AP's Story on CIRM's Grants and Cash

The Associated Press has written a brief story dealing with the CIRM grants approved on Friday and touching on the cash woes at the stem cell research agency.

Here is the lead:

"The governing board of the California stem cell agency is delaying $58 million in research grants at least until March because of the poor economy and credit market."

The four paragraph story appeared on both the The Sacramento Bee and San Jose Mercury News websites.

On the Bee site, The AP article triggered four reader comments. All were hostile to the stem cell agency. No readers commented on the San Jose site, at the time of this writing. Here is a link to the article at the Bee.

Modest Coverage of CIRM Cash Problems

News coverage of the money woes of the California stem cell agency was skimpy today with only one mainstream media outlet discussing them at any length.

Our Internet searches turned up only three stories. They were in the San Diego Union-Tribune, the San Francisco Chronicle and the San Francisco Business Times.

Reporter Terri Somers of the San Diego paper produced the only story looking more deeply at the financial issues. The other two focused on approval of $58 million in training grants.

Somers wrote:

"The problem: Should the state stem cell institute keep approving research grants, even though it will run out of money about the end of September because of the state budget impasse?

"The answer: a resounding yes."

She wrote that CIRM is hoping to raise $138 million through the private placement of state bonds just to fund the programs through the end of 2010. Somers also quoted researcher Jeanne Loring of the Scripps Institute about the significance of CIRM's financial uncertainty.

"'You don't want to be hiring people for a couple months and then laying them off, especially since these are highly trained people we've already invested millions of dollars in,' said Loring, who has been promised about $7 million in three state grants.

"'I think the trouble is short-term, but I have to worry about the short and long term,' she said."

A shorter story by David Perlman of the Chronicle began,

"The governing board of the California stem cell agency tentatively approved $58 million in new grants Friday, but with the nation in recession and the bond market stagnant, board members decided to hold up the money and reassess the situation in March."

Ron Luety of the Business Times wrote,

"CIRM is considering a plan to sell bonds on the private market. Those sales are targeted at philanthropists who helped the state agency when lawsuits by taxpayer advocates and opponents to embryonic stem cell research delayed its startup.

"No timeline was set as to when the grants will be funded, but the CIRM board will study funding against at its March 12 meeting."

Overall, the coverage should be satisfying to CIRM, some of whose directors were deeply concerned about the negative message that its financial troubles would deliver to the public and the stem cell community.

State Colleges Win CIRM Grants

The California stem cell agency this afternoon said that the 26 training grants "tentatively" approved today totaled $58 million and included 11 aimed at undergraduates and masters level students and 15 targeting young scientists.

It was the first time that California state colleges managed to snag some of CIRM's $3 billion. One two-year community college also won approval. However, all will have to wait for later action actually freeing funds for their programs. The delay in funding prompted CIRM to call the board action "tentative" in its press release. Decisions on funding could come either in this spring, depending on the nature of the financial news for CIRM.

It was the second time in CIRM's brief life that it has approved grants without actually setting the funding in motion. In its first round of grants in 2005, also training programs, the board did not have the cash to fund the grants because of litigation. However, it wanted to send a message that it was in business and intended to move forward. By and large, that message was successful.

It is likely that today's action will also be reasonably successful in communicating the same message. The news release did not dwell on the hours that the board spent discussing what some board members called a financial crisis. The main reference in the news release to CIRM's financial plight was this paragraph:

"In light of the current financial situation in California, the board meeting began with a discussion of funding scenarios through 2010. At this time CIRM can fund all existing commitments through September of 2009."

CIRM is likely to review its financial condition again at board meetings in March and April.

You can find a list of grant winners and the size of their grants here.

"Bridges" Grants Approved by CIRM Board

The board of the California stem cell agency today all but approved the top-ranked applications for the Bridges to Stem Cell Research grant round but deferred actually funding them to a later date.

Final approval was delayed today because of quorum problems. However, another member of the board is expected later this afternoon and that should provide final action.

The applications that received approval were in the "recommended for funding" category that can be found here. CIRM is expected to identify the applicants later today.

CIRM Training Grants Approved

The California stem cell agency today approved tens of million of dollars in training grants for young stem cell scientists but deferred a decision on actually funding the efforts.

Approved were all the grants that the Grants Working Group said should be funded in the Training Grants II round. You can find the list here. CIRM is expected to issue a release later today identifying the winners.

CIRM Board to Act Today on Training Grants

The board of the California stem cell agency this morning decided to move forward with approval of two rounds of training grants but with a decision on funding to come later.

The board took the action following lengthy discussion of its current bleak financial condition.

Director Sherry Lansing, head of a Los Angeles foundation bearing her name, reiterated her plea that the board proceed with action on the grants, declaring that to do otherwise would send the wrong message.

Director Claire Pomeroy, dean of the UC Davis School of Medicine, argued that the first priority of the board should be fiscal responsibility. She said it was "most important to get our financial house in order."

Following the vote on the procedure, the board took a break and will resume its meeting in Burlingame shortly and will take up the specific grant applications.

CIRM Says California Stem Cell Report is 'One-Sided'

The chief PR person for the California stem cell agency this morning volunteered the following comment on the items that appeared last night on the California Stem Cell Report.

Don Gibbons said in an email:

"Once again you have written a one sided piece using only half Dr Pizzo's quote. He said we have heard two avenues this evening, a route to darkness AND a path to hope. We presented creative solutions to make existing funds stretch to meet all commitmets through October and a solution for ongoing funding that a national expert gave us 80 to 90 percent odds of suceeding."

Philip Pizzo is dean of the Stanford Medical School and a director of the California stem cell agency.

During last night's meeting, he raised questions about the proposal to sell bonds privately for CIRM.

At one point, Pizzo said that while he loved or respected the notion that there is a "pathway out of a route to darkness," the situation has changed dramatically from 2006 when CIRM sold bond anticipation notes to finance its operations. He said potential investors in CIRM bonds are feeling "tremendous pain right now." He said that "a reality check" might be in order on the prospects for the private placement plan.

PBS News Hour Examines Stem Cell Research

The PBS News Hour Thursday night broadcast an overview of the state of stem cell research, including discussion of the Obama Administraion's plans and the latest developments at Geron.

Featured were folks from UC San Francisco, Geron and Alan Trounson, president of the California stem cell agency. You can even catch a glimpse of this writer in a very brief comment. You can see the entire 8-minute video on the News Hour website.

California Stem Cell Money Woes in San Diego, Santa Barbara and San Francisco Area

How bad is the CIRM financial crisis? It is endangering the highly touted San Diego stem cell research consortium, according to the San Diego Union-Tribune.

Reporter Terri Somers said that financial woes have prevented the consortium "from securing the loans it needs to build a much ballyhooed $115 million stem cell research center (see rendering) in Torrey Pines." The consortium includes UC San Diego, Scripps, Burnham and Salk.

Somers wrote:

"San Diego is not alone in its troubles. The Buck Institute for Aging in the San Francisco Bay Area and the University of California Santa Barbara are among other California research institutes having difficulty obtaining money for research facilities.

"All three were planning to create stem cell research centers with a combination of private funds, loans and multimillion-dollar grants from the taxpayer-funded California Institute for Regenerative Medicine.

"But banks considering the loans now say they do not have the liquidity needed to finance the construction. And some lenders question whether California's budget crisis, which is preventing the state from issuing bonds, could stall its promised financing."

Somers continued:

"In an interview yesterday, Malin Burnham, a member of the San Diego consortium's board, recalled a recent conversation he had with a local banker about a $70 million construction loan for the research facility.

"He said, 'Malin, I'd love to do that deal. I know and like all four of your institutions, but I don't have any money to lend. The situation may change in 30 to 45 days, but today I just don't have any liquidity,' Burnham said."

Somers' story includes information from last night's CIRM board meeting.

