Klein's Maneuvers, CIRM's Reputation and Bernstein's

A Canadian scientist yesterday pretty much identified a bottom line on the attempt by CIRM Chairman Robert Klein to hand pick his successor at the $3 billion public research agency.

In an interview with the Toronto Globe and Mail, Alan Bernstein said the publicity about the machinations “compromises his international reputation and the reputation of the [California] agency.”

Bernstein knows because he was the man Klein tried to name as his successor. Bernstein, head of HIV Global Vaccine Enterprise of New York, referred to publicity in news articles here and elsewhere that reported a ruckus about closed-door meetings and possible conflicts of interest involving Klein's maneuvers.

Reporter Carolyn Abraham began her article by declaring the tale was a “strange story.” She added,

“In the small and highly specialized world of stem cell research, it is even stranger still.”

It was interesting enough to draw 278 comments from readers. (On Monday morning, the Globe listed the article as the most widely read science story on its site.)

The conflict allegations were first reported in the Los Angeles Times and referred to Bernstein's role as chairman of a blue-ribbon panel that reviewed CIRM's operations and found them “extraordinary.” The panel's report is scheduled to be discussed at Wednesday's CIRM board meeting.

In his first comments about the conflict matter, Bernstein told Abraham,

“There was no conflict of interest, the review was done before I was approached about this job.”

Abraham continued,

“He (Bernstein) said Mr. Klein contacted him only recently to ask if he would be interested.
“'I didn’t go after this job, I’m very happy where I am,' he said, 'pumped about the research in HIV prevention. …But what do they say – you can’t say no to The Terminator?'”

Terminator is a reference to California Gov. Arnold Schwarzenneger, one of four state officials who can nominate a person for CIRM chair. The full CIRM board elects a chair from those who are nominated, although the board could reject them all.

Abraham wrote,

“In an interview Friday, Dr. Bernstein said he had received a personal letter from Gov. Schwarzenegger last week saying he was pleased to nominate him for the top job. But this week, he said, the governor wrote again with regrets that he would have to withdraw his nomination because of his citizenship.”

The governor's nomination of Bernstein was never released by the governor's office or CIRM. However, the lieutenant governor did, in fact, nominate Bernstein in a letter dated Nov. 30, but withdrew it later.

Late Thursday following the media flap, Klein for the first time said that Bernstein could not serve because of his Canadian citizenship. In a news release, Klein said “a technical legal requirement” barred Bernstein as a nominee. (We should note that an Australian, Alan Trounson, is president of the stem cell agency.)

Early Friday morning, we asked Don Gibbons, communications chief for CIRM, to point us to the law that Klein mentioned. We asked again late Friday afternoon. Gibbons has not replied.

The Canadian issue rankled some top scientists in Canada. Abraham wrote,

“'CIRM should be picking the best candidate for the job, not basing it on citizenship,' said Mick Bhatia, scientific director of McMaster University’s Stem Cell and Cancer Research Institute. The number of stem cell researchers is relatively small, he said, and the number with international managerial experience even smaller. 

“'Then to have to fractionate that by the number of U.S. citizens – you’ve got to be down to a few zip codes,' said Dr. Bhatia, who turned down an offer to join the California institute a few years ago. 'For an initiative that has been so global in their outreach … actively recruiting scientists internationally … I’m sure this rule is hurting CIRM.' 

“David Colman, the American who has headed the famed Montreal Neurological Institute at McGill University for the past eight years, called the California law 'archaic and anachronistic.' 

“'In this day and age, it’s ridiculous,' he said. 'Today, you want to have international searches for everything. Alan is a smart, good scientist and a tested leader. He would have been great.'”

CIRM Director Prieto Comments on Transparency

A Web site devoted to “Californians' rights to find out what's going on” last week quoted a big chunk of a piece from the California Stem Cell Report.

The item on CalAware Today by Anne Lowe was headlined, “Transparency Lacking in State's Stem Cell Agency.” It cited the our item “Public and Industry Left in the Dark by California Stem Cell Agency.”

We also received a comment on the situation via email from Francisco Prieto, a CIRM board member and Sacramento physician.

Prieto said,

“I don't think the failure to produce documentation and information well in advance of meetings is in any way malicious or deceptive, but rather reflects the fact that we put what may be excessive demands on some of our limited staff at CIRM. This has been a concern of many board members as well - that we receive supporting materials with too little time to review them in depth before a meeting. Both our internal and external communications could be improved, but it isn't due to unwillingness to communicate or ill will. I'm hoping the liberalization of our staff limits under the Alquist bill will help, but we know that our communication with the public is an area we have to take a serious look at.”

Klein's Re-nomination Almost Unnoted in Major Media

The hooha about CIRM Chairman Robert Klein and his maladroit attempts to manipulate the election of his successor generated little attention today in the mainstream media, but left an Internet legacy that may haunt the agency for some time.

Only three newspapers carried a story as far as we can tell: the San Francisco Business Times, the Los Angeles Times and The Sacramento Bee. The most complete story, however, appeared on Nature magazine's web site, which has a much narrower but important reach

In the Nature piece, Elie Dolgin wrote that Klein said he would not insist on the full $529,000 salary the chair is entitled to, but continue with the $150,000 he is currently receiving for the 12 months that he said he will serve.

Klein, who is a real estate investment banker, also indicated that he will insist on a top level scientist or clinician-scientist as a replacement to succeed him. Klein did not note that such a scientist would also by law be required to have “direct knowledge and experience in bond financing,” probably an extremely rare quality among scientists with national reputations.

Klein has had repeated difficulties in the past in hiring a president for the agency. CIRM also has not been able to hire a vice president for research and development despite a search that began nearly 18 months ago.

Any candidates for chair may find the agency's track record on hiring and management less than attractive, especially given Klein's latest unsuccessful attempt to engineer selection of a successor. Some cynics might wonder, however, whether Klein knew all along that Bernstein's Canadian citizenship would ultimately disqualify him and force the board into a position that would make Klein's re-nomination an apparent necessity. Few people know the law concerning the stem cell agency as well as Klein, who has more than once said he wrote Prop. 71, the measure that created CIRM.

Dolgin also reported that Art Torres, who has also been nominated for CIRM Chair, “probably” will not challenge Klein but is interested in staying on in his current co-vice chair slot.

Today's four stories are only part of what will pop up in the future as potential hires and journalists examine CIRM's performance. The coverage earlier in the week of the closed-door meetings and allegations of conflicts of interests will surface as well. CIRM would do well to keep in mind the admonition -- "If it can't stand the light of day, don't do it."

Questions Raised About Klein Campaign to Pick His Own Successor

The closed-door machinations involving the election of a new chair of the California stem cell agency raise important policy questions about the conduct of the agency, its openness and whether the structure of the board and chairman is in the best public interest.

Last year, the Little Hoover Commission, the state's good government agency, documented many of those problems in its 88-page report on the $3 billion enterprise. Among other things, the commission recommended much earlier action to smooth out the election process and to create a seamless leadership transition.

Additional insight into some of the issues can be found in an exchange of emails today involving CIRM board members.

The following messages went to all members of the CIRM board as a result of an item yesterday on the California Stem Cell Report, in which we asked whether Klein's Portola Valley meeting Sunday was legal under the state's open meetings law.

The first message is from James Harrison, outside counsel to the board. The second is from Jeff Sheehy, a member of the board, who responded to Harrison's memo. Sheehy raises points that go beyond the legality of the meeting, addressing the integrity of the entire election process for chairman of the $3 billion agency. Here is Harrison's email.

"Dear Board Members,

"Bob asked me to provide you with information regarding a dinner he arranged for last Sunday evening in response to a blog post by David Jensen.

"Bob wanted to create a forum for potential nominees for Chair and Vice-Chair [Art Torres, Jeff Sheehy and Alan Bernstein] to meet and exchange views prior to the Board meeting. Because of the Bagley-Keene limitations, however, he limited the dinner to a small number of board members, including himself, Ted Love, who served as interim CSO, and Robert Birgeneau, who was a colleague of Dr. Bernstein at the University of Toronto. Melissa King and I also attended.

"The participants engaged in an open and constructive discussion, and the meeting was in compliance with Bagley-Keene.

"If you have any questions, please contact me.

"James"

Here is Sheehy's response:

"Hi James,

"From what I can gather, this was just one of several informal meetings or phone calls involving several board members through which the determination of the next chair was meant to occur.  There were further conversations with the constitutional officers who have the duty to nominate individuals for chair and vice-chair with the intent to have them agree to collectively nominate a single individual for chair.

"What process was used to screen potential candidates for chair?  Were Californians, women, and/or people of color considered?  Under what board process, committee or sub-committee was this activity undertaken?  What board members were involved and what were their roles?  Why were other board members excluded?  Why did this not take place in public under established board practices including recently adopted procedures for selecting the next chair and vice-chair?

