‘Boiling Blood,’ Biotech and Rainmaking

The headline in the Wall Street Journal this morning read “Blood Boils Over Bill to Protect Biotech Drugs.”

And on Friday, the story on Politico.com was about a “king of K Street” in Washington, D.C., the man who is the $240,000 federal lobbyist for the California stem cell agency.

Both stories are related to the agency’s lobbying efforts in Congress on behalf of an industry-backed bill to stall competition from generic companies that may seek to duplicate biotech drugs.

The WSJ story indirectly makes it clear how picayune is the CIRM lobbying effort. The bill endorsed by the agency is not even mentioned. The players are many and powerful. The stage is vast, encompassing the Obama administration’s sweeping health plan effort.

Reporter Alicia Mundy focused on a proposal by Sen. Ted Kennedy that would give biotech firms 13.5 years of protection from generic competition on what the WSJ called “lucrative” drugs. That is about twice as long as proposed by President Obama, who is wrapping the IP legislation into his health care package.

Mundy reported that Kennedy’s effort “may prevail because it would help keep the pharmaceutical industry on board with the (Obama) overhaul, said industry lobbyists and Senate staffers.”

Also involved in this is Tony Podesta, an accomplished rainmaker and CIRM’s Washington lobbyist(the agency has another lobbyist in Sacramento). Chris Frates of Politico.com wrote that “in the age of Obama, it’s a particularly good time to be named Podesta.”

Frates recounted the Podesta family ties to Obama, including brother John Podesta’s co-chairmanship of the president’s transition team.

Frates said Tony Podesta is active in campaign fund-raising, hosting a recent event that funneled $500,000 to the Democratic Senatorial Campaign Committee.

Some CIRM directors and others have questioned the agency’s lobbying effort as largely meaningless given the vast issues in play in Washington. However, $240,000 would not be meaningless to a stem cell researcher in California looking for help to push science along to finding a cure for one of the array of ailments many believe could be alleviated through stem cell therapy.

Assuming that protecting the biotech industry from generic competition is the correct position for a California state agency, the question remains: What do the people of California get out of the expenditure of $240,000, which does not even buy a bleacher seat in the Capitol? And that amount does not count the additional staff and directors time, travel and expenses. Does any of it change the outcome?

CIRM directors will receive a briefing on Thursday on the legislation at a teleconference meeting of their Legislative Subcommittee. The public can participate in session at locations in San Francisco, Elk Grove, Healdsburg, La Jolla (2), Irvine and Palo Alto. Specific addresses can be found on the agenda.

(Editor’s note: The WSJ article is only available to online subscribers. If you would like a copy, please email djensen@californiastemcellreport.com.) Sphere: Related Content

CIRM on Lawsuit and Hoover

We want to call attention to a comment posted yesterday by the California stem cell agency concerning its reaction to the Little Hoover Commission report. Amy Adams, CIRM’s communication manager, filed the comment on the “Klein Warns Stem Cell Directors” item that went up July 10.

She says that CIRM is not threatening a lawsuit in connection with legislative enactment of the Hoover recommendations.

We have posted a response to her comments, which can be found either through the “recent comments” column to the left or at the end of the “Klein Warns” item. Her comments can be found there as well. Sphere: Related Content

Trotter: Memories, Water and Life

Last night, I stumbled across a photographer, John Trotter, who was almost beaten to death in the late 90s while on assignment for our old paper, The Sacramento Bee.

The attack left Trotter unable to walk and with major brain injuries. But today he has regained his career and has shot impressive and evocative photos, ranging from Mexican babies in the dry Southwest to men and women struggling to recover their lives after suffering injuries or disease.

It was an arduous journey for John as well. He says he not only had to learn how to walk again but “re-learn how to remember.”

Our chance meeting came in Sacramento, where we are visiting. He was in the city for an exhibit at the Viewpoint Gallery of some of his work, a series of photos called “The Burden of Memory.” They were taken at the brain injury clinic where Trotter did much of his rehab.

I asked him about a project he was working on that was not on display but mentioned in some biographical notes at the show. It is called “No Agua, No Vida” (No Water, No Life) and deals with the Colorado River in a far-flung way.

