The Blasto-Sisyphean Stem Cell Exercise

Joel Pett, Pulitzer Prize-winning editorial cartoonist of the Lexington Herald-Leader, wrote a short piece on Sunday in the Los Angeles Times introducing four editorial cartons on stem cells, including one involving California.

Pett said, "Cartoonists tend to regard opposition to stem cell research as some blasto-Sisyphean exercise in futility, but Gary Varvel of the Indianapolis Star takes a more ethereal view. And both Signe Wilkinson and Nick Anderson remind us that California plays a leading role in the debate because of Alzheimer's icon Ronald Reagan and the state's recently passed stem cell research initiative."

Iraq, angels and slot machines all played a role in the cartoons. Here is the link to Pett's piece. Click on the names of the cartoonists to see the full display of the cartoon.

Stem Cell Dress of The Day: Thick Skin

Sometimes things get personal in the stem cell business. Just ask stem cell chairman Robert Klein and California State Sen. Deborah Ortiz, who have been at loggerheads concerning California's stem cell agency.

Motives are maligned and heated words are bandied about, if not by the players by the observers and advocates.

Now comes a comment from Don C. Reed, a well-known patient advocate on stem cell issues. He wrote a letter printed in The Sacramento Bee Sunday that involved a statement that he made that he believes was misconstrued. But indirectly he leads us to what may be more important points. Civility and mutual respect are important elements in the public debate about stem cell issues. That does not mean the dialogue should be less than vigorous or less than forthright. Participants have a responsibility to press their points aggressively.

Stem cell matters also can be emotional, a fact that cannot be avoided, but an irritation for some, especially those from cloistered environments(that includes business). So thick skins are the order of the day.

Finally Reed reflects a little on the history of the stem cell movement, saying, "We would not be here without the pioneering efforts of Senator Deborah Ortiz. Her legislation made California the first stem-cell-friendly state in the nation. In my heart, I will always regard her as the mother of stem cell legislation."

No doubt he would also have much the same sentiments about Robert Klein -- aside from the motherhood part.

The Bee: No Compromise on Ballot Measure

The Sacramento Bee on Sunday said in an editorial that Sen. Deborah Ortiz is giving up too much with changes in her proposed ballot measure to tighten oversight of the California stem cell agency.

The Democratic lawmaker from Sacramento has said she will modify her conflict of interest provisions regarding, in The Bee's terms, the "out-of-state scientists who will hold huge sway in how multimillion-dollar grants are dispersed."

"This peer review group, already appointed, includes distinguished academics from Harvard and other top-flight institutions. But even distinguished academics may have conflicts. Do they hold consulting jobs with biomedical firms who might seek grants? What are their stock holdings?" The Bee editorial said.

"We don't know. Neither does the public. Under a policy (stem cell chairman Robert) Klein has promoted, grant reviewers are only required to disclose potential conflicts to the institute's internal staff. Klein says these employees will aggressively police any conflicts. This is the same short-staffed group that hasn't set up an organization chart, hasn't devised a budget and has trouble responding to records requests.

"The proper policy - required of all appointed public officials in California - is for grant reviewers to fill out a Form 700 disclosure, listing their investments, income, gifts and property. Only then will the public feel comfortable that grant reviewers are making decisions free of any financial entanglements."

Klein: Haste Poses Peril to Agency

California stem cell chairman Robert Klein remains unhappy with the proposed ballot measure on his agency, arguing that it is moving with unwarranted haste through the legislature.

In a statement on CIRM's web site, he declared, "There does not appear to be any compelling reason that this constitutional amendment should be rushed through the legislature, without full and adequate notice so that the public, patient groups, medical groups, and the Institute can participate fully. Jamming it through the Legislature by June 30 for a special election in November unnecessarily creates huge risks that unworkable language and provisions will make it impossible to carry out the mission of the Institute."

He also said, "Major portions of the language in SCA13 dealing with intellectual property would predictably create major legal problems and obstacles for the Institute in the development of therapies. It is vital that this constitutional amendment does not create major opportunities for litigation by the opposition to Prop. 71 that would paralyze the Institute."

Klein complained that the agency has not been fully heard because of legislative haste. "The scheduling of the hearings to date has not permitted the Institute to participate with the Senate in the development of solutions that would meet the common goals of the Institute and the Senate," he said.

The undue haste argument seems to echo that of cities in California seeking the headquarters location for CIRM. They too said a fast-track process impaired their abilities to do the best for the people of California, an argument rejected by Klein and the agency.

As for being unable to be heard by the legislature, Ortiz' concerns were well known last year, shortly after last fall's election. She introduced SCA13 more than two months ago, the same week Klein refused to appear before a special joint Assembly-Senate committee hearing on the agency (see "Stiffing Lawmakers" March 10 and "Roiling Undercurrents" March 16 on this blog).

SCA13 is expected to go through three legislative hearings in Assembly, assuming the likelihood of Senate passage. That will allow ample time for more input from CIRM and other parties.

Here are links to stories this morning on the proposal: Carl Hall, San Francisco Chronicle; Terri Somers, San Diego Union Tribune; Sandy Kleffman, Contra Costa Times. The Los Angeles Times and The Sacramento Bee did not appear to have stories this morning.

Not For Everybody: Details of CIRM's Analysis of SCA13

The California stem cell agency has prepared a detailed and strong critique of the proposed ballot measure to tighten oversight of its activities.

The eight-page memo, however, was not generally made available to the public and only circulated to the handful of persons at Monday's meeting of the Oversight Committee. It is not available on agency's web site as of this writing despite the fact that legislation was a major topic for the stem cell panel.

While the analysis treads some familiar ground for those following the issue closely, it is the first full-blown public explanation of CIRM's position that we have seen. Particularly interesting are areas that deal with compensation to the state for products developed as a result of state-financed research.

The analysis says, "While it is reasonable – and required in Prop. 71 -- to ask that an intellectual property agreement is part of any Institute grant, it is naïve to believe that a level can be set for those revenue streams and may actually decrease the amount the state would get in the long run."

The document also deals in some detail with the peer review issue – whether it should be public and to what degree.

Arguing for private sessions, citing fears that scientists would be worried about damage to their reputations, the document says, "The public and the press cannot be expected to understand the differences between extreme criticism on one proposal and the extraordinary ability of the scientist or physician for break-through research in numerous other scientific specialty areas."

That is an interesting argument to make by an agency that says that the same, understanding-impaired public has spoken so wisely on Prop. 71 that no further changes should be made in it.

Since the memo was written, the proposed ballot measure in question, SCA13 by Sen. Deborah Ortiz, D-Sacramento, has been amended to deal with some of the objections raised in the analysis.

We learned of the document on Tuesday through a very brief mention in one of the news stories about Monday's Oversight Committee meeting. At that point, we asked the CIRM public information office for a copy. The response was that they were not aware of the analysis. We followed up with additional inquiries that were turned aside. On Thursday afternoon, CIRM supplied the document after we indicated we had it from another source. The explanation was that there had been a misunderstanding.

Regardless, it would seem to be in CIRM's best interests to make its own, rather effective analysis of legislation available to the public on its web site.

The full text of the memo follows in the item below.

