No Real Problem with Canadians as CIRM Chair

A California attorney general's opinion rendered decades ago makes it abundantly clear there was no real legal barrier to a Canadian citizen serving as chairman of the state's $3 billion stem cell agency.

CIRM Chairman Robert Klein announced last week that the candidacy of Alan Bernstein, head of HIV Global Vaccine Enterprise of New York, had to be dropped because of what Klein described as a citizenship problem. Klein's announcement came after a public ruckus erupted over his attempts to maneuver Bernstein into the chair's post.

Klein referred to a California government code section that says a person cannot hold “civil office” in California without being a citizen of the state.

However, the 1978 opinion from the attorney general said,

“This section by its requirement of citizenship for the holding of a civil office is unconstitutional in that it is not narrowly and precisely drawn so as to apply only to offices whose incumbents participate directly in the formulation, execution or review of broad public policies having a substantial impact upon the public. 61 Op.Atty.Gen. 528, 12-6-78.”

In California, such attorney general opinions are the litmus test for actions by state agencies, having the force of law for all practical purposes. The attorney general's Web site says,

“The formal legal opinions of the Attorney General have been accorded 'great respect' and 'great weight' by the courts.

As reported in a previous item, Web CIRM's outside counsel, James Harrison, told us,

“We discovered the citizenship issue when Bernstein's name was mentioned as a candidate. Given the litigation CIRM has faced over the years, there was a need to be cautious and there was not sufficient time to obtain closure on this issue before the deadline for nominations. You should know that there is an AG opinion from 1978 declaring that the citizenship requirement is unconstitutional.”

Earlier we raised the question of whether the law in question would apply to CIRM President Alan Trounson, who is an Australian, and who was hired three years ago. Our reading is that it would. However, that is moot given the attorney general's opinion.

CIRM Board Meeting Back Online

The Internet audiocast of the CIRM board has resumed with discussion of changes in the biotech loan program.

CIRM Directors Resume Public Meeting

Directors of the California stem cell agency reconvened in public after a lengthy closed-door session during which they were believed to be discussing the election of a person to replace Robert Klein as chairman of the $3 billion enterprise. 

The Internet audiocast of the event was up briefly but has now vanished. 

Trounson on Recommendations of Blue-ribbon Reviewers

CIRM President Alan Trounson was generally pleased today with the report and recommendations of a  blue-ribbon panel that reviewed the $3 billion stem agency's effort.

He made a presentation to the board at its meeting today in Irvine that was a bit truncated in the Internet audiocast. However, you can find a summary of his remarks (Power Point style) here. The bulleted points are his response.

Trounson was principally responsible for the selection of the members of the panel and orchestrated the three-day October review, which was conducted almost entirely behind closed doors.

CIRM Press Release on External Review Report

The California stem cell agency today posted a press release on the report and recommendations  by a blue-ribbon review panel that were discussed today at an Irvine meeting of its board of directors. The release contains quotes from both reviewers and board members. You can find it here.

Stem Cell Agency Board Still in Closed Session

Directors of the $3 billion California stem cell agency are still meeting in closed session following a statement by its Chairman Robert Klein defending his actions in connection with an attempt to hand pick his successor.

The board went to lunch and into an executive session about two hours ago shortly after Klein orally laid out his view of what transpired in connection with the nomination of Alan Bernstein to succeed Klein. Klein did not ask for questions from the board.

We have queried the board's outside attorney, James Harrison of Remcho Johansen and Purcell of San Leandro, Ca., whether the subject of the election of a new chair is part of the executive session discussions.

Prop. 71 does not specifically provide for closed door meetings in the selection of a chair.  About the election process, it simply says,

"A chairperson and vice chairperson who shall be elected by the ICOC members. Within 40 days of the effective date of this act, each constitutional officer shall nominate a candidate for chairperson and another candidate for vice chairperson."

However, the chair and vice chair are CIRM employees by law and are entitled to salaries. Personnel matters may be considered in executive session, under state law. Most actions involving votes of the full board must occur in public.

