A California Stem Cell Mystery is Solved

The California stem cell agency today cleared up one of the mysteries involving next Thursday’s meeting of its governing board and likely action on a training program.

The agency last Saturday posted the agenda for the meeting that included a cryptic description that appeared to involve the abolition of one of its several training program. The agency did not respond to a query last Monday about exactly what was meant by the agenda item, making it nearly impossible for affected parties to respond in an appropriate and timely fashion.

Following the posting yesterday on this blog of an item describing the situation -- "The California Stem Cell Agency and Its Unnecessary Mysteries" -- the agency added a memo early today from CIRM President Randy Mills to the Thursday agenda. The memo explained that what was involved was the CIRM Scholars Program.  

Look for an item on this Web site early Monday on the expected end to the program.

The California Stem Cell Agency and Its Unnecessary Mysteries

For the second month in a row, the California stem cell agency, which sits on top of $3 billion in taxpayer cash, is playing a mystery game with the public.

Coming up next Thursday is a meeting of the 29-member board of the agency. These sessions are the most important public events involving the agency, which operates outside of normal state oversight. They deserve full transparency.

Without it, affected parties -- not to mention the people who pay the $6 billion total bill (including interest) for the stem cell research – do not have a genuine opportunity to comment and make suggestions about matters that involve their livelihoods and organizations.   

The latest problem primarily involves a cryptic agenda item for next week's board meeting that says only “consideration of the CIRM team’s determination not to present concept proposal for training program at this time.”

The agenda containing the item was posted last Saturday on the agency's Web site. The agency has not posted anything further on the matter and has not responded to a query five days ago seeking more information.

Training issues have been a subject of considerable concern and interest in the stem cell community, both at the state college level, which has received little of the agency’s cash, and universities and research institutions.

Backed by 11 top researchers, Jeanne Loring, head of the stem cell program at Scripps, has said the “Bridges” shared laboratory and training program has “provided the infrastructure upon which California’s reputation as the center of the stem cell universe was built.” (See also here.) 

Susan Baxter, executive director of the California State University’s system-wide program for biotechnology, said,

“Despite the Great Recession, Bridges graduates have succeeded in landing jobs and gaining admittance to graduate and medical schools at much higher rates than peer groups.” 

Does the training agenda item refer to the concerns of Baxter, Loring and the others? It could be a reference to the agency's high school training effort or something else entirely. It is totally unclear and unnecessarily so.

If the agency is fulfill its promise of maximum transparency, it should post ample background material on matters to be discussed when it posts the agenda 10 calendar days ahead of upcoming meetings. In the absence of that, however, it would have taken only five minutes or less to write a line specifying which training programs are up for consideration.

  

In addition to the mystery about the training programs, not to be found is information about proposed changes in the agency’s loan program. Those are scheduled to be approved next Thursday, only three business days from today. The changes likely will have a significant impact on businesses.  A board subcommittee was scheduled to consider them on Monday, but that meeting has been cancelled for unknown reasons. The agency has not responded to a query on when the session will be rescheduled, but presumably it will happen before the board meeting on Thursday.

Last month, the agency also created a similar mystery. It involved what turned out to be a $50 million program that deserved more timely attention from affected parties and the public.

In years past, the agency was infamous for failing to post material for its meetings in a timely fashion. Even board members sometimes complained about not having information. Sometimes meetings were postponed.

Since Jonathan Thomas became chairman in 2011, the situation has improved.  Randy Mills, the new president of the agency, is stressing "clarity" in what the agency does. However, the mysteries of the past two months do not auger well. The agency can and should do better. 

Webinar Now Available on Fast-Track Plan to Hand Out $1 Billion in California Stem Cell Cash

The ins-and-outs of CIRM 2.0 – at least some of them – are explained by the CEO of the California stem cell agency, Randy Mills, in a Webinar now available on the agency’s Web site.

The Webinar includes presentation slides and a Q&A. About 200 persons logged in for the session earlier this week on the new, fast-track effort to unload the agency’s next $1 billion. Kevin McCormack, senior director for communications, said after the Webinar,

"Of the 234 people who registered and, at some point tuned in today (Jan. 21), 108 were industry. Over the course of the 50 minute webinar some tuned in and dropped out so there was a rolling audience with 200 being the most tuned in at any one time."

If you are one of those who would like some cash from CIRM, this is must viewing. The 51-minute session can also be downloaded for later consumption.

Faster Cash but Tougher Competition for California Stem Cell Researchers

A slide from today's Webinar on CIRM 2.0

Randy Mills, who has led California’s $3 billion stem cell agency just since last May, today told a cyberspace audience that his agency will finance only the “absolute best” proposals under his new “2.0” version of the research effort.

Mills addressed about 200 persons who logged into a Webinar to learn more about the radical changes that began this month at the California Institute of Regenerative Medicine (CIRM), as the agency is formally known. Mills has dubbed the new direction CIRM 2.0.  And he said,

“CIRM 2.0 is going to be highly, highly competitive.”

It was a theme that the CIRM CEO came back to several times. He advised listeners that the competition will be tougher than in the past and that the agency will be more discerning.

