"Good" Audit, Poor Cooperation at CIRM

Should an auditor hired by a state agency refuse to provide copies of information about that agency to the one of the key fiscal watchdogs for the state of California?

One would think not. After all, aren't all state agencies supposed to be working together?

That situation involved the California stem cell agency and the auditing firm, Gilbert Associates, that it hired to conduct an audit as required by law. The state Controller's office is the agency that attempted to secure copies of the information. But Gilbert refused to provide the copies, arguing that the information was proprietary. Based on statements from CIRM and the controller's office, the situation has been cleared up.

But it does not augur well for CIRM's responsiveness to continuing concerns about its openness and transparency.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumers Rights of Santa Monica, Ca., said,

"CIRM would have us believe that the audit demonstrates the institute operates within the common practices of state agencies. Other state agencies don't hire auditors who stiff the controller's office when it's operating on behalf of the people of California."

"The bottom line is simple. CIRM is a state agency; they must act like one. I guess CIRM management needs to engrave that motto on their foreheads."

We should not have to remind readers that audits vary widely. And some auditors feel unwilling to bring bad news to the enterprises that hire them. The headlines were full of news a few years ago about collapsing companies with beautiful audit findings.

Here is a link to the San Francisco Chronicle story by Carl Hall on the audit findings. Here is the CIRM press release, the controller's report and the audit itself, which covers only the 2004-2005 fiscal year.

Black Leaves Oversight Committee

Gov. Schwarzenegger has the opportunity to make another appointment to the Oversight Committee of the California stem cell agency with the departure of Keith Black, director of neurosurgery at the Cedars-Sinai Medical Center in Los Angeles.

Black resigned quietly earlier this year. No announcement was made of his departure.

A spokeswoman for the agency said Black resigned because of "time constraints."

Looking Inside CIRM's Planning

Embedded in the California stem cell agency site are significant documents that provide insight and information dealing with how the agency will give away $3 billion.

For example, one summary from a May 25 meeting discusses funding mechanisms involving business and nonprofits as well as whether new embryonic stem cell lines should be the focus of early funding.

The document is intended to be comprehensive concerning discussion at the meeting but does not imply any commitment by CIRM. However, if you are interested in where the $3 billion will go or want some of it, you should watch the strategic planning process carefully. And make your voice heard as well. The agency is moving rapidly.

Here is a sample of interesting themes emerging from the May planning conference on funding structures:

Partnering with other agencies, much as does the Juvenile Diabetes Research Foundation, to extend the reach and impact of funding.

Emphasizing early phase discovery research with a strong focus on "world-class science."

Shaping the nature of grant applications prior to receiving them as do other funding organizations.

And there was this interesting caveat:

"CIRM must be aware that it will be difficult to put out large numbers of grants without potentially exhausting their review committee. For example, JDRF funds about $120M in research per year to about 500 investigators, has about 15 different types of grants, and used 150 scientific reviewers last year. That is far more reviewers than CIRM has."

At another point, the question of renewed federal support for ESC emerged, although questions were raised about the impact.

"Given the flat state of NIH funding, funding will still be tight even if the bill passes. It is not necessarily innovative to derive new ESC lines so funding may be difficult to come by," the document said.

The item below outlines several other documents as well. In the coming months, we will continue to alert you to planning documents as they are posted on the CIRM Web site.

CIRM's Strategic Plan: A Guide (v1.0) to Planning Documents

Here are links to interesting and fresh documents related to strategic planning by the California stem cell agency. During the months ahead, we will continue this regular alert to significant planning documents as they are posted on the Web.

Cord blood -- "Overview of Current Umbilical Cord Blood Banking, Clinical, and Research Activities" – Document reports a suggestion that a "donor-sibling cord blood banking service" be created for California families and that NIH cord blood funding has declined from $21 million in 2002 to $18.6 million in 2006.

ESC Databanks -- "Overview of Current ESC Databanks" – Covers many efforts worldwide. Topics for CIRM include whether there is "a need for CIRM to provide an information resource on human embryonic stem cell lines" and whether CIRM should "create its own ESC characterization database using a best practices approach."

CIRM mission statement proposals – This 18-page document includes proposals presented to the Oversight Committee as well as ones suggested by committee members. Sample from one committee member: "Set the highest standards for scientific integrity, openness, collaboration and technology transfer."

Previous postings on the California Stem Cell Report related to CIRM planning include: questions being asked, Interviewees and their answers, Hall's discussion questions, planning Web page , report from last fall's scientific conference, formal kickoff/overview , clashing interests.

CIRM Strategic Planning: The Questions Being Asked

Here are the questions that are being asked by CIRM as it interviews scores of persons around the country during its planning process. We are posting it verbatim because it does not seem to be available on the CIRM Web site.

The text follows:

Thank you again for your willingness to participate in our interview process for the CIRM scientific strategic planning initiative. We are asking all interviewees to answer questions 1 through 3, as well as 13, but would greatly appreciate your input on the remaining questions on which you would like to comment.

This template is intended for your use only; there is no need to return it to us.

1.In ten years, what will success for the Institute look like?

2.What specific objectives should the Institute pursue in order to realize that vision of success? What are concrete measures of progress along the way to those objectives?

3.What are the most pressing needs that the Institute must address immediately to achieve its goals?

4.Is there "low hanging fruit", that is, opportunities for quick, visible, low-risk successes?

5.What is the best way to foster stem cell research that achieves treatments and diagnostics? Should we target specific diseases for funding or sponsor more broadly based initiatives within which a variety of diseases can be accommodated? If we decide to fund specific diseases, how do we decide how and when to fund to fund that research?

6.Are there specific funding structures (particularly novel ones) that will best help us achieve our objectives?

7.How do we balance funding for targeted research versus funding for discovery?

8.How far along the basic / translational / clinical research continuum should the CIRM aspire to move?

9.When and how should we involve the private sector?

10.How will we know when and how to advance findings into the clinic?

