Former CEO of California Stem Cell Agency Named to Board of Firm that Received $19 Million From the Agency

Alan Trounson, the former president of the $3 billion California stem cell agency, today was named to the board of a company that has received $19.4 million from the agency, raising fresh and serious questions about conflicts of interest at the state-funded research program.

Announcement of the appointment came only seven days after Trounson left state employment. Trounson has been dogged for some time with questions about his relationship to the company, StemCells, Inc., of Newark, Ca., and its co-founder, eminent Stanford researcher Irv Weissman, who sits on the company’s six-man board and is chairman of its scientific advisory board.

StemCells, Inc., announced Trounson’s appointment in a press release this morning. The publicly traded firm said it was “thrilled” to have Trounson on its board. The first sentence of its press release noted that he had served as head of “the largest scientific funding body for stem cell research in the world.”

Weissman is director of the Institute of Stem Cell Biology and Regenerative Medicine at Stanford. He has received $34.7 million from the agency. Stanford overall has received $281 million from the stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM). It is the No. 1 recipient of cash from the agency.

One California stem cell researcher, who asked to remain anonymous, said in an email,

“This looks like payback to Alan Trounson for all of the money that CIRM paid out to Irv Weissman (founder of StemCells, Inc.) and his friends at Stanford while Alan was president of CIRM.  Many people have pointed out that Alan seemed to be biased toward Stanford in his public and private comments. The facts bear that out: Stanford and StemCells, Inc., have had more than $300,000,000 of CIRM's $3 billion in funds awarded to them in grants.  Are they really more than twice as good as UCSF ($132,650,363), and three times better than USC ($104,858,348) and UC Irvine ($98,591,836)?”

As a member of the board of directors of StemCells, Inc., Trounson is expected to receive compensation including stock in the company. In 2013, members of the board received total compensation, including stock awards, ranging from $60,800 to $99,800, according to a Security and Exchange Commission filing.

StemCells, Inc., Weissman and the stem cell agency did not immediately respond to requests for comment. Trounson, who announced last fall he was leaving the agency to return to Australia, could not be reached. The California Stem Cell Report will carry the full text of their remarks when they are received.

Last year and earlier this year, conflict of interest questions concerning Trounson and Weissman came in a $40 million stem cell genomics award round that was won by a Stanford-led team last January. The round was marked by a conflict of interest connected to Trounson, CIRM grant reviewer Lee Hood of Seattle and Weissman. Hood and Weissman own a Montana ranch where Trounson has been a guest. Trounson recruited Hood to help review the stem cell genomics applications in 2013 in closed door meetings. Hood, however, failed to disclose his relationship with Weissman.  It only came to light after another reviewer pointed out the connections between the two men. The agency had failed to detect the conflict.

As the California Stem Cell Report has previously noted,,

“Prior to the genomics round Trounson had acknowledged he had a conflict-of-interest in connection with another Weissman-related proposal. In 2012 in a round not connected to genomics, Trounson, who has visited the Hood-Weissman ranch as Weissman's guest, recused himself from the board's public discussions of applications from StemCells, Inc., a company founded by Weissman.

“Under CIRM's procedures, Trounson does not vote on applications during the review process. But beginning last year the board gave him and his staff new authority to make recommendations on applications after they were acted on by reviewers.”

Trounson ultimately recommended board approval last January of the genomics application from Stanford after Weissman was removed from the proposal.

During last January’s meeting, Trounson touted the Stanford application and specifically mentioned Michael Clarke, who is the No. 2 person in Weissman’s stem cell institute at Stanford, and who was part of the Stanford application instead of Weissman.

According to the meeting transcript, Trounson said,

“I think he's (Clarke) an extraordinary good researcher, and I think the Stanford people are terrific at that.”

The agency said earlier this year it had begun an examination of the processes in the stem cell genomics round, which was criticized for irregularities,unfairness, score manipulation and Trounson’s role.   No results of that inquiry have been announced.

Since the agency's inception in 2004 questions have been raised about conflicts of interest at the agency, mainly due to the composition of its board. Roughly 90 percent of its grants have gone to institutions that have been linked to members of its board.  The Institute of Medicine, in a $700,000 study commissioned by the agency, said that the board members essentially make proposals to themselves about what should be funded. And in 2008 the journal Nature editorialized about "cronyism" at the agency.

