Stem Cell Contingency Planning in California: Winding Down a $3 Billion Operation

The $3 billion California stem cell agency has put together a "wind down" budget for its coming fiscal year -- a spending plan that takes into account the possibility that voters will not refinance the effort with more billions this fall. 

The budget was approved by the agency's governing board finance committee last week. It proposes spending $12.3 million for the 12 months that begin July 1. Should voters reject a $5.5 billion refinancing of the agency in November, the plan anticipates a 42 percent staff reduction at the end of this year. 

The agency is now down to 33 employees, who have numbered more than 50 in past years. 

Maria Millan, CEO of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, said that details of the plan will be fleshed out as the year progresses.  It will also be discussed at a governing board meeting on June 26.

She said that CIRM has $854 million in awards under current management. They would be phased out over the next several years. Millan said that $47 million is available currently for research awards. Decisions on the use of the money will come before the board, also on June 26. 

If the ballot measure is approved, the agency's budget will require substantial modification and hiring to deal with the increased funding and new activities provided for in the ballot measure. 

During the public comment period, David Jensen, publisher of the California Stem Cell Report noted the  significance of CIRM both as an historic state enterprise and for its scientific impact on the stem cell field. He said, 

"Preserving the CIRM story digitally in a readable and accessible format should not be all that costly. And it would be a significant contribution to helping those who come after us learn about how this $3 billion effort came about and navigated with considerable success through the early days of what some may ultimately call the stem cell revolution. It would be a sad day if the complete record of the California Institute for Regenerative Medicine is not preserved for posterity." 

Several CIRM board members expressed enthusiasm for the suggestion. Millan said that archiving the data and information that CIRM has gathered is part of the wind down proposal under its public communication component. 

*This item has been brought to you by The California Stem Cell Report: The only independent source of information and news devoted solely to the stem cell agency for the last 15 years.*

$15.6 Million Operating Budget Slated for California's Stem Cell Agency

California's 14-year-old stem cell research program is set this week to approve a $15.6 million operating budget as its funding is drawing to a close.

Cash for new research awards is expected to run out later this year. But the agency, known formally as the California Institute for Regenerative Medicine (CIRM). still needs to administer multi-year awards for the next few years. It has set aside money to wind down those existing programs.

The proposed operating budget for the 12 months beginning July 1 totals $15.6 million, up from an expected $14.9 million in spending in the 2018-19 fiscal year. The budget is slated to taper down to $1.8 million in 2023-24.

For the new fiscal year, employee salary and benefits consume most of the budget, accounting for $11.4 million, up slightly from $11.3 million this year.  The most recent body count at CIRM shows about 45 employees. 

The second largest spending category for next year is "external services," largely outside contracting. That area totals $1.5 million, up from $1.1 million for the current year.

The 2019-20 budget provides $838,000 for grant application reviews, meetings and workshops. That is up from $794,000 this year.

The $838,000 appears to assume the success of a private, $220 million fundraising drive that is now underway. It would allow the agency to continue its awards in a significant fashion. However, no public announcement of any major fund donations has yet been forthcoming.

The budget comes before the Finance Committee of the agency's governing board on Wednesday. The committee routinely approves the annual operating budget with few, if any, major major changes. The spending plan will then go to the full board next month for ratification.

More details of the budget can be found on the agenda for the meeting. The session will be aired over the Internet. The public can listen in and ask questions online as well. Instructions for participating can be found on the agenda.

Go-ahead Given on $144 Million California Stem Cell Research Budget for Next Year

The California stem cell agency is moving ahead with a proposed $144 million research budget for the coming year, slightly below the $148 million expected to be handed out this year.

However, the award budget for 2019 is well below the $300 million in awards that were made in some past years.

The 2019 plan yesterday cleared the Science Committee of governing board of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. It is expected to be approved by the full board at a meeting next Thursday.

The committee also juggled some financing and all but assured that six highly rated applications that were stalled will now receive approval, also probably next Thursday.

You can read more about the 2019 research budget here and the stalled awards here. 

A Rare, Written Self-Exploration: California's Stem Cell Agency Slices and Dices its Own Spending

It is a rare day that the $3 billion California stem cell agency actually explains in writing its budget and finance choices. Today it did.

Usually the agency relies on Power Point slide presentations at its public meetings that amount to little more than an outline. Today, the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, filed a 652-word item on its blog discussing its spending plans.

Written by Kevin McCormack, the agency's senior director of communications, said the CIRM team had examined CIRM's financial picture during the last few months. He wrote,

"It boiled down to a few options.

• "Keep funding at the current rate and run out of money by 2019

• "Limit funding just to clinical trials, which would mean we could hit our 50 clinical trial goal by 2020 but would not have enough to fund Discovery and Translational level research

• "Place caps on how much we fund each clinical trial, enabling us to fund more clinical trials while having enough left over for Discovery and Translational awards"

McCormack continued,

"The board went for the third option for some good reasons. The plan is consistent with the goals laid out in our strategic plan and it supports Discovery and Translational research, which are important elements in our drive to develop new therapies for patients."

Nearly all of what McCormack wrote is familiar to readers of this web site. But it may be new to many of other followers of the agency.

McCormack noted that budgets are "rarely exciting things." Some might argue that precisely how the agency is spending $6 billion (including interest) of public money is at least as exciting as the arcane world of, let's say,  generating a "mesenchymal stromal cell-seeded small intestinal submucosa  decellularized extracellular matrix,"

CIRM's spending is directly important to hundreds of California scientists and the institutions that benefit financially from CIRM awards. The stem field in general has already benefited from the loads of CIRM research that is laying the groundwork for greater developments -- not only in California but globally.

