StemCells, Inc., 'Winding Down' Its Business; Shareholders Could Be Left in Cold

StemCells, Inc., a publicly traded firm that once held close ties to the $3 billion California stem cell agency, this morning said that it was going to close its doors and that its shareholders may not receive a dime in the liquidation.

The announcement was buried deep in a press release focusing largely on the termination of the firm's spinal cord injury trial, which the California company said was not showing sufficient benefit to patients to continue. The news release continued,

"The company also announced that, in light of the decision to terminate the Pathway Study, the company’s available strategic alternatives and its current cash position, the board of directors approved a plan to wind down the company.  As part of this process, the company will evaluate opportunities to monetize its intellectual property, including data collected in its studies and trade secrets, as well as the transfer of its proprietary HuCNS-SC cells and other assets through a potential sale. The company will not proceed with its earlier plans to conduct a rights offering, for which it had filed a registration statement with the SEC.

"As of May 31, 2016, the company had cash and cash equivalents of approximately $5.5 million. The company cannot determine with certainty the amount of any liquidating distribution to its stockholders and it is possible that there will be no liquidating distribution to stockholders. The amount of any cash distributed to its stockholders will depend upon, among other things, the company’s current liquid assets offset by its known and unknown liabilities as well as operating expenses associated with the wind down."

StemCells, Inc., was co-founded by Irv Weissman, a Stanford stem cell researcher. It was the only company to be awarded $40 million in a single round by the California stem cell agency. The awards followed vigorous lobbying by the former chairman of the agency, Bob Klein,

StemCells, Inc., also appointed Alan Trounson to its board just days after he left his post as president of the agency, triggering a controversy about conflicts of interest. 

The California Stem Cell Report will have more on the closure of StemCells, Inc., later. 

California Stem Cell Firm Battles Congress in Fallout From Planned Parenthood Flap

"Terrorized" is how the largest circulation newspaper in California, the Los Angeles Times, put it last year. That's the description of the plight of StemExpress, a small stem cell company in the Sierra Nevada foothills in California.

Now comes the Washington Post with a lengthy piece this weekend about the Placerville firm, which was caught up in the Planned Parenthood abortion/stem cell videos that are still rattling around the Internet. The headline on the story by Danielle Paquette said,

"‘We lose money doing this’: Tiny company caught in abortion debate takes on Congress"

The Post story picks up where the Times and also a piece on the California Stem Cell Report left off last year.

 

Paquette reports that the company has had to supply Republican congressional investigators with more than 2,000 pages of documents including five years of banking records. Employees have received death threats, and now the House committee wants the names of workers, a demand StemExpress is resisting. 

One particular target is Cate Dyer, president and founder of the firm. In December, a Washington

Cate Dyer, CEO of StemExpress
Photo by Max Whittaker for Washington Post

state man was arrested, according to the FBI, after he wrote on the Internet, 

“She will have to face the souls of the babies she’s bought and sold when she arrives on the other side. I’m sending her there early.”

Dyer was interviewed at some length for the article, describing the impact on her company. But it goes beyond what is happening to StemExpress. Paquette wrote, 

"The consequences of this supercharged debate transcend one firm. Scientists and doctors across the country say the political turmoil on Capitol Hill has stalled lifesaving work and imperiled progress toward, among other treatments, a Zika virus vaccine."

Paquette said,

"Those kinds of threats and the growing political pressure have chilled stem cell research at laboratories across the country."

The Post cited a case at Stanford, as well as one in New York state, involving a slow down in research.  Researcher Steven Sloan of Stanford said he was discouraged,

“The backlash makes you think twice about proceeding with this kind of work.”

Paquette concluded her article with this from Melanie Rose, a lab technician at StemExpress,

“This tissue would be thrown away if we didn’t send it to researchers who are truly trying to save lives. I want them to see what I’m doing. That something good can come of it.”

The Unique Six Percent Cinch on California's $3 Billion Stem Cell Research Effort

A look at CIRM's calculations on the life left in its operational budget.

Highlights
Six percent budget cap
Restrictions courtesy of Prop. 71
Hearing on June 7

California's $3 billion stem cell agency may be the only state department that has a rigid legal cap on the total it can spend on operational expenses -- such things as employee salaries, office space, computers, meetings and much more.

When that money -- $180 million -- runs out, that's it, as far as the state goes. That is, unless the agency can wheedle more from lawmakers and the governor, which is an unlikely prospect at this time, given competing priorities for state spending.

The agency -- formally known as the California Institute for Regenerative Medicine or CIRM, -- has run through $105 million for administrative/operational expenses over its 11-year life. CIRM has about $75 million left and currently is burning up $15 million to $16 million annually.

The cap -- 6 percent of its $3 billion in bond funding -- was imposed by Proposition 71, the ballot initiative that created the agency in November 2004. From the very beginning, some members of the governing board questioned the cap, saying it was too chintzy for a research effort with such high aspirations.

Nonetheless, the cap is politically impossible to change at this point. It would require a super, super majority vote by the legislature or another vote of the people of California. Such an effort might result in efforts to bring the agency under legislative control. Currently, the governor and legislature have no legal say on how CIRM spends its money or how its awards are made, another feature of Prop. 71.

So parsimony has been a watch word at the agency, which, on June 7, will take up its budget for the fiscal year that begins in July. The CIRM board's Finance Subcommittee has scheduled a 90-minute session at its Oakland headquarters to consider the proposal. Following approval or any modifications, it is expected to be routinely ratified at a full board meeting in June.

