Klein Lobbying Group Employee Organizing pro-CIRM Turnout for Hoover Inquiry

Patient advocate Don Reed is attempting to drum up a CIRM-sympathetic turnout at next Thursday's Little Hoover Commission hearing into the California stem cell agency.

Writing on his blog, Reed also acknowledged he is on the payroll of the private lobbying group of CIRM Chairman Robert Klein, Americans for Cures. Reed, who is a vice president of the group, said he receives a "small stipend." Reed regularly speaks on issues before the CIRM board of directors during their meetings.

As far as the Hoover Commission inquiry is concerned, Reed said,

"Personally, I am a little worried about making changes in something good. That is like going into the hospital for open heart surgery—when there is nothing wrong with you."

Reed also looked askance at the appearance of John M. Simpson of Consumer Watchdog and Jesse Reynolds of the Center for Genetics and Society as witnesses next week. Reed said,

"...I object to the choice of two critics as representing the entire consumer population of California. It is my understanding both men are paid lobbyists. (There is nothing wrong with that; they could make a similar comment about me.  I work for a group called Americans for Cures Foundation, which supports stem cell research, and receive a small stipend from that organization.) But to choose such vocal critics without a balance is to ignore the 59.2% of California which voted in favor of Proposition 71."

$500 Million Biotech Loan Program Comes Up Next Week

Some of the nitty-gritty of CIRM's proposed $500 million biotech loan program is scheduled to be revealed next week – a matter that may be a matter of great interest for financially starving stem cell companies.

So far, all we have are cryptic agenda items, but more information may be forthcoming, hopefully in time for interested parties to give them a serious look well ahead of next Wednesday's meeting of the CIRM Finance Committee.

Here is what is on the table next week:

"Consideration of policies and implementation plan/processes for CIRM loan program.
"Consideration of Loan Advance Program for approval of grants and loans."

We have yet to see a genuine business plan for the biotech lending proposal. And it is certainly a business and a risky one. Instead information has dribbled out over the last year or so, mostly becoming public only a day or two before the public meetings at which the proposal is to be discussed. One would hope that at some point CIRM Chairman Robert Klein, who originated the proposal, would put together a presentation of the sort that entrepreneurs typically submit to lenders and others when they are seeking cash for a start-up.

For the latest iteration of the biotech loan program, see four documents from the September CIRM board meeting and the transcript of the session. Mike Goldberg, a venture capitalist and chair of the Finance Committee, gave a lucid explanation of the proposal, although it was interrupted intermittently.

Next week's hearing is the last stop before the loan program goes to the full CIRM board for approval.

Also on the committee's agenda next week is the following item:

"Consideration of California requests to the US Presidential Transition team for CIRM programs and for general biotech community financial support programs."

Another Weekend CIRM Directors' Meeting on Personnel Issues

The Governance Subcommittee of the California stem cell agency this Saturday afternoon will resume its attempts to deal with some unspecified, but obviously important personnel matter.

The unusual, teleconference session has only one item on its closed-door agenda. The meeting follows another weekend meeting on Sunday afternoon Nov. 2. Don Gibbons, chief communications officer for CIRM, said no action was taken by subcommittee of CIRM directors on that date.

A special teleconference meeting of the full CIRM board of directors had been scheduled for the Monday (Nov. 3) following the Sunday Governance session. But the full board meeting was canceled late that Sunday and has not been rescheduled. The board meeting included a personnel session along with a high priority change in quorum rules to alleviate an attendance problem at meetings of the full board.

In response to a question, Gibbons said the Nov. 3 board meeting was canceled because "we determined it had been noticed incorrectly. "

We asked him to elaborate. He replied, "There was an agenda item left off the ICOC(the CIRM board of directors) posting."

It is unusual for CIRM directors to meet on weekends for any matter. Gibbons said the Nov. 2 meeting was calendared for a Sunday because of the busy schedule of its chair, Sherry Lansing, a former Hollywood studio executive who heads a foundation bearing her name.

Stem Cell Snippets: Eggs to IP

The Price of Eggs – Singapore has made a move on the human-egg pricing front, providing cash for time and lost wages, something that CIRM does not permit on research that it funds. However, Jesse Reynolds of the Center for Genetics and Society in Oakland, Ca., does not believe Singapore's action provides much impetus for efforts to boost incentives for eggs for stem cell research. His reasoning? "The continued lack of success of cloning-based stem cell research, which would use the eggs, and the frequent strides in the alternative methods of cellular reprogramming." However, CIRM President Alan Trounson has warned that the shortage of human eggs is limiting research. Our opinion: If eggs have value, someone is going to pay for them – and maybe a lot -- whether they are in California, Singapore, Korea, China or Poland.

Business and CIRM – The private sector is not giving up on CIRM despite the agency's rejection of all but one business grant application. Twenty-seven business filed letters of intent to apply for $60 million in translational research funding. Fifty-four applications came from non-profit enterprises. CIRM did not break that down between universities and research institutions. Ten grants are scheduled to be approved in April.

Stem Cell IP – If you are interested in CIRM IP matters, you might want to keep an eye on next Tuesday's meeting of the agency's IP Task Force. The agenda calls only for consolidation of non-profit and for-profit rules, but the draft has not yet been posted on the agenda. It is a teleconference meeting with sites in San Francisco, Elk Grove and San Carlos, where the public can participate.

Monday Deadline for Canadians on CIRM's Big Disease Team Round

Canadian researchers have an urgent deadline to register for the competition for a piece of possibly as much as $210 million in team-funding in an international effort involving the California stem cell agency.

The collaboration is a Canadian-CIRM project (see item below) and is aimed at funding disease teams that will bring "an investigational new drug filing at the end of the four‐to‐five year grant."

Canadian registration is required by Monday Nov. 17.

The Canadians want the names of the PIs in both Canada and California and the following information:

"the scientifically mature opportunity, with strong preclinical proof-of-concept, to use cancer stem cells in the development of a therapy or diagnostic

"key milestones and deliverables required to achieve the objectives envisaged

"the nature of the partnership between the Canadian and Californian participants

"any anticipated commercial partnerships"

Here is a link to the registration document.

Canadian-California Researchers to Compete for Golden State Cash

The California stem cell agency said today that it will officially go international with an ambitious grant program that could run as high as $210 million.

CIRM released an announcement today aimed at alerting the California and Canadian stem cell communities of this "potential opportunity" and to encourage teams to begin work to snag some of the cash.

The collaborative funding effort involves the Canadian Stem Cell Consortium, which also participated in the joint announcement, and CIRM. The effort was ballyhooed last June but had few specifics.

Today's statement said the goal is to fund multi-disciplinary, disease teams of scientist to develop therapies for specific diseases. CIRM said,

"Successful proposals will include a description of milestones on a path to an investigational new drug filing at the end of the four‐to‐five year grant."

Funds are scheduled to be awarded next year. However, the specifics of the program have not yet been approved by CIRM directors, who are scheduled to take it up in December. Full Canadian approval is not yet in place as well. But both approvals are likely to be a formality.

The announcement may raise questions about the use of California dollars in an international research project. However, under the law, CIRM cash can only be spent in California. CIRM officials have repeatedly said that CIRM grants will be only spent on the California side of international collaborative efforts.

The announcement also raises another question about the fairness of the grant approval process in this case. Given the hooha about Canadian-California collaboration, it would seem that an application pegged to that effort would have an edge over competitors who only have a California program. At least, some other applicants might think so. But perhaps we're wrong.

If the grant round totals $210 million, it would be one of the largest rounds ever by CIRM.

Little Hoover Commission Opens CIRM Probe Next Week

California's Little Hoover Commission will kick off its inquiry next week into the state's $3 billion stem cell agency with testimony from both its chairman, Robert Klein, and longtime outside observers of the unique experiment.