CIRM 2.0 is aimed at both improving the quality of applications and at speeding money into the hands of researchers, cutting the time from application to funding from an average of 22 months to four months.   Mills intends to extend the new process to basic research and translational research later this year. 

Mills, the former CEO of Osiris Therapeutics in Maryland, said,

“We’re in the time business at CIRM.”

Mills said he expects the quality of applications to improve as the agency becomes more engaged in working with researchers to build proposals that will meet the agency’s needs.  CIRM will additionally become a partner with successful applicants and provide outside, expert help to overcome such things as logjams involving possibly the FDA or manufacturing problems, Mills said.

One of the major changes in CIRM 2.0 involves timing of grant rounds. Instead of rounds a year or more apart, Mills said,

“The application window is always open.”

The agency kicked off the new program this month with clinical stage programs. The deadline for filing applications is a week from this Friday(Jan. 30). No applications have been filed as of today.  No worries, Mills basically said. Applications will be accepted again next month with a deadline of Feb. 28 and every month thereafter with the deadline falling on the last business day of each month.

The agency has strict legal requirements to limit its spending to California operations. But in a Q&A session during the Webinar, Mills made it clear that a foreign-based company was eligible to seek funding for research activities that were being conducted with the Golden State.

In a brief telephone interview later, Mills said today's session was part of a "massive" effort on the part of the agency to spread the word about research funding opportunities involving CIRM.  He said he has been surprised about the lack of awareness -- outside of a relatively small circle in California -- of the availability of CIRM cash for biotech enterprises that traditionally have been struggling for funding.  

During the Webinar, Mills also acknowledged that CIRM 2.0 is new and is likely to encounter “some bumps” that he said the agency will work to solve. Nonetheless he told the researchers,

“This is going to be one wild ride.”

Mills’ Webinar on CIRM 2.0 is expected to be posted on the CIRM Web site either later today or tomorrow.

A Show-and-Tell Tomorrow on Handing Out California's Next $1 Billion for Stem Cell Research

Want to know more – from the horse’s mouth, so to speak -- about how California’s stem cell agency plans to give away its next $1 billion?

The public and researchers have a chance to hear directly tomorrow, via the Internet, from the agency concerning its plans for CIRM 2.0, the name of its new fast-track plan for handing out cash.

Registration is required, however, for the Webinar, which is scheduled for 12 p.m. PST.  CIRM says,

“Questions may be submitted in advance of the Webinar via email to cschaffer@cirm.ca.gov or via Webex registration.  During the webinar questions may be submitted via the Webex Q&A functionality.”

CIRM 2.0 was initiated by CIRM President Randy Mills as part of his efforts after he was appointed last spring. Mills will be personally presenting the proposal for the Webinar.

The agency says the plan is intended to put money in the hands of researchers with greater alacrity and improve the quality of grant applications. The agency describes the changes in the award process as radical.  Read more about it here, here and here. 

California to Pump $35 Million into Removing Stem Cell Therapy Roadblocks

California is set to give away as much as $35 million later this month to create tools and technology to help researchers develop the stem cell therapies that were promised to voters 11 years ago.

The idea behind the awards is to eliminate bottlenecks that block commercialization of research. California’s $3 billion stem cell program was created by voters late in 2004 with the expectation that it would quickly lead to stem cell cures.  It has spent about $1.9 billion so far but no therapies have reached the marketplace.

The latest, $35 million round is budgeted for as many as 20 awards of up to $1.2 million each to be distributed over a period as long as three years.  The $1.2 million is for "direct" research costs. CIRM would also pay for "indirect" costs that raise the total substantially.

Applications were sought last year from both academics and businesses with possible collaboration involving out-of-state partners, including China, Australia, Germany and Brazil.  Non-California enterprises would not receive funding from the state agency.

Action on the applications is part of the agenda for the Jan. 29 meeting of the 29-member governing board of the California Institute for Regenerative Medicine (CIRM), the formal name of the stem cell agency.  

The round is not part of the new fast-track program, CIRM 2.0, initiated by CIRM President Randy Mills. The “tools” effort contains different timetables, among other things. The work must begin within six months of approval of the awards, considerably longer than the 45 days specified under CIRM 2.0, which began just this month.  The old process also contained a pre-application review that has been eliminated.

The board is additionally expected to approve new rules for CIRM 2.0 awards, including loans to businesses.  Given that the deadline for applying for the first round of CIRM 2.0 is Jan. 31, potential applicants would be well-served to scrutinize the proposed new regulations. Interested parties can make comments or suggestions in advance of the board meeting and the related sessions of the board’s Science Subcommittee on Tuesday and the Intellectual Property (IP) Subcommittee on Jan. 26.  

The grant rules can be found on the Science panel agenda. The new loan rules have not yet been posted on the IP agenda. Comments can be sent by email to mbonneville@cirm.ca.gov or made at one of the public meeting sites. 

Public teleconference sites for the Science Subcommittee session Tuesday include San Francisco, Oakland, Irvine, Duarte, La Jolla and Sacramento. Addresses are on the agenda.  The only public site listed currently for the IP subcommittee is San Francisco.

The Jan. 29 full board meeting will be held in Burlingame but remote teleconference locations are also available where the public can participate. They currently include locations in Irvine and La Jolla, but that could change prior to the meeting.  Addresses are available on the agenda. 

