Stem cell agency delays funding new grants

Stanford has received tentative approval for an additional round of funding from the California Institute of Regenerative Medicine, the institute announced Jan. 30 at an uncharacteristically somber meeting of its governing board. The provisional award of $3.9 million is intended to support training programs for the next generation of stem cell researchers and laboratory workers.

Although the board, also known as the Independent Citizen's Oversight Committee, or ICOC, voted to approve about $58 million in grants to Stanford and 25 other institutions, its members decided not to fund the awards at this time due to concerns about the state's inability to raise money through public bond sales. California currently has a large number of unsold bonds due to the state's large budget deficit and the global economic crisis. Even when bond sales resume, CIRM bonds will likely have to line up behind other critical state initiatives. The situation is unlikely to be resolved before the end of 2010, the board was told.

The institute is supposed to allocate $3 billion raised from the sale of state bonds over a 10-year period for stem cell research. So far it has sold about $250 million.

In his Feb. 2 newsletter, Medical School Dean Philip Pizzo, MD, a member of the ICOC, summed up the situation: While CIRM had $158 million in cash on hand from past bond sales as of January, ongoing grant commitments and other expenditures would reduce this to $39.2 million by June. Barring any additional infusion of money, CIRM is projected to have a deficit of $133.6 million by the end of 2010, assuming no further projects are approved, no new RFA's issued and a number of administrative cost containment actions implemented.

Prior to this meeting, Stanford had been awarded about $97 million in CIRM funds - $43.6 million of which is dedicated to the new Lorry I. Lokey Stem Cell Research Building. Although concerns about the availability of promised CIRM funds and bank liquidity issues have stymied the construction of other California stem cell research facilities, Stanford has received all of the CIRM money for the new research center. According to senior associate dean for finance and administration, Marcia Cohen, Stanford has in hand or in pledges about 94 percent of the total funds necessary to complete the building, with the remainder expected by the end of 2009.

In addition to the building funds, CIRM has disbursed to Stanford about $19 million; $38 million remains outstanding as part of multi-year grants.

The grim financial picture presented at the meeting sparked a lengthy discussion as to whether to approve the current awards at all. Some members argued that it was irresponsible to fund additional grants at this time, while others believed strongly that it was important to move forward. In the end, they approved some of the grants but withheld funding until the board's March or April meetings, when more might be known about the state's financial situation and the possibility of the institute's raising money through the private placement of bonds.

'The basic mantra of the ICOC is that we have faced adversity before and that we have found ways to overcome major external challenges,' Pizzo said. 'We are committed to doing that again.'

A similar funding method relying on the sale of bond anticipation notes succeeded in providing the institute with start-up funds in 2006 when litigation delayed its initial bond offerings. However, economic conditions are now much worse.

While the institute was focusing on finding ways to meet the commitments it has already made, Pizzo acknowledged it was a setback to have to hold off on funding new ones. Nonetheless, the decision to select new projects was a powerful sign. 'Even given the realities of the fiscal crisis in California in particular - as well as the events transpiring around the world - we still elected to do our best to find creative ways to move forward,' Pizzo said.