California Suspends Bond Sales: Potential Impact on Stem Cell Agency

The state of California, dogged by a mammoth financial crisis, is postponing the sale of state bonds this year, raising questions about the move's impact on the state's stem cell research effort, which is funded solely through the borrowed money.

State Treasurer Bill Lockyer said yesterday the delay in selling state bonds until later this year would save the state $248 million. It would be the first time that the state has not sold bonds in the first half of the year since 1988, according to Bloomberg News. Lockyer's action came as part of the stringent state budget proposed yesterday by Gov. Jerry Brown.

On Dec. 14, Robert Klein, chairman of the $3 billion California stem cell agency, told its directors that the reliability of the agency's funding needed “immediate attention” because of a notice that his office had “just” received from the state treasurer. Klein declared,

“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 this year “our collaborative funding partner nations” will require “assurances of our future performance.”

Klein's warning came on the eve of his successful bid to be re-elected as chairman of the agency. The notice from the treasurer did not carry the urgency that Klein indicated and was nearly two weeks old by the time he told directors about it. It also arrived in Klein's office the day before he gave a rosy financial assessment to the directors' Finance Subcommittee and said no problems existed with its bond financing.

We have queried CIRM concerning its view of the impact of the suspension of state bond sales. In the past, CIRM officials have said it has enough cash on hand to operate and award grants to about June 2012.

According to the Bloomberg article by Michael Marois and Alison Vekshin, California has about $69 billion in securities outstanding as of the end of June. Another $100 billion in debt has been authorized by voters but has not been issued.

The article said that debt service, including the interest on stem cell bonds, will cost the state nearly $5 billion in the next fiscal year, even after the moratorium.

Science Magazine Assesses CIRM: 'The Good, Bad and Ugly'

Science magazine examined California's $3 billion stem cell research effort in a piece published during the holidays, and the third paragraph of the story began with this quote,

“It's the usual CIRM circus.”

Whether one thinks the comment was well-deserved or not, it falls far short of the type of publicity that the agency needs, especially as it considers mounting a bid to secure an additional $5 billion from California voters.

Overall, the two-page article was pretty much a straight-forward overview of where CIRM stands at the beginning of 2011. The story began, however, with a look at the shenanigans of CIRM Chairman Robert Klein as he tried unsuccessfully last year to hand pick his successor. And that was what triggered the “CIRM circus” comment from Marie Csete, former chief scientific officer for CIRM.

The piece by Greg Miller was entitled, “CIRM: The Good, the Bad And the Ugly” – another less-than-felicitous phrase concerning the public agency. The article covered the basics: dollars handed out, labs built, concerns about high salaries and conflicts of interest and the recent external review report. It noted that many scientists view CIRM as a “tremendous success.” But it also reported that patient advocates “are tired of waiting for stem cell cures.” Miller's article continued,

“...(E)ven CIRM supporters say the institute has to improve its relationships with industry if it hopes to fulfill its mandate: generating stem cell therapies that help people suffering from conditions like diabetes and Parkinson’s disease. A recent report by a panel of external scientists convened by the CIRM board said translating basic science into therapies should be a major priority going forward.”

Miller wrote,

“Not surprisingly, CIRM grantees are not complaining. 'I just moved into a spectacular new building,' says Arnold Kriegstein, the director of the new Eli and Edythe Broad Center of Regeneration Medicine and Stem Cell Research at the University of California, San Francisco (UCSF). CIRM kicked in $35 million for the new facility, about a third of its cost.”

(Editor's note: UCSF has received $111 million in grants. The dean of its medical school sits on the CIRM board of directors, as do several other medical school deans whose institutions have received hundreds of million dollars.)

The article continued,

“Several California biotech leaders say they have been frustrated by their interactions with CIRM. 'In the past, there’s been a lack of recognition that it takes a company to actually take a treatment forward from the bench top into the clinic,' says Chris Airriess, chief operating officer of California Stem Cell Inc. in Irvine. Airriess says his company has twice applied, unsuccessfully, for CIRM money. He and others place much of the blame on the review process, which he says is structured too much like the NIH review process for academic research grants. CIRM reviewers criticized his company’s applications for the lack of new science, but Airriess says that misses the point. 'Companies are trying to stabilize a technology and commercialize it rather than push the bleeding edge,' he says.

“Even companies that have succeeded say it hasn’t been easy. Earlier this year, San Francisco–based iPierian won a $6 million early translation award and a $1.5 million basic biology award. 'We put a ton of effort into understanding what was being asked for,' says CEO Michael Venuti.”

