CIRM Says No to Auditor's Conflicts Concerns

Elaine Howle, the California state auditor, knows a great deal about the mischief that goes on in state government. And make no mistake about it, mischief does occur even when the multibillion dollar battle ground is in public and the economic interests are on full display.

She also knows that the mischief can grow even greater when the doors are closed and the financial interests of the major players are hidden from the public, such as in the case of grants awarded by California's $3 billion stem cell agency.

So Howle (photo above) recommended last spring that the California stem cell agency, with its $3 billion research effort, do more to ensure that its conflict of interest code is followed. Her suggestion was rather modest considering the stakes: CIRM should ask the state attorney general for an opinion about whether the men and women who make the basic decisions on hundreds of millions in dollars in grants should be required to publicly disclose their economic interests.

CIRM's answer to the state auditor came last month: No.

"It is not appropriate," said the agency in letter to Howle. The letter came only 10 days before one institution withdrew its request for $2.6 million, a pitch that was approved by grant reviewers in secret last March without turning up the fact that the applicant was tied to an international scientific flap.

Richard Murphy, interim president of CIRM, wrote to the state auditor,

"We have given careful consideration to your recommendation and have decided it is not appropriate to implement at this time. In almost three years of operation and approval of four rounds of grants, the recommendations of the CIRM working groups have never been routinely and/or regularly adopted by the ICOC. Until the time that such a pattern is detected, the question you suggest we raise with the attorney general is entirely hypothetical, and is therefore not appropriate for submission. We will, however, continue to monitor approvals for such a pattern and will reconsider our decision if one emerges."

Murphy has some interesting lines of reasoning here, ones that clearly had the influence of a skillful attorney.

One part of his response refers to "routine and regular" actions. Another says the whole matter is hypothetical, implying that hypothetical possibilities are not worthy of public action. Let's examine CIRM's contentions.

First, should hypothetical situations to be ignored by government agencies? The possibility of contracting small pox or polio is hypothetical. Does that mean that children should not receive vaccinations against those diseases? Or that the government should not require them to be vaccinated in certain situations? The possibility of a terrorist boarding a plane with a bomb is hypothetical. Does that mean inspections of passengers boarding aircraft should cease?

The point about PUBLIC disclosure of the economic interests of grant reviewers is to prevent serious problems. A scandal involving conflicts-of-interests among persons who make critical judgments on the requests for hundreds of millions of dollars in taxpayer funds could be crippling to the stem cell agency. It is in the agency's best interests to inoculate itself against that possibility. It is most certainly in the public's best interest.

As for the routine ratification of reviewer recommendations, the Oversight Committee, which has ultimate legal authority on grant approval, has modified the reviewers' recommendations from time to time. We are sure that CIRM's able legal staff has counted the occasions and is prepared to make the case that the Oversight Committee does not routinely give grants a rubber stamp.

However, from seeing the board in action and reviewing transcripts, we come to a different conclusion, although we have not yet counted and assessed each individual vote. Reviewers are making de facto decisions. Most grants are routinely approved with little discussion by the Oversight Committee. Only a relative handful have been changed by that group.

Asking for a formal opinion from the attorney general is a serious matter. Such opinions have the force of law, for most purposes. CIRM would not want to seek such an opinion if it were uncertain of a favorable result. It is also fair to say that unless something changes, CIRM is not likely to ever detect a pattern of "routine and regular" approval of reviewer recommendations. To do so would open the agency to other legal perils, such as lawsuits alleging that the Oversight Committee is failing to perform its duties as required by law.

(The CIRM response on this matter is part of a document filed as part of the six-month response to the entire state audit. The response is not available on the Internet. If you would like a copy, please send an email to djensen@californiastemcellreport.com.)

$122 Million Disease Team Effort, $25 Million for New Pluripotent Lines

Crank up those grant-writing machines. Another 147 million in California stem cell dollars are going to start moving into the pipeline this fall.

The Oversight Committee of the California stem cell agency last week approved concepts for two new research efforts – one to develop new pluripotent human stem cell lines and another for planning grants for disease team research.

The disease team research effort is the largest at $122 million and most complex. So this fall – probably November -- the agency plans to seek applications for up to 20 planning grants for a total of $1 million. Funding approval is expected next spring.

The idea behind the disease team approach is stimulate proposals that would use strongly managed, diverse teams to accelerate development of therapies into actual use. The teams would also have clear-cut milestones on which they would be measured.

All of you team-oriented folks -- and what scientist is not (a little humor there) – can find a short document here that was presented to the Oversight Committee last week about the effort. The approach is also discussed in the strategic plan. Available at last week's meeting, but not on the CIRM web site at this point, is another important, 59-page document called "Disease Team Workshop: Information Gathering Session (July 25-26, 2007)." If you want that one, send an email to info@cirm.ca.gov.

Receiving a planning grant is not a pre-condition to winning an actual disease team grant later, CIRM staff said. And at the insistence of some of the medical school deans who serve as CIRM directors, the Oversight Committee also added a 10 percent indirect cost allotment in the planning grant(that is the change from the short document you will find on the web).

As for the new stem cell lines, the RFA on that $25 million program will come up this fall with approval for funding also in the spring. The grants are aimed at supporting generation of new lines of pluripotent cells, said CIRM,

"new clinical grade lines of hESCs and other pluripotent human stem cells suitable for future clinical use or other biomedical applications

"new hESC lines generated using improved methods that may be optimal for differentiation along selective lineages or for studies of disease

"disease-specific, pluripotent stem cell lines to support the study of the effects of genetic variation on disease development and response to treatment

"the discovery and implementation of alternative methods for generating pluripotent human cells."

More specifically, the awards will be made to "support two areas of derivation: the generation of new human lines using excess embryos from in vitro fertilization, and derivations from other sources using new and novel methods."

In addition to the document from last week's meeting, you can find more on the subject in the CIRM strategic plan.

Both programs will have limits on the number of applications from each institution.

CGS on CHA: Pushed or Jumped?

That was the headline on a piece on Biopolitical Times concerning the $2.6 million grant from the California stem cell agency to a Los Angeles subsidiary of a Korean business, headed by a controversial scientist.

Jesse Reynolds of the Center for Genetics and Society wrote skeptically about the explanations involved in the withdrawal, declaring that they "seemed a bit disingenuous."

"Regardless," he said, "the outcome is the right one."

CIRM Bonds: 3.55 Percent vs. 5.168 Percent Interest

When Prop. 71 was passed, even well-informed voters believed that the new California stem cell agency would use $3 billion in NON-taxable bonds to finance its activities.

The issue is significant because it costs the state a great deal more to use taxable bonds, which were exactly what was used on Thursday.

The California Stem Cell Report asked the state treasurer's office for a comparable rate if the bonds had been tax-exempt. Spokesman Tom Dresslar replied that the rate would have been around 3.55 percent. That compares to the 5.168 percent rate that the bonds were sold at, a rather hefty boost.

The total interest cost for the $250 million in bonds is expected to be $31.941 million.

CIRM and the state treasurer's office are seeking an opinion from the IRS that they hope will allow CIRM to use non-taxable bonds, but it is not clear when that will be forthcoming.

If it can't use the cheaper financing, the state faces close to another $1 billion in interest costs, according to some estimates. That is beyond the $3 billion that non-taxable bonds were expected to cost. (Yes, the figure is nearly identical to the amount of bonds authorized under Prop. 71.)

The issues of the cost of CIRM bonds and what could be generously described as a lack of candor during the campaign on the part of California stem cell Chairman Robert Klein are currently backburner issues in the Capitol and California. But given the magnitude of the costs, they are likely to surface anew in the not-to-distant future.

Text of CHA Statement

Here is the complete text from Jean Yi, CEO, CHA Regenerative Medicine Institute, concerning her firm's withdrawal of its application for a $2.6 million grant from the California stem cell agency. The statement was supplied by Tony Knight of Sitrick and Company, a PR firm working for CHA. (See the "grant withdrawn" item below.)

"CHA Regenerative Medicine Institute (CHARMI) more than adequately addressed the baseless criticism leveled at the CIRM selection process by submitting documentary evidence of CHARMI's status as a registered non-profit corporation in California and tax exemption approvals by federal and state authorities. We think the process was needlessly politicized by CIRM's critics. Nevertheless, we are withdrawing because the last thing we want to do is be the source of any impairment to CIRM's current level of well-earned public support."

