CIRM President to Gain More Clout in Competition for Millions in Grants

The California stem cell agency is moving to strengthen the hand of its president in the review of applications for hundreds of millions of dollars in grants.

The proposal comes before the agency's Grants Working Group tomorrow morning at a two-day meeting in San Francisco to consider applications for its ambitious $210 million disease team program, the largest single research grant round in CIRM history.

The grants group makes the de facto decisions on CIRM grants, which will total about $1 billion by the end of this year.

The group operates behind closed doors for review of applications, but the move to alter CIRM's review process will be considered and voted on in public.

According to a staff memo, the new procedures would allow CIRM President Alan Trounson to pick “acting” chairs to head each grant review session. The selection would be made from either regular or alternate members of the grants group.

It was not clear what responsibilities would remain in the hands of the existing chair position. The exact language of the proposed changes in the group's bylaws was not available on the CIRM Web site at the time of this writing.

Currently the grants review chairman is appointed by the CIRM board of directors and has sole authority to preside over scientific evaluation of grants. The position of chairman has been vacant since last November.

The CIRM staff memo said changes are called for because the $3 billion agency is broadening its research to include translational, preclinical and clinical trial programs.

CIRM said,

“Consequently, there is an important need to have chairs of CIRM review panels with the expertise and seniority that is complementary to the type of RFA being considered.”

The agency also said it is impractical to have one person lead the five to seven review meetings in San Francisco each year. CIRM said similar NIH review groups rarely meet more than twice a year.

The proposal follows CIRM board approval of changes last month in compensation for review group members that could provide perhaps $4,500 or so per grant round per scientist, depending on payment decisions by CIRM staff.

(Editor's note: Based on inaccurate information on the CIRM Web site, an earlier version of this item incorrectly stated that Stuart Orkin was chairman of the Grants Working Group. Orkin says he resigned as chairman last November and is no longer on the panel. At the time of this posting, CIRM said that the position remains vacant and has been filled over the last 10 months by others on an "acting" basis. CIRM has also corrected the information on its Web site.

(The earlier item also incorrectly stated that Trounson would appoint the administrative chair. That responsibility will remain with the CIRM board. )

Shestack's Words Stir Ire in York

One of the directors of the California stem cell agency has become embroiled in a flap about billboards in a small Pennsylvania town better known for making Harleys and animal crackers than for scientific research.

The director is Jonathan Shestack, a nationally known autism patient advocate and Hollywood film producer (Air Force One). The town is York, home to a motorcycle factory and the Stauffer Biscuit Co.

The matter involves a quotation from Shestack, who has been known to speak his mind at CIRM board meetings. In this case, Shestack's 16 words were emblazoned in yellow on a billboard on Route 30. He said,

"If 1 in 150 American children were kidnapped we'd have a national emergency. We do. Autism."

Jeff Frantz of the York Daily Record wrote,

"The Autism Self Advocacy Network and several autism bloggers from around the country objected to the billboard, saying the quote equated an autism diagnosis with a lifetime prison sentence. "

Frantz also reported,

"'You know what, I stand by it all,' Shestack said. 'It is a phrase to grab people by the throat.'

“Those objectors are often people with high-functioning autism, he said. They ignore half of those with autism like his son, who will never learn to speak and will always need help with basic tasks.

"'I think the people who object are small-minded, not generous and only see the world through their own experience,' Shestack said.”

We agree with Shestack.

But the Autism York group, which put the billboard, is not buying Shestack's view and is taking the sign down.

Research VP Slot Posted at California Stem Cell Agency

The California stem cell agency has posted its opening for the newly created position of vice president, research and development, with a salary range that tops out at $332,000 annually.

The person who fills the slot is likely to be the key staff person as CIRM moves more closely to the biotech industry as the agency speeds its drive to produce something that can be used to treat patients.

Here is part of the job description:

“Oversee the preclinical and clinical development phases of CIRM's programs and projects involving not-for-profit and for-profit teams, including assembling and working closely with CIRM advisory committees to provide oversight of these programs and make go/no go recommendations to the President for continuation of CIRM support.

“Works closely with biotechnology, pharmaceutical and investment sectors to enable and enhance the development of clinical applications in CIRM's scientific portfolio.

“Oversees the CIRM research and development program in close collaboration with the Executive Director of Scientific Activities”

Earlier, CIRM President Alan Trounson indicated he was looking for someone with considerable commercial experience, especially related to clinical trials.

Interested parties might also examine the transcript of the CIRM directors meeting Aug. 6, during which Trounson discussed the position.

No deadline was set for applications. The posting said the position will remain open until it is filled.

CIRM Backs Public Option in Health Care Reform

The board of the California stem cell agency has endorsed a public option as part of the national health care insurance reform effort, a move that a backer said would help with affordable access to any stem cell therapies developed with taxpayer funds.

The board took the position last week on a motion by director Jeff Sheehy, a communications manager for UC San Francisco. He sits on the board as a patient advocate. Sheehy said,

"It's a way to keep private insurance companies honest and is essential to holding down costs in insurance."

The action was praised by John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca. In an item on his organization's blog, he said,

“I certainly haven't agreed with everything the ICOC has done, but they sure got this one right. Let's just hope they expend as much effort making this action known in Washington, D.C., as has gone into touting their biotech-friendly, anti-consumer position on biosimilar drug legislation.”

Good Faith, Loopholes and CIRM

SAN FRANCISCO – The $3 billion California stem cell agency says a headline carried last week by the California Stem Cell Report is “damagingly misleading” and would like a correction.

We disagree and will tell you why. But the matter goes beyond a mere eight words. It deals with trust, good faith and more.

The headline in question is: “CIRM Rolls Back Effort to Undercut Affordable Access.”

The subject involves a proposed – but now retracted – major change in CIRM intellectual property regulations. The revision was quietly fast-tracked for what would have been final approval last Thursday by the CIRM board at its two-day meeting here. Fortunately, the loophole was caught the day before the meeting by John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca. He wrote a letter challenging the revision. We published an item on his comments along with the text of his letter. As a result, the proposal was pulled back.

Simpson has been deeply involved in the CIRM proceedings that hammered out the IP rules and their provisions for affordable access. The process took place over several years, and CIRM directors have repeatedly reaffirmed their commitment to affordable access to any taxpayer-financed therapies. Affordability is also part of the promise of Prop. 71, the ballot initiative that created CIRM. Simpson has publicly praised the CIRM IP process for its openness and diligence and has expressed great respect for IP Task Force Chairman Ed Penhoet.

On Wednesday, the day after Simpson discovered the loophole, Chairman Robert Klein called Simpson to tell him that the offending provision was being dropped. Klein also mentioned it to us at the meeting here later that day. But loophole did not come before the full board until late in the meeting the next day.

No one at the session disputed Simpson's conclusion that the change in wording was a “tremendous loophole” that would endanger affordable access and also could prove to be a major benefit to the biotech industry.

Rather CIRM's question concerning our headline involves the intent of changing previously agreed upon language. The matter also involves whether CIRM was honoring its principles by advancing the proposed change in a manner that appeared surreptitious, at the least. The revision was buried in 491 lines of prolix regulatory language that was described on the board's agenda as merely a “consolidation” of previous regulations.

The loophole – which involved only a few words – was also proposed at a time when CIRM is aggressively moving to embrace the biotech industry. According to its strategic plan, it will take a leading role – at taxpayer expense – to lobby nationally to remove barriers facing the industry. All with the good intent, we should add, of speeding cures.

When the proposed revision came up during Thursday's board session, Elona Baum, CIRM's new general counsel who joined the agency in April after 12 years with Genentech, said that questions had been been raised about “sublicensing.” She said, “In the interests of clarity, the language was inserted.”

