Defining Which Businesses Get an Edge in CIRM Research Purchases

The "five-year threshold" language in the California supplier bill dealing with CIRM-funded research is now available online.

For those of you who don't want to click through, here is the text in question:

"'California supplier' means any sole proprietorship, partnership, joint venture, corporation, or other business entity that meets any of the following criteria:
"(A) The owners or policymaking officers are domiciled in California and the permanent, principal office or place of business from which the supplier's trade is directed or managed is located in California.
"(B) A business or corporation, including those owned by, or under common control of, a corporation, that meets all of the following criteria:
"(i) Has owned and operated a manufacturing facility or research facility located in California that researches, develops, builds, or manufactures products for life sciences research, continuously during the five years prior to submitting a bid or proposal to provide supplies to a California Institute of Regenerative Medicine (CIRM) grantee.
"(ii) Has been licensed by the state on a continuous basis to conduct business within the state during the five years prior to submitting a bid or proposal to provide supplies to a CIRM grantee.
"(iii) Has continuously employed California residents for work within the state during the five years prior to submitting a bid or proposal to provide supplies to a CIRM grantee.
"(C) The entity produces, builds, or manufactures a product or products in California and for the specific product or products that are used by CIRM grantees.
"(2) For purposes of qualifying as a California supplier, a distribution or sales management office or facility does not qualify as a manufacturing or research facility."

For more on this see this item.

CIRM Directors to Give Away Millions, No Details Available

With only two days left before the board of directors meeting of the $3 billion California stem cell agency, its public agenda is nearly bereft of any significant information for the public, other than cryptic references.

It is not a trivial matter. CIRM directors plan to give away $26 million at the end of the week and authorize another $60 million in grant programs. Neither of those figures can be detected, however, by examining the "topline" of the directors' agenda.

Indeed, the fact that CIRM's board of directors is meeting is not even of enough significance to be posted on CIRM's home page – although the directors will also be dealing with FDA concerns about hESC clinical trials, how California businesses could benefit to the tune of hundreds of millions of dollar from CIRM research as well as the agency's 46 percent increase in its operating budget.

For those of you not totally familiar with CIRM, it is an arm of the state of California – not a "quasi-public" agency as it has sometimes been described. It is enshrined in the state Constitution. It is subject to the public records and open meetings laws of the state, which declare that the public has a "broadly construed" right to access to information about state governmental matters.

However, CIRM is denying the public and interested parties any timely, specific knowledge of the matters to be decided this Thursday and Friday in Burlingame, Ca., a longstanding CIRM practice for directors meetings, with a few exceptions. Nor will the public have a chance to listen in or participate in the actual meeting via the Internet or teleconferencing, technologies easily accessible to CIRM.

Meetings of the full board of directors of the agency have never been broadcast via the Internet or via teleconferencing. However, directors subcommittees are widely available via teleconferencing in many specific locations in California and even a couple of times in Australia. But those have been a matter of convenience for directors – not the public.

Twenty-eight items are on the agenda this week. As of Tuesday, only one item has an Internet link to background information. Bob Klein, chairman of CIRM, has repeatedly pledged to comply with the highest standards of openness and transparency. Nonetheless, the agency has been generally plagued with a failure to post background material sufficiently in advance of meetings to give the public or interested parties a chance to decide whether to attend the directors' meeting or even formulate a cogent response. At several points, even CIRM directors complained about the not getting material in time.

Our understanding is that the responsibility for the board of directors' agenda lies with Chairman Klein. We are asking Klein for comment on this state of affairs.

(If you want information about the $26 million grant programs mentioned in the second paragraph of this item, you can find it on the California Stem Cell Report – not on CIRM's agenda. The $60 million proposed grant program is the only item that is linked via the agenda. You can find information on that program here.)

Will CIRM Directors Fulfill Prop. 71 Promises?

SAN FRANCISCO -- The California stem cell agency is maintaining a "watch" position on legislation aimed at pushing it into compliance with a state law that could mean hundreds of millions of dollars for California businesses.

