High Costs of Stem Cell Therapy: Will Stem Cell Firms Share More Risk?

Stem cell therapies are likely to be quite costly because of high development expenses and potentially high usage, according to a new report from the University of California at Berkeley, which said that new “financial risk-sharing mechanisms” could be needed.

“The cost impact of the therapy is likely to be high, because of a therapy’s high cost per patient, and the potentially large number of individuals who might benefit from the therapy. This expense would put additional stress on the Medicare and Medicaid budgets, cause private insurance health premiums to increase, and create an incentive for private plans to avoid covering individuals eligible for a therapy,” the report said.

Entitled “Coverage, Cost-Control Mechanisms, and Financial Risk-Sharing Alternatives of High-Cost Health Care Technologies,” the October 2009 study was prepared for the California stem cell agency at a cost of $15,000 by Richard Scheffler, director of the Petris Center on Health Care at UC Berkeley, Brent Fulton, also of the center, and three other persons. The agency said it did not endorse the report's conclusions.

California lawmakers are currently considering legislation (SB1064) by Sen. Elaine KoutaminasAlquist, D-San Jose, aimed at ensuring the affordability of state-financed stem cell therapies and requiring more openness and transparency at CIRM.

Concerning coverage by private insurance, the report, said,

“Because private plans experience approximately 20 percent annual enrollee turnover, this gives them an incentive to avoid covering an individual eligible for a therapy, not only because of the high cost of the therapy, but also because future healthcare savings might benefit a different insurer. Risk adjustment and reinsurance programs, which compensate an insurer for covering an individual with above-average risk or high health care expenses, or both, could be used to mitigate this incentive.”

The study said,

“The development of new stem cell-based therapies could significantly improve and extend the lives of people with currently incurable medical conditions, such as diabetes, macular degeneration, osteoarthritis, and spinal cord injuries. However, there is concern that these therapies may not be affordable and accessible because of the high research and development costs, coupled with the uncertainty as to whether health plans will cover these therapies. This may result in these therapies not being developed at a rate that corresponds to their economic benefit.”

The final paragraph of the study said,

“To improve the likelihood that new stem cell-based therapies will be covered by health plans, financial risk-sharing mechanisms may need to be formulated. These may include stem-cell firms bearing some financial risk, particularly regarding the uncertainty as to whether the therapies will result in future health care cost savings because of potential to cure diseases and disabilities. Risk-adjustment and reinsurance programs, which compensate an insurer for covering an individual with above-average risk or high expenses, or both, could be used to reduce private insurers’ incentive to avoid covering individuals who might benefit from an expensive therapy. In turn, this will increase the new therapies’ affordability and access, and will help ensure that investors who fund therapy development will be compensated, resulting in a development rate that more closely corresponds to the therapies’ benefits.”

The California Stem Cell Report asked CIRM for a copy of the document, which is a public record. Don Gibbons, communications chief for the agency, said,

“Please note that CIRM commissioned the attached report to provide a background survey regarding reimbursement for medical therapies.  We are providing the report to you for information purposes only.  The report and its recommendations do not reflect the views of CIRM's management or the Board’s leadership. We had intended to post this report at the same time that we post the full economic impact study that is underway, which will be later this spring.”

Here is the report.

  Stem Cell Therapy Costs by DavidJensen

CIRM Moving to Hire VP at More Than $332,000

The California stem cell agency may well have a new vice president of research and development by the end of this month and at a salary exceeding the $332,000 allotted for the position.

CIRM directors will meet one week from today to consider raising the existing pay range for the position. CIRM President Alan Trounson obviously has a candidate that wants more than $332,000, and the board is not likely to reject Trounson's choice. To do so would indicate a lack of confidence in Trounson.

CIRM has not disclosed exactly what the new salary will be or explained why it is needed. Don't look for that information until the day of the meeting and probably only if you are in attendance at one of the telephonic meeting locations around the state. CIRM generally has not posted such sensitive salary information in advance of meetings.

Trounson was eager to find someone with industry experience. Last July, Trounson told directors that he wanted “someone with the skill base to have more of a focus in their role with biotech/pharma – translation – clinical applications, which is where we are moving with our translational, disease teams and clinical grants and where we are thin in capacity.”

Trounson hired Levin and Company at a cost of $100,000 to help with the search.

The new position was created by Trounson after Marie Csete resigned suddenly last June as CIRM's chief scientific officer. She said her advice was not respected. Her position will not be filled, but her responsibilities are being parcelled out to the new VP and Patricia Olson, executive director of scientific activities, who has been with the agency since its early days. Under a new structure announced last August, Olson reports directly to Trounson as will the new VP. Previously Olson reported to the chief scientific officer.

The compensation for the new post was scheduled to come up at the CIRM board meeting earlier this month in the State Capitol. CIRM chairman Robert Klein took the matter off the table the day of the meeting, saying negotiations were not at the right stage.

The move came on the same day as The Sacramento Bee carried a front page story that said California state workers received 4 percent less pay last year than in 2008 as a result of the state's financial crisis. Approval of a salary beyond $332,000 creates a public relations risk for CIRM, given the severe cutbacks elsewhere around the state. CIRM's salaries are already quite generous compared to other state agencies.

Salaries are easy for the public to criticize and to understand, especially compared to arcane scientific studies that may not seem immediately relevant to many people. Additionally, boosting a $332,000 salary without telling the public in advance why or specifying the size of the increase plays into the hands of those who are critical of CIRM's lack of transparency and openness.

The new VP will have a financial impact on CIRM beyond the salary. He or she is expected to have at least two or more staffers assigned to work for him or her. They will be new hires at CIRM, which is already chafing under the legal limit of 50 employees. In fact, Trounson has warned that the quality of work could slip unless a way is found to circumvent or repeal the cap.

Another matter is on the table as well next Monday. The item says,

"Consideration of guidance and CIRM’s Medical and Ethical Standards regarding use of previously NIH approved lines in CIRM-funded research and additional lines that are comparable to CIRM’s recommendations to the NIH and/or would be grandfathered or approved under those recommendations.”

No further explanation was offered by CIRM.

Interested parties can take part in the board proceedings at teleconference locations throughout the state including San Francisco(4), Los Angeles(2), La Jolla(2), San Diego, Duarte, Berkeley, Sacramento, Pleasanton and Healdsburg. More locations could be added in the next few days. Specific addresses can be found on the agenda.

Trounson's Criteria for New CIRM Chairman

CIRM President Alan Trounson has offered in writing his thoughts on the qualities that should be reflected in a person who may succeed Robert Klein as chairman of the $3 billion stem cell research effort next December.

Trounson's statement was posted Saturday on the agenda for the meeting of the Evaluation Subcommittee of the CIRM directors the day after the meeting was held.

One item on the agenda called for consideration of a succession plan for the replacement of Klein, who has said he will step down in at the end of the year.

Here are the “critical qualities” that Trounson identified for the new chairman.

• “Committed to CIRM’s mission
• “Able to work with persons of disparate viewpoints to move mission forward
• “Scientific training or a good understanding of the financial issues embedded in research and clinical application
• “A deep understanding of the drug development pipeline and the challenges facing cellular therapeutics
• “Knowledge of strategic financing and healthcare economics"

Trounson identified “unquestionable integrity” as a “desired” quality.

More on the succession planning will have to wait until CIRM posts the transcript from the meeting, which will be a couple of weeks, or until it decides to make a public statement about the outcome of last week's meeting.

Accountability and Umbilical Cord Blood Legislation: CIRM's Positions

As expected, directors of the California stem cell agency moved last week to attempt to sidetrack legislation aimed at ensuring affordable access to taxpayer-funded stem cell therapies and to improve accountability and transparency at the $3 billion enterprise.

The real question is what horse will CIRM have to trade in order to send the bill off to interim study, which would, in effect, kill it for the next year or so. A case can be made that CIRM genuinely needs the bill, or least one of its major components. CIRM already has expressed an urgent need for removal of the 50-person cap on its staff, which the legislation (SB1064) by Sen. Elaine Kontominas Alquist, D-San Jose, would provide. CIRM has said that it is examining non-legislative ways to sidestep the legal ban on more than 50 staffers, but nothing has surfaced publicly.

