Eggs and Cash: Stem Cell Agency Considering Easing Restrictions on Stem Cell Lines Derived Using Payments

The California stem cell agency is moving to remove an absolute ban on use of stem cell lines derived from eggs from women who have been paid to provide them.

The action comes as state legislation is headed for Gov. Jerry Brown's desk that would permit payments for eggs to be used in research that is not funded by the agency. The measure (AB926) would not alter the separate ban on egg payments involving research funded by the $3 billion stem cell agency.

Under a proposal that will come before the agency's standards group July 24, CIRM's governing board could approve the use of stem cell lines derived as a result of payment to women. Board action would be based on whether stem cell lines would “advance CIRM's mission” and would follow a staff evaluation involving scientific and ethical issues.

Over recent years, stem cell researchers around the country have reported that they are not able to obtain sufficient eggs without payment. And earlier this year, paid egg providers were used in research in Oregon that cloned human stem cells, a feat that researchers have struggled with for years.

A CIRM staff report said that the Oregon research has “generated scientific interest among CIRM grantees and the desire to utilize derived SCNT lines. CIRM’s current policy prohibits the use of the (Oregon) SCNT lines because oocyte donors were financially compensated. CIRM requests the Medical and Ethical Standards Working Group (SWG) revaluate this prohibition with regard to CIRM grantees ability to utilize the resulting lines in light of recent scientific and policy developments.”

Last month, the California Stem Cell Report queried the agency concerning earlier, sketchy information onthe CIRM blog about a possible change in its compensation rules. We asked whether the agency was considering “sidestepping” the ban on compensation. Kevin McCormack, a CIRM spokesman, said, “No, not at all.” He said it would be premature to elaborate until a firm proposal was ready.

The staff proposal to be considered on July 24 said,

“Proposition 71’s 'prohibition on compensation' compels the ICOC(the agency's governing board) to adopt standards 'prohibiting compensation to research donors.' This requirement has been consistently interpreted to prohibit the use of CIRM funds to financially compensate oocyte (or other cell or tissue) donors. In 2006, this interpretation was extended to exclude from use, in CIRM-funded research, any stem cell line where research donors were financially compensated, even if the derivation was done without the use of CIRM funds. Proposition 71, however, does not compel the ICOC (the agency's governing board) to prohibit the use of stem cell lines where financial compensation is provided to the oocyte donors, provided that CIRM funds are not used to compensate the donors or derive the lines.”

The July 24 meeting will be held in San Francisco. No remote teleconference locations have been announced.  If approved, the changes would likely be considered July 25 by the full agency board.

California Legislation Removing Ban on Payments for Eggs for Research Heads to Governor

Legislation to allow women in California to be paid for their eggs for scientific research is on its way to Gov. Jerry Brown following final legislative approval last week.

Sponsors of the bill, a national fertility industry organization, expect the governor later this month to sign the measure, which would go into effect next year.

The measure, AB 926 by Assemblywoman Susan Bonilla, D-Concord, would repeal a ban on payments to women who provide eggs for scientific research. However, the measure would not affect the ban on payments to egg providers in research funded by the $3 billion California stem cell agency. That ban is covered by a separate legal provision. Stem cell researchers around the country have complained that they they cannot get eggs without payment.

Women in California can be paid for providing eggs for reproductive purposes. According to a legislative analysis, payments can run as high as $50,000 for women with special characteristics but average around $9,000 for each session, which can generate more than one egg.

The sponsor of the legislation is the American Society for Reproductive Medicine of Alabama, whose members represent a wide swath of the $5 billion-a-year fertility business. The measure would open new business avenues for the industry.

Bonilla argues that the measure allows women to be treated on the same footing as men who provide sperm for research and would encourage more research into reproductive health issues.

Opponents argue that the safety of the egg production procedures has not been well-established including their long-term impact. They also argue that allowing payment would lead to exploitation of poor and minority women.

The bill received its final legislative approval on July 1 when the Senate passed it on a 24-9 vote.

Challenge to WARF hESC Patents Cites Recent U.S. Supreme Court Decision

Patents on human embryonic stem cells are being challenged in a new legal filing that cites the recent U.S. Supreme Court decision that barred the patenting of human genes.

The stem cell case involves the Wisconsin Alumni Research Foundation (WARF), which holds the patents on the much-heralded work performed by Jamie Thomson  at the University of Wisconsin. The lawsuit was filed by the Public Patent Foundation of New York City on behalf of Consumer Watchdog, a nonprofit group in Santa Monica, Ca. Jeanne Loring, director of the Center for Regenerative Medicine at the Scripps Research Institute, is also involved along with Alan Trounson, president of the California stem cell agency. The agency itself is not a party.

This week's filing follows the so-called Myriad decision last month by the nation's highest court which said,

“Myriad did not create anything. To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention.”

This week's stem cell suit said,

"WARF did not create or alter the properties inherent in stem cells any more than Myriad created or altered the genetic information encoded in the DNA it claimed.” 

The legal filing came in an appeal of an earlier decision by the U.S. Patent Office. The Public Patent Foundation, which was a successful party in the Myriad case, did the earlier legal work on the challenge to the WARF patents as well as this week's appeal.

The appeal, prepared by Dan Ravicher, said the WARF patents have "put a severe burden on taxpayer-funded research in California.”

Trounson released a statement saying,

“We don't want to do anything that gets in the way of finding treatments for some of the biggest killers today, so we feel that all patients with all kinds of diseases deserve to have access to these kinds of cells.”