Hope and Home Runs: Nature and the Chron on the California Stem Effort

It wasn’t exactly a stem cell tag team, but both the journal Nature and the San Francisco Chronicle this past week carried lengthy pieces examining the state of affairs at California’s $3 billion stem cell agency.

 Neither of the articles was a valentine, but overall the agency should be satisfied with them -- if only for the reason that they will make more people aware of what the agency is doing. The agency received something of a cyber bonus with a video on the Nature Web site that accompanied its online article(see video above). Coverage of the agency, especially in the mainstream media, has been minimal over the last several years.

 Meanwhile the agency has been trying to spread the word as it tries to fend off its financial demise in less than three years, when funds for new research awards run out. 

Both pieces covered familiar ground for readers of this Web site. And both emphasized the looming financial crunch for the agency, which is examining the possibility of some sort of private-public financing arrangement. The agency has not ruled out another bond measure to secure voter approval for as much $5 billion in additional financing. Neither article discussed the likelihood of voter approval, which is problematic. 

Both pieces took a run at providing summaries of the work that the agency has financed and its contributions. Both noted that the agency has yet to produce a stem cell therapy despite the apparent promises of the ballot campaign 10 years ago that created the agency. 

Erika Check Hayden, who wrote a Nature overview of the agency in 2008, was the reporter again on the latest article on July 2.  It was headlined, 

"Stem cells: Hope on the line"

The subhead said,

“A decade ago, voters in California changed the biomedical research landscape by directly funding embryonic stem-cell research. Now the organization they created needs a hit to survive.”

Hayden wrote,

“The institute has navigated a difficult path, however. CIRM had to revamp its structure and practices in response to complaints about inefficiency and potential conflicts of interest. It has also had to adapt its mission to seismic shifts in stem-cell science.

A "home run" is now in order in the words of agency board member Sherry Lansing, the Nature article said.

Hayden interviewed former agency chairman Robert Klein about his plan for a $5 billion bond measure, perhaps in 2016. She quoted Klein as warning that the nation and California could see a “theocratic government” in the near future that would endanger research. Hayden wrote that Klein said,

“We have to protect science's access to the full range of cellular types now. And in doing that, we will protect the freedom of science to ethically pursue knowledge in this country outside of religious ideology.”

Klein also said,

“If we don't take a position now the next ten years may see a theocratic government at the state and federal level that restricts scientific research in this country for the next 50–100 years.”

As for the agency’s accomplishments, Hayden wrote,

“(I)n California, researchers are making nerve, heart, eye and skin cells from iPS cells and embryonic stem cells — a range of work rare for a single state — and they aim to test many of these in humans. They are developing drugs against cancer stem cells, which are thought to perpetuate the disease. And they are leading the world's only two trials of treatments that combine gene editing and cell therapy to treat HIV. They are doing all this with an unmatched infrastructure, including a network of 12 new or newly renovated facilities, and a funding pipeline that acts as a beacon to young scientists.

“Almost every country would be jealous of what they've got in California,” says Christine Mummery of the Leiden University Medical Center in the Netherlands.”

Mummery is a member of the agency's scientific advisory board.

Stephanie Lee was the writer on the San Francisco Chronicle story that was on the first page of the business section on July 5.

It was headlined,

“Stem cell researchers under pressure to produce”

The headline was drawn from this paragraph by Lee,

“Fund recipients are under pressure to show results - commercially viable therapies, ideally. Universities and other nonprofit groups have received most of the money, but the pressure is especially heavy on biotechnology companies that have staked their livelihoods on such therapies."

Lee mentioned StemCells, Inc., (along with photos at the company’s lab), Asterias, Capricor, Calimmune and ViaCyte as companies that are making progress.

 She continued,

“As (clinical) trials add more patients, they become more expensive. The challenge in the future will be to find money to keep these trials going when the stem cell agency runs out of money.

"’It's certainly not going to make life easier,’ said (Martin) McGlynn (CEO) of StemCells, which reported a $28 million operating loss last year."’To their credit, the California voters stepped up to the plate, and $3 billion is a lot of money,’ he said. ‘But an awful lot more is going to be needed to finish the job.’"

Lee continued,

“It is not realistic to expect a stem cell therapy to reach consumers in five years, especially when the field is so young, said Enal Razvi, managing director at Select Biosciences, a life sciences market research company.

"Even so, by 2017, ‘if they don't have products already on the marketplace, they should not be expecting public money to fill their portfolio,’ he said. ‘Apple doesn't go to California and keep asking for money to build their own iPhone.’"