CIRM says its interim study plan is a move that welcomes legislative oversight. However, the tactic has been long used by foes of legislation to kill bills without appearing to be publicly truculent. That said, the tactic is more sophisticated than some of the agency's previous stonewalling.

All this is going on against the backdrop of a California gubernatorial election, not that CIRM will even be a footnote in the campaign. But a new governor next January – whether it is Jerry Brown or a Republican – could be less friendly towards the agency than the current one, who has obliged it with vetoes on bills and a life-saving $150 million loan.

Meanwhile, patient advocate Don Reed once again has weighed in against the Alquist bill or any legislation that would make changes in the California stem cell agency. On his blog, stemcellbattles.com, he recently cited some personal examples of the need for stem cell therapies. Basically, his pitch is that anything that impedes the stem cell agency or what it wants to do is not to be supported. Reed's comments were also carried on the Huffington Post. Reed is vice president of Americans for Cures, the personal lobbying organization of CIRM Chairman Robert Klein.

The first legislative hearing on Alquist's measure is yet to be scheduled. It is expected to be in the Senate Health Committee, which she chairs.

CIRM directors are also doing their own interim study, so to speak, of legislation that would give the agency more cash and broaden its scope. On the table is a proposal that would be embodied in a bill (AB52) by Assemblyman Anthony Portantino, D-Pasadena, to increase fees for copies of birth certificates and send the money to CIRM, which then would run a public umbilical cord blood banking program.

Directors ordered an internal study of the complex matter, including the science, logistics and “liabilities” of such a move. It appears that much of the study will be performed by outside experts, which is entirely appropriate since the agency is short-staffed and has more important priorities, such as the oversight of more than 300 researchers and institutions that have been given more than $1 billion in state cash.

Consultants interested in that contract should watch the RFP section of CIRM Web site closely or call the agency directly to be sure to be notified about any sort of competition for the work.

Capitol Newspaper Explores CIRM Accountability Issues

The California stem cell agency and legislation aimed at improving accountability at the $3 billion enterprise were the subjects of a piece this morning in Capitol Weekly, a newspaper and Web site in Sacramento devoted to government and politics.

Reporter John Howard wrote,

“Lawmakers – again -- are questioning the operations and culture of the state’s stem cell program....(T) the issue isn’t so much the scientific savvy of the California Institute for Regenerative Medicine....Rather, it is the potential for conflicts in the distribution of hundreds of millions of dollars of grants – the current total is over $1 billion  -- and the perceived lack of public disclosure cloaking the agency’s activities....”

Howard continued,

“'Basically, the attitude has been that they just want the Legislature to go away so they can run their own show,' said former state Sen. Sheila Kuehl, D-Santa Monica, a supporter of stem cell research, who authored (unsuccessful) legislation in 2007 to tighten controls over CIRM.”

From CIRM, Howard quoted Vice Chairman Art Torres as saying,

"There is a tremendous adherence to dealing with conflicts of interest, to transparency, to making sure that anyone who has even a scintilla of a conflict is removed from the process.”

Also quoted in the piece were yours truly and John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca.

We should note, as we have in the past, that the conflicts at CIRM are part of its DNA and are not going to go away. One key question is how forthright will CIRM be in disclosing them to the public and interested parties.

As we told Howard in an email,

"Prop. 71 created a board of directors with built-in conflicts. The chief beneficiaries of CIRM's largess -- to the tune of around $700 million or so -- have seats on the board. The individuals from those institutions -- multiple campuses of the University of California, USC, Stanford, Burnham, Salk, etc. -- cannot vote on the specific grants to their institutions,  but they decide what type of research to pursue and the rules for conducting the research. The board also has ultimate oversight of the grants,  some of which contain financial benchmarks. The defacto decisions on the grants are made by the grants review group, which includes out-of-state scientists who score the grants on scientific merit.  Those scientists do not have to make public their statements of economic interest, although they are disclosed to some CIRM personnel. That is a major flaw in CIRM's accountability and transparency. The board legally makes the final decision on the grants, but in practice almost never reverses a positive decision by the reviewers. And only in a handful of cases has the board reversed a negative decision by reviewers."

For more on conflicts of interest at CIRM, see the list of articles in the item below.

Reading List on CIRM Conflicts of Interest

For more insight into the conflict-of-interest issues at the California stem cell agency, here are several pieces that examine the problem. More can be found by searching on the label “conflicts” at the end of items.

Conflicts of Interest, CIRM and Transparency(2008)
“Do conflicts of interest exist among the scientists who make the de facto decisions on hundreds of millions of dollars in California grants for research related to embryonic stem cells? The answer? Yes.

CIRM Says No to Auditor's Conflicts Concerns(2007)
“Elaine Howle, the California state auditor, knows a great deal about the mischief that goes on in state government. And make no mistake about it, mischief does occur even when the multibillion dollar battle ground is in public and the economic interests are on full display.  She also knows that the mischief can grow even greater when the doors are closed and the financial interests of the major players are hidden from the public, such as in the case of grants awarded by California's $3 billion stem cell agency.”

Burnham's Reed Warned by State Ethics Agency on Conflict of Interest(2009)
“California's government ethics overseers have issued a "warning letter" to a director of the California stem cell agency for attempting to influence the agency's staff to reverse a denial of a $638,000 grant to his research organization.” 

CIRM Grant Review: Questions About Fairness, Conflicts and Accuracy(2008)
This includes complaints from a researcher from Advanced Cell Technology about how CIRM interprets its financial conflict of interest policy.

“Nature” Assesses CIRM, Warns of Conflicts of Interest(2008)
“Nature magazine took a run at the California stem cell agency today, producing a fine overview and an editorial that warned of "cronyism" on its board of directors.”

Fomer Top Exec at CIRM Hired by San Diego Firm

The former chief scientific officer for the California stem cell agency, Marie Csete, has landed at a San Diego firm, where she has been named executive vice president for research and development.

Csete resigned from her state government post last June, creating a bit of a stir. She told Nature magazine that her advice was not respected at the $3 billion stem cell agency.

Csete has joined Organovo, Inc., a privately held regenerative medicine company that is focused on creating tissue on demand for research and surgical applications.

The company's news release yesterday quoted the company's president, Keith Murphy, as saying,

"She has extensive experience in clinical transplant and is a leader in the understanding of stem cell behavior. In her previous role, Marie was instrumental in fostering translation of early technologies to practical results. Marie is an excellent fit to lead the company's efforts to move our therapeutic pipeline rapidly to the clinic."

Instead of filling Csete's position as chief scientific officer, CIRM President Alan Trounson created the new post of vice president of research and development. That job is not yet filled.

The only media coverage of Csete's appointment that we could find was in the San Diego Business Journal, a brief story by Heather Chambers.

CIRM Directors Take Up Evaluation of Top Management

How should CIRM Chairman Robert Klein be evaluated? How should the performance of Art Torres, co-vice chairman of the $3 billion effort, be assessed? What about President Alan Trounson?

These matters are being considered at the first-ever meeting of the CIRM directors Evaluation Subcommittee, which comes five years after the agency was created and Klein selected for his post. Friday's session could provide an unusual opportunity to peek inside the nitty-gritty of management of a chimeric enterprise that combines big business, big science, big academia and big politics.

Depending on the job, the evaluation process will include solicitation of written comments from the governor, treasurer, state controller, some recipients of CIRM funding, patient advocates, the biotech industry and “other stakeholders.”

Questions to be addressed, in Klein's case, include whether he

• Shows “comfort with and tolerance in managing diverse and conflicting opinions”
• Demonstrates “a record of effectively communicating CIRM’s mission and accomplishments to stakeholders and public”
• Works effectively with lawmakers to ensure on-going support of CIRM

One section on Klein's evaluation form deals with accountability. It asks whether he “effectively manages compliance with CIRM’s public accountability requirements, including (1) the annual public report (2) the independent financial audit; (3) the Citizens’ Financial Accountability Oversight Committee; (4) public meeting and records laws; (5) competitive bidding; (6) conflicts of interest; and (7) intellectual property standards.”

We should note that “compliance with...requirements” is rather minimal, just meeting what is needed by law. That standard does not, for example, reach Klein's oft-repeated assertion that CIRM adheres to the highest standards of openness and transparency. CIRM's accountability or lack of it has surfaced recently in news reports and in a statement by an influential state lawmaker, Sen. Elaine Kontominas Alquist, D-San Jose.