CIRM President Alan Trounson is also scheduled to appear at the Nov. 20 hearing in the Capitol in Sacramento, following testimony by six other persons about what has become the world's largest source of funding for human embryonic stem cell research.

The commission is a bipartisan and respected California state organization that analyzes state government programs ranging from juvenile justice to California state bonding practices and makes recommendations for changes, if warranted.

The impetus for the commission's probe came earlier this year from legislation by Sen. Sheila Kuehl, D-Santa Monica, who heads the state Senate Health Committee. The inquiry will deal with issues of governance, transparency, accountability and the use of state bond funds, according to Stuart Drown, executive director of the commission.

In addition to Klein and Trounson, the commission will hear from John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., a longtime participant in and observer of CIRM affairs. Jesse Reynolds, director of the Project on Biotechnology in the Public Interest at the Center for Genetics and Society in Oakland, Ca., is on tap as well. He was on the scene during the Prop. 71 campaign and later.

Ken Taymor, executive director of the Berkeley Center for Law, Business and the Economy at the UC Berkeley School of Law, and Michael Klausner, a Stanford Law professor with expertise in governance, are scheduled to appear as well. Taymor has also been on the scene at numerous CIRM meetings.

The other two witnesses are Susan Bryant, a member of the CIRM board of directors and vice chancellor for research at UC Irvine, and Ralph O'Rear, vice president for facilities and planning at the Buck Institute in Novato, Ca. UC Irvine has received $51 million in CIRM grants. Buck has received $25 million.

The commission has scheduled another public hearing for late January, but Drown says that meeting and next week's session are not necessarily the only public events. In response to questions, he said the commission "tries to create opportunities for many voices."  Options include "advisory group meetings, site visits, focused discussions with experts – all of which would be open to the public," he said. 

Drown continued,

"The commission welcomes written testimony from the public and provides a chance to speak at the end of the public hearing.  Those opportunities should not be discounted, as they have, in some cases, been starting points of discussions with staff."

CIRM has been wary of the commission's study, contending that it has been the subject of more than enough scrutiny.

But Drown reported,

"We’ve had positive interactions with CIRM staff.  They’ve been very helpful in providing documents and we’ve agreed on a process to how to best communicate with them, using Don Gibbons (CIRM's chief communications officer) as a point person, who then either responds or directs us to someone else.  Initially, there was some uncertainty on their part about what we were after and hoped to achieve, and we sensed they were trying to fit us into the frame of what they’d already experienced.  A group came up for a chat a couple of weeks ago and we walked through our process and gave them a sense of what our reports attempt to achieve.  We explained that this isn’t an audit, but a study and an analysis."

Drown also said that Klein and Trounson are last on the Nov. 20 agenda so that they have a chance to respond to earlier comments.

The hearing may be televised live on the Internet via the CalChannel. Its schedule can be found here.

CIRM Says No Prompting on Penhoet Announcement

The California stem cell agency said today that the timing of its news release on the resignation of Ed Penhoet as vice chairman had nothing to do with an earlier item on the matter by the California Stem Cell Report(CSCR).

Don Gibbons, chief communications officer for CIRM, sent the following to us this morning,

"FYI. Your second posting on Ed Penhoet makes it sound like your first posting prompted our release. It should have been clear to you from your time in Sacramento that our release was timed to the Lieutenant Governor’s announcement, and neither his release or ours had anything to do with CSCR."

Here are links to the second posting and the first posting.

Economic Woes: California, the Stem Cell Biz and CIRM

In a story that circulated today nationally and perhaps internationally, The Associated Press has painted a bleak picture for the stem cell industry despite the election of a president who is a friend of the cause.

The news came on top of the even more unpleasant news that California is facing a $28 billion budget shortfall. The state's leaders are now in a position of holding out a tin cup to the federal government, enviously eying the $700 billion bailout for the private sector.

California Assembly Speaker Karen Bass, the state's second most powerful elected official, did not exactly say, "Please, sir, can I have some," but her words were close.

All this as the $3 billion California stem cell agency, which is constitutionally protected from budget woes, is looking to hand out tens of millions of more dollars in December and create a $500 million "bank," financed at taxpayer expense, to help struggling biotech companies. All of which may be good, but could lead to a ticklish image problem.

What the PR and policy problem boils down to is this: The state slashes medical assistance to the poorest Californians while millions and millions flow unfettered to CIRM-funded researchers.

First, the news from Associated Press reporter Matthew Perrone, writing out of Washington, D.C., He said that despite the election of a friendly president,

"Experts say struggling stem cell developers will face a new, equally daunting obstacle: an investment climate devastated by the financial crisis."

Perrone quoted WBB Securities analyst Stephen Brozak as saying,

"The good news is there will finally be freedom to operate, the bad news is there will be no more venture capital, which is the real freedom."

The AP story also said that investment in early stage stem cell companies was slumping even before this fall's financial meltdown.

"Venture capital investment in biotech startups — which includes stem cell developers — has fallen more than 65 percent to $443 million in the most recent quarter, from a high of $1.3 billion in late 1999."

According to Perrone, analyst Bill Tanner of Leerink Swann was even more pessimistic on hESC companies. Tanner said,

"Even if one of these companies was going to be successful, I doubt you'd have a new embryonic stem cell product on the market in the next 20 years."

The AP story appeared as California's Legislative Analyst posted a new estimate of California's budget shortfall -- $28 billion over the next 20 months. One recommendation from the analyst was for no new state borrowing, which could strike at CIRM's revenue source, California state bonds. Even before the new figure was released, State Treasurer Bill Lockyer said that the state will not be able to issue new bonds until 2009 because investors want to see how the state copes with its financial crisis.

The fiscal mess is so bad that Jim Sanders of The Sacramento Bee quoted Assembly Speaker Bass as saying "can we have $5 or $6 (billion?)" from the federal government.

The state's stem cell agency is all but immune from the California crisis because Prop. 71 locked in its funding sources and made it impossible for the governor or the legislature to cut its budget. However, if Lockyer refuses to issue bonds well into 2009, CIRM funding might hit a hard spot.

It is not clear what CIRM's current financial status is, although its chairman, Robert Klein, told directors on Sept. 25 that CIRM's cash situation at that point guaranteed "that this critical work to reduce human suffering and advance medical science is able to move forward."

He continued,

"The scientists and clinicians and patients counting on our progress need not be concerned about our work being interrupted."

Klein said that earlier this year he anticipated a troubled bond market and arranged for money from the state's "pooled money investment fund" that should be sufficient until late spring. But he noted,

"Maybe I should have drawn down three years of money."

There is no doubt that research cannot be done without a reliable source of funding. Nonetheless, CIRM must carefully consider how its operations, with salary ranges that exceed $500,000 annually and huge outside contracts, may be perceived by the public or elected officials. It is a time to tread with great care.

As for the $500 million biotech loan program, one could argue that it is needed now more than ever. At the same time, some might look askance at lending taxpayer funds to extremely risky ventures – ones that could not even find financing under the best of circumstances – while Californians who can least afford it will see health care, education and other vital services slashed.

The lending program will not make the slightest dent in the state's economic travails. As we have noted before, CIRM's activities currently have an infinitesimal, immediate impact on California jobs and businesses. CIRM's annual giveaway does not even exceed the $356 million budgeted for a new "condemned inmate complex" at San Quentin prison. That said, the lending program, which is yet to be fully explained, could well be a good idea.

We will know more after Nov. 19 when the CIRM Finance Committee will discuss it in greater depth.

Fresh Comment

Bradley Fikes has identified himself as the "anonymous" author of the comment mentioned in the post below.

Fresh Comment and Link to CIRM Penhoet Release

"Anonymous" has posted a comment on the "CIRM Board Changes?" item with a link to a posting by reporter Brad Fikes of the North County Times on Garamendi's news release on Penhoet. CIRM's news release has now been posted and can be found here.

