Monday, August 31, 2015

Sunlight on California's Stem Cell Loan Effort; Info Missing on Changes in $127 Million Research Programs

Some details on loan changes
New Alpha clinic center proposed; no details
Unspecified changes upcoming in $93 million award programs

A little sunshine popped up over the weekend on a bit of fiscal alchemy at the $3 billion California stem cell agency, and a little clarity emerged.

The matter involves the agency’s loan program, which affects multi-million awards to businesses. The awards are called loans but are forgiven if no viable product emerges.

The matter surfaced as a result of a cryptic agenda item for Thursday’s meeting of the agency’s directors’ Intellectual Property Subcommittee. Here is what happened:

About a week ago, the agency posted the agenda for the meeting. The agenda contained a 24-word line that said that it was going to change its policies “to permit existing loan recipient whose loan has been forgiven to convert its award to a grant.”

The need for change and its financial impact on the agency was not discussed. The specific language being changed was not spelled out. The timetable for the changes was not specified. Nor was it discussed whether the move was desired by any recipients of the agency’s largess.

Given the opaque nature of the agenda item, the California Stem Cell Report carried an item Friday morning that said,
“In just four business days, the $3 billion California stem cell agency is going to perform a bit of financial alchemy. But like most alchemists, its methods are less than transparent.” 
Much later that day or possibly early Saturday, the agency posted a brief memo and regulatory language that provided a better look at the loan rule changes, which could have an impact on royalties the state might receive on a successful stem cell therapy.

Based on what is now on the agency’s Web site, the proposal would clarify what happens if a loan-financed therapy is dropped and then revived, leading to actual revenue. Under existing rules, such a situation could trigger an ambiguous financial burden that would have to show on the company books. And business executives and investors do not like ambiguous financial burdens. 

The memo from the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, said,
“To provide clarity regarding future obligations, CIRM proposes giving existing loan recipients whose loan has been forgiven by CIRM the option to convert their loan to a grant and forego reinstatement of a forgiven loan. In this way, loan recipients will be automatically governed by the revenue sharing (and other) principles of the agency’s intellectual property regulations in the event future revenue streams are realized. This will be particularly important in the event future revenues are realized after CIRM has exhausted its funding.” 
The directors’ subcommittee is likely to approve the change on Thursday. It would then go to the full board at its Sept. 24 in San Diego for action before it enters the state’s regulatory process, which will open it to further public comment.

The Thursday meeting will also take up changes in the “loan election policy” for this year’s $100 million clinical award program. Details on that are still not available as of this morning, but one assumption would be that they are an extension of the proposed loan changes to that particular program.

The weekend’s memo on the loan changes was dated  Aug. 20.  One can only assume that it was lingering on some CIRM executive’s desk for eight days until it was made available to the public, researchers and likely affected businesses.  

Problems with timely posting of agenda material are not new to the agency. In the more distant past, they were significant but have diminished. That is, until this case and others earlier this year.

The agency also has another directors’ subcommittee coming up in just five business days. The session involves two significant, multimillion dollar programs. One proposal calls for creation of an “Alpha Clinics Accelerating Center” in connection with the $34 million Alpha clinics effort.
The other proposal before the Science Subcommittee deals with unspecified changes in the agency’s upcoming, $93 million “discovery and translational” award rounds.

This morning, no additional details were available on those two matters.

The Science Subcommittee teleconference session on Sept. 8 will be based in San Francisco. Interested parties can weigh in at public locations in Irvine, La Jolla, Los Angeles and Duarte. Addresses are on the agenda.

The meeting Thursday of the Intellectual Property Subcommittee is also a teleconference session based in San Francisco. Public locations are available in San Diego, Hawaii, Woodside and Redwood City with two in San Francisco.

The only public access to these meetings is at their physical locations. No participation is available via the Internet.  However, comments may be submitted in advance or later by emailing them to
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Friday, August 28, 2015

The California Stem Cell Agency and its Mysteries of Fiscal Alchemy

In just four business days, the $3 billion California stem cell agency is going to perform a bit of financial alchemy. But like most alchemists, its methods are less than transparent.

