Readers Write: Commentary on the Legal 'Charade'

The following was offered by L. Stephen Coles, co-founder
Los Angeles Gerontology Research Group.

"After spending two hours, I have now read through all 48 pages of Alameda County Superior Court Judge Bonnie Sabraw's April 21st ruling, and I must confess that it was quite tedious reading, in which each paragraph seemed to represent a jig-saw-puzzle piece for a large, complex puzzle. Yet, each paragraph from the Judge was systematically of the form...'The plaintiffs claim that the ICOC is unconstitutional because of reason 'x', but they did not provide sufficient evidence 'y' to support their reasoning. In fact, the very opposite could be argued by looking at the following case law 'z' from our data-base of legal precedents(s) (z = 'so-and-so' vs. 'what's-his-name'; California, 1942).'where x, y, and z are variables instanciated with appropriate items taken from the original complaint and all of which would be meaningless unless one went to Law School and then passed the Bar.

"The plaintiffs didn't seem to trust that their chief complaint would be sufficient to 'bring home the bacon,' so they decided on a 'shot gun' tactic and hope that even if their primary objection was insufficient, somehow one of the lesser charges might stick, and they would win-the-day using a strategy of assembling a concatenation of some of the most frivolous objections imaginable. In law, I belive that this is referred to as a meretricious filing, which is transparently foolish but takes up the Court's time and energy. For example, one of objections was that the ICOC hired private (expensive) lawyers at tax-payer expense to contest the present lawsuit (that seeks to destroy them) and that this is illegal according to their own Proposition 71 (sic). In other words, only our side is allowed to employ lawyers to eliminate the other side, which is prohibited, in principle, from hiring its own lawyers.

"Curiously, there was no clue in the Judge's ruling that the underlying motivation of at least some of the plaintiffs was religious and not technical, and that their funding came from an out-of-state religious organization (based in Colorado), as though we're not allowed, according to the rules of this particular parlor game, to mention the elephant standing over in the corner of the room. If all you had to go by was the text of this ruling, one could not appreciate why one side would spend hundreds of thousands of dollars to defeat something that they didn't like, forcing their adversaries to do likewise, when their case was so weak to begin with. However, it makes more sense, if you see it as a 'delaying tactic' in which 'the law' is being exploited for an ulterior (surreptitious) motive of crippling or exhausting one's adversaries rather than prevailing on merit.

"The best metaphor for reading this document that I can think of is studying the chess analysis of a game between two Masters by a Grand Master, who not only tells you the moves that were made, but why certain moves were particularly good (or, conversely, were particularly bad) in light of his knowledge of a large archive of historical championship games between other Grand Masters (both of whom may now be dead) in which similar positions emerged and one side crushed his adversary. Occasionally, he may explain why a particular move that intuitively looks good to an amateur was not made by one opponent or another, since, say, it leads to a checkmate in every possible variation past a simple planning horizon of only two-moves ahead. This parenthetical 'going down the garden path,' so to speak, obviously takes up time for the serious reader, but for didactic purposes, it is highly instructive for those willing to slog through to the end to find out whether the loser deserved to lose while the winner deserved to win (and maybe even win a prize for brilliancy in the process!), even though in ordinary games this may not always be the case. For example, even Former World Champion Bobby Fischer once committed an oversight in a real contest (in which he was presumably down on time) by moving a bishop into a position of subsequent suffocation by his enemy's pawn in the next move, which caused him to lose an otherwise won game (Sigh!).

"If it weren't so important, this lawsuit charade could be considered the ludicrous preoccupation of compulsive, self-indulgent minds and could be safely ignored by any reasonable person. On the other hand, this particular lawsuit cannot be safely ignored, and after the expenditure of even more hundreds of thousands of dollars, we shall finally prevail in the California Supreme Court in Sacramento in 2007 (the venue for the next and final anticipated appeal process and then begin the process of selling unencumbered bonds in the bond market, to fund embryonic stem-cell research grants up and down the state of California at universities and institutes, and our state will emerge in a leadership position for the rest of the country and further as a role model for the rest of the world."

Gala Donor Names to be Disclosed; Mary Poppins Would Approve

The California stem cell agency plans to disclose the names of all donors to the San Francisco gala aimed at raising $1 million for the fiscally strapped institute.

CIRM said it does not plan to give private scientific briefings to large donors at the benefit, which will feature actress Julie Andrews, among others. It also will not accept donations from biotech or pharmaceutical companies.

Disclosure of CIRM's position was made today by the Foundation for Taxpayer and Consumer Rights. John M. Simpson, stem cell project director, said CIRM's position was clarified in a letter from CIRM President Zach Hall. Simpson said the letter was welcome news, although he said the involvement of Hall and the chair and vice chair of the agency as honorary chairs of the gala was still "troublesome."

Hall's letter to Simpson said,

"First, as I stated in my telephone call to you, there has never been at CIRM any discussion of, or knowledge of, 'private scientific briefings that...will involve senior CIRM staff' for top level donors. The first we heard of this was from your letters and press releases. Such private briefings by CIRM staff would be improper and we have not, and would not, consider such an arrangement. We ask that you acknowledge that this charge is incorrect and that you correct inaccurate information on your web site. My understanding from the organizers of the gala is that donors are to be invited to briefings and tours at UCSF and Stanford University."

Simpson responded on the question of the involvement of CIRM staff:

"As I explained, representatives of the black-tie gala told me -- in writing via e-mail, copies of which are attached -- that CIRM scientific staff would provide the briefs to people buying tickets for $5,000 or $10,000."

Hall's letter did not deal with the question of whether donations would be accepted from executives or other employees of biotech or pharmaceutical companies. We have asked CIRM about that practice and are awaiting a response. In political campaigns where corporate contributions are banned, numbers of executives from individual firms sometimes buy tickets to fundraisers. Companies have also formed political action committees to make contributions where direct corporate giving is barred.

Both FTCR and the California Stem Cell Report have called for disclosure of donor names. CIRM's decision to make the names public is a good one and in keeping with its pledges of transparency and openness. It is likely to disourage some persons from purchasing tickets, but CIRM's first responsibility is to maintain its credibility and avoid the appearance of impropriety.

CIRM's decision is one that would meet the standards of the British nanny, Mary Poppins, who was portrayed so famously by Julie Andrews.

Here is a link to Simpson's and Hall's letter.

Leveraging a $3 Billion Stem Cell Giveaway

California stem cell President Zach Hall and his troops Monday formally begin a seven-month slog in search of a plan on how to give away $3 billion.

Along the way, they plan to spend something close to $500,000 with advice from a star-studded committee, including two Nobel laureates. Their goal is come up with a proposal for the Oversight Committee on how to best leverage California's stem cell investment. That panel will hear reports on the progress of the effort several times, making changes, giving direction and revising along the way before it makes the final judgment on the effort in December.

