Kudos, criticism mark California stem cell agency as it turns 20

California’s $12 billion stem cell experiment turned 20 years old this fall, winning kudos from some patients and scientists but failing to fulfill the expectations of voters who thought they had created an enterprise that would lead quickly to revolutionary cures for cancer, heart disease, stroke and much more.

It was a grand dream in 2004 when Californians voted overwhelmingly to establish the California Institute for Regenerative Medicine (CIRM) in response to then-President George W. Bush’s tighter restrictions on federal funding of human embryonic stem cell research. Nobel Prize-winning scientists campaigned for the ballot initiative, Proposition 71, during a $35 million campaign that faced little opposition but was criticized for its hype.

Hollywood weighed in as well. Actor Michael J. Fox, who is living with Parkinson’s disease, said in a television campaign ad, “Please support the effort to find cures…. It could save the life of someone you love.”

Another voice came posthumously from Christopher Reeve, the actor who played Superman on film but who was paralyzed in a horse riding accident and died before the election. “Please support Prop 71. And, stand up for those that can’t,” he said in a another TV ad.  The measure won with 59 percent of the vote.

That was two decades ago. A different note was sounded earlier this year.

“I don’t think this train runs on the track any longer. I really don’t….They got to figure out how to give us a new engine,” said Jim Lott, a longtime member of the only state entity – the Citizens Financial Accountability Oversight Committee (CFAOC) – with legal financial oversight of the stem cell research program.

He resigned from the panel last March, calling for a fundamental reexamination of the program’s structure and governance. Lott, a former hospital industry executive, served longer on the CFAOC than any other person who has worked for CIRM or who has served as its chair, president or on its board.

“I don’t think this train runs on the track any longer. I really don’t….They got to figure out how to give us a new engine.”

One former CIRM board member, Jeff Sheehy, who served from 2004 to 2020, sharply criticized CIRM as it successfully sought a $5.5 billion refinancing in 2020. In an op-ed in the San Diego Union-Tribune, Sheehy opposed the ballot measure, declaring that it was “unaffordable, unnecessary and fatally flawed.” Among his reasons was CIRM’s failure to fund a stem cell therapy that has reached the marketplace.

Stem cell policy firsts
CIRM is unique in a host of ways. It is the first such research agency in California history. No other state in the nation has a stem cell research program of this multibillion-dollar magnitude. CIRM is one of the largest regenerative medical research programs in the world in terms of dollars, by its own calculation. At the same time, unlike most other state departments, CIRM operates without the usual annual budget scrutiny and tinkering by the legislature and the governor.

CIRM set a precedent with its source of funding. It is the first scientific research program to rely on billions of borrowed state dollars, all of which flow directly to CIRM. Normally, state bonds go for such things as buildings, bridges and prisons – not to pay scientists to probe the structure of cancer cells.

California scientists have enjoyed $4.0 billion so far, primarily in the form of research grants and education/training. Businesses benefit as well. CIRM is in the midst of an $80 million public-private effort to break down barriers in manufacturing cell and gene therapies. The agency is on track to hand out $431 million overall in this fiscal year, 2024-25.

This year, over many months, CIRM conducted the first evaluation of its research portfolio in 18 years. As a result, CIRM’s 35-member governing board approved watershed changes in its priorities in hopes of generating a greater impact. How well it succeeds is likely the key to CIRM’s continued life or death.

When its remaining $3.8 billion runs out, there is no more. CIRM has little choice but to go to the voters once again. No other California state agency faces that sort of referendum to stay alive. The election could be necessary as early as 2028 if CIRM supporters want to have the best chance of persuading voters to pony up more billions.

The bubble baby story
A 12-year-old California girl and people like her could be the key to winning that election. Evangelina Padilla Vaccaro is her name.

She is literally a CIRM cover girl, gracing the cover of CIRM’s annual report in 2016. Then only four, she wore an orange cape and pink t-shirt with a sparkly blue thunderbolt while gleefully astride a hobby horse. Evangelina is alive today because of an experimental treatment devised by a UCLA scientist, Donald Kohn and his team. Kohn has received nearly $60 million from CIRM for his research, which includes sickle cell disease.

CIRM’s 35-member governing board approved watershed changes in its priorities in hopes of generating a greater impact. How well it succeeds is likely the key to CIRM’s continued life or death.

Evangelina was born with a rare genetic immune deficiency (ADA-SCID) that is popularly known as the bubble baby disease, a term that grew out of a treatment in the 1980s that involved encasing a child in a plastic bubble. The theory was that it would protect a child from even minor infections that could kill him or her. It did not work.

Kohn and his team extracted stem cells from Evangelina, added a normal copy of the defective gene and injected them, which restored her immune system. Now she plays competitive tennis.

Sixty patients have shown “sustained immune system restoration,” according to the latest results from UCLA. A news release this week about the trial said, “After a median of 7.5 years, 100 percent of (62) patients had survived, and 96% showed sustained immune system restoration.” All this is being done in a clinical trial that is not available to the wider public. It still has not been approved for general use by federal regulators.

A major setback in commercialization came when Orchard Therapeutics, which held the license for the treatment, dropped it in favor of others deemed to be more likely to be profitable. Along the way, Orchard also denied compassionate use of the therapy by more than 20 children.

Last month, Kohn received a $15 million, multi-year grant from CIRM that to help push the therapy into the marketplace.

(The Orchard bubble baby story first received significant public attention in a article carried by Capitol Weekly in 2021, which has also carried other articles chronicling the affair.)

CIRM’s stem cell revolution
CIRM has helped to finance 111 clinical trials, which are the last stage before a treatment can be commercialized. The process can take years and fail even then. Most potential conventional treatments fail to emerge from trials at a 90 percent rate.