The case in point involves a session of the intellectual property subcommittee of the agency’s board of directors. The committee is scheduled to meet next Thursday to deal with an unknown amount of cash that the agency has given to an unidentified recipient.

According to the very limited information on the meeting agenda, the cash was once a loan. But that loan has been forgiven by the agency. Now the plan is to turn that forgiven loan into a grant.

Why? How much money is involved? What is the rationale? What is the benefit to the people of California, if any? It is all something of a mystery.

Also on the agenda are unspecified changes in the “loan election policy” for clinical awards, a program that is budgeted for $100 million this year. Again, no rationale or explanation is publicly available as of this morning.

One of the favorite words of agency’s president, Randy Mills, is clarity. He reminds folks regularly that the agency should have clarity in what it does.

Mills has indeed improved the clarity of the organization in his one-year tenure at the California Institute for Regenerative Medicine, as the agency is formally known. He has brought analytic and presentation skills that have opened new insights into how the organization spends the taxpayers’ billions.  The result has been an improvement in the way the agency operates.

But in this case, the agency is falling short. Its rules call for notifying the public about meetings 10 calendar days in advance of the sessions. However, cryptic agendas that raise more questions than answers do not add up to clarity. Instead, they are opaque and can generate suspicions about the conduct of the agency on the part of the public and interested parties.

Trust in government – and the stem cell agency is part of our government – is at all-time lows. It behooves the California stem cell agency to do what it can avoid feeding that distrust and to make its operations as transparent and open as possible.
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Wednesday, August 26, 2015

California Stem Cell Agency Up to State Snuff on Cyberspace Security

Most state departments deficient
Agency says it's okay
Foreign stem cell collaborations

The California state auditor this week warned that a host of state agencies are poorly secured and vulnerable to intrusion, but the California stem cell agency is apparently not now one of the miscreants.

In a report released yesterday, State Auditor Elaine Howe said that 73 of the 77 state departments answering a recent security standards survey said that they were not in compliance with security standards.

A story by Jon Ortiz and Jim Miller in The Sacramento Bee said that most departments “have not planned for interruptions or disasters” and five departments audited more closely all had “security deficiencies.”

The Bee story said state departments’ databanks are “stuffed with Social Security numbers, medical records, tax return data and other sensitive information.”

The $3 billion California stem cell agency is one of those departments filled with sensitive data, including proprietary information that is submitted as part of applications for the billions that the agency is handing out.

Responding to a query today from the California Stem Cell Report, Kevin McCormack, senior director of communications for the agency, said that the agency was surveyed by the auditor and now meets state standards. He said,
“We were one of those 77 departments.  We did not have security deficiencies as such – in that we put confidential information at risk – but some aspects of our site were not in full compliance with the state standards, for example not having a link to all previous privacy policies and the dates they were in effect. So we put together a plan of action on how to correct the problems, that plan was approved by the state and those changes have been implemented.”
McCormack continued,
“The question of proprietary information was one of the things we had to address, namely showing all the protections we have in place in our Grants Management System which is the only place that any kind of proprietary information is kept. Because that system already requires separate log in and password protections those met the state standards without any changes being necessary.” 
The agency has awarded tens of millions of dollars to a variety of businesses. It also has relationships with researchers in a number of countries, including China

Periodically news surfaces about Internet theft of business information by Chinese interests, including in the world of biotech and pharmaceuticals (See here, here and here.)

China is also widely believed to have ambitious stem cell research aspirations, although current specifics are scarce.  In May, however, Reuters skimmed off a quick look at Chinese biotech. Earlier this month, China announced regulations aimed at both clearing the way for human research and regulating rogue stem cell clinics. (See here also.)

