The Higher the Risk, the Higher the Reward?

Think of the state of California as a venture capitalist putting up seed money for risky endeavors. In the private sector, venture capitalists enjoy enormous rates of return. But they also lose lots on enterprises that fail.

Acting through the California stem cell agency, the state is serving as something of a venture capitalist, providing funds for research that private sector is unwilling to pay for because of risk. In the private sector, the higher the risk is, the higher the potential reward. The cost to state will be $6 billion. What should be the payoff to the state?

That is the question at the heart of the intellectual property discussions involving CIRM and a proposed constitutional change that could be on the ballot next June.

California's most influential state legislator on stem cell issues is the lead author on the measure, SCA13. Sen. Deborah Ortiz, D-Sacramento, proposed the legislation earlier this year. It already has cleared three committees in the Senate with bipartisan support and with no negative votes. It is now on the Senate floor.

The proposal includes language to tighten accountability and openness of the stem cell agency. But for our purposes today we are going to deal only with the issues of return on California's investment.

In its current form, SCA13 requires CIRM "to ensure that treatments, therapies, products, and services resulting from technologies and inventions derived from grants awarded are accessible and affordable to low-income residents, including those residents eligible for state and county-funded health care programs," according to a Senate staff analysis.

Ortiz removed more sweeping language after discussions with Robert Klein, chairman of the stem cell agency, which remains opposed to the ballot measure, largely on the grounds that its requirements would be so costly that it would discourage or prevent development of stem cell therapies. (We will have more on CIRM's position later this week.)

She has scheduled hearings for Oct. 31 in San Francisco on intellectual property and stem cell research. CIRM has its own hearing one week from today in Sacramento. Changes in the measure could easily come out of developments at the hearings.

Ortiz, who was a supporter of Prop. 71, has signalled her intent to aggressively pursue avenues that will lead to greater returns to the state than CIRM supports.

After the California Council on Science and Technology told California this summer to lower its expectations about big returns on stem cell research, she said, "As the council notes, there is an expectation that intellectual property policies need to direct a revenue stream to the state. The council also acknowledges that federal tax laws prevent Prop. 71, as written, from delivering on its promise to provide royalties or revenue streams back to the state while using tax-exempt bonds.

“Senate Constitutional Amendment 13, however, would establish a method for providing benefits to the state without jeopardizing the use of tax-exempt bonds. SCA 13 would require that the state’s public health programs have access at affordable, below-market costs to the products, medicines and therapies that eventually will be developed under Prop. 71. California should not have to pay twice for medical therapies that can assist our citizens who suffer from debilitating and life-threatening chronic conditions."

Following the earlier meeting between Klein and Ortiz, she said they both agree that the state should have some sort of return on its investment. She suggested that CIRM should examine "the model used by the International AIDS Vaccine Initiative, which requires entities receiving funding to commit to make vaccines available at reasonable prices and in sufficient supplies."

Klein suggested directing a "portion of the royalty payments negotiated by the ICOC into programs or initiatives to promote access to low cost therapies."

Also opposed to SCA13, according to the Senate analysis, are the Bay Area Science and Innovation Consortium, Bay Area Economic Forum and the Bay Area Council.

Supporting the measure are the California Association for Tax Reform, California Public Interest Research Group, Californians Aware and Common Cause.

Ortiz shelved SCA13 earlier this year when the Senate's Democratic leadership indicated it wanted to focus on the measures currently on the November ballot in California.

Once the election is past, the proposal is expected to clear the Senate and move on the Assembly, where it could be substantially modified by Ortiz.

CIRM staged a late, but major effort last spring to stall the proposal on its merits. But largely not discussed publicly was the potenial impact of another stem cell measure on the ballot in California less than two years after approval of Prop. 71.

SCA13 would likely become a referendum on the conduct of the stem cell agency, attract major attention from the conservative and religious right and become a major distraction from CIRM's primary efforts.

Correction

We incorrectly identified an organization in our Monday item, "Who Gets the Money?" It should have been the Center for Genetics and Society instead of the Center on Policy and Genetics.

Correction

Earlier today, we incorrectly reported that SCA13 had passed the California State Senate and was now in the Assembly. The measure, however, is still awaiting passage in the Senate. The error occurred in an item called "Who Gets the Money?"

CIRM Lawsuit Filings Available

If you are interested in receiving copies of the actual filings last week by the California attorney general and amicus brief in the lawsuit against CIRM, please send a note to djensen@californiastemcellreport.com. We will send them to you promptly.

Who Gets the Money?

Probably the biggest question of the year for the California stem cell agency is: Where's the money?

The second biggest is: Who gets the money?

That is what is at the heart of the intellectual property issue and CIRM. Two major hearings are scheduled for this month on the topic. One is being held by the stem cell agency on Oct. 25 in Sacramento. The other will be conducted by the Health committees of the State Senate and Assembly in San Francisco on Oct. 31.

During the election campaign one year ago, California voters were told to expect billions of dollars in benefits from passage of Proposition 71. A few months ago, a report from the California Council on Science and Technology said, "Get real." Don't expect huge bags of swag anytime soon, the council reported.

But State Sen. Deborah Ortiz, chair of Senate Health Committee, has authored a proposed constitutional amendment that would provide for greater benefits to the state than now proposed by stem cell agency leaders. The measure, SCA13, has already passed the Senate and is before the Assembly. It could be placed on the ballot in June of next year.

Look for folks from the Center on Policy and Genetics, Greenlining and the Foundation for Taxpayer & Consumer Rights to testify at one or both of the hearings. All three have indicated that they differ sharply with CIRM on IP issues.

Later this week we will have more to say on SCA13 and CIRM's position on intellectual property.

At this point, neither of the two hearings has remote access, either on the Web or otherwise. You can find the physical locations of both sessions in the California Stem Cell Calendar below.

Stem Cell Showdown in Apricot City

The stem cell stage is now set for a bit of courtroom drama Nov. 17 at 8:30 a.m. in a community east of San Francisco that was once known as "The Apricot City."

Directing the affair in Department 512 in Hayward will be Superior Court Judge Bonnie Lewman Sabraw, who was Alameda County trial judge of the year in 2001 and who was named to the bench by former Gov. Pete Wilson.

At stake is the existence of the California Institute for Regenerative Medicine. The Life Legal Foundation, which was deeply involved in the Terry Schiavo case, and a couple of conservative groups called People's Advocate and the National Tax Limitation Foundation, want to euthanize the stem cell agency.

Their contention is that CIRM violates the California constitution despite the fact that it was created by a constitutional amendment approved by voters in a process permitted by the constitution. Their suit says that the agency is not under "the exclusive control" of the state government.

California Attorney General Bill Lockyer argued in a brief earlier this week, "The voters' will as expressed through the initiative process is entitled to great deference. Yet the mere pendency of these challenges, even though they are without merit, has effectively prevented the state from marketing the bonds(to fund stem cell research).''

Entering the stage this week was an array of groups that filed an argument supporting the state's position. Prepared by the Los Angeles law firm of Munger, Tolles & Olson, it said, "Given the highly politicized nature of the subject, embryonic stem cell research remains especially vulnerable to shifts in political winds and the political fortunes of particular officials and candidates."

The brief continued, "No one wants to start down a new path of research that shows great promise only to have funding for that research up for grabs every election cycle."

The filing by Munger, whose clients include Warren Buffet, noted that the petitioners had something at stake. For example, Munger said, some of the organizations are engaged in scientific research and, "like other scientific institutions in this country, have benefited from public financial support."

Reporter Terri Somers of the San Diego Union Tribune, in fact, pointed out that the Burnham Institute, the Salk Research Institute, Stanford University and the University of Southern California, which supported the Munger filing, have been selected for CIRM grants worth millions of dollars.

Other supporters include the Christopher Reeve and Michael J. Fox foundations. A complete list can be found in the CIRM press release.

While the friend-of-the-court filing noted that Proposition 71 created CIRM "notwithstanding any other provision of the constitution," its main focus was on the effectiveness and history of the peer review process that has been used at the national and other levels to make grants.

It said, "In the United States, decisions concerning government funding of research proposals have largely been separated from politics. That separation has been achieved by a system that allows political input when establishing broad policy goals, followed by scientific decision-making through the peer review process to determine which specific proposals should be funded to achieve those goals. Peer review ensures that the quality of research proposals is judged by scientific merit and by the likelihood that the research proposal will achieve the goal of improving public health."

We should note that the People's Advocate and National Tax Limitation Foundation are two groups that have supported the virtually unfettered right of the people to the initiative process. It is odd that they now find the voters' will dubious.

Reporter Bernadette Tansey of the San Francisco Chronicle also wrote about this week's filings.

Stem Cell Legislation to Rise Again

In California's Capitol, few things are certain – even death and taxes.

