Biotime-Geron Deal Attracts Interest from Brit Investor

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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.

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/va_Yea0dbF8/biotime-geron-deal-attracts-interest.html

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

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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.” 

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/6qvBfSLP3RE/los-angeles-times-stemcells-inc-award.html

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

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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.”

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/A3HGGTzzso8/texas-science-flap-cited-as-california.html

Yamanaka: 'Rejected, Slow and Clumsy'

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This week's announcement of the Nobel
Prize for Shinya Yamanaka brought along some interesting
tidbits, including who was “snubbed” as well as recollections
from the recipient.

Jon Bardin of the Los Angeles Times
wrote the “snubbed” piece and quoted Christopher Scott of
Stanford and Paul Knoepfler of UC Davis about the selection issues.
Bardin's piece mentioned Jamie Thomson and Ian Wilmut as scientists
who also could have been considered for the award but were not named.
Ultimately, Bardin wrote that the award committee was looking for a
“singular, paradigm shifting discovery,” which he concluded was
not the case with Thomson or Wilmut.
How Yamanaka arrived at his research
was another topic in the news coverage, much of it dry as dust.
However, Lisa Krieger of the San Jose Mercury News began her story
with Yamanaka's travails some 20 years ago. At the time, no one was returning his phone
calls as he looked for work, and he was rejected by
50 apparently not-so-farsighted American labs.
But that job search in 1993 came only after Yamanaka
decided he was less than successful as an orthopedic surgeon,
according to an account in JapanRealTime. “Slow and clumsy” was
how Yamanaka described himself.
And so he moved on to research. But
again he reported stumbling. In this case, he found a way to reduce
“bad cholesterol” but with a tiny complication – liver cancer.
That in turn sent him on a journey to learn how cells proliferate and
develop, which led him to the work that won the Nobel Prize.
Yamanaka said his original interest in
orthopedic medicine was stimulated by his father along with the treatments
for injuries young Yamanaka received while playing rugby and learning judo. The JapanRealTime account continued,

“'My father probably still thinks in
heaven that I’m a doctor,' he said in the interview(with Asahi
Shimbun last April). 'IPS cells are still at a research phase and
have not treated a single patient. I hope to link it to actual
treatment soon so I will be not embarrassed when I meet my father
someday.'”

And then there was, of course, the much-repeated story from the researcher who shared the Nobel with Yamanaka, John Gurdon. He has preserved to this day a
report from a high school biology teacher that said the 15-year-old
Gurdon's desire to become a scientist was “quite ridiculous.”
The teacher, who is unnamed, wrote,

“If he can’t learn simple
biological facts he would have no chance of doing the work of a
specialist, and it would be a sheer waste of time, both on his part
and of those who would have to teach him.”

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/7J31SRIukpg/yamanaka-rejected-slow-and-clumsy.html

Yamanaka and the Frailty of Peer Review

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More than one back story exists on
Shinya Yamanaka and his Nobel Prize, but one that has received little
attention this week also raises questions about hoary practice of
peer review and publication of research – not to mention the
awarding of billions of dollars in taxpayer dollars.

The Yamanaka tale goes back to a 2010
article in the New Scientist magazine by Peter Aldous in which the
publication examined more than 200 stem cell papers published from
“2006 onwards.” The study showed an apparent favoritism towards
U.S. scientists. Also specifically reported were long delays in
publication of Yamanaka's papers, including in one case 295 days.
Here is part of what Aldous wrote,

“All's fair in love and war, they
say, but science is supposed to obey more noble ideals. New findings
are submitted for publication, the studies are farmed out to experts
for objective 'peer review' and the best research appears promptly
in the most prestigious journals. 

“Some stem cell biologists are crying
foul, however. Last year(2009), 14 researchers in this notoriously
competitive field wrote
to leading journals complaining of "unreasonable or
obstructive reviews". The result, they claimed, is that
'publication of truly original findings may be delayed or rejected.' 

“Triggered by this protest, New
Scientist scrutinised the dynamics of publication in the most
exciting and competitive area of stem
cell research, in which cells are 'reprogrammed' to
acquire the versatility of those of an early-stage embryo. In this
fast-moving field, where a Nobel prize is arguably at stake,
biologists are racing feverishly to publish their findings in top
journals. 

“Our analysis of more than 200
research papers from 2006 onwards reveals that US-based scientists
are enjoying a significant advantage, getting their papers published
faster and in more prominent journals (find
our data, methods and analyses here). 

“More mysterious, given his standing
in the field, is why two of Yamanaka's papers were among the 10 with
the longest lags. In the most delayed of all, Yamanaka reported that
the tumour-suppressing gene p53 inhibits the formation of
iPS cells. The paper took 295 days to be accepted. It was eventually
published by Nature in August 2009 alongside four similar
studies. 'Yamanaka's paper was submitted months before any of the
others,' complains Austin
Smith at the University of Cambridge, UK, who coordinated
the letter sent to leading journals. 

“Yamanaka suggests that editors may
be less excited by papers from non-US scientists, but may change
their minds when they receive similar work from leading labs in the
US. In this case, Hochedlinger submitted a paper similar to
Yamanaka's, but nearly six months after him. Ritu
Dhand, Nature's chief biology editor, says that each paper
is assessed on its own merits. Hochedlinger says he was unaware of
Yamanaka's research on p53 before publication.”

Last week, Paul Knoepfler of UC Davis
wrote of other issues dealing with peer review, but coincidentally
also dealing with iPS cells. What New Scientist and Knoepfler are
discussing is not an isolated situation. It is part of a continuum of
complaints, both serious and self-interested but exceedingly
pervasive. A Google search today on the term “problems with peer
review” turned up 10.1 million references.  Writing on Ars Technica last year, Jonathan Gitlin, science policy analyst at the National
Human Genome Research Institute,  summarized many of the issues, citing a “published” (our quotation marks)
study that said peer review doesn't work “any better than chance.”
Gitlin said,

“A common criticism is that peer
review is biased towards well-established research groups and the
scientific status quo. Reviewers are unwilling to reject papers from
big names in their fields out of fear, and they can be hostile to
ideas that challenge their own, even if the supporting data is good.
Unscrupulous reviewers can reject papers and then quickly publish
similar work themselves.” 

