CIRM Eyeing Major Reliance on Industry Cash

The president of the California stem cell agency, Alan Trounson, says it is considering funding its future with money from the biotech industry.

The possibility of a state government agency relying on industry dollars raises significant and new conflict of interest questions concerning the $3 billion effort. CIRM's governing board is already filled with representatives from institutions that have received the bulk of its funding.

Trounson made his comment June 4 in an interview with Bloomberg News. He also told the financial news service that it “wants to get 10 to 12 new therapies into human testing within four years.”

Both the comment about industry funding and human clinical trials appear to be the first public remarks along those lines by CIRM officials. However, we presume that Trounson may have misspoken on the human clinical trials, although Bloomberg has not run a correction as of today (June 8). The Bloomberg article is being circulated nationwide via email by a variety of persons interested in stem cell research.

The stem cell agency, now the largest funding source in the world for human embryonic stem cell research, is unusual financially in California. CIRM relies on state bond funds for its operations and grants. That source of cash is not subject to cuts by the governor or the legislature, only the ability of the state to sell bonds.

CIRM was sold to voters in 2004 as a 10-year program. However, no sunset provision is in place for the agency. It does have a 10-year limit on its bond funding. We have been told that clock started running with the first issuance of its state bonds in 2007.

Here is how Rob Waters of Bloomberg wrote about Trounson's comments on biotech funding for CIRM,

“In the long run, the agency may try to use industry funding to continue operating once its $3 billion in state bond revenue is exhausted by the end of the next decade, he said.”

As far as we know, no California state department relies on donations from private industry for its funding. But CIRM has the unusual capability of creating a nonprofit agency, rare among state departments. A nonprofit could serve as a vehicle for channeling industry funds to CIRM.

CIRM has been edging closer to industry over the last year with the staff's proposed revision of its strategic plan calling for much tighter ties.

Trounson's comments about future reliance on industry funds casts a new and different light on all of the agency's current actions. Is a decision on a grant being made because it will enhance or harm future funding from industry? Will CIRM's standards for its research grants be altered because of the need to be friendly to an important biotech company or a top researcher tied to a biotech firm? Will CIRM create, as is proposed, a special “biotech advisory group” to help evaluate CIRM interaction with industry?

The advisory group is recommended in the revisions to the CIRM strategic plan and has already generated controversy, along with CIRM's direction away from basic research and towards efforts favored by industry.

(You can find CIRM's plans on industry linkages in the draft of the strategic plan, beginning on page 28.)

CIRM already has several representatives from industry on its 29-member governing board. One wonders what would be gained by creation of this new panel, except that it presumably could meet privately and discuss matters that might be deemed inappropriate for airing at board meetings, which are required by law to be public.

The question of the long-term outlook for CIRM came up last month a meeting of the Little Hoover Commission, the state good government agency which has drafted major recommendations for changes in CIRM's structure. The draft proposals suggested CIRM explicitly lay out its plans for sustainability or shutdown. Representatives from CIRM at that meeting did not respond to the comment.

The question of future funding is already on the agenda of the CIRM directors' Finance Subcommittee this Thursday. It would certainly seem that Trounson's comments are suitable for some discussion in that context. The public can take part in the meeting at a number of teleconference locations throughout the state. Their specific addresses can be found on the agenda.

As for Trounson's remarks on human clinical trials, we assume that Trounson was referring to the $210 million disease team grant round, the second largest in CIRM's history. The RFA calls for up to 12 grants with the objective that grantees file an investigational new drug application within four years of the start of the award. Those applications are one step along the way to human clinical trials.

We have asked Don Gibbons, CIRM's chief communications officer, if CIRM has any comment on Trounson's remarks to Bloomberg. We will carry any remarks if Gibbons responds.

Patient Advocate Slams CIRM Reforms as Ludicrous

Patient advocate Don Reed recently presented his views on the Little Hoover Commission's preliminary recommendations for improvements in the operations of the California stem cell agency.

The piece on his blog, stemcellbattles.com, used terms like “worst fears,” “disaster,” “ludicrous” and “politicizing.” Reed said the the agency is highly successful. “Why gut it?” he asked.

Reed has followed the agency since the campaign to create it in 2004. He is vice president for public policy of Americans for Cures, which is the private stem cell lobbying group of the chairman of stem cell agency, Robert Klein. He is only one of two staff members currently listed on the group's Web site.

We do not agree with Reed's analysis of what the Little Hoover Commission is considering, and we think that some of his information is off target. For example, Reed asserts that five audits have determined that CIRM is “open and honest.” In fact, all but of one of those audits had a quite limited scope involving compliance with accepted accounting practices. And as many persons know, compliance with accounting standards does not signify a healthy or open enterprise. One recent case in point is General Motors.

The only audit to go beyond such limited scope was a “performance audit” by the state's auditor, but it also did not examine CIRM's openness or honesty.

Like Reed, we support CIRM's endeavors. But we believe that it is hampered by unnecessarily restrictive provisions in Prop. 71, which are now codified in state law and the state Constitution and virtually impossible to change. Many of those provisions are management minutia that should have been left to the CIRM board to decide. Those include the dual CEO structure, super-majority quorum requirements and a poorly thought-out cap on the number of CIRM employees. That is not to mention the conflicts of interest on the board that were built into the initiative in order to win political campaign support from all the key institutions and businesses.

Reed is attempting to drum up a letter-writing campaign from patient advocates and “true believers” in stem cell research to persuade the Little Hoover Commission to pull back on its recommendations.

While we respect Reed's beliefs, the Little Hoover Commission should pay no more attention to “true believer” letters than the NIH should to the thousands of letters it has received from the religious right opposing its proposed rules on human embryonic stem cell research – at least as far as both rely on faith-based reasoning.

The California stem cell agency is giving away $3 billion in taxpayer funds at a cost of another $3 to $4 billion in interest. Evaluation and support of the effort must be based on hard facts and conditioned on how well it actually meets its public responsibilities and its much-touted adherence to the highest standards of openness and transparency.

CIRM's Finances and Budget to be Examined Next Week

The financial condition of the $3 billion California stem cell agency will come under scrutiny next week at a meeting of Finance Subcommittee of its board of directors, along with CIRM's $500 million biotech loan program.

Leading the agenda is the proposed budget for the upcoming fiscal year, which begins July 1. Also scheduled to be discussed are funding sources and financing stretching into the first half of 2010-2011.

Following a severe financial scare earlier this year, CIRM is currently in safe financial shape for the next 18 months, despite the state's huge $24 billion deficit. That's because CIRM relies on bond financing and received a $500 million booster this spring as a result of a state bond sale. CIRM also cannot be cut by the state legislature or governor because it is constitutionally outside their control as a result of the ballot initiative that created it.

That is not to say CIRM is out of the longer-term woods. Its funding will only last for another 18 months, absent another bond sale.

The agency has approved $761 million in grants, which extend over several years. Its operations budget is tiny in comparison -- only $13.4 million for the current fiscal year.

The largest component of the budget -- $7 million -- goes for the salaries and benefits for CIRM's 40 staffers. The next largest component -- $2.7 million -- is for outside contracts, necessary because of the small staff and special needs of the agency.

Last year, the budget was missing significant details concerning outside contracting and travel, triggering complaints by the Consumer Watchdog group of Santa Monica, Ca.

When some of the details were produced -- days after CIRM directors routinely approved the budget -- John M. Simpson, stem cell project director for Consumer Watchdog, reported that they showed that CIRM Chairman Robert Klein would be out of the state on CIRM business 88 days, CIRM President Alan Trounson 68 days and Chief Science Officer Marie Csete 75 days. The budgeted dollars -- $558,000 -- were up 287 percent from the previous year.

The latest budget documents from CIRM show that it has spent only $104,000 of the $558,000 as of the end of March. In fact, as of that date, CIRM had spent only $6.7 million of the $13.4 million budgeted for operations this year. CIRM officials tout this as indicative of management frugality, which is to be lauded. But the magnitude of the difference raises questions about CIRM's budget justifications last year. It also raises a question about whether CIRM should fill out its staff to the 50 person limit. The small band appears to be overworked, based both on expressions from some board members and top management as well.

