Klein Says He Can't Afford to Work for Free

California stem cell Chairman Robert Klein, a multimillionaire real estate investment banker, says he can no longer afford to donate his time to the state, according to the San Diego Union-Tribune.

His comments came Saturday in a story by reporter Terri Somers that said "market conditions" have led Klein to seek a state salary after working without pay as the chairman of CIRM since December 2004. The salary could range as high as a half-million dollars a year.

Somers wrote:

"He (Klein) said that in consideration of the current economic climate, he would continue to provide at least 15 percent of his time to the institute for free. He said his institute workweek has always surpassed 40 hours and will continue that way.

"Meanwhile, his financial firm has become 'my night job,' with daily responsibilities handled by its staff.

"Klein's salary has already been discussed by the institute's governance committee, but that figure has not been made public."

CIRM's directors will hold meetings Tuesday and Wednesday in Irvine during which the question of Klein's compensation will come up. Gov. Arnold Schwarzenegger late last week wrote directors, expressing "deep concern" about the Klein salary plan.

The bottom end of the salary range for chairman stands at $275,000 and the top at $508,750. CIRM President Alan Trounson, who does not sit on the 29-member board of directors, receives $490,000.

Another member of the board of directors, the vice chairman, is entitled to a salary ranging from $180,000 to $332,000. That post is vacant after Ed Penhoet, another multimillionaire who did not accept a salary, resigned to take a non-paying membership on the CIRM board.

Somers wrote,

"Reportedly, Schwarzenegger will nominate a candidate who does not need to take a salary, while the lieutenant governor, treasurer and controller are expected to nominate a candidate who would need a salary, said Robert Klein, chairman of the state stem cell institute."

Somers is the only mainstream media reporter to write about the Klein salary issue. Meanwhile, Wesley Smith, a bioethicist at the Discovery Institute, commented about the proposal on his blog, saying,

"This smacks of the sense of entitlement and hubris among the big shots and well connected that is utterly ruining the country.

"Well, the CIRM shouldn't be Klein's personal fiefdom. Rather than pay Klein a half million, let's show him the door instead."

Gov. Schwarzenegger Concerned about $500,000 salary for CIRM Chief

California Gov. Arnold Schwarzenegger has expressed "deep concern" about a proposal to pay the chairman of the California stem cell agency as much as half-a-million dollars a year.

The letter from the governor to the CIRM board of directors comes as the state faces a $28 billion budget crisis and is cutting aid to the poor and elderly. Legislation was also introduced this week to freeze salaries of state employees who make more than $150,000 a year.

In the Dec. 4 letter, Schwarzenegger, who considers CIRM "one of California's greatest endeavors," said that he would soon nominate a candidate to fill the position of vice chairman of its board. He told CIRM's directors,

"I am also writing to share my deep concern about reports that you plan to consider compensation for the chairman and the vice chairman. CIRM has a responsibility to spend taxpayer money with great care, so I urge you to ensure that compensation for these positions is offered only if and to the extent absolutely necessary to implement its position."

It was unclear what specifically generated the letter. The proposal to pay CIRM Chairman Robert Klein has received little attention. Prior to the governor's letter, the only reports about it have come here on the California Stem Cell Report and on a link to our item on Capitol Alert, the online service of The Sacramento Bee.

If CIRM were a normal state agency, the governor could stop the pay increase. However, CIRM is enshrined in the state Constitution as the result of the ballot initiative that created it. The agency is immune to fiddling by either the governor or the legislature. Neither of those two parties can halt the constant stream of state bond funding to CIRM.

Schwarzenegger's letter also seems to reflect a lack of knowledge about pay at the Golden State's $3 billion stem cell agency. The chairman and vice chairman have always been entitled to a salary. However, Klein and former vice chairman Ed Penhoet have declined to accept pay since December 2004. Both men are multimillionaires. Penhoet recently resigned as vice chairman, but continues to sit on the board, which will vote to select a new one once the nominees are named.

For some months, Klein has mentioned that he would be seeking a salary. However, his current timing seems to be off, given the state's economic crisis. Deserved or not, high salaries and pay increases for government workers can trigger intense and hostile public reaction even under the best of circumstances. In contrast, much more significant financial issues can stimulate no response. That's because salaries are personal and easy for the public to understand.

Klein's salary proposal comes up at next week's CIRM board meeting in Irvine. CIRM posted the governor's letter as part of the agenda.

(The Niche, Nature magazine's stem cell blog by Monya Baker, carried a link to our report on the salary matter on Dec. 5.)

Fast-Tracking CIRM Cash for Business

Biotech businesses could get a hefty financial helping hand under a plan coming up early next week before the directors of California's $3 billion stem cell agency.

