With Wildfires Burning And Covid-19 Spreading, Can California Afford Stem Cell Research? Voters Are Set To Decide

This Election Day, California voters are being asked to replenish funding for the state’s ambitious stem cell research program, with a well-financed campaign that’s making heady promises about curing diabetes, paralysis, cancer, and Parkinson’s and Alzheimer’s diseases.

Backers of Proposition 14 also cast it as a job-creation measure, arguing the money it raises will boost the state economy by cementing the Golden State’s place as a leading incubator of successful biotech startups. But opponents say that amid the Covid-19 pandemic and wildfires, California has far more pressing needs.

In 2004, Californians approved a $3 billion ballot measure, Proposition 71, to create a new state agency to fund stem cell research at a time when President George W. Bush had banned federal funding for some of this work — if scientists used newly created embryonic stem cell lines. Now, even though the National Institutes of Health funds stem cell research to the tune of $2 billion a year, California residents are being asked to authorize the sale of $5.5 billion in general obligation bonds to pay for stem cell research. With interest, it’s expected to cost the state nearly $8 billion.

Opponents say the stem cell field is now so flush with research funding from the federal government, venture capitalists, and philanthropists like Facebook co-founder Mark Zuckerberg, its supporters have no business asking California residents to pony up for continuing research — especially when the state faces a dire budget outlook due to the pandemic and wildfires, and struggles to fund public education and curb homelessness. The state’s largest newspapers have opposed the measure.

There’s been no public polling on Proposition 14, so it’s hard to predict how it will fare. While Proposition 71 passed with 59% of the vote 16 years ago, the new measure is facing a very different environment, said John Matsusaka, an economist who heads the Initiative and Referendum Institute at the University of Southern California. He said federal funding restrictions that fueled support of Proposition 71 are no longer a major concern, proponents have not done a great job demonstrating that voters got their money’s worth from the first $3 billion, and the measure is coming to voters during tough fiscal times.

“Everyone is having to tighten their belts,”  Matsusaka said. “Some may wonder if this is a ‘luxury’ investment that ought to be put on hold for now.”

The critics also say the new proposition does nothing to correct, and may even worsen, ethical issues that have mired the state’s stem cell agency, the California Institute for Regenerative Medicine, or CIRM, since its inception. Those conflicts of interest, chronicled in a call for sweeping changes by the National Academy of Medicine in 2012, include having a board composed largely of individuals from institutions, such as universities, that are the main recipients of millions of dollars in CIRM grants.

“The people who decide who is going to get funded are the people who get funded. That’s a built-in conflict of interest they made no attempt to fix,” said John Simpson, who monitored CIRM for many years as stem cell project director for the group Consumer Watchdog. “They need to go back to the drawing board and fix these structural flaws.”

Some of the conflicts have been so flagrant as to be almost comical. For example, former CIRM President Alan Trounson once asked prominent biochemist Leroy Hood to be a reviewer of a grant by Irv Weissman, the director of Stanford’s Institute for Stem Cell Biology and Regenerative Medicine, after the three men spent time fly fishing together on a Montana ranch jointly owned by Weissman and Hood.

In an episode insiders term “Trounsongate,” Trounson in 2014 took a plush board position with a Weissman spinoff firm, StemCells Inc., just a week after leaving his position at CIRM. While Trounson was at CIRM, the agency’s board awarded StemCells Inc. $20 million, even though outside reviewers had twice rejected funding the grant. (Those who rejected the grant may have been on to something; four years after receiving its CIRM grant, both the company and its CIRM-funded Alzheimer’s treatment failed.) Trounson, now in Australia, still receives an annual pension of nearly $44,000 from the state.

“I was stunned by all that, and also by the fact that nobody seemed to notice it,” said Jeanne Loring, a stem cell pioneer and professor emeritus at the Scripps Research Institute who long supported CIRM (and received $17 million in CIRM funding) but now says she’s lost faith in the agency. “I saw a lot of stuff going on that troubled me,” she said. “It was a ‘bro’ thing. It was too cozy.”

