$5.5 Billion, Stem Cell 'Handcuffs' in California? CIRM Directors Have Questions on Ballot Proposal

OAKLAND, Ca. -- Some directors of the California stem cell agency are less than pleased with aspects of a proposed, $5.5 billion ballot measure to save the program from financial extinction, including one longtime board member who said it would "handcuff"  the research effort.

A sometimes testy discussion of the initiative arose late in the board's meeting yesterday with a number of board members expressing reservations about provisions in the measure that were "not helpful."

"These are handcuffs," said Jeff Sheehy, who has served on the board of the agency since its inception in 2004. "The board has a responsibility...to look at this measure while it still can be changed."

Jonathan Thomas, chairman of the stem cell agency board, said he is calling a meeting of the board sometime in the week beginning Nov. 11 to discuss the ballot initiative.  The deadline for public comments to go state election officials is Nov. 12. Changes can be made up to Nov. 17.  (See here for how the process works.) 

Changes can only be made by the sponsor of the initiative, who is Robert Klein, a real estate investment banker who was the first chairman of the agency, formally known as the California Institute for Regenerative Medicine (CIRM).  Klein is a real estate investment banker and the founder and chairman of Americans for Cures, a stem cell advocacy group.

CIRM has only $27 million left for new awards out of the $3 billion that voters provided for it in 2004. However, those funds are reserved for a federal-state sickle cell program. Efforts to raise significant private funds have been unsuccessful.
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The proposed ballot measure goes well beyond simple re-funding of the 15-year-old program. It would alter the structure of the board, basically defer control of its conflict of interest rules to a national scientific organization, create new programs, expand the scope of its work and more.

CIRM Director Steve Juelsgaard said the proposal would make "significant changes" including some that "frankly I don't think are very helpful."

On Wednesday, prior to yesterday's meeting, Sheehy' released a 3,300-word critique of the measure that was published by the California Stem Cell Report. He raised his concerns again yesterday directly with CIRM's governing board after board chairman Thomas offered a schedule for revising the agency's strategic plan sometime next year.

The CIRM board's sometimes heated discussion did not go into all of the measure's specifics. It focused primarily on whether the board should have an additional meeting on the matter and take a formal position. Several members of the board said they wanted to know more about the proposal and expressed concern about unspecified aspects of the measure.

Sheehy told the 29-member board that it would be "an abdication of our responsibility" if the board fails to weigh in on the proposal when it still can be changed. He said the initiative was drawn up in private in a process that was not publicly disclosed.

Art Torres, vice chairman of the board and former state legislator, expressed reservations about bringing the proposal before CIRM directors in a public session. He said that the state had a formal process for filing comments that could be used by concerned board members.

Some members of the board said a formal position by the board could have considerable weight in generating needed changes.. Some, however, were concerned that board criticism of initiative at this point could be used by opponents in the ballot campaign next year even if the board ultimately endorsed measure.

CIRM is in the process of setting a date and time for its review of the ballot measure. It is scheduled to be a telephonic meeting that would have multiple public remote locations. It would also be available on the Internet with public participation access. The California Stem Cell Report will report the time and date of the meeting when it is available and is asking Klein for his comments as well.

Slides from CIRM -- Review of the Stem Cell Agency's Work

OAKLAND, Ca. -- The president of the $3 billion California stem cell agency, Maria Millan, this morning is offering a review of its work over the past year or so. Here are the slides that she plans to use.

An Insider's Critique of California's Proposed $5.5 Billion Stem Cell Initiative: 'Too Little and Too Much'

Editor's Note: The following critique of the proposed $5.5 billion ballot initiative to re-fund the state stem cell agency was offered to the California Stem Cell Report by Jeff Sheehy, a longtime member of the governing board of the stem cell agency. Sheehy is also an HIV advocate and former member of the San Francisco County board of supervisors. His piece is verbatim, including the headline below. This web site more than welcomes additional comment on this important subject, both pro and con. You may comment at the end of this item. Or send your commentary to djensen@californiastemcellreport.com. It will be carried verbatim. See here for an initial summary of the measure.)

"Prop 71 Redux, Thoughts on the 'California Stem Cell Research, Treatments and Cures Initiative of 2020'”

By Jeff Sheehy

"I have been a member of the Independent Citizen’s Oversight Committee (ICOC), the governing board of the California Institute for Regenerative Medicine (CIRM), since its inception in 2004. The original measure, Proposition 71, passed in 2004 and authorized $3 billion in bond funding for stem cell research, almost all of which has been spent.

"A new ballot measure has been proposed. It adds an additional $5.5 billion in new State of California issued bond funding for CIRM, along with additional language that makes changes in the original ballot measure. 

"Notwithstanding any debates about the relative value to California from having spent the initial $3 billion and whether there is any need for additional funding, I would like to address some of the several changes to the original Proposition 71 that are included in the measure authorizing the new debt financing meant to support CIRM’s continued existence.

