Stem Cell Fanciers Snap up More Than $100 Million in Bonds

California today sold a whopping $102.8 million of its stem cell bonds to individual investors, more than triple the amount expected by the state.

The size of the sale, 41.1 percent of the $250 million total, testified to the powerful lure of stem cell research for a large segment of the public. The number probably could have been higher if publicity had been generated earlier among the patient advocate and other sympathetic groups.

The taxable bonds were sold at a 5.168 percent rate, which is 1.15 percentage points higher than today's rate on three-year U.S. Treasury notes. Institutional investors purchased what individuals did not.

State Treasurer Bill Lockyer (see photo) said in a news release,

"The investment by individuals far exceeded our expectations and shows how strongly Californians believe in the promise of stem cell research to cure diseases and relieve suffering,"

California stem cell Chairman Robert Klein said,

"Certainly many of the investors are patients suffering from debilitating disease or injury. They’re making an investment in their future – not simply their financial future, but their future quality of life."

Lockyer also noted that it was the first time California bonds have been used to directly finance the development of intellectual capital.

He said $48 million of the proceeds will go to pay back the bond anticipation notes that philanthropists purchased to provide funds for CIRM while it was hobbled by litigation. More than $200 million will go for research grants. That means that state is still waiting for repayment of a $150 million loan to CIRM. It also means that a new round of bond financing is likely soon. The agency currently has $850 million in untapped bonding capacity out of the $3 billion authorized in 2004. It can only issue $350 million a year, but unused bonding capacity is carried over year to year.

Lockyer's news release was not posted on the Internet at the time of his writing, but you should be able to find it here later in the day.

Stem Cell Bond Offering Attracts Media Attention

The $250 millon California stem cell bond offering today has triggered some unusual coverage of the state's research agency throughout the country.

Ordinarily the issuance of bonds by California attracts virtually no media attention. But since State Treasurer Bill Lockyer has created a program under which small investors can easily buy the bonds, stem cell bond news has a bigger audience.

Both CIRM and the state treasurer's office were a tad slow on picking up the idea of generating favorable publicity on the stem cell bonds, given that the cause of stem research has some nearly fanatic followers.

But in the last couple of days, press releases rippled across the country, generating stories including one notable video piece on CNBC. The segment was long – seven minutes and 39 seconds – but more than one of the participants needed to do additional homework.

The CNBC anchor who introduced the topic about California issuing stem cell bonds began with this question: "Do they have this right?" No one really answered the question, but, of course, the answer is yes. Another participant said that government is not in the business of funding "speculative" research, apparently not aware of the billions already provided for research by the NIH. As usual with many TV news interviews, some heat was generated during the discussion among the four participants. Perhaps some light also. But for the most part, the CNBC effort demonstrated the shallow level of knowledge about stem cell research and the California stem cell agency.

For those small investors who may have missed out on today's offering, another round is certain to come up probably relatively early next year. Watch this space for details.

Biotech Bank Plan Moves Ahead at CIRM

With no fanfare whatsoever, the $3 billion California stem cell agency – already the largest single source of funding for human embryonic stem cell research in the world – Wednesday took the first step towards extending its life by moving forward on creation of a loan bank for the biotech industry.

Few details were available. They will be worked out by a Biotech Loan Task Force, chaired by Duane Roth, chairman and chief executive officer of Alliance Pharmaceutical Corp. of San Diego, Ca., and finance committee, chaired by venture capitalist Michael Goldberg(see photo), a general partner in Mohr Davidow Ventures of Menlo Park, Ca. Both are directors of the stem cell agency.

Members of the CIRM Oversight Committee did not discuss the loan bank, which is the brainchild of Robert Klein, chairman of the California Institute for Regenerative Medicine. They approved creation of the task force and a new finance committee on a unanimous voice vote at a meeting in San Diego, Ca.

Following the meeting, Goldberg told us that he has not yet developed a schedule for his group's hearings, declaring it was too early to discuss details.

As we mentioned earlier, a major lending program operated by CIRM poses a host of questions and also opportunities. One advantage of a biotech bank is that it could create an income stream that could continue to fund CIRM well beyond its bonding capacity, which is only about 10 years if it taps the maximum each year.

