StemCells, Inc., Still Looking for $40 Million from California Stem Cell Agency

Remember StemCells, Inc., and the $40 million it was awarded by the California stem cell agency.

The Newark, Ca., firm, founded by eminent Stanford researcher Irv Weissman, received an award of $20 million last July and then again in September. Nearly five months later, however, the stem cell agency has yet to cut a check for the company, a spokesman for the agency told the California Stem Cell Report in response to a query.

The hang-up is the $40 million in matching funds that the company promised the agency. The stem cell agency has yet to be satisfied that StemCells, Inc., can actually produce the match, although the spokesman did not offer details.

The StemCells, Inc., awards were unusual in a number of ways. It was the first time that former CIRM Chairman Robert Klein lobbied the CIRM governing board on behalf of a company(see here and here). It was the first time that the governing board approved an application that had been rejected twice by grant reviewers. It was the first time that the board said explicitly in a public session that it wanted proof of the matching funds as a condition of the award.

It was the first time that a CIRM award to a company received a careful and critical scrutiny from a major California newspaper. Michael Hiltzik, a Pulitzer Prize-winning business columnist and author, wrote in October in the Los Angeles Times that the award was “redolent of cronyism.” He referred particularly to longstanding ties between Klein and Weissman.

The CIRM board vote on the StemCells, Inc., grant in September was 7-5, which amounted to 12 out of 29 members of the board.

In December, a blue-ribbon panel of the Institute of Medicine (IOM) recommended that the agency tighten its conflict of interest standards to avoid such perceptions as have been generated by the StemCells, Inc., awards. The IOM said,

“(C)om­peting personal and professional interests com­promise the perceived independence of the (governing board), introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board.”

Concerns about conflicts of interest have long been of concern to observers of the stem cell agency for years. Indeed, the prestigious journal Nature in 2008 warned of "cronyism" at the $3 billion research enterprise.

Stem Cell Agency Chair Pressing for Consensus on IOM Recommendations

The chairman of the $3 billion California stem cell agency, Jonathan Thomas, yesterday outlined how he intends to proceed next week when the agency's governing board considers the far-reaching recommendations of a blue-ribbon Institute of Medicine panel.

Writing on the agency's blog, Thomas said,

“While some of the IOM’s recommendations are administrative in nature and can be implemented, others are much more complex and would require changes in (governing) board policy or legislative changes.” 

Jonathan Thomas, chairman of CIRM governing board at far right. Art
Torres (center), co-vice chair and former state Democratic party chairman,
who would  play key role in dealing with lawmakers. Robert Klein is at the
 left in this 2011 meeting, Klein's last as chairman of the agency and the one
 in which Thomas was elected chairman. 

He continued,

“My goal is to strive to reach consensus on a course of action on the 23rd. However, if the board isn’t able to choose a course of action at this time we will continue the conversation and bring it up at future board meetings until we reach agreement.”

It is worth noting that Thomas did not mention the possibility of having to ask the people of California to amend the state constitution, which would require a statewide election. Opponents to change at the agency have used that possibility to discourage action. (See here and here.) An election would be costly, politically difficult and could open the door to additional unwelcome changes at the eight-year-old research enterprise.

Thomas' desire for a consensus among the 29 board members – instead of a simple majority – could be a stumbling block as the board becomes snarled internally, perhaps for months or more. The board normally meets only about once a month and has a full slate of regular business on those occasions. The agency will run out of money for new grants in less than four years, and action on the IOM recommendations seems a necessary prelude to winning continued financial support.

While four years would appear to an ample period of time, making the sort of changes the IOM recommends would require legislative action, which probably would take a minimum of a year. Timing is important as well. The current leaders in the state Senate and Assembly will be termed out in 2014. Starting all over with novice leadership, changes in key committee chairmanships and so forth would make the task even more difficult. Then there is the need to address strategies for continued financial support. Should the agency seek a new statewide bond measure (the current funding mechanism)? If so campaign committees need to be formed, electoral strategies planned and tested and tens of millions of dollars raised for campaign expenses. If private funds instead are to be raised to the tune of hundreds of millions of dollars(the agency spends about $300 million a year), such an effort would also require considerable time. To keep the funding pipeline full, all of this should be completed well before the money runs out in 2017.

Dilly-dallying this year in drawn-out, fruitless debate over the IOM proposals would be an unfortunate beginning should CIRM directors actually want to continue the existence of the organization.

In his blog item, Thomas sounded this final note.

“It’s likely the debate will be passionate – everyone involved in this work cares deeply about it – and there will undoubtedly be disagreements, but ultimately we all share the same goal, a desire to make sure that whatever we decide helps make the stem cell agency even stronger and more effective, and is in the best interests of the people of California.”

UC Davis Stem Cell Researcher: 'Ivory Tower' IOM Recommendations Harmful to California Stem Cell Agency

The $3 billion California stem cell agency has funded in the neighborhood of 500 to 600 scientists and institutions, reviving and starting careers and stimulating construction of $1 billion in new research labs around the state.

None of those recipients, as far as we know, has come forward to comment publicly on the sweeping recommendations by Institute of Medicine for changes at the agency. Until today, that is.