The Colorado River is the main artery for much of the American Southwest, including Southern California. It has been dammed and diverted over the years and now is only a relative trickle when it enters Mexico’s Sea of Cortez. Mexico is not happy about that. In the U.S., states battle over the rights to the river water, much of which flows 242 miles across the desert to quench the thirst of Los Angeles.

It also has turned the Imperial Valley, a scorching-hot bit of sandy desolation, into a sometimes thriving industrial-agricultural community where I grew up. In fact, my first paid assignment as a reporter involved coverage of a campaign there to secede from California because of Colorado River water issues.

Trotter’s photos capture the desolation of the desert and dramatically depict how the water is being used and its impact on the lives of many.

You can see and purchase his photos on his Web site. In addition to the Viewpoint show, Trotter’s work is scheduled to be on display beginning Sept. 19 at the Mumm Fine Art Photography Galley in Napa, Ca. Sphere: Related Content

Klein Warns Stem Cell Directors on CIRM Reform Proposal

Recommendations for sweeping changes in the $3 billion California stem cell agency come before its directors next Thursday, although the agency's chairman has warned that support of some of the proposals would violate the directors' oath of office.

In an email to directors June 30, Robert Klein said five of the recommendations by the Little Hoover Commission, the state's good government agency, would be unconstitutional if enacted through the normal legislative process.

Klein wrote,

"As members of the board, we took an oath to uphold Prop. 71 and could not support these changes."

CIRM Vice Chairman Art Torres, who co-authored the memo, scheduled a meeting July 16 of the directors' Legislative Subcommittee to discuss the Hoover report. The board has not taken an official position on the study, but CIRM issued a press release last month that threatened a lawsuit should the legislature and the governor enact many of the recommendations without a vote of the people.

In response to a question from the California Stem Cell Report, Stuart Drown, executive director of the Little Hoover Commission, said neither he nor his predecessor could recall a time when a state agency had threatened a lawsuit in connection with Hoover recommendations.

The five purportedly unconstitutional recommendations would:

• Reduce the size of the unwieldy board from 29 to 15
• Reduce board member terms to four years following expiration of current members' terms, which run from six to eight years
• Eliminate the current dual CEO structure that has proved divisive in the past
• Allow the board to select its own chairman and vice chairman instead of having to accept nominations from state politicians
• Give the governor authority to appoint 11 of the reconstituted board's 15 members. (Presumably Klein would also oppose as unconstitutional a plan to require that four independent persons be placed on the board, although he did not mention it in his June 30 email. The board is currently dominated by representatives of institutions that receive grants.)

In an interview earlier this week at CIRM headquarters, Torres, newly appointed chairman of the Legislative Subcommittee, declined to discuss the specific recommendations. He said he wanted to hear first from members of the CIRM board. He said whatever action the subcommittee takes would go before the full board, presumably in August.

Klein's contention that support of changes would violate directors' oath of office is based on two memos from attorneys. One came from the board's outside counsel. The other came from a Sacramento law firm hired by Klein's private stem cell lobbying group. That firm also has a $50,000 annual lobbying contract with CIRM.

The Hoover Commission took note of the memos from the two law firms, but said the question remains legally open.

Yesterday, Daniel Hancock, former president of Shapell Industries and chairman of the Little Hoover Commission, wrote an op-ed piece in The Sacramento Bee defending the recommendations.

He said,

"As CIRM exits its startup phase, it is unclear whether the founding leaders on the governing board can objectively evaluate the best course for CIRM's future, including the crucial question of whether it should exist beyond its initially intended 10 years. Given that the longer-than-normal terms on the governing board limit turnover, current board members – whose organizations have received 80 percent of the research and facilities grants – may lack the independent perspective required to determine when CIRM's contributions to stem cell science have peaked."

Hancock, however, also said the report is designed to "start discussion."

He cited an article by one CIRM director, published on the California Stem Cell Report, as "encouraging." Jeff Sheehy wrote that he would like the Hoover study to be perceived as "the beginning of a dialogue about governance structures that results in the strengthening and institutionalization of CIRM and sets it on a path toward a long and fruitful existence."

The Hoover Commission report has received little attention in the mainstream media, which has increasingly limited resources because of the news industry's financial problems. But Alex Philippidis of BioRegion News wrote a lengthy piece on the subject on Tuesday.