CIRM Directors Wrestle With Bad News and Funding for Training

Directors of the California stem cell agency have put off action until at least later today on requests for $66 million in training grants following briefings that sketched out what some directors characterized as a financial crisis for the research funding enterprise.

Most of the nearly six-hour board meeting Thursday afternoon and evening in Burlingame, Ca., was devoted to what CIRM Chairman Robert Klein called a "crisis environment." Ultimately some directors began to question whether the board should even take up the requests for the training program grants. Some argued that they should be deferred at least until March or perhaps April when the state government financial picture might be clearer.

Others argued that the CIRM board should move forward with approvals with a caveat that the grants would be funded only if money was available. CIRM did that on its first round of grants in 2005, when it also faced the inability to sell the state bonds that it relies on.

Director Sherry Lansing(see photo), a former Hollywood film studio executive, said the agency should act on the training grants. She said,

"If we don't, we are sending a clear message that we are out of business."

The financial pressure on CIRM was bad news for applicants in the second-ranked tier of applications. Normally some of those are funded along with those in the top tier, but the directors' new caution would appear to make that unlikely whenever the applications come up for approval.

The board will resume its meeting this morning. You can listen in via the instructions that can be found here. Our reporting on the meeting is based on what could be heard on what was the first-ever audio Webcast of a CIRM board meeting.

Dark Financial Outlook for CIRM Disclosed Tonight

The financial condition of California's $3 billion stem cell agency tonight appeared bleak and "daunting," based on briefings provided to its 29-member board of directors.

One director, Philip Pizzo, dean of the Stanford School of Medicine, at one point described the presentations as akin to "a route to darkness."

CIRM's financial plight is the result of California's inability to sell state bonds because of the state's $40 billion budget crisis. CIRM relies on bond sales for funding. It has approved $635 million in grants, many covering several years, but currently does not have the cash to fund all of them.

The CIRM staff went through a detailed financial presentation, based on what we heard on the first ever audio Webcast of a CIRM board meeting. However, many of the specifics were not clear because the PowerPoint presentations containing them could not be viewed.

Nonetheless, the overall financial situation seemed challenging, to say the least.

CIRM Chairman Robert Klein promoted his plan to sell state bonds privately, which would appear to be the first ever such effort in the nation. The discussions also disclosed that the state of California is moving to sell other state bonds privately as well, which could theoretically make the state and CIRM financial competitors. Klein said, however, potential buyers of the CIRM bonds are not likely to be targeted by the state treasurer's office.

The briefings disclosed that even if the state budget crisis were solved tomorrow, CIRM would face financial difficulties. That's because it takes time to bring bonds to market. Bonds supporting more critical needs would be sold well before the state would consider offering the CIRM bonds.

Sherry Lansing, a CIRM director and head of a nonprofit foundation bearing her name, said,

"I don't think there is any other choice...We would be irresponsible not to try to do this(sell bonds privately)."

Following the staff presentations, the board adjourned for dinner. At the time of this writing, they are gathering to resume their meeting and continue the financial discussions. The proceedings can be heard by using the directions in the items just below.

Let's Hear Some Comments on CIRM's First Ever Webcast of a Board Meeting

If you are tuned into the CIRM board Webcast this afternoon and evening, please let us know what you think of the effort, either its technical aspects or the deliberations or both. You can comment by clicking on the word "comment" below. Anonymous comments are permitted. Or you can send your comments directly to djensen@californiastemcellreport.com.

Update on CIRM Board Webcast

If you are having trouble accessing the CIRM board Webcast this afternoon, Don Gibbons, chief communications officer for CIRM, reports that the correct access code is 984696. We entered that number in both boxes on the ATT screen and appear to be connected. The actual meeting has not yet begun, not an unusual delay for CIRM board meetings.

CIRM Finance Documents Surface Online

With only a few hours left before this afternoon's meeting of the board of the California stem cell agency, it has posted some figures on its website dealing with its current financial condition.

Missing is any kind of explanatory information about the significance of the numbers, definitions and assumptions used. None of the posted documents address the question of when the agency runs out of operational funds during the next 18 months if the state budget crisis continues. Nor do any address the question of when CIRM might run out of cash to pay grants already approved.

However, the three documents appear to show that CIRM's operating expenditures for the 2008-2009 fiscal year will be 22 percent, or $3 million, under budget, $10.4 million instead of $13.4 million. Much of the difference comes from a 20 percent variation ($1.4 million) in salaries and benefits, which are projected to hit $5.6 million, instead of the budgeted $7 million.

Some CIRM board members have expressed concern that the agency is under-staffed and that employees could suffer from burn-out because of their long hours. Indeed, the most recent audit of the agency shows $247,351 in outstanding unpaid vacation and annual leave as of last July. The agency is capped by law at 50 employees, which is one of the reasons for its large, $2.7 million outside contracts budget. Currently the agency has 38 staffers, the highest figure in its history. It has had openings for six hires for many months but has not filled the positions.

Other major budget categories projected to be under budget for the fiscal year include: outside contracts, $2.2 million, down $514,000 or 19 percent from projections; "other travel," down $206,000 or 37 percent from projections, and "other," down $276,000 or 31 percent.

The CIRM grant funding summary shows $703 million approved by the CIRM board by the end of the fiscal year, with $139 million actually out the door. No projections are made beyond June 30.

Not posted to the CIRM website is the latest audit of the agency by Macias Gini &O'Connell of Sacramento, Ca,, which is the firm that CIRM pays for annual audits. The audit covers the 2007-08 fiscal year and can be found on the state controllers website.

Here are links to the other two CIRM documents: actual and projected expenditures, budget allocation and expenditures.

New Instructions for CIRM Board Webcast

The California stem cell agency has posted fresh instructions on how to view the Webcast of its meeting today and Friday as well as those for listening in by telephone.

The main changes appear to be separate phone numbers for today and Friday. You can find the details here.

Bravo! Live Webcast of This Week's CIRM Board Meeting

The California stem cell agency late today announced it will offer – for the first time ever -- live, Internet access to the proceedings of its board meeting with the first Webcast coming tomorrow (Jan. 29 California time).

The move is an excellent and far-reaching step in opening up the proceedings to all those interested in the $3 billion agency, which is the largest source in the world for funding of human embryonic stem cell research. The action also furthers the agency's goals to enhance stem cell research collaboration both nationally and internationally.

The announcement of the Internet and phone access is not yet up on the CIRM website, but here is what Melissa King, who is the go-to person on all CIRM board matters, told subscribers to one of CIRM's alert services:

"We are pleased to offer you the ability to listen in to the ICOC meetings taking place on Thursday, 1/29 and Friday, 1/30 either on the phone or online. The details are below.

"NOTE: you will need Windows Media Player or RealPlayer to stream the audio online.

"Dial in: (866) 254-5938              
"Access Code: 984698

"Web streaming URL:
"http://65.197.1.15/att/confcast

"Enter Conference ID# 984698  Then click Go.

"Please note these are listen only access methods which we have made an effort to offer given requests for the ability to listen in live to our meetings. If you would like to address the ICOC with questions or comments in the context of this meeting, you are welcome to either attend the meeting in person or get written questions or comments pertinent to specific agenda items in to CIRM 5 days in advance of the meeting. General public comments are welcome (in writing in advance) as well, but we cannot guarantee they will be addressed at any specific meeting. Thank you."

CIRM has been talking about and working on providing this sort of access for some time. The agency and all those embedded in the CIRM effort are to be commended for making the Webcast available at this point. That said, we should caution potential viewers that CIRM board meetings do not always have the drama potential of, for example, The Wire HBO series. First-time Webcast efforts like this sometimes also have glitches. But the CIRM staff, we are certain, will overcome any difficulties. Congratulations to all.

(Editor's note: In the first paragraph of this item, we specified Jan. 29 California time. That's because a goodly number of those interested in CIRM are beyond the International Dateline. We are aware of that because they are among the readers of this blog.)

