Biomedical Industry Says Nay to California Stem Cell Affordability

The California biomedical industry has served notice that it will mightily resist current efforts to ensure the affordability of treatments that result from embryonic stem cell research funded by the California stem cell agency.

The industry's "letter of intent" comes in the form of a legal opinion written by a heavyweight Sacramento law firm, Wilke, Fleury, Hoffelt, Gould & Birney, on behalf of the California Healthcare Institute, the state's leading biomedical industry group. Wilke, Fleury's other clients in the past have included Big Pharma companies such as Novartis and Glaxo Wellcome.

The firm's letter to CIRM addresses the proposed intellectual property rights regulations that would apply to CIRM grants to nonprofit organizations. The IP proposal is attempting to implement the expectation that low and middle income persons will not be frozen out of Prop. 71 therapies because of their high cost.

Writing on behalf of his firm and CHI, John Valencia attacks the following CIRM language:

"…licensees will agree to provide to patients whose therapies and diagnostics will be purchased in California with California funds or fund of any political subdivision of the state the therapies and diagnostics at a cost equal to that resulting from the provisions of Title 42, United States Code section 1396r-8, subdivisions (c)(1)(A)-(B) and subdivision (c)(2)."

The law firm's 10-page argument says that CIRM is bent on a course that will not stand up to tough legal scrutiny, with the implication that its proposal is likely to meet a vigorous legal challenge.

Wilke, Fleury says CIRM's proposal is "largely redundant" and "susceptible to failure." The law firm states:

"The apparent objective of the proposed regulation – to provide California purchasers with preferred product acquisition pricing for 'therapies and diagnostics' resulting from CIRM-funded research -- lacks adequate certainty and definiteness to meet the general purpose of state agency regulatory adoptions to define, clarify, interpret and implement statutory enactments. Outpatient prescription drugs which result from CIRM-funded research will be readily available to virtually every state and local agency purchaser, at preferred product acquisition cost levels guaranteed by federal or state law, or the designed combination of the two. The proposal requires further detail in relation to key elements (i.e., definitions for key operational elements of the proposed regulation, such as 'therapies,' 'diagnostics,' 'California funds,' and 'political subdivision') in order to avoid failure upon review by the state Office of Administrative Law (OAL) for lack of clarity."

Wilke, Fleury continues:

"In virtually every instance, the proposed regulation is of questionable value until greater certainty is provided regarding the cost guarantee that will attend to CIRM-funded discoveries other than eventual outpatient prescription drugs."

Wilke, Fleury does a have a point in its letter concerning the CIRM language. More artful drafting is needed so that it will stand up to challenges and be fully understood by grant recipients.

But fundamentally the biomedical industry does not want to be hampered in any way in its efforts to extract the maximum profit from its inventions, whether they are funded by taxpayers or by the industry itself. That is certainly a justifiable position for a business, whose first loyalty is and should be to its bottom line.

That said, if business wants to dine at the public trough, it will have to abide by the etiquette of government and not its self-interest.

It is difficult to overemphasize the importance of the CIRM IP debate, given its far-reaching impact in a fledgling field of research and medicine. But the discussion concerning IP and access and affordability to CIRM-financed stem cell therapies is invisible to the public. The major media have ignored the tussle over who is going to benefit economically and medically from CIRM's $6 billion worth of taxpayer-funded stem cell therapies. Even groups representing the poor and minorities are missing from CIRM's IP discussions, although they would seem to have a substantial stake in ensuring affordability.

In public policy discussions such as this, effective representation, as offered by Wilke, Fleury, is likely to carry the day regardless of the best intentions of the rule makers and many of the supporters of Prop. 71.

Cracking the Tap for Stem Cell Cash

Monday is Revolution Day down here in Romantic Old Mexico but in California it will be the "show-me-the-money" day for the California stem cell agency.

The Finance Committee for CIRM is scheduled to open the spigot and start a major cash flow to fiscally strapped agency. The prime order of business is the governor's long-delayed promise to pump $150 million into the stem cell effort.

Of course, it is a loan to be paid back when the $3 billion in bonds are sold following the expected positive resolution of the lawsuit and appeal involving the agency.

