Stem Cell Bonds, Royalties and Campaign Promises

The upcoming sale of California state bonds for its unprecedented stem cell research effort raises anew a $700 million question along with allegations of deceit in the campaign for Prop. 71, the measure that created the Golden State program.

On the surface, the matters involve an arcane financial issue. Can California sell non-taxable bonds to finance the activities of CIRM or must they be taxable. If they are taxable (meaning the dividends are taxable to buyers), the state will have to offer a higher interest rate to purchasers. That, according to one estimate, could mean as much as $700 million in additional costs to the state.

Such additional potential costs did not surface in the 2004 campaign. At the time, interest costs to the state were reported as $3 billion, rather than as much as $3.7 billion. Those amounts would be needed to borrow the $3 billion for the grants for stem cell research.

Nearly a year after Prop. 71 passed, reporter Bernadette Tansey of the San Francisco Chronicle wrote that California stem cell chairman Robert Klein knew before the election that taxable bonds might be needed but did not disclose the matter to the public. Klein was leading the effort on behalf of Prop. 71.

What triggers the use of taxable bonds is CIRM's requirement that royalties be paid to the state if state-funded research generates a significant amount of income.

Tansey reported,

"The potential problems have to do with a complex and unsettled question: how federal tax law will apply to a novel state research venture, supported by tax-exempt bonds, that involves a state split of private profits.

"But IRS rules largely forbid the states to use tax-exempt bonds to benefit specific private enterprises rather than serving a general public good -- and to share revenue from an enterprise to the extent that the state becomes like a business partner."

The issue of taxability was nearly invisible prior to Tansey's article, which subsequently generated allegations of bait-and-switch tactics and statements that Klein had a moral responsibility to be more forthright about the matter.

Stu Leavenworth, associate editor of The Sacramento Bee, interviewed Klein following the Chronicle report. Leavenworth wrote,

"The integrity of Prop. 71 is at stake in the royalty(taxable bond) debate. During the campaign, advocates of Prop. 71 mentioned royalties repeatedly, with Klein touting it on the PBS NewsHour with Jim Lehrer. This wasn't by accident. California was in the midst of a budget crisis, so Klein needed to create the impression - no matter how tenuous - that Californians would get some direct return on their investment."

Leavenworth described the conduct during the campaign at best misleading. "At worst, it was a cynical ruse," he wrote.

We queried both CIRM and the office of state Treasurer Bill Lockyer, which issues the bonds, concerning whether future stem cell bonds would be taxable.

Dale Carlson, chief communications officer for CIRM, replied,

"Bonds have never been used before to fund research, and so we want to be certain that the Prop 71 offerings are eligible for tax-exempt status. (See, for example, the transcript of the 11/05 IP task force meeting beginning at page 19 (http://www.cirm.ca.gov/transcripts/pdf/2005/11-22-05.pdf)) The Treasurer's office assumes that they'll qualify, but will be seeking guidance from the IRS to be sure. In the meantime, this first offering will be taxable."

The response from spokesmanTom Dreassler in the treasurer's office was similar:

"We want to complete the initial sale ASAP so we can pay back the bridge financing provided by the state General Fund and private foundations. At this point, however, we do not have an IRS determination that we can sell stem cell bonds as tax-exempt. So, we will issue this initial $250 as taxable. Then we hope to get a formal determination from the IRS that establishes the extent to which we can issue tax-exempt stem cell bonds. Once we get that ruling, we can refinance the $250 million as tax-exempt, thus cutting taxpayers' costs. Our long-term intent is to sell as much as possible of the $3 billion as tax-exempt, consistent with the IRS determination."

CIRM presumably could eliminate the cost of the added interest by withdrawing requirements that royalties be paid. However, that is extremely unlikely. Meanwhile, the IRS opinion could be some time in coming.

You can find all the coverage by the California Stem Cell Report and links to the stories mentioned above, plus much, much more by searching the label "bonds" below.

UCLA to Receive Multimillion Dollar Stem Cell Gift

Don't stand under the stem cell money spigot -- especially with your mouth open. You might drown. First came the news of the pending sale of California stem cell bonds. Now comes the announcement that multimillionaire Eli Broad is going to make a whopping gift to UCLA.

