Dodging the Salary Bullet

Most of the time we write about things that affect CIRM. Here is one thing that won't – legislation to freeze salaries of high paid state employees.

The measure, AB 53, would impose a two-year ban on raises of about 785 state employees who make more than $150,000 annually. It is now before Assembly Appropriations Committee after winning unanimous approval from the Assembly Public Employees Committee on April 1.

The logic behind the bill by Anthony Portantino, D-La Canada, is that well-paid state employees should share the pain of budget cuts affecting children, seniors and so forth. The California stem cell agency has a bunch of folks who make more than $150,000 – too many in the eyes of some critics.

However, California lawmakers are politically unable to touch the agency because of Prop. 71, which requires an unprecedented 70 percent, super-majority vote of both houses and the signature of the governor to change state law affecting CIRM.

The significance of the legislation concerning CIRM is that high salaries are a red flag issue for the public even though they may be justified. Check out some of the comments on the story in The Sacramento Bee on the measure.

CIRM To Censor Confrontational Comments on its Facebook Site

Call it stem cell cyberspace – California style.

The $3 billion California stem cell agenda has embarked on a major foray into the Internet's social networking scene. It now has a fairly hefty presence on Facebook, YouTube and Flickr – all part of the expansion of its communications and public relations operations.

CIRM's Internet doppelgangers represent a creative attempt to use the latest tools to reach a wide audience, including those who might not necessarily tune into the old-fashioned print media.

But the Facebook account raises a significant public policy issue: Should taxpayer funds be used for a Web page that explicitly warns that a state agency (CIRM) will censor comments that it does not like?

Here is what the stem cell agency says on Facebook:

"CIRM's Facebook page is a place to learn more about stem cell research in California and around the world. We encourage comments on the science in our posts and our blog entries and will post regular responses from CIRM's in-house scientists or from our grantees. We will remove posts that are confrontational in nature."(Our boldface)

We asked Don Gibbons, the agency's chief communications officer and the man responsible for the cyberspace outreach, four questions about CIRM's policy on "confrontational" posts.

"How does CIRM define confrontational?

"Is it appropriate for public state agency to restrict commentary on taxpayer-funded scientific and policy matters?

"Is such a ban in keeping with the best standards for discussion of scientific matters?

"Do you know of any other state agency with such a policy?"

Gibbons replied,

"Our policy is essentially the same as yours. The goal of the site is to foster free and open discussion of the science. We will be very conservative in deciding to remove posts, reserving that action for anything that unfairly questions the integrity of our funded researchers or of stem cell science in general. Compare it to you taking down the recent posting about President Obama on your site."

Aside from the fact that the California Stem Cell Report is not funded by taxpayers or any business or organization, CIRM misses the point.

By warning its Facebook readers that their comments could be expunged, CIRM stifles legitimate commentary about CIRM's operations. It is as if the state began publishing a newspaper and warned the public that it would not print letters from readers or op-ed pieces that it deemed confrontational or unfair.

Beyond that, science -- not to mention government -- requires a robust dialog. One researcher's questions may be considered confrontational or unfair by another whose work is being scrutinized. Does that mean that the concerns should not be voiced in a public way? (See this link for an interesting related lawsuit.)

Yes, the Internet is a wild place. People say many rash things in cyberspace, and there is a problem with commentary that can be obscene and racist as was the case in the Obama comment that we deleted from the California Stem Cell Report. But obscenity and racism are a far cry from comments that are confrontational or unfair.

How will CIRM handle a comment from a person who deeply believes that hESC research involves the destruction of human life, says something to that effect on the Facebook page and suggests that hESC scientists are baby-killers? How will it deal with a comment that says the CIRM board of directors is riddled with conflicts of interest and the agency should be abolished.? Would the agency allow remarks from the scathing column about CIRM that recently appeared in the Los Angeles Times? Would the agency allow comments from stem cell scientists that suggest it is going badly awry in an endeavor to cozy up to the biotech industry?

All of those comments could be considered unfair or confrontational.

The problem here is not with the Facebook page. It is with the fact that CIRM is allowing comments to be posted on the page and supposedly encouraging them, but only if they are "correct" in the eyes of some at CIRM.

