Wanted: CEO For Promising $3 Billion Giveaway Program

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Hook Down in the Pearl of the Pacific

Like the the spawn of Godzilla, there is no getting rid of Hopalong and its hardy crew of two(your humble correspondent and his magnificent wife). We arrived about noon on Sunday in Mazatlan following three nights at sea. We nearly killed each other on 2.75 occasions. But we have learned once again lessons of the sea.

First, take a day sail – following an extended layoff from the sea -- before you set out on a three-day passage, no matter how many sea miles you have under your personal flotation device. A boat that hasn't been sailed for months needs to be rechecked better than we did. So does the crew. Then you don't have to wrestle with lines and knots while hanging from from a precarious perch that might pitch you into the plunging seas many miles from shore.

After a long layoff, be prepared for equipment to fail. A leak popped up from our rudder post when we were about 100 miles out. Crawling under the cockpit sole with two 1/2-inch wrenches to attack the steering quadrant took care of that.

Then there are the problems that you can't fix, such as the ones with the Alpha autopilot, which became crankier than the crew and yawed unmercifully. Sleep was nearly impossible as the boat rolled in response. That was unfixable because Alpha refuses to disclose the secrets of its autopilot, which cannot be opened without actually breaking something (as in cracking open a part) on the $3,000 device.

Now for good news: We successfully performed the most important task of a sailor -- listening to Mother Nature. She tells you when to sail and when not to. Our passage took us three days. Another sailboat of the same size left the same port we did, but seven days earlier and just arrived here a few hours before us. The difference is that the other boat was so beaten up by nasty waves in the Sea of Cortez that they had to put into shelter on two different occasions and wait until the sea had settled down.

What does this have to with the California stem cell agency, the subject of this blog? Really nothing. But we can tell the folks at CIRM that timing and patience are important ingredients in success. Luck too. Stay tuned for hot stuff on stem cell affairs – as soon as I catch up on all the events that occurred while we were at sea.

(Mazatlan is known as the Pearl of the Pacific with the highest lighthouse, as I recall, on the west coast of North America. Great banana coconut cream pie (spelled pay in Spanish) at Pedro y Lola's in Old Mazatlan, as well.)

Hoisting the Hook

The California Stem Cell Report will be in the middle of the Sea of Cortez for about the next week, making it impossible to file reports. We will be on a passage from the Guaymas area to Mazatlan, both of which are on the mainland of the west coast of Mexico.

By popular demand (at least one or two requests), we are providing a few more details of the cruising life, as it is known. This passage will involve at least four nights at sea, perhaps more. The entire crew of our vessel, Hopalong, consists of two persons. We stand watches 24 hours a day while we are at sea. This is required by maritime law as well as by common sense. There are other vessels out there. Some of them are not lighted at night. Others, including large commercial ships, simply set their autopilots and proceed without keeping what is known a proper watch. So we must stay out of their way.

Our watch schedule consists of three hours on, three off during the dark hours. That means one person tries to sleep while the other keeps an eye out. During daylight, we keep a six-on, six-off schedule, but this time of year does not provide 12 hours of daylight. We also have an autopilot that takes care of the actual steering for us. Hand steering becomes tedious at the very least and sometimes arduous under rough conditions, although we hand steered for 2,000 miles one year when our autopilot was down. Those were not consecutive miles but parcelled out over a period of months. I once made a passage from Hawaii to San Francisco, which involved hand-steering nearly the entire distance on a Santa Cruz 40 called Gandy Dancer. However, we had a crew of six, which made life much easier.

We hope to be filing reports again in a week or so from Mazatlan.

Newspapers Take a Whack or Two at CIRM

During a week when the California stem cell agency might think it should be receiving some kudos, it has taken a couple of stiff shots in the media.

On Thursday CIRM's Oversight Committee is expected to approve its strategic plan for spending $3 billion on embryonic stem cell research. It is a remarkable document, the result of many months of work and involving ideas and suggestions from hundreds of persons, including the top scientists in the field and patient groups. The plan is a key bench mark in the life of an extraordinary agency that is unlike any other state department in the United States. In addition, CIRM represents the single largest source of embryonic stem cell funding in the world.

But some of that is what irritates its critics. Perhaps the harshest view came from Investors Business Daily, a financial newspaper with about 211,000 national circulation. In an editorial headlined "Fool's Gold Rush," the newspaper said,

"Californians were promised wonder cures if they passed Proposition 71 to fund stem-cell research in 2004. Turns out they have bought a $3 billion jug of snake oil."

The editorial continued:

"Activist complaints about the private sector's focus on adult and umbilical-cord stem cells have driven the state to spend $3 billion on embryonic stem-cell research — something the market won't touch, even though you can find plenty of liberal venture capitalists out there willing to pay for political campaigns with celebrity endorsers.

"The only thing this amounts to is a boondoggle for voters — fool's gold the private sector had already panned for and rejected, having found the truth out first."

The emphasis on the results of adult stem cell research echoes the party line from the foes of ESC research. The newspaper also quotes the LA Times piece earlier this week. That article has been widely cited online around the country by ESC opponents. The business newspaper piece is also surfacing rapidly on anti-ESC web sites.

The Sacramento Bee, which has not said much recently about CIRM, published an editorial today that pressed for more public disclosure from the agency, a theme the paper was early to emphasize. The Bee, which has about 331,000 circulation in California's capital, said,

"...(I)t remains baffling why the institute can't be completely transparent and publicly reveal the financial interests of its grant reviewers. Scientists regularly disclose such conflicts when presenting papers at conferences. They should do so when making recommendations on grants that involve millions -- and potentially, billions -- of taxpayer dollars.

"The institute has made some good progress this year, including adoption of a strategic plan that sets realistic goals and lowers the inflated expectations of the Proposition 71 "countdown for cures" campaign. If institute leaders could take another step and come clean about internal conflicts, they could go a long way toward securing the trust they have risked squandering the last two years."

CIRM Watchdog Receives $100,000 Grant

The California stem cell agency is not the only group with good financial news this fall. The Foundation for Taxpayer and Consumer Rights has come up with a $100,000 grant to continue its work attempting to influence CIRM.

John M. Simpson, stem cell project director for the FTCR, said today that it has received the cash from the Nathan Cummings Foundation for 2007. The money will go to FTCR's Stem Cell Oversight and Accountability Project, which was also funded by Cummings this year.

Simpson told the California Stem Cell Report:

"We've tried to be constructive critics of the California Institute For Regenerative Medicine as this important groundbreaking state agency got off the ground, holding its staff members and overseers to the highest level of transparency and accountability. With $6 billion of taxpayers' money at stake and with the agency's built-in, but legal conflicts of interest, we're gratified to be able to continue our work in behalf of all Californians to ensure they benefit from the research they are funding."

The Cummings Foundation has a $500 million endowment that originated with Nathan Cummings, the late founder of the Sara Lee Corp. It has a wide range of activities including "humane health care."

Interestingly, the foundation's website quotes Nathan Cummings as saying:

"Nothing will ever be accomplished if all possible objections must first be overcome."

Sounds like a motto for the stem cell agency as well.

Affordable Access to Stem Cell Cures Hits Hard Sledding

The latest move to ensure the affordability of stem cell cures developed by California-financed research faces opposition from both the California biomedical industry and one of the chief advocates for widespread access.

John M. Simpson, stem cell project director for the Foundation for Taxpaper and Consumers Rights, said the proposed policy to be considered this Thursday by the CIRM Oversight Committee falls "far short of ensuring that all Californians will have affordable access to the therapies, drugs and cures that their tax dollars fund."

CIRM's latest access effort is linked to a new and untested law. Called the California Discount Prescription Drug Program, it was opposed by the California Healthcare Institute, which represents the state's biomedical industry. One law firm, Arnold and Porter of Washington, D.C., which has a large health industry practice, wrote about the law:

"California’s attempt to lower drug prices, by threatening drug manufacturers with prior authorization requirements, will likely face legal challenge in federal or state court. Absent a successful legal challenge, the threat of prior authorization requirements may force most drug manufacturers to the negotiating table."

