Fresh Comment

Jeff Sheehy, a member of the Oversight Committee of the California stem cell agency, has posted a hefty rebuttal to the item "CIRM Says No" below. He disagrees with the California state auditor and the position of this author. Sheehy says public disclosure of the economic interests of the individuals who make critical recommendations on multimillion dollar grants of public money would amount to "draconian overkill for a hypothetical problem (that) could severely slow the grantmaking process and delay needed therapies and cures." Your attention is invited to his comments. You can find them by clicking on the word "comment" at the end of the "CIRM Says No" item. .

CIRM Says No to Auditor's Conflicts Concerns

Elaine Howle, the California state auditor, knows a great deal about the mischief that goes on in state government. And make no mistake about it, mischief does occur even when the multibillion dollar battle ground is in public and the economic interests are on full display.

She also knows that the mischief can grow even greater when the doors are closed and the financial interests of the major players are hidden from the public, such as in the case of grants awarded by California's $3 billion stem cell agency.

So Howle (photo above) recommended last spring that the California stem cell agency, with its $3 billion research effort, do more to ensure that its conflict of interest code is followed. Her suggestion was rather modest considering the stakes: CIRM should ask the state attorney general for an opinion about whether the men and women who make the basic decisions on hundreds of millions in dollars in grants should be required to publicly disclose their economic interests.

CIRM's answer to the state auditor came last month: No.

"It is not appropriate," said the agency in letter to Howle. The letter came only 10 days before one institution withdrew its request for $2.6 million, a pitch that was approved by grant reviewers in secret last March without turning up the fact that the applicant was tied to an international scientific flap.

Richard Murphy, interim president of CIRM, wrote to the state auditor,

"We have given careful consideration to your recommendation and have decided it is not appropriate to implement at this time. In almost three years of operation and approval of four rounds of grants, the recommendations of the CIRM working groups have never been routinely and/or regularly adopted by the ICOC. Until the time that such a pattern is detected, the question you suggest we raise with the attorney general is entirely hypothetical, and is therefore not appropriate for submission. We will, however, continue to monitor approvals for such a pattern and will reconsider our decision if one emerges."

Murphy has some interesting lines of reasoning here, ones that clearly had the influence of a skillful attorney.

One part of his response refers to "routine and regular" actions. Another says the whole matter is hypothetical, implying that hypothetical possibilities are not worthy of public action. Let's examine CIRM's contentions.

First, should hypothetical situations to be ignored by government agencies? The possibility of contracting small pox or polio is hypothetical. Does that mean that children should not receive vaccinations against those diseases? Or that the government should not require them to be vaccinated in certain situations? The possibility of a terrorist boarding a plane with a bomb is hypothetical. Does that mean inspections of passengers boarding aircraft should cease?

The point about PUBLIC disclosure of the economic interests of grant reviewers is to prevent serious problems. A scandal involving conflicts-of-interests among persons who make critical judgments on the requests for hundreds of millions of dollars in taxpayer funds could be crippling to the stem cell agency. It is in the agency's best interests to inoculate itself against that possibility. It is most certainly in the public's best interest.

As for the routine ratification of reviewer recommendations, the Oversight Committee, which has ultimate legal authority on grant approval, has modified the reviewers' recommendations from time to time. We are sure that CIRM's able legal staff has counted the occasions and is prepared to make the case that the Oversight Committee does not routinely give grants a rubber stamp.

However, from seeing the board in action and reviewing transcripts, we come to a different conclusion, although we have not yet counted and assessed each individual vote. Reviewers are making de facto decisions. Most grants are routinely approved with little discussion by the Oversight Committee. Only a relative handful have been changed by that group.

Asking for a formal opinion from the attorney general is a serious matter. Such opinions have the force of law, for most purposes. CIRM would not want to seek such an opinion if it were uncertain of a favorable result. It is also fair to say that unless something changes, CIRM is not likely to ever detect a pattern of "routine and regular" approval of reviewer recommendations. To do so would open the agency to other legal perils, such as lawsuits alleging that the Oversight Committee is failing to perform its duties as required by law.

(The CIRM response on this matter is part of a document filed as part of the six-month response to the entire state audit. The response is not available on the Internet. If you would like a copy, please send an email to djensen@californiastemcellreport.com.)