The proposal would dramatically accelerate funding of grants to the private sector, delivering cash immediately on approval of the grants, as opposed to months later.

CIRM said,

"The biotechnology sector in California faces significant challenges arising from the credit crisis and economic downturn. Press reports suggest that venture capitalists have advised their biotechnology clients to cut costs in order to survive current economic conditions, which are expected to persist for at least the next 12 months. In order to achieve its mission, it is critical that CIRM partner with biotechnology companies in translational research, preclinical development and clinical programs. The financial stability of the industry therefore is essential to CIRM’s success."

Businesses would have to choose the fast-track financing to be eligible, but there seems to be no reason they wouldn't.

Generally speaking, however, fast-tracking can create a climate in which speed is favored over quality and thoroughness. CIRM's proposal could pose similar risks.

That said, if CIRM can do this for business, why shouldn't it be done for all grants. Time is money even in academia. Advancing the onset of research in universities also advances the results, which is what CIRM is all about.

The fast-track proposal is part of additional background information that is appearing on the CIRM web site as part of the directors' meeting agenda.

Here are links to other background material to be considered next Tuesday and Wednesday in Irvine.

Grant Review Group decisions on the $20 million tools and technology round and summaries of the proposals.

The latest draft of the CIRM grants administration policy for academic and non-profit institutions.

Three new alternate members of the grant review group: Andrew Barber, Richard Harvey and Steven Sheridan.

Still missing is background information on the salary request by CIRM Chairman Robert Klein, a proposal to triage proposals for grants and the application by the International Society for Stem Cell Research for funding of a conference.

Two business days remain before the CIRM board meeting begins on Tuesday.

CIRM's Klein Deserves a Salary

In February 2006, Robert Klein, chairman of the $3 billion California stem cell agency, testified in court that he did not consider himself a state employee.

The justification appeared to be that he did not accept a salary and has not since beginning his state stem cell work in December 2005.

That appears to be ready to change. Next week, he is going to seek a salary that could run upwards of half-million dollars a year. The move raises anew questions about his role with his private lobbying stem cell lobbying group. It also raises questions about whether it is possible for him to devote sufficient time to his state responsibilities and also continue to run his real estate investment banking firm in Palo Alto, Ca.

As of this morning, CIRM has yet to post on its agenda for next Tuesday and Wednesday any supporting material concerning the salary request or the conditions under which it would be granted.

Klein holds his post as chairman as the result of a vote of the 29-member board of directors, who may want to establish some clear ground rules for Klein along with approving a salary. Technically he may not even need a vote of the board to draw a salary since he is entitled to one as chairman. However, it would be impolitic to take a salary without running the matter by the board of directors.

Klein's salary move has drawn some reaction from longtime CIRM observers. John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., told the California Stem Cell Report:

"If Bob Klein is working full-time as chairman of the ICOC(CIRM's board of directors) he deserves a salary. The question is how much. A sensible benchmark would be what the director of the National Institutes of Health makes -- $191,300. Round it off to $200,000. More than that is inappropriate and, in fact, would be outrageous in these economic times.

"Klein at his own choice donated his time since CIRM was launched. Californians owe him thanks for that gesture. However, it also allowed him to say he was not a state employee. If he takes a salary, he clearly is a state employee and needs to act accordingly in every respect. Receiving a salary should prompt a close look at Klein's non-CIRM activities and just how much time he spends on the job."

Jesse Reynolds, director of the Project on Biotechnology in the Public Interest at the Center for Genetics and Society in Oakland, Ca., said,

"Chairman Klein's large proposed salary, making him the second highest state employee, is symptomatic of the CIRM's exemption from California's civil service laws - a provision that Klein himself wrote into the state's constitution via Proposition 71. What's gone less examined is that he quietly dropped his promise to serve only the first three years of his term, a promise made when he first assumed office to assuage concerns of potential power-mongering."

The news about Klein's salary has drawn little media attention. The only item we have seen came on the Capitol Alert section of The Sacramento Bee's website. Two readers filed extremely hostile comments in connection with the item.

Klein, who is a multimillionaire, is to be lauded for working without pay for the state of California for nearly four years. He has brought considerable energy and talent to a worthwhile endeavor. In decades of following California state government affairs, I cannot recall another case that comes close to Klein's example. If he will be working fulltime in his role as chairman, he merits a salary and should be well paid.

CIRM Posts Timely Info on Research Standards Meeting

The research standards working group of the California stem cell agency meets on Dec. 12 to deal with the use of IVF embryos for which donors were paid and the use of somatic cells in state-funded research.

