Negotiations Underway on CIRM Reform Legislation; Staff Cap Removal Included

Legislation to remove the 50-person cap on staff at the $3 billion California stem cell agency comes before the organization's directors next Tuesday morning as negotiations on the bill appear to be reaching a critical stage.

The proposal must clear the state Senate by May 27, or CIRM will have to wait a year to make another attempt. That would pose difficulties for the agency, which is trying to administer more than $1 billion in grants to more than 300 recipients. CIRM President Alan Trounson warned earlier this year that the quality of CIRM work will suffer without the ability to hire more staff.

Removal of the cap is part of a bill, SB1064 by Sen. Elaine Kontaminas Alquist, D-San Jose, chair of the Senate Health Committee. While CIRM would like to see the cap removed, other provisions in the current measure are not viewed with pleasure by the agency. They include an effort to guarantee affordability of taxpayer-financed stem cell therapies and proposals to improve transparency and management at the five-year-old organization, which is unprecedented in state history.

In the case of the staff cap, CIRM is hoist on a petard of its own making. The cap was written into law by CIRM Chairman Robert Klein and others in an effort to defuse potential arguments against Prop. 71 that it would create a huge new state bureaucracy. Also written into law by Prop. 71 was a unusual requirement that makes it nearly impossible to change such things as the staff cap. Such alterations require a rare, super, super-majority vote of 70 percent of both houses and the signature of the governor. That means that CIRM will have to do some horse-trading to get what it wants.

CIRM Vice Chairman Art Torres, a former state legislator and head of the state Democratic Party, is leading the closed-door negotiations on a possible compromise on the bill. On Tuesday, he hopes to be able to recommend that the CIRM board support a revised bill. In response to a query on Monday, he told the California Stem Cell Report via email that no final agreement had been reached on the legislation. Torres said that the negotiators were awaiting specific language. He said it is possible that no agreement will have been reached by next Tuesday. Another source said, “We're hopeful to have something soon.”

The legislation is now before the Senate Appropriations Committee. If the bill clears that committee, it will go to the Senate floor.

The staff of the committee this week released its analysis of the bill. Among other things, the analysis by committee consultant Katie Johnson said the bill would create additional costs ranging from $400,000 to possibly millions. The $400,000 would be for each of new performance audits of CIRM and its board of directors. The audits would be required every six years, beginning this year. The millions would come into play for additional staff salaries, although that would not affect the state's general fund. The cost would be borne by CIRM, which is financed directly by state bonds(money borrowed by the state).

Johnson wrote,

“Although CIRM is currently under the (staff) cap with 43 employees, it is reasonable that as they make more grants and further develop the loan program, more staff would be needed. CIRM's administrative expenses, including salaries, are capped at 6 percent of bond funds: 3 percent for research and research facilities, including the development, administration, and oversight of the grant making process and the operations of the working groups and an additional 3 percent for the costs of CIRM general administration. CIRM is within their administrative cap, and while paying salaries for new employees would put expenses closer to the cap, it is unlikely to exceed it.”

Members of the public who would like to tell the CIRM board what they think of the legislation will have that opportunity at a host of locations around the state. The specific sites, which range from Healdsburg to Irvine, can be found on the agenda. If you plan to attend, it would be advisable to tell CIRM in advance so there are no glitches in gaining entrance. All of the locations are open to the public by law, but some are in businesses or other locations that may not be accustomed to admitting the general public. The list of locations currently on the agenda is short and more are likely to be added in the next few days, including sites in Sacramento and San Diego.

Keeping the Cash in California: CIRM's Rules

The California Stem Cell Report aims to please. In a comment on the “parochial” item, a reader who identifies himself as Arno has asked for the specific language concerning geographic funding restrictions on research supported by the $3 billion California stem cell agenda.

We have pulled some language from the “Tools and Technologies Awards II” RFA, which is the most recent on the CIRM Web site. Similar, if not identical language, can be found in other RFAs.

The text below is from the “institutional eligibility” section of the RFA.

"All CIRM-supported research must be conducted in California. Principal Investigators may apply from non-profit and for-profit research organizations that are, at the time the Preliminary Application (PreApp) is submitted, conducting research at a site in California.

“'Non-profit organization' means: (1) a governmental entity of the state of California; or (2) a legal entity that is tax exempt under Internal Revenue Code section 501(c)(3) and California Revenue and Taxation Code section 23701d.

“'For-profit organization' means: a sole-proprietorship, partnership, limited liability company, corporation, or other legal entity that is organized or operated for the profit or financial benefit of its shareholders or other owners. Such organizations also are referred to as 'commercial organizations.'”

Here is related text from the PI eligibility section.

“The PI must have an M.D., Ph.D. or equivalent degree, and must be authorized by the applicant institution to conduct the proposed research in California.”

Here is related text from the budget section.

“Salaries for Key Personnel may include the Principal Investigator, Co-Investigators,  esearch Associates, and technical support staff (all of whom must work in California) based on percent of full time effort commensurate with the established salary structure of the applicant institution.”

Here is related text from the research design section.

“For applications from CIRM/CFP(collaborative funding partner) teams, the proposed work should be presented as an integrated project. However, applicants must clearly delineate the  research that will be performed in California and funded by CIRM from the research that will be funded by the CFP.”

(The CFP on this application is Germany.)

Parochial or Global? The California Research Spending Rule and Science

UC Davis stem cell researcher Paul Knoepfler (left) has triggered an interesting discussion on his blog centering on the question: “Does it matter where stem cell research happens.”

This is of considerable interest here in the Golden State, which has a rich, $3 billion stem cell research effort that it is basically limited to California. The reason for that is entirely political. It would have been folly to ask voters to approve the program, as they did in 2004, if the money were going to flow to Harvard, Great Britain and Singapore.

Enforcing and defining the limits on spending are not small issues. The California stem cell agency has written its rules in such a way that companies headquartered elsewhere and also with major operations elsewhere still can receive grants.

One example is the $3.7 million CIRM grant to Maine's Jackson Laboratory. The justification is that the money is largely being spent at the company's Sacramento facility. Out-of-state spending also nearly sank a $5.4 million grant to Evan Snyder at Sanford-Burnham.

