you the data,' he says. 'So it really became gene therapy at the intersection of orphan diseases very quickly.'

“What bluebird didn’t anticipate, however, was that gene therapy 'all of a sudden got interesting.' Large pharmaceutical companies started investing in the field again, and it woke investors up, and buoyed bluebird as it tried to raise more cash—ultimately carrying out one of the most successful biotech IPOs this year.

“'I’d love to say it was planned. No, it was good timing I think with a good story, and that combination led to a successful IPO,' he said.”

Earlier today we asked the California stem cell agency for a copy of the letter from bluebird rejecting the $9.4 million. CIRM's McCormack replied,

“Bluebird didn't send us a formal letter or email announcing they were not taking our money. It was a phone call in which they explained that circumstances changed with their successful IPO and the money that came in from that. In light of that success bluebird no longer needed our money to co-fund the project. They were able to move the project forward on their own and decided to do so.

“So how do we feel about this? Well, our goal has always been to help move the most promising therapies into clinical trials, and in this case that is what is happening. Having our independent panel of experts review and recommend their project, and then having our governing board approve funding clearly helps establish the credibility and viability of any company’s research. Funding approval from CIRM is the scientific equivalent of getting the Good Housekeeping Seal of Approval and undoubtedly helped with their IPO. So, now they are moving the project ahead on their own, and we still have almost $10 million that we can use to help other companies and other promising therapies.

“As for their 'exploring other opportunities to engage in CIRM programs' that may be the case but we are not currently in any discussions with them.”

(Photo credit: bluebird bio)

Zeroing in on Therapies at the California Stem Cell Agency

BURLINGAME, Ca. -- Directors of the California stem cell agency today mulled over a recommendation that they focus intensely on a handful of research projects that are most likely to result in commercializing a stem cell therapy.

No decisions were made, but directors raised questions about whether such a move would mean a reduction of funding for other research efforts or affect other projects in a negative way.

The recommendation and others came from agency's new scientific advisory board(SAB), appointed by CIRM President Alan Trounson at the behest of an Institute of Medicine study. The agency received the panel's report only on Monday and cobbled together staff responses for today's directors' meeting.

The SAB proposals were bad news for the agency's shared labs program, which costs CIRM $7.5 million a year and is set to expire in 2014. The panel recommended an end to the program after that date. CIRM agency staff agreed, declaring that the original rationale was no longer valid and that the program could be wrapped into the recipient institutions' budgets, if they wished to continue with it.

The SAB, which has only one California member, said the stem cell agency should focus on six to eight projects that would lead to early stage clinical trials involving safety and proof of concept(stage one and 2A).

Discussion of the plan came after Ellen Feigal, senior vice president for research and development, briefed the directors on 70 agency grants that are moving well along the clinical development pathway. She told them, however,

“We are not going to take 70 projects forward.”

The agency currently has $600 million in uncommitted funds after handing out $1.9 billion over the last nine years. However, it could come up with more funds if it decided to “uncommit” some grant rounds conceptually approved but for which applications have not been solicited. CIRM is scheduled to run out of cash for new grants in 2017.

Feigal said that the SAB proposal could have “downstream implications” if extra money is required to intensify efforts on six to eight projects. However, she also said the agency could simply provide an “expedited pathway.”

CIRM Director Sherry Lansing noted that the agency is “trying desperately to get a win.” She suggested putting out a “do-you-need-help” RFA which would target applicants that have well-developed projects that could be moved ahead rapidly with some cash. 

Director Jeff Sheehy said the agency needs to “talk about sustaining what we have built.” He said,

 “It is not like our folks are going to graduate from our funding to NIH funding.”

The NIH is already suffering from a major cash crunch.

The recommendations from the SAB and staff reaction will be heard by the directors' Science Subcommittee, chaired by Sheehy, before the directors' December meeting. The December meeting is also expected to include a briefing on a proposal for creation of a “strategic roadmap” for future CIRM funding.