The biotech bank also highlights the unusual nature of the agency, which enjoys special capabilities not shared with virtually all other state departments. For example, it can raise funds much like a private nonprofit organization, although fundraising is a tricky business. A case in point was the star-studded fundraiser in May of 2006 in San Francisco, featuring Julie Andrews, which promised to raise $1 million for CIRM. The actual figure was only $250,000, according to CIRM.

(An earlier version of this item incorrectly identified Goldberg as chairman of the Biotech Loan Task Force and Roth as chairman of the Finance Subcommittee.)

CHA Grant Withdrawn, Burnham Grant Denied

A California subsidiary of a Korean firm caught in an international plagiarism flap has bailed out of a $2.6 million grant from the California stem cell agency.
Arlene Chiu, chief scientific officer of the $3 billion California Institute for Regenerative Medicine, told the agency's directors at a Wednesday meeting in San Diego, that CHA Regenerative Medicine Institute of Los Angeles (CHA RMI) withdrew its application on Sept. 28 following a lengthy administrative review.

She did not elaborate on the matter. She referred questions to Tamar Pachter, general counsel for CIRM, who told us that it would be more appropriate to request the CHA information under California's open records law, a process that takes some time. CIRM directors did not comment on the matter.

John M. Simpson, stem cell project director of the Foundation of Taxpayer and Consumers Rights of Santa Monica, Ca., told directors that withdrawal of the application and action involving a grant to the Burnham Institute "spoke very well of the staff and their diligence." He said it showed CIRM was "serious about standards."

William Heisel of the Los Angeles Times reported that
Jean Yi, the CHA institute's chief executive, said it withdrew its application because of criticism that it was not a true nonprofit

Heisel continued:

"'CHA Regenerative Medicine Institute (CHARMI) more than adequately addressed the baseless criticism,' Yi said in a written statement. 'We think the process was needlessly politicized. . . . Nevertheless, we are withdrawing because the last thing we want to do is be the source of any impairment to [the California Institute for Regenerative Medicine's] current level of well-earned public support.'"

Pachter told us that CHA RMI had met the legal requirements for California nonprofit status.

CIRM directors approved the grant to CHA last March following a closed-door review. The review failed to turn up the fact that the parent of CHA RMI, CHA Health Systems, was headed by scientist Kwang-Yul Cha, who was enmeshed at the time in an international plagiarism dispute

Following disclosure of the Cha controversy, Simpson criticized CIRM's secretive grant award process. He said CIRM was "burned" because of its closed door review of the grant applications. Marcy Darnovsky, associate director of the Center for Genetics and Society of Oakland, Ca., said, "The leadership of CHA Health Systems has a shadowed recent history, including a lawsuit that alleges the director of its fertility center lied in order to obtain a woman’s eggs."

One of those alleging plagiarism, Alan DeCherney, editor of the Fertility and Sterility Journal, in May retracted his allegations of plagiarism and perjury.

Chiu also said another grant approved by directors last spring was rejected during the administrative review that is conducted on all approved grants before the checks actually go out. Chiu said the principal investigator on the $638,000 grant, David Smotrich, did not meet the criteria of being an on-site, fulltime employee of the Burnham Institute in La Jolla, Ca.

In its public review of the, CIRM said last Febarury, "This proposal is exactly the type of research that CIRM should be funding. The personnel is second to none, and it could not have been funded by NIH(National Institutes of Health.).

Terri Somers of the San Diego Union-Tribune wrote:

"Smotrich, who runs an in-vitro fertilization practice in La Jolla, is a member of Burnham's clinical faculty. He has also started a stem cell bank that is collecting donated frozen human embryos left over after the in-vitro fertilization process but no longer wanted by women trying to have children.

"From those embryos, Smotrich and scientists from the Burnham have been working to derive stem cells. He and a team that includes Burnham researchers Evan Snyder and Jeanne Loring sought the grant to fund work that Smotrich and other benefactors have underwritten to date.

"The standards of this particular grant put an independent research facility, such as the Burnham, at a disadvantage compared with an academic/medical facility such as UCSD, where clinical faculty can see patients in an office on campus, said Snyder and Smotrich.

