From Conflicts of Interest to Unfilled Promises: LA Times Columnist Lambastes CIRM

California's largest circulation newspaper, the Los Angeles Times, was the stage this week for a broadside concerning the failings of the $3 billion California stem cell agency.

Among other things, the June 7 column by Pulitzer Prize-winner Michael Hiltzik, said CIRM

• "...(H)as always displayed a curious lack of vision about its own responsibilities,"
• Has not "resolved the persistent questions about whether its grant-making process is subject to adequate public oversight or free of conflicts of interest, "
• Has failed to deal with "chronic management difficulties,"
• Has not found the therapies promised in the 2004 ballot campaign that created the agency and has failed to temper the "inflated optimism" created by electioneering rhetoric.

"Indeed," Hiltzik wrote, "given the current research and budgetary environment, the institute probably shouldn't exist."

All this coming from a writer who also said, " There's no question that stem cell research is important and potentially groundbreaking."

Hiltzik has been critical of CIRM since the 2004 election for a host of reasons. (See here,here, here and here.) Some may disagree with his opinions, but his columns appear in the nation's fourth largest circulation newspaper, currently with 605,243 average daily copies for the most recent six month period. Its influence, however, is much larger. It boasts a cumulative readership over a seven-day period of 4.4 million, exceeding even the best-performing TV stations in the area. The Times defines what is news in the Los Angeles basin, if not all of Southern California. It is the starting point for TV and radio news coverage in the area every day of the week. And when journalists elsewhere in the country look for solid coverage of California affairs, the Los Angeles Times is one of the first places they go.

All something for CIRM to consider as its governing board weighs the choice of a new chairman and forges ahead with aggressive forays into big-ticket financing rounds aimed at pushing stem cells into the clinic. The stem cell agency is also gearing up for another pitch to California voters for billions more in state bonds, perhaps as much as $5 billion, on top of the $3 billion it already has. (Double those amounts for the true cost when you add in the interest on the borrowed money.) But unless something changes in a major way in the California economy or in CIRM's slim list of accomplishments, that bond proposal is likely to be defeated and CIRM will run out of government funds in about five years, maybe less depending on its burn rate.

One way to look at the Hiltzik column in the Times, as well as other stories of that ilk, is that they are only a PR problem. Improve CIRM messaging, hire another $200,000-year spokesman and send out more Tweets on Twitter. That takes care of it. Another view would hold that genuine improvements need to be made, procedures altered and meaningful results – that is, meaningful to the untutored public – generated and cemented in the public mind. It is not as if Hiltzik is a lone voice.  Even CIRM's own blue-ribbon external review panel last fall stressed the need for significant changes, although not necessarily all those mentioned by the Times writer.

Hiltzik quoted state Controller John Chiang, who is the state's top fiscal officer and who chairs the only state entity with specific oversight of CIRM, as saying,

"We're at a critical crossroads. The voters invested a significant amount of money for what they thought was going to be life-changing improvement….[CIRM] hasn't produced a game-changer in the public mind-set."

Coming up in the next year or so are two expensive assessments of CIRM – total cost around $1 million. CIRM directors are talking about making changes based on those recommendations. However, it is not to early to act on some issues that already are troubling CIRM and hampering its abilities to fulfill the seven-year-old election promises to millions of California voters.

The Race for the Chair: Weaning CIRM From Government Support

Cardiologist Frank Litvack, a candidate for chair of the $3 billion California stem cell agency, has suggested that CIRM seriously consider how it could fund its research without relying on the state of California.

In his second statement to CIRM directors, Litvack, who also has a long career in business, on Monday covered much of the same ground that he did last week. But he was more specific when it came to what on Friday he called "evergreening" CIRM. Litvack said,

"Further thought should be given to the concept of getting CIRM to be partially or wholly self-funded in the future. One such method might be getting upside participation in the financial success of its grantees. Recently the federal government was quite successful in this regard during the banking, insurance and auto bailouts. I realize that each of these topics is replete with opinions as well as with controversy. Nonetheless, they need to be further explored and developed."

Taking CIRM or any government agency department private may seem a bit of a reach to some. However, CIRM is one the few state departments that has the legal ability to create a nonprofit organization. Such an organization could serve as springboard for weaning CIRM off government financing. Of course, the tough part is raising the money.

Here is the full text of Litvack's remarks on Monday.Remarks by Frank Litvack to CIRM Evaluation Subcommittee June 6, 2011

The CIRM Chair Race: Candidate Thomas Touts His Public Finance Experience

In his first appearance before directors of the $3 billion California stem cell agency, bond financier Jonathan Thomas, a candidate for the chairmanship of the agency, stressed his professional background as an investment banker and attorney and his service on government boards.

Thomas sidestepped the issue of whether he was an advocate of the controversial dual executive arrangement at CIRM. The overlapping roles of the chair and president have been sharply criticized by the state's top fiscal officer, John Chiang, and the state's good government agency, the Little Hoover Commission.

In a statement to the directors' Evaluation Subcommittee on Friday, Thomas did not directly mention the dual executive situation. But in a comment referring to the other candidate for chair, Frank Litvack, Thomas said,

"Though some have sought to label us as favoring 'oversight' on the one hand versus 'hands-on' on the other, I believe that both of us would in fact look to exercise oversight and, in addition, to exercise all of the numerous statutory responsibilities set forth in the language of Proposition 71. The big question here isn’t about labels…it’s about who is best prepared to carry out these combined efforts."

Thomas is chairman of Saybrook Capital of Santa Monica, an investment firm specializing in distressed government bonds. CIRM's only real source of cash is California state bonds, rated the lowest in the nation.

Thomas elaborated on his connections with Advanced Cell Technology of Santa Monica, Ca., one of two companies in the United States with an hESC product in a clinical trial.

He said,

"As I proceeded through my career in law and finance, I took particular interest in stem cell research and looked for a company to work with in that arena. In 2000, I began tracking Advanced Cell Technology (or “ACT”), a then fledgling-company pursuing therapeutic products from embryonic stem cell research. After extensive review of their intellectual property portfolio and lengthy due diligence, I led an early round financing to cover the Company’s operating expenses. I have tracked ACT over the years and am familiar through it with the ups and downs typical of the biotechnology industry. Now, 11 years later, ACT has two of the three products derived from embryonic stem cell research currently in clinical trials. It will be interesting to see how things play out."

Thomas reiterated that he would divest his current holdings in the company, which has applied several times for CIRM funding but has never won a grant.

Thomas stressed his background in public finance, which he said is "an esoteric corner of the finance industry, different in many important and nuanced respects from finance in the corporate sector." He said he has served as an adviser to government bodies and served on the Los Angeles Harbor Commission and the Alameda Corridor Transportation Authority, both for seven years.

Thomas said,

"I am keenly aware of the State’s financial difficulties. If problems arise with getting allocations from the Department of Finance for enough bonds to meet the Agency’s cash flow needs, I am very familiar with the ins and outs of private placements as an alternative funding source and know all the individuals and institutions to make that happen.

"I have been through many bond elections. Should the Agency decide to pursue a second general obligation bond measure, I will be fully prepared to help lead that effort."

Responding to a request by the California Stem Cell Report, Thomas today provided the following copy of his remarks. He said our email request last week had been sidetracked by a spam filter into a spam folder.

Remarks by Jonathan Thomas to CIRM Evaluation Subcommittee 6-3-11

Litvack Envisions Oversight Role for CIRM Chair, Shoring Up 'Messaging' and Industry Ties

Frank Litvack

Los Angeles cardiologist/businessman Frank Litvack, a candidate for chair of the $3 billion California stem cell agency, says he regards the job as part-time and says that the chair should not be involved in day-to-day management.

