On Wednesday, August 15 the California State Assembly Select Committee on Biotechnology held an informational hearing on CIRM as part of its mission of ensuring the legislature is up to date and informed about the biotech industry in California. The committee heard from CIRM’s President and CEO Dr. Maria T. Millan and the Vice Chair of our Board, Senator Art Torres (Ret.); two of CIRM’s Patient Advocates (Pawash Priyank and Don Reed) and Dr. Jan Nolta, the Director of the Institute for Regenerative Cures at UC Davis.

The final speaker was David Jensen, whose California Stem Cell Report blog has charted the history of CIRM since its inception. At CIRM we know that not everyone agrees with us all the time, or supports all the decisions we have made in the years since we were approved by voters in 2004, but we do pride ourselves on being open to a thoughtful, vigorous debate on all aspects of stem cell research. David’s presentation to the committee was nothing if not thoughtful, and we thought you might enjoy reading it and so we are presenting it here in its entirety.

For those who prefer to watch than read, here is a video of the entire hearing:

https://www.assembly.ca.gov/media/assembly-select-committee-biotechnology-20180815/video

California’s Stem Cell “Gold Rush:” A Brief Overview of the State’s $3 Billion Stem Cell Agency
Prepared testimony by David Jensen, publisher/editor of the California Stem Cell Report, before the Assembly Select Committee on Biotechnology, Aug. 15, 2018
I was in Mazatlan in Mexico in the fall of 2004 when I first heard about the creation of
California’s stem cell agency. I was reading the Wall Street Journal online and saw a headline that said a new Gold Rush was about to begin in California — this one involving stem cells instead of nuggets.

“Holy Argonauts,” I said to myself, using the term, of course, that refers to the tens of thousands of people who rushed to the California gold fields in 1849. I wanted to know more about what was likely to happen with this new stem cell gold rush.

Today, nearly 14 years later, I still want to know more about the California Institute for
Regenerative Medicine or CIRM, as the agency is formally known. But I can tell you that certain facts are clear.

Borrowing and Autonomy
The agency is unique in California history and among the states throughout the nation. It is the first state agency to fund scientific research with billions of dollars – all of it borrowed. At one point in its history, it is safe to say that the agency was the largest single source of funding in the world for human embryonic stem cell research.

The agency operates with financial and oversight autonomy that is rare in California government, courtesy of the ballot initiative that created it. But that measure also proved to be both a blessing and a curse. The agency’s financial autonomy has allowed it to provide a reasonably steady stream of cash over a number of years, something that is necessary to sustain the long-term research that is critical for development of widely available treatments.

At the same time, the ballot measure carried the agency’s death warrant — no more money after the $3 billion was gone. Cash for new awards is now expected to run out at the end of next year. Over its life, the agency has had a national and somewhat more modestly global impact, both as a source of funding and international cooperation, but also in staying the course on human embryonic stem cell research when the federal government was backing away from it.

Beyond that, the stem cell agency is the only state department whose primary objective is to produce a marketable commercial product. In this case, a cure or treatment for afflictions now nearly untreatable.

Finally, I am all but certain that CIRM is the only state agency that takes back money when a project winds up on the rocks. By the end of last month, that figure totalled in recent years more than $34 million in two big categories of awards. This sort of cash recovery is not a practice that occurs with federal research dollars. With CIRM the money goes back into the pot for more research aimed at treating horrible afflictions.

Evaluations of the Research Effort
Nonetheless the agency has hit some shoals from time to time. In 2010, the agency’s governing board commissioned a $700,000 study of its efforts by the prestigious Institute of Medicine. Two years later, the IOM reported to CIRM that it had some significant flaws.

The IOM study said that the agency had “achieved many notable results.” But it also
recommended sweeping changes to remove conflict of interest problems, clean up a troubling dual-executive arrangement and fundamentally change the nature of the governing board.

The report said,“Far too many board members represent organizations that receive CIRM funding or benefit from that funding. These competing personal and professional interests compromise the perceived independence of the ICOC (the CIRM governing board), introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board.”

The conflict issues are built in by the ballot measure, which gave potential recipient institutions seats on the 29-member governing board. Indeed, in 2017, the last time I calculated the correlation between the board and awards, roughly 90 percent of the money given out by CIRM had gone to institutions with ties to members of the governing board.

About two months after the IOM presented its report, the CIRM board approved a new policy that bars 13 of its 29 members from voting on any grants whatsoever to help deal with questions concerning conflicts of interest on the board.

Other studies about the agency’s performance resulted from a 2010 law in which the legislature modified the initiative to require triennial performance audits that would be paid for by the agency itself. The requirement specifically excluded “scientific performance” from the audit.