Science magazine concluded,

“CIRM President Alan Trounson says he is sensitive to these (industry) concerns but doesn’t think the review process is problematic: 'Companies that have put in well-formed proposals have done very well.' But he acknowledges that CIRM has had difficulty attracting proposals, particularly from larger companies. He’d like to set up an industry advisory board to help improve industry relations.

“In the coming months, he and others will be waiting anxiously to see who succeeds Klein as chair. Patient advocates want an advocate at the helm. Scientists would prefer a scientist. Trounson, who may have to work most closely with the new boss, says he’s hoping for someone with expertise in the delivery stage of therapeutic development. 'The basic science, as long as we look after it, will take care of itself,' he says. The real challenge for CIRM, he says, is getting the science into the clinic. 'We need more help on how to make it all happen.'”

In terms of the negative information in the piece, one thing helpful to CIRM is that the article is tucked away behind a subscription barrier, so it is not likely to be available to mainstream journalists (whose employers are notoriously cheap) as they do research on the agency. Nonetheless, the article is likely to be checked by most scientists interested in CIRM affairs and quite possibly by any potential, major contributors to an election campaign for more billions for the agency.

But the real problem is not with the publicity or the slant of the article – it is with the actions of Klein and the agency. There would have been little dubious to write about concerning the choice of a new chair if Klein had not tried to engineer the selection of his successor in a closed-door process that raised charges of conflict of interest. And as far as issues with the biotech industry go, those have been apparent for several years, but little has been done to deal with them.

(If you are interested in receiving the entire article, please email a request to djensen@californiastemcellreport.com, and I will send it to you.)

Klein Ballyhoos Stem Cell Effort as 'Forever Changing the Future of Human Suffering'

The chairman of the California stem cell ageny, Robert Klein, recently wrote an op-ed piece for the San Jose Business Journal replete with superlatives about the significance of the state's $3 billion research effort.

It represented the type of publicity that the agency will need to convince California voters to approve the roughly $5 billion, new bond issue that Klein is touting.

Klein is a man who loves effusive prose, and plenty was in evidence in his piece. “Far-reaching,” “huge difference,” “stem cell revolution” and a promise that the work of the California stem cell researchers “will begin to mature (in five to seven years), forever changing the future of human suffering” – all were part of the op-ed article.

Klein also trotted out some economic statistics that he has used before, but again with no source for the data. They may have come from a $300,000 economic impact study commissioned in 2009 by CIRM with orders that it “execute a vibrant and aggressive strategy to support the goals and initiatives of CIRM.” (See here and here and here..) The final report was originally scheduled for April 2010, but has never been released publicly. Don Gibbons, chief communications officer for CIRM, said yesterday that the agency is now “shooting for later this month.”

The contract is held by LECG of Devon, Pa. As of last August (the most recent information available), the firm had been paid $75,000 on its contract, which was scheduled to terminate last Oct. 6.

Klein also cited a clinical trial involving UC San Diego with the clear implication that it was the result of CIRM-funded research.

Here is what John M. Simpson of Consumer Watchdog said about the claim in 2008.

“California’s stem cell agency overstated and hyped the importance of its funding in enabling clinical trials for a drug to treat a severe blood disorder...seriously undercutting the agency’s credibility and alienating those who support publicly funded stem cell research.”

His report followed our item on the research that quoted a scientist as saying that CIRM wrongly took credit for the research.

The field of stem cell science has been criticized for the hyperbole the surrounds it, much of which was evident in the 2004 election campaign that created the California stem cell agency. While some license is expected in any campaign, dubious claims can blow back on those who utter them as voters detect the flim-flam.

Did Klein go too far in his piece last week? Is CIRM creating a record of rhetorical excesses that will backfire?  Time will tell, but the agency can rest assured that those to want to block stem cell research will be parsing the agency's PR with considerable diligence.

California Stem Cell Agency Expanding Staff, Looking for a Few New Hires

Beginning Jan. 1, the California stem cell agency is expected to start bringing aboard a number of new employees as the 50-person cap on staff is lifted by a new state law.

One of those persons is expected to be a special projects coordinator who reports directly to CIRM President Alan Trounson. The post has a salary that that tops out at $224,536.

The new position has a wide range of duties including: development of new initiatives for CIRM, meetings with the biotech industry, academia and government officials, writing strategic documents and white papers on key initiatives, negotiations on critical projects, preparation of documents for the public and monitoring scientific developments.