Correction

The "More Info Up" item on Jan. 28, 2009, incorrectly said that the state controller will begin issuing IOUs on Sunday. He will in fact be delaying payments, rather than issuing IOUs.

More Info Up for Tomorrow's CIRM Board Meeting, But None on its Financial Condition

Over the last two days, the California stem cell agency has added additional background material to its board agenda for tomorrow and Friday, but the public remains in the dark about such matters as CIRM's detailed views on its financial condition.

The material includes the latest version of the loan administration policy for CIRM's proposed $500 million biotech loan program and changes in research standards for CIRM grantees.

Also up is material connected to the effort by CIRM Chairman Robert Klein to have the stem cell agency join the list of those in Washington trying to climb aboard the trillion-dollar bailout/stimulus gravy train.

Included is a copy of a draft letter presented last week to the CIRM Finance Subcommittee that seems to have been intended to be sent out prior to the board meeting tomorrow. Klein's agenda also includes links to a Jan. 15 version of the House's 258-page stimulus bill and an undated, 76-page "discussion draft" of a report on the proposal.

Missing from CIRM board agenda are any documents having to do with CIRM's budget and financial condition as the state faces a $40 billion budget crisis. On Sunday, State Controller John Chiang is going to start stiffing state creditors – delaying payments for at least 30 days.

This time Chiang said those being stiffed will include "more than a million aged, blind and disabled " who need state assistance "to pay their rent, utilities or put food on their tables."

The stem cell agency is swaddled in relatively comfortable financial security that means that over the short term grantees will continue to be paid along with vendors. Over a longer term, nine months from now, CIRM appears to $435 million short of what it needs to fulfill the terms of all the grants it has approved. CIRM depends on state bonds for cash, and the state is not selling any as its credit rating continues to plummet.

(An earlier version of this item said incorrectly that the state controller would begin issuing IOUs on Sunday.)

Fixing Bad Links

The "CIRM Staff Nixes Appeal" item on Tuesday (Jan. 26, 2009), had bad links to Alan Trounson's denial letters. Here are good links to the Trounson letters re Susan Fisher and Prue Talbot.

The California Stem Cell Agency and $435 Million in Budget 'Bafflegab'

The finances of the $3 billion California stem cell agency are something less than transparent, a situation that today led a longtime CIRM observer to write about its "funny money" and the lack of an accurate accounting of where the agency stands.

The comments came from John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., who wrote against the backdrop of California's $40 billion budget crisis. Simpson ran through the budget arithmetic and noted that CIRM has awarded $635 million in grants, many of which are multiyear. According to information Simpson compiled from CIRM, the state treasurer and state controller's offices, he said CIRM has committed $435 million it doesn't yet have.

CIRM Chairman Robert Klein had a chance to explain the situation last week before the directors' Finance Subcommittee. Instead, Simpson wrote, "there was discussion of a proposed loan program and two recaps" of how CIRM dealt with bond anticipation notes in 2005 and 2006.

Simpson said,

"What's been missing in all of this is an accurate accounting of where CIRM stands financially."

Simpson continued,

"Here's my two-cents worth:  Somebody in this highly paid group needs to present a real budget that shows when CIRM will run out of money.  Then there needs to  be a serious, realistic discussion about what to do about it. Approving more grants when you're already $435 million in the hole might just not be the prudent course.

"One thing for certain, the ICOC (the CIRM board) and public are entitled to a clear explanation of where CIRM stands financially, not bafflegab about pie-in-the sky funding schemes and Obama stimulus packages."

The subject of CIRM finances is on the board of directors' agenda for Thursday and Friday as it was last week before the Finance panel. In the past, the subcommittee presentation is merely repeated at the full board meeting.

What is needed is a straight-forward budget and finance document (far more than a sketchy PowerPoint presentation). It should include all the numbers, written explanations of assumptions and caveats, possible future scenarios, strategies to deal with various contingencies and the pros and cons. Anything less is a disservice to the people of California, not to mention the CIRM board and the hundreds of scientists whose work hangs on CIRM's financial well-being.

(We have told CIRM that if it has any comments on Simpson's remarks or this posting, we will carry its response verbatim. If you have comments, you can post them directly on this blog by clicking on the word "comments" below. Anonymous comments are permitted.)

(Editor's note: An earlier version of this item incorrectly said CIRM had approved $653 million in grants. The correct figure is $635 million.)

CIRM Staff Nixes Appeal Efforts from Two Scientists

The staff of the California stem cell agency has rejected two attempts to overturn negative decisions on two grant applications for a total of $2.8 million, one from the Bay Area and one from Southern California.

Following a relatively new procedure, CIRM President Alan Trounson said that the applicants failed to present "compelling evidence" for a change. Trounson referred to petitions by Susan Fisher(see color photo), a professor at UC San Francisco, who sought $904,172 , and Prue Talbot(see black and white photo), a professor at UC Riverside, who sought $1.9 million.

Both women disputed the decisions of the CIRM Grants Working Group on their applications, which were considered and voted on earlier behind closed doors. Later this week, CIRM directors could overturn the actions by reviewers. However, in December, in the only other instance of the use of the new petition procedure, the board stood by the decisions of reviewers after the CIRM staff could find no compelling evidence for a reversal.

Here is what Trounson had to say on Fisher's petition:

"We agree that reviewers considered this a meritorious application. The proposal to create an 'antibody tool kit for human embryonic stem cells and their progeny' was highly regarded but not unique. To clarify, there is at least one other application in Tier 2 that proposes the development of an antibody tool kit.

"In regard to the reviewer criticisms, we believe that reviewers were justified in raising concern about the PI’s overall commitments as the application lists 15 currently active projects that consume 87% of the PI’s effort. In addition, the PI lists 3 pending projects that would consume 40% effort. Regardless of additional personnel that can help lead the project, the PI is ultimately responsible for managing and ensuring that the project is carried out as proposed. We disagree that the only way to increase the percent effort of a given individual is to remove another individual from the project. The CIRM Grants Administration Policy limits the annual salary requests for each key person to $207,000. It does not, however, limit the percent effort that an investigator can commit to a project. In fact, a key person may contribute any effort between 1 and 100 percent without requesting any salary support from the CIRM grant. Therefore, the budget cap alone should not prevent an investigator from contributing greater effort when appropriate. We recognize that effort contributed to a project should be appropriately compensated, but the CIRM grant should not necessarily be viewed as the sole source of support."

Here is what Trounson said concerning Talbot's petition:

"We appreciate the arguments presented by Dr. Talbot on strengths of this proposal. Reviewers agreed that the institution’s designation as a Hispanic Serving Institution provides an important opportunity for the recruitment and training of underrepresented minorities and this point was highlighted and accounted for in the score and final recommendation. However, this important strength was balanced by the reviewers’ assessment of the overall quality and design of the training program. When compared to other competing proposals, this application did not convince reviewers that the training opportunities would provide sufficient depth and breath to trainees. It is also important to note that the existing training of students in stem cell biology referenced in the letter was not articulated in the application despite the opportunity to do so.

"The applicant’s letter also indicates that their application for the Training Grant Program in 2005 received a higher score and recommendation than for this review. We believe that there are many factors that might contribute to this difference including among others a general strengthening of competing programs in the last 3 years, a different composition of reviewers, and a different (although similar) proposal from the applicant. Reviewers based their recommendation on the proposal that was presented to them for the current competition and not the previous."

The links to Trounson's comments also contain the petitions filed by the two scientists and the public summary of their grant reviews.

(A footnote: Fisher is featured in a video on the CIRM home page and CIRMTV dealing with Obama's inauguration.)

(An earlier version of this item did not contain the amount requested by Talbot and the total for both grants.)

Rutgers' Young on Geron Trials

Wise Young, the director of Rutgers Center for Collaborative Neuroscience and a grant reviewer for CIRM, has pulled together a fine overview of the science and media coverage of the Geron clinical trial.

