California Budget Mess Hamstrings Fresh Funding for Stem Cell Agency

The prospects for new sales of California state bonds – the only source of funding for the $3 billion California stem cell agency – remain dim, according to an article today in Bond Buyer.

"The California bond market has become hamstrung by the delay" in coming up with a prudent state budget in Sacramento, wrote Randall Jensen in the public finance newspaper.

Jensen(no relation to this writer) reported,

"California has no plans to go to market until the fall, and even that is far from ­certain. 'We still hope to be in the market this fall to sell $5.5 billion to $6 billion of GO bonds.  But the treasurer has no interest in selling bonds without a balanced budget in place,' said Tom ­Dresslar, a spokesman for state Treasurer Bill ­Lockyer.

"Dresslar said GO-bond financed public works programs have enough funds to make it though the end of the calendar year, but added that if the state doesn’t go to market until next year current projects could face a shutdown."

The stem cell agency says it has sufficient cash to fund current commitments until roughly June of next year. There is no guarantee, however, that the agency would receive funds via the first round of bond sales even when they do occur. The state has about $37 billion in bonds awaiting sale. Competition for allocations will be stiff.

Outgoing CIRM Chairman Robert Klein told directors last month that he had hoped for new bond funds this past winter. According to the transcript of the directors' Finance Subcommittee meeting on April 19, Klein said,

"It should be remembered that because of the large collaborative teams we build in California for disease teams, for example, or large collaborative teams that are necessary for clinical trials, and the international teams that we need to make certain that we retain a working reserve so that we provide assurances to these teams that this extraordinary effort they put together to bring together institutions and special expertise is not defeated, although we have an approved loan or grant. So, for that matter, it's important to the industry as well."

Missing Items: Problems with Blog Host

Two recent items have vanished from this blog because of worldwide problems with the hosting service, Blogger, which is part of Google's operations. Blogger says it is attempting to restore the items, which have disappeared from all of its thousands of blogs. If not, we will restore them later. Thanks for your patience.

Geron Loan Draws Media Attention to CIRM

The state of California's first-ever venture into a clinical trial involving human embryonic stem cells garnered more than the usual news coverage last week for the Golden State's $3 billion stem cell research effort.

At least more than usual for the stem cell agency, which has received modest attention in the mainstream media in recent years.

The $25 million loan to Geron Inc. of Menlo Park, Ca., drew articles in newspapers ranging from the Los Angeles Times to the San Francisco Business Times. However, the story was ignored by the San Francisco Chronicle, the San Jose Mercury News and The Sacramento Bee, based on our searches. That despite the fact that the circulation areas of the San Francisco and San Jose papers include the headquarters of both Geron and the California stem cell agency.

The lack of coverage by those papers undoubtedly is a reflection of the current overtaxed nature of the newspaper business along with the difficulty of peddling stem cell research stories to reporters and editors.

Keith Darce of the San Diego Union-Tribune had most developed story that we saw. It included comments from another stem cell company and termed the award "historic." Darce also pointed out that the loan is part of CIRM's effort to help stem cell companies through what is known as a financial valley of death – a period in which it is difficult to find conventional financing.

Eryn Brown at the Los Angeles Times, the state's largest newspaper and which has paid scant attention to CIRM, wrote,

"John M. Simpson, a consumer advocate with Consumer Watchdog in Santa Monica, Calif., said that making a loan to support a clinical trial made sense.  While his group has worried in the past about awards becoming 'boondoggles,' he said in this case Geron's trial was vetted carefully and the company met the requirements needed for funding. 'It could provide cures.  That's what everyone wants,' he said. 'I'm watching it with interest.'" 

CIRM's press release quoted outgoing agency Chairman Robert Klein as describing the state's investment as a "landmark step." But he cautioned that severe setbacks could be encountered. He said,

"We need to be prepared to stand by the heroic patients and the companies as they face these challenges and solve the problems that stand in the way of the recovery of patients from paralysis."

Over the last year, Klein has talked up another bond issue for CIRM that could total as much as $5 billion. CIRM operates on borrowed money (state bonds), which doubles the real cost of all its activities because of the interest expense.

To win voter approval of a new bond issue will require concrete results, such as those envisioned in the Geron trial, to justify continued state support of stem cell research.

Geron's three-year clinical trial is aimed at assessing the safety of its treatment. Any regular use of the therapy is probably a decade or more away because of the need to test its efficacy and to clear regulatory hurdles. Geron hopes to enroll 10 patients in its trial. The firm picked up its second in Chicago, according to a report this week.

Here are links to more stories, some of which incorrectly described the award as a grant, along with links to press releases on the state loan to Geron: Geron's press release, CIRM's press release, CaliforniaHealthline, Science magazine, Nature, myfoxla.com(two Los Angeles TV stations), xconomy and Fierce Biotech,

Coming up

We have dropped the hook in Panama in a bay near the entrance to the Panama Canal, where behemoths of the sea parade by hourly on their way to the Atlantic Ocean. We are catching up on California stem cell affairs and hope to have a fresh posting soon.

Lure of the Sea

The siren call of the sea is being heard once again. We are raising anchor to continue our journey to Panama from our current location in Puerto Jimenez in Costa Rica. The California Stem Cell Report will go dark, so to speak, until we find another Internet connection, which could range from a few days to about two weeks. Rest assured – or not so assured – that postings will resume in the not-too-distant future.

CIRM Directors Tackle Grant Appeal Problems

The longstanding issues involving appeals of grant reviewer decisions at the $3 billion California stem cell agency will be taken up once again April 26 by the directors' Science Subcommittee.

The agenda also includes possible action on a bank for reprogrammed stem cells.

No details are yet available on any of the proposals to be considered, but potential applicants for grants and loans would be advised to watch the appeals changes closely.

California Stem Cell Report Cited as One of 25 Best Stem Cell Blogs

The California Stem Cell Report has been named one of the 25 best stem cell blogs by a web site targeting readers interested in nursing education.

In preparing the list, nursingschools.net said,

"Whether you’re pursuing a career in medicine or science, if you’d like to keep up with these advances, then blogs on the issue are one of the best tools out there. Here, you’ll find a collection of blogs that provide all the information you’ll need to stay on top of the latest in stem cell discoveries."

The web site said of the California Stem Cell Report,

"See how stem cell politics are affecting research and development in California through this blog written by journalist David Jensen."

Also mentioned were blogs with California ties and one from the California stem cell agency. CIRM Research Results, produced by Amy Adams, was the only government blog cited. Nursingschools.net said Adams' report "shares" CIRM's "latest discoveries and political battles."

Two blogs by scientists were among the 25 including one by Paul Knoepfler of UC Davis and another Robert Lanza of Advanced Cell Technology of Santa Monica, Ca.

Of Knoepfler's work, the web site said, "The UC Davis School of Medicine maintains this blog, providing readers with information on everything stem cell as well as other science-related issues."

Of Lanza, the web site said, "Dr. Robert Lanza is a scientist and professor working on issues related to cell technology and engineering; his blog will provide readers with some insights into the field and his research."

Another blog cited was Ben's Stem Cell News. Nursingschools.net said, "Ben Kaplan is a (California) stem cell activist, blogger and a biotech professional who shares his thoughts and the latest information on stem cells here."

Kaplan appeared in campaign ads in 2004 for Prop. 71, which created the California stem cell agency.

California Stem Cell Agency Plans a More Than 16 Percent Budget Boost

The California stem cell agency is proposing an $18.5 million operational budget for the coming fiscal year that will include a more than 12 percent increase in staff and reflect the rising costs of monitoring more than 400 grants and loans.

The agency did not disclose the size of the increase for the spending plan compared to actual spending projected through the end of the current fiscal year June 30. CIRM only offered a comparision to spending that was approved last June ($16 million). The proposed budget is up 16 percent from that figure. The agency, however, has been running behind the approved spending levels so the actual budget increase is likely to be substantially higher than 16 percent.

In documents prepared for a meeting Tuesday of the CIRM directors' Finance Subcommittee, the agency's staff briefly noted that a cash crunch could occur in the coming fiscal year if the state does not sell additional bonds, the only real source of funding for CIRM's $3 billion effort. A continued suspension of bond sales is likely this year because of the state's financial crisis.

