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