However, stem cell research is global. A powerful argument can be made that funding should be global if the science is to avoid pursuing a pinched path of parochialism. Should poor or even average science be funded because it is peculiar to California? Of course, considerable differences do exist on just what is “good” science.

On his blog, Knoepfler cites the case of Advanced Cell Technology of Santa Monica, Ca., which moved its headquarters to California largely because of the passage of Prop. 71. The company, however, apparently has no significant research operations in California. All are in Massachusetts, where it was previously headquartered.

ACT has not received funds from CIRM. Has it sought any? CIRM won't say. The agency cloaks its applicants in secrecy, so it is nearly impossible to tell whether a specific company has applied for taxpayer funds. But one of ACT's researchers complained to the CIRM board about a negative decision on a grant application. The researcher said one of the reviewers had a conflict of interest, which CIRM denied.

Knoepfler and others commenting on his blog wrestle with some of the important issues of geography-based funding, which even extends to choices within California. The main argument, however, for maintenance of the ban on non-California grants is political. Support for CIRM would vanish if it were to send its billions to out-of-state researchers, regardless of the worthiness of their efforts.

(Editor's note: A very early version of this item did not contain the information about the ACT researcher's complaint about a conflict of interest.)

CIRM's Klein Honored by BIO

The largest biotech industry organization in the world this week honored Robert Klein, the first and only chairman of the $3 billion California stem cell agency, as its Biotech Humanitarian of 2010.

Jim Greenwood, president of the Biotechnology Industry Organization (BIO), said of Klein,

“His vision and determination to create alternatives to federal funding for stem cell research helped make the sate of California a global leader in disease research, giving hope and inspiration to millions of patients and families around the world,"

Klein, a Palo Alto real estate investment banker, directed the election campaign that resulted in the passage of Prop. 71 in 2004. The ballot initiative, of which Klein was a key author, created the stem cell agency, an entity which is unprecedented in California history. It also was the first government agency to use borrowed funds (state bonds) to finance scientific research.

Since 2005, CIRM has handed out more than $1 billion in grants and loans to more than 300 recipients.

The BIO award carries a $10,000 prize. Klein donated the funds to Americans for Cures, his personal stem cell lobbying group.

Klein has said he will step down as chairman of the stem cell agency at the end of this year. No names have yet surfaced as a potential successor.

WARF Loses Latest Round on Challenge to hESC Patents

Two watchdog groups said today they have scored a “major victory for unfettered scientific research” in a case involving a WARF patent on human embryonic stem cells.

Consumer Watchdog of Santa Monica, Ca., and the Public Patent Foundation of New York City filed the challenges to the WARF patents on work by Jamie Thomson of the University of Wisconsin.

The groups said in a news release that federal patent regulators have “agreed with the groups that the creation of human embryonic stem cell lines was obvious in the light of work that had been done in other species. In order to obtain a patent, work must be both new and non-obvious.”

WARF, which can appeal the decision, released the following statement.

“WARF has been invited by the Board of Patent Appeals to continue prosecution of this application and plans to do so and vigorously pursue these claims with the patent office. This decision regarding ‘913 does not affect the patent office’s 2008 decision to reaffirm WARF’s two most important base stem cell patents for primate and human embryonic stem cells, ‘780 and ‘806. These reaffirmed patents are not eligible for further appeal in this reexamination process.”

Geron Corp., of Menlo Park, Ca., which holds a license on the patent, said the decision will not “impact” the firm's “dominant human embryonic stem cell patent position.”

The 2006 challenge to the WARF patents was supported by Alan Trounson, then connected to Monash University but now president of the California stem cell agency, Douglas Melton and Chad Cowan of Harvard and Jeanne Loring, director of the Center for Regenerative Medicine at Scripps.

Loring said,

“This is great news for medical research. Human embryonic stem cells hold great promise for advancing human health, and no one has the ethical right to own them.”

The challenge involved three patents. Federal officials originally ruled unfavorably.

The Consumer Watchdog news release said,

“Under current patent law only one of the three (earfier) patent rulings could be appealed by the two groups.  That was the patent rejected by the Board of Appeals and Interferences. However, said the groups, the latest ruling by the Board of Appeals is a strong decision that could set a precedent leading to the revocation of the other two patents as well.

“The two public interest groups noted that the original three patent challenges  had already improved the situation for stem cell researchers; shortly after the PTO launched its initial re-examinations in 2006 at the groups’ request,  WARF announced a substantial easing of its licensing requirements.

“'WARF executives were acting like arrogant bullies blinded by dollar signs,' said (John M.)  Simpson (of Consumer Watchdog). 'Our challenges prompted a more co-operative stance towards the stem cell research community on their part.'”

“Both Consumer Watchdog and the Public Patent Foundation stressed that while University of Wisconsin researcher James Thomson deserved acclaim for his research that isolated human stem cells, important scientific accomplishments are not necessarily patentable.  They said one of the main reasons he was able to derive a human stem cell line was because he had access to human embryos and financial support that other researchers did not have.”

Geron issued a news release on the decision. The company said,

"'This is not a final rejection of the patent claims,' noted David J. Earp, J.D., Ph.D., Geron's chief patent counsel and senior vice president of business development. 'We are confident that WARF will make a strong case in support of the patentability of these claims in continued examination.'"

More Info on Palo Alto Institute Grant

Stanford University shed some light on a basic biology grant approved earlier this week for a researcher linked to the Palo Institute for Research and Education.

Here is what Stanford said in a news release about grants involving the school:

“A fourth Stanford researcher also received funds from CIRM, but the funds will flow through a different organization. Tony Wyss-Coray(at right), PhD, associate professor of neurology and neurological sciences, will receive about $1.52 million to study molecular and environmental factors in the adult brain that support the differentiation of neural stem cells. Understanding how old brains may generate new neurons may help researchers devise ways to combat age-related neurodegenerative diseases. Wyss-Coray has a joint appointment with the Veterans Affairs Palo Alto Health Care System, and will conduct the research as part of the Palo Alto Institute for Research and Education. “

Modest Coverage of Wechsler-Reya Recruitment

The San Diego Union-Tribune has picked up on the story that a Duke cancer stem cell researcher is being recruited to its fair city with the help of a nearly $6 million grant from the California stem cell agency.

