California Biotech Guru Steven Burrill in 'Deep Yogurt'

Steve Burrill is perhaps the leading maven on biotech in California as well as nationally. 

He has raised more than $1 billion for life sciences financing via his investment banking firm. He publishes an annual state-of-the-industry study that is something of a bible.

He is an omnipresent speaker at major biotech conferences. In 2006, his firm organized a stem cell conference that was partly a celebration of the California stem cell agency. Next week he is scheduled to be a keynote speaker at the huge BIO2014 industry conference in San Diego, which is expected to be attended by 16,000 persons.

Today, however, the Web site for his investment firm is shut down. The headlines about him on the Internet are less than pleasant. To use an expression that Burrill sometimes utters, he is in “deep yogurt.”

Nathan Vardi broke the story yesterday on Forbes. The piece was headlined 

"Steven Burrill Removed From Control Of Venture Fund For Unauthorized Payments”

Other stories used terms like “disbelief,” “fraud allegations,” “ousted” and "dumped."

Vardi’s snynopsis of the allegations said,

"G. Steven Burrill, the CEO and founder of Burrill & Co., a San Francisco financial firm specializing in biotechnology and life sciences investing, was ousted from control of a $283 million venture capital fund earlier this year by big institutional investors that cited willful or reckless misconduct related to unauthorized payments, according to documents recently filed in California State court in San Francisco." 

Alex Nash at Xconomy wrote,

“Burrill, known for his natty suits and pink shirts, is being sued for fraud by a former colleague for allegedly taking cash meant for investment and diverting it to his own 'designees and affiliates.'”

Burrill has not yet responded to requests for comments from the media covering the situation. And it is not clear whether he will still appear for his scheduled 90-minute talk next Tuesday in San Diego.

All of this involves allegations and contentions in lawsuits. But the perception is not good. Burrill himself knows the importance of perceptions. A few years back he spoke to a group at Stanford about making money in biotech and said,

 “Perceived value is more important than real value.”

 (See embedded video at the top of this article.)

And in February in comments to the Tampa Bay Business Journal about California’s success in life sciences, he said,

“Culture is a big part of it. People want to be part of a culture that tolerates failure.”

New California Stem Cell CEO and his Criteria for Handing Out Cash

The new president of the $3 billion California stem cell agency, Randy Mills, will bring his stump speech to San Diego next week where more than 10,000 biotech business types are expected to gather in perhaps the largest such meeting in the nation.

Randy Mills

Mills has scheduled a public appearance, with questions from the audience, for next Tuesday at the Manchester Grand Hyatt hotel. He will also moderate a panel at the BIO 2014 convention on commercializing stem cell therapies, a subject with which he is intimately familiar. Mills was head of Osiris Therapeutics as it slogged its way to approval of a stem cell therapy.  Linda Marban, CEO of the CIRM-funded and publicly traded Capricor, will be one of the speakers on the panel.

Mills has been on the job fulltime only since June 1. He has made two public appearances this month, one in San Francisco, where the agency is based, and one in Los Angeles. Kevin McCormack, senior director of public communications for the agency, wrote about one session last week. 

“Randy began by saying that he has a simple guiding principle; that everything we do at the agency should be ‘all about the patients.’ In fleshing that out, he identified four criteria that he will use in making any decision:

“1. Will it speed up the development of treatments for patients?

“2. Will it increase the likelihood of developing a successful treatment for patients?

“3. Will it meet an unmet medical need?

“4. Is it efficient?

“He says those criteria will help make sure that everything we do at the stem cell agency is in alignment with our goals; that we aren’t funding work that could easily attract funding from other agencies or even the pharmaceutical industry.”

McCormack continued,

“For the scientists, Randy said his goal was to give them as much support as they needed, particularly in the areas where they may not be very experienced – such as moving products into clinical trials, getting approval from regulatory agencies such as the Food and Drug Administration (FDA) and commercializing a potential therapy.” 

 The San Diego public meeting next Tuesday will be from 6 p.m. to 7 p.m. at the  Grand Hyatt, 1 Market Place, in the Gas Lamp rooms, A & B.

Other top stem cell agency officials scheduled to be at the BIO convention, which could hit 16,000 attendees, include Chairman Jonathan Thomas, former President Alan Trounson and senior vice president Ellen Feigal.

Here is the list of events for the Regenerative Medicine Day, which the stem cell agency is co-sponsoring, at  BIO next Wednesday, including speakers.

