CIRM Trio Says Alquist Legislation Creates Unnecessary Jeopardy

Three top leaders of the California stem cell agency today said new legislation aimed at making it more accountable and ensuring affordable access to taxpayer-funded therapies would instead jeopardize the agency's accomplishments.

In a word, they said, the measure is unnecessary.

Their opposition was delivered in a five-page letter to Democratic state Sen. Elaine Kontominas Alquist of San Jose, chair of the Senate Health Committee. She introduced the legislation earlier this week, declaring that CIRM was “essentially accountable to no one.”

The opposition letter was signed by CIRM Chairman Robert Klein, a Palo Alto real estate investment banker, and vice chairmen Duane Roth, a San Diego area businessman, and Art Torres, formerly head of the state Democratic Party and retired legislator.

They noted that the full, 29-member CIRM board of directors had not yet taken a position on the legislation. But they said in a letter on CIRM stationery that they wanted to “express our individual concerns regarding the bill’s potential economic impact on the state’s new tax revenues and new jobs created by CIRM.”  They declared,

“More importantly, we are concerned about the bill’s potential impact on finding treatments and cures for diseases and traumas that Californians struggle with everyday.”

Perhaps the key section of the letter, which was highlighted in boldface, said,

“In what is a model for all of state government, CIRM operates within a 6 percent cap on expenses – efficiency unrivaled even in the private sector. CIRM has placed California at the forefront of international breakthroughs in medicine without any net state general fund appropriations or debt service expenditures through December 2009. CIRM continues to serve Californians by advancing research and therapies, creating thousands of jobs, fostering the growth of the biotech industry, and generating over $100 million in new state revenue.”

The CIRM trio did not even endorse the legislation's removal of the 50-person cap on CIRM staff, which agency officials have said they sorely need. The three acknowledged that the restriction "poses challenges.”

But they said the board is “actively exploring other alternatives to address this and remains committed to the 6 percent cap on administrative expenses.” The letter did not elaborate on those alternatives and none have been discussed publicly. The cap was imposed by voters when they approved Prop. 71, which Klein often says he wrote.

The letter described CIRM as “California's most accountable state agency.” It said CIRM has given away more than $1 billion, mostly for research grants, and generated “tens of thousands of job years.”

The letter said that CIRM is already engaged in some of the activities that the legislation would mandate. That includes planning for changes at the top in December when Klein says he is going to leave, as well as planning for the time when the agency's remaining $2 billion will run out. So far, CIRM has handed out $1 billion in less than three years. The money comes from cash that the state borrows via bonds and flows directly to CIRM, untouched by the normal controls of the governor or legislature.

The letter said that the CIRM directors'  Legislative Subcommittee, chaired by Klein and including Roth and Torres, will meet soon to consider Alquist's legislation, SB1064.  The 10-member panel will make recommendations to the full board, which could take a position as early as its March 11 meeting in Sacramento.

Interested parties and members of the public will have a chance to personally address the board then. Individuals can also write or email the members of the board concerning the legislation.

The full letter, which is not on the CIRM Web site, can be found here.

State Lawmaker Says CIRM 'Accountable to No One'

A leading California state senator said today that the state's $3 billion stem cell agency is “essentially accountable to no one” and declared that more accountability and transparency are needed.

Sen. Elaine Kontominas Alquist, D-San Jose and chair of the Senate Health Committee, made the statement in a news release touting her legislation to help ensure that Californians receive a “fair return” on their investment, which will total $6 billion with interest.

Alquist said,

“I was an early supporter of California’s groundbreaking stem cell initiative, and know that our public investment on behalf of the State of California will lead to new frontiers of treatment to heal people with chronic diseases.

“However, CIRM is essentially accountable to no one given the way the initiative was written. Californians entered into a partnership with CIRM when they approved Proposition 71 in 2004, a partnership that was meant to be mutually beneficial. By accepting public bond dollars, CIRM also accepted public accountability, public transparency, and a public return on their investment.”

She continued,

“If a cure or life-saving medicine is discovered using taxpayer dollars, we must be sure that all Californians benefit from that research. Californians are the shareholders of this venture. In this economic environment, the Legislature has a duty to ensure that every public dollar is accounted for and spent wisely."

The news release highlighted three key provisions of her bill, SB1064:

• Ensuring Californians have affordable access to drugs developed by Prop 71 funds.
• Ensuring intellectual property revenue made from Prop 71 funded grants and loans return to the state’s General Fund.
• Requiring the Citizen’s Financial Accountability Oversight Committee and the Controller’s Office to conduct performance audits.

The bill would also lift the 50-person cap on CIRM staff, a change that the agency dearly desires. However, Alquist did not mention that proposal in the news release. (We should note that the cap is redundant because Prop. 71 also imposes a limit on administrative expenses.)

We asked CIRM on Wednesday for a response to the legislation, but nothing has been forthcoming. We will carry the agency's comments when we receive them.

For more details on the measure, see the “stem cell agency reform” item.

