Covid Clinical Trial Location Still Missing on $750,000 California Stem Cell Grant

The California stem cell agency stipulates that winners of research awards in its fast-track, Covid-19 round must be ready to start work within a month of approval, but a New Jersey firm that snagged $750,000 three weeks ago has yet to report the location of its California work.

The  firm is Celularity, Inc. Its proposed therapy is backed by Rudi Giuliani, the president's personal lawyer, who has also touted other possible Covid therapies, including one that has been rejected by the Food and Drug Administration.

The $750,000 is intended to finance a clinical trial someplace in California. The stem cell agency funds only California work.

In creating the Covid round, CIRM said award winners must be "ready to start work within 30 days of approval and propose achieving a clear deliverable within six months." It has been 21 days since the Celularity award was approved. 

The California Stem Cell Report has asked the firm repeatedly for the location of the California site but it has not responded with this routine information. The agency itself also has not disclosed the location and defers to the company.  

Celularity updated the information today that it files with the National Institutes of Health on the trial. However, the locations of the trial still did not show any in California. 

Trounson Going Halftime in January and February

BURLINGAME, Ca. -- The president of the $3 billion California stem cell agency, Alan Trounson, will be working half-time while living in Australia during January and February of next year.

Trounson told the governing board of the agency of his plans at the beginning of its meeting here morning. He said he needs to spend more time with his family, which lives in Melbourne.

Trounson has an 11-year-old son with whom Trounson said he hasn't spend much time in the last 18 months.  Trounson said he intends to teach his son to surf. Trounson's daughter also will be getting married in February.

Meanwhile, directors are currently discussing approval of grants in its $20 million-plus strategic partnership round.

CIRM Directors Pleased with Performance Audit Findings

The $3 billion California stem cell agency received a "very favorable" performance audit report compared to other government agencies, CIRM directors were told today.

Representatives of Moss Adams, which was paid $234,944 by CIRM for the study, made the comments during a presentation today to the agency's 29 directors. During their comments, CIRM executives and directors focused on the favorable aspects of the findings of the six-month study.

CIRM Chairman J.T. Thomas said the report showed that CIRM is "doing better than being on the right track." Co-vice chairman Art Torres said,

 "Comparatively we have done very well."

The report praised the professionalism of the CIRM staff – "a high caliber group" – and noted the seven-year-old agency is both "ramping up and ramping down" at the same time – a reference to the end of state bond funding for CIRM in 2017.

Prior to the presentation, CIRM President Alan Trounson said the staff would review the findings and come up with a plan for the board at its July meeting. The agency is already implementing some of the recommendations.

The audit was required by a recent state law that also allowed CIRM to hire more than 50 persons, a cap imposed by Proposition 71, which created the agency. The audit found a need for improvement in 27 areas and made recommendations. Of the 20 recommendations with the highest priority, half involved how CIRM manages its information, much of which is needed for good decision-making. The audit did not assess the scientific performance of the agency.

The Moss Adams report, performed by the Seattle firm's San Francisco office, said,

"CIRM board members and senior management do not receive regularly updated, enterprise-level performance information. The ability to evaluate performance against strategic goals is critical to effective leadership and program monitoring, evaluation, and reporting. CIRM does not currently have a formal performance reporting program."

In addition to decision-making information, Moss Adams called for improvements in the agency's long-troubled grants management system, better grant outcome tracking, development of a results-based communications plan, creation of a comprehensive, formal business development plan, formulation of a comprehensive information technology plan that would include steps to establish clear responsibility for CIRM's website and improved monitoring of invention disclosure forms from grantee institutions.

Last week, in a long overdue move, the agency hired a director for information technology, who is expected to solve many of the problems cited in the audit.

State law requires another performance audit in a few years. 

Leadership and Small Things

Author and Harvard business professor Rosabeth Moss Kanter weighed in this week on “big traps in small lapses.”

The case in point was the recent resignation of HP CEO Mark Hurd, a man who made more than $66,000 a day, because he fudged a $20,000 expense report.