California Stem Cell Agency Seeks Five Executives in $3 Billion Program

California’s $3 billion stem cell agency has embarked on a wave of fresh hiring of well-paid executives to fill top slots in the new structure created by Randy Mills, who has been the chief executive of the program since last May.

Five positions are open with salary ranges that hit $244,204 annually.  All of the announcements are emblazoned with the new CIRM 2.0 logo, emphasizing the “radical” changes underway at the agency. The program is formally known as the California Institute for Regenerative Medicine or CIRM.

The postings amount to the largest number of top level positions opening at the agency in a number of years, perhaps the largest since its inception 10 years ago.  Total employment at research funding program is slightly more than 50 persons and is not expected to increase significantly.

The open positions include “directors” in the following areas:  medical affairs and stem cell centers, blood and cancer therapeutics, neuro/ocular therapeutics, organ systems therapeutics and administration, which includes everything from public relations to information technology.

The agency’s governing board in December approved Mills’ reorganization with little discussion. He said it would flatten the organization, making it speedier and more efficient.

The new structure eliminated a number of positions, including that of Ellen Feigal, who was senior vice president for research and development, then the No. 2 position at the agency. She resigned last October, giving two weeks notice. At the time, she was the fifth person to leave the agency following the hiring of Mills.

Under Mills’ organization, the agency does not have a No. 2 person or a chief scientific officer. The chief scientific officer position was eliminated years ago, although it is common in many biotech companies.

A comparison of the new and old organization can be found here.

Here is a look at some of what the new positions entail:

Director, Medical Affairs and Stem Cell Centers: Oversight of “the Alpha Stem Cell Clinics, the CIRM Stem Cell Genomics Centers of Excellence, and the CIRM hiPSC Initiative with a total budget of over $90 million.”

Director, Blood and Therapeutic Area: Oversight of more than “20 active programs and a budget of over $200 million. Projects in the therapeutic area range from translational research through human clinical trials.”

Director, Neuro/Ocular Therapeutic Area: This area “currently has over 25 active programs and a budget of over $200 million. Projects in the therapeutic area range from translational research through human clinical trials.”

Director, Organ Systems Therapeutic Area: This involves more than “25 active programs and a budget of over $200 million. Projects in the therapeutic area range from translational research through human clinical trials.” 

Director, Administration:  Oversight of Communications, Information Technology (IT), and Human Resource departments; “Importantly, the Director is also responsible for managing all Governing Board activities and communications.”

All of the positions have a salary range of $167,877 to $244,204 and report directly to Mills.

No deadline exists for filing applications. The announcements said applications will remain open until the positions are filled. Mills, however, moves with dispatch. Interested persons should submit applications quickly if they want to be considered.

Fast Cash in California for Stem Cell Research; $50 Million Up for Grabs

The stem cell agency's new logo to promote CIRM 2.0

California’s $3 billion stem cell agency this month is kicking off the first round of radical changes in how it finances research, including funding of the clinical trials that it hopes will push nascent therapies into widespread use.

The money is scheduled to start flowing to scientists in the Golden State as soon as June in a new, fast-track program that is called CIRM 2.0. But only if the researchers file their applications within the next 19 days. Slow-moving researchers, however, will have a chance to file again at the end of next month and each following month.

The effort has all the earmarks of a venture capital program with heavy involvement by the financing party (CIRM), involving both the budget and the science.  The agency, known as CIRM after its formal name of the California Institute for Regenerative Medicine, last Friday repeated its pledge to be an “active investor,” which may or may not be welcomed by some researchers.

Nonetheless, Los Angeles Times columnist Michael Hiltzik recently wrote that scientists would find a “lot to like” in the new direction at the agency. Here is how CIRM put it in a news release Dec. 31 that contained links to the detailed program announcements, 

“CIRM 2.0 is a radical overhaul of the way the agency does business, implementing efficient new systems and programs that place added emphasis on speed, partnerships, and patients.

“CIRM 2.0 makes it easier for both companies and academic researchers with promising projects to partner with CIRM to get the support they need when they need it, reducing the time from application to funding from around two years to just 120 days.”

The release laid out some of the aspects of the new grant review and funding process, which the agency expects to extend to all its remaining $1 billion in award programs, 

“Speed:  In addition in to reducing the time to funding to 120 days, new clinical stage projects may be submitted to CIRM year round instead of only once or twice a year as in the past. Applications simply have to be filed by 5pm PT on the last business day of the month to be eligible for consideration in that round of review. If you miss the deadline one month, you only have to wait 30 days for the next one.

“Partnerships:  Under CIRM 2.0, the agency will not act as a passive funding source, but instead will be an active investor, devoting significant internal resources and leveraging its vast external team of world-class subject matter experts to advance the projects it selects. This will result in a true partnership that both accelerates programs and gives them the greatest opportunity for success.

“Patients: Each project will be partnered with a project-specific Clinical Advisory Panel  (CAP) to help advise and guide it forward.  Importantly, every panel will include at least one patient advisor with first-hand experience of the specific condition, who will provide input, recommendations and the appropriate sense of urgency that can only come from the unique perspective of someone living with the disease.” 