One of the specific projects mentioned in the job description seems to be linked to a recommendation this fall from a blue-ribbon panel that called for CIRM to reach out to find promising, out-of-state endeavors that could be lured to California. The description described one project for the new hire like this:

“Identification of international new and rapidly evolving basic and applied research programs that may be linked to or introduced into the CIRM Californian biotech and academic research environment.”

Trounson is looking for someone with a Ph.D. in a biomedical science with a preference for some who also has a law degree and/or an MBA.

CIRM has additionally posted openings for science officers and grants management specialists. Still open is the new position of vice president for research and development, although that job description is not posted on CIRM's Web site. The job has been vacant for about 18 months.

CIRM Directors Move Towards Wider Public Access in Chair Selection

Directors of the California stem cell agency this week opened the door to a broader and more open way of determining who should lead the $3 billion enterprise for the next six years.

They set in motion a process in which the directors will publicly establish criteria that they would like to see in a person who would succeed Robert Klein as chairman come next June. No details were forthcoming and undoubtedly not yet developed, but the process is scheduled to be completed by about Feb. 15.

The timeline may be unrealistic given that the board has only one scheduled meeting between now and then. Nonetheless the new effort will provide the public with a chance to offer suggestions and comments. The vehicle for determining criteria for the new chairman is the CIRM directors' Governance Subcommittee, chaired by Sherry Lansing, a highly regarded former Hollywood studio chief. The subcommittee is supposed to complete its work within 60 days and develop criteria that will go beyond the legal qualifications for the chair.

CIRM directors now have an excellent opportunity to reach out and engage both the public at large and CIRM's special constituencies. Reach out is the operative phrase. Passive posting of information a day or two ahead of a meeting someplace on the CIRM Web site will not draw in comments. An email and phone effort, with follow-up, would be far more successful in generating thoughtful suggestions from both the public and specific, important stakeholder groups. To be useful, background material should be available prominently on the CIRM Web site at least two weeks ahead of the first subcommittee meeting. Indeed, it is not too early for the public to file suggestions and thoughts with the agency this week and next.

Some questions for the public to consider: Does the chair need to be a nationally known scientist? Does the post require experience in the biotech industry? Must the person have extensive experience in hands-on administration? Should the person be skilled in conciliation and negotiation?

One starting point for those interested in the election is the official rundown on how the nominations and election are supposed to work.

The information was offered up yesterday on the agency's Web site for the CIRM board of directors meeting.

Written by CIRM's outside counsel, James Harrison of Remcho, Johansen and Purcell of San Leandro, Ca., the memo, however, is a bit outdated. It was prepared last August but not widely publicized by CIRM. It is also not clear that the process, even with a change of dates, will be followed exactly for the election of new chair by next June, Klein's retirement date.

The earliest meeting date for the Governance Subcommittee is likely to be sometime in January, given the upcoming holiday season. The CIRM board is scheduled to meet Jan. 26-27 in San Francisco. The subcommittee may want to tackle the issue before that meeting in order to present a tentative proposal to the full board for suggestions and possible revisions for final adoption in March 9-10 in Sacramento.

The board has a relatively light schedule during the first half of the year, only four meetings between now and August. Presumably the election for the chair would occur June 22-23 at the board meeting scheduled for San Diego. The only other meeting scheduled in the first half of the year is May 3-4 in Los Angeles.

Correction

An item today concerning an article on Nature magazine's Web site dealing with the re-election of Robert Klein as chairman of CIRM said that the reporter interviewed Klein yesterday. In fact, Klein was interviewed earlier.

Nature Magazine Says Bernstein Is Still A Possibility for CIRM Chair

Canadian scientist Alan Bernstein is not necessarily off the table as a candidate to become the next chairman of the $3 billion California stem cell agency, Nature magazine's Web site is reporting today.

His name popped up in a piece by Elie Dolgin about the re-election of Bob Klein for a term of six months as chair  at the agency as he and the CIRM board search for his replacement.

Dolgin had interviewed Klein prior to yesterday's vote and reported that Klein would “like someone with industry experience who has worked with U.S. drug regulators in the past.” Previously Klein, a real estate investment banker, said he thought a nationally known scientist was necessary to replace him as chair. The CIRM board, which chooses the chair, has not specified the criteria it desires, but is scheduled to do so over the next 60 days.