11.How can we encourage collaboration particularly between basic and clinical scientists to advance the science into the clinic?

12.CIRM is allowed to spend up to 10% of its allocated funding for facilities. How important do you consider this as a focus for spending? How can this money best be used?

13.Is there anything else you would like to add or any questions you would like us to address going forward?

Still Simmering: The Two-Boss Brew at CIRM

(This correction was posted 6/23/06:David Serrano-Sewell, CIRM Oversight Committee member, corrected us on the "Two-Boss Brew" item June 20.

(Here is what Serrano-Sewell said,

"The ICOC approved (13-5 vote) the 'internal goverance policy.' As you note, the amended policy granted to the Chair the authority to concur with the hiring of certain CIRM staff, Senior Officers. The proposed policy was amended to limit the Chair's concurrence authority to two Senior Officers in legal and communications. Please note, the adopted policy does not grant to the Chair the authority to fire or concur in the firing of those Senior Officers.


("Arguably, the policy is confusing. The President could hire a Senior Officer with the Chair's concurrence and then fire that same Senior Officer without the (Chair's) concurrence."

We thank Serrano-Sewell for heads up. We appreciate all such messages and try to correct mistakes promptly.)

For Robert Klein, chair of the California stem cell agency, it was a "watershed issue." For Zach Hall, president of the agency, it was a matter of no comment.

The issue was the "two boss" conundrum at CIRM. One member of the Oversight Committee, Jeff Sheehy, said, "This is the sloppiest thing I ever heard of."

The issue surfaced earlier this year over seeming picayune matters (see "dualing execs"). But it has resurfaced again and does not seem likely to go away.

The latest forum was this month's meeting of the Oversight Committee, which oversees CIRM, hires the president and elects the chair. Both have major overlapping responsibilities by law but the conflict has boiled down nominally to to such things as travel, office assignments and concurrence on hiring senior staff.

It was the latter that raised fresh questions about the future dynamics of CIRM. While the agency will administer $3 billion in funding, it is a small organization, now only about 20 employes. By law, it is limited to 50, which means that two strong executives can rub against each other with great regularity. Hall and Klein are two such men.

During the debate over CIRM's internal governance policy, terms like "crazy" and "Rube Goldberg" policy were bandied about, according to the transcript.

Sheehy was perhaps the most vociferous in confronting the situation. At one point, he said,

"We basically set up the situation where someone is going to have two bosses with equal authority....I work for people, so I kind of have a sense of what this means. and this is insane. I couldn't work in that environment. and I don't know why we would want to set up that structure" which he called "completely, totally untenable."

Sheehy was among those concerned about the implications for CIRM when it comes time to find replacements for Hall or Klein or, for that matter, finding top executives who are comfortable serving two masters – not to mention the 29-members of the Oversight Committee.

Sheehy said,

"The more we muddy these (management) lines, the more dangerous it is. We're making compromises. Even having to have these things negotiated out must make the job of the president extremely difficult. And I, frankly, think we should have taken care of this a long time ago. But if you guys (oversight committee members) want to go point by point over the next God knows how many years with how many presidents and fight over office space, travel allowances, hiring of staff at this level, I think we're not going to be able to do the business that we were put here to do."

Ed Penhoet, vice chair of the Oversight Committee, and others stood behind the bifurcated management. Penhoet said Klein was really an "executive chair." (Penhoet did not mention court testimony last winter by Klein, who operates his own financial firm, that he does not consider himself a state employee because he does not accept a salary.)

Others noted that the language of Prop. 71 compels a certain duality. And still others pointed to organizations, such as academic health institutions, that have executives with overlapping responsibilities.

David Baltimore, an Oversight Committee member and president of CalTech, said,

"You can't analyze this situation as you would any other organization because no one would ever set up an organization that has split authority like this except Bob, I'm afraid, because that's not an efficient or effective way to run an organization, to have two heads of two different elements that have to interact. The notion of having a CEO is that the CEO has complete control of the organization. We're not going to get there because we're not going to amend Prop. 71."

Hall's only comment during the discussion was "I have no comment."

Klein said concurrence on hiring senior staff was "critical" to his position. He later agreed to limit concurrence on the hiring of the top executives for communications and legal matters. He resisted suggestions that concurrence be changed to consultation.

"Otherwise I'm not going to feel like I can perform for this board, whether it's a legal function, the financial function, communications areas. I think it's a watershed issue."

Ultimately the Oversight Committee voted 13-5 to give Klein concurrence on the hiring of the two top legal and communications executives. That also gives him concurrence rights on firing them. The committee also, on a voice vote with Sheehy the only audible no, approved giving Hall office assignment responsibilities. On travel, by the same vote, Klein will only need approval of travel from Hall when it exceeds the budget approved by the Oversight Committee for Klein's office.

Early in 2005, the stem cell agency hired Hall, then 67 and a well-respected scientist and skilled administrator, as its interim president for one year. Ultimately he was hired as permanent president following an international search that cost $205,289. We have long suspected that the search ran into difficulties because the top candidates detected the underlying problems with CIRM's two-boss structure. Hall meanwhile was getting a close look at CIRM and Klein and probably thought the issues could be overcome. And CIRM was engaged in a truly remarkable, once-in-a-lifetime endeavor that was hard for Hall to pass up as he neared retirement. Of course, that scenario may be totally wrong but it seems to be reasonable speculation.

Discussions of the top management issues at CIRM preceded the disclosure this month that Klein was not wearing just one executive hat. He is also head of an advocacy group called Americans for Stem Cell Therapies and Cures. As its head, he sent out national emails excoriating a top California legislator as an "ongoing threat" to CIRM for carrying legislation to tighten oversight of the agency. The language in the letter went beyond the Oversight Committee's official position. CIRM said it had no comment on the Klein letter, saying he did it on his own time.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumers Rights of Santa Monica, Ca., told the California Stem Cell Report,

"Klein needs to decide whether he wants to be ICOC chairman or chairman of his advocacy group. I don't see how he can do justice to both effectively."