We should also note that state law that requires public sessions of some meetings of the directors Evaluation Subcommittee, including the one this week. However, the specific evaluation of the individuals will be private.

Klein, a Palo Alto real estate investment banker, initially declined a salary for the chairman's job, which has a pay range of $275,000 to $508,750. But in 2008, he said he would like to be paid. Directors approved $150,000 for what they specified was a half-time position.

Torres' job is also considered a part-time position; in his case, four days a week. In December, his salary was boosted from $75,000 for halftime work to the current $225,000. The range for the position fulltime is $180,000 to $332,000. Torres was formerly head of the state Democratic party and was a longtime state legislator.

The other co-chairman, Duane Roth, a San Diego area businessman, has declined a salary.

Trounson began work in January 2008 at a salary of $490,008. His job has the same range as that of the chairman.

Here are links to  the evaluation procedure and the evaluation forms for Klein and Trounson.

Evaluation of the vice chairmen is not specifically on the agenda but is mentioned in the committee's background information. More specifics are likely to surface at a later date and be colored by experience with evaluation of Klein and Trounson. Also to be considered later is the question of just how to evaluate an employee who is not being paid – Roth.

Teleconference locations for the meeting are available for public participation in India and throughout the state, including San Francisco, Los Angeles(2), Elk Grove, La Jolla, Pleasanton, Menlo Park and Emeryville.

All locations, including the one in India, must be open to the public by state law. CIRM has not responded to our question about which CIRM director is in India.

Specific addresses of the teleconference locations can be found on the meeting agenda. To avoid confusion at the time of the meeting, you may want to call CIRM in advance if you plan to attend one of the teleconference locations.

California Stem Cell Matters: What Do You Think?

Evan Snyder of the Sanford-Burnham Institute takes issue with the headline we wrote last Thursday concerning CIRM approval of more cash for his research.

The headline read: “Burnham's Snyder Receives $1.85 Million More Despite Faulty Application.”

The full text of his remarks can be found in the item below. He says the headline uses “pejorative phraseology” and “betrays an absence of journalistic impartiality.”

We responded to Snyder in an email and offered to run his comments verbatim. We gave him and are now passing along to all our readers some thoughts on what we do on this web site and what can be expected by our readers and those we write about.

We appreciate Snyder's point of view and understand where it is coming from. However, the blog has never pretended to be "objective." It offers commentary, news and information on the matters dealing with the California stem cell agency. Because of the dearth of third-party information on the agency, I do considerable basic reporting and information-gathering, far more than is done by most bloggers. I also provide explanation and analysis of the information that is gathered. And, yes, I offer my opinion from time to time.

That said, many legitimate points of view exist on these matters, including Snyder's. I am more than glad to carry his remarks as well as those last week. They provided an important addition to understanding how research comes about.

One of the major weaknesses of the mainstream media is their inability to provide ample room for many points of view. One of the strengths of the Internet is that it provides a venue for many more voices, something we encourage on the California Stem Cell Report.

For some time now, CIRM Chairman Robert Klein and CIRM President Alan Trounson have had a standing offer from us to run verbatim their comments on stem cell topics of their choice. Recently, we notified all the CIRM directors that they have the same opportunity – something that does not occur in the traditional, mainstream media. In addition, we encourage comments directly on items, which can be done by clicking on the word “comments” at the end of each piece. We encourage readers to use their names when they provide commentary, but understand that in some cases important comments can be made only anonymously. That has to do with the tiny size of the California stem cell community and the extremely powerful financial role that CIRM plays in it.

Feel free to comment on this item or simply send me your thoughts via this email address: djensen@californiastemcellreport.com.

Snyder says CSCR Headline Lacks Impartiality

Here is the text of Evan Snyder's remarks concerning the following headline – “Burnham's Snyder Receives $1.85 Million More Despite Faulty Application” – on the item on March 11, 2010.

“I would have to say that the headline you used betrays an absence of journalistic impartiality. I gather from the perjorative phraseology that you have a point-of-view on this issue and are not sitting as a disinterested chronicler. Had you been that -- which I mistakenly assumed you to be -- you would simply have stated the facts -- 'Snyder awarded grant for Parkinson's research'. However, you did not. Rather you injected yourself into the story. I was actually trained in journalism as early as high school, and my instructors would have castigated me for such a headline.

“I, and the scientists who reviewed our proposal, see this proposal as not in the least flawed. Indeed, I (and most who have studied its aims) find it to be among the most scientifically rigorous, predictive, expeditious, parsimonious, and cost-effective study ever proposed in the stem cell field for Parkinson's disease with any hope for answering long-simmering scientific questions and advancing rational and safe treatments to California citizens suffering from this horrible, debilating disease. Every aspect was spelled out in detail from moment #1; no aspects were hidden. California -- as represented by the study section, CIRM, and the ICOC -- recognized the golden unique opportunity to move the field forward for its citizens and appropriately, sagely, and responsibly seized it. Hence, I find 'zero' flaws in this application. My headline would have been very different.”

Nature Blogger Writes About Snyder Grant

One of Nature magazine's blogger wrote briefly this week about the Evan Snyder affair at the California stem cell agency.

Referring to our article on the grant, Elie Dolgin said on the site, Spoonful of Medicine.

"Here’s one creative, albeit seemingly accidental way, to get a 50% boost for your multi-million dollar research grant: Flout the rules, say you’re sorry, and then argue that you can only make up for it with extra cash. "

You can read Dolgin's entire item here.

Burnham's Snyder Receives $1.85 Million More Despite Faulty Application

Directors of the California stem cell agency this morning, on a split vote, approved a $1.85 million increase in a grant to a Southern California scientist after he submitted a proposal that would violate the agency's rules against spending CIRM funds out-of-state.

Nineteen directors of those present voted in favor of the increase, although some expressed concern about the way in which the application was processed. CIRM did not announce the number of negative votes, but they appeared to be only handful, based on what could be heard via the Internet audiocast of the meeting. The board has 29 members but not all were in attendance.

The motion to approve the increase also included a requirement that CIRM staff work with the board to improve the way in which applications are screened prior to approval by the board.

The CIRM staff made the recommendation for the 50 percent boost (for a total of $5.4 million) in the grant to Evan Snyder (see photo) of the Sanford-Burnham Medical Research Institute in La Jolla. Last April CIRM directors approved a $3.6 million award to Snyder without knowing that it would violate the explicit ban on non-California spending. The staff said the additional money was needed because of the increased cost of moving the work to California.

A straight-forward explanation of how the grant came to be approved, despite its out-of-state component, was not available prior to today's board meeting.  Nor was it today. But some details emerged during this morning's discussion. Scientific reviewers, who make the de facto decisions on grant applications, were aware that Snyder's application involved paying for work out-of-state. That information did not reach the staff level until it surfaced during a regular review following approval last April of the grant by the CIRM board.

Based on the board discussion today, the key difficulty appeared to be with a subcontract with Eugene Redmond of Yale University. Snyder mentioned Redmond in his statement to California Stem Cell Report, saying that Redmond is in the process of becoming an adjunct professor at Sanford-Burnham and will spend one week a quarter in La Jolla.

Claire Pomeroy, a CIRM board member and dean of the UC Davis medical school, said that Snyder's revised proposal replaced senior researchers with junior scientists. She said the reviewers' score on the grant might have been different if they had known last year about the use of less experienced researchers. Pomeroy also suggested that Burnham pick up some of the additional costs, but CIRM President Alan Trounson said the institute would not do that.

Other board members worried about fairness issues along with their concerns about how grants are vetted by staff prior to being examined by CIRM's grant review group. Board member Joan Samuelson, a patient advocate with Parkinson's Disease (the subject of Snyder's research), said she supported the grant. But as a condition, she said the staff must “continue the discussion” with the board about how to avoid situations like this in the future.

At the end of the board debate, CIRM director Sherry Lansing, a UC regent and former head of a Hollywood movie studio, said she was still confused about how the Snyder grant was handled and asked to be briefed later about the matter.

