Zipped Lips and CIRM's $263 Million

A glittering array of 29 scientists and executives rule California's prodigious $3 billion stem cell research effort. In many ways, they constitute some of the finest minds in the business and have even included Nobel Prize winners.

The thinking was that this elite panel of experts could bring their knowledge and wisdom to bear on the world's largest funding effort for human embryonic stem cell research. But this week, many of them will remain mum as $263 million worth of decisions are made.

The group is formally known as the Independent Citizens Oversight Committee(ICOC). More commonly, it would be described as a board of directors for the California Institute for Regenerative Medicine(CIRM). On Wednesday and Thursday, the committee will make critical, initial decisions on handing out $263 million for lab construction at the Golden State's finest research institutions. But only about one out of three of the directors will be able to vote on or even discuss some of the key issues in what is the largest round of grants ever made by CIRM.

The reason? They are associated with institutions that are seeking big chunks of the $263 million jackpot. In many cases they have conflicts of interests that CIRM's attorneys say make it illegal for them to vote or even participate in debate.

The impact goes well beyond silencing most of the board on some matters. It could also create a "quartet majority" in which the votes of four persons could be all that is needed to take some actions. Here is how it could happen, based on Prop. 71, which created CIRM, and an explanation last August from Tamar Pachter, CIRM general counsel.

The strange situation stems from the requirement that many of the Oversight Committee members -- by Prop. 71 decree -- must come from institutions that stand to benefit from CIRM's largess. They include deans of medical schools and executives at the University of California and other academic and research institutions. In fact, of the 12 lab grant applicants that CIRM has publicly identified, 11 have one or more members on the ICOC.

Last summer Pachter told board members that when the time comes to allocate the $263 million into various "buckets" – parcelled out, in other words, into such categories of competition such as "CIRM institutes" and "CIRM centers of exellence" – only about 10 members of the ICOC would not have conflicts of interest. She said,

"They are members who work for for-profits, patient advocates who are unaffiliated with institutions who will be applying for funds. That's it."

She did not spell out the ultimate implications. But Prop. 71 uses the number of ICOC members eligible to vote as the basis for a quorum, rather than the total number of persons on the ICOC. Prop. 71 also states that a quorum is 65 percent of those eligible to vote. Action can be taken by a majority of a quorum. So when 10 persons are eligible to vote, the quorum is seven. A majority would be only four – a fact not directly discussed at the August ICOC meeting.

But Oswald Steward(see photo), chairman of the Reeve, Irvine Research Center at UC Irvine, is one ICOC member who was disturbed by impact of what Pachter had to say. He acknowledged the importance of the conflict of interest rules. But he added,

"A lot of us are going to be left out...It's not just the case we can't vote; we also can't even participate in the discussions. And I think that narrows the field of expertise in a way that is unfortunate."

The ICOC ran afoul of this problem in December when it approved adding $35 million to the lab grant program. Only eight persons on the board were permitted to participate in the debate on that proposal.

The "quartet majority" problem also leads to some interesting speculation about whether it could come into play in connection with the attempt by Childrens Hospital Oakland Research Institute to overturn an unfavorable decision by the Grants Working Group on its lab grant application.

Could the Oakland hospital's bid be approved by only four members of the ICOC? One could argue that ICOC members associated with institutions with competing grants could not vote on Oakland's request because it could affect the amount of funding available for their institutions. But before the Oakland bid can come to a vote, a member of the ICOC has to make a motion to approve it. Then Oakland has to line up three other sympathetic board members.

But it certainly is something that folks in Oakland could be thinking about as well as at the University of California at Riverside and Cedars-Sinai in Los Angeles, two other rejected applicants.

FTCR: Rejected Lab Grant Applicants Should Appeal in Public

A CIRM watchdog organization today urged five institutions "rejected" for multimillion dollar state lab construction grants to appear publicly next week and make their case for funding from the California stem cell agency.

John M. Simpson, stem cell project director of the Foundation for Taxpayer and Consumers Rights, said the review process for the $263 million lab grant program "has been flawed and smacks of favoritism that can only be cured by transparency." He said,

"CIRM management decided to reveal (last month) the 12 institutions that will be recommended for an invitation to seek funding so that they could use the information in year-end fundraising efforts. How is that fair to the five who were not anointed in secret by the closed scientific brotherhood?"

The California stem cell agency has declined to say whether any other lab grant applicants – besides Childrens Hospital Oakland Research Institute – are attempting to overturn negative decisions on their grant applications.

Ellen Rose, a spokeswoman for the agency, said,

"Appeals are allowable only if there is demonstrable evidence of a financial or scientific conflict of interest. Differences of scientific opinion among PIs and reviewers are not grounds for appeal. In the past, applicants who have raised questions about their grant applications or sought clarification, which is common in any granting exercise, have been informed of this policy. Thus far we have had no formal appeals to our grant-making process."