California Lawmakers to Weigh Stem Cell Agency Reform

Just a few weeks after a key state panel recommended more accountability and transparency at the $3 billion California stem cell agency, a leading California lawmaker has proposed far-reaching changes in  the five-year-old organization.

The measure – SB1064 by Sen. Elaine Alquist, D-San Jose – would require performance audits and thorough financial and leadership transition planning at CIRM. It would alter the selection of CIRM's top leadership, ban pre-judging grant proposals and funnel any royalty revenue away from CIRM.

The proposal may well avoid the dismal fate of past legislative efforts involving CIRM. Gov. Arnold Schwarzenegger vetoed those bills after stiff opposition from the agency. However, the measure by Alquist(left), chair of the Senate Health Committee, contains a large carrot for CIRM: removal of the 50-person cap on the size of the organization. The cap was written into Prop. 71 in an effort to make it more appealing to voters. But now CIRM says the restriction could endanger the quality of work at the agency and wants it changed.

CIRM had no immediate reaction to the legislation. It said a formal response was being prepared and would be available later today or tomorrow. Alquist's office also had no immediate statement available.

Asked for comment, John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., said,

“Sen. Alquist's bill makes sensible adjustments to the California Stem Cell Research and Cures Act including requiring transition plans for leadership changes and the end of the current bond financing. The ICOC (the CIRM board) would be wise to embrace it. I hope I'm wrong, but I predict the wagons will be circled and this will once again be portrayed as threat to CIRM's very existence.”

The measure embodies many of the recommendations of the Little Hoover Commission, the state's good government agency. The Citizens Financial Accountability and Oversight Committee (CFAOC), a sister to CIRM, last month recommended adoption of some of the Hoover suggestions, declaring that the agency needed to be more open to the public. (Both CIRM and the CFAOC were created by Prop. 71 in 2004). The CFAOC action also appeared to have triggered two newspaper editorials and a column in the Los Angeles Times deploring CIRM's lack of transparency and accountability.

Among other things, the legislation would:

• Require grant recipients and their licensees to submit to CIRM a plan to assure affordable access to therapies developed using CIRM funding.
• Require that all revenues resulting from CIRM's intellectual policy agreements go into the state's general coffers instead of possibly into CIRM's treasury.
• Require development of a financial transition plan to be submitted to the governor and legislature. (CIRM has already committed one-third of its $3 billion in bond funding with another $300 million or so expected to be committed by the end of this year.)
• Require the state controller, the state's top fiscal officer, to commission annual, independent performance audits of CIRM at the agency's expense.
• Change the duties of the chair and president of CIRM, specifying that the chair does not engage in day-to-day management. The CIRM board would be given authority to decide the chair's responsibilities.
• Remove nomination of candidates for chair from statewide constitutional officers, such as the governor.
• Require CIRM to formulate a succession plan to deal with changes in its leadership. (The current chairman, Robert Klein, says he plans to leave his post in December.)
• Reduce the terms of the CIRM chair and vice chair from six to four years.
• Require all grant applications to go through CIRM's grant review group, which would end a pre-application triage that CIRM has been using.
• Require that meeting minutes include voting records of each member of the CIRM board.

The Alquist bill is likely to be changed as it wends its way through the legislature. It requires a 70 percent vote of both houses, a rare and difficult requirement for any piece of legislation.

We will carry CIRM's response and statements from Alquist when we receive them.

Attention Scientists: CIRM Is Changing Grant Rules

With little notice, the California stem cell agency is moving quietly to make significant changes that are likely to affect hundreds of scientists seeking a share in the $3 billion that the agency is handing out.

The matter comes under the innocuous heading of “submitting supplemental materials.” But just how successfully a competitor exploits the new procedures could have a major impact on whether his or her grant wins approval from the de facto decision makers, the CIRM grant review group.

The changes are scheduled to come up next Monday at a meeting in San Francisco of the grant group, the sessions of which are almost never attended by members of the public. The reason for the lack of attendance is that the sessions are devoted almost entirely to closed-door deliberations of applications.

However, in the case of the supplemental material matter, by law it must be considered in an open, public session. Interested parties may comment and make suggestions for changes. Although the agenda for the meeting makes no mention of the opportunity, any person or business can also send comments to the grants group in advance of the meeting and ask them to be considered.

The one-page justification for the grant application change and its provisions appears to have been posted last Thursday night (Feb. 11, 2010) on the CIRM Web site. However, no notice of the specific meeting or the proposed changes is provided on the home page of the CIRM Web site. That's in keeping with the standard practice of the agency, which tucks away notices on its Web site of its public meetings, even when they involve hundreds of millions of dollars in taxpayer funds.

This case and an earlier transparency failure involving the January CIRM board meeting followed a call last month by a key state panel for more openness on the part of the agency. The panel's recommendations appeared to have triggered two newspaper editorials and a separate column in the Los Angeles Times expressing deep concern about CIRM's lack of accountability. One editorial likened the agency to a “private fiefdom.”