No dissent was heard from CIRM board members about the value of the research proposed by Snyder. Director Jeff Sheehy, a patient advocate and communications manager at UC San Francisco, said,

“This is incredibly important science.”

Sheehy warned the board against becoming bogged down “in process.”

You can read more about the Snyder grant, including statements from Snyder and others by searching on the label “snyder grant.”

CIRM Okays First Clinical Trial Round; $50 Million Earmarked

Directors of the California stem cell agency this morning unanimously approved a $50 million foray – its first-ever -- into the financing of clinical trials.

The program appears likely to be of benefit to only a handful of organizations – particularly the three that have pluripotent proposals that are now on hold with the FDA. The names of the enterprises were not disclosed during the board meeting because to do so would raise conflict of interest questions.

The CIRM staff proposed one or two trials that would be limited to “novel cell therapies from pluripotent stem cells.” Both businesses and non-profit institutions could compete, but businesses would be required to take a loan instead of a grant. In both cases, matching funds would be required. During the board discussion, the CIRM staff provided two examples of matching requirements. CIRM would provide a $20 million grant on a $40 million trial with the rest to be provided by the applicant or $25 million on a $75 million trial.

The goal, a CIRM document said, is

“completion of early stage clinical trials within three years that: 1) demonstrate preliminary safety in humans and 2) provide compelling data for proof of mechanistic concept and/or early testing for efficacy that could lead to more definitive efficacy studies.”

Several board members said the clinical proposal, which could lead to awards by the end of this year, represented exactly what CIRM should be doing. Ted Love, a board member and executive vice president of Onyx Pharmaceuticals of Emeryville, Ca., said,

“We don't have the luxury of waiting.”

He and others, such as patient advocate board member Jeff Sheehy, cited the need to bring therapies to the point where they can actually be used to treat suffering persons.

Some board members did express concern about the possible appearance of favoritism and the need to ensure that the proposal contain sufficient funds to monitor clinical trial patients for long periods, perhaps their lifetimes.

CIRM President Alan Trounson also said that he understands that some of the potential applicants are facing serious cash problems and need to find funding soon. He said the clinical trial proposal also might bring out more applicants than the three possibilities he is aware of.

Under the plan, Trounson would be given significant discretion to deal with the needs of applicants.

The ambitious proposal is part of CIRM's drive to bring therapies to market. More funding for clinical trials is expected to be provided by CIRM within the next year or so. The agency has already committed one-third of its $3 billion in resources. It will need to show tangible, publicly appealing results if it is secure additional funding in a few years.

Here is a link to the CIRM press release on the program. 

CIRM VP Salary Hike Move Delayed

The directors of the California stem cell agency today put off action on a proposal that would have presumably increased the current $332,000 salary cap on the newly created position of vice president of research and development.

The deferral came on the same day that The Sacramento Bee carried a front page story that said California state workers received 4 percent less pay last year than in 2008 as a result of the state's financial crisis.

CIRM Chairman Robert Klein told the directors at their meeting in Sacramento that the proposal was being put off because negotiations with candidates for the job were not at the right point.

CIRM provided no details on what the salary level would have been. CIRM hopes to hire a person with industry experience as it pushes hard to bring therapies to market.

$62 Million Effort: First CIRM-financed Lab Opens at UC Davis

The chairman of the California stem cell agency, Robert Klein, opened its board of directors meeting today by celebrating the opening of a $62 million UC Davis stem cell research center.

The facility, partially financed with a $20 million CIRM grant, was featured in a front page story in The Sacramento Bee yesterday. It is the first to open of a dozen labs that were partially funded by CIRM.

The Bee wrote,

"UC Davis already is testing dozens of therapies in the laboratory, such as HIV treatments and organ regeneration, and is even using stem cells to repair injuries in horses.

“The new $62 million UC Davis Institute for Regenerative Cures will consolidate those efforts, which are scattered in various locations in the region. The center will bring 200 scientists and laboratory personnel together under one roof.”

Claire Pomeroy, a member of the CIRM board of directors and dean of the UC Davis School of Medicine, told directors it was a “one of a kind facility.” The directors are meeting in Sacramento in the state Capitol. The Davis facility is actually located in Sacramento – not Davis, which is just west of the larger city.

UC Davis issued a news release that said,

“Over the past 18 months, construction crews renovated 54,000 square feet of space, creating new research facilities that include Northern California’s largest academic Good Manufacturing Practice (GMP) laboratory, a state-of-the-art suite of rooms that will enable scientists to safely prepare and manufacture cellular and gene therapies for clinical trials.

“Designed to maximize research collaboration and innovation, the new Institute for Regenerative Cures will be a centralized location for researchers from departments and programs throughout UC Davis as well as a shared-research facility for other institutions to use. The initial phase of the project provides space for approximately 20 senior scientists and 115 other researchers and technicians.”

Live Coverage Today of CIRM Board Meeting

We will be filing stories as warranted out of the CIRM directors meeting today from our post here in an Internet cafe in Manzanillo, Mexico.

Snyder Provides Additional Comment on Out-of-State Spending Proposal

Evan Snyder of the Sanford-Burnham institute has emailed additional comment on his grant proposal, which this morning comes before the board of the California stem cell agency. His response came after we asked him yesterday: "How did you happen to propose spending CIRM money out of state? The agency clearly bans such actions and explicitly states that in its instructions to applicants."

Here is the text of Snyder's most recent remarks.

"As a California scientist, I wrote the strongest scientific application possible for performing a clinical trial on Parkinson's Disease in California. Having justified each step, each experiment, each reagent, I let the scientists on the Study Section vet it, and make a decision. Recognizing that performing these experiments in this manner was the only way that a clinical trial for Parkinson's Disease would ever reach fruition in California (or anywhere else in the world), not wishing to let Parkinson's patients suffer, and knowing that, other than procuring NHPs from the optimal source, the substantive work was being done in California, the Study Section recommended that the proposal be funded. In fact, they called it a "tour-de-force".  NHPs are necessary for Parkinson's Disease research work; the proper NHPs are not available in California. The alternative is for California to decide to ignore and not treat Parkinson's Disease at all for its citizenry, an unacceptable proposition to most compassionate voters. All research will be done in California.
            "As to the Australian involvement, that was simply based on CIRM’s well-established Collaborative Funding Partner Program. A partnership had been created between California and the Victorian government before the grant was written. Collaborations were encouraged. However, no CIRM funds will be used in Australia. The Victorian government determined that, if Australian investigators collaborated on a meritorious California project, the Victorian government would pay all of the expenses of the Australian component of that collaboration.
            "So, the answer is that CIRM is paying only for research done in California."

Murky Backdrop on $5.4 Million Grant to Burnham Scientist

Directors of the California stem cell agency tomorrow will be asked to approve a $1.85 million increase in a grant to a Southern California researcher after he filed a proposal that violated CIRM's rules against spending CIRM funds out of state.

The CIRM staff made the recommendation for the 50 percent boost (for a total of $5.4 million) in the grant to Evan Snyder of the Sanford-Burnham Medical Research Institute in La Jolla. Last April CIRM directors approved a $3.6 million award to Snyder, apparently without knowing that it would violate the explicit ban on non-California spending. The staff said the money was needed because of the increased cost of moving the work to California.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., called on directors to reject the grant outright. To do otherwise, he said, would be “extremely unfair to other applicants who followed correct procedures.”

In a statement to the California Stem Cell Report, Simpson said (full text available here),

“Either the applicant deliberately flouted the rules requiring all research to be done in California and thought he could get away with it or he didn't understand the rules. In either case he did not follow them.

“Assume the best and, unlikely as it seems, grant that a top California researcher and his institution didn't understand CIRM's regulations. But just as ignorance of the law is no excuse, ignorance of the rules governing CIRM awards is no an excuse for not following them.”

In response to a query, Snyder defended his proposal. He said the proposal uses California taxpayer funds "in the most economical and frugal manner possible.” He said Simpson “is misinformed about the most parsimonious way of stretching California biomedical research dollars during hard financial times. CIRM and the ICOC(CIRM directors), in fact, exerted exceptional fiduciary (not to mention scientific) responsibility in awarding this grant. They awarded the contract to the lowest bidder.”