Simpson said CIRM's statement was "Orwellian double-speak." He said,

"I strongly urge representatives of all five rejected institutions to show up at next week's ICOC meeting and make their case in public directly to the board. It is, they claim, the decision making authority. What's happened so far were merely "recommendations.'"

By law, the Oversight Committee is the final authority on grant approval. It can accept or reject – for virtually any reason -- decisions by the working groups. That is one reason CIRM says it is not necessary for grant reviewers to publicly disclose their financial interests.

In response to queries from the California Stem Cell Report last month, two other institutions disclosed that their applications have been rejected. They are the University of California at Riverside and Cedars-Sinai in Los Angeles. However, they have not responded to queries on Thursday about whether they are asking Oversight Committee to reconsider the working group action.

The lab grant program is the first in which the names of applicants have been disclosed by CIRM, which previously said the names of all applicants were confidential even when the applicants themselves disclosed their own identity. The decision to assist the applicants with fundraising is important because CIRM will look more favorably during the two-step approval process on applicants with large matching funds.

The Oversight Committee is scheduled to take up the grants next Wednesday during the scientific portion of the approval process. Only those approved next week will move on to the next step.

Time for Business to Weigh in on CIRM Biotech Loan Plan

The California stem cell agency will hear next week from lenders and investors concerning its ambitious biotech loan progam, which is aimed at plugging a funding gap that has blocked development of stem cell therapies.

The Biotech Task Force is scheduled to meet on Wednesday in Burlingame, Ca., with a remote teleconference site at BIOCOM in San Diego. On tap is testimony from "capital providers and other experts." The task force has indicated it also plans to schedule a session with business and other potential applicants, which could include nonprofit research institutions.

According to California stem cell Chairman Robert Klein, the program could offer up as much as $750 million in loans to enterprises that cannot normally find funding from the usual providers. The program could get underway as early as this year, although the schedule is up for discussion next week.

Last month, Alex Philippidis, editor of the BioRegion News, interviewed Duane Roth, chairman of the task force, concerning the program. Here are some excerpts from the BioRegion piece. Roth told Philippidis,

"Think of the loan program — at least that’s the way I’m thinking about it, and the way our task force is thinking about it — as an evergreen fund. That means we can provide early-stage funding that is not available or has very limited availability from other sources [in order to] allow these products to move forward. Eventually those companies or those institutions that are sponsoring would repay the loans with interest, which would allow us to fund somebody else six, seven, eight years down the road."

Roth continued,

"If the program existed today, we’d be — and this is my opinion, and one I think is shared by the committee — that right now, the biggest gap in the funding is at the preclinical level, when somebody’s getting ready to say, ‘OK, I have preclinical evidence that this works. Now I have to do the toxicology and all the requirements for an investigational new drug application to the [US Food and Drug Administration].’ That is the toughest money to get. And that would be, if we put out [request for awards applications] today, that is likely what we would target."

More from Roth:

"But we don’t know where in the future the funding gaps are going to be, where the venture capitalists, or the angels, or Wall Street is not funding. And what we’re going to try to do is identify those gaps, and then put programs together to fill those gaps with funding from CIRM."

"It really would be a misnomer to only think that these loans would go to, quote, biotech companies. They may well go to other institutions that are also interested in advancing what we broadly categorize as products in this area."

"With this type of technology, it’s probable that there’s going to be a lot more interaction between the research institutes and what we classically think of as the companies that move these therapies forward. Some of them, at least, will be [stem] cell-based, so it’s not unlikely that many of the research institutes will get involved through pre-clinical, clinical, early clinical trials."

It is hard to overestimate how important it is for interested companies and institutions to weigh in early and often on this program. Sometimes industry seems to be missing from key CIRM proceedings. We recently discussed this issue with a representative of a company that pays more attention to CIRM than most. She said many of the companies in the stem cell business are tiny, very busy and cash-strapped. Thus it is difficult for them to monitor CIRM and offer comments, even though CIRM proceedings could be critical to their futures. Nonetheless, California stem cell companies should be monitoring CIRM more closely. Otherwise rules and regulations that may not be in their best interests could be promulgated.

The same advice goes for groups purporting to represent the "public." If they want to have an impact, they should be at the meetings and offer specific, constructive written recommendations on matters of interest. Only one organization, the Foundation for Taxpayer and Consumers Rights, seems to filling that role regularly at this point.

For more on the biotech loan program, search this blog using the search term "biotech loans." Or click on the label "biotech loans" just below this item.

Stem Cell PR, John Scully and Stanford

What a difference Arnold makes.

Stanford announced on Wednesday that investment banker John Scully was giving it $20 million for stem cell research, among other things. News coverage was modest, especially compared to the outpouring that resulted from an identical donation from Eli Broad to UCLA last year.