CIRM directors then formally acted to remove the offending language, which will go out for a 15-day public comment period before becoming official.

Shortly after Baum offered her comments, Don Gibbons, chief communications officer, sent me the following email about the headline in question.

“Having heard this discussion, I would hope you feel it is appropriate to self correct this damagingly misleading headline. It should have been clear this was never CIRM’s intent.”

The CIRM board, which is the ultimate authority at the stem cell agency, is to be commended for removing the loophole. But how and why the language was inserted is a matter in dispute.

Gibbons is paid $190,00 a year to polish CIRM's image. We understand why he does not care for our wording. However, both Simpson and I have been given to understand that the loophole did not result from merely a lack of legal felicity.

We asked Simpson for a comment on Gibbons' opinion concerning the headline. Here is what Simpson said,

“Either the lawyer responsible for the proposed change in the definition didn’t understand its implications, which implies incompetence or the lawyer completely understood, which implies deliberate intent to make substantive policy changes and subvert the process. Neither choice is pleasant, so I’ll simply celebrate the fact that when the ICOC (the CIRM board), particularly the members of the IP Task Force, was made aware of the situation, it was immediately rectified.”

Last Tuesday, we asked Gibbons for a comment on behalf of CIRM concerning the loophole. He never responded. We are asking him if CIRM has any comments on this item. We will carry any response verbatim.

Who Will be the Lucky Eight?

SAN FRANCISCO -- The board of the California stem cell agency today approved a $44 million recruitment effort to lure a handful of “paradigm-shifting” scientists to the Golden State.

The program, which will kick in early next year, was adopted on an 18-2 vote. It was supported overwhelmingly by CIRM directors from institutions that are likely to benefit from the plan, which will provide packages perhaps as large as $4.5 million for possibly eight stellar scientists.

No legal conflicts of interest prevented medical school deans and others from voting on a “concept” proposal that could benefit their universities, research institutions or medical centers, according to CIRM lawyers.

The proposal was modified slightly from the initial plan to remove a limit of four awards per year. Also removed was wording that would have prevented awards to scientists who are more than 10 years past their postdoctoral positions.

In his first comment as a new member of the CIRM board, William Brody, president of Salk, said the program would be a good investment, helping to populate the new labs being built in California with $271 million from CIRM. He agreed with numerous other board members who said the program would lure “franchise players” and “paradigm-shifting” researchers, the type who would “ask the big questions.”

The recruitment effort is also aimed at helping the University of California and other institutions facing financial hardships.

The heart of the two-year proposal -- the cash -- did not generate significant opposition. Questions were raised, however, about the procedures, such as using a telephonic instead of a physical meeting of a special grants review group to act on nominations for the grants.

Earlier we reported that stem cell scuttlebutt has it that Kevin Eggan and Amy Wagers, both of Harvard, are possible targets of the recruitment effort.

CIRM directors did not discuss publicly whether the lavish recruitment effort would sour their relations and collaborations with other states and institutions, some of whose leading figures serve on CIRM committees.

CIRM Directors Approve $16 Million in Basic Research

SAN FRANCISCO -- The California stem cell agency today ratified decisions by its scientific reviewers to approve $16 million for basic biology research, trimming the program back from its original proposed $30 million.

Directors were told that scientific reviewers did not think additional funding was justified, based on the quality of the applications.

CIRM has posted a news release with the names of the 12 recipients. The grants all went to institutions that have representatives on the board of directors. However, none of the directors could vote specifically on the grants to their institutions.

Directors rejected attempts to fund two additional grants – 1298 and 1339 – that were not supported by reviewers.

Geron Travails a Reminder of Height of Stem Cell Hurdles

For those you who haven't seen the latest news on Geron, their latest hiccup -- if that is what it is -- demonstrates the arduous and tedious nature of bringing new stem cell therapies into the market.

Geron's plan to run a modest clinical trial on its spinal cord injury therapy has been suspended – before one person could be enrolled – as the result of FDA action. If it ever gets underway, it would be the first human trial using embryonic stem cells.

The company, which is based in Menlo Park, Ca., gave no reasons nor did the FDA, but one analyst cited possible safety concerns.

Geron has been in existence since 1990. It has never made a profit. It has no commercial products. And it has spent more than $150 million developing its spinal cord therapy, according to Steve Johnson of the San Jose Mercury News.

Geron has benefited from favorable coverage since announcing eight months ago it would start the trial. Adam Feurstein of TheStreet.com has a much more jaundiced view. However, he downplays the safety issue.

CIRM Rolls Back its Effort to Undercut Affordable Access

SAN FRANCISCO – A move that would have undercut efforts to provide affordable access to stem cell therapies financed by California taxpayers has been thwarted.

The effort was dropped after John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., brought it to light.

Simpson reported on his organization's blog tonight that CIRM Chairman Robert Klein telephoned him to say that regulatory language proposed by CIRM that would have created a “tremendous loophole” for biotech companies has been scrubbed.

Klein confirmed that action to the California Stem Cell Report at its meeting here tonight. Simpson and his organization are to be commended for bringing the move to public attention.

More details of what transpired can be found on Simpson's blog.

CIRM Directors Wrestle with Strategy and Ties to Business

The Chinese calendar calls this the year of the ox. At the California stem cell agency, however, this is the year of cozier relationships with the biotech industry.

At a two-day San Francisco meeting that begins tomorrow, the $3 billion state enterprise will re-examine its strategic plan with an eye to strengthening its ties to industry. CIRM's intent is to push taxpayer-financed stem cell therapies into the marketplace and actually treat people – but not necessarily right away. That probably won't happen for 10 to 14 years, according to its plan. Science and regulators are slow.

The plan (here and here) covers a lot of ground, ranging from CIRM's goal of a creating a “stem cell culture” in California to beefing up the management of its burgeoning portfolio of grants, which is expected to hit $1 billion this year.

But the overriding theme is closer ties to industry. A new and highly paid vice president will be handling them. CIRM will lobby increasingly on behalf of industry. The agency will implement an unprecedented, $500 million lending program for the riskiest biotech firms. And it will recruit scientific grant reviewers who understand “what is necessary for commercial success.”

Nothing is wrong with this, in principle. In fact, we think CIRM early on was not aggressive enough in engaging business. Only tiny numbers of industry representatives have appeared at CIRM meetings. Few companies have been successful in winning CIRM grants. And rejected business applicants have complained bitterly about the process.

Business must be firmly engaged with CIRM in order to develop therapies. But the marriage of business and government is fraught with peril. The best of intentions can go awry. They seemed to have done so with proposed creation this week of “a tremendous loophole” in the agency's earlier regulations to ensure affordable access to taxpayer-financed therapies.

John M. Simpson has observed CIRM for several years as the stem cell project director of Consumer Watchdog of Santa Monica, Ca. He and others we talked to have expressed concern about the vagueness of the strategic plan's proposals about industry. In response to a query, he said,

“The strategic plan envisions greater ties with the business community without providing enough specifics of how it all will work. Implicit in the plan seems to be the idea that if businesses are not taking CIRM's money it is a failure on CIRM's part and CIRM needs to loosen its rules.

“This loses sight of the fact that CIRM plays a regulatory role. In fact, if businesses want taxpayer dollars, businesses need to abide by CIRM's well-crafted regulations.

“CIRM seems to be saying we'll keep changing the rules, until you come and play with us. CIRM needs to understand if you go too far down a path of accommodation, the game isn't worth it.”

As part of the plan, another observer says that it would be useful for CIRM to survey activity in California's private sector concerning stem cell research. And, he said, more details are needed on CIRM's role in clinical trials and just exactly how it will help industry in connection with the FDA.

