A Grim Picture? Nuts and Bolts of California's Ballot Petition Pinch and $5.5 Billion for Its Stem Cell Research Program

Here is a not-so-hypothetical question: In these days of the coronavirus crisis, is it safe to touch a mailed-in petition to place a $5.5 billion stem cell research proposal on the November ballot?

While some may consider the question dubious, it is in, in fact, a real question for enterprises attempting to win a position on the ballot next fall. And it illustrates the difficulties facing backers of the proposed stem cell ballot measure, which is aimed at saving California's stem cell agency from financial extinction. 

The agency is running out of money and will begin to close its doors next fall unless more cash is coming in.

Lisa Renner wrote yesterday about California's ballot petition pinch for Capitol Weekly, a respected online news service that follows state governmental and political affairs. She said,

"It’s never easy to get initiatives qualified for the ballot, but this year of the COVID-19 pandemic is the worst ever....

"While organizations technically have until April 21 to turn in signatures to qualify for the November ballot, the shutdown effectively means that those that didn’t collect enough signatures by mid-March probably won’t make it. At best they can hope for possibly qualifying for November 2022."

Renner painted a vivid picture of the nuts-and-bolts of the petition business. She quoted Fred Kimball, owner of Kimball Petition Management.

"Kimball is faced with the challenge of confirming the signatures to make sure they are from unique registered voters. In a normal year, he said he has 75-100 people crammed in his office checking signatures. But this year, he has only six workers in house while the rest are looking at petitions from home.

"'I haven’t done this ever,' he said. 'Usually the petitions never leave the site of the office. There’s a lot of trust you put into the workers. It’s very difficult.'

"Some employees have quit because they don’t want to touch papers that have been handled by so many people and thus could be contaminated with the virus. To deal with that concern, Kimball has set a new rule that new signatures pages that come in his office must sit for one week before anyone touches them again. He also requires employees in house to wear masks and gloves."

Kimball's firm is working on the ballot proposals dealing with kidney dialysis and medical negligence. But his comments bear on any proposed initiative. 

In the case of the stem cell measure, it needs 623,212 valid signatures of registered voters to qualify for the ballot. Backers say they have 915,000 and need another 35,000 in order to account for disqualified signatures. They have launched an ambitious and "unprecedented" effort to circulate petitions via the Internet.

"Proponents usually seek at least 50 percent more than the legal minimum number of signatures to compensate for possible duplicate or otherwise invalid signatures," according to Wikipedia.

Capitol Weekly's Renner also reported on the stay-at-home orders facing county elections officials.

"Most have shut down all offices, requiring initiative supporters to set up appointments to drop off petitions. Much of their staff is also working at home, which sets up the new burden of getting the petitions to employees."

She continued,

"Joseph Holland, the Santa Barbara County clerk, recorder, assessor and registrar of voters, said his office hasn’t even finished certifying the March 3 election and is facing employees out sick and suddenly charged with taking care of their children after schools closed. “We are operating with a skeleton crew,” said Holland, who also serves as president of the California Association of Clerks and Elections Officials. 

"While his employees are considered essential under the shut-down order, figuring out logistics about where they sit is an issue. They can no longer sit side by side at cubicles as that would violate the 6-foot social distance rule. “It has reduced our capacity by half.” 

"For petition signatures that come in on a single page, the county is able to scan them and electronically send them to employees working at home for validation. But the county is not able to scan petitions that come in booklet form. Those must still be validated by employees at the office, Holland said."

The verification process involves random samples, which can trigger a full check of each signature, slowing the process considerably. There is a possibility that the current legal requirements could be modified, but that change would likely involve the governor and the legislature. 

The campaign for the stem cell measure has set for itself a deadline of this Saturday to finish collection of signatures. 

Final Cyberspace Dash Underway for $5.5 Billion California Stem Cell Initiative

Above is the instructional video from the stem cell initiative campaign web site. 

The campaign to save California's stem cell research program from financial extinction is making an "unprecedented," electronic sprint to gather the final signatures to qualify its $5.5 billion rescue measure for the November ballot. 

In the next eight days, the campaign says it needs 35,000 more signatures to be sure that the multi-billion-dollar ballot initiative is presented to voters next fall. 

The stem cell agency, officially known as the California Institute for Regenerative Medicine (CIRM), is running out of money. It will begin closing its doors in November without more funding.  The campaign's web site says, 

"Over 915,000 voters have already signed petitions to help qualify our initiative for the November 2020 ballot. In the last full week before public signature gathering was shut down due to the coronavirus, over 120,000 voters signed – a tremendous response. But we need at least 950,000 signatures to secure a place on the California ballot this fall. 

"Help us meet our goal by signing and returning a petition today. The campaign must gather the last 35,000 signatures through mail-in submissions by April 11th."

In response to questions from the California Stem Cell Report, campaign spokeswoman Sarah Melbostad described the online move as "unprecedented." She said,

"What’s happening right now across the world is unprecedented, which means the innovative changes we’re making to gather signatures through a mail-in option are unprecedented as well." 

The campaign's unusual Internet pitch is aimed at putting petitions in the hands of its supporters. The effort requires downloading documents, reading detailed instructions on filling them out and then returning them by regular mail. Normally, paid signature gatherers take care of all that.

The process is not simple and is likely to be daunting for some.  The campaign's web site mentions "wet signatures," the importance of printing out the 16 pages of the petition and the need to complete the "circulator declaration." A seven-minute instructional video has also been posted by the campaign (see above). 