Just how all this came about is a bit murky. CIRM shrouds its grant-making process in secrecy. Names of grant applicants are not revealed until after the winners are approved. Names of rejected applicants are never disclosed. Even today the CIRM staff information on the Snyder grant that is being presented to directors tomorrow does not include his name or the name of his employer. However, that information was given to directors last April as part of its “extraordinary petition” process. The staff report itself became public on the CIRM Web site only three business days prior to the CIRM board meeting in Sacramento.

Asked for a comment, Don Gibbons, chief communications officer for CIRM, said “The budget for the California researcher included a research subcontract to a U.S. organization outside California. CIRM followed standard practice for this funding round, performing a detailed budget review of each proposal approved by the board. When it became clear that this proposal included a subcontract that CIRM could not fund, CIRM asked the PI if the proposal could be revised to meet CIRM funding requirements.”

Gibbons did not respond directly to a question about how an application proposing out-of-state spending came to be approved by the board. (More of Gibbons' response can be found here.)

Gibbons also did not respond to a request for the identity of the non-California recipient originally proposed by Snyder. But in Snyder's response (full text here) to the California Stem Cell Report, Snyder refers to the St. Kitts Biomedical Research Foundation in the Carribean. Snyder said it is “the best non-human primate facility for Parkinson's Disease research in the world.” However, it is unclear whether that was out-of-state spending identified by CIRM.

The Snyder grant poses some important questions for CIRM directors.

Should they reward a researcher who failed to follow CIRM rules?

Would that be fair to other applicants?

Should CIRM President Alan Trounson have been involved in the review of the proposal, which has collaborators at Monash University in Australia, an institution where Trounson presided over the stem cell research program? Presumably a failure to fund Snyder would have a negative impact on his Australian counterparts(Trounson's former colleagues), although they are not funded by CIRM.

How does the situation affect the public perception of CIRM? Snyder's boss, John Reed, the president of the Sanford-Burnham Institute, sits on the CIRM board although he cannot vote on the grant or even take part in the discussion about it. Should Trounson take part in tomorrow's discussion of the Snyder grant?

Would the situation have been handled in the same fashion if the grant applicant had been from a less illustrious institution, such as UC Merced?

Is the research so compelling and urgent that it overwhelms any sort of negative reaction? Or would it be better to defer the issue until additional information is available to directors and the public?

These questions should be considered in the context of a recent chorus of recommendations for more transparency and accountability on the part of CIRM. (See here, here, here and here.)

Text of Simpson Comment on Snyder Grant

Here is the text of the statement from John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., concerning the Evan Snyder grant.

“Either the applicant deliberately flouted the rules requiring all research
to be done in California and thought he could get away with it or he didn't
understand the rules. In either case he did not follow them.

“Assume the best and, unlikely as it seems, grant that a top California
researcher and his institution didn't understand CIRM's regulations. But
just as ignorance of the law is no excuse, ignorance of the rules governing
CIRM awards is no an excuse for not following them.

“Granting this award would be extremely unfair to other applicants who
followed correct procedures. The ICOC should reject this grant. If he can
figure out how to follow the rules, then the researcher can apply the next
time a similar RFA is issued.”

Text of Snyder Comment on his CIRM Grant

Here is the text of Evan Snyder's response to a request for comments involving his CIRM grant.

“Actually, contrary to Mr. Simpson's assertions, this project uses the funds of California's taxpayer's -- particularly those who suffer from Parkinson's Disease and other neurodegenerative diseases -- in the most economical and frugal manner possible. The only authentic model of Parkinson's Disease that is predictive of how patients will respond to therapy -- both in terms of benefits and side-effects -- is the non-human primate model. The best non-human primate facility for Parkinson's Disease research in the world is the Axion/St. Kitts Biomedical Research Center. This facility, which has been studying Parkinson's Disease for ~30 years, was, in fact, chosen as the Michael J. Fox primate facility for precisely this reason. Not only is this facility the best in the world, but also the most inexpensive. No primate facility in California was able to match its cost, match its expertise and scientific rigor, or match its facilities. UC-Davis, the only competitive primate facility in California, is not capable of maintaining this model of Parkinson’s Disease, particularly the enormous amount of care of vigilance required. Indeed, UC-Davis does not even house the African Green Monkey which is required; rhesus monkeys are known not to offer the same predictive value. (As might be recalled, the first clinical trials using fetal tissue in PD failed to an extent because representative preclinical animal models were not used, a problem eliminated in this proposal.) It would take a number of years for UC-Davis to bring their facility up to the level of excellence required by these studies (which could lead directly to clinical trials). Furthermore, they would need to charge 300% the cost being devoted to the animal studies now; in other words, for the same amount of work, this project would need a budget nearly 3 times its present budget with a delay in its work by years. The African Green monkey furthermore requires a near tropical climate with indigenous tropical fruit and housing in an open free-ranging, colony setting. That climate or housing demands cannot be created in California.
“There is a long experience in California – including via CIRM – for obtaining animal models from the facility that produces the models the best. For example, mutant mice and other specialized murine models are obtained from Jackson labs -- even though it is in Maine -- because that facility produces the animals required. (I should mention that Axion/St. Kitts Biomedical did have a California office in its early days and will be renewing that). The only CIRM-funded work being done out of California on this project are those tasks that require a living animal -- i.e., transplantation, behavioral assessment, and possibly imaging. Once a living behaving animal is not required, all study materials are transported back to California for the real scientific analysis. This is done only by California scientists and staff. Dr. Redmond, the only key personnel member on the team not presently a permanent California resident, manages the facility and performs the surgeries and, hence, must be on site; nevertheless he is in the process of becoming a formal Sanford-Burnham adjunct professor (he has served in that role informally for a number of years). Furthermore, for one week each quarter, Dr. Redmond will live in California working with the team to further analyze the data -- the real purpose of the proposal.

“Hence, Mr. Simpson is egregiously mistaken about the nature of the grant and, most importantly, about the nature and requirements of Parkinson's Disease research that has any chance of aiding California patients. Furthermore, he is misinformed about the most parsimonious way of stretching California biomedical research dollars during hard financial times. CIRM and the ICOC, in fact, exerted exceptional fiduciary (not to mention scientific) responsibility in awarding this grant. They awarded the contract to the lowest bidder. And California is not only getting the fruits of arguably the best Parkinson's Disease research team in the world using the best Parkinson's Disease model that exists, with the shortest trajectory to treatments, but is getting it at the lowest price available in the world. Given these facts, one is lead to question Mr. Simpson’s true concern for the disease sufferers in the state as well as his concern for the most parsimonious use of taxpayer money.”

CIRM on Snyder Grant

Here is additional information from Don Gibbons, chief communications officer from CIRM, on the Evan Snyder grant.

“The budget for the California researcher included a research subcontract to
a US organization outside California.  CIRM followed standard practice for
this funding round, performing a detailed budget review of each proposal
approved by the Board.  When it became clear that this proposal included a
subcontract that CIRM could not fund, CIRM asked the PI if the proposal
could be revised to meet CIRM funding requirements.  The PI proposed an
alternative that would move that work into California. Dr. Trounson and the
science office, with additional input from an expert in Parkinson¹s
Disease, concluded that the alternative approach would be a scientifically
acceptable alternative that would meet the objectives of the original proposal.

“Because the alternative approach has an increased cost, ICOC approval is
needed for the project to proceed. “

Correction and More Details on Snyder Grant

The California stem cell agency says the out-of-state work planned by Evan Snyder of the Sanford/Burnham Institute in his $3.6 million grant was scheduled for another party elsewhere in the United States – not Australia.

We reported incorrectly yesterday that the matter involved work in Victoria. CIRM posted documents about the matter for its board of directors meeting tomorrow, but did not name Snyder or the other collaborator. The only collaborators we could find in publicly available documents were located in Australia.

CIRM explicitly bans the use of its funds for work out of state. Applications for grants carry a clear notice to that effect.

Directors are now being asked to increase Snyder's grant to $5.4 million to pay for the increased costs of moving the work to California. The grant was originally approved by directors last April.

Bad Link Fixed

A bad link to the "extraordinary petition" mentioned in the item below has been fixed.

$50 Million Clinical Trial Effort Proposed to CIRM Directors

The California stem cell agency has released additional information on its proposed, first-ever funding round for participation in clinical trials.