The proposed budget is yet to be posted on the CIRM Web site and probably will not be available until later this week. The California Stem Cell Report will carry details on the plan when it becomes available.

The meeting has a teleconference location in Irvine where the public can participate in the discussion. Listen-only access is available via the Internet or through an 800 number. Details can or will be found on the agenda.

California's Stem Cell Agency Says FDA 'Chilling' Development of Stem Cell Therapies

CIRM graphic

The president of the $3 billion California stem cell agency hit the campaign trail this month but not to head off Donald Trump or Hillary Clinton or even Bernie Sanders.

Randy Mills targeted the Food and Drug Administration (FDA), the agency that has life-or-death power over the introduction of stem cell therapies. "Give us our cures" was Mills' message for federal regulators.

The most recent forum for Mills was Fox News. The headline on an opinion piece that he co-authored with former Republican U.S. Sen. Bill Frist,  said,

"Cell therapy reversed blindness for 47,000 patients in 2015. So why is it against the law?"

And in a presentation earlier this month to the Bipartisan Policy Center in Washington, D.C., Mills said that the current FDA "paradigm" for new stem cell therapies has been inconsistent, selective and chilling.

"By having a system that approves nothing after 15 years, we are neither protecting nor helping those in need."

Mills said that FDA regulations should "be scaled to more accurately reflect the risks, be balanced against the very real consequences of doing nothing and be fairly and consistently applied."

The campaign by the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known, grew out of work last year on its strategic plan. A survey of stakeholders showed that 70 percent of them identified the FDA as an impediment to development of commercial therapies.

Kevin McCormack, senior director of communications for CIRM, wrote about Mills' piece on Fox on the agency's blog, The Stem Cellar. McCormack said,

"A lot of people are frustrated with the US Food and Drug Administration (FDA) and its woefully slow process for approving stem cell therapies. That’s one of the reasons why we started the CIRM Stem Cell Champions campaign, to gather as many like-minded supporters of stem cell research as possible and help to change the way the FDA works, to create a more efficient approval process."

In his presentation in Washington, Mills was careful to point out that CIRM is not opposed to the FDA or its regulation. He said CIRM just wants better regulation that will help bring therapies to patients by speeding their approval and balancing risk.

In response to a question about how Fox News happened to carry the Mills' piece, McCormack, replied,

"It was something Randy and Senator Frist had been talking about doing for a while, and why not Fox News, it has a big audience."

Other big audiences for CIRM's message will be in the San Francisco Bay area next month: BIO, the annual biotech industry convention, which is expected to draw more than 15,000 from June 6 to June 9, and the annual meeting June 22-25 of the International Society for Stem Cell Research, which expects to see more than 4,000 attendees. CIRM is expected to have a strong presence, relatively speaking, at both events.

The stem cell agency says FDA practices lead to selective
enforcement of its regulations.                     CIRM graphic

$4 Million in Big Ideas Approved by California Stem Cell Agency

The $3 billion California stem cell agency this week welcomed the first members of its "Great Ideas" club and gave them a total of  nearly $4 million to pursue the scientific gleams in their eyes.

Nineteen researchers received awards at a meeting yesterday of the governing board of the agency. They were the first such grants approved by the nearly 12-year-old enterprise.

Writing on the agency's Stem Cellar blog, Kevin McCormack, senior director of communications, said,

"The goal...is to provide seed funding for great, early-stage ideas that may impact the field of human stem cell research but need a little support to test if they work. If they do work out, the money will also enable the researchers to gather the data they’ll need to apply for larger funding opportunities, from CIRM and other institutions, in the future."

Basically, all the applicants had to do was demonstrate was a "strong scientific rationale." The awards were small, only a maximum of $150,000 each, with overhead costs at recipients' institutions adding as much as $87,000 more, depending on the institution. Agency employees have used terms like "big ideas" and "great ideas" to describe the grant round.

All but one of the recipients came from institutions with ties to members of the agency's governing board. About 90 percent of the $1.9 billion the agency has awarded has gone to institutions with links to board members, who, however, are not permitted to vote on grants to their institutions.

Randy Mills, president of the California Institute for Regenerative Medicine (CIRM), as the Oakland-based agency is formally known, said in a news release,

“This is a program supporting early stage ideas that have the potential to be ground breaking. We asked scientists to pitch us their best new ideas, things they want to test but that are hard to get funding for. We know not all of these will pan out, but those that do succeed have the potential to advance our understanding of stem cells and hopefully lead to treatments in the future.”

Here are three examples of the type of work involved. Alysson Muotri at UC San Diego plans to examine treatments for inflammation of the brain, which is an important component of such afflictions as Alzheimer’s, autism, Parkinson’s, lupus and multiple sclerosis. Stanley Carmichael at UCLA wants to see if reprogrammed adult stem cells can help repair damage caused by strokes. Holger Willenbring at UC San Francisco is looking at creation of mini livers with stem cells to help patients waiting for liver transplants.

A "Chicken in Every Pot" -- Stem Cells and the Latest Warnings About Hype

Let's face it, folks, without some hype, California's $3 billion stem cell research effort would not exist.

That's because it is a creature of a popular vote in 2004, and the Golden State's voters needed to be persuaded to pony up their billions for something that they were told would pay off and pay off relatively quickly.