"Proposition 71, while workable, has been criticized for some of its features. My hope had been that the new measure, 'The California Stem Cell Research, Treatments, and Cures Initiative of 2020,' would address shortcomings in the original initiative.

"It does not. In some instances, it exacerbates existing defects, in others it fails to address problems, and it introduces new elements, some of which are confusing and unnecessary.

"Conflicts of interest amongst ICOC members have been one of the largest concerns in the original measure. Executives from academic research institutions are named as members of CIRM’s governing board, the ICOC, and under Proposition 71, participate in making decisions about funding. The bulk of CIRM’s funding has gone to these institutions and that has raised significant conflict of interest concerns. These members have always recused themselves from funding decisions related to their institutions and, in 2013, CIRM’s board decided to recuse these executives from involvement in any funding decisions, although no instances of impropriety had taken place.

"The new measure addresses this issue by removing decision making over conflicts of interest from CIRM’s board and handing it to the National Academies of Sciences, a non-profit in Washington DC funded in large part by the federal government (Section 125290.40 (q) ..develop conflict of interest rules..) and (Section 125290.30, ( l ), To assure…rigorous conflict of interest rules…every four years the ICOC shall update its standards relating to conflict of interest rules…to be generally aligned with standards adopted by the National Academy of Sciences…).

"Questions related to conflicts of interest regarding the distribution of $5.5 billion in State funds obtained via debt financing should NOT be handed to an entity that is not under the control of the State of California. In addition, the National Academy of Sciences has no public meeting requirements nor other measures around public accountability and transparency that are uniformly applied to all government bodies in California.

"Those sections removing conflicts of interest oversight from the purview of Californians should be removed. The way to address any concerns expressed around conflicts of interests by board members is to add new language changing the composition of the ICOC.

"Governance has been problematic. The original Proposition 71 created ambiguity around leadership of CIRM and conflict between the Chair of the ICOC and CIRM’s President has often taken place due to this ambiguity. Based on the language of Proposition 71, each officer could claim the role of chief executive officer (CEO). Plus, the ICOC, with 29 members, is too large. The size of the board has made it difficult for all of its members to get to know each other, to develop strong collaborative relationships with each other and CIRM’s President, and for all members to meaningfully exercise their oversight duties as a body.

"The Chair should not have executive responsibilities, and the job duties in the original Proposition 71 should be rewritten (Section 125290.45. ( b) (1) (A) ). Specifically, at a minimum, Chair responsibility for bond funding, government relations, and intellectual property should be deleted. The Chair should have an oversight role leading an active (and smaller) ICOC. The absurd $400,000 salary for the Chair and the language allowing it should be removed (Section 125290.45. ( b) (4) ). I defy anyone in California to examine the workload and output of the ICOC chair and justify the current salary, which is almost double that of Governor Newsom. I also would note that the current ICOC/Proposition 71 has no mechanism for removal of the Chair—that oversight should be corrected in the new measure. In addition, the President should be clearly defined as the Chief Executive Officer.

"The new measure makes board governance worse. It expands the ICOC to 35 members, which makes no sense (125290.20. ICOC Membership…) A board of that size will be unable to properly oversee the agency. Oversight has been a challenge under the current measure with the ICOC having a roster of 29 members. The sole rationale for a board of that size is to obtain political support from various stakeholders for the new measure by setting aside seats for their representatives. What those stakeholders fail to realize is that a seat on the board is meaningless if the representative is unable to engage the agency with sufficient impact. I can tell you from experience that it helps to be in the Bay Area (where CIRM is headquartered), and it also helps to have the ear of the Chair. Otherwise, it can be quite difficult to know what is going on and also to exert influence.

"The new measure should include new language to shrink the board to between 7 and 11 members, with the same ratios between scientific, patient advocate and biotech industry appointments (Section 125290.20). The chair and two vice chairs should selected from and by board membership, on a rotating basis with one each from scientific, patient advocate and biotech members. The chair and vice chairs should constitute an executive committee. ICOC membership should be defined in a way to address the conflict of interest concerns around ICOC members having executive leadership roles at institutions receiving funding. Members should be paid on the same scale as members of the California Public Utilities Commission with at least the same level of commitment and time.

"Conflict between the Chair and the President is potentially heightened by the creation of a Scientific Advisory Board with each appointing five members (Section 125290.76. Scientific Advisory Board…). The ICOC is weakened by being left out of this process and work that belongs to the ICOC around strategic planning is duplicated, and the ICOC’s overall role in overseeing the agency is undermined. Half the members are from outside of California, which shortchanges Californians. The ICOC and the President have always been able to solicit external scientific advice so there is no reason for this in the ballot measure, and it is likely to create conflict. In addition, unlike the ICOC, this body is not required to meet in public. The scientific planning for spending $5.5 billion in debt financed funds should not take place outside of public view. This section should be deleted—it is unnecessary.

