BEFORE THE

INDEPENDENT CITIZENS' OVERSIGHT COMMITTEE TO THE CALIFORNIA INSTITUTE FOR REGENERATIVE MEDICINE ORGANIZED PURSUANT TO THE CALIFORNIA STEM CELL RESEARCH AND CURES ACT

LOCATION:

UCLA GRAND HORIZON ROOM 3D FLOOR, COVEL COMMONS, SUNSET 330 DE NEVE DRIVE LOS ANGELES, CALIFORNIA

DATE:

WEDNESDAY, DECEMBER 12, 2007 9:28 A.M.

REPORTER:

BETH C. DRAIN, CSR CSR. NO. 7152

BRS FILE NO.:

77063

BRS FILE NO.:

77063

LOS ANGELES, CALIFORNIA; WEDNESDAY, DECEMBER 12, 2007

09:28 A.M.

CHAIRMAN KLEIN: ALL RIGHT. IF I CAN GET POWER HERE, WE'D LIKE TO COMMENCE THE FORMAL SESSION. IN COMMENCING THE FORMAL SESSION, I'D LIKE TO THANK THE HUNTINGTON COMMUNITY FOR THEIR TREMENDOUS PRESENTATION THIS MORNING IN THE SPOTLIGHT. I'D LIKE TO SPECIFICALLY THANK FRANCES SALDANA AND HER DAUGHTER MARGIE. I'D LIKE TO THANK DR. OS STEWARD OF OUR BOARD, HANS KEIRSTEAD FOR HIS CONTINUING BRILLIANT WORK, AND, OF COURSE, ROBERT PACIFICI. IT'S A CHALLENGING NAME. AND, ROBERT, YOU'LL EDUCATE ME NEXT TIME ON HOW TO PROPERLY PRONOUNCE YOUR NAME. BUT THANK YOU SO MUCH FOR YOUR PRESENTATIONS. IT WAS A TREMENDOUSLY POWERFUL STORY THAT NEEDS TO BE TOLD BROADLY, AND HOPEFULLY WE CAN COORDINATE WITH YOU AND GET SOME OF THIS ON OUR WEBSITE SO THE GREATER COMMUNITY CAN UNDERSTAND THE CHALLENGES AND THE NEED FOR SUCH INTENSE DEDICATION.

AS WE GO FORWARD THIS MORNING THROUGH OUR AGENDA, WE WILL HAVE PUBLIC COMMENT WITH EACH ITEM IN OUR AGENDA. WE WILL HAVE GENERAL PUBLIC COMMENT AT THE END, AND WE WOULD ASK THAT PUBLIC COMMENT BE RESTRICTED TO THREE MINUTES EACH BECAUSE OF THE LENGTH OF THE AGENDA, THE NEED FOR A QUORUM, AND THE RISK OF LOSING THE QUORUM BEFORE WE GET THROUGH ALL OF THE CRITICAL ITEMS.

I WOULD LIKE TO VERY SPECIFICALLY, IN OPENING THIS SESSION, MAKE CERTAIN THAT WE UNDERSTAND THAT ANY OTHER COMMUNICATIONS WE'VE RECEIVED WILL BE READ WITH THE RELEVANT ITEM RATHER THAN AT THE BEGINNING, SO IT CAN RELATE IN TIME TO THE ITEM THAT IT ADDRESSES.

WITH THAT, MELISSA KING, WOULD YOU CALL THE ROLL PLEASE AFTER THE PLEDGE OF ALLEGIANCE.

MS. KING: YES. IF YOU WOULD PLEASE STAND IF YOU ARE ABLE.

(THE PLEDGE OF ALLEGIANCE.)

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: PRESENT.

MS. KING: ROBERT PRICE FOR ROBERT BIRGENEAU.

DR. PRICE: HERE.

MS. KING: FLOYD BLOOM.

DR. BLOOM: HERE.

MS. KING: DAVID BRENNER.

DR. BRENNER: HERE.

MS. KING: ALBERT BENNETT FOR SUSAN BRYANT.

DR. BENNETT: HERE.

MS. KING: MARSHA CHANDLER. MARCY FEIT.

MS. FEIT: HERE.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: HERE.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: HERE.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: HERE.

MS. KING: FRANCIS MARKLAND FOR BRIAN HENDERSON.

DR. MARKLAND: HERE.

MS. KING: DAVID KESSLER. BOB KLEIN.

CHAIRMAN KLEIN: HERE.

MS. KING: SHERRY LANSING.

MS. LANSING: HERE.

MS. KING: GERALD LEVEY.

DR. LEVEY: HERE.

MS. KING: TED LOVE.

DR. LOVE: HERE.

MS. KING: TINA NOVA. ED PENHOET.

DR. PENHOET: HERE.

MS. KING: PHIL PIZZO. CLAIRE POMEROY. FRANCISCO PRIETO.

DR. PRIETO: HERE.

MS. KING: JOHN REED. DUANE ROTH.

MR. ROTH: HERE.

MS. KING: JOAN SAMUELSON. DAVID SERRANO-SEWELL. JEFF SHEEHY.

MR. SHEEHY: HERE.

MS. KING: JONATHAN SHESTACK. OSWALD STEWARD.

DR. STEWARD: HERE.

MS. KING: JANET WRIGHT.

DR. PRIETO: I BELIEVE DR. POMEROY IS HERE, ALTHOUGH SHE'S NOT IN THE ROOM.

CHAIRMAN KLEIN: WELL, THANK YOU VERY MUCH. AND IT IS A DELIGHT TO BE BACK AT UCLA. THANK YOU, DR. LEVEY, FOR HOSTING, AND YOUR FABULOUS TEAM IN GETTING EVERYTHING READY FOR THIS MEETING, PARTICULARLY CHARLIE AND LEAH. IT TAKES A LOT TO PUT THE LOGISTICS TOGETHER WITH OUR STAFF, AND WE DEEPLY APPRECIATE ALL OF THAT EFFORT.

WE HAVE THE OPPORTUNITY TODAY TO REVIEW A NUMBER OF CRITICAL SUBSTANTIVE EFFORTS WHICH WILL BE BEGINNING WITH THE ITEMS AFTER THE CHAIRMAN AND THE PRESIDENT'S REPORT. BUT I'D LIKE TO KNOW IF WE HAVE A MOTION TO ADOPT THE CONSENT ITEMS, SPECIFICALLY THE MINUTES OF THE OCTOBER 3D ICOC MEETING, WHICH IS ITEM 4.

DR. LEVEY: SO MOVED.

MS. LANSING: SECOND.

CHAIRMAN KLEIN: IT'S BEEN MOVED AND SECONDED. AND DID THE REPORTER GET THE PARTY MAKING THE MOTION AND THE SECOND?

THE REPORTER: GOT IT.

CHAIRMAN KLEIN: ALL IN FAVOR? OPPOSED? CONSIDERATION OF THE PERMANENT ADOPTION OF THE GRANT ADMINISTRATION POLICY FOR FACILITIES. AS A CONSENT ITEM, DO WE HAVE A MOTION FOR APPROVAL?

DR. PENHOET: SO MOVED.

DR. PRIETO: SECOND.

CHAIRMAN KLEIN: SECOND, DR. PRIETO. AND IS THERE ANY PUBLIC COMMENT ON THIS ITEM? SEEING NONE, ALL IN FAVOR? OPPOSED?

ITEM 6, CONSIDERATION OF STANDARDS WORKING GROUP ITEMS FOR FINAL ADOPTION OF THE REGULATIONS AS CITED IN THE AGENDA.

MS. KING: CHAIRMAN KLEIN, WE'RE NOT CONSIDERING THAT ITEM TODAY, JUST AS A REMINDER.

CHAIRMAN KLEIN: THAT ITEM HAS BEEN REMOVED FROM THE CONSENT LIST AS WE GO FORWARD.

I'D LIKE TO CALL TO OUR ATTENTION THIS MORNING THAT WE HAVE TWO NEW BOARD MEMBERS WITH US. WE HAVE DR. FLOYD BLOOM, WHO IS HERE THIS MORNING ON MY LEFT, REPRESENTING SCRIPPS. THE VERY FAMOUS BACKGROUND AS THE EDITOR OF SCIENCE AS WELL AS TREMENDOUS RESEARCH HISTORY.

AND TO MY RIGHT WE HAVE LEEZA GIBBONS, WHO IS A TREMENDOUS PERSONALITY IN HOLLYWOOD AS WELL AS A GREAT LEADER FOR ALZHEIMER'S. AND I'D LIKE TO PARTICULARLY MENTION THAT AT THE KICKOFF GALA IN LOS ANGELES IN 2004, WHEN THE INITIATIVE, PROPOSITION 71, WAS GIVEN A HUGE LIFT, IT WAS LEEZA AND NANCY REAGAN AND MICHAEL J. FOX THAT WERE THERE TO REALLY DRAW THE PUBLIC'S ATTENTION TO HOW CRITICAL IT IS TO ADVANCE THERAPY RESEARCH. LEEZA GAVE A TREMENDOUS PRESENTATION AT THAT EVENT. SO SHE'S BEEN WITH US IN SPIRIT AND COMMITMENT A LONG TIME BEFORE THIS APPOINTMENT BY THE GOVERNOR.

SO I'D LIKE A QUICK ROUND OF APPLAUSE FOR BOTH OF THESE NEW MEMBERS.

(APPLAUSE.)

CHAIRMAN KLEIN: IN BEGINNING THE CHAIRMAN'S REPORT, IT IS IMPORTANT AS WE GO THROUGH OUR CHALLENGES DAY TO DAY TO GET OBJECTIVE, OUTSIDE ANALYSIS AND COMMENTARY FROM SEASONED VETERANS OF GOVERNMENT INITIATIVES. IN THE PROPOSITION 71 STATUTE, IT PROVIDES THAT THERE IS A CALIFORNIA FINANCIAL OVERSIGHT COMMITTEE, THE ONLY AGENCY IN THE STATE THAT HAS ITS OWN OVERSIGHT COMMITTEE. IT'S CHAIRED BY THE CONTROLLER. THE TREASURER HAS AN APPOINTMENT. THE PRESIDENT OF THE SENATE HAS AN APPOINTMENT, AS DOES THE SPEAKER. I HAVE ONE APPOINTMENT TO THAT COMMITTEE.

AND THE TREASURER'S APPOINTEE, COMPLETELY UNSOLICITED, AFTER THIS LAST MEETING IN NOVEMBER MADE A STATEMENT AT THE END, HAVING HEARD OUR AUDIT REPORT, WHICH WAS AN UNQUALIFIED AUDIT, HAVING HEARD OUR IP POLICY PRESENTED BY OUR EMINENT COLLEAGUE, DR. PENHOET,HAVING HEARD THE ISSUES WITH CONFLICTS THAT WE HAVE FACED AND ARE REFINING OUR POLICIES TO ADDRESS, AND THIS IS AN INDIVIDUAL WHO, MR. BRUNNER, WHO, IN FACT, HEADED UP ONE OF THE STATE AGENCIES TO IMPLEMENT A MAJOR PART OF THE MEDI-CAL PROGRAM.

AND IN LOOKING BACK AT HIS EXPERIENCE AND LOOKING AT OUR EXPERIENCE IN HISTORY AND ACHIEVEMENTS, I'D LIKE TO READ YOU PART OF WHAT HE SAID. HE SAID, "I'VE HAD THE OPPORTUNITY IN MY PROFESSIONAL CAREER TO START A COMPANY AND ALSO START A STATE AGENCY THAT WAS BRAND NEW AND WAS UNDER AN ENORMOUS AMOUNT OF PUBLIC SCRUTINY. SO I HAVE A PRETTY GOOD SENSE OF WHAT IT'S LIKE TO FULFILL A MISSION OF THE AGENCY AND AT THE SAME TIME GO FROM BASICALLY ZERO TO A HUNDRED ON BUILDING INFRASTRUCTURE.

"IT'S A VERY DIFFICULT PROCESS AND ONE WHERE UNFORTUNATELY I'M SITTING HERE REMEMBERING BACK ON THE MISTAKES I MADE IN DOING IT AND ADMIRING HOW FEW MISTAKES YOU'VE MADE IN PROCEEDING AHEAD WITH THIS IMPORTANT FUNCTION.

"AS I READ THE FOUR CORNERS OF THE VARIOUS AUDIT REPORTS THAT HAVE BEEN PRESENTED TO US, I CAN SAY THAT, WHILE THERE HAVE BEEN SOME ISSUES RAISED, NONE OF THEM ARE FUNDAMENTAL. THEY'RE BASICALLY SOME PROCESS ISSUES THAT NEED CLEANING UP."

HE SAYS, "THIS IS JUST INHERENTLY RUNNING ANY BUSINESS, WHETHER IT'S IN THE PUBLIC SECTOR OR PRIVATE SECTOR. I THINK OVERALL WE CAN GLEAN FROM THIS THAT YOU'VE DONE A VERY GOOD JOB. I PERSONALLY WANT TO COMPLIMENT YOU AND YOUR STAFF ON THE WORK YOU'VE DONE IN FURTHERING THIS IMPORTANT MISSION."

MYRTLE POTTER, WHO ALSO SITS ON THE COMMISSION, IS AN INDIVIDUAL WHO HAS A TREMENDOUS SPECTRUM AND INSIGHT INTO THE BIOTECH AND PHRMA AREA INTO THERAPY DEVELOPMENT BECAUSE SHE WAS GLOBAL HEAD OF GENENTECH'S EFFORT AT COMMERCIALIZATION. AND ADDING A FEW OF HER WORDS AT THE END OF THE SESSION, SHE SAYS, "I JUST WANT TO ECHO THE COMMENTS OF MY FELLOW COMMITTEE MEMBER. THE WORK IS JUST MONUMENTAL. IT'S SIMPLY MONUMENTAL.

"I'VE SEEN MANY COMPANIES COME AND GO AND GROW, AND THE PACE AT WHICH THIS ORGANIZATION HAS MOVED, THE RATE AT WHICH IT HAS BROUGHT ON TALENT, THE DEGREE TO WHICH YOU HAVE DRAWN TALENT FROM AROUND THE WORLD TO THIS WONDERFUL STATE FOR A CAUSE THAT WE SO SINCERELY BELIEVE IS JUST -- JUST SHOULD BE COMMENDED."

SHE ENDED BY SAYING, "I CAN TELL YOU THAT I'M VERY PROUD. I'M VERY PROUD TO BE ON THIS COMMITTEE. I'M EXTREMELY PROUD FOR OUR WONDERFUL STATE AND, MOST IMPORTANTLY, I'M JUST THRILLED FOR THE PATIENTS WHO WILL SO GREATLY BENEFIT FROM WHAT YOU'RE DOING. SO I JUST COMMEND YOU AND ASK YOU TO KEEP UP THE GOOD WORK, STAY DILIGENT, TAKE FULL ADVANTAGE OF IT. THE AUDIT OVERSIGHT AND QUESTIONING, ALL THAT IS GOOD. TRANSPARENCY IS GOOD. IT'S ALL GOOD. JUST KEEP GOING STRONG AND KEEP WORKING HARD."

IT'S GREAT TO HAVE SOME CONTEXT. IT'S GREAT TO HAVE INDIVIDUALS WHO HAVE TREMENDOUS EXPERIENCE IN THE AREA LOOKING AT THE OVERALL EFFORTS OF THIS FIRST THREE YEARS. BECAUSE CERTAINLY WHEN THIS INITIATIVE STARTED, WE KNEW IT WOULD TAKE US ABOUT THREE YEARS TO GET OUR SYSTEMS REFINED AND UP. AND IT IS A MAJOR SET OF ACCOMPLISHMENTS THAT WE HAVE ADDRESSED.

DR. MURPHY WILL ADDRESS THOSE ACCOMPLISHMENTS, SO I WILL NOT ADDRESS THEM INDIVIDUALLY. BUT WHAT I WOULD LIKE TO SAY IS WHILE THE STAFF IS A TREMENDOUS ASSET OF DEDICATED PEOPLE, I AM PERSONALLY, AS A PATIENT ADVOCATE, TREMENDOUSLY APPRECIATIVE OF THE DEANS, THE PRESIDENTS OF THE INSTITUTES, THE PRESIDENTS OF THE RESEARCH HOSPITALS ON THIS BOARD, THE INDIVIDUAL REPRESENTATIVES OF INDUSTRY. AS A PATIENT ADVOCATE, I LOOK AT THE RESOURCES ON THIS BOARD AND THE REMARKABLE COMMITMENT IN OVER A HUNDRED PUBLIC MEETINGS. AND I THINK THAT LONG BEFORE I WAS EVER COMMITTED TO THIS ENTERPRISE, THEY WERE WORKING HARD WITH DEDICATION AT CONTRIBUTING TO THE HEALTH OF THE PEOPLE OF THIS STATE,TO MY FAMILY, TO THE PEOPLE OF THIS NATION, AND BEYOND.

WHEN WE JUDGE INDIVIDUAL ACTIONS, WHEN WE JUDGE MISTAKES THAT I MAKE OR OTHER MEMBERS OF THIS BOARD MAKE, WE SHOULD REALIZE THAT THOSE PEOPLE ON THIS BOARD WHO HAVE DEDICATED SO MUCH OVER THE LAST THREE YEARS, WHO HOLD DOWN EXTRAORDINARY POSITIONS IN MEDICAL SCHOOLS, IN RESEARCH HOSPITALS, AND RESEARCH INSTITUTIONS, HAVE PUT THEIR LIFE ON THE LINE FOR PATIENTS EVERYWHERE. THEY HOLD MULTIPLE POSITIONS. THEY HAVE EXTREMELY TOUGH SCHEDULES. THEY'RE DEDICATED TO THE ENDS AND THE MISSIONS OF THIS INSTITUTION. AND WE SHOULD REMEMBER IN CONTEXT THAT EVERYONE HAS MADE AN EXTRAORDINARY EFFORT THAT BEGAN MANY YEARS AGO AND HAS NEVER FALTERED.

WITH THAT, I'D LIKE TO TURN TO THE PRESIDENT, DR. RICHARD MURPHY.

DR. MURPHY: MR. CHAIRMAN, THANK YOU VERY MUCH. BEFORE I BEGIN, I TOO WOULD LIKE TO SHARE WITH THE ICOC MY OBSERVATIONS ON THE RECENT EVENTS THAT HAVE OCCURRED AT CIRM.

OVER THE PAST SEVERAL WEEKS, WE HAVE BEEN THROUGH SOME CHALLENGING ISSUES THAT HAVE INVOLVED CIRM AND THE ICOC'S MEMBERS, ISSUES THAT HAVE BEEN FULLY DISCUSSED BY THE PRESS AND BY CIRM'S MANY CRITICS. WE ALWAYS BENEFIT FROM CONSTRUCTIVE SUGGESTIONS; HOWEVER, I THINK WE ALSO NEED TO KEEP OUR CRITICS IN PERSPECTIVE.

IN THAT REGARD, I'M REMINDED OF THE WORDS OF COMPOSER JEAN SIBELIUS, WHO ONCE SAID, "REMEMBER A STATUE HAS NEVER BEEN SET UP TO HONOR A CRITIC." IN MY VIEW OUR RECENT PROBLEMS AROSE NOT BECAUSE ICOC MEMBERS WERE INTENTIONALLY TRYING TO COMPROMISE CIRM'S RULES, BUT RATHER FROM INADVERTENT AND INNOCENT MISTAKES OR BECAUSE OF AMBIGUITIES IN HOW CIRMS'S GUIDELINES INTERFACE WITH STATE REGULATIONS.

SPECIFICALLY WE NEED TO LOOK AT FOOTNOTE NO. 1 IN THE ICOC'S OWN CONFLICT OF INTEREST POLICY, A FOOTNOTE THAT I, WITH THE REST OF THE ICO MEMBERS, WAS INVOLVED IN MAKING. AND THIS FOOTNOTE PLAYED A MAJOR ROLE IN THE MISUNDERSTANDINGS THAT LED TO THE PROBLEMS THAT WE FACE TODAY, THE TWO SETS OF PROBLEMS. AND I HOPE, MR. CHAIRMAN, THAT SOMETIME TODAY WITH COUNSEL WE HAVE A CHANCE TO LOOK AT FOOTNOTE 1 IN OUR OWN CONFLICT OF INTEREST GUIDELINES. WE NEED TO CORRECT THAT CONFLICT, AND WE NEED TO DEAL WITH AND CLARIFY THE AMBIGUITIES THAT GAVE RISE TO THESE ISSUES.

IN ADDITION, IT'S IMPORTANT TO EMPHASIZE THAT WE ARE A NEW AND PRECEDENT SETTING ORGANIZATION FOR WE ARE THE FIRST STATE AGENCY IN THE HISTORY OF THIS COUNTRY TO FUND MEDICAL RESEARCH AT THIS HIGH LEVEL. CERTAINLY WE ALWAYS NEED TO LEARN TO IMPROVE AND TO BE BETTER AT PREDICTING WHERE UNEXPECTED HURDLES AND AMBIGUITIES CAN ARISE. BUT LET US NOT BE DETERRED FROM OUR MISSION BY HONEST MISTAKES, AND LET US NOT FORGET THAT THE ISSUES THAT WE ARE CONFRONTING NOW PALE IN COMPARISON TO CIRM'S ACHIEVEMENTS.

THE ICOC SHOULD TAKE GREAT PRIDE IN KNOWING THAT IN THREE SHORT YEARS, SINCE THE ELECTION OF NOVEMBER 2004, CIRM'S LIST OF ACCOMPLISHMENTS IS TRULY REMARKABLE. CIRM HAS DEFEATED IN COURT OPPONENTS WHO TRIED TO DERAIL THE WILL OF THE PEOPLE WHO VOTED FOR PROPOSITION 71. CIRM HAS CREATED A FIRST-RATE FUNDING AGENCY FOR SUPPORTING SCIENTIFIC RESEARCH. CIRM HAS ASSEMBLED A GRANTS WORKING GROUP COMPOSED OF SOME OF THE COUNTRY'S BEST SCIENTISTS FROM LEADING RESEARCH INSTITUTIONS TO HELP US EVALUATE GRANT APPLICATIONS. CIRM HAS ESTABLISHED ETHICAL GUIDELINES FOR WORKING WITH STEM CELLS THAT HAVE BECOME WORLD STANDARDS. CIRM HAS CREATED INTELLECTUAL PROPERTY POLICIES THAT WILL ENSURE THAT THE PEOPLE OF CALIFORNIA WILL BENEFIT MEDICALLY AND ALSO FINANCIALLY FROM THE INVESTMENTS THEY HAVE MADE IN STEM CELL RESEARCH.

CIRM HAS ALSO PROCESSED OVER 400 GRANT APPLICATIONS AND COMMITTED OVER $200 MILLION IN GRANTS FOR RESEARCH, TRAINING, AND FACILITIES. AND EACH OF YOU IN FRONT OF YOU NOW HAVE THAT COMPENDIUM OF ALL THE LIST OF AWARDS THAT HAVE BEEN AWARDED BY CIRM. BY THE SUMMER OF 2008, WE ARE PREDICTED TO HAVE COMMITTED APPROXIMATELY $500 MILLION IN FUNDS FOR THE SUPPORT OF STEM CELL RESEARCH, WHICH WILL MAKE US THE WORLD'S LARGEST SUPPORTER OF EMBRYONIC STEM CELL RESEARCH AND THE ENVY OF THE WORLD IN OUR ABILITY TO FUND THIS TYPE OF WORK.

(DR. AZZIZ ARRIVED.)

DR. MURPHY: IN THE COMPETITION THAT THE ICOC WILL VOTE ON TODAY, CIRM WILL FUND WHAT MANY HAVE CALLED THE LOST GENERATION OF MEDICAL SCIENTISTS, OUTSTANDING YOUNG M.D. AND PH.D. SCIENTISTS WHO HAVE BEEN DELAYED IN ESTABLISHING INDEPENDENT RESEARCH LABORATORIES BECAUSE OF CUTBACKS IN FEDERAL FUNDING.

AND CIRM HAS ACHIEVED THESE MILESTONES WITH A SKELETON CREW OF STAFF, MOST OF WHOM ARE NEW TO THE FIELD AND LEARNING ON THE JOB. FORTUNATELY OUR STAFF'S COMMITMENT, INTELLIGENCE, AND WILLINGNESS TO WORK LONG HOURS HAVE PAID OFF IN ALLOWING CIRM TO MOVE FAR MORE EXPEDITIOUSLY THAN ANY ONE OF US MIGHT HAVE HOPED.

IN SUMMARY, MR. CHAIRMAN, WE MUST ALWAYS ENDEAVOR TO CORRECT SHORTCOMINGS, BUT LET US NOT FORGET THAT CIRM HAS NOW BEGUN THE LONG TREK TOWARDS REALIZING PROPOSITION 71'S VISION OF DEVELOPING STEM CELL THERAPIES TO RELIEVE THE SUFFERING OF THOSE THAT ARE WROUGHT BY INTRACTABLE DISEASES. THE JOURNEY WILL BE LONG; BUT WHEN WE LOOK BACK, THE DIFFICULTIES WE HAVE EXPERIENCED RECENTLY WILL BE SEEN AS INEVITABLE GROWING PAINS WHILE OUR ACHIEVEMENTS WILL BE SEEN AS MAJOR STEPS FORWARD WITH FAR-REACHING HEALTH CONSEQUENCES FOR US ALL.

MR. CHAIRMAN, I WOULD ALSO LIKE TO BRIEFLY COMMENT ON SPECTACULAR SCIENTIFIC NEWS THAT APPEARED SEVERAL WEEKS AGO IN TWO PUBLICATIONS THAT SHOW THAT HUMAN ADULT SKIN CELLS CAN BE REPROGRAMMED BY THE ADDITION OF A COCKTAIL OF FOUR GENES TO TAKE ON CHARACTERISTICS OF HUMAN EMBRYONIC STEM CELLS. FOR ALL OF US INTERESTED IN STEM CELLS, THESE PAPERS ARE TANTAMOUNT TO WALKING ON THE MOON FOR THREE REASONS.