Gary Robbins had a brief item yesterday on Robert Wechsler-Reya being courted by the Sanford-Burnham Institute, which is actually in La Jolla, just north of San Diego but totally contiguous. Wechsler-Reya was also mentioned in a piece by Heather Chambers in the San Diego Business Journal, which dealt with grants received earlier this week by local scientists.

The recruitment of the Duke scientist with taxpayer funds was first reported by the California Stem Cell Report last Tuesday.

A Google search turned up no further articles on the subject, although some parties in North Carolina are looking at the story.

Stem Cell Agency Seeking Legislative Removal of 50-person Staff Cap

Directors of the California stem cell agency yesterday decided to work with a state legislator on a proposal that would give CIRM much needed relief from an ill-considered limit that caps the agency's staff at 50.

Previously CIRM was moving towards an effort to kill the legislation, at least for the next year or so, because of other provisions it found less than agreeable.

The cap on CIRM staff was written into law by Prop. 71, which created the $3 billion stem cell research effort in 2004. The limit was an obvious attempt to defuse opposition arguments that the ballot initiative would create another large state bureaucracy. However, in a bit of redundancy, the measure also contained a spending limit on administrative expenses.

The personnel limit left CIRM with a staff about the size of that of a 24/7 Burger King to monitor currently more than 300 researchers and more than $1 billion in grants. Another $2 billion will be going out the door over the next four years or so.

Several months ago, CIRM President Alan Trounson warned directors that the quality of the agency's work could suffer as a result. State Sen. Elaine Kontaminas Alquist, D-San Jose, subsequently introduced legislation aimed at reforming CIRM and ensuring affordable access to taxpayer-financed therapies. The bill, SB1064, also would eliminate the 50 person cap.

Yesterday's action by directors marks the first time that CIRM has moved from adamant and successful opposition to any legislation that would change Prop. 71. The agency has had a sometimes stormy relationship with some lawmakers (see here, here and here) but has gradually moved away from abrasive tactics.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., praised CIRM's new position. In an email, he said,

"Instead of the usual stiff arm extended toward the Legislature from within circled wagons, Art Torres is drawing on his political skills to negotiate a deal that satisfies everyone. It's about time.”

CIRM Vice Chairman Torres, former head of the state Democratic Party and a longtime legislator, told directors that he and others were negotiating with Alquist to come up with legislation that would be acceptable to CIRM and remove the personnel cap. Torres said that he was working to add a provision for compensation for CIRM board members who are patient advocates and who serve on various CIRM working groups. The provision would provide pay for days attending the meetings as well as days preparing for them.

The patient advocate directors, seven in all not counting Torres and Klein, are critical to CIRM's operations because many of the other directors have conflicts of interest that prevent them voting on some matters. Some of the patient advocates, such as UC Regent Sherry Lansing, also have significant conflicts, leaving only about four of five relatively free to vote on almost any matter. The patient advocates, however, can lose salary from their jobs when they take time off for CIRM affairs. Such is not the case with other directors, such as medical school deans and executives, who also have staff that they can use to assist on CIRM matters.

Enactment of a bill is not a foregone conclusion. The CIRM legislation requires a 70 percent vote of both houses of the legislature, an unusual and exceedingly difficult hurdle to clear. It effectively ensures minority control over any changes and was written into Prop. 71 by CIRM Chairman Robert Klein, who plans to step down from his post in December.

It is unclear at this point what other provisions will remain in the bill. Torres said he hopes to conclude negotiations in about three weeks.

Simpson noted Torres' legislative effectiveness and deep contacts in Sacramento. “Kudos to the politically savvy vice chairman,” Simpson said. At the directors meeting yesterday, Torres was careful to note that other directors were involved in lobbying legislators including co-Vice Chair Duane Roth, who has Republican contacts; Lansing, a well-connected former head of a Hollywood studio; Michael Goldberg, a venture capitalist, and Leeza Gibbons, an Alzheimers patient advocate and Hollywood celebrity.

Simpson indirectly noted that salaries at CIRM, among the highest in state government, could provide a public relations problem in the State Capitol, where lawmakers have already made draconian budget cuts. In a reference to Torres' salary, Simpson said, “At $225K a year given the state's financial crisis, they're still paying him too much.”

Our take? We disagree with Simpson about Torres' salary but do think that CIRM salaries, whose range tops out at $508,750 for the CIRM president, pose a perception problem that needs to be carefully handled by CIRM.

Scanty Coverage of CIRM's $28 Million in Grants

The announcement yesterday that the California stem cell agency had given away $28 million for research attracted extremely modest attention in the mainstream media.

Our automated searches turned up only two brief items today: one in the San Francisco Business Times and one on the Orange County Register Internet site. Both focused primarily on the grants in their local areas.

The light coverage was to be expected. CIRM is receiving little media attention, a situation that is likely to continue short of a scandal or major research breakthrough.

$22 Million for Biology: CIRM Directors OK Two Reviewer-rejected Grants

California stem cell directors today approved more than $22 million in basic biology grants, overturning negative decisions by reviewers on two applications.

The directors ratified all 14 grants supported by reviewers, plus applications from researchers at UC Davis and the Sanford-Burnham Institute in La Jolla. The total was well under the $30 million that CIRM budgeted for the biology grant round.

The Davis grant was the subject of an “extraordinary petition” by its top researchers, Eric Kurzrock and Jan Nolta. They said in their petition that reviewers “simply overlooked important details” and committed “factual errors.” The petition was initially rejected by CIRM staff but the board decided to approve the grant for “programmatic” reasons.

Nolta appeared before the board along with patient advocates, including a tearful mother with an ailing child. Nolta is one of the few researchers who regularly attend CIRM board meetings. Patient advocates also sometimes attend board meetings and speak on behalf of specific grants.

The Nolta grant was approved on an 11-9 vote, but the board cut the amount of the grant by one-third. CIRM listed the grant at nearly $1 million in its news release.

Another extraordinary petition was rejected by the board. It was filed by Edward De Robertis of UCLA, who is also a Howard Hughes Medical Investigator. He appeared personally before the board last night. De Robertis has not been a regular at board meetings. Nor did patient advocates speak on behalf of his research.

CIRM directors also approved a $1.6 million application by Huei-sheng Chen of Sanford-Burnham that reviwers had nixed.