"A major flaw in the new measure is that it redirects responsibility for ethical concerns around gene therapy to the National Academy of Sciences (Section 125290.35. Medical and Accountability Standards, (8) Standard for Genetic Medical Treatments and Research) and (Section 125290.30, ( l ), Additional Accountability Requirements). As I alluded to earlier, the National Academy does not meet in public nor follow any California open government/transparency rules. Ethical concerns around gene therapy with the very real potential to permanently alter the human genome and/or genetically enhance some individuals represents ethical concerns of the highest order. These decisions should be made openly, transparently and with the participation of all sectors of society. As an example, the identification of 'gay' genes in a recent study has already raised the possibility of editing those genes out to eliminate homosexuality—a concern so grave that some researchers at the Broad Institute, where the research took place, thought the study was unethical. This type of gene editing is no longer science fiction.

"This change is also confounded by CIRM’s experience. Several thorny ethical issues around embryonic stem cell research were raised early in the agency’s existence. Those issues were successfully handled via CIRM’s Medical and Ethical Standards Working Group, superbly chaired by patient advocate Sherry Lansing and esteemed bioethicist Bernard Lo. I would expand the activity of this body and specifically delegate to it the work around genome editing and other issues related to gene therapy. In the same manner as the issues around embryonic stem cell research were resolved, the entire process should take place in public with active participation from multiple stakeholders. Moving this to the National Academies takes away Californians’ ability to influence the ethics of research that will profoundly affect the future of Californians and is paid for by Californians.

"These sections delegating responsibility for ethics issues to the National Academies should be deleted.

"The new measure fails to address a huge deficit in the original measure around intellectual property and the financial return to the State (Section 125290.30.) Proponents of Proposition 71 promised billions in return to the State from the original $3 billion in funding. To date, only a few hundred thousand dollars have been received by the state in royalties. The elements codified via amendment by the State Legislature have helped, but I still strongly believe that the mechanisms to maximize the financial return to the State are weak. Plus, the agency has been hamstrung by a lack of staffing specifically dedicated to tracking and dealing with intellectual property—the 1% of the administrative budget that is dedicated to “Affordability” in the new measure should be reallocated here.

"In addition, CIRM has not been able to accept equity stakes in companies using CIRM generated intellectual property and/or funded by CIRM to conduct research. Billions are made by venture capitalists who invest in biomedical research and holding equity is an important mechanism for investing. Unfortunately, the ban on holding equity is stipulated in the California Constitution. I note with interest AB-1027, authored by Assemblymember Burke, allows for an undiluted ownership stake for the State in companies that accept certain financing from the State. I mention that as an example of creative thinking that could be brought to bear on this issue.

"I believe that opportunities to get a fair return exist and the new measure should identify means and processes that engage experts in intellectual property and finance along with the Governor’s, Treasurer’s and Controller’s offices to develop policies and staffing that ensure that the return to the State is maximized.

"Some elements added in the new measure are very difficult to understand. One element of the initiative, the “Alpha Stem Cell Clinical Program and Establish Community Centers of Excellence Program” (12590.72), is particularly hard to wrap one’s head around. Five Alpha Clinics have already been established and CIRM can set up more. CIRM recently convened experts publicly to analyze our work to date and offer suggestions moving forward. Expanding the Alpha Clinic network was not identified as a pressing need. However, expanding cell therapy manufacturing capacity, especially large scale capacity beyond what we have at academic research centers, was clearly identified as an urgent need and a critical element in scaling regenerative medicine/cell therapies.

"The Alpha Clinic network should be expanded due to evidence-based need -- not political expediency — that’s the definition of government waste. With an additional $5.5 billion, CIRM and the ICOC are more than capable of expanding the network if the need is identified.

"Alpha Clinics are expressly designed for institutions that have existing cell therapy manufacturing capacity, along with existing clinical trial infrastructure that includes state of the art medical centers.

"The requirement to establish Community Care Centers of Excellence in the new measure is extremely confusing and at a minimum, too prescriptive. Increasing access to clinical trials can be positive, but I worry about sending a signal to individuals considering participating in early stage clinical trials that there is some hope they will be cured by early stage products. The ethics of early stage clinical trials are clear—these trials determine whether a product is safe and carry significant risks and promising efficacy is unethical.

"The real gap for patients is getting access to late stage clinical trial products that have been proven safe and are being tested to see if they really work to treat or cure disease. Frequently the sickest patients are not allowed into these trials because they are the hardest to treat successfully and inclusion will unfavorably skew the data necessary to secure product approval. A compassionate access program that allows patients desperate for therapies to get late stage products and exempts the trial sponsor from having to include their outcomes in their data sets is a way to get these therapies to patients.

