The ICOC Plays The Crest

The board of directors of the California stem cell agency met earlier this week in a restored movie house (see photo) in downtown Sacramento. The location was a bit unusual for a CIRM meeting, but the affair triggered the imaginations of some board members. Here is a report from John M. Simpson of the Foundation for Taxpaper and Consumer Rights, who attended the meeting.

ICOC members took note of their unusual surroundings as they took to the stage of the Crest Theater in Sacramento this week, a venue that has seen performances ranging from Cab Calloway to Kurt Cobain.

These days the Crest often shows classic movies like "Gone With The Wind." Calling the meeting to order, Chairman Robert Klein noted the entertainment industry backgrounds of board members Sherry Lansing and Leeza Gibbons and declared the Crest "an adequate stage for our tremendous talent."

Lansing objected that she was only a "bit player."

Introducing new President Alan Trounson, Klein suggested that the Crest's marquee should have billed the meeting as "Starring Dr. Alan Trounson, straight from Australia."

Trounson began his president's report by confessing to snapping a few photos of the Crest "because they won't believe me at home."

In fact, to the bemusement of several passersby who didn't seem to know what to make of it, the huge letters on the marquee spelled out:

Wed March 12
CA Institute For Regenerative Medicine
8:15 AM Spotlight on Deafness
9:00 AM ICOC Meeting
Open to The Public

For the most part the unusual message didn't draw a larger or different crowd than usual when the meeting is held in a hotel or academic setting.

Not usual for an ICOC meeting, however, Assemblyman Martin Garrick, R-Carlsbad, and Sen. Mark Weyland, R-Escondido, showed up to speak for adoption of a regulation that would define a "California supplier" that was presented by John Valencia, attorney for Invitrogen. You can be sure that had nothing to do with the marquee.

The ICOC ended up at the Crest this way: The date and general location of the meeting were set before a venue was booked. It turned out when Klein's aide Jena Pryne tried to nail down a site, virtually everything in Sacramento was booked for conventions and activities relating to the legislative session. She sought advice from Scott Tocher, interim associate legal counsel to the vice chair, who grew up in Sacramento.

Tocher, who remembered the Crest hosting graduations and citizenship ceremonies, thought it could work. Pryne booked it and the ICOC's name was, if not up in lights, on the marquee.

Appropriately during the board's closed executive session when members decided to hire Dr. Marie Csete as Chief Scientific Officer at a salary of $310,000, Melissa King, CIRM executive director, passed out free popcorn to those waiting for the board to return and make the action official in public.

The seats were the most comfortable I've been in at any ICOC meeting. Let's play the Crest again next year.

Fresh Comment

"Anonymous" has a fairly detailed comment on the "warf" item below about the "true overcome" of the latest action in the stem cell patent dispute.

WARF Scores in Patent Struggle

WARF has chalked up a victory in the latest round in the stem cell patent wars, but challengers are vowing to continue the legal battle.

Here is a link to the story on Science Now. John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights, also sent along this response to the anonymous comment on the role of his organization.

"Anonymous is wrong. So far the challenge has narrowed the patent claims,
but more importantly prompted a substantial change in WARF's behavior. In January 2007 facing the patent re-examinations and surrounding publicity WARF substantially eased licensing requirements and became much more cooperative with the stem research community. They also 'clarified' that they would not seek a license from CIRM although the then general counsel, Elizabeth Donnelly, told The Stem Cell meeting sponsored by Steve Burrill & Co the previous spring that was the intention."

Legal Action in Multimillion Dollar CIRM HQ Promises

The California stem cell agency is embroiled in a $425,000 flap with its landlord as part of the City of San Francisco's deal to pick up millions of dollars in agency's expenses as part of the city's successful bid to land the CIRM headquarters.

Reporter Sabin Russell of the San Francisco Chronicle today wrote that the agency's directors have authorized legal action against Stockbridge Capital Partners, owner of the building housing CIRM.

Russell wrote:

"At issue is approximately $425,000 in annual operating costs for items as diverse as electricity, janitors, parking privileges and fees similar to those paid by condominium owners.

"Part of the deal, according to stem cell board Chairman Robert Klein, was that the state-funded institute would not have to pay those costs. 'A couple of months ago, we had a meeting with Stockbridge, and at that time they assured us they would pay all expenses. They have not lived up to the representations made to the mayor or ourselves,' he said.

"Adam Alberti, spokesman for Stockbridge, said Wednesday that the company remains committed to keeping the institute headquarters in San Francisco. 'We are in year two of a 10-year rent-free deal,' he said. 'We will continue to meet that obligation.'

"Alberti said that so far the firm also has covered about $1 million of operating expenses - costs that were to be covered by 'private fundraisers and other parties' who have yet to come through with the money. 'We are working with the city and other folks involved to find ways to cover this,' he said. 'Ultimately, the guarantor of the deal is Stockbridge.'"

The dispute raises questions about whether other promises made in San Francisco's multimilllion dollar bid are being fulfilled. As far as we know, no public accounting has ever been made.

CIRM Salary Ranges Top Those at NIH

The Sacramento Bee today reported that the salary pay ranges approved by directors of the California stem cell agency amount to a 23 percent hike for top executive positions and easily surpass those at the much larger National Institutes of Health.

Reporter Jim Downing wrote that the new pay ranges provide for a possible $508,750 top salary for the positions of chairman and president, up from $412,500. A top range of $332,000 was approved for executives at the next level, up from $270,000, with CIRM's top two attorneys at $277,500, up from $225,000.

The action, taken with little debate by the Oversight Committee does not immediately increase the salary of any employee, however, just the ranges of possible pay.

Downing also reported,

"Directors of federal medical research agencies such as the National Institutes of Health make considerably lower base salaries, according to NIH spokesman Don Ralbovsky, who said he could not immediately provide exact salary information."

Fresh Comment

"Anonymous" has posted a comment on "salaries" item below concerning Wednesday's WARF patent decision. We will have an item on the patent matter later today.

CIRM Salaries Approved Along with Action on 'California Suppliers'

Here some of the highlights from today's meeting of the directors of the California stem cell agency, in addition to the appointment of Marie Csete as chief scientific officer.

They were provided by John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights, at our request. Simpson attended the session. Here is what he wrote.

"Despite (CIRM General Counsel) Tamar Pachter's recommendation, the board approved the proposed definition of a California supplier after John Valencia, an attorney for Invitrogen, made it clear that this would merely start a 45-day public comment process and the proposed regulation would be subject to change after that period taking comment into account. I was among those speaking in favor of passage.

"After lengthy discussion they adopted the Proposed Tools and Technical RFA with one substantial modification: Companies will be allowed to submit four applications like universities and research institutes. The staff recommendation would have limited companies to two applications.

"The Board also approved revised salary ranges as submitted. Top ranges were trimmed from what had been proposed at governance meeting.

"During public comment I noted that neither (CIRM Chairman Robert) Klein nor (Vice Chairman Ed) Penhoet take a salary and asked if approval of ranges for those positions indicates they intend to take a salary. He responded that after five years not doing so he may have to assess the situation and that it would be up to the board but that he 'knows of no such plans at this time.'"

We are querying Don Gibbons, chief communications officer for CIRM, specifically what salary ranges were approved.

Simpson also reported that there was little discussion of the biotech loan program and that a policy may be presented in June.

Emory Scientist Named to Key Post at California Stem Cell Agency

Emory University scientist Marie Csete today was named as the new chief scientific officer at California's $3 billion stem cell agency.

Csete (see photo) is only the second person to fill the key position, which has been vacant since last fall. Arlene Chiu resigned at that time after filling the position since 2005.

Alan O. Trounson, president of CIRM, said in a news release:

"Her training and experience as both a basic researcher and clinician is critical to our strategy of advancing discoveries into the translational pipeline. In addition, her expertise in the field of transplantation and understanding of immunology issues will be highly relevant to advancing new discoveries in the stem cell field toward therapies and cures."