In a piece complete with numbered footnotes, Young (see photo) wrote,

"The media response was massive [18]. The story was carried by almost every news source [18-20]. The community response was initially strongly positive. Coming on the 3rd day after President Barack Obama’s inauguration, some thought that the approval of the first HESC trial was due to Obama’s coming to power.

"The exuberance faded as people read the fine print. First, the trial is not for people with chronic spinal cord injury. It is intended to be used within 2 weeks after injury for people with complete thoracic spinal cord injury. Second, the goal of the trial is to show safety and feasibility, not necessarily efficacy. Third, the cells have been differentiated to the point that they are no longer acting as stem cells but only as oligodendroglia."

Young also wrote,

"Geron’s web site and news reports indicate that the trial will treat 8-10 patients who are within 2 weeks after “complete” thoracic spinal cord injury. It will probably start in July 2009. However, many details are unclear. Before the FDA placed a hold on the trial application in May 2008, Geron had said that the cells would be transplanted into the spinal cord of patients undergoing spinal cord decompressive surgery and all the patients will receive a 2-month period of pharmacological immunosuppression . It is not clear that the same regimen will be used.

"In the meantime, the reaction of the spinal cord injury community has ranged from exuberance over the approval of the first HESC trial [22] to deep pessimism over comments by Okarma, who said that people with “complete” spinal cord injury have no chance of recovering any function, or something to this effect. Many people in the spinal cord injury community [23] were disappointed at being excluded from the study which is only for the newly injured."

Geron: Stock Market Star?

The Wall Street Journal reported today that Geron has become a "sudden star" on the options market.

The piece by Rob Curran said,

"On the options market, about 24,500 call contracts giving the right to buy the stock traded against 3,600 put contracts giving the right to sell, according to TrackData.

"At 4 p.m. (Monday) in Nasdaq Stock Market trading, Geron was up 15% at $8.15. That follows Friday's roughly 36% jump.

"Shares of the developer of therapies based on stem-cell research had languished in recent years along with academic and corporate research in its niche of genetic medicine. The shares rallied Friday after the U.S. Food and Drug Administration cleared the way for the first-ever trial of a therapy derived from embryonic stem cells. That sudden swing and the promise of more like it is what drew options traders to the stock Monday, said Frederic Ruffy, options strategist at Whatstrading.com.

"'The volatility in the share price attracts a lot of option traders,' Mr. Ruffy said.

"'One of the themes you can make a lot of money with is if you can ... predict new policies,' said William Lefkowitz, derivatives strategist at vFinance Investments. 'You don't really need results to make lot of money at the beginning of the administration.'"

At the time of this writing Tuesday morning, Geron stock stood at $7.55, down 7 percent.

If you cannot access the WSJ story and would like to see it, send an email to djensen@californiastemcellreport.com and I will send it to you.

Trounson and the California Stem Cell Story

As part of his job, CIRM President Alan Trounson trots around California and elsewhere, telling the story of how and why the state is pumping $3 billion into human embryonic stem cell research.

If you would like to hear one of his talks and see the PowerPoint presentations that he uses, you can do so by going to the web site of the Milken Institute, an economic think-tank in Santa Monica, Ca.

The institute is offering a two-hour video of Trounson, including his responses to questions following his talk last Thursday (Jan. 22). Trounson has an accessible and easy speaking style, and his presentation slides are downloadable.

Some of the highlights:

Trounson almost let the Geron cat out of the bag although by the time of his talk, the information had already been fed to a number of media outlets, including the New York Times and the Wall Street Journal for publication on Friday.

Trounson had high praise for his tiny, 38-person staff. He noted that CIRM operates with a 6 percent administrative budget cap, compared to 10 percent to 12 percent for administrative costs in other similar organizations with some running as high as 25 percent.

He predicted as many as 100 applications in the upcoming $210 million disease team grant round, which is part of the $1 billion that CIRM has already specifically committed to funding. The disease team round is one of the largest given by CIRM.

He said the performance of grant recipients is closely tracked with under-performers being advised to get their "underdone bits" properly done.

In response to a question about the $40 billion California state budget crisis, Trounson said it is having an "impact." But he said, "We are well insulated from the effects of politics and the economy." Trounson said CIRM has enough money to "get through about October." He noted that CIRM Chairman Robert Klein is making contingency plans should California be unable to sell the bonds that provide the funds for CIRM.

The budget deadlock and CIRM's budget is also up for discussion at the CIRM board of directors meeting this Thursday and Friday.

ISSCR , $400,000 and CIRM

Remember the request that the California stem cell agency pony up $400,000 to support next year's annual meeting of the International Society for Stem Cell Research in San Francisco?

It ran into some rocky sledding at the CIRM directors' meeting last month. Some of us had expected it to come back at the board meeting later this week.

But no. John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., today wrote about last month's robust discussion of the request and has put together an explanation for the delay on his organization's blog. He quoted CIRM spokesman Don Gibbons as saying,

"We are examining other possible alternatives for the ISSCR meeting and will bring the issue back at a later date."

We were also wondering about the matter and last week separately queried scientist Irv Weissman of Stanford, incoming president of the society. He replied,

"I have no idea what is or is not on the ICOC (CIRM directors) agenda. I sure hope CIRM will assist the ISSCR convention, but I am not really knowledgeable what they can or cannot fund. I trust them to do the right thing. Irv Weissman, speaking for himself."

More Info for This Week's CIRM Board Meeting

The California stem cell agency today posted additional information for its board of directors meeting this Thursday and Friday, including fresh links to the underwriting plan for its $500 million biotech lending program.

We previously linked to that information but it is now on the official agenda for the sessions in Burlingame. Yet to come is the revised loan administration policy.

Also posted are the names and bios of proposed new alternate grant reviewers: Charles Cox of the University of Texas in Houston, John Rasko of the University of Sydney stem cell program and Peter Zandstra of the stem cell bioengineering program at the University of Toronto.

Another offsite teleconference location for Friday has been added beside the one in Colorado. The latest one is at or near UCLA in Los Angeles. Addresses can be found on the agenda.

Geron Price Still Moving Smartly Upward

Geron rose sharply again today, closing at $8.15, up 15 percent for the day.

Barrons reported that Needham Research upgraded its recommendation on Geron from hold to buy with a $9 price target. Needham said "significant unmet needs" exist "in the management of spinal-cord injuries."

Needham also said that Geron previously reported it had $165 million available at the end of 2008 with a projected burn rate of $50 million -- "financial resources...sufficient for operations for several years."

Meanwhile Motley Fool reported that a large group of its readers gave Geron a "distressing two-star ranking," meaning that it might lag the market.

Pluses and Minuses in the Geron News Coverage

Media coverage and commentary continued to ripple out today on the Geron clinical trial announcement, generating considerable attention also on California's $3 billion stem cell research effort.

While CIRM has not played a role in the Geron research, the agency's expertise has popped up in many stories with quotes from President Alan Trounson and Chairman Robert Klein along with references to the size of the state effort. All of which helps meet one of the agency's goals of becoming a key media source in all things stem cell.

As usual in such events, the initial coverage on Geron generally tended to be favorable for both the company and for stem cell research. Television news coverage also surfaced, which is rare on stem cell issues. There is no doubt that the Geron announcement is important in establishing a favorable public view of both the science and the business. The expected Obama administration changes in federal stem cell research rules will add to the positive climate and are likely to come in the near future.

But some not-so-ebullient views could be heard as well. The San Francisco Chronicle editorialized this morning that the Geron trials are a "a cautious but unmistakable advance."

The Chronicle continued,

"At this early point, it's mainly about testing the safety of the treatment. That's a key issue because a harmful result or botched trial could set back the stem cell cause immeasurably, a risk that researchers acknowledge."

