StemCells, Inc., Gunning for Another $10 Million from California Stem Cell Agency

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Fresh from winning $40 million from the
California stem cell agency, StemCells, Inc., is shooting for
another, $10 million award from the state research effort.

The latest proposal comes as the
publicly traded firm also faces the task of raising $40 million that it
has promised the agency to match the earlier awards. That figure
could well rise to $50 million given the new application.
Martin McGlynn, CEO of the
well-connected Newark, Ca., firm, disclosed StemCells, Inc.'s,
latest proposal in an article by Catherine Shaffer in BioWorld. She
wrote,

“Already looking ahead, StemCells has
set its sights on one more CIRM initiative designed to fund early
stage clinical trials over a four-year period. StemCells has applied
for that grant, worth up to $10 million, to fund a Phase II trial in
PMD(Pelizaeus-Merzbacher disease).”

The article did not disclose the timing on the new application.
StemCells, Inc.'s lobbying efforts with the stem cell agency were vigorously aided by the former chairman of the $3 billion
California stem cell agency, Robert Klein (see here and here). And Wednesday evening, the company convinced
the state agency's board to overturn two successive reviewer rejections of a
$20 million proposal for Alzheimer's research. The vote was 7-5.
Klein's efforts came in a record-breaking round of appeals and emotional presentations by patient advocates, which triggered complaints from the board this week about "arm-twisting" and politicking. 
StemCells, Inc., was founded by the
eminent Stanford stem cell researcher Irv Weissman, who helped to
raise millions for the ballot initiative that created the stem cell
agency. He additionally appeared in in the campaign's TV advertising.
The campaign was headed by Klein, who ultimately raised $35 million
to convince voters to create the agency. Weissman is currently on the board
of the StemCells, Inc. His wife is executive vice president.
In July, the stem cell agency board
approved the first $20 million award to the firm for research involving spinal injury.
McGlynn told BioWorld,

"We're the only company that has
programs going on in all three regions of the central nervous system:
the brain, the spinal cord and the eye."

Not discussed in the BioWorld article
was a requirement, imposed by the CIRM board, that StemCells, Inc.,
show it can deliver $20 million in matching funds on the Alzheimer's
award before receiving any state funds. CIRM said no such board
requirement existed on the spinal award, but the firm has promised to
match the $20 million on that award as well.
BioWorld described the awards as
grants. In fact, they are loans. But under the terms of the loans, if
the research is not successfully commercialized, it will be
forgiven.  

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California Stem Cell Firsts: From Emotional Appeals to $40 Million Awards

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During the last few months, the $3 billion California stem cell
agency, which is approaching its eight-year anniversary, has chalked up a
number of important firsts.

Most of them came during the July and
September meetings of its 29-member governing board and were related to strenuous efforts by researchers to win approval of awards of up to
$20 million each. Several firsts involved the agency's former
chairman, Robert Klein, who could be considered the father of the
state's stem cell research effort.
So here is the California Stem Cell
Report's list of firsts at the California Institute of Regenerative
Medicine (as CIRM, the stem cell agency, is formally known) for the
summer of 2012.
It was the first time that a single
company – in this case, StemCells, Inc. , of Newark, Ca. –
received two awards in the same round.
It was the first time any company has
been awarded as much as $40 million. Again, StemCells, Inc.
It was the first time that Klein has lobbied his former board (see here and here) on
behalf of a particular grant application. That occurred in both July
and September with one of StemCells, Inc.'s application.
It was the first time that the board
has approved an application that has been rejected twice by
reviewers, again the StemCells, Inc., proposal backed by Klein.
It was the first time that board has
received such a large outpouring of appeals by rejected applicants.
It was the first time that the board
has received such lengthy presentations of emotional appeals by
patient advocates on behalf of rejected applicants.
It was the first time that action on a
grant round has been extended over three months(see here and here). The disease team
round began in July. Action will not be completed until the end of
October.
It was the first time that the
governing board has sent so many applications back for re-review –
five, six if the one to be acted on in October is included.
It was also the first time that the
board has ordered a full-blown review of its grant appeal process
with an eye to making making major changes in it.
Several reasons exist for the number of
firsts racked up by CIRM. One is the high stakes involved in the
disease team round that began in July and the low number approved by reviewers – six compared to the 12 approved by the board, as of
today, out of 21 applications. Another reason involves the
increasing understanding on the part of many scientists that they can
appeal directly to the board when reviewers reject their
applications. However, it is also clear that not all applicants
grasp the full range of appeal possibilities. A third reason involves
the agency's muddled appeal process, which has been a problem for
years. And a fourth reason involves the board's push to drive research into
the clinic and commercialization, which applicants are quickly
learning how to exploit.
Readers should feel free to add their
own firsts to this list. They can do so – even, anonymously – by
clicking on the word “comments” at the end of this item.

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Florida Researcher Wins $6.7 Million Grant to Come to Golden State

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Dennis Steindler
UF Photo

The governing board of the California stem cell agency this morning approved a $6.7 million grant to recruit Dennis Steindler of the University of Florida to the Parkinson's Institute in Sunnyvale, Ca.