As for the supplemental material plan itself, CIRM proposes a limited opportunity both in time and space for researchers to beef up their grant bids. The general idea is to provide an opportunity for submission of “critical new information” that has come up since the application was filed. It would include citations to journal publications and research “accepted for publication” but not yet published. Also to be permitted would be a single page of “preliminary data” related to the proposed project along with two letters of support for “new collaborations.”

The entire CIRM proposal can be found here.

No Ten Year 'Sunset' on CIRM Horizon

California's unprecedented, $3 billion stem cell research program is widely perceived as a 10-year effort, but, like much conventional wisdom, that view is simply wrong.

The agency, created as the result of a 2004 political campaign, theoretically could continue to function for eons. The only relatively immediate, “life-and-death” question facing CIRM involves the cash needed to continue its grant and loan programs, which have already pumped out $1 billion to California researchers.

The fiscal hitch comes from Prop. 71, the initiative that spawned the California Institute for Regenerative Medicine. The measure provided for only $3 billion in state bond funding. When that borrowed money runs out, CIRM will have to find more -- if it wants to continue operations. But CIRM does not, in fact, face a mandatory “sunset” provision that will bring down the curtain on its offices near the San Francisco Giants baseball park.

Mainstream news organizations have continued, nontheless, to describe the state's stem cell research as a 10-year effort, including at least two reports in recent months.

The error seems to stem from the 2004 campaign, when it was in the interest of Prop. 71 supporters to allow voters to believe that they were not voting to create a big-bucks bureaucracy that would exist in perpetuity. The campaign was run by Bob Klein, who wrote much of the ballot measure and who is now chairman of CIRM.

News stories at the time commonly described the measure as having a 10-year limit. Those stories went uncorrected, presumably because the Prop. 71 campaign did not want to make an issue of it. In fact, the Prop. 71 campaign Web site carried this statement:

“Funds will be allocated incrementally over 10 years (~$295 million per year) for California-based stem cell research at leading universities and research institutions.”

The campaign Web site has now vanished into cyberspace and its domain name is for sale. But the campaign document can be found on the Web site of the world's largest organization of stem cell researchers, the International Society for Stem Cell Research. The society reports to this day that California is engaged in a 10-year program.

Last week, we discussed CIRM's life expectancy with James Harrison, the agency's outside attorney, at a meeting of the CIRM board at the Hotel Whitcomb in San Francisco. He assured us that there is no “sunset” looming for CIRM.

Later we asked him to provide his perspective via email, the full text of which is in a separate item below. Harrison is with Remcho, Johansen & Purcell of San Leandro, Ca., and is one of the authors of Prop. 71. He said,

"We wrote Prop. 71 to protect the voters' mandate against ideologically motivated litigation that could deny Californians the opportunity to have ten full years of medical and scientific advances for therapies. With ten full years of funding, the public will have an opportunity to evaluate CIRM's performance and the value of Prop. 71 to California's patients and the health care budget. At the end of this period, CIRM expects to be able to demonstrate an extremely persuasive performance.”

Harrison continued,

"Numerous (media) interviews were given to explain how Prop. 71 would adjust for delay by extending the effective time frame. Similarly, many interviews focused on the ability to reduce funding in a particular years if the scientific quality dropped in that year, with the funds saved to be used in later years, perhaps adding a year or two to the program term."

The California voter pamphlet, which goes to all registered voters statewide, also said in 2004,

“The measure states its intent, but does not require in statute, that the bonds be sold during a ten-year period.”

The pamphlet, however, came during both a presidential election year and a California election that was loaded with ballot measures. Both voters and reporters paid scant attention to it.

As for the language in the “intent” section of the measure, it says that Prop. 71 would

“Authorize an average of $295 million per year in bonds over a 10-year period to fund stem cell research and dedicated facilities for scientists at California’s universities and other advanced medical research facilities throughout the state.”

As far as we can tell, that is the only reference in the 10,000-word measure to a 10-year limit.

So what does all this mean? The intent language and the campaign's action/inaction could encourage a cantankerous attorney to make legal mischief by arguing in court that CIRM must wind up its affairs within the decade specified. We suspect such an effort would fail, but it would waste time and money at CIRM.

More importantly, the matter touches on the agency's credibility, which is likely to be examined as part of its bid for future funding. CIRM has already embarked on a course (creation of a communications task force and its disease team grants) to gin up support for more cash. If CIRM's credibility is suspect, some potential benefactors – be they lawmakers or philanthropists – may view the agency's new pitch with skepticism.

Klein already has been labeled as less than straightforward in connection with campaign claims. In one case involving allegations of deceit, the San Francisco Chronicle reported that Klein failed to disclose during the campaign negative financial details to the tune of $1 billion. Klein did not respond publicly to the 2005 article.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., today put CIRM's life expectancy in the broader context of the California's budget crisis.  Writing on his organization's blog, he said that when CIRM asks for more public cash,

"...(It) will be necessary to ask whether, after committing $6 billion, counting interest on taxpayer money, CIRM deserves more.  The question will be: Given California's other challenges, can it afford more money for stem cell research?  I don't know what the answer will be then.  If the choice were being made today, my answer would be definitely not."