Earlier this year, CIRM's apparent move away from basic research triggered concerns among some scientists. They argued that it is too early to push most research into clinical trials. For example, the agency this year will approve a $210 million disease team grant round, its largest ever single research grant round. CIRM's plan reaffirms a commitment to basic science, but whether that allays fears of critics remains to be seen.

One matter that may trouble many scientists is what may be a reluctance to share information outside of the CIRM research community. The strategic plan discusses sharing “instructive negative research” results within its own community. And it says,

“To manage the flow of information, CIRM is developing and implementing a categorization system and database to store information according to disease relevance, cell types and technologies employed, research results, questions raised and answered and possible next steps.”

In neither of those two examples does CIRM specifically say the information will be shared outside the CIRM community or with the public. That may be an oversight, but it would useful to have some assurance that the information will be publicly accessible.

The latest revision to the strategic plan also presents scientifically justified movement away from its original charter – funding work related almost entirely to hESC research. In fact, the word “embryonic” only appears 20 times in the plan's 37 pages. That may be disappointing to some patient advocates, who may also not be pleased with the 10 to 14 year timetable for therapies.

Simpson additionally identified one objective in the report that he took issue found dubious. He said,

“As a scientific goal CIRM pledges to 'encourage the development of a 'stem cell culture' in California...'

“That makes about as much sense as if NASA said it planned to encourage a rocket science culture in the United States.

“The notion of a 'stem cell culture' becomes even more troublesome when you consider the hype that has been all too common in the field.”

(The strategic plan will be taken up at a two-day meeting of the CIRM board that begins Wednesday in San Francisco. The public can participate in Southern California at a location at the City of Hope in Duarte. A Web audiocast is also available without the possibility of participation. See the agenda for details.)

Consumer Watchdog: Affordable Access to CIRM -Financed Therapies Threatened

The California stem cell agency is proposing a “tremendous loophole” that will allow biotech companies to escape requirements to ensure affordable access to stem cell therapies generated by taxpayer dollars, the Consumer Watchdog group said today.

The group also complained that the regulations are being rushed through a meeting this week of the CIRM board in San Francisco.

The comments were filed by John M. Simpson, stem cell project director of the Santa Monica, Ca., group, who has been deeply involved in the development of CIRM IP regulations. The changes, however, caught him by surprise.

In remarks filed as part of the official regulatory process, he said the proposed alteration in the definition of exclusive licensee is “a substantive change that fundamentally alters the IP regulations.”

Simpson wrote,

“This proposed new definition creates a tremendous loophole that potentially allows companies to escape the IP regulation’s access requirements for products developed with CIRM funds. This was never the intent of the IP task force during its thorough, deliberative process in developing the IP regulations.”

Simpson said,

“It merits a full hearing and thoughtful discussion. Sadly it now appears that there is, for what reason I do not know, an effort to sneak this major change in policy through virtually unnoticed. If that is allowed to happen, it would be truly sad. Developing the IP policies had been one of CIRM’s most inclusive and transparent processes with all stakeholders represented at the table. This change would completely undermine all of those efforts.”

Here is how Simpson described the proposed change:

“The access requirements for products developed by CIRM grantees apply only to grantees, collaborators and exclusive licensees. Under the new proposed definition an entity that purchased a company holding a license would not be obligated to meet the modest access requirements because they would not have received the 'license directly from a Grantee, Grantee Personnel, or Collaborator.' Presumably a licensee could also assign rights to another entity and that entity would not be held to the access requirements, again because it would not have received the 'license directly from a Grantee, Grantee Personnel, or Collaborator.'”

Simpson asked that the proposed changes be referred back to the CIRM IP Task Force before they are acted on by the full board.

We have asked CIRM if it has any comments on Simpson's letter. We will carry the full text of the agency's comments if it responds.

You can read the full text of Simpson's remarks below.

Text of Consumer Watchdog's Therapy Access Letter

Here is the full text of the letter by John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., concerning the loophole proposed in CIRM IP regulations. His letter was filed today as part of the official regulatory process.

Re: Comment on “Proposed IP Regulations: Third Round”
Dear Sir or Madam,
I am writing to protest the proposed change in the definition of Exclusive Licensee contained in the third iteration of proposed IP regulations. The proposed definition,

§ 100601. Intellectual Property Regulations
- Definitions. (k), now reads:
Exclusive Licensee. Any individual or entity receiving by license directly from a Grantee, Grantee Personnel, or Collaborator all rights to make, use, sell, offer for sale and/or import in one or more fields of use or territories a CIRM-Funded Technology or a CIRM-Funded Invention.

In the earlier second iteration the comparable definition, § 100601. Intellectual Property Regulations -
Definitions. (j), read:
Exclusive Licensee. Any individual or entity receiving all rights to make, use, sell, offer for sale and/or import in one or more fields of use or territories a CIRM-Funded Technology or a CIRM-Funded Invention, whether by assignment, license, or other mechanism.

The access requirements for products developed by CIRM grantees apply only to grantees, collaborators and exclusive licensees. Under the new proposed definition an entity that purchased a company holding a license would not be obligated to meet the modest access requirements because they would not have received the “license directly from a Grantee, Grantee Personnel, or Collaborator.” Presumably a licensee could also assign rights to another entity and that entity would not be held to the access requirements, again because it would not have received the “license directly from a Grantee, Grantee Personnel, or Collaborator.”

This proposed new definition creates a tremendous loophole that potentially allows companies to escape the IP regulation’s access requirements for products developed with CIRM funds. This was never the intent of the IP task force during its thorough, deliberative process in developing the IP regulations. I cannot understand why this language has been proposed.

Could you please provide me with the written record of the public comments made on Round Two of the proposed regulations that prompted this change, which subverts the original intent of the IP regulations?

For the record, I note that the public comment period on these regulations closes at 5 pm Aug. 18, the day before the August ICOC meeting where they are already on the agenda for consideration. I am hard pressed to understand how such scheduling provides adequate time for staff to analyze any comments and provide meaningful commentary so that the board can consider the proposed regulations in a thoughtful way.

I urge you to refer these proposed regulations to the IP Task Force for discussion and thorough consideration before they come before the full ICOC. The Task Force has not met since November of 2008. Most of us who have been deeply involved in the here-to-fore exemplary public process that developed the IP regulations were under the impression that the consolidation effort was largely a technical exercise.

However, this proposed definition of Exclusive Licensee is a substantive change that fundamentally alters the IP regulations. It merits a full hearing and thoughtful discussion. Sadly it now appears that there is, for what reason I do not know, an effort to sneak this major change in policy through virtually unnoticed. If that is allowed to happen, it would be truly sad. Developing the IP policies had been one of CIRM’s most inclusive and transparent processes with all stakeholders represented at the table. This change would completely undermine all of those efforts.

Stem Cell Star Search: Recruitment, Money and Conflicts

The California stem cell agency's proposed $44 million recruitment plan seems certain to draw some of the shining lights of the stem cell world to the Golden State, but it also opens a door on the high stakes bidding for research stars.

The proposal additionally shines a light on the built-in conflicts of interest on the 29-member CIRM board. At least 12 members of the board have positions at institutions that stand to benefit from the recruitment plan.

In response to a query, James Harrison, outside counsel to CIRM, said all will be allowed to vote this week on the proposal. However, they will not be able to vote next year on specific recruitment grants if their institution applies for a recruitment grant.

The CIRM recruitment packages could run to $4.5 million for six years for perhaps eight scientists, according an example provided by CIRM, but could be less or more. That does not include contributions from the recruiting institutions themselves.