The budget document said,

"If no new bonds are sold during FY 2011-12, expenditures could reach the 6% (legal, Prop. 71)cap by June 2012. However, plans are progressing to request authorization for new bond sales this year."

No further information was provided concerning the bond situation, although it is to be considered as a separate item at the meeting next week.

The budget document said CIRM is "well aware" and "sensitive" to California's fiscal crisis and said its spending plan is aimed at controlling spending.

The document said it reflects "continued increases in the programs, activities and overall workload at CIRM, and it mirrors changes in the number of fulltime employees, which is expected to grow to 56 from the target for FY2010-11 of 50 (an increase of 12%)."

With $1.2 billion committed out of $3 billion, CIRM cited a significant increase in workload, including a 47 percent hike in "payment transactions" for grants and loans from 663 to 975 and a 21 percent increase from 467 to 563 in scientific progress reports and "prior approval requests" for changes in awards.

Eight new positions are proposed, up from the current staff level of 48(a 17 percent increase). One is a "director of public communications" in the office of the chair of the agency. Two others are an information technology director and a special projects officer to help CIRM President Alan Trounson develop new initiatives and deal with biotech industry executives.

The largest budget category is for compensation, $10.3 million. The second largest category is outside contracting at $3.3 million. "Direct legal costs," many of which are contracted, are scheduled to hit $2.3 million. The agency is heavily reliant on outside contracting because of the former legal limit of 50 on the size of its staff. That limit was removed by legislation that went into effect at the beginning of the year.

The spending plan shows that CIRM is still wrestling with its critical grants management system after several years of work. It proposes spending $933,977 on the effort this year out of a total information technology budget of $1.3 million. It is not clear whether that figure includes the hiring of an information technology director, as proposed elsewhere in the spending plan.

The office of the chair, which includes both outgoing Chairman Robert Klein and co-vice chair Art Torres, is budgeted for $3.9 million. Again no comparision is available to estimated spending for this year, but the figure is up from the $3 million approved last June for the current year. Klein says he will leave his post this June. No successor has been chosen. The largest increases in Klein's budget appear to be in compensation (new hires) and outside contracting.

The Finance Subcommittee is expected to forward its recommendations on the budget to the full CIRM board at its meeting in early June.

The budget information from CIRM is coming much earlier than it has in the last several years, a significant improvement in an important aspect of the agency's openness and transparency. It also provides directors and the public with ample time to examine the proposal, raise questions and make suggestions for changes.

The public can take part in the meeting at locations in San Francisco (3), Pleasanton, Palo Alto, Irvine, La Jolla and Berkeley, Specific addresses can be found on the agenda.

California Stem Cell Directors to Huddle on New Chair Candidates

A key group of directors of the California stem cell agency will meet
Tuesday behind closed doors to discuss candidates to succeed Robert Klein as chairman of the $3 billion research effort.

The Governance Subcommittee has scheduled the session although it does not have any official candidates for the post. Only four state officials – the governor, treasurer, controller and lieutenant governor – can nominate candidates for the position, which could pay up to $400,000 annually for parttime work. None have done so.

The four officials have said they will not make nominations until perhaps as late as May 23.

Over the last couple of months, however, CIRM directors have indicated that they might have names that they would like to discuss, in addition to meeting with individuals to see if they have an interest in serving.

Presumably next week's meeting will take up such matters.

Sailing with the Tide

are once again hoisting sail to move farther south (actually east and south) towards Panama. That means a hiatus in fresh items on the California Stem Cell Report at least until we find another Internet connection. How long will the break be? That is unknown but probably not more than three weeks. Less if we find an Internet cafe in one of the villages along the coast of Costa Rica or Panama.

Stem Cell Agency Moving Faster on Budget Preparation

It is fair to say that the $3 billion California stem cell agency is not a spendthrift organization – at least as far as its operational budget goes.

That's the money for salaries of its 48 employees, outside contracts (the second biggest item in the budget), monitoring grant performance and so forth. The agency is limited by law to spending only six percent of its $3 billion for overhead, an amount that many of its directors think is low, perhaps even inadequate. The limit was enshrined in state law by Prop. 71, the measure that created the stem cell research program in 2004.

That said, the agency has had difficulty in presenting a coherent proposed budget to its directors in a timely fashion. It has given them proposals that do not compare actual spending to proposed spending and which produce dubious numbers for the amount of increased spending. The proposed budgets, which are for fiscal years that begin July 1, have come late and have not allowed time for thoughtful examination by the CIRM governing board. (See here, here and here.)

This year promises an improvement. CIRM President Alan Trounson presented a schedule for the budget at the board's March meeting. It calls for presentation of the budget to the directors' Finance Subcommittee later this month with presentation to the full board in May. That is a full month ahead of what occurred in the past several years. It also allows time for the directors to ask for revisions that could be presented to them in June, before the beginning of the new fiscal year.

Michael Goldberg, a venture capitalist and chairman of the Finance Subcommittee, said he expects the panel to meet on April 19 to consider Trounson's proposed spending plan for 2011-12. Spending fror the current year was originally budgeted at about $16 million. Spending for the coming year should show increased costs for staff, given the new hires expected this year and the addition of a new vice president for research and development. Increased pension contributions for the agency staffers will also boost compensation expenses.

John Robson, vice president for operations, additionally told directors in March,

"Our number of progress reports has increased significantly, our grant and loan payments, those things impact significantly on the grants management office, the science office, and the finance office. The increase in work has gone up 25 to 35 percent just in the last year."

He continued,

"We also have a couple of one-time items that are going to be reasonably expensive. We have a performance audit that was stipulated by (state Senate) bill 1064. That's budgeted at about 250,000, and then there's the Institute of Medicine audit that the board has been working on, the chair's office, and we've budgeted 400,000 for that for this year with the balance...in the next fiscal year's budget."

Also likely to be discussed at the April 19 meeting is the near certainty that the state will not issue bonds until sometime in 2012, a situation that could bring CIRM perilously close to a serious cash flow crunch.

The agency's only source of funds is money that the state borrows (bonds). CIRM says it has sufficient cash on hand to meet existing commitments until June of 2012, but a delay in issuance of bonds could mean a slowdown in CIRM's aggressive grant schedule or worse.

In response to a query, Goldberg said.

"We are watching the situation closely."

iPSC Bank and Imaging Technology Sessions Offered by CIRM

The California stem cell agency this spring will be looking into both imaging technology for cellular therapies and ethical/policy questions dealing with reprogrammed stem cells.

The iPSC session April 29 in Los Angeles involves CIRM's Standards Working Group, which makes recommendations for rules for the agency's $3 billion research program. The meeting is a continuation of last year's session dealing with the banking of iPSCs. The goal of the meeting this year is to "recommend operational criteria that will assist CIRM in developing a request for proposal for the iPSC bank."

The draft agenda includes consent standards, withdrawal of subjects from research, transfer of materials and communication of results. The agenda said,

"The generation of iPSCs for disease modeling may results in published findings of interest to donors or individual results on research studies that would alter clinical management of donors. Under what conditions, if any, should information be returned to donors as groups or individuals?"

Coming up on May 26 is a webinar on imaging technology that will feature panelists from the FDA, the NIH and industry. Moderating it will be Ellen Feigal, formerly of Amgen but now the new VP for research and development at CIRM.

The agenda includes the "FDA’s perspective on imaging technology, the use of imaging technology in preclinical studies to assess cell fate" and an overview of existing and new imaging technology.

The webinar, which is part of CIRM's Regenerative Medicine Consortium program, is free but requires advance registration.

Look for Candidates for Chair of Stem Cell Agency in Late May

The California stem cell agency, which did not have much choice about the matter, has decided to go along with a delay in picking a new chairman for the $3 billion organization.

Outgoing Chairman Robert Klein, who is scheduled to depart in June, said the CIRM board is "amenable" to postponing until May 23 nominations to fill his shoes. Four state officials – the governor, treasurer, controller and lieutenant governor – are charged with nominating candidates for the part-time position, which could pay as much as $400,000 annually.