It can arguably said that CIRM is the largest single source of stem cell research funding in the world. And one of its greatest products is hope -- hope by hundreds of thousands of persons, perhaps millions, that CIRM's research will speed development of therapies that will ease their suffering or the suffering of those who come after them.

Nothing boring about that. And kudos to CIRM for taking a longer look at the nickels and dimes that make it happen.

$68 Million Saving: California Stem Cell Agency Cuts Size of Clinical Trial Awards

CIRM's new caps on its clinical trial programs

OAKLAND, Ca. -- Directors of the California stem cell agency this morning cut the size of its key awards, saving $68 million that will allow it to support more "shots on goal" as it pursues development of a stem cell therapy available for widespread use. 

The move was made in the clinical trials program of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. Clinical trials are the last stage of research prior to federal approval of a therapy for general use. 

The unanimous action will allow the agency to continue backing its non-clinical programs as well as generating support for 50 trials by the end of 2019. 

The agency is running out of cash for new awards because of limits in the ballot initiative that created it in 2004. The board will discuss funding for the more distant future at today's meeting. 

California Stem Cell Board to Hash Over Cuts, Future Financing Plans Next Week

Directors of the $3 billion California stem cell agency, which is facing the loss of its funding, are scheduled for one of their more consequential meetings late next week -- a session that will deal with cutting the size of awards and planning for life after 2019.

The meeting Dec. 14 will continue a discussion that began last September and that now involves a possible $5 billion bond ballot measure, a private, $222 million fundraising campaign and major  reductions in the size of awards over the next two years.

The agency projects it will run out of cash for new awards in 2019. It is financed by California state bonds but that source is drying up under the terms of the ballot measure that created the effort in 2004.

Details of what exactly will be presented next week to the 29-member governing board were not available -- as of this writing -- on the web site of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. More information is expected to be posted in the next few days, but it is likely to resemble closely the matters discussed in late November by the directors. 

Also on tap are changes in the basic research and translational award programs and ratification of reviewer decisions on grant applications in the "Quest" program, which is aimed at development of technology that is uniquely enabled by stem cells. 

The meeting will be based in Oakland with teleconference locations where the public can participate in New York City, Stanford, Santa Cruz and San Diego. The meeting will be audiocast on a listen- only basis. More details can be found on the agenda.  Regarding the New York City site, from time to time teleconference sites have been set up out-of-state when a director is traveling.

The California Stem Cell Report will be covering the meeting live from CIRM's Oakland headquarters.

"Cuts," Private Fund-Raising, $5 Billion Bond Measure: Answers to the Critical State of California Stem Cell Finances?

Bob Klein explored a $5 billion bond measure at today's stem cell meeting. 
California Stem Cell Report photo

OAKLAND, Ca. -- Facing the likelihood of a slow and withering death, the California stem cell agency today edged gingerly forward on a path of "cuts" and risky fund-raising in hopes that its research results will soon generate voter support for more billions of dollars.

Two governing board committees of the $3 billion agency, formally known as the California Institute for Regenerative Medicine (CIRM), this afternoon recommended that the full board "entertain" the proposals at its Dec. 14 meeting.

The agency is down to its last $269 million and expects to halt new awards in 2019 unless additional funds are raised between now and the beginning of 2020. It has been running at a $300-million-a-year pace recently and has pumped out about $25,000 an hour, 24 hours a day, seven days a week since it started making awards in 2005, according to calculations by the California Stem Cell Report.

Today's meeting focused on both short and long term finances. The committees examined a proposal to cut its planned clinical awards by $68 million over the next two years by limiting their size. The committees also indicated support for an ambitious effort to raise $222 million privately between now and early 2020.

Longer term, directors staked their hopes on voter approval of a ballot initiative in November 2020 that could total $5 billion. Development of a stem cell therapy that would resonate with voters would be a major key to the success of that effort. The 2004 campaign raised expectations that stem cell cures were right around the corner, but so far the agency has not backed one for widespread use.

Robert Klein, a Palo Alto real estate investment banker who ran the 2004 campaign that created the agency, told the CIRM directors of a private poll that he said showed 70 percent of Californians supported stem cell research and continued funds for the stem cell agency.

Following the meeting, the California Stem Cell Report asked him for a copy of the poll. He declined to provide it or identify the firm that conducted the survey.

Klein told the CIRM board members that the agency has made "remarkable progress" and has created a "moral imperative" to continue the search for stem cell cures. He said,

"The bridge to the future is CIRM and stem cell therapies."

The now less-than-robust finances of CIRM are a product of the ballot initiative, Proposition 71, that created it. CIRM is not funded through the customary process used by most state agencies. The initiative  stipulated that CIRM would be supported by $3 billion in state bonds whose funds would flow directly to the agency and bypass the legislature and the governor. When that cash runs out, the agency is left with no other source of state funding.

Raising $222 million privately over the next two years is no small task, but deep pockets exist that may well be tapped. The Eli and Edythe Broad Foundation, for example, has donated nearly $80 million to stem cell research centers at UCLA, UC San Francisco and the University of Southern California. All three are linked to CIRM. In San Diego, the Sanford Stem Cell Consortium was given $100 million in 2013 by Denny Sanford, another billionaire. The consortium came into being after it was backed by $43 million from CIRM.

