Wanted: CEO For Promising $3 Billion Giveaway Program

One year ago this month the situation at the California stem cell agency was likened to the war in Iraq by a Nobel Prize winning scientist from Stanford.

Today the situation is much improved. So what better time for CIRM's president, Zach Hall, to announce that he is leaving.

Which is what he did last week. The move prompted comments that clashes with CIRM Chairman Robert Klein may have been involved, but Hall is 69 and has made it clear from the start that he did not want to hold the post over a long period of time.

Hall and Klein have butted heads. Klein told reporter Terri Somers of the San Diego Union-Tribune, "We mentally challenged each other to excel." But Hall also said said his plan to leave within six months is almost entirely personal. His wife retired earlier this year. They have a place in Wyoming. They love the outdoors. He doesn't need the money. And who needs the aggravation and long hours that came with the president's job.

Hall's work has set the stage for approval of the first round of research grants. And he oversaw preparation of the agency's now approved plan for giving away $3 billion for embryonic stem cell research. It is a far cry from last December when New York Times reporter Andrew Pollack quoted Paul Berg, the Stanford Nobel laureate, as likening the situation at CIRM to the Iraq war.

"We won the war and didn't know what to do afterward," Berg said.

Last week Hall summed up life at CIRM for the agency's directors:

“The institute has money in the bank now. There is infrastructure in place. And some of our initial organizational problems seem to be working out positively, so I think this is a good time for you to look for a new president.”

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights and a longtime observer of CIRM affairs, had this comment:

"Seems to me that by the time Zach leaves the following will be accomplished:

"Major training, research and joint research facilities grants will have been awarded.

"Major polices on IP, medical and ethical standards, and grant administration will be in place.

"A realistic scientific strategic plan will be in place that emphasizes science rather than hype.

"The role of the president and chief executive of CIRM will have been defined by Zach's commitment and high standards in a way that minimizes the possibility of excessive meddling by the ICOC chairman in the day-to-day operation of the institute.

"In sum, he'll have done a heck of lot to get the fledgling state agency off the ground and functioning in a productive way. Not at all a bad time to pass the torch to a younger leader."

Jesse Reynolds of the Center for Genetics and Society, another regular observer of the agency, said,

"I was surprised when he took the longer-term job in the first place, so I am not really surprised now. His can't be an easy job."

CIRM seemed to have difficulty in finding a president back in 2005 which is one reason that Hall agreed to serve longer as president. Now the agency has the task of starting a new search, although it presumably could go back to the list it had worked on then. The job is likely to seem less risky, but the agency has structural problems involving the president's job that cannot be changed short of another vote of the people. Those involve overlapping responsibilities with the chairman.

Klein, however, indicated to reporter Somers that he may be leaving in 2008, setting the stage for a different sort of relationship between a new president and new chairman. Somers wrote that Klein, who works without a salary, said "he planned to stay probably another year so he could contribute his real estate and facilities expertise when the institute is expected to award large grants for the construction of new research facilities."

The Oversight Committee took no action last week on setting up a search for a new president since the matter was not placed on the agenda in advance as required by state law. The next meeting of the group is not scheduled until February, but presumably the old presidential search subcommittee could reconvene quickly. It also seems reasonable to assume that some work is already underway to prepare for a new search, either on Klein's part or other folks at the agency.

Hall's departure overshadowed the announcement of the resignation of Mary Maxon, deputy vice chair of the agency. She has been instrumental in putting together CIRM's proposals on the critical intellectual property policies. Maxon has been with CIRM since the beginning. She noted arduous nature of work at CIRM. "It's been like three jobs in one," she told Somers.

Hall's announcement does raise the level of uncertainty at the tiny agency (roughly 20 staffers) at a time when stability seemed to be increasing. It is likely to make it more difficult to recruit other top level people, such as the chief legal officer and senior facilities officer, which are among four positions that agency hopes to fill soon.

Hall brought a steady hand, good humor, common sense and good science to a young and struggling organization in its formative years. All qualities whose absence can be sorely missed.

(Here are links to other stories on Hall: Rebecca Vesely, Oakland Tribune; Mary Engel, Los Angeles Times; Carl Hall, San Francisco Chronicle, and The Associated Press.

(Editor's Note: An earlier version of this item incorrectly attributed the "we mentally challenged each other" quote to Zach Hall. It came from Bob Klein.)

Hook Down in the Pearl of the Pacific

Like the the spawn of Godzilla, there is no getting rid of Hopalong and its hardy crew of two(your humble correspondent and his magnificent wife). We arrived about noon on Sunday in Mazatlan following three nights at sea. We nearly killed each other on 2.75 occasions. But we have learned once again lessons of the sea.

First, take a day sail – following an extended layoff from the sea -- before you set out on a three-day passage, no matter how many sea miles you have under your personal flotation device. A boat that hasn't been sailed for months needs to be rechecked better than we did. So does the crew. Then you don't have to wrestle with lines and knots while hanging from from a precarious perch that might pitch you into the plunging seas many miles from shore.

