Weak Case Made by CIRM Opponents

It has been a sow's ear of a stem cell trial.

For a couple of reasons. One is that it lacked drama. Two, the presentation of CIRM's opponents. They have taken their best shot, and it is way off the mark.

We may be wrong, but it appears that their best arguments were made months ago -- before the trial -- and rejected already by the judge.

Today's proceedings did not advance their case significantly and was dominated by CIRM's presentation, which appeared far more professional than the plaintiffs. Although CIRM's counsel had a couple of procedural fumbles with exhibits, it was nothing like the ones that plagued the opposing counsel.

CIRM's foes had an enormous burden. They had to prove that CIRM basically was not a state agency or controlled by the state. Today, Tamar Pachter, deputy attorney general, made point after point that a host of state agencies, ranging from the Department of Finance to the Legislature, can or have messed about in CIRM affairs.

Stem cell Chairman Bob Klein painted a nearly glowing picture of cooperation with the legislature and various state departments. The rocky side of that relationship was hardly touched on by the anti-CIRM people.

Mercifully, the entire affair will be put out of its misery in a couple of days. The state will call one more witness tomorrow, CIRM President Zach Hall. There will be some more haggling over additional evidence, which may require another witness from the plaintiffs to discuss the meaning of IP policy.

The judge indicated that everything could be wrapped up by Thursday. She is proposing written final arguments and only very brief oral closing arguments, if that.

But both sides have made it clear that the case will be appealed. The ultimate resolution looks like sometime next year, as predicted earlier.

Another Recess and Back At It

The following report on the California stem cell trial comes live from the Alameda County courtroom where the legal proceedings are underway. Your comments or questions are welcome as the trial progresses this afternoon.

We are just back from another recess. Bob Klein is off the stand. An official with the state treasurer's office has come and gone. Walter Barnes, chief administrative officer for CIRM, is on the stand. He came to CIRM from the state controller's office. He has been with CIRM since early in 2005. Barnes is detailing how warrants are prepared by state government. As you can tell from this and previous reports, the drama here is overwhelming. The hottest item I have is a hallway tidbit from Klein. He said CIRM had to produce 37,000 pages of documents for the folks who are suing to eliminate the agency. Stand by for more exciting reports.

Break Time Again

The following report on the California stem cell trial comes live from the Alameda County courtroom where the legal proceedings are underway. Your comments or questions are welcome as the trial progresses this afternoon.

We have just broken for a mid-afternoon recess. The plaintiffs are looking for a document that they say they haven't read. But they want to question Bob Klein about it. Attorney David Llewellyn became a tad more animated a few minutes ago as he pressed Klein on whether there were any guarantees that the state would earn any royalties from stem cell inventions financed by CIRM. Klein said no.

Lunch is Over

The following report on the California stem cell trial comes live from the Alameda County courtroom where the legal proceedings are underway. Your comments or questions are welcome as the trial progresses this afternoon.

Robert Klein continued his testimony following the lunch break. More discussion of CIRM documents continued. Klein answered questions about CIRM's intellectual property and ethical policies. He also discussed selection of working group members. He said the selection process started with 800 names. Media attention is way down today. The San Francisco Chronicle and San Diego Union-Tribune are here. No TV, however.

Stem Cell Trial Recesses for Lunch

The following report on the California stem cell trial comes live from the Alameda County courtroom where the legal proceedings are underway. Your comments are or questions are welcome as the trial progresses this afternoon. .

The California stem cell trial has recessed for lunch until 1:30 p.m. Tamar Pachter, deputy attorney general, will continue questioning stem cell chairman Robert Klein this afternoon. In his most recent testimony, Klein said that Oversight Committee members bring valuable expertise and knowledge to CIRM as the result of their backgrounds, which the plaintiffs contend create insurmountable conflicts of interest. Pachter is attempting to show that CIRM operates within the framework of state government and is a constitutional agency.

Klein Testifying About State Control of CIRM

Stem cell chairman Robert Klein is testifying this morning about how CIRM has worked with other state agencies, from the treasurer's office to the legislature. The line of questioning is being pursued by Tamar Pachter, deputy attorney general, in an effort to show that state oversight of CIRM does, in fact, exist. One contention of the foes is that CIRM operates so independently that it is unconstitutional. Klein has testified that the legislature, controller's and treasurer's offices and governor's office have all participated in developing various procedures and policies at CIRM.