The California research involving a Chinese collaborator does not allow the collaborator password access to the stem cell agency’s grant management system, McCormack said.
“None of the collaborative funding partners, foreign or domestic, can access our (grant management system). We explicitly make clear in the rules for these collaborations that we take care of the California portion of the funding and their respective agency/government/institution, etc., takes care of their portion. The California researchers would have access to our (system)  through a protected log in and password but not their collaborative funding partner.” 
The collaboration involving the China research is connected to a $1.5 million grant to Holger Willenbring, associate director of the UCSF Liver Center, who has received a total of $4.7 million from the stem cell agency. 

The latest progress report on his research on the agency’s Web site said,
“The objective of this project is to establish the feasibility of liver cell therapy with human induced hepatocyte-like cells (iHeps). As proposed we established the feasibility of generating iHeps from several expandable, potentially autologous human cell types. We identified transcription factors effective in inducing hepatocyte differentiation as well as further maturation of these cells. We also identified small molecules and culture conditions (extracellular matrix composition and stiffness) that promote proliferation and hepatocyte-specific differentiation. The next steps are to investigate the genomic integrity and therapeutic efficacy of these cells.”
Here is a link to 2014 information about Willenberg’s research.
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Monday, August 24, 2015

A Tale of Two Stem Cell Stories, Plus Reading the Entrails of the Media

Last week, two interesting stories popped up involving California’s $3 billion stem cell research effort.

One of the stories dealt with a matter that could affect as many as 27 million people. The other involved less than 100.

One story involved creation of important linkages that could help speed up the transformation of stem cells into cures. The other concerned little more than a change of address. 

The story about the change of address was displayed on the front page of the largest circulation newspaper in Northern California, the San Francisco Chronicle, and appeared in many other outlets. (See here and here.) Not a word was reported in the mainstream media about the development that could affect the 27 million people afflicted with arthritis in this country.(See here and here.)

For many persons, such disparities in news are puzzling and frustrating, not to mention disturbing. Sort of like trying to find meaning by reading the entrails of animals. 

Stem cell research is exceedingly important, the reasoning goes, and how can those dolts in the press ignore it? More specifically, the situation poses a continuing challenge for California’s stem cell agency, which has a hard time breaking into ink except when it moves its headquarters a few miles from San Francisco to Oakland.

So how do editors and reporters make the decisions that lead to such disparities? The first thing to remember is that -- like of all us -- the news media are most comfortable doing the things they have always done. The treatment of these two stories follows a pattern that has been established over many decades.  Newsies like “horse race” stories – ones with clear winners and losers. In this case, San Francisco "lost" the headquarters of the stem cell agency and Oakland "won" it.

The move also fit with an ongoing news theme – skyrocketing office space costs in San Francisco – coupled with high housing costs and the current conflict between the impact of high tech on the city vs. the desire to return to a past that is perceived by many as more benign.

Additionally, the stem cell agency headquarters story is fundamentally local as opposed to the arthritis research, which is not solely about the San Francisco Bay Area.

The tale was easy to report. It did not require weeks of digging or lengthy interviews to understand the science. The story was basically handed to the news media as a result of the Aug. 17 item on the California Stem Cell Report, although the move has been around publicly at least since July 23.

At our request, one longtime observer of the California stem scene, who must remain anonymous, elaborated on the situation. 
“Well, you write a blog that catches the eye of a reporter/editor. It concerns a state agency that was lured to the city to help kick start biotech, to be a lynch pin, if you like, for a new regional research base. Ten years after arriving the agency is a victim of its own success, or the city’s success, or just the economy (choose your story line here), so you have a story about a state agency moving, a city that is experiencing soaring rents losing businesses like this, and another neighboring city that stands to benefit. You can then focus on the biotech angle - 'is the city doing enough to keep businesses here' - or the people angle or any angle except the only one that really matters, the science.
 “That results in a front page article on the local newspaper – they love to put local stories on the front because it is more attractive to potential readers, and put all the national/international wire stories inside – which then leads other local news outlets to follow along. Why the delay? Because most media outlets don’t have specialist reporters anymore so they rely on some other news outlet, usually newspapers, to dig up something interesting, and they can then follow along. Radio first usually, they are rapid responders and can get stories on the air very quickly, followed by other online media and then TV.”  
We should add that the treatment of the two stories has lessons that apply to dealing with the media generally.  If researchers want to get their stories out – as they should – the first thing to consider is the needs of the media. Work into the existing framework. Don’t try to create a new one. That may take longer than getting a stem cell treatment approved by the FDA.

