[ExI] LA Times: California stem cell program needs a new treatment

[PJ Manney]

This brings up SO many issues around funding research -- especially
public funding -- I can't even begin to list them.  But I'd be curious
about your thoughts.

PJ

http://www.latimes.com/business/la-fi-hiltzik30-2009mar30,0,3108872.column
>From the Los Angeles Times

California stem cell program needs a new treatment

The California Institute for Regenerative Medicine threatens to suck
up precious fiscal resources of a state with none to spare and is rife
with conflicts of interest.
Michael Hiltzik

March 30, 2009

In the annals of wrongheaded things done with the best intentions, the
California stem cell program has always been in a category of its own.

The $6-billion program was enacted by voters in 2004 as Proposition 71
after a campaign of exceptional intellectual dishonesty, featuring
vignettes of sufferers from diabetes, Alzheimer's, Parkinson's and
other heartbreaking diseases for which it seemed to promise imminent
cures through research into embryonic stem cells.

As conceived by a Northern California real estate man named Robert
Klein, who remains the program's chairman and guiding spirit, the idea
was that California would fill the vacuum created by the Bush
administration's ideology-inspired ban on federal funding for much of
this research. (President Obama rescinded the ban this month.) The
state, according to the hype, would reap billions in profits from the
therapies it funded.

No one would dispute that finding cures for Alzheimer's, cancer or
diabetes is a worthy, even urgent, goal. To its credit, the California
Institute for Regenerative Medicine has placed the state at the center
of the world of embryonic stem cell research by committing hundreds of
millions of dollars in grants for the construction of state-of-the-art
labs and the training of a new generation of scientists.

But the program threatens to suck up precious fiscal resources of a
state with none to spare and is rife with conflicts of interest. Its
commitment to public disclosure is spotty. Now it's planning to hand
over up to $400 million in taxpayer funds to the biotech industry on
terms that may multiply the potential for conflicts and waste.

The institute is tangled in a persistent ethical morass. From the
start, its safeguards against conflicts of interest by members of its
29-person governing board were sketchy, and provisions for vigorous
debate over its goals and methods were nil.

Despite a provision in Proposition 71 forbidding a board member to
attempt to influence "in any way" a decision involving his or her
employer, in 2007 board member John C. Reed tried to get the
institute’s staff to reverse the rejection of a grant for the La
Jolla-based Burnham Institute for Medical Research, of which he is
chief executive. The staff refused. Reed, who should have been bounced
from the board, got his wrist slapped by state ethics officials
instead.

Meanwhile, 18 institutions with representatives on the board have
received portions of $552 million in grants from the institute. (I am
indebted to David Jensen of the California Stem Cell Report, one of
the program's outstanding bird dogs, for this math.)

Such logrolling is perhaps inevitable, given that Proposition 71
restricted the board's membership to officers of California research
institutions and biotech companies, along with advocates for research
in 11 diseases supposedly subject to stem cell-driven cures.

Lacking any truly independent members, the board is dominated by Klein
and devoid of "genuine debate," observes UC Berkeley Law professor
Kenneth Taymor, who spent months studying the body. Indeed, reading
transcripts of the board's sessions, one sometimes gets the impression
that the only vigorous debate among the members involves which
historical figure Klein more resembles, Albert Schweitzer or Mahatma
Gandhi.

That brings us to the institute's 2009 strategic plan, which calls for floating

$400 million in taxable state bonds, much of it earmarked for loans to
the biotech industry to finance the development of specific therapies.

Is this the best way to spend the state's money? Klein says the great
virtue of making loans is that, because the money gets repaid, it can
be used over and over again. That's assuming that it does get repaid.
Some of the loans, furthermore, will be non-recourse, meaning that if
the product fails or can't get further funding before the loan is
repaid, the debt will be written off.

The loans' target is the "valley of death," the phase of product
development that follows publicly funded basic research and precedes
clinical trials. Biotech firms traditionally have a hard time raising
capital for this phase, because it's very costly and speculative,
suggesting that Klein is counting unhatched chickens.

But he is ever optimistic: "The first major breakthrough will change
the world," he told me.

Part of the reason for the move into product development is that the
institute's chronic cash crunch -- an outgrowth of the state's
financial crisis -- has forced it to scale back or delay some basic
research grants. Without a new financial infusion, the institute says,
it may run out of money in September.

But the shift away from basic research isn't universally welcomed in
California's scientific community.

"The foundations for stem cell biology are still being constructed,
and that takes basic science," says Arnold Kriegstein, a neurologist
at UC San Francisco who raised the issue at a recent meeting of the
institute's board.

Kriegstein contends that in much of stem cell research, product
development is premature. He fears that the move in that direction is
motivated by a "desire to come up with a real clinical triumph they
could claim credit for. I'm concerned that in the rush to get there
they may be spending a fair amount of funds on projects that are just
not ready yet."

Marie Csete, the institute's chief scientific officer, says
Kriegstein's concerns are overwrought. "We have no intention of
abandoning basic science," she told me, observing that the institute
has helped fund more than $600 million in training, research and
infrastructure over the last four years. "We've supported basic
research in a huge way."

She also strongly disagreed that the time is not ripe for product
development. "There's very mature work that is quite close to clinical
applications," she said, adding that just because there are gaps in
our knowledge of stem cell biology doesn't mean all development
efforts need to be put on hold.

With the change of administrations in Washington and the deterioration
in the state's fiscal health, the time has come for a fundamental
rethinking of the stem cell program. The debate over its future has to
take place in the context of the state's overall needs, not merely
among a small group of self-interested board members.

Proposition 71 endowed the program with what looked like an
embarrassment of riches. The danger is that, without better oversight
and broader debate about its policies and goals, it will become simply
an embarrassment.

Michael Hiltzik's column appears Mondays and Thursdays. Reach him at
michael.hiltzik at latimes.com and read his previous columns at
www.latimes.com/hiltzik.