California's $5.5 Billion Stem Cell Campaign and Covid-19: How Science and Politics Marry

Editor's note: The following item written by the producer of the California Stem Cell Report appeared yesterday on the Capitol Weekly online news service. 

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The California stem cell agency has just finished pumping $5.3 million into the fight to save the lives of COVID-19 victims. And — in a ballot-box bonus — its efforts are already surfacing in the ballot campaign to rescue the agency from its own demise.

The agency is running out of money. It will begin closing its doors this fall without major financial support that it hopes will come from Proposition 14, a $5.5 billion bond measure on the November ballot.

The $5.3 million in the fast-track, Covid program is tiny by comparison. But the awards are likely to play a heftier role than might be anticipated based on their size. Stories about the Covid awards have appeared on the campaign website in a move to tap into the deep public concern about the coronavirus.

The Covid research piggybacks on the federal “warp speed” drive to develop Covid treatments and is aimed at demonstrating that the agency is part of what CIRM officials describe as a worldwide, “all-hands-on-deck” effort.

Three clinical trials have been funded, which involve actual patients as opposed to laboratory research. If the trials are successful, patients who have benefited are likely to surface in campaign video advertising aimed at refinancing the agency, formally known as the California Institute for Regenerative Medicine (CIRM).

CIRM sorely needs research results that will resonate with voters. The 2004 ballot campaign that created the $3 billion program raised expectations that stem cell therapies were right around the corner. But the agency has yet to produce a stem cell treatment that is widely available to the public.

The agency launched its Covid round on March 27 when CIRM board chairman Jonathan Thomas declared, “The coronavirus is creating an unprecedented threat to all of us, and, as one of the leading players in regenerative medicine, we are committed to doing all we can to develop the tools and promote the research that will help us respond to that threat.”

Indeed, failure by CIRM to respond to the COVID-19 threat — it could be argued — would be a breach of CIRM’s public responsibilities.CIRM’s Covid research financing is a case where an urgent medical need marries nicely with ballot-box politics. The agency is forbidden by law to campaign for the ballot measure. But its charter also allows it to pursue a wide range of research possibilities.

Late last month, CIRM directors capped off the round by approving two awards and adding nearly $300,000 to the original authorization of $5 million. All of the awards have been made under an emergency process that requires awardees to be ready to begin research within 30 days and achieve “a clear deliverable within six months.”

The final awards went for basic level research. Earlier, CIRM approved funds to assist in the three clinical trials, which are the final stage before a treatment can be approved for widespread public use. The trial awards range from $1 million to $701,000 each, a bargain price for joining a trial. Most of CIRM’s previous clinical trial awards run into many millions.

CIRM now counts a total of 64 clinical trials that it is helping to finance. Two of the Covid trials are taking place at the University of California, San Francisco-UC Davis and the City of Hope in the Los Angeles area. The third involves a New Jersey firm called Celularity, Inc., which has failed to respond to multiple questions about the California location of its trial. The agency is limited to funding activities within the state. CIRM directors approved the Celularity award on June 26, more than 30 days ago.

The Celularity award has another interesting angle. It involves a treatment supported by President Trump’s personal attorney, Rudi Giuliani. 

You can find more information about all the awards in a series of items on CIRM’s blog, The Stem Cellar, using the search term “covid.”   Five CIRM/Covid stories, including CIRM blog items about the Covid round, have been placed on the campaign website by the campaign staff. 

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​Read all about California's stem cell agency, including Proposition 14,  in David Jensen's new book. Buy it on Amazon:  California's Great Stem Cell Experiment: Inside a $3 Billion Search for Stem Cell Cures. Click here for more information on the author.

Quote of the Day

Jonathan Shestack, in 2013 and then a patient advocate member of the governing board of the California stem cell agency, speaking about patient advocates appearing before the board:

"We have a responsibility to look those people in the face.... So I would like to be very careful as we retool that process to make it neater and less chaotic and not upsetting to the press or to people in Sacramento, but to understand that is part of our responsibility, to look at those people and listen to them and take some of what they have to say into consideration."

From a meeting of the CIRM board Jan. 23, 2013

California's Stem Cell Covid Round Ends: Three Clinical Trials, 17 Awards

The California stem cell agency has finished its special round of Covid-19 awards, adding three clinical trials to bring its total to 64 plus 14 other awards totaling in all $5.3 million. 

