CIRM Garners Greenbacks and Flack From Critics

San Francisco Bay Area venture capitalists and a baseball mogul are among the folks who are making $14 million in bridge loans to the fiscally strapped California stem cell agency.

The names of the lenders were disclosed earlier this week at a meeting in Sacramento that approved the initial round of what is promised to be $50 million in bond anticipation notes for CIRM. Currently it cannot float general obligation California bonds because of lawsuits against it. The notes authorized this week will not be paid back if the state loses its case.

Reporters Terri Somers and Bill Ainsworth of the San Diego Union-Tribune made an extra effort to identify the players behind the charities that are buying the first round of the notes.

Here is what they wrote:

"The Jacobs Family Trust, founded by Qualcomm Chairman Irwin Jacobs and his wife, Joan, has agreed to buy $5 million in bond anticipation notes. The Moores Foundation, founded by San Diego Padres owner John Moores, has agreed to buy $2 million.

"Other investors include Blum Capital Partners ($1 million), headed by Richard Blum, husband of (U.S. Democratic)Sen. Dianne Feinstein (of California); the Beneficus Foundation ($2 million); the William K. Bowes Foundation ($2 million); and the Broad Foundation ($2 million). Beneficus was founded by John Doerr, a partner at the large Bay Area venture capital firm Kleiner Perkins Caufield & Byers, which has invested heavily in biotechnology. William Bowes, whose foundation bears his name, is also a Bay Area venture capitalist."

Moores was a catalyst in the creation of an embryonic stem cell consortium in San Diego that is touted as having the potential for being tops in the world.

Broad donated $25 million to USC earlier this year for stem cell research, among other things. CIRM President Zach Hall was a key figure in initiating the Broad effort when Hall was at USC.

Terms of the CIRM loans call for a variable interest rate capped at 5 percent. First year interest costs are estimated at $600,000. Stem cell chairman Robert Klein said the money will be enough to fund the first year of the grants approved last September by the agency.

The funding is a significant step forward for the agency, which appears to be making headway after a shaky start last year. However, not all the critics are happy. And they have a very good point about the lack of transparency that still troubles CIRM despite Klein's repeated promises to adhere to the highest and best standards of openness and transparency.

In an editorial earlier this week, The Sacramento Bee, which is the flagship of the nation's second largest chain of newspapers, said the bridge loan process was "mired in secrecy."

The Bee continued:

"Among other things, Klein's negotiations with these potential lender-donors set a vexing precedent. Never before has a state official spent so much time negotiating with private financiers to keep a public agency running. While Klein says these bridge loans will be a lifesaver for the institute, they also could plunge it into a deeper legal and political thicket.

"Although the fine print of Prop. 71 mentions 'bond anticipation notes,' it is unclear if state officials can legally issue them until the constitutionality of Prop. 71 has been affirmed. One of the lawsuits filed has asked the court to block the issuance of such notes."

The Foundation for Consumer and Taxpayers Rights of Santa Monica, Ca., warned that CIRM's leadership could be undercutting its credibility. John M. Simpson, stem cell project director for the watchdog group, said:

“At first blush it looks as though there are safeguards in place to ensure that purchasers of the notes don’t hold undue sway over the stem cell institute — they, or an affiliated entity, can’t seek a grant, loan or contract from CIRM.

“But what does it say about the institute and the secretive way it persists in doing business when the terms only became clear as the names of the first buyers were released? The stem cell institute may end up in the right place, but too often the leadership undercuts its own credibility by holding everything too close to the vest.

“A completely open, transparent process would better serve everyone. I truly wish they’d see that.”

For the record, while it still has significant transparency weaknesses, CIRM demonstrated above average openness on development of its rules for stem cell research, welcoming, at least publicly, diverse voices that did not always agree with its proposed standards.

Klein hailed the approval of the notes, saying "we've never (before) seen an aggregation of the major foundations throughout the state coming together ... as champions of research in this way," according to reporter Jim Downing of The Sacramento Bee.

A press release by CIRM quoted Eli Broad, founder of The Broad Foundation, as saying:

“California will be America’s leader in stem cell research, which will not only benefit the tremendous need of people suffering from debilitating diseases and conditions but will also help the California economy immeasurably.”

Oddly the press release did not quote any of the other investors.

We cannot provide a direct link to the CIRM press release because it appears that access to CIRM's web site and other California state web sites from this IP address in Mexico is being blocked. Some California web sites, such as the treasurer's, are accessible. We ran into this problem last fall from another location in Mexico. State computer specialists attributed the blockage to security issues and removed the block after we asked them to look into the matter. We have asked them again to make the CIRM site available.

Here are links to The Associated Press and San Francisco Chronicle stories on the bond anticipation notes. The CIRM website is www.cirm.ca.gov. You should be able to find a link on that page to the press release.

Angelides Makes Minor Stem Cell Hay

The latest score on stem cell issues in the Democratic gubernatorial race shows a modest edge for Phil Angelides over his opponent, Steve Westly.

Not that it is a matter of much significance, since both are supporters of the California stem cell agency and embryonic stem cell research. But Westly, California state controller, has launched an Internet advertising campaign on the issue, which means that he figures that there is some gain to be made through exploitation of stem cells.

Angelides, the California state treasurer, however, chalked up plus points as the result of the meeting earlier this week that authorized $14 million in bond anticipation notes for the agency. Angelides was mentioned prominently in most news stories – Westly not at all, although both are members of the committee that approved the notes. In fact, we cannot tell whether Westly attended the meeting, based on the news stories that we have seen.

Of course, Angelides is chairman of the committee, which held its meeting in his offices, making him the natural focus of coverage. Here is a link to Angelides' press release on the subject.

Can Californians Be Cowed?

Last month a stem cell industry executive told the California stem cell agency that it should not expect businesses to come crawling for grants. Another said firms "would not engage" unless the terms of grants fit the requirements of the industry. (See "resists.")

The Foundation for Taxpayer and Consumer Rights of Santa Monica, Ca., has taken umbrage at the comments.

John M. Simpson, stem cell project director for the group, focused on the comments of Stephen Juelsgaard, executive vice president of Genentech, who sounded the non-engagement note. Simpson said:

"Your remarks strike me as a blustering attempt to cow Californians into believing that needed stem cell research won't happen unless the game is played by biotech's rules -- otherwise you'll pick up your Petri dishes and go home."

The jousting highlights the stakes in the debate now underway at the California stem cell agency, which is in the process of formulating intellectual property rules for grants to business.

The foundation's comments notwithstanding, it would be naïve to expect stem cell firms to do anything less than push for the most advantageous position. In some fashion, all businesses have a basic responsibility to society. But their fundamental operating responsibilities are to their investors and to their bottom line, at least that is how they perceive it. That means they want as large a share of the take as possible.

On the other hand, CIRM must set firm rules for the unpredictable world of research and medicine and demonstrate that the people of California are likely to benefit from the $3 billion they authorized for stem cell research. CIRM must protect the the interests of the people of California – not just patients, scientists or other groups. Some at the agency believe generous terms for business mean speedy cures. But that could also translate to what could be huge boondoggles.

Juggling those competing demands and needs will be an important element in public confidence in the agency. The rhetoric will be heated. Accusations of greed and bad faith will fly. Egos will be bruised. It is our guess that Juelsgaard probably has not experienced a public attack such as the one leveled by by the foundation, if he is like most businessmen. He and others will need to develop thick skin. All the parties are likely to become disgruntled during the process, which makes it all the more important that hearings be totally open and transparent with ample advance public notice.

Naming Rights: Selling Out to Biotech?

The proposal by the California stem cell agency to sell naming rights to big donors has triggered a bit of concern from a couple of the watchdog groups.

Their objections were reported in a piece by reporter Paul Elias of The Associated Press. He wrote"

"'If they aren't careful, they are going to be seen as selling out to biotech,' said John (M.) Simpson of the Foundation for Taxpayer and Consumer Rights."

Elias continued:

"Jesse Reynolds, a longtime agency critic at the Center for Genetics and Society in Oakland, said even a grants ban wouldn't completely guard against conflicts. He said big donors could still influence how grants are awarded, perhaps pressuring research directed at diseases afflicting family members.

"'The potential for conflicts is there,' Reynolds said.

We should note that the naming proposal was first reported by the California Stem Cell Report – another reason to check into this site regularly.

We should also note that Elias' story carries a correction re the previous assertion by stem cell chairman Robert Klein that he had $50 million in commitments to purchase bond anticipation notes. The correction says that the figure is $45 million and that another $5 million is being negotiated.

The Oversight Committee is scheduled to take up the naming proposal Thursday at its meeting in Los Angeles.

Back to Romantic Old Mexico

The California Stem Cell Report will be posting items less frequently in the coming months, but we encourage all our readers to comment on the issues and send us messages keeping us up-to-date. The reason for the slower pace? We are returning to our sailboat-home in Romantic Old Mexico. Internet availability is a bit more difficult from a boat, particularly in locations where there are no marinas, than in the cities of California. Cheers to all of you and thanks for reading the California Stem Cell Report.