UC Davis researcher Paul Knoepfler, who may be the only stem cell scientist in the United States with a stem cell blog, weighed in with his thoughts today, which do not align with those of the blue-ribbon IOM panel.

“Harmful” is one word that Knoepfler, who is a stem cell agency grant recipient,  used to describe the recommendations. He predicted “extremely negative repercussions” that “would actually make CIRM less effective and less responsive to patients and California citizens.”

He wrote that the IOM report, which will come before stem cell agency governing board next week “...seems more like an ivory tower intellectual exercise than an operative, realistic guide to a dynamic agency that must operate in the real world.”

He defended the CIRM governing board, which came under fire from the IOM for conflicts of interest. Institutions linked to board members have received about 90 percent of the $1.7 billion that the board has awarded, according to compilations by the California Stem Cell Report. The IOM said,

“Far too many board mem­bers represent organizations that receive CIRM funding or benefit from that funding. These com­peting personal and professional interests com­promise the perceived independence of the ICOC, introduce potential bias into the board’s decision making, and threaten to undermine confidence in the board."

Knoepfler said,

“(The) IOM itself admits there is no evidence that any conflicts of interest have ever guided (the agency's governing board) decisions. Not one example.”

Knoepfler also wrote,

“Interestingly, highlighting the extremely sensitive nature of this issue, while I’ve been talking with many bigwigs about this, at this point no one is wiling to go on the record with an opinion about it except one courageous soul, Don Reed (see his piece here).”

There is a reason for that. The IOM is the most prestigious organization of its sort. Its studies are described as the gold standard. And it has a rareified membership that many scientists seek to join. So few are ready to give the organization a smack on the nose. Likewise, California researchers are loath to publicly criticize the stem cell agency because it holds the strings to the purse that finances their careers.

California scientists, however, should be asking themselves a bottom-line question. Do they want to see the stem cell agency continue for another 10 to 20 years? Under the best of circumstances, that may be unlikely given the other pressing needs that the state faces. But if CIRM directors do not forthrightly address the recommendations of the IOM panel, the fate of the stem cell agency is exceedingly uncertain.

Patient Advocate Says IOM Recommendations Would 'Destroy' California Stem Cell Agency

California's “beloved,” $3 billion stem cell research program should not be altered despite recommendations from the most prestigious scientific organization of its kind. So says longtime patient advocate Don Reed of Fremont, Ca.

Reed says the recommendations by the Institute of Medicine (IOM) are a “threat” that would “destroy” an agency that “is like nothing else on earth.” Reed is urging other patient advocates to turn out at next week's critical meeting of the stem cell agency's board and lobby against alterations in how it does business.

Reed and CIRM's Amy Adams
World Stem Cell Summit photo

Reed is a fixture in stem cell circles nationally and in California and has been a regular at the stem cell agency's public meetings since 2004. He is also vice president of Americans for Cures, a private stem cell lobbying group created by Robert Klein when he was chairman of the stem cell agency,  formally known as the California Institute for Regenerative Medicine(CIRM).

Reed has written twice about the IOM report on his blog with duplicate publication on the Huffington Post. Yesterday, he said IOM “defies” the voters' will when they created the stem cell agency in 2004. On Dec. 19, he said the $700,000, 17-month study was “staggeringly misguided.” He wrote,

“If its recommendations were enacted, they would silence stem cell patient advocate involvement, eliminate public debate on funding proposals, and delegate the real decisions to secret proceedings by an out-of-state-controlled board.”

Reed described the stem cell agency as “fantastic” and wrote,

“So why mess with it, in such a brutal and insulting manner?”

This writer has known Reed since the early days of the stem cell agency and respects him. But in this case he has many of his facts wrong. To mention just a few key points: Patient advocates would not be silenced; their role would be changed. Public comment would not be eliminated. Scientists could still appeal negative decisions by reviewers to the full board if they so choose, although the “extraordinary petition” process would be eliminated. The voters' will would not be defied; they provided for a mechanism for making changes in the stem cell program.

While Bob Klein has not been heard from publicly on the IOM report, some of Reed's comments reflect Klein's past positions against altering the agency. Klein, an attorney and real estate investment banker, might well be considered the father of the agency. He directed the writing of the 10,000-word measure, Prop. 71, that created the program and wrote much of ballot initiative himself. The initiative contained a detailed description of the qualifications for the chairman, which fit only one person in California. It was no surprise when he won the post.

In years past, Klein has been extraordinarily protective of the ballot measure, at one point boxing in the board on earlier proposals for changes that he disliked and that the IOM report now echoes.

In 2010, he was the prime advocate for commissioning the IOM report which he expected to serve as the basis for continued funding of the agency. It will run out of cash for new grants in 2017.

To keep the money rolling in, Klein said the IOM report would constitute a “gold standard” that would generate increased enthusiasm for the research.

According to the transcript of the Aug.18, 2010, governing board meeting, Klein declared,

“(We will) never convince the people that are adamant against us. But for the public and for the constituent groups that are reasoned and prepared to look at evidence, this is a very important validation that they can look to to separate out what is a false claim from real performance.”

Also writing yesterday about the IOM study was Bradley Fikes of the San Diego U-T, the dominant daily newspaper in that area.