"Why was the chair’s role and salary reconfigured for Bernstein in direct contradiction of adopted board resolutions stating that the chair is not the chief executive of the agency, the chair is a part-time position, and the salary is $150,000?   Items were placed and then removed from yesterday’s aborted Governance sub-committee meeting that would have restructured the adopted budget for the agency to accommodate the larger salary for Bernstein?  How was this decided?

"I look forward to your response.
"Thank you,
"Jeff Sheehy"

Klein Removes Ambiguity and Says He Will Seek 12-month Term

CIRM Chairman Robert Klein tonight issued an unequivocal statement that he would seek re-election to his post, declaring that he was needed to provide “continuity” to the $3 billion enterprise for the next 12 months.

Klein said he accepted the nomination and would “work with the (CIRM) board and the constitutional officers to identify candidates...to succeed me” within the next year.

Klein's statement also mentioned the withdrawal of Alan Bernstein, who Klein had touted in closed-door meetings as his preferred successor. Klein's statement said,

“Dr. Bernstein would have been an outstanding nominee for Chair of CIRM’s governing board, but due to a technical legal requirement regarding citizenship, he is not eligible to serve as a nominee.”

CIRM Election Wrap-up

Reporter Ron Leuty of the San Francisco Business Times has wrapped up the CIRM election events of the day in a piece that can be found here.

Klein's Careful Statement on Re-nomination

In a statement made in connection with his re-nomination as chairman of the California stem cell agency, Robert Klein said today he wanted “to continue to build” on the state's stem cell research record.

But did he say he would accept re-nomination?

CIRM's chief communications officer, Don Gibbons, pointed us to the statement when we asked whether Klein planned to accept re-nomination.

The press release from the governor's office said,

“I am honored to be nominated chair of CIRM’s governing board by Governor Schwarzenegger,” said Klein.  “California was the first state to support and fund stem cell research, and I want to continue to build on California’s global leadership including growing our national and international partnerships and forging new ones that will help carry on this important research.”

By our reading, the quotation from Klein does not say that he accepts the nomination or that he is looking forward to running the agency – only continuing to build in the area of stem cell research. That could mean a variety of things, including bird-dogging CIRM's proposed new multibillion bond issue on a volunteer basis. We may be parsing the statement too closely, but Klein, who is a lawyer, can be exquisitely careful with words.

Klein has been adamant as recently as October about not planning to head the agency for another term. Plus, he may not have votes on the board to win re-election following the Bernstein/Portola Valley plan ruckus.

Klein Re-Nominated for Chair of California Stem Cell Agency

Republican California Gov. Arnold Schwarzenegger today nominated Robert Klein for a second term as chairman of the California stem cell agency after Klein's attempt to hand pick his successor collapsed amid questions about the integrity of the process.

Reporter Ron Leuty of the San Francisco Business Times was the first to report Klein's re-nomination.

Also nominating Klein for another term was Republican Lt. Gov. Abel Maldonado, who acted after his first nomination, Alan Bernstein, withdrew. Bernstein was Klein's choice as successor. However, Klein's campaign on behalf of Bernstein failed following disclosure in the media of closed-door meetings and allegations of conflicts of interest.

Also nominated for the chairmanship is Art Torres, currently co-vice chair of the board. State Controller John Chiang proposed the election of Torres.

State Treasure Bill Lockyer today announced he would not make any nomination for chair of the $3 billion agency. But he re-nominated Torres for vice chair. Jeff Sheehy, a member of the board, has been nominated also for vice chair by Chiang.

Klein has been steadfast when questioned about his desire to give up the job at the end of his term this month. One might also question whether, after the ruckus about the Bernstein candidacy, there are sufficient votes on the board to re-elect him. We have queried CIRM about whether Klein will accept the re-nomination.

Bernstein Drops Out of Race for CIRM Chair

Efforts by CIRM Chairman Robert Klein to engineer the election of Alan Bernstein as his successor at the $3 billion California stem cell agency collapsed today when Bernstein withdrew from the race, the California Stem Cell Report has been told.

The move followed yesterday's disclosure (see here and here) of a closed-door meeting Sunday at a Portola Valley restaurant attended by only five of the 29 directors of the California Institute for Regenerative Medicine. Klein presented a plan at the meeting that would have made Bernstein an “executive chairman” of CIRM. Klein was also reportedly lobbying major state officials such as the governor to win backing for Bernstein. One of the board members attending the session, Jeff Sheehy, complained publicly about the meeting, describing it as a “horrible" way to pick a new chair.

Queried via email, Bernstein, head of HIV Global Vaccine Enterprise of New York, said,

"I am very busy at an HIV vaccine meeting and unable to offer a comment at this time."

Bernstein recently chaired the blue-ribbon panel that  recently conducted a sweeping review of CIRM's operations.

CIRM directors must pick their chair from candidates nominated by four of California's constitutional officers: the governor, lieutenant governor, treasurer and controller. Bernstein was nominated Tuesday by the lieutenant governor. Art Torres, co-vice chair of the CIRM governing board, was nominated yesterday by the controller. The state treasurer yesterday said he would not make a nomination because of the ruckus over Bernstein. The governor is yet to be heard from.

We will have more on this shortly.

Stem Cell Chairmanship Flap Draws Major Media Coverage

The ruckus over selection of a new chairman for the California stem cell agency this morning drew the rare attention of the Los Angeles Times, the state's largest circulation newspaper.

And it wasn't the kind of attention that CIRM is looking for.

Reporter Jack Dolan mentioned a “possible conflict of interest” involving Alan Bernstein, a candidate backed by outgoing chairman Robert Klein, and said Bernstein could become “one of the highest paid employees in state government.” The position of CIRM chairman carries a salary with a top range of $529,000.

Dolan reported that state Treasurer Bill Lockyer, a longtime colleague and friend of another candidate for chair, Art Torres, has decided not to nominate anyone because of misgivings about Bernstein.

Dolan quoted Tom Dresslar, Lockyer's spokesman, as saying,

"He just doesn't have enough information to alleviate his concern about Mr. Bernstein's role in crafting the (recent external review) report.”

Dolan's article raised the conflict question in connection with completion of the report, which Dolan described as “glowing.” Bernstein chaired the panel, which included seven other persons. Presumably the conflict would arise if some sort of quid pro quo existed for generating a favorable report.

Dolan quoted Klein, a strong supporter of Bernstein, as saying,

"It would be quite a compliment to the agency if someone who has done such a thorough review of the agency, and has talked to everyone involved, would accept the nomination to be chair."

Dolan did not include in his story Klein's Portola Valley plan to install Bernstein as an executive chair.

The board is expected to take up the chairmanship election later this month, although it doesn't have to vote on any of the candidates. It has a variety of options: One would be to pass on all the candidates, choose an interim chairman, let the dust settle and make a final choice in a month or two.

The Los Angeles Times has rarely reported about activities of the California stem cell agency over the last six years. Dolan recently wrote an overview assessment of the agency that has attracted national attention. His article has ricocheted around the Internet as fodder for critics of hESC research and persons concerned about what they perceive to be unnecessary government spending.

Closed-Door Portola Valley Plan to Install Bernstein as New Chair of CIRM

Engineered by outgoing Chairman Robert Klein, a closed-door plan is reportedly afoot to restructure the management of the $3 billion California stem cell agency to have it run directly by a new executive chairman, Alan Bernstein, now head of HIV Global Vaccine Enterprise of New York.

It is unclear how the current agency president, Alan Trounson, would fit into the proposed new arrangement. But one CIRM board member, Jeff Sheehy, said,

“The president obviously loses out.”

The plan was first reported today by Ron Leuty of the San Francisco Business Times. Leuty described the effort as “backroom politics.” He also characterized Bernstein as “unqualified” in an apparent reference to the legal requirement that the CIRM chairman be a “patient advocate.”

Leuty quoted Sheehy, a candidate for vice chair of the agency, as describing the dealings as a “horrible process” that was far from open.

Based on what Leuty wrote and what Sheehy and others told the California Stem Cell Report here is what has occurred.

On Sunday, a dinner meeting was held at a Portola Valley restaurant attended by Klein, Sheehy and CIRM board members Ted Love and Robert Birgeneau, the chancellor of UC Berkeley and who has rarely attended a CIRM board meeting. Birgeneau, however, is a former colleague and friend of Bernstein. Also in attendance were Art Torres, co-vice chairman of the board, and Bernstein, both of whom have been nominated for chairman, along with the board's outside counsel, James Harrison of Remcho, Johansen & Purcell
of San Leandro.

Sheehy said that a scenario was proposed at the meeting that would make Bernstein an “executive chairman” and effectively CEO of CIRM. To qualify Bernstein legally as a patient advocate, Klein would appoint Bernstein to the board of Klein's private stem cell lobbying group, Americans for Cures, which shares quarters in the building that houses the offices of Klein's Palo Alto real estate investment banking firm.

