California Stem Cell Report

Grant Reviewer Conflict in $40 Million Round at California Stem Cell Agency

2013-05-21T14:59:00.001-07:00

Internationally renown scientist Lee Hood, winner of a National Medal of Science, violated the conflict of interest policies of the California stem cell agency earlier this year when he was involved in reviewing applications in a $40 million round to create genomics centers in California.

Lee Hood
Institute of Systems Biology photo

The agency quietly disclosed the February violation in letters dated April 2 to the leadership of the California Legislature. The letter (full text below) said that Hood “agreed that there was a conflict of interest that he had overlooked.”

The conflict of interest involved a $24 million application that included participation by another eminent scientist, Irv Weissman of Stanford University, and funding for facilities at Stanford.

Hood owns property jointly with Weissman in Montana. In 2008, San Francisco Magazine, in a well-reported piece on the ballot measure that created the stem cell agency, described the property as a ranch and Hood as Weissman's “good buddy.” Hood has co-authored research papers with Weissman. Both are on the scientific advisory board of Cellerant Therapeutics, Inc., of San Carlos, Ca., a firm co-founded by Weissman. Hood's nonprofit firm, Institute for Systems Biology in Seattle, lists Stanford as a partner in the genetics of aging in humans. At Stanford, Weissman is director of the Institute for Stem Cell Biology and Regenerative Medicine, whose research involves aging. Weissman also serves on the Hood's institute's scientific advisory board.

Hood has not responded to an inquiry yesterday by the California Stem Cell Report for his perspective on the conflict of interest matter.

The conflict was not discovered by the agency during the review. It was raised by another reviewer at the end of the review, which, for the first time in CIRM history, failed to conclude with a decision supporting any of the proposals. Reviewers' comments have been sent back to applicants with another review scheduled for November. The agency said Hood will not take part in that session.

CIRM spokesman Kevin McCormack said today that Hood's conflict was “clearly a case of a new reviewer making an innocent error.” McCormack said it was not a violation of the state's conflict of interest law. The agency's conflict policies go beyond economic issues and deal with personal and professional conflicts.

The agency's letter to the state legislative leadership said,

“Dr. Hood had not previously participated in a meeting of the GWG(grant review group), and as a result, he was not familiar with CIRM’s conflict of interest policy, particularly the policy’s inclusion of 'personal' conflicts of interest. Thus, when he completed the conflict of interest form for the Genomics Awards review, he inadvertently neglected to indicate that he had a personal relationship with an investigator who was involved in one component of a joint application submitted by two institutions. Dr. Hood and the investigator are close personal friends and their families own vacation property together. Because of his personal relationship with the investigator, Dr. Hood had a conflict of interest with respect to the joint application under CIRM’s conflict of interest policies.”

The agency's letter said that Weissman would have received $11,000 over five years under the terms of the application, but that it also involved "creation of a data center at one institution and three research projects that would be undertaken at (Weissman's) institution (Stanford).

The California Stem Cell Report asked the agency about the involvement of CIRM President Alan Trounson, who has been a guest at the Montana ranch, and whether he recruited Hood as a reviewer. Last year, Trounson excused himself from participating in public discussion of another application involving Weissman.

McCormack said,

“Alan helps recruit many reviewers, including in this case Dr. Hood, but he is not involved in assigning reviewers to individual applications.”

The conflict of interest involving Hood was easily detectable in routine searches on the Internet, including a Google search on the search term “lee hood irv weissman.” The first two entries in that search yesterday turned up serious red flags.

Asked whether the agency performed “any sort of serious examination” of the confidential statements of interests filed by reviewers prior to review sessions, McCormack said,

“Yes, we do a serious examination of statements of interest from all our reviewers. However, this conflict was not identified by the reviewer either in the financial disclosure statement or identified in the conflict of interest list. Normally we do not check Google for all possible combinations of 15 GWG reviewers times about 200 individuals listed in these applications. That would be about 3000 independent Google searches to identify a possible conflict.”

The agency's legislative letter said that it plans to “amend its regulations to add greater clarity in an effort to prevent future conflicts from arising and to augment its efforts to educate reviewers, particularly new reviewers.”

Our take?

This is the latest in a series of questionable activities involving the stem cell agency, which is trying to come up with a plan to sustain itself after its state funding runs out in 2017(see here, here and here). The agency is giving more-than-serious consideration to an effort to raise funds from the private sector, which can lead to new and more difficult ethical considerations than a state-funded agency would normally face.

What these questionable activities demonstrate is that the $3 billion agency needs to give much more thought, to put it mildly, to its policies ranging from conflicts of interest to incompatible employee/director activities to the conduct of top management in providing special treatment for donors.

It also is clear that the statements of interests of reviewers are not examined closely for their accuracy by CIRM staff and attorneys. McCormack's remarks clearly indicate that the agency does not think it has time to be sure that no conflicts exist among its plethora of reviewers. That is precisely the reason reviewers' statements of interests – economic, professional and personal – should be made public rather than kept under wraps by CIRM. Then, interested parties, presumably mainly applicants, can check a panel of reviewers, if they wish, for conflicts in a particular round. Obviously, the agency can and should withhold the names of reviewers examining a specific application – the release of the names on the panel in a given review session is sufficient.

Tomorrow the CIRM governing board's evaluation subcommittee meets privately to discuss Alan Trounson's performance. It appears to be the second part of an evaluation process that began last October. Trounson's involvement with Weissman and Hood -- and his actions in connection with a $21,630 gift from a member of the public, albeit a not-so-ordinary member of the public -- should also be on the evaluation subcommittee agenda.

California Stem Cell Agency Letter Re Lee Hood Conflict

Text of CIRM Comments on Lee Hood Questions

2013-05-21T14:58:00.000-07:00

Here is the full text of the statement today by Kevin McCormack, senior director for public communications at the California stem cell agency, in connection with the conflict of interest issue involving Lee Hood, president of Institute for Systems Biology of Seattle, Wash. See here for a story on the matter.

McCormack's comments came in response to the following questions from the California Stem Cell Report.

“Did (CIRM President Alan) Trounson recruit Hood to serve on the grants working group?

“Does CIRM perform any sort of serious examination of the statements of interests of its scientific reviewers prior to specific review sessions. The conflict involving Weissman and Hood was easily detected by a Google search. The first two entries on the search term "lee hood irv weissman" raise serious red flags. Additionally, I imagine it is more than common knowledge among many in the scientific community that these two scientists are longtime friends.”

Here is McCormack's reply,

“Alan helps recruit many reviewers, including in this case Dr. Hood, but he is not involved in assigning reviewers to individual applications. Furthermore he expects all reviewers to declare whatever conflicts they have.

“Yes, we do a serious examination of statements of interest from all our reviewers. However, this conflict was not identified by the reviewer either in the financial disclosure statement or identified in the conflict of interest list. Normally we do not check Google for all possible combinations of 15 GWG reviewers times about 200 individuals listed in these applications. That would be about 3000 independent Google searches to identify a possible conflict. While this relationship may be known to some it certainly was not known to the CIRM staff who checked the conflicts. If it had been they would have raised it before the meeting.

“It's also important to point out that Dr. Hood was a new member of this review panel and was not familiar with our conflict of interest rules. This was clearly a case of a new reviewer making an innocent error.

“Finally, CIRM’s rules are stricter than state law, and this would not have been a conflict under California conflict of interest law.”

Replicating Oregon Cloning in California: Views on the Legality

2013-05-17T09:01:00.000-07:00

Oregon's stem cell cloning achievement has triggered some discussion about whether it could be replicated legally in California, which bans paying for eggs as was done in Oregon.

Stanford researcher Irv Weissman said it is “not true” that Oregon's stem cell research would be illegal in California. Leftovers from IVF clinics could be used, he said.

But in response Oregon researcher Shoukhrat Mitalipov said that “SCNT (the process he used) did not work with discarded human eggs.”

He added,

“SCNT worked with eggs from healthy young volunteers (paid of course). IVF patients (whether paid or not) have reproductive health problems and may not provide acceptable quality eggs for SCNT.”

Their comments came in emails to the California Stem Cell Report in connection with yesterday's item that said because the Oregon researchers used paid donors for eggs, the research would be illegal in the Golden State.

Weissman said,

"Not true. They did it with nearly 40 percent efficiency, which does not require paying for eggs, just use leftovers from IVF clinics."

There is no question that it is illegal to pay donors for their eggs in California. The question is whether the research could be done properly without using paid donors. In recent years, researchers at Harvard and elsewhere have said they needed paid donors for stem cell research to properly perform their research and could not find them without providing compensation.

Weissman Says Oregon-style Stem Cell Research Could be Done in California

2013-05-17T08:23:00.000-07:00

Stanford researcher Irv Weissman says it is “not true” that Oregon's stem cell research could not be done legally in California.