Last June, Michael Goldberg, chair of the Finance Subcommittee and general partner of the venture capital firm of Mohr, Davidow Ventures of Menlo Park, Ca., told his fellow directors to expect a more thorough-going budget document than was presented at that time.

The biotech loan program will come up in connection with a review of the response to an RFP for underwriters for the effort. CIRM staff does not have the expertise to run the effort so outside help is needed. The agency hopes to have more than one underwriter because of the conflicts involved in what is a very small financial community.

June 8 is the deadline for proposals with possible award on June 15, only four days after the Finance Subcommittee meeting.

The RFP did not specify an amount that CIRM would expect to pay for handling the $500 million loan program, but it certainly could be lucrative for the successful applicants.

The public can hear and participate in the meeting at a number of teleconference locations including San Francisco, San Diego, Los Angeles, Palo Alto, Pleasanton and Menlo Park. Specific addresses can be found on the agenda, which does not yet contain any links to background material to be presented at the meeting.

CIRM Board Meetings, Attendance and Discounts

The California stem cell agency has negotiated a discount hotel rate for persons who want to attend the June meeting in San Diego of its board of directors.

It is a step -- a first one for CIRM -- in the right direction to help out interested parties who must travel to attend the board meetings. It is also a move that highlights the attendance -- or lack of it -- at meetings of a $3 billion state government enterprise that is now the largest source in the world of funding for human embryonic stem cell research.

But first, the discount rates, whch are not inexpensive: A room for one night will cost $179 for one person compared to the $234 offered Monday afternoon on the Web site of the Sheraton San Diego Hotel & Marina (see photo).

The break may help to encourage attendance, particularly if somebody is looking to put together a holiday in San Diego.

However, attendance by the public, researchers, businesses or other interested parties has been sparse at CIRM board meeetings, to put it mildly. Many times the CIRM staff in attendance outnumbers other attendees, who often total only 10 to 20 persons. A few researchers or company representatives turn up regularly, knowing that $3 billion is not something to sniff at.

But most potential recipients -- be they businesses or academics -- are notably absent, a fact that has surprised us. CIRM board meetings (and those of their working groups and subcommittees) present an exceptional opportunity to talk directly to board members and staff, along with hearing their thinking during formal presentations. We understand that this openness is much different than at the NIH.

Meetings of the CIRM board are not a minor expense. Last time we checked, the cost of sessions of the 29-member board ran about $20,000 each, but that could have changed. Presumably the amount includees travel, cabs, meals, etc., for the board and staff members. The normal California state per diem rate for reimbursement for lodging in San Diego is $110. We assume that CIRM has negotiated that rate at the Sheraton for board members and employees. However, the board also has other, special needs, including meeting rooms, audio equipment, staff support and meals.

This month's meeting is scheduled for the 17th and 18th. The June 17 session is expected to begin late in the afternoon at the hotel and probably extend to about 9 p.m. or 10 p.m. At some point, the board will break for a closed-door dinner. The main business of the session is likely to be consideration of grant applications, but anything could and has come up in the past.

The session the next day is likely to be at San Diego State University, which is about eight miles from the hotel.

Melissa King, executive director of the CIRM board, said indivudals who want to take advantage of the Sheraton discount rate should call 877-734-2726 to make their reservations. She said interested parties must reference the ICOC meeting. (ICOC is the abreviation for the official name of the CIRM board.)

A Research Perspective From a CIRM Scholar

The following article was sent to the California Stem Cell Report by Brigitte Angenieux, 32, a postdoctoral fellow at the David Geffen School of Medicine at UCLA. She studies stem cells and brain tumors and is sponsored by a training grant from the California stem cell agency.

Angenieux's work involves the characterization of the biology of brain tumors to develop better and more efficient treatments. Her project consists of elucidating the genes that are important for the formation, the progression and the mechanism of drug-resistance of brain tumors. She also is interested in determining the relationship between neural stem cells and cancer cells.

She received her Ph.D. from the University of Lausanne, performing research involving retinal stem cells. She came to the United States in 2001. In addition to her research at UCLA, she enrolled in a journalism certificate program through UCLA Extension.

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HOPE AND DISILLUSION

By Brigitte Angenieux

LOS ANGELES -- Nick Orozco, 26, a young researcher, works at the University of California, Los Angeles (UCLA), one of the top 20 international universities. Orozco looks at his cell culture dish with a big smile. His experiment worked after three weeks, a small victory, but he has to redo the experiment three more times. This will take another month or so. His daily routine is a battle between hope and disillusion. Nevertheless he faces this reality with steely resolve because that’s the journey a stem cell researcher endures.

“There is a lot of hope in stem cell research, but I don’t think we understand everything. It takes a lot of time, more than what people are often willing to accept,” said Orozco.

Stem cell research makes headlines almost everyday. Doctors go on TV to explain the great potential of this new treatment. President Obama lifted the ban on federally sponsored stem cell research imposed by President Bush because of personal beliefs and ethical issues in the use of embryonic stem cells for research.

Hollywood stars haven’t shied away from the subject either. Michael J. Fox is a big advocate of stem cell research and its use to treat Parkinson’s disease, which he suffers. Recently, some news agencies have reported that the actress Farrah Fawcett, of the TV show "Charlie’s Angels," traveled to Germany to undergo a treatment to fight the spread of intestinal cancer. On April 6, the Fox News website mentioned Fawcett’s stem cell therapy even though it has been denied by the Fawcett's representatives.

Despite regular reports of breakthrough findings, this cutting edge treatment is still complex and obscure. Where are the cures researchers promised the public? Cancer is still not eradicated from the earth. Alzheimer’s patients are still struggling.

Science is not a straight-forward path, experts say. It requires time and multiple trials. There is no set time for each phase of drug development, but industry representatives commonly say it takes about two to eight years to carry an idea from the laboratory to FDA approval for a marketable drug.

“I think it’s a learning process, a trial and error effort,” said Orozco, who did his undergraduate degree at UCLA in the neurosciences and just applied to a medical school program starting in July. “This needs to be worked out before clinical trials.”

A recent case demonstrated that stem cell research should be applied with caution. An Israeli child suffering from a brain degenerative disease went to Russia for stem cell transplantation therapy. Now, several years after the transplantation, the child has developed cancer.

Dr. Meeyro Choe, 32, a pediatric fellow, took the opposite path of Orozco. She worked in a laboratory for two years between college and medical school. After medical school she took a fellowship and decided to give research another try because she “missed basic research.” She’s working at UCLA in a laboratory doing research on stem cells and cancer. As a doctor she is confronted with a dilemma: treating and answering her patient’s needs for a cure but not at the expense of their safety.

Clinical trials take an average of ten years, according to scientists. They involve three different phases, each testing a specific hypothesis. In phase I, researchers test an experimental drug or treatment for the first time to evaluate the toxicity. In phase II, the drug or treatment is given to a larger group (100 to 300 persons) to evaluate the efficiency. In phase III, the drug or treatment is given to a larger group (1,000 to 3,000 persons) to confirm its effectiveness. Then the drug or the treatment is available to the general public.

“Currently, nine out of 10 experimental drugs fail in clinical trial studies because researchers using lab and animal studies cannot predict how they will behave in people,” said Steve Peckman, associate director of The Eli and Edythe Broad Center of Regenerative Medicine and Stem Cell Research at UCLA.

Although the research is time-consuming and complex, it remains intrinsic to the future of medicine as well as the aspirations of such physician-researchers as Meeyro Choe.

“With medicine you can treat hundreds of patients, maybe, but with research you can help many more,” said Choe.

Structural Changes in CIRM? Preliminary Thoughts from California's Good Government Agency

SACRAMENTO – Significant structural changes affecting the leadership of the California stem cell agency would be made under preliminary recommendations of a staff report of the Little Hoover Commission, the state's governmental efficiency organization.

The size of the CIRM board would be reduced from 29 to 15, the dual CEO situation would be eliminated, salaries for the chairman and vice chairman would be halted and the super-majority quorums for board action would vanish.