Klein, Trounson, Hall: The Bee Looks Briefly at Leadership

The Sacramento Bee today carried an account of the recruitment of Alan Trounson as president of the California stem cell agency, including commentary on the future working relationship between him and California stem cell chairman Robert Klein.

Klein and former President Zach Hall sometimes appeared at loggerheads, if not worse, although the management and policy disputes were largely papered over in public.

Trounson told Bee reporter Jim Downing that he has "no concerns" about working with Klein. Trounson said,

"I think our skills are complementary and we are well suited for a very productive partnership. Bob Klein has a wealth of experience in finance, law, bonds, political connections and advocacy. That is worth tapping for the timely delivery of our outcomes."

Klein told Downing that he anticipated a smooth relationship.

"Dr. Trounson ... views this board as a resource that he can jointly make decisions with. Dr. Hall was accustomed to being a deputy dean at a medical school, where what he said goes. I deeply respect the contribution made by Dr. Hall, but ... his was a difficult leadership style."

Hall characterized Trounson's selection as a "wonderful, wonderful appointment." Hall said,

"The good news is that Bob (Klein) has recruited him and Bob has spent a lot of time with him. So I'm very hopeful the two of them will be able work together effectively. I think that's extremely important."

The Bee's story comes long after the appointment was announced. One reason for that is the poor media handling of the Trounson announcement. In this case, The Bee, a large and influential newspaper in the state capital, was not notified in time to participate in the the news conference, The announcement, controlled by Klein, came late Friday afternoon, one of the worst days and times for generating good news coverage and maximum attention. In fact, Friday afternoon is when many skilled media relations persons release bad news as part of an effort to minimize attention. In this case, the Trounson announcement was a "good news" story that could have received considerably more attention if properly handled.

Fresh Comment

An anonymous comment has been posted on the item below, saying a copy of the treasurer's press release can be found on the CIRM web site at this location.

Stem Cell Fanciers Snap up More Than $100 Million in Bonds

California today sold a whopping $102.8 million of its stem cell bonds to individual investors, more than triple the amount expected by the state.

The size of the sale, 41.1 percent of the $250 million total, testified to the powerful lure of stem cell research for a large segment of the public. The number probably could have been higher if publicity had been generated earlier among the patient advocate and other sympathetic groups.

The taxable bonds were sold at a 5.168 percent rate, which is 1.15 percentage points higher than today's rate on three-year U.S. Treasury notes. Institutional investors purchased what individuals did not.

State Treasurer Bill Lockyer (see photo) said in a news release,

"The investment by individuals far exceeded our expectations and shows how strongly Californians believe in the promise of stem cell research to cure diseases and relieve suffering,"

California stem cell Chairman Robert Klein said,

"Certainly many of the investors are patients suffering from debilitating disease or injury. They’re making an investment in their future – not simply their financial future, but their future quality of life."

Lockyer also noted that it was the first time California bonds have been used to directly finance the development of intellectual capital.

He said $48 million of the proceeds will go to pay back the bond anticipation notes that philanthropists purchased to provide funds for CIRM while it was hobbled by litigation. More than $200 million will go for research grants. That means that state is still waiting for repayment of a $150 million loan to CIRM. It also means that a new round of bond financing is likely soon. The agency currently has $850 million in untapped bonding capacity out of the $3 billion authorized in 2004. It can only issue $350 million a year, but unused bonding capacity is carried over year to year.

Lockyer's news release was not posted on the Internet at the time of his writing, but you should be able to find it here later in the day.

Stem Cell Bond Offering Attracts Media Attention

The $250 millon California stem cell bond offering today has triggered some unusual coverage of the state's research agency throughout the country.

Ordinarily the issuance of bonds by California attracts virtually no media attention. But since State Treasurer Bill Lockyer has created a program under which small investors can easily buy the bonds, stem cell bond news has a bigger audience.

Both CIRM and the state treasurer's office were a tad slow on picking up the idea of generating favorable publicity on the stem cell bonds, given that the cause of stem research has some nearly fanatic followers.

But in the last couple of days, press releases rippled across the country, generating stories including one notable video piece on CNBC. The segment was long – seven minutes and 39 seconds – but more than one of the participants needed to do additional homework.

The CNBC anchor who introduced the topic about California issuing stem cell bonds began with this question: "Do they have this right?" No one really answered the question, but, of course, the answer is yes. Another participant said that government is not in the business of funding "speculative" research, apparently not aware of the billions already provided for research by the NIH. As usual with many TV news interviews, some heat was generated during the discussion among the four participants. Perhaps some light also. But for the most part, the CNBC effort demonstrated the shallow level of knowledge about stem cell research and the California stem cell agency.

For those small investors who may have missed out on today's offering, another round is certain to come up probably relatively early next year. Watch this space for details.

Biotech Bank Plan Moves Ahead at CIRM

With no fanfare whatsoever, the $3 billion California stem cell agency – already the largest single source of funding for human embryonic stem cell research in the world – Wednesday took the first step towards extending its life by moving forward on creation of a loan bank for the biotech industry.

Few details were available. They will be worked out by a Biotech Loan Task Force, chaired by Duane Roth, chairman and chief executive officer of Alliance Pharmaceutical Corp. of San Diego, Ca., and finance committee, chaired by venture capitalist Michael Goldberg(see photo), a general partner in Mohr Davidow Ventures of Menlo Park, Ca. Both are directors of the stem cell agency.

Members of the CIRM Oversight Committee did not discuss the loan bank, which is the brainchild of Robert Klein, chairman of the California Institute for Regenerative Medicine. They approved creation of the task force and a new finance committee on a unanimous voice vote at a meeting in San Diego, Ca.

Following the meeting, Goldberg told us that he has not yet developed a schedule for his group's hearings, declaring it was too early to discuss details.

As we mentioned earlier, a major lending program operated by CIRM poses a host of questions and also opportunities. One advantage of a biotech bank is that it could create an income stream that could continue to fund CIRM well beyond its bonding capacity, which is only about 10 years if it taps the maximum each year.

The biotech bank also highlights the unusual nature of the agency, which enjoys special capabilities not shared with virtually all other state departments. For example, it can raise funds much like a private nonprofit organization, although fundraising is a tricky business. A case in point was the star-studded fundraiser in May of 2006 in San Francisco, featuring Julie Andrews, which promised to raise $1 million for CIRM. The actual figure was only $250,000, according to CIRM.

(An earlier version of this item incorrectly identified Goldberg as chairman of the Biotech Loan Task Force and Roth as chairman of the Finance Subcommittee.)

CHA Grant Withdrawn, Burnham Grant Denied

A California subsidiary of a Korean firm caught in an international plagiarism flap has bailed out of a $2.6 million grant from the California stem cell agency.
Arlene Chiu, chief scientific officer of the $3 billion California Institute for Regenerative Medicine, told the agency's directors at a Wednesday meeting in San Diego, that CHA Regenerative Medicine Institute of Los Angeles (CHA RMI) withdrew its application on Sept. 28 following a lengthy administrative review.

She did not elaborate on the matter. She referred questions to Tamar Pachter, general counsel for CIRM, who told us that it would be more appropriate to request the CHA information under California's open records law, a process that takes some time. CIRM directors did not comment on the matter.

John M. Simpson, stem cell project director of the Foundation of Taxpayer and Consumers Rights of Santa Monica, Ca., told directors that withdrawal of the application and action involving a grant to the Burnham Institute "spoke very well of the staff and their diligence." He said it showed CIRM was "serious about standards."

William Heisel of the Los Angeles Times reported that
Jean Yi, the CHA institute's chief executive, said it withdrew its application because of criticism that it was not a true nonprofit

Heisel continued:

"'CHA Regenerative Medicine Institute (CHARMI) more than adequately addressed the baseless criticism,' Yi said in a written statement. 'We think the process was needlessly politicized. . . . Nevertheless, we are withdrawing because the last thing we want to do is be the source of any impairment to [the California Institute for Regenerative Medicine's] current level of well-earned public support.'"

Pachter told us that CHA RMI had met the legal requirements for California nonprofit status.