Disillusionment Cited by Scripps Researchers: No on Marletta and USC

Unhappy scientists at the Scripps Research Institute are trying to broaden support for ousting its president and avoiding a merger with USC. 

Scripps is suffering from financial difficulties, including a $21 million deficit in the fiscal year ending Sept. 30. Bradley Fikes and Gary Robbins reported in the San Diego U-T Saturday on the latest developments. They wrote,

“Chemist Donna Blackmond proposed in a Friday email that faculty who are members of the elite National Academies send the board a letter 'indicating no confidence in the leadership at Scripps.’ Such a move would show that the faculty’s disillusionment isn’t limited to a few allegedly rogue professors, she said.

“Blackmond added: ‘I can inform you that the 50+ women faculty are currently in the process of drafting such a letter.’”

The top faculty leaders have already called for the removal of Michael Marletta as president of Scripps, a job he assumed in January 2012. 

Scripps' Top Faculty Wants Marletta Removed as President

The turmoil at the highly regarded Scripps Research Institute today intensified as its top faculty called for the removal of its president, Michael Marletta, who is involved in an effort to merge the organization with the University of Southern California (USC).

The demand was reported today in the San Diego U-T by Bradley Fikes and Gary Robbins. They wrote that the faculty leaders “have lost confidence” in Marletta, who assumed his position in January 2102.  

 Scripps is running a $21 million deficit for the fiscal year ending Sept. 30. Grants for biomedical research are tight and donations to Scripps are not meeting the institute’s long-term needs. Scripps derives more than 86 percent of its funding from the NIH, which is under stringent federal budget constraints.  The negotiations with USC are now in a “deep freeze,”  Fikes and Robbins reported yesterday.

 The faculty made the call for his removal in an email last night to Scripps Board Chairman Richard Gephardt, the former majority leader of the House of Representatives and now a Washington lobbyist.  He told Fikes and Robbins in an email today that the board understands a “variety of perspectives” exist concerning the future of Scripps. The San Diego newspaper did not immediately carry a response from Marletta.

Peter Farrell, another Scripps board member and executive chairman of ResMed, did not welcome the call for Marletta’s removal. He told the San Diego U-T,

 “If you’re on the board, you say, ‘Who’s running this ship, guys? You can make suggestions, but you cannot demand action. In other words, the board’s being told what it’s got to do, and if you don’t do this, we’re going to take our bat and ball and go home.”

Fikes and Robbins wrote,

“Farrell expressed sympathy for the faculty, but said Marletta is working with the best interests of Scripps Research at heart.”

In an online comment on the U-T Web site, Jeanne Loring, director of the Scripps Center for Regenerative Medicine,  said,

"Why would a board member of an organization 'feel sorry' for a group that brings in 86 percent of the funding for that organization? That makes no sense. Is he suggesting that we take our money elsewhere?"

Regarding Loring's comment concerning funding, for those unfamiliar with the way many nonprofit research organizations operate, it is on the same principle as a beauty parlor. In a beauty parlor, a beautician rents a chair and shares his/her income with the owner of the business. If the beautician’s income drops off, he or she is out the door. Likewise, scientists receive space and support at facilities like Scripps. Their obligation is to keep the grant money rolling in the door. The research organization then takes a healthy cut.

Fikes and Robbins wrote that Scripps has been a pillar of “biomedical brain power.”  But they said the scientific achievement has not been matched by fundraising since Marletta was named as president.  They wrote,

“During that time, Salk and Sanford-Burnham (both located near Scripps) have raised great sums of money. In January alone, Sanford-Burnham received an anonymous $275 million donation in January, to be given over 10 years.

“During the last couple of years, the Salk Institute has raised $275 million in a capital campaign, although Salk has far fewer faculty than does Scripps Research.”

Scripps has declined to disclose its fundraising figures, the U-T reported.

So far the Scripps-USC negotiations and turmoil have attracted little attention in the scientific media. However, that is likely to change this month in the wake of the increasing turbulence. 

Scripps-USC Update: $21 Million Scripps Deficit, Talks at Standstill

The San Diego U-T today reported that The Scripps Research Institute is running a $21 million annual deficit, a key reason that it is discussing a partnership with USC although those talks have apparently hit a wall.

