CIRM Response on Audit

Earlier this afternoon we asked Don Gibbons, chief communications officer for CIRM, if the agency had any comment on the state controller's audit(see item below). Here is his response.

"We are thrilled that the auditor found that our policies and procedures are working. The one minor issue related to specialists who call in to assist in grant review and signed conflict forms prior to the call, but not afterward, and that fix was put in place already at the April 9-11 grant review session."

New CIRM Audit and Foxes and Chickens

California's top financial officer today said the "administrative processes and expenditures" of the state's stem cell agency are "proper" and in compliance with the Prop. 71, the ballot initiative that created the agency in 2004.

The audit by the office of state Controller John Chiang made one recommendation. It involved CIRM's grants working group, where specialists failed to follow a policy requiring them to sign post-review certification forms that cover conflicts of interest, confidentiality and non-disclosure of information. CIRM said it agreed with the recommendation and has taken steps to correct the situation.

"Big deal,” said John M. Simpson, stem cell project director for Consumer Watchdog. He added,

"Under Prop. 71, none of these disclosures are open to public review. They should be."

Chiang (see photo), who is a Democrat and was elected by statewide vote, ordered the audit last year following stories about violation of conflict of interest rules by a CIRM director (first reported by the California Stem Cell Report). However, the scope of the audit was limited largely to accounting and compliance matters because that falls within the scope of the controller's office.

Simpson said in a news release that the audit ignored "fundamental flaws" at the agency.

"The problem is that Prop. 71 deliberately created an oversight board that is fraught with conflict," said Simpson.

"The board is dominated by representatives of the very institutions that will receive most of the $3 billion in research funds handed out. Controller Chiang found that CIRM is following Prop. 71’s rules, but those rules specifically put the foxes in charge of the chicken coop."

The audit did refer peripherally to the investigation by the state Fair Political Practices Commission into complaints of conflict of interest violations by CIRM Director John Reed. Chiang and Simpson asked for the FPPC probe, which is not yet complete. The controller's report said,

"The FPPC investigatory procedures may disclose additional issues, facts, and circumstances beyond the matters noted in our review, as our review was not an investigation."

CIRM President Alan Trounson, in a response to the controller's office, said that CIRM was "pleased by the many positive findings."

"It is of overriding importance to us to ensure that California have full confidence in the integrity of the processes we use to commit public funds to stem cell research."

Release of the audit came on the same day as the state Senate Appropriations Committee unanimously approved, 14-0, legislation by Sen. Sheila Kuehl, D-Santa Monica, aimed at ensuring that Californians have affordable access to CIRM-financed therapies. The measure, SB1565, would also require a study next year aimed at policy issues concerning CIRM, including its difficulties with conflicts of interest. The bill now goes to the Senate floor.

Chiang's audit will be reviewed by the Citizens Financial Accountability and Oversight Committee on July 7 in San Diego. That group was created by Prop. 71 to examine CIRM procedures.

CIRM To Invest $66 Million in Intellectual Capital

The California stem cell agency will soon embark on a new, $66 million round of training grants, including some aimed at undergraduates and possibly community college students.

CIRM directors last week approved initiation of the programs, which were overshadowed by $271 million in lab construction grants. Only one news report surfaced on the training effort.

Bradley J. Fikes of the North County Times, which circulates in northern San Diego County, reported about the $18 million effort aimed at roughly 100 students below the doctoral level. He wrote:

"State universities and community colleges got an invitation last week to join California's stem cell research program."

The "Bridges to Stem Cell Research" grants aimed at undergraduates will total roughly $18 million. The program was foreshadowed by a $31 million proposal by the state college system last year, which had the effect of jump-starting the latest effort.

Also approved last week was a $48 million continuation of the training programs already underway for CIRM Scholars. Those grants were the first ever approved by CIRM.

While the training dollars are smaller than those in the lab program, they represent an important investment in intellectual capital. And they come at a time when the state is otherwise scrimping on higher education.

The "Bridges" program triggered a light moment last week at the directors meeting chaired by Robert Klein, a multimillionaire, real estate investment banker.

John M. Simpson, stem cell project director for Consumer Watchdog, reported that Ted Love(see photo), a member of the board of directors and CEO of Nuvelo, Inc., said CIRM should not judge the success of the program by only counting the number of participants that get laboratory jobs.