In a brief email to the California Stem Cell Report, he commented in connection with yesterday's item that said because the Oregon researchers used paid donors for eggs,the research would be illegal in the Golden State.

Weissman said,

"Not true. They did it with nearly 40 percent efficiency, which does not require paying for eggs, just use leftovers from IVF clinics."

There is no question that it is illegal to pay donors for their eggs in California. The question is whether the research could be done without using paid donors. In recent years, researchers at Harvard and elsewhere have said they needed paid donors to properly perform their research and could not find them without providing compensation.

We have queried Shoukhrat Mitalipov in Oregon concerning his views on Weissman's comments. We welcome other comments as well. Comments can be filed directly by clicking on the word "comment" at the end of this item or you can email them to djensen@californiastemcellreport.com.

We should also note the comment from researcher Paul Knoepfler of UC Davis who notes that SCNT cloning is permissible in California, which is what was done in Oregon. The state does ban reproductive cloning, however.

Oregon-style Stem Cell Cloning Research Illegal in California: No Pay for Eggs in Golden State

2013-05-16T20:42:00.001-07:00

The good news out of Oregon is that some diligent scientists in the Beaver State have accomplished a major advance in stem cell research --- the cloning of human stem cells.

That bad news is that their research would have been illegal in California, and probably will be banned for decades, if not longer – thanks to Proposition 71 of 2004.

The proposition was the ballot initiative that created the $3 billion California stem cell agency, which is hailed internationally as being one of the world leaders in financing stem cell science. Unfortunately, the 10,000-word initiative also contains language that was aimed at winning voter approval of the measure -- not promoting good science.

The team writing the initiative, led by Robert Klein, the former and first chairman of the stem cell agency, put in a provision that made it illegal to pay women for their eggs. The Oregon researchers paid women $3,000 to $7,000 each for their eggs, reflecting the current market rate based on prices paid in connection with IVF. In some cases for IVF, the compensation is dramatically higher. (See here and here.) Stem cell researchers in recent years in the United States have found that they cannot secure an adequate number of donors without matching IVF donor compensation.

While compensation for eggs is a matter of some controversy, strong cases have been made that women should make their own decisions about selling their eggs – not the what some call the nanny state. Of course, that should occur under well-regulated situations. But Proposition 71 backers wanted to remove any possible campaign objections by opponents of stem cell research, and so they inserted the ban along with management minutia and other dubious material.

Can't that be changed, one might ask? Not without a herculean effort. That means another ballot measure or a super, super majority vote in the California legislature plus the signature of the governor. Imagine a measure on the ballot to allow women to sell their eggs. The uproar would be heard internationally. In 2004, when Proposition 71 was approved, it would have been better to leave the compensation issue unaddressed. Then it could have been dealt with through regulation or normal legislation, both of which are far more flexible than ballot measures that alter the state Constitution and state law.

Our quick and limited survey of the news coverage indicated that many of the mainstream media stories omitted the price of the eggs, which may suggest that the issue of compensation is becoming moot.

In related news about the Oregon accomplishment, UC Davis stem cell researcher Paul Knoepfler has posted a good look at the some of the misinformation that is surfacing on the Internet about the research, including its implications.

He said,

“Keep in mind that on day one of the iPS cell era in the stem cell field we had a huge number of misconceptions because we simply had so much to learn. Same is true here.”

Jessica Cussins over at the Berkeley-based Biopolitical Times also has a solid roundup of the coverage of the Oregon research and the analysis of its significance.

Here are links to two blog items from the California stem cell agency on the Oregon research, including one dealing with “cloning hysteria” and a more general look.

The Klein Donation: Top Stem Cell Agency Execs, Lawyers Aware of Gift but Fail to Report It

2013-05-16T08:26:00.000-07:00

A number of top level executives, in addition to six lawyers, at the California stem cell agency knew of Robert Klein's $21,630 donation in May of last year although they failed to report it to the agency's board as required by agency regulations.

As a result, the 29 directors were not aware of the gift when Klein, former chairman of the agency, appeared before them two months later and successfully asked them to override a grant reviewer decision rejecting a $20 million award to StemCells, Inc., of Newark, Ca. It was the first time in the eight year history of the agency that its board had approved an application rejected twice by its scientific reviewers. The proposal had been given a score of 61 out of 100. The board rejected higher scoring applications in that particular round.

According to a person familiar with the agency, members of its executive committee, some of whom are lawyers, were aware of the Klein donation in May. Other lawyers not on the executive committee knew as well. Previously, it was not known that the donation was known so widely among CIRM executives and lawyers. It also was not clear that they knew that Klein intended to appear before the board in July. At the time of his donation, reviewers had already rejected the StemCells, Inc., application but it was not supposed to be publicly known.

Most of the CIRM executives and lawyers aware of the gift were also present at a public meeting of the CIRM board in May as well as July but did not alert the board to board to the donation.

Last week, an agency spokesman said the failure to report the Klein gift was “due to the lack of additional donations, a transition in CIRM’s finance office and an oversight."

The board will be formally told of the gift at next week's board meeting, more than a year after it was made.

The donation by Klein, a Palo Alto, Ca., real estate investment banker, financed a trip by six CIRM science officers to Japan for an international stem cell conference. CIRM President Alan Trounson subsequently directed the officers to give special access to Klein, among other favors Trounson granted Klein. Two of the officers were heavily involved in the grant round that included the StemCells, Inc., application. The science officers participate in the application of the closed-door review process but do not vote on proposals. Trounson excused himself from participation in public discussion of the StemCells, Inc., application because of his relationship with the company's founder, researcher Irv Weissman of Stanford University.

The board vote approving the application was a narrow 7-5. It is not clear whether the vote would have changed if the board had been informed publicly about Klein's gift. But it would have heightened concerns that Klein was using his six-year service as chairman of the agency plus the donation to sway the board, which rarely overturns the decisions of its scientific reviewers. CIRM directors go along with reviewer decisions on 98 percent of applications, according to agency calculations.

One of the votes in favor of Klein's position came from Art Torres, one of two vice chairman of the agency. Torres' state-required economic disclosure statements show that he received at least $31,000 from firms controlled by Klein during 2012 and 2011. Torres works four days a week for the agency, earning an annual salary of $225,000. Torres told the California Stem Cell Report that his vote had no connection to the consulting work he did for Klein's real estate firms.

Klein has denied any impropriety in connection with his donation. He has not responded to questions involving Torres.

Klein, StemCells, Inc., and $31,000 in Consulting Fees for Torres

2013-05-15T05:33:00.001-07:00

The Robert Klein-StemCells, Inc., affair has taken another turn with the disclosure that a vice chairman of the California stem cell agency was paid at least $31,000 over a two-year period by Klein and also voted on behalf of Klein's effort to win approval of a $20 million award for StemCells, Inc.

Art Torres received what he reported were consulting fees during 2011 and 2012 from firms controlled by Klein, former chairman of the agency. In 2012, Torres backed Klein's efforts to override grant reviewers' rejection of the $20 million application from the Newark, Ca., publicly traded firm.

Art Torres, center, with Bob Klein, left, at Klein's last meeting in
2011 as chairman of the California stem cell agency.
Incoming chairman Jonathan Thomas is at right.

The 29-member board of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, narrowly voted 7-5 last September for the award. It was the first time that the board has approved an application rejected twice by its scientific reviewers. It was also the first time that Klein has lobbied the board on behalf of a specific application since stepping down in June 2011. He was elected chairman in 2005 as the agency was just beginning its work and is an iconic figure to many in the California stem cell community.

Asked for comment last week by the California Stem Cell Report, Torres said,

"My decision to support an award to StemCells, Inc. to explore the use of neural stem cell transplantation to treat Alzheimer's disease was based on the merits of the application and the hope it offers to patients who suffer from Alzheimer's, a disease that affects millions, including Bob Klein's late mother. I have no financial interest in StemCells, Inc. nor does Bob Klein, and my decision to support the award has no connection whatsoever to the work I do with Bob Klein."

Kevin McCormack, senior director for public communications at CIRM, said that Torres' statement would be the only comment on the matter from the agency.

Klein did not respond to questions, declaring that personal issues were occupying his time.

The California Stem Cell Report's questions to all three dealt with the propriety of Torres' employment by both CIRM and Klein while Klein was asking the board to award a business $20 million. The governing board has a code of conduct that declares members should “maintain the highest standards of integrity and professionalism.” However, it does not speak to questions of appropriate employment by CIRM directors outside of the agency.