$122 Million Disease Team Effort, $25 Million for New Pluripotent Lines

Crank up those grant-writing machines. Another 147 million in California stem cell dollars are going to start moving into the pipeline this fall.

The Oversight Committee of the California stem cell agency last week approved concepts for two new research efforts – one to develop new pluripotent human stem cell lines and another for planning grants for disease team research.

The disease team research effort is the largest at $122 million and most complex. So this fall – probably November -- the agency plans to seek applications for up to 20 planning grants for a total of $1 million. Funding approval is expected next spring.

The idea behind the disease team approach is stimulate proposals that would use strongly managed, diverse teams to accelerate development of therapies into actual use. The teams would also have clear-cut milestones on which they would be measured.

All of you team-oriented folks -- and what scientist is not (a little humor there) – can find a short document here that was presented to the Oversight Committee last week about the effort. The approach is also discussed in the strategic plan. Available at last week's meeting, but not on the CIRM web site at this point, is another important, 59-page document called "Disease Team Workshop: Information Gathering Session (July 25-26, 2007)." If you want that one, send an email to info@cirm.ca.gov.

Receiving a planning grant is not a pre-condition to winning an actual disease team grant later, CIRM staff said. And at the insistence of some of the medical school deans who serve as CIRM directors, the Oversight Committee also added a 10 percent indirect cost allotment in the planning grant(that is the change from the short document you will find on the web).

As for the new stem cell lines, the RFA on that $25 million program will come up this fall with approval for funding also in the spring. The grants are aimed at supporting generation of new lines of pluripotent cells, said CIRM,

"new clinical grade lines of hESCs and other pluripotent human stem cells suitable for future clinical use or other biomedical applications

"new hESC lines generated using improved methods that may be optimal for differentiation along selective lineages or for studies of disease

"disease-specific, pluripotent stem cell lines to support the study of the effects of genetic variation on disease development and response to treatment

"the discovery and implementation of alternative methods for generating pluripotent human cells."

More specifically, the awards will be made to "support two areas of derivation: the generation of new human lines using excess embryos from in vitro fertilization, and derivations from other sources using new and novel methods."

In addition to the document from last week's meeting, you can find more on the subject in the CIRM strategic plan.

Both programs will have limits on the number of applications from each institution.

CGS on CHA: Pushed or Jumped?

That was the headline on a piece on Biopolitical Times concerning the $2.6 million grant from the California stem cell agency to a Los Angeles subsidiary of a Korean business, headed by a controversial scientist.

Jesse Reynolds of the Center for Genetics and Society wrote skeptically about the explanations involved in the withdrawal, declaring that they "seemed a bit disingenuous."

"Regardless," he said, "the outcome is the right one."

CIRM Bonds: 3.55 Percent vs. 5.168 Percent Interest

When Prop. 71 was passed, even well-informed voters believed that the new California stem cell agency would use $3 billion in NON-taxable bonds to finance its activities.

The issue is significant because it costs the state a great deal more to use taxable bonds, which were exactly what was used on Thursday.

The California Stem Cell Report asked the state treasurer's office for a comparable rate if the bonds had been tax-exempt. Spokesman Tom Dresslar replied that the rate would have been around 3.55 percent. That compares to the 5.168 percent rate that the bonds were sold at, a rather hefty boost.

The total interest cost for the $250 million in bonds is expected to be $31.941 million.

CIRM and the state treasurer's office are seeking an opinion from the IRS that they hope will allow CIRM to use non-taxable bonds, but it is not clear when that will be forthcoming.

If it can't use the cheaper financing, the state faces close to another $1 billion in interest costs, according to some estimates. That is beyond the $3 billion that non-taxable bonds were expected to cost. (Yes, the figure is nearly identical to the amount of bonds authorized under Prop. 71.)

The issues of the cost of CIRM bonds and what could be generously described as a lack of candor during the campaign on the part of California stem cell Chairman Robert Klein are currently backburner issues in the Capitol and California. But given the magnitude of the costs, they are likely to surface anew in the not-to-distant future.