Sheehy told the California Stem Cell Report,

“Given that (CIRM board)members can't even put an item on the agenda without the chair's consent, and we can't remove the chair (no provisions for removal in Prop. 71), and that many members are from institutions that receive funds from CIRM, and that the legislature and constitutional officers have very little control over CIRM, Bernstein will become California's stem cell czar, effectively controlling $2 billion in state funds.”

Sheehy said the proposal also jeopardizes the integrity of the patient advocate positions on the 29-member board. He said,

“By making the patient advocate qualification--which is taken from the language for qualifications that all 10 ICOC patient advocates are appointed under--infinitely malleable, this move makes all patient advocates vulnerable to replacement by a scientist.”

We asked Harrison about the legality of the Sunday meeting, given the state's open meeting laws. He replied, “Because the meeting involved far fewer than a majority of the board, it was not subject to” the state's meeting laws.

We then asked Harrison about the possibility the session could turn into an illegal serial meeting if the participants talked with other board members. Harrison replied,

"We've advised the board members to refrain from discussing the nominations with other board members."

Information about the meeting has been communicated to at least one other board member, who warned us that we did not have all the information about the Portola Valley deal. But the person was unwilling to share anything further.

An agency spokesman told the San Francisco Business Times that he would have no comment.

Bernstein was nominated for chairman by Republican Lt. Gov. Abel Maldonado in a letter dated Nov. 30. We were told this afternoon that CIRM asked that the letter, which is a public record, be withheld until tomorrow. State Treasurer Bill Lockyer, a Democrat, is expected to announce his nominations tomorrow along with Gov. Arnold Schwarzenegger.

The board is expected to take up the nominations Dec. 15 at Stanford.

Here is Maldonado's nominating letter.
Lt. Gov.'s CIRM Chair Nomination Letter

CIRM Defends Its Information Practices

Earlier today, we told the California stem cell agency we would be glad to carry verbatim a response to our item – Public and Industry Left in Dark by California Stem Cell Agency. The agency and its directors have a standing invitation from the California Stem Cell Report to comment on this Web site and have their entire remarks carried without editing.

Here is what was filed by James Harrison, outside counsel to the CIRM board.

“CIRM takes its obligation to fully inform the public very seriously.  In fact, in most cases, there are multiple opportunities for the public to participate in the development of CIRM's policies.  Through the use of subcommittees, draft policies are normally made public well in advance of the full Board's consideration of those policies, and the public has an opportunity to comment on the policies at subcommittee meetings and at Board meetings before they are adopted. 
 
“When you criticize the agency for not posting materials ten days before a subcommittee meeting (which, as you know, is not required by law), you ignore the fact that the Board's subcommittees do not typically make final decisions; rather, they consider draft policies and make recommendations to the Board, which provides the public a second opportunity to comment.  The Finance Subcommittee Meeting is a good example.  The question of warrant coverage and a payback alternative have been raised at a prior public meeting and the Finance Subcommittee will not make any final decisions this week; rather, its recommendations will go to the full Board for consideration, providing another opportunity for public input. 
 
“In the case of the Governance Subcommittee, there are no written materials for two of the items because they are placeholders which will not be addressed at the meeting (because Bagley-Keene requires CIRM to post the agenda ten days in advance of a meeting, we sometimes include items before we know whether consideration of the items will be required in order to preserve the opportunity to consider them).  As to the one item which will be considered (the role of the former chair), the discussion is intended to be conceptual.  If the Subcommittee decides to move forward on this item, written materials will be prepared and distributed well in advance of the Board meeting at which it is considered.”

Torres, Sheehy Nominated for CIRM Chair and Vice Chair Respectively

State Controller John Chiang today nominated Art Torres, currently co-vice chair of the California stem cell agency, to a six-year term as the chairman of the $3 billion research effort. Chiang also nominated CIRM board member Jeff Sheehy for the vice chair position.

Torres, a former state legislator and head of the state Democratic party,  would replace Robert Klein, a real estate investment banker who is leaving this month at the end of his six-year term. In his nomination letter, Chiang said Torres has a unique skill set that has bridged "the gulf between the academic world, private sector and government."

Sheehy, a communications manager at UC San Francisco, has served on the 29-member board since its inception. He sits on the key grant review group, acting as the board's chief representative on that panel, which makes the de facto decisions on grant applications.

Chiang, a Democrat, said Sheehy has "distinguished himself with his leadership on increasing public accountability and transparency of CIRM's operations, both critical to retaining the public's faith in CIRM."

Chiang is also head of the Citizens Financial Accountability and Oversight Committee, a sister group to CIRM that was also created by Prop. 71. Chiang and that committee have been critical of CIRM's lack of transparency.

The CIRM board is expected to take up the election of a chairman at a meeting later this month. They hope to have nominations also from Republican Gov. Schwarzenegger, Republican Lt. Gov. Abel Maldonado and Demoratic State Treasurer Bill Lockyer. See below for Chiang's letter.

Controller's Nomination Letter for CIRM Chair

Trounson and Torres and the Battle for Chair of the California Stem Cell Agency

The president of the California stem cell agency, Alan Trounson, may resign if the new chairman of the $3 billion research effort is not a person who has worked with the biomedical industry, Nature magazine reported today.

Trounson's position was disclosed publicly for the first time by writer Elie Dolgin in a profile of outgoing CIRM Chairman Robert Klein in the Dec. 2 edition of the internationally respected journal.

Trounson's preference could have an impact on the election of the chairman, which the CIRM board is expected to take up later this month. Art Torres, a former state legislator with little connection to industry, is one of the leading candidates, along with Alan Bernstein, head of HIV Global Vaccine Enterprise of New York, who is being backed heavily by Klein. The Trounson disclosure could also shape how the CIRM board receives the report Dec. 8 of the blue-ribbon panel that was chaired by Bernstein.

Dolgin wrote,

“Klein’s departure might also trigger the president to leave, thereby causing a complete overhaul of CIRM’s leadership. Trounson says he told Schwarzenegger that he would like that next chairperson to be 'somebody who’s in the delivery end of the spectrum — that is, somebody who has worked with the biotech or pharmaceutical industry.'
.
“But as this issue was going to press, the leading internal candidate to replace Klein, many say, is vice-chair Art Torres, a former state senator and chairman of the California Democratic Party. Torres and Trounson reportedly cannot stand each other. Trounson notes that Torres is 'a politician, so he’s in that end of the spectrum.' Torres, for his part, declined to comment on his relationship with the president.”

Trounson's foray into board politics came in a multi-dimensional look at Klein and his role in Prop. 71 and as chairman of the agency. The piece included both praise for Klein along with some of his warts.

Here are some excerpts:

“He (Klein) leaves behind an agency with a long list of accomplishments, including more than US$1.15 billion in grants, six new facilities dotted across the state and close to 700 scientific papers.

“Yet many critics say that Klein and CIRM have failed to fully deliver. Despite promises that money borrowed from the state — at least $6 billion over ten years, when interest is factored in — would be returned through commercial spin-offs and savings to health care, the first marketable therapies have yet to materialize. Only two CIRM-funded projects have made it to early-stage clinical trials, and neither of these involves embryonic stem cells — the main impetus for launching the agency in the first place. The embryonic stem-cell clinical trials that have recently been approved in the United States are the product of privately funded research.

“Klein’s critics say his promotion of stem cells’ therapeutic promise was zealous and oversimplified. He 'left voters with the impression that people will be jumping out of their wheelchairs and not being diabetic within a year,' says John Simpson, a long-time observer and critic of the agency’s governance, who is at the consumer-advocacy group Consumer Watchdog based in Santa Monica, California. 'There’s been this constant compulsion for [Klein] to say, ‘See, we’re delivering, we’re delivering’, and that’s something that’s haunted him throughout the whole thing.'

“Throughout CIRM’s existence, Klein has pulled the strings, maintaining control over nearly every aspect of its structure and science, often to the chagrin of its other leaders. Still, many observers say that no one else could have weathered CIRM’s early storms. 'With Bob, there’s always this indefatigableness,' says Douglas Wick, a movie producer and diabetes advocate who worked with Klein to get CIRM funded. 'His personal energy and charisma are so strong, and he has this ability to get punched, stand up and go at it again.'”

Dolgin continued,

“But not all the early organizers of Proposition 71 remain enthusiastic about the way Klein led the charge. 'It became Bob’s show almost entirely, and there was some friction about that,' recalls Peter Van Etten, former JDRF president and chief executive. (Home developer Tom) Coleman (an early key organizer for Prop. 71) has not spoken to Klein since the initiative passed, following disagreements over what Coleman viewed as Klein’s self-promotional approach. (Movie director Jerry) Zucker (another influential early organizer of the Prop. 71 campaign) remains on better terms with Klein, but still feels some lingering resentment.