"I do see an emerging problem in making sure approved regenerative medicine/cell therapies are available to everyone in California. For instance, the FDA has approved CAR-T cell therapies for cancer (eg, Kymriah and Yescarta). These therapies cure some cancers, mostly blood related, in some patients. A patient’s own disease fighting immune cells are removed and then genetically modified to target and kill cancer cells. The complexity of the processes around cell manipulation requires special expertise and equipment. These therapies are only available at select specialized comprehensive cancer centers, usually at major academic research hospitals. Creating capacity in underserved parts of California for these and other regenerative medicine/cell products would be beneficial in ensuring access to these emerging therapies for all Californians. While the new measure requires that the Community Centers of Excellence conduct clinical trials and deliver CIRM funded products, creating this capacity should not be dependent on clinical trial work or CIRM funded products (btw, none have been approved so far). The focus should be on ensuring access to all regenerative medicine/cell therapies to patients, wherever they may be in California.

"Additionally, setting up these clinics requires working with existing healthcare provider networks—whether Kaiser or Sutter Health or County Departments of Public Health—and should also involve payers such as major insurers and MediCal. These new therapies will need to be integrated into existing care delivery systems. To implement a program like this, different sets of processes at CIRM will need to be developed—this is not a research program but a healthcare delivery program and should not be funded nor managed like a research proposal."I would suggest that Section 125290.72 be deleted and new language added to accomplish clear goals such as ensuring compassionate access for patients in need and creating capacity to deliver regenerative medicine/cell therapy throughout California if that is the intent of this initiative. It’s not clear what, if any, goals will be achieved by the current language in the new measure.

"Likewise, the Treatments and Cures Accessibility and Affordability Working Group (125290.75) is confusing. Affordability is a huge issue, especially for the therapies being developed by CIRM. I am not alone in believing our healthcare system is irrational. Systematic approaches like those bandied about in the run up to the 2020 Presidential election are the real solution.

"The response proposed in the new measure is both too little and too much. Creating a working group that works out some of the issues around reimbursement for expensive regenerative medicine/cell therapies is duplicative. Policy researchers, health economists and companies producing these products are all investing heavily in figuring out payment/reimbursement schemes. Setting aside 1% of administrative funds for this working group serves political purposes by pretending to address affordability and access—the equivalent of setting up a blue ribbon commission to study an issue you know you cannot solve.

"Section 125290.75 should be deleted. Instead, I would propose expanding the duties of the Medical and Ethics Working Group to include access and affordability issues.

"The best way for California to address the affordability issue and improve access would be to take substantial funds, perhaps via this measure, and establish a California non-profit generics manufacturing company. If generics, 90% of all prescription drugs, were priced at the cost of production, the amount of money available within the healthcare system for higher priced innovative new products, i.e. products of CIRM’s research, would be significantly increased. I would love to see a new section in the new measure specifically allocating funding for that purpose.

"There are other elements in the new ballot measure that I find overly prescriptive. For example the measure specifically requires funding the “Shared Research Laboratory Program,” an initiative originally funded by CIRM to address problems around the need to segregate embryonic stem research from any and all federally funded research. The new measure also requires funding the “Medical Training Program,” which requires CIRM to reinstitute training programs that already exist or once existed. Programs similar to these are likely to be part of a new portfolio if CIRM is refunded, and it is micromanagement to put them in this measure.

"These sections, 125290.73 and 125290.74, should be removed.

"This list of issues is not comprehensive, but only encompasses those that immediately raise concerns. I acknowledge that the potential fixes merely represent my own opinion, but they are based on real experience over a span of 15 years on the ICOC. I would welcome robust public processes that include engagement with the proponents and other interested parties in order to produce the best possible measure.

"The measure before us was constructed in private with input from a Scientific Advisory Board consisting of a select group of individuals who have received funding from CIRM. I am deeply troubled by this process for extending the life of a public agency that has existed for almost 16 years. I am extremely troubled by the lack of formal, public input from the Legislature or statewide elected officials including, but not limited to, Governor Gavin Newsom, Treasurer Fiona Ma and Controller Betty Yee.

"The original measure was created in response to the federal government’s limits on embryonic stem cell research. Those impediments were removed under President Obama, and the Trump administration has not taken up the issue. This is due in no small part to the identification of a new source of pluripotent stems cells (cells that have the ability to become any cell type found in one’s body). When Proposition 71 was passed, the only source of pluripotent stem cells, which could have transformative uses in treating and curing diseases, was from embryonic stem cells. The source for embryonic stem cells is surplus embryos created during the in vitro fertilization process. This source was highly controversial.

"Since the passage of Proposition 71, a new source for pluripotent stem cells was developed—induced pluripotent stem cells (IPS). These IPS cells are derived from a donor’s tissue—for example, from a tiny piece of skin tissue. IPS cells are also believed to pose low risk of rejection by the immune systems of patients from whom they are taken. IPS cell technology has raised no ethical concerns and many research projects that anticipated using embryonic stem cells now employ IPS cells.

"Much of the structure of the original Proposition 71 was conceived in order to insulate CIRM from any interference from ideological opponents to embryonic stem cell research. That is why board appointments are spread among multiple statewide officeholders and a 70% vote threshold by the Legislature for amending Proposition 71 was deemed necessary (this feature should also be changed in the new measure to allow the Legislature to weigh in more easily). Times have changed and now is the time to make CIRM responsive and directly accountable to the State of California and its residents."