At the $3 billion California stem cell
agency, peer review is undergoing some modest, indirect examination
nowadays. The agency is moving towards tighter scrutiny of budgets
proposed by applicants. And, following a record wave of appeals this
summer by disgruntled applicants rejected during peer review, it is
also moving to bring the appeal process under more control.
As the agency tries to move faster and
more successfully towards development of commercial therapies, it may
do well to consider also the frailties of its peer review process and the
perils of scientific orthodoxy.   

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/lESi4gQF2IA/yamanaka-and-frailty-of-peer-review.html

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

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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.

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/6sbxGqQJ77Y/researcher-alert-stem-cell-agency-to.html

Yamanaka and the Golden State

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The iPierian biopharmaceutical company
in South San Francisco was quick to make a change in its web site
this morning after the Nobel Prize for medicine was announced.

Altered was the bio for one of its
scientific advisors, Shinya Yamanaka, to note that he had won the
Nobel. The bio is tucked away on the site, but it is likely that the
company, which specializes in iPS work, will figure out how to put
the news out front on its home page as well as issue a press release.
It was all part of the reaction today
in California to the Nobel for Yamanaka, who has substantial links to
the Golden State, including UCSF and the Gladstone Institutes.
Both enterprises moved with greater
deftness than iPierian. Yamanaka is a professor at UCSF and a senior
investigator at Gladstone, and the organizations quickly put together a news conference this morning that featured Yamanaka on a video
hook-up from Japan.
UCSF, which is allied with Gladstone,
issued a press release that quoted the president of Gladstone, R.
Sanders Williams, who also mentioned the California stem cell agency.
Williams said,

“Dr. Yamanaka’s story is a
thrilling tale of creative genius, focused dedication and successful
cross-disciplinary science. These traits, nurtured during Dr.
Yamanaka’s postdoctoral training at Gladstone, have led to a
breakthrough that has helped propel the San Francisco Bay Area to the
forefront of stem cell research. Dozens of labs — often supported
by organizations such as the California Institute for Regenerative
Medicine (CIRM) and the Roddenberry Foundation–have adopted his
technology.” 

CIRM, which is the state's $3 billion
stem cell effort, published an item on its blog quoting CIRM
President Alan Trounson. He said,

"There are few moments in science
that are undisputed as genuine elegant creativity and simplicity.
Shinya Yamanaka is responsible for one of those. The induced
pluripotent stem cells he created will allow us to interrogate and
understand the full extent and variation of human disease, will
enable us to develop new medicines and will forever change the way
science and medicine will be conducted for the benefit of mankind. An
extraordinary accomplishment by a genuinely modest and brilliant
scientist. He absolutely deserves a Nobel award.”

The CIRM item by Amy Adams, the
agency's communications manager, said that just five years after
Yamanaka's research,

“CIRM alone is funding almost $190
million in awards developing better ways of creating iPS cells and
using those cells to develop new therapies (the
full list of iPS grants is on our website).”

One of the recipients of CIRM's iPS
cash is the well-connected iPierian, which has taken in $7.1 million.
Yamanaka, however, has never received a grant from the agency, and
it is not known whether he ever applied since CIRM releases only the
names of researchers whose applications were approved.

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/RbQ09EsO8Qc/yamanaka-and-golden-state.html

Tighter Controls on Stem Cell Grant Budgets Hits Quorum Bump

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SAN FRANCISCO – A move to tighten
budget controls on grants from the $3 billion California stem cell
agency stalled Monday, but it appears that the plan is headed for
ultimate approval.

The proposal was up for consideration
by the agency's directors' Science Subcommittee, which could not act
on it after it lost its quorum.
Members of the panel generally favored
the stronger budget controls, but had questions about the specifics
of implementing the plan during closed-door reviews of grant
applications. The proposal is likely to be altered to respond to
those concerns. It would then either come back to the Science
Subcommittee or go to the full board.
The plan would make it clear to
recipients of large grants that approval of an application by the
agency's governing board does not provide a carte blanche to
researchers. Ellen Feigal, senior vice president for research and
development, said it can be “extremely difficult” for CIRM staff
to deal with budget problems in grants following board approval.
The committee also approved a plan to
speed the application process on its next disease team round, which
is aimed at driving research into the clinic. The concept proposal
for that round is scheduled to come before directors later this
month. The round will be limited to “more mature stage” research
that is close to a clinical trial, if not in one. Feigal said 10 to
15 applications are expected.
Another proposal to add more millions
to CIRM's strategic partnership program was also approved.

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/EqLIk55mLu4/tighter-controls-on-stem-cell-grant.html

UCD's Knoepfler's 'Somewhat Provocative Paper' on iPS

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UC Davis researcher Paul Knoepfler is
the rare stem cell scientist who blogs about his work as well as
writing about issues in the field.

Over the weekend, he posted an item on
what he described as a “somewhat provocative paper” published by his lab in
“Stem Cells and Development.”  He said the paper argued
that iPS cells “are very similar in some ways to cancer cells.”
Most of his item deals with the
technical details and background of the research. But at the end of
this item, Knoepfler wrote,

“So what does this mean in the big
picture? 

“I believe that iPS cells and cancer
cells are, while not the same, close enough to be called siblings. As
such, the clinical use of iPS cells should wait for a lot more study.
Even if scientists do not use iPS cells themselves for transplants,
but instead use differentiated derivatives of iPS cells, the risk of
patients getting malignant cancers cannot be ignored. 

“At the same time, the studies
suggest possible ways to make iPS cells safer and support the notion
of reprogramming cancer cells as an innovative new cancer therapy. 

“Stay tuned in the next few days for
part 2 where I will discuss what this paper went through in terms of
review, etc. to get published. It wasn’t a popular story for some
folks.”