CIRM directors approved the grant to CHA last March following a closed-door review. The review failed to turn up the fact that the parent of CHA RMI, CHA Health Systems, was headed by scientist Kwang-Yul Cha, who was enmeshed at the time in an international plagiarism dispute

Following disclosure of the Cha controversy, Simpson criticized CIRM's secretive grant award process. He said CIRM was "burned" because of its closed door review of the grant applications. Marcy Darnovsky, associate director of the Center for Genetics and Society of Oakland, Ca., said, "The leadership of CHA Health Systems has a shadowed recent history, including a lawsuit that alleges the director of its fertility center lied in order to obtain a woman’s eggs."

One of those alleging plagiarism, Alan DeCherney, editor of the Fertility and Sterility Journal, in May retracted his allegations of plagiarism and perjury.

Chiu also said another grant approved by directors last spring was rejected during the administrative review that is conducted on all approved grants before the checks actually go out. Chiu said the principal investigator on the $638,000 grant, David Smotrich, did not meet the criteria of being an on-site, fulltime employee of the Burnham Institute in La Jolla, Ca.

In its public review of the, CIRM said last Febarury, "This proposal is exactly the type of research that CIRM should be funding. The personnel is second to none, and it could not have been funded by NIH(National Institutes of Health.).

Terri Somers of the San Diego Union-Tribune wrote:

"Smotrich, who runs an in-vitro fertilization practice in La Jolla, is a member of Burnham's clinical faculty. He has also started a stem cell bank that is collecting donated frozen human embryos left over after the in-vitro fertilization process but no longer wanted by women trying to have children.

"From those embryos, Smotrich and scientists from the Burnham have been working to derive stem cells. He and a team that includes Burnham researchers Evan Snyder and Jeanne Loring sought the grant to fund work that Smotrich and other benefactors have underwritten to date.

"The standards of this particular grant put an independent research facility, such as the Burnham, at a disadvantage compared with an academic/medical facility such as UCSD, where clinical faculty can see patients in an office on campus, said Snyder and Smotrich.

"'It's frustrating,' Smotrich said last night. 'But hopefully it's just a hiccup, and there will be other ways to get funding. Perhaps future (grant applications) will be written differently. This is a learning process for everyone.'"

-Trb








http://www.latimes.com/features/health/medicine/la-me-cha4oct04,1,828119.story?coll=la-health-medicine&ctrack=1&cset=true

$31 Million Stem Cell Training Proposal Defended

Officials at the California state college system have filed a sweeping defense of its appeal for $31 million from CIRM to train thousands of persons to work in the stem cell industry.

The California state university system as well as the California community college system advanced the proposal at the August meeting of the CIRM Oversight Committee, whose members raised a series of questions.

Supporters of the plan compiled a detailed, 24-page response, outlining the need for training a diverse workforce and citing CIRM's own strategic plan in support. The response and the proposal are up for consideration Wednesday at the Oversight Committee meeting in San Diego.

No competing proposals to provide the training are currently before CIRM.

Time to Tap Technology for Outreach

As such things go at the California stem cell agency, it was a fairly technical meeting. No great issues, no wrestling with egg donation matters or criteria for giving away $200 million.

The subject was the application procedures for laboratory construction grants. The audience was the men and women who must fill out the complex documents – "interested parties," as they are called.

But the conference-call session on Sept. 21 has some implications for CIRM and its goals of educating the public about its activities as well as stem cell research in general(mentioned by incoming CIRM president Alan Trounson on Sept. 24).

John M. Simpson(photo above), longtime follower of CIRM affairs and stem cell project director for the Foundation for Taxpayer and Consumers Rights, listened in on the meeting. We asked him for this thoughts on the event. Here is what he said:

"(The) 'interested parties' meeting was a valuable session allowing potential applicants to ask specific questions about the application process. CIRM needs to do whatever it can to engage as many people who are affected by their decisions in the process as possible.

"California is a big state and CIRM needs to use technology to promote involvement. So far as I know this was the first conference call where participants were invited to phone in directly themselves. Usually CIRM teleconferences have required a participant to go to a particular site created for the convenience of an ICOC board member to be involved.

"(The) dial-in from wherever an interested party was located worked great. It was well worth the cost and can serve as a model for future sessions.

"CIRM should put itself on the cutting edge where it claims to be and tap technology to a greater extent. For instance, it should broadcast all ICOC(Oversight Committee) meetings and (other) committee meetings on the Internet. Many city councils around the state have already figured out how to do this. CIRM and the ICOC need to get with the times. They should even consider a page on Facebook and Myspace that links back to CIRM's own website."

We might add that Internet webcasting would also fit in with Trounson's desire to reach out nationally and internationally with the CIRM effort.

Looking For Ways to Avoid the Stem Cell Egg Problem

A $25 million proposal to develop new lines of pluripotent human stem cells, including ones that do not require the use of human embryos or eggs, will come before the Oversight Committee of the California stem cell agency next week in San Diego.

The plan calls for as many as 16 research grants for periods of three years. Funding could come as early as next spring with the release of RFAs as early as this fall.

A CIRM staff report said,

"The ability to derive pluripotent stem cells from new sources will enable scientists to generate disease-specific and genotype-specific cells of many phenotypes. Such cells have great value for drug discovery and understanding specific disease mechanisms. Importantly, methods that will not require the donation or use of either human embryos or eggs will significantly reduce the moral and ethical concerns that surround methods currently in use. Finally, new methods of producing pluripotent stem cells will be particularly important because it may be difficult to obtain excess embryos from many racial groups.

"This RFA will support the generation of new lines of pluripotent human stem cells including:

"• new clinical grade lines of hESCs and other pluripotent human stem cells suitable for future clinical use or other biomedical applications

"• new hESC lines generated using improved methods that may be optimal for differentiation along selective lineages or for studies of disease

"• disease-specific, pluripotent stem cell lines to support the study of the effects of genetic variation on disease development and response to treatment

"• the discovery and implementation of alternative methods for generating pluripotent human cells"

The report also said,

"Awards will be made to support two areas of derivation: the generation of new human lines using excess embryos from in vitro fertilization, and derivations from other sources using new and novel methods."

Lockyer Beats Stem Cell Bond Drum

The California state treasurer's office has generated more publicity for the sale of the state's first-ever stem cell bonds next Thursday with at least one site urging San Franciscans to buy to support a local enterprise.

Tom Dresslar, communications director for Treasurer Bill Lockyer(photo at right), sent out a news advisory Thursday pointing out the sale – a "reminder" from Lockyer. The reminder said,

"California is one week away from making the largest-ever investment in human embryonic stem cell research in the nation and, we believe, the world."

Lockyer also noted,

"The $200 million investment will place California in the forefront of global research using human embryonic stem cells, considered by many experts to hold more potential to help develop treatments and cures for diseases than other types of human or animal stem cells. And it's just a fraction of the $3 billion in bonds authorized by Proposition 71. By contrast, the National Institute of Health since the 2002 fiscal year has funded a total of $131 million in human embryonic stem cell research."

The total bond issue is for $250 million, but about $45-50 million will go to pay transaction costs and to retire the bond anticipation notes that were sold to private philanthropists to help fund the California stem cell agency while it battled legal challenges. CIRM must still repay the state for something like $150 million in loans that helped to provide interim financing. The agency has roughly $1 billion in current bonding capacity that it can use soon. The likelihood is that another big bond sale will come up early next year.

Individual investors have until Oct. 3 to buy the bonds. They get first crack at them because of a new program that Lockyer started this year to make state bonds easily available to the general public. Minimum purchase is $5,000. The bond dividends are federally taxable but exempt from California state taxes. One would think that patient advocate groups might want to spread the word.

The San Francisco Business Times put together a brief piece on Lockyer's reminder. Jim Christie of Reuters also wrote an article. A blog called Sam Spade's San Francisco, the city where CIRM is headquartered, said that the bonds are one of the "best places" for San Franciscans to make an investment.

"The money you invest stays right here in San Francisco and is put to work funding the most cutting-edge medical research on the planet."

Correction

Tom Dresslar of the state treasurer's office points out that the figures for transaction costs are the estimates for actual costs on the Oct. 4 stem cell bond sale -- not bench marks.

