'Critical Stage' for $3 Billion California Stem Cell Effort and its Search for More Cash

California's $3 billion stem cell research program later this month is expected to unveil detailed plans for extending its life beyond the middle of 2020 in hopes of avoiding a lingering death.

The latest proposals, which are not yet public, are scheduled to be discussed Nov. 27. Possibilities range from another multi-billion dollar bond measure to private fundraising to possible merger with some sort of private entity.  

The stem cell agency, known formally as the California Institute for Regenerative Medicine (CIRM), projects its cash for new awards will run out in about 2 1/2 years. At that point, unless more money is forthcoming, CIRM will only be overseeing the dwindling number of awards whose terms extend beyond June of 2020.

The agency's fate was dictated by Proposition 71, which created CIRM in 2004. It also provided $3 billion in state bond funding, which flows directly to CIRM without oversight by the governor or the legislature. No additional, significant resources were contained in the ballot initiative.

CIRM's future has been an occasional topic for its board for some time. But the issue has taken on more urgency this year. At a meeting in September of a newly formed Transition Subcommittee of the governing board, CIRM Chairman Jonathan Thomas said in what may have been an understatement,

"CIRM, as we know, is at a critical stage of its mission here." 

The meeting on Nov. 27 will additionally involve the board's Science Subcommittee. What emerges from the session will go to the full, 29-member board in December for ratification.

Options in September included a multi-billion dollar bond ballot measure in 2020 and a possible merger, which was described as something of a last resort. Whatever path is chosen, it likely would lead to changes in the agency, which has been criticized for conflict of interest issues and its dual executive arrangement, among other matters.

The agency has awarded $2.3 billion in 919 grants during its 13-year history. About 90 percent of the awards has gone to institutions with links to members of the governing board, past and present, according to calculations by the California Stem Cell Report.

So far the agency has not fulfilled expectations of voters that it would generate a widely available therapy. Something may emerge in the next couple of years from the 38 clinical trials currently backed by the agency. (Forty-three have been funded but five were terminated.) The trials, which can take years, are the last stage before a therapy is approved by the Food and Drug Administration for widespread use. CIRM plans to add more trials in the next couple of years.

This month's meeting will be based at CIRM's Oakland headquarters with teleconference locations elsewhere in the state where the public can take part. It is scheduled to begin at 1 p.m. PST and run until 4 p.m.

The California Stem Cell Report will provide full coverage of the meeting that day with advance information as it is posted on the CIRM web site.

(Here is a link to the transcript of the September meeting. Here is a link to Thomas' slide presentation.)

California Approves $15 Million for Stem Cell Research Ranging from Arthritis to Alzheimer's, But Not Without a "Hair-Cut"

Highlights
Snafu in November
Ankasa whacked
Across-the-board cuts rejected

After a hiccup last month, the California stem cell agency today coughed up $15 million for a quartet of researchers looking into Alzheimer's disease, cartilage repair, arthritis and sickle cell disease, but not before lopping off a big chunk of one proposal.

Action by the governing board of the $3 billion agency came after a snafu at its Nov. 17 meeting. The proposals, all previously approved by the agency's reviewers, hit a roadblock when the budgeted cash was not enough to fund all four. The session last month also stalled as a result of quorum problems and research priorities.

Normally applications approved by reviewers during their closed-door sessions slip through the later public meetings of the agency board with no discussion. But this time around, reviewers approved the four applications, but gave one of the researchers a sizable, financial "hair cut."

Despite concerns about fairness and imposing new conditions on applicants, the board stripped $1.6 million from a $3.7 million application to develop a stem cell therapy for osteoarthritis by Ankasa Regenerative Therapeutics of La Jolla.

The action came after the lead researcher, Jill Helms of Stanford, said her company would make up the shortfall.  She made the comment after being told she could re-submit the application, which was the last to come up for a vote. She indicated that she would prefer to pursue that route rather attempting a problematic and "onerous" re-application with a new set of reviewers early next year.

The other three applications were approved with full funding after a motion to cut all four by about 10 percent failed on a 1-9 vote with one board member abstaining. Board members used the term "hair cut" to describe the reductions, which the applicants would have to make up.

Helms' application was the only one in this round from a business. The others came from non-profit institutions.

Randy Mills, president of the California Institute of Regenerative Medicine or CIRM as the stem cell agency is formally known, opposed the 10 percent cuts on all four awards. He said he and his staff did not want to see programs cut "on the fly." He said applicants were not told that they would have to come up with matching funds when they originally applied.

The other three researchers winning awards are Yadong Huang of the Gladstone Institutes, $6 million for Alzheimer's;  Mark Walters of Children's Hospital, Oakland, $4.5 million for sickle cell, and Denis Evseenko of USC, $2.5 million for cartilage repair.

All the awards went to researchers or institutions that have links to persons who sit on the 29-member board. Overall, about 90 percent of the money awarded by CIRM since 2004 has gone to institutions with ties to past or present board members. While board members set rules for funding and the scope of awards, they are not allowed, however, to vote on specific applications from institutions with which they are connected.  

Summaries of reviewers comments, scores and more can be found on this document from CIRM, which is based in Oakland.  Here is a link to the CIRM press release.

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 Agency Director Prieto Defends Agency in Trounson Affair

One of the long-standing directors of the $3 billion California stem cell agency has taken issue with an item earlier today headlined “Fallout From the Trounson Affair: A Taint on the California Stem Cell Agency.”

In an email, Francisco Prieto, a Sacramento physician, said, among other things, that it is “grossly unfair” to say that none of the media coverage and other reaction in the matter reflects well the agency. Prieto, who has served as a CIRM director since 2004, said “the agency had nothing to do with it.”

The item this morning discussed reaction to the news earlier this month that the agency’s former president, Alan Trounson, was appointed to the board of StemCells, Inc., which is the recipient of $19.4 million in funding from the stem cell agency. Concerned about a conflict of interest, the agency has announced a “full review” of all StemCells, Inc., activities. Trounson was appointed seven days after he left the agency.

The item also contained a comment from scientist Jeanne Loring of Scripps that said that the Trounson Affair detracts from the value of CIRM’s good work.

Here is the text of Prieto’s comment, the essence of which is certain to be shared by many CIRM board members,

“I think Jeanne Loring is right: CIRM has been a remarkable driver of this research, and it would be a shame if the actions of Dr. Trounson and StemCells Inc. (What were they thinking?) obscures this.  I think it is grossly unfair to say that ‘none of this reflects well on the agency,’ when the agency had nothing to do with it.  Most of us on the board – and the staff, I think it’s safe to say – felt blindsided by this.  I was gratified to see Randy Mills’ prompt and appropriate response to this, and I expect we’ll hear more from him on the subject.  I think it’s a bit disingenuous of Michael Hiltzik (of the Los Angeles Times) to say that ‘so many members had to recuse themselves that only nine were left to vote,’ when the new voting procedures (that prohibited members from grant-receiving institutions from discussing or voting on those grants) were a direct response to the reform recommendations in the IOM report, and were lauded by most at the time. I don’t think that included Mr. Hiltzik, who I believe has never had anything good to say about the agency or its work. I’m curious whether that will change as stem cell treatments we’ve funded actually start moving into clinical trials, but I won’t hold my breath.”