Stem cell chairman Robert Klein earlier summarized some of the issues at stake:

"Do we want to focus...our portfolio into high risk ventures for major breakthroughs? Do we want to focus (on) goldplated research that will help us incrementally in advancing existing therapies? Do we want, in terms of values, to have a diversification with many grants distributed broadly over large areas of disease research? Or do we want a number of blockbuster grants with high collaboration, focusing and drawing most of the money together?"

The strategic planning effort is not without controversy. Oversight Committee members spent hours haggling over the process in December. It triggered a tussle at another meeting in February. More contentiousness is likely.

At the Oversight Committee meeting in April, members probed the justification for the involvement of Pricewaterhousecooper as consultants in the process at a cost that could run as high as $250,000(original estimates from the firm ran as high as $550,000). Hall said the firm's help was needed to provide planning support, personnel and speed.

Oversight Committee member Claire Pomeroy, dean of the UC Davis Medical School, said,

"If you thought about hiring the personnel to do all of this, if you think about the costs of the public meetings, if you think about the urgency that we have to do this, I think my bottom conclusion is that it would be irresponsible not to do this starting today and with excellent facilitation. So remember, this is $500,000 to decide from scratch how we're going to spend $3 billion. and to me that's an appropriate investment."

Hall and Klein promised plenty of public access in the process. Hall said developments would be posted regularly on CIRM's Web site. However, that effort began shakily with a cryptic agenda item for the Monday session that offered meager fodder for those who might be considering testifying at the session or even sending a statement to CIRM. However, if you want to dig into the process of the strategic plan, you can read what Hall and others have to say about it in the transcript from the April Oversight Committee meeting beginning on page 15. Discussion of the Pricewaterhousecooper contract begins on page 78. You can see more about the plan in a report by Hall. Even more can be found in the March transcript of the Governance Subcommittee beginning on page 94. Also retrievable is the report on the agency's scientific conference last fall that will serve as a key reference during planning.

Aside from the roughly $250,000 for Pricewaterhousecooper, much of the rest of the estimated $500,000 for the plan will go for meetings. Hall has noted that Oversight Committee meetings average about $20,000 each. One working group meeting last year cost $55,000.

The advisory committee on the planning process includes David Baltimore and Paul Berg, both Nobel laureates; George Daley, who heads Harvard's stem cell effort; William Rastetter, retired CEO of Biogen Idec, a Massachusetts biotech firm with research facilities in San Diego, Steve Forman of the City of Hope and Oversight Committee members Jeff Sheehy, Sherry Lansing, Ed Penhoet and Klein. Hall is chair of the group, which expects to meet every three to four weeks in public sessions.

Monday's meeting will be in the CIRM headquarters in San Francisco. Remote access is not available.

Wisconsin Pushing Hard on Stem Cell Research

The cheeseheads are working quietly out in Wisconsin and have "built a critical mass of scientists" that amounts to a "tight-knit (stem cell) research hub unlike any other institution in the world."

So say Susanne Rust and Kathleen Gallagher in a three-part series in the Milwaukee Journal Sentinel. The articles name players and companies involved in the effort, which is partly funded by WARF, the group that holds the key patents on embryonic stem cells.

WARF recently said it wants the California stem cell agency to cough up cash when its research uses Wisconsin science. No reciprocal state-to-state courtesy here, just plain old business.

The Gallagher-Rust pieces provide good overview of the more stem cell recent stem cell efforts in Wisconsin, including involvement of a host of disciplines.

For those mystified by the word "cheesehead," it refers to residents of Wisconsin, once the nation's top cheese-producing state. But that title now belongs to California, as I recall. Nonetheless cheese ripples through the veins of Wisconsin residents. Evidence is available on national television each fall when fans of the Green Bay Packers wear hats shaped like wedges of cheese. One final note and official disclosure from yours truly at the California Stem Cell Report: My mother was born in Milwaukee, but the finest legal experts say that poses only a minor conflict of interest when I write about the Badger State.

San Diego Session On Sharing Stem Cell Swag

After hearing some cold economic realities last month, officials of the California stem cell move to San Diego Thursday to advance their attempts to formulate an intellectual property policy for businesses that receive CIRM funding.

The agenda posted on the Web by the IP Task Force is vague with no indication of who is going to testify or exactly what is expected to be accomplished. But the group is still digging into the basics and is not likely to come up with recommendations until next fall. At least one more meeting is in the works, this one probably in Sacramento.

It's an appropriate location, given that lawmakers are considering legislation to require as much as 50 percent royalties from businesses, under certain circumstances. By contrast, testimony at last month's hearing indicated that such a requirement is a non-starter for most businesses.

The March IP session triggered as many questions as answers. It led to requests to hear directly from stem cell companies and venture capitalists, none of whom appeared in March. Task force members wanted to know more about policies in other states and Singapore. And they wanted to hear from Big Pharma and the California Healthcare Institute, which represents the biomedical industry.

Ed Penhoet, chair of the task force, said last month's hearing raised some fundamental questions.

"What are we really attempting to do? Are we trying to drive therapies as rapidly as possible? Are we trying to stimulate business in California? Do we want to grow small companies? There (is) a whole set of potentially conflicting aims," Penhoet said.

The message from business is not likely to change much during this week's session.

One executive from Genentech, which has only a peripheral stem cell interest, told the task force that it takes something like $1 billion to push a product to market. He said that for every dollar in research, another $5 is need for development. And the odds of developing a successful product once it starts clinical testing on humans range from one in three to one in five.

According to the transcript of the session, Stephen Juelsgaard, executive vice president of Genentech(who noted that he was not speaking on behalf of his company), said,

"Biology is hard, and it's getting harder. I think we've got most of the easy biology out of the way. and so the new problems that we're dealing with are ones that really require a fair amount of effort and just a lot of hard work. And so the idea that there are going to be quick, easy fixes that come out of this, I hope people understand (is) not likely to be true.

"There are going to be a lot of failures along the way. There are going to be some very long times involved in bringing new therapies to the marketplace, and it's going to be a very expensive proposition....The amount of support that this organization might provide along the way is probably going to be, as I put it, the proverbial drop in the bucket, compared to all the costs that have to be identified, to really be successful."

His point has a certain validity. If it takes $1 billion to create a product, CIRM could fund only three if it cannot leverage its investments. Of course, it has never considered completely funding a product to market. And one of the points of the IP hearings is to find ways to build CIRM funding leverage.

Brad Margus, CEO of Perlegen Sciences of Mountain View, Ca., told the task force that if CIRM wants to be an agent that produces the next big thing in stem cells, it needs to minimize nonfinancial restrictions and heavy royalties.

"When you ask what is the primary purpose of this shot in the arm of the $3 billion," he said, "other than what it does for California and all that, I would hope that it's to make something happen that otherwise wouldn't happen....(Y)ou want to encourage the best-in-class participators to participate, not just the needy ones. When it comes to your own kids, it's perfectly fine if the one kid isn't quite that sharp; you want to help him out, equalize things, that's fine. But when we're talking about this life or death matter and really making a difference, I think you should only go with the companies that can make it happen the fastest.....