The Cost of 'Lubricants' for Stem Cell Financing

So the California stem cell agency wants a little loan? Maybe not so little. Only a piddling $250 million.

Well, to do that sort of business doesn't involve chump change. First there is the interest, let's say about another $250 million, give or take roughly $10 to $20 million plus or minus. The actual interest cost will not be known until Oct. 5, the day after the stem cell bond sale. (For those of you who have been locked into a microscope for decades, a bond is a loan. California says give us $250 million, and we will pay you back later with interest.)

Then there is the lubricant to make the financial wheels turn smoothly. That's roughly another $1.6 million. That may seem like a lot but it is less than what CIRM estimated a little while back in its strategic plan. That document calculated bond issuance costs at roughly 0.08 percent of the bond amount. In other words, about $2 million for a $250 million bond sale.

We asked Tom Dresslar, a spokesman for the state treasurer's office, which handles the bond sales, about the transaction costs of doing such business. He told us that final figures for the stem cell bond sale will not be available until after it takes place, he provided us with estimates of the costs on the October sale.

Here is his breakdown:

"Total -- Approximately $1.6 million

"Bond counsel and co-counsel -- $175,000

"Tax counsel -- $117,000

"Rating agencies -- $142,000

"Underwriting fees -- $818,000

"Various other costs comprise the balance."

Obviously it would be cheaper to fund stem cell research straight from tax revenues, with no borrowing, because there would be no interest or transaction costs. But that would mean navigating – ANNUALLY -- the treacherous shoals of the legislature – not to mention the governor's office. And the research would have to compete against demands for money for schools, police, firefighters and much, much more. It doesn't take a political wizard to figure out who wins in that contest.

(Editor's note: An earlier version of this item described the transaction costs as benchmarks for a $250 million bond sale. They are actually estimates of the costs on the stem cell bond sale.

Investing in Stem Cell Bonds

Re our earlier piece on buying California's stem cell bonds, Tom Dresslar, spokesman for the state treasurer's office, points out that the minimum buy-in is $5,000. Don't forget you need permission from the treasurer's office if you want to buy more than $1 million. And as always, do your investment homework before you buy anything.

More Openness Emerging at CIRM?

The California stem cell agency has long concealed the identities of applicants for millions of dollars in grants even when the applicants are such public entities as the University of California.

But there are signs of changing sentiment on CIRM's Oversight Committee. At the board's August meeting, some members indicated that they favored disclosing the names of institutional applicants for $222 million in lab grants and at least some portion of their applications.

For example, Oversight Committee member Francisco Prieto, a Sacramento physician, asked his fellow committee members,

"Why could we not release the names of the applying institutions and the outlines of the proposals without actually opening up the actual review? I understand that in the review of the RFAs and within the meetings that there are comments made about strengths and weaknesses of individual investigators and teams and things that could affect people's careers, but the institutions and the outlines don't have any personal interest. "

In response, Chairman Robert Klein said the matter would be brought up at next week's Oversight Committee meeting in San Diego. He said,

"I personally think that we have an opportunity here to have some more disclosure, that while protecting confidential information, proprietary information, personnel information of people that are being hired, etc."

Later David Kessler, an Oversight Committee member and dean of the UC San Francisco School of Medicine, indicated he was sympathetic to providing the names and some information concerning the institutions' applications.

Kessler made his comments after John M. Simpson, stem cell project director of the watch dog group, the Foundation for Taxpayer and Consumers Rights, noted that lab grant process has two steps. The first is a closed- door scientific review of applications from institutions, whose names are also secret. The second is public review of the actual construction proposal with the names disclosed.

Simpson said the board was

"...setting up a procedure by which, as I see it right now, you cannot risk the embarrassment of a university because it can't do science, but you can embarrass them because they don't know how to build a building. That just doesn't make sense. It doesn't serve the scientists, nor the architects, especially the public at large."

Last month, the California Stem Cell Report called on CIRM directors to make more information public concerning the identity and proposals of applicants for the lab grants.

Stem Cell Snippets: Hanky-Panky to Jobs for Those Love Long Hours

Enviros Against Stem Cell Lab/Classroom Building -- An activist group and the city of Santa Cruz have blocked construction of an $80 million facility at UC Santa Cruz that would house stem cell research activities. A judge halted the project for environmental reasons. The four-story facility would include stem cell labs and service nearly 1,400-science students.

Scientific Integrity – The California stem cell agency has based many of its policies and rules on assumptions of nearly universal scientific integrity. Glenn McGee(see photo), writing in The Scientist and on the blog of the American Journal of Bioethics, indirectly questions those assumptions. He cites studies that show widespread hanky-panky in the authorship of peer-reviewed pieces, particularly in cases where senior researchers claim authorship even when they are marginally involved. McGee also has suggestions for reform. Interestingly, the entry point for his article is a matter that figured in the controversy over approval of a California stem cell agency grant to a subsidiary of the CHA Health Systems of South Korea.

Yolo Stem Cell Land Deal – Land developer Angelo Tsakopolous has shelved his land development deal that would have also established a stem cell research center in Northern California near UC Davis and Sacramento. Jeff Raimundo, a spokesman for Tsakopolous, told the California Stem Cell Report that the controversial proposal has been put off. California stem cell Chairman Robert Klein lobbied local government officials on behalf of the proposal, but they shied away from the effort. The concept of the plan was also supported by the International Stem Society for Stem Cell Research. Tsakopolous is a persistent man, however, and his proposal could well surface again in one form or another.

Stem Cell Lab Grants – On Oct. 2, the California stem cell agency will consider rules concerning administration of $222 million in grants for stem cell lab construction. The Facilities Working Group will take up the proposal prior to consideration by the CIRM Oversight Committee the next day.

NAS Stem Cell Meeting in California – Coming up Oct. 8-9 in Irvine, Ca., is a National Academy of Sciences conference called "Therapeutic Cloning: Where Do We Go From Here?" A host of top flight scientists are listed as speakers. The session will address such questions as sources of eggs and alternative methods of creating pluripotent cells.

Looking for Work? -- If you are interested in working across the street from the home field of the San Francisco Giants baseball team, CIRM is looking for a few good men and women. Jobs available at the agency include associate legal counsel, grants management specialist, paralegal and scientific officers.. Long hours are guaranteed. (CIRM headquarters is near the Giants field.)

Trounson Expands on His International Perspective

The new president of the California stem cell agency, Alan Trounson, is expressing a strong interest in engaging scientists elsewhere in the world and nation in the state's $3 billion research program, although he said such an effort may require funding from outside the agency.

In response to questions from the California Stem Cell Report, the Australian scientist (see photo) elaborated via email on his statements at the time of his selection as the head of the world's largest single funding source for human embryonic stem cell research.

Trounson had said his new assignment at CIRM provided an opportunity to engage internationally with other groups to avoid duplication of effort and speed development of cures. However, state law concerning CIRM requires virtually all of its efforts to be focused within California, requirements that earlier this year surfaced in connection with approval of a $2.6 million research grant to a non-profit, Los Angeles subsidiary of a South Korean organization, CHA Health Systems.

The CHA grant is still apparently under an administrative compliance review along with many others approved at the same time in March. The grant was not mentioned in the questions we submitted to Trounson nor did he speak specifically to it. We asked him only to elaborate on his statement concerning efforts with other nations and states. Trounson said,

"I would like to engage research groups working in other states and particular countries in collaborations with Californian scientists and clinicians. This might be achieved by having jointly funded workshops, study programs, scientific exchanges, research projects and clinical trials. I need to find out whether CIRM funds can be used in this way or whether we need to find other mechanisms to do this. The aim is to avoid duplication and accelerate the application of discoveries into the clinic - this is the primary outcome sought and needed by Californians."

Other questions and Trounson's responses:

CSCR: What are the three greatest challenges facing you at CIRM?

Trounson:
"1. Integrating the pipeline of stem cell discovery, translation and application in the clinic
"2. Demonstration of therapeutic benefit in a variety of applications
"3. Achieving a full comprehension by education, of the nature and potential benefits of stem cells throughout the whole community."

CSCR: Working in California state government also means dealing with open records and open meeting laws which sometimes have given pause to others new to such requirements. What is your comfort level with such laws?

