Sunday Afternoon with CIRM: A Personnel Matter

The Governance Subcommittee of the $3 billion California stem cell agency has an interesting little meeting scheduled for this weekend.

Interesting in the sense that the meeting of the group of CIRM directors poses more questions than answers.

Only one substantive item is on the agenda, a closed-door personnel session. Both the narrow scope of the meeting and the unusual Sunday afternoon timing made us wonder what exactly was going on.

We asked Don Gibbons, chief communications officer for CIRM, to illuminate the subject matter further and explain the Sunday timing. His one-sentence response:

"It is because of the chair of the subcommittee’s busy schedule."

The chair is Sherry Lansing(see photo), a former Hollywood studio head (think "Titanic"and "Forrest Gump")and now head of the charitable foundation bearing her name. She is indeed a busy woman and has her fingers in several major pies, including the board of regents of the University of California.

The responsibilities of the eight-member, directors' governance committee include such things as CIRM internal controls, ethics, outside contracting as well as monitoring management goals. One could speculate that the meeting's timing reflects a certain urgency and importance, although its recommendations generally must be approved by the full board of directors. That 29-member group meets on Monday.

Closed-door personnel sessions are permitted under state law. If the committee takes any action, it must be reported following the private session. However, the public will have a chance to speak out during the meeting at six different locations in California, if they choose to do so. The teleconference sites include San Francisco, Los Angeles, La Jolla, Palo Alto, Sacramento and Laguna Beach. The street addresses can be found on the agenda.

Rare Teleconference Session of CIRM Directors on Monday

Californians will have an unusual opportunity next Monday to tell the directors of the $3 billion California stem cell agency what they think and listen to them attempt to solve a problem that has nagged them since 2005.

The occasion is a meeting of the directors, who are officially known as the Independent Citizens Oversight Committee. Virtually all of their meetings have been held under circumstances that require the physical presence of interested parties who might want to observe or comment.

However, on Monday, the meeting will be conducted via teleconference arrangements from locations throughout the state, from Healdsburg to La Jolla. One site in San Antonio, Tx, is included. Apparently one director will be staying at the Grand Hyatt there.

All the locations are public for the purposes of this meeting. The agenda includes only one item – a plan to solve the problem of meeting the board's super-quorum requirement of 65 percent at meetings of the 29-member group. The requirement is enshrined in state law courtesy of Prop. 71 and is politically nearly impossible to alter. Instead, the plan to help provide better director attendance provides for the telephonic participation of a limited number of directors on a limited basis for regular meetings.

Monday's meeting also provides an opportunity for the public to comment on any issue, although the board is legally restricted to action only on agenda items.

Here is the current list of teleconference locations in California other than Healdsburg and La Jolla(two sites): San Francisco(two sites), Sacramento, Los Angeles(five sites), Duarte, Menlo Park, Elk Grove, Irvine, Pleasanton and San Carlos. The locations could change, so keep an eye on the agenda, which also includes the specific addresses.

'No Job Too Big, No Job Too Small'

What does a stem cell watchdog do for fun?

In the case of John M. Simpson(pictured), stem cell project director for Consumer Watchdog of Santa Monica, Ca., he takes two weeks vacation and goes to work in the Obama campaign in Missouri, one of the battleground states in this year's historic presidential election.

Simpson, who has been observing and participating in the affairs of the California stem cell agency for several years, is doing a bit of everything in Joplin, Mo., the fourth largest metro area in the "show me" state.

It is a far cry from expenses and lifestyle of California. The average home price is around $70,000-$80,000. Once the lead and zinc capital of the world, tourism now drives the Joplin economy, generating $220 million annually for the 400,000 persons who live in the metro area (49,024 for the city proper).

More than 70 years ago, Depression-era bank robbers Bonnie and Clyde pillaged several businesses in the community and were chased out of town in a gunfight, leaving their camera behind. The images in it were later developed and may be the most famous of those of the two thieves.

Simpson, however, is not interested in banks. He is looking for beds. Places where out-of-state volunteers can rest during the big push for Obama turnout next Tuesday.

We asked Simpson why he is taking his vacation time to work the long and arduous hours involved in the final stage of a presidential campaign.

He said the election is pivotal, a time to unite the country and move away from "Republican rule that is dominated by the interests of big business."

California seemed to be comfortably in the Obama camp. So Simpson volunteered for out-of-state work. He attended a two-day "Camp Obama" training session in October. They put him in touch with the folks in Missouri.

In addition to scrounging up bunks for volunteers, Simpson is setting up speaking engagements for Obama surrogates, lugging furniture and sweeping floors. "No job too big, no job too small" is Simpson's credo. He reported, however, that he can't keep up with the 20-something, paid staffers who put in 20 hour days. He said he can only do 12 hours.

Simpson is recording some of his experiences on his Facebook site. You can read them after registering as a friend of John.

UCI Defends Lab Press Notice

The University of California, Irvine takes umbrage at our item that pointed out that the school did not credit the California stem cell agency (the California Institute for Regenerative Medicine) specifically by name in its press notice on the Oct. 24 ground-breaking for a stem cell lab financed in part with $27 million in agency funds.

The omission occurred in a news release sent out widely to the media. We characterized the omission as a minor PR gaffe and noted that one page on the UCI site carried a photo caption describing the lab as a "CIRM institute.'

Jennifer Fitzenberger, assistant director of media relations, sent us an email that said,

"Our stem cell center website and event invitation make very clear the new building will be a CIRM institute: http://stemcell.uci.edu/. CIRM is very clearly listed on more than one UC Irvine webpage in connection with our groundbreaking event, not just one as your blog item states."

The ground-breaking received extremely limited media coverage(three items in advancing of the event), based on a Google news search to this morning.

Here is a link to the news release that was issued on the day of the event. That release did mention the California Institute for Regenerative Medicine by its full name. Here is a link to the Sue and Bill Gross Stem Cell Research Center at UCI, which is the name of the stem cell research operation at the campus.

As we noted in the item below, this is not a major issue, at least for us. But CIRM directors have retained the power to approve the names of labs that they help finance – one indication of the importance that they attach to naming and the credit it implies. The reality is that none of these labs are going to be commonly known as CIRM facilities. Rather they will be referred by the names of the donors or some piece of vernacular originating on campus.

UC Irvine Breaks Ground on Stem Cell Lab

In a bit of a minor PR gaffe, UC Irvine announced its groundbreaking ceremonies on Friday for a new stem cell lab that will be partially financed with $27 million in CIRM funds without specifically mentioning the California stem cell agency by name.

The news release named Robert Klein and the Independent Citizens Oversight Committee, but nowhere was the phrase "the California stem cell agency" or "CIRM" used. The Independent Citizens Oversight Committee is the ungainly official name for the CIRM board of directors, but few Californians would make that connection.

One page on the UC Irvine web site did, however, carry a small rendering (see photo) of the lab which identified it as the "Sue and Bill Gross Hall: A CIRM Institute." All of this PR hooha makes little difference to the stem cell effort. However, CIRM directors have expressed their firm desire for PR credit by retaining the right to approve the naming of labs that they finance with public money. The names are not official until approved by CIRM directors.

UK, CIRM Ink Collaboration Agreement

The California stem cell agency has expanded its international connections once again, this time linking to the United Kingdom with an agreement that potentially will finance scientists working in California with scientists working half-a-world away.

No money, however, has yet been committed. Reporter Bernadette Tansey of the San Francisco Chronicle also reported that the touchy issue of ownership of IP has not yet been worked out.

The agreement was announced earlier this week. It follows similar agreements in June with Australia and Canada.

According to Maggie Shiels of BBC radio, CIRM Chairman Robert Klein said,

"...(O)ne of the diseases the CIRM was likely to focus on in the future would be stem cell therapy for a type of macular degeneration that leads to a blindness that affects 7% of the US population over 75.