Stem Cell Industry Resists Strings on CIRM Grants

The California stem cell agency received two distinct messages Wednesday at its first meeting on rules for intellectual property for business.

No blank check for biotech was one admonition (see "ownership") from a watchdog group. The other came from industry, which said don't expect us to come crawling to you for money.

Reporter Lee Romney of the Los Angeles Times covered Wednesday's hearing. Here are some excerpts:

"Representatives of private biotech companies made it clear to institute board members Wednesday that major companies with the ability to bring cures to market are unlikely to seek state money if too many strings are attached to those dollars.

"'I don't think you're sitting in a position where all these companies will come on their knees to visit you,'" Brad Margus, chief executive of Mountain View, Calif.-based Perlegen Sciences Inc., warned the institute's intellectual property subcommittee.

"'He said that only second-rate companies would be interested. 'You need to have first-draft picks, not companies who are desperate,' he said.

"Industry's key concerns, Genentech Executive Vice President Stephen Juelsgard told the committee, are that the state will dictate how much companies can charge for new treatments; maintain the right to patent technology, if companies fail to do so; and require companies to share developments they consider proprietary. Major companies 'simply wouldn't engage,' Juelsgard said. 'It's not a risk worth taking.'"

The Times story continued:

"Zach Hall, the institute's president, said he is confident a compromise can be found. 'There is a heightened sense that this is a public project. As part of that there is an expectation that there will be a very tangible return,' Hall said. 'Yet we know that if we are going to have therapies that are widely available … the private sector will have to be involved in a very fundamental way. The trick is to satisfy both of those needs. We don't expect that everybody will be happy."

The Times appears to be the only newspaper this morning with a story on Wednesday's meeting.

Democratic Candidates to Vote on CIRM Funding

So far California's political junkies have been able to just say "no" to matters surrounding the California stem cell agency.

For the most part, CIRM issues have been off the political radar with the exception of an Internet advertising campaign by state Controller Steve Westly.

But next Tuesday that could change a tad. Westly and his rival for the Democratic nomination for governor, state Treasurer Phil Angelides, will share the same platform at a meeting of the CIRM Finance Committee, which is scheduled to considered funding of the agency. Both sit on the committee as the results of the terms of Prop. 71.

One never knows what can happen at a joint appearance of political rivals, so we may see some different sorts of media types and the politically curious attending the session .

There is certain to some political scheming this week by the candidates in connection with the meeting, both to maximize the beneficial electoral impact but also to minimize any possible damage from the rival candidate.

Angelides would seem to be in the most favorable position, given that he is chair of the committee, which is also meeting in his offices.

If you want to see the Democratic duo, you find all the details of the meeting here.

CIRM's Coffers Not Looking So Bare

It is not exactly a case of wheelbarrows of cash rolling in the doors of the California stem cell agency agency.

But next week, the creaky processes of California's governmental bureaucracy will start moving to put money in a pipeline to CIRM.

The main event is a meeting of the Finance Committee of CIRM. It is scheduled to convene next Tuesday afternoon in Sacramento to consider issuing notes to fund CIRM. Stem cell chairman Robert Klein has already said he has commitments for $50 million in what he calls bridge financing. It comes in the form of state bond anticipation notes that will not be repaid if the state loses the lawsuit against the agency. Klein has targeted philanthropic organizations as purchasers of the notes.

Also next Thursday, the Oversight Committee is expected to approve a new policy that will give donors naming rights if their gifts are "substantial." Klein has indicated that he has found a significant interest in donations if naming rights accompany them.

Here are some key features of the proposed policy as it will be heard Thursday before the Governance Subcommittee of CIRM.

"No naming will be considered without a gift of substantial value to CIRM and its programs.

"A gift that requires an initial and/or on-going expenditure will not be considered if the total estimated expenditures will likely equal or exceed the value of the gift.

"No gift will be accepted from an institution, entity, or individual that has applied for CIRM funding or that intends to apply for CIRM funding, except for gifts of the use of government or nonprofit-owned facilities for ICOC, working group, or scientific meetings.

"No gift will be accepted from a biotechnology company that devotes five percent or more of its annual budget to stem cell research."

An Examination of CIRM's Autonomy

California Politics Today is not letting the issue of the independence of CIRM rest.

The question was at the heart of the California stem cell trial during which CIRM foes argued that the agency was unconstitutional because it is not under the exclusive control of the state.

Reporter Marc Strassman's piece includes some history of the agency and Prop. 71 and a feeble response from the governor's office on the matter.

Watchdog Group: No Invention Ownership for Businesses

One of the organizations monitoring the California stem cell agency says the state should own any inventions that businesses create with state-funded research, a proposal that is certain to be resisted by the biotech industry.

"No blank check for biotech" is the anthem of the Foundation for Taxpayer and Consumer Rights in Santa Monica.

John M. Simpson, stem cell project director for the group, said in a letter to CIRM's Intellectual Property Tax Force.

"With biotech firms already lining up to share in the Prop 71 funds, it's disconcerting to hear venture capitalists like Steve Burrill refer to the stem cell institute's grants as 'almost like free money.' Clearly defined IP rules, governing such things as price and accessibility for underserved populations, will ensure that businesses receiving CIRM money will meet fair obligations to the public when they take taxpayer dollars. As you and the task force write IP rules for businesses you should remember that although Californians overwhelmingly approved Prop. 71, they never intended a black check for biotech."

Simpson also wrote:

“If Prop. 71 money funds research, perhaps a clinical trial … California should receive a fair commission when it is finally available on the market. If a patentable discovery results from Prop. 71-funded research by a business, the state should own it and place it in a patent pool so that the research can be as broadly shared as possible.”

CIRM has already adopted IP rules for non-profit institutions that give them ownership of any inventions funded by CIRM, a position the Santa Monica group opposes for businesses.

The IP Task Force is hearing IP recommendations from various groups at a hearing today.

Formulating a Plan to Give Away $3 Billion

Strategic planning can be one of those "yawner" endeavors – a meaningless process that is ignored by all parties hardly before the ink dries on the plan document.

But at CIRM it has been a matter of considerable concern, pitting different interests on the Oversight Committee against each other.(See "clashing interests"). The lack of a coherent plan has also played a role in some of administrative and other problems that have troubled the new agency.

At one point late last year the start-up difficulties prompted Paul Berg, a Nobel laureate from Stanford who fills in on the Oversight Committee, to say, "I liken it to the Iraq thinking - we won the war and didn't know what to do afterward." (See "beleaguered.")

With that backdrop, the latest run at planning the strategic plan kicks off Thursday at a meeting in San Francisco of the governance subcommittee of the Oversight group.

The item in question is a $250,000-plus contract with PriceWaterhouseCoopers to support efforts to develop a strategic plan. The agenda mentions an attached document which is not yet available on the Web, but presumably will tell us more about the latest approach.

One key matter to watch for is the approach to the interests of the patient advocates, who are pressing for speedy development of therapies and seem to be quite concerned about any slower strategy.

Also on the agenda is a policy for peddling naming rights to CIRM programs or property in connection with the receipt of gifts. (See "naming.")

A proposal for a compensation plan at CIRM is up for consideration along with the latest on outside contracts with CIRM. The contracts include $75,000 with Spiegel, Liao and Kagay and $25,000 with Orrick, Herrington & Sutcliffe, both of San Francisco, for work on the California stem cell trial and expected appeal.

The meeting to consider all this will take place in San Francisco at 3:30 p.m. Thursday. Remote locations are available in San Diego, Stanford, Sacramento, Irvine and three different sites in Los Angeles. Details are available on the agenda.

Color the News Stem Cell Green

Sometimes it seems that the California stem cell business is more about deriving dollars rather than therapies from the research. On the other hand, perhaps it actually is.

The news this morning has a strong focus on the monetary matters. And later this week, the California stem cell agency will kick off its hearings into dividing up the booty from any inventions developed by businesses that receive CIRM grants.

Here is quick look at the highlights of the fresh fodder from the mainstream media.

Writing an op-ed piece in the San Francisco Chronicle, John M. Simpson, the stem-cell project director for the Foundation for Taxpayer and Consumer Rights, said:

"The biotech industry is lining up to take Prop. 71 money and wants as few strings as possible attached. Speaking to biotech executives at a conference his firm organized in San Francisco, Steve Burrill, chairman of the venture capital and merchant banking firm Burrill & Co., described the capital funding being provided by taxpayers in California and a few other states as 'almost like free money' compared to commercial venture capital. That phrase is a tipoff to the lack of any sense of obligation. Clearly defined IP rules, governing such things as price and accessibility by underserved populations, will ensure that businesses meet fair obligations to the public when they take the public's 'free money.'"

Reporter Steve Johnson of the San Jose Mercury News wrote:

"Even with California's stem-cell research institute mired in legal challenges that block most of its financing, businesses in the Bay Area and elsewhere are betting their bottom lines that stem cells one day will yield staggering new medical cures and profits.

"About 100 companies in the United States and an equal number in other countries are trying to develop stem cell-based therapies and other products, according to venture capitalist G. Steven Burrill, who hosted a stem-cell conference in San Francisco last week.