"Who knows?" asked Love. "Maybe one of these students will end up being a multimillion dollar real estate mogul who supports stem cell research."

"It brought the house down," Simpson said.

Requests for applications for the training program are expected to be posted on the CIRM website in June. Cash should start flowing in 2009.

Media Coverage, Lab Needs and a Proposal for a New CIRM Mantra

Here are a few more links to some of the Internet coverage concerning the CIRM meeting this week during which directors awarded $271 million in lab construction grants for stem cell research.

Chronicle of Higher Education -- Jeffrey Brainard put together a bit of an overview, including discussion of conflicts of interest at CIRM.

The Niche, blog of Nature Reports Stem Cell – Monya Baker touches on some of the aspects of the media coverage and the need for the labs.

The Biopolitical Times, blog for the Center for Genetics and Society – Jesse Reynolds critiques stories by the Los Angeles Times and San Francisco Chronicle on the lab awards.

Consumer Watchdog -- John M. Simpson says the CIRM board of directors should begin each meeting by repeating the following quotation from Claire Pomeroy, one of its members and dean of the UC Davis School of Medicine, "All Californians are paying for Prop. 71 so all should benefit from it."

Consumer Watchdog Rethinks Stand on Klein's Private Contact with Grant Applicants

The man who probably has spent more time than any other independent observer physically watching the affairs of the California stem cell agency now believes that CIRM Chairman Robert Klein did not violate the agency's no-contact rule with grant applicants. We disagree.

It is a change of position for John M. Simpson, stem cell project director for Consumer Watchdog. Earlier he responded to questions from the California Stem Cell Report about Klein's actions, which you can read all about here, by saying there could have been a technical violation.


Simpson now says,

"Upon further reflection, I don't believe Bob Klein violated the Facilities Working Group bylaws when he played a role in negotiating discounts if applicants take all the CIRM money upfront.

"First, the applications were no longer before the Facilities Working Group. The group's work was done.

"Second, the discussions weren't focused on specific applications but on a discount rate that would apply to all equally if accepted.

"Not that it's relevant to whether there was a technical violation, it's also the case that everyone at the meeting -- including me - understood from the discussions that Klein would be involved in the negotiations."

However, the ban in the bylaws does not permit conditions. Drafted by CIRM's outside counsel, James Harrison, the single sentence states flatly:

"Members of the Facilities Working Group shall not communicate with an applicant about an application to CIRM."

The facilities group work is not really done until the CIRM board of directors act. The board has absolute authority over grant approval, as CIRM likes to point out. Directors could well send a recommendation back to a review group for reconsideration.

Another possibility: Sometimes, reviewers make a recommendation that basically says a grant should be funded if there is enough cash. Let's say a reviewer, following the review group action, decides that the applicant needs a little guidance to help bring about directors' approval. He or she could contact the applicant and give them suggestions on how to successfully approach the directors. Under Simpson's construct, that certainly would be permissible.

In this particular case, Klein's proposal to stretch CIRM funds was inventive and successful. But, in our view, he violated the bylaws to do it, although it seems at this point to have created no harm. Nobody is arguing he performed a dastardly deed.

However, bylaws are in place for a reason. If they are violated on relatively minor matters, what does that mean ultimately for CIRM's credibility and integrity.

CIRM Conflicts: Comments from the Cerberus

The California stem cell agency is bit of a strange beast politically and governmentally speaking. It was deliberately created that way by those who drafted Prop. 71, which established the agency in 2004.

While the trend in government in the past few decades has been towards minimizing conflicts of interest, the voter-approved initiative installed them in spades when it created CIRM's 29-member board of directors. And there is virtually nothing that the ordinary branches of government, such as the governor or the legislature, can do about it. To alter the law concerning CIRM requires a state constitutional amendment or a nearly equally unattainable super, super-majority vote of the legislature –70 percent.

John M. Simpson, stem cell project director for Consumer Watchdog, commented on the conflicts today in his blog after attending two days of meetings of the directors earlier this week. Here is part of what he wrote:

"Only seven members (out of the 29 positions) could vote on the overall grant awards Wednesday -- all the rest had to recuse themselves. They couldn't even talk about the proposals. Besides the members of the board who hold their seats by virtue of their academic roles, several patient advocate members were conflicted because they work for academic institutions that had requests pending. One member is a UC regent."

