The stem cell agency’s Biotech Loan Task Force approved a draft loan policy[Related: Life Insurance][Related: Life Insurance] at its meeting last week (opens in new tab) and sent it on to the stem cell board’s finance committee for consideration. Even though the panel was told to expect defaults of up to 50 percent in some loan categories, the prediction was that total assets of the program could grow to between $600 million and $1 billion over ten years.
The task force envisions lending $500 million to borrowers over seven years. Most of the loans would be in the $1 million to $5 million range.
So far the concept appears promising (opens in new tab), but I’ve still got questions. The main one is with CIRM’s limited staff, how will loan applications be adequately vetted? Robert Klein, chairman of the stem cell agency’s Independent Citizens Oversight Committee (ICOC), has suggested using outside "designated underwriters." Lots more needs to be made clear about how that would work and how conflicts will be avoided.
Duane Roth, chairman of the task force said, said he hoped the finance committee could consider the loan policy so it could be taken up at the ICOC’s next meeting in late June or in August. The goal, he said, is to have a loan policy in place so that when applications to fund disease research teams are awarded in Spring 2009, loans would be an option for financing along with grants.
When the idea of loans was floated, I was concerned that it could be a means to let companies avoid patient access provisions in the policies for grants. While those rules spelled out in Intellectual Property regulations need to be strengthened, letting companies dodge them altogether would have been completely outrageous. So far, at least, the proposed loan rules require the same policies as in grants.
There are still many details to be worked out, but with the right safeguards the loan program could turn out to be a way to stretch public money for more research funding.