“'If I had to do it over again I’d make the same call to Bob Klein because I don’t think the rest of us would have got it done without him,' Zucker says. But, he adds, 'What I was most unhappy about was the realization after a while that [Klein] wrote the initiative for him to be the chairman. That was something I was too naive to realize. It’s shameless almost.'”

Dolgin also spoke with Joel Adelson, a health policy researcher at UC San Francisco, who co-authored a study of the agency earlier this year. Dolgin wrote,

“'Klein has in effect acted like the chief operating officer beside Trounson and beside (former CIRM President Zach) Hall, and I can only say that this looks like it must have been very uncomfortable for these guys,' Adelson says. 'It’s an unusual situation,' says Trounson. 'And if you ask me what I prefer,I prefer the simple situation where the president is in charge of all management and reporting to a board on policies. But it’s bifurcated, and it was set up that way, so you don’t have a choice.” (Hall declined to comment for this story.)”

Dolgin also quoted a CIRM board member on Klein.

“'He’s an historic figure with real genius in terms of moving biomedicine forward,' says Jeff Sheehy, a CIRM board member and director for communications at the University of California, San Francisco’s AIDS Research Institute. 'He’s as good as they get if not better.'”

Dolgin also noted that some criticism of Klein focused on CIRM's emphasis on clinical applications. However, a significant number of folks in the biotech industry believe the agency is overbalanced towards basic research.

Public and Industry Left in Dark by California Stem Cell Agency

Does the California stem cell agency, which is costing taxpayers $6 billion, have an obligation to inform the public in a timely fashion about matters that come before its governing board and affect how the agency spends its money?

That's the question we posed to CIRM yesterday. It is a question that is not new. It was raised because CIRM's record of openness and transparency is mediocre at best when it comes to its finances and other important issues facing its board of directors.

This afternoon's meeting of the directors' Governance Subcommittee is a good example. It is scheduled to meet at 3:30 p.m. PST to consider matters that appear to be of considerable substance. However, not one word of explanation has yet been offered to the public: No justification, no discussion of the pros and cons, no delineation of the costs, no explanation how it might affect the nature of its grants. The public is left in the dark, unable to make an intelligent comment or suggest changes.

All that CIRM offers are cryptic phrases on the Governance agenda that raise more questions than answers. Here is the exact language:

“Consideration of budget allocations and structural priorities.
“Consideration of future assignments to and volunteer support by Chair Emeritus.
“Consideration of authorization to compensate Patient Advocate Vice-Chairs of Grants Working Group in excess of cap if service as GWG Vice-Chair and Vice-Chair of any other Working Group requires commitment of more than 26 days per year.”

These items have implications that seem to involve how CIRM might spend its remaining $2 billion or some of portion of that amount. The “chair emeritus” item could involve continued work and compensation for outgoing Chairman Robert Klein, a Palo Alto real estate investment banker, possibly involving CIRM's proposed, new multibillion dollar bond measure. The third item is harder to decypher. It certainly involves additional payment to some members of the board of directors. It also may be linked in some fashion to the election or non-election of a patient advocate as vice chair of the board. But no member of the public, which is paying CIRM's freight, is allowed to know.

CIRM has two other directors meeting coming up soon with important matters on the agenda. One is the Finance Subcommittee this Friday. It will consider complex changes in what Chairman Klein has described as a $500 million biotech loan program. CIRM posted an explanation of the changes only yesterday, three days before the meeting, hardly enough time for biotech companies or the public to evaluate the proposal and make plans to testify. Ironically, CIRM says it is trying to engage industry more completely, but holding back on release of proposed changes in the loan program has the opposite effect. Still a mystery is a second item before the Finance panel. The matter involves CIRM's only source of cash, the bond market. Directors are scheduled to discuss “future implications for CIRM” of the market's behavior – definitely not a lightweight topic.

In just five business days, the entire CIRM board will meet in what is likely to be one of its more important meetings. The Dec. 8 session will discuss the recently completed report by the blue-ribbon external panel. That report was publicly available one week ago, a timely posting, which is much to CIRM's credit. But there is no link to that report on the board agenda, leaving the public to ferret it out. Three routine items on the agenda have background information. The other six significant items have no links to any explanations or justifications, leaving the public or interested parties at a loss.

Last week, the California Stem Cell Report carried an item headlined,
“CIRM Management Stumbling at Routine Tasks.” The item said that it is not clear why CIRM cannot or will not provide the background information in a timely fashion, which should be a routine task. The item said,

“The inability of an enterprise to perform routine tasks in a routine fashion is also one sign of serious, embedded management problems that are likely to extend well beyond the routine matters.”

We can add that if routine tasks are not handled routinely, it makes it much more difficult to deal with the truly urgent and extraordinary.

As for the question we posed to CIRM early yesterday morning --- does CIRM believe it has an obligation to fully inform the public about matters before its directors – the agency has yet to respond in any fashion.

Correction

The “Nature Reports” item on Nov. 30, 2010, incorrectly carried the first name of Bill Caldwell of ACT as Bob in a quote from the Nature magazine Web site.

Nature Reports on CIRM External Review and Industry Reaction

“Positive review for California stem cell agency” – that's the headline on the Nature magazine's Web site concerning the assessment of CIRM by a blue-ribbon panel.

The piece by Alla Katsnelson began:

"The first comprehensive external review of the California Institute for Regenerative Medicine (CIRM) has come to overwhelmingly positive conclusions about the state stem cell agency’s progress. But some in the biotech community continue to grumble that the agency, which began operations in 2006(sic), is focusing too much on basic research rather than fulfilling its mandate of taking stem cell therapies from bench to bedside."

The Nature article noted that the report recommended more engagement with industry. Katsnelson then wrote,

"But some say that many of these things should already have been done. 'You’ve got to remember, their whole mandate is commercialization,' says Bill Caldwell, CEO of Massachusetts-based(sic) stem cell company Advanced Cell Technology (ACT). What the agency should have done, he says, is identified 3-5 potential therapies that were “low-hanging fruit' in terms of clinical development. 'Let’s get those through and into the clinic so that we can demonstrate to the world that the [human embryonic stem cell] platform has value,' he says.

"Also, Caldwell notes, the agency should already have called for project proposals that tackle some technical areas that need work, such as techniques for the cryoprotection of cells, as well as methods to coax cells into dividing more rapidly. 'These are commercial issues that can help these products move into the market,' he says."

Nature also quoted an item from this Web site.

"A commenter to the California Stem Cell Report blog, identified as 'an executive/scientist from a California biotech firm who must remain anonymous,' echoed Caldwell’s sentiments. 'If CIRM was to hold true to its promise to deliver products in 10 years, then it needed to start translational activities immediately and not building infrastructure for already rich universities like Stanford, who enjoy $10B plus endowments,' the commenter wrote."

(Editor's note: An earlier version of this item incorrectly carried Caldwell's first name as Bob not Bill.)

Torres and Bernstein Mentioned as Potential Candidates for CIRM Chair

The mystery of who will be nominated to chair the $3 billion California stem cell agency for the next six years could be answered this week if four of the state's top elected officials respond in a timely fashion.

It is up to those officials to make the nominations, but already at least two names are floating about – Art Torres, co-vice chair of the agency, and, surprisingly, Alan Bernstein, head of the external review panel that just filed its report on CIRM's programs. Duane Roth, the other co-vice chair of CIRM, is possibly in the mix as well. There could be more.

Bernstein's name has been mentioned by several sources and is reportedly being pushed by outgoing Chairman Robert Klein. Bernstein, executive director of the New York-based Global HIV Vaccine Enterprise, was not involved with CIRM until he led the external review. He has held his current position since 2007. A Canadian, he also was the founding president of the Canadian Institutes of Health Research, which had a budget of $1 billion.

We queried Bernstein about whether he was seeking the post. He replied,

“As to your second question, under Proposition 71, the constitutional officers are the individuals empowered to nominate candidates. To my knowledge, they have not yet sent their nominations to CIRM. If I were nominated, I would make a comment at that time.”

Some of the CIRM board members were skeptical of Torres when he came aboard as vice chairman in 2009, but he seems to have acquired a following. A former state legislator, he brought much-needed Capitol savy to the agency, which was plagued by serious legislative missteps early on, largely the result of actions by Klein. It is clear that Torres is seriously thinking about the post.

Roth comes out of the San Diego business community and has worked on legislative issues as well, particularly in Washington. He has been a strong advocate of bringing CIRM closer to the biotech industry, a position he shares with others on the board.

Also on the table is the question of a salary for the chairman, which he is entitled to under law. No one is publicly discussing numbers. But in 2008, the latest available figure, Bernstein was paid $593,133, including $60,836 in other compensation, at Global Vaccine. Torres currently receives $225,000 on an 80 percent basis. Roth does not receive a salary.