"Mr. Klein said the UK was well ahead in animal trials in this field and that the deal could pave the way for earlier than hoped for human trials."

"'We are very hopeful that this collaboration can bring us together in human trials to prove the first global embryonic stem cell therapy. It will hopefully break open this entire field,' he said."

According to Monya Baker, writing on The Niche (the Nature magazine stem cell blog), Lord Paul Drayson, the UK minister of science, said,

"UK’s National Health System made his country particularly able to carry out clinical trials and gather clinical data."

Don Gibbons, chief communications officer for CIRM, was quoted as saying,

"We could do a one-off with an investigator in Paris, but that bogs us down."

Baker said the agreement permits CIRM to accept applications "under the same rules and avoid bureaucracy."

If Klein's optimism is borne out, the "break-through" on the first embryonic stem cell therapy could mean that Great Britain will be the first to see the clinical fruits of research funded at least in part by California taxpayers.

The UK/CIRM announcement received light news coverage. For example, Bernadette Tansey's story was tucked away on page D2 of the Chronicle.

A meeting is scheduled for January 2009 among scientists and others to determine the "most fruitful options" for collaboration.

CIRM IP Hearing Set for Oct. 29

For those of you interested in profits from California-financed stem cell therapies, you should pay attention to the latest CIRM meeting on intellectual property.

The IP Task Force has scheduled a session Oct. 29 to discuss what appears to be a routine matter, but it could also involve discussions that go beyond routine.

Here is the language from the agenda. No additional information is available to the public at this point.

"Consideration of draft amendments to consolidate non-profit and for-profit intellectual property regulations and begin formal process of adoption."

The meeting has teleconference locations from which interested parties can participate. They include San Francisco, La Jolla, Irvine and San Carlos. More be be added later to the agenda.

Tracking the Little Hoover Commission and CIRM

The Little Hoover Commission, which is looking into the governance of the California stem cell agency, has posted some material concerning its inquiry, accessibility and schedule.

The first meeting will be held Nov. 20 in Sacramento with the second Jan. 22, also in Sacramento. The agenda says,

"As part of its study, the commission will explore the transparency and accountability of the existing governance structure."

The agenda also says that more information can be had by contacting project manager Eric Stern. To be notified of events concerning the CIRM inquiry, send a message to littlehoover@lhc.ca.gov. The phone number for the commission is 916-445-2125.

Fresh Comment

"Ron" has filed a comment on the "courtier" item below, including the text of a San Francisco Business Times article on the veto of SB1565.

CIRM and the Cause of Philanthropy

By now, you all have heard about Larry Lokey's whopping $75 million gift to Stanford to help build a new stem cell lab. But there is another bit of the story that has not received much attention.

And that is the role of the California stem cell agency in creating a friendly climate that encourages our wealthiest citizens to make huge contributions to human embryonic stem cell research and science in general.

Stanford and Lokey did not specifically cite CIRM and Prop. 71. But the agency has done much to portray favorably hESC research and draw the attention of scientists who need to believe there is a stable source of potential funding for their research. If not, they will choose another path of inquiry.

Four years ago, hESC was the poor stepchild of the NIH, all but banned by the Bush Administration. That is unchanged at the federal level. But California's Prop. 71 fired up the efforts in a number of other states and created a sense that the science could proceed even without the sanction of the NIH.

Lokey is not alone in making a major contribution to stem cell research. Eli Broad, Denny Sanford and others have also donated tens of millions of dollars in California.

Their generosity has set an example and a standard for others to emulate. The hESC philanthropy trend serves both science and charity well.

Biotech Courtier, the People's Will and 'Money Talks'

Gov. Schwarzenegger's veto of this year's CIRM legislation was deeply buried by most news outlets, if they carried anything at all. But his action triggered a fiery op-ed piece by J. Wesley Smith in the San Francisco Chronicle.

Writing on Oct. 2, Smith, senior fellow in human rights and bioethics at the Discovery Institute, asked,

"What is it about embryonic stem cell research that turns politicians into courtiers? "

He said government leaders are more than ready to denounce the "get-rich, money-talks ethos" of Big Pharma, but "trip over each other to grant (biotech) policy agendas carte blanche."

Smith was talking about SB1565, legislation by state Sen. Sheila Kuehl, D-Santa Monica, which was aimed at providing affordable access to CIRM-financed therapies. The measure was opposed by the biotech industry and CIRM.

Smith said the governor claimed "incongruously that it 'does nothing to advance the will of over 7 million voters,' when precisely the opposite - assuring access for the poor to CIRM-facilitated treatments - was clearly part of the package voters thought they bought when passing Proposition 71."

Smith continued,

"Given the governor's constant harping about the crucial importance of bipartisanship, the veto is ironic. Talk about a bipartisan measure! SB1565 passed the Senate unanimously and by an overwhelming 64-7 in the Assembly. Other than naming freeways after dead luminaries, it is rare to find such agreement in the ideologically divided California Legislature.

"In backing the CIRM's fiscal profligacy and giving the back of his hand to the poor and the ill through his veto, Schwarzenegger made a joke of his reputation as a fiscal conservative and bipartisan consensus builder. How sad that the once mighty Arnold, who came to Sacramento vowing to smash boxes, has instead assumed the role of a mere industry retainer."

Jerry Steele, an advocate of adult stem cell therapy writing on the TheraVitae blog, also was critical of the veto. He said,

"The CIRM has been mired in many controversies on where the money has been distributed and is deathly quiet on the issue of when it is going to produce any cure."

Steele asked if California has received a return on its investment,

"Well, even the staunchest supporter of the CIRM would be hard pressed to come up with any successful results- I tried Google and the most I could come up with was a few semi-famous scientists have migrated to California to live off the taxpayer."

Geron, a Menlo Park, Ca., stem cell company, had a different view, although it was very brief. In what amounted to a one sentence news release, the firm said it supported the veto because the legislation ran "counter" to Prop. 71.

Don Reed, patient advocate and a vice president of the private stem cell lobbying group belonging to CIRM Chairman Robert Klein, gave a cyberspace sigh of relief on his blog. But he noted that the Little Hoover Commission, a bipartisan good-government state agency, will be looking into CIRM.

Reed vowed,

"If the Little Hoover Commission develops a new law or initiative against us, I will let you know about it early, so we can protect California’s great gift to the world."

Unsaid was the implication that any proposed change in CIRM's operations would be an attack.

CIRM Seeking Solution to Director Absenteeism

The California stem cell agency has been dogged for four years by problems with attendance of its directors at its board meeting, and it now is moving forward on a plan to allow some of them to participate by telephone.

The attendance issue is not minor. Without a quorum, the board of the directors cannot take legal action. Concerns arose last month that the board would have difficulties at an important, two-day meeting in December.

John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., attended the meeting of the CIRM Governance Committee that approved the telephone participation. He wrote on his organization's blog earlier this week about the problems with attendance:

"Even when there has been a quorum present there has all too often be a mad rush to take votes before members left for the day. It's not the sort of atmosphere which is conducive to sound deliberation and good policy making."

The attendance issue stems from inflexible language in Prop. 71 that can only be changed by the legislature or another vote of the people. The measure requires a supermajority of 65 percent of directors to conduct business. It also created an unwieldy board of 29 persons, all of whom have major responsibilities elsewhere.

Here's how Simpson described the proposed changes to ease the current problem, short of changing state law.

"The proposed rules would allow up to five members to take part in ICOC meetings by teleconference, but would give the chairman the discretion to limit the number based on 'his or her assessment of the importance of in-person attendance at the ICOC meeting for which a teleconference participation request was made.'

"The rules also limit the number of times a member could phone in to twice a year and offer the teleconference option to ICOC members with significant medical needs."

Simpson continued:

"First, of course, folks who cannot maintain the substantial commitment to the ICOC (the board of directors) ought to quit. There's nothing wrong with that. There is something very wrong with holding a seat and never showing up.