Billion Dollar Questions and the True Cost of California's Ambitious Stem Cell Program

Robert Klein, a believer in bond financing and backer of the 

stem cell  agency -- California Stem Cell Report photo

Will California's stem cell research program really cost $6 billion dollars? 

That is a figure that has been widely used over the years by many in the news media and elsewhere, including this web site.  The number is based on the projected interest expense on $3 billion in state bonds that pay for the California Institute for Regenerative Medicine (CIRM), as the state stem cell agency is formally known. 

The $6 billion projection originated as an official estimate in the 2004 state voters pamphlet by the state Legislative Analyst, the respected source of nonpartisan financial information about state government.  The pamphlet was released by state election officials in connection with the ballot measure that created the stem cell agency. 

However, times were different 15 years ago. Interest rates were substantially higher. The Legislative Analyst did not forsee the low interest rates that the country has seen since then, particularly since 2008.  

The latest estimate of the total interest expense is about $1 billion, making the total costs for the stem cell agency about $4 billion instead of $6 billion. The figure comes from CIRM, which based it on information from the state treasurer's office, which sells the bonds. The treasurer did not respond to direct email queries by the California Stem Cell Report. 

Kevin McCormack, senior director of communications for CIRM, told us, 

"Per the state treasurer’s records as of 9/5/19, the interest cost on the bond proceeds that have been issued to date for CIRM is $836,579,927."

In response to questions, McCormack said another $600 million in bonds remain to be sold. With their sale, he said that the total interest expense will rise to roughly $1 billion.

The use of borrowed money to finance biomedical research is one of the very unusual aspects of the stem cell agency. State bonds are generally used to finance construction of long-term facilities such as roads and prisons.

The use of bonds was championed by Robert Klein, a California real estate investment banker, a profession that is deeply reliant on the use of borrowed money. Klein directed the writing of the 2004 initiative, led the subsequent ballot campaign and became the agency's first board chairman. 

Klein founded a stem cell advocacy group called Americans For Cures and  this month submitted a proposed ballot initiative to provide $5.5 billion more in state bonds to the agency, which is running out of cash. 

The website for Americans for Cures, which has offices in Klein's Palo Alto, Ca., offices, stoutly defends the use of bonds as a "new paradigm for funding medical research." It says, 

• "First, bonds spread the cost of a massive public investment over a period of 30 to 50 years.
• "Second, bonds provide a critical mass of financial assets that can be marshaled in the near-term increases dramatically.
• "Third, when funding structure changes to long-term bonds authorized by voters, healthcare constituencies are united in support. It is in their collective interest that voters approve bonds—if the bonds fail, the capital demands for research will fall back upon the appropriations process.
• "Using bonds to fund medical research creates a large-scale, long-term portfolio; historically, these have high statistical opportunities of success due to broad risk diversification.
• "Stem cell research is also funded by the federal government’s National Institutes of Health (NIH) budget. It may also be funded by the private sector, but such investment generally occurs later, during the testing and development phase, than during initial basic research."

The use of borrowed money is likely to be campaign issue, as it was in 2004, should Klein's new initiative qualify for the November 2020 ballot. Opponents of the 2004 measure argued against the state borrowing money for stem cell research. They declared in the state ballot pamphlet:

"We cannot afford to pile another $3 billion in bonded debt on top of a state budget teetering on the edge of financial ruin.

"General Fund bond debt will grow from $33 Billion on May 1, 2004, to a Legislative Accounting Office projection of $50.75 Billion in debt by June 30, 2005-a staggering 54% increase in just 14 months!"

Currently the state has about $80 billion in general obligation and revenue bond debt, according to state documents.  The state's financial situation is better than in 2004. And in June, California Gov. Gavin Newsom signed a $215 billion state budget that contained a $21.5 billion surplus. 

The price tag on California's stem cell program, however, is only one part of the political mix during the next 12 months. How it all will play out is far from clear. 

California's Big Research Tent: Beyond Stem Cells and Into VROs

California's $3 billion stem cell research program is unprecedented in state history, and it is now ready to mark another first: Backing a couple of clinical "VROs"  with $13.5 million.

VRO is a term that only a policy wonk could love or perhaps a researcher seeking funding under the rubric. It is not exactly posted on the home page of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known. It is nestled comfortably among the 10,000 words of the 2004 ballot initiative that created CIRM.

VRO stands for vital research opportunity. It is fair to say that few persons are aware of the language or know that CIRM's funding authority is something of a big tent that can go well beyond stem cells. Or that CIRM's program could be more expansive under a new, proposed $5.5 billion ballot initiative.

CIRM's governing board set the stage for the awards last November when it approved a VRO process for gene therapy research that did not involve stem cells but involved an aspect of regenerative medicine.

According to the meeting transcript, an application for an award would be considered a VRO if, among other things, "the approach is intended to replace, regenerate, or repair the function of aged, diseased, damaged, or defective cells, tissues, and/or organ. This basically constitutes the definition of regenerative medicine and brings that as a requirement."
 