(You can read recent news stories here and here that contain a reference to a 10-year program. You can read campaign news stories that contain a reference to 10 years here, here and here. The item below carries the verbatim text of what Harrison sent the California Stem Cell Report concerning the life expectancy of CIRM.)

Statement on CIRM's Life Span From the Agency's Counsel

Here is the text of the statement to the California Stem Cell Report from James Harrison of Remcho, Johansen &  Purcell of San Leandro, Ca., CIRM's outside counsel, on the life expectancy of the stem cell agency. 

"We wrote Prop. 71 to protect the voters' mandate against ideologically motivated litigation that could deny Californians the opportunity to have ten full years of medical and scientific advances for therapies. With ten full years of funding, the public will have an opportunity to evaluate CIRM's performance and the value of Prop. 71 to California's patients and the health care budget. At the end of this period, CIRM expects to be able to demonstrate an extremely persuasive performance.

"To permit this evaluation to occur and to protect against delays arising from events beyond the agency's control (such as the litigation, which delayed the program for two and one half years), the measure was drafted to provide some flexibility. Thus, the measure sets forth limits on the percentage of funds that the agency can commit over the first 10 years of grant making (section 125290.70(a)(1)(B)), but permits funds that are not allocated in a particular year to be carried over to the following years. Likewise, the bond act authorizes the issuance of $350 million per year in bonds, but permits any remaining amount to be carried over into subsequent years. (Section 125291.45(b).)

"To date, CIRM has committed approximately one billion and expects to commit the remainder over the course of the next 7 years, which is consistent with the ten year time frame, as adjusted by the delay caused by the litigation. Of course, if there are other delays, such as federal regulatory roadblocks or other events beyond CIRM's control, this time frame could be extended.

"The loan program could also extend this time frame. To extent that CIRM recovers money from the loan program, the funds will be used to make new grants and loans to help successful proofs of concept reach patients, thereby providing the voters with more research funding than they've paid for.

"Throughout the campaign, the proponents of Prop. 71 explained that it was their intent for the funds to be committed over a period of ten years to permit the voters to evaluate the agency's performance, but they noted that if there were delays, the measure was designed to permit ten full years of funding as a basis for evaluating the value of Prop. 71.

"Numerous interviews were given to explain how Prop. 71 would adjust for delay by extending the effective time frame. Similarly, many interviews focused on the ability to reduce funding in a particular years if the scientific quality dropped in that year, with the funds saved to be used in later years, perhaps adding a year or two to the program term."

Eugene Washington to Join CIRM Board

An academic executive who was a key figure in developing UC San Francisco's first-ever strategic plan is scheduled to become the newest member of the board of directors of the $3 billion California stem cell agency.

He is A. Eugene Washington, who became dean of the UCLA School of Medicine this month. Prior to assuming the job, he was executive vice chancellor, provost and professor of gynecology, epidemiology and health policy at UCSF. In 2005, he co-chaired the development of UCSF's first campus-wide strategic plan.

Mona Gable profiled Washington in a piece last month in UCLA Today. She quoted Nancy Adler, vice chair of the UCSF Department of Psychiatry and director of the Center for Health and Community, as saying,

“He has a capacity to see things in innovative ways and to get people to work together to do things. He’s really a consensus builder. Sometimes that can be waffly, but his capacity to have a strong vision and bring people along to share in it, rather than impose it on them, is what characterizes him.”

As executive vice chancellor, he oversaw areas dealing with conflicts of interest, industry contracting and information technology in the UCSF office of research. That experience may serve him well given CIRM's enormous reliance on outside contracting and its ongoing issues with its grant management system.

Washington's appointment has not been formally announced, as far as we can tell, although it was discussed at last week's CIRM board meeting. His predecessor, Gerald Levey, the former UCLA dean of medicine, has retired. However, Levey, who has been on the CIRM board since its first meeting, will be serving as Washington's alternate on the 29-member CIRM board. Given that situation, it is unclear whether Washington will be in regular attendance at CIRM.

Southern California Newspaper Calls for Greater Transparency at CIRM

Another negative newspaper editorial popped up this week concerning the California stem cell agency. The piece called for more accountability and openness on the part of $3 billion research effort. And, the editorial said, if the agency goes to court to fight reforms, lawmakers should place the proposals on a statewide ballot.

The article in the Riverside Press Enterprise cited recommendations from the Little Hoover Commission, the state's good government agency, and the Citizens Financial Accountability and Oversight Committee, a sister agency to CIRM. Most recently, the citizens committee last week called for some reforms, a move that triggered a less than favorable column – for CIRM – in the Los Angeles Times, the state's largest paper, and a harsh editorial in the San Diego Union-Tribune.

