MOORLACH UPDATE — I Told You So! — August 26, 2017

It’s time to seriously discuss the California Institute for Regenerative Medicine, also known as CIRM (see MOORLACH UPDATE — Millstones and SCA 7 — March 30, 2017 march 30, 2017 john moorlach).

When Proposition 71 was on the ballot in 2004, I was one of the three signatories to write the argument against this ballot measure and campaigned against it.  So let’s see what I said and wrote some 13 years ago.  Here are three published interviews and a copy of the ballot argument for a refresher course.


“It’s financially unsound,” Moorlach said in a Friday interview.  “It doesn’t have a guaranteed revenue stream other than the state budget to pay off the bonds.  The state’s budget as of yesterday is already under water by $8 billion.  To add another $3 billion over 10 years is poor stewardship.”

Arguments that government funding is needed to do research private companies aren’t willing to tackle are a “rationalization,” Moorlach said.

If the pharmaceutical companies conclude it is too long a time or there is a high risk that we won’t see a benefit, that should be telling the rest of us something really loud and clear,” Moorlach said.

(“California’s ambitious embryonic research program gets going.”  North County Times, December 19, 2004)


“We’re adding debt when our state is in the worst shape it’s ever been historically,” Moorlach said.  “If the research does not produce any royalties or residuals, then the payments have to come out of the general fund.  Most of the patents on stem cell research have already been pulled.  We’re not talking about anything dramatic here . . .  Some of the holders of the patents are the biggest funders of Prop 71, so it’s sort of a big money grab.”

(“Prop 71 opposition opinions vary—While churches oppose the proposition for several reasons, Orange County treasurer’s resistance to the measure is purely fiscal.” Daily Pilot, October 26, 2004)


Orange County Treasurer John Moorlach:  “I see it as another financial boondoggle.”

George Skelton, columnist for the LA Times“Is Stem Cell Research the Next Big Thing for California?”, October 14, 2004


ARGUMENT Against Proposition 71


It’s wrong to launch a costly new state bureaucracy when vital programs for health, education, and police and fire services are being cut. We cannot afford to pile another $3 billion in bonded debt on top of a state budget teetering on the edge of financial ruin.

General Fund bond debt will grow from $33 Billion on May 1, 2004, to a Legislative Accounting Office projection of $50.75 Billion in debt by June 30, 2005-a staggering 54% increase in just 14 months!


Backers will cynically use images of suffering children and people with disabilities in their commercials, but pharmaceutical company executives and venture capitalists contributed $2.6 million to put this measure on the ballot. By getting taxpayers to fund their corporate research, they stand to make billions with little risk.


And who will oversee how this money is spent? According to the fine print, the proponents give themselves power to exempt their “Institute for Regenerative Medicine” from aspects of our California “open meeting” law (specifically passed to stop this kind of backroom deal-making).

Why do proponents want to keep what they are doing a secret? If we’re being asked to pay for this research, then it should be freely available to all, not just to those who will be “awarded” special contracts by the “Institute.” The initiative also grants the “Institute” power to rewrite California’s medical informed consent safeguards.

Most importantly, the fine print specifically prohibits the Governor and Legislature from exercising oversight and control over how this money is spent-or misspent. Even if the state teeters on the brink of financial ruin, our elected representatives will still have to borrow and spend this money, because the proponents are putting this money grab into our Constitution.


Opponents of this boondoggle include liberals, conservatives, Republicans, Democrats, Independents, medical professionals, and stem cell researchers. We all strongly support Stem Cell Research, but oppose this blatant taxpayer rip-off that lines the pockets of a few large corporations.

If there was any doubt about the true motives of the corporate promoters of this bond debt, one need only look at what it doesn’t fund. The fine print does not initially fund adult and cord blood stem cell research. Adult and cord blood stem cell research has already produced more than 74 major medical breakthroughs, but this measure excludes support for these proven areas of research, without a two-thirds vote of the Institute’s “working group.”

Consider just one example: Cord blood stem cells are being used to treat sickle cell anemia with a staggering success rate of 90%. That’s real progress, helping real people, but it may not receive one penny from this initiative.

Join with millions of your fellow citizens in demanding an end to “corporate welfare” and bonded debt. This is no time to spend billions we don’t have on a self-serving sham.

Vote “NO” on Proposition 71. It’s not what they say it is.

TOM McCLINTOCK, California State Senator

Orange County Treasurer

  1. REX GREENE, M.D., Cancer Center Director and Bioethics Consultant


Thirteen years later, and my fears were realized.  CIRM did not generate any revenues and left the taxpayers holding the debt “bag,” with payments in the 2017-18 Budget of some $728 million!!  Can you imagine how many roads that could fix.  This time I’m saying it:  I told you so!

The San Francisco Business Times provides some amazing news below.  Miracle of miracles, a royalty check will finally be forwarded to the State of California.  It breaks my heart to see the public sector abused like this.  False promises. Personal enrichment.  No accountability.  Leaving innocent taxpayers holding the bag.  Wait.  Innocent taxpayers.  Not really.  They voted for Proposition 71.