Particularly the death of legislation.

Few measures ever truly die, they just are reincarnated in one fashion or another. Such is the case with the stem cell measure (SB18) vetoed recently by our governor. It would have required a performance audit of the California stem cell agency and provided protection for egg donors.

The bill by Sen. Deborah Ortiz, D-Sacramento, cleared the legislature with only two votes against it. But only one vote really counted – Arnold's.

Her office says the measure will rise once more when the legislature returns. Some changes are likely, but the California Institute for Regenerative Medicine cannot rest easy yet.

Low Hanging Fruit vs. Embryonic Stem Cell Research

"Scientists want to be free," according to the New York Times, which reports that the California stem cell agency is going to have to sort through conflicting agendas involving patient groups and scientists as it dispenses billions of dollars in stem cell research funds.

Reporter Nicholas Wade wrote Tuesday about the agency's stem cell conference earlier this month, extensively quoting Zach Hall, CIRM's president.

"Perhaps his most formidable problem is that the public's hopes for immediate success run high," said Wade, "but scientists at the conference warned that many basic problems with human embryonic stem cells remained to be solved - a sign that no therapeutic use of the cells is likely for years. Underlining that caution, few companies are in the cell therapy field and venture capitalists have shown little interest, some speakers complained."

Wade continued, "Because of the pressure for quick progress, several scientists urged Dr. Hall to focus on the 'low hanging fruit,' meaning research with the adult stem cells like the blood-forming cells of the bone marrow. Bone marrow transplantation has been developed into a routine though still hazardous therapy that can now treat eight diseases and could be extended to more, said Dr. Robert S. Negrin, chief of the Stanford blood and marrow transplant program.

"The idea of seeking quick gains from adult stem cells was resisted by some patients' advocates who said the intent of Proposition 71 was to focus on the research with human embryonic stem cells that the federal government cannot support.

"The new institute will have to sort through other conflicting agendas. Scientists want to be free to follow long-term goals, and some voiced the fear that patients' advocates would seek to force short-term solutions or channel the most money to the diseases with the most sufferers."

Wade did not really discuss the role of the Oversight Committee in making decisions about research strategy. Nor did he spend much time on the role of stem cell chairman Robert Klein. His name was only mentioned once in the piece in the New York Times, which has rarely reported on CIRM. Chalk up the Times' attention to the staging of the international stem cell conference, which was partially aimed at generating this sort of article, among other many other things.

Villains, Big Pharma and Stem Cell Research

California political life has some perennial villains. For example, Big Oil. You can't go wrong attacking Big Oil, goes the general political wisdom.

A newcomer to that pantheon is Big Pharma. While the phrase does not exactly roll off your tongue, Big Pharma has major problems with its public image. And now Big Pharma is being invoked in connection with the California stem cell agency. At issue is who stands to benefit from $3 billion in taxpayer-financed stem cell research.

Here is how the matter was defined in an op-ed piece Monday in the San Jose Mercury News written by Jerry Flanagan, health care policy director for the Foundation for Taxpayer and Consumer Rights, and Deborah Burger, president of the California Nurses Association:

"The proposal to apply federal ownership rules to California stem-cell research raises key questions: Do taxpayers who are funding stem-cell research deserve a return on their investment? Should private industry be allowed to charge the public whatever price it chooses to access medical treatments whose discovery and development the public already paid for?"

The article gave this example of past performance involving Big Pharma: "The rights to the blockbuster glaucoma drug Xalatan, developed with $4 million in taxpayer grants at Columbia University, were sold to Pharmacia Corp. for less than $150,000. Pharmacia made $507 million on Xalatan in 1999 alone, charging U.S. patients $50 a bottle for ingredients that cost only pennies."

Flanagan and Burger also noted that there are some signs that Californians should be wary of the intellectual property position of the California stem cell agency.

"At least 13 of the 16 applicants to receive the first round of Proposition 71 grants have already fostered deep ties with the drug and biotech industries," they wrote. "For example:

•"One university grant recipient, the University of California-San Francisco, has staff who serve on pharmaceutical company boards and the stem-cell oversight board (which approves grant applications), receives funding from one of the world's largest drug manufacturers (Bristol-Myers Squibb), and has a research center on campus paid for by biotech giant Genentech.

•"At least eight of 11 universities to receive grants have staff serving on the boards of, or are employed by, pharmaceutical and biotech companies such as Amgen, Genentech, Bristol-Myers Squibb and Johnson & Johnson.

•"The private Burnham Institute has four board members with ties to biotech or pharmaceutical companies and its president is a member of the stem-cell oversight board."

The Bee: Stem Cell Conference Wise, But CIRM Leaders Still Bogus on Disclosure

The Sacramento Bee does not find many matters to be pleased about concerning the California stem cell agency.

Editorially it has been been a frequent and vociferous critic. But during the weekend, it wrote approvingly about the $215,000 stem cell conference earlier this month. That was the one with the secret budget that we wrote about earlier.

The Bee called the session "one of the wisest expenditures we've seen yet from this agency." The conference "exposed the challenges researchers face in studying embryonic stem cells, which have the ability to develop into any tissue and organ of the body."

As an example, The Bee wrote, "Say that scientists find a stem cell cure for Type 1 diabetes, which afflicts 1 million Americans. How do you mass-produce the billions of islet cells needed to treat these people? Should that be a private or public enterprise? If it is private, will only the rich be able to afford it?"

The editorial continued, "Unfortunately, in assembling a series of panel discussions that were broad in scope, conference organizers ignored any discussion of the many ethical quandaries that confront this field. One key question is how research institutes will ensure that women aren't exploited, or put at undue risk, when they donate eggs and embryos for research. Similar concerns surround people who may one day volunteer for experimental - and potentially risky - stem cell therapies.

"At the moment, lawsuits have blocked the stem cell institute from distributing grant money, so these issues may seem premature. They are not. During this period of limbo, institute leaders would be smart to deal with all outstanding concerns about the institute's operations, so they can hit the ground running if and when they have money to spend.

"Speaking of outstanding concerns, it was heartening to hear scientists publicly disclose their business relationships during presentations at the conference. For months, institute leaders have claimed that scientists wouldn't want to serve as advisers if they had to publicly reveal their economic interests. Last week's confab, once again, proved such claims are completely bogus."

“Everything” Targeted in Stem Cell Research

Reporter Edie Lau of The Sacramento Bee had another take on last weekend’s stem cell conference that we missed in our search.

She wrote, “What should California spend its stem cell money on to produce good medicine? Scientists called together over the weekend to give their ideas had, in sum, a short answer: On everything.”

She noted that stem cell research is still in the early stages and that much needs to be done.

She also had this: “Dr. Irving Weissman, director of the Institute for Cancer and Stem Cell Biology and Medicine at Stanford University, said one method for testing cells is by putting them into mice and seeing how the cells behave.

“Weissman acknowledged that the step is, to some minds, objectionable. That's because in creating animals possessing human cells, scientists would be creating human chimeras, calling to mind monsters of Greek mythology. Nevertheless, Weissman said the work is essential, and raised concerns over a bill in Congress that would ban such research.”

Want a Stem Cell Grant? Here Are Some Clues, Sort Of

If Californians wanted to know about the big international stem cell conference staged last weekend by the state's stem cell agency, the man they needed to rely on was reporter Carl Hall of the San Francisco Chronicle.

He appears to have been the only newspaper reporter filing reports on the two-day conference in San Francisco. His stories Sunday and Monday (a shared byline with Cornelia Stolze)provided some insight into the thinking at the agency and some details on how it intends to proceed, although it is still facing a court battle over its existence that will extend into 2006.

Hall wrote on Sunday that presentations Saturday "broke little new ground." On Monday, he reported that the session "marked a turning point for the state stem cell agency as officials try to shift from the frustrations of starting a controversial new enterprise into solving some of the most exciting challenges of biology." ("Turning point" may have been a bit optimistic.)

Hall said stem cell directors compared the presentations at the $215,000 conference to "reading about political candidates on the eve of an election: Even though they had heard it all before, they were still primed for a fresh summary. 'We're getting a solid scientific and clinical foundation for the institute's future work,' said Michael Goldberg, a venture capitalist who serves on the Prop. 71 governing board, known as the Independent Citizens Oversight Committee.'"

Hall's stories provided some fresh reporting on possible future direction of the agency.

"Several committee members said it's clear the program must bankroll novel collaborations to solve the big problems and avoid duplicating efforts, such as creating central facilities for banking lines of stem cells and carrying out clinical trials.

"That pointed to some obvious conflicts if research centers long used to competing with one another suddenly find themselves trying to collaborate, while also allying with profit-seeking companies on projects backed by tax-exempt bonds.