The final awards were made on Friday in the emergency, fast-track round. However, the agency noted that additional Covid awards are possible through its existing awards process and today issued a "special call" for applications in its Quest awards program.  The deadline is Aug. 31.

The agency said in an email, 

"For this special edition of DISC2, the overall timeline and award amount have been capped at 12 months and $250,000, respectively. The expected outcome, at the end of the award, is a candidate therapeutic, diagnostic, medical device, or tool that can immediately progress to translational stage activities."

Last week's awards of $250,000 each went to Karen Christman at UC San Diego and Lili Yang at UCLA.

Christman hopes to develop a treatment for acute respiratory distress syndrome, the agency said, a life-threatening lung injury that occurs when fluid leaks into the lungs and is prevalent in COVID-19 patients.  Her research involves extracellular matrix hydrogels, a structure that provides support to surrounding cells.

Yang is seeking to use blood stem cells to create invariant natural killer T (iNKT) cells, a powerful type of immune cell with the potential to clear virus infection and mitigate harmful inflammation.

For more details, the agency's review summary for Christman's application (DISC2COVID19-12007 #2 ) can be found here. The summary of Yang's review (DISC2COVID19-12020) can be found here. Yang also sent a letter to the agency board as did Christman.

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​Read all about California's stem cell agency, including Proposition 14,  in David Jensen's new book. Buy it on Amazon:  California's Great Stem Cell Experiment: Inside a $3 Billion Search for Stem Cell Cures. Click here for more information on the author.

Quote of the Day

"In science, true hope is clear-eyed and brings a tight focus on the barriers and potential setbacks that exist along the path to desired results." 

-- Jerome Groopman, in his New Yorker article titled "The Long Game of Coronavirus Research."

Covid Clinical Trial Location Still Missing on $750,000 California Stem Cell Grant

The California stem cell agency stipulates that winners of research awards in its fast-track, Covid-19 round must be ready to start work within a month of approval, but a New Jersey firm that snagged $750,000 three weeks ago has yet to report the location of its California work.

The  firm is Celularity, Inc. Its proposed therapy is backed by Rudi Giuliani, the president's personal lawyer, who has also touted other possible Covid therapies, including one that has been rejected by the Food and Drug Administration.

The $750,000 is intended to finance a clinical trial someplace in California. The stem cell agency funds only California work.

In creating the Covid round, CIRM said award winners must be "ready to start work within 30 days of approval and propose achieving a clear deliverable within six months." It has been 21 days since the Celularity award was approved. 

The California Stem Cell Report has asked the firm repeatedly for the location of the California site but it has not responded with this routine information. The agency itself also has not disclosed the location and defers to the company.  

Celularity updated the information today that it files with the National Institutes of Health on the trial. However, the locations of the trial still did not show any in California. 

California's $40 Million Stem Cell Genomics Center: Its Fate and Outcomes

California's stem cell agency hit something of a milestone six years ago when it approved $40 million to create a genomics center that was aimed at positioning the state as a global leader in stem cell genomics. 

The round triggered complaints about irregularities, unfairness, score manipulation and the role of its then president, Alan Trounson. The $40 million, at the time the largest single research award by the agency, was ultimately divided three ways and now has been spent. 

The California Stem Cell Report queried the agency this week about the award, its status and results. Here is the response in Q&A format.

Q: How was the $40 million shared and with which institutions?
A: The genomics grant was split into three awards: $22.7M to Stanford (GC1R-06673-A), $13.2M to the Salk Institute (GC1R-06673-B), $4M to UC Santa Cruz (GC1R-06673-C). (The application numbers carry links to the progress reports on the CIRM website.) 

Q: Is there any requirement for the grantees to come up with a plan for continued funding? 

A: There was no requirement for the grantees to come up with a plan for continual funding in the concept RFA.  Stanford and Salk provided co-funding to support the centers during the award period.

Q: If not, what prevents the doors from closing at the genomics center(s) in the next couple of years?

A: The Stanford sequencing center established by the genomics awards continues to operate with other sources of funding.  The Stem Cell Data Hub established by UCSC continues to be supported.  UCSC has no plans to shut down the site even though its CIRM award has ended. 

Q: How much time remains on the grant(s)? I See there was at least one extension given, but it is unclear why there was delay.

