This blog provides news and commentary on public policy, business and economic issues related to the $3 billion California stem cell agency, officially known as the California Institute for Regenerative Medicine(CIRM). David Jensen, a retired California newsman, has published this blog since January 2005. His email address is djensen@californiastemcellreport.com.
The Proposition 71 campaign of 2004,
which has filled the coffers of more than 500 researchers and
institutions with $1.4 billion, was the subject today of a discussion
about miracles.
Specifically did the campaign promise
miracles?
The story begins with a column May 27
by Michael Hiltzik of the Los Angeles Times about the
"Son of CIRM" initiative, Proposition 29, on the June ballot. It
seeks to fund more medical research with $800 million handed out by
an organization patterned after the stem cell agency.
In the column, Hiltzik did not speak
well of the agency and said the 2004 campaign promised miracles.
In a letter today in the Times, J.T,
Thomas, chairman of CIRM, and Alan Trounson, president of
CIRM, said the campaign did not promise "miraculous cures."
Hiltzik filed a riposte this afternoon
on his blog, quoting from TV campaign ads featuring Christopher
Reeve and Michael J. Fox. Hiltzik also wrote,
"Joan Samuelson, a leading
Parkinson's patient advocate, is shown in another ad asserting,
'There are more Americans than I think we can count who are sick
now, or are going to be sick in the future, whose lives will be saved
by Prop. 71.' Shortly after the measure passed, Samuelson was
appointed to the stem cell program's board.
"Do these ads amount to promising
'miracles'? Given that the essence of scientific research is that no
one can predict the outcome, to assert as fact that 'lives will
be saved by Prop. 71' is plainly to promise something downright
extraordinary, if not outright miraculous.
"Yes, this is the language of
advertising, not research, but for Trounson and Thomas to pretend
that the ad campaign somehow promised merely 'good science' and not
specific outcomes, as their letter suggested, is (at least)
miraculously disingenuous."
The top two leaders of the California
stem cell agency today took strong issue with a column in the Los
Angeles Times that spoke less than favorably about the history and
efforts of the state research enterprise.
Pulitzer Prize-winning writer Michael
Hiltzik mentioned California's $3 billion stem cell effort in a piece
May 27 about Proposition 29 on the June ballot. The "Son of CIRM" initiative,
tailored after the ballot measure that created the stem cell agency
in 2004, would provide $800 million annually for research into
tobacco-related illnesses. The money would be derived from a $1
dollar-a-pack tax on cigarettes.
Among other things, Hiltzik said,
"Proposition 71(the stem cell
initiative), you may recall, was sold to a gullible public via
candy-coated images of Christopher Reeve walking again
and Michael J. Fox cured of Parkinson's. The
implication was that these miracles would happen if voters approved a
$3-billion bond issue for stem cell research."
The reponse from J.T. Thomas, chairman
of the CIRM board and a Los Angeles bond financier, and CIRM
President Alan Trounson came in the form of a letter to the editor.
The letter was only four paragraphs long and may have been cut prior
to publication, which is common practice for letters to the editor.
We have asked CIRM about whether there is more to the letter. (Following publication of this item, CIRM spokesman Kevin McCormack said the complete text was published by the Times, which has a 150-word limit on letters. The CIRM letter was 148.)
Here is the full text as published.
"In his article opposing
Proposition 29, Michael Hiltzik makes a number of misleading
statements about Proposition 71, the voter-approved measure funding
stem-cell research.
"No ads for Proposition 71
promised miraculous cures. They promised good science, and that is
what is being funded, with more than 62 promising therapies for 40
different diseases on their way to clinical trials.
"The stem-cell agency has
conflict-of-interest rules as strict as any government agency. We
undergo state-mandated audits to ensure we follow all rules and
regulations, and the most recent one, completed just this month,
praised the agency for its performance.
"As for being 'an unwieldy
bureaucrac just 6% of the money we get goes to pay for staff; 94%
goes to fund research here in California, creating new jobs,
generating income for the state and, most important, helping find
treatments for deadly diseases."
As the $3 billion California stem cell
agency intensifies its efforts this year to push cures into the
clinic, a Canadian academic is raising a host of serious questions
about the drive towards commercialization in scientific research.
Exhibit No. 1 was stem cell research,
in an article Monday in The Scientist magazine. It was written
by Timothy Caulfield, a Canada Research Chair in Health Law
and Policy, and a professor at the Faculty of Law and School of
Public Health, University of Alberta. He said,
"Commercialization has emerged as
dominant theme in both the advocacy of science and in the grant
writing process. But is this push good for science? What damage
might the market’s invisible hand do to the scientific process?"
Caulfield noted that research has
played a role in commercial enterprises and that the goal-oriented
research has led to important developments. But he also wrote,
"There are many recent examples of
how commercialization plays out in top-down policy approaches to
science. The UK government recently justified a £220 million
investment in stem cell research on the pledge that it will help
stimulate an economic recovery. A 2009 policy document from
Texas made the optimistic prediction that stem cell research could
produce 230,000 regional jobs and $88 billion in state economic
activity. And President Obama’s 2011 State of the
Union address went so far as to challenge American researchers
to view this moment in time as 'our generation’s Sputnik
moment'—the opportunity to use science and innovation to drive the
economy, create new jobs, and compete with emerging economies, such
as China and India.
"The impact of this
commercialization pressure is still unfolding, but there is a growing
body of research that highlights the potential challenges, including
the possibility that this pressure could reduce collaborative
behavior, thus undermining scientific progress, and contribute to the
premature application of technologies, as may already be
happening in the spheres of stem cells and genetic
research. For example, might the controversial new Texas stem cell
research regulations, which allow the use of experimental adult
stem cell therapies without federal approval, be, at least in part, a
result of the government’s belief in the economic potential of
the field?
"Such pressure may also magnify
the growing tendency of research institutions and the media to hype
the potential near future benefits of research—another phenomenon
that might already be occurring in a number of domains and
could have the effect of creating a public expectation that is
impossible to satisfy.
"Furthermore, how will this trend
conflict with the emerging emphasis on an open approach to
science? A range of national and international policy entities, such
as the Organisation for Economic Co-operation and Development,
suggest 'full and open access to scientific data should be adopted as
the international norm.' Can policy makers have it both ways?
Can we ask researchers to strive to partner with industry and
commercialize their work and share their data and results
freely and as quickly as practical?"
In late July, the governing board of
the California stem cell agency is expected to make some hard
financial decisions about where its future spending will be targeted.
Just last week it approved a five-year plan with explicit goals for speeding stem cell research into the marketplace.
A onetime aspirant to become the leader
of the free world was in California recently touring the lab of a
stem cell researcher in La Jolla.
The visit was somewhat unusual. The
visitor was Rick Perry, the governor of Texas who campaigned
unsuccessfully for the Republican nomination for president and who is
a strong opponent of hESC research. The lab is run by Scripps' Jeanne
Loring, who engages in hESC research among other things.
The event – if you can call it that –
also led to a video on YouTube of Perry at the lab, three blog
items by UC Davis stem cell researcher Paul Knoepfler and
responses from Loring and Michael Thorsnes, who put up
the video and who has what he modestly describes as
"significant political experience" in the Democratic party.