FIRST, THE SCIENCE SHOWS SPECTACULARLY WELL THAT ADULT HUMAN CELLS HAVE THE ABILITY TO TURN THE CLOCK BACK TO BECOME EMBRYONIC AND TO TURN INTO CELLS IN THE THREE MAJOR GERMINAL LAYERS OF BODY TISSUES. IT'S A TRUE AND REMARKABLE FINDING THAT STEMS FROM DR. YAMANAKA'S WORK WITH MOUSE CELLS DONE A YEAR AGO. ONE PROBLEM IN THESE PAPERS IS THAT CELLS WERE INDUCED INTO PLURIPOTENCY USING VIRUS VECTORS, WHICH WE KNOW FROM GENE THERAPY STUDIES CAN ALTER THE GENOME OF A WHOLE CELL AND CREATE UNEXPECTED EVENTS, INCLUDING CANCER.

IN ADDITION, AT LEAST TWO OF THESE GENES USED IN THESE STUDIES HAVE BEEN SHOWN TO BE CANCER CAUSING IN THE ANIMAL STUDIES. THEREFORE, IMPORTANT FUTURE GOALS WILL BE TO DETERMINE HOW TO INDUCE PLURIPOTENCY WITHOUT VIRAL VECTORS AND ALLOW GENES WITH THE POTENTIAL TO CAUSE CANCER.

THE SECOND IMPORTANT FEATURE OF THESE STUDIES IS THAT THEY WERE DONE WITHOUT THE USE OF HUMAN EGGS, WHICH SHOULD MAKE THE GENERATION OF PATIENT-SPECIFIC STEM CELLS MUCH EASIER AND MORE EFFICIENT.

FINALLY, THIS FINDING EMPHASIZES THE NEED FOR SCIENTISTS TO CONTINUE THEIR WORK ON HUMAN EMBRYONIC STEM CELLS, WHICH REMAIN THE GOLD STANDARD FOR UNDERSTANDING INNATE PLURIPOTENCY. IN ONE OF THE PAPERS, IT WAS DETERMINED THAT INDUCED PLURIPOTENT CELLS DIFFER FROM HUMAN EMBRYONIC STEM CELLS IN THE ACTIVITY OF ABOUT A THOUSAND GENES. TO UNDERSTAND WHETHER THOSE GENES ARE SIGNIFICANT OR NOT IN PLURIPOTENCY, MUCH MORE WORK WILL NEED TO BE DONE COMPARING THE TWO FORMS OF CELLS.

WE ALSO DON'T KNOW WHETHER IN THE END HUMAN EMBRYONIC STEM CELLS WILL TURN OUT TO BE THE CELLS OF CHOICE FOR THERAPIES, WHICH FURTHER DEMANDS THAT WE CONTINUE TO INVESTIGATE THEM. CALIFORNIA IS ONE OF THE FEW PLACES IN THE WORLD WHERE THESE PARALLEL TRACKS OF RESEARCH CAN BE PURSUED WITH ADEQUATE FUNDING.

I SHOULD ALSO POINT OUT THAT THE TWO SENIOR AUTHORS ON THESE PAPERS, DRS. YAMANAKA AND THOMPSON, WILL BOTH BE OPENING LABS IN CALIFORNIA TO PURSUE THEIR WORK, DR. YAMANAKA IN SAN FRANCISCO AT THE GLADSTONE INSTITUTE AND DR. THOMPSON AT THE UNIVERSITY OF CALIFORNIA IN SANTA BARBARA.

THEIR SETTING UP THESE LABS SUGGESTS TO ME THEIR EAGERNESS TO BENEFIT FROM THE VIBRANT STEM CELL RESEARCH COMMUNITY THAT WE HAVE CREATED IN CALIFORNIA.

MR. CHAIRMAN, LET ME NOW OUTLINE SOME OF THE CHANGES THAT HAVE HAPPENED AT CIRM SINCE OUR OCTOBER ICOC MEETING. FIRST OF ALL, WE HAVE HAD A NUMBER OF CHANGES IN PERSONNEL. WE HAVE HIRED THREE SCIENTIFIC OFFICERS, TWO OF WHOM ARE HERE, AND I WILL ASK THEM TO STAND. FIRST, WE HAVE HIRED DR. ELIZABETH ASHA NIGH. ASHA IS A NEUROSCIENTIST WHO COMES TO US FROM HER TRAINING AT HARVARD MEDICAL SCHOOL.

DR. UTA GRIESHAMMER IS A DEVELOPMENTAL BIOLOGIST INTERESTED IN HOW ORGANS FORM IN EMBRYOS, WHO COMES TO US MOST RECENTLY FROM UCSF. IN FACT, SHE WAS THE ONE RESPONSIBLE FOR THE NEW CELL LINES RFA.

WE ALSO, MR. CHAIRMAN, ARE PLEASED TO HAVE WITH US THE OTHER SCIENTIFIC MEMBERS OF CIRM. THEY INCLUDE DR. KUMAR HARI, DR. BETTINA STEFFEN, DR. PATRICIA OLSON, WHO IS OUR INTERIM DIRECTOR OF SCIENTIFIC ACTIVITIES, AND MS. AMY LEWIS, WHO IS THE DIRECTOR OF GRANTS ACTIVITIES.

AS YOU KNOW, MR. CHAIRMAN, THESE INDIVIDUALS LIE AT THE HEART OF THE SCIENTIFIC ACTIVITIES OF CIRM FOR THEY PREPARE THE SCIENTIFIC CONCEPT PAPERS AND THE RFA'S.THEY ARRANGE AND STAFF THE MEETINGS OF THE GRANTS WORKING GROUP, AND THEY PREPARE THE SUMMARIES OF THE GRANTS REVIEWS FOR THE APPLICANTS, AND TO GUIDE THE FUNDING DECISIONS OF THE ICOC.

MR. CHAIRMAN, I ASK THE ICOC TO JOIN ME IN THANKING THIS OUTSTANDING GROUP OF PEOPLE FOR THEIR EFFORTS.

(APPLAUSE.)

DR. MURPHY: AND I APOLOGIZE. I MISSED DR. GIL SAMBRANO, WHO IS RESPONSIBLE FOR THE GRANTS WORKING GROUP.

WE HAVE ALSO HIRED DR. MIKE YAFFE, WHO IS CURRENTLY A FULL PROFESSOR AT UCSD, WHO IS INTERESTED IN THE BIOLOGY AND GENETICS OF MITOCHONDRIA. AND FINALLY, WE HAVE HIRED ELLEN ROSE AS OUR INTERIM CHIEF OF COMMUNICATIONS. ELLEN HAS A LONG HISTORY IN WORKING IN BIOTECH IN THE BAY AREA, AND SHE WILL BE WORKING WITH US HALF-TIME UNTIL WE HIRE A FULL-TIME HEAD OF THIS IMPORTANT OFFICE.

WE HAVE ALSO LOST SOME PEOPLE. LORI HOFFMAN, OUR CHIEF FINANCIAL AND ADMINISTRATIVE OFFICER, INTENDS TO RESIGN IN JANUARY 2008 TO MAKE WAY FOR OUR NEW CHIEF OPERATING OFFICER, WHO I WILL SPEAK ABOUT IN A MOMENT. ON BEHALF OF CIRM, I WOULD LIKE THANK LORI FOR HER SERVICES TO CIRM AND WISH HER WELL IN HER FUTURE ENDEAVORS.

(APPLAUSE.)

DR. MURPHY: ALSO, ROSEMARY CHENGSON, WHO IS OUR FINANCIAL OFFICER, WILL BE STEPPING DOWN. DENNIS BUTLER, OUR TECHNOLOGY OFFICER, HAS MOVED TO THE PRIVATE SECTOR. AND MARIO GARCIA, A GRANTS MANAGEMENT SPECIALIST, IS ACTUALLY ON HIS WAY TO UGANDA TO WORK IN MICROLOAN PROGRAMS. WE WISH ALL OF THESE PEOPLE GOOD FORTUNE AS THEY MOVE FORWARD IN THEIR CAREERS. THANK YOU.

WE ALSO HAVE OPEN POSITIONS AT THE INSTITUTE. WORKING CLOSELY WITH DR. TROUNSON, WE HAVE BEGUN TO REDESIGN THE ORGANIZATIONAL CHART OF THE INSTITUTE, COPIES OF WHICH YOU HAVE IN TAB 19 IN FRONT OF YOU, AND WE'LL BE TALKING ABOUT THIS LATER. AS PART OF THIS REORGANIZATION, WHICH IS REALLY A GENERAL OUTLINE WHICH WE EXPECT DR. TROUNSON TO CHANGE AS NEEDED IN THE FUTURE, WE WILL BE HIRING TWO NEW SENIOR PEOPLE. AND DR. TROUNSON INTENDS TO HAVE THE INSTITUTE RUN BY THREE SENIOR PEOPLE, HIMSELF AS PRESIDENT, A CHIEF SCIENTIFIC OFFICER, AND A CHIEF OPERATING OFFICER.

THE CHIEF SCIENTIFIC OFFICER WILL BE RESPONSIBLE FOR ALL SCIENTIFIC ACTIVITIES OF THE INSTITUTE, AND THE COO WILL BE RESPONSIBLE FOR ALL ADMINISTRATIVE ISSUES, ALSO, THOUGH, DEALING WITH OUR GRANTS PROGRAM.

TODAY, MR. CHAIRMAN, IN EXECUTIVE SESSION WE WILL BE RECOMMENDING THE APPOINTMENT OF A NEW CHIEF SCIENTIFIC OFFICER FOR THE INSTITUTE AND A NEW CHIEF COMMUNICATIONS OFFICER. WE HAVE ADVERTISED INTERNATIONALLY FOR ALL OF THESE POSITIONS, AND WE LOOK FORWARD OVER THE NEXT SEVERAL MONTHS OF IDENTIFYING A NEW CHIEF OPERATING OFFICER.

WE HAVE ALSO ISSUED TWO RFA'S FOR TWO NEW PROGRAMS WHICH YOU HAVE ALREADY APPROVED. AN RFA WAS ISSUED FOR THE DISEASE TEAM PLANNING AWARDS THAT WILL BRING TOGETHER INTERDISCIPLINARY TEAMS OF RESEARCHERS TO KICK-START PROMISING STRATEGIES THAT WILL EXPLOIT STEM CELL TECHNOLOGY FOR UNDERSTANDING AND TREATING DISEASES. IN ADDITION, WE HAVE ISSUED AN RFA THAT WILL FUND THE DERIVATION AND PROPAGATION OF NEW PLURIPOTENT CELL LINES FROM EMBRYONIC AND ADULT SOURCES. IT WILL ALSO SUPPORT THE OPTIMIZATION OF NEW METHODS TO GENERATE PLURIPOTENT CELLS.

FINALLY, MR. CHAIRMAN, WE WOULD LIKE TO -- I HAVE ENCLOSED IN YOUR PACKAGE, BUT WILL NOT SPEND TIME GOING OVER THEM NOW, ANSWERS TO THE QUERIES THAT THE ICOC RAISED IN OCTOBER IN SAN DIEGO. AND THE QUERIES WERE WILL WE RUN A GRANTS ANNUAL CONFERENCE FOR OUR INVESTIGATORS, AND THE ANSWER IS YES. WE TALK ABOUT RFA ELIGIBILITY FOR PI'S WHO SPEND LESS THAN A HUNDRED PERCENT OF THEIR TIME IN CALIFORNIA. YES, THAT WILL BE ALLOWED, AT LEAST IN THE ONE RFA FOR NEW STEM CELL LINES.

WE WERE QUESTIONED ABOUT WHETHER WE WOULD ALLOW PI'S, MULTIPLE PI'S PER GRANT. OUR POSITION NOW IS WE WILL NOT. THE FOR-PROFIT ELIGIBILITY FOR GRANTS WE WILL TALK ABOUT LATER TODAY. IN YOUR HANDOUT WE HAVE OUTLINED A NEW MECHANISM FOR DEALING WITH UNSOLICITED PROPOSALS THAT COME TO THE CIRM.

AND, FINALLY, I WOULD LIKE TO JUST TOUCH UPON WHERE WE ARE IN OUR GRANT PROGRAM. MELISSA, WOULD YOU PLEASE PUT THE NEXT SLIDE UP. WHAT WE'RE LOOKING AT HERE ARE CHANGES IN THE BUDGET OF THE INSTITUTE THAT HAVE HAPPENED SINCE YOU APPROVED THE BUDGET OF THE INSTITUTE, WHICH WAS AN INTERIM BUDGET, IN JUNE OF 2004. AND WHILE YOU HAVE A DETAILED COPY OF THIS IN YOUR HANDOUT, BASICALLY THE CHANGES ARE THAT BECAUSE OF PERSONNEL TRANSITIONS, WE HAVE ENCOUNTERED AN ADDED COST OF $278,000, AND THAT IS BECAUSE HAVE HAD TWO PRESIDENTS THIS YEAR, MYSELF AND ALAN TO COME, SO SOME OF THAT IS PROJECTED COSTS. WE HAVE BEEN LOOKING AND SEARCHING FOR THE COO, CSO, AND CCO POSITION, AND WE HAVE A NEW PERSON TO HELP US WITH LEGISLATIVE OVERSIGHT.

WE HAVE PUT OUT AN RFA FOR A COMMUNICATIONS COMPANY, WHICH WE WILL NOT HIRE UNTIL WE HAVE THE NEW COMMUNICATION HEAD IN PLACE. SO THAT $100,000 IS MONEY NOT SPENT. WE HAVE DONE AN ECONOMIC IMPACT ANALYSIS, WHICH WAS REQUESTED OF US BY THE BUREAU OF STATE AUDITS, AND THERE ARE OTHER BUDGET ADJUSTMENTS THAT COME TO A TOTAL OF ABOUT $57,000. SO AT THIS TIME WE HAVE EITHER INCURRED OR PLAN TO INCUR EXPENSES OF ABOUT $486,000, AND THAT DOES NOT ACCOUNT FOR THE SALARIES OF THE NEW CSO AND COO, WHO WE EXPECT TO BE WITH US SOMETIME IN THE SPRING.

MR. CHAIRMAN, WITH THAT, I WILL END MY REPORT, AND I'M HAPPY TO ENTERTAIN ANY QUESTIONS.

CHAIRMAN KLEIN: THANK YOU VERY MUCH, DR. MURPHY. WE COULD HAVE AT THIS POINT JEFF SHEEHY'S COMMENTS.

MR. SHEEHY: THANK YOU, DR. MURPHY. I THINK YOU'RE DOING A TREMENDOUS JOB. AND YOUR INITIAL STATEMENTS ABOUT OUR RECENT DIFFICULTIES, I HOPE WE WOULDN'T CHARACTERIZE THEM EITHER, WE WOULD NEITHER MINIMIZE THEM, NOR PERHAPS EXAGGERATE. BUT, YOU KNOW, WE HAVE HAD THREE NEWSPAPERS' EDITORIAL BOARDS TAKE A RATHER STRONG VIEW OF THESE THINGS, THE L.A. TIMES, THE SACRAMENTO BEE, AND THE SAN FRANCISCO CHRONICLE. SO I DO THINK THAT THESE ARE REALLY SERIOUS MATTERS, AND WE DO HAVE A GROUP OF YOUNG SCIENTISTS WHO WERE VERY HOPEFUL WHOSE HOPES HAVE BEEN DASHED.

AND WE DO HAVE A STATE INVESTIGATION BEING UNDERTAKEN. SO I DON'T THINK WE SHOULD TRY TO DOWNPLAY THIS. WE SHOULD ACCEPT IT AND MOVE ONE.

I ALSO WOULD HOPE THAT WE COULD HAVE A LITTLE MORE TRANSPARENCY. WE HAVE REVEALED FOUR OF THE NAMES -- THE NAMES OF FOUR INSTITUTIONS WHOSE GRANTS WERE THROWN OUT, BUT NOT THE FIFTH, BURNHAM. AND I FIND THAT -- YOU KNOW, I THINK I WOULD BE HAPPIER IF WE HAD MORE TRANSPARENCY ON SOME OF THESE THINGS. I CAN UNDERSTAND THE PUBLIC'S UNHAPPINESS WITH THE LACK OF INFORMATION THAT THEY'RE GETTING FROM US.

CHAIRMAN KLEIN: JEFF, I THINK THAT DR. MURPHY HAS PLANNED AS A PART OF THE NEW FACULTY AWARDS DISCUSSION OF THIS ITEM AND, IN FACT, DIRECTLY ADDRESSING THIS. THE INTENT WAS TO DO THIS IN A FORMAL SESSION. SO WE CERTAINLY BELIEVE THAT IT IS A VERY SERIOUS AREA OF FOCUS BECAUSE WE HAVE TO MAKE CERTAIN THAT OUR EXTREMELY HIGH STANDARDS ARE MET CONTINUOUSLY. WE'RE A YOUNG AGENCY. WE ARE LEARNING. WE ARE MAKING, AS MR. BRUNNER SAYS, MISTAKES THAT COME WITH MOBILIZING A NEW STATE AGENCY FROM GROUND ZERO, PARTICULARLY WHILE UNDER THE STRESS OF LITIGATION WITH A DIMINISHED STAFF, BUT WE STRIVE TO BE A HUNDRED PERCENT. THAT HAS TO BE OUR STANDARD, AND WE ARE COMMITTED TO IT.

DR. LOVE: I JUST WANTED TO MAKE ONE COMMENT IN RESPONSE. JEFF, I'M SURE YOU'VE SPOKEN WITH RICHARD, AS I HAVE, AND I JUST WANT TO EMPHASIZE THAT MY IMPRESSION HAS BEEN THAT THIS HAS BEEN TAKEN EXTREMELY SERIOUSLY. THERE'S BEEN NO EFFORT TO MINIMIZE ANYTHING. I UNFORTUNATELY RECOGNIZE THAT THE MEDIA DOESN'T ALWAYS PROPERLY REPRESENT THINGS AS THEY HAPPEN. I THINK THIS IS A SITUATION WHERE, WHILE THERE'S BEEN A FAIR AMOUNT OF MEDIA ATTENTION, WE REALLY NEED TO UNDERSTAND THE FACTS BEFORE WE MAKE ANY CONCLUSIONS ABOUT WHAT REALLY HAPPENED HERE.

I DON'T FULLY UNDERSTAND THE FACTS, BUT I REALLY DON'T THINK THAT THERE'S BEEN ANY EFFORT TO HIDE OR MINIMIZE ANYTHING.

DR. MURPHY: MR. CHAIRMAN, MAY I RESPOND BECAUSE I THINK MR. SHEEHY'S POINT IS AN IMPORTANT ONE. NONE OF US AT CIRM MINIMIZE THE IMPORTANCE OF THESE ISSUES. IN FACT, STAFF AT CIRM WAS THE ONE WHO UNCOVERED THE ISSUES. WE TAKE IT VERY SERIOUSLY.

WHAT I DO WANT TO EMPHASIZE THOUGH, JEFF, IS THIS WAS NOT -- THESE MISTAKES WERE NOT MADE INTENTIONALLY. THEY WERE NOT MADE IN ANY WAY TO UNDERMINE OR END RUN CIRM'S REGULATIONS. THEY WERE INNOCENT, INADVERTENT MISTAKES. THAT DOESN'T MEAN WE DON'T DEAL WITH THEM. IN FACT, WE NEED TO DEAL WITH THEM, AND WE NEED TO DEAL WITH THEM IN A WAY THAT WILL PREVENT THESE MISTAKES IN THE FUTURE.

CHAIRMAN KLEIN: YES, I THINK WE HAVE SHERRY LANSING AND THEN DR. PENHOET.

MS. LANSING: I'LL JUST TALK LOUD. I WANT TO SAY THAT I THINK THAT WE ARE TAKING IT VERY SERIOUSLY. I RESPECT WHAT JEFF IS SAYING. BUT TO ME, AS UNFORTUNATE AS THESE MISTAKES WERE, AND THEY ARE VERY UNFORTUNATE, AND I DO NOT THINK THAT THEY WERE INTENTIONAL, BUT AS UNFORTUNATE AS THEY WERE COMING UNINTENTIONALLY, WHAT IT'S SHOWN TO ME IS THAT OUR SYSTEM IS WORKING BECAUSE WE UNCOVERED THEM AND WENT PUBLIC WITH THEM. I THINK THAT'S VERY IMPORTANT TO ACKNOWLEDGE. I THINK YOU HAVE SAID THAT, AND I JUST WANT TO REEMPHASIZE THAT, THAT WE'RE THE ONES THAT SAW THEM. WE'RE THE ONES THAT WENT PUBLIC WITH THIS, AND WE ARE THE ONES THAT ARE CORRECTING IT. AND SO TO ME THE PROPER CHECKS AND BALANCES ARE IN PLACE.

DR. PENHOET: IF I COULD, I'D LIKE TO POINT OUT THAT WE HAVE NOT PROVIDED ANY INFORMATION TO THE PRESS ABOUT THE INVOLVED INSTITUTIONS. IT WAS MADE BY SOMEONE, QUOTE, UNQUOTE, A KNOWLEDGEABLE INSIDER, TO THE PRESS, NOT AN OFFICIAL ANNOUNCEMENT BY THE ICOC OR THE CIRM. WE EXPECT TO HAVE A FULL DISCUSSION OF THOSE ISSUES, INCLUDING THE NAMES OF THE INSTITUTIONS INVOLVED AT THIS MEETING TODAY, WHICH IS THE APPROPRIATE TIME, IN MY VIEW, TO HAVE THAT DISCUSSION WHILE WE'RE DISCUSSING THESE GRANTS. SO THERE WAS NO -- THERE WAS NO RELEASE BY CIRM OR ICOC. IT WAS A, QUOTE, UNQUOTE, LEAK OF INFORMATION BY A, QUOTE, UNQUOTE, KNOWLEDGEABLE SOURCE THAT GOT THOSE NAMES IN THE PAPER, IN MY VIEW, PREMATURELY. BUT WE WILL DEAL WITH THE ISSUE IN PUBLIC TODAY IN THE RIGHT FORUM, WHICH IS THIS MEETING AS PART OF OUR DISCUSSION OF THAT WHOLE SERIES OF GRANTS.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. AND I WOULD LIKE TO SAY THAT WHAT WE HAVE ALREADY ANNOUNCED COMING FROM AN EXECUTIVE COMMITTEE DISCUSSION WAS THREE IMMEDIATE ACTIONS BECAUSE WE HAVE TO LEARN AND RESPOND IN REAL TIME TO TRY AND MAKE SURE WE AVOID THESE PROACTIVELY, MAKING CERTAIN THAT WE'RE NOT DEALING WITH REMEDIAL ACTIONS TO UNCOVER AND CORRECT.

AND THOSE THREE ACTIONS THAT HAVE BEEN ANNOUNCED IS, ONE, HAVING A TWO-LEVEL REVIEW, INCLUDING TWO-LEVEL LEGAL REVIEW, BEFORE ANY RFA'S ARE RELEASED TO MAKE CERTAIN THAT WE HAVE TWO SETS OF EYES AS A FILTER TO BE SURE THAT IN OUR OWN RFA'S WE DON'T CONTRIBUTE TO CONFUSION AND WE PROVIDE ABSOLUTE CLARITY ON OUR REQUIREMENTS AND EXPECTATIONS.

SECONDLY, WITH EVERY RFA ROUND, IF THERE'S ANY SPECIAL CHARACTERISTICS OF THAT, THERE WILL BE A SPECIFIC DIRECTION TO BOARD MEMBERS AND STAFF ALERTING THEM, RAISING THE ANTENNA TO MAKE CERTAIN THAT WE KNOW WHERE SENSITIVE POINTS MAY BE TO HAVE FULL PERFORMANCE UNDER OUR -- AND WITH THE BENEFIT OF EXPERT LEGAL GUIDANCE.

AND AS A THIRD ITEM, SETTING UP AND MAKING SURE WE HAVE FULL ACCESS IDENTIFIED FOR THE BOARD MEMBERS AND THE STAFF AS WELL AS OUTSIDE PARTICIPANTS TO OUR LEGAL COUNSEL SO THAT IF THERE ARE QUESTIONS, THEY CAN BE DEFINED IN A DEFINITIVE MANNER AND A CONSISTENT MANNER WITH EACH RFA TO ELIMINATE CONFUSION, WHICH QUITE UNDERSTANDABLY CAN ARISE AS WE WILL DISCUSS LATER IN LOOKING AT THIS PARTICULAR FACT PATTERN.

BUT, AGAIN, WE ARE MOVING FORWARD AT THIS POINT INTO THE FIRST ITEM, WHICH DOES ADDRESS THIS ISSUE, WHICH IS ON THE AGENDA ITEM NO. 9, I BELIEVE, CONSIDERATION OF THE APPLICATIONS FOR NEW FACULTY AWARDS.

AND WE WOULD LIKE TO -- IN ADDRESSING THIS ITEM, WE HAVE A COMMUNICATION FROM THE OFFICE OF THE PRESIDENT, UNIVERSITY OF CALIFORNIA SYSTEM THAT IF IT COULD BE DISTRIBUTED, THAT WOULD BE GREAT. SUE NORTH, WHO IS INTERIM GOVERNMENTAL AFFAIRS, ADDITION TO OUR STAFF, IS DISTRIBUTING THESE MATERIALS TO THE BOARD, AND THERE SHOULD BE COPIES AS WELL FOR THE PUBLIC.

I'D LIKE TO GIVE THE BOARD MEMBERS A COUPLE MINUTES TO READ THIS COMMUNICATION.

MR. SIMPSON: ARE THERE COPIES AVAILABLE FOR THE PUBLIC?

CHAIRMAN KLEIN: WE'VE JUST MADE COPIES. IT WAS RECEIVED LATE LAST NIGHT.

DR. SIMPSON: THANK YOU, MR. CHAIRMAN.