The UC Davis press release on the
research, which was financed by the California stem cell agency and the NIH,  was picked up by several online sites, including Redorbit,
Medicalexpress and geekosystem.

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/eNPFE1TC2TI/ucds-knoepflers-somewhat-provocative.html

Researcher Alert: California Stem Cell Agency Tightening Budget Oversight on Grants

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Some of California's top stem cell
researchers are going to have to sharpen their spreadsheets if they
want to win money from the state's $3 billion stem cell agency.

The agency is moving to beef up
scrutiny of the high-profile, big-ticket grant applications
that it will consider during the next several years. The effort may well extend to all grant programs. The move also makes
it clear to researchers that the CIRM staff is in the driver's seat
when it comes to budgeting on research projects.
The plan was laid out this week in a memo to directors of the California Institute for Regenerative Medicine (CIRM) by Ellen Feigal, the agency's senior vice
president for research and development. She said,

“Increasing the importance of
budgetary review will encourage applicants to propose rigorous,
realistic and vetted budgets, and will further our mission to be good
stewards of taxpayer dollars. These additions will not significantly
increase the workload burden on GWG members (grant reviewers) and
explicitly acknowledge that program goals, scientific plans, accurate budgeting and prudent spending are inextricably linked.”

The proposal comes before the CIRM
directors' Science Subcommittee next Monday and would alter the
closed-door grant review process in the following manner, according
to Feigal's memo.

• “To assist GWG review,
appropriate expertise on budget and financial matters (e.g., this
could be in the form of a specialist reviewer, or can also be
assigned to a GWG reviewer with the appropriate background and
expertise), will review applications for sound budgeting and provide
comments or questions to the GWG for consideration by the reviewers
before the reviewer’s final scores are entered.
• “If the financial/budgetary
matter potentially directly impacts on the design or feasibility of
conducting the project, the GWG may consider this issue in the
scoring; otherwise, budgetary and financial issues and questions will
not contribute to the scientific score.
• “As appropriate, review summaries
sent to the ICOC (the CIRM governing board) will identify scientific
as well as budget or other issues. To the extent endorsed by the
GWG, the review summaries will also identify potential resolution
should the ICOC approve a given award with budget issues.
• “CIRM officers should be provided
explicit discretion to consider the budget comments, as well as
budget or other issues. To the extent endorsed by the GWG, the
review summaries will also identify potential resolution should the
ICOC approve a given award with budget issues.”

Feigal's memo clearly indicates that
CIRM staff has experienced push-back from recalcitrant researchers
when efforts have been made to bring costs under control. She noted that
the agency's staff examines a research project's budget during the
“prefunding” review that follows board approval. However, Feigal
said, at that stage, “It is often challenging to make substantive
changes to the budget, based on appropriateness of study activities
and costs, given the ICOC approval at a given budget amount.”
The agency has already examined some
budgets prior to board approval. One grant review in a $200
million-plus round this summer, for example, declared that costs to
prepare regulation packages had “overlap” and were “excessive,”
along with costs dealing with manufacturing and per patient expenses.
That was for a high-scoring application by Antoni Ribas of UCLA, and
he was not alone.
In her memo, Feigal listed other cases
of budgetary shortcomings in recent applications:,

• “Budget does not align with the
program deliverables and milestones. For example, the budget
includes activities not relevant to project objective(s) or that are
out of scope.
•”Budget does not contain adequate
expenses for known costs. For example, an applicant may budget
$100,000 for a GMP manufacturing run of a biologic in which it is
generally accepted knowledge that the actual expenses are typically
much greater.
•“Budget item significantly exceeds
a known cost or seems excessive without adequate justification. For
example, an applicant may propose a surgical expense of $100,000 per
patient for a procedure with Medicare reimbursement set at $15,000.
•“Cost allocations are not done
properly. For example, an applicant is developing the same
therapeutic candidate for 3 indications, and is applying for CIRM
funding for 1 of the 3, but is charging CIRM for the cost of the
entire manufacturing run.”

Initially, the budgetary review would
be used in disease team, early translational, strategic partnership
rounds, and any new rounds “as deemed appropriate.” Feigal said,
however, that “all applications for CIRM awards should be
carefully examined for budgetary appropriateness.”
Our take: This seems to be a
well-advised move, albeit one that is not likely to find favor with
researchers accustomed to loose oversight. It moves budgetary review
to an earlier stage and gives the CIRM directors a chance to weigh in
on those matters prior to approval of grants, instead of creating a
sense of entitlement on the part of recipients that may pop up
following board approval of their applications. Indeed, the plan
makes such good sense that it raises the question why it was not in
place years ago.
A final note: Feigal's memo is an
excellent example of the type of information that clarifies issues
and helps CIRM directors make the best possible decisions. It
provides some history, good evidence for a change and an explanation
of benefits. Additionally, the memo is timely, having been posted on
the CIRM website sufficiently in advance of next week's meeting to give affected parties and others time to comment
and make constructive suggestions. The memo is also far superior to
the Power Point presentations that are often submitted to the board
minus any nuanced, written discussion of the issue at hand.
Next week's meeting will be based in
San Francisco but also has teleconference locations in Irvine (2), La
Jolla, Stanford, Pleasanton, Oakland and Los Angeles where the public
and researchers can participate. The specific addresses can be found on the agenda.

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/30DY8fml4zE/researcher-alert-california-stem-cell.html

Stem Cell Orthodoxy and Peer Review

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Going against the grain can be
difficult as UC Davis stem cell scientist Paul Knoepfler learned
again in connection with his research that dealt with similarities
between cancer and iPS cells.

His “unsettling” findings troubled
some scientists who reviewed his paper prior to its publication in
September in Stem Cells and Development. (See here and here.)
As many readers know, iPS or
reprogrammed adult cells are currently a hot research avenue in stem
cell research because they avoid many of the ticklish ethical and
political problems connected with human embryonic stem cells.
Knoepfler shared his thoughts on the
publication and peer review process on his blog last week. He wrote,

“Not surprisingly...there are certain
members of the stem cell field who would rather focus away from the
ideas that iPS cells are similar in some respects to cancer.”