Thorsnes, a retired San Diego lawyer and now a photographer, raised about $5.4 million for John Kerry's and Al Gore's
presidential efforts as well as other Democrats.
Issues raised in all the hoopdedoo include
consorting with the enemy, openness, exploitation of scientists for
political gain, public education and education of political leaders,
promotion of patient causes, rushing to judgment and even strange
bedfellows.
As far as we can tell, Perry's visit
received no attention in mainstream media, but Thorsnes, a key figure
in arranging the visit, put up a video of it on the Internet.
Knoepfler, who is the rare stem cell scientist with a blog, saw the
video and on May 21 raised what he now calls "a big stink"
in a blog posting. Subsequently Knoepfler toned down the language in
that item because of what he says was its "overly extreme
verbiage."
For several years now, Knoepfler has
been writing a fine blog that deals mostly with stem cell science but
also public policy, biotech business and more. Unfortunately,
however, his original item is no longer available, but our
recollection is that Knoepler's item was strong, indicating that
Loring should not have allowed the visit because it would bolster the
political fortunes of an enemy of science or at least hESC science.
Knoepfler cited what he called the campaign-style video as evidence
of exploitation.
On May 24, after a related May 22 item dealing with Rick Perry, Knoepfler said he rewrote the original item to temper his comments as a result of learning more
about what led up to the visit. That included more information from Thorsnes, who is chair of the executive advisory board of the
Parkinson’s Disease Association of San Diego.
Loring was quoted in original item as
saying,
"I think that scientists have an obligation to educate the
public. I welcome visits from both stem cell proponents and
opponents, so I have a chance to clarify any misconceptions about
what it is that we really do. We have to figure out how to deal with
our opponents as well as our friends. I have a policy of welcoming
opponents so I can teach them. It works. Education wins minds."
The California Stem Cell Report
queried Loring about any additional comments she had on the subject.
She replied,
"Governor Rick Perry left my lab
understanding far more about induced pluripotent stem cells than he
did when he arrived. If we don't engage those who don't share our
views, who will tell them the truth? How will they know that we are
ethical and working to improving human health?
"The visit was arranged by Michael
Thorsnes, a well-known Democratic fundraiser. He is a very
impressive person who knows politicians of every stripe, and he
arranged the meeting with Perry so that I could explain our project
to make iPSCs from people with Parkinson's disease, and our work
using iPSC derivatives in multiple sclerosis. Perry is promoting
'adult' stem cell therapy in Texas, and I wanted to be sure that he
understood the difference between 'adult' stem cells and pluripotent
stem cells. He does. Educating those in positions of power is one
of our responsibilities, and I take it very seriously."
Our take: Perry is first and foremost a
politician with large ambitions. It is more than legitimate to think
about how such a visit might be used or misused. Nonetheless,
foregoing the opportunity to educate political leaders, who control
research spending in this country, means isolation of the scientific
community and less understanding on the part of lawmakers. As far as
Perry's possible political gain is concerned, it is conceivable that
the visit could backfire on Perry should a political opponent
characterize the Loring lab tour as some sort of endorsement by him
of hESC research.
Everybody's particular interests were
at work in this episode: Thorsnes' desire for support for his cause,
Perry's political schmoozing and his own special interest in stem
cells – pro adult and con hESC, and Loring's desire to promote
scientific research in general and to educate a major political
figure.
As for the video, Knoepfler now says he
would allow a lab visit by Perry but no video. But in this digital
age, that condition could kill a likely visit. If researchers want to
talk to politicians – and they should -- risks are always involved,
but that is the price of relying on public funding and building
public enthusiasm for continued support.
One final note: Earlier in this item,
we said it was unfortunate that the original Knoepfler post is not
available. Without being able to read the original, it is difficult
to completely understand the subsequent string of events. On the
California Stem Cell Report, when corrections or other changes are
made, we always retain something to show what the original item said
and note where changes are made and why. It keeps the record straight
and provides a necessary paper trail. All in all, however, from
Perry's visit to today, it has been a robust and healthy exchange for
the stem cell community and beyond.
One of the members of the governing
board of the California stem cell agency, Francisco Prieto, has
commented on the item yesterday dealing with California's Proposition 29, which
would create a CIRM-like agency to fund research into tobacco-related
illness.
Prieto, who is a Sacramento physician
and president of the Sacramento Sierra Chapter of the American
Diabetes Association, said in an email,
"I'm with George Skelton(Los
Angeles Times columnist). Whatever you think about ballot box
budgeting, you could take every penny raised by this and bury it in
the ground - it would still: Reduce smoking (mostly by preventing
some kids, the most price-sensitive group of smokers from starting) .
Save lives. Hurt the lying tobacco companies. All very good things."
In the last couple of weeks, two
well-respected Los Angeles Times columnists have visited what
might be called the "Son of CIRM" initiative on the
June ballot in California. It is aimed at fighting cancer by spending
$800 million or so annually on research with the money coming from a
$1-a-pack tax on cigarettes.
One of the columnists, Michael
Hiltzik, said the measure, Proposition 29, is another
example of why California is a world leader in "paving the road to hell with good intentions." The other writer, GeorgeSkelton, said,
"Prop. 29 would increase cancer
research. Reduce smoking. Save lives. Hurt the lying tobacco
companies. Good plan."
In his work at the Times, Hiltzik deals primarily with business
and financial news. He has written from time to time critically about
the $3 billion California stem cell agency. Skelton is a longtime
observer of the Califorrnia political scene and has been around since
Pat Brown was governor.
In a column slated for publication
Sunday, Hiltzik said that the drafters of the cancer measure closely
examined Proposition 71, which created the stem cell agency in
2004, and "managed to reproduce the earlier measure's worst
features."
He said the Proposition 71 "retired
the trophy for doing the wrong thing in the wrong way for what sounds
like the right reasons." Hiltzik wrote,
"Proposition 71, you may recall, was sold to a gullible
public via candy-coated images of Christopher Reeve walking
again and Michael J. Fox cured of Parkinson's.
The implication was that these miracles would happen if voters
approved a $3-billion bond issue for stem cell research. Who could be
against that?
"As it turned out, the stem cell
measure created an unwieldy bureaucracy and etched conflicts of
interest into the state Constitution. By last count about 85% of the
$1.3 billion in grants handed out by the program, or some $1.1
billion, has gone to institutions with representatives on the stem
cell board. The program is virtually immune to oversight by the
Legislature or other elected officials. For these reasons and others,
it has grappled with only mixed success with changes in stem cell
science and politics that have called its original rationale into
question."
Hiltzik continued,
"Proposition
29, similarly, places most spending from the tobacco tax in the hands
of a nine-member board that must comprise one cardiovascular
physician affiliated with a California academic medical center; the
chancellors of UC Berkeley, UC San Francisco and UC
Santa Cruz; two representatives of lobbying groups devoted to
tobacco-related illness (including one who has been treated for such
a disease); and three representatives from National Cancer
Institute-designated cancer centers in the state. There are
10 of the latter, including five UC campuses and the City of Hope.
Plainly, every member of the board will represent an employer that
thinks it's in line for some of the money."
