The Murky World of $2 Million in CIRM Spending

A key committee of directors of the California stem cell agency on Wednesday will examine one of the most important aspects of the $3 billion institute's operating budget, but one that remains hidden from the public with only one day left before the matter is to be aired.

One can only speculate about the reasons for the secrecy. Perhaps it is a deliberate and quite possibly illegal attempt to avoid public scrutiny of CIRM's outside contracts, which are the second largest element in its budget. Or perhaps the secrecy is related to CIRM's inability to produce budget documents in a timely fashion.

Whatever the reason, both are causes for concern. After nearly four years, CIRM should be able to produce routine budget documents quickly. Trying to avoid public scrutiny is hardly fitting for an enterprise that styles itself as an exemplar of bioethics and openness. Withholding the information also makes it virtually impossible for the public or other interested parties to comment intelligently before the CIRM Governance Subcommittee, which convenes on Wednesday to examine the agency's $2 million or so in outside contracts.

CIRM has an operating budget of about $8 million. The largest item in the budget – something like $5 million -- goes for benefits and salaries, including two salaries that rank among the top 10 highest for California state employees, according to a San Francisco Chronicle story this past weekend.

When we cite the budget figures, we must qualify them with terms such as "or so" and "roughly" because CIRM's latest effort at a budget is something of a hodge-podge, missing such things as updated totals with year-to-year comparisons. The most recent available document came up last December. It appears to show something like a $200,000 to $600,000-plus increase in outside contracts since last June, although some of that will be for the 2008-09 budget year.

Up for consideration at Wednesday's Governance meeting is a modification in the roughly $500,000-a-year contract for legal services with the law firm of Remcho, Johhansen & Purcell of the San Leandro, Ca. The Remcho contract is on top of the salaries of four other attorneys working for CIRM including a general counsel but not attorney/Chairman Robert Klein.

James Harrison is the lawyer with Remcho who appears to do most of his firm's work for CIRM. He has been working with Klein since at least the 2004 campaign for Prop. 71, which created CIRM. Harrison wrote portions of the initiative as did Klein. Harrison appears to be a skilled and competent attorney. The agenda item on his contract suggests that it will be extended or perhaps payments will be increased or both. It is not likely that Klein is bringing the contract before the directors in order to cut it.

How much is the proposed increase? We can't tell you. CIRM will not disclose details of the budget item. We began asking for some indication of the details on May 22. At first we were told that the information would not be made public until tomorrow morning, one day before the meeting. That raised a question of whether a document on the matter existed at CIRM. In that case, it would be a public record that would have to be disclosed under state law. We were then told that all of the information about the matter was "verbal," as of last Friday. We were told at another point that a one-page, proposed unsigned contract extension existed for Remcho but that it was deemed not to be a public record.

Whatever the actual facts are, it would not be the first time that public information has been withheld by CIRM for reasons that are difficult to understand. One memorable case last year involved a $31 million proposal by the California State University and College system. Klein's office refused to release the document, but the California Stem Cell Report linked to it after finding it on a non-CIRM Internet site.

Also on the agenda of the Governance Subcommittee, which is chaired by former Hollywood studio executive Sherry Lansing, is more information that is not available to the public. It deals with a look at all the outside contracting, but again we can tell you nothing further about its specifics because CIRM has chosen to withhold the report.

CIRM's staff is capped by law at 50(currently it has only about 26 employees). And "privatizing" some of its work work is necessary and makes good sense. But the use of outside contractors by government agencies requires careful selection and keen oversight.

The California legislative analyst said in a lengthy report in 1996 that outside contracting problems for state government include accountability, accurate cost comparisons and quality control. We also wonder whether it is possible for CIRM's tiny staff to properly monitor a host of contractors, particularly in the case of the proposed $500 million biotech lending program.

We asked John M. Simpson of Consumer Watchdog for his thoughts on outside contracting by CIRM. Simpson, who has watched CIRM closely for about three years, said,

"While there are some services that are best performed by outside contractors, there is a real danger of going outside when it's unnecessary and the work should be performed by staff.

"For instance, while I greatly respect James Harrison's abilities as a lawyer, I am hard pressed to understand why the stem cell agency spends so much on an outside legal counsel when it has a staff counsel.

"The point is that contracts with outside vendors offer a multitude of opportunities for waste and abuse. All of them must be closely evaluated by the oversight board. Moreover, circumstances change. Some of what made sense to be contracted out as the institute was in start-up mode, might now be more appropriately handled by staff."