CHAIRMAN KLEIN: TO PROCEED ON THIS ITEM, I WOULD LIKE TO OPEN BY ADDRESSING THE BASIC FACT PATTERN HERE IN TERMS OF THE GENERAL CONSIDERATION OF THIS GRANT ROUND. THE BASIC QUESTION WITH THIS GRANT ROUND IS SHOULD WE CONSIDER THOSE APPLICATIONS THAT HAVE BEEN PROCESSED AND QUALIFIED, OR SHOULD WE, IN FACT, DEFER THIS ROUND. WE HAVE THE OPPORTUNITY AS WELL AT THE END OF THE GRANT ROUND AFTER ANALYSIS OF THE DISTRIBUTION OF GRANTS TO DECIDE TO BRING BACK TO THE JANUARY BOARD MEETING A SUPPLEMENTAL GRANT ROUND THAT WILL ADDRESS THE OPPORTUNITY FOR THOSE CANDIDATES WHO COULD NOT, IN FACT, BE PRESENTED TODAY BECAUSE OF THE ISSUES THAT AROSE AS WELL AS ADDITIONAL MEMBERS.WE CAN, IN LOOKING AT WHAT HAS TURNED OUT TO BE AN EXTREMELY STRONG AND POPULAR PROGRAM, IN JANUARY ADDRESS, IN FACT, PUTTING ADDITIONAL FUNDS INTO THE SYSTEM. AND IF WE FEEL, AFTER LOOKING AT IT, THAT OUR GOAL OF HAVING A STATEWIDE INFRASTRUCTURE OF YOUNG FACULTY HASN'T BEEN FULLY ACHIEVED, WE CAN MAKE CERTAIN THAT OUR ORIGINAL DESIRE TO DISTRIBUTE THAT CAPACITY CAN BE PRESERVED BY HAVING A PROVISION AND MAINTAIN OUR PROVISION ON A CUMULATIVE BASIS THAT NO INSTITUTION WOULD HAVE MORE THAN FOUR AWARDS. THAT WOULD MAKE CERTAIN THAT WE GET THE DISTRIBUTION THAT WE WANT THROUGH THE STATE.

BUT WHAT WE NEED TO DO IS WITH CARE PROCEED HERE TO UNDERSTAND THE ISSUES AND TO ADDRESS THE PHENOMENAL OPPORTUNITY WE HAVE FOR A BRILLIANT PROGRAM THAT HAS BEEN PEER REVIEWED AND COMES TO US WITH A NUMBER OF EXTRAORDINARY CANDIDATES AND RECOMMENDATIONS.

IN PROCEEDING THROUGH THIS, JAMES HARRISON, WOULD YOU LIKE TO SET FORWARD THE FACTS THAT THE STAFF THROUGH OUR FAIL-SAFE SYSTEMS, OUR CHECKS AND BALANCES, HAVE DISCOVERED IN THE PROCESS AND HOW THAT INFORMATION HAS BEEN EVALUATED BY LEGAL COUNSEL. AND I'LL ASK TAMAR PACHTER FOR HER CONCURRENCE IN THAT EVALUATION.

MR. HARRISON: THANK YOU. AS MOST OF YOU ALREADY KNOW, DURING A REVIEW OF APPLICATIONS FOR NEW FACULTY AWARDS, CIRM STAFF DISCOVERED THAT TEN APPLICATIONS WERE ACCOMPANIED BY LETTERS OF INSTITUTIONAL SUPPORT SIGNED BY MEMBERS OF THE ICOC. THE AFFECTED INSTITUTIONS ARE UCSF, UCLA, UCSD, USC, AND BURNHAM. RFA 0702, THE REQUEST FOR APPLICATIONS FOR NEW FACULTY AWARDS, REQUIRED A LETTER OF SUPPORT SIGNED BY THE DEAN OR DEPARTMENTAL CHAIR TO DOCUMENT THE INSTITUTIONAL SUPPORT AND COMMITMENT THAT WOULD BE PROVIDED TO THE APPLICANTS.

(DR. WRIGHT ARRIVES.)

MR. HARRISON: IN ADDITION, IT'S IMPORTANT TO NOTE THAT THE ICOC'S CONFLICT OF INTEREST POLICY INCLUDES A FOOTNOTE WHICH PROVIDES THAT SENIOR ACADEMIC OFFICERS WHO, AS PART OF THEIR RESPONSIBILITIES, OVERSEE AND ADVISE RESEARCHERS IN THEIR INSTITUTIONS OR WHO SIGN OFF ON GRANTS, LOANS, OR CONTRACTS SHALL NOT BE DEEMED TO HAVE A CONFLICT OF INTEREST UNDER THIS PROVISION. RECUSAL, HOWEVER, IS REQUIRED IN THIS SITUATION UNDER PROPOSITION 71 IN POINTS 2, 3, 4, AND 5.

AS A RESULT OF THE DIRECTION IN THE RFA, THAT EITHER THE DEAN OR THE DEPARTMENTAL CHAIR SIGN, AND THE LANGUAGE IN THE ICOC CONFLICT OF INTEREST POLICY REGARDING SIGNING OFF ON GRANTS, LOANS, OR CONTRACTS, SOME MEMBERS OF THE ICOC UNDERSTOOD THAT THE RFA DIRECTED THAT THEY SIGN THE LETTER OF INSTITUTIONAL SUPPORT AND THAT THE CONFLICT OF INTEREST POLICY AUTHORIZED THEM TO DO SO.

ANOTHER PROVISION OF STATE LAW, HOWEVER, PROHIBITS MEMBERS OF THE ICOC FROM USING THEIR OFFICIAL POSITION IN AN ATTEMPT TO INFLUENCE A DECISION REGARDING A GRANT TO THEIR EMPLOYER. IN THIS CASE, OF COURSE, THE BOARD MEMBERS WERE ACTING IN THEIR CAPACITY AS DEANS OR EXECUTIVE OFFICERS OF THEIR INSTITUTIONS, NOT ICOC MEMBERS. AND THERE'S STRONG SUPPORT IN BOTH THE CASE LAW AND IN ATTORNEY GENERAL OPINIONS FOR THE PROPOSITION THAT THEIR CONDUCT WAS PERMISSIBLE BECAUSE THEY WERE ACTING IN THEIR PRIVATE CAPACITY, NOT IN THEIR OFFICIAL CAPACITY.

BECAUSE OTHER CASE LAW AND OPINIONS HAVE BROADLY CONSTRUED THIS STATUTORY PROVISION, HOWEVER, AND BECAUSE AN ADVERSE DECISION WOULD VOID THESE SPECIFIC GRANTS, THE CIRM EXECUTIVE COMMITTEE DECIDED OUT OF CAUTION TO REFRAIN FROM CONSIDERING THE APPLICATIONS THAT WERE ACCOMPANIED BY A LETTER OF SUPPORT SIGNED BY A MEMBER OF THE BOARD.

AS CHAIRMAN KLEIN NOTED, THE EXECUTIVE COMMITTEE HAS ALSO TAKEN ACTIONS TO ENSURE THAT THIS PROBLEM WILL NOT ARISE IN THE FUTURE AND INTENDS TO PRESENT TO THE BOARD FOR ITS CONSIDERATION AMENDMENTS TO THE CONFLICT OF INTEREST POLICY AT THE BOARD'S NEXT MEETING TO CLARIFY THE SCOPE OF THE CONFLICT OF INTEREST POLICY. THE ULTIMATE GOAL OF THESE CHANGES IS TO PRODUCE AS CLEAR AND EASILY UNDERSTOOD STANDARD FOR CONFLICTS AS IS POSSIBLE.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. DR. MURPHY, WOULD YOU LIKE TO MAKE ANY STATEMENT AT THIS POINT OR LATER IN THIS DISCUSSION ADDRESSING THIS ISSUE?

DR. MURPHY: I'LL WAIT, MR. CHAIRMAN.

CHAIRMAN KLEIN: OKAY. TAMAR, DO YOU CONCUR IN THIS ANALYSIS?

MS. PACHTER: YES, I DO.

CHAIRMAN KLEIN: THANK YOU. IT IS IMPORTANT TO NOTE THAT OUR COUNSEL HAS LOOKED AT THIS IN GREAT DETAIL, AS THEY INDICATE, LOOKING AT GUIDANCE FROM ATTORNEY GENERAL'S OPINION, LOOKING AT FPPC GUIDANCE, LOOKING AT ALL OF THE INFORMATION AVAILABLE. IT IS AN INHERENT LIMITATION THAT AS A YOUNG AGENCY THERE ISN'T A BODY OF INTERPRETATION THAT'S PRESENT. AND ONE OF THE BASIC ISSUES HERE WAS CONSERVATISM TO MAKE CERTAIN THAT WE PROTECT THE MISSION, PROTECT THE OFFICERS, AND PROTECT THE CANDIDATES.

THE ISSUE OF HAVING GRANTS GOING FORWARD THAT COULD BE POTENTIALLY VOIDED OR HELD UP FOR A SUBSTANTIAL LENGTH OF TIME IN LITIGATION, BEING DESTRUCTIVE OF THE INTENT OF THE GRANTS, BEING DESTRUCTIVE OF THE ABILITY OF THE CANDIDATES TO BE ABLE TO PERFORM, AND LOOKING AT THE ALTERNATIVE THAT WE CAN HAVE AN ADDITIONAL GRANT ROUND THAT COULD BE BROUGHT BACK TO THIS BOARD IN APPROXIMATELY SIX MONTHS AS A CLEAN, CLEAR, CONSERVATIVE OPTION IF WE DO NOT HAVE ADEQUATE REPRESENTATION AND HAVEN'T BUILT THE FULL STATEWIDE INFRASTRUCTURE AFTER WE HAVE GONE THROUGH THOSE GRANTS THAT WE CAN CONSIDER TODAY WERE IMPORTANT CONSIDERATIONS.

I'D LIKE TO POINT OUT THAT YOU HAVE A CONFUSION HERE THAT REVOLVES AROUND A FOOTNOTE THAT'S BEEN REFERENCED THAT WAS DEBATED AND DERIVED IN A PUBLIC HEARING ON APRIL 25, 2005. THIS IS AN OPENLY DERIVED PUBLIC HEARING WHERE THIS OCCURRED. THERE WAS A LOT OF DEBATE ABOUT THE MEANING OF THIS FOOTNOTE WHEN IT OCCURRED. AND TWO YEARS LATER WELL-INTENTIONED PEOPLE LOOKING AT THE SAME FOOTNOTE CAME TO DIFFERENT CONCLUSIONS. WHEN YOU HAVE FIVE DIFFERENT PEOPLE COMPLETELY UNCOORDINATED WHO ARE ADVISED BY THEIR STAFFS AND WHO INDIVIDUALLY REACHED THE CONCLUSION THAT IT MEANS THE SAME THING, THERE IS A REAL STRONG BASIS FOR BELIEVING THAT INNOCENTLY THEY HAVE ARRIVED AT A CONCLUSION THAT IS CERTAINLY VALID AND REASONABLE TO FIVE EMINENT INDIVIDUALS.

SO CLEARLY, AS DR. MURPHY REFERENCED IN HIS OPENING STATEMENT, I BELIEVE AND THE EXECUTIVE COMMITTEE CONCLUDED THAT THESE APPEAR TO BE HIGHLY INNOCENT AND INADVERTENT MISTAKES OF EXTRAORDINARILY DEDICATED PEOPLE AND THAT, IN FACT, THE RFA CREATES THE PRESUMPTION THAT WE HAVE LOOKED AT THIS ISSUE AND RESOLVED THAT THESE DEANS COULD WRITE INSTITUTIONAL COMMITMENT LETTERS, WHICH IS SOMETHING THEY DO EVERY DAY IN THE GRANT PROCESS, SOMETHING THAT THEY'RE USED TO DOING AND CONDITIONED TO EXPECT IN THEIR ROLE AS DEAN, NOT AS MEMBERS OF THIS BOARD.

SO IT IS IN THAT CONTEXT THAT WE LOOK AT THIS ISSUE. THE UNIVERSITY OF CALIFORNIA PRESIDENT'S OFFICE HAS ASKED FOR THE OPPORTUNITY TO ADDRESS THIS ISSUE BECAUSE THEY'VE CONCLUDED THAT, IN FACT, THERE WAS NOT A CONFLICT OF INTEREST FROM THEIR OWN INDEPENDENT ANALYSIS. SO I WOULD LIKE LAWRENCE COLEMAN, WHO'S VICE PROVOST FOR RESEARCH, TO PLEASE PRESENT THE LETTER OF COMMUNICATION THAT WYATT HUME HAS SIGNED TO THIS BOARD AND EXPLAIN THEIR POSITION.

MR. COLEMAN: GOOD MORNING. AND THANK YOU FOR THIS OPPORTUNITY. AS YOU HAVE IN FRONT OF YOU A LETTER FROM OUR PROVOST, RORY HUME, TO CHAIR KLEIN AND INTERIM PRESIDENT MURPHY, I JUST WANT TO SORT OF GO OVER THAT SO THAT WE SORT OF GET IT ON OFFICIALLY TO THE RECORD.

THE UNIVERSITY OF CALIFORNIA SHARES THE COMMITMENT OF THE CALIFORNIA INSTITUTE FOR REGENERATIVE MEDICINE TO OPERATE ACCORDING TO THE HIGHEST STANDARDS OF INTEGRITY. AND WE APPRECIATE THE NEED TO AVOID EVEN THE APPEARANCE OF CONFLICTS OF INTEREST THAT WOULD UNDERMINE THE INTEGRITY OF THE REVIEW AND FUNDING PROCESSES AT CIRM. WHILE WE BELIEVE THAT NO APPLICABLE CONFLICT OF INTEREST LAWS OR REGULATIONS WERE VIOLATED BY THE ACTIONS OF THOSE ICOC MEMBERS WHO SUBMITTED LETTERS OF SUPPORT IN ACCORDANCE WITH THE INSTRUCTIONS IN THE RFA, WE UNDERSTAND THE DESIRE TO ERR ON THE SIDE OF CAUTION. WE DO, HOWEVER, URGE CIRM AND THE ICOC TO DO EVERYTHING IN ITS POWER TO AVOID DISADVANTAGING THE PROMISING YOUNG FACULTY MEMBERS WHO HAVE BEEN DISQUALIFIED OR MAY BE DISQUALIFIED FROM THE CURRENT COMPETITION THROUGH NO FAULT OF THEIR OWN.

OUR STRONG RECOMMENDATION IS THAT CIRM BRIEFLY DELAY AWARDING THE LATEST ROUNDS OF GRANTS TO ALLOW AN OPPORTUNITY FOR ALL APPLICANTS TO BE RESUBMITTED, ADMITTING ANY OF THESE LETTERS, AND CONSIDERED ON EQUAL FOOTING. THIS IS, WE BELIEVE, THE BEST WAY TO AVOID DISADVANTAGING THE CURRENTLY DISQUALIFIED APPLICANTS.

WE UNDERSTAND THAT CIRM IS CONSIDERING INSTEAD ANNOUNCING AWARDS AT TODAY'S MEETING AND ISSUING A NEW REQUEST FOR PROPOSALS AT SOME POINT IN THE NEAR FUTURE THAT WOULD ALLOW THE QUALIFIED INDIVIDUALS AN OPPORTUNITY TO REAPPLY. WHILE WE APPRECIATE CIRM'S INTENT TO PROVIDE A NEW FUNDING OPPORTUNITY, WE REMAIN CONCERNED THAT FACULTY MEMBERS OF THE AFFECTED INSTITUTIONS WOULD BE DISADVANTAGED BY SUCH AN APPROACH. THIS IS PARTICULARLY TRUE IF THE NEW RFP ALLOWS EVEN THOSE INSTITUTIONS THAT SUBMITTED THE MAXIMUM NUMBER OF AWARDS PERMITTED UNDER THE PREVIOUS COMPETITION OR THE CURRENT COMPETITION TO NOMINATE ADDITIONAL CANDIDATES. SINCE CIRM'S INTENTION WAS TO ALLOW EACH ELIGIBLE INSTITUTION TO PUT FORWARD A FIXED NUMBER OF CANDIDATES, WE WOULD HOPE TO SEE A MECHANISM THAT AVOIDS CIRCUMVENTING THAT ORIGINAL INTENT.

WE WOULD BE VERY CONCERNED ABOUT ANY APPROACH THAT RESTRICTS THE OPPORTUNITY OF THE AFFECTED INSTITUTIONS TO PUT FORTH THE SAME TOTAL NUMBER OF CANDIDATES FOR NEW FACULTY AWARDS THAT OTHER INSTITUTIONS ARE PERMITTED TO SUBMIT.

AGAIN, WHILE WE APPRECIATE THE NEED TO AVOID APPARENT CONFLICTS AND TO MAINTAIN THE PUBLIC TRUST, WE WANT TO STRESS THAT THOSE MEMBERS OF THE ICOC WHO SIGNED LETTERS OF SUPPORT AS REQUESTED BY CIRM DID NOT SIGN SUCH LETTERS AS PRIVATE INDIVIDUALS, NOR WERE THEY ACTING AS MEMBERS OF THE ICOC. INSTEAD, THE LETTERS OF SUPPORT THAT THEY SIGNED ON BEHALF OF THEIR ACADEMIC INSTITUTIONS EXPRESSED THE FORMAL SUPPORT OF THOSE INSTITUTIONS FOR THE FINE YOUNG SCIENTISTS AND PHYSICIANS NOMINATED FOR THESE IMPORTANT AWARDS.

THESE LETTERS, AS REQUIRED BY CIRM, ALSO STATED THE FACTS ABOUT THE NATURE OF THE APPOINTMENTS HELD BY THE APPLICANTS AT EACH INSTITUTION. AS YOU KNOW, ALL ICOC MEMBERS RECUSE THEMSELVES FROM ANY ACTION THAT INVOLVES DECISION-MAKING ABOUT APPLICATIONS FROM FACULTY AT THEIR HOME INSTITUTIONS AS REQUIRED BY LAW. IT IS OUR BELIEF THAT THE PRESENT SITUATION HAS HIGHLIGHTED THE NEED FOR CIRM TO CLARIFY ITS POLICIES AND PROCESSES RELATED TO RECUSAL AND CONFLICT OF INTEREST AND TO HARMONIZE THOSE POLICIES WITH THE INSTRUCTIONS IT PROVIDES TO APPLICANTS.

WE TRUST THAT CIRM IS COMMITTED TO IMPROVING AND STRENGTHENING ITS PROCESSES, BUT IN THE MEANTIME OUR REQUEST IS THAT CIRM ACT IMMEDIATELY TO MAKE SURE THAT ALL APPLICATIONS IN THE CURRENT COMPETITION ARE CONSIDERED ON THEIR MERITS AND ON EQUAL FOOTING WITH EACH OTHER. WE WOULD LIKE TO SEE A SOLUTION THAT AVOIDS PENALIZING SOME OF CALIFORNIA'S MOST OUTSTANDING EARLY CAREER SCIENTISTS FOR CIRCUMSTANCES BEYOND THEIR CONTROL.

THE UNIVERSITY OF CALIFORNIA APPRECIATES THE ENORMOUS WORK CIRM IS DOING TO ADVANCE STEM CELL RESEARCH IN CALIFORNIA, AND WE ARE GRATEFUL FOR THE SUPPORT RECEIVED BY OUR RESEARCHERS. WE RESPECTFULLY REQUEST THAT YOU ADDRESS THE CURRENT SITUATION WITH THE URGENCY IT DESERVES. AND THESE ARE THE COMMENTS OF OUR PROVOST, RORY HUME. THANK YOU.

CHAIRMAN KLEIN: ON THIS ITEM AT THIS POINT, I WOULD LIKE TO HAVE A REPORT FROM THE PRESIDENT ON HOW MANY APPLICATIONS DO WE HAVE THAT WE HAVE THE ABILITY TO PROCEED ON THE RECOMMENDATIONS?

DR. MURPHY: MR. CHAIRMAN, 48 APPLICATIONS ARE ACTIONABLE TODAY.

CHAIRMAN KLEIN: ALL RIGHT. SO THE OPTIONS BEFORE THIS ORGANIZATION ARE TO PROCEED ON 48 APPLICATIONS WHICH WE CAN PROCEED ON THAT ADDRESS OUR MISSION, OR THE OPTION WOULD BE TO DEFER THE ENTIRE ROUND. IN TERMS OF THE ISSUES RAISED BY THE UNIVERSITY OF CALIFORNIA, ALL VERY LEGITIMATE ISSUES --

MS. LANSING: HOW MANY HAD TO BE EXCLUDED?

CHAIRMAN KLEIN: THERE HAD TO BE EXCLUDED A TOTAL OF TEN APPLICATIONS.

WE HAVE THE OPPORTUNITY IF, AFTER WE GO THROUGH THE AWARDS THAT ARE MADE TODAY, TO HAVE AN INTENT OF THE BOARD. WE CAN'T TAKE ACTION TODAY BECAUSE IT'S NOT CALENDARED AND NOTICED, BUT WE CAN DERIVE AN INTENT OF THE BOARD TO COME BACK IN JANUARY WITH A NEW RFA THAT WILL ADDRESS THE NEEDS, A, TO PROVIDE AN OPPORTUNITY TO COMPLETE OUR STATEWIDE INFRASTRUCTURE BUILDING OF YOUNG FACULTY WITH THE FULL DISTRIBUTION OF THAT. WE HAVE THE ABILITY TO MAKE CERTAIN, IF IT'S APPROPRIATE, TO, AS WE DID IN THE FIRST ROUND, HAVE A LIMITATION OF FOUR PER INSTITUTION.

TO THE EXTENT THAT ANY INSTITUTION HAS ALREADY BEEN AWARDED FOUR, THEY WOULD NOT BE ABLE TO COMPETE IF THAT WERE ADOPTED BY THE BOARD IN JANUARY BECAUSE ONE OF THE GOALS STATED ORIGINALLY WAS TO HAVE A DISTRIBUTION OF THIS FACULTY INFRASTRUCTURE BUILT UP.

SO WE HAVE THE ABILITY TO ADDRESS THE KEY CONCERNS THAT ARE BEFORE US. ARE THERE BOARD COMMENTS AT THIS TIME? AND THEN I'M GOING TO TAKE PUBLIC COMMENTS.

FIRST I'LL GO TO DUANE AND THEN TO SHERRY.

MR. ROTH: MR. CHAIRMAN, THIS IS REALLY A QUESTION. AFTER LISTENING TO WHAT TRANSPIRED, FOOTNOTE 1 AND THE WAY IT WAS PRESENTED, WHICH IS NEW TO ME, I WONDER IF ANYONE CONSIDERED RECERTIFICATION, FOR LACK OF A BETTER TERM, OF THE ENTIRE GROUP. AND I WANT TO REMEMBER -- I WANT TO JUST STATE THAT THERE IS PRECEDENT FOR THIS WITH THE SEED GRANTS THAT WE GAVE, WHICH CAME IN ORIGINALLY AND THEN WE ASKED EVERYBODY TO CERTIFY SOMETHING, I DON'T REMEMBER WHAT IT WAS, BEFORE THEY WENT FORWARD. THAT IS NO. 1.

NO. 2, WE'VE MADE CONDITIONAL GRANTS IN THIS ORGANIZATION PENDING RESOLUTION OF CERTAIN KEY ISSUES. SO I JUST WONDER IF THERE ISN'T THE POSSIBILITY TO MOVE AHEAD ON A CONDITIONAL GRANT PENDING CERTIFICATION ON GRANTS.

CHAIRMAN KLEIN: BOTH OF THESE ITEMS WERE CERTAINLY VERY SERIOUSLY EXAMINED. DR. MURPHY, WOULD YOU LIKE COUNSEL TO ADDRESS THOSE OR WOULD YOU LIKE TO ADDRESS THEM?

DR. MURPHY: WELL, I THINK DR. OLSON JUST ADVISED ME THAT, DUANE, CERTIFICATION IN THAT PREVIOUS COMPETITION WAS DONE BEFORE THE GRANTS WERE EVALUATED. SO IT WAS TECHNICALLY QUITE DIFFERENT.

DR. OLSON: IT WAS BEFORE RECEIPT OF APPLICATION. IT BASICALLY ASKED THE INSTITUTION TO CERTIFY THAT THE APPLICANTS MET THE ELIGIBILITY CRITERIA THAT WERE SPECIFIED IN THE RFA. SO APPLICATIONS HAD NOT EVEN BEEN RECEIVED WHEN THAT CERTIFICATION FORM WAS REQUESTED.

CHAIRMAN KLEIN: SO IF WE COULD, DR. MURPHY, COUNSEL, MY UNDERSTANDING FROM SEVERAL CONVERSATIONS IS, IN FACT, WE LOOKED AT THIS. AND A RESUBMISSION OF THE LIMITED NUMBER WAS NOT AN ADEQUATE REMEDY BECAUSE OF THE INTERFACE OF OTHER STATE LAWS WITH PROPOSITION 71. IS THAT A CORRECT STATEMENT?

MR. HARRISON: THAT IS CORRECT.

CHAIRMAN KLEIN: SHERRY LANSING, I BELIEVE, AND THEN WE CAN GO TO DR. FRIEDMAN.

MS. LANSING: I JUST WANT SOME INFORMATION. SINCE THIS WAS --

CHAIRMAN KLEIN: IS THIS MIC ON, PLEASE?

MS. LANSING: I WANT JUST A POINT OF INFORMATION. BECAUSE I REALIZE THAT THIS WAS OUR ERROR, SO I WANT TO BE FAIR TO TEN PEOPLE -- THAT'S WHY I ASKED HOW MANY THERE WERE -- WHO HAD NOTHING TO DO WITH THIS.

I ALSO WANT TO STATE FOR THE RECORD THAT I'M A REGENT, SO I WILL HAVE TO RECUSE MYSELF FROM THIS VOTE ANYWAYS. BUT I JUST WANT TO ASK YOU SOMETHING. WHAT IS -- HOW LONG WOULD WE HAVE TO DELAY IF WE WANTED TO GO BACK, AND WHAT IS THE RISK OF DELAY?

DR. MURPHY: ON ALL THE GRANTS, SHERRY?

MS. LANSING: YES. IN OTHER WORDS, IF WE SAY WE MADE A MISTAKE, SO WE'RE GOING TO --

CHAIRMAN KLEIN: SHERRY, IT WOULD BE BETTER IF SOMEONE ELSE ASKED THAT QUESTION.

