Judge Sets High Hurdle for Stem Cell Foes

The courtroom tussle over the existence of the California stem cell agency will resume briefly next Tuesday with all parties optimistic that they will prevail.

The judge said she will set a trial date at that point, which means that the matter will continue on well into the next year. Regardless of her ultimate ruling, it is expected to be appealed.

However, she did state that foes of CIRM had failed to prove that Prop. 71 was unconstitutional. Meanwhile stem cell chairman Robert Klein said the agency can make do financially until the middle of next year.

Reporter Megan Garvey of the Los Angeles Times wrote:

"'The Supreme Court has stated that it is the court's solemn duty to uphold an initiative, resolving all doubts in its favor, unless its unconstitutionality' is unmistakably clear, Alameda County Superior Court Judge Bonnie Lewman Sabraw wrote in a 24-page decision on pretrial motions in the cases.

"Sabraw said the plaintiffs — People's Advocate, the National Tax Limitation Foundation and the California Family Bioethics Council — had 'not satisfied" that 'substantial test.'"

Klein released a statement today that said:

"Her explanation for denying these claims provides CIRM with a strong basis for moving forward successfully in this case. On the question of the constitutionality of Prop. 71, the plaintiffs have a high bar to clear in the hearing. They must introduce evidence that they have failed to introduce over the past year. We remain encouraged by this ruling and look forward to hearing what the court will permit on an expedited basis on December 6th."

Reporter Steve Johnson of the San Jose Mercury News quoted Dana Cody , who represents agency foes, as saying that she was not at all disappointed and is pleased with a prospect of a trial.

The story that most folks across the country were likely to see was written by Paul Elias of The Associated Press. He wrote that the decision meant Cody and her clients will have to "clear high legal hurdles to win the case."

Here is a link to the text to the judge's decision. Klein's statement follows in a separate item since it is not yet available on the CIRM web site.

Text of Klein Statement

STATEMENT BY ROBERT KLEIN, CHAIR OF THE INDEPENDENT CITIZENS' OVERSIGHT COMMITTEE, REGARDING JUDGE SABRAW'S RULING

"On behalf of the California Institute for Regenerative Medicine (CIRM), our governing board and the patient, medical and academic organizations who signed an amicus brief in support of stem cell research, we are very pleased the court has denied many of plaintiffs' challenges to Proposition 71, and we have great confidence in the judicial process.

We appreciate the time and care that Judge Bonnie Sabraw took in writing this decision-we are grateful for the depth of her opinion, the numerous citations and her extensive narrative supporting the conclusion that Proposition 71 is constitutional. She states that it is the 'Court's solemn duty to uphold an initiative, resolving all doubts in its favor, unless its unconstitutionality clearly, positively and unmistakably appear.' Judge Sabraw repeats this theme later in the decision, stating that 'all presumptions and intendments favor the validity of an Act,' and then goes on to rule that the California Family Bioethics Council has not met its burden of demonstrating that Proposition 71 is unconstitutional on 'any of the five grounds asserted.'

Her explanation for denying these claims provides CIRM with a strong basis for moving forward successfully in this case. On the question of the constitutionality of Proposition 71, the plaintiffs have a high bar to clear in the hearing. They must introduce evidence that they have failed to introduce over the past year. We remain encouraged by this ruling and look forward to hearing what the court will permit on an expedited basis on December 6th.

The CIRM looks forward to working with the Attorney General and Remcho, Johansen & Purcell, which serves as special counsel to the CIRM, as well as Munger, Tolles, and Olson, which represents nearly thirty national and statewide advocacy organizations, university and research hospitals and research institutions who have signed an amicus brief in support of Proposition 71, as the case moves forward (http://www.cirm.ca.gov/pressreleases/2005/10/10-12-05.asp).

This opinion should be extremely helpful in providing broad support for the Bond Anticipation Note program of the CIRM. We believe it is critically important to demonstrate that democratically mandated scientific and medical research funding programs for chronic disease cannot be tied up in court by a small group that is politically opposed to stem cell research. For California patients suffering from chronic diseases and injuries, every day counts in advancing our understanding of disease and our search to improve therapies to alleviate human suffering. We look forward to the institute funding stem cell research during the course of the litigation."
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Hwang Denies Patent Demand Report

South Korean stem cell superstar Hwang Woo-suk says the University of Pittsburgh scientist whose actions precipitated disclosure of the eggs-for-cash scandal did not ask for a share of a patent.

