Potential Death of California Stem Cell Program Hangs Over Its Performance Evaluation

The looming demise of California's $3 billion stem cell research effort dominated today's meeting of its governing board, which was told both that the agency has made "incredible progress" but needed to do better.

The occasion was the presentation of a $230,000 performance audit required by state law, a task performed by the firm of Moss Adams, one of the largest accounting and consulting firms in the world.

The firm's 38-page report targeted fund-raising, retention of staff and better utilization of board members in its recommendations for improvement and called for a more concrete plan for raising more than $200 million. Excerpts from the report can be found here and an earlier story on the audit findings here.

In its oral presentation, Moss Adams representatives had a number of good things to say about the stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM). They cited the agency's "incredible progress" and said "we usually see a lot of good things here."

It was the third go-around for Moss Adams, which has performed all three of the CIRM performance audits. (See this for links to the previous audits.) Today's presentation, however, focused more on the issues surrounding the agency's end within a few years, unless ambitious fundraising plans are successful.

The agency expects to run out of cash for new awards next year unless it is successful at raising $200 million from private contributors. That would take care of the agency's needs until a possible $5 billion bond measure might be approved by California voters in 2020.

One board member, Jeff Sheehy, also a member of the San Francisco board of supervisors, raised a number of critical questions, seeking more details about the fund-raising effort. He said there seemed to be a "lot of uncertainty" about it.

Jonathan Thomas, chairman of the agency, said a fund-raising plan is in place. He is leading the effort and being assisted by two other employees. He said some board members have been engaged and he plans to consult with all 29 board members.

David Higgins, a board member from San Diego, asked Thomas about a "double-edged sword" that could come into play because of a successful fund-raising effort. Higgins said the public might be more likely to oppose to a new bond measure if the $200 million is raised, reasoning that public funding was not needed in light of private support. Thomas said he did not think that was a major problem.

The Good and the Not-So-Good: Excerpts From an Evaluation of the California Stem Cell Agency

The latest performance audit of California's $3 billion stem cell agency reports both pluses and minuses on the agency's work. Here are some excerpts from the $230,000 study, the third such audit of the California Institute for Regenerative Medicine (CIRM).

"CIRM has a collaborative, engaged, and performance-oriented culture. Managers, Board members, and staff report improved morale and a more collaborative culture since CIRM 2.0 implementation. CIRM appointed a new president in 2014 and again in 2016. Turnover is often elevated during times of leadership transitions, as noted in 2014 and 2015. However, CIRM’s turnover rate dropped to 10 percent in 2016, suggesting stability in the organization’s leadership and culture."

"CIRM’s uncertain future funding results in employee concerns related to job security. These concerns can, in turn, translate into poor employee morale and reduced organizational productivity. Employees facing potential layoffs often experience elevated stress and anxiety that can become evident in their day-to-day interactions with colleagues and grantees. Because individual employee performance and team performance impact overall organizational performance, declining employee morale can negatively impact CIRM’s ability to efficiently and effectively achieve its mission."

"CIRM’s strategic plan emphasized that CIRM is patient-centered. As such, CIRM has increased its stakeholder engagement, particularly with patient advocates. The agency hosts patient events and trainings across the State of California and has at least 1,000 patient advocates registered. Additionally, CIRM’s Science Officers now proactively search for viable projects, helping engage researchers and increase the quality of proposed grants." 

"As CIRM’s Proposition 71 funding is exhausted, the role of the Communications Department should be elevated to serve a strategic function in educating the public. It is imperative that members of the public are aware of and understand CIRM’s activities and impact while CIRM remains fact-based and objective about its role as a state agency. To achieve this, CIRM should establish metrics focused on external communication and public awareness. Examples of these metrics include: Number of posts on social media accounts, number of press mentions, follower growth on social media accounts, number of 'likes' or 'shares' on social media accounts, growth in website visitors, citations of CIRM-funded research in publications These metrics provide insight on the organization’s communications output, reach, and engagement with audiences beyond patient advocates."

"With the implementation of CIRM 2.0, the organization improved many of its processes to be more efficient and effective. Examples of key process improvements include: ... Establishing “The Wall” by developing a policy clarifying the roles and responsibilities of CIRM employees within and outside the grant review process to ensure it remains fair and impartial.  Streamlined the review summary process by reducing the time to summarize grant applications from six weeks to approximately three weeks.  Reduced grant processing time by reducing the time required to process grants from 22 months to 120 days.  Incorporated milestone-based payments in contracts by shifting the responsibility for project progress to grantees and ultimately holding them responsible for achieving research objectives."

"The ICOC is a large, statewide governing board, with 29 members located across California. There are inherent challenges to this structure: Geography limits the ability of some members to participate in Agenda Item #8 ICOC Meeting March 13th, 2018 California Institute for Regenerative Medicine FY 2016-2017 Performance Audit  17 person and interface with CIRM staff; individuals on a large board may feel less personally responsible and therefore less inclined to participate; and it is difficult for officers and committee chairs to meaningfully build relationships with and identify the best roles for such a large number of members. This is evident in committee participation; while CIRM leverages ICOC expertise through standing and ad-hoc committees, which is a best practice, some members serve on multiple committees while others serve on none. In addition to these challenges, changes to CIRM’s conflict of interest policy in 2013 eliminated the ability of institutional members to participate in grant funding votes. This has limited their overall participation, and several ICOC members reported a reluctance to participate in discussions. Both ICOC members and CIRM staff reported a decline in the engagement of institutional members in all discussions, not just those related to grants."

"In its transition plan, CIRM leadership identified $200 million in additional required funding to continue operating at existing capacity between 2019 and the potential bond measure in 2020. This additional funding would enable the organization to maintain current annual grant awards and staffing levels. Currently, key board members are leading fundraising efforts, which have remained largely confidential. In order to secure this significant amount of funding, additional resources are likely required to demonstrate CIRM’s funding needs, seek donors of varying size and requirements, and provide overall support for fundraising efforts."