He quoted Don Gibbons, chief communications officer for CIRM, as saying that changes proposed by Hoover Commission could "waste" time. Philippidis wrote,

"He(Gibbons) cited the 2007 reorganization of California's Department of Public Health, which at least one local news report blamed for a delay in payments to area shelters for victims of domestic violence."

Philippidis reported that Gibbons said a court challenge to the Hoover proposals "would not come from the agency, but most likely from a board member set to lose his or her seat, or patient advocates who have defended CIRM and the ICOC(the CIRM board), saying their value in helping research institutions leverage private donations outweighed any concerns over conflicts of interest raised by Little Hoover."

Philippidis also quoted a state higher education official, Charles Reed, who warned that giving the governor more appointment power would politicize the agency. The president of the UC system currently appoints two members of the 29-person CIRM board. The UC system also has another five appointees on the panel. California politicans appoint the remaining 22.

The meeting of Legislative Subcommittee will be conducted via teleconference with locations throughout the state from which the public can participate. They include San Francisco, Healdsburg, La Jolla(2), Palo Alto and Elk Grove. Specific addresses can be found on the agenda.

(Editor's note: Based on incorrect information from the BioRegion News article, earlier versions this item erroneously connected Charles Reed to the UC system. )

Sphere: Related Content

The Bee on Hoover Report: Time for Candor

The Sacramento Bee on Sunday carried an editorial headlined "time for a change at stem cell institute."

The editorial, published also in other McClatchy newspapers including those in Fresno and Merced, was keyed to the report by the Little Hoover Commission. The Bee wrote,

"For far too long, this institute(CIRM) and its leadership have been secretive, defensive and unwilling to acknowledge a flawed management structure, the legacy of a flawed ballot initiative.

"Maturity involves being able to consider outside criticism and engage in self-evaluation. Sadly, the leaders of the stem cell institute have developed a bunker mentality that continues to hurt the agency's mission.

"The institute's reaction to a recent report by the Little Hoover Commission is the latest demonstration."

The Bee continued,

“If adopted by CIRM and the Legislature, (the Hoover) recommendations and others could go a long way toward helping the stem cell institute operate more effectively, with greater accountability of taxpayer dollars. Yet instead of taking a few days to absorb the report and discuss it with his board, (CIRM Chairman Robert) Klein immediately dismissed it in a press release.

"The agency's spokesman dismissed the Little Hoover's process as 'ludicrous,' and Klein threatened a court challenge if the Legislature attempted to act on the recommendations.

“Fortunately, Klein is just one of 29 members of the institute's oversight board. Many others are distinguished academics and patient advocates who have greater candor, and less pride of parenthood, in acknowledging CIRM's flaws.

"Now is the time for their voices to be heard, in public meetings, as the institute approaches its five-year mark."

Sphere: Related Content

No IOUs for California stem cell researchers

The State of California began printing IOUs this afternoon to pay its bills because of a $26 billion budget crisis, but stem cell researchers funded by the state need not worry.

That's because the California stem cell agency is immune – for the time being – from fallout from the financial debacle.

The ballot measure, Prop. 71, that created CIRM gave the research effort special legal status. The governor and legislature cannot touch the agency's funding.

CIRM is not the only state agency that is isolated from all the effects of the budget mess. While most state employees are facing a nearly 5 percent pay cut from just last month on top of previous cuts, the the California Highway Patrol is likely to see a pay raise, according to Jon Ortiz of The Sacramento Bee.

Diana Lambert, also of The Bee, reported that the budget pain has not yet “trickled up” to leaders of the University of California system. She reported salaries of $295,000 to $450,000 for UC chancellors along with generous benefits.

Lambert continued,

“The salaries and perks continue despite cuts to freshman enrollment next year, fee increases at some professional schools of as much as 50 percent and student fee hikes of nearly 17 percent over two years.”

At a troubled California regional transit agency, some “foreworkers” are pulling down six figure salaries, including overtime, that run as high as $218,621, according to Daniel Borenstein of the San Mateo Times.

The inequities illustrate the difficulties in dealing with the California cash crisis, which extends into local and regional entities as well as state government. The governor and lawmakers cannot by law reach into all fiscal corners of the state in their efforts to make semi-rational cuts.

One of the reasons for that is government by ballot initiatives, such as Prop. 71, which hamstring legislators – for good reasons and bad – when they try to deal with both policy and budget matters.