His comments (see the full text below) were made Friday to the CIRM directors' Evaluation Subcommittee. Litvack said,

 "My  belief  is  that  the  chairman’s  role  is  best   accomplished  by  a  leader  on  a  part-­‐time  basis.    An  organization  that   has  two  chief  executives  carries  with  it  the  intrinsic  potential  for   serious  challenges."

By law (Prop. 71), CIRM has a dual executive arrangement with overlapping responsibilities for the chairman and the president. The arrangement has stirred controversy and criticism and has led to public disputes between the two executives in the past.

Litvack made the text of his remarks available at the request of the California Stem Cell Report. Jonathan Thomas, a Los Angeles bond financier and the other candidate for CIRM chair, did not respond to an identical request. (Thomas later said the request had been diverted by his email spam filter and sent the text on June 6. It can be found here.)   CIRM directors will vote later this month on the two men.

Thomas reportedly favors continuation of the current dual executive structure and is more inclined towards a fulltime role, along with a larger salary. The CIRM board earlier this spring identified a range of $137,500 to $400,000 annually for the job with no more than an 80 percent commitment.

Litvack said,

"The  role  of  the  president  is  daily  management.  He  or  she  must  be  free   to  pursue  this  role  without  encumbrance.  The  function  of  chairman,   on  the  other  hand,  is  not  day  to  day  management,  rather  it  is  to   articulate  the  vision  of  the  organization  and  represent  the   organization  to  outside  parties."

Litvack also said CIRM's most strategic imperative is "to get new products into the clinic."

He sketched out several initiatives for CIRM, including a "core expertise in pre-clinical and regulatory affairs." Litvack said,

"It (the agency)   may  consider  developing  a  publicly  available  repository  of  expertise   and  data  so  as  to  assure  that  each  new  IND  applicant  is  not reinventing  the  wheel  and  wasting  precious  time  and  money.     Stepped  up  collaboaration  with  other  organizations  devoted  to  the   promotion  of  innovation  and  translation  including  the  passionate   and  commited  disease  advocate  community,  the  clinical  researchers   as  well  as  with  FDA  and  other  regulatory  agencies  would  be  of   strategic  and  tactical  value.    CIRM  leadership  must  take  a  pivotal   role  in  facilitating  the  interactions  of  therapy  innovators  with   the  FDA.  While  CIRM  will  always  stand  for  safety,  however,  when  it   comes  to  critical  and  life- threatening  illnesses,  patients  should   have  a  more  active  role  in  their  therapeutic  options."

Litvack also discussed the need to "shore up" CIRM's "messaging" and its relationship with industry. He said, "

The  public  is  waiting  to  hear  what  is  being   done  with  their  money.    Patients  are  waiting  to  hear  when  exactly  it   is  that  science  will  deliver  what  they  have  been  waiting  for."

As for industry, which has been unhappy with its meager share of CIRM largess, Litvack said,

"The  cell  therapy  industry  is  nascent, and  the  capital  markets  have   not  recently  been  kind  to  it.   CIRM  needs  to  shore  up  its  commercial   relationships,  as  most  new  therapies  will  require  the  private  sector  ."

Here is the full text of Litvack's comments on Friday.
Remarks by Frank Litvack to the CIRM Evaluation Subcommittee 6-3-11

Researcher Alert: New Industry-Oriented Stem Cell Fund, Major Changes in Assessing Some Grant Applications

The California stem cell agency is proposing far-reaching changes in how it reviews its highest profile grant applications along with creation of a new, industry-friendly "opportunity fund" that would be kickstarted with $25 million.

Unfortunately, details of proposals were revealed too late publicly for meaningful comments from the scientists and businesses that would be most likely affected. The CIRM directors' Science Subcommittee will consider the proposals on Monday. The agency's plans were not laid out fully on its web site until Friday, in the case of the grant review changes, and yesterday for the new fund.

The grant review proposal involves major disease team and clinical trial research rounds. The plan would depart radically from the current peer review process and bring CIRM and potential investigators together early to work out issues and smooth the way for better applications and better results from the research.

The CIRM proposal said,

"These are complex grants requiring multidisciplinary expertise for execution, and a multidisciplinary group of external experts to review the applications."

Under the plan, the agency would hold a Q & A session with investigators prior to the application deadline. Investigator questions would be addressed and key categories of needed information discussed.

Peer reviewers would provide their assessments of the applications 14 days prior to the meeting of the grant review group along with a list of key questions and issues. Applicants would receive the questions 10 days in advance of the review session and would be asked to provide written responses.

Applicants would have a chance to address "pivotal questions" by telephone on the actual day of the review, but apparently only at the discretion of the review group. Some applications could be deferred until additional information is gathered.

CIRM said it believes the changes – aimed principally at dealing with "pivotal questions" – will improve the research and also facilitate timely review.

Creation of an opportunity fund was recommended by a blue-ribbon external review panel last fall. CIRM said its proposal would "attract industry participation through a funding mechanism that is more aligned with industry’s financing practices."

Under the the first phase of the fund, CIRM President Alan Trounson would have $25 million to help out select grant recipients: disease team and targeted clinical development projects and early translational projects that target a development candidate.

Called a bridge funding program, it would "enable uninterrupted funding of development activities (but not new patient enrollment) to occur until the next relevant RFA/review is offered," CIRM said.

The grants would limited to $5 million and one year. Recipients would be required to submit an application in the next applicable round.

The next phases of the opportunity fund would involve the following:

"...timely short-term one year funding to new projects where an external high impact research opportunity has been identified through an inventory of the research landscape, collaboratively partnered with a California researcher and the team is assembled and research is available for immediate implementation."

And

"...preclinical, first-in-man studies and Phase II studies for projects satisfying the accelerated review eligibility requirements and receiving GWG (grant review group) recommendation."

The public and interested parties can take part in tomorrow's discussions telephonically at locations in San Francisco, Healdsburg, Irvine(2), La Jolla and Stanford. Specific addresses can be found on the agenda. 

Monday's meeting calls for discussion of the grant review changes and the opportunity fund, which presumably means that they will be acted on at a later date by the committee. But if researchers or businesses want to help shape the proposals, they should listen in on Monday, make comments at the time or/and file written suggestions via email to CIRM following the meeting. Both written and oral comments are needed to have a maximum impact. 

Advanced Cell Technology and the California Stem Cell Agency

Over in the Investor Stemcell Forum, participants are engaged in a bit of a fracas concerning whether Advanced Cell Technology of Santa Monica, Ca., has ever failed to receive a CIRM grant.

The trigger for the discussion was a piece on the California Stem Cell Report concerning the selection of a new chair for the $3 billion California stem cell agency.

The June 2 item said, "Bond financier Jonathan Thomas says he would liquidate his holdings in Advanced Cell Technology of Santa Monica, Ca., an unsuccessful applicant for CIRM funding, if he is elected chairman of the California stem cell agency."

For the record, Nature reported on Nov. 29, 2010, that ACT has applied several times for CIRM grants but never was approved. In 2008, the California Stem Cell Report carried an item about how an ACT scientist publicly complained that a financial conflict of interest played a role in one grant denial.

The California stem cell agency refuses to disclose the names of rejected applicants. The winning applicants are only identified by CIRM after the board acts on their applications.

Patent Reform Critics Say Legislation is 'Constitutionally Infirm'

The California stem cell agency yesterday posted its analysis of federal patent legislation that pits General Mills against the National Small Business Association, Merck against the Institute of Electrical and Electronics Engineers and, in California, SangamoBioSciences against CONNECT.

On Monday, the CIRM directors' Legislative Subcommittee will take up the wide-ranging and technical legislation with an eye to endorsing or opposing it.