Foes Probe Conflicts of Interest

Opponents of the stem cell agency this morning finished questioning stem cell chairman Robert Klein -- at least for the time being. Tamar Pachter, deputy attorney general, has just picked up questioning of Klein. CIRM foes focused this morning on conflict of interest, particularly in working groups. Largely the testimony was factual, dealing with requirements of rules and how the policy works. CIRM opponents contend that conflicts of interest are so great within the agency that it cannot operate as a constitutional state agency. They also contend that the CIRM working groups actually make decisions not recommendations. So far testimony has not proven that allegation.

Stem Cell Trial Resumes This Morning

The California stem cell trial has resumed this morning in Alameda Superior Court. Stem cell chairman Robert Klein is back on the witness stand and is being questioned by attorney David Llewellyn concerning the meaning of Prop. 71. We are filing directly from the courtroom as Klein testifies. Your comments and questions are welcome throughout the day.

Fumbling Marks First Day of Stem Cell Trial

It was a $6 billion playbill, but if you wanted good theater, you couldn't find it on Monday.

At issue is the existence of the California stem cell agency, which some conservative and Christian right organizations are seeking to terminate.

Their basic contention is that CIRM, created by voters through approval of a ballot initiative in a constitutionally authorized process, is actually unconstitutional because the agency is purportedly not under the control and exclusive management of the state.

The case of the CIRM foes moved slowly on Monday with fumbling over exhibits and evidence, tedious readings of long and short documents and a lengthy opening statement that tested the patience of Alameda Superior Court Judge Bonnie Lewman Sabraw.

No new ground was broken and about the only surprise was that the plaintiffs said they would base their case solely on exhibits.

Late in the day, they summoned stem cell chairman Robert Klein to answers questions about the meaning of CIRM documents. One series of questions attempted to clear up whether he was responding for CIRM, the Oversight Committee or simply as chairman. Another line of questioning, ultimately dropped, involved the meaning of "categories" and "programs."

At one point, attorney David Llewellyn, representing the California Family Bioethics Council, read a segment of the ballot analysis of Prop. 71 to Klein.

"Did I read that correctly," he asked Klein.

"Yes, you read it correctly," Klein responded.

Llewellyn apologized early to the judge for not having his exhibits in order.

Speaking for CIRM was Tamar Pachter, deputy state attorney general, who gave a 15-minute opening statement, the only presentation made by the defense in the day-long proceedings.

She denied that the agency, which will cost California $6 billion, was unconstitutional. She said the voters used their constitutional powers through the initiative process to "tear down barriers" and "strike directly through to their desired end." Pachter said CIRM opponents were using a "tortured interpretation of the (state) constitution" to support their case.

Following the day's proceedings, Mike Claeys of the Alliance for Stem Cell Research said he was "astonished by the lack of coherent arguments" and the "level of disorganization" of the plaintiffs.

CIRM's opponents did seem ill-prepared and poorly organized. But this was day one in the nonjury trial, which is certain to be appealed and ultimately not resolved for another 12 months or so. And a fumbling, country-boy routine may be part of the strategy.

Outside of the courtroom, four Bay Area TV stations collected sound bites from all the principals, including Llewellyn, who sounded crisper and more on message than he was in the courtroom. We understand that at least two radio stations covered the affair along with the usual gaggle of print reporters, but none from out of state.

What appears on TV is not likely to reflect courtroom fumbling, but rather the interviews in the corridors with Llewellyn and his fellow attorneys as well as with Klein and his supporters including four who showed up in wheelchairs.

It is the second venue for CIRM. It needs to win both in court and with the public.

CIRM On The Mark With Media Info

The California stem cell agency moved adroitly last week to stay on top of the media agenda in connection with the beginning of today's trial challenging the very existence of the institute.

Nicole Pagano, a spokeswoman for CIRM, released a notice to the media on Feb. 23 containing the various times, names and basic details of the trial. It was the kind of stuff that rarely makes its way in an obvious fashion into news stories but is quite helpful to reporters, particularly out-of-town reporters and those not well-versed in the issue.

