Lure of the Sea

The siren call of the sea is being heard once again. We are raising anchor to continue our journey to Panama from our current location in Puerto Jimenez in Costa Rica. The California Stem Cell Report will go dark, so to speak, until we find another Internet connection, which could range from a few days to about two weeks. Rest assured – or not so assured – that postings will resume in the not-too-distant future.

CIRM Directors Tackle Grant Appeal Problems

The longstanding issues involving appeals of grant reviewer decisions at the $3 billion California stem cell agency will be taken up once again April 26 by the directors' Science Subcommittee.

The agenda also includes possible action on a bank for reprogrammed stem cells.

No details are yet available on any of the proposals to be considered, but potential applicants for grants and loans would be advised to watch the appeals changes closely.

California Stem Cell Report Cited as One of 25 Best Stem Cell Blogs

The California Stem Cell Report has been named one of the 25 best stem cell blogs by a web site targeting readers interested in nursing education.

In preparing the list, nursingschools.net said,

"Whether you’re pursuing a career in medicine or science, if you’d like to keep up with these advances, then blogs on the issue are one of the best tools out there. Here, you’ll find a collection of blogs that provide all the information you’ll need to stay on top of the latest in stem cell discoveries."

The web site said of the California Stem Cell Report,

"See how stem cell politics are affecting research and development in California through this blog written by journalist David Jensen."

Also mentioned were blogs with California ties and one from the California stem cell agency. CIRM Research Results, produced by Amy Adams, was the only government blog cited. Nursingschools.net said Adams' report "shares" CIRM's "latest discoveries and political battles."

Two blogs by scientists were among the 25 including one by Paul Knoepfler of UC Davis and another Robert Lanza of Advanced Cell Technology of Santa Monica, Ca.

Of Knoepfler's work, the web site said, "The UC Davis School of Medicine maintains this blog, providing readers with information on everything stem cell as well as other science-related issues."

Of Lanza, the web site said, "Dr. Robert Lanza is a scientist and professor working on issues related to cell technology and engineering; his blog will provide readers with some insights into the field and his research."

Another blog cited was Ben's Stem Cell News. Nursingschools.net said, "Ben Kaplan is a (California) stem cell activist, blogger and a biotech professional who shares his thoughts and the latest information on stem cells here."

Kaplan appeared in campaign ads in 2004 for Prop. 71, which created the California stem cell agency.

California Stem Cell Agency Plans a More Than 16 Percent Budget Boost

The California stem cell agency is proposing an $18.5 million operational budget for the coming fiscal year that will include a more than 12 percent increase in staff and reflect the rising costs of monitoring more than 400 grants and loans.

The agency did not disclose the size of the increase for the spending plan compared to actual spending projected through the end of the current fiscal year June 30. CIRM only offered a comparision to spending that was approved last June ($16 million). The proposed budget is up 16 percent from that figure. The agency, however, has been running behind the approved spending levels so the actual budget increase is likely to be substantially higher than 16 percent.

In documents prepared for a meeting Tuesday of the CIRM directors' Finance Subcommittee, the agency's staff briefly noted that a cash crunch could occur in the coming fiscal year if the state does not sell additional bonds, the only real source of funding for CIRM's $3 billion effort. A continued suspension of bond sales is likely this year because of the state's financial crisis.

The budget document said,

"If no new bonds are sold during FY 2011-12, expenditures could reach the 6% (legal, Prop. 71)cap by June 2012. However, plans are progressing to request authorization for new bond sales this year."

No further information was provided concerning the bond situation, although it is to be considered as a separate item at the meeting next week.

The budget document said CIRM is "well aware" and "sensitive" to California's fiscal crisis and said its spending plan is aimed at controlling spending.

The document said it reflects "continued increases in the programs, activities and overall workload at CIRM, and it mirrors changes in the number of fulltime employees, which is expected to grow to 56 from the target for FY2010-11 of 50 (an increase of 12%)."

