THE CALIFORNIA INSTITUTE
FOR REGENERATIVE MEDICINE

Science, Governance, and the Pursuit of Cures

Committee on a Review of the
California Institute for Regenerative Medicine

Board on Health Sciences Policy

INSTITUTE OF MEDICINE
       OF THE NATIONAL ACADEMIES

THE NATIONAL ACADEMIES PRESS

Washington, D.C.

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THE CALIFORNIA INSTITUTE FOR REGENERATIVE MEDICINE Science, Governance, and the Pursuit of Cures Committee on a Review of the California Institute for Regenerative Medicine Board on Health Sciences Policy

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THE NATIONAL ACADEMIES PRESS  500 Fifth Street, NW  Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Govern- ing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineer- ing, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropri- ate balance. This study was supported by Contract No. 2267 between the National Academy of Sciences and the California Institute for Regenerative Medicine. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number-13:  978-0-309-26590-4 International Standard Book Number-10:  0-309-26590-8 Additional copies of this report are available for sale from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu. For more information about the Institute of Medicine, visit the IOM home page at: www.iom.edu. Copyright 2013 by the National Academy of Sciences. All rights reserved. Printed in the United States of America The serpent has been a symbol of long life, healing, and knowledge among almost all cultures and religions since the beginning of recorded history. The serpent adopted as a logotype by the Institute of Medicine is a relief carving from ancient Greece, now held by the Staatliche Museen in Berlin. Suggested citation: IOM (Institute of Medicine). 2013. The California Institute for Regenerative Medicine: Science, governance, and the pursuit of cures. Washington, DC: The National Academies Press.

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“Knowing is not enough; we must apply. Willing is not enough; we must do.” —Goethe Advising the Nation. Improving Health.

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Acad- emy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineer- ing programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is presi- dent of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Insti- tute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sci- ences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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COMMITTEE ON A REVIEW OF THE CALIFORNIA INSTITUTE FOR REGENERATIVE MEDICINE HAROLD T. SHAPIRO (Chair), President Emeritus, Professor of Economics and Public Affairs, the Woodrow Wilson School of Public and International Affairs, Princeton University, New Jersey TERRY MAGNUSON (Vice Chair), Vice Dean for Research, School of Medicine, S.G. Kenan Professor and Chair, Department of Genetics, University of North Carolina at Chapel Hill RICHARD R. BEHRINGER, Professor, Department of Genetics, the University of Texas MD Anderson Cancer Center, Houston REBECCA S. EISENBERG, Robert and Barbara Luciano Professor, School of Law, University of Michigan, Ann Arbor INSOO HYUN, Associate Professor, Department of Bioethics, School of Medicine, Case Western Reserve University, Cleveland, Ohio GARY A. KORETZKY, Francis C. Wood Professor, Perelman School of Medicine at the University of Pennsylvania, Philadelphia CATO T. LAURENCIN, Albert and Wilda Van Dusen Distinguished Professor of Orthopaedic Surgery; Professor of Chemical, Materials and Biomolecular Engineering; Chief Executive Officer, Connecticut Institute for Clinical and Translational Science; and Director, Institute for Regenerative Engineering, University of Connecticut, Farmington AARON D. LEVINE, Assistant Professor, School of Public Policy, Georgia Institute of Technology, Atlanta MICHAEL H. MAY, Chief Executive Officer, Center for Commercialization of Regenerative Medicine, Toronto, Canada CHERYL A. MOORE, Executive Vice President and Chief Operating Officer, Howard Hughes Medical Institute, Chevy Chase, Maryland STUART H. ORKIN, David G. Nathan Professor of Pediatrics; Chair, Department of Pediatric Oncology, Dana-Farber Cancer Institute; and Investigator, Howard Hughes Medical Institute, Harvard Medical School, Boston, Massachusetts ALLEN M. SPIEGEL, Marilyn and Stanley M. Katz Dean, Albert Einstein College of Medicine of Yeshiva University, Bronx, New York SHARON TERRY, President and Chief Executive Officer, Genetic Alliance, Washington, DC Consultant RALPH SNYDERMAN, Chancellor Emeritus for Health Affairs; and James B. Duke Professor, School of Medicine, Duke University, Durham, North Carolina  v