Klein Addresses CIRM Board on His Succession Moves

Robert Klein, chairman of the California stem cell agency, today commented orally and briefly on his efforts to hand pick his successor at the $3 billion enterprise.

His remarks were a shorter and slightly altered version of the material he posted this morning on the agenda for today's CIRM directors meeting in Irvine.  Klein made one important addition to the posted material. He indicated that the board could not legally have a search committee that would make recommendations to the four state officials who make nominations. Prop. 71, the measure that created CIRM, stipulates that the board may choose from the nominees, although it could also reject them and request new ones.

Klein's surprise statement was the most forthcoming he has been on his unsuccessful effort to engineer the selection of Alan Bernstein as his successor. Bernstein is head of HIV Global Vaccine Enterprises of New York and chair of a panel that reviewed CIRM operations. News reports spoke of closed-door meetings and conflicts of interests involving Klein's attempt and rankled some CIRM board members.

Klein's comments this morning came just before the board's lunch break and a brief invitation from a UC Irvine stem cell researcher, Peter Donovan, to the board to tour the UCI stem cell facility, which CIRM helped finance. Klein did not entertain questions from CIRM directors.

Klein Defends Role in Selection of Successor

CIRM Chairman Robert Klein today posted a statement on the CIRM Web site regarding his attempt to engineer selection of his successor at the $3 billion stem cell agency. Klein's remarks were filed on the agenda for today's meeting of the CIRM board. It was not immediately clear whether he read the statement to the full board because the audiocast of the meeting began late and was interrupted from time to time.

Here is an excerpt:

"I organized a dinner among all of the individuals whose names were under consideration for nomination. I asked for Board counsel to be present to be sure that Bagley-Keene (open meeting law) requirements were observed. The intent was to provide a free exchange of ideas between the candidates and an opportunity for them to get to know one another. Indeed, I intentionally invited an individual whom I knew had a significantly different position than mine, in order to provide him an opportunity to present his views. The mutual respect and understanding of the candidates’ positions is generally considered essential to prepare for a thoughtful Board discussion on similarities, differences and strategic advantages of one possible candidate versus another. It was also intended to lay a foundation for constructive cooperation between those who succeeded and those who did not succeed in the election.

"Ultimately, lacking time to resolve a technical legal issue, the Governor nominated me, but I have made it clear that I only intend to serve until a new Chair can be selected. In my view, the best candidate would be a person who has exceptional scientific and/or clinical expertise and outstanding patient advocacy credentials that testify to his or her ability to assist in reaching the ultimate objective of our principal mission of driving therapies safely and quickly through FDA-approved clinical trials to patients. Certainly, I would include in our primary mission the parallel development of basic science to validate our understanding of chronic disease and the “mechanisms of action” of potential therapies; as therapies proceed through clinical trials, there will be innumerable intellectual challenges to overcome, ranging from basic science through early translational development issues through to clinical trial methodologies. The ideal candidate would have the education and experience to understand this entire continuum of biomedical knowledge.

"I had scheduled a Governance Subcommittee meeting to discuss the value of a scientist-clinician as Chair, but given that Dr. Bernstein was no longer a candidate, that issue was
moot.

"I look forward to a future, robust discussion at the Governance Subcommittee and at the Board of the best criteria for a new Chair."

(Editor's note: Klein later presented a briefer and slightly altered version of the statement orally to the board.)

CIRM Directors Probe New Directions for Stem Cell Agency

Directors of the California stem cell agency have just finished hearing the formal presentation of the report from the blue-ribbon review panel that recommended a strong push towards developing therapies and engaging the biotech industry, which has complained about its treatment by CIRM.

The directors took a short break and are scheduled to reconvene shortly. Some members of the public are expected to present statements.

CIRM directors this morning questioned the panel about engaging industry, improving communications  and proposals by the panel to reach out to find research any place in the world that could lead to therapies. Board members indicated that sort of "proactive" effort could be difficult given that CIRM funding is restricted to California. Review panelists said various kinds of collaborative efforts could be used without running afoul of the funding restrictions.