CIRM and WARF are Talking Patents

The following correction on this item ran on June 27: In a June 20 item, we incorrectly described the Wisconsin State Journal as the Madison State Journal.

The stakes are global in the Wisconsin vs. California stem cell patent fight.

So says reporter David Wahlberg of the Madison State Journal , who explored the implications of the dispute in a piece that reported discussions are currently underway between the California stem cell agency and the Wisconsin Alumni Research Foundation, which holds the patents.
The story said:

"Mary Maxon, (Vice Chair Ed) Penhoet's deputy at CIRM, said last week that 'there are currently no intentions of suing WARF.' But, she added, 'We are concerned.'"

Wahlberg also wrote:

"One possibility, said CIRM's Maxon, is that the institute might pursue an omnibus license with WARF that would apply to all of its grantees and commercial partners."

The story was rewritten by The Associated Press and distributed nationally. That version appeared in the San Jose Mercury News.

Dateline Juncalito: News for Blog Geeks Only

This blog is now coming to you from the cockpit of Hopalong, a sailboat anchored in the Sea of Cortez off a tiny Mexican community called Juncalito. Small it may be, but not so small that it is without a motto: "Juncalito, a sleepy little drinking village with fishing problem."

Perhaps 50 to 100 Mexicans and gringos live in the "barriocito." All the homes are off the grid – generating electricity either through solar panels or generators. The locals dread the possibility of electrical lines running to their modest homes. They fear rising land values that would push rents higher. Many of the gringo residences amount to no more than a trailer and large veranda shaded by open, palm-thatched structures known as "palapas." No phone service, cellular or otherwise, is available. The community has no stores or services, but does include a small church.

We are connecting from the boat to the Internet via a free Wi-Fi connection. One of the norteamericanos set up the connection through a satellite TV service. Signal repeaters are mounted on two of the homes. Powered by batteries that depend on solar power, the Wi-Fi station is shut down each day at 4 p.m. and comes up sometime in the morning – usually, but not always. Occasionally it does not come up at all. Signal quality is not always the best and sometimes connections are dropped. But the California Stem Cell Report is not complaining. It saves a nearly 40 mile trip into town.

CIRM News Coverage: Inertia, Limits and Business-as-Usual

The routine occurred yesterday, and California newspapers were on it like a dog on a bone.

California newspapers consumed many inches of valuable news space for two pedestrian legal events while at the same time largely ignoring more far-reaching and significant news concerning the California stem cell agency.

The routine matter involves litigation against the agency, and the coverage illustrates nicely how the media works or doesn't work.

Here are the specifics. The losers in the lawsuit against CIRM filed their expected appeal. The state then filed its expected move to expedite proceedings. Nothing changed. There were no surprises. It would have been real news if neither event occurred.

So why was the predictable legal action covered while California newspapers have largely ignored more important developments at the agency, including its unprecedented $1 million gala fundraising effort and what also appears to the unprecedented case of a top state agency executive using his own nonprofit advocacy group to lobby the legislature? This is not an idle musing on our part. Others are wondering, including some members of the CIRM's Oversight Committee.

The answers range from inertia to business-as-usual to the internal structure of newsrooms.

The first difficulty newspapers face in covering the stem cell agency is where it fits. Newsrooms are generally organized along lines that have changed little for decades. Coverage responsibilities are broken into turf areas. Generally politics and state government are covered by the Capitol bureaus. Business by the business news departments. Science by a reporter working on the city or state/national desk. When a business reporter branches out into a story involving a state agency, woe to him or her unless all the appropriate editors have been consulted in advance. Otherwise turf hackles will rise.

CIRM is a cross-over story. It has powerful elements involving politics, government, business, science, health, not to mention religion and ethics(that is a often city-side story). It does not fit neatly into the traditional news definitions. Resolving the differences and deciding on a consistent approach to coverage requires thought and work from editors who are hard-pressed by their daily deadline chores. So decisions are put off. It is simply easier to muddle along in the same old way, which, we should add, is one of the reasons why newspapers have lost significant readership over the last few decades.

CIRM is novel, which should make it a "good" story. However, novelty can again pose barriers. It is simple to cover an election, relatively speaking. It is has been done hundreds of thousands of times. Most of the questions about the nature of the coverage have been asked and answered, perhaps not as well as some would like, but to the satisfaction of many in the news industry. But then comes a state government story (or is it a state government story?) about bigtime fundraising by a state agency. Is it really a historical first? Is it illegal? Is it wrong? Who says so? (After all, reporters cannot make assertions on their own; they must quote an authority.) Editors want black and white answers. There is a low tolerance for ambiguity in the news business. Meantime, the editor tells the reporter, you are already late on that weekend piece I asked you to do. Let's talk later about this other story, if it is a really a story.

State agencies, such as CIRM, additionally have traditionally been given short shrift by Capitol bureaus, which prefer the public arena of the legislature and the high profile of the governor. It is rare to find a state agency that is covered consistently and thoroughly.

In recent weeks, we can add coverage of the June primary election to the mix. Newspapers, which have been squeezing their staffs hard as profits dwindle, are particularly hard-pressed during major election periods. They require diversion of resources to election matters. Secondary matters are put off, sometimes forgotten.

Coverage of CIRM is not easy. It operates in a public backwater – not in the hallowed halls of the Capitol, where reporters are feed and often pampered informationally. In contrast, important CIRM meetings are scattered around the state, requiring expensive trips by reporters. The issues are gray. The subjects are difficult, complex and unfamiliar for most newsies. (What do you mean, there is a patent thicket?). The stories are boring unless skillfully told.

Newspapers covered Wednesday's CIRM lawsuit developments because they fit easily into the traditional definitions of news. No matter that the filings are of little consequence. They fit what newspapers do and have done and will continue to do.