California's Trounson Wants to 'Shame' the 'Malefactors' of Stem Cell Medicine

Alan Trounson at Cornell
Cornell photo

The former president of the California stem cell agency, Alan Trounson, has kept busy since leaving his post last month. Just this week he authored an opinion piece in The Scientist. Earlier this month he was at Cornell decrying the lack of federal funding for research.

In his article in The Scientist, Trounson called for the outing of stem cell clinics that sell untested and expensive treatments to desperate people.  “Malefactors” is what he called them.

He wrote,

 “It is time that a ‘shame file’ of unregistered and unscientific treatment centers is constructed and widely communicated to warn patients of the dangers of these unregulated and inadequately managed therapies being offered internationally.”

Trounson suggested that the Institute of Medicine could host such a file and help protect uninformed patients. But he also said Alliance for Regenerative Medicine, an industry group that is also engaged in lobbying, could do better in helping to expose dubious stem cell clinics.

He said,

“While this organization and its members do not approve of unregistered clinical trials, they ought to be more active in ensuring the scientific integrity of all studies going forward.”

Trounson said that the $70 million Alpha clinic effort that he championed at the California stem cell agency is also aimed at tackling the problem. Grant applications in that program are due to be reviewed this fall. 

Trounson warned that fringe stem cell clinics damage the entire field.

“The activities of these medical tourism centers are a major barrier to the delivery of genuine cell therapeutic clinical trials by bringing the whole field of cell-based therapies into disrepute.”

At Cornell on June 6, Trounson, who is a senior scientific advisor at CIRM until the end of this month, was the keynote speaker for a symposium on stem cells that also featured broadcast journalist Charlie Rose.

The university put out an item on the appearance. Trounson was quoted as saying,

"The [federal] government looks handicapped in this area. You've got a budget situation where you cannot seem to put more money into research — in fact, less money is going into research. We have to convince the people elected to government that this is an incredible revolution and that we need to keep funding the science."

That could be a pitch for the California stem cell agency as well. It is scheduled to run out of money for new grants in less than three years and is currently looking at ways to develop new funding sources.

USC and Scripps: A Looming Scientific Hookup?

The University of Southern California (USC) and the Scripps Research Institute are engaged in talks that could involve a merger of their enterprises, a move apparently triggered by economic pressures and a desire for more scientific clout.

The institutions released a statement on the discussions today in the wake of the first report on the move, which was published on the San Diego U-T Web site yesterday. According to the Los Angeles Times this afternoon, the institutions did not specify their final goal or lay out a timetable.

A statement from both said that Scripps and USC are “discussing the possibility of a relationship that would enhance the missions of both institutions. TSRI(Scripps) and USC have a shared commitment to academic excellence that will result in meaningful breakthroughs to improve health and well-being.” 

Gary Robbins and Bradley Fikes broke the story late yesterday in the San Diego newspaper. They wrote that Scripps, which is based in La Jolla, Ca., has heavy reliance on federal research funding, which is stagnant and under great pressure. At the same time, USC, located roughly 130 miles north in Los Angeles, is eyeing the research capabilities of Scripps, which counts two Nobel Prize winners on its staff. 

Both enterprises have large stem cell research efforts. The California stem cell agency has given USC $105 million in 26 awards. Scripps has received $45 million in 19 awards. As expected in the early stages of such discussions, it is not clear how the two stem cell research efforts would be affected. 

Fikes at the U-T is blogging live about the latest reaction, comments and information on the talks.

Scientific Journals: A Case of 21st Century Dinosaurs?

Out of California's Silicon Valley comes a stout prediction this month that a $10 billion business that feeds off government-financed research has entered its terminal stages.

The forecast was made by Dylan Tweney, editor-in-chief of Venture Beat, a technology news operation that not-so-coincidentally has no print arm.

He wrote on June 6,

“Imagine an industry where a few companies make billions of dollars by exerting strict control over valuable information — while paying the people who produce that information nothing at all.

"That’s the state of academic, scientific publishing today. And it’s about to be blown wide open by much more open, Internet-based publishers.”

He said that the leading companies in the field, Elsevier and Springer, have margins in excess of 35 percent. They subsist off research that is almost totally financed by public money while, at the same time, they do not pay scientists to review the research prior to publication.

Tweney noted that the industry's relatively new competitors, including Plos, Academia and Arxiv, offer free access compared to pricey journal subscriptions that cost Harvard University $3.75 million in 2012.