The grant was approved immediately following a 45-minute executive session with no further debate. (For more on this, see here, here and here.)

Steindler later told the California Stem Cell Report he would begin work in California as soon as possible.

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California Stem Cell Agency Okays $38 Million for Basic Research

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Directors of the California stem cell agency today approved about $38 million for research into basic biology, including two appeals by researchers on applications initially rejected by reviewers.

The governing board turned down five appeals in the round, which attracted 357 applications in its "pre-app" process, 64 of which were invited to apply. Reviewers approved 25 applications.

The following appeals in the biology round were approved:

  • $1.3 million, Deborah Lieu of UC Davis. (Review summary here, appeal here.) 764
  • $1.4 million, Yanhong Shi  of the City of Hope. (See review summary here and appeal here.)

The board also approved another application that was rejected by reviewers based on a recommendation by CIRM President Alan Trounson.  It is very unusual for the board to approve rejected applications based on staff recommendations following a review. Trounson described the grant addressed a major bottleneck in stem cell science.

 The California stem cell agency is expected to post a press release shortly with the names of all recipients. The agency usually withholds names of applicants until the the board formally acts.
(An earlier version of this item reported that the board approved $37 million in grants.)

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Arm-twisting and Emotion: Stem Cell Directors Move to Reform Appeals on Multimillon Dollar Grants

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Frustrated with politicking,
“arm-twisting,” lobbying and “emotionally charged
presentations,” the governing board of the $3 billion California
stem cell agency today approved short-term changes in its grant
appeal process and ordered up a study to prepare long-term reforms.

The moves followed a prolonged series of appeals on grant applications that began in July and continued through today,
setting records for the number of appeals and generating hours of
sometimes tearful and emotion-laden presentations from members of the
public.
The board adopted changes in the appeal process for its next few meetings that are aimed at curbing its
free-wheeling nature and making it more understandable to the public
and applicants. The board also directed creation of a panel to make
recommendations by the end of the year for more wide-ranging reforms.
Directors of the agency were clearly
not happy with the appeal process this summer. However, it has been a
problem since 2008 when Bert Lubin, now a director of the stem cell
agency and CEO of Childrens Hospital of Oakland, Ca., was the first applicant to make a public pitch before the board to overturn
reviewer rejection of his application.
One director, UCLA medical school dean,
Gerald Levey, said at the time,

"I don't think we can run a board
this way. If we do, it would be chaos." 

Today, CIRM Director Carmen Puliafito,
dean of the USC School of Medicine, said that “lots of lobbying”
was going over the last couple of months. He predicted there will
more lobbying and “more politicking.” Puliafito said,

“On big money grants, people will be
calling their friends.”

The name of former board chairman,
Robert Klein, was not mentioned during this afternoon's discussion.
But Klein vigorously and successfully backed an appeal (see here,
here and here) by StemCells, Inc., of Newark, Ca., for a $20 million
application that had been rejected twice by reviewers. Last night the
board approved the award on a 7-5 vote. It was the first time the
board has approved an award that was rejected twice by its reviewers.
Director Jeff Sheehy, co-vice chairman
of the review group and a communications manager at UC San Francisco,
said the agency is dealing with “big money grants” that are
“incredibly complex.” He also referred to “certain arm-twisting
by certain individuals.”
Several board members made references
to appearances by persons who have diseases or conditions that might
be affected by CIRM-financed research. Director Duane Roth, head of
CONNECT, a San Diego business development organization, said the
board is making decisions in “an emotionally charged setting.”
Other issues cited by directors include
the integrity of review process, fairness, consistency, shifting
appeals procedures, transparency and board discipline on appeals.

James Harrison, outside counsel to the board, said the board's action today includes "eliminating the reference to unpublished data in the discussion of 'material new information," imposing a 3-page limit on other correspondence, explaining that applicants should have seven business days from the time the (grants review group) recommendation is made available to them to file an (extraordinary petition), and posting all of the information regarding these policies in one place on CIRM’s website."

For a list of articles and CIRM
documents dealing with the appeal process, see here.

Source:
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Dennis Steindler Application: Excerpt from Review Summary

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The CIRM summary of the review on the
$6.7 million grant to recruit Florida scientist Dennis Steindler to
the Parkinson's Institute in California carried a strong minority report. However, the review itself drew fire this morning from some CIRM board members.
They included patient advocate Jeff Sheehy, co-vice chair of the grant review group, who supported approval of the grant. He noted that the low score reflected two extreme opinions. He said some of the reviewers were doing their research on the Parkinson's Institute on the Internet during the actual review.  Sheehy said that was not a "good way" to perform a review and reflected a "major short-coming." 
Here is an excerpt from the review.

"In summary, this is an
application from an established leader in NSC biology to pursue
research focused on disease mechanisms in PD. Strengths of the
proposal include the quality of the PI, the focus of the project on
an interesting hypothesis, and the leadership in basic science that
the candidate would bring to the applicant institution. Weaknesses
included deficiencies in the research plan, the limited track-record
of the PI in PD research and an institutional environment lacking
adequate support for basic science investigations."