After a long layoff, be prepared for equipment to fail. A leak popped up from our rudder post when we were about 100 miles out. Crawling under the cockpit sole with two 1/2-inch wrenches to attack the steering quadrant took care of that.

Then there are the problems that you can't fix, such as the ones with the Alpha autopilot, which became crankier than the crew and yawed unmercifully. Sleep was nearly impossible as the boat rolled in response. That was unfixable because Alpha refuses to disclose the secrets of its autopilot, which cannot be opened without actually breaking something (as in cracking open a part) on the $3,000 device.

Now for good news: We successfully performed the most important task of a sailor -- listening to Mother Nature. She tells you when to sail and when not to. Our passage took us three days. Another sailboat of the same size left the same port we did, but seven days earlier and just arrived here a few hours before us. The difference is that the other boat was so beaten up by nasty waves in the Sea of Cortez that they had to put into shelter on two different occasions and wait until the sea had settled down.

What does this have to with the California stem cell agency, the subject of this blog? Really nothing. But we can tell the folks at CIRM that timing and patience are important ingredients in success. Luck too. Stay tuned for hot stuff on stem cell affairs – as soon as I catch up on all the events that occurred while we were at sea.

(Mazatlan is known as the Pearl of the Pacific with the highest lighthouse, as I recall, on the west coast of North America. Great banana coconut cream pie (spelled pay in Spanish) at Pedro y Lola's in Old Mazatlan, as well.)

Hoisting the Hook

The California Stem Cell Report will be in the middle of the Sea of Cortez for about the next week, making it impossible to file reports. We will be on a passage from the Guaymas area to Mazatlan, both of which are on the mainland of the west coast of Mexico.

By popular demand (at least one or two requests), we are providing a few more details of the cruising life, as it is known. This passage will involve at least four nights at sea, perhaps more. The entire crew of our vessel, Hopalong, consists of two persons. We stand watches 24 hours a day while we are at sea. This is required by maritime law as well as by common sense. There are other vessels out there. Some of them are not lighted at night. Others, including large commercial ships, simply set their autopilots and proceed without keeping what is known a proper watch. So we must stay out of their way.

Our watch schedule consists of three hours on, three off during the dark hours. That means one person tries to sleep while the other keeps an eye out. During daylight, we keep a six-on, six-off schedule, but this time of year does not provide 12 hours of daylight. We also have an autopilot that takes care of the actual steering for us. Hand steering becomes tedious at the very least and sometimes arduous under rough conditions, although we hand steered for 2,000 miles one year when our autopilot was down. Those were not consecutive miles but parcelled out over a period of months. I once made a passage from Hawaii to San Francisco, which involved hand-steering nearly the entire distance on a Santa Cruz 40 called Gandy Dancer. However, we had a crew of six, which made life much easier.

We hope to be filing reports again in a week or so from Mazatlan.

Newspapers Take a Whack or Two at CIRM

During a week when the California stem cell agency might think it should be receiving some kudos, it has taken a couple of stiff shots in the media.

On Thursday CIRM's Oversight Committee is expected to approve its strategic plan for spending $3 billion on embryonic stem cell research. It is a remarkable document, the result of many months of work and involving ideas and suggestions from hundreds of persons, including the top scientists in the field and patient groups. The plan is a key bench mark in the life of an extraordinary agency that is unlike any other state department in the United States. In addition, CIRM represents the single largest source of embryonic stem cell funding in the world.

But some of that is what irritates its critics. Perhaps the harshest view came from Investors Business Daily, a financial newspaper with about 211,000 national circulation. In an editorial headlined "Fool's Gold Rush," the newspaper said,

"Californians were promised wonder cures if they passed Proposition 71 to fund stem-cell research in 2004. Turns out they have bought a $3 billion jug of snake oil."

The editorial continued:

"Activist complaints about the private sector's focus on adult and umbilical-cord stem cells have driven the state to spend $3 billion on embryonic stem-cell research — something the market won't touch, even though you can find plenty of liberal venture capitalists out there willing to pay for political campaigns with celebrity endorsers.

"The only thing this amounts to is a boondoggle for voters — fool's gold the private sector had already panned for and rejected, having found the truth out first."

The emphasis on the results of adult stem cell research echoes the party line from the foes of ESC research. The newspaper also quotes the LA Times piece earlier this week. That article has been widely cited online around the country by ESC opponents. The business newspaper piece is also surfacing rapidly on anti-ESC web sites.

The Sacramento Bee, which has not said much recently about CIRM, published an editorial today that pressed for more public disclosure from the agency, a theme the paper was early to emphasize. The Bee, which has about 331,000 circulation in California's capital, said,

"...(I)t remains baffling why the institute can't be completely transparent and publicly reveal the financial interests of its grant reviewers. Scientists regularly disclose such conflicts when presenting papers at conferences. They should do so when making recommendations on grants that involve millions -- and potentially, billions -- of taxpayer dollars.

