Klein Given New, Six-Month Term as Chairman; Board to Examine Criteria for Replacement

Directors of the California stem cell agency today re-elected Robert Klein as chairman of the $3 billion enterprise, culminating a weeks-long flap that included closed-door dealings, allegations of “sleazy” conduct and dubious, last minute financial warnings about CIRM's financial condition.

Klein said he would serve for no more than six months and would prefer a shorter term. He is expected to serve without a salary. The directors also instructed its Governance Subcommittee to examine the criteria for a replacement and report back to the full board in 60 days.

The vote on Klein was not entirely audible on the Internet audiocast but it appeared nearly unanimous with the exception of Jeff Sheehy, who abstained.

Sherry Lansing, chair of the Governance Subcommittee and a former Hollywood studio chief, supported Klein's re-election and defended the election process. She said,

"Nothing was done that was not correct."

She said all actions taken were in the best interests of CIRM's mission.

Klein had been publicly telling the board and others for months that he would not seek re-election to a six-year term. Behind the scenes, he began to attempt to engineer the selection of his successor, a Canadian scientist, Alan Bernstein, who chaired the recent “external review” of CIRM's programs.

Klein's effort began to fall apart after Bernstein's name surfaced publicly in an item Nov. 29 on the California Stem Cell Report.

A spate of articles dealing with the issue appeared in a number of publications, including the Los Angeles Times, the San Francisco Business Times, Nature magazine's Web site, the Biopolitical Times, the Toronto Globe and Mail and The Sacramento Bee as well as here. The various articles detailed the reports of backroom dealings and issues with Klein's conduct.

On Monday, the state's top fiscal officer, John Chiang, who has a special role in connection with the agency, urged cancellation of this week's election, declaring that the process was fundamentally flawed. Sheehy read Chiang's letter to the board and said he agreed with it.  No other CIRM directors publicly raised questions about the election flap.

Klein has been chairman of the California Institute for Regenerative Medicine, as the agency is formally known, since voters approved its creation in 2004 through Prop. 71. Klein and a handful of associates wrote the measure, which included a detailed legal list of qualifications that fit only one person in the state – Klein. The move so angered one early major backer of Prop. 71 that he now refuses to speak to Klein, according to Nature magazine.

Klein has been the dominate force at the stem cell agency since he was elected by the 29-member board to his first six-year term. He also has angered at least some members of the CIRM board and clashed with its first president, Zach Hall. Prop. 71 gave overlapping executive responsibilities to the chairman and president of the agency.

As of this week, CIRM has approved $1.1 billion in grants, 90 percent of which has gone to institutions that have representation on the CIRM board of directors. The board is making larger awards currently, and Klein is looking for more cash. His plans include another bond measure, perhaps as high as $5 billion, before voters possibly in 2012 or 2014.

Klein Re-elected

Robert Klein today was re-elected as chairman of the $3 billion California stem cell agency.

He said he will only serve for no more than six months. More on this shortly.

Bad Link Fixed

A bad link in an item today concerning the Biopolitical Times story on the election of the CIRM chairman has  been repaired. If you wish, you can find the story directly here.

CIRM Directors Convene Behind Closed Doors to Consider Election of Chairman

Directors of the California stem cell agency met briefly this afternoon in public but immediately went into a closed-door executive session to consider the election of a new chairman for the agency.

Chairman Robert Klein, who is seeking re-election, said the directors had a “very limited” time to consider the matter because some would have to leave soon. That would mean that the panel could lose its quorum and its ability to act legally.

Based on the Internet audiocast of the meeting, it was impossible to determine how many of the 29 members of the board answered the roll call. But the executive director of the board, Melissa King, reported a “healthy quorum.”

Among those responding as present was Sherry Lansing, who had previously reported in her letter endorsing Klein that she would be unable to attend. Lansing is former Hollywood studio executive and chair of the CIRM Governance Committee, which deals with such matters as election of the chair.