"I'd like California to try to do it differently ....and think a little smarter. If there really is a company out there that has the next thing that you need in stem cell research to happen, and your objective scientific advisors say this is what we want, you should be really, really aggressive in getting it. And I'm concerned that some of these things that we're throwing out there, like revenue sharing or the capping what a company (can earn), will only defeat that purpose."

The California stem cell agency is in a difficult place on IP issues, which really boil down to who gets the money. But the money is not there yet. No one knows how much will be there, if any, and how soon. The agency needs to make reasonable efforts to satisfy its public interest constituencies, such as the legislature and watchdog groups. If not, they can make considerable mischief for CIRM and stem cell research in general. At the same time, to be successful in bringing therapies to patients, CIRM must assist in finding alluring opportunities for businesses and research. CIRM is aided by the paucity of funding for embryonic stem cell research, but its munificence can carry it only so far.

At this stage, the main actor in this juggling act is Ed Penhoet, businessman, academician and philanthropist. The role will require all of his considerable skills.
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Thursday's session can be heard remotely at locations in Chico, Irvine, Los Angeles and San Carlos. See the agenda for details.

Greed, Giveaways and the Public

An exchange at CIRM' s Intellectual Property Task Force meeting last month illustrated some of the conundrums facing the agency as it tries to deal with public perceptions and the marketplace.

The following question was posed by Jeannie Fontana, who serves as alternate member of the stem cell Oversight Committee. It was directed to and answered by Brad Margus, CEO of Perlegen Sciences of Mountain View, Ca.

Fontana: "As a patient advocate, you appeal to my sense of urgency and efficiency by which you try to come up with therapies. I'm curious, though, as you talk about what CIRM should be concerned about, appealing to companies' greed, trying to pull in the No. 1 draft choice, how do you think CIRM should handle the public's perception of taxpayer dollars going to a for-profit company that may be the most efficient way of developing a therapy, but for some reason that's perceived as giving away money, hard-earned taxpayer dollars away to the greedy pharmaceutical industry. How would you suggest we approach that?"

Margus: "Perception is really tough because people can construe it and twist it to sound like another Big Pharma is going to get rich off of the discovery. If tomorrow we had something ready for clinic -- I make that as an important milestone because that's when the dollars really go up and you really need a lot of expertise that isn't usually done in academic settings -- if tomorrow we had a stem cell treatment ready for the clinic, there are two roads you can go if you're CIRM. One would be to somehow have the infrastructure at CIRM to use CRO's and bid them out and have the CRO's do it. I think you want a party involved to partner with CIRM that's going to take it forward that knows how to do this in their sleep and can get it there.
"I think I could convey that to the public that, again, if it's been credible all along that your objective here is to move as quickly as possible, if the selection of that partner to take the research forward, in whatever company it was, was a very objective process with clear criteria, I don't think you would be castigated that much."

Fontana: "I wish that were the case. It doesn't seem to be that way."

Click here to go to the full transcript of the hearing.

Stem Cell Advocate Apologizes

California stem cell advocate Don C. Reed has apologized for his Web column criticizing a member of the Oversight Committee of the California stem cell agency for a poor performance before unfriendly legislators.

We wrote last week about Reed's column. He offered an eyewitness view of the proceedings, which were not covered by any media.

Reed used the pseudonym "Sam" when he referred to the Oversight Committee member, who is Jeff Sheehy. In his apology, Reed said he was frustrated by the legislative action on the bill to tighten controls on the stem cell agency.

Reed is a plain-spoken fellow. His columns are forthright – no verbal sleight-of-hand, no sophistry. But he provides interesting observations and insights on the stem cell scene.

Speaking of observations, our item last week on Reed's column probably confused some readers. We described him as a "competent reporter," leading some to think he performed the same sort of tasks as reporters for the Los Angeles Times or Sacramento Bee. He does not. He is unabashed activist. A better choice of words would have been "competent observer."

And his latest column observes quite accurately that nothing he or Sheehy could say would have changed the outcome on SB401 last week.

California vs. Wisconsin: Dangerous Monopoly?

An op-ed piece recently in the Los Angeles Times ripped into the hold that the Wisconsin Alumni Research Organization has on stem cell patents, saying that the organization"may exert a dangerous monopoly."

The article by Jennifer Washburn, author of "University , Inc.: The Corporate Corruption of Higher Education, says the patents pose a "new and potentially even more worrisome challenge" to the California stem cell agency than its difficulties since January of last year.

WARF has already served notice that it wants cash from California. This blog was the first medium to publish that news March 14.

Washburn's predictions, however, have been challenged by Lawrence Ebert, an intellectual property attorney in New Jersey. "There may be a visceral reaction to lash out against patents perceived to be overbroad," Ebert wrote, but he said negotiation and a "research safe harbor" in federal law could protect California from being ravaged by WARF.

Sailing and Blogging

For those of you interested in the mechanics of such things, this blog is now being filed via Internet cafes in Mexico. We can plug in our laptop to an ethernet DSL connection and peck away happily. But it is a 40-mile roundtrip to the Internet cafes, so we log on only a couple of times a week. The blockage issue that we reported earlier seems to have vanished. We are experimenting with a link to a wireless hub that is tied to a satellite. It is located at a closer, tiny beach community that consists largely of gringo-owned palapas. The community, however, does not have electricity; their power comes only from generators, solar panels and batteries, so the link is not always up. Palapas are open-air, palm covered structures often tied to a trailer or a small, concrete block structure.

Since we live on a sailboat, we move about from time to time. That means we will have to forage anew for an Internet link when we hoist anchor and sail off to a another port.

Social Justice Stem Cell Conference at UC San Diego

The University of California, San Diego, is sponsoring a conference on May 13 called Social Justice and Stem Cell Research. Scheduled speakers are Larry Goldstein, UCSD professor of cellular and molecular medicine; Wesley Smith, a senior fellow with the Discovery Institute in Seattle; John Evans, UCSD associate professor of sociology and Alta Charo, professor of law and bioethics at the University of Wisconsin. Advance registration is required for the session, which is free but has limited seating. See http://ethicscenter.net.

CIRM Fends Off Legal Challenge; Round Two Coming Up

As expected, the California stem cell agency won the first round in its legal battle against fundamentalist and conservative foes who claim it is unconstitutional.

The decision attracted news coverage internationally and is likely to enhance efforts by CIRM to sell unprecedented state notes to finance its activities. The legal action against the agency has blocked its financing until the appeals are concluded, perhaps in 12 months or so.

CIRM has scratched hard to keep going without its voter-authorized funding, including a plans for a controversial $1 million gala fundraiser.

Coverage of the decision was straight-forward with few surprises. Here is how the largest circulation paper in the state, the Los Angeles Times, reported the decision in a piece by Lee Romney:

"(Judge Bonnie) Sabraw forcefully rejected the challengers' key contention: that the Stem Cell Research and Cures Act violated the state Constitution by creating a publicly funded entity that was not "under the exclusive management and control" of the state.