The campaign's message stresses speed. 

"Time is of the essence; a fast response is needed to preserve our opportunity to guarantee our ballot position."

The legal minimum of valid signatures of registered voters is 623,212. The extra hundreds of thousands of signatures are needed because many are disqualified by election officials during the certification process.

The campaign's online pitch also includes a schedule of 30-minute webinars aimed at building support and answering questions. They begin tonight at 6:15 p.m. PDT and continue on April 5, 7 and 11. 

Backers of a $5.5 Billion California Stem Cell Measure Claim 915,000 Signatures, Ballot Qualification at Stake

The campaign to place a $5.5 billion, stem cell measure on the California ballot this fall says it has gathered more than enough signatures to bring it before voters. 

In response to questions from the California Stem Cell Report, a campaign spokeswoman said,

"In our last full week of signature gathering, we received 120,000 signatures, showing the tremendous support from California voters. With 915,000 signatures in hand and a new sign-from-home option that allows individuals to mail in their signatures, we’re confident that we will be able to gather the final signatures we need while, most importantly, keeping Californians safe." 

The proposal needs 623,212 valid signatures of registered voters to qualify. Because so many signatures are disqualified in the verification process, many more than the bare minimum are required. 

The next step is for the campaign to submit the signatures to election officials for verification, a process than can take a month or more under normal government operating conditions. 

The entire process has a deadline of June 15 to be completed.  

Campaign spokeswoman Sarah Melbostad said, "Voters can go to our website caforcures.com to sign the petition and ensure the continuation of treatments and cures that could save or improve the lives of millions."  

(Editor's note: An earlier item on this subject that was briefly up this afternoon  incorrectly said that the campaign had not responded to a question concerning the current number of signatures. That post has been deleted.)

California Pumps $5 Million into Search for Stem Cell Treatment for Covid-19

Coronavirus

California's stem cell agency, in an emergency action, has allocated $5 million for research into treatments for Covid-19 and set the deadline for the first applications for one week from today. 

The agency, formally known as the California Institute for Regenerative Medicine (CIRM), approved the funding last Friday during an emergency meeting of its governing board. 

In an item yesterday on the CIRM blog, Maria Millan, CEO and president, said,

"California researchers have made us aware that they are pursuing potential stem cell based approaches to the Covid-19 crisis, and we felt it was our responsibility to respond by doing all we can to support this research and doing so as quickly as we possibly can."

The agency set accelerated timetables for action, both by the agency and applicants. It said it would expect winning applicants to begin work within 30 days of being approved. 

CIRM's move comes as itself is facing a mortal financial threat. It was created by voters CIRM in 2004 with $3 billion. It is now down to its last $27 million and is hoping voters will approve $5.5 billion more via a proposal that is yet to qualify for the November ballot. Otherwise CIRM's doors will begin to close in the fall. 

Presumably, billions of private and public dollars are already pouring globally into the search for various aspects of Covid-19, so the $5 million is a relatively tiny amount. CIRM has developed a speedy process, however, for bringing funds to bear on research and is acting to accelerate that even further. 

Jonathan Thomas, chairman of the CIRM board, said, 

"The coronavirus is creating an unprecedented threat to all of us and, as one of the leading players in regenerative medicine, we are committed to doing all we can to develop the tools and promote the research that will help us respond to that threat." 

The campaign to qualify the $5.5 billion initiative for the ballot released a statement heralding the action by CIRM. Robert Klein, the Palo Alto real estate developer behind both the original ballot measure and this year's funding initiative for CIRM, said, 

"The investment by California’s stem cell institute to combat Covid-19 highlights the remarkable potential of this research and therapy development to impact the lives of every Californian. ...We urge Californians to think back on this moment, when they decide the fate of future life-saving stem cell discoveries and treatments come November."

The campaign said 10 days ago that it has suspended the gathering of signatures. It is not clear whether it has enough to qualify for the fall ballot. More than 600,000 valid signatures are required. 

Here are links to additional CIRM information on its Covid-19 program:

• Concept statement
• Application information and timetables
• Presentation slides from last week's meeting
• CIRM's news release

Covid-19 Break for California Stem Cell Report

The California Stem Cell Report, at least this writer, has tested positive for covid-19.  The symptoms are such that it makes it make difficult to compose even short postings. We are following the usual precautions and hope to return to regular publication soon.

California's $5.5 Billion Stem Cell Initiative: Signature Gathering Suspended Due to Coronavirus

Backers of a $5.5 billion stem cell research initiative in California have suspended their efforts to gather signatures to place it on the November ballot, but are expressing confidence that the proposal will qualify.  

In response to questions from the California Stem Cell Report, the campaign said it had run afoul of statewide bans on public gatherings. Voter signatures on petitions to place the initiative on the ballot generally require small gatherings in public places. 

The proposal is intended to refinance the California stem cell agency, which has spent nearly all of the $3 billion it was provided by voters in 2004. It will begin to close its doors next fall unless more funding is provided. 

Sarah Melbostad, a spokeswoman for Californians for Stem Cell Research, released a statement that said, 

"In keeping with the governor’s statewide order for non-essential businesses to close and residents to remain at home, we’ve suspended all signature gathering for the time being."

The statement continued, 

"We’re proud of our team and proud of the promising and significant number of signatures we’ve gathered to date – demonstrating strong support amongst voters. We’re confident that we still have time to qualify and plan to proceed accordingly."