On relations with the biotechindustry, Alan Bernstein, head of HIV Global Vaccine Enterprise of New York and chairman of the review panel, said the group had "heard a lot of things from industry about things not working." He said,

"CIRM's management has to start talking with industry in a meaningful two-way dialogue."

CIRM Director Leeza Gibbons, a Hollywood entertainment figure and patient advocate, had a suggestion on improving recognition of CIRM among the California public. "We all want and need heroes," she said. Creating emotional connections is the way to win the hearts of the people, she said.

During its three-day review in October, members of the panel had wondered why the stem cell agency attracted so little attention in the mainstream media in California, a problem that relates as much, if not more,  to the nature of the state of the media as it does to CIRM.

Bernstein said greater use of patient advocates was important in communicating with the public, a suggestion that dovetailed into Gibbons' comment.

The panel reiterated its recommendation that the board should focus on strategic matters and clarify the conflicting roles of chairman and president, a longstanding problem created by the language of Prop. 71. 

Scientist George Daley of Harvard, one of the review panel members, said, "CIRM is in unique position" in the world "...because it has a bully pulpit, because it has tremendous influence."
He suggested that CIRM might want to assemble a "rapid strike force" to review outstanding research opportunities in the world to figure out how California can play a role.

Upcoming

We will be bringing you live coverage of today's meeting of the governing board of the California stem cell agency at UC Irvine. We are monitoring the session via the Internet from El Salvador with a cellular connection from a sailboat in the Estero de Jaltepeque. Stories will be filed as warranted. The meeting is scheduled to get underway at 9:30 a.m. PST, but usually begins shortly after the scheduled start-up time. If you would like to listen to the Internet audiocast, directions can be found on the meeting agenda.

The Canadian Citizenship Question – Day Four, an Answer!

The requirement that the chairman of the California stem cell agency be a citizen of California is unconstitutional according to a 1978 opinion by the state attorney general.

That's what James Harrison, outside counsel for CIRM, told the California Stem Cell Report early today. He was responding to an email query yesterday concerning the reason that Alan Bernstein, a Canadian, was scrubbed as CIRM Chairman Robert Klein's favorite candidate to succeed him in the position. Official opinions of the attorney general are widely regarded to have the force of law. The way the attorney general's Web site puts it is,

“The formal legal opinions of the Attorney General have been accorded 'great respect' and 'great weight' by the courts."

Here is what Harrison had to say,

“We discovered the citizenship issue when Bernstein's name was mentioned as a candidate. Given the litigation CIRM has faced over the years, there was a need to be cautious and there was not sufficient time to obtain closure on this issue before the deadline for nominations. You should know that there is an AG opinion from 1978 declaring that the citizenship requirement is unconstitutional.”

As far as we can tell the first public mention of Bernstein's name as a candidate came on Nov. 29 on the California Stem Cell Report. However, his name was being bandied about privately well before that. Late on Dec. 2, Klein released a statement that Bernstein was no longer being considered because of “a technical legal requirement regarding citizenship.”

Klein's statement followed stories in the media (see here, here and here) involving closed-door meetings and concerns about conflicts of interest in connection with his attempts to engineer selection of his successor. The ostensible citizenship condition also led to a well-read story in the Toronto Globe and Mail in which scientists in Canada deplored the requirement.

Harrison's response today about the matter came four days after we asked CIRM's official spokesman to provide the exact legal language concerning what Klein said was a citizenship problem.

We still have questions about whether the citizenship question applies to CIRM President Alan Trounson, an Australian, as well as the actual date when CIRM officials became aware there might be an issue with Bernstein.

Our assessment of the situation? Klein's statement was specious, at best. At worst, it might be called something else. It appears to be a dubious effort to paper over what is serious leadership issue involving Klein and raises significant questions about his credibility.

The Canadian Citizenship Question: Day Three

What exactly in California law bars non-citizens from becoming the chair of the $3 billion stem cell agency? Especially since its president is an Australian.

We asked Don Gibbons, CIRM's chief communications officer, about the issue last Friday morning. So far we have not heard back from him despite two additional queries. This morning we tried James Harrison, outside counsel to the board.