At issue is a requirement in Prop. 71 – ballyhooed during the 2004 campaign – that CIRM set standards to ensure that the recipients of nearly $3 billion in grants purchase goods and services from California suppliers "to the extent reasonably possible."

Those standards still have not been set, nearly four years after creation of the stem cell agency. Because of the delay, some biotech companies and lawmakers pressured the agency earlier this year to move more rapidly. To make it clear that they were serious, legislation was introduced setting the standards in state law in the absence of CIRM setting its own standards through regulation.

That bill, AB 2381 by Assemblyman Gene Mullin, D-San Mateo, has easily passed the Assembly and is now before the Senate Health Committee on Wednesday, where it is virtually certain to pass.

On Friday, the Legislative Subcommittee of the CIRM board of directors discussed Mullin's bill, ultimately deciding to continue to watch its progress. The discussion was a bit muddled because Mullin proposed changes in the legislation only a few days before the Friday meeting. They involve a "five-year threshold" for suppliers, but no text of the proposed changes was available at the San Francisco CIRM headquarters. One Sacramento-area teleconference location, however, seemed to have a copy of the latest proposal. No members of the public had access to the Mullin changes.

CIRM Chairman Robert Klein said a five-year threshold for suppliers would discourage companies from moving to California as well as putting new companies at a disadvantage.

CIRM director Susan Bryant, from a teleconference location at UC Irvine, read other suggested "supplier" language from the University of California system. Again, no text was available at the meeting site at CIRM headquarters.

Meanwhile, it was disclosed during the meeting that James Harrison, outside attorney for CIRM, has begun work on separate standards for suppliers and grant recipients involved in the agency's $1.1 billion lab construction effort. Speed is critical in that effort because recipients are required to complete their lab buildings in two years or face penalties.

Later this week, CIRM directors will address the supplier questions during their meeting in Burlingame, Ca. No background information or text of what they are to consider is yet available to the public on the agenda for the meeting, which begins in two days.

California's Big Biotech Loan Program Headed for Approval in August?

SAN FRANCISCO -- The California stem cell agency's proposed $500 million biotech loan program seems to be headed for August action by the agency's board of directors, but not before size of the program, conflict of interest questions and underwriting issues are resolved.

The Finance Subcommittee of CIRM's board of directors discussed the proposal briefly on Friday, identifying policy questions that remain to addressed by the subcommittee. CIRM Chairman Robert Klein, who originated the plan, said the size of the program was critical. Without sufficient bulk, the size of individual loans would be limited. Klein said that clinical trials involve "very large loans."

CIRM Director Duane Roth said that directors also have to address potential conflict of interest questions that might arise during the loan-making process, a concern echoed by John M. Simpson, stem cell project director of the Consumer Watchdog group.

Klein also said that CIRM does not a large enough staff or expertise to handle a loan program. He said it would have to involve some sort of financial underwriting, similar to the type of underwriting practices at Fannie Mae, the housing loan organization.

No documents from CIRM about the program were available at the meeting or before it.

CIRM Directors Nix Kuehl Legislation

SAN FRANCISCO -- The California stem cell agency is preparing to oppose legislation designed to ensure that Californians have affordable access to therapies developed with taxpayer funds.

Too restrictive and premature. That was the sentiment at today's meeting of the Legislative Subcommittee of the board of the directors.

They were talking about SB1565 by Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Antelope Valley. The measure has passed the Senate and faces a hearing in the Assembly Judiciary Committee. No lawmaker has voted against the bill.

Directors pointed out that they already have an affordable access plan in place in their regulations for CIRM-financed therapies. They argued that the legislation would require each product to go before the legislature to determine a price.

Kuehl's measure is a response in part to widespread consumer unhappiness with the high cost of health care and industry pricing of therapies. But Claire Pomeroy, a CIRM director and dean of the UC Davis School of Medicine, said that CIRM's policy "cannot overcome the dysfunction" of the healthcare system. She said the legislature should give CIRM "the opportunity to do the right thing."

CIRM President Alan Trounson said that locking affordability provisions into state law would cripple CIRM's ability to negotiate prices and drive the industry away from developing therapies for diseases with small numbers of patients.