The email notification went beyond those matters to include attachments that will help set the tone of the reporting during the trial and expose reporters to information that they may not have seen until now. The attachments included an 1,862-word rundown on the key attorneys in the case, including the CIRM opponents; a 1,378-word background paper on the organizations involved, again including the CIRM opponents; a 1,796-word timeline on the litigation, and a copy of the 42-page filing by the state on behalf of CIRM.

The material was generally straightforward, quoting from the web sites of CIRM's opponents, even using some of their special terminology such as "the unborn." When sources were not specifically cited, it appeared that the information was the result of pretrial research into the opposing attorneys and their public records.

All of this is quite helpful to reporters, even if they don't use it immediately in stories. The information also has subtle effects that accrue to CIRM's benefit. It tends to make CIRM the lead source for information on the trial and set the agenda for the terms of the public debate about the trial. It tends to create an aura of authority for CIRM, that contrasts favorably to its opponents, at least so far. The information also tends to bolster CIRM's contention that the main motivation of its opponents is religious as opposed to a desire for good government and policy. That kind of background is likely to filter into many news stories.

Providing such information certainly comes under the legitimate functions of any state agency, although some might argue whether it is appropriate for CIRM to release short biographies of opposing attorneys.

Nothing similar was available from CIRM's foes.

As of this writing, the background information is not available on CIRM's website. Presumably, you can receive it by sending an email to npagano@cirm.ca.gov. If that doesn't work, send a request to us, djensen@californiastemcellreport.blogspot.com, and we will forward the information to you.

Coming Up

For those of you who have forgotten, the California stem cell agency goes on trial in the Apricot Capital of the World on Monday. More specifically in Alameda County Superior Court in Hayward, Ca. The nonjury trial is scheduled to begin at 9:30 a.m. Pacific Standard Time. We will be in attendance and will file a report at least by early evening on Monday, perhaps sooner, depending on time constraints and Internet accessibility. Here is a link to a piece Sunday by reporter Paul Elias of The Associated Press, setting the stage for the showdown. Here is another piece by Rebecca Vesely in the Oakland Tribune.

The Wages of Eggs

Cash and human eggs – some folks simply do not want to see them linked together, only reluctantly recognizing that women who donate eggs should be reimbursed for their expenses.

The California stem cell agency recently decided to permit reimbursement for lost wages, a position that troubles California state Sen. Deborah Ortiz, chair of the Senate Health Committee and author of legislation that would regulate egg donations involving non-CIRM funded research.

She cites ethical and fairness issues, among other problems, in implementing a policy of reimbursement for lost wages.

We asked Ortiz' office, via email, for an elaboration on her position, including examples of how reimbursement would amount to coercion or inducement.

Hallye Jordan, director of communications for Ortiz, said the senator's general concern

"is that it would be difficult to establish a fair system for reimbursement of lost wages, particularly when the pool of subjects may include professional women who would be compensated for high hourly earnings and low-income women who may be compensated at minimum wage.

"For a higher income, professional subject, her employer may be able to accommodate her lost time if she is paid by salary. In that case, a credible argument could be made that payment for lost wages that isn't necessary could constitute a monetary reward that goes beyond the 'direct' expenses.

"For women who don't work, or are paid on a seasonal, informal basis, a lost wages policy won't benefit them, anyway. That suggests others steps may be needed to increase diversity among egg donors."

We pursued the question a bit further with Jordan, while noting that the whole question is a bit murky. Here is our subsequent question and Jordan's response.

California Stem Cell Report:
How could a $40,000-a-year woman afford to take off any substantial amount of time if she loses pay? Or even a $70,000-a-year person? Most households in that range do not have the economic slack to accommodate big losses in wages. And workers in that range are not likely to be excused with pay by the employers in order to make egg donations. As for non-working women and seasonal workers, that could be even tougher. A woman who does not work outside of the home makes a genuine, measurable economic contribution to a household. If she is away for any length of time, presumably somebody would have to be paid to perform her tasks.

As for the seasonal workers or informal workers, what "other steps" might be taken? If successful diversity efforts are to be made, something has to be done to recognize the economic situation of persons in minority groups.

Jordan:

"Good points, all. But I don't see how CIRM could pay for lost wages to awoman who has no income. Would they then reimburse her for child care,cooking, cleaning, if she hires someone to take her place in the home? That opens up that whole arena of non-direct expenses, which Prop. 71 prohibits, and (CIRM chairman Robert) Klein said, at the Aug. 30 meeting, includes lost wages. So, all I can say is 'tis a sticky situation."