"Second,  a better solution would be to reduce quorum requirements to a simple majority and to adopt a procedure to remove or otherwise sanction members who are chronically absent. Perhaps such suggestions will come from the state's efficiency panel, The Little Hoover Commission, as a result of its planned study."

The CIRM board of directors plans to call a special meeting to adopt the new rules so that they will be in place in December.

Science and Construction Dominate CIRM Newspaper Series

California reporter Sandy Kleffman has pulled together a lengthy overview of the state's $3 billion stem cell research effort, focusing primarily on the science of the research and the building of stem cell laboratories.

The two-part series began Sunday in some newspapers in the San Francisco area. Kleffman reported that therapies are 10 years away and "numerous hurdles must be overcome." Despite the hurdles, Kleffman reported that "optimism remains."

She wrote:

"'I would say this is the most exciting time to be in science, ever,' said Dr. Arnold Kriegstein, director of the UC San Francisco Institute for Regeneration Medicine.

"'I don't think there's ever been as many opportunities to actually alter the course of a disease as there is right now.'"

Kleffman also wrote,

"Others fear the new therapies will be too expensive for many Californians.

"Money may be one of the biggest hurdles. The $3 billion taxpayer investment will not be nearly enough to take most therapies through the required trials and bring them to market.

"'The drug industry computes that it needs $1 billion for every new drug,' said Alan Trounson, president of the state stem cell agency, known as the California Institute for Regenerative Medicine. "If that's the case, we're going to be handicapped severely here.'

"For that reason, Trounson and other stem cell leaders have begun to look at partnering with the biotech industry to ensure the work continues beyond the limits of the state program."

The series was written before the release of the latest, CIRM-financed, economic impact report on its activities. Kleffman's stories also did not deal with the bulk of the public policy issues surrounding CIRM.

Her work was keyed to the fourth anniversary of the agency, which came into being November 2004. The media have a fondness for anniversary pieces since they provide an easy entry point to a story. However, given the short staffing at newspapers today and the host of more compelling issues this fall, don't look for many more anniversary pieces on CIRM this fall. Next year is another story.

CIRM Denies It Was Prompted to Release Economic Study

The California stem cell agency today said that it was not prompted to release publicly a $50,000 economic impact study concerning CIRM as the result of an inquiry from the California Stem Cell Report.

Don Gibbons, chief communications officer for the agency, said in a one-sentence email to us,

"You have quite the ego, writing not once, but twice, that you prompted us to post the Analysis Group report, which is not true."

Gibbons did not explain why the report, which was originally scheduled to be released last January, was posted on the CIRM website one day after we inquired about its whereabouts. We attempted to email him several times this morning, seeking an explanation. However, our emails are being rejected by the CIRM email system. Our presumption is that there is some sort of technical glitch involving emails that are being sent via a satellite link from Mexico.

So this posting also serves as a request to CIRM for an elaboration on the reasons for the delays in releasing the Analysis Group report.

We have additionally asked the Analysis Group if it has any comments on the two items that were posted on Wednesday concerning its work. If they do, we will carry their comments verbatim.

Fresh Comment

"SEO Firm" has posted a comment on the $350,000 item below.

Clarification

The item below concerning economic impact reports involving the California stem cell agency may have been confusing to some. The $350,000 includes the $50,000 already spent for the Analysis Group report that was released this month and the $300,000 proposed to be spent in the RFP.

Coming Next Spring: A $350,000 Paean to CIRM's Value

Is the California stem cell agency performing work that is beneficial to the economy of the state of California?

Any fair-minded person has to respond affirmatively to that question, and perhaps even some who are not so fair-minded.

But does CIRM have to spend $350,000 of taxpayer funds to prove its economic value? Will such an effort convince any skeptics that the $3 billion ($6 billion including interest) stem cell research program is economically worthwhile? The answer to both those questions is no.

If CIRM pays for an economic study, it will be forever clouded by the reasonable assumption that the agency received the findings that it already knows it wants. And those findings would amount to a paean that holds up CIRM as critical to the economic survival of the Golden State.

That conclusion is even more likely given the language in the recent CIRM RFP for a consultant to prepare the economic propaganda piece for the agency.

The RFP makes no bones about what CIRM wants and what the consultant better provide for $300,000. Certainly not an independent, detached assessment of CIRM's economic worth. Instead, the RFP states that the consultant must "execute a vibrant and aggressive strategy to support the goals and initiatives of CIRM."

To be sure the consultant fulfills expectations, he will work with a high-powered CIRM panel consisting not only of the chairman and president of CIRM, but also the vice chair, the vice president for operations, the general counsel, the legal counsel and unspecified "others." Lots of "minders" there to be sure no heresy comes forth.

CIRM has already spent $50,000 this year for what was supposed to be a new economic study. That report was originally scheduled to be released in January. After the California Stem Cell Report asked about it on Oct. 7 in connection with the $300,000 RFP, the document was publicly released a day later on the CIRM web site.

The $50,000 report was prepared by the Analysis Group of Palo Alto, Ca., which is likely to have the inside track on this latest contract. (For more details on the report, see the item below.)

Analysis Group also received $200,000 from the Prop. 71 campaign, which was directed by now CIRM Chairman Robert Klein, for a document that predicted health care savings of as much as $12.6 billion over 30 years and a net state government profit of at least $1 billion.

That report, however, was held up as an example of stem cell hype. "Hopelessly optimistic" was how one reasonably detached writer, David Hamilton, described the campaign analysis in a "biotech bubble" story for Slate.com.

The latest RFP also indicates that CIRM grant recipients will be burdened with additional paper work in the future. It implies that grant applicants will need a nose for dollars and must be able to demonstrate how CIRM cash, if they receive it, will benefit the California economy.

The RFP states that the consultant must create "a standard and routinized methodology for data collection from CIRM grantees and loan recipients and other sources to enable future measurements of economic impact."

Compliance with that methodology is likely to become part of the terms of any grant or loan in the future. We would hope that all the data gathered would be available to the public so that other economists and health policy experts would be able to draw their own independent conclusions.

Interested economic consultants must submit their proposals by Oct. 24. The contract could be awarded shortly thereafter. Look for the economic report in March 2009, if the RFP is to be believed, with the lucky consultant also embarking on a bit of a road show, according to the RFP's terms.

Unsaid in the RFP is the near certainty that the consultant will have an ongoing, lucrative relationship with CIRM for years to come as he updates the report with fresh information annually.

Economists Say "Too Early" to See Significant, Quantifiable CIRM Results

Has the four-year-old, $6-billion, California human embryonic stem cell research effort already paid off?

According to a $50,000 study commissioned by the state stem cell agency, it is "too early to expect to observe significant quantifiable health and economic benefits from CIRM’s funding."

The 31-page report by the Analysis Group of Menlo Park, Ca., which previously performed two controversial economic impact studies for the Prop. 71 campaign, was originally scheduled to be released in January. The document was made available to the public on Oct. 8 after the California Stem Cell Report asked about it in connection with CIRM's plans to spend $300,000 for another economic study.

Analysis affirmed that it is too early to draw definitive economic conclusions about the world's largest human embryonic stem cell research program. The report also contained useful summaries of CIRM's efforts and related stem cell activities in California.

It said, for example,

"Some stem-cell related companies appear to have increased activities in California. For example, Stem Cell Sciences is expanding into California from the UK, and companies like Invitrogen and Novocell (formerly CyThera) have hired new scientists from within and outside the U.S. Other companies, such as Jackson Labs, have committed to major relocations or large-scale expansions in California. As an example, Jackson Labs is in the process of developing and expanding a new California research facility near Sacramento that will ultimately be more than 200,000 sq ft."

The report is largely based on CIRM press releases and other CIRM documents, which presented the justification for another, six-month study at a cost of $300,0000 and continued ongoing work for many years by an economic consultant. The Analysis Group's and the report's two authors, Laurence Baker of Stanford and Bruce Deal(see photo), managing principal of Analysis.