What does all this mean for coverage of the California stem cell agency? The immediate impact comes from the beginning of the summer vacation period. Editors and reporters who normally handle the CIRM stories may not be around. So expect less attention during the coming dog days. The election will continue to consume news space (more limited overall nowadays for profit reasons) as well as newsroom resources that otherwise might be used to cover CIRM. At the same time, the agency is beginning to be old news. After all it has been around for 18 months, which is sometimes more than a lifetime for a news story. Not to mention that is only one of many subjects most reporters are required to cover. Overall, we can expect stabilized or waning coverage of the agency at least through the fall, short of a major scandal or an example of aggressive, first-rate reporting that would stimulate the competitive juices of other newsies. If a scandal develops, it will generate a feeding frenzy that will will ignore any constructive work that CIRM has done.

All this said, we are not denigrating the efforts of the reporters, or even the editors, who have worked diligently on stem cell coverage. But we all operate in environments that limit and shape what we do. Newspapers are no different.

Here are links to the latest stories about the litigation:
Reporter Jim Downing of The Sacramento Bee, Lee Romney of the Los Angeles Times, Steve Johnson of the San Jose Mercury News, Terri Somers of the San Union-Tribune, Rebecca Vesely of the Oakland Tribune. Here is CIRM's press release.

Background Statement from Americans for Stem Cell Therapies and Cures

Here is the background statement by Americans for Stem Cell Therapies and Cures re the letter by Robert Klein concerning SB401. The statement provides some background on the organization as well. (For more, see the Klein-Ortiz item.

The statement begins here

June 7, 2006

Statement of Americans for Stem Cell Therapies and Cures


The statement issued on June 5th, 2006 by Americans for Stem Cell Therapies and Cures (a 501(c)4 organization dedicated to advancing education, patient advocacy, and political support for stem cell research) represents only the views of the Proposition 71 campaign committee organization (originally entitled Californians for Stem Cell Therapies and Cures). The three Directors who signed the statement were Directors during the campaign and they remain Directors. The name of the organization has been changed to indicate a reorientation of focus to national educational needs on stem cell research, as well as the need for reform of the federal restrictive policies that bar effective National Institutes of Health funding of embryonic stem cell research. The organization also strongly supports the expansion of regenerative medicine (including embryonic stem cell research) in other states, as well as continuing its support for stem cell research in California.

No Other Organization Involved in the Statement

No other organization was involved in formulating the statement, directly or indirectly. It represents the position of the Proposition 71 campaign committee as articulated through the renamed 501(c)4. Specifically, the Directors – including the Chairman of Americans for Stem Cell Therapies and Cures, Robert Klein – hold a number of other positions with patient advocacy and/or educational institutions which did not participate in formulating this statement. For example, Robert Klein is a member of the International Board of the Juvenile Diabetes Research Foundation; but, this statement did not involve and it was not formulated with any of their staff or other Board members. Similarly, this statement did not involve and it was not formulated with any of the staff or other Board members of the ICOC or the CIRM. This statement represents the personal viewpoints of the Board members of Americans for Stem Cell Therapies and Cures as expressed through the statement of this entity. Members of the Board were polled to confirm the content of the statement before it was released.

Prior Statements of the Role and Scope of Americans for Stem Cell Therapies and Cures

The current mission of Americans for Stem Cell Therapies and Cures remains consistent with the role previously described by Robert Klein when asked at a press break in the February 3rd, 2005 ICOC meeting in San Diego about his continuing personal role as Chairman of the Proposition 71 campaign committee, then entitled Californians for Stem Cell Therapies and Cures. Robert Klein stated that he would continue as Chairman with the responsibility to guide the federal education and advocacy efforts, with a goal of raising a million dollars for that effort, while working on retiring the remaining $1.4 million in campaign vendor obligations. He specifically pointed out that this organization was completely different and separate from the Alliance for Stem Cell Research (formerly called the California Research and Cures Coalition), from which he had resigned as Chairman before being elected to the ICOC Chairmanship.

Distribution of the 501(c)4 Statement Against SB401 on June 5th, 2006

The statement distributed on June 5th was restricted to organizations and individuals who had previously communicated with the Proposition 71 campaign committee staff and expressed an interest over the last 2 years (since April 2004) in updated information as it became available. The statement to organizations focused on the negative impact potential of SB401 and related unconstructive legislation cosponsored by Senator Ortiz and the anti-stem cell conservative Senator Runner. The statement expressed an appreciation for the highly constructive leadership of Senator Don Perata, Senator Joe Dunn, Senator Jackie Speier, and Senator Deborah Bowen who led a joint legislative effort, with the leadership of the Board and staff of the CIRM, to improve the transparency, public reporting, public notice, and conflicts of interest provisions of Proposition 71. The CIRM now leads the nation, with the most stringent standards in these areas, along with its national leadership on medical and ethical standards for stem cell research. The CIRM developed its model medical and ethical research standards in cooperation with a national task force of the National Academies of Science, supplemented by information and input gained in numerous public hearings in the State of California.

There was no general distribution of this statement, as it was not deemed to be necessary at this time. No interviews were given to promote the statement. The intent of the statement was to rebut the highly misleading statements of Senator Ortiz on the value of SB401 and related legislation which she claimed were essential to address defects in Proposition 71. In her May 12, 2006 Superior Court decision, Judge Bonnie Sabraw rejected the claim by the plaintiffs contesting the Constitutionality of Proposition 71 that there were defects in the Proposition and/or its implementation. In part, she stated:

“The evidence at trial establishes that the application of the Act has been in compliance with hits statutory framework, and that CIRM and the ICOC are operating in the same fashion as other state agencies. Each ICOC member, and each alternate, has taken the oath of office and publicly filed Form 700, the standard form California public officials file to disclose financial holdings. The ICOC developed and adopted incompatible activities statements, the conflict of interest code required by the Political Reform Act, and conflict of interest policies for ICOC members, CIRM staff, and members of each of the ICOC advisory grouops. Between January 2005 and the date of trial, the ICOC, its subcommittees, and its working groups held over 40 noticed, public meetings, in cities across the state, held pursuant to the Bagley-Keene Open Meeting Act. CIRM has responded to numerous Public Records Act requests. The selection of the site for CIRM’s facilities was run by the Department of General Services, as required of state agencies, which department also executed the lease. The required independent audit is in process and is to be reviewed by the Citizen’s Financial Oversight Committee. In addition, testimony was presented that CIRM is subject to audit by the Controller and the Department of Finance, and that the Controller has met with the ICOC to discuss the type of practices he expected the ICOC to follow.”