Text of CHA Statement

Here is the complete text from Jean Yi, CEO, CHA Regenerative Medicine Institute, concerning her firm's withdrawal of its application for a $2.6 million grant from the California stem cell agency. The statement was supplied by Tony Knight of Sitrick and Company, a PR firm working for CHA. (See the "grant withdrawn" item below.)

"CHA Regenerative Medicine Institute (CHARMI) more than adequately addressed the baseless criticism leveled at the CIRM selection process by submitting documentary evidence of CHARMI's status as a registered non-profit corporation in California and tax exemption approvals by federal and state authorities. We think the process was needlessly politicized by CIRM's critics. Nevertheless, we are withdrawing because the last thing we want to do is be the source of any impairment to CIRM's current level of well-earned public support."

Klein, Trounson, Hall: The Bee Looks Briefly at Leadership

The Sacramento Bee today carried an account of the recruitment of Alan Trounson as president of the California stem cell agency, including commentary on the future working relationship between him and California stem cell chairman Robert Klein.

Klein and former President Zach Hall sometimes appeared at loggerheads, if not worse, although the management and policy disputes were largely papered over in public.

Trounson told Bee reporter Jim Downing that he has "no concerns" about working with Klein. Trounson said,

"I think our skills are complementary and we are well suited for a very productive partnership. Bob Klein has a wealth of experience in finance, law, bonds, political connections and advocacy. That is worth tapping for the timely delivery of our outcomes."

Klein told Downing that he anticipated a smooth relationship.

"Dr. Trounson ... views this board as a resource that he can jointly make decisions with. Dr. Hall was accustomed to being a deputy dean at a medical school, where what he said goes. I deeply respect the contribution made by Dr. Hall, but ... his was a difficult leadership style."

Hall characterized Trounson's selection as a "wonderful, wonderful appointment." Hall said,

"The good news is that Bob (Klein) has recruited him and Bob has spent a lot of time with him. So I'm very hopeful the two of them will be able work together effectively. I think that's extremely important."

The Bee's story comes long after the appointment was announced. One reason for that is the poor media handling of the Trounson announcement. In this case, The Bee, a large and influential newspaper in the state capital, was not notified in time to participate in the the news conference, The announcement, controlled by Klein, came late Friday afternoon, one of the worst days and times for generating good news coverage and maximum attention. In fact, Friday afternoon is when many skilled media relations persons release bad news as part of an effort to minimize attention. In this case, the Trounson announcement was a "good news" story that could have received considerably more attention if properly handled.

Fresh Comment

An anonymous comment has been posted on the item below, saying a copy of the treasurer's press release can be found on the CIRM web site at this location.

Stem Cell Fanciers Snap up More Than $100 Million in Bonds

California today sold a whopping $102.8 million of its stem cell bonds to individual investors, more than triple the amount expected by the state.

The size of the sale, 41.1 percent of the $250 million total, testified to the powerful lure of stem cell research for a large segment of the public. The number probably could have been higher if publicity had been generated earlier among the patient advocate and other sympathetic groups.

The taxable bonds were sold at a 5.168 percent rate, which is 1.15 percentage points higher than today's rate on three-year U.S. Treasury notes. Institutional investors purchased what individuals did not.

State Treasurer Bill Lockyer (see photo) said in a news release,

"The investment by individuals far exceeded our expectations and shows how strongly Californians believe in the promise of stem cell research to cure diseases and relieve suffering,"

California stem cell Chairman Robert Klein said,

"Certainly many of the investors are patients suffering from debilitating disease or injury. They’re making an investment in their future – not simply their financial future, but their future quality of life."

Lockyer also noted that it was the first time California bonds have been used to directly finance the development of intellectual capital.

He said $48 million of the proceeds will go to pay back the bond anticipation notes that philanthropists purchased to provide funds for CIRM while it was hobbled by litigation. More than $200 million will go for research grants. That means that state is still waiting for repayment of a $150 million loan to CIRM. It also means that a new round of bond financing is likely soon. The agency currently has $850 million in untapped bonding capacity out of the $3 billion authorized in 2004. It can only issue $350 million a year, but unused bonding capacity is carried over year to year.

Lockyer's news release was not posted on the Internet at the time of his writing, but you should be able to find it here later in the day.

Stem Cell Bond Offering Attracts Media Attention

The $250 millon California stem cell bond offering today has triggered some unusual coverage of the state's research agency throughout the country.