CIRM Board Attorney Challenges Assessment of Klein's Financial Warning

James Harrison, outside counsel to the CIRM board of directors, this afternoon took issue with our item yesterday that reported that CIRM Chairman Robert Klein issued an “urgent, financial alarm” concerning the agency's bond funding as part of his bid for re-election.

We are carrying the message from Harrison, of Remcho, Johansen & Purcell of San Leandro, Ca., verbatim. Our assessment of it follows his remarks. For the original items, see here and here.

Harrision's remarks:

“I write in response to your recent blog postings regarding CIRM’s financial condition and in appreciation for the additional information provided by the Treasurer’s Office.

“First, Bob Klein did not issue 'an urgent, financial alarm' in his candidate statement as you suggest.  Rather, he made the Board aware of an issue that he intends to “immediately focus” on if the Board were to re-elect him as Chair.  Currently, CIRM has no authority for the Treasurer to issue additional bonds on CIRM’s behalf.  Given CIRM’s expectation that the disbursement of funds will accelerate in 2011, it important that this authorization occur in the first quarter while CIRM’s existing Board members and staff who are familiar with the process are in place.

“In an email communication to CIRM on December 2, 2010, the Treasurer’s Office informed CIRM that the Treasurer’s Office only had “December and January available for finance committee meetings since we could issue bonds as early as February 2011.”  Based on this exchange, staff believed that it was a priority for Bob to work with them to prepare the internal projections that are essential for the meeting.  It is important to obtain an additional authorization even though Bob believes that it is not necessary to obtain bond funds in the immediate future.  We welcome the additional information from Tom Dresslar, the Treasurer’s spokesperson, but don’t perceive a significant difference between what the Treasurer’s Office has said and what Bob Klein said in his statement.  Furthermore, even if the California Stem Cell Research and Cures Finance Committee meeting were to occur in February or March, Bob would like to ensure that all of the background work that is necessary to provide additional authority to issue bonds on CIRM’s behalf is completed in the first quarter of 2011, including updated projections for 2011 and 2012 that are generally required by the Department of Finance.  Given that Bob has stated that he only has 90 to 180 days available to serve as Chair, he would like to focus on this immediately.”

Obviously our characterization of Klein's remarks is our opinion. But given the nature of his choice of words – such as “just informed,” “immediate,” “essential” and “there may not be another opportunity” – plus the election-eve timing of the statement, ample evidence exists to conclude that Klein was sounding an urgent alarm aimed at generating concern among CIRM board members. And the point of the concern was to demonstrate Klein's indispensability to directors.

Upcoming

We plan to provide live coverage of this afternoon's meeting of the board of the California stem cell agency and its deliberations on the matter of a new chair, based on the audiocast of the proceedings on the Internet. The meeting is likely to involve one or more executive sessions of unknown length. If you would like to listen to the audiocast, instructions can be found on the agenda. The meeting is scheduled to begin at 4 p.m. PST.

California Stem Cell Researcher Says Election Ruckus Is Damaging CIRM

Here is a comment on the CIRM chair election from a California stem cell scientist, who asked to remain anonymous.

“Stem cell researchers are tired of the political wrangling that is going on in the ICOC and CIRM. We come in to work every day and make progress on our research funded by CIRM grants. CIRM is an incredible boost to stem cell research, and we are profoundly grateful as scientists for the opportunity to invest our experience, our ideas, and our perseverance in a push toward something so meaningful as curing people of terrible diseases.

“We are grateful for the infrastructure that CIRM built so that we can worry less about finding the equipment we need and instead can use CIRM- funded equipment to advance our research. We are amazed by the fact that we can train young people and create jobs with CIRM's support. We appreciate the fact that CIRM listens to us and asks our advice about what directions the institute should pursue. CIRM has single-handedly created the environment in California that makes us the world leaders in translational stem cell research.

“I speak for many of my colleagues when I say to the ICOC and CIRM: STOP IT!! Put your egos on hold long enough to think about what you are risking by this infighting that makes the headlines. It makes a great organization look petty and pathetic, and is risking all of the good that CIRM has done. Calm down and stay out of the limelight for a few months, for the sake of CIRM, for California, and for the sick people whom we want to help.”