Skelton took a different approach on May 14. Using the words of a federal judge,
he lambasted the tobacco industry for its "a
certified history of deception, distortion and lying. And let's not
forget fraud and racketeering."
Skelton dealt with the current TV ads
being aired in California against the initiative. They criticize the
measure for its conflicts of interest and also say that the money
would be spent out of state.
Skelton wrote,
"The anti-29 side is hitting this
hard: that the research money generated in California could be spent
out of state. And the politest thing possible to say about that claim
is that it's disingenuous. It's stretching something that's
conceivable into a virtual certainty."
Skelton continued,
"The anti-29 camp charges that
(the structure of the board) would allow a conflict of interest in
awarding contracts. But there are state laws that protect against
such conflicts.
"Anyway, the tobacco crowd can't have it
both ways: complaining that the money could be spent outside
California and also griping when the system is set up to practically
guarantee that it will be spent in California."
Our take:
Ballot box budgeting – which is at
the heart of both the stem cell and cancer initiatives -- is one of the
reasons that California is staggering from one year to the next in a
perennial financial mess. Initiatives also sometimes create nasty
blowback that can damage the effort that they ostensibly serve. Such
is the case with the California stem cell agency, which suffers from
management and other minutia embedded in Proposition 71 that is virtually
politically impossible to change.
Hiltzik wrote,
"Gov. Brown's latest budget
proposal calls for cuts of $1.2 billion in Medi-Cal and
$900 million in CalWorks (a relief program for families with
children) and steep cuts in financial aid for college students and in
court budgets. The University of California and Cal State systems are
becoming crippled by 20 years of cutbacks in state funding,
leading to soaring tuition charges. Tobacco-related illnesses create
some of the burden on Medi-Cal and other public healthcare programs,
yet a minimal portion of Proposition 29 revenue, if any, would go to
helping taxpayers carry that burden.
"With the overall state budget gap
approaching $16 billion, how can anyone make the case for diverting a
huge chunk of $800 million a year in new revenue to long-term
scientific research, whether in California or not? Even if you
believe that case can be made, the proper place to make it is in the
Legislature, where all these demands on the budget can be weighed and
balanced against one another — not at the ballot box, where the
only choice is to spend it the way the initiative's drafters choose
or not to raise it at all."
The California Stem Cell Report agrees
wholeheartedly.
(A personal disclosure: I worked for
Skelton when he was bureau chief for United Press International in
Sacramento some decades ago and consider him a friend. I am also
acquainted with Hiltzik but have not known him as long. I hold both
men in high regard.)
Media coverage of yesterday's $69
million in research awards and other matters involving the California
stem cell agency was nearly non-existent today.
That is not unusual, however, since the
$3 billion enterprise is not within the attention span of the
mainstream press and electronic outlets.
The California Stem Report could find
only two stories involving yesterday's actions. One by Ron Leuty
appeared in the San Francisco Business Times and was a look at the grant awards. The other appeared on Nature's website.
Unfortunately, Nature's lead was incorrect.
It said,
"The California Institute of Regenerative Medicine
(CIRM) voted on 24 May to accept a new strategic planwhich
shrinks or eliminates support for basic research, facilities and
training, while funneling more of its funds toward clinical
development."
The CIRM governing board actually put
off until at least July decisions on which programs to cut and which
to expand. Basic research is not likely, however, to take a major
hit, for a variety of reasons.
The California stem cell agency today
awarded $69 million in grants, including the first involving a collaboration with researchers in China, but none of the awards went to California
biotech businesses.
The awards were made in the agency's
third translational round, which funds projects that are in the
initial stage of identifying drugs or cell types that could become
drug therapies.
CIRM originally allocated $95 million
for the round, but CIRM spokesman Kevin McCormack said that grant
reviewers determined that no applications beyond $69 million were
worthy of funding.
The CIRM governing board overturned a negative
reviewer decision on one grant after the scientist – W. Douglas
Boyd of UC Davis -- filed an appeal. The appeals of two other
researchers, including one from a San Diego business, were not successful (see here
and here).
CIRM did not disclose the number of
applications from businesses. The agency has been sharply
criticized for failing to fund businesses in a substantial way.
The approved grants involve
collaboration with researchers in Australia and Germany as well as
China. The collaborations are based on agreements worked out earlier
by CIRM with overseas groups, which fund their own countries' researchers. No CIRM cash is involved, according to the agency.
CIRM President Alan Trounson, a native
of Australia and researcher there until joining the stem cell agency,
said in a press release,
"The sun now never sets on the
CIRM collaborative projects..."
The news release also said,
"The
Chinese Ministry of Science and Technology has committed roughly
$850,000 in collaboration with a team at UCSF to study liver failure.
This is the stem cell agency’s first joint effort with scientists
in China, which is home to a fast-growing stem cell research
community."
The UCSF liver team is led by Holger
Willenbring, whose goal is "to develop a source of autologous
therapeutic cells for patients with liver disease who otherwise would
require a liver transplant," according to the CIRM review summary.
The agency did not spell out the details of how the collaboration
would work.
All of the winning applicants, with the
exception of a Salk researcher, work for institutions linked to at
least one of the 29-members of the CIRM governing board. CIRM
directors, however, are barred from voting or even discussing applications in which CIRM attorneys have determined there is a conflict
of interest.
The governing board of the California stem cell agency adjourned its meeting earlier today. Our coverage will conclude with the $69 million grant award item.
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The governing board of the $3 billion
California stem cell agency today rejected a proposal that would have
restricted transparency surrounding the financial interests of its
directors and top executives.
On a unanimous voice vote, the board
decided it would stick with the more complete disclosure rules that it
has operated under since 2005. CIRM staff had offered changes that would have narrowed the amount of economic
information that the board members and the executives would have been
required to disclose.
The directors' Governance Subcommittee, however,on May 3 rejected the plan. Sherry Lansing, a former
Hollywood film studio CEO and chair of the subcommittee, said at the time,
"I personally feel strongly that
because of CIRM's unique mission and the agency's incredibly
long-standing commitment to transparency, i believe that we should
continue to set an example by requiring the broadest disclosure for
members of the board and high level staff."
Retention of existing disclosure
rules comes at a time when more conflicts may arise. The agency is
moving to engage the biotech industry more closely as it pushes to
develop stem cell therapies. Already one case of conflict has arisen this
year dealing with industry. It involves a "special advisor"
to CIRM who was nominated to become director of a firm sharing in a
$14.5 million grant. She also was working for the firm. (See here and
here.)
The CIRM board also has built-in
conflicts of interest, written into the law by Proposition 71, which
created the agency. About 92 percent of the $1.3 billion awarded so
far has gone to institutions tied to members of the CIRM governing
board. Board members are not permitted, however, to vote on or
discuss grants to their institutions. But it is fair to say that if
California voters had foreseen that nearly all of the grants would
have gone to directors' institutions, they would not have
approved creation of the stem cell agency.
As the California Stem Cell Reportremarked earlier, it is a good
move for CIRM to retain more transparency rather than less. As one of
the Moss Adams staffers said today – in a different context –
during the presentation of the first-ever performance audit of CIRM,
"When people have to fill a void
in information, they assume the worst."
