California Stem Cell Agency Still in Talks on $40 Million for StemCells, Inc.

The California stem cell agency and StemCells, Inc., are still trying to reach agreement on a deal in which the company would receive $40 million from the state's taxpayer-funded research effort.

The sticking point is the $40 million in matching funds required from the Newark, Ca., firm under the terms of the two awards approved in July and September. The latter award was okayed on a 7-5 vote by the governing board after it was rejected twice by the agency's reviewers.

On Monday the California Stem Cell Report queried the agency about the status of the awards. Kevin McCormack, the agency's spokesman, replied,

“We are still in talks with them over the terms of the funding. Hopefully, we'll have an agreement soon.”

He did not elaborate further.

CIRM staff normally reviews applications after they are approved by the agency's governing board to be sure that all conditions are being met. However, in the case of the September award to StemCells, Inc., CIRM's governing board took the unusual step of publicly stating that the firm must demonstrate it has the $20 million in matching funds before it receives any payments from CIRM. The board did not take that sort of public position on the $20 million grant approved earlier in the summer, although matching funds are required in that case as well.

The former chairman of the $3 billion stem cell agency, Robert Klein, appeared twice before the board to lobby for approval of the second award to StemCells, Inc., which is a publicly traded firm.. It was the first such appearance by Klein before his former colleagues since leaving the agency in June 2011.

Action on the StemCells, Inc., awards attracted attention from the Los Angeles Times last month. Pulitzer Prize-winning columnist Michael Hiltzik wrote that the process was “redolent of cronyism.” He said a “charmed relationship” existed among StemCells, Inc., its “powerful friends” and the stem cell agency.

Texas Flap Looms Over California Stem Cell Agency's Grant Appeals

In nine days, the California stem cell agency plans to take another crack at finding ways to curb its free-wheeling appeal process involving scientists whose applications for millions have been rejected by reviewers.

It is a matter of considerable interest to researchers who need the cash to keep their labs running and remain in good standing with their host institutions.

The stem cell agency's governing board this fall created a task force to deal with the appeals issue after a record-breaking number of researchers made public appeals featuring emotional patient advocates. Even the former chairman of the agency, Robert Klein, made a two-time pitch for one applicant. Board members later complained publicly about “arm-twisting,” lobbying and“emotionally charged presentations.”

The agenda for the Nov. 30 task force meeting in Oakland -- with teleconferencing sites in San Francisco, Irvine, Palo Alto, Seattle and Rochester, N.Y. -- contains few clues on what the panel is hoping to specifically accomplish in next week's 90-minute session.

But interested researchers can check the transcript from the Oct. 24 meeting, during which CIRM President Alan Trounson described the problem as “very critical.” He said,

“I think this is a very serious matter that could really bite us very hard in a similar way to what's happened in Texas. Unless we come up with some kind of process that really addresses the science, it's a very large concern.”

Trounson's Texas reference was to the mass resignations of reviewers at that state's $3 billion cancer research effort. Questions have been raised about integrity of its grant review process and the program's political and biotech industry relationships. James Drew of the Dallas Morning News produced a bit of an overview this week. In another piece, Eric Berger of the Houston Chronicle provided quotes from emails from the infighting on a controversial $18 million grant.

Changes in California's grant appeal process may well be also discussed at the agency's board meeting Dec. 12 in Los Angeles. The board hopes to wrap up its action by late January.

Here is a link to an item with more specifics on material presented to the task force in October. Here is a link to an August 2012 list of articles and documents related to the CIRM appeals process.

Interested parties can address comments to the agency at info@cirm.ca.gov.   

Pomeroy Moving On, Will Leave Stem Cell Board

Claire Pomeroy, one of the longtime members of the governing board of the $3 billion California stem cell agency, will be leaving her position at UC Davis and the stem cell board next June.

Pomeroy yesterday announced her departure from Davis as vice chancellor for human health services and dean of the medical school. In a telephone interview, she told the California Stem Cell Report that she is examining a “few select opportunities” to work at a national level on health reform and health policy issues.

Claire Pomeroy
UC Davis photo

Pomeroy, 57, will be spending time in Washington, D.C., working on health issues on behalf of the University of California during the transition period before she leaves her position in California.

Pomeroy came to UC Davis 10 years ago, shortly before the Golden State's stem cell agency was created in 2004. At that time, UC Davis had what she called a “fledgling” stem cell research effort. Today the school has chalked up $128 million in grants from the stem cell agency, ranking fifth among institutions funded by the agency.

She said that creation of the stem cell agency “catalyzed development of our program,” which she said has risen to “national prominence.”

Pomeroy's service on the stem cell agency board was also instrumental in attracting a $100 million grant from the Moore Foundation to start a new school of nursing at UC Davis in 2009. Through her service on the board, she met Ed Penhoet, who also served on the board and was one of the co-founders of Chiron and then president of the Moore Foundation. Subsequently, Penhoet called her for lunch to discuss her thoughts on nursing education, and developments moved on from there.