So big that California Gov. Arnold Schwarzenegger is going to preside at the announcement on Monday, which will be televised live at 10 a.m. PDT on the governor's web site. The exact amount is not known, but Broad gave $25 million to UCLA's crosstown rival, USC for stem cell research, but apparently that was not enough to justify a gubernatorial presence. Of course, the governor may have just had a vacant spot in his calendar, and the amount may be less than the $25 million.

Broad also loaned $2 million to the California stem cell agency when it was strapped for funds because of lawsuits.

Broad and his wife, Edythe, were among the 50 most generous philanthropists in the country, according to a Business Week ranking in 2005. They have given close to $2 billion to various charities. Bravo to them. They help set an example that could well be emulated by others.

Whoopee! CIRM To Dive Into The Dough

Those of you of a certain age may remember the Scrooge McDuck comic books of the 1950s. He was the gazallionaire uncle of Donald Duck. The richest duck in the world, old Scrooge was fond of diving into the mounds of loose money in his vault and throwing the stuff into the air.

Come Sept. 27, California stem cell Chairman Robert Klein and company will finally be able to do that -- sort of – after the state sells $250 million in state bonds to finance the grants and operations of the California Institute for Regenerative Medicine.

According to Reuters, State Treasurer Bill Lockyer this week set the date for the sale, nearly three years after voters approved Prop. 71, which created CIRM and authorized $3 billion in bond financing. Lawsuits made the state unable to sell the bonds. After that was cleared up in May, state budget issues delayed them further.

Since 2004, CIRM has made to do with loans from the state and private philanthropists. All of those will have to be repaid, but it is unclear whether the bond money will go to that first or directly to grant recipients.

Interestingly, Reuters said the stem cell bonds will be taxable, which means that they will require a higher interest rate than the non-taxable bonds, costing the state more.

Christmas Coming Early for 25 California Scientists

Fifty-nine "young" California scientists are seeking awards from the California stem cell agency that could run as high as $3 million a year.

CIRM is scheduled to give away $85 million to 25 scientists in December, which should make a fine holiday treat.

Dale Carlson, chief communications officer for CIRM, told the California Stem Cell Report that applications came from researchers at 28 organizations. Eleven University of California and California State University campuses were represented. The California State Univesity system is separate from UC. Four private universities submitted applications. Thirteen non-profit research institutions were included.

The institute refuses to disclose both the names of individual applicants and institutions, even those that are taxpayer-funded enterprises.

The five-year faculty award program is aimed at drawing the best and brightest into stem cell research in California and not just embryonic stem cell research. Arlene Chiu, CIRM's top scientist, said,

“These grants are designed to encourage newly independent investigators to pursue bold and innovative studies across the full range of stem cell types – human and animal, embryonic and adult. We will consider providing successful applicants salary and research funding for up to five years, ensuring that they have stable, secure financial support as they begin their independent scientific careers.”

Director Says CIRM "More Effective" Than Other State Agencies

One of the directors of the California stem cell agency, David Serrano Sewell, has responded to comments critical of the agency in an Internet piece headlined "California's stem-cell management disarray."

Written by David Hamilton, the article said CIRM "is probably one of the most grueling places to work in all of biomedicine." He noted the departure of several top staffers at the agency this year.

Sewell, who is a member of the CIRM Oversight Committee, responded directly with an online comment on Hamilton's Venture Beat piece. Sewell said in part,

"I challenge you to find a state agency that has been more effective. Those grants don’t just happen, it takes hard work and lots of meetings. And, we’ve been transparent throughout the entire process. Thus, the system envisioned by Prop 71 works. I can appreciate that it’s your job to read the tea leaves and make some half baked spin, but you’re just wrong here."

Hamilton responded in part,

"I intended no denigration of the ICOC membership, but it’s a bureaucratic fact that when you have a 26-headed hydra trying to run a public agency, whoever controls the agenda and many if not most staff resources effectively directs the body’s effort — and that’s more or less what (California stem cell chairman) Bob (Klein) does."

You can read the entire exchange, including the original article, here. Scroll down to the bottom to find the comments.

Fresh Bustling in CIRM Presidential Search

The search for a new and permanent chief executive officer to direct the world's largest single source of funding for human embryonic stem cell research is generating a flurry of activity this month.

Robert Klein, chairman of the Oversight Committee for CIRM, scheduled a special teleconference meeting Sept. 14 of the full Oversight Committee at 3 p.m. and a meeting of the presidential search committee at 5 p.m. Another meeting of the search committee is scheduled for Sept. 28. (You can find the agendas and teleconference locations here.)