"'Plaintiffs did not present any evidence that the state is appropriating funds for any purpose or benefit other than a public purpose — the public purpose declared in Prop. 71 of fighting disease and promoting the general economy of the state," she wrote.

"She also concluded that the institute and its oversight board 'are operating in the same fashion as other state agencies,' with adequate state oversight.

"Sabraw also systematically rejected all other claims by the plaintiffs — People's Advocate, the National Tax Limitation Foundation and the California Family Bioethics Council. Among those: that the stem cell institute's board is plagued by conflicts of interest and that voters were misled.

"Hank Greely, a law professor and chairman of the Stanford Center for Biomedical Ethics, called the opinion 'long and careful' but not surprising. 'I thought the cases were very weak to begin with. I think the judge's opinion bears that out,' he said.

"Greely added that the ruling could give more confidence to investors whom (stem cell chairman Robert) Klein is soliciting to purchase bond-anticipation notes to help fund the institute and its work during the litigation. Buyers of the never-before-issued state bonds would be repaid only if the litigation is resolved in the state's favor and general obligation bonds are issued."

Klein said in a press release:

"CIRM’s first grants equaled 50 percent of the entire national funding of the NIH for embryonic stem cell research for last year. Stem cell research in California has officially begun. We will win in this fight against a small and politically motivated minority, step by step. They will not keep medical research from improving the lives of millions of people. We owe it to the voters, we owe it to patients, we owe it to the families of California."

Here are links to other stories on the decision: The Associated Press (the New York Times carried the AP story, which was also distributed worldwide), The Sacramento Bee, San Francisco Chronicle, San Diego Union-Tribune, San Jose Mercury News, Oakland Tribune, Bloomberg, Contra Costa Times and Reuters.

Here are links to various press releases reacting to the decision: Foundation for Taxpayer and Consumer Rights, Alliance for Stem Cell Research and Stanford University.

If you would like a complete copy of the decision, please email djensen@californiastemcellreport.com. It will take several days to respond because of the nature of Internet availability here in Mexico.

Klein's Exercise in Stem Cell Sophistry

California stem cell Chairman Robert Klein says he has no control over the $1 million gala to raise funds for the California Institute of Regenerative Medicine.

Balderdash. If Klein gave the word, the fundraiser would be called off tomorrow. The sponsoring agency, the San Francisco Foundation, would not make this effort without the full support of CIRM.

Klein's sophistry does not serve CIRM well. The agency is strapped. It needs money to perform its legitimate activities. It is legal for it to participate in fundraising efforts such as the gala. So why not say so from the start and offer to disclose the names of all the donors.

California voters approved the creation of CIRM, an unprecedented agency with built-in conflicts of interest outside of the usual control of either the legislative or executive branches of government. Its budget, for example, is untouchable by either the governor or the legislature. No other state department enjoys that position.

Like it or not, California must live with the reality of its stem cell creation. Sure there are ethical questions about raising funds from potential beneficiaries of CIRM grants, but state government is riddled with such conflicts to a greater or lesser degree. The chief example is campaign fundraising by officeholders from the governor down. Other than trusting the good judgment of the governor, senators and others, the only way to be sure the public interest is protected is let the sun shine on governmental affairs, particularly those of CIRM. In a word, disclosure.

Klein wrote about the fundraiser in a letter to the Foundation for Taxpayer and Consumer Rights of Santa Monica, Ca., which is mightily disturbed by the gala and which protested the involvement of Klein and two other CIRM officials as honorary chairmen of the fundraiser.

Klein said,

"I would like to clarify that Dr. Hall, Dr. Penhoet, nor I have any fiscal responsibility, control or decision-making authority over the gala event."

The response did not satisfy John M. Simpson, stem cell project director for the foundation. He replied to Klein,

"You have placed yourselves in an unseemly position that undermines CIRM's integriy and troubles all of us who believe in stem cell research and good government.
"The three of you shold resign from the gala committee. There should be no 'private scientific briefings.' The names of the donors and amounts of donations must be released publicly before CIRM accepts money from the gala. In addition, fundraising activities need to be fully discussed in public at ICOC meetings when they are proposed. You will find that a number of ICOC members share my concern about this fundraising event."

Simpson asks a great deal. But that is his job. Now it is CIRM's job to do something to remove the taint on the event and the public agency itself.

Here is the link to Klein's letter and the Foundation's.
 

Stem Cell Hard Ball Under the Dome

Working the halls of the California Capitol can be bruising. Just how bruising is illustrated in an article concerning the appearance by Jeff Sheehy, a member of the Oversight Committee of the California stem cell agency, before a legislative group.

Written by Laura Mecoy, the piece deals with the Assembly Health Committee hearing on SB401, which is aimed at tightening oversight of the stem cell agency. Sheehy, who testified against the measure, owes his position on the Oversight Committee to an appointment by a former leader of the state Senate, now out of office.

Mecoy quotes Sheehy as saying saying Senate staffers tried to intimidate him into not testifying. He says he feels his position on the Oversight Committee is "at risk," although there is apparently no way for the Senate to remove him.

"They said, 'Don't come. We're going to shove this down your throat,'" Sheehy was quoted as saying.

Sen. Deborah Ortiz said she did not ask the particular staffer in question to speak to Sheehy, but she did say that she that she asked another staffer to speak to him concerning "inappropriate" behavior following the hearing.

Sheehy said that after the hearing he threatened to campaign against her in San Francisco in her bid for the Democratic nomination for secretary of state.
Mecoy wrote:

"'He has the right to oppose me for whatever reason,' (Ortiz) said. 'But you do not make the connection between a piece of legislation and an election.'

"Sheehy said he wouldn't normally have made such a connection. But he said he believes Ortiz is pursuing the Senate bill to help her secretary of state campaign."

More Disclosure Needed in $1 Million CIRM Gala

One good rule in life is to avoid unnecessary pain.

Sometimes CIRM has difficulty with that. The latest example is the $1 million fundraiser next month to benefit the agency.

It is a unique effort for a unique agency. But it has kicked up a bit of a ruckus. Fundraisers are commonly used by politicians to attract campaign funds from donors who seek to influence or gain access. In this case, financially strapped CIRM is involved in an enterprise that could see biotech businesses – ultimate beneficiaries of CIRM's program – giving tens of thousands of dollars to the agency that they later may approach for million dollar grants.

All of this is going on presumably without the disclosure of the names of the donors as is required for political campaigns.

Already the gala fundraiser, which showcases Julie Andrews, has generated sharp criticism from The Sacramento Bee, which said the situation is "analogous to what might happen if Caltrans started seeking private donations to build a new San Francisco Bay Bridge.

"Funding for the bridge is stymied, so 'Friends of Caltrans' hold a gala fundraiser. Out of self interest, bridge contractors rush to buy tickets. Those contributing hope they will get special status when bridge contracts are awarded, and possibly they will."