"The institute has made some good progress this year, including adoption of a strategic plan that sets realistic goals and lowers the inflated expectations of the Proposition 71 "countdown for cures" campaign. If institute leaders could take another step and come clean about internal conflicts, they could go a long way toward securing the trust they have risked squandering the last two years."

CIRM Watchdog Receives $100,000 Grant

The California stem cell agency is not the only group with good financial news this fall. The Foundation for Taxpayer and Consumer Rights has come up with a $100,000 grant to continue its work attempting to influence CIRM.

John M. Simpson, stem cell project director for the FTCR, said today that it has received the cash from the Nathan Cummings Foundation for 2007. The money will go to FTCR's Stem Cell Oversight and Accountability Project, which was also funded by Cummings this year.

Simpson told the California Stem Cell Report:

"We've tried to be constructive critics of the California Institute For Regenerative Medicine as this important groundbreaking state agency got off the ground, holding its staff members and overseers to the highest level of transparency and accountability. With $6 billion of taxpayers' money at stake and with the agency's built-in, but legal conflicts of interest, we're gratified to be able to continue our work in behalf of all Californians to ensure they benefit from the research they are funding."

The Cummings Foundation has a $500 million endowment that originated with Nathan Cummings, the late founder of the Sara Lee Corp. It has a wide range of activities including "humane health care."

Interestingly, the foundation's website quotes Nathan Cummings as saying:

"Nothing will ever be accomplished if all possible objections must first be overcome."

Sounds like a motto for the stem cell agency as well.

Affordable Access to Stem Cell Cures Hits Hard Sledding

The latest move to ensure the affordability of stem cell cures developed by California-financed research faces opposition from both the California biomedical industry and one of the chief advocates for widespread access.

John M. Simpson, stem cell project director for the Foundation for Taxpaper and Consumers Rights, said the proposed policy to be considered this Thursday by the CIRM Oversight Committee falls "far short of ensuring that all Californians will have affordable access to the therapies, drugs and cures that their tax dollars fund."

CIRM's latest access effort is linked to a new and untested law. Called the California Discount Prescription Drug Program, it was opposed by the California Healthcare Institute, which represents the state's biomedical industry. One law firm, Arnold and Porter of Washington, D.C., which has a large health industry practice, wrote about the law:

"California’s attempt to lower drug prices, by threatening drug manufacturers with prior authorization requirements, will likely face legal challenge in federal or state court. Absent a successful legal challenge, the threat of prior authorization requirements may force most drug manufacturers to the negotiating table."

Simpson's group has been nearly alone in actively advocating affordable access to the results of California stem cell research. He responded with the following when the California Stem Cell Report asked him about the access/intellectual policy proposal coming up later this week:

"The proposed for-profit (intellectual property) policies -- like the non-profit polices -- fall far short of ensuring that all Californians will have affordable access to the therapies, drugs and cures that their tax dollars fund.

"There is an appropriate formula for a payback to the state if taxpayer dollars fund discoveries that produce a revenue stream. The plan appears to strike a reasonable balance between capping the payback so companies know their potential liability and provisions that increase the state's share if there is a true 'blockbuster' discovery. The provision that Californians get preference in the event of a limited supply is only fair since we are funding the research.

"But there must be a provision to preclude the possibility of egregious profiteering. If prices are unreasonable, the state through the attorney general must have the right to intervene -- 'march in' -- and remedy the situation. There must be a reasonable relationship between the public money invested and the price that is charged.

"What must be be prevented is the Genentech situation. The National Cancer Institute provided $44.6 million to develop the cancer drug Avastin, yet Genentech set the price at $100,000 a year.

"Another troubling aspects about the for-profit policy is that it provides that there will be a discount on therapies purchased in California with public funds without spelling out the mechanism for reaching the discount. The devil will certainly be in the details.

"We see that in the non-profit regulations. The original policy called for selling drugs and therapies at the federal Medicaid price. Under incessant battering from the so-called California Healthcare Institute – actually nothing but a shill for the biomedical industry -- the regulation before the ICOC Thursday has been watered down to cover only drugs and only through the California Discount Prescription Drug Plan. It doesn't cover all purchases made by publicly funded health plans. They pledge to amend the regulation to include therapies when a mechanism is worked out, but with CHI in the picture I am frankly worried."

CIRM's affordability language says:

"As a consequence of expenditure of the 'first dollar' of CIRM funding, the for-profit awardee organization agrees to provide a plan to provide access at the time of commercialization to resultant therapies for uninsured California residents.

"In addition, the awardees will provide the therapies at a discount price to residents whose therapies are purchased in California by public funds. For drugs generated as a consequence of CIRM funding, awardees agree to provide drugs at prices negotiated pursuant to the California Discount Prescription Drug Program (commencing with California Health and Safety Code section 130500, et seq.) to eligible Californians under that program. Awardees also agree to provide discount pricing for therapies in addition to drugs that result from CIRM funding.

"In the unfortunate event of limited availability of therapeutic products resulting from CIRM funding, awardees agree to give preference to Californian residents unless prohibited by law and whenever feasible. If an awardee is unable to grant preference to Californian residents, the awardee agrees to submit a statement of justification to CIRM."