CIRM's operational budget is tight overall, probably tighter than many state agencies, although some might quarrel with its priorities, documentation and justification. And scientists certainly should not see their multi-year projects shelved and research basically lost because of state financial vagaries. Midstream loss of funding would throw away much of the original investment.

But that doesn't mean that ballot initiatives such as Prop. 71 represent good government or good policy. Indeed, Prop. 71 itself is one of CIRM's worst enemies as it hampers the board and creates conflicts of interests that are all but impossible to resolve. Sphere: Related Content

California Stem Cell Agency to Hit Staffing Cap

SAN FRANCISCO – The California stem cell agency has added two new positions to support its 29-member board in a move that is likely to push its staffing to its legal limit of 50 for the first time ever.

CIRM President Alan Trounson provided the additional staff after some members of the board complained at a meeting in June that they could not get adequate back-up from CIRM staff. The contentious session in San Diego also highlighted what several board members called “festering” issues dealing with governance and the limitations of Prop. 71, which created the stem cell agency and is virtually impossible to change.

One of those limitations is the 50-person cap on staff, which CIRM could reach this fiscal year. The agency was scheduled to hit 47 under the budget approved last month. However the spending plan did not include the two additional staffers for the board nor did it include a high level finance specialist that the agency is planning to hire.

CIRM Chairman Robert Klein told directors at a special teleconference meeting that the two new board staff positions will terminate at the end of 2010 because of the staff limit. He explained that the agency will then need to hire two additional scientific officers to help handle its burgeoning grant load. By the end of this year, the agency is expected to have approved $1 billion in grants.

Although Wednesday's meeting did not specifically discuss hitting the 50-person cap, Klein said the agency plans to come up with alternative means of financing the board positions after 2010.

Klein also raised the possibility of having the board vote on the move to add the two staffers. Several board members said that was not necessary because hiring the persons was entirely within Trounson's authority.

Board member Jeff Sheehy, who raised the board staffing issue at the June meeting, said adding the new staff still did not provide adequate support for CIRM's big board. Only one person has had primary responsibility for dealing with the board, although additional help is provided by others.

Sheehy, a communications manager for UCSF, alluded to criticism by some board members that the board was micro-managing by seeking additional support. He said,

“If the board can't suggest a minimal level of support for the board, the board is not in control of the agency.”

One of the two persons will be assigned to Vice Chairman Art Torres, who deals with bond financing and legislative issues. That position has been filled. The other position will be an administrative assistant for board executive director Melissa King. That job is expected to be posted shortly.

Following the brief public meeting, the board went into executive session to discuss personnel matters, including the recent resignation of Marie Csete as chief scientific officer. Sphere: Related Content

Csete Discloses Reasons for Resignation: Lack of Respect at CIRM

Nature magazine reported today that Marie Csete says she resigned as chief scientific officer of the $3 billion California stem cell agency because her advice was not respected.

Reporter Erika Check Hayden quoted Csete as saying,

"When it became clear to me that my considered clinical advice was not respected, I concluded that it made no sense for me to stay at CIRM."

Hayden also wrote,

“When Csete left Emory University in Atlanta, Georgia, to join CIRM in March 2008, she gave up her lab and divorced her husband John Doyle. He is a professor at the California Institute of Technology in Pasadena, an institution she would be inviting to apply for research funding and so needed to avoid contravening state conflict-of-interest laws. 'We were willing to sacrifice a lot for me to be in a position to make a positive impact at CIRM,' she says. 'I wanted to see it to the end.'

Hayden continued,

“Csete says she hopes her leaving will mark 'a new start' for the agency. 'I had tried everything I could to change what I think needed to change from the inside, and that was not going to happen,' she says. 'I felt I would have more impact by stepping away and advising the leadership of the board on my way out about ways to revise the structure and management of the agency to make it more optimal.'"

Csete's departure is likely to come up a teleconference meeting of the full CIRM board early tomorrow evening. The board is scheduled to consider a plan, posted this evening, to bolster support for the CIRM board. The meeting was called following a contentious session in San Diego earlier this month during which a number of “festering” issues surfaced.

In a reaction earlier to Csete's announcement, CIRM Chairman Robert Klein said he planned to contact each board member to discuss the matter, raising the possibility that he would be engaged in an illegal serial meeting.

We queried James Harrison, outside counsel to CIRM, about the plan. He replied last week,

“There will be no serial meeting -- the discussion will occur at our next meeting.”

