Coronavirus Fallout: New and Bigger Hurdles Now Face $5.5 Billion California Stem Cell Measure

California's intensifying battle against the coronavirus is creating ever larger obstacles and uncertainty concerning the proposed $5.5 billion ballot initiative to refinance the state's stem cell research program, which is running out of money.

The new, statewide ban on public gatherings is certain to hamper the gathering of the 600,000-plus signatures needed to place the measure on the November ballot. No one knows how long that ban will be in place. Signature gathering in California largely occurs in public places using paid workers. 

The financial fallout from the crisis also raises questions about whether funds can be raised to support the petition drive -- not to mention a fall ballot campaign that could cost in the neighborhood of $50 million. The usual contributors to such an effort are likely to feel financially squeezed, plus they may be refocusing on new and higher priorities dealing with health care, if they have cash they are willing to contribute.

The impact of the coronavirus crisis has already knocked off one ballot measure in Palo Alto, a wealthy Silicon Valley enclave.  The school board there this week removed a $16-million-a-year property tax measure from its May ballot.  An article in the Palo Alto Daily Post said, 

"'In order to do even a high-polling ballot initiative … the committee doing it needs to have a certain amount of resources, including money raised and feet on the street,' (school) trustee Melissa Baten-Caswell said. 'It is really not conceivable that they’re going to have enough to run the rest of the campaign in this time frame.'

The financial squeeze is also being reported nationally. Some big national political donors backed the measure that created the stem cell program 15 years ago.  Politico wrote just this morning,

"Campaigns across the country have canceled face-to-face fundraisers for the foreseeable future and are scrambling to figure out how to raise enough money to stay solvent. Big donors' stock portfolios are tanking. And small-dollar, online contributors — who have never been more important to campaigns — are facing sudden financial uncertainty and the real possibility of unemployment."

Backers of the $5.5 billion stem cell initiative have until June 15 to complete the qualification process, which goes beyond simply gathering signatures. They must be verified by election officials as valid signatures of registered voters which can take some time. 

The campaign had expected to submit more than enough signatures by late April. The California Stem Cell Report has queried the campaign for comment, but has received none. 

The stem cell agency, known formally as the California Institute for Regenerative Medicine (CIRM), was created in 2004 by voters with $3 billion in funding. It is now down to it last $27 million for awards. 

Halloween Meeting Set for $3 Billion California Stem Cell Agency: Last Research Awards Expected to be Made

California's $3 billion stem cell agency next week is expected to give away the last of its funds for new research awards and hear a report on private donations that it may have received in the recent past or perhaps expects in the future. 

The donations report is something of a mystery, based on the agenda, but perhaps appropriate for the governing board's meeting, which comes on Halloween, Thursday Oct. 31. 

More details are likely to be posted online in the next week or so and reveal more clues about the direction -- over the next 12 months -- of the agency, formally known as the California Institute for Regenerative Medicine (CIRM).

The agency expects to run out of money for new awards at the end of this month unless a there is a surprise announcement that a private fund-raising effort has produced significant results. CIRM was created in 2004 by voters, who allotted it $3 billion in state bonds. No other source of cash was provided by the ballot initiative. 

In addition to consideration of applications for clinical and translation stage awards, also on next week's agenda are:

• "Use of public funds in connection with ballot measure presentation"
• Last week's report on the economic impact of the agency 
• Changes in the "administrative funds donor agreement and disclosure of funds received from donors." (Those changes were not available on the agenda but are likely to be available in the next few days.)

The ballot measure discussion involves the appropriate and legal role of the agency in connection with the $5.5 billion, proposed ballot initiative to provide additional support for CIRM. The measure is now before state officials for certification prior to being circulated for the 600,000-plus signatures needed to qualify for the November 2020 ballot. 

State law prohibits the use of state funds to support ballot campaigns. The agency has been careful to adhere to the law. But it is always a touchy area. A number of gray areas exist involving the agency's additional legal requirements to respond to questions and inform the public about the conduct of the taxpayer's business.

The public can comment and recommend changes in the proposed initiative between now and Nov. 12.  Suggestions for changes will be relayed to the backers of the measure.