At that time, a Google search on the term "UCLA stem cell million broad" generated 244,000 hits by the afternoon following the announcement. In comparison a search at noon today on "Stanford stem cell million Scully" generated 11,500 hits.

The biggest single difference in terms of the coverage was the appearance of Gov. Arnold Schwarzenegger at an event at UCLA announcing the gift from Broad. It generated a wide range of stories including TV spots from the stem cell labs on the Westwood campus.

As we pointed out at the time, huge donations offer an opportunity to not only tout the institution and recognize the donor, but also to promote the field of human embryonic stem cell research.

When 55 percent of the public nationally says it has little or no knowledge of stem cell research, the field still needs major help. Donations provide a chance to tell a positive story – one that does not involve warnings of expensive therapies, dubious results or even research fraud much less conflicts of interest.

We should also note that the donation will probably give a boost to Stanford's bid for a multimillion dollar CIRM lab construction grant. One of the important criteria for the grants is a big fund match from the applicants.

Here is a link toe the Stanford news release on Scully (see photo) and a story in the San Jose Mercury News. The San Francisco Chronicle does not appear to have carried a story.

(An earlier version of this item incorrectly identified Scully as the former CEO of Apple.)

FTCR: Is CIRM 'Missing the Laboratory for the Test Tubes?'

The California stem cell agency is wrestling currently with a host of touchy issues in addition to the biggest round of grants in its history. Some of those matters surfaced last month and will surface again next week when the Oversight Committee also decides which institutions move on to the next round in the $263 million lab grant offering.

John M. Simpson, stem cell project director at the Foundation for Taxpayer and Consumers Rights, offers this commentary on some of those issues and how CIRM is approaching them.

"I mentioned in passing the other day that I think the ICOC folks sometimes miss the forest for the trees. (Maybe I should use a different metaphor, perhaps miss the laboratory for the test tubes?)

"Here's what I mean: Apparently everyone was worried at the last Governance Committee meeting about the bad image they might get if they use the word 'limousine' in the travel policy. But when a major restructuring of the institute's management structure is presented, it just sails through with nary a thought or comment.

"When Zach Hall was president he had seven direct reports. The new organizational chart shows Alan Trounson with only two, plus an administrative assistant. That is a substantial change in management philosophy and substance.

"I also expect the two managers reporting to him, the chief science officer and the chief operating office will command substantial salaries as both are to be either Ph.Ds or MDs. I tried to get at some of this in the December Governance Meeting when I ask on Page 30 of the transcript what their salaries and the salary of the director of finance and legal affairs will be.

"Re-reading Rich Murphy's response to my concern that the agency will be top heavy (Page 31), I have serious questions about Trounson's role. Here's what Murphy said:

"'I also want to be sure Alan has the guidance around him for him to be able not only to lead the institute, but for him to be the visionary leader of the institute. So he is going to have to keep his eyes on the field, he's going to have to be out on the road participating in meetings learning about new directions of the field. And when he comes back, one of the things he's going to have to do is to bounce off his ideas with high level leaders who are of his quality scientifically...'

"Just what is Trounson going to do day-to-day? Is he going to run the institute or is going to be spending more time on the road going from one conference to another around the world while the CSO and COO -- both with big salaries -- manage things?

"I'm not saying the new management structure is necessarily the wrong approach. My point is that it's a substantial departure from past practice and I'd have thought oversight committee members would have wanted to discuss it in detail in public.

"I would think the ICOC should be having a serious conversation about how this is going to work. I don't think anybody has focused on it, and it's much more important than whether someone takes an airport limo rather than a taxi."

Monkey Business, BioTime and the Search for Science

WARF and BioTime --California's BioTime Inc. has hooked up with WARF and signed a licensing agreement to use some of its patents on human embryonic stem cell research. The Emeryville firm said the WARF patents will allow it to manufacture and commercialize human embryonic stem cell-derived cell types and related products for scientists to use in research and in drug discovery. As part of that effort, the company plans to develop and commercialize a collection of research tools for stem cell research. Here is a link to a Wisconsin story on the subject, and here is a link to the company press release.

Monkeys and the American Psyche -- Scientific American says the reprogramming of adult rhesus monkey (see photo) stem cells into embryonic stem cells is one of the top 25 scientific stories of 2007, but that doesn't mean much to the public. The overwhelming majority of Americans has never heard of the research. So says the first poll taken since the announcement of the research results in November. According to the survey by the Virginia Commonwealth University, only 38 percent of those polled had heard of the reprogramming results. The implications for stem cell advocates? They have a long way to go before this stuff is entrenched in the American psyche.