Simpson's group has been nearly alone in actively advocating affordable access to the results of California stem cell research. He responded with the following when the California Stem Cell Report asked him about the access/intellectual policy proposal coming up later this week:

"The proposed for-profit (intellectual property) policies -- like the non-profit polices -- fall far short of ensuring that all Californians will have affordable access to the therapies, drugs and cures that their tax dollars fund.

"There is an appropriate formula for a payback to the state if taxpayer dollars fund discoveries that produce a revenue stream. The plan appears to strike a reasonable balance between capping the payback so companies know their potential liability and provisions that increase the state's share if there is a true 'blockbuster' discovery. The provision that Californians get preference in the event of a limited supply is only fair since we are funding the research.

"But there must be a provision to preclude the possibility of egregious profiteering. If prices are unreasonable, the state through the attorney general must have the right to intervene -- 'march in' -- and remedy the situation. There must be a reasonable relationship between the public money invested and the price that is charged.

"What must be be prevented is the Genentech situation. The National Cancer Institute provided $44.6 million to develop the cancer drug Avastin, yet Genentech set the price at $100,000 a year.

"Another troubling aspects about the for-profit policy is that it provides that there will be a discount on therapies purchased in California with public funds without spelling out the mechanism for reaching the discount. The devil will certainly be in the details.

"We see that in the non-profit regulations. The original policy called for selling drugs and therapies at the federal Medicaid price. Under incessant battering from the so-called California Healthcare Institute – actually nothing but a shill for the biomedical industry -- the regulation before the ICOC Thursday has been watered down to cover only drugs and only through the California Discount Prescription Drug Plan. It doesn't cover all purchases made by publicly funded health plans. They pledge to amend the regulation to include therapies when a mechanism is worked out, but with CHI in the picture I am frankly worried."

CIRM's affordability language says:

"As a consequence of expenditure of the 'first dollar' of CIRM funding, the for-profit awardee organization agrees to provide a plan to provide access at the time of commercialization to resultant therapies for uninsured California residents.

"In addition, the awardees will provide the therapies at a discount price to residents whose therapies are purchased in California by public funds. For drugs generated as a consequence of CIRM funding, awardees agree to provide drugs at prices negotiated pursuant to the California Discount Prescription Drug Program (commencing with California Health and Safety Code section 130500, et seq.) to eligible Californians under that program. Awardees also agree to provide discount pricing for therapies in addition to drugs that result from CIRM funding.

"In the unfortunate event of limited availability of therapeutic products resulting from CIRM funding, awardees agree to give preference to Californian residents unless prohibited by law and whenever feasible. If an awardee is unable to grant preference to Californian residents, the awardee agrees to submit a statement of justification to CIRM."

The latest legislative analysis of the prescription drug measure says:

"According to the author, this bill is needed because Californians, especially those with no drug coverage, continue to pay some of the highest costs in the world for prescription drugs. The author states that this bill uses the state's purchasing and negotiating power to help Californians cope with the rising cost of prescription drugs by creating a drug discount card program for state residents. According to the author, despite the skyrocketing cost of drugs, to date the state has done little, compared to other states, to help residents afford their medication."

Both industry and health advocate groups opposed some facets of the legislation for different reasons. You can read a discussion of those concerns in a Senate staff analysis.

Here is a piece by Health Access California on the new law.

Here is the full text.

How Funny is ESC Research?

This you have to see.

Eve Herold, author of a book called "The Stem Cell Wars," is going to appear tomorrow on the Daily Show with Jon Stewart. Generally folks who lean towards positions favored by Stewart (and this includes Herold), receive easy treatment with only minor battering. But it does sound like it is worth checking out.

CIRM Moves to Clean Up Audit Issues

The performance audit requested by former Sen. Deborah Ortiz is already having an impact on the the California stem cell agency.

On Monday, CIRM's Governance Subcommittee approved a number of changes in its policies that seemed to be needed as a result of the state auditor's work. The full audit is not expected to be officially released until March.

The changes deal with contracting, travel and other policies.

Dale Carlson, chief communications officer for CIRM, told the California Stem Cell Report:

"We decided to address issues raised in (the audit) process to date, rather than wait for the final report. Our objective is to run a tight ship. If we can eliminate ambiguities, we'd prefer to do so sooner, not later. The problems are relatively minor, evidence of an agency that is young and new to the detailed requirements of travel and contracts applied to established government entities. Better to uphold the highest possible performance standards now, before signficant resources are placed in our trust. We want to be a model agency."

We can also say that it is good PR as well as good management to take care of this kind of stuff before it winds up as a bone of contention in a critical audit.

CIRM is heavily dependent on outside contractors because of its small staff. These changes seem appropriate but still allow considerable leeway in letting contracts without bids. While the bidding process does not guarantee good value, negotiated contracts can also lead to abuses. How all this shakes out will depend on the skills of CIRM staffers in dealing with outside contractors, which can be a real art.

Here are links to the proposed new policies which were approved unanimously and sent along to the Oversight Committee for action later this week. Travel.
Contracting.

The Loss of CIRM's Friendly Critic in Sacramento

The California legislature reconvenes Monday in Sacramento minus its chief advocate for embryonic stem cell research.

Her absence will not well serve the California stem cell agency, although its chairman, Robert Klein, probably has a different view. He labelled her an "ongoing threat" in a harshly worded screed earlier this year.

While it is impossible to fully determine the roots of his animosity, Klein and the agency are losing a valuable asset with the departure of former Sen. Deborah Ortiz, D-Sacramento.

She was the one of the earliest and strongest advocates for stem cell research in California and played a key role in the conceptualizing Prop. 71. Following its passage, she understood some of its failings and began to work to correct them. But Klein did not welcome the attention and stiffed the Senate Health Committee, which Ortiz chaired, during a session examining the research agency.

It is natural to bridle at one's critics. And sometimes their motives are mixed. But in the case of Ortiz, she was a friendly critic, one who supported CIRM but also understood its imperfections and the political risks that they continue to pose.

Having powerful friends in politics and government is important for any state agency. Otherwise a department can become fair game for the genuinely malicious. A friend such as Ortiz can provide important guidance to governmental novices as they attempt to navigate the tricky byways of the Capitol. But most importantly a powerful legislator can deflect truly harmful fire by taking an agency under wing.

Perhaps one of the best known examples of a friendly critic was Harry Truman when he was a U.S. senator in the early 1940s. His committee of one exposed examples of poor military training, waste and fraud. Folks in the Roosevelt administration did not care for this. But ultimately Truman earned appreciation from within the administration. He was a Democrat and a friendly critic. Problems with the war effort? Well, the Roosevelt administration could say, "Harry's on top of it." Harry took the wind out of the sails of many of those who could have played hob with FDR's plans.

The stem cell agency enters a new stage Monday in Sacramento. It has no obvious or powerful champion or friendly critic. That may well change as legislators settle down for their new session. But ESC research is a complex field, tricky politically and governmentally. Ortiz had mastered those complexities. She will be difficult to replace.

The LA Times' Reality Check on CIRM

The Los Angeles Times, California's largest newspaper with nearly one million circulation, Sunday published an overview of the state's stem cell agency, headlined "Reality Check for Stem Cell Optimism."

Written by Mary Engel, the story spoke of the "long and slow scientific journey" facing CIRM.

"Even with the $150-million state loan approved recently to kick-start work stalled by legal challenges, there are no breakthroughs in sight. Gone are the allusions to healing such afflictions as spinal cord injuries and Parkinson's and Alzheimer's diseases that dominated the 2004 campaign for Proposition 71. In fact, scientists say, there is no guarantee of cures — certainly not any time soon — from the measure that was optimistically titled the California Stem Cell Research and Cures Act."

Engel's piece included a host of interviews with a variety of folks interested in the agency. She also had an interesting quote from Sen. Deborah Ortiz, D-Sacramento, concerning some of the hype involved in the campaign for Prop. 71. It reflected one of the realities of political life – one sometimes not fully understood by those who criticize the overblown rhetoric of the campaign.

"'A campaign requires a message to be driven home,' (Ortiz) said. 'You can't raise those hopes and then say, 'Oh by the way, it may take us 10 or 15 years.' That's just the nature of campaigns.'"

Framing News Coverage of CIRM

Certain news media tend to set the agenda in news coverage throughout the nation. One of those is The Associated Press, whose news service goes into virtually every newspaper, radio and television station in the country.