"Coaxing commercial blockbusters from stem cells is costly and could take years. Even so, many of the executives and others drawn to the event sounded optimistic, given the progress they and others say is being made."

And reporter Daniel Levine of the San Francisco Business Times has a follow on our earlier report that Wisconsin wants California to cough up royalties for any CIRM-funded research into embryonic stem cell research.

Reporter Marc Strassman of California Politics Today also has three items: One links to a UC San Diego campus newspaper item about conflict of interest involving a member of the stem cell Oversight Committee; a second quotes Phil Angelides on Prop. 71 bonds two days after the measure passed and a third involves a statement from California State Sen. Deborah Ortiz on proceedings in the California stem cell trial.

WARF Under Assault For Excessive Royalties

The latest criticism of Wisconsin's control of patents on embryonic stem cells is well-covered in a piece in the Wisconsin State Journal that comes as California is facing new claims from WARF for a piece of the action in the Golden State.

Earlier this month, WARF's chief counsel told a stem cell conference that she expects to see California pay royalties to her agency. That's because CIRM-approved rules give the state roughly 25 percent royalties on inventions developed by CIRM-funded research at non-profit institutions. CIRM is scheduled to consider IP rules for grants to commercial firms next week.

Reporter Ron Seely of the Wisconsin newspaper wrote the article about patent complaints by Jeanne F. Loring, a stem-cell researcher with the Burnham Institute in San Diego,, and Cathryn Campbell, a patent attorney with McDermott, Will & Emery, a Washington, D.C., law firm.

Their charges were contained in an article in Science magazine that said WARF patents are "a more daunting barrier to progress in the field" than President Bush's restrictions on embryonic stem cell research.

Seely wrote:

"But the authors of the Science article also take issue with how WARF distributes the cells and the fees it charges for their use.

"Initially, WARF charged academic investigators $5,000 for the cells. After an agreement with the National Institutes of Health, which made WARF the main distribution center for the cells, that fee was reduced to $500.

"The price is steeper for private laboratories. WARF charges an upfront fee of up to $125,000 to private commercial labs for the cells, plus an annual maintenance fee of up to $40,000 to retain the license."

Seely quoted Carl Gulbrandsen, executive director of WARF, as saying,

"I'm not embarrassed at all to say that I hope the University of Wisconsin will make a whole lot of money from these patents."

Seely also carried a more detailed defense by Gulbrandsen of his position.

Loring has leveled charges at WARF previously. Nature magazine reported in May 2005 that she said her startup firm collapsed because she could not get access to embryonic stem cells at a reasonable price from WARF. That matter was discussed briefly in an article by Merrill Goozner in February in PLoS Medicine that explored the problem of patent thickets and stem cell research, particularly in California.

(Goozner's article is available without charge, but the piece by Loring in Science and the article in Nature require paid subscriptions. We should also note that Loring is a key figure in creation of the nation's first public embryo bank, which she said will make embryos available to qualified researchers at no cost.)

Seely's piece on Loring's most recent allegations appears to be the most comprehensive one available today. Most of the country and California saw this Associated Press piece.

One interesting sidelight on the patent dispute comes from Kathleen Gallagher of the Milwauke Journal in an article she wrote in 2004. She said,

"Significant discoveries involving stem cells may be 10 years away. Then it could take another five to eight years to get therapies through the U.S. Food and Drug Administration, said Carl R. Clark, director of marketing and licensing for the Medical College of Wisconsin Research Foundation. That means WARF's initial patents could expire before any royalties are generated.

"One of the companies best-positioned to bring stem cell therapies to market is Geron Corp. of Menlo Park, Calif.

"Geron funded much of the early research at the University of Wisconsin-Madison leading to James Thomson's first-ever isolation of human embryonic stem cells in 1998.

"The company has certain rights to develop therapeutic and diagnostic products involving certain stem cells. Geron has said it hopes to be in clinical trials by the end of 2005 or early in 2006 for therapies for spinal cord injuries.

"That makes Geron a fan of WARF's patent.

"'If 50 new companies are spawned in California in the next five years, those are licensing royalties to Madison and Menlo Park,' said Thomas B. Okarma, Geron's president and chief executive officer."

Can WARF Collect Stem Cell Royalties From California?

Earlier this month, we reported on a call by the Wisconsin Alumni Research Foundation for royalties from California-funded stem cell inventions.

The issue was addressed today in IPBIZ, a blog by patent lawyer Lawrence Ebert. He raises questions about WARF's position and includes a number of legal citations. Here are a few excerpts from the item:

"First of all, the information in the (California Stem Cell Report) post is worth consideration by people in California, and in New Jersey, Maryland, Connecticut, and Illinois, about state-financed funding of stem cell research."

He continues:

"My second point is, notwithstanding the significance of WARF's expressed position on March 14, it does not really constitute a threat to the other states. [There may be other things that do constitute a threat, but that's another story.]"

Ebert also says:

"Moreover, there's another reason the folks at WARF ought to be careful. CIRM is a state agency. Accusations of patent infringement against states play out a bit differently than the garden variety suit against a garden variety defendant."

ACT's Caldwell Responds to 'Unease' Item on State Funding of Stem Cell Research

Last week we wrote about how some in the biotech industry preferred federal funding of embryonic stem cell research as opposed to state-funded efforts. We puzzled over the situation and invited those quoted in the item to respond. We promised to carry their responses verbatim. Here is the response from William M. Caldwell, chief executive officer of Advanced Cell Technology, Inc., of Alameda, Ca.

"I appreciate your allowing me to comment on your recent blog of March 16, 2006, "The Big Uneasy." I believe you misrepresented my stand on state funding for stem cell research and welcome the opportunity to correct the impression I believe you gave your readers.

"You are correct that I believe we should see national funding via the National Institutes of Health, especially in my arena of embryonic stem cell research. But I do not regard the state's $3 billion stem cell agency "with unease," as you put it.

"The real issue here is bringing treatments, therapies and cures to the bedside. In an environment where our national government has failed in providing us with the best possible path to this objective, and in fact blocking the ability of science to move forward, California has stepped up and led the nation.

"In August 2001, when President Bush announced a ban on federal funding of all but a limited number of stem cell lines, the states began stepping into this breach by setting out to establish their own stem cell research programs. Bush's restrictive federal policy on this research has given the states a remarkable opportunity, but it also has left them to battle with complex economic, ethical, policy, and moral issues. States are now facing important political and organizational challenges in designing and implementing effective state-financed stem cell programs -- all of which have been institutionalized over decades at the NIH.

"As the CEO of Advanced Cell Technology, a leading biotechnology company focused on developing and commercializing human stem cell technology, I believe our recent moving of the company's headquarters from Massachusetts to California as a direct result of the passage of Prop. 71, is a clear indication that I am a supporter of the California Institute of Regenerative Medicine (CIRM). However, as I said at The Stem Cell Meeting last week, state funding of this research is not the best approach. Embryonic stem cell research should be funded by the National Institutes of Health, the major source of research funding for the life sciences in the United States, not each individual state.

"Having states independently fund and regulate embryonic stem cell research will, I believe, create a disjointed morass of dissimilar bureaucratic procedures, oversight, rules and regulations.

"Because of uniform federal standards and guidelines, the funding recipient has consistency in protocols, processes and applications wherever the research is done in this country. States having different agendas, for whatever reason, will potentially impose immense challenges for the scientific community, which typically will conduct collaborations in diverse geographic areas of this country.

"The lack of federal funding in this field has driven some individual scientists to move abroad to countries that are soliciting expertise in this area and are willing to fund this research. Some universities and other research enterprises have opened up facilities abroad to take advantage of a better regulatory climate. Just look at Singapore and which universities have developed a presence there in the past decade. This is completely unsatisfactory from an American perspective.

"I stand by my statement that State-funded stem cell programs are not the ideal solution, but from a scientist's perspective, in a world where our federal government has turned a blind eye to this promising research, it is the only U.S. alternative available."

CGS On Money, Eggs and Women

Women should not be paid for their eggs, and here is why, according to Jesse Reynolds, Project Director, Biotechnology Accountability, at the Center for Genetics and Society in Oakland, Ca.

Reynolds sent his comment in connection with the "cash larded" item earlier today. If others would like to comment on this matter, you may use the comment function at the end of this item (click on the word comment) or send an email to me at djensen@californiastemcellreport.blogspot.com. Here is Reynolds' full comment.

"I'd like to make two clarifications, and an assertion.

"First, you state that 'One of the working assumptions of stem cell researchers is that IVF will provide a lot of eggs that could be used for science.' However, the assumption has generally been about a surplus of embryos - not eggs - created but not used for IVF. There are negligible surplus eggs in IVF. Because they are difficult to extract and do not store well, eggs are typically the limiting factor in IVF. (There is, however, some recent advances with freezing eggs.) Thus, any eggs for research generally must be designated as such from the start. In the US, there is little discussion of 'mixed donation' - providing eggs for both purposes in one extraction - although the UK is considering this. Egg extraction in the US is generally done as in an 'either/or' context.