Here is the Power Point summary of the recommendations and staff responses. We have asked the agency for a copy of the original document from the SAB.

California Stem Cell Directors Adjourn

Directors of the California stem cell agency adjourned the public portion of their meeting at 2:02 p.m. today. They moved into a closed personnel session to discuss the evaluation of CIRM President Alan Trounson. No further public action is anticipated today.

Stem Cell Directors to Discuss Advisors' Proposals for Changes

BURLINGAME, Ca. -- Directors of the California stem cell agency will be working through their lunch today. When they regroup in a few minutes, the first item on the agenda is expected to be the recommendations of the new scientific advisory board.

The advisory board was selected by the agency, but it has some proposals for changes and refocusing efforts at the agency. Discussion of the proposals will continue at the agency's board meeting in December, when it is also expected to discuss its road map for funding beyond 2017, when money for new grants will run out.

The Power Point presentation of the recommendations can be found here. The information was not available to the public until this morning.

A Look at the California Stem Cell Agency's Most Promising Research

BURLINGAME, Ca. -- Directors of the California stem cell agency are being briefed on their grants that are most likely to develop into commercial stem cell cures in the near future -- meaning at least a number of years down the road.

Here is a link to the lengthy Power Point presentations being used. No additional document is available on the status of the translational portfolio.

CIRM's Scientific Advisors Laud California Stem Cell Agency

BURLINGAME, Ca. -- Although the California stem cell agency's new scientific advisory board recommends a number of changes at the enterprise, the board's bottom line is that the agency has had a "transformative" impact on stem cell science.

The conclusion from the panel, which was selected by the agency, was contained in a Power Point summary offered by the agency at its meeting here today. Here is an excerpt.

"The case that CIRM has been transformative in this exciting emerging field of  biomedical science seems self-evident to the SAB(scientific advisory board). The level of activity in this field in California is extraordinarily high and there are many excellent programs being supported by the CIRM that would have failed to be supported given the limited amounts of funding available for this field when CIRM was established. The program has yielded a large number of extremely well trained students and investigators supported directly or indirectly by the CIRM, there is a critical mass in a number of the major academic centers around California that has allowed it to compete internationally in this field, and the commercial environment for regenerative medicine in California has thrived as a result of CIRM intervention. 

"SAB noted that CIRM, despite its considerable achievements, had not received the attention and attribution that many equivalent funding bodies would have had for their contribution to successful science. SAB strongly suggests that CIRM ramps up its outreach activities, both to improve the California public’s awareness of CIRM’s uniqueness in the world, its successes so far, and the potential of stem cell research to advance treatment of diseases and injuries. Its brand recognition internationally and even nationally is limited and this should be corrected."

Stem Cell Conflict-of-Interest Rules Sent Back for More Work

BURLINGAME, Ca. – Directors of the California stem cell agency today sidetracked minor changes in its conflict of interest rules for the scientists who review applications for millions of dollar in state funds.

The scientists score the applications, and their decisions have determined the fate of 98 percent of thousands of applications over the last nine years. The agency has given out $1.9 billion.

The proposed conflict changes were referred to the directors' Governance Subcommittee for possible alteration. The action came after two directors, Jeff Sheehy and Steve Juelsgaard, found fault with them for different reasons.

Sheehy objected to the proposal after the staff said the changes would  allow two situations at the agency which have been determined to be conflicts of interest. Juelsgaard was concerned about ambiguous definitions of personal and professional conflicts as well as protection of privacy.

Today's proposal was largely triggered by a conflict of interest earlier this year involving two internationally renown scientists: Lee Hood, president of the Institute for Systems Biology in Seattle, Wash., and Irv Weissman of Stanford, who are close friends and own a ranch together in Montana.