The analysis was written by Scott Tocher, staff counsel to CIRM Chairman Robert Klein. It said,

"CIRM’s interest in the health and productivity of the patent system in general is clearly a vital interest of the agency. CIRM’s mission requires dual goals of academic openness and the need to bring scientific advances to the public via commercialization. A robust and fair patent system will ensure that the fruit of CIRM-funded research is propelled through the development process and reaches patients."

Tocher's analysis indicates the key point of the battle over the legislation involves a matter that critics say makes the legislation "constitutionally infirm."

Tocher wrote,

"For the first time since its genesis in 1790, U.S. patent law will award patents to the first person to file for a patent rather than to the first person to arrive at an invention. All other major patent offices in the world already award patents on a first-to-file basis. Though equitable, the first-to-invent system leads to disputes that the Patent Office has been forced to resolve through complicated Interference proceedings. Under the new system, filers will still have to show possession of the invention, and will still have to establish novelty. They will not, however, face concerns that others may have arrived at the invention first and simply not have filed yet. There will no longer be Interference proceedings, and applicants will no longer be able to 'swear behind' prior art cited against them by giving evidence that, despite their later filing date, they arrived at the invention first."

Tocher continued,

"This is by far the Act's most significant change, and will likely increase the pressure for all entities to file for patent rights as soon as an invention is made. This change will also increase the risk in electing to forego patent rights in favor of maintaining an invention as a trade secret."

Tocher wrote,

"If enacted, this provision almost certainly will face a legal challenge in light of the United States Constitution’s provision that 'Congress shall have power … To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.' To the extent that a first-to-file system awards a patent in some cases not to an 'inventor' in the common understanding of that word, but to a person who is first to file, critics argue the legislation is constitutionally infirm."

Tocher listed some of the enterprises for and against the measure. Backers include General Mills and Merck. Sangamo BioSciences, a CIRM grant recipient, is also in favor. One of the opponents is CONNECT, a San Diego business development organization, whose CEO is Duane Roth, co-vice chairman of the stem cell agency.

Also posted on the CIRM agenda yesterday was an item from the California Stem Cell Report dealing with the patent legislation.

The Candidate's Letters: What Thomas and Litvack Have to Say

Here is a brief look at the letters of interest submitted to the board of the $3 billion California stem cell agency by two men in pursuit of a six-year appointment as its new chairman. First the item on Jonathan Thomas, then Frank Litvack. CIRM directors begin evaluating the men on Monday.

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Bond financier Jonathan Thomas says he would liquidate his holdings in Advanced Cell Technology of Santa Monica, Ca., an unsuccessful applicant for CIRM funding, if he is elected chairman of the California stem cell agency.

In a May 23 letter to the CIRM board, Thomas, chairman of the Saybrook Capital, also of Santa Monica, said he raised funds for ACT early on and still holds a "small portion" of the company's stock.

Other than that, he said he has no other "actual or potential" conflicts.

Thomas' letter did not discuss the holdings of his firm, which deals in municipal bond financing, the only real source of cash for the $3 billion California state stem cell agency.

Thomas, who is also a lawyer, cited his public finance expertise and said it would be helpful in the event of a ballot measure seeking additional funding in 2014 or 2016. Outgoing Chairman Robert Klein, a real estate investment banker and attorney, has touted a proposal that could run as high as $5 billion.

Thomas said he has had "direct experience as an underwriter, financial advisor or issue in billions of dollars of bond financings."

He also proposed hiring Rob Church of Hogan Lovells, a Los Angeles law firm. He said that Church has had many years of experience working with the FDA on clinical trials, a costly area on which CIRM is pinning much hope.

Thomas noted that he has a long term interest in science, majoring in biology and history at Yale and earning a doctorate from Oxford studying the role of disease in British expansion into East Africa.

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Frank Litvack, a Los Angeles cardiologist, also has a wide range of business interests but says he would divest any that pose a conflict of interest.

In a May 25 letter to the CIRM board, Litvack detailed his business background, much of it reported earlier, along with current activities including his role as an "informal adviser" to a firm that is based on research by a CIRM grant recipient, Eduardo Marban.

He said does not have "an informed opinion" on whether the job of chairman requires full or parttime work, "absent spending time within the organization." He said his other commitments are "elastic" and would devote the time necessary to do the job.

Litvack called himself a "consensus builder." He said the chairman should lead the areas that "fall outside of the president's statutory responsibility including aspects of finance related to agency funding and philanthropy, public communications as well as optimizing relationships with industry and international collaborators."

Litvack said he has raised several hundred millions of dollars for companies but that his most fulfilling role has been as a clinician.

Regarding cell therapy, Litvack, who is listed on the staff at Cedars-Sinai in Los Angeles, said he is on the board of Pervasis Pharmaceuticals of Cambridge, Ma., whose product is an endothetial cell therapy. He said that for two years he has been an unpaid advisor to Capricor Inc., of Los Angeles , a cardiac stem cell company. He said,

"The company is based on the research of Dr. Eduardo Marban, a CIRM grant recipient ($5.6 million) and director of the Cedars-Sinai Heart institute. I have advised them with regards to clinical trial strategy and the shift from autologous to allogeneic stem cells."

Prieto on Patent Reform

The vice chair of the CIRM Legislative Subcommittee, Francisco Prieto, has offered a brief comment on the subject of patent reform, a matter that will come before the panel on Monday.

Prieto, a Sacramento physician, said in an email last night to the California Stem Cell Report,

"I'm not sure we'll take a position, but we do want to be informed, and have a pretty serious interest. The outcome affects the ultimate result of most of the fruits of our labor: whether and how any treatments developed from CIRM funded research are able to be developed and marketed. That ultimately will decide whether any treatments or cures ever actually make it to the clinic and into patients who need them."

Meanwhile, CIRM has provided links on the meeting's agenda to the text of the complex legislation and two items offered by advocates in the fray. CIRM has yet to produce its own analysis, a rundown on the pros and cons and an explanation of how CIRM's position would make a difference in the outcome.

In a related matter, the Finance Subcommittee, three days after the meeting on patent reform, is scheduled to consider hiring a federal lobbyist, which would make the stem cell agency one of the rare state departments with its own national lobbyist.

Here is a list of the members of the Legislative Subcommittee, which is chaired by Art Torres, co-vice chair of the agency and former head of the California state Democratic Party.

CIRM Plans for Lobbyist to Push Patent Reform Position

Shades of Tony Podesta. The other shoe is dropping at the $3 billion California stem cell agency.

This time it comes in the form of open-ended approval for the chairman of the agency to hire federal lobbyists. No details are yet available on the CIRM web site. But on June 9, the directors' Finance Committee will convene for 30 minutes to act on the proposal.

All that is known about the matter at this point is the verbiage in the agenda item:

"Consideration of augmentation of budget of the Office of the Chair to fund, as necessary, contract for federal governmental relations support."

The matter dovetails nicely with the plan to push CIRM into the stormy patent reform battle in Washington.

Some of you may recall that CIRM hired the well-connected, powerful and flamboyant Podesta – he wears red shoes – for $240,000 for 10 months in 2009. (See here, here and here.) Podesta was ultimately paid only $20,077.92, according to a CIRM document. No public explanation has been provided for the difference.

The lobbying effort in 2009, pushed hard by outgoing Chairman Robert Klein, was not without controversy. It made CIRM one of the rare state agencies with its own lobbyist. (See here and here.)

One can only speculate on what will emerge next week. But one would wonder why there is any need to act on the lobbying plan or much less even schedule a meeting on it until a new chairman is elected later this month.

hESC Patents Piece from San Diego Researchers

The foray by the California stem cell agency into the tricky and arcane world of patent reform triggered a note today from the acting director of the San Diego Consortium for Regenerative Medicine, Xuejun H. Parsons.