Time to Sign Up for CIRM E-alerts

The California stem cell agency's new e-alert drew a modest reponse on its first day.

In response to a query, Don Gibbons, chief communications officer for CIRM, reported that 24 persons on Friday requested email alerts for RFAs. Twenty each sought them on press releases, CIRM events and consumer news.

CIRM is providing a valuable service with the e-alerts. We recommend them to anyone interested in the agency. You can sign up for them by going to the CIRM home page.

CIRM Improves Web Site, Moves to Strengthen Communications

The California stem cell agency beefed up its web site today, adding key links and information as well as tools for those who would like to follow its affairs closely.

The move is part of a communications and public relations effort this year that includes adding more staff and hiring outside firms to provide assistance.

In addition to the web site improvements, CIRM this week posted an RFP for a PR firm to provide $110,000 worth of help. The agency also wants to hire a communications manager on staff at a salary of up to $120,000. It has signed a $90,000 contract for a communications special project manager. And it is about ready to sign a deal for an overhaul of its web site.

One of the more significant improvements today on the CIRM web site is a provision for email alerts on the agency's activities. Called e-alerts, they permit CIRM fans or foes to sign up for automatic email notification in the following areas: RFAs and "other news for researchers," press releases, meeting and event announcements and consumer briefs.

Since CIRM's very inception, tracking its affairs has been difficult because it was not always clear when new information was posted on its web site. The e-alert service is a major step forward in addressing the problem. However, the e-alert sign-up has one minor flaw. It has a limit of 35 characters on the e-mail address of subscribers. But we suspect that is not likely to be much of an issue for most persons.

Also new on the CIRM site is an "about stem cells" feature, that includes definitions of key terms, links to major outside sources and a rundown on stem cell research that has been financed by CIRM. The agency has also combined the previously separate job opportunities and RFPs on the same page.

All of this comes under the domain of Don Gibbons(see photo), formerly of Harvard and Stanford, who came aboard last February as chief communications officer. He replaced Dale Carlson, who left last fall to return to the private sector.

CIRM President Alan Trounson, himself in place fulltime only since January, early on identified public outreach and education as one of his main priorities. CIRM's strategic plan calls for spending as much as $4.5 million on the effort.

The plan says,

"To an unusual degree, stem cell research is in the public eye. Its progress is keenly followed not only by scientists and clinicians, but by ethicists, legislators, politicians, social scientists, and those interested in public policy. Most importantly, patients and their families feel a deep involvement in stem cell research. The engagement, support and interest of this broad constituency are a great strength for CIRM. It also confers a responsibility for the Institute to communicate and interpret the results of stem cell research in many venues and to be aware of its broad impact on society; effective communication that fosters awareness is an imperative for CIRM."

Earlier this week, CIRM posted the $110,000 RFP for a PR firm to research and make recommendations concerning negative and positive perceptions of CIRM among opinion leaders. The proposal also seeks assistance in generating coverage in national media.

The RFP states,

"Given CIRM’s position as the No. 1 funder of this stem cell work, the CIRM perspective should be included in every major overview piece in these national outlets. CIRM staff has excellent contacts in traditional print national news outlets and is looking to fill gaps in national broadcast outlets and in national opinion and thought-leader magazines."

The contract also calls for the firm to provide news clipping service on stem cell issues for daily email distribution to about 150 persons.

The $90,000, special projects RFP this month went to Ellen Rose, who was brought in last year on an interim basis, Gibbons said. She was formerly with Alza, a drug delivery subsidiary of Johnson and Johnson.

We are a believer in performance-based public relations efforts. Positive coverage of CIRM and hESC research doesn't necessarily happen on its own. Reporters and editors are awash in information. Getting their attention is especially difficult in these days of shrinking staff and space in the print media.

Good public relations also means building contacts and trust that will serve the agency well when the inevitable bad news arises, including the "potential tragedies" in clinical trials warned of by CIRM Chairman Robert Klein.

But good-news stories are fundamentally based on the agency's own performance, responsiveness and openness. Without a solid track record, no amount of spin or rhetoric can gloss over weaknesses and failings – at least in the long term.

(Editor's note: An earlier version of this item omitted the word "broadcast" in the quote from the $110,000 RFP.)