Regarding the currently cryptic Halloween agenda, look for more details on the California Stem Cell Report between now and Oct. 31. We will be filing fresh items as the information emerges.  

Next week's meeting will be held at CIRM's Oakland headquarters. The public can attend and also participate via the Internet. Remote telephonic locations that are open to the public can be found in La Jolla, San Diego, Fresno and San Francisco. Directions and instructions can be found on the agenda.

California Stem Cell Program Trying to Build $220 Million Financial Bridge: An Update

For many months now, California's stem cell research program, which expects to run out of cash by the end of this year, has been seeking to raise privately $220 million. But it has yet to report that it has snagged a significant chunk of that amount.

The most recent overview of the current fundraising effort came last December at a meeting of the governing board of the California Institute for Regenerative Medicine (CIRM), as the state stem cell agency is formally known. 

Jonathan Thomas
CIRM photo

Jonathan Thomas, chairman of the CIRM board, briefed the panel on the progress of the effort to create a financial bridge to the hoped-for passage of a possible $5 billion ballot measure in November 2020. 

The fund-raising effort is targeting high net-worth, potential donors and medically oriented foundations with a smorgasbord of philanthropic options. The choices can be tailored to a potential donor's appetite, including supporting specific types of research, Thomas said. 

Thomas is expected to update the board on the fundraising effort at its next meeting March 21, which will be based at its Oakland headquarters. The session will also be available on the Internet with remote hook-ups that will allow members of the public to comment and ask questions.

CIRM was created by voters in 2004 who also provided it with $3 billion in state bond funding. No additional source of cash was established.  At the beginning of this year, the agency was down to its last $144 million for new awards. It has set aside cash for administering its final awards should a new bond measure fail to pass. 

Here is the text of what Thomas told the 29-member board in December about the fund-raising drive. The text comes from the transcript of the meeting.

“So I'm going to move next to a report on the bridge fundraising, sort of a year-in-review summary. As you recall, through the end of last year (2017), we had secured 7 million from Bill Bowes and Pitch Johnson. We talked about that earlier (2015). (The funds are allocated for a "wind-down.")

“At our December board meeting last year, when we reported on the fact we were aware we're going to be out of funds potentially by the end of 2019, we talked about a couple things. One, Bob Klein (former chairman of the agency’s governing board) was here and talked about his potential intent to run a new bond measure in the november 2020 general election for $5 billion. 

We, also at that meeting, discussed the fact that we would like to be able to keep things going at a normal pace between the time we had run out of money, which we anticipated to be late 2019, and the election. And so we decided at that point that we would look to pursue bridge funding to fill that gap ideally in an amount equal to roughly the average of what we put out over the last few years.

“So the vision at that time was to raise bridge funds to not only go through 2020, but, if successful in 2020, the next actual realization of bond proceeds would be in the spring issuance by the state treasurer of bonds on behalf of all state agencies funded out of the state treasurer's office. So it would really be getting from late 2019 to spring of 2021.

“The idea was all of that money had to be raised in a staggered way through the last installment in the middle of 2020. A note that this is just referring to research funds. We have admin funds earmarked currently all the way through 2023.

“The strategy at that point to pursue the vision was to identify the most likely parties interested in medical research both in California and in the rest of the country. We spent a great deal of time doing that.
“Secondly, to tailor the asks to specific candidates that we felt would be the most successful in terms of what we were pitching. Thirdly, to approach those candidates either directly or through third-party intermediaries well known to the candidates. And the theory there is not only is how you ask is important, but who gets you in the door to ask is vital.

“So we've spent a lot of time analyzing who the correct third-party intermediary would be who would have individual and direct contact with the candidates in question. We've had weekly meetings of our fund-raising team, consisting of myself, Maria Millan (CIRM president and CEO), Maria Bonneville (vice president of administration for CIRM), Scott Tocher (CIRM general counsel), and Eliana Barnett (senior executive assistant in CIRM's office of president), to discuss strategy as we continue to update. And we have coordinated with Bob Klein's office and with Melissa King (executive director of Americans for Cures) of Bob Klein's office on these discussions. (Klein founded Americans for Cures.)