Reporter Steve Johnson of the San Jose Mercury News wrote,

"California's $3 billion effort to fund such research, launched in 2004, illustrates some of the obstacles federal officials could face in trying to lure companies to begin such studies.

"Aside from being hindered by legal challenges during its first few years, California's program has funneled the vast majority of its money so far for basic research at universities and other nonprofit institutions. And for a variety of reasons — ranging from a lack of investors to skittishness over the ethical debate surrounding the cells — only a handful of companies in the state are experimenting with embryonic stem cells on their own, despite predictions that the effort would quickly bring about a job boom.

"'I would have expected there to be more interest' among businesses, said Alan Trounson, president of the California Institute for Regenerative Medicine, which voters created in November 2004 by passing Proposition 71."

Senior columnist Adam Feuerstein of TheStreet.com had an even bleaker view. He wrote,

"I say don't buy into the hype.

"Geron has a long track record of over-promising and under-delivering. In fact, the company's only real accomplishment after years and years of effort has been to burn through tons of shareholder cash.

"Before you send emails that blast me for spitting on stem-cell therapies, understand that my cynicism is directed at Geron, not the promise of stem cells. Today's news was well orchestrated by Geron -- a splashy story in The New York Times, a conference call and an appearance on CNBC. But let's get real: Geron is starting a small phase I study, and with Friday's run, the stock's market cap now stands around $600 million. And for that, you get very little.

"Sorry, but Geron looks more like a short to me than a long."

Stanford's Christopher Thomas Scott released a statement that said,

"President Obama's intention to lift the restrictions on embryonic stem cell research, Congress' promised actions to legislate funding, and Geron's announcement are three important steps to a long road for cures and treatments. After an eight year drought, patience is needed. The federal government must retool those agencies and institutes bereft of stem cell expertise. The NIH must appropriate funding at a level needed to produce the kinds of results we need to have more encouraging news from the private sector. Finally, the states must enact policies that are in step with the new vision in Washington. This will take time. Once the US is back on track, then it can do what it does best: discover, translate, and develop the science and treatments for its citizens."

Here some links to other interesting stories on the Geron trial and its implications:ABC News, Wired News (Trounson heavily quoted), The Associated Press and the Los Angeles Times.

Correction

The CIRM YouTube item Jan. 22, 2009, incorrectly stated that CIRM posted 28 videos on the CIRMTV site. The correct figure is 14. The number of videos was listed twice in two different categories on the CIRMTV site.

Fresh Comment

Jesse Reynolds of the Center for Genetics and Society of Oakland, Ca., has posted a comment on the "Klein Wants $10 Billion" item. In it, Reynolds identifies as the source of the job multiplier information used by Klein a much-criticized, $200,000 report paid for by the Prop. 71 campaign in 2004. The document was prepared by a Stanford economist who Klein did not identify in the material he presented last Wednesday to the CIRM directors Finance Subcommittee.

Geron Stock Finishes Day up 36 Percent

Geron stock closed at $7.09 today, up 36 percent with the biggest one-day gain in five years, according to Bloomberg.com.

Bloomberg said,

"The FDA’s action may help pave the way for other companies to get permission to start their own trials, said Christopher Thomas Scott, director of Stanford University’s Stem Cells in Society program.

"'Geron is a path-breaking company in getting the first stem-cell trial,'Scott said in a telephone interview yesterday. 'The message is that FDA now feels comfortable with the measure of risk the first trial will contain for the first few patients.'

Bloomberg continued,

"Two other U.S. companies, Advanced Cell Technology Inc. of Los Angeles, and closely held Novocell Inc., based in San Diego, are using embryonic stem cells to develop therapies and are working to begin clinical trials.

"Less than one biotechnology drug out of three that enter clinical trials is approved, said Joseph DiMasi, an economist with the Tufts University Center for the Study of Drug Development in Boston. That risk of failure also applies to Geron, which has spent $45 million preparing an FDA submission on the stem-cell treatment."

From the Reed Family: A Thankful Perspective on the Geron Trials

Don Reed of Fremont, Ca., is a nearly tireless and good-hearted advocate for human embryonic stem cell research. Today's announcement concerning the Geron clinical trials has special meaning for him and his family. We asked him for comment. Here is what he sent.

"MAGNIFICENT BEGINNING

"Don, Roman, and the entire Reed family would like to congratulate Geron Corporation and the stem cell research community for today's wonderful news.

Years ago, California's Roman Reed Spinal Cord Injury Research Act of 1999 funded Dr. Hans Keirstead's pioneering work, just approved for human trials by the FDA. These particular trials, to re-insulate nerves in the damaged spine, will involve only newly injured individuals. But they are forerunners of the day when paralysis will no longer be an automatic life sentence in a prison of immobility.

"Roman was asked by a reporter: what was the first thing he would do on the day when regenerative medicine allows him to walk again?

"He replied: 'I want to walk down the beach, hand in hand with my wife Terri, and toss a ball around with my children.'

"A small dream -- and an enormous one-- because if we can cure paralysis, the very symbol of that which has been called incurable, we can do anything.

"Congratulations to all, and may the New Year, and the new administration, live up to this magnificent beginning.

"Thank you,"

Don C. Reed

Fresh Details on $500 Million Biotech Loan Plan and Underwriting

For those of you looking for more information on the California state plans to start a $500 million loan program for the biotech industry, you can find the latest details stuck away in the Internet archives of the state's stem cell agency.

The biotech loan program and a proposal to hire a delegated underwriter to run it will come up at next Friday's CIRM board meeting in Burlingame, Ca., with an off-site, teleconference location in Broomfield, Co.

No significant information is available via the agenda for the board meeting, but eight documents related to the loan proposal can be found. They were posted on Wednesday just hours before the meeting of the Finance Subcommittee at which they were to be considered. The dilatory posting, a perennial problem at CIRM, basically denied the public or interested parties the ability to make any sort of thoughtful comment at the Wednesday session.

Following the meeting, the documents could only be found shunted off to the archives, five layers down from the home page. That's because the agency generally, but not always, moves agendas for past meetings to its archive site. At some point, CIRM may move the links to the documents to the agenda for the board meeting, three layers down from the CIRM home page.

We asked Don Gibbons, chief communications officer for CIRM, what action was taken on the biotech loan documents. Here is the verbatim text of his reply:

"passed a motion to recommend the LAP to the board as is with the provision that council work with Roth, Goldberg and Penhoet between now and the meeting to refine language on page 9 (redline version) related to loan repayment when project is abandoned."

LAP refers to the loan adminstration policy.

We have not had a chance to digest all the information contained in the eight documents, but wanted to let interested parties know where they could be found. One document came from Silicon Valley Bank and another from Orix Venture Finance in response to a CIRM request for information on structuring the underwriting program.

The Silicon Valley document consisted of only a PowerPoint presentation, apparently a duplicate of one made last year to a panel of CIRM directors. Previously, however, the Silicon Valley presentation was not available via the CIRM website.

Other documents include various versions of the loan administration policy.


(If you have thoughts on any of these issues, you can comment by clicking on the word "comment" below. Anonymous comments are permitted. Or you can write CIRM directly via its web site and ask to have your comments made part of the public comment allowed at each CIRM board meeting.)

UCI Touts Role in Geron Trials

The University of California, Irvine was quick today to put out a news release on its role in development of the Geron therapy that is now moving into history-making clinical trials.

The school headlined the release: "UCI behind world's first embryonic stem cell study in humans." And it said,

"A therapy developed at UC Irvine that made paralyzed rats walk again will become the world’s first embryonic stem cell treatment tested in humans."

Specifically mentioned were Hans Kierstad (see lower photo) and Gabriel Nistor, who published their work in 2005, generating considerable international attention. Kierstad's smiling face dominated the entire home page of UCI today. We asked Nistor to send us a photo which is at the top.