The Pros and Cons of Retaining Klein as Chair of the California Stem Cell Agency

Directors of the California stem cell agency have a choice today whether to continue with the man who has led the agency since its inception in 2004, Robert Klein, or to choose another course that would not see him as chairman. Here is a look at the pros and cons of sticking with Klein.

First the pros

• Continuing with Klein could create a perception of stability and continuity at a time when directors are confronting recommendations for significant changes in direction. It could be regarded as a determination to continue to focus on the agency's primary tasks.
• Given Klein's endorsement by 11 top stem cell scientists, his retention could be seen as a demonstration of strong, continued support for funding basic research.
• Klein's reputation, somewhat battered in recent weeks, probably remains high in the global stem cell community.
• Continuing with Klein would likely mean retention of CIRM President Alan Trounson, who reportedly might leave if another candidate that he does not favor is elected chair. His departure would generate some instability at the agency. Trounson has headed the agency for the last two years.
• Another few months with Klein at the helm could make it easier to fill the much-needed new position of vice president of research and development. CIRM has been without a chief scientific officer for nearly 18 months. Trounson created the new slot but has not been able to bring a candidate on board. With Klein and Trounson gone, it is unlikely a top-notch hire could be made until a new president is in place.
• With Klein still in place, CIRM directors could use the time to sort through their options to determine what future changes are necessary, if any, in top agency leadership and board structure.

The cons

• Delaying Klein's departure could mean that the board is hamstrung in considering all its options in dealing with governance issues. His personality, history and continuing efforts at leadership would dominate the discourse or at least be a significant diversion.
• The continuing presence of Klein could be an impediment to the board setting its own criteria for a new chairman.
• Continuing support of Klein would deliver a message to the various stakeholders, the public and the CIRM staff that the board goes along with his misrepresentation of significant matters having to do with agency (See here, here and here.)
• Klein's retention only pushes off to another day the problems that the agency faces, ranging from Trounson's status, hiring of a VP for research and development, changes in strategic direction and more. Better to be decisive and wipe the slate clean. An interim chair or president could be selected. CIRM could function successfully without Klein or Trounson.
• Klein could better serve in a role outside the agency, particularly given his interest in another multibillion dollar bond election for CIRM. Engaging in such election campaign activities as a state employee or while on the state payroll is inappropriate. By law, Klein is a state employee regardless of whether he accepts pay.
• CIRM, like any business start-up, is maturing. Just as in business, different leadership is called for at different stages. It is not uncommon for businesses to move away from the original start-up entrepreneur as they grow and change.
• The absence of Klein would make it easier to hire a new president, if necessary. His reputation for micro-management and the dual executive arrangement legally built into CIRM pose obstacles for many qualified candidates.
• Given the endorsement of Klein by 11 top academic researchers who want continued strong funding of basic research, the biotech business community could read Klein's retention as an unwillingness by CIRM to engage fully with industry to actually deliver cures to the clinic.

There are undoubtedly other reasons on both sides of this issue. Readers can send in their own by clicking on the word "comment" at the end of this item. Or they can send their comments directly to djensen@californiastemcellreport.com for posting.

The Biopolitical Times Recounts the "Sordid" Saga at CIRM

The Center for Genetics and Society, which has not written much recently about the California stem cell agency, has posted its perspective on the latest events involving the election of a new chair at the $3 billion enterprise.

Pete Shanks, an author and blogger for the Berkeley organization, yesterday recounted the dealings to date on the center's Biopolitical Times site. He also wrote,

“In fact, the most important part of this apparently sordid tale may be that we do not know what has been going on behind the scenes at a public agency.”

Shanks described the chair selection process as a “saga” with a “circus atmosphere.” He noted Klein's closed-door attempts to engineer selection of his own successor and then his maneuverings to place himself into a position for re-election despite his pledge to leave. Shanks also noted that Klein in 2004 told the New Yorker magazine he was interested in serving as chairman for no more than 24 months.