DR. WRIGHT: THAT'S MY QUESTION.

CHAIRMAN KLEIN: IT'S JANET WRIGHT'S QUESTION.

DR. MURPHY: JANET, THE TIME IT WOULD -- FOR US TO DELAY THE WHOLE COMPETITION AND THEN TO RE-UP IT FOR EVERYBODY WOULD BE SOMEWHERE BETWEEN A SIX- AND SEVEN-MONTH DELAY. WITH ALL OF THE OTHER COMPETITIONS THAT WE ARE CURRENTLY JUDGING, I THINK THAT THAT WOULD -- IT WOULD NOT BE BEFORE THAT TIME.

SO IF I COULD, MR. CHAIRMAN, GIVE YOU MY OWN VIEWS OF THIS. WE LOOKED AT A NUMBER OF POTENTIAL REMEDIES. ONE IS COULD WE SEND THE GRANTS BACK AND HAVE THE LETTERS REPLACED. AND AS THE CHAIRMAN SAID, NO, WE CAN'T BECAUSE THE GRANTS ARE ALREADY, QUOTE, TAINTED WITH THE ORIGINAL SIGNATURES. COULD WE CALL OFF THE WHOLE COMPETITION? WE COULD AND BEGIN AGAIN, AS HAS BEEN SUGGESTED HERE.

THE PROBLEM WITH THAT IS THAT THERE WERE 45 OR 48 GRANTS, WHATEVER THE NUMBER WAS, THAT WERE PROPERLY PROCESSED IN THE COMPETITION. SO I THINK ON THE ONE HAND WE HAVE TO BE FAIR TO THOSE FOLKS TOO WHO WENT THROUGH THE COMPETITION IN AN UNTAINTED WAY. AND I HATE TO USE THE WORD "TAINT" BECAUSE I, FRANKLY, THINK THIS WAS NOT TAINT. IT WAS WHAT WE ALL KNOW IT WAS.

I THINK -- I HAVE SPOKEN WITH MANY OF THE STUDENTS, BY THE WAY, AT SOME OF THESE SCHOOLS TO EXPLAIN TO THEM WHAT YOU NOW KNOW. THEY WERE, OF COURSE, DISAPPOINTED. THEY WERE UNDERSTANDING, AND THEY WERE EXTREMELY GRATEFUL TO THEIR DEANS FOR PUTTING THEM FORWARD. IT IS -- THEY REALIZE THAT THIS WAS AN UNFORTUNATE EVENT. THEY WISH IT DIDN'T HAPPEN. NONE OF US WISH IT HAPPENED. BUT THEY ALSO WERE NOT OPPOSED, IN THE MOST PART, TO GO FORWARD WITH THE COMPETITION THE WAY IT'S BEEN RECOMMENDED BY THE EXECUTIVE COMMITTEE.

CHAIRMAN KLEIN: AND I WOULD LIKE TO EXPLAIN THAT WE DO AGREE WITH THE UNIVERSITY OF CALIFORNIA SYSTEM, THAT THERE IS A VERY GOOD ARGUMENT THAT THIS DID NOT, IN THE CONTEXT OF THESE FACTS, CONSTITUTE A CONFLICT. UNDER NEW RULES THAT ARE CRISP AND CLEAR, IT WOULD BE CLEAR IN THE FUTURE THAT IT IS A CONFLICT; BUT GIVEN THE CONTEXT, WE BELIEVE THAT THE INDEPENDENT ANALYSIS OF THE UC SYSTEM HAS A GREAT DEAL OF MERIT TO IT.

THE ISSUE HERE IS WE DO KNOW WE HAVE DEDICATED OPPOSITION WHO WILL LITIGATE ANYTHING THEY CAN. AND TO GO FORWARD ON GRANTS THAT HAVE THIS ISSUE ASSOCIATED WITH THEM ESSENTIALLY IS AN INVITATION TO LITIGATION THAT WOULD REALLY INTERRUPT ANY EXPECTATION, ANY REASONABLE EXPECTATION, OF BENEFIT TO THOSE GRANTEES BECAUSE THEY COULD BE TIED UP IN COURT FOR A SUBSTANTIAL LENGTH OF TIME; WHEREAS, IF, AFTER REVIEWING THE STATEWIDE SUFFICIENCY OF OUR INFRASTRUCTURE BUILDING, WE HAD A NEW ROUND, WE COULD ADDRESS IT WITHOUT CONTEST AND WITHOUT ISSUE.

DR. FRIEDMAN.

DR. FRIEDMAN: THANK YOU, MR. CHAIRMAN. I'D LIKE TO SUPPORT THE PROPOSITION OF MOVING FORWARD WITH THOSE GRANTS THAT WE CAN TODAY.

MS. PACHTER: I'M SORRY --

DR. FRIEDMAN: I'M SORRY.

MS. PACHTER: -- TO INTERRUPT YOU, DR. FRIEDMAN, BUT WE DON'T WANT TO GET OURSELVES IN DEEPER. AND SO ANYONE FROM AN INSTITUTION THAT HAS AN APPLICATION BEFORE THIS AGENCY ON THIS RFA SHOULD NOT PARTICIPATE IN THIS DISCUSSION.

DR. FRIEDMAN: OKAY. LET ME THEN PLEASE DELETE WHAT I JUST SAID, AND LET ME GIVE YOU A MORE GENERAL PHILOSOPHIC POSITION. WHATEVER WE DO, I WOULD LIKE TO MOVE AS QUICKLY AS WE CAN TO ADDRESS THE OPPORTUNITIES THAT EXIST AND ASK THE STAFF TO PLEASE HELP ADVISE US AS TO WHAT MECHANISMS WE HAVE FOR BEING ABLE TO DO THAT.

I SUGGEST THAT NO MATTER WHAT DECISION WE MAKE TODAY, IT WILL BE UNFAIR TO SOMEONE. AND THAT IS TRUE AND REGRETTABLE.

CHAIRMAN KLEIN: I THINK THAT THAT CAPTURES THE CONCEPT, BUT WE, OUT OF CONSERVATISM, I THINK IT'S BEST AT THIS POINT THAT WE MOVE TO EITHER THE PATIENT ADVOCATES WHO HAVE NO CONFLICTS OR TO THE MEMBERS WITH THERAPY DEVELOPMENT EXPERIENCE THAT HAVE NO CONFLICTS. TED LOVE.

DR. LOVE: SO, BOB, AS THIS HAS BEEN EXPLAINED TODAY PUBLICLY, IT'S PRETTY CLEAR THAT THERE WAS NO MALICIOUS INTENT. AND I'M NOT AT ALL CONVINCED THERE WAS ANY ADVERSE CONSEQUENCE. AND YET THE OPTIONS THAT WE PUT OUT ON THE TABLE ACTUALLY WILL HURT EVERYONE WHO APPLIED POTENTIALLY OR WILL CARVE OUT THESE TEN INDIVIDUALS TO BE HURT.

AND I'M JUST TRYING TO ASK MYSELF KIND OF IN THE OLD TRADITIONAL COUNTRY ALABAMA WAY IS THERE A WAY WE CAN JUST DO THE RIGHT THING? WE JUST FUND ALL OF THESE PEOPLE. THERE WAS NOTHING -- THERE WAS NOTHING MALICIOUS ABOUT WHAT ANYONE DID. AND AT THE END OF THE DAY, IT SEEMS TO ME THAT WE, MAYBE APPROPRIATELY, BUT WE'RE BASICALLY TAKING AN ACTION WHICH HURTS PEOPLE TO PROTECT OURSELVES FROM LEGAL EXPOSURE. AND AS A PHYSICIAN, I CAN TELL YOU, AND I'VE BEEN IN THAT SITUATION MANY TIMES, AND I THINK FORTUNATELY I'VE ALWAYS TRIED TO MAKE THE RIGHT DECISION FOR THE INDIVIDUAL INVOLVED AND NOT MAKE A DEFENSIVE DECISION. SO IS IT ABSOLUTELY RIDICULOUS THAT WE ENTERTAIN THE IDEA OF FUNDING ALL OF THESE?

CHAIRMAN KLEIN: HERE'S THE KEY IS THAT FROM MY INDIVIDUAL PERSPECTIVE, THE ONLY RIGHT MORAL CHOICE IS TO TAKE AN ACTION THAT PROTECTS EVERYONE. AND THE STAFF'S RECOMMENDATION IS INTENDED TO ACCOMPLISH THAT. BECAUSE IF WE GO THROUGH THE RECOMMENDATIONS WE CAN ACT ON TODAY, WE WILL PROTECT THOSE CANDIDATES. IF WE WERE TO FUND THOSE PEOPLE THAT WE HAVE BEEN ADVISED OUT OF CONSERVATISM NOT TO ACT ON TODAY, WE INVITE LITIGATION ON THOSE GRANTS. IT WILL BE A LONG TIME FOR THEM TO EVER SEE ANY FUNDS. WHEREAS, IF, IN FACT, WE APPROPRIATELY LOOK AT OUR STATEWIDE OBJECTIVES AFTER THIS ROUND, DECIDE AT THE END THIS ITEM THAT WE SHOULD BRING BACK IN JANUARY A PROPOSAL FOR A NEW ROUND WITH SUPPLEMENTAL FUNDING IN ADDITION TO LEFT-OVER FUNDING, WE HAVE A CLEAN OPPORTUNITY WHERE INSTEAD OF WAITING YEARS IN LITIGATION, THOSE TEN PEOPLE WILL HAVE A TRUE OPPORTUNITY TO COMPETE TO GET A GRANT THAT THEY ACTUALLY CAN RECEIVE THE FUNDS.

SO THE STAFF'S RECOMMENDATION IS TO PROTECT THOSE INDIVIDUALS AS WELL AND TO GIVE THEM NOT A FALSE PROMISE, BUT AN OPPORTUNITY TO COMPETE AND GET REAL FUNDING.

DR. LOVE: IT IS VERY FRUSTRATING, I GOT TO TELL YOU, TO BE IN A POSITION WHERE WE KNOW WE ARE NOT DOING THE RIGHT THING FOR INDIVIDUALS WHO HAVE BASICALLY BEEN PUT IN A DISADVANTAGED POSITION THROUGH ABSOLUTELY NO INTENTION OF THEIR OWN AND THROUGH NO ADVERSE INTENTION OF ANYONE ELSE. AND WE'RE BASICALLY -- I UNDERSTAND LAW AND I UNDERSTAND AVOIDING LEGAL RISK, BUT IT JUST ALWAYS DISTURBS ME WHEN I FIND THAT PEOPLE ARE GETTING HURT BECAUSE WE'RE TRYING TO PROTECT OURSELVES AGAINST LEGAL EXPOSURE AND LEGAL LIABILITY.

CHAIRMAN KLEIN: THIS IS PROTECTING THE APPLICANT AND THEIR ABILITY TO ACTUALLY GET FUNDS. SO IT'S NOT THAT THE AGENCY WOULD BE OUT FUNDS. IT'S NOT THE AGENCY HERE WE'RE PROTECTING. IT IS, IN FACT, THE RECIPIENTS THAT WE'RE PROTECTING THAT IS FUNDAMENTAL TO THIS.

DR. LOVE: THAT'S ABSOLUTELY -- I DON'T WANT TO JUST DRIVE THIS TRUCK, BUT I'D REALLY LIKE TO KNOW THIS IS CRYSTAL CLEAR. IT IS CRYSTAL CLEAR THAT IF WE DON'T GIVE THESE PEOPLE THE FUNDING THAT THEY COMPETED FOR AND WON THROUGH A LEGITIMATE PROCESS, THEY'RE BEING ADVERSELY IMPACTED. I JUST WANT TO MAKE SURE THAT WE KNOW THAT WE HAVE BALANCED THE ISSUES PROPERLY AND HAVE COME DOWN ON THE RIGHT SIDE THAT INTEGRATES ALL OF THE ISSUES. IT'S NOT OBVIOUS TO ME AT THIS POINT.

CHAIRMAN KLEIN: WE'VE EXHAUSTED EVERY OPTION WITH LEGAL RESEARCH THAT HAS INVOLVED MULTIPLE ATTORNEYS WITH A NUMBER OF DAYS OF INQUIRY. AND IT APPEARS THAT THE RISK TO THE TEN APPLICANTS AND THEIR ABILITY TO ACTUALLY GET FUNDING IS EXTRAORDINARILY HIGH IF WE DON'T TAKE THE STAFF AND THE EXECUTIVE COMMITTEE RECOMMENDATION.

DR. MURPHY: MR. CHAIRMAN, IF I JUST MAY ADD ONE OTHER POINT. TED, THE OTHER VULNERABILITY WE HAVE HERE IS THE VULNERABILITY THAT THE DEANS THEMSELVES ARE EXPOSED TO BECAUSE IF, IN FACT, WE CROSS OVER THIS LINE AND ROLL THE DICE AND SAY WE THINK THIS IS OKAY AND, IN FACT, IN THE FUTURE IT IS SHOWN TO BE NOT OKAY, THE DEANS, WHO I AGREE WITH YOU ACTED TOTALLY INNOCENTLY, COULD BE SUBJECT TO CRIMINAL PENALTY BY EXPOSING THEMSELVES TO BREAKING STATE LAW 1090, WHICH IS PUNISHABLE BY CRIMINAL SANCTIONS. SO I THINK THAT'S ANOTHER REASON WE NEED TO PLAY THIS QUITE CONSERVATIVELY.

DR. LOVE: JUST LAST ON THIS POINT. LET'S ASSUME THAT WE HAVE A PROCESS WHERE THOSE INDIVIDUALS DO NOT PARTICIPATE, BUT IT IS THE OTHER MEMBERS OF THIS BOARD WHO TAKE ON THAT, HOW COULD THEY BE AT RISK IF -- THE DEFAULT PROCESS IS WE WILL NOT FUND THOSE TEN, AND THAT'S WHERE WE START, BUT THE OTHER MEMBERS OF THIS BOARD TAKE IT UPON THEMSELVES TO, WITHOUT ANY INPUT OR ANY INFLUENCE FROM THOSE INDIVIDUALS, PROVIDE THE GRANT FUNDING, THAT DOES NOT PROVIDE ANY LEGAL -- I FEEL LIKE, JIM, I'M CREATING PROBLEMS FOR YOU, BUT I'M JUST REALLY TROUBLED WITH THIS.

MR. HARRISON: YOU KNOW, I APPRECIATE YOUR FRUSTRATION AND, FRANKLY, ALL OF YOUR FRUSTRATION. IT'S AN EXTRAORDINARILY FRUSTRATING EXPERIENCE.

ONE OF THE CHALLENGES THAT WE FACE IS THAT THIS PARTICULAR LAW HAS BEEN SO BROADLY CONSTRUED BY THE COURTS; AND WHEN IT HAS BEEN APPLIED, IT'S BEEN APPLIED WITH QUITE ADVERSE CONSEQUENCES. IT MAY NOT MAKE ANY SENSE. LET ME GIVE YOU ONE QUICK ILLUSTRATION, IF I CAN, TO TRY TO CRYSTALLIZE IT.

THERE'S A FAMOUS CASE CALLED THOMPSON VS. CITY OF CALL. IN THIS PARTICULAR INSTANCE, A COUNCILMEMBER FOR THE CITY OF ALBANY OWNED PROPERTY. DEVELOPER WANTED TO DEVELOP PROPERTY IN THE CITY. THE CITY SAID YOU CAN DEVELOP, BUT WE NEED YOU TO DEED SOME SPACE FOR A PUBLIC PARK. THE DEVELOPER TALKED TO THE COUNCILMEMBER, DECIDED TO ACQUIRE THE COUNCILMEMBER'S PROPERTY TO DEED TO THE CITY FOR A PUBLIC PARK. COUNCILMEMBER HAD NOTHING TO DO WITH IT.

HE WENT TO THE CITY ATTORNEY AND SAID, "THIS IS THE SITUATION. WHAT SHOULD I DO?" CITY ATTORNEY SAID RECUSE YOURSELF, DON'T PARTICIPATE IN THE COUNCIL'S DECISION.

COUNCIL APPROVES THE DEVELOPMENT AGREEMENT, PROPERTY IS DEEDED TO THE CITY FOR A PUBLIC PARK. LO AND BEHOLD, THE COURT FINDS THAT, EVEN THOUGH THIS MEMBER NEVER EVEN PARTICIPATED IN THE DECISION, THAT THERE WAS A VIOLATION OF 1090. AND THE CONSEQUENCES OF THAT WERE THAT THE CITY GOT TO KEEP THE PARK, AND THE COUNCILMEMBER HAD TO FORFEIT THE $274,000 THAT HE HAD BEEN PAID BY THE DEVELOPER. AND MIND YOU, THIS WAS IN 1973.

SO THE POINT IS THAT THE COURTS HAVE VERY BROADLY CONSTRUED THIS PROVISION. WE THINK WE HAVE VERY STRONG ARGUMENTS THAT THERE WAS NO VIOLATION OF ANY CONFLICT OF INTEREST LAW HERE, BUT THE RISKS ARE HIGH, NOT ONLY TO BOARD MEMBERS, BUT, AS BOB SAID, TO THE APPLICANTS THEMSELVES BECAUSE UNDER THIS PARTICULAR PROVISION OF LAW, THERE'S NO QUESTION. IF THERE'S A VIOLATION, THE CONTRACTS ARE SIMPLY VOID. THERE'S NO ANALYSIS OF WHETHER IT'S FAIR OR RIGHT. THEY'RE JUST VOID.

SO WE HAVE STRUGGLED MIGHTILY OVER THE LAST WEEK TO TRY TO RESOLVE THIS, TO TRY TO FIND A WAY TO ADDRESS THIS AND CORRECT IT IN A MANNER THAT BOTH ACHIEVES THE MISSION AND THE GOALS OF THE AGENCY AND PROTECTS THOSE INVOLVED. AND THIS IS, FRANKLY, THE BEST THAT WE COULD COME UP WITH.

CHAIRMAN KLEIN: I'D ALSO LIKE TO SAY IN TWO YEARS OR THREE YEARS FROM NOW, WITH THE 1090, THERE MAY BE ATTORNEY GENERAL'S GUIDANCE THAT MAKES IT CLEAR THAT THIS WAS NOT A VIOLATION. THERE'S A FIREMAN'S GUIDANCE THAT SPECIFICALLY THE FIREMEN WENT AND GOT A CLARIFICATION THAT, IN FACT, THEY COULD ACT IN A SIMILAR SITUATION AND NOT HAVE A VIOLATION. THE ISSUE HERE IS THAT WE HAVE STATE STATUES THAT DON'T HAVE YEARS OF APPLICATION AND DON'T HAVE CLARIFICATIONS AND VERY STRICT APPLICATIONS THAT DON'T LOOK AT INTENT.

SO IN PROTECTING THE APPLICANTS AND MAKING SURE THEY GET A REAL GRANT THAT IS NOT VOIDED, I THINK THAT, FROM A MORAL STANDPOINT, THE RIGHT THING TO DO FOR THEM IS THE SAME THING -- IS THE RIGHT THING TO DO FOR THE OTHER APPLICANTS AS WELL.

COUNSEL, COULD YOU ADVISE ME ON A PROCEDURE WHERE WE CAN GO FORWARD? AND I BELIEVE WE'LL HAVE TO ADDRESS THESE GRANTS ONE AT A TIME; IS THAT CORRECT? OR HOW -- WHAT PROCEDURE CAN WE DO IN ADDRESSING WHETHER OR NOT WE'RE GOING TO PROCEED ON THE TEN?

MR. HARRISON: I BELIEVE THAT THE ONLY WAY THAT YOU COULD DEAL WITH THAT ISSUE WOULD BE THROUGH A MOTION MADE BY A MEMBER WHO OBVIOUSLY HAS NO INTEREST TO NOT FUND ANY OF THE APPLICATIONS. YOU WOULD THEN ASK FOR A VOTE EN BLOC, AND BOARD MEMBERS WOULD VOTE ON THE MOTION EXCEPT AS TO THOSE APPLICATIONS IN WHICH THEY HAVE AN INTEREST, WHICH IS SORT OF THE OBVERSE OF THE WAY THAT WE'VE DONE IT IN THE PAST. BUT I BELIEVE THAT'S THE ONLY WAY THAT YOU COULD CONSIDER THIS ITEM.

CHAIRMAN KLEIN: ALL RIGHT. SO --

MR. HARRISON: MR. KLEIN, THE OTHER WAY TO DO IT WOULD BE FOR A MOTION THAT WAS -- FOR A MOTION ESSENTIALLY TO CANCEL THIS RFP, NOT TO FUND ANY OF THEM THAT WAS JUST VOTED ON BY THOSE WHO DON'T HAVE AN INTEREST. WE HAVE TO CHECK THE QUORUM TO MAKE SURE WE HAVE A SUFFICIENT NUMBER OF MEMBERS PRESENT FOR THAT, BUT THAT WOULD BE ANOTHER OPTION.

CHAIRMAN KLEIN: OKAY. WHAT I'D LIKE TO DO IS TAKE A FIVE-MINUTE BREAK BECAUSE I WANT TO BE VERY CAREFUL WITH THESE MOTIONS. AND WE HAVE, BEFORE THAT BREAK, I THINK DR. AZZIZ AND DR. PRIETO WANTED TO MAKE A COMMENT. DR. AZZIZ, THOUGH, IS WITH AN INSTITUTION.

DR. AZZIZ: THAT DOES NOT HAVE ANY GRANTS IN THIS ROUND.

CHAIRMAN KLEIN: JAMES? JUST FOR TOTAL FOCUS, DR. AZZIZ WITH AN INSTITUTION DOES NOT HAVE ANY GRANTS IN THIS ROUND. DR. OLSON; IS THAT CORRECT?

DR. MURPHY: THAT IS TRUE.

MR. HARRISON: WE DO HAVE HIM IDENTIFIED ON THE CONFLICTS LIST AS TO CERTAIN APPLICATIONS. I DON'T KNOW WHAT THE SOURCE --

CHAIRMAN KLEIN: IT'S NOT YOUR INSTITUTION, BUT AFFILIATE INSTITUTIONS.

DR. AZZIZ: RIGHT. THAT'S CORRECT. THE CONFLICTS, I'M ALWAYS IN CONFLICT BECAUSE OF MY SECONDARY AFFILIATION.

CHAIRMAN KLEIN: THAT'S RIGHT, SO WE CAN'T TAKE A COMMENT AT THIS TIME. DR. PRIETO.

DR. PRIETO: I APPRECIATE WE'RE TRYING TO PROCEED WITH AN EXCESS OF CAUTION. I THINK, TO ANSWER TED'S QUESTION, THOUGH, THE ONLY ANSWER HAS TO BE THAT A MISTAKE WAS MADE, AND THOSE TEN GRANT APPLICANTS ARE GOING TO SUFFER IN SOME WAY, AND HOW CAN WE MINIMIZE THAT? HOW CAN WE PROVIDE THE BEST PROCESS FOR THEM? CLEARLY TRYING TO JUST GO FORWARD AND APPROVE THE APPLICATIONS, I THINK, IS -- REALLY WOULD BE RECKLESS AND PUT THEM AT MORE RISK.

BUT I HAD A QUESTION FOR JAMES REGARDING YOUR SUGGESTION OF HOW WE MIGHT PROCEED. WERE YOU SUGGESTING THAT ONE OF US COULD MAKE A MOTION TO NOT FUND ANY OF THE APPLICATIONS IN THE RFP, OR JUST THE TEN THAT WERE DISQUALIFIED?

MR. HARRISON: WELL, I THINK THAT THE MOTION -- I THINK THE MOTION WOULD BE NOT TO FUND ANY OF THEM. IF YOU WERE TO DECIDE THAT THE BEST WAY TO RESOLVE THIS IS, RATHER THAN DEALING WITH THOSE APPLICATIONS THAT ARE NOT AT ISSUE, THAT ARE NOT AFFECTED BY WHAT WE'VE BEEN DISCUSSING, THEN WHAT YOU DO IS HAVE A MOTION NOT TO FUND ANY APPLICATIONS AT THIS POINT IN TIME.

DR. PRIETO: MY PREFERENCE WOULD BE MOVE FORWARD ON THOSE APPLICATIONS THAT ARE NOT IN ANY WAY CONFLICTED AND NOT SUBJECT TO ANY ERROR, AND THEN TO SEPARATELY CONSIDER A RESUBMISSION IN WHATEVER FORMAT.

MR. HARRISON: THE OTHER WAY TO APPROACH IT, OF COURSE, WOULD SIMPLY BE TO START CONSIDERING THE APPLICATIONS THAT ARE NOT AFFECTED BY THIS ISSUE.

CHAIRMAN KLEIN: WHAT -- COUNSEL, WHAT I'D LIKE TO DO HERE AND, DR. PRIETO, WHAT I'D LIKE TO DO IS, BECAUSE THIS PARTICULAR TYPE OF MOTION HAS UNUSUAL CONFLICTS ISSUES ASSOCIATED WITH IT, AND WE HAVE TO CALCULATE THE QUORUM BASED ON HOW IT IS PHRASED AND HOW WE PROCEED, I'D LIKE TO TAKE JUST A FIVE-MINUTE BREAK FOR EVERYONE, TALK TO COUNSEL, CONFIRM THE QUORUM THAT WE NEED TO MAKE CERTAIN WE'RE PROCEEDING PROPERLY.

AND, JON SHESTACK, THANK YOU FOR BEING HERE. WE WILL TAKE -- WHAT I'D LIKE TO DO IS AS SOON AS WE COME BACK, WE'LL IDENTIFY THE MOTION, THEN WE'RE GOING TO TAKE FULL PUBLIC COMMENT AT THAT TIME. BUT WHAT I'D LIKE TO DO IS IDENTIFY THE ISSUE THAT'S IN FRONT OF US SPECIFICALLY FOR CONSIDERATION SO THE PUBLIC COMMENT CAN BE QUITE TARGETED TO WHAT IS UNDER CONSIDERATION. THANK YOU. WE'LL ADJOURN FOR FIVE MINUTES.