Old news, right? But not entirely. Last week the world's foremost stem cell research organization, the International Society for Stem Cell Research (ISSCR), issued stern warnings about "communications" involving stem cell research. "Circumspect and restrained" were the watchwords from the more than 4,000-member group. Seek "timely corrections" of misleading information in the media, the world's stem cell researchers were told, among other things.

All of which is interesting coming from the ISSCR, which loaned its considerable clout in 2004 to the $36 million effort to convince Californians to create the state's stem cell agency with billions borrowed by the state. The effort was also endorsed by a host of individual, top researchers. The campaign is widely regarded as over-promising results on an unrealistic timetable. (See here and here.)

That said, electoral campaigns are not science. Think about promises of a "chicken in every pot," and you will have a good idea of what needs to be said to win an election. And there's the rub.

To generate cash from citizens, it is necessary to create some excitement. Otherwise, it is ho-hum time. One Canadian writer, Kelly Crowe, put it this way in a piece on the public relations guidelines from the ISSCR,

"Would you read a story if this was the headline: 'New study raises questions about an experimental treatment that might not work and won't be ready for a long time.'"

Beyond public perceptions, there is the small matter of stimulating business interest in turning stem cell research into cures, the mission of the California stem cell agency. Businesses are often portrayed as daring innovators bringing fresh, exciting stuff to all of our homes. The reality is that businesses are more often timid, unwilling to take risks that might affect their financial well-being.

So they too must be shown the stem cell light by the agency and its backers so that industry will cough up the considerable cash necessary to bring a stem cell therapy to market and fulfill the promises made to voters 12 years ago.

Just how far should stem cell advocates go in promoting their cause? The ISSCR has its new guidelines. Others may disagree. One person's hype is another person's honest belief. It is unlikely that the ISSCR guidelines will settle the questions.

Little doubt exists that stem cell hype is rampant, some of it from the scientific community and some from enterprises offering untested procedures and treatments. The hype has a natural audience. The public tends to want to believe in scientific and medical miracles, and stem cells smack of miracles.

Randy Mills, the president of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, regularly brings the facts of "risk" to his dealings at the agency. It is one of his finer innovations.

Last year, his plan for the agency's next five years contained three pages of "risks," including inadequate health benefits, foot-dragging by the federal regulators and safety issues.

Mills exudes excitement for stem cell research and its potential, but at the same time he has a keen eye for the obstacles. It could be called realism. Unless you see the obstacles, you cannot hurdle them. Nor can the public be expected to be patient if it is oversold and under-delivered. 

(A final note: Kelly Crowe's piece is a dandy and involves much more than stem cell research. The headline: "It's not just stem cell research that's overhyped— medical science spin is a widespread problem.")

Big Pharma's $100 Million Spending Plan for the Golden State

Big Pharma is going to be spending $100 million in California this year for a special effort, but none of the cash will be going for stem cells or, for that matter, any research purpose whatsoever.

The target of the spending is a ballot measure, the same sort of initiative that created the California stem cell agency. In this case, however, the proposal on the November ballot would limit prices that state agencies can spend for prescription drugs.

Writing in the Los Angeles Times this weekend, columnist Michael Hiltzik explored a bit of the ins and outs of the measure, He said,

"The so-called California Drug Price Relief Act would cap the price any state agency or healthcare program could spend on prescription drugs at the level paid by the U.S. Dept. of Veterans Affairs, which customarily receives the largest discounts of any government agency. Turning the VA’s prices into a benchmark for California could cost Big Pharma billions of dollars a year in profits, especially if the discounts were later demanded by other states or even private insurers."

Hiltzik reported that as of April 29, the opposition to the measure has amassed $68 million -- six months before the election. He said that experts estimate that at least $100 million will be spent to defeat the proposal. That could make the campaign among the most expensive in California history.

Fueling the debate are the skyrocketing prices of some drugs. The issue has surfaced in the presidential campaigns with both Donald Trump and Hillary Clinton taking on the drug industry. Trump even talked about squeezing "$300 billion" out of Big Pharma. All of which means that the California battle is likely to attract considerable national attention.

Meanwhile the hooha has helped to dampen the outlook for the industry this year, which does not necessarily bode well for some of California's ambitious plans to push stem cell therapies into the marketplace. Expectations of lower revenues may well suppress industry's enthusiasm for such things as the stem cell agency's proposal to create a $150-million, public-private stem cell "powerhouse."

California's Latest, $4 Million Effort to Transform Human Stem Cell Research

The California stem cell agency's "great ideas" program is set to give away $4 million next week to 18 researchers to help them pursue fledgling pathways to a new therapy or cures for stroke, bladder injury, eye problems, Parkinson's disease and more.

In its solicitation for applications, the agency said the seed funding was aimed at supporting "exploration of transformational ideas that hold the potential to greatly impact the field of human
stem cell research." The expectation is that these awards will provide more information that will help generate more funding to carry the efforts forward.

"Great ideas" is how Gil Sambrano, the agency's director of portfolio and review, described the round in a slide prepared for the meeting of the governing board of the agency next Thursday. Board approval of the positive recommendations by the reviewers is routine. At that point, the agency will identify the winners but not the unsuccessful applicants.

The field of applicants began at 101 earlier this year and was winnowed down to 60 before the final 18 were selected.

Approval of the applications was performed behind closed doors by the agency's blue-ribbon, out-of-state reviewers. The identities of reviewers in a specific round are not disclosed nor are their professional and economic interests.

None of the awards exceeds $238,000. Researchers will receive only a maximum of $150,000 for "direct costs." The excess goes to the institution or business involved for a variety of overhead costs. Duration of the awards varies.