The $100 million commitment was the nation's largest grant for nursing education, according to the Moore Foundation.

'The Knoepfler Award:' Recognizing Risk and Those Who Make a Difference

A UC Davis stem cell researcher-blogger has announced a “stem cell person of the year” award complete with a $1,000 cash prize that he is putting up himself.

Paul Knoepfler, who may be the only stem cell scientist in the U.S. actively blogging on the subject, said he has decided to put his money where his mouth is. 

Since announcing the contest in a Nov.13 blog item, Knoepfler has already received eight nominations, including one for a scientist. Three days after the item aappeared, UC Davis featured Knoepfler in a press release that included a video of Knoepfler explaining the effort.

Paul Knoepfler
UC Davis photo

He said he wanted to go beyond “old fashioned awards” given by “stodgy committees.” Knoepfler said he is seeking to recognize that stem cell research is “transcending the lab.”

The goal of the award, Knoepfler said, is “to advance the stem cell field and give credit to those who make a real difference.”

Knoepfler wrote,

“The criteria are that the person made a truly outstanding difference in the stem cell field for 2012. The winner could be a scientist, a patient advocate, someone in industry, a student, a physician…really anyone who has made the field better. For non-scientist nominees I’m particularly interested in those who took personal risks or gave of themselves to help others. For scientists I am looking for outstanding scientific achievement and in particular out-of-the-box thinking. Folks in any country are eligible.”

Deadline for nominations is Dec. 17. Self-nominations are permissible. Knoepfler plans to pick five finalists and interview them by phone. He also plans an online vote that he said  “may” influence his decision.

Complete details are available on Knoepfler's blog. 

California Stem Cell Agency Blogs on Geron Clinical Trial

The California stem cell agency published an article online last week concerning the hESC clinical trial that Geron abandoned last year, dealing mainly with one of the participants in the program.

The piece was studiously non-committal about whether the $3 billion research program is likely to fund the trial once again, should BioTime, Inc., of Alameda, Ca., be successful in acquiring the assets of once was the first hESC clinical trial in the United States. The agency loaned Geron $25 million a few months before the company cancelled the trial.

Amy Adams, CIRM's communications manager, simply wrote,

“They (BioTime) would need to apply for a loan if they want CIRM to financially support the continued trial.”

The latest round of funding that BioTime could apply for has a deadline of Dec. 18 for letters of intent. In addition to a loan, a grant is also a possibility.

Adams focused on Katie Sharify, who was enrolled in the clinical trial shortly before Geron said it was dropping the effort for financial reasons. Adams interviewed Sharify before an audience of scientists.

Adams wrote,

“Katie told me that it would be impossible not to hope that a trial would help her, but that by the time she made the decision to participate she knew she was doing it to further science, not necessarily to further her own recovery. She told the audience, 'I was part of something that was bigger than me, and bigger than all of you.'”

Stem cell scientist Paul Knoepfler of UC Davis also wrote about the BioTime-Geron deal last week. Noting that Geron's decision a year ago left many “upset to put it mildly,” Knoepfler said the “idea of BioTime buying the Geron stem cell program is a great one that provides new hope on many levels.”

Researcher Alert: Keeping Tabs on the Stem Cell Exchequer

The California stem cell agency has posted the dates for meetings of its board of directors for 2013 with most of the sessions scheduled for the San Francisco Bay Area.

One is expected to take place in San Diego in August, and another in Los Angeles 13 months from now. The other five are in Northern California. Not yet on the schedule is a board workshop in early January that will be open to the public.

Why is this of interest to researchers and others? The  board controls the purse strings to $3 billion for research grants and determines what areas are to be funded. Astute scientists would do well to take in the sessions. They offer insights into board thinking and opportunities to deal with the agency staff and directors on an informal basis. Only a handful of researchers – or less – attend the meetings on a regular basis, but have been well-served by the time spent. 

BioTime Will Have to Compete for California Cash for Geron's Dormant Clinical Trial

The California stem cell agency said today it does not plan to reactivate the $25 million loan to assist in Geron's spinal injury clinical trial despite an impending deal that would turn the effort over to BioTime, Inc.

Kevin McCormack, senior director for public communications for the agency, said BioTime will have to compete in an upcoming award round if it wants to win California dollars.

Responding to a question from the California Stem Cell Report, McCormack said,

“That (earlier) loan was specific to Geron and when the trial was ended the loan ended too. Of course if Biotime and Geron do complete their deal then Biotime would be free to apply to us for a new disease team grant.”

McCormack later added that BioTime could also compete in other appropriate rounds, including the strategic partnership round just posted by CIRM. It provides for four awards of up to $15 million. Funding could come as early as October of next year. The strategic partnership round is a business-friendly effort that is aimed at attracting “industry engagement and investment.” The deadline for letters of intent is Dec. 18.

The stem cell agency made its $25 million loan to Geron in 2011 just a few months before the Menlo Park firm abandoned its human embryonic stem cell trial for financial reasons. (The full text of the loan agreement can be found here.) The company has repaid the loan with interest.