Klein, a real estate investment banker, initially declined a salary in 2004. But he sought one in 2008. The board decided to pay him $150,000 annually for what it considered a half-time position. The current salary range for chairman tops out at $529,000, which is also the maximum for the president and the yet-to-be-filled position of vice president of research and development. Should the new chairman receive a salary anywhere close to the maximum, it is bound to trigger cries of outrage from certain segments of the public. Such a move also would not help CIRM in its dealings in Sacramento, where lawmakers are mired in a financial swamp.

The four constitutional officers who are required by Prop. 71 to make nominations are the governor, lieutenant governor, the treasurer and the controller. The treasurer is a longtime colleague of Torres and is expected to nominate him. The controller has been critical of the agency in his role as chair of the Citizens Financial Accountability Oversight Committee, a panel created by Prop. 71 as a watchdog over CIRM's financial affairs. But he has given no sign of his preferences.

CIRM is hoping to see nominations this week. However, nothing compels the four officeholders to make them. No penalty exists for failure to do so. In cases of other state agencies, top spots are sometimes left open for months, if not longer. Nonetheless, the governor and lieutenant governor may want to make nominations before they leave office. CIRM directors also do not have to actually elect a chairman. If they fail to do so, Klein could continue as chair. Or he could leave the position, and the board could choose another person as acting chair. The board could then ask the politicians for different nominations. If the governor and lieutenant governor do not make nominations by early January, the task would fall to Jerry Brown and Gavin Newsom, who will assume office then as governor and lieutenant governor respectively.

The process for nominating persons for chair, essentially freezing the board out of an important role, was written into Prop. 71 by Klein and his co-authors of the measure. It is another case of inartful language that has made it difficult for the board to do its work.

The state's Little Hoover Commission, California's good government agency, last year recommended changes in the procedure to give directors more authority but those proposals have gone nowhere.

The board is not expected to take up the chairmanship at its Dec. 8 meeting, much of which will be devoted to a discussion and perhaps decisions on recommendations of the external review panel. The board's actions on the proposals could influence a later decision on chairmanship, which could come at a meeting in mid-December.

Bernstein, although chairman of the external panel, told the California Stem Cell Report that he will not be making the group's presentation to the board on Dec. 8. He said that task will be carried out by another member of the panel, Richard Klausner, managing director of The Column Group, venture capital fund.

Bernstein said,

“As you may know, the External Advisory Panel (EAP) has not yet presented its report to CIRM's governing board. EAP's Reporting Chair, Dr. Rick Klausner, will present the report and lead the discussion at the Board's December 8 meeting. In light of this, it would be inappropriate for me to make any comment about the report at this time, let alone respond to an anonymous blogger before CIRM's board has had an opportunity to review and discuss the report.”

In a follow-up email, Bernstein said he was not referring to the California Stem Report in his reference to an anonymous blogger.

BioTime and CIRM Join in hESC Deal

The California stem cell agency has reached an agreement with BioTime of Alameda, Ca., to make five clinical grade hESC cell lines available to California-based researchers, it was announced this morning.

In a news release, Michael West, president of the publicly traded BioTime, said,

“We believe this agreement is in the best interests of both the people of California and BioTime. There are at least three potential benefits to the parties: First, access to cGMP-manufactured cell lines may help CIRM-funded researchers accelerate their work in a wide array of new cell-based therapies and drugs, and more quickly translate the research into improved medical outcomes for people with difficult to treat diseases. Second, the publication of the research results using these cell lines may benefit BioTime's own work to better understand the characteristics of the lines when used to manufacture human therapeutics. Lastly, BioTime may benefit from future commercial revenues from products developed as a result of this collaboration through a royalty-bearing license. The development of standards and open platforms often allows new fields of science and technology to move forward more quickly.”

The BioTime news release continued,

“Research grade versions of the cell lines will be provided to CIRM grantees and California-based institutions free of charge until April 30, 2011 for research use only.

“The GMP grade versions of these cell lines along with a letter of cross-reference to a biologics master file containing manufacturing and controls information and additional documentation needed to establish GMP compliance, and the complete genomic DNA sequence information on the cell lines, will be available to California-based researchers at a price approximating BioTime’s cost of materials by November 22, 2011. Although no royalties will be payable to BioTime by researchers who acquire the cell lines for research use, entities that desire to use the GMP-compliant cell lines for therapeutic or other commercial purposes, may do so only after signing commercialization agreements acceptable to BioTime and entitling BioTime to receive royalties on net sales not to exceed 2.0% of net sales, reducible to 1.5% if the researcher must pay any other royalties in connection with the resulting product commercialization. The researchers will be responsible for obtaining any licenses that may be needed from third parties to use the GMP cell lines in their products. Lastly, the form of a material transfer agreement has been agreed to by CIRM and BioTime for research use. The pre-negotiation of terms will serve to help accelerate research by eliminating protracted negotiations.”

CIRM had not made an announcement of the deal at the time of this writing.

Biotech Exec Says CIRM Review Misguided, Biased and Disservice to Public

Last week the blue-ribbon panel reviewing the programs at the $3 billion California stem cell agency released its report. We carried an item on the group's recommendations and asked for comment from our readers, promising to carry them verbatim. The following was submitted by an exective/scientist from a California biotech firm who must remain anonymous.

“The review by the external panel is nothing short of froth and it is disingenuous in its honesty towards Californian citizens, who are funding CIRM. The review board was composed of academics and lacked industry experts. The review board continued to suggest focusing on basic research, which is what led to CIRM's current disastrous state in the first place. If the architects of CIRM initially sold the public on the idea that stem cells will deliver products that reduce the healthcare burden within 10 years, and the average drug development process from entry into IND-enabling phase to completion of phase III takes 10 years, then the focus on CIRM from the start should have been on funding game changing translational projects as well as programs that are entering the IND phase. The board is completely misguided in its recommendations and this is not at all a surprise considering its bias. Moreover the board is asking CIRM to fund outside of California research, and this is ridiculous. CIRM is not NIH, and even NIH is perceived to mismanage public dollars and has been scrutinized for its extremely poor translational output to date. Why would we the public of California wish to adopt a broken model and subsidize non-California research with California dollars?

“The external review board should be filled with industry leaders, all of which should come from within the state. California is the birthplace of the greatest biotechs in the world (Amgen, Genentech, Gilead, amongst many others), and yet CIRM refuses to leverage this asset and instead recruits unqualified (in the business realm) academics who have generated very few if any commercial products in their lifetime of work. This is disgraceful and has been a complete waste of $3B of taxpayer dollars. If CIRM was to hold true to its promise to deliver products in 10 years, then it needed to start translational activities immediately and not building infrastructure for already rich universities like Stanford, who enjoy $10B plus endowments. Let Stanford spend from their endowment to build its infrastructure goals, not California's public dollars. This is a complete fraud architected by CIRM insiders, and it will all implode under this failed strategy of making CIRM serve as a funding buffer for drying NIH dollars.

“CIRM’s job is not become a global stem cell leader. Its job is to fund commercialization of stem cell-based technologies that can reduce suffering of Californians. Its job is not to fund basic science. Its job is to focus on translation. Its job is not look to fund research outside of California, as this is 100% California dollars.

“Moreover, the board told an executive attending the meeting during an exchange, that CIRM will not be able to deliver on its promises and it is in trouble. The board shared that it should forget about ever reaching that goal, as there will not be any products coming in 5 years as originally promised to California citizens. Yet, this alarming reality is not reflected in the comments, showing how dishonest and filtered this review report truly is. It is a disservice to the public to lie to them. I am appalled and disgusted by the whole thing to be quite frank, and feel the entire CIRM body needs to be completely overhauled.

“The public would better be served if we treated CIRM as an early stage regenerative medicine focused venture capital firm, since the limited partners (LPs) are the public citizens, and they expect the same return on investment in the same horizon (10 yrs) as what is expected by LPs that invest in venture capital, and have to endure the same risks. Life science VCs do not invest in infrastructure, they do not invest in university programs at the clip of 97%, if at all. They invest in people within corporate structures that have the intellect and talent and experience to bring products to market that solve unmet medical needs, and deliver value over current products. This is not rocket science.”

Bee Readers' Commentary on CIRM Not Warm and Fuzzy

As of late Sunday afternoon, 25 readers of The Sacramento Bee had filed comments on the newspaper's Web site dealing with the California stem cell agency, ranging from violent opposition to mild disgust with the research effort.

The readers were reacting to two pieces on the front page of the Bee's Sunday Forum section dealing with the agency – one by yours truly and one by Larry Goldstein of UC San Diego. The number of comments was quite modest but provides some inkling of the public perception problem facing CIRM. One good sign for CIRM is that the number of comments was small. That can be interpreted to mean that the public doesn't know much about the agency or simply doesn't care, which is better than vehement opposition if CIRM is successful in placing another multibillion dollar bond measure on the ballot. Keep in mind when reading the comments below that those who hold the strongest opinions are the most likely to make public comments. Those in mild support of CIRM are not likely to make the effort.