Here are the first and last paragraphs from a report on english.chosun.com:

"Prof. Gerald Schatten of the University of Pittsburgh demanded to share a patent for stem cell cloning technology developed by geneticist Hwang Woo-suk and his team, press reports said Monday. Hwang and his team deny the report. Schatten recently ended his collaboration with Hwang citing ethical flaws in occyte procurement for an earlier project."

"The most likely interpretation is that Schatten did informally ask for a share of the patent but Hwang did not officially discuss the issue with his team and the government. Schatten has not commented on the allegation."

CIRM Survives Initial Court Test

The California stem cell agency has turned back a good portion of the challenges to its very existence, but there is little doubt that the legal struggle will continue.

According to a report by Carl Hall in the San Francisco Chronicle, Alameda County Superior Court Judge Bonnie Sabraw "denied essentially every legal argument brought by the plaintiffs in litigation alleging that Prop. 71 violated the state Constitution because it would allow taxpayer-backed bond revenues to be distributed without direct legislative control."

Sabraw was appointed to the bench by Gov. Wilson, a fact that should not be an encouragement to foes of CIRM.

Hall continued:

"In a 24-page decision issued late Tuesday, Sabraw said the plaintiffs had failed to overcome a fundamental presumption that voter mandates must be honored unless they were shown to be "clearly, positively and unmistakably unconstitutional."
"She denied five separate motions seeking summary judgment, any one of which might have been enough to put the closely watched California stem cell enterprise on ice for a very long time, if not out of business.
"Arguments turned aside by the judge included claims that the initiative deals with more than one subject, allows financial conflicts of interest in awarding stem cell research grants and would "alter the basic governmental framework."
"The judge did not throw out the lawsuits entirely. Instead, she set a hearing for Tuesday for lawyers to work out a plan for the next critical proceedings in court.
"But because Sabraw turned back virtually all of the plaintiffs' arguments, it appears they will have to be extraordinarily creative if they hope to keep the lawsuits moving forward -- and the stem cell institute standing still."
Hall continued: "She denied everything the plaintiffs asked," Klein said. "I would go into any hearing with this on our side."

Hall also reported that Dana Cody, executive director of the anti-abortion Life Legal Defense Foundation in Sacramento, one of the lawyers seeking to overturn Prop. 71, didn't return telephone calls late Tuesday. Other lawyers on the plaintiffs' side couldn't be reached for comment, according to Hall.

A Sad Tale of Stem Cell Conflicts?

By now we all know about the Korean egg flap, but Bloomberg News offers a special insight about previously unreported possible conflicts of interest involving the scientist whose actions precipitated the disclosure of the Korean matter.

Here is what the report by John Lauerman and Heejin Koo says:

"The public furor arose after former colleague Gerald Schatten, a University of Pittsburgh stem cell researcher, ended his 20-month collaboration with Hwang. Schatten said he had learned there might be truth to charges Hwang had used egg cells that were unethically obtained.
"Schatten asked Hwang for a half share in the patent for patient-specific stem cell cloning six weeks before his withdrawal from the project, South Korea's JoongAng Ilbo newspaper reported yesterday. Hwang's World Stem Cell Hub spokesman Sung Myung Whun declined to confirm or deny the report.
"'We feel that it is inappropriate to comment on the report at this time,' Sung said at a press conference held at the institute in Seoul today."

The article continued, "Michele Baum, a University of Pittsburgh spokeswoman, said she didn't have any information about the patent issue. Schatten wasn't immediately available for comment."

This is a sad business. We assume all involved are well-meaning individuals, but perhaps they are not. Nonetheless, it reflects poorly on stem cell research wherever it occurs.

What it means for the California stem cell agency is disclosure, disclosure, disclosure and more disclosure. If that is uncomfortable for some in the scientific community, so what? CIRM is the single largest source of stem cell funding research funding in the world. If the activities of some researchers can't stand the light of day, they should move on. The California stem cell agency does not have to play the good-old-boy game.

Eggs and Ethics: CIRM's Proposed Rules

Given the circumspection of our bureaucratic friends, the Korean egg affair may not even be mentioned at a key CIRM meeting on Thursday.