The session of the group is slated for 1:30 p.m. in the state treasurer's office in Sacramento.

The treasurer's Web page coincidentally has an interesting feature on it, a constantly changing total for California state government indebtedness. The total approached $24 billion at the time of this writing. Your share was $2,551.93 -- if you live in California.

As for Revolution Day, it marks the 1910 revolution in Mexico, a multi-year affair that, among other things, sent tens of thousands of Mexicans fleeing into the United States because of the bloodshed and destruction of the economy. You can read more about it in "The Hummingbird's Daughter" by Luis Urrea" and "Rain of Gold" by Victor Villasenor , both men with strong California ties.

CGS Package of Stem Cell Items

The Center for Genetics and Society has a tidy wrapup of a bunch of stem cell developments in its latest newsletter on its web site. The items range from politics to a look at a "groundbreaking proposal on human biotech policy."

Some excerpts:

"The election results don't support the 'overwhelming mandate' or 'successful wedge' interpretation of some pundits. But the political winds have clearly shifted. "

"Francis Fukuyama and Franco Furger have just
released the most comprehensive analysis and set of recommendations on governance of human biotechnologies in the United States that has been prepared to date."

The book is called "Beyond Bioethics: A Proposal for Modernizing the Regulation of Human Biotechnologies."

CGS also had an item on a little-noticed meeting in October: "Toward Fair Cures: Integrating the Benefits of Diversity in the California Stem Cell Research Act was a first-of-its-kind conference on minority health disparities and stem cell research."

Not Dead Yet

In recent days, the California Stem Cell Report has been performing unspeakable acts involving the innards of one particular sailboat. Thus we have not been posting as frequently as the hundreds of thousands of readers (that is bit of hyperbole) might like. But never fear. We are not dead yet. Hot stuff – or maybe not-so-hot stuff – will be forthcoming in the next few days. Cheers to all.

Major Conflicts of Interest, Picayune Details

Sometimes tiny details tell us more about the nature of things than a panoramic perspective.

Such was the case last month at a meeting of the CIRM Oversight Committee when it considered what appeared to be a routine, previously discussed issue. We wrote about it then, noting that it illustrates the powerful nature of the built-in conflicts-of-interest involving CIRM.

The matter has come up again in the form of a comment on the proposed regulation offered by the Oversight Committee. The following was written by John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights. The letter is addressed to CIRM as part of the official state process for adopting regulations. We quote it verbatim.

"I am writing to object to the removal at the October Independent Citizens' Oversight Committee meeting of the last sentence of SECTION 100309, Press Release Requirements of the Nonprofit Intellectual Property Policy. The sentence read: 'In the event CIRM wishes to participate in a joint press release, the grantee will coordinate with the CIRM Communications officer.'

"According to the Initial Statement of Reasons, 'This regulation is necessary so the CIRM is apprised of current significant developments regarding CIRM-funded research and ensure proper attribution to the CIRM and the State of California for the CIRM-funded activity.'

"Without the sentence, there is no way of ensuring that CIRM and the State of California receive proper attribution for CIRM-funded research in news releases.

"Section 100309 was approved twice by the ICOC. The regulation received no comments from the public during a thorough review of the regulations conducted by the IP Task Force and CIRM staff during the summer. During that process public comment was appropriately considered on other aspects of the policy and the IP regulations were modified taking that comment into account as mandated by the Office of Administrative Law procedures.

"The role of the ICOC at the October meeting should have been simply to make sure that those modifications were appropriate and took public comment into account. It was not appropriate to raise new issues that had been settled. Removing a sentence that had been approved twice by the board was at best arbitrary and capricious.

"More troublesome was the motivation for the removal. The action came on a motion from David Baltimore. Unfortunately the transcript of the meeting was not expected to be available before the end of the period for public comment.

"However, my notes show that Baltimore expressed concern that the requirement to co-ordinate with CIRM's Communications Officer would place a burden on universities. Rather than acting in the interests of all Californians, he was clearly acting in what he perceived to be the interest of the institution he represents. This sort of behavior does not bode well if one expects ICOC members to live up to the committee's name, 'independent' and truly act in the interests of all Californians rather than the institutions they represent."