With $1.2 billion committed out of $3 billion, CIRM cited a significant increase in workload, including a 47 percent hike in "payment transactions" for grants and loans from 663 to 975 and a 21 percent increase from 467 to 563 in scientific progress reports and "prior approval requests" for changes in awards.

Eight new positions are proposed, up from the current staff level of 48(a 17 percent increase). One is a "director of public communications" in the office of the chair of the agency. Two others are an information technology director and a special projects officer to help CIRM President Alan Trounson develop new initiatives and deal with biotech industry executives.

The largest budget category is for compensation, $10.3 million. The second largest category is outside contracting at $3.3 million. "Direct legal costs," many of which are contracted, are scheduled to hit $2.3 million. The agency is heavily reliant on outside contracting because of the former legal limit of 50 on the size of its staff. That limit was removed by legislation that went into effect at the beginning of the year.

The spending plan shows that CIRM is still wrestling with its critical grants management system after several years of work. It proposes spending $933,977 on the effort this year out of a total information technology budget of $1.3 million. It is not clear whether that figure includes the hiring of an information technology director, as proposed elsewhere in the spending plan.

The office of the chair, which includes both outgoing Chairman Robert Klein and co-vice chair Art Torres, is budgeted for $3.9 million. Again no comparision is available to estimated spending for this year, but the figure is up from the $3 million approved last June for the current year. Klein says he will leave his post this June. No successor has been chosen. The largest increases in Klein's budget appear to be in compensation (new hires) and outside contracting.

The Finance Subcommittee is expected to forward its recommendations on the budget to the full CIRM board at its meeting in early June.

The budget information from CIRM is coming much earlier than it has in the last several years, a significant improvement in an important aspect of the agency's openness and transparency. It also provides directors and the public with ample time to examine the proposal, raise questions and make suggestions for changes.

The public can take part in the meeting at locations in San Francisco (3), Pleasanton, Palo Alto, Irvine, La Jolla and Berkeley, Specific addresses can be found on the agenda.

California Stem Cell Directors to Huddle on New Chair Candidates

A key group of directors of the California stem cell agency will meet
Tuesday behind closed doors to discuss candidates to succeed Robert Klein as chairman of the $3 billion research effort.

The Governance Subcommittee has scheduled the session although it does not have any official candidates for the post. Only four state officials – the governor, treasurer, controller and lieutenant governor – can nominate candidates for the position, which could pay up to $400,000 annually for parttime work. None have done so.

The four officials have said they will not make nominations until perhaps as late as May 23.

Over the last couple of months, however, CIRM directors have indicated that they might have names that they would like to discuss, in addition to meeting with individuals to see if they have an interest in serving.

Presumably next week's meeting will take up such matters.

Sailing with the Tide

are once again hoisting sail to move farther south (actually east and south) towards Panama. That means a hiatus in fresh items on the California Stem Cell Report at least until we find another Internet connection. How long will the break be? That is unknown but probably not more than three weeks. Less if we find an Internet cafe in one of the villages along the coast of Costa Rica or Panama.

Stem Cell Agency Moving Faster on Budget Preparation

It is fair to say that the $3 billion California stem cell agency is not a spendthrift organization – at least as far as its operational budget goes.

That's the money for salaries of its 48 employees, outside contracts (the second biggest item in the budget), monitoring grant performance and so forth. The agency is limited by law to spending only six percent of its $3 billion for overhead, an amount that many of its directors think is low, perhaps even inadequate. The limit was enshrined in state law by Prop. 71, the measure that created the stem cell research program in 2004.

That said, the agency has had difficulty in presenting a coherent proposed budget to its directors in a timely fashion. It has given them proposals that do not compare actual spending to proposed spending and which produce dubious numbers for the amount of increased spending. The proposed budgets, which are for fiscal years that begin July 1, have come late and have not allowed time for thoughtful examination by the CIRM governing board. (See here, here and here.)

This year promises an improvement. CIRM President Alan Trounson presented a schedule for the budget at the board's March meeting. It calls for presentation of the budget to the directors' Finance Subcommittee later this month with presentation to the full board in May. That is a full month ahead of what occurred in the past several years. It also allows time for the directors to ask for revisions that could be presented to them in June, before the beginning of the new fiscal year.