CIRM directors also reacted sharply to a provision in the Kuehl/Runner bill that would make it easier for CIRM to finance research that does not use human embryonic stem cells. The provision seems to play into the hESC vs. adult stem cell debate. CIRM Chairman Robert Klein said that Runner said the change was "very important" to Republican members of the state Senate.

Presumably, recent research developments that demonstrated that adult stem cells can be reprogrammed to take on the pluripotent characteristics of hESC lie behind the proposed change. However, directors said much more work needs to be done before that method can be shown to provide cells that truly match the characteristics and usefulness of embryonic stem cells.

Kuehl's bill also would request a study of CIRM by an independent body that would report back to the legislature next year at this time with recommendations for changes, including dealing with the built-in conflicts of interest at CIRM. One CIRM director is currently under investigation for violating the state's conflict of interest laws. And the board of directors is dominated by members from institutions that are benefiting to the tune of hundreds of millions of dollars in research grants.

Directors said that they understood that the state's Little Hoover Commission has already indicated it is going to perform the inquiry, regardless of the fate of the Kuehl bill.

Directors did not have a quorum at today's meeting and thus could not vote on a position on the legislation. However, their sentiments will come before the full board of directors next week, which is certain to oppose the Kuehl measure.

Here is the latest legislative staff analysis of the measure and the CIRM staff analysis, which we should note was well done.

We will have more later on other legislation discussed today by the Legislative Subcommittee.

Half-Million Salary for Klein?

SAN FRANCISCO -- Back in the early days of the California stem cell research effort, its newly elected chairman – millionaire real estate investment banker Robert Klein -- said he would not accept a salary for his work.

Now that is changing. He could be drawing a salary as high as $508,750, perhaps as early as this year. But the money may not come from state coffers.

The question of salaries for both the chairman of CIRM and the vice chairman came up during Thursday's hearing on the agency's budget for 2008-09.

John M. Simpson, stem cell project director for the Consumer Watchdog group of Santa Monica, Ca., asked whether the budget included salaries for the chairman and the vice chair.

The answer was no. But Klein, who has held his post since December 2005, said, "It's true at some point this issue needs to be addressed."

He said that personally he would like to see "non-taxpayer dollars" used for salaries for the chairman and vice chairman rather than using funds that could be used for research. He indicated that he would not be averse to raising private funds for salary purposes.

The vice chairman of CIRM is Ed Penhoet, also a multimillionaire. He does not accept a salary. We are querying him on his position on salaries.

Coming Up

Directors of the California stem cell agency later today will consider state legislation affecting CIRM. We will have a report on that meeting late this afternoon Pacific Daylight Time.

$13 Million Approved for CIRM Operations

SAN FRANCISCO -- The Finance Subcommittee of the California stem cell agency Thursday approved a 46 percent increase in its 2008-09 budget, which will total $13 million and push staffing close to the legal limit of 50.

The panel of CIRM directors made no changes in the budget that was presented by CIRM staff. Their questions largely centered on clarifying line items in the budget.

CIRM Chairman Robert Klein and director Jeff Sheehy both defended an increase in travel that seems to be up at least 287 percent from the current year, for a total of $558,000. However, that figure is for "other travel." Travel expenditures are also lodged in other budget areas, but were not broken out for Thursday's meeting.

Citing this week's agreements with Canada and the Australian state of Victoria, Klein said more collaboration is expected internationally. He indicated that travel is expected to both Great Britain and Washington, D.C. -- this to deal with federal stem cell legislation and regulation.

Klein said the agency "really needs to have our science teams to have access to leading-edge research." He said meetings with other scientists help CIRM prepare grant proposals that effectively target the most promising areas of research. Sheehy said that while some persons tend to regard travel as something of a boondoggle, "The conferences are very important. This is really work."

John M. Simpson, stem cell project director for the Consumer Watchdog group of Santa Monica, Ca., praised the budget generally but said more detail was needed for it to be fully understood.