Here is a link to summaries of the scientific reviews of the applications, including comments scores on both winning and losing applicants.

Rise and Fall of California's Onetime Biotech Guru Steve Burrill

Two years ago, the investment empire of California biotech maven Steve Burrill was crumbling amidst allegations of fraud and mismanagement.

Steve Burrill

Today Burrill has all but vanished from the San Francisco scene that he once dominated. He has agreed to repay nearly $5 million and pay a $1 million penalty. He has been barred by the Securities and Exchange Commission from the securities industry.

All that and more was covered by Thomas Lee of the San Francisco Chronicle in a piece Sunday about Burrill, named in 2002 as one of the world's top visionaries by Scientific American. Lee's article  ran on the front page of the California newspaper's business section.

According to the SEC, Burrill misused company funds for such things as charitable contributions, gifts for his wife and girlfriend, trips to Europe, jewelry and private jets.

Andrew Ceresney, director of the SEC’s Enforcement Division. said in a March 30 press release,

“Burrill spent his fund’s capital on whatever he pleased, and elevated his own interests above those of investors.”

Burrill was once a sought-after speaker at such events as the national BIO conference, which draws upwards of 16,000 attendees. In 2006, wearing his trademark pink ties, he presided over an international stem cell conference in San Francisco that was a bit of a celebration of California's new stem cell agency.

Lee brought to his story a fresh perspective from Minnesota, where Burrill promoted a $1 billion biotech park in a rural elk farm that involved a Woodland, Ca., real estate firm, Tower Investments.

Lee, who wrote about the proposal as a reporter in Minnesota, said that Burrill "personified the idea that (Minnesotans), too, could create an economic miracle out of nothing." Lee continued,

"Burrill did not respond to a request for comment left through his attorney or messages sent to him through LinkedIn. Public records do not list a current address or phone number. The office in the Presidio of San Francisco listed on his website is vacant, with his name off the building directory and the space up for lease. No one seems to know his current whereabouts."

'Paying for Miracles:' the Vatican and California's Stem Cell Research Program

California's $3 billion stem cell program owes its life to human embryonic stem cells. The state's research effort was created in 2004 to finance scientific inquiries involving such cells, long a matter a major controversy and banned at the time from federal funding by then President Bush.

Last week, Randy Mills, the president of the California agency, took part in a conference at the Vatican, which is adamantly opposed to hESC research as "gravely immoral" because it involves the destruction of embryos.

UC Davis stem cell researcher Paul Knoepfler wrote about the appearance on his Niche blog. He quoted Mills as saying,

“We are committed to accomplishing our mission of accelerating stem cell treatments to patients with unmet medical needs. We are encouraged that the Vatican is taking a leadership role by bringing together an outstanding collection of voices from the stem cell community to try to find common solutions to some very real problems. We are honored to participate.”

The California stem cell agency's position on adult stem cells has evolved over the years. In 2008, the agency fought an effort (see here and here) in the California legislature to make it easier for the agency to support adult stem cell research. The agency opposed the measure with Bob Klein, then chairman of the agency, indicating the move was attempt to sabotage the research program.

In 2010, an academic study showed that through 2009 only 18 percent of California's dollars went for grants that were "clearly" not eligible for federal funding under the Bush restrictions. In 2013, the agency's web site showed that that about 240 of the 595 awards that it had handed out went for hESC research. At the time, such funding amounted to $458 million out of the $1.8 billion it had awarded.

Updates to the 2013 figures could not be found on the agency's web site as of this writing. We are querying the agency for fresh figures.

The Vatican conference last week involved theology as well as science. The topic of Mills' panel, however, was "a look at who is paying for miracles."

Mills also often says he is "agnostic" about the sorts of cells to be used to develop therapies. But "agnostic" is probably not a word that he used last week at the Vatican.

California Stem Cell Report Dark This Week

Since the publisher of this report is making a passage aboard the sailing vessel Hopalong this week along the west coast of Mexico, don't expect any fresh items. Postings will resume next week.

California Stem Cell Research and a Super Doc: Inside a $4.4 Million Windpipe Grant at UC Davis

Paolo Macchiarini, Guardian photo 

Headlines around the world once hailed Paolo Macchiarini as a super-surgeon, a stem cell trailblazer who was responsible for the ground-breaking, first-ever stem cell-based trachea transplant.

It was good enough work, indeed, to be cited in 2013 as a starting point in a pitch by a team from the University of California, Davis, for $13 million from the $3 billion California stem cell agency. 

In their application, scientists Peter Balafsky and Alice Tarantal said they would build on the "first-in-human surgical successes with (the) stem cell-based tissue engineered airway implants" pioneered by Macchiarini

Last month, Macchiarini was fired from the prestigious Swedish Karolinska Institute. Six of eight of his patients have died. The institute said,

 "He has acted in a way that has had very tragic consequences for the people affected and their families."

The controversy has stirred up the international stem cell community with blog postings and sharp accusations. And in January, Vanity Fair carried an article that reported Macchiarini falsely claimed he was part of a “highly classified group of doctors from around the world who cater to the world’s VIPs,”including Pope Francis, Bill and Hillary Clinton, Emperor Akihito of Japan and President Obama.

The Italian doctor has denied the charges that led to his dismissal in Sweden and has been working in Russia.