CIRM also quoted Harvard's Stuart H. Orkin, who is also chair of the group at CIRM that performs scientific reviews of grants, as saying,

"I am very pleased that Dr. Marie Csete will assume the Chief Scientific Officer position at CIRM. She was an active and insightful member of the Scientific Working Group. Her leadership will ensure that CIRM meets its potential for the state of California."

CIRM's news release, which is not yet available on its website, also said,

"Prior to joining the CIRM, Dr. Csete was John E. Steinhaus Professor of Anesthesiology at Emory University, with adjunct appointment in Cell Biology, and program faculty appointments in Biochemistry, Cell and Developmental Biology, Neurosciences, and the Emory/Georgia Tech Biomedical Engineering Program. She was also the director of Liver Transplant Anesthesiology at the Emory University Hospital in Atlanta and director of the Emory/Georgia Tech Human Embryonic Stem Cell Core, and co-Director of the Emory MD/PhD Program.

"Dr. Csete graduated from Princeton University with a degree in Music and received her M.D. from Columbia University’s College of Physicians & Surgeons. After residency and fellowship training at the Massachusetts General Hospital and St. Elizabeth’s Hospital in Boston, Massachusetts, she was Assistant Professor in Residence at the University of California, San Francisco where she directed the liver transplant anesthesiology team."

Brief comments from Csete appeared on this website last October in defense of secrecy of the names of applicants for stem cell lab construction grants. The agency refused to release the names at that time, but in December decided that they should be public so that they could raise matching funds for their grant applications.

She will earn $310,000 a year at CIRM and will receive $20,000 in moving expenses.

Biopolitical Times: CIRM Eyeing Ways to Pay Women for Eggs

The Biopolitical Times is reporting that CIRM President Alan Trounson dropped a "bombshell" recently, declaring that "he wanted to open the door to paying women for their eggs for CIRM-funded research, a clear end-run around California law."


On Monday, Susan Fogel of Pro-Choice Alliance for Responsible Research, who is of the few who follow California stem cell matters closely, reported on the Feb. 28 meeting of the CIRM Standards Working Group. She said,

"Alan Trounson stepped up to the podium, and certainly surprised nearly everyone in the room with a proposal that the SWG support paying women for their eggs by offering them compensation in the way of discounts on their fertility treatments - 'egg-sharing' - if they agree to give up some of their eggs before they have achieved their own reproductive success. Never mind that Proposition 71 itself prohibits compensation for egg providers in CIRM funded research; the CIRM regulations, adopted after a deliberative and public process, prohibit compensation; California statute passed and signed into law in 2006 (SB 1260) prohibits compensation in non-CIRM funded research, and the National Academies guidelines prohibit compensation. The only permissible payment is for reimbursement of incurred expenses. Trounson made several assertions: (1) researchers cannot use spare embryos (this is incorrect - there is no California law that prevents people from donating embryos to research), (2) it is highly unlikely that women would give extra eggs when they go through fertility treatments (no evidence here), and (3) it is extremely difficult in California to get human eggs (others pointed out that there is no such evidence; however, SWG member Kevin Eggan stated that he hasn't been able to recruit egg donors in Massachusetts)."

We asked CIRM for comment on Fogel's article. Don Gibbons, chief communications officer, said, "her piece is largely accurate, just make clear this is about DISCUSSING the topic, NOT PLANS TO CHANGE POLICY.(his capitals)" Following that response, we asked him specifically about whether CIRM believed the statement that Trounson "wanted to open the door" to compensation was "largely accurate." Gibbons responded,

"No, he wanted to open a discussion on the options."

Fogel's item also said,

"It soon became clear that at least one person in the room knew this was coming. (CIRM Chairman Robert) Klein and Trounson had clearly been conspiring on turning California law on its head. Klein jumped in to make the argument that since it is permissible to reimburse women for medical care they might need for health consequences of providing eggs, he had a legal opinion from James Harrison(outside counsel to CIRM), of the Remcho firm, with a twisted definition of 'medical' to include IVF treatment, and arguing that paying women for a portion of their IVF would be 'reimbursement' not 'compensation.'"

The Biopolitical Times article is likely to raise a something of a stir, perhaps as early as Wednesday when the Oversight Committee meets in Sacramento and makes the rounds in the Capitol to see legislators. The piece prompted an email to us from one knowledgeable and longtime CIRM observer, who said,

"Once again, the advice of Klein leads another soul over the precipice."

The reference was apparently to advice that Klein, who is an attorney and claims credit for writing Prop. 71, gave to a CIRM director last year. He told the man to lobby CIRM staff on behalf of a grant to his own institution, a move that currently is under investigation by state officials as a violation of state conflict-of-interest rules.

As for the current CIRM rules on donor expenses, they were carefully crafted following months of hearings and approved in 2006 with virtually no dissent by CIRM directors.

Obviously we have two different perceptions of what occurred at the Feb. 28 meeting, which was not covered by any media. Perhaps it will become clearer when the transcript is posted, which should happen in the next week or so.

,

The Bee Calls for Tougher Legislation on CIRM

On the eve of the Sacramento meeting of directors of the California stem cell agency, The Sacramento Bee today editorialized for major changes in the way the agency operates.

The Bee said "questions about its internal conflicts and finances remain as urgent as ever."

The Bee continued:

"Given that the state faces a multibillion-dollar budget deficit – and that $3 billion in bonds could be put to better use than lavish executive pay salaries – one might think that lawmakers would be ready for a full revamp of the stem cell agency."

The Bee said recently introduced legislation by Sen. Sheila Kuehl, D-Santa Monica and chair of the Senate Health Committee, "doesn't go far enough in ensuring an equitable outcome."

The Bee said,

"What's needed is clear legal authority for future attorneys general to regulate the pricing of stem cell therapies when companies are making excessive profits after benefitting from the state's investment.

"Kuehl's bill doesn't do this. Neither would it eliminate the potential conflicts, and excessive number of board members, that have long kept the institute's oversight committee from operating effectively and credibly. All her bill would require is a study of the institute's governance by the Little Hoover Commission by 2009. Too little, too late.

"Although SB 1565 is better than nothing, it is a far cry from what California taxpayers and patients deserve for the $3 billion – $6 billion, including interest – they have agreed to invest in this field of science."

Biotech Loan Plan Now Available to Public

The California stem cell agency today posted its draft policy for its biotech loan program, which could total as much as $750 million, a little more than 24 hours before it is scheduled to receive its first public hearing.

The document, which we are still reviewing, can be found here. The proposal will be discussed Tuesday at a 4 p.m. meeting of the Biotech Loan Task Force in Sacramento with remote locations in San Carlos in the San Francisco Bay Area and Pleasanton.

The policy will go to the full CIRM board of directors on Wednesday morning.

We have written repeatedly about CIRM's failure to keep the public informed in a timely fashion about its proposed policies and initiatives. This latest example is one of the most egregious, given the far-reaching nature of the plan. One would think that someone on the board of directors would point out this level of performance is not acceptable in either the public or private sector.

It is a management failure, one that rests with Robert Klein, chairman of CIRM, and Alan Trounson, president of CIRM.

That said, we have to give the agency some credit for posting many of the documents for the Wednesday meeting with something close to sufficient notice. But posting and preparing these documents should be routine tasks. When an organization struggles with routine tasks, it means it does not have time or capability to respond well to exception events or crises.

Part Two of Lab Grant Applications Now Available

The latest versions (part two) of the applications in CIRM's lab grant construction program have now been posted. They can be found here.

The Primrose Path of Stem Cell Research in California

Campaign rhetoric and reality: No, this isn't about this year's presidential election campaign, but about the California stem cell agency, its seductive origins and the sweet promises to voters in 2004.

Those matters have surfaced as part of this week's meeting of the directors of the $3 billion institute, which was born nearly four years ago in what is one of the ultimate political acts – an initiative campaign in which voters thrust aside lawmakers, seize control of the reins of government, write legal code themselves and raise and allocate billions of dollars.

All fueled by campaign promises – in the case of Prop. 71 – that not only will sick people will be cured but California residents, businesses and researchers will receive special treatment.

Well, not exactly, CIRM now says, particularly in the case of California businesses.