Dolgin continued,

“Notably, Bernstein’s name is not necessarily off the table. According to Klein, California’s attorney general-elect Kamala Harris will look into the legality of a 1978 attorney general decision ruling that the requirement of citizenship for holding public office is unconstitutional.”

Dolgin's story was one of only two that we have seen thus far concerning Klein's re-election. The board specified yesterday that he should serve no more than six months. Klein said he hoped to leave sooner because of family reasons. He was receiving a half-time $150,000 salary but will receive no pay during his new service.

We reported earlier on the other story on the election by Ron Leuty in the San Francisco Business Times. It noted that the next nominees for chair will come from four state officials, all Democrats, including the newly elected governor and lieutenant governor, Jerry Brown and Gavin Newsom respectively. That is a good situation for Art Torres, co-vice chair of CIRM, and who is likely to be a candidate again for chair. Torres was head of the state Democratic Party and a longtime state legislator. He knows all the nominating officials. Torres was nominated by the state controller this month but withdrew his name in favor of Klein.

During its public session, the board expressed no displeasure with Klein's attempts to engineer the selection of his successor.  Sherry Lansing, chair of the directors' Governance Subcommittee, said nothing illegal or incorrect occurred.  But Dolgin wrote,

"Not everyone was happy with this scenario. In a strongly-worded letter sent two days ago, state Controller John Chiang urged the CIRM board members to delay their decision and start anew with fresh nominees. 'It is clear that the current selection process is fundamentally flawed,' Chiang wrote. '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.'

"'This path that they’ve gone down is a face-saving path for Klein who screwed up this election by trying to manipulate it and tap his own successor,' says John M. Simpson, stem cell project director of the Santa Monica-based advocacy group Consumer Watchdog. “He needs to let go and let the board step up and exercise its oversight responsibilities without constantly trying to pull the strings.'"

As for Klein's mention of the possibility that Bernstein's name would come up again, that would appear to be extremely unlikely. Bernstein told the Toronto Globe and Mail that the ruckus surrounding Klein's maneuvers damaged his (Bernstein's) reputation and that of the California stem cell agency.

As for the citizenship issue, it is difficult to understand why Klein is raising the matter again, except to note that he earlier misrepresented the attorney general's opinion as the reason for Bernstein being compelled to drop out of consideration.

(Editor's note: An earlier version of this item said that Dolgin interviewed Klein yesterday.)

UCSD's Goldstein Says His CIRM Grants Not All Basic Research

In an item carried Dec. 13 called “Eleven Top Stem Cell Researchers Back Klein for Re-Election,” we wrote,

“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.”

One of those mentioned by name was Larry Goldstein of UC San Diego, who has $14 million in grants from CIRM. Goldstein emailed us today, pointing out that his $11 million grant is not basic research. He said,

“For what it's worth, this grant, which constitutes the bulk of my CIRM funding is not basic research, it is translational with the goal of launching a clinical trial. Many of the statements about my research funding being only basic are incorrect as a result.”

Brown and Newsom to Nominate Two of the Next CIRM Chair Candidates

One news article on the re-election of Robert Klein as head of the California stem cell agency surfaced quickly tonight with an interesting reminder.

Reporter Ron Leuty's piece in the San Francisco Business Times was straight-forward. But it also refreshed readers on the nomination process for CIRM chair. It noted that two of the next nominees for chair will come from two new state officials, incoming Gov. Jerry Brown and Lt. Gov. Gavin Newsom, both Democrats.

Klein was nominated by the sitting governor and lieutenant governor, both Republicans.

Brown's choice could be interesting. However, he has been known to dally on filling vacancies in his own administration, much less enterprises outside the scope of his influence, such as CIRM. He also has a penchant for sometimes unusual appointments. Brown and CIRM vice Chair Art Torres, former longtime state legislator,also have known each for for decades.

Two other Democratic state officials, Treasurer Bill Lockyer and Controller John Chiang, also will make nominations for the new chair. Chiang had previously nominated Torres. Lockyer and Torres are old friends and colleagues. Lockyer did not nominate this month for chair, but nominated Torres for vice chair.

CIRM also produced a routine news release on the re-election tonight. You can find it here.

Torres and Roth Re-elected as CIRM Vice Chairs

Directors of the California stem cell agency today routinely re-elected Art Torres and Duane Roth as co-vice chairman of the $3 billion research effort.

Neither faced active opposition. Jeff Sheehy had been nominated for vice chair against Torres, but told the board he was not seeking the post.

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).