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Calif. Stem-Cell Leaders Begin Planning For ‘Sustainability’ After Proposition 71

Leaders of California’s stem cell research initiative have begun planning how the effort can be sustained beyond 2017, the last year of funding under Proposition 71, which voters approved in 2004 to set aside $3 billion for stem cell research in the state.
During a panel discussion at the Biotechnology Industry Organization’s 2008 International Convention, held earlier this month in San Diego, the president of California’s stem cell agency said the chairman of the agency’s governing board has begun meeting with undisclosed members of the US House and Senate, as well as “committees of importance,” with an eye to securing sources of funding beyond the state.
“We’re looking at a strategic plan. And one of those [topics] is sustainability, and what are we going to do to be sustainable. There’s an argument for more state funding. But it may be that — yes, to be frank, it is — that we may be able to find new ways of financing the endeavor going forward,” said Alan Trounson, president of the California Institute for Regenerative Medicine.
Trounson was one of six professionals who discussed CIRM’s progress, and the broader promise of future stem cell research, at “California’s Stem Cell Initiative, from Research to Therapies,” a panel talk held June 17 during BIO 2008.
The panel talk took place a day before CIRM announced a pair of collaborations with international partners. In one effort, five Canadian agencies will contribute a combined CDN$100 million ($98.9 million) over three years toward a collaboration with CIRM focused on cancer stem cells — an outgrowth of the Cancer Stem Cell Consortium, a year-old effort among academic, business, and government partners from Canada and California.
Canada’s CDN$100 million contribution includes CDN$30 million from each of three partners: the Canadian funding agency Genome Canada; the Canadian Institutes of Health Research; and the government of Ontario province, through the Ontario Institute for Cancer Research.
CIRM said it would support the collaboration through existing programs, and identified one possibility: Working with the Canadian consortium to form multidisciplinary teams of scientists to pursue CIRM “Disease Team” grants. The California stem cell agency plans to issue a formal request for applications for the grants in October, with winners to be announced in June 2009. CIRM said successful proposals “will likely include a description of a path to an investigational new drug filing at the end of the four- to five-year grant.”
CIRM can only fund research carried out in California, and the agency said scientists from Canada would be funded through the Cancer Stem Cell Consortium, while California researchers would be funded through CIRM. “It adds to our research and our efforts by amplifying what we can do. We can do more together than alone,” said Ellen Rose, a CIRM spokeswoman.

“There’s an argument for more state funding. But it may be that — yes, to be frank, it is — that we may be able to find new ways of financing the endeavor going forward.”