Nonetheless, competition for philanthropic cash is heated. Thomas and Klein, however, both indicated that they would collaborate on raising the $222 million, which would allow the agency to add eight new clinical awards in 2020, among other things.

The risk lies in the timetable for bringing in the cash. The agency has a relatively tight schedule for making awards --- a schedule that a major philanthropist may or may not be ready or willing to comply with.

Without more cash, the stem cell agency projected that it would wither away by 2023 as it managed a declining number of old research grants.

For more, recent articles on CIRM's current critical funding situation, see here, here, here and here.

California Tightening Stem Cell Research Belt; Size of Research Awards Targeted

The stem cell agency outlined its assessment of its current position
 in this slide prepared for today's meeting. 

OAKLAND, Ca. -- California's $3 billion stem cell agency is preparing to put the squeeze on its research awards over the next two years, cutting the caps on new grants in some areas by 50 percent or more.

It is all part of a strategy to prolong the life of the 13-year-old research effort as it fights to fulfill the expectations of voters who created it when they approved a ballot initiative in 2004. Voters provided only $3 billion in funding, however, and the agency is now expected to run out of cash for awards in 2019 unless it changes its financial ways.

Meeting here today are two key groups, the Transition and Science subcommittees of the governing board of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known.

They are scheduled to wrestle with both the agency's short-term finances and the longer term effort to extend CIRM's life for perhaps an additional 10 years or more via another ballot initiative in 2020. As for next year, based on past discussions and practices it appears certain that the agency's directors will reduce the size of awards to the scientists and businesses who are often hard-pressed to find non-governmental support.

A proposal by the president of CIRM, Maria Millan, calls for reducing clinical program awards by a total of $68 million over the next two years. Here is how the cuts would work compared to the average award this year in each category.

• Phase 1 and phase 1/2 clinical trial grants would see their caps reduced from $20 million to $12 million for nonprofits and $8 million for for-profit enterprises. The average award in 2017 in these categories was $10.3 million. 
• Phase 2 trials would see their caps cut from also $20 million to $15 million for both non-profit and for-profit enterprises. The 2017 average award was $15.3 million. 
• Phase 3 trial awards, which averaged $16.7 million in 2017, would have their caps cut from $20 million to $10 million for both types of enterprises.

Millan's presentation indicated that would her proposals would allow the agency to support 24 new trials and eight trial candidates over the next two years, in keeping with a strategy of taking "more shots on goal" as the agency tries to develop a stem cell therapy for widespread use. Clinical trials, which can take years, are the last stage before a therapy is approved by the federal government. 

Millan's plan would also allot only $10 million for what the agency calls "Discovery" awards (basic research) next year (10 projects) and $9.25 million in 2019 (nine projects). Discovery awards are expected to hit $46 million this year. Education awards are expected to total $1 million this year. Next year they  would receive $750,000 and nothing in 2019. 

Key to the spending plan is the assumption that the agency could raise an additional $220 million from a variety of sources between the end of next year and early 2020. The goal of the fund raising is to bring in $55 million by the final quarter of next year. The rest would be raised between then and the first quarter of  2020. 

CIRM did not release details of its strategy for raising the $220 million. CIRM Chairman Jonathan Thomas, however, has already been on the fundraising trail and reports that he has identified a number of potential donors.

The financial plans and any changes will go to the full board for ratification at a meeting Dec. 14 here at CIRM headquarters.

The California Stem Cell Report will cover today's meeting and file reports as warranted on this web site. Below is another presentation slide from the stem cell agency. 

First Time: California Stem Cell Directors Open Session in CIRM HQ in Oakland

CIRM graphic showing state of its administrative budget as of today 

The governing board of the $3 billion California stem cell agency this morning opened its meeting at 9:10 a.m. PST at its Oakland headquarters, the first time such a meeting has been held at the physical offices of the 12-year-old enterprise.

In the past, the 29-member board has held meetings at hotels and university campuses. Those sessions cost thousands of dollars for room rental, audio services and more. Today's meeting is a face-to-face session of the board. About half of the directors' meetings are currently conducted via telephone and are much less expensive than the face-to-face sessions, which were standard earlier.  About 12 meetings are scheduled each year. 

Reducing administrative costs is critical for the agency, which has a lifetime, operational budget that is capped by law at $180 million, 6 percent of the $3 billion in bond funding that voters allotted when they created the California Institute for Regenerative Medicine (CIRM) in 2004. 

Its staff numbers slightly more than 50 persons and was in the 20s during its early days, not much more than it takes to staff a 24-hour Burger King, if that. 

The agency projects it will run out of cash for grants sometime in 2020 but will need to fund operational expenses beyond then as multi-year awards wind down.

(The CIRM graphic was not included in an early version of this item.)

Quartet of Researchers Snagged in Budgeting, Parliamentary Web at $3 Billion California Stem Cell Agency

Highlights
Fiscal discipline at CIRM
The 10 percent solution
A quorum shortage pops up

Four California scientists who are ready to kick off highly rated projects to treat everything from Alzheimer's to rotting jaw bones became tangled last week in a financial and procedural briar patch involving the directors of the $3 billion California stem cell agency.

The basic problem, however, was simple. Money.

The agency had budgeted only $15 million for this latest round of awards last Thursday. But the four applications -- already approved by the agency's reviewers -- totalled $16.6 million. Typically, the agency's full board rubber stamps in public the decisions of its reviewers, who act behind closed doors without disclosing their economic or professional interests. The board has reversed approvals by reviewers on only four occasions out of hundreds of awards over the past 12 years, according to the agency.

