California's $25 Million Loan to Geron: Approval Came Only After Major Departure from Longstanding Procedures

The state of California chalked up a historic first last May when its stem cell research agency approved a $25 million loan to a corporation engaged in another first – a clinical trial for a treatment created from human embryonic stem cells.

It was the first time that the state has funded a clinical trial -- one watched by untold numbers of persons globally who hope that stem cells will ease their pain and cure their suffering. The funding is also critical to Geron Corp. of Menlo Park, Ca., which initiated the safety trial for its spinal injury stem cell therapy.

CIRM President Alan Trounson told agency directors in May,

"It's just possible that this trial might have faltered without our backing."

Approval of the loan, however, came after the $3 billion stem cell agency publicly deviated significantly from its normal funding procedures. The Geron application was not given a public scientific score, standard practice for all the other 433 applications that the agency has approved over the last six years. The usual summary of grant reviewer comments was not provided to the public or the board. The three other applicants in the $50 million round all withdrew prior to presentation to the CIRM board – another first in CIRM's grant program. And no public explanation was provided at the time for the departures from long-established procedures.

In response to questions from the California Stem Cell Report, CIRM defended its actions. James Harrison, the board's outside counsel, said the unusual handling of the Geron application was necessary to protect confidential information. Harrison said,

"CIRM has a significant challenge and responsibility to protect the confidentiality of the companies’ submissions as any violation could have adverse consequences for the companies, including a material disclosure, particularly for those companies that are publicly traded."

Regarding the failure to provide a summary of grant reviewer comments, Harrison said a summary was indeed available, pointing to a document that contained only a 67-word listing of the criteria used by evaluators. By contrast, the top-scoring applicant for a $14.6 million disease team grant in 2009 had a 1,219 word summary review.

Regarding withholding the scientific score of the Geron application by reviewers, Harrison said publishing it would have been "confusing" because all the other applicants had dropped out.

Asked whether the applicants were encouraged by CIRM in any manner to drop their applications. Harrison replied,

"In this case, three applicants, on their own volition, withdrew their applications before the board meeting and therefore the applications were not presented to the board."

Asked whether the other applicants had any sort of assurances that they would have a better chance later, Harrison said,

"CIRM has made no assurances, either directly or indirectly, to any applicants, including the applicants for the Targeted Clinical Development Awards, regarding future funding.  CIRM does try to assist applicants by providing feedback, where appropriate."

As to the lack of an explanation to the public and interested parties for the departure from longstanding procedures, Harrison did not respond directly. He said,

"This was CIRM's first clinical trial review and we expect to strengthen and refine the procedures for the next round, including explaining to the public how and why clinical review summaries differ from other CIRM grant review summaries."

(The full text of Harrison's statement can be found here.)

Geron's application was approved in May by directors on a 16-1 vote. The dissent came from Joan Samuelson, a patient advocate member of the board and a member of the grant review group.

According to the transcript of the directors meeting, she said the trial was not ready and CIRM was not ready.

"There were lots of -- this is based on the peer review and the comments by the scientist members of the grants working group. There were many concerns that many of the scientist members felt should be satisfied before embarking on a clinical trial and they weren't."

Ellen Feigal, CIRM's vice president for research and development, responded following Samuelson's remarks. Feigal said,

"I want to make it clear, making the decision to move towards and into a clinical trial is a very complicated decision. It's not black and white. It's based on judgment, on experience, on science, and the data, and there's not really a right or wrong answer. And I just think that the tenor of the discussions that we've had, the tenor of the discussions of the grant review group had were appropriately deliberative and considered all the different issues."

(Editor's note: Discussion of the Geron application begins on page 142 of the May transcript. It picks up again on page 153. The 16-1 roll call vote on the application by the 29-member board can be found here. Five board members did not vote because of conflicts of interest. The others either were not present or did not answer the roll call. Votes by the grant review group are not disclosed. The names of scientists specifically evaluating applications are not disclosed except for the membership of the grant review group.)

Text of CIRM Response on Geron Funding Procedures

Here is the text of what the California stem cell agency said concerning the unusual procedures in the approval of the $25 million loan to Geron in May 2011. The statement came in response to emailed questions from the California Stem Cell Report. James Harrison of Remcho, Johansen & Purcell of San Leandro, Ca., outside counsel to the board, prepared the statement after consulting with the chairman, vice chairmen and senior management of the agency.

Here are the questions posed by the California Stem Cell Report..

"Why wasn't the grant scored?
"Were the other applicants encouraged by CIRM in any manner to drop their applications? Were the other applicants given any sort of assurances -- including a wink or a nod -- indicating that they would be approved or have a better chance later?
"Why wasn't the grant reviewers' summary posted on the CIRM web site? Was a grant review summary ever prepared?
"Does CIRM expect that its conduct in this case will inspire confidence on the part of other applicants that they will receive fair treatment in the future? How does the unusual handling of this round square with CIRM's vows to adhere to the highest standards of openness and transparency?"

Harrison's response:

"Before I answer your questions, I wanted to provide you with some context.  As you know, the Targeted Clinical Development Award program represented CIRM’s first effort to fund clinical research, a highly specialized area of medical research.  As a result, CIRM had to develop new criteria and processes for the review of applications.  In addition, the agency hired Dr. Ellen Feigal, who has tremendous clinical experience, as Vice President for Research and Development to oversee CIRM’s clinical program.  Indeed, Ellen participated in the Grant Working Group’s Targeted Clinical Development review within days of being hired.  We recognized when we issued the Targeted Clinical Development RFA that this was an iterative process and we intended to learn from this first effort in order to refine our procedures for future rounds of clinical awards.  We have already begun to work on these refinements, including a procedure to obtain supplemental information which will be presented to the Board in August.

"It is also important to bear in mind that one of CIRM’s major goals is to collaborate with the biotechnology and pharmaceutical sectors to bring therapies from the bench to the bedside, and CIRM’s clinical trial program represents one of our most important opportunities to engage with companies.  In order to work with companies, we need to be able to assure them of CIRM’s capacity to protect their proprietary information and their ability to obtain financing.  This is particularly true for companies involved in clinical research:.  At this stage of commercial product development, many things are proprietary (e.g., FDA communications, data, clinical plans, etc.); therefore, CIRM has a significant challenge and responsibility to protect the confidentiality of the companies’ submissions as any violation could have adverse consequences for the companies, including a material disclosure, particularly for those companies that are publicly traded.  Thus, we were  mindful of the importance of protecting the confidentiality of the applicants for Targeted Clinical Development Awards.

"With that context, here are our answers to your specific questions:

"Why wasn't the grant scored?  The Grants Working Group did score the application, but given the fact that the application was reviewed pursuant to new criteria and was the only application presented to the Board, we concluded that presenting the score without context would have been confusing.  We therefore presented the GWG’s recommendation without the score.

"Were the other applicants encouraged by CIRM in any manner to drop their applications?  Every applicant for CIRM funding has the right to withdraw its application for funding before the Board considers the application.  In this case, three applicants, on their own volition, withdrew their applications before the Board meeting and therefore the applications were not presented to the Board.

"Were the other applicants given any sort of assurances -- including a wink or a nod -- indicating that they would be approved or have a better chance later?  CIRM has made no assurances, either directly or indirectly, to any applicants, including the applicants for the Targeted Clinical Development Awards, regarding future funding.  CIRM does try to assist applicants by providing feedback, where appropriate.

"Why wasn't the grant reviewers' summary posted on the CIRM web site?  A public summary was prepared and posted on CIRM’s website; given the fact that much of the information relating to the review was proprietary, the summary was, by necessity, brief.

"Was a grant review summary ever prepared?  Yes, see above.

"Does CIRM expect that its conduct in this case will inspire confidence on the part of other applicants that they will receive fair treatment in the future? Yes, we believe that the care CIRM took in protecting the confidential information of applicants serves applicants, grantees and the public.  The protection of applicants’ confidential information is critical to CIRM’s success."