One of the justifications for placing persons with conflicts on the board was to tap their knowledge and expertise. Obviously, that did not occur earlier this week. Instead they were gagged by state law.

The conflicts and recusals also meant that it would only take a majority of four to hand out $271 million in taxpayer funds. No vote tally was announced by CIRM in its press release, but it is fair to assume that all seven voted in favor of the grants, a foregone conclusion since last December.

CIRM's board of directors have only overturned the positive decisions of its grant reviewers on one occasion and never on their negative decisions, which raises other good government issues. Discussion of that will have to wait for another day.

Pravda to Marin: A Look at Media Coverage of CIRM's Stem Cell Grants

The California stem cell agency's $271 million lab construction effort gained additional attention today, ranging from Pravda in Moscow to Merced in the fields of California's agricultural central valley.

Some stories, including those in the New York Times and on the Xinhau news service, did not use CIRM's $1.1 billion figure for the total impact of the grant program, which includes additional contributions required by CIRM of the applicants and other expenditures that are linked to the labs.

Many of the stories in California focused sharply on the local angles in the program, rather than the national and international implications. In an odd story, Pravda, for reasons difficult to understand, zeroed in on UC Davis.

One editor for an international news organization told us he considered the grant announcement a "local" story, which I told him was shortsighted. Adding 800,000 square feet in research facilities to house 2,200 scientists is likely to have a significant impact in the global stem cell arena for decades to come.

Here in California, it was important news locally as well.

Terri Somers of the San Diego Union Tribune reported primarily about the San Diego Consortium for Regenerative Medicine and its $115 million research center. CIRM is popping for only $43 million of the total. She wrote:

"'The fact that we want to build a stem cell research facility here in San Diego and the state is willing to give us $43 million to help make that happen is pretty good,' said Louie Coffman, the consortium's vice president. 'Forty-three million dollars is a pretty good head start.'"

While Coffman is out beating the bushes for cash, he said the consortium plans to seek a loan. The facility includes extra lab space that it could rent to pay off debt.

Richard Halstead of the Marin Independent Journal also reported on the fundraising tasks ahead. He said,

"Now that it has the grant, the Buck Institute must figure out where it is going to find the other $20.5 million it will need to construct the building, plus at least another $1.4 million to stock it with equipment.

"'That is a big question,'said James Kovach, president and chief operating officer of the Buck Institute."

Halstead continued:

"Kovach said he will pursue several options simultaneously. He said philanthropic foundations that have adopted a results-oriented approach - 'what has been termed venture philanthropy' - should be interested in funding such a project."

Overall, a search this morning on the term "California stem cell laboratoraties" generated roughly 60 to 70 stories on Google News. Here are links to other stories: San Francisco Chronicle, Sacramento Bee, San Jose Mercury News, North County Times (San Diego area), Merced Sun Star, Madera Tribune, GlobeSt.com, Santa Cruz Sentinel, Earthtimes and Entrepreneur.com.

Fresh Comment

Jeong Hwan Kim has posted a new comment on "Flamm" item April, 21, 2008.

Beating the $1.1 Billion Stem Cell PR Drum

Most recipients of California stem cell largesse were quick to post news releases today dealing with their construction efforts backed by the state's stem cell agency.

UC San Francisco offered the most razzle-dazzle with multiple renderings, a campus map and a video. UC Irvine had a video as well. All the news releases offered a quick look at the specific impact at each location. More and technical details can be found in the applications themselves on the CIRM web site.

Here are links to all the recipient press releases we could find late this afternoon.

Buck Institute
San Diego Stem Cell Consortium – no release at the time of this writing
Stanford
UC Berkeley
UC Davis
UC Irvine
UCLA – no release at the time of this writing.
UC Merced
UC San Francisco
UC Santa Barbara
UC Santa Cruz
University of Southern California

NY Times, San Diego UT and More on Golden State's Stem Cell Labs

The New York Times and some California media carried stories this afternoon on the landmark, $1.1 billion lab construction program triggered by the California stem cell agency. More is expected on Thursday.

Andy Pollack of the New York Times wrote:

"California has awarded $271 million in grants to build 12 new stem cell research centers in the state, even as one of the political rationales for the building program might soon disappear."