The proposals, which are not yet official recommendations of the Little Hoover Commission, were unveiled Wednesday at a meeting of the group's CIRM subcommittee. The final report with modifications is likely to come up for approval in June.

Public comment on the plan, however, was severely hampered by the commission's refusal to make the document available to either CIRM or interested parties in keeping with the commission's longstanding practice of not publicly disclosing draft documents. Instead the public and CIRM heard a relatively quick oral overview.

Ironically, one of the charges of the Little Hoover Commission is to examine the transparency of CIRM. However, the commission's practice stands in sharp contrast to CIRM's policy of publicly disclosing its draft documents.

At one point, Stuart Drown, executive director of the commission, said that CIRM has worked hard at transparency, declaring,

"They put all kinds of stuff on the Web."

Other potential recommendations offered Wednesday include removal of the cap of 50 on the size of CIRM staff but retaining the 6 percent overhead limitation along with creation of procedures for possible removal of CIRM board members. Currently none exist under Prop. 71, the ballot initiative that created the $3 billion research effort.

The Little Hoover subcommittee also cited the need for a succession plan for CIRM leadership, including the chairman. It recommended a clear, revised, long-term plan for the organization that would lay out its plans for sustainability or shutdown. CIRM is widely regarded as a 10-year program, but there is no sunset provision on its work, which officially began in 2004.

CIRM Chairman Robert Klein has projected its existence for several years beyond 2014 and has mentioned the possibility of seeking additional bond funding, CIRM's only current source of significant cash. CIRM has the capability of creating a nonprofit organization, an unusual attribute among state agencies. Such an organization could possibly serve as a funding arm in the future.

Drown said a perception remains that the CIRM board is an "insiders' club." In addition to shrinking the size of the board, the initial recommendations suggested appointment of outside, independent individuals, possibly from the scientific community or the public, or both.

The subcommittee clearly shied away from any changes that would require another ballot measure, a procedure mandated by Prop. 71 for certain, major alterations in CIRM. The panel also appeared to be reluctant to recommend modification of the 70 percent, legislative vote requirement for other changes involving CIRM.

That super, super-majority vote standard does not apply to any other function in state government and was created by voter approval of Prop. 71.

Any changes recommended by the Little Hoover Commission would have to clear that 70 percent hurdle or be voluntarily adopted by CIRM -- if that is legally possible. CIRM could not, for example, reduce the size of the board on its own.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., praised the commission's staff for its recommendations and generally expressed support.

Two representatives from CIRM attended the meeting, Don Gibbons, chief of communications, and James Harrison, outside counsel to CIRM. They spoke briefly during the meeting but engaged the commission staff outside on the sidewalk in nearly 100-degree heat following the meeting. Klein sent a letter to the commission, the text of which follows in an item below.

During the session, we expressed our concerns to the subcommittee about its secrecy involving draft reports. We also sent a letter to the Little Hoover Commission concerning the practice. The text of that letter follows the Klein letter.

Individuals interested in making comments about CIRM can send them to the Little Hoover Commission at at littlehoover@lhc.ca.gov.

Klein Letter to Little Hoover Commission

Here is the text of the letter sent by CIRM Chairman Robert Klein this week to the Little Hoover Commission.

May 26, 2009
Daniel W. Hancock Chairman, Little Hoover Commission
925 L Street, Suite 805
Sacramento, CA 95814

Dear Chairman Hancock:

We understand that the Little Hoover Commission Subcommittee on the California Institute for Regenerative Medicine (“CIRM”) will be meeting tomorrow to consider draft recommendations from its staff. Unfortunately, my wife is undergoing treatment for breast cancer, having just completed her third surgery, and my mother passed away this weekend, so I will not be able to attend the meeting, and CIRM’s President, Dr. Alan Trounson, is traveling out of state so he will not be able to share our views with you. After the Commission’s first hearing, Dr. Alan Trounson and I embraced Commissioner Kaye’s sentiments that a collaborative effort, with the Commission and CIRM working together, would be the most productive. I want to assure you that despite the unfortunate timing of tomorrow’s meeting, we remain highly committed to working collaboratively with you on recommendations to improve CIRM’s performance. CIRM has a long history of working with others to find common ground. For example, CIRM has previously acted on suggestions from members of the Legislature, the Bureau of State Audits, the Controller, and members of the public to enhance its efficiency and transparency.

In an effort to promote a dialogue, I have requested, through CIRM staff and through your staff at a CIRM meeting in Los Angeles, the opportunity to meet with members of the Commission to discuss your ideas for improving CIRM’s performance. I believe a discussion of ideas with your board will lead to the best outcome rather than CIRM “staking out” a position. To date, however, no meetings have been scheduled. I also understand that your staff will not share its draft recommendations with CIRM. This, of course, raises a question about how CIRM can participate in this process without seeing the staff’s recommendations.

On behalf of Dr. Trounson and myself, I apologize that we cannot join you tomorrow for the Subcommittee meeting. Again, we strongly believe that a collaborative effort to evaluate proposals will best advance the goal, as expressed by Commissioner Kaye, of identifying recommendations that could be implemented through legislation rather than another ballot measure, and we look forward to working with you to achieve common objectives. I am also committed to taking any recommendations for enhancing CIRM’s effectiveness to CIRM’s full Governing Board for a full discussion. The Board’s diversity spans the spectrum from deans of medical schools to presidents of independent research institutions to patient advocates who are themselves suffering from a chronic disease and to patient advocates who have worked with the federal government to advance this critical research. Finally, the board includes experts who have experience in actually developing and delivering therapies to patients. The rich diversity of the Board can contribute greatly to the development of collaborative recommendations that will benefit CIRM and the citizens of California. I am confident that, by working together, we can ensure that CIRM serves as a model for innovation and effectiveness.

Sincerely, Robert N. Klein Chairman, CIRM’s governing board

Letter from CSCR to Little Hoover Commission

Here is the text of a letter sent by the California Stem Report today to the Little Hoover Commission concerning its refusal to release its staff recommendation reports.

May 28, 2009

To the members of the Little Hoover Commission:

In 2004 California voters overwhelmingly approved (by 83 percent) a change in the state Constitution called the Sunshine Initiative. It established a “broadly construed” guarantee that you and I have a right to know what the government is doing, why it is doing it and how.

Today the Little Hoover Commission, a body devoted to good government, has a chance to pioneer an important aspect of the implementation of the voter's will.

It can do that by publicly releasing the Commission's staff draft reports on the important issues that the Commission examines and which all of California faces.

The issue of staff reports came sharply into focus just yesterday (Wednesday May 27) at a meeting of the Little Hoover Subcommittee looking into the $3 billion California stem cell agency, an extraordinary body unprecedented in state history.

Interested parties, including the stem cell agency, gathered to examine the staff report on the research effort and to make responsible, well-considered comments. Some of the individuals asked for copies of the report in order to inform their thinking. No was the answer. California citizens were told that it is the long-standing tradition of the Little Hoover Commission not to disclose publicly the written staff recommendations. Instead stem cell agency representatives and others were only allowed to hear a rapid-fire oral presentation, necessarily much briefer than what we understand was a 20-plus page document.

However, that practice – a policy of the Little Hoover Commission – flies in the face of the state's Constitution, which now states, as the result of the 2004 change:

“The people have the right of access to information concerning the conduct of the people's business, and, therefore, the meetings of public bodies and the writings of public officials and agencies shall be open to public scrutiny.”

We understand the sensitivities involved in making staff reports public. They are not the work of the Little Hoover Commission until modified and acted on by the full commission. But those concerns pale in the face of the benefits.

Publicly releasing the draft reports will be much fairer for such entities as the California stem cell agency (the California Institute for Regenerative Medicine) and any others that the Little Hoover Commission examines. With the release of the reports, they will have a chance to respond more intelligently to staff comments, critical or otherwise. Factual errors will come to attention earlier. The public will have a better chance to make more thoughtful comments. Indeed, public release of the staff reports will help to generate more public attention on the important issues studied by the Little Hoover Commission and will enhance its credibility and increase its impact. The issues will be more widely aired, building support for the Commission's ultimate recommendations.