Trounson: "Transparency is a simpler form of conducting an activity such as that involving the CIRM, where the entire community has an interest. I welcome the open format."

CSCR: Other observations you feel are important?

"I need time to focus on and analyze the efficiency of delivery of the CIRM strategy and to format priorities for the CIRM building on the very sound base achieved by the founders."

Attention Stem 'Cellists:' Buy Your Bonds Now

Supporters of human embryonic stem cell research have a chance to put their money where their rhetoric is early next month and help fund California's ambitious effort at pushing the field forward.

On Oct. 4, the state of California has scheduled its first ever bond sale for the California stem cell agency – a $250 million proposition that individual investors would have been hard-pressed to take part in, at least until this year.

State Treasurer Bill Lockyer, however, has set up a procedure to let smaller, individual investors buy California state bonds in the amounts that mom-and-pop investors are comfortable with. Typically in the past, institutional investors would buy huge chunks of state bonds, and the treasurer would not bother with what he regarded as nickel-and-dime sales, known officially as "retail" accounts.

Buying the bonds does take a little homework, however. You must set up a brokerage account, if you do not already have one. You should also check with your broker soon to be sure he or she sure is on board and can send in the orders well ahead of Oct. 4. There are restrictions: You generally can't buy more than $1 million worth of the bonds without seeking permission from the state. You can read all the details and deadlines here.

State bonds pay a dividend that will be determined later, but they can be described as undoubtedly a safer investment than putting money into a stem cell or biotech company. After all, California's millions of taxpayers stand behind the bonds.

And you might even get a certificate suitable for framing that you could post on your front door.

Ensuring a Stem Cell Future: CIRM's Proposed Biotech Loan Program

The California stem cell agency is preparing to take the first step towards setting up a loan program that would help to extend its life well beyond 10 years and solve some of the sticky problems associated with sharing the potential wealth created by its grants.

The Oversight Committee for the $3 billion agency will meet Oct. 3 in San Diego to consider creation of a task force to develop a "biotech loan program." No details for the effort were available today on the CIRM web site, but the task force is likely to be similar to an intellectual property task force that drew up the standards for sharing potential gains from inventions that result from CIRM grants.

We have discussed the concept of a loan program on a couple of occasions with the chairman of CIRM, Robert Klein(photo above). He told us that it would be one way to assure that funding continues for stem cell research for some time. The effort would do so by generating income from interest charged on the loans. Klein noted that it is imperative to begin the program soon in order to generate cash that could presumably be reinvested in additional loans and, we speculate, in other financial instruments.

Intellectual property issues have bedeviled the grant program, generating controversy over the size of the state's potential royalties from stem cell inventions. Sharing-the-wealth questions are among the concerns that have surfaced in the California Legislature, and they are likely to surface again. Another contentious area revolves around sharing results of research with other scientists at low or no cost, a shibboleth of science. Profit-oriented researchers regard such requirements with skepticism.

A loan program could erase many of these IP issues because the return to the state would come from repayment of the loan – not royalties -- although other conditions obviously could be attached to lending.

A loan program also is linked to what is widely and wrongly believed to be the 10-year life span of the California stem cell program. No "sunset" provision exists in Prop. 71, although the 2004 debate about the ballot measure constantly referenced a 10-year period. The agency is limited to the issuance of $3 billion in bonds at a rate not to exceed $350 million a year, although it can carry over amounts not issued from year to year. In addition, CIRM enjoys a special status among state agencies. It can accept private funds, much as a nonprofit charity does, including those from fundraisers. The only other state department that we know of that has a similar capability is the Fair Political Practices Commission, another agency created by a ballot measure. There could be others, however. One possibility concerning financing for CIRM beyond 10 years could involve earmarking donations to the agency for loans to industry.

A loan program also carries with it a series of other interesting questions such as:

How does the agency establish the credit-worthiness and perform due diligence on applicants? It has no expertise in this area. Presumably it would rely on outside contractors.

But where does it find even an oversight staff for a lending and investment program that could run into hundreds of millions of dollars? The agency is limited by law to 50 employees. It currently has 26. Even at 50, some Oversight Committee members believe it will be understaffed for its existing programs. Contracting out such critical functions also involves difficult conflict-of interest questions, since outside firms do not have to file public statements of their economic interests.

How does CIRM deal with defaults? Does it take a share of the company in return, which may be worth nothing or even less than nothing(i.e. loaded with unpayable debt)? Does it sue for payment? The biotech industry currently consists primarily of companies that are hard-pressed to maintain their own financial viability.

Presumably those questions and many more will be addressed by the new biotech task force.

Klein has had experience in creating and running state lending programs. He served for six years as a member of the board of the multi-billion dollar California Housing Financing Agency. Klein says he authored the legislation creating the agency when he was an aide in the legislature. Klein notes his own business, a real estate investment banking firm, has never obtained any financing from the housing agency.

Because of his background, Klein is likely to be even more immersed in the loan program than he is in other agency matters, and will probably seek additional personal staff from the 50 allotted to the agency.

To learn about other matters on the Oct. 3 Oversight Committee agenda, see the item below.

CIRM October Meeting: Disease Teams, Biotech Loan Program and New Stem Cell Lines

Directors of the California stem cell agency always seem to have more than they can do in their meetings, and October's seems to be no exception.

Creation of a new $122 million disease team effort and a biotech loan program (see above) that could give CIRM life in perpetuity are among the matters to be discussed in San Diego at the Oct. 3 meeting of the Oversight Committee. That is not to mention rules for the $222 million lab grant program and consideration of a concept for grants for development of new cell lines.

Also on the agenda is creation of a Finance Subcommittee, which is likely to generate more work for Oversight Committee members, and may be linked to developing ways for funding CIRM after it runs out of its $3 billion in state bonds. The $30 million training proposal from California's state and community colleges is also up for discussion.

No details of any of the new proposals are yet available. Presumably more information will be forthcoming well in advance of the meeting so that the important constituencies affected by the matters will have time to respond. The agenda itself was not yet posted on the CIRM web site at the time of this writing, but presumably will be on line on Monday.

'Little Rooms, Big Dreams'

Patient advocate Don Reed has written an interesting mini-profile of Stanford stem cell researcher Renee Reijo-Pera, chronicling her journey from secretarial chores and "not-so-good" college grades to her current position.

Reijo-Pera (see photo) was one of six children and the first in her family to graduate from college, Reed reported on his blog, stemcellbattles.com. She studied business administration in college until her junior year, when she switched to sciences following an exposure to a human biology course aimed at non-science majors.

She cited the influence of a particular instructor as providing the impetus, which makes one wonder about the emphasis on research to the neglect of teaching at many universities. All it takes is a handful of folks like Reijo-Pera to make a bigger difference than a wheelbarrow of research papers involving relative trivia, although I may be overstating the case a bit.

Reed was leaving his interview with Reijo-Pera when he commented on the small size of the rooms in her research complex.

"Little rooms, big dreams," she replied.

You can find Reed's piece at stemcellbattles.com. Look for the Sept. 21 item in the archives if it doesn't pop up immediately.

More on Alan 'Big Fish' Trounson: Spin Doctors 'Wrong'

Here is how Constance Holden of ScienceNow put it:

"California has landed one of the biggest fish in the Pacific to head its stem cell venture."

She continued:

"'Things are booming in California right now,' says former CIRM President Zach Hall, who notes that Trounson's varied experience makes him "almost uniquely qualified for the job."

Holden wrote:

"Those who know Trounson say his personal skills should smooth the way for cooperation with CIRM's high-profile board chair Robert Klein, who has more than once ruffled colleagues with his propensity to take unilateral actions. "Alan is charming, ... a lovely human being," says stem cell researcher Evan Snyder of the Burnham Institute for Medical Research in San Diego, California. Researcher John Gearhart of Johns Hopkins Medical Institutions in Baltimore, Maryland, says he is 'politically savvy,' in addition to having a 'very broad base of knowledge.'

"Trounson is one of several major stem cell scientists whom Australia has lost to the United States lately, including Martin Pera, now at the University of Southern California in Los Angeles, and Paul Simmons, now at the University of Texas, Houston. Trounson himself has made it clear he regards the CIRM presidency as the capstone of his career. "This is the biggest job in stem cells in the world," he told the Australian paper The Sunday Age."