"'It's frustrating,' Smotrich said last night. 'But hopefully it's just a hiccup, and there will be other ways to get funding. Perhaps future (grant applications) will be written differently. This is a learning process for everyone.'"

-Trb








http://www.latimes.com/features/health/medicine/la-me-cha4oct04,1,828119.story?coll=la-health-medicine&ctrack=1&cset=true

$31 Million Stem Cell Training Proposal Defended

Officials at the California state college system have filed a sweeping defense of its appeal for $31 million from CIRM to train thousands of persons to work in the stem cell industry.

The California state university system as well as the California community college system advanced the proposal at the August meeting of the CIRM Oversight Committee, whose members raised a series of questions.

Supporters of the plan compiled a detailed, 24-page response, outlining the need for training a diverse workforce and citing CIRM's own strategic plan in support. The response and the proposal are up for consideration Wednesday at the Oversight Committee meeting in San Diego.

No competing proposals to provide the training are currently before CIRM.

Time to Tap Technology for Outreach

As such things go at the California stem cell agency, it was a fairly technical meeting. No great issues, no wrestling with egg donation matters or criteria for giving away $200 million.

The subject was the application procedures for laboratory construction grants. The audience was the men and women who must fill out the complex documents – "interested parties," as they are called.

But the conference-call session on Sept. 21 has some implications for CIRM and its goals of educating the public about its activities as well as stem cell research in general(mentioned by incoming CIRM president Alan Trounson on Sept. 24).

John M. Simpson(photo above), longtime follower of CIRM affairs and stem cell project director for the Foundation for Taxpayer and Consumers Rights, listened in on the meeting. We asked him for this thoughts on the event. Here is what he said:

"(The) 'interested parties' meeting was a valuable session allowing potential applicants to ask specific questions about the application process. CIRM needs to do whatever it can to engage as many people who are affected by their decisions in the process as possible.

"California is a big state and CIRM needs to use technology to promote involvement. So far as I know this was the first conference call where participants were invited to phone in directly themselves. Usually CIRM teleconferences have required a participant to go to a particular site created for the convenience of an ICOC board member to be involved.

"(The) dial-in from wherever an interested party was located worked great. It was well worth the cost and can serve as a model for future sessions.

"CIRM should put itself on the cutting edge where it claims to be and tap technology to a greater extent. For instance, it should broadcast all ICOC(Oversight Committee) meetings and (other) committee meetings on the Internet. Many city councils around the state have already figured out how to do this. CIRM and the ICOC need to get with the times. They should even consider a page on Facebook and Myspace that links back to CIRM's own website."

We might add that Internet webcasting would also fit in with Trounson's desire to reach out nationally and internationally with the CIRM effort.

Looking For Ways to Avoid the Stem Cell Egg Problem

A $25 million proposal to develop new lines of pluripotent human stem cells, including ones that do not require the use of human embryos or eggs, will come before the Oversight Committee of the California stem cell agency next week in San Diego.

The plan calls for as many as 16 research grants for periods of three years. Funding could come as early as next spring with the release of RFAs as early as this fall.

A CIRM staff report said,

"The ability to derive pluripotent stem cells from new sources will enable scientists to generate disease-specific and genotype-specific cells of many phenotypes. Such cells have great value for drug discovery and understanding specific disease mechanisms. Importantly, methods that will not require the donation or use of either human embryos or eggs will significantly reduce the moral and ethical concerns that surround methods currently in use. Finally, new methods of producing pluripotent stem cells will be particularly important because it may be difficult to obtain excess embryos from many racial groups.

"This RFA will support the generation of new lines of pluripotent human stem cells including:

"• new clinical grade lines of hESCs and other pluripotent human stem cells suitable for future clinical use or other biomedical applications

"• new hESC lines generated using improved methods that may be optimal for differentiation along selective lineages or for studies of disease

"• disease-specific, pluripotent stem cell lines to support the study of the effects of genetic variation on disease development and response to treatment

"• the discovery and implementation of alternative methods for generating pluripotent human cells"

The report also said,

"Awards will be made to support two areas of derivation: the generation of new human lines using excess embryos from in vitro fertilization, and derivations from other sources using new and novel methods."