A VRO designation also requires a two-thirds vote of the grant reviewers, who conduct their meetings behind closed doors.

On Thursday, the board is expected to approve its first two VRO proposals. One for $8 million targets Parkinson's disease. The summary of the review said the research has "the potential to slow disease progression and provide amelioration of motor symptoms."

The other is a $5.5 million award for treatment of a rare autoimmune disease called IPEX. The summary of the review said the research offered "a valuable alternative to the current standard of care options, which have significant toxic side effects."

VRO awards are permitted under the 2004 ballot measure, which says:

"The institute shall have the following purposes: (a) To make grants and loans for stem cell research, for research facilities, and for other vital research opportunities to realize therapies, protocols, and/or medical procedures that will result in, as speedily as possible, the cure for, and/or substantial mitigation of, major diseases, injuries, and orphan diseases."

Currently on file with state election officials is a proposed ballot initiative that would provide an additional $5.5 billion for the agency, which is soon expected to run out of cash for new awards.

The measure would make a number of changes in CIRM, including permitting the agency to venture even farther afield than permitted under the 2004 language.

The measure would impose a new requirement that the agency support training programs for "careers in stem cell research and other vital research opportunities." It would establish experience in "other vital research opportunities" as acceptable criteria for the selection of governing board members and the chair of CIRM. The criteria would apply also to the grant review group and appointments to a new scientific advisory board.

The proposed ballot measure also defines a VRO as including personalized medicine, genetics and aging. Here is the proposed, new language:

"Vital research opportunity means scientific and medical research and technologies, includinq but not limited to qenetics, personalized medicine, and aqinq as a patholoqy, and/or any stem cell research not actually funded by the institute under paragraph (3) of subdivision (c) of Section 125290.60 which provides a substantially superior research opportunity, vital to advance medical science as determined by at least a two-thirds vote of a quorum of the members of the Scientific and Medical Research Funding Working Group (reviewers) and recommended as such by that working group to the ICOC (the governing board),or as determined by the vote of a majority of a quorum of members of the ICOC. Human reproductive cloning shall not be a vital research opportunity."

The language still can be modified by the initiative backers prior to being certified for the November 2020 ballot. Here is how that mechanism works. 

The 'Permissible' and 'Impermissible:' Admonitions Involving the California Stem Cell Agency and a $5.5 Billion Proposal

The 29 directors of the California stem cell agency are hearing a warning this week that certain types of their possible activities on behalf of a proposed $5.5 billion ballot initiative could lead to a criminal investigation by state or local law enforcement agencies. 

While that would seem to be an unlikely event, it has caught up another California public enterprise (the Bay Area Rapid Transit District). That's because state law restricts the use of public funds in connection with ballot campaigns. It is a complex subject, however, and laden with lots of gray areas. 

James Harrison
Remcho Johansen & Purcell photo

James Harrison, the former and longtime general counsel for the state stem cell agency, is scheduled to brief the board Thursday on the subject of "the permissible" and "the impermissible." Harrison is  well-known and respected for his work on election law and initiatives. 

He was deeply involved in drafting the $3 billion, 2004 ballot initiative that created the agency, known formally as the California Institute for Regenerative Medicine (CIRM). Harrison is also immersed in the proposed $5.5 billion measure for the 2020 ballot. It is designed to re-fund the agency, which expects to run out of cash this year for new awards. 

Harrison's memo to the CIRM board and his slide presentation on the use of public funds have been posted by the agency on its web site. In short, he says the key principles are:

"Communications about a ballot measure should be delivered through CIRM’s ordinary communication methods, like its website, blog, newsletter, emails to interested persons, and public meetings, in the style CIRM normally uses to communicate other information. CIRM should avoid passionate or inflammatory language and modes of communication that it does not regularly employ, and should not encourage voters to vote in a particular manner. For example, CIRM should not 'borrow the voices and the sympathy' of individuals who could benefit from the passage of the stem cell funding measure when discussing the measure, as BART did for Measure RR. CIRM should also take care to state past or present facts in a fair and dispassionate manner, and avoid using graphics, text, or video aesthetics that are similar to campaign advocacy (and different from CIRM’s normal practices). Taking steps like these will help ensure that the FPPC (Fair Political Practices Commission) or a court will conclude that CIRM is engaging in information sharing, rather than overt campaigning."

Harrison's presentation specifically discusses the BART case and others. The memo contains a list of specific permissibles and impermissibles. One permissible allows the board to vote on whether it supports the initiative. Another allows the agency to "prepare staff reports and other analyses to assist decision-makers in determining the impact of the measure and what position to take." 

Impermissibles include gathering signatures on the initiative and preparing materials for the public to use in support of the agency's position on the initiative. Working for an initiative on state time is barred, but CIRM employees can work for the campaign on their own time. 