Knoepfler, whose research was financed
in part by the California stem cell agency, wrote,

“Once we had a manuscript together
comparing iPS cells to cancer cells, we sent it to several high
profile journals without much luck. We thought that the fact that our
data indicated that iPS cells are similar to cancer cells might make
reviewers and editors excited. We thought that the paper was novel
and thought provoking in a number of ways. At the same time I
realized the theme of the paper would be controversial. 

“I would say two general things about
the review process at the two journals that turned down the paper.
First, the reviewers at these journals were enormously helpful with
their suggestions and helped us improve the paper substantially.
Second, they were clearly very uncomfortable with the notion that iPS
cells are related in some ways to cancer so unsettled in fact that I
believe it influenced their reviews.”

At one journal, a reviewer said the
findings were either “not sufficiently novel” or “trivial.”
“Little useful insights” said another. And a third said, “many
unsettling results....”
Knoepfler commented on this blog,

“Yeah, it may be unsettling that iPS
cells share traits with cancer cells, but if that is the reality,
isn’t it important that people know that and think about it, talk
about it, and address the issue with eyes open?”

Knoepfler's item and similar comments
from other researchers that can found elsewhere on the Internet
indirectly raise questions about the California stem cell agency's process
of peer review of applications for hundreds of millions of dollars in
funding, especially in the wake of this summer's unprecedented rash of appeals of decisions by grant reviewers.
The key question is whether the agency's closed-door process reinforces orthodoxy or, in fact, is all but controlled by what
amounts to scientific conventional wisdom. Obviously, no researcher
likes to see a paper rejected or a grant denied. But the record
number of appeals at CIRM and other private complaints could well indicate
that potentially profitable proposals are receiving a less than
welcome reception behind closed doors from agency reviewers.
The agency's board itself is
hard-pressed to make such determinations. It is hamstrung by
procedures that do not permit it to expand an application directly –
only a staff-written summary. Names of applicants and institutions
are censored, although the board is required by law to discuss in
public most aspects of a research proposal. Exceptions are permitted for proprietary information. Additionally, a handful of the 29 members of the governing board do participate in the reviews, which come before final action by the board. 
Currently the agency is pushing hard to
commercialize stem cell research and fulfill at least some of the
promises to voters that were made in 2004. To do that, the agency may
well have to step outside of the normal comfort zone of the good
burghers of stem cell science.

Source:
http://feedproxy.google.com/~r/blogspot/uqpFc/~3/LITB6cXS-ZM/stem-cell-orthodoxy-and-peer-review.html

$700,000 Blue-ribbon Study of CIRM All But Finished

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The $700,000 study of the $3 billion
California stem cell agency is nearly concluded and is expected to be
released sometime in November.

A draft of the report has been sent out
for “peer review” and no additional public meetings are
scheduled, according to a spokeswoman for the Institute of
Medicine(IOM), which is conducting the study. The IOM did not respond
to questions from the California Stem Cell Report about the number of peer reviewers or how they were selected.
The study began last year under a contract with the stem cell agency, which commissioned the effort, in
part, because agency directors hoped the findings by the blue-ribbon
panel would bolster efforts to win voter approval of another multi-billion dollar state bond issue. More recently the agency has
explored the possibility of private financing to continue operations.
The agency is expected to run out of
funds for new awards in 2017. It currently has something in the
neighborhood of $700 million for awards that is not already committed
in one fashion or another.
Christine Stencel, senior media
relations officer for the IOM, said in an email,

“There will be no
further information-gathering meetings. The committee members have
finished drafting their report and it is now undergoing peer review.
Reviewers are anonymous to study staff and committee members; they
will be listed in the front matter of the report when it’s finished
and released.”

She said the stem
cell agency will not be given an opportunity to comment further.
Stencel said,

“Sponsors are not
treated as peer reviewers; that is, they’re not afforded an
opportunity to comment on IOM draft reports prior to public release.
IOM is aiming for a public release in November (the exact time frame
will hinge on the duration of the peer review, which is influenced by
people’s schedules and adherence to deadlines). IOM is looking at
options for how best to hold this release, whether there will be an
event of some sort. Once plans are set, they’ll be noted on the
project web pages and IOM will alert the various stakeholders and
interested parties of the plans. The study is moving along and we’re
looking forward to the report’s debut in the not too distant
future.”

Source:
http://californiastemcellreport.blogspot.com/feeds/posts/default?alt=rss

Fortune Magazine on California Stem Cell Agency: Warm, Personal and Favorable

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California's $3 billion stem cell
research effort today garnered a handsome dollop of favorable
national news coverage– a lengthy piece in Fortune magazine that
spoke of looming stem cell cures and the leading role of the state
stem cell agency.

The article led the Fortune web page online at one point this morning and
likely will be read by tens of thousands of persons, although it was not the cover story on the print product. 
Written by a former senior editor of
the magazine, Jeffrey O'Brien of Mill Valley, Ca., the piece was warm
and personal. He began with the story of his 95-year-old
grandmother and her health issues, ranging from arthritis to macular
degeneration. And he wrote,

“The citizens of California have
spoken. If my grandmother and I had the power to get the rest of the
country to follow, we would.”

O'Brien also discussed the science and
finances of the stem cell business. He said,

“To be clear, the earliest stem cell
therapies are almost certainly years from distribution. But so much
progress has been made at venerable research institutions that it now
seems possible to honestly discuss the possibility of a new medical
paradigm emerging within a generation. Working primarily with rodents
in preclinical trials, MDs and Ph.D.s are making the paralyzed walk
and the impotent virile. A stem cell therapy for two types of macular
degeneration recently restored the vision of two women. Once they
were blind. Now they see!

“Some experts assert that AMD could
be eradicated within a decade. Other scientists are heralding a
drug-free fix for HIV/AIDS. Various forms of cancer, Parkinson's,
diabetes, heart disease, stroke, and ALS have already been eradicated
in mice. If such work translates to humans, it will represent the
type of platform advancement that comes along in medicine only once
in a lifetime or two. The effect on the economy would be substantial.
Champions of stem cell research say it would be on the order of the
Internet or even the transistor.”