Last week, the chairman of the agency, Jonathan Thomas, began the public discussion by declaring that the board should go through the applications one by one and vote on them. When the money ran out, that would finish action on funding for November.

Fiscal discipline was cited as the main reason for such a course.

Steve Juelsgaard 

Wait a minute, said Steve Juelsgaard, a member of the board of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. He asked for the amount of
funding already being provided for the afflictions targeted by the proposals. If research in a particular area was already heavily supported, perhaps approving another award in that area was not necessary, Juelsgaard reasoned. However, the agency staff could not provide those figures at the time of the meeting.

A lengthy discussion followed involving several scenarios. One would have cut each award by 10 percent but approve all four.  But that could mean that the proposals would be altered from the versions that were approved by the reviewers. (However, the board is not legally required to accept what the reviewers decide.  Under the terms of the ballot initiative that created the agency, the board has the final say, which is part of the justification for not publicly disclosing the economic interests of reviewers.)

Another proposal would have simply increased the funding for the round. That could not be acted on because it required 10 days advance public notice.

The board ultimately approved a Juelsgaard motion to slice roughly 10 percent from each award with the condition that applicants come up with matching funds to bring the total to the level approved by reviewers.

Yadong Huang, Gladstone photo

One applicant, Yadong Huang from the Gladstone Institutes, said, however, that non-profit research organizations were already hard-pressed and could not necessarily come up additional cash. His $5.9 million application (TRAN1-09394) was top-ranked by reviewers and targeted Alzheimer's.

Jill Helms, Linked In photo

Another applicant, Jill Helms, chief scientific officer of Ankasa Regenerative Therapeutics, Inc., of La Jolla, spoke on behalf of the company's application (TRAN1-09270) to target osteonecrosis, an affliction that "causes jaw bones to rot and thigh bones to snap." She urged the board to give priority to applications that already had co-funding. Her $3.7 million application contained a 20 percent co-funding component.

Helms, who is also a Stanford University medical school professor, unsuccessfully asked the CIRM board in 2015 to overturn a negative recommendation by reviewers.

During the two-hour telephonic meeting, the board did approve conditionally two awards under the matching-fund requirement. They were for the Alzheimers proposal and one dealing with sickle cell disease (TRAN1-09292).  The identity of the chief scientist on the sickle cell proposal was not disclosed by the agency under its longstanding policy and tradition within the research field.

Jeff Sheehy, Science photo

The board failed to complete action on the two others because it  lost the quorum that is required to do business legally. That came after a motion by board member Jeff Sheehy to reject one of the four applications failed on a 3-8 vote. Sheehy said another related proposal was already being funded by the agency and that the time to translate the research into a therapy  "would be enormous." The $2.5 million application  (TRAN1-09288) up for consideration last week involved cartilage repair.

Thursday's meeting was being conducted telephonically. After Sheehy lost his motion, he did not respond to telephonic queries from the board. The meeting was nearing its scheduled end at noon. Other board members also failed to respond, and the meeting was adjourned minutes later.

Juelsgaard and some other members said it was important for board members to stick around for the full meetings. Juelsgaard said,

"For gosh sakes, this is something that you signed up to do."

Termination of CIRM board business because of quorum problems regularly occurred some years ago. (See here, here and here.) But since Thomas has been chairman the issue has rarely popped up.

Thomas indicated the board would try to schedule a special telephonic meeting to deal with the four applications. It also has a face-to-face meeting scheduled for Dec. 13 in Oakland. Both meetings legally require 10 days advance notice.

The review summaries on the applications are consolidated in this CIRM document along with their scores and more information.

California Stem Cell Research: $639 Million Left in the Golden State's "Big Bucket"

Randy Mills, head of the California stem cell agency, calls the cash
available for research awards "the big bucket." CIRM graphic

California's ambitious stem cell research agency has $639 million remaining in uncommitted cash as it continues to seek therapies and perhaps cures for afflictions ranging from spinal injury to diabetes.

Randy Mills, president of the 12-year-old program, announced the figure today at a San Diego meeting of the agency's governing board. He also said the program, formally known as the California Institute for Regenerative Medicine (CIRM), is expected to run out of funds in June 2020.

CIRM is financed by money that the state borrows -- $3 billion in bonds approved by California voters in 2004. Using borrowed money also leads to interest costs, increasing the ultimate taxpayer expense to roughly $6 billion. However, that estimate dates back to 2004 and no fresher figure has been produced by the state.

Mills reminded his directors that the agency is allowed only $180 million for operational expenses over the life of the program. About $61 million remains for those expenses.The current annual operational budget of $16 million pays for the roughly 55-person staff  to oversee $900 million in active awards and to make new awards.

The agency has handed out $2.1 billion over its life but many of those research efforts are finished. No therapies have been developed for widespread use.

The agency also has a "return rate" of 3 percent to 5 percent on awards.  The "return" is cash that is left over from an award or that is returned to the agency when a researcher does not meet research milestones, and the award is cancelled.  The returned cash is running at about $40 million annually.

Just what will happen to the agency come 2020 is unclear. Mills today said he and his team are monitoring the funds carefully so that awards and the operational funds run out at the same time.

The agency also may begin lose key staff as time passes and no plan for 2020 emerges, a possibility that Mills has publicly discussed, albeit briefly.