A: All three genomics grants have ended as of May 31^st.  The sequencing centers at Stanford and the Salk were given six month award extensions to continue supporting projects with technical delays in sequencing activities.  The data hub at UCSC was given a 12 month extension to process data generated by the sequencing centers.

Q: What else do readers need to know about this award? 

A: A number of outputs were generated from genomic center projects, including:

• 60 publications connected to CESCG funding
• 10 data analysis/visualization tools created
• 1 new sequencing technique developed
• 300 new iPSC lines created
• Central online data hub created with standard metadata, analysis pipelines, restricted access
• Data repository of human single cell global transcription in heart, pancreas, blood, brain, brain
• 84TB data generated from sequencing activities across projects

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​Read all about California's stem cell agency, including Proposition 14,  in David Jensen's new book. Buy it on Amazon:  California's Great Stem Cell Experiment: Inside a $3 Billion Search for Stem Cell Cures. Click here for more information on the author.

Former Chief of California Stem Cell Agency Returns to California as Head of Sanford Burnham

C. Randal Mills, who led California's $3 billion stem cell agency for three years, this afternoon was named as chief executive officer of the Sanford Burnham Prebys Medical Discovery Institute in La Jolla, Ca.

Randy Mills
Sanford Burnham photo

The institute said in a news release that Mills brought to Sanford "decades of experience as an entrepreneur and transformational leader in the biomedical industry."

Most recently, Mills was president of the National Marrow Donor Program/Be The Match nonprofit, an international leader in facilitating and supporting bone marrow transplantation.

Mills left Be The Match in February of this year, citing personal reasons.
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Mills, who goes by Randy, was  president and CEO of the California stem cell agency from May 2014 until July 2017. 

During his time at the agency, which is formally known as the California Institute for Regenerative Medicine (CIRM), Mills instituted something he called CIRM 2.0. It streamlined and sped up the work of the agency, sharpening its focus with an emphasis on performance metrics. The structure of the effort remains in place today. 

When Mills left the agency, CIRM Chair Jonathan Thomas, who recruited Mills, said his efforts had created a "bold strategic plan, the results of which include an 82 percent reduction in approval time, a 3-fold increase in the number of clinical trials, and a 65 percent reduction in the time it takes to enroll those trials."

Sanford Burnham has received $39.4 million from CIRM over the years. Its president, Kristiina Vouri, sits on the governing board of the stem cell agency, which has included a Sanford representative since 2004. 

Vouris said in the news release that Mills "comes to us with extensive organizational and executive leadership experience. His diverse background and knowledge of translational research and drug discovery will help us propel the Institute into a bright and successful future.”

Mills will begin his work immediately at Sanford Burnham, which has 700 employees in the San Diego area.  

Covid Research Backed by California's Stem Cell Agency: 15 Awards, Including Help with Three Clinical Trials

The California stem cell agency is down to its last $272,357 in its special, $5 million effort to help finance research involving Covid-19.

The research round began in May and has approved 15, fast-track research projects, including participation in three clinical trials. The latest awards were approved last Friday by agency directors. 

• Evan Snyder of Sanford Burnham Prebys Medical Discovery Institute received $250,000  to create lung organoids to test two drug candidates for treatment of the virus.
• John Zaia of the City of Hope received an additional $250,000 for his previously approved study dealing the use of convalescent plasma treatments. 
• Steven Dowdy at UC San Diego was awarded $150,000 to study a more effective way of delivering a genetic medicine, called siRNA, into the lungs of infected patients.

Summaries of the CIRM application review on the grants can be found here, including the six rejected.  

Approval of the latest awards came as a New Jersey firm that two weeks ago received a $750,000 award still has not disclosed the location of its clinical trial site in California. By law, the stem cell agency can only finance work within California.

The awardee is Celularity, Inc., a business whose proposed therapy is backed by Rudi Giuliani, the president's personal lawyer, who has also touted other possible Covid therapies, including one that has been rejected by the Food and Drug Administration.

In creating the Covid round, CIRM said award winners must be "ready to start work within 30 days of approval and propose achieving a clear deliverable within six months." It has been 16 days since the Celularity award was approved. 

The California Stem Cell Report has asked the firm repeatedly for the location of the California site but it has not responded. The agency itself also has not disclosed the location and defers to the company.