The first audit results came in 2012 and contained 27 recommendations for improvement. The most recent performance audit came last spring. The audit firm, Moss Adams, recommended improvements in the areas of private fund-raising, retention of staff and better utilization of board members. The board was told that the agency had made “incredible progress” and that the auditors “usually see a lot of good things.”

The Story of CIRM 2.0
In recent years the agency has been on a self-improvement regime. The effort began in 2014 and was dubbed CIRM 2.0 — a term that was originally coined by a stem cell researcher at UC Davis.

The new direction and emphasis was described by the agency as “radical.” It was aimed at improving speed, efficiency and innovation. And it seems to have largely succeeded.
In 2014, it took almost two years for a good idea to go from application to the final funding stage. The goal was to shorten that to 120 days. Delays in funding are of particular concern to businesses, often for cash flow reasons, but they also mean delays in actually developing a treatment.

This week, the agency said the cash delivery figure now stands at less than 90 days for clinical awards and about 120 days for translational awards.

In 2014, the agency was participating in nine clinical trials, the last stage before a treatment is certified by the federal government for widespread use. Today the agency is involved in 49. In 2014, about 50 patients were involved in those trials. Today the figure is more than 800.

One of the more interesting aspects of CIRM 2.0 marked a departure from what might be called an academic pass-fail approach to the “final exam” for applications from scientists. Instead, CIRM is engaged in a more partner-oriented approach that can be found in some businesses.

Instead of flatly failing an application that is not quite ready for prime time, the idea is to coach applicants along to help bring them up to approval level. Today the agency can count 30 applications that won approval through that process. All of which is work could have slipped away in the more distant past.

CIRM and the Biotech Biz
CIRM is now much more engaged with industry than during its earlier years, when it drew bitter criticism from some business executives. Engagement with biotech firms is critical to bringing a treatment to the public. CIRM is not in the business of actually manufacturing, marketing and selling products. That is a matter left to the private sector.

One reason for closer business connections involves maturation of the work in the field, which has brought research closer to reality. But it is also due to a different focus within the agency as top management has changed.

One of the more difficult areas involving stem cell research and likely treatments is their cost. It is rare to hear researchers or companies talk forthrightly in public about specific dollar amounts. But the cost of drugs and treatment are high visibility matters for patients and elected officials. And estimates of stem cell treatments have run up to at least $900,000.

In 2010, the California legislature moved to help assure affordability by requiring grantees to submit affordable access plans with the caveat that the agency could waive that requirement. How that will ultimately play out as actual products come into the marketplace is yet to be determined.

The Public Policy Questions
A number of significant public policy questions surround the California’s stem cell program involving its creation and execution. They include:
● Is a ballot initiative the best way to approach research and create new state programs?
The initiative is very difficult to alter when changes are needed or priorities change. .
● Does the state have higher health priorities, such as prenatal health care, than supplying
researchers with cash that they could well secure from other sources?
● Is borrowing money to finance the research the best way to go about it? The interest
expense raise the total cost of a $20 million research award to $40 million.
● Should executives of potential recipient institutions serve on the board that awards their employers hundreds of millions of dollars?

This is just a short list of some of the policy matters. Other questions can and should be asked in the wake of the agency’s nearly 14 years of work.

Lives Saved but No Widespread Therapies
Returning to our earlier list of the clear facts about CIRM, another fact is that lives have been saved as the result of clinical trials that the agency it has helped to finance. The youngster from Folsom mentioned earlier in this hearing is one of a number of cases.

That said, these patients received treatment in clinical trials, which may or may not succeed in producing a commercial product that is available to the general public.

Little doubt exists that the agency has advanced the stem cell field and is building towards a critical mass in California. The burgeoning research program at UC Davis, with $138 million in CIRM funding, is one example. Another is the $50 million Alpha Clinic network aimed at creating powerful collaboration within institutions and throughout the state. In addition to Davis, UC San Francisco, UCLA, UC Irvine, UC San Diego and the City of Hope in the Los Angeles area are all part of the Alpha network.

Nonetheless, CIRM has not yet backed a stem cell treatment that is ready for widespread use and fulfilled the voter expectations from 2004 that stem cell cures were right around the corner.

The agency itself also has something of a deadline that is right around the corner in political and scientific terms. Backers of the agency are hoping for another ballot initiative in November 2020 that would pump $5 billion into the program and stave off its slow demise as research winds down. Development of a stem cell treatment that would resonate with voters would be an invaluable development to encourage voters to continue this unique experiment — even if California’s stem cell gold rush does not quite measure up to the dramatic events of 169 years ago.
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