"Because the level of funding required to sustain CIRM’s operations is significant, CIRM should develop a formal fundraising plan to identify required resources, activities, and strategies. CIRM’s fundraising plan should identify additional resources and support within the organization required to help potential funders understand the benefit of their investment. For example, the role of the communications team could be expanded to develop fundraising materials that detail CIRM’s goals, plans, and successes as well as funding requirements."

"Transition plans and associated strategies should continue to be deployed as living documents that are continually updated and available to Board members, staff, and external stakeholders. Future iterations should also include organizational structure options during a potential wind-down process. For example, grant funds are currently expected to be exhausted by 2019; grant monitoring, management, clinical trials, and closeout will continue past that date; and intellectual property reporting will be required for 10 years. Eventually, some CIRM activities could be transferred to another state agency. As the transition proceeds, stakeholders and grantees should be made aware of staffing changes to help preserve continuity."

Performance Audit of California Stem Cell Agency: Improvements Needed in $200 Million Fund-Raising Program, Staff Retention and Use of Board Members

A performance audit of California's $3 billion stem cell agency says that more needs to be done to retain the agency's staff as well as exploiting the talents of  board members as the research effort nears what could be its demise.

"There is a significant potential for staff attrition as CIRM plans for a potential wind-down," the $230,000 study by Moss Adams declared. CIRM is the abbreviation for the agency's official name,nthe California Institute for Regenerative Medicine.

The 38-page report also said that expertise of  the 29 board members "could be more effectively leveraged, especially since strong board engagement will be particularly important during organizational transition."

CIRM has estimated it will run out of cash for new awards in 2019 unless ambitious fund-raising plans are successful.  Its ultimate hope is that California voters will approve another multi-billion dollar bond measure in November 2020. To bridge the financial gap between 2019 and the end of 2020, the agency is seeking to raise more than $200 million.

Loss of employees has long been a concern of the agency as it confronts the expiration of the bond funding provided by the ballot initiative that created the program in 2004.

The performance audit said the agency should be "building on efforts to date, continue to regularly communicate transition plans to staff and consider strategies to retain employees, including implementing staff development programs, recognition and reward opportunities, work-life balance initiatives, and cross-functional initiatives."

Beyond its recommendations, the audit had praise for the agency. One example involved its "culture." The report said,

"CIRM has a collaborative, engaged, and performance-oriented culture. Managers, board members, and staff report improved morale and a more collaborative culture since CIRM 2.0 implementation. CIRM appointed a new president in 2014 and again in 2016. Turnover is often elevated during times of leadership transitions, as noted in 2014 and 2015. However, CIRM’s turnover rate dropped to 10 percent in 2016, suggesting stability in the organization’s leadership and culture."

Moss Adams, however, also said more can be done. It said the agency should "develop succession plans for the chair and vice chair, document knowledge of individuals serving in leadership roles, and continue to identify potential highly qualified prospective (board) members."

The audit recommended improvements in the agency's fund-raising efforts. It said the agency has not "formalized its ($200 million) fund development plan." The audit recommended creation of "a formal development plan that identifies roles and responsibilities and the timing of fundraising activities to meet CIRM’s programmatic and administrative funding needs."

Moss Adams additionally recommended improvements in measuring the performance of the agency's public relations program. It said,

"CIRM does not have metrics associated with the effectiveness of the agency’s communication and public education strategy. Recommendation: Develop communications and public education metrics that are integrated into CIRM’s quarterly reporting."

The study, which is required by state law, is the third conducted by Moss Adams. It will be discussed at Tuesday's meeting of the agency's board. The agenda for that meeting said the agency will have a response to the audit findings, but that document is not yet available on the CIRM web site.

The audit, which is required by state law, is the agency's third. Links and excerpts from items involving the previous two can be found here. 

Interested parties can participate in the meeting at 16 different locations throughout California. The  locations can be found on the agenda, but more specifics may be necessary for those who want to attend. They can be had by sending an email to info@cirm.ca.gov.

California Stem Cell Performance Audits and More: Public Has 16 Golden Opportunities to Weigh In

Californians throughout the state next week will have what appears to be a record number of opportunities to participate -- albeit remotely -- in one of the more important, regular public meetings involving the $3 billion state stem cell agency.

The occasion is the March 13 meeting of the governing board of what is known formally as the California Institute for Regenerative Medicine or CIRM. The meetings of the CIRM governing board are the single most important public events that the agency holds.

The board has 29 members. Fifteen of those members will be participating remotely in next week's session, which means that the public can participate as well from those locations in addition to the physical site of the meeting at CIRM HQ in Oakland. The remote locations range from Fresno to La Jolla  and from Riverside to Elk Grove.

And if you are in New York City, you can weigh in from there as well. One of the agency directors will be hooked up from the Big Apple.

During the meeting, the board solicits public comment on each item under consideration plus general comments as well.

The top item on the agenda is the triennial performance audit of the agency, which in the past has

Graphic by Shopify

reported checkered but improving results in the last two reports. Conflict of interest issues surfaced in the last audit(see below).  In 2012, the audit, required by state law, identified 27 areas where improvements were needed.

The actual audit for this year has not yet been posted on the CIRM web site but is likely to pop up any day now.  The audit, which is required by state law, cost the agency $230,000, bringing to $694,944 the total that the agency has spent on its three performance audits.

If you are interested in attending at the remote locations, check the addresses in advance. Sometimes not enough specificity is provided. But an email to info@cirm.ca.gov will provide full directions.

Here is a link to the 2017 CIRM request for a proposal to conduct the performance audit.

Below are excerpts and links to previous items on the two earlier performance reports. At the end is a comparison of performance audit findings to results from other studies of the agency.