In January 2012, Torres authored a document discussing CIRM's conflict of interest rules. He said they are intended “to eliminate even the appearance of impropriety.” He also referred to CIRM's policy on “incompatible activities” for employees. It deals with activities that could “discredit” the agency or that are “inimical” to it. However, it does not specifically deal with the type of situation involving Torres and Klein, who is a real estate investment banker and attorney. The policy additionally does not address cases where a governing board member is also an employee of the agency.

Torres' economic disclosure statements, which are required by state law, contain only broad ranges for compensation, and the amount could be significantly higher than $31,000. Torres reported that in 2011 he was paid between $10,001 and $100,000 by both Klein Financial Corp. and K CP Cal, which share the same address as Klein's offices in Palo Alto. In 2012, Torres reported receiving between $10,001 and $100,000 from K CP Cal and between $1,001 and $10,000 from Klein Ventures LLC, which also has the same address.

Torres reported that the payments were consulting fees and that the firms dealt with real estate. He did not respond to requests for more details.

Torres earns $225,000 a year in his part-time role as one of two vice chairmen for the agency. Under the arrangement, he works four days a week.

Torres was chairman of the state Democratic Party and a longtime state legislator. He was nominated for vice chairman in 2009 by state Treasurer Bill Lockyer, among others.

Last week, another financial arrangement involving Klein surfaced in connection with the StemCells, Inc., application. Klein gave the agency $21,000 last May,two months before he pitched the board on the StemCells, Inc.,application. The donation was not reported to the board prior to Klein's appearances before the panel. The agency's regulations require such gifts to be reported to the board but do not specify a time frame. Following inquiries from the California Stem Cell Report, the agency said it would report the donation at the agency board meeting next week.

Klein's donation financed a trip by six CIRM science officers to Japan for an international stem cell conference. The agency directed the officers to give special access to Klein. Two of the officers were heavily involved in the grant round that included the StemCells, Inc., application, which scientific reviewers scored at 61 on a scale of 100.

A Patent War on iPS: One Researcher's View

2013-05-14T19:08:00.001-07:00

As the California stem cell agency pushes ever more aggressively to turn research into cures, the second largest share of its awards, in terms of numbers of grants, has gone to efforts involving induced pluripotent cells, also known as reprogrammed adult cells.

But questions do exist whether those efforts can surmount barriers that have to do with patents and ownership of the intellectual property.

UC Davis stem researcher and blogger Paul Knoepfler discussed some of the problems in a post yesterday. He wrote,

“All the talk and the slew of publications about potentially using iPS cells to develop therapies to help patients is exciting in theory, but unfortunately the reality is that it is not entirely clear if most researchers are, from a legal standpoint, even allowed to develop and commercialize iPS cell-based therapies at all.

“The patent landscape for iPS cells is complicated to put it mildly. A Google patent search for “induced pluripotent stem cells” produced almost 200,000 results .

“A search for “cellular reprogramming produced more than 1,000 results.
I’m not sure all of these results are really separate patents, but still….that’s a big complicated mess.…..

“It is no exaggeration to say there are likely dozens of institutions around the world wanting to commercialize iPS cell-based products.

“Will they all have to pay expensive licensing fees or end up in court?
…or will the patent holders voluntarily and freely allow others to commercialize iPS cell-based medical treatments?

“I don’t think so.

“This could get really messy.”

Patient Advocate Reed Defends Klein Donation to Stem Cell Agency

2013-05-14T15:31:00.000-07:00

The California Stem Cell Report today received the following email from Don Reed, a patient advocate, who has long been involved in California stem cell agency affairs. Reed is vice president of public policy for Americans for Cures Foundation, a position he has held for some years. Americans for Cures is the personal lobbying organization created by Robert Klein, former chairman of the California stem cell agency. Reed said his opinions below are his own and may or may not reflect those of the foundation.

“I must take issue with your entry, 'Robert Klein Gives $21,630 to the California Stem Cell Agency,' May 05, 2013.

“When Bob Klein donated $21,630 to the California stem cell program (to allow scientists to attend a research conference in Japan) he was doing exactly what he always does: advancing research to ease suffering and save lives. The scientists needed a way to attend a top-level conference. Believing in the benefits of researchers sharing thoughts, Bob paid for their trip.

“Unfortunately, your article appears to imply corrupt motivations.

“'A seemingly innocuous…gift…generated a wave of special favors for (Klein) that stretched out to include a gold mining multimillionaire from Canada.'.
A 'wave of special favors?' The article states that 'Klein wanted to meet with the six science officers…' and to get their impressions on the conference.

“Is that not natural? First, would it not be helpful to hear from the scientists if the trip was worth the time and expense? Second, Bob Klein works in real estate, a full-time job. He does not have the scientist’s automatic involvement to keep him up to speed on everything new in regenerative research. But he wants to know the latest: what is working, what is not. He is always eager for a chance to speak one-on-one with an expert.

“He met with a Canadian millionaire? Why is this shocking? The millionaire supports stem cell research; so does Bob. California is working closely with Canada on several projects; they pay their scientists, we pay ours; more bang for the buck. If there is a person with the resources and will to advance Canadian research, it is natural that Bob would want to develop a deeper interest in the shared research.

“And why should Klein be criticized for supporting a research project attempting to alleviate Alzheimer’s? He saw his own mother die of the disease, after losing the ability to recognize her own son. I am familiar with that particular Alzheimer’s project, and it had some amazing results, restoring memory to laboratory rats. This was a water maze test, and the rats recovered the memory of a pathway out of the water, which they had forgotten. To the best of my knowledge, no one else in the world had achieved memory return, and the project deserved the most serious consideration. Yes, the board of directors voted against the Grants Working Group; it is not only their right but their responsibility to exercise judgment, and not merely be a rubber stamp for the GWG.

“There is also the matter of free speech. Anybody else in California can come to the meetings of the program and voice their opinion—why should Klein be denied the right to voice his opinion?

“Bob Klein owns no stem cell stock, no biomedical enterprises. Financially, supporting stem cell research has cost him a great deal. This is the man who led the fight to build the California stem cell program, donating roughly six million dollars, taking out loans on his house to help finance Proposition 71. And, for six years (without salary) he worked full-time as Chair of the Board of the oversight committee. Physically and emotionally, it has been an exhausting decade for him. He has not profited in any way, except to see the advancement of research for cure.

“Passing a $3 billion stem cell program in the midst of a recession was like relocating Mount Everest—seemingly impossible, but he did it anyway. He moved the mountain. Thousands of people helped, but one man made it possible. Without Bob Klein, California would not have the greatest stem cell program in the world: challenging diseases considered incurable since the dawn of time. That he should continue to support it, with his dollars, time, energy and creativity, is commendable.

“Sometimes a good deed is just that: no sinister motivations, no secret agendas-- just a positive action which benefits all.”

WARF hESC Patent Update: Seven Years and Challenge Still Underway

2013-05-12T17:13:00.000-07:00

Last week UC Davis stem cell researcher Paul Knoepfler and Scripps researcher Jeanne Loring engaged in an online Q&A that touched on patents and how they can stifle research and discourage development of therapies.

Loring did not mention it in the Q&A but she is the key figure in the ongoing challenge to the WARF (Wisconsin Alumni Research Foundation) patents on human embryonic stem cells. Her effort began in 2006 but has dropped out of the news. We asked her for an update on the case.

Here is the text of what she replied,

“Dan Ravicher is the lawyer behind several big patent cases, including the recent Supreme Court case challenging human gene patenting (Myriad), and a challenge to Monsanto's restrictive enforcement of its patents on genetically modified seeds.

“I'm lucky that he is also the lawyer working with John M. Simpson (of Consumer Watchdog) and me to challenge the WARF patents. Currently, we are getting ready for another year of appeals and counter-appeals on the third of WARF's three patents that give them control over all human embryonic stem cells.

“This is Dan's summary of the current situation:

"'We filed challenges at the Patent Office to all three of WARF's hESC patents. During those challenges, WARF agreed to narrow all three of the patents, and they also loosened their licensing requirements. But, even though the patents were narrowed, we still think they're invalid, and thus disagree with the Patent Office's decision to re-issue them in the narrowed forms. Unfortunately, due to the age of the patents and changes in the law, we were only allowed to appeal one of the three decisions, and that appeal is now pending at the Court of Appeals in Washington. But, we expect the decision in our appeal will affect the validity of the other two patents, since they're all basically on the same technology."

“The 'narrowing' of the patents has had an unexpected consequence. Before the narrowing, WARF's patents would have covered iPSCs as well as hESCs. After the narrowing, they can only claim hESCs.”

In the Q&A on Knoepfler's blog, which also involved an interesting discussion of IPS research, Loring said,

“Patents on fundamental things -- genes, human embryonic stem cells, iPS cells -- allow the patent holder to have a monopoly, preventing anyone else from using whatever they’ve patented.