The company has tried to sell the assets associated with the clinical trial since last November. The only public interest that has surfaced has come from BioTime, Inc., of Alameda, Ca. Michael West, founder of Geron, is the CEO of BioTime. Tom Okarma, CEO of Geron from 1999 to 2011, is CEO of the BioTime subsidiary that would assume the clinical trial.

News from clinical trial is expected to be published soon, according to a story in the San Francisco Business Times by Ron Leuty. He quoted CIRM President Alan Trounson as saying that “some findings” from the trial would be published next month in a medical journal.

Geron's stock traded at $1.24 at the time of this writing today, up from $1.21 yesterday. BioTime's stock stood at $2.99, up from $2.97.

Geron, BioTime Deal Moves Forward with Letter of Intent

Geron Corp., which once pioneered human embryonic stem cell research, is close to selling off its hESC business in a complicated deal involving two former CEOs of the company and BioTime, Inc., of Alameda, Ca.

The two publicly traded firms yesterday announced a “letter of intent” involving a transaction in which BioTime would acquire the assets of Geron's hESC clinical trial that the company suddenly abandoned last year. The firm also laid off 66 people, about 40 percent of its staff.

Abandonment of the program came only a few months after the $3 billion California stem cell agency loaned Geron $25 million to assist in the trial. The agency could restore the loan for the trial, but the Geron-BioTime announcement did not mention that possibility. The California Stem Cell Report has asked the agency for comment.

The letter of intent came one year and one day after Geron announced that it was giving up the hESC spinal injury trial because of financial reasons. The Menlo Park, Ca., firm has been trying to sell its hESC assets since then. BioTime has been the only firm to express public interest. The Geron trial was the first hESC trial approved by the FDA.

The proposed deal involves Michael West, who founded Geron and is now head of Biotime, and Tom Okarma, who was CEO of Geron from 1999 to 2011. Okarma is now head of BioTime Acquisition Corp.,(BAC) a subsidiary of BioTime.

Also involved is an unnamed private investor who would provide $10 million.

Here is how yesterday's press release described the deal in which BioTime would acquire Geron's “intellectual property and other assets related to Geron’s discontinued human embryonic stem cell programs.”

“ BioTime would contribute to BAC $5 million in cash, $30 million of BioTime common shares, warrants to purchase eight (8) million common shares of BioTime at a pre-specified price, rights to use certain human embryonic stem cell lines, and minority stakes in two of BioTime’s subsidiaries. In addition, a private investor would invest $5 million in cash in BAC. 

“Following consummation of the potential transaction, Geron stockholders would receive shares representing 21.4% of the common stock of BAC as well as warrants to purchase 8 million shares of BioTime common stock at a pre-specified price. BioTime would own approximately 71.6%, and a private investor would own approximately 7.0% of the outstanding BAC common stock for their $5 million investment. BioTime would also receive warrants that would enable it to increase its ownership in BAC by approximately 2%, which would reduce the Geron stockholders’ ownership in BAC to 19.2%. BAC would also be committed to pay to Geron royalties on the sale of products that are commercialized in reliance upon Geron patents acquired by BAC.”

Prior to release of the letter of intent, an article earlier this week by Vickie Brower in The Scientist said,

“The offer couldn’t come at a better time for Geron, which in recent months has started to feel pressure from its shareholders to boost its stock price and move products through the pipeline. Since last November, when the company announced its decision to shutter its hESC and regenerative medicine business and funnel its resources into developing telomerase-related treatments for cancer, the stock price has dropped more than 50 percent to $1.30 a share. Geron claimed the move was simply to save money, but many took the decision—which effectively terminated a clinical trial of an hESC treatment for spinal cord injury—as a setback for the entire field." 

News coverage of yesterday's announcement was light. Here is a link to a piece by Ryan McBride on Fierce Biotech.

Geron's stock price closed at $1.21 yesterday and rose to $1.24 in after hours trading. BioTime closed at $2.97. No after hours trading was reported for BioTime.

Study of California Stem Agency Likely to be Released in About a Month

The $700,000, Institute of Medicine performance study of the $3 billion California stem cell agency is expected to be released in late November or early December, the IOM said today.

In response to a question last week from the California Stem Cell Report, Christine Stencel, senior media relations officer for the IOM in Washington, D.C., briefly discussed the release plans and the impact of the East Coast super-storm.

Here is the text of her response:

“The DC area escaped the worst of Sandy’s thumping but nonetheless our schedules and planning have been somewhat thrown off as we’re playing catch up after two days of being shut down and some of our committee members and reviewers are in the areas that got the brunt of the storm. We’re not sure whether the storm will cause any delays in peer review, but we’re working toward the goal of publicly releasing the report in late November or early December. The study staff is working with committee members to determine the best release format but I anticipate there will be a press briefing. I’ll send a media advisory when we’ve got all the details worked out.”

The stem cell agency is paying for the report, which is examining the performance of the agency. The IOM began its work in the summer of 2011.