David Serrano Sewell, a member of the CIRM Oversight Committee, told the California Stem Cell Report, in response to a query:

"Alan is a unique person, he has the administrative and person skills needed for this job. And, he's a top sciencetist. We are lucky to have him. Second, the spin doctors could not resist from speculating that the governance structure and Bob were some road block to selecting a President. Wrong. ... They were hoping for this to be the case, and it was not. We found someone who is truly amazing. Enough said.

Market Conditions Delay Sale of Stem Cell Bonds

The sale of $250 million in California state bonds to finance human embryonic stem cell research has been postponed from Sept. 27 to Oct. 4 to see if market conditions improve, providing a "better deal" for the state's taxpayers.

At this point, the delay looks like a pretty good move given the Federal Reserve Board's reduction in interest rates.

The California Stem Cell Report Tuesday learned of the bond sale delay and queried the state treasurer's office, which handles the sale, about the reason.

Spokesman Tom Dressler replied, "We made a determination that if we hung in for another week, market conditions would give us as better deal for taxpayers."

What that means is that the bonds would require a lower interest rate to be sold to investors. And since the state must pay the interest, that translates to lower costs to taxpayers.

Also on Tuesday, Fitch Ratings announced that it rated the bonds at "A+," which is below the top rating and the result of the state's continuing state financial problems.

Fitch said the rating reflected the state's "broad, diverse and wealthy economy, moderate debt burden, and notable progress made to date reducing the structural imbalance remaining from the fiscal crisis earlier in this decade and beginning to rebuild its financial position. These strengths are offset by still significant near-term imbalances, the state's continued reliance on volatile capital gains revenues, including from the slowing residential real estate market, decelerating revenue growth and ongoing spending pressures in education, corrections and infrastructure."

Trounson, Air Bridges and Hot Water

Coverage and commentary continued to roll out today on the appointment of Alan Trounson as the new president of the agency that is the world's single largest source of funding for human embryonic stem cell research.

In the United States, one commentator who has been a strong critic of the California stem cell agency said Trounson "certainly brings a lot to the table." In Australia, California stem cell Chairman Robert Klein was quoted as saying he envisions "an air bridge from Australia to California."

First the commentary from Jesse Reynolds of the Center for Genetics and Society in Oakland, Ca. Reynolds wrote on the center's blog, Biopolitical Times:

"(Trounson is) an accomplished scientist, businessman, and advocate - a diverse set of skills which will be critical for such a challenging post. Of course, the most important skill - the ability to juggle the numerous strong personalities and interests on the agency's board - is less visible from a CV."

Reynolds touched on the flap a few years ago involving Trounson and the rat video.

"As an advocate, Trounson got himself into hot water five years ago by misrepresenting the progress of embryonic stem cell research before the Australian Parliament. He showed MPs a video of a paralyzed rat that regained mobility after an injection of what he claimed were human embryonic stem cells. In fact, it had been treated with germ cells taken from a human embryo after 5 to 9 weeks of development. This caught the attention of the Prime Minister, who called Trounson's statements "very untidy" and ordered a review of a US$ 24 million grant.

Of all his public activities, I find Trounson's position on cloning-based stem cell research to the most interesting. He has repeatedly made skeptical statements (Reynolds has links to those) on the potential for the theoretical technique to produce cures, regularly citing its inefficiency and impracticality, particularly the need for many human eggs. Trounson has even called it a 'a non-event.'

But when actual limits on the practice are at stake, Trounson has changed his tune. During debates at the United Nations on a global ban on human cloning, he said that "the benefits of therapeutic cloning are really quite enormous." And when Australia was reviewing its three-year moratorium on research cloning, Trounson said, "This is really something that we can't ignore.... I think it's terribly important to make disease-specific stem cells. A lot of people think that we will see things happening to those cells that we wouldn't be able to predict if we're looking at patients with the full expression of the disease."

In Australia, Leigh Dayton, in a story on the Australian News Network, a web site involving a number of Australian newpspapers, had an interview with Klein,

"'I see an air bridge from Australia to California,' said Bob Klein, the driving force behind the establishment of the California Institute for Regenerative Medicine, the agency with the job of doling out up to $300 million a year for stem cell research. 'Hopefully, this will be the start of a tremendous international relationship.'

"Mr. Klein and Professor Trounson predicted their partnership would speed up the delivery of therapies from the laboratory to the clinic.

"'I see (his appointment) as a tremendous opportunity to be in the front line of a major revolution in medicine,' Professor Trounson said. 'This is the epicentre for stem cell research and therapies.'"

Fresh Comment

Marie Godfrey has posted a comment on the "Wired, Sheehy" item below.

Wired Story on Trounson; Sheehy Comments

Wired.com carried a story today by this writer on the appointment of Alan Trounson as the new president of the California stem cell agency. It included a portion of a response that we received from Jeff Sheehy, a member of the CIRM Oversight Committee, in response to questions concerning the presidential search process, whether many members of the ICOC had met face-to-face with Trounson and whether Trounson had been among the candidates from the very beginning.

Here is the complete response from Sheehy:

"Not sure if you mean the very, very beginning--I wasn't on Presidential search sub-com at that point, so I don't know the candidates who were in that mix. Many members of the ICOC have met him face to face, both through this process and also through other occasions, ie, as a fellow scientist at conferences or some other occasion/s in the past. Bob has met him, again, I don't have all of the details---though personally, I believe that his recent trip to the ISSCR conference in Australia played an essential and probably decisive role in this stellar recruitment. As for the process, I had felt that it would not be possible to find a candidate that fulfilled everyone's expectations. After the first interview, I was frankly stunned and delighted to realize that Dr. Trounson would either meet or exceed almost every expectation that we individually had for a candidate for this position--a world renowned stem cell researcher, significant management/administrative experience, significant private sector experience, significant translational experience, a clear well-articulated scientific vision, demonstrated leadership experience, experience with the public, media and political leaders, ability to position CIRM to realize its potential as a global engine for stem cell research and to develop and sustain the relationships with other nations' stem cell efforts in order to avoid wasteful duplication of effort and create (my least favorite word, but I don't have another) synergies between these efforts and CIRM's, and no issues around maintaining a lab. I'm sure I'm missing a couple of other points, but I think you get the gist. In short, we are fortunate to have him lead CIRM and I firmly believe that under his leadership, we will succeed in making a difference in the lives of patients and as Terri Somers put it in the SD Union Trib, it is a "coup" for California."

Reaction to Trounson: CIRM Management Issues to His Love of Learning

The appointment of Alan Trounson to head California's $3 billion stem cell agency is triggering more reaction today, ranging from curiosity about his Australian origins to the continuing structural and management issues at the fledgling institute.

Here are some samples:

David Hamilton, writing on VentureBeat.com, discussed the management problems. He said,

"...(T)he challenges CIRM still faces are significant, and it doesn’t help that Trounson apparently won’t even start his new job until the end of the year — and even then will likely work part-time while he winds down his involvement with his Monash laboratory. With all due respect to acting president Richard Murphy, it’s still likely to be a while before CIRM gets the steady hand on the tiller it appears to need so badly.

Monya Baker, news editor of NatureReports Stem Cells, wrote on The Niche, the stem cell blog of Nature magazine,

"One strength that has not been highlighted is Trounson’s potential to link US scientists with those in the Asia-Pacific region. He has been very active in efforts to found an Asian-Pacific Stem Cell Network, and quite vocal about the advantages that that region has for stem cell research. When meeting with leading stem-cell scientists from around the region in June, Trounson was emphatic in discussing the need for political champions.

"Trounson also has experience working successfully in a highly politicized environment. Though largely unnoticed in the US, Australian politicians and scientists launched a successful campaign to make somatic cell nuclear transfer legal."

Patient advocate Don Reed brought his unique perspective to the news in his Sept. 16 item on www.stemcellbattles.com, including how the announcement looked from a teleconference perspective. Reed noted that Trounson disclosed, in response to a question, that his Australian ancestors arrived there as a result of the British judicial system. Trounson said "he was descended from a convict, who had been jailed because of two overdue library books—and that he had inherited his ancestor’s love of learning.(see editor's note below)"

Larry Ebert, writing on his Ipbiz blog, has a discussion of patent and WARF issues related to Trounson.

