Biopolitical Times: Trounson-Weissman-StemCells, Inc., Affair is 'Shameful'

The headline on the Biopolitical Times story said it all: “Shameful Conflicts of Interest Involving California’s Stem Cell Agency.”

The piece by Pete Shanks of the Center for Genetics and Society in Berkeley, Ca., dealt with the former president of the agency, Alan Trounson, and StemCells, Inc., which holds a $19.4 million award from the agency, along with Irv Weissman, the Stanford researcher who founded the firm and who now sits on its board.

Trounson was named to the StemCells, Inc., board on Monday, seven days after he left the agency. Yesterday the agency, formally known as the California Institute for Regenerative Medicine(CIRM), launched a “full review” of all activities involving StemCells, Inc. The agency also banned its staff and board fromcommunicating with Trounson about matters involving the publicly traded firm.  

Shanks wrote,

“Let's be blunt: This looks like a pay-off. Technically, what Trounson and Weissman and StemCells, Inc., just did may not be illegal. But it's shameless.”

Shanks pointed out that the problems with conflicts of interest at the agency are nothing new. As far back as 2004, they were noted prior to passage of the measure that created the state research effort. Their importance was noted by major supporters of the measure, including Weissman.

Weissman was quoted in Nature in September 2004 as saying,

“We want to avoid even the appearance of a conflict.”

Shanks concluded,

“CIRM should take a long look at its practices and procedures, which have never served the agency well — and especially should consider its obligations to the public, who fund it. There can be practical difficulties in balancing expertise and objectivity; the best scientists in any field do tend to know each other well. All the more reason to be especially careful. This kind of obviously problematic conflict of interest can and should easily be avoided.”

Scripps-USC Deal is Dead; Cash Problems Remain

The $600 million merger of The Scripps Research Institute with the University of Southern California has been quietly put to rest, but the issues behind it – money, money and money -- are still very much alive.

Scripps announced the termination of the proposed deal yesterday in a three-paragraph statement. Bradley Fikes and Gary Robbins of the San Diego U-T, who have been on this story like a dog on a bone, wrote,

“James Paulson, who chairs the Department of Cell and Molecular Biology, praised the decision in an email to U-T San Diego.

“'This is a very positive step taken by the board and Dr. (Michael) Marletta(president of Scripps),’ Paulson wrote. ‘It clears the slate to look at all possible options to secure the future of TSRI, and will undoubtedly be welcomed by the faculty.’”

Faculty leaders had called for the removal of Marletta, declaring that they lack confidence in him. Scripps is running a $21 million deficit for the fiscal year ending Sept. 30. It also has come up short in philanthropic contributions while federal funding for research has shrunk.

UC San Diego earlier expressed an interest in some sort of arrangement with Scripps, which is reknown for its biomedical research. But little information has surfaced on whether that possibility has advanced. 

California Stem Cell Agency Bans Some Communications with its Former President; Conflict of Interest Feared

The California stem cell agency today banned its employees and governing board from communicating with its former president, Alan Trounson, about matters involving StemCells, Inc., which holds a $19.4 million award from the state program.

Citing the need to protects its integrity and prevent conflicts of interest, the agency also ordered a full review of all agency activities linked to the publicly traded,  Newark, Ca., firm.

Today’s action followed Monday’s appointment of Trounson to StemCells, Inc.’s, board of directors. The announcement came only seven days after Trounson’s departure from the agency.  Members of the StemCells board received as much as $99,800 in total compensation in 2013.

Trounson’s relationship with StemCells, Inc., and its founder, Stanford researcher Irv Weissman, has come under sharp criticism. John Simpson of Consumer Watchdog of Santa Monica, Ca., a longtime observer of California stem cell affairs, said this week that Trounson’s appointment “calls into question not only his ethics, but unfortunately casts a shadow over CIRM and its award process as well.” 

Simpson said,

“Whether it’s true or not, this has every appearance of being a payback for the money CIRM paid out to Irv Weissman and Stanford University. StemCells Inc. and Stanford have received more than $300 million from CIRM — more than any other researchers.”

Weissman has received $34.7 million in grants from the stem cell agency, which is formally known as the California Institute of Regenerative Medicine (CIRM). Stanford has received $281 million.

In its announcement today, Randy Mills, the agency's new president, said,

“CIRM was created by the people of California to help accelerate stem cell treatments to patients with unmet medical needs.  Our responsibility is to them. So it is essential that we conduct these efforts with fairness and integrity. We take even the appearance of conflicts of interest very seriously.”

The agency also said that it was sending a letter to Trounson and StemCells, Inc.,  “reminding them of the legal limitations that apply to Dr. Trounson under state law.

“Although it is permissible for Dr. Trounson to accept employment with a CIRM-funded company, state law prohibits him from:

“1.  Communicating with Board members and CIRM employees on behalf of Stem Cells, Inc. for the purposes of influencing any administrative action, including the award or revocation of a grant or loan, involving Stem Cells, Inc. for one year following the termination of his employment with CIRM; and
“2. Assisting Stem Cells, Inc. in responding to a Request for Applications in which Dr. Trounson was involved as a CIRM employee or assisting Stem Cells Inc. with its existing loan.”