The stem cell agency delivered the bad news as the result of a request by Sacramento attorney, John R. Valencia of the firm of Wilke, Fleury, Hoffelt, Gould & Birney, on behalf of an unnamed California-headquartered life sciences corporation. Valencia also represents, among others, the California Healthcare Institute, which, in turn, represents California's biomedical industry. That organization has members on its board of directors who also serve as directors of CIRM.

Valencia made a seemingly simple request of CIRM: define "California supplier." The term is found in Prop. 71, which states:

"The ICOC (CIRM's board of directors) shall establish standards to ensure that grantees purchase goods and services from California suppliers to the extent reasonably possible, in a good faith effort to achieve a goal of more than 50 percent of such purchases from California suppliers."

Unfortunately, the two words in question are not otherwise spelled out in the initiative. And it is clear now that CIRM wants few restrictions on where it goes for outside, private contracting. Valencia, however, argues that CIRM can find virtually everything it needs in California, which is not called the Golden State for nothing.

It is not a trivial matter. In his letter to CIRM, which comes before its directors on Wednesday, Valencia points out that it could ultimately run to $300 million.

Valencia says it is "vitally necessary" to define California supplier. He says the definition is virtually required by Prop. 71 whose overall objective is to advance California economic interests. He wrote:

"Why send hundreds of millions of California taxpayer dollars outside the state, where it does nothing to create California jobs, economic growth or tax revenue?"

Tamar Pachter, general counsel to CIRM, has an answer, which boils down to this: CIRM is not legally required to give preference to California suppliers beyond what is stated in Prop. 71 as well as existing law. It's a "goal" not a "mandate," she writes in response to Valencia's request. Weasel words in Prop. 71 -- she explains, although that is not her terminology -- provide plenty of wiggle room. Those terms include "reasonably possible," "good faith effort" and "goal."

We can chalk up that verbiage to CIRM Chairman Robert Klein, who led the initiative campaign and claims responsibility for writing Prop. 71, although other attorneys were involved as well.

More than one issue underlies this matter. One is the question of campaign promises. Some say that CIRM should be measured against the promises of the campaign, however overstated they may have been. Others say that no one should be so naïve as to believe that the sweet talk of a campaign has any connection to the ultimate reality.

Another matter involves the practical realities of running an enterprise involving stem cell research, clearly a global endeavor. Parochial requirements concerning California preferences make CIRM's task more difficult – not easier.

Nonetheless, the stem cell institute must recognize its obligation to California voters in clear and unmistakable ways – perhaps not necessarily in this particular case. But it had its way with voters in 2004. Failing to be responsive could have unfortunate consequences. Hell hath no fury like a voter scorned.

Dissecting the Legislative Strategy Behind the Latest California Stem Cell Bill

Think motherhood when you think about new state legislation aimed at California's $3 billion stem cell agency.

That's the strategy on the latest bill that targets the world's largest source of funding for human embryonic stem cell research, all of which comes at the expense of California taxpayers.

Think of those millions of taxpayers as investors. Who can say they should not receive a tidy return on their $6 billion (including interest) commitment? Who can oppose a nonpartisan, thorough-going review of the agency, which has stumbled more than once and which is riddled with built-in conflicts of interest? Especially when that agency lives in a constitutionally protected, ivory-tower world, far from the bloody financial fray now underway beneath the Capitol dome.

While motherhood is not as popular as it once was, these are motherhood questions for lawmakers and hard to oppose.

The current political climate may now be as receptive for passage of the bill, SB1565, as at any time. Legislative demonstrations of fiscal prudence are the order of the day in the Capitol. Stifling government profligacy is the paramount virtue.

CIRM gave supporters of the legislation more leverage when the agency offered an ill-timed plan to boost the maximum pay ranges of CIRM's top executives by 50 percent, or $200,000 annually in some cases. The CIRM pay plan received a public and negative airing on the same day that a $16 billion state budget deficit was announced. A subcommittee of CIRM directors balked at the executive pay proposal, but it will surface again next Wednesday. Introduction of the CIRM legislation came only a few days after that subcommittee hearing, probably not coincidentally.

The lead author on the CIRM bill is Sen. Sheila Kuehl, D-Santa Monica, who is chair of Senate Health Committee. Republican Sen. George Runner of Antelope Valley, who is part of the GOP leadership, is co-author.

Their position is that CIRM has offered an inadequate return to California investors/taxpayers. Kuehl and Runner instead propose to guarantee in state law that California residents have affordable access to therapies developed with state cash, an issue which affects CIRM's intellectual property rules. The lawmakers also want to mandate a study of CIRM with recommendations for changes. Kuehl said that one reason for her latest legislation involves breaches of the agency's conflict-of-interest policy by a number of its directors.

The bill needs 70 percent approval of both houses of the Legislature –- a super, supermajority requirement created by Prop. 71. The unique and unprecedented requirement is intended to protect the agency, but lawmakers may now regard it as a challenge to their authority.

CIRM has opposed similar legislation in the past, but it has not taken an official position on SB1565, which is the embodiment of simplicity in some ways. It could be easily severed to put the requirement for a study on CIRM operations in a separate measure, which could help its chances.

CIRM is likely to oppose the study, however, because it could generate public hearings and open the door to greater changes in CIRM procedures. At the very least, the hearings could lead to critical news coverage and possibly threaten CIRM's credibility and clout.

Next Wednesday some CIRM directors and executives will be visiting with lawmakers following the agency's Oversight Committee meeting. Kuehl's legislation is likely to come up during those sessions along with the pay proposal. CIRM supporters should be prepared with some good answers.

Background Documents Now Available for CIRM Meeting, More to Come

The California stem cell agency has begun posting background information for its Oversight Committee meeting next Wednesday in Sacramento. Agenda topics with background documents include: a proposal for a $20 million "tools and technology" program, policies for administering lab grants, bios on new scientific grant reviewers, a plan to delegate authority to the president on both relocation expenses and requests for regulations as well as the previously posted documents on the 50 percent pay range hike.

Still to be posted is information on the IP item, amendments to the interim lab grant administration policy and the draft biotech loan policy, which is also not on the March 11 agenda of the biotech loan task force.

All the documents can be found via this location.

Wright's Departure From CIRM Illustrates Agency's Voting Practices

The 29-member board of directors for the California stem cell agency has a new vacancy, caused by the impending impending departure of Janet Wright, a Chico cardiologist, for a new job in Washington, D.C.

Ordinarily, the loss of one of 29 members would be insignificant. But Wright's departure affects actions involving CIRM's mammoth $758 million stem cell lab construction program.

It also illustrates what some may consider the board's bizarre voting structure and its built-in conflicts of interest.

The impact of Wright's departure could be felt as early as next week's meeting of the board, which is known as the Oversight Committee or ICOC. One of the matters on the agenda involves the lab grant program. Only board members whose institutions are not affected can vote on the matter. Those affected cannot even take part in the discussion.

Earlier this year we wrote about what amounts to a floating ICOC quorum with a "quartet majority," and how it can reduce many of the board members to silent sphinxes on some issues. To recap how it works, Prop. 71 uses the number of ICOC members eligible to vote as the basis for a quorum, rather than the total number of persons on the ICOC. Prop. 71 also states that a quorum is 65 percent of those eligible to vote. Action can be taken by a majority of a quorum. So when 10 persons are eligible to vote, the quorum is seven . A majority would be only four.

In January, only 10 members of the board, including Wright, were allowed legally to participate in the discussion of lab grant matters. She filled a patient advocate position on the board and rarely, if ever, was disqualified from participating or voting. Six of the 10 persons in the lab grant case are patient advocates. The others mostly represent industry, which sometimes has strong backing from patient advocates who want to see cures on the market quickly.

In theory, with absences, a quorum on lab grant issues could be as low as three, or so it appears. That would mean only two persons are needed to take action on some far-reaching and important issues. However, the possibility of that actually happening seems remote.