“Taken together, these online publishers represent a significant threat to traditional journal publishers like Elsevier because they reach more people and cost nothing. The only remaining value that traditional publishers offer is the imprimatur they provide: The articles they publish have been peer-reviewed and are thus presumably more reliable.

“But even that imprimatur is under attack. The 'reproducibility crisis' in academic publishing refers to the fact that a huge proportion of published research, particularly in medical fields, is based on results that cannot be reproduced by other researchers. In one study, a tiny 6 percent of scientific findings in cancer research were reproducible.”

Scientific publishing has also lured the California stem cell agency, which financed to the tune of $600,000 the start-up of a journal in North Carolina.

As Tweney alludes, the situation is not much different than that of the newspaper and magazine industries a few years back. For the most part, those businesses blundered along in a very profitable mode, ignoring the Internet until it was too late to do anything other than scramble for survival. It is possible that the academic journal business can find a new model. But given organizational inertia and the unwillingness to cannibalize an existing and still profitable business, it is unlikely.

(Disclosure: Tweney is this writer's son-in-law. He did not consult me prior to writing his June 6 piece.)

California Stem Cell Directors Okay Tight, $17 Million Budget

Directors of the California stem cell agency today approved a $17.3 million, hold-the-line budget for the fiscal year that begins July 1, cutting $573,000 from a spending plan that was proposed in early May.

The vote was 17-0 during a special teleconference meeting that also saw a proposed $900,424 grant sent back for a special examination by the agency's reviewers, said a CIRM spokesman via email.

Presentation slides prepared for the meeting indicated that the new president of the $3 billion agency, Randy Mills, is still evaluating the agency. The documents said,

“If significant changes to the structure are needed, a proposal to the board along with the associated budgetary implications will be made at that time.”

Directors were also told that without a $250,000, legally required performance audit this coming year, the operational budget would be $400,000 under the estimated current spending of $17.4 million.

The spending plan reflects initial parsimony on the part of Mills, who made a career in business prior to coming to the agency. The previous CIRM CEOs have all come from academia.

In other business, Kevin McCormack, senior director for public communications, said that the $900,424 proposed award to Helen Blau of Stanford was sent back for re-review by a subset of the agency's grant review group, also on a 17-0 vote. At the agency's board meeting May 29, some directors said the initial review was flawed and voted for a re-review by the full review group. However, re-reviews usually are undertaken by a smaller panel.

The action on Blau award came as one high-level CIRM staffer, Natalie DeWitt, began work this week at Blau's Stanford lab. Both DeWitt and the agency told the California Stem Cell Report that she had no role in the review of the Blau application.

A Nearly $1 Million Award, the California Stem Cell Agency and the Revolving Door

Directors of the California stem cell agency tomorrow are scheduled to deal once again with a $900,424 proposed award to a Stanford researcher who recently hired a top staffer from the state research effort.

The award would go to Helen Blau, one of the leaders of Baxter Laboratory at Stanford. On Monday, Natalie DeWitt, who was special projects officer for former CIRM President Alan Trounson, went to work for Baxter as director of research development.

The award first came up at the directors' meeting May 29. It was recommended for board approval by Trounson and unidentified CIRM staff.

During that meeting, CIRM Director Jeff Sheehy, who is also a member of the grant review group, said that a copy of the application and the scientific critique was not provided to him at the March 24 review session. The application was submitted by Blau in January.

Sheehy and another director said the review was flawed. Sheehy noted that the Blau proposal was not approved for funding by the agency's out-of-state scientific reviewers. He said that during the closed-door review session several negative comments were made about the proposal during oral discussion. The application received a scientific score of 73, two points below the cut-off for funding. CIRM staff said, however, the proposal had merit and should be funded.

Director Sherry Lansing said it was important for the board to be open and transparent and suggested that the application be sent back to the full review group for further consideration. The 29-member board did so on a 9-0 vote. Members not voting either had conflicts of interest or were not present.

At the time of the meeting, DeWitt's then future employment by Baxter was not widely known and was not mentioned during the discussion.

Asked for comment today by the California Stem Cell Report, DeWitt said in a telephone interview that she was not involved in any way with the application. She also said she has not been involved with any of Blau's applications to CIRM or those from Garry Nolan or Peter Jackson, the other two leaders of the Baxter lab. Blau has been awarded $2.8 million by CIRM and Nolan $1.3 million. He is also a leader on a $20 million CIRM grant.