The agency has allotted $50 million to be handed out between now and July for programs involving clinical trials or preparation for clinical trials.  Applicants can ask for as much cash as they desire. But their proposed budgets will be scrutinized by an outside panel and subject to possibly substantial revision. If CIRM does not fancy the researcher’s figures, the application will not be presented to reviewers.  

The budget review is a significant change from past procedures.  It is just one of many changes, small and large, that scientists need to understand about the new process. Others involve restrictions on appeals, solvency requirements for businesses and, in some cases, hefty co-funding requirements that must be documented in advance. In-kind support, for example, will no longer be acceptable as  matching cash or for co-funding.

If scientists want to be competitive, they would be wise to carefully review the program announcements posted at the first of the month. In some cases in years past, applicants have lost out simply because they failed to understand in a timely fashion all the nuances of the process.

Other changes include the following:

• Businesses are limited to 10 percent indirect costs compared to 20 percent nonprofits, a requirement backed by CIRM board members representing nonprofits.  The agency said no legal conflict of interest existed for board members from nonprofits who voted for the bigger indirect allotment for their enterprises.
• Budgets must contain contingency plans for financing should expenses exceed initial estimates.
• Applicants must be ready to work within 45 days of CIRM board approval of their applications.
• The agency – not grant reviewers -- will determine whether applications meet eligibility requirements. If they do not, they will not be reviewed. An appeal by an applicant may be made behind closed doors to the grant review group.
• No public appeals are formally allowed. However, state law permits all members of the public, including researchers, to speak directly to the board on any issue. That avenue for seeking funding, however, has not been very successful in recent months. 

The grant review group is likely to continue to make -- behind closed doors -- virtually all the de facto decisions on application approvals. Their actions will come in three "recommendations" to the board: fund the application, do not fund but allow re-submission or do not fund and do not allow resubmission.  The CIRM board will then ratify in public the group’s decision, as it has almost invariably in the past. The board has the legal authority to do anything it wants with applications, but it has rarely overturned positive decisions by the board. Infrequently, it would approve some lower ranked applications. The new procedures would seem to make any public appeals to the board by researchers even less likely to be successful.

Randy Mills, CIRM photo

CIRM 2.0 is the brainchild of Randy Mills, who took over the presidency of the agency last May. He has launched a major effort to spread the word about the move. It includes a Jan. 21 “webinar” conducted by Mills to discuss CIRM 2.0. Advance registration is required.

On Jan. 20, the CIRM directors Science Subcommittee is scheduled to vote on new grant administration rules involving CIRM 2.0. That is another matter that researchers who wish to be successful in securing funds should be following and making recommendations on.  Sites where they can participate are in San Francisco, Oakland, Irvine, Duarte, La Jolla and Sacramento. See the agenda for specific addresses.

Gil Sambrano continues to head the review process, albeit with a new title: director of portfolio development and review. His phone number and email can be found on the program announcements posted at the first of the month (see here, here and here). 

For additional news stories on CIRM 2.0, see here and here.

LA Times: Researchers Sure to Find 'Lot to Like' in CIRM 2.0

The Los Angeles Times, the newspaper with the largest circulation in California, today took a crack at the California stem cell agency and its “reboot” as CIRM 2.0.

The piece was written by Michael Hiltzik, the Pulitzer Prize-winning columnist who has often been a critic of the $3 billion state research program.  The springboard for the article was the restructuring of the agency’s grant process, which its new president, Randy Mills, has dubbed CIRM 2.0.  The abbreviation comes from the formal name of the agency, the California Institute for Regenerative Medicine (CIRM).

Hiltzik wrote,

“Biomedical researchers are sure to find a lot to like about CIRM 2.0, especially Mills' commitment to streamline the program's grant and loan approval process for projects aimed at clinical trials of potential therapies. Reviews of applications take about 22 months on average; Mills hopes to cut that to about three months.”

Hiltzik said the new effort, which began just this month, was initiated by Mills after “he reached the conclusion that 'there was a lot of room for improvement.’”  Hiltzik wrote,

“That's a striking admission for a program that already has allocated roughly two-thirds of its original $3-billion endowment.” 

Hiltzik discussed the pressure to fulfill the public expectations for quick development of stem cell cures that were generated by the 2004 ballot campaign that created the agency in 2004. He also addressed the pressure to find new sources of funding by 2020, when the money is expected to run out.  Hiltzik wrote,  

“Mills says winning approval for more public funding isn't the goal of CIRM 2.0. ‘It's not our job at CIRM to extend the life of CIRM,’ he told me. Instead, he couches the need for urgency in terms of serving patients.”

Hiltzik continued, 

“As head of CIRM, however, Mills can't escape the tyranny of public expectations. CIRM's mandate, as he describes it, is ‘to accelerate stem cell treatments to patients with unmet needs.’ That presupposes that stem cell treatments exist or will be found for the major medical conditions at which Proposition 71 was aimed. What if science and nature don't cooperate?”

Hiltzik also touched on the competition involving funding of clinical trials and funding of basic research.

Arnold Kriegstein in front of CIRM-financed stem cell
research building -- UCSF photo

“Academic researchers may have a legitimate concern about too much money shifting toward late-stage research prematurely. ‘The field is so young,’ says Arnold Kriegstein, director of the stem cell lab at UC San Francisco, ‘that it's unreasonable to expect that fully transformational therapies are just a few years away. This is the time to continue basic research programs, not cut them off.’”

