CIRM Makes a YouTube Move

The California stem cell agency has joined YouTube, an Internet video-sharing service used by millions worldwide.

CIRM, the world's largest source of funding for hESC research, hooked up with YouTube on Jan. 15 with videos of California scientists talking about their research. Since then, 259 videos have been watched, as of this writing. Currently CIRM appears to have 28 different videos on the site.

The service is called CIRMTV, and it is part of CIRM's expanding PR effort. On Tuesday, CIRMTV keyed off the Obama inauguration with a four-minute video of CIRM President Alan Trounson and UC San Francisco researcher Susan Fisher (see photo) discussing the likely impact of the new president.

The inaugural video currently has the highest number of views, 109, with one of Hans Kierstad of UC Irvine coming up in second with 76 views, outstripping UC San Diego's Catriona Jamieson, who had 57, and Stanford's Irv Weissman, who had 48.

As always with the Internet, the main problem is how to build traffic. CIRM needs lots of links to the site to build viewership along with comments on the material from outside sources, ranging from print publications to other Internet sites. However, stem cell research has limited general appeal considering the other matters on YouTube, and it is unrealistic to expect massive numbers.

Don Gibbons, chief communications officer for CIRM, reports that CIRMTV has "zero outside cost" and requires "minimal staff time."

The same videos can be seen on the CIRM web site. In our case, the YouTube version loaded and played smoothly while the CIRM site stalled repeatedly. There could be a host of reasons for that, ranging from server capacity to video quality to the bandwidth of our connection.

Normally the videos cannot be downloaded for viewing later when you are not connected to the Internet. But Wikipedia reports that free software can be downloaded to provide that capability.

On Tuesday, CIRM also devoted a good chunk of its home page to the inauguration, featuring both the Trounson-Fisher video and a link to a two-page statement on the impact of Obama's expected stem cell moves.

For more on California state government uses of YouTube, see this piece by Daniel Wood of the Christian Science Monitor.

Stem Cell Research Funding in Lieu of Everything Else?

Attorney Kristie Prinz of the California Biotech Law Blog says the points raised in the our "Millions for Science vs. Cuts in Medical Help for the Poor" are well-taken.

She writes,

"Clearly, California voters believed in the value of stem cell research when they voted for Proposition 71, and there is little doubt that stem cell research has the potential to be tremendously beneficial to the state's biotech community, but did the voters really intend to fund stem cell research with state taxpayer money in lieu of everything else?"

Prinz continues,

"In my opinion, Jensen's point is well-taken.  As a transplant from the South--not Southern California, but the 'real' South--I have always been uncomfortable with California's ballot initiatives for the simple reason that I always felt like I was missing some critical information to making a decision: the budget.  I have run my law firm now for five years, and I can assure you that while I made some mistakes early on, I quickly learned that a business owner cannot make any spending decision without carefully reviewing the budget that will finance such spending.  I serve on a nonprofit board of directors, and the same is true in making spending decisions for that organization.

"Yet, as a California voter, I am somehow expected to make a decision on a ballot initiative without being able to see the overall financial picture of the state.

"Does this really make sense?"

If you have thoughts on any of these issues, you can comment by clicking on the word "comment" below. Anonymous comments are permitted. Or you can write CIRM directly via its web site and ask to have your comments made part of the public comment allowed at each CIRM board meeting.

CIRM Vice Chairman Vote Delayed

The California stem cell agency has deferred a decision on a vote to select the new vice chairman of its board of directors – State Democratic Party Chairman Art Torres or Duane Roth, head of an economic development group and who currently sits on the 29-member board.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., wrote about the delay on his organization's blog.

He said,

"The surprising delay of the vote will give ICOC members more time to think about exactly what attributes the vice chair should have.  For some members the decision could come down to this: If Roth loses, he remains on the board and presumably continues as the productive member many think he has been. Torres would be a new player, bringing strong political connections to Sacramento and Washington -- but does the California Institute for Regenerative Medicine (CIRM) really need and benefit from that?"

Simpson also has a statement from Roth on why he is the best candidate for the job. Torres has been in Washington for the inaugural, and no statement is currently available from him.

Gravy Train Bedfellows: Catfish Farmers and California Stem Cell Research

What do a couple of porn kings, some plumbers and bricklayers, travel agents, yacht builders and catfish farmers have in common with the $3 billion California stem cell agency?