“The plan to implement the strategy is to offer a menu of fund-raising options including charitable gifts, the loan product that we discussed that tied to the election, program-related investments, and other derivatives of those ideas. We developed that menu of options in consultation with legal counsel, bond counsel for the state, the state treasurer's office, the state controller's office, and other outside parties with relevant input, such as those that have had programs that we might wish to emulate. Note that we're asking for a variety of things, including unrestricted gifts or loans or gifts or loans to specific projects or conditions or whatever.

“The idea with the gift would be, or loan, if you put money in, not only would it enable the bridge period, but it would allow for giving us the most credible shot of getting an election passed in 2020, at which time, whatever your particular interest would be, if the measure passed, you would have a tremendous leveraging effect. 

“So if you were to put in, for example, 50 million and the measure passed, you've have a hundred-to-one leverage that would result from that, a good chunk of which could go towards whatever your specific interest was.

“So as we've been developing those ideas, we've been refining the asks as we've gone along in terms of what feedback we get as to what sounds more appealing or less appealing.

“To date, implementing that plan, which is connected to the strategy, we've met or had confidential calls with dozens of stakeholders, including ultra high net worth individuals whether individually or in groups.

“I referenced an event that Bob and I did in the summer in the Palo Alto area for a number of family offices. We've also talked, met with major foundations, with corporations who have an interest in the medical research space, and with numerous third-party intermediaries of the kind I described earlier. The way it sort of is broken down, been looking at funding either CIRM generally or with respect to specific projects, which I've sort of taken the lead on. Maria Millan has done a lot of great work in developing project-specific related asks for different initiatives that CIRM either has or would consider having that would get the fundraisers in the game.

“To date, as you might expect, a number of the meetings that we've had, the people we have talked to have, as far as the pitches go, either declined respectfully, others are ongoing as we speak. Since the last board meeting, we've continued our strategy discussions of third-party intermediaries. We've had several approaches to specific ultra high net worth individuals either in person or through these intermediaries. As before, a number of those have declined. However, there are a number of those discussions which are ongoing.

“We've calendared a number of meetings with potential stakeholders between now and the next board meeting, including meetings with major foundations, ultra high net worth, again, either in person or through third-party intermediaries. In addition, we have two group meetings similar to the one we had in the summer with family offices scheduled for the first quarter, which are one in San Diego and one in Los Angeles.

“So that is sort of where we are at this point. We continue to look for our anchor investor. And if we can do that, the strategy is when you get the anchor investor on board, that anchor investor typically has a number of friends that he or she can then rope into the fold. We're also going to focus more beyond the anchor investment to the smaller potential gifts. We've spent a great deal of our time on the anchor effort. And we will be, as we have successes, reporting in real time back to the board and in the next in-person meeting in March.

“So that's a review of the year. Are there questions? Thank you. That is most definitely a subject to be continued and continued and continued.”

The Golden State's Stem Cell Agency Sells its 'Powerful' Story: 2,700 Discoveries, 50 Clinical Trials, Billions Awarded

Ronnie's California stem cell story

"Something Better Than Hope" -- That's the new anthem of California's $3 billion stem cell research program, which is scheduled this year to run out money for new awards.

The 14-year-old stem cell agency trumpeted its new slogan this morning when it released its annual report for 2018. It's a "powerful story," the agency declared on its blog. 

The 28-page document chronicled the state of affairs at the California Institute of Regenerative Medicine (CIRM), as the agency is formally known. The report is titled "Something Better Than Hope. Right Now." CIRM said, 

"While once there was only hope, now we know that cures are imminent."

Kevin McCormack, senior director of communications, celebrated the agency's annual review on its blog, The Stem Cellar. He wrote,

• "50 clinical trials funded to date, 7 this year alone
• "$2.6 billion in CIRM grants has been leveraged to bring in an additional

• "$3.2 billion in matching funds and investments from other sources.

• "1,180 patients have been involved in CIRM clinical trials"

The report itself said,

"CIRM has funded 1,000 projects at more than 70 institutions in California and is the largest single funder in the world of clinical research for stem cell and regenerative medicine. More than 2,700 medical discoveries have been peer reviewed and published in scientific journals. But, most importantly, lives have been saved, second chances have become possible and cures have risen beyond hope."