Already posted on the group's agenda is substantial background material along with other staff-prepared material clearly laying out the policy issues involved.

Interested parties have ample time to assess the matters to be decided and make their own decisions on whether to attend the meeting or send comments that can be considered next week. CIRM is to be commended for the early posting of the information.

Closer Ties to Industry Promised in Revised CIRM Strategic Plan

The California stem cell agency has quietly unveiled its latest plan on how it intends to spend nearly $3 billion over the next nine years, including a major shift into backing research intended to drive therapies into the marketplace.

The proposal, a revision of the 2006 strategic plan, calls for much closer ties with the biotech industry, "dramatic increases" in funding of potential therapies, expanded national and international collaboration, development of a "real-time financial reporting system" and more funding for interdisciplinary research.

The plan envisions an agency that is on the leading edge of human embryonic stem cell research and calls for considerable travel globally by its top executives and scientific staff.

The strategic plan update was posted on the CIRM website Tuesday as part of the agenda for next week's meeting of the CIRM board in Irvine, Ca. (We have been critical of the laggard posting of information on board agendas, but CIRM deserves praise for a timely posting of this important document.)

Much of the revised plan reflects the thinking of CIRM President Alan Trounson(see photo), an Australian scientist who has been in his job only since January. The proposal is subject to approval and changes by CIRM directors. Public hearings are also promised.

The plan states:

"CIRM places high value on interdisciplinary approaches. When scientists work in collaboration with engineers, physicians, chemists, mathematicians, and others to solve complex problems, they can achieve more than they could have working alone."

It continues:

"CIRM’s current leadership considers this collaborative approach so critical to the agency’s goals that it is recommending that the $120 million recommended in the 2006 plan to be awarded over three years be increased by 75 percent in the first year’s round of grants alone. It is anticipated that the scope of Disease Team Awards will be expanded to include funding for clinical trials and that they will be awarded annually (and more frequently if needed)."

On the subject of "working with industry," the plan says,

"CIRM’s president proposes to create an industry advisory body that will aid its executive to more effectively communicate and partner with the bioengineering, biotechnology and pharmaceutical industries. Consequently, the science initiative outlined later in this document calls for a major increase in CIRM’s industry collaborations."

The proposal presents CIRM's assessment on the current state of the stem cell art, along with an all-in-one-place rundown of its view of its accomplishments.

The document includes plans for stepped-up hiring, particularly in the scientific area. CIRM has long labored with staff shortages. It is capped at 50 employees and now has about 30 after four years of existence. Failure to fill the allotted slots has led some CIRM directors to worry about staff burnout.

The revised goals appear to be ambitious, as did the 2006 plan. Here is a sample from its latest 10-year aspirations:

"CIRM grantees will have clinical proof of principle that transplanted cells derived from pluripotent cells can be used to restore function for at least one disease."

"CIRM-sponsored research will have generated therapies based on stem cell research in Phase I or Phase II clinical trials for 2-4 additional diseases."

"CIRM funded projects will have achieve sufficient success to attract private capital for funding further clinical development of stem cell therapies."

The plan provides more details on CIRM's communications and outreach efforts, which have expanded significantly in 2008. It also outlines the new CIRM website, which is scheduled to debut this month with new features targeting specific audiences from researchers to the public. It additionally lays out a plan for a series of town hall meetings.

The proposal is not a finished document. It has blanks where numbers need to be filled in and contains parenthetical comments that suggest additional material will be added. It is shy on assigning dollars to specific initiatives. The document's structure also does not allow easy, straight-forward comparisons to the 2006 plan.

Nonetheless, it is an important document, one that will clearly drive funding decisions during the next few years. Researchers in academia and the private sector as well as biotech business executives should pay close attention to it and suggest modifications in the next few weeks if they think they are necessary. It wouldn't hurt to express them directly to the board in Irvine next Tuesday and Wednesday but letters or emails can also be sent. Wednesday is probably the best day since approval of grants is likely to consume most of Tuesday. However, it is impossible to predict reliably the order of the agenda at CIRM directors' meetings.

CIRM Directors Meet Next Week: $210 Million Proposal on Table

In addition to considering a salary for California stem cell Chairman Robert Klein, directors of the California stem cell agency next Tuesday and Wednesday will take up changes in its strategic plan and debate the framework of the whopping disease team grant round, which could total $210 million.

Meeting in Irvine, the panel is also scheduled to approve $20 million for as many as 20 grants to develop innovative research tools and technology.