"Your post could be interpreted as implying that eggs are needed for stem cell research. But the distinction between typical embryonic stem cell research and that using cloning techniques is often blurred. Almost all human embryonic stem cell research is done with surplus embryos from IVF. Only a tiny fraction of researchers are attempting to make clonal embryos for stem cell lines. This is what requires eggs. Stem cell lines are yet to be successfully derived from clonal embryos. Moreover, some observers and scientists are beginning to question to need for SCNT (a.k.a. research or therapeutic cloning) and thus the need for eggs. For example, see 'Beyond Fraud - Stem-Cell Research Continues' by Evan Snyder and Jeanne Loring and the lead story in our most recent newsletter.

"The Center for Genetics and Society believes that that women should not be paid for their eggs. It is true everyone else in the process gets paid, but they are doing their jobs. As a society, we've generally concluded that people should not risk their health for research in order to make income. That's why we are not allowed to sell organs, such as kidneys. The logic that 'everyone else is paid' would imply that kidney donors should be paid by the highest bidder.

"We conclude that economically vulnerable women should not be financially induced to put their health at risk for research that at this point is speculative and, all too often, hyped."

Stem Cell Research Chain Larded With Cash Except for Women Egg Donors

The Wall Street Journal this morning carried an interesting piece on the risk, pain and money involved in the fertility and egg business.

Written by reporter Sylvia Pagan Westphal, the article offers some perspective on the research and economic issues involved in providing eggs for stem cell research – a subject of current interest in the California legislature and with the California stem cell agency.

Here are the first three paragraphs of the article:

"Nichola Grant underwent five in-vitro fertilization attempts the traditional way. First came weeks of daily hormone shots to stimulate egg production, which painfully bloated her ovaries and stomach. Then doctors inserted a needle through her vaginal wall to remove the eggs -- up to 20 at a time, she says -- from her ovaries. On three occasions fertilized eggs were put back in her womb but failed to lead to a baby.

"That was enough discomfort for Ms. Grant, a 34-year-old nurse in Queens, N.Y. She went to Manhattan fertility doctor John Zhang. There were barely any shots -- mostly pills -- and he removed just three eggs. He implanted one in the womb, and she delivered a baby boy in January. 'It was so easy,' she says. 'It's no comparison.'

"Dr. Zhang doesn't claim his method leads to higher pregnancy rates, but he does assert that Ms. Grant's story represents what's wrong with standard operating procedure at fertility clinics. He says the fertility profession is too concerned with drawing lots of eggs from women. The result, he believes, is more pain, a higher risk of complications and a success rate little improved over gentler approaches."

Westphal's piece continues: "'A lot of people realize we're overdoing it,' adds George Inge, a doctor at the Center for Reproductive Medicine in Mobile, Ala. 'We've got to come out with ways so women are not so beat down.'"

The story reports that the IVF business runs about $3 billion a year, according to Debora Spar, a Harvard Business School professor. More than 120,000 women underwent IVF procedures in 2003.

As for the risk of the procedure, the Journal says:

"One of the most serious complications is ovarian hyperstimulation syndrome, or OHSS, a potentially fatal condition in which ovarian tissue leaks fluid into the body cavity. This makes the blood thicker and increases the risk of stroke. Mild OHSS, which brings discomfort but doesn't require hospitalization, occurs in up to 35% of IVF cycles. Moderate to severe forms take place in up to 6% of cycles."

The piece cited the case of one woman who was admitted to a hospital where doctors drained seven liters of fluid over two days from from her abdominal cavity with a needle. Other sources have cited two deaths in the UK.

One of the working assumptions of stem cell researchers is that IVF will provide a lot of eggs that could be used for science. However, should Zhang's procedures become the market standard, that source would dry up. Which brings us to the question of whether women should be allowed to sell their eggs.

At every stage of the egg gathering process, money is being made except by the woman, who provides the critical material, if we are to follow the CIRM model. The clinics, even nonprofit ones, that extract the eggs maintain a margin in excess of costs. Doctors and nurses and other staff at the clinics earn their livings by harvesting eggs. The eggs then are provided to scientists to perform research. The scientists make their living doing this, receiving grants, being paid salaries, possibly enjoying revenues from inventions that require the use of a woman's eggs. The research institutions' coffers and reputations are enriched as well by the stem cell research that requires the use of eggs from a woman who receives no payment. The commercial enterprises that bring the therapies to market stand to make huge sums based on material that has been derived at no cost from a woman, who may or may not know that at the time of donation that a host of people and enterprises stand to gain economically from her donation.

Prop. 71 bars compensation for eggs, and CIRM has approved rules to ensure that women know some of the economic implications of their donations. But they are unlikely to tell donors that the research chain is larded with folks who will make money on something that they are giving away.

Somehow it doesn't seem quite fair.

CIRM Tackles IP Rules for Private Business March 29

The California stem cell agency will begin to develop its share-the-wealth rules for research grants to private enterprise next week as one expert warns of a "chilling effect" if the state gets too greedy.

The note of caution came from David Mowery, professor at the UC Berkeley Haas School of Business.
A press release last Friday from the school said:

"Should intellectual property and patenting laws be tweaked so that a portion of profits from stem cell research goes back to taxpayers and not just into the coffers of universities and biotech companies? Should the state be able to negotiate low prices on drugs or treatments that are eventually developed with Proposition 71 funds?
"'The direct or near-term benefits from such policies are likely to be very small,' Mowery argues. 'On the other hand, the risk of such policies having a chilling effect on licensee interest in intellectual property is likely to be great.'"

The press release continued:

"'To begin tampering with this legislation on the question of stem cell research in order to set up what amounts to a separate set of laws for this new area of research will dramatically raise overhead costs and serve as a drag on innovation,' he says. 'The relatively small amount of money that will be returned to taxpayers will hardly make it worth it.'"

The size of that return – if any – is likely to be lurking among the subjects at a meeting of CIRM's Intellectual Property Task Force next Wednesday (3-29). The primary item on the agenda? "Informational presentations by representatives of granting agencies and the commercial life sciences sector regarding grants to for-profit entities." At this point, that is the most detailed information available on the Web.

The IP Task Force is on a pretty fast track to develop its regulations, so if you want to have your views considered, it would be wise to touch base with the group. The meeting can be heard at five different locations throughout California, but the San Francisco site is probably where the chairman of the task force, Ed Penhoet, will be located.

Other sites are located in Elk Grove, Chico, Irvine and Stanford. The addresses can be found on the agenda.

Altruism Won't Supply Enough Eggs and Other News From UCLA

California Politics Today is back with another item on the California stem cell agency – this time an interview with a UCLA law professor about his view that the lawsuits against CIRM are frivolous and should have been dismissed long ago.

Reporter Marc Strassman spoke with Russell Korobkin, who has recently written written op-ed articles about the lawsuits.

The plaintiffs in case have argued that CIRM is operating outside the "exclusive" management and control of the state. However, Korobkin told Strassman that the "totality of circumstances" within state government, in fact, brings the agency within the control of the state. He also said it is not unconstitutional for voters to create an agency that has built-in conflicts of interests, as does CIRM.

The 36-minute interview, which can be seen on the Web, covered a great deal of ground. Among other matters, Korobkin said he was "not enough of an expert" to say whether Prop. 71 supporters engaged in a bait-and-switch campaign in the 2004 election. He also said women should be paid for their eggs, although he noted that was prohibited by Prop. 71. Korobkin said altruism is not going to generate the quantity of eggs needed for research.

Strassman prepared a written report on the interview, but did not include in his item some of the material that we extracted from the full video.

A Caveat Emptor on CIRM

The headline reads: "California's Proposition 71 may devolve into 'stem cell civil war.'"

But then again it may not, as my onetime boss, George Skelton, then UPI bureau chief in Sacramento and now political columnist for the Los Angeles Times, used to tell me decades ago concerning the use of the word "may."

The headline in question comes from an article by reporter Marc Strassman on California Politics Today.

Strassman has followed Prop. 71 for a very long time, and we are overdue in providing more information on his news and commentary.

Strassman's site is rich with detail about Prop. 71. Here are two sample headlines from his report:

"'Proposition 71 stem cell quagmire deepens as 'egg recruitment' and 'cellular vampirism' issues receive heightened scrutiny" (California Politics Today, November 17, 2005)

"'Stem Cell Wars, Volume 2, Chapter 2: Human Egg Farming--"Can either the free market or altruistic volunteers provide the human eggs needed for hESC research under Proposition 71, or will some form of coercion be necessary?' (California Politics Today, November 20, 2005)"

One of the unique features of Strassman's site is access to his audio and sometimes video recordings of interviews with many of the stem cell players. Strassman does have a skeptical point of view about the California stem cell agency and produces a report that is as much commentary as reporting.