Topics on the agenda include compensation. Despite a salary range for the position that reaches $412,500 annually, the amount does not appear enough. The cost of housing in the San Francisco area appears to be one of the reasons. Other issues as well seem to be raising difficulties in finding a new president. (Search on the label "presidential search" to see full details.)

Similar rounds of meetings, which are conducted almost entirely behind closed doors, have occurred in the past with no result. The $3 billion agency has been operating on a lame-duck status for nine months since the former president, Zach Hall, announced his plans to retire.

Early in August, the Oversight Committee hired Richard Murphy, former head of the Salk Institute, to serve as interim president for six months.

Fresh Comment

Christine has posted a comment on the "Framing News Coverage" item.

ISSCR Backs Controversial California Effort

The prestigious International Society for Stem Cell Research has stepped into the flap over a land development proposal in Northern California, endorsing the concept of a stem cell research facility linked to the plan.

California stem cell Chairman Robert Klein, who backs the proposal, said in an interview that it was the first time the society has taken such an action. The group represents 2,500 scientists and others in 47 countries.

In a July letter to Yolo County officials, George Daley, president of the ISSCR, said,

"There is a severe shortage of funds for bridging the gap between academic discovery research and industry-sponsored clinical development. This gap of funding is a harsh place where small firms struggling to bring regenerative medicine to patients receive very little support from government and/or private investors. The need for philanthropic support of medical research has never been more urgently needed than today. The substantial gift offered by the Tsakopoulos Family would create a Translational Medicine Development Fund to bridge the gap between basic research and tangible potential therapies and/or cures for seventy or more chronic diseases and injuries within the field of regenerative medicine.

"We also endorse this unique concept because it will bring international institutions together and create a critical mass of scientific research that will allow collaboration and progress in a way that has never been seen before. This exciting proposal would create a world class model for scientific research and collaboration that is the first of its kind.

"We strongly encourage you to study this concept as a part of a general plan to bring economic development to your county."

Klein and Angelo Tsakopolous, a Sacramento area land developer, are lobbying for a proposed 2,800-acre land deal near the capital that would also create a stem cell research center with a projected endowment of $200 million. Earlier this spring, Klein's private lobbying organization received a $125,000 contribution from Tsakopolous' company. Klein would head the research center.

Yolo County's elected supervisors shelved the plan at least temporarily in July.

Daley serves as an ad hoc membe of the California stem cell agency's grants review group and served on the advisory panel for its strategic plan. In June Klein was named to the ISSCR's advisory group.

The text of the ISSCR letter, which was provided to the California Stem Cell Report by Klein, follows in the item below.

Text of ISSCR Letter

Here is the text of the letter from the ISSCR concerning the Northern California county land development/research center proposal.

July 11, 2007

The Honorable Supervisor Mariko Yamada, Chair
Yolo County Board of Supervisors
625 Court Street, Room 204
Woodland, CA 95695

Dear Supervisor Yamada,

The International Society for Stem Cell Research (ISSCR), which represents over 2500 scientists, ethicists, and clinical researchers in the field of stem cell biology from 47 countries, heartily endorses the concept of an International Center for Regenerative Medicine at the Davis Ranch site, dedicated to the translational development of new therapies.

There is a severe shortage of funds for bridging the gap between academic discovery research and industry-sponsored clinical development. This gap of funding is a harsh place where small firms struggling to bring regenerative medicine to patients receive very little support from government and/or private investors. The need for philanthropic support of medical research has never been more urgently needed than today. The substantial gift offered by the Tsakopoulos Family would create a Translational Medicine Development Fund to bridge the gap between basic research and tangible potential therapies and/or cures for seventy or more chronic diseases and
injuries within the field of regenerative medicine.

We also endorse this unique concept because it will bring international institutions together and create a critical mass of scientific research that will allow collaboration and progress in a way that has never been seen before. This exciting proposal would create a world class model for scientific research and collaboration that is the first of its kind.

We strongly encourage you to study this concept as a part of a general plan to bring economic development to your county. We believe that stem cell research will inevitably spawn commercial interest and change the lives of your residents and millions of Americans who live with intense suffering and face premature death. We urge you to carefully consider this unique and innovative proposal to find therapies and/or cures to treat devastating illnesses and injuries.