Deal and Baker wrote,

"While it is clearly too early in the course of CIRM’s activities to make a broad assessment of their economic benefits, it is possible to begin to monitor and report on some aspects of CIRM’s activities and their relationships to possible sources of economic benefits."

We queried Don Gibbons, chief communications officer for CIRM, concerning the relationship between the $300,000 proposal and the $50,000 study. He replied,

"It is a very different study from the one proposed in the RFP. Instead of analyzing existing related studies and making projections based on those studies, we are seeking to benchmark certain data points now and determine what data we should be collecting going forward so that we can compare today’s benchmarks to data from serial reviews over time. This requires much more extensive work."

CIRM obviously has an inherent self-interest in demonstrating its value and assuring its existence well beyond its 10-year financing limit. CIRM Chairman Robert Klein has talked on more than one occasion about keeping CIRM alive pretty much indefinitely, but it only has bond funding capabilities for 10 years. Perpetuating CIRM is one of the goals of Klein's $500 million biotech loan proposal, which is aimed at providing an additional $100 million in funding. Klein has additionally spoken of going to the legislature in a few years with a request for additional funding. He would certainly need a hefty study demonstrating CIRM's worth to California to support such an appeal.

Until more time passes and more data are gathered, that tome remains to be produced. Meanwhile, Deal and Baker say,

"CIRM research grants are just beginning to go out, and it would not be reasonable to expect any health benefits or therapies attributable to CIRM at this time. Making predictions about the likelihood of particular future breakthroughs for particular diseases is outside our area of expertise. It is possible that no new treatments of widespread therapeutic use will be developed, which would mean very limited or no economic benefits from improved health."

But on the other hand, Deal and Baker report,

"All told, the information available to date suggests that California is already starting to see new economic activity resulting from CIRM and that there is significant potential for additional future economic benefits."

We are certain that Deal and Baker will find ample evidence over the next few years to document CIRM's value. We hope that CIRM and Deal and Baker will share the raw data and other information with other economists as well.

Finessing the CIRM Directors' Attendance Issue

Next Monday, directors of the California stem cell agency will try once again to figure out how to work around their perennial problem of having enough directors on hand to conduct their business.

The 29-member board has regular difficulty meeting its 65-per cent quorum requirement. Chairman Robert Klein is reportedly worried that not enough members will be on hand in December to hand out many millions in additional grants.

Sherry Lansing, a CIRM director and former Hollywood film studio executive, has taken on the task of finding a work-around in her capacity as chairperson of the CIRM Governance Subcommittee.

The group initiated its effort last month. Several suggestions were made for changes in the proposed policy. However, the latest version is not yet available on the CIRM website.

The quorum issue is one created by Prop. 71, which locked into state law procedural issues that are better left to regulation, which is easier to change. Ironically, directors recently successfully opposed legislation to ensure affordable access to CIRM-financed therapies on the grounds that the bill would codify in state law matters better left to regulation by CIRM directors.

CIRM could ask lawmakers to change the super-quorum requirement but that would open up discussions for other possible changes.

The public can listen in or make comments at teleconference locations in La Jolla, San Francisco, Los Angeles and Irvine. Othere locations may be added later. You can find them on the agenda.

Poppycock and CIRM

The California stem cell agency generates a certain amount of nonsense from time to time.

Some of it comes from CIRM Chairman Robert Klein, including a comment he made to the San Diego Union-Tribune in connection with the upcoming examination of CIRM by a bipartisan good-government panel, the Little Hoover Commission.

Klein has repeatedly referred in the past to the heavy scrutiny that he contends CIRM has endured. Most recently he told reporter Terri Somers:

“It's very important that the (Little Hoover) commission recognize the exhaustive reviews we've already been through and come out of with totally and consistently extraordinarily high marks."

Poppycock, we say.

While Klein thinks CIRM has been subjected to exhaustive and heavy scrutiny, that is hardly the case. He and others who express that view really do not know what heavy scrutiny means. Think Watergate, think the ongoing national financial crisis, think the California/Enron electrical deregulation debacle, think Paris Hilton and Britney Spears, think about television news vans camped outside Klein's home should a scandal erupt at CIRM. Indeed the scrutiny of CIRM does not even go as far as the local government coverage we saw last year in a small town on the Arizona/New Mexico boundary. The local paper published every single payment by the city down to one dollar, along with the name of each recipient. In California, few would even remember the last time a story about the stem cell agency was carried on the evening television news or appeared on the front page of a newspaper.

Klein also refers to the financial audits paid for by CIRM. However, they have an exceedingly limited scope and cover such things as whether Klein provided receipts for his trip expenses and whether a reported purchase of a computer actually can be tracked to a specific computer being used in the CIRM office. Klein has additionally cited the legal challenge to CIRM's existence, which was handily rejected by the courts at every step. That, in fact, covered limited matters as well and was largely bungled by CIRM's legal opponents. The courts did not attempt to assess whether Klein and CIRM were doing their jobs well or whether Prop. 71 was useful to the people of California -- only whether the challengers had proved their case.

The courts also did not determine whether the 50-person limit on CIRM staff was appropriate. Klein now acknowledges that was a mistake on his part in writing Prop. 71, although the agency is still well below that staffing level, a matter of concern to some directors who are worried about burnout and overwork involving CIRM employees.

The state auditor did conduct a lengthy "performance audit." CIRM officially thanked the auditor for her work and made changes in its operations as a result. That audit also was limited in scope. It did not address such questions as whether the quorum requirements written into state law are hampering CIRM's mission. It did not address whether an agency such as CIRM should exist outside of any normal state government controls. It did not address the question of whether overlapping responsibilities between the chairman and president create an inherent, unhealthy conflict that will continue to generate problems as it has in the past.

Back in 2004, backers of human embryonic stem cell research could not find either private or federal funding for their cause. So they ventured into the political arena with Prop. 71 to seek funding from the California public. But playing with the people's cash carries trade-offs. One is public scrutiny that can be uncomfortable.

We recognize Klein's need to posture publicly about CIRM and its actions. Such performances are not uncommon among both politicians and business executives, who believe their main responsibility is to fend off perceived attacks on their endeavors.

However, the Little Hoover Commission is a solid state organization, not given to flip analysis or decisions. Its inquiry should result in recommendations that will help to improve CIRM's operations and deliver more value to the public. Corporations pay millions of dollars to outside consultants to examine their operations and make recommendations that maintain their competitiveness and efficiency. The Little Hoover Commission is going to do that for free for CIRM. The process will certainly make some uneasy, just as it does in the private sector. CIRM should welcome this as a healthy opportunity that could create momentum for needed improvements.

CIRM's Financial Immunity

Just how protected is the California stem cell agency from the financial travails of the state of California?

Almost entirely.

During the legislative/gubernatorial budget stalemate earlier this year, nursing homes, hospitals and other private sector providers to the state did not get paid by the state for nearly three months. Some firms went out of business or had to borrow money because the state could not pay its bills.

That did not happen with those providing services to the state stem cell agency because of its unique and unprecedented constitutional position, which assures that it has cash regardless of how the rest of the state is affected.

CIRM's extraordinary position was mentioned briefly last month at the agency's Governance Subcommittee meeting.

John M. Simpson of Consumer Watchdog asked,

"Is it the case that because of the state's budget crisis, the vendors have not actually gotten paid? Does that affect the (grant) checks actually being handed over?"

CIRM Chairman Robert Klein responded,

"No, it doesn't. our funds are segregated from the state budget."

All of which raises significant governmental policy questions. One can make a case that stem cell research cannot proceed properly if it is cut back every time the governor cannot muscle a budget out of lawmakers. But should researchers be treated differently than hospitals? Should they be treated better than needy children dependent on state aid?