His latest missive carries the headline mentioned in the first paragraph of this story. Strassman's item concludes with the following:

"Given all that's transpired, and been revealed, since California voters bought the deal proposed to them by Robert Klein and his team of lawyers, economists, and bio-medical researchers (largely ones associated with Stanford University), on November 2, 2004, one can only wonder why the ultra-modern bio-medical technology, cutting-edge legal construction, and beyond state-of-the-art organizational structures instantiated in that initiative measure were not more thoroughly subjected to the more ancient, but still relevant, legal and commercial principle of caveat emptor, 'let the buyer beware.'"

Is CIRM the Big Uneasy?

How do some California stem cell entrepreneurs regard the state's $3 billion stem cell agency?

With unease, at least based on comments at a stem cell conference in San Francisco earlier this week.

Generally, speakers spoke approvingly of the efforts by California and other states to fund stem cell research. But they exhibited a decided preference for national funding via the National Institutes of Health, which, of course, has been cut off by President Bush and is threatened by various legislators. At least in terms of embryonic stem cell research.

William Caldwell, CEO of Advanced Cell Technology, of Alameda, Ca., said state funding of embryonic stem research is "not the way to go." He said the California stem cell research funding effort is "the worst of all evils but it is the evil we've got."

Caldwell did not elaborate on his rather dramatic phrasing, but others echoed it in one form or another. Fred Middleton, managing director of Sanderling Ventures, a biomedical venture capital firm in San Mateo, Ca., did not speak directly to Caldwell's comment. But he said there is "not a clear road map" to CIRM funds.

Perhaps we are a bit dense on this, but Caldwell's position is a little difficult for us to understand. Federal funding for embryonic stem cell research is one-tenth of what is proposed in California. The federal spending is subject to the whims of the president and Congress. Federal stem cell research funding also has to battle a host of other worthy and powerful causes for its share of the federal research pie, which is not likely to expand in the near future.

Contrast that to CIRM, which operates almost totally independently from the legislature and the governor. Its funding comes from $3 billion already approved by voters and is not likely to go away. The money is devoted to stem cell research and is not likely to be tapped by other research efforts. And the agency is emulating many of the processes of the NIH, which are already familiar to biotech industry.

Of course, California's program is new and somewhat unpredictable. It is going beyond NIH standards in some regards. Its intellectual property policies may be tougher for private businesses.

In a perfect world, it would be best to have national standards for stem cell research and unfettered federal funding. But the fetters are not likely to come off during the next two or three years. So what is so problematic about California's approach?

Perhaps Mr. Caldwell, Mr. Middleton or others can enlighten us and the readers of this report. They or you may comment, even anonymously, by clicking on the word "comment" at the end of this item. Or you can send an email directly to me, djensen@californiastemcellreport.com, with your preferences on how your response should be handled.

California Should Expect Modest Royalties From Stem Cell Firms

The California stem cell agency is going to give folks a glimpse later this month at its initial thinking concerning the division of spoils from inventions that come about from its grants to commercial firms.

But we already have a suggestion from one interested party that the state's share be modest. Fred Middleton, managing director of a biomedical venture capital firm in San Mateo, Ca., Sanderling Ventures, suggested minimal royalties – something in the 3 percent to 8 percent range. Ten percent would be too high, he said.

He also said the state should not expect a short-term payback on its investment.

Not that any of this is likely to have a great impact in the near future. CIRM has not yet funded a single grant. And it could be some time before it starts considering grants to businesses. However, it would behoove any commercial California stem cell enterprise to weigh in early as the ground rules are being formulated.

Middleton made his comments at a stem cell conference in San Francisco earlier this week.

Demons, Disease and Stem Cells

Nobel Prize winner Paul Berg says that social conservatives are "actively demonizing" some scientists for stem cell research and other work that offends the critics' sensibilities.

Berg, a Stanford University professor who serves as an alternate member on the California stem cell Oversight Committee, made the comment in a speech at a major stem cell conference in San Francisco earlier this week.

Berg said,

"Perhaps for the first time, the threat looms that certain lines of biomedical research could be forbidden, indeed, criminalized. Currently, legislation passed several times in the House and pending in the Senate threatens criminal penalties of 10 years in prison and a $1 million fine for using a procedure that involves cloning a patient’s genetic information in the form of embryonic stem cells. Never mind that this procedure is intended solely for creating a deeper knowledge of the genetic and cellular roots of disease; and, that the procedure is presently the only means for creating patient-specific embryonic stem cells for the treatment of several debilitating ailments. Even more ludicrous, are the same criminal penalties for providing or receiving any therapy if the development of that therapy involved the nuclear transfer technology. Consider the arrogance of withholding possibly life-saving aid from the American public because some members of the Congress are offended by the technology!"

He continued:

"I am concerned that the quality of the science may no longer be the sole or principal determinant in whether a particular line of research would be permitted; rather, theological and ideological pronouncements parading as fundamental ethical and moral values may increasingly take over. Vocal and organized minorities through their political representatives could become a prominent force in defining the boundaries and even the permissibility of scientific research."

Berg said,

"Presently, social conservatives are actively demonizing scientists conducting research on AIDS, reproductive technologies and fetal and embryo development. The call by social conservatives to limit certain lines of inquiry, as now exists for human embryo research, has been to restrict federal funding for the 'offensive' activity."

Berg also suggested that research is entitled to protection under the First Amendment and discussed legal arguments that support that position. He said,

"Abridging (the) implicit right to unfettered inquiry because it offends someone’s religious beliefs or ethical views is in my view no more justifiable than prohibiting press investigations that offend certain constituencies."

Berg spoke at The Stem Cell Meeting in San Francisco on Monday.

$50 Million for CIRM: All But In The Bag

California stem cell chairman Robert Klein says he now has commitments for the $50 million he has been trying to raise to fund grants approved six months ago by the stem cell agency.

Klein made the disclosure to a stem cell conference in San Francisco earlier this week. The next steps will come from the state treasurer's office to formally approve the bond anticipation notes and do the paperwork. An official in the treasurer's office said that process normally takes only a few weeks.

Of course, that assumes normal proceedings. However, it may also be necessary to arrange for some hoopla to recognize the buyers of the notes and maximize their public impact. State Treasurer Phil Angelides, who is seeking the Democratic nomination for governor, also may want to be sure the proceedings enhance his campaign.

With exception of one purchaser, Klein has not identified the buyers. But he has targeted philanthropic organizations. One reason is that the notes will not be repaid if the state loses the lawsuits against the agency. The risk involved means that the notes will carry a higher interest rate than normal state bonds.

Klein discussed the financing in appearances before The Stem Cell Meeting, sponsored by Burrill and Co., in San Francisco. Burrill is a life sciences merchant bank with more than $500 million under management. The conference drew hundreds of participants from across the nation and internationally.

The End to The Stem Cell Meeting

The following comes to you live from The Stem Cell Meeting in San Francisco.

At the end of the day came rhetoric about the culture of death, bald eagles and their eggs and how we all should be able to get along.

The last meeting of The Stem Cell Meeting in San Francisco concluded with a lively panel on ethics in stem cell research. It was heated at times, humorous and informative. But it did not change the mind of a single person (we think).

Following the final panel, the host of the conference, Steve Burrill, head of the firm bearing his name, told the audience the two-day conference was planned to avoid an event where business people talk only to business people and scientists only talk to scientists. And that it was, an interesting cross section of bureaucrats, executives, scientists, religious folks and so forth. Burrill promised another session the same time next year.

We will have more tomorrow on the events at the meeting.

Wisconsin to CIRM: Cough Up Some Cash

The following is coming live from The Stem Cell Meeting today in San Francisco, sponsored by Burrill and Co.

Wisconsin wants a piece of the California stem cell pie.

That's because the California stem cell agency has decided to give its own state 25 percent royalties on any inventions created with CIRM-funded embryonic stem cell research.

Wisconsin is involved because the Wisconsin Alumni Research Foundation has two patents that broadly cover the preparation of embryonic stem cells. Beth Donley, general counsel, Wisconsin Alumni Research Foundation, said that if CIRM stipulates 25 percent royalties for California that requirement amounts to commercialization. And that means WARF wants a payment from California.

How much would that amount to? Speaking during a panel session at The Stem Cell Meeting in San Francisco today, Donley said that licenses start at fairly low rates and mentioned a bottom figure of $75,000. In February of 2005, Peter Balbus, managing director at Pragmaxis LLC, of Glen Ellyn, Ill., estimated that Wisconsin could receive $200 million for $4 billion in stem cell product revenues. However, it is not clear whether that estimate is still valid.

Donley told industry representatives at the conference, sponsored by Burrill & Co., that she had spoken with CIRM officials on three occasions. The last time was on Monday when she told Robert Klein, California stem cell chairman, that the 25 percent royalty provision meant that CIRM was "trading on (Wisconsin) technology to build a (commercial) program." She said CIRM could provide the royalty in various ways. One would be to provide a stream of revenue from whatever California receives. Another would be to build it into grant arrangements with the nonprofit institutions.

Todd Lorenz, chair, Life Sciences and Health Care, Dorsey & Whitney LLP, another member of the panel, said Donley's statement raised the issue of "suffocation of product." The term refers to excessive layers of royalties of as much of 25 to 30 percent that stifle commercialization of therapies. Donley said Wisconsin was entitled to receive payments for use of its products and that the funds would go for research and education.