The budget is well within Prop. 71 limits, according to CIRM, based on average allowable allocations. Those allocations showed that CIRM will be spending $1.8 million next year on legal expenses, up from $1.2 million this year. That includes its own legal staff and outside legal contracts.

The budget goes to the full board of directors next week, where it is expected to be approved.

We have asked CIRM to provide a breakdown of travel expenses in all categories and a breakdown on external contracts. We will carry that information when we receive it. We also asked Klein to clarify the organizational changes noted in the budget. He said he would get back to us on the language in the spending plan.

Differences in Old, New Versions of Budget Appear Minor

A quick, line-by-line examination of the old and new proposed budgets for CIRM for 2008-09 (see item below) shows only tiny differences in the two documents.

We could be wrong, but none of the major figures appears changed. In fact, the only change we could detect is under the "accomplishments" section.

The old document (posted a couple of days ago) said CIRM "awarded" $167 million in facilities grants to eight institutions. The new document says CIRM "awarded" $195.8 million in grants to eight institutions.

All of which raises a probably picayune question concerning the figures. Why are they different from those announced in May when a CIRM press release said its directors "voted to distribute" $271 million to 12 institutions. Our assumption is that the figures in the budget document actually represent checks going out to the institutions, and that four still have not been actually funded. But we could be wrong, and we have asked CIRM about the numbers.

CIRM Changes Budget Plan for This Afternoon's Meeting

The California stem cell agency has posted a revised operating budget for the fiscal year beginning July 1. The spending plan will be discussed at its directors' Finance Subcommittee meeting this afternoon along with CIRM's proposed $500 million biotech loan program.

The new budget document does not show what changes have been made from the one posted earlier this week nor does it indicate that it has been changed. The agenda as well does not indicate the presence of a revised document. No reason was given for posting the revisions.

Also added for today's meeting are additional teleconference locations where the public can listen to the discussion and comment as well. Those locations include: La Jolla, Los Angeles, San Diego, San Francisco, Pleasanton, Berkeley, Irvine, Carlsbad and Palo Alto.

No background documents have yet been posted on the biotech bank proposal for today's meeting which begins 5 ½ hours from now at 3:30 p.m. PDT.

Deep Yogurt, Biotech and the Anguish of Big Pharma

SAN DIEGO -- Biotech investment guru Steve Burrill Wednesday took hundreds of BIO attendees on a warp speed overview of the state of the industry now and in 2020.

His flight was fast and furious, and he may have caught some sign of skepticism in the crowd. Undeterred he told them he may be off on the timing of his predictions, but they were coming -- probably sooner rather than later.

Some of his observations may have been unsettling to some. Babies will have chips inserted into them at birth to track their health. Walmart will be the model for the delivery of health care. Healthcare seekers will wear T-shirts embedded with technology that will touch their heart, among other things. Self-care will be the order of the day.

Say goodbye to those blockbuster, high-margin drugs. Hello to even more generics. Consumers will drive the market. Big Pharma, already suffering the anguish of expiring patents, will suffer more. Can you spell patent devaluation, he basically asked his audience. The biopharmaceutical industry will have to be re-invented. He said:

"Our friends in Pharma are in deep yogurt."

Research and development will migrate overseas. Pricing will be set on a global basis. Burrill declared,

"Every company is global from Day One."

The average age of death, now about 80, will climb to 100. No longer will health care providers wait for the disease and then try to ambush it with low chances of success. Instead, providers and consumers will be out front, moving to prevent those nasty germs and tumors from even getting a start.

As for financing biotech business, things will pick up later this year. And in 2009, industry will start to roll. "It will be a very good year, a year from now," he said.

Burrill's comments were based on one of his firm's latest studies: "Biotech 2008: a 20/20 Vision to 2020." The report can be purchased online for $295, or $430 if you want bound copy.

Not Coming Up

We are going to hold Steve Burrill's comments today on the future of biotech for later dissemination. It seems there is a surfeit of stem cell news.

CIRM Legislation on Affordable Access Moves Forward

Legislation aimed at ensuring affordable access to California-financed stem cell therapies easily cleared the Assembly Health Committee on Tuesday and is headed for a hearing next week in the Assembly Judiciary Committee.