Web sites have been wrestling with the problem of untrammeled commentary since the 1990s. A variety of controls have emerged on private sites. But private Web sites are a wholly different animal than a Web site funded by taxpayers.

CIRM should encourage the broadest of commentary on its Facebook page and as well on its main home page. From time to time, it may well have to delete a comment that is obscene, racist or libelous.

But it should narrowly define what it would remove. Comments that are confrontational or unfair should not be censored. And comments that question "the integrity of ... stem cell science in general" certainly should be allowed. CIRM can and should rebut comments. That is the value of open dialog, which is paramount to a successful democracy.

We welcome comments on this and all other topics, confrontational or otherwise. You can make them by clicking on the word "comments" below. Anonymous comments are permitted.

(Editor's note: Gibbons' response also made reference to an item that we deleted last month along with a related comment from him. We posted notes explaining the deletions. You can find them here. For more on the CIRM's cyberspace efforts, see the item below.)

CIRM Facebook Likely a Pioneer Effort Among State Agencies

The California stem cell agency's use of Facebook, YouTube and Flickr seems to be relatively novel among state departments.

Our web searches did not turn up any other California state agencies with Facebook pages, but given the nature of Internet searches some may, in fact, actually exist. Some state college campuses (Stanislaus, Chico and others) have Facebook pages as does UC Berkeley. Most of the ones we looked at show light activity.

CIRM's effort is not the only Facebook page called the "California Institute for Regenerative Medicine." Another, created by Judy Roberson, can be found here, but it appears largely moribund. Another CIRM-related site was started by attendees at a CIRM meeting in 2008 in San Francisco.

The CIRM Facebook page does not yet appear to have generated major traffic. Only 55 "fans" are registered, as of this writing. It has been up since at least late February although it was just announced this week. CIRM's YouTube site reports 23 subscribers with 1,705 "channel views" since its inception Jan. 15. (The state has a number of YouTube pages including a state YouTube Channel, which has had only 33,848 channel views since March of 2008.) We could not find viewing numbers on Flickr site.

Low usage is normal for early-stage web sites. Driving traffic to a web site is a continuing challenge unless you have a brand name such as the New York Times or President Obama.

CIRM's Facebook page compares favorably in terms of usage to the U.S. government's Facebook page, which has only 489 fans but obviously a much larger user base.

The content on CIRM's Facebook and the other pages consists primarily of material that can found already on the main CIRM web site. Some links are provided to news stories about CIRM, although none of the stories contained significant critical remarks. The Facebook page does promise both blogs from CIRM staffers and interactivity, with CIRM personnel responding to questions.

CIRM's cyberspace efforts seem relatively low cost. But, web pages must be freshened regularly with new content and nurtured with marketing drives to push traffic. Otherwise they whither. In a year or so, CIRM should examine the reader numbers from the sites to determine whether its tiny staff can justify continuing these fledgling endeavors.

CIRM Says Cash Will Come From This Month's Bond Sale

The California stem cell agency confirmed this afternoon that it expects to receive cash from the proceeds of a $3 billion to $4 billion taxable state bond sale later this month.

In response to an inquiry from the California Stem Cell Report, Don Gibbons, a spokesman for CIRM, said,

"We have been told we could receive some level of new direct funding through the bonds that are scheduled to be issued beginning April 20."

Gibbons did not specify an amount or a range or whether it would be enough to scrub plans for a private state bond sale effort by CIRM.

However, we believe that it is quite likely that the amount will be sufficient to fund CIRM at least through this year or until the state's bond mavens believe that another taxable bond issue can be offered.

CIRM Bond Effort Still a Possibility

The private sale of bonds by the California stem cell agency could remain an option, according to the California state treasurer's office.

Tom Dresslar, spokesman for Treasurer Bill Lockyer, made the comment today in response to questions from the California Stem Cell Report.

CIRM has not responded to our inquiries concerning the reports that proceeds from a $3 billion to $4 billion taxable bond sale this month sale would help out CIRM. John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., predicted that the CIRM would snag about $400 million. (See his comment on the "cash infusion" item.)