SUNDAY, MAY 17, 2015

Conflict-of-Interest Failings Reported in Application Reviews at California Stem Cell Agency

Conflict-of-interest issues have dogged the $3 billion California stem cell agency since its inception, and they are surfacing once again this week in a report commissioned by the agency itself.

This time the matter is being brought up by Moss-Adams, LLP, of Seattle, a business consulting firm that is being paid $230,000 by the agency to conduct a "performance audit."

In a report to be discussed at a CIRM governing board meeting on Thursday, the firm said it discovered serious problems dealing with the reporting of the interests of the agency's blue-ribbon reviewers.

TUESDAY, MAY 19, 2015

California Stem Cell Audit: Praise for Mills but More Work Needed on IP, Conflicts of Interest

The California stem cell agency this week received good marks for changes made by its new president, but it is also being told that it needs to improve how it tracks potential royalties and how it prevents grant reviewer conflicts of interest.

SUNDAY, MAY 17, 2015

Conflict-of-Interest Failings Reported in Application Reviews at California Stem Cell Agency

Conflict-of-interest issues have dogged the $3 billion California stem cell agency since its inception, and they are surfacing once again this week in a report commissioned by the agency itself.

This time the matter is being brought up by Moss-Adams, LLP, of Seattle, a business consulting firm that is being paid $230,000 by the agency to conduct a "performance audit."

In a report to be discussed at a CIRM governing board meeting on Thursday, the firm said it discovered serious problems dealing with the reporting of the interests of the agency's blue-ribbon reviewers.

THURSDAY, MAY 24, 2012

CIRM Directors Pleased with Performance Audit Findings

The $3 billion California stem cell agency received a "very favorable" performance audit report compared to other government agencies, CIRM directors were told today.

Representatives of Moss Adams, which was paid $234,944 by CIRM for the study, made the comments during a presentation today to the agency's 29 directors. During their comments, CIRM executives and directors focused on the favorable aspects of the findings of the six-month study.

TUESDAY, MAY 15, 2012

IP to Grant Oversight: Study Calls for Host of Improvements at California Stem Cell Agency

The $3 billion California stem cell agency is laboring under a range of problems that include protection of its intellectual property and management of its nearly 500 grants plus an inadequate ability to track its own performance, a seven-month study said yesterday.

The performance audit by the Moss Adams accounting firm of Seattle, Wash., made 27 recommendations for improvements, including more effort to ease strain connected to the agency's controversial dual executive arrangement. The study said that the nearly eight-year-old agency has many "opportunities" to "enhance performance reporting and decision making, strengthen effectiveness and efficiency, retain essential human resources and leverage technology."

In response to the report, the stem cell agency said, "(M)anagement concurs with the findings and recommendations....The recommendations are focused and constructive. CIRM is already implementing many of these recommendations, and we will be investigating the others in the coming months."

--

Here is a link to the California state controller's comparison of the findings of the 2012 performance audit to previous findings from a number of enterprises ranging from the National Academy of Sciences to the state's Little Hoover Commission. 

Aussie Bioethics Web Site Negative on California Stem Cell Royalties

The California stem cell agency and its royalty news drew attention today from down under in an article that did not exactly view the research effort with warm regards.

The piece appeared on the bioethics blog called Bioedge and was written by Michael Cook, who publishes the web site. He picked up on American news about the royalty matter, largely from the California Stem Cell Report, but also from the $3 billion agency itself.

Cook described the critics as scathing. He concluded,

"During the campaign for Proposition 71, supporters strongly argued that destructive research on human embryos was absolutely necessary for the science to proceed and that cures would certainly come. Almost 14 years later, there have been no cures. The royalty cheque was for a potential therapy for glioblastoma, a deadly brain tumour – but even this not on the market yet. Thus far, it has only passed Stage I clinical trials and been written up in glowing terms in O, The Oprah Magazine."

Full Text of Comments Summarized in Sacramento Bee Royalty Article

Below is the full text of the California stem cell agency response to questions from the California Stem Cell Report in connection with today's article in The Sacramento Bee concerning stem cell agency royalties. The full text of comments from Marcy Darnovsky and Bernard Munos were carried earlier in this piece on the California Stem Cell Report. The quote from Jean Loring of Scripps is verbatim from a comment she made on this item on the California Stem Cell Report. 

Comments from Maria Millan, CIRM CEO
"We view this initial payment as a 'mile marker' and not the destination. It is a good sign that we are going the right direction to a worthwhile destination - treatment and cures for patients with unmet medical needs. The royalty payment is only a piece of the intended return to California. The true return is in treatments & cures and the alleviation of human suffering and the mitigation of the financial burden of the multitude of diseases that CIRM is targeting."

Are there any other royalty possibilities in the pipeline for the next 12 months?

"Once there has been a cheque it means the grantee licensor has exceeded the $500,000 exemption so any subsequent payments to them trigger additional payments to the state. As regards future payments we have already identified another potential payee and are working with the grantee on the calculations involved in determining payment."

What time period does that royalty cover? In other words how long has the licensing been in effect, if that is the proper way to look at it?  

"For this particular payment from City of Hope this covers 4 license agreements over the last 2 years."

Is there anything else that CIRM wants to add to shed more light on this subject? 

"It wasn’t anticipated that revenue sharing would repay the $3b given to us to fund stem cell research in California. The only way that would have been possible is to demand such a high return from any funding we offered that very few companies would be willing to take the money. It would have completely undermined our mission of accelerating stem cell therapies to patients with unmet medical needs. It's also worth noting that an independent Economic Impact Report prepared in 2008 predicted that these kinds of payments would take many years to appear, even saying: “For example, tax receipts were modeled to commence shortly after funding under the proposition began, while improvements in health were modeled as becoming possible in as few as five or as many as 15 years, and receipts from intellectual property only beginning in the latter half of year 14. So, we are on track for where experts predicted we would be."