Loring was quoted in a Consumer Watchdog press release as saying,

"Human embryonic stem cells hold great promise for advancing human health, and no one has the ethical right to own them.”

John M. Simpson of Consumer Watchdog said,

 “The best course if WARF truly cares about scientific advancement would be to simply abandon these over-reaching patent claims.”

A story by Bradley Fikes in the San Diego U-T cited intellectual property attorney Lisa Haile of DLA Piper as saying,

“A successful use of the Myriad case as a precedent for throwing out the foundation’s patent would open the door to similar challenges in just about any biotech product using material derived from life.”

WARF made no immediate comment.

Other stories on the WARF challenge appeared in the Milwaukee Journal, Genomeweb and the LaCross Tribune. 

California Legislation, Human Egg Sales and Profits

California legislation to allow women to be paid for their eggs for scientific research is sailing toward final passage literally swaddled in motherhood and apple pie arguments. Missing from the debate is a key reason behind the bill – building profits for what some call the “baby business.”

The legislation is touted as providing equal treatment for women, permitting them to be paid for supplying eggs for stem cell and other research, much as men are paid for sperm. It also would put women who sell their eggs for research on an equal economic footing with women who sell their eggs for fertility treatments, which is currently permitted under state law. Payments to those women range from an average of $9,000 to as much as $50,000, according to a legislative analysis of the bill.

 Assemblywoman Susan Bonillla, D-Concord, author of the bill(AB926), says,

“It is time to let women, just as any other research subject, make an informed decision as to participation, and justly compensate them for doing so.”

She also says that the ban on payments has had serious impact on fertility research. In a legislative bill analysis, she says,

“It has led to a de facto prohibition on women’s reproductive research in California, adversely impacting the same women that the ban intended to protect. With few oocytes donated, fertility research and fertility preservation research has been at a standstill. This greatly affects women suffering from fertility issues and women facing cancer who would like to preserve their oocytes.”

Bonilla is carrying the measure on behalf of an industry group, the American Society for Reproductive Medicine of Alabama. The fertility or baby business, which is largely unregulated, brings in about $5 billion annually in the United States from something like 500 clinics. It has grown rapidly over the last couple of decades, but is likely heading for a soft spot.

Little public information is available on the Internet discussing the industry's economic challenges. However, demographic studies show that the size of the key market for fertility services is stagnating. A 2012 report by the federal government projects that the number of women in the 35 to 44 age group, prime consumers of fertility services, is likely to grow only 0.5 percent from 2010 to 2020. And since that forecast was made, the Census Bureau has downgraded its projections for total population growth.

Bonilla's legislation effectively adds a new, potential revenue stream for the industry. Fertility clinics would be able to buy the eggs and then resell them to researchers, adding premiums for eggs from women with special characteristics. The bill would also add a tool for bringing down the cost of fertility treatments, which can run as much as $12,000 to $17,000 a round or more and require several rounds, according to the NIH. Clinics could discount those prices for some women, bringing in new customers, if they agree to authorize the use of excess eggs for scientific research.

None of this appears necessarily pernicious. What is pernicious is the absence of discussion of the economics of the legislation. Without a full understanding of all that is at stake, including economic issues and motivations, legislators, the governor and the public are hard-pressed to make good decisions about a significant change in California law.

Opponents of the legislation have raised serious questions about the treatment of women by fertility clinics, noting that the bill would turn egg providers into “vendors” – not patients of the clinics. The Center for Genetics and Society in Berkeley has captured the arguments in opposition including testimony before a Senate committee hearing early in June.

Jennifer Schneider, a physician who lost a 31-year-old daughter to cancer seven years after the younger woman sold her eggs three times, told lawmakers,

“Unlike infertile women who are considered patients, egg donors are treated as vendors( (her italics). When they walk out of the IVF clinic, no one keeps track of them.  My daughter’s death was not reported. The long-term risks of egg donation are unknown."

Sindy Wei, a former egg provider and now a physician with a Ph.D. in biology, testified that she wound up in an intensive care unit after 60 eggs were extracted from her in 2001. She said,

“I fear that cases like mine are buried deep by fertility centers concerned about their image. An industry thriving on profits and reputation has little incentive to report adverse events, or protect the health and medical rights of donors.”

Where is the $3 billion California stem cell agency on all this? The agency has not taken a position on the bill nor have any major research organizations. The measure does not change the law affecting agency-funded research, which bans the use of compensation for eggs in its research. Enactment of the law, however, would create a two-tier stem cell research standard in California, one for scientists not constrained by the payment ban and another for those who could use the full range of research tools. Some stem cell researchers may well think that they have become disadvantaged as a result.

(Editor's note: An earlier version of this article said the IVF business generated $4 billion in revenues annually. More recent estimates place it at $5 billion.)

Cost of a Stem Cell Therapy? An Estimated $512,000

(Editor's note: Updated figures on costs can be found in this 2017 item.)

The likely costs of potential stem cell therapies and cures receive almost no attention in the media as well as publicly from scientists and the biotech firms.

Usually any public discussion is obliquely framed in the context of “reimbursement,” as if industry is owed something instead of making a business decision about what will make a profit. Euphemisms and jargon cloak unpleasant realities such as astronomical patient costs. But what reimbursement really involves are, in fact, pricing decisions and profit margins along with lobbying campaigns for inclusion of therapies in normal coverage of health insurance and Medicare. 

And today a singular figure – $512,000 for one stem cell treatment – appeared in the Wall Street Journal . The story by Kosaku Narioka and Phred Dvorak dealt with what would be the first-ever human study of a treatment that uses reprogrammed adult stem cells.