Text of CIRM Analysis of SCA13

SCA 13 (Ortiz/Runner) Analysis
As of May 20, 2005
Summary: SCA 13 is a proposed California Constitutional amendment, which would change the California Stem Cell Research & Cures Act (Proposition 71) in three key areas: (1) open meetings; (3) financial issues related to intellectual property like return on investment and revenue sharing, and (1) conflict of interest for Independent Citizens’ Oversight Committee (ICOC) members, California Institute for Regenerative Medicine (CIRM) employees, and Working Group members.
Process to qualify for ballot: SCA 13 requires a 2/3 vote in both the state Senate and Assembly to appear on the next state ballot that occurs at least 131 days after passage by the Legislature. If the Governor calls a special election for November (the likely date would be November 8), the Legislature would need approval by June 30, unless a bill signed by the Governor extends the qualification date.
Part 1: Open Meetings
Current law on open meetings as provided in Proposition 71:
• Applies the Bagley Keene Open Meeting Act to meetings of the ICOC, with exceptions, and requires the ICOC to award all grants, loans, and contracts in public meetings, as well as all governance, scientific, medical, and regulatory standards. Since its first regular business meeting on January 6th, 29 public meetings of the ICOC and committees have been held.
• Allows the ICOC to conduct closed sessions as permitted by the Bagley Keene Act, as well as to consider matters involving information relating to patients or medical subjects, disclosure of which would compromise personal privacy; matters involving confidential intellectual property or work products of various kinds; matters involving pre-publication, confidential scientific research or data; and matters involving personnel matters.
• Provides that the California Public Records Act applies to all records of the ICOC, except as otherwise provided in the Act, with exemptions for records pertaining to patients or medical subjects, disclosure of which would compromise personal privacy; matters involving confidential intellectual property or work products of various kinds; matters involving pre-publication, confidential scientific research or data; and matters involving personnel matters.
• Provides that ICOC advisory working groups are not subject to open meeting laws, but provides that records the working groups submit as part of their recommendations to the ICOC shall be subject to the Public Records Act. This allows for confidential peer review of grant proposals.
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Open Meetings – SCA 13 amends the State Constitution to require that records and meetings of the Working Groups be governed by open meeting and public record laws with certain exceptions to protect intellectual property and confidential or proprietary information.
SCA 13 proposes:
That Section 8 is added to Article XXXV thereof, to read:
SEC. 8.
b) (1) Except as provided in paragraph (2), meetings and records of the institute, the ICOC, or any body established to govern the institute, and any working or advisory group, are subject to California open meeting and public record laws that are applicable to state agencies.
(2) Notwithstanding paragraph (1), the ICOC, any body established to govern the institute, and any working group or advisory group, may conduct a closed session for the purpose of considering or discussing matters involving intellectual property or proprietary information and matters involving prepublication confidential scientific information associated with individual research proposals submitted for funding.
Concerns:
1. No recognition of necessity for confidential peer review in proposal. While elements of peer review are noted in the exceptions, clear language to protect the confidentiality of the entire grant evaluation process needs to be recognized. The rigor of the scientific review process will be compromised significantly if the Grants and Facilities Working Groups are prevented from reviewing proposals in private meetings. It is the standard and uniform practice of public (e.g., NIH and UC Special Research Program) and private funding agencies (e.g., American Cancer Society, American Heart Association, Juvenile Diabetes Research Foundation, National MS Society), and widely accepted in the scientific community, to conduct scientific peer review of grant applications in private. Requiring such meetings to be conducted in public would compromise and discourage the critical discourse and analysis necessary to ensure rigorous scientific review. This will also discourage applicants from sharing with the Working Group details of proposed projects that might include proprietary or unpublished results. Such details can make or break a grant proposal. For example, in analyzing any grant, part of the process is looking at scientific research history and academic reputation of the scientist or physician. Peer reviewers look at the potential grantee’s record – whether the scientist or physician achieved what he or she claimed to achieve in previous projects. They will also critically review whether the scientist or physician has the specific technical/scientific knowledge and research staff to accomplish the specific grant proposal. While the scientist or physician may be brilliant in a specific technical sub-area of the science, they may be subject to devastating criticism as to adequacy of their knowledge of the specific scientific specialties required for the grant application under consideration. For scientists or physicians who dedicate their lives to treating chronic diseases, being criticized publicly could jeopardize
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his or her reputation and credibility, permanently damaging their career and ability to carry out future life-saving research in medical therapies. The public and the press cannot be expected to understand the differences between extreme criticism on one proposal and the extraordinary ability of the scientist or physician for break-through research in numerous other scientific specialty areas. If a scientist or physician is criticized as having major deficiencies in a proposed experiment, generally it is believed that they public will conclude that the scientist is incompetent; the public will not research the person’s entire career and realize that 95 percent of their work has been an incredible contribution to the advancement of therapies for chronic disease. This is why peer review has to be conducted confidentially. The National Institute of Health, the University of California System-statewide, and all major patient funded foundations for medical research, just to name a few organizations, all consistently maintain a confidential peer review process for these reasons.
2. Negatively impact Working Group membership. We will not be able to get candid and critical review to invest the public’s money in the best research. We will not get the best proposal submitted, and we will not get the best review in a public environment. We believe a public meeting requirement for scientific peer review meetings of Working Groups will discourage potential reviewers from joining the Working Groups.
Part 2: Intellectual Property
Current law on intellectual property as provided in Proposition 71:
• Requires the ICOC to establish standards that require all Proposition 71 grants and loans to be subject to intellectual property agreements that balance the opportunity of the state to benefit from the licenses, patents, and royalties that result from basic research, therapy development, and clinical trials with the need to ensure that essential medical research is not unreasonably hindered by the intellectual property agreements.
Intellectual Property and treatment access – SCA 13 amends the California Constitution to require that contracts, awards, grants, or loans entered into by any state entity that provides state funding for research funded by the Institute comply with specified criteria, including that they do not result in a gift of public funds; that any clinical treatments, products, or services resulting from funded research are made available at affordable costs to low-income residents; that the State recoup legal and administrative costs associated with patenting and licensing agreements; and that the State receives a share of royalties or revenues commensurate with its role in the development of the clinical treatments, products, or services.
SCA 13 proposes:
First – That Section 6 of Article XXXV thereof is amended to read, to read:
SEC. 6. Except as otherwise provided in this article, notwithstanding any other provision of this Constitution or
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any law, the institute, which is established in state government, may utilize state issued tax-exempt and taxable bonds to fund its operations, medical and scientific research, including therapy development through clinical trials, and facilities.
Concerns:
3. Likely legal challenges – The phrase “except as otherwise provided” in Section 6 opens an avenue for legal challenges based upon procedural arguments that will disrupt the financing of meritorious research. SCA 13 is being advanced with ambiguous language and no serious implementation plan. Proposition 71 was carefully written with the involvement of three separate law firms and based upon case law research to avoid the constant litigation that would be likely should SCA 13 become law as written. The legal battles could paralyze the Institute’s mission for years to come. As the Senate Elections consultant wrote in his analysis: “[SCA 13] is somewhat unorthodox in that instead of amending the statutory language dealing with the open meeting, conflict-of-interest, and other requirements that Proposition 71 added to the codes, it asks voters to make those changes by amending the Constitution. While amending the Constitution isn’t uncommon, the author and committee may wish to consider whether it would be more appropriate to, instead of asking the voters to place into the Constitution language aimed at providing more specificity to a statutory initiative, ask the voters to amend the initiative itself.” He continues: “While the language of Proposition 71 precludes the Legislature from amending the measure until 2008, there is no restriction on putting another measure on the ballot that would ask the voters if they want to amend Proposition 71.”
SCA 13 proposes:
That Section 9 is added to Article XXXV thereof, to read:
SEC. 9.
(a) Every contract, award, grant, loan, or other arrangement entered into by the institute or the Independent Citizen's Oversight Committee that provides state funding or other resources, shall ensure all of the following:
(1) Notwithstanding Section 6, the contract, award, grant, loan, or other arrangement does not result in a gift of public funds within the meaning of Section 6 of Article XVI.
(2) All clinical treatments, products, or services resulting from the biomedical research are made available at the costs of producing them to California residents who are eligible to receive assistance through state and county health care and preventive health programs including, but not limited to, the Medi-Cal and Healthy Families programs.
Concerns:
4. Discourages private sector involvement -- While well-intentioned, these provisions could have a host of unfortunate and unintended consequences, including discouraging industry from involvement with the Institute. Private industry is a critical partner in developing scientific discoveries into safe and
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effective drugs and treatments that benefit the public. If an affordable drug-pricing requirement or a revenue sharing requirement were to discourage industry from participating in technology transfer, it would be to the detriment of the public health and well being.
5. Ignores legislative processes – As previously noted, the ICOC is cooperating with the California Council on Science and Technology to study how the state should treat intellectual property made under state contracts, grants, and agreements, as requested by ACR 252 (Mullin) in the 2003-04 session. This study group is currently meeting and anticipates having a report to the Legislature by July, 2005. SCA 13 ignores the legislative process and preempts the work of experts in this field.
6. Gifting prohibition – The prohibition on gifting may affect the Institute’s ability to provide training grants.
SCA 13 proposes:
(3) The terms of any loan, lease, or rental arrangement are consistent with, or below, market rates for rent or interest.
(4) The State recoups the full amount of its legal and administrative costs incurred with respect to patenting and licensing activities related to the biomedical research.
Concerns:
7. No State patenting costs – Section 9(a)(4) provides that the State will recoup legal and administrative costs related to patents and licensing. These costs are borne by the grantee institution, not the State. This clause is superfluous, as the State will not incur these administrative and legal costs.
SCA 13 proposes:
(5) The State is provided a share of the royalties or revenues, derived from the development of clinical treatments, products, or services resulting from the research, that is sufficient to repay its expenses incurred in developing the clinical treatments, products, or services.
Concerns:
8. Lack of clarity in language -- The provision stating "The State is provided a share or the royalties or revenues, derived from the development or treatment of clinical treatments, products, or services resulting from the research, that is sufficient to repay its expenses incurred in developing the clinical treatments, products or services" is problematic. The word "develop" has a specific meaning in the biotech and pharma industry and the State will not likely be engaging in these activities because they are both expensive and risky, which raises the question of what this provision even means and thus how it would be implemented. Furthermore, calculating intellectual property formulas setting forth mechanisms for shares of revenue does not belong in the Constitution. As the Senate Elections Committee consultant wrote in his analysis: “While ensuring the taxpayers are
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fully reimbursed for their costs, this measure doesn’t impose any limits on what those costs can be. The author and committee may wish to consider whether such a limit is appropriate or feasible.”
SCA 13 proposes:
(6) In addition to royalties or licensing revenues described in paragraph (5), royalties or licensing revenues are transmitted to the State in an amount sufficient to repay any costs of issuing bonds incurred by the State in funding the biomedical research.
Concerns:
9. Revenue levels -- It is not clear how agreements would be structured so that the State received royalties sufficient to repay costs associated with issuing the bonds. While it is reasonable – and required in Proposition 71 -- to ask that an intellectual property agreement is part of any Institute grant, it is naïve to believe that a level can be set for those revenue streams and may actually decrease the amount the state would get in the long run. A typical structure for sharing revenue streams is to require a certain percentage.
10. Effect on tax exempt status on bonds – If the State has a right to share in royalties, even if it is only in an amount that recovers the State’s costs, the transfers to the research entities will not be treated as grants, resulting in tax-exempt questions.
Part 3: Conflict of Interest
Current law on conflict as interest as provided in Proposition 71:
• Applies the Political Reform Act to the Institute staff and members of the ICOC, with certain modifications. This means that all board members and staff must file a statement of economic interests (Form 700).
• Allows a member of the ICOC to participate in a decision to approve or award a grant, loan, or contract to a non-profit entity in the same field as his or her employer.
• Allows an ICOC member to participate in awarding a grant, loan, or contract for purposes of research involving a disease from which the member or an immediate family member suffers from or which the member has an interest in as a representative of a disease advocacy organization.
• Provides that service as a member of the ICOC shall not be deemed incompatible with service as a faculty member or administrator of the University of California, representative or employee of a disease advocacy organization, a nonprofit academic research institution, or a life science commercial entity.
• Provides that ICOC working group members are not subject to the Political Reform Act and instead, subjects them to conflict of interest rules to be adopted by the ICOC, which shall be based on standards applicable to members of scientific review committees of the National Institutes of Health (NIH). The ICOC has adopted strong conflict of interest policies for the ICOC, employees, and
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working group members. All policies are accessible to the public on www.cirm.ca.gov.
Conflict of Interest – SCA 13 requires two levels of compliance with conflict of interest – financial disclosure and divestment or blind trust depending upon role with the work of the Institute. The chair and vice chair and any appointed member of the Independent Citizen's Oversight Committee (ICOC), the Institute president, and any member of any working or advisory group appointed to assist the Institute or its governing body must disclose his or her income, investments, and interests in real property. The chair and vice chair and ICOC members, the Institute president must divest of or place into a blind trust, any financial or real property interest held in any organization that applies for funding from, or contracts with, the Institute or in any organization with a substantial interest in stem cell therapy. An organization with a substantial interest in stem cell therapy is defined as one that has more than five percent of the organization’s current annual research budget is allocated to stem cell therapy, based upon publicly available information.
SCA 13 proposes:
Section 8 is added to Article XXXV thereof, to read:
SEC. 8.
(a) The chair and vice chair and any appointed member of the Independent Citizen's Oversight Committee (ICOC), the president and each employee of the institute, and any member of any working or advisory group appointed to assist the institute or its governing body shall disclose his or her income, investments, and interests in real property in the manner set forth in Chapter 7 (commencing with Section 87100) of Title 9 of the Government Code, or its successor. The chair and vice chair and any appointed member of the ICOC, the president of the institute or its governing body shall divest themselves of or place into a blind trust, any financial or real property interest held by that person in any organization that applies for funding from, or contracts with, the institute or in any organization with a substantial interest in stem cell therapy. An organization with a substantial interest in stem cell therapy is one for which, based upon publicly available information, more than five percent of the organization’s current annual research budget is allocated to stem cell therapy.
Concerns:
11. This amendment would subject members of the Working Groups to the Political Reform Act’s conflict of interest provisions, including disclosure of investments, income, gifts, travel payments and real property through the filing of Form 700. This information would be subject to public disclosure. The divestment provision puts a greater onus on ICOC members and the president than is imposed on any other state official. CIRM Working Groups are advisory, not decision-making bodies and Working Group members are not employees of CIRM. COI policies for Working Group members should recognize this important but limited role.
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This provision would negatively impact the Institute’s ability to recruit and retain leading scientists and clinicians for the ICOC and the Working Groups. We are concerned that anyone who is a member of an ad hoc advisory group would need to disclosure without regards to the nature of their work or focus area. This may impede the Institute from taking advantage of volunteer expertise.