Among other things, CIRM would provide up to $186,000 a year for salaries, $1 million for lab renovations and equipment (with an equal amount from the institutions) and $300,000 annually for lab operations, not including indirect costs.

To your average Californian, the amounts might seem quite generous. But according to one well-informed observer, they are not excessive although they could be construed as “lavish” for public institutions.

To help put the plan in perspective, we queried some folks in the field.

Ann Keissling, who serves on the CIRM research standards group and is director of the Bedford Stem Cell Research Foundation in Massachusetts, said,

“After a brief review, this looks like an excellent plan. The approximately $4 million for a six-year commitment to a good mid-career investigator is appropriate, and will give California institutions with less robust stem cell departments the chance to bring themselves up to a par with other institutions.

“Over reliance on NIH-funding is weakening U. S. science for a number of reasons and those institutions with the greatest NIH-dependency will be forced to develop alternatives. This might be an excellent opportunity for good science to go forward rapidly that might languish waiting for federal funding. This would not only be a boon for California, but for U. S. biomedical science in general. A win for everyone in the long run.”

Dennis Clegg, who runs the stem cell program at UC Santa Barbara, said,

“Since many places have a hiring freeze, including UCSB, CIRM help in recruiting is very welcome. More support would have greater impact, but CIRM has to weigh its various priorities.”

A few years ago, Clegg recruited Jamie Thompson to the campus as an adjunct professor, putting together a $1 million package for him.

One California researcher, however, said anonymously that the size of the CIRM proposal seems to go beyond the current packages being offered or in place. The scientist also expressed concern about fairness towards researchers already in California.

“We should be giving those young researchers who we have been nurturing with CIRM money a chance to blossom rather than bringing in some of those half-tamed Harvard boys.”

CIRM said the program is modeled after the “early career” awards from the Howard Hughes Medical Institute. The Hughes program is monetarily more modest, sprinkling only $4 million among 11 researchers this year.

One commentator said that the CIRM packages could be aimed at recruiting recipients of Hughes awards or other programs that remove their grants when the recipient leaves the original institution.

In terms of specific individuals, stem cell scuttlebutt has it that UC Berkeley is looking for a star and needs financial assistance because of the California state financial crisis. The names of Kevin Eggan and Amy Wagers, both of Harvard, have been mentioned in that regard. Eaggan has also popped up as a possibility at UC San Francisco as well.

Eggan serves on the CIRM standards group. Wagers is on the CIRM grant review group.

While the program helps academia, biotech businesses will be frozen out . Only academic and research institutions and medical centers will be allowed to nominate candidates. No reason was given by CIRM.

The proposal seems certain to have something of inflationary impact on the field and to trigger bidding wars as rival institutions compete. It could also stimulate upward financial pressure from scientists who might not be considered by institutions as meeting the CIRM criteria of being “highly likely to become world leaders in their fields.” They are naturally going to look at the deals and ask for more for themselves.

But the even the brightest stars are lagging behind others in the university firmament. UC Berkeley, UCLA and Stanford are paying much more handsome salaries in another field, $1.9 million, $1.3 million and $1 million respectively to their football coaches.

New Info on Pay Raises for Grant Reviewers

Don Gibbons, chief communications officer for CIRM, has provided fresh information on the proposed compensation increases for scientific grant reviewers. In a comment on the “Whopping Pay Hike” item, he indicated this evening that the amount is not likely to exceed $4,500 per grant round per scientist. We appreciate that he has brought this new information to our readers' attention. We have also filed a response to his comment. Both can be found via the “recent comments” column to the left or by clicking on “comments” on the original item.

Whopping Pay Hike Proposed for CIRM Grant Reviewers

The California stem cell agency, which constantly stews about recruiting and keeping enough top notch scientists to review its grant applications, is now proposing to pay them $750 a day, which could total as much as $10,000 per reviewer for each grant round.

If the compensation reaches that level, it would be a 500 percent increase in the flat $2,000 that was previously provided.

The pay hike comes before the CIRM board later this week. In a memo, the CIRM staff said it was needed in order for the agency to be “competitive” in securing reviewers, who are usually well-known and respected scientists.

CIRM offered no figures for the overall estimated cost of the increase in what it calls "honorarium." But at $750-a-day, which amounts to $195,000 if it were applied on annual basis, the amount is pay – not honorarium.

We based our cost estimates on information provided in 2007 by Richard Murphy, then interim president of CIRM. Murphy also had served as head of the Salk Institute and as a member of CIRM board.

Murphy told the California Stem Cell Report that when he did grant reviews it took him one to two weeks to review the grants and write them up, including meeting time and travel. Based on that, the proposed pay for reviewers – which covers days of service, not just actual meetings -- could run from $3,750 to $10,000 per grant ground for each reviewer. Of course, the amount depends on how fast a reviewer works and could be less or more.

The number of grant reviewers actually used varies, depending on the need for specialists. However, 13 sit as regular members of the grant review group and many, many more as alternates or ad hoc members.

Murphy spoke to us at a CIRM board meeting during which the compensation was boosted from $500 a day to the flat $2,000. The $500 only applied to meeting days. The compensation does not include travel expenses, which are also reimbursed by CIRM.

As CIRM indicated, retaining skilled reviewers appears to be getting tougher. Lifting of the federal ban on hESC grants would certainly would seem to create more demand from the NIH for scientific reviewers who might also be recruited by CIRM. And the stem field generally is much more active than it was in 2005, when CIRM got started, generating more demand for reviewers. All of those reviewers also have their own personal research projects to attend.

The need for increased CIRM incentives is also likely linked to the absence of a chief scientific officer (CSO) at CIRM. One of the “the most important and least appreciated aspects of the CSO's role has been to personally beg, harangue and plead” with other scientists to serve as reviewers, as one person told us.

The post is now vacant after the resignation of Marie Csete earlier this year. Csete had served as CIRM reviewer and was well-respected and well-known in her field, giving her the heft to bring in reviewers.

It is likely to be some months before her post is filled.

CIRM also cited as justification for the pay increase an increasing future workload as grant rounds become more complex.

Salk CEO Brody Named to CIRM Board

The latest addition to the board that controls California's $3 billion stem cell agency is an electrical engineer and a physician. He was once ranked as the highest paid university president in the United States (Johns Hopkins, 2007, $1.49 million). And in pinch he could fly you – as a pilot – to the headquarters of Novartis in Basel, Switzerland, where he sits on the board of directors of that $53 billion pharmaceutical enterprise.

William R. Brody (see photo) is the man who is coming aboard at CIRM. Last fall he took over as head of the Salk Institute in La Jolla, Ca. And last week, California Lt. Gov. John Garamendi named him to replace Martha Chandler, the executive vice president at Salk, on the CIRM board. Chandler presumably resigned in favor of her boss.

In a news release on Friday, CIRM quoted Garamendi as saying that Brody is one of the nation's leading thinkers in biomedical engineering and healthcare policy. CIRM said he has authored more than 100 medical journal articles and co-founded three medical device companies.

Brody's pedigree also includes stints on the board of directors of a number of companies. In addition to Novartis, he currently sits on the IBM board, including its executive compensation committee, and the board of the Commonweath Fund, a foundation working toward a “high performance health system.”

Brody has spoken out and written on subjects of wider interest than those in scientific journals. In 2005, he deplored “the hodgepodge of local legislation, control and restriction (that) does not recognize the fundamentally porous nature of modern research science.” And he raised the specter of a human embryonic stem cell scientist being arrested in an unfriendly state during a layover there.