Michael Goldberg, a venture capitalist and chairman of the Finance Subcommittee, said he expects the panel to meet on April 19 to consider Trounson's proposed spending plan for 2011-12. Spending fror the current year was originally budgeted at about $16 million. Spending for the coming year should show increased costs for staff, given the new hires expected this year and the addition of a new vice president for research and development. Increased pension contributions for the agency staffers will also boost compensation expenses.

John Robson, vice president for operations, additionally told directors in March,

"Our number of progress reports has increased significantly, our grant and loan payments, those things impact significantly on the grants management office, the science office, and the finance office. The increase in work has gone up 25 to 35 percent just in the last year."

He continued,

"We also have a couple of one-time items that are going to be reasonably expensive. We have a performance audit that was stipulated by (state Senate) bill 1064. That's budgeted at about 250,000, and then there's the Institute of Medicine audit that the board has been working on, the chair's office, and we've budgeted 400,000 for that for this year with the balance...in the next fiscal year's budget."

Also likely to be discussed at the April 19 meeting is the near certainty that the state will not issue bonds until sometime in 2012, a situation that could bring CIRM perilously close to a serious cash flow crunch.

The agency's only source of funds is money that the state borrows (bonds). CIRM says it has sufficient cash on hand to meet existing commitments until June of 2012, but a delay in issuance of bonds could mean a slowdown in CIRM's aggressive grant schedule or worse.

In response to a query, Goldberg said.

"We are watching the situation closely."

iPSC Bank and Imaging Technology Sessions Offered by CIRM

The California stem cell agency this spring will be looking into both imaging technology for cellular therapies and ethical/policy questions dealing with reprogrammed stem cells.

The iPSC session April 29 in Los Angeles involves CIRM's Standards Working Group, which makes recommendations for rules for the agency's $3 billion research program. The meeting is a continuation of last year's session dealing with the banking of iPSCs. The goal of the meeting this year is to "recommend operational criteria that will assist CIRM in developing a request for proposal for the iPSC bank."

The draft agenda includes consent standards, withdrawal of subjects from research, transfer of materials and communication of results. The agenda said,

"The generation of iPSCs for disease modeling may results in published findings of interest to donors or individual results on research studies that would alter clinical management of donors. Under what conditions, if any, should information be returned to donors as groups or individuals?"

Coming up on May 26 is a webinar on imaging technology that will feature panelists from the FDA, the NIH and industry. Moderating it will be Ellen Feigal, formerly of Amgen but now the new VP for research and development at CIRM.

The agenda includes the "FDA’s perspective on imaging technology, the use of imaging technology in preclinical studies to assess cell fate" and an overview of existing and new imaging technology.

The webinar, which is part of CIRM's Regenerative Medicine Consortium program, is free but requires advance registration.

Look for Candidates for Chair of Stem Cell Agency in Late May

The California stem cell agency, which did not have much choice about the matter, has decided to go along with a delay in picking a new chairman for the $3 billion organization.

Outgoing Chairman Robert Klein, who is scheduled to depart in June, said the CIRM board is "amenable" to postponing until May 23 nominations to fill his shoes. Four state officials – the governor, treasurer, controller and lieutenant governor – are charged with nominating candidates for the part-time position, which could pay as much as $400,000 annually.

The CIRM board is limited to electing a chairman from those candidates, although it does not have to accept any. If the board were truly unhappy with the nominations, presumably it could designate an acting chairman or simply let the vice chairman assume responsibility in absence of a chairman. The latter action probably would not even require a vote of the board. On the other side of the coin, the officials cannot be compelled to make a nomination.

Klein's brief letter, also signed by co-vice chairman Art Torres, to the nominating officials came in response to a March 24 letter from all four officials balking at a CIRM board request 10 days earlier for nominations by April 11. The officials said more time was needed because of the importance of the position.

Klein said,

"We appreciate your desire to find a high caliber leader to replace CIRM's current board chair and the board is amendable to your proposed schedule."