Find a compelling angle, one that can be summarized in a couple of sentences. Speak English. Avoid jargon and technical-speak. Talking about a “chondrogenic drug candidate targeting resident mesenchymal stem cells” will never make the front page. Talking about a relatively simple therapy, the first of its kind for arthritis, has a much better chance.

Don’t expect to find relatively well-informed science reporters at news outlets. The few that once existed are mostly gone. Be a guide for editors and reporters and help them along by providing material that answers all their basic questions.

Finally, lower your expectations. The financial crunch on the news media means less space for science stories and fewer reporters to write them. But don’t be discouraged. A good story, properly presented can find a home at some point in the media. But it may not be tomorrow.

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Sunday, August 23, 2015

The StemExpress Controversy and Collateral Damage

Back in July, after the Planned Parenthood, anti-abortion controversy erupted and entangled a California firm, one Internet headline read,
“Fetus Miner’s Friends in High Places”
The site that posted the headline was the American Conservative. The item referred to Charlotte Ivanic, the older sister of Cate Dyer, CEO of StemExpress LLC of Placerville. It is the stem cell and human tissue firm that was named in the videos involving Planned Parenthood.

In July, Ivanic was the highly regarded top health policy aide to House Speaker John Boehner, who denounced Planned Parenthood and approved House committee investigations into Planned Parenthood and StemExpress.

Dyer once said that her sister is “one of her biggest inspirations.”

Now she is gone from public service. She left on Aug. 5 and has become a Capitol Hill lobbyist. In a press release, Boehner said, 
“Charlotte has spearheaded some of our most significant accomplishments on behalf of the American people. She is one of the best I’ve seen at bringing people together to find common ground, and she leaves Boehnerland with the deepest respect — and best wishes — of her peers as well as lawmakers from both parties.” 
The news about her resignation was slow to ripple out. It was only yesterday that one anti-abortion Web site caught up with the news. had this to say, 
“It took three weeks for Charlotte Ivancic to resign from John Boehner’s staff after the videos went public. This yet again shows that John Boehner is just a progressive like liberal Democrats. Why else would he have a leftist like Charlotte Ivancic on his staff in the first place? John Boehner is not only mentally unstable but a progressive hack too. Boehner has to go, NOW!”
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Friday, August 21, 2015

StemExpress: Anti-Abortion Activists Telling "Long Series of Lies"

A beleaguered California company caught in the national, anti-abortion controversy involving Planned Parenthood late today said its foes were engaged in a “long series of lies.”

The company, StemExpress LLC of Placerville, made the charge in a statement that included the unedited portions of the latest anti-abortion video along with a transcript of what was said.
(If you would like the video, please email It is a large file.)

The firm said,
David Daleiden and the Center for Medical Progress today released their latest heavily edited, highly-deceptive video in which they claim StemExpress “admitted” to receiving fully intact fetuses from Planned Parenthood….
“During the video, the parties refer to 'cases,' which is a term of art referring to livers in this conversation. CMP’s accusations that this conversation somehow refers to 'intact fetuses,' which were never mentioned at any point during the entirety of the illegally recorded conversation, are false.
“StemExpress has never requested, received or provided to a researcher an “intact fetus.” CMP’s and Daleiden’s claims to the contrary are unequivocally false.”
The statement and release of the transcript reflected a more aggressive posture on the part of StemExpress, which has lost business as a result of the activists’ efforts. Its employees have also been threatened with violence.