As for future funding, thoughts about another bond issue, public-private partnerships and more legislative funding have been bandied about. But nothing concrete has yet emerged.

Operational funds are described as "the little bucket" by Mills. CIRM graphic

California's Stem Cell Agency Approves Nearly $19 Million Operational Budget

CIRM's budget comparisons. The column in the center reflects estimated final spending for this year.

A key committee of the California stem cell agency today approved an $18.9 million operational budget for its next fiscal year, a nearly 10 percent increase over its current level of spending.

The money will go for such things as salaries, meetings, travel and office supplies at the $3 billion state enterprise. It does not affect the size of its grant program, which has seen the agency hand out roughly $2 billion since 2005.

The increase of 10 percent largely reflects its failure to fill vacant positions at the Oakland-based organization, which has a staff of about 55.

The spending plan was approved unanimously by the Finance Subcommittee of the agency's governing  board with little discussion during a 20-minute teleconference meeting. The budget is expected to be ratified by the full board at its meeting June 15 in Berkeley. It will take effect July 1.

For more on the budget and the agency's unusual 6 percent budget cap, see here and here.

$18.9 Million Spending Plan for California's Stem Cell Agency, Up Nearly 10 Percent

The California stem cell agency is set to approve tomorrow an $18.9 million operational budget for its coming fiscal year to pay for such things as employee salaries and pencils, an increase of nearly 10 percent over its current spending levels.

The budget will come before the Finance Subcommittee of the agency's governing board, which is expected to approve the proposal with few changes. The full board is expected to ratify the budget at its meeting June 15 in Berkeley.

The $3 billion agency operates under 6 percent spending cap imposed by Proposition 71, the ballot measure that created the research effort in 2004. The agency has $180 million (6 percent of the $3 billion) to spend on operational matters over its life, not including research grants. It has run through roughly $105 million.

When the $180 million is gone, that is the end of the money unless the agency can wangle extra cash from the legislature or private sources. Funding for both expenses and research grants is expected to run out in 2020.

CIRM documents show that the 10 percent budget increase over estimated spending for this fiscal year is tied largely to the fact that the agency did not hire as many persons as expected during the current fiscal year.  In the budget proposal, presented by Finance Director Chila Silva-Martin, the agency said it plans to fill out its staff about 55 in the coming year, although retention issues are likely to surface in the next few years because of the lack of funding beyond 2020.

Also playing a role in the bigger budget is a step up in the number of grant review sessions.

The largest expenditure for the fiscal year beginning July 1 -- $13.3 million --  is for salaries and benefits. The figure is up from $11.5 million for the current year. The second largest expense categories come from outside contracting and application reviews and meetings. Both categories have nearly identical totals -- about $1.8 million each. Outside contracting is about the same as last year but reviews and meetings are up from $1.4 million.

The public can listen in on tomorrow's session via a toll-free number. A teleconference site where public comment is possible is located in Irvine. That site is in addition to the main location in Oakland. Full details can be found on the agenda.

The Unique Six Percent Cinch on California's $3 Billion Stem Cell Research Effort

A look at CIRM's calculations on the life left in its operational budget.

Highlights
Six percent budget cap
Restrictions courtesy of Prop. 71
Hearing on June 7

California's $3 billion stem cell agency may be the only state department that has a rigid legal cap on the total it can spend on operational expenses -- such things as employee salaries, office space, computers, meetings and much more.

When that money -- $180 million -- runs out, that's it, as far as the state goes. That is, unless the agency can wheedle more from lawmakers and the governor, which is an unlikely prospect at this time, given competing priorities for state spending.

The agency -- formally known as the California Institute for Regenerative Medicine or CIRM, -- has run through $105 million for administrative/operational expenses over its 11-year life. CIRM has about $75 million left and currently is burning up $15 million to $16 million annually.

The cap -- 6 percent of its $3 billion in bond funding -- was imposed by Proposition 71, the ballot initiative that created the agency in November 2004. From the very beginning, some members of the governing board questioned the cap, saying it was too chintzy for a research effort with such high aspirations.

Nonetheless, the cap is politically impossible to change at this point. It would require a super, super majority vote by the legislature or another vote of the people of California. Such an effort might result in efforts to bring the agency under legislative control. Currently, the governor and legislature have no legal say on how CIRM spends its money or how its awards are made, another feature of Prop. 71.

So parsimony has been a watch word at the agency, which, on June 7, will take up its budget for the fiscal year that begins in July. The CIRM board's Finance Subcommittee has scheduled a 90-minute session at its Oakland headquarters to consider the proposal. Following approval or any modifications, it is expected to be routinely ratified at a full board meeting in June.

The proposed budget is yet to be posted on the CIRM Web site and probably will not be available until later this week. The California Stem Cell Report will carry details on the plan when it becomes available.

The meeting has a teleconference location in Irvine where the public can participate in the discussion. Listen-only access is available via the Internet or through an 800 number. Details can or will be found on the agenda.

Headquarters Move by California Stem Cell Agency 'Disappointing' to San Francisco

The San Francisco Chronicle today picked up the story about how “a simple state agency” is moving its $3 billion operation east from San Francisco across the Bay to Oakland.

The newspaper carried the article by Victoria Colliver on its front page, one of the few times that news about the state stem cell agency has made such a splash in its hometown paper during the last 10 years. The story followed yesterday's piece on the California Stem Cell Report, which carried the first published details about the move.

Most of what the Chronicle reported was familiar to our readers but Colliver also had this from Kevin McCormack, senior director for communications for the agency.