They reported that the study received preliminary approval on Wednesday from a key panel of the Japan Health Ministry. The treatment involves a form of age-related macular degeneration, which has also been targeted by the California stem cell agency with different approaches.

Buried deep in the Wall Street Journal article, with little other discussion, was this sentence:

“One eventual obstacle, even if tests go well, could be cost: (Masayuki) Yamato (of Tokyo Women's Medical University) says initial estimates for the treatment run around ¥50 million ($512,000) per person."

The subject of costs for potential stem cell treatments has rattled around in the background for years without much deep public discussion. One reason is that high costs of treatments are controversial and can trigger emotional debate. Another reason is that it is very early in the therapy development process and estimates are not likely to be entirely reliable.

A few years ago, however, the California stem cell agency commissioned a study involving costs of stem cell therapies. The UC Berkeley report said,

“The cost impact of the therapy is likely to be high, because of a therapy’s high cost per patient, and the potentially large number of individuals who might benefit from the therapy. This expense would put additional stress on the Medicare and Medicaid budgets, cause private insurance health premiums to increase, and create an incentive for private plans to avoid covering individuals eligible for a therapy.”

The findings did not seem to be exactly welcomed. The agency sat on the 2009 study for seven months until it was uncovered by the California Stem Cell Report in April 2010. Then the agency was careful to say that the study did not reflect the view of CIRM management or board leadership.

Their wariness of being out in front on the issue could be well-advised. The pharmaceutical industry received some unpleasant attention this spring when more than 100 influential cancer specialists from more than 15 countries publicly denounced the cost of cancer drugs that exceed more than $100,000 a year.

Nonetheless pricing is critical to both patient accessibility and therapy development. If companies cannot make a profit on a possible therapy, it is virtually certain not to appear in the marketplace.

While the subject remains in the background, it does not mean there is a lack of interest. The copy of the Berkeley stem cell cost study that was posted online by the California Stem Cell Report has been read 11,701 times since it was made available in April 2010 on scribd.com.

(For a 2015 look at costs for non-government approved procedures, see this item.)

A copy of the Berkeley study can be found below.

Stem Cell Therapy Costs by DavidJensen

Bluebird and Banking: Media Pluses for California Stem Cell Agency

The California stem cell agency scored a couple of favorable publicity points last week as the result of a successful stock offering by an award recipient and another piece about creation of a stem cell bank in Northern California.

The IPO by bluebird bio (the company's preferred spelling) of Massachusetts was a big winner for the company, raising millions of dollars more than anticipated.

The Boston Globe wrote,

“Shares of the Cambridge life sciences company bluebird bio Inc. soared almost 60 percent on their first day of trading (last) Wednesday, an impressive debut for a business that endured years of stagnation and another encouraging sign for the biotechnology industry.

“The local gene therapy company raised $101 million in an initial public offering priced at $17 per share, higher than the $14 to $16 estimated by investment bankers. Bluebird shares closed at $26.91 per share on Wednesday.”

The stock continues to trade around $25 a share at the time of this writing, which is good news generally for the biotech industry.

The company received a $9.4 million award last fall from the $3 billion stem cell agency. The company has yet to receive any actual cash from the agency as both parties work out final details of an agreement, a spokesman for the agency said last week.

The stem cell agency touted the successful IPO in a blog item by  that said,

“Bluebird Bio, one of the oldest companies in the struggling gene therapy field, is having an outstanding first day in the stock market today, and largely by marrying its gene therapy technology with stem cell science. The company’s financial milestone brings hope and excitement to both fields.”

However, the news stories about the IPO failed to mention the stem cell agency's involvement, which would have been nice for the agency but was to be expected given the way news is covered.

The story about the stem cell bank appeared on Xconomy, an Internet news service dealing with technology. Written by Bernadette Tansey, a former San Francisco Chronicle reporter, the piece dealt with the both business and science of stem cell banking. She wrote,

“One of the main goals of California’s $3 billion stem cell research agency is to draw companies into the state so they can vie for a share of the funding.

"With a recently funded $32 million initiative, the California Institute for Regenerative Medicine(CIRM) has attracted two of the biggest US players in stem cell banking to Novato, CA, to form one of the largest biobanks of induced pluripotent stem cells (iPS cells) in the world.”

The stem cell bank effort has become a minor staple in recent news coverage of CIRM, surfacing in a number of articles since the awards were approved. One of the reasons for that is that the project has a relatively straight-forward story line compared to many research efforts and the concept of "banking" is familiar to editors, writers and readers. 

Pay-For-Eggs Legislation Draws More Media Attention

California legislation to allow women to be paid for their eggs for scientific research generated several news articles this week as the measure neared final legislative approval.

The coverage included both pro and con but did not amount to major attention from the mainstream media. And, with one exception, the articles failed to report that the legislation did not apply to research funded by the $3 billion California stem cell agency, which bans compensation for egg providers.

The proposal (AB926) is now on the state Senate floor with a vote possibly coming as early as next Thursday. A spokesman for the American Society for Reproductive Medicine in Birmingham, Ala., an industry group sponsoring the bill, said unequivocally that the Gov. Jerry Brown is expected to sign the measure. (See the Senate floor bill analysis here and a press release on the bill here.)

Assemblywoman Susan Bonilla
Photo Source -- Bonilla's office

The articles about the legislation by Assemblywoman Susan Bonilla, D-Concord, have appeared in the journal Nature, the San Francisco Chronicle and the Huffington Post over the past few days.

Alice Crisci, a California patient advocate writing on the Huffington Post, yesterday remarked that women egg providers should be treated the same as men involved in scientific experiments.