He summarized Reed's latest item as well as this on the California Stem Cell Report yesterday. Fikes plans to file his own story within the next few days.

Feel free to file your own comments by clicking on the word “comment” below or with the stem cell agency at info@cirm.ca.gov. Anonymous comments are permitted on this blog.

Live Audiocast Available for Next Week's CIRM-IOM Meetings

The California stem cell agency will provide a live audiocast of next week's critical discussions of action on the sweeping recommendations proposed for the agency by the Institute of Medicine.

Instructions for hooking into the telephonic arrangement can be found on the agendas for Wednesday and Thursday. Also expected to be posted soon on the Wednesday agenda are recommendations by CIRM Chairman J.T. Thomas.

The audiocast will only provide the opportunity to listen and no opportunity to provide testimony. If you are interesting in making suggestions or comments ahead of the meeting, email them to info@cirm.ca.gov. The public can also testify at the board meeting.

The meeting is scheduled for the Claremont Hotel in the Berkeley hills across the bay from CIRM's San Francisco headquarters.

California Stem Cell Face-Off: CIRM Directors Wrestle with Tough IOM Recommendations

Two days next week at the posh Claremont Hotel in the Berkeley hills could settle the fate of California's $3 billion stem cell agency.

At 9 a.m. next Wednesday, the governing board of the state research effort will begin a critical, two-day public session. On the table will be the $700,000, blue-ribbon report from the prestigious Institute of Medicine (IOM). The study recommends sweeping changes in the structure and operations of the California Institute of Regenerative Medicine (CIRM), as the stem cell agency is formally known.

The IOM report alone poses major challenges for the agency. But the recommendations are freighted with even more significance. Below the surface lies the hard fact of CIRM's dwindling resources and possible demise. In less than four years – without either renewed public support or private contributions – the research effort will begin a shriveling, downward spiral.

Claremont Hotel

The IOM report places a special burden on the agency governing board. The board paid the IOM to evaluate its performance. In 2010, then CIRM Chairman Robert Klein trumpeted the value of an IOM study, saying it would serve as a springboard for a new, multibillion-dollar state bond measure for the agency(see here and here). Given the state's difficult financial condition – not to mention the position of potential private sector investors – winning approval of that kind of investment will be more than difficult. 

California's major newspapers already have editorially backed the IOM proposals. Indeed, if the directors choose to ignore the major IOM recommendations, they will hand opponents a devastating weapon, one that could be used to convince voters to reject any proposal for continued funding. The board would also give private investors more major reasons to say no to CIRM pitches for cash.

Under Klein's leadership, the 29-member board has rejected similar proposals for changes in the past. When the IOM presented the study to the board just last month, the reception was not much different. Several board members bristled. One influential board member, Sherry Lansing, chair of the University of California board of regents, said the directors' “hands are tied” because some of the recommendations might require a vote of the people. Her comments echoed similar statements from Klein in 2009, when he said board members would violate their oath of office if they supported recommendations for changes that he opposed.

The IOM discussion in December, however, was relatively brief and less than definitive. Klein has been off the board since June 2011, replaced by Los Angeles bond financier Jonathan Thomas, who is regarded as a welcome change by a number of board members.

Nonetheless, the recommendations of the IOM could mean that some members of the board would lose their seats; others would lose important roles in the grant-award process or within the agency itself. Conflict of interest rules would be tightened. In some ways, the board would lose power, which would be shifted to the president. The board would no longer vote on individual applications – only a slate recommended by reviewers. Applicants for CIRM awards would be directly affected, being barred from making the sort of direct and public appeals that clogged the CIRM board meetings last year. And that would be just the beginning.

Thomas, the CIRM chairman, is expected to make his recommendations for action on the report, although they have not yet been posted on the CIRM web site. Under what might be considered “normal” leadership, Thomas would be testing sentiment among board members via personal conversations and phone calls. However, in California that would be illegal – a violation of open meeting laws that bar what are called “serial meetings” at nearly all public agencies.

Thomas' task is not easy. Rounding up a majority vote for anything significant among 29 strong-minded individuals is not simple. But it is even more difficult when facing a board that has a tradition of consensus management and oversight.

The site of next week's meetings is interesting. The nearly 100-year-old, iconic Claremont hotel has a troubled financial history. It was up for sale for $80 million last spring but there were no takers. In the early 20th century, the property on which it is located was lost and won in a checkers game in Oakland, or so the story goes.

The stakes are also high for the California stem cell agency. Moves next week by directors could easily determine whether CIRM becomes nothing more than an interesting scientific footnote or establishes a path that will lead it to long-lasting leadership in regenerative medicine.

Nature Biotechnology: California Stem Cell Agency Receives 'Stinging Rebuke'

The headline this week in Nature Biotechnology read: “IOM smacks down California Institute of Regenerative Medicine.”

The story by Senior Editor Laura DeFrancesco said that the $3 billion California stem cell agency “received a stinging rebuke of much of the way it has been carrying out its business by a group of independent reviewers.”

At the same time, DeFranesco wrote that the blue-ribbon, Institute of Medicine panel “praised the courage and vision of the individuals who spearheaded the program as well as those toiling in the CIRM office in San Francisco.”