Klein: A Man With Two Hats

John M. Simpson, stem cell project director for the strong>Foundation for Taxpayer and Consumers Rights, has this to say about the endorsement of a candidate for California lieutenant governor by the state's stem cell chairman.

"Bob Klein needs to decide if he wants to be a stem cell advocate or the head of California's stem cell agency.

"Wearing these two hats at the same time does a disservice to both the California Institute for Regenerative Medicine and Americans for Stem Cell Therapies and Cures."

Simpson's comment came as a result of a query from the California Stem Cell Report.

Stem Cell Snippets: Galas to Free Stem Cell Movies

Here are some short notes and links to items connected to California stem cell issues.

Shades of Arnold -- The celebrated stem cell fund raiser last spring in San Francisco has not yet resulted in one dollar for CIRM. The agency told the California Stem Cell Report that it knows of no reason for the delay or the size of the contribution to CIRM, if one is forthcoming.

IP – CIRM's IP Task Force meets this Thursday in La Jolla to wrestle with rules for sharing possible stem cell booty with business. The proposed IP policy says, "There are no extant policy models that capture in entirety the intent of the State of California in its objectives to fund the for-profit research sector and provide a return to the state. As a consequence, this proposed policy is a unique synthesis of best practices and recommendations from funding agencies and foundations around the world." The Task Force may hear from representatives of businesses in the San Diego area. You can participate in the session at offsite locations at San Carlos in the Bay Area and UC Irvine. Here is the agenda.
Good Old Days – Writer Paul Billings in New Scientist magazine longs for the days when the feds reigned supreme. He remains fond of national funding models, despite their failings in ESC research. And he says Prop. 71's "most visible outcome to date has been the creation of a new bureaucracy." We should note that CIRM's staff totals about 20, probably less than the staff of the magazine.

Free Stem Cell Movies – A stellar cast of San Diego stem cell scientists with cameo performances from two CIRM character actors is featured in a 17-chapter ESC video serial available on the California Institute for Telecommunications and Information Technology website. The videos are from an invitation-only conference called "Stem Cell Meeting on the Mesa." Lots of science, plenty on ethics and a bit on policy and business.

An Extraordinary Agency (CIRM), Now Two Years Old

The California Institute for Regenerative Medicine – the state stem cell agency – marks its second anniversary this month.

The $6 billion agency was created when 59 percent of California voters approved Prop. 71 in 2004. A spokesman for CIRM said no special activities are planned for the birthday, which could be considered to be Nov. 2, the date of the 2004 election, or later in the month, when the results of the election were actually legally certified.

Without attempting a major overview of the agency's work, it is safe to say that it has made substantial progress towards its goal of turning stem cells into cures. It has improved its operations substantially from those difficult days of 2005. It has funded training programs to develop more stem cell scientists. And it is on the verge of making its first research grants and financing new laboratories.

The endeavor – believed to be the largest single source of embryonic stem cell funding in the world – has attracted international attention. A number of states in this country are attempting to emulate the effort in one way or another. CIRM also has gone beyond national ESC research standards and become the benchmark for ESC research standards in this country.

That said, life at CIRM is not all hunky dory. It faces considerable challenges, as readers of the California Stem Cell Report know. But the folks at CIRM are engaged in an enterprise that comes along only once in a lifetime. Although the details of the work at the agency are sometimes pedestrian, CIRM staffers are on the cutting edge of an unprecedented effort that ranges over new ground in science, medicine, religion, ethics, government, politics and business. They should take great pride in what they are attempting to do.

We wish the entire tiny band of CIRMies – all 20 or so -- a grand and happy birthday.

Klein and the Endorsement: CIRM Says No Comment

The California stem cell agency has no comment on the allegations that its chairman could be violating the law with his endorsement of a candidate for California lieutenant governor as detailed in the item below.