Lockyer Beats Stem Cell Bond Drum

The California state treasurer's office has generated more publicity for the sale of the state's first-ever stem cell bonds next Thursday with at least one site urging San Franciscans to buy to support a local enterprise.

Tom Dresslar, communications director for Treasurer Bill Lockyer(photo at right), sent out a news advisory Thursday pointing out the sale – a "reminder" from Lockyer. The reminder said,

"California is one week away from making the largest-ever investment in human embryonic stem cell research in the nation and, we believe, the world."

Lockyer also noted,

"The $200 million investment will place California in the forefront of global research using human embryonic stem cells, considered by many experts to hold more potential to help develop treatments and cures for diseases than other types of human or animal stem cells. And it's just a fraction of the $3 billion in bonds authorized by Proposition 71. By contrast, the National Institute of Health since the 2002 fiscal year has funded a total of $131 million in human embryonic stem cell research."

The total bond issue is for $250 million, but about $45-50 million will go to pay transaction costs and to retire the bond anticipation notes that were sold to private philanthropists to help fund the California stem cell agency while it battled legal challenges. CIRM must still repay the state for something like $150 million in loans that helped to provide interim financing. The agency has roughly $1 billion in current bonding capacity that it can use soon. The likelihood is that another big bond sale will come up early next year.

Individual investors have until Oct. 3 to buy the bonds. They get first crack at them because of a new program that Lockyer started this year to make state bonds easily available to the general public. Minimum purchase is $5,000. The bond dividends are federally taxable but exempt from California state taxes. One would think that patient advocate groups might want to spread the word.

The San Francisco Business Times put together a brief piece on Lockyer's reminder. Jim Christie of Reuters also wrote an article. A blog called Sam Spade's San Francisco, the city where CIRM is headquartered, said that the bonds are one of the "best places" for San Franciscans to make an investment.

"The money you invest stays right here in San Francisco and is put to work funding the most cutting-edge medical research on the planet."

Correction

Tom Dresslar of the state treasurer's office points out that the figures for transaction costs are the estimates for actual costs on the Oct. 4 stem cell bond sale -- not bench marks.

The Cost of 'Lubricants' for Stem Cell Financing

So the California stem cell agency wants a little loan? Maybe not so little. Only a piddling $250 million.

Well, to do that sort of business doesn't involve chump change. First there is the interest, let's say about another $250 million, give or take roughly $10 to $20 million plus or minus. The actual interest cost will not be known until Oct. 5, the day after the stem cell bond sale. (For those of you who have been locked into a microscope for decades, a bond is a loan. California says give us $250 million, and we will pay you back later with interest.)

Then there is the lubricant to make the financial wheels turn smoothly. That's roughly another $1.6 million. That may seem like a lot but it is less than what CIRM estimated a little while back in its strategic plan. That document calculated bond issuance costs at roughly 0.08 percent of the bond amount. In other words, about $2 million for a $250 million bond sale.

We asked Tom Dresslar, a spokesman for the state treasurer's office, which handles the bond sales, about the transaction costs of doing such business. He told us that final figures for the stem cell bond sale will not be available until after it takes place, he provided us with estimates of the costs on the October sale.

Here is his breakdown:

"Total -- Approximately $1.6 million

"Bond counsel and co-counsel -- $175,000

"Tax counsel -- $117,000

"Rating agencies -- $142,000

"Underwriting fees -- $818,000

"Various other costs comprise the balance."

Obviously it would be cheaper to fund stem cell research straight from tax revenues, with no borrowing, because there would be no interest or transaction costs. But that would mean navigating – ANNUALLY -- the treacherous shoals of the legislature – not to mention the governor's office. And the research would have to compete against demands for money for schools, police, firefighters and much, much more. It doesn't take a political wizard to figure out who wins in that contest.

(Editor's note: An earlier version of this item described the transaction costs as benchmarks for a $250 million bond sale. They are actually estimates of the costs on the stem cell bond sale.