The agenda currently has links to the revisions in the strategic plan, the disease team proposal and another proposal for a $60 million "basic research initiative." Not yet posted is background information on the Klein salary proposal, a "pre-application review" process, new scientific members for grant review group, an accelerated funding plan for grants and loans to business and a conference grant to the 2,100-member International Society for Stem Cell Research.

CIRM President Alan Trounson is on the board of directors of the society. Klein was a member of an advisory committee to ISCCR in 2007, according to The Niche, Nature magazine's stem cell blog. Don Gibbons, CIRM's chief communications officer, is a member of the group's public education committee.

A Salary for Klein? Half-Million Likely

California stem cell chairman Robert Klein, who has worked without state pay since late 2004, is now seeking a salary that could run as much as half-a-million dollars annually, making him one of the state's highest paid employees.

The request will come up at next week's meeting in Irvine of the CIRM board of directors. The agenda only states that the item involves "consideration of compensation of chair of the ICOC(the CIRM board)." No details were offered online. But Don Gibbons, the agency's chief communications officer, confirmed today that it was a salary request but declined to offer a justification for the move.

According to the CIRM salary ranges, Klein (see photo) is eligible for compensation as high as $508,750. Klein is a multimillionaire real estate investment banker and operates a Palo Alto. Ca., firm bearing his name. He forswore pay in December 2004 when he was elected chairman by the CIRM board.

If Klein receives the full amount in the CIRM range, he would become the second highest paid state employee outside of the University of California, according to salary information compiled by The Sacramento Bee. He would displace CIRM President Alan Trounson in that slot. Trounson earns $490,008. In addition to Trounson and Klein, Marie Csete, chief scientific officer for CIRM, is in the top ten earners with a salary of $310,008 and ranks No. 8.

CIRM's Gibbons has not responded to a query about whether Klein is seeking the full $508,750.

CIRM executive pay popped up in the news last spring, when CIRM directors approved a 23 percent hike in the management salary ranges, easily surpassing pay levels at the much larger NIH. At least one CIRM director initially balked but the boost was ultimately approved with little debate.

Twenty-three percent government pay increases generate an image and PR problem at any time. But given the Golden State's current $28 billion budget shortfall and cutbacks in education and aid to the poor and elderly, the timing can appear especially inappropriate. And Klein's salary request, deserved or not, is also likely to create such problems.

However, a bit of a precedent for the salary request popped up today in a story by Jim Sanders in The Sacramento Bee. He reported that 214 legislative staffers received pay hikes this year, despite the state's economic woes. One-third of the raises went to employees earning less than $40,000 yearly but 16 went to staffers making more than $100,000.

The article generated intense reader comment that reflected a certain hostility towards government pay boosts. One reader, identified only as Coaki, said, "These people are incredibly insensitive and stupid. Pay raises with a $27 billion deficit?"

At CIRM, the way for Klein's salary request was cleared when Ed Penhoet resigned as vice chairman. He is also a multimillionaire and co-founder of Chiron. Penhoet, who is continuing to sit on the board, was eligible for a salary, which he did not accept. Penhoet's resignation cited time constraints and did not mention the salary issue. But a vice chairman working for free while the chairman takes a handsome salary would create an awkward situation. No successor to Penhoet has been nominated.

Differing Views on the Future of the Stem Cell Industry

The headline in the San Francisco Chronicle this morning read: "Drastic cuts among some biotech companies."

But just the day before, the Chronicle reported that "many in the stem cell field have a buoyant air these days."

The Chronicle is not alone in posing apparently contradictory views. Monya Baker carried links to some on her Nature magazine blog, The Niche. And here is the "good news" version of the stem cell biz from Midwest: "Why stem cell companies in Wisconsin and beyond will finally catch the eye of investors."

A couple of things are at work here. One is the optimism spurred by the Obama administration and its plans to ease restrictions on human embryonic stem cell research. A superficial assessment of that move generates an unrealistic, but rosy outlook for the stem cell business. The other factor involves the perennial optimism of the entrepreneur. They are a class given to always seeing the glass as half-full. What better time to invest in stem cells? Values are down. Bargains are waiting to be snatched up.

Indeed, financial bottom-feeders with strong stomachs and patience may do well. But the financial vulture business is tough. All the bad economic news has not yet sifted out. Realistically, it would seem to be a good time to be cautious about the prospects of any individual stem cell company.

We all should remember as well that the history of the biotech industry is littered with far more money-losing enterprises than successes.

An Unseemly Bid for Federal Help

California is running out of cash, and its governor has just called lawmakers kindergärtners.

That's in Sacramento, where government leaders have failed to deal with a $28 billion budget shortfall, and the state has cancelled bond sales.

In Washington, the win-at-any-cost battle against a possible economic depression is now running around $8.5 trillion, including loan guarantees.