“Deep freeze” is the term quoted by Bradley Fikes and Gary Robbins in their latest article concerning a possible hookup between the two institutions.

Michael Marletta
Scripps photo

Robbins and Fikes quoted from the minutes of a meeting Monday involving a handful of faculty and administrators at Scripps, which is located in La Jolla, Ca.. They also carried remarks from an email today from Michael Marletta, who became president of Scripps in 2011.  Marletta said,

"The institute has on hand enough funds to continue operating with no changes in its operations and without disposing of any real estate or other property for the foreseeable future. We are, however, being proactive about the future economic environment with a process in place and commitment to addressing the operating deficit — this financial picture would be the envy of many biomedical institutes."

Marletta continued,

"The market forces affecting The Scripps Research Institute are being felt by all independent biomedical research institutes, universities and medical schools across the country. Specifically, these include declines in National Institutes of Health funding and a downturn in basic research support from the pharmaceutical and biotechnology industries."

USC, which is located in Los Angeles, has sent a nonbinding letter to Scripps stating that it would pay $600 million over a 40 year period to take over Scripps. Fikes and Robbins wrote,

“USC is trying to improve its modest standing in chemistry and biology, areas where Scripps Research is a world leader.”

The Fikes-Robbins story carries the full text of two Q&A email exchanges between Marletta, Scripps and the two reporters.  At one point, Marletta said,

“We are in no danger of financial collapse. If we did nothing we would likely reach a tenuous point in about five years. However, doing nothing is not an option and not our plan. There are both short-term and long-term options to consider that will keep Scripps and its outstanding scientific programs here for a very long time.”

The text of the minutes of Monday’s meeting is also carried on the San Diego U-T site. The meeting was of a group of faculty and administrators recently formed to improve communications about Scripps’ status and to build support for changes.

Richard Gephardt
Gephardt Government Affairs photo

The group is chaired by Richard Gephardt, the former House majority leader who twice unsuccessfully sought the Democratic nomination for president. He now runs a Washington lobbying firm bearing his name and is chairman of the Scripps board.

Wikipedia reports,

“Gephardt has also been significantly involved with the pharmaceutical industry. In addition to a large lobbying contract with the Medicines Company,^[30] Gephardt serves as chair of the Council for American Medical Innovation (CAMI), formed by and affiliated with PhRMA. In this capacity he hired his own firm to lobby for the organization, to push to extend patents and block generic drugs from the market.^[31]”

Expectations, Ballyhoo and Stem Cell Research

Two seemingly unrelated biotech stories popped up this morning on the news.  One involved an international stem cell research brouhaha. The other involved what could amount to a nearly $2 billion biotech deal for a California firm.  

What brings them together is the diaphanous nature of some of the work in these much ballyhooed fields. But first, let’s look at the latest reports about the STAP stem cell flap concerning research in Japan and Massachusetts that seemed to promise a fast and easy way to make pluripotent stem cells.

After five months and major questions, the journal Nature has decided to retract the STAP paper despite the fact that the journal had it vetted by some of the best scientists in the world. Even with the review, Nature said “extensive” errors have surfaced along with “inexplicable discrepancies.”

It is fair to say that 20 years ago, that paper would still be widely accepted and remain firmly entrenched in Nature’s archive as reliable. What has changed is the Internet and impact of social media on evaluation of research. That has given researchers the unfettered ability to discuss and publish their findings dealing with replication of results and other issues.  At the same time, the speed in which this cyber review takes place is remarkable.  The change from 20 years ago is the equivalent of the move from hand-cranked printing presses to the high-speed presses of today that can spit out thousands of pages an hour.

(We should note that California stem cell researcher Paul Knoepfler of UC Davis played an important role in probing the scientific reliability of the STAP research with responsible reporting and commentary on his blog, ipscell.com.)

Now, about that nearly $2 billion deal, Wall Street Journal columnist Helen Thomas this morning wrote about the acquisition of Seragon Pharmaceutical by Roche, describing it as “disconcerting.” She said it could be a case of shelling   “out vast sums for assets that could quite possibly amount to nothing.”  San Diego-based Seragon “was formed only last year and has one breast cancer drug in early stage trials,” Thomas wrote.

She continued,

“The global pharma sector's forward earnings multiple has expanded to almost 16 times, up from less than 11 times two years' ago, in part because investors believe the (biotech) industry's R&D machine is again producing the goods.”