Locking up public money in special funds is part of the state's budgetary problem. However, there are no good answers that will satisfy everybody concerning the creation of special pockets of cash for what almost everybody agrees are worthwhile endeavors, whether they are stem cell research or special programs for gifted children.

Nonetheless, it is likely to appear a bit unseemly to a good segment of the public for the stem cell agency to hand out tens of millions of dollars while California is so hard pressed that it may have to ask the federal government for a $7 billion short term loan so that it can pay its bills.

Arnold Nixes CIRM Legislation

Despite overwhelming bipartisan legislative support, California Gov. Arnold Schwarzenegger has vetoed legislation aimed at ensuring affordable access to stem cell therapies as the result of taxpayer-funded research.

His veto message said:

"This bill (SB1565)undermines the express intent of Proposition 71 in two ways: it eliminates the priority for funding human embryonic stem cell research and it places an unnecessary restriction on the Independent Citizens’ Oversight Committee authority to adopt intellectual property regulations that balance patient need and essential medical research.

"More than seven million voters were very clear when they passed Proposition 71 in 2004. They wanted to fund embryonic stem cell research that the federal government wouldn’t. They also wanted to make sure that California receives a return for its historic investment in medical research. Both of those important goals are already being accomplished.

"This bill does nothing to advance the will of over seven million voters. For this reason, I am unable to sign this bill."

Only a handful of lawmakers voted against the bill, which required 70 percent approval of both houses of the Legislature.

Stem Cell Blog Takes a Break

The California Stem Cell Report will go dark for the next couple of weeks while we do a little island-hopping in the Sea of Cortez. More exciting stem cell tales are expected to be forthcoming then, although there is a saying among cruising sailors – "We have no plans, and we are sticking to them." Meantime, watch for items from John M. Simpson on the Consumer Watchdog site.

Ballot Blowback: The Klein Quorum Petard

Prop. 71 created the California stem cell agency nearly four years ago, but the ballot measure also plays hob with CIRM from time to time.

One of those occasions came last week at its directors meeting in San Diego, which barely mustered the 65 percent quorum necessary to conduct its business legally. It was not the first time. Maintaining a quorum is a regular problem at meetings of directors and their subcommittees. Thursday's meeting also set a record for the largest percentage of alternates filling in for directors. Five alternates were there, 28 percent of the 18 directors in attendance.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., was there and wrote about the events on his organization's blog.

"Chairman Bob Klein is so worried about the possibility of no quorum at the December meeting when the board is slated to award a substantial number of grants, that he announced he will schedule a special ICOC(directors) meeting in about 30 days to adopt the procedures to allow telephone participation in December.

"All of this trouble comes from what I believe is a paranoid fear that stem cell research opponents could somehow gain control of the board and wreak havoc with a mere simple majority quorum requirement.

"And so Proposition 71 passed with a super-majority rule that Bob Klein wrote into it. And now he is often hoisted by his own petard."

The super-majority quorum also does something else. It gives a minority on the board tremendous power. All a handful of persons – maybe even one -- have to do is walk out of the room, and CIRM directors are legally paralyzed.

There is definitely an attendance problem at CIRM meetings, which stems in part from the membership of the board of directors. Prop. 71 stipulates that 29 persons serve on the board, which makes it difficult to schedule meetings at mutually convenient times. It also stipulates that the most of the directors come from top executive positions at other enterprises. These are folks who are more than busy. They already have important responsibilities at their own organizations, and naturally those come first.

The use of alternates to fill in for the directors additionally nullifies some of the justification for the selection of the directors. That argument contends that deans of medical schools and the chancellor of UC Berkeley, among others, should serve on the board because they bring skills and knowledge from their own positions to make good decisions on stem cell matters. So the fact that their organizations also stand to benefit to tune of hundreds of millions of dollars should be put aside. But if they are sending alternates, the state does not receive the benefit of their expertise. That said, at least some of the alternates more than hold their own and make significant contributions at the meetings.

So why not just change the law to reduce the quorum? Easier said than done. Under Prop. 71, that requires another super-majority vote – in this case, a 70 percent vote of both houses of the legislature and the signature of the governor. That is an exceedingly difficult task. Nonetheless some legislator might be willing to carry the bill. But to win approval, Klein might have to do some horse-trading that would affect other aspects of CIRM in ways that do not find his favor. In other words, it is a legislative can of worms that Klein probably does not want to open.

Predictive Toxicology and CIRM's Priorities

Looking for a key to the CIRM cash drawer?

There may be several in a document recently posted on the agency's website. The 35-page piece is called "Stem Cells in Predictive Toxicology." It grew out of a CIRM workshop back in July.

One section of the report targeted "areas of priority" for CIRM, which said in part,

"For these methods to become mainstream, it will also be necessary to develop improved protocols for cell growth, maintenance, and differentiation, and to define in vitro phenotypes that correspond to relevant human endpoints. A second critical goal will be the derivation of iPS cell lines from a diversity of individuals, including those with known disorders or disease susceptibilities, to
allow for the development of comprehensive, customizable approaches for correlating toxicity mechanisms with variable individual response."

The report also said,

"These 'clinical trials in a dish' could help inform and optimize further trials in humans. Workshop participants agreed that the use of stem cell-based assays in the process of drug discovery has the potential to reduce late-stage attrition, to lower the cost of drug discovery, and to help understand the genetic contribution to drug susceptibility."

It continued,

"Workshop participants were extremely enthusiastic about the potential for stem cells to provide superior model systems for predicting toxicity in drugs and environmental pollutants. While technological and cultural hurdles exist, experts were optimistic that these could be overcome. Even in a limited capacity, incorporation of human cell based assays into drug discovery efforts and environmental toxicity screens offers the potential for safer, more customized medicines, reduced costs of drug discovery, reduced or refined use of animal models, and more accurate risk assessment for environmental pollutants."

CIRM Grantees Get More Than Cash

Earlier this month, CIRM grantees assembled for a two-day session to talk about their work and hear some of the leading folks in the field air their own views about stem cell research.

Those of you who did not get to attend can share a bit of the experience via a 146-page report coming out of the conference. Of particular interest are one page summaries of 129 research projects involving CIRM grantees.

There was also this from Alan Trounson, president of CIRM,

"The experiment of Proposition 71 is a critical model for funding innovation that is being closely examined worldwide as a new investment by the community in improving human social values and health....

"Investment in quality of life through the support of stem cells and regenerative medicine needs to be demonstrated to have been a wise choice. Our grantees are the vanguard of this investment in science, and we need to be able to clearly demonstrate the benefits this investment will make in the general community. In the end this will have to be shown as treatments in the clinic in the form of new drugs, cell therapies, gene therapies, tissue engineering etc., for some of the most debilitating diseases and injuries presently costing the society and individuals dearly."

UC Davis Moves Ahead on $62 Million Stem Cell Lab

Some nostalgic folks in Sacramento were perturbed years ago when the California State Fair abandoned its location in a seedy part of the river city.

Last week, however, one of those old Fair buildings officially began a transformation into a state-of-the-art stem cell research laboratory.

The occasion was the groundbreaking Friday for the $62 million project, partially funded with $20 million from CIRM. It was the first-groundbreaking for a CIRM facility in Northern California.

CIRM Chairman Robert Klein was on hand along with Claire Pomeroy, vice chancellor for Human Health Services and dean of the medical school at UC Davis. Pomeroy also is a member of the CIRM board of directors.

The 92,000-square-foot lab is scheduled to be completed in late 2009. Jan Nolta, professor of hematology and oncology and a regular attendee at CIRM meetings, is director of what is officially tagged the "UC Davis Institute for Regenerative Cures, a facility supported by the California Institute for Regenerative Medicine."

The first groundbreaking for a CIRM-funded facility occurred earlier this month at USC. The Trojan marching band high-stepped through those proceedings. There is no word on whether the Aggie band turned out for Pomeroy's affair.
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San Diego's Sanford Center to Seek 16 Disease Team Grants

In the unlikely possibility that you missed it, the San Diego stem cell consortium announced earlier this month that it snagged $30 million from a South Dakota philanthropist, T. Denny Sanford(pictured).