SCA13 Wins Approval

A proposed ballot measure to tighten oversight of the California stem cell agency today advanced to the Senate floor, where it is expected to be debated next week.

The measure by Sen. Deborah Ortiz, D-Sacramento, was unanimously approved by the Senate Appropriations Committee.

Ortiz said, “This measure will ensure the state can continue to attract the best and brightest researchers and scientists while protecting the financial interests of the state as well as our goal to develop cures for debilitating and deadly diseases that affect more than 1 million Americans. We will continue working with members of the stem cell governing board to ensure the public’s confidence in and long-term support of this $3 billion publicly-funded research program is maintained.”

We are seeking comment from the stem cell agency.

Klein, Ortiz Agree on SCA 13 Changes, But Differences Remain

Stem cell chairman Robert Klein and Sen. Deborah Ortiz have reached "conceptual agreement" on modifications to her legislation to tighten oversight on the California stem cell agency.

Differences remain on important points, however. The full significance of the agreement could not be determined. As this item is being written, the proposed constitutional amendment, SCA 13, is being heard by the Senate Appropriations Committee. We are also seeking comment from the stem cell agency.

Here is a rundown on changes, as provided by her office.

Oversight Committee members, chair and vice chair, and institute president would be required to disclose their economic interests in the manner set forth in the Political Reform Act. They would be required to divest or place in blind trust any financial or real property interest in any organization that applies for funding or that has substantial interests in stem cell therapy, defined as greater than 5 percent of its research budget.

Working group members would be required to disclose their economic interests in manner set forth in political reform act with disclosure to the Oversight Committee. Disclosure would be to the committee and not to the general public.

The committee would provide the state auditor with the disclosure statements. The state auditor would be required to annually review disclosure statements as well as decisions or recommendations of each working group member and report findings to the legislature regarding whether working group members have complied with requirements.

SCA 13 would adopt the NIH requirement that members must recuse themselves from deliberation on any proposal if they or a close relative or professional associate has a financial interest in the proposal, including a direct benefit of any type deriving from the proposal itself, or a financial benefit of any type from an applicant institution of over $5,000 per year, including honoraria, fees, stock, or other benefits.
Meetings of the Oversight Committee and the agency would be subject to open meeting laws.