O'Brien continued,

“The obstacles along the road from
lab rat to human patients are many, of course, but the biggest by far
is money. With the dramatic events in the lab, you might think that a
gold rush would be under way. That's far from true. Long time
horizons, regulatory hurdles, huge R&D costs, public sentiment,
and political headwinds have all scared financiers. Wall Street isn't
interested in financing this particular dream. Most stem cell
companies that have dared go public are trading down 90% or more from
their IPOs. Sand Hill Road is AWOL. The National Venture Capital
Association doesn't even have a category to track stem cell
investments.”

As for the California stem cell agency
itself, the article contained remarks from its Chairman J.T.Thomas,
President Alan Trounson and former chairman Robert Klein about the origins and progress of the California Institute for Regenerative Medicine (CIRM).
O'Brien wrote, 

“The $1.7 billion awarded so far has made one obvious mark on the state: a dozen gleaming research institutions. CIRM has proved adept at getting billionaires to donate funds to the cause.”

O'Brien interviewed a several
prominent businessmen who have contributed tens of millions of
dollars to stem cell research “about the prospects of a legitimate industry emerging.” One was “bond genius” Bill Gross, who has
contributed to UC Irvine. Gross replied.

“Goodness, you're talking to the
wrong guy. Our donation had nothing to do with business.”

Eli Broad, another big stem cell donor,
said pretty much the same thing. And Andy Grove, the former chairman
of Intel, was “surprisingly full of doom and gloom.” O'Brien
wrote,

“For close to two hours, Grove argues
passionately about how the FDA is enabling predatory offshore
industries by impeding progress and the many reasons financiers want
no part of stem cells. "VCs aren't interested because it's a
shitty business," he says. Big Pharma? Forget it. CIRM? "There
are gleaming fucking buildings everywhere. That wasn't necessary."
When I press him to be constructive, he wearily offers one possible
solution. Rather than courting billionaires to put their names on
buildings, we need a system of targeted philanthropy in which the 99%
can sponsor the individual stem cell lines that matter to them.”

O'Brien said, however,

“It was clear during our talk that
Grove wants an economic model for stem cell research and development
to emerge, even if he's not willing to bet money on its happening.
And that puts him in good company.”

While the Fortune article has its
negative points about stem cell research, it is about as laudatory as
it is going to get at this point for the California stem cell agency.
The piece recognizes and even celebrates much of the work of the
agency. The article clearly details the void in financing
for commercialization of stem cell research, bolstering support for
efforts like those in California. Importantly, it also helps to push
the activities of the stem cell agency more fully into the national
discussion of stem cell research and its future. That should pay off
again and again in future news coverage and also benefit the stem
cell agency as it explores the possibility of additional funding –
either private or public – after the cash for new awards runs out
in 2017.

(The story is in the Oct. 8, 2012, edition of Fortune.)

Source:
http://californiastemcellreport.blogspot.com/feeds/posts/default?alt=rss

CIRM Sponsoring Online Session with FDA on Thursday

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One of the lesser known activities of
the California stem cell agency is webinars that put researchers
together with the folks who make the federal decisions about whether
stem cell research will be turned into therapies.

One of those sessions is coming up on Thursday, and it is not too late for scientists and other interested
parties to get on board.
Writing on the stem cell agency's blog,
Cynthia Schaffer, CIRM's contract administrator and compliance officer
had this to say today about the webinars.

“The FDA very graciously donates
their time to speak on these webinars because they too have pledged
to maintain an active dialogue with the industry and provide
education on their regulatory expectations for product development in
the regenerative medicine field. CIRM science officer Kevin
Whittlesey recently
wrote a paper with Celia Witten of the FDA about the role of the
FDA in reaching out to regenerative medicine community, including
webinars such as these. 

“In that paper they point out that
the communication goes both ways:

“'Appropriate regulation requires a
strong understanding of the latest scientific developments to meet
current and future regulatory needs and challenges.'

“So the FDA benefits by learning from
the other speakers in the webinar – what is the current state of
the technology, what are investigator’s current thoughts on best
practices and the latest research findings, etc. They also learn what
the industry is facing by listening to the questions asked and the
discussion of the challenges during the Q&A sessions. A group of
FDA employees attend each of these CIRM sponsored webinars, and the
wide variety of other workshops and meetings that CIRM hosts
throughout the year.”  

(Editor's note: An earlier version of this item incorrectly identified Cynthia Schaffer as Cynthia Adams.)

Source:
http://californiastemcellreport.blogspot.com/feeds/posts/default?alt=rss

October CIRM Board Meeting Moved to Burlingame

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The location of the October meeting of
the governing board of the California stem cell agency has been
changed from Irvine to Burlingame, near San Francisco International
Airport, in an effort to save travel costs.  

CIRM Chairman J.T. Thomas said the
one-day meeting is being moved because the session will require the
attendance of a large number of CIRM staffers who are based in the
agency's San Francisco headquarters. They will be involved in
presentations involving the agency's new strategic partnership fund and other matters.
The date of the meeting remains
unchanged – Oct. 25. Look for posting of the agenda on the CIRM web
site on Oct. 15. The site of the meeting is the Hilton Bayfront
Hotel, 600 Airport Blvd.

Source:
http://californiastemcellreport.blogspot.com/feeds/posts/default?alt=rss

Reproducing Research Results: Removing a Scientific Roadblock

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The California stem cell agency faces
no easy task in trying to translate basic research findings into
something that can be used to treat patients and be sold commercially.