Penhoet Resigns as Vice Chairman of CIRM

The vice chairman of the $3 billion California stem cell agency, Ed Penhoet, has resigned from his post, but CIRM announced Monday afternoon that he will remain as one of the 29 members of the board of directors.

The statement by CIRM came only hours after the California Stem Cell Report said that Penhoet "denied scuttlebutt in the California stem cell community that he is leaving the board." However, the item also said incorrectly that he denied he "is stepping down as its vice chairman." That item was based on a one-sentence response from Penhoet that did not address all the questions we asked him on Saturday. (More on that below.)

We also queried CIRM early this morning on the matter, asking Don Gibbons, chief communications officer, for comment on reports that Penhoet was stepping down. No response was forthcoming from Gibbons on the matter.

CIRM's press release, which has not yet been posted on its website, said Penhoet was stepping down because of "the time constraints of this leadership position."

CIRM said:

"However, Penhoet has accepted the appointment by Lieutenant Governor John Garamendi to one of the board’s member positions designated for the life sciences commercial sector."

Penhoet was not quoted in the CIRM press release on the leadership change, which said that the co-founder of Chiron will continue to head the CIRM IP Task Force.

The move clears the way for nomination of a new vice chair by the state's constitutional officers, such as governor and lieutenant governor. It is likely that CIRM Chairman Robert Klein will make suggestions for possible nominees. Former CIRM board member Tina Nova has been mentioned as a candidate, but she said earlier today that no one has approached her about serving in that capacity. She also said she has "no plans to return to the CIRM board."

The full CIRM board must vote on the vice chair, selecting from the nominees. The post carries a salary of up to $332,000 annually. Penhoet did not accept a salary, raising a question whether the next vice chair will. If so, it also raises the possibility that Klein, who also has not accepted pay, will seek the $508,750 salary for which he is eligible. He has repeatedly said he may seek a salary at some point.

Some of you may wonder about some of the details involved in preparing our original item below that reported incorrectly that Penhoet said he was not stepping down. Our email query to Penhoet on Saturday said,

"I am planning on writing an item that will say that California stem cell scuttlebutt has it that you are resigning as vice chair of the ICOC. Is that correct?"

Penhoet's response:

"I have no intention of leaving the board, David."

We then asked,

"I may be parsing this too finely, but do you intend to imply that you would remain on the board but give up the vice chair position? Thanks."

Penhoet did not respond to that question. We notified him early this afternoon that our original item had been posted but have received no further communications.

CIRM was queried at 7:35 a.m. California time today about the subject but has not responded to us as of this writing.

Changes on CIRM Board? Penhoet, Nova Say No

Ed Penhoet, one of the co-founders of Chiron, has denied scuttlebutt in the California stem cell community that he is leaving the board of the $3 billion California stem cell agency and is stepping down as its vice chairman.

Penhoet's statement came in response to a query from the California Stem Cell Report concerning the talk about changes in the CIRM board. He said,

"I have no intention of leaving the board."

If Penhoet (see photo) were to resign as vice chairman, CIRM Chairman Robert Klein would like to replace him with Tina Nova(see photo), president and CEO of Genoptix, Inc., of Carlsbad, Ca., according to the scuttlebutt. However, Nova resigned in September from the CIRM board of directors, citing demands of her business.

Responding this morning to our question, Nova said she is not interested in resuming service with CIRM. She said,

"I have no plans to return to the CIRM board. My business is demanding all of my time, that is why I resigned.  I have not been approached about the vice chair position, and I have not spoken to Ed Penhoet for over three months."

CIRM has not responded to an inquiry on the Penhoet/Nova matter. We will carry its response when we receive it.

Given the firm denials from both Penhoet and Nova, one can only wonder how the subject came to surface publicly. Such talk usually has some sort of basis in fact, although it can become distorted as it passes around. It could also represent some sort of trial balloon on the part of persons interested in seeing changes made.

As far as the mechanics of selection of board members are concerned, Klein does not have legal authority to either appoint or re-appoint board members or select a vice chair. Klein is also elected by the board.

The vice chair and chair, who serve for a term of six years, are elected by the full board of directors from nominees offered by California constitutional officers, such as the governor and state treasurer.

Penhoet has been on CIRM's board since its first meeting in December 2004. He heads the task force that worked out the difficult issues of intellectual property concerning CIRM grants, bringing his broad background as a scientist and businessman into play.

2009 CGS Forecast: Petri Dishes -- Not Stem Cell Therapies

The usual season for prognostications for the coming year is the end of December. But Jesse Reynolds of the Center for Genetics and Society in Oakland, Ca., weighed in last week with a couple.

Writing on his group's Biopolitical Times, Reynolds said,

"With the end of stem cell research as a political vehicle, its advocates are likely to temper expectations. They'll not just move out the goalposts on the timeline towards treatments, but the touted uses of stem cells will shift from potential cellular therapies to models of human diseases in Petri dishes and better drug testing methods. These new purposes will win fewer votes than "your own personal biological repair kit," but they are also much more realistic."

Reynolds also predicted there will be no outpouring of federal cash for hESC in the near future. He made a different case than we did in our item below. He said,

"Even when President-elect Obama removes the Bush restrictions, federal funds will be available only to work with embryonic stem cell lines, not to create new ones. Grants for the latter are restricted by the Dickey-Wicker amendment, which would be left in place by both the repeatedly-vetoed stem cell bill and Obama's platform."

Reynolds also made his case for the death of hESC research as a political vehicle. He said,

"...(T)he real message from this election cycle is the end of embryonic stem cell research as a relevant political issue. It was huge in 2004, present but marginal in 2006, and seemed comatose with the 2007's failure of New Jersey's stem cell funding initiative. In this cycle, the topic made barely a peep.

"Hopefully now work can proceed in concert with a level-headed conversation about the true potential of stem cell research and the real challenges posed by human reproductive and genetic biotechnologies."

Waiting For Barack: Don't Hold Your Breath on Stem Cell Cash

Signals are emerging from the Obama team that the president-elect will move quickly to overturn President Bush's restrictions on federal funding for human embryonic stem cell research. However, that may not necessarily translate to a rush of big dollars at the national level.

On Sunday, the leader of Obama's transition team, John Podesta, indicated that the president-elect would move quickly with executive orders that do not require Congressional action, which can drag on for months if not years.

Podesta mentioned stem cell research specifically as one area that Obama could move on immediately.

Podesta's comments followed something along the same lines last week from Obama's chief of staff, Rahm Emanuel. In an interview with the Wall Street Journal, he enunciated a credo for the new administration:

"Do what you got elected to do."

He said "bucket No. 1" for the Obama administration would be children's health care. Second comes ending restrictions on stem cell research. Third is an economic recovery package.

Earlier this year, CIRM Chairman Robert Klein speculated that the Obama administration, beset by a host of enormous issues, would be slow to act on stem cell research. Klein suggested that Congressional action would be needed.

While that does not appear to be the case at this point, transition teams sometimes have trouble getting their act together and priorities can change.

What is certain is that the NIH is suffering from a financial squeeze. Until that squeeze is relieved and the necessary bureaucratic grant-making procedures are completed, don't expect to see large sums flowing into human embryonic stem cell research from the feds. Plus, other worthy scientific research will be fighting for the dollars that might go to the stem cell cause.

Indeed, the existence of such programs as California's $3 billion stem cell research effort could serve as a justification for the feds to hold back on beefed-up hESC research funding at the national level.

CIRM Quorum Solution Stalled

Today's attempt to deal with the perennial problem of attendance at meetings of directors of the $3 billion California stem cell agency was postponed Sunday on short notice.

A special teleconference meeting had been scheduled for today on the issue, but late Sunday the agency said the session had been postponed. No reason was given for the delay. No date was set for a future meeting.