Sheehy Steps Back from Stem Cell Agency Positions; Cites His Opposition to Prop. 14

A longtime member of the governing board of the $3 billion California stem cell agency has stepped away from two leadership roles in the wake of his vote against the ballot measure that would refinance the research enterprise, which is running out of money. 

Jeff Sheehy, an HIV/AIDs patient advocate on the board since 2004, made the moves after becoming the only member of the 29-member board to vote against endorsing Proposition 14, which would provide $5.5 billion for the California Institute of Regenerative Medicine (CIRM), as the agency is formally known. 

The proposal would also make significant changes in the operations of the agency, enlarge its scope, lock up money for certain purposes and expand the size of its board from 29 to 35.

Sheehy voted against the endorsement on June 26 and released a statement to the California Stem Cell Report which cited a wide range of reasons for his negative vote. 

The actual vote on Proposition 14 was 21-1. Some members of the board were not present. Two vacancies also exist on the board. 

Sheehy was chairman of the board's science subcommittee. He was also a member of CIRM's grant working group and for years directed the evaluation by the full board of the billions of dollars in grant applications. 

Responding to a question last week, Sheehy said,

 "I instigated the change. I believe that it doesn't make sense for me to have any leadership roles given that I do not support Proposition 14.  I can imagine a scenario where the reality of my opposition becomes stark, and I don't want to drag the functionality of the board or the agency into any potential, campaign back-and-forth."

The changes in Sheehy's role became apparent last Friday when another board member led the evaluation of the Covid-19 applications. It came as a surprise to at least one board member, Vice Chairman Art Torres, who inquired at the beginning of the Friday meeting about the change. 

"What happened to Mr. Sheehy? He's not running these things anymore?" Torres asked.

Chairman Jonathan Thomas replied briefly, "Mr. Sheehy is is not going to be running the application review."

Torres replied, "Sorry to hear that."

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​Read all about California's stem cell agency, including Proposition 14,  in David Jensen's new book. Buy it on Amazon:  California's Great Stem Cell Experiment: Inside a $3 Billion Search for Stem Cell Cures. Click here for more information on the author.

Saving CIRM: $5.5 Billion Ballot Campaign, Rhetoric and Winning

The campaign to save California's financially strapped stem cell research agency said this week that voter approval of a $5.5 billion rescue measure "has never been more important to the future of California’s health care, for the patients and their families, than it is now."

The pitch came in an opinion piece carried on the Capitol Weekly online news service. The article appears to be the first "op-ed" piece that the campaign has placed since qualifying the ballot initiative, Proposition 14. 

The article carried the byline of Robert Klein, chairman of the campaign effort, Californians for Stem Cell Research. Klein is the Palo Alto real estate developer who led the 2004 ballot campaign and directed the writing of the original initiative as well as the current one. He also was the first chairman of the agency, known officially as the California Institute for Regenerative Medicine (CIRM). 

Klein's article echoed rhetoric from the campaign web site, in some cases using identical phrasing, which is to be expected.  He wrote,

"CIRM funding has advanced research and therapy development for more than 75 different diseases and conditions, more than 90 clinical trials, more than 1,000 medical projects at 70 institutions across California and nearly 3,000 published medical discoveries. This investment has already saved and improved lives, including a high school student who was paralyzed in a diving accident and was able to regain function in his upper body and go on to college, a mother who went blind from a genetic disease has had some of her eyesight restored, two FDA-approved cancer treatments are already saving lives, and many more."

Klein's campaign piece pushed the envelope in some cases. One example is the mention of "more than 90 clinical trials." The agency itself only claims 64. The key to Klein's figure of 90 is the phrasing "CIRM funding has advanced ... more than 90 clinical trials." That is a different criteria than used by the agency. Klein is basing his figure on any kind of research connected in any way to any kind of trial. 

Klein's number of 90 has also climbed from 80 just 16 days ago.  

Additionally, Klein's claims in his article for the agency's economic benefits are based on studies that the agency itself has paid for as opposed to independent, third party analyses. The most recent example came last fall; the study cost CIRM $206,000. 

The 2004 campaign that established the agency was widely criticized for its hype. Most ballot campaigns can be criticized on the same grounds. However, none have dealt with science in the way that Proposition 14 does. But Klein's job is to win approval of the proposal. Without a victory in the fall, CIRM will begin to close its doors. 