In 41 additional pages, Judge Sabraw examined Proposition 71 and the CIRM with a microscope and she concluded that it is operating properly, in every facet of its mandate, and it includes numerous safeguards, public transparency, and accountability requirements that are often layered, to provide several levels of protection for the public.

The statement was stimulated by a San Diego Union Tribune article on June 2nd, 2006. It clearly indicated that Senator Ortiz’s press operation had succeeded in misleading a highly responsible and thoughtful journalist as to the Senator’s importance in the “creation” of Proposition 71 and the allegedly positive effect of her legislative attacks on Proposition 71. Senator Ortiz did not see drafts of Proposition 71 until after it was finished and submitted to the Attorney General for certification for the petition process. She did not participate in its drafting. She previously supported Proposition 71, during the election campaign; but, since the election, she has co-sponsored her legislation with the most conservative, anti-stem cell element in the Senate in a “grandstanding” attempt to impose her personal view of how the Proposition should be changed, even after Senator Perata, Senator Dunn, Senator Speier, Senator Bowen, and other legislative leaders had endorsed the enhancements to Proposition 71, jointly constructed with the leadership of the ICOC and the CIRM. Unfortunately, it was not possible for the Board of the Americans for Stem Cell Therapies and Cures and the staff of that organization to draft a response and distribute it to the Board members for clearance until the following Monday, June 5th. It is the intent of the organization to immediately respond, when grossly misleading information on Proposition 71 is issued by any member of a public or private organization. It is hoped that these occasions will be rare.

In addition, as stated earlier, the Legislature – led by Senators Perata, Dunn, Speier and Bowen, with input from the Assembly leadership offices – jointly and constructively worked with the ICOC and CIRM leadership to enhance Proposition 71 provisions. Senator Ortiz participated in these discussions; but, she broke from the group consensus and continued her attacks on Proposition 71, when she realized there was not a legislative consensus to adopt every one of her very detailed demands.

Staffing and Office

Americans for Stem Cell Therapies and Cures operations include sharing a single office at the location of Robert Klein’s personal offices. It has recently contracted with two independent consultants to expand its staffing support for the federal and 5-state focus of its efforts outside of California. Donations to the organization are not tax deductible, because it is a 501(c)4 committed to education, political advocacy, and political reform. Donations can be sent to 550 California Avenue, Suite 330, Palo Alto, CA 94306.

Google Ranks California Stem Cell Report No. 4

We discovered something modestly interesting about "California stem cell" information the other day.

Out of 21.3 million hits produced by Google on that search term, the California Stem Cell Report is ranked No. 4. Yes, that is the blog you are now reading.

No. 1 was a Washington Post article from Nov. 14, 2004, on the election results on Prop. 71. No. 2 was another Washington Post article – this one from Oct. 24, 2004, on Prop. 71. No. 3 is the Alliance for Stem Cell Research, an offshoot of the Prop. 71 campaign group in California. CIRM's Web site is ranked No. 10.

What does all this mean? We don't know, but, as we said, we found it modestly interesting.

Klein's Letter Helps Build CIRM Legacy -- Unfortunately

Whatever the fallout may be from last week's scathing letter about Sen. Deborah Ortiz, California stem cell chair Robert Klein has nailed down one result.

He has it made it more difficult to reach a compromise on Ortiz' sweeping measure to tighten oversight of the California stem cell agency. And if, as a lame duck legislator, she had been inclined to slide back on the measure, that inclination now seems unlikely.

Klein's letter last week called her an "ongoing threat" to the California stem cell agency. The missive, which he signed as head of an advocacy group rather than as chair of the agency, carried a personal, vituperative tone. While it made policy arguments against the measure, SB401, the letter also contained a number of errors and distortions.

Ortiz' office has been silent on the letter. But it is certain that it will harden her resolve to pursue her measure vigorously.

Klein's letter and his previous actions, dating back to his refusal to testify before the state Senate Health Committee in spring of 2005, are helping to create an unfortunate legacy for CIRM. And that is a reputation as an intransigent state bureaucracy that is unresponsive to both public and legislative concerns.

The pity is that sort of fallout was unnecessary.

DHS Stem Cell Advisory Committee to Sunset

Earlier we reported that a measure by Sen. Deborah Ortiz aimed at protecting women egg donors would also extend the life of the Department of Health Services advisory committee on health care regulation.

However, that bill, SB1260, has been amended to remove that extension. Ortiz' office reported:

"As it was originally drafted, SB 1260 did extend the life of the DHS advisory committee currently working on guidelines for stem cell. But the bill was amended April 26, 2006 to allow for the advisory committee to sunset January 1, 2007, as is provided in current law. We retained the provisions (by deleting the sunsets) that require the DHS to produce guidelines, exercise continuing oversight, and report to the Legislature, but decided to let the advisory committee phase out after this year because the expectation was that the committee would complete its work by the end of the calendar year anyway and the costs of continuing it would be too high to sustain."

The bill is now before the Assembly Health Committee after breezing through the state Senate.

Correction on Gala Donor Names

The item below contained a bad link to the names of the donors to the gala. Here is the correct link to the names.

Watchdog Says CIRM 'Laundering' Cash

"A total mockery of public accountability." That's how the Foundation for Taxpayer and Consumers Rights is describing the release of the names of the donors to the $1 million gala for the California stem cell agency.