CIRM can count many high-powered admirers. Nobel Prize winning scientist Jennifer Doudna of UC Berkeley says, “CIRM has revolutionized regenerative medicine….(Its) most significant contribution is the creation of a robust infrastructure for stem cell research in California” that benefits patients worldwide.”

“One cannot overstate the importance that CIRM has played in the stem cell revolution,” said George Daley, dean of the Faculty of Medicine at Harvard. He was quoted in CIRM’s most recent annual report, which also included Doudna’s remarks.

CIRM has funded research into more than 95 diseases, including clinical trials that have involved more than 4,300 patients. More than 50 new businesses have roots in CIRM-funded research, the agency says. It has created a unique Alpha Clinic Network in California that specializes in stem cell and gene therapies with nine locations ranging from Sacramento to San Diego.

“Despite funding uncertainties and challenging market conditions,” the agency’s annual report declared last month, “CIRM-funded projects continue to attract significant industry investments and partnerships, with $24.4 billion in follow-on funding to date. This funding has taken many forms, including co-investment, equity raises, IPOs, and acquisitions.”

Not mentioned in the annual report was an exhaustive 2011 study of CIRM, commissioned by the agency itself at a cost of $700,000. The study said the agency had achieved “many notable results.” However, 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.

Conflicts of interest and audits
The conflicts of interests at the agency are posed by the nature of its 35-member governing board. It includes many persons with ties to institutions that receive awards. The situation was created by language in the two ballot initiatives that created and funded CIRM.

CIRM has “inherent conflicts of interest,“ said its former general counsel and one of the authors of the initiatives, James Harrison of Olsen/Remcho law firm, in a memo to the CIRM board.

The top five recipients of CIRM grants are Stanford, UCLA, UC San Francisco, UC San Diego and the City of Hope in the Los Angeles area. All have had representation on the board since its inception. Awards to those institutions total $1.8 billion.

CIRM prohibits board members from speaking during discussion and votes on awards to their institutions or voting on them. But those members can participate fully in discussion of “concept plans” for award rounds that could benefit their institutions.

“CIRM-funded projects continue to attract significant industry investments and partnerships, with $24.4 billion in follow-on funding to date. This funding has taken many forms, including co-investment, equity raises, IPOs, and acquisitions.”

The conflict situation disturbed the blue-ribbon, National Academy of Medicine (formerly the Institute of Medicine) panel that produced the 200-page study of CIRM. “They (the agency’s directors) make proposals to themselves, essentially, regarding what should be funded. They cannot exert independent oversight,” said Harold Shapiro, the former president of Princeton who chaired the study.

CIRM has implemented few of the study recommendations, including shrinking the size of the board, which would require another vote of the people or a super, super majority vote of the legislature and the signature of the governor. The board did create a special board committee to ratify decisions on applications made by out-of-state reviewers behind closed doors.

Many of the study’s findings echoed those of California’s Little Hoover Commission in 2009.

A legally required performance audit of CIRM in 2023 said the agency was suffering from a wide array of afflictions ranging from employee morale problems and an excessively large governing board to pay inequity and royalty income issues. Seven of the 13 issues were holdovers from three years earlier.

‘Affordable’ Multimillion-Dollar Treatments, New Priorities
More recently, CIRM has wrestled with the challenges of the multimillion-dollar costs of some of its expected gene therapies. Genetic treatments currently on the market run upwards of $4 million, but are believed to be “one-and-done” cures.

CIRM is the only government entity in the country charged by voters with making the therapies that it helps to finance affordable and accessible. It is a challenge that goes far beyond CIRM’s ability to solve on its own.

Former CIRM Director Sheehy, however, argued for research that he said could lower costs. “One of the biggest opportunities and a huge unmet need is a way to genetically modify cells ‘in vivo,’ that is deliver the gene therapy directly to the cells in a person without having to remove the cells, gene-modify them and put them back.

“If CIRM were to identify a path or paths with researchers/companies, and do so and fund (the path) aggressively and collaboratively and attach the intellectual property (if you can’t hold it, own all or part of it so you can share it for a discount or freely), that would dramatically expand the availability of and reduce the cost of existing and future gene therapies.”

In its review of affordability priorities this year, CIRM directors directed the staff to engage at a national level to “expand sustainable access” to therapies and to support clinical efforts to “inform robust market access and reimbursement strategies.”

The new priorities also include advancing “at least 4-7 rare disease projects to BLA (a step prior to commercialization)” via a platform technology pilot program. Also now on CIRM’s table is a plan to “propel 15-20 therapies targeting diseases affecting Californians to late-stage trials”

The impact of CIRM’s new focus may lead to results that will resonate with the voters who hold the key to additional billions of dollars. The stories of patients like Evangelina and her fellow “bubble babies” and the others in clinical trials ranging from spina bifida to heart disease could inspire voters to extend CIRM’s life.

But the $5.5 billion ballot initiative that saved CIRM in 2020 narrowly won approval with only 51 percent of the vote. More than 8.2 million voters said CIRM should close its doors rather than fulfill its goal of revolutionizing “science and healthcare delivery.”

Competition for state dollars is ferocious, and the agency is all but unknown to most California voters. Supporters of a future ballot initiative will need all the support they can muster, especially from the researchers and their institutions, plus the emotion and gratitude of patients, their friends and families if they wish to succeed at saving CIRM from financial extinction.

Jensen is a retired newsman and has covered CIRM for nearly 20 years on his newsletter, the California Stem Cell Report. He authored the book, “California’s Great Stem Cell Experiment,” in 2020.