California voters can expect to see more rhetoric like Klein's over the next three months or so, intensifying significantly in October. The same sort of rhetoric is  already coming from the opposition and can be more extreme. As the ChurchMilitant web site said on June 29, 

"California state officials have confirmed a ballot initiative that, if approved, would give a state biomedical agency $5.5 billion to kill human embryos in order to extract their stem cells."

All this -- Klein's envelope-pushing and opponents' emotional, religious screeds -- is part of the way ballot campaigns work in California. Cautious, deliberative discussions cannot be expected to carry the day for the partisans on both sides. It is war with a deadline. 

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​Read all about California's stem cell agency, including Proposition 14,  in David Jensen's new book. Buy it on Amazon:  California's Great Stem Cell Experiment: Inside a $3 Billion Search for Stem Cell Cures. Click here for more information on the author.

Quote of The Day: Noah's Ark and the California Stem Cell Agency

'''CIRM operates at the nexus of the Political (with a capital P), scientific, institutional, and business forces of an aggressive state that views economic development as a priority.' Its organization, (Hamilton Moses) adds, doesn't help. ' 'Noah's Ark' boards, where each member is appointed to represent a constituency, rarely work.'"
 --  Hamilton Moses is a biomedical consultant in Virginia who focuses on non-profit governance, quoted in Nature Reports Stem Cells, from article Sept. 13, 2007, by Monya Baker

Bert Lubin: A Memory from a Sickle Cell Moment in 2008

Bert Lubin died last week. He was a member of the board of the California stem cell agency for a number of years, but what I remember him for was an appearance he made before the agency's governing board in 2008. 

Back then he was not serving as a member of the board. Instead he was a supplicant. And he was the first person to appear before the board seeking to reverse a negative decision by CIRM's reviewers.  

Lubin lost but not without raising a not-so-discreet ruckus. 

One board member, Gerald Levey, then dean of the UCLA School of Medicine, was more than irritated by Lubin's appeal of the reviewers' decision. I wrote at the time, 

"Levey said, "I don't think we can run a board this way. If we do, it would be chaos." 

"Levey was responding to a request by Lubin for a 10 minute presentation...of Childrens' case. Levey warned that allowing the presentation would lead to 50 other rejected applicants coming to the board.

"Director Joan Samuelson said that even 100 persons would be okay with her. She provoked laughter when she declared that the number would show more interest than at any other board meeting," the California Stem Cell Report wrote.

Ironically, the application involved sickle cell disease, a program that Lubin pioneered at Children's Hospital Oakland. In 2008, sickle cell was receiving little or no attention from CIRM. Today the agency is more than proud of its sickle cell arrangement with the National Institutes of Health.

Earlier this week, Kevin McCormack, senior director of communications for CIRM, wrote an item on Lubin for the agency's blog, The Stem Cellar. McCormack quoted Lubin as saying, 

"When I became the director of the research program we had $500,000 in NIH grants and when I left we had $60 million. We just grew. Why did we grow? Because we cared about the faculty and the community. We had a lovely facility, which was actually the home of the Black Panther party. It was the Black Panthers who started screening for sickle cell on street corners here in Oakland, and they were the start of the national sickle cell act so there’s a history here and I like that history. 

"Then I got a sense of the opportunities that stem cell therapies would have for a variety of things, certainly including sickle cell disease, and I thought if there’s a chance to be on the CIRM Board, as an advocate for that sickle cell community, I think I’d be a good spokesperson. So, I applied. I just thought this was an exciting opportunity."I thought it was a natural fit for me to add some value, I only want to be on something where I think I add value.” 

"Bert added value to everything he did."

Celularity and $750K from California Stem Cell Agency: Where is the Money Being Spent?

The New Jersey firm that was awarded $750,000 by the California stem cell agency to help finance a Covid-19 clinical trial has four trial sites in two states, but has not identified any in California. 

State law requires that awards from its taxpayer-funded stem cell agency be spent for work in California. 

The firm is Celularity, Inc., which is developing a product that has been fast-tracked by the federal government and which has the support of President Trump's personal attorney, Rudy Giuliani. 

According to the National Institutes of Health website this morning, Clinicaltrials.gov, Celularity has three clinical trial sites in its home state of New Jersey and one in Washington state for the Covid therapy. The information shows that all of those sites are currently recruiting patients. The estimated primary completion date of the work is Nov. 30, 2020.