As for Wright's replacement, that is up to state Treasurer Bill Lockyer. According to state law, he must pick a patient advocate to fill the position. Lockyer's spokesman, Tom Dresslar, told the California Stem Cell Report,

"It's our intent to move with due diligence and as expeditiously as possible. Treasurer Lockyer's objective is to find a qualified person with impeccable credentials who demonstrates a strong commitment to helping ensure CIRM provides Californians what they voted for when they passed Prop. 71."

If you are interesting in serving on the board or want to recommend someone, you can write the treasurer at this Internet location.

Wright's new job was first reported in the Chico Enterprise-Record Feb. 26, which said she has become vice president for science and quality with the American College of Cardiology. She had worked in Chico for 23 years.

(An earlier version of this item incorrectly stated that the Wright had left for her new job last month. That information, reported by the Chico Enterprise-Record, was incorrect. As of March 17, CIRM could not say when she would no longer be on the board. Wright did not respond to email queries.)

Kurt Cobain, CIRM and Green Footprints

Next week the directors of the California stem cell agency are meeting in the Crest Theater in Sacramento, an unusual and colorful location for a meeting of a state agency. Normally it is a venue for classic movies, such as a fully restored version of "Gone With The Wind," as well as musical performances. However, hundreds of new citizens have been sworn in there as well, including the mother of the late Sacramento Mayor Joe Serna.

We have just received an additional tidbit about the Crest from Jerry Schroeder, the architect responsible during its restoration and who has a keen eye for truly important historical matters. Here is what he had to say.

"In the basement, in the green room, there are green footprints walking up the wall put there by an unknown-at-the-time musician called Kurt Cobain. He got into a can of paint while waiting to go on stage. The footprints have been preserved as part of the restoration project."

See the item below for specifics about what CIRM is likely to do as it sits above Cobain's footprints.

CIRM's Fifty Percent Pay Range Hikes Back Again

Directors of the California stem cell agency next week will take up once more a proposal to increase the top pay range of the key executives of the agency by 50 percent or as much as $200,000 annually in some cases.

The proposal stalled last month when a subcommittee of the directors balked, citing both the state's budget crisis and what they considered the dubious justification for some of the higher increases.

California is currently facing a $16 billion budget deficit, and the political heat around it is scalding. The pay proposal, however, would have no impact on the state budget because Prop. 71 was crafted to constitutionally protect the CIRM budget from cuts by lawmakers and the governor. Nonetheless, the pay proposal represents to some lawmakers and the public an example of profligate government spending.

One would suspect that the backers of the proposal, CIRM Chairman Robert Klein and President Alan Trounson, would have a plan to ease concerns of skeptical CIRM directors. However, that is not evident from the public documents now available. The March 12 agenda for the directors (the Oversight Committee) contains only a one-sentence reference to the matter. (The meeting location is pictured above. More details on that at the end of this item.)

When they were first proposed, the pay range hikes contained no detailed, written analysis supporting the increase. That analysis is still lacking.

The Sacramento meeting will also take up a draft biotech loan loan policy, which has moved through a series of hearings and is the subject of a $50,000 study to examine its economic underpinnings. The loan proposal could total as much as $750 million, according to Klein, and could be available to both the private sector and nonprofit groups. The biotech loan task force will hold another meeting March 11. The draft policy is not yet available from CIRM.

Also on the agenda for next week are proposed changes to intellectual property regulations and changes in the grant administration policy for the $758 million (including matching funds) lab construction program.

Incidentally, this is the first time that the ICOC has met in a venue where the Cab Calloway once performed. The Sacramento's meeting will be at the Crest Theater(see photo), a venue that hosts both film and live performances. It is located on the K Street mall, virtually in the shadow of the Capitol, and was restored some years ago under the direction of an architect friend, Jerry Schroeder. The March 12 agenda did not indicate whether popcorn would be served.

Wired Piece on CIRM Lab Program

The California stem cell agency's latest news concerning its vaunted $758 million (including matching funds) lab construction program received a little more attention today in a piece by yours truly on Wired.com.

The article is a slightly briefer version of what we wrote Thursday on this blog, but it did include later information about the availability of the latest application information on the CIRM website. Ellen Rose, spokeswoman for CIRM, says the applications should be up sometime next week.

Regarding the "attention" reference above, Wired has a slightly larger reach than this modest website. According to Wired's web site, it has 4 million "average unique users" a month.

CIRM Loans Turning Into Cash

(Editor's note: The following was based on incorrect information from the state treasurer's office. The notes were repaid and no windfall exists.)

The California stem cell agency appears to be the beneficiary of an $11 million windfall.

It comes in the form of cash from the Gordon and Betty Moore Foundation -- $10 million – and another $1 million from California venture capitalist J. Taylor Crandall.

Both had invested those sums in bond anticipation notes (BANs)issued by CIRM and were to have been repaid following the agency's California Supreme Court victory over its foes.

However, the state treasurer's office says the notes have "surrendered" by both the foundation and Crandall, meaning CIRM gets to keep the cash. The other purchasers of the bond anticipation notes have been repaid. And so has the state's $150 million loan to CIRM.

In response to a query from the California Stem Cell Report, Tom Dresslar, a spokesman for state Treasurer Bill Lockyer, said,

"We don't have any new bond issues planned. The timing of the next issue largely will be determined by CIRM's requirements. We understand CIRM may make some facility grants soon. Initial funding for those grants would come from the state's Pooled Money Investment Account."

Crandall is managing partner of Oak Hill Capital Partners and has "senior responsibility" for its technology, media and telecom groups.

The Moore Foundation is the creation of Gordon Moore (see photo) and his wife. Moore is one of the founders of Intel. Ed Penhoet, vice chairman of CIRM, was president of the foundation at the time of the BAN purchase.

Light Coverage of CIRM Lab Leverage

The San Diego Union-Tribune and the San Francisco Chronicle both carried stories this morning on the half-billion dollars pledged to match lab construction grants scheduled to be awarded in May by the California stem cell agency.

Sabin Russell of the Chronicle quoted David Serrano Sewell, a member of the CIRM board of directors, as saying,

"Sometimes it has been hard to see that vision come to fruition, but it has here."

Terri Somers of the San Diego paper wrote,

"Louis Coffman, vice president of the San Diego (stem cell) consortium, said he could not reveal the sources of the pledged donations."

That strikes us as somewhat of an odd position since these contributions will need to be publicly verified at some point.

Fresh Comment

Larry Ebert has posted a comment on the stem cell patent item below.

AP Story on WARF Patent Matter

Re the WARF patent fight(see item below), here is a link to The Associated Press Story, which has been now carried on the San Jose Mercury News website.

Stem Cell Patent Fight Enters Another Round

Players in the ongoing saga of stem cells, WARF, California and patents rolled out another chapter today with folks on both sides finding something to make them happy.

WARF apparently fired out the first news release, declaring it was "pleased by the United States Patent and Trademark Office’s decision to uphold the claims of a key stem cell patent."

The opposing side, the Foundation for Taxpayer and Consumer Rights of Santa Monica, Ca., and the Public Patent Foundation, said the decision showed the following gains for researchers.

"The original broad patent was abandoned showing it was underserved and new amended claims have been narrowed.

"The original patent covered all embryonic stem cells no matter how they are derived, but the amended 'non-final' ruling, while permitting the patent, narrowed the claim only to stems cells derived from pre-implantation embryos.

"The newest stem cell research technology — Induced Pluripotent Stem Cells (IPS cells) — would clearly not be covered by the narrowed patent.

" Stem cells derived from fetal tissue could have been claimed under the old patent, but now cannot be."

FTCR and the patent group have been personally supported by CIRM President Alan Trounson in their challenge to the WARF patents.

The Wall Street Journal picked up on the story in its health blog, quoting Ken Taymor(see photo), a longtime follower of California stem cell affairs and executive director of the Center for Law, Business at UC Berkeley.

"It’ll be several years before the patent fight shakes out, according to Taymor, who co-authored a recent article on the subject in the journal Cell Stem Cell. 'In the mean time, there is all this other patenting activity that’s going on — patenting activity that’s not being challenged,' he said.

'Those are essential steps for commercialization.'