The summary continued, 

"During programmatic discussion some GWG (grant review group) members cited a need to broaden stem cell leadership not only at the
large universities but also at the smaller institutions as well. They
felt that the candidate's recruitment would strengthen the applicant
institution and provide leadership and strength in basic research.
The need for increased research focused on Parkinson's Disease was
also cited by some reviewers. A motion to recommend the application
for funding carried with a majority vote. Because more than 35% of
GWG members opposed the motion, opponents have exercised their right
to have that position reported to the ICOC. The consensus statement
from this group is as follows: 'Despite the facts that the
applicant has many excellent attributes, that Parkinson's disease is
a key area of interest, and that the applicant institution may
deserve additional consideration, our opinion is that the application
clearly falls short in several critical scientific areas that
outweigh the programmatic concerns and do not justify a
recommendation for funding. We believe that the people of California
depend upon us to make recommendations based on our scientific
expertise, for outcomes that are most likely to impact medicine and
the health and treatment of their citizens. We believe that their
money can be better spent.'"

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Board Concludes Private Session on Recruitment Grant

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The governing board of the California stem cell agency has just concluded a 45 minute executive session on a $6.7 million grant to recruit a Florida scientist to the Parkinson's Institute in Sunnyvale, Ca.

It was the longest executive session ever on a recruitment grant, which are usually approved routinely with little serious discussion.

The board is now resuming discussion of the matter(see here and here.)

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StemCells, Inc., Hails $40 Million in Awards from California Stem Cell Agency

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StemCells, Inc., was quick this morning
with a press release about winning a $20 million award last night from the
California stem cell agency.

The publicly traded, Newark, Ca., firm
also pointed out that the CIRM board in July awarded another $20
million to the business.
The news release hailed the awards as
validating its science and business. Martin McGlynn, who personally
appeared before the CIRM board last night, said,

 "CIRM's approval of two
awards to StemCells illustrates the tremendous promise of
our neural stem cell technology and the high degree of confidence in
the world class team of scientists and clinicians who will be working
to translate this technology into potential treatments and cures for
these devastating diseases." 

On the Alzheimer's award last night,
McGlynn said,

 "With the recent spate of late-stage clinical
failures in Alzheimer's disease, it is clear that the field could
benefit from alternative approaches to lessen the huge burden on
families, caregivers and our healthcare system.

He continued,

"Our recently reported preclinical
data, which showed that our neural stem cells restored memory and
enhanced synaptic function in two animal models relevant to
Alzheimer's disease, shows our approach has promise. We greatly
appreciate the support from CIRM, which should help us accelerate our
efforts to test our HuCNS-SC cells in Alzheimer's disease."

The news release did not note that the
board has required that the firm must show proof that it has access
to $20 million in matching funds prior to receiving cash from the
agency on the Alzheimer's grant. The California Stem Cell Report is
asking CIRM whether that requirement extends to the earlier grant as
well.
One of the analysts who follows the
company released a special report on the firm this morning. Stephen
Dunn of LifeTech Capital said,

 “We are reiterating our strong
speculative buy with a price target of $4.50 as StemCells Inc.
continues to distinguishing themselves as one of the most advanced
players in the stem cell space.”

At the time of this writing, the firm's
stock was trading at $2.20 up seven cents. Its 52 week high is $2.67
and its 52 week low is 59 cents.  

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Two Additional Appeals Rejected in Disease Team Round

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The governing board of the California stem cell agency last night rejected appeals by two applicants -- OncoMed Pharmaceuticals of Redwood City and Albert Wong of Stanford -- in the $200 million disease team round.

Both petitions generated little discussion. You can find more on their petitions here and here.

The board also approved changes in its intellectual property and grant administration rules. Both proposals will now enter the state's official administrative law process for more comment and possible change.

Source:
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CIRM Board Eyes Florida Researcher for $6.7 Million Grant

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The board of the California stem cell agency is discussing a proposal to award $6.7 million to recruit a Florida scientist to the Parkinson's Institute in Sunnyvale, Ca.

The scientist is Dennis Steindler of the University of Florida. The recruitment award received a score of 57, although the scores ranged from 30 to 75.  Jeff Sheehy, a member of the grant review group and CIRM board member, said the score reflected two extremely divergent positions by two reviewers.

The board has awarded four grants in its recruitment round over the past couple of years, but this is the first extended discussion of an award recommended by reviewers. It is also the first to have a representative of the applicant institution speaking publicly for the grant.

CIRM directors have now moved into executive session to discuss matters they prefer to air in private.

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California Stem Cell Agency: A New Board Member and a New Vacancy

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The chairs are shifting a tad on the
governing board of the $3 billion California stem cell agency as a
French immigrant is added, a Latino leaves and a veteran patient
advocate is reappointed.