Loring is among those who would like to see a proposition to fund stem cell research that’s more modest, and also better addresses conflicts of interest. But rather than slimming and reorganizing the unwieldy 29-member CIRM board, as the National Academy of Medicine recommended, the new proposition increases the number of board members to 35. (This was done so members with conflicts of interest can recuse themselves from decisions and still leave a quorum, and to add representatives from less populous areas of the state.)

Supporters of the measure have spent more than $16 million, with half of that coming from Robert N. Klein II, a Palo Alto real estate developer who wrote Proposition 71 and worked to get Proposition 14 on the ballot after his son was diagnosed with type 1 diabetes. (Jordan died of complications from diabetes in 2016.) Another $2 million came from Dagmar Dolby, the widow of audio engineer Ray Dolby, and $1 million was contributed by the diabetes advocacy group JDRF International. The opposition has raised a meager $250.

One of the loudest voices of opposition is a CIRM board member: Jeff Sheehy, an AIDS activist from San Francisco who has served on the board since its inception, does not think the project has been run well enough or made enough progress to request more funding. Proponents note all other board members support the measure.

Sheehy is upset that the original proposition led to few new stem cell therapies, that CIRM is using its money to fund a host of projects that have nothing to do with embryonic stem cells, and that so few of the royalties that supporters promised from new therapies have come in. He’s also concerned that the new proposition will no longer send future royalties to state coffers, but will route them back to biotech companies to subsidize treatment costs.

“The promise was that this would pay for itself, that we’d have cures within a short period of time. To date, we’ve gotten less than $500,000 back,” Sheehy said. “This is unaffordable, and with California facing epic deficits, it just makes no sense to pay for stem cell research with debt.”

Sheehy said with the federal government spending so much on stem cell research, the original rationale for Proposition 71 no longer exists. A 2017 STAT investigation found CIRM had funded just 27 clinical trials for stem cell therapies, and completed two, compared to 571 trials, with 165 completed, by NIH. CIRM supporters said the disparity was because the agency was focused on supporting infrastructure and buildings. At the time, CIRM board member Jim Lott said he was “floored by the disparity” and would not support a similar bond measure.

“We’ve had epic wildfires we need to deal with,” Sheehy said. “Covid has exposed huge inequalities in our health care system. And you only have to walk down the streets of San Francisco or Los Angeles to know we have a huge homeless problem.”

Others say stem cell research should be funded, but not through a bond issue that the state will be paying off for decades and not with funds that have no legislative oversight. “You shouldn’t use bonds to finance something that should be part of an overall budget where spending can go up and down depending on the economic situation,” said Simpson.

While critics say the state can’t afford to pay for stem cell research, proponents of Proposition 14 say the state can’t afford not to pay for it. They say dividends may not appear overnight, but will appear long term as new therapies roll out in coming decades.

They cite a CIRM-commissioned study that concluded the agency will have created 80,000 biotech jobs by the end of 2023. (Another CIRM-funded study estimated the measure created about 4,200 jobs each year.) CIRM proponents also say the state will not have to start paying interest for five years, a time when the California budget may be in far better shape to repay the debt.

Melissa King, executive director of Americans for Cures and the head of field operations for the group Yes on 14, said the group should be asking for even more money. “What this is is an economic stimulus program for the state,” she said. “Right when we need it most.”

One of the people speaking out in favor of Proposition 14 is Larry Goldstein, who directs the stem cell program at the University of California, San Diego, and has received $21 million in CIRM funding. He said state funding remains imperative because the Trump administration could still ban research on embryonic stem cells, and the money was an investment that would be paid back through new startups, job creation, and the lowering of health care costs as treatments based on CIRM-funded research keep people out of hospitals.

“Look at the organizations that did endorse this, it’s chambers of commerce that are absolutely guardians of tax policy and economic development,” he said. “When you look at the cost of this measure in the context of disease, it makes good sense.” California Gov. Gavin Newsom is among those who support the measure.