Chiang SB 1565 Text: Support for Stricter Oversight

Here is the text of the letter from California's top financial officer, Controller John Chiang, endorsing SB 1565, which is aimed an ensuring affordable access to CIRM-financed therapies. It would also require an independent study of the stem cell agency next year along with recommendations for changes in its operations. The Chiang letter was sent to state Sen. Sheila Kuehl, D-Santa Monica, author of the legislation, which has passed the Senate and is now before the Assembly.

"I write in support of Senate Bill 1565, legislation to help ensure that uninsured and low-income Californians have access to affordable therapies and medications resulting from the State's $6 billion investment in stem cell research. This bill will codify the intellectual property standards for stem cell grant recipients promulgated by the California Institute for Regenerative Medicine (CIRM), requiring each grantee to submit a plan that will afford uninsured Californians access to any drug that is, in whole or in part, the result of research funded by the CIRM.

"SB 1565 also requires the Little Hoover Commission to conduct a study of the governance structure of the California Stem Cell Research and Cures Act. As chair of the Citizens Financial Accountability and Oversight Committee (CFAOC), which was created by Proposition 71 to oversee the finances of the publicly funded stem cell research program, I welcome stricter accountability and oversight in order to ensure the public's confidence in the stem cell program.

"Thank you for introducing SB 1565, and I applaud your efforts to provide Californians with better access to potentially lifesaving research and cures."

Fresh Comment

Patient Advocate Don Reed has filed a comment on ballyhoo item below.

CIRM Lab Grants: UC Santa Cruz on Hold

The California stem cell agency's sweeping, $1.1 billion stem cell lab construction program appears to have hit what we call here in Mexico a "tope."

The Silicon Valley Business Journal is reporting that lab plans at UC Santa Cruz have run smack into that perennial California issue – water. The proposal to build a stem cell research facility on the campus is now on indefinite hold.

Just two weeks ago, CIRM directors approved a $7.2 million grant to help with the center. However, the Business Journal piece by Lisa Sibley said the project cannot proceed until the university resolves its water fight with the Santa Cruz City and County. At issue is where the campus will find the additional water for its future growth.

All of which could amount to a significant "tope," as the bone-jarring speed bumps in Mexico are known.

Campus officials are minimizing the impact, however. In response to a question from the California Stem Cell Report, campus spokesman Tim Stephens said,

"While the EIR (environmental impact report) for the biomedical facility was challenged in court, all parties have been participating in mediation talks to settle the litigation. We are very optimistic about the outcome of these talks and expect that construction of the biomedical building, which will house the stem cell center, could begin early in 2009."

CIRM is requiring lab grant recipients to complete their projects in two years(2010), an admirable goal but one that may be difficult in a state that is famous for lawsuit-happy environmentalists, slow-working government bureaucracies that must issue permits and approve plans and activist community groups, such as the glider enthusiasts that are balking at stem cell lab plans in the San Diego area.

For readers not familiar with California, water is an enormous issue in the state, which is basically a desert, especially in the most populated areas. In many cases, water must be piped in hundreds of miles to meet the needs of industry and agriculture, which are by far the largest users of water. Households come in a distant third.

As Mark Twain once remarked, "Whiskey is for drinking. Water is for fighting over."

(Editor's note: Re tope(pronounced tow-pay): For those of you who do not read all the details of how this website is produced, it is written and reported principally from a sailboat on the west coast of Mexico.)

CIRM Conflict Legislation Wins Support From Key State Official

California's top financial officer, John Chiang, is backing legislation aimed at dealing with conflicts-of-interest at the state's $3 billion stem cell agency.

Alex Philippidis, editor of the BioRegion News, reported on Monday that state Controller Chiang believes that the bill by Sen. Sheila Kuehl, D-Santa Monica, is the "best hope" for eliminating conflicts of interest at the agency. The legislation, SB 1565, has already cleared the state Senate on a 40-0 vote and is now before the Assembly.

Among other things, it would require the state's Little Hoover Commission to examine CIRM and make recommendations by July 2009 for changes in its structure and operations.

Philippidis quoted Chiang spokeswoman, Hallye Jordan, as saying,

"The controller believes that the public accountability is critical to ensure public confidence in the stem-cell program, that their dollars are being spent on finding cures through stem cell research, rather than benefiting individual biotech companies or institutions that are conducting the research. Transparency and accountability to the public about how their dollars are being spent is important."