Respectfully,
George Q. Daley, MD, PhD
President, ISSCR

New CIRM Director, Salk, UC San Diego, Coziness and Much More

The Salk Institute for Biological Studies seems to be doing well in connection with the $3 billion stem cell agency. So is the University of California campus in San Diego.

At least so it appears from the latest appointment to the 29-member Oversight Committee that serves as the board of directors for CIRM. On Friday (Aug. 31), Democratic Lt. Gov. John Garamendi announced that he had named Marsha Chandler to the committee as one of four executive officers from a California research organization who sit on the panel.

Chandler is executive vice president and chief operating officer of the Salk Institute in La Jolla, Ca., a job she has held since July 1. That was the date when Richard Murphy retired both as president of Salk, which is a $100 million-a-year enterprise, and from the CIRM Oversight Committee. Early in August, Murphy was hired for six months by the Oversight Committee to serve as the interim president of CIRM. Murphy has said he will not participate in any matters affecting Salk. Chandler was appointed to fill the vacancy left by Murphy's departure from the Oversight Committee.

Prior to joining Salk, Chandler was the No. 2 executive at the UC San Diego campus. The dean of the medical school there, David Brenner, also serves on the Oversight Committee.

The Oversight Committee awards research and lab construction grants to academic institutions such as the University of California and non-profit institutions such as Salk. The committee also sets the rules and standards for awarding the grants. Oversight Committee members are barred by law, however, from voting directly on grants to institutions in which they have economic ties.

So far UC San Diego has received $14.8 million in CIRM grants. Salk has received $6.6 million.

Similar relationships exist involving CIRM and other UC campuses, other universities and other nonprofits, and it all appears suspiciously cozy to many outsiders. But there is no evidence of any wrongdoing. Nonetheless, the links between the persons who control the $3 billion in taxpayer funds and the beneficiaries of that largess virtually demand that the Oversight Committee and CIRM operate with more openness and transparency than most other state agencies or the NIH. Those entities are subject to executive and legislative controls from which CIRM is constitutionally exempt. The stem cell institute, however, has been reluctant at times to make its operations totally transparent. For example, it refuses to disclose the names of public or private universities or research organizations that seek grants until after the grants are approved, which makes it impossible for the public or other interested parties to comment.

Chandler's academic background is in political science, but she has been a university administrator for nearly 20 years. At Salk she fills a newly created position, one aimed at giving Salk's yet-to-be-named, new president more time for scientific work. Ironically, CIRM cannot easily make similar executive management changes because its executive structure is locked in state law that, for all practical purposes, is impossible to change. Chalk that up to the drafters of Prop. 71, the ballot initiative that created CIRM. For readers not familiar with California law, an initiative is drafted by private individuals, usually in secret and outside of the legislative process. We have never seen a list of all the persons involved in drafting the language of Prop. 71, but California stem cell Chairman Robert Klein takes credit for writing most of it.

A check of news sources shows that Chandler has not made headlines in San Diego, although her name surfaced along with many others in stories about the UC executive pay flap and a piece in the San Diego Union-Tribune about the UC housing assistance program. Ironically, CIRM is barred by law from offering such housing assistance in its search for a new, permanent president.

Two vacancies still exist on the Oversight Committee, and it is not known when they will be filled.

(An appeal to readers: If you know of the names of individuals who participated in writing Prop. 71, please send their names along to the California Stem Cell Report – djensen@californiastemcellreport.com. Or you can just post them anonymously, if necessary, by clicking on the word "comments" below.)

Klein Speaks Out on Presidential Search

California stem cell chairman Robert Klein today defended the conduct of the search for a permanent president of his agency, declaring that there is "great interest" in the opportunity to head the $3 billion enterprise.

In an op-ed piece in The Sacramento Bee, Klein responded to a Bee editorial Aug. 12 that summarized issues complicating CIRM's presidential search, which we have written about on this blog and for Wired.com. The institute has operated in a lame-duck management status since early last December. Some CIRM Oversight Committee members worried as early as last January about the negative impact of a lengthy search.

Klein wrote:

"The CIRM governing board is committed to recruiting a new president who can provide the global strategic leadership this position requires. Academic searches for comparable positions traditionally take 12 to 18 months. Our recruitment effort has a more aggressive schedule; but as I stated in an interview with The Scientist, recruiting a great scientist with a proven record in directing and managing major ongoing research involves finding medical scientists who can take over existing grants, assume the responsibility of mentoring graduate students and post-doctorate students in the labs, and assume the institutional management responsibilities for leading the stem cell efforts of a major university or research facility."