Hiltzik concluded, 

“Despite the program's unquestionably positive impact on stem cell science, especially in California, it still lacks a coherent sense of its proper role. CIRM 2.0 is the latest effort to find that role, but it may not be the last.”

California Stem Cell Report Goes Dark for a Couple of Weeks

The California Stem Cell Report will take a break between now and early January.  New and exciting stem cell tales, however, will come readers' way probably in the first full week of the new year -- unless something big pops. Happy holidays to all.

North Korea, Sony and California Stem Cells

Lauren Miller, a California stem cell agency director, and Seth Rogen at
the Los Angeles premier of "The Interview" on Dec. 11. The appearance
 coincidentally followed the agency's board meeting. Getty Photo, Michael Tran

It would seem unlikely that California’s $3 billion stem cell agency would have a link – even tenuously – to a major international news story dealing with hacking, Hollywood and North Korea.

But it has happened.

The link to the flap is Lauren Miller, who was appointed as a patient advocate just one year ago this month to the governing board of the agency by Gov. Jerry Brown.

Miller is married to Seth Rogen, who starred, directed and co-wrote the now “disappeared” movie comedy,  “The Interview.” Rogen and Miller, an actress and writer, have worked together and co-founded an Alzheimer's awareness and fund-raising effort.

For those oblivious to things Hollywood, the film dealt with a couple of TV tabloid types on a mission to assassinate North Korean dictator Kim Jong-un. The plot has it that the dictator turns out to be a fan of their show.

The North Korean government did not care for the treatment and denounced it as “a blatant act of terrorism.” Federal officials said North Korea was behind a devastating cyber attack on Sony Pictures, which produced the $44 million film. Sony had planned to begin showing the film nationwide Christmas Day but concerns arose about threats from the hackers. Sony has since pulled the movie and is not allowing public showings, which will probably turn it into a cult film, secret, of course. 

Miller and Rogen co-founded Hilarity for Charity, which raises funds to combat Alzheimer’s Disease. On the stem cell agency Web site, Miller says,

“As the founder of Hilarity for Charity, an organization which raises awareness of Alzheimer's Disease among young people, I am truly thrilled to join the California stem cell agency Board as the Alzheimer's Patient Advocate,” Miller says. “To have the opportunity to learn about, and support the research for so many important diseases is such a great honor and responsibility and I look forward to starting.”

The item continues:

“Miller’s commitment to raising awareness about Alzheimer’s comes from her family’s battle against the disease. Her grandfather died of Alzheimer’s and her mother was diagnosed with it when she was just 55 years old.”

Former California Stem Cell CEO Zach Hall on Conflicts of Interest and Last Week's CIRM Board Voting

Conflict of interest issues have long been a difficult issue for the California stem cell agency, and so it was last week.

The matter involved a proposal to reduce the indirect cost funding rate for both businesses and nonprofit institutions from as high as 20 percent to 10 percent of an award. That recommendation quickly ran into objections from Donna Weston, who is chief financial officer at Scripps and also a member of the board (the ICOC). She and seven other representatives of nonprofit entities all voted to keep their institutions from losing the cash. The rest of the board members voting also went along, on a 17-0 roll call at the Thursday meeting.

During the session, the California Stem Cell Report queried James Harrison, general counsel to the agency, about whether the votes by the nonprofit representatives involved a prohibited conflict of interest. Harrison, who was at the meeting, replied via email,

"No, it is a standard, so it is exempt." 

The item drew the attention of Zach Hall, who served as the first president of the agency.  Here is the text of what he had to say in an email to this writer: 

“As a former President of CIRM and Vice-Chancellor for Research at UCSF, I have what I hope is a constructive comment about the issue of conflict of interest and CIRM indirect cost rates.   

      James Harrison's response to your question about conflict of interest of ICOC institutional representatives who vote on their own indirect costs may be correct by the rules of CIRM, but this voting arrangement constitutes a fundamental conflict by any reasonable standard. Institutional representatives on the ICOC are now disqualified from voting on CIRM grant applications from their own institution. In these instances, most of the money – the direct costs – goes to the investigator, rather than to administrative or infrastructure costs, and, in any case, the total amount is small compared to the overall institutional budget. In contrast, indirect costs rates are much more important for the institution, as they apply to all CIRM grants that an institution receives and all of the money goes to the administration for research support. Because it is so important, research institutions spend tens or hundreds of thousands of dollars to negotiate the best possible indirect cost rate with the federal government. In contrast, for CIRM grants, institutional representatives do not negotiate but actually vote on the size of their own indirect cost rate. By sitting on both sides of the table, they undermine the integrity of the whole process.

      As a former administrator at a California university, I know how important the indirect cost rate is for a research institution. I thus strongly support a rate of 20% on CIRM grants, a rate which is still below the cost of research support at most institutions. Nevertheless, I believe it is a mistake to allow institutional representatives to vote on the rates. This kind of conflict of interest, permitted by the current rules, is exactly what has provoked repeated criticism of the CIRM board structure. In my view, research institutions should make their case to the board and to the public, like any other recipient of CIRM funds, but their representatives should then be disqualified from voting. To increase the confidence of the public in the process, they might consider removing themselves voluntarily from the vote, if not compelled by law.”