To qualify for the ballot, the valid signatures of 623,212 registered voters are needed. Large numbers of signatures are usually disqualified during the certification process. So tens of thousands of signatures or more beyond the minimum are invariably necessary. 

The campaign originally expected to have the signatures gathered by the end of April. The campaign did not respond to a question concerning the number of signatures that it has on hand now. 

The California Stem Cell Report understands that petition circulation companies throughout the state are calling in their signatures next week. At that point, reliable figures may be available. The halt to signature gathering affects other potential ballot measures this fall. 

Here is the full text of the campaign's statement:

"In keeping with the Governor’s statewide order for non-essential businesses to close and residents to remain at home, we’ve suspended all signature gathering for the time being.

"As the COVID-19 issue is updating daily, if not hourly, we at the campaign are monitoring the situation very closely and will comply with all statewide, regional and local ordinances.

"We’re proud of our team and proud of the promising and significant number of signatures we’ve gathered to date – demonstrating strong support amongst voters.

"We’re confident that we still have time to qualify and plan to proceed accordingly.

"When faced with this current situation, we’re reminded every day how important this initiative is to save and improve the lives of millions of Californians living with chronic diseases and conditions, such as cancer, Alzheimer’s, heart disease, HIV/AIDS, kidney disease and more."

Coronavirus Fallout: New and Bigger Hurdles Now Face $5.5 Billion California Stem Cell Measure

California's intensifying battle against the coronavirus is creating ever larger obstacles and uncertainty concerning the proposed $5.5 billion ballot initiative to refinance the state's stem cell research program, which is running out of money.

The new, statewide ban on public gatherings is certain to hamper the gathering of the 600,000-plus signatures needed to place the measure on the November ballot. No one knows how long that ban will be in place. Signature gathering in California largely occurs in public places using paid workers. 

The financial fallout from the crisis also raises questions about whether funds can be raised to support the petition drive -- not to mention a fall ballot campaign that could cost in the neighborhood of $50 million. The usual contributors to such an effort are likely to feel financially squeezed, plus they may be refocusing on new and higher priorities dealing with health care, if they have cash they are willing to contribute.

The impact of the coronavirus crisis has already knocked off one ballot measure in Palo Alto, a wealthy Silicon Valley enclave.  The school board there this week removed a $16-million-a-year property tax measure from its May ballot.  An article in the Palo Alto Daily Post said, 

"'In order to do even a high-polling ballot initiative … the committee doing it needs to have a certain amount of resources, including money raised and feet on the street,' (school) trustee Melissa Baten-Caswell said. 'It is really not conceivable that they’re going to have enough to run the rest of the campaign in this time frame.'

The financial squeeze is also being reported nationally. Some big national political donors backed the measure that created the stem cell program 15 years ago.  Politico wrote just this morning,

"Campaigns across the country have canceled face-to-face fundraisers for the foreseeable future and are scrambling to figure out how to raise enough money to stay solvent. Big donors' stock portfolios are tanking. And small-dollar, online contributors — who have never been more important to campaigns — are facing sudden financial uncertainty and the real possibility of unemployment."

Backers of the $5.5 billion stem cell initiative have until June 15 to complete the qualification process, which goes beyond simply gathering signatures. They must be verified by election officials as valid signatures of registered voters which can take some time. 

The campaign had expected to submit more than enough signatures by late April. The California Stem Cell Report has queried the campaign for comment, but has received none. 

The stem cell agency, known formally as the California Institute for Regenerative Medicine (CIRM), was created in 2004 by voters with $3 billion in funding. It is now down to it last $27 million for awards. 

Autism and Stem Cells: Live Online Event Tomorrow from California Stem Cell Agency

The California stem cell agency wrote this week about the "definitely strange" and challenging times, but it is making a move tomorrow to stay on balance with an online Q&A exploration of autism and stem cell research. 

The specific matter is a Facebook Live event called "Ask the Stem Cell Team About Autism" at 12 p.m. tomorrow.  The agency said on its blog:

"The event features Dr. Alysson Muotri from UC San Diego. We have written about his work with stem cells for autism in the past. And CIRM’s own Associate Director for Discovery and Translation, Dr. Kelly Shepard."

Kevin McCormack, senior director of communications at the agency, said that some people had asked why the agency was going ahead with the program.

"It’s a good question. And the answer is simple. Because there is still a need for good, thoughtful information about the potential for stem cells to help families who have a loved one with autism. And because we still need to do all we can to dispel the bad information out there and warn people about the bogus clinics offering unproven therapies.

"In many ways Facebook Live is the perfect way to deliver this information. It allows us to reach out to large numbers of people without having them in the same room. We can educate not contaminate."

McCormack noted,

"If you can’t tune in while we are live, not to worry, you’ll be able to watch it again afterwards when it gets posted to our CIRM Facebook page."

Coronavirus Shutdown Hits California's Stem Cell Agency; Effort to Re-finance Research Program Hampered

California's $3 billion stem cell agency closed its physical doors this morning to avoid being considered, along with thousands of other San Francisco Bay Area enterprises, an "imminent threat to public health" under the terms of strict, new government orders. 

Maria Millan, CEO and president of the Oakland-based agency, told her 34 employees yesterday that the action was being taken in compliance with legal orders issued by six Bay Area counties. The agency's staff will continue their work from home or elsewhere.

The stringent directives affect seven million people and businesses ranging from retail to entertainment. But many enterprises were exempted because of the services or goods they provide, such as supermarkets and banks. 