Hood was recruited by CIRM President Alan Trounson to serve as a scientific reviewer in a $40 million grant round involving Weissman. Trounson has been a guest of Weissman's at the ranch. One of the applications in the round involved Weissman, who could have received a payment of a few thousand dollars, and Stanford,which would would have been the site of a $24 million genomics facility.

The agency said it did not detect the relationship between Hood and Weissman until it was called to their attention by another reviewer who was also participating in the closed-door review of applications. The agency is conducting another review of the applications later this fall.

The other conflict case involved John Sladek of the University of Colorado.

The changes proposed today would create a threshold of $5,000 a year for conflicts involving salary or consulting fees. Less than that would not trigger a conflict situation. Other proposed changes to be taken up by the agency board involve personal and professional conflicts along with the nature of the economic disclosures that reviewers, all of whom are from out-of-state, must disclose privately to a handful of agency officials.

Wide-ranging Recommendations for California Stem Cell Agency

The California stem cell agency this morning released a Power Point summary of wide-ranging recommendations from its newly created scientific advisory board(SAB).

The recommendations will be discussed later today and again in December. Here is an excerpt from the lead recommendation.  The complete Power Point presentation can be found at the end of this item.

"SAB advises CIRM to identify, through a prioritization process, the top 6 to 8 projects, with clear relevance to the remit of CIRM’s stem cell mission, and to setaside the funding to ensure the projects can proceed to phase 1 and 2a clinical trials as rapidly as possible, without financial impediments. – Achieving clinical proof of concept is a key goal to achieve, to attract future potential investors and supporters of stem cell research, and has a strong chance of success, as long as CIRM advances the most promising clinical candidates “at speed”; this will require careful assessment / prioritization of portfolio.

"Preliminary management response: Management accepts this recommendation and will need to identify a process for selection of these projects that would include representatives from GWG(grant review group), CDAP(another agency advisory panel), and other external expertise as needed, and the amount of funding that would need to be set aside by the ICOC(CIRM directors). Recommendations will be developed for this priority group of projects as to where expertise and approach need to be modified to maximize the potential and to ensure rapid and effective progress. Management will provide separately a process to select these priority projects."

CIRM Scientific Advisory Board Recommendations

CIRM Directors Open Today's Meeting

Directors of the California stem cell agency have just begun their meeting. The Power Point presentation of the recommendations of the newly created scientific advisory board is now available and will be posted on this web site shortly.

Upcoming: Live Coverage of Today's California Stem Cell Meeting

BURLINGAME, Ca. -- The California Stem Cell Report will provide live, gavel-to-gavel coverage today of the meeting of  the governing board of the $3 billion California stem cell agency.

The meeting begins at 9 a.m. PDT. Stories will be filed as warranted throughout the day. On the agenda are the first recommendations from the agency's new scientific advisory board, an update on the agency's critical translational research program and changes in its conflict-of-interest rules for grant reviewers. At the time of this writing, neither the recommendations of the science advisors or the report on translational grants is available to the public.

For those who wish to follow the board action live, the agency is providing an Internet audiocast and a WebEx Internet connection. Full details are on the meeting agenda. For those who have not used either in the past, we recommend that you log on in advance of the 9 a.m. PDT meeting to work out any kinks.

Stem Cell Person of the Year Award: Nominees Now Named

Voting is underway around the world for the semi-finalists for the Stem Cell Person of 2013 award, and one of the top staff members of the California stem cell agency is in the running.

She is Patricia Olson, executive director of scientific activities for the $3 billion California Institute for Regenerative Medicine(CIRM). Olson is the only member of the unique agency's staff to have been nominated for the award, which is made by UC Davis stem cell researcher Paul Knoepfler. The award carries a $1,000 prize that comes out of Knoepfler's pocket.

Olson's name caught my eye because in many ways she represents the entire, tiny staff of the nine-year-old agency. Only a little more than 50 people work at the San Francisco enterprise, which is an unusual combination of science, academia, business and government. In its early years, the number of employees was even smaller, less than it would take to staff your average Burger King. Yet, the agency has given out $1.9 billion, acted on thousands of grant applications and overseen 570 awards. More are to come.