Pollack reported that California stem cell Chairman Robert Klein and others say, however, that "even if the restrictions were lifted, new laboratory space would be needed to expand research and to recruit scientists, who are already flocking to California because of the availability of research financing."

Terri Somers of the San Diego Union-Tribune wrote an online piece this afternoon that will probably be updated in the print version Thursday morning.

KNBC TV (channel 4) and three other Los Angeles TV stations (7, 11 and 18) covered the news conference and presumably will have coverage this evening. Here is a link to the KNBC online version.

The San Francisco Chronicle and San Jose Mercury News this afternoon used The Associated Press story. They may staff written stories tomorrow.

The Sacramento Bee carried a staff-written online piece and is also likely to have more later.

Ron Leuty of the San Francisco Business Journal weighed in with a piece that was circulated nationally via the national news network linking business journals.

New Stem Cell Labs for California: The $1.1 Billion CIRM Achievement

The California stem cell agency and 12 universities and research institutions today officially kicked off an unprecedented, $1.1 billion stem cell lab construction program that Gov. Arnold Schwarzenegger hailed as "good news" for both science and the economy.

The agency completed action on the grant program this morning and announced a new total figure for the building effort -- $1.1 billion instead of roughly $800 million. CIRM said the revised amount resulted from "additional institutional commitments for faculty recruitment packages and other related capital costs."

In a news release from CIRM, Schwarzenegger said,

"This will go a long way toward medical research that could save lives and improve them for people with chronic diseases. But also, this kind of public-private investment in a growing jobs sector is exactly the kind of good news our economy needs right now."

Robert Klein, chairman of CIRM, said,

"This Prop. 71 stem cell research facilities program is one of the largest building programs ever dedicated for a new field of medical science and it will deliver an impact that will be felt world-wide."

Alan Trounson, president of CIRM, said,

"These facilities will house basic and clinical researchers working collaboratively, with stem-cell-specific core labs literally ‘down the hall’ – an arrangement that is instrumental to our ability to accelerate the pace of research toward clinical application."

The news release from CIRM also quoted a number of the private donors who were tapped to provide additional funds to the institutions, including Eli Broad, whose foundation ponied up more than $50 million to UCLA and USC. He said,

"California is at the epicenter of stem cell research,.By creating new research centers and attracting the very best scientists from around the world, we will enable the rapid progress of one of the most promising areas of scientific and medical research today. The partnership between public institutions, the state, private foundations and donors demonstrates the unprecedented commitment California is making to stem cell research."

Also quoted by CIRM was Li Ka-shing, a Hong Kong philanthropist who contributed $40 million to UC Berkeley. He said,

"When I made a gift to support the establishment of the Li Ka Shing Center for Biomedical and Health Sciences at Berkeley, I was inspired by the passage of Prop. 71 and the promise of significant advances in stem-cell research."

The institutions receiving the government funding are the University of California campuses at Davis, Berkeley, San Francisco, Los Angeles, Merced, Santa Cruz, Santa Barbara and Irvine, the San Diego Stem Cell Consortium (which includes UC San Diego, Scripps, Salk and Burnham institutes), Stanford, USC and the Buck Institute north of San Francisco.

Eight of the applicants took a 9 percent reduction in the initially recommended amounts, opting to take the cash sooner rather than later.

CIRM's news release includes details about program, including a breakdown of what was requested and the amount granted.

Media Start to Roll on CIRM Lab Grants

The California stem cell agency called a news conference for this morning to trumpet its roughly $270 million in grants for stem cell lab construction. But even before the Los Angeles event occurred a number of stories and items popped up.

Three large, mainstream outlets that reach hundreds of thousands of readers or listeners carried generally positive reports.

A stem cell building "spree" was how Mary Engels described it in the state's largest newspaper, the Los Angeles Times, which generally has ignored the agency. Sabin Russell of the San Francisco Chronicle called it a lab construction "boom."

Russell also reported,

"This is an incredibly unusual opportunity that may never happen again, anywhere," said Ralph O'Rear, vice president for facilities and planning at Buck Institute for Age Research in Novato.

Buck is one of the institutions that applied for the grants.