The release also noted that UCI has received more than $52 million from the California stem cell agency. It did not mention that Susan Bryant, vce Chancellor for research at the UCI School of Biological Sciences, and Oswald Steward, director of the UCI Reeve-Irvine Research Center at the campus, sit on the agency's board of directors.

Stem Cell Stocks Rising on Geron's Good News

Geron's high-flying coattails are having a sharp impact today on the prices of some of its competitors.

Streetinsider.com reported earlier today that Aastrom Biosciences, Inc., of Ann Arbor, Mi., and StemCells Inc. of Palo Alto, Ca.,, both jumped 30 percent. At that point, Geron was up 50 percent. (StemCells Inc. was founded by Irv Weissman of Stanford, Fred Gage of the Salk Institute and David Anderson of Caltech.)

Meanwhile scientist Hans Kierstad of UC Irvine or one of his associates has emblazoned "a flash" on the website at California Stem Cell Inc. Geron's hESC therapy is based on technology invented and co-developed by Kierstad and Gabriel Nistor, also of UC Irvine. Kierstad is the chairman of the California Stem Cell scientific advisory board, of which Nisor is also a member.

At the time of this writing, Geron's stock price stood at $7.64, up 47 percent.

CIRM Publishes Reviews on $66 Million Grant Round; Names of Applicants Remain Secret

Ranked and scored reviews of applications for $66 million in stem cell/biotech training grants can now be found on the web site of the California stem cell agency, which is expected to give away the money next Thursday or Friday.

None of the names of the institutions proposing the programs have been disclosed by CIRM in keeping with its longstanding and mistaken policy of not disclosing the identities of those who are seeking public funds. The names of the winners ultimately will be made public, after they been officially approved. CIRM never releases the names of the losers.

The recommendations, which are in reality de facto decisions, of the Grant Working Group that are virtually certain to be ratified by the full CIRM board can be found in the categories of "recommended for funding" and "not recommended for funding." CIRM directors almost never have overturned those decisions by grant reviewers in the process of approving 253 grants since 2005.

Something of a case can be made for not revealing the names of individual scientists who compete for the grants on the grounds that it could be embarrassing. But not to disclose the names of the enterprises – many of which are publicly funded institutions – serves no public interest. It prevents the public from making thoughtful comments on the grants and has led to an embarrassing situation for CIRM itself involving a $2.6 million grant to CHA RMI of Los Angeles. (Following the flap, CHA ultimately withdrew its application.)

In contrast, stem cell insiders are not likely to have too much difficulty in determining the identities of most of the applicants based on the material in the grant reviews.

That said, CIRM is to be commended for posting the links to the reviews on Thursday in reasonably timely fashion ahead of the CIRM board meeting.

Here is where you can find the reviews for the $18 million program to train lab personnel and the $48 million effort to train young scientists.

San Diego UT: California Stem Cell Effort Leads Nation

In a fortuitous bit of timing, the leading newspaper in one of California's stem cell hotbeds today ran a front page story declaring that the state's "taxpayer-funded investment has allowed it to build the infrastructure that puts it ahead of every other state."

The article by Terri Somers in the San Diego Union-Tribune was prepared earlier but it was published the same morning that Geron announced the federal go-ahead on its vaunted hESC clinical trials. The timing promises to generate more general interest in Somers' piece and the field overall.

Somers constructed a broad overview of the state of stem cell research in the nation but particularly in California. Her piece does sound some cautionary notes, including this from researcher Larry Golstein of UC San Diego.

"The devil will be in the details," said Goldstein of how the Obama Administration deals with both executive regulation of stem cell science and legislation controlling hESC reserarch.

Geron Stock Soars 20 Percent on Approval of Clinical Trials

Today is a big, big day for California's Geron Corp., which has received federal approval to begin "the world's first study of a treatment based on human embryonic stem cells."

The Associated Press covered the basics of the action. An early version of its story said said,

"The company gained federal permission this week to inject eight to 10 patients with cells derived from embryonic cells, said Dr. Thomas Okarma(see photo), president and CEO of Geron Corp. of Menlo Park, Calif.

"The patients will be paraplegics, who can use their arms but can't walk. They will receive a single injection within two weeks of their injury.

"The study is aimed at testing the safety of the procedure, but doctors will also look for signs of improvement like return of sensation or movement in the legs, Okarma said."

Andrew Pollack of the New York Times provided a nuanced, comprehensive piece. He reported on the political and scientific implications and quoted Robert Klein, chairman of the California stem cell agency, on the move.

Klein said the FDA approval was tied to the Obama Administration although that was denied by an FDA spokesman and Geron.

Geron's stock rose 20 percent early this morning, hitting $6.26 at 9:47 a.m. EST, close to its 52-week high of $6.55.

Here are links to the Geron press release and other stories about the much-delayed trial: Geron (includes video), Wall Street Journal , AFP and Financial Times.

Klein Wants $10 Billion in Aid From Obama Administration

The chairman of California's state stem cell research agency, Robert Klein, has unveiled more details of what appears to be a $10 billion-plus proposal seeking assistance from the Obama Administration to aid the biomedical industry.

Some of Klein's proposals would clearly benefit industry and researchers in California, but they also could have an impact in locations throughout the nation that have either major biotech industry centers or research facilities.

Klein laid out his thoughts in a draft of a five-page letter during a meeting Wednesday of the directors' Finance Subcommittee. John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., who sat in on the session, said the meeting was running late and Klein's plan was not even discussed. Klein said people should read it so it can be taken up at CIRM's full board meeting next week.

Klein proposed five "federal initiatives." They include a $1.5 billion biomedical lab construction effort, $2.1 billion for assistance to some established state government research programs (presumably including California), a $3 billion loan guarantee program that appears to dovetail with Klein's $500 million biotech lending plan and $6 billion for increased NIH funding of biomedical research. The fifth element would allow some small biotech firms to sell their R&D credits. It contained no price tag.

The letter and accompanying chart promised that the proposals would generate 159,832 "job years" based on estimates provided by an unidentified Stanford economist. The Klein letter did not explain the assumptions underlying the multipliers that were used to come up with the job count.

The letter appears to be directed primarily at Congress. However, it is not clear whether it has actually been sent.

The proposals are the subject of a report scheduled to be discussed next Thursday by CIRM directors in Burlingame. We have asked Don Gibbons, chief communications officer for CIRM, if Klein intends to seek a vote on the proposals or whether he will simply ask them to sign it. He could take an assistance pitch under his signature alone, but we suspect that he would like to have all the board members endorsing it. One question that directors should ask is whether Klein or other CIRM employees will be traveling to Washington or other locations to lobby for the proposals. Another is how much staff time is being devoted to this effort at a tiny, 38-person agency that is chronically understaffed.

Klein's proposals to join the bailout/stimulus gravy train in Washington have grown rapidly over the past few months. CIRM itself, however, is currently well-financed and needs little assistance from the federal government. We have noted that there is a certain logic to Klein's effort. But we have also noted that the Obama Administration's financial pie is limited and that CIRM should step out of the federal hand-out line.

CIRM Makes a YouTube Move

The California stem cell agency has joined YouTube, an Internet video-sharing service used by millions worldwide.

CIRM, the world's largest source of funding for hESC research, hooked up with YouTube on Jan. 15 with videos of California scientists talking about their research. Since then, 259 videos have been watched, as of this writing. Currently CIRM appears to have 28 different videos on the site.

The service is called CIRMTV, and it is part of CIRM's expanding PR effort. On Tuesday, CIRMTV keyed off the Obama inauguration with a four-minute video of CIRM President Alan Trounson and UC San Francisco researcher Susan Fisher (see photo) discussing the likely impact of the new president.

The inaugural video currently has the highest number of views, 109, with one of Hans Kierstad of UC Irvine coming up in second with 76 views, outstripping UC San Diego's Catriona Jamieson, who had 57, and Stanford's Irv Weissman, who had 48.