Correction

The "pay plan" item on April 2, 2011, incorrectly stated that Ted Love is chair of the Evaluation Subcommittee. He is vice chair of that committee.

California Budget Mess Threatens CIRM Funding

The collapse of efforts to resolve California's financial crisis in June seems nearly certain to place the state's $3 billion stem cell research program perilously close to a serious cash crunch come next year.

The situation should come as no surprise to lame duck CIRM Chairman Robert Klein, who stunned the agency's governing board in 2009 with similar news. Additionally, in December of last year, only days after he told the CIRM directors Finance Subcommittee that no funding problems existed, Klein warned the full board that it was "essential" that the agency quickly provide assurances of "reliability of our funding."

Klein, a real estate investment banker, considers himself something of a government bond expert because of his experience with housing bonds. He says he and a handful of associates crafted the ballot initiative that created CIRM, Prop. 71, to avoid the financial vagaries that have plagued the NIH. To do that, he relied on borrowed money (state bonds), which makes everything CIRM does cost twice as much as it would on a normal basis. For example, the $20 million grant to scientist Dennis Carson at UC San Diego actually will cost state taxpayers about $40 million because of the interest on the borrowing. Interest costs for CIRM currently run $200,000 a day on the $1 billion it has borrowed so far.

Klein's plan assumed that the state would regularly issue bonds. However, beginning last January, the state suspended the sales of bonds for six months to avoid $248 million in additional interest costs. Today, the state budget remains many billions in the red, and most signs point to continuation of that bond delay decision.

Two days ago, The Bond Buyer financial newspaper reported that state Treasurer Bill Lockyer will not sell bonds until the state budget is balanced. Reporter Rich Saskal quoted Lockyer's spokesman, Tom Dresslar, as saying,

"The bottom line in terms of (revenue anticipation notes) and infrastructure bonds is the timely adoption of a balanced budget."

The California Stem Cell Report first discussed the bond sale problem on March 23. That was before the collapse of budget negotiations in Sacramento. The situation is much more serious today.

At this point, a balanced state budget is not likely to occur unless voters approve in November tax increases  – which they have previously rejected -- through a ballot initiative that is yet to be written. Even then, bond sales are not likely until sometime in 2012, according to Lockyer.

While CIRM says it has sufficient cash on hand to deal with its existing obligations until June of 2012, the agency's timetable calls for new grant rounds to continue to move forward aggressively this year and next. Extreme pressure will be felt in the treasurer's office from competing interests for urgent and early bond sales when they resume. And a good possibility exists that CIRM bond sales will not come up in the first round in 2012, assuming sales are resumed then.

On May 3-4, the 29 directors of the stem cell agency are scheduled to meet in Los Angeles. High on their agenda should be a discussion of finances and alternatives to ensure that CIRM's grant programs continue to move forward – albeit slowly -- even if bond revenues do not materialize until well into next year. Delay could be the operative response. Postponing new grant programs, RFAs for existing efforts and even payments to researchers and institutions – all could be on the table. One additional matter to discuss – designation of someone to deal with the full range of bond issues, given that Klein is leaving his post in less than three months, if not sooner.

Sacramento Bee Whacks Pay Plan for New CIRM Chair

In case you missed it, The Sacramento Bee editorialized last week about the $3 billion California stem cell agency, deploring its much-criticized, dual-CEO structure and the possibility of a $400,000 salary for a new, part-time chairman.

The March 28 editorial also caught the eye of Wesley J. Smith, a bioethicist who doesn't have much truck with the state's stem cell research program. He wrote on his blog,

"It isn’t the management structure that is so wrong about the CIRM.  It is the whole cronyism/conflicts of interest/arrogant thing.  California can’t afford the CIRM’s borrow and spend mandate when our infrastructure is collapsing and our state sinking to the bottom of a red ink Marianas Trench."