The Foundation for Taxpayer and Consumer Rights said the event puts CIRM "up for sale." It would not be surprising to see more criticism and pain for CIRM as the visibility of the event increases.

Some of this pain could have been avoided if CIRM itself had announced that it was participating in the fundraiser. If this is an event that CIRM is proud of, it should have been the first to disclose it. Instead news of the event oozed out, creating a less than savory impression. The way the announcement was handled raises questions about the role of the Edelman PR firm, which has a hefty contract with CIRM. Edelman should have known about the fundraiser and should have advised CIRM about how to avoid some of the negative publicity. If Edelman did not know about the event, it is either not doing its job or information is being withheld by CIRM from Edelman.

As for the propriety of the event, Robert M. Stern, president of the Center for Governmental Studies in Los Angeles, told us,

"My primary concern is the lack of disclosure. I am not as upset as some of those who are quoted about the actual fundraising itself."

He noted that the University of Californa and the state college system accept contributions. He added that the Fair Political Practices Commission, also a financially troubled agency, has the authority to do similar fundraising but never has as far he knows.

We believe disclosure of the names of all the donors to the fundraiser would be a good first step for CIRM in complying with its pledges to adhere to the highest standards of openness and transparency.

We recognize CIRM's financial realities and the unique nature of its private-public bureaucractic DNA, so to speak. To deal with those realities, perhaps CIRM should consider another type of fundraising that would leverage its base of support. CIRM officials repeatedly point to the 59 percent approval of Prop. 71 as justifying many of their actions. Why not tap that base for mom-and-pop size contributions as political campaigns did so successfully in 2004? Thousands or tens of thousands of grassroots contributions, ranging from $10 and up, do not carry the onus of hefty sums from the biotech industry. Such a mechanism could easily be built into CIRM's website, which is currently being redesigned by Zoomedia of San Francisco – a gratis contribution by Zoomedia as part of San Francisco's successful bid for the CIRM headquarters.

Eyewitness Legislative View from Stem Cell Advocate

Stem cell advocate Don Reed attended the hearing Tuesday on legislation to tighten up oversight of the California stem cell agency and posted an account of the proceedings.

Reed is firm supporter of CIRM, as you will see from his account on his blog. But he is also a competent reporter who provides information that you will not find elsewhere.

Following the presentation by Sen. Deborah Ortiz, Reed wrote that:

"We now had our two opportunities to respond. A member of the ICOC spoke first. Let’s call him Sam. He is a great guy, and on the ICOC board he is an effective speaker because he has essentially no time limits, and can take as long as he wants to gather his thoughts. But this was a different situation, far more structured."

On Ortiz' presentation, Reed wrote in part:

"Naturally, every point was slanted to her benefit, but if you did not know what was going on, she was absolutely convincing. This is an old pro at the height of her powers, a genuinely great advocate for her cause—I just wish we were on the same side.

"She framed the lawsuits issue completely out of whack: as if our side implied she was responsible for the current lawsuits! 'Frankly, I think they would have sued, no matter what,' she said with a smile and a tilt of her head. (This was, of course, not the issue at all; rather the additional lawsuits which her new law would make likely.)"

One thing about "Sam," in all fairness, it is tough to compete on unfriendly turf, something some critics of CIRM have learned when they appear before that agency.

There is more interesting commentary from Reed. Check it out.

Effort Advances to Beef Up Royalties and Oversight of CIRM

Legislation to tighten oversight of California's $6 billion stem cell research program moved forward Tuesday despite opposition from the state's stem cell agency.

The measure by Sen. Deborah Ortiz, D-Sacramento, cleared the Assembly Health Committee on a 9-2 vote. It now goes to the Assembly Appropriations Committee.

As we reported last week, Ortiz' wide-ranging proposal, SB401, would require more openness in meetings of the California stem cell agency, require divestiture of investments by Oversight Committee members in some cases and increase the state's share of royalties.

The action was not covered by any newspapers as far as we can tell. The legislative staff analysis said the only opposition to the bill, at the time the analysis was written, came from CIRM and the California Healthcare Institute, an industry group. The analysis said,

"The California Healthcare Institute (CHI) maintains that this bill limits the effectiveness of CIRM. In addition, CHI states that while this bill seeks to apply licensing and other conditions to its grants and loans that are in the best interest of the state, its provisions may discourage industry participation and points out that the state's share of financial return should be proportionate to its contribution, not a fixed percentage of total revenues similar to the percentages contained in this bill."

Ortiz' office released background information on the bill that said:

"As editorial boards across the state have noted, while the promise of stem cell research is great, Prop. 71 omits several important protections to ensure public accountability and transparency of funding decisions. For example, the initiative exempts its working groups, which make important recommendations on what projects to fund, from state open meeting and public records requirements. It similarly omits requirements for working group members to disclose interests they have in entities engaged in stem cell research. Finally, the initiative is unclear on the question of how the state is to achieve an economic return on its investment in stem cell research."

The measure was amended in committee to ensure that it would be placed on the November statewide ballot.

Stem Cell Firms Not Bargaining on IP From Strong Position

Venture capitalists are like cloned sheep. That is one basic reason that embryonic stem cell research is not being funded.

Or so it seems, based on an article by Terri Somers in the San Diego Union-Tribune. Her piece illustrated the weakness of the position of businesses now trying to influence the formulation of intellectual property policies by the California stem cell agency.

Last month, some executives told the agency that it should not expect businesses to come crawling for grants unless the royalty provisions were appropriate – meaning generous. That position belies the reality that venture capitalists and other funding sources, including the federal government, are shying away from stem cell enterprises.

Somers pointed out that out of $5.9 billion invested by venture capital firms in biotech and medical devices last year, only $120 million went to stem cell research, according to Fred Schwartzer, managing director of venture capital firm Charter Life Sciences in Palo Alto, Ca. The federal government provides only about $30 million annually for stem cell research.

Compare that to the $300 million a year that is expected to be pumped out by CIRM. That would make the agency the single largest source of stem cell research funding in the world, unless something changes in the next year or two.

If California stem cell firms take their petri dishes and go home (to borrow a phrase), shunning CIRM's beneficience, they are only likely to damage themselves. And, compared to the meddlesome and harsh demands of some VC firms, CIRM could appear to be a kindly, generous old uncle.

It may be some time before the private investment climate changes for stem cell research, according to Schwartzer. Somers said,

"Once there are some 'big IPOs and big acquisitions' of companies based on stem cell research, (Schwartzer) believes the private investment climate will change.

"'VC are like cloned sheep . . . they will follow,' he said."

Somers' article was based on discussions at the annual BIO convention in Chicago. She also quoted executives with Invitrogen, Stem Cell Sciences and Stem Cell Therapeutics. The piece is worth reading to gain a fuller view of investor thinking about the stem cell business.