From the agency's start, many worried that the size of the staff would not be adequate to keep up, a question that can still be raised justifiably. But the CIRM staff has forged on, scrutinizing grantee work with more care than the mighty NIH, as we have noted in the past.

Olson is one of the few longtime veterans of the agency, joining it in 2006. She has acquired a set of skills and institutional knowledge that has well-served both CIRM and the stem cell field. Like many of us, she has a bit of a sharp edge at times. But it is exercised all for the sake of focusing diligently on stem cell science and efficiently executing the agency's mission.

Only 12 semi-finalists will emerge from the current voting, which concludes Oct. 16. Many worthwhile candidates are on the list. But as a representative of the CIRM staff, a vote for Pat Olson could provide a big high-five for her and all the “stem cellists” at their King Street headquarters and all the work that they have done -- not only this year, but for the last nine years.

You can cast your votes by going to this page on Knoepfler's blog.

New Grant Reviewers for California Stem Cell Agency

Five new scientific grant reviewers are expected to be approved tomorrow by directors of the California stem cell agency, and at least four have backgrounds that might make them judges in the upcoming $40 million stem cell genomics round.

They include one scientist who once held $7.4 million in grants from the California stem cell agency. He is Martin Pera of the University of Melbourne in Australia. Pera was the first head of the USC stem cell program, serving from 2006 to 2011. The program was launched in the wake of the passage of Prop. 71, which created California's $3 billion stem cell program.

According to the University of Melbourne, Pera has done a significant amount of research in the area of cytogentics and genome mapping.

Scientific grant reviewers for CIRM all come from out-of-state. Pera is likely the first former CIRM grant recipient to be selected as one of the reviewers who make 98 percent of the decisions on the agency's grant applications. None are required to disclose publicly their financial or professional interests.

Other proposed scientific reviewers include:
Bradley Bernstein of Massachusetts General Hospital and Harvard, who is co-director of the epigenomics program at the Broad Institute.

Richard Gibbs, director of the human genome sequencing center at the Baylor College of Medicine.

Barry Rosen of the Wellcome Trust in the United Kingdom, who has done work in genetics and genome engineering.

Steven Jon Russell of the Harvard Medical School, who works in diabetes and completed the first outpatient trial of a treatment device described as a closed-loop artificial pancreas blood glucose control system.

Others being reappointed are Shelly Heimfeld of Hutchinson Cancer Research Center, Ihor Lemischka of Mount Sinai and Thomas Zwaka, also of Baylor.

The CIRM staff document prepared for tomorrow's meeting contains additional information on all the scientists.

Live Coverage Tomorrow for Meeting of Directors of California Stem Cell Agency

The California Stem Cell Report will provide live, gavel-to-gavel coverage tomorrow from the Burlingame, Ca., meeting location of the governing board of the $3 billion California stem cell agency.

Stories will be filed as warranted throughout the day. On the agenda are the first recommendations from the agency's new scientific advisory board, an update on the agency's critical translational research program and changes in its conflict-of-interest rules for grant reviewers. At the time of this writing, neither the recommendations of the science advisors or the report on translational grants is available to the public.

For those who wish to follow the board action live, the agency is providing an Internet audiocast and a WebEx Internet connection. Full details are on the meeting agenda. For those who have not used either in the past, we recommend that you log on in advance of the 9 a.m. PDT meeting to work out any kinks.

Nobel Winner Ties to California Stem Cell Agency

The California stem cell agency can claim a connection to two of the winners today of the Nobel Prize in medicine, including one who was involved as far back as 2005.

Writing today on the agency's blog, Amy Adams, the agency's communications manager, said,

“Randy Schekman established the stem cell training program at UC Berkeley, which supports graduate and post-doctoral students working in stem cell labs.”