The California Stem Cell Report has great respect for Prieto and the other 28 members of the agency’s board and its staff.

However, there is no escaping the impact of the news and the resultant commentary, which will be around virtually forever, embedded in every Internet search that is performed about the stem cell agency. Today, for example, a Google search on the term “California stem cell agency” turned up eight hits on the first page of search returns. Five dealt with the Trounson Affair.

Moreover, conflict of interest concerns were aired very early on in CIRM’s history, dating back to 2004, before the ballot proposal creating the agency was even approved by voters. Revolving door issues also came up years ago, including in 2007 when Richard Murphy, a former member of the board, was hired as interim president at a salary of $300,000 for six months work. The Little Hoover Commission mentioned the issue briefly in its 88-page report in 2009.

Additionally, given that financing of the agency was limited to 10 years, revolving door problems were always likely to surface. It was an issue that could have been dealt with by the board years ago, avoiding the situation with Trounson today. Revolving door restrictions could have and should have been part of his conditions of employment.

The IOM’s recommendations for dealing with conflict-of-interest problems at the agency were far-reaching. The steps taken by the agency do little to comply with the IOM recommendations.  The strange case of having only nine out of 29 members eligible to vote is not all that uncommon. Indeed, the agency has worked hard to keep its 12 patient advocate members in attendance at board meetings because sometimes they are the only ones who can vote without legal conflicts-of-interest.

The situation with Trounson is certainly unpleasant.  Whether board members think the reaction is unfair is not the main point. It is up to them to take action to respond to those public concerns and ensure that the agency’s integrity is reinforced and that its work is not impugned by conflicts of interest, real or perceived.

Los Angeles Times: California Stem Cell Agency Rife with Conflicts and Unrealistic Expectations

The Los Angeles Times, California’s largest circulation newspaper, is carrying a piece this weekend about “cronyism,” conflicts of interest and “inflated expectations” at the state’s $3 billion stem cell agency.

The column by Pulitzer Prize-winning writer and author Michael Hiltzik used this month’s Trounson Affair as a starting point to dissect the situation at the California Institute for Regenerative Medicine (CIRM), as the agency is formally known.

Trounson was appointed to the board of StemCells, Inc., of Newark, Ca., on July 7, just seven days after leaving the agency. StemCells, Inc., holds a $19.4 million award from the agency.  CIRM has ordered a full review of the situation and barred its staff from communicating about StemCells, Inc., matters with Trounson. 

But even before Trounson’s appointment, there were issues involving StemCells, Inc.(See here and here.)  Hiltzik said,

 “The relationship already reeked of cronyism.”

Hiltzik wrote,

“Trounson's move comes as CIRM must begin looking to the future, but any discussions about extending the agency's life span will have to address the flaws created by Proposition 71 (the ballot initiative that created the agency in 2004). Among them is the program's very structure, and even its scientific goals.”

Hiltzik continued,

“How bad are the conflicts? When the board considered a proposal earlier this year to spend $16 million to attract three star scientists to California, so many members had to recuse themselves that only nine were left to vote. (Six ended up voting in favor.)

“When conflicts of interest are so rife that only one-third of your board can weigh in on a major policy issue, that's tantamount to not having any board at all.”

Some of the issues at the agency have to do with the ballot campaign that created it in 2004, an election in which California voters were led to believe that miraculous stem cell therapies were imminent.

Hiltzik wrote,

“Programs like CIRM are always susceptible to inflated expectations.

"”Since Big Science needs great public support it thrives on publicity,’ the physicist Alvin Weinberg, a veteran of the Manhattan Project, wrote in a famous 1961 article in "Science" about the drawbacks of big-money scientific research. He added: ‘The inevitable result is the injection of a journalistic flavor into Big Science which is fundamentally in conflict with the scientific method.... The spectacular rather than the perceptive becomes the scientific standard.’"

Hiltzik acknowledged the contributions that CIRM has made to stem cell science.

“CIRM-funded labs have produced genuine achievements. But the agency tends to delineate its progress in buildings built, papers published, and big-name scientists lured to California. But the specific cures promised by the Proposition 71 campaign haven't materialized, which doesn't surprise anyone steeped in the realities of the scientific method.”

Hiltzik concluded,

“Even if one believes the need for California to devote $3 billion to a narrow, extremely speculative field of science, the Trounson case and other CIRM administrative missteps have made clear that Proposition 71 created the wrong framework to manage a complex research effort. The initiative left the public with no way to tell if its money has been well spent, and no accountability if it hasn't.

“Moreover, the program deprived potentially more promising research efforts of resources and contributed to the general impoverishment of California's entire higher-education system. If its sponsors have the audacity to ask taxpayers for even more money under the same terms as Proposition 71, the reply should be a resounding ‘no.’ If the voters are gullible enough to repeat the same mistake they made in 2004, there's no cure for them.”

The Hiltzik column appeared online last night. It is scheduled to appear in the Sunday print edition of the Times, which says it has a combined print and online reach of 4 million readers. 

California's $40 Million Stem Cell Genomics Award: Irregularities, Complaints and Integrity

A number of firsts were recorded last month as the California stem cell agency gave $40 million to a Stanford-led consortium to put California in the global forefront of stem cell genomics.

Not all of those firsts necessarily enhanced the reputation of the California Institute of Regenerative Medicine (CIRM), as the $3 billion agency is formally known.

The unusual events and irregularities surrounding the award, CIRM's largest research grant, merit additional attention, given their implications about the integrity of the agency's grant review process and how the agency does its business.

The California Stem Cell Report recently asked a number of persons connected with the round and other knowledgeable individuals about the process. Their comments included a judgment that the agency staff “took a lot of liberties behind closed doors.” One of the rejected applicants "unequivocally" disputed assertions by CIRM President Alan Trounson that all applicants were informed by him about the need for matching funds, a key criteria for grant reviewers. The request for applications did not contain such a requirement.

The comments came in addition to earlier complaints by rejected applicants that scores had been manipulated in an “appalling” fashion and that scientific merit was not the first order of business in assessing the top four applications.