The latest legislative analysis of the prescription drug measure says:

"According to the author, this bill is needed because Californians, especially those with no drug coverage, continue to pay some of the highest costs in the world for prescription drugs. The author states that this bill uses the state's purchasing and negotiating power to help Californians cope with the rising cost of prescription drugs by creating a drug discount card program for state residents. According to the author, despite the skyrocketing cost of drugs, to date the state has done little, compared to other states, to help residents afford their medication."

Both industry and health advocate groups opposed some facets of the legislation for different reasons. You can read a discussion of those concerns in a Senate staff analysis.

Here is a piece by Health Access California on the new law.

Here is the full text.

How Funny is ESC Research?

This you have to see.

Eve Herold, author of a book called "The Stem Cell Wars," is going to appear tomorrow on the Daily Show with Jon Stewart. Generally folks who lean towards positions favored by Stewart (and this includes Herold), receive easy treatment with only minor battering. But it does sound like it is worth checking out.

CIRM Moves to Clean Up Audit Issues

The performance audit requested by former Sen. Deborah Ortiz is already having an impact on the the California stem cell agency.

On Monday, CIRM's Governance Subcommittee approved a number of changes in its policies that seemed to be needed as a result of the state auditor's work. The full audit is not expected to be officially released until March.

The changes deal with contracting, travel and other policies.

Dale Carlson, chief communications officer for CIRM, told the California Stem Cell Report:

"We decided to address issues raised in (the audit) process to date, rather than wait for the final report. Our objective is to run a tight ship. If we can eliminate ambiguities, we'd prefer to do so sooner, not later. The problems are relatively minor, evidence of an agency that is young and new to the detailed requirements of travel and contracts applied to established government entities. Better to uphold the highest possible performance standards now, before signficant resources are placed in our trust. We want to be a model agency."

We can also say that it is good PR as well as good management to take care of this kind of stuff before it winds up as a bone of contention in a critical audit.

CIRM is heavily dependent on outside contractors because of its small staff. These changes seem appropriate but still allow considerable leeway in letting contracts without bids. While the bidding process does not guarantee good value, negotiated contracts can also lead to abuses. How all this shakes out will depend on the skills of CIRM staffers in dealing with outside contractors, which can be a real art.

Here are links to the proposed new policies which were approved unanimously and sent along to the Oversight Committee for action later this week. Travel.
Contracting.

The Loss of CIRM's Friendly Critic in Sacramento

The California legislature reconvenes Monday in Sacramento minus its chief advocate for embryonic stem cell research.

Her absence will not well serve the California stem cell agency, although its chairman, Robert Klein, probably has a different view. He labelled her an "ongoing threat" in a harshly worded screed earlier this year.

While it is impossible to fully determine the roots of his animosity, Klein and the agency are losing a valuable asset with the departure of former Sen. Deborah Ortiz, D-Sacramento.

She was the one of the earliest and strongest advocates for stem cell research in California and played a key role in the conceptualizing Prop. 71. Following its passage, she understood some of its failings and began to work to correct them. But Klein did not welcome the attention and stiffed the Senate Health Committee, which Ortiz chaired, during a session examining the research agency.

It is natural to bridle at one's critics. And sometimes their motives are mixed. But in the case of Ortiz, she was a friendly critic, one who supported CIRM but also understood its imperfections and the political risks that they continue to pose.

Having powerful friends in politics and government is important for any state agency. Otherwise a department can become fair game for the genuinely malicious. A friend such as Ortiz can provide important guidance to governmental novices as they attempt to navigate the tricky byways of the Capitol. But most importantly a powerful legislator can deflect truly harmful fire by taking an agency under wing.

Perhaps one of the best known examples of a friendly critic was Harry Truman when he was a U.S. senator in the early 1940s. His committee of one exposed examples of poor military training, waste and fraud. Folks in the Roosevelt administration did not care for this. But ultimately Truman earned appreciation from within the administration. He was a Democrat and a friendly critic. Problems with the war effort? Well, the Roosevelt administration could say, "Harry's on top of it." Harry took the wind out of the sails of many of those who could have played hob with FDR's plans.

The stem cell agency enters a new stage Monday in Sacramento. It has no obvious or powerful champion or friendly critic. That may well change as legislators settle down for their new session. But ESC research is a complex field, tricky politically and governmentally. Ortiz had mastered those complexities. She will be difficult to replace.

The LA Times' Reality Check on CIRM

The Los Angeles Times, California's largest newspaper with nearly one million circulation, Sunday published an overview of the state's stem cell agency, headlined "Reality Check for Stem Cell Optimism."

Written by Mary Engel, the story spoke of the "long and slow scientific journey" facing CIRM.

"Even with the $150-million state loan approved recently to kick-start work stalled by legal challenges, there are no breakthroughs in sight. Gone are the allusions to healing such afflictions as spinal cord injuries and Parkinson's and Alzheimer's diseases that dominated the 2004 campaign for Proposition 71. In fact, scientists say, there is no guarantee of cures — certainly not any time soon — from the measure that was optimistically titled the California Stem Cell Research and Cures Act."