(A RECESS WAS TAKEN.)

CHAIRMAN KLEIN: ALL RIGHT. IF WE COULD PROCEED, PLEASE. THANK YOU VERY MUCH FOR YOUR PATIENCE. SO WE'VE HAD A VERY HEALTHY DISCUSSION WITH VIEWS PRESENTED. I WOULD LIKE TO, FIRST OF ALL, SEE AMONG THOSE -- COULD COUNSEL READ THOSE MEMBERS PRESENT WHO HAVE NO CONFLICTS FROM PRIMARY OR SECONDARY INSTITUTIONS SO WE KNOW EXACTLY WHO CAN MAKE A MOTION HERE, PLEASE.

MS. PACHTER: LEEZA GIBBONS, ROBERT KLEIN, TED LOVE, WHO ARE HERE, ED PENHOET, DR. PRIETO, DUANE ROTH, JON SHESTACK, AND DR. WRIGHT.

CHAIRMAN KLEIN: OKAY. AND COULD THE STAFF PLEASE GET THOSE MEMBERS WHO MAY BE IN THE LOBBY, NOT REALIZING WE HAVE RECONVENED, TO PLEASE IMMEDIATELY JOIN US. LEEZA, WE'RE COMING BACK INTO VOTING.

I'D LIKE TO DO THIS IN TWO STEPS. ONE, SEE IF THERE IS A MOTION. IF THERE IS NOT A MOTION, I WILL STILL TAKE PUBLIC COMMENT. THE -- IS THERE A MOTION TO -- FROM THE BOARD TO NOT PROCEED AS ADVISED BY THE EXECUTIVE COMMITTEE, BUT RATHER TO THROW OUT ALL OF THE APPLICATIONS AND START OVER? IS THERE ANY -- IS THERE A MOTION TO DO THAT? IF THERE IS NOT A MOTION AND A SECOND, I'M STILL GOING TO TAKE PUBLIC COMMENT, BUT I WANT TO PROVIDE THE OPPORTUNITY FOR SUCH A MOTION IF, IN FACT, BOARD MEMBERS FEEL COMPELLED TO MAKE IT.

SEEING NO MOTION, I'D LIKE PUBLIC COMMENT, PLEASE.

MR. SIMPSON: JOHN SIMPSON FROM THE FOUNDATION FOR TAXPAYER AND CONSUMER RIGHTS. I CAME HERE TODAY EXPECTING THAT I WAS GOING TO HAVE TO ASK YOU TO NAME THE INSTITUTIONS THAT WERE INVOLVED IN THIS REGRETTABLE MISTAKE PARTLY BECAUSE OF THE SORT OF STONEWALLING ATTITUDE THAT WAS SHOWN BY THE AGENCY WHEN THE INFORMATION WAS FIRST LEAKED. IT WOULD HAVE BEEN SO MUCH SIMPLER, SO MUCH BETTER, AND YOU WOULD HAVE HAD MUCH MORE PUBLIC TRUST IF WHEN IT CAME TO LIGHT, YOU HAD SIMPLY GONE OUT PUBLICLY WITH ALL FIVE INSTITUTIONS.

SO I COMMEND YOU FOR FINALLY DOING IT, BUT I WISH YOU WOULD JUST BE UP FRONT AND TRANSPARENT FROM THE BEGINNING. IT WOULD BE SO MUCH BETTER FOR THE BOARD, FOR THE PATIENTS, FOR ALL THE TAXPAYERS OF CALIFORNIA.

THE OTHER THING I NOTED WAS THAT WE STILL HAVEN'T SAID WHICH DEANS IT ACTUALLY WERE. I MEAN WE CAN GO AND CHECK THE LISTS OFF; BUT IF WE GO AND LOOK, IN FACT, AT SOME OF THE PUBLICATIONS YOU'VE GOT, IT WOULD STILL SHOW US THAT THE DEAN AT UCSD IS ED HOLMES RATHER THAN DEAN BRENNER. SO WHY CAN'T WE JUST SIMPLY SAY THE FACTS IN A SIMPLE STRAIGHTFORWARD WAY AND GET IT ALL OUT THERE? IT'S BEST FOR EVERYBODY.

I'M SITTING HERE IN A QUANDARY FINALLY ABOUT WHICH WAY YOU SHOULD GO. I THINK THAT THERE ARE VERY COMPELLING ARGUMENTS ON THE SIDE OF THE USC PROPOSITION. I GUESS AT THE END OF THE DAY NO ONE IS GOING TO BE HAPPY.

I WOULD MAKE ONE FINAL POINT, AND THAT WOULD BE TO SUGGEST THAT THIS LATEST ROUND OF CONFLICTS IS ENTIRELY DIFFERENT THAN THE EARLIER INCIDENT WITH DR. REED FROM THE BURNHAM WHERE HE ACTIVELY LOBBIED ON THE ADVICE OF THE CHAIRMAN; AND THAT, INDEED, AT MY REQUEST HAS BEEN TAKEN UP BY THE STATE ETHICS COMMITTEE, THE FAIR POLITICAL PRACTICES COMMISSION. THAT'S APPROPRIATE. IT NEEDS TO BE LOOKED AT. THAT WAS A VERY SERIOUS, EGREGIOUS VIOLATION.

I -- I -- I NOTE THAT HE HAS RECUSED HIMSELF COMPLETELY DURING THE PROBE. THAT'S A MINIMAL STEP. I ACTUALLY THINK HE REALLY SHOULD RESIGN. I'VE MADE THAT POINT BEFORE. SO THANK YOU VERY MUCH. APPRECIATE IT.

CHAIRMAN KLEIN: MR. SIMPSON, IT'S A GROSS MISSTATEMENT OF THE FACTS TO INDICATE THAT AS CHAIRMAN THAT I SUGGESTED THAT MR. REED ACTIVELY LOBBIED. THAT IS FALSE. IT HAS NO PRETENSE OF BEING TRUE.

AND WHAT IS IMPORTANT TO UNDERSTAND IS THAT IT IS THAT SAME FOOTNOTE THAT WAS MISLEADING TO MR. REED AS IT WAS THE DEANS. IT HAS CREATED A GREAT DEAL OF CONFUSION; AND, IN FACT, IT SHOWS YOU HAVE FIVE PEOPLE THAT ALL INTERPRETED THE SAME, OF GREAT DISTINCTION, OF GREAT COMMITMENT TO RESEARCH. THEY BELIEVE THEY'RE ACTING APPROPRIATELY. OBVIOUSLY THE UC SYSTEM THINKS THEY ACTED APPROPRIATELY WITHIN THE CONSTRAINTS THAT OUR OWN CONFLICTS PROVISIONS PROVIDED.

MR. REED.

MR. REED: IN A COURT OF LAW, IF A LAWYER RAISES A POINT WHICH THE JUDGE SAYS IS INADMISSIBLE, THE JURY WILL BE JUST ADVISED TO DISREGARD THAT INFORMATION. IT SEEMS TO ME THAT SOMETHING LIKE THIS SHOULD BE MADE A PART OF OUR PROCESS. SO THAT IF SOMETHING COMES UP WHICH IS OUT OF LINE, BUT NOT PART OF A SYSTEMATIC PATTERN TO DECEIVE, THAT PIECE OF INFORMATION COULD BE DENIED THE PROCESS WITHOUT PENALTY. AS IT IS NOW, IT SEEMS TO ME THAT IF THERE IS A VIOLATION, HOWEVER SMALL OR LARGE, THE WHOLE THING GETS SHOT DOWN. TO ME THAT'S LIKE A FOOTBALL GAME WHERE THE FIRST PENALTY THEY SHOOT THE PLAYER.

I WOULD LIKE TO SEE SOME FORM OF A MECHANISM TO WHERE OBJECTIONS COULD BE MADE WITHOUT STOPPING THE VALUABLE WORK OF THE SCIENTISTS. THANK YOU.

CHAIRMAN KLEIN: ADDITIONAL COMMENTS?

MS. FOGEL: THANK YOU. I'M SUSAN FOGEL WITH THE PRO CHOICE ALLIANCE FOR RESPONSIBLE RESEARCH. I JUST WANT TO STEP BACK FOR A MINUTE AND SAY SOMETHING ABOUT CIVIC PARTICIPATION. THERE'S BEEN A LOT OF TALK TODAY ABOUT THE DEDICATED OPPOSITION, YOUR MANY CRITICS. UNLESS YOU'RE TALKING ABOUT THE ANTICHOICE LOBBY, WHICH THEY ARE YOUR DEDICATED OPPOSITION, THE REALITY IS, AS A PUBLIC AGENCY, YOU ARE APPROPRIATELY SUBJECT TO PUBLIC SCRUTINY. AND WHEN MAJOR NEWSPAPERS AROUND THE STATE AND NONPROFIT ORGANIZATIONS WHO ARE PARTICIPATING IN THIS PROCESS RAISE ISSUES THAT SEEMS QUITE APPROPRIATE, WE SPENT HOURS TALKING ABOUT THEM TO BE RAISED, IT'S DISTURBING TO HEAR THAT PARTICIPATION BE CRITICIZED MEETING AFTER MEETING AFTER MEETING.

WE SHOW UP HERE AT EVERY MEETING JUST LIKE YOU DO BECAUSE WE CARE ABOUT THE PROCESS. WE CARE ABOUT THE OUTCOMES. AND WE WOULD LIKE SOME RESPECT TOO. THANK YOU.

CHAIRMAN KLEIN: I THINK IT IS A VERY IMPORTANT PART OF OUR PROCESS TO HAVE CRITICAL COMMENTS. THE POINT WAS MADE EARLIER THAT THE INTENT WAS TO MAKE A FULL PRESENTATION AND HAVE A FULL DEBATE IN PUBLIC AT THIS MEETING. AND IT IS IMPORTANT TO NOTE THAT IT IS JUST LAST NIGHT THAT WE FINALLY GOT THE UNIVERSITY OF CALIFORNIA'S POSITION. AND SO TO PREEMPTORILY RELEASE INFORMATION WITHOUT HAVING THEIR POSITION, WITHOUT HAVING THEM -- WHILE GIVING THEM AN OPPORTUNITY TO PRESENT THEIR POSITION, DID NOT SEEM TO BE THE RIGHT APPROACH TO THE EXECUTIVE COMMITTEE.

IT IS CLEARLY A COMMITTED PUBLIC DEBATE WE HAD HERE THAT WAS VERY HEALTHY AND INVITED. WE APPRECIATE THAT DEBATE.

WE DO NOT HAVE A MOTION THAT WOULD THROW OUT THESE GRANTS AND START OVER. SO, DR. MURPHY, I WOULD LIKE TO THEN PROCEED WITH THIS GRANT REVIEW OF THE GRANTS THAT YOU CAN BRING TO US. AND IF YOU WOULD DIRECT THE STAFF ON THE SEQUENCE YOU WOULD LIKE TO PROCEED WITH.

OKAY. THERE'S BEEN A REQUEST, BECAUSE OF QUORUM ISSUES, DR. MURPHY, IF WE CAN QUICKLY TRY AND DEAL WITH ITEM 10 AND THEN GO INTO THIS LARGER GRANT REVIEW. ITEM 10 DEALS WITH SUPPLEMENTAL FUNDS, EQUIPMENT FUNDS, THAT WOULD BE ADDED TO THE MAJOR FACILITIES ROUND. VERY SPECIFICALLY, IT DEALS WITH $35 MILLION IN EQUIPMENT FUNDING THAT WOULD BE MADE AVAILABLE IN THE SAME MAJOR FACILITIES ROUND TO INCREASE OUR TOTAL SOURCE OF FUNDS FROM APPROXIMATELY 237 MILLION TO $272 MILLION IN THAT ROUND.

COUNSEL, BEFORE WE BEGIN THAT DISCUSSION, COULD YOU TELL US WHO CAN VOTE ON THAT AND WHO CAN PARTICIPATE IN THE DISCUSSION ON ADDING THOSE FUNDS? BECAUSE A NUMBER OF THE BOARD MEMBERS BELONG TO INSTITUTIONS THAT ARE PARTICIPATING IN THAT ROUND, THEREFORE, THEY COULD NOT PARTICIPATE IN THAT DISCUSSION.

MS. PACHTER: LEEZA GIBBONS, ROBERT KLEIN, TED LOVE, TINA NOVA, DR. PRIETO, DUANE ROTH, JON SHESTACK, AND DR. WRIGHT.

CHAIRMAN KLEIN: THE INDIVIDUALS WHO CAN PARTICIPATE?

MS. PACHTER: WHO CAN PARTICIPATE IN A DISCUSSION OF THE RECOMMENDATION FOR ADDITIONAL FUNDS FOR MAJOR FACILITY GRANT AWARDS.

DR. MURPHY: MR. KLEIN, THIS IS A FOLLOW-UP ITEM TO A PREVIOUS ISSUE THAT WAS RAISED AT THE OCTOBER ICOC MEETING. AND I BELIEVE THIS WAS COMING FROM YOUR DESK IN TERMS OF FOLLOWING THAT UP. I THINK IT WAS YOU, MR. CHAIRMAN.

CHAIRMAN KLEIN: ALL RIGHT. GIVEN TIME CONSIDERATIONS AND SINCE WE'VE HAD SUBSTANTIAL SUGGESTIONS ON THE MAJOR FACILITIES ROUND PREVIOUSLY, IS THERE ANYONE WHO WOULD LIKE TO MAKE A MOTION TO SUPPORT THE ADDITION OF THOSE FUNDS?

DR. LOVE: SO MOVED.

MR. ROTH: SECOND.

DR. WRIGHT: SECOND.

CHAIRMAN KLEIN: MOVED BY TED LOVE, SECOND BY DUANE ROTH, AND THE SECOND SECOND IS JANET WRIGHT.

OKAY. SO PUBLIC DISCUSSION? SEEING NO PUBLIC DISCUSSION, I'D LIKE A ROLL CALL VOTE, PLEASE.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: AYE.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: TED LOVE.

DR. LOVE: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: THAT MOTION CARRIES.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. OKAY. WITH THAT, DR. MURPHY, THE MAJOR FACILITIES ROUND HAVING BEEN ADDRESSED, IF YOU COULD PLEASE ADDRESS THE NEW FACULTY GRANTS.

DR. MURPHY: YES, MR. CHAIRMAN. THE NEW FACULTY GRANTS, WE WILL HAVE INTRODUCTORY COMMENTS BY JEFF SHEEHY, PLEASE.

MR. SHEEHY: SO WHEN DID WE MEET? IN OCTOBER. IT'S STARTING TO RUN TOGETHER. TO CONSIDER THE NEW FACULTY AWARDS, WE RECEIVED, I THINK, 59 APPLICATIONS, AND THERE WERE 42 IN THE BASIC AREA AND 17 PHYSICIAN SCIENTISTS. WE SOUGHT TO APPROVE 15 BASIC SCIENTISTS AND 10 PHYSICIAN SCIENTISTS.

THE PURPOSE WAS TO SUPPORT INVESTIGATORS IN THEIR CRITICAL EARLY PHASES OF MANAGING THEIR OWN INDEPENDENT LABORATORIES AND RESEARCH PROGRAMS. IT WAS OPEN -- THIS IS THE FIRST ONE THAT WAS OPEN TO THE FULL SPECTRUM OF STEM CELL RESEARCH, SO WE ALSO LOOKED AT NONEMBRYONIC STEM CELL, ADULT STEM CELL APPLICATIONS AS WELL.

WE HAVE A POTENTIAL AWARD UP TO $85 MILLION. AND I THINK AN INTERESTING FACET ON THIS THAT KIND OF CHANGES THE CALCULATIONS THAT WE TYPICALLY MAKE IS THAT THERE WERE INTERNAL COMPETITIONS AT THE UNIVERSITIES. SO A LOT OF TIMES WE TALK ABOUT THIS IN TERMS OF PAYLINE AND, YOU KNOW, THE NIH DOES 30 PERCENT, OR THE NIH DOES 20 PERCENT. WHEN WE LOOK AT THE OVERALL NUMBER OF APPLICATIONS THAT WERE BEING CONSIDERED, IT WAS MUCH LARGER, I BELIEVE, THAN THE 59 THAT WE ACTUALLY RECEIVED.

THERE WERE THREE MAIN CRITERIA THAT WERE EVALUATED. ONE WAS THE RESEARCH PLAN. THE SECOND WAS THE INFORMATION ABOUT THE PRINCIPAL INVESTIGATOR, THEIR BACKGROUNDS, THEIR PUBLICATIONS, THEIR FUTURE PROSPECTS, AND THE INSTITUTIONAL COMMITMENTS, WHETHER THE INSTITUTIONS WOULD SUPPORT THEM GOING FORWARD.

SO THE FUNDING RECOMMENDATIONS FROM THE WORKING GROUP WERE -- AND THIS HAS CHANGED, SO IT'S VERY HARD TO KEEP UP WITH THIS. THIS IS CURRENT? THAT'S WHAT I'M THINKING. SO THEY RECOMMENDED 12 -- SO WHAT DO WE HAVE? IN TIER 1 WE HAVE 12 BASIC SCIENTISTS THAT WERE RECOMMENDED AND FIVE PHYSICIAN SCIENTISTS, AND THE TOTAL FUNDING AMOUNT THAT WOULD BE POSSIBLE IS 42.4. SO THERE'S TIER 1 RECOMMENDED FOR FUNDING.

IN TIER 2, WHICH IS RECOMMENDED FOR FUNDING IF WE HAVE FUNDS AVAILABLE, WE HAVE EIGHT BASIC SCIENTISTS RECOMMENDED AND ONE PHYSICIAN SCIENTIST. AND THAT WOULD TOTAL ANOTHER $20 MILLION APPROXIMATELY, WHICH WOULD BRING US JUST OVER $60 MILLION, WHICH IS BELOW WHAT WE SOUGHT TO DO. WE WOULD HAVE -- IN THOSE TWO CATEGORIES,WE CAN EASILY FILL OUT THE 15 THAT WE ANTICIPATED. WE WOULD FALL SHORT ON THE PHYSICIAN SCIENTIST SIDE EVEN IF WE DID ALL SIX.

YOU KNOW, TYPICALLY IN THIS WHAT WE'VE DONE IS IN THE PAST WE'VE LOOKED AT THE --

DR. OLSON: IT'S JUST THE SPREADSHEET OF THE RECOMMENDED.

MR. SHEEHY: SO WE'RE NOT WORKING OFF A HISTOGRAM AT THIS TIME. SO WE'RE WORKING STRAIGHT OFF THE TABLE. SO IN THE PAST WHAT WE HAVE DONE IS THAT WE MOVED INTO ACTUALLY CONSIDERING IN BLOCKS. SO I'M NOT SURE HOW THE CHAIR WOULD LIKE TO PROCEED. WE ACTUALLY HAVE THAT ONE GRAPH THAT DOES OFFER US THE POTENTIAL TO CONSIDER, WITHOUT HAVING TO HAVE RECUSALS, ALL THE ONES IN TIER 1, FOR INSTANCE, WITHOUT THEM ALL DISCLOSED. AM I CORRECT, COUNSEL? AND ALSO TO DISPOSE OF TIER 3 POTENTIALLY.

MS. PACHTER: WHAT I HAVE SUGGESTED IS THAT WE NOT TAKE A BLOCK VOTE UNTIL THE END, THAT WE JUST MOVE APPLICATIONS INDIVIDUALLY ONE BY ONE BETWEEN TIERS. AND ONCE THE BOARD IS SATISFIED THAT NO FURTHER APPLICATIONS NEED TO BE MOVED, THEN TO TAKE BLOCK VOTES AT THE END.

MR. SHEEHY: GREAT. SO THE NEXT SLIDE WOULD BE THE SPREADSHEET WITH THE NAMES REVEALED. I JUST WANTED TO BE CLEAR HOW WE WERE PROCEEDING. JUST NUMBERS.THAT'S RIGHT. NUMBERS AND SCORES.

IT'S A LITTLE CLEARER ON OUR SCREEN. I THINK FOR THE PUBLIC IT'S A LITTLE BIT TOUGHER. AND THE ONES THAT ARE BOLDED ARE THE PHYSICIAN SCIENTISTS. THAT GIVES YOU A SENSE OF HOW PEOPLE FELL IN THE SCALE.

SO THE GREEN ONES ARE THE ONES THAT WERE RECOMMENDED FOR FUNDING. AND THEY MAY BE ABLE TO CRUNCH THIS DOWN AND SHOW YOU TIER 2.

SO AT THE BOTTOM IS TIER 3. DO WE HAVE THE NUMBERS ON TIER 3 SO WE CAN SEE KIND OF WHERE THE SCORES WERE? YOU DON'T SHOW THE NUMBERS FOR TIER 3.

CHAIRMAN KLEIN: JEFF, I BELIEVE THE NUMBERS ARE SHOWN THROUGH 58. AND NORMALLY AFTER WE FIND OUT WHETHER THERE'S ANY DESIRE BY THE BOARD TO HAVE A CLOSED SESSION TO DISCUSS PROPRIETARY INFORMATION, THEN WE WOULD GO THROUGH THE NORMAL PROCESS OF ASKING IF ANYONE WANTS TO LOOK AT NUMBERS OR CONSIDER GRANTS BELOW 58.

SO WHAT WE HAVE HERE, JEFF, MAYBE DR. OLSON COULD JUST GIVE US THE TWO STATISTICS. ONE, HOW MANY GRANTS IN THE RECOMMENDED FOR FUNDING AND HOW MANY GRANTS IN THE CATEGORY OF IF AVAILABLE FOR FUNDING?

DR. OLSON: OKAY. SO IF YOU LOOK, AND IT'S MORE EASY TO SEE ON THE OTHER ONE, BUT IN THE TOP TIER, I.E., THOSE GRANTS THAT WERE RECOMMENDED FOR FUNDING, THERE'S 17 TOTAL. SO YOU LOOK, SEE THE GREEN LINE AT THE BOTTOM OF YOUR SCREEN. IT SAYS THAT'S THE RECOMMENDED FOR FUNDING CATEGORY. THERE'S 17 OUT OF 48 APPLICATIONS THAT FALL INTO THAT CATEGORY. YOU CAN SEE IT SHOWS HOW MANY ARE SCIENTISTS. SO 12 OF THOSE 17 ARE SCIENTISTS, AND PHYSICIAN SCIENTISTS COMPRISE FIVE OF THE 17. AND ADJACENT TO EACH OF THOSE NUMBERS, YOU CAN SEE THE REQUESTED AMOUNTS OF FUNDING AND THE SUBTOTALS IN EACH OF THOSE CATEGORIES.

THE SUBTOTAL CURRENTLY, AS JEFF INDICATED BEFORE, IN THAT CATEGORY IS $42.4 MILLION. THE TIER 2 COMPRISES NINE APPLICATIONS OUT OF THE 48. SO THIS IS RECOMMENDED FOR CONSIDERATION FOR FUNDING. AND AS YOU CAN SEE IN THIS CATEGORY, WE HAVE SIX OF THOSE NINE ARE SCIENTISTS AND THREE OF THOSE NINE ARE PHYSICIAN SCIENTISTS. AND, AGAIN, THE SUBTOTAL IN THAT CATEGORY IS $19.8 MILLION.

CHAIRMAN KLEIN: THANK YOU. DR. PENHOET. DR. PENHOET: JUST A CLARIFYING QUESTION. A PERSON IS DEFINED FOR THIS PURPOSE AS A PHYSICIAN SCIENTIST IF THEY HAVE AN M.D. DEGREE IRRESPECTIVE OF WHAT KIND OF WORK THEY'RE DOING.

DR. OLSON: NO.

DR. PENHOET: WHAT DEFINES A PHYSICIAN SCIENTIST?

DR. OLSON: I'LL LET KUMAR SAY.

DR. KUMAR: DR. PENHOET, AS SPECIFIED IN THE RFA, PHYSICIAN SCIENTISTS MUST HAVE COMPLETED RESIDENCE TRAINING TO BE ELIGIBLE FOR THIS APPLICATION AS A PHYSICIAN SCIENTIST.

DR. OLSON: AND NOMINATED BY AN INSTITUTION THAT HAD AN ACCREDITED MEDICAL SCHOOL.

DR. PENHOET: IF THEY'RE DOING COMBINATORIAL CHEMISTRY, THEY'RE STILL INCLUDED IN THE PHYSICIAN SCIENTISTS.

DR. OLSON: THAT IS CORRECT. SO THE DESIGNATION BETWEEN -- IT'S ACTUALLY MORE APPROPRIATE. THEY COULD BE DOING MORE TRANSLATIONAL WORK; THEY COULD BE DOING BASIC WORK.

CHAIRMAN KLEIN: DR. OLSON, WOULD YOU INFORM THE BOARD AND THE PUBLIC? WHAT ARE THE REQUIREMENTS OF HOW MUCH TIME THEY COMMIT TO THIS RESEARCH IF, IN FACT, THEY'RE AWARDED A GRANT?

DR. OLSON: THIS AWARD HAS A COMMITMENT OF 33 PERCENT OF THEIR TIME OVER FIVE YEARS, WHICH IS ACTUALLY A SUBSTANTIAL COMMITMENT OF TIME FOR THOSE OF YOU WHO KNOW ABOUT AND HAVE MULTIPLE GRANTS. SO WE WANTED THEM TO BE WORKING ON THIS RESEARCH.

CHAIRMAN KLEIN: IF SOMEONE IS A PHYSICIAN AND THEY GET THIS GRANT, THEY HAVE TO COMMIT 33 PERCENT OF THEIR TIME SPECIFICALLY TO THIS AREA?

DR. OLSON: RIGHT. AND THAT IS ACTUALLY AN IMPORTANT THING. WHEN WE HAD TALKED TO PEOPLE IN INTERVIEWS AND WHEN WE HAD TALKED WITH PHYSICIAN SCIENTISTS, THAT'S ACTUALLY ONE OF THE BIG THINGS IS BUYING SOME OF THEIR TIME AWAY FROM THEIR CLINICAL RESPONSIBILITIES. SO THAT, IN PART, DROVE THE REQUIREMENT FOR, YOU KNOW, WE WANT TO TRAIN RESEARCHERS WHO CAN HELP IN TRANSLATING THE INVENTIONS AND THE DISCOVERIES THAT ARE MADE IN THE SCIENCES INTO THE CLINIC.