Finding The Worthy – The topic of stem cell research grants to businesses came up recently in the Biopolitical Times, a blog produced by the Center for Genetics and Society. Jesse Reynolds wrote that the California stem cell agency should resist efforts by businesses to lower revenue-sharing requirements that might be linked to grants to the private sector. He also wrote:

"Although there is likely not enough current stem cell research capacity in California to warrant $300 million in grants per year, there's no effective mechanism to prevent as much money going out the door as possible, regardless of the research's quality. The CIRM's governing board is dominated by representatives of grant recipients - from the public, nonprofit, and corporate sectors alike."

Nearly three years, one anonymous writer from the world of academic science in California expressed a similar reservation about whether there is enough good stem cell science worthy of funding in California. More recently some on the Oversight Committee have expressed concern about maintaining the quality of the research that is being funded. However, this is not a subject likely to be discussed freely in public by folks at CIRM. To do so could appear to be casting doubts on the agency's mission.

NIH to ACT: Nyet!

A California-based firm, Advanced Cell Technology, says it has created human embryonic stem cells without harming the embryos from which they were derived.

The company said the results "have the potential to end the ethical debate surrounding the use of embryos to derive stem cells."

The NIH, however, says that isn't good enough. According to Rick Weiss in the Washington Post, the head of the NIH stem cell task force, Story Landis, said,

"(T)he only way to prove that the technique does not harm embryos would be to transfer many of them to women's wombs and see if the resulting babies were normal. But it would be unethical to do that experiment, she said, so the question cannot be answered."

That doesn't make Robert Lanza(see photo), the chief scientific officer at ACT, happy, Weiss wrote,

"That standard has Lanza fuming. By all scientifically recognized measures, he said, the embryos -- currently frozen in suspended animation because they were donated for research and not to make babies -- are normal, he said.

FTCR on Childrens Hospital Appeal: Fairness v. Secrecy

John M. Simpson, stem cell project director of the Foundation for Tazpayer and Consumers Rights, offered the following comment on the item below dealing with Childrens Hospital Oakland appeal of what amounts to a grant denial.

"CIRM management's now inconsistent penchant for secrecy coupled with news of the Children's Hospital letter of appeal once again demonstrates the importance of complete transparency.

"When institutions ask for public money they should be publicly identified. When they are rejected -- even if it's by members of a closed scientific brotherhood -- they should be identified and the reasons for the rejection should be spelled out.

"In this case CIRM management touted the 'successful' applicants and remained mum about what may, in fact, be excellent programs.

"Anything less than full disclosure leaves CIRM management justifiably open to charges of favoritism. In the long run that inevitably undercuts public faith in an agency whose dedicated staff in fact is attempting to serve the public interest by fostering important scientific research."

Rejected CIRM Grant Applicant Seeks Reversal of Action

One of the rejected applicants for CIRM's $263 million in lab construction grants has asked the agency's directors to reverse the decision and fund an effort that has an "immediate and broad application" in the treatment of sickle cell anemia.

Bertram Lubin, president of the Children's Hospital Oakland Research Institute, wrote members of the CIRM Oversight Committee on Dec. 28 seeking to overturn the negative recommendation by the CIRM Grants Working Group.

Lubin's letter follows CIRM's unusual reversal last month of its longstanding policy of secrecy concerning the names of grant applicants. In the case of the lab grants, CIRM identified 12 applicants that its Grants Working Group decided were worthy of funding by the Oversight Committee. The agency said public disclosure of the names would help the 12 institutions raise matching funds for the grant proposals. Grants with larger amounts of matching funds will have an edge in the competition for the CIRM money. However, the agency has refused to disclose the names of rejected applicants, a policy that has met objections from the Foundation for Taxpayer and Consumers Rights and the California Stem Cell Report.

Lubin (see photo) said his organization's proposal would expand a program "focused on clinical and preclinical research into the use of stem cells to cure inherited disorders of hemoglobin (sickle cell anemia and thalassemia), which affect a disproportionate number of children in California."

Lubin wrote:

"In contrast to some approved proposals that may have only distant and uncertain prospects of actually curing disease, our proposed facility would support the development of curative therapy with a new type of stem cell, with immediate and broad application to very large numbers of individuals."

He said the research involves umbilical cord blood stem cells and "will have a "direct and near-term impact on clinical practice."

Lubin continued,

"The cost of medical care for sickle cell disease averages over $50,000/year over a life expectancy of 30-50 years. In the course of our research, individuals with inherited blood diseases will receive transplants, and our extensive experience indicates these will be curative in the large majority of cases. The enhanced and extended lives of these individuals will represent a direct benefit; the savings to the health care system as a consequence of their cure is less direct but will benefit all California citizens. The knowledge gained from this research will enable improved treatment worldwide, with consequent saving of lives and resources."

Lubin also cited language in Prop.71 that states that CIRM should address the medical needs of the ethnically diverse population in California. Sickle cell anemia mainly affects African Americans in the United States.

The appeal from the Children's Hospital is the first such to surface publicly at the agency in any of its grant programs. We are querying CIRM about whether other applicants have appealed in this round or in the past.