“Patents are supposed to stimulate investment in development. Why, as Justice Scalia said last week, would anyone have the incentive to study a gene and, for example, develop diagnostic tests, if they couldn’t prevent everyone else from working on that gene?

“But patents also stifle competition and the advances that come from having many different groups studying the genes or cells. One of the main reasons I returned to academia was so I could have freedom to study human ES cells without worrying about getting threatening letters from a patent holder, demanding that I either stop working on the cells or pay a steep licensing fee.

“There will inevitably be problems commercializing iPSC-based therapies and assays, because at least three institutions own patents on aspects of iPSCs. I’m paying attention to the patent 'landscape,' but have decided to deal with those problems when they arise, and hope that the iPSC patent holders realize that the potential of these cells is too great to keep to themselves. It would be better for all of us if the issue of stem cell patents never has to be decided in the Supreme Court.”

Cash and Favors: Robert Klein Gives $21,630 to the California Stem Cell Agency

2013-05-05T19:33:00.000-07:00

A seemingly innocuous $21,630 gift to the California stem cell agency has kicked up new questions about a controversial $20 million research award and generated a wave of special favors for the donor that stretched out to include a gold mining multimillionaire from Canada.

Robert Klein
Elie Dolgin/Nature photo

The gift was made last May by Robert Klein, chairman of the stem cell agency from 2004 to July 2011, but has never been publicly reported to the agency's governing board as required by its own regulations.

In July, two months after he donated the cash, Klein made an unusual appearance before his old board and pitched it to override rejection by scientific grant reviewers of a $20 million application by StemCells, Inc., of Newark, Ca. The board subsequently asked for a reevaluation of the proposal, which was again rejected by reviewers. Klein persisted at a September meeting, and the 29-member board decided, on a 7-5 vote, to go along with him. It was the first time in its eight-year history that the board has approved an application that was rejected twice by its scientific reviewers, who scored the proposal at 61 out of 100.

Klein's donation to the agency, formally known as the California Institute for Regenerative Medicine (CIRM), included more than the cash, which financed trips to a prestigious stem cell conference in Japan for six of the agency's science officers in June 2012. He also arranged the waiver of roughly $3000 to $4000 for their registration fees for the annual meeting of the International Society for Stem Cell Research. Nine agency executives and other staffers were already attending at taxpayer expense, but the six could not attend because of travel budget cuts at the $3 billion agency. (The total of 15 amounted nearly one-third of the agency's staff.)

Klein's donation triggered a number of special favors from the agency, according to documents provided by CIRM to the California Stem Cell Report under a state Public Records Act request. Klein wanted to meet with the six science officers, who have a wide range of responsibilities, including managing and developing grant and loan programs, participating in reviews of applications and evaluating research progress. CIRM President Alan Trounson obliged. At the meeting in Japan, the six science officers received a memo approved by Trounson instructing them to meet privately “one-on-one” with their benefactor and to give him special access to their activities. The meetings were actually scheduled to also include a third person, Rob McEwen, who is one of the 100 richest persons in Canada, a $20 million donor to a stem cell center in Toronto and CEO of the gold mining company bearing his name.

The memo indicated that the science officers – all California state employees – should be helpful by identifying areas of “special importance” to Klein and “other donors.” The CIRM documents show no objection from the agency to instructions from another member of the public -- Klein aide Melissa King -- to provide her and Klein with written summaries about the science officers' activities at the convention along with “details” about their work at CIRM. Email addresses of the six were also provided to Klein, who may have additionally received their cell phone numbers although that is not entirely clear.

At Klein's request, Trounson also invited McEwen to a closed-door session in Japan involving the agency's international partners, a session at which presumably valuable, little known scientific information might be mentioned and future directions charted. Trounson specifically told McEwen in an email that it was Klein who asked that the executive be invited to the session.

Both the agency and Klein deny any wrongdoing in connection with the donation, which was the only private contribution to CIRM in the 2011-12 fiscal year. Both say there was no connection between the donation last May 16 and the StemCells, Inc., application, which was rejected by reviewers one month earlier during closed-door meetings April 18-20, 2012.

CIRM's gift regulations bar donations from persons who have applied for funding or who intend to apply for funding, but the rules do not speak to gifts from persons who lobby on behalf of funding for others. The rules require that the governing board of the agency be informed at a public meeting of gifts accepted by Trounson on behalf of CIRM. Trounson is required to identify the donor and conditions imposed by acceptance of the gift. Trounson did neither prior to Klein's appearance last July on behalf of StemCells, Inc.

At the July meeting, Trounson recused himself from public discussions of the StemCells, Inc., application, although he did not offer an explanation. However, his action was connected to his relationship with stem cell scientist Irv Weissman of Stanford University, who founded the publicly traded company, currently sits on its board and holds 124,608 shares of the firm. Trounson was a guest once at Weissman's ranch for four days in July 2011, CIRM said in response to a question this week.

In the wake of the California Stem Cell Report's inquiries, Kevin McCormack, the agency's senior director for public communications, said last week that the agency plans to report the donation to the governing board at its meeting in the San Francisco Bay Area later this month.

McCormack said the failure to report the donation prior to the board's consideration of StemCells, Inc.'s, application was “due to the lack of additional donations, a transition in CIRM’s finance office and an oversight."(See thefull text of McCormack's statement here.)

Asked whether the agency is concerned about the appearance of Klein's donation and the subsequent board action, McCormack replied,

“No, the two items are entirely separate with no connection. Item 1 involved Bob Klein making a donation to allow science officers to attend a critically important scientific meeting on stem cell research. The science officers had originally planned on attending but then were told they could not because of cuts in our out-of-state travel budget – Bob Klein’s donation, without using state funds, enabled the science officers to attend. Item 2 is an ICOC (board) decision to fund a research project that they felt had promise and was important for the people of California.”

As for the special treatment of Klein in the wake of his donation, the agency did not respond to inquiries asking for an explanation.

Klein said in an email that his donation was not connected to StemCells, Inc. He said that as late as June he had “no idea” that the its application had been rejected by reviewers. Klein said that he committed to the donation in “April or May.” (The full text of Klein's comments re the application can be found here and here.)

Prior to leaving CIRM in 2011, Klein was a non-voting member of the CIRM grant review committee, which consists of out-of-state scientists and seven CIRM board members. His service on the committee included the period when it approved a planning grant for StemCells, Inc., to prepare its application for the $20 million.

Klein noted that he did not pick the six science officers for the Japan trip. One of them was the lead science officer on the award round involving StemCells, Inc. A second was also heavily involved, according to the transcript of the July 2012 board meeting. Science officers, however, do not vote on or score applications. Klein characterized the CIRM staff as recommending against approval of the grant so “they were clearly not influenced” by his donation.

Klein said his meetings with the six science officers were aimed at determining whether they believed the cost of attending the stem cell convention justified what they learned at the meeting. He said a second goal was to aid universities and other researchers, mainly in Canada, “in advancing their contributions from an existing donor or donors.” Canada is one of CIRM's research partners.

Klein defended the involvement of McEwen, who Klein said has contributed to the stem cell group conducting the meeting. Klein said McEwen does not engage in technical discussions and added,

“On a conceptual basis it was important for him to understand the spectrum of medical advances towards therapies. His additional contributions to Canadian non-profits could assist Canada in collaborating with California on more international research, with California only funding the research done in California and the donor helping to fund the research done in Canada. No specific grant applications were discussed. Finally, the discussion with the international partners focuses on the funding process and funding collaboration it does not discuss any individual.”

Private funding of activities by state employees has stirred up controversy over the years in California. The most recent example was Gov. Jerry Brown's much-reported trip to China this spring, which was financed by private donations. Articles in the Los Angeles Times and The Sacramento Bee both noted that private funding arrangements have plenty of critics.

Columnist George Skelton of the Times wrote,

“It just looks unseemly — a pack of lobbyists and other favor-seekers paying big bucks to traipse after the governor, schmoozing and gaining invaluable access.”

Reporter David Siders carried a quote in The Bee from Jock O'Connell, international trade adviser for the economics consulting firm Beacon Economics, who said,

“They're donating because they want to curry favor with the incumbent administration."

Asked whether CIRM planned to accept donations for trips in the future, McCormack replied that the agency is “always open to donations from generous supporters” provided they meet the state's legal requirements.

The Klein Donation: Text of Stem Cell Agency's Key Responses

2013-05-05T19:26:00.000-07:00

Here is the text of the key comments from the California stem cell agency in response to questions from the California Stem Cell Report (CSCR) concerning the $21,630 contribution by Robert Klein. Here is a link to the full story on the matter.

CSCR to CIRM:

“Is CIRM concerned about the appearance created by the donation from Bob Klein to enable scientific staff to attend the ISSCR meeting in Yokohoma, coming one month after the GWG (the review group) rejected StemCells Inc's Alzheimer's application and one month before the July Board meeting that led to the approval of the award?”(Editor's note: It was actually two months before the board meeting.)