Harrison referred to tomorrow's teleconference meeting.

We also asked Don Gibbons, chief communications officer for CIRM, whether Csete had a contract or was given severance from her $310,000-a-year job. He replied that she had neither. We asked Gibbons this evening whether CIRM has any comments on the Nature article today. He has not yet responded.

The public can take part in the tomorrow's meeting at teleconference locations in San Francisco (4), Los Angeles (4), Duarte, Sacramento, Elk Grove, La Jolla, Healdsburg, Irvine, Berkeley, Palo Alto, Stanford and Tucson, Ariz. See the agenda for specific addresses. Sphere: Related Content

Three Handlers Clear First Round in $500 Million Biotech Lending Program

MENLO PARK -- Three financial firms today made the first cut in their bid to handle the California stem cell agency's $500 million biotech lending program.

The CIRM directors' Finance Subcommittee sent Square 1 Bank in East Palo Alto, Comerica Bank in San Diego and Silicon Valley Bank of Santa Clara into negotiations with the agency's staff.

The ultimate winners of the contracts will be selected by the full board of the $3 billion agency after its staff completes its negotiations.

Losing out in the bid were Adjuvant Capital Partners of San Francisco and Orix Venture Finance in Palo Alto.

The Finance Subcommittee, which had asked for the staff analysis five days ahead of today's meeting, was presented today with a five-page summary of the proposals.

The three winning firms had the best cost rankings. CIRM used the example of a $20 million loan serviced over a six-year period. The firms had a choice of using a fee for service or a loan origination model. Square 1 had the lowest cost – $71,000 for the sample loan on a fee for service basis. Additional expenses were shown for handling the warrants. No dollar amounts were presented in that case, only percentages. Additional fees are likely to be imposed on potential borrowers.

No potential borrowers were present for today's session. But it may well be appropriate for CIRM to consult with them prior to locking down terms and fees that be difficult for the borrowers, who are supposed to be coming from a financial "valley of death."

The Finance Subcommittee gave the following scores to the firms: Square 1, 978; Comerica, 928; Silicon Valley Bank, 878; Orix, 484, and Adjuvant, 466.

At least two and possibly three firms will ultimately take part in handling the loan program. CIRM needs more than one because of the likely possibility that conflicts of interest will arise at the financial firms.

CIRM expects to kick off its loan program with its $210 million disease team round, which is expected to be approved later this year. It will be the largest research round in CIRM's history.

Following the teleconference meeting, Michael Goldberg, chairman of the Finance Subcommittee and a partner in the Mohr-Davidow venture capital firm of Menlo Park, said links with CIRM will help to establish the financial firms as early leaders in the growth of the stem cell industry in California.

All of the proposals can be found via the agenda for today's meeting. Sphere: Related Content

Candidates Bid to Handle CIRM's $500 Million Loan Program

Directors of the California stem cell agency tomorrow will examine proposals from five financial firms that appear to be seeking millions of dollars to basically run the agency's ambitious and unprecedented $500 million biotech lending program.

The proposals come from Comerica Bank in San Diego, Orix Venture Finance in Palo Alto, Square 1 bank in East Palo Alto, Adjuvant Capital Partners in San Francisco and Silicon Valley Bank of Santa Clara.

Their plans were received by CIRM on June 8 after the agency posted an RFP for underwriters for the loan effort. The responses from the five financial firms were not made public until 16 days later.

Their posting late Friday on the CIRM web site came only two business days before the teleconference meeting of the directors' Finance Subcommittee at which they are to be discussed. The directors had asked to receive the material at least five days before tomorrow's meeting. One director said he preferred 10.

The winning underwriters are likely to be No. 1 on CIRM's list of outside contractors – in terms of dollars from CIRM. Outside contracting – at more than $3 million annually – is the second largest item in CIRM's $13 million annual operational budget. (Salaries and benefits are first.)

CIRM is expected to select more than one underwriter because of conflict of interest problems. It is a small financial world in the biotech community.

The Finance Subcommittee discussed the process of selecting underwriters at its June 11 meeting. According to the transcript, the CIRM staff initially proposed that it select the underwriters, but directors said no.

Directors asked for a staff analysis of the proposals that would include thoughts from CIRM Chairman Robert Klein, who originated the concept for the biotech lending program, and CIRM Vice Chairman Duane Roth, who headed the biotech loan task force.