“After all, aren't we past the days when we treat women like they are less capable than men of making sound decisions for their own well-being? It's my body and my choice if I want to donate a dozen of my eggs to science. Who knows -- maybe it's my egg that will be used to find a cure for cancer.”

Debra Saunders, writing a column in the Chronicle on Sunday, said,

“That sperm-egg parity argument is so bogus. When men donate sperm, they risk second thoughts about unknown, random offspring, but they do not risk serious medical side effects. Egg donation, on the other hand, can be hazardous to your health. The New York Times reports, "Egg donors can suffer serious side effects from the powerful hormones needed to generate multiple eggs." And: "The most significant risk is ovarian hyper-stimulation syndrome, which can cause bloating, abdominal pain and, rarely, blood clots, kidney failure and other life-threatening ailments."

Charlotte Schubert, writing in Nature on Tuesday, said,

“In practical terms, the bill would bump up payments from hundreds to thousands of dollars. In Oregon — which, like most states, does not have regulations governing egg donation — women recently received $3,000–7,000 each for eggs used in a study that created stem-cell lines from cloned human embryos.”

Prices for eggs can run substantially higher depending on the characteristics of the supplier.

Bonilla's office said the bill did not come up for a vote during today's Senate floor session but could come up next Thursday.

Compensation for Human Eggs Approved by Key California Senate Committee, But Not For CIRM Researchers

Legislation that would permit women in California to be paid for their eggs for scientific research yesterday cleared a key state Senate committee and is likely headed for the governor's desk.

The measure by Assemblywoman Susan Bonilla, D-Concord, was approved on a 6-1 vote by the Senate Health Committee and now goes to the Senate floor. Earlier, it passed the Assembly on a 54-20 vote.

Some stem cell researchers and other scientists have chafed under state restrictions that bar compensation for eggs while that the same time fertility clinics are paying an average of $9,000 a session for eggs, with some prices going as high as $50,000.

However, the legislation will not affect researchers using grants from the $3 billion California stem cell agency. The agency's regulations bar compensation for eggs in the research that it funds. That means that at least a two-tiered research system would exist in California not to mention another tier created by federal regulations that differ from both those of the stem cell agency and those set by the legislation.

CIRM's restrictions are required by Proposition 71, which created the agency in 2004, and cannot be changed without a 70 percent vote of the legislature. Bonilla's bill requires only a majority vote.

Bonilla's legislation is sponsored by American Society for Reproductive Medicine, the chief industry group for the largely unregulated fertility industry.

The analysis prepared for yesterday's committee session summarized Bonilla's arguments for the measure in this fashion:

“This bill seeks to create equity in the field of medical research compensation by removing the prohibition on compensation for women participating in oocyte (egg) donation for medical research. All other research subjects are compensated for their time, trouble, and inconvenience involved in participating in research. AB 926 ensures that women are treated equally to all other research subjects - allowing them to actively evaluate their participation in research studies. Unfortunately, the ban on compensation has had serious unintended consequences. It has led to a de facto prohibition on women’s reproductive research in California, adversely impacting the same women that the ban intended to protect. With few oocytes donated, fertility research and fertility preservation research has been at a standstill. This greatly affects women suffering from fertility issues and women facing cancer who would like to preserve their oocytes.”

A number of organizations are opposed to the bill including the Center for Genetics and Society in Berkeley and the Catholic Church. The bill analysis summarized some of the opposition arguments in this fashion:

“Egg harvesting exposes healthy young women to multiple synthetic hormones in order to produce many times the normal number of eggs per cycle. One of the potential harms is OHSS, which has resulted in hospitalizations and at least a few documented deaths. These groups state that many experts remain concerned about the long-term risks of these drugs, especially their potential impact on infertility and various cancers. Follow-up research on egg providers, which could establish the frequency and severity of these adverse outcomes, is widely recognized to be grossly inadequate.”

In addition to risk and religious objections, opponents also argue that poor and minority women are likely to be exploited by enterprises seeking their eggs to resell at a profit.

No major stem cell research organizations, including the California stem cell agency, have taken a position on the bill. The legislation has received little public attention, although The Sacramento Bee carried an article last March. Ruha Benjamin, author of "People's Science" and assistant professor at Boston University, also wrote about the measure in April on the Huffington Post. Benjamin said,

“UC Berkeley professor Charis Thompson compares egg donation to 'other kinds of physically demanding service work,' arguing for a 'salary negotiation between the state agency (or relevant employer) and the donor.' This, she contends, is a 'sensible and dignified recognition of [the donor's] work, time, and effort.' And instead of refusing compensation to women, Thompson suggests that we 'direct our efforts to understanding and minimizing' the risks.

“Indeed. Now more than ever, we must redouble our efforts, because the market in eggs appears to be expanding from private reproduction to public research, and increasingly overseas, if the surrogacy industry is any indication of how 'cheaper' women become a reserve army of bio-labor in less regulated regions.” 

Merksamer Makes Only Bid For Stem Cell Agency Lobbying Contract

Only one of California's lobbying firms is interested in working for the California stem cell agency – at least interested enough to put in a bid.

However, that is likely more of a function of the small size of the contract – $65,000 – and the entrenched nature of CIRM's existing lobbyist – Nielsen, Merksamer, Parrinello, Gross & Leoni LLP – one of the state Capitol's larger lobbying firms with $5 million in billings last year.

The firm touted its longstanding connection to the $3 billion agency in its 21-page proposal in response to a CIRM RFA this spring. The firm has been with CIRM since 2005.