"How does the unusual handling of this round square with CIRM's vows to adhere to the highest standards of openness and transparency?  CIRM’s mission is to fund research to find therapies and cures for chronic disease and injury – we believe that CIRM’s handling of the clinical trial awards serves this goal and is consistent with our commitment to transparency and to protecting applicants’ confidential information."   

After receiving Harrison's comments, we asked the following questions.

"I cannot find a summary of the reviewers comments. The only thing that I turned up was this, which is not a summary of what the reviewers had to say as provided in other grants:
http://www.cirm.ca.gov/summary-application-ct1-05168

"Perhaps you can point me to something else.

"Given the great departure from normal grant review procedures, why was
there no attempt to explain that in public at the May meeting? But
perhaps I missed it in the transcript. Thanks."

Harrison replied,

"You identified the correct summary. As I mentioned in my earlier email, because of the proprietary nature of the information, the review summary was, by necessity brief. This was CIRM's first clinical trial review and we expect to strengthen and refine the procedures for the next round, including explaining to the public how and why clinical review summaries differ from other CIRM grant review summaries."

Stem Cell Directors Moving on $243 Million Program and Industry-Friendly Efforts

Directors of the California stem cell agency will meet next week to begin the first stage of giving away $243 million in their pursuit to push a stem cell therapy into the clinic.

The immediate effort involves $3.3 million in planning grants for the second round of the CIRM disease team program. Applications are targeting cancer, HIV, Alzheimer's, ALS, Huntington's Disease, Parkinson's and muscular dystrophy, among others. The next step in the disease team effort will be much larger – $240 million, to be awarded next summer with roughly $20 million for each grant.

For the smaller planning grants to be awarded next week, 36 researchers applied for cash of up to $100,000. Nineteen were approved for funding by the grants review group, which is tantamount to full CIRM board approval. Their scores ranged from 87 to 62. One application was approved for funding but no score was listed. However, that application was ranked below the application with a score of 62. CIRM provided no explanation for failing to publish the score. Names of applicants were not disclosed in keeping with the agency's longstanding practice.

The disease team round was open to both business and academic researchers. We have queried CIRM about whether any businesses applied. The stem cell industry has been less than happy with its meager share of CIRM grants. The $3 billion agency's new chair, Jonathan Thomas, has indicated he wants to make CIRM more industry friendly.

The board meeting next week will be Thomas' first full session as chairman. The meeting was originally scheduled for two days, which was not uncommon under the tenure of former Chairman Robert Klein. But next week's session has been reduced to one day under Thomas. The agenda also seems not as fully packed as under Klein, although it has two executive sessions that could consume a fair amount of time. One deals with the evaluation of CIRM President Alan Trounson. The other deals with proprietary matters on grant applications.

Heavy agendas during the Klein era often generated quorum problems because of the supermajority requirements for voting by the board. It took so long to work through the material that competing priorities among board members meant that some – sometimes quite a few – had to leave.

Today – with eight business days before the Aug. 25 meeting – the agenda has a fair amount of background material posted, giving interested parties a chance to examine the information in a timely fashion.

Included on the agenda is a document about CIRM's ongoing issues, including security, with its self-developed, computerized grants management program, a listing of its translational grant portfolio and a plan to extend its $44 million researcher recruitment effort.

The CIRM board also has plans to take up a report from its new Intellectual Property Subcommittee.  The full board agenda contained no indication of what the report would deal with, but presumably it will involve a new, $30 million program aimed at the stem cell industry. That program will be acted on by the IP subcommittee next Monday, preceding the full board meeting. The panel's recommendation would normally go to the full board meeting on Aug. 25.

Also missing from the agenda is any explanation of the purpose of the discussion of the translational grant portfolio or analysis of the portfolio. Additionally, still to come is the latest version of changes in the grant review process for CIRM's big-ticket grant efforts as well as a job description for CIRM's first-ever chief financial officer.

The job description effort has been underway for some months and is linked closely to issues involving CIRM's controversial dual executive arrangement between the chairman and president. The new CFO will be reporting to both the president and the chairman.

The disease team planning grant item also reflected a change in the way CIRM presents the public summary of reviewer comments on the applications. The new format is more concise. Gone is the narrative format that often contained a more fulsome discussion of the applications. Here is a link to one summary on a planning grant application and another link to an application in January.

California Stem Cell Achievements: The Perspective from Robert Klein

The former chairman of the $3 billion California stem cell agency -- Robert Klein -- last week fired off an email touting the accomplishments of his tenure in a statement that had many of the earmarks of an election campaign document.

The 3,770-word missive was emailed under the auspices of Americans for Cures, Klein's stem cell lobbying group which has the same address as his Palo Alto real estate investment banking firm. Presumably the email went to a national audience.

Americans for Cures said in an introduction to the statement that Klein is now preparing "for the next installment of this magnificent effort," which could well be another statewide bond election seeking additional billions for stem cell research. Klein directed the 2004 ballot campaign that created CIRM.

CIRM will run out of cash in about 2017. It relies on borrowed money – state bonds – for its operations and grants. Interest costs double the real expenses of the program, making what appears to be a $20 million grant actually cost around $40 million.

Another stem cell bond measure is not likely to be attempted until 2014 or later. California's current financial crisis makes it unlikely that a bond measure would win voter approval any time soon.

In his statement, Klein soft-peddled the state's current economic downturn, declaring that California was under "maximum financial stress" also in 2004. (Editors note: Unemployment in California was 6 percent just before the Proposition 71 election that created CIRM. In contrast, joblessness stood at 12.1 percent in June of this year.)

Titled "Bob Klein's last words as chair of the stem cell board," the document clearly reflects Klein's view of the California stem cell world. Almost needless to say is that there are other, more measured perspectives.

Here is the email from Americans for Cures and Klein.Statement by Robert Klein, Aug. 4, 2011, on his term as chairman of the California stem cell agency

Faulty Research, Fraud Attract Page One Attention in Wall Street Journal

The Wall Street Journal today reported a sharp upturn in retractions of scientific studies and a trend in research fraud that one editor of an influential scientific journal called a "scar on the moral body of science."

The journal's page one piece was headlined, "Mistakes in Scientific Studies Surge."

The article documented instances in which hundreds of thousands of persons were treated on the basis of faulty research.

Reporter Gautam Naik wrote,

"Science is based on trust, and most researchers accept findings published in peer-reviewed journals. The studies spur others to embark on related avenues of research, so if one paper is later found to be tainted, an entire edifice of work comes into doubt. Millions of dollars' worth of private and government funding may go to waste, and, in the case of medical science, patients can be put at risk."

The Journal piece has implications for the California stem cell agency, which ballyhoos the number of papers its grant recipients publish -- some 600 or so from $1.3 billion in grants and loans. The agency also has established critical bench marks for performance that must be verified on some big-ticket grants if state money is to continue to flow to recipients. And CIRM grants are awarded on the basis of a peer review process.

Naik wrote,

"Since 2001, while the number of papers published in research journals has risen 44%, the number retracted has leapt more than 15-fold, data compiled for The Wall Street Journal by Thomson Reuters reveal.

"Just 22 retraction notices appeared in 2001, but 139 in 2006 and 339 last year. Through seven months of this year, there have been 210, according to Thomson Reuters Web of Science, an index of 11,600 peer-reviewed journals world-wide."

The article said that retractions related to fraud increased more than sevenfold between 2004 and 2009, according to an analysis in the Journal of Medical Ethics, a finding also supported by another researcher.
Naik wrote,

"Why the backpedaling on more and more scientific research? Some scientific journals argue that the increase could indicate the journals have become better at detecting errors. They point to how software has made it easier to uncover plagiarism.

"Others claim to find the cause in a more competitive landscape, both for the growing numbers of working scientific researchers who want to publish to advance their careers, and for research journals themselves.

