Hand-Off at The Top

Jonathan Thomas takes oath of office. (left to right, Robert Klein, Thomas, Melissa King, executive
director of  CIRM board, James Harrison, outside board counsel)

It was a statement that could be taken in more ways than one.

It came from outgoing CIRM Chairman Robert Klein today as he swore in his successor, Jonathan Thomas, a Los Angeles bond financier.

Thomas read the prescribed oath for all state employees. Then Klein shook his hand and said,

"I congratulate you on a journey that you will never forget."

Klein said one reason he is leaving his post is to spend more time
 with his wife and family.
 (left to right, Klein and his wife, Danielle, and Thomas, following the swearing in. 

CIRM Directors Adjourn Meeting

CIRM directors just concluded their meeting in San Diego this afternoon with the swearing-in of newly elected Chair Jonathan Thomas. His first responsibility was to preside over the unanimous approval of a resolution honoring Robert Klein for his work and then adjourn the meeting.

Consumer Watchdog: $400,000 CIRM Chair Salary Will Incense Public

Consumer Watchdog's John Simpson, a longtime observer of the California stem cell agency, today said that the public will be outraged by the salary of its new chairman, damaging the prospects of a new multibillion dollar bond measure for stem cell research.

Simpson, stem cell project director for the Santa Monica, Ca., organization, supported the candidacy of Frank Litvack, writing an op-ed piece May 31 in The Sacramento Bee. Jonathan Thomas, a Los Angeles bond financier, was elected last night on a 14-11 vote.

Asked for comment on the outcome of the election, Simpson said in an email,

"The election of Bob Klein's successor was an opportunity for the board to end the dysfunctional dual executive model that has plagued CIRM since its launch and move to a structure where the chair serves in an oversight capacity. All outside evaluators have advocated this.

"Instead, after considerable arm-twisting from some of the state's top Democrats, the board picked a $400,000-a year candidate, Jonathan Thomas, who plans to be deeply involved in the agency's day-to-day operations. CIRM already has one executive who makes a half-million-dollar salary, President Alan Trounson. It's pure folly to spend nearly that much again so that two overly paid executives can trip over each other in a 50-person state agency.

"By comparison Dr. Francis S. Collins, director of the National Institutes of Health, gets a salary of $199,700, according to the NIH Department of Human Resources.

"The public outrage that will result from hiring a $400,000-a-year chairman will prove to be a public relations disaster from which the stem cell agency will never recover. Those contemplating going to the public in the future to seek another bond issue should have considered the negative impact such a salary will have. Opponents of a bond initiative will have a field day.

"The board had the chance to correct CIRM's management structure and put the agency on the right track for the future. They squandered that opportunity, opting instead to select the candidate with the best political connections, and did so at considerable unnecessary expense to the public."

More Info on Roll Call on New CIRM Chair

We have added the following information to the earlier item today on the roll call vote on the new chair of the California stem cell agency.

Absent last night were CIRM directors Leeza Gibbons, Eugene Washington, Marcy Feit and Sam Hawgood. Feit attended the meeting this morning and said she would have voted for Thomas. She said had planned to be available to vote from a teleconference location, but could not reach it because of a transportation hang-up.

CIRM Board Puts Off Changes in Review of Big Ticket Grants

Directors of the California stem cell agency this morning put off major proposed changes in the review process for high profile grant applications in clinical trial and disease team rounds.

Director Jeff Sheehy, chair of the directors' Science Subcommittee, sought the delay because, saying that the leadership of the committee and CIRM staff had not been able to reach a consensus on the language. There was no discussion on the matter.

Earlier this month, CIRM staff indicated some urgency existed concerning implementation of the plan.

Trounson's Report Available Online

The California stem cell agency this morning posted the presentation of CIRM President Alan Trounson. In it, Trounson reviews recent stem cell research and briefs the board on his current priorities. During the meeting, board member Jon Shestack noted the importance of posting the material and its importance in communicating about CIRM's direction.