CHAIRMAN KLEIN: THANK YOU. DR. POMEROY. AND DR. POMEROY, I TAKE IT YOU'RE NOT GOING TO ADDRESS ANY MOTION. IT'S A QUESTION.

DR. POMEROY: IT'S A QUESTION ABOUT GRANTS FOR WHICH I HAVE NO CONFLICTS. THERE ARE TWO GRANTS LISTED IN THE RECOMMENDED IF FUNDS ARE AVAILABLE THAT DON'T HAVE SCORES. COULD YOU CLARIFY WHY AND --

MR. SHEEHY: THOSE WERE MOVED UP FROM TIER 3 IN PROGRAMMATIC REVIEW BY THE SCIENTISTS. THE FIRST ONE WAS MOVED UP BECAUSE IT ADDRESSES A SPECIFIC CONDITION THAT HAS TENDED TO BE UNDERREPRESENTED IN OUR RESEARCH ON ALZHEIMER'S DISEASE. AND THE SECOND ONE ACTUALLY HAD A VERY INTERESTING TRAINING COMPONENT THAT ONE OF OUR RESEARCHERS THOUGHT WAS AN IMPORTANT ASSET TO ADD TO OUR PORTFOLIO.

CHAIRMAN KLEIN: SO IF THOSE GRANTS ARE TO BE ACTUALLY CONSIDERED FOR FUNDING, THEN AT THAT TIME THE BOARD MEMBER WHO WOULD MAKE THE MOTION WOULD EFFECTIVELY TRIGGER THAT SCORE BEING DISPLAYED BECAUSE WE DON'T CONSIDER ANY GRANT FOR APPROVAL WITHOUT DISPLAYING THE SCORE. AND AFTER THE CONFIDENTIAL EXECUTIVE SESSION, IF WE'RE TO HAVE ONE, THERE'S AN OPPORTUNITY TO ASK ABOUT PROPRIETARY INFORMATION RELATED TO THOSE GRANTS IF THAT'S IMPORTANT TO THE DECISION.

AT THIS TIME I'D LIKE TO ASK, DR. OLSON, WOULD YOU LIKE TO COVER ANY MORE MATERIAL BEFORE I ASK THE BOARD WHETHER THEY WOULD LIKE AN EXECUTIVE SESSION?

DR. OLSON: NO, CHAIRMAN.

CHAIRMAN KLEIN: DR. MURPHY?

DR. MURPHY: NO, MR. CHAIRMAN.

CHAIRMAN KLEIN: IS THERE ANY BOARD MEMBER WHO WOULD LIKE AN EXECUTIVE SESSION TO EXAMINE ANY OF THE PROPRIETARY INFORMATION RELATED TO ANY OF THESE GRANTS?

DR. LOVE: QUESTION. TO CLAIRE'S QUESTION, CAN WE FUND THEM WITHOUT KNOWING THE SCORES?

CHAIRMAN KLEIN: NO.

DR. LOVE: MUST WE GO TO EXECUTIVE SESSION IN ORDER TO SEE THE SCORES?

CHAIRMAN KLEIN: IN EXECUTIVE SESSION WE CAN LOOK AT THE PROPRIETARY INFORMATION; AND BASED ON THAT,YOU WOULD EVALUATE WHETHER OR NOT YOU WANTED TO MAKE A MOTION FOR APPROVING A GRANT THAT WAS BELOW A 58 SCORE. SO IT WOULD BE BASED ON YOUR ANALYSIS OF THE PROPRIETARY INFORMATION.

SO THE QUESTION IS WOULD YOU LIKE AN EXECUTIVE SESSION TO DISCUSS THAT PROPRIETARY INFORMATION? IS THAT MATERIAL TO YOUR POTENTIAL DECISION ON THOSE GRANTS?

DR. LOVE: I'D BE INTERESTED IN AN EXECUTIVE SESSION IF THAT'S WHAT WE NEED TO DO IN ORDER TO CONSIDER FUNDING THOSE TWO GRANTS.

CHAIRMAN KLEIN: YES, DR. BENNETT.

DR. BENNETT: SIMILARLY, I DON'T KNOW WHETHER THIS REQUIRES AN EXECUTIVE SESSION OR NOT, BUT HOW CAN WE GET SOME COMMENT ON THE LAST ITEM IN THE GREEN FUNDABLE CATEGORY, WHICH HAS A LOWER SCORE THAN TWO OF THE OTHER ITEMS IN THE RECOMMENDED FOR FUNDING?

CHAIRMAN KLEIN: THERE'S -- AGAIN, THIS HAS BEEN MOVED UP BECAUSE OF PROGRAMMATIC CONSIDERATIONS. AND IN EXECUTIVE SESSION THERE'S AN OPPORTUNITY TO LOOK AT THE PROPRIETARY INFORMATION TO EVALUATE WHETHER THE BOARD BELIEVES THAT DECISION TO MOVE IT UP WAS APPROPRIATE OR NOT. AND THEN WE'LL COME BACK AND HAVE A DISCUSSION OF THAT GRANT AT THE TIME IT'S CONSIDERED FOR FUNDING.

IF I COULD GET THE CHAIR OF THE PEER REVIEW GROUP, THE VICE CHAIR OF THE PEER REVIEW, JEFF SHEEHY, TO COMMENT, PLEASE.

MR. SHEEHY: I THINK IT'S APPROPRIATE AT THIS POINT TO KIND OF MENTION. I THINK ALL OF THE BOTTOM THREE, AT LEAST TWO OF THE BOTTOM THREE, I THINK, ARE PHYSICIAN SCIENTISTS, ALL THREE. AND WITHIN THIS PARTICULAR COMPETITION, THEY TENDED TO SCORE, ESPECIALLY IF THEY WERE DOING TRANSLATIONAL RESEARCH, LESS WELL.

AND DISCUSSIONS WITH WORKING GROUP MEMBERS HAVE KIND OF INDICATED THAT, FROM THEIR PERSPECTIVE, A BASIC SCIENCE QUESTION WITH THE NOVELTY THAT'S INVOLVED SOMETIMES GETS A BETTER SCORE THAN A TRANSLATIONAL RESEARCH QUESTION. SO IN A WAY WITHIN THE REVIEW WE WERE DOING A LITTLE FISH AND FOWL KIND OF COMPARISON. SO THE SCORES, IN GENERAL, FOR THE PHYSICIAN SCIENTISTS WERE LOWER.

CHAIRMAN KLEIN: DR. OLSON.

DR. OLSON: I JUST WANTED TO BRING ONE FURTHER POINT TO EVERYBODY'S ATTENTION. THERE IS AN ERROR ACTUALLY IN ROUND TWO. IN FACT, THERE IS ONLY ONE PHYSICIAN SCIENTIST IN THE SECOND CATEGORY THAT IS RECOMMENDED FOR FUNDING CONSIDERATION. BUT SO NOT THREE, ONLY ONE. SO IN POINT OF FACT, THE NUMBER OF PHYSICIAN SCIENTISTS TOTAL, I BELIEVE, IS LESS THAN WHAT WOULD BE INDICATED IN THAT ROUND. SO I JUST WANTED TO PUT THAT CORRECTION OUT THERE.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. AND, AGAIN, WE WILL GO THROUGH EACH OF THESE. JOHN SIMPSON.

MR. SIMPSON: JOHN SIMPSON, FOUNDATION FOR TAXPAYER AND CONSUMER RIGHTS. WITHOUT GOING INTO EXECUTIVE SESSION, I THINK YOU CAN ANSWER SOME OF THE QUESTIONS ABOUT THESE BY REFERRING TO THE PUBLIC SUMMARIES, CAN YOU NOT?

CHAIRMAN KLEIN: THE PUBLIC SUMMARIES ARE AN ADDITIONAL SOURCE. WHAT WE HAVE TRADITIONALLY DONE AND WILL DO TODAY, SINCE THERE'S A REQUEST FOR EXECUTIVE SESSION, IS HAVE THE EXECUTIVE SESSION. ALL OF THOSE PUBLIC COMMENTS RELATED TO THE PUBLIC SUMMARIES AND OTHER POLICY OBSERVATIONS, AS JEFF SHEEHY HAS JUST MENTIONED IN TERMS OF THE SCORING PATTERNS, WILL ALL BE BROUGHT UP WHEN WE GO THROUGH AND LOOK AT GRANTS FOR APPROVAL. SO WE HAVE CONSOLIDATED ALL OF THAT INFORMATION AT ONE TIME IN MAKING A FULLY INFORMED DECISION. SO WE'RE GOING --

DR. POMEROY: ONE MORE QUESTION. FOR THE TIER 3, COULD WE -- CAN YOU POINT OUT AGAIN WHICH ARE PHYSICIAN SCIENTISTS IN LIGHT OF YOUR LAST COMMENT OF THE UNDER REPRESENTATION, PERHAPS, OF PHYSICIAN SCIENTISTS?

DR. OLSON: THE BOLD TEXT.

DR. POMEROY: CAN YOU READ OFF THE NUMBERS BECAUSE WE DON'T HAVE THE BOLD ON OUR VERSION.

DR. OLSON: APPLICATIONS 560, APPLICATION 573, APPLICATION 534, APPLICATION 558, APPLICATION 551, APPLICATION 541. THAT IS IT.

CHAIRMAN KLEIN: THANK YOU. WE'RE GOING TO ADJOURN TO EXECUTIVE SESSION. ARE WE DOING EXECUTIVE SESSION IN THIS ROOM? WE'RE DOING EXECUTIVE SESSION IN THIS ROOM.

MR. SIMPSON: IS EXECUTIVE SESSION JUST FOR THE PURPOSE OF THESE GRANTS, OR WILL YOU BE DOING OTHER EXECUTIVE SESSION BUSINESS AT THIS POINT?

CHAIRMAN KLEIN: THIS IS JUST FOR THE PURPOSES OF LOOKING AT PROPRIETARY INFORMATION. IN FACT, TAMAR PACHTER, WOULD YOU LIKE TO RECITE THE PROVISIONS UNDER WHICH WE'RE ADJOURNING INTO EXECUTIVE SESSION? WE WILL DO A LATER EXECUTIVE SESSION DEALING WITH PERSONNEL AND OTHER ITEMS FOR WHICH EXECUTIVE SESSION IS APPROPRIATE.

MS. PACHTER: WE ARE GOING INTO EXECUTIVE SESSION TO DISCUSS CONFIDENTIAL INTELLECTUAL PROPERTY OR WORK PRODUCT AND PREPUBLICATION CONFIDENTIAL SCIENTIFIC RESEARCH OR DATA RELATING TO THE NEW FACULTY AWARD APPLICATIONS. SO WE CAN'T DISCUSS ANYTHING ELSE BUT THAT IN EXECUTIVE SESSION.

THE CITATION IS TO HEALTH AND SAFETY CODE SECTION 125290.30(D)(3)(B) AND (C).

CHAIRMAN KLEIN: ALL RIGHT. THANK YOU. AND IT APPEARS THAT WE DON'T HAVE A LARGE NUMBER OF ITEMS. ARE WE GOING TO HAVE LUNCH DURING THIS EXECUTIVE SESSION, STAFF?

MS. KING: NO.

CHAIRMAN KLEIN: NO. SO IS A REASONABLE ESTIMATE 40 MINUTES, MAYBE 30 MINUTES, 30 TO 40 MINUTES? RECONVENE IN 30 TO 40 MINUTES. AND WE'LL TRY AND START THIS IMMEDIATELY. SO IF EVERYONE WHO IS NOT INVOLVED IN THE EXECUTIVE SESSION COULD PLEASE TAKE A BREAK.

(THE BOARD THEN WENT INTO EXECUTIVE SESSION, NOT REPORTED NOR HEREIN TRANSCRIBED.)

CHAIRMAN KLEIN: WE ARE RECONVENING IN THE PUBLIC SESSION TO PROCEED WITH THE NEW FACULTY AWARDS. DR. MURPHY, WOULD YOU LIKE TO GIVE US GUIDANCE OF HOW YOU WOULD LIKE TO PROCEED.

DR. MURPHY: I THINK AFTER THE CAMERA SESSION, WE ARE READY TO PUT BACK ONTO THE SCREEN THE SCORES AND TO OPEN DISCUSSION TO ANY GRANTS THAT YOU FEEL IS NECESSARY IN PUBLIC SESSION.

CHAIRMAN KLEIN: ALL RIGHT. FIRST OF ALL, IN LOOKING AT THE RECOMMENDED FOR FUNDING CATEGORY, IS THERE A MOTION AMONG THIS GROUP TO ADVANCE FOR FUNDING ANY PORTION OF TIER 1?

MS. PACHTER: EXCUSE ME, CHAIRMAN KLEIN. TO MAKE THIS EASIER, I STRONGLY SUGGEST THAT YOU MOVE APPLICATIONS INDIVIDUALLY BEFORE CONSIDERING APPLICATIONS AS A BLOCK. SO --

CHAIRMAN KLEIN: WELL TAKEN, COUNSEL.

MS. PACHTER: I SUGGEST THAT YOU ENTERTAIN MOTIONS TO EITHER MOVE INDIVIDUAL APPLICATIONS OUT OF TIER 1 OR TO MOVE APPLICATIONS FROM TIER 2 OR TIER 3 INTO TIER 1.

CHAIRMAN KLEIN: APPRECIATE THAT. LET US FOR BENEFIT OF THE PUBLIC AND FOR THE BOARD AT THIS POINT JUST REMIND EVERYONE THAT IN ANY ACTIONS, WE HAVE FIRST ASK -- BEFORE ANY MOTIONS OR ANY ACTIONS, WE'LL ASK WHAT THE CONFLICTED PARTIES ARE. ADDITIONALLY, MEMBERS IN VOTING WILL STATE THAT THEY ARE VOTING FOR OR AGAINST ONLY THOSE ITEMS THAT THEY ARE NOT IN CONFLICT OR ARE NOT ABSTAINING SO THAT WE MAKE IT CLEAR ON THE RECORD ON A ROLL CALL VOTE THE NATURE OF THE EXACT AND PRECISE VOTE THAT WAS TAKEN TO AVOID ANY CONFLICTS OR APPEARANCE OF CONFLICTS.

ADDITIONALLY, EVERY MEMBER HAS BEEN GIVEN A LIST OF ANY CONFLICTS THEY HAVE, AND THOSE LISTS ARE MONITORED BY COUNSEL AND BY STAFF AS A DUAL SYSTEM TO MAKE CERTAIN THAT WE DON'T HAVE INADVERTENT ISSUES THAT ARISE.

SO IN ADVANCING THIS QUESTION, DR. POMEROY.

DR. POMEROY: I WOULD LIKE TO MOVE THAT WE REVEAL THE SCORES FOR THE TWO IN TIER 2 THAT WE DON'T HAVE AVAILABLE TO US SO THAT WE CAN MAKE A DECISION ABOUT WHETHER THEY NEED -- THEY SHOULD BE MOVED.

CHAIRMAN KLEIN: OKAY. IS THERE A SECOND FOR THAT MOTION?

MS. GIBBONS: I SECOND.

CHAIRMAN KLEIN: MS. GIBBONS IS THE SECOND FOR THAT MOTION. IS THERE DISCUSSION ON THAT MOTION? AND COULD THE STAFF PLEASE TELL US WHO WOULD BE IN CONFLICT BEFORE WE DO THAT DISCUSSION?

MS. PACHTER: SO WE'RE TALKING ABOUT THE SCORES FOR APPLICATIONS 538 AND 537. THERE ARE NO RECUSALS ON 537. THE RECUSALS ON 538 ARE BENNETT AND LANSING.

CHAIRMAN KLEIN: OKAY. AND STAFF, TO GIVE US A BASIS FOR THIS DISCUSSION, WOULD YOU LIKE TO GIVE US A QUICK --

MS. PACHTER: ALL WE'RE DOING IS JUST A MOTION TO REVEAL THE SCORES.

CHAIRMAN KLEIN: I UNDERSTAND THAT. SO THAT THEY SUBSTANTIVELY ARE REMINDED OF THE SUBJECT OF THESE MOTIONS, STAFF, COULD YOU JUST REMIND US IN VERY SHORT ORDER THE TOPICS WE'RE DEALING WITH HERE?

DR. OLSON: APPLICATION 538, WHICH WAS ONE OF THE ONES THAT INFORMATION IS BEING REQUESTED OF, HAS THE TITLE OF "ES-DERIVED CELLS FOR THE TREATMENT OF ALZHEIMER'S DISEASE." APPLICATION NO. 537, WHICH IS THE OTHER SUBJECT APPLICATION, HAS THE TITLE "INVESTIGATION OF THE POTENTIAL OF MOUSE EMBRYONIC STEM CELLS TO DEVELOP INTO NEUROENDOCRINE CELLS IN VITRO."

CHAIRMAN KLEIN: OKAY. WOULD ANY MEMBER OF THE COMMITTEE LIKE ADDITIONAL INFORMATION BEFORE MOVING FORWARD TO PUBLIC COMMENT? OS STEWARD.

DR. STEWARD: JUST PROCEDURALLY, IT HAS BEEN THE PRACTICE NOT TO REVEAL THE SCORES OF GRANTS THAT WERE NOT EVENTUALLY MOVED INTO THE FUNDING RANGE. AND I JUST WONDER IF THIS MOTION COULD BE TABLED UNTIL WE CONSIDER SOME OF THE OTHER GRANTS THAT WE ALREADY KNOW ARE HIGHER IN THE LIST. IS THAT A -- IS THAT APPROPRIATE?

CHAIRMAN KLEIN: IT'S APPROPRIATE TO ASK THE MAKER OF THE MOTION AND THE SECOND IF THEY'D LIKE TO PROCEED IN THAT MANNER.

DR. POMEROY: I NEED TO KNOW THE SCORES TO MAKE AN ASSESSMENT.

CHAIRMAN KLEIN: OKAY. SO THE POSITIONS OF THE MEMBERS HAVE BEEN STATED. ANY ADDITIONAL COMMENT BY MEMBERS? OKAY. PUBLIC COMMENT ON THESE, ON THIS QUESTION? THIS IS JUST ON THE QUESTION OF WHETHER THE SCORES ARE TO BE DISCLOSED.

MR. SIMPSON: JOHN SIMPSON, FOUNDATION FOR TAXPAYER AND CONSUMER RIGHTS. WE BELIEVE THAT YOU SHOULD REVEAL ALL OF THE SCIENTIFIC SCORES FOR ALL OF THEM SO WE, OF COURSE, SUPPORT REVEALING TWO OF THEM. THANK YOU.

CHAIRMAN KLEIN: IT'S NICE TO HAVE YOU IN SUPPORT, MR. SIMPSON.

MR. SIMPSON: WHEN IT'S THE RIGHT THING, I DO THAT.

CHAIRMAN KLEIN: ALL RIGHT. I'D LIKE --

MS. PACHTER: MR. CHAIRMAN, I THINK WE SHOULD, IF IT'S ALL RIGHT WITH DR. POMEROY, THAT WE SHOULD DO THIS AS SEPARATE MOTIONS SO WE CAN HAVE THE PEOPLE WHO ARE CONFLICTED ON 538 NOT VOTE AND THEN VOTE ON 537. SO I WILL RESTATE THE MOTION FOR THE CHAIR. AND THE MOTION IS TO REVEAL THE SCORE FOR APPLICATION NO. 537 FIRST. AND THE RECUSALS ON 537 ARE NONE. EVERYONE IS QUALIFIED TO VOTE.

CHAIRMAN KLEIN: COUNSEL, ON THIS PARTICULAR MOTION, IT IS BETTER TO PROCEED IN THIS MANNER RATHER THAN STATE THEY'RE VOTING IN FAVOR EXCEPT FOR THOSE IN WHICH THEY'RE IN CONFLICT?

MS. PACHTER: YES. YOU CAN DO A VOICE VOTE.

CHAIRMAN KLEIN: FIRST OF ALL, I NEED TO CHECK WITH THE SECOND IF WE CAN SWITCH THIS INTO TWO MOTIONS. IS THE SECOND AGREED THAT WE CAN MOVE THIS INTO TWO MOTIONS?

MS. GIBBONS: YES.

CHAIRMAN KLEIN: THANK YOU.

MR. HARRISON: CHAIRMAN KLEIN, THIS CAN BE DONE AS A VOICE VOTE AS WELL SINCE THERE ARE NO CONFLICTS.

CHAIRMAN KLEIN: ON THE FIRST OF THESE?

MS. PACHTER: 537, YES.

CHAIRMAN KLEIN: SO ALL IN FAVOR? OPPOSED? ALL RIGHT. THAT MOTION PASSES.

LET'S GO TO THE SECOND ITEM. IN THIS CASE DO WE NEED A ROLL CALL?

MS. PACHTER: YES.

MR. SHEEHY: I ACTUALLY LIKE THIS ONE. WOULD THE MAKER AND THE SECOND KIND OF ACCEPT A FRIENDLY AMENDMENT TO CHANGE IT TO MOVE IT INTO TIER 1?

CHAIRMAN KLEIN: THEY WANT TO KNOW THE SCORE BEFORE THEY DISCUSS MOVING IT.

MR. SHEEHY: WE WOULD JUST NOT DEAL WITH IT IF IT HAD A BAD SCORE?

CHAIRMAN KLEIN: WELL, NO. YOU CAN HAVE ANOTHER MOTION.

MR. SHEEHY: WELL, THERE WILL BE A MOTION TO MOVE IT INTO TIER 1, SO I WAS JUST TRYING TO SAVE TIME.

CHAIRMAN KLEIN: OKAY. SO THANK YOU. ANY ADDITIONAL BOARD COMMENTS? ANY PUBLIC COMMENTS ON THIS ITEM? SEEING NO PUBLIC COMMENTS ON THIS ITEM, ROLL CALL VOTE.

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: FOR.

MS. KING: ROBERT BIRGENEAU.

DR. BIRGENEAU: YES.

MS. KING: FLOYD BLOOM.

DR. BLOOM: YES.

MS. KING: DAVID BRENNER.

DR. BRENNER: YES.

MS. KING: MARCY FEIT.

MS. FEIT: YES.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: YES.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: YES.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: YES.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: YES.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: GERALD LEVEY.

DR. LEVEY: YES.

MS. KING: TED LOVE.

DR. LOVE: YES.

MS. KING: ED PENHOET.

DR. PENHOET: YES.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JEFF SHEEHY.

MR. SHEEHY: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OSWALD STEWARD.

DR. STEWARD: YES.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: THAT MOTION CARRIES.

CHAIRMAN KLEIN: COULD WE PLEASE SEE THE SCORES? ALL RIGHT. SO AT THIS POINT COUNSEL HAS INSTRUCTED US THAT, TO THE EXTENT WE WISH TO MOVE ANY ITEM INTO TIER 1 OR ANY ITEM OUT OF TIER 1, THAT WE SHOULD PROCEED ON AN INDIVIDUAL BASIS. SO WOULD ANYONE -- DOES ANYONE WANT TO MAKE A MOTION ON EITHER OF THOSE OPPORTUNITIES?

MR. ROTH: I'D LIKE TO MOVE THAT -- I'D LIKE TO MAKE A MOTION ACTUALLY TO MOVE FOUR GRANTS THAT ARE IN TIER 2 INTO TIER 1.

MS. PACHTER: MR. ROTH, WE'RE GOING TO HAVE HAVE TO DO THOSE INDIVIDUALLY, I'M SORRY, TO ACCOUNT FOR THE CONFLICTS.

MR. ROTH: ALL RIGHT. SO I'LL TAKE THE FIRST ONE, 536, A MOTION TO MOVE IT INTO TIER 1.

CHAIRMAN KLEIN: OKAY. IS THERE A SECOND?

DR. LOVE: SECOND.

CHAIRMAN KLEIN: THERE'S A SECOND FROM TED LOVE. NEITHER OF THOSE ARE IN CONFLICT; IS THAT CORRECT?

MS. KING: CORRECT.

CHAIRMAN KLEIN: COULD YOU PLEASE STATE THE CONFLICTS?

MS. PACHTER: CONFLICTS ARE BLOOM AND BRENNER.

CHAIRMAN KLEIN: THANK YOU. COMMENTS FROM THE BOARD ON THE MOTION?

DR. POMEROY: CAN I GET A CLARIFICATION? DO THEY NEED TO -- DO GRANTS NEED TO BE OFFICIALLY MOVED INTO TIER 1 IN ORDER TO BE FUNDED, OR CAN WE LEAVE IT IN TIER 2 AND FUND IT?

CHAIRMAN KLEIN: THEY NEED TO BE MOVED INTO TIER 1 FOR FUNDING.

DR. POMEROY: OKAY.

CHAIRMAN KLEIN: OKAY. THANK YOU. ADDITIONAL COMMENTS? SEEING NONE, ARE THERE COMMENTS FROM THE PUBLIC?

MR. REED: THIS, I THINK, IS A REALLY IMPORTANT ONE TO MOVE BECAUSE IF THIS IS THE IPS, THEN WE NEED TO NOT MISS A CHANCE TO BE WITH SOMETHING WHICH THE PRESS IS DESCRIBING AS CUTTING EDGE SCIENCE. I THINK THIS IS AN IMPORTANT ONE.

CHAIRMAN KLEIN: THANK YOU.

DR. PRIETO: FOR SCIENTIFIC STAFF OR PERHAPS FOR DR. MURPHY, WHETHER THE EXPERIENCE OF THE YAMANAKA PAPER, THE THOMPSON PAPER SHED ANY LIGHT ON THE LIKELIHOOD OF SUCCESS FOR THIS PARTICULAR GRANT?

DR. OLSON: IN THIS CASE -- WELL, I WOULD SAY IT PROBABLY INCREASES THE FEASIBILITY.

DR. PRIETO: THANK YOU.

DR. OLSON: BUT IF YOU WANT TO HEAR FROM THE SCIENCE OFFICER PER SE ABOUT THE APPLICATION, THAT WOULD BE APPROPRIATE.