Warnings about Overhyping Stem Cell Science

The following is coming live from The Stem Cell Meeting today in San Francisco, sponsored by Burrill and Co.

California stem cell chairman Robert Klein is heading a panel called "Stem Cell Politics: Global Strategies for Supporting Research." Michael Werner of The Werner Group has just told the audience that no state in this country is "talking about the kind of money" that is likely to be available in California. The best prospects for significant stem cell research funding are in New Jersey, Maryland and Illinois. Angela McNab, chief executive of the Human Fertilization and Embryology Authority in the UK, warned that the audience that they cannot take public confidence in stem cell research for granted. She said excessive enthusiasm can lead to overhyping benefits and the speed with which they will be produced. She warned that when results are not forthcoming, opponents "will use the hype to discredit the science."

We will have more on the conference later today.

Coming Up

Today we are attending The Stem Cell Meeting in San Francisco sponsored by Burrill and Co. The conference will be discussing the investment environment for stem cell research along with ethical issues, among other things. Topics include "Where is The Money" and "The Business of Stem Cells." We hope to post items from the conference as it occurs, if the opportunity is available. If not, we will post news from the conference this evening (Pacific Standard Time).

No Teleconferencing for Research Working Group Meeting

Earlier this month we reported that some sort of teleconferencing arrangements were in the works for today's meeting of the research working group of the California agency. However, the reference to those arrangements has been stripped from the agenda posted on the Web. We queried the agency about the matter. They responded that teleconferencing is available only for members of the working groups – not the public.

The New, Obscure Run at California Stem Cell Research Guidelines

Belatedly and quietly, another California state agency is looking into ethical standards for embryonic stem cell research. And at its first meeting two members suggested that it might be appropriate to pay women for donating eggs.

The agency in question is the Department of Health Services. Under 2003 legislation by California state Sen. Deborah Ortiz, chair of the Senate Committee, the department was required to develop guidelines for embryonic stem cell research by Jan. 1, 2005, with the use of an advisory committee.

That 13-member committee was not appointed until six months after that deadline. It did not hold its first meeting until Feb. 24 of this year with the only public notice coming on an obscure website within the Department of Health Services.

Lea Brooks, chief of the public information section of DHS, said the department has no plans to notify the public about committee meetings other than by postings on the website, even if individuals request notification. The committee is expected to have two more meetings before concluding its work this fall.

The committee's guidelines affect all embryonic stem cell research in California, except for that financed by the California stem cell agency, which already has approved its own rules. CIRM is constitutionally independent of DHS and and is not required to adhere to the DHS guidelines.

Members of the advisory committee, however, seem to be in agreement on creating guidelines that are consistent with CIRM regulations, based on a somewhat garbled transcript of the Feb. 24 meeting, which was not covered by the media.

However, the ticklish issue of payments for eggs, which CIRM has shied away from, was raised by committee member Elliott Dorff, a professor of philosophy, who, according to the transcript, said:,

"One issue is just simply how realistic it is to expect women to donate their eggs free of charge. That the UCLA Bruins -- I can’t say the law school at UCLA -- every single time, there are ads for women to donate their eggs for purposes of fertilizing other couples. And while the standard used to be $5,000 plus expenses, I’ve seen ads as high as $80,000 for a particular kind of egg. And so one issue that - I mean I understand why the guidelines don’t want to have any exchange over this, but if the case, I’m sort of wondering whether is it at all realistic."

Committee member Gregory Stock also expressed concerned about a ban on remuneration.

The delay in implementation of the guideline law is a matter of some dispute. Questions have also been raised about reported changes in the committee's composition.

Brooks said the law, as originally passed, did not provide funding. However, other sources indicated that the governor attempted to "defund" it in his first budget. Brooks said it took from June 7, 2005, the date of the committee's appointment, until recently to get all members of the committee to agree to serve and to agree on a meeting date.

Another source said one list of committee members was circulated but that it was changed without notifying persons who were on the original list. The implication was that the committee was altered to be less restrictive on research. Brooks said there was only one list.

It is not clear how much privately funded embryonic stem cell research is underway in California. However, Stanford and UC San Francisco both have private grants to build facilities to do privately funded research. The state also has a number of privately funded stem cell companies.

The bulk of the first advisory committee meeting was largely occupied with background briefings and organizational issues, based on the transcript.

The next public meeting may come in May or June with the final session later this year, according to Henry Greely, chairman of the panel. During the interim, subcommittees will work privately to prepare material for the full committee meetings.

Here is the official list of the committee members: Elizabeth Helen Blackburn, Ph.D, Professor, Departments of Biochemistry and Biophysics, University of California, San Francisco; Samuel H. Cheshier, M.D., Ph.D. Neurosurgical Resident, Department of Neurosurgery, Stanford University School of Medicine; Gregory Stock, Ph.D., M.B.A., Director, Program on Medicine, Technology and Society, University of California, Los Angeles; Irving Weissman, M.D.Director and Professor, Institute of Cancer/Stem Cell Biology and Medicine, Division of Neurosurgery, Department of Medicine, Stanford University School of Medicine; Otoniel Martinez-Masa, Ph.D. Professor, Department of Obstetrics and Gynecology, David Geffen School of Medicine, University of California, Los Angeles; Fred Gage, Ph.D. Laboratory of Genetics, The Stalk Institute for Biological Studies; Bertram H. Lubin, M.D. President, Children’s Hospital Oakland Research Institute and Director of Cord Blood Program; Bernard Lo, M.D. Director of Program in Medical Ethics, Professor of Medicine, University of California, San Francisco; David Magnus, Ph.D. Director, Stanford Center for Biomedical Ethics and Associate Professor, Department of Pediatrics, Stanford University; Henry Greely, J.D. Professor of Law, Stanford Law School; Radhika Rao, J.D. Professor of Law, University of California, Hastings College of Law, San Francisco; Elliot Dorff, Ph.D. Professor of Philosophy, University of Judaism, Los Angeles; Margaret R. McLean, Ph.D. Assistant Director, Markkula Center for Applied Ethics and Director, Biotechnology and Heath Care Ethics, Santa Clara University.

More information on the committee can be found at this website.

Coming Up

A little later today we will look at the other California state agency that deals with stem cell research issues. Obscure and dilatory seem to be its hallmarks, although its actions could be far-reaching.

The California Stem Cell Trial: 'Purely Political'

If you missed the piece by the UCLA law professor arguing that the California stem cell trial was a waste of valuable court time, you might want to check out a version of it that appeared this morning in the San Francisco Chronicle.

The article was written by Russell Korobkin. He said, among other things:

"So far, the judicial system has been complicit in the use of the courts for purely political purposes. Because the lawsuit clearly lacked legal merit, the case could have, and should have, been thrown out months ago. Instead, an overly cautious Alameda County Superior Court judge told the plaintiffs that, although she found their written arguments unconvincing, she would afford them another opportunity to convince her by presenting evidence at trial."

Penultimate Clashes in the Stem Trial

The almost final arguments in the California stem cell trial have now been filed. Rebuttals are due next week.

Here is part of what reporter Bernadette Tansey of the San Francisco Chronicle had to say about the filings:

"Robert Taylor, an attorney for the taxpayer group People's Advocate, argued that members of the independent committee charged with distributing billions in stem cell grants represent the interests of the universities and disease advocacy organizations from which they are drawn, not the interests of the state at large. But the state prosecutor defending the stem cell initiative said the challengers had failed to produce any evidence at trial to prove their claims. The testimony demonstrated that the new research institute is subject to supervision and control by state authorities including the treasurer's office and the Legislature, wrote Deputy Attorney General Tamar Pachter...."
"The opponents will have a last chance to counter each other's written arguments Wednesday, when final reply briefs must be filed with Alameda County Superior Court Judge Bonnie Sabraw. She will then issue a written ruling, possibly within weeks. But even if the plaintiffs lose, their appeals could take another year."

It appears that Tansey was the only reporter to file a story this morning on the filings, but, of course, that statement has to be qualified by proficiency of the usual search engines, which do not find everything.

Four Stem Cell Biggies Form Consortium

San Diego is on a stem cell roll this week. First it was the public embryo bank – the nation's first ever. Now it is a plan to become the world's epicenter of stem cell research.

Reporter Terri Somers broke both of the stories in the San Diego Union-Tribune. Her piece today said that "four La Jolla research institutes plan to join forces and seek state funding to build a facility for human embryonic stem cell research."

They are the University of California, San Diego, and the Burnham, Scripps and Salk institutes. The site would be on the UC campus, which is close to the other three organizations. Somers said their agreement would create a nonprofit entity to plan and build the embryonic stem cell research facility. They would also pledge not to individually seek grants from CIRM.

Somers said, "A new building is important because federal limitations on stem cell research make it impossible to do much of the work in labs that receive federal funding."

Part of the consortium's strategy is to create a better chance of receiving grants, Somers wrote.