"'The stakes are so high,' said the Lancet's editor, Richard Horton. 'A single paper in Lancet and you get your chair and you get your money. It's your passport to success.'"

Naik continued, "The apparent rise in scientific fraud, said Dr. Horton 'is a scar on the moral body of science.'"

By about 9 a.m. PDT, the article had attracted more than 200 comments on the Journal's web site. Some readers minimized the problem. Another reader said that to be a credible scientst,

"One must jump (through) many hoops in conforming to proper authorities."

Another commented about problems created by agenda-driven results. Another criticized the peer review process as simply an inexpensive way for scientific journals to fill their pages. Reader Daniel Viel said, "Bottom line: this is big business. A tremendous amount of money involved every time a study 'pushes' drugs."

New Stem Cell Agency Chair Discloses More than $3 Million in Investments

The new chairman of the California stem cell agency, Jonathan Thomas, last week reported that he has more than $3 million in investments, including holdings in an enterprise that invests in "distressed debt" and in a consulting firm that teaches businesses how to "out-behave the competition."

Thomas' statement of economic interests -- required by state law – disclosed that the bond financier has more than $1 million invested in Saybrook Capital of Santa Monica, Ca., a firm that he co-founded. Thomas is currently a partner in the firm, which deals with "distressed debt," including government bonds. He has said he will continue to be involved with the business while he also serves the part-time (80 percent) chairman of CIRM at a salary of $400,000.

In his statement, Thomas also reported that as of taking office on June 23 he had a more than $1 million investment in the Saybrook Opportunity Fund and another $1 million-plus holding in LRN, a Los Angeles-based firm that provides "legal/ethical" consulting.

LRN was founded in 1994 by Dov Seidman, an attorney and author of the book "How." On the firm's web site, Seidman said he started LRN "with a powerful vision that the world would be a better place if more people did the right thing." Since then, the firm says it has consulted with 500 companies including Pfizer, Johnson & Johnson, eBay, 3M and Walt Disney.

We asked Thomas about he came to be involved in LRN. Scott Tocher, counsel to the CIRM chair, replied via email that Thomas "knew the gentlemen who founded the company and thought it was a very interesting business model and on that basis made his investment."

Thomas' holdings also include shares in 71 different companies for a total that could range from $206,000 to $1.4 million. Most of the holdings were less than $10,000 each. Eight ranged between $10,001 and $100,000. The state disclosure law requires reporting of investment values only in broad ranges.

Thomas disclosed holdings in four pharmaceutical companies: Allergan, Gilead Sciences, Pfzer and Watson Pharmaceuticals. The investments ranged from $2,000 to $10,000. A similar investment was reported in Thermo Fisher Scientific, which makes stem cell research equipment.

Pfizer is deeply involved in stem cell research, including a $100 million commitment in the United Kingdom. The Pfizer effort includes a collaboration with Peter Coffey at University College of London. Last fall, CIRM directors awarded Coffey $4.9 million to lure him to UC Santa Barbara. Coffey is also involved in a joint $24 million research program backed by CIRM and the UK.

Thomas reported income of between $10,001 and $100,000 each from Saybrook and CSI Management Limited. Tocher said CSI is the contracting affiliate for CSIP Group of Los Angeles, a private equity firm with a primary focus on China.

Thomas' statement shows that he had a more than $100,000 share in the gross income of Saybrook Capital. Tocher said that state law required the disclosure "regardless of whether or not JT actually received any income. As is typical of private equity firms, not all income is distributed for a variety of reasons (reserves, co-investment, etc.)."

The statement also disclosed Thomas' $3,239 investment in Advanced Cell Technology of Santa Monica, Ca., a human embryonic stem cell research firm. Thomas last month sold the ACT stock at what he said was a "significant loss."

All CIRM board members are required to file economic disclosure statements, which are used to help determine whether they can vote on matters that come before the governing board or even take part in discussion. The disclosure statements for board members and top executives at CIRM can be found here. The agency began posting them on its web site just this spring. Thomas' statement is not yet posted but you can find it below. Jonathan Thomas Statement of Economic Interests

Rao Leaving the Golden State for NIH

California stem cell researcher Mahendra Rao is returning to the NIH after five years as vice president at Life Technologies in Carlsbad, Ca.

NIH Director Francis Collins yesterday announced that Rao will be director of the NIH Intramural Center for Regenerative Medicine. The new center is an effort by the NIH to speed development of stem cell therapies.

Rao left the NIH in 2006 because he was restricted in his work on human embryonic stem cells. He said he could not do the job he was hired to do so he left.

While in California, Rao was connected to the Buck Institute for Age Research in Northern California and was involved in the activities of the California stem cell agency.

The NIH did not announce Rao's salary.

$250,000 Stem Cell Agency Performance Audit to Skip its Scientific Performance

When is a "performance audit" not a performance audit? Answer: When the California stem cell agency commissions it.

Under a new law, the $3 billion state research effort is required to conduct its first-ever "performance" audit this year and again every three years. Under the law, CIRM could have stipulated that the audit would include scientific performance, but it has chosen not to do so.

Instead, the audit will primarily examine "policies and procedures" for issuing contracts, grants and treatment of intellectual property to determine how well the agency is doing.

Admirable goals but certainly not even close to a full measure of CIRM's performance. Most would agree that the paramount measure is whether the agency has made good on the promises of the 2004 election campaign that created it. To do that would require an examination of CIRM's scientific program and the results it has generated.

The agency plans to pay $250,000 for the audit, selecting a bidder next month. The deadline for firms to present their bids is Friday. At least 10 firms have expressed an interest in the contract. They include Teeb Lead Project Management Solutions, Capital Partnerships Inc. (also dba The Resources Company), Crowe Horwath LLP, KPMG LLP, IntelliBridge Partners, Moss Adams LLP, Level 4 Ventures, Inc., Thompson, Cobb, Bazilio& Associates, PC; Moss Adams LLP, Strategica, Inc., and Sjoberg Evashenk Consulting, Inc.

The requirement for the audit was contained in legislation authored by State Sen. Elaine Alquist, D-San Jose. When she introduced her bill last year, she said CIRM is "essentially accountable to no one."

Alquist initially would have placed the performance audit in the hands of an independent, third party, the state controller, instead of CIRM itself. The controller, the state's top fiscal officer, is chairman of the only state body, the Citizens Financial Accountability Oversight Committee, specifically charged with evaluating the performance of the stem cell agency and its board. Introduction of the legislation came after Controller John Chiang and the committee unanimously called for more accountability at CIRM.

The legislation  also originally provided that the audit would include CIRM's strategic policies and plans, which would have brought scientific matters under scrutiny.

But as the bill moved through the legislature, CIRM was successful in amending it to remove the "strategic policies and plans" language. Also inserted was language that the audit did not need to cover scientific performance, which gave CIRM more control of the scope of the audit.

However, CIRM took the matter further this summer. In its RFP for the audit, the agency misstated the statute, telling potential bidders that the law bars an examination of scientific performance, when in fact it does not.

Here is CIRM's language from the RFP:

"The statute specifically excludes scientific performance from the scope of the audit."

Here is the language from the law:

"The performance audit shall not be required to include a review of scientific performance."

Asked for a comment, CIRM defended the RFP characterization. Melissa King, executive director of the CIRM board, said in an email,

"The statement is correct because it is intended to convey that a scientific review is expressly excluded from the required audit areas. Furthermore, most government accounting firms do not have the expertise to conduct a scientific review. That is one of the reasons we have asked the IOM (Institute of Medicine) to conduct a study."

The $700,000 IOM study is more far-reaching, but has also been commissioned by CIRM. The IOM has a reputation for independence. However, any examination that is paid for by the agency that is the subject of the scrutiny will always face questions about its objectivity. It goes to the old saying about he who pays the piper, calls the tune.

