Backers say ‘enemies’ are hoping for missteps

San Francisco Business Times

Near the midway point of a six-hour meeting, members of a group laying out the process for awarding $222 million in stem cell research facilities grants debated a word: urgency — and whether it should be a factor for awarding the money.

Did it demonstrate how quickly the California Institute for Regenerative Medicine — the agency charged with overseeing voter-approved Prop. 71 — wants structures built and research to begin?

“Timeliness” may be better, one member said during the July 12 meeting in a Burlingame hotel conference room. Another suggested “schedules and milestones.”

In the end, CIRM‘s facilities working group settled on “urgency” as one of five criteria for awarding the facilities grants. But the episode illustrates the pressure inherent with quickly — and publicly — creating a seamless process for a politically charged program.

The grants won’t be the first awarded by CIRM and its Independent Citizens Oversight Committee. In fact, CIRM already has earmarked $208 million — most of that for scientific work — that eventually will come from $3 billion in bond proceeds that Prop. 71 authorized in 2004 for human embryonic stem cell research.

Yet the $222 million set aside for facilities — for which CIRM is expected to request applications next month — could literally be the most concrete legacies of Prop. 71.

“We know that our enemies, the people who just ideologically and morally oppose embryonic stem cell research, cannot win on their moral arguments, their religious arguments. They have no standing on that,” said David Serrano Sewell, a San Francisco deputy city attorney who has multiple sclerosis and sits on CIRM‘s oversight board as a patient advocate.

“But the technical things can hold us up. It did for two years.”

‘The major shot’

The state Supreme Court in May turned down a request from the conservative California Family Bioethics Council and taxpayer groups to review an appellate ruling that rejected claims that the stem cell program suffers from weak state supervision and its board has conflicts of interest.

That court battle effectively tied up the sale of bonds. But Gov. Arnold Schwarzenegger approved a $150 million state loan last year and the state treasurer sold $45 million in bond anticipation notes that have funded grants to date.

If the Independent Citizens Oversight Committee on Aug. 8 approves the criteria hammered out by the facilities working group, the first tranche of actual Prop. 71 bonds could be sold to large institutional investors by the end of next month. That roughly $250 million will mostly repay the state and investors in the bond anticipation notes.

Nonetheless, CIRM‘s citizen boards are pressing forward on grant awards quickly and yet, they say, transparently and cautiously.

“They’re talking here really about the major shot they’re going to get at building things,” said John Simpson, stem cell project director with the Foundation for Taxpayer and Consumer Rights, a watchdog group based in Santa Monica. “It’s a big amount of money, and they’re trying to come up with the rules so they’re fair.”

Twenty or so facilities grant applications may come to CIRM, said Lori Hoffman, the agency’s acting president. Grant awards, which could range from $5 million to $40 million each, may be made as early as February or as late as May.

Applicants must match their requests with 20 percent cash.

The Buck Institute for Age Research in Novato, the J. David Gladstone Institutes in San Francisco, Stanford University and University of California campuses in San Francisco, Berkeley and Davis are among the likely applicants for the facilities grants.

“We need to really expand the capacity for stem cell research in the state,” Hoffman said, “and this is by far the most important piece of that puzzle, to provide the space required for current and new investigators.”

Rising costs, tension

Another reason for moving quickly, said Richard Keller, CIRM‘s senior officer for scientific and medical research facilities, is that construction costs are rising about 1 percent a month. Each delay then means less bang for CIRM‘s bucks.

The lag time in the planning and construction of the large facilities is critical, Hoffman said, and the sooner grants are approved, “the sooner (applicants) start and the sooner research can begin.”

Along with urgency — and on top of Prop. 71 standards such as the 20 percent match — the other criteria for judging applications are value, leverage, functionality and shared resources.

The facilities working group could set up a two-step application system that calls for a scientific review then a facilities review that would put more emphasis on value and leverage. The scientific review could come as early as December, Hoffman said, but the two-step process would push grant awards into March or as late as May.

“They’re feeling that pressure, and there’s also the whole thing of the fact that if you build something it may be a couple of years before you see it,” Simpson said. “There’s pressure to do this really quickly.”

Sewell, of the oversight committee’s facilities working group, said tension is inherent with ironing out the details quickly and publicly. A facilities working group meeting in April featured a terse exchange between Sewell and CIRM‘s then-president, Zach Hall, that centered on establishing the June public hearings.

That meeting was cited by Hall, who has prostate cancer and was planning to retire in June, as one of the reasons he moved up his resignation to April.

But, Sewell said, the struggle to craft policies and criteria publicly will have a long-term impact on scientific research and health care.

“(Opponents) would like nothing more than to go to Superior Court and file an injunction because we failed to define something,” Sewell said. “Our meetings are a little longer as a result. … We just want to do this right.”
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