They are all looking to ride the trillion-dollar, bailout/stimulus gravy train that is underway in Washington, D.C.

Everybody is doing it, so why not us? That's the logic.

We must, however, add a qualifier to the business about CIRM, which continues to operate amply funded despite a $40 billion budget crisis affecting other California state departments.

CIRM directors are not yet officially begging for a handout from the Obama administration. But the matter, championed by CIRM Chairman Robert Klein, is breezing through the agency. It comes up again tomorrow afternoon at a meeting of the directors Finance Subcommittee, where it is likely to be sent on with a favorable recommendation to the full board unless some board members stand against Klein.

As is often common with CIRM, the latest specifics about Klein's gravy-train proposal are being withheld from the public even though the meeting is less than 24 hours from now. (The agency's failure to provide such information is persistent, corrosive to the public trust and puts the lie to Klein's pledge of transparency and openness, but that is a subject of another item.)

Here is what we have been able to ferret out about Klein's plan to snag some of the federal goodies. He wants a federal guarantee for CIRM's $500 million biotech lending program. With such a guarantee, the size of the program could be boosted to $1 billion, Klein says. Another element is a move to improve research and development tax credits for the biotech industry. (You can find the latest, Dec. 19, 2008, discussion of this here in a CIRM transcript.) Klein may have other proposals in mind as well.

There is a logic to Klein's effort. Huge amounts of money are going out the door. Biotech ventures, not to mention stem cell research, are chronically short of cash. The industry has high promise, according to conventional wisdom. If you are running a business, it behooves you to grab the cash when you can. Next year, the door will be closed.

But the federal largess comes with a cost, maybe not to CIRM but to the nation as a whole. Many competing demands exist, some for worthwhile efforts that will die if they do not receive help. Klein's proposals may well be be competing with other calls for assistance from California state government or cities and counties, not to mention $1 billion promised by President Obama for autism research.

The financial pie is, in fact, limited. CIRM is well-funded and can progress quite smartly without siphoning off federal assets that might be better used. Moreover, the biotech industry has an army of lobbyists who are more than capable of carrying their own water without the assistance of CIRM, which is a minuscule player in Washington anyway.

The Wall Street Journal today reported on the impact of the competition for federal dollars. It said,

"...(T)he unprecedented largess granted through the $825 billion economic-stimulus bill may bind Obama's hands later. The growing deficit will make it difficult, if not impossible, to fulfill spending promises that total hundreds of billions of dollars....This burst of spending so early in his presidency could also hobble Mr. Obama politically in the years to come as the country's soaring budget deficit demands cutbacks in social programs and even potential tax increases."

I may be old-fashioned, but under such circumstances, I think CIRM should remove itself from the hand-out line and get back to the doing the best it can with its already ample resources. As another president remarked at his inauguration 48 years ago,

"Ask not what your country can do for you. Ask what you can do for your country."

(As for those porn kings, catfish farmers and others mentioned earlier, here are couple of links to them in stories in the Los Angeles Times and New York Times as well as a Phoenix, Ariz., radio station. The porn kings request seems to a bit of humor, highlighting the unsavory nature of the gravy train bandwagon.)

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If you have thoughts on any of these issues, you can comment below by clicking on the word "comment" or you can write CIRM directly via its web site (info@cirm.ca.gov) and ask to have your comments made part of the public comment allowed at each CIRM board meeting.

The public can participate in the meeting tomorrow afternoon at teleconference locations in La Jolla, Berkeley, San Carlos, Palo Alto, Irvine and two in San Francisco. Addresses can be found on the agenda.

Digging Into the Method of CIRM's Creation

For those of you interested in knowing more about California's flawed initiative process – the device that created the state's $3 billion stem cell research effort – you can learn a little more without reading the entire 402-page report cited in the "CIRM Defends" item.

Instead, you can see a very brief version of it in the Los Angeles Times from Nov. 10, 2008. The op-ed piece by Robert Stern and Tracy Western notes that a record 63 initiatives have been on the ballot in the decade since 2000.