"Dr. Edward Holmes, medical school dean at UC San Diego and a member of the stem cell board, said the "industrial model" of drug development is a hard sell in academia.

"'Academics are rewarded for not doing the same thing twice,' he said.

Dr. Francisco Prieto, a diabetes specialist on the stem cell board, suggested it will be no simple matter to turn the scientific priorities into a workable program, adding that some key elements were absent from the weekend agenda. 'We've heard a lot about the what and how of stem cell research, but we've talked very little about the ethical and social implications,' he said.

Jeff Sheehy, a board member appointed to represent people with HIV/AIDS, said the talks highlighted 'a fundamental tension here between basic science and clinical science.'

"'How much do you have to know before you can actually start putting these cells into somebody?' he said, a question regulators also are beginning to tackle."

If researchers are looking for clues to what types of grants they might be able get funded in the future, Hall wrote, "Although it's hardly the final list, these appear to be some of the most important recommendations most experts endorsed:

"-- A centralized bank of human embryonic stem cell colonies and other raw materials to do the research, probably one in Northern California and another in Southern California to serve labs in each region.

"-- Fundamental research on the basic tools of stem cell research, in particular how to reliably coax the ultra-flexible stem cells into forming the many specialized cells of the body, a process known as differentiation."

"-- More efficient ways to genetically reprogram stem cells to represent particular genetic diseases, probably using a type of research cloning technology, called somatic cell nuclear transfer.

"-- Foster collaborations among many institutions, drawing in corporate partners early on to ensure that basic research is done in a way that will satisfy regulators and is directed toward projects with the best chance of paying off."

Hall reported that the agency plans to create subcommittee to come up with a strategic plan, a process that could cost hundreds of thousands of dollars, according to CIRM documents. Presumably most of that will go to a private consulting firm, given its minimal staffing and high use of outside firms.

Otis Aims at Stem Cell Report; Governor Nixes SB18

Hurricane Otis is taking a run at the California Stem Cell Report. As of this posting, it should brush by us down here in Romantic Old Mexico near Guaymas. But preparations for all possibilities are distracting us from postings.

However, we can tell you that the governor vetoed a measure to tighten oversight of the California stem cell agency. Reporter Carl Hall of the San Francisco Chronicle looks like he may be the only writer this morning to cover the veto.

The measure by Sen. Deborah Ortiz, D-Sacramento, would have added performance audit requirement and egg-donor protections to the California stem cell program.

Hall wrote, "In a veto message, the governor said he supported the main provisions of the bill but found it to be "in direct conflict" with a provision in Prop. 71 barring amendments until 2008."

"Ortiz issued a news release Friday decrying the veto, arguing that the bill
was 'carefully drafted' to avoid conflict with Prop. 71. She said that
'patient protections and appropriate public accountability must be included to
maintain the public's confidence' in the stem cell effort. Zach Hall, the institute's president, said during an interview Friday that the
institute never took a formal position on the bill. Officials already are
working through details of egg-donor protections, he said, and support the
need for routine audits.

"'We have always assumed we would be audited, and we want to be," Hall said.
'Exactly how it happens is not a major issue for us. It can be by whatever
mechanism the Legislature feels is appropriate.'"

Stem Cell Science: Glue Your Ears to the Internet

The California stem cell agency's first-ever, international science conference can be monitored on the Internet this weekend.

The agency said the sessions will be webcast live on www.thesciencenetwork.org and at www.cirm.ca.gov. The full agenda for the conference can be found here.

This is the first webcast of an event involving CIRM, a move that is long overdue. Meetings of the working groups are generally available at remote locations that are set up for the benefit of Oversight Committee members. The public is welcome also. However, none of the Oversight Committee meetings have a similar arrangement and none have been broadcast.

Both the University of California and Zoomedia have the capability of doing webcasts, which are quite common on the Internet. Zoomedia is rebuilding the agency's website as part of San Francisco's bid to secure the headquarters of CIRM. It would behoove Zoomedia to also webcast CIRM meetings as well.

CIRM Stalls Again on Mystery Costs

Shortly after we posted the item below on the mystery budget for this weekend's stem cell science conference, the California stem cell agency reinforced its stalling tactics on the session's costs.

We received an email from CIRM, which claims the information is "preliminary" and thus is not public. The claim is part of the hoary bureaucratic stall technique discussed in our earlier item. The appropriate translation of the message from CIRM is, "Sue us. Our $500-an-hour attorney will take on any comers. We may not prevail, but the litigation will take months, if not years, so go for it."

Here is what CIRM said: "We have determined that the record you have requested is a preliminary draft, which will not be retained by CIRM in the ordinary course of business and is exempt from disclosure under Government Code section 6254(a).
 
"The budgeted amount for the Scientific Conference is $215,000. This figure is available on the CIRM website at http://www.cirm.ca.gov/meetings/pdf/2005/08/31/083105_item_3c.pdf.
 
"The figures for individual budget items have not yet been finalized, however we anticipate that our actual costs will fall below the budgeted $215,000 figure. We will be happy to provide you with the breakdown of the conference costs when those numbers are final."

Hundreds – if not thousands – of state government bureaucrats have argued over the years that much of what they do is "preliminary" and thus not fit for the public. CIRM, however, has published online scores of documents, equally as preliminary as the proposed spending plan for its science conference. Indeed, CIRM published preliminary versions of its own annual budget plans. Other government agencies do the same. The governor of California publishes incredibly detailed preliminary versions of his budget each year as does the President of the United States.

We should note that if the preliminary information is not retained, not even the CIRM staff will know whether the figures come in under budget – unless it subscribes to the oral tradition of bookkeeping.

The significance of CIRM's response has little to do with the conference itself. It has a great deal to do with whether it is a responsible public agency that takes its charge seriously and honestly. Based on this sad reaction to a request for routine information, it appears that empty rhetoric is likely to be the order of the day for the California stem cell agency.

Mystery Spending at CIRM's Scientific Conference

The California stem cell agency will stage its first-ever scientific conference this weekend in San Francisco with expenses that run to about $9,000 per featured participant.

The two-day event is budgeted at a total of $215,000 and is designed to help identify scientific priorities for the first phase of stem cell research by the agency. Internationally known researchers are flying in for the session in Baghdad-by-the-Bay.

Presumably CIRM is picking up their expenses, but the agency has refused to release the spending plan for the conference until some indefinite date in the future. On the surface, the conference seems to be a worthwhile endeavor. In business terms, it is good marketing move. It will help focus international attention on CIRM and help generate credibility for the agency as it hits up potential purchasers of the bond anticipation notes that it needs.

But $215,000 is a large sum for an agency that has been vocal about its need to conserve its financial resources given the court challenges it faces.

How is that money being spent? No one outside the agency knows. Is there something dubious going on? Probably not, but the agency's refusal to share – in a timely fashion --public information about its activities does raise questions.

CIRM says it will disclose the conference budget when it is "final," whatever that means. The conference begins in two days. One would think CIRM would have "finalized" its conference spending plans by now.

One version of the agenda shows 25 outside speakers (excluding CIRM officials), amounting to a per capita expense of nearly $9,000. We have been told only that there are no honoraria, but little else.

CIRM's response to the information follows a time-honored and dubious tradition in some bureaucracies that stall when they receive requests for information. Often, the techniques are used because the information contains something embarrassing. Stalling allows time to cover up the worst disclosures, impart a favorable spin or simply out wait the inquiring party. Other times, the stall amounts to a mindless reflex by an organism that simply wants to repel any intruder.

Often the stall works. Information – like fish – does not improve with age. Time passes, and the information becomes less relevant.

It is difficult to understand why the agency is refusing to release the information. It is certainly not in CIRM's best interest to raise unnecessary questions about how it conducts the public business.

The stem cell agency's actions in this case fall woefully short of the promises by stem cell chairman Robert Klein to meet the highest standards of openness and transparency.

Too Much Inside-The-Box Thinking From CIRM

Every other day – at least during non-hurricane season – a stem cell news story seems to pop up with quite some regularity. Often enough that some might think that stem cell research is commonplace.

Just how uncommon it actually is was highlighted recently by The Economist magazine in a piece that makes clear the opportunities and challenges faced by the California stem cell agency.

The Economist article (Sept. 22 edition) cites a report by Michael Steiner and Nils Behnke, consultants with Bain & Company that forecasts only a $100 million market for stem cell therapies by 2010, rising to $2 billion by 2015. That contrasts with some reports that predict a $10 billion market by 2010.

The Economist says Bain's predictions are convincing.

"According to Bain's estimates, there are now roughly 140 stem-cell-related products in development, for various forms of cancer, liver disease and other conditions. But more than four-fifths of these projects are in early-stage development, where many a gleam in a scientist's eye dies, and still far from the clinical studies where promising new treatments can also still falter. In addition to these scientific hurdles, the field is fraught with ethical debate over some of its most promising areas, such as the use of stem cells from embryos and therapeutic cloning," the magazine wrote.