Violation of the orders is deemed to be "an imminent threat to public health," a formidable piece of legalese that can be enforced by police. 

The orders generally ban public gatherings, which would seem to mean effectively a ban in the Bay Area on public gathering of signatures to qualify a $5.5 billion stem cell research measure for the November ballot. The agency is running out of money and hopes to stave off its financial demise with approval of the measure next fall. 

The deadline for completing the tedious qualification process for the ballot measure is June 15. Backers of the measure had hoped to have more than enough signatures by the end of April. 

Yesterday's orders are in effect until at least April 7.

As a practical matter, the process of soliciting signatures for ballot measures in California was already encountering barriers because of safe distance and other concerns. 

The campaign  has not yet responded to questions concerning the impact of coronavirus situation. 

The agency, formally known as the California Institute for Regenerative Medicine (CIRM), had already allowed its employees to work from home. The agency funds research but does not actually perform it. 

Americans for Cures, a Palo Alto patient advocacy group supporting the measure, said it would be working remotely in compliance with the new orders. The group was founded by Robert Klein, who oversaw preparation of the proposed stem cell initiative.

The agency says that none of its current portfolio, which includes 60 clinical trials, has specific application to the coronavirus. Here is the text of the note that Maria Millan, CEO and president of CIRM. sent to the agency's team yesterday.

"As we enter week two of our agency-wide telecommute, the COVID-19 crisis continues to intensify, resulting in additional containment measures with an increasing number of school, university and business closures, cancellation of gatherings, and severe travel restrictions. In addition, a three week 'shelter in place' order has just been issued for six counties in the Bay Area- San Francisco, San Mateo, Santa Clara, Alameda, Marin, Contra Costa. As stated last week, this situation remains fluid, we are monitoring it closely and I am remaining in close contact with the LT, HR and our Board so we can continue to take appropriate action as needed.

"We are committed to working with our community to deploy containment measures in order to 'flatten the curve' of this outbreak and, as always, we are committed to the health and well-being of our employees and their families. In this spirit, and taking into account the containment response timing in our local communities, we will extend the CIRM agency-wide telecommute plan to April 13 . We will be in constant contact and will notify you of any additional changes. To date, there have been no documented or reported COVID-19 cases or exposure in CIRM employees.   "Thank you for continuing our important work at CIRM, for your responsive support of our programs/grantees/patient advocates during this crisis and for continuing to execute our strategic goals. I’d like to acknowledge our IT department who have armed us with the technological tools to work remotely, our project managers for coordinating us and keeping the schedules on track and leadership for enabling their teams to remain productive. "Please feel free to contact your manager, HR, Maria B or me if you have any questions related to CIRM’s COVID response or if you need assistance in transitioning to the agency-wide CIRM telecommute plan. "Take good care & look forward to working with you from a distance (for now)."

Fresh Hurdles for $5.5 Billion Stem Cell Measure: Coronavirus and Safety Distance

Signature gathering -- Too close for safety?  Photo Hero Images

The current coronavirus emergency and the practice of social distancing are likely to put a crimp in gathering signatures to qualify a $5.5 billion stem cell initiative for the November ballot in California.

The situation is already troubling much smaller petition efforts in New York State where state legislative candidates need as few as 500 signatures to qualify for the ballot.

One candidate going door-to-door reported that a resident shouted through a window, 

“I don’t want to talk to anybody or open the door!” 

In California, 623,212 valid signatures are needed to put the $5.5 billion stem cell proposal on the ballot. Backers had hoped to have well over that by the end of April.

Without voter approval of the measure, the state stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM), will go out of business. It was created by voters in 2004 with $3 billion but is running out of money.

Other major ballot proposals are also caught in the safety distance pinch. The include ones dealing with sports betting, dialysis clinics, packaging waste reduction and a measure to modify Prop. 13, the property tax law of 1978.

Whether they are affected in a significant way depends on individual deadlines and how many signatures they have to date. Gathering signatures for a ballot measure is an expensive proposition that requires hiring signature gathering firms that, in turn, hire the "gatherers" to be in places with high pedestrian traffic. The signing process also requires what some persons might regard as less than safe physical distances in supermarket parking lots and other locations. Shoppers may well be more focused on stocking up rather than signing up. 

In New York state, Gov. Andrew Cuomo has sharply reduced the amount of signatures required for candidates to qualify for the ballot.  

In a statement, Cuomo said,
"Public health experts have been clear that one of the most common ways to communicate COVID-19 is through direct person to person contact, and we are doing everything in our immediate power to reduce unnecessary interactions.

"This executive order modifies the election process in a way that both protects public health and ensures the democratic process remains healthy and strong regardless of the ongoing pandemic."

Any impediments to gathering signatures in California are likely to mean increased expense. In 2018, costs ran as high as $9 a signature. 

It is not clear that the California governor or other state officials can do anything to deal with the slowdowns in signature gathering, which affect other efforts besides the stem cell initiative. However, state lawmakers might be able to make an immediate change in state law with a two-thirds vote of both houses and the agreement of the governor. 

To make the November ballot, the stem cell initiative campaign must clear the certification process by June 15.  The campaign did not immediately respond to a request for comment. 

Does the Failure of a Big Bond Measure Earlier This Month Mean Bad News for $5.5 Billion Stem Cell Proposal?

Tax fatigue: A problem for bond measures?