But the matter will still be lingering in the air, a little distasteful but impossible to ignore.

It is just the sort of issue that the panel -- the Scientific and Medical Standards Accountability Working Group – should confront explicitly and directly. In fact, it amounts to a case study for CIRM, albeit one that is a tad fuzzy. But the reality is that such matters are usually less than clear cut. Facts are elusive; memories become weak.

The accountability group consists of five patient advocate members of the Oversight Committee, nine scientists and clinicians "nationally recognized in the field of stem cell research," four medical ethicists and Robert Klein, chairman of the California stem cell agency.

At the meeting in San Francisco, the group is scheduled to consider rules that would prohibit any cash-for-egg programs involving CIRM. The proposed language states:

"No payments, cash or in-kind, have been provided for donating oocytes, gametes, blastocysts, or eggs. Individuals may be reimbursed for expenses incurred as a result of a clinical procedure, as determined by (a review group). Individuals who consent to donate stored gamets, blastocysts or eggs may not be reimbursed for the cost of storage prior to the decision to donate."

Missing from the agenda material posted on the Web is anything other than the technical language of the draft regulations, which are rather intimidatingly labelled "do not cite or quote." But never fear. If you discuss them, you are probably not going to be called before a grand jury a la the Karl Rove case.

Also up for consideration is a report from the task force on intellectual property, another complex and important issue. But there is no clue on CIRM's website concerning the contents of that report.

If CIRM truly desires to fulfill its promise of being responsive, it is going to have to do much better at providing background that is accessible to the public. It should examine the type of work done by the state legislative analyst as well as analyses prepared by legislative staffers in Sacramento. All of which is prepared in a timely fashion and generally available online.

The accountability group is co-chaired by Sherry Lansing, a former Hollywood movie executive and now a cancer patient advocate, and Bernard Lo of UC San Francisco, whose expertise is listed by CIRM as "biomedical ethics related to oocyte, embryo and stem cell research." You can see all of the members the group at this link.

The Korean Lesson: More Sunshine Needed in California

"I am very sorry that I have to tell the public words that are too shameful and horrible." -- Hwang Woo-Suk

"It won't be the first time that a scientist has lied to journalists...." -- Chris Shaw, professor of Neurology at Kings College London

"Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants." -- Louis Brandeis

Can the California stem cell agency learn something from the South Korean cash-for-eggs affair?

The answer is a resounding yes. A few days ago, The Sacamento Bee noted that the whole egg extraction business is a dicey waypoint in the "minefield" of stem cell research. The Bee commended the agency's plans to look more deeply into the issue.

But the story about the Korean researcher and the milieu in which he operates has additional implications. Some involve different cultures – not only Korean and US but those of other societies. The case also involves jingoistic ambitions – here and elsewhere – and economic aspirations.

But we are going to focus on another aspect of the affair – the need for maximum disclosure and transparency on the part of the California stem cell agency. Its unique structure contains built-in conflicts of interest with little direct oversight from any other California governmental entity. "Trust us" says CIRM.

The South Korean stem cell story, however, makes clear what we all know; temptations are great on the cutting edge of science. Prestige, honors and potentially billions of dollars are at stake. Even the high priests of science are not immune from infection.

CIRM's own peculiar governmental DNA is likely to make it more susceptible to abuse. The best vaccine, as Justice Brandeis suggests, is a good dose of sunshine. Open the doors more widely. Do a better job of making records available on the Internet. Be more straightforward about financial affairs. Require more disclosure of financial interests on the part of scientists, contractors and others associated with the agency.

Obviously, transparency is not going to prevent all wrong-doing. The truly crooked are less likely to be deterred. Then there are the well-intentioned, presumably such as the South Koreans who paid cash for human eggs. They will find excuses for what they are doing.

Hwang is the global superstar of stem cells. He will survive this scandal. But the California stem cell agency would be hard-pressed to come through a similar affair.

CIRM should resist its natural, insular tendencies. If its dealings are truly open and transparent, those who are tempted by money or ambition will find it more difficult to operate. The public will have an opportunity to examine the agency's affairs. And when the inevitable scandal – small or large – surfaces, CIRM can say it has done all it could to prevent wrongdoing.

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The quotes from Hwang and Shaw at the beginning of this post are from an article by Stephen Pincock in The Scientist.