We asked Dresslar for his comments on the bond sales reports. In his initial response, he said,

"We will sell taxable bonds. Proceeds can be used on taxable bond-funded projects, including stem cell. We hope to pay the PMIA for the outstanding 250 million loan to CIRM.

Then we asked him,

"Will funds be available for grants and operations beyond the repayment of that loan? If the funds are used in that fashion, will it enable CIRM to take out a new loan? In other words, does CIRM need to continue its plans to privately market bonds? Are the items I have been writing concerning the LA Times and Bond Buyer stories off base?"

Dresslar replied,

"It will be up to the Department of Finance to allocate funds from bond sale. But about 1 billion of the proceeds will be used to replenish PMIA for outstanding loans, including CIRM. There will be no new loans, at least for the time being. So I would think private placement remains an option."

Cash Infusion for CIRM Confirmed

Another report surfaced this morning, confirming that the California stem cell agency will be among the beneficiaries of the sale later this month of $3 billion to $4 billion in taxable state bonds.

Rich Saskal of The Bond Buyer wrote that the state of California plans to use a portion of the proceeds "to provide forward funding for taxable bond programs, such as affordable housing and stem cell research."

The news came as a bit of a surprise to some members of CIRM's board of directors that we queried. The agency itself and the treasurer's office have not yet responded to our inquiries, which is not unexpected since they went out overnight.

The stories in Bond Buyer and the Los Angeles Times did not specify how much cash is likely to be forthcoming for CIRM, which would have run out of money next fall without additional funding. Bonds are virtually the only source of cash for CIRM's operations and grants.

Cash Crunch Coming to an End at CIRM?

No official word is out yet, but the financial woes of the California stem cell agency are likely all but over.

According to a report late today by Tom Petruno on the Los Angeles Times website, within the next two weeks state Treasurer Bill Lockyer will try to raise up to $4 billion in a taxable bond sale that would bail out CIRM.

Petruno wrote,

"Part of the offering will be used to finance projects that don’t qualify for tax-free funding -- such as the stem-cell research measure that California voters approved in 2004."

The California stem cell agency is dependent on California bonds for its grants and operations. But bond sales dried up last year. And CIRM will run out of cash by next fall unless it receives more funding from bonds.

Petruno explained that the proposed $4 billion bond sale is unusual. He wrote,

"(State Treasurer Bill) Lockyer will use taxable bonds instead because the U.S. Treasury will pick up part of the interest cost of the securities.

"Under the Build America Bond program, states and other municipal issuers can choose to sell taxable bonds for public-works projects and have the federal government pick up 35% of the annual interest expense on the securities."

If bond funds are coming to CIRM, that could mean that it will give up its plan to market taxable state bonds privately, which would be an unusual and difficult chore.

No announcements have been made by CIRM or the treasurer, but Petruno sourced his story to a spokesman for the state treasurer's office, Tom Dresslar. We are querying the agencies concerning the Times report.

Patient Advocate Reviews CIRM

Perspectives on California's stem cell effort can vary widely. Here is a view from patient advocate Don Reed, who is regular attendee at CIRM meetings and an officer in the private stem cell lobbying group created by CIRM Chairman Robert Klein.

Some excerpts from a recent entry on his blog, stemcellbattles.com, entitled "A Year in the Life of the California Stem Cell Program:

"In the midst of all the economic gloom and doom, something shining has emerged in California: the beginning of a vastly better world."

"Look at the path that CIRM has laid down for cure: educating and supporting scientists, helping train their support staff, setting up loans for the companies that will risk so much to develop products for patients… this is something which should be shared, and imitated."

"It is not enough just to labor endlessly—everybody wants results. As (CIRM) President Alan Trounson puts it: 'I tell my colleagues here at CIRM probably at least once a week: 'We are in a hurry; we have a short time frame, and we need to get genuine cures to Californians.'"

Niche Links to CIRM Articles

Nature magazine's stem cell blog, The Niche, has a rundown and links to various pieces concerning the status of the California stem cell agency.