Here is the full text of the StemExpress statement.
“StemExpress today released the following concerning CMP’s 8th video:
“David Daleiden and the Center for Medical Progress today released their latest heavily edited, highly-deceptive video in which they claim StemExpress ‘admitted’ to receiving fully intact fetuses from Planned Parenthood. Accompanying this document is a link to the unedited part of that video where this supposed admission discussion occurred, as well as a transcript of what was actually said.
“As anyone can see and read, the entire discussion was in fact about ‘intact livers.’ Livers are among the most urgently needed of medical tissues by scientists and medical researchers working to cure cancer, diabetes and Alzheimer’s disease.
“During the video, the parties refer to ‘cases,’ which is a term of art referring to livers in this conversation. CMP’s accusations that this conversation somehow refers to ‘intact fetuses,’ which were never mentioned at any point during the entirety of the illegally recorded conversation, are false.
“StemExpress has never requested, received or provided to a researcher an ‘intact fetus.’ CMP’s and Daleiden’s claims to the contrary are unequivocally false.
“Earlier today, a court found that this footage was likely obtained in violation of California criminal law prohibiting the illegal recording of private conversations. In a different court later this afternoon, Daleiden and his CMP co-defendants invoked the 5th Amendment rather than answer questions about their ongoing illegal activities in a related case in federal court. The release of today’s video and CMP’s claims about it are just another in a long series of lies.”
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California's StemExpress Loses Bid to Block Anti-Abortion Videos; Appeal Being Considered

A Los Angeles judge today rejected a bid by a California stem cell/human tissue firm to halt the release of an anti-abortion video that the firm said is harming its business and endangering the lives of its employee.

The firm, StemExpress LLC of Placerville, said, however, it is considering appealing the ruling.

Brian Melley of The Associated Press wrote,
“Los Angeles Superior Court Judge Joanne O'Donnell rejected efforts by StemExpress to block the videos, though she said the company likely will prevail in its lawsuit claiming its privacy was violated by an anti-abortion activist posing as a biomedical company employee.”
Melley continued,
“StemExpress won a temporary restraining order last month, but O'Donnell said Friday that the center's First Amendment rights to release the videos trumped the company's right to block them under their privacy claims.
“The judge said she couldn't tell who was telling the truth about how confidential the May meeting was, but she said the fact (David) Daleiden concealed his identity and secretly recorded the conversation made his account less believable.
“O'Donnell rejected the center's argument that the secret recordings were legal under an exemption that allows such subterfuge if someone believes they are gathering evidence of a crime.
"'Defendants' apparent ideological conviction that fetal tissue procurement is a violent felony does not, without more (evidence), rise to the level of a 'reasonable belief,' O'Donnell wrote.”
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California Firm Says Anti-abortion Activists Misleading Courts, Endangering its Employees

A California stemcell/human tissue company this morning renewed its efforts to halt distribution of a video by anti-abortion activists that it says will endanger its employees and damage its business.

The firm, StemExpress LLC of Placerville, said in court filings that it was only seeking to stop the distribution of the video, not the information contained within it.

It said that the activists, the Center for Medical Progress of Irvine, Ca.,  and David Daleiden, have misled the judge in the case. The firm said the activists want to distribute the video to “inflame” the public against the company and provoke a “hostile reaction.” The company has already received death threats against its president.

StemExpress also said its request for a preliminary injunction does not violate the First Amendment of the Constitution.

The firm argued that such orders have been upheld in other cases “where anti-abortion protesters were constitutionally enjoined not in what they wanted to say, but how, where, and when they wanted to say it.  Such injunctions are simply not subject to strict constitutional scrutiny.”

The activists have argued that they did not violate state law barring recording the conversations without the permission of all parties because the discussions involved a crime -- “harvesting and killing live babies for resale.”

StemExpress noted that the activists did not report any alleged crimes to authorities during a two-year investigation.