Wandering The Seas

We are putting to sea once again. That means that postings will be intermittent on the California Stem Report until we arrive at a location a little later this month that has Internet access. Meantime, feel free to post comments on any subject. Just click on the comments link at the end of each item.

Chopped Mitochondria?

State Treasurer Phil Angelides says tax-exempt financing of stem cell research "may not always offer the lowest-cost choice" for the California stem cell agency, according to the web site, California Politics Today.

Reporter Marc Strassman disclosed the treasurer's position, quoting from an Oct. 26 letter by Angelides to the stem cell agency.

"It is more likely that the Institute will want to pursue a strategy that involves a mix of taxable and tax-exempt financing, as the state will do with the recent housing bond approved by the voters," Angelides wrote to CIRM.

Strassman said Angelides, who is seeking the Democratic nomination for governor, "distanced" himself from other proponents of the Prop. 71 in the October document.

In the letter, Angelides said his staff estimated that if the state were to use taxable bonds to fund the agency, the increased interest costs would be $423 million. Other estimates have placed it as high as $700 million.

Strassman said that under Angelides' scenario, the state would spend $6.5 billion for stem cell research with a net return of $1.1 billion. Strassman continued:

"How many of the venture capitalists clustered on Sand Hill Road in Menlo Park up in the hills behind Stanford, whose investments in existing and future bio-tech start-ups could see triple-digit increases in value as a result of Prop. 71-funded grants, would accept a deal like that....?

"Would Treasurer Angelides be willing to make, or be allowed to stay in office after making, any other investment on these terms with the billions of dollars of taxpayer money under his control as the State's chief financial officer? Would any CFO?

"Why then should the voters and taxpayers of California accept such terms either? What do the folks in and around the Stanford bio-tech venture capital community think the rest of us are, anyway, chopped mitochondria?"

Strassman carried another item that recounted a history of Angelides' statements concerning tax-exempt financing of the agency and expectations of significant returns for the state. Also included was a similar history for state Controller Steve Westly, who is also seeking the Democratic gubernatorial nomination. Look for the material towards the end of the article which leads with the state's bond counsel refusing further comment about conversations with Angelides.

Klein Speaks at Stanford Conference

The Stanford Graduate School of Business is hosting a conference this Saturday that will feature California stem cell chairman Robert Klein and address the "entrepreneurial challenges" that the agency has faced.

The session will also include Philip A. Pizzo, dean of the Stanford School of Medicine; Hank Greely, Stanford law professor, and Amy DuRoss, chief of staff for the stem cell agency.

The session will be at 11:50 a.m. at the Graduate School of Busines, 518 Memorial Drive, at Stanford University. The full agenda can be found here.

Klein Says He Knew about Federal Tax Problem Prior to Election

California stem cell Chairman Robert Klein has confirmed that he knew that Prop. 71 had a $700 million problem prior to last fall's election that created the agency he now heads.

Associate Editor Stu Leavenworth of The Sacramento Bee reported today that Klein confirmed in an interview "that one of the state's bond lawyers - Chas Cardall, of the firm Orrick, Herrington & Sutcliffe - briefed him during the campaign about the IRS complications. (That fact, without the lawyer's name, was reported by the San Francisco Chronicle last week.) Because of advice from Cardall and others, Klein says he purposely wrote Prop. 71 to allow use of both tax-exempt and taxable bonds."

Klein also told Leavenworth that he did not disclose the problem with tax-exempt bonds to analysts who prepared an economic study touting the economic benefits of Prop. 71.

"Why didn't he?" Leavenworth wrote in a column. "Klein equivocated when asked that question. 'I'd want to go back and review this area,' he said, unable to provide more information."

"Laurence Baker, a Stanford University professor who helped write the economic study, said he now wishes he had known that IRS rules could limit the receipt of royalties. Baker's study projected that stem cell research could bring in $537 million to $1.1 billion in royalties over 20 years.

"Now, says Baker, it appears that any royalties might be partly or completely offset by higher interest rate costs(which could run to $700 million).

"'Had we known, we would have factored it into our analysis,' said Baker. 'We worked hard to incorporate as much information as we could into our report.'"

Leavenworth continued:

"The integrity of Prop. 71 is at stake in the royalty debate. During the campaign, advocates of Prop. 71 mentioned royalties repeatedly, with Klein touting it on the PBS NewsHour with Jim Lehrer. This wasn't by accident. California was in the midst of a budget crisis, so Klein needed to create the impression - no matter how tenuous - that Californians would get some direct return on their investment."