Ordinarily the issuance of bonds by California attracts virtually no media attention. But since State Treasurer Bill Lockyer has created a program under which small investors can easily buy the bonds, stem cell bond news has a bigger audience.

Both CIRM and the state treasurer's office were a tad slow on picking up the idea of generating favorable publicity on the stem cell bonds, given that the cause of stem research has some nearly fanatic followers.

But in the last couple of days, press releases rippled across the country, generating stories including one notable video piece on CNBC. The segment was long – seven minutes and 39 seconds – but more than one of the participants needed to do additional homework.

The CNBC anchor who introduced the topic about California issuing stem cell bonds began with this question: "Do they have this right?" No one really answered the question, but, of course, the answer is yes. Another participant said that government is not in the business of funding "speculative" research, apparently not aware of the billions already provided for research by the NIH. As usual with many TV news interviews, some heat was generated during the discussion among the four participants. Perhaps some light also. But for the most part, the CNBC effort demonstrated the shallow level of knowledge about stem cell research and the California stem cell agency.

For those small investors who may have missed out on today's offering, another round is certain to come up probably relatively early next year. Watch this space for details.

Biotech Bank Plan Moves Ahead at CIRM

With no fanfare whatsoever, the $3 billion California stem cell agency – already the largest single source of funding for human embryonic stem cell research in the world – Wednesday took the first step towards extending its life by moving forward on creation of a loan bank for the biotech industry.

Few details were available. They will be worked out by a Biotech Loan Task Force, chaired by Duane Roth, chairman and chief executive officer of Alliance Pharmaceutical Corp. of San Diego, Ca., and finance committee, chaired by venture capitalist Michael Goldberg(see photo), a general partner in Mohr Davidow Ventures of Menlo Park, Ca. Both are directors of the stem cell agency.

Members of the CIRM Oversight Committee did not discuss the loan bank, which is the brainchild of Robert Klein, chairman of the California Institute for Regenerative Medicine. They approved creation of the task force and a new finance committee on a unanimous voice vote at a meeting in San Diego, Ca.

Following the meeting, Goldberg told us that he has not yet developed a schedule for his group's hearings, declaring it was too early to discuss details.

As we mentioned earlier, a major lending program operated by CIRM poses a host of questions and also opportunities. One advantage of a biotech bank is that it could create an income stream that could continue to fund CIRM well beyond its bonding capacity, which is only about 10 years if it taps the maximum each year.

The biotech bank also highlights the unusual nature of the agency, which enjoys special capabilities not shared with virtually all other state departments. For example, it can raise funds much like a private nonprofit organization, although fundraising is a tricky business. A case in point was the star-studded fundraiser in May of 2006 in San Francisco, featuring Julie Andrews, which promised to raise $1 million for CIRM. The actual figure was only $250,000, according to CIRM.

(An earlier version of this item incorrectly identified Goldberg as chairman of the Biotech Loan Task Force and Roth as chairman of the Finance Subcommittee.)

CHA Grant Withdrawn, Burnham Grant Denied

A California subsidiary of a Korean firm caught in an international plagiarism flap has bailed out of a $2.6 million grant from the California stem cell agency.
Arlene Chiu, chief scientific officer of the $3 billion California Institute for Regenerative Medicine, told the agency's directors at a Wednesday meeting in San Diego, that CHA Regenerative Medicine Institute of Los Angeles (CHA RMI) withdrew its application on Sept. 28 following a lengthy administrative review.

She did not elaborate on the matter. She referred questions to Tamar Pachter, general counsel for CIRM, who told us that it would be more appropriate to request the CHA information under California's open records law, a process that takes some time. CIRM directors did not comment on the matter.

John M. Simpson, stem cell project director of the Foundation of Taxpayer and Consumers Rights of Santa Monica, Ca., told directors that withdrawal of the application and action involving a grant to the Burnham Institute "spoke very well of the staff and their diligence." He said it showed CIRM was "serious about standards."