Coming on board for next week's meeting
is Anne-Marie Duliege, chief medical officer of Affymax Inc., of
Palo Alto, a publicly traded biopharmaceutical company that deals
with kidney disease. Leaving is David Serrano Sewell, who has been
named to the state Medical Board by Gov. Jerry Brown. Reappointed is
Jeff Sheehy, an HIV/AIDs patient advocate who may be the most public face
of patient advocates on the stem cell agency.
Anne-Marie Duliege
Affymax Photo

State Controller John Chiang appointed
Duliege to the CIRM post, saying, 

“Dr. Duliege brings
first-hand knowledge of what is required to take a drug from research
phase through FDA approval.”

In May, Duliege made a presentation to
the Bioscience Forum in South San Francisco called “Beating the
Odds,” a discussion of Affymax's first commercial product.
According to information posted by the group, Duliege led the way by
shepherding it through a 10-month gauntlet at the FDA.
Duliege has been with Affymax since
2007. Her prior positions included time at Chiron and Genentech. She
is a practicing physician, working part-time, and received her
medical degree from Paris Medical School.
Affymax has had a previous tie to the
stem cell agency. Ted Love, one of the initial members of the CIRM board, also sits on the Affymax board of directors. Indeed, Duliege fills the seat
vacated by Love when he resigned from the CIRM board. The position must be
filled by an officer of a California life science company.  
David Serrano Sewell
CIRM Photo

Serrano Sewell, who has also served on
the CIRM board since its inception, is apparently resigning to accept
an appointment to the board that regulates
California physicians. Apparently – because the stem cell agency
has not confirmed that he is leaving, although this morning it placed a resolution honoring him on the agenda for next week's meeting.  That almost invariably means a board member is departing.

Serrano Sewell, an attorney for the
city of San Francisco, was one of 10 patient advocate members on the
29-member board. Sewell was apppointed by the California lieutenant
governor. His seat will remain vacant until the current lieutenant
governor, Gavin Newsom, makes an appointment, who must also be a patient advocate.
Jeff Sheehy
CIRM Photo

Sheehy was reappointed recently by
state Senate President Pro Tem Darrell Steinberg. Sheehy is a
communications manager at UC San Francisco and a nationally known
HIV/AIDS advocate. He is co-chairman of CIRM's Science Subcommittee
and vice chairman of the grants review group. Sheehy leads the
discussion of grant applications when they come before the full board
in public session.

With the latest shuffling, the board has essentially lost its only African-American member – Ted Love.
Eugene Washington, dean of the UCLA medical school, is a member of
the board but never attends the meetings. Instead he sends a
surrogate. Serrano Sewell's departure brings the number of Hispanics
to three, co-vice chairman Art Torres, Francisco Prieto and Marcy
Feit. No Asians sit on the board.

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StemCells, Inc., Wins Another $20 Million From California Stem Cell Agency

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Following a second impassioned pitch by its former chairman, Robert Klein, the governing board of the California stem cell agency approved a $20 million award to a financially strapped biotech firm, StemCells, Inc., of Newark, Ca.

Approval came on a 7-5 vote with the condition that the company demonstrate it has access to $20 million in matching funds prior to funding.  It is the second $20 million award that the company has received in the disease team round, which now totals $214 million. Another disease team application has been tabled and will not be considered until October.

The current CIRM chairman, J.T. Thomas, a Los Angeles bond financier, asked for the financial proof because he said some concerns were expressed during an executive session that CIRM would now "account for such a large part of the assets of the company." Martin McGlynn, CEO of StemCells, Inc., also told the board that the company might have to drop its Alzheimer's research if it did not receive the CIRM award.

The StemCells, Inc., application was rejected twice by reviewers. The original rejection came before the July meeting at which Klein first appeared (see here and here). The proposal was then sent back for re-review, during which it was rejected again.

However, the 29-member board narrowly approved the application following discussion tonight and following its rejection of another Alzheimer's research proposal from USC. Both applicants produced a number of witnesses, including patients, on behalf of their appeals.

The re-review on the StemCells, Inc., application said in reference to a statement by Klein to board in July,

“The reviewers did not feel there was compelling data for neuron migration in the submitted manuscript. This is the manuscript specifically referenced at the ICOC (CIRM governing board) meeting (in July) that prompted the call for additional analysis. The manuscript is not yet accepted, it is 'potentially acceptable' but requires 'major revisions' according to the journal editor note. In addition, however, the studies in this manuscript used mouse NSCs, not the human NSCs proposed for the disease team award....”

In July, Klein said, “....(W)e have brand-new data that demonstrates and totally contradicts the key weakness on which it was downgraded.” 

A footnote: The CIRM staff said that as a result of two StemCells application, a proposal is being prepared to limit applications to one per entity in later rounds.

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Nearly $6 Million Sought: Four Scientists Seek to Overturn Rejection by CIRM Reviewers

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Four researchers are appealing
rejection of their proposals to win millions of dollars from the
California stem cell agency just as the agency is moving to curb such
reconsideration efforts by scientists.