Sacramento Bee, Royalties and California Stem Cell Payoff

The Sacramento Bee this morning carried an article by this writer on the California stem cell agency and its first $190,345.87, royalty check. The article is aimed at a more general audience including policy makers in the state Capitol. Here is a link to the piece, which carries this headline on The Bee web site:

 "Will California's $3 billion in stem cell spending pay off? First royalty check arrives"

The full text of comments summarized in the piece will be carried later today on the California Stem Cell Report. 

California Politics, Stem Cells and Campaign Endorsements

A relatively obscure stem cell scientist last week one-upped -- sort of -- one of the more powerful lawmakers in the United States Senate.

It was not a direct, head-to-head contest -- just sort of a rough comparison involving Democratic politics in California.

The two individuals involved are Hans Keirstead, who is touting his involvement in the creation of the $3 billion California stem cell agency,  and Sen. Dianne Feinstein, who has served in the Senate for 26 years.

Despite her long track record, last week she did not receive the endorsement of the California state
Democratic Party for re-election, apparently because she was not right type of liberal for the activists who dominate the party. The party, indeed, did not endorse any Democrat in Feinstein's re-election contest.

At its convention this past weekend, however, the party did endorse Keirstead in a Southern California congressional race.  He is running to replace Republican Rep. Dana Rohrabacher, who was once described oddly by a fellow Republican as "Putin's favorite congressman." 

Keirstead campaigning earlier this month.
Photo by Andrea Adelson, LB Indy

In political terms, Keirstead is indeed obscure, having never run for office before. However, he has achieved some recognition within the stem cell world, but most of that population does not vote in his district.

Keirstead, who did much of his research at UC Irvine, is trumpeting his stem cell work as part of his campaign. Here is a sample from a campaign web page:

"Hans served as a lead scientific advisor for the California Stem Cell Initiative which established a $3 billion stem cell research fund to support medical innovation in California."

The two candidates who receive the most votes in the June primary election will face off in November, whether they are Democrats or Republican. Keirstead has seven likely Democratic candidates facing him, according to one report. However, the filing deadline to run is March 9.

Rohrabacher is widely regarded as vulnerable and Democrats nationally are hoping to remove him from office in November.

Feinstein is way ahead in the polls in her separate race and vastly better financed than her opposition. The Democratic Party's lack of endorsement gained considerable attention in the mainstream media, but her backers said it provided little tangible benefit for her Democratic opponents.

California's Stem Cell Agency Hits 45 Clinical Trials

Directors of the $3 billion California stem cell agency yesterday added another clinical trial to its portfolio, bringing to 45 the number of its forays into the late stage research that is the most likely to produce a therapy sooner rather than later.

The decision on the $5.7 million award carries more weight in terms of the viability of the agency than might ordinarily be assumed. The agency's cash is running out. It is facing its demise in less than two years unless prodigious funding raising efforts are successful.

One of those efforts involves asking California voters in the fall of 2020 for $5 billion more in bond funding. The California Institute for Regenerative Medicine or CIRM, as the agency is formally known, would dearly love to point to a therapy or cure that would resonate with voters.

Thursday's award went to Joseph Rosenthal, director of pediatric hematology and oncology at the City of Hope and lead investigator on the trial. He told the agency,

"CIRM funding will allow us to conduct a Phase 1 trial in six adult patients with severe SCD (sickle cell disease). We believe this treatment will improve the quality of life of patients while also reducing the risk of graft-versus-host disease and transplant-related complications. Our hope is that this treatment can be eventually offered to SCD patients as a curative therapy.”

CIRM directors also approved a $4 million award to Fate Therapeutics, Inc., of San Diego, a publicly traded firm that is developing a "natural killer" cell cancer immunotherapy derived from induced pluripotent stem cells.

CIRM said that the goal is to treat many patients in an "off-the-shelf manner." The firm hopes to launch a clinical trial in 2019. Fate's stock closed at $10.58 today, down one cent. Its 52-week low is $2.52 and its 52-week high $11.70.

Here is a link to CIRM's press release on the awards. Here is a link to the CIRM blog item on the matter. Here is a link to the Fate Therapeutics press release which the company posted this morning.

'Less Than a Drop in the Bucket' -- Dueling Perspectives on California's First Stem Cell Royalty Check

California is counting its first royalties from a 13-year-old effort to develop stem cell cures and has declared that it hopes that the check will be the first in a flood of payments.

Others, however, warn of the dangers of over-excitement about the $190,345.87 payment from the City of Hope, saying that it is "less than a drop in the bucket" compared to the cost of the $3 billion California Institute for Regenerative Medicine or CIRM, as the state stem cell agency is formally known.

Here is a longer look at the two perspectives in the wake of Monday's royalty report.

John McCain, Washington Times photo

 The royalties were generated from a $5.2 million award in 2012 to the City of Hope for research involving a potential therapy for glioblastoma, one of the deadliest forms of brain cancer and the type afflicting U.S. Sen. John McCain. 

"A little piece of history" is how Kevin McCormack, senior director for communications for the  stem cell agency, described the royalty in an email. He also wrote on the agency's blog,

"It’s the first of what we hope will be many such checks, helping repay, not just the investment the state made in the field, but also the trust the voters of California showed when they created CIRM."

McCormack continued,

"Maria Millan, CIRM’s President & CEO, says the amount of the payment is not the most significant part of this milestone – after all CIRM has invested more than $2.5 billion in stem cell research since 2004. She says the fact that we are starting to see a return on the investment is important and reflects some of the many benefits CIRM brings to the state."

Asked for comment on the payment, John M. Simpson of Consumer Watchdog in Santa Monica, Ca., who was deeply involved in the development of the agency's initial intellectual property rules, said,

“Once again it’s clear that Proposition 71 (the ballot initiative that created the agency) was oversold by its sponsors. Despite campaign hype, it’s only now that we are seeing the first royalty payment and a rather modest one at that."