"What’s more, Geron and WARF hold a lot of the newer stem cell patents. 'So the more interesting question,' Taymor said, 'is what patents do they hold and what’s the scope of the claims that they have downstream in commercialization?' Taymor and his colleagues are looking into that now, and plan to publish their findings."

The story received a fair amount of attention in Wisconsin. At the time of this writing, only one newspaper in California, which is the leading biotech state in the nation, had carried a story. That publication is the San Jose Business Journal, and it wrote based on a Geron press release.

Here is a link to the story in The Scientist.

California Set for $758 Million Stem Cell Lab Construction Program

California's young stem cell agency has extracted promises of nearly $500 million in matching funds to help build what it calls one of the most ambitious medical science lab construction programs in the nation's history.

The agency announced today that the 12 competitors for $262 million in CIRM lab construction grants said they had raised the matching dollars in an effort to win the grants in May. The agency will give higher priority to institutions with larger matching funds.

The largest single "matching and leverage" amount -- $150 million -- came from Stanford, which is seeking a $50 million grant from CIRM. The San Diego Consortium for Regenerative Medicine, which consists of UC San Diego, Scripps, Salk and Burnham, offered $65 million for its $50 million grant request. UC San Francisco logged in with $54 million for a $40 million grant for its building(See photo. Larger version here).

Interestingly, UCLA came up with only $12 million matching for a $30 million request. UC Irvine offered only $23 million for a $37 million grant. (A table with the complete list of the grant requests and size of matching is available here.)

In a news release, CIRM Chairman Robert Klein said the total of about $758 million (including leverage and grants) can mean "a research infrastructure building program that historically exceeds any prior state government research facilities program for a new field of medical science anywhere in the U.S."

CIRM President Alan Trounson said,

"The research facilities established by the CIRM Major Facility Grants will provide a safe haven from federal government restrictions for stem cell scientists to conduct research that will lead to therapies and cures for millions of patients who suffer from chronic disease and injury. These grants are an important part of the CIRM’s goal of making California an ideal environment for all avenues of stem cell science to flourish."

However, none of the labs are likely to be built before a new US president changes George Bush's restrictions on stem cell funding. We understand there are other concerns about federal restrictions and have queried CIRM concerning those.

While the sums for lab construction appear vast, some of the applicants may be disappointed. The total amount of grants requested is $336 million, exceeding CIRM's budgeted $262 million by $74 million.

Earlier this year, Klein said he might ask some of the institutions to reduce the size of their requests in order to fund all of the building programs.

CIRM's Facilities Working Group is scheduled to review the applications April 4 and 5 with its decisions going to the CIRM directors for ratification May 6-7. CIRM directors have already ratified the decisions of the scientific reviewers on the grant requests.

You can find the scientific reviews here. However, that document does not list the applicants by name. You will need to pick up the number of the application from today's news release and find the same number on the scientific review document to correlate the two.

The latest applications are scheduled to be posted on the CIRM website sometime in the future. We have queried CIRM concerning that date.

(Our figures on the totals in the grant program differ slightly from those in CIRM's press release. We have based ours on the cumulative totals of the raw figures and then rounded.)

'Mystery' Documents Now Available on CIRM Research Standards

Background information has now been posted for Thursday's session of the California stem cell agency's Standards Working Group in San Francisco(see item below). The documents involve a summary and response to public comments on proposed revisions to CIRM MES regulations along with reports dealing with clinical trials and reprogramming of adult stem cells.

Other subjects on the agenda include a report on CIRM guidelines for oocyte donation. That report is not available at the time of this writing.

Fresh Comment: CIRM's Mystery Meeting Remains a Mystery

Marcy Darnovsky of the Center for Genetics and Society makes an important comment on the "mystery" item we posted. She is absolutely right. Those documents from the California stem cell agency should have been posted days ago if CIRM wanted serious public comment. The daylong meeting on Thursday involves complex issues dealing with the ethics and practice of stem cell research. The session could have major implications for the conduct of CIRM-financed stem cell research, but there is no way to know.

CIRM has repeatedly pledged to adhere to the highest standards of openness. Earlier today, we discussed a relatively minor item that belies that pledge. The failure to provide adequate information on the Thursday session, assuming its subject is of some consequence, is a more significant issue. CIRM can and should do better. You can see Darnovksy's comment by clicking on the word "comment" at the end of the item.

Fresh Comment

"Anonymous" has posted a comment on the Trounson item below that has confused us. It asks for names of "invited stem cell companies." We wonder if that comment should have been posted to the "routine withholding" item?

Trounson on 'Impressive Research' Backed by CIRM

California stem cell agency President Alan Trounson is in Fast Company.

The magazine and online, that is.

Trounson talked about his new job and his old job, along with some general views on science.

Here are some excerpts from the question-and-answer feature by Elizabeth Svoboda in the March issue.

"What are some of the most impressive research that the institute is supporting?"

"For lung diseases like emphysema, we're finding that if you put stem cells into the bloodstream, the cells will be drawn to inflammation in the lung to repair damaged tissue. You can also do repairs on seriously injured hearts. Researchers are showing that colonies of cardiac muscle cells grown from stem cells will integrate quite normally into the hearts of rats and mice."

"The institute has unusual rules for grantees: They must make discoveries available publicly and pay royalties to the state. Why?"

"The citizens of California are funding this research, so it's important for them to be able to access developments at a reasonable rate. It's about enabling research, but it's also about enabling patients to access the benefits."

The article continued:

"What do you hope to contribute to the field for posterity?"

"In a big-picture sense, I want to be up on the mountain looking down on the Serengeti, watching all the animals move through. I want to be remembered for having guided some basic discoveries from the lab to the clinic. If I can help get that process going, I think that's sufficient."

"And how did your family feel about moving?"

"My wife, Karin, is Swedish, and she said, 'Alan, it has taken me 20 years to become an Australian, and you want me to become an American now? I don't think so.' But she came around. The boys think it's pretty cool--the 6-year-old thinks there's Halloween every night in America."

CIRM Ill-served by Withholding Routine Information

With some considerable pride, the California stem cell agency issued a press release earlier this month that it was hosting a San Francisco meeting beginning today of the world's leading agencies involved in financing stem cell research.

It wasn't exactly news. The event and CIRM's role were known to most folks who follow the agency. However, the meeting and how the agency handled requests for information about it demonstrate some of the continuing problems at CIRM with openness and transparency.

Hosting the event seems a legitimate and worthwhile endeavor. As California stem cell Chairman Robert Klein noted in the news release, hosting the International Stem Cell Forum is another demonstration of CIRM's leadership. It also will help facilitate cooperation with activities in California.

However, CIRM has refused to answer one simple and basic question – roughly how much is the hosting going to cost? Keep in mind that CIRM is a state agency. Its financial affairs are all legally public. Keep in mind also that CIRM went out of its way to call attention to its role in the event at the Hotel Monaco, a luxury boutique hotel with rates running from about $250 to $500 a night. The agency should have been prepared to answer routine questions about its news release, such as the cost of a particular activity.

We began making inquiries on Feb. 19. Simple questions: what does "hosting" the event entail, what is the location of the meeting and whether it is open to the public. A spokesperson for CIRM came back quickly the same day with a partial response. She said that hosting includes "paying for the meeting room at the hotel where the meeting is taking place as well as the audio visual set up and possibly some things like copies. We are also paying for 2 dinners (but not alcohol)." After some prompting, the location was disclosed a day later.

But despite additional inquiries, no estimated cost has been forthcoming. One CIRM justification for not supplying a ballpark figure is that it might not be exact. Another is that it takes too much staff time to dig up the estimate.

We assume that CIRM budgets with some care. That means that the estimated cost would be readily available in a matter of minutes from whomever is currently handling CIRM's bookkeeping. The more likely reason for withholding the information is that someone very high in the organization is concerned that the figure might appear too extravagant and generate unfavorable comment.

This is not the first time CIRM has stonewalled on an event cost. One particular case comes to mind – the first scientific meeting that the agency sponsored a couple of years ago.