That will come on top of the $43 million the consortium received from CIRM to build its new lab on a bluff overlooking the Pacific Ocean. Some 245 scientists will work out of the facility.

However, Heather Chambers of the San Diego Business Journal reported that the group is still $27 million shy of collecting enough cash to build and equip the $115 million, four-story facility. It is scheduled to be completed by December of 2010, or the consortium could face penalties from CIRM. Construction is scheduled to begin in January.

Terri Somers of the San Diego Union-Tribune put together a piece on the donation and its impact. Buried in her story was an interesting note on the consortium's plans to seek as many as 16 grants from CIRM in its upcoming disease team grant round. CIRM appears ready, however, to limit applications to four from an individual institutions.

The consortium consists of four organizations, Scripps, Salk, Burnham and UC San Diego. Based on Somers' story, it appears that the consortium plans to have each organization apply for four grants, which could run to $20 million or so each. Currently CIRM is allotting about $210 million, not including loans, for its disease team grants.

Obviously, there is not enough money for 16 grants at $20 million each for the San Diego quartet/consortium, not to mention other likely competitors from San Francisco to Los Angeles.

But San Diego's ambitious plans provide some indication of how tough the competition is getting for California stem cell cash.

We should also note that the consortium is no longer known as the San Diego consortium. Its name is now the "Sanford Center for Regenerative Medicine, an Institute of the California Institute for Regenerative Medicine." We should additionally note that Sanford, owner of First Premier Bank, has joined a number of other wealthy individuals who are making hefty contributions to help advance science and medicine. Sanford Center officials say more donors are welcome to help make up the $27 million shortfall, although raising cash in the current economic climate may be a tad tough.

California Efficiency Panel To Scrutinize CIRM

California's Little Hoover Commission has decided to examine the state's $3 billion stem cell research effort.

Stuart Drown, executive director of the group, said the first hearings will be held Nov. 20 with another likely Jan. 22. In response to a query from the California Stem Cell Report, Drown said,

"The commission has been asked to look at governance and transparency, but may look at other issues as well, including a discussion on ways to insure the most effective use of bond money. The commission currently is involved in a study of bond oversight. In setting up the study of the state's stem cell research activities, the commission has directed staff to ensure the study adds value to the current discussion through constructive recommendations and avoids merely repeating work done by others."

CIRM is funded through California state bonds at a total cost to the state of $6 billion. Funds are routed directly to CIRM, bypassing both the governor and the legislature.

The impetus for the study came from legislation by Sens. Sheila Kuehl, D-Santa Monica, and George Runner, R-Antelope Valley, requesting the inquiry. The primary focus of the bill, however, is affordability of stem cell therapies funded by CIRM. The Little Hoover Commission, a bipartisan group, is charged by law with promoting "efficiency, economy and improved service" in California state government.

Writing on his organization's blog, John M. Simpson, stem cell project director of Consumer Watchdog of Santa Monica, Ca., said,

"Some stem cell research advocates have lobbied hard against the (Kuehl) bill, partly because they objected to a Little Hoover Commission study.

"I don't get it.  We are talking about $6 billion in public money. What could be more important than ensuring it's spent fairly and so that all Californians benefit from the research they're paying for?

"You'd think anybody who wants that would welcome an outside independent look and suggestions on how to make things work better.  The good news is no matter what Gov. Schwarzenegger does with SB1565,  the Little Hoover Commission has decided CIRM is worth a study."

SB1565 is now on the governor's desk.

CIRM Directors Approve Biotech Loan Policy

Directors of the California stem cell agency Thursday gave the go-ahead to an outline of a far-reaching, $500 million biotech loan program, but many details remain to be worked out.

In apparently the only news story on the subject, Terri Somers of the San Diego Union-Tribune reported this morning:

"Biotechnology companies are expected to rush for the funding because most are perpetually hunting for money from investors. Banks typically won't fund biotech companies because they have little to no revenue, little collateral and a high risk of failure."

She wrote,

"'I am very excited,' said Babak Esmaeli-Azad, chief executive of San Diego-based DNAmicroarray, which is working on stem cell therapies. 'It's a step in the right direction.'

"Stem cell therapies are expected to come to market through companies, not research institutes. The institutes have very little capacity and experience in clinical trials or the process of turning a successful scientific experiment into a pill or injection that might eventually make it to market."

Somers said that companies have become "restless and skeptical" regarding funding from CIRM.

"'We've been waiting for a turning point for (the institute) to become very friendly and accessible by the corporations,' Esmaeli-Azad said. 'This may be that turning point.'"

Under the terms of what was approved by CIRM directors Thursday, Somers said there will be two types of loans:

"One will require the company to pay back the money no matter what happens, including failure of the product or company.

"The second does not require the company to pay the money back unless it has sufficient revenue. This type of loan would have a higher interest rate and give an equity stake to the state, which it would cash out if the product is successful."

The stem cell agency also issued a press release on the biotech loan program. It said that directors had approved a "program" and a "policy" for biotech loans. The news release declared that it was "an integral part of CIRM’s effort to strengthen California’s biotechnology industry and create collateral economic benefits such as high-paying jobs and increased tax revenues."

Somers reported that CIRM plans to "to add further detail to the policy as it receives comments and advice from industry executives, finance experts and the public." One of the key questions involves the use of delegated underwriting a la Fannie Mae as well as administration of the loan program, not to mention conflict of interest issues.

Earlier CIRM said that the plan would not be in place until December, when directors were expected to take final action. An additional hearing on the plan had been announced within the next 60 days by the CIRM Finance Subcommittee.

Klein and Sheehy Tangle Over Lucrative CIRM Contract with Former CIRM Director

Should a former director of the California stem cell agency be paid hundreds of thousands of dollars by the agency after he leaves the board?

That was the essential question at a meeting last week of the CIRM Governance Subcommittee, which is a subset of the 29-member board of directors.

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., wrote about the session on his organization's blog in an item headlined, "Tempers flare at stem cell subcommittee meeting."

Simpson alluded to the "old boys network" at CIRM and wrote,

"Stem Cell Board Chairman Bob Klein and member Jeff Sheehy clashed heatedly over a former board member's highly paid consultancy to the state agency at a recent  meeting of the Governance Subcommittee.

"I lit the spark on Friday when I asked what Dr. Richard Murphy was doing under the description of "Strategic Consulting" for a fee $155,000 from April 15 through Dec. 31.  Was he revising the California Institute for Regenerative Medicine (CIRM) strategic plan?  That was a large part of it, President Alan Trounson said."

Simpson also wrote:

"'You don't like Dr. Murphy,' Klein told Sheehy. 'Let's stick to the mission.'

Sheehy said that 'he deeply resented' the suggestion his concern stemmed from 'personal animus.'  

"'We need a more open process,' he said."

Murphy served as interim president of CIRM last year and part of this year under a $300,000, six-month contract. The consulting contract followed.

In another item, Simpson also discussed the proposal by the Governance Subcommittee to deal with CIRM's longstanding difficulties in securing quorums necessary to do business legally. Ironically, the subcommittee meeting itself did not have a quorum.

More Info Emerges on CIRM Biotech Loan Effort

The California stem cell agency has posted important details of its proposed $500 million biotech loan program, including the size of loans and information on possible interest rates.

The agency is considering $200 million in loans for the disease team grants that are scheduled for 2009 with individual loans exceeding $25 million. More details are also available on the delegated-underwriting proposal that CIRM is borrowing from Fannie Mae.

The "loan program overview" can be found here and loan portfolio information can be found here.

In addition to consideration at tomorrow's directors meeting in San Diego, the CIRM Finance Subcommittee will hold a hearing on the program within the next 60 days. It is scheduled to be approved by directors in December.