Spending on the measures hit a record $330 million in 2006. Stern and Western, top officials at the Center for Governmental Studies in Los Angeles, said,

"What all this suggests is that California's policy agenda today is increasingly driven by ballot initiatives rather than by the elected members of the Legislature. Prompted in many cases by legislative deadlock or legislative inaction, these initiatives effectively shift the policymaking burden to voters, and often leave them overwhelmed and bewildered by poor drafting, misleading campaigns, look-alike counter-initiatives and highly technical policy details.

"The ballot initiatives that voters are being asked to decide are too often lengthy, rigid, inflexible and error-prone. The initiative process is badly outdated and needs to be reformed."

CIRM Defends Its Spending, Positive Impact Cited

The California stem cell agency today commented on the "Millions for Science vs. Cuts in Medical Help for the Poor" item but seems to have missed the point.

Here is full text of what Don Gibbons, chief communications officer for CIRM, sent along:

"Your item on the California budget makes me think you are Herbert Hoover's grandson. CIRM bonds are structured so that there is no repayment prior to January 2010. That means our bonds have no impact on the general fund that is in trouble. All of our grants are pure economic stimulus. When half of Washington is ringing its hands over the fact that “not enough shovel-ready projects” exist to absorb the needed stimulus, shuttering projects that are already having a positive impact, with no negative impact, makes no sense. And the Obama administration is talking about high tech stimulus, like our research, as well as bricks and mortar, like our facilities construction."

Putting aside his personal comments about my ancestry, Gibbons does not deal with the essential point of the item, which is whether it is good public policy to lock up state funds via the initiative process and then hamstring elected leaders when it come time to deal with issues that go well beyond such relatively minor matters as stem cell research.

Beyond that, CIRM's spending, financed by the state of California, flies in the face of the hardship seen elsewhere and poses PR and legislative problems that may ultimately damage the agency. And that is regardless of whether the spending is legal, justified or economically beneficial. State employees are being laid off and salaries cut while three CIRM executives rank in the top ten highest paid state employees while running a tiny, 38-person staff. That is not a image to wave in front of lawmakers right now.

As we have observed in the past, CIRM does have an economic impact, but it is relatively minor in the context of the California economy. In regards to CIRM and economic stimulus/bailouts in Washington, we will have more on CIRM's moves to seek federal assistance later today or tomorrow.

The issues surrounding the creation of CIRM via ballot initiative go well beyond the agency itself and are part of the problems that have helped to create the state's $40 billion budget crisis. It is a crisis that will strike at CIRM as well if it is not solved in the next month or two.

Last summer, the Center for Governmental Studies, a respected nonpartisan think tank in Los Angeles, released its latest report on the California initiative process. "Democracy by Initiative." The 402-page study cited Prop. 71, which created CIRM, as an example of an initiative sponsored by "wealthy elites," one that contained "deficiencies in drafting." "Ineptly written," one critic was quoted as saying.

The report declared:

"Jean Ross, executive director of the California Budget Project, has described initiatives as a case of eating 'dessert without having to eat your vegetables. You can put $3 billion worth of stem cell research bonds on the ballot [Proposition 71] without the voters having to tell you where the $300 million a year to pay those bonds is going to come from, and without asking voters to make the kinds of priorities and choices that the executive branch and legislative branch have to. The voters didn’t have a choice, do you want to cover all children with health insurance in California for 10 years, or do you want stem cell bonds? Those are the kinds of choices that come from the legislature.'"

The report also noted that it cost $6.9 million to qualify Prop. 71 for the ballot, including $2.7 million to paid circulators. CIRM Chairman Robert Klein, who says he wrote the measure, contributed $1.9 million to the qualification process, 70 percent of the total for paid circulators.

Tens of millions more were spent during the campaign to win voter approval.

If you have thoughts on any of these issues, you can comment below by clicking on the word "comment" or you can write CIRM directly via its web site and ask to have your comments made part of the public comment allowed at each CIRM board meeting.

Fresh Comment

"Anonymous" has left a fresh comment on the
"Riddle of the Stem Cell Trinity" item.

A California Stem Cell Question: Millions for Science vs. Cuts in Medical Help for the Poor

As California's public universities are turning away students and state cash is being cut for projects ranging from research labs to affordable housing, the California stem cell agency is on track to give away $66 million later this month.

The awards will come following CIRM's handout of more than $19 million last month.

No one – except for those congenitally opposed to hESC work -- is contending that all these millions are going to unworthy scientists or to dubious research. But the CIRM giveaways stand in marked contrast to what is happening to the rest of the state in the light of its $40 billion budget crisis.