Steiner estimated that slightly more than "$1 billion was spent on stem-cell work last year, a mere 1% of global spending on health-care R&D. More than four-fifths of that investment came from governments. Venture capital, the traditional engine of biotechnology, is remarkably scarce in stem cells. Only $50 million was pumped into the field last year, as private investors look for safer bets in more developed products with larger markets, where regulation and patent protection is more clearly defined," the magazine said.

Given the $1 billion figure, that would make CIRM's probable $300 million a year pretty hefty. It would be a figure large enough to have a significant impact on stem cell research and its practices, including the possibility of changing them So far CIRM has been in a get-along, go-along mode, too timid to challenge the sacrosanct, closed-door, we-know-best attitude of the scientific community and its business allies. Yes, it is difficult and risky to make changes in the comfortable practices of old. But, as stem cell chairman Robert Klein likes to point out, 59 percent of California voters said emphatically that they are fed up with inside-the-box thinking when they approved Prop. 71.

Where's The Money?

"People quote things out of context all the time, but we tried to make it clear what it was." -- Bruce Deal, managing partner of the Analysis Group, the Menlo Park firm that produced a report that touted the largess that Prop. 71 would provide for California.

Reporter Malcolm Maclachlan quoted Deal in a piece in Capitol Weekly headlined "Stem Cell's Shell Game. It was the first interview that we have seen with Deal, whose report has come under criticism, particularly in light of the California Council on Science and Technology's admonition that California should not expect big returns from the California stem cell agency any time soon.

One might suspect some of the critics of a bit of dissembling. Most of them are not so naïve as to expect that studies generated on behalf of political campaigns are paragons of balance and objectivity. It is, and was, hardly realistic to expect campaign supporters to put out a report on Prop. 71 that was less than approving.

The report in question was produced by Laurence Baker, an associate professor of the Stanford University School of Medicine, and Deal, managing partner of the Analysis Group.

Maclachan wrote, "The figures, Deal said, were based on payouts that some research universities have received for IP (intellectual property) rights. They were calculated on the assumption that, over time, Prop. 71 would pay for both basic research and later-term studies leading to commercially available therapies. 'The idea of the report was to give examples of what could be possible if therapies were successful and the state could secure intellectual property rights,' Deal said. 'People quote things out of context all the time, but we tried to make it clear what it was.' "

The Baker/Deal study is likely to be a subject of continuing interest because of the intellectual property issues involving the the stem cell agency. State Sen. Deborah Ortiz, chair of the Senate Health Committee, has already said she expects more benefits than what the CCST study says is reasonable. The stem cell agency itself scheduled and the cancelled one meeting this month on IP matters. And still out there is Ortiz' proposed constitutional amendment which could make a statewide ballot in nine short months. Her previous legislative efforts at openness within the agency forced it to tighten its rules. The constitutional change could serve as a hammer to convince CIRM to attempt to provide more benefits to the California from taxpayer-financed stem cell research.

Bustamante Names New Stem Cell Overseer

The newest member of the Oversight Committee of the California stem agency is Marcelina "Marcy" Andaya Feit, president and CEO of ValleyCare Health System, a non-profit healthcare system with hospitals in Livermore and Pleasanton in California.

Lt. Gov. Cruz Bustamante made the appointment, filling a vacancy left by the resignation of Phyllis Preciado, who took a job in Oregon.

Here is the full text of Bustamante's press release, which was not available on the Internet at the time of this writing.

"Lt. Governor Cruz Bustamante today announced the appointment of Marcelina "Marcy" Andaya Feit to the Independent Citizens Oversight Committee overseeing California’s stem-cell research initiative, which was created when voters approved Proposition 71 in 2004.

"Ms. Feit is the President and CEO of ValleyCare Health System, a non-profit healthcare system with hospitals in Livermore and Pleasanton. Valley Care Systems also operates a skilled-nursing facility, a geriatric-psychology program, and a health and wellness center.

"'Ms. Feit has spent her entire 32-year career in Central Valley health-care programs,' Bustamante said. 'She is a registered nurse who began her career as a surgical nurses’ aide and advanced through the ranks to become one of the few minority women to become a chief executive officer of a California health-care system.

"'She is a native of Stockton and the daughter of a farmer. She spent her youth in the Stockton area and was graduated from Manteca High School. She worked her way through nursing school and earned a Master of Science Degree in Nursing Administration.

"'She has a life-long commitment to improving health care for Central Valley residents, particularly those in rural areas. Her tenacity and her tireless efforts to overcome many obstacles in her career have provided her with the tools and the strength to greatly benefit the work of the Independent Citizens Oversight Committee.

"'Ms. Feit has made a formal commitment to seek policy guidance from medical providers and activist groups in Central Valley communities. Californians are very fortunate to have a person with her medical knowledge and management skills on the Independent Citizens Oversight Committee.'

"The Lieutenant Governor has five appointees on the committee. Ms. Feit fills the position for an appointee from a 'Type II Diabetes advocacy group.'

"Ms. Feit helped spearhead the Livermore Center of Excellence in Diabetes, which provides inpatient and outpatient care for individuals with Type I, Type II or gestational diabetes. The program also provides diabetes counseling, group support, nutritional advice and education services to the community. The American Diabetes Association has certified and recognized the Center of Excellence in Diabetes for its high quality of self-management education."

Reviewers Unaware of Funding Shortfall?

Some of the scientists who reviewed the training grants authorized by the California stem cell agency may not have known that no funds were available, according to The Scientist.

In an article on the grant program, writer Alison McCook said, "Stuart Orkin, Dana-Farber Cancer Institute researcher and cochair of the committee that reviewed the grant applications, told The Scientist that committee members did not consider where the money was coming from when awarding grants, and some likely didn't even know about the ongoing legal battles."

The reviewing scientists ranked the proposals on scientific merit as part of the process of making recommendations for funding to the stem cell Oversight Committee.

McCook also interviewed Dennis Clegg, chair of the department of molecular, cellular and developmental biology at the University of California, Santa Barbara, a grant recipient. He was quoted as saying, "We can't write checks yet."

That appears to be contrary to the expectations of California stem cell leaders, who had expressed hope earlier that grant recipients would proceed with the programs and seek reimbursement later. One suspects the response to that expectation would vary, depending on how flush a particular recipient is.

Stem Cell Discussions on Saturday

Coming up this Saturday afternoon – forget those college football games – is a stem cell conference in Los Angeles.

On tap is Sen. Deborah Ortiz, D-Sacramento, the chair of the state Senate Health Committee and the most influential legislator on stem cell issues. Ortiz has been critical of the performance of the California stem cell agency. Recently she has focused more on the possibility of generating revenue and benefits for the state from any stem cell research funded by the agency.

Also on the conference panel sponsored by the California Science Center are Lawrence S.B. Goldstein, professor of cellular and molecular medicine at the University of California, San Diego, School of Medicine, and a leader in stem cell research; Ted Peters, pastor and professor at Pacific Lutheran Theological Seminary, Berkeley, Ca., and ethicist on the stem cell citizen’s oversight committee. and Irving Weissman, immunologist, professor, and director of the Stem Cell Institute at Stanford University, School of Medicine.

For more information, check the California Science Center site.

CIRM System: Convoluted and Opaque?

"Grossly unfair," "completely unworkable," "doomed for failure" – several of the things The Sacramento Bee has to say about the grant-making process of the California stem cell agency.

"It is hard to imagine a system that is more convoluted and opaque," The Bee editorialized on Sunday.

"You can't say the oversight board wasn't warned. Months ago, institute reformers told the oversight board that its closed-door policies would be self-defeating. 'You will be confined to considering what the working groups put on your plate, with little or no sense of how it got there, or what is missing or why,' wrote Terry Francke, counsel for the good-government group, Californians Aware.

"The institute overseers now have two choices:

"1) Become a true decision-making board and insist on all information about grant applications it is judging.
"2) Become more like the National Institutes of Health, and delegate the job of awarding grants to an outside panel of scientists. Such scientists, as decision makers, would need to disclose their potential conflicts.

"Without changes, the current experiment seems doomed for failure."

More Favorable PR Stems From Training Grants

California universities have begun patting themselves on the back for receiving the first-ever grants in the state's $3 billion stem cell research effort.

None that we saw mentioned that zero dollars were delivered with the awards, except for the press releases from the University of California, Santa Barbara, and Stanford University.

Nonetheless, the decisions on the grants and the follow-up press releases create an appearance of activity and momentum, which is exactly what CIRM officials sought.