Thomas noted, however, that only one in 10 potential therapies entering clinical trials reaches the marketplace. “The risks are substantial,” she said. Those same risks apply as well to the 10 clinical trials that the California’s $3 billion stem cell agency has been involved in.

Earlier this year, noted bioethicist Art Caplan wrote about what he called the “off-the-rails syndrome” in stem cell research. The STAP article was his starting point.  Stem cell research is a field that has had more than its share of hype. Well-respected scientists routinely refer to its revolutionary potential. Little public attention is paid to the obstacles and the lengthy and often unsuccessful process of developing a truly usable product.  Expectations of desperate patients are raised. Many of them wind up paying for expensive, untested and perhaps unsafe treatments.

The Seragon-Roche deal is also a reflection of the hype that can arise in biotech/stem cell research. It can be so powerful that the supposedly “rational” economic markets are swept up in the exuberance of a nifty research story.  Ultimately the deal may pan out for Roche, although Roche can afford to take a big loss. But stories are stories.

What does all this mean for the California stem cell agency? Good reasons exist to manage expectations so that the public and potential sources of funding are surprised by successes rather than being surprised by the agency’s failures.  No one wants to see a story like the Solyndra scandal emerge from the California stem cell agency.

Hype and Hope: Illuminating the Reality of Stem Cell Treatments

“Selling Stem Cells Honestly” is the headline this week over at the Biopolitical Times, which also says “it’s about time.”

The article appeared on the Internet site that is produced by the Center for Genetics and Society of Berkeley. The piece cites several recent efforts from within the stem cell community to highlight the risks of dubious, expensive stem cell treatments that are being offered domestically and internationally.

Pete Shanks
CGS photo

The article was written by Pete Shanks, who said the warnings are welcome. But Shanks, author of a book on human genetic engineering, added,

“A little perspective is called for, however: CIRM (the California stem cell agency) was sold to the public in 2004 with the strong implication that cures were imminent. The Proposition 71 Voters Guide argument in favor was presented by Cures for California, and the initiative was presented as ‘Proposition 71, the California Stem Cell Research and Cures Initiative.’ (It was also going to be an economic miracle.)

“Scientists led the way in talking about ‘life-saving cures’ and advocates campaigned under the slogan ‘Countdown to Cures.’  Professor and entrepreneur Irv Weissman (of Stanford) donned a white coat for commercials, presented himself as a doctor, and assured the TV audience: 

“’The chances for diseases to be cured from stem-cell research are high…. If the promise of stem-cell research comes true, we can hope for a single treatment with the right stem cells to cure diseases every family has.’”

Shanks continued,

“Of course, the claims of cures around the corner carefully avoided including a timetable. But in a report published two days after the election, Weissman told the San Francisco Chronicle:

“’If somebody comes up with a saleable product in five years, I'll be shocked. If we don't have lots of therapies in 20 years, I'll be even more shocked.’

“Right. There has been a decade of hype about the potential of stem cells. CIRM is approaching the end of its mandate — and money — and looking for more. All of a sudden, they are taking a more … realistic … line. But is it really any surprise than some patients are, well, impatient?” 

Shanks concluded,

 “It's excellent that more scientists are now publicly calling for oversight. Perhaps they will learn a broader lesson: Do not over-promise ‘cures’ in an effort to raise money. Or, as (Paolo) Bianco and Douglas Sipp, another long-time monitor of the field, argued in Nature last week:

“Sell help not hope.”

One final note: Shanks did praise a couple of scientists by name for their clear-eyed view of the stem cell treatments, including Paul Knoepfler of UC Davis. He blogs on the subject often and has authored a book aimed at the public that informs about stem cells in general an gives good advice about how to judge stem cell treatments. Additionally we should mention that when Weissman was head of the International Society for Stem Cell Research a few years back, it began an effort to inform the public about dubious stem cell treatments. The move ran afoul of companies that threatened legal action, and it was substantially toned down. Even if such efforts to inform the public are accurate and well-justified, the legal costs of defending them can run quite high. 

Hillary Backs California Stem Cell Agency

Hilary Clinton at BIO2014
San Diego U-T,  John Gastaldo photo

Hillary Clinton today endorsed California’s nearly 10-year-old, $3 billion effort to create stem cell therapies for everything from cancer to urinary incontinence.

Speaking to the world’s largest annual biotech gathering, BIO2014, she said,

"California (undertook) a very important task in creating a funding stream for stem cell research. Other states have followed suit, when it looked as though the federal government would not be doing that. States have a role to play, but we need a national framework."