Also in 2005, he made a comment which seems to have application to CIRM, which refuses to disclose the financial interests of scientists who make the de facto decisions on hundred of millions of dollars in grants. Brody wrote,

“...(C)onflict-of-interest situations should always require disclosure. Disclosure is a necessary—but not sufficient—condition for supervising conflicts of interest. Additional checks, balances or prohibitions may be required to reach an appropriate risk profile for the behavior, but full disclosure is always the vital first step.”

He had this to say on another occasion.

“In my mind, conflict of interest begins the day a scientist has an idea. Even receiving NIH grant support drives a certain mode of behavior that could conflict the objectivity of that scientist. And licensing the idea to outside interests adds additional conflicts. A surgeon who develops a new clinical procedure will want to pursue the development of that procedure—which means conflict, hopefully positive—even without the involvement of an outside company. If she invents a surgical device that enables the operation and licenses that technology to an outside company, the conflict becomes more apparent, even though the conflict was no less real before any agreement was signed. But it is probably impossible to erect a firewall between the scientist and the supposed source of conflict. I know of few surgeons who would use a device invented by someone else if that colleague, even for reasons of conflict of interest, did not use that device herself. As a venture capitalist once told me, 'No conflict, no interest.'”

The July issue of the Salk Institute's house organ carried a profile on its new CEO in which he said, “The best institutions have to have a ruthless commitment to excellence."

That effort includes, he said, “assembling the money for hefty research start-up packages for new faculty.” That could mean a vote – depending on his view of conflicts of interest – for the $40 million research recruitment plan being offered up later this week at the CIRM board meeting.

The Salk profile also has other interesting tidbits, but does not mention that Brody holds ratings as an airline transport pilot and flight instructor, which in theory could make it possible for him to wing his own way to Basel.

Brody's career is indeed impressive. However, he seems careful to soft-pedal it. As he told then San Diego Union-Tribune reporter Terri Somers in an article last fall,

“I grew up in Stockton. Someone from Stockton can't put on airs.”

Montana Lad Speaks Out on Scientists, Stem Cells and Obama

Nature Reports Stem Cells this week carried an interview with the son of some fur traders and junk dealers on the subject of stem cells.

Among other things, he said most scientists don't know what medicine is and then took on President Obama concerning the new NIH rules on stem cell research.

The comments came from Irv Weissman of Stanford in a Q&A with Monya Baker, editor of Nature Reports Stem Cells. The interview keyed on his role as the new president of the International Society for Stem Cell Research.

Here is the section on scientists and medicine.

Baker: "Why is it so hard to move science into medicine?"

Weissman: "First, most scientists don't know what medicine is. They don't know what whole-body physiology or pathology [is]. So they tend to be, at least at the beginning, unrealistic in their expectations. Second, there are not many people trained to do clinical trials.

"And you have to realize that things don't make it into clinical, commercial therapies without a lot of money."

He spoke about overcoming nontechnical barriers in the stem cell field.

“(G)going from labs to commercial and clinical products, we need to understand how it could be a commercially viable business. Stem cells, unlike drugs or proteins, self-renew and differentiate in a fashion regulated by the body; they regenerate systems for life from a single therapy. If you're going to deliver stem cells for lifetime therapy, the cost of goods and reasonable profit has to be priced with the knowledge it replaces daily therapies like insulin or blood transfusions.

“One of the greatest experiments I know of is being done in California. The California Institute of Regenerative Medicine [CIRM] sent out last year an RFA [request for applications] for disease teams to take stem cells and/or therapies derived from them through preclinical right up to the filing of the first IND [investigational new drug application] with the FDA. That's an area that was formerly funded only by companies. Now universities and other nonprofit institutions need to learn what companies do, including rigorous manufacturing practices [GMP] and FDA-compliant regulatory documents.”

Weissman also answered a question about how he came to be a scientist:

“I was born and brought up in Great Falls, Montana. My father and grandfather were fur traders and junk dealers. I was about to be the first in those generations to get an education. When I was ten years old I read a book called Microbe Hunters, which was about the lives of people like Robert Koch and Louis Pasteur. It was incredibly exciting to me.

“I really looked for a way to do research after that. I should say I was never a straight A student. When I was about 16, I met Ernst Eichwald at the local hospital. Ernst was German, his father was Jewish.

“During the beginnings of WWII Ernst belonged to a student group against the Nazis; somebody in his group was arrested, and without going home he crossed the border. He came to Harvard, he was on faculty there; he came to Utah, was on faculty there for awhile. He got sick of academic politics and decided to run the pathology service at the Montana Deaconess Hospital. Very early he handed me a paper [George Snell's paper on histocompatibility genes] as if I could read it, and I told him that I didn't understand the first word! He spent a whole Saturday with me, and we covered just that one paper.

“I realized that the language of science substitutes Greek and Latin terms for plain English, that it was a way to keep people out of the field. He didn't need to say histocompatibility. He could say "tissue-transplantation compatibility", but I also realized I could understand it. Thanks to the freedom Dr. Eichwald gave me, I began designing my own experiments at 16.”

CIRM Presents 'Groaning Board' of Info for Next Week's Meeting

The California stem cell agency has done a fine job this past week in posting background material for its two-day meeting that begins on Wednesday in San Francisco.

We have been critical of the agency for its past dilatory practices in providing material in time for interested parties to read it and formulate thoughtful responses or suggestions in advance of the board meeting.

However, the agenda for the upcoming meeting is chock-a-block with information for all to chew on. Indeed, nearly all the major items have some sort of information linked to them.

Matters with fresh material include reviewer decisions on applications for $30 million in basic biology grants, a report on outside contracts, proposals for increases in the pay of scientific reviewers and $70 million in new grant programs, a status report on CIRM's massive lab construction round and interim IP rules for its new, $500 million biotech lending program. Other items have older material linked to the agenda items, but at least it's a start.

Still missing is fresh material on the ambitious lending effort and recommendations on which firms should run the program.

Kudos to CIRM staffers for pushing out the information. It serves the agency and the public well.

Research Standards Meeting Scheduled for Mid-September

Speaking of timely information from CIRM, the agency this week posted its agenda for a major meeting Sept. 17-18 dealing with research standards and rules.

CIRM's Scientific and Medical Accountability Standards Working Group will gather in San Francisco to review matters involving both the federal government (NIH and FDA) along with New York state's plan to pay for human eggs for stem cell research.

Also on tap are California matters, including CIRM's MES regulations.

No background material is yet available via the agenda. But the timely posting of the agenda allows interested parties to make travel plans, gather their own material and cogitate.

Participation in CIRM Board Meeting Available in Southern California

Members of the public can rarely participate in meetings of the board of the $3 billion California stem cell agency unless they are physically present at the session, but next week is one of those occasions.

If you are in the Los Angeles area, you will be able to sit in and make comments from the City of Hope in Duarte. There will be a telephonic connection at that complex where CIRM director Michael Friedman will be located. He is CEO of the City of Hope.

The meeting agenda does not have the specific room for the telephonic connection, which you should ascertain in advance. You can do that by phoning Friedman's office, 626-256-4673, or emailing CIRM at info@cirm.ca.gov.

A $100 Million Agenda Next Week for California Stem Cell Directors

The board of the California stem cell agency meets one week from today to give away $30 million for research into basic biology and to authorize a new, $30 million immunology grant round, not to mention the creation of a $40 million effort to lure top scientists to the Golden State.

The 29-member board is also likely to implement the first stage of its ambitious and risky $500 million lending program for the biotech industry and approve delegated underwriters to run the effort.

CIRM directors additionally are scheduled to discuss the latest revision of the strategic plan, which is now available along with a related report on CIRM operations. The draft plan was posted earlier this week in plenty of time to be read and digested by all interested parties. (We will have more later on the update on the strategic plan.)