Was voter rejection of a $15 billion school bond measure a bad omen for another bond measure that would save the California stem cell agency from financial extinction? 

The question arises because the failure of the school bond proposal shocked its backers. The measure was considered nearly a certainty by some. However, it turned out to be the first state school bond measure to be rejected by voters in nearly three decades, despite almost non-existent organized opposition.  

Some attribute its March 3 downfall to "bond/tax fatigue," along with confusion. If so, the rejection of measure may not augur well for the proposed, $5.5 billion bond measure to refinance the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is formally known. 

CIRM began life in 2004 with $3 billion provided by voters. It is now down to its last $27 million. The doors will begin closing in November if fresh financing is not found.  

CIRM's backers say there is a significant difference between what happened earlier this month and what may happen in November with the stem cell measure. 

In response to a question from the California Stem Cell Report, stem cell campaign spokeswoman Sarah Melbostad released a statement that said, "California voters did not have an emotional connection to Proposition 13," the school bond measure.

On the other hand, the statement indicated that the stem cell measure has emotion in abundance.

"Investing in the future health of our families and loved ones is one of the most important investments we can make today," the statement said.  "In the November 2020 election, California voters will have the opportunity to continue forging a pathway for life-saving treatments and cures." (Underlining by this writer)

The statement acknowledged the several reasons bandied about for Proposition 13's loss, including confusion.

"As many experts have noted, voters likely confused the ballot number with the well-known Proposition 13 from 1978 and voted no as a result." 

(Proposition 13 limited increases in property taxes, which stirred much concern in the 1970s and which continues to this day.)

Confusion could play a role as well in November on the stem cell measure. That is, confusion involving the research financed by CIRM and the dubious activities of unregulated clinics that purport to sell "stem cell" therapies that can cure everything from sexual dysfunction to bad knees -- all with the same product. 

The federal government has attempted to crack down on the "snake oil" clinics with mixed success. In California, both state medical regulators and legislators have not moved significantly on the clinics, whose treatments have led to lawsuits and accusations of physical and financial harm.  

That said, headlines also appear regularly on the Internet and elsewhere dealing with "miraculous" stem cell cures from the clinics. Many of claims are related by celebrities, including William Shatner (Capt. Kirk of Star Trek fame), sports figures and even a former Trump administration cabinet member/former Texas governor, Rick Perry. 

That attention could cut two different ways. One side could conceivably help build support generally for stem cell therapies by telling stories of success. The other side could lead to concern that all stem cell work is questionable. Ultimately, the old P.T. Barnum saying -- "I don't care what the newspapers say about me as long as they spell my name right." -- may come into play.

The election this month was also politically different than the presidential election next fall. Major elections, with their higher turnout, generally are regarded as more favorable for bonds. Plus the California voters have a 34-year, overall history of approving about 90 percent of the bond measures on the ballot. 

Here is the full text of the statement from Californians for Stem Cell Research, Treatments and Cures.

"Public polling data from PPIC consistently showed that Proposition 13 had only a very slim margin of support among likely voters.

"As many experts have noted, voters likely confused the ballot number with the well-known Proposition 13 from 1978 and voted no as a result.

"California voters may have also experienced school bond fatigue with the number of different school bonds passed in recent years — and are looking to the Governor and state legislature for other options.

"California voters did not have an emotional connection in regards to Proposition 13. Proponents of the ballot measure failed to demonstrate how funds would effect local communities and school districts.

"Investing in the future health of our families and loved ones is one of the most important investments we can make today—in the November 2020 election, California voters will have the opportunity to continue forging a pathway for life-saving treatments and cures.

"California voters’ breakthrough investment in 2004 firmly established the state as the global leader of stem cell research, we must continue to support these efforts in researching and developing new therapies, treatments and cures for chronic diseases, conditions and injuries.

"Patient advocates, leaders in medical research, revered medical practitioners and Nobel Prize winners support this Initiative because they all agree it is the most viable path to real treatments and cures for diseases that touch nearly all Californians – from cancer and diabetes to Alzheimer’s and Parkinson’s."

Checking in on Skimpy Media Coverage of the $3 Billion California Stem Cell Program

The Capitol Weekly website, a must read for state policy makers and legislators, published an article yesterday involving California's stem cell agency. The article began like this,

"A small firm in Menlo Park is probably the only company in the nation that is named after the number of a particular human protein. It is a small number too, only 47. But it has large implications for California’s financially strapped state stem cell agency."

The piece pulled together the events of last week involving the purchase of Forty Seven, Inc., a grantee of the stem cell agency, by Gilead Sciences, Inc., for $4.9 billion. It was the lead story on Capitol Weekly for much of yesterday.

The political and governmental news website is a case where California stem cell news reaches an important audience not normally attuned to what emanates from the stem cell agency's headquarters in Oakland.  

While regular readers of the California Stem Cell Report are familiar with many aspects of the Forty Seven deal and its significance, that is not necessarily the case with the readers of Capitol Weekly. They consist of "elected officials and staff, political professionals, activists, academics and regular state employees," according to its web site. Capitol Weekly is also something of an institution and has been publishing, first in print and then online, since the 1980s.  

As our readers are aware, news coverage of the California Institute for Regenerative Medicine (CIRM) in the mainstream media is virtually non-existent, which poses a challenge for the agency as it hopes for voter approval of a proposed ballot measure next fall to give it an additional $5.5 billion. 