Nielsen Merksamer's proposal also noted a couple of other interesting aspects of the continuing arrangement. CIRM will run out of money for new grants in 2017, and Nielsen Merkasamer said,

“Furthermore, as a premier legislative advocacy and (Nielsen's italics) ballot measure law firm, Nielsen Merksamer can actively and effectively assist CIRM as it contemplates returning to the voters for additional funding.”

The proposal also suggested that it can conceal information that normally would be public record. The firm said,

“Another unique advantage offered by Nielsen Merksamer is that, unlike the vast majority of lobbying firms, since we are a full-service law firm, our relationships with our clients are subject to the attorney-client privilege.”

CIRM used such a technique in 2012 and 2008 in matters involving its budget and PR advice.

Nielsen Merksamer also said,

“(N)o one understands CIRM’s 'total picture' better than Nielsen Merksamer. Not only has Nielsen Merksamer been representing CIRM before the Legislature for the past decade, but Nielsen Merksamer was also one of the principal drafters of the aforementioned Proposition 71—which brought CIRM to life. The depth of Nielsen Merksamer’s familiarity with, and understanding of, CIRM’s mission and structure, the challenges it faces, and the promise it holds simply cannot be matched by any other legislative advocate.”

The firm said it would not need the $65,000 offered by CIRM but would charge only $49,200 annually, about the same as it has been paid for several years. Steve Merksamer and Gene Erbin, who drafted portions of Proposition 71, would handle most of CIRM's affairs. John Moffatt and Missy Johnson would also be available.

The firm's proposal outlined several instances where it successfully killed legislation opposed by CIRM. You can read about them in their proposal below.

Merskamer 2013 Lobbying Proposal by DavidJensen

Light Coverage of Cellular Dynamics IPO But One Exec Says It's Good for Stem Cell Biz

A handful of media outlets today carried stories about the public stock offering announced yesterday by Cellular Dynamics International, Inc., a Wisconsin firm that will benefit to the tune of $16 million-plus from the California stem cell agency.

Kathleen Gallagher of the Milwaukee Journal Sentinel described the company, founded by stem cell pioneer Jamie Thomson, as in the business of making “fully functioning human cells in industrial quantities.”

Judy Newman of the Wisconsin State Journal in Madison, where the company is based, quoted Beth Donley, chief executive of Stemina Biomarker Discovery, as saying,

“It can’t help but increase the value of other stem cell companies.”

Thomson is a professor both at the University of Wisconsin in Madison and at UC Santa Barbara, and we queried Dennis Clegg, co-director of the Center for Stem Cell Biology and Engineering at UC Santa Barbara, about the school's ties to Cellular Dynamics, which hopes to take in $57 million in its public offering.

He replied in an email that Santa Barbara has a collaboration with Cellular Dynamics and the University of Wisconsin to develop a vision-restoring, stem-cell-based therapy for people with advanced retinal diseases. That $900,000 effort is financed by the Foundation Fighting Blindness.

The California stem cell agency grant to Cellular Dynamics is for work at the stem cell bank being created at the Buck Institute in Novato, north of San Francisco.

The Milwaukee Business Journal and Genomeweb also carried stories on the IPO.

Cellular Dynamics: California Stem Cell Agency Recipient Plans $57 Million IPO

A Wisconsin firm that is the beneficiary of more than $16 million from the California stem cell agency today announced that it intends to go public to raise $57.3 million for its iPS cell ventures.

Jamie Thomson
UCSB photo

The firm is Cellular Dynamics International, Inc., and was co-founded by internationally known stem cell scientist Jamie Thomson of the University of Wisconsin, who is currently the company's chief scientific officer. Thomson is also a professor at UC Santa Barbara, where he is co-director of the Center for Stem Cell Biology and Engineering.

In March, the California stem cell agency awarded a $16 million grant to Cellular Dynamics to derive three iPS cell lines from 3,000 individuals as part of the agency's stem cell banking initiative. (Here is a link to the grant review summary.)

The company said in its SEC filings that it also will be the prime subcontractor on a $10 million grant that the Coriell Institute for Medical Research of Camden, N.J., received in the agency's stem cell banking round. Cellular Dynamics said some of the funds from the IPO will be used to complete its California laboratory in leased space at the Buck Institute in Novato, north of San Francisco.

Cellular Dynamics was founded in 2004 and sold its first commercial product in 2010. It reported revenues of $6.6 million in 2012 and losses of $22.3 million. It has 115 full-time and part-time employees worldwide.

The company said,

“During 2011 and 2012, we had three large biopharmaceutical customers that individually accounted for greater than 10% of our total revenue in one or both years. Eli Lilly and Company (Lilly) accounted for 10% of total revenue in 2011 and 18% of total revenue in 2012. Hoffmann-La Roche Inc. (Roche) accounted for 13% of total revenue in 2011 and GlaxoSmithKline plc (GSK) accounted for 11% of our total revenue in 2012.”

Cellular Dynamics also said in its filings,

“Our total revenue grew from $2.6 million in 2011 to $6.6 million in 2012, an increase of 154%. This growth was driven by a 247% increase in sales of our iCell products which grew from $1.5 million in 2011 to $5.2 million in 2012. At December 31, 2011, our backlog of revenue expected to be recognized in 2012 was $1.1 million. At December 31, 2012, our backlog of revenue expected to be recognized in 2013 had grown to $4.1 million.

“For the three months ended March 31, 2013 our total revenue was $2.4 million, an increase of 109% over the corresponding period in 2012. This growth was driven primarily by an increase in iCell product sales, which grew from $0.6 million for the three months ended March 31, 2012 to $1.8 million for the three months ended March 31, 2013, an increase of 173%.”

