Stem Cell Agency on Errant Fast Track

There probably wasn’t much reason to hope that California’s new embryonic stem cell institute, the offspring of perhaps the most misleading initiative campaign of 2004, would be a model of circumspection and openness as it geared up to spend $6 billion of taxpayers’ money.

But did it have to live down to our expectations so quickly?

In the months since its creation by Proposition 71 on last November’s ballot, the California Institute for Regenerative Medicine has behaved not like the state agency it is, but with the arrogance of a private corporation that happens to be playing with the taxpayers’ cash.

For instance, the institute staged an elaborate “search” for a headquarters city, playing San Francisco, San Diego and Sacramento off against each other like Walt Disney Co. dangling a theme park project in front of a bunch of rube mayors. San Francisco won -- which sure looked preordained, given its proximity to the homes of the agency’s chairman, interim president and the venture capitalists who donated millions to pass Proposition 71.

It has largely refused to cooperate with state Sen. Deborah Ortiz (D-Sacramento), a supporter of stem cell research who is trying to create the public accountability for the agency that was left out of Proposition 71, along with a set of ethical rules and financial disclosure requirements for all agency employees and board members. Instead, it hired a lobbying firm for a reported fee of nearly $10,000 a month, thus becoming perhaps the only state agency that pays an outside lobbyist to battle the Legislature.

Most troubling is the agency’s overwrought reaction to two state court lawsuits aimed at halting the sale of $3 billion in bonds designed to fund its program. The litigants contend that providing public bond proceeds to an entity subject to virtually no public oversight is unconstitutional.

It’s true that the lawyers behind the litigation oppose the institute’s work on religious and moral grounds. But their concerns about the gifting of taxpayer funds to this unique agency are shared by many supporters of stem cell research. By any legitimate legislative standard, Proposition 71 was a mess, rife with opportunities for conflicts of interest and the misuse of public funds, vague on how taxpayers would profit from their unprecedented largesse and almost impervious to amendment.

“We don’t support the end goal of the litigation,” says Jesse Reynolds of the Oakland-based Center for Genetics and Society, which favors embryonic stem cell research yet has been critical of the institute. “But the content of the lawsuits and the points they make are pretty serious.”

The agency’s attitude reflects the personality of its chairman, the Bay Area real estate developer Robert Klein II, who supervised the drafting of Proposition 71 and spearheaded the electoral campaign. Klein often seems to assume that anyone who criticizes himself or his agency must be fanatically hostile to embryonic stem cell research, or worse.

Here’s how he characterized the lawsuits during a board meeting last month: “It is very clear that the people filing the litigation do not respect the democratic process and the mandate of 7 million voters. It is important, if they won’t respect the democratic process, that they at least respect the suffering of over half of all California families who have a member” who might benefit from stem cell research.

He’s talking about litigants who, following all legal niceties, presented a legitimate petition to the California Supreme Court. Evidently judicial review has no place in Klein’s world: The actions of voters, even if they might be based on misinformation and contradict the state Constitution, trump the principle of checks and balances. Who’s really disrespecting the democratic process here, Mr. Klein?

(I intended to put this question directly to Klein, but at the last minute he canceled our scheduled interview.)

Then there’s his evocation of the suffering of “over half of all California families,” which he suggests would be relieved by the research to be funded by his agency. Leaving aside my doubts that Klein can substantiate this obviously inflated statistic, this statement reiterates his campaign theme, which was that cures for numerous diseases are just over the horizon, if only the voters would put up billions for grants and stay out of the way.

One would think that the agency overseeing the most ambitious scientific research program in the country would avoid making foolishly optimistic predictions of treatments and cures. Zach Hall, the institute’s interim president, has moved in that direction -- observing, for example, that the agency should “help the public understand that the road to therapy is long and difficult, and that this will not happen overnight.” But he needs to educate his chairman that sanctimony is not science.

He might further point out the hazards of haste. The institute seems determined to start issuing grants within the next few months, possibly before it has in place an operational budget, a full sheaf of ethical standards and conflict-of-interest rules, or, indeed, bond money. (Klein has proposed raising $100 million from private foundations or others to “bridge” the state financings, despite the potential for further conflicts of interest in taking money from sources that may not be entirely disinterested in the agency’s work.)

If this closely watched agency stumbles out of the gate because it doesn’t understand that, despite the popularity of Proposition 71, it must still prove itself a responsible and deserving recipient of taxpayer funds, it could cost the cause of embryonic stem cell research immeasurably -- in credibility, effectiveness, and public support.

“The potential for stem cell research,” Reynolds says, “will be better served by doing it right than doing it fast.”