The plan, expected to be approved on Thursday by directors, would provide $50 million for one or two trials and would be limited to “novel cell therapies from pluripotent stem cells.” Both businesses and non-profit institutions could compete, but businesses would be required to take a loan instead of a grant. In both cases, matching funds would be required. No match percentage was specified.

The goal, a CIRM document said, is

“completion of early stage clinical trials within three years that: 1) demonstrate preliminary safety in humans and 2) provide compelling data for proof of mechanistic concept and/or early testing for efficacy that could lead to more definitive efficacy studies.”

The clinical trial proposal is part of CIRM's aggressive push to develop therapies from stem cells. The agency has already committed one-third of its $3 billion in resources. It will need to show some high profile, tangible results if it is secure additional funding in a few years.

California voters approved the stem cell research effort five years ago, creating CIRM as a way to circumvent federal restrictions on funding for human embryonic stem cell research. Prop. 71 gave top priority to support for that area. Notably, however, the clinical trial proposal does not extend to hESC research.

The plan is part of a relatively brief agenda for the CIRM board meeting in Sacramento this week. Traditionally, board members use part of the day to discuss CIRM privately with legislators and legislative staff.

Another matter on the agenda involves a grant in which a La Jolla researcher planned to use state funds to finance research outside of California, which is barred by CIRM. The $3.6 million grant to Evan Snyder of the Burnham Institute was approved by directors last April. Apparently it was unknown at the time that Snyder planned to use state funds outside of California. After months of discussions and the hiring of an outside consultant, CIRM staff is now recommending that the grant be funded at $5.4 million to handle the increased costs of doing all the work in California.

The staff report said,

“CIRM staff was assured that the core facilities at the grantee institution were adequate and could replace all the research activities critical to this project. To address the ability of junior staff to substitute for experienced senior out-of state investigators, CIRM was reassured that, in addition to the expertise of the PI, there is an established collaborative, integrated multi-institutional network that will be actively engaged in the project and can provide scientific and technical expertise to complement the newly hired and more junior staff. CIRM also received adequate assurances with regard to the ability of the PI to commit adequate time to the project.”

Not discussed in the staff report is the question of exactly how the grant happened to win approval from CIRM directors with the non-California component. CIRM rules are explicit on the ban on the use of CIRM funds outside of California. We are querying the agency concerning the matter.

Oddly, the staff report also does not mention the names of those involved and the institutions despite the fact that they were identified to the board last April.

The grant was approved by directors after Snyder filed an “extraordinary petition,” which is usually an appeal by an applicant who has been rejected by scientific reviewers.. In Snyder's case, reviewers, however, had approved it for funding.

Also on the CIRM directors' agenda is a proposal that would apparently increase the salary for the new vice president of research and development, who would effectively be the No. 2 staff person at CIRM. Currently the top of the range is $332,000 but does not seem high enough to lure the right person. CIRM has not provided any details, however, other than a terse listing that compensation for the position will be considered by directors.

Another item to be considered involves recommendations on new state legislation affecting CIRM. As we reported earlier, the agency hopes to sidetrack the bills by asking that they be sent off to interim study for a year or so.

The latest version of the agenda contains instructions for listening to the board proceedings via the Internet.

(Editor's note: An earlier version of this item incorrectly said that the Snyder grant would have used CIRM funds to support his Australian collaborators. CIRM said that funding in that country is coming from a non-CIRM source.)

Howlers: Loud as Thunder

From time to time, we have discussed the media and its behavior in connection with the California stem cell agency.

The other day, we ran across an apt, media-related commentary in Barbara Kingsolver's new novel, “The Lacuna.”

The remark was offered by one of her characters during a discussion of newspapers with Leon Trotsky in Mexico prior to World War II. One could say that it still applies more than 70 years later.

Here is how it went:

“It's true sir. The newspapers are like howlers on Isla Pixol.”

“What are these howlers?” Trotsky asked.

“A kind of monkey, very terrifying. They howl every morning: First one starts, then a neighbor hears it and starts his own howl, as if he can't help it. Soon the whole forest is bellowing, loud as thunder. It's their nature, probably they have do it, to hold their place in the forest. To tell the others no one has gotten the best of them.”

Communications Subcommittee Meeting Delayed

The California stem cell agency yesterday postponed the first meeting of the directors new subcommittee aimed at improving communications with the public.

CIRM Chairman Robert Klein cancelled the session for personal reasons, the agency said. The session has not yet been rescheduled.

CIRM Director Prieto's Comments

We would like to call attention to comments filed by Francisco Prieto, a member of the CIRM board of directors and a Sacramento physician, concerning our “School Children vs. Stem Cell Scientists” item. His thoughtful remarks offer extra insight into the stem cell agency. Prieto's comments can read by clicking on them at the left or at the end of the item in question.

CIRM Moves Adroitly in Attempt to Sidetrack Legislation

The California stem cell agency is taking a different tack concerning unwanted legislation that would alter the way it does business.

In the past, CIRM directors have opposed all legislation that would affect it. While measures have passed both houses with more than 70 percent votes, the governor vetoed them at the behest of the agency.

However, last week the directors' Legislative Subcommittee decided to ask that legislation by state Sen. Elaine Kontominas Alquist, D-San Jose, be sent to interim study. The move is politically adept. It serves the same purpose as outright opposition. If the agency is successful in sending the bill to interim study, it effectively kills the bill for the next year or so but CIRM does not appear to be stone-walling legislative and other critics. The move instead would put CIRM in the public position of appearing to be listening carefully to those who are raising questions.

The agency's new tactics came to light in response to a question last week that we posed to Don Gibbons, chief communications officer for CIRM, concerning what action the subcommittee had taken.

He said the directors subcommittee acknowledged CIRM is “not perfect.”

Gibbons said,

“Moving the bill to interim study not only involves allowing CIRM to educate the legislature on our progress but also allows the committee chair to call a hearing after the legislature adjourns to provide substantive oversight to review the progress that CIRM has made on all the issues raised by the Little Hoover Commission and the Controller’s Financial Accountability Committee and verify the transparency we all support.”

Alquist's bill, SB1064, is aimed at ensuring affordable access to therapies financed with taxpayer funds and providing for more accountability and openness from CIRM.

Gibbons also said the directors subcommittee voted to seek further study of an umbilical cord blood banking bill that would provide birth certificate fees to CIRM for that purpose.

The full text of Gibbons' statement can be found in the item below.

Text of CIRM Comments on Alquist Legislation

We asked Don Gibbons, chief communications officer for CIRM, last week about action by the CIRM directors' Legislative Subcommittee on legislation concerning the agency. Here is the full text of his response.

“The Legislative Subcommittee expressed concerns about SB1064, introduced by Sen. Elaine Kontominas Alquist of San Jose. The bill would alter the management structure of CIRM in ways the subcommittee suggested the Senator and her staff did not fully understand. Acknowledging that CIRM is not perfect the committee did not recommend embracing or rejecting the bill, but rather to seek a vote in the legislature to move the bill to 'interim study' to give CIRM staff time to educate members of the legislature and their staffs about the related issues.

“Moving the bill to interim study not only involves allowing CIRM to educate the legislature on our progress but also allows the committee chair to call a hearing after the legislature adjourns to provide substantive oversight to review the progress that CIRM has made on all the issues raised by the Little Hoover Commission and the Controller’s Financial Accountability Committee and verify the transparency we all support. In short, we are welcoming legislative oversight and looking forward to the outside scientific review that President Trounson has been putting together for later this year.

“The subcommittee also voted to seek further study of the impact of  AB52, introduced by Assemblyman Anthony Portantino of Pasadena. That bill would move from the Department of Public Health to CIRM the previously legislated authority to receive fee surcharges from birth certificates to fund the  collection and oversight of public banking of umbilical cord blood in California. This study would be internal with the CIRM Science Office directed to look at issues around the science, logistics, and liabilities of such a service with the help of appropriate outside experts.”

School Children vs. Stem Cell Scientists; A Public Perception Problem

From Humboldt to San Diego, thousands of Californians yesterday protested the budget cuts that are ravaging efforts to teach their children to read, write and calculate.