The all-news radio station in San Francisco, KCBS, carried a brief item and probably will carry another later today. Coverage by radio and television is especially important for CIRM since most people get their news through those media. Radio stories on all-news stations also are often repeated a number of times throughout the day, magnifying the CIRM message.

On the smaller venues, the perspective on the lab program was more skeptical.

Chris Thompson on East Bay Express had a jaundiced view on his blog -- he referred to the grants as "hot, sticky money."

J. Wesley Smith, an attorney, author and foe of hESC research, quoted from the Chronicle story on his blog, Secondhand Smoke, and deplored the effort.

"I would have hoped that at a time when California is literally drowning in a $20 billion in deficit, that some restraint would be shown. But who was I kidding? This is the kind of moral corruption, pigs-feeding-at-the-trough kind of excess that undermines the people's confidence in government and our ruling institutions.

"Somebody ought to sue: Hint. Hint."

In Sacramento, both the California Healthline, an Internet news digest service from the California HealthCare Foundation and the Capitol Basement Internet news service mentioned the Los Angeles Times article in a roundup of California governmental news.

Today's news conference is likely to generate some television coverage in the huge Los Angeles market. More stories are likely to ripple out as the 12 recipient institutions send out their news releases in the days ahead. The more aggressive will ship out their stuff today.

CIRM, of course, will have its own news release. Look for it sometime after 11:30 a.m. PDT today, the scheduled time for the news conference.

Time for a Party at CIRM Central

California's stem cell agency has roughly 800 million reasons to celebrate this week, and well it should.

By this time tomorrow, it will have launched a massive wave of construction of labs for research into human embryonic stem cells – certainly the largest in the nation's history and perhaps globally. The final figures are not yet set but the value of the construction could exceed $800 million.

Building the labs will serve as a short-term stimulus economically, something to be applauded in these difficult economic times. But more importantly the construction will create a base for scientific growth in California for many decades to come, even if the stem cell dream proves elusive. And that is saying something for a state whose parsimonious government has short-changed its infrastructure since the 1970s.

The California Institute for Regenerative Medicine, as the agency is formally known, will set off its building wave with $262 million in grants to 12 universities and research institutions, ranging 600 miles from Sacramento to La Jolla. To earn the taxpayer's largess, the institutions had to come up with additional contributions that pushed the ultimate size of the effort beyond $800 million. And they aggressively tapped private donors for hefty chunks of cash.

The grants are the single largest round for CIRM, which has had its difficulties in the past and will have more in the future. But the agency, created by voters in 2004 and unprecedented in state history, has served as a beacon for scientific research nationally and internationally.

The agency's grants, which will total more than $500 million by the end of this week, have stimulated a beneficent buzz at a time when researchers bemoan the slow strangulation of research funding at the national level. The agency's actions undoubtedly played a role in the migration of at least 50 scientists to California since Prop. 71 passed, including several luminaries in the stem cell field. More are likely to come in the future.

Last January, we reported for Wired.com on the importance of CIRM's effort. Sean J. Morrison,director of the University of Michigan Center for Stem Cell Biology and board treasurer of the International Society for Stem Cell Research, commented on the significance of CIRM to the Golden State. He told us then:

"The resources invested by CIRM will help to maintain California as an international leader in biomedicine during this period of declining federal investment."

CIRM has pioneered in other areas as well. Its research standards are a benchmark nationally. It has crafted intellectual policies in areas where you might say no man has gone before. It has fought a court battle to survive and raised tens of millions of dollars in private contributions to get through its early days. All the while operating with a tiny staff (26 or so) that is hardly larger than the number needed to run a 24-hour Burger King.

But these no folks are hamburger flippers. Some are scientists in their own right. All are skilled and dedicated. And they all put in incredible effort and hours.

Yes, it is time for a party for the stem "cellists" down at CIRM Central in San Francisco. Congratulations.

Fresh Comment

"Anonymous" has posted a comment on the "zeal" item below, raising an interesting question about whether the Facilities Group, which is an advisory body, can overrule bylaws adopted by the CIRM board.

Response from Grant Applicants on Klein Contact

In an earlier item concerning private contacts by Robert Klein, chairman of the California stem cell agency, with some of the applicants for $262 million in stem cell lab construction grants, we mentioned that we had queried some members of the CIRM board about whether they or their staff had been dealing with Klein on their applications. We also queried other applicants that do not have representation on the CIRM board.