As always with the Internet, the main problem is how to build traffic. CIRM needs lots of links to the site to build viewership along with comments on the material from outside sources, ranging from print publications to other Internet sites. However, stem cell research has limited general appeal considering the other matters on YouTube, and it is unrealistic to expect massive numbers.

Don Gibbons, chief communications officer for CIRM, reports that CIRMTV has "zero outside cost" and requires "minimal staff time."

The same videos can be seen on the CIRM web site. In our case, the YouTube version loaded and played smoothly while the CIRM site stalled repeatedly. There could be a host of reasons for that, ranging from server capacity to video quality to the bandwidth of our connection.

Normally the videos cannot be downloaded for viewing later when you are not connected to the Internet. But Wikipedia reports that free software can be downloaded to provide that capability.

On Tuesday, CIRM also devoted a good chunk of its home page to the inauguration, featuring both the Trounson-Fisher video and a link to a two-page statement on the impact of Obama's expected stem cell moves.

For more on California state government uses of YouTube, see this piece by Daniel Wood of the Christian Science Monitor.

Stem Cell Research Funding in Lieu of Everything Else?

Attorney Kristie Prinz of the California Biotech Law Blog says the points raised in the our "Millions for Science vs. Cuts in Medical Help for the Poor" are well-taken.

She writes,

"Clearly, California voters believed in the value of stem cell research when they voted for Proposition 71, and there is little doubt that stem cell research has the potential to be tremendously beneficial to the state's biotech community, but did the voters really intend to fund stem cell research with state taxpayer money in lieu of everything else?"

Prinz continues,

"In my opinion, Jensen's point is well-taken.  As a transplant from the South--not Southern California, but the 'real' South--I have always been uncomfortable with California's ballot initiatives for the simple reason that I always felt like I was missing some critical information to making a decision: the budget.  I have run my law firm now for five years, and I can assure you that while I made some mistakes early on, I quickly learned that a business owner cannot make any spending decision without carefully reviewing the budget that will finance such spending.  I serve on a nonprofit board of directors, and the same is true in making spending decisions for that organization.

"Yet, as a California voter, I am somehow expected to make a decision on a ballot initiative without being able to see the overall financial picture of the state.

"Does this really make sense?"

If you have thoughts on any of these issues, you can comment by clicking on the word "comment" below. Anonymous comments are permitted. Or you can write CIRM directly via its web site and ask to have your comments made part of the public comment allowed at each CIRM board meeting.

CIRM Vice Chairman Vote Delayed

The California stem cell agency has deferred a decision on a vote to select the new vice chairman of its board of directors – State Democratic Party Chairman Art Torres or Duane Roth, head of an economic development group and who currently sits on the 29-member board.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., wrote about the delay on his organization's blog.

He said,

"The surprising delay of the vote will give ICOC members more time to think about exactly what attributes the vice chair should have.  For some members the decision could come down to this: If Roth loses, he remains on the board and presumably continues as the productive member many think he has been. Torres would be a new player, bringing strong political connections to Sacramento and Washington -- but does the California Institute for Regenerative Medicine (CIRM) really need and benefit from that?"

Simpson also has a statement from Roth on why he is the best candidate for the job. Torres has been in Washington for the inaugural, and no statement is currently available from him.

Gravy Train Bedfellows: Catfish Farmers and California Stem Cell Research

What do a couple of porn kings, some plumbers and bricklayers, travel agents, yacht builders and catfish farmers have in common with the $3 billion California stem cell agency?

They are all looking to ride the trillion-dollar, bailout/stimulus gravy train that is underway in Washington, D.C.

Everybody is doing it, so why not us? That's the logic.

We must, however, add a qualifier to the business about CIRM, which continues to operate amply funded despite a $40 billion budget crisis affecting other California state departments.

CIRM directors are not yet officially begging for a handout from the Obama administration. But the matter, championed by CIRM Chairman Robert Klein, is breezing through the agency. It comes up again tomorrow afternoon at a meeting of the directors Finance Subcommittee, where it is likely to be sent on with a favorable recommendation to the full board unless some board members stand against Klein.

As is often common with CIRM, the latest specifics about Klein's gravy-train proposal are being withheld from the public even though the meeting is less than 24 hours from now. (The agency's failure to provide such information is persistent, corrosive to the public trust and puts the lie to Klein's pledge of transparency and openness, but that is a subject of another item.)

Here is what we have been able to ferret out about Klein's plan to snag some of the federal goodies. He wants a federal guarantee for CIRM's $500 million biotech lending program. With such a guarantee, the size of the program could be boosted to $1 billion, Klein says. Another element is a move to improve research and development tax credits for the biotech industry. (You can find the latest, Dec. 19, 2008, discussion of this here in a CIRM transcript.) Klein may have other proposals in mind as well.

There is a logic to Klein's effort. Huge amounts of money are going out the door. Biotech ventures, not to mention stem cell research, are chronically short of cash. The industry has high promise, according to conventional wisdom. If you are running a business, it behooves you to grab the cash when you can. Next year, the door will be closed.

But the federal largess comes with a cost, maybe not to CIRM but to the nation as a whole. Many competing demands exist, some for worthwhile efforts that will die if they do not receive help. Klein's proposals may well be be competing with other calls for assistance from California state government or cities and counties, not to mention $1 billion promised by President Obama for autism research.

The financial pie is, in fact, limited. CIRM is well-funded and can progress quite smartly without siphoning off federal assets that might be better used. Moreover, the biotech industry has an army of lobbyists who are more than capable of carrying their own water without the assistance of CIRM, which is a minuscule player in Washington anyway.

The Wall Street Journal today reported on the impact of the competition for federal dollars. It said,

"...(T)he unprecedented largess granted through the $825 billion economic-stimulus bill may bind Obama's hands later. The growing deficit will make it difficult, if not impossible, to fulfill spending promises that total hundreds of billions of dollars....This burst of spending so early in his presidency could also hobble Mr. Obama politically in the years to come as the country's soaring budget deficit demands cutbacks in social programs and even potential tax increases."

I may be old-fashioned, but under such circumstances, I think CIRM should remove itself from the hand-out line and get back to the doing the best it can with its already ample resources. As another president remarked at his inauguration 48 years ago,

"Ask not what your country can do for you. Ask what you can do for your country."

(As for those porn kings, catfish farmers and others mentioned earlier, here are couple of links to them in stories in the Los Angeles Times and New York Times as well as a Phoenix, Ariz., radio station. The porn kings request seems to a bit of humor, highlighting the unsavory nature of the gravy train bandwagon.)

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If you have thoughts on any of these issues, you can comment below by clicking on the word "comment" or you can write CIRM directly via its web site (info@cirm.ca.gov) and ask to have your comments made part of the public comment allowed at each CIRM board meeting.

The public can participate in the meeting tomorrow afternoon at teleconference locations in La Jolla, Berkeley, San Carlos, Palo Alto, Irvine and two in San Francisco. Addresses can be found on the agenda.

Digging Into the Method of CIRM's Creation

For those of you interested in knowing more about California's flawed initiative process – the device that created the state's $3 billion stem cell research effort – you can learn a little more without reading the entire 402-page report cited in the "CIRM Defends" item.

Instead, you can see a very brief version of it in the Los Angeles Times from Nov. 10, 2008. The op-ed piece by Robert Stern and Tracy Western notes that a record 63 initiatives have been on the ballot in the decade since 2000.

Spending on the measures hit a record $330 million in 2006. Stern and Western, top officials at the Center for Governmental Studies in Los Angeles, said,

"What all this suggests is that California's policy agenda today is increasingly driven by ballot initiatives rather than by the elected members of the Legislature. Prompted in many cases by legislative deadlock or legislative inaction, these initiatives effectively shift the policymaking burden to voters, and often leave them overwhelmed and bewildered by poor drafting, misleading campaigns, look-alike counter-initiatives and highly technical policy details.