The same day, CIRM also announced it will join with the government of Victoria, Australia, to collaborate on stem cell research, in part through “an arrangement under which they will jointly seek grant applications, evaluate them, and make recommendations for funding research activities,” according to a statement released by the agency. Trounson, an Australian stem-cell pioneer, is very familiar with the province. Carson, Victoria, is home to Monash University’s Immunology and Stem Cell Laboratories, which Trounson headed from 2004 until last year, when he left to join CIRM.
As with the Canadian collaboration, the initial avenue for the Victoria-CIRM effort, which they have dubbed the “stem cell airbridge,” will be through the pursuit of Disease Team grants.
Both collaborations will allow CIRM to at least leverage additional research activity using its $3 billion over 10 years — and in the case of the Australian effort, possibly secure additional funds.
Yet the chairman of the board that oversees CIRM told reporters after the panel talk that the Canadian and Australian efforts offered less of a glimpse into the agency’s future sustainability strategy than the launch of medical efforts against deadly diseases.
“We’re not in competition with other states and nations. We’re fighting a global fight against disease on a collaborative basis,” said Robert Klein, chairman of the Independent Citizens Oversight Commission. “We have tremendous assets marshaled in California. But to really honor our obligation to patients, we need to collaboratively marshal those assets globally, wherever we can, under the same medical and ethical standards, to address those areas of a target disease where we can bring tremendous expertise.”
Klein also confirmed the talks with members of Congress, adding, “We’re not ready to talk about it.”
President Bush’s restrictions on stem cell funding — namely limiting funds to research on the limited number of cell lines that existed as of Aug. 9, 2001 — prompted California’s life sciences academic and industry leaders to seek funding from the state government. They won a key ally two years later when Arnold Schwarzenegger took office as governor, a Republican succeeding Democrat Gray Davis, whom voters recalled.
During a keynote luncheon at BIO 2008, Schwarzenegger said his interest in the topic was sparked by watching his father-in-law, R. Sargent Shriver, succumb to Alzheimer’s disease [BRN, June 23].
Schwarzenegger championed Proposition 71, the $3 billion bond referendum approved by California voters in 2004, later challenged in court by stem-cell funding foes, and upheld last year by California’s highest court [BRN, May 28, 2007].
Washington’s restrictions are expected to be lifted next year, since the presumptive nominees of both major parties, Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.), have both said publicly that they favor funding research into embryonic stem cells.
Canada’s federal government, by contrast, is on track to giving Genome Canada CDN$29.5 million in the fiscal year that started April 1, plus another CDN$63.8 million in 2009-10 and 2010-11, for a total CDN$700 million since 2000-01. Genome Canada also will also raise CDN$2.3 million in investment income this fiscal year, and another CDN$2 million in 2009-10 and 2010-11, for a total CDN$86.7 million since 2000-01, according to the agency’s Corporate Plan 2008-09, available here.
Even with Canada’s subsidies to Genome Canada, CIRM remains the world’s largest source of stem cell research funding, having approved a total 206 research and facility grants totaling more than $554 million — including the 38 grants totaling $24 million approved for 25 California institutions on June 27.
“The emphasis that California has placed in this area — both from a science and from an economic standpoint — has had reverberations, not just locally, but around the world,” said panelist Jeff Karan, a senior partner with Proteus Venture Partners, a Palo Alto, Calif., investment firm specializing in funding regenerative medicine companies.
Karan told the panel audience that the climate for private investment in stem cell startups has warmed, but continues to be slowed by issues of regulation, intellectual property, and technology — including the creation, expansion, and controlled differentiation of cells for therapies.
Another hurdle, Karan said, has been the longer timeframe for returns on investment than investors typically seek: “The pushback we get from institutional investors and other venture capitalists is, ‘You’re not going to see a return in five to seven years.’”
CIRM’s Scientific Strategic Plan, released in December 2006, includes several categories of funding set to end in 2017.
During the panel talk, Trounson said he was looking both at, and beyond, pursuing government funds.
“There may be more innovative ways to drive the initiative than simply asking for another handout,” he said, although he qualified that statement by adding, “it’s more perhaps the way we see that kind of handout,” noting that officials like Klein prefer to describe the funding as an “investment.”
“So if the state is prepared to continue investing money in stem cells, there’s probably going to be some entity that is related and then [we would] create another one that has huge energies,” Trounson said. “I just think it’s more creative thinking, and in the sense that we may want to indicate that in our strategic plans we will draw for sustainability, I figure it’s a very important component.”
He said officials haven’t yet thought about what form a new stem cell agency should take.
“I don’t think I have a format or formula at this time. But it’s time now — eight years, 10 years — before the closing of the current opportunity that it should be, that I think is worthy of being discussed and strategized,” Trounson said.
In addition to public funding, Trounson said that stem cell research could also be advanced through private investors drawn by the potential for making money as costs are cut through new treatments and cures developed through the stem-cell effort.
“What about convincing governments that return of those funds, which might be seen as a saving, would come back to drive the initiative? It’s also possible that it could come back as a driver for the investors. If you think about the cost of drug discovery, it’s pretty steep. And so the [savings from] the [stem] cell therapies is probably going to be big enough,” Trounson said. “If you’ve got investors who come into the biotech companies … or pharma, they could expect some of the benefit to come back through the savings that there is to the community.”
“That would certainly drive an initiative towards cures, and really propel the system forward,” Trounson added.

CIRM Board Chairman Criticizes Drug-Access Provision of CIRM Bill
The chairman of the governing board of California’s stem cell agency has criticized a bill pending in California’s state Assembly that would require the agency’s licensees and grant recipients to develop plans giving uninsured residents affordable access to “any drug that is, in whole or in part, the result of research funded by” the agency.
“Any plan subject to that approval shall require that the grantees and licensees thereof sell drugs at a price that does not exceed any benchmark price in the California Discount Prescription Drug Program,” the bill states.
Robert Klein, chairman of the Independent Citizens Oversight Commission, told BioRegion News that the board believes Senate Bill 1565 “will damage the field by trying to put in legislation provisions which should remain on a regulatory basis so they can adjust to different therapies, to different diseases.
“We’re going to have to be responsive to what makes an orphan drug feasible,” Klein said minutes after the conclusion of a panel discussion devoted to an update on the activity of the California Institute for Regenerative Medicine. “It is not a program of one size or one approach being appropriate to every company.”
“Having an ineffectual program will not be effective, and we’re in discussions with the legislature. It will probably take until July or August before the leadership really has a chance to digest the information,” because the state budget has dominated the legislative agenda in recent weeks, Klein added.
The legislation, available here, also includes a request by the Legislature that a study of CIRM’s governance be carried out by the Milton Marks, or “Little Hoover,” Commission on California State Government Organization and Economy. The original bill ordered such a study, but was amended after the Little Hoover commission told the Legislature that it alone has exclusive authority over the subject and timing of its research, since by law it is independent of the Legislature [BRN, June 16]. 
SB 1565 earlier this month passed the Assembly’s health and judiciary committees by unanimous votes, and was re-referred June 24 to the Assembly’s appropriations committee. The Senate approved the measure 40-0 on May 15. Of the bill’s progress through the legislature, Klein said lawmakers were merely “moving the bill just to keep it alive.”
On another topic, Klein said the ICOC was preparing to approve later this summer a loan program intended to help California life science companies and research institutions seeking to commercialize new stem cell-based drugs [BRN, Dec. 17, 2007].
“It’s going to the board for final approval in August, so we hope to have it operational by August,” Klein said.

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