As Jordan indicates, the final word has not yet been written on this matter. Ortiz' legislation is in its early stages and subject to considerable modification. CIRM itself indicated when it adopted its regulations that it was open to changes. Whether it will go so far as to change the wage reimbursement provision is unclear, but probably unlikely.

Stem Cell Ethics Rules "Flawed"

The Center for Genetics and Society says that the recently adopted ethics standards of the California stem cell agency are "fundamentally flawed" and that its intellectual property rules are unlikely to come close to recouping the cost of the agency's program.

In its most recent newsletter, the center, a longtime critic of CIRM, says,

"While the research standards adopted by the governing board of the California Institute for Regenerative Medicine (CIRM) have some improvements in the details, the core of the policy remains inadequate. It leaves the approval of research protocols to local 'Stem Cell Research Oversight Committees' that will be formed by, and affiliated with, the institutions doing the research.

"These committees will consist largely of stem cell researchers themselves and their colleagues from related scientific fields, whose sympathies and loyalties are likely to lie with their institutions and with the research. Further, there will be no oversight of these committees, and key information will not be available to the public for scrutiny."

The center continued,

"The state's share of revenues under the new policy on intellectual property is unlikely to make a significant dent in the $6 billion cost of the program, and it is far from clear that this huge public investment in stem cell research is the best use of funds to promote the health of most Californians."

The center noted that the campaign for Prop. 71 promised that the program would pay for itself. Of course, those promises were based on a study that the campaign purchased.

The center's newsletter, Genetic Crossroads, provides a useful overview of recent events involving CIRM, including links to other coverage. But it includes many other topics as well. For example, the Feb. 23 edition includes research cloning, a recap of the latest developments in the Hwang affair, coverage of the Schatten case and other stories on related matters in this country and abroad. The newsletter is available by free electronic subscription.

CHI, Stem Cells, Love and Morrow

The California Healthcare Institute made some stem cell news this month with the appointment of a new director to its board and with the involvement of its chief counsel in an faith-based political flap.

CHI, a biomed industry group and supporter of the California stem cell agency, named Ted Love, chairman and CEO of Nuvelo Inc. of San Carlos, a biopharmaceutical firm, to the CHI board of directors. Love is also a member of the Oversight Committee of the California stem cell agency.

Earlier this month, CHI and stem cell research surfaced in a different way in the congressional campaign of Republican state Sen. Bill Morrow. His wife, Barbara, is vice president and general counsel of CHI.

Her connection to CHI became an issue, at least for some, because CHI supports embryonic stem cell research, something that Christian activists oppose.

According to the Agape Press web site, whose motto is "reliable news from a Christian source:

"Senator Morrow does not deny that his wife is employed at the Institute. But he claims her work as general counsel does not require her to promote the company's position on ESCR. The state lawmaker explains that his wife took the job after much prayer and consideration.

"'We sat down with pastors and nationally known bioethicists who were Christians and ministers ... before we accepted that position,' Senator Morrow says.

"Morrow states that he and his wife felt 'very comfortable' with the advice they received -- specifically, that it would clearly understood Mrs. Morrow would not be called on to lobby in support of ESCR. 'And under those conditions, which they've held up to, that's what she's done,' he adds."

Stem Cell Audit Proposal Delayed

Consideration of a proposal to have the legislature's auditor general examine the California stem cell agency has been put off until March 8 or later.

The office of Sen. Deborah Ortiz, who backed the audit along with a bipartisan group of 10 other legislators, announced the delay. No further explanation was offered.

$25 Million for Stem Cell Research and Other Stuff at USC

Funding for stem cell research in California received a big boost today from a self-made billionaire who is the son of Lithuanian immigrants.

The money -- $25 million – is going to USC to create the Broad Institute for Integrative Biology and Stem Cell Research. The institute will be named after Edythe and Eli Broad, who provided the funds through the Broad Foundation.

USC said the 215,000-square-foot facility will be the largest stem cell research center in California when it opens in 2008. The program will involve Childrens Hospital in Los Angeles and teams from Caltech and other regional scientific institutions.

Eighteen new investigators will be involved in the Center for Stem Cell and Regenerative Medicine and another 18 will be engaged in transplant biology, cardiovascular disease, diabetes and other metabolic diseases.