The latest appeals come in what the
agency calls its basic biology round. The agency's governing board
meets next Wednesday and Thursday to hand out as much as $35 million
to as many as 25 scientists competing for the research dollars.
The four appeals follow a record outpouring last month of attempts at reconsideration in another
round. One upshot has been a proposal that would tighten the review process. That plan also comes before directors next week.
In three of the latest appeals, the
applications were given scientific scores that exceeded those of some
proposals that were approved by reviewers. The lower scoring
proposals were given the go-ahead on the basis of “programmatic
review,” which one CIRM document says is designed to allow
“consideration of issues beyond scientific merit, such as disease
representation and societal impact.” 
The latest appeals – formally known
as extraordinary petitions – were filed by Michael Teitell of UCLA,
Deborah Lieu of UC Davis, Tony Hunter of Salk and Hanna Mikkola, also
of UCLA. In all, their applications seek nearly $6 million from CIRM.
Hunter's $1.8 million application had the highest scientific score, 70,  of the four appeals. It ranked above three grants approved by reviewers. 
In his appeal, Hunter said “no major scientific issues were found” by reviewers concerning his application. He also reported new data involving a “major concern” of reviewers. Hunter said the information was developed after the application was submitted April 25.

In the case of Lieu, reviewers
said she was “relatively inexperienced.” Lieu's appeal said she
has “24 publications with over 6 years of experience in the
differentiation of cardiac muscle cells from human pluripotent stem
cells, 12 publications (3 co-corresponding author) on human
pluripotent stem cells and their cardiac derivatives, and 3
publications on the engineering of pacemaker cells” in addition to
other related professional experience.
She is seeking $1.3 million. Her
application received a score of 68, ranking it above two other grants
approved by reviewers and equal to a third also approved by
reviewers.
Mikkola said her application built on work previously funded by CIRM. She also cited new data that the
reviewers did not have access to. Mikkola's application for $1.4 million
received a score of 65, which ranks it above one grant approved by
reviewers.
Teitell's letter to the board also cited new data that is scheduled to published in November that deals with one of the concerns of reviewers. Teitell additionally disputed some of the critical information in the summary of reviewer comments.

He is seeking $1.4 million. CIRM did not release a score on his application, although it appears to be below 63, the lowest score disclosed publicly by the agency.

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Bob Klein, "Lobbying" and Reader Reaction

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A robust discussion has arisen
concerning Bob Klein and his appearance last month before the
governing board of the $3 billion California stem cell agency, a body
that he once chaired and an enterprise that he once oversaw.

The comments were triggered by the original "unseemly performance" item on the California Stem Cell Report and a subsequent comment by Francisco Prieto, a longtime member of the board.
The comments discussed whether Klein
was manipulated and whether he was engaged in so-called “revolving
door” activity – the practice of former government officials,
such as Klein, becoming paid representatives of enterprises that were
involved with their former agency.
The comments raise a number of
interesting questions that we will discuss on the California Stem
Cell Report during the next few days.
You can read the remarks by going to this item and scrolling down to the end of the piece.
(Editor's note: Our apologies to some
of those who commented for the delay in posting their remarks.)

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Researcher Alert: Troubling CIRM Grant Appeal Process Up for Revision

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Directors of the California stem cell
agency next week are expected to make unspecified changes in how
scientists can appeal denials of their applications for millions of
dollars in research grants.

The move follows a jam-packed and
emotional meeting last month in which the CIRM governing board faced a record outpouring of appeals of negative decisions by grant
reviewers. The board is the ultimate arbiter on applications. While it almost never overturns positive decisions by reviewers, it sometimes
approves applications that they have rejected. 
No details of the proposed changes in
the appeal process are yet available for the meeting Sept. 5-6 in
Burlingame, Ca. All that is known at this point is the following item
from the board agenda: “consideration of modifications to the
extraordinary petition policy and adoption of additional
information policy.” Extraordinary petitions are the key vehicle
for appeals.
The appeals process has long troubled the CIRM board. It has made changes in the procedures, but last
month's high stakes, $243 million round posed new challenges and
consumed so much time that the board was unable to complete action on
several items.
As a result of the July appeals, the
board sent five applications back for re-review. (See here, here and
here.) Some of those are expected to come up next week and others at
the end of October. The board agenda, however, did not specify which
applications would be considered next week. Nor did it specify how many additional appeals have been filed in the round that was up for
approval in July.

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USC Researchers Appeal Rejection of $20 Million Proposal

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Researchers from the University of
Southern California are making a pitch to overturn rejection of their
$20 million grant application by reviewers in one of the signature
commercialization rounds of the California stem cell agency.

The appeal by Roberta Diaz Brinton and
Lon Schneider will be taken up one week from tomorrow by the
governing board of the $3 billion state enterprise.
The USC application deals with Alzheimer's. It came in the $243
million disease team round that was considered last month during a
record-breaking outpouring of appeals and a day of emotion-filled
appearances by patients. CIRM directors adjourned their meeting
without completing action on a number of items, leaving open the possibility of additional appeals such as the one from USC.
The Brinton-Schneider application
received a score of 63 from reviewers. They said in a letter to
the board,

“We are submitting the petition at
this time as we are new to the CIRM ICOC(governing board) process and after listening
to the July 26 ICOC meeting deliberations now understand that the
petition process allows the ICOC to further consider our proposal.
We noted that the proposal scored one point above ours and another
two points below ours, each utilized the extraordinary petition
strategy to gain ICOC review which resulted in funding approval in
the former, and reconsideration in the latter instance.”