The Nature Biotechnology piece covered familiar ground for many readers, summarizing the IOM's sweepingrecommendations last month, including those dealing with the built-in conflicts of interest on the agency's 29-member governing board.

DeFrancesco wrote that is unclear whether the agency will move to adopt any of the recommendations from the panel, many of which have been rejected in the past.

Some members of the CIRM governing board last month bristled at some of the recommendations. The board is scheduled to discuss the IOM report, for which it paid $700,000, at a public meeting Jan. 23 in Berkeley. Patient advocates are already organizing a turn-out to lobby against some recommendations.  

Roman Reed is Stem Cell Person of 2012; Leigh Turner Runner-up

Roman Reed, a Fremont, Ca., patient advocate, this week was named Stem Cell Person of 2012 by the Knoepfler Stem Cell Lab at UC Davis, which cited Reed for energizing a new generation of advocacy.

Roman Reed (left) and Paul Knoepfler
Knoepfler Lab photo

UC Davis stem cell scientist Paul Knoepfler awarded Reed $1,000 from his personal funds. The ceremonial check appears to be close to four-feet long in a photo taken in Knoepfler's lab.

Knoepfler wrote on his blog that Reed made a “tremendous difference” in 2012. The researcher said,

“One of the most notable was catalyzing the TJ Atchison Spinal Cord Injury Research Act in Alabama, which provides $400,000/year in funding for research. Of course, TJ and many others who helped make this possible also deserve great credit and have my admiration, but Roman provided key leadership. Here in California, Roman’s Law supported its 11th year of grants all eligible for all forms of stem cell research. Roman informs me that it funded $749,00 overall and approximately $200,000 in stem cell funding. 

“In addition, Roman in 2012 mentored and energized a whole new generation of advocacy from young, energetic leaders: TJ Atchison, Katie Sharify, Richard Lajara and Tory Minus.”

Knoepfler personally made the decision on the award, but also conducted an advisory poll that Reed won. Knoepfler wrote,

Leigh Turner
U of Minn photo

“Only 6% behind Roman was the amazing activist Ted Harada followed by Roman’s dad the remarkable Don Reed, the wonderful Judy Roberson, and the super Katie Sharify nearly all tied for third. Next after them was the relative new kid in stem cell town, Leigh Turner.”

Knoepfler named Turner, an associate professor at the Center for Bioethics at the University of Minnesota, as the official runner-up in the contest, No. 2 behind Reed. Knoepfler wrote,

“Leigh took the courageous, outside-the-box step in 2012 of contacting the FDA to investigate Celltex when he perceived patients could be at risk. As “thanks” for his action, he was put under enormous pressure and there was talk of possible litigation against him. Pressure was applied to his employer, the University of Minnesota. We’ll never know for sure, but from everything that I know I believe that Leigh’s actions directly led to prompt FDA action, which otherwise might not have happened at all or until much later. In my opinion, Leigh’s act of courage, helped make hundreds of patients safer in a direct way and indirectly may have set a higher standard for the field of stem cell treatments.”

BioTime Stock Jumps 22 Percent in Two Days in Wake of Geron Deal

The stock price of Biotime, Inc., of Alameda, Ca., shot up more than 12 percent today following the announcement of a complex deal that will give it the stem cell assets of Geron Corp., the first firm to launch a clinical trial for an hESC therapy.

Geron stock price Jan. 2-8
Google chart

BioTime stock closed at $3.88, up 43 cents or 12.46 percent. That followed a 9.6 percent gain yesterday. Geron's stock closed at $1.63, up three cents or 1.9 percent.

News coverage of the deal was light with our tracking showing only one story so far today on The Scientist magazine web site.

BioTime Buys Geron's Stem Cell Assets, Including hESC Clinical Trial

Geron Corp., which pioneered the first clinical trial of an hESC therapy, today sold its stem cell business to another San Francisco Bay Area firm whose two top executives were once CEOs at Geron.

Michael West
BioTime photo

The total value of the complex deal was not clear from the public statements released by Geron and the acquiring firm, BioTime, Inc., of Alameda, but an unidentified outside investor is adding $10 million to transaction.

In a telephone interview this evening, Michael West, CEO of BioTime, said that as a result of the deal his firm will hold 600 patents and patent applications involving stem cells. He said the aggregation should help in attracting financial interest in the firm and its efforts.

West founded Geron in 1990. BioTime Acquistion Corp., the BioTime subsidiary that is picking up the Geron assets, is headed by Tom Okarma, who was Geron's CEO from 1999 to 2011.

After Okarma left the firm in 2011, Geron abruptly jettisoned its stem cell business along with the clinical trial. Geron has been looking since then for a buyer for the assets.

Tom Okarma
Geron photo

Only a few months prior to the Geron decision in 2011, the California stem cell agency had signed a $25 million loan agreement with Geron to support the clinical trial. The company paid back with interest the amount of the loan that it had received.

Information from the two companies did not specify whether BioTime will begin seeking additional participants in the clinical trial. Nor did BioTime indicate whether it would seek additional funding from the state stem cell agency.

However, West said during the telephone interview that he has an “open mind” about working with CIRM. Last year, agency officials indicated an interest in continuing to support the clinical trial. West said BioTime had already hired some employees that were laid off by Geron, including its patent attorney. He said that he hoped to reassemble at least part of Geron's now scattered stem cell team.