Her remarks were reported by Bradley Fikes in the San Diego U-T, who was covering the convention, which has attracted 15,000 attendees.

Fikes’ piece covered her general comments on biotech and such things as genetically modified organisms. He also wrote,

“State support, along with a ‘national framework’ including provisions to help patients who can't afford biotech therapies, are part of a rational policy, said Clinton.” 

Fikes reported that California Gov. Jerry Brown made an appearance at the gathering. Fikes said Brown “gave a brief endorsement of California biotech.”

Fikes did not report on whether Brown endorsed more funding for the Golden State’s stem cell agency. It will run out of cash for new awards in 2017 and is looking for more financial support.

The agency is likely to find to some politic way to incorporate Clinton’s statement into their fundraising efforts. 

California Stem Cell Agency Cites "Real Progress" on Calimmune's HIV Clinical Trial

The California stem cell agency this morning announced that one of its early stage clinical trials has produced “encouraging safety data” in its search for a therapy that could eradicate AIDS.

The agency said in a press release the trial will now move forward to its next stage which will focus on efficacy. The gene-based therapy, dubbed Cal-1, was developed by Calimmune of Tucson, Az.

Randy Mills, president of the stem cell agency, said,

“While still early in clinical development this announcement demonstrates real progress towards this mission. The accomplishments of Calimmune’s team is a great example of how CIRM partnerships are working to impact patient’s lives today.”

Louis Breton, CEO of Calimmune, said that the safety benchmark achievement “is an important step in bringing this potential one-time therapy to the patients, and takes us closer to our ultimate goal of eradicating AIDS." (Here is the company press release.)

Kevin McCormack, senior director for public communications for the agency, said in an agency blog item that the therapy “takes blood stem cells from people who are HIV-positive, genetically modifies them so they carry a gene that blocks the AIDS virus from infecting cells, and then re-introduces the modified cells to the patient. The hope is that those stem cells will then create a new blood system that is resistant to HIV.”

Calimmune has a powerful scientific pedigree. Nobel Laureate David Baltimore, one of the firm’s founders, is chairman of the Calimmune board. He also once served on the governing board of the stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM).

The Calimmune Web site says that the company was formed in 2007 around stem cell technology discovered in the labs of Baltimore, while he was at Caltech, and Irvin Chen at the UCLA AIDS Institute in early 2000.  Delaware state records show that the firm was incorporated in 2006.

Baltimore served on the CIRM board from 2004 until June 6, 2007. He resigned from the agency board about 18 months before the application process began for the grant round that ultimately funded Calimmune. 

In addition to Baltimore, another member of the the Calimmune board is Harry George, managing general partner of Solstice Capital, whose Tuscon’s office shares the same address as Calimmune.

The trial, which is taking place in San Francisco and Los Angeles, is partly funded by CIRM, which has awarded Calimmune $8.3 million. Originally, the Calimmune research was part of a $20 million disease team grant involving UCLA. That was split, however. CIRM now lists the original award as a closed, $9.9 million grant shared by Calimmune  and UCLA.

Calimmune and the stem cell agency discussed the therapy at today's session of BIO2014 in San Diego, which is attended by about 15,000 persons in the biotech industry.

Here is a copy of the Calimmune contract with the stem cell agency. 

   California Stem Cell Agency Contract with Calimmune

Safety, Safety, Safety Should be No. 1 Job in Research Labs

Working in a research lab doesn’t even come close to the risk involved in being a logger, which ranks as the most deadly occupation in America.

Nonetheless, handling a variety of risky substances and chemicals does involve significant hazards. We were reminded of that in the last few days in the wake of a tragic case at UCLA and the anthrax exposure flap at the CDC.

According to a report yesterday, as many as 84 persons were potentially exposed to live anthrax at CDC laboratories in Atlanta.  The details of how the exposure came about are still being investigated, but it is clear that it involved a breach of safety standards.

Anthrax, of course, can cause death.  Along the way, the inhalation form of the disease “progresses rapidly with high fever, severe shortness of breath, rapid breathing, bluish color to the skin, a great deal of sweating, vomiting blood and chest pain that may be so severe as to seem like a heart attack,” according to emedicineheath.com.