William Heisel of the Los Angeles Times reported that
Jean Yi, the CHA institute's chief executive, said it withdrew its application because of criticism that it was not a true nonprofit

Heisel continued:

"'CHA Regenerative Medicine Institute (CHARMI) more than adequately addressed the baseless criticism,' Yi said in a written statement. 'We think the process was needlessly politicized. . . . Nevertheless, we are withdrawing because the last thing we want to do is be the source of any impairment to [the California Institute for Regenerative Medicine's] current level of well-earned public support.'"

Pachter told us that CHA RMI had met the legal requirements for California nonprofit status.

CIRM directors approved the grant to CHA last March following a closed-door review. The review failed to turn up the fact that the parent of CHA RMI, CHA Health Systems, was headed by scientist Kwang-Yul Cha, who was enmeshed at the time in an international plagiarism dispute

Following disclosure of the Cha controversy, Simpson criticized CIRM's secretive grant award process. He said CIRM was "burned" because of its closed door review of the grant applications. Marcy Darnovsky, associate director of the Center for Genetics and Society of Oakland, Ca., said, "The leadership of CHA Health Systems has a shadowed recent history, including a lawsuit that alleges the director of its fertility center lied in order to obtain a woman’s eggs."

One of those alleging plagiarism, Alan DeCherney, editor of the Fertility and Sterility Journal, in May retracted his allegations of plagiarism and perjury.

Chiu also said another grant approved by directors last spring was rejected during the administrative review that is conducted on all approved grants before the checks actually go out. Chiu said the principal investigator on the $638,000 grant, David Smotrich, did not meet the criteria of being an on-site, fulltime employee of the Burnham Institute in La Jolla, Ca.

In its public review of the, CIRM said last Febarury, "This proposal is exactly the type of research that CIRM should be funding. The personnel is second to none, and it could not have been funded by NIH(National Institutes of Health.).

Terri Somers of the San Diego Union-Tribune wrote:

"Smotrich, who runs an in-vitro fertilization practice in La Jolla, is a member of Burnham's clinical faculty. He has also started a stem cell bank that is collecting donated frozen human embryos left over after the in-vitro fertilization process but no longer wanted by women trying to have children.

"From those embryos, Smotrich and scientists from the Burnham have been working to derive stem cells. He and a team that includes Burnham researchers Evan Snyder and Jeanne Loring sought the grant to fund work that Smotrich and other benefactors have underwritten to date.

"The standards of this particular grant put an independent research facility, such as the Burnham, at a disadvantage compared with an academic/medical facility such as UCSD, where clinical faculty can see patients in an office on campus, said Snyder and Smotrich.

"'It's frustrating,' Smotrich said last night. 'But hopefully it's just a hiccup, and there will be other ways to get funding. Perhaps future (grant applications) will be written differently. This is a learning process for everyone.'"

-Trb








http://www.latimes.com/features/health/medicine/la-me-cha4oct04,1,828119.story?coll=la-health-medicine&ctrack=1&cset=true

$31 Million Stem Cell Training Proposal Defended

Officials at the California state college system have filed a sweeping defense of its appeal for $31 million from CIRM to train thousands of persons to work in the stem cell industry.

The California state university system as well as the California community college system advanced the proposal at the August meeting of the CIRM Oversight Committee, whose members raised a series of questions.

Supporters of the plan compiled a detailed, 24-page response, outlining the need for training a diverse workforce and citing CIRM's own strategic plan in support. The response and the proposal are up for consideration Wednesday at the Oversight Committee meeting in San Diego.

No competing proposals to provide the training are currently before CIRM.

Time to Tap Technology for Outreach

As such things go at the California stem cell agency, it was a fairly technical meeting. No great issues, no wrestling with egg donation matters or criteria for giving away $200 million.

The subject was the application procedures for laboratory construction grants. The audience was the men and women who must fill out the complex documents – "interested parties," as they are called.

But the conference-call session on Sept. 21 has some implications for CIRM and its goals of educating the public about its activities as well as stem cell research in general(mentioned by incoming CIRM president Alan Trounson on Sept. 24).

John M. Simpson(photo above), longtime follower of CIRM affairs and stem cell project director for the Foundation for Taxpayer and Consumers Rights, listened in on the meeting. We asked him for this thoughts on the event. Here is what he said:

"(The) 'interested parties' meeting was a valuable session allowing potential applicants to ask specific questions about the application process. CIRM needs to do whatever it can to engage as many people who are affected by their decisions in the process as possible.

