The Wall Street Journal
Even as legal challenges have tied up funding for California’s ambitious $3 billion effort to fund stem-cell research, big-dollar contributions from prominent Californians who stepped into the breach have kept the effort going.
Amid court challenges from groups opposed to the state effort, private donors have contributed more than $100 million in recent years to prop up the new stem-cell research agency, the California Institute for Regenerative Medicine, as well as research programs at state universities, according to a tally by The Wall Street Journal. Among the donors are Ray Dolby, the founder and chairman of Dolby Laboratories Inc., who has devoted $21 million to stem-cell-research programs in the past two years. Los Angeles real-estate developer Eli Broad has given at least $27 million. Venture capitalist John Doerr, bond-fund manager Bill Gross, and Qualcomm Inc. founder Irwin Jacobs have also been major contributors.
Such donations underscore the strong support for the controversial research in some corners of the philanthropic world, even as a larger debate rages about the role of government funding. Without these private contributions, the state might have been forced to sharply curtail operations. At the same time, the money has raised concern about the potential for private individuals influencing the direction of the research.
California’s research effort began when voters approved the program in a 2004 ballot initiative. Very little of the research world-wide is even close to being tested in clinical trials. Following voter approval, two court challenges filed the following year by fiscal conservatives and anti-abortion organizations blocked the issue of bonds to fund the agency. The challenges argue in part that CIRM‘s creation violates the state’s constitution.
California’s stem-cell program represents the largest state-led effort to sidestep federal restrictions on the work. Several other states including New York, Connecticut and New Jersey have proposed similar efforts, although on a smaller scale. Wealthy donors have funded stem-cell research at Johns Hopkins University and Boston’s Beth Israel Deaconess Medical Center.
Stem cells, primordial cells capable of transforming themselves into various types of body tissue, may hold the key to new treatments for degenerative problems such as Parkinson’s disease, diabetes and spinal injuries, say proponents.
CIRM has been able to hire 19 staffers, occupy a new headquarters building in San Francisco, and issue a handful of training grants — much of which wouldn’t have been possible without the outside assistance. Meanwhile, private donations to the University of Southern California, the University of California at San Francisco, and other institutions have sparked a flurry of research-facility construction and hiring of new stem-cell scientists. CIRM was chartered primarily to make grants to university and other researchers.
The private funding is supporting research including basic studies aimed at illuminating the way stem cells “differentiate” into neurons, insulin-producing beta cells and other tissues. Several universities are deriving new stem-cell lines, work that isn’t permitted in federally-funded laboratories. UCSF also has restarted a program using off-campus labs where researchers are attempting to clone embryos in order to produce stem cells with particular genetic characteristics.
Such efforts don’t come cheaply, in part because of the federal restrictions. Federal rules prohibit funding for research involving all but a handful of embryonic stem-cell lines that existed in 2001, many of which proved unsuited for some experiments. Last month, President Bush vetoed a bill that would have expanded federal support for the work.
Several universities are building entirely new research facilities with private support. New buildings can not only run into the hundreds of millions of dollars to construct, but they often require the purchase of expensive laboratory equipment dedicated to the privately funded work.
The work is also politically controversial. Anti-abortion groups oppose the use of human embryonic stem cells, the most potent form of the cells, because it destroys the embryo. Other researchers are working with more specialized forms of the cells, which can be derived from bone marrow or blood.
So far, private funding has greatly outpaced the state’s spending on stem-cell research. In just the past six months, Mr. Broad’s foundation gave $25 million to USC and Mr. Gross, the bond-fund manager, provided $13 million to UCSF. Mr. Dolby last year donated $5 million to help CIRM cover operating expenses, and in May gave $16 million to help fund a new research building for stem-cell research at UCSF. He declined to comment for this story.
“We think one of the great new research frontiers is stem-cell research,” says Mr. Broad, whose foundation purchased $2 million of “bond-anticipation notes” to help cover CIRM‘s operating costs and recently pledged $25 million to USC to build new stem-cell laboratories. “It’s great for the economy of California, and we will support it further.”
Critics, however, consider it unseemly for a state agency to solicit private donations and worry that such contributions may bias funding decisions once CIRM begins to make grants to companies. “You don’t normally have a state agency going around hat in hand, begging from people who potentially have a vested interest in the outcomes of what the agency is doing,” says John Simpson, director of the stem-cell project at the Foundation for Taxpayer and Consumer Rights, a consumer group in Santa Monica, Calif.
Robert Klein II, chairman of CIRM‘s oversight board, shrugs off such concerns and says that donor support for CIRM reflects philanthropists’ determination that “a small group of ideological individuals cannot abuse the state’s court system to destroy democratically mandated science and medical-funding programs.”
Mr. Klein, a real-estate developer who drafted the stem-cell ballot initiative and now effectively manages the agency, says he planned from the beginning to allow private donations to CIRM. He says such contributions have helped the agency keep its overhead costs low, so that state funds, once available, will go directly to research. CIRM‘s headquarters in downtown San Francisco, for instance, was provided by private and corporate donors who ponied up $18 million in cash and in-kind contributions so the agency could occupy the site rent-free for a decade. Philanthropic support for the agency became a necessity amid the legal challenges to CIRM‘s existence.
At the time, the agency had nearly burned through an initial $3 million seed loan from the state. A $5 million gift from Mr. Dolby and his wife Dagmar gave the institute some breathing room, but not much. Mr. Klein began reaching out to wealthy people across the state, pitching them on bond-anticipation notes, which carry a low interest rate and will be repaid once the state bond sale proceeds. The going was slow at first.
After almost a year of effort, CIRM in April raised $14 million from six foundations, including those run by Messrs. Broad, Doerr and Jacobs. A week later, the agency announced $12.1 million in grants to help junior scientists get up to speed on stem-cell technologies. Mr. Klein says the agency is close to raising $30 million more in bond-anticipation notes.
Other fund-raising activities, however, have been criticized. In May, San Francisco philanthropists held a fund-raiser for the agency featuring actress Julie Andrews. Details of the individual donations have not been released although Mr. Klein and his deputy served as honorary co-chairmen of the fund-raiser.
Mr. Simpson says the agency’s actions smack of “laundering money” through the foundation in order to avoid disclosure rules. A CIRM spokesman said Mr. Simpson’s allegation is “incorrect” and insists the donations comply with CIRM policies.
CIRM‘s reliance on private funding may be drawing to a close. In April, a lower state-court judge upheld the agency’s constitutionality in all respects, making it possible for the state to issue bonds to fund the research. Although plaintiffs appealed that decision, the judge’s ruling was sweeping enough that Gov. Arnold Schwarzenegger last month provided a $150 million loan to CIRM to expand research efforts. Money from that state loan may begin to flow early next year.
Meanwhile, the private donations are already having an impact. USC has a new building that could become the state’s largest stem-cell research center on the drawing board. It also recently hired Martin Pera, a prominent researcher from Australia, to run its new stem-cell research program. That step is notable in part because the federal restrictions sparked fears that U.S. scientists would leave the country to pursue their work.
UCSF is using private money to renovate an entire floor of a building so that its stem-cell researchers will be able to work in a central location. One team deriving new stem-cell lines currently works in a laboratory at Menlo Park, Calif.-based biotechnology company Geron Corp., while another labors at an off-site leased facility in San Francisco.
The university also is proposing an entirely new research building at the cost of as much as $100 million. Much of that must be raised privately, although Arnold Kriegstein, director of the university’s stem-cell program, hopes CIRM might also be able to kick in some funding. “Fund-raising is one of the bottlenecks to getting moving as quickly as possible,” says Dr. Kriegstein.