Roll Call on Election of New CIRM Chair

Here is the roll call on the 14-11 vote last night electing Jonathan Thomas as the new chair of the California stem cell agency. All members who were available voted. There were no abstentions.

Voting for Thomas were Floyd Bloom, Jacob Levin (alternate for Sue Bryant), Michael Friedman, Michael Goldberg, Philip Pizzo, Stephen Juelsgaard, Robert Klein, Sherry Lansing, Robert Quint, David Serrano Sewell, Jeff Sheehy, Jon Shestack, Oswald Stewart, Art Torres.

Voting for Frank Litvack: Robert Price (alternate for Robert Birgeneau), David Brenner, Ted Love, Bert Lubin, Sholmo Melmed, Claire Pomeroy, Francisco Prieto, Carmen Puliafito, Duane Roth, Joan Samuelson, Kristina Vuori

Absent were Leeza Gibbons, Eugene Washington, Marcy Feit and Sam Hawgood. Feit attended the meeting this morning and said she would have voted for Thomas. She said had planned to be available to vote from a teleconference location, but could not reach it because of a transportation hang-up.

Stem Cell Directors Resume Meeting in San Diego

Directors of the California stem cell agency  resumed their meeting this morning in San Diego with a presentation by CIRM President Alan Trounson on his priorities and review of recent research. He began with a report on a a piece in Nature Biotech about public perceptions of stem cell research, which shows strong support for the endeavor. Robert Klein is conducting the meeting. Newly elected Chair Jonathan Thomas is seated at the directors' tables. Klein's resignation does not officially take effect until tomorrow.

Thomas Reacts to Vote News

Jonathan Thomas was not in the room late last night when directors of the California stem cell agency voted to elect him to a six-year term as chairman of the $3 billion research endeavor. He was elsewhere in the hotel in San Diego. Directors went on to some minor business as they waited for his return. Shortly after he and his wife were seated in the audience, outgoing Chairman Robert Klein reiterated the vote and Thomas received a standing ovation. In this photo, Thomas is applauding in return. His wife is seated. In the background is Frank Litvack(with glasses), who lost the election for the chairmanship.

Race for the Chair: Political and Financial Pressure Help Thomas Win CIRM Chairmanship

SAN DIEGO, Ca. –- Directors of the $3 billion California stem cell agency late yesterday evening elected Los Angeles bond financier Jonathan Thomas as chairman of the unprecedented research enterprise as it strives to fulfill seven-year-old campaign promises to turn stem cells into cures.

The board voted 14-11 to choose Thomas over Frank Litvack, a cardiologist/businessman, also from Los Angeles. The vote came with no debate following a three-hour closed session. Each candidate appeared separately in private, followed by a discussion among board members, also in private. Only one member of the public spoke out on the election during the public portion of tonight's meeting, during which each candidate read a statement.

The California Stem Cell Report was told that Gov. Jerry Brown's office called six members of the CIRM board during the past two days and managed to switch some members from Litvack to Thomas. The governor's office did not respond to queries about the matter.

Outgoing Chairman Robert Klein said the key factor in the vote was the state's current financial crisis and its possible negative impact on CIRM, which depends solely on state bonds for cash. Earlier Thomas sounded an alarm about CIRM finances, telling directors it was necessary to move to assure financial stability. CIRM faces both short and long term financing problems. Thomas could be the last chairman of CIRM unless he and the board devise a way to finance it beyond 2018, roughly the date when the agency runs out of money.  (For more on Thomas' remarks, see here.)

Klein told the California Stem Cell Report that Thomas would be paid something in the range of $390,000 to $395,000 annually for 80 percent time on the job. (The agency later said the correct figure is $400,008.)

Thomas is chairman and co-founder of Saybrook Capital of Santa Monica, Ca. The firm specializes in distressed government bonds. The current state budget crisis in California has left the state with the worst bond rankings of any state in the nation. State Treasurer Bill Lockyer, who controls the sale of state bonds, and the governor and lieutenant governor all nominated Thomas.