The Oversight Committee will meet publicly next week to consider the decisions of the working group. Only grants that receive the go-ahead next week will go on to the next stage of the competition, which is the largest round of grants in CIRM history.

A copy of Lubin's letter was made available to the California Stem Cell Report by a source that asked not to be identified. The copy did not come from Children's Hospital. The full text of the letter is carried below.

Text of Lab Grant Appeal Letter

Here is the text of the grant appeal letter from the Childrens Hospital Oakland Research Institute.

December 28, 2007

Dear Members of the ICOC,

We are requesting that the ICOC reverse the decision of the Grants Working Group and recommend CHORI’s application for a Major Facilities Grant. We think it is very much in the interest of the citizens of California, and of CIRM itself, that this proposal be funded. We have proposed a facility that will expand and further develop a program focused on clinical and preclinical research into the use of stem cells to cure inherited disorders of hemoglobin (sickle cell anemia and thalassemia), which affect a disproportionate number of children in California. These disorders cause severe anemia with onset in infancy, but also widespread damage to vital organs such as brain, lung, liver and kidney. Our track record in this work is, we are confident, world-class.

Our request to the ICOC rests on the following points:

Our program has pioneered use of umbilical cord blood stem cells to cure genetic and malignant diseases in children; of particular significance is our demonstration that cord blood stem cells can be used to cure sickle cell disease.

CHORI laboratories have identified a new type of blood stem cell present in the placenta. These cells promise to provide a rich source of stem cells that will make curative therapy available to individuals who currently need it but do not have suitable stem cells available. Fulfillment of this promise will however require a program of rigorous preclinical and clinical research. The facility we have proposed is designed to house this research program. Our track record in curative stem cell therapy, and our discovery of these cells, make us the most suitable center to carry out the research.

The RFA for the Major Facilities Grant did not restrict the work to human ES cells and their derivatives. In fact, our application seems to fit precisely with the Program Objectives listed in the RFA. It is unusual only because we are proposing to carry out research that will have direct and near-term impact on clinical practice.

In framing our proposal, we had in mind the goals of Proposition 71 and of CIRM to serve the diverse population of California by encouraging ethnic diversity and participation in clinical trials focused upon the applicability of stem cell therapy. We have pioneered, and continue to develop, curative stem cell-based therapies for sickle cell anemia and thalassemia, which affect individuals from underserved minority populations in California.

Our proposal addresses another key goal of Proposition 71, which is to improve the California health care system and reduce the long-term health care cost burden on California through the development of therapies that treat disease and injuries with the ultimate goal to cure them. The cost of medical care for sickle cell disease averages over $50,000/year over a life expectancy of 30-50 years. In the course of our research, individuals with inherited blood diseases will receive transplants, and our extensive experience indicates these will be curative in the large majority of cases. The enhanced and extended lives of these individuals will represent a direct benefit; the savings to the health care system as a consequence of their cure is less direct but will benefit all California citizens. The knowledge gained from this research will enable improved treatment worldwide, with consequent saving of lives and resources.

In contrast to some approved proposals that may have only distant and uncertain prospects of actually curing disease, our proposed facility would support the development of curative therapy with a new type of stem cell, with immediate and broad application to very large numbers of individuals.

No resources to support construction of this facility are likely to be provided by the federal or state governments in the foreseeable future. We and our colleagues would welcome the opportunity to discuss this matter with you in detail.

Respectfully,
Bertram H. Lubin, MD
President, Director of Medical Research


Mark Walters, MD
Director, Blood and Marrow Transplant Program
Children's Hospital & Research Center, Oakland

No Stem Cell Sinecure at CIRM

The California stem cell agency is planning to make some pay changes for its staff and seems to be setting the stage with an interesting document that is now up on its web site.

In some ways, the three-page statement of "compensation philosophy" could be considered a list of the reasons not to work for CIRM. On the other hand, it is a realistic portrayal of work-life at the agency. The staff is tiny – now only 26 and limited to 50 by state law. The work is intense and demanding.

CIRM directors have repeatedly expressed concern about burnout. Seven persons, including some high level officials, have left since October.

Nonetheless CIRM offers some extraordinary opportunities to work at the cutting edge of science, government and business. It is doing pioneering work and is watched globally. It currently has a "wow" factor that has even enticed its new President, Alan Trounson, away from Australia.

Here is the segment of the compensation philosophy that might give pause to some who may be looking for a sinecure:

"CIRM recognizes recruiting and retention challenges that are unique to CIRM and that reduce the pool of talent available to the Institute. These include:

CIRM’s inability to offer tenured positions to any of its employees. All CIRM staff are at-will employees and can be terminated at the discretion of the President, which is a strength of the Institute but a liability for individual employees.

CIRM’s anticipated life-span is 10-14 years, which rules out the possibility of a longterm career track that is available for many civil service positions in the UC system.