Eleven Percent Stock Price Drop for StemCells, Inc., on Bad News From California Stem Cell Agency

Six month performance StemCells, Inc., stock price
Yahoo chart

The stock price of StemCells, Inc., of Newark, Ca., plummeted nearly 11 percent today following a federal filing that it had lost its $19 million award from the California stem cell agency.

Termination of the Alzheimer’s research award to the publicly traded company was announced last Thursday by the $3 billion state agency. The publicly traded firm filed a report with the Security and Exchanges Commission on Friday, but it was not seen widely until today.

The price of the company’s stock fell 10.78 percent in heavy trading, 2.2 million shares compared to an average volume of about 676,000. It closed at 91 cents, still above its 89 cent low for the last 12 months. The stock continued to sink in after-hours trading. The 52-week high is $2.43. 

The award has been controversial since it was approved in 2012 on a thin, 7-5 vote by the 29-member governing board of the agency, formally known as the California Institute for Regenerative Medicine (CIRM). It was the first CIRM award approved that had been rejected twice by CIRM’s blue-ribbon grant reviewers. It was the first involving heavy, public lobbying by the first chairman of the agency, Robert Klein. And it was the first award involving a company that later appointed a top CIRM executive, former President Alan Trounson, to its board of directors. (See here and here.)

The company’s brief, SEC filing said the forgivable loan was cancelled because of a failure to meet a milestone it had negotiated with the stem cell agency. The filing echoed comments by CIRM.

Last Thursday morning the California Stem Cell Report requested a comment on the CIRM announcement from Martin McGlynn, president of StemCells, Inc., which was co-founded by eminent Stanford researcher Irv Weissman and serves on its board of directors.  McGlynn responded this afternoon.

He said that the company had reported on its research Nov. 20 at an investor event in New York. He said that “we did not see the research showed an improvement in the predetermined measures of memory enhancement.”

The firm has collected $9.6 million from the state. In response to a question about whether the agency would be repaid any of the loan, Kevin McCormack, senior director of communications for CIRM, replied,

“We are in the process of winding down that loan so as we do that we'll get a better idea of the final financial picture.”

StemCells, Inc.,’s stock price has been falling since July 3, when it hit its 12-month high at $2.43.  On July 7, the company announced the appointment of Trounson to its board, only seven days after he left the stem cell agency. The move surprised the agency. Its subsequent limited investigation said that it could find no evidence of illegal actions. The California Stem Cell Report suspects that most investment analysts would not link Trounson's appointment to the price drop. 

Here is the text of McGlynn’s response.

"Thank you for your email, and your request for comment, which I have provided below:

"As you know, Alzheimer’s Disease is significant unmet medical need. The funding for our Alzheimer’s program was in the form of a forgivable loan. Thus, the loan would be forgiven in the event that certain predetermined preclinical milestones were not accomplished. Those milestones included a “go/no go” goal of replicating certain behavioral changes observed in mouse models of relevance for Alzheimer’s, obtained in a small pilot study that had been conducted by our collaborator, Dr. Frank LaFerla, Chancellor's Professor and Chair, Neurobiology and Behavior School of Biological Sciences, University of California Irvine, and described in detail in the original application for funding under the CIRM Disease Team RFA. It has become clear to both the CIRM and StemCells that this goal has not been achieved, so the parties have begun the process of winding down the program.

"We presented this data during our recent Analyst & Investor Event in New York on November 20th. The conference was webcast live and a replay of that event is available at http://www.media-server.com/m/p/m8h3mw5w. During the conference, the Company presented data showing that the Company’s proprietary human neural stem cells, HuCNS-SC® cells robustly engrafted into the hippocampus for up to 3 months post transplantation (the longest time point tested). The Company also presented compelling data derived during the preclinical testing, showing that HuCNS-SC transplantation significantly increased the number of pre- and post-synaptic hippocampal spines in the AD mice, suggesting an increase in synaptic density in this important brain region.

"Unfortunately, despite this compelling histological data, we did not see an improvement in the predetermined measures of memory enhancement and the Company stated that in the absence of consistent behavior modification in the animal models tested, pre-determined success criteria were not met, and that it would be working with the CIRM on an orderly wind down of the program.

"Importantly, we do not view this as a “loss”, rather, we believe we have made a significant contribution to the field. We are of course disappointed that we didn’t see the preclinical efficacy that we had hoped for, but we are grateful to have had the opportunity to collaborate with Dr. LaFerla and CIRM to pursue this worthwhile cause. It is possible that in the future, more reliable and validated animal models of memory enhancement will emerge, at which time StemCells, Inc. will be well positioned to reenter the arena.

"Thank you
"Martin McGlynn"

Stanford Pulls Its $10.9 Million Alpha Stem Cell Clinic Application

Stanford University has withdrawn its $10.9 million request to the California stem cell agency to create an Alpha stem cell clinic on its campus, along with a complaint that an illegal conflict of interest was involved in reviewing the proposal.

No further details about the alleged conflict were disclosed by the stem cell agency, which cloaks such matters in secrecy.