Bernard Munos

Bernard Munos, a senior fellow at FasterCures. a think tank aimed at speeding medical research, elaborated at more length in his response to a query by the California Stem Cell Report. He said,

"The $200,000 check from City of Hope should be acknowledged, but it only represents 0.02% of the $1.1 billion in royalties that were promised to California taxpayers -- and does not even cover the annual salary of CIRM’s part-time vice chairman.

"It is also unclear how the licensing (by the City of Hope) of a discovery to a New York-based company, Mustang Bio, Inc., will generate jobs and investment in California, as proponents of CIRM originally promised voters. 

"The world has changed since 2003 when George W. Bush severely restricted government-funded research on embryonic stem cells. The Obama administration lifted those restrictions, and regenerative medicine has diversified into many lines of research that have taken the field well beyond the embryonic vs. adult stem cell debate of the early days, which gave CIRM its initial impetus. Looking ahead, it is unclear whether CIRM still has a role to play. 

"Regenerative medicine offers enormous promises, and Californians may indeed want to leverage that opportunity by supplementing federal funding with their own. We have proposed a way to do this, as an alternative to developing plans to extend CIRM with another $5 billion in California bonds, to be paid out of the state’s general fund. 

"Whenever a multi-billion dollar fund is created, it tends to attract all kinds of people who want a piece of it. Unless strong governance is in place with clear rules on how the money must be disbursed, some of it is likely to fund projects that don't get the scrutiny they should, or even lie outside the organization's remit. Inadequate governance has been a problem at CIRM, as documented by reports from the Institute of Medicine -- now the National Academy of Medicine -- and others. Before consenting to an extension of CIRM's mandate, Californians should look at the returns they have gotten, and are likely to get (or not) from CIRM's past investments, and should demand an independent assessment of whether these investments are consistent with what they were promised and with CIRM's mission."

Marcy Darnovsky, FIXED photo

Marcy Darnovsky, executive director of the Center for Genetics and Society, in Berkeley, Ca., said in her email,

"Many Californians voted to establish CIRM because they believed the promises that its backers were making: that we'd soon see revolutionary medical breakthroughs, that our state would get back a billion dollars or more in royalties, that the agency would be run by an 'independent' board. Almost a decade and a half later, none of that has come to pass. 

"The rules and regulations about royalty returns to California are confusing and unclear, and need to be made far more transparent. But it's hard not to ask whether this first royalty payment is anything other than theater, meant to assuage and allure voters now that CIRM is talking about another ballot measure for $5 billion more from the public purse.

"The royalty check from City of Hope is less than a drop in the bucket. It's almost as if you loaned someone $3000 (at your own expense) because they promised to do some good work and pay you back $1000. Years later, they haven’t finished the work but they are offering you twenty cents instead of $1000, and asking for thousands more."

The debate over what Millan has called the "value proposition" of the agency's work is likely to intensify over the next two years. CIRM expects to run out of cash within that period and is pinning its hopes for survival on a proposed $5 billion ballot initiative on the November 2020 ballot -- a campaign that should excite some considerable interest if it is not heavily overshadowed by the presidential election that year.

Counting the Stem Cell Beans: Inside California's First Stem Cell Royalty Check

Readers who really want to dig into the numbers involving the first royalty check generated by  research funded by the $3 billion California stem cell agency have a special treat.

Below is a look at how the royalty payment by the City of Hope was calculated. The royalties grew out of an arrangement with Mustang Bio, Inc. of New York City.

 First Royalty Payment Generated by California  State Stem Cell Agency by DavidJensen on Scribd

After 13 years, California Receives Its First Stem Cell Royalty Check

California's $3 billion stem cell agency this morning reported the first royalty check resulting from its 13-year-old research program -- a payment of nearly $200,000 from the City of Hope.

The money, however, did not go to the agency, which is scheduled to run out of cash by 2020. It went to the state's general fund and can be used for anything from smog prevention to patching up the state's freeways. 

The royalties resulted from a $5.2 million grant in 2012 to Stephen Forman at the City of Hope in the Los Angeles area. The research, now overseen by Christine Brown, involved the use of genetically modified CAR-T cells to improve cure rates of patients with "high-grade" malignant glioma, an aggressive type of brain cancer.

In an email today, Kevin McCormack, senior director of communications for the agency, described the $190,345.87 royalty check as a "little bit of history."

It was a "bit of history" that goes back to the ballot initiative campaign of 2004 that created the California Institute of Regenerative Medicine or CIRM as the agency is formally known.  Backers of the measure created what some say were unrealistic expectations that the agency would generate $1.1 billion in royalties. 

The royalty payment resulted from an agreement by the City of Hope to license the technology to Mustang, Bio, Inc., of New York City. It is a subsidiary of Fortress Biotech, Inc. Both are publicly traded firms.

The San Francisco Chronicle first reported the size of the payment, although the fact that a royalty check was coming was disclosed last summer. Joaquin Palomino wrote in the Chronicle this morning, 

"'This is an initial payment for the recognition of the potential of this therapy,' Brown said. 'If it’s ultimately approved by the FDA as a commercial product, this could be a continued revenue source' for California."

The Chronicle article also said, 

"'In order to prove that it was a good investment for California taxpayers, we are going to need to see returns in the tens or hundreds of millions of dollars, not in the hundreds of thousands,' said Bernard Munos, a senior fellow at the medical think tank FasterCures and a close observer of CIRM. 'It’s too early to claim victory, or to claim this was a great deal for the taxpayers of California."

Here is a link to CIRM's blog item on the payment. Below is a letter from the City of Hope to CIRM about how the royalty payment was calculated.

   First Royalty Payment Generated by California  State Stem Cell Agency by DavidJensen on Scribd

California Stem Cell CEO Millan on What's Missing in CIRM News Coverage

California's $3 billion stem cell research program suffers from the same sort of problem that arises at other state departments, ranging from Fish and Wildlife to Pesticide Regulation.