The Riverside editorial said,

“California's stem cell research agency is not a private fiefdom, but a public entity answerable to taxpayers. Legislators should follow the recommendations of a state watchdog, and impose rules that would bring accountability and openness to an agency spending $3 billion of public money.

“Those steps should start with restructuring the agency's governing board to provide more independence, reduce conflicts of interest and hold members responsible for their actions. And the Legislature should oblige the agency to make decisions more transparently when awarding research grants.”

The piece continued,

“...(N)ot surprisingly, the institute has been dogged by widespread suspicion of conflicts of interest. The agency says that board members abstain from voting on matters that affect them. But the need for frequent recusals suggests an inherent structural flaw in the board,

“How the agency disburses money is largely hidden from public view, as well. The institute only identifies those grant applicants who collect money. But publicizing all the applicants, not just the successful ones, would protect against self-interest or favoritism in funding decisions. Connecticut's stem cell program follows that practice, and so should California's.

“The stem cell institute claims that most of those reforms would require a new ballot measure, but that argument is suspect. The measure allows the Legislature to make changes that further the intent of Prop. 71. Steps that provide greater public trust and protect against insider dealing surely further the agency's mission -- not to mention the public interest.

“And if the agency goes to court to fight such reforms, the Legislature should simply put them on the ballot.”

CIRM Financially Secure Into Summer 2011

SAN FRANCISCO – Directors of the California stem cell agency today heard some good financial news – $55 million worth – that will keep them out woods through the summer of 2011.

John Robson, CIRM's vice president for operations, reported that the agency has enough cash on hand to pay for its grants and operations into the first quarter of the 2010-11 fiscal year. Previously, he had predicted that money would run out around June of 2011.

Robson explained that much of the additional cash was discovered as a result of closer accounting of the results of a state bond sale in spring 2009. Additional cash became available because of delays in completion of four stem cell labs that are partially funded by CIRM. He also said more accurate financial information is being generated by a new grants management system.

CIRM relies on state bonds for its funding. Presumably it will receive another jolt of cash in the next 18 months as the result of additional bond sales.

Robson additionally reported that the Buck Institute, which has not been able to raise matching funds for its $21 million CIRM lab grant, has decided to begin construction regardless. Robson said that if Buck does not receive $15 million in matching funds from federal stimulus cash or philanthropy, it has decided to take on additional debt for the project.

CIRM Directors Change Big Biotech Loan Program

SAN FRANCISCO – Directors of the California stem cell agency tonight approved changes in the terms of its $500 million biotech loan program with little discussion and no dissent.

Approved were the guidelines that can be found here. Elona Baum, CIRM general counsel, highlighted some of the changes from the previous loan terms. They included lowering the minimum size of a loan below $3 million under some circumstances, designating the default interest rate as LIBOR plus 2 percent and compounding interest instead of using simple interest.

The changes also included new terms for use of warrants as part of the loan process and acceleration of loan payments in the event of a change of control, at CIRM's discretion. Also approved were extensions of loans beyond five years up to 10, with payment of 25 percent of accrued interest and an increased interest rate each year. Loans could be extended beyond 10 years with approval of the directors' Finance Subcommittee.

No biotech businesses or members of the public commented on the changes. The loan terms are guidelines. CIRM staff is preparing a final Loan Administration Policy.

Also approved by CIRM directors were:

Initiation of a $40 million grant round for “tools and technology”

Regulations dealing with CIRM research standards

Creation of a directors Scientific Issues Subcommittee, but no members were named

Put off until March was a proposal for CIRM to begin to fund at least part of clinical trials. No details were available from CIRM.

The CIRM board briefly discussed last week's meeting of a key state panel that urged it to be more open, transparent and accountable. Among other things, the Citizens Financial Accountability Oversight Committee recommended that CIRM post online the statements of economic interest and travel expense claims of its board members and top management. Some members of the CIRM board said the committee's recommendations were not based on factual information.

The board also discussed a scathing San Diego Union-Tribune editorial this morning and generally expressed a desire to be able to respond quickly to negative articles. Some board members also expressed dismay that they had not been given a copy of the editorial early in the day. Duane Roth, a San Diego businessman and a CIRM director, has written a letter in response to the San Diego paper that he said he expected to see published this week.

(Editor's note: An earlier version of this item did not contain the sentence concerning board members dismay about not receiving a copy of the editorial earlier.)

Public Can Participate Today in CIRM Board Meeting at Locations in San Francisco, San Diego and Los Angeles

Biotech executives, researchers and the public can participate in today's meeting of the board of directors of the California stem cell agency at locations in San Francisco, Los Angeles and San Diego.

It may be the first time that three such widespread locations have been available around the state for a CIRM board meeting. The sites are the Hotel Whitcomb in San Francisco(where the meeting is based), the Lansing Foundation in Los Angeles and the Salk Institute in La Jolla in the San Diego area.

Interested parties can listen in as well on the meeting today and tomorrow via the Internet. However that connection is one-way only. It does not provide for comments from the public.