Not only are its stories read by millions, but perhaps more importantly they are read by editors – gatekeepers -- who make judgments about what is fit to print. Those editors look to The AP for guidance about what is important, what is not and what to think about subjects they are not familiar with.

Now comes an update on the California stem cell agency by AP reporter Paul Elias, who has covered CIRM since its inception. The story, which is also likely to be circulated overseas, sounds a bit of a cautionary note in advance of next week's meeting of the CIRM Oversight Committee.

Elias quoted Zach Hall, president of the agency, as saying,

"Our aspirational goal is to cure disease. But you can't snap your fingers and have that done."

Elias also wrote:

"...(M)uch of the money (the agency) doles out in 2007 will finally go to senior scientists eager to push stem cell research out of the lab and into patients.

"But don't expect those promised cures anytime soon. The research is in such a nascent stage that even fundamental questions such as what defines a human embryonic stem cell remain unanswered."

Elias's "walk-up," as such stories are known in the business, could generate more coverage and attention to next week's meeting in Irvine. It will also shape how news media is likely to frame its thinking concerning an agency that has received short shrift in news coverage during the last year.

Review of the CIRM Grants Ends Five Hours Early

A batch of hard-working scientists has just finished the work of reviewing more than 200 applications for $24 million in California's first-ever grants for embryonic stem cell research.

The grants review group has concluded three days of closed-door meetings at the Miyako Hotel in San Francisco, analyzing the requests for funds from the California stem cell agency. Their session ended about 4:20 PST, five hours ahead of schedule, according to Dale Carlson, spokesman for CIRM.

Carlson also noted that the group took steps to add a tad more openness to the review process.

"The grants working group agreed to provide the names of members recused from each application review due to conflicts. So after the (Oversight Committee) decision, we'll be releasing the names and institutional affiliations of the grant recipients, along with the titles of their proposals and their abstracts; the title, abstract, score of each application the (Oversight Committee) decides not to fund, and the working group members recused from consideration of each application due to conflicts."

The California Stem Cell Report expects the CIRM Oversight Committee to give its blessing to virtually all of the recommendations at its February meeting.

We should note that reviewing the grants is hard work and not well-compensated. The reviewers are due a round of electronic applause. Congratulations.

TV Covers CIRM Grants Session

The California stem cell agency received some rare attention from television news this week as the result of its grant review session in San Francisco.

Reporter David Louie of KGO TV reported on complaints about the closed door meetings being held to decide which scientists receive $24 million in research grants. John M. Simpson of the Foundation for Taxpayer and Consumers Rights was quoted (see "moral seduction" item below).

Louie also quoted Dale Carlson, spokesman for CIRM, as saying there are competing claims concerning what is in the public's best interest:

"'The public's right to know, the public's right to find the best possible science that will turn stem cells into therapies and cures fastest. And when we try to balance those claims, we think the public is more interested in finding good science than in knowing who lost.'"

Louie continued:

"Carlson points out the institute is following long-standing procedures by the National Institutes of Health and other funding agencies by keeping the review process secret."

The California Stem Cell Report has carried CIRM's view on this issue at some length and will continue to do so in the future. However, as we have noted in the past, the assertion that the current federal funding procedures have produced the best science is an untested proposition. No contrary major government model exists for comparison purposes, unless we are mistaken. But we have ample evidence that secret sessions and lack of disclosure can create problems when tens of millions of dollars are being given away.

To be perfectly clear, we assume that all the CIRM folks and the reviewers are honorable and upright. The question here is one of policy and protecting embryonic stem cell research and the agency itself from nasty scandals that would damage the field. Not to mention the human casualties – scapegoats and sacrificial lambs, by and large -- that result when government programs go awry.

Reporter Bonnie Eslinger of the San Francisco Examiner also wrote a story on the grant process. You can find it here.

Fresh Fodder on CIRM Website

The all-important background information for CIRM's spate of meetings over the next week is starting to appear on the agendas on the agency's web site.

For example, which employees will have offices with windows and which will have cubicles is laid out in one document. The issue troubled the two top execs at the agency earlier this year.

A definition of capital equipment for labs to be funded by CIRM is offered, and language on the use of human tissue in research is up.

Look for more documents to be posted over the next few days.

Moral Seduction and CIRM's $24 Million Grant Giveaway

Some of the top stem cell scientists in the nation today began the arduous task of sifting through more than 200 pleas for about $24 million in research grants from the California stem cell agency, a process that is being conducted in secret with no public disclosure of the financial interests of the reviewers.

Is the process fair? Who is seeking the money? Do the reviewers have conflicts of interest? Will grant applicants with ties to CIRM's benefactors receive special treatment? Are applicants with representatives on the CIRM Oversight Committee moving to the head of the line? All of this is impossible to tell. And it all places CIRM in an unnecessarily vulnerable position because the agency has assumed responsibility for policing the secret statements of economic and other professional and personal interests of the scientists who review the grant applications.

Alternatives exist. Applicant names and their institutions could be publicly identified. The statements of economic interests by grant reviewers could be made public.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights, today told the grant reviewers in San Francisco that Connecticut is leading the way in terms of openness and transparency on the grant reviews. Simpson said in a statment:

"California's stem cell institute will tell you that they epitomize a transparent and publicly accountable operation, but it's simply not true. In fact they won't even tell you who applied for public money or with whom they are affiliated."

The foundation's press release "contrasted California's policy, where only grant recipients are identified, to Connecticut's process that discloses all applicants identities and affiliations and other key information."

The press release continued:

"Last week (Connecticut's) Stem Cell Advisory Committee awarded $20 million in research grants. There were 21 grants awarded from a pool of 70 applications. The grants were discussed and awarded at a public meeting where pplicants were identified by name. A proposed project's scientific score was listed along with comments from peer reviewers.

"Applications for grants are public records when they are made, except that proprietary information can be redacted.

"'California's stem cell overseers talk about transparency and public accountability,' said Simpson. 'Connecticut's leaders don't just talk the talk; they walk the walk. We should be ashamed of ourselves.'"

Recently we discussed, via email, some of the issues of openness and transparency at CIRM with Robert M. Stern, president of the Center for Governmental Studies in Los Angeles and one of the key authors of California's public disclosure law.

Stern told the California Stem Cell Report:

"I totally agree with you that the statements of economic interests (of grant reviewers) should be public. It is the only way that Californians can have confidence that there are no conflicts of interest."(For more from Stern see the item below.)

No one is talking about outright corruption on the part of the reviewers or CIRM. At this point, the issue is more subtle.

Some top thinkers on conflicts of interest call it "moral seduction," a process "that encourages complacency among professionals" and is "illustrated by the common assertion that 'we aren’t doing anything wrong.'"

In a working paper on conflicts, Don A. Moore of Carnegie Mellon University, Philip E. Tetlock of the Haas School of Business and Lloyd Tanlu and Max H. Bazerman, both of the Harvard Business School, also write:

"Although it is tempting to be cynical about motivation, and to assume that professionals always realize when they are succumbing to conflicts of interest, we suggest this judgment is too harsh. Putting the most Machiavellian fringes of professional communities to the side, we suggest that the majority of professionals are unaware of the gradual accumulation of pressures on them to slant their conclusions, a process we characterize as moral seduction. Most professionals feel that their conclusions are justified and that they are being unfairly maligned by ignorant or demagogic outsiders who raise concerns about conflicts of interest."

Last week the identities of foundations and individuals (see item below) that are loaning CIRM tens of millions of dollars were released. Is it ridiculous to wonder whether grant applicants linked to those CIRM benefactors might receive some special consideration? Only CIRM will know, based on its current rules. Will the agency act to intervene to prevent an abuse of the review process but at the same time offend a multimillion dollar donor? No one can tell.

Embryonic stem cell research is already fraught with controversy. California's $3 billion stem cell agency is riddled with built-in conflicts of interest – all legal. It operates like no other state department, uncontrolled by the governor or the legislature. And this week involves only the first look at applications for research grants, which are expected to pour out at a rate of $300 million annually. It behooves CIRM to go beyond its existing disclosure rules and open its important grant decision-making process to more public scrutiny.