Engel's piece included a host of interviews with a variety of folks interested in the agency. She also had an interesting quote from Sen. Deborah Ortiz, D-Sacramento, concerning some of the hype involved in the campaign for Prop. 71. It reflected one of the realities of political life – one sometimes not fully understood by those who criticize the overblown rhetoric of the campaign.

"'A campaign requires a message to be driven home,' (Ortiz) said. 'You can't raise those hopes and then say, 'Oh by the way, it may take us 10 or 15 years.' That's just the nature of campaigns.'"

Framing News Coverage of CIRM

Certain news media tend to set the agenda in news coverage throughout the nation. One of those is The Associated Press, whose news service goes into virtually every newspaper, radio and television station in the country.

Not only are its stories read by millions, but perhaps more importantly they are read by editors – gatekeepers -- who make judgments about what is fit to print. Those editors look to The AP for guidance about what is important, what is not and what to think about subjects they are not familiar with.

Now comes an update on the California stem cell agency by AP reporter Paul Elias, who has covered CIRM since its inception. The story, which is also likely to be circulated overseas, sounds a bit of a cautionary note in advance of next week's meeting of the CIRM Oversight Committee.

Elias quoted Zach Hall, president of the agency, as saying,

"Our aspirational goal is to cure disease. But you can't snap your fingers and have that done."

Elias also wrote:

"...(M)uch of the money (the agency) doles out in 2007 will finally go to senior scientists eager to push stem cell research out of the lab and into patients.

"But don't expect those promised cures anytime soon. The research is in such a nascent stage that even fundamental questions such as what defines a human embryonic stem cell remain unanswered."

Elias's "walk-up," as such stories are known in the business, could generate more coverage and attention to next week's meeting in Irvine. It will also shape how news media is likely to frame its thinking concerning an agency that has received short shrift in news coverage during the last year.

Review of the CIRM Grants Ends Five Hours Early

A batch of hard-working scientists has just finished the work of reviewing more than 200 applications for $24 million in California's first-ever grants for embryonic stem cell research.

The grants review group has concluded three days of closed-door meetings at the Miyako Hotel in San Francisco, analyzing the requests for funds from the California stem cell agency. Their session ended about 4:20 PST, five hours ahead of schedule, according to Dale Carlson, spokesman for CIRM.

Carlson also noted that the group took steps to add a tad more openness to the review process.

"The grants working group agreed to provide the names of members recused from each application review due to conflicts. So after the (Oversight Committee) decision, we'll be releasing the names and institutional affiliations of the grant recipients, along with the titles of their proposals and their abstracts; the title, abstract, score of each application the (Oversight Committee) decides not to fund, and the working group members recused from consideration of each application due to conflicts."

The California Stem Cell Report expects the CIRM Oversight Committee to give its blessing to virtually all of the recommendations at its February meeting.

We should note that reviewing the grants is hard work and not well-compensated. The reviewers are due a round of electronic applause. Congratulations.

TV Covers CIRM Grants Session

The California stem cell agency received some rare attention from television news this week as the result of its grant review session in San Francisco.

Reporter David Louie of KGO TV reported on complaints about the closed door meetings being held to decide which scientists receive $24 million in research grants. John M. Simpson of the Foundation for Taxpayer and Consumers Rights was quoted (see "moral seduction" item below).

Louie also quoted Dale Carlson, spokesman for CIRM, as saying there are competing claims concerning what is in the public's best interest:

"'The public's right to know, the public's right to find the best possible science that will turn stem cells into therapies and cures fastest. And when we try to balance those claims, we think the public is more interested in finding good science than in knowing who lost.'"

Louie continued:

"Carlson points out the institute is following long-standing procedures by the National Institutes of Health and other funding agencies by keeping the review process secret."

The California Stem Cell Report has carried CIRM's view on this issue at some length and will continue to do so in the future. However, as we have noted in the past, the assertion that the current federal funding procedures have produced the best science is an untested proposition. No contrary major government model exists for comparison purposes, unless we are mistaken. But we have ample evidence that secret sessions and lack of disclosure can create problems when tens of millions of dollars are being given away.

To be perfectly clear, we assume that all the CIRM folks and the reviewers are honorable and upright. The question here is one of policy and protecting embryonic stem cell research and the agency itself from nasty scandals that would damage the field. Not to mention the human casualties – scapegoats and sacrificial lambs, by and large -- that result when government programs go awry.

Reporter Bonnie Eslinger of the San Francisco Examiner also wrote a story on the grant process. You can find it here.

Fresh Fodder on CIRM Website

The all-important background information for CIRM's spate of meetings over the next week is starting to appear on the agendas on the agency's web site.

For example, which employees will have offices with windows and which will have cubicles is laid out in one document. The issue troubled the two top execs at the agency earlier this year.

A definition of capital equipment for labs to be funded by CIRM is offered, and language on the use of human tissue in research is up.

Look for more documents to be posted over the next few days.