The CIRM board is limited to electing a chairman from those candidates, although it does not have to accept any. If the board were truly unhappy with the nominations, presumably it could designate an acting chairman or simply let the vice chairman assume responsibility in absence of a chairman. The latter action probably would not even require a vote of the board. On the other side of the coin, the officials cannot be compelled to make a nomination.

Klein's brief letter, also signed by co-vice chairman Art Torres, to the nominating officials came in response to a March 24 letter from all four officials balking at a CIRM board request 10 days earlier for nominations by April 11. The officials said more time was needed because of the importance of the position.

Klein said,

"We appreciate your desire to find a high caliber leader to replace CIRM's current board chair and the board is amendable to your proposed schedule."

Correction

The "pay plan" item on April 2, 2011, incorrectly stated that Ted Love is chair of the Evaluation Subcommittee. He is vice chair of that committee.

California Budget Mess Threatens CIRM Funding

The collapse of efforts to resolve California's financial crisis in June seems nearly certain to place the state's $3 billion stem cell research program perilously close to a serious cash crunch come next year.

The situation should come as no surprise to lame duck CIRM Chairman Robert Klein, who stunned the agency's governing board in 2009 with similar news. Additionally, in December of last year, only days after he told the CIRM directors Finance Subcommittee that no funding problems existed, Klein warned the full board that it was "essential" that the agency quickly provide assurances of "reliability of our funding."

Klein, a real estate investment banker, considers himself something of a government bond expert because of his experience with housing bonds. He says he and a handful of associates crafted the ballot initiative that created CIRM, Prop. 71, to avoid the financial vagaries that have plagued the NIH. To do that, he relied on borrowed money (state bonds), which makes everything CIRM does cost twice as much as it would on a normal basis. For example, the $20 million grant to scientist Dennis Carson at UC San Diego actually will cost state taxpayers about $40 million because of the interest on the borrowing. Interest costs for CIRM currently run $200,000 a day on the $1 billion it has borrowed so far.

Klein's plan assumed that the state would regularly issue bonds. However, beginning last January, the state suspended the sales of bonds for six months to avoid $248 million in additional interest costs. Today, the state budget remains many billions in the red, and most signs point to continuation of that bond delay decision.

Two days ago, The Bond Buyer financial newspaper reported that state Treasurer Bill Lockyer will not sell bonds until the state budget is balanced. Reporter Rich Saskal quoted Lockyer's spokesman, Tom Dresslar, as saying,

"The bottom line in terms of (revenue anticipation notes) and infrastructure bonds is the timely adoption of a balanced budget."

The California Stem Cell Report first discussed the bond sale problem on March 23. That was before the collapse of budget negotiations in Sacramento. The situation is much more serious today.

At this point, a balanced state budget is not likely to occur unless voters approve in November tax increases  – which they have previously rejected -- through a ballot initiative that is yet to be written. Even then, bond sales are not likely until sometime in 2012, according to Lockyer.

While CIRM says it has sufficient cash on hand to deal with its existing obligations until June of 2012, the agency's timetable calls for new grant rounds to continue to move forward aggressively this year and next. Extreme pressure will be felt in the treasurer's office from competing interests for urgent and early bond sales when they resume. And a good possibility exists that CIRM bond sales will not come up in the first round in 2012, assuming sales are resumed then.

On May 3-4, the 29 directors of the stem cell agency are scheduled to meet in Los Angeles. High on their agenda should be a discussion of finances and alternatives to ensure that CIRM's grant programs continue to move forward – albeit slowly -- even if bond revenues do not materialize until well into next year. Delay could be the operative response. Postponing new grant programs, RFAs for existing efforts and even payments to researchers and institutions – all could be on the table. One additional matter to discuss – designation of someone to deal with the full range of bond issues, given that Klein is leaving his post in less than three months, if not sooner.

Sacramento Bee Whacks Pay Plan for New CIRM Chair

In case you missed it, The Sacramento Bee editorialized last week about the $3 billion California stem cell agency, deploring its much-criticized, dual-CEO structure and the possibility of a $400,000 salary for a new, part-time chairman.

The March 28 editorial also caught the eye of Wesley J. Smith, a bioethicist who doesn't have much truck with the state's stem cell research program. He wrote on his blog,

"It isn’t the management structure that is so wrong about the CIRM.  It is the whole cronyism/conflicts of interest/arrogant thing.  California can’t afford the CIRM’s borrow and spend mandate when our infrastructure is collapsing and our state sinking to the bottom of a red ink Marianas Trench."

The Bee's editorial pointed to the proposal (first reported on the California Stem Cell Report March 23) by outgoing CIRM Chairman Robert Klein, a real estate investment banker, Art Torres, co-vice chairman of the CIRM and former state legislator, and Ted Love, a biotech industry executive and vice chair of CIRM's Evaluation Subcommittee, to use "private" donor funds to pay a portion of the new chairman's salary. The Bee said,

"Nonsense. It’s all public money. That board does not need a part-time chair with that kind of salary. The board should nix it at the next meeting. Having a single agency with two CEO-level salaries is craziness at any time, but especially during a deep economic downturn. The Legislature should realign the roles of board chair and agency president before this goes too far. Make it crystal clear that the full-time president manages all day-to-day operations – and that the board chair is a part-time oversight role."

The good news for CIRM in the editorial is that it drew only nine comments from readers on The Bee's Web site. All were negative about CIRM, however.

(Editor's note: an earlier version of this item incorrectly said that Ted Love was chair of the Evaluation Subcommittee.)

The Hook is Down

The California Stem Cell Report will resume postings later today from Bahia Ballena in Costa Rica. We have dropped the anchor for a few days and found an Internet connection, although it is a tad primitive. Look for an update on CIRM's looming financial problems and much more.

Hoisting Anchor

The Nicaraguan anchorage where the California Stem Cell
 Report was  based the last few weeks. Hopalong is the
name of our craft and home.

The California Stem Cell Report will be on a break for a week or two while we make a passage from Nicaragua past Costa Rica to Panama. We will resume postings when we again find an Internet connection.

Gov. Brown and Others Seek Delay in Filling CIRM Chair Position

California Gov. Jerry Brown and three other top state officials are balking at making nominations as early as next month for the new chair of the $3 billion California stem cell agency.

In a letter to the CIRM board, Brown, Controller John Chiang, Treasurer Bill Lockyer and Lt. Gov. Gavin Newsom said they wanted to wait until possibly May 23.

The CIRM governing board on March 14 asked that nominations be made by April 11. The board had approved a timetable that would have made it possible for the board to fill the slot by its meeting early in May.

CIRM Chairman Robert Klein was re-elected in December to a six-month term but has made it clear that he would prefer to leave earlier.

Here is the entire text of the letter from Brown and the others to the CIRM board:

"Thank you for your letter of March 14 regarding the nomination process and
proposed April 11 deadline for nominations for the next chair of the Independent Citizens
Oversight Committee. As your letter makes clear, this position requires a high-caliber
leader who possesses a unique executive skill set and commitment to CIRM’s important
mission. Given that, we, the constitutional officers responsible for nominating candidates,
find that a meaningful, successful search and recruitment for this role would be difficult to
complete by your requested deadline. Therefore, we propose that the deadline for
nominations be extended to no later than May 23rd, which would provide our respective
offices with up to 60 days, a more reasonable period in which to complete this important
responsibility."

State Treasurer Confirms Possible Delay in Stem Cell Bond Sales

California state Treasurer Bill Lockyer has confirmed that there is a reasonable possibility that the California stem cell agency will not be able to access new funds until sometime next year.

In a report in the Los Angeles Times yesterday, Lockyer said that sale of all state bonds could be delayed because of inaction on California's state budget woes. State bonds are the only real funding source for CIRM's $3 billion effort.

On Wednesday, the California Stem Cell Report discussed the likelhood of continued delays of state bond sales and the impact on CIRM.

The following day Tom Petruno of the Times reported,

"Without a balanced-budget deal in hand, however, Lockyer would be unlikely to try to sell bonds before the election, his office says. Even if the measure passed in November, it isn’t clear whether there would be enough time to get a deal together before the end of the year, said Tom Dresslar, Lockyer’s spokesman."