Given the history and nature of California ballot campaigns, the state stem cell agency is certain to see public complaints that it is using public resources to support the initiative. The key, Harrison is telling CIRM directors, is to think about the context and content of proposed activities. 

His admonitions also include:

• "Ask legal counsel when you are not sure about a proposed activity.

• "Remember that even minimal use of public funds related to a measure can lead to investigation and litigation."

California Stem Cell Agency Posts $54 Million in Good News for Eight Researchers

Eight California researchers may be able to breathe a sigh of relief this morning with the news that the California stem cell agency has enough cash on hand to fund their applications to develop therapies for afflictions ranging from Parkinson's to eye diseases.

All eight of the applications have been approved already by the agency's reviewers. The agency's  governing board very rarely reverses the reviewers' actions. 

Until a day ago, it was uncertain whether the agency had the money to fund all the proposals. The good news for the scientists came in the form of a posting late yesterday on the web site of the agency, formally known as the California Institute for Regenerative Medicine (CIRM). The posting said that the agency has $54.2 million available for new awards as of Wednesday of this week (Oct. 23). The total for the eight application is about $52 million. 

Of course, it is possible that the board could move in a different direction based on considerations not readily apparent from the agenda for its meeting next Thursday. 

If the agency has $2 million or so left after next week's meeting, it is also unclear what it will do with the cash. One possibility is that it could retain the cash for awhile and combine it with funds that might be recovered from awards that have not met milestones.  So far this year, the agency has recovered $30.3 million.

CIRM has expected to run out of cash this year for new awards after dispensing $2.7 billion over the last 15 years to 1,017 recipients. It is hoping voters will approve $5.5 billion more via a ballot initiative in November 2020. 

Thursday's meeting does have another financial fillip. Listed on the agenda is a line that says a report will be made on private donations. That could be good news or not-so-good news depending on how successful its private funding efforts have been over the last couple of years. Results of that drive are yet to be publicly announced. 

(Editor's note for careful readers: The CIRM document that contains the $54.2 million figure also lists $57.2 million in applications. One of those applications, a $5 million proposal, was not approved by reviewers, however.) 

Want to Speak to the Directors of the California Stem Agency? Here is Your Chance.

The $3 billion California stem cell agency meets Oct. 31 to consider applications for $52 million in research funding. Also on the table are issues ranging from its finances to an initiative that would re-fund it with $5.5 billion. The agency expects to run out cash for new awards by the end of the month.

The meeting is open to the public with its main location at its headquarters in Oakland. Here is the current list of locations, which may change. The public can also participate via the Internet as the meeting is streamed live. See the agenda for instructions. 

Here are links to items dealing with issues before the board. "Last Research Awards...." "Competition for $52 Million..."

CIRM HQ: 1999 Harrison Street Suite 1650, Oakland, CA 94612

Other locations, which are usually hosted by a member of the agency's governing board: 

10901 N. Torrey Pines Road, La Jolla, CA 92037
4005 N Fresno St., Fresno, CA 93726
765 Market Street, #31D, San Francisco, CA 94103
9500 Gilman Drive #0602, La Jolla, CA 92093-0602
291 Campus Drive, Stanford, CA 94305
Medical Sciences 1C, Room 110, Davis, CA 95616

California Stem Cell Researchers Compete Next Week for $52 Million in Awards

Directors of the California stem cell agency will make yes-or-no decisions next week  on eight applications for $52 million to seek cures for afflictions ranging from Parkinson's to an incurable eye disease called retinitis pigmentosa.

All eight have been approved behind closed doors by the agency's grant reviewers, but it is yet to be determined whether the agency has enough cash to ratify that action.

Prior to voting on the applications, the 29-member board is scheduled to discuss how the agency's final funding will be parceled out. The agency expects to run out of cash for new awards at the end of the Oct. 31 meeting. However, also on its agenda are a few words promising a report on the status of its search for private donations. 

Below is a table on the applications. It includes links to the review summaries prepared by the agency, which is formally known as the California Institute for Regenerative Medicine. Links to the review summary can be found on the application numbers.

Some of the applicants have filed additional letters with the board seeking to bolster their pitches. The letters can be found by clicking on the researcher's name. Some of the applicants are expected to address the board personally Oct. 31 in Oakland.

The agency has a non-embarrassment policy of not disclosing the names of applicants and their institutions until a vote by its board.  However, when they write the board, their names become a public record. The names of applicants who fail to win approval are never disclosed by the agency.

Look for more stories in the upcoming days from the California Stem Cell Report on the agency's Halloween meeting.