Monya Baker wrote,

"The leadership and governing structure of CIRM have come under a lot of criticism. Its 29-member board is politically appointed and must include patient advocates as well as high-ranking officials from the institutions most likely to receive CIRM funds. Its plans to give loans and grants to companies have been called both essential and overambitious. The agency has also been praised for taking a leadership role in drafting guidelines and for helping to maintain a U.S. pipeline of stem-cell scientists. "

The Cartography of Stem Cell Science

The global reach and aspirations of the California stem cell agency are the subject of some legitimate debate and criticism.

On one hand, the agency has severe financial problems and will run out of money by next fall unless something changes in its cash position. It has approved nearly $700 million in grants including an ambitious lab construction program, which require attentive monitoring. And CIRM is continuing to hand out tens of millions of dollars in grants. All of this with less than 40 persons on its staff, and all of which leads some to say the agency needs to stick to its knitting.

But at the same time, stem cell science is hardly confined to the borders of the Golden State. Hot stuff is happening across the nation and globally. CIRM's leadership wants to leverage its position and build scientific and financial alliances throughout the world with the goal of pushing science along a bit faster.

Out in Minnesota, William Hoffman has captured the global stem cell picture in a way that words cannot. Co-author of "The Stem Cell Dilemma," he has been charting stem cell science since 2003 on a map of the world. The changes in that picture have been dramatic. He recapped them on Friday on the Bioethics Forum.

Hoffman wrote,

"To this layman, one of the most baffling things about the (the stem cell) debate here and the reaction to President Obama’s executive order is the near total inability of some leading critics to see the 'big picture' that the maps help to illustrate."

Some stories are best told in words. Some with numbers. Hoffman has demonstrated the the global spread of stem cell science may be best told with the tools of a cartographer.

Here is a link to the World Stem Cell Map website.

Angell, Corruption and Medical Research

The former editor in chief of the New England Journal of Medicine weighed in on the “smell of corruption” in medical research earlier this year in a piece that has some implications for the California stem cell agency.

Writing in the New York Review of books on Jan. 15, Marcia Angell(see photo), now a senior lecturer at the Harvard Medical School, said,

“After much unfavorable publicity, medical schools and professional organizations are beginning to talk about controlling conflicts of interest, but so far the response has been tepid. They consistently refer to ´potential´ conflicts of interest, as though that were different from the real thing, and about disclosing and ´managing´ them, not about prohibiting them. In short, there seems to be a desire to eliminate the smell of corruption, while keeping the money. Breaking the dependence of the medical profession on the pharmaceutical industry will take more than appointing committees and other gestures. It will take a sharp break from an extremely lucrative pattern of behavior. But if the medical profession does not put an end to this corruption voluntarily, it will lose the confidence of the public, and the government (not just Senator Grassley) will step in and impose regulation. No one in medicine wants that.”

That was Angell´s conclusion after a lengthy exploration of the links between drug companies and researchers. As for CIRM, it has a raft of issues involving conflicts of interest and is now on a course that will link it ever closer to industry.

The question is whether the state agency will become the handmaiden of biotech – in effect captured by the industry. The agency should and must work with industry. But business has much different primary objectives than any state agency. Profits must come first for any business. Otherwise, they will cease to exist. In the case of CIRM, its first responsibility is to the people of California. And as we are now seeing on the national scene, the paramount interests of business have not necessarily served the people well.

Angell´s article is a well-documented look at how the people who pay the piper call the tunes. It is well worth reading along with a Feb. 26 exchange in the letters column with some of the folks identified in her piece.

(Editor´s note: We came across the Angell piece in an odd fashion. We discovered it in a pile of old boating magazines, romance novels and mystery potboilers at an informal book exchange for sailors in Mazatlan. Her article is certainly not the regular sort of reading for most of the salty dogs of the sea.)

Time Now for CIRM to Let Sunshine In

California Gov. Arnold Schwarzenegger today set a fine example of openness – one that should be emulated by the California stem cell agency.

His action follows by one day another sterling case of transparency – this one involving a member of the board of directors of the California stem cell agency, Philip Pizzo(on right), whose main job is running the Stanford School of Medicine.

Both men acted to maintain and bolster support for important societal institutions at a time when public confidence in our leaders has been sadly eroded.