Still Time to be Heard on Stem Cell Ethics and Conflict Rules

Some folks in Santa Monica have made an important point that has been largely overlooked by the mainstream media.

That is, the stem cell regulatory opera is not over until the California Office of Administrative Law makes its own special brand of music.

The case in point is conflict of interest regulations for the working groups at the California stem cell agency. The agency has approved the rules, but to have the force of law, they must go through the same regulatory process that all state regulations face.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights, noted recently the regulations are open for public comment until May 29. Other regulations to set ethical standards for CIRM-funded research will have an administrative law public hearing on May 1 in Oakland, the day the comment period on them closes.

Simpson, by the way, does not think much of proposed conflict of interest rules.

"These rules require the members to disclose potential conflicts, but then the information is kept secret and the public has no access. ...We need full public disclosure," he said.

Sen. Deborah Ortiz, D-Sacramento, as well thinks poorly of the conflict of interest rules. Her bill, SB401, would tighten them considerably but not as much as Simpson would like.

Here is a link to the CIRM's Web page on the administrative law proceedings.

Excerpts from Loring's "Daunting" Article

San Diego stem cell researcher Jeanne Loring says control by the Wisconsin Alumni Research Foundation over two key embryonic stem cell patents "may ultimately prove a more daunting barrier to progress in this field" than President Bush's restrictions on federal funding of stem cell research.

Loring, who is with the Burnham Institute, made the statement in a piece in Science magazine that she co-authored with Cathryn Campbell, of the Washington, D.C., law firm of McDermott Will and Emery. Based on news reports, we wrote about the issue on March 25, but thought the matter needed more exploration. At our request, Loring provided a copy of her article, which we are excerpting below.

"In reaction to the (President's) limitations, individual states and private foundations are designating funds to support research on the much larger number of HES lines that were derived after the President’s deadline. Although these funding sources sidestep the strictures of the President’s order, they do not remove what may ultimately prove a more daunting barrier to progress in this field: the intellectual property rights for HES cells."

The article continued:

"These two patents have considerable consequence for HES cell research in the United States, because they have claims to ES cells themselves, not just a method of deriving them. The claims give the patent owner, the Wisconsin Alumni Research Foundation (WARF) the legal right to exclude everyone else in the United States from making, using, selling, offering for sale, or importing any HES cells covered by the claims until 2015. The right of exclusivity is rooted in the U.S. Constitution and was intended to benefit society by encouraging innovation while discouraging secrecy on the part of inventors.
"No other country has allowed HES cells to be so broadly patented, and although the U.S.patent rights can only be enforced within the United States, HES cells made in another country become subject to U.S. patent law if they are imported into the United States."

The article said,

"As a result of an NIH contract to serve as the main distribution center for HES cells in the United States, WARF recently reduced the price of cells to $500 for academic investigators, and opened the possibility of rebates for investigators who had paid $5000 before the contract went into effect. Although the academic price is now less onerous, the situation for commercial biotechnology and pharmaceutical companies remains difficult. First, because the (California) biotechnology company Geron funded the patented HES cell derivations, they received an exclusive license for broad therapeutic use in the United States of HES cell–derived cardiac, nervous system, and pancreatic cells. This means that if a company wishes to develop therapies in these areas, they must negotiate with Geron for fees and royalties.
"But what if a company simply wants to use the ES cells for basic research? Even if the company’s research is noncommercial, WARF still requires a commercial license, which costs an upfront fee (typically $125,000), with $40,000 annual maintenance fees to retain the license. This fee gives commercial entities the same research freedom as academic researchers, and, with negotiated royalty payments, they may commercialize reagents for research. Two companies, Becton-Dickinson and Chemicon, announced that they have obtained research licenses from WARF.
"The research license cost has complicated the situation for start-up biotechnology companies that want to obtain NIH funding for HES cell research. Small companies may find themselves in what we call the “SBIR paradox.” The NIH is willing to fund HES cell research through its Small Business Innovative Research (SBIR) program, but the company is not allowed to use NIH money, usually $100,000 for a phase 1 SBIR, to pay WARF for a commercial research license. Therefore, the company must come up with separate funding of perhaps $125,000 for a license to do the NIH-funded research with the cells. As a result of discussions with the NIH, WARF has offered to take equity instead of cash for a license in some cases."

The article said:

"In December of 2003, a request for interference was filed against the claims to purified stem cell preparations in both the 1998 and 2001 WARF patents. Two patents that are licensed to Plurion (U.S. Patent 5,690,926 and 5,670,372) have issued from a 1992 application claiming methods of deriving pluripotent cells. A pending application with the same priority date claims the isolated pluripotent stem cells themselves. When the PTO indicated that the Plurion composition of matter claims were allowable, the applicant filed a request for interference, asserting that these claims overlap (and predate) the WARF pluripotent stem cell claims. Although no interference has yet been declared, the outcome of this case may have important consequences for ES cell researchers, funding agencies, and companies."

$1 million CIRM Fundraiser Stirs Critics

How could Mary Poppins do this?

But the question some are also asking is how could the California stem cell agency do this? Specifically, participate in an unprecedented $1 million fundraiser for CIRM, probably the first state agency to raise cash for its operations in such a fashion and on such a scale.

Actress Julie Andrews of Mary Poppins fame, among others, is featured in the black-tie gala that will take place in the San Francisco City Hall Rotunda on May 22. Sponsors of the event – called Reach for Tomorrow, Research Today – say it is the "largest event in our country's history to benefit stem cell research."

For $10,000 a head, donors are offered a private tour of Mission Bay (San Francisco not San Diego), Stanford and UC San Francisco stem cell research laboratories, two tickets to a private scientific briefing, a VIP reception prior to dinner and a full page acknowledgement in the event program. Or for $1,500, the buyer receives one ticket to the dinner and "gala performance." Tickets to the performance only go for $35 to $100.

The event carries CIRM's official imprimatur. Its chairman, Robert Klein, vice chair Ed Penhoet, and president, Zach Hall, are honorary co-chairs of the event, sponsored by the San Francisco Foundation, which dealt out $65 million in 2004 in the San Francisco Bay Area.

The fundraiser puts CIRM "up for sale," said John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights of Santa Monica, Ca.

Simpson said,

"CIRM must not create the appearance that a biotech executive -- or other person wising to curry favor -- can do so and exercise undue influence by writing a big enough check."

He continued,

"Most Californians' comments are limited to three minutes when items are discussed at your public committee meetings and hearings. Now you are offering exclusive private access to those with enough money.

"CIRM must not solicit donations by offering donors benefits not available to the public."

The Sacramento Bee editorialized Sunday on the glittering affair:

"What is wrong with this picture? Plenty, if you think that public stewards of taxpayer money should keep at arm's length from those seeking that money. By agreeing to participate in the fundraiser, Hall, Klein and Penhoet have flunked this test."

In response to our query, Nicole Pagano, spokeswoman for the agency, said:

"The CIRM is not involved in the outreach or soliciting of funds for the gala. We remain grateful to Debra Strobin and her team for their efforts to support this agency."