"Due to CIRM’s projected limited life span, the Defined Benefit Plan (a traditional pension plan) is not perceived to be of significant value by staff members who will presumably have left the organization by the time they reach retirement age.

"The Defined Benefit Plan dictates a five-year vesting schedule, which is unattractive if the employee is with CIRM for a limited time period.

"CIRM has a defined contribution plan (e.g. 401K & 457) not supplemented with employer contributions.

"CIRM’s Conflict of Interest policy limits an employee’s ability to engage in outside opportunities to earn additional income through consulting and/or holding investments in organizations that can benefit from CIRM’s programs, including a requirement that employees divest themselves of any investment in a company that devotes more than 5% of its research budget to stem cell research.

"CIRM, unlike many of CIRM’s academic competitors, does not offer housing allowances, which is a significant challenge when relocating prospective staff to the Bay Area with its high cost of real estate and living.

"CIRM does not provide a long-term career path or advancement for staff within CIRM due to the limited number of positions defined by law to be within CIRM’s structure. Promotion can come only when existing staff members leave.

"Given our statutory inability to recruit a large number of new staff, CIRM employees need to be flexible and willing to transfer skills to support CIRM’s overall operating goals, which may go beyond bench-marked job descriptors gained from larger established institutions.

"Staff members need to be willing to be cross-trained as CIRM’s needs develop.

"As part of their job descriptions, CIRM employees need to be able to work “out of the box” in that they are to interact with institutions arround the world to ensure positive international relations."

The proposed changes in pay come up at next week's Oversight Committee meeting. No information on the specifics is yet available on the CIRM web site.

Correction

The "CIRM Perspective" item below incorrectly stated that the increase in the staff in the chairman's office was from four to 12 positions. The correct increase is from four to eight positions.

Limos, Red Flags and Perception

The California stem cell agency is excising the word "limousine" from its new travel and expenses policy after one director warned that it was a "red flag."

The action came at a meeting Monday of the Governance Subcommittee of the directors of the $3 billion research effort.

The subcommittee was reviewing a new travel policy aimed at dealing with some of the concerns of the California state auditor, who last year questioned lunches that cost $36, dinners that cost $65, pricey air travel and chauffeured limos, which the auditor said that CIRM preferred to describe as "large-sized vehicles" with hired drivers.

As prepared for the Governance Subcommittee, the new policy, which applies to directors, staff, out-of-state members of CIRM working groups and job candidates, permitted the use of limousines from airports and railroad stations.

Sherry Lansing(see photo), former head of a Hollywood film studio and chair of the Governance Subcommittee, said, "Limousines should be used only in extreme conditions because you can almost always get a cab." Claire Pomeroy, another member of the subcommittee and dean of the UC Davis medical school, said that the use of large rented cars with drivers "raises lots of red flags."

James Harrison, outside counsel to CIRM, said the policy would be revised to remove the word limousine when it comes before the full Oversight Committee next week. However, it appears that use of rental cars with drivers will be permitted under some circumstances. Robert Klein, CIRM chairman, suggested that "sedan service" be permitted when there is a necessity for speed or bad weather conditions exist.

Some subcommittee members noted that sedan service can be less expensive than cabs in some situations.

Lansing and Pomeroy are correct, however. The use of limousines at taxpayer expense is not something that sits well with the general public. Especially when the governor has just announced he will propose a budget that will hurt many groups, including AIDS patients, the poor and the elderly and slap a tax on renters, homeowners and business owners who buy property insurance.

No matter that the amounts for rental of "sedans" are relatively trivial. No matter that the money would not make even a dimple in the state budget crunch, even if the governor could lay his hands on the money, which he can't, thanks to Prop. 71. It's all about symbolism and perception and maintaining CIRM's reputation.

CIRM's Perspective on Staffing in Klein's Office

Robert Klein, the chairman of the $3 billion California stem cell agency, has taken issue with our piece on Friday entitled "CIRM's Klein Beefs Up Staff."

Ellen Rose, interim chief communications officer for the agency, sent along the following perspective today from agency after we discussed last Friday's item with both her and Klein on Monday.

"As you know, the board approved a new organizational chart in December that includes an increase from 4 to 8 people in the Office of the Chair and Vice-chair. We realized that it is not feasible to accomplish all of the responsibilities of the Office as outlined in Prop. 71 with just 3-4 people.

"During the next 1 to 2 years, CIRM will undertake two major, first-of -their kind funding programs - the Biotech Loan Program and the tax exemption status for the bonds - that involve up to $2 billion in value. Clearly, these are hugely complex and important funding programs and having the appropriate staffing and expertise in the Office of the Chair, which is tasked with their management, is necessary for successful development and execution of these programs. In addition, the Office of the Chair is responsible for intellectual property negotiation in the contracts for the Biotech Loan Program.