Meanwhile the California stem cell agency has posted its own analysis of the bill, SB 1565 by Sen. Sheila Kuehl, D-Santa Monica, and Sen. George Runner, R-Antelope Valley, setting the stage for CIRM directors to take a position on the proposal.

The vote Tuesday on the bill was 16-0. No lawmaker has voted against the bill as it has moved through the Senate and now in the Assembly. If it clears the next committee, it will go to the Assembly floor, but it will have to return to the Senate for concurrence in Assembly amendments.

The CIRM analysis of the measure did not make a recommendation on approval or support. But it said, among other things,

"SB 1565 appears to tie the price for any and all commercialized products to the lowest pricing based on the current benchmarks of the CalRx program in effect at this time. Any change to that price over time, given any new circumstances, need for flexibility in order to leverage commercialization on products for “orphan diseases” or even for time itself would require a change in statute with more than 70 percent vote of both houses of the Legislature as well as approval by the governor. Any change would further be delayed by a minimum of one year in order to enact authorizing statute."

The analysis also took note of another change in the bill since it cleared the Senate. That amendment would delete a Prop. 71 provision that requires a two-thirds vote of the CIRM grants working group to fund research that does not involve pluripotent or progenitor cells. The Prop. 71 provision is aimed at giving a priority to hESC research.

The bill has also been altered to request, instead of mandate, a study of CIRM by an independent commission with an eye to preparing recommendations for changes in its structure, including its built-in conflicts of interest on its board of directors (ICOC).

According to the Assembly staff analysis of the legislation, its authors believe that "given the ICOC/CIRM's unique formation as a public entity, the public's investment of $3 billion in bond funds, and the close-knit nature of the scientific community, the ICOC and CIRM warrant a high level of scrutiny by an independent body...to ensure public trust and confidence and protect the integrity of the ICOC and CIRM from real or perceived conflicts of interest."

The CIRM Legislative Subcommittee will discuss the bill at its meeting on Friday. Its analysis also discusses two other state measures and links to their text and analysis. However, the CIRM link to the analysis for SB1565 is for an older version of the bill. Here is the link to the latest analysis.

Stem Cell Watchdog Warns of the Lure of the World Stage

San Diego – The Consumer Watchdog group today sounded a cautionary note on the international agreements involving CIRM (see item below) and warned that they "should be supported so long as they are based on scientific merit, not merely the glamor and glitz of playing on the world stage."

John M. Simpson, stem cell project director for the watchdog group, noted that California law requires that CIRM-funded research be conducted within the state. Prop. 71 also requires that California suppliers be given preference, an issue that is now before the California legislature.

Simpson said in a statement,

"If the collaborations are driven by the science, that’s great. If it’s a matter of saying let’s go international, just to play on the world stage, I would be dubious."

He continued,

"It’s important that applicants for the disease team grants be judged completely on the scientific merit of their proposals,. Decisions cannot be twisted for geographic equity. I would hope that international collaborative efforts would rise to the top, but if they don’t, so be it."

Sweeping Cancer Fight Launched by CIRM and Canada

SAN DIEGO -- Backed by $100 million in Canadian cash, the Canadian government and the California stem cell agency today announced a three-year effort to probe the role of cancer stem cells in developing the disease.

California Gov. Arnold Schwarzenegger said in a statement:

"Entering into collaborations such as this, which bring together leading medical research capabilities, have great potential in improving the lives of not only Californians, but people around the world."

Canadian Minister of Health Tony Clement said his government will contribute more than $100 million to the Cancer Stem Cell Consortium, which will work with CIRM on the effort.

A statement from CIRM said,

"The first potential area for collaboration under consideration is the upcoming CIRM Disease Team grants. These grants will provide an opportunity for researchers in California and Canada to collaborate, broadening the potential pool of expertise that can be applied toward research in a specific area."

CIRM's board of directors next week is scheduled to approve $1 million in planning grants for the disease program, which will run about $122 million. Those grants are expected to be awarded this time next year.