“The lease is up now, and this is now one of the hardest real estate markets in the country. We’re a simple state agency, and we don’t have that kind of money. ... San Francisco is just unaffordable to us.”

McCormack said it would have cost the agency $1.5 million to pay for the equivalent space (20,000 square feet) that it now has in San Francisco. Instead, it found a home in Oakland with 17,000 square feet for $697,560 a year.  The agency has about 55 employees.

Colliver’s story began by saying that the stem cell agency is “the latest victim of San Francisco’s ski-high rents.”

The Chronicle quoted Todd Rufo, head of economic development for San Francisco, as saying, “…(W)e’re disappointed to see them go….”

No coverage has yet surfaced in Oakland area media outlets, according to a Google search this morning.

California Stem Cell Agency Saying So Long to San Francisco

The new HQ location for the California stem cell agency

The city of Oakland does not have the same snap and sizzle as San Francisco, but it will soon have something that the famed city-by-the-bay will not have – the headquarters of an internationally known, $3 billion, stem cell research agency.

California’s taxpayer-financed program, which is arguably the largest, single source of stem cell research funding in the world, is leaving San Francisco this fall and moving across the bay to the sunnier and cheaper climes of Oakland.

The reason is that the agency is no longer the beneficiary of free space in San Francisco and can’t afford to pay sky-high rent to stay there.

Red bubble shows location of new CIRM HQ -- Google map

The new address for the California Institute for Regenerative Medicine (CIRM), as the agency is formally known, will be 1999 Harrison St. in Oakland.  CIRM will be housed on the 15th and 16th floors of a granite-clad building overlooking Lake Merritt in the downtown area.

In San Francisco, the agency’s neighbors included Happy Donuts, which also sold Louisiana fried chicken, and the San Francisco Giants baseball park.  In Oakland, its neighbors will include the FBI and Cerexa, Inc., a biotech firm owned by Forest Laboratories of New York. If CIRM workers are missing Happy Donuts fare, Oakland's famous Chicken&Waffles restaurant is only 15 minutes away on the bus.

The stem cell agency enjoyed its rent free location as the result of a bidding war in 2005 among cities in California to acquire the agency headquarters. San Francisco offered a package that it calculated at $18­­­­­­­ million. It also helped San Francisco that Bob Klein, the first chairman of the agency, lived on the San Francisco peninsula.

The agency and its auditor estimate that CIRM saved $12 million in rent and related benefits during the 10 years it has been in San Francisco. That money, however, will ultimately be spent on research or agency expenses.

That includes the rent for the new digs that will run $697,560 annually. The base rate for the 17,097 square feet is $3.40 a foot. The agency will have 14,411 square feet on the 16th floor of the 27-story building and 2,686 on the 15th. 

In response to a query, Kevin McCormack, CIRM’s senior director for communications, said,

“The term for the 16th floor is five years; the term on the 15th floor is three years, with an option to extend by two years to be coterminous with the term on the 16th floor.  This will provide CIRM with the flexibility to reduce its space and rent burden, depending upon the circumstances.”

The agency is expected to run out of cash for new awards in less than five years but will have ongoing functions related to its existing awards.

Costs for tenant improvements are still being calculated along with costs for the move.

Under the San Francisco lease, the owner provided free parking, a significant benefit for the agency employees, which number about 55.  Parking can run to $15 to $20 a day in the agency's current neighborhood, according to sanfrancisco.bestparking.com.

In Oakland, employees will have to pay for their own parking, but the agency is looking into government assistance programs. The location is near a BART station, a mass transit overhead rail system that runs through much of the San Francisco Bay Area.

Over the years, Oakland has presented a changing face to the public. In World War II, it was part of what was described as a “second gold rush” as the result of defense plant operations. In 1966 , the city was the headquarters of the Black Panthers, whose co-founder, Huey Newton, attended high school there. Today Oakland is involved in a wave of gentrification that has created tension­­ within the community.

It may be fitting for the agency to return to what is known as the East Bay area in California. Its first, temporary headquarter was located in Emeryville, just three miles up the road from its new space. 

California's Stem Cell Agency Needs New Home by This Fall; Faces $1 Million in New Costs

The California stem cell agency isn’t quite at the stage of “Ain’t Got No Home,” the title of the immortal hit song from 1956.  But the search for a new roost for the research effort is intensifying.

And it will likely add another $1 million or so to the agency’s annual operating costs. 

The $3 billion agency now operates out of free digs in San Francisco in a gentrified neighborhood that was a tad gritty back when the agency moved in a decade ago. Today the area is much tonier. Even the Happy Donuts shop down the street (open 24 hours) has cleaned up its signage, and a chichi pizza parlor is located on the ground floor of the stem cell agency’s building.

Come next fall the agency will be moving out of its roomy offices that were built to its custom orders. No more free rent – a benefit valued at about $1 million annually by the agency’s auditor. Gone will be the free parking, a matter of great import in San Francisco.

The free office space came as the result of a $17-$18 million package put together by San Francisco to entice the agency to the city. 

The California Institute for Regenerative Medicine (CIRM), as the agency is formally known, is looking for about 12,000 to 18,000 square feet(see specifications list below). On Nov. 14, 2005, when the agency moved into its current space, it had about 20,000 square feet with 18 window offices, 17 internal offices and 19 cubicles, according to a CIRM document.  That was for about 25 to 30 employees. Those employees currently number in the mid-50s, not a large number to be handling $3 billion.