"'Individually all of the consortium institutes are stellar, but together we will be a tour de force and become the epicenter of stem cell research in the United States, and therefore the world,' said Dr. Edward Holmes, UCSD vice chancellor of health sciences."

Holmes, John Reed, president of Burnham, and Richard Murphy, president of Salk, are all on CIRM's 29-member Oversight Committee.

"In that role, they vote on who they think should receive research grants; however, the three would not be allowed to vote on grant requests from the consortium," Somers reported.

Zach Hall, president of CIRM, praised creation of the consortium, saying CIRM istrying to encourage the pooling of resources.

"Hall, a former vice chancellor at UC San Francisco, helped draft a plan for creating four distinct research institutes within the University of California.
"'They were all within the University of California and it was still difficult because each has different cultures, different personalities and different rules,' Hall said. 'The fact that these four institutions have put this together I think is a wonderful signal. I'm tremendously impressed with the effort that must have gone into this.'"

One of the players credited with pushing the effort during the last year is John Moores, who owns the San Diego Padres baseball team and is on the UC Board of Regents and the Scripps board. Reed said Moores was an important catalyst in pushing discussions forward.
------
For those of you outside of California, Jolla is pronounced hoy-yah. It is derived from the Spanish word "joya," which means jewel. There is a pun in there someplace about stem cell jewels and crowning consortiums, but we are not going to look for it.

Los Angeles Readers Told of Stem Cell 'Silliness'

LA Weekly, a 207,000-circulation alternative newspaper, has offered up its status report on the California stem cell agency in a piece headlined "The Stem Cell Debate Gets Silly."

Regular readers of this blog are not likely to find new information in the article by Steven Kotler. However, it does quote us on the subject of the stem cell trial, which obviously makes the piece worth checking out. It also quotes bioethicist Alta Charo as saying the stem cell debate is still "about everything but stem cells."

Kotler also wrote good-reading piece in 2003 on the state of stem cell research, which still retains freshness. A sample:

"Irv Weissman doesn’t look the bear-eating sort. He’s of middle height, middle weight, mildly balding, with fine clothes, a jovial aspect and a long, wispy beard. He looks like a Russian poet or an aged food critic. But, beneath this exterior, he’s just a boy from Montana. Which is to say he comes from a culture of bear eaters."

Kotler's website makes it difficult to provide a direct link to the story, but you can find it under "articles" Jan. 1, 2003.

CIRM Faces State Performance Audit

The California stem cell agency is facing a new and tougher official examination of its performance.

That is the result of approval of a request by Sen. Deborah Ortiz and 10 other legislators for a review of CIRM by the California auditor general. The audit should be significantly more rigorous than the ones authorized by state law involving the state controller's office.

Ortiz' office released the following statement:

"In presenting the audit request, Sen. Ortiz said the audit will review the administrative expenditures as well as the policies and procedures to ensure they are consistent with the intent of the initiative and with best practices for research organizations and public agencies – critical steps to ensure that up to $7 billion in public money is being spent appropriately.

"'I believe the audit will help ensure that the program is on sound footing as it moves into its grant-making phase next year,' she said.

"In her testimony, Sen. Ortiz noted CIRM and ICOC will have spent close to $8 million in administrative funds by the end of the year and approved $40 million in training grants in September 2005, which they hope to finance through loans from philanthropic organizations since the public bonds authorized by voters in approving Proposition 71 are held up by litigation.

"As some of you know, the program has stumbled in its first year of existence,' Ortiz said. 'It has struggled with implementation of open meeting procedures as well as policies to guard against conflicts of interest on the part of its working group members. In addition, it has issued contracts for some questionable things, including a $27,000 per month contract for public relations work, a $300,000 contract for private legal counsel and a $10,000 per month contract for lobbying.'

"State Auditor Elaine M. Howle said the audit would evaluate the CIRM’s and ICOC’s strategic plans, including determining whether they are clearly defined. Her office also will determine whether CIRM and ICOC are properly identifying and avoiding conflicts of interest, establishing realistic timetables realistic, have in place effective management controls to ensure they are complying with state laws and whether they are protecting the state’s interest. She said her office also would evaluate the development of policies and procedures, including contracting for facilities, hiring practices and the procurement of goods and services.

"Howle estimated the length of the audit will be six months. She did not say when the audit would begin."

The legislature's joint audit committee approved the audit today by a 9-0 vote. Reporter Steve Johnson of the San Jose Mercury News wrote a story on the decision. You can read it here.

CIRM: Remarkable But a State Budgetary Wisp

The budgets proposed by the governors of California in January are always a bit of wishful thinking. They are projections for proposed spending by the state of California for the fiscal year beginning in July. They are usually revised significantly in May.

Nonetheless, it is useful to consider how the state currently regards the California stem cell agency in terms of its budget. The governor's budget places CIRM in category 6445, under higher education, along with the University of California and the California State University system. The governor's budget states that spending by CIRM will run at about $309 million during the next fiscal year, which means that it assumes that court challenges to CIRM will fail. Keep in mind that the budget reflects figures provided by the agencies.

A month or so after the governor proposes his budget comes the legislative analyst's report, dissecting the spending plan agency by agency. In California, the legislative analyst is generally considered the most authoritative source on state fiscal matters.

So what does that legislative analyst think about the CIRM budget? It doesn't. The budget item, 6445, is not included in the analyst's report. Why is that, we asked the head of the higher education unit in legislative analyst office, Steve D. Boilard? Here is his response verbatim:

"It was intentionally omitted. In the short time we have to review the budget proposal, we just focus on major issues. The Gov's budget proposes to spend about $300 million in bond funds ($276 million of which would be provided for research grants) to carry out Prop 71. Of course, the fact the actual selling of bonds is tied up in the courts casts some doubt on whether this will in fact happen."

Boilard is correct. CIRM is not a major issue for the legislative analyst's office. But it goes beyond that. CIRM's budget is not subject to approval by the California legislature or the governor. Even the State Supreme Court must have its $42 million-a-year budget approved by the legislature. But CIRM does not, which, of course, makes it one of the most remarkable agencies in California history and one of the reasons we write about it in this blog.

CIRM Makes "Progress" Says Monitor

Jeanne Loring, co-director of the stem cell center at the Burnham Institute in La Jolla, reports that her staff is taking pay cuts to keep grad students and post doctoral clinicians on payroll until the money starts flowing from the California stem cell agency.

So said writer Daniel Wood of the Christian Science Monitor in a piece on the agency and its current state of affairs. Known as a "situationer," the article said,

"By most accounts, the CIRM has made significant progress on practically every front. It has filled out its governing board with some of the top scientists in the country and has held over five dozen public meetings to air concerns."

The article, which also appeared in USA Today, was generally favorable. Wood reported,

"'The CIRM has been subjected to an extraordinary amount of attention from public, press, and legislators and has responded with extraordinary openness through the past year,' says R. Alta Charo, a law and bioethics professor at the University of Wisconsin in Madison."

A couple of comments: Perhaps the attention seems "extraordinary" to Charo, but the reality is that it has amounted to only a minor blip. The attention CIRM has received has been higher than that given to the creation of the department created by Prop. 65 a few years ago in California. But Prop. 65 did not carry a $6 billion price tag. Extraordinary attention is what the gubernatorial recall election received in 2003.

The other comment: CIRM continues to assert that because it has held something in the neighborhood of 60 meetings, that means it is moving forward. And reporters, constrained by media obligations to report even the weakest of assertions, repeat the claim. We all know that what counts, at least in business terms, is product sold, contracts signed and money in the bank. So far, CIRM still is living on the dole and has not funded a grant. Purchasers of bond anticipation notes are not going to be fooled by a tally of meetings as a measure of progress. The agency has other, better benchmarks. CIRM should drop the feeble claim. Perhaps they could schedule a meeting to officially retire the assertion.

Public Embryo Bank Started at Secret San Diego Location

A secret location in San Diego houses what is believed to be nation's first public embryo bank, which seeks to tap into the more than 400,000 human embryos frozen at in vitro fertilization clinics around the country, the San Diego Union-Tribune reported this morning.

Reporter Terri Somers wrote the story, which said that scientists are gathering the leftover embryos with plans to "send them to stem cell researchers around the globe."

The embryo bank is called the Stem Cell Resource. Somers said it was "created by a local in vitro fertilization doctor, two scientists from the Burnham Institute for Medical Research and a fourth person whom the others declined to identify." The location is being kept secret for security reasons.

"The impetus behind the bank's creation was a combination of a shortage of embryonic stem cells for research purposes and the desires of women to do something with embryos that they said would never have a chance of life," Somers reported.

"'Until now, patients who decided that they wanted to donate their embryos to research had no place to send them,' said (one) of the bank's founders, Dr. David Smotrich, who founded his own practice, La Jolla IVF, six years ago."

"'We've already been contacted by scientists in Israel, and we've talked to people at Harvard and elsewhere around the country,' said Jeanne Loring, one of the founding scientists."

Somers continued:

"A few in vitro clinics have had agreements to supply embryos to researchers. Advanced Cell Technologies, a biotechnology company started in Massachusetts to conduct stem cell research, has had agreements with a few different doctors, Chief Executive William Caldwell said.