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IOM Staff ADRIENNE STITH BUTLER, Senior Program Officer JING XI, Research Associate THELMA L. COX, Senior Program Assistant DONNA RANDALL, Administrative Assistant LORA K. TAYLOR, Financial Associate ANDREW M. POPE, Director, Board on Health Sciences Policy vi

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Reviewers T his report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confiden- tial to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report: Laurence Baker, Stanford University Christopher H. Colecchi, Broadview Ventures, Inc. James Fossett, University of Albany Joseph G. Hacia, University of Southern California Zach Hall, Retired Mark S. Humayun, University of Southern California Edison Liu, The Jackson Laboratory Mary Majumder, Baylor College of Medicine Robert M. Nerem, Georgia Institute of Technology Mahendra Rao, National Institutes of Health David Resnick, Nixon Peabody Janet Rossant, University of Toronto vii

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viii REVIEWERS William A. Sahlman, Harvard Business School Bernard Seigel, Genetics Policy Institute Nancy S. Wexler, Columbia University Although the reviewers listed above provided many constructive com- ments and suggestions, they were not asked to endorse the report’s conclu- sions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Ellen Wright Clayton, Vanderbilt University, and Huda Akil, University of Michigan. Appointed by the National Research Council and the Institute of Medicine, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

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Preface T he energetic, imaginative, and committed coalition of California citizens and others responsible for the passage of Proposition 71 in the 2004 general election produced a social innovation. Although state initiatives in research and development are not new, this initiative, in both scope and design, broke new ground. In essence, the voters of Cali- fornia expressed a strong desire to move ahead in the field of regenerative medicine, including research using human embryonic stem cells, despite the ongoing near paralysis of the federal government in aspects of this arena. In the globalized world of biomedical research, they grasped the possibil- ity that by building on California’s already strong and deep biomedical research and biotechnology community and by structuring a distinctive model of finance, they could not only dramatically advance the field of regenerative medicine, but also establish California as one of the worldwide hubs in this promising area of biomedical research and development. At the time, this was also a courageous initiative given that certain aspects of regenerative medicine, especially work using embryonic stem cells derived from human embryos, were highly controversial in ethical terms. It is worth remembering that in 2004, there had been little demonstration of the poten- tial for reprogramming somatic cells to bring them to a pluripotent state. The California Institute for Regenerative Medicine (CIRM) was the organization charged with responsibility for thoughtfully expending the $3 billion set aside by voters through the passage of Proposition 71 to advance critical aspects of the field of regenerative medicine in California. Indeed, one of the Institute’s principal aims was to help create in California an international hub of research and development in regenerative medicine. It ix

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x PREFACE is the committee’s judgment that overall, CIRM has done a very good job of initially establishing and then updating the strategic plans that have set priorities for and guided its programs, and of taking advantage of its guar- anteed flow of $300 million per year for 10 years to establish a sustainable position in regenerative medicine for California. The challenge of moving its research programs closer to the clinic and California’s large biotechnol- ogy sector is certainly on CIRM’s agenda, but substantial achievements in this arena remain to be made. Despite its demonstrable achievements to date, as well as the largely positive independent reports covering various aspects of its operations, no one would claim that CIRM is a perfect organization or that it should adhere slavishly to its initial form of organization, set of regulations, or pat- tern of priorities. The field of regenerative medicine has advanced rapidly since November 2004, and CIRM itself has seen the need to alter its activi- ties and approaches in some areas. The committee believes the same should be true of its governance structure, some of its administrative practices, and its use of external perspectives on strategic scientific priorities and on the evaluation of other key policies, such as intellectual property, to ensure that they continue to encourage the development and deployment of new treatments. Experience has shown that Proposition 71 can, in partnership with the California Legislature and the governor, be amended in a manner that would optimize CIRM’s functionality and best serve the interests of the citizens of California. In this report, the committee has endeavored to evaluate various aspects of CIRM’s programs and experiences with the aim of acknowledging both its successes and remaining challenges. The committee also has considered the lessons of CIRM’s experience for other states, or even the federal gov- ernment, that might wish to use CIRM’s experience to inform some of their initiatives. Finally, we wish to thank our colleagues on the committee for their tireless devotion to this task. We also wish to express our appreciation to CIRM for its openness and responsiveness to the committee’s many requests for information during the course of this study. Harold T. Shapiro, Chair Terry Magnuson, Vice Chair Committee on a Review of the California Institute for Regenerative Medicine