California state departments have long used the terminology of “draft” to avoid public release of important documents. Speaking from years of experience with state government and the news business, my conclusion is that the use of such terminology is based mainly on timidity and unnecessary anxiety about the impact of the release of the documents. Doing the public's business will never be a tidy process, nor is winning public support. But withholding information -- and secrecy -- is a sure road to breeding cynicism and virulent suspicion of government, however well-intentioned public officials' actions may be.

I come to these judgments after decades as a California journalist, a longtime editor at The Sacramento Bee (business, special projects) and former UPI reporter in the state Capitol. My comments are also informed by two years as a press aide with former Gov. Jerry Brown. I do not represent the stem cell agency. Indeed, my blog on the agency –- now in its fourth year – has been expunged by the agency from its informational clippings, including other news reports and press releases, distributed at state expense to its board members.

I wish I could be with you today to make this presentation personally but my physician needs to see me on a matter she thinks is important. I have asked Stuart Drown to distribute this letter to you today in hopes of moving forward on implementation of the Sunshine Initiative.

I urge the Commission to release publicly its staff recommendations in a timely fashion. By doing so, the Little Hoover Commission can set an example for the rest of the state and take a first step towards restoring public confidence in government.

Thank you for your consideration.

Sincerely,

David Jensen, Publisher/Editor
California Stem Cell Report
californistemcellreport.blogspot.com
djensen@californiastemcellreport.com

CIRM as a Lobbyist: Mission Creep, Industry Ties and Board Conflicts

The California stem cell agency is once again going to consider its position and lobbying efforts on behalf of industry-supported federal legislation dealing with development of generic biotech therapies.

The topic is expected to be placed on the June agenda of the CIRM board because of a question about whether the board's endorsement of the bill on May 12 complied with the state's open government laws.

On the surface, the matter involves what some might consider a relatively minor legal point. But the endorsement also goes to both CIRM's mission -- whether it should be involved in heavy-duty federal lobbying -- and the agency's ties to the biotech industry and possible financial links involving directors.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., raised the issue of legality of the board endorsement with CIRM's outside counsel, James Harrison of Remcho, Johansen and Purcell of San Leandro, Ca. Simpson has shared his exchange of emails with Harrison with the California Stem Cell Report.

Simpson wrote Harrison on May 14, arguing that the motion to support the federal bill was "improperly passed" and is therefore void.

Simpson said,

"No notice was given that there would be consideration of supporting a particular bill. In fact the consensus at the previous (board) meeting was to develop principles.

"Based on the earlier meeting and the posted agenda, I decided not to attend one of the public sessions in person where I would have been able to comment. Instead I opted to listen to the meting over the Web. It is quite possible some (board) members not in attendance made the same decision."

Harrison responded on May 19,

"As you know, (the) Bagley-Keene (act) requires that a board's agenda include a 'brief general description of an item' to be transacted at the meeting. (Gov. Code,§ 11125.) Furthermore, Government Code section 11130.3 provides that an action is not void for failure to provide notice so long as the agenda was in 'substantial compliance' with Section 11125. The board's agenda for its May 12, 2009, meeting clearly satisfied the requirements of Bagley-Keene. Indeed, it specifically cited HR 1548, the federal legislation that was the subject of the motion. The agenda requirements of Bagley-Keene were not intended to prevent debate from evolving or to hamstring a board from taking action. In this case, the board's agenda was more than sufficient to put the public on notice that the board would consider federal biosimilar legislation. We therefore disagree with your assessment regarding the propriety of the agenda.

"Nevertheless, in order to provide a further opportunity for board member and public comment and to address any new developments, Chairman (Robert) Klein has directed staff to include an item relating to consideration of federal biosimilar legislation (HR 1427 and HR 1548) on the board's June agenda. The board will therefore be free to consider public comment and additional motions relating to this item."

Simpson said he disagreed with Harrison's analysis but appreciated that the matter would be brought up again.

The move to endorse HR 1548 by Rep. Anna Eshoo, D-Palo Alto, dates back to last month. (You can read more here, here and here.)

Supporters of CIRM's endorsement of her bill have argued that it is necessary to protect the biotech industry, which has perennial financial problems, so that it will develop drugs. Opponents have worried about mission creep at the tiny agency, which has a staff of about 39 persons. They have also suggested that CIRM is fooling itself if it thinks it can be a major player in Washington.

One anonymous reader also raised concerns about possible conflicts of interests among board members. In a comment filed on our May 12 item, the reader said "the whole thing stinks." The reader wrote,

"The industry members of the board include at least one self-described former employee of biotech leader, Genentech. Are there stock options? What about former Chiron founder and ex-vice-chair, (Ed) Penhoet, does he have stock options? What about the new CIRM counsel, formerly at Genentech, does she have
options?

"What about the two UCSF members, the UCSF (medical school) dean and Jeff Sheehy, who now answer to a former Genentech executive, UCSF's new
chancellor?...

"The whole thing stinks. Using a position on a state board to direct state funds to lobby for a bill to advance one's own private interests over those of patients ought to be against the law. This smells like Cheney and Halliburton!"

We do not have answers to the reader's questions, but we should note that Sheehy has expressed major reservations about endorsing the bill. Nonetheless, the reader's concerns highlight the conflict-riddled nature of the stem cell agency and the virulent suspicions that the situation can generate. The reader's comments also speak to CIRM's transparency and accountability, which will come under scrutiny this afternoon in Sacramento.

That's when a subcommittee of the state's Little Hoover Commission, the state's good government agency, will consider possible recommendations for changes in the operation of the $3 billion state stem cell research effort.

The Silence of the Scientists

Consumer Watchdog, the Santa Monica, Ca., group that has spent more time and money than any other organization monitoring California stem cell matters, today chastized a trio of major researchers for their failure to speak out on an issue that some contend is holding back not only the science but the industry.

Writing on his organization's blog, John M. Simpson, stem cell project director for the group, discussed the dispute that involves Irv Weissman of Stanford, Fred Gage of the Salk Institute and David Anderson of Caltech and indirectly their institutions.

StemCells Inc. of Palo Alto, Ca., which was founded by the three researchers, is "thwarting noncommercial neural stem cell research" at Children's Hospital of Orange County as part of the company's zealous protection of its patents, Simpson said.

The springboard for Simpson's latest commentary was an article about the matter by Michael Hiltzik in the Los Angeles Times. It pointed out that some experts believe that over-protection of IP is hampering stem cell science and even the high tech industry.

Simpson's piece was headlined "A deafening -- and embarassing -- $ilence" and substituted a "$" for the "S" in silence.

Simpson wrote,

"This is a situation that should have been settled easily in a month, if not a week. After a two-year stalemate the silence is deafening."

The three researchers have not responded to requests for comments from Hiltzik nor from earlier ones from the California Stem Cell Report. We are renewing our queries and have promised the men that we will carry their comments verbatim.

You can read our earlier item on the Hiltzik piece here.

More Bad Link Fixes on the Stem Cell Patent Flap

A couple of other bad links in the patent ruckus item on May 25 have been fixed. Here are the good links to the original piece about the issue and our follow-up item on it.

Fixing Link to LA Times Stem Cell Patent Column

We had a bad link to the Los Angeles Times piece on the patent ruckus in Orange County. Here is the correct link.

Stem Cell Patent Flap Gains Wide Media Exposure

Three of the top names in California stem cell research – not to mention the world – surfaced during the weekend in a piece in the Los Angeles Times about a matter that is at the heart of the field – money.

Michael Hiltzik, a columnist at California's largest newspaper, brought up the scientists in connection with a patent imbroglio in Orange County that reaches into Stanford, the Salk Institute and Caltech via the researchers, who are Irv Weismann, Fred Gage and David Anderson, respectively of the three institutions.

Generally, such disputes put the general public to sleep. But Hiltzik wrote today,

"...(T)he penetration of private investment concerns into what used to be largely academic pastures threatens to hobble, rather than hasten, the march of science. The harvest may be secrecy, delay and the directing of research only toward developments that promise quick financial returns."