The court filing said the activists’ belief that StemExpress is
“…‘harvesting and killing live babies for resale’ is neither objectively reasonable nor credible from a subjective standpoint.  First, abortion before viability is not murder in California…. While defendants may wish that abortions were illegal and constitute murder, that is simply not the law.  This alone precludes defendants’ purported ‘defense’ of their illegal conduct.  Second, defendants have no evidence that would even remotely support the claim that plaintiffs participated in any abortion procedure involving a viable fetus.  To state the obvious, StemExpress does not perform abortions.  And contrary to Daleiden’s hearsay statements, StemExpress has never received a living, fully-intact fetus from an abortion clinic.”
Here is the full text of this morning's filing.
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Thursday, August 20, 2015


The arthritis spending item yesterday incorrectly stated that the California stem cell agency was spending $17 million on arthritis research. The correct figure is $19.5 million.  The lower figure was based on erroneous numbers on the agency's "arthritis fact sheet," which did not include a $2.3 million award to Schultz in March. Sphere: Related Content

Solid Hook-Up: California Stem Cell Agency and Calibr Connection

Creating pathway to clinic
The Calibr approach
Problematic pharma-academic ties
As of today, the California stem cell agency has a $4 million hook into a San Diego research enterprise that also has ties to a glittering array of partners, ranging from Merck to Bristol-Myers Squibb

The connections fit with the state stem cell agency’s new goal of creating a clear pathway from the basic research bench to the use of stem cell cures in clinics for millions of people.

The signal event came routinely and quickly this morning when directors of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, approved a $1.7 million award.
The cash is going to the California Institute for Biomedical Research (Calibr) and its director, Peter Schultz.

The funds will be used for pushing into clinical trials a treatment that would -- for the first time -- modify the progress of osteoarthritis, which afflicts 27 million Americans. The therapy could also be used to treat damaged cartilage in knees and elbows.

CIRM has now invested $10 million in Schultz, a reknown chemist and biotech entrepreneuer. Six million of that went for research that was performed at Scripps. All of the funds involve the proposed arthritis therapy. Including today’s award to Schultz and funds to other researchers, the agency has now handed out $19.5 million to find a therapy for arthritis.

Schultz founded Calibr three years ago with up to $90 million, promised over seven years by Merck. The Big Pharma firm has first refusal rights on treatments developed by Calibr. If Merck passes, then other enterprises can make an offer. Calibr has additional partnerships, including a $28.9 million, five-year relationship with the Gates Foundation.

Peter Schultz, catching a big one
Schultz says “our mission is a little bit arrogant.” In a lengthy piece in March by Bradley Fikes of San Diego Union-Tribune, Schultz said Calibr has “a very broad spectrum of interest and we hope to have a significant impact on a number of diseases."

Fikes wrote,  
"'There are a lot of discoveries being made in life science, and many of these discoveries are made in academic institutions and basic research institutions,’ Schultz said. ‘The process of translating those discoveries into new medicines has become somewhat difficult.’
“These institutions have trouble collaborating with big pharma because of differences in culture and regulatory challenges of for-profit and not-for-profit collaboration.
"'That's left the universities try to do drug discovery themselves,’ Schultz said. ‘The problem there is they don't have the knowledge, experience or even the processes to do drug discovery, which is a lot different than a cottage industry approach to basic research."
Fikes continued,
“Meanwhile, big pharma is becoming more risk-averse, looking for validated drug targets and in-licensing compounds. That makes pharma collaboration with basic research centers even more problematical, Schultz said.
"’We have to come up with other ways to really facilitate and accelerate the translation of new research into new medicines,’ Schultz said. ‘Universities are trying to set up their own drug discovery units. Scripps has done that in Florida, Vanderbilt, we see Cornell, Rockefeller and Sloan-Kettering teaming up to do that. They're building something from scratch, and usually without having the experience of having been there and done that. And in some cases what they wind up doing is hiring a lot of people from pharma industry and recreating a pharma-like process.’"
Calibr has 110 employees, Fikes reported, including 60 postdocs. Its annual operating budget for 50 projects totals $25 million. Calibr is still busy hiring with seven positions open on its Web site as of this afternoon.
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California Stem Cell Agency Awards $1.7 Million to Help Treat Arthritis

Directors of the California stem cell agency, as expected, this morning approved $1.7 million to help push an arthritis treatment into clinical trials. The funds went to Peter Schultz, director of the California Institute for Biomedical Research. We will have more details later today. Sphere: Related Content