THE SAN FRANCISCO CHRONICLE

Los Angeles, CA — California stem cell policymakers revealed a rough outline of what could be a $500 million attempt in 2007 to push the state’s stalled experiment in stem cell research into a new phase of productive grant making.

The outline emerged from interviews during a two-day meeting here of the California Institute for Regenerative Medicine‘s governing board, which is charged with implementing the $3 billion Proposition 71 stem cell bond initiative passed by state voters in the November 2004 election.

During the meeting, board members informally endorsed a broad scientific strategic plan covering the entire $3 billion program, proposing 25 initiatives to construct laboratories, fuel research and develop the first treatments from human embryonic stem cells, the ultra-flexible starting cells derived from early-stage embryos. Scientists aim to create disease-specific stem cell lines to study how illnesses develop and eventually mold replacement cells to restore function in diseases such as Parkinson’s or diabetes.

Discussion of the strategic plan prompted questions about the stem cell program’s ability to recover from litigation delays and startup troubles. Despite continuing delays, policymakers said they still intend to assemble a research enterprise that would dwarf comparable efforts being set up in other states.

Prop. 71 was specifically designed to step into a perceived financing void created by the Bush administration’s refusal to allow traditional National Institutes of Health funding for most human embryonic stem cell research, which the president opposes on moral grounds.

California’s substitute plan envisioned up to $350 million a year in taxpayer-backed bonds over 10 years, but Prop. 71 also included leeway to carry over debt authority if the total falls short in any given year. Lawsuits blocked any bonds from being issued for the program’s first full two years of life, which means a carryover of $700 million has accumulated.

Now, the program’s leadership anticipates entering the bond market next year with a maximum authority of roughly $1 billion – the $700 million carryover plus up to $350 million in fresh bond entitlement for the program’s third year in operation.

No one expects the fledgling program to find enough grant proposals to soak up that much money – nor does the institute have the staff and outside grant reviewers to oversee such a splurge. Nevertheless, California’s stem cell research advocate-in-chief Robert Klein, chairman of the state institute, said he hopes for a big push in 2007 once the cloud of lawsuits lifts. That is expected by the middle of the year.

Klein said the state program will certainly use a large chunk of its carryover capacity as soon as the first bonds are issued.

“We know we’ll be over $350 million,” he said.

For starters, the program would repay a $150 million state loan advanced by Gov. Arnold Schwarzenegger, plus another $45 million in philanthropic loans.

The institute also plans to move quickly to commit funds for capital construction projects, which would take several years to complete and are considered critical for the program’s long-term success. For 2007, policymakers project committing about $156 million for facilities.

Klein noted that this amount would almost certainly be matched 2 to 1 by institutions and private donors, bringing the effective total for new facilities alone to more than $500 million.

As for the stem cell program’s own disbursement plans, the new scientific spending plan estimates $125 million for scientific grants next year, including $53 million for the first installment of a four-year “jump-start initiative” for basic exploration of human embryonic stem cell science; $13 million for scientific training programs; and $20 million for “translational” research, aimed at turning fundamental findings into clinical innovations.

Zach Hall, president of the institute, who summarized the strategic plan during a special meeting of the institute’s governing board Tuesday night, said the numbers represent only a rough midpoint in a range of possibilities. Priorities are expected to shift, he said, as the program moves ahead.

Members of the stem cell program’s governing panel, the 29-member Independent Citizens Oversight Committee, must vote their approval before any particular initiative can be carried out. Early discussions Tuesday and Wednesday revealed little controversy, at least for now while plans are fluid.

The overall plan represents “a good balance between realism and optimism,” said board member Francisco Prieto, a Sacramento-area physician. “We’re now starting to put together a real agency, and that’s gratifying.”

Others raised questions about the detailed policies being debated by the board covering such matters as how to restrict profiteering and ensure that treatments are affordable. Those policies would apply in the event any therapies are developed by for-profit companies using Prop. 71-financed research.

“No matter how good the scientific strategic plan is, it’s meaningless without the proper policies in place,” said John Simpson, director of a Prop. 71 monitoring project at the Foundation for Taxpayer and Consumer Rights in Los Angeles. “I don’t think they’re there yet.”

For his part, Klein said the 2007 research grant total could reach $220 million, depending on the quality of grant proposals and the program’s capacity to dole out large sums of money. Additional staff and reviewers are being recruited.

“The goal is to only fund the best science,” Klein said. “We are gearing up.”