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Stem cell grants, minus cash, on tap

by Laura MecoySacramento Bee
September 8th, 2005

State agency is betting on novel way to fund awards amid legal challenge.

LOS ANGELES - The panel overseeing the state's new stem cell program plans to approve its first grants Friday in Sacramento, and then herald its decisions as a major breakthrough in training programs.

There's just one hitch: There's no money to pay for the estimated $45 million in grants the committee plans to approve for training new scientists in embryonic stem cell research.

The agency's leaders promised worried committee members during a teleconference meeting last week that they will hold a press conference after Friday's vote to put the best face on the situation.

"We are going to come out of that meeting and say we have a fabulous training program here, and that we are going to provide a work force for the country," said Zach Hall, the agency's interim president. "We're going to play that up."

The committee's chairman, Robert Klein II, said the agency needs to show it's creating the "finest training program in the history of the country" to help attract money to pay for the grants.

With that attention, he said, he's "very positive" he'll be able to raise the money to pay for the first year of the three-year grants.

Lawsuits challenging the stem cell agency's constitutionality have effectively eliminated public financing for the foreseeable future.

So Klein is counting on philanthropic organizations buying a novel new investment tool, bond anticipation notes, to fund the grants. The organizations would agree to turn their investments into contributions, if the stem cell agency loses in court.

Klein won't name the potential investors and contributors. But he said he could have the money in hand as early as October.

Further legal challenges are expected, however. One of the lawsuits filed against the agency asks the courts to block the bond anticipation note sale.

In advance of Friday's meeting, Jesse Reynolds, Center for Genetics and Society program director, said the stem cell panel should delay the grant awards so it can focus on its finances and other issues bedeviling the 9-month-old program.

"What purpose is served by announcing winners before you have the money?" he asked. "I can't think of anything beyond public relations."

Reynolds is among a handful of public interest advocates who have repeatedly criticized the panel's desire to "do things fast rather than do them right."

Committee members have said they must act quickly to deliver on the promises of embryonic stem cell research to treat and cure dozens of illnesses.

Susan Fogel, Pro-Choice Alliance for Responsible Research coordinator, said the committee is creating "a mistaken impression" that science is moving forward by awarding grants without money to fund them.

She said she was "disappointed" by the stem cell panel's "focus on spin and public relations that doesn't have anything to do with the science."

The agency hasn't been able to sell any of the voter-approved $3 billion in bonds for stem cell research and the institute's operations. Investors viewed the bonds as too risky because of the lawsuits filed by tax groups and embryonic stem cell research opponents. Klein said those lawsuits could take an additional nine to 15 months to resolve.

The stem cell agency, the California Institute for Regenerative Medicine, has kept its doors open for the past nine months with a $3 million loan from the state and a $5 million donation.

Walter Barnes, the agency's chief administrative officer, said the institute would run out of money for operations by May if it doesn't get new financing or drastically cut spending.

Klein said the bond anticipation notes the state plans to sell will help pay for operational costs. But he said most of the money - about $15 million - would go to the training grants.

Twenty-six California universities and nonprofit institutes, including the University of California, Davis, have applied for up to $3.75 million each to train students.

A "working group" of scientists and patients' advocates evaluated the complete applications behind closed doors last month. The working group recommended 16 for funding, according to abbreviated descriptions of the grants released last week.

But it's almost impossible to determine which applicants are finalists because the stem cell panel withheld the applicants' names from the public and from the committee members to protect the losers from public humiliation.

UC Davis officials confirmed their application was among the finalists. The working group recommended funding 12 trainees, rather than the 16 requested, and providing $2.68 million instead of the $3.43 million UC Davis sought.

The secrecy surrounding this process has come under fire from public watchdog groups who contend it keeps the public from fully evaluating the panel's decisions.

Fogel, Pro-Choice Alliance's coordinator, said the absence of applicants' names also eliminates important information for the stem cell panelists making the final decisions.

"How can they vote on whether this applicant is an appropriate one who is capable of delivering if they don't know who the applicant is?" she said. "I have never seen a foundation give out a grant to 'anonymous.' "

The agency plans to announce the winners after the committee votes, but not to disclose the losers to save them from embarrassment.

"I think they have to be big boys and girls here," Fogel said.

Some educated guessing is already under way from the descriptions of the applications that were released last week.

At Friday's meeting in Sacramento, savvy observers also can glean some information by watching which committee members leave the room for which votes. This is part of the "recusal" process required by conflict-of-interest laws.

Several members of the committee represent universities and nonprofit institutions that have applied, so their absence could signal their employer is being considered. The meeting is scheduled to begin at 8:30 a.m. Friday at the Sheraton Grand Sacramento Hotel, 1230 J St. To view the agenda, go to www.cirm.ca.gov/meetings/2005/09/09-09-05.asp.



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