"But Caldwell, (Pamela)Madsen (founder of the American Fertility Association) and others contacted for this story believe the Stem Cell Resource might be the first embryo bank of its kind, making collections from various doctors and screening who will receive them.

"Mindful of the federal funding crunch, the Stem Cell Resource plans to make the embryos available to vetted researchers at no cost, said Loring, an embryologist with the Burnham Institute and one of the bank's founders. Dr. Evan Snyder, a pediatrician and stem cell researcher at the Burnham Institute, is also a founder."

Somers wrote:

"Smotrich used his own money – about $100,000 so far – to fund the startup of the embryo bank. He has been reimbursed in part by private funds through the Burnham Institute. And he hopes that the facility will eventually be eligible for grants from the California Institute of Regenerative Medicine, which was created by Proposition 71.

"Everyone who works at the Resource does so without pay, including Smotrich, several Burnham scientists and an embryologist who performs the in vitro fertilization work for Smotrich's practice."

The Stem Cell Trial: A View From an Advocate

For a view of the California stem cell trial from the very personal perspective of a Prop. 71 supporter and tireless advocate, take a look at some of the Web postings by Don C. Reed.

We have mentioned Reed previously. He is an amiable fellow and easy to underestimate.

He attends CIRM meetings religiously and was present at each day of the trial last week. Here is a sample from one of his postings about the trial on his web site, stemcellbattles.com.

"Describing the Judge herself is difficult, without sounding like I am kissing up.

"But anyone wanting to know how to maintain control while still allowing everyone their dignity, should visit the courtroom of Judge Sabraw.

"Once when an attorney thrust his arm almost violently into the air, so eager to be heard, the Judge smiled and said, “I see that ___________ is champing at the bit.” Her tone was polite, but she immediately softened it anyway, saying, “But I do not wish to make light of it; what would you like to say?”

"Before deciding on any point, even the smallest procedural matter, she would check both sides repeatedly, allowing argument until every slightest nuance was explored.

"Just once a lawyer argued a little bit too long—after her decision had been made.

"She interrupted him.

"'That objection was overruled," she said.

"She spoke ever so softly, and she smiled, but there was just the faintest tinge of frost in the air.

"It was suddenly quiet in the room, and the attorney did not find it necessary to comment any further on the matter."

Reed also wrote about a two-day conference last week at UC Berkeley on stem cell issues that went totally unreported elsewhere, if you are to believe Google searches.

You can see more of Reed's commentary by going to his archives.

IP Policy for Business Upcoming Along With Grants Rules

The California stem cell agency is busy laying the ground work for some tough work on intellectual property policies involving grants to biotech businesses and research firms.

This is likely to be more difficult than development of the policies on IP for non-profit institutions, which were approved last month. Money, of course, is the key: How to provide sufficient profit motive to stimulate development of therapies.

Patient advocates on the Oversight Committee have already indicated that they are likely to favor policies that will speed treatments. Watchdogs of the public purse are likely to be less generous with the results of state-funded research.

We are also likely to see more comments from the biotech industry. Look for the first public hearings on this issue late this month. Development of a complete policy is likely to take some months. If you want to weigh in with comments prior to the first hearing, you can contact the agency via its web site.

While the IP policy gets underway, Zach Hall, president of CIRM, says his top priority right now is fund-raising for two, previously announced conferences, one this spring and another later this year. Hall is no stranger to fund-raising. He was the man who initially presented the proposal to the Broad Foundation that resulted in a $25 million donation last month to USC for stem cell research. Hall's presentation was made three years ago, but he was pretty pleased with the outcome when we talked to him at the stem cell trial last week. Hall made the pitch while he was working at USC.

Also coming up is a meeting of interest to folks who are interested in receiving a grant from CIRM. The matter at hand is the grants administration policy that is being formulated by the agency. The Research Working Group will consider the proposal on March 14 at UC San Francisco. Some sort of teleconferencing is planned for remote locations, but the details are not available on the agenda.

The text of the proposed grants administration policy is also not available on the agenda, but you can find a summary here and the full proposal here.

The Stem Cell Trial: 'Reaching for The Water Pitcher'

The California stem trial is now in the hands of the judge, who is awaiting final written arguments that will be filed later this month.

The arguments will include statements from both sides and then a rebuttal from each. They are due by March 15.

The trial came to an end on Thursday with perhaps only one reporter in attendance, Andrew Pollack of the New York Times. He reported:

"Don C. Reed, a supporter of stem cell research who watched the entire trial, said the plaintiffs seemed disorganized and nonaggressive.

"'There was a great deal of reaching for the water pitcher,' said Mr. Reed, whose son was paralyzed in a football accident. 'It was not at all the savage attacks I had expected.'"

Reporter Paul Elias of The Associated Press took in Wednesday's proceedings. You can read his report here. Russell Korobkin, professor of law at UCLA and a senior fellow at the UCLA Center for Society and Genetics (not to be confused with the Center for Genetics and Society in Oakland), commented on the trial in an op-ed piece in the Los Angeles Times. He said the court challenge to the California stem cell agency was an example of "frivolous arguments" made "to obscure issues or just to create delay."

"What is most troubling is not that the plaintiffs' arguments lack legal heft but that they no doubt realize this, yet argue anyway. The three groups fighting Prop. 71 — two pro-life associations and an anti-tax organization — are not what you would describe as passionate about technical governance issues. But because they know the state cannot issue the bonds to fund research while litigation is pending, they are using weak legal justifications to delay the inevitable," Korobkin said.

One of the attorneys in the case, David Llewellyn, is a graduate of the UCLA law school, but did not have the opportunity to study under Korobkin, who joined the faculty only in 2000.

The stem cell agency also received some attention this week on "Forum," a program on San Francisco public radio station KQED. Discussing CIRM were Christopher Thomas Scott, executive director of the Stanford Program on Stem Cells and Society; California state Sen. Deborah Ortiz, D-Sacramento; Jesse Reynolds, project director on Biotechnology and Accountability, Center for Genetics and Society, and Pilar Ossorio, assistant professor of law and medical ethics, University of Wisconsin Law School. You can listen to the program here.

Chron Story on Stem Cell Trial

The San Francisco Chronicle, in fact, carried a report this morning on the California stem cell trial. A couple of readers called it to our attention. It was the third item in a series of brief. Bernadette Tansey was the reporter.

Stem Cell Trial Coverage and Silent Testimony

News coverage of the California stem cell trial dropped sharply today with stories apparently only in the San Diego Union-Tribune and the Oakland Tribune. The San Francisco Chronicle sent a reporter Tuesday but apparently did not carry a story, based on a look at their web site.

The trial could be over today and is unlikely to produce any significant developments, which is why we aren't there today. The affair certainly will be over on Thursday. The next major development will be the filing of the final briefs and rebuttals by both sides.

Reporter Terri Somers of the Union-Tribune led with the focus on the constitutional issues involving CIRM and testimony by stem cell Chairman Robert Klein. She quoted Klein as saying,

“I'm thoroughly under the control of a spectrum of agencies of the government of the state of California.”

Reporter Rebecca Vesely of the Oakland Tribune wrote:

"Plaintiffs attempted to argue in Alameda County Superior Court that Klein, his board and agency staff operate outside state control and therefore violate state laws.

"'I'm extremely surprised by that concept,' Klein told the court. 'I am convinced we are under the authority and control of the state of California.'"

You could say that Klein's position on the relationship between CIRM and other state agencies has evolved. Last spring, the CIRM-Legislature connection was nearly malignant, but has since become less virulent.

But even at the worst stages, it would be hard for the plaintiffs to make the case that CIRM is outside of control of all state agencies. CIRM is certainly an extraordinary agency. Nothing like it has existed in California history. And it operates with greater freedom and lack of oversight than virtually any other branch of state government. But Tamar Pachter, deputy attorney general, has produced an impressive list of minor and major links between CIRM and other state agencies to make the case that CIRM is really a part of state government – not some other bureaucratic beast, as argued by plaintiffs. It was an enlightening display of how many state agencies could make serious mischief or worse for CIRM if it gets on the wrong side of some officeholders.

In another venue Tuesday, there was silent testimony to the weakness of the plaintiffs case. Advanced Cell Technology celebrated the relocation of its national headquarters to California, specifically Alameda, a small city on an island in San Francisco Bay.

Business reporter David Morrill wrote in the Oakland Tribune:

"'We came to California from Massachusetts because it allows us to be in an environment that we really believe will be the center or hub of this industry segment for the next 10 years,' said William Caldwell, chief executive of Advanced Cell Technology. 'We feel California provides more opportunities than Massachusetts because it not only provides an openness to do the research, but they are also funding that opportunity.' Advanced Cell's new 15,000 square-foot headquarters at 1201 Harbor Bay Parkway in Alameda were formerly used by Avigen Inc., which also has its headquarters on Harbor Bay Parkway."

ACT obviously does not believe the plaintiffs will prevail in their attempt to kill off CIRM.