The Macchiarini saga and its California connections offer a peek into the global nature of stem cell research and how scientists must rely on the integrity of others thousands of miles away --  as well as  the sometimes agonizingly slow search for cures. It also provides a deeper look at how the California stem cell agency goes about handing out money.

The California Stem Cell Report queried both Balafsky and Tarantal about their grant along with the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known.  

Kevin McCormack, senior director of communications, replied for CIRM. Asked whether the agency looked into the research by Belafsky as a result of the questions raised about Macchiarini, McCormack said,

"As with all the research we fund we have been carefully following the progress of Professor Belafsky’s project ensuring it continues to meet our rules and regulations."

Peter Belafsky, UCD photo

Belafsky, professor and director of the Voice and Swallowing Center at UC Davis, and Tarantal, professor in the Department of Pediatrics and Department of Cell Biology and Human Anatomy, said Macchiarini is not involved in the CIRM project. The point was stressed in boldface letters in their email response:

"Dr. Macchiarini has had no involvement in this project on any level, in any way, at any time."

(For the full text of the response, see here.)

Macchiarini was not always isolated from UC Davis and Belafsky. Macchiarini served on Belafsky's international team in 2010 when the Belafsky group performed the second-ever larynx transplant. The operation restored the voice of a Modesto, Ca., woman who had been unable to speak for a decade. 

UC Davis issued a press release saying Macchiarini served as an advisor and assisted in the surgery. The statement also said that Martin Birchall of the United Kingdom, a co-leader with Macchiarini on his ground-breaking 2008 transplant surgery, served as a scientific advisor and assisted with the California larynx surgery.

Birchall was identified as a collaborator on the CIRM grant that was approved for Belafsky and Tarantal.  A press release from University College London said that the work in Davis would serve as a "fundamental under-pinning" for two clinical trials in the United Kingdom.

Birchall received a $19,800 planning grant in 2011 to prepare an application for research that appears to be aligned with the current work at UC Davis. Birchall was listed by CIRM at the time as a researcher at the California campus.

Belafsky and Tarantal told the California Stem Cell Report that Birchall is no longer involved with their work. They said,

"Dr. Birchall was involved in our project at the onset, but due to the logistical difficulties of intercontinental collaboration, is not currently an active participant."

The Belafsky/Tarantal application originally sought $13.3 million. It was trimmed to $4.4 million on the recommendation of the agency's then president, Alan Trounson, who apparently agreed with reviewers that the initial scope and budget were high, but still recommended funding.

The application was given a score of 70 on a scale of 100 by agency's blue-ribbon scientific reviewers, all of whom came from out-of-state. As is their usual practice, the reviewers met behind closed doors and voted on the application. The action then went to the CIRM governing board, which has almost never rejected a favorable decision by its reviewers, whose economic and professional interests are not disclosed publicly.

The score of 70 placed the proposal just below the cutoff line of 75 for routine approval by the board, but the reviewers did not nix application.

The agency publishes a summary of reviewer comments, which does not identify applicants or their collaborators. The summary on the UC Davis application said the research "presents a unique opportunity to bring a world-leading regenerative medicine technology to California." The summary additionally said, without elaboration, "It was also noted that this project is unlikely to be funded by other agencies."

The summary said,

"Reviewers agreed that having already treated human patients (such as those involved with Macchiarini) using this approach is strong proof of concept(for Belafsky's work)."

Reviewers noted that "manufacturing and testing methods were not well described" but "the UK-based collaborators (Barchall and his group) will clearly play an important role in helping to establish the manufacturing process."

The summary added,

"Reviewers were unclear on the relationship between the California- and UK-based team members and whether the relationship and efforts were collaborative or duplicative."

Belafsky appeared before CIRM directors in Los Angeles in December 2013 to ask them to approve his research, saying good treatments for "complex breathing and swallowing problems" do not exist. With little debate, the board voted 8-0 to approve the award.

CIRM's McCormack said that the agency has paid out $3.3 million of the $4.4 million grant. He said, 

"Dr. Macchiarini has never been a part of the UC Davis project or any work that CIRM has funded.... The primary aim of the CIRM project is to determine the scientific reproducibility of research results from previously published studies regarding tissue-engineering for severe airway stenosis. The results are pending."

Belafsky said in his email,

"The translation of high-risk, complex innovation from the laboratory to suffering patient is not an easy road. The controversy surrounding Macchiarini has resulted in the redoubling of our efforts to explore the science behind what saves lives and what does not. This step is essential in order to lay a firm, evidence-based foundation upon which to build.

"Since your primary focus relates to the work of Macchiarini, I would like to re-emphasize that our project is fundamentally different. Our research is focusing on decellularized trachea only, whereas he has utilized synthetic grafts."

Belafsky continued,

"This is a work in progress, and we do not yet have the data to answer all the questions raised by the scientific community. We may apply to CIRM for funds to continue our research, but will not consider human implantation until we are satisfied that the science is sound and the technology is safe."

Text of Belafsky-Tarantal Reponse

Here is the text of the response from scientists Peter Belafsky and Alice Tarantal of UC Davis concerning questions asked by the California Stem Cell Report. The questions first and then the response.

The questions

"Has Macchiarini been involved in any way, including informal consultation or contact, with your CIRM award? If so, please describe the nature of that contact.

"What is the nature of the collaboration with Birchall?

"Have the disclosures concerning Macchiarini altered your direction or delayed your CIRM research?

"Has UCD inquired concerning your CIRM research in the wake of the Macchiarini disclosures? If so, what is the status of that inquiry?