It took a bit of a scandal -- disclosed by the Los Angeles Times -- to force the governor to make his move. But today, Californians can check out for the first time online the economic interests of the top state executives appointed by Schwarzenegger. They can also view the officials´ monthly travel expense reports. (The information is a public record, but has not been easily accessible previously.)

The governor put the material online after Michael Rothfield of the Times reported that several top members of his administration charged taxpayers thousands in airfare, hotel and meal costs with little oversight. Two members have since left.

In announcing the new online information, the governor said,

“Since taking office I have taken steps to make government more accountable and responsive to the people. By making the economic, gift and travel information of the senior members of my administration easily available online, we are taking unprecedented steps to open up our government to the people – yet another critical step toward more government transparency.”

On Wednesday, Pizzo announced that Stanford will be posting online “the medical- and research-related consulting activities for some 1,200 physicians and faculty affiliated with the medical school.”

Pizzo, dean of the medical school, said,

"Industry collaborations are critical to furthering research efforts and innovative patient care, but at the same time, concerns over these activities are eroding the public trust. I hope that steps to increase transparency will resonate with those we serve, educate and work with — and reinforce that trust."

The Stanford medical school has been in the forefront of moves to increase transparency in medical research. In 2006, Stanford physicians were barred from ”accepting biomedical industry gifts, including drug samples, anywhere on the medical center campus or at off-site clinical facilities where they practice,” the school says.

The California stem cell agency has promised the highest standards of openness and transparency. In some ways, it is quite open. But it is an agency that was constructed with huge built-conflicts. Its board of directors is dominated by folks from the institutions that have been the chief beneficiaries of CIRM´s largess. As of last October, 18 institutions with representatives on the board (past and present) had received $552 million in CIRM grants.

The political reality is that the structure of the agency is not going to change. Given that fact, it behooves CIRM to lay all its cards on the tables. At least that way, the public knows who stands to benefit from the billions CIRM is giving away at a rate of $24,000 an hour.

CIRM should make the statements of economic interests from its directors and top officials available online in easily searchable and downloadable databases along with their travel and other expenses.

The agency should also disclose the economic interests of its scientific grant reviewers. Although they make the de facto decisions on grants, the reviewers´ statements of interest are withheld from the public and the scientists who are the subject of their scrutiny. That is a situation that naturally generates suspicion, especially since their deliberations are conducted behind closed doors.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., wrote about the Stanford action on his organization´s blog. Simpson called for more disclosure from CIRM. In a comment to the California Stem Cell Report, Simpson said,

“Bob Klein (CIRM chairman) talks about transparency. He ought to do something about…. Working group members aren't required to file any public disclosure now and that is outrageous. If the governor can post monthly travel reports, so can the stem cell agency. Doing less means that claims of transparency are nothing more than empty rhetoric.”

CIRM is currently a bit strapped for cash, but the governor´s office has already done the hard work of setting up online templates for the disclosure statements. It would take little more to fill in the information.

Evidence of public´s current disenchantment with our leading institutions can be read and heard every day. CIRM can help to restore confidence by following the governor´s lead. CIRM will also help itself by acting in a way that demonstrates its responsiveness to concerns about its conduct and openness.

Comments on the California Stem Cell Report

Late last night, an anonymous comment was posted on this site that contained deeply, deeply offensive language concerning President Obama.

I removed the comments today within minutes of learning of them. I apologize for their appearance and profoundly regret their presence on this website. The comments had no place on this blog or in the discourse about the events in our country.

I also want to share with our readers the current state of the ¨comment¨ function on the California Stem Cell Report. A few years back, I began with un-moderated comments. But libelous and offensive anonymous postings appeared concerning one of the spouses in a marital dispute, who happened to be involved in the stem cell business. As a result, I began moderating comments.

Virtually all of the comments since then have been civil and within the bounds of reasonable discourse. A few amounted to spam. Moderation allowed me to prevent them from ever being posted.

A week or so ago, I removed moderation in hopes of stimulating additional commentary and dialogue. A couple of spam items surfaced and were removed. Then this latest ugly comment came in.

I believe it is an aberration and do not want to let the hate-mongers stifle public debate. So I am going to continue un-moderated comments, at least for the time being. My policy is to allow virtually all comments with the exception of offensive or obscene statements such as the one posted last night. I believe that robust criticism of this blog, its writer as well as others involved in California stem cell matters is to be encouraged. Libel and spam, of course, are not okay.

