New Stem Cell Agency Chair Discloses More than $3 Million in Investments

The new chairman of the California stem cell agency, Jonathan Thomas, last week reported that he has more than $3 million in investments, including holdings in an enterprise that invests in "distressed debt" and in a consulting firm that teaches businesses how to "out-behave the competition."

Thomas' statement of economic interests -- required by state law – disclosed that the bond financier has more than $1 million invested in Saybrook Capital of Santa Monica, Ca., a firm that he co-founded. Thomas is currently a partner in the firm, which deals with "distressed debt," including government bonds. He has said he will continue to be involved with the business while he also serves the part-time (80 percent) chairman of CIRM at a salary of $400,000.

In his statement, Thomas also reported that as of taking office on June 23 he had a more than $1 million investment in the Saybrook Opportunity Fund and another $1 million-plus holding in LRN, a Los Angeles-based firm that provides "legal/ethical" consulting.

LRN was founded in 1994 by Dov Seidman, an attorney and author of the book "How." On the firm's web site, Seidman said he started LRN "with a powerful vision that the world would be a better place if more people did the right thing." Since then, the firm says it has consulted with 500 companies including Pfizer, Johnson & Johnson, eBay, 3M and Walt Disney.

We asked Thomas about he came to be involved in LRN. Scott Tocher, counsel to the CIRM chair, replied via email that Thomas "knew the gentlemen who founded the company and thought it was a very interesting business model and on that basis made his investment."

Thomas' holdings also include shares in 71 different companies for a total that could range from $206,000 to $1.4 million. Most of the holdings were less than $10,000 each. Eight ranged between $10,001 and $100,000. The state disclosure law requires reporting of investment values only in broad ranges.

Thomas disclosed holdings in four pharmaceutical companies: Allergan, Gilead Sciences, Pfzer and Watson Pharmaceuticals. The investments ranged from $2,000 to $10,000. A similar investment was reported in Thermo Fisher Scientific, which makes stem cell research equipment.

Pfizer is deeply involved in stem cell research, including a $100 million commitment in the United Kingdom. The Pfizer effort includes a collaboration with Peter Coffey at University College of London. Last fall, CIRM directors awarded Coffey $4.9 million to lure him to UC Santa Barbara. Coffey is also involved in a joint $24 million research program backed by CIRM and the UK.

Thomas reported income of between $10,001 and $100,000 each from Saybrook and CSI Management Limited. Tocher said CSI is the contracting affiliate for CSIP Group of Los Angeles, a private equity firm with a primary focus on China.

Thomas' statement shows that he had a more than $100,000 share in the gross income of Saybrook Capital. Tocher said that state law required the disclosure "regardless of whether or not JT actually received any income. As is typical of private equity firms, not all income is distributed for a variety of reasons (reserves, co-investment, etc.)."

The statement also disclosed Thomas' $3,239 investment in Advanced Cell Technology of Santa Monica, Ca., a human embryonic stem cell research firm. Thomas last month sold the ACT stock at what he said was a "significant loss."

All CIRM board members are required to file economic disclosure statements, which are used to help determine whether they can vote on matters that come before the governing board or even take part in discussion. The disclosure statements for board members and top executives at CIRM can be found here. The agency began posting them on its web site just this spring. Thomas' statement is not yet posted but you can find it below. Jonathan Thomas Statement of Economic Interests

CIRM's New Chair to Sell Stem Cell Stocks Shortly but Continue Link with Bond Firm

The new chairman of the $3 billion California stem cell agency, Jonathan Thomas, says he will soon sell his interests in a California stem cell company but will retain his financial ties to a bond investment firm, pending a double-check with the agency's outside counsel.

As part of his pitch for the $400,000 post as the chair of CIRM, Thomas, a bond financier and partner in Saybrook Capital of Santa Monica, Ca., said he led an earlier round of financing for Advanced Cell Technology, also of Santa Monica, Ca. He said he still owned a "small portion" of the company's stock and was prepared to liquidate it to avoid any conflicts. He also said he has no other "actual or potential conflicts."

The California Stem Cell Report queried Thomas via email concerning the timing of the sale and also his relationship with Saybrook. The firm posted a news release this week congratulating Thomas and declaring that it was looking forward to a continuing and flourishing relationship with him.

In response to our query, Thomas, who is being paid $400,000 a year for 4/5 time by CIRM, said,

"With respect to ACT, I will be selling my interests very shortly.  Re Saybrook, we don't buy or underwrite (nor have ever bought or underwritten) any State of California GO's (state general obligation bonds).  No conflict of any kind there.  Re severing ties with Saybrook, I have been previously advised that there are no conflicts maintaining affiliations with the firm.  Just to get additional input on both issues, though, I will check again with (the CIRM) Board counsel and advise."

(Thomas later said that no conflicts existed with Saybrook and indicated he was continuing his financial relationship with the firm.)

Advanced Cell Technology reportedly applied for a loan in the $50 million CIRM clinical trial round this spring. No action was reported on the application, but financial scuttlebutt has it that ACT is line for a CIRM loan later this year.

As for the California state bonds, the stem cell agency relies on the state to borrow money for its funding and has no other real source of cash. Saybrook specializes in distressed government bonds. Currently California has the lowest bond rankings of any state in the nation.

Prior to the election for chairman, we asked the CIRM board counsel, James Harrison of Remcho Johansen & Purcell of San Leandro, Ca., whether the board required the chair candidates, including Thomas, to file a written disclosure of financial interest. Harrison said,

"We have discussed the state's disclosure and disqualification rules with both candidates."

But he said no written disclosure was required in advance of board action.

As of this year, the stem cell agency has begun posting the state-required financial disclosure forms of its board members and top officials. Thomas is required to file his within 30 days of assuming office, which would be July 23.

As chair, Thomas will be working with the office of state Treasurer Bill Lockyer, who controls the sale of state bonds. One of the mechanisms Thomas will operate through is the California Stem Cell Research and Cures Finance Committee, a six-member body created by Prop. 71, which also created the stem cell agency. The committee determines whether it is "necessary or desirable" to sell bonds for CIRM. In addition to sitting on the committee, Thomas can appoint two members. The other members are the state treasurer, state controller and state director of finance.

In its press release on Thomas, Saybrook said,

"'JT (Jon Thomas) is the best man for the job. I’ve known him since our high school tennis days and he brings an impressive skill set to the position,' said Jon Schotz, partner at Saybrook Capital, LLC and Jon Thomas’s graduate school roommate at Yale.

"Jonathan Rosenthal, also a partner at Saybrook Capital, LLC says: 'I couldn’t be happier for JT. We’ve had a wonderful partnership and friendship for the past 20 years and expect that it will continue to flourish.'"