Stories of the lives of patients in clinical trials were not neglected, including Ronnie, the toddler in the video at the top of this item.

Maria Millan, the CIRM CEO who was a pediatric surgeon earlier in her career, wrote,

"CIRM’s mission is to accelerate stem cell treatments to patients with unmet medical needs.  

"Think about patients like baby Elianna on page 2. She was treated with stem cells for a life-threatening blood disorder while still in her mother’s womb. Ronnie (page 15), who was born with what was previously considered a fatal immune disorder, is alive and thriving today. These stories inspire and motivate us to continue to build upon the great strides CIRM has already made "

The annual report is expected to serve as an important tool as the agency attempts to raise privately more than $200 million to back its efforts until the fall of 2020. That is when CIRM is hoping that California voters will approve $5 billion more for the agency so it can continue its work. 

Annual reports from businesses and government agencies are predictably tilted towards the most positive view of their performance. CIRM's report is no exception. Nonetheless, the agency has run up a record of accomplishment that is significant and important. However, it has not yet fulfilled the expectations of voters in 2004 who were led to believe that nearly miraculous stem cell cures were right around the corner.

Don Reed is a patient advocate who has not lost faith in the promise of stem cells. The California stem cell agency is also indebted to him for his ability to turn the phrase that adorned the cover of the annual report. He was quoted in the report as saying:

"Today, thanks to the 7.2 million voters who authorized the California Institute for Regenerative Medicine, or CIRM, we have something better than hope; we have results, accomplishments, people made well— and a systematic way to fight chronic disease."

Potential Death of California Stem Cell Program Hangs Over Its Performance Evaluation

The looming demise of California's $3 billion stem cell research effort dominated today's meeting of its governing board, which was told both that the agency has made "incredible progress" but needed to do better.

The occasion was the presentation of a $230,000 performance audit required by state law, a task performed by the firm of Moss Adams, one of the largest accounting and consulting firms in the world.

The firm's 38-page report targeted fund-raising, retention of staff and better utilization of board members in its recommendations for improvement and called for a more concrete plan for raising more than $200 million. Excerpts from the report can be found here and an earlier story on the audit findings here.

In its oral presentation, Moss Adams representatives had a number of good things to say about the stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM). They cited the agency's "incredible progress" and said "we usually see a lot of good things here."

It was the third go-around for Moss Adams, which has performed all three of the CIRM performance audits. (See this for links to the previous audits.) Today's presentation, however, focused more on the issues surrounding the agency's end within a few years, unless ambitious fundraising plans are successful.

The agency expects to run out of cash for new awards next year unless it is successful at raising $200 million from private contributors. That would take care of the agency's needs until a possible $5 billion bond measure might be approved by California voters in 2020.

One board member, Jeff Sheehy, also a member of the San Francisco board of supervisors, raised a number of critical questions, seeking more details about the fund-raising effort. He said there seemed to be a "lot of uncertainty" about it.

Jonathan Thomas, chairman of the agency, said a fund-raising plan is in place. He is leading the effort and being assisted by two other employees. He said some board members have been engaged and he plans to consult with all 29 board members.

David Higgins, a board member from San Diego, asked Thomas about a "double-edged sword" that could come into play because of a successful fund-raising effort. Higgins said the public might be more likely to oppose to a new bond measure if the $200 million is raised, reasoning that public funding was not needed in light of private support. Thomas said he did not think that was a major problem.

Performance Audit of California Stem Cell Agency: Improvements Needed in $200 Million Fund-Raising Program, Staff Retention and Use of Board Members

A performance audit of California's $3 billion stem cell agency says that more needs to be done to retain the agency's staff as well as exploiting the talents of  board members as the research effort nears what could be its demise.

"There is a significant potential for staff attrition as CIRM plans for a potential wind-down," the $230,000 study by Moss Adams declared. CIRM is the abbreviation for the agency's official name,nthe California Institute for Regenerative Medicine.

The 38-page report also said that expertise of  the 29 board members "could be more effectively leveraged, especially since strong board engagement will be particularly important during organizational transition."

CIRM has estimated it will run out of cash for new awards in 2019 unless ambitious fund-raising plans are successful.  Its ultimate hope is that California voters will approve another multi-billion dollar bond measure in November 2020. To bridge the financial gap between 2019 and the end of 2020, the agency is seeking to raise more than $200 million.