If CIRM were, say, part of the state Department of Health, chances are good that it would not be able to spend taxpayer money so freely.

The disparity raises major public policy issues about the use of ballot initiatives to promote and protect various causes. Should the elderly and poor see their much-needed assistance and medical care cut while cash flows unimpeded, in this case, to researchers, some of whom are already exceedingly well funded?

A ballot initiative, Prop. 71, is just what created the $3 billion stem cell effort in 2004 – not carefully crafted legislation hammered out over months with all parties having their say in public. The measure was drafted in secret by CIRM Chairman Robert Klein (with the help of a couple of others he rarely acknowledges) and placed on the ballot with a signature-gathering effort that probably cost $1 to $2 million. (That is the most common way of placing an initiative on the ballot in California – hiring firms that specialize in such efforts and paying them on a per signature basis.)

Voters did speak, approving Prop. 71 with a 59 percent vote. However, the measure faced only the most feeble opposition. The groups concerned about ethical issues involving hESC were largely focused instead on re-electing George Bush as president.

The upshot is that the Golden State can do little now to enact even the most minor needed changes in the Prop. 71. It locked into state law and the state Constitution true minutia, such as specifying that CIRM Chairman Klein is in charge of putting out the annual report. Prop. 71 enacted super-majority quorum requirements that hamper the agency in conducting its official business and capped its staff size at a ludicrously low 50 persons to run a $3 billion program. And it created a board of directors dominated by the very enterprises that benefit the most from CIRM largess.

Klein, in order to insure that he and the agency would not have to heed the wishes of the governor or other elected officials, wrote into Prop. 71 an unprecedented, constitutional requirement for a 70 percent vote of the legislature to change the law, plus the signature of the governor. That makes it virtually politically impossible to make alterations in the measure. By contrast, even passing a budget for the state of California or raising taxes requires only a two-thirds vote. While less than that for changes in CIRM, the two-thirds requirement is now barring a solution to the state's disastrous financial problems.

All of that is a backdrop to the upcoming CIRM directors meeting Jan. 29 in Burlingame, Ca. In addition to giving away the big bucks, an overdue review of its financial condition is on the agenda. So far, however, no financial documents are posted on the CIRM web site. The subject came up last month repeatedly at the directors meeting in Irvine. Klein, however, shied away from discussing specifics.

But here are the basics: CIRM depends on state bonds for cash. The money flows directly to the agency. The governor and the legislature cannot touch it. But the state has stopped issuing bonds because of its precarious condition. CIRM says that so far it has plenty of cash. But it has awarded more than $600 million in multi-year grants, which need regular payments. One contingency Klein promises to discuss is the private placement of bonds. One would think those would have limited appeal when not even the state of California can find a market for its bonds.

Private placements, moreover, are not likely to be necessary. If California cannot get its financial act together in the next month or two, it will face problems of a magnitude that will dwarf such concerns as stem cell research. That pressure seems certain to force the state's public servants to cobble together a solution before CIRM runs aground financially. Nonetheless contingency plans are always good.

The grants scheduled to be awarded include $18 million to support up to 10 awards for three years "to augment the ranks of laboratory personnel trained in the state-of-the-art techniques required by stem cell research labs." Certainly a worthy endeavor while the state's educational institutions are being whipsawed financially.

The second round involves $48 million in training grants for young scientists, including stipends of up to $77,000 for three years, including research and travel, tuition and health insurance in some cases. Another worthy endeavor, an investment in the future. It is a remake of the first-ever grants awarded by CIRM in September 2005. The agency didn't have the money then to fund the grants immediately, but the cash ultimately came through and helped make the state attractive to new, young talent.

If you have thoughts on any of these issues, you can comment below by clicking on the word "comment" or you can write CIRM directly via its web site and ask to have your comments made part of the public comment allowed at each CIRM board meeting.

$500 Million CIRM Lending Program Up on Wednesday; Details Missing

With only two business days left before a key CIRM meeting, California's stem cell research agency is keeping under wraps important details of how it plans to lend $500 million to the state's riskiest biotech ventures and make $100 million doing so.

Directors of the agency have approved the concept for what amounts to a biotech bank that would cater to enterprises that cannot gain normal financing. Loan default rates of up to 50 percent have been predicted by the plan's backers. The specifics, however, remain to be resolved. On Wednesday, the directors' Finance Subcommittee will dive into that complex subject.