Kanter asked,

“How can very smart, accomplished people do such stupid things?”

Kanter, whose 18 books have won her recognition as one of the 50 most influential business thinkers in the world, noted that Hurd has a fair amount of company.

“Hurd is not the first, and probably won't be the last, top leader to fall from grace over seemingly trivial and avoidable lapses of judgment.”

Citing several cases ranging from the US military to politics, she said the underlying causes include embarrassment (fear of disclosure), lack of attention and arrogrance.

Her bottom line:

“As is often said, the devil is in the details — and so is the angel. Signs of character are most visible when they are least visible — that is, demonstrated by what people do when they think no one is watching, such as following the rules or taking the moral high ground with no audience observing them. That's why the signals of a leader's judgment lies in the small things.”

Her comments apply to leadership in any organization.

New CIRM Figures Show 25 Percent Budget Increase

SAN DIEGO – The California stem cell agency is proposing a nearly $13 million budget for the next fiscal year, a 25 percent increase over its estimated spending this year.

The largest component of the budget goes for salaries and benefits, which are projected at $7.4 million for 47 employees. That is $1.9 million more than this year's estimated figure of $5.5 million. Personnel costs next year amount to an average of roughly $150,000 in salaries and benefits for each CIRM employee.

The figures are drawn from budget documents posted yesterday on the CIRM Web site. They contain far more details than the spending plan offered last week. CIRM directors were not entirely pleased and asked for more information before taking up the budget today or tomorrow at their meeting here.

Still missing from the budget information are CIRM staff calculations for the percentage increases and decreases in spending for the next fiscal year compared to estimated spending for the current fiscal year. Any such comparisons in this article are the responsibility of the California Stem Cell Report.

Other than salaries and benefits, the next largest budget category is outside contracts. CIRM did not compile total figures, instead placing them in at least three different categories. Out calculations show that they appear to be close to $3.1 million. It is difficult to make a comparison to the previous year because of changes in the way CIRM calculates the figures.

Travel for the upcoming year, which begins in three weeks, is budgeted at $497,000, which is $209,000 or 73 percent more than this year's estimated $288,000.

The CIRM staff presented a 3-page justification for the travel, which includes oversea trips and lobbying expeditions to Washington, D.C. CIRM said travel by Chairman Robert Klein and others in his office (six employees) to the nation's Capitol is necessary for lobbying purposes. They include building support for federal tax exemptions for the California bonds that finance research grants, which could save $400 million, and lobbying for federal loan guarantees for CIRM's $500 million lending program for the biotech industry. The office of the chairman is allotted $148,000 for travel.

As for international forays by CIRM President Alan Trounson, his office (five employees) is provided $83,00 for travel. The budget material said he is central to CIRM's international agreements and must travel to Washington as well.

The science office (25 employees) accounts for $204,000 in travel, which CIRM said is needed to maintain leadership in stem cell science and to stay abreast of the field.

CIRM signaled it is dumping its troubled Grantium grants management program. It identified grants management as a “risk” and “critical” for CIRM It said that Grantium has not met all of CIRM's needs.

CIRM said the budget contains funds to create a new grant management program, but did not specify the amount. The budget does not appear to contain a straight-forward accounting of all the past costs associated with the Grantium program or the projected cost of the new system. It appears to be something in the neighborhood of $610,000. The amount may be on top of the more than $800,000 allotted in the past for the troubled Grantium program. That figure, however, probably is low.

Possibly linked to the grant management issues are future research grants, although CIRM did not specifically tie them to the problems.

CIRM said,

“Many of the more clinical (grant) programs will have complicated milestones and 'go-no-go' decision points, detailed risk and efficacy data and decisions regarding maturity and development with multiple partners. Such evaluation will require new capacity in the science office and the office of the general counsel.”

Links to all the budget documents can be found on the board's agenda this week.

CIRM Directors To Define Vice Chair Job and Executive Evaluation Process

Directors of the $3 billion California stem cell agency expect to add some finishing details next week to employment arrangements with its chairman, Robert Klein, along with those of the vice chairman and the president.