Their statement reinforced a concern
expressed by CIRM Director Oswald Steward, director of the Reeve Center at UC Irvine,  at last month's board
meeting about fairness in the grant process. He said,

“I'm not really quire sure that all
of the applicants clearly understood that they could come back to us
to address the criticisms(of reviewers).”

Concerns about whether all applicants fully understand the appeal process have surfaced on a number of occasions over the last several years. The CIRM board, however, is generally reluctant to overturn negative recommendations by reviewers. It also almost never reverses positive recommendations.

Next week the board is scheduled to
make unspecified changes in the appeal process. No further details on
those changes have yet been released by the agency although the
meeting is just four business days away.
In the Brinton-Schneider letter to the
CIRM board, the scientists defended their scientific approach and
responded to criticism by reviewers, especially those related to
sedation. Reviewers expressed reservations about over-sedation, which
the researchers said were erroneous.
It is not clear whether other scientists will
be making appeals during next week's board meeting.

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Stem Cell Agency Moving to Curb Free-Wheeling Appeals by Researchers

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The $3 billion California stem cell
agency on Tuesday released details of proposed, major changes in how
scientists are allowed to appeal decisions when their
applications for millions of dollars are rejected by grant reviewers.

The agency posted on its web site a 4 ½ page plan to curb the free-wheeling pitches that reached a record level at last month's governing board meeting. Some of the changes
would formalize ad hoc procedures that have emerged over the last
several years. The plan would also make it clearer exactly what can
and cannot be done or expected under the agency's appeal process,
which is poorly understood by at least some researchers.
The agency's proposal, due to be acted
on at the CIRM board meeting next Wednesday and Tuesday, is heavily
nuanced, dealing with such matters as “supplemental information,”
an “additional analysis option,” “criteria for material dispute
of fact,” “criteria for material new information” – not to
mention the old standby – “extraordinary petition.”
CIRM also reiterates in a footnote its
distinction between an “appeal” and an “extraordinary
petition.” However, it is a distinction without a difference except
to those in thrall of bureaucratic jargon. Both are appeals. Their
purpose is to provide a method for overturning reviewers' decision under certain conditions.
Details on CIRM's proposed changes came
only four business days prior to next week's governing board meeting
– a little late to generate thoughtful comment and constructive
suggestions from those most likely to be affected by the changes –
the 500 or so recipients of $1.6 billion in CIRM funding. Before final action on the changes, the board may well want to send out the proposal to all of its grant recipients and ask them for written comment that could then be considered at a public meeting of its Science Subcommittee.
The CIRM board has been bedeviled by
the appeal process for more than four years, including the
presentations at its public meetings by scientists. Ironically, the
first such public appearance was made by Bert Lubin, who is now a member of the CIRM
board  and CEO of Childrens Hospital in Oakland, Ca..
As the California Stem Cell Report
wrote at the time, the pitch by Lubin, who was unsuccessful,
disturbed some board members. Gerald Levey, then dean of the UCLA
medical school and a member of the board, said,

"I don't think we can run a board
this way. If we do, it would be chaos." 

Lubin was later quoted in the journal
Nature as saying that his rejected application did not come from “the
in crowd” of stem cell researchers or organization.

“So a project that was really going
to go into patients was essentially triaged.”

A final note: CIRM's proposal for changes in
the appeal process also uses language that obfuscates exactly what
researchers can do under state law. The document says that scientists
“may” make oral and written comments to the board, which is a
state government entity. In fact, state law makes it clear that
researchers as well as any member of the public have the “right”
to comment. The board legally cannot prevent them from speaking or
making comments. And the board, to its credit, has always allowed
ample public comment even when it slows the board's work.  

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An Unseemly Performance: Former Chair of Stem Cell Agency Promotes $20 Million Research Proposal

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Bob Klein is nearly an icon in the
history of the $3 billion California stem cell. And when he appeared
before its governing board last month and aggressively touted a $20
million grant proposal already rejected by agency reviewers, his
actions raised eyebrows.

Robert Klein
Elie Dolgin/Nature photo
Klein's comments carried unusual
weight, given that they were supported by his unique and influential
relationship with the California Institute for Regenerative
Medicine(CIRM). He and his associates wrote the 10,000-word ballot
initiative that created the stem cell agency in 2004. He ran the $35
million electoral campaign that convinced voters to buy into the
idea. Klein raised millions on behalf of the effort. He personally
provided the campaign $3 million. And he was the first chairman of
the agency, leaving that office only 13 months ago, when he was
designated chairman emeritus.
The meeting last month marked Klein's
first public appearance before the board on behalf of a specific
application.. He heralded the applicant, StemCells, Inc., as unique
and the “best” in United States with a “huge body of
experience.”