Although the stem cell agency said on Sunday that a trial site existed in California, it declined to disclose the location. The agency referred questions about a site in California to the company, which has not responded to three requests yesterday and today for information.

Corey Casper, interim president of the Infectious Disease Research Institute in Seattle, is listed as the principal investigator for the trial by Celularity. Casper spoke to stem cell agency directors on May 15 on behalf of the application. Casper also did not respond to inquiries about the location of the California work. 

Six weeks ago, when Celularity's application first came before directors of the California Institute for Regenerative Medicine (CIRM), Casper said the treatment "has a biologic plausibility for being very important and very unique in its treatment for Covid disease."

He continued,

"I think that we have adequate safeguards that have been put into the trial to really assure the safety of the participants."

Safety concerns have been raised by CIRM's grant reviewers as well as by other scientists. The reviewers, who are from outside California, originally rejected the application, giving it a score of 84, one below the cutoff point. After Celularity addressed reviewers' concerns, it scored 85 and was sent to directors who approved it last Friday with no debate.

It is CIRM's 64th clinical trial.

Rudy Giuliani and Covid-19: A California Stem Cell Angle

Capitol Weekly, an online service that covers California government and political news, this morning carried an article dealing with an award last week involving a Covid-19 clinical trial. Here is an excerpt from the freelance piece by yours truly. 

"California’s stem cell agency last week awarded $750,000 to a New Jersey firm to help finance a clinical trial for the firm’s proposed Covid-19 treatment — a therapy that has been hailed by President Trump’s personal attorney as having “real potential.” 

"The firm is Celularity, Inc. Its president and co-founder is Robert Hariri, who describes himself as a longtime friend of Rudy Giuliani, Trump’s personal lawyer. The speedy passage of Celularity’s proposed product through the federal drug approval gauntlet has attracted attention from the New York Times as well as the respected STAT biomedical online news service and other media. 

"Last Friday, directors of the taxpayer-funded stem cell agency, formally known as the California Institute for Regenerative Medicine(CIRM), approved Celularity’s $750,000 application with no discussion. The headline on a STAT article on March 31 said, “Rudy Giuliani wants FDA to fast-track a stem cell therapy for Covid-19; critics see political meddling.”" 

For more details, see Capitol Weekly.

Quote of the Day: 'Immunity to Science'

“We’re now in this position where scientific information is treated as something that you believe or don’t believe because of your partisan leanings. We’ve become a society that has developed an immunity to science, that has said, well none of these guys can be believed.”
 -- Lucy Jones, seismologist, in Los Angeles Times

Directors of the California Stem Cell Agency Back $5.5 Billion Stem Cell Ballot Measure -- With One Exception

Directors of the financially strapped, California stem cell agency this morning endorsed a $5.5 billion bond measure to refinance the enterprise and set it on a new path for the next 10 to 15 years.

"It's a no brainer that this is a huge benefit for California and that (the agency) does just a fantastic job for curing major diseases over a period of time," said George Blumenthal, chancellor of UC Santa Cruz and a member of the governing board of the California Institute for Regenerative Medicine (CIRM), as the agency is formally known.

Endorsement came on 21-1 vote after about a 30-minute discussion. Jeff Sheehy, a patient advocate member of the board since its inception in 2004, voted no. He did not speak out during the meeting, which heard no dissent from other board members or the public.

The board has 29 slots. Only 22 members were present for the morning. online vote. Two seats are vacant.

Sheehy released a statement to the California Stem Cell Report in which he cited a wide range of reasons for his negative vote. They included,

"(The) state assuming additional debt at the onset of a recession of indeterminate length (that could become a depression) AND the absence of the original purpose for CIRM (the no longer existing federal restrictions on embryonic stem cell research funding) plus the abundant Federal and private sector funding for identical research, the failure to maximize return on investment plus a blatant giveaway to Pharma AND the handcuffs placed on the legislature."

Sheehy also said, 

"(A)fter spending all of this money ($3 billion), CIRM has yet to produce a single FDA approved product and the State has not achieved any healthcare cost savings from therapies developed by CIRM." 

(See the full text of his lengthy statement here.)