The picture painted in newspapers and on television stands in dramatic contrast to the situation at the financially comfortable California stem cell agency. Its finances are uniquely isolated from both normal state budgetary controls and the state's budget crisis. Consequently next week, CIRM is expected to move forward on a project involving tens, perhaps hundreds of millions of dollars. No details are available, but it is an effort to aid the biotech industry with the costly clinical trials that are necessary to bring products to market. CIRM directors are also expected to put more money on the table to hire an executive to fill a newly created position that is designed to tie the $3 billion program ever closer to industry. A salary of $332,000 a year, currently top of the current range for the job, is apparently not enough of a lure.

Good arguments exist for these actions. They may in fact be good policy for the stem cell research program. But they do not reflect the travails of the rest of California state and local government. The Golden State is now scraping the bottom nationally in terms of per capita spending for the education of its children -- who certainly represent the future as much as the 300-plus stem cell scientists and institutions that have received $1 billion from CIRM over the last five years. Indeed, California's financial problems are so severe that some say the state is effectively, if not legally bankrupt. One of the causes is ballot-box budgeting, voter approval of spending initiatives that that cannot be controlled by state lawmakers or the governor. Such is the case with CIRM's finances.

Unpleasant comparisons pose a public perception problem for CIRM. Fortunately for the agency, however, it operates in a media shadow. CIRM is all but invisible in the mainstream press. Reporters are focusing on broader issues and higher profile matters, such as the release of prisoners from jails because of a lack of money. The fact is that CIRM's finances have virtually no current impact on the state's financial crisis. Nonetheless, CIRM's spending carries symbolic importance, which CIRM directors should be cognizant of as they vote to spend millions more that the state must borrow. Their largess could bite back as lawmakers wrestle with legislation to ensure more openness and accountability at CIRM.

Next Thursday's meeting of the CIRM board of directors will, in fact, be in the bowels of the beast, so to speak. The 29-directors are scheduled to convene in a large meeting room in the State Capitol. Their agenda is relatively brief. Traditionally, following the meeting, directors fan out to meet with lawmakers privately.

As far as meaningful public participation is concerned, CIRM discourages that by withholding justification and details on what is to be discussed by directors. That includes the proposal to take part in expensive clinical trials, which was deferred from the February meeting. Also not available is size of the proposed salary for CIRM's new vice president for research and development, who will effectively become the No. 2 executive on CIRM staff. CIRM already enjoys some of the highest salaries in state government. President Alan Trounson earns $490,008 a year and was once listed as the second highest paid state employee outside of the UC system.

The lack of information on the specifics of what CIRM directors are considering is pretty much standard practice for the agency, despite calls for more openness and transparency. The reasons are unclear for CIRM's failure to post information in a timely fashion prior to directors' meetings, which are not even noticed on CIRM's home page on the Internet. The sessions, however, are the most important activities at the agency. That's when the direction of research is set, standards established and money handed out. We may see additional information posted next week, but usually it comes too late for the public or interested parties to make plans to attend the meetings or formulate a considered comment.

On Monday, a new subcommitte of CIRM directors will discuss ways to improve communications and sell its story to the California people. One good first step would to be mandate that background information for meetings be posted at least five business days prior to the sessions. A modest but do-able goal.

Telling the California Stem Cell Story: $1 Million for PR/Communications and More Likely

The California stem cell agency is already spending more than $1 million on selling itself, but its directors could be asked next week to bump up that figure substantially.

The subject will come up Tuesday at the first meeting of the directors' new subcommittee on communications, chaired by Robert Klein, a Palo Alto real estate investment banker who is also chairman of CIRM. Topic one on his agenda is “potential strategic options for communicating with the California public regarding CIRM’s performance.”

With the meeting only four business days away, no specific information is yet available for the public on just what Klein is proposing, which is ironic for a panel that is being called on to improve communications. The session also follows recommendations in January from a sister state panel to CIRM that called for more openness and transparency on the part of the $3 billion enterprise.

The new communications panel was created in December with little debate by directors, who were told that outside experts would assist in the new communications drive.

Missing from next week's agenda is the question of just what CIRM hopes to achieve with its communications/public relations program.

Does it want to change or shape public opinion in California? In the nation? If so, in what way? How can that be measured? The last question is the trickiest for public relations programs, whose goals tend to be squishy. Public relations practitioners often focus on activities as opposed to results.

One implicit, if not explicit goal of the upcoming public relations push is likely to be creation of an environment that would make the legislature eager to provide billions more for CIRM. Another potential goal would be to set the stage for voter approval of another huge bond measure. Without a major public relations push, winning more cash could be difficult given the deep financial problems facing California state government – not to mention a host of other worthy causes seeking state funds, ranging from the state's beleaguered education system to poor persons who need medical care.

Underlying the discussion is the question of the role of public relations at a state agency. Should CIRM be engaged in a taxpayer-financed campaign to perpetuate itself?

All state agencies have a responsibility to communicate effectively with the public. Naturally they peddle a point of view that supports what the agency does. But when do California public servants cross the line between straight-forward communication and aggressive, full-blown marketing/PR campaigns that are commonly found in business and politics.

Beefing up CIRM's PR efforts will not come cheap. The agency is spending about $1.1 million already, according to figures compiled by the California Stem Cell Report. The total includes $616,772 in outside contracts and roughly $500,000 for salaries and benefits for three staff persons, including the $190,008 salary for communications chief Don Gibbons. The figure for outside contracts includes some two-year contracts, including one for $230,000 with Fleishman-Hillard, Inc.

Our total does not include the $200,000 for CIRM sponsorship of the annual convention of the International Society for Stem Cell Research in San Francisco this summer, which could be called a maketing/PR expenditure.

At the Feb. 3, 2010, CIRM directors meeting, both Klein and co-vice chairman Art Torres raised questions about the Fleishman contract. Torres said that the directors communications subcommittee should review it to determine exactly what the firm is doing. Klein also was critical of the news and information clips that are being provided by Fleishman via Gibbons. He circulates the news clips to directors and another version of the clips to CIRM's more than 300 grantees.

Klein's and Torres' comments came during a briefing by Gibbons on the agency's communications effort. He said he and his staff are “reaching for the heart and the brain of the consumer.”

Because “so little” is left of the traditional media, Gibbons said that “bypassing” it is “very important to us.” He said the “gold standard” is face to face communication. He told directors he was preparing computer slides for them to use to speak to groups about CIRM. Another “very, very warm and fuzzy” presentation is also in the works to be used by patient advocacy groups, Gibbons said.

Gibbons cited a report sent to directors at the beginning of the year. It said that from December 2007 to December 2009, CIRM was “mentioned” in 1,233 articles in “various media.” Six favorable opinion pieces or editorials appeared in California newspapers. No negative coverage was reported, although some occurred.

Directors were also briefed on CIRM's online and social media efforts, including its own much improved Web site and presences on Facebook, Flickr and YouTube. The CIRM Web site receives about 11,000 “unique visitors” a month. According to Wikipedia, the term “unique visitor” is “a statistic describing a unit of traffic to a Web site, counting each visitor only once in the time frame of the report.”

About 55 percent of the audience comes from California, including many from CIRM itself and grantee institutions or recipients. Ninety persons, including a “large number” of disease advocacy groups, have signed up for CIRM's electronic monthly digest.

CIRM is making efforts to drive more traffic to its online sites, but that is one of the more difficult chores facing folks in cyberspace. CIRM's numbers are low compared to major news sites, which run into the millions, but its subject is specialized. Few persons wake up in the morning with a compelling need to check out the latest on CIRM's doings.

A high profile breakthrough in research would generate more online traffic as would a scandal. Major stories in the mainstream media also generate significant, new traffic on Web sites. Despite their declining numbers, newspapers remain the backbone of the news business in this country. A front page piece in the Los Angeles Times, which has all but ignored the stem cell agency, could dramatically push up CIRM's numbers at least temporarily.

The fundamental communications challenge for CIRM may well be time, as it is for all media. People only have so much time in their days. What they read and what they do on their computers is linked to what they consider important to their lives and what is high in the public eye. In other words, what people talk about.

In 2004, then President Bush was an unconscious ally of the folks who wanted to create CIRM via a ballot initiative. Without Bush's opposition, hESC research would have remained tucked away in the public consciousness. Bush's stem cell orders instead triggered a tumultuous national debate that raised the visibility of stem cell science and set the stage for voter approval of Prop. 71.