CIRM's response:

“No, the two items are entirely separate with no connection. Item 1 involved Bob Klein making a donation to allow science officers to attend a critically important scientific meeting on stem cell research. The science officers had originally planned on attending but then were told they could not because of cuts in our out-of-state travel budget – Bob Klein’s donation, without using state funds, enabled the science officers to attend. Item 2 is an ICOC decision to fund a research project that they felt had promise and was important for the people of California.”

CSCR to CIRM:

"Please explain why the agency could not finance the trip itself ."

CIRM's response:

"During the financial year 2011/12 the Governor's Office issued an Executive Order requiring state agencies, under the Governor's direct authority, to reduce out-of-state travel. Although CIRM was not required to participate, we nevertheless imposed restrictions on out-of-state travel to meet the intent/spirit of the Governor's request. Accordingly, we made a decision to reduce the number of our science staff who would be attending the conference. Bob Klein's donation made it possible for those staff to go."

CSCR asked several questions re the failure to report the Klein donation to the board as required by agency rules.

CIRM's response:

“Under the Gift Policy, the President had the authority to accept Mr. Klein’s generous offer as a 'Direct payment or reimbursement by third parties for the costs of general operation or grant management administrative activities.' (Gift Policy, Sec. III(A)(2).) Because CIRM receives gifts only infrequently, CIRM staff determined that it would be more efficient to report gifts to the Board on a semi-annual basis. Mr. Klein’s donation was the first gift CIRM had received in some years. Due to the lack of additional donations, a transition in CIRM’s finance office, and an oversight, CIRM staff has not yet presented a report including Mr. Klein’s gift. Staff plans to report Mr. Klein’s gift as part of the finance report at the May Board meeting. Because the President had the authority to accept the gift pursuant to section III(A)(2) of the Gift Policy, it did not require a commitment letter. (See Gift Policy, Sec. III(C)(1) ['A Commitment Letter is not required for gifts described under III.A.2., 3. and 4.'].) However, consistent with the policy, Dr. Trounson sent Mr. Klein a letter of appreciation, a copy of which we have already provided you.”

The Klein Donation: Text of Robert Klein's Response re StemCells, Inc.

2013-05-05T19:25:00.002-07:00

Here is the text of the initial response from Robert Klein, chairman of the California stem cell agency until July 2011, to questions from the California Stem Cell Report (CSCR) concerning his $21,630 donation to the agency. The questions posed by CSCR on precede the response by Klein. Here is a link to a story on the matter.

CSCR to Klein:

“Why did you give the agency the money?
“Did you place on conditions on its use?
“Did anyone connected with the agency indicate in advance that your donation would be desired? If so who? Who did you deal with primarily on the donation -- Trounson, Thomas or...?
“The donation came one month after grant reviewers rejected StemCells Inc.'s Alzheimer's application. Do you think it was appropriate to make the donation and then ask the board twice to override its reviewers?
“Do you think the donation and subsequent action on StemCells, Inc.'s Alzheimer's application will negatively color the perception of future efforts by CIRM at private fundraising?”

Klein's response:

“In April or May of 2012 I committed approximately $20,000 as a contribution to CIRM to cover the travel expenses of staff to the International Stem Cell Society meeting in Japan. My commitment to ensure scientific staff can participate in international meetings dates back many years. In 2011 I wrote the following explanation of its importance in obtaining the knowledge to accelerate the drive of scientific research to reach patients with chronic disease.

Leverage Leading Edge Science

“Travel by CIRM staff members and leadership permits CIRM to stay in contact with, and understand, the leading edge advances of scientists all over the world, and to leverage those advances by creating a platform for collaborations between these leading scientists and their peers in California. Currently, CIRM has collaboration agreements with 15 foreign governments pursuant to which these governments have pledged $134,380,000 in commitments to fund the work of their scientists on join teams with California scientists to develop therapy candidates and to advance therapies to human trials. Although a significant amount of this commitment is currently pending scientific peer review and not all of it will be awarded as part of a successful application, every dollar in funding by a foreign government magnifies the scientific impact of California’s taxpayer dollars. If just $40 million is awarded each year over ten years, it would provide California with $400 million of scientific leverage.

It is critical to understand that there are unpublished scientific discoveries in progress in each of these nations. Often, publication may trail a scientific discovery by nine months or more.
The travel requested by CIRM provides a critical link for the timely transmission of valuable new information. California cannot afford to lose the opportunity to harness discoveries in other countries to advance the development of therapies in California and to capture the opportunity to advance therapies for patients instead of using California taxpayer dollars to duplicate discoveries already mastered in other countries.
While CIRM’s scientific staff works with scientists in other countries to capture the scientific knowledge for the benefit of California’s therapy development teams, the Chairman’s Office works with international finance ministers, the premiers of international states, and foreign funding agencies to ensure funding allocations for these bilateral funding agreements. These discussions often involve face-to-face negotiations in foreign nations and states, in addition to meetings at international conferences, all of which are supported by extensive staff work in California.
CIRM issued its first co-funding awards early in 2009. Over the last two years, these agreements have yielded $57 million in international funds actually approved through peer review. This $57 million represents participation by only the first five countries and one international state with which CIRM established a collaboration. Now, CIRM has agreements with nine countries and two international states and an additional three countries will be added in the near future.
Even if CIRM were only to obtain $30 million per year in international matching funds, the ratio of return on CIRM’s $206,920 travel expenditures would be approximately 145 to 1.
Proposition 71 specifically anticipated and directs CIRM to develop leverage and global leadership to capture the benefit for patients.

Keeping on the Cutting Edge of Stem Cell Science

"CIRM’s over 20 MDs and/or PhDs science officers on the grant review staff at CIRM reach out nationally and internationally through conferences that may include 10-20 meetings per day and workshops of 8-12 hours per day to grasp the leading edge of this pre-publication, dynamic revolution in medical knowledge. In order to ensure that the every research dollar is optimally deployed to advance therapies to save lives or rescue the quality of life for patients, it is critical that CIRM staff remain on the cutting edge of new discoveries. International conferences and workshops provide a critical opportunity for massive and decisive transfers of information, which ensures that California is funding the right research.

“I principally corresponded with Dr. Trounson on the issue covering the travel expenses for the staff for the reasons stated above. I had no input into the selection of scientific staff. In May and even in June when the conference occurred I had no idea that there would be any disagreement on the Alzheimer’s application of Stem Cells Inc. in August. At the Board meeting I asked that there be consideration for the fact that three other peer reviews had found the work leading up to this application to be outstanding and they had ranked it highly. In addition, the current peer review had not been briefed on the fact that they downgraded the applicant for following the directions on material points by the prior peer reviews. Finally, the standard deviation on the 2012 peer review was extremely high and the re-review by the three member committee resulted in a split decision. It is particularly appropriate with a huge standard deviation, demonstrating both strong support and opposition within the peer review group, for the Board to make its own independent decision. Please recall that the staff recommended against approval so that they clearly were not influenced by my commitment to a contribution to the Agency, months before, for the benefit of scientific staff to be able to attend an international science conference. Additionally, Dr. Trounson, I believe, recused himself from the review of the Stem Cells Inc. application, for unrelated reasons, so he was not involved. I personally had served on the three prior peer reviews, including one in the prior year that recommended this application for a Disease Team approval. I know how strongly the scientists on those three prior peer reviews supported funding this scientific research, with the 2011 review specifically recommending this Disease Team for approval. I believe it was extremely important for me to provide a voice to those three scientific panels who disagreed with a portion of the scientists on the 2012 scientific panel. Supporting the scientific movement to human trials for Alzheimer’s has to be eventually approved by the FDA; but, this loan will move the science and the potential for clinical trials forward significantly and hopefully obtain FDA approval. I believe all three of the Board’s overrides of the peer review recommendations on the Disease Team round in 2008 are leading directly to human trials in the United States and/or United Kingdom. 92% of the all of the funds awarded by CIRM have followed the recommendations of the peer review committee; but, in those significant cases where the Board has made an independent decision, there has been an extremely high success rate particularly when there has been a high level of disagreement within the Peer Review Board that was overridden and prior peer reviews recommended and/or approved the scientific approach and concepts of the applicant.”

(Editor's note: The applications in this round were reviewed once in April 2012 by CIRM's full grant review group. StemCells, Inc.'s application was subject to a reevaluation after Klein's appeal in July 2012 and rejected again, but it was not a full review. Klein may be referring also an earlier round that provided grants for planning to apply for the full $20 million.)