Also surfacing was a problem generated by Proposition 71, the ballot initiative that created the stem cell agency in 2004. The measure set up a 29-member governing board, including deans of medical schools and others with ties to research organizations. The board was supposed to exercise its expertise on funding decisions. However, only seven members of the board actually voted in the genomics round. Most of the rest had legal conflicts of interest and were not allowed to even participate in the discussion. It is not unusual for that sort of situation to arise during funding decisions by the board.

The CIRM stem cell genomics story began publicly in a scientifically big way with an article in the journal Nature Biotechnology in January 2012  by Trounson and two members of his staff. In it, Trounson said his proposal was needed so that the agency could take a "firm and lasting grip" on stem cell leadership.

Later that month, the governing board of the agency approved the concept for one or two genomics award. In February 2013, grant reviewers for CIRM, whose identities are withheld by the agency, took a crack at the applications. However, they declined to send any applications forward to the board for final action. It was the first time in the agency's nine-year history that has occurred. The reviewers offered no public explanation for the move.

The closed-door review session was marked by a conflict-of-interest violation by Lee Hood of Seattle, Wash., an internationally known genomics specialist, who was recruited by Trounson to be a reviewer in the round. Hood is a close friend of Irv Weissman, who heads Stanford University's stem cell institute. Weissman was named in Stanford's then $24 million application. Hood and Weissman also own a ranch together in Montana.

Trounson has been a guest at the ranch. In 2012, he recused himself during CIRM board discussions of two applications involving Weissman. The applications were from StemCells, Inc., of Newark, Ca., for $20 million each. StemCells, Inc., was founded by Weissman, who still holds a large amount of stock in the firm and serves on its board of directors.

Following the unsuccessful genomics review in February 2013, the applications were sent back to researchers with reviewer comments. The proposals could be retooled for a re-review in the fall, they were told.

After the fall review, the reviewers – minus Hood -- sent the applications to the board with recommendations to fund all four despite the fact that they would cost $146 million, well above the $40 million budgeted for the round. It was the first time that reviewers had made such a decision. Normally they stay within the budget, but they offered no public explanation for their actions in the genomics round.

At that point the CIRM staff, headed by Trounson, became more involved. Under new procedures, the staff may make recommendations concerning applications. In this case, they recommended that only the Stanford application be funded, but only after restoring a provision eliminated by reviewers. Trounson also recommended no funding for the three other top applications in the round. It was the first such major intervention by Trounson and the most aggressive staff move on grant applications.

Trounson offered only a 23-word phrase for recommending the Stanford application and no explanation for rejecting the other three. Stripped from the public review summaries for the three competing applications were the dollar amounts that they had requested. It has been the longstanding practice of the agency to include those figures. The amounts ultimately were made available to the board at its Jan. 29 meeting.

At that meeting, Trounson strongly backed retention of funding in the Stanford application for a project led by Michael Clarke, associate director of Weissman's stem cell institute at Stanford. Following the 2013 conflict violation involving Hood and Weissman, Weissman was removed from Stanford's application. Clarke was included, however. No questions were raised at last month's board meeting about whether Clarke could be regarded as a surrogate for Weissman's interests and whether that would involve a conflict of interest for Trounson.

Late in the meeting, Trounson also said that he had personally told all the applicants, with the exception of Stanford, that matching funds were expected as part of the applications, an assertion disputed following the meeting by Jeanne Loring of the Scripps Research Institute, whose rejected proposal contained no matching funds.

She said in an email,

"During the ICOC (governing board) meeting, Alan Trounson said that he had told us during his visit to all of the first round grantees that it would be important provide money for 'matching' funds. I state unequivocally that he did not tell me or anyone in my lab about this."   (Loring's boldface)

Stanford said its application contained $7 million in matching funds. The agency withheld the figures when they were requested by the California Stem Cell Report prior to the Jan. 29 board meeting, although it has released the figures in at least one other grant round.

Complaints about manipulation of the scores were raised prior to the board meeting by Pui-Yan Kwok,  leader for an application from UC San Francisco and UC Berkeley. He said that the scores of the top to applications were “based on the reviewers removing from consideration the poorest performing center-initiated projects.” He described the situation as appalling.

The agency defended its practices at the board meeting and in response to questions. It said the scoring procedures were permitted under the RFA. It said that while the procedures may be different than those of the NIH so is the stem cell agency. It said that all persons involved had been screened for conflicts of interest under CIRM rules and state law. 

In response to a query by the California Stem Cell Report concerning the process and the questions that needed to be addressed, Loring replied,

“I am concerned about the interference of the CIRM president in influencing the ICOC decisions. He has de facto power to promote or defeat specific applications, and he often wins by promoting one applicant over another. Stanford and Stanford faculty-founded companies such as Stem Cells. Inc., should not be so blatantly promoted over others. The relationship between the president and the head of the stem cell program at Stanford involves personal favors which make him conflicted and he should at the very least recuse himself from any discussion or recommendation of Stanford faculty's applications.”

Loring continued,

“The 29-member board is difficult enough to deal with, but now that most of the members are considered to be conflicted and are not allowed to even discuss the applications, we are left with a small number of non-scientists making decisions about scientific merit.

“I know that at least 5 members of the ICOC were very upset that they were unable to voice their opinions about what should be their mission- to guide CIRM's policies and choices for funding so that they are in the best interest of the voters.”

(For the full text of Loring's remarks see here.)

Other critical comments came from a longtime observer of the agency, who asked not to be identified, and who said,

“It appears that CIRM staff took a lot of liberties behind closed doors in driving this initiative to its final outcome. For example, what happened to require a resubmission and re-review etc. Did they change anything about this initiative in the process?  Were certain criteria shared with some but not all applicants?

“It also appears that the board was taken by surprise and not prepared to deal with the complexities in this initiative.  Clearly staff has not kept them in the loop and they had little access to the details of the process and how reviewers were managed.  They have always funded the vast majority of what the reviewers scored highly, and still did not break the bank.  This is a brand new situation where the reviewers recommended more grants than they could afford to fund.  This happens a lot in the NIH (especially today with severe budget cuts), so NIH has developed many processes to deal with this.  CIRM has not seen anything like this before.”

During the board meeting, some board members questioned parts of the grant review process. The anonymous observer said, 

“The questions (all legitimate) raised by the certain members of the board were by and large not understood or picked up by the other voting members, so they went nowhere. 

“Too many thoughtful board members were conflicted out, leaving the decision-making to a handful who are not prepared to deal with this complex situation.  I blame the IOM (Institute of Medicine) report in giving too much power, without the appropriate process, to staff.  Staff can recommend, but if the board has no information other than what staff provides, then they are acting in the dark.”

(For the full text of those remarks see here.)