She pointed out that the San Diego Regenerative Medicine Institute has a short piece on its web site about the patentability of human embryonic stem cells. CIRM was created by California voters in 2004 to fund hESC research because the federal government would not, but the agency has drifted away from a sharp focus on hESC.

The web site item briefly discusses the need for patents and links to a more comprehensive article by Parsons, Yang D. Teng, Dennis A. Moore and Evan Y. Snyder. The piece  in the journal "Recent Patents on Regenerative Medicine" is a technical overview of the science linked to the patents. It may be of interest to CIRM directors as they ponder whether to take a stand in the savage fight in Congress over patent reform legislation.

The California Stem Cell Agency and Multimillion Dollar Machinations in Washington

The directors of the California stem cell agency are preparing to jump into a brutal political fray in the hallowed halls of Congress that pits, in the views of some, a "global corporatist elite" against American entrepreneurs and inventors.

It is all about patent law and so-called reform. More than 100 lobbying firms representing at least 267 organizations have already joined the battle. Millions of dollars are being spent to influence the outcome.

Patent law is one of the more arcane subjects in the public policy arena. The CIRM directors Legislative Subcommittee is being asked to make a considered judgment on the controversial emotional and technical issues during a brief, 90-minute meeting on Monday that includes other significant matters.

And with only three business days before the meeting, CIRM has not publicly presented a summary of the legislation and issues. No analysis, no pros and cons and no rationale for why the state agency should be involved are available. The meeting agenda does not even state that patent reform is the matter to be discussed.

It is exceedingly unlikely, to put it mildly, that CIRM's position for or against the legislation will make a dime's worth of difference, given the vast number of players and their global importance. Directors should step back and rethink their policy on lobbying legislation either at the national or state level. CIRM has more than enough to do running a research program that will cost California taxpayers $6 billion, including interest.

Litvack Picks Up Public Support for Bid to Become Chair of Stem Cell Agency

The Consumer Watchdog organization today endorsed a Los Angeles cardiologist as the new chairman of the $3 billion California stem cell agency, declaring that it is time to "correct the agency's dysfunctional management structure."

Writing in an op-ed piece in this morning's Sacramento Bee, John M. Simpson, stem cell project director of the Santa Monica organization, called for the election of Frank Litvack over bond financier Jonathan Thomas, chairman of Saybrook Capital, also of Santa Monica.

Simpson noted that the agency has been much criticized for its dual executive structure, which has led to public conflict and issues involving the outgoing chairman, Robert Klein, and president. Simpson said Litvack believes that the chairman should not be involved in day-to-day management at CIRM. Thomas is believed to envision a more hands-on role for the chairman.

Simpson wrote,

"As CIRM was in startup mode, Klein was very much a hands-on chairman, intimately involved in the agency's day-to-day management. The problem is that CIRM's president is supposed to be the chief executive.

"Klein's propensity to micromanage was understandable – perhaps even helpful – as CIRM got off the ground. But it continued during Klein's six-year tenure."

Simpson said,

"CIRM already has a world-renowned $500,000-a-year stem cell scientist – its President Alan Trounson. There's no need to spend another half-million on an investment banker so two executives can trip over each other at taxpayer expense.

"Litvack understands what the chairman's role should be and has realistic expectations about a salary. He should be elected so the agency can move successfully beyond the Klein era and perhaps to a time when it becomes simpler to get things done at CIRM."

Simpson's piece also contains a concise summary of the all the hooha since last fall surrounding selection of Klein's successor.

Email to the California Stem Cell Report

My email provider seems to be having difficulties and is bouncing back messages to senders. For readers who may be trying to email me, please use this alternate email address: svhopalong(at)gmail.com.

Researcher Alert: Fresh Opportunities Looming for CIRM Cash

Drawing nearly all the attention nowadays at the California stem cell agency is selection of a new chairman, but real work is also going on.

That is not to underestimate the importance of the decision, but the trains still have to keep running at CIRM headquarters in San Francisco.

Next Monday, for example, the directors' Science Subcommittee will meet to consider matters that all potential grant applicants should be watching.

One involves a possible mechanism that could be used by some applicants to advance their cause with information not in the grant application. Its main purpose seems, however, to give reviewers a chance to dig deeper into a grant proposal. Another proposal before the committee would extend the more than $90 million "new faculty" grant program into another round. A third would create an "opportunity" fund controlled by the CIRM president. A blue-ribbon panel last fall recommended the idea.

No details were available on any of this on the CIRM web site as of Monday night, only four business days before the subcommittee meeting.

The agenda item on the grant application information was the most fulsome, but only said,

"Discussion of process for obtaining supplemental information from applicants for Clinical Trial and Disease Team grant rounds, including an opportunity to obtain information during Peer Review, subject to later staff confirmation, of additional information not presented in the application."

Even less information was offered up concerning the faculty program and the opportunity fund. However, in March , CIRM President Alan Trounson told CIRM directors,

"The Governing Board could create an 'Opportunity Fund' to be used by the President to rapidly provide continuation funds for projects identified by VP, R & D and members of the Clinical Advisory Panel as having been highly successful and their plan to move forward is compelling and competitive as assessed against defined criteria. This process would accelerate existing promising and competitive CIRM projects and reduce the amount of time spent writing proposals and in review. CIRM already has mechanisms to discontinue or cut back projects that are not making progress. This additional tool would allow CIRM to accelerate projects that are beating expectations."

Interested parties can participate in the discussion at telephonic locations in San Francisco, Irvine(2), La Jolla, Healdsburg and Stanford. Specific addresses can be found on the agenda.

Opportunities for Public Comment on Nominees for CIRM Chair

Directors of the California stem cell agency are planning at least three public meetings prior to making their decision on cardiologist Frank Litvack or bond financier Jonathan Thomas to replace outgoing chairman Robert Klein at the end of June.

The public will have a chance to weigh in with comments at all of the meetings. Two sessions have telephonic locations throughout the state, including San Francisco, Los Angeles(2), Coronado, La Jolla, Irvine (2), West Hollywood, South San Francisco and Berkeley.

Here is the schedule, according to the board's outside counsel, James Harrison.

June 3 (next Friday) – CIRM directors' Evaluation Subcommittee telephonic meeting to which all 29 members of the CIRM governing board have been invited. The session will begin with a brief public presentation by the candidates. Then they will be questioned separately behind closed doors. By law, the public can participate during the public portion from the telephonic locations. You can find the addresses of the locations on the agenda. Some are vague and will require contacting CIRM in advance for more specifics. The locations could change, be dropped or more added.

June 6 – Evaluation Subcommittee meeting possibly involving all board members. Again, public participation is possible with the caveats noted above. No action is expected to be taken at either the June 3 or June 6 meetings, Harrison told the California Stem Cell Report.

June 22-23 – Full CIRM board meeting in San Diego with the candidates making a public presentation. A closed session is expected prior to a public vote, which could well be publicly unanimous by that point. Again, the public will have a chance to comment. The specific address for the meeting is yet to be announced.

The public or other interested parties can also comment by emailing information to the CIRM board and asking that it be distributed to all members. That should be done earlier rather than later in order to have any impact.

The schedule of meetings could change depending on the druthers of the CIRM board.

Good News for CIRM and Not-So-Good News

The $3 billion California stem cell agency made the papers this weekend in Los Angeles and San Francisco.

One story dealt with research funded by CIRM, the other with selection of its next chairman.