In San Francisco, however, at the headquarters of the $3 billion California stem cell agency, all is financially well. The agency is assured of a constant stream of cash that cannot be touched by the governor or lawmakers, courtesy of the voters in 2004.

But CIRM Chairman Robert Klein wants more – specifically loan guarantees from the federal government for his proposed $500 milliion biotech bank. With guarantees, it could double in size, he believes, and help struggling biotech firms.

Klein will make his pitch to CIRM directors on Monday, seeking their support for an effort to convince the Obama administration to provide the financial assurances for the CIRM program. Certainly, a good case can be made to help out stem cell firms, which have had a hard time attracting cash. And since money is flying around in Washington, why not try to grab a few bucks. Everybody else is doing it.

But the question is whether it is appropriate? Do CIRM directors really want to put their hands out for help while the poor and elderly in California are seeing their government assistance cut? On the surface, it does appears a bit unseemly.

Novocell Chief Joins JDRF

The head of the only company to win a grant from the California stem cell agency is leaving his business to become the chief executive of the Juvenile Diabetes Research Foundation.

The departure of Alan Lewis is a bit of an illustration of the small world of stem cell research. His company, Novocell, won a $50,000 grant from CIRM, whose chairman is Robert Klein, who is also a member of the board of directors of the JDRF.

The foundation itself is significant provider of research funding. It has awarded more than $1.3 billion in grants since 1970, including more than $156 million in this fiscal year.

Could it be that JDRF and CIRM might collaborate on a funding effort? Possibly. CIRM has ambitious plans for collaboration. They already involve Canada, Japan, Great Britain and the state of Victoria in Australia.

CIRM Turning to 'Dramatic' Increases in Therapeutic Research

What direction is the $3 billion California stem cell agency going to take in the coming year and beyond?

As CIRM Chairman Robert Klein put it, how is the four-year-old enterprise going to respond to a "changing scientific landscape of stem cell science as well as the evolving thinking of the board and of CIRM’s staff and many stakeholders?".

Is the emphasis going to be on basic research or more focused on developing clinical applications? What are the best opportunities for successful grant funding?

Klein provided some answers to those questions in his testimony Nov. 20 before the Little Hoover Commission, California's good-government agency, which is conducting an examination of CIRM affairs.

Klein laid out the essence of the new 2008 strategic plan (an updated version of the 2006 document). He noted that it reflects the "vision, priorities and scientific guidance" of CIRM President Alan Trounson. The plan is subject to CIRM board approval and revision.

What may be of greatest interest to researchers seeking funding is Klein's comment that the plan will call for "dramatic increases" in funding of research "targeted to elicit therapeutic applications."

Here is more of what Klein had to say:

"The 2008 strategic plan update reflects the high value that CIRM places on interdisciplinary approaches. Biological scientists, working with physicians, chemists, mathematicians, and others to solve complex problems, can progress faster and further than can scientists working alone. For this reason CIRM awarded 'Disease Team Planning Grants' to support up to six months of planning and proposal development for novel, team-based research efforts aimed at reaching FDA approval for human trials within 48 to 60 months. The goal is to safely fast-track research from the laboratory to the bedside, with the ultimate aim of submitting an Investigational New Drug (IND) application to the FDA based on stem cell technology. CIRM’s current leadership considers this approach so critical to the agency’s goals that it is recommending a five-to-tenfold increase over the 2006 Plan in funds allotted to the Disease Team research grant program."

Klein continued,

"Building upon the values and foundation expressed in the 2006 strategic plan, the specific goals of the 2008 update of the strategic plan include:

"Measure CIRM’s successes and shortcomings in achieving the goals set in the 2006 Strategic Plan and learn from both.

"Outline a system for updating CIRM’s future research programs in light of the rapid evolution and new developments in stem cell science and regenerative medicine over the past two years.

"Map a plan for accelerating progress through the “pipeline to cures” by focusing research and organizing CIRM’s portfolio to facilitate the connections between CIRM-funded basic stem cell research and translational, pre-clinical, and clinical research.

"Lay out an option for developing robust systems for capturing and evaluating the results of CIRM-funded programs and for sharing these data in ways that accelerate the field.

"Reassess and enhance CIRM’s relationships with the biotechnology and pharmaceutical business communities, relationships essential to our goal of lifesaving therapies based on stem cell research.

"Propose new ways for CIRM to lead stem cell science and regenerative medicine by sharing expertise and collaborating with partners in the scientific community, both nationally and around the world."