"California is a big state and CIRM needs to use technology to promote involvement. So far as I know this was the first conference call where participants were invited to phone in directly themselves. Usually CIRM teleconferences have required a participant to go to a particular site created for the convenience of an ICOC board member to be involved.

"(The) dial-in from wherever an interested party was located worked great. It was well worth the cost and can serve as a model for future sessions.

"CIRM should put itself on the cutting edge where it claims to be and tap technology to a greater extent. For instance, it should broadcast all ICOC(Oversight Committee) meetings and (other) committee meetings on the Internet. Many city councils around the state have already figured out how to do this. CIRM and the ICOC need to get with the times. They should even consider a page on Facebook and Myspace that links back to CIRM's own website."

We might add that Internet webcasting would also fit in with Trounson's desire to reach out nationally and internationally with the CIRM effort.

Looking For Ways to Avoid the Stem Cell Egg Problem

A $25 million proposal to develop new lines of pluripotent human stem cells, including ones that do not require the use of human embryos or eggs, will come before the Oversight Committee of the California stem cell agency next week in San Diego.

The plan calls for as many as 16 research grants for periods of three years. Funding could come as early as next spring with the release of RFAs as early as this fall.

A CIRM staff report said,

"The ability to derive pluripotent stem cells from new sources will enable scientists to generate disease-specific and genotype-specific cells of many phenotypes. Such cells have great value for drug discovery and understanding specific disease mechanisms. Importantly, methods that will not require the donation or use of either human embryos or eggs will significantly reduce the moral and ethical concerns that surround methods currently in use. Finally, new methods of producing pluripotent stem cells will be particularly important because it may be difficult to obtain excess embryos from many racial groups.

"This RFA will support the generation of new lines of pluripotent human stem cells including:

"• new clinical grade lines of hESCs and other pluripotent human stem cells suitable for future clinical use or other biomedical applications

"• new hESC lines generated using improved methods that may be optimal for differentiation along selective lineages or for studies of disease

"• disease-specific, pluripotent stem cell lines to support the study of the effects of genetic variation on disease development and response to treatment

"• the discovery and implementation of alternative methods for generating pluripotent human cells"

The report also said,

"Awards will be made to support two areas of derivation: the generation of new human lines using excess embryos from in vitro fertilization, and derivations from other sources using new and novel methods."

Lockyer Beats Stem Cell Bond Drum

The California state treasurer's office has generated more publicity for the sale of the state's first-ever stem cell bonds next Thursday with at least one site urging San Franciscans to buy to support a local enterprise.

Tom Dresslar, communications director for Treasurer Bill Lockyer(photo at right), sent out a news advisory Thursday pointing out the sale – a "reminder" from Lockyer. The reminder said,

"California is one week away from making the largest-ever investment in human embryonic stem cell research in the nation and, we believe, the world."

Lockyer also noted,

"The $200 million investment will place California in the forefront of global research using human embryonic stem cells, considered by many experts to hold more potential to help develop treatments and cures for diseases than other types of human or animal stem cells. And it's just a fraction of the $3 billion in bonds authorized by Proposition 71. By contrast, the National Institute of Health since the 2002 fiscal year has funded a total of $131 million in human embryonic stem cell research."

The total bond issue is for $250 million, but about $45-50 million will go to pay transaction costs and to retire the bond anticipation notes that were sold to private philanthropists to help fund the California stem cell agency while it battled legal challenges. CIRM must still repay the state for something like $150 million in loans that helped to provide interim financing. The agency has roughly $1 billion in current bonding capacity that it can use soon. The likelihood is that another big bond sale will come up early next year.

Individual investors have until Oct. 3 to buy the bonds. They get first crack at them because of a new program that Lockyer started this year to make state bonds easily available to the general public. Minimum purchase is $5,000. The bond dividends are federally taxable but exempt from California state taxes. One would think that patient advocate groups might want to spread the word.

The San Francisco Business Times put together a brief piece on Lockyer's reminder. Jim Christie of Reuters also wrote an article. A blog called Sam Spade's San Francisco, the city where CIRM is headquartered, said that the bonds are one of the "best places" for San Franciscans to make an investment.