According to the Geron press release, when the deal is officially concluded in September, “it is anticipated that Geron stockholders would own approximately 21% of BAC, BioTime would own approximately 72%, and a private investor would own approximately 7% after an additional $5 million investment in BAC.”

For its new operations, BioTime has leased space in Menlo Park that Geron once used for its stem cell business.

Both firms are publicy traded. BioTime's stock price closed at $3.45 today and had a 52-week high of $6.35 and a low of $2.67. Geron closed at $1.60 and had a 52-week high of $2.99 and a low of 91 cents.

Here is a link to an article in the San Francisco Business Times about the deal. Here are links to the BioTime press release, a BioTime FAQ and the Geron press release.

Reverse Engineering Grandpa

Stem cells are rarely the subject of cartoons, but one popped last week from Bizarro.

The cartoon appeared in the San Francisco Chronicle and elsewhere, including the Bizarro web site. The image was of a petri dish in a lab with tiny maternal speck giving parental advice to an even tinier speck: "You can be anything you want to be when you grow up." Artist Dan Piraro said the cartoon was his favorite of the week because of its “strangeness.”

Piraro wrote on his blog,

“To use a term common in the vernacular of geneticists, it’s creepy cool.”

The cartoon did not differentiate between embryonic and adult cells, much less reprogrammed adult cells. Using reprogrammed cells in the cartoon would have been even creepier and cooler, giving new meaning to the 1947 song, “I Am My Own Grandpa.”(See here and here.)

(A nod to "Bob" for calling our attention to the cartoon.)

Feigal Interim President at Stem Cell Agency

The $3 billion California stem cell agency has a new CEO – at least until early March – when Alan Trounson is scheduled to resume his fulltime duties.

Ellen Feigal, vice president for research and development, is the interim president at the agency while Trounson is in Australia. Trounson left California Dec. 20.

Trounson told the board last fall that he would be reducing his time at work to 50 percent while he is in Australia. Trounson, who was recruited from Australia to head CIRM, said he wanted to spend more time with his family. Trounson's wife and 11-year-old son live in Australia.   

Going Dark for Holidays

There will be no stem cell excitement on this web site until after the turn of the year. We are taking some time  off. Have fine and happy holidays.

San Diego Newspaper Calls for Major Changes at California Stem Cell Agency

The San Diego U-T today ran an editorial that was headlined “Stem cell research institute must fix itself.”

The editorial was written in response to findings by the Institute of Medicine that the $3 billion California stem cell should make sweeping changes to deal with issues ranging from conflicts of interest to management structure.

The San Diego U-T editorial came as part of a unanimous reaction so far from California newspapers.

The San Diego paper said,

“We hope we are wrong in thinking that, given the number of times the same criticisms of CIRM have come up over the past seven years, the agency doesn’t really take them seriously.

“If that is the agency’s attitude, it could well be a fatal error. CIRM has enough money remaining from the original $3 billion to continue awarding research grants for another four years. But it will either have to go back to California voters in 2014 or 2016 for another bond issue to continue its operations or find a different source of funding.

“Whichever CIRM decides, whoever is asked to foot the bill, either taxpayers or the private sector will demand transparency and accountability. We hope CIRM can demonstrate it.”

Boxing in the California Stem Cell Board

Robert Klein is much admired for his prodigious efforts on behalf of stem cell research, including his service as the first chairman of the $3 billion California stem cell agency.

Klein was adept at many tasks, such as directing the ballot campaign that resulted in passage of Proposition 71 in 2004 and creation of of the agency. One of Klein's less publicly recognized skills was putting the governing board of the agency in a box from time to time.

The 29 members of that board could well be headed for another box – this time in connection with their position on the Institute of Medicine's sweeping recommendations for major changes at the stem cell agency.

Here is how that could work based on a similar situation in 2009 involving Klein and the Little Hoover Commission, the state's good government agency.

Klein did not welcome the inquiry by the commission, which was requested by state lawmakers who had butted heads with Klein. He knew that the commission would come up with recommendations that he would find odious.

So even before the Hoover report was released in its final form, Klein had the board's outside counsel, James Harrison, prepare a legal memo on a draft version of the study. Harrison's memo said many of the most far-reaching recommendations of the commission would require a vote of the people – a more costly and unlikely proposition than a vote of the legislature.

Harrison's memo was dated June 23, 2009. The commission report was released June 26, 2009. On June 30, 2009, Klein warned directors in an email that support of some of the proposals would violate their oath of office. The first time a subcommittee of directors had to a chance to react publicly came on July 16, 2009. The full board did not have the Hoover report on its agenda until Aug. 6, 2009. By that time, they were thoroughly boxed in.

Their choices were minimal, even if they disagreed with Klein. To do anything other than go along with him would mean rejection of a 10-page legal opinion from Harrison, which could be interpreted as no-confidence vote on Harrison and possibly Klein. Board members were not interested in losing Harrison, who has been valuable asset to the board since day one. Overthrowing Klein was even less likely in 2009.

Harrison is currently revisiting his 2009 memo in the wake of the Institute of Medicine recommendations, which echo some of the major Hoover proposals. The board has also scheduled a workshop for Jan. 23 that will discuss the IOM proposals.