There are a number of interpretations of that sort of response. One is that the agency does not disagree with the assertion of illegality. Another is that they do disagree but for unknown reasons they choose not to share that belief with the public. Still another is that they do not know whether Klein's actions are illegal but they do not want to acknowledge their ignorance in public. And still another is that they do not want to engage in an exchange with an organization that sometimes has been held in low regard at CIRM. And yet one more is that they do not want to bring any more attention to the allegations by appearing to take them seriously. Or perhaps a combination of those considerations is the reason for the no comment response.

Does Klein's Endorsement of a Political Candidate Violate the Law?

The Biopolitical Times – the blog of the Center for Genetics and Society – has suggested that California stem cell Chairman Robert Klein has committed an illegal act by endorsing the Democratic candidate for California lieutenant governor.

Jesse Reynolds, a Center official who has followed CIRM since its inception, wrote:

"It's my understanding that as an appointed state official, he is prohibited from endorsing candidates for office."

Reynolds quoted a California State Supreme Court decision, Stanson v. Mott, as setting limits on electioneering by appointed officials. It said,

"A fundamental precept of this nation's democratic electoral process is that the government may not 'take sides' in election contests or bestow an unfair advantage on one of several competing factions. A principal danger feared by our country's founders lay in the possibility that the holders of governmental authority would use official power improperly to perpetuate themselves, or their allies, in office...; the selective use of public funds in election campaigns, of course, raises the specter of just such an improper distortion of the democratic electoral process."

Klein, of course, said he was endorsing John Garamendi as a private citizen – not as head of the Oversight Committee for the stem cell agency. If elected lieutentant governor, Garamendi would have the ability to appoint as many as five members to the 29-member Oversight Committee.

Reynolds wrote:

"His attempt at endorsing Garamendi as something other than his official capacity - chairman of the board of California's $3 billion stem cell program - is disingenuous and wrong. Everyone knows what his day job is. Klein's action is the equivalent of Leon Kass, then chair of the President's Council on Bioethics, lobbying Congress on stem cell research as a "private citizen" - a move that was
roundly criticized by stem cell research advocates."

Reynolds also cited an earlier item on the California Stem Cell Report which reported that Klein is head of Americans for Stem Cell Therapies and Cures, a lobbying and political action group. Reynolds continued:

"Klein chaired a similar advocacy organization, the California Research and Cures Coalition, just after the passage of Proposition 71. He resigned that post [PDF] under pressure. This is more egregious, in that the new organization is a lobbying outfit, not just an 'education' nonprofit. Moreover, it advocates for candidates that will appoint the board members whose support Klein needs to stay on in his official capacity. Klein must choose: Is he an advocate, or a public servant? He should resign from one of the two boards."

We are querying CIRM concernings its position on whether Klein can legally endorse candidates for state office. However, he and other state officials regularly make contributions to candidates for state office, an act that is tantamount to an endorsement and which is apparently not banned by state law.

The Scientist Magazine: WARF Patents Over-Reaching

The prestigious magazine, The Scientist, has taken on WARF and its stem cell ownership claims in two pieces that denounce the WARF patents as absurd and harmful to scientific research.

Richard Gallagher, editor of the magazine, and Glenn McGee , director of the Alden March Bioethics Institute in New York state, wrote an editorial and column, respectively, on the subject.

Gallagher said:

"Patents are a good thing. In general, they promote progress by encouraging research and development with incentives. But sometimes, they over-reach, and they impede progress rather than help it. This is one of those cases. The WARF patents point up the sometimes uncomfortable conflict between intellectual property rights and scientific freedom that many of our readers often feel as they find their way in the funding environment of the 21st century."

McGee wrote:

"So can someone own the cells that make up what is important about a human embryo? And if so, do we have to pay them every time we make our own embryonic cells, every time we make a medicine or other innovation from embryonic cells, and even when we use the cells to teach?

"Basically, if it looks like an embryonic cell, you'd better pay up. And if you try to make something out of your own embryo - yes, the one you made with your own body, from your own body - well, hope you have good lawyers."