Shanks' item contains links – all in one place – to most of the reporting on the CIRM chair election. He also said,

“The place to look is David Jensen's blog, the California Stem Cell Report....No one outside of CIRM knows more about it.”

Klein's Fiscal Warning Does Not Match Up with State Treasurer's Account

In his bid to be re-elected, the chairman of the $3 billion California stem cell agency, Robert Klein has issued a financial warning to CIRM directors that is distinctly at odds with what the state treasurer's has told him.

In response to questions from the California Stem Cell Report, Tom Dresslar, spokesman for state Treasurer Bill Lockyer, provided an account that differs in major ways with information that Klein released in an election-eve pitch to CIRM directors. (The state treasurer manages the bond sales that are CIRM's only real source of cash.)

In a statement posted today on the CIRM Web site, Klein said that he was "just informed" by the state treasurer about a looming financial problem that needed "immediate" attention. Klein said it was “essential” for CIRM to quickly provide assurances of “reliability of our funding.”

However, the treasurer's statement did not carry that urgency or compelling weight. It primarily involved hypothetical bond sale timing matters. Dresslar said that CIRM was alerted to the treasurer's view of the state of CIRM bond financing on Dec. 2, the day before Klein gave a rosy financial assessment to the directors' Finance Subcommittee. Klein was also aware of the bond timing questions before last Wednesday's board of directors meeting and did not bring them to the board's attention.

Klein's statement today on CIRM's "financial stability,"  however, said,

“The (state) Treasurer's office has just informed us that the next California Stem Cell Research and Cures Finance Committee (the panel that authorizes CIRM bond sales) meeting must be held in January 2011. Recent applications for clinical trial rounds and the acceleration of our funding commitments on our other programs require an immediate focus on this issue, given there may not be another opportunity until late 2011 to authorize additional bond funding.”

Klein also said that early next year “our collaborative funding partner nations” will require “assurances of our future performance.”

Here is the full text of what the treasurer's office e-mailed to the California Stem Cell Report.

“On the record:

“We don't necessarily agree Klein issued an 'urgent financial alarm' in his statement of candidacy. Regardless, here's what the State Treasurer's Office told CIRM, and didn't tell CIRM:

“We did not say the Finance Committee had to meet in January to authorize additional bond sales. Additionally, we did not tell CIRM there was a possibility the Finance Committee, if it didn't authorize additional bonds in January, would have to wait until late 2011 to do so.

“We told CIRM that, under existing Finance Committee resolutions, the Institute effectively has zero bond authorization remaining. That means, in order for us to sell more stem cell bonds, the Finance Committee has to meet and approve additional authorization. We told
CIRM we could have a bond sale as early as next February. We said if CIRM wanted to get some of the proceeds of any February sale, the Finance Committee would have to meet in December or January.

“This communication with CIRM occurred Dec. 2.

“It's important to stress we have set no firm bond-sale schedule for 2011. Hypothetically, if the State conducted a bond sale in February 2011, and stem cell bonds were not included in the deal, the CIRM Finance Committee could meet in any subsequent month of the year and authorize additional bonds that could be sold in any subsequent 2011 sales.”

Klein's rendition of the bond sales situation is not the first such instance in recent weeks. He earlier announced that his hand-picked candidate to succeed him had to drop out because he was not a U.S. citizen. Klein, who is an attorney, based that assertion on an antiquated state law that the state attorney general has officially declared is unconstitutional.

CIRM directors meet tomorrow afternoon at 4 p.m. PST at Stanford University to deal with the chairmanship question. The public can participate in the meeting there or at teleconference locations in Los Angeles (2), La Jolla(2), Burbank and Duarte. The specific addresses can be found on the agenda. The meeting is also scheduled to be audiocast on the Internet(directions also on the agenda).

Business Reporter Pokes Fun at Stem Cell Agency Election Process

Reporter Ron Leuty of the San Francisco Business Times today offered himself up as a candidate for chair of the $3 billion stem cell agency. Leuty's “statement of candidacy” included this paragraph:

“I am a resident of California — if that matters — and I have been in the hospital, which I believe would fulfill the requirement that the ICOC Chair be a patient advocate. One time after knee surgery, I was in some serious pain and there were no nurses around to give me a painkiller — you should have heard me advocating then!”