CIRM has since acknowledged that Klein has been in contact with some applicants. The agency contends he has done nothing wrong despite a no-contact rule in the agency's bylaws. (See the "zeal" item below.)

However, for the record, we received responses from five institutions. Two shunted the query to other entities. Three addressed the question at least partially or completely. Of those, only one responded fully to the question of whether he or his staff had contact with Klein. That answer was no.

CIRM Agenda Still Short of Info

The California stem cell agency has posted on the Internet additional background material on its proposed $500 million biotech loan program, but other key information to be considered by the agency's directors during their meeting this afternoon and tomorrow is still not yet available to the public.

Only cryptic phrases, with no explanation or links, can be found on the CIRM Oversight Committee agenda on the following subjects:

-- A proposal for fast-tracking "urgent" or "opportune" research opportunities

-- Changes in the rules for running the agency's $262 million stem cell lab grant program

-- A definition of California "supplier," which could help to ensure that California firms get preference in tens of millions of dollars linked to CIRM spending

-- Equipment funding for the stem cell lab construction program

-- And recommendations that would define "principal investigator" and his/her responsibilities in connection with CIRM research.

The Oversight Committee is scheduled to meet at 4:30 p.m. today in Los Angeles.

Klein, Zeal and CIRM's No-Contact Rule

The chairman of the California stem cell agency, Robert Klein, has apparently violated his agency's bylaws by contacting applicants for $262 million in stem cell lab construction grants scheduled to be approved this week.

CIRM, however, contends Klein did nothing wrong. One non-longtime CIRM observer called the violations "technical." And Klein's actions are not likely to have any significant impact on funding or result in sanctions on him personally.
According to the San Francisco Business Journal(see item below), Klein has been dickering with applicants in an effort to convince them to reduce the size of their grant requests by 10 percent if they receive the money sooner rather than later. CIRM's board of directors is scheduled to take up the grants in Los Angeles tomorrow.

Bylaws for CIRM's Facilities Working Group, of which Klein is a member, forbid him from contacting applicants. Article Seven, section four, states:

"Members of the Facilities Working Group shall not communicate with an applicant about an application to CIRM."

In response to a query about Klein's actions, Don Gibbons, chief communications officer for CIRM, said,

"Chairman Klein was specifically authorized by the Facilities Working Group at its last public meeting to work with the institutions on this project in his capacity as board chair. This supersedes the language you cite."

However, our review of the transcripts and a grant administration policy document from the April meeting showed no such authorization. A possibility exists that the authorization is somewhere in the 418 pages, and we asked Gibbons to provide a citation.

Gibbons said he was too busy with other matters today to provide a citation. He said,

"The Facilities Working Group approved the Facilities Grant Administration Policy with the understanding that Mr. Klein, in his role as chair, would carry out the negotiation."

It is not clear what sanctions, if any, might apply if Klein is found to be in violation of the bylaws. As for the grants themselves, in our view, it is unlikely that any might be affected by Klein's contact with applicants.

We queried John M. Simpson, stem cell project director for Consumer Watchdog, on Klein's actions. Simpson, who was at the Facilities meetings on April 4 and 5, said,

"Given the working group's bylaws it would have been better if Bob Klein hadn't been the one to contact grant applicants about taking less CIRM money if the entire grant were paid up front. I think the idea is a good one and supported it enthusiastically at the working group meeting as a way to avoiding making more cuts. I still do.

"Based on the discussion at the meeting, I understood that Klein was one of those that would be contacting applicants. I thought that as long as all applicants were treated equally and offered the same discount in return for taking the money up front there was no problem.

"Re-reading the the working group's bylaws today, I reluctantly conclude that in his zeal to maximize the impact of CIRM's $262 million, Klein may have technically broken the rules."

The no-contact clause in the bylaw has existed since 2006 and was drafted by James Harrison, outside counsel to CIRM. During the meeting when the language was adopted, Klein said,

"The purpose of having a committee here is that we are able to gather information generally; but once there's an application in, you can't discuss anything with them...there has to be a bright line created here."

CIRM board member David Serrano Sewell also commented in 2006 on what he described as "ex parte discussions." He said,

"It sort of just goes without saying and common sense that an applicant doesn't have a one-on-one conversation about their particular application. Should that discussion happen, a, it's inappropriate, it's unethical, and, c, it's going to have to be disclosed on some level."