Leavenworth described the conduct during the campaign at best misleading. "At worst, it was a cynical ruse," he wrote.
We should note that the interview with Leavenworth is the first time that Klein has publicly said he knew of the issue prior to the election. He would not comment on the question for the Chronicle.

Klein's Silence Ill Serves Stem Cell Agency

California stem cell Chairman Robert Klein remains publicly mum on a $700 million question involving his actions during the Prop. 71 campaign a year ago.

Each day, his continued silence damages his credibility as well as that of the California Institute for Regenerative Medicine.

At issue is a report in the San Francisco Chronicle last week that said Klein knew that there was a federal cloud over the use of tax-exempt bonds during the campaign but failed to disclose the information. At least one neutral observer, Bob Stern from the Center for Governmental Studies in Los Angeles, has said Klein had a moral obligation to disclose the matter.

While it is seemingly a technical tax issue, it could increase taxpayer costs for the stem cell research program by an additional $700 million – close to $7 billion instead of $6 billion.

The Chronicle article came up again at the legislative hearing earlier this week into billion-dollar intellectual property issues involving CIRM, an agency that has taken a "trust us" position on many key matters before it.

"If this report is true, then Mr. Klein knowingly misled the voters of California and the supporters of Prop. 71," said Jesse Reynolds, director of biotechnology accountability for the Center for Genetics and Society in Oakland.

Trust is what is involved here. Klein was the most visible advocate for Prop. 71, carrying its water on television, radio and print media. It would be one thing if he had slipped out of the public limelight following the campaign, as do many electioneers. Instead he took charge of the agency that he is credited with creating. Now he is in a different role – that of a public steward, whose rhetoric must be connected to reality.

It hardly seems in his best personal interest or that of CIRM to let stand unanswered allegations that he deceived the public. How does that reflect on his future promises and plans for the stem cell agency? Can he be trusted on the complex and financially important issues of intellectual property?

One public relations strategy on issues such as this is to ignore them publicly, hoping that they will go away. The public has a short memory, goes the reasoning. In many ways, however, the public may not be the most significant constituency. In this instance, the international stem cell community is probably more important. So are the political and business decisionmakers in California. The questions raised by the Chronicle article are not likely to be forgotten when they evaluate future statements by Klein.

He may want to look at the example of Nelson Rockefeller, the former governor of New York. Rockefeller once had a tough re-election campaign that focused heavily on taxes. During the election, he promised that he would not support a tax hike. Rockefeller won the election and offered up a tax increase the next year. He was asked how he could square that with his election promise. "That was the biggest mistake of my life," he replied.

Penhoet on IP and Stem Cells

Ed Penhoet, vice chairman of the California stem cell agency and chair of the IP task force, did not break a lot of new ground with his testimony earlier this week on intellectual property. Here is the essence of what he had to say. The full text can be found at the CIRM web site.

"Our role is to spur development of new treatments and therapies – science in the service of therapies – in the promising area of stem cell research. To accomplish this, we recognize the importance of partnerships, especially with the private sector, to develop new tools to treat and study disease and injury.

"I believe that the State of California may achieve economic benefits from CIRM-funded research in a number of different ways including:

"• Providing cures as opposed to lifelong therapies for patients

"• Increased economic activity resulting from growth of an industry based on stem cell science: jobs, taxes, and economic development

"• Direct remuneration to the state from arrangements with industry which provide royalties or other forms of revenue-sharing

"• Attracting substantial increases in research and development funding to California by non-Californian entities."

Ability to Deal Calmly Wanted

The California stem cell agency has 72 applicants for its general counsel position despite a hiring freeze at the financially constrained organization.

Writing for Inhousecounsel.com, Petra Pasternak said the job posting has appeared on such Internet locations as craigslist.com and biospace.com.

"The ideal applicant would combine an in-depth knowledge of IP law with a broad business background -- a big job, according to lawyers," Pasternak wrote.

"'It's not quite like searching for a general counsel in a tech company,' said Stacy Taylor a partner in Foley & Lardner's San Diego office. 'I would guess it's more of a hybrid with experience at a tech company, but also experience dealing with essentially publicly funded research.'