That grant was approved in September 2005 although the agency did not immediately have the cash to fund it.

Adams also wrote,

“Thomas Sudhoff (of Stanford) is a collaborator on a Tools and Technologies Award to Marius Wernig...In the collaboration with Wernig, the group intends to study defects in the normal signaling between neurons in people with autism, schizophrenia, depression and other diseases. Starting with stem cells developed from people with those diseases, they’ll be able to study the defects in cellular communication and then try to find ways of fixing those defects.” 

Brown Veto of Spinal Research Funds Triggers Ire

California Gov. Jerry Brown's veto of legislation backed by some stem cell patient advocates has triggered a sharp and negative reaction. One person said he was “disgusted” by the veto. Another person called the governor a “stingy rat.”

It was Roman Reed, a California patient advocate, who said he was disgusted and now planned to run for the state legislature to help find cures for paralyzed persons. Reed said in an interview with the blog ipscell.com:

“Curing the paralyzed and finding medical cures is the most important task of our lives for the health of our loved ones and the economy.  Some fights we just have to win and together we can.”

The legislation in question is AB714 by Assemblyman Bob Wieckowski, D-Fremont. It would have provided $1 million to UC Irvine's Reeve-Irvine Research Center, which has received $15.1 million from similar state appropriations over past years. The money has gone for research into spinal cord injuries and paralysis and has involved human embryonic stem cells. However, funding of the act has expired.

Brown said in his veto message that the measure “strives to do only good.” But the governor said that he has proposed $511 million in additional support for the University of California over the next four years. He indicated that it is now up to the UC system to decide whether it wants to use some of that additional cash for the spinal cord research.

UC Davis researcher Paul Knoepfler wrote about the veto on his blog and carried Reed's remarks. One of the persons commenting on the item identified himself as Brian Sanderson and said,

“I recall reading that Christopher Reeve(the actor who played Superman) said 'I wish I was a rat' when he heard of the progress that had been made repairing spinal cords of rats. Personally, I think that the Governor is behaving like a stingy rat.”

Reed was named as the Knoepfler Lab Stem Cell Person of 2012 for his lobbying efforts here and in Alabama as well as for his mentoring of other advocates. Reed is the son of another stem cell activist, Don Reed, who wrote about the veto on his blog, Stem Cell Battles. The legislation involved in the governor's veto is named after the younger Reed, who was paralyzed as the result of a football accident some years ago.

The legislation indirectly involves directors of the California stem cell agency. The head of the UCI Reeve Center, Oswald Steward, sits on the agency's governing board, along with Sue Bryant, interim provost of UCI, and Sherry Lansing, a former chair of the UC Board of Regents. Roman Reed also came up with the motto of the stem cell agency: “Turning stem cells into cures.”

Trounson to Make London Appearance

Alan Trounson, president of the California stem cell agency, is scheduled to speak later this month in London at King's College.

The event is slated for Oct. 28. Trounson will be hosted by Fiona Watt, who is a member of the stem cell agency's newly created scientific advisory board and director of the Center for Stem Cells and Regenerative Medicine at the school.

Trounson's topic is “The California Institute for Regenerative Medicine: How to invest $3 billion in stem cell research.”

Scientific Advisors Take First Look at $3 Billion California Stem Cell Agency

Directors of the California stem cell agency on Wednesday will hear the first recommendations from a newly formed scientific advisory board, created to provide “cohesive” advice that a blue-ribbon study said has been lacking at the agency.

Formation of the panel was recommended last December by the prestigious Institute of Medicine (IOM) in its $700,000 report on the performance­ of the stem cell agency. The IOM said a scientific advisory board would be invaluable in helping the agency to “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.”

The report from the eight-member panel is not yet available to the public although only two business days remain before the agency's governing board meeting in Burlingame, Ca.