Paul Knoepfler of UC Davis, writing on his blog, touched on some of the aspects of the IP issues involving Cellular Dynamics and  Japanese researcher Shinya Yamanaka, who won the Nobel Prize last year for discovering how to reprogram adult stem cells into pluripotent cells (the iPS process).

 Knoepfler wrote,

"A recent question is the issue of who has the intellectual property (IP) rights to iPS cell technology. People have told me in the past that they wondered if Cellular Dynamics has unambiguous rights to develop all of these iPS cell-based products."

Knoepfler also wrote,

 “This (the IPO) looks to be very interesting and could transform the field as it develops.”

News coverage today of the IPO filing was light, but is more expected to surface tomorrow. Here is a link to the only story that had surfaced as of this writing. 

No price or date has yet been set for the offering.

Pomeroy on Doing the Right Thing and Foster Care

Claire Pomeroy
CIRM photo

On Claire Pomeroy's last day as a member of the governing board of the $3 billion California stem cell agency, she also published an essay on the Huffington Post in which she discussed fleeing from an abusive home at age 14.

Pomeroy, former vice chancellor and dean of the medical school at UC Davis and now president of the Lasker Foundation in New York,  wrote last month,

“For some children, the uncertainty of life on the street is better than certainty of violence at home. It was for me. At age 14, I escaped from an abusive home with no money, nowhere to go and only the clothes I was wearing. I remember staring into the night, standing somewhere between fear and freedom. I became one of the millions of homeless teens, yet I was lucky because foster care ultimately saved me.”

“However, after an emergency placement and three foster homes, the challenges were not over. At 17 I aged out of the foster care system early when my foster parents moved out of state. On my own again, I had to find a job, a place to live and finish high school. Then I climbed the next mountain to graduate from college and medical school.”

Pomeroy said she only recently began publicly talking about her foster care experience. She said she is doing so because “many  people lack an understanding of the harsh statistics and their impact on the country's future. The nation faces a crisis that demands a call to action to start truly caring about foster youth before it is too late.”

She said that she was “lucky” in the foster care system but said that many children, particularly minorities among others such as the disabled, were not as fortunate and “were failed by the system and society.” Pomeroy called them “throwaway children” who were “robbed of their ideals, gave up hope and struggled to find a reason to live.”

Less than half of the foster children who “age out” of the system graduate from high school, she wrote. Only 3 percent to 11 percent earn a bachelor's degree. More than 400,000 children were in foster care in 2011 and have a one in 11 chance of being homeless.

Pomeroy called for expansion and improvement of foster care across the country. “It is time to stop forcing children to be the heroes of their own survival,” she wrote. “Now is the time to do the right the right thing.”

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On a personal note, we have four grandchildren, one of whom was adopted out of foster care as a toddler. The other was adopted at birth. Some of the siblings of those two African-American children remain in foster care today.

Bluebird bio of Massachusetts Still Waiting for California Stem Cell Money

Seven months after the California stem cell agency awarded $9.4 million to bluebird bio of Cambridge, Mass., the company has yet to receive any of the cash from the Golden State.

Kevin McCormack, a spokesman for the $3 billion agency, this week said negotiations are still underway with the bluebird, which is planning to go public,  but did not elaborate. Post-award negotiations are common at the agency, but generally take much less time.

The cash from CIRM is scheduled to assist in clinical trials for a stem cell-gene therapy to correct a genetic disease in young patients with B-thalassemia, a rare blood disorder that can cause widespread organ damage and premature death.

Earlier this month, bluebird bio, which prefers the lower case lettering for its name, announced that it intends to take the company public in an $86 million offering. In March, it announced a collaboration with Celgene that provided for an upfront payment of $75 million and promised up to $225 million per product in potential option fees and clinical and regulatory milestones. The CIRM grant is conditioned on a matching commitment from bluebird.

Cash from the stem cell agency can only be spent on operations within California. According to the CIRM summary of the review of the bluebird application, which was scored at 73, the company said,

“We will have at least two clinical sites in California, and more likely up to 4 sites, 2) our viral vector manufacturing will occur in California, 3) our cell processing will occur in California, 4) we will hire several consultants and full-time employees within California to support the program. Overall, several million dollars will be spent employing the services of people, academic institutions, and other companies within the state of California.”

The company has said that it is working with Donald Kohn at UCLA and Elliot Vichinsky at Oakland's Children's Hospital.

The bluebird web site lists a California location for bluebird at 1001 Bayhill Dr, Suite 200, in San Bruno, which is south of San Francisco. An Internet search indicates that is a generic address for a number of business including a realty firm, a roof repair business and a family law attorney. The California Stem Cell Report has asked bluebird to clarify the nature of the address.

In an interview last October with Ron Leuty of the San Francisco Business Times, David Davidson, the lead scientist on the project, said,

“We began the process (with CIRM) early in (2012) but discussions have been going on for over a year about potentially pursuing this.

“The interaction with CIRM has been extraordinarily collaborative. We had contact with the coordinators at CIRM that helped us manage the process. It took a lot of effort on our part to put together a dossier providing support for our program. It was really like a mini-regulatory filing — on the science, the preclinical toxicology work that we’ve done, a detailed plan for the trial, a detailed plan for the budgets, a detailed plan on how we intended to spend the CIRM money in California. That was an important part of it. They wanted a clear plan on how this investment would be spent."

Vatican Funding for California Stem Cell Agency?