The matter pits researcher Philip Schwartz of the Children's Hospital of Orange County against StemCells, Inc., of Palo Alto, Ca., which was founded by Weissman, Gage and Anderson. Schwartz has spent six years providing academic researchers with neural stem cells cultured by a method he helped to invent at Salk, Hiltzik wrote.

But StemCells Inc. has effectively put a halt to Schwartz' distribution. That occurred after the firm wrote a letter to Children's Hospital warning that Schwartz' efforts infringed on its patents in the neural stem cell field and that it wanted to discuss a licensing arrangement.

This all started two years ago, but nothing has been resolved, although little apparent conflict exists between the “core clienteles” of StemCells Inc. and Children's Hospital. Hiltzik said,

"...(I)n the biotech world, where millions or even billions of dollars in profits beckon to those who can assert ownership of important discoveries, good intentions and purely scientific goals don't matter like they used to. Access by basic researchers to the essential building blocks of biomedical advances has been shrinking for years, thanks to a land rush by entrepreneurs wielding patent portfolios."

Hiltzik reported that the conflict between research and business has gone beyond biotech. He noted that Andy Grove, the fabled former CEO of Intel, this month warned of the evil effects of over zealous protection of IP.

The problem has become more serious, however, in stem cell science, according to Gregory Graff, a patent expert at Colorado State University.

According to Hiltzik,

"Graff says this phenomenon is becoming especially pronounced in stem cell science, which is especially dependent on collaboration but is already being cordoned off by commercial entities claiming property rights to essential research. The best solution, he says, may be for academic institutions -- where 45 percent of all stem cell research is performed -- to create collaborative patent pools so they can more freely disseminate information and technology without giving up all their potentially lucrative patent rights."

The issues raised by the Children's Hospital-StemCells, Inc., flap were first publicly reported April 15 by John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca. We carried a follow-up on April 16, noting that Harvard business professor and biotech industry consultant Gary Pisano warned in 2006 about the harmful impact of the "monetization of IP" on the biotech business. Our item triggered a robust exchange of comments that are attached at the end of the piece.

We asked Weissman, Gage and Anderson for comment a couple of times over the last several weeks. They did not respond to our queries. Nor they did respond to Hiltzik.

Little Hoover Hearing on CIRM on Wednesday

Possible recommendations for changes in the operations of the $3 billion California state stem cell agency will be discussed on Wednesday in Sacramento at a meeting of the CIRM subcommittee of the state's Little Hoover Commission.

The nonpartisan commission is California's longstanding good government and efficiency body and has been examining CIRM since last November, including the agency's accountability and transparency. The Little Hoover report is expected to be out this summer.

The session this Wednesday afternoon will provide a preview of its thinking and allow the public to make comments. To read more about its proceedings, click on the label below that says "hoover."

Consumer Watchdog Seeks Alteration of NIH Plan

Citing the “perverse effect” of proposed NIH stem cell research rules, the Consumer Watchdog group today called for changes in the guidelines along the lines recommended by the California stem cell agency and the Interstate Alliance on Stem Cell Research.

John M. Simpson, stem cell project director of the Santa Monica, Ca., group, said that the NIH plan would bar funding of research that had received financial support from the Bush Administration.

In a press release from his organization, Simpson said,

"Most of us were heartened when President Obama lifted Bush Administration restrictions on funding stem cell research, but the perverse effect of these proposed NIH rules is that the limited research scientists were able to conduct under Bush will now be ineligible for federal funding,

"Certainly this is not what President Obama intended and the regulations must be modified."

Simpson also noted that comments can be sent to the NIH online at the following Web site: http://nihoerextra.nih.gov/stem_cells/add.htm

Oceanside Firm Disappointed by NIH hESC Proposal

A California stem cell company has filed a strong critique of the NIH's proposed rules for human embryonic stem cell research.

International Stem Cell Corp. of Oceanside Tuesday said it was “surprised and disappointed” by the draft guidelines.

The company said the government is proposing to fund research that involves the destruction of human embryos while barring funding for research that uses cells from unfertilized eggs (parthenogenetic stem cells). International Stem Cell uses unfertilized eggs.

The firm said in a news release that use of such cells has been approved by CIRM and three independent embryonic stem cell research oversight committees in the United States.

International Stem Cell also said the proposed NIH rules will limit opportunities for U.S. researchers, potentially lead to lost jobs and researcher flight to other countries and create a de-facto monopoly for two organizations that control most of the patents for current embryonic stem cells.

Latest CIRM Comments on NIH hESC Rules

Here is a link to the most recent version of CIRM's comments on the proposed NIH rules on human embryonic stem cell research. Comments to the NIH must be filed by May 26.

CIRM Seeks Changes in NIH hESC Plans

The CIRM board of directors today approved recommendations for changes in proposed NIH rules for research involving human embryonic stem cells.

The action came on a 20-0 vote in a session during which directors were told that 7,000 responses to the rules had been received by the NIH. CIRM Chairman Robert Klein said the responses were running 7 to 1 against.

CIRM supports the NIH plans with some changes. The opposition appears to oppose them outright for religious reasons.

Board members were encouraged to individually call on their constituencies to file comments on behalf of hESC research with the NIH. Philip Pizzo, dean of the Stanford School of Medicine, said he had already done so in his weekly newsletter and emailed a copy of his comments to board staff for wider distribution.

Klein said the agency could not legally ask all its grant recipients in a “mass mailing” to support hESC research, but he said individual board members were free to do whatever they wished.

Geoff Lomax, senior officer for the CIRM Standards Working Group, developed the recommendations following a public hearing and contacts with researchers. He said the suggestions were aimed at avoiding the loss of material that is needed scientifically and already in use.

The document presented to the board will be refined by attorneys and staff before it is sent to the NIH by May 26.

CIRM Backs Biotech Industry Legislation, Aiming for Greater Federal Influence

The California stem cell agency today performed something of a semi-reversal and endorsed industry-supported federal legislation that would set rules for creation of generic biotech drugs.

CIRM’s board of directors last month supported a move to develop a statement of principles on the legislation, declining to ratify a recommendation by its Legislative Subcommittee that it support the industry bill.

However, this morning the board decided to back the industry measure rather than acting on the statement of principles developed by its staff over the last two weeks. The vote was 16-2 with two abstentions.

The consensus was that the industry needed to be encouraged financially to develop therapies, generally following the arguments made at the board meeting April 28-29.

Board member Joan Samuelson of Healdsburg, Ca., a patient advocate representative on the board, today said,

“The overriding concern is getting therapies to patients.”

Board member Oswald Steward, chair and director, Reeve, Irvine Research Center, University of California, Irvine, said, however, the board “should not act like a political action committee.” He said it “should be respected as much as the National Academy of Sciences.”

Jeff Sheehy, another board member and director for communications, UCSF AIDS Research Institute, supported Steward’s position, declaring he had “a lot of problems supporting a particular bill.” He said it would take the board “fairly deeply into the legislative process.”

Several board members, including Chairman Robert Klein, argued that CIRM could not become a player on the legislation without taking a specific stand. A statement of principles was meaningless at this point, they said.

The bill backed by CIRM is HR 1548 by Rep. Anna Eshoo, D-Palo Alto, which is favored by the Biotechnology Industry Organization. The board took no position on a rival bill, HR 1427 by Rep. Henry Waxman, D-Los Angeles, which BIO opposes. The Generic Pharmaceutical Association opposes the Eshoo bill.

Some board members were concerned about irritating Waxman, including Gerald Levey, dean of the UCLA School of Medicine. He said he did not “want to see CIRM caught in a political battle because we have enough of those.”

CIRM Vice Chairman Art Torres, a former state legislator who worked with Waxman, indicated that relations with Waxman would not be a problem as long the board did not directly oppose the Waxman bill.

Torres also indicated that the competing proposals may be wrapped into President Obama’s health initiative, which Waxman would carry.