In response to questions, CIRM spokesman Kevin McCormack today said in an email that DeWitt was not involved with the $900,424 application by Blau. He said DeWitt served notice May 19. DeWitt said that sometime in late April or May that she “let a few key people (at the agency) know” that she was looking for work elsewhere and “spoke with the (CIRM) lawyers.”

DeWitt said her work at CIRM involved the $70 million Alpha Clinic proposal and the $40 million stem cell genomics award that went to a Stanford-led consortium. She said Baxter's Peter Jackson, who has some expertise in human genetic disease, is not involved in the genomics proposal. The CIRM contract on the award is yet to be signed.

DeWitt was mentioned yesterday in an article on the California Stem Cell Report dealing with “revolving door” issues involving government employees who go to work for enterprises that are linked to their former agency. The issues are likely to become of more concern to the stem cell agency in the next couple of years. The agency is scheduled to run out of money for new grants in 2017, and some employees are likely to be looking for work in the stem cell field in California, which only involves a small number of private and public enterprises.

CIRM employees are briefed on conflict-of-interest and revolving door issues, according to the agency. Its employee handbook also contains information on the subject along with a link to a state Fair Political Practices Commission document further explaining revolving door rules.

It says state officials are barred from taking part in decisions that directly relate to a prospective employer. The document says,

“The ban of influencing prospective employment prohibits any public official from making, participating in making, or influencing a governmental decision that directly relates to a prospective employer while negotiating or after reaching an employment arrangement.”

It continues,

 “The ban on influencing prospective employment is triggered by negotiating or having an arrangement regarding prospective employment. While submitting a résumé or an application to a prospective employer does not trigger the ban, the following contacts will trigger the ban:

• “An interview with an employer or his or her agent.

• “Discussing an offer of employment with an employer or his or her agent.

• “Accepting an offer of employment

In response to a question, McCormack said,

“Very few people, Natalie included, tell their employer that they are looking for work so I have no idea when she started looking.”

McCormack did not respond to a request for the names of the CIRM staff involved in making the recommendation to approve the $900,424 Blau award.

At tomorrow's teleconference meeting, the CIRM board is scheduled to act on a proposal to have the Blau application re-examined by a subset of the grant review group -- not the full group. Interested parties can either take part in the meeting or listen in from a number of sites in Northern and Southern California and elsewhere. Specific locations can be found on the agenda. 

Stem Cells and Revolving Doors: The California Experience

The phrase “revolving door” is not one that rolls off the tongues of most Americans. But it is shorthand for an issue that concerns both Elon Musk of Tesla and SpaceX fame as well as taxi drivers in New York City.

It is also a matter of importance to the $3 billion California Institute for Regenerative Medicine (CIRM) and other state agencies.

Natalie DeWitt
CIRM photo

The issue surfaced this week with the departure of a high level staffer at the San Francisco-based agency -- Natalie DeWitt, special projects officer for its former president, Alan Trounson. DeWitt's final day at the agency was last Friday. She began her new job on Monday at Baxter Laboratory at Stanford University.

Garry Nolan, Helen Blau, Peter Jackson
Baxter Laboratory photo

Baxter is run by Stanford scientists Helen Blau, Garry Nolan and Peter Jackson. Blau has received $2.8 million from the stem cell agency. Nolan has received $1.3 million. He is also a leader (co-PI) on a $20 million award in the agency's signature disease team effort.

No one is alleging that DeWitt or others have done anything wrong. She has a fulsome resume and a record of accomplishment.

Her departure from CIRM and employment at Baxter, nonetheless, does bring to the fore revolving door employment issues that now are a matter of greater concern for the agency than they were five years ago. The agency is scheduled to run out of funds for new awards in less than three years. Some of its employees are undoubtedly going to be looking for future employment in California's small, stem cell research community. It would be natural for agency employees to want to capitalize on their unique experience at CIRM. That is what gaining professional experience is all about.

But there are legal and ethical constraints. To prevent improper influence on governmental actions, the state of California has laws dealing with revolving door employment. Briefly summarized, state law says that certain former state employees and consultants can be banned from attempting to influence their former agency, either for one year or permanently. Current state officials also can be barred from taking part in decisions that directly relate to a prospective employer.

The California Stem Cell Report this week queried CIRM about its revolving door policies. Kevin McCormack, senior director of public communications, replied,

“These are issues that we are encouraged to be mindful of from the day we are hired to the day we leave. Once we accept the job we are given an 'employee handbook' (see below) which includes information about the state policy on what is appropriate behavior. As state employees, we have to periodically go through ethics training, and this covers what is and is not acceptable behavior in these instances. We are also encouraged to consult our in-house lawyers for guidance or to get advice from the state ethics agency on how the rules might apply to a particular situation.”