The cancellation notice followed a closed-door meeting of the directors' Governance Subcommittee on Sunday afternoon. It was the Governance panel that had come up with a proposal to to help solve the attendance issues, which have made it difficult to maintain the supermajority quorum needed to do business legally. The plan would allow, on a limited basis, participation of directors via telephone.

However, the only item on the Governance agenda Sunday afternoon dealt with personnel matters. It was not clear whether the cancellation of today's directors meeting, which also included a personnel session, had anything to do with the meeting of the Governance committee Sunday afternoon. The agency released no announcement of actions by the Governance panel.

Potholes in Freeways vs. Therapies in the Clinic

"Where are the cures?" is the headline on the piece in the Nov. 10 issue of Newsweek.

The article by science columnist Sharon Begley virtually cried out for a sidebar on California.

Begley wrote about the "valley of death," translational research and the need for industrial skills that can make the production of stem cell therapies economic.

She quoted Hans Kierstead of UC Irvine, mentioned Geron of Menlo Park, Ca., as well as a proposal to create a "center for cures" at the NIH. Along the way, she noted that scientists involved in basic research are wary of the "center" proposal – a feeling that has surfaced indirectly at the California stem cell agency.

But Begley said:

"The existence of such a center would free scientists to go back to making important discoveries, not figuring out large-scale pipetting, for goodness' sake."

All of what Begley wrote about is on the $3 billion plate at the California stem cell agency. And some of the CIRM actions are coming quite soon. The "valley of death," for example, is scheduled to be dealt with next month through a $500 million lending program. Waiting for action from the new presidential administration is not good enough for CIRM Chairman Robert Klein and company.

As Begley concluded:

"There is lots of talk these days about increasing the nation's spending on infrastructure, such as roads and bridges, to lift the economy out of its doldrums. Me, I'd be willing to put up with potholes in exchange for a new administration spending serious money to take the discoveries taxpayers have paid for and turn them into cures."

Conflicts of Interest, CIRM and Transparency

Do conflicts of interest exist among the scientists who make the de facto decisions on hundreds of millions of dollars in California grants for research related to embryonic stem cells?

The answer? Yes.

Even the California stem cell agency acknowledges that fact. Because of conflicts, the agency regularly excuses some of the scientists who review the grant applications from participating in specific cases.

But CIRM stoutly maintains that the financial and professional interests of reviewers are not suitable for release to the public or applicants. The agency contends the reviewers are only making recommendations. However, the reviewers' decisions are almost never rejected by CIRM's board of directors. The agency also has turned down a recommendation by the state auditor that it seek an opinion from the state attorney general on whether it should publicly disclose the reviewers' interests.

Trust us, the agency says. We will police the conflicts and assure that no abuses occur.

Rarely do rejected applicants raise conflict issues publicly. No one wants to offend the world's largest source of funding for human embryonic stem cell research. In August, however, one scientist brought up the question of conflicts at a meeting of the CIRM board of directors.

Steven Kessler, a scientific director at Advanced Cell Technology of Los Angeles, was not happy with the response he received from CIRM staff on a letter he wrote concerning what he said was a conflict of interest on the part of a unnamed reviewer.

According to the transcript of the meeting, here's how Kessler summarized his position for CIRM directors:

"If a grant reviewer has a financial relationship with company "X"...that is, he's receiving funding from that organization or he's expecting royalty income from some company by virtue of having licensed technology to that company and that reviewer is sitting in on reviews from other for-profit organizations...and doesn't recommend those for funding, to us, from a business perspective, that's a conflict of interest."

Kessler said he had cited "numerous instances" of conflicts on the part of the reviewer, where there would be "every incentive to help impede the competition for the company that he has a relationship with.".

Kessler said,

"I was told that the way CIRM interprets its own conflict of interest policy, the example I gave you was not a conflict of interest."

At that point CIRM Chairman Robert Klein cut off Kessler, declaring that the directors needed to discuss the names for CIRM-funded labs before going to lunch.

Kessler's comments followed a discussion in which Klein and other directors expressed concern about reviewers quitting if they were subject to public complaints.

Klein said,

"To the extent that (applicants) are criticizing peer reviewers, which is sometimes common, we're going to lose our peer reviewers."

On Sept. 14, we asked CIRM for a copy of Kessler's conflict-of-interest letter. On Oct. 22, more than five weeks later and after repeated follow-up queries, the agency declined to release the letter.

Initially, Don Gibbons, chief communications officer for CIRM, said there was a question of redaction of material from the letter. Then he said our inquiry was lost by CIRM's interim general counsel. Ultimately, on Oct. 22, Gibbons said,

"Our interim general counsel has determined that the Kessler letter is part of the grant application process and as such is not a public document."

We asked for the legal reasoning behind that statement. On Oct. 29, Gibbons quoted interim counsel Ian Sweedler as saying,

"Applicants need to know that they can contact CIRM with information about potential conflicts, and that they can do that without leveling public allegations against a professional colleague."

Obviously conflicts of interest can at times involve judgment calls. CIRM also places a burden on its reviewers, all of whom come from out-of-state and cannot apply for CIRM grants. Marie Csete, now CIRM's chief scientific officer, commented last year on the situation when she was a reviewer prior to her employment at CIRM. Among other things, she said that she and the other reviewers were being asked to fund the work of their competitors.

CIRM's overriding concern has been the care and feeding of reviewers. We acknowledge that they need considerable attention. However, the main issue here is the stewardship of public funds and the integrity of a state government process involving billions of dollars. From its birth, CIRM has wrestled with problems spawned by the ballot initiative that created the research program. CIRM was deliberately cobbled together with built-in conflicts starting at the very top. The chief beneficiaries of CIRM's largess sit on its board of directors and set the rules for grants and control the process.

The bounty from CIRM is huge. Here is a list of CIRM recipient institutions (with grant totals) which have or had employees or representatives on the CIRM board of directors: Stanford, $94 million; UC San Francisco, $82 million; UCLA, $51 million; UC Irvine, $51 million; USC, $48 million; Sanford (San Diego) Consortium, $43 million; UC Davis, $36 million; UC San Diego, $33 million; UC Berkeley, $29 million; UC Santa Cruz, $17 million; Burnham, $18 million; Salk Institute, $16 million; Scripps, $9 million; UC Merced, $8 million; UC Santa Barbara, $7 million; UC Riverside, $6 million; Caltech, $2 million, and City of Hope, $2 million.

The built-in conflicts at CIRM are not likely to change, short of another ballot measure. They are enshrined in the state Constitution, a move by Prop. 71 writers who wanted to make CIRM immune to normal government oversight.

However, handing out billions behind closed doors with no outside scrutiny is a recipe for abuse. State ethics officials are already looking into the attempt by one CIRM director to influence CIRM staff on behalf of his institution. Should a major scandal erupt, it would ill serve the agency, the people of California and the cause of science.

If only to protect itself, the agency should comply with its repeated promise to adhere to the highest standards of openness and transparency and publicly release the statements of the economic and professional interests of its reviewers.

(Further note: Kessler also declined to release his letter to us. The CIRM grant review committee meets next Wednesday and Thursday in San Francisco to review applications for $66 million in public funds. The review sessions are closed but the public may comment on Wednesday morning.)

Sunday Afternoon with CIRM: A Personnel Matter

The Governance Subcommittee of the $3 billion California stem cell agency has an interesting little meeting scheduled for this weekend.

Interesting in the sense that the meeting of the group of CIRM directors poses more questions than answers.

Only one substantive item is on the agenda, a closed-door personnel session. Both the narrow scope of the meeting and the unusual Sunday afternoon timing made us wonder what exactly was going on.

We asked Don Gibbons, chief communications officer for CIRM, to illuminate the subject matter further and explain the Sunday timing. His one-sentence response:

"It is because of the chair of the subcommittee’s busy schedule."

