San Francisco Business Times Surveys CIRM

Reporter Ron Leuty of the San Francisco Business Times put together a wide-ranging series of articles this week on the state of California's stem cell agency.

The six pieces cover everything from CIRM's proposed $18 million training program and $500 million biotech bank to its lab construction grants and CIRM-connected research results. Leuty wrote:

"Nary a segment isn’t touched in CIRM’s strategy: companies, newly minted researchers, community college biology students, cutting-edge investigators, small labs, shared labs and big buildings. Likewise, (CIRM Chairman Robert) Klein said CIRM’s portfolio of funded technologies, products and disease targets will be broad. At the very least, stem cells could offer the pharmaceutical industry a more accurate and more animal friendly way of testing the toxicity of drugs. At most, they could change the medical treatments forever."

Much of the ground is familiar to our readers, but Leuty brings a fresh look and interviews with businessmen, scientists and others that are worth reading. Unfortunately the articles are locked behind a subscription only web site. But our bet is that Leuty will ship you copies if you send him an email. He can be contacted through the Business Times website.

It is also a likely bet that CIRM has ordered up some reprints as well. If not, they should.

Fresh Comment

Larry Ebert of the IPBiz blog has posted a comment on the Koch/Murphy item below.

Koch's Experience

An attorney, who must remain anonymous but who is familiar with intellectual property law, sent the following re Nancy Koch in the item below:

"Chiron's chief IP attorney, under whom she worked, was a strong and insightful patent portfolio strategist, so she probably has good experience from working with him."

Murphy and Koch: IP and Presidential Consulting

The California stem cell agency has picked up a couple of consultants – one for intellectual property and one to advise its president – with contracts totalling $230,000.

Nancy Koch (see photo) has been hired part-time for six months through Oct. 7 on a $150,000 contract to deal with IP matters. Richard Murphy snagged an $80,000, four-month contract to assist CIRM President Alan Trounson. It is Murphy's third tour of duty at the $3 billion agency.

Murphy first served on CIRM's board of directors and then as the $300,000, six-month interim president at CIRM. His latest contract runs through July 31.

In response to a query, CIRM reported that Koch was deputy general counsel of Chiron Corp. and its successor Novartis Vaccines and Diagnostics, Inc. During 11 years at Chiron/Novartis, Koch was responsible for a wide range of intellectual property matters including litigation and licensing. Between 1983 and 1995, Ms. Koch worked at the Farella, Braun and Martel law firm in San Francisco.

CIRM Looking for More Help

The California stem cell agency is continuing to hire, currently listing eight openings ranging from a public relations staffer to an intellectual property lawyer.

If it fills the positions, staffing at CIRM will hit about 39 persons, creeping up on its legal limit of 50.

Recently, CIRM posted an opening for an attorney (salary up to $165,000) to deal with legislative matters and provide legal support to CIRM Chairman Robert Klein. The position would also assist outside counsel on conflicts of interest, deal with agency regulations, the biotech loan program and bond financing for CIRM as well as "finalizing" intellectual property regulations. The agency has also been seeking a staff IP attorney for some time at a salary of up $277,500.

Another recent posting is for a science writer/multimedia editor with a salary of up to $75,000. The position would be in CIRM's public relations department with responsibilities for creating videos, writing research summaries and developing pitches for the media.

Other job openings at CIRM include scientific officer, grants management specialist, grants review specialist and two administrative coordinators.

CIRM To Update Goals; Watchdog Urges Openness

The California stem cell agency is moving to revise its strategic plan, as well it should as the field has changed and the ambitious, original goals have not been met.

Just how the changes will be made is unclear. But John M. Simpson of Consumer Watchdog is urging an open process that reflects the spirit of the original proposal. Simpson wrote on his blog:

"...(I)t is essential that the the methodology in developing the plan not be scrapped.

"Key to the plan was the open and transparent way it was developed. Hearings were held around the state. Seventy interviews with 73 individuals were conducted. The interview team even asked me what I thought. Strategic Plan Advisory Committee meetings were public.

"I'm not saying the update needs to take as much, time but certainly it must have the same inclusive approach if it is to win the same broad-based support from all stakeholders that the original plan enjoyed."

Trounson and Clues to CIRM's Scientific Interests

Want to track the latest scientific thinking at the $3 billion California stem cell agency? What research looks promising to the folks at CIRM? And does it mean possibilities for future funding?

CIRM President Alan Trounson is now offering some clues. He has begun a practice of discussing what he considers interesting research at the beginning of meetings of the CIRM board of directors. He also touches on issues of the day in stem cell research during the presentations.

His observations are tucked away in two different places on the CIRM web site. They can be found in the transcripts of the meetings of the board of directors, which is known as the Oversight Committee, as well as on the online agendas of the meetings, but only after the meetings take place – at least so far.