The panel was created last July and has held at least one meeting, which was not noticed publicly. The members include only one Californian, Corey Goodman, co-founder of venBio, a San Francisco biotech venture capital firm. According to an article by Bernadette Tansey on Xconomy, his current advice to biotech industry executives is:

 “Don’t do what I did. That worked then—it won’t work now.”

The other scientific advisors are: Sir John Bell, Oxford University, Great Britain; Christine Mummery, Leiden University Medical Center, The Netherlands; Sean Morrison, Children’s Research Institute at UTSW, Texas; Stu Orkin, Harvard Medical School, Dana Farber Cancer Institute, Mass., and also a member of the IOM panel that studied CIRM; Fiona Watt, Centre for Stem Cells and Regenerative Medicine, King's College London; John Wagner, University of Minnesota Stem Cell Institute,who is also a member of the CIRM standards group, and Maria Grazia Roncarolo, San Raffaele-Telethon Institute for Gene Therapy (TIGET).
(More information on each member is available by clicking on their names.)

In response to queries from the California Stem Cell Report, Kevin McCormack, senior director of public communications, said that the members of the board will not receive compensation but will be reimbursed for their expenses. McCormack said that they have been screened for conflicts of interest.

CIRM, as the $3 billion stem cell agency is known, has not yet prepared a written description of its new advisors' duties. McCormack instead referred to the IOM's description of what the board should be doing.

The IOM recommended formation of “a single Scientific Advisory Board, as opposed to multiple advisory boards as proposed in the 2012 strategic plan, (that) would provide cohesive, longitudinal, and integrated advice to the president regarding strategic priorities, which is lacking in the current CIRM organizational structure."

At its July 25 meeting, the CIRM governing board was told by President Alan Trounson that the scientific advisory board “may or may not be supportive completely of our strategic plan, but it will be a recommendation we'll bring to the board for further discussions about how we orient ourselves.”

The IOM cited several areas where CIRM has “made strategic decisions that resulted in the omission of some important areas.” They included “addressing the novel ethical and regulatory aspects of clinical applications of potential stem cell therapies” and preparation of “academic institutions in California for collaboration with the private biotechnology or large pharmaceutical sectors.”

The IOM report said,

“(T)he notable absence of industry representatives on most disease teams demonstrates the inadequate emphasis of CIRM’s translational/development RFAs on what is needed to enable regulatory approval for cell-based therapies.”

Also scheduled for Wednesday's governing board meeting is a review of its translational grant portfolio. That report is also not yet available publicly. In the past, such reports were often limited to a Power Point outline and not available to the public until their presentations were underway during the board meeting.

Here is the text of the IOM's summary of its recommendation for creation of the scientific advisory board.

“CIRM proposes to create a Clinical Advisory Panel and Industry Advisory Board. Although the committee supports CIRM’s intent to establish advisory boards, it recommends that one Scientific Advisory Board be established. Striking the proper balance in research across the portfolio of basic, translational, and clinical studies will require that CIRM solicit broad input in executing its strategic plan. The committee believes the proposed Scientific Advisory Board could serve an invaluable role in this process.

“Recommendation 4-1. Establish a Scientific Advisory Board. CIRM should establish a single Scientific Advisory Board comprising individuals with expertise in the scientific, clinical, ethical, industry, and regulatory aspects of stem cell biology and cell-based therapies. A single Scientific Advisory Board, as opposed to multiple advisory boards as proposed in the 2012 strategic plan, would provide cohesive, longitudinal, and integrated advice to the president regarding strategic priorities, which is lacking in the current CIRM organizational structure. The majority of the members of the Scientific Advisory Board should be external to California, appointed by and reporting to the CIRM president. 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. The board’s reports and the president’s response to those reports should be delivered to the ICOC(the CIRM board) and discussed in sessions open to the public.”

Groundbreaking Ahead? Geron's Stem Cell Program Officially Goes to Biotime/Asteria

Geron's once-heralded stem cell therapy program -- financed at one point with $25 million from the California stem cell agency – has officially landed in the hands of an Alameda, Ca., enterprise involving two former CEOs of Geron.