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Acknowledgments S everal individuals and organizations made important contributions to the study committee’s process and to this report. The committee wishes to thank these individuals, but recognizes that attempts to identify all and acknowledge their contributions would require more space than is available in this brief section. To begin, the committee would like to thank the sponsor of this study. Funds for the committee’s work were provided by the California Institute for Regenerative Medicine (CIRM). The committee thanks Lynn Harwell, who served as project officer, and CIRM staff for their assistance during the study process. The committee gratefully acknowledges the contributions of the many individuals who assisted in the conduct of this study. The perspectives of many individuals and organizations were valuable in understanding CIRM and its work. The committee thanks those who provided important oral tes- timony at its open workshops. Appendix A lists these individuals and their affiliations. As part of its review, the committee also visited three sites that receive CIRM funding to gather information about the role of that support in their work. In addition, many individuals with knowledge of CIRM, as well as analogous programs in other states, participated in interviews with committee members (see Appendix A). The committee also received writ- ten testimony through several questionnaires targeting various stakeholder groups. The committee greatly appreciates the time, effort, and information provided by all of these knowledgeable and dedicated individuals. xi

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Contents ACRONYMS xv SUMMARY 1 1 INTRODUCTION AND CONTEXT 17 Statement of Task and Study Approach, 19 Character and Potential of Stem Cell Research, 21 The Stem Cell Controversy, 22 Organization of This Report, 25 References, 27 2 CIRM’S INITIAL PROCESSES AND FUNDING MODEL 29 CIRM’s Origins, 29 CIRM’s Funding and Economic Impact, 33 CIRM in the Context of Other State-Based Science and Technology Initiatives, 39 Conclusions and Recommendation, 45 References, 49 3 CIRM’S GOVERNANCE STRUCTURE 51 Organization of CIRM’s Governance Structure, 52 Governance Structure of Programs Comparable to CIRM, 54 Prior Assessments of CIRM’S Governance Structure, 55 Conclusions and Recommendations, 58 References, 71 xiii

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xiv CONTENTS 4 NATURE, SCOPE, AND ACCOMPLISHMENTS OF THE CIRM SCIENTIFIC PROGRAM 75 Strategic Planning, 76 Grant Review and Funding Process, 83 Bioethics, 87 Industry Engagement, 89 Conclusions and Recommendations, 90 References, 102 5 CIRM’S INTELLECTUAL PROPERTY POLICIES 105 Description of CIRM’s Intellectual Property Policies, 106 The Legal Framework and Reach of CIRM’s Intellectual Property Policies, 109 Revenue Sharing, 111 Access Plans, 114 March-in Rights, 117 Dissemination of Biomedical Material Within California, 119 Conclusions and Recommendations, 121 References, 123 GLOSSARY 127 APPENDIXES A Data Sources and Methods 131 B Summary of Questionnaires 145 C Proposition 71 159 D Senate Bill 1064 177 E Committee Biographies 195

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Acronyms CCR5 C-C chemokine receptor type 5 CEO chief executive officer CFO chief financial officer CIRM California Institute for Regenerative Medicine CPRIT Cancer Prevention Research Institute of Texas CRADA cooperative research and development agreement CTRC clinical translational research center CTSA Clinical and Translational Science Award EAP External Advisory Panel FDA Food and Drug Administration FTE full-time equivalent GSP gross state domestic product GWG Grants Working Group hES human embryonic stem (cell) HHS Department of Health and Human Services ICOC Independent Citizens Oversight Committee IND Investigational New Drug IOM Institute of Medicine iPS induced pluripotent stem (cell) IRB institutional review board xv

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xvi ACRONYMS ISSCR International Society for Stem Cell Research MSCRF Maryland Stem Cell Research Fund NACD National Association of Corporate Directors NAS National Academy of Sciences NCSL National Conference of State Legislatures NGA National Governors Association NIH National Institutes of Health NRC National Research Council NYSTEM New York State Stem Cell Science Research Fund OTA Office of Technology Assessment R&D research and development RFA request for applications RNAi ribonucleic acid interference SAB Scientific Advisory Board SVP senior vice president SWG Standards Working Group TGR The Guttmacher Report UCLA University of California, Los Angeles UCSD University of California, San Diego UCSF University of California, San Francisco