If you have any thoughts on all this, you can post them as comments by clicking on the word "comments" at the end of this item or you can send them to me privately at djensen@Californiastemcellreport.com.

Novocell Patents and Potential Profits

The latest developments involving Novocell, a San Diego, Ca., firm, and its stem cell patents are explored today in a piece by Terri Somers in the San Diego Union-Tribune.

She reported that the privately held firm "may have found new ways to make money from its technique for coaxing human embryonic stem cells into insulin-producing pancreatic cells." Somers recapped Novocell's patent picture and reported that the company announced on Tuesday that it "received a patent that essentially gives it control over all endoderm cells made from human embryonic stem cells."

She quoted Liz Bui, Novocell's director of intellectual property, as saying the firm hopes to collaborate with larger firms that have previously shied away from stem cell research.

Somers also noted the broad nature of the Novocell patent. She wrote:

"Many patents are for a method, or scientific process for making something, sort of like a high-tech recipe.

"The patent Novocell received is for composition, meaning it is not for how to make the endoderm cells, but the actual cells 'the product of the recipe.'"

She said that such patents have been controversial, citing the example of those held by Jamie Thomson of the University of Wisconsin. Some have argued that the patents on Thomson's work are so broad that they impede science.

CIRM Enters Battle Over Textbook Guidelines

Deciding what goes into the millions of textbooks used by California school children is a tedious and arcane task. But it is also one that is, at times, fought bitterly and intensely, albeit well away from the public gaze.

The California stem cell agency now seems ready to join that fray.

Reporter Ron Leuty of the San Francisco Business Times wrote this week:

"Backed by the state Board of Education — as well as powerful lawmakers — the California Institute for Regenerative Medicine is ready to reshape the state’s science curriculum and direct a rewrite of textbooks to include sections on stem cells."

Leuty said that the board, which deals with matters in grades kindergarten through 12, voted on March 11 to include stem cell science in the science curriculum.

(One might wonder whether it ever was excluded. But no matter.)

What the action does is set the stage for the state's Curriculum Commission to set guidelines for textbook publishers who peddle their wares for California pupils. Leuty also wrote that that the commission, with the help of CIRM, is charged with setting up a pilot stem cell program in high schools in 2011.

CIRM says it is all about jobs, tying education to training for work in the stem cell industry or related fields. But for others, it is about ideology and "truth." At least that's the way Katie Short of the Life Legal Defense Foundation of Napa, Ca., put it. She told Leuty,

"We would be for the truth being told."

Speaking as one who covered education for a couple of years (including the state Board of Education), we can testify that Short and like-minded folks (the intelligent design crowd) are likely to muster a strong presence as stem cell textbook guidelines are promulgated. It is not a battle for the faint of heart and may require that CIRM hire an outside consultant to be effective.

LA Times Column Rips CIRM as Riddled with Conflicts and Sucking Up Precious Dollars

The first sentence in the article in the Los Angeles Times, California's largest circulation newspaper (1.2 million readers), says,

"In the annals of wrongheaded things done with the best intentions, the California stem cell program has always been in a category of its own."

And that's just the beginning. Next come rife conflicts of interest, spotty public disclosure, a "persistent ethical morass" and a multiplying potential for waste. Not to mention the 2004 ballot initiative that created CIRM through a political campaign of "exceptional intellectual dishonesty," led by the man who is now chairman of the $6 billion research program, Robert Klein (see photo).

The scathing piece was written by Times columnist Michael Hiltzik for Monday's edition of the Times, which says it has 1.2 million daily, generally well-educated readers. The home page of Times website, which has more than 11 million unique visitors a month, also linked to the article.

The activities of the California stem cell agency have rarely graced the pages of the Times. So CIRM is likely to be new subject to many, if not most of its readers, making it easier for a column such as Hiltzik's to have a significant, opinion-shaping impact.

Hiltzik makes his point of view abundantly clear. He writes that CIRM "threatens to suck up precious fiscal resources of a state with none to spare and is rife with conflicts of interest."