He continued:

"In one among many of its attempts to avoid what could and should be a reversal of these patents stemming from the decision to review them, Wisconsin's Governor Jim Doyle has announced that companies who fund work at universities and nonprofits in that state will not have to pay any licensing fees. Previous attempts to ameliorate the problem have been more aggressive: offering to provide the cell lines at lower prices or to cross-license in a friendly way, for example. It wasn't enough for Californians, and now it appears it won't be enough to stop right-thinking people everywhere from filing suit, on moral grounds if nothing else.

"The protection of patents is supposed to extend to 'things under the sun made by man.' There has yet to be a serious challenge to the absurdity of patents on disease genes, and the even more absurd notion that the ability to find, to discover, constitutive parts of an embryo means that you own them."

CIRM Ripped for Secrecy

The California stem cell agency, which has sworn to uphold the highest standards of openness, has come under fire in the op-ed pages of The Sacramento Bee for its secrecy in the process of reviewing applications for tens of millions of public dollars in research grants.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumers Rights, took on CIRM. He wrote:

"Despite mouthing high-minded slogans, the institute's leaders frequently miss the mark whenever there is a clear opportunity to transact the public's business in public."

Simpson continued:

"No useful purpose is served by CIRM's penchant for secrecy. It should disclose who applied and where they are from, enabling all concerned to track awards and dispel worries about discrimination.

"There's no need to worry about embarrassing somebody because he didn't get a grant. CIRM is planning to fund only 12.9 percent of the applicants.

"Missing this cut is no big deal. Scientists need to develop thicker skins if they want to use public money for their work, and CIRM needs to let the sun shine in.

"Bottom line: They want our money. They must tell us who they are and ask for it in public."

Klein Says $150 Million Loan Up for Approval Later This Month

California stem cell Chairman Robert Klein has released a statement on Gov. Arnold Schwarzeneger's failure to fulfill – so far – his $150 million promise to bail out the fiscally strapped California stem cell agency.

More than three months ago the governor vowed to provide the money "now." Aides told CIRM that funds would be forthcoming by mid August.

Klein's statement did not explain why the delay has occurred but said a meeting of the CIRM Finance Committee will be held later this month to finalize the loan. Klein said the deal was "extraordinarily complex."

Stem Cell Politics: Beware the ESC Troglodytes

At one point stem cell advocates deplored the intrusion of politics into stem cell research. They pointed to President Bush's intrusion into the science as an example of how harmful it could be.
No more. Stem cell advocates are now hammering away at the need to throw out the nonbelievers and defeat the ESC troglodytes.
A fair amount has already been written about the stem cell political push elsewhere in the country. But the issue has surfaced in a few races in California as well.
One of the political enterprises involved is Robert Klein's Americans for Stem Cell Therapies and Cures, whose headquarters are located in his business offices. (Klein, of course, is also the chairman of the California stem cell agency.)
The Americans group has produced a report card on the California statewide races from governor to controller, but does not rate California legislative or congressional candidates. Singled out for special attention is State Sen. Tom McClintock, a Republican who is running for lieutenant governor.
Reporter Rebecca Veseley of the Contra Costa Times covered a news conference this week during which Klein disparaged McClintock as representing "the far right." Klein noted that the lieutenant governor can make five apppointments to the Oversight Committee for CIRM. He said that could place McClintock in a position where he could damage stem cell research. A spokesman for McClintock said he would apppoint "taxpayer watchdogs who will demand accountability."
Klein's group is primarily pushing a national agenda, building mailing lists, arranging for speakers and drumming up voter turnout.
Klein also makes personal political contributions. We do not yet know the figures for this fall, but he contributed $5,000 last spring to Debra Bowen who defeated Deborah Ortiz, a longtime stem cell advocate, for the Democratic nomination for California secretary of state. Ortiz riled Klein with her insistence on greater accountability from CIRM, and he lambasted her publicly "as an ongoing threat" shortly before the primary election last June.

$150 Million Snared in 'Red Tape'?

"Red tape and election year politics" apparently have delayed Gov. Arnold Schwarzenegger's promised $150 million loan to the California stem cell agency, according to The Associated Press.

Reporter Paul Elias has written a follow on our report (see item below). Elias said:

"'This is a unique and extremely complicated financial transaction with a lot of moving parts,' said California Department of Finance spokesman H.D Palmer. 'It has taken a little bit longer than anticipated, but nobody has been slow on this.'"