Broad co-founded the Kaufman and Broad home building firm and once owned SunAmerica insurance company, which he sold to AIG in 1998 for $18 billion, according to Forbes magazine. Broad was estimated to be worth $6 billion by Forbes.

Frankenstein, Train Wreck or Good Listener?

The Los Angeles Times has joined The Sacramento Bee in calling for more public disclosure of the financial interests of scientific advisors to the California stem cell agency.

In an editorial today, the Times said,

"One issue the institute still must confront is making the financial disclosures of its scientific advisors open to the public. These scientists will recommend which grant proposals should be approved, and it's important for the public to know that the reviewers, who often have links to companies and universities, will not be enriched by the advice they give.

"The agency's leaders argue that no worthwhile scientist would stand for such disclosure. But it's entirely reasonable — and increasingly common — to ask stem cell scientists to disclose their financial and research relationships. If a scientist wants to help decide how California spends $3 billion on stem cell research, he or she should be willing to take steps to assure the public that its money is being well spent."

The editorial generally lauded the agency, particularly the ethics and intellectual property rules approved earlier this month. But it added,

"It has taken more pressure from public interest groups than it should have to set the institute on the right path. That's probably because the governing board has no members from such groups, something the Legislature should correct once the three-year moratorium on amending Proposition 71 is over. Still, the board showed that it has learned how to listen and respond, one of its most promising steps so far."

On Sunday, the agency was likened to a Frankstein monster in an op-ed piece in the San Francisco Chronicle. Dana Welch, executive director of the Berkeley Center for Law, Business and the Economy, posed a series of questions about the agency, ranging from the direction of CIRM's priorities to IP rights.

"Prop 71 left these questions and more wide open. Answer any one wrong, or leave them to chance, and we risk a South-Korean-like train wreck, potentially setting back by years the development of potential cures. Answer these questions right, and California becomes a model for other states and countries conducting stem cell research," she wrote.

The questions raised by Welch are identical to the ones being discussed at a conference early in March at Boalt Hall in Berkeley. Her group is one of the sponsors.

Ortiz Seeks Performance Audit of CIRM; Westly Says "Tough Oversight" Needed

Acting on a suggestion of Gov. Schwarzenegger, California State Sen. Deborah Ortiz and nine other legislators are calling for a performance audit of the California stem cell agency.

Their request will come before the Joint Legislative Audit Committee on Wednesday at 1:30 p.m. in room 447 of the state Capitol.

In the letter calling for the audit, Ortiz, a Sacramento Democrat, said the review should include:

"...the strategic policies and plans developed by the CIRM and the ICOC; policies and procedures for issuance of research and facility contracts and grants; policies for hiring and compensation of staff and for procurement of goods and services; policies for managing conflicts of interest for ICOC and working group members; and policies and procedures relating to management of intellectual property rights associated with research funded or commissioned by the CIRM."

She noted that a performance audit of CIRM would have been required by her legislation (SB18) that was vetoed by the governor. She said the governor's veto message urges the legislature to pursue an audit through the Joint Legislative Audit Committee.

Ortiz' request, which includes support from three Republican legislators, calls for completion of the audit by Sept. 30. Her office did not issue a press release on her Feb. 1 request letter. We asked for it after discovering the item on the agenda of the Audit Committee.

CIRM also faces an audit of its own that will cost about $50,000 and be performed by the firm of Gilbert Associates of Sacramento. But the one requested by Ortiz is likely to be the most rigorous.

State Controller Steve Westly, who is seeking the Democratic nomination for governor, announced last week he would be reviewing CIRM's financial activities. Westly's campaign is making a special effort, fueled by Google ads, to "get stem cell research back on track now."

As state controller, Westly is also chair of the Financial Accountability and Oversight Committee of CIRM and is required by law to "review" CIRM's own audit annually and issue a public report.

In a little noticed press release last week, Westly described himself as a strong supporter of Prop. 71 and said, “Tough oversight will ensure the public's confidence in our stem cell program. The stakes are too high for the institute to risk its funds or the public's trust.”

Westly's office will review the audit already commissioned by CIRM and discuss it a meeting of the Financial Accountability Committee later this spring.