Philippidis continued:

"'If the public is not confident that their investment is being adequately protected and that they’re not going to see any financial benefits from the research as promised, then the public is likely going to be less inclined to support funding future research,' Jordan said."

Chiang, a Democrat who was elected in a statewide vote, and John M. Simpson of Consumer Watchdog filed complaints with the state Fair Political Practices Commission last year concerning a violation of CIRM's conflict-of-interest policy. The still-pending case involves CIRM director John Reed of the Burnham Institute, who attempted to influence CIRM staff on behalf of a $638,000 grant to his institution. Reed's action came at the suggestion of CIRM Chairman Robert Klein.

Philippis also took a close look at the audit that CIRM commissioned on its financial activities. He wrote:

"In January, Macias Gini and O’Connell completed its audit of CIRM’s finances for the year ended June 30, 2007. According to that audit, available here, CIRM’s net asset deficit rose by 46 percent, or nearly $7 million, to $22.2 million, “primarily due [to] expenses exceeding revenues.”

"And while CIRM generated nearly 13 times, or $4.55 million, above its 2006 fiscal year revenue — almost all of it through higher investment earnings — expenses dropped by $6.1 million.

"That $6.1 million figure reflects the difference between a $13.6 million cut in research grant expenses and two expenses that rose in FY ’07: Operational expenses that zoomed up 47 percent or nearly $2 million; and interest expenses on its bonds that rocketed 25-fold over the previous year ($5.5 million, vs. $225,416). CIRM cut another $2.1 million in operations costs, however, by cutting back on travel and meetings.

"Not recorded in the audit: The $1 million 'fair' value of CIRM’s roughly 20,000 square feet of office space donated by the city of San Francisco to the stem-cell agency free for 10 years. CIRM moved into that space in November 2005."

Access to the BioRegion News article is available through free registration, we are told, despite what appears to be a requirement for a paid subscription.

(Editor's note: The Philippides piece contains an error concerning the initial story on Reed's lobbying effort, stating that Reed's action was discovered by Simpson. In fact, the lobbying by Reed was first reported by the California Stem Cell Report.)

Cashing in on California: Opportunities for Non-State Businesses

The California stem cell agency is offering another round of grants that is open to firms headquartered outside the state – a $20 million program aimed at developing tools and technology for stem cell research.

And this time, a non-California firm can submit up to four applications for grants.

The latest proposal comes as some in the California biotech industry and state lawmakers are attempting to compel CIRM to follow through on the Prop. 71 requirement to give preferential treatment to California businesses.

The grant program and the California supplier issue are operating on different tracks but both affect state businesses by either restricting or increasing competition from non-state firms.

First the new tools and tech proposal. It is open to both education and research institutions in California as well as businesses.

The key catch for businesses is that a research site must exist in California at the time the grant application is submitted, which may or may not be on application deadline July 10.

If CIRM holds to past practice, it will not check on whether the research site exists until after the grants are approved, in this case next December or even later. Nor does CIRM define what it means by research site. So there is plenty of time to pick up some likely property in California and prepare it for use.

The application does, however, require a short description of facilities in which the work will be done and the major equipment and resources available.

The grant proposal came up after CIRM was pressured in March to follow through on the Prop. 71 requirement to give preferential treatment to California firms.

Assemblyman Gene Mullin, D-San Mateo, is carrying a bill to define the term "California supplier" as it applies to CIRM. His legislation, AB 2381, has already passed the Assembly 75-0 and is now before the Senate Health Committee.

Under the push from legislators and industry, CIRM directors have moved ahead on their own regulatory definition of California supplier. It is more open than Mullin's proposed law to enterprises from out-of-state and declares that a California supplier is any that employs at least one-third of its employees, with a minimum of 100, in the state.

Or, a California supplier could also be one that "produces, builds, or manufactures a product or products in California for the specific product or products which are used by CIRM grantees."

At the CIRM directors meeting earlier this month, Duane Roth, one of the directors who helped draw up the language, said that the wording is intended to deal "with a product that's manufactured in California, but the headquarters of the company who owns them is not in California. That product would qualify as a, quote, California supplier, just that product, not the company, but the product."

Tony Lakavage of Beckman Dickinson, a global medical technology company with operations in San Jose, Ca., spoke on the supplier issue at the directors meeting. He said the firm has 1,500 employees in the state but 30,000 worldwide. He said that products made in California by his firm would apparently qualify for purchase but other global companies might have difficulty qualifying.