Moral Seduction and CIRM's $24 Million Grant Giveaway

Some of the top stem cell scientists in the nation today began the arduous task of sifting through more than 200 pleas for about $24 million in research grants from the California stem cell agency, a process that is being conducted in secret with no public disclosure of the financial interests of the reviewers.

Is the process fair? Who is seeking the money? Do the reviewers have conflicts of interest? Will grant applicants with ties to CIRM's benefactors receive special treatment? Are applicants with representatives on the CIRM Oversight Committee moving to the head of the line? All of this is impossible to tell. And it all places CIRM in an unnecessarily vulnerable position because the agency has assumed responsibility for policing the secret statements of economic and other professional and personal interests of the scientists who review the grant applications.

Alternatives exist. Applicant names and their institutions could be publicly identified. The statements of economic interests by grant reviewers could be made public.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights, today told the grant reviewers in San Francisco that Connecticut is leading the way in terms of openness and transparency on the grant reviews. Simpson said in a statment:

"California's stem cell institute will tell you that they epitomize a transparent and publicly accountable operation, but it's simply not true. In fact they won't even tell you who applied for public money or with whom they are affiliated."

The foundation's press release "contrasted California's policy, where only grant recipients are identified, to Connecticut's process that discloses all applicants identities and affiliations and other key information."

The press release continued:

"Last week (Connecticut's) Stem Cell Advisory Committee awarded $20 million in research grants. There were 21 grants awarded from a pool of 70 applications. The grants were discussed and awarded at a public meeting where pplicants were identified by name. A proposed project's scientific score was listed along with comments from peer reviewers.

"Applications for grants are public records when they are made, except that proprietary information can be redacted.

"'California's stem cell overseers talk about transparency and public accountability,' said Simpson. 'Connecticut's leaders don't just talk the talk; they walk the walk. We should be ashamed of ourselves.'"

Recently we discussed, via email, some of the issues of openness and transparency at CIRM with Robert M. Stern, president of the Center for Governmental Studies in Los Angeles and one of the key authors of California's public disclosure law.

Stern told the California Stem Cell Report:

"I totally agree with you that the statements of economic interests (of grant reviewers) should be public. It is the only way that Californians can have confidence that there are no conflicts of interest."(For more from Stern see the item below.)

No one is talking about outright corruption on the part of the reviewers or CIRM. At this point, the issue is more subtle.

Some top thinkers on conflicts of interest call it "moral seduction," a process "that encourages complacency among professionals" and is "illustrated by the common assertion that 'we aren’t doing anything wrong.'"

In a working paper on conflicts, Don A. Moore of Carnegie Mellon University, Philip E. Tetlock of the Haas School of Business and Lloyd Tanlu and Max H. Bazerman, both of the Harvard Business School, also write:

"Although it is tempting to be cynical about motivation, and to assume that professionals always realize when they are succumbing to conflicts of interest, we suggest this judgment is too harsh. Putting the most Machiavellian fringes of professional communities to the side, we suggest that the majority of professionals are unaware of the gradual accumulation of pressures on them to slant their conclusions, a process we characterize as moral seduction. Most professionals feel that their conclusions are justified and that they are being unfairly maligned by ignorant or demagogic outsiders who raise concerns about conflicts of interest."

Last week the identities of foundations and individuals (see item below) that are loaning CIRM tens of millions of dollars were released. Is it ridiculous to wonder whether grant applicants linked to those CIRM benefactors might receive some special consideration? Only CIRM will know, based on its current rules. Will the agency act to intervene to prevent an abuse of the review process but at the same time offend a multimillion dollar donor? No one can tell.

Embryonic stem cell research is already fraught with controversy. California's $3 billion stem cell agency is riddled with built-in conflicts of interest – all legal. It operates like no other state department, uncontrolled by the governor or the legislature. And this week involves only the first look at applications for research grants, which are expected to pour out at a rate of $300 million annually. It behooves CIRM to go beyond its existing disclosure rules and open its important grant decision-making process to more public scrutiny.

Looking Closely at CIRM's Disclosure Rules

Are CIRM's disclosure rules for its grant reviewers good enough? Robert M. Stern, president of the Center for Governmental Studies in Los Angeles, found some weaknesses. Keep in mind that the only disclosure the reviewers make is basically to CIRM itself – not the public, which Stern believes is necessary once the agency clarifies some of its rules. You can find the text of the rules here.

Here is what Stern told the California Stem Cell Report:

"The CIRM requirements are too broad and too vague, and I would not make their disclosures public until they are made more specific. Some examples: what is a 'common financial interest' and what is a 'financial benefit of any amount?' They are not defined.

"Are former students for all-time considered professional associates? There needs to be a time period.

"What is the distinction between 'long-standing personal differences' and 'long-standing scientific differences or disagreements?'

"These are examples of terms that are very subjective and thus difficult to understand and comply with.

"Perhaps other agencies in other states or at the federal level have used these terms and have interpreted them. If so, it would be helpful to have their guidance.

"One further point, if these terms are interpreted in advice letters or
regulations, are the interpretations and advice letters public?"