The $3 billion California stem cell
today officially embarked on a course that will mean closer ties to
the biotech industry in hopes of fulfilling the campaign promises to voters to
turn stem cells into cures.
On a unanimous voice vote, directors approved
changes in the seven-year-old agency's strategic plan. The action
will likely mean less money for some activities that enjoyed more cash in the past, but directors put off action until at least late July. The plan also sets the course for what may be the last years of life
for the unprecedented state research program. Authorization to borrow
more money (state bonds) for its grants will run out in about 2017.
During a brief discussion of the plan, which has been debated for some months, CIRM Director Jeff Sheehy noted that the agency has now entered "the realm of trade-offs." Ellen Feigal, CIRM's senior vice president for research and development, told the board that the plan will require hard decisions and sharp focus on priorities.
Among other things, for first time CIRM overtly set a goal of creating 20 programs that include outside
investment that focus on products. Another five-year goal explicitly calls for financing at least 10 therapies in early-phase
clinical trials, affecting at least five diseases. Overall, the plan seeks to achieve clinical proof-of-concept for stem cell therapies.
In contrast to the Proposition 71
campaign rhetoric, CIRM's strategic plan acknowledges that developing therapies takes a very long time,
often decades.
Two scenarios were presented to the
board for spending the agency's remaining $836 million for grants and
loans. One would allocate $506 million for development research, $195
for translational research and $135 million for basic research, but
nothing for training and "facilities/core resources."
The other scenario calls for $486
million for development research, $160 million for translational
research, $105 for basic research, $60 million for training and $25
million for "facilities/core resources."
The first scenario would mean a $85 million cut in training and shared lab programs – cash that helps to finance researchers and that benefits the many institutions that have representation on the CIRM board.
The board put off action on either scenario after CIRM President Alan Trounson said he wanted more time to prepare a complete analysis of the scenarios.
The plan also calls for creation of a
platform to enable grantees, disease foundations, venture capitalists
and others to purse CIRM's mission when its state bond funding runs
out. The possibility exists that another bond measure would be submitted to voters. But in either case, CIRM will need a solid record to attract support.
The governing board of the California stem cell agency has just resumed its meeting and Internet audiocast. It is discussing applications for $95 million in funding.
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The Internet audiocast of today's meeting of the governing board of the California stem cell agency has been down for more than 30 minutes. CIRM says it is attempting to solve the problem.
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The $3 billion California stem cell
agency received a "very favorable" performance audit report
compared to other government agencies, CIRM directors were told
today.
Representatives of Moss Adams, which
was paid $234,944 by CIRM for the study, made the comments during a
presentation today to the agency's 29 directors. During their
comments, CIRM executives and directors focused on the favorable
aspects of the findings of the six-month study.
CIRM Chairman J.T. Thomas said the
report showed that CIRM is "doing better than being on the right
track." Co-vice chairman Art Torres said,
"Comparatively we
have done very well."
The report praised the professionalism
of the CIRM staff – "a high caliber group" – and noted
the seven-year-old agency is both "ramping up and ramping down"
at the same time – a reference to the end of state bond funding for
CIRM in 2017.
Prior to the presentation, CIRM
President Alan Trounson said the staff would review the findings and
come up with a plan for the board at its July meeting. The agency is
already implementing some of the recommendations.
The audit was required by a recent
state law that also allowed CIRM to hire more than 50 persons, a cap
imposed by Proposition 71, which created the agency. The audit found a need for improvement in 27 areas and made recommendations. Of the 20 recommendations with the highest priority,
half involved how CIRM manages its information, much of which is
needed for good decision-making. The audit did not assess the
scientific performance of the agency.
The Moss Adams report, performed by the
Seattle firm's San Francisco office, said,
"CIRM board members and senior
management do not receive regularly updated, enterprise-level
performance information. The ability to evaluate performance against
strategic goals is critical to effective leadership and program
monitoring, evaluation, and reporting. CIRM does not currently have a
formal performance reporting program."
In addition to decision-making
information, Moss Adams called for improvements in the agency's
long-troubled grants management system, better grant outcome
tracking, development of a results-based communications plan,
creation of a comprehensive, formal business development plan,
formulation of a comprehensive information technology plan that would
include steps to establish clear responsibility for CIRM's website
and improved monitoring of invention disclosure forms from grantee
institutions.
Today's meeting of the governing board of the $3 California stem cell agency is now underway. Chairman J.T. Thomas is giving his report. We will carry stories as warranted today.
Sphere: Related Content
The California Stem Cell Report will
provide live coverage of tomorrow's meeting of the governing board of
the $3 billion California stem cell agency. Directors are expected to
make major decisions about the agency's future direction, hear the results
of the first-ever performance audit and award about $95 million in
grants or loans.
The meeting will be held near the San
Francisco airport with another public teleconference location at UC
San Francisco. Los Angeles will also have two public teleconference
locations. Another will be in La Jolla.
The meeting will be audiocast live on
the Internet, which the California Stem Cell Report will monitor from its
base in Panama near the Pacific entrance to the Panama Canal.
Instructions for listening in on the
audiocast can be found on the agenda along with specific addresses
for the public teleconference locations. The meeting is scheduled to
begin at 9 a.m. PDT.
Early on, Fox was well-known for his
support of human embryonic stem cell research. ABC News
recently described him as having become "one of the country’s
most visible advocates for stem cell research." In California, Fox was a prominent promoter of the ballot initiative, Proposition 71,
that created the $3 billion California stem cell agency in 2004. "
He filmed a TV commercial that was
aired widely during the 2004 campaign to create the stem cell agency,
declaring,
"It could save the life of someone you love."
Today he is considerably less
confident. In an interview last week with ABC, he cited "problems
along the way." Fox said,
“It’s not so much that [stem cell
research has] diminished in its prospects for breakthroughs as much
as it’s the other avenues of research have grown and multiplied and
become as much or more promising. So, an answer may come from stem
cell research but it’s more than likely to come from another area.”
The director of robotics and biosurgery
at UC Davis is appealing rejection of his application for a
$4.9 million grant from the California stem cell agency.
The scientist, W. Douglas Boyd,
noted that his proposal was given a scientific score of 67, which was
one point below the cutoff for most grants approved by CIRM's
Grants Working Group. Thirteen grants fell in the 68 to 53
range, including Boyd's. Reviewers approved four in that range,
including two with scores of 53.
Boyd's letter was brief, focusing on a
letter of support from an Indiana firm, Cook Biotech, Inc.,
that would supply the "material and technical expertise to
create a new bioengineered cardiac patch
material."
The appeal letter, along with other
appeals(see here and here), will be given to CIRM directors in the agenda material for their meeting tomorrow in San Francisco. The
board does not have to act on the petitions or discuss them.
Researchers can also appear before the board to make a case.
Claire Pomeroy, CEO of the UC
Davis HealthSystems, is a member of the CIRM board. She
will be barred from taking part in any discussion of Boyd's
application or voting on it.
In a move that was long overdue, the $3
billion California stem cell agency last week hired a director of
information technology to straighten out key problems ranging from
its grants management system to how it handles its website.