The Stanford application last October came before the board of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. It was pulled from the agenda without a vote shortly before it was to be considered because of the late allegation of a conflict.

The application was to have come again before the CIRM board yesterday but again was removed. Kevin McCormack, senior director for communications, said that both the proposal and the complaint had been withdrawn by the applicant.

McCormack did not disclose the identities of the reviewers in the Alpha round nor the identity of the applicant, which the agency keeps secret. But the California Stem Cell Report has learned that it was Stanford.

The proposal received a low score, 64 or below, from the agency’s blue-ribbon reviewers, all of whom come from out-of-state, and was not recommended for funding. It was a rare loss for the Palo Alto institution, which has been the most successful in the state in winning money from CIRM. It has collected $298.3 million in 90 grants. The figure far surpasses the No. 2 institution, UCLA, which chalked up $215.3 million in 75 grants.

The winners in the $34 million round were the City of Hope in Duarte, UC San Diego and UCLA-UC Irvine. All of the institutions involved have representatives on the CIRM governing board. They are not allowed to vote on applications from their institutions.

In addition to Stanford, the other losing applicants in the round were UC Davis and UC San Francisco. 

See below for a CIRM list of the conflicts of interest in the round involving various directors.

   Conflict List -- Alpha Stem Cell Clinics -- Directors of California Stem Cell Agency

San Francisco Business Times: CIRM 2.0 is 'Business-Friendly,' 'All-Out Charge' for Stem Cell Cures

Official approval yesterday of the California stem cell agency’s new, $50 million fast-track research effort has generated a lengthy piece in the San Francisco Business Times, a weekly newspaper that circulates widely in an area known for its biotech enterprises.

Ron Leuty authored the article, which could be considered an anniversary overview of the agency as much as anything else. The springboard was the CIRM board action yesterday on CIRM 2.0. Kathy Robertson of the Sacramento Business Journal also had a piece albeit briefer.

Leuty described the plan as “business friendly” and critical to the agency’s future if it is to secure funding beyond 2020.  He wrote,  

“CIRM leaders always stressed that the road from research to the clinic would is unavoidably long and winding. But now, as they talk of seeking another round of cash — possibly asking taxpayers for $5 billion to make its mission permanent — they realize that a high-profile medical victory in the next 24 months may be the only realistic way to make their case.”

Leuty said that Randy Mills, who has served as president of CIRM only since May, “is leading an all-out charge to make the agency more responsive with its remaining six years of cash — and to show the results that could convince others that CIRM must continue to be a long-term stem cell research player.”

Leuty continued,

“Plans for a warp-speed CIRM is not without its critics. 

“Some researchers think the agency should be investing more in basic stem-cell research that may provide the progress that could give private investors confidence. They include people like Dr. Arnold Kriegstein, director of the stem cell program at the University of California, San Francisco.

 "'A modest investment in basic science will pay greater dividends,’ Kriegstein said.

 "A speed-focused CIRM may also not be best for taxpayers, said John Simpson, an advocate with Consumer Watchdog and a frequent CIRM critic.

 "’I understand that they want to be more efficient,’ Simpson said. ‘I question whether they can do it with the necessary and thorough vetting of proposals.’" 

Leuty also had this from Kriegstein: 

"Even in pharma, with all the experience and depth, the likelihood of success is relatively small. The stem cell pathway is less certain. There's bound to be more risk." 

The California Stem Cell Report would like to note that the California stem cell community has been all but silent on the Mills’ CIRM 2.0 plan. The agency has had four hearings on the matter since September. The number of persons from the research community commenting at those sessions has numbered less than 10, perhaps less than five. Kriegstein was not on the scene nor was Simpson.

We should also note that researchers, with a few notable exceptions, have rarely appeared before the the CIRM board over the last 10 years as it has set its priorities and established the rules for the funding that have had a major impact already on hundreds of California scientists.

The California stem cell agency offers a valuable opportunity for researchers to influence decision-making and priorities. They should take advantage of it. Coming before the board after the fact and complaining about this or that flaw in CIRM processes is far too late.

California Stem Cell Agency Press Release on its $50 Million, Fast-Track Plan

Here is a link to the press release by the California stem cell agency on its radical plan to change and speed up its approach to funding research. The board approved $50 million to kick start the drive. You can find the story from the California Stem Cell Report here.

California Stem Cell Agency Concludes Meeting

The governing board of the California stem cell agency adjourned its meeting at 11:40 p.m. PST today. The California Stem Cell Report will post shortly a few additional items on the session today. (The additional postings concluded at 12:55 p.m. PST. Also please note that an earlier version of this item incorrectly said the meeting ended at 1:40 p.m. instead of 11:40 a.m. It was one of the shortest, regular meetings ever for the board.)

California Launches $50 Million, Fast-Track Stem Cell Drive

Directors of the $3 billion California stem cell agency today approved a $50 million plan that will radically reshape its efforts to produce a widely available stem cell treatment, a goal that it has not yet reached after 10 years of trying.

Speed is what the new push is all about – shortening the agency’s funding cycle for awards from nearly two years to about four months.

The plan was devised by Randy Mills, who has been president since last May of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. He has dubbed the effort “CIRM 2.0” and says,

“We are in the business of trying to save people’s lives….We have to behave with the appropriate sense of urgency.” 