The Folks Betting on CIRM BANs

Here is more on the recent buyers of tens of millions of dollars in bond anticipation notes (BANs) for CIRM. The notes will not be paid back if CIRM loses the lawsuits against it. The information was supplied by CIRM at the request of the California Stem Cell Report and has only been lightly edited.

J. Taylor Crandall

J. Taylor Crandall is a managing partner of Oak Hill Capital Partners and has been part of the firm since 1986. Crandall has senior responsibility for originating, structuring and managing investments for the firm's Technology, Media & Telecom industry groups.He serves as a co-Managing Partner of Oak Hill Special Opportunities Fund, L.P.

The David and Lucile Packard Foundation

The David and Lucile Packard Foundation was created in 1964 by David Packard (1912-1996), the co-founder of the Hewlett-Packard Company, and his wife, Lucile Salter Packard (1914- 1987).

The Gordon and Betty Moore Foundation

Established in September 2000, the Gordon and Betty Moore Foundation seeks to develop outcome-based projects that will improve the quality of life for future generations. The foundation believes in a strong monitoring and evaluation component to grant-making and concentrates their funding in three areas of interest to the Moores: environmental conservation, science and the San Francisco Bay Area. Moore was a top executive at Intel for decades and is a seminal figure in the semi-conductor industry.

Henry and Susan Samueli

Susan Samueli earned a B.A. in Mathematics from UC Berkeley in 1972. From 1972 to 1985 she was with IBM where she worked initially as a software programmer and then as a systems engineer. After leaving IBM, she focused her energy on raising her children. She developed an active consulting practice in the areas of nutrition, homeopathy, and Chinese herbs and subsequently received a Ph.D. Degree in nutrition from the American Holistic College of Nutrition and a Diploma in Homeopathy from the British Institute of Homeopathy.

Since 1985 Henry Samueli has been a professor in the Electrical Engineering Department at UCLA, and since 2003 he has also served as a Distinguished Adjunct Professor in the Electrical Engineering and Computer Science Department at UC Irvine. He has published over 100 technical papers and he is a named inventor in 36 U.S. patents. He has been on a leave of absence from UCLA since 1995. In 1988 he co-founded PairGain Technologies, a telecommunications equipment manufacturer, and served as a consultant and Chief Scientist of the company until 1994. In 1991 he co-founded Broadcom Corporation where he currently serves full-time as Chairman of the Board and Chief Technical Officer. Broadcom is a global leader in providing semiconductor solutions for wired and wireless communications.

In December 2003, Susan and Henry purchased the management contract for Honda Center (then named the Arrowhead Pond of Anaheim), a sports and entertainment venue. In June 2005 they purchased the Anaheim Ducks National Hockey League club, Honda Center's primary tenant.

Susan is on the boards of the Orangewood Children's Foundation, Opera Pacific and Temple Beth El. She also serves on the Advisory Board of the Susan Samueli Center for Integrative Medicine at UC Irvine's College of Medicine.

Henry serves on the UC President's Board on Science and Innovation, the UCLA Chancellor's Competitiveness Council, the UC Irvine Chief Executive Roundtable, and the Industrial Advisory Boards of the Henry Samueli School of Engineering and Applied Science at UCLA and the Henry Samueli School of Engineering at UC Irvine.

Susan is the Executive Director of the Samueli Foundation which provides grants to nonprofit organizations in five major program areas: Education, Health, Social Services, Spirituality & Interfaith, and The Arts. Since 1998 the Samueli Foundation has granted over $180 million, and in 2003 and 2004 Susan and Henry were listed among Business Week's 50 Most Generous Philanthropists in the nation.

Herb and Marion Sandler

The Sandler Family Supporting Foundation endows gifts in the area of human rights, the environment and medical research.

Steven L. and Mary Green Swig

A graduate of the University of Oregon and the University of Santa Clara School of Law, Steven Swig was formerly with the Law Office of Joseph Alioto. He has also been Partner and Managing Director of Titchell, Maltzman & Mark; Executive Vice-President of Swig, Weiler & Dinner; and Counsel with Howard, Rice, Nemerovski, Canady, Falk & Rabkin. Currently he is President and Co-CEO of the Presidio School of Management. A long-time San Francisco resident, he has served on many boards including the University of Oregon, the ACLU and the American Conservatory
Theatre.

M. Mary Green Swig started as a single mother working out of her home,when she launched Mary Green Enterprises, now a successful and trend-setting high-fashion lingerie firms. She has earned many prestigious design and fashion awards, including such honors as her recent selection as one of the Leading Women Entrepreneurs of the World. In 1985, she extended her collections to include a men's line known as Mansilk. During the course of her business, Mary Green has become a force in undergarment fashions.

Seventh Street Warehouse Partnership

Seventh Street partnership is owned by the Resnick family, which also owns Roll International Corporation, the Los Angeles-based privately-held holding company.