The Bee's editorial pointed to the proposal (first reported on the California Stem Cell Report March 23) by outgoing CIRM Chairman Robert Klein, a real estate investment banker, Art Torres, co-vice chairman of the CIRM and former state legislator, and Ted Love, a biotech industry executive and vice chair of CIRM's Evaluation Subcommittee, to use "private" donor funds to pay a portion of the new chairman's salary. The Bee said,

"Nonsense. It’s all public money. That board does not need a part-time chair with that kind of salary. The board should nix it at the next meeting. Having a single agency with two CEO-level salaries is craziness at any time, but especially during a deep economic downturn. The Legislature should realign the roles of board chair and agency president before this goes too far. Make it crystal clear that the full-time president manages all day-to-day operations – and that the board chair is a part-time oversight role."

The good news for CIRM in the editorial is that it drew only nine comments from readers on The Bee's Web site. All were negative about CIRM, however.

(Editor's note: an earlier version of this item incorrectly said that Ted Love was chair of the Evaluation Subcommittee.)

The Hook is Down

The California Stem Cell Report will resume postings later today from Bahia Ballena in Costa Rica. We have dropped the anchor for a few days and found an Internet connection, although it is a tad primitive. Look for an update on CIRM's looming financial problems and much more.

Hoisting Anchor

The Nicaraguan anchorage where the California Stem Cell
 Report was  based the last few weeks. Hopalong is the
name of our craft and home.

The California Stem Cell Report will be on a break for a week or two while we make a passage from Nicaragua past Costa Rica to Panama. We will resume postings when we again find an Internet connection.

Gov. Brown and Others Seek Delay in Filling CIRM Chair Position

California Gov. Jerry Brown and three other top state officials are balking at making nominations as early as next month for the new chair of the $3 billion California stem cell agency.

In a letter to the CIRM board, Brown, Controller John Chiang, Treasurer Bill Lockyer and Lt. Gov. Gavin Newsom said they wanted to wait until possibly May 23.

The CIRM governing board on March 14 asked that nominations be made by April 11. The board had approved a timetable that would have made it possible for the board to fill the slot by its meeting early in May.

CIRM Chairman Robert Klein was re-elected in December to a six-month term but has made it clear that he would prefer to leave earlier.

Here is the entire text of the letter from Brown and the others to the CIRM board:

"Thank you for your letter of March 14 regarding the nomination process and
proposed April 11 deadline for nominations for the next chair of the Independent Citizens
Oversight Committee. As your letter makes clear, this position requires a high-caliber
leader who possesses a unique executive skill set and commitment to CIRM’s important
mission. Given that, we, the constitutional officers responsible for nominating candidates,
find that a meaningful, successful search and recruitment for this role would be difficult to
complete by your requested deadline. Therefore, we propose that the deadline for
nominations be extended to no later than May 23rd, which would provide our respective
offices with up to 60 days, a more reasonable period in which to complete this important
responsibility."

State Treasurer Confirms Possible Delay in Stem Cell Bond Sales

California state Treasurer Bill Lockyer has confirmed that there is a reasonable possibility that the California stem cell agency will not be able to access new funds until sometime next year.

In a report in the Los Angeles Times yesterday, Lockyer said that sale of all state bonds could be delayed because of inaction on California's state budget woes. State bonds are the only real funding source for CIRM's $3 billion effort.

On Wednesday, the California Stem Cell Report discussed the likelhood of continued delays of state bond sales and the impact on CIRM.

The following day Tom Petruno of the Times reported,

"Without a balanced-budget deal in hand, however, Lockyer would be unlikely to try to sell bonds before the election, his office says. Even if the measure passed in November, it isn’t clear whether there would be enough time to get a deal together before the end of the year, said Tom Dresslar, Lockyer’s spokesman."

Correction

An item on March 24, 2011, incorrectly said that Duane Roth, co-vice chair of the California stem cell agency, signed the letter proposing the use of private donor funds for the salary of the new chair. The item should have said the letter was signed by Ted Love, chair of the board's evaluation subcommittee.

Papering over the Pay Problem at CIRM: When is a $400,000 Salary Not $400,000?

Three top leaders of the California stem cell agency have come up with a plan that they hope will allow CIRM to avoid the wrath of the public when its new chairman is paid a salary that could be seven times the income of an entire, typical California household.

