Will Californians OK Billions More for Stem Cell Research?

Dec. 30, 2019, 10:45 AM

California’s stem cell agency spent $2.9 billion in taxpayer funds creating laboratories, funding future scientists’ education, and underwriting research that’s yet to produce a commercial product. Now proponents of continuing the agency’s mission are refining their pitch to voters for another $5.5 billion.

Backers of the California Institute for Regenerative Medicine, which created an ecosystem and funding source for early-stage stem cell research, will begin gathering signatures in January for a November bond initiative to fund developing treatments that may be years away from reaching patients. They will face doubters and lots of competition for voters’ attention and tax dollars.

“I think that a funding decision by popular vote that locks in a substantial income stream over a decade over a particular use is not good social policy. It’s not to say that the money isn’t being used for a good purpose,” said Ken Taymor, deputy director of the Forum for Collaborative Research at the University of California Berkeley School of Public Health.

The question, said Taymor, is “can we afford to spend it on what CIRM is doing as opposed to other public health needs?”

Believers and skeptics agree Proposition 71, passed in 2004, propelled California into the leading state in regenerative medicine, the biomedical science of replacing damaged cells with healthy ones and in the process helping the body heal itself. California has four times as many life sciences employees as the next closest state, Massachusetts.

Among the arguments is whether there’s enough reason and return on investment to have a dedicated funding source outside the regular budgetary process.

Jeff Sheehy, a CIRM board member since 2005, gives the agency an A plus for advancing science as California was the only entity funding embryonic stem cell research after then-President George W. Bush restricted federal funding.

“We supported the field, we’ve grown biomedical research and biotech in California tremendously. I think if you look at returns to the state, you might say B minus. And that speaks to one of my frustrations as we try to move forward, as we talk about moving forward, that we really haven’t grappled with the mechanics of ensuring that the state gets a real return on its investment,” Sheehy said.

Grant recipients since Prop. 71 passed paid the state $352,560 in total invention-related income, the California Legislative Analyst said in a Dec. 2 analysis of the proposed initiative. That’s far less than perhaps voters envisioned 15 years ago when promises of royalties helped Prop. 71 win a majority of votes.

Numbers Game

It’s a long, expensive timeline from inspiration to treating patients. Taxpayer-funded grants led to more than 50 clinical trials. The agency approved $2.68 billion in awards, including $904 million for early-stage discovery research, $707 million for clinical investment, and $482 million for infrastructure. Beneficiaries included Stanford University, the University of California, the University of Southern California, and the Scripps Research Institute.

“It’s sort of like you build the highways and bridges and you don’t have to build them again. You have to maintain them. It’s a different allocation of funds,” said Jeanne Loring, director of the Center for Regenerative Medicine at the Scripps Research Institute’s Department of Molecular Medicine.

The idea is “to nurture the new growth and help the established entities to succeed, and to succeed in this case, we need to demonstrate what works in the clinic. And they know exactly how to do it and what it takes, and what it takes is money,” said Loring, who has been the recipient of CIRM grants.

CIRM is down to its last $27 million with no new funding source yet approved to continue operating. The remaining funds will be spent on administering existing grants, the agency said.

Competing Choices

California voters will face a long November ballot with competing demands for money, said Zev Yaroslavsky, a specialist in state politics and government and director of the Los Angeles Initiative at UCLA’s Luskin School of Public Affairs.

“They’re going to have to make a decision whether roads are more important than stem cell research, is education more important than water infrastructure,” Yaroslavsky said.

California’s strong economy favors voters’ generosity for funding, Yaroslavsky said.

What Californians get in return for their generosity is part of the equation voters will consider.

California’s stem cell agency pumped $15.4 billion into the U.S. economy and helped create 56,549 additional full-time equivalent jobs in California, USC economists said in a study released in October. It’s not known how many of those jobs would have been created without that money.

Arnold Kriegstein, director of UC San Francisco’s Developmental and Stem Cell Biology Program, said UCSF researchers established five startups “all spun out of stem cell research.”

“I think it would be safe to say none of those would exist today without the early support from CIRM,” said Kriegstein, a neurology professor and founding director of the Eli and Edythe Broad Center of Regeneration Medicine and Stem Cell Research at UCSF.

“Those companies attracted more than $450 million in venture capital and hired dozens and dozens of scientists, and they’re contributing taxpayers to feed the California economy,” Kriegstein said.

Attracting Capital

The long and broad game is part of the selling point, particularly when looking at expanding access to patient trials of therapies created using bond funds, said Robert N. Klein, who backed Prop. 71. Klein, a real estate developer, was the agency’s first oversight committee chairman.

The new initiative would create a working group to help find ways to cover patient costs from public, private, and nonprofit sources.

Demonstrating early governmental and private coverage will “definitely encourage investment in this field by biotech because they see that there’s a real capacity to have a viable, financially viable, therapy,” said Klein.

Yet images of children successfully treated for the “Bubble Boy” disease with a CIRM-funded trial therapy collide with conflicts and criticism remaining from the original initiative, including lack of legislative oversight.

“CIRM earned our support in fulfilling an important health and science role. But it hasn’t earned its right to a privileged position in the budget,” UC Berkeley’s Taymor said.

To contact the reporter on this story: Joyce E. Cutler in San Francisco at jcutler@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Peggy Aulino at maulino@bloomberglaw.com

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