Geron Weighs Biotime Bid for hESC Biz

Geron, Inc., of Menlo Park, Ca., said today it is assessing an offer by two of its former executives to buy the human embryonic stem cell program that it abandoned nearly a year ago.

Geron startled the stem cell world, including the $3 billion California stem cell agency, when it jettisoned the first clinical trial of an hESC therapy for financial reasons. The agency had loaned the company $25 million just a few months earlier. Geron repaid the loan with interest.

Geron has been mum until today about the Oct. 18 offer by Biotime, Inc., of Alameda, Ca., which is headed by Michael West, who founded Geron in 1990. Tom Okarma, president of Geron from 1999 to 2011, is involved with West on the deal and is now working at Biotime.

Geron's remarks came during a conference call on its third quarter earnings. A spokesman said the company is working with Biotime to “assess the feasibility” of the proposal. He said the proposed transaction is complex and the company is seeking “additional important details.”

The spokesman declined to offer any additional comments on the Biotime proposal when questioned following his initial statement.  

See here and here for earlier stories on the California Stem Cell Report on the Biotime offer. 

Biotime-Geron Deal Attracts Interest from Brit Investor

A British investment trust that has invested in Geron says it is going to take an advantage of an offer by an Alameda firm that is seeking to acquire Geron's human embryonic stem cell assets.

Jonathan C. Woolf, managing director of British & American Investment Trust PLC, said last week in a letter to its shareholders that it is disappointed in Geron's performance and the abandonment of its hESC program last November. The sudden halt to the program and its historic clinical trial also surprised the California stem cell agency, which had loaned Geron $25 million just a few months earlier. The agency has expressed an interest in continuing the trial.

Woolf said,

“We have been highly critical of Geron management's decisions and strategy over the past 20 months, in particular the decision in November 2011 to abruptly exit Geron's regenerative medicine (stem cell) business in which it was the acknowledged world leader. Since that time, Geron management has attempted to sell or partner this business but to date has been unable to announce any progress on this.”

Woolf's trust is not listed as a major Geron shareholder by Morningstar, but Woolf said 17 percent of his firm's investments are in the Menlo Park, Ca., company. The specific size of the trust's holdings in Geron was not immediately known.

Woolf pointed to the offer by Biotime, Inc., of Alameda, Ca., as a way for Geron shareholders to benefit. On Oct. 18, Biotime proposed a complicated deal in which it would acquire Geron's hESC program. Biotime's president, Michael West, founded Geron in 1990. The head of the Biotime subsidiary that would acquire the Geron assets is Tom Okarma, who was CEO of Geron from 1999 to 2011. (Here are links to brief stories on the offer: Fiercebiotech, New Scientist.)

In his letter, Woolf noted Geron's declining stock performance. He said he is “seriously concerned” that Geron has failed to find a buyer for the assets. Woolf said,

“These now dormant and untended assets are inevitably losing value as competitors make progress in Geron's absence from the field and patent protection periods decline.”

Woolf continued,

“We believe BioTime's proposals would make Geron's stem cell assets in combination with those of BioTime once again the world's leading stem cell business with sufficient resources to recommence the discontinued programmes and develop the business further into the medium term.”

Woolf urged Geron directors and other Geron shareholders to work with Biotime to complete the deal. Geron has not commented on the offer.

California Stem Cell Agency First: Big Pharma Hook Up

BURLINGAME, Ca. – For the first time, a Big Pharma company has hooked into the $3 billion California stem cell agency, a move that the agency described as a “watershed” in its efforts to commercialize stem cell research.

The involvement of GlaxoSmithKline comes via a partnership with ViaCyte, Inc., of San Diego, Ca., in a clinical trial, partially financed with a $10.1 million grant today from the stem cell agency. The trial involves a human embryonic stem cell product that has “the potential to essentially cure patients with type 1 diabetes and provide a powerful new treatment for those with type 2 disease,” ViaCyte said. Scientific reviewers for the agency, formally known as the California Institute for Regenerative Medicine(CIRM),  “characterized the goal of the proposed therapy as as the 'holy grail' of diabetes treatments.”

CIRM Director Jeff Sheehy, who is co vice chair of the agency's grant review group, said the ViaCyte product could be manufactured on a large scale and basically involves “taking (small) pouches and popping them into patients.”

The stem cell agency's award triggered arrangements between ViaCyte and Glaxo that will bring in financial and other support from Glaxo. The exact amount of cash was not disclosed. CIRM said Glaxo will “co-fund and, assuming success, conduct the pivotal trial and commercialize the product.” Under the terms of the grant, Glaxo and ViaCyte will have to meet CIRM milestones in order to secure continued funding. 

Following board approval, Jason Gardner, head of the Glaxo stem cell unit, characterized the arrangement as a partnership. He told the board that the company intends to develop a “sustainable pipeline.”

Gardner credited CIRM President Alan Trounson with being instrumental in helping to put the arrangement together, beginning with their first meeting three years ago. Trounson said the deal will resonate not only in California but throughout the world.