The staff analysis posted Saturday on the CIRM web site is six sentences long, which seems a bit paltry.

Perhaps someone at CIRM knows the cost of each of the competing proposals, but it was not presented in the staff analysis. Their cost is nearly impossible to calculate from the proposals themselves because of their complexity and the lack of a common basis.

One applicant, Adjuvant Capital Partners, declined to use the fee options proposed by CIRM. Peter Barton Fair of Adjuvant wrote,

“Both of the proposed fee structures compensate the delegated underwriter based on the number of closed transactions they underwrite. As we have seen recently in the mortgage industry, incentivizing an underwriter based on volume creates a conflict of interest and can result in the underwriting of poor quality loans. The fee structure we proposed eliminates this conflict of interest.”

Fair's reference was to the use of delegated underwriting by Fannie Mae, which many believe played an important role in its financial downfall.

The Finance Subcommittee directed the staff to invite representatives from all five companies to attend tomorrow's meeting to answer questions.

It is doubtful that potential borrowers will appear. Some of them, however, might have questions about the fee structures. One applicant, Orix, proposed an upfront, nonrefundable fee that could total $50,000 from a loan applicant on a $10 million loan. Based on the Orix proposal, it appears that the fee would have to be paid before the CIRM board approves the proposed research. Orix also proposed $950-a-day, per person fees for “out of pocket expenses.”

Such fees may be customary and justified for this sort of work. However, CIRM's loan program ostensibly targets firms facing a “financial valley of death.” They may be a bit strapped to handle such costs.

If you are interested in hearing or participating in tomorrow's meeting, you can find teleconference locations in San Francisco, Palo Alto, Menlo Park, Irvine, Berkeley, Tucson, Az., Los Angeles and Stanford. Specific addresses can be found on the agenda.
Sphere: Related Content

CIRM Director Responds to Hoover Commission Recommendations

Jeff Sheehy, who has served on the board of the California stem cell agency since its inception and as acting vice chair of its grant review group, prepared the following piece on the Little Hoover Commission's report on the agency. Sheehy is a communications manager at UC San Francisco and is a nationally known HIV/AIDs patient advocate. Here is Sheehy's article.

Last Thursday, the Little Hoover Commission issued a report, "Stem Cell Research: Strengthening Governance to Further the Voters’ Mandate," recommending changes to Proposition 71, the initiative establishing the state’s stem cell research funding agency, the California Institute of Regenerative Medicine (CIRM).

CIRM has already mounted a vigorous negative response, which I, as a member of CIRM’s governing board (the Independent Citizens’ Oversight Committee or ICOC), find disappointing.

So while my preferred method of responding would have been through processes of the ICOC, that avenue has not been made available. Therefore, I am taking this opportunity to express my views.

To begin, I should flesh out the three underlying principles implicit in the report. First, CIRM is a tremendous success. While it will take time for the cures to emerge, incredible, innovative science in the new field of regenerative medicine has been funded, a dozen state-of-the-art research facilities are being built around the state, scores of scientists have been recruited to California from around the world, and networks have formed around the state that are the seeds for new Silicon Valleys, but of biotech not chips. Having established itself as the world’s hub for regenerative medicine, California is already reaping the benefit from the initial investments.

Second, Robert Klein has earned the gratitude of California for his incredible leadership in passing Proposition 71 and in leading the establishment of CIRM. His unimaginable level of effort has been the single biggest ingredient in CIRM’s success. If it were up to me, I would honor his service by naming CIRM after him upon his retirement.

Third, given CIRM’s success and Mr. Klein’s announced retirement upon completion of his term, we need to institutionalize CIRM as we plan for a longer future, sustained either by the proceeds of its loan program, additional voter approved funds, or appropriations from the Legislature. By the time the initial tranche of funding is exhausted, CIRM will have moved several potential therapies far down the developmental pipeline, and the economic stimulus from placing California ahead of the world in regenerative medicine will be obvious to everyone. Eventually there will be cures for chronic and life-threatening diseases that will save healthcare dollars. California will reap the economic benefit of being the home of many of the companies that provide those cures.