Looking Closely at CIRM's Disclosure Rules

Are CIRM's disclosure rules for its grant reviewers good enough? Robert M. Stern, president of the Center for Governmental Studies in Los Angeles, found some weaknesses. Keep in mind that the only disclosure the reviewers make is basically to CIRM itself – not the public, which Stern believes is necessary once the agency clarifies some of its rules. You can find the text of the rules here.

Here is what Stern told the California Stem Cell Report:

"The CIRM requirements are too broad and too vague, and I would not make their disclosures public until they are made more specific. Some examples: what is a 'common financial interest' and what is a 'financial benefit of any amount?' They are not defined.

"Are former students for all-time considered professional associates? There needs to be a time period.

"What is the distinction between 'long-standing personal differences' and 'long-standing scientific differences or disagreements?'

"These are examples of terms that are very subjective and thus difficult to understand and comply with.

"Perhaps other agencies in other states or at the federal level have used these terms and have interpreted them. If so, it would be helpful to have their guidance.

"One further point, if these terms are interpreted in advice letters or
regulations, are the interpretations and advice letters public?"

The Folks Betting on CIRM BANs

Here is more on the recent buyers of tens of millions of dollars in bond anticipation notes (BANs) for CIRM. The notes will not be paid back if CIRM loses the lawsuits against it. The information was supplied by CIRM at the request of the California Stem Cell Report and has only been lightly edited.

J. Taylor Crandall

J. Taylor Crandall is a managing partner of Oak Hill Capital Partners and has been part of the firm since 1986. Crandall has senior responsibility for originating, structuring and managing investments for the firm's Technology, Media & Telecom industry groups.He serves as a co-Managing Partner of Oak Hill Special Opportunities Fund, L.P.

The David and Lucile Packard Foundation

The David and Lucile Packard Foundation was created in 1964 by David Packard (1912-1996), the co-founder of the Hewlett-Packard Company, and his wife, Lucile Salter Packard (1914- 1987).

The Gordon and Betty Moore Foundation

Established in September 2000, the Gordon and Betty Moore Foundation seeks to develop outcome-based projects that will improve the quality of life for future generations. The foundation believes in a strong monitoring and evaluation component to grant-making and concentrates their funding in three areas of interest to the Moores: environmental conservation, science and the San Francisco Bay Area. Moore was a top executive at Intel for decades and is a seminal figure in the semi-conductor industry.

Henry and Susan Samueli

Susan Samueli earned a B.A. in Mathematics from UC Berkeley in 1972. From 1972 to 1985 she was with IBM where she worked initially as a software programmer and then as a systems engineer. After leaving IBM, she focused her energy on raising her children. She developed an active consulting practice in the areas of nutrition, homeopathy, and Chinese herbs and subsequently received a Ph.D. Degree in nutrition from the American Holistic College of Nutrition and a Diploma in Homeopathy from the British Institute of Homeopathy.

Since 1985 Henry Samueli has been a professor in the Electrical Engineering Department at UCLA, and since 2003 he has also served as a Distinguished Adjunct Professor in the Electrical Engineering and Computer Science Department at UC Irvine. He has published over 100 technical papers and he is a named inventor in 36 U.S. patents. He has been on a leave of absence from UCLA since 1995. In 1988 he co-founded PairGain Technologies, a telecommunications equipment manufacturer, and served as a consultant and Chief Scientist of the company until 1994. In 1991 he co-founded Broadcom Corporation where he currently serves full-time as Chairman of the Board and Chief Technical Officer. Broadcom is a global leader in providing semiconductor solutions for wired and wireless communications.

In December 2003, Susan and Henry purchased the management contract for Honda Center (then named the Arrowhead Pond of Anaheim), a sports and entertainment venue. In June 2005 they purchased the Anaheim Ducks National Hockey League club, Honda Center's primary tenant.

Susan is on the boards of the Orangewood Children's Foundation, Opera Pacific and Temple Beth El. She also serves on the Advisory Board of the Susan Samueli Center for Integrative Medicine at UC Irvine's College of Medicine.

Henry serves on the UC President's Board on Science and Innovation, the UCLA Chancellor's Competitiveness Council, the UC Irvine Chief Executive Roundtable, and the Industrial Advisory Boards of the Henry Samueli School of Engineering and Applied Science at UCLA and the Henry Samueli School of Engineering at UC Irvine.

Susan is the Executive Director of the Samueli Foundation which provides grants to nonprofit organizations in five major program areas: Education, Health, Social Services, Spirituality & Interfaith, and The Arts. Since 1998 the Samueli Foundation has granted over $180 million, and in 2003 and 2004 Susan and Henry were listed among Business Week's 50 Most Generous Philanthropists in the nation.

Herb and Marion Sandler

The Sandler Family Supporting Foundation endows gifts in the area of human rights, the environment and medical research.

Steven L. and Mary Green Swig

A graduate of the University of Oregon and the University of Santa Clara School of Law, Steven Swig was formerly with the Law Office of Joseph Alioto. He has also been Partner and Managing Director of Titchell, Maltzman & Mark; Executive Vice-President of Swig, Weiler & Dinner; and Counsel with Howard, Rice, Nemerovski, Canady, Falk & Rabkin. Currently he is President and Co-CEO of the Presidio School of Management. A long-time San Francisco resident, he has served on many boards including the University of Oregon, the ACLU and the American Conservatory
Theatre.

M. Mary Green Swig started as a single mother working out of her home,when she launched Mary Green Enterprises, now a successful and trend-setting high-fashion lingerie firms. She has earned many prestigious design and fashion awards, including such honors as her recent selection as one of the Leading Women Entrepreneurs of the World. In 1985, she extended her collections to include a men's line known as Mansilk. During the course of her business, Mary Green has become a force in undergarment fashions.

Seventh Street Warehouse Partnership

Seventh Street partnership is owned by the Resnick family, which also owns Roll International Corporation, the Los Angeles-based privately-held holding company.

Jewish Community Federation of San Francisco, the Peninsula, Marin and Sonoma Counties

The Jewish Community Federation works to protect and enhance Jewish life through fundraising, strategic planning and providing funding for programs that care for those in need, that strengthen and secure the safety of the Jewish people and that foster Jewish renaissance at home, in Israel and in other Jewish communities.

Who Gets the Dough and Who Shares: CIRM Tackles IP, Grants and Even Office Space

The California stem cell agency will be more than busy during the next two weeks, wrestling with its plan on how to give away $3 billion as well as proposals to share the boodle that results from the taxpayer-funded research, among other things.

CIRM's staff has done a good job of posting the agendas well in advance of the meetings, which begin this week. But still missing on most items up for consideration is the background information that really fleshes out what is being considered.

The main event comes Dec. 7 when the Oversight Committee meets at the University of California at Irvine. To be voted on are the strategic spending plan, intellectual property proposals for grants to both businesses and non-profit enterprises and the newly revised CIRM budget prepared in the wake of the recent infusion of $181 million in private and state loans. Of all the sessions scheduled during the next couple of weeks, this meeting is the one most likely to be covered by the media.

The only document now available for public viewing on the Oversight Committee agenda is the IP proposal for businesses.

Beginning tomorrow, the grants review group will hold a three-day meeting to determine who receives the first research grants from the agency. The Oversight Committee must approve the recommendations of the group before the checks go in the mail. But the reality is that the 29-member committee is unlikely to make any major changes in the recommendations of the review group.

Virtually all of the important deliberations of the group will occur in private, with none of the messy public hassles that attend the spending of taxpayers' money by cities and counties in California or, for that matter, the state. Names of the applicants are secret. The financial interests of most of the reviewers additionally are being withheld from the public. CIRM has promised to police the whole process so that no shenanigans occur, something of a burden for the tiny staff of about 20 at the agency.

One of the first items on the public portion of the grants review group session is "updated procedures for the evaluation and recommendation of grant applications." Just what those proposed procedures are is unknown. No information has been made available by CIRM. But by 10:30 a.m., the group will begin its three days of closed-door meetings presumably using those yet-to-be-revealed procedures. Of course, some of the rules for evaluating grant applications can be found in state law, which cannot be changed by the review group. Other interim procedures can be found here.

The grant group is scheduled to work grueling 12-hour days as it thrashes over the more than 200 grant applications. It is meeting at the Miyako Hotel in San Francisco, which is rated as a three-star (out of five) facility and which travelers also scored as 5.9 out of 10 on TravelPost.com.