Working groups would be allowed to conduct closed sessions to conduct peer review and to consider matters involving intellectual property, proprietary information, and prepublication scientific information.
Working groups would be required to produce a written summary of their reasons for funding or not funding any project as well as how each project recommended for funding will benefit California residents and to conduct an open public meeting to solicit public comments before submitting the recommendation to the Oversight Committee.

Unchanged would be provisions requiring that the grants and contracts ensure that the state receives a return on its investment in the form of access to low cost treatments, recoupment of legal and administrative costs, and a share of the royalties. Ortiz is continuing to look at language to address concerns that these provisions may impede the issuance of bonds, "a relatively technical fix," and that they may jeopardize
the tax exempt status of any bonds issued, according to her office.

Both Klein and Ortiz agree that the "state should receive some type of return on its investment in research and part of that return should be ensuring that stem cell therapies and treatments resulting from research funded by the state are affordable and accessible."

But they disagree, said her office, about the mechanism. Ortiz "wants to adopt the model used by the International AIDS Vaccine Initiative, which requires entities receiving funding to commit to make vaccines available at reasonable prices and in sufficient supplies. Mr. Klein believes the state could direct a portion of the royalty payments negotiated by the ICOC into programs or initiatives to promote access to low cost therapies. They agreed to conduct further research and seek legal opinions about the viability of each approach."

We hope to bring more details and information on this issue later in the day.

SCA 13: A Yeah and a Compromise

The big dog of California newspapers, the Los Angeles Times, has endorsed legislation that would tighten oversight of the California stem cell agency. Meanwhile, the politically influential Sacramento Bee has offered up a possible compromise on the measure, which is vehemently opposed by the agency.

Lives will be lost is the position of CIRM if the proposal by Sen. Deborah Ortiz, D-Sacramento, is passed. Ortiz supported creation of the agency and supports stem cell research. But she believes that the agency should be held to standards that generally apply to other state bureaucracies.

The Times, the largest circulation (900,000) newspaper in California, said that "leaders of the (stem cell agency) are engaging in inexcusable rhetoric. If enacted, said the institute's acting chief, the (Ortiz) amendment would 'cripple our efforts.' A board member said it would lead to 'extra suffering and death.'"

The Times continued, "It's understandable that companies and scientists would be unwilling in an open forum to discuss their or others' work related to possible contracts or disclose their patent applications. But SCA 13 makes broad allowances for such discussions to be private."
"From a purely pragmatic standpoint," the newspaper said, "(stem cell chairman Robert) Klein should welcome the constitutional amendment because it could insulate the institute from lawsuits alleging that the lack of public oversight had rendered the stem cell bonds unconstitutional."After all, this isn't Klein's or his board's $3 billion — it's the public's. And public oversight is one of the best ways to guard against public money going astray."

(We should note that the editor of the Times editorial page, Michael Kinsley, has Parkinson's, which many believe could be treated with future cures from stem cell research. It is unknown whether the Times' position on SCA 13 reflects his own.)

The Sacramento Bee, with 300,000 circulation in the Capitol, said:
"California's Legislature and the state's $3 billion stem cell research institute are engaged in a dangerous game of political chicken. No one will win if both keep careening toward the ballot box."

The compromise suggestion The Bee proferred dealt with whether the working group meetings of the agency should be public and whether assurances should be enacted to guarantee that stem cell cures would be available to low income persons.

The Bee said that "there is no reason these (working group) meetings need to be completely closed. Peer reviewers could easily hold open discussions on whether proposed research projects meet the institute's goals and criteria. Then they could move into private sessions to discuss the reputations and qualifications of applicants, consider patent issues and conduct the final scoring. This type of hybrid would help inform taxpayers (and the oversight board) about the projects they are financing, without discouraging candid discussions."

It also said, "A current draft of (Ortiz') measure requires that therapies be made available at cost 'to California residents who are eligible to receive assistance through state and county health care and preventive health programs.' Ortiz's intent is admirable, but this provision is premature. Scientists are still years away from full and final testing of embryonic stem cell therapies, and the institute's oversight board is many months away from discussing their eventual licensing. Lawmakers could easily wait two years before delving into this issue. At that point, they will have legal standing under Proposition 71 to amend the law without a constitutional amendment."

Dodging the Two-Thirds Bullet

You might call it the stem cell work-around. It is a way to fast track a tough stem cell oversight proposal onto the November ballot.

The tactic would avoid Sen. Deborah Ortiz' nasty problem of securing a two-thirds vote in both houses of the California legislature for her proposed constitutional amendment on the California stem cell agency.

That is a difficult task under the best of circumstances. Two-thirds approval means that members of both parties have to vote for a proposal. The requirement has been one of the main reasons for the yearly budget gridlock in Sacramento. While Ortiz' measure (SCA13) has bipartisan support, it is unclear whether that is sufficient to deliver all the votes she needs. Her task is even trickier given the timetable for placing a measure on the ballot. Normally the proposal would have to clear both houses by the end of June.

Now comes a little noticed comment in one legislative analysis of SCA13 from the Elections, Reapportionment and Constitutional Amendments Committee, which approved the measure earlier.

The analysis suggested that "the author and committee may wish to consider whether it would be more appropriate to, instead of asking the voters to place into the Constitution language aimed at providing more specificity to a statutory initiative, ask the voters to amend the initiative itself."

That would require a simple majority vote in both houses, the analysis said. But it would also require the governor's signature while a constitutional amendment does not.

There is no indication whether Ortiz is considering making such a change in her legislation.

Ortiz has scheduled a news conference call for noon Thursday (May 26). SCA13 comes up in the Senate Appropriations Committee later that afternoon. Ortiz also met with Robert Klein Wednesday to exchange views about the proposal, which the stem cell Oversight Committee unanimously opposed on Monday.

For the record, the committee analysis listed only one other formal opponent to the proposal, Stanford University. Caltech, USC and the California Healthcare Institute have expressed "concerns." In support are Californians Aware, Calpirg and California Common Cause.

Stem Cell Agency Lambastes Ortiz

If the senator from Sacramento is trying to get the attention of the California stem cell agency, she did in big way on Monday.

"How dare she!" said one Oversight Committee member, Jeff Sheehy. "How dare she steal hope from the people of California."

His remarks came during discussion of the proposed constitutional amendment by Sen. Deborah Ortiz, D-Sacramento, that would tighten conflict of interest standards for the agency and ensure that the agency and its working groups would be subject to state open meeting and open record laws.

The Oversight Committee unanimously voted to oppose the proposal, SCA13, which requires a 2/3 vote of both houses of the Legislature and voter approval before it would become law. The committee moved its June meeting to Sacramento so it could lobby lawmakers against the proposal.

Also likely to be flooding lawmakers with their opposition are large national patient groups, some of which are represented on the Oversight Committee.

Interestingly, perhaps significantly, the opposition statement by the stem cell agency did not mention Ortiz' companion measure, SB18. Whether the agency is in support of that measure, neutral or opposed is not clear at this point. Also not clear is whether the absence of mention of SB18 is part of a bargaining ploy.

Both SCA13 and SB18, which have bipartisan support, are in the Senate Appropriations Committee and are scheduled for a hearing on Thursday. If they are approved by the committee, they then move to the Senate floor.

Ortiz has a meeting scheduled with stem cell chairman Robert Klein on Wednesday and other Oversight Committee members during the week.

The agency issued a statement following Monday's meeting that said "as currently drafted" Ortiz' constitutional amendment will" make it extremely difficult, if not impossible, for scientists to do their jobs, and it will delay critically needed medical therapies."

Klein said, "We cannot understand this rush to judgment to try and get SCA13 on this fall’s ballot.”

"We need to send a shot over the bow of the Legislature," Caltech President David Baltimore, a member of the Oversight Committee, was quoted as saying by reporter Rone Tempest of the Los Angeles Times.

Ortiz told reporter Steve Johnson of the San Jose Mercury News, "Rather than joining me and trying to find a way to put sound accountability measures into the law, they have simply attempted to create the fear that accountability is equal to opposition.''

"There is no sinister plot here," Ortiz told Terri Somers of the San Diego Union Tribune, adding that the measure would not delay any possible therapies or treatments. "This legislation does not prevent them from moving forward and issuing grants."