Our question to him was more specific and related to a provision that we found in state law (government code section 1020) that says,

“A person is incapable of holding a civil office if at the time of his election or appointment he is not 18 years of age and a citizen of the state.”

So we asked Harrison about that in addition to an opinion by the state attorney general's office concerning application of the section in the case of an appointment of a person to fill an unexpired district attorney's term. That instance involved an elective office. So far we have not found an opinion concerning application of the code to a non-elective position, such as president of the stem cell agency.

Of course, the key is how “civil office” is defined. The government code contained no definition. We searched other sections of California law as well but turned up no definition. However, opinions by the attorney general that related to “civil office” that we uncovered dealt with popularly elected officials.

Another little twist is whether the chair is “elected.” The directors vote on the position, but he is not elected by a vote of citizens.

So what does this all mean? When did CIRM Chairman Robert Klein and Harrison know there was a difficulty? Why was it not disclosed until after the ruckus erupted about Klein's attempt to install a Canadian as his successor?

Perhaps all will be revealed on Day Four of the “Canadian Citizenship Question.”

Read This Item to See What CIRM Has Expunged From Its Web Site

With one day left before Wednesday's meeting of the directors of the California stem cell agency, the public can find much to mull over by reviewing the agenda for the session.

But no one will find anything on three matters that have been expunged from CIRM's Web site. They deal with the less than artful attempt by CIRM Chairman Robert Klein to engineer the selection of his successor.

The items were removed after Alan Bernstein was scrubbed as a candidate following reports of conflicts of interest, inappropriate closed-door meetings and a late-coming disclosure that his Canadian citizenship reportedly disqualified him.

Here are the items that were stripped from CIRM's official agendas for both last Wednesday's meeting of the Governance Subcommittee and the full board session this Wednesday.

“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.”

On the Governnance Subcommittee agenda today you will find only one word – “CANCELED” – in the place of these proposals. No mention is also made on the agenda for Wednesday's full board meeting that the document has been significantly altered and matters removed with no explanation.

Last week, we reported that CIRM had left the public and industry in the dark when it failed to provide any additional information beyond the cryptic listings of the three items, which appeared to involve fairly significant matters.

The board's outside counsel, James Harrison of Remcho Johansen and Purcell of San Leandro, Ca., Harrison, responded at the time, defending its information practices and also indirectly shedding some light on Klein's scheme to select his own successor. Harrison said in an email on Wednesday,

“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.”

Our response? From the very first, CIRM should have said on the agenda that the items were placeholders involving selection of a new chairman or involved a conceptual discussion and why. To do otherwise is to withhold from the public important information that the State Constitution says it has a right to see. The upshot is that interested parties are left to ferret out or speculate on reasons behind the proposals, which, quite frankly, is not in CIRM's best interests.

CIRM also compounded the error by expunging the items entirely. It is not the first time that material on CIRM's Web site has been altered without providing any indication to readers that it has been changed. The information that CIRM presents on its Web site constitutes an official government document. When changes are made, there should be a trail that shows the changes. In this case, the items should have been left on both both agendas with a note that the meeting was cancelled or the matters would not be taken up. In essence, stakeholders and interested parties now have to save all versions of CIRM Web documents in order to detect whether changes are being made, significant or otherwise.

As for the items currently listed by CIRM to be considered by its directors on Wednesday, they include the report of the external review panel(see here and here), changes in IP policy, current budget figures and changes in its biotech loan programs.

The Irvine meeting will be audiocast on the Internet. Directions for tuning in can be found on the agenda.

Canadians No, Australians Yes?

You could call it “The Canadian Citizenship Question.”

Robert Klein, the chairman of the $3 billion California stem cell agency, brought up the subject last week when he used it to explain why his hand-picked successor, a man from Canada, could not be voted on by CIRM directors. Canadians cannot chair the agency, Klein said last Thursday, because of “a technical legal requirement regarding citizenship.”

However, non-citizens can serve as president of the agency – the case in point being Alan Trounson, an Australian.