Several other matters to be considered also now have background material posted on the agenda, a substantial improvement from the days when such information was very late in coming.

The news out of this meeting – if any mainstream news outlets choose to cover it – is likely to be the $30 million given away for basic biology research. That program calls for about 20 grants over a three-year period. Some of the grants are likely to involve Japanese partners, although California funds are to be spent only in this state.

Scientists and others who want to help shape upcoming grant rounds should take special note of the proposed programs for research leadership awards and for stem cell transplantation immunology grants.

The usual procedure is for the board to approve the “concept” for the awards. Then the staff prepares the RFA and posts it. So next week will be the last chance to present to the CIRM board comments on the proposals and any suggestions for changes.

The research leadership award program is aimed at helping to recruit top scientists to California. The proposal says recipients will be researchers “judged to be highly likely to become world leaders in their fields.”

No exact dollar amount was placed on the effort but CIRM presented an example in which eight scientists could possibly see $40 million or so. That would include up to $1 million for lab renovations and equipment, to be matched by the recruiting institution. The six-year program would also provide up to $186,000 per scientist for annual salaries plus benefits and $300,000 a year for lab operations.

Nominations must come from a California university, research institution or medical center.

The program is certain to find strong support from the 12 heads of research institutions, medical school deans, etc., on the CIRM board.

The other proposed grant round provides $30 million for up to 20, three-year grants for research into stem cell transplantation immunology. Japan and the state of Victoria in Australia are funding partners, meaning that teams of researchers from those countries will be competing.

Given the discussion of the two new grant rounds and the strategic plan, persons interested in the future direction of CIRM and future funding initiatives should be on the scene or at least check in on the online audiocast. The audiocast, however, only allows you to hear the proceedings – not take part.

Directions for listening are already available on the agenda. The meeting itself will last two days and take place at the Mission Bay campus of UC San Francisco.

Comment on Verfaillie Post

A thoughtful and informed comment has been posted on the Verfaillie item from Aug. 11. The anonymous poster raises a question about whether she should be allowed to serve as a CIRM grant reviewer and as well as another question about whether CIRM should increase its vigilance on who sees confidential grant information at CIRM. You can read the comment at the end of original item or by finding it in the “recent comments” column just to the left of this post.

CIRM Grant Reviewer Verfaillie Linked to Investigations in Minnesota

A internationally known stem cell researcher who serves as a grant reviewer for the $3 billion California stem cell agency is at the heart of an inquiry at the University of Minnesota concerning the integrity of some of its stem cell research.

The matter involves Catherine Verfaillie (pictured) and New Scientist magazine, which raised concerns about the research. Verfaille is currently listed on the CIRM Web site as one of the scientists who make de facto decisions on research grant applications for hundreds of millions of dollars from the California Institute of Regenerative Medicine.

We queried CIRM two days ago about Verfaillie but the agency has not responded.

The research inquiries at the University of Minnesota involve scientists who worked in Verfaillie's lab or who were affiliated with her. She is now working at Katholieke Universiteit Leuven in Belgium but is still associated with the University of Minnesota. New Scientist once described her as running “one of highest-profile teams in stem-cell biology.”

Here is how Chris Williams of The Associated Press began his story last week on the research investigation,

“The University of Minnesota has launched its third internal investigation in two years into allegations of research misconduct....”

Jeremy Olson of the St. Paul Pioner Press wrote,

“In a familiar pattern, reporters from New Scientist magazine found images in a published study that appeared questionable and alerted U officials.

“The university already has retracted one stem cell study and corrected two others because of concerns raised by New Scientist. Having to launch yet another inquiry is an embarrassment for a university that has been viewed as a global expert in stem cell research....”

Arthur Caplan, director of the Center for Bioethics at the University of Pennsylvania, said that the Minnesota case has implications that go beyond one researcher or institution.

According to reporter Williams,

"'What's unusual here is that you're starting to get other people involved," (Caplan) said. 'It's become a problem of a group, not an individual.'"

Williams continued,

“The Minnesota situation is also unusual, Caplan said, in that its researchers have been getting special scrutiny from New Scientist. He suspects there would be more questions of sloppiness or fraud at other universities if more outsiders were watching.

“There is particular pressure on scientists working in the stem cell field, with its mix of politics, the prestige of breakthroughs and the potential profits from patents.

"'I really can't think of too many areas that are more set up for somebody to cut corners than stem cell work,' he said.”

Peter Aldous and Eugenie Samuel Reich have been investigating the work at the University of Minnesota over several years. Their most recent piece on Aug. 5 said,

“Other stem cell biologists are disturbed that so many problems have been found in papers from a single institution. 'It's pretty discouraging," says Arnold Kriegstein of the University of California, San Francisco. Given the pressure on scientists in such competitive fields, he wonders what might emerge at other research centres if their publications were subjected to similarly close scrutiny.

"'It raises serious issues about how widespread this could be,' he says."

Aldous and Reich's Aug. 5 article has a full rundown on the cases they have investigated.

More Coverage on the New Research VP Position at CIRM

For more on creation of the new VP of research and development at CIRM, see a posting by Monya Baker on The Niche, Nature magazine's stem cell blog.

Among other things, Baker wrote,

“In the last organizational plan, (former chief scientific officer Marie) Csete had reported to (CIRM President Alan) Trounson, and Patricia Olson, director of scientific activities, had reported to Csete. Science officers, who decide what kinds of grant programs will be offered, reported to Olson. Under the new organizational chart, Olson will report directly to President Trounson, as will the vice president of R&D. (The general counsel and the vice president of operations already report to Trounson).”

In a related development, seven executive search firms have responded to CIRM's RFP to help in finding a Csete replacement.

In response to a question from the California Stem Cell Report, Don Gibbons, chief communications officer, said the firms are: Korn/Ferry International, McCormack & Farrow, Levin and Company, Caliber Associates, Russell Reynolds Associates, Spencer Stuart and The A-list.

CIRM paid Spencer Stuart about $500,000 previously for two presidential searches. In neither case did Spencer Stuart produce a candidate who would accept the job.

Also at yesterday's meeting, Trounson left open the possibility that CIRM might have to pay more than $332,000 to fill the position. That is the top of the current salary range at CIRM for the post. Csete earned $310,000. Trounson, however, said yesterday he hopes to fill the position without boosting the salary range.

Support for Public Health Care Option, but "Nyet" to Hoover

SACRAMENTO – The California stem cell agency appears to be on track to reject nearly all of the recommendations for improvements in its operations made by the state's good government agency, the Little Hoover Commission.

Meeting yesterday in a teleconference session, the directors' Legislative Subcommittee concluded its discussion of the Hoover report with a consensus “nyet” to the commission.

The panel earlier last month rejected the most sweeping recommendations, including reducing the size of the board of directors from 29 to 15 and trimming the powers of its chairman. The action was taken based on an opinion from the CIRM's outside counsel that the legislature could not make those changes.

Yesterday, the subcommittee went along (no vote was taken) with the CIRM staff response, which can be found here and here. The panel did agree to poll its scientific grant reviewers on whether they would resign if their statements of economic interests were made public. It also agreed to post vote tallies in the future by the board of directors on grant applications.

Art Torres, chairman of the subcommittee and a former state legislator, will prepare a report on the group's discussion and present it to the full board at its meeting Aug. 19-20 for ratification.

The Legislative Subcommittee, on a 6-3 vote, also expressed support for a public option in the national health care reform legislation. Director Jeff Sheehy, a UC San Francisco communications manager and AIDs activist, and Torres backed the effort.

Sheehy said access to health care and future stem cell therapies is critical to CIRM's mission. Duane Roth, co-vice chairman of the board of directors, opposed the endorsement, citing problems elsewhere in the world with government-run health care plans.

