Tuesday, January 27, 2015

Bump on CIRM 2.0 Speedway: California's Missing Stem Cell Loan Rules

When the applications come in this Friday for the California stem cell agency’s new, $50 million stem cell research round, business applicants will not be seeing a substantial portion of key financial rules for the awards.  

Missing will be the terms of loans that the agency expects to offer to for-profit enterprises. Loans -- rather than grants -- have been the favored method of businesses for receiving awards. The reason is that the agency’s loans have been forgivable if the research does not generate an appropriate amount of cash for the company. Grants, on the other hand, carry requirements for royalty payments. (None have been generated.)

Under the terms of the fast-track, CIRM 2.0 applications, businesses will have the choice of grants or loans. New grant terms are expected to be approved at Thursday’s meeting of the governing board of the $3 billion agency, one day before the deadline for applications for the first round of CIRM 2.0.

Action on new loan rules was originally scheduled for this week but postponed a few days ago after the agenda was posted Jan. 17. The specific reasons are not entirely clear.  The California Stem Cell Report yesterday asked about the delay and for a copy of the latest loan proposal. Kevin McCormack, senior director for communications, replied, 
“We are in the process of revising the (loan policy) and nAeeded additional time to ensure alignment with CIRM 2.0 and the other policy changes so we postponed the meeting.  It will be rescheduled before the March board meeting.
 “And as we are still working on the loan policy it would be premature to share that with you right now, it's still a work in progress.”  
Given that businesses have amounted to a tiny percentage of awards in the past, the delay in the loan rules question may not be significant. But this round is aimed at clinical stage projects, which are more likely to involve businesses and could generate more applications from the private sector.

Some time is available to adopt new rules before CIRM board action on the awards, possibly during an April 23 telephonic meeting. But one of the main points of CIRM 2.0 is to put cash in the hands of recipients significantly faster than in the past. This is especially important for stem cell companies, which are always pretty much cash starved.

Delays in any portion of the aggressive timetable for CIRM 2.0 could mean delays in handing out money.

It is not surprising that some difficulties have arisen in the new award procedures. Randy Mills, CEO of the stem cell agency, last week told an Internet audience of about 200 there would be “some bumps.” He said,
“This is going to be one wild ride.”  
To help smooth it out for both the agency and applicants, it would behoove the agency to post the proposed loan terms in a timely fashion. That means that they should be available to the public when a meeting agenda involving the rules – be it for a subcommittee or full board meeting -- is posted on the CIRM Web site. That is normally 10 calendar days ahead of the session.  The agency, which is costing taxpayers $6 billion including interest, doesn’t need any more mysteries.
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