Even clinical trials, which only begin
long after the basic research is done and which involve more ordinary
therapeutic treatments than stem cells, fail at an astonishing rate.
Only one out of five that enter the clinical trial gauntlet
successfully finish the second stage, according to industry data
cited last spring by Pat Olson, executive director of scientific activities at the stem cell agency. And
then come even more challenges.
But at a much earlier stage of
research there is the “problem of irreproducible results,” in the
words of writer Monya Baker of the journal Nature. Baker last month reported on
moves by a firm called Science Exchange in Palo Alto, Ca., to
do something to ease the problem and speed up preclinical research.
The effort is called the Reproducibility Initiative and also involves
PLOS and figshare, an open science Internet project.
Elizabeth Iorns
Science Exchange Photo
Science Exchange is headed by Elizabeth
Iorns, a scientist and co-founder of the firm. She wrote about  test-tube-to-clinic translation issues in a recent article in New
Scientist that was headlined, “Is medical science built on shaky
foundations?”
Iorns said,

“One goal of scientific publication
is to share results in enough detail to allow other research teams to
reproduce them and build on them. However, many recent reports have
raised the alarm that a shocking amount of the published literature
in fields ranging from cancer biology to psychology is not
reproducible.”

Iorns cited studies in Nature that
reported that Bayer cannot “replicate about two-thirds of published
studies identifying possible drug targets” and that Amgen failed at
even a higher rate. It could not “replicate 47 of 53 highly
promising results they examined.”
The California Stem Cell Report earlier
this week asked Iorns for her thoughts on the implications for the
California stem cell agency, whose motto is "Turning stem cells into cures." Here is the full text of her response.

“First, I think it is important to
accept that there is a crisis affecting preclinical research. Recent
studies estimate that 70% of preclinical research cannot be
reproduced. This is the research that should form the foundation upon
which new discoveries can be made to enhance health, lengthen life,
and reduce the burdens of illness and disability. The
irreproducibility of preclinical research is a significant impediment
to the achievement of these goals. To solve this problem requires
immediate and concrete action. It is not enough to make
recommendations and issue guidelines to researchers. Funders must act
to ensure they fund researchers to produce high quality reproducible
research. One such way to do so, is to reward, or require,
independent validation of results. The reproducibility initiative
provides a mechanism for independent validation, allowing the
identification of high quality reproducible research. It is vital
that funders act now to address this problem, to prevent the wasted
time and money that is currently spent funding non-reproducible
research and to prevent the erosion of public trust and support for
research.”

Source:
http://californiastemcellreport.blogspot.com/feeds/posts/default?alt=rss

Text of Comments on Awards to Stem Cell Directors' Institutions

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Here is the full text of comments made
by the California stem cell agency, Joe Mathews, co-author of
“California Crack-Up” and Bob Stern, former president of the
Center for Governmental Studies and co-author of the California
Political Reform Act, in connection with the Sept. 23, 2012, article
in The Sacramento Bee headlined “Stem Cell Cash Mostly Aids Directors' Interests.” The comments were abbreviated for
publication in The Bee because of newspaper space constraints.

Comments by Alan Trounson, president of
CIRM:

“To make sure we do the best job of
managing taxpayer's money it's natural that we turn to people who
know most about stem cells and stem cell research. In fact, as the
state's own Little Hoover Commission reported in its analysis of
CIRM: “The fact that CIRM funding has gone largely to prestigious
California universities and research institutes is hardly surprising
and should be expected, given the goals of Proposition 71 and the
considerable expertise resident in these research centers.” But in
recruiting the best minds, we also adopt best practices to ensure
that there is no conflict of interest. Every board member has to
recuse themselves from voting on, or even being part of a discussion
on anything to do with their own institution, or to an institution or
company that they have any connections to. All this is done in
meetings that are open to the public. CIRM’s conflict of interest
rules have been subject to multiple reviews – by the Bureau of
State Audits, the Little Hoover Commission and the Controller – and
there is no evidence that any of CIRM’s funding decisions have been
driven by conflicts of interest. Indeed, CIRM rigorously enforces its
conflict of interest rules at each stage of the funding process to
ensure that all decisions are made on the merits of the proposal for
funding and not as a result of any conflicts of interest. 

“In addition all funding applications
are reviewed by an independent panel of scientists on our Grants
Working Groups, all of whom are out-of-state and meet strict conflict
of interest requirements, and it is their recommendations that help
guide the ICOC (CIRM governing board) on what to fund.”

Joe Mathews' comments:

“California ballot initiatives are a
terrible way to make public policy. And they are even worse as a
method for making scientific policy. 

“It's not merely that
this initiative was drafted in such a way as to benefit the
enterprises of its directors. It's that, under this initiative's own
provisions and the California constitution, it's so hard to change
Proposition 71 and fix what ails CIRM. Effectively, these provisions are
baked in, and nothing short of another vote of people can really make
the change. (Yes, there are provisions, as you know, that permit the
legislature by super-majority to do things, but supermajorities are
effectively out of reach in California). 

“Sadly, initiatives
like Proposition 71 are not uncommon. Many measures are drafted to benefit
the people who would support the measure, or oversee the program
established. This has been very common with bonds. Essentially, to
win the support of various groups whose money and backing is
important to passage of a bond, a sponsor of an initiative bond will
set up rules and include money specifically intended for each group.
This is a form of pay-to-play. Agree to back the initiative and
you're in. And it happens because there's no rule against it and
because passing initiatives in California require difficult,
expensive campaigns. 

“And this sort of thing will continue
to happen. There is no serious push to do anything about this.
Indeed, good government groups and reformers in California have
opposed changes to the initiative process -- because they want to use
the process for their own schemes.”

Bob Stern's comments:

“It would have been better had
institutions receiving grants not to have had their representatives
on the board awarding grants. On the other hand, we want to have the
most knowledgeable people on the board overseeing this very important
program. The question: Were these people the only qualified ones to
sit on the board?”

Source:
http://californiastemcellreport.blogspot.com/feeds/posts/default?alt=rss

$1.5 Billion in Stem Cell Awards Goes to Directors' Institutions

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The Sacramento Bee today published an article that reported that $1.5 billion, more than 90 percent of the amount dispensed by the California stem cell agency, has gone to institutions linked to past and present directors of the agency.

The piece was carried on the front page of the newspaper's Sunday Forum section and was written by David Jensen, publisher-editor of the California Stem Cell Report.