DR. MURPHY: FRANCISCO, I THINK THAT THERE IS SO MUCH TO LEARN NOW ABOUT IPS CELLS THAT ANY KIND OF GOOD SCIENCE THAT WE CAN FUND TO SUPPORT THAT IS GOING TO BRANCH OUT INTO AREAS THAT NONE OF US REALLY UNDERSTAND AT THIS POINT. SO, NO, I THINK THAT THIS IS COMPLEMENTARY TO WHAT HAS BEEN FOUND AND WILL BE VERY HELPFUL TO THE ENTIRE EFFORT IN TERMS OF THE FUTURE OF IPS WITHIN CIRM.

CHAIRMAN KLEIN: AND, KUMAR, WOULD YOU LIKE TO MAKE A SUPPLEMENTAL COMMENT OF ANY KIND ON THE MERITS OF THIS PARTICULAR APPLICATION?

DR. KUMAR: YES, I WOULD. THIS PARTICULAR APPLICATION IS FOR SMALL MOLECULE SCREENING AS WE'VE BEEN DISCUSSING. AND I DO NOTE THAT WITH THE ADVANCES IN INDUCED PLURIPOTENT STEM CELL RESEARCH THAT DO INVOLVE THIS GENETIC COCKTAIL OF FACTORS, THIS REPRESENTS A VERY IMPORTANT LEAP IN THE UNDERSTANDING OF REPROGRAMMING STEM CELLS BECAUSE IT IS A NONGENETIC MODIFICATION-BASED APPROACH.

CHAIRMAN KLEIN: VERY SIGNIFICANT. ADDITIONAL COMMENTS FROM THE BOARD? ANY ADDITIONAL PUBLIC COMMENT? SEEING NONE, CAN WE CALL THE ROLL.

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: FOR.

MS. KING: ROBERT BIRGENEAU.

DR. BIRGENEAU: YES.

MS. KING: ALBERT BENNETT.

DR. BENNETT: YES.

MS. KING: MARCY FEIT.

MS. FEIT: YES.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: YES.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: YES.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: YES.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: YES.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: SHERRY LANSING. GERALD LEVEY.

DR. LEVEY: YES.

MS. KING: TED LOVE.

DR. LOVE: YES.

MS. KING: ED PENHOET.

DR. PENHOET: YES.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JEFF SHEEHY.

MR. SHEEHY: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OSWALD STEWARD.

DR. STEWARD: YES.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: THAT MOTION CARRIES.

CHAIRMAN KLEIN: OKAY. THANK YOU VERY MUCH. AND COULD STAFF LET SHERRY KNOW WHERE WE ARE IN THIS PROCESS SO THAT SHE, IF SHE CAN REENTER, HAS THAT OPPORTUNITY AT THIS MOMENT.

ALL RIGHT. SO THAT MOTION CARRIED; IS THAT CORRECT? YES. CAN WE MOVE TO THE NEXT ITEM. IS THERE A MOTION ON THE NEXT ITEM?

MR. ROTH: I WOULD MOVE ITEM 540 INTO TIER 1.

CHAIRMAN KLEIN: OKAY. IS THERE A SECOND?

DR. LEVEY: SECOND.

CHAIRMAN KLEIN: SECOND, DR. LEVEY. COMMENTS FROM THE BOARD AFTER THE RECUSALS, PLEASE.

MS. PACHTER: THE RECUSALS ARE FEIT, LANSING, AND SHEEHY.

CHAIRMAN KLEIN: OKAY. COMMENTS FROM THE BOARD? COMMENTS FROM THE PUBLIC? ROLL CALL.

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: FOR.

MS. KING: ROBERT BIRGENEAU.

DR. BIRGENEAU: YES.

MS. KING: FLOYD BLOOM.

DR. BLOOM: YES.

MS. KING: DAVID BRENNER.

DR. BRENNER: YES.

MS. KING: ALBERT BENNETT.

DR. BENNETT: YES.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: YES.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: YES.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: YES.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: YES.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: GERALD LEVEY.

DR. LEVEY: YES.

MS. KING: TED LOVE.

DR. LOVE: YES.

MS. KING: ED PENHOET.

DR. PENHOET: YES.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OSWALD STEWARD.

DR. STEWARD: YES.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: THAT MOTION CARRIES.

CHAIRMAN KLEIN: THANK YOU. THE NEXT ITEM.

MR. ROTH: MR. CHAIRMAN, I WONDER IF I CAN ASK A QUESTION ABOUT GRANT 550 BEFORE I MAKE ANY MOTION ON IT. CAN WE GET SOME SCIENTIFIC COMMENT ON THAT FROM BOTH THE SCIENTIFIC STANDPOINT.

CHAIRMAN KLEIN: THAT'S 550?

MR. ROTH: THAT'S RIGHT. IT'S IN THE TOP TIER RIGHT NOW AT A SCORE OF 61.

CHAIRMAN KLEIN: QUESTION IS IN ORDER.

MR. ROTH: SO COULD WE GET THE SCIENTIFIC REVIEW?

CHAIRMAN KLEIN: QUESTION REQUESTED IS BEFORE WE GO INTO THIS, CONFLICTS ON THAT ITEM, PLEASE.

MS. PACHTER: ON 550, AZZIZ, LANSING, AND LEVEY.

CHAIRMAN KLEIN: THANK YOU. IF WE COULD HAVE THE SCIENTIFIC OFFICER DO A SHORT PRESENTATION ON 550 TO GIVE US THE SUBSTANCE OF THE MERITS ON THIS GRANT.

MR. ROTH: PARTICULARLY WITH RESPECT TO WHY IT WAS MOVED UP.

CHAIRMAN KLEIN: QUESTION IS WHY WAS IT MOVED UP PROGRAMMATICALLY.

DR. OLSON: DR. HARI WILL ADDRESS APPLICATION 550.

CHAIRMAN KLEIN: THANK YOU.

DR. HARI: SO BRIEFLY, THIS IS A STUDY ON EPIGENETIC MODIFICATIONS; THAT IS, HERITABLE CHANGES NOT ASSOCIATED WITH SPECIFIC DNA CHANGES, AND THE EFFECTS OF THOSE MODIFICATIONS ON TUMOROGENESIS IN STEM CELL DIFFERENTIATION. THERE'S A LARGE AMOUNT OF WORK PROPOSED THAT HAS STRONG COMPONENTS, BUT THE RELEVANCE TO THE STEM CELL FIELD IS MINIMAL.

OF THE THREE AIMS PROPOSED, ONLY ONE OF THOSE AIMS UTILIZES STEM CELLS. HOWEVER, THIS PRINCIPAL INVESTIGATOR IS A RISING STAR AND HAS INTEREST IN TRANSLATIONAL RESEARCH, AMAZING TRAINING, AND AN AMAZING PUBLICATION RECORD. THE INSTITUTION IS STRONG AND SUPPORTIVE OF JUNIOR FACULTY AND COMITTED TO STEM CELL RESEARCH.

SPECIFICALLY, WITH RESPECT TO WHY THIS APPLICATION WAS MOVED UP, THE MOTION WAS BASED ON A DISCUSSANT NOTING THAT THIS IS A PHYSICIAN SCIENTIST THAT IS A RISING STAR WITH EXCELLENT TRAINING AND AN INTEREST IN TRANSLATIONAL RESEARCH AGAIN. AND ANOTHER DISCUSSANT SUPPORTED THIS MOTION BECAUSE THE APPLICANT WITHIN THOSE APPLICATIONS THAT WERE IN TIER 2 FOLLOWING THE SCIENTIFIC REVIEW WAS THE STRONGEST OF THE PHYSICIAN SCIENTISTS.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. AND JEFF SHEEHY.

MR. SHEEHY: AGAIN, THE PHYSICIAN SCIENTIST AS A RULE SCORED LOWER. THERE WASN'T A LOT OF NOVELTY IN THE SCIENCE. AND WHAT THIS PERSON IS DOING IS ALSO, I FOUND INTERESTING FROM AN HIV POINT OF VIEW, IT'S MANIPULATION OF THESE CELLS. THIS IS A CANCER APPLICATION, BUT THIS WOULD HAVE AN APPLICATION IN HIV, IF I REMEMBER THE APPLICATION. IS THAT THE ONE -- I'M CORRECT, THIS IS THE ONE WHERE THEY'RE DOING GENETIC MANIPULATION OF HEMATOPOETIC STEM CELLS.

DR. HARI: THIS IS ACTUALLY AN APPLICATION THAT HAS TO DO WITH EPIGENETIC MODIFICATIONS IN CANCER CELL LINES, NOT NECESSARILY --

MR. SHEEHY: I'M CONFUSED WITH A DIFFERENT ONE. I APOLOGIZE. THEY WERE BOTH VERY STRONG. I JUST THINK THAT IT REFLECTS THE GENERAL DIFFICULTY OF PHYSICIAN SCIENTISTS IN GETTING INTO TIER 1.

MR. ROTH: IT'S STRIKING THE ONE SENTENCE, THAT THE APPLICANT IS MUCH STRONGER THAN THE PROPOSAL.

MR. SHEEHY: IF YOU REMEMBER, IT'S A THREE-LEGGED STOOL. SO IT'S THE APPLICANT, THE INSTITUTION, AND THE PROPOSAL. AND THE PHYSICIAN SCIENTISTS ALMOST ALWAYS FARED WORSE ON THE PROPOSAL. SO THAT WASN'T ALWAYS REFLECTED, BY THE WAY, IN THE SCORE OF ALL THREE LEGS. THERE WAS A LITTLE BIAS TOWARDS HAVING A GOOD SCIENTIFIC PROPOSAL.

MR. ROTH: SO WITH THAT, I'M NOT GOING TO MAKE A MOTION ON THAT, BUT MOTION TO MOVE 535 INTO TIER 1.

CHAIRMAN KLEIN: OKAY. THERE'S A MOTION TO MOVE 535 INTO TIER 1. IS THERE A SECOND?

MR. SHEEHY: SECOND.

CHAIRMAN KLEIN: SECOND FROM JEFF SHEEHY. CONFLICTS?

MS. PACHTER: 535, GOLDBERG.

CHAIRMAN KLEIN: IS THAT THE ONLY CONFLICT?

MS. PACHTER: THAT IS THE ONLY CONFLICT.

CHAIRMAN KLEIN: THANK YOU. WOULD THE MEMBERS LIKE A PRECIS OF THE APPLICATION? YES, DR. AZZIZ.

DR. AZZIZ: I WOULD SINCE I'M GOING TO BE FIRST ON THE ROLL CALL.

CHAIRMAN KLEIN: DR. OLSON.

DR. OLSON: DR. HARI WILL ADDRESS THAT APPLICATION.

DR. HARI: THIS APPLICATION HAS TO DO WITH BIOENGINEERING AND ENGINEERING OPTICALLY ACTIVATABLE PROGENITOR CELLS AND USING THEM TO STIMULATE THE DIRECTED DIFFERENTIATION OF NEURONS. SPECIFICALLY, THE APPLICANT WILL DEVELOP AND DISSEMINATE THE TECHNOLOGY IN AN ATTEMPT TO REGULATE SIGNALING PATHWAYS WITHIN THE CELL.

THE AIMS ARE TO DEVELOP HARDWARE AND SOFTWARE FOR ROBOTIC SYSTEMS TO PROMOTE THIS DIFFERENTIATION AND ALSO TO STUDY DIFFERENTIATION IN VIVO AFTER TRANSPLANTATION OF THESE ENGINEERED CELLS AND TRY TO DEVELOP THE PRECISE CONTROL OF THE SYSTEM POST-TRANSPLANTATION.

THIS WAS CONSIDERED BOLD AND IMAGINATIVE TECHNOLOGY. AND, IN FACT, ONE COMMENT FROM THE REVIEWERS IS THAT THERE'S A FEARLESS COMBINATION OF ENGINEERING AND STEM CELL BIOLOGY WITHIN THIS PROPOSAL; HOWEVER, THE WEAKNESS IS THAT THE BIOLOGICAL UNDERPINNINGS ARE WEAK, AND IT MAKES THE LIKELIHOOD OF SUCCESS UNCERTAIN.

SO THE PI, WHILE ACKNOWLEDGING TECHNICAL PITFALLS ON THE TECHNOLOGICAL SIDE, DOES NOT ACKNOWLEDGE CERTAIN BIOLOGICAL PITFALLS SUCH AS THE TRANSFER OF DIFFERENTIATION PROTOCOLS FROM MOUSE EMBRYONIC STEM CELLS TO HUMAN EMBRYONIC STEM CELLS FOR NEUROGENESIS, WHICH IN THE PAST HAVE NOT PROVEN FRUITFUL. THERE IS NOT SUFFICIENT DETAIL IN THE METHODS REGARDING THESE DIFFERENTIATION PROTOCOLS TO DETERMINE WHETHER THE BIOLOGICAL PLAN MAKES SENSE.

CHAIRMAN KLEIN: KUMAR, LET ME ASK YOU. OFTEN, SINCE WE'RE ON CUTTING EDGE ISSUES HERE, WHERE THE AREAS OF BIOLOGY HAD QUESTIONS TO THEM, WE THEN LOOKED TO THE QUALITY OF THE MENTORS AND ADVISORS. WHAT WAS THE STRENGTH OF THE MENTORS AND ADVISERS IN THIS CASE?

DR. HARI: IT IS OUTSTANDING. THIS IS A SUPERSTAR PHYSICIAN SCIENTIST. THE RESEARCH PLAN SYNERGIZES IN AN EXCITING WAY WITH THE PI'S CURRENT CLINICAL WORK. THE PERSON IS ALREADY ESTABLISHED AS A LEADING SCIENTIST IN THE FIELD. AND I'LL JUST READ ONE SENTENCE BECAUSE I THINK THIS IS VERY TELLING.

THE PRINCIPAL INVESTIGATOR DOES NOT NEED A CIRM AWARD, BUT THE QUESTION IS WHETHER CIRM CAN DO WITHOUT HAVING IN ITS PORTFOLIO ONE OF THE BEST AND BRIGHTEST YOUNG INVESTIGATORS IN CALIFORNIA AND IN THE COUNTRY. THE INSTITUTION HAS ONE OF THE STRONGEST STEM CELL PROGRAMS IN THE COUNTRY AND AN UNWAVERING COMMITMENT IN DEVELOPING BIOMEDICAL RESEARCH FACULTY IN THE FIELD.

CHAIRMAN KLEIN: ALL RIGHT. ADDITIONAL QUESTIONS FROM THE BOARD?

DR. PENHOET: ARE ANY OF THE SUPPORTING COLLEAGUES WORKING DIRECTLY WITH THIS INVESTIGATOR, OR ARE THEY JUST PEOPLE WHO HAPPEN TO BE IN THE NEIGHBORHOOD? IS THERE ANY INDICATION OF COLLABORATION ON THE BIOLOGY SIDE SPECIFICALLY?

DR. HARI: NOT AS DESCRIBED IN THE PUBLIC SUMMARY. I BELIEVE TO ANSWER THAT QUESTION SPECIFICALLY, WE MAY HAVE TO TAKE IT IN CLOSED SESSION.

DR. PENHOET: OKAY.

MR. ROTH: ED, I THOUGHT HE TALKED ABOUT MENTORING.

CHAIRMAN KLEIN: MENTORING THE PROGRAM, I THOUGHT, WAS REVIEWED AS BEING EXCELLENT. IS THAT NOT CORRECT?

DR. HARI: THERE'S A STATEMENT REGARDING THE ENVIRONMENT AND THE PROPOSED RESEARCH. THE PI IS JOINTLY APPOINTED IN TWO DEPARTMENTS. AND THE STATEMENT HERE IS THAT THE REQUIRED SPACE IS IN A HIGHLY COLLABORATIVE SCIENCE AND ENGINEERING ENVIRONMENT WITH STATE-OF-THE-ART FACILITIES AS WELL AS ADMINISTRATIVE SUPPORT. THE INSTITUTION, IN FACT, HAS COMMITTED TO ALLOWING THIS PRINCIPAL INVESTIGATOR TO ONLY ONE DAY A WEEK CLINICAL COMMITMENT. AND I DON'T NOTE SPECIFIC MENTORING, SPECIFIC DISCUSSION OF MENTORING WITHIN THE PUBLIC SUMMARY.

CHAIRMAN KLEIN: IN THE PUBLIC SUMMARY. SO THE QUESTION IS WAS THERE A BACKGROUND DISCUSSION AT THE PEER REVIEW? ALL RIGHT. ADDITIONAL QUESTIONS? PUBLIC COMMENT? SEEING NONE, CAN WE CALL THE ROLL.

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: FOR.

MS. KING: ROBERT BIRGENEAU. FLOYD BLOOM.

DR. BLOOM: YES.

MS. KING: DAVID BRENNER.

DR. BRENNER: YES.

MS. KING: ALBERT BENNETT.

DR. BENNETT: YES.

MS. KING: MARCY FEIT.

MS. FEIT: YES.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: YES.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: YES.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: YES.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: SHERRY LANSING.

MS. LANSING: I'M GOING TO ABSTAIN BECAUSE I WASN'T HERE FOR A LOT OF THE DISCUSSION.

MS. KING: GERALD LEVEY.

DR. LEVEY: YES.

MS. KING: TED LOVE.

DR. LOVE: YES.

MS. KING: ED PENHOET.

DR. PENHOET: YES.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JEFF SHEEHY.

MR. SHEEHY: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OS STEWARD.

DR. STEWARD: YES.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: THAT MOTION CARRIES.

CHAIRMAN KLEIN: COULD WE GO TO THE NEXT ITEM.

MR. ROTH: MY LAST MOTION WILL BE ON 553, AND I WOULD PROPOSE TO MOVE THAT INTO TIER 1.

CHAIRMAN KLEIN: 553, IS THERE A SECOND?

DR. LOVE: SECOND.

CHAIRMAN KLEIN: DR. LOVE. CONFLICTS?

MS. PACHTER: 553, BRENNER AND MARKLAND.

CHAIRMAN KLEIN: OKAY. QUESTIONS FROM THE BOARD, AND WOULD THE BOARD LIKE A PRECIS OF THE APPLICATION?

MR. ROTH: YES, PLEASE.

CHAIRMAN KLEIN: DUANE ROTH HAS REQUESTED A SUMMARY OF THE APPLICATION.

DR. OLSON: DR. GREISHAMMER WILL ADDRESS IT.

CHAIRMAN KLEIN: THANK YOU.

DR. GRIESHAMMER: APPLICATION 553 IS ENTITLED "MECHANISMS OF NANOG FUNCTION IN HUMAN EMBRYONIC STEM CELLS." AS THE TITLE IMPLIES, THIS PROPOSAL FOCUSES ON THE FUNCTION OF AN IMPORTANT TRANSCRIPTIONAL REGULATOR, NANOG, IN HUMAN EMBRYONIC STEM CELL SELF-RENEWAL. IT'S ALREADY KNOWN THAT THIS TRANSCRIPTION FACTOR IS IMPORTANT FOR CELL RENEWAL AND THAT ITS OVEREXPRESSION CAN ACTUALLY LEAD TO FEEDER INDEPENDENT SELF-RENEWAL OF HUMAN EMBRYONIC STEM CELLS, SO IT'S CLEARLY AN IMPORTANT MOLECULE.

THE CANDIDATE, THEN, PROPOSES TO STUDY THE MOLECULAR MECHANISMS OF HOW THIS MOLECULE FUNCTIONS IN THIS PROCESS. AND SO THE REVIEWERS FELT THAT THIS WAS INDEED A VERY IMPORTANT SUBJECT TO ADDRESS IN THE EMBRYONIC STEM CELL FIELD.

SPECIFICALLY, THE CANDIDATE PROPOSES TO PERFORM WHAT'S CALLED A STRUCTURE FUNCTION ANALYSIS OF THIS MOLECULE. AND THE REVIEWERS FELT THAT THE PROPOSAL WAS WELL WRITTEN AND HAS INTERESTING PRELIMINARY DATA; HOWEVER, THEY FELT THAT THE PROPOSAL LACKED INNOVATION, THAT THE EXPERIMENTS THAT WERE PROPOSED WERE PRETTY STANDARD EXPERIMENTS. AND CONSIDERING HOW IMPORTANT THIS MOLECULE IS IN THE FIELD, THEY WERE WORRIED THAT THERE WAS A LOT OF COMPETITION FOR THIS PROJECT. AND IN THIS RESPECT FELT THAT THE REVIEWER HAD NOT A VERY STRONG TRACK RECORD IN THE MOLECULAR BIOLOGY FIELD OR THE HUMAN EMBRYONIC STEM CELL FIELD TO BE COMPETITIVE WITH OTHERS.

OTHER CRITICISMS INVOLVED THE FACT THAT THE INVESTIGATOR PROPOSED TO USE PRESIDENTIAL HUMAN EMBRYONIC STEM CELL LINES AND PROPOSES TO USE CERTAIN METHODS FOR INTRODUCING THIS FACTOR INTO CELLS THAT THEY FELT WERE NOT APPROPRIATE REALLY TO GET RELIABLE DATA ON THE FUNCTION OF THIS MOLECULE.

THE INVESTIGATOR DOES HAVE FACULTY MENTORS AND COLLABORATORS LINED UP TO HELP. AND I THINK THIS PRETTY MUCH COVERS THE ASSESSMENT.

CHAIRMAN KLEIN: WHAT WAS THE ASSESSMENT OF THE QUALITY OF THE CANDIDATE'S PREPARATION? KNOWING THAT THE CANDIDATE HAD NOT PREVIOUSLY BEEN IN THE STEM CELL AREA, IS THIS -- WHAT WAS THE QUALITY OF THE RECRUITMENT INTO THE STEM CELL AREA OF THIS CANDIDATE?

DR. GRIESHAMMER: I DON'T SEE, CERTAINLY NOT IN THE PUBLIC. YOU'RE REFERRING TO MENTORS AND COLLABORATORS?

CHAIRMAN KLEIN: NO. AS TO WHETHER THE CANDIDATE, ALTHOUGH NOT BEING STRONG IN THE STEM CELL AREA, WAS THE CANDIDATE STRONG, HAD A STRONG BACKGROUND COMING FROM ANOTHER AREA AND WAS BEING RECRUITED AS A NEW FACULTY INTO THE STEM CELL AREA.

DR. GRIESHAMMER: THAT WASN'T SPECIFICALLY DISCUSSED. HOWEVER, THERE ARE STRONG PRELIMINARY DATA. AND THIS PERSON HAS CLEARLY ALREADY DONE SOME WORK IN THIS FIELD THAT THIS PERSON WAS ABLE TO PRESENT IN THE PRELIMINARY DATA OF THIS APPLICATION.

CHAIRMAN KLEIN: SO THERE'S STRONG PRELIMINARY DATA, AND YET THERE'S A QUESTION ABOUT THE COMPETITION IN THE AREA AND WHETHER THEY WILL BE SUCCESSFUL, AND NANOG IS A VERY IMPORTANT ELEMENT. SO ON THE ONE HAND, THEY BALANCE THE SIGNIFICANT DATA WITH THE CONCERNS OVER FEASIBILITY?

DR. GRIESHAMMER: YEAH. FEASIBILITY REALLY OF THE RESEARCH ITSELF, MORE THE BACKGROUND OF THE PI.

CHAIRMAN KLEIN: ALL RIGHT. ADDITIONAL QUESTIONS?

DR. PRIETO: IF THE PI INTENDS TO USE THE FEDERALLY APPROVED OR PRESIDENTIAL CELL LINES ONLY, ISN'T THIS A GRANT THAT COULD ALSO BE SUBMITTED TO THE NIH OR OTHER PLACES FOR FUNDING?

DR. OLSON: LET ME JUST MAKE THE COMMENT THAT WE HAD NO -- THIS ONE WAS SPECIFICALLY OPEN TO ALL TYPES OF STEM CELL RESEARCH. SO, IN FACT, THERE WAS NO EXPLICIT REQUEST THAT IT BE THE TYPE OF RESEARCH THAT COULD NOT BE FUNDED BY THE NIH.

MR. ROTH: JUST A COMMENT AFTER LISTENING TO THIS AND READING WHAT WAS IN THE PUBLIC SECTION. I THINK PART OF OUR MISSION IS TO FUND NEW PEOPLE COMING IN. AND, YOU KNOW, MANY DON'T HAVE STEM CELL EXPERIENCE, BUT WE WANT THEM TO GET THERE, AND THAT'S PART OF THE REASON WE'RE DOING THESE PARTICULAR GRANTS, TO TAKE STRONG PEOPLE AND MOVE THEM AHEAD.

CHAIRMAN KLEIN: AS A QUESTION HERE, FOLLOWING DR. PRIETO'S COMMENT, SINCE THERE'S SUBSTANTIAL ISSUES WITH THE PRESIDENTIAL LINES AND GENETIC CHANGES IN THE HUMAN CELLS BECAUSE OF THE MOUSE FEEDER LEVELS AND THE OBSERVED REARRANGEMENT, CHROMOSOMAL REARRANGEMENTS, ON THE HUMAN CELLS, WHAT DO WE FEEL ABOUT THIS ISSUE OF WHETHER THIS PARTICULAR RESEARCH IS GOING TO GIVE US A CLEAR VISION OF HOW NANOG WILL WORK GIVEN THE DEFICIENCIES AND LIMITATIONS OF THOSE LINES? IS THIS A GRANT THAT MIGHT BE RESUBMITTED WITH CONSIDERATION OF USING LINES THAT HAVE A GREATER POTENTIAL FOR CLEARER RESULTS THAT ARE UNCOMPLICATED BY THE NATURE OF THOSE PRESIDENTIAL LINES? THAT'S JUST A QUESTION.

DR. GRIESHAMMER: DID YOU WANT ME TO ADDRESS THAT?

CHAIRMAN KLEIN: PLEASE.

DR. OLSON: I JUST WANT TO SAY THAT I THINK SINCE WE HAVEN'T REALLY DEFINED -- THE BOARD HAS NOT DEFINED THE ELIGIBILITY CRITERIA UNDER WHICH WE'LL ALLOW FOR RESUBMISSION, THAT THAT MAY BE A TRICKY THING TO DO AT THIS TIME.