Fourteen of the 16 grants went to institutions that have representatives on the CIRM board. That is in keeping with the pattern over the last five years. More than $900 million out of the $1 billion in grants so far have gone to institutions with links to board members. CIRM directors with conflicts of interest are not allowed to vote on or take part in the discussion about the applications affecting their enterprises.

Of the non-board-connected recipients, one $1.5 million grant went to a business, iPierian, Inc. a South San Francisco biopharmaceutical company, and researcher Barta Strulovici. Another $1.5 million grant went to Tony Wyss-Soray at the Palo Institute for Research and Education, a nonprofit involved with the Veterans Administration system.

CIRM received 154 pre-applications  in this round that were screened by staff and a few outside reviwers. Fifty-seven pre-applicants were invited to make full applications. Fifty-two applications were received and reviewed. Reviewers made positive decisions on 14, which they sent to the board. CIRM did not announce the number of applications received from businesses.

Duke Researcher Wins $6 million Grant From California -- With a Condition

California will give a Duke University cancer stem cell research nearly $6 million if he comes to work in the Golden State at the Sanford-Burnham Institute in La Jolla.

Directors of California's $3 billion stem cell agency, as expected, today approved the research grant for Robert Wechsler-Reya. The grant is the first installment in a $44 million program aimed at luring eight stellar researchers from their posts elsewhere in the country.

Wechsler-Reya's name was not mentioned during the brief discussion of the grant by CIRM directors at their meeting in Los Angeles. But the California Stem Cell Report identified him on Tuesday. CIRM issued a news release today that confirmed our report.

CIRM Chairman Robert Klein indicated that negotiations between Burnham and Wechsler-Reya need to be concluded by the end of June, a stipulation that Burnham has apparently agreed to. Klein said approval of the grant “would be helpful in concluding the relationship.” Burnham is additionally courting Wechsler-Reya's spouse, Tannishtha Reya, another Duke researcher.

CIRM expects to review another round of applications in its recruitment program in July. The agency needs to know whether it has eight or seven grants left to make.

CIRM President Alan Trounson said it was also important to have some diversity in expertise among the scientists who are recruited. In other words, CIRM does not necessarily want to lure only cancer stem cell scientists to the state.

At one point on Tuesday, CIRM's outside counsel, James Harrison, said the grant was being taken off the directors' agenda. His statement followed our item that said Wechsler-Reya had not made a decision about leaving Duke. Later in the day, Harrison said that he made a mistake about the matter.

Burnham will not be eligible for another recruitment grant if the Wechsler-Reya goes through. Each institution is limited to one.

CIRM Directors Meeting Underway

Directors of the California stem cell agency have begun their meeting today. They are currently discussing applications for basic biology grants. Reviewers recommended funding 14 for a total of $19.6 million. Last night directors discussed scores on grants that were not recommended for funding, raising the possibility that some might be funded.

CIRM Receives Another $112 Million

Alan Trounson, president of the California stem cell agency, last night outlined his priorities, provided more details on a key strategic review of its program and sketched out upcoming CIRM events.
Directors were also told that the agency received an additional $112 million as the result of recent California state bond sales. That should ensure CIRM has enough cash to operate until the end of 2011. Bonds are virtually the only source of cash for the agency, but they flow directly to CIRM untouched by the governor or legislature.

CIRM has posted Trounson's slide presentations on its Web site. Also included are biographies of scientists who will participate in the strategic review. You can find Trounson's presentation here, budget information here and the biographies here.

California Stem Cell Directors End Public Session Tonight

Directors of the California stem cell agency just concluded their public session tonight without approving any grant applications or taking other significant action. Their session will resume tomorrow morning at the City of Hope in the Los Angeles area. We will have coverage again then.

$5.9 Million Grant to Duke Scientist Moving Forward Again

Directors of the California stem cell agency began a discussion tonight of a $5.9 million grant to help lure a Duke University scientist to California despite a statement earlier today that the matter would not be brought up.

James Harrison, outside counsel to CIRM, this afternoon said in an email that the matter would not be considered. Asked about the change this evening, Harrison replied in an email, “I was wrong! Chalk it up to miscommunication while everyone was in transit.”

CIRM Chairman Robert Klein initiated a staff presentation on the application. Directors discussed it briefly and will discuss it again tomorrow in public after it comes up in an executive session tonight.

The grant is expected to go to Robert Wechsler-Reya to help recruit him to the Sanford-Burnham Institute.

John Reed, CEO of the institute, is a member of the CIRM board of directors. His alternate, who is filling in for him tonight, will not be allowed to participate in the discussion or vote on the grant.

CIRM Directors with Conflicts of Interests on Biology Grants

Here is the list of the CIRM board members scheduled to be recused from voting on or discussing grant applications this evening on which they have conflicts of interest. You can find the review summaries of the grants here. The list was prepared by CIRM legal staff.
CIRM Basic Biology Award II
Application # Members in Conflict
RB2-01494 Feit,Hawgood,Lansing,Sheehy
RB2-01496 Lansing,Levin,Steward
RB2-01497 Brody,Goldberg,Pizzo
RB2-01498 Brody,Goldberg,Pizzo
RB2-01499 Azziz
RB2-01500 Lansing,Penhoet,Price
RB2-01502 Azziz,Lansing,Levey
RB2-01504 Gill,Lansing
RB2-01507 Brody,Goldberg,Pizzo,Pomeroy
RB2-01512 Fontana
RB2-01514 Gill,Lansing
RB2-01523 Azziz,Lansing,Levey
RB2-01526 Feit,Hawgood,Lansing,Sheehy
RB2-01527 Pomeroy
RB2-01530 Brody
RB2-01534 Lansing,Levin,Steward
RB2-01540 Feit,Hawgood,Lansing,Sheehy
RB2-01542 Bloom,Fontana
RB2-01547 Bloom,Gill,Lansing
RB2-01549 Feit,Hawgood,Lansing,Sheehy
RB2-01550 Lansing,Levin,Steward
RB2-01553 Brody,Goldberg,Pizzo
RB2-01562 Azziz,Lansing,Levey
RB2-01566 Brody,Goldberg,Pizzo
RB2-01567 Feit,Lansing,Pomeroy,Prieto
RB2-01571 Azziz,Lansing,Levey
RB2-01577 Lansing,Levin,Steward
RB2-01580 Brody,Feit,Goldberg,Hawgood,Lansing,Pizzo,Sheehy
RB2-01581 Brody,Goldberg,Pizzo
RB2-01585 Gill,Lansing
RB2-01588 Azziz,Lansing,Levey
RB2-01592 Brody,Goldberg,Pizzo
RB2-01597 Feit,Hawgood,Lansing,Sheehy
RB2-01598 Fontana
RB2-01600 Brody,Goldberg,Lansing,Pizzo
RB2-01602 Feit,Hawgood,Lansing,Sheehy
RB2-01603 Lansing
RB2-01608 Feit,Gill,Hawgood,Lansing,Sheehy
RB2-01609 Azziz,Lansing,Levey
RB2-01616 Brody,Goldberg,Pizzo
RB2-01622 Brody
RB2-01627 Lansing,Levin,Steward
RB2-01628 Pomeroy
RB2-01629 Lansing,Levin,Steward
RB2-01630 Brody,Goldberg,Pizzo,Pomeroy
RB2-01637 Brody,Goldberg,Pizzo
RB2-01640 Brody,Goldberg,Pizzo
RB2-01645 Brody,Gill,Lansing
RB2-01646 Bloom,Gill,Lansing