If Harrison produces another legal memo that is as explicit as the 2009 document, CIRM directors will have few choices.  The best procedure may well be for Harrison to continue his work on the memo until after the Jan. 23 meeting. Directors could then decide on initial steps in connection with the IOM recommendations and ask Harrison how they can proceed legally, although the task is really more of a political challenge than a legal one.

Directors paid $700,000 for the IOM's evaluation and advice. It is a prestigious body with virtually no critics in the scientific community. It would be odd, to say the least, for CIRM directors to now reject major recommendations from the blue-ribbon panel only because the proposals might require a statewide vote. The response is likely to be from some: Well, stem cell directors, let's have a statewide vote, and we expect you to support the IOM changes if you plan to seek additional state funding. 

Placing another stem cell measure on the ballot -- with or without related additional funding for the agency -- would bring into play a host of issues, including possible elimination of the agency. Not to mention disturbing existing stakeholder relationships and raising uncertainty in the scientific and biotech business communities. 

Directors believe the agency has made a major contribution both to California and to science. So does the IOM. The directors need to move forward on the IOM recommendations if they are to continue their research efforts beyond 2017, when cash for new grants runs out.  And putting the board in a box is not the best way to give them the room they need to maneuver. 

Exploring the Straw Man Argument Against IOM Reforms at California Stem Cell Agency

Constitutional objections to some of the Institute of Medicine's sweeping recommendations for changes at the $3 billion California stem cell agency amount to little more than a straw man, at least based on a legal memo produced earlier by the agency.

The legal objections to structural reforms at the agency were initially advanced in 2009 when the stem cell agency was fighting an unwelcome analysis of its activities by the state's good government agency, the Little Hoover Commission. The objections were voiced again at a meeting earlier this month by some governing board members, particularly Sherry Lansing, who is also chairwoman of the University of California regents. Her comments came within minutes of the start of the Institute of Medicine's (IOM) presentation to the board.

She said directors' hands “are tied” because of requirements in Proposition 71, the ballot initiative that created the stem cell agency, which is formally known as the California Institute for Regenerative Medicine(CIRM). While Lansing did not elaborate, some of the initiative is written into the state constitution, which can only be amended by a vote of the people. However, Proposition 71 can also be amended by a 70 percent vote of each house of the Legislature and the signature of the governor, which is no small task to achieve.

The 2009 legal memo (see the full text below) dealt with the recommendations of the Little Hoover Commission, some of which were cited and echoed by the IOM. The legal memo contended that the legislature was barred from making major changes in the structure of the stem cell agency governing board because the changes supposedly would not “enhance the ability of the (agency) to further the purposes of the grant and loan programs.” The argument was that only the people could make “non-enhancing” changes. The vague “enhancement” requirement was written into Proposition 71 by its authors, one of whom is James Harrison, the outside counsel to the board, who was also the lead author on the 2009 memo. Harrison is revisiting the supposed constitutional issues in the wake of the IOM study.

However, the objections cited in his earlier memo are dubious and easily overcome. The meaning of “enhance” is so vague as to permit wide interpretations. Certainly, removing public suspicion about conflicts of interest would seem to help move the agency forward. Straightening out the muddled management structure of the agency, with its overlapping responsibilities for the chairman and president, would certainly seem to enhance the functioning of the agency. Assuring that the governing board has the full ability to exercise strong oversight over the conduct of the agency would certainly seem to be an enhancement and long overdue.

At least that is what the most prestigious body of its sort says. The Institute of Medicine studied the agency for 17 months under a $700,000 contract with CIRM. The IOM's charge was to evaluate the performance of the agency and make recommendations for improvements. The IOM recommendations echoed findings not only of the Little Hoover Commission, but some in two earlier studies also funded by the agency.

For CIRM directors now to reject the IOM findings and turn away would be to indicate that their earlier admiration and respect for the IOM was something of a sham or, more likely, now inconvenient.

As for removing ambiguity about what does or does not enhance the agency's mission, the 29-member board could simply adopt a resolution declaring that all the IOM recommendations would enhance the CIRM mission.

One of major obstacles to acting on the earlier recommendations for changes was Robert Klein, the first chairman of the agency board. Klein, an attorney and real estate investment banker, also directed the writing of Proposition 71 and wrote portions of it himself. He would often make numerical code citations to the initiative during agency board meetings.

Klein is now gone from the board, leaving in 2011 at the end of his term. He was replaced by Jonathan Thomas, a Los Angeles bond financier, who has ushered in a new and different era at the stem cell agency. Some might say a more reasonable era. He says he and governing board take the IOM study seriously. 

The report is scheduled for discussion Jan. 23 at a public workshop at the Claremont Hotel in Berkeley, Ca., the day before the regular board meeting. .

The IOM's recommendations have won theeditorial endorsement of all the California newspapers that have so far written about them. The newspapers believe that the proposals would indeed enhance the agency's mission and are, in fact, necessary if the agency is to survive beyond 2017, when the money for new grants runs out.

Directors of the stem cell agency are currently mulling the future of their efforts. If they are to be successful in raising additional hundreds of millions of dollars – be they private or public – the directors must confront the findings of the IOM in a forthright manner. And they must move to dispel the cloud that now hangs over the stem cell agency.