That statement seems to indicate that the board is currently committed to finding an active scientist with a major research portfolio that he or she would have to give up to become president of CIRM. It also seems to mean that the board is not actively pursuing candidates who would be top notch administrators but have a lesser scientific pedigree.

Fresh Comments

Comments have been posted on the Burger King item below from David Hamilton and David Jensen.

Chris Scott: Rocky Road Ahead for CIRM

A onetime candidate for the presidency of the California stem cell agency today outlined his views of the challenges facing the agency in the next 12 months or so. They include the "K-factor," the politics of the CIRM Oversight Committee and micromanagement.

Christopher Scott, head of the Stem Cells in Society Program at Stanford, said, among other things, in an op-ed piece in The Sacramento Bee:

"The institute must quickly find a replacement for (its No. 1 scientist, Arlene) Chiu and double its staff; put in place efficient mechanisms for research and ethical oversight; generate new rounds of proposals, renewals and reviews."

The Bee noted that Scott had been a candidate earlier for the permanent presidency of the institute but said he is not a candidate currently.

Scott wrote that Richard Murphy, the new interim presidency of CIRM "should demand more control over the institute's budget line items and governance decisions while listening to the strong personalities on the citizens committee and in Sacramento."

Scott said:

"The Red Cross collapsed under the weight of its hydra-headed board; the difficult issues centered on control and the dysfunction of consensus management. CIRM faces some of the same problems. Paying attention to the needs of the major players and being flexible to alternate views will help him balance control."

Scott continued, hitting various topics:

"The K-Factor. Robert Klein(chairman of the Oversight Committee) is a blue-chip entrepreneur, passionate advocate and hero to many. His forceful personality and charisma made the institute what it is, but these qualities may not be suited for efficiently executing its mission. Though Klein has said he will step down in 2008, some founding entrepreneurs mistime their exit. Murphy will have to deftly manage Klein's freewheeling ways, leveraging his strengths while covering his weaknesses. Checking the ego at the door will help."

Scott wrote,

"Secession. Any executive who has worked in a startup knows six months will pass in an instant. A permanent president must be found, one who can handle the political challenges while tending to the small stuff, the decidedly unsexy but essential routine of ramping up and running a large research granting agency."

He concluded:

"CIRM's second phase is more important than the first. California voters put their money on the line for a vision of science and medicine. Now comes the hard part. The institute must execute the plan, bringing new knowledge, discoveries and therapies to California."

Grueling Work, CIRM and Burger King

Is the $3 billion California stem cell agency a Rube Goldberg-like contraption deliberately designed to function on a shoestring?

Reporter David Hamilton of Venture Beat says yes. Hamilton, who once covered biotech for the Wall Street Journal, today wrote about the state of the CIRM in the wake of the departure of its No. 1 scientist.

“…(I)t seems safe to say that the stem-cell agency is probably one of the most grueling places to work in all of biomedicine. Structually, CIRM is a Rube Goldberg-inspired contraption in which a panel of 26 appointed academic luminaries, business types and patient advocates oversees a professional staff of no more than 50. The powerful oversight committee chairman, Robert Klein II, essentially runs the show, which undoubtedly complicates the job of finding a prominent biologist — not usually the shyest and most self-effacing people around — willing to give up their laboratory in order to butt heads with Klein over the institute’s management and direction.

“What’s more, CIRM itself was deliberately designed to function on a shoestring. That hard cap of 50 staffers was initially intended to reassure California voters that the agency wouldn’t waste taxpayer money on a hiring binge, and in that sense, it’s clearly worked. On the other hand, add the fact that the agency hasn’t even come close to filling all 50 positions to the string of departures, and it begins to look a lot like the institute is paying the price by burning through its human resources at an accelerated rate.”

We should add that as of a couple a weeks ago, CIRM had 26 employees, perhaps the equivalent of the staff needed for a 24-hour Burger King. CIRM´s board of directors numbers 29.

CIRM Challenges Report on Chiu

The California stem cell agency has responded to our item on Monday dealing with the implications of the departure of its No. 1 scientist, Arlene Chiu. Dale Carlson, chief communications officer for the institute, cited the following sentence from the post:

"While it would be incorrect to say that all CIRM staff departures this
year are related to the presidential situation..."