Live Coverage of Today's CIRM Directors Meeting

We will have live coverage and stories as warranted from today and tomorrow's meeting of the CIRM board of directors. We will be listening via the Internet from our post here on the water in El Salvador. The agenda includes $30 million in grants, perhaps reasons for the delay on the Wechsler-Reya grant, changes in outside contracting policies and a vote to stifle legislation that would reform CIRM and ensure the affordability of any taxpayer-financed therapies. The meeting begins at 4 p.m. PDT.

Action Stalled on $5.9 Million CIRM Grant to Recruit Duke Scientist

The California stem cell agency today called an abrupt halt to scheduled approval of a $5.9 million grant to lure a Duke University cancer stem cell researcher to the Sanford-Burnham Institute in La Jolla, Ca.

No reason was immediately offered for the removal of the grant application from the agenda today of the CIRM directors. James Harrison, outside counsel for CIRM, said in an email,

“This item will not be considered at this meeting.”

The CIRM governing board was expected to approve the funding for Robert Wechsler-Reya at their two-day meeting in the Los Angeles area. It would have been the first grant in a $44 million, two-year program to assist California institutions in recruiting top scientists.
Wechsler-Reya and his spouse, Tannishtha Reya, also a Duke stem cell scientist, are both being courted by the Sanford-Burnham.

We are seeking more explanation from CIRM and comment from Wechsler-Reya.

Wechsler-Reya Still Mulling Move to California's Burnham

Cancer stem cell researcher Robert Wechsler-Reya says he has not yet made a decision to leave Duke University and come to California, where he would be the recipient of CIRM's first Research Leadership Award.

Directors of the California stem cell agency today or tomorrow are scheduled to approve a $5.9 million grant for Wechsler-Reya to help lure him and his wife, stem cell scientist Tannishtha Reya, to the Sanford-Burnham Institute in La Jolla, Ca.

The California Stem Cell Report yesterday queried Wechsler-Reya concerning the award. Here is the verbatim text of his response:

“Thanks for your interest in the Leadership award.  I just recently received the news, and am very honored to have been chosen by the CIRM committee as the first recipient of this Award.  The prospect of interacting with the vibrant stem cell community at Sanford-Burnham, and in the broader San Diego area, would be truly unique, and we are really excited about this opportunity. However, as you can imagine, this would be a major move for me and my family, and therefore we plan to take some time to think about it before making a decision.

“In that vein, a couple of suggested corrections to your blog:

“- Since I have not yet decided to leave, I wouldn't say that I'm leaving Duke. ('He is considering leaving Duke' would be more accurate)

“- I'm not sure the first round drew only one applicant; there may have been more applicants, but the committee made only one award

“If you have any other questions, please feel free to contact me.  (I'm giving a talk tomorrow, and out of town until Thursday, so it may take me some time to get back to you).”

CIRM Millions To Help Snag Duke star Wechsler-Reya for Burnham

The recipient of CIRM's first Research Leadership Award, with $5.9 million in funding, is Robert Wechsler-Reya (at left) of Duke University, a reliable source said today.

He told the California Stem Cell Report he is considering leaving Duke and joining the Sanford Burnham Institute in La Jolla, Ca., where the CIRM-funded research is expected to be performed. Sanford Burnham is providing “an extremely generous commitment of laboratory space, matching funds for equipment, additional support for relocation and research, and access to excellent core facilities,” CIRM grant reviewers said.

(An earlier version of this item said Wechsler-Reya had decided to leave Duke. After it was published, he said in an email that he had not yet made a decision. CIRM, however, does not fund work performed outside of California.)

The reviewers also said that Sanford Burnham “has committed to recruiting the candidate's spouse(Tannishtha Reya, also at Duke, photo at right), who is an independent stem cell scientist; this represents a particularly beneficial leveraging of award funds.”­

The leadership award program, budgeted for a total of $44 million over two years, is aimed at recruiting top talent to California by means of assisting institutions with financing. The effort's goal is to attract perhaps eight scientists, although the first round this year drew only one applicant.

The stem cell agency has not identified Wechsler-Reya in keeping with its secrecy policy concerning the names of applicants. Directors are expected to approve the grant either tomorrow or Thursday. Then the agency will confirm the name.

John Reed, chief executive of Sanford Burnham, is also a member of the CIRM board of directors. He or his alternate is expected to be recused from both the discussion and voting on the grant for Wechsler-Reya. Reviewers have already approved the grant. CIRM directors almost never overturn positive decisions by reviewers, who conduct their work behind closed doors.

We have queried both researchers concerning the grant and their plans. We will carry their responses verbatim when we receive them. (See the "Still Mulling" item.)

CIRM's Nearly $6 Million Carrot

The California stem cell agency this week is expected to pony up $5.9 million to help lure an unidentified but “emerging leader” in cancer stem cell research to the Golden State.