Does all this mean a reduction in CIRM funding for basic research? After all, the agency's funds are limited albeit rather large. Klein's remarks did not directly answer that question but recognized that it will be raised. He said,

"CIRM appreciates the tradeoffs involved in awarding funding for therapy development versus basic research and the impact of each on achieving CIRM’s mission. Fortunately, CIRM has not been presented with a binary choice. CIRM has the capacity to fund both basic research and therapy development. As CIRM’s 2006 and 2008 scientific strategic plans make clear, CIRM recognizes that it must fund both basic research and preclinical and clinical research in order to meet the goals established by Proposition 71. Indeed, CIRM’s funding priority is to create a “scientific pipeline to cures” stretching from early discoveries to clinical applications. The draft 2008 update to the strategic plan thus calls for dramatic increases beyond the 2006 plan in the types of research targeted to elicit therapeutic applications, and it envisions significantly more investment in focused “disease team” awards, translational research awards, and linkages to industry—the final conduit for getting research advances to the patient."

Given Klein's disclosures and acknowledgment of the existence of the 2008 plan document, which is a public record, on Tuesday we asked Don Gibbons, CIRM's chief communications officer, for a copy. He refused, declaring,

"He (Klein) said we were working on it. The drafting is not done yet. Once it is, it will be posted for everyone to comment."

Klein: Federal Backing Could Lead to $1 Billion CIRM Loan Effort

Chairman Robert Klein of the California stem cell agency is proposing that the Obama administration provide loan guarantees that he projects would allow the Golden State to mount an ambitious $1 billion lending program for the biotech industry.

He broached the proposal at a Nov. 19 meeting of the Finance Subcommittee of the CIRM board of directors and plans to bring it up at a special teleconference meeting of the full board on Monday.

Klein's plan would double the size of the proposed $500 million CIRM loan program that is his brainchild. The board of directors is yet to sign off on details of the plan, which have not yet been fully worked out.

The $3 billion state stem cell agency itself has no apparent financial problems, although the state is in the midst of a $28 billion budget crisis. The voter-approved law that created the agency guarantees a steady stream of cash that cannot be touched by either the governor or the legislature. But Klein believes that the federal guarantees would help the lending effort.

At the Finance Subcommittee meeting earlier this month, Klein noted the trillion-dollar bailout figures floating around in the nation's capital. According to the transcript, he said,

"In terms of our financial interest, the loan guarantees that are being considered for a number of sectors of the economy could include the biotech sector.

"And here, if there were a 50-percent loan guarantee provision for governmental loan biotech programs, it would mean that if we had allocated conceptually, and only conceptually, because it's subject to approval of every loan at that time at the board level, but if we conceptually approved a $500 million allocation for a loan program and there were a government program for 50-percent guarantee, we'd have the possibility, subject to a lot of detailed work and legal review, to create a billion dollar program with that. So it would substantially expand our capacity for funding."

Klein brought up the proposal to seek "early input" from CIRM board members. However, the Finance Subcommittee ran out of time and adjourned without discussing the matter. He asked board members and the biotech community to send comments to him.

Klein is also seeking to lobby the Obama administration on other biotech industry matters. They include removing unspecified small business loan restrictions, expanding the FDA staff and substantially increasing funding for NIH grants.

On the restriction issue, he said,

"I believe it would be beneficial if some of those restrictions were changed to make it more possible for companies that have received venture capital funding in the past to get SBIC (Small Business Investment Corporation) loans because with falling stock prices, doing another round of stock offerings is not feasible unless you're going to hedge funds, which are extraordinarily difficult to deal with and create tremendous pressure on these small companies to the extent hedge fund money is available at all."

Klein said a substantial increase in FDA staff is needed to avoid a "choke point" on moving stem cell therapies into the clinic. He said,

"Everyone is going to need expert advice on exactly what kind of data and what kind of preclinical work is going to be required for an IND to be approved for a phase I human trial. That advice is required three years or more in advance because this is an innovative area. And so it's going to be an early priority with a lot of lead-time importance to get FDA expansion that can deal with cellular therapies as they advance."

CIRM has not yet provided written background on Klein's proposal on its Monday agenda, which also includes a plan to help ease the problem of absenteeism at board of directors meetings.

The public can listen in and participate during the teleconference meeting from locations in San Francisco (2), Los Angeles (5), La Jolla (3), Elk Grove, Sacramento, Pleasanton, Berkeley, Menlo Park, Healdsburg, San Carlos, San Diego, Irvine (2) and Duarte. You can find the specific addresses on the agenda.

WSJ: No Magic Stem Cell Funding Cure From Feds

Alan Trounson, president of the $3 billion California stem cell agency, is minimizing the impact of President-elect Obama's plan to ease federal restrictions on human embryonic stem cell research.