Investing in Stem Cell Bonds

Re our earlier piece on buying California's stem cell bonds, Tom Dresslar, spokesman for the state treasurer's office, points out that the minimum buy-in is $5,000. Don't forget you need permission from the treasurer's office if you want to buy more than $1 million. And as always, do your investment homework before you buy anything.

More Openness Emerging at CIRM?

The California stem cell agency has long concealed the identities of applicants for millions of dollars in grants even when the applicants are such public entities as the University of California.

But there are signs of changing sentiment on CIRM's Oversight Committee. At the board's August meeting, some members indicated that they favored disclosing the names of institutional applicants for $222 million in lab grants and at least some portion of their applications.

For example, Oversight Committee member Francisco Prieto, a Sacramento physician, asked his fellow committee members,

"Why could we not release the names of the applying institutions and the outlines of the proposals without actually opening up the actual review? I understand that in the review of the RFAs and within the meetings that there are comments made about strengths and weaknesses of individual investigators and teams and things that could affect people's careers, but the institutions and the outlines don't have any personal interest. "

In response, Chairman Robert Klein said the matter would be brought up at next week's Oversight Committee meeting in San Diego. He said,

"I personally think that we have an opportunity here to have some more disclosure, that while protecting confidential information, proprietary information, personnel information of people that are being hired, etc."

Later David Kessler, an Oversight Committee member and dean of the UC San Francisco School of Medicine, indicated he was sympathetic to providing the names and some information concerning the institutions' applications.

Kessler made his comments after John M. Simpson, stem cell project director of the watch dog group, the Foundation for Taxpayer and Consumers Rights, noted that lab grant process has two steps. The first is a closed- door scientific review of applications from institutions, whose names are also secret. The second is public review of the actual construction proposal with the names disclosed.

Simpson said the board was

"...setting up a procedure by which, as I see it right now, you cannot risk the embarrassment of a university because it can't do science, but you can embarrass them because they don't know how to build a building. That just doesn't make sense. It doesn't serve the scientists, nor the architects, especially the public at large."

Last month, the California Stem Cell Report called on CIRM directors to make more information public concerning the identity and proposals of applicants for the lab grants.

Stem Cell Snippets: Hanky-Panky to Jobs for Those Love Long Hours

Enviros Against Stem Cell Lab/Classroom Building -- An activist group and the city of Santa Cruz have blocked construction of an $80 million facility at UC Santa Cruz that would house stem cell research activities. A judge halted the project for environmental reasons. The four-story facility would include stem cell labs and service nearly 1,400-science students.

Scientific Integrity – The California stem cell agency has based many of its policies and rules on assumptions of nearly universal scientific integrity. Glenn McGee(see photo), writing in The Scientist and on the blog of the American Journal of Bioethics, indirectly questions those assumptions. He cites studies that show widespread hanky-panky in the authorship of peer-reviewed pieces, particularly in cases where senior researchers claim authorship even when they are marginally involved. McGee also has suggestions for reform. Interestingly, the entry point for his article is a matter that figured in the controversy over approval of a California stem cell agency grant to a subsidiary of the CHA Health Systems of South Korea.

Yolo Stem Cell Land Deal – Land developer Angelo Tsakopolous has shelved his land development deal that would have also established a stem cell research center in Northern California near UC Davis and Sacramento. Jeff Raimundo, a spokesman for Tsakopolous, told the California Stem Cell Report that the controversial proposal has been put off. California stem cell Chairman Robert Klein lobbied local government officials on behalf of the proposal, but they shied away from the effort. The concept of the plan was also supported by the International Stem Society for Stem Cell Research. Tsakopolous is a persistent man, however, and his proposal could well surface again in one form or another.

Stem Cell Lab Grants – On Oct. 2, the California stem cell agency will consider rules concerning administration of $222 million in grants for stem cell lab construction. The Facilities Working Group will take up the proposal prior to consideration by the CIRM Oversight Committee the next day.

NAS Stem Cell Meeting in California – Coming up Oct. 8-9 in Irvine, Ca., is a National Academy of Sciences conference called "Therapeutic Cloning: Where Do We Go From Here?" A host of top flight scientists are listed as speakers. The session will address such questions as sources of eggs and alternative methods of creating pluripotent cells.