(The full text of his testimony can be found here.)
Irv Weissman
Stanford Photo
StemCells Inc. is a publicly traded company based in Newark, Ca., that was founded by renown Stanford
scientist Irv Weissman, who sits on its board. Weissman also played
an important role in the Prop. 71 ballot campaign that created the
stem cell agency. StemCells, Inc.'s application was turned down by
CIRM reviewers who gave it a score of 61, but the company appealed the action to the agency's governing board. Following the appearance by Klein, Weissman and others, the CIRM board sent the application back for more review.
The board will reconsider it next month or in October.
One California stem cell researcher,
who requested anonymity, said it is “highly inappropriate for Bob
Klein to be advocating for any grant application from a public
company.”
The scientist said,

 “He has
considerable influence with the ICOC(the CIRM governing board), and
is closely associated with biotech in the Bay Area. Even if he
doesn't make a lot of money himself from this, then he certainly has
friends who will.  Irv Weissman would be one of those friends."

In response to questions asked on Aug. 7 by the
California Stem Cell Report, Klein today defended his actions.  He was asked if he had “any sort of
financial ties” to firms or individuals that would benefit from
approval of the award. Klein, who is a real estate investment banker and also an attorney, said he has
“no financial interest” in the firm or individuals that might
benefit.
Klein also indicated his appearance was
entirely appropriate. He defined his role as a patient advocate –
not as a lobbyist who is paid for advocating on behalf of a company.
Klein said he had “a particular responsibility to contribute my
background knowledge and experience.”
Klein said he hoped other former board
members would follow his example. He said,

“(I)t would be a tragedy if the
expertise of board members built up over six or more years is lost.”

(The full text of his response can be found here.)
Klein's appearance came at a propitious
time for financially strapped StemCells, Inc. The company's
financial information shows that it is losing $5.4 million a quarter
as of the end of June and had only $9 million in cash on hand. It
also had liabilities of $11.6 million, up substantially from $8.5
million in September of last year.
The researcher who criticized Klein's efforts as inappropriate also said,

"StemCells Inc has been on the
stock market for 20 years, without producing anything of value for
the investors.  The stock price has been sinking fast:  it
was 60 cents this June; last year at this time, it was around $5 a
share.   

“On July 17, when the CIRM Disease
Team Award review results became available, the stock rose from 87
cents to $1.80 – a person who could anticipate the outcome of the
CIRM applications could have made considerable money in that 24 hour
period.”

Weissman's role
with the StemCells, Inc., is more than scientific. According to the
company's financial statements, he holds 88,612 shares. His wife,
Ann Tsukamoto, is executive vice president of the firm. She holds
185,209 shares in the firm.
Weissman played a significant role in
the Prop. 71 campaign. He did the “billionaire circuit,” raising
money for the initiative, according to an article by Diana Kapp in
San Francisco magazine. Among other things, Weissman worked the
exclusive Bohemian Grove in Northern California and “pitched”
Bill Bowes, a co-founder of Amgen, who, along with his wife, gave
$1.3 million to the campaign. Weissman was the key to securing a
$400,000 contribution from Microsoft's Bill Gates. Weissman also plumped for Prop. 71 in a TV campaign ad.
In addition to StemCells, Inc., Klein
and Weissman supported a successful attempt last month to overturn
reviewers' rejection of another $20 million application by Judith Shizuru
of Stanford. The application received a score of 53 from reviewers.
One of the application's problems cited
by reviewers was the availability of antibodies for the study. The
antibodies were developed by Systemix, a company founded by Weissman.
Systemix was acquired by Novartis in 1997 for about $70 million.
Weissman said he has “negotiated back” rights to key antibodies,
which he said are now held by Stanford.
Klein said that reviewers believed the
research was “a showstopper” but did not think the documentation
was adequate. He told the CIRM directors that they now have a letter
with proprietary information that supports the grant application.
Our take: The stem cell agency has long
labored under the perception that it is something of an insiders'
club. Even the prestigious journal Nature warned in 2008 about what
it called “cronyism” at CIRM. If anything, the situation is worse today,  four years later. Enterprises associated with persons on the CIRM board of directors have received more than 90 percent of the funds handed out by the agency. Klein's efforts last month
reinforce the not-so-pleasant image of the stem cell agency as an
old boy's club and create an impression – at the very least – of
unseemly insider influence.

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CIRM Board Member Prieto Defends Klein's Right to Appear Before Board

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A member of the governing board of the
California stem cell agency, Francisco Prieto, has commented
in an email about the “unseemly performance” item concerning the
agency's former chairman, Robert Klein. Prieto is a
Sacramento physician who serves as a patient advocate member of the
board. He has been on the board since its inception. Here are his
remarks.

“I wanted to comment on this piece
from the perspective of another patient advocate.  While I think
you know that I did not always agree with Bob Klein during his tenure
on the ICOC(the agency's governing board), I would strongly defend
his right to appear and give his opinions to the Board.  He is a
private citizen now, albeit one with considerable experience and
expertise, and I think his greatest vested interest in this case
stems (you should pardon the expression) from being the child of a
parent with Alzheimers.  As you point out, some eyebrows may be
raised, and I can imagine that some board members might be swayed in
either direction by his testimony, but  he is a passionate and
committed advocate, and he has the right to advocate before us.”