The new hire comes as the CIRM
governing board faces the results of its first-ever performance audit, which is markedly critical of how the agency handles its
information. Half of the audit's 20 highest priority recommendations for improvement focus on information deficiencies, including
critical information necessary for CIRM executives to determine the
agency's performance.
Solving those problems will fall on
the shoulders of Bill Gimbel, who is no stranger to CIRM. He has been
working with the agency as an information technology advisor since
2010 through a contract with Infonetica, Inc., of Pleasanton, Ca., according to CIRM spokesman Kevin McCormack. Gimbel is now the first staff person in a chief technology position at CIRM since October 2007, when about 25 percent of CIRM employees left.
Bill Gimbel
A graduate of MIT, Gimbel, who will be
paid $180,000 annually, has a broad range of experience in computer
technology and software dating back to 1992. According to his
Linkedin web site, he was most recently director of IT at Infonetica.
He lists himself as owner of aptReader, an app for reference books.
He has also worked for LearningExpress and Scholastic, Inc.
The stem cell agency has been wrestling with information technology issues for years. The critical grants
management system has been an issue at least since 2007, when
directors were told its costs would not exceed $757,000. No figures
for the total spent since then have been made public by CIRM, which
is attempting to build a custom system, but the amount clearly and
easily surpasses the 2007 estimate, based on some of the outside
consulting costs. Although the agency hopes to resolve many of the
problems by the end of this calendar year, the grant system was the
target of considerable attention by Moss Adams, the firm that
prepared the performance audit.
Over the years, CIRM directors have received
intermittent, sketchy CIRM staff reports about the grants management
system, but the Moss Adams discussion is the most
comprehensive.
Among other things, the Moss Adams report said in bureaucratically delicate language,
"Integration
of website content management has not been an integral part of the
GMS (grants management system) development process, which could
result in suboptimal operational efficiency and effectiveness.
"Grants management system
development is effectively managed at a tactical level, but it lacks
dedicated, strategic governance and oversight, which has resulted in
an elongated development process and requirements conflicts."
Moss Adams said,
"The new grants management system
intellectual property module, currently under development, does not
include provisions to address commercialization activity."
The performance audit additionally
said,
"CIRM board members and senior
management do not receive regularly updated, enterprise-level
performance information. The ability to evaluate performance against
strategic goals is critical to effective leadership and program
monitoring, evaluation, and reporting. CIRM does not currently have a
formal performance reporting program."
Moss Adams continued on other
information technology topics:
"Data and document access are
inefficient as a result of CIRM operating without a document
management system.....In most cases, CIRM staff cannot access
information without human interface. Information is stored in
multiple locations, which are not linked or indexed."
The audit said that the agency has
tried to solve its information problems without a plan.
"CIRM’s
information system needs have been met by a variety of tools,
including in-house developed applications, off-the-shelf
applications, databases, and spreadsheets, most of which are not
integrated," the audit stated.
One of the effects of all this is much
wasted time when CIRM's tiny staff tries to extract information from
the hodge-podge of systems. It is time that cannot be spared as the
workload increases in the next few years, as it is certain to do.
"They're
talking about pain at the $3 billion California stem
cell agency. And mortality. But not the end of life as you and I know
it.
"They're
talking about the pain that comes from cutting off millions of
dollars for scientists. They're talking about what will happen when
the state stops borrowing money to finance stem
cell research –
a final-breath moment that arrives in about five years....
"CIRM's
changing priorities create 'stark tension,' said one board
member, Michael Friedman, CEO of the City of Hope in the Los Angeles
area, in January. 'We're going to have to make some really
painful and difficult decisions,' he told directors.
"CIRM's
success – or lack of it – will play a critical role in its future
finances, whether they are based on another bond measure or private
support."
A San Diego biotech firm, Eclipse
Therapeutics, whose multimillion dollar grant application was
rejected by reviewers at the California stem cell agency, is asking
the agency's board to overturn the decision next Thursday.
Eclipse, a spinoff from
Biogen Idec, said it is reducing its request from $3.5 million
because it has raised $2 million since it applied for the grant six
months ago. However, its appeal did not state specifically how much
it was now requesting from CIRM. The research involves cancer stem cells.
The company's appeal said that
during the period following submission of its application, it has accomplished all of the activities that CIRM had identified
as the first milestone in the research project. Eclipse also said it
has accomplished a number of activities in milestones two and three.
The firm said that it is now accelerating its IND filing by one year.
Eclipse was formed in March 2011 with
$2 million in seed funding from City Hill Ventures, also of San
Diego, according to a Bioworld article by Marie Powers. The
co-founders are Peter Chu, now president of Eclipse, and Christopher
Reyes, chief scientific officer. Chu and Reyes ran Biogen Idec's
cancer stem cell program. They are also the applicants for the CIRM
grant.
Their appeal carried a routine cover
letter to the CIRM board from CIRM President Alan Trounson. He made
no comment on the worthiness of the request. On
an earlier appeal from Stuart Lipton of Sanford-Burnham, Trounson's
cover letter said Lipton's letter was "without merit."
Eclipse said its proposal received a
scientific score of 58 out of 100 from CIRM reviewers. CIRM, however, has not released the company's score. Two other proposals with scores of 53
were approved by reviewers.
For several years, CIRM has been
sharply criticized for its failure to fund businesses in a
significant way. It is currently moving to engage them more closely.
If Eclipse's appeal is successful, it will be one of less than 20
business to be funded without a nonprofit partner. Businesses have
received only about 4 percent of CIRM's $1.3 billion in awards to 494enterprises.
Appeals from rejected applicants
are included in the agenda material presented to the CIRM board, but
the board does not have to act on them or discuss them. Researchers
can also appear before the board to make a case.
Sanford-Burnham researcher Stuart
Lipton is seeking to overturn rejection of his application for a $5
million grant from the California stem cell agency, declaring that
reviewers misinterpreted the proposal and relied partly on
"grantsmanship" instead of science.
Lipton's proposal deals with strokes
and is one of 22 rejected by CIRM's reviewers in a $95 million
round that comes before the agency's directors next Thursday.
Lipton's letter to CIRM yesterday said
some of the reviewers' criticism was "completely unfounded,"
"incorrect" or "in error." The two-page letter
went into specific scientific detail.
In a cover letter to the CIRM board,
CIRM President Alan Trounson said Lipton's appeal was "without
merit." He did not go into details but said CIRM staff is
prepared to discuss it next Thursday.
The scientific score on Lipton's grant
was not disclosed by CIRM, but it appears to be between 62 and 53.
Two grants ranked at 53 were approved by reviewers. Appeals from
rejected scientists are included in the agenda material presented by
the board, but the board does not have to act on them or discuss them.
Researchers can also appear before the board to make a case.
Kristiina Vuori, president of
Sanford-Burnham, is a member of the CIRM board. She will be barred
from taking part in any discussion of Lipton's application or voting
on it.
The California stem cell agency this
week once again posted in a timely fashion important information
dealing with matters to be decided next Thursday by directors of the
$3 billion stem cell agency.
The agency's actions are a marked
improvement in openness and transparency compared to the practices
prior to the election last June of J.T. Thomas as chairman of the
CIRM board. Previously, background material on multimillion dollar
matters was not available much of the time until shortly before the directors meeting, making it virtually impossible for interested
parties or the public to comment or attend the sessions. Even CIRM directors would complain from time to time about the laggard performance.