You can read more here.

CIRM Director Lansing Backs Klein Re-election

Former Hollywood studio chief and CIRM Director Sherry Lansing today endorsed Robert Klein for re-election as chairman of the $3 billion California stem cell agency.

In a two-paragraph statement posted on the CIRM Web site, Lansing said she enthusiastically supported Klein as well as the re-election of Art Torres and Duane Roth as co vice chairs.

No other members of the CIRM board have posted endorsements of Klein.

Lansing is chair of the CIRM Governance Subcommittee. She said she would not be able to attend tomorrow's CIRM board meeting at which the question of Klein's tenure will be taken up. Lansing said she will be in transit from China at the time.

Klein's term expires this month. He once said he would not seek re-election, but changed his mind after his closed-door attempt to hand pick his successor failed in a flurry of negative news stories.

Klein's Fiscal Warnings at Odds With His Rosy View 11 Days Ago

Less than two weeks ago, CIRM Chairman Robert Klein told directors of the California stem cell agency that its financial situation was rosy and no problems existed with its bond financing, its only source of cash.

His statements on Dec. 3 stand in sharp contrast to his election eve warning today that the agency must act swiftly to stave off a looming funding problem.

Klein made his comments at a meeting of the directors Finance Subcommittee, chaired by Michael Goldberg. Only a handful of the 29 CIRM directors attended the meeting. Here is the text of what Klein said, according to the transcript.

“Chairman Goldberg: Okay. Thank you. I'd like to in the time that remains briefly address the climate for california bond issuance since we're going as an agency dependent on their bond authority. And there's been articles in the press in the last two weeks in connection with the last large series of bond financings the state has done about some of the challenges and difficulties. And without getting into any of the specifics of those issues, I'd like to ask Chairman Klein, who's maintained contact with the issuing authorities, what the general perspective or view is over the course of the next 12 to 24 months and whether or not there's any cause for action on the part of the ICOC (CIRM's board of directors) with respect to anything we can or should be doing being mindful of that.

“Chairman Klein: Thank you, Chairman Goldberg. So given that over the last three years we've tried to always look forward at least a couple of years and foreseeing the difficult environment particularly with some of the initiatives that passed in this last session, this last electoral cycle, we've been fortunate, by doing advanced planning, to make sure we could cover our strategic plan advances we would need to make over the running 24-month period going forward. At this point we've achieved that objective, and we have a little less than 24 months, but approximately that level of cash funding that's available to us. So our programs are very stable during this period. It's hopeful that in that time period California will return to a much stronger bond position.

"Nevertheless, for our scientific partners and our international partners and our individual scientists within the state, it's important to again remind everyone that under the state institution, the top 40 percent of the revenue of the state goes to education, and then bond debt service is the next priority ahead of harbors, ahead of major new highway construction, and other projects to the extent they come out of state funds versus federal funds. So California will retain the ability, even if this difficult period is a full two years or longer, to fund this agency on a timely basis. And institutions and the scientists will be covered in the time period of our commitment. So we're very thankful for the support of the state treasurer's office and for the support of the governor and the director of finance, for the work of (CIRM staffer) Lynn Harwell, who has been instrumental in executing on this plan, for (CIRM directors) Ted Love and Marcy Feit, who have been on the bond finance credit committee of the state with me. And we are thankful and very appreciative of the fact that we'll be able to honor our strategic plan and have the flexibility during that time to use reserves that are set up specifically to respond to new scientific developments that are certainly expected to arise at various times during that cycle.

“Chairman Goldberg: Thank you, Chairman Klein.”

Eve of the CIRM Election: Klein Invokes Sudden Financial Warning

CIRM Chairman Robert Klein today sounded an urgent, financial alarm in his bid to be re-elected to a new term at the $3 billion California stem cell agency.