Carlson then said,

"In fact, it wouldn't be correct to say that ANY of the staff departures were related to the presidential situation, nor to each other. Each of these folks left or is leaving for individual reasons. The timing is coincidental and nothing more should be read into them.

"Contrary to Mr. Simpson's speculation, Dr. Chiu's desire to return to Southern California and pursue other interests is exactly as stated. She would not be staying longer if the presidential vacancy did not exist."

Stem Cell Snippets: McGee, Lansing, Prinz

Pricing Stem Cell Cures – The California stem cell agency is still wrestling with anticipated prices of stem cell therapies. Not directly, mind you. It comes under the topic of intellectual property. Glenn McGee, director of the Alden March Bioethics Institute, wrote recently about a drug pricing issue that could resonate in the future – if not currently -- with CIRM. The issue involves Merck and its cervical cancer drug, Gardasil, which he said is priced out of the reach of millions of women. McGee cited a report that Merck has spent $48 million in the last 10 years on lobbying. He wrote:

"If the company can afford to spend huge amounts convincing legislators the vaccine is something every woman deserves, it can afford to take its own advice, and reduce the price."

Variations of McGee's argument are certain to surface in the future involving stem cell cures. Plus they will be freighted with heated rhetoric about how those cures owe their very existence to funds provided by California taxpayers. Something for the good burghers on CIRM Oversight Committee to consider.

Another Presidential Search – Sherry Lansing, a member of the Oversight Committee for the California stem cell agency, has added more to her plate. She will serve as vice chair of the search committee to find a new president for the University of California. As a CIRM director, she is already involved in the search for a new president for CIRM in addition to her other many philanthropic activities. Incidentally, the current UC president earns $405,000 annually, which is apparently not enough to attract a CIRM president. However, the UC position has other benefits, but may or may not involve less aggravation than the CIRM post.

Prisons vs. Stem Cell Research -- California attorney Kristie Prinz wants to know. Writing on her California Biotech Law Blog, she raises a fundamental question about the $3 billion California stem cell agency,

"One cannot help but wonder if the money couldn't have been better spent elsewhere, even if you are a supporter of the biotech industry and of the concept of the research generally. Our schools, health care, keeping drugs off the street, illegal immigration, crime, overcrowded prisons, and terrorism are just some of the many issues facing this state that could have also been better funded with the same money. Did we as taxpayers make a good decision when we voted to use the funds instead on stem cell research? It's a thought-provoking question that all Californians should consider."

More Analysis on the Chiu Resignation

The following came in today from Christopher Thomas Scott, head of the Stem Cells in Society Program at Stanford, concerning the departure of Arlene Chiu(see item below). He makes the very good point that, compared to the NIH, CIRM is working with quite lean staff resources.

Here are Scott's comments:

"The other shoe dropped at CIRM. Arlene Chiu, the top executive responsible for the nuts and bolts of the organization, resigned. Her manifold responsibilities included the tough work of writing and disseminating the agency's request for proposals, scheduling and running a time consuming and complicated scientific review process, overseeing the awards, managing staff, and most recently, filling a leadership vacuum left by the departure of former president Zach Hall. For those of us familiar with the research grants business, we know Dr. Chiu as a tireless and enthusiastic science professional, and understood how she kept CIRM on its feet. She did much of this working with less staff than stipulated by the operating budget. Even at full strength, the numbers of professionals in her group would be far fewer than a comparable agency of the NIH, where she and Hall had made their professional careers. There, the institutes have the benefit of massive federal support. Here, Hall and Chiu, along with a skeleton crew, had to manage the launch of an organization while fighting lawsuits, scrabbling for money, and dancing through political hoops. While the reasons for Dr. Chiu's departure are known only to her, its likely she's tired of the long hours, the pressures of running a research enterprise on thin margins and the purgatory caused by an unsuccessful presidential search.

"Interim president Richard Murphy, on the state rolls for only 180 days, has a doubly difficult task in front of him. He must find a replacement for his top scientist and one for himself. And, the award money must reach the California labs, which have begun to ramp up the experiments that will bring new knowledge and hopefully, new therapies to Californians. Any executive who has been in a start up knows that six months will pass in an instant. More importantly, it is just as hard, perhaps harder, to execute a vision as ambitious as this than to have it in the first place."