The agency said that it did not know that Trounson was going to be appointed to the StemCells board and only learned about it through the press release Monday morning.

The $19.4 million award to StemCells, Inc., occurred under unusual circumstances.  Robert Klein, the first chairman of CIRM, lobbied on behalf of the award, which was rejected twice by the agency’s respected reviewers.  Despite reviewer actions, the board approved the award on a 7-5 vote. (See here, here and here.)

Trounson’s relationship Weissman came under question also in the $40 million stem cell genomics award earlier this year. The No. 2 person in Weissman’s Stanford stem cell institute was involved in that award. However, the agency has not yet signed a final agreement involving that proposal.

The agency did not mention any awards beyond those involving StemCells, Inc., in its review.

The San Francisco Chronicle carried a story this afternoon on the agency's ban regarding Trounson.

Stephanie Lee wrote in the Chron,

“'It’s a pity that Trounson and StemCells Inc. simply don’t get it,' Simpson said. 'A full review of CIRM activities relating to StemCells Inc.,  as Mills pledged, is absolutely essential and the results must be made public as soon as available.'”

Bradley Fikes of the San Diego U-T quoted CIRM Chairman Jonathan Thomas as telling his board members,

"The announcement (by StemCells, Inc.)raises serious and obvious concerns on a number of fronts." 

Watchdog Says Trounson-StemCells, Inc., Connection Casts 'Shadow' Over California Stem Cell Agency

The San Francisco Chronicle today carried a story on the appointment of Alan Trounson, former president of the $3 billion California stem cell agency, to the board of  StemCells, Inc., which has received $19.4 million from the research program.

Trounson’s appointment came only seven days after he left state employment. Last year, members of the firm's board received as much as $99,800 in cash and company stock, as reported by the California Stem Cell Report yesterday.

Chronicle reporter Stephanie Lee today wrote that the agency's funding was "pivotal" for StemCells, Inc. On Saturday, in an overview of the stem cell agency, she quoted Martin McGlynn, CEO of the publicly traded company, as saying,

 “We would not have been able undertake another program, and certainly one as challenging and as risky as Alzheimer’s, were it not for the fact that (the agency) was willing to provide funding for us.”

Lee also quoted John Simpson of Consumer Watchdog of Santa Monica, Ca., a longtime observer of the agency, on the matter. Simpson said that Trounson’s joining of the board “calls into question not only his ethics, but unfortunately casts a shadow over CIRM and its award process as well.”

Simpson continued,

“Whether it’s true or not, this has every appearance of being a payback for the money CIRM paid out to Irv Weissman (an eminent Stanford researcher and founder of StemCells, Inc.) and Stanford University. StemCells Inc. and Stanford have received more than $300 million from CIRM — more than any other researchers.”

Simpson said that Trounson should have waited two years before joining a company that had received funds from the stem cell agency.

Lee said that StemCells, Inc., filed a document with the federal Security and Exchange Commission that said said,

 “There was no arrangement or understanding between the Company and Dr. Trounson pursuant to which he was selected as a director of the Company.”

Lee said the Newark, Ca., company declined to comment. The California Stem Cell Report yesterday asked StemCells, Inc., Weissman and Trounson for comment as well as the stem cell agency.  Their remarks will be carried verbatim when they are received.

Ron Leuty of the San Francisco Business Times also wrote a piece on the matter yesterday.

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

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

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

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

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

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

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

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

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

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

As the California Stem Cell Report has previously noted,,

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

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

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

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

According to the meeting transcript, Trounson said,

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

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

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

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

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

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

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

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

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

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

"Stem cells: Hope on the line"

The subhead said,

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

Hayden wrote,

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

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

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

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

Klein also said,

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

As for the agency’s accomplishments, Hayden wrote,

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

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

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

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

It was headlined,

“Stem cell researchers under pressure to produce”

The headline was drawn from this paragraph by Lee,

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

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

 She continued,

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

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

Lee continued,

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

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

Disillusionment Cited by Scripps Researchers: No on Marletta and USC

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

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

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

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

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

Scripps' Top Faculty Wants Marletta Removed as President

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

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

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

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

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

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

Fikes and Robbins wrote,

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

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

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

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

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

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

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

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

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

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

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

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

Michael Marletta
Scripps photo

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

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

Marletta continued,

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

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

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

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

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

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

Richard Gephardt
Gephardt Government Affairs photo

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

Wikipedia reports,

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

Expectations, Ballyhoo and Stem Cell Research

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

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

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

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

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

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

She continued,

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

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

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

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

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

Hype and Hope: Illuminating the Reality of Stem Cell Treatments

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

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

Pete Shanks
CGS photo

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

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

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

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

Shanks continued,

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

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

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

Shanks concluded,

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

“Sell help not hope.”

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

Hillary Backs California Stem Cell Agency

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

   California Stem Cell Agency Contract with Calimmune

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

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

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

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

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

Sheri Sangji
Sangji family photo

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

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

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

In return, he will serve no jail time.