They are all struggling to gain the public's attention, tell their story and create support for their activities. The big difference is that Fish and Game and Pesticide Regulation are not likely to go out of business in two years. The stem cell agency, however, could well be on its way to closing its doors by then because it is running out of cash.

The California Stem Cell Report recently talked with Maria Millan, CEO and president of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. One of the topics was news coverage and how the agency is perceived, especially considering that voters may be asked to give the agency another $5 billion.

Millan was asked: What is the most "uncovered" story about CIRM, what is the "least written about?" Here is how she responded,

"I don't think people really have an understanding for what the value proposition of CIRM is as an agency. They know we're a funding agency, and I think it's best recognized for money."

Millan said that a lot of news coverage involves such things as "are you spending that money well, do you have enough oversight, do you have enough things in place to make sure that that's being done responsibly? There's a lot of focus on that."

"I think we've solved a lot of those issues and have things in place to catch issues and deal with them as they come up.... Part of it is that some of these assets didn't exist before and now we have them, and part of it is that the field has matured, and we've been positioned well to drive it."

Millan said that CIRM is "the model" for stem cell research and its funding. She said, 

"It's well-recognized that we do this very, very well. The NIH (National Institutes of Health) recognizes that we've been able in the space of stem cell regenerative medicine to do this extremely well. We have a portfolio in terms of development and our way of doing things that's unparalleled. 

"They recognize that. We're working with them to generalize this and it'll just be a two-way street in terms of benefiting for both sides of relationships."

Millan also talked about the value that her agency brings to the state, enhancing its position globally in biomedical research. She said,

"My goal is to make sure that we're responsibly sharing the knowledge, bringing things forward, because it's going to benefit California. I know that we want to make sure that we're responsible for optimizing our funds that they really support California directly, but there are a lot of things that can happen outside that will feed into us if we enable them."

Significant coverage in the mainstream media of the activities of the agency, created by voters in 2004, is rare nowadays. However, CIRM recently received some widespread attention within the state and nationally as the result of a lengthy assessment of its efforts on NPR and KQED's web sites.

The November 2020 ballot, which will include a presidential election, is the target date for the proposed $5 billion bond measure to keep CIRM alive.  Look for more intense coverage of the agency as that date nears.

(Look for more on the California Stem Cell Report on our conversation with Millan in the coming weeks.)

California: Stem Cell Capital of the World? The Perspective from Oakland

The California Stem Cell Report recently spent an hour chatting with Maria Millan, the president and chief executive officer of the $3 billion California Institute for Regenerative Medicine (CIRM), as the 13-year-old, state stem cell agency is formally known. 

Maria Millan, CIRM photo

The session at CIRM headquarters in Oakland, Ca., covered a wide range of topics as the agency was releasing its annual report. One question raised by this publication was whether the Golden State has reached the sort of critical mass that would make it "the stem cell capital of the world."

Here are some lightly edited excerpts of Millan's response to that question.

"I don't know if we've reached the critical mass, but I think we are probably the furthest to (it). I remember joining (the agency)....and actually some of our programs were geared toward how can we bring in more business into California. What I'm seeing right now is a lot of players who don't actually need to come to California.  They're fine. They've got funding. They've got trials. They already have a plan to bring their products to market in the U.S., but they're coming to California, so that's telling."

"California is expensive, so we have to think about that piece of it. These cell therapies are manufacturing intensive. One of the things we are setting up is the translating center (a $15 million project at Quintiles -- now IQVIA -- in San Diego) to address that need because the process and the manufacturing have to occur close to the site of delivery, and the scientists are here, the developers are here.

"It would be great if there was a way that we could continue to help the field to address this need because that is what's going to be required in terms of getting these therapies really to patients and (meeting) the manufacturing challenges. 

"We're doing what we can with the expertise and what we currently have in place. We need to do that in partnership with other entities, so there's a lot of interest in that. The NIH and the FDA at a regenerative medicine forum identified this as a clear need -- standardization in manufacturing...."

"Another thing that is important in terms of recognition, the space of stem cell regenerative medicine does not follow the classical pharma model of drug development at all. Even the CAR-T therapies and the SPARC, those were all developed in academia, they were spun out to smaller, nimble organizations. These projects are highly risky. The de-risking role that CIRM has is critical, (reflecting) a recognition that there's now probably a new dance that occurs to getting these types of treatments developed and out there and commercialized....

"We have played a critical role in being kind of not just a funder, not just a match-maker, but an active participant in connecting the dots and bringing this conversation forward."

(Look for more on the California Stem Cell Report from Millan's additional comments throughout the month.)

Advancing Science, Avoiding Harm: New Fed Rules to Raise Curtain on Clinical Trial Results

The Wall Street Journal today carried a piece about sweeping, new federal research disclosure rules aimed at beefing up the public accessibility of findings of clinical trials backed by billions in public dollars.

The regulations are targeting what Francis Collins, head of the National Institutes of Health (NIH), has called a "disappointing" record of publishing clinical trial results.  He said that "both real and potential harm can result from failure to fully disclose the results of clinical trials."

The regulations are scheduled to roll out somewhat slowly but have been more than 20 years in the works. The Journal reporters, Daniela Hernandez and Amy Dockser Marcus, wrote online today,

"The new rules are part of a push for greater transparency and accountability for the NIH's huge investment in biomedical research. In the past, many organizations have failed to properly register studies and report their findings, actions that NIH officials say result in misspent funds, potential human harm and a lack of public trust in science. The NIH spends roughly $3 billion annually on clinical trials."

Violation of the rules carries the possibility of fines running up to thousands of dollars a day plus endangerment of future funding from the NIH.