In December, the governing board’s Governance Subcommittee briefly discussed what the agency is seeking. The specifications call for a facility that could accommodate the meetings of its board of directors, which would be a major change. CIRM would like a room that could handle 50 to 75 people. Twenty-nine persons sit on the board. The space would appear to be large enough to handle normal public and staff attendance but fall short of the space needed for the few occasions when large crowds appear. 

Board meetings have generally involved rented conference rooms at hotels. The hope is that a meeting room within CIRM offices could defray meeting costs.

Office space costs have skyrocketed in San Francisco over the last several years, pushed upward by the booming tech industry. According to one office space expert, 12,000 square feet of Class A office space in the city of San Francisco could run as much $900,000 a year with additional parking costs of up to $450 a month per stall. If the agency wants 18,000 feet, the cost climbs to roughly $1.4 million.

Given that situation, CIRM has expanded its search to include cheaper locations across the bay from San Francisco, including Oakland, where California Gov. Jerry Brown has a home, and Emeryville, a city once known as Butchertown because of its slaughterhouses. Today Emeryville businesses include the Pixar Studios. CIRM was also housed in Emeryville in 2005 while it waited for its offices in San Francisco.

At the December governance meeting, Art Torres, vice chairman of the agency, said that the city of South San Francisco is also on the list of possible locations. Genentech has its headquarters there and sponsored a sign declaring the city as the “Birthplace of Biotechnology.”

During the Governance Subcommittee meeting, one board member, Al Rowlett of Sacramento, pressed for consideration of other cities. Torres, who was leading the discussion, rebuffed him, according to the transcript of the meeting. Torres said that the four locations are being considered because the staff lives in them or nearby. He continued,

“I would just hate to move to an entirely different new city and then people have to make very difficult decisions on whether they could do so or just leave CIRM. At this critical stage of our development, I would feel that would be a burden that would be very heavy for us.”

Torres also said he is working with the city of San Francisco to see if it can persuade landlords to ease rent or provide some other kind of support.

Randy Mills, CEO of CIRM, told directors in January that the office move could lead to some disruptions in its activities. The agency last week reported no major new developments in the office space search. In 2009, the agency considered the possibility of use of a nonprofit to own the office space, given the legal cap on CIRM's operational budget. However, that possibility has not surfaced publicly in recent years. 

For those who want to know more about the inimitable Clarence "Frogman" Henry, who wrote and sang "Ain't Got No Home," here is a link to his Web site.

Here is the list of specifications discussed by directors in December.

   CIRM Office Space Specifications December 2014 by DavidJensen

The New, Official Life Expectancy of the California Stem Cell Agency

Randy Mills' calculations on cash for future CIRM funding

Randy Mills, the new president of the $3 billion California stem cell agency, rewrote some of the agency’s history last week and extended the life span of the now nearly 10-year-old enterprise.

All that talk about the agency running out of money for new awards in 2017? Bushwa, he basically said. “It’s simply not true,” he told the directors of the agency at their meeting in Millbrae.

Mills' comments appeared to be directed at media stories, including those on this Web site, that mention the 2017 timetable. However, the date was not concocted by the writers of those stories. It came directly from the agency itself, which has never challenged it until Mills did last week. The timetable was even referenced as recently as December 2013 by the agency’s directors.

Randy Mills

That said, Mills’ view of the spending possibilities for the California Institute for Regenerative Medicine(CIRM), as the agency is formally known, is not inaccurate. It comes from his fresh, business-oriented analysis of the agency’s finances. It is based on different assumptions than those used previously by the agency.  His perspective does not appear to assume, for example, that all the grant rounds approved in concept by the board will go forward at their existing levels.

A case in point came last week when Mills recommended and the board approved slicing $5 million out of a $15 million component of the agency’s Alpha clinic RFAs. It was the first time that the board has so heavily cut a previously approved "concept" figure.

The agency's last major review of the cash available for awards occurred at last December’s board meeting. CIRM Chairman J.T. Thomas said at the time, 

“We now find ourselves with the reality that, having started with $3 billion, we are down now to how to deploy our last $600 million….”

Pat Olson, executive director of scientific activities, said,

“There’s essentially $950 million yet to be awarded, 321 (million) of the concept approved and the 629 (million) of the future.”

Steve Juelsgaard

Steven Juelsgaard, a CIRM board member and former executive vice president of Genentech, however, looked at the numbers with basically the same view as Mills. Juelsgaard, who has been chipping away at some of the financial assumptions of the agency, said,

“So we’ve been talking for the longest time as if we have three to four years worth of money to spend, right? I asked myself, well, why is that true? Who made that decision that it’s three to four years? That length of time is driven by how quickly we spend our money, not by anything else. So if we spend our money more slowly, we could go for six years or eight years or whatever the number is that you want to pick. It’s all a matter of burn rate.”

Enter Mills five months later as president. By last week, he was telling board members that, yes, they have enough money to give out awards until 2020 at a rate of $190 million a year.  He said that about $1 billion is available.  

“We will be able to fund most anything that meets our criteria.”

Of course, if the agency spends more than $190 million a year, the money will run out faster. And the  agency is engaged in clinical trials and commercialization efforts, which are far more expensive than basic research.

But Mills’ 2020 timetable has some significant advantages even if it slows the pace of awards. It gives the agency substantially more time to arrange some sort of financing for the future. Currently its only real source of funding is state bonds. Its ability to authorize those bonds ends in 2017, according to the agency. Currently Thomas is examining the possibility of some sort of private-public financing arrangement. Asking voters to approve another bond measure has not been ruled out, but it could be problematic politically.  The additional time would improve the possibility that clinical trial results would emerge that would resonate with the public as well as with private funding sources.