Here is a sample of the comments:

From "John_Toradze:"

“I am a scientist, one of those rare ones who is also an entrepreneur. And, I'm sorry, but Dr Goldstein is simply not competent to discuss whether California is going to profit by its stem cell investments. Professors learn to spend money in a system that is disconnected from applications. They never learn how money is made in that system. In the grants world, money grows on trees, and it falls into the laps of people who "write good" and have buddies who like them. Peer review committees are notoriously incestuous (at best). Further, science is (and should be) disconnected from profit. Science is about finding out how things work.

“Here's the cold water reality. Currently, there are two clinical trials for stem cells. Neither one came out of the California bond issue. And both of these are simply safety tests. It will be years more before efficacy tests happen. Even if things go extremely well, medicine moves at a snail's pace. So even if both these trials were ours, California won't see money back for a decade.

“But the real kicker is that the California money is a tiny pittance compared to what NIH hands out each year. Simply put, in a Bayh-Dole environment, the relative size of investment makes California's investment into a play against the house at a casino. Science is about being smart, but more than that, it is about being lucky and stumbling across something. Odds are stacked against us.

“Last, as others have pointed out already, embryonic stem cells have problems.”

From “donghofamily:”

“Do we really have $300 million a year to divert from education and basic services of the state? While this is a noble effort, we as California taxpayers cannot afford to fund stem cell research for the world when we can't even meet the basic education and health care needs of our state's citizens. The idea that we would go further into the hole on this is laughable.”

From “Speede:”

“CIRM is one of the greatest scams ever foisted on the people of California.....Now, CIRM, with $2 billion in its coffers, is asking for more taxpayer dollars. It is time to end CIRM and its unquenchable thirst for taxpayer dollars. A history of 10 years with not one therapy to show for $1 billion in expenditures is enough. California taxpayers can't afford another con job designed to enrich a small coterie of insiders.”

From “pressto:”

“Proposition 71 has been a complete waste of $6 billion in taxpayer dollars. What we need is reform on ballot measures so that any spending measure that would be funding out of the general fund requires a 2/3 vote to pass because it has been ridiculous bond measures like Prop 71 that has been the real cause of driving up our deficit.”

The California Stem Cell Agency and the Promises of its Creators

The California stem cell agency drew attention this morning on the front page of The Sacramento Bee's Sunday opinion section in two articles – one by yours truly and one by a San Diego stem cell researcher.

The scientist is Larry Goldstein of UC San Diego, who has received more than $14 million in grants from CIRM. Goldstein wrote that that “viewed against scientific principles, medical need, history and logic – the state's stem cell agency is a calculated but not reckless risk, and it is not merely a bet on a narrow research avenue.” In many ways, Goldstein's article seems to have been written in response to a piece in the New York Times this month that said that CIRM is a risky research endeavor, compared to the NIH, because it is narrowly focused on stem cells instead of a broader range of possible therapies.

Our piece was an overview of CIRM in connection with the promises of the election campaign of 2004 that created the program.

The article noted that the agency this month is facing the results of an external review and the departure of its chairman, Robert Klein. The article said,

"This confluence of self-examination and changing of the guard comes amid criticism over the agency's promise of transparency and openness as it operates independently from oversight of the governor and Legislature; conflicts of interest by a board of directors who have directed $1 billion in grants to universities and research enterprises to which they have links; and the fact that no embryonic stem cell therapy is ready for patients, although the 2004 campaign for Proposition 71 seemed to offer hope for speedy development of cures."

The article concluded,

"Regardless of the outcome of a future bond measure, CIRM is likely to be in business for another decade. It still has about $2 billion to hand out. And despite the 10-year time frame bandied about in the 2004 campaign, no sunset date exists for the stem cell agency. Whether the historic $6 billion investment, which includes $3 billion in interest, ultimately pays off for California – with therapies – is still very much an open question."

You can read the full piece here in The Bee and here.

Text of Bee Article on the State of Affairs at CIRM

Here is the overview piece on the California stem cell agency that appeared Nov. 28, 2010, on the front page of The Sacramento Bee's Sunday's opinion section. The version in The Bee can be found here.  The author is also the publisher/editor of the California Stem Cell Report.

With a review pending, the state's stem cell agency looks for new leadership, new therapies and more money

By David Jensen
Special to The Bee

Lured by visions of nearly magical medical solutions for everything from cancer to Alzheimer's, California voters six years ago approved a plan to borrow billions of dollars to pay scientists to look into human embryonic stem cell research.

Today the unprecedented $3 billion research effort by the California Institute for Regenerative Medicine faces a watershed moment, including the most sweeping review yet of its progress along with the departure of the man whose name has become synonymous with California stem cell research. Additionally, leaders of the program are pressing hard for concrete results that will persuade voters to cough up billions more to continue the effort.

This confluence of self-examination and changing of the guard comes amid criticism over the agency's promise of transparency and openness as it operates independently from oversight of the governor and Legislature; conflicts of interest by a board of directors who have directed $1 billion in grants to universities and research enterprises to which they have links; and the fact that no embryonic stem cell therapy is ready for patients, although the 2004 campaign for Proposition 71 seemed to offer hope for speedy development of cures.

Proposition 71 was described as a 10-year effort that would sidestep the Bush administration's ban on funding of human embryonic stem cell research. Actors Michael J. Fox, who has Parkinson's disease, and the late Christopher Reeve, who played Superman, were featured in ads promising cures in the campaign.

The ballot initiative gave the new state agency $3 billion in state bond financing and has fueled a lab building spree at California research organizations and universities, fed by $271 million in seed money from the California Institute for Regenerative Medicine, known as CIRM. As of this month, CIRM has handed out $1.1 billion to about 400 California scientists and research institutions. That is a pace that runs close to $56,000 an hour since the state treasurer first sold California stem cell bonds on Oct. 4, 2007.

The campaign was headed by Robert Klein, a Palo Alto real estate investment banker who was subsequently chosen chairman of CIRM. Klein says he is stepping down in December at the end of his six-year term. The agency's 29 directors are expected to meet next month to pick a new leader.

Longtime CIRM observer John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, said Klein's influence has been so pervasive that it is hard to predict what his departure will mean. "Perhaps, now the agency will move out of its ongoing startup mode and finally develop more routine procedures," Simpson said.

Also next month, the agency's directors will deal with a key, strategic report from a blue-ribbon panel that recently conducted the most sweeping review ever of CIRM's programs. CIRM barred the public from nearly all of the review sessions that were orchestrated over a three-day period at its headquarters in San Francisco.

The report, released Wednesday, had high praise for the agency's work, but it made no attempt to measure CIRM against the campaign promises of 2004. The panel recommended closer ties with the biotech industry, some segments of which have been unhappy with CIRM. It also recommended performing a triage on existing research to weed out nonproductive efforts, a process it warned will irk some patient advocate groups that supported Proposition 71. Also recommended was an improved public relations and public education effort, which will be necessary if voters are to approve more funding. It said the board should consider some management and structural changes in a suggestion that echoed some proposals last year from the state's Little Hoover Commission, the state's good government agency.

In an 88-page report, the Hoover commission proposed a wide range of changes at CIRM. It suggested reducing the size of the unwieldy, 29-member board and the elimination of conflicts in the roles of the chairman and president of CIRM. It also called for more oversight, disclosure of the votes of individual board members on grants and more openness and transparency.

Noting that most of CIRM's grants have gone to institutions connected to its directors, the Hoover commission said that suspicions that CIRM is an "insiders' club" undermine the legitimacy of the agency. Even the prestigious British scientific journal Nature warned in 2008 of "cronyism" at the stem cell agency.

In January, a sister panel to the CIRM board of directors unanimously called for more openness at the agency and endorsed the findings of the Hoover commission. The panel, the Citizens Financial Accountability Oversight Committee, was created by Proposition 71 to provide financial oversight of CIRM. State Controller John Chiang, the state's top fiscal officer and chairman of the committee, said, "To ensure that taxpayer dollars are spent lawfully, wisely and successfully, the stem cell program must pursue the highest standards of transparency to be fully accountable to the public."

In February, state Sen. Elaine Kontominas Alquist, D-San Jose, chair of the Senate Health Committee, introduced something of a reform bill for CIRM. She said in a news release that the agency is "essentially accountable to no one."

But a CIRM lobbying effort, led by former state Sen. Art Torres, now co-vice chair of CIRM, was successful in watering down much of Alquist's proposal, which was ultimately signed into law and will eliminate a 50-person cap on CIRM staff when the legislation goes into effect Jan. 1. Removed from the bill was a provision that would have directed Chiang's committee to conduct a performance audit, the first ever, of the agency. Instead, CIRM itself will commission the performance audit and control its terms.