Paul Laikind, president of ViaCyte, also addressed the board, stressing the importance of CIRM's financial support for his company over past years. It has received $26.3 million (not including the latest grant) from California taxpayers at a time when stem cell funding was nearly dried up. He noted that small companies such as ViaCyte do not have the resources to carry a product through the final stages of clinical trials and subsequent production. Gardner also said,

“When the commercial funding avenues have become much more risk averse, CIRM support (has ensured) that promising, innovative cell therapy technologies are fully explored.”

In comments to the California Stem Cell Report, Elona Baum, CIRM's general counsel and vice president for business development, described the award as a “watershed” for the eight-year-old agency, linking the agency with Big Phama for the first time. Much of CIRM's current efforts are aimed at stimulating financial commitments from large companies, which are necessary to commercialize stem cell research.

Arrangements between Big Pharma and small companies are not unusual and can vanish quickly. However, the CIRM-ViaCyte-Glaxo deal sends a message to other Big Pharma companies and smaller ones, perhaps clearing away concerns that have hindered other deals that could involve the stem cell agency.

The stem cell agency is pushing hard to fulfill the promises of the 2004 ballot campaign that created CIRM. Voters were led to believe that stem cell cures were virtually around the corner. None have been developed to date.

Viacyte, bluebirdbio Win About $10 Million Each from California stem cell agency

BURLINGAME, Ca – Directors of the California stem cell agency this morning approved $19.5 million in awards to two companies for research aimed at completing an early stage clinical trial within four years.

The cash went to Viacyte, Inc., of San Diego, Ca., slightly more than $10.1 million for a diabetes project, and to bluebirdbio of Cambridge, Mass , $9.4 million for a B-thalassemia effort. CIRM directors approved the awards with virtually no discussion. The agency is limited to funding research by the companies that is performed in California

The awards are part of the agency's push to commercialize stem cell research and engage industry more closely. All of the six applicants came from industry. However, the firms that were turned down were not identified with the exception of Athersys, Inc., of Cleveland, Ohio.

CIRM Director Steve Juelsgaard asked for a discussion of an appeal by Athersys, Inc., of Cleveland, Ohio, whose application was rejected by reviewers who scored it at 60 out of 100. The two winners had scores of 88 and 73. .However, following a brief look at the application, the board rejected Athersys' application along with other proposals turned down by reviewers. .

Click on this link for the CIRM press release on the awards.  

Trounson Going Halftime in January and February

BURLINGAME, Ca. -- The president of the $3 billion California stem cell agency, Alan Trounson, will be working half-time while living in Australia during January and February of next year.

Trounson told the governing board of the agency of his plans at the beginning of its meeting here morning. He said he needs to spend more time with his family, which lives in Melbourne.

Trounson has an 11-year-old son with whom Trounson said he hasn't spend much time in the last 18 months.  Trounson said he intends to teach his son to surf. Trounson's daughter also will be getting married in February.

Meanwhile, directors are currently discussing approval of grants in its $20 million-plus strategic partnership round.

Athersys Appeals California Rejection of $8 Million Proposal

One of the co-founders of Athersys, Inc., of Cleveland, Ohio, is attempting to overturn reviewer rejection of his company's application for an $8.3 million award from the California stem cell agency to assist in a clinical trial for a therapy for stroke victims.

The application by Robert Mays, who co-founded Athersys in 1995 and is head of neuroscience at the publicly traded firm, was turned down by reviewers who gave it a scientific score of 60 out of 100. Reviewers expressed “concerns related to limited preclinical data, lack of evidence that this therapeutic approach will benefit stroke, and concerns regarding manufacturing within the proposed timeline.”

A document from Mays that CIRM released said reviewers' objections could be addressed by “information that may not have been adequately conveyed at the time or with new information that has since become available.” The document laid out several “recent” studies that it said supported its pitch for funding in a phase two clinical trial.

CIRM's review summary also raised the question of how much of the work would be done in California. The stem cell agency is limited to funding research in California.

May's appeal said,

“We are conducting the phase 2 clinical study at many high volume clinical sites across the U.S., including in California. With respect to the process development work intended to support scaled-up / optimized manufacturing for subsequent phase 3 studies and commercialization, we plan to complete key elements of this work in California, with collaborators such as UC-Davis. We are in the process of building up our California beachhead, and plan that several California-based employees will manage the clinical study, as well as the process development work. Ultimately, success in the phase 2 clinical study and in the process development work would lead to the establishment of a manufacturing plant in California to support later stage development and commercialization in the western half of the U.S. and Asia.”

The Athersys application came in CIRM's first strategic partnership round. Two out of six applications were approved by reviewers. The winners, whose identities are being withheld until tomorrow by the stem cell agency, received scores of 88 and 73. The scores of the other applicants and their identities were also withheld by the agency.

The Athersys appeal will come before the CIRM governing board at its meeting tomorrow in Burlingame, Ca.

Texas Science Flap Cited as California Stem Cell Agency Eyes its Own Processes

OAKLAND, Ca. – Meeting against a backdrop from Texas that involves conflicts of interest and mass resignations of grant reviewers, a task force of the $3 billion California stem cell agency today began a partial examination of its own grant approval process, specifically focusing on appeals by rejected applicants.

