2 groups in S.D. among 6 buying bond notes
The San Diego Union-Tribune
SACRAMENTO, CA — The California Institute for Regenerative Medicine announced yesterday that six charities, including two based in San Diego, would provide $14 million in bond anticipation notes to fund stem cell research in California.
The funding is intended to allow stem cell research to go forward while state officials fight litigation challenging the constitutionality of Proposition 71, the ballot measure approved by voters in 2004 that provides $3 billion in bonds for stem cell research.
The litigation has prevented the state from selling the bonds to support the initiative. Without the sale of the notes, the stem cell initiative would have run out of money during spring without a dime having gone to research.
“This is a historic step for the state of California in moving forward with the funding requirements of Proposition 71 and getting funds out to researchers,” said Robert Klein, chairman of the Independent Citizens’ Oversight Committee, the board of the California Institute for Regenerative Medicine.
The Jacobs Family Trust, founded by Qualcomm Chairman Irwin Jacobs and his wife, Joan, has agreed to buy $5 million in bond anticipation notes. The Moores Foundation, founded by San Diego Padres owner John Moores, has agreed to buy $2 million.
Other investors include Blum Capital Partners, headed by Richard Blum, husband of Sen. Dianne Feinstein; the Beneficus Foundation; the William K. Bowes Foundation; and the Broad Foundation. Beneficus was founded by John Doerr, a partner at the large Bay Area venture capital firm Kleiner Perkins Caufield & Byers, which has invested heavily in biotechnology. William Bowes, whose foundation bears his name, is also a Bay Area venture capitalist.
The six philanthropic organizations are buying innovative bond anticipation notes. If the state wins the lawsuit, the groups will be paid back with interest of up to 5 percent. If the state loses the lawsuit, the notes become a donation to the state.
The announcement was made at the same time that the stem cell research finance committee authorized the sale of the $14 million in bond anticipation notes.
Treasurer Phil Angelides, chairman of the finance committee, praised the philanthropic foundations for agreeing to buy the notes.
“I thank the philanthropic foundations who have stepped forward to allow this important scientific research to move forward expeditiously,” Angelides, who is seeking the Democratic gubernatorial nomination, said in a statement.
Klein, the institute board’s chairman, said that under strict new rules issued by the finance committee, the organizations buying the notes would not be able to influence the direction of research or apply for grants themselves.
Those safeguards won approval from John Simpson of the Foundation for Taxpayer and Consumer Rights, who has criticized the stem cell organization for secrecy in the past.
Simpson said the rules appeared to guard against conflicts of interest.
Klein said the $14 million approved yesterday would cover 170 fellowships already awarded by the stem cell agency and the next research program the board approves.
He also said that he has an additional commitment from other investors to buy $31 million in bond anticipation notes, but he hasn’t finished the deals yet and said he could not announce the buyers.
In all, Klein said there are plans to sell up to $50 million in bond anticipation notes, enough to fund the stem cell institute for about two years. That’s how long it is expected to take the lawsuits challenging the initiative to work their way through the courts.
Eli Broad, founder of the Broad Foundation, which is buying $2 million of bond anticipation notes, said California seeks to be a leader in stem cell research.
Such leadership, he said in a written statement, “will not only benefit the tremendous need of people suffering from debilitating diseases, but will also help the California economy immeasurably.”
Staff writer Terri Somers contributed to this report.