However, the 2006 meeting, which we attended, was mainly considering the process prior to facilities group action. No one at that meeting discussed a situation where the chairman of the CIRM would negotiate some terms of a grant privately following the facilities group action, but before the grant came before the full CIRM board, which has final authority on funding.

At this year's April meeting of the facilities group, attorney Harrison presented language that would permit the reduction in the size of grants if applicants agreed to take the lesser amount up front. He did not mention the no-contact rule in the bylaws involving members of the facilities group. It appears, however, that no restriction exists on staff negotiating a hold-back on funding with grant applicants.

One final note on yesterday's item below, which was written before we turned up the no-contact rule. We raised a series of questions about whether Klein had contacted members of the CIRM board who had lab grant applications pending this week. We asked CIRM to respond to those questions. Here is Gibbons' response:

"The discount proposal was discussed at the April 5 public meeting of the Facilities Working Group, at which time Citizens Watchdog's John Simpson said it 'bordered on brilliant,' per the transcript on the CIRM web site.

"All discussions on the proposal subsequent to that time have been conducted in collaboration with CIRM legal counsel in full compliance with all regulations governing CIRM, so the chair did not negotiate with any board members."

We have queried members of the CIRM Oversight Committee who have applications pending concerning contacts with Klein. We will report on their responses tomorrow, but so far it appears that none had contact.

(The actual discussion of the "hold-back" or "discount" plan begins on page 45 of the transcript of the April 5 meeting.)

$800 Million in New Stem Cell Labs: Haggling Over 10 Percent

The California stem cell agency and some of the nation's top stem cell research institutions are dickering over the final details of perhaps the world's largest-ever wave of new lab construction for human embryonic stem cell research.

Reporter Ron Leuty of the San Francisco Business Journal pulled together pieces of the process in a report Friday. The implications of his article raise fresh questions about the ongoing conflicts of interest among CIRM directors.

Twelve institutions, 10 of which have representatives on the CIRM board, are seeking $336 million from CIRM this week. A CIRM panel has approved $289 million, leaving a shortfall of about $47 million. The agency required applicants to match the grants plus more, pushing the total amount of construction proposed to $832 million. Robert Klein(see photo), chairman of CIRM, offered a "hold-back" plan at a CIRM meeting in April. John M. Simpson of Consumer Watchdog reported on April 7 that CIRM grant reviewers expressed support for asking some institutions to take less if they get their money up front.

Leuty reported fresh details of how this is playing out in the final days before CIRM directors meet Tuesday afternoon in Los Angeles. Leuty said Klein is telling institutions that if they agree to lower their requests by roughly 10 percent, they will get the cash sooner rather than later.

Leuty wrote:

"'CIRM has been very aggressive about putting this idea forward,' said Chris Shay, project manager for the planned $200 million, 200,000-square-foot headquarters for the Stanford Institute for Stem Cell Biology and Regenerative Medicine. 'They don't want to do any more cutting.'"

Leuty said Stanford has already made a counter to the 10 percent offer.

He also wrote:

"'We're the only independent (applicant),' said Ralph O'Rear, vice president of operations for the Buck (Institute), which could receive $20.5 million in CIRM funding for a 65,700-square-foot, $70.1 million facility. 'We don't really have the kind of means and the resources that Stanford or USC have, so (early CIRM cash is) really something more meaningful for them than us.'"

Leuty continued:

"'We're interested in doing it if we can make it pencil out for us,' said Glenn Lucas, executive vice chancellor at UC Santa Barbara, which could land $3.5 million in CIRM funds for a $6.4 million project. 'They're essentially asking us to take less money up front to buy down the risk.'"

Last week Nature magazine warned of "cronyism" at CIRM because of the dual roles of medical school and research institution executives who also serve as directors of CIRM. In the case of the bargaining over the 10 percent discount, some questions arise:

-- Have Klein or others at the agency discussed the discount plan outside of public meetings with CIRM directors whose institutions would be financially affected?

-- Have the institutions' staffs informed their deans/CIRM directors of the negotiations or sought their advice?

-- Have the deans/directors given advice formally or informally to their staffs about negotiating with CIRM or Klein?