The story by freelance writer Amber Dance in the Los Angeles Times was the sort of coverage that CIRM needs more of if it is to win approval of the possible, new $5 billion bond measure touted by Chairman Robert Klein.

The article had an optimistic lead on a promising ViaCyte Inc. therapy for diabetes. It cited in the second paragraph CIRM's $26 million in funding to the San Diego firm. CIRM President Alan Trounson was quoted. All that in a newspaper that has the largest circulation in California and that has largely ignored CIRM.

The other piece appeared in the San Francisco Examiner. Authored by Katie Worth, the headline read,

"California stem cell czar offered top pay, asked to name job description."

It began by saying that the new CIRM chairman could have a salary of more than $500,000. The story mirrored the lack of clarity on the part of the CIRM board concerning exactly what the chairman should do. Worth quoted from the Little Hoover Commission report on CIRM. She wrote,

"In 2009, California’s Little Hoover Commission criticized CIRM’s governance structure, noting that Klein’s 'actions and personal style' and the fact that he essentially wrote his own résumé into the requirements for chairman, create a situation that 'distorts accountability and succession planning and could, in the event of an abrupt departure of the individual, leave the agency leaderless for an extended period.'"

In the world of marketing, PR and election campaigns, it takes a lot of positive stories to counter the ones that reflect poorly on an enterprise, such as Worth's.

The puzzle for CIRM is how to generate enough positive pieces.

CIRM's Klein Honored by Scientists

The International Society for Stem Cell Research announced last week that it is making its first ever public service award to Robert Klein, the outgoing chairman of the $3 billion California stem cell agency.

In a news release, the scientific group cited Klein "for his outstanding contribution of public service to the field of stem cell research and regenerative medicine."

The ISSCR said,

"Through his vision as author and champion of the California Stem Cell Research and Cures Initiative (Proposition 71), Klein secured long-term financial support for stem cell research in California. Through his leadership at CIRM, Klein developed a framework that fosters new and established talent, innovative science and clinical application. His advocacy for stable financial support for stem cell research on the international stage has been unprecedented."

IOM Study of CIRM: Panel to be Appointed in Fall

The Institute of Medicine study of the $3 billion California stem cell agency begins in July but the full IOM committee is not expected to be appointed until next fall.

Responding to an inquiry from the California Stem Cell Report, Adrienne Stith Butler, study director for the $700,000 CIRM-financed project, said that the IOM will make information about the process available on the Internet in July. She said,

"There will be two sources of information about the project - the IOM website and the National Academies website. Once the committee is appointed and the study begins we will distribute information about the meetings through a list serve (sign up will be on the study's IOM page, which will be posted once the study begins). In addition, information about meetings and opportunities for public comments will be available through the National Academies Current Projects System (this is a separate system from the IOM page).

"Once we begin in July, you can find information on the IOM site at www.iom.edu. The Current Projects System posts the study once the committee is appointed (which will probably be early fall). That system can be accessed at www.nationalacademies.org."

Stith Butler replaces Cathy Liverman as the study director on the project. Liverman was involved in the preparation of the original proposal to CIRM.

Previously, Stith Butler served as study director for the IOM report, "Preparing for the Psychological Consequences of Terrorism: A Public Health Strategy." She served as a staff officer for the IOM reports, 'In the Nation’s Compelling Interest: Ensuring Diversity in the Health-Care Workforce" and "Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care."  She also participated in The Future of Nursing: Leading Change, Advancing Health.

CIRM Makes Formal Announcement of Thomas-Litvack Nominations

The California stem cell agency has posted its own version of the nomination of two Los Angeles men to become the new chairman of the $3 billion research enterprise.

The announcement came yesterday. The nominations were made last Friday and Monday and were covered at the time by a handful of news outlets.

The CIRM notice was a straight-forward, five-paragraph item and contained links on the CIRM web site to nominating letters and statements of interest from both Jonathan Thomas, bond financier, and Frank Litvack, a cardiologist. Also linked to was a bio on Litvack.

Read All About It!

For you curious souls out there, I have freshened up information on this web site about the California Stem Cell Report and its background. If you are interested, here is a link.

If you have questions – embarrassing or otherwise – please feel free to send them along to me at djensen@californiastemcellreport.com. Depending on your druthers, I will answer them in a private email or online here. If you prefer, you can post them anonymously by clicking on the word "comment" at the end of this item. I strongly believe that people who write on public walls – that includes all government agencies and CIRM as well as the media – should be prepared to be fully and publicly examined, even if it is uncomfortable or worse.

If you have suggestions or comment on the content, direction or tone of what appears on the California Stem Cell Report, please use the same methods of communication. I am looking forward to hearing from you.

Nature Says CIRM Faces 'Stark Choice" in New Chairman

Nature magazine today weighed in with its story on the nominations for the new chairman of the $3 billion California stem cell agency.

Writing on the publication's Spoonful of Medicine blog, Elie Dolgin said that the CIRM board of directors faces "a stark choice over who will lead the San Francisco-based institute as it enters into its next phase" – a cardiologist or bond financier.

The piece contrasted Frank Litvack's scientific and medical credentials with the investment background of Jonathan Thomas, who is chairman of a bond investment firm, Saybrook Capital in Santa Monic, Ca.

Dolgin reported that Thomas declined to comment on his salary request, which is reportedly at the top of the $400,000 range for the part-time job. Litvack is ready to take $137,500.

Meanwhile, the CIRM directors' Evaluation Subcommittee scheduled a June 3 meeting to interview the candidates. The session will be mostly closed but there is a provision for public comment at some time duiring the meeting.

The public can attend at locations in San Francisco, South San Francisco, Coronado in the San Diego area and Los Angeles. Specific addresses can be found on the agenda.

Minimal News Coverage on CIRM Chair Nominees

The latest news coverage of selection of a new leader for California's $3 billion stem cell agency is meager, to say the least.

Absent from the game this morning is most of the major media in the state, including the Los Angeles Times, the San Francisco Chronicle and the San Jose Mercury News. The Chronicle's and Mercury's backyards include the headquarters of CIRM, not to mention the major beneficiaries of the agency's largess. Oddly, The Sacramento Bee carried a story yesterday about the third nomination of Jon Thomas for chair of CIRM but failed to report the new nomination of Frank Litvack.

Here are links to the stories that searches by the California Stem Cell Report turned up this morning: Ron Leuty's piece in the San Francisco Business Times, Kathie Worth in the San Francisco Examiner and David Sider in The Bee.

Litvack vs. Thomas for Chair of the $3 Billion Stem Cell Agency

California State Controller John Chiang today nominated Frank Litvack, a "serial entrepreneur" and cardiologist, to become the new chairman of the $3 billion California stem cell agency.

Chiang cited Litvack's deep background in medical business development and "unique combination of skills." The controller said,

"Litvack knows from personal experience what it takes to develop new medical technologies and move them through the regulatory process to adoption in the market place."

Chiang, the state's top fiscal officer, said that Litvack "has been a clinician, a researcher and an entrepreneur, who has found or led several medical technology companies."

The controller continued,

"Dr. Litvack is a strong proponent of the oversight model of governance, as I have advocated. I believe he has the executive, medical, regulatory and financing experience, as well as the leadership skills that are needed to successfully guide the ICOC (the CIRM governing board) and CIRM through this upcoming transition and onto further success in the coming years. His interest in serving as ICOC's next chair is grounded in such a strong sense of civic duty and belief in CIRM's mission of saving lives that he will serve in the position at the lowest salary being offered, irrespective of his commitment to spend whatever amount of time is necessary to work with the ICOC and CIRM management to ensure that the next chapter in CIRM's history is as successful as the first."