In both cases, the agency is ill-served by refusing to release routine information about its activities. Ultimately, the cost will come to light. All CIRM achieves at this point is to foster suspicion and speculation about what other, much more important information is being withheld, such as the breaches last year by some of its directors of CIRM's conflict-of-interest policies. Those remained hidden until disclosed here and by the San Francisco Chronicle.

As for our question about whether the meeting is public, the answer is no. That raises a whole host of additional questions about whether public funds should be used for meetings that bar the very persons who finance them.

(Here is a link to the only news story we have seen on the event.)

Fresh Comment

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights, has posted his economic disclosure under "comments" on the item below. You can see it by clicking on the word comments on the main item.

A Look Behind the Cyberspace Curtain

It's been a merry old romp.

Three years plus and more than 1,500 items posted. That's the count for the California Stem Cell Report, which began its cyberspace explorations of the stem cell world in January of 2005.

A little more than 12 months ago, we gave you a bit of an annual report on this enterprise, which is the creation solely of yours truly, David Jensen. Along with that came our economic disclosure. Today we will give you an update in both areas.

Nothing has changed on our economic interests, which can be found here. But briefly neither my wife nor I nor any members of our immediate family hold any interest in biotech or stem cell companies or other enterprises that could stand to gain or profit or benefit from the activities of California's stem cell agency.

This blog is financed personally on an extremely low budget. Some people ask why I do it. The answer is that the California Institute for Regenerative Medicine and its related activities are interesting, important and unique.

The Golden State's $3 billion enterprise is on the cutting edge of science, business, politics, religion, medicine – not to mention life, death and even sex(certainly one or another stem cell therapy is likely to tackle that last area). How often does one have a chance to dig into all those areas?

The overall readership of this blog is modest by Internet standards. No megamillion counts of page views here. We are currently running about 8,000-9,000 page views a month. Our readers, however, are deeply interested in the subject and seem to represent important sectors in the world of stem cells. They include folks from the UK, Canada, Australia, Korea, India, Germany, Sweden and Singapore. Readers from virtually all the major California research institutions dip into the California Stem Cell Report from time to time. But less than half of the total are from California. Other regions represented include New York, Massachusetts, New Jersey, Wisconsin, Illinois and Texas, Readers also come from enterprises such as the National Institutes of Health and the National Academy of Sciences along with patent attorneys, lawmakers and their aides and investment companies.

This past 12 months, we have branched out somewhat, publishing freelance articles with Wired News online and a couple with The Sacramento Bee.

We also broke the story on the attempt by one of the CIRM directors to lobby the agency on behalf of a grant to his institution. That story led to an ongoing investigation by the state Fair Political Practices Commission and a new audit of CIRM. The story also apparently played something of a role in the formulation of the latest legislation targeting CIRM.

We take no particular pleasure in CIRM's missteps. We support human embryonic stem cell research and CIRM's programs generally. Our main effort is simply to present information about CIRM, which has slipped well below the radar of the mainstream media. We do have a point of view, however. Our starting point is that CIRM is a public agency first. Everything else is a poor second. Without public trust and credibility, without conduct that matches the standard for Caesar's wife, CIRM's efforts could easily become a poster child for what can go wrong. Instead of being an exemplar, CIRM could become a nightmare of conflicts and concealment because it is uniquely free from normal state oversight and is riddled with built-in conflicts of interest that are not going to disappear. As we have reported, the conflicts are so deep that more than once the vast majority of CIRM directors have been disqualified at meetings from taking part in public discussions, not to mention being barred from voting. The result is that sometimes decisions can be made by as few as four out of the 29 members on the board.

We are interested in hearing from readers, both on individual items and on the general direction of the blog. If you have suggestions for changes, improvements or whatever, please send them along to me (djensen@californiastemreport.com) or you can post them via the comment function (created by Google), which does not allow myself or others to know your identity.

As for others involved regularly in CIRM affairs and regularly trying to influence the organization, we urge them to disclose their financial interests as well(via the comment function or other means). That includes newspaper reporters, but that is not anymore likely to happen than CIRM opening the scientific grant review sessions to the public.

CIRM Conflict Problems Behind Latest Stem Cell Bill

A state lawmaker says her new legislation aimed at the California stem cell agency was triggered in large part by breaches of the agency's own conflict-of-interest policy by the agency's directors.

Reporter Terri Somers of the San Diego Union-Tribune today reported that Sen. Sheila Kuehl, D-Santa Monica, said that the bill's requirement for a review of CIRM by the state's Little Hoover Commission was aimed at finding possible solutions to some of the problems that have generated a separate state investigation and audit.

The Little Hoover Commission is a nonpartisan state agency aimed at improving efficiency and performance of state government. In addition to studies, it can conduct public hearings and offer up legislative solutions.

Somers wrote:

"'Those (reviews) are directed at things that have happened,' Kuehl said yesterday. 'What I want to do is look ahead to see if there are necessary fixes.'"

Somers continued:

"Kuehl said her decision to look at the potential for conflicts of interest arose after learning that several grant applications to the institute had to be disqualified because members of the institute's board had written letters in support of the applicants."

The conflict cases involve John Reed, president of the Burnham Institute, and the deans of five medical who intervened on behalf of potential grants to their organizations, which is a violation of CIRM ethics policy.

Kuehl told Somers that a Los Angeles Times editorial urged reconfiguration of the CIRM board, but that following discussions with CIRM, she agreed that directors with expertise brought "the best understanding." Kuehl said,

"I'm really looking for solutions that will protect the public interest but not throw the baby out with bathwater in terms of expertise."

Late yesterday, CIRM released a statement from CIRM Chairman Robert Klein concerning the Kuehl bill, SB1565. It said,

"Last week we had highly productive discussions with Sen. Kuehl and similar discussions with Sen. (George) Runner and we believe we should be able to arrive at satisfactory language that advances the mission of Prop. 71."

CIRM directors have adamantly opposed legislation similar to SB1565 in the past. Klein's statement was carefully crafted to avoid saying anything directly about the latest bill and leave open the possibility of defusing it with some sort of action by CIRM itself.

Here is a link to the text of the bill, which is not yet available online through the legislature. The Foundation for Taxpayer and Consumer Rights put up the copy.

Lawmakers Target California Stem Cell Agency

One of California's more powerful legislators today introduced a bill aimed at the state's $3 billion stem cell agency and designed to ensure that "the state’s neediest residents will have access to therapies and drugs" developed as a result of taxpayer-financed research.

The measure would also require the state's Little Hoover Commission to study the structure of CIRM and report to the legislature by July 1 of next year with recommendations.

The legislation, SB1565 by Sen. Sheila Kuehl, D-Santa Monica, comes only a few days after CIRM attracted unwanted attention (see item below) with its proposal to boost the top pay ranges of its key executives by as much as $200,000 a year or 50 percent. The salary proposal received an unfriendly reception from some of CIRM's directors on Wednesday.

Kuehl(see photo), chair of the Senate Health Committee, said in a statement that the bill, co-authored by Republican George Runner of Antelope Valley, would maintain "the public’s trust by identifying ways to increase public accountability and reduce conflicts of interest."

CIRM watchdog John M. Simpson of the Foundation for Taxpayer and Consumer Rights said in a news release:

"The stem cell agency’s oversight board was designed with built-in conflicts of interest and it’s too big to be effective. They always have difficulties mustering a quorum. An outside analysis by unbiased observers can only be good. A hard-nosed look by the Little Hoover Commission is just what’s needed.”

Simpson also said,

"We need a provision that allows the State Attorney General to intervene if drugs or therapies funded by the stem cell agency are priced unreasonably. We’ve seen too many cases where companies benefit from publicly funded research and then set prices at obscene levels. They act like socialists when seeking research funding but are greedy capitalists when there are profits on the table."

No comment was immediately forthcoming from CIRM.

The text of the bill was not available online at the time of this writing, but Kuehl's office said the legislation would

"...require that grantees and licensees submit for CIRM's approval plans that will afford uninsured Californians access to drugs and cell therapies resulting from CIRM-funded research. The bill also ensures that publicly funded programs get the best prices for stem cell therapies and drugs by requiring grantees and licensees to sell them to publicly funded programs at a price that does not exceed one of the benchmark prices in Cal-Rx, the state’s prescription drug discount program."