The initiative would cost California taxpayers an estimated $7.8 billion, according to official state figures. The total could be lower or higher depending on interest rates because the $5.5 billion is borrowed money. The initiative also significantly expands the scope of the agency, including a heavy emphasis on making any stem cell therapies affordable and accessible.

CIRM, however, has not helped to finance any stem cell therapies that are widely available to the public.

(Here is a link to the description of the measure by the state's legislative analyst, including its $7.8 billion cost. Here is the actual text of the more than 10,000-word proposal)

Endorsement of the proposal by the stem cell agency board was a foregone conclusion. Sheehy's dissent was not, although he expressed some concerns earlier about the measure. Directors previously had indicated support informally. Without voter approval of the proposition on Nov. 3, CIRM will begin closing its doors next fall as it runs out of its original $3 billion. 

Today's meeting also included a contingency budget to wind down CIRM, which currently has only 33 employees. Over the last 15 years, the number of employees has never numbered higher than in the mid 50s.

CIRM directors were laudatory of the measure and Robert Klein, sponsor of the proposal. Klein is leading the campaign as he did in 2004. He was also the first chairman of the agency. Speaking to the board, Klein touted economic benefits of the measure and minimized its interest costs. He said it would not detract from other state priorities, a matter of significant concern to Sheehy.

Klein said the measure is aimed at "reducing human suffering and saving the lives of those we love." (The text of his comments is being sought from the campaign.)

David Higgins, a board member/patient advocate for Parkinson's disease and who has Parkinson's, said his family includes many persons who have had the affliction.  Higgins, who choked with emotion at one point, said the efforts of CIRM are "very personal" for him.

The agency is barred by law from using state funds to support the ballot campaign, but it is permitted to provide the endorsement as it did today.

Text of Sheehy's Statement on His Negative Vote on $5.5 Billion Stem Cell Measure

Here is a statement from Jeff Sheehy, a director of the California Institute for Regenerative Medicine (CIRM) concerning his "no" vote on the $5.5 billion bond measure to refinance the agency. Sheehy has served as a patient advocate member of the board since its inception in 2004. He is a former member of the San Francisco County board of supervisors and a longtime patient advocate for HIV/AIDs. Sheehy's statment follows.

I do not support the new ballot measure authorizing $7.8 billion in new funding for CIRM for the following reasons. In referencing the new measure, I note the true cost of the bonds including interest, as opposed to the headline figure of $5.5 billion. I hope that Governor Gavin Newsom, whom I served as HIV/AIDS Adviser when he was Mayor of San Francisco, other State policymakers and voters will consider these points when deciding whether they will support this measure.

First, I'm concerned about the cost to the State at a time of fiscal crisis. CIRM has spent $3 billion over the last 15 years. The Legislative Analyst calculates a repayment period of 25 years and currently CIRM is costing the State $327 million a year to pay back the bonds for the first tranche of funding authorized by voters in 2004 via Proposition 71. I think CIRM has provided value. But after spending all of this money, CIRM has yet to produce a single FDA approved product and the State has not achieved any healthcare cost savings from therapies developed by CIRM.

I look at the current fiscal crisis the State faces and I know we will see cuts in education, healthcare, and housing not only this year, but for several years into the future. Issuing bonds does not mean they are “free money”. They have to be paid back, and the $327 million California is paying annually is $327 million the State does not have for other needs.

The Legislative Analyst estimates that the new measure will add at a minimum another $310 million a year in annual repayments from the General Fund. That means California taxpayers will be paying close to $650 million a year for stem cell research—research that is currently well funded by the federal government and the private sector. To reiterate, State imperatives such as education, healthcare, and housing that are funded by the General Fund are not only chronically under-resourced, but in moments such as our current situation with a deficit, will actually be second in line behind repaying bonds for stem cell research. Bonds have to be repaid first leaving more important priorities to be cut. We must be honest and acknowledge that paying for stem cell research means that other needs will not receive funding. Adding debt in what may be the biggest fiscal crisis California has experienced since the Great Depression is a terrible idea.

Second, CIRM was created because the Federal government restricted human embryonic stem cell research. This is not longer true and the rationale for the State of California going into debt to fund this research no longer exists. The Federal Government will spend $306 million this year and $321 million next year on human embryonic stem cell research — more than CIRM has spent in any single year of its existence. The Federal government will spend another $593 billion on human induced pluripotent stem cell research and $605 million on non embryonic stem cell research this fiscal year. In total, the Federal government will spend $2,129 billion on stem cell research this year. This spending dwarfs what California will spend.