CIRM President Alan Trounson said,

"One of CIRM’s primary goals is to accelerate the field of stem cell research as a whole. In some instances we can do this more effectively through collaborations that involve the best scientific endeavors, regardless of geography. Through this relationship, CIRM money will continue to be earmarked only for research that takes place within California, but our funding can be significantly leveraged to accelerate the clinical benefits for patients. Coordinating our joint efforts in cancer stem cell research through collaborative programs with our colleagues in Canada will enhance the opportunities to contain and to prevent recurrence of certain cancers."

The Canadian/California announcement said the the Canadian partners in stem cell consortium are the Canada Foundation for Innovation, Canadian Institutes of Health Research, Stem Cell Network, Ontario Institute for Cancer Research and Genome Canada. The news release said they "are expected to make an initial investment of more than $100 million Canadian dollars in the collaboration, with Genome Canada, the Canadian Institutes of Health Research and the Ontario Government through the Ontario Institute for Cancer Research, having already confirmed commitments of up to $30 million each for cancer stem cell research. CIRM will support the collaboration through its existing programs."

CIRM also announced another collaborative agreement between the Australian state of Victoria, also utilizing the disease team grant program. The announcement said CIRM and Victoria are "laying the foundation for an arrangement under which they will jointly seek grant applications, evaluate them, and make recommendations for funding research activities." (Trounson is from Australia, moving to California to take the presidency of CIRM in January.)

The announcement did not indicate any funding beyond the $122 million from CIRM.

Both announcements were made at the BIO conference here, which has attracted an estimated 20,000 persons from throughout the world.

Schwarzenegger made a luncheon speech at the conference. Video clips are expected to be mounted on his web site later today. His office also prepared a California biotech fact sheet that highlight CIRM's $1.1 billion lab construction effort and its $530 million in research grants.

CIRM Budget to Jump Nearly 50 Percent

The California stem cell agency has proposed a $13 million operating budget for its next fiscal year, up 46 percent from this year's spending plan.

The proposal's biggest increases are for salaries and benefits -- $6.7 million, up 39 percent – and external contracts – $2.7 million, up 50 percent. The agency is proposing to increase its staff from 37 to about 45. Prop. 71 caps staff size at 50.

The "other travel" category is scheduled to jump 287 percent, to $558,000. CIRM said the increase will allow the scientific staff to attend meetings that will enable CIRM "to have an integrated picture of state of the art and forward-looking research agendas."

The spending plan also seems to shift more responsibilities to CIRM Chairman Robert Klein. The document said,

"The proposed budget reflects the redirection of legal and communication staff and contracts, as appropriate, from the Office of the President to the Office of Administration and the Office of the Chair. It also reflects the creation of the new Office of the Vice-Chair/President which is focused on intellectual property issues."

No further explanation was offered.

The budget for the $3 billion agency will be taken up tomorrow at a meeting of the Finance Subcommittee of CIRM's board of directors. It will then go to the full board at its meeting June 26 and 27.

The budget presentation is lucid and reasonably complete but was posted yesterday, only two days before it is scheduled to be discussed publicly.

Canadian Money and Gladstone/Yamanaka Research

SAN DIEGO – Robert Klein, chairman of the California stem cell agency, and Alan Trounson, its president, are in San Diego for the mammoth biotech industry conference -- BIO -- that has attracted about 20,000 persons.
They are scheduled to hold a news conference later today to announce more developments in the California/Canadian stem cell research partnership. Their event appears to be tied to Ontario Premier Dalton McGuinty's announcement Tuesday that his province will pony up $1 million for new stem cell research linked to California. That's on top of $30 million announced a year ago.

According to CBC News, the research will be conducted by Shinya Yamanaka of the Gladstone Institute in San Francisco. Also part of the research effort are the University of Toronto and the Hospital for Sick Children in Canada.

Rob Ferguson of the Toronto Star reported:

"'Both centers will be collecting patients with various diseases and making (ips) cells,' said Dr. Deepak Srivastava, director of Gladstone and a pediatric cardiologist."

We will have more on the Klein/Trounson news conference later today as well as a report on the biotech industry outlook by Steve Burrill, head of the Burrill & Co. biotech investment firm in San Francisco.