The proposal, which has not been laid out in public, was advanced in a March 17 letter sent to the four state officials who have responsibility for nominating a person this spring to replace outgoing Chairman Robert Klein, who is a real estate investment banker. He and Art Torres, co-vice chair of the agency and a former state legislator, and Ted Love, a San Francisco area biotech executive, signed the letter.

Under terms approved last month by the CIRM board, the new chair could be paid as much as $400,000, which is nearly seven times the median California household income of $61,000. The Klein proposal calls for only $150,000 of the $400,000 to come from "taxpayer" funds. The remainder would come from so-called "private" funds donated to CIRM several years ago by philanthropists. In fact, those "private" funds are now "taxpayer" funds, just as any gift becomes the property of the recipient, and the cash is in state/CIRM coffers.

The plan also would establish a dubious precedent and raise conflict of interest questions. It would place private individuals and possibly biotech companies in the position of paying for the salaries of CIRM leaders, as John M. Simpson, stem cell project director for Consumer Watchdog of Santa Monica, Ca., pointed out.

Asked for a comment, Simpson said,

"This plan sounds like an incredibly dubious course to me. If you want to influence CIRM, just donate to the ICOC(the CIRM governing board) chair's salary. Folks used to call that bribery."

In their letter, Klein, Torres and Love wrote,

"We are...cognizant of the difficult financial situation confronting the state and the need for agencies like CIRM to ensure fiscal restraint."

They also said,

"It is very important, however, for CIRM to have the right leadership and not limit our choice to individuals who have sufficient personal wealth to serve for little or no compensation. CIRM is at a critical juncture as it moves towards the funding of human clinical trials, Given the complexity of this effort and the importance of providing rigorous overesight, it is essential for CIRM's governing board to have strong leadership."

In addition to attempting to minimize negative public reaction, the pay plan would provide political cover for the state officials nominating candidates for chair. The officials are the governor, treasurer, controller and lieutenant governor.

As Torres mentioned at the March board meeting, none of those officials are likely to be enamored of the idea of recommending somebody for a lucrative state post while state funds to aid the poor and children are being slashed in the face of California's financial crisis.

High salaries for public officials are an anathema to much of the public, which has a visceral, hostile reaction to them. That is the case whether the salaries are deserved or necessary to attract the appropriate talent. The Klein plan, however, only compounds the PR problem. Attempting to make a $400,000 salary appear to be a mere $150,000 only makes CIRM appear deceptive and less than trustworthy. That is not to mention the dubious precedent it would set for the agency by relying on private handouts for essential operations.

The pay plan has yet to be acted on by the CIRM board. The letter said it would go to the directors' Governance Subcommittee at its next meeting and then to the full board if it is approved by the subcommittee. That could take place at the May meeting of the directors.

(An earlier version of this item incorrectly said that the letter was signed by Duane Roth, co-vice chair of the agency.)

California's Bond Sale Suspension, Stem Cells and Cutbacks

Simmering beneath the surface of California's financial crisis is the possibility that the state's $3 billion stem cell agency could become a victim, waylaid as state leaders look for more ways to cut state spending.

Lawmakers and others are discussing the likelihood of a continued suspension of sales of state bonds, which are the lifeblood of the $3 billion California stem cell agency. Without the funds from the bonds, the agency has no cash for its ambitious grant programs.

Currently CIRM has enough money on hand to last roughly through June 2012 in support of existing programs, according to its top officials. But the state has suspended sales of bonds through the middle of this year. Already, the state is forking over to investors $5 billion a year in interest for all its bonds, a figure that has skyrocketed in recent years. The interest cost to California taxpayers for CIRM is roughly $200,000 a day for the $1 billion the agency has borrowed so far.

Should sales of bonds, which take months to arrange, be resumed in a timely fashion, CIRM would not be affected. However, without the certainty of cash coming in, the agency would likely delay, as a minimal response,  additional grant rounds and loans, interrupting its efforts to transform stem cell into cures.  In January 2009, CIRM directors made a move along those lines when they were surprised by a financial crunch. More drastic measures might be required if bond sales are delayed for a lengthy period.