Revolving door problems are not new to either state or national government. They have long dogged such agencies as the Department of Defense. That's what Musk complained about via Twitter in a matter involving his space exploration firm, SpaceX. According to Bloomberg News, Musk tweeted last month about how competitors of his space company hired an Air Force official allegedly as part of a move to secure a chunk of a $68 billion Pentagon satellite project. And in New York City, questions also rose last month concerning the employment of a former top city taxi regulator by the noted ride-sharing company Uber, a competitor in the city's big taxi business.

DeWitt, who was paid $199,000 in 2013, worked for the stem cell agency from September 2011 until this month.  She played a key role in the $70 million Alpha Clinic proposal championed by Trounson. She was also deeply involved in the $40 million stem cell genomics award that went to a Stanford consortium last January following a controversial review process. She and Trounson co-authored an article in Nature Biotechnology promoting the genomics plan.

DeWitt, who has a Ph.D. in cell and molecular biology from the University of Wisconsin, was a senior editor at Nature from 2001 to 2010. Seven months after joining CIRM, she co-founded a firm called AccendoEditing. According to her Linked In profile, the firm works with clients to “to present scientific manuscripts and grants in a clear and engaging fashion.” It also “provides insights into the review process.”

DeWitt was one of the organizers of a conference last September at the University of Oxford dealing with cancer and stem cells. Her new bosses, Blau and Nolan, were scheduled speakers along with Stanford's noted stem cell scientist Irv Weissman.

At the Baxter Laboratory, DeWitt is its director of research development. Asked last Friday about leaving CIRM, she replied via email,

“The reason I'm moving on is simply that what I consider a fantastic opportunity presented itself to me.”

She has not responded to a query Monday about her views on the subject of revolving door issues.

  California Stem Cell Agency on Revolving Door Issues

Stanford's $40 Million Stem Cell Genomics Award Still Hanging Fire

More than four months after a Stanford-led consortium won a $40 million stem cell genomics award, the California stem cell agency has not yet concluded a formal contract with the researchers.

The award was approved Jan. 29 by the agency's board following a process that Stanford's competitors said was marred by unfairness, apparent preferential treatment and manipulation of scientific scores.

The award is aimed at creating medical treatments tailored to a patient's genetic makeup and making the state a world leader in stem cell genomics.

In response to a query from the California Stem Cell Report, Kevin McCormack, senior director for communications, said that the contract with the consortium remains unsigned. He said, however, that the agency is hopeful that final details will be worked out soon.

WARF Triumphs in Latest Chapter of hESC Patent Challenge

A California-based effort to ease patent restrictions on the research use of human embryonic stem cells last week suffered a severe blow when a federal court of appeals ruled in favor of a Wisconsin organization known as WARF.

At the heart of the matter is the question of who profits from stem cell research along with whether the patents stifle scientific research.

The ruling came Wednesday in a legal action brought by Consumer Watchdog of Santa Monica. The effort was supported by the former president of California stem cell agency, Alan Trounson, and Jeanne Loring, head of the stem cell program at Scripps in La Jolla, Ca. Doug Melton and Chad Cowan, both of Harvard, also backed the challenge.

The lawsuit was filed in a case involving the Wisconsin Alumni Research Foundation (WARF) and involved work by Jamie Thomson of the University of Wisconsin and of UC Santa Barbara. Consumer Watchdog said that Thomson deserved credit for being first to isolate and maintain human embryonic stem cells. But the organization said that “his achievement was not the result of his having created a patentable invention.” Consumer Watchdog's brief said that the work involved was “obvious.” One of the main reasons for Thomson’s achievement, the organization said was that “he had access to human embryos and financial support that other researchers did not have.”

A federal court of appeals in Washington, D.C., said Consumer Watchdog had no standing to sue to overturn WARF patents.

The court said that because Consumer Watchdog “has not identified a particularized, concrete interest in the patentability" of the work or shown “any injury in fact...it lacks standing to appeal” earlier decisions in favor of WARF.

It is unclear what the next step is in the eight-year-old dispute. John M. Simpson, the stem cell spokesman for the Consumer Watchdog, said,

"We are reviewing the decision and considering our options.  It's important to remember that because of our challenge WARF's claims were substantially narrowed as the patent went through the PTO (patent office) process."