Looking for Work? -- If you are interested in working across the street from the home field of the San Francisco Giants baseball team, CIRM is looking for a few good men and women. Jobs available at the agency include associate legal counsel, grants management specialist, paralegal and scientific officers.. Long hours are guaranteed. (CIRM headquarters is near the Giants field.)

Trounson Expands on His International Perspective

The new president of the California stem cell agency, Alan Trounson, is expressing a strong interest in engaging scientists elsewhere in the world and nation in the state's $3 billion research program, although he said such an effort may require funding from outside the agency.

In response to questions from the California Stem Cell Report, the Australian scientist (see photo) elaborated via email on his statements at the time of his selection as the head of the world's largest single funding source for human embryonic stem cell research.

Trounson had said his new assignment at CIRM provided an opportunity to engage internationally with other groups to avoid duplication of effort and speed development of cures. However, state law concerning CIRM requires virtually all of its efforts to be focused within California, requirements that earlier this year surfaced in connection with approval of a $2.6 million research grant to a non-profit, Los Angeles subsidiary of a South Korean organization, CHA Health Systems.

The CHA grant is still apparently under an administrative compliance review along with many others approved at the same time in March. The grant was not mentioned in the questions we submitted to Trounson nor did he speak specifically to it. We asked him only to elaborate on his statement concerning efforts with other nations and states. Trounson said,

"I would like to engage research groups working in other states and particular countries in collaborations with Californian scientists and clinicians. This might be achieved by having jointly funded workshops, study programs, scientific exchanges, research projects and clinical trials. I need to find out whether CIRM funds can be used in this way or whether we need to find other mechanisms to do this. The aim is to avoid duplication and accelerate the application of discoveries into the clinic - this is the primary outcome sought and needed by Californians."

Other questions and Trounson's responses:

CSCR: What are the three greatest challenges facing you at CIRM?

Trounson:
"1. Integrating the pipeline of stem cell discovery, translation and application in the clinic
"2. Demonstration of therapeutic benefit in a variety of applications
"3. Achieving a full comprehension by education, of the nature and potential benefits of stem cells throughout the whole community."

CSCR: Working in California state government also means dealing with open records and open meeting laws which sometimes have given pause to others new to such requirements. What is your comfort level with such laws?

Trounson: "Transparency is a simpler form of conducting an activity such as that involving the CIRM, where the entire community has an interest. I welcome the open format."

CSCR: Other observations you feel are important?

"I need time to focus on and analyze the efficiency of delivery of the CIRM strategy and to format priorities for the CIRM building on the very sound base achieved by the founders."

Attention Stem 'Cellists:' Buy Your Bonds Now

Supporters of human embryonic stem cell research have a chance to put their money where their rhetoric is early next month and help fund California's ambitious effort at pushing the field forward.

On Oct. 4, the state of California has scheduled its first ever bond sale for the California stem cell agency – a $250 million proposition that individual investors would have been hard-pressed to take part in, at least until this year.

State Treasurer Bill Lockyer, however, has set up a procedure to let smaller, individual investors buy California state bonds in the amounts that mom-and-pop investors are comfortable with. Typically in the past, institutional investors would buy huge chunks of state bonds, and the treasurer would not bother with what he regarded as nickel-and-dime sales, known officially as "retail" accounts.

Buying the bonds does take a little homework, however. You must set up a brokerage account, if you do not already have one. You should also check with your broker soon to be sure he or she sure is on board and can send in the orders well ahead of Oct. 4. There are restrictions: You generally can't buy more than $1 million worth of the bonds without seeking permission from the state. You can read all the details and deadlines here.

State bonds pay a dividend that will be determined later, but they can be described as undoubtedly a safer investment than putting money into a stem cell or biotech company. After all, California's millions of taxpayers stand behind the bonds.

And you might even get a certificate suitable for framing that you could post on your front door.

Ensuring a Stem Cell Future: CIRM's Proposed Biotech Loan Program

The California stem cell agency is preparing to take the first step towards setting up a loan program that would help to extend its life well beyond 10 years and solve some of the sticky problems associated with sharing the potential wealth created by its grants.

