Wednesday, October 28, 2009

California More Generous Than Expected With Stem-Cell Money

CIRM, the California agency in charge of research and development funding of stem-cell related work, is awarding $225 million to 14 preclinical projects, it said this morning. That's nearly $60 million more than its scientific reviewers recommended.

We reported yesterday that CIRM would hand out at least $166 million in "Valley of Death" funding unless its governing board added projects to the approved list at the last minute, and that's exactly what happened Wednesday morning.

The agency's international partners are also kicking in funding, bringing the total to more than $250 million, a huge injection of cash for stem-cell related projects that the funders hope can reach clinical trials within four years. The money will mainly go to eight California-based groups: seven non-profit institutions and one private firm, Novocell.

Reviewers at the agency originally recommended 11 projects and $166 million in funding, but the 29-member CIRM board voted to add three more projects that didn't make the original cut, including one led by Stanford University researcher and stem-cell pioneer Irving Weismann that aims to create anti-CD47 monoclonal antibodies to target leukemia stem cells. (You can read the reviewers' concerns about the project in the report linked above.)

The only for-profit group to lead an award-winning team is Novocell in San Diego. They propose a method of implanting specially-encapsulated beta cells grown from embryonic stem cells to treat type-1 diabetes. Because Novocell is the lead investigator, the cash is structured as a loan, not a grant. Of the $20 million, all but $2.8 million will go to Novocell, CEO John West told In Vivo Blog. West also says the cash infusion from "the stem-cell experts" was a validation of the firm's work and puts it in a "good position" to look for its next round of venture funding.

There are some minor details to work out first, though. West says Novocell hasn't yet received a loan document from CIRM and isn't exactly sure about the terms. Based on the loan program's guidelines, West is aiming for 10% warrant coverage and a payback period closer to 10 years, the far end of the range. "We have a good feeling we'll work it out," said West.

CIRM loans will certainly have more generous terms than typical bank loans, and the agency has said it doesn't expect many of them to be paid back. West said he was surprised that Novocell was the only for-profit to lead a disease team application. But he noted that not many of the state's stem-cell related firms were far enough along to push a program into the clinic within four years, one of the top criteria of the agency's reviewers.

Of the $20 million, $2.8 million will go to co-investigator Jeffrey Bluestone at the University of California, San Francisco. CIRM reviewers were optimistic the project could meet the goal of getting to clinic within four years: "These elements make a successful IND filing to treat diabetes likely and led to a strong recommendation for funding."

CIRM officials originally hoped for more loans in this first disease-team funding round. The agency has spent two years building a $500 million loan pool targeted at for-profits. That program, the brainchild of CIRM chairman Bob Klein, is still in place, but it won't quickly help fill the venture funding void. A second round of funding for translational projects is slated for next year.
Photo courtesy of flickr user Peter Ito.

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