Coming up next Monday are discussions of the CIRM's internal space and travel policies, issues that shed some light earlier this year on the bifurcated and sometimes dueling leadership at the agency. (See "'Dualing' Execs.") Also up for consideration are policies for contracting with outside consultants. The agency relies on private contracts for a number of important services because of its small staff. Again, specifics are missing on the issues. The Governance Subcommittee is meeting in San Francisco, but remote access is available in many areas in California.

Finally on Friday, the Facilities Working Group, which is preparing for handing out nearly $300 million in grants for labs, will do a little work in San Francisco on the definition of capital equipment and review the progress on the first round of its grants, which are scheduled to go out in the first six months of next year.

ACT Press Releases and the NY Times

The ACT flap is one of those stories that will dog embryonic stem cell research for years – regardless of the merits or the lack of merits of the issue. One reason is that ESC research foes will not let it die.

The latest chapter, however, came in the New York Times with a related press release from ACT, the Alameda, Ca., firm whose research triggered the hooha.

Reporter Nicholas Wade wrote on Nov. 22:

"The scientific journal Nature today issued a clarification of a recent report that human embryonic stem cells could be derived without harm to the embryo, but the journal affirmed the report’s scientific validity.

"The finding, by Robert Lanza and colleagues at Advanced Cell Technology...caused a stir when it was published online in August, because it seemed to undercut the argument of stem-cell opponents that working with the cells necessarily means a potential human life has to be destroyed."

Wade also reported:

"Dr. Lanza said that he had just finished training a team from the University of California, San Francisco, in how to use his technique, and that he expected visitors from four other laboratories."

The company quickly followed the Times story with a press release headlined:

"New York Times Cites Advanced Cell's Review in Nature On an Approach to Generate Human Embryonic Stem Cells Without Destroying the Embryo"

The Interests At Stake at the California Stem Cell Agency

Another look at the conflicts of interest – all legal – in the operations of the California stem cell agency came recently in the San Jose Mercury News.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumers Rights, wrote an op-ed piece involving the upcoming, nearly $300 million in grants for stem cell research facility.

Needless to say, the money will be hotly pursued by all of California's leading universities and research instititutions. Thirteen of those have voting members on the 29-member board that will make decisions on the grants. They are barred from voting directly on grants applications from their instititutions.

But coming up next week, they will make some decisions on the ground rules for those grants. Don't look for them to vote against the institutional interests of their employers. Simpson explored some of the ins and outs of the rules and the issues.

His conclusion:

"Those representing the institutions that want the money ought not set the rules for how they get it. Unfortunately, that's not what Prop. 71 provides."

CIRM's Own Best Interest Requires More Disclosure

The president of the California stem cell agency, Zach Hall, has penned a two-year anniversary piece on CIRM and its progress but notes that a "source of consternation" remains for some.

Count the California Stem Cell Report as one of those consternated.

The issue is the refusal of CIRM to disclose the names of those seeking hundreds of millions of dollars in public money.

Hall says the agency insists on secrecy, even when some of the applicants disclose their applications themselves, because that is the way scientific grant applications have always been handled at the federal level. He contends in an op-ed piece in The Sacramento Bee that secrecy will "promote the best possible science."

Does secrecy really mean better science? We can't say we have reviewed all the scientific literature on the question, but we doubt that there is much, if any. It is an untested proposition.

We do have ample evidence to support the belief that handing out hundreds of millions of public dollars behind closed doors leads to abuse of the public trust. Nearly every week one scandal or another – from California to Washington, D.C. -- emerges about boondoggles involving public booty.

We are not besmirching CIRM or its officials, although the agency has built-in and legal conflicts of interest at its highest levels that deserve constant scrutiny. But human nature being what it is, the opportunity to carve out a nice multimillion dollar chunk of cash is much too tempting. The only way to minimize the temptation is to make the process as open as possible. Even then, abuses are nearly certain to occur.

CIRM would be well served to protect itself from allegations of self-dealing and misdeeds by maximizing the openness of its grant reviews, including disclosing the names of applicants and the financial interests of those reviewing the grants.

CIRM Nearly Awash in Cash -- Sort Of

The cash will start rolling into the California stem cell agency by the end of the year – some $181 million that will go for financing its first research grants more than two years after voters approved the creation of CIRM.

Most of the money comes from a $150 million loan of state funds authorized by the governor of California. The additional funds will come from the private sector. None of it will be repaid if the agency loses its legal battles, which is considered to be an unlikely event.

Details of the terms of the loans were not immediately available. But CIRM released a brief synopsis of the private lending: Gordon and Betty Moore Foundation, $10 million; The David and Lucille Packard Foundation, $5 million; Gordon E. Moore, $5 million; The Sandler Family Supporting Foundation,$5 million; H&S Investments I, LP. $2 million; Jewish Community Endowment Fund, $1 million; Seventh Street Warehouse Partnership, $1 million; Steven L. and Mary Green Swig, $1 million, J. Taylor Crandall, $1 million.

News coverage was light. Here are links to stories by Maria La Ganga in the Los Angeles Times, Jim Wasserman in The Sacramento Bee and The Associated Press.

(Editor's note: An earlier version of this item carried incorrect figures (supplied by CIRM) for the individual BANs purchases. Those figures have been corrected in this item and on the CIRM website.)

Industry Opposition to Affordable Stem Cell Therapies Deplorable

Two advocates for affordable access to stem cell therapies developed with California taxpayer funds have deplored the California biomedical industry's opposition to such efforts.

State Sen. Deborah Ortiz, D-Sacramento, one of the chief advocates in Sacramento for stem cell research, said she was not surprised by the opposition of the California Healthcare Institute (see item below).

Here is her complete statement, which she released following an inquiry from the California Stem Cell Report:

“I am disappointed, but not surprised. It appears CIRM is responding to opposition from biotech companies at the expense of working Californians who are footing the bill for California’s embryonic stem cell research.

“The biomedical industry has demonstrated all along that they value increased profits over making treatment affordable to Californians.

“We urge advocates and ICOC members who have fought to bring equity and affordability to California’s taxpayer-funded embryonic stem cell research program to continue their battle to make these therapies available to all who need them.”

Joe Araya Tayag, a program manager at the The Greenlining Institute, a group that advocates for minorities, also responded to a query from the California Stem Cell Report concerning the legal opinion written on behalf of the California Healthcare Institute.

Here is the text of Tayag's comments, which are not available elsewhere on the Web:

"It would be shameful for the biomedical industry to refuse to commercialize state-funded products at a discount. California’s priority should be to ensure that public monies support the development of affordable life-saving therapies.

"Amidst widening minority health and healthcare disparities, Prop. 71 promises to quell the growing costs of the state healthcare crisis through the development of cures rather than the maintenance of illnesses. To fulfill this promise, the affordability provisions for the low-income and uninsured in the CIRM’s IP policies must be upheld. Input from underserved minority communities—who will be most affected by these provisions—must elevate their participation in protecting these policies.

"Over 20 percent of Californians are uninsured and of those, over half are Latino. Also, considering that over 72 percent of Medi-Cal program enrollees are people of color, these provisions will directly guarantee that the state’s minorities have a better chance of affording the promised cures and medical diagnostics.

"While the policies may be more clear, they are certainly not redundant. Policies that are setting world-precedence for future partnerships between biomedical industry and the state must continue to laud the importance of access along with innovation.

"California is in the position to take a leadership role in the drafting of IP policies that best extend these provisions of access and affordability. Although being in support of the often referred-to mantra of 'faster cures,' Californians should draft policies that ensure the promotion and development of 'fair cures.'"

Biomedical Industry Says Nay to California Stem Cell Affordability

The California biomedical industry has served notice that it will mightily resist current efforts to ensure the affordability of treatments that result from embryonic stem cell research funded by the California stem cell agency.

The industry's "letter of intent" comes in the form of a legal opinion written by a heavyweight Sacramento law firm, Wilke, Fleury, Hoffelt, Gould & Birney, on behalf of the California Healthcare Institute, the state's leading biomedical industry group. Wilke, Fleury's other clients in the past have included Big Pharma companies such as Novartis and Glaxo Wellcome.