WARF has not responded to a request for comment from the California Stem Cell Report.

Consumer Watchdog is represented in the matter by the Public Patent Foundation of New York, which successfully argued before the U.S. Supreme Court last year that genes cannot be patented because they occur naturally in nature.  

Here is a link to legal documents and other material in the case.  Last week's decision can be found below. 

  Appellate Court Decision Involving Consumer Watchdog and WARF

California's $70 Million Alpha Stem Cell Clinic Project Runs Into Roadblock

The California stem cell agency's $70 million Alpha Clinic plan has hit a stumbling block in the drive to make the Golden State the“go-to” location worldwide for stem cell treatments.

The agency reported today that it has encountered difficulties in lining up the necessary expertise to make the decisions on the complex applications, which are now awaiting judgment. The closed-door review session was originally scheduled for this month.

The delay surfaced when the California Stem Cell Report asked the agency about the reviews of the applications. In a brief response, Kevin McCormack, senior director for communications for the California Institute for Regenerative Medicine (CIRM), said,

“It's being rescheduled because it is just taking a little longer than anticipated to get the caliber of experts needed to review something as complex as this.”

McCormack said the new review session would probably be held in the fall. The agency expects to have 15 experts from outside of the state to examine the applications in addition to eight members of the agency board. 

The Alpha clinic proposal attracted applications from eight, unidentified, major California institutions earlier this year. The intention is to create one-stop locations for stem cell treatments that would lure patients and scientists from around the world.

The plan is a much-touted initiative by former CIRM President Alan Trounson, who resigned to rejoin his family in Australia. Randy Mills, the former CEO of Osiris Therapeutics, replaced Trounson six days ago. Trounson has been pushing Alpha Clinics since 2011. Just last month, he extolled the proposal before hundreds of regenerative medicine specialists at a Berkeley conference sponsored by the Regenerative Medicine Foundation.

Trounson said that the clinics would serve as a “proving ground” to develop business models, to build and share data and to create a strategy that would help convince insurance companies and Medicare to pay for the treatments.

He said that existing clinical research centers are not able to provide all the resources necessary for development and application of stem cell treatments. He said developing clinical expertise in a “random, spontaneous way doesn't work in the best interests of the patient.”

Trounson, who is renown for his IVF work, said the existing structure of the IVF industry in the United States is evidence of the weakness of an unstructured approach.

Agency spokesman McCormack did not answer a question about whether applicants would be given a chance to modify their proposals in the wake of the delay. One of the aspects of the RFA involves applicants providing some sort of matching funds or equivalent support to leverage the funds provided by the state of California. More time could mean that applicants could round up more matching cash.

The delay also could possibly endanger existing commitments of support and affect employment arrangements as well as building schedules.  

Stem Cell Parsimony: California's New Stem Cell CEO Has Sharp Budget Knife

In his first major public act, the new president of the $3 billion California stem cell agency this week whacked away at its proposed operational budget for the coming fiscal year, cutting $200,000 here and $20,000 there.

When he was done, Randy Mills offered up a $17.3 million budget that reflected basically the same level of spending as this year. It could be even less given inflation and the vagaries of estimating expenditures for the current fiscal year.

Current spending is estimated to hit $17.4 million by June 30, the end of the fiscal year. But that estimate is a month old and is likely to change somewhat. The budget proposed in early May by former CIRM President Alan Trounson hit $17.9 million, a 9.5 percent increase over estimated expenditures for this year.

Mills' tight budget sent a parsimonious message to the agency staff and the agency's governing board. It also gave him more maneuvering room in upcoming years. The agency is limited by law to spending no more than 6 percent of its grant awards on administrative expenses. A possibility exists that it could run out of operational funds if it does not carefully watch its spending. Some members of the board have expressed concern in the past that the capped amount is too small for effective management and oversight of the agency's large portfolio of awards.

The new CEO's budget also reflects the first time that the agency has not seen a significant year-to-year increase in its proposed spending compared to actual spending. 

Mills, former CEO of Osiris Therapeutics of Maryland, did not make across-the-board cuts in Trounson's initial CIRM budget. Rather Mills surgically excised the cash, including $50,000 from his own office.

In terms of agency activities, the category of “reviews, meetings and workshops” took the biggest hit. Mills sliced $333,000 from what once was a total of $2.5 million. A meeting for the 600 CIRM grantees was eliminated along with $100,000 worth of meetings with outside advisors on the agency's complex disease team projects. Other outside contracting was lopped by $160,000. But even relatively small items were hit. A plan to spend $5,000 for a sponsorship at a personalized medicine conference fell by the way. Plans for training in the finance department were trimmed by $2,120.