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

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

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

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

USC Dangling $600 Million Lure for Scripps

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

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

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

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

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

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

Ostrowski, however, also wrote,

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

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

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

Burrill's Appearance Scrubbed at Big Biotech Convention

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

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

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

Alex Lash of Xconomy wrote, 

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

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

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

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

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

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

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

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

Fikes and Robbins wrote,

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

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

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

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

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

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

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

Tweeting the Elusive Stem Cell: A Canadian Study

Julie Robillard, CIRM photo

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

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

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

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

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

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

McCormack continued,

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

McCormack concluded,

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

California Biotech Guru Steven Burrill in 'Deep Yogurt'

Steve Burrill is perhaps the leading maven on biotech in California as well as nationally. 

He has raised more than $1 billion for life sciences financing via his investment banking firm. He publishes an annual state-of-the-industry study that is something of a bible.

He is an omnipresent speaker at major biotech conferences. In 2006, his firm organized a stem cell conference that was partly a celebration of the California stem cell agency. Next week he is scheduled to be a keynote speaker at the huge BIO2014 industry conference in San Diego, which is expected to be attended by 16,000 persons.

Today, however, the Web site for his investment firm is shut down. The headlines about him on the Internet are less than pleasant. To use an expression that Burrill sometimes utters, he is in “deep yogurt.”

Nathan Vardi broke the story yesterday on Forbes. The piece was headlined 

"Steven Burrill Removed From Control Of Venture Fund For Unauthorized Payments”

Other stories used terms like “disbelief,” “fraud allegations,” “ousted” and "dumped."

Vardi’s snynopsis of the allegations said,

"G. Steven Burrill, the CEO and founder of Burrill & Co., a San Francisco financial firm specializing in biotechnology and life sciences investing, was ousted from control of a $283 million venture capital fund earlier this year by big institutional investors that cited willful or reckless misconduct related to unauthorized payments, according to documents recently filed in California State court in San Francisco." 

Alex Nash at Xconomy wrote,

“Burrill, known for his natty suits and pink shirts, is being sued for fraud by a former colleague for allegedly taking cash meant for investment and diverting it to his own 'designees and affiliates.'”

Burrill has not yet responded to requests for comments from the media covering the situation. And it is not clear whether he will still appear for his scheduled 90-minute talk next Tuesday in San Diego.

All of this involves allegations and contentions in lawsuits. But the perception is not good. Burrill himself knows the importance of perceptions. A few years back he spoke to a group at Stanford about making money in biotech and said,

 “Perceived value is more important than real value.”

 (See embedded video at the top of this article.)

And in February in comments to the Tampa Bay Business Journal about California’s success in life sciences, he said,

“Culture is a big part of it. People want to be part of a culture that tolerates failure.”

New California Stem Cell CEO and his Criteria for Handing Out Cash

The new president of the $3 billion California stem cell agency, Randy Mills, will bring his stump speech to San Diego next week where more than 10,000 biotech business types are expected to gather in perhaps the largest such meeting in the nation.

Randy Mills

Mills has scheduled a public appearance, with questions from the audience, for next Tuesday at the Manchester Grand Hyatt hotel. He will also moderate a panel at the BIO 2014 convention on commercializing stem cell therapies, a subject with which he is intimately familiar. Mills was head of Osiris Therapeutics as it slogged its way to approval of a stem cell therapy.  Linda Marban, CEO of the CIRM-funded and publicly traded Capricor, will be one of the speakers on the panel.

Mills has been on the job fulltime only since June 1. He has made two public appearances this month, one in San Francisco, where the agency is based, and one in Los Angeles. Kevin McCormack, senior director of public communications for the agency, wrote about one session last week. 

“Randy began by saying that he has a simple guiding principle; that everything we do at the agency should be ‘all about the patients.’ In fleshing that out, he identified four criteria that he will use in making any decision:

“1. Will it speed up the development of treatments for patients?

“2. Will it increase the likelihood of developing a successful treatment for patients?

“3. Will it meet an unmet medical need?

“4. Is it efficient?

“He says those criteria will help make sure that everything we do at the stem cell agency is in alignment with our goals; that we aren’t funding work that could easily attract funding from other agencies or even the pharmaceutical industry.”

McCormack continued,

“For the scientists, Randy said his goal was to give them as much support as they needed, particularly in the areas where they may not be very experienced – such as moving products into clinical trials, getting approval from regulatory agencies such as the Food and Drug Administration (FDA) and commercializing a potential therapy.” 

 The San Diego public meeting next Tuesday will be from 6 p.m. to 7 p.m. at the  Grand Hyatt, 1 Market Place, in the Gas Lamp rooms, A & B.

Other top stem cell agency officials scheduled to be at the BIO convention, which could hit 16,000 attendees, include Chairman Jonathan Thomas, former President Alan Trounson and senior vice president Ellen Feigal.

Here is the list of events for the Regenerative Medicine Day, which the stem cell agency is co-sponsoring, at  BIO next Wednesday, including speakers.