Jewish Community Federation of San Francisco, the Peninsula, Marin and Sonoma Counties

The Jewish Community Federation works to protect and enhance Jewish life through fundraising, strategic planning and providing funding for programs that care for those in need, that strengthen and secure the safety of the Jewish people and that foster Jewish renaissance at home, in Israel and in other Jewish communities.

Who Gets the Dough and Who Shares: CIRM Tackles IP, Grants and Even Office Space

The California stem cell agency will be more than busy during the next two weeks, wrestling with its plan on how to give away $3 billion as well as proposals to share the boodle that results from the taxpayer-funded research, among other things.

CIRM's staff has done a good job of posting the agendas well in advance of the meetings, which begin this week. But still missing on most items up for consideration is the background information that really fleshes out what is being considered.

The main event comes Dec. 7 when the Oversight Committee meets at the University of California at Irvine. To be voted on are the strategic spending plan, intellectual property proposals for grants to both businesses and non-profit enterprises and the newly revised CIRM budget prepared in the wake of the recent infusion of $181 million in private and state loans. Of all the sessions scheduled during the next couple of weeks, this meeting is the one most likely to be covered by the media.

The only document now available for public viewing on the Oversight Committee agenda is the IP proposal for businesses.

Beginning tomorrow, the grants review group will hold a three-day meeting to determine who receives the first research grants from the agency. The Oversight Committee must approve the recommendations of the group before the checks go in the mail. But the reality is that the 29-member committee is unlikely to make any major changes in the recommendations of the review group.

Virtually all of the important deliberations of the group will occur in private, with none of the messy public hassles that attend the spending of taxpayers' money by cities and counties in California or, for that matter, the state. Names of the applicants are secret. The financial interests of most of the reviewers additionally are being withheld from the public. CIRM has promised to police the whole process so that no shenanigans occur, something of a burden for the tiny staff of about 20 at the agency.

One of the first items on the public portion of the grants review group session is "updated procedures for the evaluation and recommendation of grant applications." Just what those proposed procedures are is unknown. No information has been made available by CIRM. But by 10:30 a.m., the group will begin its three days of closed-door meetings presumably using those yet-to-be-revealed procedures. Of course, some of the rules for evaluating grant applications can be found in state law, which cannot be changed by the review group. Other interim procedures can be found here.

The grant group is scheduled to work grueling 12-hour days as it thrashes over the more than 200 grant applications. It is meeting at the Miyako Hotel in San Francisco, which is rated as a three-star (out of five) facility and which travelers also scored as 5.9 out of 10 on TravelPost.com.

Coming up next Monday are discussions of the CIRM's internal space and travel policies, issues that shed some light earlier this year on the bifurcated and sometimes dueling leadership at the agency. (See "'Dualing' Execs.") Also up for consideration are policies for contracting with outside consultants. The agency relies on private contracts for a number of important services because of its small staff. Again, specifics are missing on the issues. The Governance Subcommittee is meeting in San Francisco, but remote access is available in many areas in California.

Finally on Friday, the Facilities Working Group, which is preparing for handing out nearly $300 million in grants for labs, will do a little work in San Francisco on the definition of capital equipment and review the progress on the first round of its grants, which are scheduled to go out in the first six months of next year.

ACT Press Releases and the NY Times

The ACT flap is one of those stories that will dog embryonic stem cell research for years – regardless of the merits or the lack of merits of the issue. One reason is that ESC research foes will not let it die.

The latest chapter, however, came in the New York Times with a related press release from ACT, the Alameda, Ca., firm whose research triggered the hooha.

Reporter Nicholas Wade wrote on Nov. 22:

"The scientific journal Nature today issued a clarification of a recent report that human embryonic stem cells could be derived without harm to the embryo, but the journal affirmed the report’s scientific validity.

"The finding, by Robert Lanza and colleagues at Advanced Cell Technology...caused a stir when it was published online in August, because it seemed to undercut the argument of stem-cell opponents that working with the cells necessarily means a potential human life has to be destroyed."

Wade also reported:

"Dr. Lanza said that he had just finished training a team from the University of California, San Francisco, in how to use his technique, and that he expected visitors from four other laboratories."

The company quickly followed the Times story with a press release headlined:

"New York Times Cites Advanced Cell's Review in Nature On an Approach to Generate Human Embryonic Stem Cells Without Destroying the Embryo"

The Interests At Stake at the California Stem Cell Agency

Another look at the conflicts of interest – all legal – in the operations of the California stem cell agency came recently in the San Jose Mercury News.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumers Rights, wrote an op-ed piece involving the upcoming, nearly $300 million in grants for stem cell research facility.

Needless to say, the money will be hotly pursued by all of California's leading universities and research instititutions. Thirteen of those have voting members on the 29-member board that will make decisions on the grants. They are barred from voting directly on grants applications from their instititutions.

But coming up next week, they will make some decisions on the ground rules for those grants. Don't look for them to vote against the institutional interests of their employers. Simpson explored some of the ins and outs of the rules and the issues.

His conclusion:

"Those representing the institutions that want the money ought not set the rules for how they get it. Unfortunately, that's not what Prop. 71 provides."