Both the performance review and the IOM study are certain to become election campaign documents in a couple of years. CIRM survives only on money that the state borrows – bonds. And the agency is aiming for voter approval of another multibillion dollar bond measure to continue its operations beyond about 2017. To win support, CIRM and its backers undoubtedly will ballyhoo what it presumes will be favorable findings to bolster its bid for more cash.

When viewed in the context of a ballot campaign, CIRM efforts to limit the scope and shape the findings of either the performance audit or the IOM study will also undoubtedly damage their credibility.

Friday Deadline for Nominations for IOM Panel Studying the California Stem Cell Agency

If you have not yet made nominations for the 14-member Institute of Medicine panel that will assess the operations of the $3 billion California stem cell agency, this is the last week that you will have a chance to do so.

Friday is the deadline for the IOM's call for nominations.

The institute is looking for "expertise in (but not limited to) stem cell research, developmental biology, bioethics, research administration, financial structures for biomedical research, program evaluation, economics and finance, business administration, and intellectual property."

Adrienne Stith Butler, the IOM study director, said this morning that she has received about 200 nominations so far, which she said is about normal for studies that she has worked on.

You can read more about the $700,000, 17-month study here, including the formal call for nomination.

California Stem Cell Agency Chair Sells Interest in Advanced Cell Technology

Jonathan Thomas, at right, at his first CIRM board meeting in June.  Outgoing
Chairman Robert Klein is at left and co-Vice Chairman Art Torres in center. 

The new chairman of the $3 billion California stem cell agency, Jonathan Thomas, has sold "at a significant loss" the 17,046 shares he held in a California-based stem cell firm.

In response to a query from the California Stem Cell Report, Thomas, a bond financier in Los Angeles, said that his stock in Advanced Cell Technology of Santa Monica, Ca., was sold recently at 19 cents a share or a total of $3,239. Over the last 12 months the stock price of ACT has ranged from four cents to 27 cents. Thomas did not disclose size of the loss he took on his investment.

Thomas additionally said the firm in which he is a partner, Saybrook Capital, also of Santa Monica, sold all 11,364 shares it held in ACT at $0.1856 a share. Thomas said in an email,

"To put the sales in context from a volume standpoint, ACT has had a three month average daily trading volume of over 4.9 million shares. With these sales, I have no remaining investment of any kind in ACT stock. All sales were at a significant loss."

Thomas will remain a partner at Saybrook while serving as the part-time (80 percent) chairman of CIRM.

Prior to his election as chairman of CIRM, Thomas publicly disclosed his interest in ACT, which is only one of two companies in the United States with a clinical trial underway involving a human embryonic stem cell therapy(see here, here and here). He said in a statement to CIRM directors last spring,

"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."

ACT moved its official headquarters to California after passage in 2004 of Prop. 71, the ballot measure that created the state's stem cell research effort. ACT has applied for grants from the stem cell agency, but never received one. At one point, an ACT researcher publicly complained about conflicts of interest in the grant review process. CIRM, however, gave short shrift to the complaint.

ACT reportedly applied for a loan from CIRM in its recent $50 million clinical trial round. But the company was not identified as a winner when directors approved a loan to Geron in May. However, ACT is reportedly in line for an award later this year from CIRM, according to industry scuttlebutt.

Under state law, Thomas is required to file a statement of his economic interests within 30 days of assuming his position. Thomas was sworn in on June 22. He told the California Stem Cell Report on Saturday that he is "just finishing up getting all the data together. It will be good to go in the next few days."

$150,000 Buyout at Stem Cell Agency in Management Shuffle

Even minor reorganization of an enterprise can come at a price. At the California stem cell agency, rejiggering its financial management generated a $150,000 buyout for the vice president of operations.

The payment was made when the position was eliminated and a new financial management structure created, shifting more authority to the office of the chairman of the $3 billion agency and away from CIRM President Alan Trounson. All of which was done this spring, prior to the election of Jonathan Thomas as the new chairman of CIRM.

Earlier this month, we asked CIRM whether any severance or other payments had been made to John Robson when he left the agency after his job was done away with. Melissa King, executive director of the board, replied,

"When the board approved John's appointment in June 2008 (see June 27, 2008 transcript at (pages) 233-243), it included a separation payment of $150,000 if John were terminated without cause within 60 months of his appointment. This separation payment was intended to compensate John for forgoing pension benefits from his former employer to accept the position at CIRM, where his new pension benefits would not vest for 5 years (60 months) As you know, as part of CIRM's recent reorganization, the position of vice president for operations, which John held, was eliminated. Consistent with the terms of John's appointment, CIRM made a separation payment of $150,000 to John."

Under the new structure approved in early May, a chief financial officer/director of finance will report to both Thomas and Trounson. Previously, the vice president of operations reported directly to Trounson. The move adds to the controversial dual executive arrangement at CIRM, which State Controller John Chiang, the state's top fiscal officer, has said "severely compromises" oversight at the agency.

The reorganization plan said,

"The director of finance will be jointly appointed by the president and the chair and will support, and report jointly to, the president and the chair. The president and the chair will be jointly responsible for employment and compensation decisions relating to the director of finance."

The new structure also places 12 persons out of 53 paid staff at CIRM partly or totally in the office of the chair. The total includes both the chairman and one of the vice chairs, who are both on salary.

CIRM has not yet posted a job opening for the new position. At last report, the chairman and president have not yet been able to agree on a job description.

Correction

An item July 28, 2011, dealing with California coverage of the dismissal of the suit against the NIH incorrectly referred to an article in the San Diego Union-Tribune. That article was published prior to the dismissal.

Legal Prognostication: Challenge to NIH Stem Cell Funding to End in 2013

A Stanford law professor is predicting that the legal fulminations about federal funding of human embryonic stem cell research will be resolved in 2013 in favor of the NIH.

That "best guess" comes from Hank Greely, who has been pondering stem cell legal issues for a number of years.

Writing on the Law and Biosciences Blog on the Stanford Law School web site, Greely issued the usual legal caveats and then said,

"But my best guess is that, sometime in 2013, the Supreme Court denies cert in this case and this question mark over human embryonic stem cell research funding is ended – though there may certainly be other questions raised between now and then.

"It is tempting to say 'all’s well that ends well.'  The judiciary seems to be headed to making a decision in this matter that is both (in my view) clearly legally correct and good policy.  But those who have suffered from the last 11 months of scrambling, uncertainty, and expense might have a different view.  It is one of the costs of our system of government – happily, in this case, so far, not a terribly high cost."

Minimal Media Attention to CIRM Reaction to Lawsuit Dismissal

The California stem cell agency drew little notice in mainstream media coverage this morning of yesterday's court decision dismissing a challenge to federal funding of hESC research.

That was pretty much to be expected given the lateness of the CIRM reaction to the news and was not an auspicious beginning for the "communications war" discussed last month by new CIRM Chairman Jonathan Thomas.

CIRM posted a news release with its reaction around midafternoon West Coast time. The first news stories about the decision appeared about six hours earlier.

The only mention we could find this morning of CIRM's official reaction was in a story by Eryn Brown of the Los Angeles Times. Her last paragraph read:

"'We clearly think it's the right decision,'" said Dr. Jonathan Thomas, chairman of the California Institute for Regenerative Medicine, the state's stem cell funding agency. 'It will now lift the cloud that's been hanging over researchers around the country.'"

The Associated Press story, most likely the most widely used and read article across the country, contained no mention of CIRM. It appeared on the San Francisco Chronicle, San Jose Mercury News and San Diego Union-Tribune web sites.

At The Sacramento Bee, which also carried the AP story, readers searching on the term "stem cell lawsuit" would have additionally seen a press release on PR Newswire from the Family Research Council, which is no friend of hESC research or CIRM. The public relations news service delivers press releases to many news sites around the country.