The endorsement will come before the full board at its meeting later this month.

Also meeting yesterday was the full CIRM board, again in a teleconference session, to discuss a proposal by President Alan Trounson connected to finding a replacement for Chief Scientific Officer Marie Csete, who has resigned.

Trounson plans to create a new vice president for research and development to enhance CIRM's engagement with industry. The title and additional responsibilities could also make it more appealing to possible job candidates.

Trounson's proposal does not require board approval but he is obviously taking care to ensure support from the CIRM board.

The plan hit a bump when Claire Pomeroy, dean of the UC Davis School of Medicine, raised questions about reporting ambiguities in Trounson's organizational chart, which seemed to conflict with the reporting lines in the job description dealing with basic science research.

Sherry Lansing, chairperson of the Governance Subcommittee and former head of a Hollywood film studio, indicated that the plan seemed to justify the creation of a third VP. In that case, the executive director of scientific activities would be designated as a vice president.

In other action, the board added Gerald Levey, dean of the UCLA School of Medicine, and Ted Love, a Bay Area biomedical businessman, to the newly created Evaluation Subcommittee. Levey was then elected chairman of the committee and Francisco Prieto, a Sacramento physician, vice chairman.

The full list of committee members can be found here, minus the Levey and Love additions.

For the record, we should note that some of the material for yesterday's two meetings was posted extremely late on the CIRM web site. One memo dealing with the Hoover report was not available at teleconference location in Sacramento, although it may have been posted on the Web at the time of the meeting. The staff's discussion draft of the Hoover report did not appear until the day before the meeting. Likewise for the organizational chart.

CIRM Dwarfed in Biotech Patent Fight

The battle to protect the biotech industry from generic drug makers, a war in which CIRM is a dogface, is going swimmingly, according to an article this week by The Associated Press.

In a piece headlined “The influence game: Biotech drug lobbying war,” Alan Fram wrote that the weapons include “millions of dollars in lobbying, thousands in campaign contributions and uncounted visits to members of Congress. And one noteworthy letter.”

His conclusion?

“The lobbying battle has so far been one-sided. The Senate health committee voted 16-7 for a 12-year (patent) protection period last month, while (Rep. Henry) Waxman's House energy panel voted 47-11 for 12 years of protection last Friday on an amendment by Rep. Anna Eshoo, D-Calif., who has numerous biotech firms in or near her Silicon Valley district.”

CIRM is a decidedly bit player on this stage, given the vast stakes and expenditures involved. The agency has written a letter – NOT the one cited by Fram – after directors, over the last few months, debated whether a state-funded agency should lobby to protect the biotech industry. That letter in turn generated another letter from U.S. Sen. Dianne Feinstein. (Both can be found here.)

CIRM also has hired a Washington lobbying firm, the Podesta Group, an unusual step for a state agency, paying it $240,000 for 10 months work. But Podesta's assignments from CIRM seem to involve more than patent protection.

All of CIRM's efforts are hardly a dribble on the health care reform playing field, where all the action is taking place. The Associated Press article, distributed nationally, spells out how money talks when it comes to locking up intellectual property. Fram described a “huge disparity” in cash. He wrote,

“Representing biotech companies, the Biotechnology Industry Organization has spent $3.7 million lobbying so far this year. Their ally, (the Pharmaceutical Research and Manufacturers of America), has spent $13.1 million — the second most of any group that lobbies in Washington.

“The main group opposing them, the Generic Pharmaceutical Association, has spent $1.1 million lobbying this year. Another group, a coalition of generic drug companies, insurers and large employers, has spent another $180,000, though most of its members — like AARP and the General Motors Corp. — are more focused on the overall (health reform) bill and are devoting few resources to the generic fight.”

Fram continued,

“All that money has let the biotech industry launch a lobbying blitz, with targets including lawmakers from biotech-heavy states like California, Maryland, Massachusetts, New Jersey and North Carolina.

“The biotech organization has brought its CEOs to Washington, and has run print and radio ads in the states of pivotal lawmakers. The pharmaceutical association has helped organize lobbying by universities that conduct biotech research and venture capitalists who invest in such firms, and paid for a Duke University study that concluded biotech firms need 12 to 16 years of protection from generic competitors to break even.”

All of which brings us to a business maxim of Jack Welch, the fabled executive who once led General Electric. He did not mess with enterprises in which GE could not be No. 1 or No. 2. Even today, his Web site says that maxim “stopped the decades-long practice of sprinkling money everywhere.”

The California stem cell agency is not even close to being No. 1 or No. 2 in the biotech patent protection game. That is something for CIRM directors to think about as they consider their priorities later this month when they deal with their strategic plan. Their grant portfolio is just about to hit $1 billion. They have only a tiny staff to oversee those expenditures and to hand out another $2 billion over the next few years. They will soon launch a new $210 million grant round, the largest research round ever for CIRM. And they will enter new, uncharted waters with a risky $500 million biotech lending program. A sharper focus on essentials may be in order.

Sizzling Month for Biotech; More on Patent Protection for Biotech

Good news is surfacing in the biotech industry. One industry watcher on Monday reported that the sector was “hot” during July, but warned that challenges remain including the fate of patent protection for biotech drugs – a matter also of concern to the California stem cell agency.

Burrill & Co., the San Francisco life sciences merchant bank, said the sector was propelled by “drug data, positive drug sales/earnings and partnering and M&A deals.”

But Steven Burrill, CEO of the company bearing his name, also said,

“We don’t yet believe biotech is fully back on track as many companies are still struggling to find the necessary funding to maintain their operations, almost half of US public biotechs have market caps below $100 million and we are seeing companies still consistently turning off their lights for the last time. It is important to remind ourselves that the biotech industry is undergoing a major transition, a process that will likely continue for many months yet.

“This is because we do not know how President Barack Obama’s proposal for health care reform will fully impact the biotechnology industry and the status of biosimiliar legislation (follow-on biologics) is also still unresolved and there are fears that these issues will drive the prices of innovative drugs lower and eat away at biotech company profits.”

CIRM, a taxpayer-funded organization, is lobbying Congress on the biosimilar patent protection legislation. Last month it sent a letter to to U.S. Sen. Diane Feinstein, D-California, backing lengthy, 12 to 14 year patent protection periods, also an industry-supported position.

Without that protection, CIRM said “patient access to this promising technology will de delayed or eliminated and California's biotechnology sector will suffer.” Feinstein sent the letter along to the key Democratic negotiators on the health care reform legislation, urging support of the CIRM position. You can a find copy of both letters here.

A Look Behind a 13-word Matter for CIRM Directors

A bureaucratic yawner – at least that seems to be the appearance of one of the matters before the directors of the $3 billion California stem cell agency on Thursday.

But appearances are sometimes deceptive. And in this case, the issue is freighted with baggage related to the performance of CIRM Chairman Robert Klein and President Alan Trounson. And it goes to touchy matters involving CIRM directors and their oversight of CIRM.

Agenda item No. 3 simply says “consideration of appointment of at-large members and chair and vice-chair for Evaluation Subcommittee.”

The matter comes before the board as it is about to establish – for the first time in nearly five years – a formal evaluation procedure for its chairman and president. The procedure will also include the vice chairmen of the board of directors.

One could make something of a case that formal evaluations were not necessarily called for earlier because until recently Klein had declined a salary. The former vice chairman also refused pay. Now, however, one of the co-vice chairmen and Klein both receive half-time salaries, respectively $75,000 and $150,000.