Mainstream coverage of the agency and the ballot measure will step up next fall, but the news media has severe financial and staffing limitations. Most of their efforts will go to cover the presidential race and matters that have more perceived, immediate impact on California. 

Capitol Weekly has a special niche that reaches influential folks and opinion leaders in the state Capitol. The California Stem Cell Report has an arrangement with Capitol Weekly in which it often picks up items from this site after they are published here. This writer also sometimes writes a piece for Capitol Weekly that is tailored to its audience, which does not necessarily want or need as much detail as many of the readers of the California Stem Cell Report. Yesterday's story on Capitol Weekly is one example. 

The media environment is tough right now for coverage of science-oriented stories or small state agencies, with the exception of such things as the coronavirus. But it is a reality that confronts the campaign on behalf of the $5.5 billion initiative to keep CIRM alive. 

Inside California Stem Cell IP: A Look at the Royalty Money Trail

The $4.9 billion purchase last week of a California immunology firm is a rich deal for Forty Seven, Inc., but it is no immediate cash cow for the state's stem cell agency, which backed the firm's "don't-eat-me" research with upwards of $45 million.

CIRM's intellectual property (IP) regulations, which have received little public attention, are key to determining who gets what out of the arrangement. However, at this point, nobody knows how much or when any cash will come back to the state. 

The IP rules are currently aimed at financing more research and production of  therapies as opposed to generating the most income possible for the state. It is a balancing act, according to CIRM. 

At the request of the California Stem Cell Report, the agency last week answered a number of questions concerning some of the details that come into play in cases such as Forty Seven. The upshot is that a grant, which is what Forty Seven received, can be converted to a loan, paid off and thus end any obligation to pay royalties. 

Here is how the agency's intellectual property rules work, starting with the sale of Forty Seven. 

The per share price to be paid for Forty Seven is $95.50, up 1,600 percent since last October's low of $5.53. The agency does not share in that run-up. State agencies are barred by the State Constitution from owning stock. 

The stem cell agency has awarded Forty Seven directly $15 million for its cancer-fighting trials. Noted Stanford researcher Irv Weissman separately has received $30 million from the agency, much of which went for the basic research behind Forty Seven. Weissman, who co-founded the firm and is on its board of directors, stands to gain $191 million. Stanford is set to receive $67 million.

Any payout for the agency, known formally as the California Institute for Regenerative Medicine (CIRM), is down the road. If a profitable treatment ultimately emerges, the state -- not the agency -- might get some royalties through the company or Stanford.  In that case, state lawmakers could spend the funds for anything from salaries at the Department of Motor Vehicles to purchase of office furniture. 

Or Gilead Sciences, Inc., the new owner of Forty Seven, could convert the CIRM grant to a loan, which then could be paid off with interest, ending the possibility of extended royalties from the company. In that case, the payoff would go to CIRM for research purposes -- not the state's general fund. 

In 2015, when CIRM directors approved the loan conversion provision, Randy Mills, then president of the agency, said the mission of the agency is to produce therapies -- not to generate large profits. He said loan conversions would recycle CIRM cash with interest into more research faster than royalties. 

Here is the text of our questions and CIRM's responses concerning IP rules,  with more details on how it all works.  

California Stem Cell Report: Can you refresh me on the date of the changes in the IP rules related to the loan conversion and the justification? .... My recollection is that conversions were authorized because of pressures from grantees. 

CIRM: The interim loan conversion policy was implemented in May 2015. Our then President and CEO Randy Mills recommended the changes, and the CIRM Board approved them, to try and bring in more for-profit applications. He felt the existing policy added complications on the commercial development path for therapies, making it less attractive for for-profit companies to apply to us for funding. Engaging with for-profit companies is key to delivering on our mission so we made the changes, not because of pressure from existing grantees or anyone else. 

Transcript of Intellectual Property Subcommittee May 19, 2015

and

Transcript of CIRM governing board meeting May 21, 2015 
(The meetings involved approval of the current IP regulations.)

California Stem Cell Report: Is it accurate to say that a company can escape any obligation to pay royalties by unilaterally converting a grant to a loan? Can CIRM do anything to prevent the company from such a conversion? (See here for language from an federal document filed by Forty Seven.)

CIRM: Our goal is to always give every project we fund the greatest chance of success and that often means creating the easiest path for companies we fund to partner with other commercialization partners that have the capital to successfully bring the program through the necessary steps to move the given therapeutics to market and to patients. If a project is successful, and clearly that’s why CIRM was created, the company is still obligated to repay the funding we provided it but it has the option of doing so in a lump sum or to allow that repayment through potential, but still uncertain, future royalties.

As these policies were discussed and approved by our Board it does not make sense for us to try and prevent a company from following our rules.

California Stem Cell Report: Does the proposed new initiative do anything to prevent that from occurring or affect it in any way? 

CIRM: The new initiative does not address this issue. Our Board has, as it always has had, the flexibility to change the IP policy if it so chooses.

California Stem Cell Report: Can you please clarify the language concerning the interest rate on the loan? Does the interest take effect retroactively beginning with the date of the award? In other words, let's say the award was made in 2016. The company converts to a loan in 2026. Does it have to pay interest for all of those 10 years? 

CIRM: Yes, the interest takes effect retroactively but only to the date of each individual payment. Since the grant is paid out over the life of the Award, each payment is treated individually in determining the compounded interest up the conversion date. The specific interest rates are determined by the stage of clinical development at the time of election.

