Plans for Stem Cell Research Advance

California remains on target to issue the first grants from its novel $3-billion stem cell research institute by May, according to its chairman, although biotechnology companies and other industry applicants might be frozen out of the initial grant-making process.

Bob Klein, chairman of the stem cell agency’s board, pledged Thursday to issue grants by May at the end of a meeting of the committee overseeing the California Institute for Regenerative Medicine.

The 29-member committee was scheduled to discuss restricting the first rounds of grants to nonprofit labs and universities because of patent and profit issues but delayed extensive conversation on the matter until its next meeting in March.

Earlier this week, an influential institute subcommittee floated the nonprofits-only plan, and it appears to have widespread support of the full committee.

Edward Penhoet, the committee’s vice chairman, said at the subcommittee meeting Monday that it would be relatively simple to create a single, boilerplate intellectual property agreement between the institute and nonprofit grant recipients spelling out who owned the rights to any drugs or other commercial products created with taxpayer money.

A much thornier issue, Penhoet said, was hammering out similar agreements with companies applying for grants. Complicating the matter is the fact that the University of Wisconsin, where human embryonic stem cells were first discovered, and its corporate partner, Geron Corp. of Menlo Park, claim broad commercial rights to any stem cell-based products.

Ensuring that California taxpayers recoup their $3-billion bond investment, which is expected to balloon to $6 billion once interest is added, has become an important issue for the nascent agency. Putting off making grants to corporate interests is seen as a way to put off the controversial issue until the agency has better intellectual property standards in place.

Still, Klein and the board dealt with other controversial issues, including how Klein intends to collect the $1 million he loaned the campaign that backed Proposition 71, which created the institute.

An Oakland public interest group said Thursday that it was concerned that Klein and the campaign organization he led might violate conflict-of-interest guidelines in their efforts to pay back the debt to Klein.