While Mills paints a rosier financial picture than the agency previously offered, he also has demonstrated a clear fondness for focused austerity. It fits with the mood of the board. Juelsgaard, who is chairman of the agency’s Finance Subcommittee, is also attempting to bring a sharper financial perspective to the agency at a time when directors are clearly feeling a pinch.  

Gone are the days when $120 million was added with modest discussion to one round of grants. No longer is the governing board throwing another $23 million at already hefty efforts to lure stem cell stars to California labs.

Instead last December, after directors were told that only $629 million out of $3 billion was left uncommitted, CIRM Director Jeff Sheehy, in a comment echoed in tone by other board members, said,

“I just think all of us are starting to get concerned about the burn rate. We’re just flying through the money.”

 One of Mills’ first public actions involved the agency’s $17 million annual operational budget, which is limited by state law. On top of those limitations, in May he whittled the spending plan down to the point where it could be described as less than the previous fiscal year, given inflation.

Also in May, when directors were considering elimination of what was left of the $57 million researcher recruitment program, Mills basically disengaged himself from support of the effort. He told directors,

“It’s not that I don’t like the concept of recruiting great people….It’s just we have to make sure we recruit the people we need.”

Mills' actuarial exercise was not the first involving CIRM's mortality. Back in 2004, it was widely believed that the agency had only a 10-year life, a belief held by some of its staffers, which would have meant this year would have been the agency's last. That misconception grew out of the agency's 10-year authorization to issue bonds. That authorization is now commonly believed to have begun in 2007 because that was the year litigation about the agency was ultimately resolved. It may well be that the date of CIRM's final reckoning will change once again before its last check goes out the door.

California Stem Cell Directors Okay Tight, $17 Million Budget

Directors of the California stem cell agency today approved a $17.3 million, hold-the-line budget for the fiscal year that begins July 1, cutting $573,000 from a spending plan that was proposed in early May.

The vote was 17-0 during a special teleconference meeting that also saw a proposed $900,424 grant sent back for a special examination by the agency's reviewers, said a CIRM spokesman via email.

Presentation slides prepared for the meeting indicated that the new president of the $3 billion agency, Randy Mills, is still evaluating the agency. The documents said,

“If significant changes to the structure are needed, a proposal to the board along with the associated budgetary implications will be made at that time.”

Directors were also told that without a $250,000, legally required performance audit this coming year, the operational budget would be $400,000 under the estimated current spending of $17.4 million.

The spending plan reflects initial parsimony on the part of Mills, who made a career in business prior to coming to the agency. The previous CIRM CEOs have all come from academia.

In other business, Kevin McCormack, senior director for public communications, said that the $900,424 proposed award to Helen Blau of Stanford was sent back for re-review by a subset of the agency's grant review group, also on a 17-0 vote. At the agency's board meeting May 29, some directors said the initial review was flawed and voted for a re-review by the full review group. However, re-reviews usually are undertaken by a smaller panel.

The action on Blau award came as one high-level CIRM staffer, Natalie DeWitt, began work this week at Blau's Stanford lab. Both DeWitt and the agency told the California Stem Cell Report that she had no role in the review of the Blau application.

Stem Cell Parsimony: California's New Stem Cell CEO Has Sharp Budget Knife

In his first major public act, the new president of the $3 billion California stem cell agency this week whacked away at its proposed operational budget for the coming fiscal year, cutting $200,000 here and $20,000 there.

When he was done, Randy Mills offered up a $17.3 million budget that reflected basically the same level of spending as this year. It could be even less given inflation and the vagaries of estimating expenditures for the current fiscal year.

Current spending is estimated to hit $17.4 million by June 30, the end of the fiscal year. But that estimate is a month old and is likely to change somewhat. The budget proposed in early May by former CIRM President Alan Trounson hit $17.9 million, a 9.5 percent increase over estimated expenditures for this year.

Mills' tight budget sent a parsimonious message to the agency staff and the agency's governing board. It also gave him more maneuvering room in upcoming years. The agency is limited by law to spending no more than 6 percent of its grant awards on administrative expenses. A possibility exists that it could run out of operational funds if it does not carefully watch its spending. Some members of the board have expressed concern in the past that the capped amount is too small for effective management and oversight of the agency's large portfolio of awards.

The new CEO's budget also reflects the first time that the agency has not seen a significant year-to-year increase in its proposed spending compared to actual spending. 

Mills, former CEO of Osiris Therapeutics of Maryland, did not make across-the-board cuts in Trounson's initial CIRM budget. Rather Mills surgically excised the cash, including $50,000 from his own office.

In terms of agency activities, the category of “reviews, meetings and workshops” took the biggest hit. Mills sliced $333,000 from what once was a total of $2.5 million. A meeting for the 600 CIRM grantees was eliminated along with $100,000 worth of meetings with outside advisors on the agency's complex disease team projects. Other outside contracting was lopped by $160,000. But even relatively small items were hit. A plan to spend $5,000 for a sponsorship at a personalized medicine conference fell by the way. Plans for training in the finance department were trimmed by $2,120.

Mills' budget will now go to the full board in a telephonic meeting on June 13 for what is expected to be routine approval. A number of public locations are available where interested parties can listen and comment. The specific locations can be found on the meeting agenda.