California Institute for Regenerative Medicine Takes Back $19 Million Alzheimer's Program Loan Award From Bay Area's StemCells Inc.
Published: Dec 16, 2014
December 15, 2014
By Jessica Wilson, BioSpace.com Breaking News Staff
StemCells Inc. filed a document with the U.S. Securities and Exchange Commission (SEC) on Friday, stating that the California Institute for Regenerative Medicine, or CIRM, would terminate a $19.3 million loan made to StemCells in September 2012 to fund the development of the company’s experimental neural stem cell therapy for Alzheimer’s disease.
In the SEC filing, StemCells claimed that the termination of the loan occurred because the company failed to reach a milestone upon which the loan depended. StemCells has thus far received $3.8 million from CIRM. The funds had been meant to help the company’s research into the restoration of memory in people with Alzheimer’s.
San Francisco-based CIRM was established in November 2014 with the passage of Proposition 71, the California Stem Cell Research and Cures Act. A taxpayer supported agency, CIRM is funded by bond sales, which have thus far totaled $3 billion. The revocation of the loan is happening as CIRM prepares to request further funding from California voters, and other investors, according to the San Francisco Business Times.
The loan to StemCells has caused controversy since its inception. The initial cause for concern was that StemCells’ proposal to use purified neural stem cells, known as HuCNS-SC cells, extracted from the brain tissue of aborted fetuses to restore memory in people suffering from Alzheimer’s disease didn’t “pass muster with CIRM’s scientific review committee,” according the San Francisco Business Times. Despite this, CIRM approved the $19.3 million award.
Most recently, the controversy has been fueled by the fact that earlier this year the former president of the board at CIRM, Alan Trounson, joined StemCells’ board. This event instigated a policy change at CIRM, whereby an employee must now inform CIRM’s general counsel if he or she is in conversation regarding employment with a company that has or is applying for funding from CIRM.
“This policy establishes a procedure to ensure there is not even a perception of a conflict of interest as a result of that action, regardless of whether or not the person is offered or accepts the position," CIRM President and CEO Randy Mills said in a statement in September 2014. “It is our responsibility to work proactively to continually earn the trust the public has placed in us,” he concluded.
In the document StemCells filed with the SEC, the company stated that, “The final amount of the Loan Award will be determined upon submission of the final financial report and the loan balance will be forgiven.”