Big Bucks Giveaways and CIRM Integrity

Handing out hundreds of millions of dollars behind closed doors naturally leads to concerns about fairness and conflicts of interest.

Especially when it becomes personal, such as when a scientist's career and the economic well-being of his family, his business or his employer may be at stake.

It is even more complicated when those who make the de facto decisions (the scientific reviewers) are competitors in the field, albeit from a different state, and when their economic and professional interests are cloaked by secrecy.

Then couple all that to a public agency with $3 billion to hand out for research in a controversial area of science. The agency itself has its own important needs and responsibilities. Above all, it must maintain public trust and its own integrity. It must have candor from its reviewers and protect them from unwarranted attacks and retribution from disgruntled applicants. It must somehow provide the reviewers with the incentive to come to the Golden State and work hard to hand out tons of cash that they will not have a chance to compete for. Beyond that, the agency must maintain the confidence of applicants and potential applicants. They must feel that they are being treated fairly regardless of the final outcome on their bids for the golden ring.

No small challenge. But one that faces the California Institute of Regenerative Medicine.

CIRM's 29 directors will wrestle with the task once again on Thursday in San Diego. They constitute the body that has the legal authority to make the grants. However, scientific reviewers, during closed door sessions, have already scored each grant and made their decisions on funding, which are presented to CIRM directors. The CIRM board almost never overturns a positive or negative decision by reviewers.

But state law permits any person to appear before directors and make a pitch, including rejected grant applicants. When that first occurred last January, it made some directors more than uneasy. It happened again in June. In an effort to bring order to the process, CIRM staff has come up with a plan to deal with requests for reconsideration of negative application reviews.

The proposed "policy regarding extraordinary petitions" for "special consideration" calls for them to be submitted to CIRM at least five days before the directors meeting at which the application will be considered for funding. The policy declares that the petitions should only be submitted under "extraordinary circumstances" and be limited to no more than three pages. They will be posted on the CIRM website. Material may be cut from the public versions to "protect personal, proprietary or confidential" information.

The staff will evaluate the petitions and be prepared to make a recommendation to the board of directors. However, the evaluations will only be presented if requested by a director.

The policy is slightly modified from the plan offered at last month's directors meeting. CIRM President Alan Trounson then described the proposal as a method for handling "extraordinary requests for reconsideration," declaring,

"What we don't want to do is have a raft of complaints that might topple continuously into the press, which would be very damaging, I think, for the reviewers."

CIRM's outside counsel, James Harrison of Remcho, Johansen & Purcell, of San Leandro, Ca., said,

"We have tried to develop a policy that strikes a balance between the right of applicants to communicate with the board and the necessity for thorough, fair, and thoughtful consideration of applications."

John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., had his own perspective:

"It is a way to bring order to the chaos of people who decide to, in fact, lobby the board, which ...people are entitled to do."

CIRM Director Sherry Lansing, a former Hollywood studio executive, told Simpson his was an "incredibly clear" summary.

This week's proposed policy has its flaws. It does not make clear what "extraordinary circumstances" justify an appeal, a word that CIRM does not want to use to describe the petitions. Applicants certainly will ask for a definition of "extraordinary circumstances" from CIRM before filing a petition. The proposed policy also appears to allow considerable fiddling with the public version of the petition, permitting material to be censored on the basis of overly broad, undefined terms such as "personal" and "confidential." The proposed policy additionally does not specify that the petitions must be posted publicly before the CIRM directors meeting.

Both CIRM management and board members have acknowledged the review process is not perfect. The proposed policy is a good first step in beginning improvements that will both help CIRM with its mission and protect the organization's integrity as well.

CIRM Spending Plans, More Details on Biotech Loans and Delegated Underwriting,

Directors of California's $3 billion stem cell research agency meet this Thursday to finish up work on its faculty grant program, deal with a proposed $500 million biotech loan program and act on a new plan to handle requests for reconsideration from rejected applicants.

The board will also discuss just how much cash is currently available for grants. A CIRM document shows that currently the agency has committed $1 billion through June 2009 and only has $1.9 billion left to give away. Its plan now calls for the research funding effort to continue through the first half of 2017.

The CIRM document also appears to project a $510 million "profit" from its biotech loan plan. CIRM plans to plow back the "profit" into more grants or loans. The agency has said defaults could be as high as 50 percent in the loan program. It has yet to lay out in a straightforward manner how it can generate "profits" of $510 million with default rates of that magnitude.

The CIRM board will also discuss the "business review" plan for the biotech loan program. It proposes contracting with delegated underwriters, mentioning their use by Fannie Mae. The business review plan cites the Fannie Mae delegated underwriting system for multi-family housing as a success as compared to "recent problems" with the single-family program.

Not provided in the business review plan are details about how the underwriters would be selected(other than issuing an RFP), how they would be paid and what provisions would be in place to avoid conflicts-of-interest in what is a tiny financial world.

The compensation plan is important because if it gives an underwriter major incentives for qualifying businesses for loans, it could also be encouraging lax financial standards.

The biotech loan policy can be found here. Missing is background material on "loan portfolio policies."

Also on the agenda for San Diego are names for CIRM funded labs, a petition to designate a "covered stem cell line" as acceptably derived and a project to consolidate nonprofit and for-profit IP regulations. Discussion of the $210 million disease team RFA is also scheduled, a session not to be missed by those who plan to vie for the cash.

As of this writing, three days prior to the directors meeting, background material is available on their agenda on five of the 13 substantive, public items to be discussed.

Coinciding with the meeting is the first ever Stem Cell Awareness Day. In a news release, CIRM President Alan Trounson said the day, which involves his old employer, Monash University, in Australia, is designed to "inform a broad audience of patients, clinicians, students and the general public about some of the many advances in the field that California is helping to accelerate through CIRM funding.”

The day will include a Webcast from the CIRM meeting location in San Diego involving juvenile diabetes presentation but not of the directors meeting itself. A live, interactive online Q&A is scheduled for the afternoon with California research scientists taking questions.

CIRM will preview its new Web site offline at the directors meeting. The new site is expected to be available to the public in October. Other events are scheduled in California, including ground-breaking at UC Davis on its new stem cell lab, which is partially funded by CIRM, and the launch of a new, stem cell Web site at Stanford.

You can find a full rundown on the day's events here along with instructions on how to log on for the Internet activities.

CIRM Grant Review: Questions About Fairness, Conflicts and Accuracy

Here is the text of article by yours truly concerning questions about fairness in the CIRM grant review process that ran Sept. 18, 2008, in BioWorld Perspectives.
Following this item, you can find related posts, including the text of responses we received from businesses that we queried and links to related CIRM and other documents.

CIRM Grant Controversy Continues with Publication of Biotech Company Names

By David Jensen

BioWorld Perspectives Contributing Writer

Editor's note: David Jensen publishes the California Stem Cell Report and has written nearly 2,000 items on the California stem cell agency since 2005. Jensen's Perspective last month, "Red Flags Remain in Plan to Help Biotechs," dealt with the controversy surrounding CIRM.