In a “statement of candidacy” on the CIRM Web site, Klein indicated he was needed at the agency to handle a sudden, new quasi-crisis that requires action next month. And in an effort to make it easy for directors to choose him at their meeting tomorrow at Stanford University, he also reduced his proposed term to three to six months, down from 12 months. However, he did not renew his pledge not to take a salary, which could hit $529,000 annually.

Several items concerning Klein's candidacy were fresh in the statement. One was the financial warning from Klein, who portrays himself as something of an expert on government bond financing. He said that the agency needed to move swiftly on new issuance of new state bonds, CIRM's only source of financing.

At their meeting just last Wednesday, CIRM directors heard no mention of the problem, only a routine budget presentation with no indication that quick action was needed.

But in his message dated yesterday, Klein said it was “essential”for CIRM to quickly provide assurances of “reliability of our funding.” He wrote,

“The (state) Treasurer's office has just informed us that the next California Stem Cell Research and Cures Finance Committee meeting must be held in January 2011. Recent applications for clinical trial rounds and the acceleration of our funding commitments on our other programs require an immediate focus on this issue, given there may not be another opportunity until late 2011 to authorize additional bond funding.”

Klein also said that “our collaborative funding partner nations” require early next year “assurances of our future performance.”

It is not the first time Klein has sprung a January financial surprise on directors. In January 2009, he unveiled a critical bond funding problem that directors also had not been informed about earlier.

(See here, here and here.)

Another new item in the candidacy statement was Klein's promise to only serve three to six months, although it is not clear that the board can elect a chairman for anything less than the six years specified by law. Previously Klein promised to serve only 12 months. Significantly, in the otherwise fairly detailed document, he did not renew his promise not to take a salary. Currently he receives $150,000 for halftime work and is entitled up to $529,000 annually

Klein, a Palo Alto real estate investment banker, additionally backed away from his position that he can only be replaced by a nationally known scientist. Instead, he said he would work with the board to develop criteria for selection of a new chair.

Klein also pledged to “change the communications paradigm,” which encompasses the agency's public relations efforts. He cited an example of a 3 million, “affinity group” email effort during the 2004 election campaign for Prop. 71 as something he would like to replicate. Klein said that CIRM's communications should be changed “from our highly refined scientific focus (with emerging, quality public components) to a broad and innovative program that will be meet our obligation to inform all Californians of the milestones of progress we have achieved.”

More Coverage of Call for Delay in CIRM Chairman Election

The San Francisco Business Times late yesterday carried a story on the “strong” recommendation by the state's top fiscal officer to cancel tomorrow's scheduled election of a new chairman of the California stem cell agency.

You can find the article by Ron Leuty here.

Klein's Collateral Damage: Delay Needed in CIRM Chair Election

Fans of the editorial pages of the leading newspaper in California's capital this morning read a piece denouncing the “shenanigans” of the chair of the state's $3 billion stem cell agency, Robert Klein, and urging him to step aside.

The op-ed article in The Sacramento Bee was written by John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., a longtime observer of and participant in CIRM affairs. He said,

“As his six-year term comes to an end, Bob Klein should be high-fiving his way around a victory lap, basking in accolades for his substantial accomplishments as the first chair of the California Institute for Regenerative Medicine.

“Instead, unable to transcend a propensity to micromanage, he tried to pull strings behind the scene to anoint his successor. Inevitably the effort blew up in his face embarrassing him and his choice for the job, and causing collateral damage to the image of the agency’s governing board, the Independent Citizens Oversight Committee(ICOC).”

Simpson said that Klein's conduct and the election of a new chair are not minor matters to be shunted into a convenient closet at CIRM headquarters in San Francisco. He wrote,

“Indeed, how CIRM is governed and whether the board steps up and exercises appropriate oversight could spell the difference between CIRM’s successfully funding $3 billion in cutting edge research or becoming a boondoggle that is a monument to wasteful spending.”

Simpson continued,

“So what should the ICOC do to restore a modicum of reason to the succession process?