The firm's letter to CIRM addresses the proposed intellectual property rights regulations that would apply to CIRM grants to nonprofit organizations. The IP proposal is attempting to implement the expectation that low and middle income persons will not be frozen out of Prop. 71 therapies because of their high cost.

Writing on behalf of his firm and CHI, John Valencia attacks the following CIRM language:

"…licensees will agree to provide to patients whose therapies and diagnostics will be purchased in California with California funds or fund of any political subdivision of the state the therapies and diagnostics at a cost equal to that resulting from the provisions of Title 42, United States Code section 1396r-8, subdivisions (c)(1)(A)-(B) and subdivision (c)(2)."

The law firm's 10-page argument says that CIRM is bent on a course that will not stand up to tough legal scrutiny, with the implication that its proposal is likely to meet a vigorous legal challenge.

Wilke, Fleury says CIRM's proposal is "largely redundant" and "susceptible to failure." The law firm states:

"The apparent objective of the proposed regulation – to provide California purchasers with preferred product acquisition pricing for 'therapies and diagnostics' resulting from CIRM-funded research -- lacks adequate certainty and definiteness to meet the general purpose of state agency regulatory adoptions to define, clarify, interpret and implement statutory enactments. Outpatient prescription drugs which result from CIRM-funded research will be readily available to virtually every state and local agency purchaser, at preferred product acquisition cost levels guaranteed by federal or state law, or the designed combination of the two. The proposal requires further detail in relation to key elements (i.e., definitions for key operational elements of the proposed regulation, such as 'therapies,' 'diagnostics,' 'California funds,' and 'political subdivision') in order to avoid failure upon review by the state Office of Administrative Law (OAL) for lack of clarity."

Wilke, Fleury continues:

"In virtually every instance, the proposed regulation is of questionable value until greater certainty is provided regarding the cost guarantee that will attend to CIRM-funded discoveries other than eventual outpatient prescription drugs."

Wilke, Fleury does a have a point in its letter concerning the CIRM language. More artful drafting is needed so that it will stand up to challenges and be fully understood by grant recipients.

But fundamentally the biomedical industry does not want to be hampered in any way in its efforts to extract the maximum profit from its inventions, whether they are funded by taxpayers or by the industry itself. That is certainly a justifiable position for a business, whose first loyalty is and should be to its bottom line.

That said, if business wants to dine at the public trough, it will have to abide by the etiquette of government and not its self-interest.

It is difficult to overemphasize the importance of the CIRM IP debate, given its far-reaching impact in a fledgling field of research and medicine. But the discussion concerning IP and access and affordability to CIRM-financed stem cell therapies is invisible to the public. The major media have ignored the tussle over who is going to benefit economically and medically from CIRM's $6 billion worth of taxpayer-funded stem cell therapies. Even groups representing the poor and minorities are missing from CIRM's IP discussions, although they would seem to have a substantial stake in ensuring affordability.

In public policy discussions such as this, effective representation, as offered by Wilke, Fleury, is likely to carry the day regardless of the best intentions of the rule makers and many of the supporters of Prop. 71.

Cracking the Tap for Stem Cell Cash

Monday is Revolution Day down here in Romantic Old Mexico but in California it will be the "show-me-the-money" day for the California stem cell agency.

The Finance Committee for CIRM is scheduled to open the spigot and start a major cash flow to fiscally strapped agency. The prime order of business is the governor's long-delayed promise to pump $150 million into the stem cell effort.

Of course, it is a loan to be paid back when the $3 billion in bonds are sold following the expected positive resolution of the lawsuit and appeal involving the agency.

The session of the group is slated for 1:30 p.m. in the state treasurer's office in Sacramento.

The treasurer's Web page coincidentally has an interesting feature on it, a constantly changing total for California state government indebtedness. The total approached $24 billion at the time of this writing. Your share was $2,551.93 -- if you live in California.

As for Revolution Day, it marks the 1910 revolution in Mexico, a multi-year affair that, among other things, sent tens of thousands of Mexicans fleeing into the United States because of the bloodshed and destruction of the economy. You can read more about it in "The Hummingbird's Daughter" by Luis Urrea" and "Rain of Gold" by Victor Villasenor , both men with strong California ties.

CGS Package of Stem Cell Items

The Center for Genetics and Society has a tidy wrapup of a bunch of stem cell developments in its latest newsletter on its web site. The items range from politics to a look at a "groundbreaking proposal on human biotech policy."

Some excerpts:

"The election results don't support the 'overwhelming mandate' or 'successful wedge' interpretation of some pundits. But the political winds have clearly shifted. "

"Francis Fukuyama and Franco Furger have just
released the most comprehensive analysis and set of recommendations on governance of human biotechnologies in the United States that has been prepared to date."

The book is called "Beyond Bioethics: A Proposal for Modernizing the Regulation of Human Biotechnologies."

CGS also had an item on a little-noticed meeting in October: "Toward Fair Cures: Integrating the Benefits of Diversity in the California Stem Cell Research Act was a first-of-its-kind conference on minority health disparities and stem cell research."

Not Dead Yet

In recent days, the California Stem Cell Report has been performing unspeakable acts involving the innards of one particular sailboat. Thus we have not been posting as frequently as the hundreds of thousands of readers (that is bit of hyperbole) might like. But never fear. We are not dead yet. Hot stuff – or maybe not-so-hot stuff – will be forthcoming in the next few days. Cheers to all.

Major Conflicts of Interest, Picayune Details

Sometimes tiny details tell us more about the nature of things than a panoramic perspective.

Such was the case last month at a meeting of the CIRM Oversight Committee when it considered what appeared to be a routine, previously discussed issue. We wrote about it then, noting that it illustrates the powerful nature of the built-in conflicts-of-interest involving CIRM.

The matter has come up again in the form of a comment on the proposed regulation offered by the Oversight Committee. The following was written by John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights. The letter is addressed to CIRM as part of the official state process for adopting regulations. We quote it verbatim.

"I am writing to object to the removal at the October Independent Citizens' Oversight Committee meeting of the last sentence of SECTION 100309, Press Release Requirements of the Nonprofit Intellectual Property Policy. The sentence read: 'In the event CIRM wishes to participate in a joint press release, the grantee will coordinate with the CIRM Communications officer.'

"According to the Initial Statement of Reasons, 'This regulation is necessary so the CIRM is apprised of current significant developments regarding CIRM-funded research and ensure proper attribution to the CIRM and the State of California for the CIRM-funded activity.'

"Without the sentence, there is no way of ensuring that CIRM and the State of California receive proper attribution for CIRM-funded research in news releases.

"Section 100309 was approved twice by the ICOC. The regulation received no comments from the public during a thorough review of the regulations conducted by the IP Task Force and CIRM staff during the summer. During that process public comment was appropriately considered on other aspects of the policy and the IP regulations were modified taking that comment into account as mandated by the Office of Administrative Law procedures.

"The role of the ICOC at the October meeting should have been simply to make sure that those modifications were appropriate and took public comment into account. It was not appropriate to raise new issues that had been settled. Removing a sentence that had been approved twice by the board was at best arbitrary and capricious.

"More troublesome was the motivation for the removal. The action came on a motion from David Baltimore. Unfortunately the transcript of the meeting was not expected to be available before the end of the period for public comment.

"However, my notes show that Baltimore expressed concern that the requirement to co-ordinate with CIRM's Communications Officer would place a burden on universities. Rather than acting in the interests of all Californians, he was clearly acting in what he perceived to be the interest of the institution he represents. This sort of behavior does not bode well if one expects ICOC members to live up to the committee's name, 'independent' and truly act in the interests of all Californians rather than the institutions they represent."

Klein: A Man With Two Hats

John M. Simpson, stem cell project director for the strong>Foundation for Taxpayer and Consumers Rights, has this to say about the endorsement of a candidate for California lieutenant governor by the state's stem cell chairman.

"Bob Klein needs to decide if he wants to be a stem cell advocate or the head of California's stem cell agency.

"Wearing these two hats at the same time does a disservice to both the California Institute for Regenerative Medicine and Americans for Stem Cell Therapies and Cures."

Simpson's comment came as a result of a query from the California Stem Cell Report.

Stem Cell Snippets: Galas to Free Stem Cell Movies

Here are some short notes and links to items connected to California stem cell issues.