The president of the California organization, Alan Trounson, told the task force that it was dealing with a “very serious matter” that in some ways is similar to what happened in Texas. He said the science community is “very much concerned.”

The situation in Texas involves the five-year-old Cancer Prevention and Research Institute, which like the California stem cell agency, formally known as the California Institute of Regenerative Medicine (CIRM), has $3 billion of borrowed money to use to finance research.

The chief scientific officer of the Texas organization, Nobel laureate Alfred Gilman, resigned Oct. 12 during a flap about its attempts “to simultaneously support basic research and nurture companies.”

Gilman's departure was triggered by a $20 million award made without scientific review. Reviewer resignations followed with letters that accused the Texas group of “hucksterism” and dishonoring the peer review process. (Writer Monya Baker has a good overview today in Nature.)

The situation in Texas came to a head AFTER the governing board of the California research group created its task force. The problems in Texas are bigger and not identical to those in California, which mainly involve the free-wheeling nature of the appeal process, not an entire lack of scientific review. Nonetheless, this past summer, directors of the California agency for the first time approved an award that was rejected twice by reviewers. The award went to StemCells, Inc., of Newark, Ca., which now has won $40 million, ranking the company No. 1 in awards to business from CIRM.

Earlier this month, Los Angeles Times business columnist Michael Hiltzik characterized the StemCells, Inc., award as “redolent of cronyism.”

Today's session of the CIRM task force focused primarily on an aspect of the agency's appeals process that CIRM labels as “extraordinary petitions.” They are letters which rejected applicants use to challenge decisions by grant reviewers. The researchers follow up with public appearances before the governing board, often trailing squads of patients making emotional appeals.

Both researchers and patients have a right under state law to appear before the CIRM board to discuss any matter. CIRM, however, is trying to come up with changes in the appeal process that will make it clear to researchers on what the grounds the board might overturn reviewers' decisions. The agency is also defining those grounds narrowly and aiming at eliminating appeals based on differences in scientific opinion.

At today's meeting, CIRM Director Jeff Sheehy, a patient advocate and co-vice chair of the grants review group, said peer review is an “extraordinary way of analyzing science, but it is not always perfect.” However, he also said that “as a board we are not respecting input” from scientists and thus allow the perception that we can be “persuaded against the judgment of scientists.”

CIRM Director Oswald Steward, director of the Reeve-Irvine Research Center at UC Irvine, agreed with a suggestion by Sheehy that board must act with “discipline” when faced with appeals by rejected applicants. Steward said, 

“The process has gotten a little out of hand.”

It was a sentiment that drew no dissent at today's 90-minute meeting.

Missing from today's meeting, which had teleconference locations in San Francisco, Irvine, La Jolla and Palo Alto, were any of the hundreds of California scientists whose livelihoods are likely to be affected by changes in the grant approval process. Also absent were California biotech businesses, along with the only representative on the task force from CIRM's scientific reviewers.

Our comment? When researchers and businesses that have millions at stake fail to show up for key sessions that set the terms on how they can get the money, it is a sad commentary on their professional and business acumen.

Bert Lubin, a CIRM director and chairman of the task force, indicated he would like to have two more meetings of the task force prior to making recommendations to a full board workshop in January with possible final action later that month. Lubin, CEO of Children's Hospital in Oakland, said the matter is “really important for the credibility of our whole organization.”

BioTime Makes Bid for Geron's Stem Cell Assets

Biotime, Inc., and two men who were leading players in history of Geron Corp. today made a surprise, public bid for the stem cell assets of their former firm.

Michael West
West photo

Tom Okarma
AP file photo

The men are Michael West and Thomas Okarma. West founded Geron in 1990 and was its first CEO. West is now CEO of Biotime. Okarma was CEO of Geron from 1999 to 2011. Okarma joined Biotime on Sept. 28 to lead its acquistion efforts. Both Geron, based in Menlo Park, Ca., and Biotime, based in Alameda, Ca., are publicly traded.

West and Okarma sent an open letter this morning to Geron shareholders and issued a press release making a pitch for the Geron's stem cell assets. Geron jettisoned its hESC program nearly a year ago and closed its clinical trial program for spinal injuries. The move shocked the California stem cell agency, which just a few months earlier had signed an agreement to loan the firm $25 million to help fund the clinical trial. The portion of the loan that was distributed was repaid with interest.

At the time, Geron said it would try to sell off the hESC program, but no buyers have surfaced publicly. Personnel in the program have been laid off or found employment elsewhere.

The West-Okarma letter to shareholders said that under the deal,

“Geron would transfer its stem cell assets to BAC(a new subsidiary of Biotime headed by Okarma), in exchange for which you along with the other Geron shareholders would receive shares of BAC common stock representing approximately 21.4% of the outstanding BAC capital stock. BioTime would contribute to BAC the following assets in exchange for the balance of outstanding BAC capital stock:

• “$40 million in BioTime common shares;
• “Warrants to purchase BioTime common shares (“BioTime Warrants”);
• “Rights to certain stem cell assets of BioTime, and shares of two BioTime subsidiaries engaged in the development of therapeutic products from stem cells.”