“Do not take Klein at his word. When Proposition 71 was passed he vowed to serve only a couple of years as chairman, without pay. Six years later, he is in the job, now officially defined as a half-time position, drawing $150,000 and re-nominated to a second term.

“There is no reason for the ICOC to act now; Wednesday’s vote should be canceled. All pending nominations should be withdrawn. If the board doesn’t elect a successor, Klein continues until a successor is selected. If he is elected to a second term, based on past history, he’ll likely be around in six years.

“The ICOC and its governance committee must have a serious public discussion about the sort of candidate required; it’s clear the constitutional officers would welcome the input. New nominations can be made and an election held by March.”

Simpson concluded,

“There are two eminently qualified candidates: Current vice chairs Art Torres and Duane Roth. Bob Klein needs to get out of the way so one of them can ultimately be elected.”

Simpson's article followed a letter to CIRM directors by the state's top fiscal officer calling for cancellation of tomorrow's election of a new CIRM chairman. Controller John Chiang, who heads a CIRM financial oversight committee, said the current process is fundamentally flawed.

CIRM Director Prieto Weighs in on Letter From Scientists

Another member of the governing board of the $3 billion California stem cell agency today questioned a letter from 11 leading stem cell scientists supporting the re-election of Robert Klein as chairman.

Francisco Prieto, a Sacramento physician, commented on remarks by David Serrano Sewell, a CIRM board member and San Francisco deputy city attorney, in the “11 Scientists” item earler today. Prieto also said that the chairman of the agency did not need to have substantial scientific experience as proposed by the 11 scientists.

Prieto said,

“I have to agree with David. This decision is a board responsibility, and our concern is what is best for the future of CIRM. These scientists have the right to weigh in as does any other citizen, but I question at least part of their premise: We may indeed need ' substantial scientific and medical experience,' but there is no particular reason that this expertise must be in the person of the chair. I would argue it more appropriately rests with a VP for R&D, a position we have been trying to fill for much too long now. Bob Klein has an impressive fund of scientific and medical knowledge, but it is largely self-taught, and we may decide that our ongoing division of responsibilities at CIRM should change as the agency matures and evolves.”

Top California Official Urges Suspension of CIRM Chair Election

The state's top fiscal officer, who has a special role in connection with the California stem cell agency, this afternoon called for cancellation of this week's election of a new CIRM chair, declaring that the current process is fundamentally flawed.

John Chiang, who heads a Prop. 71-created committee that reviews the financial practices and performances of CIRM, said in letter to the agency's governing board,

“It is clear that the current selection process is fundamentally flawed. The taxpayers who provide the funds for CIRM must be assured that the chair and vice chair are selected in an open, transparent process – not through a backroom deal or by default because a deal has fallen apart.”

CIRM directors are scheduled to meet on Wednesday to consider the choice for a chairman to replace Robert Klein, a Palo Alto real estate investment banker, whose term is expiring. The only other candidate besides Klein is Art Torres, one of two vice chairs at CIRM. However, Torres withdrew from the running last week, clearing the way for Klein to continue to serve.

Chiang's letter referred to the ruckus over Klein's attempt to hand pick his own successor. The move failed following reports of closed-door meetings and conflicts of interest. The flap attracted attention in the international stem cell community, attention that CIRM did not welcome.

Chiang, a Democrat, said he was strongly recommending that the CIRM board suspend the selection of the chair and vice chair and ask that the nominations be withdrawn. Chiang said,

“The first step in a new process should be for the (directors')Governance Subcommittee to have a full, public discussion of the necessary criteria for a new Chair. The first question the Board should examine is the role of the Chair of the ICOC and how it differs from the role of the President. While I understand that Proposition 71 provides for a unique, co-leadership model, it is critical from a good governance perspective that there is a clear delineation of duties and decision-making.

“What makes a governing board effective is long-term transparency and accountability. The ICOC's most important role - to provide independent oversight of CIRM management - is compromised when the ICOC chairman is essentially serving as the CIRM CEO.