The Oversight Committee for the $3 billion agency will meet Oct. 3 in San Diego to consider creation of a task force to develop a "biotech loan program." No details for the effort were available today on the CIRM web site, but the task force is likely to be similar to an intellectual property task force that drew up the standards for sharing potential gains from inventions that result from CIRM grants.

We have discussed the concept of a loan program on a couple of occasions with the chairman of CIRM, Robert Klein(photo above). He told us that it would be one way to assure that funding continues for stem cell research for some time. The effort would do so by generating income from interest charged on the loans. Klein noted that it is imperative to begin the program soon in order to generate cash that could presumably be reinvested in additional loans and, we speculate, in other financial instruments.

Intellectual property issues have bedeviled the grant program, generating controversy over the size of the state's potential royalties from stem cell inventions. Sharing-the-wealth questions are among the concerns that have surfaced in the California Legislature, and they are likely to surface again. Another contentious area revolves around sharing results of research with other scientists at low or no cost, a shibboleth of science. Profit-oriented researchers regard such requirements with skepticism.

A loan program could erase many of these IP issues because the return to the state would come from repayment of the loan – not royalties -- although other conditions obviously could be attached to lending.

A loan program also is linked to what is widely and wrongly believed to be the 10-year life span of the California stem cell program. No "sunset" provision exists in Prop. 71, although the 2004 debate about the ballot measure constantly referenced a 10-year period. The agency is limited to the issuance of $3 billion in bonds at a rate not to exceed $350 million a year, although it can carry over amounts not issued from year to year. In addition, CIRM enjoys a special status among state agencies. It can accept private funds, much as a nonprofit charity does, including those from fundraisers. The only other state department that we know of that has a similar capability is the Fair Political Practices Commission, another agency created by a ballot measure. There could be others, however. One possibility concerning financing for CIRM beyond 10 years could involve earmarking donations to the agency for loans to industry.

A loan program also carries with it a series of other interesting questions such as:

How does the agency establish the credit-worthiness and perform due diligence on applicants? It has no expertise in this area. Presumably it would rely on outside contractors.

But where does it find even an oversight staff for a lending and investment program that could run into hundreds of millions of dollars? The agency is limited by law to 50 employees. It currently has 26. Even at 50, some Oversight Committee members believe it will be understaffed for its existing programs. Contracting out such critical functions also involves difficult conflict-of interest questions, since outside firms do not have to file public statements of their economic interests.

How does CIRM deal with defaults? Does it take a share of the company in return, which may be worth nothing or even less than nothing(i.e. loaded with unpayable debt)? Does it sue for payment? The biotech industry currently consists primarily of companies that are hard-pressed to maintain their own financial viability.

Presumably those questions and many more will be addressed by the new biotech task force.

Klein has had experience in creating and running state lending programs. He served for six years as a member of the board of the multi-billion dollar California Housing Financing Agency. Klein says he authored the legislation creating the agency when he was an aide in the legislature. Klein notes his own business, a real estate investment banking firm, has never obtained any financing from the housing agency.

Because of his background, Klein is likely to be even more immersed in the loan program than he is in other agency matters, and will probably seek additional personal staff from the 50 allotted to the agency.

To learn about other matters on the Oct. 3 Oversight Committee agenda, see the item below.

CIRM October Meeting: Disease Teams, Biotech Loan Program and New Stem Cell Lines

Directors of the California stem cell agency always seem to have more than they can do in their meetings, and October's seems to be no exception.

Creation of a new $122 million disease team effort and a biotech loan program (see above) that could give CIRM life in perpetuity are among the matters to be discussed in San Diego at the Oct. 3 meeting of the Oversight Committee. That is not to mention rules for the $222 million lab grant program and consideration of a concept for grants for development of new cell lines.

Also on the agenda is creation of a Finance Subcommittee, which is likely to generate more work for Oversight Committee members, and may be linked to developing ways for funding CIRM after it runs out of its $3 billion in state bonds. The $30 million training proposal from California's state and community colleges is also up for discussion.

No details of any of the new proposals are yet available. Presumably more information will be forthcoming well in advance of the meeting so that the important constituencies affected by the matters will have time to respond. The agenda itself was not yet posted on the CIRM web site at the time of this writing, but presumably will be on line on Monday.