Palmer's position is much different than that of Schwarzenegger in July when he indicated, in a politically timed announcement, that the money would be made available promptly. His aides also said they expected funds the paperwork to be completed in mid-August.

Missing: Arnold's Promised $150 Million Stem Cell Loan

Last July, in the heat of the national debate about stem cell research, Gov. Arnold Schwarzenegger made headlines by promising $150 million to bail out the fiscally strapped California stem cell agency.

Today, more than three months later, the agency has not seen one dime of the promised loan despite the governor's July 21 statement that CIRM "need(s) the money now." Schwarzenegger said that it was "critical we take action" and that money should begin flowing "as soon possible."

The California Stem Cell Report queried both the governor's office and CIRM concerning Schwarzenegger's failure to provide the money. The governor's office has not responded to our request on Friday about what has blocked the cash. CIRM also has been less than informative.

Dale Carlson, spokesman for the agency, said that the State Department of Finance "needs to review the loan documents which are still being written," but declined to elaborate.

Unexplained was whether there is some problem with making the loan to CIRM, which one would think would be a fairly routine procedure that could be executed in less than three months. Unexplained also was the exact nature of the loan mechanism, which was not discussed in news reports at the time of the governor's announcement.

Anne Sheehan, an aide to the governor, told the CIRM Oversight Committee at the beginning of August that the loan amounted to "uncharted waters" for the state but that she expected action on it by the middle of August.

Since Schwarzenegger's politically exquisite timing of the loan announcement, which received worldwide attention, he has been involved in a re-election campaign in which he has built a commanding lead over his Democratic opponent, state Treasurer Phil Angelides. Perhaps the campaign has distracted Schwarzenegger's office from fulfilling the loan promise.

California stem cell Chairman Robert Klein alluded to the pressures of the campaign at a meeting of the CIRM Oversight Committee earlier this month. He indicated that the elections had made it difficult to hold a meeting of the CIRM Finance Committee, a special body created by Prop. 71, to approve issuance of CIRM bonds.

However, neither CIRM nor the governor's office explained if or why the Finance Committee would be involved in a loan between two state entities. Klein indicated that the Finance Committee, at its next meeting, would review more requests for bond anticipation notes, which are expected to be issued to private contributors to CIRM.

A July 20 press release by CIRM cited a section of Prop. 71 that appears to allow the state director of finance to provide funding to CIRM from the state's general fund if it is within the amount of unsold bonds authorized by the Finance Committee. That group has already approved $200 million in bonds, which have not been sold, so it would appear giving CIRM the $150 million is a simple ministerial act, but maybe not.

Klein said he hoped the Finance Committee could meet very soon after the fall elections, which will come a week from Tuesday.

The stem cell agency has been strapped for funds because of lawsuits that have blocked the issuance of state bonds that would fund it. It has operated, for the most part, on the basis of private contributions and loans since it began operations in late 2004. CIRM did not respond to a question from the California Stem Cell Report about whether the failure to provide the loan has created any financial difficulties at the agency.

Welcome to The Biopolitical Times

The Center for Genetics and Society has entered the blogosphere with a site called The Biopolitical Times. Initial topics are heavily tilted to the current relationship between vote-crazed politicians and their attempts to exploit embryonic stem cell research.

An excerpt from an item by Marcy Darnovsky:

"We’ve moved on from Fox and counter-Fox, wherein Rush Limbaugh demonstrates that “big idiot” is far too kind. Now we have top-level Democrats demonstrating their skill in cheap emotional blackmail. The take-home sentiment of a new ad by Majority Action, a Democratic 527, is that the Stem Cell Saviors will cure us all. And anyone who doubts that may as well have the blood of that sweet little six-year-old on their hands. This ad should be as embarrassing to those of us who support embryonic stem cell research as Limbaugh’s antics should be to its opponents."

The center, which has actively tracked the California stem cell agency, is inviting comments, private or public, on the site.