Organizing the event is Strobin, the wife of Edward Strobin, former Banana Republic chief operating officer who died of cancer in 2000. She said in a press release:

"There is great hope in the knowledge that stem cell research can provide, and I am frustrated by the incredible delays in enabling this research to take hold. I want this event to elevate awareness of stem cell research and its potential value to people like my husband who had very little chance to conquer his form of cancer."

In scientific stem cell circles, sometimes folks refer to stem cell experiments that might generate a "yuck" response. This government experiment is close to reaching that level.

Fundraising is commonplace in political and charity circles. In the case of politics, the persons and firms buying the tickets are required by law to be publicly identified. In the case of this fundraiser, they are not. But it would behoove CIRM to post a list of contributors, including in-kind efforts, on its web site. Such a requirement should be added as well to Sen. Deborah Ortiz' measure, SB401, to tighten oversight over the agency.

The creation of CIRM was a unique blend of private and public affairs. It has built-in conflicts of interest that are legal but troubling to many. The only assurance of integrity is full public disclosure of its affairs, including this fundraiser.

At least that is how Mary Poppins, our proper British nanny, would probably see it.

Release of Stem Cell Cash Generates Generally Positive Coverage

An "exhilirating" flow of dollars has started to fill the coffers of universities and research institutions around California that are the first recipients of CIRM's stem cell research grants.

The cash is aimed at creating a cadre of stem cell scholars, who are generally believed to be in short supply because of President Bush's action restricting federal funding of stem cell research.

The opening of the money spigot triggered a piece in the New York Times, which has visited the agency only infrequently. Its coverage is significant because of the newspaper's stature among decision makers nationally. The brief article by Carolyn Marshall bore the headline: "In End Run Around Legal Challenge, California Gives Out Stem Cell Research Grants." Stem cell Chairman Robert Klein was quoted as saying the funding was "exhilirating," but the article also quoted Jesse Reynolds of the Center for Genetics and Society as saying the funding mechanism raises a "real prospect" that private entities could unduly influence the agency.

Most of the news stories generally had a positive note (giving away money always connotes well-being). Reporter Steve Johnson of the San Jose Mercury News, however, also included information about a swank fundraiser planned to provide $1 million for CIRM at up to $10,000 per plate. That prompted John M. Simpson of the Foundation for Taxpayer and Consumer Rights to worry that the purchase of tickets by stem cell companies could create a potential conflict of interest. Johnson's mention of the fundraiser, which we did not see in other newspaper reports April 11 on the grant funding, certainly seemed appropriate given the agency's fiscal woes.

The CIRM press release on the grants had this to say, among other things:

"'Stem cell researchers around the globe are keeping a close eye on California. I am very pleased for these research institutions,'" said Stuart Orkin, M.D., Chair of the CIRM Research Funding Working Group and the David G. Nathan Professor of Pediatrics at Harvard Medical School. “Even more gratifying is to see the undaunted commitment of Californians who understand the urgency of funding this research.

Reporter Erin Allday of the San Francisco Chronicle wrote:

"Dr. Arnold Kriegstein, who heads the stem cell research program being developed at UCSF, said he's already heard from at least 200 prospective students interested in the 16 training spots that will be made available by the $1.15 million grant the campus is receiving.

"Kriegstein said the UCSF stem cell program has four faculty members, with another two or three expected to join the staff by the end of the year. He hopes classes will start for the grant students early this summer."

The Contra Costa Times editorialized happily about the opening of the money gates, airily dimissing concerns about the built-in conflicts of interest on the CIRM Oversight Committee.

The occasion triggered a spate of press releases from the institutions receiving the cash, which in turn triggered some additional local stories. The press releases, however, mainly speak to the various constituencies of the institutions, who will presumably be favorably impressed that CIRM is giving money to their institutions.

Here are links to other stories on the funding: The Associated Press , The Sacramento Bee, the Los Angeles Times, the San Diego Union-Tribune.

CIRM Backers Are Big Givers

Two of the folks who are helping out CIRM financially are among the 50 most generous philanthropists in the nation.

Business Week (Nov. 28, 2005) provided the list of the top donors. Ranking No. 5 were Eli and Edythe Broad. Ranking No. 22 were Irwin and Joan Jacobs. Both have agreed to purchase bond anticipation notes on behalf of the strapped stem cell agency (See "Greenbacks.").

The Broads have given an estimated $1.8 billion to charities during their lifetimes, which amounts to 33 percent of their remaining net worth, according to Business Week. The Jacobs have ponied up $490 million for charity during their lifetimes, about 29 percent of their remaining net worth.

The list contains many other Californians, who still have billions. Topping that list in terms of net worth is Larry Ellison, the CEO of Oracle, with $17 billion. Business Week says he is interested in research on aging and diseases. Ellison's lifetime giving totals $690 million, only 4 percent of his remaining net worth.

We would suggest Ellison as a target for CIRM fundraisers, but he is undoubtedly already on their list.

Biotech Industry Exec Latest Appointee to CIRM Oversight Committee

The newest addition to the 29-member Oversight Committee of the California stem cell agency is Duane Roth, founder, chairman and chief executive officer of the Alliance Pharmaceutical Corp. of San Diego.

Roth fills a slot vacated by the resignation of the Gayle Wilson, the wife of former California Gov. Pete Wilson.

By law the the position is allotted to a representative a commercial life science entity. Roth easily fills that designation. Alliance describes itself as a "a research and development company focused on transforming innovative scientific discoveries into novel therapeutic and diagnostic agents." He has also served on the boards of directors of theBiotechnology Industry Organization, the California Healthcare Institute and BIOCOM.

California stem cell Chairman Robert Klein said in a press release:"Duane’s leadership as an entrepreneur as well as an economic development proponent in the biotech industry will be a real asset for our effort.  We look forward to his active participation and innovative insight."

Roth said,"In my many years of experience in the biotech field, I have seldom seen such an exciting and promising area of science as stem cell research, and I look forward to the challenges and the successes we encounter as we push this field forward together, here in the great state of California."

The appointment was made by Gov. Schwarzenegger.

Ortiz Pushing CIRM on Conflicts and Openness

The California stem cell agency comes under increased scrutiny next week as the legislature considers two major bills, including one that would dramatically open up the agency's meetings, require tougher economic disclosure by agency officials and require 50 percent royalties on some CIRM-funded inventions.

California Sen. Deborah Ortiz, chair of the Senate Health Committee, is the author of both measures, one of which involves egg donations. The other is SB401, which she quietly amended to tighten up regulation of the stem cell agency. She told stem cell Chairman Robert Klein in a letter that she wanted "push" the agency's own rules further to ensure public transparency and accountability.

Last week, the CIRM Oversight Committee voted to oppose the bill as "unnecessary and premature" although it said it was willing to work with the legislature.