The Klein Donation: Text of Robert Klein's Comments on Special Treatment by CIRM

2013-05-05T19:25:00.000-07:00

Here is the text of comments from Robert Klein, former chairman of the California stem cell agency, concerning his $21,630 donation to the agency and subsequent actions by the agency. Klein's comments May 1 came in response to questions from the California Stem Cell Report(CSCR) on April 30. The text of the inquiry from CSCR precedes Klein's response. Here is a link to the story on the matter.

CSCR to Klein:

"I have sent the following to CIRM asking for their response and am offering the same opportunity to you. Here is what I sent the agency:
'The documents that I have received so far show that after Klein gave CIRM $21,000 the agency instructed six of its science officers to give him special access to their activities and apparently did not object to additional instructions from another member of the public, Melissa King, to provide Klein and her with written summaries about their activities at the ISSCR convention and “details” about their work at CIRM. Email addresses of the six were also provided to Klein, who may have additionally received their cell phone numbers although that is not entirely clear. The CIRM documents show that the six were told to engage in one-on-one sessions with Klein, which actually included a third person, a wealthy Canadian mining company executive. One document indicates that the science officers should assist in fundraising for CIRM by identifying areas of “special importance” to Klein and 'other donors.'
"'Additionally, Alan Trounson, at Klein's request, invited the mining executive to a closed door session involving the agency's international partners, a session at which presumably valuable, little known scientific information would be discussed and future directions charted. Trounson specifically told the executive that it was Klein who asked that executive be invited to the session, adding to Klein's clout in any business or other dealings that Klein might have with the executive.'

My questions to CIRM deal with the special treatment that was provided in connection with your donation. I would ask you if you think that state agencies should provide this sort of extraordinary treatment for individuals who donate to the agency. At the very least, doesn't this raise questions about the integrity of the agency and doubts in the public mind about whether it can be fair and even-handed in its activities?

Klein's response:

"In April or May of 2012 I committed to contribute a charitable donation to CIRM to cover the travel costs for 5-7 additional science officers to attend the International Stem Cell Conference in Japan. It is important to CIRM that their science officers understand the cutting edge research being developed around the world so that CIRM does not fund redundant research; but, to the contrary, the science officers understand how to create networks between California scientists and scientists in other foreign countries who are doing complementary research that can potentially accelerate the advancements of therapies for patients. I do not hold any financial interest in biotech companies. I have historically been involved in encouraging international collaboration to advance medical therapies; for patients, every day of delay in the development of a therapy is a delay they cannot afford. To conceptually document the value of additional scientists traveling to these meetings, it was discussed that there should be conceptual, bullet point summaries about the value for CIRM obtained through the scientists discussions at the international conference. The idea was to create bullet points of information about a few of the most meaningful scientific concepts and contacts the science officers benefitted from each day of attendance at the conference. I did not participate in the selection of the science officers who attended and I did not play any part in determining what activities they participated in. There were two fundamental goals to the very short one-on-one sessions that were arranged at "down time" that would not conflict with their other activities. The first goal was to conceptually understand if each of the science officers believed that the benefit to the agency was sufficient to justify the cost of their attending, when considering the learning and contacts they had gained which might accelerate research and therapies for patients. The second goal was to assist universities and non-profits, principally in Canada - a research partner of CIRM - in advancing their contributions from an existing donor or donors.

"The Canadian mining executive had an important history in contributing to the International Stem Cell Society and to Canadian non-profit research institutions. This individual has an expert background in mining and a passionate personal commitment to medical research; but, he does not engage in technical discussions of research. On a conceptual basis it was important for him to understand the spectrum of medical advances towards therapies. His additional contributions to Canadian non-profits could assist Canada in collaborating with California on more international research, with California only funding the research done in California and the donor helping to fund the research done in Canada. No specific grant applications were discussed. Finally, the discussion with the international partners focuses on the funding process and funding collaboration it does not discuss any individual grants. The value of international collaboration and the benefits of collaborating with new international partners is discussed. Scientific theories and individual grants are not discussed and new scientific information is not presented. I attended this session of international partners to support international collaboration; again, I do not hold any financial interest in any biotech organizations. Additionally, I do not have any business or financial relationship with the Canadian mining executive. The Canadian executive, based upon family and friends who have had chronic disease, is a significant donor to non-profit research institutions in Canada. All of my activities, the donation and the encouragement to develop information to validate the future benefits of science officers traveling to international stem cell conferences were focused on benefitting California patients with chronic illness or injury and the agency formed through Proposition 71."

The Klein Donation: Trounson's Memo Instructing Six Staffers to Meet with Klein and Canadian Gold Mining Executive

2013-05-05T19:24:00.001-07:00

Here is a copy of the memo that CIRM President Alan Trounson sent to six stem cell agency science officers after Robert Klein gave the agency $21,630. The SO abbreviation refers to science officers.
CFP refers to collaborative funding partner, which are international partners with CIRM. Here is a link to a story on the matter.

The Klein Donation: Memo from Klein Aide to Six Stem Cell Agency Science Officers

2013-05-05T19:24:00.000-07:00

Here is the email that Melissa King, an aide to Robert Klein, sent to the six science officers from the California stem cell agency. King was executive director of the CIRM governing board when Klein was chairman of the agency from 2004 to July 2011. Here is link to the story involving Klein's $21,630 gift to the agency.

hESC Research Totals $458 Million out of $1.8 Billion from California Stem Cell Agency

2013-05-01T14:18:00.000-07:00

The California stem cell agency today said that it has awarded $458 million to fund research involving human embryonic stem cells (hESC) out of a total of $1.8 billion it has given away during the past eight years.

The amount is of some interest because the key reason that the agency now exists is the perceived need in 2004 to fund hESC research in the wake of the Bush Administration restrictions on federal funding in that area. The restrictions created a national uproar in the scientific and patient advocate community, which feared that promising therapies would never be developed.

The $35 million ballot campaign to create the agency focused hard on hESC research to the virtual exclusion of any mention of adult stem cell research. Opposing the effort were such forces as the anti-abortion movement and the Catholic church. But this month LifeNews.com carried a mildly approving item that pointed to the agency's turn towards adult stem cell research.

When the Obama administration lifted the Bush restrictions, some questions were raised about the need for the California effort, which is costing state taxpayers $6 billion, including interest. But those concerns received little public attention and quickly died out.

Funding for the agency comes through state bonds. Cash for new awards is scheduled to run out in 2017. The agency is looking at developing a public-private effort for thefuture that would need a $50 to $200 million “public investment” and major private funding.

Amy Adams, CIRM's communications manager, provided the $458 million figure following publication of this item yesterday on the California Stem Cell Report.

'Praise' for California Stem Cell Agency from Unlikely Corner

2013-04-30T14:39:00.000-07:00

The California stem cell agency this month received what some might consider a gesture of approval from a longtime foe – LifeNews.com.

LifeNews is a site devoted to anti-abortion efforts and information and is sharply opposed to research involving human embryonic stem cells.

So it was with some surprise that we read a tacit endorsement of recent CIRM activities in an April 22 piece written by Gene Tame out of Sacramento. It said the most recent $32 million grant round from CIRM “demonstrates – again – where the future of stem cell reserch lies.”

Tame wrote,

“CIRM has been steadily moving away from its original mission to give preferential treatment to funding for human embryonic stem cell research (hESCR). Instead, after adopting a renewed emphasis on translating research into clinical trials, CIRM has more and more shifted the bulk of its grants towards funding research utilizing adult stem cells and other alternatives to hESCR, such as induced pluripotent stem cells (iPSCs).”

Tame continued,

“(T)he lack, once again, of funding for hESCR only serves to highlight how old and dated that approach to finding treatments and cures increasingly seems.”

Tame is correct in his assertion that the stem cell agency has moved a considerable distance from its reason for being – research involving human embryonic stem cells. In 2004, the ballot campaign to create the agency pitched voters hard on hESC research and made no real mention of adult stem cells. Instead, it focused on the threat from the Bush Administration with its restrictions on hESC research, which have been lifted by the Obama Administration. .

In 2010, a study by a Georgia Tech academic, Aaron Levine, reported that through 2009 only 18 percent of California's dollars went for grants that were "clearly" not eligible for federal funding under the Bush restrictions.

At the date of the study, CIRM had not publicly disclosed statistics on its funding of hESC research.

Today, however, its web site shows that only about 240 of the 595 awards that it has handed out are going for hESC research. CIRM has not made public the dollar value of those 240 awards, but it has given away a total of $1.8 billion. (Following publication of this item, the agency told the California Stem Report that it has funded $458 million in hESC research.)

A footnote: Levine was a member of the blue-ribbon Institute of Medicine panel that recommended sweeping changes at CIRM.

California Stem Cell Agency Seeks Lobbyist Bids

2013-04-26T13:54:00.001-07:00

The California stem cell agency has put out a bid for a private lobbyist to watch out for its interests in Sacramento, perhaps severing a longtime relationship with one of the Capitol's more prestigious power brokers.