The chair is Sherry Lansing(see photo), a former Hollywood studio head (think "Titanic"and "Forrest Gump")and now head of the charitable foundation bearing her name. She is indeed a busy woman and has her fingers in several major pies, including the board of regents of the University of California.

The responsibilities of the eight-member, directors' governance committee include such things as CIRM internal controls, ethics, outside contracting as well as monitoring management goals. One could speculate that the meeting's timing reflects a certain urgency and importance, although its recommendations generally must be approved by the full board of directors. That 29-member group meets on Monday.

Closed-door personnel sessions are permitted under state law. If the committee takes any action, it must be reported following the private session. However, the public will have a chance to speak out during the meeting at six different locations in California, if they choose to do so. The teleconference sites include San Francisco, Los Angeles, La Jolla, Palo Alto, Sacramento and Laguna Beach. The street addresses can be found on the agenda.

Rare Teleconference Session of CIRM Directors on Monday

Californians will have an unusual opportunity next Monday to tell the directors of the $3 billion California stem cell agency what they think and listen to them attempt to solve a problem that has nagged them since 2005.

The occasion is a meeting of the directors, who are officially known as the Independent Citizens Oversight Committee. Virtually all of their meetings have been held under circumstances that require the physical presence of interested parties who might want to observe or comment.

However, on Monday, the meeting will be conducted via teleconference arrangements from locations throughout the state, from Healdsburg to La Jolla. One site in San Antonio, Tx, is included. Apparently one director will be staying at the Grand Hyatt there.

All the locations are public for the purposes of this meeting. The agenda includes only one item – a plan to solve the problem of meeting the board's super-quorum requirement of 65 percent at meetings of the 29-member group. The requirement is enshrined in state law courtesy of Prop. 71 and is politically nearly impossible to alter. Instead, the plan to help provide better director attendance provides for the telephonic participation of a limited number of directors on a limited basis for regular meetings.

Monday's meeting also provides an opportunity for the public to comment on any issue, although the board is legally restricted to action only on agenda items.

Here is the current list of teleconference locations in California other than Healdsburg and La Jolla(two sites): San Francisco(two sites), Sacramento, Los Angeles(five sites), Duarte, Menlo Park, Elk Grove, Irvine, Pleasanton and San Carlos. The locations could change, so keep an eye on the agenda, which also includes the specific addresses.

'No Job Too Big, No Job Too Small'

What does a stem cell watchdog do for fun?

In the case of John M. Simpson(pictured), stem cell project director for Consumer Watchdog of Santa Monica, Ca., he takes two weeks vacation and goes to work in the Obama campaign in Missouri, one of the battleground states in this year's historic presidential election.

Simpson, who has been observing and participating in the affairs of the California stem cell agency for several years, is doing a bit of everything in Joplin, Mo., the fourth largest metro area in the "show me" state.

It is a far cry from expenses and lifestyle of California. The average home price is around $70,000-$80,000. Once the lead and zinc capital of the world, tourism now drives the Joplin economy, generating $220 million annually for the 400,000 persons who live in the metro area (49,024 for the city proper).

More than 70 years ago, Depression-era bank robbers Bonnie and Clyde pillaged several businesses in the community and were chased out of town in a gunfight, leaving their camera behind. The images in it were later developed and may be the most famous of those of the two thieves.

Simpson, however, is not interested in banks. He is looking for beds. Places where out-of-state volunteers can rest during the big push for Obama turnout next Tuesday.

We asked Simpson why he is taking his vacation time to work the long and arduous hours involved in the final stage of a presidential campaign.

He said the election is pivotal, a time to unite the country and move away from "Republican rule that is dominated by the interests of big business."

California seemed to be comfortably in the Obama camp. So Simpson volunteered for out-of-state work. He attended a two-day "Camp Obama" training session in October. They put him in touch with the folks in Missouri.

In addition to scrounging up bunks for volunteers, Simpson is setting up speaking engagements for Obama surrogates, lugging furniture and sweeping floors. "No job too big, no job too small" is Simpson's credo. He reported, however, that he can't keep up with the 20-something, paid staffers who put in 20 hour days. He said he can only do 12 hours.

Simpson is recording some of his experiences on his Facebook site. You can read them after registering as a friend of John.

UCI Defends Lab Press Notice

The University of California, Irvine takes umbrage at our item that pointed out that the school did not credit the California stem cell agency (the California Institute for Regenerative Medicine) specifically by name in its press notice on the Oct. 24 ground-breaking for a stem cell lab financed in part with $27 million in agency funds.

The omission occurred in a news release sent out widely to the media. We characterized the omission as a minor PR gaffe and noted that one page on the UCI site carried a photo caption describing the lab as a "CIRM institute.'

Jennifer Fitzenberger, assistant director of media relations, sent us an email that said,

"Our stem cell center website and event invitation make very clear the new building will be a CIRM institute: http://stemcell.uci.edu/. CIRM is very clearly listed on more than one UC Irvine webpage in connection with our groundbreaking event, not just one as your blog item states."

The ground-breaking received extremely limited media coverage(three items in advancing of the event), based on a Google news search to this morning.

Here is a link to the news release that was issued on the day of the event. That release did mention the California Institute for Regenerative Medicine by its full name. Here is a link to the Sue and Bill Gross Stem Cell Research Center at UCI, which is the name of the stem cell research operation at the campus.

As we noted in the item below, this is not a major issue, at least for us. But CIRM directors have retained the power to approve the names of labs that they help finance – one indication of the importance that they attach to naming and the credit it implies. The reality is that none of these labs are going to be commonly known as CIRM facilities. Rather they will be referred by the names of the donors or some piece of vernacular originating on campus.

UC Irvine Breaks Ground on Stem Cell Lab

In a bit of a minor PR gaffe, UC Irvine announced its groundbreaking ceremonies on Friday for a new stem cell lab that will be partially financed with $27 million in CIRM funds without specifically mentioning the California stem cell agency by name.

The news release named Robert Klein and the Independent Citizens Oversight Committee, but nowhere was the phrase "the California stem cell agency" or "CIRM" used. The Independent Citizens Oversight Committee is the ungainly official name for the CIRM board of directors, but few Californians would make that connection.

One page on the UC Irvine web site did, however, carry a small rendering (see photo) of the lab which identified it as the "Sue and Bill Gross Hall: A CIRM Institute." All of this PR hooha makes little difference to the stem cell effort. However, CIRM directors have expressed their firm desire for PR credit by retaining the right to approve the naming of labs that they finance with public money. The names are not official until approved by CIRM directors.

UK, CIRM Ink Collaboration Agreement

The California stem cell agency has expanded its international connections once again, this time linking to the United Kingdom with an agreement that potentially will finance scientists working in California with scientists working half-a-world away.

No money, however, has yet been committed. Reporter Bernadette Tansey of the San Francisco Chronicle also reported that the touchy issue of ownership of IP has not yet been worked out.

The agreement was announced earlier this week. It follows similar agreements in June with Australia and Canada.

According to Maggie Shiels of BBC radio, CIRM Chairman Robert Klein said,

"...(O)ne of the diseases the CIRM was likely to focus on in the future would be stem cell therapy for a type of macular degeneration that leads to a blindness that affects 7% of the US population over 75.

"Mr. Klein said the UK was well ahead in animal trials in this field and that the deal could pave the way for earlier than hoped for human trials."

"'We are very hopeful that this collaboration can bring us together in human trials to prove the first global embryonic stem cell therapy. It will hopefully break open this entire field,' he said."

According to Monya Baker, writing on The Niche (the Nature magazine stem cell blog), Lord Paul Drayson, the UK minister of science, said,

"UK’s National Health System made his country particularly able to carry out clinical trials and gather clinical data."

Don Gibbons, chief communications officer for CIRM, was quoted as saying,

"We could do a one-off with an investigator in Paris, but that bogs us down."