'Little Rooms, Big Dreams'

Patient advocate Don Reed has written an interesting mini-profile of Stanford stem cell researcher Renee Reijo-Pera, chronicling her journey from secretarial chores and "not-so-good" college grades to her current position.

Reijo-Pera (see photo) was one of six children and the first in her family to graduate from college, Reed reported on his blog, stemcellbattles.com. She studied business administration in college until her junior year, when she switched to sciences following an exposure to a human biology course aimed at non-science majors.

She cited the influence of a particular instructor as providing the impetus, which makes one wonder about the emphasis on research to the neglect of teaching at many universities. All it takes is a handful of folks like Reijo-Pera to make a bigger difference than a wheelbarrow of research papers involving relative trivia, although I may be overstating the case a bit.

Reed was leaving his interview with Reijo-Pera when he commented on the small size of the rooms in her research complex.

"Little rooms, big dreams," she replied.

You can find Reed's piece at stemcellbattles.com. Look for the Sept. 21 item in the archives if it doesn't pop up immediately.

More on Alan 'Big Fish' Trounson: Spin Doctors 'Wrong'

Here is how Constance Holden of ScienceNow put it:

"California has landed one of the biggest fish in the Pacific to head its stem cell venture."

She continued:

"'Things are booming in California right now,' says former CIRM President Zach Hall, who notes that Trounson's varied experience makes him "almost uniquely qualified for the job."

Holden wrote:

"Those who know Trounson say his personal skills should smooth the way for cooperation with CIRM's high-profile board chair Robert Klein, who has more than once ruffled colleagues with his propensity to take unilateral actions. "Alan is charming, ... a lovely human being," says stem cell researcher Evan Snyder of the Burnham Institute for Medical Research in San Diego, California. Researcher John Gearhart of Johns Hopkins Medical Institutions in Baltimore, Maryland, says he is 'politically savvy,' in addition to having a 'very broad base of knowledge.'

"Trounson is one of several major stem cell scientists whom Australia has lost to the United States lately, including Martin Pera, now at the University of Southern California in Los Angeles, and Paul Simmons, now at the University of Texas, Houston. Trounson himself has made it clear he regards the CIRM presidency as the capstone of his career. "This is the biggest job in stem cells in the world," he told the Australian paper The Sunday Age."

David Serrano Sewell, a member of the CIRM Oversight Committee, told the California Stem Cell Report, in response to a query:

"Alan is a unique person, he has the administrative and person skills needed for this job. And, he's a top sciencetist. We are lucky to have him. Second, the spin doctors could not resist from speculating that the governance structure and Bob were some road block to selecting a President. Wrong. ... They were hoping for this to be the case, and it was not. We found someone who is truly amazing. Enough said.

Market Conditions Delay Sale of Stem Cell Bonds

The sale of $250 million in California state bonds to finance human embryonic stem cell research has been postponed from Sept. 27 to Oct. 4 to see if market conditions improve, providing a "better deal" for the state's taxpayers.

At this point, the delay looks like a pretty good move given the Federal Reserve Board's reduction in interest rates.

The California Stem Cell Report Tuesday learned of the bond sale delay and queried the state treasurer's office, which handles the sale, about the reason.

Spokesman Tom Dressler replied, "We made a determination that if we hung in for another week, market conditions would give us as better deal for taxpayers."

What that means is that the bonds would require a lower interest rate to be sold to investors. And since the state must pay the interest, that translates to lower costs to taxpayers.

Also on Tuesday, Fitch Ratings announced that it rated the bonds at "A+," which is below the top rating and the result of the state's continuing state financial problems.

Fitch said the rating reflected the state's "broad, diverse and wealthy economy, moderate debt burden, and notable progress made to date reducing the structural imbalance remaining from the fiscal crisis earlier in this decade and beginning to rebuild its financial position. These strengths are offset by still significant near-term imbalances, the state's continued reliance on volatile capital gains revenues, including from the slowing residential real estate market, decelerating revenue growth and ongoing spending pressures in education, corrections and infrastructure."