Stem Cell Snippets: Warehouses, Fox Ad and Pombo

Here links to some stories related to California stem cell issues:

UC Davis – A warehouse in Sacramento is being converted into a $75 million stem cell research center by UC Davis. Reporter Jim Downing of The Sacramento Bee wrote:

"The new director of the Davis program, Jan Nolta, starts work Nov. 1. Nolta, who grew up in Willows, was recruited from Washington University in St. Louis along with longtime collaborator Gerhard Bauer, an Austrian native who is an an expert in the design and management of ultra-clean laboratories. Nolta and Bauer were at the UC Davis Medical Center on Wednesday as U.S. Rep. Doris Matsui, D-Sacramento, toured the laboratories of Mark Zern, an organ transplant expert whose research team is studying ways to use embryonic stem cells to regenerate the liver."

Michael Fox – His stem cell TV ad rivals the nuclear destruction commercial in the 1964 presidential race in terms of free air time, according to one longtime observer at the Poynter Institute, a newspaper think tank.

Pombo – Stem cell research rose to a higher level of visibility in a Central Valley congressional race in California. Reporter Lisa Vorderbrueggen of the Contra Costa Times wrote the story concerning incumbent Republican Richard Pombo and Democrat Jerry McNerney.

Arlington Speaks on CIRM's Orphan Software

The head of the Arlington Group, the defunct grant review software firm used by the California stem cell agency, says that CIRM has not acquired the copyright or intellectual property rights to the program used by the agency and other major grant providers.

Earlier, we reported that the San Diego Union-Tribune quoted CIRM President Zach Hall as saying that the agency owned the computer codes involving the grant review program. (See item below.)

In response to an inquiry from the California Stem Cell Report, Mary Taylor, CEO and founder of Arlington, provided the following statement that we are carrying verbatim:

"CIRM acquired the rights to the Easygrants software source code to use, modify, or have modified for them for their business purposes.

"They did not acquire the intellectual property, distribution rights, copyright, etc. Second, Arlington Group delivered to CIRM all of the work that had been done to date on their system, including significant documentation of requirements for the system configuration, as well as the initial development work. With this in hand, when they begin working with the new development group, they can hit the ground running.

"Finally, with this transaction, CIRM is saving the state money on license fees for 2007 and forward. So while it was an unexpected challenge, worst of all for AG, CIRM has taken the steps needed to ensure their success and be good stewards of the state's money."

Why is all this important? Orphaned software can be a disaster. Often it is poorly documented internally, without explanations of how the code was constructed and works. When glitches occur, that makes it extremely difficult to maintain by the purchasers. That can mean that information is lost and cannot be compiled properly. Hopefully that is not the case here.

Death of CIRM Software Firm Only a 'Hiccup'

The California stem cell agency, which faces an enormous task in reviewing a flood of grant applications, is minimizing the impact of the demise of the company that produced the software for evaluating and coordinating the applications.

Reporter Terri Somers of the San Diego Union-Tribune wrote that the Arlington Group of McLean, Va., suddenly went "belly up," leaving CIRM in a digital lurch.

But, she also wrote, CIRM President Zach Hall said that CIRM now owns the computer codes behind the Arlington program. Somers continued:

"There was no warning that Arlington was about to go out of business, Hall said. Apparently an investor withdrew his money unexpectedly, causing the company to fold, he said.

"Before that happened, the institute had paid $108,000 to Arlington, Hall said.

"The institute has since contracted with a new company, composed of former Arlington employees, to build the system at a cost equal to what it was to have paid the defunct company, Hall said."

The original eight-year contract called for payment of $233,474 in the first year.

Somers reported:

"'This has been a hiccup for us in terms of time schedule,' Hall said. 'But it's not a major issue.'"

Dale Carlson, spokesman for CIRM, today told the California Stem Cell Report,

"We got the source code, which will be helpful to us going forward. We've got their senior developers ready to work with us. It isn't delaying the review of the grants. It isn't costing us any more money. And we're talking with Arlington's major customers about an ongoing network to support the platform."

Those customers include the Bill & Melinda Gates Foundation, David and Lucile Packard Foundation and the Howard Hughes Medical Institute.

(Editor's note: A slightly earlier version of this item did not include the last two paragraphs.)