(Editor's note: An earlier version of this item carried a reference to an article in the San Diego Union Tribune. That article, however, was published prior to the decision referred to in this story. )

NIH Lawsuit Reaction: CIRM Chair Thomas Touts Research 'Stability' in California

The California stem cell agency this afternoon weighed in with a reaction to dismissal of the lawsuit against federal funding of hESC research, using the opportunity to promote the different situation in California.

It was the first foray by new CIRM Chairman Jonathan Thomas, outside of his election last month, in an official CIRM press release. Thomas said in the release,

"The field of stem cell research depends on a stable source of funding, such as CIRM provides in California. Young scientists uncertain about future funding might opt to work in areas other than stem cell science, which could slow progress toward new cures. This ruling is a positive step, but with the possibility that the case might be appealed, a predictable source of state and private funding continues to be essential."

CIRM President Alan Trounson was quoted as saying,

"California scientists have been able to carry on with research toward therapies for HIV/AIDS, diabetes, sickle cell disease and spinal cord injury, among others, without worrying about disruptions in their funding. With federal dollars available these scientists can leverage results from CIRM grants to get additional federal capital and can tap into potential collaborators in other states who bring expertise that could speed progress toward stem cell-based therapies."

Stability and potential leveraging are the two themes Trounson and Thomas hit – something that CIRM has tried to sell for some time.

The news release was a bit late for East Coast daily newspaper deadlines and much too late to be included in the initial news reports, but it could pick up some traffic on the Internet. Whether it makes any stories in California news outlets will have to be determined later.

When Thomas was elected, he said the agency is in a "communications war." However, CIRM is handicapped because it is in the midst of a reorganization of its PR efforts including the hiring of a director of communications to work out of Thomas' office.

Stem Cell Scientist Says 'Blog or Be Blogged'

Paul Knoepfler
Knoepfler Lab Photo

California stem cell researcher Paul Knoepfler today published a piece in Nature about his nearly two years as a stem cell blogger – a period that included a bout with both cancer and "negative feedback," including insistence that he shut down his blog.

Knoepfler is an associate professor at the School of Medicine at UC Davis. He may well be the only stem-cell faculty scientist in the world who produces a regularly updated blog on stem cell issues.

Knoepfler writes on subjects ranging from basic science and public policy to peer review and stem cell tourism. He also brings a patient advocate point of view to the subject, which has troubled some researchers.

In his Nature piece, Knoepfler offers tips to beginngers and seeks out other stem cell researchers who may be bloggers.

Concerning his unsuccessful search for scientists who blog on stem cells, Knoepfler wrote,

"Why is this? Other scientists in academia tell me they worry that blogging would damage their careers. Specifically, they fear that colleagues would view them as amateurs, 'wasting time' on blogging, which could reduce their chances of achieving tenure. They fear the wrath of others in the field should they post the 'wrong' thing on their blog, and they worry about payback in negative grant and paper reviews. Some are concerned about attracting unruly and insulting readers' comments."

Knoepfler continued,

"There has been some negative feedback, usually expressed privately rather than on the blog itself. Some critics cautioned that I might anger 'the wrong people' in academia or at funding agencies. Others were more direct with their disapproval of some of my most popular posts — usually those that mentioned specific funding agencies or companies by name — with the implied threat that I would see papers or grant applications rejected. Some who disliked my outspokenness insisted I shut down the blog. But don't let this put you off — the threats came from a very small number of people and have (so far) been toothless. My lab is fine in terms of funding and publishing, and I recently got tenure."

Knoepfler concluded,

"Savvy scientists must increasingly engage with blogs and social media. A new generation of young researchers has grown up with an ever-present Internet. Publishers have been quicker than academics to react to this new world, but scientists must catch up. Even if you choose not to blog, you can certainly expect that your papers and ideas will increasingly be blogged about. So there it is — blog or be blogged. "

Our take: Knoepfler produces a useful and interesting blog. It is a credit to the field and to UC Davis. Ultimately, it and hopefully others like it will help to create greater understanding of some of the issues involved in stem cell research.

To the naysayers: human embryonic stem cell research needs many strong advocates if the field is to continue to advance. For scientists or academcians to turn away from blogging is to surrender the field to opponents. The absence of reliable and well-communicated information means that other, less-well-informed views will fill the void. Not all researchers should be bloggers, but those who are effective communicators should seriously consider emulating Knoepfler's pioneering effort.

NIH Wins Dismissal of Stem Cell Lawsuit

A lawsuit aimed at stifling federal funding for human embryonic stem cell research was dismissed today, but it was not immediately clear whether the decision would be appealed.

The dismissal by Judge Royce Lambreth received widespread attention from the mainstream meda and was heralded by researchers and stem cell advocates. One opponent, the Family Research Council noted, however, in a blog item by David Prentice that the debate on the legal question and issue is far from over.

From Washington, D.C., also came word that Reps. Diana DeGette, D-Col., and Charlie Dent, R-Pa., will continue to push their federal legislation to ensure that federal funding of hESC research would continue to be permitted.  Julian Pecquet wrote on thehill.com that DeGette said her legislation is "vital as ever."

Today's decision follows an earlier appellate decision in favor of the NIH. Meredith Waldman of Nature wrote,

"The appeals court in April said that, given the ambiguity of the word "research" in the text of the amendment, which prohibits government funding for "research in which a human embryo or embryos are destroyed", the NIH was "reasonable" in concluding that it could fund research using cell lines derived from embryos (which are destroyed in the process) as long as it does not fund the derivation itself.

"Today, Lamberth wrote: 'While it may be true that by following the Court of Appeals’ conclusion as to the ambiguity of 'research,' this Court has become a grudging partner in a bout of 'linguistic jujitsu,' such is life for a [lower] court.'"

Tom Schoenberg of Bloomberg News provided this background,

"In fiscal 2010, NIH spent about $200 million to fund more than 200 human-embryo research grants, the Justice Department and the institutes’ director, Francis Collins, said in court papers....The U.S. allowed 37 embryonic stem-cell lines for taxpayer- funded research in June, the most of any month this year, according to the NIH. The total number of U.S.-endorsed lines now stands at 128."

The California stem cell agency had no immediate reaction to the decision, but Amy Adams, CIRM communications manager, posted a short notice of the decision on the CIRM research blog with links to earlier items concerning the lawsuit.

CIRM's King Leaving for Stanford

Melissa King at June meeting of CIRM board. Others are
 (l to r) then Chairman Robert Klein, newly elected chairman
Jon Thomas,  and James Harrison, outside counsel to the
board. The occasion was the swearing-in of Thomas. 

One of the stalwart veterans of the $3 billion California stem cell agency is leaving in September after nearly seven years in the trenches.

Melissa King, executive director of the CIRM governing board, will depart CIRM for the MBA program at Stanford University.

King has been with CIRM since shortly after the 2004 election in which voters created the agency by approving Prop. 71. King also worked in the campaign for the ballot initiative, dealing with endorsements and media relations, among other things.

During her tenure at CIRM, she was a key figure in making sure board affairs ran smoothly. While she was visible at the 29-member board's public meetings, much of what she did is what I call "invisible work." That's the type of work whose value is only fully realized when it disappears.

Based on our observations over the past seven years, she is smart, well-grounded and hard-working. Sometimes, board members would comment on the extremely late hours she kept as she emailed material to them for upcoming board meetings.

King's last board meeting will be Aug. 24. CIRM is now seeking to find a replacement.

We wish Melissa the very best in her new endeavor. We are sure she will bring valuable insights to her fellow students and faculty at Stanford.

Implications of Perceptions of Waste and the Stem Cell Agency

The headline in The Sacramento Bee this morning read "Why raise taxes when officials squander our money?"

And prominently mentioned was the California stem cell research agency and the $400,000 salary of its new chairman.

The opinion piece was written by Dan Walters, The Bee's longtime time political columnist, whose articles are reprinted in many other newspapers around the state.

