Saturday, July 19, 2014

Los Angeles Times: California Stem Cell Agency Rife with Conflicts and Unrealistic Expectations

The Los Angeles Times, California’s largest circulation newspaper, is carrying a piece this weekend about “cronyism,” conflicts of interest and “inflated expectations” at the state’s $3 billion stem cell agency.

The column by Pulitzer Prize-winning writer and author Michael Hiltzik used this month’s Trounson Affair as a starting point to dissect the situation at the California Institute for Regenerative Medicine (CIRM), as the agency is formally known.

Trounson was appointed to the board of StemCells, Inc., of Newark, Ca., on July 7, just seven days after leaving the agency. StemCells, Inc., holds a $19.4 million award from the agency.  CIRM has ordered a full review of the situation and barred its staff from communicating about StemCells, Inc., matters with Trounson. 

But even before Trounson’s appointment, there were issues involving StemCells, Inc.(See here and here.)  Hiltzik said,
 “The relationship already reeked of cronyism.”
Hiltzik wrote,
“Trounson's move comes as CIRM must begin looking to the future, but any discussions about extending the agency's life span will have to address the flaws created by Proposition 71 (the ballot initiative that created the agency in 2004). Among them is the program's very structure, and even its scientific goals.”
Hiltzik continued,
“How bad are the conflicts? When the board considered a proposal earlier this year to spend $16 million to attract three star scientists to California, so many members had to recuse themselves that only nine were left to vote. (Six ended up voting in favor.)
“When conflicts of interest are so rife that only one-third of your board can weigh in on a major policy issue, that's tantamount to not having any board at all.”
Some of the issues at the agency have to do with the ballot campaign that created it in 2004, an election in which California voters were led to believe that miraculous stem cell therapies were imminent.
Hiltzik wrote,
“Programs like CIRM are always susceptible to inflated expectations.
"”Since Big Science needs great public support it thrives on publicity,’ the physicist Alvin Weinberg, a veteran of the Manhattan Project, wrote in a famous 1961 article in "Science" about the drawbacks of big-money scientific research. He added: ‘The inevitable result is the injection of a journalistic flavor into Big Science which is fundamentally in conflict with the scientific method.... The spectacular rather than the perceptive becomes the scientific standard.’"
Hiltzik acknowledged the contributions that CIRM has made to stem cell science.
“CIRM-funded labs have produced genuine achievements. But the agency tends to delineate its progress in buildings built, papers published, and big-name scientists lured to California. But the specific cures promised by the Proposition 71 campaign haven't materialized, which doesn't surprise anyone steeped in the realities of the scientific method.”
Hiltzik concluded,
“Even if one believes the need for California to devote $3 billion to a narrow, extremely speculative field of science, the Trounson case and other CIRM administrative missteps have made clear that Proposition 71 created the wrong framework to manage a complex research effort. The initiative left the public with no way to tell if its money has been well spent, and no accountability if it hasn't.
“Moreover, the program deprived potentially more promising research efforts of resources and contributed to the general impoverishment of California's entire higher-education system. If its sponsors have the audacity to ask taxpayers for even more money under the same terms as Proposition 71, the reply should be a resounding ‘no.’ If the voters are gullible enough to repeat the same mistake they made in 2004, there's no cure for them.”
The Hiltzik column appeared online last night. It is scheduled to appear in the Sunday print edition of the Times, which says it has a combined print and online reach of 4 million readers. 
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2 comments:

  1. Anonymous2:55 PM

    As a public company StemCells, Inc. could not selectively disclose material information (i.e. the appointment of a new board member) to subsets of the public (i.e. people at CIRM). Such information needs to be made to all investor (potential investors) at the same time.

    http://en.wikipedia.org/wiki/Regulation_Fair_Disclosure

    Trounson should have (and probably did) ask whether board positions with CIRM grantees was permissible under the existing CIRM regulations, but he couldn’t tell them he had taken the position prior to the public disclosure by the company.

    Whether the rules at CIRM needed adjusting is a fair question.

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    Replies
    1. Anonymous makes a good point about the disclosure of material information. However, there are a couple of additional matters to consider in that regard. The first is whether Trounson's appointment is "material information." It apparently had little, if any impact, on the stock price, which was driven by a stock sale during the week in question. Indeed, it is hard to imagine that the appointment of a single director who has no financial investment in the company as being "material." Additionally the company did not assert that the appointment was material when asked for comment by the California Stem Cell Report. The stem cell agency also has a competing public interest, which would need some consideration as well in terms of whether Trounson could or should disclose his pending appointment to the stem cell agency. However, advance disclosure or not, the main problem with the appointment is the perception, if not the reality, of a major conflict of interest and the damage to the integrity of a $3 billion public enterprise.

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