Lab Grant RFA Now Available

The California stem cell agency has posted the request for applications for $227 million in lab construction grants, the largest round in its history. Letters of intent are required by Sept. 26. The news release can be found here. The RFA can be found here.

CIRM Loses its No. 1 Scientist

The top scientist at the California stem cell agency, Arlene Chiu, will soon depart in a move that reinforces the importance of maintaining the organization's stability and finding a new, permanent president.

CIRM has been in a lame-duck mode since last December when former President Zach Hall announced that he planned to leave. John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumers Rights, said Chiu's resignation "underscores the importance" of finding a permanent president.

Simpson said the failure to have a new, permanent CEO in place represents "a substantial failure of leadership first and foremost on the part of board Chairman Bob Klein and to a lesser extent on the part of all board members."

Earlier this month, the CIRM Oversight Committee installed Richard Murphy, former president of the Salk Institute, as interim president for at least six months as it continues to seek a permanent replacement for Hall.

CIRM is still a young organization (less than three years old) with a small staff (26 persons)that has seen other significant departures relatively recently. They include Kirk Kleinschmidt, director of legislative relations; Mary Maxon, the lead staff person on intellectural property, Scott Tocher, associate general counsel; and scientific officer Ruth Globus. While it would be incorrect to say that all CIRM staff departures this year are related to the presidential situation, voids in permanent leadership create uncertainties and instability. Departures for unrelated reasons can take on a life of their own, triggering others to consider making job changes. Couple that with the regularly long hours that CIRM staffers put in, and you have the potential for more losses.

In several ways, the press release on Chiu's departure acknowledged those concerns. Indeed, the headline on the release did not even say she was resigning. Carefully crafted to stress continuity and stability, it noted that she will continue through the end of October on a fulltime basis and after that as a consultant on some of CIRM's important efforts. Chiu as well issued a statement emphasizing the progress at CIRM and the credentials of interim President Murphy.

On a personal note, Chiu is one of the first persons that we met at CIRM. Her diligence, integrity and dedication have always impressed us. And as one of the earliest regular staff members, she set a tone and example that was important in establishing a healthy organizational culture at the new enterprise.

She was recruited by Hall, who issued the following statement, which is not currently available on the CIRM Web site:

"Persuading Dr. Arlene Chiu to come to CIRM from NIH was one of the most important accomplishments of my presidency. As the senior CIRM scientist during its first three years - a time of constrained resources, Arlene recruited, mentored and led the scientific team responsible for awarding the first $200 M in grants for stem cell research in California - a remarkable legacy. She has a deep understanding of stem cell research, expert knowledge of grants administration, and extraordinary personal qualities of integrity, grace and a passion for the mission of CIRM. Arlene has left her mark on the DNA of CIRM. She will be hard to replace."

Murphy and Klein also issued statements which can be found in the CIRM press release. Chiu's statement can also be found in the press release.

Here is the complete statement from Simpson:

"Dr. Chiu is one of the all-too-often unsung heroes of CIRM, regularly going beyond the call of duty to ensure scientific excellence in the agency's efforts. She has built an excellent scientific staff that should be able to carry on in her absence.

"We agreed to disagree on some things, like the amount of transparency and openness that belongs in the peer review process; but I have tremendous respect for her and her contributions.

"I believe Dr. Chiu's departure underscores the importance of the oversight committee performing its single most important task: hiring a president and chief executive.

"Had the committee done so in a timely way, I believe Dr. Chiu would still be at CIRM. Given the situation, the selection of Richard Murphy as interim president is a necessary stopgap to hold the agency together.

"But the failure to hire a permanent president, given Zach Hall's announcement of his plans last December, is a substantial failure of leadership first and foremost on the part of board Chairman Bob Klein and too a lesser extent on the part of all board members."

News coverage of Chiu's resignation was light. Here are links to the stories we saw: Jim Downing of The Sacramento Bee, Kristen Philipkoski, Wired.com, Sacramento Business Journal (the same story appeared in other Business Journals), and the Associated Press.

Back in Mexico

For those of you unfamiliar with all the details of this blog, we produce it primarily from west coast of Mexico where we live on a sailboat. We have returned once again to Mexico after a stay in the Old Country minding grandchildren and providing low-skill labor for our children. But never fear. The items will continue to be posted on a reasonably regular basis. Later today, we will have an item on the departure of Arlene Chiu, the top scientist at the California stem cell agency.