Just what is being proposed at that session is not available to the public on CIRM's web site – only this cryptic language from the agenda:

"Consideration of policies and implementation plan/processes for CIRM loan program, including but not limited to the Loan Administration Policy and the role of delegated underwriters/financial service providers."

The lending program is the brainchild of CIRM Chairman Robert Klein, who has been pushing it for more than a year. The idea behind it is to help to provide funding for companies through what is known as a financial "valley of death" and to generate additional funds (the $100 million profit) for CIRM to use as additional loans or grants.

The closest thing to a current, basic, one-stop overview of the lending program is the proposal approved by CIRM directors in September. No business plan for the enterprise has been produced.

The biotech bank program calls for delegated underwriting of the loans, a practice much criticized at Fannie Mae, which had to be taken over by the federal government. CIRM does not have the expertise to run a half-billion dollar lending program, so an outside contractor must be hired. An earlier draft of a "concept plan" for underwriting was discussed Nov. 19, 2008, at a Finance Subcommittee meeting. It is not clear whether an identical plan will be offered on Wednesday.

Also discussed in November was a 12-page loan administration policy for loans to businesses. Directors made a number of suggestions for changes in it. The version to be considered on Wednesday is not available to the public on the CIRM web site.

Only two companies offered comments on the plans at the November meeting, International Stem Cell of Oceanside, Ca., and DNAmicroarray of San Diego. Both expressed general support of what they heard although they had some criticism of details.

Earlier this month, CIRM posted a request for information concerning the criteria and compensation for an underwriter, including provisions for dealing with conflicts of interest. According to CIRM, only one business responded, Silicon Valley Bank of Santa Clara, Ca., which has been involved in CIRM discussions about the lending program for months. CIRM expects to have more than one underwriter in order to avoid possible conflicts of interest.

In response to a question, CIRM spokesman Don Gibbons said last Thursday,

"We are also in discussion with a few other institutions and hope to have comments from them prior to the Finance committee meeting."

Gibbons has not yet responded to a request for the names of those companies.

Silicon Valley Bank and its parent group, SVB Financial Group, have 27 offices worldwide and 11,000 clients, according to its web site. The bank says that "more than half of all venture-backed companies in the U.S. are SVB clients."

The bank says,

"With an unmatched network of relationships with life science VCs and a dedicated team of life science experts, we are the partner of choice for emerging and established medical device and biotech companies."

SVB presented a plan to the Finance Subcommittee in September that laid out a possible business relationship with CIRM. Directors discussed the possibility of having a similar presentation at a full board meeting but were concerned about leaving the appearance that a decision had been made to go with Silicon Valley Bank. They suggested that if the bank's slides were used that its name be removed from them. It is not clear whether such a presentation will be made at Wednesday's meeting or at the full board meeting later this month.

Teleconference locations (two in San Francisco, one each in La Jolla, Berkeley, San Carlos, Palo Alto and Irvine) where the public can participate in the Wednesday meeting can be found on the meeting agenda.

Another Reed Ethics Item

Writing on the The Niche stem cell blog for Nature magazine, Monya Baker also posted an item on the ethics case involving CIRM director John Reed. Baker's account can be found here.

Klein Ducks Little Hoover Questions

Late last year a California government efficiency agency investigating the state's $3 billion stem cell research effort asked its chairman, Robert Klein, what changes he would make in it after four years of experience.

Klein's response came in the form of what one might call a "modified stonewall." He will not answer the question because it would be "inappropriate" for him to give his views.

The matter involves the Little Hoover Commission, a state department charged with analyzing the performance of other state entities, and which has held one public hearing concerning CIRM. The commission's staffers and some of its members have also attended some CIRM meetings and interviewed other persons with an interest in the agency.

On Nov. 26, the Hoover commission sent a letter requesting Klein's views, a request first made at its hearing earlier that month. The letter asked for an answer by Dec. 15. On Dec. 19, Klein tried to rope in members of the CIRM board in fashioning a response, declaring that it would be "inappropriate" for him to respond, although he frequently says he wrote Prop. 71, the measure that created CIRM in 2004.