Sheri Sangji
Sangji family photo

At UCLA, the case involves the horrible burning death of a lab worker, Sheri Sangji, in 2008. The University of California once said the charges that it was at fault were "outrageous."  It took four years for the University of California to accept responsibility for the conditions that led to her death.  The school has agreed to follow safety procedures and create a $500,000 scholarship in Sangji’s name.

The researcher involved, Patrick Harran, became the first professor in the United States to be

charged with a felony in the death of a worker.  Last Friday a judge approved a deal in which Harran admitted no wrongdoing.  According to an article by Kim Christensen in the Los Angeles Times, he agreed to “develop and teach an organic chemistry course for college-bound inner-city students for five summers, perform 800 hours of non-teaching community service in the UCLA Hospital system, and pay $10,000 to the Grossman Burn Center in lieu of restitution to Sangji's family.”

In return, he will serve no jail time.

Her family was bitter about both settlements.  The family said in a statement,

"This settlement, like the previous one with UCLA, is barely a slap on the wrist for the responsible individual." 

What does all this have to do with stem cell research in California? Thousands of persons work in labs linked to such research in the Golden State. Sometimes they deal with dangerous substances.  It behooves the scientists in charge to ensure that none of their workers suffer because of a failure to adhere to safety standards. Moreover, safety at state-funded labs should be a matter of utmost concern for the folks at the California stem cell agency who have more than $1 billion in experiments under their oversight.  It wouldn’t hurt to remind recipients of state largess of the need for making safety their No. 1 task.

For other pieces and commentary on the UCLA case, see OSHA faults UCLA, pervasive problems in labs, and UCLA response.

USC Dangling $600 Million Lure for Scripps

Fresh information is emerging on the USC-Scripps deal, including the loss of two scientists to the Los Angeles school. And from Florida is coming news that Scripps would receive $15 million a year for 40 years under the terms of some sort of merger. 

The departing Scripps scientists are biochemist Ray Stevens and biologist Peter Kuhn, according to a piece by Gary Robbins in the San Diego U-T.  The move, which does not appear to be directly connected to the deal, is being hailed on USC social media sites (See here and here.) 

Jeff Ostrowski of the Palm Beach Post wrote about the possible USC-Scripps deal, which has rankled some in Florida. The state houses a 624-employee branch of Scripps. He said that Scripps would receive $15 million a year for 40 years under the terms of the deal. Ostrowski continued,

 “While the sum of $600 million sounds large, applying even a rock-bottom interest rate of 2.2 percent to the 40-year payment schedule reduces the present value of the deal to $250 million.

“Scripps reported net assets of $728 million — including investments worth $459 million and land, buildings and equipment valued at $372 million — as of Sept. 30, 2012. The gap between Scripps’ fortune and USC’s $15 million-a-year offer led one critic to dismiss the deal as ‘a joke.’”

No further details of the possible arrangement were reported in the Florida newspaper.

Ostrowski, however, also wrote,

“When (former Gov. Jeb) Bush announced The Scripps Research Institute’s expansion to Palm Beach County in October 2003, he touted an economic impact study that said the investment in Scripps would spawn 6,500 spinoff jobs and create as many as 50,000 high-paying jobs statewide in 15 years.

“Scripps Florida had 634 employees as of March, and private-sector biotech jobs have yet to appear. The lab’s arrival sparked a $1.5 billion spree of public subsidies for research labs from Miami to St. Petersburg. The goal was to turn around Florida’s notoriously low-wage economy, but the state continues to lag in most measures of biotech prowess.”

Nothing new has surfaced on the interest expressed by UC San Diego in Scripps, which is located nearby. USC is about 130 miles north of Scripps.

Burrill's Appearance Scrubbed at Big Biotech Convention

The keynote appearance this afternoon by California biotech maven Steve Burrill has been cancelled at the BIO convention in San Diego in the wake of allegations of mismanagement and inappropriate diversion of $19 million.

Ron Leuty of the San Francisco Business Times reported in a brief piece late yesterday that the 90-minute talk was scrubbed.

A lawsuit filed last month by Ann Hanham, a former managing director of Burrill & Co., said that $19 million was diverted by Burrill at the firm. The suit also said that Burrill was removed from control of a $283 million venture capital fund.

Alex Lash of Xconomy wrote, 

"A spokeswoman for the San Francisco-based financier told Xconomy that Burrill made the decision Friday and has decided to keep a low profile. Burrill has not made a statement since news of the lawsuit broke last week.