So what's with the Vatican sending cash to the California stem cell agency? One would imagine that is an improbable event since the agency is involved in human embryonic stem cell research, which is an anathema to the Roman Catholic church.

However, CIRM President Alan Trounson earlier this week disclosed the payment in an interview with Patt Morrison of the Los Angeles Times. He said,

“Last year I was invited to the Vatican to present a paper, but when I sent in a summary of what I was going to say, they decided not to have it. They sent a check to the treasurer of California and the treasurer rang us up and said, "What the heck is this check from the Vatican for?" It was for the inconvenience!”

We wanted to know a little more about this so we queried the agency about the matter. Kevin McCormack, a CIRM spokesman, said,

“The money was actually a wire transfer from the Vatican to us for $453.23 and it went to CIRM's account. It was to reimburse us for money spent on plane tickets, etc., for Dr. Trounson to attend the Vatican conference on stem cells.”   

Monterey Newspaper Chides California Stem Cell Agency

The California stem cell agency and its former chairman, Robert Klein, came under sharp criticism this week in an editorial in the Monterey County Herald newspaper.

The editorial cited articles on the California Stem Cell Report dealing with a $21,630 gift by Klein to the agency, his employment of the vice chairman of the agency and the violation of the agency's conflict of interest policies by a grant reviewer.

The editorial was headlined "State Stem Cell Agency Still Up to Old Tricks." The piece said,

“Robert Klein is no longer chairman of California's stem cell bureaucracy, but it is still doing things his way. Which is too bad for all concerned.

“Klein is the former developer and financier who wrote and sponsored the ballot measure that created the California Institute for Regenerative Medicine. The ballot language practically guaranteed he would be the chairman, and he ran the agency the way he ran his businesses, using undisclosed side deals and other machinations to create webs that outsiders could never penetrate.

“Now, Klein has been replaced as chairman, but he is still up to his old tricks.”

The editorial concluded,

“Much has been said about the agency setting a new more straightforward direction now that Klein is gone, but so far it seems to be following a twisting and expensive path toward irrelevance and litigation.”

California's Alpha Stem Cell Clinics: Open in 2014, Six to Eight Locations

The San Francisco Business Times yesterday said that the first Alpha Clinic sponsored by the $3 billion California stem cell agency could open as early as 2014.

The timing was disclosed by CIRM President Alan Trounson in an article by Ron Leuty, who also reported that that Trounson's $70 million proposal (see here and here) would involve as many as six to eight clinics. The locations of the clinics was not disclosed and would be subject to a competitive RFA. However, Leuty's piece mentioned UC San Francisco and Stanford.

The article also said initial treatments might focus on eye disease, “brain therapies” and spinal cord injuries.

The Alpha Clinic plan is scheduled to come before the CIRM board in late July. The proposal is aimed at speeding stem cell treatments and creating something of a one-stop shopping experience for patients.

Once the CIRM board approves the concept, an RFA will be issued and interested institutions will have to submit bids and compete for funding.  

$70 Million Alpha Stem Cell Clinic Proposal Draws Reader Comment

In addition to the comments filed online in connection with the $70 million proposal to create Alpha Clinics in California for stem cell treatments,  two other readers commented privately in emails. 

One came from a close observer of the stem cell agency who said, “If done right -- and I'm sure you and I agree that is a big 'if' – it could be an outstanding legacy.”

The other comment came from a physician-researcher at a major California institution and was longer and more critical. Here is the text.

“Another boondoggle for some medical schools but made to order for private operators like for profit cancer, dialysis, and laser eye specialty clinics that do one procedure.  I can see each of the medical schools gifted with one as they each were gifted with about 25 million dollars for stem cell institute buildings; and CIRM and (Irv) Weissman's companies like Stem Cells, Inc., getting a piece of the action as well.  Of course the deans and chancellors on the CIRM steering committee will vote for it. How can they not? It's money in their pockets.

“This has the fit and feel of, say, old Latin American Laetrile clinics or offshore clinics offering suspect surgeries or injections for cancers, Parkinson's disease, and the like.  It makes no difference that they are set up in California.  CIRM will pay for an unneeded infrastructure that will be empty space and staff sitting on their hands 99% of the time.  Or worse yet, CIRM will pay but the space will be used for other things, other clinic procedures paid for by insurance.  

“Now (CIRM President Alan) Trounson and CIRM want to get into the medical tourism business making California a 'go-to place' for stem cell treatments.  They want to start with bone marrow injections and transplants, procedures that cancer centers do regularly.  All CIRM needs is a drug or treatment.  It's not like there are tons of drugs out there and the only barrier is the lack of clinical space and capacity.  The start up time for any one drug is very long.

“NIH at various times has tried to organize clinical trials groups with infrastructure, like quick reaction forces, ready to gear up for a new trial at the drop of a hat. They mainly did nothing but suck money, kept staff employed, because there are generally few drugs ready for early human trials and each treatment that is brought along requires a unique contract, ethics reviews, and different facilities, equipment and staff than planned for.  The latest incarnation are CTSAs or CTSIs, clinical and translational science centers funded by the federal NIH that most if not all California medical schools already have.

“The CIRM clinics are going to be generic stem cell clinics advancing California tourism.  Come to California, we will inject stem cells for any illness, in any part of your body, never mind that cancer is different from heart disease is different from bone disease is different from brain disease, no matter.  Next step is for CIRM to form a travel agency with discounted air and Ritz Carlton packages for patients and extended family non-stop from China.  There is likely considerable revenue to be generated here and Trounson, Weissman, and (Robert) Klein (former CIRM chairman) should find a way to benefit. It sounds so wonderful!!  The public will love it.  Now all they need are some treatments.  Love the name: Alpha Clinics, they wouldn't want to start with Beta test clinics when they can go big from the get-go.  What an irresponsible waste.”    