Correction

An item on March 24, 2011, incorrectly said that Duane Roth, co-vice chair of the California stem cell agency, signed the letter proposing the use of private donor funds for the salary of the new chair. The item should have said the letter was signed by Ted Love, chair of the board's evaluation subcommittee.

Papering over the Pay Problem at CIRM: When is a $400,000 Salary Not $400,000?

Three top leaders of the California stem cell agency have come up with a plan that they hope will allow CIRM to avoid the wrath of the public when its new chairman is paid a salary that could be seven times the income of an entire, typical California household.

The proposal, which has not been laid out in public, was advanced in a March 17 letter sent to the four state officials who have responsibility for nominating a person this spring to replace outgoing Chairman Robert Klein, who is a real estate investment banker. He and Art Torres, co-vice chair of the agency and a former state legislator, and Ted Love, a San Francisco area biotech executive, signed the letter.

Under terms approved last month by the CIRM board, the new chair could be paid as much as $400,000, which is nearly seven times the median California household income of $61,000. The Klein proposal calls for only $150,000 of the $400,000 to come from "taxpayer" funds. The remainder would come from so-called "private" funds donated to CIRM several years ago by philanthropists. In fact, those "private" funds are now "taxpayer" funds, just as any gift becomes the property of the recipient, and the cash is in state/CIRM coffers.

The plan also would establish a dubious precedent and raise conflict of interest questions. It would place private individuals and possibly biotech companies in the position of paying for the salaries of CIRM leaders, as John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., pointed out.

Asked for a comment, Simpson said,

"This plan sounds like an incredibly dubious course to me. If you want to influence CIRM, just donate to the ICOC(the CIRM governing board) chair's salary. Folks used to call that bribery."

In their letter, Klein, Torres and Love wrote,

"We are...cognizant of the difficult financial situation confronting the state and the need for agencies like CIRM to ensure fiscal restraint."

They also said,

"It is very important, however, for CIRM to have the right leadership and not limit our choice to individuals who have sufficient personal wealth to serve for little or no compensation. CIRM is at a critical juncture as it moves towards the funding of human clinical trials, Given the complexity of this effort and the importance of providing rigorous overesight, it is essential for CIRM's governing board to have strong leadership."

In addition to attempting to minimize negative public reaction, the pay plan would provide political cover for the state officials nominating candidates for chair. The officials are the governor, treasurer, controller and lieutenant governor.

As Torres mentioned at the March board meeting, none of those officials are likely to be enamored of the idea of recommending somebody for a lucrative state post while state funds to aid the poor and children are being slashed in the face of California's financial crisis.

High salaries for public officials are an anathema to much of the public, which has a visceral, hostile reaction to them. That is the case whether the salaries are deserved or necessary to attract the appropriate talent. The Klein plan, however, only compounds the PR problem. Attempting to make a $400,000 salary appear to be a mere $150,000 only makes CIRM appear deceptive and less than trustworthy. That is not to mention the dubious precedent it would set for the agency by relying on private handouts for essential operations.

The pay plan has yet to be acted on by the CIRM board. The letter said it would go to the directors' Governance Subcommittee at its next meeting and then to the full board if it is approved by the subcommittee. That could take place at the May meeting of the directors.

(An earlier version of this item incorrectly said that the letter was signed by Duane Roth, co-vice chair of the agency.)

California's Bond Sale Suspension, Stem Cells and Cutbacks

Simmering beneath the surface of California's financial crisis is the possibility that the state's $3 billion stem cell agency could become a victim, waylaid as state leaders look for more ways to cut state spending.

Lawmakers and others are discussing the likelihood of a continued suspension of sales of state bonds, which are the lifeblood of the $3 billion California stem cell agency. Without the funds from the bonds, the agency has no cash for its ambitious grant programs.

Currently CIRM has enough money on hand to last roughly through June 2012 in support of existing programs, according to its top officials. But the state has suspended sales of bonds through the middle of this year. Already, the state is forking over to investors $5 billion a year in interest for all its bonds, a figure that has skyrocketed in recent years. The interest cost to California taxpayers for CIRM is roughly $200,000 a day for the $1 billion the agency has borrowed so far.

Should sales of bonds, which take months to arrange, be resumed in a timely fashion, CIRM would not be affected. However, without the certainty of cash coming in, the agency would likely delay, as a minimal response,  additional grant rounds and loans, interrupting its efforts to transform stem cell into cures.  In January 2009, CIRM directors made a move along those lines when they were surprised by a financial crunch. More drastic measures might be required if bond sales are delayed for a lengthy period.

Proposals to prolong the suspension of bond sales surfaced during budget debate in the legislature last week. In February, the state's legislative analyst also said halting bond sales was one on a list of moves that could meet the $26 billion state budget shortfall if tax extensions were not approved in June by voters. Efforts to place such a measure on the June ballot have come up short in Sacramento.

Complicating the issue is the possiblity that a ballot initiative on tax extensions would be placed before voters in the fall. The Sacramento Bee reported yesterday that Gov. Jerry Brown is considering such an effort and could announce it this week. That would raise the need for additional cuts this year in the state spending. Deferring sales of state bonds could be a relatively politically painless way of saving some money. ($248 million was the estimate for a six-month suspension.)

The possibility of a bond delay comes after CIRM Chairman Robert Klein in December warned the agency's governing board that it was "essential" that the agency quickly provide assurances of "reliabity of our funding."

He said,

"Recent applications for clinical trial rounds and the acceleration of our funding commitments on our other programs require an immediate focus on this issue, given there may not be another opportunity until late 2011 to authorize additional bond funding.”

Klein added that “our collaborative funding partner nations” would require early this year “assurances of our future performance.” 

All of the discussion concerning further delays in bond sales is cloaked in the sometimes murky politics of Sacramento and could change suddenly – for better or for worse. Nonetheless, it would behoove CIRM directors to begin examination of their possible responses if bond sales should be substantially delayed this year and next.

Trounson's Views on Grant Terminations at CIRM

The California stem cell agency and the NIH have some things in common. They both give away billions of dollars, and they both generally work outside the view of the general public.

But major differences do exist. CIRM operates on borrowed money. The NIH does not – at least nominally. CIRM operates free of legislative or meddling by the state's top official(the governor). The NIH does not. Congress and the president have full sway over the organization. Another difference involves oversight that the agencies exercise on the scientists who are beneficiaries of their largess. The NIH basically sends the money out the door and researchers do whatever they want – at least that is the view of some. CIRM, however, has actually terminated at least three grants (out of 406) from scientists who are not meeting the requirements of the grants. However, the agency has not reported since June 2009 whether additional grants have been withdrawn.

CIRM President Alan Trounson earlier this year described CIRM's efforts to ensure that researchers are abiding by the terms of their grants. He spoke at a meeting in January of the Citizens Financial Accountability Oversight Committee. The panel, chaired by the state's top fiscal officer, Controller John Chiang, is a sister organization to CIRM and is the only state entity specifically charged with overseeing CIRM finances.

Trounson made his remarks in connection with his summary of last fall's blue-ribbon external review report and its concern about lean staffing at CIRM.

Here is what Trounson had to say, according to the transcript of his remarks.

"We were going to...increase the number of scientific staff because we actually feed back on our projects. The NIH does not feed back on the projects, nor do many of the research foundations. So when we get quarterly reports or yearly reports, we're feeding back to those scientists, saying, hey, that's not what you really agreed to, or fantastic, you've accelerated....We have a one-to-one on the scientists. And if it's a company, we are making sure that they are meeting those kind of deadlines that they put in.

"That does not happen with NIH nor with many of the other funding bodies. We want it to happen. We're here for a relatively short time. Maybe they're there forever, but we want these dollars to work as effectively as possible. So we have stopped some projects. We've actually terminated them because they didn't do what they agreed to do. It's never happened with an NIH project. And you can imagine some of the senior scientists in California being told you didn't do what you said you were going to do, and we're going to take your grant away because we've given you a couple of opportunities to correct that, but you didn't. And that has happened. So we are different in that respect."