However, at least two board members balked. According to the transcript of the directors Legislative Subcommittee on Dec. 19, board member Jeff Sheehy, a communications manager at UC San Francisco, said,

"I would rather you just wrote the letter based on the items that you think are important."

Claire Pomeroy, dean of the UC Davis School of Medicine, told Klein,

"It's asking your opinion about writing the initiative, which was the process that happened before the board even existed. so it seems to me that it is appropriate for you to clarify your personal testimony in response to this letter."

Francisco Prieto, a Sacramento physician and CIRM board member, supported Klein's attempts to develop some sort of board consensus on changes.

During the meeting Klein indicated he would poll board members and perhaps staff about recommendations on possible changes.

Sheehy strongly objected to a detailed, full board review on the questions that the Little Hoover Commission directed to Klein. Sheehy warned that it could generate internal controversy that could have "negative consequences."

He said the board should focus on more important, unfinished work. Sheehy said,

"We're still working on trying to get a strategic plan for this institute....I can go down the list. We're still trying to get grants out. We're still trying to figure out a prescreening process. So there's a lot of the nitty-gritty stuff about our work we need to do."

On Dec. 22, Klein wrote a five-page letter to the Hoover Commission that said the "board is working well." He said the size of the board is beneficial because it provides diversity of viewpoints. He defended its conflict of interest rules, but did not mention the case of a director being investigated by the state for actions taken on the advice of Klein personally. He defended CIRM's transparency but did not discuss its perennial failure to provide timely public, Internet access to important background material on many proposals(including their texts) to be acted on at directors' meetings.

He also reiterated his refusal to give his personal opinion about changes. However, in the past he has publicly stated that the 50 person cap on staff was a mistake. He also has acknowledged attendance problems at board meetings, which often make it impossible to do business officially. Those problems stem from the structure of the board and its super-majority quorum requirements that are locked into state law. He also has supported triaging or prescreening grant applications because of difficulties with the grant review process.

We have asked CIRM for copies of the responses to Klein's queries concerning recommendations for changes. We will carry those when we receive them.

Reprogramming and Unicorns

CIRM President Alan Trounson has weighed in on some of the issues that attend the reprogramming of adult stem cells.

In a piece in the December 2008 issue of Cell Stem Cell entitled "Rats, Cats, and Elephants, but Still No Unicorn: Induced Pluripotent Stem Cells from New Species," Trounson noted that reprogramming is likely to attract attention from animal conservationists trying to preserve endangered species.

On the human front, he wrote,

"No matter how similar mouse, rat, and human iPSCs might be, it remains to beseen whether the usefulness of human iPSCs can be established, given the presence of viral sequences and of multiple copies of the transcription factors in potentially unregulated sites in the human genome. Regulatory agencies are likely to consider these lines to be genetically engineered and will consequently hold them to a very high bar in order to establish safety for use in human therapy. On the other hand, the potential availability of riPSCs for modeling human diseases will be very attractive to researchers and companies involved in drug discovery, as the mouse has often proven inadequate as a model for candidate therapeutics."

Chron on Reed Conflict Case

Reporter David Perlman of the San Francisco Chronicle on Wednesday wrote a piece on the ethics case involving a director of the California stem cell agency. Perlman secured a brief comment from the director, John Reed, who is also head of the Burnham Institute of La Jolla, Ca., Perlman wrote that Reed said only that he will now resume his activities on the CIRM board.

Reed Ethics Case Receives Modest Coverage

The ethics warning by California regulators involving a director of the state's $3 billion stem cell agency drew light news coverage today.

The conflict-of-interest incident received the most fulsome attention in two San Diego area newspapers, the Union-Tribune (Terri Somers writing) and the North County Times(Bradley Fikes writing). That's because the case involves John Reed, head of the Burnham Institute in La Jolla, Ca.

Erika Check, writing on the blog of Nature magazine, carried the following statement from Robert Klein, chairman of CIRM.

"We are delighted that with the completion of the review by the Fair Political Practices Commission. Dr. John Reed will reengage in his role as an ICOC [board] member. As CIRM matures, we continue to review and enhance our policies and procedures to avoid potential problems in the future."

It was Klein, an attorney who drafted much of Prop. 71, who advised Reed to write a letter lobbying the CIRM staff to reverse an unfavorable decision involving a $638,000 grant to Burnham. The letter prompted the state ethics investigation.