In response to the same query, Michael Snyder of Stanford and Joe Ecker of the Salk Institute in La Jolla, co-leaders of the Stanford-led effort, did not raise any questions about the CIRM review process. They said,

“The net result (of their proposal) is that this center will help bring cutting edge technologies to all stem cell researchers in California and along with the funded projects will help keep California at the leading edge of two important fields: stem cell research and genomics, and thereby help accelerate both the science and therapeutics treatments possible in this field, and spur industry and economic development. questions.”

(For the full text of their remarks see here.)

(Editor's note: An earlier version of this item incorrectly said the first name of Michael Clark was William.)

California's Stem Cell CEO Search: Dangling a 16-page Lure

The California stem cell agency yesterday posted what could be called a recruiting brochure for the effort to hire a new president to replace Alan Trounson.

The document, which was prepared by the search firm Korn Ferry, is couched in language designed to stimulate interest in those seeking a challenge and opportunity.

• “Few technologies have captured the imagination of the public quite like human stem cells,” the brochure begins.
• “Transformative public funding,” it says at one point.
• “One of the most influential agencies in the universe of stem cell research,” it says at another.

The 16-page brochure deals directly with less pleasant aspects of the job such as the likelihood that the agency could wind up in hospice care in three years when the money for new grants runs out.

It is also surprisingly forthright about the longstanding and controversial problem of the dual executive arrangement decreed by law. It may be the first time that the agency has so directly admitted publicly and formally that the overlapping responsibilities of the president and chairman have caused serious difficulties. 

The document says,

“This unique partnership has amply demonstrated its value when the president and chair have worked well together, but the organization has suffered when this has not been the case. An ability to adapt to this model of governance and management will be a critical attribute for the next president.”

The CIRM/Korn Ferry brochure is explicit about the direction of the agency towards pushing therapies into the marketplace and clinic. That is significant because of continuing pressures to well fund basic research, which means less money for efforts that are closer to clinical use. The document says,

"With the remaining resources of the state’s commitment, it is CIRM’s intention to focus its funding decisions increasingly on a host of projects with particular clinical promise, bringing the science it has strategically cultivated to the fruition of human therapy.  Both the governing board and the staff of CIRM are committed to this pivot in organizational priorities, driven to fulfill the dream of the people of the State...."

It is unclear when a new president will be on the scene. There is talk about a hire being made by April or May, but having the new person actually in the office five or more days a week could be a different matter. Trounson said last November he would stay on for awhile. But his family remains in Australia, where he is seeking to return.

The directors' Presidential Search Subcommittee meets tonight in Berkeley to discuss the brochure, which the agency labels a "candidate position statement." Korn Ferry has a $160,000 contract with the agency. The agency has previously used search firms in its presidential recruitment. None of them have come up with the person that was ultimately hired.  

Teleconference locations where the public can comment are available in Costa Mesa, La Jolla and San Francisco. Specific addresses can be found on the agenda.

(Editor's note: The three sentences on the size of the Korn Ferry contract and the success of previous search firms were not contained in an earlier version of this story.)

CEO Search at California Stem Cell Agency: Board Discussions Set for Late This Month

Directors of the $3 billion California stem cell agency late this month will act on what it calls a “candidate position statement” in its search for a new president for the research effort.

The agency scheduled a meeting Jan. 28 of its Presidential Search Subcommittee to consider the document, which was not available on the CIRM Web site as of this writing. On Jan. 29, the full CIRM board is expected to act on the document at its meeting in Berkeley.

The agency's agenda material did not specify what it means by a “candidate position statement.” In normal parlance, a candidate position statement is offered by a person seeking a position. Our best guess is that what CIRM is considering is a document that would specify the positions that it would like a candidate for president to address. The board last month approved a statement of criteria that implied that candidates should address certain questions. We are querying CIRM concerning the matter.

Both the subcommittee meeting and the full board meeting include closed-door sessions during which the search for a new president will be discussed. The current president, Alan Trounson, has announced that he is resigning to return to Australia. Directors of the agency have said they are emphasizing speed in selection of a replacement. Trounson announced his departure more than three months ago.

Teleconference locations for the subcommittee meeting Jan. 28 where the public can participate are located in La Jolla, San Francisco and Costa Mesa. The base for the meeting is at the Claremont Hotel in Oakland. Specific addresses can be found on the agenda. 

Replicating Oregon Cloning in California: Views on the Legality

Oregon's stem cell cloning achievement has triggered some discussion about whether it could be replicated legally in California, which bans paying for eggs as was done in Oregon.

Stanford researcher Irv Weissman said it is “not true” that Oregon's stem cell research would be illegal in California. Leftovers from IVF clinics could be used, he said.

But in response Oregon researcher Shoukhrat Mitalipov said that “SCNT (the process he used) did not work with discarded human eggs.”

He added,

 “SCNT worked with eggs from healthy young volunteers (paid of course). IVF patients (whether paid or not) have reproductive health problems and may not provide acceptable quality eggs for SCNT.” 

Their comments came in emails to the California Stem Cell Report in connection with yesterday's item that said because the Oregon researchers used paid donors for eggs, the research would be illegal in the Golden State.

Weissman said,

 "Not true. They did it with nearly 40 percent efficiency, which does not require paying for eggs, just use leftovers from IVF clinics."

There is no question that it is illegal to pay donors for their eggs in California. The question is whether the research could be done properly without using paid donors. In recent years, researchers at Harvard and elsewhere have said they needed paid donors for stem cell research to properly perform their research and could not find them without providing compensation.

Weissman Says Oregon-style Stem Cell Research Could be Done in California

Stanford researcher Irv Weissman says it is “not true” that Oregon's stem cell research could not be done legally in California.

In a brief email to the California Stem Cell Report, he commented in connection with yesterday's item that said because the Oregon researchers used paid donors for eggs,the research would be illegal in the Golden State.

Weissman said, 

"Not true. They did it with nearly 40 percent efficiency, which does not require paying for eggs, just use leftovers from IVF clinics."

There is no question that it is illegal to pay donors for their eggs in California. The question is whether the research could be done without using paid donors. In recent years, researchers at Harvard and elsewhere have said they needed paid donors to properly perform their research and could not find them without providing compensation.

We have queried Shoukhrat Mitalipov in Oregon concerning his views on Weissman's comments. We welcome other comments as well. Comments can be filed directly by clicking on the word "comment" at the end of this item or you can email them to djensen@californiastemcellreport.com. 

We should also note the comment from researcher Paul Knoepfler of UC Davis who notes that SCNT cloning is permissible in California, which is what was done in Oregon. The state does ban reproductive cloning, however.

Oregon-style Stem Cell Cloning Research Illegal in California: No Pay for Eggs in Golden State

The good news out of Oregon is that some diligent scientists in the Beaver State have accomplished a major advance in stem cell research --- the cloning of human stem cells.