Already at one California university, the requirements have increased the workload. The WSJ reported,

"Stanford University School of Medicine is 'adding five or six full-time employees to our overall infrastructure for human research,' said Mark Cullen, senior associate dean for research.

"Dr. Cullen said many of his researchers are still worried and confused about how the new policies will affect their work; the new hires are meant to add to an existing support system made up of roughly 100 staffers."

The NIH is particularly interested in reporting research that has negative results. The WSJ wrote,

"Under the old rules that required publication in journals, negative results often remained undisclosed because journals prefer to publish positive findings.

"'The release of negative results not only prevents duplication and potential unnecessary risk to human volunteers, it also advances our understanding of the science,' said NIH’s Dr. (Carrie) Wolinetz (NIH's associate director for science policy).

In 2015, Collins and Kathy Hudson, then NIH's deputy director for science, outreach and policy and now executive director of the People-Centered Research Foundation, wrote in JAMA,

"If the clinical research community fails to share what is learned, allowing data to remain unpublished or unreported, researchers are reneging on the promise to clinical trial participants, are wasting time and resources, and are jeopardizing public trust.

"The scientific community has a disappointing track record for dissemination of clinical trial results.

Millions, Billions and Babies: The 2017 Stem Cell Story from California

Cover of CIRM annual report

California's 13-year-old stem cell research program has lured in nearly $390 million in private investment this past year, an accomplishment touted in its just released annual report for 2017.

The 23-page document is chock-a-block with facts and figures about the agency along with upbeat stories about its impact on a handful of patients, young and old.

All told, one could consider the report a key marketing tool for the agency's efforts to stave off its own financial demise, now slated for just two years down the road unless a rescue effort is successful.

The $3 billion stem cell agency, formally known as the California Institute for Regenerative(CIRM), expects to run out of cash for new awards in 2019. Its survival depends on a $200 million-plus, private fund-raising effort now underway and voter approval of a yet-to-be-written, $5 billion bond measure in 2020. The agency has been funded nearly entirely by state bonds, an unusual approach for state agencies, which generally survive on year-to-year appropriations.

The 2017 annual report, which cost $34,000, lays out the case for the agency's work, from clinical trials to patient advocacy. Included is less well-known information about the private investment that

has been drawn in to match awards and to support spin-off companies.

Private investment is critical to translating basic research into therapies and cures. So far, the agency has not delivered on expectations of voters in 2004 that it would produce a treatment that can be used by the general public. But it now has invested in 44 clinical trials and hopes that a therapy will emerge that will resonate with voters.

The agency cited its impact in the private sector with a comment from Deepak Srivastava, president of the Gladstone Institutes in San Francisco.

"CIRM has funded the full pipeline of our work on cardiac regeneration—from basic discoveries, all the way to preclinical studies. As a result of their support, we established Tenaya Therapeutics, a local start-up company that launched with $50 million in Series A investment and aims to tackle heart failure."

Maria Millan, CEO of CIRM since July, said,

"If not for CIRM, many programs currently in clinical trials to address debilitating and fatal medical conditions might have stalled or have been discontinued due to lack of funding. As a result, we are seeing more partnerships and follow-on industry investment—almost $390 million this year—to  advance CIRM-funded programs.

"By investing when others are not yet ready to do so, CIRM’s partnership enables researchers to develop a value proposition that attracts follow-on investors and industry partnerships."

The annual report will undoubtedly be a key document for CIRM Chairman Jonathan Thomas this year as he seeks to raise more than $200 million in private donations to tide the agency over until a bond election in November of 2020.

But the agency has a significant, additional challenge in reaching the general public, a point noted by Robert Klein,  the real estate investment banker who led the 2004 campaign that created the agency.  He cited the "lack of communication" in the mainstream media about CIRM.

Klein told CIRM directors last fall that 90 percent of the science reporters in the media have vanished in the last 20 years. He said that science writers were once the key to telling the story of scientific research as well as illuminating the progress of the quest for stem cell cures. Today is different, he said, and a more intense effort will be needed to win support for more billions.

"We've lost our communication link," Klein said.

(CIRM's summary of its impact graphically displayed below.)

The Unregulated Stem Cell Wildfire: Fresh Look at Practices Not Approved by the FDA

They have crept across the country like a malignant rash, popping up from coast to coast. They take tens of thousands of dollars from desperate people from seeking a cure for afflictions ranging from cancer to blindness. Instead some become more ill.

You can see it yourself on your computer screen in the comfort of your own home. Just click on the map above. It was brought to you by Paul Knoepfler of UC Davis and Leigh Turner of the University of Minnesota. Back in 2016, they published the first ever look that documented the size of the unregulated stem cell clinic market. And California led the way with the most clinics.

Recently, they probed more deeply. Knoepfler wrote last week on his blog,

"In our new paper, Leigh and I also found that clinics marketing certain conditions and types of stem cells exhibited specific trends over the years. For instance amniotic stem cell clinics, while lagging behind bone marrow and fat stem cell clinics in numbers, show a sharp upward trend. This spike fits with increasing mainstream media advertising efforts by amniotic clinics.

The Regenerative Medicine article is ensconced behind a pay wall, but here is a snippet from its summary.

"Between 2009 and 2014, the number of new US stem cell businesses with websites grew rapidly, at least doubling on average every year. From 2014 to 2016, approximately 90–100 new stem cell business websites appeared per year. In contrast, from 2012 to the present, regulatory activity in the form of FDA warning letters has been limited. These data point to a problematic disconnect between a rapidly expanding US direct-to-consumer stem cell industry and limited FDA oversight of this marketplace. More consistent, timely and effective FDA actions are urgently needed."

Knoepfler said on his blog,

"While Leigh and I documented the nearly 600 clinics as of 2016, my sense is that there are likely to be upwards of 700 clinics today. What will the map of stem cell clinics look like in 2019 or 2020? What do you think? Fewer? More? Or about the same number of clinics? What would similar temporal maps of clinics in other countries look like?"