CIRM disclosed only the names of the donors – not their business affiliation nor the amounts they contributed.

Reporter Steve Johnson of the San Jose Mercury News wrote Friday that one was the chief executive of a firm that plans to seek funding from CIRM. That exec made a $3,000 contribution.

John M. Simpson, stem cell project director for the foundation, said CIRM's handling of the information amounts to "nothing more than laundering money to evade CIRM's own policies."

Here is a link to link to the names, which it said include biotech and venture capital executives.

Klein to Ortiz: You Are an "Ongoing Threat"

In a harshly worded letter, California stem cell Chairman Robert Klein says state Sen. Deborah Ortiz is "an ongoing threat" to his agency. Klein's excoriation of Ortiz has publicly irritated at least one member of CIRM's Oversight Committee and is certain to irritate others. The letter also raises anew long dormant questions about Klein's activities outside of CIRM.

Klein's letter lambasted Ortiz, who is the most influential legislative voice on stem cell issues, because she is the author of SB401, which would tighten oversight of CIRM -- but only if the measure is approved at a statewide election, as was Prop. 71, the measure that created CIRM.

Klein's letter, which he prepared in his position as president of an advocacy group called Americans for Stem Cell Therapies and Cures, goes beyond – both in tone and language -- the official CIRM position on the bill, which is that the measure is premature and unnecessary.

CIRM declined to comment on the letter, which it says Klein prepared on his own time. Nonetheless, the 4-page missive is certain to disturb the Oversight Committee members who advocated less aggressive tactics with the legislature in connection with SB401.

Claire Pomeroy, dean of the UC Davis School of Medicine, was one. Earlier this spring at a meeting of the Oversight Committee, she said, "I personally support continuing to talk rather than being inflammatory and confrontational."

Oversight Committee member Jeff Sheehy was quoted in a June 8 piece by Terri Somers in the San Diego Union-Tribune as objecting to the timing of the letter, which was sent on Monday before Tuesday's election involving Ortiz, a Sacramento Democrat who was seeking statewide office.

Sheehy said,

“The larger question here is the appropriateness of the chair of a state agency, especially a man who has been very insistent on having operational responsibilities of the institute, having his own political action committee. It just doesn't seem appropriate to me."

Sheehy also said he "feels like he has been lied to" concerning Klein's involvement in the group, which grew out of the old Prop. 71 campaign committee.

Somers' article quoted John M. Simpson, stem cell project director of the Foundation for Taxpayer and Consumer Rights, Santa Monica, Ca., as saying:

"'This is certainly not something that is appropriate for the chairman of the (institute's board) to be cranking out."

The article continued,

"Although Klein legally has a right to campaign for causes he supports, Simpson said, most state residents forever will associate his name and actions with the stem cell institute."

The first sentence of Klein's letter states:

"As a State Senator, Deborah Ortiz has been an ongoing threat to Proposition 71, the California Institute of Regenerative Medicine (CIRM), and stem cell research in its entirety."

"Crippling" is another word the letter uses to describe SB401, which Klein say is merely an attempt by Ortiz "to impose her own legislative controls" on CIRM. It goes on to accuse her of "grandstanding" defying the will of the electorate, requiring "expensive" audits of the agency, consorting with the far right and being praised by "enemies of stem cell research." The letter also compares her invidiously to other legislators who instead exercised "highly constructive and responsible" leadership.

Ortiz' office had no comment on the letter.

Responding to an inquiry by the California Stem Cell Report, the Americans group released a background statement that said Klein's letter was "stimulated" by a June 2 article by reporter Somers which, among other things, repeated a statement in a much earlier story by Somers that Prop. 71 was Ortiz' brainchild.

The June 2 article, according to Klein's group,

"...clearly indicated that Sen. Ortiz's press operation had succeeded in misleading a highly responsible and thoughtful journalist as to the senator's importance in the 'creation' of Prop. 71 and the allegedly positive effect of her legislative attacks on Prop. 71. Sen. Ortiz did not see drafts of Prop. 71 until after it was finished and submitted to the attorney general for certification for the petition process. She did not participate in the drafting."

Jesse Reynolds of the Center for Genetics and Society was quoted by Somers in her June 8 article. He said,

“When you look at Sen. Ortiz's history of involvement with Prop. 71, (Klein's statement is) not accurate. She was the first to propose a bond initiative. Klein wouldn't be where he is today without Ortiz.”

Klein clearly believes that he can wear two stem cell hats. In some ways, his position reflects his statement during the February stem cell trial in Hayward, Ca., that he does not regard himself as a state employee since he does not accept a salary. But there is no doubt that he is working fulltime, if not more, as chair of the stem cell agency. He is a formidable fundraiser ($50 million or more for CIRM to date), aggressive, intelligent, knowledgeable. "Super salesman" is how Fortune magazine described him.

But would it be appropriate for the state director of highways to also be head of an advocacy group promoting state highway construction? State employees have a right to a private life, but not when it conflicts with their public responsibilities. Private persons likewise can pursue their own agendas, but they do not necessarily have a right to chair a public agency that enhances that agenda.

Another way to look at the linkage in Klein's case is to consider the public impact of his letter concerning Ortiz. Imagine this possible beginning to a news story: "A little known group called Americans for Stem Cell Therapies and Cures says an influential Democratic state legislator is a threat to all stem cell research." Ho-hum. The reason that this letter is significant is because it is signed by the chair of an agency that is going to give away $3 billion for embryonic stem cell research. Without the ties between Klein and CIRM, his letter has little impact.

One of Klein's responsibilities as chair of CIRM is to be an advocate for stem cell research. But should he go beyond the agency's debated and approved position? At the very least, the differing messages create confusion. They can also foster suspicion, mistrust and concern that secret agendas are at work.

The background statement from the Americans group said CIRM was not consulted during preparation of the letter. The group said the letter represents only the view of the Prop. 71 campaign committee, formerly known as Californians for Stem Cell Therapies and Cures. The statement said the name was changed to reflect national educational and political plans.