That bad news is that their research would have been illegal in California, and probably will be banned for decades, if not longer – thanks to Proposition 71 of 2004.

The proposition was the ballot initiative that created the $3 billion California stem cell agency, which is hailed internationally as being one of the world leaders in financing stem cell science. Unfortunately, the 10,000-word initiative also contains language that was aimed at winning voter approval of the measure -- not promoting good science.

The team writing the initiative, led by Robert Klein, the former and first chairman of the stem cell agency, put in a provision that made it illegal to pay women for their eggs. The Oregon researchers paid women $3,000 to $7,000 each for their eggs, reflecting the current market rate based on prices paid in connection with IVF. In some cases for IVF, the compensation is dramatically higher. (See here and here.) Stem cell researchers in recent years in the United States have found that they cannot secure an adequate number of donors without matching IVF donor compensation.

While compensation for eggs is a matter of some controversy, strong cases have been made that women should make their own decisions about selling their eggs – not the what some call the nanny state. Of course, that should occur under well-regulated situations. But Proposition 71 backers wanted to remove any possible campaign objections by opponents of stem cell research, and so they inserted the ban along with management minutia and other dubious material.

Can't that be changed, one might ask? Not without a herculean effort. That means another ballot measure or a super, super majority vote in the California legislature plus the signature of the governor. Imagine a measure on the ballot to allow women to sell their eggs. The uproar would be heard internationally. In 2004, when Proposition 71 was approved, it would have been better to leave the compensation issue unaddressed. Then it could have been dealt with through regulation or normal legislation, both of which are far more flexible than ballot measures that alter the state Constitution and state law.

Our quick and limited survey of the news coverage indicated that many of the mainstream media stories omitted the price of the eggs, which may suggest that the issue of compensation is becoming moot.

In related news about the Oregon accomplishment, UC Davis stem cell researcher Paul Knoepfler has posted a good look at the some of the misinformation that is surfacing on the Internet about the research, including its implications.

He said,

“Keep in mind that on day one of the iPS cell era in the stem cell field we had a huge number of misconceptions because we simply had so much to learn. Same is true here.”

Jessica Cussins over at the Berkeley-based Biopolitical Times also has a solid roundup of the coverage of the Oregon research and the analysis of its significance.

Here are links to two blog items from the California stem cell agency on the Oregon research, including one dealing with “cloning hysteria” and a more general look.

Exploring the Straw Man Argument Against IOM Reforms at California Stem Cell Agency

Constitutional objections to some of the Institute of Medicine's sweeping recommendations for changes at the $3 billion California stem cell agency amount to little more than a straw man, at least based on a legal memo produced earlier by the agency.

The legal objections to structural reforms at the agency were initially advanced in 2009 when the stem cell agency was fighting an unwelcome analysis of its activities by the state's good government agency, the Little Hoover Commission. The objections were voiced again at a meeting earlier this month by some governing board members, particularly Sherry Lansing, who is also chairwoman of the University of California regents. Her comments came within minutes of the start of the Institute of Medicine's (IOM) presentation to the board.

She said directors' hands “are tied” because of requirements in Proposition 71, the ballot initiative that created the stem cell agency, which is formally known as the California Institute for Regenerative Medicine(CIRM). While Lansing did not elaborate, some of the initiative is written into the state constitution, which can only be amended by a vote of the people. However, Proposition 71 can also be amended by a 70 percent vote of each house of the Legislature and the signature of the governor, which is no small task to achieve.

The 2009 legal memo (see the full text below) dealt with the recommendations of the Little Hoover Commission, some of which were cited and echoed by the IOM. The legal memo contended that the legislature was barred from making major changes in the structure of the stem cell agency governing board because the changes supposedly would not “enhance the ability of the (agency) to further the purposes of the grant and loan programs.” The argument was that only the people could make “non-enhancing” changes. The vague “enhancement” requirement was written into Proposition 71 by its authors, one of whom is James Harrison, the outside counsel to the board, who was also the lead author on the 2009 memo. Harrison is revisiting the supposed constitutional issues in the wake of the IOM study.

However, the objections cited in his earlier memo are dubious and easily overcome. The meaning of “enhance” is so vague as to permit wide interpretations. Certainly, removing public suspicion about conflicts of interest would seem to help move the agency forward. Straightening out the muddled management structure of the agency, with its overlapping responsibilities for the chairman and president, would certainly seem to enhance the functioning of the agency. Assuring that the governing board has the full ability to exercise strong oversight over the conduct of the agency would certainly seem to be an enhancement and long overdue.

At least that is what the most prestigious body of its sort says. The Institute of Medicine studied the agency for 17 months under a $700,000 contract with CIRM. The IOM's charge was to evaluate the performance of the agency and make recommendations for improvements. The IOM recommendations echoed findings not only of the Little Hoover Commission, but some in two earlier studies also funded by the agency.

For CIRM directors now to reject the IOM findings and turn away would be to indicate that their earlier admiration and respect for the IOM was something of a sham or, more likely, now inconvenient.

As for removing ambiguity about what does or does not enhance the agency's mission, the 29-member board could simply adopt a resolution declaring that all the IOM recommendations would enhance the CIRM mission.

One of major obstacles to acting on the earlier recommendations for changes was Robert Klein, the first chairman of the agency board. Klein, an attorney and real estate investment banker, also directed the writing of Proposition 71 and wrote portions of it himself. He would often make numerical code citations to the initiative during agency board meetings.

Klein is now gone from the board, leaving in 2011 at the end of his term. He was replaced by Jonathan Thomas, a Los Angeles bond financier, who has ushered in a new and different era at the stem cell agency. Some might say a more reasonable era. He says he and governing board take the IOM study seriously. 

The report is scheduled for discussion Jan. 23 at a public workshop at the Claremont Hotel in Berkeley, Ca., the day before the regular board meeting. .

The IOM's recommendations have won theeditorial endorsement of all the California newspapers that have so far written about them. The newspapers believe that the proposals would indeed enhance the agency's mission and are, in fact, necessary if the agency is to survive beyond 2017, when the money for new grants runs out.

Directors of the stem cell agency are currently mulling the future of their efforts. If they are to be successful in raising additional hundreds of millions of dollars – be they private or public – the directors must confront the findings of the IOM in a forthright manner. And they must move to dispel the cloud that now hangs over the stem cell agency.

(Editor's note: The full text of the 2009 legal memo can be found below. Also below is another related legal memo from Americans for Cures, a stem cell lobbying group sponsored by Robert Klein at the same time he was chairman of the stem cell agency. Despite the language on the Americans for Cures memo, it is a public record. It became a public document when Klein submitted it to the Little Hoover Commission.) 