"The ballot initiatives that voters are being asked to decide are too often lengthy, rigid, inflexible and error-prone. The initiative process is badly outdated and needs to be reformed."

CIRM Defends Its Spending, Positive Impact Cited

The California stem cell agency today commented on the "Millions for Science vs. Cuts in Medical Help for the Poor" item but seems to have missed the point.

Here is full text of what Don Gibbons, chief communications officer for CIRM, sent along:

"Your item on the California budget makes me think you are Herbert Hoover's grandson. CIRM bonds are structured so that there is no repayment prior to January 2010. That means our bonds have no impact on the general fund that is in trouble. All of our grants are pure economic stimulus. When half of Washington is ringing its hands over the fact that “not enough shovel-ready projects” exist to absorb the needed stimulus, shuttering projects that are already having a positive impact, with no negative impact, makes no sense. And the Obama administration is talking about high tech stimulus, like our research, as well as bricks and mortar, like our facilities construction."

Putting aside his personal comments about my ancestry, Gibbons does not deal with the essential point of the item, which is whether it is good public policy to lock up state funds via the initiative process and then hamstring elected leaders when it come time to deal with issues that go well beyond such relatively minor matters as stem cell research.

Beyond that, CIRM's spending, financed by the state of California, flies in the face of the hardship seen elsewhere and poses PR and legislative problems that may ultimately damage the agency. And that is regardless of whether the spending is legal, justified or economically beneficial. State employees are being laid off and salaries cut while three CIRM executives rank in the top ten highest paid state employees while running a tiny, 38-person staff. That is not a image to wave in front of lawmakers right now.

As we have observed in the past, CIRM does have an economic impact, but it is relatively minor in the context of the California economy. In regards to CIRM and economic stimulus/bailouts in Washington, we will have more on CIRM's moves to seek federal assistance later today or tomorrow.

The issues surrounding the creation of CIRM via ballot initiative go well beyond the agency itself and are part of the problems that have helped to create the state's $40 billion budget crisis. It is a crisis that will strike at CIRM as well if it is not solved in the next month or two.

Last summer, the Center for Governmental Studies, a respected nonpartisan think tank in Los Angeles, released its latest report on the California initiative process. "Democracy by Initiative." The 402-page study cited Prop. 71, which created CIRM, as an example of an initiative sponsored by "wealthy elites," one that contained "deficiencies in drafting." "Ineptly written," one critic was quoted as saying.

The report declared:

"Jean Ross, executive director of the California Budget Project, has described initiatives as a case of eating 'dessert without having to eat your vegetables. You can put $3 billion worth of stem cell research bonds on the ballot [Proposition 71] without the voters having to tell you where the $300 million a year to pay those bonds is going to come from, and without asking voters to make the kinds of priorities and choices that the executive branch and legislative branch have to. The voters didn’t have a choice, do you want to cover all children with health insurance in California for 10 years, or do you want stem cell bonds? Those are the kinds of choices that come from the legislature.'"

The report also noted that it cost $6.9 million to qualify Prop. 71 for the ballot, including $2.7 million to paid circulators. CIRM Chairman Robert Klein, who says he wrote the measure, contributed $1.9 million to the qualification process, 70 percent of the total for paid circulators.

Tens of millions more were spent during the campaign to win voter approval.

If you have thoughts on any of these issues, you can comment below by clicking on the word "comment" or you can write CIRM directly via its web site and ask to have your comments made part of the public comment allowed at each CIRM board meeting.

Fresh Comment

"Anonymous" has left a fresh comment on the
"Riddle of the Stem Cell Trinity" item.

A California Stem Cell Question: Millions for Science vs. Cuts in Medical Help for the Poor

As California's public universities are turning away students and state cash is being cut for projects ranging from research labs to affordable housing, the California stem cell agency is on track to give away $66 million later this month.

The awards will come following CIRM's handout of more than $19 million last month.

No one – except for those congenitally opposed to hESC work -- is contending that all these millions are going to unworthy scientists or to dubious research. But the CIRM giveaways stand in marked contrast to what is happening to the rest of the state in the light of its $40 billion budget crisis.

If CIRM were, say, part of the state Department of Health, chances are good that it would not be able to spend taxpayer money so freely.

The disparity raises major public policy issues about the use of ballot initiatives to promote and protect various causes. Should the elderly and poor see their much-needed assistance and medical care cut while cash flows unimpeded, in this case, to researchers, some of whom are already exceedingly well funded?

A ballot initiative, Prop. 71, is just what created the $3 billion stem cell effort in 2004 – not carefully crafted legislation hammered out over months with all parties having their say in public. The measure was drafted in secret by CIRM Chairman Robert Klein (with the help of a couple of others he rarely acknowledges) and placed on the ballot with a signature-gathering effort that probably cost $1 to $2 million. (That is the most common way of placing an initiative on the ballot in California – hiring firms that specialize in such efforts and paying them on a per signature basis.)

Voters did speak, approving Prop. 71 with a 59 percent vote. However, the measure faced only the most feeble opposition. The groups concerned about ethical issues involving hESC were largely focused instead on re-electing George Bush as president.

The upshot is that the Golden State can do little now to enact even the most minor needed changes in the Prop. 71. It locked into state law and the state Constitution true minutia, such as specifying that CIRM Chairman Klein is in charge of putting out the annual report. Prop. 71 enacted super-majority quorum requirements that hamper the agency in conducting its official business and capped its staff size at a ludicrously low 50 persons to run a $3 billion program. And it created a board of directors dominated by the very enterprises that benefit the most from CIRM largess.

Klein, in order to insure that he and the agency would not have to heed the wishes of the governor or other elected officials, wrote into Prop. 71 an unprecedented, constitutional requirement for a 70 percent vote of the legislature to change the law, plus the signature of the governor. That makes it virtually politically impossible to make alterations in the measure. By contrast, even passing a budget for the state of California or raising taxes requires only a two-thirds vote. While less than that for changes in CIRM, the two-thirds requirement is now barring a solution to the state's disastrous financial problems.

All of that is a backdrop to the upcoming CIRM directors meeting Jan. 29 in Burlingame, Ca. In addition to giving away the big bucks, an overdue review of its financial condition is on the agenda. So far, however, no financial documents are posted on the CIRM web site. The subject came up last month repeatedly at the directors meeting in Irvine. Klein, however, shied away from discussing specifics.

But here are the basics: CIRM depends on state bonds for cash. The money flows directly to the agency. The governor and the legislature cannot touch it. But the state has stopped issuing bonds because of its precarious condition. CIRM says that so far it has plenty of cash. But it has awarded more than $600 million in multi-year grants, which need regular payments. One contingency Klein promises to discuss is the private placement of bonds. One would think those would have limited appeal when not even the state of California can find a market for its bonds.

Private placements, moreover, are not likely to be necessary. If California cannot get its financial act together in the next month or two, it will face problems of a magnitude that will dwarf such concerns as stem cell research. That pressure seems certain to force the state's public servants to cobble together a solution before CIRM runs aground financially. Nonetheless contingency plans are always good.

The grants scheduled to be awarded include $18 million to support up to 10 awards for three years "to augment the ranks of laboratory personnel trained in the state-of-the-art techniques required by stem cell research labs." Certainly a worthy endeavor while the state's educational institutions are being whipsawed financially.

The second round involves $48 million in training grants for young scientists, including stipends of up to $77,000 for three years, including research and travel, tuition and health insurance in some cases. Another worthy endeavor, an investment in the future. It is a remake of the first-ever grants awarded by CIRM in September 2005. The agency didn't have the money then to fund the grants immediately, but the cash ultimately came through and helped make the state attractive to new, young talent.

If you have thoughts on any of these issues, you can comment below by clicking on the word "comment" or you can write CIRM directly via its web site and ask to have your comments made part of the public comment allowed at each CIRM board meeting.