In addition to himself, Westly announced that following the following persons are on the committee:

"Richard Siegal, member, appointed by the State Controller
"John Hein, appointed by the Assembly Speaker
"Jim Lott, appointed by the Senate President Pro Tem
"Daniel S. Brunner, appointed by the State Treasurer
"Myrtle Potter, member, appointed by the Chair of the Independent Citizen's Oversight Committee"

No further information was provided in Westly's press release about the qualifications of the five persons.

A copy of Ortiz' letter follows below because it was not available online at the time this writing.

Ortiz's Audit Request Letter

Here is a copy of Sen. Ortiz' audit request letter.

February 1, 2006

Assemblymember Nicole Parra
Chair, Joint Legislative Audit Committee
State Capitol, Room 4005
Sacramento, CA 95814

Dear Assemblymember Parra:

We are writing to request that the State Auditor conduct a performance audit of the California Institute for Regenerative Medicine (CIRM) created by Proposition 71, the California Stem Cell Research and Cures Act, in November, 2004, and to report the results of the audit by September 30, 2006.

We believe a performance audit of the CIRM and the Independent Citizen’s Oversight Committee (ICOC) which governs it would be of great value in guiding the implementation of this large new state program and ensuring that taxpayers’ funds in this area are well spent. Among other things, we would recommend that the audit review the strategic policies and plans developed by the CIRM and the ICOC; policies and procedures for issuance of research and facility contracts and grants; policies for hiring and compensation of staff and for procurement of goods and services; policies for managing conflicts of interest for ICOC and working group members; and policies and procedures relating to management of intellectual property rights associated with research funded or commissioned by the CIRM.

As has been widely reported, the initial implementation of this important new program has been hampered by a number of problems. Due to litigation, the CIRM has not been able to issue bonds to commence making research and facility grants. As a result, the program has relied on loans from private individuals and may soon begin issuing bonds that are not backed by a payment guarantee by the state. In addition, a number of CIRMs hiring, compensation, and contracting actions and expenditures have been questioned as being excessive. Finally, many reviewers have questioned the criteria used to select a site for the CIRMs administrative offices.

SB 18 (Ortiz and Runner) of the 2005-06 Session would have required the State Auditor to conduct a performance audit of the CIRM and the ICOC and to provide the audit report to the Legislature on or before June 30, 2006. It would also have required the State Auditor, on or before October 2007, to provide an analysis of the CIRMs implementation of the recommendations contained in the audit report.

In his veto message, the Governor stated he was vetoing the measure due to concerns that these provisions constituted an impermissible legislative amendment of Proposition 71, which provides that its provisions may be amended by the Legislature in furtherance of its purposes no earlier than the third full calendar year following its adoption by 70 percent of the membership of both houses or the Legislature. The veto message urges the Legislature to pursue a performance audit of the CIRM through the Joint Legislative Audit Committee. Accordingly, through this letter we are requesting that JLAC commission a performance audit of CIRM and the ICOC.

Thank you for your attention to this request. If you have any questions regarding the request, please feel free to contact us or our staffs.

Sincerely,



_
SENATOR DEBORAH ORTIZ, SENATOR GEORGE RUNNER, SENATOR LIZ FIGUEROA, SENATOR SHEILA KUEHL, SENATOR ABEL MALDONADO, SENATOR RICHARD ALARCÓN, SENATOR GLORIA ROMERO, SENATOR ROBERT DUTTON, SENATOR JACK SCOTT, ASSEMBLYMEMBER WILMA CHAN, ASSEMBLYMEMBER JACKIE GOLDBERG

Major Stem Cell Conference Scheduled for March 2-4 at UC Berkeley

Another major stem cell conference is scheduled for March in Bay Area. This one is is being held March 2-4 at UC Berkeley's Boalt Hall and is called "California's Stem Cell Initiative: Confronting the Legal and Policy Challenges."

The 2 ½-day conference has a host of speakers ranging from Ed Penhoet, vice chair of the California stem cell agency, to California state Sen. Deborah Ortiz, who is carrying legislation to step up oversight of the agency. Scientists, academicians, economists and more are scheduled to appear.

You can register at this link. The cost ranges from a $350 corporate level to $25 for students. You can access a fine bibliography of articles by speakers at the conference by clicking here. The other March conference is sponsored by Burrill and Company, a San Francisco life sciences merchant bank. Registration fees are $1495 for that meeting. You can read our earlier item on it here.