Completion of the transaction was announced Tuesday by BioTime, which acquired the Geron assets. The move “could jump start groundbreaking but not yet clinically successful stem cell programs,” according to an article by Ron Leuty of the San Francisco Business Times. Leuty also outlined the complicated financial terms.

Geron, based in Menlo Park, Ca., was the first in the nation to launch a clinical trial for a human embryonic stem cell therapy. In 2011, in a major departure from its usual procedures, the stem cell agency loaned Geron $25 million to help with the trial. About three months after the loan agreement was signed on Aug 1, 2011, Geron announced it was abandoning the trial for financial reasons. Four patients had been enrolled in the trial.

Geron repaid the loan with $36,732.33 in interest, laid off 38 percent of its staff (66 persons connected to the stem cell program) and began an effort to sell off the stem cell effort.

About a year later, BioTime, which is headed by Michael West, who founded Geron, began expressing an interest. Tom Okarma, another Geron CEO, hooked up with West on the effort and is now head of Asteria Biotherapeutics, a BioTime subsidiary that is taking control of the old Geron stem cell program.

Geron let Okarma go in February 2011. He was head of the company as it plowed through the arduous FDA process to begin the clinical trial of the stem cell treatment for spinal injuries.

The stem cell agency has said that the loan to Geron is not transferable automatically to BioTime. The firm will have to compete for funding under the agency's established rules.

Both Geron and BioTime are publicly traded. In the last 12 months, Geron stock has traded at a range from 91 cents to $3.95, closing at $3.40 yesterday. BioTime has traded in a range from $2.67 to $5.02, closing at $3.88 yesterday.

As part of the deal with Geron, the stem cell agency received 537,893 warrants to buy Geron stock at $3.98 each. The warrants expire in 2021.

Here are other news articles on completion of the transaction, which was announced earlier this year: by Jef Akst at The Scientist, by Damian Garde at Fierce Biotech.

Trivializing Conflicts of Interest at a $3 Billion California State Agency

The California stem cell agency is planning minor changes in its conflict-of-interest rules that narrowly target a violation that arose last spring involving two internationally known scientists.

The proposal was triggered by a situation in which Lee Hood of Seattle, Wash., was recruited to serve as a scientist-member of the group that was reviewing applications in a $40 million grant round last spring. One of the applications involved stem cell scientist Irv Weissman of Stanford University, a close friend of Hood. The men also own a ranch in Montana together and have scientific and professional links. Alan Trounson, the stem cell agency's president, has been a guest of Weissman's at the ranch and recruited Hood, an expert in genomics, as a grant reviewer.

CIRM, as the $3 billion stem cell agency is known, said it did not detect the relationship between Hood and Weissman until it was called to their attention by another reviewer who was also participating in the closed-door review of applications.

A staff memo prepared for next week's meeting  of the agency governing board described the violation as “inadvertent and highly technical.”

On Monday, the California Stem Cell Report reported that unspecified changes were being considered in the conflict rules. Following publication of the item, more information on the proposal was posted on the agency's Web site in preparation for next Wednesday's meeting of the agency's governing board in Burlingame, Ca.

The memo, prepared by the agency's attorneys, said, 

“In order to prevent both the reality and appearance of a conflict, while preserving CIRM's ability to attract the best reviewers available, the rules should flag only those interests that could genuinely be deemed material.”

The changes would create a threshold of $5,000 a year for conflicts involving salary or consulting fees. Less than that would not trigger a conflict situation. Other proposed changes to be taken up by the agency board involve personal and professional conflicts along with the nature of the economic disclosures that reviewers, all of whom are from out-of-state, must disclose privately to a handful of agency officials.