"Frederick Dorey, a special counsel in the life sciences group at Cooley Godward (Palo Alto office), said that the position will require good negotiating skills and a cool head.

"'You'll be dealing with activists, people who are passionate about these issues,' he said, adding that a key skill will be the ability to deal calmly with widely divergent views."

Looking for Stem Cell Research Money?

Zach Hall, president of the California stem cell agency, has provided some clues to the direction of upcoming research grants – should CIRM be able to secure funding.

Reporter Rebecca Vesely of the Oakland Tribune carried Hall's comments in her story about Wednesday's meeting of the Oversight Committee.

"Hall said in the short term he would like to start approving innovation grants of several hundred thousand dollars each, with a focus on new ideas and bringing the brightest scientists into the field of stem cell research," Vesely wrote.

"'I think we should not be afraid at this point to try some risky fields,' he said.

"Hall also said the institute should start issuing 'safe haven' grants — those that would fund physical space to do embryonic stem cell research. Federal rules restricting embryonic stem cell research prohibit scientists from using federally funded laboratories for most embryonic stem cell research."

Vesely said the agency is drawing up plans for a one-day conference on the health risks of embryo donation, focusing on the scientific evidence of the risks -- not on the political debate surrounding egg donation.

Marisa Lagos of the San Francisco Examiner quoted Hall as saying, “We believe it is our responsibility to become better informed … to look critically at the evidence. What is the data? What is the best end? What are the best practices to reduce risks?”

Unanswered Questions about Stem Cell Research and IP

We received an interesting and detailed note from a well-informed observer about many of the issues involving California stem cell research and intellectual property. The immediate impetus for his comments was the background paper provided for Monday's legislative hearing on IP issues.

The writer is Terry Feuerborn, formerly Executive Director of Research Administration and Technology Transfer within the Office of the President at the University of California. He currently serves as the Technology Transfer Ombudsman for the Lawrence Livermore National Laboratory and the Lawrence Berkeley National Laboratory. Here are his comments.

"There are a lot of problems with the Background Paper. There is little real understanding of the higher education research environment, academic science, the pros and cons of the Bayh-Dole Act, or the realities of patenting and licensing new technology. It is not possible to deal with all the deficiencies of this report. Much of it is devoted to dealing with aspects of Prop. 71 that present issues. One such issue is the provision that the state "benefit from royalties, patents, and licensing fees that result from the research." This requirement, admirable on the surface, needs more analysis than the report provides.

"The proposition assumed that there would eventually be royalty income and that this should be shared with the state. Where will this royalty income come from and how will it be generated? Let us begin with the total dollars committed to basic research by CIRM. Funds used for buildings, training, and for administration are not likely to produce inventions. For the sake of being very conservative, however, let us say that all $3 billion will go to support basic research. How many inventions will that produce? For many years, technology transfer managers have used various estimates for the number of inventions that can be expected for a given amount of basic research conducted. Realities vary, of course, from institution to institution based on local factors. A handy estimate used a good bit of the time, however, is that you can expect one invention to be reported for every $2 million of funded basic research. Other estimates can be used, but the logic involved is what is important. Accordingly, for $3 billion, there may be 1500 inventions reported--give or take hundreds in either direction. Each invention reported will require a highly specialized technical analysis just to decide whether or not a patent application should be filed. This is necessary because it is too costly to file a patent application for every invention reported.

"There are often legal and scientific reasons for not filing a patent application as well. Who will perform these evaluations and who will bear the cost? CIRM? The State of California? Where will the expertise and funds come from? Most likely it will have to be from the grantees--who already have patenting and licensing offices. How many patent applications will be filed from the pool of reported inventions? If research grants are made with good judgment, to the best scientists, it is possible that patent applications will be filed on 25% to 50% of the reported inventions. The higher estimate would cast a broad net to insure that patent applications are filed on all of the most promising inventions. Accordingly, there could be up to 750 patent applications, give or take hundreds in either direction.
It costs a lot to file and prosecute patent applications in the US. It can cost $200,000 or more to file corresponding patent applications in Europe and Japan. Who will pay these costs? CIRM? The State?
Licensees can be expected to pay for the costs of patenting inventions for which they have a license, but how many patents will be licensed? For that matter, how many patents will be awarded in response to all of the patent applications? In addition, patenting is an extremely litigious activity. There are infringement suits, interferences in the Patent Office, and legal disputes of all sorts--particularly if breakthrough inventions are involved. In other words, patenting and licensing is a very difficult and costly activity for an institution of higher education with a lot of risk involved. To what extent will the State share in those costs and risks if it expects to share in the benefits? If there is to be a state share of royalties, will it come from the grantee institutions or directly from licensees? There are serious practical and legal issues involved in either approach. And finally, what formula for sharing would seem to be appropriate? Until matters such as this are discussed in detail and dealt with in a reasonable and fair way, policies may be put in place that will have unanticipated consequences."