Proposals to prolong the suspension of bond sales surfaced during budget debate in the legislature last week. In February, the state's legislative analyst also said halting bond sales was one on a list of moves that could meet the $26 billion state budget shortfall if tax extensions were not approved in June by voters. Efforts to place such a measure on the June ballot have come up short in Sacramento.

Complicating the issue is the possiblity that a ballot initiative on tax extensions would be placed before voters in the fall. The Sacramento Bee reported yesterday that Gov. Jerry Brown is considering such an effort and could announce it this week. That would raise the need for additional cuts this year in the state spending. Deferring sales of state bonds could be a relatively politically painless way of saving some money. ($248 million was the estimate for a six-month suspension.)

The possibility of a bond delay comes after CIRM Chairman Robert Klein in December warned the agency's governing board that it was "essential" that the agency quickly provide assurances of "reliabity of our funding."

He said,

"Recent applications for clinical trial rounds and the acceleration of our funding commitments on our other programs require an immediate focus on this issue, given there may not be another opportunity until late 2011 to authorize additional bond funding.”

Klein added that “our collaborative funding partner nations” would require early this year “assurances of our future performance.” 

All of the discussion concerning further delays in bond sales is cloaked in the sometimes murky politics of Sacramento and could change suddenly – for better or for worse. Nonetheless, it would behoove CIRM directors to begin examination of their possible responses if bond sales should be substantially delayed this year and next.

Trounson's Views on Grant Terminations at CIRM

The California stem cell agency and the NIH have some things in common. They both give away billions of dollars, and they both generally work outside the view of the general public.

But major differences do exist. CIRM operates on borrowed money. The NIH does not – at least nominally. CIRM operates free of legislative or meddling by the state's top official(the governor). The NIH does not. Congress and the president have full sway over the organization. Another difference involves oversight that the agencies exercise on the scientists who are beneficiaries of their largess. The NIH basically sends the money out the door and researchers do whatever they want – at least that is the view of some. CIRM, however, has actually terminated at least three grants (out of 406) from scientists who are not meeting the requirements of the grants. However, the agency has not reported since June 2009 whether additional grants have been withdrawn.

CIRM President Alan Trounson earlier this year described CIRM's efforts to ensure that researchers are abiding by the terms of their grants. He spoke at a meeting in January of the Citizens Financial Accountability Oversight Committee. The panel, chaired by the state's top fiscal officer, Controller John Chiang, is a sister organization to CIRM and is the only state entity specifically charged with overseeing CIRM finances.

Trounson made his remarks in connection with his summary of last fall's blue-ribbon external review report and its concern about lean staffing at CIRM.

Here is what Trounson had to say, according to the transcript of his remarks.

"We were going to...increase the number of scientific staff because we actually feed back on our projects. The NIH does not feed back on the projects, nor do many of the research foundations. So when we get quarterly reports or yearly reports, we're feeding back to those scientists, saying, hey, that's not what you really agreed to, or fantastic, you've accelerated....We have a one-to-one on the scientists. And if it's a company, we are making sure that they are meeting those kind of deadlines that they put in.

"That does not happen with NIH nor with many of the other funding bodies. We want it to happen. We're here for a relatively short time. Maybe they're there forever, but we want these dollars to work as effectively as possible. So we have stopped some projects. We've actually terminated them because they didn't do what they agreed to do. It's never happened with an NIH project. And you can imagine some of the senior scientists in California being told you didn't do what you said you were going to do, and we're going to take your grant away because we've given you a couple of opportunities to correct that, but you didn't. And that has happened. So we are different in that respect."

CIRM's oversight on grants is increasingly important as it ventures into clinical trials and more translational research. Terms of those grants and loans require deadlines for specific achievements and go or no-go decisions that are more commonly made by businesses than governmental agencies. With tens of millions of dollars at stake on an individual grant, the process is likely to trigger ferocious behind-the-scenes debate.

Here is more on grant terminations at CIRM.