He continues,

"The institute is tangled in a persistent ethical morass. From the start, its safeguards against conflicts of interest by members of its 29-person governing board were sketchy, and provisions for vigorous debate over its goals and methods were nil."

Hiltzik says CIRM director John Reed should have been ousted from the board for attempting to overturn rejection of a grant to the organization he heads, the Burnham Institute. Hiltzik quotes figures from the California Stem Cell Report that show 18 institutions with representatives on the board (past and present) have received $552 million in CIRM grants as of last October.

Hiltzik writes,

"Lacking any truly independent members, the board is dominated by Klein and devoid of 'genuine debate,' observes UC Berkeley Law professor Kenneth Taymor, who spent months studying the body. Indeed, reading transcripts of the board's sessions, one sometimes gets the impression that the only vigorous debate among the members involves which historical figure Klein more resembles, Albert Schweitzer or Mahatma Gandhi."

Hiltzik also discusses the ongoing shift at CIRM towards product development. He quotes Arnold Kriegstein of UC San Francisco as saying he fears the move is motived by a "desire to come up with a real clinical triumph they could claim credit for. I'm concerned that in the rush to get there they may be spending a fair amount of funds on projects that are just not ready yet."

There is much more, including a defense of CIRM's strategy by its chief scientific officer Marie Csete.

Hiltzik's observations cannot be written off as the frothings of a journalistic lightweight. The author of three nonfiction books, he shared a Pulitzer Prize in 1999 for reporting on corruption in the entertainment industry. In 2004, he won a Gerald Loeb Award, one of the top national honors in financial journalism, for his columns. Earlier this month, he was a co-winner of another national business reporting prize for a Los Angeles Times series called "Shedding Risk."

It is safe to say that Hiltzik's latest column will not be warmly received by CIRM. It will add fuel to the state's Little Hoover Commission's investigation of CIRM. It will feed legislative efforts to ensure that Californians have affordable access to stem cell therapies that result from CIRM-funded research. And it will hamper both Klein's efforts to privately market state bonds to bail out CIRM and his lobbying efforts for a $10 billion federal, biotech stimulus package.

(Editor's note: What do you think about the Hiltzik column? You can make your comments by clicking on the word "comment" below. The comments are unmoderated and can be totally anonymous. Google, which houses this blog, makes it impossible to identify the authors in such a case. Or you can send your comments to djensen@californiastemcellreport.com for posting.)

Prieto Dismayed by Bee Editorial on CIRM

Francisco Prieto is a Sacramento area physician who serves on the board of directors of the California stem cell agency.

Today he took on his hometown newspaper, The Bee, in connection with its editorial on March 18 deploring the election of two vice chairmen to the board of directors.

In an op-ed piece in the newspaper, Prieto said he was surprised to see it endorsing a Republican from Southern California (Duane Roth) for any statewide position.

Prieto wrote,

"Given The Bee's more usual political inclinations, it seems odd that you would suggest one candidate is superior simply because he is sufficiently well off to decline the salary this position normally carries. No employer has the right to insist an employee work for nothing, and that certainly includes the state of California. It was outrageous to imply that the superior candidate for any position must be the one wealthy enough to forgo a salary.

"Does The Bee really believe that those Californians – most of us – who need our salaries to support our families do not have the right to participate on California boards and commissions? That is a remarkably elitist and anti-democratic point of view.

"I was taken aback by your closing lines: 'the ICOC(the CIRM board) is neither independent, nor a group of citizens …' I can understand questioning our motives and integrity – that comes with the territory. But isn't revoking our citizenship a bit harsh?"

Science Magazine on the State of CIRM

The California stem cell agency "is scaling back, rethinking its priorities and looking at how to mesh its activities with those that will soon be funded by the National Institutes of Health," according to Science magazine.

Writing in the March 27 edition(subscription required), Constance Holden provided an overview of the current status of the beleaguered $3 billion agency. It will run out of money next fall unless it can privately market California state bonds.

Holden characterized as "bold" the bond sale effort by CIRM Chairman Robert Klein, whom she described as "perennially optimistic."