(Editor's Note: John M. Simpson of the Foundation for Taxpayer and Consumers Rights, asked the light-hearted question about Trounson"s ancestor. After this item was first posted on this blog, Simpson said that Trounson said that his ancestor stole the books. Simpson said that Trounson also reported that "his ancestor had been 'trying to better himself'
and hoped that his genetic material had continued through to him...")

'Call Me Slogger'

For those of you interested in the prurient details of this blog and its author, you can read more about them on Wired.com today. See the story headlined "Stem-Cell Blogger Tells Ups and Downs of Connecting From Sailboat."

In other news, we will have more later today on the appointment of Alan Trounson as president of CIRM.

NY Times on Trounson

The New York Times reported today that Alan Trounson's "mix of scientific and business experience was an important factor in his selection" as the president of the California stem cell agency

Reporter Andrew Pollack cited CIRM board members as the source for the assessment. Here is Pollack's story.

The Age newspaper in Australia focused on the loss of Trounson and two other major stem cell scientists. The newspaper also quoted Trounson as saying,

"It doesn't get bigger than this."

FTCR on Trounson: 'Highest Regard'

The Foundation for Taxpayer and Consumers Right is a longtime observer of and participant in California stem cell issues. John M. Simpson is the organizations's stem cell project director. We asked him today for his reaction to the appointment of Alan Trounson as the new president of CIRM. Here is Simpson's statement verbatim.

Alan Trounson is one of the scientists we sought to support our challenge of the the human embryonic stem cell patents held by WARF. He in fact filed a statement to the PTO on our behalf. He agrees with our view that the work done by Jamie Thomson was important and laudable, but not patentable because it was "obvious" to those in the field based on prior research.

Trounson is a stem cell scientist with a worldwide reputation for excellence. I hold him in the highest regard.

He has experience in both basic research and translational research -- moving discoveries in the lab to actual cures.

Trounson has expressed his willingness to turn away from his laboratory and take the helm at CIRM fulltime. He also will divest himself of any investments in stem cell companies. Both steps are necessary.

I believe Trounson can make a major contribution to CIRM, California and stem cell research in general as president, so long as he never forgets his responsibility and accountability as a public official to the citizens of California. If needed, FTCR will remind him of those duties.

Trounson Resume and Management Experience

The resume of Alan Trounson, the new president of the $3 billion California stem cell agency, is 70 pages long and you can find it here. Here is a document from CIRM on his management experience.

Dr. Alan Trounson Management Experience
1990-Present
I. Director, Monash Immunology and Stem Cell Laboratories (2004- Present)

• Developed this lab and continues to direct it

• Deputy Director Richard Boyd

• 120 people

• 50 PhD students

• 30 PIs/Senior PIs

• Administrative staff

• Research Support staff

• Finance staff

• Facilities staff

II. Founder, Australian Stem Cell Centre (2003)

• Chief Executive Officer, 2003

• Executive Vice-Chairman, 2003-2006

• Secured funding from Australian Government to found

III. Monash Institute of Reproduction and Development

• Director, 2002-2003

• Assistant Director, 1990-2002

• 250+ people

• Now named Monash Institute of Medical Research (MIMR

Trounson's Business Activities

Alan Trounson, just named as president of the California stem cell, agency, has said he will divest any interests he has in stem cell companies. Here is a list of companies that Trounson founded. The list was provided by CIRM.

Abstracts of Companies Founded by Alan Trounson
1. Infertility Medical Centre/ Monash IVF Pty Ltd (http://www.monashivf.com )

- Established 1978 as a company providing services to infertile couples. In 1982 the original company was absorbed by Monash University as 51% ownership, with the majority other ownership by private gynaecologists who manage the patient treatments. The primary activity is now to service patients requiring IVF and related therapies and diagnosis of inheritable genetic diseases using preimplantation genetic diagnosis. Largest provider in Australia – New Zealand. Clinics in Victoria and Queensland. Presently in sale mode for $100mill+

2. Sydney IVF Pty Ltd (http://www.sydneyivf.com )

- Founded by Trounson and Dr R Jansen in 1986 for provision of infertility services in Sydney. Sydney IVF has international clinical and business relationships in infertility services and stem cell provider activities (eg. GMP embryonic stem cells to ESI Pte Ltd., Huntington’s Disease embryonic stem cell lines to US distributor)

3. Intergramed America Inc (http://www.intergramed.com )

- The company was founded by Robert Moses (foundation CEO), Vicki Baldwin, David Beams and Trounson in 1984 as IVF Australia Inc/ then IVF America Inc, initiating new IVF clinical services and for provision of services in women's health care and physician practice. The management company focuses on infertility and assisted reproductive technology. Raised $20mill as public float on NYSE. Present market cap ~ $80mill. Services provided to clinics nationally across the US and is one of the largest providers in the US.

4. Embryonic Stem Cells International (ESI) Pte (http://www.escellinternational.com )

- Founded by Trounson and Drs Pera, Reubinoff, Bongso in 2000 to support our research in embryonic stem cells (ESCs). Commercial rights and IP to the initial 6 ESC lines developed by the founders were transferred to ESI. These ESCs are part of the “NIH recognised” cell lines and were the subject of the change in ESC support by NIH when Trounson and colleagues applied for NIH funding under President Clinton’s administration. The initial investment was obtained equally from Business Angels associates from the Melbourne community and the Economic Development Board of Singapore. The company was registered in Singapore. Carl Strachan (Melbourne) chaired the Board and the foundation CEO was Robert Klupacs (previously Commercial Manager of Institute Reproduction and Development under Trounson’s directorship}. The company provided the initial financial support for


Trounson and Pera at Monash, Reubinoff at Hadassa Medical Center, Jerusalem and Bongso at National University of Singapore. The company focused their commercial interests under Alan Coleman (CEO) for ESCs and diabetes (funding Drs Elefanty and Stanley in Trounson’s Centre) and ESCs and cardiac therapy (funding Dr Christine Mummery, Utrecht, Holland).
Trounson and his wife exited all shareholdings in ESI Pte in 2002 to avoid conflict of interest of management with the award of the National Stem Cell Center.

5. Maccine Pte (http://www.maccine.com)
Maccine was founded by Trounson in 2002 with Australian investors to provide primate discovery support services to Pharmaceutical and Biotechnology companies worldwide. The initial facilities were based at the Primate Research Center in Bogor, Indonesia and was moved to Bin Tan Island under Singapore lease to develop a new state of the art primate center to service Singapore and world commercial interests. The Singapore Development Corporation now has the majority ownership and the Australian parent company (Trounson – Chairman of Board) is being dissolved. The business involves the development of primate efficacy models in various therapeutic areas (e.g. cognition, diabetes, cardiovascular, pain, oncology); pharmacokinetic screening and ranking; and early toxicokinetic evaluation of candidate drugs for use in human medicine.

6. CopyRat/InjenKO Pty Ltd.
CopyRat is a spinout company from Monash University founded by Trounson in 2001 that was developing novel gene-targeting and stem cell technology in the rat in order to supply Knockout animals as models for human diseases.
IngenKO was a subsidiary of CopyRat Pty Ltd, a company formed in 2002 by Drs Hertzog and Trounson that aimed to become a world leading supplier of mouse and rat models of human disease to the biomedical industry. The investment was limited to $4mill by local Melbourne investors and despite limited cash flow from providing mouse Knockout and Knock in services to non-profit organizations and biotech companies, Monash University decided to close the merged company in 2005 because of the limited capital available.