The text of the Forum article is below. The Bee also carried a chart listing the top 10 recipient institution. The full text of the comments from Alan Trounson, president of the California stem cell agency,  and two other persons quoted in the article can be found here.

Stem cell cash mostly aids directors' interests

Special to The Bee

By David Jensen

With its latest round of awards earlier this month, California's stem cell agency has now handed out $1.5 billion to enterprises linked to its directors.

The figure amounts to 92 percent of the $1.7 billion awarded by the agency. The grants and loans range from $261 million to Stanford University, whose medical school dean, Philip Pizzo, sits on the agency's governing board, to $170,500 to Children's Hospital in Oakland, whose president, Bert Lubin, also is a member of the board.

The University of California, Davis, has received $128 million. Claire Pomeroy, chief executive officer of UC Davis Health System, is another one of the 29 board members. In all, 27 institutions with past or present representatives on the agency board have received funding.

None of this is illegal. And none of it is likely to change. The situation was created by Proposition 71, the 2004 ballot measure that established the state's $3 billion stem cell agency, formally known as the California Institute for Regenerative Medicine, or CIRM. The initiative was crafted so that virtually all of the institutions that stood to benefit from the state's largesse had seats at the table where the money is handed out.

The built-in conflicts of interest at CIRM have perturbed some experts in California government, but concerns have also reached into the scientific community. The prestigious journal Nature, in 2008, editorialized against what it called cronyism at CIRM. It said the agency "must fight the tendency of the academic institutions on the board to hoard dollars."

Some California scientists, wary of offending those who control the lifeblood of their research, privately grumble about an "old boys network."

Joe Mathews, co-author of "California Crackup," a study of major issues in state government, said last week: "California ballot initiatives are a terrible way to make public policy. And they are even worse as a method for making scientific policy."

The stem cell agency has a different view. Alan Trounson, president of the San Francisco-based enterprise, said: "There is no evidence that any of CIRM's funding decisions have been driven by conflicts of interest. Indeed, CIRM rigorously enforces its conflict of interest rules at each stage of the funding process to ensure that all decisions are made on the merits of the proposal for funding and not as a result of any conflicts of interest."

Mathews, California editor of Zocalo Public Square, and others point to the creation of the California stem cell agency as an example of abuse of the initiative process by special interests. The 10,000 words in Proposition 71 were written in private by Bay Area real estate investment banker Robert Klein and a handful of associates, who quietly determined the composition of the board. Klein later served six years as the first chairman of the stem cell agency, leaving in June 2011.

Klein later argued publicly that placing medical school deans and university and research institution executives on the board provided the expertise needed to make the decisions about how to spend the research money. However, the makeup of the board also served to win the support of institutions that envisioned the prospect of fresh cash – in this case money that the state borrows via bonds.

Mathews described the state's initiative process this way: "Essentially, to win the support of various groups whose money and backing is important to passage of a bond, a sponsor of an initiative bond will set up rules and include money specifically intended for each group. This is a form of pay-to-play. Agree to back the initiative, and you're in."

Bob Stern, who co-wrote the California Political Reform Act, said, "It would have been better had institutions receiving grants not to have had their representatives on the board awarding grants."

Trounson said the board follows "best practices" when it comes to grants and legal conflicts of interest. The agency has worked out an unusual procedure to prevent its directors from violating conflict of interest laws as they vote on applications that seek as much as $20 million each. Before each public session, agency attorneys determine which board members cannot vote on a proposal because of legal conflicts of interest. Applications to be approved are considered as a group. Each board member then votes on the entire group by saying, "Yes, on all those except with which I have a conflict."

No final tally is announced. The public can ferret out the overall vote a month or two later in the minutes of the meeting on the CIRM website (http://www.cirm.ca.gov). But the minutes do not list individual votes or conflicts of interest.

Domination of the board by academics and nonprofit institutions has led to bitter complaints from business. Less than 7 percent of all awards have gone to for-profit enterprises. Currently, however, the agency is embracing industry more warmly in an effort to commercialize stem cell research, which raises another set of coziness problems. They surfaced in July and again this month.

Klein, who led the stem cell ballot campaign before becoming chairman of the agency, appeared before his old board to lobby on behalf of a $20 million request from StemCells Inc. of Newark. The California firm was founded by the eminent Stanford stem cell scientist Irv Weissman. He sits on StemCells Inc.'s board, and he and his wife hold 273,821 shares of stock in the firm. Weissman was also an important backer of Proposition 71, working the "billionaire circuit" and raising more than $1 million for the campaign, according to an article in San Francisco magazine.

CIRM's reviewers had rejected StemCells Inc.'s application. After Klein made his pitch in July, the board sent the application back for re-review, an unusual procedure.

When the application returned to the board early this month, reviewers again rejected it. Klein again importuned his former colleagues, and – following a closed door session – the board approved the award, 7-5.

Eleven members were disqualified from voting because of legal conflicts of interest. It was the first time in the board's eight-year history that it approved an application twice rejected by reviewers.

Mathews said no likelihood exists of changing the board structure at CIRM. He said it is "baked in" by Proposition 71. That's because Klein and company wrote into the initiative a requirement for a super, super-majority vote – 70 percent – of each house of the Legislature to make any modifications.

Another initiative could be mounted, but that possibility is also exceedingly remote. 

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StemCells, Inc., Discloses How it Will Generate $40 Million in Matching Funds

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StemCells, Inc., said yesterday that it
will come up with the $40 million needed to match loans from the California
stem cell agency through “existing infrastructure and overhead”
and will not be issuing stocks or warrants to the agency.