On Monday, the directors' Governance Subcommittee, chaired by former Hollywood studio executive Sherry Lansing, will consider how they intend to evaluate the performance of Klein, CIRM President Alan Trounson and whomever fills the now-vacant vice chairmanship of the board of directors.

Last week, the board decided the position of chairman is a halftime job and agreed to pay Klein $150,000 a year. Klein, a multimillionaire real estate investment banker, said current economic conditions had compelled him to seek a salary. Klein had worked for free during the last four years.

At its meeting at UC Irvine last week, the CIRM board deftly sidestepped potentially negative fallout from from the pay matter. The issue had become somewhat charged after Gov. Arnold Schwarzenegger expressed "deep concern" concerning the salary reports.

Under CIRM's salary ranges, if Klein were to serve fulltime, he would be entitled to as much as half-a-million dollars-a-year, which could raise PR and policy issues at a time when California is facing an economic crisis.

In an interview Tuesday, Lansing said Klein is entitled to fringe benefits provided to all state employees but that he will not receive performance awards or merit pay under the compensation plan for CIRM employees.

Actions next week on the vice chairman's position could also help to determine who is likely to fill that slot. Next year, CIRM directors will choose a vice chairman between two candidates: Art Torres(left photo), currently head of the state Democratic Party, and Duane Roth(right photo), who currently serves on the CIRM board and is head of Connect, a San Diego businesses development organization with close ties to the life science industry.

Lansing said that the subcommittee will discuss duties of the vice chairman and what his responsibilities are likely to involve. One question that may come up is whether the board should approve a salary for the job. CIRM salary ranges provide for $180,000 to $332,000 for the position.

Roth says he will not seek compensation as vice chairman. Torres says he will need a salary.

Teleconference locations for the meeting where the public can sit in and comment are available throughout the state: San Francisco, Los Angeles, Stanford, Sacramento, La Jolla and Irvine. The specific addresses can be found on the agenda. They may change or increase before the Monday meeting so it is good to check in advance.

Advocate Reed Says No Need for Independent Look at CIRM

On Sept. 5, 2008, we carried an item dealing with a proposal for an examination of the California Institute for Regenerative Medicine by a bipartisan state department charged with improving government operations.

We said that corporations pay hundreds of thousands of dollars or more for independent assessments of their operations and that CIRM should welcome the opportunity to have a similar study performed for free. The springboard for our comments was an item written by patient advocate Don Reed on his blog, stemcellbattles.com. Reed has responded to our item. Here is what he sent us.

"Several days ago David Jensen printed a thoughtful article inquiring why I was encouraging people to write to Governor Arnold Schwarzenegger ( State Capitol Building, Sacramento, CA 95814), urging him to veto Senate Bill 1565.
 
"The reason is simple. If people like our stem cell program as it is (I do), they should defend it. The Governor will be deciding in the next few days whether to accept SB 1565, or veto it.  This is the only chance we have of preventing SB 1565 from becoming law.
 
"SB 1565 could completely restructure California’s stem cell research program, as well as removing our state’s official preference for embryonic stem cell research.
 
"The article criticized advocates like myself who are allegedly “blind to blemishes… (and who) regard any evaluation or analysis of the effort as destructive.”
 
"I don't see it that way. As someone who attends and participates in most of the meetings of the stem cell program, I see a constant and vigorous process of adjustment and correction.  The CIRM has had (by my count) four in-depth official audits; the California Court system has examined our (California’s) structure.  Evaluation and analysis is ongoing, and the public is involved in every step of the way. That’s good; it’s democratic; it’s necessary.
 
"What I do object to is throwing out something magnificent after the decision has been made.  California fought for our stem cell program, debated over it, and voted.
 
"Why did we have to use the initiative process?
 
"Practicality!
 
"I fought for three years trying to pass the Roman Reed Spinal Cord Injury Research Act—and California ended up with only $1.5 million a year for that program. It is a good program, spending $12 million, but bringing in more than $50 million dollars in matching grants, new money for the economy—but it is so little, compared to the need.
 