Today, the federal government is funding hESC science. President Obama has rescinded Bush's ban. The grand debate has slipped away, although the adamant foes continue to work their constituencies. Without a strong catalyst, CIRM is likely to have a difficult time raising its profile and building a public relations position that would justify billions of dollars more for stem cell research in California.

The public can take part in Communications Subcommittee meeting at teleconference locations in San Francisco, Irvine, Los Angeles(3), Menlo Park and Emeryville. Addresses can be found on the agenda.

(Editor's note: Gibbons communications presentation begins on p. 121 of the transcript of the Feb. 3, 2010, board of directors meeting. The slides that went with the presentation can be found here(slides 38 through 66). The December report on communications can be found here.)

Analysis of CIRM Challenges on HealthyCal

HealthyCal, a Web site dealing with health issues facing California, has published an analytical overview of the California stem cell agency written by the publisher of this Web site.

It begins:

“A little more than five years ago, visions of seemingly magical stem cell cures danced in the minds of California voters. Lured by the promise of human embryonic stem cells and the intransigence of the Bush administration, Californians voted to borrow $3 billion and give it away to scientists to come up with therapies for ailments ranging from Alzheimer’s to diabetes.

“In approving Prop. 71, voters repudiated the Bush administration ban on funding of human embryonic stem cell research. The voter initiative also created the California Institute for Regenerative Medicine (CIRM), an enterprise unlike any in state history and one that is uniquely independent of the governor and the legislature. It is also an agency that is facing a new set of challenges as it enters its second five years of existence.”

You can read it all here.

The Hidden Cost of Long Hours

The chairman of the California stem cell agency, Robert Klein, likes to point out that the tiny staff at the $3 billion enterprise works long hours to deliver the goods for its directors and the hundreds of researchers and others who enjoy the state largess.

In December, CIRM President Alan Trounson provided a few specifics. He told CIRM directors that some CIRM employees were at work until 11 p.m. He added,

"This morning, it was two in the morning, they were still responding to e-mails from me, so you have to say there's something very special about this group of people."

What Klein and top CIRM management do not mention is the hidden cost of the midnight oil.

What this kind of pace means is that people put off taking legitimate vacations and rack up uncompensated time off, which must be paid for at some point. According to its own annual audit, CIRM owes $370,067 to its employees for “unused compensated leave.” That includes vacations that have not been taken, “annual leave” and compensatory time off for those long hours. Already the agency has paid out $203,022 between 2006 and 2008 to 22 departing employees, according to state figures compiled by California Watch.

(The non-profit newsgathering organization put together the figures for a story by Chase Davis that was carried in some California newspapers today. He reported the state has paid out an estimated $100 million to departing state employees over about 3.5 years, ignoring rules that bar the workers from amassing such huge benefits.)

The CIRM staff, which now numbers in the mid-40s, indeed deserves considerable praise for its diligence. But the reasons for the long hours and resultant stressed staff – not to mention costs down the road – are not so deserving of praise. One can begin with Prop. 71, which is a 10,000-word tribute to micro-management, and immutable micro-management at that. Written by Klein and several other people, it imposed the 50-employee cap that is now deemed by Trounson and others to be endangering the quality of the work at the organization. CIRM wants the cap removed, but that will require an unlikely feat – agreement of 70 percent of both houses of the legislature and the governor. CIRM's top leadership also recently indicated that it would oppose the only legislation to eliminate the cap.

Big run-ups in unused time off also reflect an organization's inability to perform routine tasks routinely. When the staff's energy is often consumed by last minute and late hour scurrying-about, it leaves little room to deal with genuine emergencies or allow time for thoughtful analysis. In the case of CIRM, where careful thinking should be valued, it has prevented its science officers and others from staying in the forefront of the stem cell field through attendance at key scientific conferences. CIRM has declared the importance of such efforts and has budgeted generously for them. But much of the funding remains unused.

Some CIRM directors also have worried publicly about staff burn-out. The fact that 22 former employees are on the list of those receiving time-off payments may be evidence for that concern, given that the staff size has probably averaged somewhere in the 30s for the past five years. One can only wonder why more persons were not hired early on. But hiring itself is a time-consuming process, one that CIRM's top executives may have found difficulty in finding time for.

Hard work and diligence should be recognized. CIRM should also recognize that it cannot and should not rely on its employees to give up regular vacations and time off to burn the stem cell candle at both ends.

Stem Cell Agency Launches High School Education Effort

The California stem cell agency this week announced its online high school study program, which is aimed at helping to provide workers for the biotech industry.

Art Torres, co vice chairman of the stem cell agency, said that California is "a fertile ground for stem cell science," but added that to "realize the full potential of this burgeoning field" requires development of "an educated workforce."

In a news release, CIRM said the high school science program provides “a robust source of educational materials with a wide variety of teaching formats and levels of presentation.” Four units were provided on the CIRM Web site. The agency said the program can be taught in a day or fill a week. Another component is in development.

The program is tied to legislation that requires the state Department of Education to post on its Web site the model curriculum launched by CIRM.

In response to a question, Don Gibbons, chief communications officer for CIRM, said the program cost $45,500 to produce, including the component under development.

We also asked about CIRM's outreach to promote use of the program and whether the agency had an email list for all high school science teachers in the state.

Gibbons replied,

“We previewed it (the program) at the Nat. Bio Teachers Assoc. last November in Denver. The California chapter of that group is just forming and we will ship materials to their organizing meeting in two weeks in Roseville. We developed a list of county science coordinators around our school outreach for Stem Cell Awareness Day and will be reaching out to them, as well as the 50+ teachers who asked for a CIRM researcher guest lecture that day. The state has a master site for high-speed access to on-line resources and we will be posted there. We will be seeking to present at the Cal Sci Educ Conf this October. Etc.”

The CIRM announcement was covered Thursday by the San Francisco Business Times in a brief article by Ron Leuty.

CIRM Directors to Take Position on Affordability, Accountability Measure

Directors of the California stem cell agency on March 4 will take their first public look at new legislation aimed at ensuring affordable access to therapies financed by taxpayers, including proposals to improve accountability and openness at the state research effort.

Also on the table at the meeting of the directors' Legislative Subcommittee is legislation to create a state board to deal with umbilical cord-blood matters.

Already three leaders on the CIRM board, Chairman Robert Klein, vice chairmen Art Torres and Duane Roth, have publicly opposed the affordability and accountability legislation as unnecessary. The CIRM board has successfully resisted every effort over the last few years by lawmakers to make changes in agency operations.

However, this year CIRM has declared that it needs to bypass the voter-approved limit on its staff at 50 persons, an action that the legislation would allow. The restriction was written into the law via Prop. 71 by Klein and others along with caps on agency spending. On the surface, removing the cap would seem to require a 70 percent vote of the legislature, also imposed by Prop. 71. But Klein says the agency is considering unspecified alternatives that would not require a vote of the legislature to avoid the restriction.

Earlier this month, Sen. Elaine Kontominas Alquist of San Jose, chair of the Senate Health Committee, introduced the accountability legislation (SB1064), declaring that CIRM is “essentially accountable to no one.” Introduction of the measure followed recommendations from a sister state panel to CIRM, calling for increased openness and transparency. The action apparently triggered two harsh newspaper editorials concerning CIRM.

The umbilical cord blood measure (AB52) is authored by Assemblyman Anthony Portantino, D-Pasadena. In addition to creating a new state board beginning next January and raising fees on copies of birth certificates to fund it, the measure specifically mentions CIRM. It says,

"California pioneered the first sibling donor cord blood pilot project, and is a world leader in the more general area of stem cell research and its medical applications through the establishment and funding of the California Institute of Regenerative Medicine (CIRM). This makes California ideally situated to become the leader in harnessing the therapeutic potential of nonhematopoietic cord blood-derived stem and progenitor cells."

In addition to the Legislative Subcommittee location at CIRM headquarters in San Francisco, the public can participate in the session at teleconference locations in La Jolla, Davis and Menlo Park. The specific addresses should be posted on the agenda in the next day or two. Comments also may be submitted to the board via email.