Legal Memo from California Stem Cell Agency on Little Hoover Recommendations 2009

Legal memo from Americans for Cures regarding the Little Hoover Commission Report 2009 

California Editorial Unamity: Stem Cell Agency Needs Revamp

With the addition of another editorial this week, reaction among California newspapers so far has been unanimous that the $3 billion California stem cell agency should heed the sweeping recommendations of the prestigious Institute of Medicine.

The Riverside Press-Enterprise added its voice yesterday, declaring,

“Good intentions do not justify poor practice.”

Like others, the newspaper said that the agency “needs to revamp its governance structure to avoid potential conflicts of interest and boost public confidence in the agency.”

The Riverside paper focused on the conflicts of interest at the organization, which has seen about 90 percent of its funding go to institutions with ties to directors, but also supported other recommendations, including elimination of the dual executive arrangement at the research effort. 

The editorial said,

“An agency spending Californians’ money has no business being cavalier about good government practice and ethical safeguards — no matter how promising the potential therapies might be. The stem-cell institute is not a private fiefdom, but a taxpayer-supported undertaking. Yet many on the stem-cell institute’s board objected this month to the report’s recommendations.

“The agency also said that Prop. 71’s provisions mean that enacting many of the proposed fixes would require either a supermajority vote of the Legislature or another ballot measure. That prospect should warn Californians about the dangers of voting for complex, costly, politically driven initiatives that have little to do with fundamental state duties.

“Still, the stem-cell agency cannot just sit on these recommendations without damaging its credibility. The search for medical breakthroughs does not justify ignoring vital safeguards for spending taxpayer dollars.”

For a look at other editorials, see here and here.

Constitutional Questions Raised on Sweeping Changes at the California Stem Cell Agency

The outside counsel to the governing board of the California stem cell agency is preparing an opinion on whether some of the major changes recommended by the blue-ribbon Institute of Medicine(IOM) study might require a vote of the people.

More than three years ago, the same issue was raised  and used by the agency to resist unwanted changes.

Kevin McCormack, agency spokesman, said today that James Harrison of Remcho Johansen & Purcell of San Leandro will perform the analysis. Harrison has been counsel to the CIRM board since its inception. He also wrote part of Proposition 71, which created the stem cell agency in 2004.

Harrison's analysis was disclosed after CIRM Director Sherry Lansing, who is also chairwoman of the University of California Board of Regents, said this morning that the board's "hands are tied" concerning some of the IOM proposals because they could require a vote of the people. Other members of the board bristled at the IOM recommendations.

In 2009, Harrison tackled a similar task in connection with related, proposed structural changes at the $3 billion stem cell research effort. In reaction to proposals by the Little Hoover Commission, the state's good government agency, Harrison said,

“The Little Hoover Commission’s proposals would effect drastic and disruptive changes to CIRM’s governance and operating systems. Such changes run counter to the voters’ intent, and do not further Proposition 71’s purposes.”

The California Stem Cell Report wrote at the time, 

"The 10-page legal memo hung most of its arguments on a provision in Prop. 71 that states that it can only be amended by the legislature if the changes 'enhance the ability of the institute to further the purposes of the grant and loan programs.'
"Harrison's memo said the Hoover proposals (in question) could only be enacted through another ballot measure...."

The Little Hoover proposals dealt with the structure of the board and the conflicting responsibilities of the president and the chairman. The IOM has recommended major changes in both areas and approvingly cited the Hoover study .

Harrison's analysis will also delineate which IOM recommendations can be implemented by board action and which will require legislative approval.

The IOM report, which cost the stem cell agency $700,000, recommended a host of changes that critics for years have said are needed. But the 17-month study also went beyond what the critics had proposed. The IOM said that the 29-member governing board should be stripped of power to approve individual grants. Instead, the board would be limited to voting for or against a slate of applications.

The IOM also proposed far-reaching changes to remove conflict of interest problems, clean up a troubling dual-executive arrangement and fundamentally change the nature of the governing board. The recommendations would greatly strengthen the role of the agency's president, significantly alter the role of patient advocates on the governing board and engage the biotech industry more vigorously.

CIRM's governing board and its first chairman, Robert Klein, an attorney who directed the writing of the stem cell initiative and wrote parts of it, have mightily resisted related proposals. In 2009, Klein even warned of lawsuits if legislative action were initiated for reforms (see here and here). 

In an editorial today, The Sacramento Bee said changes are long overdue at the agency. The Bee said CIRM has "been consumed by a siege mentality that has prevented any real introspection.”  In another editorial earlier this week, the San Francisco Chronicle said that prompt and major changes are needed at the agency.

Many of the more significant recommendations clearly require either a rare, super, supermajority vote of the legislature (70 percent) and the signature of the governor or another ballot initiative, which is very unlikely. Achieving the 70 percent vote is exceedingly difficult except on the most noncontroversial matters before the legislature. The requirement permits only 13 members of the 40-member Senate to block any CIRM legislation, giving minority viewpoints extraordinary power over the content of any CIRM legislation.

(See here for a list of IOM recommendations that would likely require legislative action.)

IOM Report: Many Major Changes at Stem Cell Agency Require Legislation

As the Institute of Medicine began its presentation today to the governing board of the $3 billion California stem cell agency, one of its key directors, Sherry Lansing, pointed out that some of the IOM recommendations require legislative action and perhaps a vote of the people.

Her essential point was that the agency is hamstrung by the very measure that created it in 2004. She did not elaborate on her comment, but here is a look at some of matters she was talking about. (Lansing is chairwoman of the UC board of regents and former CEO of a Hollywood film studio.)

The ballot measure locked in management minutia and more, and then slapped on tight restrictions that make it nearly politically impossible to alter even such matters as who is in charge of production of the annual report. (By order of law, the chairman, in case you are wondering.)

And if the 29-member governing board -- so sized and specified to every nit and nat by the ballot measure -- wants to make the sweeping changes recommended by the IOM, agency directors face a formidable task in California's Capitol.

Many of the most important recommendations for the California stem cell agency require a vote of the California legislature and signature of the governor. The IOM's choice of words – that these proposals “may” need legislation – is conservative. There is little doubt that legislative action would be needed to fully implement the recommendations below.

The vote needed is no simple majority. It is a rare, super, super-majority (70 percent) of each house. The requirement was also written into state law by Proposition 71, the 10,000-word ballot initiative that created the stem cell agency. The 70 percent requirement gives extraordinary power to minority viewpoints that must be dealt with to win passage of legislation. In the state Senate, for example, it would take only  13 senators to block a bill.  

With that background, here are direct quotes from the IOM report on its legislative recommendations.

Separate Operations from Oversight

The board should focus on strategic planning, oversee financial performance and legal compliance, assess the performance of the president and the board, and develop a plan for transitioning CIRM to sustainability. The board should oversee senior management but should not be involved in day-to-day management. The chair and the board should delegate day-to-day management responsibilities to the president. Each of the three working groups should report to management rather than to the ICOC.