Baker said the agreement permits CIRM to accept applications "under the same rules and avoid bureaucracy."

If Klein's optimism is borne out, the "break-through" on the first embryonic stem cell therapy could mean that Great Britain will be the first to see the clinical fruits of research funded at least in part by California taxpayers.

The UK/CIRM announcement received light news coverage. For example, Bernadette Tansey's story was tucked away on page D2 of the Chronicle.

A meeting is scheduled for January 2009 among scientists and others to determine the "most fruitful options" for collaboration.

CIRM IP Hearing Set for Oct. 29

For those of you interested in profits from California-financed stem cell therapies, you should pay attention to the latest CIRM meeting on intellectual property.

The IP Task Force has scheduled a session Oct. 29 to discuss what appears to be a routine matter, but it could also involve discussions that go beyond routine.

Here is the language from the agenda. No additional information is available to the public at this point.

"Consideration of draft amendments to consolidate non-profit and for-profit intellectual property regulations and begin formal process of adoption."

The meeting has teleconference locations from which interested parties can participate. They include San Francisco, La Jolla, Irvine and San Carlos. More be be added later to the agenda.

Tracking the Little Hoover Commission and CIRM

The Little Hoover Commission, which is looking into the governance of the California stem cell agency, has posted some material concerning its inquiry, accessibility and schedule.

The first meeting will be held Nov. 20 in Sacramento with the second Jan. 22, also in Sacramento. The agenda says,

"As part of its study, the commission will explore the transparency and accountability of the existing governance structure."

The agenda also says that more information can be had by contacting project manager Eric Stern. To be notified of events concerning the CIRM inquiry, send a message to littlehoover@lhc.ca.gov. The phone number for the commission is 916-445-2125.

Fresh Comment

"Ron" has filed a comment on the "courtier" item below, including the text of a San Francisco Business Times article on the veto of SB1565.

CIRM and the Cause of Philanthropy

By now, you all have heard about Larry Lokey's whopping $75 million gift to Stanford to help build a new stem cell lab. But there is another bit of the story that has not received much attention.

And that is the role of the California stem cell agency in creating a friendly climate that encourages our wealthiest citizens to make huge contributions to human embryonic stem cell research and science in general.

Stanford and Lokey did not specifically cite CIRM and Prop. 71. But the agency has done much to portray favorably hESC research and draw the attention of scientists who need to believe there is a stable source of potential funding for their research. If not, they will choose another path of inquiry.

Four years ago, hESC was the poor stepchild of the NIH, all but banned by the Bush Administration. That is unchanged at the federal level. But California's Prop. 71 fired up the efforts in a number of other states and created a sense that the science could proceed even without the sanction of the NIH.

Lokey is not alone in making a major contribution to stem cell research. Eli Broad, Denny Sanford and others have also donated tens of millions of dollars in California.

Their generosity has set an example and a standard for others to emulate. The hESC philanthropy trend serves both science and charity well.

Biotech Courtier, the People's Will and 'Money Talks'

Gov. Schwarzenegger's veto of this year's CIRM legislation was deeply buried by most news outlets, if they carried anything at all. But his action triggered a fiery op-ed piece by J. Wesley Smith in the San Francisco Chronicle.

Writing on Oct. 2, Smith, senior fellow in human rights and bioethics at the Discovery Institute, asked,

"What is it about embryonic stem cell research that turns politicians into courtiers? "

He said government leaders are more than ready to denounce the "get-rich, money-talks ethos" of Big Pharma, but "trip over each other to grant (biotech) policy agendas carte blanche."

Smith was talking about SB1565, legislation by state Sen. Sheila Kuehl, D-Santa Monica, which was aimed at providing affordable access to CIRM-financed therapies. The measure was opposed by the biotech industry and CIRM.

Smith said the governor claimed "incongruously that it 'does nothing to advance the will of over 7 million voters,' when precisely the opposite - assuring access for the poor to CIRM-facilitated treatments - was clearly part of the package voters thought they bought when passing Proposition 71."

Smith continued,

"Given the governor's constant harping about the crucial importance of bipartisanship, the veto is ironic. Talk about a bipartisan measure! SB1565 passed the Senate unanimously and by an overwhelming 64-7 in the Assembly. Other than naming freeways after dead luminaries, it is rare to find such agreement in the ideologically divided California Legislature.

"In backing the CIRM's fiscal profligacy and giving the back of his hand to the poor and the ill through his veto, Schwarzenegger made a joke of his reputation as a fiscal conservative and bipartisan consensus builder. How sad that the once mighty Arnold, who came to Sacramento vowing to smash boxes, has instead assumed the role of a mere industry retainer."

Jerry Steele, an advocate of adult stem cell therapy writing on the TheraVitae blog, also was critical of the veto. He said,

"The CIRM has been mired in many controversies on where the money has been distributed and is deathly quiet on the issue of when it is going to produce any cure."

Steele asked if California has received a return on its investment,

"Well, even the staunchest supporter of the CIRM would be hard pressed to come up with any successful results- I tried Google and the most I could come up with was a few semi-famous scientists have migrated to California to live off the taxpayer."

Geron, a Menlo Park, Ca., stem cell company, had a different view, although it was very brief. In what amounted to a one sentence news release, the firm said it supported the veto because the legislation ran "counter" to Prop. 71.

Don Reed, patient advocate and a vice president of the private stem cell lobbying group belonging to CIRM Chairman Robert Klein, gave a cyberspace sigh of relief on his blog. But he noted that the Little Hoover Commission, a bipartisan good-government state agency, will be looking into CIRM.

Reed vowed,

"If the Little Hoover Commission develops a new law or initiative against us, I will let you know about it early, so we can protect California’s great gift to the world."

Unsaid was the implication that any proposed change in CIRM's operations would be an attack.

CIRM Seeking Solution to Director Absenteeism

The California stem cell agency has been dogged for four years by problems with attendance of its directors at its board meeting, and it now is moving forward on a plan to allow some of them to participate by telephone.

The attendance issue is not minor. Without a quorum, the board of the directors cannot take legal action. Concerns arose last month that the board would have difficulties at an important, two-day meeting in December.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., attended the meeting of the CIRM Governance Committee that approved the telephone participation. He wrote on his organization's blog earlier this week about the problems with attendance:

"Even when there has been a quorum present there has all too often be a mad rush to take votes before members left for the day. It's not the sort of atmosphere which is conducive to sound deliberation and good policy making."

The attendance issue stems from inflexible language in Prop. 71 that can only be changed by the legislature or another vote of the people. The measure requires a supermajority of 65 percent of directors to conduct business. It also created an unwieldy board of 29 persons, all of whom have major responsibilities elsewhere.

Here's how Simpson described the proposed changes to ease the current problem, short of changing state law.

"The proposed rules would allow up to five members to take part in ICOC meetings by teleconference, but would give the chairman the discretion to limit the number based on 'his or her assessment of the importance of in-person attendance at the ICOC meeting for which a teleconference participation request was made.'

"The rules also limit the number of times a member could phone in to twice a year and offer the teleconference option to ICOC members with significant medical needs."

Simpson continued:

"First, of course, folks who cannot maintain the substantial commitment to the ICOC (the board of directors) ought to quit. There's nothing wrong with that. There is something very wrong with holding a seat and never showing up.

"Second,  a better solution would be to reduce quorum requirements to a simple majority and to adopt a procedure to remove or otherwise sanction members who are chronically absent. Perhaps such suggestions will come from the state's efficiency panel, The Little Hoover Commission, as a result of its planned study."

The CIRM board of directors plans to call a special meeting to adopt the new rules so that they will be in place in December.

Science and Construction Dominate CIRM Newspaper Series

California reporter Sandy Kleffman has pulled together a lengthy overview of the state's $3 billion stem cell research effort, focusing primarily on the science of the research and the building of stem cell laboratories.