The other comments can be found at the end of the original item or in the column to the right of this item, headed "recent comments."

Trounson Proposes $70 Million, Fast-Track Stem Cell Clinic Plan for California

Alan Trounson, president of the California stem cell agency, this summer plans to seek $70 million for creation of what he calls Alpha Clinics, high-powered organizations that will fast-track stem cell therapies to patients.

The proposal is scheduled to come before CIRM board at its meeting in late July and would consume a significant slice of the $700 million to $800 million that the $3 billion agency has left to hand out.

Trounson broached the need for the clinics as far back as two years ago, but did not put a price tag on the concept until an interview published online late today in the Los Angeles Times. The interview will be carried in the print edition of the paper tomorrow.

In the Q&A session between Times columnist Patt Morrison and Trounson, he said, 

"I'm intending to set up a network of stem cell clinics in California in the next couple of years, to make treatments available as clinical trials or as registered treatments for patients. I'm going to ask the [CIRM] board for about $70 million to get that set up. It will make California a go-to place for stem cell therapies. I want to make sure it's part of our medical fabric."

In other media reports in previous years, Trounson has said the Alpha Clinics would speed delivery of stem cell-based therapies and reduce costs of clinical trials by building on the success of specialist cancer, transplant and in-vitro fertilization clinics.

Leigh Dayton wrote about Trounson's plan in The Australian last July 14. Dayton said,

“Initially the clinics would use the capacities and infrastructure in the most advanced university medical clinics to deliver bone-marrow stem cell therapies. As research evolves, so will the treatments and services offered.”

Trounson also discussed the Alpha Clinics during an appearance at USC in 2011. A university publication wrote,

"These clinics will initially serve to get patients into clinical trials or to offer sound advice to individuals who might otherwise go overseas to receive harmful stem cell therapies from disreputable clinics.

"'I’m willing to invest money to get these [clinics] up,' Trounson said. 'I think if nothing happens beyond 2017 and we don’t get any refunding, we can leave a footprint of stem cell clinics in California that will go on forever.'"

Trounson was not at last week's CIRM board meeting, but Ellen Feigal, senior vice president for research and development, said a white paper is being prepared on Alpha Clinics. She said a concept proposal would be brought to the board July 25 at a meeting in the San Francisco Bay Area. Once the board approves the concept, the staff will then prepare and post the RFA.

Interested parties can address suggestions or questions to Feigal at info@cirm.ca.gov.

Sacramento Bee: Ongoing Conflict Problems No Help for Future Funding of Stem Cell Agency

The Sacramento Bee says conflict of interest problems continue to trouble the California stem cell agency despite its assertions that it has “turned a page” on the issues.

In an editorial Saturday, The Bee said that CIRM Chairman Jonathan Thomas “has vowed to be aggressive in avoiding conflicts in dispersing millions of public dollars for stem cell research. Yet serious conflicts continue to be revealed involving CIRM.”

The Bee cited articles on the California Stem Cell Report earlier this month about a $21,630 gift by its former chairman, Robert Klein, and the employment by Klein of Vice Chairman Art Torres. The Bee said the situation “throws into question a $20 million grant awarded last year to StemCells Inc., a company that wants to transplant neural stem cells to treat Alzheimer's disease.” (See here, here and here)

The Bee also cited the case of Lee Hood, an internationally renown scientist who violated the agency's conflict of interest policy. Hood failed to disclose to CIRM a conflict involving an application that he was reviewing on behalf of the agency. The Bee said the agency's failure to detect the conflict was “serious oversight."

Eight readers commented on the editorial and agency, generally unfavorably about CIRM.

But reader “bchild” said,

“It took a couple years for them to start funding projects and it may take years to see results. Wall Street got 1.5 trillion and the promise of 10x that if they get into trouble again, the scientists (and their business buds) just want a couple billion...In the end who do you trust more with public money? At least there is the appearance of public benefit here..."

The Bee concluded,

“None of this helps CIRM's reputation in being fair and impartial in spending $3 billion in public funds. It surely won't help the institute's standing with the Legislature and the public, should it need help staying in operation when its funding is exhausted in a few years.”

The editorial was also carried by at least one other paper in the McClatchy chain.

Multimillion Dollar Carrots for Stem Cell Research in California

Directors of the California stem cell agency approved an $80 million business-friendly plan that will dangle multimillion dollar carrots before biotech firms in an effort to push therapies into the marketplace.

The upfront payment effort will allow CIRM to take part in early stage clinical trials at no risk and could generate a list of achievements that will be useful in creating support for fresh funding after CIRM's money runs out in 2017.

The proposal is the first-ever from CIRM that involves no upfront payments. Instead, recipients will have to meet agreed-upon criteria to receive either grants or loans.

A CIRM staff document said,

“The major development milestone and success criteria will be mutually agreed upon between CIRM and the applicant at the beginning of the project(s) and at a minimum will require completion of a clinical trial that shows some level of biological activity/clinical efficacy and safety. The advantage to CIRM of this...is that CIRM funds will only be applied to projects that are successful.”

The proposal was wrapped into what the agency calls its strategic partnership plan, which also has a more conventional aspect, providing loans and grants in advance.

As part of the program, the CIRM board also today approved a $6.4 million award to Sangamo BioSciences of Richmond, Ca., to help develop a therapy for beta-thalassemia. The firm will have to match the amount of the award.