In addition to the meeting site in San
Francisco, a public teleconference location will be available at UC
San Francisco, two in Los Angeles and one in La Jolla. Specific
addresses can be found on the meeting agenda.
The California stem cell agency will
not renew a contract with a "special advisor" who has been
nominated to the board of directors of a firm that is sharing in a $14.5 million grant from the agency.
She is Saira Ramasastry, managing
partner of LifeSciences Advisory, LLC, of Emerald Lake Hills, Ca.
Ramasastry has worked for CIRM since May of 2010. Last month, she was
nominated to the board of Sangamo BioSciences, Inc., of Richmond, Ca.
Her responsibilities with CIRM have included "industry analysis
and consultation." Sangamo cited her experience with CIRM in its
press release on her nomination. She was also employed as a
consultant by Sangamo, according to the firm.
Ramasastry's dual roles raise obvious
conflict of interest questions. The case highlights the issues
that can arise between CIRM and the biotech industry as the agency
moves to engage industry more closely. CIRM's response additionally
demonstrates a lack of awareness of the potential for serious
mischief or worse when dealing with consultants.
The California Stem Cell Report asked
CIRM on May 6 for comment on the Sangamo-Ramasastry matter. The
questions included whether Ramasastry disclosed to CIRM her work for
Sangamo and whether CIRM took any action per the agency's conflict of
interest code. CIRM did not respond to the question of whether
Ramasastry ever disclosed her ties to Sangamo, which expects to
receive $5.2 million from the CIRM grant if it runs a full four
years.
Here is the text of CIRM's reply today
from spokesman Kevin McCormack.
"Saira Ramasastry was an
independent contractor. As required by law, we do ask independent
consultants to complete Form 700s(statements of economic interests)
if they participate in an agency decision making role. Her role did
not fall into that category - she was identified as a 'special
advisor' in connection with our external review process - and so she
did not have to fill out a Form 700. Her contract with CIRM comes to
an end at the end of June, and she will not be elected to Sangamo's
board of directors until July. Obviously once she is a member of the
Sangamo board she will not be consulting or advising CIRM because of
our strict conflict of interest rules."
(Editor's note: The board election is
June 21, according to the company, not July.)
Our take: CIRM is heavily dependent on
outside contractors. Expenditures for their services are the second
largest item in CIRM's operational budget, exceeded only by salaries
and benefits of regular employees. The responsibilities of outside
contractors cover a wide range of sensitive tasks including computer
system security, development of software that deals with proprietary
information from grant recipients, analysis of confidential business
operations of grant and loan applicants and much more.
The agency needs to know who their
consultants are working for besides CIRM. Whether they make decisions
for CIRM is beside the point. Gathering information that is not
normally accessible to the public can be extremely valuable to
businesses and their competitors as well as applicants for
CIRM's $3 billion. In Ramasastry's case, she was privy to a great
deal of confidential or economically useful information during her work on CIRM's external
review and likely much more.
The use of California's Form 700 is
hardly adequate to assess conflict of interest issues involving
private consultants. The form was developed in the 1970s to deal with
elected officials primarily and provides only the grossest sort of
look at financial holdings and income.
CIRM's current move to embrace industry
requires more scrutiny of conflicting interests – not less. NextThursday the CIRM board will deal with some of its conflict ofinterest rules. It is fine opportunity to ask for a sharper analysis
of conflict issues and consultants with an eye to strengthening CIRM
regulations and ensuring protection of the agency and its grantees'
work – not to mention the interests of the people of California.
State Treasurer Bill Lockyer has
appointed Michael Marletta, president and CEO of the Scripps Research
Institute, to the 29-member board of directors of the $3 billion
California stem cell agency.
Marletta fills the seat of Floyd Bloom,
also a Scripps executive, who resigned last year. Scripps has
received $45.3 million in funding from CIRM.
In a letter yesterday to the stem cell
agency, Lockyer said Marletta is a member of the National Academy of
Science, American Academy of Arts and Sciences and the Institute of
Medicine. Marletta joined Scripps in 2011 and became president in
January.
Prior to that, he was at the University
of California, Berkeley, where he once served as chairman of the
department of chemistry, among other roles. An item on the Scripps
web site said Marletta "focused his research on the intersection
of chemistry and biology. He is acknowledged as a pioneer in
discovering the role of nitric oxide, a critical player in
communication between cells."
The CIRM board has another vacancy to
fill. Ted Love resigned last month after serving on the board since
its inception in December 2004. CIRM said Love, executive vice
president of Onyx Pharmaceuticals, resigned for personal reasons.
State Controller John Chiang is considering a number of candidates to
replace him. Love was the only African-American on the board.
For those interested in how the
California stem cell agency is going to spend its next $95 million,
you can check out short digests today of the 19 research grant applications, including reviewer comments, that are virtually certain of receiving the cash.
The applications came in what CIRM
calls its "early translational III" round, which is
scheduled to be acted on by the CIRM board May 24 in San Francisco.
Digests of reviewer comments are
part of the directors' meeting agenda. They include scientific
scores, a statement from the applicant and a summary of what
reviewers had to say during their closed door sessions. But you won't
find the names of the applicants, their institutions or businesses.
The stem cell agency conceals the names of the winners until after
the board acts. Names of the unlucky ones are not disclosed by CIRM.
The agency says it does not want to embarrass anybody including the
institutions involved.
However, persons familiar with the area
of science involved may well be able to discern at least some of the
names of applicants from the information contained in the summaries.
Scientific scores of the successful
applicants ranged from 88 to 53. Nine grants scored higher than 53
but were rejected by reviewers(the Grants Working Group). The panel
turned down 22 applications overall. The CIRM board has final
authority on applications, but has almost never rejected a positive
decision by reviewers. Sometimes, however, it will overrule a
negative decision.
One successful application that was
scored at 53 involved ALS. The $1.7 million proposal was approved
for "programmatic reasons," according to the summary.
Often, programmatic motions for approval are made by CIRM board
members sitting on the review panel. However, the summary did not
disclose who made the motion or the vote. The summary said,
"The programmatic reasons provided
were that ALS is a devastating disease that is not well-represented
in CIRM's portfolio."
The other successful application that
scored at 53 sought $6.3 million for research involving heart
disease. The summary did not clearly identify the specific reason for
approving the grant on a programmatic motion. But it said,
"The
GWG (grants working group) ... advised as a condition for funding
that the applicant consult additional vector specialists with
translational and clinical experience to select a more appropriate
vector to move this program towards the clinic."
Again CIRM withheld the vote on the
motion and the name of the person who made the motion.
Applicants who have been rejected by
reviewers can appeal to the full board. So far no appeals have been
publicly posted by CIRM. The success rate on such appeals is mixed.
The translational round was open to
both academics and businesses, which have received a tiny fraction of
CIRM's $1.3 billion in spending so far. Some businesses have
complained publicly and, as well, to a panel of the Institute of
Medicine that is evaluating CIRM's performance.
