CSCR Statement To IOM-CIRM Performance Inquiry

California Stem Cell Report

Publisher/Editor, David Jensen californiastemcellreport.blogspot.com [email protected] Statement to IOM-CIRM review panel Jan. 24, 2010 Ladies and gentlemen: My name is David Jensen, and I would like to offer some thoughts on the California Institute for Regenerative Medicine, including some of the issues that may be appropriate for your distinguished panel to address. But first let me give you some background about myself. I have been writing about the stem cell agency since January 2005 and have posted more than 3,100 items on the California Stem Cell Report. I have also authored articles on the agency that have appeared in BioWorld, Wired.com, Fiercebiotech, Healthycal.org and The Sacramento Bee, the leading newspaper in the state capital. I am a retired journalist, having spent decades in the business. As a reporter, I covered state politics and government, among other areas. I later spent two years and one week working as a press aide for the governor of California, Jerry Brown, in his first term in office including his election campaign. I was executive business editor of The Sacramento Bee for 10 years, during which time I directed investigations that won awards in California and nationally. Later, as special projects editor, I handled major investigative pieces, including the 1994 Pulitzer Prize-winning series, the Monkey Wars, which dealt with issues connected to primate research and the assaults by so-called animal rights advocates. I come to you from a public policy perspective, which has been the focus of the California Stem Cell Report, along with sidetrips into the biotech business and economics. The California stem cell agency is unprecedented in the history of the nation and California. It is the first state agency to fund scientific research with billions of dollars all of it borrowed. CIRM operates with autonomy that is unique in California government. Cash continues to flow to it regardless of the financial condition of the state. By law, the governor and the legislature cannot touch CIRM finances. The agency was created by a ballot initiative not lawmakers in 2004 in a move to sidestep the NIH, which was entangled in a presidential order that prevented it from funding human embryonic stem cell research. Some say that the solution offered up by the Proposition 71 ballot initiative and CIRM might well be the answer to solving other intractable problems that continue to stymie lawmakers. Beyond that, CIRM represents a unique confluence of big science, big business, big academia, big politics -- not to mention religion, morality, ethics and life and death. All this while California is mired in a lingering financial crisis that has given the Golden State the worst credit rating of any state in the nation. While it is not in your charge to answer the question of whether the stem cell research program is the best way right now to spend $6 billion (including interest) in California, it is a question that goes to the heart of the organization. It is also a question that is likely to be addressed in one form or another as CIRM faces the prospect of raising more billions if it wants to continue its efforts. CIRM must have the confidence and support of the state's elected leaders and voters if it is to succeed and prosper in the future.

While Prop. 71 was aimed at taking politics out of stem cell research, CIRM is very much a creature of the political process. It was created through a $30 million election campaign. Roughly one-quarter of the campaign funds were raised from one venture capital firm, which has invested heavily in a business that is now the recipient of $7 million in CIRM cash. . (http://californiastemcellreport.blogspot.com/2010/06/campaign-contributions-kleiner-perkins.html) Another election campaign for additional bond funding will require tens of millions of dollars. Backers of the effort will have to tap the industry that is likely to benefit, which, of course, raises some perception problems, at the very least. The agency, as well, will be under heavy pressure to demonstrate concrete results that can be presented to the California people as a benefit with the promise of much more to come. In 2004, Proposition 71 was sold as hope not science. That is not likely to change much in a couple of years. That's because people are not really interested in experiments with odd things that they cannot touch or see unless they believe the research will relieve suffering or make money. The stem cell agency, which has been widely and justifiably criticized for its failure to engage the biotech industry, is now rushing to embrace it. CIRM can and should work closely with industry. But it is a delicate dance. CIRM is not only what some might call a partner with industry, it is a regulator and something of a venture capitalist. Its primary responsibility is to generate value for the people of California. CIRM's interests are not necessarily the same as the interests of a for-profit enterprise that may be funded by CIRM. CIRM's desire to help industry and generate results could lead to situations where both the appearance and reality of its dealings are less than salubrious. Something along those lines occurred just last year with the approval of a $25 million loan to assist in Geron's now-abandoned clinical trial. Geron's application was handled last May in a unique and unusual manner that deviated sharply from other grant rounds. At the time the CIRM board approved the Geron loan, the agency failed to provide a scientific score on Geron's application, which has been standard practice on more than 1,000 other applications, including other businesses. CIRM failed to provide the usual summary of grant reviewer comments that were also provided on all previous business and academic applicants. The three other applicants in the $50 million round all withdrew prior to presentation to the CIRM board another first in CIRM's grant program. And no public explanation was provided at the time for the departures from long-established procedures used for more than 400 other approved grants and loans. (See http://californiastemcellreport.blogspot.com/2011/08/californias-25-million-loan-to-geron.html) The stem cell agency has an impressive array of built-in conflicts of interests, which the agency works carefully to manage with respect to both the law and their appearance. However, nothing can change the appearance of some of the problems. As far back as 2008, the journal Nature warned of cronyism at CIRM. Today, $1.1 billion of the $1.2 billion in CIRM funding so far has gone to institutions tied to members of the CIRM governing board. It is fair to say that if California voters had foreseen that situation, they would not have approved creation of the stem cell agency. One recommendation for your panel to consider is a restructuring of the board, which would require voter approval, to both shrink its unwieldy size and to remove a healthy chunk of the conflicts. Another matter to consider is public disclosure of at least the statements of the economic interests of grant reviewers. Currently those statements(along with their professional conflicts) are hidden from

public view and from applicants, which leads to unhealthy speculation about who is doing what to whom and what financial interests are at play. This is no small matter. The CIRM review group is more than influential. It makes the de facto decisions on grants. The CIRM board almost never overturns an action on an application by the review group. (For more on conflicts, see http://californiastemcellreport.blogspot.com/2010/03/reading-list-on-cirm-conflictsof.htmlhttp://californiastemcellreport.blogspot.com/2010/03/reading-list-on-cirm-conflicts-of.html ) Much more could be said about needed changes at CIRM, including reforms in the dual executive arrangement dictated by Proposition 71, which the state's top fiscal officer has said "severely compromises" the agency.(See http://californiastemcellreport.blogspot.com/2011/03/dual-execs-atcirm-severely-weaken.html) Not to mention the super-majority quorum requirement (65 percent) that has hampered CIRM board action. Then there is the super, super-majority vote requirement (70 percent) for the legislature to make even non-controversial changes in the minutia embedded in the 10,000-word initative that created CIRM. But time and money are running short for the folks at CIRM. Their most important task is to move quickly and responsibly with openness and transparency to assure that the people of Calfiornia receive maximum value for their $6 billion. I hope that your report will help them in that pursuit.

CSCR Statement To IOM-CIRM Performance Inquiry

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California Stem Cell Report

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