The letter asked Geron shareholders to write the firm's board of directors to urge them to approve the offer.

Geron had no immediate response to the proposal. Asked for comment, Kevin McCormack, spokesman for the California stem cell agency, said the deal “had nothing to do with us.” However, in the past, CIRM has indicated that it could find a way to transfer the loan to an entity that would continue spinal injury clinical trial. CIRM President Alan Trounson was also involved at one point in trying to assist in a deal.

Geron's shares rose 12 cents to $1.54 today while Biotime's shares lost four cents to $3.95.

Here are links to the two news stories that have appeared so far on the proposed deal: Associated Press, Marketwatch.

California Stem Cell Agency Boosting Disease Team Program to $543 Million

Directors of the California stem cell agency are set to give away $20 million next Thursday and authorize a handsome addition to their signature disease team effort, bringing its total to $543 million.

It is all part of the $3 billion agency's push to develop therapies prior to running out of money for new grants in 2017.

The $20 million is expected to go to the first two winners in the agency's new strategic partnership program. CIRM says the effort is aimed at creating “incentives and processes that will: (i) enhance the likelihood that CIRM funded projects will obtain funding for Phase III clinical trials (e.g. follow-on financing), (ii) provide a source of co-funding in the earlier stages of clinical development, and (iii) enable CIRM funded projects to access expertise within pharmaceutical and large biotechnology partners in the areas of discovery, preclinical, regulatory, clinical trial design and manufacturing process development.”

CIRM reviewed six applications with two winning approval. The agency's governing board is expected to ratify the decision next week. None of the applicants have been identified by the agency, which routinely withholds that information prior to board action even when applicants have identified themselves.

Addition of a new $100 million disease team round will come on top of the second, $213 million disease team awards approved last this summer. The first round, awarded in 2009, totaled $230 million.  The size of the new round could be altered by CIRM directors prior to approval. Also before the board is a $40 million proposal to expand the industry-friendly strategic partnership effort into a second round.

The thrust of the disease team effort is to speed the process of establishing clinical trials and to finance efforts that might founder in what the biotech industry calls a valley of death – a high risk financial location, so to speak, where conventional financiers fear to tread.

The new disease team round will require “co-funding” from applicants but the agency did not specify what it means by the term. The matter of matching funds has become an issue in awards to StemCells, Inc., of Newark, Ca., in this summer's disease team round.

Next week's agenda additionally contains a plan to tighten review of proposed research budgets in grant applications, making it clear that CIRM staff will be negotiating such matters even after the board approves grants and loans.

So far no researchers have testified in public on the budget plan although it could well have a significant impact on their future efforts.

Additional matters will discussed as well at the meeting in Burlingame, which also has a teleconference location in La Jolla that will be open to the public. The address and additional material can be found on the agenda.  

Los Angeles Times: StemCells, Inc., Award 'Redolent of Cronyism'

The Los Angeles Times this morning carried a column about the “charmed relationship” between StemCells, Inc., its “powerful friends” and the $3 billion California stem cell agency.

The article was written by Pulitzer prize winner and author Michael Hiltzik, who has been critical of the agency in the past. The piece was the first in the major mainstream media about a $20 million award to StemCells, Inc., that was approved in September by the agency's board. The bottom line of the article? The award was “redolent of cronyism.”

Hiltzik noted that StemCells, Inc., now ranks as the leading corporate recipient of cash from the agency with $40 million approved during the last few months.

But he focused primarily on September's $20 million award, which was approved despite being rejected twice by grant reviewers – “a particularly impressive” performance, according to Hiltzik. It was the first time that the board has approved an award that was rejected twice by reviewers.

Hiltzik wrote,

“What was the company's secret? StemCells says it's addressing 'a serious unmet medical need' in Alzheimer's research. But it doesn't hurt that the company also had powerful friends going to bat for it, including two guys who were instrumental in getting CIRM off the ground in the first place.”

The two are Robert Klein, who led the ballot campaign that created the agency and became its first chairman, and Irv Weissman of Stanford, who co-founded StemCells, Inc., and sits on its board. Weissman, an internationally known stem cell researcher, also was an important supporter of the campaign, raising millions of dollars and appearing in TV ads. Klein, who left the agency last year, appeared twice before the CIRM board this summer to lobby his former colleagues on behalf of Weissman's company. It was Klein's first appearance before the board on behalf of a specific application.

The Times piece continued,

“But private enterprise is new territory for CIRM, which has steered almost all its grants thus far to nonprofit institutions. Those efforts haven't been trouble-free: With some 90% of the agency's grants having gone to institutions with representatives on its board, the agency has long been vulnerable to charges of conflicts of interest. The last thing it needed was to show a similar flaw in its dealings with private companies too.”