The Little Hoover Commission offers some reasonable suggestions for improvements that could help the functioning of CIRM and further institutionalize the agency. The 29-member ICOC is too big and too cumbersome—that’s obvious to anyone who regularly attends our meetings and sees us struggle to attain a quorum. The report seems to suggest an organic transition to a smaller board as terms end in 2010 and 2012.

Twelve members’ terms expire in 2010—4 from non-UC research institutions, 4 from non-UC universities, and 4 from the life sciences industry. I would recommend halving that number in proportion, which would reduce the ICOC by 6. The chair and vice-chair terms also expire in 2010 and the Little Hoover commission recommends not reappointing someone to those positions. Rather, they recommend that the chair and vice-chair be nominated from the membership of the ICOC and then voted in by the members. Two-year rotating terms are recommended. This would reduce the size by 2.

In 2012, the 5 UC medical school appointments expire along with the 10 patient advocate terms. I would alter the Little Hoover recommendations by reducing the UC medical school number to 3 and the patient advocate slots to 6 seats with 6 designated alternates. My rationales are that UC is part of the state of California and should be well represented, and that patient advocates currently fill 12 slots since the chair and vice-chair must have patient advocate credentials, so 6 would be the appropriate proportional reduction. Creating 6 alternates addresses persistent complaints of patient advocates that they are not allowed to appoint proxies. In addition, the participation of patient advocates in the working groups has been an extremely positive innovation in Prop. 71 and the alternates would be available for the working groups.

This would give the ICOC, hopefully renamed the Board of Directors for CIRM, 15 members. I would set a quorum of 9, which should be more easily attainable, especially with proxies and alternates. If prospective members cannot commit to adequate attendance, they should decline appointment, and non-attendance should be grounds for removal. I would strongly urge maintaining the original diversity, which has been strength, not a hindrance.

In addition, I would define the pool of conditions and diseases from which the patient advocates are drawn more broadly and not specify which conditions or diseases an individual advocate must be drawn from, but merely state that each patient advocate must be drawn from a different disease or condition. Further, I would recommend that either the chair or vice-chair should be a patient advocate member. And to address the inequitable and immense economic burden of service for lower income ICOC members, I would increase the per diem by a reasonable multiple.

Little Hoover recommends 4-year terms. Again, this makes sense. The transition should occur organically as proposed above and that would give staggered terms so the entire Board does not turn over at once. I think the non-UC appointment process should be considered carefully. It should reflect a balance of power between Legislature and the Governor and/or other constitutional officers such that individuals are appointed for merit and desire to serve CIRM’s mission and not to fulfill any political agenda.

In eliminating the appointed chair and vice-chair, I agree with the Little Hoover commission on eliminating the operational aspects of those positions. The new Board should be focused exclusively on oversight and not day-to-day management, which belongs in the hands of a president hired by and accountable to the Board. This is not intended nor should it be construed as any criticism of Mr. Klein. I believe that if a successful restructuring is accomplished, his dual role will be properly perceived as a heroic sacrifice for CIRM’s mission and an essential feature of its success in initiating its operations. If we try to fill Mr. Klein’s shoes, I believe we risk the success of the entire enterprise.

The Little Hoover ccommission recommends expanding the size of the agency beyond 50 employees. I do not know anyone who does not think this is reasonable. I would suggest a cap, but that number should be determined after thorough analysis.

I also think most agree that the 15-member limit for scientist grant reviewers is too low. This should be expanded, again after thorough analysis. In addition, the current staff-led triage process should be eliminated in favor of a process within the structure of an expanded Grants Working Group. I must reject other changes to the peer review process. The operation of the Grants Working Group has been an outstanding success, and CIRM staff should be commended.

Finally, I heartily support a performance audit by the Citizens’ Financial Accountability Oversight Committee, an entity established by Prop. 71.

In short, I wish the report by the Little Hoover Commission could be perceived and advanced as the beginning of a dialogue about governance structures that results in the strengthening and institutionalization of CIRM and sets it on a path towards a long and fruitful existence. Sphere: Related Content

Correction

The “tipping point” item incorrectly stated the Little Hoover Commission's final report included a recommendation for reduction of the super-majority quorum requirement for the stem cell agency board. The change was initially recommended in the commission's draft report, but was dropped in the final report, which said the quorum requirement was “problematic.”

Our thanks to Don Gibbons, CIRM's chief communications officer, for pointing this out. Sphere: Related Content