(Editor's note: The full text of the 2009 legal memo can be found below. Also below is another related legal memo from Americans for Cures, a stem cell lobbying group sponsored by Robert Klein at the same time he was chairman of the stem cell agency. Despite the language on the Americans for Cures memo, it is a public record. It became a public document when Klein submitted it to the Little Hoover Commission.) 

Legal Memo from California Stem Cell Agency on Little Hoover Recommendations 2009

Legal memo from Americans for Cures regarding the Little Hoover Commission Report 2009 

Balloting Begins on Stem Cell Person of the Year

The nominations are in. Voting has begun, with about 1,000 ballots cast so far. But only one vote truly counts. That belongs to Paul Knoepfler, who is running the The Stem Cell Person of the Year contest and will pony up $1,000 of his hard-earned cash to honor the winner.

On Monday, Knoepfler announced 16 finalists out of 30 nominees. They range from scientists to patients to advocates. Voting began instantly and will continue until Dec. 31 at 11:59 p.m. Votes will count for something, but Knoepfler makes it clear that they are only advisory. He makes the decision.

This is Knoepfler's first year at the contest. The UC Davis stem cell researcher, patient advocate and blogger wants to recognize someone who made a difference and took some risks in doing so.

You can find the entire list of candidates on Knoepfler's blog, but we wanted to note that they have a father and son competing against each other – Don Reed and his son, Roman. (Could be tense around the holiday tables in the Reeds' households.) Also on the list is Jeanne Loring of Scripps, whose nominator said engages the wider community with great effectiveness. I once heard Loring say that every stem cell researcher should have a spiel that could be delivered in five minutes in a taxi and that would not only explain stem cell research, but persuade the cab driver of its virtues.

All of the nominees have much to recommend them. Knoepfler will be chewing his fingernails before this is all over.  

California Editorial Unamity: Stem Cell Agency Needs Revamp

With the addition of another editorial this week, reaction among California newspapers so far has been unanimous that the $3 billion California stem cell agency should heed the sweeping recommendations of the prestigious Institute of Medicine.

The Riverside Press-Enterprise added its voice yesterday, declaring,

“Good intentions do not justify poor practice.”

Like others, the newspaper said that the agency “needs to revamp its governance structure to avoid potential conflicts of interest and boost public confidence in the agency.”

The Riverside paper focused on the conflicts of interest at the organization, which has seen about 90 percent of its funding go to institutions with ties to directors, but also supported other recommendations, including elimination of the dual executive arrangement at the research effort. 

The editorial said,

“An agency spending Californians’ money has no business being cavalier about good government practice and ethical safeguards — no matter how promising the potential therapies might be. The stem-cell institute is not a private fiefdom, but a taxpayer-supported undertaking. Yet many on the stem-cell institute’s board objected this month to the report’s recommendations.

“The agency also said that Prop. 71’s provisions mean that enacting many of the proposed fixes would require either a supermajority vote of the Legislature or another ballot measure. That prospect should warn Californians about the dangers of voting for complex, costly, politically driven initiatives that have little to do with fundamental state duties.

“Still, the stem-cell agency cannot just sit on these recommendations without damaging its credibility. The search for medical breakthroughs does not justify ignoring vital safeguards for spending taxpayer dollars.”

For a look at other editorials, see here and here.

Southern California Newspaper Tackles Stem Cell Agency and UC Irvine Grants

The Orange County Register today zeroed in on the $3 billion California stem cell agency and its relationship to the local University of California campus in the wake of sweeping recommendations for changes at the eight-year-old agency.

The article by Melody Petersen was headlined “Ties to stem cell board lucrative.”

Petersen began her article with story of the $20 million award to StemCells, Inc., earlier this year and the firm's partnership with Frank LaFerla of UC Irvine, which is located in Orange County.

The award was rejected twice by reviewers at the stem cell agency but the governing board of the agency (CIRM) approved it on a 7-5 vote in September following lobbying on behalf of the company by the board's former chairman, Robert Klein, and others.

Petersen said the award was not the first time that questions have been raised about stem cell agency grants. She said that the 17-month study by the prestigious Institute of Medicine (IOM) and some of its findings, particularly those dealing with conflicts of interest, echoed criticisms that have been raised for years.

She wrote,

“Repeated independent reviews of the agency, including one by the (IOM) released this month, have found that its board is rife with conflicts of interest. In fact, of the $1.7 billion that the agency has awarded so far, about 90 percent has gone to research institutions with ties to people sitting on the board, according to an analysis by David Jensen at the California Stem Cell Report, which closely follows the agency's operations.

While the agency has yet to produce a cure, Petersen said,

“What's clear already is that the money has transformed stem cell research in California and poured hundreds of millions of dollars into the state's universities, including UC Irvine.”

She noted that the CIRM governing board is dominated by members from the UC system, including two professors at UC Irvine.

Peterson continued,

“Before Proposition 71 (the measure that created the agency) passed, UC Irvine had less than ten stem cell scientists, who received about $1.5 million in funding each year. Now, after receiving $100 million in grants from the state agency, the university has sixty scientists working to advance stem cell research and teaching. It touts itself as one of the top stem cell research centers in the world. In 2010, it opened an $80 million four-story stem cell research center with the agency picking up $27 million of the cost.