If you are interested in the sites in San Diego and Los Angeles, check in advance with the Lansing Foundation and Salk to be sure that you know more specifically where the teleconference connection is located.

Here are the procedures for using the Internet. Today's broadcast begins at 4:30 p.m. PST. Listeners should go this Website http://65.197.1.15/att/confcast and use conference ID# 141973. The broadcast Thursday begins at 8:30 a.m. PST. Use http://65.197.1.15/att/confcast and conference ID# 141977.

Scathing Commentary on CIRM from San Diego Union-Tribune

The San Diego Union-Tribune today blistered the California stem cell agency in an editorial calling for greater transparency and a "much less blithe attitude about conflicts of interest."

The editorial carried the headline: "Stem-cell shenanigans / Lawmakers should force state institute to shape up." The San Diego paper said,

"This reeks. It increasingly appears as if the Legislature needs to save CIRM from itself. The institute’s good work does not excuse its machinations."

The Union-Tribune, whose circulation area includes one of the nation's hotbeds of biotech, said that it supported Prop. 71, the measure that created the stem cell agency in 2004, and has backed the agency since then .

The newspaper continued,

"Nevertheless, a June 2009 report by the Little Hoover Commission, a state watchdog group, made a strong and convincing case that CIRM had fundamental conflict-of-interest problems. Those overseeing CIRM often also won grants from the agency.

"Dismayingly, CIRM dismissed the criticism out of hand, which only raised more eyebrows. This is not how a public agency is supposed to act when legitimate ethical concerns are raised by a respected public watchdog.

"Now, however, the Legislature has the opportunity to compel CIRM to take these concerns seriously. Institute officials say they are hamstrung by a provision in Proposition 71 that puts a 50-employee limit on CIRM and are asking for a change in state law.

"Lawmakers must do so only if the legislation also includes specific provisions requiring much more transparency in how management and grant decisions are made and a much less blithe attitude about conflicts of interest."

The Latest on Changes in CIRM's Biotech Loan Program

CIRM today reported another change in what is to be expected concerning alterations in the $500 million biotech loan program at tomorrow's and Thursday's meetings of its board of directors.

In an email, Don Gibbons, CIRM's chief communications officer, said,

“There is a bit of change again in the agenda. We decided that we needed the loan term guidelines for the Early Translational RFA and that the phone meeting of the board could not happen prior to posting that RFA. So the original agenda item has been split in two, the actual amendments to the loan administration policy will occur at a later meeting, but the term guidelines will be up for approval as related to the early translational RFA.”

Advisory

The link in the "Fecundity" item today was faulty. It has now been fixed.

Fecundity, Stem Cells and the Dark Side of Prop. 71

Los Angeles Times columnist Michael Hiltzik has provided a bit of a filip to his look Monday at the California stem cell agency.

It came in the form of an entry in his blog entitled “Of stem cells and administrative arrogance.”

Among other things, he said Prop. 71, which created California's $3 billion research effort, was “too specific about how the program would be managed and how it would spend its money -- embryonic stem cell research was placed front and center at a time when that line of research was so, well, embryonic that no one could tell how fecund it might be.”

Hiltzik also said,

“Prop. 71 is an excellent illustration of how the state's initiative process can lead to doing the wrong thing with the right intentions. Now that many other research vectors are proving more interesting, the California Institute for Regenerative Medicine is at a crossroads, only five years after it was launched. Its latest major round of grants included some that had little to do with embryonic stem cells; it's moving away from basic science grants toward lending to commercial firms; its 10-year sunset deadline is fast approaching, with no one sure whether its lifespan should or can be extended; and real and potential conflicts of interest involving its board members and grant applicants continue to exist.”

“Now,” he said, “even Prop. 71 itself is in the program's way.”

A footnote on the sunset comment: The organization itself does not terminate after 10 years. Rather it loses its ability to issue state bonds.

(Editor's note posted Feb. 8, 2010: Section 3 of Prop. 71 states that the intent of the measure -- and "intent" is the key word -- is to

"Authorize an average of $295 million per year in bonds over a 10-year period to fund stem cell research and dedicated facilities for scientists at California’s universities and other advanced medical research facilities throughout the state."

(The outside attorney for the board says there is no legal time limit on the board's bonding abilities, just the total amount of the bonds, $3 billion. We will soon post an item discussing at more length the misperceptions about CIRM's life span.)

CIRM Delays Action on Clinical Trials, Biotech Loan Changes

The California stem cell agency today said its directors would put off until their March meeting a discussion of a proposed foray into financing of clinical trials.

CIRM also said that directors would not vote this week on changes in its $500 million biotech loan program. Instead they are expected to act later on the proposal during a special telephonic meeting.

Both topics are on the agenda for this week's meeting in San Francisco, which begins on Wednesday and continues on Thursday.