CIRM laid out its own assessment of its performance last month in a document prepared for the three-day review. The stem cell agency said its spending "contributed" to research published in nearly 600 articles in scientific journals. It said that its awards played a partial role in research that has led to the initial stages of two clinical trials. It cited the funding of labs at institutions throughout the state and points to the spending as a benefit to the California economy. CIRM as well has had a significant impact on the embryonic stem cell scene nationally, keeping it alive and talked about despite the Bush ban.

However, CIRM has not delivered on the overheated campaign rhetoric of 2004. A TV ad featured twin brothers, one with cerebral palsy. The healthy brother said, "His life is different. With stem cells it doesn't have to be that way." In the ballot pamphlet sent to every voter in California, supporters said, "Vote yes on Prop. 71. It could save the life of someone you love."

Consumer Watchdog's Simpson said the "unrealistic expectations created in most voters' minds will continue to haunt the agency."

The campaign rhetoric ignored the slow and tedious nature of scientific inquiry, not to mention the required approval of therapies by federal authorities. Only one clinical trial using human embryonic stem cells is currently under way in the nation. A second was given the go-ahead by the federal government last week. Both are privately funded and do not involve California's stem cell agency. CIRM's strategic plan in 2006 acknowledged that use of the actual therapies will come only years from now.

As Klein gets ready to step down, he is publicly touting another huge bond measure for the ballot – up to $5 billion – that could come as early as 2012. He has pushed for tangible research results that can be used to sell the bond measure to voters, who don't seem to be in a mood for additional government spending.

Regardless of the outcome of a future bond measure, CIRM is likely to be in business for another decade. It still has about $2 billion to hand out. And despite the 10-year time frame bandied about in the 2004 campaign, no sunset date exists for the stem cell agency. Whether the historic $6 billion investment, which includes $3 billion in interest, ultimately pays off for California – with therapies – is still very much an open question.

(David Jensen has been writing about the California stem cell agency since 2005 on his website, the California Stem Cell Report, californiastemcellreport.blogspot.com.)

New Directions for CIRM? Closer Links with Industry, Aggressive Search for Innovation, Better Communication

The $3 billion California stem cell agency has done an “extraordinary” job so far, a blue-ribbon review panel said today, and should expand its efforts internationally, create closer ties with the biotech industry and perform triage on its existing portfolio of research grants.

The panel's 19-page report said that the agency now stands at a critical point as its first and only chairman, Robert Klein, is departing, and as it moves more aggressively into development of clinical applications.

The panel encouraged CIRM to seek out innovative projects, even from out-of-state and bring them to California, instead of merely posting requests for grant applications. Industry needs to play a much larger role in funding, the panel said, and it urged changing grant review processes to meet industry needs. “Considerable obstacles to industry engagement remain,” echoing a view stated by biotech firms for past several years. (See here and here.)

The eight-member panel was recruited by CIRM and conducted three days of mostly closed door hearings orchestrated by the agency in San Francisco in October. It was convened as part of the agency's strategic planning process. The panel was not asked to measure CIRM's current results against the campaign promises made in 2004 when voters created the program.

The 29-member CIRM board will discuss the report at its meeting Dec. 8 in Irvine. The subject could come up as early as next Wednesday at a meeting of the directors' Governance Committee.

One recommendation dealt directly with the board itself and the overlapping responsibilities of the chairman and president of the agency, which have been troublesome in the past. Noting that the board has had a “very hands-on approach” during the past six years, the panel's report said.

“We believe this is an appropriate time for the Governing Board to examine its role and composition, mindful of the legal reporting, fiduciary and accountability requirements of the state of California. With the imminent stepping down of the founding Governing Board Chair and CIRM visionary Mr. Robert Klein, it is imperative that the roles and responsibilities of the Governing Board Chair and CEO positions remain distinct but complementary to ensure the continued positive, collaborative partnership between these two key individuals. There should be clarity of the roles and responsibilities of the Governing Board Chair and CEO as it pertains to CIRM’s strategic directions, its policies, international partnerships, funding decisions, public communications and oversight.”

The panel also recommended improvements in CIRM's public relations and education efforts. The panel said,

"(It) strongly encourages CIRM to significantly increase both the quality and breadth of its community outreach and education programs. The objective should be to ensure state-wide visibility and awareness of the contributions that California is making to the global research effort and to create opportunities for Californians to be informed about advances in the research, and to engage in dialogue with the scientific and clinical community about the benefits, limits and resulting guidelines for this exciting area of biomedicine."

Such an effort is all the more important if CIRM is to win approval of the  new, multibillion dollar bond measure that Klein is touting.

The panel had strong praise for CIRM's program so far, particularly since the agency was operating with a staff of less than 50. “Remarkable” and “extraordinary” were a couple of the adjectives. The report said,

“CIRM has built significant additional research capacity in the state, has attracted scores of talented young people to stem cell research, and has catalyzed large and important stem cell projects across the state. The (panel) was most impressed with this rapid start up, the overall quality of the scientists and projects that have been funded, the development of major buildings and other facilities for stem cell research, the forging of several important international partnerships and the innovative training programs that are in place.”

The panel warned that some patient advocate groups might have to lower their expectations as the result of the grant triage, which it called “portfolio prioritization.” The report said,

“While the (the panel) appreciates the natural wishes of disease groups to move forward on particular diseases or conditions, CIRM’s Governing Board, guided by management and external advisors, must begin the difficult process of focusing the number of disease areas to those that it believes have the greatest chance of development progress and clinical success, given reasonable timelines and budget. Attempting to move forward across too broad a front might compromise moving forward on any disease. Undoubtedly, these will be difficult decisions....”

Backers of basic science might also find some reason to be concerned about the emphasis on funding development of clinical applications. However, the report said,

"We strongly encourage CIRM to continue to invest in the research programs, intellectual infrastructure, training and development necessary to advance the understanding of stem cells."

On the international front, the panel said CIRM's efforts should be expanded into non-stem cell areas that could support CIRM's mandate. The agency should "sharpen the focus on meaningful, targeted excellence required for global leadership in the development of innovative treatments based on regenerative medicine."

You can find a list of all the reports recommendations here.

The California Stem Cell Report is interested in hearing from readers about their views on the panel's recommendations and conclusions. You can post them directly by clicking on the word “comments” or you can email them to djensen@californiastemcellreport.com. We will post them verbatim. We encourage writers to identify themselves but anonymous comments are permitted.

Recommendations for CIRM from Blue-ribbon Panel

Here is a list of the recommendations of the blue-ribbon panel concerning the California stem cell agency.

• Build on CIRM’s previous and ongoing investments
• Sharpen the focus on meaningful, targeted excellence required for global leadership in
the development of innovative treatments based on regenerative medicine
• Sustain a vigorous program of fundamental discovery while, at the same time, make
critical choices in translating results from the laboratory to the clinic
• Transition to a much more proactive strategy of funding that aligns CIRM’s peer review
and other processes with its mandate of delivering new treatments to the clinic
• Adopt a porous approach to strategic opportunities, scanning the global environment for
scientific advances that have the potential to enrich CIRM’s portfolio
• Prioritize the investment portfolio, with input from CIRM’s diverse stakeholders
• Build on and expand CIRM’s current international strategy, continuing to develop strategic
international partnerships that will create both scientific and financial synergies
• Assume a global leadership role in addressing not just the scientific, but also the
economic, regulatory, ethical and health delivery issues associated with stem cell
research and regenerative medicine
• Expand engagement with the healthcare industry and explore innovative partnerships that
will catalyze the movement of research from the laboratory to the clinic
• Increase greatly public awareness within the state and internationally of CIRM’s progress
on all fronts of regenerative medicine and the potential and realized health and economic
benefits , through outreach via patient advocacy groups, grantees and their host
institutions, conferences and the internet
• Clarify the roles and responsibilities of the Governing Board and senior management and
specifically between the Governing Board Chair and President in order to maximize the
likelihood of success of CIRM’s mission

Upcoming

The 19-page report from the blue-ribbon panel that reviewed the operations of the California stem cell agency is now available. We will have an item on the report, plus excerpts, a little later this afternoon.

CIRM Management Stumbling at Routine Tasks

Only four business days remain before a key California stem cell agency meeting that will deal with its financial future and the future of its departing chairman, Robert Klein, but the $3 billion state enterprise still is not providing any information to the public on those matters beyond cryptic hints.

The failure to provide the information represents a continuing and inexplicable problem with CIRM, which operates outside the normal oversight for nearly all state agencies. Its standard practice for a year and more has been to delay posting for the public background material on issues to be considered by directors, effectively denying interested parties and the public the ability to comment intelligently on major matters.

The issues coming before the Governance Subcommittee of the CIRM board of directors next Wednesday are not trivial. They could well deal with spending priorities for the next $2 billion that CIRM will hand out and whether it will be able to fulfill the promises of the campaign that created it six years ago. However, the only information that CIRM deigns to give the public describes the matters only as “budget allocations and structural priorities.”