Hiltzik wrote,

“(Weissman) has also been a leading beneficiary of CIRM funding, listed as the principal researcher on three grants worth a total of $24.5 million. The agency also contributed $43.6 million toward the construction of his institute's glittering $200-million research building on the Stanford campus.”

CIRM board approval of the $20 million for StemCells, Inc., came on 7-5 vote that also required the firm to prove that it had a promised $20 million in matching funds prior to distribution of state cash.

Hiltzik continued,

“The problem is that StemCells doesn't have $20 million in spare funds. Its quarterly report for the period ended June 30 listed about $10.4 million in liquid assets, and shows it's burning about $5 million per quarter. Its prospects of raising significant cash from investors are, shall we say, conjectural.

“As it happens, within days of the board's vote, the firm downplayed any pledge 'to raise a specific amount of money in a particular period of time.' The idea that CIRM 'is requiring us to raise $20 million in matching funds' is a 'misimpression,' it said. Indeed, it suggested that it might count its existing spending on salaries and other 'infrastructure and overhead' as part of the match. StemCells declined my request that it expand on its statement. 

“CIRM spokesman Kevin McCormack says the agency is currently scrutinizing StemCells' finances 'to see what it is they have and whether it meets the requirements and expectations of the board.' The goal is to set 'terms and conditions that provide maximum protection for taxpayer dollars.' He says, 'If we can't agree on a plan, the award will not be funded.'"

Hiltzik wrote,

“The agency shouldn't be deciding on the spot what does or doesn't qualify as matching funds. It should have clear guidelines in advance.

“Nor should the board overturn the judgment of its scientific review panels without clear-cut reasons....The record suggests that the handling of the StemCells appeal was at best haphazard and at worst redolent of cronyism.” 

Researcher Alert: Stem Cell Agency to Take Up Grant Appeal Restrictions

The move by the $3 billion California stem cell agency to curtail its free-wheeling grant appeal process will undergo its first public hearing next week.

The proposals will mean that scientists whose applications are rejected by reviewers will have fewer avenues to pursue to overturn those decisions. The changes could take effect as early as next year.

The move comes in the wake of a record number of appeals this summer that left the board complaining about “arm-twisting,” lobbying and “emotionally charged presentations.”

Among other things, the new "guidelines" attempt to define criteria for re-review – “additional analysis” – of applications involved in appeals, also called “extraordinary petitions.” The plan states that re-review should occur only in the case of a material dispute of fact or material new information. (See the end of this item for agency's proposed definitions.)

In addition to alterations in the appeal process, the CIRM directors' Application Review Task Force will take up questions involving “ex parte communications.” The agenda for the Oct. 24 meeting did not contain any additional information on the issue but it likely deals with lobbying efforts on grants outside of public meetings of the agency. We understand that such efforts surfaced last summer involving the $$214 million disease team round and Robert Klein, the former chairman of the stem cell agency.

Klein appeared twice publicly before the board on one, $20 million application by StemCells, Inc., the first time a former governing board member has publicly lobbied his former colleagues on an application. The application was rejected twice by reviewers – once on the initial review and again later on a re-review – but it was ultimately approved by directors in September on a 7-5 vote.

The board has long been troubled with its appeal process but last summer's events brought the matter to a new head. The issue is difficult to deal with because state law allows anyone to address the CIRM governing board on any subject when it meets. That includes applicants who can ask the board to approve grants for any reason whatsoever, not withstanding CIRM rules. The board can also approve a grant for virtually any reason although it has generally relied on scientific scores from reviewers.

The proposals to restrict appeals are designed to make it clear to scientists whose applications are rejected by reviewers that the board is not going to look with favor on those who depart from the normal appeals procedure.

While the board almost never has overturned a positive decision by reviewers, in nearly every round it  approves some applications that have been rejected by reviewers. That has occurred as the result of appeals and as the result of motions by board members that did not result from public appeals.

Ten of the 29 board members are classified as patient advocates and often feel they must advance the cause of the diseases that they have been involved with. Sometimes that means seeking approval of applications with low scientific scores.

Here is how agency proposes to define “material dispute of fact:”

“A material dispute of fact should meet five criteria:(1) An applicant disputes the accuracy of a statement in the review summary;(2) the disputed fact was significant in the scoring or recommendation of the GWG(grant review group); (3) the dispute pertains to an objectively verifiable fact, rather than a matter of scientific judgment or opinion;(4) the discrepancy was not addressed through the Supplemental Information Process and cannot be resolved at the meeting at which the application is being considered; and (5) resolution of the dispute could affect the outcome of the board’s funding decision."

Here is how the agency proposes to define “material new information:”

“New information should: (1)be verifiable through external sources; (2) have arisen since the Grants Working Group(grant review group) meeting at which the application was considered; (3) respond directly to a specific criticism or question identified in the Grants Working Group’s review; and (4) be submitted as part of an extraordinary petition filed five business days before the board meeting at which the application is being considered."

Next week's hearing is scheduled for Children's Hospital in Oakland with a teleconference location at UC Irvine. Addresses can be found on the agenda.