Change the Composition and Structure of the Board and Working Groups

CIRM should put systems in place to restructure the board to have a majority of independent members, without increasing the size of the board. It should include representatives of the diverse constituencies with interests in stem cell research, but no institution or organization should be guaranteed a seat on the board. Consideration should be given to adding members from the business community. The terms of board members should be staggered to balance fresh perspectives with continuity.

The chair and other ICOC members should be prohibited from serving on the working groups. During the reconstitution of the working groups, the current level of representation of disease advocates should be maintained, such board members being replaced with other disease advocates who are not board members.

Revise Conflict of Interest Definitions and Policies

CIRM should revise its definitions of conflict of interest to recognize conflicts arising from nonfinancial interests, such as the potential for conflict arising from an individual’s interest in a specific disease, and should reassess its policies for managing conflict of interest in light of this broader definition.

Restructure the Grant Review and Funding Process

CIRM should restructure the grant review and funding process to separate oversight and strategic planning from day-to-day operations. The ICOC should remain responsible for oversight and articulation of an overall strategic plan. However, grant management, funding recommendations, and grant administration should be the responsibility of the CIRM scientific staff, reporting to the president. This restructuring would help mitigate concerns related to conflicts of interest and would also put the review and funding process in the hands of those best equipped to make those decisions.

The committee recommends several changes pertaining to the development and approval of RFAs, composition of the Grants Working Group, reordering of rankings by CIRM staff, notification of applicants, and process for making final decisions.

Enhance Industry Representation in Key Aspects of CIRM Organization

Industry representation on the ICOC, the Scientific Advisory Board, the Standards Working Group, and the Grants Working Group should be enhanced to leverage industry’s expertise and resources in product development, manufacturing, and regulatory approval in support of the ultimate goal of bringing therapies to patients.

Consider Harmonizing Intellectual Property Policies with Policies of Bayh-Dole Act

 As other sources of funding for stem cell research become available and as the field of regenerative medicine advances from the laboratory to the clinic, the ICOC should reconsider whether its goal of developing cures would be better served by harmonizing CIRM’s IP policies wherever possible with the more familiar policies of the Bayh-Dole Act.  

Excerpts from the IOM Report on the California Stem Cell agency

Here are excerpts from the $700,000 Institute of Medicine (IOM) report on the $3 billion California stem cell agency -- the California Institute of Regenerative Medicine (CIRM).

Overall Comments

“Improvements to CIRM’s governance structure, scientific program, and policies are critical to bet­ter serving California taxpayers who elected to devote funding to promote stem cell research in the state. The necessary changes outlined by the IOM committee, if enacted by the state and/or the institute, would help to instill confidence among the scientific community and California residents in the vital work that CIRM is accomplishing.”

“It is the committee’s judgment that overall, CIRM has done a very good job of initially establishing and then updating the strategic plans that have set priorities for and guided its programs, and of taking advantage of its guaranteed flow of $300 million a year for 10 years to establish a sustainable position in regenerative medicine for California. The challenge of moving its research programs closer to the clinic and California’s large biotechnology sector is certainly on CIRM’s agenda, but substantial achievements in this arena remain to be made.

“Despite its demonstrable achievements to date, as well as the largely positive independent reports covering various aspects of its operations, no one would claim that CIRM is a perfect organization or that it should adhere slavishly to its initial form of organization, set of regulations, or pattern of priorities. The field of regenerative medicine has advanced rapidly since November 2004, and CIRM itself has seen the need to alter its activities and approaches in some areas. The committee believes the same should be true of its governance structure, some of its administrative practices, and its use of external perspectives on strategic scientific priorities and on the evaluation of other key policies, such as intellectual property, to ensure that they continue to encourage the development and deployment of new treatments.”

“While the restrictions on amending the administrative structure of CIRM established in Proposition 71 had the advantage of protecting the institute’s ongoing operations from outside interference in an ethically controversial arena, they also made it difficult to modify the organization’s structure in response to experience and/or changing circumstances. Moreover, these protections, whatever their benefits, appear to some to shield CIRM from the normal accountability mechanisms in place for state agencies.”

Conflicts of Interest

“Far too many board mem­bers represent organizations that receive CIRM funding or benefit from that funding. These com­peting personal and professional interests com­promise the perceived independence of the ICOC, introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board. Neither the board chair nor board members should serve on any working group. The board itself should include representatives of the diverse constituencies that have an interest in stem cell research, but no institution or organiza­tion should be guaranteed a seat.”

“The problematic perception of conflicts of interest has persisted for as long as CIRM has existed. The IOM committee would be less concerned about individual board members with actual or perceived conflicts of interest if the board membership included more truly independent members. The majority of board members should be independent, with no competing or conflicting personal or professional interest. Broader representation from a wider variety of stakeholders will inject new perspectives into the panel and will help to dispel the perception of conflicts of interest.

“CIRM also should revise its conflict of interest definitions to include non-financial interests, such as the potential for personal conflicts of interest to arise from one’s own affliction with a disease or personal advocacy on behalf of that disease. CIRM policies for managing conflicts of interest should apply to that broader definition.”

Structure and Governance

“Currently, the ICOC (the agency's governing board) functions both as an executor and as an overseer—competing duties that compromise the ICOC’s critical role of pro­viding independent oversight and strategic direc­tion. The IOM committee recommends that CIRM’s operations be separated from its over­sight. The board should delegate more author­ity and responsibility for day-to-day affairs to the president and senior management, and the ICOC’s three working groups should report to senior management within CIRM, rather than to the ICOC. The moves would permit the board to better focus its energy and collective talent on strategic planning, overseeing financial perfor­mance, ensuring legal compliance, assessing the president’s performance, and devising a plan for preserving and expanding its considerable assets to permit the institute to continue its important work after the bond measures end.”

Unrealistic Goals

“While the latest round of awards challenge teams to have filed a request to begin clinical trials or to have completed early-stage trials in patients within four years, the committee feels these ambi­tious goals are unrealistic. New therapies take more time to progress to federal approval, and early-stage clinical trials are beset by a stagger­ingly high failure rate. Rather than judging suc­cess by simply tallying the number of active clini­cal trials, the IOM committee suggests that CIRM also continue its focus on underlying biological mechanisms that drive the success or failure of a promising therapy and on careful design of clini­cal trials. Advances in these areas will help the entire field progress, even if a specific drug candi­date is not approved." 