CIRM's oversight on grants is increasingly important as it ventures into clinical trials and more translational research. Terms of those grants and loans require deadlines for specific achievements and go or no-go decisions that are more commonly made by businesses than governmental agencies. With tens of millions of dollars at stake on an individual grant, the process is likely to trigger ferocious behind-the-scenes debate.

Here is more on grant terminations at CIRM.

More Media Attention on California's Stem Cell Journal Venture

The state of California's modest foray into scientific publishing is drawing attention in a couple of science publications.

Both "The Scientist" and "Nature Medicine" recently carried items dealing with the $600,000 venture by the California stem cell agency in partnership with a North Carolina business, AlphaMed Press of Durham.

Nature published the more fulsome piece that predated action by CIRM's governing board last week. The article by Michelle Pflumm carried the headline, "Government-funded journal seen by some as waste of grant money."

Pflumm cited critics John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., and Martin Frank, executive director of the American Physiological Society, which publishes 14 journals.

Simpson said,

"They need to demonstrate a need, and I don't think they have done that."

Frank said government dollars are better spent for research. He said,

"We are not flush with money today."

Pflumm also quoted Arnold Kriegstein, director of the stem cell program at UC San Francisco, as praising the move. He said,

"What I find most novel is the idea that there would be negative results published. I think that's the big attraction and the big element that seems to be missing for what's out there currently."

UC San Francisco has received $112 million from CIRM. The dean of its medical school sits on the CIRM governing board.

Pflumm's article noted the plethora of existing stem cell-focused journals, as many as 18 by one count.

The Scientist magazine carried only a brief mention of the journal. It said,

"The scientific community welcomes two new scientific journals to the peer-reviewed landscape—Nature Publishing Group’s Nature Climate Change and Stem Cells Translational Medicine, an open-access title launched by the California Institute of Regenerative Medicine (CIRM). Nature Climate Change will make its official debut next month, but has been publishing free content (about 12 papers or commentaries per month) since January on its website. Stem Cells Translational Medicine is the first foray into the publishing world for California’s state-funded stem cell agency, and the first print installment is slated for publication next January, with some online articles going up in December. You can check out an iPad preview of the journal here."

That link is to a document uploaded to the Internet by the California Stem Cell Report.

Pera Cites Personal and Professional Reasons for Returning to Australia

Scientist Martin Pera said tonight that he was departing as head of the USC stem cell research program for both personal reasons and an opportunity to help lead a national consortium in Australia.

Pera also said that disposition of the $7.4 million in grants from CIRM in which he is the principal investigator is under discussion with the agency, USC and himself.

Pera came to California in 2006 from Australia to launch the USC stem cell effort.

His comments came in response to a query from the California Stem Cell Report. Here is the text of what he emailed.

"It has been a fantastic and very rewarding experience to serve as the Founding Director of the Eli and Edythe Broad Center for Regenerative Medicine and Stem Cell Research at USC. I am very grateful for the support of the Broad Foundation, the University of Southern California, and CIRM in this endeavor. I have been able to bring on board some great young scientists who are doing exciting and innovative stem cell research, and to work with clinical colleagues on some very promising new therapeutic approaches in regenerative medicine. The University is fully committed to recruiting a world class scientist to guide the Center through its next stage in development.

"The opportunity to help lead a national stem cell research consortium in Australia, alongside personal considerations, were key factors in my decision to move to the University of Melbourne, a top ranked institution in biomedical research.

"The disposition of the CIRM grants on which I am Principal Investigator is a matter under discussion between the Keck School of Medicine, CIRM, and myself, but there is no question of these funds being used to support research conducted outside of the State of California."

In an aside, Pera said he has "always enjoyed" the California Stem Cell Report.

Pera Leaving Golden State for Down Under

Internationally reknown stem cell researcher Martin Pera, who holds $7.4 million in California stem cell grants, is leaving the state to return to Australia to head the stem cell program at the University of Melbourne.

Martin Pera
USC Photo

In a March 7 memo to staff at USC's Keck School of Medicine, Dean Carmen Puliafito said that Pera will assume his new job in Australia on June 1 but plans on remaining "actively engaged" with colleagues at USC during the 2011-12 academic year.  Pera joined USC in 2006 to launch the school's stem cell program.

Pera was the first director of USC's stem cell effort, which began following the passage of Prop. 71 in 2004, the measure that created the $3 billion California stem cell agency. A good portion of Pera's motivation for coming to the state was widely believed to be the availability of generous stem cell research funding here. During Pera's tenure, USC has garnered $72 million in CIRM grants, ranking 5th among state institutions.

Pera is the principal investigator on three grants from the California stem cell agency. It is not clear how those grants will be dealt with. By law, CIRM cannot finance research outside of California. We have queried CIRM and Pera concerning the status of the research.

(Pera responded following the publication of this item, saying that the grants are under discussion by the various parties. He also cited personal as well professional reasons for returning to Australia.)

Pera, a former colleague of CIRM President Alan Trounson when they were both in Australia, has personal ties to Australia and has wanted to return, one researcher told the California Stem Cell Report today.

USC's Puliafito, a member of the CIRM governing board, said an international search is underway for Pera's successor. USC is likely to seek help from CIRM's $44 million recruiting fund.

CIRM Posts Key Information in More Timely Fashion

The California Stem Cell Report has grumped mightily about the lackdaisical posting of important public information about matters that are to come before the directors of the $3 billion California stem agency.

Today, however, we are pleased to report that CIRM performed much better in advance of last week's meeting. Agency staffers should take some pride in that accomplishment.

We are referring to the posting on the CIRM web site of information that provides background, justification, dollars and cents and more on the matters that the 29 directors must act on. Without that information well in advance of a governing board meeting, the public, scientists, biotech businesses and policy makers are basically shut out by CIRM.

Normally we try to follow the posting of the background information on a daily basis. However, we were at sea until Sunday March 6. When we logged on to the CIRM web site at that time, we were pleasantly surprised to find a passel of information for the March 10 meeting.

As we examined the documents, they appeared to have been posted primarily March 3 and 4. To double check, we asked Melissa King, executive director of the governing board, about the dates.

She replied,

"Most, if not all, of it was up by Friday, 3/4. I was pushing for that."

While not all the important information was there, such as CIRM Director Jeff Sheehy's proposal on the role of the chair, most of the major stuff was available to the California public and CIRM stakeholders. It represents a step forward for CIRM. We hope the effort will continue into the future.

Real Life and the California Stem Cell Report

For the readers of the California Stem Cell Report who may want to know what we do in real life, you can find some inkling on the Hopalong Chronicles. It is an intermittent account of life on a sailboat named Hopalong, on which we haved lived fulltime for the last 12 years – mostly in Mexico but now in Central America. The latest item recounts the events surrounding last Friday's tsunami warning here in Nicaragua. You can find the blog here.

CIRM Schedules Action on New Directions for May

Directors of the California stem cell agency last week curtailed discussion of recommendations for changes in the agency's direction, including stronger ties with the biotech industry, putting off the matters until their May meeting.

At last Thursday's meeting, CIRM President Alan Trounson quickly ran through his agency's response to the proposals last fall from a blue-ribbon panel commissioned by the agency. But other matters, including selection of a new chair, occupied the board's time.

CIRM's staff response to the commission did not contain specific implementation plans and was vague on some of the matters.

Art Torres, co-vice chair of the CIRM board, told directors that he would like to see directors vote specifically on the staff proposals regarding CIRM's international leadership role, improvement of communications and PR and movement away from traditional funding models (responses 3, 5 and 7 in the CIRM memo).

Director Jeff Sheehy, a communications manager at UC San Francisco, asked the CIRM staff to provide in May a "clear implementation path" for its proposals, including specific actions that the staff would like the board to take.

The recommendations will affect how CIRM allocates its remaining cash, including support for basic research versus grants and loans for efforts more focused on producing clinical therapies. The proposals could mean putting more cash behind research before the results have been "written up," in Trounson's words. The staff recommendations also could mean more cash for biotech firms, including grant rounds that would be limited to business applicants.

Commenting on involvement of biotech companies with CIRM, Trounson said,

"Companies sometimes don't know we are in this space. They all don't read our web site avidly."

He added,

"Clearly we're not meeting their needs."