Democratic leaders in the Legislature want to force drug companies to divulge price increases with SB 17.  Its ironic that its own “lab” couldn’t get anything accomplished in 13 years, but the monopoly party has the audacity to rail that private sector pharmaceutical companies are gouging patients.  And, even more absurd, the Democrats want to extend this heart-tugging financial boondoggle that is compensating former legislators with massive salaries.  You can’t make this stuff up.

Let’s hope a crack journalistic investigative reporter team starts to peel this onion.


1st CIRM royalty check in mail — 13 years after California voters OK’d $3 billion stem cell agency

By Ron Leuty

California’s stem cell research funding agency will send a royalty check to the state’s general fund soon — the first such payment since California voters 13 years ago approved the sale of $3 billion in bonds to support stem cell research.

It is a big deal for the Oakland-based California Institute for Regenerative Medicine, or CIRM, and for California taxpayers. Spinning grants and loans made to researchers and companies into product gold, generating revenue, royalties and a payback to the state’s general fund, could have huge political, financial and PR benefits for the agency.

CIRM continues to face political pressure against the backdrop of an already-stressed state general fund that must make principal and interest payments — potentially totaling $6 billion — to the buyers of CIRM bonds.

To date, CIRM has spent more than $2.5 billion since voters passed Proposition 71 in 2004, and officials are looking at making their last grants by mid-2020. The agency has funded more than 30 clinical trials, most of which are ongoing, and has aggressive plans to fund 40 more over the next four years. But bringing products out the other end of that pipe is tough.

Those trials still must make it through the rough-and-tumble clinical trial process — not to mention win Food and Drug Administration approval, get uptake from doctors and patients, and are covered by insurers and other payers — that can take years and cost hundreds of millions of dollars.

“We are expecting the first check to be delivered to the state very soon,” CIRM spokesman Kevin McCormack said in an email.

Yet even as a public state agency, CIRM officials are holding tight to key information about the first royalty check: How large (or small) is the check? When will the check actually be forwarded to the general fund? And from which CIRM-funded project did it spring?

“The royalty check is something that is still being worked out so it’s premature to say anything at the moment,” McCormack said in a followup email. “Sorry to sound so secretive but it is a big deal, the first of what we hope will be many such repayments for the state’s investment.”

CIRM has reason to seek maximum PR benefit from the royalty check. The Prop. 71 campaign was highly charged, coming out of President George W. Bush’s restrictions on federal stem cell research spending on certain embryonic stem cell lines.

Religious conservatives fought that work because it involves the destruction of embryos, which they consider human life, to extract the vital stem cells. Fiscal conservatives were against the eye-popping $3 billion figure. Researchers saw the money as vital, given the federal limitations, since they were prohibited, for example, from using federally funded equipment on restricted stem cell lines that were funded by CIRM or others.

Challenges to Prop. 71 effectively delayed the agency from getting up and running until 2006 and much of CIRM’s early work was just that — early in a just-emerging field. The agency also spent hundreds of millions on new buildings — at Stanford University, the University of California, San Francisco, and the Buck Institute for Research in Aging in Novato, among other sites — so CIRM-funded projects on restricted cell lines could continue without worrying about who paid for which piece of equipment.

CIRM has funded basic research on stem cells even as the field expanded beyond embryonic to the emerging field of induced pluripotent stem cells. Those cells — created from adult, or mature, stem cells that are engineered to be embryonic-like and prodded by researchers to become another type of mature cell — have provided scientists with flexibility.

CIRM also has funded translational research. But, as CIRM Chairman Jonathan Thomas pointed out at a June board meeting in Burlingame, the timeline to move experimental stem cell therapies from basic research to human trials is eight years; non-stem cell therapies take 3.2 years.

“We want to cut that time in half to four years,” Thomas said.

Then there is CIRM’s funding of clinical trials — more than 30 to date. CIRM leaders are betting on those trials, including one at UCSF dealing with a genetic blood disease that is deadly for fetuses, to produce results. That means new therapies as well as revenue/royalties.

“We don’t want these clinical trials just to be run,” Thomas said. “We want them to go and impact patients and patient lives.”

But putting money into the state’s general fund means a lot — so does the size and rate of those payments — as CIRM considers whether to ask California voters to support a new round of bond sales. Other options could be a combination of philanthropic and venture capital cash or a straight-up funding from the state.

All of those roads are long and tough if there’s no sign of CIRM-funded work producing revenue.

And the political road hasn’t gotten any easier. Earlier this year, for example, Republican state Sen. John Moorlach of Costa Mesa introduced a bill that would have put a Prop. 71 repeal on the ballot.

The state, according to a fact sheet from Moorlach’s office, has spent $1.2 billion servicing Prop. 71 debt.

Moorlach believes Prop. 71 “did not live up to its promises,” spokesman Jacob Ashendorf said in an email. “Therefore, it would make sense to stop future debt from being incurred for that program.”

The bill, supported by the California Pro Life CouncilCalifornia Catholic Conference and the influential Howard Jarvis Taxpayers Association among others, was halted after Thomas spoke at a Senate health committee meeting in Sacramento. Accompanying Thomas on the trip was Art Torres, a powerful former state senator who is vice chairman of CIRM’s board.

The bill could be reconsidered.


This e-mail has been sent by California State Senator John M. W. Moorlach, 37th District.

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