The agency's scientific reviewers do not have to disclose publicly their financial and professional interests despite the fact that they have made all of the decisions on 98 percent of the applications for the $1.8 billion the agency has handed out. The interests of the reviewers are also withheld from applicants, many of whom may have competing or professional interests. The agency requires that reviewers who have conflicts must be removed from consideration of applications where conflicts exist. However, there is no way to determine whether that is actually done because the applications are reviewed behind closed doors and the economic and professional disclosures are withheld from the public.

Our take:
The agency's position on the conflict involving Weissman and Hood is disingenuous. To say that it is “highly technical” trivializes the entire matter. The conflict problem does not necessarily arise because Hood's friend (Weissman) could have received a few thousand dollars through approval of a grant. It involves much, much more. The application was for $24 million to create the first-ever stem cell genomics center in California. Should Weissman's employer, Stanford University, have been selected for the facility, it would have accrued to the great benefit of that institution, both monetarily and otherwise. Indirectly, it would have also enhanced Weissman's already substantial reputation and prestige as a person whose name can sway actions by California's state research effort. In the world of science, reputation and prestige often count for more than money.
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Conflict-of-Interest Changes Coming at California Stem Cell Agency

Directors of the $3 billion California stem cell agency meet next week to consider changes in conflict of interest rules for the persons who make virtually all the decisions on the hundreds of applications  for the cash that it hands out for research.

Details of the changes and their justification are not yet publicly available for the meeting in Burlingame, Ca., on Oct. 9. The only information that was posted on the CIRM Web site as of this morning was this brief note from the meeting agenda:

“Request for consent to initiate rule-making to amend conflict of interest regulations for non-ICOC members of the Grants Working Group.”

ICOC is the abbreviation for the stem cell governing board, whose members are required to publicly disclose many of their financial interests.

The changes would affect the out-of-state scientists who score grant applications during closed-door deliberations. The agency's governing board, which has the ultimate legal authority for application approval, has ratified 98 percent of the decisions by the grant working group, according to the agency's own calculations.

The agency does not require the scientists to disclose publicly either their economic or professional interests and has resisted proposals for more transparency for years. The interests of reviewers instead are disclosed privately to a limited number of persons within the agency There does not appear to be a significant effort to audit the disclosures for accuracy.

Questions about the legal necessity for public disclosure of grant reviewers' interests have arisen as far back as 2007, including a recommendation by the state auditor that the agency seek an opinion from the state attorney general on the matter. The auditor said,

 “The FPPC (the state's government ethics agency) believes that members of working groups, who perform duties such as advising the committee on standards and policy or evaluating grant applications and making award recommendations to the committee, may need to be included in the conflict-of-interest code. Specifically, the FPPC believes that, under state regulations, working group members may act as decision makers if they make substantive recommendations that are, over an extended period, regularly approved without significant amendment or modification by the committee. Thus, as decision makers, working group members would need to be subject to the conflict-of-interest code.”

However, the agency said, also  in 2007,

  “The recommendations of the CIRM working groups have never been routinely and/or regularly adopted by the ICOC. Until the time that such a pattern is detected, the question you suggest we raise with the attorney general is entirely hypothetical, and is therefore not appropriate for submission. We will, however, continue to monitor approvals for such a pattern and will reconsider our decision if one emerges."

Because of the closed door nature of the grant application review process, conflict questions rarely surface publicly. Last spring, however, the California Stem Cell Report reported conflict violations involving an internationally reknown scientist-reviewer in a $40 million grant round. The scientist, Lee Hood of Seattle, Wash., is a close friend of one of the applicants, Irv Weissman of Stanford. They also own property together in Montana.

As we reported at the time,

“The conflict was not discovered by the agency during the review. It was raised by another reviewer at the end of the review, which, for the first time in CIRM history, failed to conclude with a decision supporting any of the proposals. Reviewers' comments have been sent back to applicants with another review scheduled for November. The agency said Hood will not take part in that session.”

Hood was recruited as a reviewer by CIRM President Alan Trounson, who has been a guest of Weissman at the Hood-Weissman ranch.