Mills' budget will now go to the full board in a telephonic meeting on June 13 for what is expected to be routine approval. A number of public locations are available where interested parties can listen and comment. The specific locations can be found on the meeting agenda.

Sparse News Coverage This Morning of California Stem Cell Agency Action

LA JOLLA, Ca. -- Media coverage of the resurrection of the Geron's landmark human embryonic stem cell trial was light today in the wake of a $14.3 million award by the California stem cell agency to support its continuation.

The San Diego U-T and the San Francisco Business Times both carried stories but none others appeared this morning in a Google search.

Bradley Fikes of the San Diego newspaper attended yesterday's CIRM board meeting here. He wrote,

"A potentially groundbreaking trial to treat spinal cord injuries with tissue grown from human embryonic stem cells will resume, after being funded by the California's stem cell agency."

Both he and Ron Leuty of the San Francisco Business Times also noted the award to Sangamo BioSciences of Richmond, Ca. Leuty wrote,

"Sangamo BioSciences Inc. (NASDAQ: SGMO) of Richmond will split a $5.6 million California Institute for Regenerative Medicine award with Dr. John Zaia of the Beckman Research Institute at the City of Hope near Los Angeles to take blood stem cells from HIV patients and cut and replace a gene that is key to the spread of the AIDS virus."

Asteris issued a press release this morning that said,

“We are preparing to initiate the dose escalation Phase 1/2a clinical trial of AST-OPC1 in patients with cervical injuries in 6-9 months subject to FDA clearance,” stated Edward Wirth III M.D., Ph.D., Asterias’ Chief Translational Officer. “Achievements in this CIRM-supported program could also help accelerate further development of AST-OPC1 in other neurodegenerative diseases such as stroke and multiple sclerosis. We are currently evaluating the function of AST-OPC1 in nonclinical models of these diseases.”

“This award provides significant non-dilutive funding to accelerate the development of AST-OPC1 for patients with spinal cord injury. Given the lack of any approved therapies for spinal cord injury and the high level of disability, substantial costs of care, and shorter life expectancy of injured individuals, AST-OPC1 has the potential to address a substantial unmet medical need in this condition,” stated Katharine Spink, Ph.D., Asterias’ Chief Operating Officer."

BioTime's stock price was up 22 cents this morning at the time of this writing to $2.95. It has risen from $2.42 on May 22 when the California Stem Cell Report first carriednews of the California stem cell agency award.

Sangamo has not yet issued a press release, but its stock price was at $13.68 this morning, up 16 cents.

CIRM Press Release on Today's Meeting and the Asterias Award

LA JOLLA, Ca. -- Here is a link to the press release from the California stem cell agency on today's meeting of its board of governors, which has just concluded.

California Stem Cell Agency Approves $14 Million for Landmark hESC Clinical Trial

Above is a CIRM video involving one of the participants in the original Geron trial.

LA JOLLA, Ca.  – The state of California today pumped $14.3 million into an historic clinical trial for a stem cell therapy that was once abandoned because it was deemed too risky financially by the firm that devised the treatment.

The action came when the governing board of the California Institute for Regenerative Medicine (CIRM) approved the award to Asterias Therapeutics of Menlo Park, Ca., a subsidiary of BioTime, Inc., of Alameda, Ca. The firms purchased the spinal cord injury treatment along with the human embryonic stem cell assets of Geron Corp., also of Menlo Park, in 2013.

The scientists who reviewed the Asterias application said the therapy could have a “highly significant impact” on the spinal cord injury, which afflicts more than 200,000 people nationwide. According to a CIRM review summary, the reviewers said a successful result from the trial would be a “high visibility achievement for the entire field of stem cell-based/regenerative medicine.”

The Geron clinical trial was the first ever in the United States for a therapy based on human embryonic stem cells, an area of research roiled by controversy. Some persons believe that deriving such cells is tantamount to killing a human being.

Geron submitted nearly 28,000 pages of material to the FDA in its years-long bid to start the trial, which began in 2010. However, in November 2011, the company stunned the stem cell world by giving up on the trial, citing business reasons.

The action also shocked the stem cell agency, which less than four months earlier had signed an agreement loaning the company $25 million. The agency's governing board gave the go-ahead on the loan during a process that involved major departures from its normal procedures. Geron repaid the loan with interest.