Shades of Arnold -- The celebrated stem cell fund raiser last spring in San Francisco has not yet resulted in one dollar for CIRM. The agency told the California Stem Cell Report that it knows of no reason for the delay or the size of the contribution to CIRM, if one is forthcoming.

IP – CIRM's IP Task Force meets this Thursday in La Jolla to wrestle with rules for sharing possible stem cell booty with business. The proposed IP policy says, "There are no extant policy models that capture in entirety the intent of the State of California in its objectives to fund the for-profit research sector and provide a return to the state. As a consequence, this proposed policy is a unique synthesis of best practices and recommendations from funding agencies and foundations around the world." The Task Force may hear from representatives of businesses in the San Diego area. You can participate in the session at offsite locations at San Carlos in the Bay Area and UC Irvine. Here is the agenda.
Good Old Days – Writer Paul Billings in New Scientist magazine longs for the days when the feds reigned supreme. He remains fond of national funding models, despite their failings in ESC research. And he says Prop. 71's "most visible outcome to date has been the creation of a new bureaucracy." We should note that CIRM's staff totals about 20, probably less than the staff of the magazine.

Free Stem Cell Movies – A stellar cast of San Diego stem cell scientists with cameo performances from two CIRM character actors is featured in a 17-chapter ESC video serial available on the California Institute for Telecommunications and Information Technology website. The videos are from an invitation-only conference called "Stem Cell Meeting on the Mesa." Lots of science, plenty on ethics and a bit on policy and business.

An Extraordinary Agency (CIRM), Now Two Years Old

The California Institute for Regenerative Medicine – the state stem cell agency – marks its second anniversary this month.

The $6 billion agency was created when 59 percent of California voters approved Prop. 71 in 2004. A spokesman for CIRM said no special activities are planned for the birthday, which could be considered to be Nov. 2, the date of the 2004 election, or later in the month, when the results of the election were actually legally certified.

Without attempting a major overview of the agency's work, it is safe to say that it has made substantial progress towards its goal of turning stem cells into cures. It has improved its operations substantially from those difficult days of 2005. It has funded training programs to develop more stem cell scientists. And it is on the verge of making its first research grants and financing new laboratories.

The endeavor – believed to be the largest single source of embryonic stem cell funding in the world – has attracted international attention. A number of states in this country are attempting to emulate the effort in one way or another. CIRM also has gone beyond national ESC research standards and become the benchmark for ESC research standards in this country.

That said, life at CIRM is not all hunky dory. It faces considerable challenges, as readers of the California Stem Cell Report know. But the folks at CIRM are engaged in an enterprise that comes along only once in a lifetime. Although the details of the work at the agency are sometimes pedestrian, CIRM staffers are on the cutting edge of an unprecedented effort that ranges over new ground in science, medicine, religion, ethics, government, politics and business. They should take great pride in what they are attempting to do.

We wish the entire tiny band of CIRMies – all 20 or so -- a grand and happy birthday.

Klein and the Endorsement: CIRM Says No Comment

The California stem cell agency has no comment on the allegations that its chairman could be violating the law with his endorsement of a candidate for California lieutenant governor as detailed in the item below.

There are a number of interpretations of that sort of response. One is that the agency does not disagree with the assertion of illegality. Another is that they do disagree but for unknown reasons they choose not to share that belief with the public. Still another is that they do not know whether Klein's actions are illegal but they do not want to acknowledge their ignorance in public. And still another is that they do not want to engage in an exchange with an organization that sometimes has been held in low regard at CIRM. And yet one more is that they do not want to bring any more attention to the allegations by appearing to take them seriously. Or perhaps a combination of those considerations is the reason for the no comment response.

Does Klein's Endorsement of a Political Candidate Violate the Law?

The Biopolitical Times – the blog of the Center for Genetics and Society – has suggested that California stem cell Chairman Robert Klein has committed an illegal act by endorsing the Democratic candidate for California lieutenant governor.

Jesse Reynolds, a Center official who has followed CIRM since its inception, wrote:

"It's my understanding that as an appointed state official, he is prohibited from endorsing candidates for office."

Reynolds quoted a California State Supreme Court decision, Stanson v. Mott, as setting limits on electioneering by appointed officials. It said,

"A fundamental precept of this nation's democratic electoral process is that the government may not 'take sides' in election contests or bestow an unfair advantage on one of several competing factions. A principal danger feared by our country's founders lay in the possibility that the holders of governmental authority would use official power improperly to perpetuate themselves, or their allies, in office...; the selective use of public funds in election campaigns, of course, raises the specter of just such an improper distortion of the democratic electoral process."

Klein, of course, said he was endorsing John Garamendi as a private citizen – not as head of the Oversight Committee for the stem cell agency. If elected lieutentant governor, Garamendi would have the ability to appoint as many as five members to the 29-member Oversight Committee.

Reynolds wrote:

"His attempt at endorsing Garamendi as something other than his official capacity - chairman of the board of California's $3 billion stem cell program - is disingenuous and wrong. Everyone knows what his day job is. Klein's action is the equivalent of Leon Kass, then chair of the President's Council on Bioethics, lobbying Congress on stem cell research as a "private citizen" - a move that was
roundly criticized by stem cell research advocates."

Reynolds also cited an earlier item on the California Stem Cell Report which reported that Klein is head of Americans for Stem Cell Therapies and Cures, a lobbying and political action group. Reynolds continued:

"Klein chaired a similar advocacy organization, the California Research and Cures Coalition, just after the passage of Proposition 71. He resigned that post [PDF] under pressure. This is more egregious, in that the new organization is a lobbying outfit, not just an 'education' nonprofit. Moreover, it advocates for candidates that will appoint the board members whose support Klein needs to stay on in his official capacity. Klein must choose: Is he an advocate, or a public servant? He should resign from one of the two boards."

We are querying CIRM concernings its position on whether Klein can legally endorse candidates for state office. However, he and other state officials regularly make contributions to candidates for state office, an act that is tantamount to an endorsement and which is apparently not banned by state law.

The Scientist Magazine: WARF Patents Over-Reaching

The prestigious magazine, The Scientist, has taken on WARF and its stem cell ownership claims in two pieces that denounce the WARF patents as absurd and harmful to scientific research.

Richard Gallagher, editor of the magazine, and Glenn McGee , director of the Alden March Bioethics Institute in New York state, wrote an editorial and column, respectively, on the subject.

Gallagher said:

"Patents are a good thing. In general, they promote progress by encouraging research and development with incentives. But sometimes, they over-reach, and they impede progress rather than help it. This is one of those cases. The WARF patents point up the sometimes uncomfortable conflict between intellectual property rights and scientific freedom that many of our readers often feel as they find their way in the funding environment of the 21st century."

McGee wrote:

"So can someone own the cells that make up what is important about a human embryo? And if so, do we have to pay them every time we make our own embryonic cells, every time we make a medicine or other innovation from embryonic cells, and even when we use the cells to teach?

"Basically, if it looks like an embryonic cell, you'd better pay up. And if you try to make something out of your own embryo - yes, the one you made with your own body, from your own body - well, hope you have good lawyers."

He continued:

"In one among many of its attempts to avoid what could and should be a reversal of these patents stemming from the decision to review them, Wisconsin's Governor Jim Doyle has announced that companies who fund work at universities and nonprofits in that state will not have to pay any licensing fees. Previous attempts to ameliorate the problem have been more aggressive: offering to provide the cell lines at lower prices or to cross-license in a friendly way, for example. It wasn't enough for Californians, and now it appears it won't be enough to stop right-thinking people everywhere from filing suit, on moral grounds if nothing else.

"The protection of patents is supposed to extend to 'things under the sun made by man.' There has yet to be a serious challenge to the absurdity of patents on disease genes, and the even more absurd notion that the ability to find, to discover, constitutive parts of an embryo means that you own them."

CIRM Ripped for Secrecy

The California stem cell agency, which has sworn to uphold the highest standards of openness, has come under fire in the op-ed pages of The Sacramento Bee for its secrecy in the process of reviewing applications for tens of millions of public dollars in research grants.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumers Rights, took on CIRM. He wrote:

"Despite mouthing high-minded slogans, the institute's leaders frequently miss the mark whenever there is a clear opportunity to transact the public's business in public."