The CIRM board will meet June 22 and 23 in San Diego to choose between Litvack and Jon Thomas, chairman of Saybrook Capital of Santa Monica, Ca., to succeed Robert Klein, a real estate investment banker and attorney who has resigned as chair of the organization.

Thomas was nominated last week by Gov. Jerry Brown and state Treasurer Bill Lockyer. Lt. Gov. Gavin Newsom is also expected to nominate Thomas. (Later in the day, Newsom did nominate Thomas.)

By law, the 29-member CIRM board can only a elect a chairman from candidates nominated by the four state officials.

Thomas reportedly favors the current controversial dual executive situation at CIRM in which the chairman and president have overlapping responsibilities. That has lead to public conflict in the past and has been much criticized, particularly by the state's good government agency, the Little Hoover Commission. It said CIRM was personality driven.

Controller Chiang, also chair of the only state entity charged with review of CIRM and its board, last March said that oversight of CIRM is "severely compromised" when the chair is part of management.

Klein favors continuation of the existing dual executive relationship. A reliable source told the California Stem Cell Report that Klein favors Thomas, although the board's outside counsel denied that on behalf of Klein.

Litvack is disposed to more of an oversight role for the chair, a position that the CIRM board seems more inclined to support, at least as of its March meeting. The board also has designated the job as part-time – only 50 to 80 percent. The post carries a salary that tops out at $529,100. However, the board is looking at paying no more than $400,000 with a low of $137,500 because of its part-time nature.

The pay apparently is another difference between the two men. Thomas is reportedly seeking a salary at the high end of the range while Litvack would accept $137,500.

Litvack has been involved with a number of firms, most notably Conor Medsystems Inc. of Menlo Park, Ca. He was CEO when it was purchased by Johnson & Johnson for $1.4 billion. Conor was developing a new kind of stent.

Thomas' firm, which he co-founded, specializes in distressed and defaulted municipal bonds, a financial category that includes state bonds. The stem cell agency is funded virtually entirely by California state bonds. The state has the lowest bond rating of any state in the nation.

The CIRM directors' Evaluation Subcommittee is expected to meet behind closed doors soon to interview the candidates. They are expected to make a public presentation at the San Diego meeting at which time the public can make comments or raise questions.

Governor's Nomination Letter for Thomas

Here is the brief letter in which California Gov. Jerry Brown nominated Jon Thomas, chairman of Saybrook Capital of Santa Monica, to chair the $3 billion California stem cell agency.
Governor's Nomination of JonThomas

$700,000 IOM Study of California Stem Cell Agency to Begin July 1

The California stem cell agency has signed a nearly $700,000 contract with the prestigious Institute of Medicine to produce a wide-ranging report to determine whether the agency is operating at "peak performance" and whether improvements are needed.

The 17-month study will cost $699,247, under the terms of a contract signed on April 21. The project is scheduled to begin July 1 and conclude by Nov. 30, 2012. CIRM directors authorized the study last August.

The original proposed schedule would have had the study completed by September 2012. That date would have made it available that fall for use in a campaign for a possible $3 billion to $5 billion bond ballot measure for CIRM, which has been talked up by outgoing CIRM Chairman Robert Klein. Such bond measures are usually placed before voters during a major statewide election, such as for governor or president, in order to help win passage. A presidential election is set for November 2012.

Last August, Klein said the study would be key to winning voter approval of more bonds($3 billion were approved in 2004). However, the current timing would appear to make the full report unavailable for a November 2012 campaign. Nonetheless, selected portions of it could be leaked in advance to help win support.

Most of CIRM's directors agreed last August that a study by the well-regarded IOM would benefit CIRM and create more enthusiasm for stem cell research. The lone no vote came from Duane Roth, a San Diego businessman and co-vice chair of the board. He told directors,

"I would just caution that the outcome on something like this can cut both ways. And to go in just sort of blind trust that they're going reach the conclusion you want them to reach, I don't think is a foregone conclusion. So you at least ought to think about the downside of a rather critical (study)."

The IOM's study proposal said,

"The principal objective of this review is to ensure that all aspects of CIRM's operations are functioning at peak performance."

Under the terms of the contract, the IOM will select a 14-member committee to hold four meetings (only two that are partially public). The first meeting will be held behind closed doors although it deals with the very public issues of bias and conflict of interest. The second and third meetings are scheduled to have public workshops in California and will be the only ones held in the state.

Once it is written, the report will go through the National Research Council's peer review process. CIRM will see a prepublication copy of the report as much as three months ahead of publication.

Here are some of the questions that the IOM study proposes to address:

• "Does CIRM have the portfolio of projects and grant opportunïties necessary to meet its scientific goals?"
•  "Are the internal organizational and management systems (in particular the board and working group structures and operations, the peer review system, the conflict of interest guidelines, and the grants management system) effective in working toward the institute's scientific goals?...Do they achieve the level of transparency and the level of stakeholder and scientific community involvement needed to meet the institute's public responsibilities and scientific goals?"
• "What are the advantages of CIRM's model for covering long-term costs of medical research? Could aspects of this funding model serve as a paradigm for other states or counties? "

 Although the study is being financed at taxpayer expense, the contract said the report will be the property of the the IOM – not CIRM. The contract also said "minutes and working papers from the committee meetings in closed (deliberative) sessions are considered proprietary by the consultant (the IOM) and will not be available for review by CIRM or provided to CIRM."

CIRM plans to pay for the study with funds that it has gathered over the last few years from private donors. Klein has argued that the money thus does not come from California taxpayers. However, as the California Stem Cell Report and others have pointed out, once the money is given to the state, it is all public money and belongs to taxpayers.

The IOM project comes as CIRM is scheduled to undergo its first-ever performance audit. The audit is required as the result of legislation last year supported by CIRM. The review is budgeted for $250,000 for the coming fiscal year although the total was originally estimated at about $400,000. Last fall, CIRM conducted an "external review" of its performance that consumed 2,000 hours or more of staff time.

The IOM study director is Cathy Liverman. The IOM contract and proposal can be read below.
IOM/CIRM Contract

IOM/CIRM Contract

Newsom to Nominate Thomas for Chair of Stem Cell Agency

California Lt. Gov. Gavin Newsom plans to nominate Southern California investor Jonathan Thomas for chair of the California stem cell agency, according to the San Francisco Business Times.

Reporter Ron Leuty cited an anonymous source in reporting the move today in his story on the nomination of Thomas by Gov. Jerry Brown and state Treasurer Bill Lockyer. State Controller John Chiang is yet to make his nomination.

In addition to Leuty, the Los Angeles Times and The Sacramento Bee today carried stories on their web sites about the nomination. The San Francisco and Los Angeles papers both cited coverage of the matter by the California Stem Cell Report.

Here are links to the stories in the Los Angeles paper (written by Eryn Brown) and The Bee(by Paresh Dave).

Here is a link to the Lockyer nominating letter, courtesy of The Bee. We hope to bring you Brown's 56-word letter during the weekend.

Prop. 71 Requirements for Chair of the California Stem Cell Agency

Here is the text of what Prop. 71 stipulates are the legal criteria for the CIRM chair.

"The chairperson and vice chairperson of ICOC (the CIRM governing board) shall be full or part time employees of the institute and shall meet the following criteria:
(A) Mandatory Chairperson Criteria
(i) Documented history in successful stem cell research advocacy.
(ii) Experience with state and federal legislative processes that must include some experience with medical legislative approvals of standards and/or funding.
(iii) Qualified for appointment pursuant to paragraph (3), (4), or (5) of subdivision (a)(which stipulate that the chair come from 'representatives' of 'disease advocacy' groups.) .
(iv) Cannot be concurrently employed by or on leave from any prospective grant or loan recipient institutions in California.
(B) Additional Criteria for Consideration:
(i) Experience with governmental agencies or institutions (either executive or board position).
(ii) Experience with the process of establishing government standards and procedures.
(iii) Legal experience with the legal review of proper governmental authority for the exercise of government agency or government institutional powers.
(iv) Direct knowledge and experience in bond financing."

