“What was the company's secret? StemCells says it's addressing 'a serious unmet medical need' in Alzheimer's research. But it doesn't hurt that the company also had powerful friends going to bat for it, including two guys who were instrumental in getting CIRM off the ground in the first place.”
“But private enterprise is new territory for CIRM, which has steered almost all its grants thus far to nonprofit institutions. Those efforts haven't been trouble-free: With some 90% of the agency's grants having gone to institutions with representatives on its board, the agency has long been vulnerable to charges of conflicts of interest. The last thing it needed was to show a similar flaw in its dealings with private companies too.”
“(Weissman) has also been a leading beneficiary of CIRM funding, listed as the principal researcher on three grants worth a total of $24.5 million. The agency also contributed $43.6 million toward the construction of his institute's glittering $200-million research building on the Stanford campus.”
“The problem is that StemCells doesn't have $20 million in spare funds. Its quarterly report for the period ended June 30 listed about $10.4 million in liquid assets, and shows it's burning about $5 million per quarter. Its prospects of raising significant cash from investors are, shall we say, conjectural.
“As it happens, within days of the board's vote, the firm downplayed any pledge 'to raise a specific amount of money in a particular period of time.' The idea that CIRM 'is requiring us to raise $20 million in matching funds' is a 'misimpression,' it said. Indeed, it suggested that it might count its existing spending on salaries and other 'infrastructure and overhead' as part of the match. StemCells declined my request that it expand on its statement.
“CIRM spokesman Kevin McCormack says the agency is currently scrutinizing StemCells' finances 'to see what it is they have and whether it meets the requirements and expectations of the board.' The goal is to set 'terms and conditions that provide maximum protection for taxpayer dollars.' He says, 'If we can't agree on a plan, the award will not be funded.'"
“The agency shouldn't be deciding on the spot what does or doesn't qualify as matching funds. It should have clear guidelines in advance.
“Nor should the board overturn the judgment of its scientific review panels without clear-cut reasons....The record suggests that the handling of the StemCells appeal was at best haphazard and at worst redolent of cronyism.”