The two-part series began Sunday in some newspapers in the San Francisco area. Kleffman reported that therapies are 10 years away and "numerous hurdles must be overcome." Despite the hurdles, Kleffman reported that "optimism remains."

She wrote:

"'I would say this is the most exciting time to be in science, ever,' said Dr. Arnold Kriegstein, director of the UC San Francisco Institute for Regeneration Medicine.

"'I don't think there's ever been as many opportunities to actually alter the course of a disease as there is right now.'"

Kleffman also wrote,

"Others fear the new therapies will be too expensive for many Californians.

"Money may be one of the biggest hurdles. The $3 billion taxpayer investment will not be nearly enough to take most therapies through the required trials and bring them to market.

"'The drug industry computes that it needs $1 billion for every new drug,' said Alan Trounson, president of the state stem cell agency, known as the California Institute for Regenerative Medicine. "If that's the case, we're going to be handicapped severely here.'

"For that reason, Trounson and other stem cell leaders have begun to look at partnering with the biotech industry to ensure the work continues beyond the limits of the state program."

The series was written before the release of the latest, CIRM-financed, economic impact report on its activities. Kleffman's stories also did not deal with the bulk of the public policy issues surrounding CIRM.

Her work was keyed to the fourth anniversary of the agency, which came into being November 2004. The media have a fondness for anniversary pieces since they provide an easy entry point to a story. However, given the short staffing at newspapers today and the host of more compelling issues this fall, don't look for many more anniversary pieces on CIRM this fall. Next year is another story.

CIRM Denies It Was Prompted to Release Economic Study

The California stem cell agency today said that it was not prompted to release publicly a $50,000 economic impact study concerning CIRM as the result of an inquiry from the California Stem Cell Report.

Don Gibbons, chief communications officer for the agency, said in a one-sentence email to us,

"You have quite the ego, writing not once, but twice, that you prompted us to post the Analysis Group report, which is not true."

Gibbons did not explain why the report, which was originally scheduled to be released last January, was posted on the CIRM website one day after we inquired about its whereabouts. We attempted to email him several times this morning, seeking an explanation. However, our emails are being rejected by the CIRM email system. Our presumption is that there is some sort of technical glitch involving emails that are being sent via a satellite link from Mexico.

So this posting also serves as a request to CIRM for an elaboration on the reasons for the delays in releasing the Analysis Group report.

We have additionally asked the Analysis Group if it has any comments on the two items that were posted on Wednesday concerning its work. If they do, we will carry their comments verbatim.

Fresh Comment

"SEO Firm" has posted a comment on the $350,000 item below.

Clarification

The item below concerning economic impact reports involving the California stem cell agency may have been confusing to some. The $350,000 includes the $50,000 already spent for the Analysis Group report that was released this month and the $300,000 proposed to be spent in the RFP.

Coming Next Spring: A $350,000 Paean to CIRM's Value

Is the California stem cell agency performing work that is beneficial to the economy of the state of California?

Any fair-minded person has to respond affirmatively to that question, and perhaps even some who are not so fair-minded.

But does CIRM have to spend $350,000 of taxpayer funds to prove its economic value? Will such an effort convince any skeptics that the $3 billion ($6 billion including interest) stem cell research program is economically worthwhile? The answer to both those questions is no.

If CIRM pays for an economic study, it will be forever clouded by the reasonable assumption that the agency received the findings that it already knows it wants. And those findings would amount to a paean that holds up CIRM as critical to the economic survival of the Golden State.

That conclusion is even more likely given the language in the recent CIRM RFP for a consultant to prepare the economic propaganda piece for the agency.

The RFP makes no bones about what CIRM wants and what the consultant better provide for $300,000. Certainly not an independent, detached assessment of CIRM's economic worth. Instead, the RFP states that the consultant must "execute a vibrant and aggressive strategy to support the goals and initiatives of CIRM."

To be sure the consultant fulfills expectations, he will work with a high-powered CIRM panel consisting not only of the chairman and president of CIRM, but also the vice chair, the vice president for operations, the general counsel, the legal counsel and unspecified "others." Lots of "minders" there to be sure no heresy comes forth.

CIRM has already spent $50,000 this year for what was supposed to be a new economic study. That report was originally scheduled to be released in January. After the California Stem Cell Report asked about it on Oct. 7 in connection with the $300,000 RFP, the document was publicly released a day later on the CIRM web site.

The $50,000 report was prepared by the Analysis Group of Palo Alto, Ca., which is likely to have the inside track on this latest contract. (For more details on the report, see the item below.)

Analysis Group also received $200,000 from the Prop. 71 campaign, which was directed by now CIRM Chairman Robert Klein, for a document that predicted health care savings of as much as $12.6 billion over 30 years and a net state government profit of at least $1 billion.

That report, however, was held up as an example of stem cell hype. "Hopelessly optimistic" was how one reasonably detached writer, David Hamilton, described the campaign analysis in a "biotech bubble" story for Slate.com.

The latest RFP also indicates that CIRM grant recipients will be burdened with additional paper work in the future. It implies that grant applicants will need a nose for dollars and must be able to demonstrate how CIRM cash, if they receive it, will benefit the California economy.

The RFP states that the consultant must create "a standard and routinized methodology for data collection from CIRM grantees and loan recipients and other sources to enable future measurements of economic impact."

Compliance with that methodology is likely to become part of the terms of any grant or loan in the future. We would hope that all the data gathered would be available to the public so that other economists and health policy experts would be able to draw their own independent conclusions.

Interested economic consultants must submit their proposals by Oct. 24. The contract could be awarded shortly thereafter. Look for the economic report in March 2009, if the RFP is to be believed, with the lucky consultant also embarking on a bit of a road show, according to the RFP's terms.

Unsaid in the RFP is the near certainty that the consultant will have an ongoing, lucrative relationship with CIRM for years to come as he updates the report with fresh information annually.

Economists Say "Too Early" to See Significant, Quantifiable CIRM Results

Has the four-year-old, $6-billion, California human embryonic stem cell research effort already paid off?

According to a $50,000 study commissioned by the state stem cell agency, it is "too early to expect to observe significant quantifiable health and economic benefits from CIRM’s funding."

The 31-page report by the Analysis Group of Menlo Park, Ca., which previously performed two controversial economic impact studies for the Prop. 71 campaign, was originally scheduled to be released in January. The document was made available to the public on Oct. 8 after the California Stem Cell Report asked about it in connection with CIRM's plans to spend $300,000 for another economic study.

Analysis affirmed that it is too early to draw definitive economic conclusions about the world's largest human embryonic stem cell research program. The report also contained useful summaries of CIRM's efforts and related stem cell activities in California.

It said, for example,

"Some stem-cell related companies appear to have increased activities in California. For example, Stem Cell Sciences is expanding into California from the UK, and companies like Invitrogen and Novocell (formerly CyThera) have hired new scientists from within and outside the U.S. Other companies, such as Jackson Labs, have committed to major relocations or large-scale expansions in California. As an example, Jackson Labs is in the process of developing and expanding a new California research facility near Sacramento that will ultimately be more than 200,000 sq ft."

The report is largely based on CIRM press releases and other CIRM documents, which presented the justification for another, six-month study at a cost of $300,0000 and continued ongoing work for many years by an economic consultant. The Analysis Group's and the report's two authors, Laurence Baker of Stanford and Bruce Deal(see photo), managing principal of Analysis.

Deal and Baker wrote,

"While it is clearly too early in the course of CIRM’s activities to make a broad assessment of their economic benefits, it is possible to begin to monitor and report on some aspects of CIRM’s activities and their relationships to possible sources of economic benefits."