Simpson continued:

"No useful purpose is served by CIRM's penchant for secrecy. It should disclose who applied and where they are from, enabling all concerned to track awards and dispel worries about discrimination.

"There's no need to worry about embarrassing somebody because he didn't get a grant. CIRM is planning to fund only 12.9 percent of the applicants.

"Missing this cut is no big deal. Scientists need to develop thicker skins if they want to use public money for their work, and CIRM needs to let the sun shine in.

"Bottom line: They want our money. They must tell us who they are and ask for it in public."

Klein Says $150 Million Loan Up for Approval Later This Month

California stem cell Chairman Robert Klein has released a statement on Gov. Arnold Schwarzeneger's failure to fulfill – so far – his $150 million promise to bail out the fiscally strapped California stem cell agency.

More than three months ago the governor vowed to provide the money "now." Aides told CIRM that funds would be forthcoming by mid August.

Klein's statement did not explain why the delay has occurred but said a meeting of the CIRM Finance Committee will be held later this month to finalize the loan. Klein said the deal was "extraordinarily complex."

Stem Cell Politics: Beware the ESC Troglodytes

At one point stem cell advocates deplored the intrusion of politics into stem cell research. They pointed to President Bush's intrusion into the science as an example of how harmful it could be.
No more. Stem cell advocates are now hammering away at the need to throw out the nonbelievers and defeat the ESC troglodytes.
A fair amount has already been written about the stem cell political push elsewhere in the country. But the issue has surfaced in a few races in California as well.
One of the political enterprises involved is Robert Klein's Americans for Stem Cell Therapies and Cures, whose headquarters are located in his business offices. (Klein, of course, is also the chairman of the California stem cell agency.)
The Americans group has produced a report card on the California statewide races from governor to controller, but does not rate California legislative or congressional candidates. Singled out for special attention is State Sen. Tom McClintock, a Republican who is running for lieutenant governor.
Reporter Rebecca Veseley of the Contra Costa Times covered a news conference this week during which Klein disparaged McClintock as representing "the far right." Klein noted that the lieutenant governor can make five apppointments to the Oversight Committee for CIRM. He said that could place McClintock in a position where he could damage stem cell research. A spokesman for McClintock said he would apppoint "taxpayer watchdogs who will demand accountability."
Klein's group is primarily pushing a national agenda, building mailing lists, arranging for speakers and drumming up voter turnout.
Klein also makes personal political contributions. We do not yet know the figures for this fall, but he contributed $5,000 last spring to Debra Bowen who defeated Deborah Ortiz, a longtime stem cell advocate, for the Democratic nomination for California secretary of state. Ortiz riled Klein with her insistence on greater accountability from CIRM, and he lambasted her publicly "as an ongoing threat" shortly before the primary election last June.

$150 Million Snared in 'Red Tape'?

"Red tape and election year politics" apparently have delayed Gov. Arnold Schwarzenegger's promised $150 million loan to the California stem cell agency, according to The Associated Press.

Reporter Paul Elias has written a follow on our report (see item below). Elias said:

"'This is a unique and extremely complicated financial transaction with a lot of moving parts,' said California Department of Finance spokesman H.D Palmer. 'It has taken a little bit longer than anticipated, but nobody has been slow on this.'"

Palmer's position is much different than that of Schwarzenegger in July when he indicated, in a politically timed announcement, that the money would be made available promptly. His aides also said they expected funds the paperwork to be completed in mid-August.

Missing: Arnold's Promised $150 Million Stem Cell Loan

Last July, in the heat of the national debate about stem cell research, Gov. Arnold Schwarzenegger made headlines by promising $150 million to bail out the fiscally strapped California stem cell agency.

Today, more than three months later, the agency has not seen one dime of the promised loan despite the governor's July 21 statement that CIRM "need(s) the money now." Schwarzenegger said that it was "critical we take action" and that money should begin flowing "as soon possible."

The California Stem Cell Report queried both the governor's office and CIRM concerning Schwarzenegger's failure to provide the money. The governor's office has not responded to our request on Friday about what has blocked the cash. CIRM also has been less than informative.

Dale Carlson, spokesman for the agency, said that the State Department of Finance "needs to review the loan documents which are still being written," but declined to elaborate.

Unexplained was whether there is some problem with making the loan to CIRM, which one would think would be a fairly routine procedure that could be executed in less than three months. Unexplained also was the exact nature of the loan mechanism, which was not discussed in news reports at the time of the governor's announcement.

Anne Sheehan, an aide to the governor, told the CIRM Oversight Committee at the beginning of August that the loan amounted to "uncharted waters" for the state but that she expected action on it by the middle of August.

Since Schwarzenegger's politically exquisite timing of the loan announcement, which received worldwide attention, he has been involved in a re-election campaign in which he has built a commanding lead over his Democratic opponent, state Treasurer Phil Angelides. Perhaps the campaign has distracted Schwarzenegger's office from fulfilling the loan promise.

California stem cell Chairman Robert Klein alluded to the pressures of the campaign at a meeting of the CIRM Oversight Committee earlier this month. He indicated that the elections had made it difficult to hold a meeting of the CIRM Finance Committee, a special body created by Prop. 71, to approve issuance of CIRM bonds.

However, neither CIRM nor the governor's office explained if or why the Finance Committee would be involved in a loan between two state entities. Klein indicated that the Finance Committee, at its next meeting, would review more requests for bond anticipation notes, which are expected to be issued to private contributors to CIRM.

A July 20 press release by CIRM cited a section of Prop. 71 that appears to allow the state director of finance to provide funding to CIRM from the state's general fund if it is within the amount of unsold bonds authorized by the Finance Committee. That group has already approved $200 million in bonds, which have not been sold, so it would appear giving CIRM the $150 million is a simple ministerial act, but maybe not.

Klein said he hoped the Finance Committee could meet very soon after the fall elections, which will come a week from Tuesday.

The stem cell agency has been strapped for funds because of lawsuits that have blocked the issuance of state bonds that would fund it. It has operated, for the most part, on the basis of private contributions and loans since it began operations in late 2004. CIRM did not respond to a question from the California Stem Cell Report about whether the failure to provide the loan has created any financial difficulties at the agency.

Welcome to The Biopolitical Times

The Center for Genetics and Society has entered the blogosphere with a site called The Biopolitical Times. Initial topics are heavily tilted to the current relationship between vote-crazed politicians and their attempts to exploit embryonic stem cell research.

An excerpt from an item by Marcy Darnovsky:

"We’ve moved on from Fox and counter-Fox, wherein Rush Limbaugh demonstrates that “big idiot” is far too kind. Now we have top-level Democrats demonstrating their skill in cheap emotional blackmail. The take-home sentiment of a new ad by Majority Action, a Democratic 527, is that the Stem Cell Saviors will cure us all. And anyone who doubts that may as well have the blood of that sweet little six-year-old on their hands. This ad should be as embarrassing to those of us who support embryonic stem cell research as Limbaugh’s antics should be to its opponents."

The center, which has actively tracked the California stem cell agency, is inviting comments, private or public, on the site.

Stem Cell Snippets: Warehouses, Fox Ad and Pombo

Here links to some stories related to California stem cell issues:

UC Davis – A warehouse in Sacramento is being converted into a $75 million stem cell research center by UC Davis. Reporter Jim Downing of The Sacramento Bee wrote:

"The new director of the Davis program, Jan Nolta, starts work Nov. 1. Nolta, who grew up in Willows, was recruited from Washington University in St. Louis along with longtime collaborator Gerhard Bauer, an Austrian native who is an an expert in the design and management of ultra-clean laboratories. Nolta and Bauer were at the UC Davis Medical Center on Wednesday as U.S. Rep. Doris Matsui, D-Sacramento, toured the laboratories of Mark Zern, an organ transplant expert whose research team is studying ways to use embryonic stem cells to regenerate the liver."

Michael Fox – His stem cell TV ad rivals the nuclear destruction commercial in the 1964 presidential race in terms of free air time, according to one longtime observer at the Poynter Institute, a newspaper think tank.

Pombo – Stem cell research rose to a higher level of visibility in a Central Valley congressional race in California. Reporter Lisa Vorderbrueggen of the Contra Costa Times wrote the story concerning incumbent Republican Richard Pombo and Democrat Jerry McNerney.