Walters was discussing efforts to raise taxes to help solve the state's ongoing budget crisis. He wrote,

"It's a valid debate to have, but voters' instinctive reluctance to pay more taxes is bolstered by a steady stream of incidents implying that the taxes they already pay are often wasted.

"Take, for example, what occurred as California State University system trustees raised student fees due to budget cuts. Simultaneously, they approved a $400,000 salary for the new president of San Diego State University, $100,000 higher than his predecessor.

"Brown publicly castigated the trustees.  'At a time when the state is closing its courts, laying off public school teachers and shutting senior centers, it is not right to be raising the salaries of leaders who – of necessity – must demand sacrifice from everyone else,'  Brown said.

"But Brown didn't utter a peep when the board that oversees a $3 billion stem cell research bond issue decided to pay its new Brown-appointed chairman – ironically – $400,000.

"So much for demanding sacrifice."

Walters continued,

"We can't solve our basic fiscal problems by just rooting out waste. But when officials squander our money, they undercut their own efforts to persuade voters to give them even more to spend."

Walters cited two other examples in addition to the stem cell agency. One involved the high speed rail project and the other state prisons.

Again, the point about all this is not the specifics on CIRM salaries but the environment in which the agency is operating. Concern about waste and/or excessive public sector salaries is not going to vanish, and the agency must deal with it if it is going to be successful in asking voters to approve another multibillion bond measure to continue its existence.

(A footnote: Walters was in error when he said Brown appointed new CIRM Chairman Jonathan Thomas. He was nominated by Brown and two other statewide officials and elected by the CIRM board.)

Klein's Role as CIRM Chairman Emeritus

Robert Klein, left, at his last meeting as chairman of CIRM.
Klein's wife, Danielle, is in the center, with newly elected
chairman Jonathan Thomas on right. 

Bob Klein, who has spent the last six-and-half years as chairman of the $3 billion California stem cell agency, is now officially chairman emeritus.

So what does that mean, we asked agency spokesman Don Gibbons awhile back, and does it carry compensation? Gibbons replied,

"The role of the chair emeritus is to be determined. If he volunteers for a special project for CIRM in the future, the agency would probably cover his expenses, again TBD(to be determined) on a case-by-case basis."

Gibbons said Klein traveled last month at CIRM expense to the BIO convention in Washington, D.C., with newly elected CIRM Chairman Jonathan Thomas "to make introductions and hand off his connections."

Klein, a real estate investment banker, served most of his term without seeking compensation. In December 2008, the board authorized a $150,000, half-time salary. Klein stopped drawing that salary on Dec. 17, 2010, and served until June 23 without a salary. Gibbons said Klein received no severance or final payment.

Here is a link to the resolution the board approved last month designating Klein as chairman emeritus and recounting his contributions to the agency.

August Deadline for Nominations for IOM CIRM Study Panel

The Institute of Medicine has set an Aug. 5 deadline for submitting nominations for the 14-member panel that will evaluate the performance of the $3 billion California stem cell agency.

In its formal announcement(see below), the institute said it is seeking "expertise in (but not limited to) stem cell research, developmental biology, bioethics, research administration, financial structures for biomedical research, program evaluation, economics and finance, business administration, and intellectual property."

The purpose of the $700,000, 17-month inquiry is to determine whether CIRM is "functioning at peak performance" and to develop recommendations for short- and long-term actions to improve its activities.

We asked the IOM study director, Adrienne Stith Butler, to clarify some of the language in the formal request for nominations. She replied, "Service is not limited to those working for government agencies (the last paragraph is intended to take care of confusion that has come up in the past about government employees serving on IOM/NAS(National Academies of Science) committees). Anyone can be nominated if there is no conflict of interest. Generally speaking, employees/board members from the sponsor have a conflict of interest."

Nominations, which can also come from any person, should include a description of the nominee's expertise and contact information. They should be emailed toStith Butler at Astith@nas.edu.

Here is the IOM request for nominations, which was sent yesterday to 35 organizations or associations. It was also circulated to the IOM and NAS membership.
IOM Call for Nominations for CIRM Study 7-14-11

CIRM's Trounson and Australian Visiting Professorship

An Australian nanomedicine center announced this spring that CIRM President Alan Trounson would be spending all of July 2012 as a visiting professor; however, that arrangement appears to be less than certain.

We queried CIRM about the announcement, asking how much Trounson, who earns $490,000 as president of the stem cell agency, would be paid as a visiting professor in Australia, the source of the compensation and whether the compensation was vetted for possible conflicts of interest.

About a week ago, Don Gibbons, the agency's chief communications officer, replied,

"Whether this happens is still under discussion, but if it does it is most likely one or two weeks, and would focus on nanotechnology and how it might impact the stem cell field, and what we should be doing about it in California."

The announcement from the Australian Centre for NanoMedicine came as a surprise to some members of the CIRM board late in June. The center is part of the University of New South Wales and was formed in April 2010. Trounson, who emigrated from Australia to take the CIRM post, would be the second visiting professor in the program. 

Op-ed in San Jose Merc: Stem Cell Agency a Bust

The headline on the op-ed article in the San Jose Mercury News read "Old Boss or New Boss, state stem cell agency still a bust."

The piece by K. Lloyd Billingsley, editorial director of the Pacific Research Institute, a conservative think tank in San Francisco, said,

"...Californians do not get what they pay for....CIRM's own scientists acknowledge that no CIRM-produced cures have trickled down to California patients."

Billingsley also focused on salaries at CIRM, including that of the new chairman, CIRM President Alan Trounson and co-vice chairman Art Torres.

Billingsley additionally quoted this writer as saying,

"Voters' expectations are certainly an important measure in assessing the stem-cell agency. At this point, I suspect most voters would not say that their expectations have been fulfilled."

The piece generated extremely modest reader reaction. It included one comment from stem cell scientist Paul Knoepfler of UC Davis. He said,

"I think this opinion piece is a bust. It is full of misleading information and bends everything to fit the extreme agenda beneath the surface. CIRM has done an enormous amount of good and as a stem cell scientist I am confident that new treatments and cures will be created via CIRM." 

Billingsley's piece appeared online July 17.

The Governor on CIRM Chair's $400,000 Salary: The Board Did It

This week's hooha over high government salaries, including a couple at the California stem cell agency, has found Gov. Jerry Brown delicately ducking any role in the $400,000 part-time salary for the new chairman of CIRM.

The flap has implications for the future of the California stem cell agency. It has triggered public comments ranging from extreme indignation to a cynical, shoulder-shrugging "what's new" reaction. It also found the governor deploring a $400,000 salary at one California state institution but declining to do so in the case of CIRM. Instead he basically said the CIRM board has to take the heat for the $400,000 salary for its new chairman, Jonathan Thomas, who was nominated by Brown for the job.

On July 7, the Los Angeles Times editorialized that the salary could doom the $3 billion stem cell agency to extinction. It reasoned that the compensation matter is almost certain to be a significant and negative issue in an election on the proposed $3 billion to $5 billion bond measure that CIRM needs to continue its operations beyond 2017 or so.

The governor amplified the salary controversy earlier this week when he opposed the $400,000 deal for the new president of San Diego State University, which has 35,000 students and a budget of close to $800 million.

Brown said the executive would be paid more than twice the salary of the chief justice of the United State Supreme Court. Brown said,

"At a time when the state is closing its courts, laying off public school teachers and shutting senior centers, it is not right to be raising the salaries of leaders who--of necessity--must demand sacrifice from everyone else."

Despite the opposition from Brown and Lt. Gov. Gavin Newsom the salary was approved by the state university board of trustees. Newsom also nominated Thomas for his $400,000 job.

The California Stem Cell Report queried both the Brown's and Newsom's offices via email about how they could oppose the salary for the San Diego State president but not be opposed to the same salary for part-time work (80 percent) at the stem cell agency, which has only about 50 employees and an operational budget of $18 million.

