$800 Million in New Stem Cell Labs: Haggling Over 10 Percent

The California stem cell agency and some of the nation's top stem cell research institutions are dickering over the final details of perhaps the world's largest-ever wave of new lab construction for human embryonic stem cell research.

Reporter Ron Leuty of the San Francisco Business Journal pulled together pieces of the process in a report Friday. The implications of his article raise fresh questions about the ongoing conflicts of interest among CIRM directors.

Twelve institutions, 10 of which have representatives on the CIRM board, are seeking $336 million from CIRM this week. A CIRM panel has approved $289 million, leaving a shortfall of about $47 million. The agency required applicants to match the grants plus more, pushing the total amount of construction proposed to $832 million. Robert Klein(see photo), chairman of CIRM, offered a "hold-back" plan at a CIRM meeting in April. John M. Simpson of Consumer Watchdog reported on April 7 that CIRM grant reviewers expressed support for asking some institutions to take less if they get their money up front.

Leuty reported fresh details of how this is playing out in the final days before CIRM directors meet Tuesday afternoon in Los Angeles. Leuty said Klein is telling institutions that if they agree to lower their requests by roughly 10 percent, they will get the cash sooner rather than later.

Leuty wrote:

"'CIRM has been very aggressive about putting this idea forward,' said Chris Shay, project manager for the planned $200 million, 200,000-square-foot headquarters for the Stanford Institute for Stem Cell Biology and Regenerative Medicine. 'They don't want to do any more cutting.'"

Leuty said Stanford has already made a counter to the 10 percent offer.

He also wrote:

"'We're the only independent (applicant),' said Ralph O'Rear, vice president of operations for the Buck (Institute), which could receive $20.5 million in CIRM funding for a 65,700-square-foot, $70.1 million facility. 'We don't really have the kind of means and the resources that Stanford or USC have, so (early CIRM cash is) really something more meaningful for them than us.'"

Leuty continued:

"'We're interested in doing it if we can make it pencil out for us,' said Glenn Lucas, executive vice chancellor at UC Santa Barbara, which could land $3.5 million in CIRM funds for a $6.4 million project. 'They're essentially asking us to take less money up front to buy down the risk.'"

Last week Nature magazine warned of "cronyism" at CIRM because of the dual roles of medical school and research institution executives who also serve as directors of CIRM. In the case of the bargaining over the 10 percent discount, some questions arise:

-- Have Klein or others at the agency discussed the discount plan outside of public meetings with CIRM directors whose institutions would be financially affected?

-- Have the institutions' staffs informed their deans/CIRM directors of the negotiations or sought their advice?

-- Have the deans/directors given advice formally or informally to their staffs about negotiating with CIRM or Klein?

We are querying CIRM concerning these matters. We will carry an update on its response Monday afternoon.

We should also note that CIRM directors whose institutions are applying for the grants will be barred from voting on or even discussing them at this week's meeting.

(Editor's note: An earlier version of this item used the expression "10 percent discount" in the third paragraph. That has been changed to "hold-back.")