"The other increase in headcount is because Government Affairs has been transitioned back into the Office of the Chair. Prop. 71 calls for this function to reside there as part of the Chair's overall responsibility around interaction and education with government (CA Legislature, US Congress, and others), healthcare providers, the public, disease advocacy groups, and other key constituencies.

"Finally, as I mentioned yesterday, we will also increase the administrative help in the Office of the Chair because we want to facilitate more timely dissemination of materials to the public."

For those interested in reading more on this subject, here are some pertinent links:

Our item last year on the cutbacks in the chairman's office.

The old management structure presented to the Oversight Committee last March, which stipulated no more than four staffers in the office of the chair, which includes the vice chair.

The new management structure approved last month, which raised the number of staff from four to eight.
The organizational chart approved last month.

(An earlier version of this item incorrectly stated that the increase in the staff in the chairman's office was from four to 12 persons.)

Correction

On Jan. 4, in an item called "Klein Beefs Up Staff," we incorrectly reported that CIRM's chief communications officer reports to both the president and chairman of CIRM. Under the organizational chart approved last month, the communications position reports directly to the chief operating officer with dotted-line links called "access" by CIRM to the president and chairman.

Limos, Meals and More at CIRM

Ten months ago, the California state auditor took the California stem cell agency to task for sloppy bookkeeping and excessive travel and meal expenses.

The auditor found fault with lunches that cost $36, dinners that cost $65, pricey air travel and chauffeured limos, which the auditor said that CIRM preferred to describe as "large-sized vehicles" with hired drivers.

CIRM moved quickly to clean up its procedures for its staff. But the problems identified by the auditor involving CIRM directors remain uncorrected. Today, however, the director's subcommittee on governance will take a crack at a new travel policy for both directors (members of the Oversight Committee) and staff.

In at least one regard, the proposed new policies appear to roll back one of the changes backed by the auditor: elimination of the use of chauffeured cars. Whether the policies meet the auditor's standards in other areas is difficult to tell, but the complex documents contain ample flexibility, which some might call loopholes.

Normal limits on per diem expenses could be waived for foreign travel in the case of "a special event or function, e.g., a national or international sports event." First class air travel could be possibly permitted in the case of "unduly long layovers" or in the case of undefined "medical needs." And the use of limos would be permitted to and from an airport or railroad station.

The proposed travel policies to be considered this afternoon were not posted until late Friday on the CIRM web site. Missing were two important documents that should have been created in formulating the new rules. One would show how the new policy meets the problems detected in the audit last year. Another would show how the proposed CIRM policy diverges from the University of California travel policy on which it is based(another issue in the audit). A possible third document would show how the new policy is changed from the existing policy and how the proposed staff and director policies diverge from each other.

The state auditor did not wait until her report was published in February of last year to tell CIRM about some of the problems she had detected. Former CIRM President Zach Hall dealt early on with many of the issues involving staff. But as for the travel policies for CIRM directors, the audit stated, "According to the institute president, institute staff did not presume to suggest a policy for the committee." Dealing with those is the responsibility of Chairman Robert Klein.

In terms of raw dollars, the amounts involved in CIRM travel and expenses are piddling compared to its whopping multimillion dollar grants, probably not more than a few hundred thousand dollars although details cannot be found in the latest CIRM budget documents. But talk of chauffeured limos and $65 dinners does not sit well with the public or the media. Few persons can understand what $1 billion means. It is much easier for your average Californian, who is paying $4 a gallon for gas in some locations, to grasp a vision of limos and luxury lunches – an image that does not serve CIRM well.

(Editor's note: Some of the rules for expenses are linked to a "business meeting expenditure policy" that is yet to be approved or posted on the CIRM web site.)

Two San Diego Area Firms Seeking Cash From CIRM

Novocell and International Stem Cell Corp. are among the first 10 companies seeking grants from California's $3 billion stem cell agency.

Reporter Terri Somers of the San Diego Union-Tribune wrote Sunday about their plans as part of a story on CIRM's efforts to pump money into the stem cell business.

Somers' story was the first to disclose the names of any applicants for disease team planning grants. CIRM has refused to disclose the names of organizations seeking millions of dollars in public funds on grounds that they would be embarrassed if they were not awarded a grant. However, last month CIRM reversed itself on the names of 12 applicants for $263 million in lab construction grants, identifying them in order to give them a leg up on raising matching funds to help their applications.

Somers wrote,

"Novocell (a privately held company in San Diego) is developing a diabetes treatment that would create insulin-producing islet cells from human embryonic stem cells. It then would coat those islet cells in a polymer to make the cells invisible to the body's immune system, so they would not be rejected or require the patient to take immune-suppression drugs.

"The company plans to be part of two disease teams, Alan Lewis, chief executive, said.

"One team, which Novocell would lead, would include scientists from academia as well as a company from outside San Diego, Lewis said. That company, which he declined to name, has more expertise in development than Novocell, which is focused on research. He wouldn't name the academic part of the team."