California's Stem Cell Story Gains National Attention on NPR

California's $3 billion stem cell research effort broke into national news this morning when National Public Radio (NPR) picked up a lengthy overview of the Golden State's 13-year-old program to develop therapies that could treat everything from cancer to incontinence.

While the story chronicled the pluses and minuses of the work of the California Institute for Regenerative Medicine (CIRM),  as the agency is formally known, overall the piece bolstered the agency's efforts to tell its story to millions of more persons. It could be said to fit into the category of "I don't care what you say about me, just as long as you spell my name right."

NPR says it reaches 99 million people monthly across its platforms.  Roughly 12 million of those persons are likely to be found in California, given that the state has about 12 percent of the nation's population.

The stem cell agency piece first appeared last week in California on the web site of a popular media outlet, KQED, which produces TV and radio news. KQED's syndicated California Report is expected to air a broadcast version of the story and has linked online to the longer version as well.

All of this meets the need of the agency to reach the millions of California voters who are likely to vote on a possible, $5 billion bond measure in November 2020. The agency is slated to run out of money by then and will whither away without additional cash.

While some in the media would be loath to admit it, they tend to run in packs, chasing the same stories for a variety of reasons. The widespread appearances of the article by David Gorn could well stimulate additional media coverage in the shorter term and also help to shape coverage over the next couple of years or so.

A Man Named Lucas and the Future of the California Stem Cell Agency

Lucas Lindner, photo by Cait Covers the Bases

The news last fall from a California stem cell firm was leaden and dense. Terms such as "Phase 1/2a SCiStar study" and "Full enrollment of Cohort 3 (AIS-A; 20 million AST-OPC1 cells)" littered the company's statement. 

Today the state's $3 billion stem cell agency turned the jargon into a heart-warming, human story -- the type that is critical to sustaining the life of the 13-year-old research effort, which is running out of cash.

The story involves Asteria Biotherapeutics, Inc., of Fremont, the California Institute of Regenerative Medicine(CIRM), as the stem cell agency is formally known, a clinical trial for a treatment for spinal injury and a young man named Lucas Lindner.

He is one of the patients in Asterias' clinical trial for a human embryonic stem cell therapy for spinal cord injury.  CIRM has funneled $21 million into the research. 

Writing on the agency's blog, Kevin McCormack, senior director for CIRM communications, said,

"On a Sunday morning in early 2016, Lucas Lindner was driving to get some donuts for his grandmother. A deer jumped in front of his truck. Lucas swerved to avoid it and crashed, suffering a severe spinal cord injury that left him paralyzed from the neck down."

But after the treatment, McCormack wrote,

"Lucas can now type 40 words a minute, use a soldering iron and touch his pinkie to his thumb, something he couldn’t do after the accident.

"In August of last year Lucas did something else he never imagined he would be able to do, he threw out the first pitch at a Milwaukee Brewers baseball game. At the time, he said 'I’m blown away by the fact that I can pitch a ball again.'"

Of course, there are scientific caveats and qualifications in the story. But what the tale really can do is resonate with nearly all California voters if the story ever reaches them.

Those voters are key to continuing the work of the agency, which expects to run out of state funds in 2019 and is hoping that voters will pump an additional $5 billion into the agency through a bond measure on the November 2020 ballot. (A private fund-raising effort is underway to bridge the cash gap.)

The agency has largely functioned in obscurity during the last 10 years or so. Its story is not well known by the public. And it has yet to help finance a therapy that is available to the general public. But CIRM's 44 clinical trials, including the one by Asterias, provide hope for patients and the agency.

The key lies, however, in how the story is told and how well CIRM supporters can turn mind-numbing scientific jargon and public policy issues into compelling yarns that will open both the hearts and purses of California voters.

California Makes a $25 Million Kidney Transplant Wager: Its 44th Stem Cell Clinical Trial

The California stem cell agency this week more than doubled down on its bet on a potentially breakthrough treatment for kidney transplants, raising to $25.4 million its support for a project that is entering its final stages.

The hope is that the treatment will not only improve the success rate of kidney transplants but also lead to use in liver, heart and other solid organ transplants. If successful, the therapy would eliminate the need for immunosuppressive drugs in genetically matched kidney transplant patients.

Maria Millan, CIRM photo 

Maria Millan, president of the agency, said in a news release:

“These immunosuppressive drugs not only can cause harmful side effects, but they are also expensive and some patients lose their transplant either because they can’t afford to pay for the drugs, or because their effectiveness is not adequate."

The award also could help save the life of the stem cell agency, which is facing its financial demise as its funding runs out.

The award brings to 44 the number of clinical trials being assisted by the $3 billion agency, formally known as the  California Institute for Regenerative Medicine(CIRM). Clinical trials are the last stages of research prior to certification by the federal government of a treatment for widespread use.

The stem cell agency is hoping that one of its trials will soon produce a therapy that will resonate with California voters who may be asked in 2020 to provide $5 billion more. The agency expects to run out of state funding next year and is attempting to raise more than $200 million privately to tide it over until a bond election in  November 2020.

Action on the award was swift on Thursday. It took less than eight minutes for the agency governing board to unanimously approve an $18.8 million award to Medeor Therapeutics, Inc., of San Mateo, Ca. The award comes on top of a $6.7 million investment in the firm's research in 2016.

Steven Deitcher, Medeor photo

The vote simply ratified a decision on the Phase 3 trial that was already made by the agency's reviewers, who gave the research strong support during a meeting behind closed doors weeks earlier.

Steven Deitcher, co-founder and president of Medeor, said in the agency's news release,

"CIRM funding accelerates our timelines, and these timelines are what stand between needy patients and potential transformative therapies. This CIRM award combined with investor support represent a public-private collaboration that we hope will make a difference in the lives of organ transplant recipients in California, the entire U.S., and beyond."