The $3 billion agency has had a contract since 2005 with Nielsen Merksamer Parrinello Gross & Leoni LLP of Sacramento, which reported lobbying revenue last year of more than $5 million. That made it one of the top revenue producers among California lobbyists.

The agency's contract is tiny, however. It started at $49,900 for five months in 2005 on a no-bid contract with Nielsen, although the annual figure is now $49,999. The agency's request this month for bids calls for a boost to $65,000 annually.

Nielsen Merksamer is very active in health care lobbying. Its biotech/pharmaceutical clients have included Genentech, Merck & Co. and Pfizer. The firm also played a role in the drafting of and campaign for Proposition 71 in 2004. In 2009, at the behest of Robert Klein, then chairman of the agency, it produced a legal memo that Klein used to help box in the agency governing board on taking a position on the Little Hoover Commission report recommending major changes at the enterprise.

The stem cell agency is one of the few agencies that hires a private lobbyist, which has raised some eyebrows. Nearly all agencies handle legislative relations internally.

Deadline for bids is May 3.

Stem Cell Agency Provides More Cost Detail on Future Plans

2013-04-23T16:58:00.001-07:00

The California stem cell agency today clarified the size of the assumed "public investment" in its rough outline of its plan for future activities.

In response to a query from the California Stem Cell Report, Don Gibbons, a spokesman for the agency, said,

"This hypothetical range of public investment ($50 million to $200 million) is thought of as a one-time investment, with hope of private investments in multiples of that with the fund recharging to some extent based on revenue."

Gibbons also said the agency did not want to indicate what it was prepared to pay for the study. He said,

"We have not wanted to post the budget range because we want honest estimates of what folks think the budget should be rather than having them penciling estimates that max out the budget."

Deadline This October: California Stem Cell Agency Seeking Detailed Public-Private Plan for its Future

2013-04-23T16:00:00.000-07:00

The $3 billion California stem cell agency, which is currently scheduled to go out of business in a few years, hopes to come up with a detailed plan by this fall for a novel public-private arrangement that would extend its life.

The rough outlines of the proposal assume $50 to $200 million in “public investment,” although it is not clear whether that would be a one-time figure or an annual amount from presumably the state budget or perhaps another state bond measure. The concept includes additional private funding of a yet-to-be-determined nature. (The agency later said that the public investment figures would be a one-time event.)

The broad sketch of the agency's latest thinking about how to regenerate itself was found in an RFP posted four days ago on its website.

CIRM is seeking a consultant who would flesh out the general concepts that it has offered. Work would begin in mid June and be completed in four months, close to the ninth anniversary of the agency, formally known as the California Institute for Regenerative Medicine. The RFP did not contain a figure for the cost of the study, but said that the price would be part of the criteria for evaluating bids.

CIRM was created in November 2004 when California voters approved Proposition 71, a ballot initiative. Since then it has awarded $1.8 billion to 595 recipients. It is funded by money borrowed by the state (bonds), but cash for new grants is scheduled to run out in 2017. Interests costs on the bonds raise the total cost of the agency to roughly $6 billion.

CIRM said in the RFP that the plan for its future should provide

“...an in-depth analysis of various public-private funding models with potential to attract private sector investment to, and facilitate further development of the most promising CIRM-supported research projects; and recommend a single preferred approach for achieving this goal, complete with details relating to the recommended structure and an operational plan.”

The RFP also contained a just-released, $31,750 study by CBT Advisors of Cambridge, Mass, that examined mechanisms for financing translational research, which is the key focus nowadays at the stem cell agency. Such research is aimed at pushing laboratory findings into the marketplace.

Among other things, the CBT report, whose lead author was Steve Dickman, said,

“The nature of CIRM as a state agency is perhaps the biggest weak point (and) has to be addressed politically and cleared up as soon as possible or raising money will be unnecessarily challenging.”

The CBT study did not address how that might be done, which could be a considerable task. Proposition 71 modified the state constitution and state law and can be altered only by a super, super majority vote of the legislature or by another ballot initiative.

California is the first state to provide billions for stem cell research by using borrowed money. It also is unique in California state government in that its funding flows directly to the agency and cannot be altered by the governor or the legislature.

Translating all that into some sort of public-private arrangement would be novel among state government departments and could well require legislative or voter approval.

The California Stem Cell Report has queried the agency concerning the frequency of the assumed “public investment” and CIRM's budget for the RFP. We will report that information when we receive it. (The agency later declined to disclose what it was prepared to pay for the study.)

California Stem Cell Agency Budget Up 4.6 Percent, Topping $17 Million

2013-04-17T14:40:00.000-07:00

During the past couple of years, the California stem cell agency has vastly improved the way it budgets the relatively tiny amount it spends on operational expenses.

At one point a few years back, its operational budget was often all but incoherent to the public and to at least some members of its governing board. (See here, here and here.) But times have changed. The process for its operational budget, which amounts to about $17 million for the 2013-14 fiscal year, is now more transparent and better organized.

The long overdue improvements can be credited to the hiring of Matt Plunkett in December 2011 as its first chief financial officer in its eight-year history, as well as the efforts of CIRM directors Michael Goldberg and Marcy Feit. Goldberg, a venture capitalist, is chairman of the board's Finance Subcommittee and Feit, CEO of Valley Healthcare in Pleasanton, Ca., is vice chair. Plunkett, however, left the agency suddenly last summer and the agency has no plans to replace him. CIRM Chairman J.T. Thomas says Plunkett put new financial systems in place that can be operated without a CFO.

Interested readers can get a glimpse of what is upcoming for CIRM spending beginning in July in documents prepared for the Monday meeting of the governing board's Finance Subcommittee meeting. The agenda, however, lacks a much-needed explanation and justification for the spending. All that is presented now for the public are raw numbers and a PowerPoint presentation, which is no substitute for a nuanced, written overview.

Nonetheless, here are the basics. The budget proposed for 2013-14 stands at $17.4 million, up 4.6 percent, according to California Stem Cell Report calculations, or $771,000 from forecast expenditures for the current year. The budget represents the cost of overseeing $1.8 billion in grants and loans and preparing new proposals and reviews of applications for hundreds of millions of dollars in additional awards.

The largest budget component is for personnel – $12.1 million, up from $10.7 million. Second largest is outside contracting at $2 million, down from $2.9 million for the current year, continuing a trend away from outside contracts, which once were burgeoning.

One interesting area includes “reviews, meetings and workshops,”- which are expected to cost $1.8 million this year. Next year, they are budgeted for $2 million. Some might look askance at those sorts of expenditures for “meetings.” However, that includes the fees and expenses for scientific reviewers for multi-day meetings in the San Francisco area, which is a high cost area, and other large gatherings. However, the figure does not include travel for reviewers, who come from out of the state and even from overseas.

Examples of the meeting costs include a three-day grant review session last September at the Claremont Hotel in Oakland that cost $44,019. A two-day meeting at the same hotel for the 29-member CIRM governing board cost $34,424. (These figures and others involving outside contracts can be found on the agenda of the board's Governance Subcommittee meeting April 10.)

The agency also dissected the budget from different perspectives on expenditures. The spending plan includes $2.0 million for the office of Chairman Thomas and $1.6 million for the office of President Alan Trounson. Comparable figures for actual spending this fiscal year were not provided, however, by CIRM for the Finance Subcommittee meeting. The size of the chairman's budget reflects the controversial dual executive nature of management at CIRM, which has come under repeated criticism, including from the recent blue-ribbon report by the Institute of Medicine.. However, the arrangement is locked into state law as the result of the ballot measure, Proposition 71, that created the stem cell agency in 2004.

Legal expenses are budgeted at $2.2 million with public relations and communications running slightly more than $1 million. The scientific office, as one might expect, consumes much larger amounts, with basic research, translational research, grants review and grants administration budgeted at $4.7 million. The development side of the scientific office, which focuses on pre–clinical and clinical research, is slated for $3.4 million. The agency did not offer comparable figures for the current year.

Under Proposition 71, the agency can legally spend only 6 percent of its $3 billion in bond funding for operational expenses. At one time the agency had a 50-person staff cap, but that was altered several years ago by the legislature. The most recent figures show it has 54 employees. However, this month's budget documents did not list the number of staff for this year or next.

The stem cell agency also reported that it expects to spend an additional $1 million a year for rent beginning in 2015, when a free rent deal provided through the city of San Francisco expires. The city put together a $18 million package to attract the CIRM headquarters in a bidding war with other California cities. The agency has never produced a public accounting of whether it has received full value on the package.

The proposed budget is likely to be approved by the Finance panel next week without significant changes and then by the full board late in May.