As for International Stem Cell, a publicly traded firm in Oceanside, Ca., Somers reported that it "has created corneas using embryonic-like human stem cells derived from an unfertilized egg."

She continued:

"The company would have liked to create teams for several diseases, but for this planning grant the stem cell institute limited companies to being the lead investigator on only one team, said Jeff Krstich, chief executive.

"Nonprofit institutes, including universities, which generally have researchers with expertise in more areas than a company, can apply to lead four disease teams.

"International Stem Cell's team is all internal, and plans to focus first on corneal implants, Krstich said. Last year the company published a scientific journal article showing that it can create corneas from embryonic-like stem cells it created from a process known as parthenogenesis, which involves using an unfertilized egg rather than an embryo."

Somers also had an interesting comment from Lewis concerning the ongoing and contentious debate about sharing revenues that might result from CIRM-funded inventions. Some who claim to represent industry seem to balk at such requirements. But Somers wrote,

"'We weren't expecting free money from CIRM,' said Lewis of Novocell. 'Obviously there needs to be a benefit to the California taxpayers down the road, when a product is approved.'"

Somers' article and the willingness of the two companies to discuss their plans add useful information to the dialog about stem cell research in California. She also indirectly exposed some of the silliness in CIRM's refusal to disclose information about how it is going about the public's business. In this case, she said that CIRM would not provide a breakdown of the diseases targeted by those intending to seek planning grants. No reason was given in Somers' story, and it is hard to imagine how CIRM could concoct one that could be construed to be in the public's interest.

The Cerberus and The Scientist

Leanne Jones watches fruit flies. John M. Simpson watches the Oversight Committee of the California stem cell agency.

Both Jones (see photo) and Simpson came together on Sunday in an article about the scientist and the watchdog by Bradley J. Fikes on the North County Times in the San Diego area.

Fikes wrote about their different perspectives on the $3 billion research effort that has come to be so important in their lives. In the case of Jones, the Oversight Committee last month approved a $2.7 million grant for Jones and her work at the Salk Institute.

Fikes wrote,

"'Early on in your career, you have all these ideas, and you have to be very focused because your funds are so limited,' Jones said. 'Since I started my lab, I've had to spend a considerable amount of time writing grants to try to fund the lab once my initial funding from the Salk ran out. That meant that I could do very little in the way of "hands-on" experiments.

"'This CIRM grant gives me enough of a base so that I don't have to write grants for a while, which means I can spend more time in the lab actually doing the experiments, rather than just talking or writing about them. ... This is going to be fun.'"

As for Simpson, he described his role as a constructive effort to make sure that taxpayers get what they pay for and to ensure that CIRM research benefits the public at a price that people can afford. Simpson also noted that his organization, the Foundation for Taxpayer and Consumers Rights, has acted to remove impediments to stem cell research in general, citing the challenges to the stem cell patents held by WARF.

CIRM Directors Meet to Mull More Faculty Awards, Mega Millions for Labs

Coming up in the middle of this month is the $263 million California stem cell lab construction bonanza, but some other items are also up for consideration by directors of the state's stem cell agency.

CIRM has posted the agenda for the two-day session beginning Jan. 16. Besides the largest round of grants in CIRM history, the Oversight Committee is scheduled to take up a proposal to "make whole" -- sort of -- the 10 scientists who suffered as a result of breaches of CIRM's conflict of interest policy by the deans of their medical schools.

No details are yet available on the posted agenda, but CIRM plans to offer a new round of faculty award grants. Initial discussions indicated that it would be open to all (with qualifications)– not just the those who were dumped from last month's $54 million round.

Also on the agenda are compensation changes, travel policy and new plans for conferences and meetings. Some of those will mean increased spending, although no details are yet available on the CIRM website.

As for the "Mega Millions Jackpot" – whoops, that is another California state program -- for lab construction, if CIRM holds to past practice, sometime between now and Jan. 16, we should see the postings on the public summaries of the grant reviews for 12 institutions that were anointed earlier. Given the complexity of the proposals and staff turnover at CIRM, we would expect to see the summaries later rather than earlier, which would make it difficult for the public or other interested parties to review them and prepare comments for the Oversight Committee meeting.

Trounson on Appreciation

Alan Trounson, the new president at the California stem cell agency, has replied to the note of appreciation from John M. Simpson, stem cell project director of the Foundation for Taxpayer and Consumers Rights.

Here is the text of Trounson's letter:

"Thanks for your comments. We do take note of all inputs from all sources. I am particularly keen to guide the program towards clinical applications based on the best available scientific data. These young people are critical to this particular objective.

"I look forward to a constructive relationship that can extract the best of the incredible opportunity the people of California have provided through Prop 71.

"My very best wishes for a happy, safe and productive New Year."