Stanford received $3.7 million. Its press release quoted Michael Longaker, professor of medicine and chair of the advisory committee for Stanford’s Program in Regenerative Medicine, as saying, “It is particularly gratifying to be able to link the incredible depth and breadth of talent at Stanford. We want stem cell biology and regenerative medicine to be a catalyst for collaborations between faculty and trainees in all the schools. This exciting educational environment should help propel Stanford to a leadership role in regenerative medicine.”

USC, which received $3.2 million, noted that its application was described as "very thoughtful" by reviewers.

"This grant award bodes well for the program we are trying to develop here at the Keck School of Medicine - the USC Institute for Stem Cell and Regenerative Medicine - and speaks highly of the research being conducted here and at Childrens Hospital Los Angeles," said Brian E. Henderson, M.D., dean of the Keck School of Medicine and a member of the Oversight Committee that awarded the grants.

Childrens Hospital Los Angeles announced that it is "the only pediatric institution in California awarded a stand-alone CIRM training grant." It was approved for $2.4 million.

"The biomedical environment and strength of stem cell research at Childrens Hospital Los Angeles and the Keck School of Medicine combine to provide a rich milieu for training the next generation of physicians and scientists who will use stem cells as the basis for research and therapy," said Donald B. Kohn, director of the Gene, Immune and Stem Cell Therapy Program at Childrens Hospital Los Angeles. Childrens is affiliated with USC.

The University of California, San Francisco, combined the announcement that it had received a $3.6 million grant with a press release on creation of the Institute for Stem Cell and Tissue Biology.

It said its training program "will be led by Renee Reijo Pera, PhD, co-director of the UCSF Program in Developmental and Stem Cell Biology’s Human Embryonic Stem Cell Center and associate professor in the Department of Obstetrics, Gynecology and Reproductive Sciences, and Kevin Shannon, MD, professor in the Department of Pediatrics, who studies genes that normally regulate the growth of immature blood-forming cells that are mutated in leukemias."

The Gladstone Institutes at UC San Francisco received a $2.4 million grant. "Gladstone Institutes President Robert W. Mahley, MD, PhD, a professor of medicine and pathology at the University of California, San Francisco (UCSF), will serve as the director of the CIRM Scholars Training Program. Gladstone Institute of Cardiovascular Disease Associate Investigator Bruce Conklin, MD, a UCSF associate professor of medicine and cellular and molecular pharmacology, will serve as associate director," a press release said.

UCSB noted that funding of its $1.3 million grants awaits the sale of bond anticipation notes, since litigation has effectively halted the sale of other California state bonds.

The press release went on to say, "Martin Moskovits, UCSB's dean of the Division of Mathematical, Life and Physical Sciences, called the grant 'a strong statement that we are significant international players in the kind of biomedical research from which important new therapies for human disease will be developed." He explained further that, 'We have already established important partnerships with companies and medical schools with whom we intend to pursue a vigorous research program.'"

Freezing Out the Conflict

Ten of the California stem cell training grants awarded last week went to institutions that have representatives on the committee that approved the multimillion dollar programs.

However, the California stem cell agency went to excruciating lengths to avoid the appearance of a conflict of interest, barring committee members from discussing or voting when their institution's application was considered.

Oversight Committee members were given only bowdlerized summaries of the grant applications, which were solely identified by an alphanumeric code, along with funding recommendations from an agency working group. The summaries were identical to the material available on the Internet. Names of the institutions and individuals were blacked out.

Privately ahead of the meeting, individual committee members were notified that they could not participate in discussion when an application with a particular code came up. None of the committee members knew when another was barred from discussion, according to CIRM officials.

And when the actual vote was taken, the name of the committee member whose institution was seeking funds was not called during the roll call.

Serrano Sewell Demures on Stem Cell Report Item

Stem cell Oversight Committee member David Serrano Sewell has taken umbrage with language concerning him in our report on last Friday's meeting.

Here is what he had to say:

"As an ICOC member, I do enjoy this blog. However, on occasion you get things wrong. Recently the report stated:

"'David Serrano Sewell, a patient advocate committee member from the Amyotrophic Lateral Sclerosis Association, abruptly cut off attorney Charles Halpern of Berkeley, Ca., when he raised questions about the criteria for the training grants. Sewell heatedly declared that CIRM had been 'transparent in every respect.'

"First, I represent both the MS and ALS community. At our recent 9/9/05 meeting, Mr. Halpern did raise a series of issues regarding the ICOC training grants. ICOC staff forwarded his letter via email and a hard copy was provided for all the ICOC members at the meeting. At the meeting, Mr. Halpern's opportunity to speak well exceeded his three minutes. Charlie was getting close to seven minutes, and that's when I reminded (stem cell chairman) Bob (Klein) that members of the public are given three minutes to speak. So, yes I did 'cut off' Charlie, not because of the subject matter, but because the ICOC had other issues to address."

Greenlining Enters Fray with Emphasis on Minorities

A relatively new and influential critic – the Greenlining Institute – is rejoining the public debate over the California stem cell agency.

"The health and well being of our families is on the line," the organization said in an e-mail to the California Stem Cell Report. "It is time for California’s minority communities to take ownership of their billion dollar investment by asking questions, demanding answers, speaking up, and being heard."

Greenlining, a self-described "multi-ethnic public policy think tank bridging together a coalition of more than 40 non-profits throughout the state," popped up last spring during a legislative hearing involving the stem cell agency but has been silent since.

In the wake of the grant announcement on Friday, Joe Tayag, health policy associate at Greenlining, said, . "We feel that it’s time for communities of color to participate in this dialogue and we’ll be starting our public advocacy campaign soon."

Tayag also offered the following commentary, which he titled "The Color of Stem Cells: Why the benefits of stem cell research might not be for people like me."

Here are his remarks in full since they are not available elsewhere on the Internet:

"After losing half of one of my lungs to tuberculosis while volunteering in the Andes last year, I assumed that life would just never be the same again. By this I meant that the flight of stairs to my apartment would always seem twice as long and that I would have to give up things I enjoyed like taking long runs on Sunday mornings.

"However, the promise of therapeutic treatments derived from stem cell research gives individuals like me a hope for normalcy. Yet, as an immigrant from a low-income family, I can’t stop from cringing at the thought that the low-income and marginalized communities of the state still have no explicit guarantee of access to the promised 'cures' of Prop. 71—much less to adequate health care in general.

"Last Friday, the Independent Citizen’s Oversight Committee (ICOC) allocated a little over $39 million to prestigious research institutions like UCLA, UC Berkeley, Stanford, USC, and Cal Tech among others. Yet, it’s unclear from perusing through many of their grant proposals just how much focus these research institutions will give to communities of color and their health needs.

"The initiative passed last November with overwhelming minority support. Despite this, there has been no mention of issues crucial to communities of color especially with regard to the California Institute of Regenerative Medicine’s research and staffing diversity. After all without minorities represented at CIRM’s decision making bodies, who will listen to the needs of the African American communities who are more susceptible to heart disease? Or to the Latino communities who suffer from diabetes? Or to the Asian Pacific Islanders who are more prone to sickle cell anemia?

"Without a more diverse governing board, these questions will be left to dwindle in uncertainty as California drafts the first ever model of state-sponsored stem cell research arrangements that will be referred to by the rest of the nation. New Jersey and North Carolina are already following suit and unless California sets a proper example of diverse representation, we’re bound to see the ignorance of minorities’ needs ripple throughout the rest of the country.

"To prevent this, minority communities should be represented proportionate to their numbers in California in each of the following areas of Prop. 71’s implementation:

-- The institute’s governing board (also known as the Independent Citizen’s Oversight Committee). As it stands, only 3 members of the ICOC are minorities.

-- The recipients of the $39 million in grants going toward the training of lab technicians, medical students and social scientists.

-- The groups of people on whom the medical products are tested to ensure compatibility amongst all communities.

"Due to scarce resources, we currently have a kind of disease hierarchy with regard to research priorities. Diseases that disproportionately affect communities of color (such as diabetes, heart disease, HIV/AIDS and sickle cell anemia) should be considered and represented in any discussion of the allocation of grants and research goals—but who will uphold the needs of the underserved when communities of color are not being allowed at the decision-making table?

"The reverse is also true: just as the minority public deserves to be represented, the state-sponsored agency needs to report the proper information to the minority public. CIRM is notorious for releasing important information as late as hours before its public hearings and thus, does not allow enough time for people to digest their materials—much less understand them.

"The last September meeting of the Independent Citizen’s Oversight Committee is evidence of this. Although the ICOC meeting agenda contained some background material on several matters such as the proposed budget and guidelines for embryonic stem cell research, the items were not 'translated' to the public in terms that regular citizens could understand.