One critical element of opposition to SCA13 is the board's apparent belief that few scientists would be willing to present their research proposals during partially open working group sessions of the agency despite the lure of the $3 billion research grant pool. Committee members noted that the usual grant procedures elsewhere call for private sessions. However, Ortiz' measure would allow for private sessions involving intellectual property, proprietary information and matters involving prepublication confidential scientific information.

Here are links to other stories on the subject this morning: Carl Hall, San Francisco Chronicle; Sandy Kleffman, Contra Costa Times.

Correction

We had a bad link on the "Political Interference, Venture Capitalists" item May 23. Here is the correct link to the article in question.

"Can't Get The Money Out"

Reporter Megan Garvey of the Los Angeles Times has pulled together an overview of the California stem cell agency amidst the latest news from South Korea. "Stuck in Neutral" is headline.

She wrote, "With no relaxation of restrictions on the federal horizon, hurdles facing the state's funding efforts have taken on a new sense of urgency, said Bob Klein, chairman of the stem cell agency's board and author of Prop. 71, the ballot measure that created the agency.

"'It makes it terribly frustrating,' said Klein, a real estate lawyer whose son, Jordan, now a teenager, was diagnosed with insulin-dependent diabetes several years ago. 'It means all the tools we expected to be out there are on the table today. They're not possibilities. They're real, and we can't get money out.'"

Political Interference, Venture Capitalists and a Personal Plea

Three members of the Oversight Committee of the California stem agency have put together a compelling defense of the agency, pleading for rejection of efforts to tighten oversight of the institute.

The authors are Joan Samuelson, David Serrano Sewell and Jeff Sheehy. All are patient advocate representatives on the board and personally live with afflictions that might be helped by future therapies developed with stem cell research.

The article, which appeared in the San Francisco Chronicle last week, argues that the agency should be left to its own devices. Anything less could cost lives. Delays mean "someone who could have been benefited from new stem-cell based therapies -- perhaps one of us -- could die waiting."

"We beg, we plead: Let us get on with our work," they wrote, making an exceedingly personal argument that is difficult to oppose without appearing callous or worse.

Their article began, "A strange mix of religious ideologues, good-government activists and well-meaning Sacramento legislators have taken aim at the newly established California Institute for Regenerative Medicine, the stem-cell research center established by Prop. 71. Some want to kill it outright in the courts, some may impair its effectiveness by overburdening it with needless regulation and others could bring it to a screeching halt with legislation drafted in haste."

They went on, "Two lawmakers in Sacramento have proposed an amendment that would reopen Prop. 71, sending parts of it back to Californians for another vote. This action, supported by some ideological opponents of stem-cell research, is neither warranted nor sound policy, but creates a delay that means someone who could have been benefited from new stem-cell based therapies -- perhaps one of us -- could die waiting."

The three stem cell directors concluded, "Continue to scrutinize our every move, hold us to the highest standards, but allow us to move urgently toward the cures that are so tantalizingly close. Lives are at stake."

Regardless of the emotional appeal by the three, the agency cannot escape its heritage. It was created in the crucible of politics and electoral government. That was the method chosen by its sponsors, including Robert Klein, its chairman. The agency now must live with the facts of its life. It is a public agency, albeit an unusual one. That means it is subject to review, both formally and informally, by the people of California and their elected representatives. And if the agency does not meet with their approval, it is subject to change by the same methods that created it.

Put in another context, if venture capitalists, some of whom are deeply involved in the agency, had put up $3 billion to finance a biotech start-up, they would certainly expect to have something to say about how it conducts its business. Entrepreneuers who find themselves tied financially to VCs often don't like the subsequent VC meddling. But the VCs provide the money, and they want to call at least some of the tunes.

If the sponsors of Prop. 71 wanted to keep government out of the stem cell business, they shouldn't have asked for government money. It is much too late to stuff that cat back in the bag.

The Bee Roasts Robert Klein as "Rogue Operator"

In some past years, The Sacramento Bee's editorials were often a tad bland. "On one hand," they said, but "on the other...."

Sunday's piece on the stem cell agency was far from that. The editorial likened stem cell chairman Robert Klein to the crazed officer in the Vietnam War movie "Apocalypse Now" and described him as a "rogue operator" and "czar."

The rhetorical heat was generally over Klein's conduct over the last six months, but more specifically about legislation to tighten controls over the agency.

The Bee said Klein, "has gradually been consolidating power. In recent weeks, Klein has installed his cohorts as state employees, hired and fired consultants without consulting his fellow board members, and basked in the adulation of patient activists who see him as their savior."

The editorial continued: "At a Senate committee hearing on Tuesday, a lobbyist named Eugene Erbin showed up and proceeded to criticize aspects of (Sen. Deborah) Ortiz's bill, saying he was representing the institute.

"Erbin's lobbying raised eyebrows for two reasons.

"One, the institute's oversight board hasn't yet discussed hiring its own contract lobbyist, much less Erbin, who works for the Sacramento firm of Nielsen, Merksamer, Parrinello, Mueller and Naylor, which represents several biomedical firms. That hiring - at $50,000 for five months -makes the institute one of the few state agencies with its own private lobbyist.

"Moreover, the oversight board hasn't yet publicly discussed its position on Ortiz's bill. Klein claims the board is holding open deliberations on all key policy. His actions in this situation suggest otherwise."

We should note that this blog first reported hiring of the lobbyist and the nature of the firm's contract May 5 in "The $10,000-a-month Stem Cell Lobbyist."

Preciado Resigns from Stem Cell Agency

The Oversight Committee for the stem cell agency is losing its first member – Dr. Phyllis Preciado of Fresno.

She is resigning from the agency beginning in June to take an unspecified position in Oregon.

“My decision to accept a position in Oregon was based on the needs of my family, but that did not make it an easy one,” said Preciado in a statement released by the agency.

Stem cell chairman Robert Klein said she has "been a passionate voice on the ICOC for patient advocacy and the people of California’s Central Valley."

According to an article earlier this year in the Fresno Bee, she "worked 15 years as a registered nurse before attending medical school at the University of California at Irvine in her 30s. She still is paying off $100,000 in student loans and laughingly says: 'I think I'm the only one who is poor on the committee.'

"She was a faculty research fellow for UC San Francisco's Fresno Latino Center for Medical Education, but left the position (in January) and is pursuing other career opportunities."

The Fresno Bee also reported that she "designed, developed and started a community-based diabetes program at a Fresno clinic and produced a diabetes education video for Hispanic teenagers.

"She is the diabetes action plan co-chair for the California Medical Association Foundation Network of Ethnic Physicians Organization, and a member of the joint task force for the California Diabetes Prevention and Control Program-Diabetes Coalition of California."

Her position on the board is that of patient advocate for Type II diabetes. Lt. Gov. Cruz Bustamante will have 30 days to fill the position.

Stem Cell Snippets: Solace and Legislation

A 'TOUCHING" PICTURE: Check out this editorial cartoon in The Sacramento Bee by Rex Babin. It is likely there have been others but this is the first we have seen this year. It portrays Robert Klein and the agency in a reaching out position.

ENDORSING THE "ESSENCE:" We missed this editorial in the Los Angeles Times earlier, but with the paper's 900,000 circulation, we should call attention to it. It says, "Klein and his colleagues should incorporate the essence of Ortiz's public disclosure rules into their bylaws, whether or not the legislation reaches the governor's desk. He should also embrace the detailed set of stem cell research guidelines that the National Academy of Sciences just fast-tracked into print, six months ahead of schedule, in hope of influencing Klein's agency."

MAKING LEMONADE: Some of the also rans in the HQ race are finding solace. Reporter Clint Swett of The Sacramento Bee writes about how The Big Tomato is making lemonade out of its HQ lemons.

Stem Cell Ballot Measure Moves Ahead

Legislation to step up accountability and oversight of the California stem cell agency cleared its second hurdle today and now moves on to the Senate Appropriations Committee.

The proposed constitutional amendment (SCA13) by Sen. Deborah Ortiz, D-Sacramento, was approved 5-0 by the Elections, Reapportionment and Constitution Amendments Committee. It will be heard next Monday in Appropriations.