SB401 embodies many of the concepts in Ortiz' proposed constitutional amendment, SCA13, which is on the floor of the state Senate in its "inactive" file. Making SB401 her main vehicle has several advantages. It has already passed the Senate and is now before the Assembly Health Committee, where it will be heard Tuesday. The measure also requires only a majority vote by each house, as opposed to the 2/3 vote for a constitutional amendment. Both measures require voter approval. But SCA13 could go to the ballot without the governor's signature, which is required on SB401.

Here are some of the provisions of the measure.

It would require 50 percent royalties on "net licensing revenues" to the state from grant or loan recipients if the state shares in the expenses of developing and protecting any patent on a CIRM-funded invention. If there is no sharing of such expenses, 25 percent royalties would be required. Higher royalties would be required if taxable bonds are the source of the funding.

The state attorney general would be required to review any proposed intellectual property agreements.

Businesses receiving grants would have to agree to sell CIRM-funded inventions to state and county health programs at the best price available to any purchaser.

Businesses would have to pay royalties to the state that are "consistent with the rates historically received by the University of California" for similar research.

The bill would require Oversight Committee members to place in a blind trust or divest financial holdings of more than $2,000 in entities that apply for funding or contracts with the Oversight Committee or any other organization that has a "substantial interest in stem cell therapy." An organization with a "substantial interest" is defined as one that allocates more than 5 percent of its current annual research budget to stem cell therapy.

The legislation would require that members of working or advisory groups to CIRM disclose to the Oversight Committee any income, real property and investments that they or a close family member have in a California-based academic or nonprofit research institution, a biotech or pharmaceutical company or in real property interests in California. The disclosures would be provided to the state auditor, who would be required to compare the interests to the voting records of the members. The auditor would be required to file an annual report with the Legislature "containing findings on conflicts of interest."

SB401 would extend the state's open meeting laws to include working or advisory groups to Oversight Committee, including the Financial Accountability Oversight Committee, with provisions for closed meetings dealing with confidential matters. Currently such groups do not have to abide by state open meeting rules. The agency has argued that scientists must have their privacy in order to critique applications for state money from other scientists.


The other measure, SB1260 by Ortiz, who is seeking the Democratic nomination for California secretary of state, would ban the sale of human eggs and require that donors be properly informed about the medical risks of the egg extraction. A similar measure was vetoed last year by the governor. The stem cell agency has already adopted policies on egg donations that in many ways are similar to the protections proposed by Ortiz' bill. The legislation would also give the state Department of Health Services oversight responsibilities for the law.

Ortiz' proposal would affect all egg donations in California. The regulations by CIRM only affect eggs used in research funded by CIRM. The bill, which states that it is not an attempt to amend Prop. 71, comes before Ortiz' committee on Wednesday.

The $500,000 Plan to Spend $3 Billion

CIRM President Zach Hall zeroed in on the critical point. How will the California stem cell agency be judged 10 years from now?

“What people will really care about is whether we spent our money well. Did it yield something to improve the quality of life, not just for Californians, but for everyone?”

In a word, results.

Hall's comment came at a meeting of the Oversight Committee of the stem cell agency last week. Not that he is ignoring the other important stuff, such as the best medical and ethical standards in the world, but that will come along as well if the agency is sharply focused, disciplined and diligent.

Development of the plan is expected to take something like six months and cost $500,000. Reporter Terri Somers of the San Diego Union-Tribune wrote a piece that set the matter in perspective.

She said,

"While much about the strategic plan remains amorphous, this much is certain: It won't be a laundry list of diseases to be cured. It will be a plan that allows the best and latest scientific discoveries to influence where the taxpayer money is invested, Hall said.
"And it will be fluid, because in the 10 years California intends to provide funding, scientists will likely make discoveries that catapult some research ahead of others, Hall said."

Based on Somers' story and Hall's proposal, it appears that the public will have ample opportunity to make its voice heard, if it so desires. The planning process and documents are also expected to be available on CIRM's Web site.

In what may be the only story on the meeting, Somers discussed the tension between some of the factions, if you can call them that, on the board, such the patient advocates who have pushed for rapid development of therapies. One of those is Jeff Sheehy, a patient advocate. Somers quoted Sheehy as saying,

“We tend to think of disease advocates as being tied to a specific disease when, really, it is just a mode of operating and thinking.
“My father has Alzheimer's, my mother was diagnosed with ovarian cancer, and I have HIV and my greatest risk factor right now is cardiovascular. If I had to chart today what I want to cure first, this morning, it would be ovarian cancer. My point is that everyone in California is impacted by chronic life-threatening disease. And I don't so much want to cure my disease as I want to cure something.”

The next steps on the strategic plan? CIRM staff will begin interviews with experts and "stakeholders" in the next few days, along with ICOC members as appropriate. A public meeting is expected sometime in May in San Francisco.

Here is a link to the CIRM press release on last week's meeting.

Zoloth Speaking Monday at UC Santa Cruz

Santa Cruz, California, is not exactly the center of the universe but if you are in the area on Monday, you might want to consider taking in a talk by bioethicist Laurie Zoloth.

We heard Zoloth, a professor of medical ethics, humanities and religion at Northwestern, talk at a stem cell conference last month in San Francisco. She is an apt speaker, downright zingy at times. And she has an ability to penetrate the murk.

Her topic on Monday is "May We Make the World? Bioethics, Stem Cells, and the New Biology," followed by a question-and-answer period. The event will take place from 4 to 6 p.m. at the Stevenson Event Center on the UC Santa Cruz campus.

Alliance for Stem Cell Research Beefs Up Web Site

The Alliance for Stem Cell Research has launched a new and much improved Web site as part of its efforts to promote stem cell research in California and nationally.

Susan DeLaurentis, president of the group, told us in an email:

"We have worked hard to present the technical information in a way that can be widely understood, to address both urgent and ongoing issues related to stem cell research, and to give visitors the opportunity to better understand how stem cell research could affect their lives, and the lives of those around them."

She said that the group has promoted the site using names from its database plus personal contacts. They have also asked related groups to direct their readers to the site.

Like the Center for Genetics and Society, the alliance site carries links to news stories. It also has a rundown of stem cell activity state by state.

The Alliance is the non-profit descendant of the key campaign group behind Prop. 71 and once shared Northern California offices with California stem cell chairman Robert Klein. It is now located in Los Angeles.

Useful Stem Cell Newsletter

The Center for Genetics and Society in Oakland, Ca., produces a useful Web newsletter each month that is of interest to those who follow stem cell issues.

If you haven't seen it already, it is worth checking out. The latest edition from March 29 covers everything from a roundup on Hwang to the $38 million-a-year human-egg trade. In the case of Hwang, it provides a useful summary of where things apparently stand, based on news and other Internet reports.

Of course, the center's voice can be heard in the articles, but links are also provided to the original stories. The newsletter allegedly can be automatically delivered by a free subscription. However, I have to report that my efforts to have it delivered by that means have been totally unsuccessful.

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.