"As a grass roots organizer I helped with Senator Deborah Ortiz’s groundbreaking legislation. She did a terrific job, gaining permission for the (then) controversial new medical procedure. To me, she will always be the Mother of California stem cell research. But those bills came with no money. It took a real fight to get a lousy hundred thousand bucks to run a committee, and no research money whatsoever.
 
"I remember a group of advocates meeting with Senator Barbara Boxer, a true friend of research, and she told us: “What you need is billions of dollars, and we can’t get that for you in Sacramento.” 
 
"So Sacramento couldn’t raise the money to fund the research. Washington dropped the ball for political reasons.
 
"But California came through.
 
"Embryonic stem cell research offers hope for cure not only for my paralyzed son, but also for Sarah Palin’s boy who has Down’s Syndrome, and for millions more who suffer with incurable illness or injury.  
 
"SB 1565 would remove California’s official preference for embryonic stem cell research, which was the reason we passed the program in the first place. Unfortunately the new Republican platform calls a complete ban on embryonic stem cell research, both public and private, criminalizing it completely. SB 1565 is co-authored by Senator George Runner, a long-time opponent of embryonic stem cell research, and if that bill passes, it could provide ammunition to the opponents of the research.
 
"And the program itself? The California structure--with decisions made by patient advocates and experts-- was designed specifically to keep the focus on the quest for cure. No one wanted it to become a self-serving bureaucracy, rambling around in search of reasons to justify its existence, making endless speeches and not actually doing a lot.
 
"We wanted intelligent action, and we got it.
 
"So of course we are going to defend it. Can someone point me to a better program, anywhere in the world?
 
"If so, let me know. In the meantime, I think we should protect what we won.
 
"Anybody that cares about stem cell research should write Governor Schwarzenegger today. (tip: on the outside of the envelope, put VETO S.B. 1565, that helps them."

The Search for a New Zach Hall

Preliminary work has already begun to find a replacement for Zach Hall as president of the California stem cell agency, one of the key decisions that must be made this year by CIRM's directors.

The presidential search subcommittee is expected to hold its first meeting on the matter Jan. 31 at CIRM headquarters in San Francisco. The full Oversight Committee is likely to address the issue at its two days of meeting in February.

Hall, 69, plans to leave his post in June, if not earlier.

The Sacramento Bee editorialized today on Hall's tenure and the task facing the Oversight Committee, which seemed to have some difficulty finding a president in 2005, when CIRM was less settled.

The Bee wrote:

"The institute's next president will face many of the challenges Hall confronted: implementing strong ethical standards for stem cell research; overcoming funding restrictions imposed by lawsuits filed against the agency; and hiring the best staff. More art than science will be the challenge of responding to an oversized, 29-member oversight board that is rife with internal conflicts and strong personalities, including the board's often-imperious chairman, Robert Klein II.

We've had some occasional differences with Hall, but he clearly deserves credit for many of the agency's recent successes. He's hired some excellent assistants, implemented a thoughtful strategic plan and tried to move the institute from a highly politicized agency to one that focuses on science and seeks to command respectability. At times, Hall could have done more to solicit opinions and respond to the agency's critics, but given his background -- he came from the insular National Institute of Health -- he's gone further than many would have expected."

The editorial continued:

"The talent search should be easier now that the institute has received a $150 million loan from the state and won its first round of court challenges. Even so, fissures will be likely. Some board members will want to hire a star scientist; others will want a seasoned administrator.

"Whatever the outcome of the debate, the board must make certain qualifications priorities. The next president must be a leader of integrity, with experience in running a public agency and a commitment to transparency. At his best, Hall provided this leadership. He gives the board something to build on."

Wanted: CEO For Promising $3 Billion Giveaway Program

One year ago this month the situation at the California stem cell agency was likened to the war in Iraq by a Nobel Prize winning scientist from Stanford.

Today the situation is much improved. So what better time for CIRM's president, Zach Hall, to announce that he is leaving.