"Though the 'translation' from scientific jargon to understandable speech seems like a difficult task, the request does not seem even close to colossal considering that CIRM currently has an almost $30,000 a month public relations contract with the Edelman PR firm. With $30,000 a month going to public relations, why is it that communities of color still hide at the sound of the words, 'stem cell research?' I would argue that it is due to the lack of outreach and education in our communities that many people of color believe that the issue does not concern them."

In contrast, the $3 billion that minority communities pledged to give to stem cell research clearly means that it does concern them. The legislative fate of these tiny cells is calling for communities of color to ask questions such as: will the treatments derived from the research that I am helping to fund cure my ailing loved ones? And even if they will, will the treatments be affordable to my community?

"The health and well being of our families is on the line. It is time for California’s minority communities to take ownership of their billion dollar investment by asking questions, demanding answers, speaking up, and being heard."


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Peddling the Name of the Stem Cell Scholar Program

California stem cell chairman Robert Klein is exploring the possibility of offering a major benefactor to the agency the right to have its name placed on the stem cell scholars program.

Klein discussed the plan with the Oversight Committee late in Friday's meeting in Sacramento. As a hypothetical example, he suggested an individual or foundation known as "Patent" who purchased $10 million in bond anticipation notes for the agency would be offered the right to have recipients of CIRM training grants identified as "Patent Scholars."

He said there is precedent for such a move, noting that universities and colleges have buildings and programs named after individuals.

No formal vote was taken on the suggestion, which had a mixed response from board members.

Gayle Wilson, wife of the former Gov. Pete Wilson, opposed the plan, saying she could not recall any other state agency that had such a program. Robert Price, a surrogate for Oversight Committee member Robert Birgeneau, chancellor of the University of California at Berkeley, said there could be "political problems" with some individuals or organizations that might be viewed askance.

Oversight Committee members Oswald Steward, chair and director of Reeve, Irvine Research Center University of California, Irvine, and Michael Goldberg, a general partner with Mohr, Davidow Ventures, said they supported the proposal but did not elaborate on their reasons.

Klein said he would exercise "care and sensitivity" in pursuing the matter.

California Stem Cell Calendar

There are no new entries for the stem cell calendar this week.

Coverage is Right Medicine for Stem Cell Agency

News coverage of the first grants from the California stem cell agency pretty much delivered the message sought by its leaders.

"Stem Cell Grants Begin," "Medical Schools Get Stem Cell Grants," "Stem Cell Funds Awarded," "Stem Cell Agency Awards $39 million" -- those were some of the headlines.

Subordinated was the reality that the agency does not yet have the money. Even more deeply subordinated were complaints about the grant process from critics.

Which is just what stem cell chairman Robert Klein and president Zach Hall like to see. Hall told reporters the agency wanted to counter its critics and their negative message with a positive move. The two leaders also indicated they wanted to have grants ready in place to aid in their fundraising pitch to philanthropies.

What most people saw or heard across the country was The Associated Press story by Paul Elias. That is the one that turns up most often in Internet searches and also the one that would used by thousands of newspapers, radio and televisions.

He wrote, "California's $3 billion stem-cell agency began awarding its first research grants yesterday despite legal challenges that put its future in doubt. 'This is really a historic and important occasion for us,' said Zach Hall, interim president of the California Institute for Regenerative Medicine."

In California, the most thorough story appeared in The Sacramento Bee. Reporter Edie Lau wrote, “Selecting the recipients was an arduous process that took the board the better part of the day, and revealed some of the weaknesses in a system that is still being invented.”

“David Baltimore, a Nobel laureate and president of the California Institute of Technology, said the working group's recommendation to fund 60 percent of the applications was too generous,” Lau said.

“Citing the stringent standards of the National Institutes of Health, Baltimore said, 'Were we to go with 60 percent at NIH reviews, many of us scientists would be very uncomfortable with the quality.' "

Reporter Alex Raksin of the Los Angeles Times focused on grants to schools in the paper's circulation area. He did not mention until the fifth paragraph that no funds were available.

At the San Jose Mercury News, the first paragraph on reporter Steve Johnson's story said, "The board overseeing California's stem-cell research institute Friday awarded $12.5 million in training grants to 16 applicants around the state -- including five in the Bay Area -- despite not having the money yet to pay for them."

At the San Francisco Chronicle, David Perlman, the paper's science editor, wrote, "Leaders of California's $3 billion stem cell research agency announced their first multimillion-dollar grants Friday to train dozens of scientists in the field -- but where the money will come from remains uncertain."

The bulk of the material in all the stories dealt with the grants, how much, to whom and what they are for.

The coverage had some downsides, apart from the issue of funding. The story broke late on Friday on a day when other events continued to dominate the news. While it is unlikely that the grant announcement would have ever been front page news, one good way to bury a story is to run it out late for Saturday papers.

Also lost in the shuffle for the most part was the appointment of Hall as permanent president, which could have been peddled separately from the grants on another day as a good sign that the agency was moving forward. Repitition of a message is an important PR tool.

TV and radio coverage was largely missing, and is likely to continue to be missing unless the agency can generate events that play to the interests of those media.

Coming Up

Later today and tomorrow, we will have much more on Friday's meeting of the Oversight Committee of the California Institute for Regenerative Medicine. Assessment of the media coverage of the meeting, more on the grant program, a look at a somewhat novel and new fundraising approach, a deeper look at what the critics have to say and more will be forthcoming. Don't miss a word.

CIRM Hands Out $39 Million (sort of), Picks Almost New President

The California stem cell agency took two large steps forward Friday, naming a permanent president and parceling out the first grants in what it expects will be a $3 billion program.

Both steps were aimed at delivering a message that the infant agency is determined to survive and thrive despite lawsuits aimed at snuffing it in its crib. The Oversight Committee also gave short shrift to critics who complained that its grants were, in fact, illegal.

Zach Hall, who was named interim president only last March, was chosen as the new permanent president of CIRM. The action removes questions about the direction of the leadership of the organization, which had hoped to name a permanent executive three months ago. Hall is highly regarded by many in the scientific community outside of the agency.

While Hall's appointment helps to solidify the management of CIRM, the training grant program remains a question because it is unfunded. During Friday's meeting of the Oversight Committee, Hall told reporters that it was important to make decisions on the grants in order to deliver a message that CIRM is alive and well, despite its much publicized travails.

CIRM chairman Robert Klein said he hopes to deliver the funding for the stem cell training grants by the beginning of November. He indicated that grant recipients should begin their programs with the expectation they will be reimbursed later. Klein hopes to sell bond anticipation notes to provide the $12.5 million that is needed for the first year funding. His target market is philanthropic institutions and individuals. The clinker in his plan is that holders of the notes would not be repaid if CIRM's legal critics are successful.

CIRM's $3 billion plan makes it the single largest source of stem cell research funding in the world. Hall said the nearly $39 million in training grants approved Friday would create the “broadest training (stem cell) training program in the country and, I assume, the world.”
There were few surprises in the training grant program awards, which, by law, are limited to California organizations. Eight University of California campuses received funding. Other winners included the Burnham Institute, the California Institute of Technology, Childrens Hospital in Los Angeles, the Scripps Research Institute, Stanford University, the J. Gladstone Institutes and the Salk Institute for Biological Studies.

The names of the losers were not announced, although we reported earlier that all of the UC campuses had sought funding. CIRM officials said they would not disclose the names in order to avoid embarassing the losing institutions.

The grants are expected to provide funding for 180 stem cell scholars -- “intellectual capital” as described by Klein. New stem cell researchers are needed because President Bush's anti-stem cell policies have discouraged many from entering the field. “We know the pipeline is pretty dry,” said Philip Pizzo, dean of the Stanford University School of Medicine.

A few members of the Oversight Committee, which is largely composed of high-powered executives and academicians, on Friday demonstrated they are not used to being criticized openly during the public comment portion of their meetings. Oswald Steward,
chair of the Reeve, Irvine Research Center University of California, Irvine, sharply objected to the length of comments by Susan Fogel, coordinator of the Pro-Choice Alliance for Responsible Research, and then muttered under his breath at her retort.

David Serrano Sewell, a patient advocate committee member from the Amyotrophic Lateral Sclerosis Association, abruptly cut off attorney Charles Halpern of Berkeley, Ca., when he raised questions about the criteria for the training grants. Sewell heatedly declared that CIRM had been “transparent in every respect.”

Halpern is a longtime member of the Institute of Medicine of the National Academy of Sciences, he has served as dean of the City University of New York Law School and the president of the Nathan Cummings Foundation. He said said Prop. 71 required adoption by the Oversight Committee (ICOC) of criteria for training grants prior to their consideration by the working group that reviewed them. The working group had a draft version of the criteria, but the Oversight Committee did not approve the criteria until Friday, only minutes before it began to consider the grant recommendations. All but one of the group's 26 funding recommendations were approved.