Ortiz is pushing hard to place the measure on the November ballot (see item below).

Push for Ballot Review of Stem Cell Agency

California's most influential legislator on stem cell issues is pushing hard to place on the November ballot her bipartisan measure to tighten oversight and accountability of the stem cell agency.

The proposed constitutional amendment by Sen. Deborah Ortiz, D-Sacramento, is scheduled to come before the Senate Election, Reapportionment and Constitutional Amendment Committee Wednesday(5-18).

Approval is not assured, but it is important for the proposal (SCA13) to clear the committee early because of deadlines for measures for the special election that the governor is expected to call for November.

Ortiz' measure, which requires 2/3 approval of both houses, would tighten conflict of interest standards for the agency and ensure that the agency and its working groups would be subject to state open meeting and open record laws.

An analysis of the bill by the committee staff said that it would go beyond CIRM's recently adopted conflict-of-interest standards. The measure would impose on the chair, vice chair and members of the ICOC (the Oversight Committee), the president of the institute, and members of Prop. 71 working groups standards identical to those of the NIH that have triggered the resignations of some NIH scientists who felt they were being penalized financially.

The legislation is also aimed at establishing "clearer and more protective standards for handling of patents and intellectual property resulting from research paid for with state funds," according to the analysis, which notes that Prop. 71 supporters have estimated that the state could receive more than $1 billion in royalties as the result of CIRM research. The measure additionally seeks to assure that lower income persons will have access to medical treatments that are developed as a result of CIRM-funded research.

No opposition is listed to Ortiz measure on the analysis, dated April 27. But it did note that the California Healthcare Institute had "concerns" about the "the timing of SCA 13 and certain provisions that will interfere with the CIRM's progress and pose obstacles to funding the best stem cell research. CHI states that working group meetings at which grant requests are reviewed and debated should be confidential; in addition, confidentiality is required to protect proprietary information contained in grant applications.

"CHI further states that applying NIH conflict of interest requirements to persons associated with the CIRM, as opposed to employed by the CIRM, is unnecessary.

"Regarding SCA 13's provisions dealing with intellectual property and licensing agreements, CHI states that the issue is being studied by the California Council on Science and Technology and the ICOC is consulting with the University of California and other research institutions on this complex issue and that requiring the state to recoup the full amount of administrative costs associated with patenting and licensing activities is premature."

In related action, the Ortiz measure (SB18) to require state audits of the agency and to protect egg donors was temporarily and routinely put aside by the Senate Appropriations Committee along with other spending measures. They will be taken up later after budget legislation is hashed over.

For more on Ortiz' proposals, see "Will California Vote Again on Stem Cell Research," April 15, on this blog.

Robert Klein, Rube Mayors and Arrogrance

Los Angeles Times business columnist Michael Hiltzik began his piece on the California stem cell agency by saying it was the "offspring of perhaps the most misleading initiative campaign of 2004.

That was just the warm-up. The agency has "behaved not like the state agency it is, but with the arrogance of a private corporation that happens to be playing with the taxpayers' cash," he wrote.

It dangled "a theme park project (the stem cell HQ) in front of a bunch of rube mayors." And the agency's reaction to lawsuits is "overwrought."

Hiltzik attributes much of the "mess" to Robert Klein, chairman of the agency.

"The agency's attitude reflects the personality of its chairman, the Bay Area real estate developer Robert Klein II, who supervised the drafting of Proposition 71 and spearheaded the electoral campaign. Klein often seems to assume that anyone who criticizes himself or his agency must be fanatically hostile to embryonic stem cell research, or worse.

"Here's how he characterized the lawsuits during a board meeting last month: 'It is very clear that the people filing the litigation do not respect the democratic process and the mandate of 7 million voters. It is important, if they won't respect the democratic process, that they at least respect the suffering of over half of all California families who have a member' who might benefit from stem cell research.

"He's talking about litigants who, following all legal niceties, presented a legitimate petition to the California Supreme Court. Evidently judicial review has no place in Klein's world: The actions of voters, even if they might be based on misinformation and contradict the state Constitution, trump the principle of checks and balances. Who's really disrespecting the democratic process here, Mr. Klein?"

Hiltzik said he intended to put this question directly to Klein, "but at the last minute he canceled our scheduled interview."

While this blog can't say it concurs with everything Hiltzik has to say, it was a mistake for Klein not to talk to him. The Los Angeles Times has more than 900,000 subscribers. Typically newspapers have about two readers or so for each subscriber, making a total readership of something like 1.8 million. Most do not read the business page but let's say about 35 percent do, which is probably low. That means roughly 500,000 business page readers, who are the demographic cream, did not hear Klein's rebuttal to Hiltzik.

The Worst of Beasts or The Best of Beasts?

Picture the California stem cell agency as an elephantine chimera. Then picture the blind men groping our elephant to come up with pronouncements about the nature of the beast.

That was a bit what it was like in two op-ed pieces in the San Francisco Chronicle. The persons making the pronouncements were State Treasurer Phil Angelides and Jesse Reynolds, program director for the Center for Genetics and Society. Both certainly have their eyes wide open but one could hardly tell they were talking about the same government bureaucracy.

To Reynolds, our elephant "best resembles a publicly funded, privately managed venture capital firm."

He said, "Prospecting for high-risk investments is appropriate in the private venture-capital model, but it is no way to lead a public agency. The institute would be giving out grants with one hand and asking for loans with the other. Too many likely "philanthropic sources" would have an interest in where the grants go, and could expect favors in return for a risky loan. The potential for conflict is just too great.

"Unfortunately, this is part of a pattern by the institute's leadership. Its excessive haste and reluctance to act like a public agency have led to decisions that are inappropriate and put the institute at risk. The "independent citizens" board is neither -- it is dominated by individuals who have a stake in the research. Many have major investments in the biotechnology industry. The top leaders of the California Institute for Regenerative Medicine continue to resist applying California's open-meetings laws, the Public Records Act and effective conflict-of-interest provisions to its powerful advisory groups, from which they were exempted by Prop. 71."

To Angelides, the agency is the source of funding for "groundbreaking stem-cell research, which scientists believe holds the key to curing and treating debilitating and life-threatening diseases and injuries that affect nearly every California family."

The folks who have sued the agency, he said, are "(hurting)the millions of people in our state who every day live with AIDS, Parkinson's, diabetes, Alzheimer's, heart disease and spinal-cord injuries. It threatens the hope of so many families who look forward to the day when a scientific breakthrough will ease the pain of their loved ones."

Further, Angelides holds the litigants in mighty low regard. "The legal firm of record in the lawsuit -- the Life Legal Defense Foundation -- has a clear ideological agenda that includes outlawing a woman's right to choose. The organization is committed to pursuing its agenda at any expense -- even if it means that their lawsuit threatens to prolong the suffering of more than 8 million Californians with heart disease, more than 500,000 with Alzheimer's disease, more than 30,000 afflicted with spinal- cord injuries, and countless more. Sadly, these tactics are emblematic of the kind of ideological warfare that Californians rejected when they spoke out so clearly against President Bush's efforts to block stem-cell research."

The two men's views are not entirely incompatible but the real question may be whether CIRM will be successful in its efforts to become more than some sort of government/political/venture capital chimera that is viewed with distaste by even some of its supporters.

(For more on chimeras, see the item on this blog, "The Yuck Factor" April 12.)

Battey To Stay at NIH

The NIH stem cell chief has confirmed that he has withdrawn his name from consideration as the new president of the California stem cell agency.

In response to a query from this blog, James Battey said in an email: "I believe serving as President, CIRM, is an exciting and important way to further the progress of regenerative medicine. However, I plan to continue as Director, National Institute on Deafness and Other Communication Disorders, which is also an important opportunity to further the progress of biomedical research in the normal and disordered processes of hearing,balance, smell, taste, voice, speech, and language."

Battey Withdraws

NIH stem cell chief Jim Battey has withdrawn from consideration as the new president of the California stem cell agency, according to a usually reliable source.

Battey earlier disclosed his retirement in September from NIH and the plans to seek the CIRM position. He said he was leaving the NIH because of new conflict of interest standards at the federal body. He said, "I manage a family trust...which supports the education of my father's seven grandchildren, and it contains assets I'm told I'd have to divest. That would cost a lot of money, and I can't do that to my family.”