Loss of employees has long been a concern of the agency as it confronts the expiration of the bond funding provided by the ballot initiative that created the program in 2004.

The performance audit said the agency should be "building on efforts to date, continue to regularly communicate transition plans to staff and consider strategies to retain employees, including implementing staff development programs, recognition and reward opportunities, work-life balance initiatives, and cross-functional initiatives."

Beyond its recommendations, the audit had praise for the agency. One example involved its "culture." The report said,

"CIRM has a collaborative, engaged, and performance-oriented culture. Managers, board members, and staff report improved morale and a more collaborative culture since CIRM 2.0 implementation. CIRM appointed a new president in 2014 and again in 2016. Turnover is often elevated during times of leadership transitions, as noted in 2014 and 2015. However, CIRM’s turnover rate dropped to 10 percent in 2016, suggesting stability in the organization’s leadership and culture."

Moss Adams, however, also said more can be done. It said the agency should "develop succession plans for the chair and vice chair, document knowledge of individuals serving in leadership roles, and continue to identify potential highly qualified prospective (board) members."

The audit recommended improvements in the agency's fund-raising efforts. It said the agency has not "formalized its ($200 million) fund development plan." The audit recommended creation of "a formal development plan that identifies roles and responsibilities and the timing of fundraising activities to meet CIRM’s programmatic and administrative funding needs."

Moss Adams additionally recommended improvements in measuring the performance of the agency's public relations program. It said,

"CIRM does not have metrics associated with the effectiveness of the agency’s communication and public education strategy. Recommendation: Develop communications and public education metrics that are integrated into CIRM’s quarterly reporting."

The study, which is required by state law, is the third conducted by Moss Adams. It will be discussed at Tuesday's meeting of the agency's board. The agenda for that meeting said the agency will have a response to the audit findings, but that document is not yet available on the CIRM web site.

The audit, which is required by state law, is the agency's third. Links and excerpts from items involving the previous two can be found here. 

Interested parties can participate in the meeting at 16 different locations throughout California. The  locations can be found on the agenda, but more specifics may be necessary for those who want to attend. They can be had by sending an email to info@cirm.ca.gov.

Stem Cell Blowback on the Ice Bucket Challenge

Virulent opposition to research involving human embryonic stem cells is surfacing anew in the wake of the vast attention attracted by the Ice Bucket Challenge.

Sarah Pulliam Bailey wrote on Religion News Service that the objections have “gone viral” on the Internet because the beneficiary of the watery fundraising, the ALS Association, finances research involving human embryonic stem cell (hESC) lines.

For those of you who are not tuned into the icy effort, it involves celebrities and others pouring frigid water over themselves and challenging others to do likewise and donate to the ALS Association.  About $16 million has been raised so far and is still growing. Photos, news stories and blogs all chronicle the challenge on the Web.  A search this morning on the term “ice bucket challenge” turned up 57.2 million hits.

Our readers might ask how this involves the $3 billion California stem cell agency. The answer is that hESC research is the primary reason for the existence of the agency. It was created in 2004 by California voters after former President Bush restricted federal funding for research involving hESC.  Ironically Bush has participated in the challenge(see video above).

Bush’s restrictions, since lifted by President Obama, generated major controversy in the scientific community and raised fears that efforts to develop what seemed to be nearly magical therapies would wither and die. Without that concern, voters would have been unlikely to approve the measure, Proposition 71, and campaign contributors would have been unwilling to open their checkbooks.

The stem cell agency, however, has turned away from hESC research. Less than 250 of its 622 awards have gone to that field, according to the agency. Instead the agency is backing adult stem cell research, once an anathema to the organization, along with experiments involving reprogrammed adult stem cells. Leaders in the stem cell field, however, say human embryonic stem cells remain the scientific gold standard. (No figures were immediately available on the dollar value of the hESC awards.)

Continued funding of hESC research is linked to the agency’s search for alternative sources of cash as its current financing winds down. Efforts to develop a fresh stream from public sources will run up against the controversy involving hESC experiments, one of the reasons for the lack of interest by Big Pharma. The hESC opposition could also have an impact on development of private sources of funding who may not want to become embroiled in the flap, which can lead to picketing and public protests involving entities that support hESC research.