CIRM 2.0 will begin next month for awards related to clinical trials with $50 million allotted for the first six months of the year. The program will be extended to other award programs as well. The agency hands out cash at an average rate of $190 million a year and has about $1 billion left.

The program appears akin to a venture capital process but without face-to-face pitches by those seeking funds.

Researchers from both business and nonprofits will be able to apply on the last business day of each month instead of very sporadically. No caps will be stipulated on the grants, but budgets will be closely scrutinized prior to reaching reviewers.

CIRM directors from nonprofit institutions vigorously balked at a 10 percent cap on indirect costs in the awards.  The indirect funds go to the institution and not for research. Some of the indirect rates currently run as high as 20 percent of the total award and are much valued by California research institutions, most of whom have members on the CIRM board of directors.

Director Donna Weston, chief financial officer of the financially troubled Scripps Institute, led the move against the 10 percent cap. Others indicated that researchers at some nonprofits would not be allowed to apply for grants that only contained a 10 percent rate. As result, the board agreed on a 10 percent cap on indirect costs for businesses and 20 percent on nonprofits.

No opposition was heard online during what appeared to be a unanimous vote. The California Stem Cell Report queried CIRM about whether it is a legal conflict of interest for directors from nonprofit institutions to vote on the indirect cost change that would benefit their institutions.

James Harrison, general counsel to the board, replied,

"No, it is a standard, so it is exempt."

Mills’ plan calls for researchers to receive their money within about four months of submitting an application. Board approval is scheduled for 90 days after submission. Work must begin within 45 days after board action. Unsuccessful researchers with applications that have potential will be coached by the agency so that they can turn in a successful proposal. Successful applicants will see greater involvement in their work by CIRM staffers and will face go-no go milestones. Failing to meet a milestone will mean loss of funding.

Moving the cash quickly to biotech businesses is critical, says Mills, who was a CEO of a stem cell firm for 10 years. Most operate on a thin financial edge and are perpetually raising money. Business applicants, however, will have to show six months of cash-on-hand to win approval. Matching funds will be required in some of the first rounds, and in some cases also from non-profits.

   

Mills predicts that CIRM 2.0 will result in higher quality applications because of the coaching and because proposals are less likely to be submitted prematurely in order to conform to CIRM’s previous funding cycles.

CIRM directors also approved Mills’ reorganization plan that is likely to break up silos at CIRM that may have formed over the past eight years. Mills said his structure will be more efficient and encourage innovation. The new plan calls for the staff – Mills prefers the word “team” – to be organized on much different lines than previously. Units will be organized on therapeutic lines such as “blood and cancer” and “organ systems.” Currently the CIRM team has been organized into such things as “research and development” and “scientific activities.”

For more on CIRM 2.0, see here, here and here. Here is a link to the CIRM press release.

California Stem Cell Agency Opens Board Meeting in Berkeley

The California stem cell agency governing board opened its meeting at 11:05 a.m. PST today with an announcement that the session will be abbreviated because of a massive storm in the San Francisco Bay Area. Some flights have been cancelled in and out of San Francisco airports.

Chairman Jonathan Thomas is now discussing his activities in recent months.

California Stem Cell Agency Cancels $19 Million Award to StemCells, Inc.

StemCells, Inc. has lost its controversial, $19 million award from the California stem cell agency, it was disclosed today.

Cancellation of the forgivable loan was revealed in slides posted on the agency's Web site as part of the presentation today by its new president, Randy Mills, to the agency's board of governors.

The slide said the Alzheimer's award was "discontinued due to lack of functional improvement observed in preclinical studies" after the agency had provided the publicly traded firm with $9.6 million. It was not immediately clear whether any of the money will be repaid.

The company has not yet announced the loss of the award but has been asked for comment.

The most recent cash infusion came last spring in a move that coincided with the appointment of former CIRM President Alan Trounson to the StemCells, Inc., governing board. Trounson joined the board only seven days after leaving the California Institute for Regenerative Medicine (CIRM), as the agency is formally known.  The move surprised and shocked the agency, but it said its limited investigation detected no illegal action in the disbursement to the company. (Also see here.)

The StemCells, Inc., application was approved by the 29-member CIRM board in 2012, on a 7-5 vote,  after being rejected twice by the agency's blue-ribbon reviewers. The approval followed heavy lobbying by the former chairman of the agency, Robert Klein. It was the first time that the board had approved an award that reviewers had turned down twice. It was also the first case of such public lobbying by Klein.

Later in 2012, Pulitzer Prize-winning columnist Michael Hiltzik of the Los Angeles Times wrote that the award was "redolent of cronyism."  Hiltzik asked rhetorically what was the company's secret in winning approval of the award. He then wrote,

“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.”

Hiltzik referred to Klein and eminent Stanford research Irv Weissman, a co-founder of StemCells, Inc., who still sits on its board and holds considerable shares in the Newark, Ca., company.

Weissman was a key backer of the ballot measure that created CIRM in 2004 and helped raise money for the ballot campaign.  Trounson has recused himself on some matters dealing with applications connected to Weissman. Trouson has been a guest at Weissman's ranch.