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Text of Klein's Comments Supporting Rejected Applications

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Robert Klein, who served 6 ½ years as the first chairman
of the $3 billion California stem cell agency,  testified before the agency's board for the first time on July 26, 2012. Klein, a real
estate investment banker and attorney, spoke on behalf of two applicants whose
grants had been rejected by the agency's reviewers. The appearance
has raised questions about the propriety of Klein's actions.

Here is a link to an item on his appearance. Here is the text of
his comments as reported in the transcript of the meeting.

“As the board knows, I've never addressed any grant from the
floor. It is critical here to understand that we have here
StemCells, Inc., which is the only company in North America
and, for that matter, maybe in the world, that has had two stem cell
therapies in the brain with these specific neural stem cells. They
have a huge body of experience here. 

“Secondly, one of the fundamental issues here that it (the
company's grant application) was downgraded on was the issue of the
fundamental concept, the platform concept, of injecting two focal
injections in the brain, in the hippocampus of the brain. It's
important to note that I've sat on three (CIRM)peer reviews where the
scientists really affirmed this specific approach with extremely high
scores, three different views. All right.

“So it's very important to realize we have a standard deviation
here of 12 (on the review scores). These scientists were completely
split. With some recusals on that panel, if you have 12 or 13 that
can really vote, three or four very low scores can bring it out of
the funding category all the way down. It is in the region where
this board is looking where the other three peer reviews, right,
early translation, the one before that was the planning grant review,
that the hippocampus was a good platform.

“Then they said the key weakness was you can't show migration.
Dr. Laferla (a co-PI on the application) has told me that
today the Journal of Neuroscience accepted the publication of
the data demonstrating migration. It was stated previously in the
application, but it wasn't accepted for publication. It now is.
That is the fundamental weakness that they identified in this
approach.  

“So we have a reaffirmed approach to the hippocampus by three
different peer review groups and a substantial portion of these
reviewers along with data dealing with the weak point. I'm sorry it
happened today. The data was out there, accepted for publication
today, means that it should definitely fall into this category. And,
of course, Dr. (Alan) Trounson (president of CIRM) wouldn't
have been able to review that in process because he was recused from
this grant by his own voluntary recusal. So the progress of this
data being accepted for publication is new information today. 

“If I look at the entire history of CIRM, as Leeza (Gibbons,
a CIRM director) says, building up to this point, we have reaffirmed
this approach from the very beginning with Dr. Laferla, with multiple
scientific approvals, and board approval, and we have the best
company in North America with the greatest experience with these
neural stem cells, with the best researcher we have for the potential
to address this disease, and we have brand-new data that demonstrates
and totally contradicts the key weakness on which it was downgraded.”

Here is the text of Klein's remarks on
behalf of a second application, also rejected by CIRM reviewers.

“This is the only other disease team grant I will address. Very
specifically, this was a disease team grant that I was on the peer
review in the planning grant stage. There are some fundamental
issues here. Is the international company on which the one antibody
that's not coming from Stanford, the two for sorting are
coming from Stanford, is the other antibody coming from this
international company a commitment that you can rely on? 

“The reviewers said this was a showstopper. That's the word they
used. They made a decision this was a showstopper because they did
not believe the company because they thought that the documentation
was inadequate. You now have a letter that goes into great
proprietary depth about the depth of this company's commitments
written by the head of development and translation internationally
for the company. 

“If we cannot depend on company commitments of this type, and
you will review the letter in executive session, if you have one, I
will not understand how we'll be able to collaborate with companies
with proprietary products and processes where they're making
commitments to academic institutions of the highest standard. I
believe this company is going to perform. I was on an hour call to
confirm with eight members of that company their level of commitment,
and I am completely convinced by that point. 

“The review is completely factually wrong on this issue about
the other two antibodies for sorting this. Dr. (Irv) Weissman
has just said they have not only been developed, they have been used
in clinical trials. There's data on them. And they are, in fact,
being thawed under FDA direction to reuse in this trial. 

“So I believe there's a major factual difference. Remember with
Karen Aboody there was a major factual error that was pivotal
in elevating that, and we found tremendous performance on that grant
by Karen Aboody of City of Hope. 

“So you have a decision to make. As a risk issue, do we believe
this company? Finally, this is broader than SCID. 

“Donald Kohn has written a letter that's in the public
domain that I suggest you read. It makes it very clear that opening
the niche for repopulating the immune system without chemotherapy and
radiation is a key contribution to every form of genetically modified
stem cells for an entire range of childhood diseases and other
genetic diseases in addition to therapies like sickle cell or aids. 

“I suggest that that profound contribution that can be made to
the field is a risk that is worth taking early on because of his
contribution to so many other areas. You have 12 other letters from
North America's leading pediatric geneticists that fundamentally
provide extraordinary support for this position and this approach.”

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