The multi-year grant is the first in CIRM's fledgling program to assist California institutions with recruiting top talent from elsewhere in the country.

In keeping with its policy of secrecy concerning the names of applicants, the agency did not disclose either the name of the individual or the institution involved. But you can read a summary of reviewer comments here in which they gave the application a score of 83 out of 100.

No other applications were listed in the first round of what CIRM calls its Research Leadership Awards Program. The $44 million, two-year effort is aimed at recruiting top talent – “the most productive and promising early-to-mid career scientists in stem cell biology and regenerative medicine.”

The program stands to benefit some of 14 or so institutions that have representatives (some have more than one) on the 29-member CIRM governing board, which will vote on the application from the researcher Wednesday or Thursday at its meeting in the Los Angeles area. CIRM staff does not reveal the names of the applicant or institution to directors.  If a director has a conflict on an agenda item, he or she is not permitted to vote on the matter or even take part in the discussion. Following the vote, CIRM will disclose the winner in a press release.

The initial response to the recruitment assistance program seems modest, but CIRM is aiming to attract perhaps only eight researchers. And that depends on whether institutions such as the University of California, Salk, Scripps and others can offer up suitable candidates. At one point Kevin Eggan and Amy Wagers, both of Harvard, were identified in stem cell scuttlebutt as possible targets of the recruitment effort. But it is unclear whether they are still in play.

The awards are likely to draw more attention as institutions and potential candidates begin to focus on the largess to be approved later this week.

Remcho Up for 30 Percent Hike at CIRM; Contracting Changes Also on Table

Directors of the California stem cell agency are being asked this week to approve a 30 percent, $150,000 annual increase in payments to its longtime outside legal counsel, who gives advice on everything from the performance evaluation of the CIRM chairman to pregnancy leave.

The contract with Remcho, Johansen & Purcell of San Leandro, Ca., comes before CIRM directors Wednesday and Thursday at their meeting in the Los Angeles area.

Also on the agenda are revisions in the agency's policies for the outside contractors that are absolutely essential to CIRM's operation. Contracts with outside enterprises total roughly $3 million. Their expenses are the second largest item in CIRM's operational budget.

Documents detailing the Remcho and contract policy moves were posted on the CIRM Web site on Friday, only two business days before the CIRM board meeting.

In the case of Remcho, its man at CIRM is James Harrison, who worked with CIRM Chairman Robert Klein during the Prop. 71 campaign that created CIRM in 2004. Klein, Harrison and a few others wrote the ballot initiative.

Remcho was hired in a no-bid contract after the election. Klein has said that arrangement was approved by the state attorney general because of the specialized nature of Prop. 71.

Remcho currently has a two-year, $1 million contract with CIRM that ends this June. Directors are being asked to add $150,000 this year to the contract and approve a new one for 2010-2011 for $475,000.

CIRM staff prepared a three-page memo detailing the scope of Remcho's work, which includes virtually every piece of the CIRM pie: its finances, $500 million loan biotech industry loan program, contract negotiations, performance evaluation of the chairman and president, preparation of RFAs, contracting policies, legislation and even creation of a pregnancy leave policy.

The memo, however, did not state a reason for the $150,000 increase this year for Remcho nor did it say whether the hike was for work already performed.

Remcho bills CIRM at a rate of $350 an hour for work by its partners and $265 for associates, which CIRM says is significantly discounted. The contract would amount to about 3,100 hours for one partner, roughly a year-and-a-half of fulltime work, assuming a 40-hour week and two weeks vacation.

Directors are additionally being asked to alter their existing contracting policies in a manner that would remove some contracts from their normal oversight. Under the proposed changes, Remcho's contract and others below $600,000 for any single year would not have to be approved by the CIRM board.

New policy language would state:

“When a contract has a duration greater than 12 months, the approval threshold shall be based on the contract amount authorized for the initial year and separately for each subsequent year.”

No justification for the addition of the language was presented by CIRM staff, but it would clarify some ambiguities. It would also give the staff far greater leeway in executing contracts and avoid coming to the board with matters that could be controversial.

Board approval would be required only when the amount of the contract “is expected” to be more than $600,000, instead of the current $500,000. Approval of the directors' Governance Subcommittee would be required when the contract is likely to be more than $300,000 instead of $250,000.

Our take? Harrison performs admirably for CIRM. He is more than competent and nearly unflappable. But the arrangements that led to Remcho's close ties to CIRM, totally acceptable in the world of business, raise persistent concerns involving fairness to other law firms that might bridle at suggestions that they could not perform the lucrative work as well as Remcho. It may be impossible, for all practical purposes, to open the work to others, but directors should recognize the perception problems the contract presents.

As for the changes that would remove some contracts from the directors' approval, they should be rejected. CIRM's unusual dependency on outside help in a business and academic world of competitive secrets plus its need to monitor more than $1 billion in research requires careful and regular oversight by directors.

CIRM Directors to Hand Out $30 Million and Wrestle with Contracting Policies

Directors of the California stem cell agency meet next Wednesday and Thursday in the Los Angeles area to give away more than $30 million and to make undisclosed changes in its policies for outside contracting, which now run roughly $3 million annually.

CIRM, which is limited by law to only 50 employees, is heavily dependent on outside contractors for everything from public relations to legal advice to federal lobbying. Outside contracts are the second largest item in CIRM's operational budget, behind only its salaries and benefits.

The outside work includes such sensitive matters as computer systems and programs involving proprietary information from grant applicants and recipients and oversight of their performance.

The agenda for next week's meeting contains no information on exactly what contracting changes are being proposed. That is in keeping with CIRM's de facto policy of withholding such details from the public until it is too late for interested parties to comment in a timely fashion. With only three business days remaining before the meeting, CIRM Chairman Robert Klein has released only six words on the proposed changes: “consideration of amendments to contract policy.”

In a related matter, the board will consider the agency's contract with Remcho, Johansen and Purcell of San Leandro, which has served as its primary legal adviser since 2005. Currently it has a two-year, $1 million contract that is scheduled to expire at the end of June. CIRM also withheld information on the Remcho agenda item.

As far as grants go, the board is scheduled to hand out a budgeted $30 million for “basic biology” research and another undisclosed amount for CIRM “research leadership awards.” The latter program is new and is budgeted for $44 million over two years with grants as high as $4.5 million each. The purpose of the program is to assist institutions in luring “paradigm-shifting” scientists to California.