He urged a definition that relied on the economic impact of a company in California, according to the transcript of the meeting.

James Harrison, outside counsel to CIRM, presented the California supplier issue to the directors. Alan Trounson, who is in his fifth month as president of CIRM, told directors that neither he or the CIRM staff had seen the definition proposed by Harrison and that "there are issues we would have with this." CIRM Chairman Robert Klein apologized to Trounson for not bringing the matter to him.

CIRM directors indicated that more work needed to be done on the definition as it moves through the regulatory process.

While the application deadline for the tools and tech grants is July 10, potential applicants must file letters of intent by June 11. Otherwise, they will not be considered. Actual funding is scheduled for no sooner than March of next year.

The first round of grants open to out-of-state firms was a $25 million offering on new cell line proposals. Those grants are scheduled to be approved late in June.

Fresh Comment

JimL has posted a comment on the Geron "harsher reality" item. I have responded to his comment, which concerns the motivation of the FDA on the Geron hold. .

Ballyhoo, Economics and California Stem Cells

In an exuberant essay in the leading newspaper in Silicon Valley, an official of the California stem cell agency has touted its $271 million in lab construction grants as bold evidence of "the economic might of the little stem cell."

David Lichtenger (see photo), chairman of the Facilities Working Group at CIRM and head of Integrated Facilities Solutions of Palo Alto, Ca., wrote the op-ed piece that appeared May 16 in the San Jose Mercury News.

He said,

"Stem cells are tiny. In fact they are microscopic. Yet, they might prove to be the mighty engine not only for medical advances, but also for the ailing California economy.

"The economic might of the little stem cell was boldly evident earlier this month when the California Institute for Regenerative Medicine (CIRM), the state's stem-cell agency, awarded $271 million to 12 universities and research institutions to build new stem-cell laboratories."

The economic impact of stem cell research was one of the main arguments behind passage of Prop. 71, which created CIRM in 2004. It continues to play a major role in the justification for CIRM's $3 billion in spending.

We believe the agency has a responsibility to tell the story of its work and to maintain and build public support. Call it marketing, public relations, public education or whatever. Fundamentally, it is all the same thing and quite necessary. Without continued public support, the agency becomes vulnerable to assaults from many sides.

However, long after the last Prop. 71 vote was counted, the grandiose economic claims from the campaign generated blowback, including a study from a UC Berkeley economist Richard Gilbert debunking them. The agency last year also seemed headed for production of another economic study to justify its existence. More recently the proposed $500 million biotech loan program promised handsome returns even at default rates of up to 50 percent.

All of which indicates a need for some perspective. CIRM leveraged its $271 million in lab grants into a $1.1 billion program that will certainly generate hundreds, if not thousands of construction-related job. However, the biotech industry, which goes well beyond stem cells, is a tiny player in the California economy. It accounts for something over 100,000 jobs, according to a state report, a mere piffle compared to the total workforce of 18 million in an economy that runs at around a mammoth $1.7 trillion annually.

And CIRM's $271 million does not even surpass the $356 million being spent on San Quentin's "condemned inmate complex."

That said, CIRM's lab grants have indeed generated a long overdue investment in the science side of California's infrastructure. CIRM deserves ample credit for handily leveraging its dollars. The agency is also preparing to make another substantial contribution this year to the state's intellectual capital with $66 million in training programs.

Lichtenger's essay was reasonably measured and nicely written. However, it is doubtful that stem cells will be the "mighty engine" for the "ailing California economy" any time in the foreseeable future. It behooves CIRM to exercise judicious restraint as it touts its achievements. Managing expectations is the key, and the best course is to avoid over-promising.


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CIRM Creates FDA Committee

Gern Talk, a web site devoted to discussions of matters related to Geron, has picked up a recent piece by patient advocate Don Reed along with our report, "Harsher Realities," on the FDA hold on Geron's clinical trials.

Reed raised his previous concerns regarding the most recent FDA action. But he also had a note about a discussion involving the FDA hearings last month dealing with clinical trials and stem cells.

That discussion occurred at the meeting of the board of directors of the California stem cell agency. Reed said that Robert Klein, chairman of the California stem cell agency "expressed concern" about

"...a possibility that the FDA might put in a condition that embryonic stem cell trials might only be allowed for dying patients. This would be a disaster, meaning that human trials for embryonic stem cells to heal blindness as well as paralysis and other non-life-threatening conditions could not go forward. He asked for volunteers on the board to be on a special FDA committee. Board members Jeff Sheehy and Leeza Gibbons very kindly volunteered for the chore!