In an email, Don Gibbons, CIRM's chief communications officer, said, “Chill on the (agenda) documents. The clinical RFA discussion is being put off until the March board meeting and the loan program vote will be at a special telephonic board meeting after everyone has had a chance to review the minor changes made by the finance subcommittee. Both these agenda alterations have been in the works for a few days, I just needed to verify them.”

Earlier posts (here and here) on the California Stem Cell Report have noted that CIRM had not posted an explanation of or a justification for the loan changes. CIRM also has not laid out just what is being proposed in the clinical trial venture. All of which makes it quite difficult for researchers, biotech businesses and the public to offer any sort of well-considered comment prior to board action.

The proposed loan guidelines, however, were posted today, but still missing is an explanation of why they are needed or exactly how the changes departed from the original plan.

Also posted today, under the topic of membership of a directors Scientific Issues Subcommittee, was a 12-page report on the prescreening process in use at the agency for some grant rounds. The report included a survey of 117 applicants.

The report said, in part, that “the results suggest that applicants, PreApp (preapplication) reviewers and GWG (the scientific grant review group) reviewers favor this process. The process has created an opportunity for many applicants to compete that have not previously applied to CIRM and a significant number of these have succeeded in acquiring a grant. The process allowed us to consider more proposals within a single review cycle than would have been possible using conventional review.”

LA Times on CIRM Plans to Remain 'Relevant'

The changing focus of the California stem cell agency – with its aggressive push towards fast, tangible and marketable results and presumably away from its original emphasis on human embryonic stem cell research – was the focus of a Los Angeles Times article early last month.

The Jan. 10, 2010, piece by Karen Kaplan said,

“Now the institute has a more immediate goal: boosting therapies that are much further along in development and more often rely on less glamorous adult stem cells. It is concentrating its vast financial resources on projects that could cure conditions such as age-related macular degeneration, AIDS, sickle cell disease and various types of cancer.

“In shifting its focus, the agency is moving to fill a void known as the 'valley of death' -- a point at which projects are typically too commercial to vie for federal funds, yet too risky to entice private investors.

“This is how the agency -- with its constitutional mandate to invest $3 billion in stem cell research over 10 years -- plans to stay relevant as the state slashes billions from education, public safety, health and welfare programs to close a gargantuan budget hole.”

Kaplan's piece was more oriented towards the science of stem cells than the column this morning by Michael Hiltzik, also in the Los Angeles Times, which is California's largest newspaper with a readership of roughly of 1 million. Kaplan provided a contrast to Hiltzik, who took a more critical view, focusing on the public policy questions at the agency. Hiltzik's article also was an opinion piece as opposed to Kaplan's article, which was a news feature.

Kaplan, however, also wrote,

“Some scientists who study basic stem cell biology say the new emphasis on clinical trials is premature. They say many fundamental questions about stem cells still need to be answered, and diverting money from basic science means that revolutionary therapies -- still many years away -- will take even longer to materialize.

(CIRM President Alan) Trounson acknowledged that the shift has elicited 'a bit of a reaction from scientists' despite the institute's commitment to continue steering millions of dollars to basic biology. But, he said, the investments will have to produce actual therapies 'if we're going to be relevant to the community.'"

Not said was the need to provide real results that will help CIRM peddle its story in a few years to raise additional cash -- perhaps from the legislature, perhaps from private sources or both – when its 10-year bonding capacity runs out, possibly in 2017.

Also not discussed was the fact that the Prop. 71 campaign was almost entirely based on the need to fund human embryonic stem cell research. It is probably fair to say that the measure that created CIRM would not have passed had not then President Bush already imposed restrictions on the federal funding of hESC research.

Kaplan's article led with an anecdote involving research by Karen Aboody of the City of Hope, who has an $18 million grant from CIRM. Michael Friedman, the CEO of the City Hope, serves on the CIRM board of directors. His institution has received $37 million from CIRM. Also mentioned was Martin Pera of USC, a former colleague of Trounson's in Australia. Pera has received $6.4 million from CIRM. The dean of the USC medical school, Carmen Puliafito, serves on the CIRM board of directors. USC has received $71 million from CIRM.

CIRM directors are barred from voting on grants involving their institutions or even discussing the merits of those applications when they come up for approval. However, they do approve the concepts for all grants and control procedures for grant-making.

Recent Comments

For unknown reasons, our “recent comment” function to the left on this page has ceased to work properly. Consequently, some recent comments have not appeared. We are attempting to fix the problem.

Meanwhile, here are some comments that have been posted in the last few days.

Anonymous has left a new comment on the post "CIRM Proposes $40 Million Stem Cell "Tools" Round;...":

"The 'disease in a dish' proposal combined with funding clinical trials seems like CIRM is trying to be everything to everyone.

"They will have to take care that the 'tools' aren't merely grantsmanship for more years of basic research funding going nowhere fast; a nice new grant stream for the universities, not so nice expenditure for the taxpayers and patients hoping for CIRM to help meet their medical needs. "

Brad has left a new comment on the post "CIRM Proposes $40 Million Stem Cell "Tools" Round;...":

"The meetings are on Wednesday and Thursday not Tuesday and Wednesday like your article states. Great blog and reporting I check things out at least once a week.