CIRM Directors Move to Alter Role of Chair of $3 Billion Stem Cell Program

Directors of the California stem cell agency, in sharply divided moves, today said that its next chairman should serve in a part-time capacity in largely an oversight role.

The board's actions are aimed at giving guidance to four elected state officials who have the authority to nominate persons for the job, which carries a salary that can reach as high as $500,000 for fulltime work. The moves are the latest effort by the board to deal with top-level management issues that have troubled the agency since its inception.

In a 17-5 vote, the 29-member board approved a motion designating the position as parttime with the "best assessment" that it needed only a 50 percent to 80 percent time commitment, depending on the candidates.

On an 11-8 vote with three abstentions, the board approved a motion indicating that the new chair would fill more of an oversight role with the board delineating the responsibilities of the chair and president. The state's top fiscal officer, Controller John Chiang, warned yesterday that the current co-executive situation "severely compromises" accountability at CIRM.

The board hopes to elect a new chair perhaps as early as May but possibly in June to replace Robert Klein, whose term has expired.

Finding a replacement roiled the board last fall. Discussion was also vigorous today during the debate over the role of the chair – an issue that has troubled CIRM since its earliest days. Prop. 71, which created CIRM in 2004, established a dual executive situation that has created friction and still troubles the agency today, CIRM President Alan Trounson acknowledged during today's meeting.

Duane Roth, co-vice chair of the board and a San Diego businessman, noted the longstanding problem
He said,

"This has been flagged...as something we need to get fixed."

Director Claire Pomeroy, dean of the UC Davis School of Medicine, said that CIRM has evolved to the point that the board must ensure that the staff is respected and allowed to run the organization. She said,

"We should empower them to go and do their job without the micromanagement of our board."

She said the public understands that CIRM has not been optimally functional because of the "lack of clarity" between the roles of the chair and the president.

Art Torres, co-vice chair of the board and a fomer state legislator, also warned that the nominating state officials – governor, treasurer, controller and lieutenant governor – may well find themselves hard pressed to nominate someone for a $500,000 state job as the state faces a financial crisis.

Some board members offered suggestions that the time commitment range be altered to 20 to 80 percent or from 20 to 100 percent but those proposals did not win sufficient support.

The board also recommended additional criteria for the position that included "experience with advocacy, proven vision and leadership abilities, and prior scientific understanding and experience with governance."

The board 's timetable calls for nominations from the officials by April 11 with public presentations by candidates at the May board meeting.

Here is the text of the successful motion by Director Jeff Sheehy, a communications manager at UC San Francisco on the role of the chair.

"The Governance Subcommittee recommends that the board clearly delineate the discrete responsibilities of the chair, vice chairs and president, and that the chair and vice chairs lead a robust oversight effort, including taking advantage of the skills of the board members in conducting their oversight role, and if the chair and vice chairs possess expertise in the areas of responsibility assigned to the chair in Proposition 71, then the board may elect to take advantage of their expertise operationally in those areas as well."

Here is a link to the CIRM press release that deals with the succession issue and other matters at today's meeting.

Stem Cell Directors Adjourn Meeting

CIRM directors have concluded their meeting. We will have a story coming up shortly on action dealing with the selection of a new chair.

CIRM Directors Taking Up Chair Selection

The governing board of the California stem cell agency has resumed its session with a discussion of the selection of a new chair.

California to Partner with AlphaMed on Stem Cell Research Journal

A $600,000 venture into scientific publishing with a North Carolina firm today received the go-ahead from the governing board of the California stem cell agency.

Anthony Atala

The endeavor with AlphaMed Press of Durham, N.C., is expected to focus on translational aspects of stem cell research. The research journal would operate independently of CIRM and have a $1 million annual budget. CIRM would contribute $200,000 of that for each of three years.

Some members of the CIRM board expressed a desire for assurances that the journal would publish "negative" findings, which they said some journals are loath to do. Director Philip Pizzo, dean of the Stanford School of Medicine, said commercial interests have actively moved to suppress the publication of negative findings. Pizzo had high praise, however, for the new journal's editor, Anthony Atala, director of the Wake Forest Institute for Regenerative Medicine.

A CIRM staff memo said that the AlphaMed had agreed to publish negative results, but the matter is expected to be brought up at the May CIRM board meeting. That raises the possibility that a final contract with AlphaMed may be delayed, although that issue was not discussed at the board meeting.

CIRM President Alan Trounson said AlphaMed currently has an office in Palo Alto and plans to expand it.

Lunch Break for CIRM Board

The governing board of the California stem cell agency is on a lunch break/executive session. Still to come today is action on the selection process for a person to replace Robert Klein as chairman of the enterprise.

CIRM Board Reverses Initial Rejection on $1.8 Million Grant

A UCLA stem cell researcher today won approval of an $1.8 million grant when directors of the California stem cell agency overturned an initial, negative decision by grant reviewers.

The proposal by Martin G. Martin deals with inherited diarrheal disorders. In January, Martin appealed the rejection by reviewers, and the board sent the proposal back to the grant panel. CIRM staff reported that reviewers changed their position in light of additional information.

The board recently altered its appeals procedures to facilitate sending applications back to reviewers when directors need more information when acting on appeals.

World Stem Cell Summit Garners Support from State Stem Cell Agency

The California stem cell agency board today approved $125,000 to send as many 125 persons to the World Stem Cell Summit in Pasadena in October.

Up to 75 would be patient advocates, a group that will be key in drumming up support for a new $3 billion to $5 billion bond ballot measure that has been proposed by by CIRM Chairman Robert Klein. The other 50 would be researchers and others involved in CIRM grant programs. The subsidies would be paid with funds donated to the agency by private parties.

The stem cell meeting is sponsored by a stem cell advocacy organization, the Genetics Policy Institute.

Board members raised questions about the cost of the registration -- $495 -- at the convention. They also asked whether any speakers or parts of the program would be controlled by industry sponsors. A representative of the convention said sponsors cannot "pay to play."

During the board discussion, CIRM staff disclosed that the agency also expected to receive a request for a $50,000 conference grant to support the meeting from Caltech, one of the convention sponsors.

San Leandro Law Firm Awarded $700,000 by California Stem Cell Agency

The California stem cell agency today approved on a voice vote a 32 percent increase($160,000) in fees this year for Remcho, Johansen & Purcell of San Leandro, Ca., for its work as outside counsel for the agency. Also approved was a $545,000 contract for 2011-12.

The firm, principally through James Harrison, has represented CIRM since 2004. Harrison is one of the five attorneys who drafted the ballot initiative that created the agency. A CIRM memo said the $350 per hour rates for partners and $265 per hour rates for associates at the firm are "significantly lower than the market rates for firms with similar expertise."

The memo presented to the board today did not explain why additional funds were needed this year. Nor did it give provide an overall figure for the current contract. A CIRM document from last June reported that Remcho was slated originally to be paid $475,000 this year.

CIRM staff reported the $475,000 figure during the meeting after being asked for it by Director Ted Love, a biotech industry executive. The board was also told that an increased workload generated the need for the 32 percent increase in the Remcho contract this year.

Another $22 Million to Go to 17 California Stem Cell Research Institutions

Directors of the California stem cell agency today approved a $22 million extension of the $50 million shared lab program that was scheduled to expire in 2012.

CIRM said the programs at 17 research institutions are a "valuable resource." A CIRM memo declared,

"These labs provide dedicated (safe harbor) research space, specialized instrumentation, a supply of cell lines and culture materials, and stem cell expertise. Additionally, they supply instruction and training in cutting-edge methods both as formally offered courses and one-on-one, customized instruction. This training function extends to the CIRM Bridges programs that rely on the Shared Labs to provide basic stem cell techniques courses for Bridges trainees. Furthermore, the Shared Labs serve as foci for collaboration, networking, and information exchange for stem cell research communities at the various institutions."

CIRM staff said CIRM funds cover about 20 to 25 percent of the cost of running the labs.

Duane Roth, a San Diego businessman and co-vice chairman of the CIRM board, raised a question about whether the productivity of each shared lab was evaluated as part of the proposal. The answer was no. Subsequently, the board directed the staff to provide such evaluations in the future.