The public can participate in the Finance meeting at two locations in San Francisco one each in Irvine, Pleasanton, La Jolla and Berkeley. Specific locations can be found onthe agenda.

Meager California Biotech Representation in Governor's China Trip

2013-04-15T14:55:00.003-07:00

California Gov. Jerry Brown and a flying squad of business types visited China last week, beating the drum for the Golden State in an effort to raise billions of dollars in investments.

Some 90 persons were involved in the governor's delegation, but representation was meager from California's renown biotech sector and none at all from the $3 billion California stem cell agency, which has a collaboration underway with Chinese scientists. It may have been the only state agency with a formal collaboration agreement with China prior to Brown's visit.

According to many reports, the Chinese government regards growth of its biotech industry as one of its core economic efforts. Within that sector, biomedicine ranks as the most important and fastest growing, according to an Italian Trade Commission report. Stem cell research is especially important, according to this Canadian study. Indeed, some scientists in China are eyeing a Nobel Prize in the field (See here or here.)

California would seem to be well placed to take advantage of that situation, given its substantial biotech industry and community, which is only rivaled by Massachusetts. Add to that the existence of the unique California stem cell agency, which has funded a $1.5 million study by Holger Willenbring at UC San Francisco that also involves research by Lijian Hui at the Shanghai Institutes for Biological Sciences, which is separately funded by that country to the tune of nearly $1 million.

A look at the list of those traveling to China with the governor showed two representatives who could be considered from biotech: Joe Panetta, head of BioCom, a life science industry organization in Southern California, and Michel Baudry, dean of the Graduate College of Biomedical Sciences, Western University of Health Sciences in Pomona, Ca..

We queried Baudry before he left for China about the situation. Here is the full text of his reply.

“I do not know how this set of delegates were selected. What I do know is that this is the first of several delegations of California business delegates going to China with Governor Brown, and that more trips are scheduled. The focus of this first trip is Energy and Environment, and this might be why there is no biotech delegates in this trip. I am quite sure that they will participate in the following trips.”

Meanwhile, the folks in Richmond on San Francisco Bay are waiting to hear about plans of a major but unnamed Chinese biotech company for the 53-acre, former Bayer Healthcare Campus.

(Following the posting of this item, Ron Leuty of the San Francisco Business Times gave us a heads up on the latest on the site. He reported in March that Joinn Laboratories, a Chinese contract research organization, purchased the site. Leuty said that its plans are vague about future development, but that it may lease some of the space.)

StemCells, Inc., Nails Down Controversial, $19 Million Award from California Stem Cell Agency

2013-04-11T14:31:00.000-07:00

The stock price of StemCells, Inc., price today jumped as much as 9 percent after the company disclosed it had finally concluded an agreement with the California stem cell agency for a $19.3 million forgivable loan for research twice rejected by the agency's scientific reviewers..

The stem cell agency governing board seven months ago approved the loan to the Newark, Ca., firm. But the cash was withheld until the financially strapped company could demonstrate that it could match the size of the loan, as promised in its application.

The StemCells, Inc., (SCI) application was nixed two times in 2012 by the agency's scientific reviewers who gave it a score of 61. In a controversial move, the 29-member board approved the award in early September on a 7-5 vote after former agency chairman Robert Klein intervened publicly on behalf of the firm. It was the first time that Klein had lobbied the board publicly on behalf of an application. It was also the first time that the board approved an application that was rejected twice by its reviewers, a panel of internationally recognized stem cell scientists.

In a press release, Martin McGlynn, CEO of StemCells, Inc., said,

"With CIRM's support, we are now able to lay the groundwork that could result in the world's first neural stem cell trial in Alzheimer's patients."

Both the company and the $3 billion state research agency were tight-lipped about the nature of the matching funds from the company, which reported losses of $28.5 million in 2012 on revenues of $1.4 million.

In a brief response to questions from the California Stem Cell Report, McGlynn said,

“At this time, we do not intend to elaborate any further on the contents of our press releases or public filings pertaining to the SVB (Silicon Valley Bank) or CIRM(the stem cell agency) loans.”

Earlier this week, the company reported receiving a $10 million loan from Silicon Valley Bank. Both McGlynn and the stem cell agency did not answer a question about whether those funds are being used to back the award from California taxpayers.

The agency confirmed that the firm was providing $19.3 million in matching resources. But Kevin McCormack, senior director of public communications, did not provide any specifics on the nature of the match. He only said,

“The matching requires them to demonstrate they have enough funds necessary to fund SCI’s share going forward as well as their own operations and other commitments.”

The award was originally for $20 million. We have queried the agency about the smaller figure announced today.

The company's stock price rose as high as $1.87 earlier today after closing at $1.71 yesterday. It stood at $1.77 at the time of this writing. Its 52 week high is $2.67, and its 52 week low is $0.59. The loan from Silicon Valley Bank gives the bank warrants to purchase 293,531 shares of the company at $1.70 over the next 10 years.

The 10-year loan from CIRM is low risk for the company, which said its “obligation to repay the loan will be contingent upon the success” of the research. If a product is developed, it will take years before it could hit the market.

The award to StemCells, Inc., put the stem cell agency in a touchy situation involving the company's decision last month to reject an additional $20 million award from the agency.( It was the first time a recipient has rejected an award.) Neither the company nor the agency would give a reason for the rejection of the loan for a spinal injury project . However, the award also required a $20 million match, which undoubtedly tested the company's resources.

The spinal injury application was scored at 79 by agency reviewers and was routinely approved by the board. With its withdrawal by the company, the agency, which prides itself on funding only the best science, was left supporting research (StemCells, Inc.'s Alzheimer's project) judged significantly inferior by reviewers with its score of 61.

In response to a question about that situation, CIRM's McCormack said,

“Our goal is to always fund the best, most promising science. This is not the first time that our board has voted to fund a project that the Grants Review Group had not recommended (this has happened in around 2% of cases) The board did so for a number of reasons, not the least of which is that this was the first disease team application that had a goal of moving a promising stem cell therapy for Alzheimer's towards clinical trials.”

The round in question, however, had another application dealing with Alzheimer's which was scored at 63, two points higher than the one from StemCells, Inc. Reviewers also did not recommend funding that application.

The action last September by the agency board came only after it publicly said the funds would not be distributed until the StemCells, Inc., could show it could provide the match, still another first for the agency.

The award triggered a column in the Los Angeles Times by Pulitzer Prize winning writer Michael Hiltzik, who said in October that the process was “redolent of cronyism.” He said a “charmed relationship” existed among StemCells, Inc., its “powerful friends” and the stem cell agency.

StemCells, Inc., was founded by Stanford researcher Irv Weissman, who was a major fundraiser for Proposition 71, which created the stem cell agency in 2004. Klein headed the ballot campaign, which spent more than $30 million to win voter approval. Weissman sits on board of directors of StemCells, Inc., and holds 124,608 shares in the firm, including 8,630 he reported this month receiving.

Modest Approval from Long-time Stem Cell Agency Critic

2013-04-07T15:32:00.000-07:00

Of all California's newspapers, The Sacramento Bee, the only daily paper in the state capital, has long been the most critical – editorially – of the Golden State's $3 billion stem cell research agency.

Today, however, the newspaper gave a modest nod of approval to the agency's modest efforts to clean up its built-in conflicts of interest, which have been cited as a major flaw by the prestigious Institute of Medicine.

The headline on the Bee's editorial today said,

“Stem cell agency finally addresses potential for conflicts”

The piece said that Jonathan Thomas, chairman of the agency, “has taken important steps in reducing the potential for conflicts within this agency.”

The editorial continued,

“He hasn't gone as far as we would like, or that independent outside reviewers have recommended....But he's achieved what's possible, at least for now, and the board may empower him to go further.”

The Bee referred to action last month in which the agency's governing board decided, among other things, that 13 of the 15 board members linked to recipient institutions could not vote on any grants, although they could participate in discussion of applications. Twenty-nine persons sit on the board. In a $700,000 report commissioned by the agency, the Institute of Medicine recommended a fully independent board.

The Sacramento newspaper said,

“We think Thomas and the oversight board should go further and adopt the Institute of Medicine recommendations. But that is politically unlikely. As is now obvious, it will be up to the Legislature to fully remove representatives of funding-eligible institutions from being involved in decisions about grants that could come back to them.

“Thomas, to his credit, recognizes that his compromise may not be the perfect solution. He wants to test out the new policy for a year, and see how it works. There's a lot riding on the outcome. CIRM is expected to run out of funds in 2017, and while philanthropy and foundation money could extend that for a few years, supporters of California stem cell research clearly want to go back to the ballot to seek additional funding. To make that case, CIRM supporters can't afford any more scandals about insider dealing. The next year will reveal whether it is on the right track.”