California Stem Cell Report:  Can you also clarify the following language from the SEC document related to how the total interest amount is calculated. It raises a possibility that interest could be as much as 30 percent in year in some cases. The phrase I am referring is "plus zero to 30% per annum that varies depending on the stage of the research and the stage of development at the time the election is made."

CIRM: The election point at the time of conversion as well as the starting point of the CIRM-Funded Project affects the return. Please see page 29 of the CIRM GAP linked here for the chart.

California Stem Cell Report: If a unilateral conversion is allowed, doesn't that adversely affect the interests of the state of California by providing a relatively inexpensive way to avoid paying potentially many more millions to the state?

CIRM: There is a balancing act between the CIRM’s mission - accelerating stem cell therapies to patients with unmet medical needs - and a financial return back to the State. In the interests of funding for-profits, who are generally better prepared to advance clinical projects to cure patients, this loan conversion policy was adopted by the CIRM Board. Since it is a loan, the money returns to CIRM for further reinvestment in other projects. Indeed, without the adoption of the conversion option by our Board it is possible that companies like Forty Seven Inc. might not have applied to CIRM for funding. Before these new regulations were introduced CIRM had few for-profit companies applying for our funding.

Bloomberg News: $191 Million Payout for Stanford Researcher in Immunotherapy Deal

Renowned stem cell scientist Irv Weissman of Stanford University stands to gain $191 million from the sale of a Menlo Park, Ca., immunotherapy firm that he co-founded to develop a cancer treatment, Bloomberg News reported this afternoon.

The firm is Forty Seven, Inc., whose scientific underpinnings were developed in Weissman's lab. Gilead Sciences, Inc., of Foster City, Ca., announced Monday that it is buying Forty Seven for $4.9 billion which amounts to a price of $95.50 a share.

Weissman serves on the company's board and holds 4.2 percent of the company's stock, according to the article.

Weissman was not immediately available for comment on the report.

The article by Devon Pendleton said,

"Stanford’s payout from the sale is $67.1 million. Other winners from the deal include billionaire Stanley Druckenmiller’s Duquesne Family Office and the Rockefeller family’s venture capital firm Venrock Associates. The entities, which own stakes of 0.8% and 1.2%, respectively, acquired their holdings in the last quarter of 2019, filings show, when the shares traded for as low as $5.53 and as high as $45.39."

Pendleton wrote that Weissman "credits the support of the nonprofit Ludwig Institute for Cancer Research and the state-funded California Institute for Regenerative Medicine (CIRM) with funding Forty Seven’s early clinical research and development."

CIRM, commonly known as the state stem cell agency, awarded Forty Seven directly and Weissman $30 million for earlier research. The agency does not stand to benefit from the sale unless the proposed therapies reach the marketplace and generate a profit. That could trigger royalties to the state.  However, the agency has said that the deal validates its efforts to successfully stimulate research that leads to a product and fills an unmet medical need.

Bloomberg said,

"Biotechs saw it as too dicey to invest in at an early stage, Weissman said. So he and (Ravindra) Majeti formed Forty Seven, with Stanford getting an equity stake and future royalties that it agreed to share with the state."

Majeti is a professor of medicine at Stanford, a director of Forty Seven and also held stock. The Bloomberg piece did not identify his gain.

(A slightly earlier version of this story attributed the initial report to the Los Angeles Times. It was a Bloomberg News story that was picked up by the Los Angeles Times.) 

Trump, Fetal Tissue Restrictions and California's Stem Cell Agency

The $5.5 billion ballot proposal to save California's stem cell agency from financial extinction popped up this week in a discussion of the Trump administration's looming restrictions on the use of fetal tissue.  

The proposed ballot initiative surfaced in a lengthy piece in "The Scientist" magazine, which said, 

"The Trump administration’s changes to policy involving material donated from abortions have led scientists to adjust their research projects or seek alternative sources of funding."

The author of the article, Diana Kwon, interviewed researchers around the country, who spoke of how they were dealing with the new reality. One of them was Andrew McMahon of the University of Southern California, who was recruited to the Golden State with the help of a $5.5 million award from the California Institute for Regenerative Medicine (CIRM), as the stem cell agency is known. 

Kwon said that McMahon "still has about a year left before he needs to apply for more funding, and he’s started looking into potential alternatives to NIH." 

She noted that the NIH restrictions are yet to be fleshed out and continued with comments from McMahon,

"'My understanding is that it’s not entirely clear at the moment what that process is going to be,' McMahon says. 'I’ve been using the time to obtain non-NIH funding to support aspects of the research that I would have tried to get NIH funding [for] in the future.'"

Also quoted was Larry Goldstein, director of the UC San Diego stem cell program. Kwon wrote, 

"In California, the state’s stem cell agency, the California Institute for Regenerative Medicine (CIRM) has provided funding for stem cell studies using fetal tissue since it was founded in 2004. That fund is about to run out, but (a proposed ballot initiative) that would provide $5.5 billion in funding to CIRM (is expected to) come before voters in November.

"'That will hopefully provide funding for areas of fetal tissue research that involves stem cells,' Goldstein says. 'But . . . it’s ridiculous to rely on one or two states to self-fund, because we don’t have all of the best and brightest [scientists], and it means lots of students and postdocs will train in areas where federal training support will be unavailable to them.'"

Need More on Gilead/Forty Seven? See Xconomy's Piece

If you are looking for the most complete story on the $4.9 billion, Forty Seven/Gilead deal, take a look at the article on the news service, Xconomy. 