We have sent an e-mail to Battey asking him for comment on the report that he has withdrawn.

For more on Battey, see "Conundrums of Conflict" April 11 on this blog.

More on CIRM Presidential Candidates

The Johnson & Johnson scientist being considered for the presidency of the California stem agency apparently is Per Petersen – not Per Pedersen.

Petersen is chairman of research and development of the J&J Pharmaceuticals Group in New Jersey, according to normally reliable sources. He was formerly with Scripps in San Diego.

Earlier reports spelled the man's last name as Pedersen. The latest information on him is not backed by the full and credit of the U.S. Government but it does appear to be relatively sound.

California Stem Cell Legislation Amended

California State Sen. Deborah Ortiz has modified her legislation to tighten controls on the stem cell agency and protect egg donors.

According to the office of the Sacramento Democrat, the measure, SB18, has been amended to:

"Reduce the scope of the audit required by the bill by deleting 2 of the 5 requested items and limiting the review of contracts to a sample of contracts, and defer the deadline for the initial audit by three months.

"Extend the timeline for follow-up audits, if further review by the auditor finds they are needed.

"Clarify that the informed consent procedures contained in the bill for physicians who administer assisted oocyte production (AOP) for purposes of facilitating donation of eggs for medical research supplant and do not replace existing informed consent requirements."

As amended the bill does the following:

"Requires the (State) Auditor to conduct an initial audit of the Institute and ICOC by June 30, 2006.

"Requires the audit to include a review of the strategic policies and plans developed by the Institute and ICOC and policies and procedures for issuing contracts and for protection of intellectual property rights associated with research funded by the Institute and ICOC.

"Expresses intent that further audits be commissioned if the auditor's analysis of the implementation of recommendations from the initial audit indicates that further audits are necessary.

"Requires physicians who administer assisted oocyte production, as defined, to women for purposes of donating eggs for medical research to provide a standard written summary of health and consumer issues associated with AOP and to obtain written informed consent.

"Places limits on the sale or transfer of human oocytes or embryos and limits compensation to women to encourage them to produce human oocytes for the purposes of medical research.

"Expresses intent that the ICOC commission further research concerning the risks and benefits of ovarian stimulation drugs used in AOP."

The bill is up for consideration Monday in the Senate Appropriations Committee. A companion measure, SCA13, is before the Senate Elections, Reapportionment and Constitutional Amendments Committee. No hearing is yet scheduled on that measure.

For more on the Ortiz legislation, see http://californiastemcellreport.blogspot.com/2005/05/state-legislative-hearing-may-16-on.html

The Small World of Stem Cells

A scientist who works for the firm that describes itself as the “world's most comprehensive and broadly based manufacturer of health care products” is reportedly being considered for the presidency of the California stem cell agency.

The firm is Johnson & Johnson, which has 111,000 employees worldwide. The man is Per Pedersen, who San Francisco Chronicle reporter Carl Hall identified as a candidate for the CIRM presidency.

Johnson & Johnson also has stem cell investments in California. Reporter Antonio Regalado of The Wall Street Journal has reported that “Johnson & Johnson says it recently made an equity investment in Novocell Inc., a Carlsbad, Calif., company that controls several of the stem-cell supplies endorsed for funding by the White House. Novocell is trying to turn stem cells into insulin-making cells that could be transplanted into people with Type-1 diabetes, replacing tissue damaged by that disease.”

The linkage involving Pederson, Johnson and Novocell is interesting. Whether it is a serious conflict is difficult to tell. But it does illustrate the small world of stem cells. It is probably impossible to find a president for CIRM who doesn't have some sort of ties that could be construed as a conflict of interest.

A couple of footnotes to all this. Novocell, whose web site is under construction, may have moved recently since most reports place it in Irvine, which is near Carlsbad. Johnson & Johnson in Sweden reports that it has no employee by the name of Per Pedersen. And we are told that the person in question is not Roger Pedersen, a noted stem cell scientist.

We are checking further with Johnson & Johnson on Pedersen.

A Clubhouse For Cash

San Francisco blogger and political columnist Chris Nolan had little to say about the stem cell HQ affair. She explains that it was pretty much a done deal for San Francisco.

Now she says that not only will the HQ be in the Bay Area but nearly all the $3 billion as well.

“CIRM is going to usher in – with $3 billion to spend, it can hardly help itself – a new round of spending and investment up and down the state. But most of the money will stay up here,” the stand-alone journalist writes.

“The (silicon) valley's movers and shakers, its venture capitalists, don't like to travel. A plane ride to San Diego is barely acceptable. A drive up to the city is better. And two, they will keep much of their money here in the Bay area. Why? Many of these venture capitalist – particularly Kleiner Perkins Caufield and Byers which produced many of the greatest hits of the Internet, are tight with the research institutes that ring the Bay Area: University of California San Francisco and Berkeley and Stanford have been pumping out engineers for years. Biologists, too. And the biologists of the future are going to be computer geeks, if they're not already. No one has any reason to leave town; they've got the money, the resources and, now, the clubhouse.”

The Bridge to Three Billion Dollars

A web site in India the other day carried an item on the California stem cell agency. The motto of the web site is “It's All About Money, Honey.”

The stem cell agency itself has three billion reasons why that should be its motto as well.

With its bonds ($3 billion worth) under a financial cloud because of litigation, the agency is now facing substantial increased costs because of its bridge financing proposal.

During a packed meeting Monday in which opponents were critical of the agency's financing plans, the California Stem Cell Research and Cures Finance Committee approved the $200 million plan to issue short-term bond anticipation notes, according to reporter Carl Hall of the San Francisco Chronicle.

They “would fill the financing gap at least for a while, allowing the program to move forward until the lawsuit is resolved,” Hall wrote.

“If the lawsuit can't be resolved, the bond anticipation notes would become worthless, in effect putting purchasers of the notes in the position of making a grant to the state stem cell program.

“Officials envision charitable organizations stepping forward to pick up the notes, knowing full well they may never be repaid. No such organizations have been identified as yet, but Robert Klein, chairman of the stem cell program and a member of the finance panel, said he had no doubt some can be found.

“The use of bond anticipation notes is one of several options being investigated to prevent the California Institute for Regenerative Medicine, created by Prop. 71, from shutting for lack of funds before making its first grant.”

Hall said that “Anne Sheehan, representing state Department of Finance Director Tom Campbell, abstained from the 5-0 vote authorizing the short-term notes, suggesting that it's unclear whether the notes would be the best way to structure an interim finance scheme.”

State Treasurer Phil Angelides, who has responsible for issuing the state bonds, chaired the meeting. In a joint statement with California Attorney General Bill Lockyer, Angelides said, “We are concerned that a few, narrow anti-choice interests are attempting to thwart the will of California’s voters, who voted decisively to make funding available for this important research. With today’s decision by the Stem Cell Research and Cures Finance Committee, we will do everything possible to implement the voters’ desire to fund research that will help people suffering from debilitating diseases.”

Angelides indicated he would hold more hearings within a month or so to consider the bond anticipation notes and their interest costs.

Charles Halpern, a Berkeley attorney and former law school dean, told this blog following the meeting, “Klein had said that he intended to discuss his alternative financing plan at today’s meeting. Angelides steered the discussion away from this because of the Bagley-Keene (public notice) problem.

“It was unclear whether Klein has in mind passing the hat for charitable contributions, or trying to actually sell bond anticipation notes —BANs— in the commercial bond market with a high interest rate to reflect the extra risk that investors will be shouldering. Very confusing and Tom Campbell’s surrogate abstained on the vote about BANs because it seemed premature.”

“Jesse Reynolds of the Center for Genetics and Society in Oakland told committee members that conflicts of interest may arise if Klein or other leaders of the California Institute for Regenerative Medicine solicit contributions from organizations with a stake in future stem cell research grants,” Hall wrote.

Klein said in a statement he is working with other state officials to “look at alternative structures for bridge financing by charitable donors or other funding methods and to come to a consensus decision on the best way to ensure funding for the Institute while access to the critical research funding approved by California voters is temporarily blocked by groundless lawsuits.”