A subtext of today’s session concerned the extent of CIRM’s role as a lobbyist at the federal level. The statement of principles on the legislation made a strong case for federal activities by CIRM as did Klein. CIRM recently hired a powerful Washington lobbyist, the Podesta Group, on a $240,000, 10-month contract, but the board has never had a full-blown discussion about how far it wants to go in lobbying at the federal level. The state of California has its own lobbyist, who works out of the governor’s office, but few, if any, state agencies engage in major federal lobbying efforts.

To be a significant player on the federal scene requires a hefty effort. Spending on lobbyists (nearly 11,000 in all) totaled $3.3 billion last year, and that figure does not reflect all expenditures made in attempts to influence federal legislation and regulations.

We invite comment on this subject or others. You can comment by clicking on the word "comment" below. Anonymous comments are permitted.

More Info on CIRM Board Webcast

You will need the following conference ID number to log into the Internet audiocast for this morning's meeting of the board of the California stem cell agency: 100945.
The url is http://65.197.1.15/att/confcast

CIRM Debate on Federal Issues Available at Many Locations Throughout California

Federal biotech legislation and proposed NIH rules on hESC research are the topics early Tuesday morning at a meeting of the board of the California stem cell agency that will be accessible at teleconference locations throughout California and on the Internet.

Interactivity will not be available for the Internet audiocast, but will be possible at multiple locations, including San Francisco (4), Los Angeles(2), Sacramento, La Jolla(3), Pleasanton, Berkeley, Elk Grove, Healdsburg, Hillsborouugh, Irvine(2), Stanford and Beverly Hills. Specific addresses where the public can attend can be found on the agenda.

CIRM said that the meeting can be heard on the Internet by using this URL:
http://65.197.1.15/att/confcast

No background material has been posted yet for the meeting, but you can read more about the issues here.

Podesta, CIRM and the Biotech Industry

The federal lobbyist for the California stem cell agency is doing quite well financially so far this year, but the CIRM account represents only a tiny fraction of its business.

During the first quarter of this year, the Podesta Group raked in $5.2 million, up 50 percent from a year ago, according to a story by Kevin Bogardus of The Hill Web site. The Washington, D.C., lobbyist won a $240,000, 10-month contract from CIRM earlier this year. In addition to California's publicly funded stem cell research effort, Podesta counts some major players in the pharmaceutical industry among its clients.

Federal lobbying is a big business. Total spending in 2008 hit $3.27 billion (yes, Billion) in 2008, up from $2.84 billion the previous year, according to Opensecrets.org. But the number of federal lobbyists is down to 10,785 from 15,287 last year.

Podesta accounted for only $16 million of the 2008 total. Most of its clients paid the firm less than $500,000 last year. They include Amgen, $240,000; Amylin, $180,00; Cubist Pharamceuticals, $150,000; Millenium Pharmaceuticals, $200,000; Novartis, $210,00; Reed Elsevier, $690,000; Roche, $240,000; Sereno, $350,000; Sunshine in Government Initiative, $200,000, and the University of Texas Anderson Medical Center, $300,000.

One of the issues currently being lobbied hard in Washington involves the financial future of the biotech industry. Competing legislation is before Congress that would set the rules for creation of generic biotech drugs -- biosimiliars.

It is also an issue on which CIRM is scheduled to take a position on May 12, although the CIRM board has backed away from a stand on specific bills.

J.K. Wall of the Indianapolis Business Journal on March 23 wrote about the lobbying efforts of Eli Lilly on biosimiliars.

Wall wrote:

"Indeed, generic biotech drugs represent a big threat to the large pharmaceutical companies, which increasingly have turned to biotech drugs for growth as their most successful chemical-pill-form medicines cruise toward the end of their patent lives."

Wall continued,

"Trouble is, biotech has become a synonym for exorbitant. For example, Herceptin, a biotech breast cancer treatment introduced 11 years ago by Genentech Inc, costs $40,000 for one year of treatment.

"'Excessive exclusivity means that it will be decades before patients have access to affordable biogeneric medicines,' said Kathleen Jaeger, CEO of the Generic Pharmaceutical Association, in a statement. 'Timely access to affordable biogenerics will save lives and save consumers and state and federal governments billions of dollars.'"

At its board meeting last month, some CIRM directors exhibited considerable discomfort at entering the fray with specific endorsements of competing legislation. Some questioned not only the appropriateness of CIRM taking a position, but whether it could have any significant impact on the legislative process. Mission creep was one complaint.

But the need to "protect" the biotech industry carried the day, and CIRM is scheduled to approve a statement of principles on generic biotech drugs on May 12.

No doubt exists that this is an important issue, affecting the industry and the development of drugs that could potentially ease much misery and suffering.

But one wonders whether California voters, in approving Prop. 71, envisioned hundreds of thousands of taxpayer dollars being spent for lobbying on behalf of any industry.

One also wonders about CIRM's relationship with Podesta and its array of drug industry clients. Which is the dog and which is the tail? Do CIRM's interests become subsumed in the pharmaceutical mix? And how can California taxpayers know for sure? Perhaps they can ask one of Podesta's other clients: The Sunshine in Government Initiative.

CIRM Takes on Federal Chores

The California stem cell agency will be dealing with federal stem cell and biotech matters over the next couple of weeks, including the proposed NIH rules on hESC research.

The agency has created a task force that will meet publicly this Thursday to hear comments on the rules. The panel is preparing a report that will be submitted to the full CIRM board on May 12 with the intent of getting the comments to the NIH later this month.

You can find CIRM's preliminary work on the subject here and our report here. Comments for CIRM can also be submitted via email at info@cirm.ca.gov.

Also on tap for the May 12 board meeting is consideration of a statement of principles dealing with federal legislation on production of biosimiliars, which would be copies of biotech drugs following expiration of their patents.

Teleconference locations are available for the May 12 meeting in San Francisco, Los Angeles(2), Sacramento, La Jolla(2), Pleasanton, Berkeley, Elk Grove, Healdsburg, and Irvine(2). Specific addresses can be found on the agenda.

Five teleconference locations exist for Thursday's meeting: San Francisco Elk Grove, Los Angeles, Healdsburg and Duarte. You find the addresses on the agenda.

Advisory

The California Stem Cell Report will be publishing intermittently over the next couple of weeks. We are back from Mexico for a visit to the Old Country (California) for visits with family and friends, who sometimes get in the way of daily publication of items on stem cell matters. And, no, we did not bring swine flu back with us from Mexico although a herd of wild swine chased us down the street as we ran to catch our plane out of Mazatlan.

Skimpy Coverage of CIRM Board Meeting

News coverage of the meeting of the board of the California stem cell agency was quite light today, focusing entirely on the approval of $68 million in grants.

Here are links to the stories and the few news releases put out by recipients. More publicity handouts are likely to surface over the next few days.

News

Terri Somers, San Diego Union Tribune

San Francisco Business Times

News releases

BioTime

Stanford

UC Irvine

CIRM Approves $68 Million in Grants; Wrestles with Executive Evaluation

LOS ANGELES -- The California stem cell agency today approved $68 million in grants for early translational research and left open the possibility that more might be awarded in June.

CIRM said in a news release,

"The 15 early translational grants approved by the board will go to 13 not-for-profit and two for-profit organizations. These grants are intended to either lead to a drug candidate for an unmet medical need or address a bottleneck in the development of new therapies."

CIRM President Alan Trounson was quoted as saying,

“With these early translational grants CIRM has taken the first step in funding translational research that will be critical for the development of future therapies.”

CIRM has talked about the importance of making grants to business. In this round, Novocell of San Diego, received $5.4 million and BioTime of Alameda, Ca., received $4.7 million. You can see a complete list of the approved applicants here.

Twelve additional grants had been recommended for funding by reviewers – if funds were available. But the board decided to put off a decision on those until June in hopes that CIRM will have an improved financial situation.

The board took no action on four letters from applicants seeking to reverse negative decisions by reviewers, but it rejected all applications ranked in the bottom tier. You can find the text of the petitions via the meeting agenda.

