Life or death choices ahead for California Institute for Regenerative Medicine

Directors of the $12 billion California stem cell agency will face a fundamental question next week that could determine whether its efforts to produce revolutionary treatments for afflictions ranging from heart disease to cancer will live or die.

The question is contained in a briefing on the funding model for the 18-year-old California Institute for Regenerative Medicine (CIRM), which is the only California state department that has a slow-moving, financial guillotine hanging over it.

Embedded in the briefing are 14 words with a host of implications: “What is (or what are) the most important outcomes for CIRM in 10 years?” The question and possible answers raise political, financial, scientific, medical and ethical challenges for CIRM, an enterprise that is unique in California history and the largest such state effort in the nation.

All of which comes before the agency’s 35 directors at their June 29 meeting.

CIRM has arrived at this point courtesy of the ballot-box budgeting contained in two ballot initiatives. CIRM was created in 2004 through an initiative campaign that raised voter expectations that miraculous cures were just around the corner. (The agency, however, has yet to fund a stem cell therapy that is available to the general public outside of the small world of clinical trials.)

While the 2004 initiative gave birth to CIRM, that initiative and its successor, Proposition 14 of 2020, provided the agency only a limited amount of cash and no means of ongoing support when that funding runs out.

By some calculations, CIRM is likely to need help from voters again as early as 2028.

While the 2004 initiative gave birth to CIRM, that initiative and its successor, Proposition 14 of 2020, provided the agency only a limited amount of cash and no means of ongoing support when that funding runs out.

CIRM currently has $4 billion available for spending on research involving stem cells and gene therapies. When that is gone, CIRM’s doors will close unless it finds another source of cash. In 2020, CIRM narrowly avoided that fate when voters approved Proposition 14, 51 percent to 49 percent, which provided it with $5.5 billion more.

The refinancing came after the agency ran through its initial $3 billion provided in Proposition 71 of 2004. CIRM’s total cost to taxpayers is estimated to run about $12 billion because of interest expense. Its funding is provided through borrowing – issuance of state bonds.

Nominally, CIRM has about 10 years of funding left depending on its rate of spending. However, waiting a decade to seek refinancing would be perilous – akin to delaying treatment of a terminal illness that could be easily cured if caught early.

That’s where California political realities mesh and do not mesh with the realities of cutting-edge science and medicine. Billion-dollar bond measures have a better chance of approval during presidential election years, which attract more voters inclined to approve them.

That means that the two best years to ask voters for more billions are 2028 and 2032. But waiting until 2032 for what would be CIRM’s third ballot measure would be problematic. Failure to win approval in 2032 would leave almost no opportunities to raise the billions of dollars needed to keep CIRM alive in its current state. Plus a last minute, 2032 election would trigger another wave of departures of CIRM’s skilled staff who may seek more secure employment.

Prior to the 2020 ballot measure, the agency lost about half of its employees in the years immediately preceding the campaign. CIRM is still wrestling with replacing them and ramping up its operations to the levels of 2018. As of this month, it has only 56 employees.

The agency could slow its spending to prolong its life. However, that means that it would not be fulfilling its key objective, which is to fund risky research that can help save lives and ease suffering. Scientists need cash over a number of years to produce significant results.

CIRM could also miss opportunities that could be important in justifying extension of its funding. The agency needs results that will resonate with voters, especially given the narrow margin of voter approval in 2020.

Of course, there is the possibility that CIRM directors could effectively decide to simply let the agency expire. Doing nothing will make that happen. However, the agency can write a proposed initiative, though CIRM cannot legally mount a ballot campaign.

Supporters of the agency would have to try to find a backer who would lead an initiative and raise tens of millions of dollars to gather a million or so signatures from registered voters’ signatures and run a campaign – all of which takes a year or two at least.

That would mean that early stages of the effort would need to begin in about two years if a 2028 ballot campaign were to be mounted. An alternative would be to seek funding via the legislative process, but that has been rejected by past CIRM directors. It would require negotiation with elected politicians who are likely to have their own ideas about CIRM’s priorities.

An alternative would be to seek funding via the legislative process, but that has been rejected by past CIRM directors. It would require negotiation with elected politicians who are likely to have their own ideas about CIRM’s priorities.

Meanwhile, CIRM has strategic choices to make regarding its current $464 million-a-year research spending. The largest amount of funding – $252 million for 2023-24 – goes for clinical stage work that is the closest to actually being widely available to the public. CIRM could step up that amount in hopes of backing a therapy that voters will find compelling.

Or it could pour more money into neuropsychiatric research in hopes of generating a breakthrough basic research finding that would open a door to creation of new treatments for mental illness. The research budget is on the agenda for the June 29 meeting, but based on past performance it is not expected to be modified significantly.

Then there is the matter of multimillion-dollar costs of some gene therapies, including some backed by CIRM. In 2020, voters directed the agency to find ways to make the therapies that it finances affordable. In one case, 28 children afflicted by a rare immune deficiency known as the bubble baby disease are on a waiting list for a treatment that has already cured nearly 50 persons but is still in a clinical trial run by UCLA. No source of funding to treat those children is currently lined up.

CIRM has already pumped more than $40 million into related research for the gene therapy treatment. The agency could use some of the $4 billion it currently has to treat the children on the waiting list.

Other scenarios exist for CIRM, including transforming it into a modest enterprise that financially aids patients in clinical trials. A stream of funding, albeit a small one currently, is embedded in state law that serves that purpose. CIRM could become involved in creation of a non-profit research enterprise or another type of organization that is trying to deal with the astronomical costs of gene therapies.

CIRM is little known to the general public. But it does have a small constituency that has the potential to be mobilized. Hundreds of researchers, both in academic enterprises and the private sector, have received funding from CIRM, perhaps becoming dependent on the flow of taxpayer dollars. The organizations that benefit, including Stanford University and a number of University of California campuses, also have a stake in seeing CIRM stay alive. Scores of patient groups, ranging from Parkinson’s to diabetes advocates, have lobbied CIRM for funding of their favored research and would be loath to see it disappear.

The agency operates, however, in a financial environment filled with competing and compelling priorities when it comes to spending billions of taxpayer dollars, including the homeless crisis and the lack of affordable housing. Whether CIRM can clear those hurdles and avoid the financial guillotine is very much up in the air.

Jensen has covered the stem cell agency since 2005 on his newsletter, The California Stem Cell Report. He is the author of the 2020 history of CIRM, “California’s Great Stem Cell Experiment.”