"But the overall response from almost everyone (and these are supporters of the research, good people, whose opinions I respect) was that the situation would be handled on the basis of scientific merit, and the safety of the patients, nothing more. Again and again people said, no, no, everything is fine, don’t worry."

Jesse Reynolds of the Center for Genetics and Society also had something to say on the Biopolitical Times on Geron:

"Those of us who support embryonic stem cell research should urge caution, not haste. A botched clinical trial will set the field back years, if not decades."

CIRM Affordable Access Bill Easily Clears Senate

On a unanimous 40-0 vote, the California State Senate has passed legislation to ensure affordable access to CIRM-financed stem cell therapies and to require a study that could lead to reforms in the agency's complex and unique structure.

The measure (SB 1565) by Sen. Sheila Kuehl(see photo), D-Santa Monica, now goes to the Assembly for further action.

The bill was on a "special consent" calendar Thursday, indicating that no controversy existed concerning it. There is no indication that there was any debate on the measure. The California stem cell agency has taken no position on the legislation.

For more on the bill, see the "patient advocate" item below.

The Harsher Reality of the FDA Hold on Geron

At least one analyst is minimizing the impact of the FDA's hold on Geron's clinical trials for its human embryonic stem cell product.

Ren Benjamin, an analyst with Rodman & Renshaw in New York, told Bloomberg News earlier this week said that he thinks the company will "be able to work through the issues with the FDA."

However, the reality is likely to be a tad harsher. The hold is the second pronounced signal in two months from the FDA that it wants to proceed with extreme caution on hESC trials. And the action has stirred some concerns in the patient advocate community, which has pressed for more speed on the research.

Even prior to the Geron hold, Don Reed, vice president for public policy for Americans for Cures, worried about the FDA posture on his blog, stemcellbattles.com. He wrote on May 6,

"The FDA hearings on embryonic stem cells have been (in my view) deeply politicized, setting the stage to block human trials, an enormous setback."

He continued,

"A laundry list of new conditions may send...Geron, Advanced Cell Technology, and Novocell, and the entire embryonic stem cell research field back to the drawing board, conceivably for
decades."

Reed referred to the FDA hearings last month during which the bugaboo of teratomas was raised by the FDA. Monya Baker of Nature's Niche stem cell blog covered the meeting. On April 11, she wrote that the consensus from attendees at the meeting was that the FDA "seems cautious about moving forward, but not spooked."

But then came the FDA hold this week. It had to be a bitter pill for Geron. Thomas Okarma, CEO of the company, said that the company had spent four years working with the FDA and amassed 21,000 pages of documents to alleviate the agency's concerns.

Geron's stock took a big hit on the day the hold was announced, dropping to a 52-week low of $3.76. It stood at $3.97 at the time of this writing, compared to a 52-week high of $9.85.

Geron has been mum since Okarma's statement along with Novocell and Advanced Cell Technology, although we have asked for comments from all three. We are likely to hear more from Geron after it receives the FDA's written concerns.

As for analyst Benjamin's somewhat optimistic position, his firm is a market maker in Geron stock, which means that it has a stake in the company's well-being.

Affordable Access to CIRM Therapies: A Patient Advocate's Position

For a patient advocate's take on legislation aimed at ensuring affordable access to CIRM-financed therapies, take a gander at the May 13 posting by Don Reed on his blog, stemcellbattles.com.

Earlier this week, Reed (see photo) was the only person to testify before the state Senate Appropriations Committee on the measure, aside from the bill's author, Sen. Sheila Kuehl, D-Santa Monica.

Reed's view is that CIRM's regulations, which can be easily changed unilaterally by CIRM, are sufficient to provide affordability. He also contends that an outside study of CIRM's structure is unnecessary and that its built-in conflicts are only a "convergence of expertise." We should note that last week most of the experts on the panel were barred by law from even discussing -- much less voting on -- $271 million in grants because of their conflicts of interest.

Reed is a regular at meetings of the board of directors of the stem cell agency and is vice president for public policy for Americans for Cures, the private advocacy group directed by CIRM Chairman Robert Klein.

Kuehl's bill, SB 1565, was approved 14-0 by the committee and is now on the Senate floor. In addition to codifying in state law affordable access, the measure would require an independent study of CIRM by a state agency known as the Little Hoover Commission with recommendations for reform.