In May, Trounson discussed a report in Nature in April involving the McEwen Center for Regenerative Medcine (Gordon Keller's group) and research by Lei Yang. VistaGen Therapeutics of South San Francisco was also involved. Trounson's slides from the agenda can be found here.

Among other things, Trounson said he anticipated "that there will be a proposal coming downstream for clinical trials." He said,

"Interestingly, in these studies there was not any observation of teratomas or unwanted cell types."

Other topics for Trounson in May:

-- The Catriona Jameson work at UC San Diego involving TargeGen of San Diego, Ca., and the work, also reported in Nature April 2008 involving Michael Clarke's lab, Stanford and the University of Michigan.

-- Work involving Lorenz Studer, Sloan Kettering and Wakayama Riken, published in Nature Medicine March 2008.

Here are links to the transcript and slides in March and the transcript in January, where he also discussed recent stem cell research. No slides were posted in January.

(A tip of the hat to John M. Simpson of Consumer Watchdog who pointed out the usefulness of Trounson's briefings.)

Fresh Comment

"Anonymous" has posted a comment on the "Cost Overruns" item.

CIRM View on Remcho Fees

Don Gibbons, chief communications officer for CIRM, sent the following comment on the item below concerning the contract with its outside lawyers:

"You state the board approved a '$165,000 retroactive payment.' That is not what occurred. The board approved an increase in the total amount billable during the life of the contract which runs through June 30. CIRM also made it clear that it did not expect to need the full amount. The only retroactive piece is for the hours billed in April and May, which while not yet invoiced, are expected to be under $60,000, and again this occurred because of a cancelled committee meeting in April."

Correction

The "Cost Overruns" item below incorrectly reported that CIRM has "roughly 26" employees. CIRM today reported that it has 31 employees.

CIRM's Outside Lawyers Win Retroactive, 66 Percent Pay Hike

A key panel of CIRM directors has approved a $165,000, retroactive payment to its outside attorneys, Remcho, Johansen and Purcell of San Leandro, Ca. Details of the proposed action were never disclosed to the public in advance of approval.

John M. Simpson of Consumer Watchdog reported the approval on his blog, saying,

"Stem Cell Agency Chairman Bob Klein said Remcho billed the additional hours because of (James) Harrison's work on the agency's first bond sale, efforts to negotiate discounts in the grant awards to build research facilities and added involvement in vetting Requests for Applications (RFAs) for grants."

Simpson, who attended the Governance Subcommittee meeting Wednesday and made comments during the session, wrote,

"I suggested that retroactively approving the increase was bad policy. Klein said the item was on the agenda for an earlier planned governance committee meeting, but the session was canceled.

"He said that Harrison ran up the additional billable hours at the law firm's risk, though I can't imagine the agency would have refused to pay."

Well prior to the meeting, the California Stem Cell Report asked for more information on the cryptic Remcho agenda item, but CIRM repeatedly refused to disclose what was being considered despite the fact that the information is certainly a public record.

Cost Overruns and Candor from CIRM

The California stem cell agency now says it is "mind-bogglingly silly" to think, in effect, that the total cost of the Grantium contract for a new grant management program would only be $757,000.

CIRM's directors were assured last October during their meeting in San Diego that the figure was the "complete cost." The expenses were reviewed at the time in some detail by Ed Dorrington, CIRM's information technology director. Richard Murphy, interim president of CIRM, vouched for the figures as well.

We raised questions about the cost in our posting below -- "CIRM Lagging" – since CIRM is seeking an additional $85,000 to perform work that is necessary for the Grantium software.

Don Gibbons, chief communications officer for CIRM, responded to our item,

"Regarding your posting on Grantium, it is mind bogglingly silly to think that a one-person IT department at CIRM could handle all the internal aspects of migrating to a new grant management system while maintaining a legacy system that is our responsibility."

Our response: CIRM's chief executive told its board one thing in October. Now CIRM says something different. New, complex software installations are usually difficult. The costs should have been anticipated. That's what good management is all about.

Additionally, CIRM has chosen to go lean on its staff, keeping it far less than the 50 authorized even after some directors have repeatedly worried about burnout and overwork. In fact, last December Murphy told the directors' Governance Subcommittee that he had chosen not to replace a departing information technology staffer because "the institute is now working quite well in its computer capabilities." That was two months after the Grantium contract was approved by directors.

CIRM Chairman Robert Klein also chimed in at the time, praising the "lean" staffing at CIRM. Lean is good, especially in state agencies that sometimes tend to be overstaffed. But there can also be a financial cost – perhaps in this case $85,000. Less obvious is the wear and tear on employees that results from excessively long hours week-in and week-out.

(Editor's Note: An earlier version of this item incorrectly reported that CIRM had "roughly 26" employees. Following the posting of this item, CIRM reported that it has 31 employees.)

Consumer Watchdog: No Way to Run $6 Billion Enterprise

John M. Simpson, stem cell project director for Consumer Watchdog, commented on his blog Tuesday on the financial matters before the CIRM Governance Subcommittee today.