Which is what he did last week. The move prompted comments that clashes with CIRM Chairman Robert Klein may have been involved, but Hall is 69 and has made it clear from the start that he did not want to hold the post over a long period of time.

Hall and Klein have butted heads. Klein told reporter Terri Somers of the San Diego Union-Tribune, "We mentally challenged each other to excel." But Hall also said said his plan to leave within six months is almost entirely personal. His wife retired earlier this year. They have a place in Wyoming. They love the outdoors. He doesn't need the money. And who needs the aggravation and long hours that came with the president's job.

Hall's work has set the stage for approval of the first round of research grants. And he oversaw preparation of the agency's now approved plan for giving away $3 billion for embryonic stem cell research. It is a far cry from last December when New York Times reporter Andrew Pollack quoted Paul Berg, the Stanford Nobel laureate, as likening the situation at CIRM to the Iraq war.

"We won the war and didn't know what to do afterward," Berg said.

Last week Hall summed up life at CIRM for the agency's directors:

“The institute has money in the bank now. There is infrastructure in place. And some of our initial organizational problems seem to be working out positively, so I think this is a good time for you to look for a new president.”

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights and a longtime observer of CIRM affairs, had this comment:

"Seems to me that by the time Zach leaves the following will be accomplished:

"Major training, research and joint research facilities grants will have been awarded.

"Major polices on IP, medical and ethical standards, and grant administration will be in place.

"A realistic scientific strategic plan will be in place that emphasizes science rather than hype.

"The role of the president and chief executive of CIRM will have been defined by Zach's commitment and high standards in a way that minimizes the possibility of excessive meddling by the ICOC chairman in the day-to-day operation of the institute.

"In sum, he'll have done a heck of lot to get the fledgling state agency off the ground and functioning in a productive way. Not at all a bad time to pass the torch to a younger leader."

Jesse Reynolds of the Center for Genetics and Society, another regular observer of the agency, said,

"I was surprised when he took the longer-term job in the first place, so I am not really surprised now. His can't be an easy job."

CIRM seemed to have difficulty in finding a president back in 2005 which is one reason that Hall agreed to serve longer as president. Now the agency has the task of starting a new search, although it presumably could go back to the list it had worked on then. The job is likely to seem less risky, but the agency has structural problems involving the president's job that cannot be changed short of another vote of the people. Those involve overlapping responsibilities with the chairman.

Klein, however, indicated to reporter Somers that he may be leaving in 2008, setting the stage for a different sort of relationship between a new president and new chairman. Somers wrote that Klein, who works without a salary, said "he planned to stay probably another year so he could contribute his real estate and facilities expertise when the institute is expected to award large grants for the construction of new research facilities."

The Oversight Committee took no action last week on setting up a search for a new president since the matter was not placed on the agenda in advance as required by state law. The next meeting of the group is not scheduled until February, but presumably the old presidential search subcommittee could reconvene quickly. It also seems reasonable to assume that some work is already underway to prepare for a new search, either on Klein's part or other folks at the agency.

Hall's departure overshadowed the announcement of the resignation of Mary Maxon, deputy vice chair of the agency. She has been instrumental in putting together CIRM's proposals on the critical intellectual property policies. Maxon has been with CIRM since the beginning. She noted arduous nature of work at CIRM. "It's been like three jobs in one," she told Somers.

Hall's announcement does raise the level of uncertainty at the tiny agency (roughly 20 staffers) at a time when stability seemed to be increasing. It is likely to make it more difficult to recruit other top level people, such as the chief legal officer and senior facilities officer, which are among four positions that agency hopes to fill soon.

Hall brought a steady hand, good humor, common sense and good science to a young and struggling organization in its formative years. All qualities whose absence can be sorely missed.

(Here are links to other stories on Hall: Rebecca Vesely, Oakland Tribune; Mary Engel, Los Angeles Times; Carl Hall, San Francisco Chronicle, and The Associated Press.

(Editor's Note: An earlier version of this item incorrectly attributed the "we mentally challenged each other" quote to Zach Hall. It came from Bob Klein.)