The measure requires a super, super-majority vote – 70 percent of both houses – to pass. The requirement was created by Prop. 71 to make it extraordinarily difficult for lawmakers to make changes in the operation of the agency.

Passage would require a consensus from lawmakers that is rare in the Capitol. However, it is probably fair to say that the this week's pay proposal by CIRM will certainly contribute mightily to building that consensus.

(Here is a link to Ron Leuty's story on the bill in the San Francisco Business Journal.)

CIRM's 50 Percent Pay Range Hike Hits Roadblock

A key group of directors of the California stem cell agency today balked at boosting the maximum salary ranges of its top executives by 50 percent, citing the Golden State's budget deficit which has ballooned to $16 billion.

Reporter Jim Downing of The Sacramento Bee reported that members of CIRM's Governance Subcommittee said that increases of more than $200,000 (in the case of the CIRM president) were excessive. The subcommittee action came on the same day that news broke that the state budget deficit had increased another $1.5 billion.

CIRM President Alan Trounson, who earns $490,000, argued that the increases, which affect six other top positions at CIRM, were needed to attract top talent.

Downing quoted Trounson as saying,

"If I can't make appointments of people who can do the job, you've essentially wasted my salary, which is a disaster."

One of the members of the Governance Subcommittee is Claire Pomeroy, dean of the UC Davis School of Medicine(see photo). Downing wrote,

"Pomeroy, whose cash compensation at UC Davis totals $543,800, according to a University of California spokeswoman, noted that she is responsible for 8,000 employees at UC Davis, while the stem cell agency president heads a staff of 50 at most.

"'To me, there are still very fundamental questions about what positions they're citing as comparable,' (Pomeroy) said. 'This is sending the wrong message to the public about our priorities and about how we're going to spend what are limited pots of money.'"

The subcommittee did not act on some of the proposed salary ranges because they affected both Trounson and CIRM Chairman Robert Klein, who were present for the meeting. Klein, however, has declined a salary.

The subcommittee recommended increasing the top pay for some executives from $270,000 to $332,000, rather than the proposed $405,000. They did not act on ranges for agency attorneys, citing a lack of information, Downing reported.

As we have noted, the proposed increases in the pay ranges would have no impact on the state budget because CIRM's budget is constitutionally untouchable. However, the pay raises are important symbolically and politically.

The pay proposal now goes to the full board of directors for its March meeting.

Biotech Loan Taskforce Votes To Hire PriceWaterhouseCoopers

The California stem cell agency's plan to offer an ambitious loan program to the stem cell industry was discussed on Tuesday during a meeting in San Diego with teleconference links to elsewhere in the state.

John M. Simpson, stem cell project director for the Foundation for Taxpayer and Consumer Rights, attended the session. We asked him for a report on the event. Here is what he sent.

"CIRM's Biotech Loan Task Force voted unanimously on Tuesday to hire PriceWaterhouseCooopers as consultant for $50,000 to report on loan programs from other states and to offer a model of how the California program could work including rates of return that might be expected.

"PriceWaterhouseCoopers were the consultants that helped CIRM develop its strategic plan. Task force Chairman Duane Roth (see photo) said CIRM had checked with three consulting firms and had proposals ranging up to a cost of $350,000.

"But the primary purpose of the meeting was to hear views of executives of the companies that might apply for loans.

"Meeting in San Diego the loan committee heard general support for a loan program from a panel of seven industry executives. The panel included: William Adams, chief financial officer of International Stem Cell Corp..; William Caldwell, chairman and CEO of Advanced Cell Technology; David Gollaher, president of the California Healthcare Institute; Joydeep Goswami, vice president of stem cells and regenerative medicine for Invitrogen; David J. Earp, chief patent counsel and senior vice president for business development of Geron; Alan Lewis, president and CEO of Novocell and Ken Stratton, general counsel of Stem Cells Inc.

"Roth said that the motive for the program from CIRM's perspective is that it "is a way to recycle money and fund more research."

"Over the course of three hours the executives and the committee members discussed various ways the program could be implemented.

"Earp told the group that with a grant it's CIRM that assumes the risk but with a loan, the company assumes the risk.

"Adams said his company was very interested in a loan program and thought it could help products through the so-called "Valley Of Death," a reference to a promising scientific discovery that fails to make it to the clinic because of a lack of funding. He added that with current economic conditions "the Valley of Death has become more of a Grand Canyon of Death."

"A consensus emerged that a loan program should focus on translational research, not basic science.

"Roth suggested that a company would be able to apply for a loan tied to a specific product or for a company loan. If it was tied to a product and the product failed to be developed, the loan would be forgiven. Such a loan would carry a higher rate of interest than one tied to a company.

"Committee Member Ted Love urged that however the program comes together, "We should be starting out simple."

"CIRM President Alan Trounson told the meeting by telephone from San Francisco that the loan program should be built into various Requests For Applications (RFAs) that are called for in CIRM's strategic plan. There should not be a separate RFA for loans.

"Roth said he envisioned loan applicants applying under CIRM's usual RFA process and then submitting applications for peer review. Loans would be offered only after the application had been judged on scientific merit.

"ICOC Chairman Bob Klein asked if a loan from CIRM could serve as validation" of a company's efforts that would increase the possibilities for additional funding. The executive panel agreed that it would, perhaps with the most benefit to a public company.

"Committee members also wrestled with the fact that CIRM is limited by law to a maximum of 50 employees. That will make it difficult to administer a loan program in-house, they agreed.

"Klein suggested that CIRM follow the model of the housing industry and like "Fanny Mae" use "designated underwriters" to do the nitty gritty work of loan administration.

"Roth said he hoped to have the PriceWaterhouseCoopers report in March and hoped to offer a loan policy for ICOC consideration by June.

"After the meeting in a brief interview Klein suggested that the program might start simply with two RFAs -- perhaps Disease Team Research and Research Tools. He expected both would be offered in the fall.

Here is Simpson's commentary on the meeting:

"A loan program an intriguing idea, but the devil will be in the details and I'll continue to monitor them as they emerge. It's too early to know if FTCR will support the final program or not.

"From a policy making point of view, they are going about this the right way: gathering facts from stakeholders and discussing ideas in public meetings.

"Duane Roth should be commended for the way he is running the committee and the executives deserve thanks for participating on Tuesday."

Mystery Meeting Solved

The subject of the mystery meeting at CIRM has been solved. For you diligent readers, you may recall that the Standards Working Group scheduled a meeting for Feb. 28 but nothing was on the agenda. Here is the list of the significant items to be discussed that were posted today.

"Scientific presentations and group discussion of current issues in stem cell science.
"Clinical trials
"iPS experiments \
"Report on CIRM Guidelines for Oocyte Donation.
"Report and discussion of regulatory consideration for CIRM MES regulations."

It appears to be a worthwhile and informative session. We are looking to some background information on these subjects prior to the meeting.

Negative Reaction to 'Big Bucks' at California Stem Cell Agency

The headline on Biopolitical Times was "Big Bucks Become Bigger at CIRM." The subject was the proposed, whopping increase in salary pay ranges for top execs at the California stem cell agency.

Here is part of what Jesse Reynolds of the Center for Genetics and Society had to say today under the headline:

"Given the dire condition of the state's budget and the recent pay scandal at the University of California, this move will only attract more criticism for the California Institute for Regenerative Medicine. If the compensation sums skyrocket according to the CIRM's plan, calls for its termination, such as the recent editorial in Investor's Business Daily, would likely grow more common. "

Reynolds also had a good link to a 2005 story about the controversy about high salaries at CIRM, which you can find here.

We were not critical in 2005 on the salary issue. Talented people cost money. As we have remarked earlier, the increases in the CIRM pay ranges may be justified. But they have not been justified by CIRM. The agency's pay plan is extraordinarily ill-timed because of California's current budget crisis. Negative reaction could have been minimized with more thoughtfulness at CIRM -- thoughtfulness that could have spread increases over several years with a well-explained rationale. But our sense is that some of the folks at the top of the CIRM organization have a very limited grasp about public perceptions involving government.