The Associated Press also wrote a brief story that appeared on various websites, including those of the San Francisco Chronicle, The Sacramento Bee and the San Jose Mercury News.

None of the stories carried a response from Reed, who Somers reported is traveling.

(An earlier version of this item did not contain the information from the Nature blog.)

Burnham's Reed Warned by State Ethics Agency on Conflict of Interest

California's government ethics overseers have issued a "warning letter" to a director of the California stem cell agency for attempting to influence the agency's staff to reverse a denial of a $638,000 grant to his research organization.

The attempt by John Reed, CEO of the Burnham Institute of La Jolla, Ca., was first disclosed by the California Stem Cell Report in November 2007.

Subsequently, John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca, asked the Fair Political Practices Commission to investigate Reed's action. California's top fiscal officer, Controller John Chiang, also called for an FPPC inquiry. Simpson disclosed the FPPC's warning today in a news release circulated nationally.

The FPPC said that Reed "intended to influence a decision that had the potential to affect his economic interests." The ethics agency said that Reed's action "raises ethical concerns," declaring,

"We are closing this matter with a warning letter....Dr. Reed is advised that failure to comply with the provisions of (state conflict of interest laws) can result in an enforcement action against him, including monetary penalties of up to $5,000 for each violation."

Reed recused himself from serving on the board during the FPPC investigation and appointed an alternate to fill in.

Simpson said he hoped that the 29 members of the CIRM board of directors had learned from the Reed incident. He said Reed can now return to the board and make a "positive contribution."

In response to an inquiry, Chiang's office said,

"Any conflict of interest threatens CIRM’s credibility and jeopardizes voters’ tremendous investment in stem cell research, which is why CIRM itself adopted a conflict-of-interest policy shortly after its creation.

"CIRM and the ICOC have a tremendous amount of work ahead of them – the controller hopes they can move forward and use the guidance provided by the FPPC to avoid any further conflicts in the grant process."

Simpson noted that the CIRM board is riddled with built-in conflicts of interest as the result of the language of Prop. 71, which created the $3 billion research effort.

Simpson said,

"Most of the people handing out the money are the very same people from the institutions that get the money. That means the conflict rules in place must be strictly adhered to and there must be consequences when they are violated.”

Reed wrote his letter seeking to influence the staff on the advice of CIRM Chairman Robert Klein, an attorney who wrote much of Prop. 71. Klein's action triggered calls for his resignation from The Sacramento Bee and Consumer Watchdog.

Ted Kennedy Backs Torres as CIRM Vice Chairman

Will the next vice chairman of the world's largest funding source for hESC research be Sen. Ted Kennedy's candidate or that of California Gov. Arnold Schwarzenegger?

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., disclosed Kennedy's endorsement of Art Torres, the head of the California Democratic Party, on the Consumer Watchdog blog last week.

Contesting Torres for the vice chairmanship of the $3 billion California Institute for Regenerative Medicine is Duane Roth, a current member of the CIRM board of directors, who was nominated by the Republican Schwarzenegger. Roth is also head of Connect, a San Diego area group supporting life science and technology businesses.

In a letter last month to CIRM Chairman Robert Klein, Kennedy said Torres is a friend of 37 years and declared that the former state lawmaker has an outstanding record of public service.

Torres' "years of advocacy for medical research and better health care for Californians will be a major asset" for CIRM, Kennedy said.

"A great deal is at stake," the Massachusetts Democrat said, "and I'm confident that Art Torres will make a difference for our country."

Simpson said he was not sure which candidate was best. Simpson wrote,

"The first task  for the ICOC (CIRM directors) is to define exactly what the vice chairman should be doing.  Both men need to offer a clear public statement of what he would bring to the position as well as his vision for the post." 

It is up to the 29-member CIRM board of directors to choose between Torres and Roth. No vote is yet scheduled.

CIRM's Financial Status, $500 Million Lending Program on the Table

Directors of the California stem cell agency next week will discuss how to run its ambitious and novel $500 million plan to lend money to the state's riskiest biotech ventures as well as the agency's own finances in the light of the Golden State's budget crisis.

The meeting of the Finance Subcommittee is scheduled for Jan. 21 at eight teleconference locations throughout the state. Businesses and others interested in the biotech loan effort should not miss the session.