Roth noted that CIRM's external review panel has recommended that the agency should focus on funding only the best programs.

The CIRM board has 29 members but only eight in attendance today could vote on the extension. The others had connections to the grant recipients that created a legal conflict of interest.

CIRM Directors Begin Business Meeting

Directors of the California stem cell agency have settled into their business session with action scheduled today on approval of a once-rejected $1.8 million grant by a UCLA researcher and a closed-door meeting on CIRM's first-ever involvement in clinical trials, a $50 million loan round for stem cell companies. Geron and Advanced Cell Technology are likely to be among the applicants. 

CIRM Directors Begin Business Meeting

Directors of the California stem cell agency have settled into their business session with action scheduled today on approval a once-rejected $1.8 million grant by a UCLA researcher and a closed-door meeting on CIRM's first-ever involvement in clinical trials, a $50 million loan round for stem cell companies. Geron and Advanced Cell Technology are likely to be among the applicants. 

CIRM Chair Should Back Away from Management Role, Says Top State Official

The board of the $3 billion California stem cell agency should direct its chairman to step aside from management of the organization and concentrate on oversight, it was told this morning.

In remarks prepared for delivery at the directors' meeting in Burlingame, Ruth Holton-Hodson, a representative of California's top fiscal officer, said,

"Frankly, it is difficult to uphold the appearance of accountability and objectivity when the board chair is involved in both management and oversight of CIRM's operations. Under the current model, the chair is essentially responsible for evaluating and approving much of his own work."

Holton-Hodson, deputy state controller, spoke on behalf of state Controller John Chiang. He is one of four statewide elected officials who can nominate candidates for chair of CIRM. He is also chair of the only state body charged specifically with financial oversight of the stem cell agency.

Holton-Hodson reiterated a number of points made by Chiang in his letter to the board yesterday. She said,

"It is also important to keep in mind that the chair is but one member of the ICOC Governing Board(the CIRM board of directors). Good governance must rely on the actions of the whole board, not a single member. As CIRM moves into the next phase, it is important that it be driven by a fully engaged oversight board, rather than a single individual, regardless of how talented that individual may be.

"As the Controller stated in his letter, CalPERS and CalSTRS (the state's mammoth retirement systems) both have a policy of voting in support of shareholder resolutions that separate the chair and the CEO of corporate boards because board independence is at the heart of effective governance and accountability. The public deserves no less from publicly-funded agencies and undoubtedly thought that independent oversight is what they would be getting from a body named the Independent Citizens' Oversight Committee(the formal name of the CIRM governing board)."

Later today the board is expected to discuss the selection of a person to replace Robert Klein, whose term has expired as chair.

Stem Cell Directors Conclude Cardiovascular Session

The briefing on cardiovascular disease for directors of the California stem cell agency has concluded. The governing board  is expected to convene shortly to deal with other matters, ranging from selection of a new chair to a $125,000 program to send patient advocates to the World Stem Cell Stem Summit in Pasadena.

CIRM Directors Begin Meeting Today

Directors of the California stem cell agency have begun their session today with a briefing on cardiovascular disease. The actual business meeting will probably begin in roughly 45 minutes although the agenda had called for a start time of 9 a.m. PST.

The meeting can be heard via an Internet audiocast. Instructions for the audiocast can be found on the agenda. The California Stem Cell Report will provide ongoing reports today on the meeting as warranted.

Upcoming Coverage this Morning of CIRM Board Meeting

We plan to bring our readers live coverage of the meeting today of the board of the California stem cell agency, assuming our Internet connection from Nicaragua holds up. The board is expected to discuss the selection of a new chair and the agency's response to recommendations for closer ties to industry and aggressive outreach for promising research outside of California. Readers can listen to an Internet audiocast of the session, which is scheduled to begin at 9 a.m. PST. Directions for the audiocast can be found on the agenda.

Dual Execs at CIRM Severely Weaken Oversight, CIRM Directors Told

California's top fiscal officer today called on directors of the state's $3 billion stem cell agency to overhaul the role of its chairman, declaring that oversight of the enterprise is "severely compromised" when the chair is part of management.

In a letter to the 29 members of the CIRM board of directors, State Controller John Chiang said,

"It is difficult to uphold the appearance of accountability and objectivity when the board chair is involved in both management and oversight of CIRM's operations. In essence, under the current co-executive model, the chair is responsible for evaluating much of the work of the chair."

CIRM directors meet tomorrow in Burlingame to discuss the selection of a new chair to replace Robert Klein, who is its first and only chairman. Proposition 71, written by Klein and a handful of associates, legally gives the chair overlapping responsibilities with the president, a situation that has created friction in the past. Klein has additionally reached deep into the organization to deal with relatively minor matters.

Chiang said,

"The (directors') most important role – to provide independent oversight of the California Institute for Regenerative Medicine management – is severely compromised when that management includes the (board) chair."

Chiang, a Democrat, is one of four state elected officials who can nominate candidates for chair of CIRM. Chiang is also the head of the only governmental entity specifically charged with financial oversight of the agency. Last fall Chiang nominated Art Torres, co-vice chair of CIRM, to replace Klein, whose term has expired. Torres declined to run following a flap that arose when Klein tried to engineer the selection of his successor.

Chiang noted that principles of good corporate governance call for boards to "be objective and distinct from management."

Chiang continued,

"I understand that part of the concern in moving to an oversight function from the co-executive model is the need for the chair to have expertise in certain areas as bond finance or the process of moving research to commercialization. Corporations and public agencies throughout the nation hire that expertise rather than rely on the chair."

A representative from the controller's office is expected to appear before the CIRM board at its meeting in Burlingame tomorrow. Remote locations in Irvine and two in Los Angeles are available where the public can participate in the meeting. Specific addresses can be found on the agenda. Instructions for listening to the Internet audiocast also can be found on the agenda.

(Ron Leuty of the San Francisco Business Times has also written about Chiang's letter. Leuty's article can be found here.)

California Stem Cell Agency Ventures into Publishing

The California stem cell agency appears ready to partner with the AlphaMed Press of North Carolina to start a new scientific journal dealing with stem cell research and efforts to translate the findings into clinical treatments.

CIRM's venture into publishing comes amid a proliferation of new journals devoted to stem cell research.

CIRM plans to commit $600,000 over a three-year period to kick off the new publication, which would be edited by Anthony Atala, director of the Wake Forest Institute for Regenerative Medicine.

In a memo to the CIRM board, agency president Alan Trounson said competing proposals from Elsevier, one of the larger scientific publishers in the world, and the International Society for Stem Cell Research, were not as good as that offered by AlphaMed, which has published the "Stem Cells" journal for 29 years.

Trounson is currently listed on the AlphaMed web site as a member of its editorial board. Don Gibbons, chief communications officer for CIRM, said in January, however, that Trounson had resigned from the panel.

In an email, Gibbons said,

"Alan has been an editorial board member at 'Cell Stem Cell' and 'Stem Cell.' His role was to peer review articles submitted for publication. He did not receive compensation, expense reimbursement, travel, or any other form of payment from either publisher. There is no conflict of interest under CIRM or state rules. When these two publishers submitted proposals, however, Alan decided to (and did) resign from the editorial boards."

AlphaMed's editorial board also includes a number of CIRM grant recipients.

In an acknowledgement of the difficult scientific publishing environment, Trounson plans to change the original terms of the RFP to stipulate that the journal be self-sustaining in five years instead of three.

Stem cell journals have proliferated in recent years, according to an article Aug. 7, 2010, in "Stem Cell Reviews and Reports." In the piece, Paul Sanberg and Cesar Borlongan, both with the medical school at the University of South Florida, reported on what they called a "rapidly evolving field." They said 18 journals now exist directly focusing on stem cell research and another 16 have "relevant overlaps to stem cell research." They noted that their count is not "exhaustive."