Elizabeth Ashford, a spokeswoman for Brown, replied via email,

"The governor has not endorsed this salary. The (CIRM) board approved the hire, and the board set the salary. These actions were independent of our office. As we've said many times on record, the governor is troubled by high public service salaries - in this case, however, it is in the board's hands."

As a courtesy, we then emailed Ashford,

"Just so you are not surprised, I expect to say something along the lines of that it was widely known that Thomas wanted $400,000 for part-time work and that if the governor didn't know that, he should have. I probably will also say something about how the $400,000 salary for the president of San Diego State was also in the hands of a body independent of the governor's office....As to why there was a difference in the reaction from the governor, I will probably suggest that it was a case of juggling a lot of balls and losing sight of one. Plus Thomas was the governor's nominee while the president of San Diego State was not."

Ashford responded,

"This is not an accurate or factual representation of the governor's relationship to the board or this decision. He does not set or influence salaries for the board, as I stated previously. Your hypothesis is just that - a theory."

The lieutenant governor's spokesman, Francisco Castillo, also responded and ducked the issue of whether the Newsom opposed the $400,000 CIRM salary. Castillo said,

"These institutions have an obligation to live within their means and, when they can't, they shouldn't be asking California's middle class to bear the cost. Unlike the stem cell institute, which the lieutenant governor is proud to have based in San Francisco, our CSU (California State University) has suffered devastating budget cuts offset by record tuition hikes and any salary increases need to be carefully scrutinized in that context."

Controversy over compensation is not peculiar to government. Some segments of the public are not pleased by the 35 percent increase in the median pay of CEOs of Standard and Poor 500 companies in 2010. That compares to a 1.6 percent decline in average hourly earnings of U.S. workers over the last 12 months ending in May. It all adds up to a public opinion environment unfavorable to enterprises perceived as greedy i.e. rewarding executives with excessively high salaries. And that translates to a critical and major minus for CIRM's hopes of winning voter approval of another bond measure.

As for the governor's inconsistencies, here is a personal footnote from Brown's first term in office. In 1974, shortly after Brown was first elected governor, I was the press aide for the Brown transition team. The tiny group had moved into offices in the old State Capitol, which had been declared an earthquake hazard during a campaign to approve tens of millions of dollars for its reconstruction.

A year or so earlier, Brown, then secretary of state, had occupied offices in the Capitol. But when the hazard notice was publicized, he piggybacked on the reconstruction campaign to move out to private offices nearby, declaring that he would not endanger his employees by compelling them to work in an unsafe building. Virtually all of the other occupants of the Capitol remained in their offices.

A UPI reporter recalled the news release in which Brown announced his flight from the Capitol and wrote a somewhat embarrassing story. Brown was privately philosophical about the story. "That's the price of excessive rhetoric," he said.

San Jose Mercury News: Stem Cell Bond Proposal Is Financially Spacey

The San Jose Mercury News today said that California is in "no position" to make an additional multibillion dollar bet on the California stem cell agency and its efforts to come up with a new stem cell therapy.

Commenting on the possibility that CIRM would seek voter approval of another mammoth bond measure, the newspaper said in an editorial,

"What planet are these guys from? "

The newspaper continued,

"Going back for more would make no sense regardless of the economy, but even contemplating it now shows either ignorance or an incredible disregard for the magnitude of California's financial crisis. How could the agency ask for an additional $3 billion when the state is trimming more than $10 billion from essential services?

"The stem cell agency has fulfilled its promise to build a research infrastructure that would attract some of the world's greatest scientific minds. But Californians have yet to see any tangible evidence that their investment is producing the cures that were also promised. And even if they had, $3 billion is a substantial investment for one state to make in a worldwide research challenge."

After seven years, the newspaper said,

"...(T)he research should be far enough along for venture capitalists to see the wisdom of investing."

The editorial's starting point was the kerfuffle over the $400,000 salary of CIRM's new chairman, which the newspaper withheld judgment on. What caught our attention is that the newspaper seem surprised by what it called a "real eye-brow raiser" – the proposed bond measure.

The bond proposal has been publicly known for many, many months. Much of the CIRM funding is being spent in the Mercury News' backyard. For the newspaper not to be aware of the plan says a great deal about the state of coverage of the agency by the mainstream media. It also reflects the current sad state of the newspaper industry in general.

Time to Nominate Members for the IOM Study of the California Stem Cell Agency

The prestigious Institute of Medicine is looking for a few good men and women to evaluate whether the $3 billion California stem cell agency is operating at "peak performance" and to determine whether improvements are necessary.

While the IOM has not yet put out a public call for nominations, it has asked for some from the agency, which is paying nearly $700,000 for the 17-month study. Adrienne Stith Butler, study director for the CIRM project, said, however, anyone can suggest a person for the panel, including biotech firms, scientists and the public. Fourteen persons are to be named to the study panel this summer.

According to an IOM document on the study process, the institute is looking for a range of expertise and a "balance of perspectives." Provisional committee members will be screened for conflicts of interest. The IOM distinguishes between conflicts and points of view.

According to the IOM,

"A point of view or bias is not necessarily a conflict of interest. Committee members are expected to have points of view, and the National Academies attempt to balance these points of view in a way deemed appropriate for the task. Committee members are asked to consider respectfully the viewpoints of other members, to reflect their own views rather than be a representative of any organization, and to base their scientific findings and conclusions on the evidence. Each committee member has the right to issue a dissenting opinion to the report if he or she disagrees with the consensus of the other members."

The largest expenditure in the $700,000 IOM study budget is for salaries, $261,516. Other expenditures include program direction, management and space costs, $135,346; general administration costs, $121,482; travel, $103,964, with reports, technology/communication, meeting and other expenses making up the remainder.

The initial work on the study appears to be information gathering and selection of members of the study committee. The first public meeting is expected to be held this fall in Washington, D.C. Nominations for the study panel can be emailed to Stith Butler at Astith(at)nas.edu.

Governor Defied; State College Trustees Approve Controversial $400,000 Salary

You could say so much for political power.

Trustees of the 19-campus California State University system today defied Gov. Jerry Brown and the lieutenant governor and approved a $400,000 salary for the new president of San Diego State University.

Both Brown and Lt. Gov. Gavin Newsom, both of whom are among the trustees, opposed the salary, although both men have remained mum on the $400,000 salary of the new chair of the California stem cell agency, who they nominated in June.

Laurel Rosenhall of The Sacramento Bee reported that Newsom noted that the increase came on the same day as undergraduate tuition was boosted $1,000 by trustees.

Rosenhall wrote,

"'I caution us today with these two decisions, and I feel compelled to make this point,' Newsom said. 'There are plenty of people watching, and people we need as supporters.'

"Newsom said he had heard from two lawmakers earlier in the day who were concerned about the proposed salary hike. One of them, state Sen. Ted Lieu, posted his thoughts on Twitter:

"'To CSU full board, let me be very clear: I will find it extremely difficult to vote to restore CSU funding if SDSU Prez salary is approved,' Lieu wrote."

$400,000 Salary Riles Governor But Not at Stem Cell Agency

High public salaries made the news again today in California. And again it involves a $400,000 pay package but not at the California stem cell agency.

This time it involves San Diego State University. Gov. Jerry Brown says the school, which has 35,000 students and a $794 million operational budget, doesn't need to pay $400,000 for a new, fulltime president. Ironically, Brown and other state officials nominated a man who is being paid $400,000-a-year for part-time (80 percent) work as the new chairman of the California stem cell agency, which has an operational budget of $18 million and a staff of about 50.

According to The Sacramento Bee, Brown wrote the California State University trustees, who are considering the salary today,

"I fear your approach to compensation is setting a pattern for public service that we cannot afford."

He continued,

"The assumption is that you cannot find a qualified man or woman to lead the university unless paid twice that of the Chief Justice of the United States. I reject this notion.