Here are links to other stories on Monday's meeting: Alexa Bluth, The Sacramento Bee; Sandy Kleffman, Contra Costa Times; Paul Elias, The Associated Press; Andrew Pollack, New York Times.

State Legislative Hearing May 16 on Stem Cell Measure

Legislation to tighten controls on the California stem cell agency is scheduled for a hearing May 16 in the state Senate Appropriations Committee, where it is expected to be approved.

The measure would then go to the Senate floor for a vote before moving on to the Assembly.

The bill, SB18, has bipartisan support. The chair and co-chair of the Senate Health Committee – Deborah Ortiz, D-Sacramento, and George Runner, R-Antelope Valley -- are co-authors.

For more on the measure, see the earlier items on this blog: “Vote Again (4-15)”, “Looking For Analysis (4-19)” and “Ho-hum (4-21).

Rich and Rounded....That's the Way It Is

Charles Halpern is not a man pleased by much about the California stem cell agency. But, according to reporter Carl Hall of the San Francisco Chronicle, Halpern, a former law school dean and longtime agency critic, sounded happy that the agency settled on San Francisco for its permanent headquarters.

“He said the Bay Area's penchant for political activism will ensure 'a rich and rounded discussion' of every move the institute makes,” Hall wrote.

"'There's a whole network of civil society institutions around here that care about this stuff,' Halpern said. 'So it's a good thing the (institute) will be located in the hub of that kind of intellectual and critical discussion. That's a very positive thing. Only through a well-informed public dialog will this program be able to succeed.'"

Hall's piece also warned that folks should lower their expectations about cashing in on an immediate stem cell gold rush.

“Stem cell research is too early-stage to qualify as the next pillar of the regional economy, UCSF Chancellor J. Michael Bishop said during an interview Saturday. 'There's not much of an industry around stem cells yet,' he said. 'We haven't even figured out how to make the stem cells do what we need them to do to be useful clinically. Until that is done, it's a pretty shaky base for startups.

"'I'd like be more rah-rah, but that's the way it is.'"

Readers Write

We welcome comments and will publish them. You can respond directly by clicking on the word "comments" following each item. Or you can send them to djensen@californiastemcellreport.com. The following is from Tom Hall, a retired history professor from Berkeley:

"I've been visiting your blog site for the past week or so and very impressed with what I am finding on it. The Halpern letter was a real service. Not only does he raise some important points (the $10 million construction issue for instance) but he does a nice job of raising general issues -- does Klein have some secret agenda or is he just flying by the seats of his pants? It seems to me that politically, Klein's greatest strength is the apparent fact that no one wants to mount an initiative that would either repeal the stem cell enterprise or place it firmly under public control."

Behind the Stem Cell Scene

Columnists Matier and Ross of the San Francisco Chronicle popped up with a tidbit this morning on the stem cell HQ affair and the scientist and rag merchant who played background roles. Here is what the writers had to say:

“All the money and lofty arguments aside, San Francisco's landing of California's prestigious new stem cell research institute may have hinged on one very practical consideration.

“Zach Hall, the center's interim chief executive officer, lives in San Francisco -- and had privately made it clear to anyone who would listen that he was in no mood to move to San Diego.

“As a matter of fact, friends say his desire to be closer to home in the city -- where his wife has a full-time job at the Symphony -- was one reason he quit his last job commuting three times a week to the USC medical school and took the interim stem cell post.

“By the way, much of the credit for San Francisco's stem cell victory is being given to Gap founder Don Fisher, who -- just as things were looking a bit grim -- rallied local developers to provide rent-free space for the headquarters.

“UCSF Vice Chancellor Bruce Spaulding, who was part of the informal team that worked on the bid, said the developers needed to be convinced of the long- term financial benefits of landing the project.

“'For all the mayor did, Spaulding said, 'the guy who made the argument most eloquently and powerfully was Don Fisher.'”

The "Murkier" $100 Million Workaround

Questions are already being raised about the plan to fund the California stem cell agency with $100 million in philanthropic contributions.

Stem cell chairman Robert Klein sketched out the plan on Friday as a way to work around lawsuits that place a cloud over bonds that might be issued on behalf of the California Institute for Regenerative Medicine. (See our May 5 item "Looking for a $100 Million Helping Hand.")

Reporter Laura Mecoy of The Sacramento Bee did the most complete job of reporting on the subject in reports in the major California newspapers. But look for more in the next day or two in other newspapers.

Mecoy said that the most influential California legislator on stem cell matters, Sen. Deborah Ortiz, D-Sacramento, took a dim view of the $100 million plan.

"It would just make a murky issue even murkier," said Ortiz. "It is not the kind of openness you expect in government."

Mecoy said Klein characterized the $100 million as a bridge loan to, in his words, "make certain this momentum to develop new research and medical therapies is not slowed down."

“He refused to name the potential contributors,” Mecoy wrote, “but said they would only be repaid if the bonds sell. If the bonds aren't sold, he said the loans would become contributions.

“Klein said he plans to pursue this proposal on Monday when the stem cell agency's finance committee meets for the first time.

“(Jesse) Reynolds, program director at the Center for Genetics and the Society, called the contribution proposal 'risky,' and said it creates a 'strange relationship between a public agency and private lenders.' He also said Klein opens himself to possible conflict of interests by seeking contributions from foundations that also fund research and could be seeking state stem cell money as part of their future studies.

"'I don't think the head of a state agency responsible for giving out grants should be involved in fundraising,'" Reynolds said.

“Klein said the stem cell board's process for reviewing grants protects against conflicts of interest.

“He also said Proposition 71, the initiative that created the stem cell program, provided for contributions to be used to help fund grants and loans.

“During the election, though, such contributions were presented as matching funds that would be solicited by researchers seeking grants and loans from the state.

"'The problem here is we can't afford to lose eight or 10 months while this process (of litigation) moves forward,' Klein said.”

HQ: The Final Dissection(Maybe)

The post-mortems this morning on the stem cell HQ affair did not offer any extraordinary insights beyond what has already been reported. They did note that the San Francisco area, site of the new HQ, is an expensive place to live. Just how expensive? A 2003 study showed that family of four with two working parents needs to earn more than $70,000 a year to sustain its basic needs in that area.

You can find the study here.

Here are links to news stories on the HQ decision: Carl Hall, San Francisco Chronicle; Laura Mecoy, The Sacramento Bee; Terri Somers, San Diego Union Tribune; Steve Johnson, San Jose Mercury News; Paul Elias, The AP ; Louis Sahagun, Los Angeles Times; Marni Leff Kottle, Bloomberg.com

Flash!!! San Francisco Wins

San Francisco wins the stem cell HQ. Sacramento runs distant third. The vote was 16 for Baghdad-by-the-Bay and 11 for San Diego. Read Reporter Daniel Levine's story here in the San Francisco Business Times, filed at 4:01 PDT.

Looking for a $100 Million Helping Hand

The California stem cell agency may borrow $100 million from philanthropic organizations to start its research program.

The plan was announced after litigation raised financial clouds over the issuance of bonds by the California Institute for Regenerative Medicine.

Reporter Daniel Levine of the San Francisco Business Times quoted stem cell chairman Robert Klein as saying today, "We are looking at the potential to put together $100 million from various financial donors, to move forward and hire staff and make certain this movement to develop new research and advance medical therapies is not slowed down. As Nancy Reagan said, we cannot afford to lose any more time."

Levine also reported that “Klein said if for some reason the institute is unable to issue the bonds, the loans would be converted to grants. As such, he said the bridge financing would create no liability for the state.”

The (Almost) Final HQ Media Morsels

"It's cachet, it's reputation, and at this point it's become a sport,'' said stem cell institute vice chairman Ed Penhoet.

Today the last dog will be hung in the Affaire HQ. Here are links to morsels at the final pre-hanging media meal. Of course, we will dine again, journalistically speaking, at a post-mortem tomorrow.

Reporters Rachael Gordon, Carl T. Hall, Ilene Leichuk, San Francisco Chronicle; Paul Elias, The AP; Terri Somers, San Diego Union Tribune; Bradley Fikes, North County Times, Judy Silber, Contra Costa Times.