We wanted to know more about this situation. So we asked Don Gibbons, CIRM's communications chief, early Friday about the exact wording of the law. We renewed our query late that afternoon and again this morning. So far the agency has not responded.

During the weekend, however, we dug into the State Constitution and the law dealing with state personnel. Our quick look turned up nothing that would bar a Canadian from the chairmanship, but we could have easily missed something.

We will bring you exactly what CIRM has to say about all this when we receive a response.

Is Klein a Shoo-In for Chair of California Stem Cell? Maybe, Maybe Not

Is the re-election of Robert Klein as chairman of the California stem cell agency a foregone conclusion? A significant number of our readers think so.

The only other candidate to be nominated for that post is Art Torres, now co-vice chair of the $3 billion enterprise. Nature magazine has reported that he probably is not going to push his candidacy.

However, if the CIRM governing board re-elects Klein, it will be indicating to the public and the international stem cell community that it tolerates, if not approves of Klein's maladroit attempts to engineer the selection of his successor. As was pointed out in a Toronto newspaper on Saturday, Klein's machinations compromised the reputation of California's stem cell effort.

The belief that Klein is bound to be re-elected seems to be based on several assumptions. One is that if Torres is elected, CIRM President Alan Trounson will resign. Nature magazine reported last week that Torres and Trounson “cannot stand each other.”

That would leave the agency with a new chair and with no president and no vice president of research and development, a new position that replaces the post of chief scientific officer. Trounson has not filled the VP slot despite a hiring effort that began nearly 18 months ago. That leadership situation may seem daunting to some board members.

However, the CIRM board may choose other avenues. One possibility would see the board deferring all action until the dust settles. That would mean Klein would continue in his post, unless he walks directly out the door, which he may do if he is not re-elected on his own terms. If Klein does that, as co-vice chairs, Torres and Duane Roth, could split the job's responsibilities until the board decides to vote.

In another scenario, the board could name an acting chair and schedule a later election for chair. If the directors are concerned that naming an acting chair might violate the technical terms of Prop. 71, they could officially designate the position as “interim presiding officer” or something similar. The board already created a “non-statutory” vice chair in giving the posts to Torres and Roth. To avoid giving the appearance of favoritism to Torres, the board could look to somebody like Gerald Levey, a former member of the board and former dean of the UCLA medical school, for the interim job. Other possibilities include board members Ed Penhoet, co-founder of Chiron, and Sherry Lansing, former Hollywood studio chief, both currently members of the board and well-regarded.

Given a little more time, the board could put together a group of board members to deal with selection of a new chair, which could make fresh recommendations for nominations to the four statewide officials entitled to make them. The CIRM board could even ask the public, researchers and industry via its Internet site to make suggestions for candidates, as did state Controller John Chiang, one of the nominating officials.

One matter for the board to consider is Klein's lame duck status -- even if he were re-elected for a 12-month term as he has suggested. He will increasingly lose effectiveness. Outside of CIRM, researchers and the biotech industry will be looking ahead to his replacement – something that is likely occur as well within the agency.

Klein, a real estate investment banker, says it is necessary to find a nationally respected scientist to replace him and has promised to do so. However, the board has made no public statement that it wants a scientist as chairman. Plus Klein's past searches for a president for CIRM have been rocky and prolonged. It took a year to bring Trounson on board, including a delay of three months after his hiring was approved. No reason exists to expect anything different should Klein embark on his own search for his successor.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., and longtime observer of CIRM, said the board should simply vote in Torres.

He made the suggestion when queried by the California Stem Cell Report. Simpson declared,

"Nobody disputes Bob Klein's substantial contributions to CIRM. The agency would not even exist if it were not for him. Nonetheless, there is a time for every leader to move on.

"That time is past due for Klein, a point that was hammered home by his sleazy and inappropriate backroom tactics to manipulate the selection of his successor."

"Suggestions to elect an interim chairman are intriguing, but unnecessary. Art Torres has been nominated for the post and has all the qualifications necessary to lead CIRM to the next level."

In whatever case, Prop. 71 makes it clear that the choice of chairman is a matter for the entire 29-member board. Klein is only one member of that board.

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.