An Unseemly Performance: Former Chair of Stem Cell Agency Promotes $20 Million Research Proposal

By Dr. Matthew Watson

Bob Klein is nearly an icon in the
history of the $3 billion California stem cell. And when he appeared
before its governing board last month and aggressively touted a $20
million grant proposal already rejected by agency reviewers, his
actions raised eyebrows.

Robert Klein
Elie Dolgin/Nature photo

Klein's comments carried unusual
weight, given that they were supported by his unique and influential
relationship with the California Institute for Regenerative
Medicine(CIRM). He and his associates wrote the 10,000-word ballot
initiative that created the stem cell agency in 2004. He ran the $35
million electoral campaign that convinced voters to buy into the
idea. Klein raised millions on behalf of the effort. He personally
provided the campaign $3 million. And he was the first chairman of
the agency, leaving that office only 13 months ago, when he was
designated chairman emeritus.

The meeting last month marked Klein's
first public appearance before the board on behalf of a specific
application.. He heralded the applicant, StemCells, Inc., as unique
and the “best” in United States with a “huge body of
experience.”

(The full text of his testimony can be found here.)

Irv Weissman
Stanford Photo

StemCells Inc. is a publicly traded company based in Newark, Ca., that was founded by renown Stanford
scientist Irv Weissman, who sits on its board. Weissman also played
an important role in the Prop. 71 ballot campaign that created the
stem cell agency. StemCells, Inc.'s application was turned down by
CIRM reviewers who gave it a score of 61, but the company appealed the action to the agency's governing board. Following the appearance by Klein, Weissman and others, the CIRM board sent the application back for more review.
The board will reconsider it next month or in October.

One California stem cell researcher,
who requested anonymity, said it is “highly inappropriate for Bob
Klein to be advocating for any grant application from a public
company.”

The scientist said,

“He has
considerable influence with the ICOC(the CIRM governing board), and
is closely associated with biotech in the Bay Area. Even if he
doesn't make a lot of money himself from this, then he certainly has
friends who will. Irv Weissman would be one of those friends."

In response to questions asked on Aug. 7 by the
California Stem Cell Report, Klein today defended his actions. He was asked if he had “any sort of
financial ties” to firms or individuals that would benefit from
approval of the award. Klein, who is a real estate investment banker and also an attorney, said he has
“no financial interest” in the firm or individuals that might
benefit.

Klein also indicated his appearance was
entirely appropriate. He defined his role as a patient advocate –
not as a lobbyist who is paid for advocating on behalf of a company.
Klein said he had “a particular responsibility to contribute my
background knowledge and experience.”

Klein said he hoped other former board
members would follow his example. He said,

“(I)t would be a tragedy if the
expertise of board members built up over six or more years is lost.”

(The full text of his response can be found here.)

Klein's appearance came at a propitious
time for financially strapped StemCells, Inc. The company's
financial information shows that it is losing $5.4 million a quarter
as of the end of June and had only $9 million in cash on hand. It
also had liabilities of $11.6 million, up substantially from $8.5
million in September of last year.

The researcher who criticized Klein's efforts as inappropriate also said,

"StemCells Inc has been on the
stock market for 20 years, without producing anything of value for
the investors. The stock price has been sinking fast: it
was 60 cents this June; last year at this time, it was around $5 a
share.

“On July 17, when the CIRM Disease
Team Award review results became available, the stock rose from 87
cents to $1.80 – a person who could anticipate the outcome of the
CIRM applications could have made considerable money in that 24 hour
period.”

Weissman's role
with the StemCells, Inc., is more than scientific. According to the
company's financial statements, he holds 88,612 shares. His wife,
Ann Tsukamoto, is executive vice president of the firm. She holds
185,209 shares in the firm.

Weissman played a significant role in
the Prop. 71 campaign. He did the “billionaire circuit,” raising
money for the initiative, according to an article by Diana Kapp in
San Francisco magazine. Among other things, Weissman worked the
exclusive Bohemian Grove in Northern California and “pitched”
Bill Bowes, a co-founder of Amgen, who, along with his wife, gave
$1.3 million to the campaign. Weissman was the key to securing a
$400,000 contribution from Microsoft's Bill Gates. Weissman also plumped for Prop. 71 in a TV campaign ad.

In addition to StemCells, Inc., Klein
and Weissman supported a successful attempt last month to overturn
reviewers' rejection of another $20 million application by Judith Shizuru
of Stanford. The application received a score of 53 from reviewers.

One of the application's problems cited
by reviewers was the availability of antibodies for the study. The
antibodies were developed by Systemix, a company founded by Weissman.
Systemix was acquired by Novartis in 1997 for about $70 million.
Weissman said he has “negotiated back” rights to key antibodies,
which he said are now held by Stanford.

Klein said that reviewers believed the
research was “a showstopper” but did not think the documentation
was adequate. He told the CIRM directors that they now have a letter
with proprietary information that supports the grant application.

Our take: The stem cell agency has long
labored under the perception that it is something of an insiders'
club. Even the prestigious journal Nature warned in 2008 about what
it called “cronyism” at CIRM. If anything, the situation is worse today, four years later. Enterprises associated with persons on the CIRM board of directors have received more than 90 percent of the funds handed out by the agency. Klein's efforts last month
reinforce the not-so-pleasant image of the stem cell agency as an
old boy's club and create an impression – at the very least – of
unseemly insider influence.

Source:
http://californiastemcellreport.blogspot.com/feeds/posts/default?alt=rss