Implications of a Solar Power Debacle for the California Stem Cell Effort

What can the $3 billion California stem cell agency learn from Solyndra?

The topic came up at a staff meeting on Monday at the San Francisco headquarters of the agency that has pumped $1.3 billion so far into stem cell endeavors in the Golden State.

For those who have not followed the Solyndra debacle (see here, here and here), it involves the abrupt shutdown of the solar power enterprise in Fremont, Ca., and shuttering of a new, state-of-art manufacturing facility. It appears that the federal government has lost a $535 million loan to the company. The FBI is conducting an investigation along with Congress. Executives of the firm have refused to testify before Congress, citing their constitutional rights. Approximately 1,100 people have lost their jobs.

Where do CIRM and Solyndra converge? Both are involved in cutting edge technology. Both are engaged in financially risky areas of business. The stem cell agency, however, is on the funding side, as is the federal government in the case of Solyndra, which is/was engaged in development and production, much as are CIRM grant recipients.

In an interview Monday with the California Stem Cell Report, CIRM Chairman Jonathan Thomas said a staff member brought up Solyndra at the Monday meeting. The subject is increasingly important to CIRM as it engages the biotech industry more aggressively with grants and loans in a push to actually move research into the marketplace.

During the discussion, Thomas said he stressed the need for the agency to be "totally realistic" and "completely factual" about company plans. He said CIRM must have "excellent procedures" when evaluating stem cell enterprises. "Deep due diligence" is necessary, he said.

The stem cell agency has provided only 7 percent of its largess to business, but is likely to boost that amount by many tens of millions of dollars – if not hundreds of millions – in the next year or two. CIRM's funding will run out around 2017. It is seeking to come up with tangible results that will resonate with voters should it decide to ask for more multibillion dollar infusions of cash.

All that is occurring within the biotech industry, which has a business failure rate of 90 percent. Only a handful of biotech firms turn a profit.

But without taking risks that are nearly certain to make elected officials and policy makers uneasy(probably after the fact), CIRM is unlikely to spur the development that fulfills its mission. And that is not to mention the exceedingly high expectations fostered by the 2004 ballot campaign that created CIRM. How the tiny agency balances risk and research will be a key ingredient in how it is perceived by voters and whether they will give thumbs up to its continued existence.