"Thanks,
Brad Bixby
www.BioSpherix.com"

The California Stem Cell Report said in response
"Brad -- Thanks for letting us know. We have posted a correction."

Gilly Newman has left a new comment on the post "CIRM Disagrees with Many Recommendations for More ...":

"Hi,
"I've been following up on your site quite regularly. My son plans to go for stem cell therapy early next year. I am worried that can CIRM's outburst have an effect on the therapy as a whole."

We ecourage comments and would like more.

LA Times Columnist Targets CIRM; Structural Changes Needed

The California stem cell agency, which has “self-righteously” opposed better public oversight of its activities, should be altered to create a research program that “exemplifies not only good science, but good government,” a Pulitzer Prize-winning columnist said today in the Los Angeles Times.

While noting that the agency has funded “important work,” Michael Hiltzik said,

“...(I)t's ridiculous for CIRM to maintain that increased legislative oversight and a more compact and objective board are inimical to its purpose of fostering stem cell research in California.”

Hiltzik, whose piece was the 10th most viewed article on the Times Web site early this morning, first wrote about the agency during the political campaign that created it in 2004. His latest article came after he attended last week's session of a key state panel that unanimously called for more openness and accountability from CIRM. The panel, the Citizens Financial Accountability Oversight Committee, is chaired by state Controller John Chiang, who is the state's top fiscal officer.

Hiltzik said that the $3 billion agency came under withering fire at the meeting of the committee, which is part of Prop. 71, the same measure that created the stem cell agency.

Hiltzik focused on comments by committee member Loren Lipson, a physician and research scientist at USC. (The dean of the USC medical school sits on the CIRM board of directors. USC has received $71 millions from CIRM.)

Hiltzik wrote,

“Lipson objected to CIRM's practice of keeping the identities of grant applicants secret until and unless they win a grant. He thinks that without full transparency, it's impossible to know whether the scientific peer reviewers or the board have shown undue favoritism to the victors.

“That's especially a problem, Lipson believes, because the stem cell research community is small and so much of the board is, by design, self-interested. 'To me it looks like an old-boys club,' he told me after the meeting. 'When I look at that board I get a bad feeling of impropriety.'

“CIRM officials assured him that conflicts of interest aren't a problem on the board or among its scientific peer review teams, but he remains unimpressed. 'They never really answered my questions,' he says.”

Hiltzik, the author of three nonfiction books and winner of one of the top prizes in financial journalism, also discussed CIRM's new-found desire to change one provision of Prop. 71: the 50-person cap on the size of its staff.

He wrote,

“The good news for taxpayers is that the program's request for more staff could open the door for our elected representatives to finally insist on some jurisdiction over the spending of our $3 billion -- $6 billion including interest on the state bonds with which the money is raised. The key questions are these: Is it being spent appropriately, and is it being spent without conflicts of interest? On both issues, there's reason for doubt. Unfortunately, the program has managed to fend off every effort by elected officials to weigh in.

“The 50-employee limit was trumpeted by Proposition 71's supporters as proof that the program would be lean and mean, with almost all the money going to science. You might think they must have known from the start that managing a $3-billion scientific research program would require a larger staff, but then that would make them look cynical, and who wants to do that?”

Hiltzik continued,

“There's no question that CIRM has funded important work and bolstered the state's research profile. And there's no reason to doubt that CIRM needs more staff scientists to make sure grant recipients are spending our money properly, especially since the program is about to start doling out loans to commercial companies, not just grants to academics.

“But it's ridiculous for CIRM to maintain that increased legislative oversight and a more compact and objective board are inimical to its purpose of fostering stem cell research in California. CIRM mouthpieces love to claim that the 'voters' intent' should be honored by keeping the program rigorously free of political oversight -- but then the voters' intent was also to give it 50 staff members, and not a soul more.

“Nothing requires the Legislature to crack open the door on Proposition 71 only as far as CIRM wishes. The Legislature should let the program have the additional staff, but on its own terms. These should include a change in CIRM's board structure and imposition of the sort of oversight the program should have had in the first place -- including a reduction in the requirement for legislative amendments from 70% to a bare majority and giving Chiang the broader authority he requested. That's the way to create a public stem cell research program that exemplifies not only good science, but good government.”

CIRM Clinical Trial and Biotech Industry Loan Plans Remain Veiled

With only two days remaining before this week's meeting of the board of directors of the California stem cell agency, still missing publicly are any details on proposals that appear to involve hundreds of millions of dollars in taxpayer funds.

The plans concernCIRM's fledgling $500 million biotech loan program and participaton in funding of clinical trials, which can cost hundreds of millions of dollars. The agenda for the CIRM board meeting, which begins Wednesday afternoon, contained only 46 words this morning on the proposals.

CIRM's latest lack of transparency comes only six days after a key state panel unanimously urged CIRM to be more open and accountable.