We are querying CIRM concerning these matters. We will carry an update on its response Monday afternoon.

We should also note that CIRM directors whose institutions are applying for the grants will be barred from voting on or even discussing them at this week's meeting.

(Editor's note: An earlier version of this item used the expression "10 percent discount" in the third paragraph. That has been changed to "hold-back.")

California Supplier? A Minor Question Involving Stem Cell Millions

California lawmakers are barreling ahead with an effort to tell the state's stem cell agency how to define "California supplier," a move aimed at assisting the Golden State's biotech industry.

The legislation would ensure that California firms that make research tools and life science supplies receive a preference over out-of-state businesses in connection with CIRM-funded research. The potential benefit could run to tens of millions of dollars, if not hundreds of millions.

The measure – AB 2381 -- by Gene Mullin, D-San Mateo, unanimously cleared the Assembly last week (May 1) on a 70-0 vote and is now in the Senate, where its prospects appear good.

At the same time, CIRM directors are scheduled to consider their own action on California suppliers during their meeting Tuesday and Wednesday. However, the agency has not yet posted proposed definitions of the term on its web site.

The topic came before CIRM directors (the Oversight Committee or ICOC) last March. Two lawmakers made an unusual appearance before CIRM directors, urging them to move quickly on the matter.

Attorney John Valencia of Wilke, Fleury, Hoffelt, Gould & Birney of Sacramento, representing the stem cell firm Invitrogen, also reminded directors that the issue has been lingering for more than year. In January of this year, Valencia wrote a letter to the agency that led to the matter being placed before directors.

The issue centers on language in Prop. 71 that says:

"The ICOC (CIRM's board of directors) shall establish standards to ensure that grantees purchase goods and services from California suppliers to the extent reasonably possible, in a good faith effort to achieve a goal of more than 50 percent of such purchases from California suppliers."

However, the term California suppliers is not defined.

Mullin's bill, which is backed by at least one biotech industry group, would define supplier in this manner:

"any sole proprietorship, partnership, joint venture, corporation, or other business entity, the owners or policymaking officers of which are domiciled in California and whose permanent, principal office or place of business from which the supplier's trade is directed or managed is located in California."

CIRM directors appeared to make it clear at their March meeting that they wanted to move forward separately on defining California supplier. But Mullin's bill holds their feet to the fire.

If his bill passes and is signed by the governor, it would be the first legislation enacted that would affect CIRM, which enjoys special protection from legislative or gubernatorial tinkering. Prop. 71 requires a unique and unprecedented super, super-majority vote of both houses (70 percent) to enact an law dealing with the stem cell agency.

Presumably CIRM would go some extremes to prevent passage of the bill and avoid a precedent that would make it easier to pass more sweeping legislation involving the agency.

Stem Cell Snippets: Surfing the Big Wave to Practicing PR

Trounson's Longings – CIRM President Alan Trounson says he "absolutely" misses being in the laboratory. Trounson (photo at right) made the comment in an interview late last month on Australian radio. He told interviewer Monica Attard on ABC radio that "I still wake up at night thinking I’m in the laboratory." Trounson also talked about how grant money was luring Australian researchers away from their country. "It’s like surfing in the big surf and unless you can catch the wave you’re never going to get the thrill of it. If you are sitting there and waiting for the wave to come and ... you might get on it, you might not because there’s really not much funding...." He went on to say that "a lot of really good scientists have relocated (from various places) to California because of the money and because of the opportunity."

Liberals Criticize Grant to California Stem Cell Firm – The state is New Jersey. The firm is StemCyte of Covina, Ca. The money relatively small – only $589,000. But a New Jersey state grant in that amount inveigled the company to open a New Jersey facility, creating 12 jobs. Questionable financial decision for the state, said the New Jersey Policy Perspective group, while higher education and transportation budgets are being cut in that state.

CIRM PR Contract – The California stem cell agency is looking for some public relations assistance, specifically a communications special projects manager. Under the terms of the RFP, compensation would amount to $90,000 under a 13-month "all inclusive contract including all administrative expenses and travel." The consultant would be required to work no more than 30 hours a week on an as-needed basis. Deadline for applications is May 19 with the award date scheduled for May 26 and possibly earlier. The agency has also posted job openings for a communications manager, IP attorney, scientific officer and two administrative coordinators (one senior).