Trounson (see photo) was quoted today in a piece in the Wall Street Journal by Gautam Naik and Robert Lee Hotz. The article was headlined "Obama's Promise on Stem Cell Doesn't Ensure New War on Diease." This morning the story appeared prominently on the main page of the WSJ web site but on page A9 of the print publication.

Trounson's remarks dealt both with the impact of California's research effort, now the world's largest source of funding for hESC science, and Obama's stem cell plans.

Concerning the Golden State, Trounson said,

"We are at such a high pace and we have so much funding ourselves that there will be no real competition to our leadership."

Trounson also said,

"The incremental money from NIH will be relatively small because of the economy."

The WSJ piece said that "two big questions" must be answered at the federal level.

"How much federal money will be made available for the research? And how quickly can America's major science-funding agency, the National Institutes of Health, take on a leadership role in a field where it has only modest experience and whose funding efforts have lagged behind several state initiatives.

"'To make stem-cell science take off, it needs something equivalent to Nixon's war on cancer,' says James Thomson, a stem-cell scientist at the University of Wisconsin who created the first human embryonic-stem-cell line in 1998. 'But because of today's economic realities, it's not going to happen for at least a couple of years.'"

The WSJ story may be limited to subscribers only. If you would like a copy, please email me at djensen@californiastemcellreport.com

The Bee Assails the CIRM 'Club'

The Sacramento Bee said today that the board of directors of the $3 billion California stem cell agency is "is rife with potential conflicts," "overly large and unwieldy" and "awards multimillion-dollar grants in a manner that favors secrecy over accountability."

The comment came in an editorial on last week's hearing by the state's good-government agency, the Little Hoover Commission, into the stem cell research program.

The editorial said,

"The most striking testimony came from Kenneth Taymor(see photo), executive director of the UC Berkeley Center for Law, Business and the Economy.

"Taymor, who has been watching the institute's operations for three years, noted that nearly everyone on the institute's governing board – medical school deans, university officials – has some sort of financial interest in the grants being awarded.

"Even with officials recusing themselves, the board's deliberations, he said, have the feel of 'a club that was allocating money among themselves' based on preordained decisions."

According to The Bee,

"The hearing revealed, once again, that this institute's 29-member governing board is rife with potential conflicts; that it is overly large and unwieldy; and that it awards multimillion-dollar grants in a manner that favors secrecy over accountability."

The Bee concluded:

"This is troublesome stuff, yet it doesn't appear the Little Hoover Commission will recommend sweeping structural changes, even though the institute still has more than $2 billion left to spend.

"Downsizing its governing board, eliminating conflicts and stripping the institute's chair of operational authority would require a constitutional amendment to Prop. 71. Based on their discussion Thursday, members of the Little Hoover Commission don't want to go that far.

"That's too bad. Without real reforms, Klein and his board will continue to operate like a club, spending taxpayer dollars without the normal safeguards of other public agencies."

Minimal Coverage of Hoover-CIRM Inquiry

News coverage of last week's state Capitol hearing into the affairs of the California stem cell agency was quite light, with only one newspaper writing about the session -- at least based on an Internet search.

Reporter Terri Somers of the San Diego Union-Tribune pulled together the single story on the inquiry by California's Little Hoover Commission, reflecting the importance of the biotech and stem cell industry in her area. The Sacramento Bee did not cover the event, but its Capitol Alert Internet service linked to Somers' piece.

The meager coverage was to be expected. Other matters are consuming news organizations, which also are suffering from heavily cut-back staffs.

Somers led with a statement by CIRM Chairman Robert Klein concerning the possibility of another bond measure to continue the work of the agency, which has only a 10-year funding capability. Another bond proposal could be placed on the ballot if the legislature approves or if it qualifies via the initiative process.

Somers described Klein's "unflinching confidence" in the research enterprise and reiterated his familiar pitch that CIRM has been overseen to a fare-thee-well.

Somers wrote,

"But what was perhaps most revealing were the areas of questioning by the commission members. They asked about the size of the institute's governing board, the transparency of its spending decisions, the ability of biotechnology companies to benefit from stem cell grants and the power and job responsibilities of Klein and (CIRM President Alan) Trounson.

"'I'm concerned that there is an arrogance in how the funding is handled and the institute is structured,' said commission vice chairman Eugene “Mitch” Mitchell(see photo), a vice president of San Diego's Sempra Energy. 'I find it baffling that it is a state agency, but there are so many rules it doesn't have to adhere to.'"

She continued,

"Ken Taymor, a UC Berkeley law professor who has attended many of the institute's board meetings, said the public continues to be frustrated that funding decisions are still made behind closed doors. He also urged the commission to look at how power is divided between Klein and Trounson.