A note on the analysis from the Appropriations Committee says that the Little Hoover staff contends that the legislature does not have the legal authority to direct its work. An opinion as been requested from the Legislative Counsel's office on the question. However, the Legislative Counsel works for the legislature and is inclined to find ways for lawmakers to do what they want.

Here is a link to the floor analysis available to California state senators as they consider the measure.

(Editor's note: After this item was posted, we learned that the bill passed the Senate on Thursday on a 40-0 vote. It nows goes to the Assembly.)

Complete Okarma Statement on FDA Hold

Here is the full text of the statement by Geron CEO Thomas Okarma(pictured) on the FDA's "verbal" hold on the firm's proposed clinical trials.

"We have not yet received a letter from the FDA explaining the decision to place the submission on hold, so we are unable to comment specifically. Once we have the letter and have had a discussion with the agency, we will communicate our findings and our thinking to shareholders. We are disappointed with this action given the interactions we had with the FDA over four years leading to the filing, and the breadth and depth of the submission, some 21,000 pages, predicated on those discussions with the agency."

The company's entire four-paragraph press release can be found here.

Fresh Comment

"Anonymous" has posted a new comment on the "CIRM BANs" item.

FDA Says Whoa to Geron

The FDA slammed on the brakes today on Geron, which had been hoping to launch clinical trials this year on a treatment for persons with spinal injuries.

News reports said it was unclear why the FDA imposed the clinical hold on the test, but it is good bet that the action could be linked to the FDA's hearings last month on stem cell clinical trials. Cautionary notes seemed to be the order of the day at the session.

Geron said it was disappointed in the action. The company's stock plummeted nearly 20 percent following the news, closing $3.94.

Steve Johnson of the San Jose Mercury News and Monya Baker of the Niche blog for Nature magazine both wrote today about the FDA action.

Baker covered the FDA hearings last month and produced the most comprehensive reports on the proceedings. She has links to all her coverage in her Geron item today, plus a link to her interview with the Marie Csete, chief scientific officer for the California stem cell agency, concerning the issues involved in placing stem cells in persons.

Media Play: Harvesting Organs vs. Building Stem Cell Labs

One of the top five stories last week on Bioethics News was the New York Times report on California's awards of $271 million to build new stem cell labs, according to the site's blog.

The story ranked No. 3 in popularity. However, the blog reported that the piece lagged well behind the No. 1 story, a USA Today article on a New York City plan to equip ambulance crews to prep bodies for organ harvest -- before receiving consent from families.

Half-Billion-Dollar Biotech Loan Proposal Moves to Finance Committee

How do you turn $500 million into as much as $1 billion over 10 years? Loan it to struggling biotech companies that could default on the loans at a rate of up to 50 percent.

Sound too good to be true? Maybe, but that's what the California stem cell agency is projecting for what appears to be the most optimistic scenario for its proposed biotech loan program.

The program came up for discussion last week at the CIRM directors meeting. John M. Simpson of Consumer Watchdog attended the session and filed an item for his group's blog. Simpson wrote that the concept "appears promising" but he still had questions.

"The main one is with CIRM's limited staff, how will loan applications be adequately vetted? Robert Klein, chairman of the stem cell agency's Independent Citizens Oversight Committee (ICOC), has suggested using outside 'designated underwriters.' Lots more needs to be made clear about how that would work and how conflicts will be avoided."

We have written previously about the same concerns. But with the new economic models that were laid out last week, a need has arisen for a sharp-eyed, detached business analysis of the plan. It would also be useful to see that analysis in a form that is reasonably accessible. The documents available so far on the latest agenda of the Biotech Loan Task Force are fairly technical and somewhat incomplete. For example, they do not explicitly lay out a range of scenarios from the best to the worst.

Two fundamental questions are yet to be addressed about the biotech loan program: Is it a "good way" to turn $500 million into $400 million or less -- instead of $1 billion? And what is the likelihood that might occur?

Risk cannot be removed from this intriguing plan, but it should be fully understood.

The biotech loan program has been sent to the CIRM Finance Committee, which could hold hearings over the next couple of months. The hope is that the biotech loan program could be launched in the disease team program grants in the spring of 2009.

Fresh Comment

Zach Dicker of Biotech Science News has posted a new comment on the "biotech loan" item.