In addition, the Alliance for Regenerative Medicine estimates the private sector spent almost $10 billion in 2019 on regenerative medicine. Growth in private sector investment in regenerative medicine is on a steep upward curve.

Third, the new measure fails in several ways to fix flaws in the original Proposition 71. This new measure does nothing to change the absurd requirement that any changes to it requires a 70% vote of the legislature. This agency should not be outside oversight by the elected representatives of the people. Originally this was justified by opposition to human embryonic stem cell research and the perceived need to insulate the research from political considerations. Now that the Federal restrictions have been lifted and this research can be freely funded, this requirement makes no sense. An agency that will end up costing the State $650 million a year should be fully accountable to elected officeholders.

In addition, the new measure should ensure that CIRM fulfill a key promise made in Proposition 71 that CIRM funding will “benefit the California budget by… providing an opportunity for the state to benefit from royalties, patents, and licensing fees that result from the research.” According the Legislative Analyst, “since 2004, grant recipients have contributed $352,560 in total invention-related income to the State.”

I would note that CIRM has helped produce a therapy that holds significant promise. This product, an anti-CD47 monoclonal antibody for cancer, has 
been acquired by a major pharmaceutical company and will lead to substantial revenue. CIRM has spent roughly $38 million on developing the monoclonal antibody and should receive upwards of $30 million (perhaps as much as double this number) in return. While the Board has worked hard to put in place policies to obtain a return for the State, that return, which could have been enormous, is constrained because the State cannot hold equity in the product. The California Constitution prevents the State from holding equity. CIRM should have asked the legislature to amend the constitution in this ballot measure to allow CIRM to hold equity. Equity provides the opportunity to fully vest in the products supported by CIRM funding and would recognize CIRM’s role as a source of venture capital. Failing to maximize the return on the State’s investment, especially when it is paid for with debt financing, is fiduciary malpractice. From my perspective, millions are gifted to pharmaceutical companies under the current law.

More troubling, the new initiative introduces changes that will lead to the State receiving NOTHING for the General Fund from future returns. Per the Legislative Analyst, the new measure “would require the State to use any income from CIRM agreements to improve the affordability of stem cell treatments.”

Thus, CIRM/State of California will fund development of products if this new measure is approved. The return from investing in those products will then be given back to companies to pay for the products CIRM invested in. This is literally the worst possible giveaway, robbing the State of a return on investment and freeing companies from any price restraints on products since CIRM will make up the difference. We could actually see the company (famous for aggressively pricing Hepatitis C cures and HIV preventive medications) that acquired the anti-C47 monoclonal antibody return funds to the State and see the State forced to use those funds to buy the drug for patients. It would have been far better if the new measure had been written with provisions that ensure a fair return to the State’s General Fund via the ability to hold equity and that require fair pricing for products funded by CIRM. The original intellectual property policies adopted by CIRM did include a provision that required grantees to offer public entities in the State of California the lowest available price.

I note that the new measure does include “accessibility and affordability” provisions, but the focus is on insurance coverage. Fair pricing and improving the State’s return on its investment are not included, presumably to avoid offending Big Pharma.

I continue to have serious concerns around Board member conflicts of interest, with the majority of the Board coming from institutions that have received the bulk of CIRM’s spending. Rather than being addressed in the new measure, conflicts of interest are exacerbated with the new measure adding Board members from institutions that receive funding.

I also have concerns about governance with a 35 member Board—too big to function, and surreally, a Board member for every 2 CIRM employees—and the chief executive role awkwardly split between the Board chair and CIRM’s president.

For these reasons—the State assuming additional debt at the onset of a recession of indeterminate length (that could become a depression) AND the absence of the original purpose for CIRM (the no longer existing Federal restrictions on embryonic stem cell research funding) plus the abundant Federal and private sector funding for identical research, the failure to maximize return on investment plus a blatant giveaway to Pharma AND the handcuffs placed on the legislature—I cannot support the new $5.5 billion measure.

Jeff Sheehy
CIRM Governing Board Member
Appointed 2004 by State Senate President Pro Tem John Burton
Re-appointed 2012 by State Senate President Pro Tem Darrell Steinberg