"The money you invest stays right here in San Francisco and is put to work funding the most cutting-edge medical research on the planet."

Correction

Tom Dresslar of the state treasurer's office points out that the figures for transaction costs are the estimates for actual costs on the Oct. 4 stem cell bond sale -- not bench marks.

The Cost of 'Lubricants' for Stem Cell Financing

So the California stem cell agency wants a little loan? Maybe not so little. Only a piddling $250 million.

Well, to do that sort of business doesn't involve chump change. First there is the interest, let's say about another $250 million, give or take roughly $10 to $20 million plus or minus. The actual interest cost will not be known until Oct. 5, the day after the stem cell bond sale. (For those of you who have been locked into a microscope for decades, a bond is a loan. California says give us $250 million, and we will pay you back later with interest.)

Then there is the lubricant to make the financial wheels turn smoothly. That's roughly another $1.6 million. That may seem like a lot but it is less than what CIRM estimated a little while back in its strategic plan. That document calculated bond issuance costs at roughly 0.08 percent of the bond amount. In other words, about $2 million for a $250 million bond sale.

We asked Tom Dresslar, a spokesman for the state treasurer's office, which handles the bond sales, about the transaction costs of doing such business. He told us that final figures for the stem cell bond sale will not be available until after it takes place, he provided us with estimates of the costs on the October sale.

Here is his breakdown:

"Total -- Approximately $1.6 million

"Bond counsel and co-counsel -- $175,000

"Tax counsel -- $117,000

"Rating agencies -- $142,000

"Underwriting fees -- $818,000

"Various other costs comprise the balance."

Obviously it would be cheaper to fund stem cell research straight from tax revenues, with no borrowing, because there would be no interest or transaction costs. But that would mean navigating – ANNUALLY -- the treacherous shoals of the legislature – not to mention the governor's office. And the research would have to compete against demands for money for schools, police, firefighters and much, much more. It doesn't take a political wizard to figure out who wins in that contest.

(Editor's note: An earlier version of this item described the transaction costs as benchmarks for a $250 million bond sale. They are actually estimates of the costs on the stem cell bond sale.

Investing in Stem Cell Bonds

Re our earlier piece on buying California's stem cell bonds, Tom Dresslar, spokesman for the state treasurer's office, points out that the minimum buy-in is $5,000. Don't forget you need permission from the treasurer's office if you want to buy more than $1 million. And as always, do your investment homework before you buy anything.

More Openness Emerging at CIRM?

The California stem cell agency has long concealed the identities of applicants for millions of dollars in grants even when the applicants are such public entities as the University of California.

But there are signs of changing sentiment on CIRM's Oversight Committee. At the board's August meeting, some members indicated that they favored disclosing the names of institutional applicants for $222 million in lab grants and at least some portion of their applications.

For example, Oversight Committee member Francisco Prieto, a Sacramento physician, asked his fellow committee members,

"Why could we not release the names of the applying institutions and the outlines of the proposals without actually opening up the actual review? I understand that in the review of the RFAs and within the meetings that there are comments made about strengths and weaknesses of individual investigators and teams and things that could affect people's careers, but the institutions and the outlines don't have any personal interest. "

In response, Chairman Robert Klein said the matter would be brought up at next week's Oversight Committee meeting in San Diego. He said,

"I personally think that we have an opportunity here to have some more disclosure, that while protecting confidential information, proprietary information, personnel information of people that are being hired, etc."

Later David Kessler, an Oversight Committee member and dean of the UC San Francisco School of Medicine, indicated he was sympathetic to providing the names and some information concerning the institutions' applications.

Kessler made his comments after John M. Simpson, stem cell project director of the watch dog group, the Foundation for Taxpayer and Consumers Rights, noted that lab grant process has two steps. The first is a closed- door scientific review of applications from institutions, whose names are also secret. The second is public review of the actual construction proposal with the names disclosed.

Simpson said the board was

"...setting up a procedure by which, as I see it right now, you cannot risk the embarrassment of a university because it can't do science, but you can embarrass them because they don't know how to build a building. That just doesn't make sense. It doesn't serve the scientists, nor the architects, especially the public at large."

Last month, the California Stem Cell Report called on CIRM directors to make more information public concerning the identity and proposals of applicants for the lab grants.