The group, which shares space in Klein's personal offices in Palo Alto, pointed to a comment at a CIRM meeting in February 2005 during which Klein told reporters that he would continue as chairman of the campaign committee with the goal of raising $1 million for federal advocacy work as well as retiring the campaign's then $1.4 million debt.

The full text of the letter follows the item below on some of its allegations. For technical reasons, we cannot post the background document, which is as interesting, if not more so than the letter. If you would like a copy of the background document, please send an email to djensen@californiastemcellreport.com. We will send it to you as a PDF attachment, probably on Wednesday.

Klein and the Facts of The Matter

The anti-Ortiz letter from Robert Klein and the Americans for Stem Cell Therapies and Cures is part of a special genre. It is an advocacy document designed to arose supporters and stir outrage, just as documents produced during political campaigns are aimed at generating support for a particular candidate or issue. It is hard to hate a proposed statute. It is much easier to dislike a perceived enemy. While allowances can be made for rhetorical excess, Klein's letter has accuracy and distortion problems that should be addressed.

Let's speak to some of them as they come up in the letter. For example, it says Deborah Ortiz is interested in imposing "her own legislative controls." If SB401 becomes law, however, it will be only after the approval of both houses of the legislature, the governor and a vote of the people. If Klein can prevent Ortiz from receiving 21 votes for her bill in the State Senate, it is dead. That is a far cry from "her own" controls.

The letter states that Ortiz is on an "anti-research crusade." The fact is that she has been advocate of stem cell research well before the existence of CIRM.

Another Klein contention: "SB 401 ignores the single most important element in stem cell research: the patients and their families." If that is the case, such niceties as treatment of women egg donors should be given short shrift. Businesses promising quick cures should be given top priority and top dollar. We are certain that Klein would not stand for long behind that particular logic.

SB401 is "untimely," the letter states. The California stem cell agency has been in existence for nearly 18 months, but many of the issues involved with SB401 continue to fester. Members of the CIRM Oversight Committee themselves have noted that such things as intellectual property and research standards will continue to need to be addressed for some time to come.

Another excerpt: "The Ortiz legislation defies the will of the California electorate. The text of the initiative states clearly that CIRM was supposed to be legislatively protected for 3 years." What this argument fails to note is that if the people so "will, " any initiative may be amended by another vote of the people. What the Ortiz legislation would do, among other things, is ask the California people in 2007 to say whether they want tighter oversight over the agency they created in 2004.

Finally Klein asserts that CIRM is "already the gold standard in public accountability and transparency." The reality is another story. While the agency has improved in recent months, the background material for virtually all of its meetings is publicly released so late that interested parties do not have an opportunity to make plans to attend. Even members of the Oversight Committee have complained about not receiving the material in a timely fashion, and as recently as this spring. Even some of the smaller school districts in California do a better job in providing information in advance of their board meetings than does CIRM. Just last week, CIRM also refused to provide the complete identities of donors to its $1 million fundraiser and declined to specify the individual amounts they gave.

Text of the letter is below.

Text of the Klein-Ortiz-SB401 Letter

Here is the letter signed by Robert Klein concerning Deborah Ortiz and SB401. It was supplied by a representative of the group.

AMERICANS FOR STEM CELL
THERAPIES AND CURES


550 CALIFORNIA AVENUE • PALO ALTO, CA 94036
PHONE: (650) 812-9304 • FAX: (650) 833-0105

June 5, 2006

Dear Stem Cell Advocate,

As a State Senator, Deborah Ortiz has been an ongoing threat to Proposition
71, the California Institute of Regenerative Medicine (CIRM), and stem cell research
in its entirety. In a stream of legislative acts, Senate Bill 18, Senate Constitutional
Amendment 13 and most recently Senate Bill 401, the Senator has attempted to impose
crippling restrictions on the research she claims to champion. Rather than allowing the
CIRM time to develop policy and standards, Senator Ortiz attempted to impose her own
legislative controls on the new agency barely one month after its approval by the voters. Her
policies, if implemented, would be disastrous for the new stem cell research program.

SB 401 will stunt progress in stem cell research.

Despite the fact that the Governor vetoed SB 18 (which in its original form would have
mandated a three year delay of promising forms of stem cell research), and that SCA 13 died
quietly as it became more fully understood, Ortiz’ anti-research crusade has continued in the
form of Senate Bill 401.

SB 401 was originally a bill which had nothing to do with stem cell research. Its subject was
medical advertising. In that guise it passed through several Senate hearings. Then the
contents were removed, and replaced with a completely different bill, very similar to the
research-restrictive SCA-13. This “gut and amend” procedure shoved the bill through
without full hearings, denying due process.

SB 401 adds new layers of bureaucracy and unfunded costs. Example: the Ortiz bill would
require the Attorney General’s office to approve each individual financial arrangement
between state and researcher. Not only is this new expense unfunded, but what is to prevent
an Attorney General who opposes the research from delaying it? Furthermore, the Attorney
General’s office does not have this expertise and the University of California system has
proven the value of hiring private attorneys with scientific expertise who can effectively
compete in negotiations with private sector attorneys (to actually protect and advance the
state’s interest).

Still another threat in SB 401 is the often vague and confusing language, offering possible
grounds for new lawsuits and accompanying delays in research. SB 401 offers a potential for
still more unnecessary legal challenges-- and accompanying delays-- to virtually any research
project imaginable.


Above all, SB 401 ignores the single most important element in stem cell research: the
patients and their families. As Nancy Reagan said, “We have already waited too long; it is
time to let the research go forward.”

The legislation is untimely and uncalled for.