The board additionally approved $200,000 to co-sponsor the annual convention of the International Society for Stem Cell Research in San Francisco during the summer of 2010. John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., supported the move although he was critical when the subject was first broached last December with a $400,000 price tag. Simpson praised as thorough the CIRM staff justification for the expenditure.

In other business, CIRM directors approved an evaluation process for the CIRM chair, vice chairs and president – the first such in the four-year history of the organization. The plan stirred debate concerning the composition and chairmanship of a new Evaluation Subcommittee of directors.

Some directors objected to permitting the Evaluation Subcommittee, which includes three of the four persons to be evaluated, decide who chairs the panel. Board member Jeff Sheehy, director for communications at the AIDS Research Institute at UC San Francisco, moved to designate the chair and vice chair of the Governance Subcommittee to fill the same positions on the Evaluation Subcommittee. Sherry Lansing, a UC regent and former movie studio CEO, and Claire Pomeroy, dean of the UC Davis School of Medicine, are chair and vice chair of the governance panel. They were key to working out the evaluation process.

Sheehy said it was not appropriate for the people being evaluated to have a voice in picking the chair of the Evaluation Subcommittee.

Klein, who will sit on the Evaluation Subcommittee, opposed Sheehy's motion although he indicated he was willing to permit the full board to select the heads of the evaluation panel. Sheehy's motion failed on a vote of 5-15 with four self-recusals and two abstentions.

Directors Robert Azziz, chairman of the department of obstetrics and gynecology at Cedars of Sinai in Los Angeles, and Carmen Puliafito, dean of the USC School of Medicine, expressed concern about the composition of the committee. Azziz said he wanted to avoid the perception of a conflict of interest. Puliafito said that the membership could give the appearance of "self-dealing."

The process was finally approved on an 18-5 vote with one self-recusal and two abstentions.

The board will make a decision on the chairs at a later date.

Here is the structure of the subcommittee as presented during today's board meeting. It will include:

• The chair and vice chairs of the Governance(Sherry Lansing), Finance (Michael Goldberg) and Legislative(CIRM Chairman Robert Klein) directors subcommittees.
• The chairs of the IP Task Force(Ed Penhoet) and the Biotech Loan Task Force (Duane Roth, who is also vice chair of the CIRM board of directors).
• The vice chairs or acting vice chair or co-chair where applicable of the Grants(Joan Samuelson or Sheehy), Standards (Lansing), Facilities (David Serrano Sewell) working groups.
• Two members appointed by the board but not yet named.
• The chair (Klein) and vice chairs (Roth and Art Torres)of the board except when they are the subject of an evaluation.

CIRM Debates Federal Legislation; $60 Million Grant Approvals Scheduled for Today

LOS ANGELES -- The board of the California stem cell agency last night backed away from endorsing industry-supported federal legislation dealing with biosimiliars, which would be copies of original biotechnological drugs following expiration of patent protection.

The board did not go along with its Legislative Subcommittee recommendation to support HR 1548 by Rep. Anna Eshoo, D-Palo Alto, which is favored by the Biotechnology Industry Organization. The subcommittee took no position on a rival bill, HR 1427 by Rep. Henry Waxman, D-Los Angeles, which BIO opposes.

Instead of endorsing the Eshoo measure, the board voted to seek development of a statement of principles that it would like to see in any such legislation. That statement could come up before the full board during a telephonic meeting May 12.

Robert Price, who sits on the board as an alternate for UC Berkeley Chancellor Robert Birgeneau, questioned the value of CIRM taking any position at all on the legislation.

Price, who is associate vice chancellor for research at UC Berkeley, asked,

"Do we really matter that much? I think we don't. Let's not engage in hubris here."

A number of other members of the board spoke both on behalf of the legislation and the need to protect businesses that put up the cash to develop new drugs.

Board member Ed Penhoet, former president of Chiron and a member of the National Academcy Sciences Board on Science, Technoloogy and Economic Policy, said the two pieces of legislation deal with the balance between the cost of therapies and the cost of innovation. He said it was "the most important issue in health care today."

Board member Sherry Lansing, the former head of a Hollywood film studio and a University of California regent, said,

"There will be no drugs unless we protect the people who take the risk."

As for the argument over high costs denying access to drugs, CIRM Vice Chairman Art Torres, former chairman of the California state Democratic Party, said,

"You can't have accessibility unless you have something to access."

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., characterized the push for CIRM to become a player in Congress as a "little bit of mission creep."

In other business, CIRM communications chief Don Gibbons previewed the agency's new website, which he said should be up in a few days. He said it was designed to offer more information that will be better organized and accessible.

CIRM officials also officially confirmed for board members the news on the California Stem Cell Report that the agency's financial woes are over for some time. The agency will receive $505 million from the recent state bond sale. However, cash will get tight again by the end of 2010 unless CIRM raises more funds through the sale of state bonds.

In light of the good financial news, the board indicated that it wanted to reconsider its one-year delay in a training grant program. That topic is expected to come up in June. Additionally put off was an update on CIRM grantee progress report monitoring. Earlier a CIRM official had said said grants would be pulled because of a lack of progress, but he did not say when that would be announced.

Also on the board agenda last night were applications for $60 million in grants, including four petitions to overturn negative recommendations from reviewers. However, that was put off until this morning along with a request for $200,000 to co-sponsor the annual convention of the International Society for Stem Cell Research.

Another item scheduled to be acted on today is the performance evaluation process for the Chairman Robert Klein, President Alan Trounson and Vice Chairs Torres and Duane Roth. It is the first time the CIRM board has officially promulgated publicly an evaluation procedure for the positions. But until recently the chair and vice chairs did not receive compensation. Roth has declined a salary, but Torres is receiving one.

This morning's meeting can be heard via the Internet. Details for the Web access are here. Teleconference locations for listening and participating are available in Sacramento, Pleasanton and at Stanford. Specific addresses can be found here.

Controller Calls for Online Posting of Financial Holdings of CIRM Officials

California's top fiscal officer wants to see posted on the Internet the statements of economic interests and travel and other expense forms of the top officials of the state's $3 billion stem cell agency.

Controller John Chiang, who chairs the committee that oversees CIRM's financial practices, will soon call a meeting of the panel to discuss how to implement the postings.

Chiang's plan would cover the 29-member CIRM board of directors, its executive staff and the members of the financial practices panel, which is officially called the Citizens Financial Accountability and Oversight Committee (CFAOC).

Chiang's move follows the lead of Gov. Arnold Schwarzenegger, who posts his top staff's economic interest statements and expenses on the Web. On April 2, we wrote about governor's postings and recommended the practice as something to be emulated by CIRM.

Internet publication of CIRM's information came up April 14 at a meeting of the CFAOC. Ruth Holton-Hodson, deputy controller for health and consumer policy, was filling for Chiang, who was ill.

According to the transcript, she said,

"The public is naturally very concerned about transparency, especially in these times when it comes to spending public dollars and potential conflicts of interest that might arise."

She noted that Chiang will be offering online the financial information for himself and his staff.

Posting the information serves the public well. But it is also healthy for CIRM, an agency that is riddled with built-in conflicts of interest, perhaps more so than any other state department.

The CIRM board of directors is dominated by folks from the institutions that have been the chief beneficiaries of CIRM´s largess. As of last October, 18 institutions with representatives on the board (past and present) had received $552 million in CIRM grants. More has been awarded since then. This week the CIRM board is expected to approve an additional $60 million in grants, most of which is likely to go to institutions connected to board members. Board members cannot vote on grants to their institutions, but the entire board sets the rules under which the grants are made and establishes the priorities for spending the billions of dollars.

Hallye Jordan, spokeswoman for Chiang, said a date has not yet been set for the meeting of the CFAOC to discuss implementing postings by CIRM. The subject will be the only item on the agenda.

Public CIRM Hearing Next Week on NIH hESC Rules

If you are interested in the proposed NIH regulations for hESC research and California's reaction to them, put a May 7 meeting of the California stem cell agency on your calendar.

Not long after the CIRM directors Legislative Subcommittee Monday approved creation of a task force on the subject, a meeting with teleconference locations in San Francisco, Elk Grove, Los Angeles, Healdsburg and Duarte was scheduled for next week. Specific addresses can be found on the agenda.