Southern California Investor Nominated for Chair of the State's Stem Cell Agency

California Gov. Jerry Brown and the state's treasurer, Bill Lockyer, today nominated the head of a Southern California bond investment firm, Jonathan Thomas, as a candidate to become the new chairman of the $3 billion California stem cell agency.

Two other state officials, Controller John Chiang and Lt. Gov. Gavin Newsom, have the ability to nominate candidates to succeed Robert Klein at the research organization. However, they are yet to be heard from publicly.

Brown's nominating letter was very brief, only 56 words, and said nothing about Thomas other than nominating him.

Lockyer's letter was a bit longer. He said,

"Mr. Thomas's experience as a public finance investment banker, attorney, board member of various government agencies, and board member of the Crippled Children's Society of Southern California, as well as his lifelong background, education and interest in biology and medical sciences, makes him exceptionally well-suited to fill the role of ICOC (the CIRM governing board) chair and to lead the ICOC into the next stages of its ongoing pursuit of cures through stem cell research."

Thomas is chairman and co-founder of Saybrook Capital of Santa Monica, Ca., a firm that specializes in distressed and defaulted municipal bonds, an investment category that includes state bonds. The stem cell agency is funded by California state bonds. The state has the lowest bond rating of any state in the nation.

Thomas is reportedly favored by Klein as his replacement, although Klein has denied that through a spokesman. Thomas reportedly supports the much-criticized dual executive structure at CIRM in which the president and the chairman have overlapping responsibilities. Klein also favors continuation of the arrangement, which is codified in state law by Prop. 71. The ballot measure, which created by CIRM, was written by Klein and a handful of others.

The chairman's job carries a salary range that tops out at $529,100. However, the board earlier this year indicated that it was looking at no more than $400,000 for part-time work (up to 80 percent). Klein, an attorney and real estate investment banker, worked without salary for a number of years. At one point, he asked for compensation. The board approved a $150,000 salary for half-time work.

The board is expected to act on the nominations at its June 23 meeting in San Diego.

Seattle Gilead Exec Is Potential Candidate for Chair of California Stem Cell Agency

A third candidate and possibly a fourth has emerged for nomination as the new chairman of the $3 billion California stem cell agency.

Bruce Montgomery

One is Bruce Montgomery, an executive in Washington state with Gilead Sciences, Inc., of Foster City, Ca., reliable sources told the California Stem Cell Report. The other is Stephen Juelsgaard of Woodside, Ca. He is a former executive with Genentech who was appointed to the CIRM board recently. His appointment may indicate that he is not actively seeking to replace Robert Klein, who is resigning as chairman.

Scuttlebutt has it that Montgomery is favored by CIRM President Alan Trounson. Montgomery is senior vice president for respiratory therapeutics at Gilead. He was the founder and CEO of Corus Pharma of Seattle when it was purchased by Gilead in 2006. Prior to that he was an executive with Patho Genesis Corp. and worked at Genentech.

Montgomery was also once chairman of the Washington State Biotechnology and Biomedical Association. He is a physician with an active California license.

Juelsgaard's appointment to the board does not rule him out as a candidate for chair, but it would seem to make his possible nomination more awkward.

The other potential nominees whose names have surfaced are Frank Litvack, former CEO of Conor, and Jonathan Thomas, chairman of Saybrook Capital of Santa Monica, Ca.

Four statewide officials are charged with nominating candidates. The officials are the governor, treasurer, controller and lieutenant governor. Their nominations are expected on Monday if not sooner. The CIRM board can only choose among the nominees. The board is expected to take up the matter at a meeting in San Diego June 23.

Cardiologist/Entrepreneur Eyed for Stem Cell Agency Chair

Frank Litvack
Cedars Photo

A Los Angeles cardiologist who is also described as a "serial entrepreneuer" is under consideration as a possible candidate for chairman of the $3 billion California stem cell agency.

He is Frank Litvack, former CEO of of Conor Medsystems Inc. of Menlo Park, Inc., which was purchased by Johnson & Johnson for $1.4 billion in 2006. Conor developed what Business Week called a "new breed of stent."

Several sources told the California Stem Cell Report that Litvack is one of several possibilities to replace Robert Klein, who is resigning effective June 23, as chairman of CIRM.

Four statewide officials are scheduled to make nominations for the post on Monday. At one point earlier this year, it appeared that there would be an effort to have the four nominate one person. However, that attempt has fallen by the way. John M. Simpson, stem cell project director at Consumer Watchdog of Santa Monica, Ca., said,

"There will definitely be choices."

The 29-member CIRM board is expected to vote on the candidates at its meeting June 23 in San Diego. The CIRM directors Evaluation Subcommittee is expected to schedule a closed door meeting to interview candidates, who will make public presentations to the full board probably at the June meeting. At that time, the public will have an opportunity to comment.

The California Stem Cell Report disclosed yesterday that Jonathan Thomas, chairman of the Saybrook Capital of Santa Monica, Ca., is also under consideration as a candidate. Thomas is reportedly backed by Klein, although Klein has denied that via a spokesman.

Thomas is believed to support the current dual-executive structure at CIRM with overlapping responsibilities involving the chair and the president. The structure has been strongly criticized and has created public conflict in the past. Litvack reportedly favors a role that would place the chair instead in more of an oversight role.

Litvack has a slight connection already to the CIRM board. He and Sherry Lansing, chair of the CIRM Governance Committee, both serve on the Health Board of Advisors at RAND, a Santa Monica, Ca., thinktank.

In 2005 while Litvack was head of Conor, Business Week wrote about how the firm provided stock options to some doctors evaluating its technology, which was well-regarded.

The magazine said,

"Yet Conor's technology is difficult to assess, in part because some doctors helping to evaluate the devices have received stock options from the company. Among the 14 doctors who sit on Conor's scientific advisory board and are participating in clinical trials of its stent, three received consulting fees and five have received options, according to documents obtained by BusinessWeek.

"Such relationships are a growing source of concern in the medical-device industry, drawing increasing scrutiny from regulators and medical ethicists. Still, Wall Street is smitten with Conor's potential."

According to Bloomberg Business Week, Litvack is managing director of Calmedica Capital LP and a director of Nile Therapeutics Inc. and Pervasis Therapeutics Inc. From 1986 to 2000, he co-directed the Cardiovascular Intervention Center at Cedars-Sinai Medical Center. He has also founded Progressive Angioplasty Systems Inc., and co-founded itherX Pharmaceuticals, Inc.

Klein Makes It Official -- His Last Day is June 23

Robert Klein, the first and only chairman of the $3 billion California stem cell agency, has officially resigned effective June 23.

His resignation came in a May 10 letter to the statewide officials who are responsible for nominating candidates for chair of the unprecedented research effort, which is generally regarded as the single largest source of funding in the world for human embryonic stem cell research.

Klein's resignation letter is significant because he has talked about leaving his post at earlier dates several times in the past but never has. His May 10 letter makes it official.

The governor, treasurer, controller and lieutenant governor are expected to make their nominations on Monday, if not sooner. The board is expected to choose among the candidates to fill Klein's slot at its meeting in San Diego June 23.

Klein has served six-and-a-half years as chair of the 29-member CIRM board of directors. His letter mentions eight years of work. That includes the time that he and a handful of others spent writing the 10,000-word ballot initiative, Prop. 71, that created the stem cell agency. It also includes his direction of the 2004 statewide electoral campaign on behalf of Prop. 71.