The basic biology round is aimed at both business and nonprofit applicants, including proposals with Japanese collaborators.

Here is a link to scores on all the biology grants to be considered next week along with summaries of reviewer comments, although the directors' agenda does not provide a link to the information. (Review summaries could not be found on the CIRM Web site for the researcher recruitment grants.)

Reviewers approved 14 biology grants, including a $1.4 million application with a score of 66. That grant was slotted for approval despite having a lower score than two other grants that scored ahead of it with 71 and 69.

The directors have final legal authority on approval but almost never overturn a favorable decision by scientific reviewers, who operate behind closed doors and do not have to disclose publicly their economic and professional interests.

Concerning the grant with the 66 score, the CIRM review summary said,

“The reviewers acknowledged that the PI is a strong leader in his/her field with an outstanding publication record in high impact journals. They did note, however, a limited experience with hESC or iPSC. While they appreciated the complementary expertise of the collaborators, the reviewers were puzzled by what they perceived to be a lack of engagement with the local community of stem cell scientists at the applicant's institution. The research environment and facilities were considered excellent.”

Under the “programmatic review” section of the summary, CIRM indicated the rationale for approval. CIRM said,

“A reviewer reasoned that this proposal fills a programmatic need in the area of hematopoiesis for CIRM. Though the application was judged risky, the proposal was felt to represent a scientific direction with great potential. The review panel discerned that the benefits of studying RUNX1 in humans warranted the risks and outweighed the concerns over feasibility.”

One scientific reviewer did not participate in the decision because of a publicly undisclosed conflict of interest. He is Ali Brivanlou of the Rockefeller University. The grant review group includes members of the CIRM board who also may vote during the group's review process.

Significantly not on the agenda is an item dealing with compensation for a new vice president of research and development, whom the agency has been seeking since last summer. The matter has been on the table for several past meetings. The absence this time could mean that no further discussion of the matter is required since a person has been hired. If so, look for an announcement next week.

CIRM directors are also expected to seek to stifle the latest legislative attempts to reform CIRM operations, improve its transparency and ensure affordable access to taxpayer-financed therapies. Their strategy is to have the measure, SB1064, sent to interim study, which would shunt the effort aside for a year or so.

The board meeting will be available via the Internet(audio only). The Wednesday meeting will take place in Monrovia at the Doubletree Hotel and Thursday at the City of Hope in Duarte. Instructions for logging into the audiocast can be found on the agenda. If you want to follow the discussion, you may want to have a copy of the agenda and any background material handy for reference.

CIRM Reform Legislation Advances in Senate

Despite industry opposition, legislation aimed at improving transparency and accountability at the $3 billion California stem cell agency easily cleared its first legislative hurdle this month.

The bill, also aimed at ensuring affordability of taxpayer-financed stem cell therapies, was sent to the state Senate Appropriations Committee on a 6-0 vote in the Senate Health Committee, which is chaired by the bill's author, Sen. Elaine Kontominas Alquist, D-San Jose.

The California Healthcare Institute opposed the bill, SB1064. The biomedical industry group said the measure's requirements for affordability would create a “disincentive” to commercialization of therapies and give CIRM less flexibility.

The board of the stem cell agency is expected next week to formally ask that the bill be sent to interim study, which would effectively kill the measure for the next year or so. However, the legislation contains a rather large carrot for the stem cell agency, which is struggling with a legal cap that limits it to only 50 employees to monitor the $1 billion in grants CIRM now has out – not to mention another $2 billion that it intends to give away. The legislation would remove the staff limit, which CIRM President Alan Trounson has said is endangering the quality of CIRM work. A spending limit on administrative expenses would remain in place.

CIRM Chairman Robert Klein and a handful of his associates in 2004 wrote the staff cap into the 10,000-word ballot measure, Prop. 71, that created the agency. It was an obvious ploy to defuse potential opposition arguments that CIRM would become another large government bureaucracy. Klein led the political campaign on behalf of Prop. 71.

Earlier this year, Alquist said that she was introducing the legislation because CIRM is essentially accountable to no one. Her action followed a call by a sister organization to CIRM that urged greater accountability and transparency on the part of the agency, whose 29-member board is packed with representatives of institutions that have received the bulk of the $1 billion given by CIRM.

The sister organization is the Citizens Financial Accountability Oversight Committee and is chaired by state Controller John Chiang, the state's top fiscal officer. Chiang endorsed Alquist's legislation as did the Little Hoover Commission, a state good government agency that studied the stem cell agency. Much of the Alquist legislation is based on the findings of the Hoover Commission.

Among other things, Alquist's bill would eliminate overlapping responsibilities between the CIRM chairman and president, which have been the source of turmoil in the past. It would change the selection process for the chairman and require performance audits of CIRM and its directors. Currently, CIRM operates with unprecedented autonomy in state government. Its finances and budget cannot be touched by the governor or the legislature. Cash flows from state bonds directly to CIRM in an unfettered stream, regardless of the state's financial crisis and severe cut backs elsewhere.

According to the Health Committee staff analysis by Lisa Chan-Sawin, Alquist states that

“while stem cell research is an important and laudable goal, concerns about transparency, accountability and oversight raised by the public, the independent Citizen's Financial Accountability Oversight Committee, the Little Hoover Commission, and the State Controller detract from CIRM's ability to provide grants and loans in the most efficient way. These concerns divert resources and attention from CIRM's ability to maximize voter's investment in stem cell sciences.”

Exciting(?) California Stem Cell News Upcoming

Look for fresh items beginning tomorrow on the California Stem Cell Report. We have finished our obeisance to King Neptune with a four-night, nonstop, sleep-deprived passage from Mexico to El Salvador. We are now ensconced in a rustic marina at the mouth of the Estero de Jaltepeque after surfing over the bar this morning in our 39-foot home, the sailing vessel Hopalong.

Off to El Salvador

The California Stem Cell Report, which has been quiet for the past week or so, will also be quiet until late next week. We leave tomorrow morning on a passage to El Salvador from Hualtuco in southern Mexico, roughly a four or five night sailing voyage. We will bring you all the California stem cell news that is fit to print after we drop anchor in Bahia del Sol and catch up on our sleep(sailing 24 hours a day also means standing watch night and day with only two persons aboard).