"What is the current status of your research? The CIRM progress report on its web site appears to be old, and you are nearing the final stages of the term of the award.

"Do you plan to apply to CIRM to advance your research into a clinical trial?

"Is there anything else that would be useful for the public to know?"

The response

"Hi, David.

"I appreciate your inquiry and dedication to advancing regenerative medicine. I am a head and neck surgeon specializing in the care of patients with complex airway collapse. In June of 2008 an international team performed what was then considered to be the world’s first tissue-engineered organ transplant to help save a suffocating mother who was failed by contemporary medicine. The team took a donor trachea stripped of innate cells, implanted it with autologous stem cells, and transplanted it into her failing windpipe. The operation was a success, and the patient is alive and well. Based on this achievement, similar technology was used in 2010 to save the life of a 10 year-old boy; he is now a thriving 15 year-old.

"Since the initial success with decellularized/re-cellularized human donor trachea, work on synthetic trachea implanted with autologous stem cells has not shown equal promise, and people have died. We have had no involvement in these procedures or investigations.

"An article published in 2013, by Gretchen Vogel (Science. 2013 Apr 19;340(6130):266-8), questioned the success of this work and urged caution before moving the science forward. She and others, our team included, have suggested that more research is required to determine the fate of the cells and the long-term viability of the grafts before making the implants widely available to patients. Our team at UC Davis is uniquely qualified to address these questions and we coordinated the CIRM proposal to fund the research to critically evaluate the donor trachea method. Our university’s support in this endeavor has not wavered.

"The ultimate goal of our work is to provide better treatment options for people with life-threatening airway stenosis. The primary aim of our CIRM grant is to take a step back and understand what happens with the grafts in the lab before initiating operations in people. This is a work in progress, and we do not yet have the data to answer all the questions raised by the scientific community. We may apply to CIRM for funds to continue our research, but will not consider human implantation until we are satisfied that the science is sound and the technology is safe.

"To answer your questions, Dr. Birchall was involved in our project at the onset, but due to the logistical difficulties of intercontinental collaboration, is not currently an active participant. Dr. Macchiarini has had no involvement in this project on any level, in any way, at any time. (Belafsky's boldface italics)

"The translation of high-risk, complex innovation from the laboratory to suffering patient is not an easy road. The controversy surrounding Macchiarini has resulted in the redoubling of our efforts to explore the science behind what saves lives and what does not. This step is essential in order to lay a firm, evidence-based foundation upon which to build.

"Since your primary focus relates to the work of Macchiarini, I would like to re-emphasize that our project is fundamentally different.  Our research is focusing on decellularized trachea only, whereas he has utilized synthetic grafts.

"Warm regards,

"Peter Belafsky, MD, PhD

"University of California, Davis"

The California Stem Cell Effort -- $3 Billion, $6 Billion or $9 Billion?

Many persons know that the true cost of California's stem cell research effort runs closer to $6 billion rather than the $3 billion figure normally bandied about.

What if the cost were boosted to about $9 billion because of wasted research that cannot be replicated?

That's a question that comes up as the result of a piece yesterday on Slate, an online news site. The headline on the article by award-winning science writer Daniel Engber said,

"There's a replication crisis in biomedicine -- and no one even knows how deep it runs."

The Slate piece cited a $28 billion figure nationally for the amount of preclinical, biomedical research that cannot be reproduced and thus represents money wasted. The estimate was produced last June by two economists. They analyzed previous studies to come up with the dollar figure, calculating that 50 percent of the research they examined could not be replicated.

Engber's article also dealt with work by the Reproducibility Project for Cancer Biology.  He wrote,

"For some experiments, the original materials could not be shared, red tape notwithstanding, because they were simply gone or corrupted in some way. That meant the replicating labs would have to recreate the materials themselves—an arduous undertaking. (Elizabeth) Iorns (a member of the project team) said one experiment

Elizabeth Iorns, Science Exchange photo

called for the creation of a quadruple-transgenic mouse, i.e. one with its genome modified in four specific ways. 'It would take literally years and years to produce them,' she said. 'We decided that it was not going to happen.'

"Then there’s the fact that the heads of many labs have little sense of how, exactly, their own experiments were carried out. In many cases, a graduate student or post-doc did most of the work, and then moved on to another institution. To reconstruct the research, then, someone had to excavate and analyze the former student or post-doc’s notes—a frustrating, time-consuming task. 'A lot of time we don’t know what reagents the original lab used,' said Tim Errington, the project’s manager, 'and the original lab doesn’t know, either.'"

The increasing attention to the replication problem has definite implications for the California's stem cell research effort, which has had difficulty getting industry to pick up its research and move it into widespread use. 

The agency, formally known as the California Institute for Regenerative Medicine(CIRM), has embarked on a unique, $150 million effort to entice industry into advancing the Golden State findings. One of the agency's lures will allow its business partner to cherry pick the agency's research and lock up its selections for commercial use. 

But if 50 percent of CIRM's research can't be replicated, the agency may not be actually offering very much. 

As for CIRM's costs, it survives only on money that the state borrows (bonds). The $3 billion it will disperse carries interest costs that make the total bill roughly $6 billion, not counting non-replication waste. CIRM is slated to run out of cash in about four years. 

Seventy-eight comments have been filed on the Slate story, which is part of a collaboration called Future Tense that involves Arizona State University, New America and Slate. Tomorrow Future Tense will hold an event in Washington, D.C., on the reproducibility crisis in biomedicine.  The conference is called "Trust But Verify." Here is a link to the agenda. 