Questions are being raised about the fairness, conflicts of interest and even the accuracy involved in the grant review process of California's $3 billion state stem cell research program, the San Francisco-based California Institute for Regenerative Medicine (CIRM).
While nearly all of the rejected applicants remain silent, a handful of stem cell companies have publicly discussed their concerns.
Complaints About CIRM Add up in 2008
One California stem cell company, Advanced Cell Technology Inc., of Los Angeles, has complained about a financial conflict of interest on the part of one unnamed reviewer. Others have complained about inaccuracies in reviews, the failure to provide an opportunity to rebut reviewers and the lack of a grant resubmission process like the National Institutes of Health. Privately, more complaints are aired about reviewer conflicts and a tilt at CIRM toward funding "big guns," well-established senior scientists.
Last month, Alan Trounson, president of CIRM, told the agency's directors that "large numbers" of rejected applicants have contacted the agency concerning reconsideration of their rejected applications or related issues. But when asked more recently for specifics, a spokesman for the agency minimized the number, saying it amounts to no more than 10 on any round of grants.
CIRM acknowledges its review process is not perfect. It is working on a formal procedure for requests for reconsideration, which will come before directors on Sept. 24 or 25. But basically, CIRM sees no fatal flaws in the making of its grants, which now total $614 million over three years. When CIRM's review process came under fire last month, Trounson told directors, "Scientists, like other people, kind of believe [if] they live in California [they] should get a grant, [that] CIRM was set up to give them grants."
The agency first had to deal with public complaints from a rejected applicant last January. Questions of fairness surfaced more visibly later in the year, the first time that businesses have been permitted to apply for CIRM cash.
Out of the 18 applications from the private sector only one business, Novocell Inc., of San Diego, has received a grant. In the case of Novocell, it amounted to $50,000 to help plan for a much larger disease team grant.
Watchdog Publishes Names of Biotechs That Likely Applied for Grants
Until recently, the names of the rejected business applicants were unknown. CIRM's policy is to withhold the identities of all rejected applicants. But last month, Consumer Watchdog, of Santa Monica, Calif., a nonprofit group that has followed CIRM for nearly three years, disclosed on its website the names of the 18 businesses that filed letters of intent (LOI) to apply for grants.
The list reads like a Who's Who of California biotech companies. According to John M. Simpson, Consumer Watchdog's stem cell project director, firms that filed an LOI to apply for the Disease Team Planning Grant were: Advanced Cell Technology; BioCardia Inc., of South San Francisco; DNAmicroarray Inc., of San Diego; Genomics Institute of the Novartis Research Foundation, of San Diego; International Stem Cell Corp., of Oceanside; Novocell; Panorama Research Inc., of Mountain View; RegeneMed Inc., of San Diego; StemCyte Inc., of Covina; and Stemedica Cell Technologies Inc., of San Diego.
The companies that filed an LOI to apply for New Cell Lines Grant were: Advanced Cell Technology; BioTime Inc., of Alameda; California Institute of Molecular Medicine, of Ventura; Cascade Life Sciences Inc., of San Diego; DNAmicroarray; Gene Security Network Inc., of Redwood City; International Stem Cell.; Raven Biotechnologies Inc., of South San Francisco; RegeneMed; the Supercentenarian Research Foundation, of Inglewood; VistaGen Therapeutics Inc., of South San Francisco; and WaferGen Biosystems Inc., of Fremont.
Simpson noted that some companies earlier had "groused" about their treatment. And he asked, "Did the companies get a fair shake or not?"
We queried all 18 concerning the grant reviews. Fifteen did not respond to the questions. One said it was satisfied, one said anonymously it was quite dissatisfied, and one was withholding judgment until the next round of grants. At least three additional companies, however, have publicly told CIRM directors that they have issues with the agency's review process.
Alan Lewis, CEO of Novocell, responded to our query, saying he was pleased with the process. Lewis said his company has "developed a relationship with CIRM" and tried to help it in formulating the grant process. He noted that "very few" industry representatives often attend CIRM meetings.
At the August meeting of CIRM directors, Steven Kessler, a scientific director at Advanced Cell Technology, said that his company had filed information that one of the reviewers had a financial conflict of interest as the result of ties to another company. Kessler did not identify the individual or spell out the exact nature of the conflict. He told directors that he was told by the agency "the way CIRM interprets its own conflict of interest policy, the example I gave you was not a conflict of interest."
Kessler also cited the low success rate of business applications as "clear evidence of bias."
At the same meeting, William Adams, chief financial officer of International Stem Cell, indicated that CIRM directors were excessively worried about "ticking off" scientific grant reviewers with public criticism of the quality of their reviews.
At the June directors meeting, Kenneth J. Woolcott, chief business officer of Cascade LifeSciences, commented on the process but did not seek an appeal, having been told none was available. Shortly after Woolcott left the meeting, a reconsideration letter from an applicant from a nonprofit was read by a director, resulting in the approval of that grant.
Woolcott was not pleased when he learned about the situation. He then sought reconsideration of the Cascade application, alleging that its review included factual errors involving a "fundamental oversight." He also said reviewers did not adhere to the published review criteria. CIRM rejected Cascade's request. (See links below for more information.)
In response to our query, another California company researcher, who asked for anonymity, said reviewers' comments on his application were "ridiculously incomplete" and "misinformed." "You can tell when people really didn't read it," this scientist said.
Leading to Positives for Future Stem Cell Grants?
Consumer Watchdog's Simpson said that the publication of the names of rejected businesses has had a healthy impact. (In fact, BioWorld Today reported last month that the biotech industry is poised to receive more CIRM funding in the future.)
"I'm not advocating that anybody be required to divulge proprietary information, but the application process needs to be more transparent," he said.
"My publishing the names of the applicants has enabled them to communicate with one another, compare notes and figure out how to voice what appear to be very legitimate concerns about the grant-making process.
"I'm by no means a big fan of the biotech industry, but I think this is a case where awards have been tilted toward academia. There ought to be a level playing field."
Interested in reading more? Here are some links to documents relating to the California stem cell agency and complaints about fairness in its grant review process:

• Consumer Watchdog Identifies Businesses Rejected for CIRM Grants
  
• CIRM's August Proposal for a Reconsideration Procedure (this draft is likely to be modified before CIRM's meeting later this month)
  
• Transcript of August 13, 2008, CIRM Meeting
  
• Cascade LifeSciences Seeks Reconsideration
  
• Text of Cascade's Reconsideration Letter
  
• CIRM Response to Cascade Complaints
  
• Transcript of June 26, 2008, CIRM Meeting Involving Cascade

Text of Responses From CIRM Applicants

For the piece in BioWorld Perspective on the CIRM grant process, we queried 18 companies identified by Consumer Watchdog as filing letters of intent to apply for grants.

Three responded directly to the questions, one off the record. A fourth also responded but said it was wrapped up in other business and could not answer the questions at this time.

Here are the questions we asked and the responses from the two companies that responded on the record.

1. Was your company satisfied with the fairness of the CIRM grant review process and the accuracy of reviewer comments? If not, why not?

2. Do you have suggestions for improving the process and improving CIRM's engagement with industry?

3. Does your firm have plans to apply for a CIRM grant in the foreseeable future?

4. Are there any other comments you would like to make on this subject?

Alan Lewis, CEO Novocell,
Question one:

"Yes we were and have developed a relationship with CIRM whereby we participate in their meetings and have tried to help them during the formulation of the grant process."

Question two:

"I believe it is up to the industry to participate actively in meetings to share their issues and concerns. there are often very few industry representatives at such meetings."

Question three:

"Yes---we will submit a disease-focused grant(diabetes) and we have also submitted 2 tool grants. We intend to collaborate with academic scientists to take advantage of the skills and experience of stem cell scientists in California. The disease grant will allow all grant participants to help create a cell therapy for insulin requiring diabetics using human embryonic stem cells as the source. This program will benefit greatly by academics who are leaders in diabetes research translation synergizing with the Novocell development effort to create this first-in-class product."

Question four:

"Since funding of stem cell research is very difficult---both government and venture capitalists have avoided this space--the CIRM funding is incredibly important to ensure this important research is both funded and encouraged to develop innovative products not being pursued elsewhere. Patients around the world will be the beneficiaries of these transforming products."

Dawn Applegate, President RegeneMed

"CIRM seems to be responding to the issue (meetings of Sept 12). We will hold our evaluation until the next round of funding results. The numbers speak for the last round: 50 and 59 applicants, 13 and 10 from industry, 16 and 22 awards, on a percentage basis with academics and industry being treated equally, industry should have received 7-8 of the total 38 awards; the question is were the applications equally competitive."

Our thanks to those who responded. A public dialog is healthy and can help meet the needs of all interested parties, including CIRM.