"The board's size, at 29 members, makes it inefficient, said several observers. And it is unusual that it has no members whose sole interest is that of the taxpayers, said Michael Klausner, a Stanford Law School expert on nonprofit governance."

Somers wrote,

"John Simpson of Consumer Watchdog, a Santa Monica advocacy group, suggested trimming the board's membership to 15 people with no conflicts of interest."

(Simpson put out a press release that was distributed widely.)

Somers additionally reported that Trounson indicated that California businesses will do better on the next round of grants. He predicted that probably one-third of the tools-and-technology grant round will go to the private sector. Only one business has won a grant and that was for only $50,000.

We will have more on the hearing over the next few days, but if you can't wait and want to wade through the testimony, it is all available here on the Little Hoover Commission website. An archived video of the entire session should be available soon via the same link.

CIRM No-Pay Egg Rules: A 'Stem Cell Debacle'?

A front page article Sunday in the leading newspaper in one of California's stem cell hot spots says that the state laws aimed at boosting embryonic stem cell research are also hobbling it by "creating a shortage of human eggs."

The article was written by Terri Somers of the San Diego Union-Tribune, who follows stem cell business and research issues more closely than any other reporter in the state.

The crux of the problem, she reported, is that Prop. 71 bans paying women for their eggs, creating what some believe to be a shortage.

Somers wrote,

"'This is what I call the great stem cell debacle, and it's ridiculous,' said Dr. Samuel Wood(see photo), who founded Stemagen, a San Diego biotechnology company that is trying to create human embryonic stem cells through therapeutic cloning.

"'The people of California passed Prop. 71 to fund billions of dollars worth of stem cell research including (therapeutic cloning) and then the legislators and leaders of the stem cell institute put guidelines in place that greatly hamper, or virtually eliminate, the possibility of this being successful.'"

Somers continued:

"The institute has distributed $614 million through 229 grants, but only one has involved therapeutic cloning. Several grant requests were denied after doubts were raised that the scientists would be able to obtain enough eggs, called oocytes, to conduct the research.

"'It's clear that without having access to resources, in this case human oocytes, we cannot move forward,' said Shoukhrat Mitalipov, a University of Oregon scientist considered a leader in therapeutic cloning."

Both Mitalipov and Wood had grant applications rejected by the California stem cell agency, Somers reported. But CIRM President Alan Trounson, Wood and Stemagen's chief scientific officer, Andrew French, co-authored a 2006 paper advocating cloning-based stem cell research, according to Jesse Reynolds of Biopolitical Times.

Somers quoted David Smotrich, who runs La Jolla IVF, a fertility practice, as saying the average payment for buying eggs in California is $3,000 to $5,000 but sometimes higher.

She said,

"Wood, who also runs a fertility practice in San Diego, conducted a survey of women who were egg donors for fertility purposes and found that 60 percent would consider doing so for research. All but one would expect to be compensated, at a rate of at least $3,000, he said. Wood hopes the survey will help change state law."

But there is opposition to easing CIRM's payment standards. Somers wrote,

"'People voted for Prop. 71 with the understanding that eggs would not be paid for,' said Jeff Sheehy, an AIDS activist and member of the institute's board. 'We can't suddenly say that the words and law don't mean what we thought they meant.'

"In 2006, the Legislature passed a law prohibiting payment for oocytes donated for research that is not funded by the institute. For that reason, the Legislature should address the issue, said Sheehy, a member of the institute's standards committee. Elected leaders could give the institute direction, he said."

Earlier this year, Trounson raised concerns about egg shortages. In June, he said researchers are "floundering" because they do not have enough eggs. One Harvard researcher, Kevin Eggan, who serves on a CIRM panel, also complained last spring that a $100,000 advertising campaign on the East Coast seeking egg donors had been unsuccessful. The Associated Press has written about the problem as well in a story that circulated nationally.

Recently Singapore, which has launched a major stem cell research effort involving top level American scientists, approved paying egg donors for their time as well as lost wages. CIRM rules allow reimbursement for lost wages but do not permit compensation for lost time.

Somers quoted Marie Csete, CIRM's chief scientific officer, as saying its standards committee will meet in February to discuss egg payments.

Egg Amplification

On Nov. 13, we carried an item on Singapore's new rules allowing egg donors to be compensated for both time and lost wages. CIRM rules permit reimbursement of lost wages but provide for no compensation for time.

Underway Once More

The California Stem Cell Report is going dark for about a week as we once again venture into the fearsome seas on a multi-day passage. But rest assured, we will be back.

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."