Comments on the proposed rules must be submitted by May 24 to the NIH. You can read more on what CIRM has done so far here, but keep in mind that this is very much a work in progress.

California's Stem Cell Education Bill Comes Before CIRM and Senate on Wednesday

The board of directors of the California stem cell agency on Wednesday will discuss newly strengthened legislation to push stem cell research training and education into California public schools.

The bill, SB 471 by Sen. Gloria Romero, D-East Los Angeles, and Senate President Pro Tem Darrell Steinberg, D-Sacramento, will now require state schools to establish and promote as a state priority a stem cell and biotech education program. Previously the legislation said such an effort "should" occur.

The bill is now dubbed the "California Stem Cell and Biotechnology Education and Workforce Development Act of 2009." It is supported by the BIOCOM industry group and opposed by the California Catholic Conference. CIRM has not yet officially taken a position on the measure, but has been working with the measure's authors.

The measure was added Monday afternoon to the board's agenda for its meeting that begins today in Los Angeles. Remote, interactive teleconference locations for the meeting are available in Sacramento, Pleasanton and at Stanford. Specific sites can be found on the board's agenda.

The bill is now before the Senate Education Committee, where it is certain to be approved on Wednesday. The legislation is likely to move easily through the Senate because the top Senate leader, Steinberg, is one of the authors.

Here is a link to the legislative staff analysis of the measure.

Public Can Participate in CIRM Board Meetings at Stanford, Sacramento and Pleasanton

For those of you unable to be personally present at the Tuesday and Wednesday meetings of the board of the $3 billion California stem cell agency, you can hear and participate in the proceedings from remote locations in Sacramento, Pleasanton and at Stanford.

The specific locations can be found on the agenda for the meetings. The remote access is being provided for the convenience of board members whose schedules make it difficult for them to attend the meetings in Los Angeles.

The practice began a few months ago to help avoid the problem of mustering the super-quorum needed for the CIRM board to officially do its business.

Also available is an Internet audiocast of the proceedings – one-way only. No participation is permitted via the audiocast. You can find details of how to gain access to the audiocast here.

For your planning purposes, the Tuesday session usually is devoted mainly to grant reviews, although Chairman Robert Klein is likely to discuss CIRM finances. Other business may come up as well.

CIRM's Initial Assessment on NIH hESC Rules; Task Force to Develop More Analysis

A key group of directors of the California stem cell agency this morning moved to create a task force to study and comment on the proposed NIH rules for human embryonic stem cell research.

The Legislative Subcommittee of the CIRM board of directors voted 7-0 to proceed with the work on the NIH rules, which have drawn fire from scientists in California. The action now goes to the full board for expected approval at its meeting Tuesday and Wednesday in Los Angeles.

CIRM plans to consult with institutions, scientists, the public and others in developing an analysis and recommendations on the NIH rules by May 24. Meetings of the task force are expected to be conducted in public. The CIRM board will hold a telephonic, public meeting on the final CIRM document, according to CIRM Chairman Robert Klein.

CIRM will also work with the Interstate Alliance on Stem Cell Research in developing its proposal. The alliance previously scheduled a May 5 meeting in Washington, D.C., which could provide a venue for exploration of the issues, said Geoff Lomax, senior officer for medical and ethical standards.

Following the 7:30 a.m. meeting today, CIRM posted background material and other information on the issues on its website. They include a comparison between the NIH guidelines and CIRM regulations and an intial assessment of the impact of the NIH proposal.

Among other things, CIRM's first-cut at the rules said,

"Our conclusion from this preliminary analysis is that the consent protocol for some lines does not include all items identified by NIH in its eligibility criteria, suggesting some scientifically significant lines may not qualify. All lines evaluated were derived from balstocysts created for reproductive purposes but no longer required for family planning."

"The draft policy sets ' high bar' for consent and disclosure. There are concerns that established cell lines may not meet the proposed standard. Substantial foundational research has been performed utilizing established lines. NIH should consider a 'grandfathering' clause or other mechanism that enables continued use of established lines. NIH should give consideration to whether a particular line was derived in accordance with consensus guidelines or the legal requirements at the time of consent or derivation."

"Further, experience suggests there may be uncertainty to whether specific cell lines conform to every requirement of the draft guidelines. This uncertainty may result in qualifying lines not being utilized. There was broad consensus that a registry of compliant lines would be the most efficient method for identifying lines and ensuring promising research materials are not unnecessarily disqualified."

"For grantee institutions the promulgation of NIH guidelines raises question related to the implementation of grants where a mix of funding is involved. For example, one institution identified the case where research involves a comparative analysis of multiple hESC lines. It is conceivable that such a study could involve lines not recognized or approved by every funding source. Harmonization of rules, to the extent allowed by law, would be desirable from this grantees perspective."

CIRM said,

"As the largest funder of human embryonic stem cell research in the world, CIRM has an interest in ensuring that the NIH rules are consistent with CIRM’s medical and ethical standards, which were modeled upon guidelines adopted by the National Academies of Science, and with the best interests of science and patients."

The NIH announced its proposed new rules only 10 days ago. CIRM completed its preliminary analysis last Friday. However, the actually posting of documents relies on a state department that does not work during the weekend.

The Legislative Subcommittee also voted to support 6-0 with one abstention (Jeff Sheehy) a federal bill dealing with biosimiliars, which are copies of the original biotechnological drugs following the expiration of patent protection.

The panel backed HR 1548, by Rep. Anna Eshoo, D-Palo Alto, which is also supported by the Biotechnology Industry Organization. The industry group opposes a rival bill, HR 1427 by Rep. Henry Waxman, D-Los Angeles. The subcommittee did not take a position on Waxman's bill.

CIRM Panel to Debate NIH Rules This Morning

The San Francisco Chronicle this morning carried a stout defense of the NIH's proposed rules for human embryonic stem cell research just hours before the California stem cell agency is scheduled to debate the proposal.

The proposed regulations, opposed by some scientists in California, were endorsed Jesse Reynolds of the Center for Genetics and Society of Oakland, Ca., in an op-ed piece in the Chronicle.

Reynolds said the proposals were thoughtful and the "right thing to do."

He said that that barring federal funds for cloning-based stem cell research would help to prevent creation of a technical foundation for reproductive cloning, which "continues to tempt rogue scientists."

The CIRM directors Legislative Subcommittee is scheduled to take up the NIH proposal at 7:30 a.m. PDT today. The agency has only posted a cryptic agenda item on the subject and has not offered to the public any analysis of the regulations or a rationale for why CIRM should take a position on the federal plan.

We will have coverage of the meeting later today.

CIRM Reassures Grantees on Their Cash

Late Friday, the California stem cell agency sent the following email to CIRM grantees:

"We at CIRM headquarters want to send you some reassuring news regarding CIRM’s finances and our plans to continue a full and robust research portfolio. This week the California State Treasurer successfully sold $6.85 billion in bonds, more than twice the amount originally sought by the treasurer. This vote of confidence by the investor community is good news for CIRM, our grantees and all the patients in California and elsewhere we seek to serve.

"Robert Klein, chair of the CIRM governing board, thanked the State Department of Finance and the State Treasurer’s Office for their tremendous efforts. He indicated that the estimated $275 million in additional funds expected for the agency raises the funds available for grants and facilities to some $400 million and this will cover all commitments, existing and expected, for the next 18 months."

More on the $505 Million for CIRM

The San Francisco Weekly, which produced a thorough overview of CIRM earlier this month, today picked up our report on the $505 million cash infusion that is expected to bail out the California stem cell agency.

Peter Jamison wrote,

"CIRM spokesman Don Gibbons said he could not confirm (David) Jensen's figures, because the agency has received nothing in writing from the state treasurer. However, Gibbons said CIRM 'has indications' that the report is accurate and hopes to make a definitive announcement at a board meeting next week in Los Angeles. Jensen quoted Robert Feyer, bond counsel to the treasurer's office, as confirming that $505 million was set aside for CIRM and would be available next Tuesday."