The California Stem Cell Report
yesterday asked CIRM for the number of businesses that applied in the
translational round, including the pre-application process, which is
used to whittle down the total number of applications. The request included total numbers as well. CIRM spokesman
Kevin McCormack declined to produce the figures prior to the CIRM
board meeting, saying they "won't be ready" until after the
session.
The $3 billion California stem cell
agency is laboring under a range of problems that include protection of
its intellectual property and management of its nearly 500 grants plus an inadequate ability to track its own performance, a seven-month
study said yesterday.
The performance audit by the Moss Adams accounting
firm of Seattle, Wash., made 27 recommendations for improvements,
including more effort to ease strain connected to the agency's
controversial dual executive arrangement. The study said that the
nearly eight-year-old agency has many "opportunities" to
"enhance performance reporting and decision making, strengthen
effectiveness and efficiency, retain essential human resources and
leverage technology."
In response to the report, the stem
cell agency said, "(M)anagement concurs with the findings and
recommendations....The recommendations are focused and constructive.
CIRM is already implementing many of these recommendations, and we
will be investigating the others in the coming months."
The performance audit is the first ever
made of the California Institute for Regenerative Medicine. The
audit is required by state law and was commissioned by the agency at
a cost of $234,944. For years, the agency for years had resisted calls for a
performance audit until it sought legislative approval in 2010 for
removal of a 50-person cap on its staff. Originally, the performance
audit legislation would have put the study in the hands of the only
state body charged with oversight of the agency and its board. CIRM,
however, was successful in lobbying to have that provision removed.
The 54-page report identified once
again a number of issues that have troubled the stem cell agency for
some years. Moss made 12 top priority recommendations, many of which
dealt with information technology and grants management. Many of the
recommendations focused on providing better and faster information on
performance outcomes, which the audit said has been slow to come and
hard to generate.
The report said,
"Key performance information is
not readily available to CIRM leadership and other stakeholders on an
ongoing basis. CIRM board members and senior management do not
receive regularly updated, enterprise-level performance information.
The ability to evaluate performance against strategic goals is
critical to effective leadership and program monitoring, evaluation,
and reporting."
The audit stated,
"CIRM does not effectively
communicate outcome-based performance internally or externally. As
such, CIRM does not focus on performance metrics as part of its
(staff) meeting process."
The report additionally said,
"CIRM does not have an integrated
financial information system....The use of spreadsheets results in
labor intensive processes to generate reports and respond to
information inquiries, since data must be pulled from multiple
spreadsheets, a process that may be prone to error. ...Spreadsheets
are not linked to each other or a master report. CIRM does not have a
comprehensive list of spreadsheets or instructions for how to
maintain the files or generate reports from them."
Moss Adams said that CIRM needed to do
a better job in "bond forecasting," a reference to the
California state bonds that finance virtually every aspect of the
agency's operations. CIRM directors were caught by surprise a few
years ago when they suddenly learned the agency was up against a
major cash crunch.
Some of the recommendations will
require more work from CIRM grantees and their technology transfer
offices in an effort to track intellectual property and grant outcomes.
The report also recommended a speed-up in CIRM's review of progress
reports from grant recipients, which have been lagging completion by
several months.
The dual executive arrangement, which
was written into law by Prop. 71, has troubled CIRM since nearly day
one. CIRM's own external review panel also identified it as problem
two years ago. The executive structure is virtually impossible to
change because of the political difficulty in making alterations in
the ballot initiative.
Moss-Adams said,
"The working relationship between
the chairman’s office and the president’s office has vastly
improved over the past year, but there are still opportunities for
improvement."
The performance audit recommended,
"Make every effort to manage and
operate as one cohesive organization, while recognizing the varying
roles, responsibilities, and authorities that exist with positions in
both the chairman’s office and president’s office."
One of the top 12 recommendations
involved CIRM's public relations/communications effort. CIRM
Chairman J.T. Thomas told directors last June that the agency was in
a "communications war."
Moss-Adams said,
"CIRM does not have a
communication plan, and there is lack of clarity on how to address
mission-based communication to CIRM’s various target audiences,
especially the general public....The best way to facilitate
results-based communications is to 1) quantify goals and outcomes in
CIRM’s strategic plan and 2) report on achievement of those goals
and outcomes by enhancing CIRM’s annual report with additional
performance-based information."
Another performance assessment of the
stem cell agency is also underway. It is being conducted by the
prestigious Institute of Medicine and is costing CIRM $700,000. That
report is expected this fall.
CIRM's board of directors is scheduled
to consider the Moss Adams report at its meeting May 24.
Our take: While the findings and
recommendations of the performance audit were delicately worded in
many cases, they brought out issues that need to be addressed, many
of which have been around for a great deal of time. At their meeting
next week, CIRM directors should act very directly on the
recommendations. They can do that by requiring a written report each
month from CIRM Chairman J.T. Thomas and CIRM President Alan Trounson
on the specific steps that they are taking to implement the
performance audit's recommendations. Otherwise, the inevitable drift
will set in.
The $3 billion California stem cell
agency dodged the governor's financial knife today.
This morning, Gov. Jerry Brown
announced sweeping cuts throughout California state government as he
attempted to close a new, $15.7 billion deficit. A report in the Los
Angeles Times said the governor was "grabbing any spare change available." But this afternoon, in response to a
query, Kevin McCormack, CIRM's spokesman, said,
"The answer is no, we won't be
affected."
The question arose because California's
financial picture is much bleaker than it was just four months ago.
And the stem cell agency's only real source of cash is money borrowed
by the state -- general obligation bonds.
Under Prop. 71, which created the
agency in 2004, the bond funds flow directly to the agency without
intervention by the legislature or the governor. However, Brown has
been chary of additional bond sales since they create an increasing
burden in the form of interest costs. Those costs must be financed
out of money that otherwise might go to the University of
California, K-12 schools and medical help for the poor.
Under an agreement arrived at last year, CIRM has what amounts to a $225 million line of credit with the
state, which should take care of its needs until January. The cash is
coming from short-term borrowing by the state instead of bonds.
The Brown Administration has cut back
on bond borrowing and intends to cut more this fall. According to the state Department of Finance, the cost of borrowing
has declined $173 million this fiscal year, down to $5.2 billion.
CIRM's share of the debt service is more than $200,000 a day.
The StemCells, Inc., item earlier today
incorrectly stated that the disease team applications will come
before the board of the California stem cell agency later this month.
In fact, they are scheduled to come up at the board meeting in late
July.
StemCells, Inc., said today it has
applied for as much as $40 million in funding from the California
stem cell agency for two projects dealing with Alzheimer's disease
and cervical spinal cord injury.
The announcement came in a news release
dealing with the publicly traded firm's quarterly earnings. The applications are part of a $240 million round expected to be acted on in late July by the board
of the $3 billion California stem cell agency. Funding for
businesses in the disease team round is expected to come through a
loan.
"In January 2012, we submitted two
applications to the California Institute of Regenerative Medicine
(CIRM) for 'Disease Team Therapy Development Research Awards,' one
for Alzheimer's disease and one for cervical spinal cord injury. A
research award may be up to $20 million, payable over four years, to
fund preclinical and IND-enabling activities with the aim of starting
human clinical trials within a four-year window."