CIRM to Dish Up Millions for New Cell Line Research

The California stem cell agency next week is scheduled to hand out $25 million in grants for development of new cell lines and $1 million to help institutions that plan to apply later for $122 million in disease team planning grants.

The new cell line round is the first to be open to businesses based throughout the United States, although they must have a "research site" in California as of Feb. 5 of this year. Twelve firms have applied for funding. Fifty applications in all were received for 16 grants.

Fifty-nine applications were received for the 20 disease team planning grants, including nine businesses.

Also on the agenda for June 26 and June 27 in Burlingame, Ca., is the budget for CIRM for the financial year beginning July 1, CIRM's positions on stem cell legislation in California and Washington, D.C., a report on gifts to CIRM, consideration of a new round of grants for translational grants, "consideration of issues affecting" the $271 million lab grant programs and much more.

The agenda lists 28 items but, as usual at this point, does not contain any background material on any of them, including the decisions made by grant review committee on the new cell line and disease team planning applications. Some material is likely to be posted before the actual meeting.

Link to IP Law & Business Story

The item below originally omitted the link to the story about CIRM and IP. You can find the story here if you use the magazine's free registration.

California Stem Cell Cash – Last Resort for Business?

Revolutionaries, uncertainties and big California bucks are all part of a piece in IP Law & Business magazine this month dealing with the state's $3 billion stem cell research agency.

Written by Joe Mullin, the cover piece explored the world of IP at CIRM, including comments from Robert Klein, chairman of the agency, and concerns from biotech businesses.

Klein was described as maintaining "the rhetoric and stance of a combative underdog." Mullin wrote that Klein spoke to a group of stem cell activists last spring, firing them up for the fray.

"'How many people do you think it takes to start a revolution?' he asked the crowd. 'I can tell you, it's many less than the people in this room.'"

Mullin noted the importance of California's $3 billion for research at both academic institutions and businesses. But he said that the fact that California has called for payback on some of its investment is troubling to some in industry. He wrote:

"...(If) California is any guide, state funding may usher in long periods of uncertainty, and new demands for a much larger share of the proceeds from any discoveries than what the life science industry has seen before."

Mullin continued:

"By contrast (to the federal government), California's stem cell agency is still an unknown quantity, and that spooks the biotech industry. 'There is an oft-repeated concern that IP will need to be shared with competitors,' says (Paul) De Stefano(a Fish & Richardson partner and former chief corporate counsel for Genentech Inc.). 'Whether that's a legitimate fear or not, I've heard literally dozens of investors talk about it,' he adds.

"BioTime Inc., for instance, had considered applying for a small CIRM grant-only about $300,000-but has decided to look elsewhere for now. The company's CEO, Michael West, says he still might apply for a CIRM grant, but he'll keep the money away from BioTime's core business so as not to burden the company with what he calls 'completely unrealistic' state royalty rates."

Mullin wrote:

"The fact that CIRM is considering changes to the IP policies is 'disquieting, to say the least,' says Palo Alto-based StemCells, Inc. general counsel Kenneth Stratton. His company, which along with Geron is well-established by industry standards, won't say whether it is applying for a CIRM grant. But like West at BioTime, Stratton says that the requirements make CIRM money expensive and less attractive than other options. The agency is at risk of becoming a 'funder of last resort,' says Stratton."

However, Mullin quoted CIRM officials as saying it is currently processing 50 grant applications from businesses. That number undoubtedly will rise as more requests for applications are forthcoming from CIRM.

Our comment: Klein is inclined to flourishes that are keyed to his different audiences. On one hand, he fires up activists with rhetoric unsettling to businesses. On the other hand, he assuages industry anxiety at sessions involving his generous $500 million biotech loan proposal. Business concerns about uncertainty are financially quite legitimate and to be expected. However, those concerns will never be completely alleviated, and California has a big bundle of cash previously unavailable to industry. CIRM has an obligation to cut the best deal possible for the people of California.

(Access to the IP Law & Business article requires free registration, although it calls the process a "subscription.")