We queried Don Gibbons, chief communications officer for CIRM, concerning the relationship between the $300,000 proposal and the $50,000 study. He replied,

"It is a very different study from the one proposed in the RFP. Instead of analyzing existing related studies and making projections based on those studies, we are seeking to benchmark certain data points now and determine what data we should be collecting going forward so that we can compare today’s benchmarks to data from serial reviews over time. This requires much more extensive work."

CIRM obviously has an inherent self-interest in demonstrating its value and assuring its existence well beyond its 10-year financing limit. CIRM Chairman Robert Klein has talked on more than one occasion about keeping CIRM alive pretty much indefinitely, but it only has bond funding capabilities for 10 years. Perpetuating CIRM is one of the goals of Klein's $500 million biotech loan proposal, which is aimed at providing an additional $100 million in funding. Klein has additionally spoken of going to the legislature in a few years with a request for additional funding. He would certainly need a hefty study demonstrating CIRM's worth to California to support such an appeal.

Until more time passes and more data are gathered, that tome remains to be produced. Meanwhile, Deal and Baker say,

"CIRM research grants are just beginning to go out, and it would not be reasonable to expect any health benefits or therapies attributable to CIRM at this time. Making predictions about the likelihood of particular future breakthroughs for particular diseases is outside our area of expertise. It is possible that no new treatments of widespread therapeutic use will be developed, which would mean very limited or no economic benefits from improved health."

But on the other hand, Deal and Baker report,

"All told, the information available to date suggests that California is already starting to see new economic activity resulting from CIRM and that there is significant potential for additional future economic benefits."

We are certain that Deal and Baker will find ample evidence over the next few years to document CIRM's value. We hope that CIRM and Deal and Baker will share the raw data and other information with other economists as well.

Finessing the CIRM Directors' Attendance Issue

Next Monday, directors of the California stem cell agency will try once again to figure out how to work around their perennial problem of having enough directors on hand to conduct their business.

The 29-member board has regular difficulty meeting its 65-per cent quorum requirement. Chairman Robert Klein is reportedly worried that not enough members will be on hand in December to hand out many millions in additional grants.

Sherry Lansing, a CIRM director and former Hollywood film studio executive, has taken on the task of finding a work-around in her capacity as chairperson of the CIRM Governance Subcommittee.

The group initiated its effort last month. Several suggestions were made for changes in the proposed policy. However, the latest version is not yet available on the CIRM website.

The quorum issue is one created by Prop. 71, which locked into state law procedural issues that are better left to regulation, which is easier to change. Ironically, directors recently successfully opposed legislation to ensure affordable access to CIRM-financed therapies on the grounds that the bill would codify in state law matters better left to regulation by CIRM directors.

CIRM could ask lawmakers to change the super-quorum requirement but that would open up discussions for other possible changes.

The public can listen in or make comments at teleconference locations in La Jolla, San Francisco, Los Angeles and Irvine. Othere locations may be added later. You can find them on the agenda.

Poppycock and CIRM

The California stem cell agency generates a certain amount of nonsense from time to time.

Some of it comes from CIRM Chairman Robert Klein, including a comment he made to the San Diego Union-Tribune in connection with the upcoming examination of CIRM by a bipartisan good-government panel, the Little Hoover Commission.

Klein has repeatedly referred in the past to the heavy scrutiny that he contends CIRM has endured. Most recently he told reporter Terri Somers:

“It's very important that the (Little Hoover) commission recognize the exhaustive reviews we've already been through and come out of with totally and consistently extraordinarily high marks."

Poppycock, we say.

While Klein thinks CIRM has been subjected to exhaustive and heavy scrutiny, that is hardly the case. He and others who express that view really do not know what heavy scrutiny means. Think Watergate, think the ongoing national financial crisis, think the California/Enron electrical deregulation debacle, think Paris Hilton and Britney Spears, think about television news vans camped outside Klein's home should a scandal erupt at CIRM. Indeed the scrutiny of CIRM does not even go as far as the local government coverage we saw last year in a small town on the Arizona/New Mexico boundary. The local paper published every single payment by the city down to one dollar, along with the name of each recipient. In California, few would even remember the last time a story about the stem cell agency was carried on the evening television news or appeared on the front page of a newspaper.

Klein also refers to the financial audits paid for by CIRM. However, they have an exceedingly limited scope and cover such things as whether Klein provided receipts for his trip expenses and whether a reported purchase of a computer actually can be tracked to a specific computer being used in the CIRM office. Klein has additionally cited the legal challenge to CIRM's existence, which was handily rejected by the courts at every step. That, in fact, covered limited matters as well and was largely bungled by CIRM's legal opponents. The courts did not attempt to assess whether Klein and CIRM were doing their jobs well or whether Prop. 71 was useful to the people of California -- only whether the challengers had proved their case.

The courts also did not determine whether the 50-person limit on CIRM staff was appropriate. Klein now acknowledges that was a mistake on his part in writing Prop. 71, although the agency is still well below that staffing level, a matter of concern to some directors who are worried about burnout and overwork involving CIRM employees.

The state auditor did conduct a lengthy "performance audit." CIRM officially thanked the auditor for her work and made changes in its operations as a result. That audit also was limited in scope. It did not address such questions as whether the quorum requirements written into state law are hampering CIRM's mission. It did not address whether an agency such as CIRM should exist outside of any normal state government controls. It did not address the question of whether overlapping responsibilities between the chairman and president create an inherent, unhealthy conflict that will continue to generate problems as it has in the past.

Back in 2004, backers of human embryonic stem cell research could not find either private or federal funding for their cause. So they ventured into the political arena with Prop. 71 to seek funding from the California public. But playing with the people's cash carries trade-offs. One is public scrutiny that can be uncomfortable.

We recognize Klein's need to posture publicly about CIRM and its actions. Such performances are not uncommon among both politicians and business executives, who believe their main responsibility is to fend off perceived attacks on their endeavors.

However, the Little Hoover Commission is a solid state organization, not given to flip analysis or decisions. Its inquiry should result in recommendations that will help to improve CIRM's operations and deliver more value to the public. Corporations pay millions of dollars to outside consultants to examine their operations and make recommendations that maintain their competitiveness and efficiency. The Little Hoover Commission is going to do that for free for CIRM. The process will certainly make some uneasy, just as it does in the private sector. CIRM should welcome this as a healthy opportunity that could create momentum for needed improvements.

CIRM's Financial Immunity

Just how protected is the California stem cell agency from the financial travails of the state of California?

Almost entirely.

During the legislative/gubernatorial budget stalemate earlier this year, nursing homes, hospitals and other private sector providers to the state did not get paid by the state for nearly three months. Some firms went out of business or had to borrow money because the state could not pay its bills.

That did not happen with those providing services to the state stem cell agency because of its unique and unprecedented constitutional position, which assures that it has cash regardless of how the rest of the state is affected.

CIRM's extraordinary position was mentioned briefly last month at the agency's Governance Subcommittee meeting.

John M. Simpson of Consumer Watchdog asked,

"Is it the case that because of the state's budget crisis, the vendors have not actually gotten paid? Does that affect the (grant) checks actually being handed over?"

CIRM Chairman Robert Klein responded,

"No, it doesn't. our funds are segregated from the state budget."

All of which raises significant governmental policy questions. One can make a case that stem cell research cannot proceed properly if it is cut back every time the governor cannot muscle a budget out of lawmakers. But should researchers be treated differently than hospitals? Should they be treated better than needy children dependent on state aid?

Locking up public money in special funds is part of the state's budgetary problem. However, there are no good answers that will satisfy everybody concerning the creation of special pockets of cash for what almost everybody agrees are worthwhile endeavors, whether they are stem cell research or special programs for gifted children.

Nonetheless, it is likely to appear a bit unseemly to a good segment of the public for the stem cell agency to hand out tens of millions of dollars while California is so hard pressed that it may have to ask the federal government for a $7 billion short term loan so that it can pay its bills.