Economic Impact

“In the short term, CIRM’s expenditures are supporting approximately 3,400 jobs and their innovative efforts have also attracted substantial additional private and institutional resources to this research arena in California CIRM’s long-term impact on such critical aspects of the California economy as state tax revenues and health care costs beyond the shorter-term and temporary impact of its direct expenditures cannot be reliably estimated at this point in CIRM’s history.... (T)he estimate of the Analysis Group (2008) that the CIRM program alone would support about 3,400 jobs as long as it was allocating about $300 million per year in research and development grants appears quite reasonable to the committee. To put this estimate in context, however, total employment in California is roughly 16 million, and NIH alone provides more than $3.5 billion per year to California research institutions.”

Intellectual Property

“CIRM should propose regulations that specify who will have the power and authority to assert and enforce in the future rights retained by the state in CIRM-funded intellectual property. CIRM should seek to clarify which state agencies and actors will be responsible for the exercise of discretion currently allocated to CIRM and the ICOC (the CIRM governing board) over future determinations on issues regarding march-in rights, access plans, and revenue-sharing rights that might arise years after CIRM's initial funding period has passed.... (T)he ICOC should reconsider whether its goal of developing cures would be better served by harmonizing CIRM’s IP policies wherever possible with the more familiar policies of the Bayh-Dole Act(federal IP law).

$1.5 Billion in Stem Cell Awards Goes to Directors' Institutions

The Sacramento Bee today published an article that reported that $1.5 billion, more than 90 percent of the amount dispensed by the California stem cell agency, has gone to institutions linked to past and present directors of the agency.

The piece was carried on the front page of the newspaper's Sunday Forum section and was written by David Jensen, publisher-editor of the California Stem Cell Report.

The text of the Forum article is below. The Bee also carried a chart listing the top 10 recipient institution. The full text of the comments from Alan Trounson, president of the California stem cell agency,  and two other persons quoted in the article can be found here.

Stem cell cash mostly aids directors' interests

Special to The Bee

By David Jensen

With its latest round of awards earlier this month, California's stem cell agency has now handed out $1.5 billion to enterprises linked to its directors.

The figure amounts to 92 percent of the $1.7 billion awarded by the agency. The grants and loans range from $261 million to Stanford University, whose medical school dean, Philip Pizzo, sits on the agency's governing board, to $170,500 to Children's Hospital in Oakland, whose president, Bert Lubin, also is a member of the board.

The University of California, Davis, has received $128 million. Claire Pomeroy, chief executive officer of UC Davis Health System, is another one of the 29 board members. In all, 27 institutions with past or present representatives on the agency board have received funding.

None of this is illegal. And none of it is likely to change. The situation was created by Proposition 71, the 2004 ballot measure that established the state's $3 billion stem cell agency, formally known as the California Institute for Regenerative Medicine, or CIRM. The initiative was crafted so that virtually all of the institutions that stood to benefit from the state's largesse had seats at the table where the money is handed out.

The built-in conflicts of interest at CIRM have perturbed some experts in California government, but concerns have also reached into the scientific community. The prestigious journal Nature, in 2008, editorialized against what it called cronyism at CIRM. It said the agency "must fight the tendency of the academic institutions on the board to hoard dollars."

Some California scientists, wary of offending those who control the lifeblood of their research, privately grumble about an "old boys network."

Joe Mathews, co-author of "California Crackup," a study of major issues in state government, said last week: "California ballot initiatives are a terrible way to make public policy. And they are even worse as a method for making scientific policy."

The stem cell agency has a different view. Alan Trounson, president of the San Francisco-based enterprise, said: "There is no evidence that any of CIRM's funding decisions have been driven by conflicts of interest. Indeed, CIRM rigorously enforces its conflict of interest rules at each stage of the funding process to ensure that all decisions are made on the merits of the proposal for funding and not as a result of any conflicts of interest."

Mathews, California editor of Zocalo Public Square, and others point to the creation of the California stem cell agency as an example of abuse of the initiative process by special interests. The 10,000 words in Proposition 71 were written in private by Bay Area real estate investment banker Robert Klein and a handful of associates, who quietly determined the composition of the board. Klein later served six years as the first chairman of the stem cell agency, leaving in June 2011.

Klein later argued publicly that placing medical school deans and university and research institution executives on the board provided the expertise needed to make the decisions about how to spend the research money. However, the makeup of the board also served to win the support of institutions that envisioned the prospect of fresh cash – in this case money that the state borrows via bonds.

Mathews described the state's initiative process this way: "Essentially, to win the support of various groups whose money and backing is important to passage of a bond, a sponsor of an initiative bond will set up rules and include money specifically intended for each group. This is a form of pay-to-play. Agree to back the initiative, and you're in."

Bob Stern, who co-wrote the California Political Reform Act, said, "It would have been better had institutions receiving grants not to have had their representatives on the board awarding grants."

Trounson said the board follows "best practices" when it comes to grants and legal conflicts of interest. The agency has worked out an unusual procedure to prevent its directors from violating conflict of interest laws as they vote on applications that seek as much as $20 million each. Before each public session, agency attorneys determine which board members cannot vote on a proposal because of legal conflicts of interest. Applications to be approved are considered as a group. Each board member then votes on the entire group by saying, "Yes, on all those except with which I have a conflict."

No final tally is announced. The public can ferret out the overall vote a month or two later in the minutes of the meeting on the CIRM website (www.cirm.ca.gov). But the minutes do not list individual votes or conflicts of interest.

Domination of the board by academics and nonprofit institutions has led to bitter complaints from business. Less than 7 percent of all awards have gone to for-profit enterprises. Currently, however, the agency is embracing industry more warmly in an effort to commercialize stem cell research, which raises another set of coziness problems. They surfaced in July and again this month.

Klein, who led the stem cell ballot campaign before becoming chairman of the agency, appeared before his old board to lobby on behalf of a $20 million request from StemCells Inc. of Newark. The California firm was founded by the eminent Stanford stem cell scientist Irv Weissman. He sits on StemCells Inc.'s board, and he and his wife hold 273,821 shares of stock in the firm. Weissman was also an important backer of Proposition 71, working the "billionaire circuit" and raising more than $1 million for the campaign, according to an article in San Francisco magazine.

CIRM's reviewers had rejected StemCells Inc.'s application. After Klein made his pitch in July, the board sent the application back for re-review, an unusual procedure.

When the application returned to the board early this month, reviewers again rejected it. Klein again importuned his former colleagues, and – following a closed door session – the board approved the award, 7-5.

Eleven members were disqualified from voting because of legal conflicts of interest. It was the first time in the board's eight-year history that it approved an application twice rejected by reviewers.

Mathews said no likelihood exists of changing the board structure at CIRM. He said it is "baked in" by Proposition 71. That's because Klein and company wrote into the initiative a requirement for a super, super-majority vote – 70 percent – of each house of the Legislature to make any modifications.

Another initiative could be mounted, but that possibility is also exceedingly remote.