Halpern said, “The (working group) cannot apply its proposed criteria to pending applications until these criteria have been reviewed, amended, and approved by the ICOC—nor can the (working group) assume that the ICOC will simply rubberstamp its proposed criteria.”

Prior to the meeting, Marcy Darnovsky, associate executive director of the Center for Genetics and Society in Oakland, Ca., said, “It is irresponsible for (CIRM) leaders to promise grants that they may be unable to deliver.”

Jesse Reynolds, director of the program on biotechnology accountability at the Center, attended the Friday meeting. He told the board that approval of the grants continues “a pattern of doing things fast at the expense of doing things right. Good policy would be guided by the availability of resources, rather than a concern with a public relations campaign.”

The full text of Halpern's letter to CIRM, which is not available elsewhere on the Internet, follows this item.
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(Note: Normally our coverage of CIRM is prepared at sea in the far reaches of the Sea of Cortez in Mexico. Today's report, however, and those that will appear over the next day or so are based on our attendance at what turned out to be a nonstop session Friday of the Oversight Committee in Sacramento.)

Text of Halpern Letter

Here is the text of the letter sent to the California stem cell agency by Charles Halpern. It is not available elsewhere on the Web.

I reviewed the agenda for the September 9 ICOC meeting with interest and concern. My comments are addressed to Agenda Item 8, to the criteria for grants and for the procedure by which they have been processed. At this meeting, the ICOC should devote its time to genuine deliberation on the criteria for awarding grants—both training grants and research grants. The fact that these are Interim Criteria should not obscure the fact that the early rounds of grants will shape the Prop. 71 stem cell initiative for years to come. The criteria recommended by the Scientific and Medical Research Funding Working Group (WG), while a good starting point, are woefully incomplete. The ICOC should also reconfigure the process by which grant recommendations are presented to the ICOC in a manner which permits true deliberation on grant awards by the ICOC. In particular, the ICOC should assure that none of the work in California laboratories and none of the training it funds will benefit those who are working on reproductive cloning outside the state. (See the second numbered paragraph below.) The ICOC can take this opportunity to reassure Californians that all steps are being taken to make sure that no scientist trained with our tax dollars will take his/her skills out of state to help to clone human beings.The ICIC should refuse to ratify the recommendations for training grants which have been improperly presented to the ICOC before it has approved Interim Criteria, in violation of statute. The ICOC should carefully review the criteria for training grants recommended by the WG and make appropriate substantive additions, including the critically important matters discussed below. Finally, it should return the amended Interim Criteria to the WG to be applied to the applicant pool. This procedure is required by Prop. 71 and sound scientific practice. It will not lead to significant delay in developing training programs or research grants since it appears that there is no money available at this time for distribution to designated grantees. There is time to do the job right. Agenda # 8 Statutory Process for Adoption of Grant Criteria The starting point is the text of the Prop. 71, specifically, Sec. 125290.60(b) which states: “The Working Group shall perform the following functions: (1) “Recommend to the ICOC interim and final criteria, standards and requirements for considering funding applications and for awarding research grants and loans.” It is hard to imagine clearer language. This section delineates the first order of business for the Scientific and Medical Research Funding Working Group The WG deliberates on the critically important matter of criteria and makes recommendations to the ICOC. The ICOC, in turn, considers the WG recommendations and adopts criteria which it transmits to the WG to be applied. Of course, the WG cannot apply its proposed criteria to pending applications until these criteria have been reviewed, amended, and approved by the ICOC—nor can the WG assume that the ICOC will simply rubberstamp its proposed criteria.The WG proceeded with its review process for training grants in early August as if their recommended criteria had been approved by the ICOC. In doing so, the WG violated the procedures established by Prop. 71. The ICOC should remand the applications to the WG for consideration in light of the Interim Criteria adopted after due consideration by the ICOC at this meeting. Supplemental Interim Criteria for Training Grants Concerning the substantive content of the Interim Criteria, the sketchy criteria proposed by the WG are a good start but they are seriously deficient. Issues that were simply not dealt with by the WG go to the heart of the stem cell program under Prop. 71. They must be addressed by the ICOC. The following additional Interim Criteria would fill many of the gaps: First, training grants should be awarded only to institutions that agree (a) to conform to the Revised Interim NAS Guidelines for Stem Cell Research, which will be considered at this meeting of the ICOC, and (b) in due course, to adopt the Final Guidelines that will be approved by the ICOC after going through a formal APA public comment process. This undertaking should be a primary criterion in evaluating applications. Obviously, the institutions cannot be fully in compliance at this time, because even the Interim Guidelines have not yet been adopted. The process of establishing ESCROs, for example, with their procedures and policies, will take some time to be completed at most institutions. In fact, the WG didn’t know how far the applicant institutions have progressed, since the application did not even raise the question. The WG should consider how well the past practices in stem cell research of each institution have conformed to the general norms set forth in the NAS Guidelines. If institutions have diverged from the NAS norms or been casual about informed consent, about protecting egg donors, about permitting chimeric research, about embryo banking practices, they are unsuitable to be training the next generation of researchers. If they have been particularly scrupulous in addressing these issues, they should be rewarded for their past practice. An evaluation of past performance, as compared to the NAS norms, should be added into the Scientific Score for each applicant. Second, institutions should be funded as training sites only if they agree to follow best practices—i.e., to apply the Interim and Final Guidelines for Stem Cell Research to all of the stem cell research that takes place within the institution and in cooperating academic and corporate laboratories, not just to research that is funded by CIRM grants. Third, the WG should only consider grants to institutions that have taken effective action to assure that none of the work in its labs and none of the training it provides will benefit those, outside the state, who are working on reproductive cloning. This requires at least two commitments: (a) Each institution should train only applicants who will commit not to work on reproductive cloning for five years after the end of the training period. (b) Each institution should commit to enter into partnerships or agreements to share information, techniques, or personnel only with institution that have committed to do no work on reproductive cloning. Each applicant should explain how it will police these commitments, and in particular, how it will work to assure that people trained in CIRM-funded programs will not take their knowledge into reproductive cloning research. Californians have expressed the strongest opposition to reproductive cloning. The ICOC must take all possible steps to assure that California resources and personnel trained with our dollars do not help to further this awful practice. Needless to say the technical problems being addressed in our state’s laboratories to make research cloning a feasible methodology can be used to further the ends of those who do not share our state’s commitment to prevent the cloning of human beings. Fourth, each applicant should be seriously evaluated on the basis of its training program’s benefit to the state of California. For some reason, the WG summaries have treated this issue cavalierly, putting in identical empty boilerplate language in each summary making it impossible to make discriminating distinctions. Institutions might have said, for example, that they will try to place their graduating fellows in positions within the state; or they might have gone further and required their fellows to make “best efforts” to find positions in the state after the end of their training period. The institutions might have stressed that their CIRM-funded training program would enhance their institutional commitment to serving the health needs of the poor in the state. Many people were distressed by the recent report suggesting that the State should not expect any royalty or license revenues from CIRM-funded research, when the promoters of the Prop. 71 and their economists had painted a rosy picture of the money flowing to the state. The ICOC must make it clear that it takes the “benefit to the state” issue seriously, not like the applicants and WG which apparently chose to disregard it. The WG should resubmit this question to applicants, and responses should bereflected in their overall scores. In addition, the ICOC should find out how it happened that this issue was not taken seriously, inform the public, and take remedial action. Supplemental Interim Criteria for Research Grants The same supplemental criteria listed above should be inserted into the Interim Criteria for research grants. The WG recommendations are good so far as they go—but they are incomplete. The WG draft does not assure that all funded research will be carried out in complete conformity with the Revised Interim NAS Guidelines for Stem Cell Research as they are issued by the ICOC. They do not assure that all the research in the funded institutions conforms to the high scientific and ethical standards demanded for research funded by CIRM. They do not take the vigorous steps needed to assure that research funded by the California taxpayers never goes to advance reproductive cloning. They do not make benefit to the state a criterion to be evaluated in making awards. All of these omissions should be addressed by the ICOC at this meeting. When money becomes available for research grants, a framework will be in place. In the meantime the state’s institutions can prepare to become viable candidates for grants with a clearer sense of the criteria they will have to address. The Process for Reviewing Grants The information being provided to the ICOC members and to the public is woefully inadequate. It is insufficient to permit ICOC members to make informed judgments, and it undermines the commitment to the state’s voters that the ICOC will exercise careful stewardship of the grants made with the public’s money. Moreover, the ICOC members are put in an impossible conflict of interest dilemma. They cannot know if they are being asked to vote to fund a training program that is headed by a close relative or by a person with whom they have an advantageous financial relationship. So they cannot know when to recuse themselves; and, of course, the public has no way to assess whether there has been inappropriate influence. A voting system that permits intelligent participation by the ICOC in the grants selection process and informs the public must be developed before any grants are awarded. The system presented in this Agenda does not measure up.
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These are not issues of mere procedural nicety. They set the terms of the relationship between the vitally important WG and the ICOC. Will the Working Group be treated properly as an advisory group as promised to the voters by Prop. 71 or will it effectively exercise full decision-making authority with the ICOC simply rubberstamping its actions? If the WG is functionally a decision–making body and not an advisory body, that would, of course, raise significant legal issues about CIRM and about the application of the state’s conflict of interest rules to WG members.