Correction

The egg compensation item on April 18, 2016, incorrectly said that Gov. Jerry Brown vetoed a similar bill last year. He actually vetoed the bill in 2013.

Pay-for-Eggs Legislation Up Again in California: Fertility Industry Trying to Repeal Ban on Compensation for Human Eggs in Research

The industry that deals in human eggs is once again pushing forward with California legislation to allow it to pay women thousands of dollars to harvest their eggs for research purposes.

The measure (AB2531) by Assemblywoman Autumn Burke, D-Inglewood, is now on the Assembly floor after clearing the Assembly Health Committee on a 17-0 vote. (See the March 31 legislative analysis of the measure here.)

The bill is essentially the same as the one vetoed by Gov. Jerry Brown in 2013. It is not clear whether the current author of the measure has been successful in removing Brown’s opposition.

The legislation is sponsored by American Society for Reproductive Medicine, the dominant trade group in the largely unregulated fertility industry.

When she introduced her bill in February, Burke said in a press release,

Autumn Burke on Assembly floor
Sacramento Bee photo

"It's perfectly legal for a woman to get paid when advertising through Craigslist to provide eggs for infertile couples, but she can't get paid for a donation in medical research. It's insulting to women, and it keeps California's research institutions in the dark ages. Instead of leading the way on women's health, we're stuck behind 47 other states all because of a misguided ban that assumes women shouldn't be allowed to make their own decisions."

Burke and the industry organization have an array of groups backing the legislation, ranging from California's district nine of  the American Congress of Obstetricians and Gynecologists to California Cryobank.

The bill is opposed by the Center for Genetics and Society in Berkeley along with groups ranging from the Catholic church to "We Are Egg Donors."

Marcy Darnovsky, NBC photo

Earlier this month, Marcy Darnovsky, executive director of the Center for Genetics and Society, wrote:

"The health risks of egg harvesting are significant, but they’re woefully under-studied. A well-known and fairly common short-term problem is ovarian hyper-stimulation syndrome (OHSS), but no one is sure how many women get the serious – sometimes life-threatening – version of it. Data on long-term outcomes, including follow-up studies on reports of cancers and infertility in egg providers, are notoriously inadequate.

"It is impossible for women to give truly informed consent if adequate health and safety information can’t be provided.

"Offering large sums of money encourages women in need to gamble with their health. It’s what bioethicists call 'undue inducement.'"

California's $3 billion stem cell agency bans compensation for women who provide eggs for research that the agency finances but it does allow reimbursement of expenses. The legislation would repeal a state law banning compensation.

(Editor's note: The original version of this story said that Brown vetoed an egg compensation bill last year instead of 2013.)

CRISPR and Anti-HESC Updates from UC Davis Researcher

UC Davis stem cell scientist and blogger Paul Knoepfler has been busy this week, posting updates on CRISPR and two persons who have been behind the drive against the research use of human emrbryonic stem cells.

First, the information about the embryonic stem cell opponents, James Sherley and Theresa Deisher.

Sherley is running Asymmetrex, Inc., an adult stem cell firm in Boston. Knoepfler reported,

"I haven’t really seen Sherley out there in the public domain as an activist that much ever since the ES cell court ruling."

The negative ruling came in a federal court case challenging federal financing of human embryonic stem cell research.

Knoepfler cited a piece in Mother Jones magazine for his description of continuing activism on the part of Deisher. She was involved in the secretly recorded video tapes of Planned Parenthood officials. Among others, employees of Stem Express of Placerville, Ca., were also taped without their permission, and the California Department of Justice is investigating whether state laws were broken.

On the CRISPR front, Knoepfler has a series of links to good articles on the ongoing discussion involving the genetic modification technique. The debate continues unabated, although not in the mainstream media.

California's $3 billion stem cell agency held a daylong session on the matter some months ago. The agency is scheduled to take another look at it, but no date has been announced yet.

Speak Up! California Stem Cell Agency Open for Comments Next Tuesday

Directors of the $3 billion California stem cell agency are scheduled to meet next Tuesday with many teleconference locations throughout the state, providing members of the public an ample opportunity to speak to the agency's governing board on any issue of concern.

The session is scheduled for only one hour and is expected to involve routine approval of changes in the agency's loan policy. So interested parties who want to be heard should not be laggard in being present. State law allows the public to speak on any issue at a meeting, not just items on the agenda.

Teleconference locations are in San Francisco, San Diego, Davis, Pasadena, South San Francisco,  Beverly Hills, Elk Grove, Fresno and two each in La Jolla, Los Angeles and San Francisco. The meeting will be home-based at the agency's headquarters in Oakland.

More detailed addresses can be found on the agenda.

Growing Human Organs in Pigs? Time for California to Step Up?

Looking for a new heart? Need a new kidney? How about a pancreas?

All of those priceless human organs are in short supply. And a Stanford law professor says it is time to get moving on developing more of them.

In an opinion piece last week in the Los Angeles Times, Hank Greely said,

Hank Greely

"Today we face the possibility of babies getting organs grown in human/nonhuman chimeras — beasts that are pigs except for a single human organ. To the uninitiated, this may sound more like the dark arts than modern medicine, but pursuing careful research and potential clinical use of these chimeras is both proper and important.

"Every day about 30 Americans die because they can't get an organ transplant. Upward of 120,000 Americans are on transplant waiting lists. We are, medically, on the cusp of being able to save these lives in new ways: repairing failing organs with new genes or stem cells, building mechanical organs and growing replacement organs."