Holden also wrote that John Robson, CIRM vice president for operations, said:

"...(O)ther CIRM officials 'are not as optimistic as Bob' about finding buyers, but they should be able to carry through their modified plans if sales bring in at least $200 million. Even then, he says, grants for basic research will have to be reduced, from $60 million to $20 million, until at least the end of 2010."

Holden also discussed the $210 million disease team grant program, whose deadline for applications was Thursday.

Holden wrote:

"Some scientists worry that the emphasis on applications is coming too soon. 'I am concerned that some of this rush to the clinic is premature,' says Arnold Kriegstein of the University of California, San Francisco. 'My concern is … they’re taking risks with potentially very little gain.'"

The headline on the Science magazine article said, "CIRM Close-Hauled, Seeks Bonds to Sustain Headway."

For those not familiar with sailing terminology, "close-hauled" refers to a point of sail upwind or "to weather." It is often the most uncomfortable point of sail with the boat pounding into large waves and heeled over so far that the crew must hang on constantly.

The reference also brings to mind another saying from the world of the sea, "Gentlemen never sail to weather." Our comment: Sometimes they don't have a choice.

Luring CIRM Bond Buyers: What Cost to the State?

What sort of interest rates will the California stem cell agency have to offer to privately sell taxable state bonds to fill its research coffers?

They could be a bit higher than the 5.5 percent or so that CIRM Chairman Robert Klein has discussed publicly.

That's because of the juicy rates provided to investors this week on tax-exempt California general obligation bonds.

Here is what Liam Denning wrote today in the "Heard on the Street" column in the Wall Street Journal.

"California's issue was priced for success, at an effective coupon of 6.1% on its 30-year bonds. For Californians, that equates to a taxable yield of more than 9% -- a spread of more than 550 basis points over equivalent Treasurys.

"Little wonder individual investors scooped up half the issuance, helped along by a high-profile advertising campaign. But the risk-reward balance was the main driver. California may be just a single-A credit, but in muni-land that still implies ultra-low default rates and a call over the state's considerable tax-raising powers. The prospect of tens of billions of federal stimulus dollars provides further comfort -- and probably precludes the need for more formal intervention.

"Somewhat perversely, the very prospect of higher taxes to refill state coffers makes munis more attractive to individuals, particularly the growing number of retirees burned by the stock market crash."

Of course, the private sale of the bonds is a different matter than the recent bond sale. But it is not all clear that potential purchasers of CIRM bonds would be willing to accept less than what was provided this week.

Higher interest rates are not a trivial matter for the state. CIRM is generally referred to as a $3 billion agency, which refers to its bonding and funding capacity. However, during the Prop. 71 campaign, estimates of the total cost, including interest, doubled that to $6 billion. That figure assumed the use of tax-exempt bonds. Using taxable bonds could add another $700 million to the $6 billion, according to one estimate.

None of the bonds that have been issued thus far for CIRM are tax-exempt. The whole issue of what was promised during the campaign and Bob Klein's statements on tax-exempt bonds led to something of a flap a few years ago involving allegations of deceit. You can read about it here.

Whatever the cost, CIRM does not appear to have much of a choice other than to privately market the bonds. The alternatives appear to be a shut-down or severely curtailing its operations.

Big California Bond Sale Augurs Well For CIRM

The state of California sold a whopping $6.4 billion in bonds today, a financial move that should help to give a positive spin to efforts to sell state bonds privately to finance the state's beleaguered stem cell research agency.

California was originally scheduled to sell $4 billion in general obligation bonds, but Bloomberg News' Jeremy Cooke reported that dealers boosted the sale by 64 percent and completed it a day earlier than expected.

Individual investors snapped up $3.2 billion in bonds before they were offered to institutional investors.

Interest rates were about 0.2 percent higher than similar securities and ranged from 3.2 percent to 6.1 percent, Cooke reported.

The high interest rates made the bonds attractive but will cost the state more.

CIRM plans to use taxable state bonds, as opposed to the tax-exempt bonds that were sold today. That means they will have to offer higher interest rates than those offered today.

The stem cell agency relies on state bonds for its funding. It will run out of cash next fall unless it can successfully market bonds privately. The state has told the agency it has a backlog of needs and CIRM's are well down the list.