Also on tap are plans to ask the Obama administration for loan guarantees that would, according to CIRM Chairman Robert Klein, enable CIRM to double its lending program to $1 billion.

No details are yet available on the agenda posted by CIRM on its web site.

Here is the information currently provided on the matters to be discussed:

"Consideration of policies and implementation plan/processes for CIRM loan program, including but not limited to the Loan Administration Policy and the role of delegated underwriters/financial service providers.

"Consideration of Stimulus Program topics

"Update on challenges of state finances and the impact on agency bond issues"

(Stimulus program topics are expected to include the loan guarantees.)

The loan program would target enterprises that cannot get normal financing because of their risk. Default rates are projected as high as 50 percent, but a $100 million "profit" is also expected. The excess is expected to be used for additional grants or loans.

Action taken at next week's meeting is likely to go before the full board of directors at its meeting on Jan. 29 in San Francisco.

The teleconference locations are in San Francisco(2), Menlo Park, La Jolla, Berkeley, Hillsborough, Irvine and Palo Alto. Specific addresses can be found on the agenda.

CIRM's $500 Million Loan Program: Lucrative Contract Looms

The California stem cell agency is seeking advice on its plan to have an outside contractor run a $500 million biotech lending program, and Friday is the deadline.

The information will play a key role in creating a potentially lucrative contract to administer the seven- to 10-year program for the $3 billion agency.

Banks, delegated underwriters and other financial service providers with an interest would be well-advised to weigh in with suggestions. The "request for information," however, is not limited to potential bidders but also solicits comments from "others with relevant experience or information."

CIRM is seeking information concerning the scope of services, models for relationships between "financial services providers/delegated underwriters" and CIRM, compensation structure and conflicts of interests.

CIRM is considering three possible models for the contractor:

"...a delegated underwriter model (delegated underwriter advances its own funds with CIRM guarantee), a hybrid model (delegated underwriter advances its own funds, but CIRM provides cash as collateral), and a fee for services model (CIRM originates loan and advances funds and pays financial services provider a fee for services)."

The stem cell agency states that its staff

"...does not have the internal expertise or capacity to manage all of the financial components of a loan program. CIRM therefore plans to externalize these tasks while maintaining ultimate control over the loan program. To ensure that CIRM obtains this expertise at the best value to California taxpayers, CIRM plans to issue a request for proposals to select two to three financial services providers/delegated underwriters. Because this is a start-up program, it is important to have at least two delegated underwriters at the outset. This would permit CIRM to learn from their different approaches and to refine our best practices. Furthermore, it would permit CIRM to transfer future transactions to another delegated underwriter if the relationship with one of the contractors is unsuccessful."

In February, CIRM plans to seek bids from potential contractors. The loan program is scheduled to begin this spring.

CIRM Begins Application Triage Experiment

The California stem cell agency is moving forward on its plan to perform closed-door, staff-connected triage on grant proposals before they move into the peer review process.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., reported on the action by CIRM directors on Tuesday. But he suggests an alternative that could serve CIRM's desire to reduce the number of applications on some grant rounds. Just open up the grant application process so that the public would know who is applying and hear the pros and cons on the applications.

Writing on his organization's blog, he said,

"It's our $3 billion that's being handed out. If you want our money, you ought to be willing to ask for it in public. Nothing builds more trust in a review process than having it completely transparent."

Simpson reported that Tuesday's special, teleconference board meeting failed to muster a quorum despite an attempt to set up multiple out-of-state locations for the convenience of traveling board members. Only 15 checked in. Nineteen are needed for a quorum. The full board has 29 members.

Failure to attain a quorum meant no action on the request by the International Society of Stem Cell Research for $400,000 to help finance its $1.5 million convention in San Francisco in 2010. It was the second time the board has failed to act on the request.

Here is a link to CIRM's four-page explanation of the triage proposal. The process will be applied in the $60 million basic biology round. The RFA should be posted before the end of this year with the "pre-applications" due towards the end of January.

Correction

The Dec. 22, 2008, item on the ISSCR grant request from the California stem cell agency incorrectly gave the figure as $420,000 as the result of erroneous information from CIRM. The correct figure is $400,000. The additional $20,000 appeared in the CIRM grant application from the ISSCR which we have been told automatically adds 5 percent "indirect costs" to the amount requested. However, the 5 percent does not apply in this case.