Other scientists said the proposition was needed to keep potential treatments out of the “valley of death” where so many treatments that seem promising in cells or mice wither before moving to human clinical trials. “That work is a lot of repetition, a lot of scaling up. That’s not something you can get a grant for from NIH,” said Jan Nolta, who directs the stem cell program at the UC Davis School of Medicine in Sacramento and who has received about $2.6 million in CIRM funding for work using stem cells to treat Huntington’s disease and chronic wounds. “CIRM has really filled a void in funding.”

Nolta said CIRM has succeeded in setting up a large research infrastructure throughout the state, including at her institution, built five clinics to help patients participate in clinical trials, and lured many of the nation’s top stem cell researchers to California.

One of those scientists is Andy McMahon, a kidney researcher who had been at Harvard, but moved to USC, lured by a package that would not only fund his research but help create a juggernaut stem cell program at his new university and partially fund an $80 million building. “I would not be here without that,” McMahon said, adding that while the NIH had funded his work on kidney development, he had found it difficult to receive federal funding for research on kidney regeneration and disease.

“Our program is absolutely the envy of colleagues,” said McMahon, who directs the Eli and Edythe Broad Center for Regenerative Medicine and Stem Cell Research at USC. “They are envious of how California has invested in this infrastructure.”

Many critics, and even some recipients of CIRM funding, agree that the initial 2004 campaign, which featured ads starring Christopher Reeve and Michael J. Fox, went overboard in promising cures right around the corner. The new campaign is more measured, but still dangles the prospect of cures. A video for Proposition 14 features Stemmy the Stem Cell — “the tiniest, yet mightiest superhero on the planet” — voiced by actor Seth Rogen, whose wife, actress and Alzheimer’s advocate Lauren Miller Rogan, is a CIRM board member. In the video, “Stemmy” says he’s helped blind people regain sight, people with diabetes make their own insulin, and increased motor function for quadriplegics.

CIRM has also taken credit for work it played only a small role in, critics say. CIRM’s literal poster child is Evangelina Padilla-Vaccaro, a now-8-year-old girl who was born without an immune system and likely would have died without an innovative stem-cell treatment she received in a CIRM-funded clinical trial. But that work had been underway for 30 years, long before CIRM’s creation. Likewise, CIRM claims to be responsible for two FDA-approved treatments, Inrebic and Daurismo, but Sheehy said the contribution from CIRM was so minor, the institute did not receive any royalties. (And neither treatment involves embryonic stem cells, he noted.)

Proposition 14 backers said they never claimed in the earlier campaign they would create cures, only progress toward cures. But opponents disagree with that assessment and worry the current campaign will further fuel patient expectations and push people into the lobbies of dubious stem cell clinics that offer unproven and sometimes dangerous treatments at exorbitant prices. “All we’re doing is supplying patients for dodgy clinics,” Sheehy said. “They created a monster.”

CIRM supporters say the institution has always spoken out against rogue clinics. They say if  Proposition 14 does not pass, progress on potentially effective and safe treatments now in the pipeline would slow. The measure is backed by dozens of patient advocacy groups.

“I believe we’re at a crucial tipping point where this progress has to be funded so it can come to fruition,” said Joe Panetta, a CIRM board member and president and CEO of Biocom, a lobbying group for the biotech industry. “We have 90-plus clinical trials underway, therapies on the fast track for paralysis and blindness. If they don’t fund this, that research will stop. We’d have to walk away from all that.”

Sheehy said no clinical trials underway would stop because they have already been fully funded by CIRM. “That’s one of the biggest lies they’re telling,” he said. “These clinical trials won’t stop unless they don’t hit their milestones.” He also criticized the new proposal for not changing rules to allow the state to benefit from owning equity in firms it helps support. If the state had owned equity in CIRM-funded startup Forty Seven, he said, it might have received a payday when Gilead bought the company for $4.9 billion in March.

Critics said any promising treatments are likely to get investor or NIH funding to continue. Loring is a good example. She said she started Aspen Neuroscience to develop a stem cell-based treatment for Parkinson’s disease after she was twice turned down for funding by CIRM. “It took me two months to get 6.5 million dollars to start my company,” she said. “Then I got $70 million more this January.”

“CIRM was designed to jump-start companies and then have the private sector take over,” she said. “That was always the plan.”


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