Here is the text of Klein's letter.

"It has been my honor to serve as the Chairman of the Governing Board of the California Institute for Regenerative Medicine (“CIRM”) for the last six and a half years. With your support and the support of the other constitutional officers and the Legislature, we have made great strides towards achieving our goal of finding therapies and cures for Californians who suffer from chronic disease and injury. Just last week, CIRM’s Governing Board approved a loan to Geron, a California company, to support a human clinical trial involving the use of embryonic stem cells to treat individuals with spinal cord injury. We expect that CIRM’s Disease Team Research Awards, which were approved last year, will lead to additional human clinical trials within the next 24 months.

"Having spent the last eight years of my life dedicated to the cause of stem cell research, I remain deeply committed to CIRM’s mission. When I .,agreed to be considered for a second term, however, I made it clear that, in light of my personal and professional obligations, I could only serve six months. I am therefore writing to submit this letter of resignation from my position as the Chair of the Governing Board of CIRM, effective at the close of business on June 23, 2011."

"Thank you for your leadership and support of stem cell research. I strongly believe the advances of California’s stem cell scientists and clinicians will profoundly reduce the future of human suffering from chronic illness and injury."

Southern California Investor Identified as Possible Candidate for CIRM Chair

Robert Klein, chairman of the $3 billion California Institute for Regenerative Medicine, is backing the head of a Southern California investment firm to succeed him at the helm of CIRM as it pushes aggressively to bring stem cell therapies into the marketplace, according to a reliable source.

However, James Harrison, outside counsel to the CIRM board, flatly denied that Klein has endorsed any candidate.

Nominations for the position are scheduled to be announced on Monday. Klein's six-year term expired last December. Klein, a real estate investment banker and attorney, was re-elected to his post on an interim basis and said he will not serve after June.

The candidate in question is Jonathan Thomas, chairman and co-founder of Saybrook Capital LLC, of Santa Monica. The firm manages $750 million in investments, focusing on distressed and defaulted municipal bonds, a term that includes state bonds. CIRM is funded by bonds issued by the state of California, which has the lowest bond rating of any state in the nation.

Thomas has been connected with investments involving the city of Los Angeles, PG&E and the Los Angeles Community College District, according to Bloomberg Business Week. Other clients have included the Dodgers, Walt Disney, Catellus Development and Maguire Thomas. According to Bloomberg, Thomas is currently writing a medical mystery novel.

In 2005, Business Week provided this description of Thomas' firm.

"Nestled 3,000 miles from Wall Street in the beachside town of Santa Monica, Calif., Saybrook Capital is an unlikely player in the rough-and-tumble world of bankruptcies. But since it started in 1990, the 60-person boutique investment bank has carved out a key role in some of the country's largest bankruptcies, advising creditors of Pacific Gas & Electric and shareholders of Kmart and Adelphia Communications). Often it competes against much bigger firms such as Lazard and Rothschild. 'We tend to get the deals that are big, ugly, and complicated,' says Jonathan Rosenthal, who runs the firm's bankruptcy practice."

Thomas has not responded to a query yesterday from the California Stem Cell Report.

CIRM responded our query through Harrison, who said,

"Don (Gibbons, CIRM's chief communications officer)advised us that you were planning on running an item stating that Bob has endorsed Jon Thomas for chair. In fact, Bob has not endorsed a candidate for chair. He has tried to assist individuals who have expressed an interest in the position by providing them with information and background regarding the agency. Bob believes the board as a whole should make the decision on the next chair after the constitutional officers make their nominations. As an individual board member, Bob will personally evaluate each candidate who is nominated based on the needs of the agency and the candidates' presentations to the board. Any representation that Bob has endorsed a specific candidate is not accurate."

We queried Harrison again following his response, asking him about Klein's ties to Thomas and whether he(Harrison) was making a distinction between backing and endorsing.

Harrison replied,

"Bob is not backing any candidate for chair, has not had business
dealings with Thomas, and has no historical social relationship with
him.

"Bob said he would be happy to talk with your source to correct this
misimpression and to understand why the individual has reached this
conclusion."

The 29-member board of the stem cell agency is in an odd position concerning selection of a chair. Unlike most governing boards, CIRM directors are hamstrung in their choice of a director, courtesy of Prop. 71, which created CIRM and was written by Klein, Harrison and a handful of others. Under the terms of the ballot initiative, which altered the state constitution, the board can only pick a chairman from persons nominated by the governor, treasurer, controller and lieutenant governor.

Those officials are expected to make their nominations on Monday, if not sooner. Names of persons under consideration are not being publicly revealed prior to that date.

Last winter, Art Torres, co-vice chair of the board, was nominated for the top post but bowed out. It appears that he is not now actively seeking the position, although he has not responded to a question on the matter from the California Stem Cell Report.

The chair selection process last winter came up short after news reports surfaced that Klein was trying to engineer, behind closed doors, the selection of his successor. The headline on one story said, "CIRM: The Good, the Bad And the Ugly."

Correction

The "Latest California Budget" item earlier today incorrectly indicated that CIRM had funds through about June. The correct date is about June of 2012.

Latest California Budget Proposal Not the Best News for CIRM

California Gov. Jerry Brown is proposing a "dramatically" reduced sale of state bonds, which are the only real source of income for the California stem cell agency, during the coming fiscal year.

His plan was contained in what is the known as the May revise of the governor's budget. Randall Jensen(no relation to this writer) wrote today in The Bond Buyer, a newswpaper devoted to public finance, that the plan is part of an effort to reduce what Brown called California's $81 billion "wall of debt."  Jensen said,

"The state already skipped its usual springtime general obligation bond issue at Brown’s behest. The revised budget proposal calls for selling only about $1.5 billion of GO (general obligation) bonds in the fall, as the state’s only GO issue of calendar year 2011, after selling $10.5 billion of GOs in 2010."

Brown also proposed a $2.4 billion bond sale in the spring of 2012. He said the state currently has a backlog of $48.2 billion in unsold bonds.

If CIRM bonds are not part of the fall sale, it could lead to a cash flow crunch at CIRM, which says it has only enough funds on hand to meet its current commitments through about June of 2012. Competition for inclusion in the bond sale is likely to be stiff.

Brown's bond sales plans also assume enactment of his budget. However, Republicans have in the past  successfully blocked tax increases, which are part of the spending plan, because of the requirement of a two-thirds vote for approval.

(Editor's note: An earlier version of this item incorrectly indicated that CIRM had funds through June. The correct date is about June of 2012.)

Former Genentech Exec Appointed to CIRM Board

Stephen Juelsgaard (Photo Iowa State)

A former, longtime Genentech executive yesterday was named to the 29-member board of the $3 billion California stem cell agency.

Stephen Juelsgaard of Woodside, Ca., was appointed by California Lt. Gov. Gavin Newsom to replace Ed Penhoet, a co-founder of Chiron. Penhoet had sat on the board since the agency's inception in 2004. He was vice chairman at one point and directed development of CIRM's intellectual property provisions. Juelsgaard fills a slot on the board reserved for a representative from a life science business.

Juelsgaard is a lecturer at the Stanford law school and a member of the board of directors of Ivivi Health Sciences LLC of San Francisco, a privately held firm that focuses on electrotherapy devices to relieve pain.

Juelsgaard was executive vice president of Genentech when he left the firm in 2009. He joined it 1985. Last fall he endowed a deanship at Iowa State University with $3 million. Juelsgaard holds a doctorate in veterinary medicine from the school.

Another former Genentech attorney, Elona Baum, is general counsel at CIRM, which has about 50 employees.