Kevin McCormack, senior director for the stem cell agency’s public communications, wrote about the ice bucket fad last week on the agency’s blog. He said it “shows how a little bit of creativity can create so much more interest in a disease, and the people suffering from it, than any amount of well-meaning, more traditional attempts at education.” And he poured a bucket of water over his head.

Nonetheless, the opponents hold their views with great passion and zeal and have little respect for hESC science. Here is what one person said today in a comment posted on the Religion News Service article. The individual was identified only as “jamadan.”

“My father died of ALS 6 years ago. My father was and my family is ‘pro-life’, meaning we believe abortion to be murder and embryonic research akin to Nazi medical testing on dead camp victims. Nothing can make us ‘accept’ abortion or anything that benefits from it. Not even our own lives. I think you’ll find that true for all Christians, who by definition, must be pro-life.” 

For other commentary involving objections to the Ice Bucket Challenge, see here, here and here.

(A footnote: This item marks the first video appearance of former President Bush and Kevin McCormack on this blog.)

The Klein Donation: Trounson's Memo Instructing Six Staffers to Meet with Klein and Canadian Gold Mining Executive

Here is a copy of the memo that CIRM President Alan Trounson sent to six stem cell agency science officers after Robert Klein gave the agency $21,630.  The SO abbreviation refers to science officers.
CFP refers to collaborative funding partner, which are international partners with CIRM. Here is a link to a story on the matter.

Implications of a New Multibillion Dollar Bond Campaign for CIRM

The chairman of the California stem cell agency, Robert Klein, this week raised the possible size of a new bond issue to finance stem cell research to as high as $5 billion.

Klein made the comment in a piece by Ron Leuty in the San Francisco Business Times. Leuty reported that Klein, who directed the 2004 electoral campaign that created CIRM, said the new ballot measure could could come by 2016 and raise $3 billion to $5 billion.

Previously, the publicly reported figure topped out at $4 billion. Katie Worth of the San Francisco Examiner reported that number in August, which appears to the first disclosure in the media of the size of the bond issue. (She is also one of the few reporters that has attended a recent CIRM board meeting and written a story about it.)

Media reports of a new bond issue have significant implications -- political and financial -- for CIRM and how it is perceived by the public. To win voter approval of a bond issue will require a political campaign. The Prop. 71 in 2004 cost about $30 million. Another campaign is not likely to require as much, but the cost will run into millions. Funds will needed to be raised from many sources, some of whom will be making flinty-eyed judgments on the financial value of CIRM's activities on their particular enterprises. Some are likely to expect something in return for their campaign contributions.

The proposed bond issue also places CIRM squarely in a political context. Nearly all of its actions will be judged in the not-so-pleasant light of an electoral campaign. Klein acknowledges the need for politically acceptable results from CIRM. Not coincidentally they can also mean advancing the science and therapies.

Here is part of what Leuty wrote concerning Klein's discussion of another electoral campaign for a multibillion dollar bond issue.

"That may seem like a tough sell in a state smacked upside the head by a recession, but Klein is the ultimate salesman/evangelizer/patient advocate. He pulled together a powerful group of people cutting across political party lines and backgrounds to get Prop. 71 passed when most people had no scientific concept of stem cells."

Leuty continued,

"'Strategically, what we’re focused on is trying to make sure there is enough therapies advanced to Phase I or Phase II efficacy trials (where) voters of California can judge the performance and decide if they should approve another $3 billion to $5 billion,' Klein, the outgoing chairman of the San Francisco-based agency, told me in a phone conversation Tuesday. 'The voters are going to have to see real evidence.'"

Klein said CIRM will not run out of funding until late 2016 or early 2017, although different scenarios exist, depending on quickly CIRM hands out money. Leuty wrote,

"By then, many clinical trials will be well under way. Even if the National Institutes of Health starts funding basic embryonic stem cell research, Klein said, CIRM would be a natural partner for funding the translation of that work into bedside therapies.

"'In five or six years, we will have a very strong showing and evidence that when given stable funding we will have novel ways to reduce suffering,' Klein said."