Greely pointed to a researcher at the Salk Institute in La Jolla, Juan Carlos Izpisua Belmonte. Greely said the scientist wants to "to grow a human pancreas in a pig to provide insulin-making cells for transplant into diabetics." Greely wrote,

"His research into how this can be accomplished is exciting but very early, yet even those preliminary steps have been threatened by a surprise moratorium announced last fall by the National Institutes of Health. NIH said it would not fund any research that involved putting human stem cells into earliest-stage nonhuman embryos. NIH said this wasn't a ban, but just a pause to consider the implications of such research and possibly to create a policy for it."

Greely did not mention it, but such research could be financed by California's $3 billion stem cell agency. In response to a question, Kevin McCormack, senior communications director for the agency, said,

"On a purely theoretical level CIRM has no objection to growing replacement organs or tissues in pigs, provided it met all CIRM’s rules and regulations. We fund research that does that all the time with mice and rats. Right now none of the research we fund is being used to do that."

The Salk scientist has already received $6.6 million in awards from the agency, but none of it involves growing people organs in pigs.

Greely noted that both California and the nation have an effective system for regulating such research and that the NIH should not be sitting on its hands. He said,

"That's no guarantee that human organs will grow in pigs, but we won't find out if Belmonte and others can't try."

Financial Terms Approved Today for California's $150 Million, Stem Cell Powerhouse.

Highlights
Likely a major legacy
$75 million loan, 50 percent to be repaid
Convertible notes could sold by CIRM
Changes in application review?

Directors of California's stem cell agency this morning approved financing terms for a proposed, $150 million, public-private company that the agency hopes will accelerate the creation of long-sought stem cell therapies.

The plan to create a stem cell "powerhouse" is likely to be one of the landmark legacies of the state's $3 billion research effort -- for better or worse. Such a partnership would be unique in California history and nationally.

The agency has yet to produce the cures promised to voters in 2004 when they created the research effort and provided the billions in bond funding. Total costs, including interest, will run about $6 billion..

Today's action set the terms for the $75 million in a loan that the agency -- formally known as the California Institute for Regenerative Medicine (CIRM) -- would hand out. The funds would go to a private partner that would also put up $75 million.

A joint committee of the directors approved the terms, with virtually no discussion, on an 8-0 vote during a meeting that lasted only 10 minutes.

The aim of the agency is to "de-risk" development of therapies in order to entice a well-financed and well-managed partner to take CIRM research into the marketplace and make it widely available to the public. The partner would be expected to pay back only 50 percent of the loan plus interest. The new company would also have the pick of the 94 percent of CIRM research that doesn't already have a business partner.

The agency plans to provide the $75 million in three different notes. CIRM would then be able to sell the notes to another investor at time when it would appear to be most profitable. Or the agency could simply hold onto the loans.

The loans would be convertible to stock in the company, although state agencies cannot legally own such stock. However, a possible buyer for the notes might see an opportunity for profit and would be willing to pay the agency more than the value of the loan.

If the company is successful, it could generate royalties to the state's general fund under the provisions of CIRM's rules. Cash from the sale of the loans, however, would go directly to CIRM. The agency has not yet earned any royalties from the research it has funded.

Directors of the agency approved the concept for the new company -- minus today's finance terms -- at a meeting in December. Maria Millan, senior director for medical affairs, told them that the goal is "to create a therapeutic powerhouse that increases the likelihood of getting stem cell therapeutics to the patients."

Today's action set the stage for final preparation of a request for interested parties to apply for the $75 million for what it calls ATP3 (short for Accelerating Therapeutics through Public-Private Partnerships). CIRM has said the partner could be an existing company, a new one or some sort of combination. The agency said it consulted with companies, lawyers and venture capitalists to prepare the financing terms.

Under the current timetable, the application request would be posted in the third quarter of this year, according to Kevin McCormack, senior director for CIRM communications. The proposals would be reviewed the agency's grant reviewers behind closed doors during the first quarter of next year. In nearly all cases over the last 11 years, favorable decisions by the reviewers are routinely ratified by CIRM directors. The directors are expected to take their formal vote in early summer of 2017.

The blue ribbon reviewers come from out-of-state. The identities of reviewers on specific applications are withheld by the agency. Their professional and economic interests are not publicly disclosed, although agency asks for the information and asks the reviewers to recuse themselves if they (the reviewers) see a conflict.

CIRM Director Steve Juelsgaard, former executive vice president of Genentech, said the award is more about business than science and needs reviewers who understand what makes a business successful. CIRM officials said they would brief the joint committee on review procedures for the award when they are more developed.

McCormack confirmed to the California Stem Cell Report that proposal is unique. He said,

"CIRM diligently scoured the landscape for inspiration for its ATP3 model. This effort confirmed that ATP3 is a novel response to a unique set of challenges not commonly encountered in CIRM’s field. A given component of the program may be inspired by one example or another, but the design of ATP3 as a whole is custom tailored to CIRM’s environment."

McCormack also said that the state governor's, treasurer's and controller's offices have all been briefed on the plan. However, under the ballot initiative that created the agency, no state officials, including the legislature, have legal control of the agency policies or research funding.

Here are links to the presentation today, a CIRM staff memo on the loan terms and the term sheet. Here is a look at the risk-benefit analysis by CIRM, and a look at how the intellectual and royalty rights would work. Other background can be found here and here.