Frank Vinluan put together a dandy piece that covers a lot of business, ranging from the science to finance. Here is one tidbit that I have not seen elsewhere:

"Forty Seven has agreed to a “no shop” provision that bars the company from pursuing another offer, according to a securities filing. But under certain circumstances, Forty Seven may provide information to and speak with another party that has submitted an acquisition proposal that its board deems a superior offer, according to the merger agreement. These steps would be taken to comply with the board’s fiduciary duty to shareholders. If Forty Seven accepts a better offer, the merger agreement with Gilead requires it pay the larger company a $160 million termination fee."

Whoopee Time at the California Stem Cell Agency: Celebrating a $4.9 Billion Deal

The California stem cell agency this afternoon burst out with an exuberant cheer, declaring that a huge financial deal announced just yesterday gave its research program a $4.9 billion seal of approval. 

If you missed it, the deal involves the $4.9 billion purchase of Forty Seven, Inc., by Gilead Sciences, Inc., two companies nestled only 20 minutes apart on the San Francisco Bay peninsula. 

Writing on its blog, The Stem Cellar, the agency all but said, "WHOOPEE!"  Not that that would have been inappropriate. The agency declared, 

"It’s not every day that a company and a concept that you helped support from the very beginning gets snapped up for $4.9 billion...CIRM has supported this program from its very earliest stages, back in 2013, when it was a promising idea in need of funding."

CIRM, of course, is the official name of agency, the California Institute for Regenerative Medicine. 

Maria Millan, CIRM photo

The blog item continued with this from Maria Millan, CEO of CIRM:

“To say this is incredible would be an understatement! Words cannot describe how excited we are that this novel approach to battling currently untreatable malignancies has the prospect of making it to patients in need and this is a major step. Speaking on behalf of CIRM, we are very honored to have been a partner with Forty Seven, Inc., from the very beginning."

The Forty Seven tale originated in the Stanford University lab of Irv Weissman. CIRM quoted him as saying,

Irv Weissman, Stanford photo

"The story of the funding of this work all of the way to its commercialization and the clinical trials reported in the New England Journal of Medicine is simply this: CIRM funding of a competitive grant took a mouse discovery of the CD47 ‘don’t eat me’ signal through all preclinical work to and through a phase 1 IND with the FDA (Food and Drug Administration). Our National Institutes of Health (NIH) did not fund any part of the clinical trial or preclinical run up to the trial, so it is fortunate for those patients and those that will follow, if the treatment continues its success in larger trials, that California voters took the state’s right action to fund research not funded by the federal government.”

Ingrid Caras, CIRM photo

Ingrid Caras, CIRM senior science officer, who was on the agency team that provided assistance to the academic researchers, said,

“I had the pleasure of working with and helping the Stanford team since CIRM provided the initial funding to translate the idea of developing CD47 blockade as a therapeutic approach. This was a team of superb scientists who we were fortunate to work closely with them to navigate the Regulatory environment and develop a therapeutic product. We were able to provide guidance as well as funding and assist in the ultimate success of this project.”

McCormack concluded, 

"Forty Seven Inc. is far from the only example of this kind of support and collaboration. We have always seen ourselves as far more than just a funding agency. Money is important, absolutely. But so too is bringing the experience and expertise of our team to help academic scientists take a promising idea and turn it into a successful therapy."

CIRM did not mention the amount of money provided to support the research. But it has awarded $15 million directly to Forty Seven. Weissman has received $30 million, much of which has played a role in Forty Seven's products.  

'Perfect Example' and 'Broader Utility:' Pieces of the Forty Seven-Gilead-California Stem Cell Story

The history of the stock price of Forty
Seven, Inc., since it went public in 2018.
Google graphic

The stock price of Forty Seven, Inc., California's "don't eat me," cancer therapy firm, today closed at $$93.91 as the state's stem cell agency hailed the firm's performance as "perfect example" of the agency's value to the field and to the people of California. 

The closing price represented a stunning increase over the firm's record low of $5.53 last October. It came as Gilead Sciences, Inc., and Forty Seven announced this morning that the firm would be purchased by Gilead for $4.9 billion. 

Maria Bonneville, a spokeswoman for the agency, said, 

"Forty Seven, Inc., is the perfect example of CIRM’s value to the field of regenerative medicine.  We take pride in our ability to work with our grantees to make them as successful as possible and get them ready to partner in order to fulfill our mission."

Mathew Herper of Stat news interviewed Daniel O'Day, CEO of Gilead, today about the deal. Here is what Herper wrote, 

"So why purchase Forty Seven?

"'Because it’s novel,' O’Day said, referring to the company’s lead medicine, magrolimab, an antibody against CD47, a protein that cancer cells use to tell white blood cells 'don’t eat me.' The idea is that blocking this protein will allow the body’s immune system to attack cancer cells.

"'We had our eyes on Forty Seven for a while,' O’Day said. Data presented in two malignancies, myelodysplastic syndrome and acute myeloid leukemia, at last year’s annual meeting of the American Society of Hematology showed that the drug was doing 'some pretty special things,' he said. He said Gilead scientists believe that magrolimab could have 'broader utility' because it could be relatively safe and could be combined with other medicines relatively easily." 

The stem cell agency, formally known as the California Institute for Regenerative Medicine (CIRM), publishes anonymized summaries of what grant reviewers have to say about the applications from researchers. Here is the review summary for one application for $5 million in 2017. Here is the summary for a $10.2 million application in 2016.