"At a time when the state is closing its courts, laying off public school teachers and shutting senior centers, it is not right to be raising the salaries of leaders who--of necessity--must demand sacrifice from everyone else."

The point in all this salary hooha is not whether the chairman of CIRM or San Diego State really deserves the salary. It is how it is perceived by large segments of the public, in this case, including the governor. In the case of CIRM, the salary flap is also likely to have an impact on its ability to pass another multibillion dollar state bond measure to continue its existence.

We are querying the governor's office about how it squares the San Diego state salary letter with Brown's nomination for CIRM chair. So far, the governor's office has failed to answer other, earlier queries concerning Brown's role in the CIRM chair nomination process.

For out-of-state readers, the California State University system is separate from the University of California.

State Treasurer's Office Says Stem Cell Report 'Violated Fundamental Principles of Journalism'

Tom Dresslar, a spokesman for state Treasurer Bill Lockyer, is sharply critical of some of what has appeared on the California Stem Cell Report concerning Lockyer's role in the election of Jonathan Thomas as chairman of the California stem cell agency.

Following publication of the "price of defiance" item yesterday, we emailed Dresslar and asked him if the treasurer's office would like to make a comment that would be carried verbatim.

Here are Dresslar's remarks. Our response follows.

"Crock conspiracy theories from the shadows might serve the interests of folks who want to generate 'public outrage,' but they do zilch to advance California's stem cell enterprise. Unfortunately, the Stem Cell Report has chosen to give voice to the black helicopter set and, in the process, violated fundamental principles of journalism.

"On multiple occasions, this blog -- either on its own assertion or though anonymous sources -- has reported that in advocating the selection of Jonathan Thomas as ICOC chairman, State Treasurer Bill Lockyer issued an implicit warning to the board: If you don't kowtow to me, the stem cell institute will have a heckuva time getting bond funding any time soon. Not once did the Report contact this office and seek comment before publishing this bunk.

"'Politics and the Price of Defiance (July 11)' provides the latest example. 'Implicit in some of the lobbying by (Governor Jerry) Brown and Lockyer was the likelihood that failure to follow their lead could endanger bond funding for CIRM.' The item went on to hint that it was not so far-fetched to think that Brown and Lockyer were prepared to engage in 'Tammany Hall tactics.' To bolster that point, it cited the example of an assemblyman who alleges he faces office budget cuts
because he voted against the recently adopted state budget. After the item ran, I received this email from you:

"'Today I ran an item on the lobbying on Thomas by Brown and Lockyer. If your office would like to comment, I would be glad to carry any statement verbatim. Thanks.'

"That's not the way journalism works. You don't throw mud on someone and offer to let them try to clean it off after the fact. You give them the opportunity to defend themselves against the mud-throwing. I understand blogs aren't newspapers. But that doesn't absolve blog writers from the responsibility of adhering to basic tenets of fairness and journalistic integrity.

"To set the record straight: Lockyer engaged in no threats -- implicit, implied, hinted, winked or any other kind -- as he advocated for Thomas. Additionally, your readers should know that, while Lockyer sells stem cell bonds and other state bonds, he has no power to refuse to sell any
type of bond.

"Lockyer cares deeply about CIRM, its mission and its success. That's why he nominated Thomas. That's why wrote to his appointees on the ICOC in support of Thomas. Both candidates were exceptionally well-qualified. But considering the qualifications set forth in Proposition 71, and the challenges CIRM faces, Lockyer strongly believed Thomas was the best man for the job. And, in contrast to the other candidate, Thomas was prepared to give the job his all, not half his all. That's what CIRM needs and deserves."

Here is the response from the California Stem Cell Report.

"We respect both Dresslar's professionalism and his frank and forthright opinion. He has been both responsive and accessible to the California Stem Cell Report. 

"However, this blog is first and foremost an expression of opinion and analysis. The traditional reporting that we engage in is there because the mainstream media simply does not cover one of the more extraordinary experiments in state government, the California stem cell agency. 

As a matter of opinion and analysis, it is fair to say that in our judgment some of the actions by the state treasurer can be construed to contain an implicit warning that CIRM's funding could be affected negatively. Certainly some of the CIRM board members took it that way.

"In retrospect, it would have been preferable to have a comment from the treasurer's office in the original post on June 21. However, it is very unlikely that it would have materially altered what we wrote. Did our accounts amount to 'mud-throwing?" Hardly. Whatever Lockyer and Brown did was within their responsibilities as elected officials. To fail to support vigorously their nominee for CIRM chair would be more reprehensible in the eyes of many.

"Finally, one of the operating principles of this blog is to allow and encourage those with differing views extraordinary access to this web site. We have a standing offer to leaders of the California stem cell agency, including all its directors, and others to write on California stem cell matters with the promise that their words will be carried verbatim. That is an offer you will not find from the mainstream media or its opinion writers. We have done that as the result of more than three decades in the news business and two years as a press aide to the governor of California. From that experience, we learned that short shrift is often given to many voices in the public arena. The California Stem Cell Report can provide much greater access. And we would like to encourage its full utilization."

Reader Calls for More Context and Comparison on CIRM Salaries

Jim Fossett filed a comment on the "Salary Hooha" item that deserves more attention.

Here is one key paragraph from his remarks:

"The coverage of CIRM salaries is a cheap shot calculated, and quite successfully so, to incite public outrage without providing any context or consideration of what other people doing similar kinds of jobs get. None of this context appeared in any of the original coverage and it should have."

Fossett makes a good point about the need for context by the mainstream media in reporting public salaries. We differ with him about inciting public outrage. There is no need to incite public outrage about public salaries. It has existed in abundance for years, for good and bad reasons. It is not likely to vanish, no matter how much context and comparison is provided.

CIRM is not alone in being targeted in the media in the past week or so. A proposal to pay the president of San Diego State University $400,000 and a press release on state salaries statewide also triggered hostile public commentary.

For the record, here is a list from The Sacramento Bee of the top five public salaries in California in 2009, all of which seem dubious to the California Stem Cell Report, particularly the coaches' salaries. However, that's because we believe the UC system has no business in bigtime intercollegiate athletics – that despite enjoying many football and basketball games while at UCLA. But that is a topic for another web site.

• Jeff Tedford, UC Berkeley football coach, $2,338,409.39
• Benjamin Clark Howland, UCLA basketball coach, $2,135,188.22
• Timothy H. Mccalmont, UCSF professor of medicine, $1,902,464.33
• Philip E. Leboit, UCSF professor of medicine, $1,854,158.22
• Ronald Busuttil, UCLA professor of medicine, $1,782,044.62

Fossett's comment can be seen in full at the end of the "Hooha" item.

Politics and the Price of Defiance

The California stem cell agency last month had a bit of instruction in politics when directors chose a new chairman.

Both California Gov. Jerry Brown and state Treasurer Bill Lockyer made an extra effort – beyond their nominating letters – to assure the election of their man, Jonathan Thomas, a Los Angeles bond financier, as chairman. We noted a few days ago that such episodes are not uncommon when an enterprise is reliant on public funding.

Implicit in some of the lobbying by Brown and Lockyer was the likelihood that failure to follow their lead could endanger bond funding for CIRM.

Some might think that possibility was remote, that Tamany Hall tactics are just a part of the past. Those who favor that view might want to consider the case of Democratic Assemblyman Anthony Portantino. He voted no on the recently passed state budget in defiance of legislative leaders in his own party.

Now he is being punished. His staff is being sent home for a month of unpaid leave, and he is being threatened with a cutoff of both his mail service and office supplies, according to The Sacramento Bee. Such are examples are not uncommon in California politics in one form or another.

It is something to think about as readers ponder the wisdom of CIRM directors in electing Thomas as their new chairman.

Correction

On June 23, Robert Klein, then chairman of the California stem cell agency, said that the new chairman of the enterprise would be paid $390,000 to $395,000. However, the agency says the correct figure is $400,008.