7. National (Australian) Stem Cell Center (http:// www.nscc.edu.au/ascc)
- Trounson (with help of David de Kretser, Monash University, now Governor of Victoria), Dianna DeVore (US patent attorney), Bob Moses (biotechnology business leader) and colleagues won the national competitive grant for the first Australian Biotechnology Centre of Excellence, the National Stem Cell Center (now the Australian Stem Cell Centre - ASCC) in 2002. Funding was from the Australian Government to the tune of ~A$110 million over 10 years supplemented by other Federal and State funds, and provided support for a national endeavour for building strong platforms in adult and embryonic stem
cell research. The key scientists at the onset included Paul Simmons (adult mesenchymal stem cells), Peter Rathjen (mouse embryonic and neural stem cells), Martin Pera (human ES cells), Bernie Tuch (clinical diabetes research), Harvey (adult cardiac stem cells and heart repair), Mal Horne (neural stem cells and Neuro degeneration), Andrew Elefanty and Ed Stanley (embryonic stem cells differentiation into blood and pancreatic lineages), Richard Boyd (thymic immunology and stem cells) and Trounson (embryonic and adult stem cells and respiratory repair). A Board of Governors drawn from business, law, academia, ethics and politics heads the ASCC. A Stakeholders Committee represents the Research and Academic Institutions involved and reports to the Australian Government through a Deed of Agreement. The founding Chairman of the Board was R. Moses, CEO was Trounson, and COO was DeVore. Trounson stepped down to head a new research institute at Monash 2004 (Monash Immunology and Stem cell laboratories) and was made Deputy Chairman of the Board and Global International Strategic Advisor. These positions were concluded in 2006 and 2007, respectively.

Trounson Statement

The California stem cell agency released the following statement from its new permanent President, Alan Trounson.

Vision Statement for Relationship Between CIRM President and the Governing Board (ICOC)

Alan Trounson

The art of delivery of new developments in science and medicine, in my experience, has been dependent on creating partnerships with others with expertise in a different discipline. A shared vision then provides for a working relationship where the partners invest their expertise in achieving the potential outcome.

Historical Partnerships in Delivery of New Developments

There are many historical examples of productive partnerships, and in my case the key models include:

1.In vitro fertilization and associated technologies Trounson (scientist) and Dr. Carl Wood (clinician). Wood was a man of extraordinary vision and lateral thinking who provided the clinical platform for the embryology developed in basic research by Trounson and colleagues. There are now >4 million IVF children in the world as a consequence of this partnership and others.

2. The Institute of Reproduction and Development (IRD) Trounson (female reproduction and development – Deputy Director) and Dr. David de Kretser (male infertility expert – Director) came together as a partnership to develop a new Institute of Reproduction and Development at Monash University by fusing their research groups – Centre for Early Human Development (Trounson) and Andrology research group (de Kretser) in 1990. The IRD was the first research only institute at Monash University and rose quickly to international prominence as the world leading research institute in human reproduction, with more than 350 scientists by 2001. de Kretser was appointed Governor of Victoria in 2006 and Trounson left to establish the National (Australian) Stem Cell Centre in 2002.

3.The Australian Stem Cell Centre (ASCC) Trounson (scientist), Robert Moses (biotechnology business) and Dianna DeVore (patent attorney and molecular geneticist) joined in a partnership to win the Australian Biotechnology Centre of Excellence from all other disciplines in biotechnology. The ASCC was initiated with a grant of A$54 million for 3 years, followed by another tranche of A$54 million to carry through to 2011. Moses was made foundation Chairman of the Board, Trounson CEO and DeVore COO.

4. Embryonic Stem Cells Trounson (embryologist) and Martin Pera (embryonal carcinoma specialist from Oxford) joined together in a partnership at the IRD to develop human embryonic stem cells. They were successful, producing these cells in the late 1990s and led the new science of directing differentiation of these extremely interesting cells into the neuronal and other lineages.

5. Monash Immunology and Stem Cell Laboratories Trounson (stem cell biologist - Director) and Richard Boyd (thymic immunologist – Deputy Director) joined together to form a new research centre at Monash University – Monash Immunology and Stem Cell Laboratories. The two disciplines of stem cells and immunology created a unique focus for the delivery of stem cell technologies. Regulating the immune system is critical for delivery of allogenic cell therapies, and embryonic stem cells are being developed to reprogram tolerance and autoimmunity for transplantation and regenerative medicine.

Prospective Partnership Between Governing Board (ICOC) and the President of the CIRM

Partnership with the ICOC offers a unique mechanism for integrating key stakeholders from academic research, industry and advocacy in the discovery and development processes as we move toward therapies. The initiative (Prop 71) creates a participatory partnership between the leadership of the President of the CIRM and the governing board; the board represents a high-value spectrum of knowledge in medical research, patient advocacy and biotech experience that the President can draw upon in advancing the mission.

Klein, the visionary financier and designer of innovative systems, Chair of the governing board, and Trounson will form a partnership to deliver the incredible opportunity of cell therapies for regenerative medicine. Together they have the financial, political and scientific capacity to take the well prepared CIRM strategy to the desired outcomes in the clinic efficiently and effectively. The partnership provides the further opportunity to engage nationally and internationally with other leading groups in stem cell science to avoid duplication of effort and to hasten clinical applications.

Alan Trounson Named President of CIRM

California's $3 billion stem cell institute has found a new president, eminent Australian scientist Alan Trounson who is giving up his research to immigrate to California and oversee the world's largest single source of funding for embryonic stem cell research.

Reporter Sabin Russell of the San Francisco Chronicle quoted George Daley, president of the International Society for Stem Cell Research, as saying,

"It's a surprise move to have someone of his prominence in this role. This is a recognition of the incredible impact the California initiative has had. He's voting with his feet."

California stem cell chairman Robert Klein, who headed the presidential search, was obviously pleased by the move. He cited Trounson's "global vision."

The California Institute for Regenerative Medicine had been operating on lame duck status since last December, when former President Zach Hall announced he was going to retire. Early in August, the CIRM Oversight Committee named Richard Murphy, former president of the Salk Institute, as interim president.

Media reports indicated that Trounson hoped to begin work in San Francisco by the end of the year, but has not worked out all the visa requirements. Trounson will be paid either $490,000 or $475,000 annually depending on whether the state picks up his moving expenses. The salary is a substantial increase over the previous cap of $412,500 on the president's salary. Trounson is also giving up any investments in stem cell companies. Mary Engel of the Los Angeles Times said he will be able to work part-time on a pro-rated salary for up to six months as he closes his laboratory.

Reporter Terri Somers of the San Diego Union-Tribune wrote that the appointment is "viewed as a coup for California's ground-breaking institute because of his research resume, his entrepreneurial and management abilities and his experience navigating Australia's rocky political climate on human embryonic stem cell research."

Somers continued:

"'I have great respect for Alan as a scientific colleague and a deeply ethical and moral individual who will provide great leadership to the CIRM in coming years,' said Larry Goldstein, an embryonic stem cell researcher at the University of California San Diego who has collaborated with Trounson."

The Los Angeles Times' Engel quoted John Simpson of the Foundation for Taxpayer and Consumers Right as saying, "This is an excellent move. I am wonderfully impressed and completely surprised."

Somers also reported:

"As well as founding the Australian Stem Cell Centre at Monash University in 2003, Trounson has founded or co-founded eight companies. Among those companies is globally recognized Embryonic Stem Cells International in Singapore.
"Started in 2000 with angel investor money and investment from Singapore's research-loving government, Embryonic Stem Cells International holds the commercial rights and intellectual property to the initial six embryonic stem cell lines developed by the founders, who include Ariff Bongso, a Singapore IVF specialist considered to be a pioneer in deriving stem cells from human embryos."

Trounson told the Sydney Morning Herald:

"It's obviously a tremendous personal opportunity and honour, but it is also a sign of the high regard in which Australian research organisations and scientists are held internationally in stem cell research.

"This is a research field in which our achievements are world class - I see myself as an ambassador for all Australian medical researchers."

Trounson surfaced in American media earlier this year in support of challenges to stem cell patents held by the Wisconsin Alumni Research Organization.

The Los Angeles Times also reported:

"Trounson's career has not been free of controversy. He was criticized in 2002 after showing Australian legislators -- who were voting to legalize embryonic stem cell research -- a video of a rat that he said had been cured of paralysis using embryonic stem cells. It turned out that the rat had been given slightly older cells called foetal germ cells.

"Trounson said Friday that he had apologized to the parliament and learned "a very valuable lesson about ensuring precision in what you say to people."

Here are links to stories on the Trounson appointment. CIRM has not yet posted a news release. San Diego Union-Tribune, Los Angeles Times, San Francisco Chronicle, San Jose Mercury News , The Sydney Morning Telegraph, The Associated Press, Cellnews.