"The spokeswoman said his lawyers should file a response to the lawsuit by the end of July." 

(Editor's note: The information from Alex Lash was added after this item was originally posted.)

UC San Diego Says Alliance with Scripps is Not Out of the Question

The University of California at San Diego is emerging as a suitor for The Scripps Research Institute as its top faculty say a merger with USC would “destroy” much of the institute.

According to an article by Bradley Fikes and Gary Robbins of the San Diego U-T, the only major daily newspaper in the area, the chancellor of UC San Diego thinks an arrangement with Scripps is worth exploring.  

Both institutions are located near each other in the La Jolla area north of the City of San Diego proper. USC(the University of Southern California) is about 130 miles farther north in central Los Angeles. All three are biomedical research powerhouses.

Pradeep Khosla (left) and David Brenner, dean of the UC
 San Diego Medical School and a member of the state
 stem cell agency governing board. UCSD photo

Fikes and Robbins wrote,

“UC San Diego Chancellor Pradeep Khosla said in an interview: 'I would certainly listen' if the institute proposed a merger or some other alliance. 'I would talk to my colleagues, talk to my faculty, talk to my regents. ... There’s enough in there for me to say, ‘We need to talk a bit more.’”

His comments came as all of the active faculty chairs at Scripps delivered a note to the Scripps president and the board chairman declaring,

“We believe that the proposed path with USC would destroy much of what has been built and what we and others in the community value so much. We understand that institutions like Scripps face serious financial challenges and have to face up to that reality. Under the right terms, and being fully protective of the ‘TSRI Brand’ and culture, merger with USC or another institution could be an option for TSRI. From the information disseminated so far, the terms of the proposed merger with USC are not even close to what it would take to build faculty support.”

The note also said that the faculty was prepared "to make personal sacrifices to work for and maintain independence.”

The “information” mentioned in the faculty note is not yet available. 

Fikes and Robbins broke the story about a possible hookup between Scripps and USC. Scripps is wrestling with financial problems. Fikes reported today that Scripps' expansion into Florida is part of its economic travails. USC is better off financially and has its eyes on Scripps' prestigious researchers.

Stem cell research is no minor matter at all three institutions. UC San Diego has received $146 million from the state stem cell agency, USC $105 million and Scripps $45 million. All three have representatives on the agency's governing board. 

Tweeting the Elusive Stem Cell: A Canadian Study

Julie Robillard, CIRM photo

Twitter used to mean chirping. The word conjured up images of sparrows fluttering and warbling under the eaves. Today, it more likely evokes images of lightning-like communications and billion-dollar businesses.

Twitter – the non-chirping variety -- drew attention this week from Kevin McCormack, the majordomo of communications at California’s $3 billion stem cell agency. His job is to tell the story of the agency and build public support.

McCormack was at the annual meeting of the International Society for Stem Cell Research in Vancouver in Canada where he ran across Julie Robillard, a neuroscientist who is looking into how social media – blogging, Twitter, etc. – are shaping how science is communicated.

Robillard, who writes a blog on neuroscience, had a poster presentation at the meeting dealing with the public policy implications of the use of social media related to stem cell research.  McCormack discussed her work yesterday on the stem cell agency’s blog.

“She says this is clear evidence there is worldwide interest in stem cell research. The problem, however, is that the quality of many of the tweets was also widely varied. Some came from researchers and were thoughtful and trying to raise awareness about new research or important questions, but others—many others—were more interested in promoting stem cells as cures for everything from sagging skin or acne to severed spinal cords.”

“She says social media is reshaping how conversations take place between people who are interested in stem cells: anyone from a scientist to a patient to a provider of sham therapies. She says there is a lot of information out there about stem cells but the quality is not always great and in some cases it’s downright questionable.”

McCormack continued,

“News reports, stories in newspapers, on the radio and TV or online are the single biggest drivers of traffic on Twitter and are a reminder of the importance of good journalism when covering these issues. A poorly written or researched story that makes inflated claims about a treatment, or fails to mention that the research was done in mice not people, can get huge play on social media and mislead many people. This is a little worrying when fewer and fewer mainstream media outlets have a dedicated science journalist on staff.”

McCormack concluded,

 “She also says it’s a reminder to those of us trying to inform the public about all the progress being made with stem cell research that we need to be more engaged and more active, so that our voices can help drown out those with bad information or shoddy products to sell.”

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.