“As UC Irvine has won increasing amounts of taxpayer money, its two professors who sit on the agency's board have risen in status on campus.

Susan Bryant
UC Irvine photo

“Professor Susan Bryant, an expert in regenerative medicine, was dean of the School of Biological Sciences when she was named to the agency's board in 2004. She was then promoted to vice-chancellor of research. In July, she was named the university's interim executive vice-chancellor and provost, its second most powerful administrator.

“When Professor Oswald Steward, a stem cell scientist, joined the agency's board in 2004, he was director of UCI's Reeve-Irvine Research Center for Spinal Injury. Since then, the scientists working in his center have received millions of dollars in grants from the agency. In May, the university rewarded Steward with an additional title: senior associate dean of research for the School of Medicine.”

“The two professors are prohibited from receiving any agency funds for their own scientific work. But so much money has been funneled into the stem cell field in California that it can be difficult to show their continued scientific efforts are not somehow benefiting. For example, Bryant co-authored a scientific article in 2009 with nine other scientists about the genetics of salamanders, which can regenerate limbs. In the report, the group recognized the state agency for partially funding their work. Bryant said that the money was received by another scientist in the group who was not employed by UC Irvine. She said the state agency has never given a grant for research involving salamanders. 'I have never-ever benefited from CIRM funding,' Bryant said using the agency's acronym.

Os Steward
UC Irvine photo

“Steward said he stopped his stem cell research when he joined the board in 2004. His board position, he said, 'has prevented me from taking on lines of research I otherwise would do.'

“Tom Vasich, a campus spokesperson, said Bryant and Stewart's positions on the agency's board played no part in their promotions and success at the school.”

Petersen additionally reported that Steward and Bryant are not allowed to vote on grants to UC Irvine.

Petersen pointed out that the University of California has 16 members on the 29-member board. One of those is the chairwoman of the UC Regents, Sherry Lansing. Petersen also noted that three of the UC officials, including Steward, hold seats on the board as patient advocates.

Petersen is a recent addition to the Register's staff, joining it in November as an investigative reporter. She worked as a business reporter for the New York Times and authored  "Our Daily Meds," a book about the pharmaceutical industry. She shared in the top award in newspaper financial journalism when she was at the San Jose Mercury News.  

Two More Editorials: The California Stem Cell Agency Should Heed IOM Recommendations for Reform

Two other major California newspapers today said the $3 billion California stem cell agency needs to “clean up its act” if it wants to be successful in continuing its efforts at turning stem cells into cures.

The editorials appeared in the Los Angeles Times, the state's largest circulation newspaper at more than 700,000, and the San Jose Mercury News in California's Silicon Valley. The Mercury News has a reported circulation of nearly 600,000, although that figure includes other Bay Area newspaper owned by the same chain.

Both editorials focused on the 17-month evaluation of the agency by the prestigious Institute of Medicine (IOM) as did earlier editorials in The Sacramento Bee and the San Francisco Chronicle. The IOM recommended sweeping reforms at the agency that would alter its structure and target conflicts of interest. 

The Times said,

“The $700,000 spent on the study...will be wasted if the institute's oversight board fails to heed the (IOM) committee's criticisms, which echo the findings of the Little Hoover Commission and other groups over the years.”

The editorial continued,

“The 29-member board is made up almost entirely of representatives of advocacy groups and research institutions that have a direct interest in how the money is spent.”

The Times cited the California Stem Cell Report's calculations that about 90 percent of the $1.7 billion awarded by CIRM has gone to institutions linked to current and former members of its governing board. 

The Times noted an award to a Northern California firm that has stirred some criticism. The editorial said,

“The board also overrode the advice of its scientific advisors — twice on a single application when it considered a grant for a well-connected company, StemCells Inc. based in Newark, Calif. The board granted the company $20 million after Robert Klein, the driving force behind the passage of Proposition 71, which created and funded the agency in 2004, and its former head, lobbied so intensively for the company that one board member described it as 'arm-twisting.'"

The Times concluded,

“The agency has used more than half of its funding and one day will almost certainly want to ask taxpayers for more. It should remember that voters will look for evidence of public accountability as well as respected research.”

The San Jose paper sounded a similar note about the agency. Its editorial said,

“(I)f it wants to survive...it should heed the Institute of Medicine's advice to eliminate conflicts of interest on its board -- and do it before awarding the remaining $1.2 billion of the $3 billion voters approved for stem cell research.”

But the paper said the stem cell agency should not be provided any more state funding.

“Long-term funding was never the intent when Proposition 71 passed in 2004. It was supposed to kick-start research at a time when federal funding was blocked and to establish California as a major player in the rapidly advancing medical field. 

“The agency could continue to bring value to the state as an advocate and funder of research, but only if it can attract private donors, partners and investors. For that to happen, it will need a board that passes the ethics test, with more independent experts and industry executives free of conflicts. 

“At the outset, stem cell advocates took immense pride in structuring the agency to keep it relatively free of legislative interference despite the use of public money. Politicians kept their hands off, which was good. But the agency created its own inappropriate influences in the way it constituted its board. Now it needs to clean up its act.“