Sanberg and Borlongan wrote,

"With new journal proliferation comes competition. It has recently come to light that publishing stem cell studies has been fierce and sometimes hostile, with allegations of biased reviewers blocking competitors’ novel findings, leading to significant delay in publication or outright rejection (http://news.bbc.co.uk/2/hi/8490291.stm). New stem cell journals and traditional journals must amend their policies to allow more transparent review and editorial decision handling of stem cell and similar cutting edge research. Stem cell research is one of the most entrepreneurial areas of medical science. It is therefore not surprising that entrepreneurial publishers have developed numerous publication outlets for this rapidly expanding field. Ultimately, whether this stem cell journal proliferation continues, and aids the field of stem cells to 'differentiate' into a more mature research arena, will depend on the quality of peer review and science of stem cells."

Trounson's memo to the board did not address the issues raised in the Sanberg-Borlongan article.

He said the new, open-access journal would have full editorial independence, would publish "negative data" and periodic commentaries from CIRM that have been "appropriately" peer reviewed. Funds for the project are included in this year's CIRM budget. Trounson earlier said that new journal would help to accelerate the “the entire field as knowledge is aggregated and shared more readily” and encourage collaboration between stem cell biologists, clinicians and engineers.

The main office for AlphaMed is in Durham, N.C., although it has an office in California, according to Trounson.

Although CIRM is barred from funding research outside of California, CIRM's Gibbons said,

"Nothing in our statute prevents us from contracting for other services outside of California."

Trounson's memo said the first articles will go online this December with the print publication in January.

His memo appears to be principally an information item for the CIRM board on Thursday. It did not specify what action, if any, was needed by the board to execute the agreement with AlphaMed.

Here are links to the proposals by the three competing organizations.

CIRM Directors Moving on New Chairman and New Directions for Stem Cell Agency

Directors of the California stem cell agency are likely to settle this May on a new chairman of the $3 billion enterprise, replacing the man who has been the spirit behind the effort even before it was a gleam in voters' eyes.

The proposed timetable for election of a successor to Robert Klein, the first and only chair of CIRM, will come before directors at their meeting in Burlingame on Thursday.

Also on the agenda are far-reaching recommendations from CIRM management for new directions for the six-year-old, unprecedented state research program.

However, most attention is likely to be focused on the selection of Klein's replacement in a process that is proceeding more openly and orderly than last year's closed-door attempt by Klein to engineer the selection of his successor.

This week Klein offered his own view of the role of the chair in a new memo to board members, arguing for a person who would work on an 80 percent to 100 percent basis, presumably at a salary that could run to $500,000 a year. Klein, a real estate investment banker and lawyer, has worked without salary for most of his six-year term. In December 2008, the board designated his position as 50 percent with a $150,000 salary.

The directors' Governance Subcommittee last month recommended that the new chair work on an 50 to 80 percent basis, which could mean a salary in the range of $137,500 to $400,000. The subcommittee also recommended additional criteria for the new chair, which will come before the board on Thursday. Director Joan Samuelson added her additional thoughts for a global role for CIRM in a memo to the board.

The subcommittee backed away from making an immediate decision on delineation of responsibilities of the chair and president. Under Prop. 71, which created the stem cell research effort, the chair and president have overlapping responsibilities that have created friction in the past and generated criticism from the state's good government agency, the Little Hoover Commission.

Under the proposed timetable for selection of Klein's replacement, the board would provide the nominating state officials (governor, lieutenant governor, treasurer and controller) with recommended criteria, anticipated time commitment and salary range. The officials would be asked to make nominations by April 11. An evaluation subcommittee of directors would then conduct closed-door sessions with candidates. At the May 3-4 board meeting, candidates would make public presentations to directors with a possible final vote following. Klein has said he will serve only until the end of June.

Selection of the new chair will also be influenced by board decisions on implementation of the recommendations of last fall's external review report. Prepared by a blue-ribbon panel, the report recommended improved ties with the biotech industry, expansion of CIRM's international links and a more active role in seeking out promising research areas.

Some industry executives have been been critical of CIRM. Biotech businesses have received a tiny fraction of the $1.1 billion handed out so far by the agency.

CIRM management's response to the external report called for closer ties with industry, including formation of a special advisory panel and possibly twice-a-year RFAs specifically targeting industry. Management also proposed that some translational RFAs could require partnerships between academia and industry.

The management response additionally recommended reaching out to involve research elsewhere in the country. The 12-page memo said,

"When entities with promising new developments outside California are identified, CIRM will encourage them to partner with California institutions and apply to general or specific RFAs. The challenge is to find ways to pull projects under CIRM’s umbrella while staying within the spirit and regulations that govern the Institute."

Some of the management language in its memo is tentative, rather than flatly declaring that this or that task should be done, and does not require up or down votes by the board, if any votes are required at all. How the board responds to those suggestions will be critical in shaping future CIRM action.

The external review report also recommended clearer delineation of the responsibilities of the chair and president. The management memo appeared to agree but made no specific suggestions.

The blue-ribbon report recommended improvement in public awareness of the agency and its work. In response, the management memo, among other things, recommended hiring a public communications officer in the office of the chair, who would presumably operate independently from the current communications staff, which is under the president. CIRM already has a large public relations/communications effort, including outside consultants.

The management memo mentioned an "office of science education and communication" within CIRM that would enhance its public relations efforts. The memo said,

"The amount of effort required to produce continually renewed content cannot be under estimated."

In addition to the Burlingame location, the public can participate in the directors meeting at locations in Irvine and Los Angeles. Specific addresses can be found on the agenda. The meeting is also expected to be audiocast on the Internet.

Passage to Panama

We were remiss in not alerting our faithful and not-so-faithful readers earlier that we have begun a passage to Panama from El Salvador. As many of you know, we live on a sailboat south of the border, with the exception of trips to the Old Country (the U.S.) from time to time. For the last nine months, the boat has been in El Salvador. But the lure of other ports has compelled us to hoist the hook and move on, which meant that we lost regular Internet connections. However, you can expect a spate of fresh items in the upcoming week since we are now in San Juan del Sur in Nicaragua, where cyber cafes seem to be on every corner.

Geron's Golden Parachute for Okarma

Tom Okarma may be out as Geron's CEO but he has a nifty cushion to ease the pain.

Reporter Ron Leuty of the San Francisco Business Times has reported that the onetime head of the Menlo Park stem cell firm could receive up to $1.3 million, including $802,500 in severance pay, as part of an agreement with the firm.

The package consists of consulting fees, reimbursement of legal fees, health care coverage plus an additional $24,000 for benefits not covered by Medicare. He also has stock options that Leuty reported would have been worth more than $3.9 million if cashed out at Wednesday's closing price.

Geron, we should point out, has reported negative profit margins during the last 10 years. One web site reports that its current profit margin is MINUS 3,359.71 percent. Of course, making money is exception rather than the rule for biotech companies. Geron additionally could be in line for a $25 million loan from the California stem cell agency.

'Nature" Blogs on Chair Selection at $3 Billion Stem Cell Research Effort

Nature magazine's blog, Spoonful of Medicine, yesterday carried an item on selection of a chair for the $3 billion California stem cell agency to replace Robert Klein, who has headed the enterprise since 2004.

In her piece,  Michelle Pflumm covered ground that was familiar to readers of the California Stem Cell Report, but offered additional material with interesting perspectives. The headline on her item read "CIRM board members at odds over future chair’s duties and salary." The item was published prior to yesterday afternoon's meeting of the board's Governance Subcommittee.

She wrote,

"Twenty of 29 board members filled in the survey(for criteria for a new chair). Of those who did, most cited leadership and a history of stem cell advocacy as the most important skills needed in the next chairperson. However, a handful of members listed scientific know-how as the prime desired qualification. Under the terms of Proposition 71, the 2004 ballot initiative that led to CIRM’s creation, the chairperson must have a 'documented history in successful stem cell research advocacy.' No mention is made of scientific proficiency."

She continued,

"Additionally, the CIRM board members had differing opinions over how much power should sit in the position of the incoming chair. Eight survey respondents said the president should report to the chair, while only three thought the chair should report to the president. The remainder called for a more collaborative arrangement.

"In the past, critics have charged Klein with exerting too heavy-handed a role on the agency and not granting the president sufficient independence. As Joel Adelson, a health-policy researcher at the University of California-San Francisco, told Nature last year: 'Klein… acted like the chief operating officer beside (CIRM President Alan) 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.'"