On Monday Lockyer sent a strong letter to his five appointees to the CIRM board urging them to vote for Thomas. He said the bond financier was the only candidate with a "complete toolkit" for the job. Lockyer stressed Thomas' background in bond financing.

Unless CIRM receives funds from a fresh bond sale, it will run out of cash in the middle of next year. However, the state is limiting its bond sales because of its budget crisis. CIRM will face tough competition to have its bonds placed in the two sales rounds expected to come up in the next 12 months. .

Some observers interpreted Lockyer's letter as a veiled warning to the entire 29-member board to approve Thomas, with the letter implicitly raising the possibility that the agency could come up short in the next bond rounds.

Longer term, CIRM has only about $1.4 billion or so to hand out for grants or loans. Klein has touted a $3 billion to $5 billion bond measure that would be presented to voters sometime during the next few years. To win support of the proposal, the agency will need a record of substantial accomplishment that resonates with the public.

During Thomas' six-year term, the agency will also have increasing responsibilities for monitoring its massive and growing grant portfolio. The task will become more challenging with larger and more complex grants and loans that have achievement benchmarks that must be met. If not, CIRM is supposed to withdraw its cash. At the same time, the agency continues to wrestle with its computerized grant management system.

To accomplish its goals, CIRM is working ever more closely with the biotech industry. Some industry executives have been dismayed at the tiny fraction of funding that has gone to businesses. A blue-ribbon review panel last fall cited the need to bolster funding for industry. At the same time, the taxpayer-funded agency must assure that the state receives full value for its dollar.

Litvack also had a blue-ribbon business resume along with a record of scientific accomplishment. One description calls him a "serial entrepreneur." He was CEO of Conor MedSystems of Menlo Park, Ca., when it was sold a few years go to Johnson &  Johnson for $1.4 billion. More recently he has been involved with Pervasis Pharmaceuticals and Capricor, Inc.

Litvack touted his scientific and business experience in developing new products and running the FDA gauntlet. State Controller John Chiang, who recently gained national attention for cutting off the pay of California legislators because they failed to pass a balanced budget, nominated Litvack. Chiang said,

"Litvack knows from personal experience what it takes to develop new medical technologies and move them through the regulatory process to adoption in the market place."

Thomas Elected New Chairman of CIRM

Jon Thomas was elected chairman of CIRM on a 14-11 vote. More to come.

Board Resumes Public Session

The CIRM board just came back into public wsession after about three hours of meeting in private.

CIRM Directors Still Mulling Chair Selection Privately

The two candidates for the chairmanship of the California stem cell agency appeared separately and in private before the organization's directors tonight. Their appearances have concluded. Directors have now been huddled behind closed doors for about two hours. The staff and and the two candidates are all gathered in the public  meeting room, chatting in small groups..

CIRM Board Goes Behind Closed Doors

The CIRM  board has gone into executive session following presentations by the two candidates for chair. It is unclear when the public session will resume.

Thomas Stresses His Bond Expertise, Cites State's Dicey Financial Condition

Jonathan  Thomas, a candidate for chair of the $3 billion California stem cell agency, tonight hammered away at the value of his bond financing experience and what it could bring to the survival of the research enterprise. 

Speaking to the CIRM board, Thomas, a Los Angeles bond financier, hit on many of the themes sounded by state Treasurer Bill Lockyer in his letter on Monday. Lockyer nominated Thomas for the post. In his letter, he said Thomas was the only candidate who had a "complete toolkit" for the job. 

In his comments, Thomas repeatedly said he had "all" the qualifications for the job. Lockyer, in fact,  underlined all in his letter when he referred to Thomas' qualifications.. 

Thomas spoke candidly about CIRM's financial condition. He asked whether CIRM will have funds available after 2017, a reference to CIRM projections that its $3 billion will run out about then. Thomas said the state is in a "full out fiscal crisis." As a result, a "real possibility" exists that CIRM will not have "timely access to the funds it needs."  He said the the agency may have to look to other sources of funding.  