“It also is important to keep in mind that the Chair is but one member of the ICOC Governing Board. Good governance must rely on the actions of the whole Board, not a single member. While the current structure may have been necessary as CIRM was in start-up mode, as the Institute moves into the next phase, it is important from a good governance perspective that it be driven by a fully participating oversight board rather than a single individual, regardless of how talented that individual may be.

“The ICOC has a responsibility to the taxpayers of California to conduct its business in an open and transparent manner. The most effective way the ICOC can assure the public that the Chair and Vice Chair selection process was fair and resulted in the best candidates is to restart the process in a transparent manner.”

The committee that Chiang heads is the only state entity that is charged legally with regularly examining the operations at CIRM.
State Controller Calls for Suspension of Stem Cell Agency Election

Bad Link to Letter Fixed

In the "11 Top Scientists" item today, we had a bad link to the letter that they wrote. The link is now fixed. If you want to go straight to the letter, here is the link.

Eleven Top Stem Cell Researchers Back Klein for Re-election

A who's who of California – if not global – stem cell science is lobbying directors of the state's $3 billion stem cell agency to go along with Robert Klein as its chairman despite the disclosure of his now failed, closed-door efforts to hand pick his successor.

The letter may not necessarily have its desired impact. One CIRM board member, David Serrano Sewell, said,

"Honestly, I'm not sure anyone really cares what they think, they should focus on research and finding cures, not dwelling on board matters."

The 11 signatories to the letter include two Nobel Prize winners, one of whom, David Baltimore, is a former member of the governing board of CIRM. All but one of them have tens of millions of dollars at stake in grants from the stem cell agency and are heavily invested in basic research, as opposed to translational efforts to push research into the clinic.

Irv Weissman of Stanford, one of the signers, for example, has $23 million in grants from CIRM. Another, Larry Goldstein of UC San Diego, holds $14 million in grants. Most of the institutions employing the scientists also have representatives on the CIRM board of directors. (For additional information on Goldstein's grant, see here.)

CIRM is currently involved in assessing the future direction of its research. Should it move more strongly towards business and actual use of stem cell therapies on patients, it is likely to mean that basic research will have a smaller share of CIRM's remaining $2 billion.

In the letter, the 11 said,

“In this regard, we stress, that our collective experience with the discovery of new approaches to the treatment of disease is that new solutions to currently intractable problems will come primarily from research that gives rise to new understanding of disease itself. On occasion, significant progress can also come from thoughtful application of existing knowledge, but either on its own is insufficient. Hence, it is crucial for the next ICOC Chair to have a deep understanding of both scientific and medical principles in order to balance short and long-term investment in stem cell research and clinical application.”

The group plumped for the proposal by Klein, a real estate investment banker, that he be replaced with a nationally known scientist. They said,

“We also enthusiastically support Mr. Kleinʼs proposal to find a successor who has substantial scientific and medical experience as well as personal familiarity with the burdens of disease.”

That requirement is not part of the legal qualifications for chair, which do include a familiarity with bond financing, which is the only source of CIRM funding.

The board meets Wednesday afternoon at Stanford to consider action on nominations for its chair. It does not actually have to vote, however. If it does not do so, Klein, whose term is expiring, would automatically continue in office.

One of our readers refreshed us on that last week after we wrote that Klein appears to be a shoo-in for re-election after the only other nominee, vice chairman Art Torres, said he was stepping aside for the good of the agency. Klein has offered to serve for 12 months without salary until the board picks a new chair. His decision to decline a salary (he now earns $150,000 for half-time work) apparently removes a conflict of interest and enables him to participate in board discussions about chair selection that he would be otherwise barred from. However, removal of his salary would require board action, which would seem to be an ongoing conflict for him, whether he wants the salary or not.

There is a remote possibility that another candidate for chair could surface. The state treasurer has not yet made a nomination. The state controller nominated Torres but could withdraw that nomination in favor of someone else. The governor and lieutenant governor have nominated Klein. The board's choice is limited by Prop. 71 to those nominated by the four state officials, but it does not have to accept any.