Director Ricardo Azziz, chairman of the department of obstetrics and gynecology, Cedars-Sinai Hopsital in Los Angeles, put it this way last spring,

“We have been remiss and we are now backtracking to make sure that we have this.”

In late April, CIRM directors created their Evaluation Subcommittee. But they did not settle upon the at-large members or the chair or vice chair of the panel.

The subject triggered a contentious debate during which some directors expressed concerns about public appearances and conflicts of interests because the CIRM vice chairmen and chairman would be serving on the Evaluation Subcommittee, even though they would recused when their performances came up.

According to the transcript, Azziz said,

“There is a potential for the perception of conflict of interest. While I think it is crucial that we obtain feedback from the chair and vice chairs regarding the other members of that group performance, I think that having them as a member of the group raises a significant risk of conflict of interest. And I'm unaware of any other evaluation team, for example, a financial oversight committee, that would include the CFO that is composed similarly.”

Director Carmen Puliafito, dean of the USC medical school, said the committee created a “perception of self-dealing and self-interest.”

Nonetheless the directors approved the structure of the committee, which was presented by Sherry Lansing, chair of the Governance Committee and a former head of a Hollywood film studio. She said Claire Pomeroy, dean of the UC Davis medical school and co-chair of the governance panel, took the lead in coming up with the structure. Lansing indicated that other possibilities were rejected because they appeared to lack support.

Director Jeff Sheehy, a communications manager with UC San Francisco, offered a motion that would have made Lansing and Pomeroy the co-chairs of the Evaluation Subcommittee in addition to their roles on the governance panel.

He said they were most familiar with the evaluation process. But his effort failed after it was opposed by Klein. Initially Klein said the Evaluation Subcommittee should decide who should be the chair, although Klein normally names the chairs of subcommittees. Later, he indicated he would be willing to have the full board select the head of the evaluation panel, setting the stage for this week's meeting.

The session is available to the public at many locations throughout the state. Specific addresses can be found on the agenda.

The Podesta Watch: Public Health Care Option and Loans to College Students

Tony Podesta, the “legendary Democratic fundraiser” who is now CIRM's go-to guy in Washington, made the news during the last few days for roles in connection with the public option in the national health care legislation and aiding Sallie Mae, the nation's largest provider of student loans.

Podesta, who is under a $240,000, 10-month lobbying contract with the California state agency, was mentioned on the nationally broadcast PBS program, Bill Moyer's Journal, on Friday. The program was a scathing look at lobbying efforts by the health insurance industry against the public option in national health care reform legislation. On Thursday, CIRM directors will be asked to endorse the public option.

The guest on the Moyers' program was Wendell Potter, a former health insurance executive who is now an advocate for health care reform.

Here is how the Podesta's name came up, according to the transcript:

Moyers:

"I mean, they (former Congressional staffers) left the government. They go to work for the industry. Now they're back with an insider status. They get an access, right?"

Potter:

“Oh, they do, they do. And these lobbyists' ability to raise money for these folks also is very important as well. Lobbyists, many of the big lobbyists contributed a lot of money themselves. One of the lobbyists for one of the big health insurance company is Heather Podesta, the Podesta Group, and she's married to Tony Podesta, who's a brother of John Podesta.”

Moyers:

“Who used to be the White House chief of staff."

Potter:

“Right. Right. And they're Democrats. And my executives wanted to meet with — and when I say my, the people I used to work for-- “

Moyers:

“At CIGNA.”

Potter:

“Yeah, wanted to meet with Hillary Clinton, when she was still in the Senate and still a candidate for president. Well, that's hard to do. That's hard to pull off, but she did. That just shows you that you can, through the relationships that are formed and that the insurance industry pays for, by hiring these lobbyists, you can your foot in the door. You can get your messages across to these people, in ways that the average American couldn't possibly.”

Danielle Knight, in a special report to the Huffington Post Investigative Fund, mentioned the Podesta Group in a piece headlined, “Lobbying Showdown Over The Future Of Student Loans." The article discussed Sallie Mae's efforts to position itself as the “clear winner” in multibillion dollar fight over the private student loan industry. Knight wrote that in March,

“(S)allie Mae retained the Podesta Group, founded by Tony Podesta, a legendary Democratic fundraiser whose brother headed the Obama transition team. In addition to Podesta himself, the firm, which was paid $110,000 for its work in the first half of the year, assigned at least four of its lobbyists to push Sallie Mae's case on Capitol Hill: Paul Brathwaite, the former executive director of the Congressional Black Caucus and a former Clinton Labor Department official; Israel 'Izzy' Klein, a former aide to Sen. Charles E. Schumer of New York and Rep. Edward J. Markey of Massachusetts, both Democrats; Lauren Maddox, a former assistant secretary for communications and outreach at the Education Department in the Bush administration; and Donni Turner, a former aide to Sen. Richard Durbin of Illinois, Rep. David Scott of Georgia, and former Sen. Max Cleland of Georgia, all of them Democrats.”

Linda Stamato of nj.com also mentioned Podesta in connection with Sallie Mae.

The Meaning of "Further" and a $3 Billion Science Program

Patient advocate Don Reed has pulled together a lengthy piece on a proposed overhaul of the California stem cell agency, concluding that that the $3 billion enterprise does not need to be fixed.

Reed said CIRM is doing “a terrific job.” Writing on his blog, stemcellbattles.com, he said,

“Why should major changes be imposed on such an outstanding program?”

Reed wrote yesterday about the recommendations of the Little Hoover Commission, the state's good government agency, and a meeting earlier this month of the CIRM directors' Legislative Subcommittee.

The heart of Reed's article deals with whether a vote of the people is required on five Hoover recommendations, including trimming the size of the board from 29 to 15 and reducing the powers of the chairman, who has responsibilities that overlap with the president. Both the size of the board and the dual executive situation have created difficulties for CIRM.

Proposition 71, which created the agency nearly five years ago, says the legislature can make changes in CIRM only if they “further” the purposes of the act. Otherwise, a vote of the people is needed to alter the ballot initiative.

That's where the issue hangs. What does further mean? CIRM's lawyers, in an opinion sought by Chairman Robert Klein, have opined that five of the Hoover recommendations require a vote of the people. The Hoover Commission says it is an open question. And as Reed points out in his piece, we told the CIRM Legislative Subcommittee that other, equally capable attorneys could find that the recommendations in question could be legally enacted by state lawmakers.

Reed, an unabashed supporter of CIRM, explores the issue in some detail and notes that it will come before the full board in August. An interim report from the Legislative Subcommittee is scheduled for Thursday of this week.

CIRM Seeks Help in Search for Csete Replacement

The California stem cell agency wants to hire an executive search firm – its third such arrangement in the last four years – to recruit a successor to Marie Csete to lead the organization's scientific research efforts.

CIRM contracted with a search firm, Spencer Stuart, on two different occasions in the past in an effort to find a president for the $3 billion enterprise. Despite spending about $500,000, the searches never turned up a candidate who would accept the job.

In both cases, the two men who ultimately accepted the presidency surfaced by other means.

CIRM's latest effort calls for a timetable of no more than six months to find a vice president for research and development, a new position at the agency. The post would cover the responsibilities of CIRM chief scientific officer, the title that Csete carried.

Alan Trounson, CIRM president, said the new position is aimed at attracting candidates with more commercial research backgrounds.

The RFP said the salary is likely to be $180,000 to $332,000, although it left the door open to going higher. CIRM asked search firms to provide advice on salary levels based on “industry trends and best practices.”

The CIRM board has yet to approve creation of the new vice presidency although the RFP was posted 11 days ago. Bids from search firms must be in by Monday. The board takes up consideration of the new post on Thursday.

Here are links to funding for Spencer Stuart: 2005, 2008.