"Let's not kid ourselves. This problem could last for a long time," Thomas said. 

The board has not heard that sort of candid public comment about its finances recently, although the warning signs have been there for some time. 

Thomas also addressed the dual executive issue. He said the CIRM chairman and president should have complementary positions -- not overlapping. He said he spoke with CIRM President Alan Trounson on Sunday and would expect to have a complementary, highly collaborative arrangement with him. 

Thomas brought up the statement by Frank Litvack, the other candidate for chair, that he would serve in a parttime role. Thomas said the position demands more time than that offered by Litvack. 

We have asked Thomas for a copy of his remarks. He said his only copy was marked up and said he would provide one tomorrow. 

Text of Litvack's Statement to CIRM Board June 22, 2011

Here is the text of Frank Litvack's remarks this afternoon to the directors of the California stem cell agency. Litvack is a candidate for chair of the agency.
Litvack statement to CIRM board June 22, 2011

Race for the Chair: Litvack Discusses "Black Box" of Bond Financing

SAN DIEGO, Ca. – Los Angeles cardiologist and businessman Frank Litvack tonight made a final pitch to directors of the California stem cell agency to become the next chairman of the $3 billion research effort.

In remarks prepared for delivery, Litvack stressed his business experience during which he said he raised hundreds of millions of dollars. He noted that his enterprises were all high risk ventures and were not "back-stopped by the faith and credit of the state of California," a reference to the state bond funding behind CIRM.

He also reviewed his work in developing new products and his dealings with the federal agencies that regulate them.

Litvack reiterated much of what he has told the board previously, including his commitment to serve as more of an oversight chairman rather the engaging in day-to-day management. Prop. 71, which created the stem cell effort, set up a much-criticized dual executive arrangement with overlapping responsibilities for the chairman and president.

Litvack also addressed the "black box" issues raised by state Treasurer Bill Lockyer and others concerning the need for bond financing experience. (See here and here.)

Litvack said,

"In the spectrum of financial instruments, state bonds are not considered complicated. In fact, they are among the most simple."

He reviewed the current state financial situation and how state bonds work. Come next spring, Litvack said,

"Should the unthinkable happen, as it occasionally does, and there is no (state) budget by next year, then CIRM will need to assume the mentality of a start-up venture and get creative....One might consider a private placement (of bonds) if permitted. As with any form of financing, it is not the mechanics that is rate-limiting. Rather it is the ability to clearly articulate the vision to the prospective investors."

Other new proposals surfacing in Litvack's remarks included:

• CIRM-sponsored meetings between venture capitalists and promising stem cell companies to help generate much-needed funding for the businesses.
• Possibly selling industrial development bonds, which are aimed at building businesses in a particular region, to help finance clinical trials.

For more on Litvack's background and previous statements, see here and here and here.

CIRM Directors Approve $27 Million Training Effort at State and Community Colleges

Directors of the California stem cell agency this afternoon approved a $27 million extension of a training program at California state and community colleges. CIRM staff said the program supports 160 trainees a year at 16 institutions. The extension will cover a three year period. The vote was 7-0.. Nineteen of the 29 CIRM directors were not able to vote or participate in discussion of the proposal because of conflicts of interest.

$47 Million Training Extension Approved

On a 6-0 vote, directors of the California stem cell agency this afternoon approved a $47 million extension of a scientific training program at the state's universities and research institutions.  Only seven members present at the meeting were eligible to vote on the matter. The board has 29 members. The others were disqualified because of conflicts of interest.

An Example of Conflict of Interest Issues at CIRM

The $47 million training program extension now being debated by the directors of the California represents a good example of the conflicts built into the California stem cell agency.

The board has 29 members. Twenty are barred from participating in the debate or voting  because of conflicts of interest. Here is a list of the institutions that stand to receive funding under the extension.