Ortiz started her attacks on Proposition 71 on December 6th and 7th, 2004; on the very day
the National Academies of Science convened a two-day national taskforce workshop with
the Proposition 71 sponsors, to advance their mutual efforts to develop a MODEL FOR
MEDICAL AND ETHICAL STANDARDS. Senator Ortiz ignored these efforts and
claimed that the Proposition 71 sponsors were not interested in high medical and ethical
standards. She advanced her attacks in press coverage at the expense of the National
Academies of Science and Proposition 71 sponsors’ committed efforts. By denying the new
agency time to develop regulatory best practices, the Ortiz legislation defies the will of the
California electorate. The text of the initiative states clearly that CIRM was supposed to be
legislatively protected for 3 years. As stated within the text of the initiative, “Sec. 8.
Amendments. The statutory provisions… may be amended… by a bill introduced and
passed no earlier than the third full calendar year following adoption …”

CIRM has taken positive steps to ensure accountability.

Senator Don Perata, Senator Joe Dunn, Senator Jackie Speier and Senator Debra
Bowen led a highly constructive and responsible Senate effort to improve Proposition 71 in
a joint venture with the leadership of the Board and staff of CIRM. In contrast, Ortiz played
a “grandstanding” role, constantly undermining and attacking the good faith efforts of the
CIRM and the Proposition 71 sponsors. In areas such as patient protection, ethical
standards, public oversight and more, the CIRM has adopted the most stringent
“standards and practices” regulations in the nation, with the approval of Senators
Perata, Dunn, Speier and Bowen. Nothing, unfortunately, satisfies Senator Ortiz. Case in
point: Senator Ortiz requested a 6 month full performance audit of CIRM and its practices.
This is an expensive and serious government operation, done in addition to CIRM’s
completed independent audit: which, by the terms of Proposition 71, already must be
reviewed in a public hearing by the Independent Financial Oversight Committee chaired by
the State Controller and with representation of the State Treasurer, the President Pro
Tempore of the Senate and the Speaker of the Assembly, and the CIRM. Only three weeks
after demanding the performance audit, without waiting for its results, Senator Ortiz went
ahead with SB 401, imposing restrictive “solutions” to a problem not shown to exist.

The California Institute for Regenerative Medicine is already the gold standard in public
accountability and transparency, having held nearly 70 public meetings and numerous
conferences to address issues of intellectual property, patient privacy and safety, scientific
planning, and more. The CIRM’s medical and ethical standards in many cases are more
stringent than those of the National Institutes of Health’s requirements, as well as
qualitatively exceeding the recommendations of the National Academies of Science.

Strange bedfellows: Ortiz and “the far right”.


Ortiz’s legislature has been publicly praised by the enemies of stem cell research. For
example, in a March 30th, 2006, report from Lifenews.com, an influential right-to-life group
bitterly opposed to embryonic stem cell research:

“State Sen. Deborah Ortiz, a Democrat who has been leading efforts in the legislature to get more
state oversight on CIRM, says she plans legislation to put on the ballot a measure that require(s) grant
recipients to share half their proceeds with the state. “For pro-life advocates who didn’t want Proposition 71,
the battles are a positive development because it means any research…will only be postponed.”
SB 401’s co-author is conservative George Runner, who has been described as “virulently
anti-embryonic”1 stem cell research.

Stem cell research advocates oppose the Ortiz legislation.

Not one patient advocacy organization has endorsed Senator Ortiz’s cripplingly anti-
research legislation. On the contrary, some of embryonic stem cell research’s biggest
patient-advocate supporters have come out against SB 401: The Coalition for the
Advancement of Medical Research - a 100-group organization, the Juvenile Diabetes
Research Foundation, the Alliance for Stem Cell Research, Californians for Cures, the
Christopher Reeve Foundation, Research for Cures-- and every other patient advocacy
organization which has taken a public position.

SB 401 is opposed by California Institute of Technology, Stanford University, the University
of California, and the University of Southern California. The measure is opposed by the
California Healthcare Institute and major newspapers, such as the Los Angeles Times.

For all of these reasons we would hope that you would immediately communicate your
position against this bill to all supporters of Proposition 71.

Sincerely,

Americans for Stem Cell Therapies and Cures

(Proposition 71 Campaign Committee)

Robert N. Klein, Chairman

Dr. Genevieve Ames, Director

Don C. Reed, Secretary


1 “Sen. Ortiz has since teamed up with virulently anti-embryonic stem cell Republican George
Runner (R-Antelope Valley) to propose two new bills and a constitutional amendment..."--Los
Angeles City Beat, March 24, 2005

CIRM's Strategic Plan Interviewees

Who is California stem cell agency talking to about its plans for its billion-dollar giveaway?

As of late last month, 14 persons from outside the agency had been interviewed as part of the strategic planning process. They included Bill Neaves, president and CEO of the Stowers Institute for Medical Research, George Scangos, president and CEO of Exelixis, Inc., a South San Francisco drug company, Mahendra Rao, vice president of Invitrogen Corp. of Carlsbad, Ca., and formerly of the NIH, and Bruce Stillman, president of the Cold Spring Harbor Laboratory, a nonprofit research institution in Cold Spring Harbor, N.Y.

Some of the comments garnered during the 14 interviews have been summarized in a CIRM planning document (see page 11 "opinions from interviewees").

For the full list of interviewees, see this document.

More Fresh Stuff on CIRM Planning

Knowing the right questions to ask is a good start in most endeavors.

CIRM President Zach Hall has posted a number to be discussed during the formulation of a plan to give away $3 billion for stem cell research.

They range from the question of supporting young investigators to investigator-initiated curiosity-driven grants to the need to build more labs and facilities for embryonic stem cell research. The document outlining the questions is on the CIRM web site and can be found under the button called "Strategic Planning Info" on the home page.

Material is added to the strategic planning Web site with reasonable regularity, but the folks maintaining it say they cannot notify interested parties when it is updated. So you will just have to wander onto that particular Web page from time to time to check for new stuff. That said, it is a relatively simply process to add an update notification mechanism such as an RSS feed or something similar. Doing so would genuinely improve CIRM's outreach efforts. Passive postings on the Web draw little attention.