Knoepfler Blog Added to Links

We are in the midst of cleaning up the aging links that we have posted on the California Stem Cell Report. But first we want to call your attention to a new addition – the Knoepfler Lab Stem Cell Blog.

It is a researcher-oriented blog written by UC Davis Assistant Professor Paul Knoepfler and the folks at his lab. Knoepfler is interested in developing an exchange of information and discussion of issues among researchers, focusing on the science of stem cells. Some of the blog's recent headlines include: "Stem Cell Myths -Part 2- Teratoma are Good," "Stem Cell Banking--how far should we go?" and "What will be the next big news/paper on iPS cells?"

If you have a suggestion for a link to an Internet site dealing with stem cell issues, particularly those related to California, please send your suggestions to djensen@californiastemcellreport.com.

Latest on New CIRM VP and Compensation

The California stem cell agency could be eyeing the possibility of beefing up non-salary compensation for a new vice president, who it has been seeking to hire since last summer.

The move appears to be in lieu of boosting the existing VP pay range beyond $332,000 and comes as CIRM President Alan Trounson seems to closing in on a candidate. On two recent occasions, the question of compensation for the new VP for research and development has been on the agenda of CIRM directors. In both cases, however, it was removed with no action. CIRM Chairman Robert Klein explained on one occasion that negotiations were not quite at the appropriate stage.

We have reported that directors were expected to be asked to increase the salary to meet the demands of the new VP. Otherwise there would be no reason to place VP compensation before directors. However, Don Gibbons, chief communications officer for CIRM, said in an email:

“You should know that despite your repeated assertions otherwise, there has never been any discussion of exceeding $332,000.”

We then asked Gibbons whether other types of compensation were being considered or the compensation package restructured in some way. Gibbons replied that “parts of compensation packages other than annual salary can require board review,” but did not elaborate.

The salary is touchy politically because California remains in the throes of a financial crisis that has resulted in major cutbacks around the state. CIRM, on the other hand, has not felt the impact because its budget cannot be touched by the governor or the legislature.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., attended the last directors meeting that was scheduled to address the compensation issue. He asked CIRM Chairman Klein about the matter.

According to the meeting transcript, Klein replied:

“We continue to calendar it and will for flexibility in each of our calls until we have gotten to a point that we can make a decision. It provides us the flexibility to consider it. But until we get to the point where we have done all of our due diligence and come to final terms, we're not in a position to take any action if, in fact, action is required. The president has the authority to hire this person. And to the extent that they need any additional approvals from us, we carry that on our agenda. So until we've hired him, we'll continue each time to have it on the agenda because it gives us flexibility.”

Geron and ACT Could Apply in $50 Million Clinical Trial Loan Program

Two more potential applicants for the California stem cell agency's $50 million clinical trial program were identified today by Nature Medicine magazine.

­

In a piece by Christian Torres in its April edition, the magazine indicated that Geron of Menlo Park, Ca., and Advanced Cell Technology of Santa Monica, Ca., may well apply.

Torres wrote:

“Trials must take place in the state to qualify, and only companies or researchers with an investigational new drug (IND) application on file with the US Food and Drug Administration (FDA) are eligible for funding. Currently, that leaves only two known projects in the running: a treatment for spinal cord injury by Menlo Park–based Geron and a therapy for Stargardt’s macular dystrophy, a retinal disease, by Santa Monica–based Advanced Cell Technology.”

Earlier, iPierian, Inc., of South San Francisco was identified as another potential applicant.

The Nature magazine article indirectly raises questions about whether iPierian would be eligible for the loan program. The clinical trial proposal approved by directors last month said that applicants would be required to have an “IND filed by application deadline on the novel cell therapy derived from human pluripotent stem cells proposed for CIRM funding.”

However, during the board discussion, CIRM staff said the filing would be required three weeks prior to the grant review, probably in October. An “active” IND would be required at the time of the notice of award, which typically would be within six months of board approval of the application. CIRM President Alan Trounson would also have the ability to extend that another six months.

(The board discussion can be found beginning on page 41 of the meeting transcript.)

We are querying iPierian about its intentions.

Last month, Trounson said he knew of only three companies that would be in a position to apply for the clinical trials loans.

Torres also interviewed the co-chair of iPierian's scientific advisory board concerning the CIRM program. Torres wrote,

“Deepak Srivastava(at right), director of the Gladstone Institute of Cardiovascular Disease in San Francisco(and iPierian's scientific co-chair), says the CIRM announcement is important for academic researchers who 'have faced a major road block with venture capitalists and companies, who find these therapies too risky for their appetite.'

“'With CIRM, we can finally fund this high risk, but necessary, step,' he says.”

The RFA for the clinical trial program is expected to be posted next month, with board approval of one or two applications in December.

Ipierian to Seek Multimillion Clinical Trial Loan from CIRM

One of the handful of companies likely to be eligible for CIRM's ambitious clinical trial loan program has identified itself – iPierian, Inc., of South San Francisco.

According to Ron Leuty of the San Francisco Business Times, the firm will seek funding for possible therapies for Lou Gehrig's disease and spinal muscular atrophy.

Last month, CIRM directors approved the $50 million program, its first venture into clinical trials. The one or two winning applicants could see cash by the end of this year. Directors were told that perhaps only three firms might be eligible to apply. They were not identified at the meeting because that would raise conflict of interest questions. CIRM also does not identify applicants for grants or loans for fear of embarrassing them if they lose their bids for cash.

Leuty wrote about the CIRM clinical trial program on Friday. He quoted John Walker(at left), president of iPierian, as saying that CIRM's assistance fits “very nicely” with the company's plans to generate a therapy candidate within three years.

Ipieran is backed by Kleiner Perkins Caufield and Byers, Highland Capital Partners, FinTech Capital Partners and MPM Capital, which have provided $31.5 million to the firm.

Ipierian came into being last July when iZumiBio and Pierian merged. The company's Web site said it was collaborating with Gladstone Institutes and Kyoto University's Center for iPS Cell Research and Application with Shinya Yamanaka, whose lab first succeeded in creating iPS cells in mice.

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.