CIRM Chairman Robert Klein, its board of directors and executives should understand that CIRM is a public agency first – with all the baggage that connotes – and a scientific endeavor second. Without public money and support, no research grants or fresh hESC science would exist.

CIRM Alleges Misrepresentation of Salary Proposal

The California stem cell agency says we have "misrepresented the issue on the salaries" in our post below, an allegation with which we do not agree.

Here is the statement this afternoon from Ellen Rose, interim communications officer for CIRM:

"You have misrepresented the issue on the salaries in your post. As I stated over the weekend, we are changing the ranges. This does not translate into a salary increase for anyone. We’ve done this to be in line with what we learned from the Mercer survey. Your post makes it seem like salaries are being automatically increased, which is not the case."

Here is our response to her:

"I repeatedly referred to salary ranges, including in the headline. But I will be glad to carry your comments verbatim. Meanwhile, do you want explain the rationale, such as why salary ranges should be increased. If they should be increased, why the 75th percentile? Why increase salary ranges in a year when the state is facing a budget crisis? And why increase the ranges unless there is the intent to pay someone at the level in the not too distant future? There is no point increasing salary ranges if there is no intent to pay at that level.

"Again, I will carry responses to those questions verbatim or to other comments in support of the pay range increase. Thanks."

The boosts in the salary ranges may be warranted, but CIRM has not made a case, particularly for such an ill-timed effort.

Fresh Comments

"Anonymous" has posted a comment on the pay item below and John Simpson. You can read comments by clicking on the word "comments" at the end of the item in question.

CIRM Proposes 50 Percent Pay Range Hikes; Watchdog Says They are Unjustified

The California stem cell agency is set to boost the maximum salary ranges of its top executives by 50 percent, a move that one watchdog group says flies in the face of California's budget crisis.

Under the proposal to be considered Wednesday by a subcommittee of the CIRM board of directors, the top salary range for the president would skyrocket more than $200,000 -- from $412,500 to $618,750. The salary range would also apply in the case of the chairman of the agency, Robert Klein, a multimillionaire real estate investment banker. However, Klein has declined to accept a salary.

Other proposed salary increases would see the top of the range climb from $270,000 to $405,000 for vice chairman, chief scientific officer and chief operating officer, a new position that is currently unfilled. The top of the salary range for general counsel and intellectual property attorney (another new, unfilled position) would jump from $225,000 to $337,500.

The Foundation for Taxpayer and Consumer Rights said the increases "are unjustified in the face of a state budget crisis."

In a statement prepared for release Tuesday, John M. Simpson, stem cell project director for the group, said CIRM was "tone-deaf" in proposing the pay hikes. He said,

"CIRM doesn’t operate with some financier’s private stash of cash. CIRM is a state agency funded by taxpayer dollars. It needs to act like one.”

Simpson also said that CIRM's general counsel already received a 41 percent pay increase in December after only 10 months on the job, boosting her salary from $160,000 to $225,000.

The CIRM document proposing the other executive salary range increases did not offer a rationale nor did an accompanying salary survey paid for by CIRM. We asked Ellen Rose, spokeswoman for CIRM, what the justification was for the increase, She said,

"We are re-aligning the maximum of the ranges to be slightly above the 75th percentile data Mercer provided to be consistent with our Compensation Philosophy."

No further rationale was provided by CIRM for the top pay increases, which amount to more than an average of 16 percent a year since 2005 when the first salary schedule was approved by CIRM directors. At that time, CIRM salaries generated considerable heat because of what critics called their extravagance.

CIRM is a tiny agency with only 26 employees, although it hands out grant money at a rate exceeding $20,000 an hour. It is limited by law to only 50 employees. Its operating budget this year is running about $8 million, about $5.5 million of which is salaries.

The proposed pay raises would have no impact on the state budget. CIRM operates outside of the normal realm of state budget matters. CIRM's budget cannot be cut by the governor or the legislature. CIRM spending (which is financed by state bonds) is untouchable because of constitutional changes approved in Prop. 71. That fact is not likely to be understood by the public. Beyond that, the increases are a symbol of governmental profligacy that will not sit well with many persons, regardless of their position on stem cell research. The pay hikes additionally will hand another cudgel to foes of human embryonic stem cell research.

The chair of the CIRM subcommitteee considering the pay increases on Wednesday is Sherry Lansing, a former Hollywood film studio executive and currently a member of the University of California regents. Several years ago, as a regent she went through a major flap concerning excessive compensation for top executives at many UC campuses.

That episode reflected poorly on UC, and CIRM is likely to suffer the same fate.

(The subcommittee meeting begins at 3 p.m. The public may participate in the sessions at locations in San Francisco, Los Angeles, Sacramento, Carlsbad and Irvine. You can find the specific addresses here.

CIRM's Latest on Navigating the Financial 'Valley of Death'

Coming up on Tuesday is a three-hour meeting involving the California stem cell agency's ambitious proposal for a biotech loan program that could pump as much as $750 million into the state's stem cell business.

The session is scheduled for San Diego with two teleconference locations in San Francisco. It is a must if you are associated with an enterprise interested in the loans or want to shape policy concerning them. And that includes nonprofit organizations, as well as businesses. The Biotech Loan Task Force seems to be heading in the direction of making the loans available to nonprofits as well as private enterprise. Additionally, funds would probably be available to out-of-state companies, so long as the loans were going to California operations.

The idea behind the effort is to leverage the cash available to CIRM and to help organizations bridge what is called the "valley of death" – an economic gap between research funding and traditional financing.

The plan – brainchild of California stem cell chairman Robert Klein – received a major airing last month. Generally the reception was cordial. Few want to rain on a $500 to $750 million parade, the range of amounts that Klein has discussed offering as loans.

At the invitation of CIRM, Gregory Bonfiglio(see photo), managing partner of Proteus Venture Partners of Palo Alto, Ca., laid the groundwork during the hearing. His firm, which has offices in Boston and Cambridge in the UK, is devoted to developing the business of regenerative medicine.

He told the loan task force last month that currently 300 companies exist that are "pure play regenerative." He said 800 clinical trials are underway in the US involving stem cells and regenerative medicine.

Gone are the bad old days – the "trough of disillusionment" – and, he said, "We're now on our way out."

Bonfiglio said,

"How do I know that? What is the current market dynamic? Well, the current market dynamic, triggered again in part to respond to Prop 71, is that you are seeing an incredible amount of activity at the university level. this technology is so compelling that it has captured the imagination of the best and brightest at our major universities. every major university in the United States now with a medical school has a dedicated regenerative medicine program. There are 65 of them in the US alone. There are another ten to twelve in the UK, and there is also very, very promising research going on in Singapore, in Australia, in China, in India."

He also cited additional changing market forces that have created a more favorable economic climate.

One of the caveats to the program was voiced by Richard Murphy, interim president of CIRM. Jeff Sheehy, a member of the CIRM Oversight Committee, echoed some of Murphy's concerns. Murphy said,

"I think the notion that all of this would be evaluated by CIRM staff is really overshooting. As you know, we're limited to 50 people in the organization. We would need to have real partnerships somewhere to be able to do this in a way that these guys would buy into as partners. I suspect that cannot be done in-house, at least with our present structure."

Klein said,

"We could have a delegated underwriting group that becomes the coordinating officer or the coordinating firm that, just as in the real estate field, the delegated underwriters evaluate the appraisals, the market studies, the toxicity reports, etc. In this field the delegated underwriter, a bank, for example, Silicon Valley Bank, could be a delegated underwriter who could agree to service this for us."

In addition to Bonfiglio, industry was represented at the January meeting by Burrill & Co., Advanced Cell Technology, Invitrogen, Silicon Valley Bank, Bay City Capital and Cooley Godward.

While we are not particularly fond of Powerpoint presentations without additional elaboration, Bonfiglio's is available on the CIRM site along with the transcript of his remarks. Combined, they provide a useful perspective on state of the regenerative and stem cell medicine business.