Applications in the round were reviewed
behind closed doors in April. CIRM also has a policy of not releasing the
names of applicants until its board acts and then only if an
applicant is approved. CIRM says it does not want to embarrass firms
that do not win approval. That includes individual researcher names
as well as the names of such institutions as the University of
California.
During discussion of grant applications by the CIRM board, directors are not told the names of the applicants,
just the number of the application. If board members have conflicts
of interest on specific applications, they are barred from voting on
and discussing the application. The names of applicants have
occassionally slipped out. Sometimes their identities can also be
discerned by information contained in the summaries of the reviews of
the applications, which become available on the CIRM web site shortly before the directors act. The summaries normally carry scientific scores and recommendations for funding.
Most companies seeking funding from
CIRM do not identify themselves in advance, although they do if they
appeal a negative decision by reviewers. The board has ultimate
authority for approval of grants but has almost never rejected a
recommendation for funding by reviewers.
StemCells Inc. was founded by Irv Weissman of Stanford, who sits on its board of directors. Weissman is also on its scientific advisory board along with Fred Gage
of Salk and David Anderson of Caltech. Weissman and Gage have won
substantial grants from CIRM.
StemCells Inc.'s stock price closed at
92 cents yesterday. Its 52-week high was $8.20, and its 52 week low
was 70 cents.
The "stem cell lawyers" item
May 9 incorrectly stated that CIRM is expected to have six lawyers on
staff in the next fiscal year. The agency expects to have a legal
team of six (four lawyers and two assistants).
The California stem cell agency is
spending $2.4 million a year on lawyers, a figure that one agency director has described as "awfully bloated."
More than one dollar out of every ten
that CIRM spends on its operations goes for legal advice, and the
subject came up at a meeting last month of a meeting of its
directors' Finance Subcommittee. The issue triggered a sharp exchange revolving around a proposal to hire an additional attorney to deal with
intellectual property issues.
In the next fiscal year, the agency
expects to have legal team of six (four lawyers and two administrative assistants) on board out of a total CIRM staff
of 60. It also has three outside lawyers or firms under contract at
an annual cost of $1.1 million. Overall, CIRM is spending 13 percent of its
$18.5 million operational budget on legal matters. Its budget for
legal services will increase $50,000 next year.
CIRM's proposed budget includes a cut
in external legal contracts to help finance the addition of another
staff attorney. Elona Baum, CIRM's general counsel, is also
advancing an additional proposal this month that would pay for another staff attorney indirectly through CIRM loans to business, thus
avoiding problems with the 6 percent legal cap on the agency's
budget.
At the April 2 meeting of the Finance
Subcommittee April 2, Art Torres, CIRM's co-vice chairman and an
attorney himself, vigorously questioned the addition of another
lawyer. In an exchange with Baum, Torres said,
"Well, wait a minute. We already
have you. We have Ian. We have Scott. We have James. What more do we
need to add more to our legal services budget, which looks awfully
bloated."
Baum and CIRM President Alan Trounson
defended the addition of a staff lawyer. Both cited the need to
protect intellectual property and promote commercialization of
CIRM-funded inventions. Trounson and Baum said grantee institutions
are failing to do so. Consequently, they said, the stem cell agency
is "at risk."
In one exchange, Torres said,
"There
are current counsels within the UC and Stanford and USC that ought to
be taking care of this for their grantees."
"Well, they're not – you know, this is not being
taken care of in a way which is -- which is -- which is reasonable to
the organization here. and I think it's putting the organization at
risk...."
Baum cited an "a very in-depth"
memo that she said justified hiring an additional attorney. Following
the meeting, the California Stem Cell Report asked for a copy of the
memo.
It consisted of a one-page job
description. Dated March 5, it was written by Baum and directed to
Trounson. It described the duties of the new lawyer but not the
justification for hiring the person. In addition to IP work, duties including 350 hours
of work to "provide increased certainty of commercialization
rights," 250 hours for due diligence in the grant award process,
200 hours of work on genomics and reprogrammed adult stem cell
efforts. The memo calls for 690 hours on business transactions
including 150 hours to administer the loan program and 200 hours on
agreements with companies seeking to relocate to California.
Much of the committee discussion focused on the
need for legal expertise on IP issues, which Baum said the agency
lacked.
CIRM first took a crack at hiring an IP
attorney in 2008, seeking both a consultant and a fulltime staff attorney. A fulltime staffer was never hired. However, Nancy Kochwas hired as an IP consultant for six months at $150,000 and has been
with the agency since. Koch was deputy general counsel of Chiron
Corp. and its successor Novartis Vaccines and Diagnostics, Inc.
During 11 years at Chiron/Novartis, Koch was responsible for a wide
range of intellectual property matters including litigation and
licensing. Her current contract is for $250,000 for a year but would be reduced
to help provide cash for a staff attorney. Baum said last month that
Koch is primarily involved now with collaborative arrangements with
other countries.
Our take? It is commonplace to be
critical of lawyers, their profession and their numbers. CIRM,
however, is an unprecedented agency operating in uncharted scientific
waters with an enormous reponsibilility for generating a return for
the state. It is engaged with firms that will be negotiating
aggressively to cut the most beneficial deal possible for themselves
– not for California taxpayers, who are paying the freight. CIRM
must protect the state's interests. And first-rate IP lawyers do not
come cheap. In 2008, the agency was lowballing when it offered $150
an hour. If CIRM fails to generate a financial return for the state,
critics are sure to say that it was overmatched legally when it dealt
with the private sector. On the other hand, the agency is sure to be
battered by contemporary critics for its battalion of barristers.
The issue of a new hire went unresolved
last month, and it was turned back to a handful of directors and
staff to solve. CIRM directors will deal with it again at their
meeting later this month.
A final footnote: Philip Pizzo, a CIRM
director and dean of the Stanford medical school, was part of the
meeting during which Trounson identified Stanford as failing to take
of care of some of its IP responsibilities. Pizzo said towards the
end of the meeting, "If Stanford is going to be referenced, we
ought to be clear that we've got all the facts correct about what
Stanford does or doesn't do."
Pizzo said Stanford does a "great
job."
(An earlier version of this item said incorrectly said that CIRM would have six lawyers on staff next year.)
The California Stem Cell Report is the only nongovernmental website devoted solely to the $3 billion California stem cell agency. The report is published by David Jensen, who worked for 22 years for The Sacramento Bee in a variety of editing positions, including executive business editor and special projects editor. He was the primary editor on the 1992 Pulitzer Prize-winning series, "The Monkey Wars" by Deborah Blum, which dealt with opposition to research on primates. Jensen served as a press aide in the 1974 campaign and first administration of Gov. Jerry Brown. (Time served: two years and one week.) He writes from his sailboat in Panama(previously Mexico) with occasional visits to land. Jensen began writing about the stem cell agency in 2005, noting that it is an unprecedented effort that uniquely combines big science, big business, big academia, big politics, religion, ethics and morality as well as life and death. The California Stem Cell Report has been identified as one of the best stem cell sites on the Internet. Its readership includes the media (both mainstream and science), a wide range of academic/research institutions globally, the NIH and California policy makers.
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