Approval of the funds for Asterias was not unexpected. The California Stem Cell Report carried an item on the matter May 22.

Today, Jonathan Thomas, chairman of the CIRM board, said in a statement,

“This new investment means we have a chance to build on the lessons we learned first time around. If this therapy can achieve even very modest improvements for patients, it could have an enormous impact on the quality of their life, and the lives of their families."

CIRM's scientific grant reviewers, all of whom are from out-of-state, gave the Asteria application a score of 76 out of 100 during their closed-door review of the proposal. Asterias, which currently has 17 employees including some from Geron, said in its application,

“Initial clinical safety testing was conducted in five subjects with neurologically complete thoracic injuries. No safety concerns have been observed after following these five subjects for more than two years. The current project proposes to extend testing to subjects with neurologically complete cervical injuries, the intended population for further clinical development, and the population considered most likely to benefit from the therapy.

“Initial safety testing will be performed in three subjects at a low dose level, with subsequent groups of five subjects at higher doses bracketing the range believed most likely to result in functional improvements. Subjects will be monitored both for evidence of safety issues and for signs of neurological improvement using a variety of neurological, imaging and laboratory assessments.”

Asterias' application continued,

“By completion of the (Phase 1/2a) project, we expect to have accumulated sufficient safety and dosing data to support initiation of an expanded efficacy study of a single selected dose in the intended clinical target population.”

The complete application is not available. CIRM released only selected excerpts on its Web site. See here for the text of the CIRM review summary.

While reviewers praised the bulk of the proposal they also raised concerns. They “questioned the strength of the preclinical efficacy data.” They “expressed concern regarding the manufacturing plan and strategy to support future development, which they viewed as risky.” They also said the budget “may be high.”

BioTime, which is headed by the founder of Geron, Michael West, is a publicly traded firm. Its stock price closed at $2.73 yesterday. Its 52-week price range runs from $2.21 to $4.82.

Here is a link to the CIRM press release on the grant. 

Text of the CIRM Review Summary of the Asterias hESC Clinical Trial Proposal

Here is a copy of the summary of the review of Asterias application 

for funding for its hESC clinical trial involving spinal cord injury. 

Lunch Break for California Stem Cell Directors

LA JOLLA, Ca. -- Directors of the California stem cell agency have adjourned for lunch. Later this afternoon, they are scheduled to approve a $14.3 million award to Asterias Therapeutics for an historic hESC trial.

Researchers Seek to Overturn Negative Decisions by California Stem Cell Agency

LA JOLLA, Ca. -- Three rejected applicants for millions of dollars from the California stem cell agency have appealed negative reviewer decisions in the agency's business-friendly strategic partner program.

The agency's staff rejected two of the appeals but is sending one back to reviewers.

Names of the applicants and the amounts sought were withheld by the agency. The agency also withheld the contents of the appeal letters, material that was, until recently, was routinely disclosed.

California Spending $16.2 Million to Lure Stem Cell Scientists

LA JOLLA, Ca.  -- Directors of the California stem cell agency this morning approved $16.2 million to recruit three star researchers to UCLA, UC Berkeley and the Gladstone Institutes in San Francisco.

The move came on a 6-2-1 vote by the 29-member board. Most of the directors were disqualified from voting because of conflicts of interest.

The recipients are Todd McDevitt of the Georgia Institute of Technology, who is being recruited by Gladstone; Xavier Darzacq of the Ecole Normale Superlieure in Paris, who is being sought by UC Berkeley, and John Chute of Duke, who is being recruited by UCLA. Chute is the second researcher from Duke to be lured to California with the help of a CIRM grant.

Appeals by UC San Francisco and UC Davis were rejected by the board.

The vote on the awards followed an unsuccessful effort to scrap the entire recruitment program.

California Stem Cell Researcher Recruitment Program Narrowly Survives

LA JOLLA, Ca. -- Directors of the $3 billion California stem cell agency this morning rejected an attempt to reject proposals to spend $16.2  million to recruit star scientists to the Golden State.

The move failed on a 4-5 vote on the 29-member board. Most members of the board were disqualified because of conflicts of interests. The major beneficiaries of the program all have representatives on the CIRM.

Names of the researchers and the recruiting institutions were not disclosed.

The motion was made by Francisco Prieto and seconded by Steve Juelsgaard. Prieto said the grants are "not the best place to for the (agency) to put its money right now."

The discussion of the matter is continuing following the vote.