He said,

"There is simply no excuse for the documents being unavailable the day before the meeting. They should have been there when the agenda was posted. Members of the subcommittee cannot make informed decisions when they receive documents at the last minute. Nor can interested stakeholders offer intelligent comment.

"This is simply not the way to run a $6 billion publicly funded program."

CIRM posted its report on contracts this morning. Still missing is the amendment to Remcho's big contract for legal services. The meeting begins at 3 p.m. today.

CIRM Lagging on Budget Preparation

The California stem cell agency is only one month away from a new budget year, but it has not yet presented to its directors a spending plan for the next 12 months.

This afternoon's meeting of the agency's Governance Subcommittee would have been a good time to offer the proposed budget. That would allow CIRM's directors to make suggestions for revisions and raise questions that might take time to answer.

Presumably CIRM President Alan Trounson will offer a spending plan in time for the June 26 board of directors meetings, but that will come only a few days before the financial year begins on July 1.

While it is too late to present a budget to the Governance Subcommittee, CIRM directors certainly can offer suggestions today about the type of information that they would like to see in the budget proposal, including a bit longer perspective than just the next 12 months.

Some possible questions to be addressed include:

Does CIRM plan to bring its staffing up to the limit of 50 over the next three years? If not, why not? (CIRM directors have repeatedly expressed concern about staff burnout and overwork. The agency has also has lost a substantial number of employees since its inception, including 25 percent in a two-month period last year.)

What is the anticipated impact of the Prop. 71 spending cap on operations over the next 10 years? Are there steps that need to be taken now to avoid a financial crunch later when less flexibility may exist?

Given the heavy reliance on outside contracting, are steps being taken to assure that the staff, which is trained mainly in scientific matters, performs well in selecting and monitoring contractors? What steps are being taken to assure that outside contractors do not have conflicts of interest that could motivate them improperly? Do the proposed $500 million biotech lending program and administration of the $1.1 billion lab construction effort pose special oversight issues?

What steps are being taken to avoid overruns linked to outside contracts, such as the apparent overrun on the grants management contract with Grantium of Ottowa, Canada. (Directors were assured last October that the complete cost of the three-year contract would be $757,000. Recently, CIRM posted an $85,000 RFP for a consultant to help with work on the program. We asked CIRM on May 15 about the need for the consultant. We have received no response to that question.)

Obviously other budget issues need to be addressed as well. But we would hope that Trounson and his tiny 26-person staff would begin to publicly address some of these issues soon.

A Brief Look at CIRM's Outside Contracts

The California stem cell agency plans to post on its web site later today a key financial document on its legal, lobbying, public relations and other outside contracts, less than 24 hours before the report is to come before a panel of the agency's directors.

The document reviews some of CIRM's spending this year for outside contractors, who consume the second largest amount of money in the agency's operational budget (see item below). However, the document was missing even a guess at how much will be spent by the end of this fiscal year, which is about one month away.

The report only covered expenditures for contracts through February. It also contained no total for all outside contracts through February. Nor did it appear to specify all of the ongoing obligations resulting from multiyear contracts.

A quick look at the document showed that CIRM has contracted for $596,899 worth of legal services, apparently mostly for the first three quarters of the year. The figure included $250,000 for the Remcho law firm(see item below). CIRM also spent $100,000 with the State Department of Justice. CIRM has had seven attorneys or law firms on its staff or under contract during the reporting period, including a general counsel. Joining the agency recently is attorney Nancy Koch, who won a $150,000 contract for intellectual property, most of which will be spent during the next fiscal year.

We should note that our $596,899 figure does include $36,900 for the Nielsen, Merksamer law firm of Sacramento, Ca., which performs lobbying services among other things. CIRM classified Nielsen's services under "public education" rather than legal services or lobbying. Our total for legal services does not include, however, $20,000 for the Rubenstein Associates PR firm of New York City.

In February, the Consumer Watchdog group disclosed a $10,000 CIRM contract with Rubenstein through the Remcho law firm and said CIRM was "laundering" its PR advice through Remcho. It was not clear whether the $10,000 figure in February was part of the $20,000 reported by CIRM in today's outside contracting report.

After a flap developed in 2005 about outside contracts, CIRM directors told CIRM staff to provide quarterly reports on outside contracting. The last came in December 2007.

Look for a link to the outside contracting report under the Governance Subcommittee agenda. Its meeting is scheduled for 3 p.m. Wednesday in Los Angeles with teleconference locations in San Francisco at CIRM headquarters, Sacramento, La Jolla, Carlsbad, Palo Alto and Stanford. All of the locations are open to the public.

Don Gibbons, chief communications officer for CIRM, provided a copy of the outside contracting report to the California Stem Cell Report this afternoon and said it was expected to be posted later today. However, he is working through the state bureaucracy, which sometimes does not move with great alacrity.

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.