We are always interested in comments from readers. They can be posted directly by clicking on the comments link at the end of each item. It provides for anonymous commentary, although we prefer that writers identify themselves. Or comments can be sent to us at djensen@californiastemcellreport.com.

Stem Cell Training Grant Program Stalls

Many California institutions selected for stem cell research training grants are "holding tight," reluctant to begin their efforts without cash from the California stem cell agency, The Sacramento Bee reported today.

Reporter Edie Lau said that CIRM has backed away from suggestions that the medical schools begin the programs and seek reimbursement later. She also wrote that efforts to raise funds for the program are taking longer than anticipated.

The agency in September approved $39 million in training grants for 16 California institutions. The University of California, San Francisco, garnered one of the larger grants, $3.6 million to train 16 scientists.

"Obviously, we're disappointed," said Dr. Arnold Kriegstein, director of the school's Institute for Stem Cell and Tissue Biology. "We really have it on hold until we're guaranteed or at least assured that there's funding," Kriegstein said.

New Water Fountains for Stem Cell Science

San Francisco city and California stem cell agency officials snipped a red ribbon Tuesday at the official opening of CIRM's new headquarters in Baghdad-by-the-Bay.

Reporter Rachael Gordon of the San Francisco Chronicle wrote that optimism prevailed at the event, the usual course for such ribbon cuttings.

"The mayor's director of economic development, Jesse Blout, said no new stem cell related companies have put down stakes in San Francisco since the decision on where to locate the headquarters was made. But, he said, 'they're circling,'' she reported. "(San Francisco Mayor Gavin) Newsom said he expects some announcements to be made soon."

Noting the ample communal areas in the headquarters, Gordon quoted CIRM president Zach Hall as saying they will foster collaboration. "I'm a great believer in science by the water fountain,'' said Hall.

CIRM staff has not moved into the facility. That will come Nov. 11.

It was interesting decision by the Chronicle to cover the ribbon cutting but skip the legislative hearing into the intellectual property issues involving CIRM, although the Chron has been one of the leaders in coverage of the stem cell agency.

More Reporting from Monday's IP Hearing

The Contra Costa Times and the San Francisco Examiner also carried reports on Monday's legislative hearing into intellectual property issues involving the California stem cell agency.

Here is the lead on the Examiner story by Marisa Lagos:

"Almost exactly a year after California voters approved $3 billion in public funds for stem cell research, it is still unclear who will own the rights and revenue from any research findings — and whether taxpayers will get a return on their investment."

Here is the lead on the Times story by Sandy Kleffman:

"During the campaign for California's $3 billion stem cell initiative, supporters predicted as much as $1 billion would be returned to state coffers through royalties from stem cell therapies. But now, some question whether the state will get a dime."

Whoops! Monday's IP Hearing Generates a Story

The trouble with computer-based automated tools is that sometimes they turn on you.

No sooner had we written that no California newspaper had printed a story on Monday's IP hearing than up popped one from the Oakland Tribune, found by a dilatory search engine that we had working for us.

The article by Rebecca Vesely said, among other things, that we should not expect to see IRS rulings on the tax-exempt status of California stem cell bonds any time soon, according to the state treasurer's office.

Juan Fernandez, counsel in that office, said the IRS will be consulted only after lawsuits against CIRM are settled and a CIRM IP policy is in place. By some reckoning that may push off an IRS opinion well into 2007.

As for the CIRM timetable on IP, Ed Penhoet, vice chairman of the agency, said the Oversight Committee would not make any IP decisions until February. That seems to conflict with a timetable proposed for tomorrow's Oversight Committee meeting, which shows IP policy coming before that body in December. A wild guess is that a December decision is a tad optimistic.