In a statement to shareholders, Martin
McGlynn, CEO of the publicly traded firm, discussed the $40 million in loans awarded by agency this summer, including $20 million last
week. The stem cell agency's governing board, after it emerged from
an executive session on the matter, last Wednesday night adopted a
motion requiring the company to demonstrate that it has the matching
funds.
CIRM Chairman J.T. Thomas, a Los Angeles bond financier, said that
concerns were expressed during the executive session that the agency
“would account for such a large part of the assets of the company.”
At his suggestion, the board approved the loan on the condition that
“it show it has access” to the $20 million in matching funds that
company offered during the application process. StemCells, Inc., also
offered a $20 million match on another loan approved in July by CIRM.
The latest financial reports from
StemCells, Inc., which is based in Newark, Ca., show that it had
assets of $17 million as of June 30 and liabilities of $11.6 million.
The company reported net income for the second quarter of $833,522
compared to a loss of $4 million for the same period a year ago.
In its filing with the SEC, the company
said,

“We have incurred significant
operating losses since inception. We expect to incur additional
operating losses over the foreseeable future. We have very limited
liquidity and capital resources and must obtain significant
additional capital and other resources in order to provide funding
for our product development efforts....”

In his statement yesterday, McGlynn
said the California stem cell agency had “doubled down” on
StemCells, Inc., in approving the two loans. He said the company is
not concerned about meeting the matching requirements. McGlynn said, 
Martin McGlynn
StemCells, Inc., Photo

“To be clear, we do not interpret the
diligence requirement as an obligation to raise a specific amount of
money in a particular period of time, and we wish to correct the
misstatements made by some uninformed third parties that the ICOC is
requiring us to raise $20 million in matching funds. In
point of fact, we expect that a substantial amount of our
contribution towards these projects will come from existing
infrastructure and overhead, salaries for our existing personnel, and
other contributions in kind. Furthermore, we will soon be
reviewing the budgets for both projects in detail with CIRM
staff. Because each disease team budget was prepared on a
stand-alone basis, we expect to see significant economies and
efficiencies now that the company has in fact been awarded funding
for both.”

McGlynn also said,

"Under this particular CIRM
program (RFA 10-05), funding for companies will be in the form of
unsecured, non-recourse, interest-bearing, term loans, which will be
forgivable in the event the funded research fails to result in a
commercialized product. On the other hand, should the product be
successfully commercialized, CIRM would earn milestone payments
depending on how successful the product becomes. Because CIRM
shares the downside risk, and could participate handsomely on the
upside, the structure makes the loan about as close to 'equity' as one could, without having to dilute existing shareholders in order
to gain access to significant amounts of capital.  The company
will not issue stock, warrants or other equity to CIRM in connection
with these awards. 

"Of course, we realize that CIRM
prefers that applicants from industry provide evidence of their
ability to secure whatever additional funds may be needed to complete
any CIRM-funded project, in this case the filing of an IND for each
indication. This is stated in the text of RFA 10-05 itself and
was repeated in various comments by CIRM staff during the application
process. When making the second award on September 5, the
ICOC naturally recognized the sizeable commitment it was making
to StemCells, so it instructed CIRM staff to satisfy themselves
of the company's ability to access the capital needed to fund the
project, namely the Alzheimer's program through to the filing of the
IND.”

McGlynn also said firm's bid for
another $10 million from CIRM could come in the form of a grant
instead of a loan. He said,

"Finally, I can confirm that in
June of this year the Company applied for up to $10
million under CIRM's Strategic Partnership I program
(RFA 12-05). Unlike the disease team awards under RFA
10-05, if companies are approved for funding under RFA 12-05, they
may elect to take such funding in the form of a grant, not a
loan. Our application under RFA 12-05 is for a controlled Phase
II clinical trial of HuCNS-SC cells in Pelizaeus-Merzbacher disease
(PMD), a rare myelination disorder. StemCells completed a Phase
I study in PMD in February 2012 and in April announced that
all of the patients from that study showed evidence of cell-derived
myelination and three of the four patients in the study showed
measurable gains in motor and/or cognitive function.”

According to CIRM, the awards in the strategic partner round will be approved either next month or in December. 
StemCells, Inc. stock was trading at
$1.85 at the time of this writing. Last week, it rose to $2.43.
During the last 12 months, its high was $2.67 and its low was 59
cents.

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Road to Commercialization: California Stem Cell Agency Seeking Top Level Product Development Execs

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Looking for a good job at an
enterprise that is on the cutting edge of biotechnology?

Nine positions are open at the $3
billion California stem cell agency, headquartered in San Francisco.
Some of them could pay more than $200,000 a year.
Several of the new jobs are closely
aligned with the agency's fresh focus on commercializing stem cell
research and driving therapies into the clinic. Scientists and
lawyers are being recruited along with a business development
officer. For some of the positions, travel is required.
One new, high-level position is
described as a senior development officer. The job posting calls for
“expertise in product development for stem cell therapies.” The
person would “directly interact with investigators on CIRM’s
clinically applicable research programs to help provide product
development guidance from preclinical, manufacturing, and first in
human to early phase clinical regulatory perspectives.” An M.D. or
Ph.D. degree in a biomedical science is required. Pay tops out at
$232,891. This person would report to Ellen Feigal, senior vice
president for research and development.
A second, high-level position reporting to Feigal is senior medical officer, who would manage the
agency's portfolio aimed at commercialization of stem cell research,
specifically “focused on IND enabling and clinical development
projects.” This also requires an M.D. or Ph.D. and substantial professional experience in development of biomedical research and
products. Pay also could run as high $232.891 annually.
A third new job at CIRM is
business development officer. That person would help generate
“outside investment in stem cell research in California for both
CIRM-funded and not currently CIRM-funded programs by
biopharmaceutical strategic partners; equity investors (venture
capital and others); and disease foundations.” The salary range
hits $216,270 annually. It wouldn't be surprising if the person in
this job also became involved in developing a funding mechanism for
CIRM after it runs out of state cash in 2017 or so. 
This position reports to Elona Baum,
general counsel and vice president, business development.
And yet another new position is called
director of alliance management. The job deals with the agency's
extensive collaborative funding partnerships, many of which are
abroad. CIRM wants somebody with a law degree, experience in
intellectual property and business law along with strong negotiating
skills. The pay range for the post tops out at $232,891 annually. This position reports to CIRM President
Alan Trounson.
Other open positions include: deputy
general counsel, two science officers and office manager.

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