Also up for consideration is the future role for Klein, who has said he will leave as chairman next month at the end of his term. The subcommittee agenda only mentions  “future assignments to and volunteer support by Chair Emeritus.” One likely role for Klein is work on the beginning stages of a campaign for a multibillion dollar bond measure to continue funding CIRM's effort. Unclear is whether CIRM directors intend to pay Klein for work after he leaves the board. Klein has considerable expertise and knowledge that should not be lost to the agency. However, building support for a bond election campaign should not be financed with CIRM's public funds.

The Governance group might also consider his role in the context of the other departing members of its board. They too have history and knowledge that should not be lost. Again, the question of compensation does arise.

Just why the agency does not provide timely information to the public on its meeting agendas is unclear. But at least two possible reasons exist. The agency may not be capable producing of the documents in a timely fashion for a variety of reasons. One likely possibility is that they are stalled on the desk of one of CIRM's top officials, but there are obviously more possibilities. Given that the failure to provide the public with important information is CIRM's standard mode of operation, it could reflect a management breakdown. The inability of an enterprise to perform routine tasks in a routine fashion is also one sign of serious, embedded management problems that are likely to extend well beyond the routine matters.

Another reason for not providing the information to the public is an overt decision by the agency itself to withhold the material, which is a matter of public record by law. Government agencies, both federal and state, sometimes stall in the release of documents for a variety of reasons, which can include a desire to restrict public input in the decision-making process. Another reason could involve an unwillingness to release to the public information that could be embarrassing or involve sensitive – but legally public – information having to do with salaries or compensation.

We cannot say exactly why CIRM does not make the information available in a timely fashion, but for whatever reasons it reflects poorly on the enterprise. The track record the agency is compiling on its lack of transparency will certainly come back to haunt CIRM come bond election time. It would be relatively easy to solve the situation, but CIRM does not seem to have the will to do so.

As for the specific issues coming up next week, the agency just posted a notice that another important meeting will occur one week from Friday that involves the future of the agency. The meeting of the directors' Finance Subcommittee will consider significant changes in its fledgling biotech loan program, once billed as a $500 million effort. Also on the table is an examination of the current, rocky state of the government bond market and the implications for CIRM, which has no other source of funds than state bonds.

All the information that CIRM has provided to the public, which includes the many biotech firms throughout California and hundreds of scientists, is the following:

“Consideration of risk premium options for loan programs, including amendments to warrant coverage requirements in Loan Administration Policy and adoption of interim regulations to offer payback of multiple of loan amount as alternative to warrant coverage. “

“Discussion regarding bond market and future implications for CIRM.”

California Stem Cell News: A Not-So-Good Story Line

If one is to believe Google, the top of the news today about the California stem cell agency is a story that relates how its $3 billion effort has failed to deliver on the emotion-ladened campaign promises of 2004.

The piece in the Los Angeles Times, the state's largest circulation newspaper, was ranked No. 2 in a Google news search this morning on the term “California Institute for Regenerative Medicine.” Ranked at No. 1 was a summary of the article. Yahoo news placed the Times article a tad higher than Google, declaring it was No. 1.

The story yesterday by Jack Dolan of the Times' Capitol bureau follows one earlier this month in the New York Times that warned that California voters are not likely to see a good return on their unprecedented investment in stem cell research.

Both stories highlight one of the major challenges facing the state stem cell agency, especially if CIRM seeks another $3 billion to $5 billion from voters in a couple of years.

To win approval of such a bond measure in a statewide election, it will take more than a few hundred research papers, one of the measures of success that CIRM uses. The papers may contribute to the development of the science, but voters expect more tangible results. They want to see paralyzed people walk, blindness cured and memories recovered – all of which are not likely between now and time for an election for more funding for CIRM.,

That is not to say that another bond measure is doomed, but it will take some great science and top-notch marketing – not to mention luck – to win approval of more cash for research.

The story that CIRM wants to see should be much different than Dolan's piece, which does not give the agency much to celebrate, at least in terms of PR.

Dolan wrote,

"Under (CIRM Chairman Robert Klein's) stewardship, the agency has funded research leading to hundreds of scientific papers, but scientists say marketable therapies for maladies such as cancer, Alzheimer's and spinal cord damage promised during the campaign remain years, if not decades, away."

Dolan cited the built-in conflicts of interest at CIRM. He wrote,

"'When you're talking about spending $1.1 billion dollars, there's absolutely no excuse for people making the decision to give themselves the money,' said Robert Fellmeth, executive director of the Center for Public Interest Law at the University of San Diego.

"While board members recuse themselves from voting on grants where they have a direct conflict, the mere presence of so many conflicted members is a concern, Fellmeth said. 'There is a quid pro quo atmosphere that develops, because you defer to each other.'"

Dolan additionally hammered at the high salaries at the upper levels of CIRM, a matter that resonates roundly and negatively with voters.

Little of what he wrote is new to the readers of this blog, but a piece in the Los Angeles Times reaches a new and far wider audience than that of the California Stem Cell Report. A story in the Times also stimulates additional links to the article, sometimes in a manner that does not cast CIRM in the best light.

The Scientist magazine linked to the story in a three-paragraph item that began like this:
“The California Institute for Regenerative Medicine has been plagued with criticisms and doubts during its first six years in operation, yet the chairman of the institute plans to ask state voters for another $3 billion in bonds in 2014 to keep the institute up and running.”

Then there was this headline from blogger Wesley Smith: “CIRM to Try and Sucker Californians Into Letting It Borrow Even More Money." Smith wrote,

"Who cares that California is falling into the ocean fiscally?  Who cares that our taxpayers are groaning under high taxes and an astonishing level of bond debt?  Not the California Institute of Regenerative Medicine.  Like the man-eating plant in (the play) 'Little Shop of Horrors,' its appetite is insatiable.  It wants more!"

Rankings of news stories on Internet search engines, of course, change over time, sometimes in a matter of hours. But pieces such as those in the New York and Los Angeles Times will still be part of the news background for CIRM come election time. Reporters from around the state and nation will find them as part of their coverage of the bond measure. More questions will be asked. And CIRM will need to find some good answers.

Second hESC Trial Scores Significant Media Coverage

FDA's approval of a second clinical trial involving a human embryonic stem cell therapy developed by Advanced Cell Technology attracted wide spread media coverage yesterday and today, but missing were some interesting sidelights.

Stories appeared from Boston to Los Angeles about the effort by the firm, which is headquartered in Santa Monica, Ca.

Alla Katsnelson of Nature magazine wrote,

"The trial will examine the safety of a therapy for Stargardt’s Macular Degeneration, an inherited juvenile eye disease affecting an estimated 1 in 10,000 young people in the US. As the disease progresses, a layer of the retina called the retinal pigment epithelium (RPE) degenerates, causing vision loss. It's hoped the new therapy would also work for other types of macular degeneration, a widespread cause of blindness, particularly in the elderly....

“Macular degeneration has been seen as stem cell therapy’s low-hanging fruit because the cells that need replacing are so accessible, both for delivering the treatment and for monitoring its effects. The eye is also an immune-privileged site – meaning that injections won’t elicit an immune response. Last year, the pharmaceutical giant Pfizer agreed to back the work of researchers at University College, London, who are developing a similar therapy."

Carolyn Johnson of the Boston Globe was one of the few mainstream media writers to note the company's stock price. She said,

"ACT has withstood financial struggles over the past few years, and its stock price closed on Friday at under 5 cents a share. But the small clinical trial that it has gained approval for — to treat 12 patients with Stargardt’s macular dystrophy — will make it the second company in the United States to test a human embryonic stem cell treatment.

"'It’s been a long road. . . . We’ve had our telephones turned off a few times,'’ said Dr. Robert Lanza, chief scientific officer for ACT. 'We’ve hung in there.'"

Unmentioned in the stories was the fact that ACT, lured by the passage of the measure that created the $3 billion California stem cell agency, moved its headquarters from Massachusetts to California in 2005. While ACT has never received a grant from the stem cell agency, it is one of the few companies that has complained publicly at a meeting of CIRM directors about a conflict of interest on the part of a grant reviewer.

The comments by Stephen Kessler in August 2008 were cut off by CIRM Chairman Robert Klein, who said directors needed to discuss the names for CIRM-funded labs before going to lunch.

Also not mentioned were reports that ACT is one of the few companies likely to have applied in CIRM's $50 million clinical trial round.

CIRM carried a straight-forward item about the trial on its research blog.

Writing on his blog, researcher Paul Knoepfler of UC Davis called it “a great day.” He said,

“I think there is reason for cautious optimism. Cell therapy-based approaches to treating blindness together represent a fundamentally new, exciting area.”

Here are links to other stories: New York Times, USA Today, Xinhau, AFP, Science, Los Angeles Times, ACT news release.