Telling Drama Promised at Big Tomato Meeting

Can The Sacramento Bee drive public attendance at tomorrow's meeting of the California stem cell agency?

The Bee editorialized this morning about the meeting, suggesting readers might like to attend. The session will contain “drama” and might be “extremely telling,” the newspaper said.

Rivalries could be exposed that “sit beneath the surface of the institute's oversight board, which includes hypercompetitive university officials, biotech industrialists and advocates for various patient groups,” The Bee said. “Those rivalries got a bit ugly in May, when the institute held a beauty contest to decide its headquarters. San Francisco became the queen - and a lovely one, to be sure - but some said the contest was rigged.

“There are also some side dramas to watch. Months ago, institute chairman Robert Klein II prepared an organizational chart that gave him his own exclusive staff, including the institute's general counsel. Board members objected; the chart was shelved. Now, interim president Zach Hall is preparing to unveil a new organizational chart that gives the president more control over his employees.”

As far as we can recall, this is the first time that a newspaper has urged the public to attend a meeting of the California Institute for Regenerative Medicine. But despite the comic opera of Arnold Vs. The Legislative Ants, life is generally slow in the Big Tomato.

Bowdlerization and Sleazy Speculation

The grant-making exercise this week of the California stem cell agency exposes something of its faux secrecy as well as one weakness of its conflict of interest standards.

The agency has released a bowdlerized version of its funding recommendations. Names are blacked out in the documents but enough details remain, in at least some cases, that the institutions could be identified by stem cell insiders. Only the shareholders in the agency – the California public – are left out.

All to avoid what one newspaper calls the “public humiliation” of some being identified as losers.

Susan Fogel, coordinator of the Pro-Choice Alliance for Responsible Research, said the absence of applicants' names prevents Oversight Committee members from making good decisions.
"How can they vote on whether this applicant is an appropriate one who is capable of delivering if they don't know who the applicant is? I have never seen a foundation give out a grant to 'anonymous,' " she told reporter Laura Mecoy of The Sacramento Bee.

As for potential embarrassment, Fogel said, “I think they have to be big boys and girls here."

Mecoy's article noted that “at Friday's meeting in Sacramento, savvy observers also can glean some information by watching which committee members leave the room for which votes. This is part of the 'recusal' process required by conflict-of-interest laws.

“Several members of the committee represent universities and nonprofit institutions that have applied, so their absence could signal their employer is being considered.”

We assume that Oversight Committee members will see the grant applications with the names included, as opposed to Fogel's speculation. Otherwise how would they know when there might be a conflict of interest. However, committee members may be simply be told by staff not to vote. It is impossible to know, however, what the agency's procedures are in this case because it has not made them public.

Given the limited amount of money theoretically available, another more subtle conflict arises. That involves negative voting or changes in the size of grants. For instance, if one grant is denied or decreased, that makes more money available for another grant. An Oversight Committee member could vote to slice funding on one application with the intent of making it available for another grant. Then that member abstains from the vote on the other grant. Is she or he involved in a conflict of interest?

Obviously, carried to an extreme, this kind of reasoning or possible regulation could paralyze the agency. But it does illustrate the weakness of the agency's existing rules. In the absence of maximum disclosure of all economic interests and the names of institutions seeking training grants, such speculation about hidden conflicts is bound to occur. And it is not in CIRM's best interests to feed gossip – well-founded or otherwise – about possible sleazy dealings within its grant-making process.

Coming Up

Later today we will have a more on objections to the stem cell agency's grant process and also a look at secrecy issues at CIRM.

Dressing Up The Dog

Leaders of the California stem cell agency are attempting to put the “best face” on their decision to award $45 million in training grants without the money to pay for them, The Sacramento Bee reported today.

Reporter Laura Mecoy quoted CIRM interim president Zach Hall as saying, “We are going to come out of (tomorrow's) meeting and say we have a fabulous training program here, and that we are going to provide a work force for the country. We're going to play that up."

She also wrote, “The committee's chairman, Robert Klein II, said the agency needs to show it's creating the 'finest training program in the history of the country' to help attract money to pay for the grants.

“With that attention, he said, he's "very positive" he'll be able to raise the money to pay for the first year of the three-year grants.

“Klein won't name the potential investors and contributors. But he said he could have the money in hand as early as October.”

The agency's plan to move ahead with the grant process has met with criticism and is expected to meet with more.

Mecoy said one critic recommended delaying the grant awards so it can work on other matters.

"What purpose is served by announcing winners before you have the money?" asked Jesse Reynolds, Center for Genetics and Society program director. "I can't think of anything beyond public relations."

Mecoy also talked to Susan Fogel, Pro-Choice Alliance for Responsible Research coordinator, who said the “committee is creating 'a mistaken impression' that science is moving forward by awarding grants without money to fund them.

“She said she was 'disappointed' by the stem cell panel's 'focus on spin and public relations that doesn't have anything to do with the science.'"

Mecoy additionally reported that UC Davis officials confirmed their application was among the finalists. She said, however, that the recommended funding supported 12 trainees, rather than the 16 requested, and provided $2.68 million instead of the $3.43 million UC Davis sought.

No Money for Training Grants

The proposed budget for the California stem cell agency has been posted online, and it shows no funds for training grants until at least January 2006.

The spending plan appears to be identical to the one presented last month to the governance subcommittee, which recommended a conservative approach with no grant funding.

Presumably that means that the Oversight Committee will take some sort of action on the grants Friday and delay funding until sometime in the future.
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Time for a Little More Explanation

The California stem cell agency meets this Friday to vote on its first grants, but what is missing from its proposed agenda appears to be public discussion of how the agency intends to pay for them.

The agency's budget was up for review at an agency subcommittee meeting in late August, but oddly the financial plan is not on the agenda of the full Oversight Committee.

The staff report presented in August recommended adoption by the Oversight Committee of a conservative spending plan that would not provide any grants during 2005-2006. No such spending recommendation appears to be up for specific consideration at the Sacramento meeting, although the budget might be cloaked in item 13. (For more on the budget, see "Inside Spending Plans" item Aug. 31.)

The Oversight Committee agenda also contains some background material on several other matters, particularly on the important subject of guidelines for embryonic stem cell research. The proposed rules are available for download by the public. What is missing, however, is a “translation” and summary of the issues at hand – along the lines of the analysis provided by the California Legislative Analyst on bills before state lawmakers.

Admittedly that is not an easy task, but without a translation from scientific jargon, the important policy questions are only open to the scientific stem cell community – not the public. Providing such an analysis would seem to be an excellent task that could be performed by the Edelman PR firm, which is being paid nearly $30,000 a month for public information services for the agency.

Identifying (sort of) Winners and Losers in the First Stem Cell Grants

The California stem cell agency is slowly, slowly opening the envelope that will reveal the winners of the first grants to be given by the agency.

Twenty-six applicants are discussed as part of an online background document for the Sept. 9 Oversight Committee meeting. But their names are blacked out. We suspect, however, that persons involved in stem cell research could identify the institutions based on the descriptions in the documents.

The information gives a summary of the proposed program, a scientific score and something of a critique of the program and suggestions for improvements, at least in some cases. Also included are recommendations on whether to fund the application. The amount requested is reported along with the recommendations for grant amounts, which are in some cases less than requested.

Here is an example of the summary assessment of strengths and weaknesses of one proposed program, which was not recommended for funding.

“This application presents strengths in its proposal to develop a textbook in stem cell biology, to serve disadvantaged and minority students, and fill a needed gap in the mathematical approaches to stem cell biology. As a focus for the new institution, it will have considerable institutional commitment and attention. However, the limited number of faculty available and the lack of depth and accomplishment in stem cell biology weigh against these positive attributes.”

One quick guess is that application came from the University of California, Merced, based on the references to its newness and limited faculty, but we could be wrong. We do know that all the UC campuses reportedly made applications.

Given the likelihood that stem cell insiders will be able to identify the grant applicants, the only folks who won't know are members of the public, the shareholders who are paying for this stuff.

Unexplained by CIRM is what is exactly to be done with these applications. Based on its budget, the agency does not have money to fund the proposed programs. What may occur is a vote on the applications with funding deferred until money becomes available.