Application Number	Amount In millions	Institution	Principal  Investigator	Target
CLIN1-11591	$5.5	Stanford	Rosa Bacchetta	IPEX
CLIN1-11472	$6.6	Not disclosed	Not disclosed	Retinitis pigmentosa
CLIN2-11620	$10.5	Not disclosed	Not disclosed	Retinitis pigmentosa
CLIN2-11661	$8.0	Brain Neurotherapy Bio	Krystof S. Bankiewicz	Parkinson’s Disease
CLIN2-11650	$10.3	UCLA	Sophia Deng	Limbal stem cell deficiency
TRAN1-11536	$4.9	UCLA	Caroline Y. Kuo	Immune deficiency
TRAN1-11555	$3.2	UCLA	Yvonne Y. Chen	Myeloma
TRAN1-11544	$2.9	Not disclosed	Not disclosed	Ovarian cancer

Halloween Meeting Set for $3 Billion California Stem Cell Agency: Last Research Awards Expected to be Made

California's $3 billion stem cell agency next week is expected to give away the last of its funds for new research awards and hear a report on private donations that it may have received in the recent past or perhaps expects in the future. 

The donations report is something of a mystery, based on the agenda, but perhaps appropriate for the governing board's meeting, which comes on Halloween, Thursday Oct. 31. 

More details are likely to be posted online in the next week or so and reveal more clues about the direction -- over the next 12 months -- of the agency, formally known as the California Institute for Regenerative Medicine (CIRM).

The agency expects to run out of money for new awards at the end of this month unless a there is a surprise announcement that a private fund-raising effort has produced significant results. CIRM was created in 2004 by voters, who allotted it $3 billion in state bonds. No other source of cash was provided by the ballot initiative. 

In addition to consideration of applications for clinical and translation stage awards, also on next week's agenda are:

• "Use of public funds in connection with ballot measure presentation"
• Last week's report on the economic impact of the agency 
• Changes in the "administrative funds donor agreement and disclosure of funds received from donors." (Those changes were not available on the agenda but are likely to be available in the next few days.)

The ballot measure discussion involves the appropriate and legal role of the agency in connection with the $5.5 billion, proposed ballot initiative to provide additional support for CIRM. The measure is now before state officials for certification prior to being circulated for the 600,000-plus signatures needed to qualify for the November 2020 ballot. 

State law prohibits the use of state funds to support ballot campaigns. The agency has been careful to adhere to the law. But it is always a touchy area. A number of gray areas exist involving the agency's additional legal requirements to respond to questions and inform the public about the conduct of the taxpayer's business.

The public can comment and recommend changes in the proposed initiative between now and Nov. 12.  Suggestions for changes will be relayed to the backers of the measure.

Regarding the currently cryptic Halloween agenda, look for more details on the California Stem Cell Report between now and Oct. 31. We will be filing fresh items as the information emerges.  

Next week's meeting will be held at CIRM's Oakland headquarters. The public can attend and also participate via the Internet. Remote telephonic locations that are open to the public can be found in La Jolla, San Diego, Fresno and San Francisco. Directions and instructions can be found on the agenda.

California Stem Cell Health Dividends: A Whopping $900 Billion? Maybe Only $175 Billion?

A team of University of Southern California researchers said today that work by California's stem cell agency could pay off with nearly $900 billion in "health dividends" by 2050 by treating or curing afflictions ranging from diabetes to heart disease.

The study, commissioned by the agency, acknowledged the difficulty in forecasting the benefits of research backed by the the state program, which is unprecedented in California history. But the report said,

"We find that nearly half of Californians aged 50 and older will develop diabetes during their lifetime. Furthermore, more than one-third will experience a stroke, and between 5 and 8 percent will develop either breast, colorectal, lung, or prostate cancer.  

"Taking into account the high prevalence and the social and economic burden of these diseases, an intervention that reduces the incidence of these selected cancers, diabetes, and stroke by 50 percent would generate almost $900 billion in social value between 2018 and 2050.  

"A more modest 10 percent decline in incidence translates to $175 billion in social value during the same period. Put in this context, the CIRM investment would be worthwhile if it increased our chances of success even modestly. Against the billions of dollars in disease burden facing California, the relatively small initial investment is already paying dividends as researchers work to bring new therapies to patients."

The agency, known formally as the California Institute for Regenerative Medicine (CIRM), was created by voters in 2004, who provided it with $3 billion. It has yet to fund a product that is widely available to the public. However, the agency is involved in 56 clinical trials, which are the last stage before a treatment is certified for widespread use.

CIRM expects to run out of cash for new awards by the end of this month. It hopes that a proposed initiative for the November 2020 ballot will provide it with an additional $5.5 billion. 

Today's report, titled "Future Health Dividends for California," and its companion study last week on the agency's economic impact are likely to be significant topics during the 2020 campaign. 

The 22-page study came up with a "social value" calculation using the Future Elderly Model -- "a microsimulation model of health and economic outcomes for older Americans." Basically it involves quality of life outcomes as well as more straight forward financial projections. The study also lays out its methodology and limitations including an acknowledgement that the projections are not guaranteed. 

Today's report and last week's economic study cost CIRM a total of $206,000. The work was performed at USC's Leonard D. Schaeffer Center for Health Policy & Economics. The authors are Bryan Tysinger, Karen Mulligan, Henu Zhao, Alwyn Cassil  and Dana Goldman.

Here is a link to an item on the CIRM blog about the study.