CHAIRMAN KLEIN: OKAY. POINT WELL TAKEN. THANK YOU. ADDITIONAL QUESTIONS? PUBLIC COMMENT?

MR. REED: I HAVE TWO THOUGHTS. FIRST, AS THIS IS ONE OF THE FOUR KEY GENES THAT WERE USED IN THE IPS RESEARCH, IT SEEMS TO ME REALLY IMPORTANT THAT WE STUDY IT AND KNOW HOW THIS REVOLUTIONARY NEW PROCEDURE MAY WORK OR MAY NOT WORK. IS IT ALWAYS A DANGER? IS IT POSSIBLY A DANGER? IS IT IMPORTANT? I THINK THIS IS IMPORTANT. POSSIBLY MAY WANT TO USE DIFFERENT CELL LINES, BUT I THINK THE KEY IS IMPORTANT.

SECONDLY, AS WE'RE GOING THROUGH THIS, AND I SEE THE MONEY TRICKLING AWAY, WHICH IS IMPORTANT IT BE DONE, I CAN'T FORGET ABOUT THESE OTHER TEN PEOPLE THAT ARE NOT GOING TO BE PART OF THIS. AND I JUST PROBABLY -- MAYBE IT'S NOT EVEN APPROPRIATE TO ASK, BUT IS THERE SOME WAY TO KEEP IN THE BACK OF OUR MINDS THE TEN PEOPLE THAT, THROUGH NO FAULT OF THEIR OWN, LOST OUT THEIR GRANTS?

CHAIRMAN KLEIN: WE NEED TO VOTE ON EVERY GRANT ON ITS MERITS AND BASED UPON THE INFORMATION AND RECOMMENDATIONS WE HAVE BEFORE US. HAS TO BE AN INDIVIDUAL DECISION.

DR. STEWARD: SO I WONDER -- THESE ARE ACTUALLY A LITTLE BIT DIFFERENT THAN ANY OF THE GRANTS THAT WE'VE TALKED ABOUT BEFORE IN THAT WE'RE REALLY FUNDING PEOPLE HERE. PEOPLE WHO DOING GOOD SCIENCE, BUT STILL PEOPLE. THESE ARE FACULTY DEVELOPMENT AWARDS. WHEREAS, IN THE PAST WE'VE REALLY FOCUSED ON STRICTLY THE SCIENCE. AND I SAY THAT BY WAY OF INTRODUCING A QUESTION.

I'M A BIT CONCERNED ABOUT ONE OF THE COMMENTS IN THE DISCUSSION HERE, AND MAYBE YOU COULD COMMENT ON THIS. AND IT IS THE TRACK RECORD OF THE PI IS NOT OF HIGH ENOUGH QUALITY TO CONVINCE THE REVIEWERS THAT HE/SHE WILL BE SUCCESSFUL IN THE FIELD. COULD YOU AMPLIFY ON THAT?

DR. GRIESHAMMER: BASICALLY DURING THE REVIEW DISCUSSION, REVIEWERS WERE OF VERY DIFFERENT OPINION ABOUT THIS INVESTIGATOR. AND SOME FELT THAT THIS PERSON IS A TALENTED INVESTIGATOR; THAT IS, HAS A GOOD LIST OF PUBLICATIONS IN THE PERSON'S FIELD OF STUDY. THE NO PROVEN NO TRACK RECORD COMES REALLY FROM ASSESSING WHETHER THIS PERSON HAS SPECIFIC PUBLICATIONS ALREADY WITHIN THE FIELD OF NANOG STUDIES OR HUMAN EMBRYONIC STEM CELLS, WHICH ARE THE SUBJECT OF THIS PROPOSAL. BUT I THINK THERE'S CERTAINLY A GOOD LIST OF PUBLICATIONS THAT SOME REVIEWERS FELT WAS INDEED INDICATIVE OF A TALENTED INVESTIGATOR. IT WAS JUST NOT WITHIN THIS FIELD OF STUDY THAT'S PROPOSED HERE.

DR. STEWARD: I JUST WANT TO MAKE SURE THAT I UNDERSTAND HERE, THAT THEY SEEM TO BE REFERRING HERE TO THE QUALITY OF THE PREVIOUS WORK IRRESPECTIVE OF THE AREA IN WHICH IT IS. SO I MEAN I SORT OF READ A LITTLE BIT OF A DIFFERENCE OF PRESENTATION HERE IN THE DISCUSSION PART VERSUS THE SUMMARY PART JUST TO UNDERSTAND THIS.

DR. GRIESHAMMER: SO THAT WOULD REFER THEN TO PERHAPS THE REVIEWER HAVING AN OPINION ABOUT THE OTHER WORK THAT'S NOT COVERED IN THIS GRANT FOR THIS PERSON. AND AT THIS POINT I CAN'T -- I'M NOT CERTAIN HOW STRONGLY PEOPLE WERE IN AGREEMENT WITH THAT OR NOT. I DON'T REMEMBER.

CHAIRMAN KLEIN: OKAY. DR. OLSON, YOU WANT TO MAKE A COMMENT?

DR. OLSON: WELL, I WAS JUST GOING TO ADD THAT, YOU KNOW, THE PRELIMINARY -- THE SUMMARIES REFLECT THEIR CRITIQUES, AND THE DISCUSSION THEN REFLECTS WHAT WAS HAPPENING IN THE DISCUSSION. SO THERE ARE DIFFERENT THINGS EMPHASIZED AT DIFFERENT TIMES.

CHAIRMAN KLEIN: OKAY. PUBLIC COMMENT? SEEING NONE, CALL THE QUESTION. ROLL CALL.

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: AGAINST.

MS. KING: ROBERT BIRGENEAU.

DR. BIRGENEAU: NO.

MS. KING: FLOYD BLOOM.

DR. BLOOM: YES.

MS. KING: ALBERT BENNETT.

DR. BENNETT: ABSTAIN.

MS. KING: MARCY FEIT.

MS. FEIT: NO.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: NO.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: AGAINST.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: NO.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: NO.

MS. KING: SHERRY LANSING.

MS. LANSING: NO.

MS. KING: GERALD LEVEY.

DR. LEVEY: NO.

MS. KING: TED LOVE.

DR. LOVE: NO.

MS. KING: ED PENHOET.

DR. PENHOET: NO.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: NO.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JEFF SHEEHY.

MR. SHEEHY: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: ABSTAIN.

MS. KING: OSWALD STEWARD.

DR. STEWARD: NO.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: THAT MOTION FAILS.

CHAIRMAN KLEIN: DR. MURPHY, DO YOU WANT TO MAKE A COMMENT?

DR. MURPHY: MR. CHAIRMAN, COULD I JUST RESPOND TO MR. REED'S COMMENT. YOUR ANSWER I WOULD AGREE WITH. WE HAVE TO EVALUATE ALL OF THESE GRANTS ON THEIR MERIT, BUT I DO WANT TO SET THE RECORD STRAIGHT. ALTHOUGH THERE WERE TEN GRANTS THAT FELL WITHIN THE DISQUALIFIED GROUP, MY RECOLLECTION IS ONLY SEVEN OF THOSE WERE WITHIN WHAT WE WOULD CALL THE FUNDABLE REGION. SO WE'RE REALLY TALKING ABOUT -- WE'RE TALKING ABOUT NOT TEN GRANTS, BUT SEVEN.

CHAIRMAN KLEIN: OKAY. BUT WE'RE ONLY GOING TO LOOK AT THE MERITS ON THESE GRANTS BEFORE US, NOT CONSIDERING THOSE IN THIS REVIEW.

SO NEXT ITEM IS UP FOR CONSIDERATION. LEEZA GIBBONS.

MS. GIBBONS: I MOVE THAT APPLICATION 538 BE MOVED INTO THE FIRST TIER FOR FUNDING.

CHAIRMAN KLEIN: THE MOTION IS 538 BE MOVED INTO THE FIRST TIER.

DR. LOVE: SECOND.

CHAIRMAN KLEIN: TED LOVE IS THE SECOND. DISCUSSION BY THE MEMBERS?

MS. KING: AFTER WE READ THE CONFLICTS.

CHAIRMAN KLEIN: AFTER WE READ THE CONFLICTS.

MS. PACHTER: THERE ARE NO CONFLICTS ON 537,
MR. CHAIR.

CHAIRMAN KLEIN: IT'S 538.

MS. PACHTER: 538 IS BENNETT AND LANSING.

CHAIRMAN KLEIN: DR. OLSON, WHO WOULD BE
PROVIDING A PRECIS OF THIS?

DR. OLSON: THAT WOULD BE ME. THE APPLICANT
HAS PREVIOUSLY SHOWN -- SO FIRST LET ME STATE THAT THIS
IS AN APPLICATION THAT DEALS WITH ALZHEIMER'S DISEASE AND
BOOSTING IMMUNE RESPONSES TO BETA AMYLOID PROTEIN, WHICH
IS THE PATHOLOGICAL OR BELIEVED TO BE THE PATHOLOGICAL
PROTEIN IN ALZHEIMER'S DISEASE.

SO THE APPLICANT HAS ACTUALLY PREVIOUSLY SHOWN
THAT BETA AMYLOID-SPECIFIC T-CELL IMMUNOTHERAPY DOES
PROVIDE BENEFICIAL EFFECTS IN A MOUSE MODEL OF
ALZHEIMER'S DISEASE, AND I WANT TO MAKE THE POINT NOTABLY
WITHOUT A CONCURRENT INFLAMMATORY RESPONSE.

SO THE OVERALL OBJECTIVE OF ESSENTIALLY THIS
PROTOCOL IS TO DEVELOP WAYS OF STIMULATING T-CELLS USING
HUMAN EMBRYONIC STEM CELL TECHNOLOGY TO PRODUCE BETA
AMYLOID PRESENTING DENDRITIC CELLS, WHICH ARE, IN FACT,
THE STIMULATORY CELLS THAT COULD BE USED, THEN, TO
STIMULATE A PATIENT'S T-CELL POPULATION.

THE STRATEGY BASICALLY IS TO CREATE FUSION
PROTEINS, INTRODUCE THOSE GENES INTO T-CELLS, SCREEN FOR
THE ONES THAT ARE BEST, AND THEN DIFFERENTIATE THOSE
TRANSFECTED EMBRYONIC STEM CELLS INTO THE DENDRITIC
LINEAGE. AND ACTUALLY THE REVIEWERS DID COMMENT HERE
THAT THIS IS NOT A STRAIGHTFORWARD. IT'S GETTING
DENDRITIC CELLS OUT OF EMBRYONIC STEM CELLS IS NOT
STRAIGHTFORWARD AT THIS POINT. YOU WOULD PREFER TO GO
THROUGH THE LYMPHOID LINEAGE, BUT, IN FACT, THAT HAS
PROVED VERY DIFFICULT. PEOPLE HAVE TAKEN AN ALTERNATE
ROUTE, AND HE DID CITE A PUBLICATION OR THE APPLICANT
CITED A PUBLICATION THAT WOULD SUGGEST THAT WAS TRUE.
AND THEN USING THESE DENDRITIC CELLS ONCE OBTAINED TO
ACTUALLY STIMULATE T-CELLS FROM DONORS TO SHOW THAT IT
WORKED.

SO THE REVIEWERS GAVE THIS PROPOSAL HIGH MARKS
FOR NOVELTY, INNOVATION, AND POTENTIAL SCIENTIFIC AND
CLINICAL IMPACT, BUT NOTED, AS DID THE APPLICANT, THAT
THE PROPOSAL IS HIGH RISK. THE STUDY PLAN WAS CAREFULLY
CONSIDERED AND IS LINEAR, LOGICAL. POTENTIAL PROBLEMS
HAVE BEEN RECOGNIZED AND ALTERNATIVE STRATEGIES PROPOSED
WHENEVER POSSIBLE.

AS FAR AS THE QUALIFICATIONS OF THE PRINCIPAL
INVESTIGATOR, MOST OF THE PUBLICATIONS ARE ACTUALLY IN
SPECIALIST JOURNALS, SO NOT IN THE HIGH PROFILE GENERAL JOURNAL. THE APPLICANT APPEARS TO HAVE MANY OF THE
SKILLS NEEDED TO DO THE WORK ALTHOUGH WAS NOTED TO HAVE
LIMITED EXPERIENCE WITH HUMAN EMBRYONIC STEM CELLS.
THERE WAS SOME PERCEPTION THAT THE APPLICANT HAD -- WHAT
DO I WANT TO SAY -- MOVED AROUND A BIT WITHIN THE
NEUROLOGICAL FIELD OR WITHIN THE IMMUNOLOGICAL FIELD.
AND THAT WAS OF CONCERN, BUT THE APPLICANT HAS STATED
THAT ALZHEIMER'S DISEASE AND IMMUNOTHERAPY IS A MAJOR
THRUST AT THIS POINT. IT WAS NOT CLEAR TO THE REVIEWERS
HOW WELL SET UP THE LAB WAS TO DO THE WORK.

THERE WAS A BIT OF CONCERN ABOUT THE CAREER
DEVELOPMENT PLAN IN THAT THE INTERESTS SEEMED BROAD AND
THERE WERE NO CONCRETE PLANS FOR ADVISORY COMMITTEES,
MENTORSHIP, ETC.

THE INSTITUTIONAL SUPPORT STATED THAT THEY HAD
SIGNIFICANT ALLOCATION OF SPACE AND THAT 75 PERCENT OF
HIS OR HER TIME WOULD BE ACTUALLY AVAILABLE TO CONDUCT
THE RESEARCH. THE APPLICANT IS CURRENTLY IN YEAR FIVE OF
A TENURE APPOINTMENT, AND AT THIS INSTITUTION GENERALLY
TENURE DECISIONS ARE MADE WITHIN SEVEN YEARS. THERE WAS
A BIT OF CONCERN ABOUT THAT. THE INSTITUTION HAS WHAT I
THINK WAS CHARACTERIZED BY THE REVIEWERS AS SOMEWHAT OF A
DEVELOPING STEM CELL PROGRAM. AND, AGAIN, IT WAS NOTED
THERE WAS NO FORM OF MENTORING.

AGAIN, HOWEVER, THE REVIEWERS FOUND THE PROPOSAL LUCID, ARTICULATE, AND WELL WRITTEN, BUT THE
APPLICANT NOT NECESSARILY A TOTAL STAND-OUT OR
EXCEPTIONAL IN THE FIELD PERHAPS BECAUSE OF A BROAD SET
OF INTERESTS THAT HAD BEEN LOOKED AT OVER THE TIME WHERE
AS A GRADUATE STUDENT AND POST-DOC.

THE INSTITUTIONAL ENVIRONMENT IS FINE. AND
THEN THERE WAS, AGAIN, THE CONCERN ABOUT THE TWO YEARS
BEFORE TENURE DECISION.

AND SO IN PROGRAMMATIC DISCUSSION, HOWEVER, THE
RECOMMENDATION WAS TO MOVE THIS APPLICATION INTO TIER 2.
AND THE POINT WAS MADE THAT ALTHOUGH THE APPLICANT MAY
NOT APPEAR TO BE EXCEPTIONAL ON PAPER, THAT THE APPLICANT
IS EXCEEDINGLY WELL POSITIONED TO DO THE WORK IN THE
SENSE THAT THEY HAVE A LOT OF THE SKILLS. THEY NOTED IT
HAD BEEN LINEAR IN PROGRESS, AND THAT THIS IS ESSENTIALLY
AN APPLICATION ON A CLINICALLY RELEVANT TARGET FROM A
VERY WELL-TRAINED IMMUNOLOGIST. THE PANELISTS NOTED THAT
THE STEM CELL PROGRAM AT THE INSTITUTION IS DEVELOPING,
AND THERE IS INCREASING EXPERTISE IN STEM CELL SCIENCE.
THEY CONSIDERED THAT THIS WAS AN IMPORTANT TARGET FOR
STEM CELL RESEARCH; I.E., ALZHEIMER'S DISEASE, AND THAT
THE PROPOSAL ITSELF WAS CONSIDERED LUCID, WELL REASONED,
ALBEIT RISKY. THEREFORE, THAT'S WHAT RESULTED IN THE
DECISION IN THE RECOMMENDATION OF THE PANEL TO MOVE IT
INTO TIER 2.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. AND,
AGAIN, WHEN WE LOOK AT THIS, THERE IS -- IN TERMS OF THE
OVERALL SCORE, THERE'S A QUESTION ON THIS RELATED TO THE
ABILITY TO DERIVE DENDRITIC CELLS FROM EMBRYONIC CELLS;
IS THAT CORRECT?

DR. OLSON: THAT IS CORRECT, AND THERE WAS NO
PRELIMINARY DATA PRESENTED THAT SHOWED THAT THE APPLICANT
WAS ABLE TO DO THAT, ALTHOUGH THE APPLICANT DOES CITE A
PUBLICATION WHERE DENDRITIC CELLS HAVE BEEN DERIVED FROM
MYELOID CELLS. THIS WAS PERCEIVED AS -- YOU KNOW, AS I
SAID, THE RESEARCH WAS PERCEIVED AS RISKY.

CHAIRMAN KLEIN: IT'S INTERESTING. OUR
PRESIDENT-ELECT HAS COMMENTED ON DENDRITIC CELLS DERIVED
FROM AMNION AND/OR EMBRYONIC STEM CELLS, AND IT'S IN THE
GENERAL KNOWLEDGE OF THE PUBLIC AT THIS POINT THAT THAT
IS AN ONGOING AREA OF RESEARCH IN AUSTRALIA, WHICH CANNOT
OBVIOUSLY QUALIFY FOR OUR GRANTS, BUT THEY SEEM TO BE AN
OUTSIDE GENERAL VERIFICATION OF THE CAPACITY TO ACHIEVE
THIS. ALTHOUGH SINCE THOSE PUBLICATIONS ARE NOT --
THEY'RE NOT AT A STAGE WHERE WE HAVE OUTSIDE VALIDATION
OF TOP PEER REVIEWED PUBLICATIONS OF THIS POSSIBILITY AT
THIS TIME, IT WAS A STATEMENT MORE OF INTENT AND
COMMITMENT TO THE GOAL BY AN OUTSTANDING LAB AT MONASH,
BUT NOT OF ACTUALLY ACCOMPLISHING IT, BUT AT LEAST
THERE'S A VALIDATION OF OTHERS BELIEVING THIS CAN BE ACCOMPLISHED.

JEFF SHEEHY AND THEN I'LL GO TO OS STEWARD.

MR. SHEEHY: I REALLY -- I HOPE WE DON'T GET
CAUGHT UP IN THE TYRANNY OF THE SCORES ON THIS ONE
BECAUSE THIS IS ONE, YOU KNOW -- IN THESE REVIEWS I THINK
WHEN WE COULD DO THE PROGRAMMATIC, THERE'S GENERALLY THIS
I DON'T THINK WE MIGHT HAVE GOTTEN THIS ONE RIGHT. AND,
YOU KNOW, IN THE FIRST GO-ROUND, THIS WOULD NOT HAVE BEEN
A TIER 1. BUT IF YOU LOOK AT THE THREE LEGS OF THE
STOOL, I THINK THIS WOULD HAVE SCORED MUCH HIGHER IF HE
HAD BEEN AT A NAME UNIVERSITY, SO HE WAS DINGED FOR THAT,
HAD AN ECLECTIC CAREER, SO HE WAS DINGED FOR THAT. YET,
IF YOU LOOK AT THE NOTES, HE HAS THE CAPACITY TO DO THIS
RESEARCH.

AND THEN THERE WAS THIS VERY ACTIVE DISCUSSION
ABOUT THE FEASIBILITY OF DERIVING DENDRITIC CELLS FROM
EMBRYONIC STEM CELLS. AS THE CHAIR HAS SAID, THEY'RE
WORKING ON THAT AT MONASH. I'VE HEARD TOM OKARMA AT
GERON TALK ABOUT THAT. THAT'S ONE OF THE THINGS THAT
THEY'RE TRYING TO LOOK AT IN TERMS OF DEALING WITH THE
IMMUNE PROBLEMS THAT -- IMMUNE REJECTION PROBLEMS. AND
IT SEEMS TO ME LIKE THIS IS EXACTLY WHAT WE SHOULD BE
FUNDING. THIS IS VERY HIGH RISK AND PROBABLY MAYBE WON'T
WORK; BUT IF IT DOES WORK, THIS CAN MAKE A MAJOR IMPACT
ON AN IMPORTANT CLINICAL POPULATION. AND IT CAN HELP --IF HE CAN DERIVE THESE DENDRITIC CELLS, IT HAS
APPLICATIONS IN ALL SORTS OF PLACES AND IT'S INCREDIBLY
IMPORTANT.

AND I THINK IF YOU LOOK AT THE SCORE COMPARED
TO OTHER SCORES, YOU'RE NOT GOING TO WANT TO DO IT; BUT
IF YOU TAKE IT OUTSIDE OF THAT AND REALLY LOOK AT THIS AS
BEING KIND OF AN OUTLIER THAT WE SHOULD REALLY TAKE A
CHANCE ON, I WOULD URGE US TO VOTE FOR THIS ONE.

CHAIRMAN KLEIN: I THINK OS STEWARD AND THEN
DR. LEVEY.

DR. STEWARD: THIS IS A QUESTION. I HOPE IT IS
AN APPROPRIATE ONE. IT HAS TO DO WITH PORTFOLIO. MY
RECOLLECTION IS THAT WE HAVE PERHAPS NO MORE THAN ONE
OTHER PROPOSAL OF ANY TYPE THAT WE FUNDED IN ALZHEIMER'S
DISEASE, BUT I COULD BE WRONG. AND THE QUESTION IS HOW
MANY DO WE HAVE OUT THERE RIGHT NOW?

CHAIRMAN KLEIN: I THINK DR. OLSON IS
ATTEMPTING TO ADDRESS THAT. WHILE SHE'S LOOKING, DR.
LEVEY, WOULD YOU LIKE TO MAKE A COMMENT?

DR. LEVEY: ONE OF THE THINGS I THINK THE BOARD
MIGHT WANT TO CONSIDER THE NEXT TIME WE HAVE A ROUND OF
NEW FACULTY AWARDS IS WHETHER WE WANT TO BE SPECIFIC
ABOUT NOT ONLY THE ENVIRONMENT, BUT ALSO THAT THERE'S
MENTORING IN PLACE BECAUSE THESE ARE BASICALLY YOUNG
RESEARCHERS. AND I THINK THAT THE EVIDENCE IN THE LITERATURE IS QUITE CLEAR, THAT PEOPLE WHO ARE SUCCESSFUL
GENERALLY HAVE GOOD MENTORS. MENTORING IS A VERY
IMPORTANT EXPERIENCE THAT FREQUENTLY IN THE HUBBUB OF
EVERYTHING THAT GOES ON TODAY WE'VE GOTTEN AWAY FROM.

AND LET'S JUST TAKE THIS INDIVIDUAL AS WELL.
IF YOU'RE WORKING IN AN ENVIRONMENT THAT ISN'T STRONG IN
STEM CELL RESEARCH AND HE OR SHE, WHOEVER THIS IS, IS NEW
THIS AREA, I THINK THE CHANCES OF SUCCESS ARE PROBABLY
SMALLER. AND THERE'S NOTHING TO STOP THE PERSON FROM
USING SOMEONE AT ANOTHER UNIVERSITY TO WHOM HE OR SHE CAN
REPORT TO. I WONDER IF WE COULD THINK ABOUT THAT,
WHETHER WE WANTED TO ADD THIS TO ONE OF OUR REQUIREMENTS
RATHER THAN CATCH AS CATCH CAN SOME ARE MENTORED, SOME
AREN'T MENTORED BECAUSE, AS I SAID, THE ABILITY OF YOUNG
FACULTY TO SUCCEED IS, IN FACT, RELATED TO THE QUALITY OF
THE MENTORING EARLY IN ONE'S CAREER.

CHAIRMAN KLEIN: I THINK THAT THERE WAS A BROAD
RECOGNITION IN PEER REVIEW OF THE VALUE OF MENTORING. I
THINK THIS IS AT AN INSTITUTION THAT WAS BUILDING A
PROGRAM AND TRYING TO RECRUIT SOME PEOPLE INTO MENTORING,
BUT COULDN'T CLAIM THAT THEY WERE COMPLETELY IN PLACE.

DR. OLSON, CAN YOU ANSWER THE QUESTION RELATED
TO THE PORTFOLIO REPRESENTATION OF ALZHEIMER'S?

DR. OLSON: AMONG THE SEED AND THE
COMPREHENSIVE GRANTS, THERE HAVE BEEN THREE THAT WERE SPECIFICALLY DIRECTED TO ALZHEIMER'S DISEASE, SO YOU WERE
CORRECT. THE NUMBER WAS SMALL.

CHAIRMAN KLEIN: OKAY. ADDITIONAL COMMENTS
FROM THE MEMBERS? FROM THE PUBLIC?

MR. SIMPSON: JOHN SIMPSON, FOUNDATION FOR
TAXPAYER AND CONSUMER RIGHTS. I HEARD JEFF SHEEHY'S
WARNING ABOUT NOT TAKING THE NUMBERS TOO SERIOUSLY, BUT
IT'S VERY DIFFICULT TO KNOW HOW WE CAN PUT A NUMBER IN
APPROPRIATE CONTEXT IF WE'RE NOT PART OF BEING ABLE TO
SEE THE PEER REVIEW PROCESS. ONCE AGAIN, I'D LIKE TO
POINT OUT THE IMPORTANCE OF THOSE SESSIONS BEING OPEN.

BEYOND THAT, GIVEN THE DATA THAT WE'VE GOT, IT
DOES SEEM TO ME THAT WE'RE GETTING VERY CLOSE TO HAVING A
SCIENTIFIC SCORE HERE THAT IS JUST NOT ON PAR WITH THE
REST OF THE THINGS YOU'RE CONSIDERING MAKING A GRANT TO,
AND THAT SEEMS TO ME TO BE TROUBLESOME. THANK YOU.

CHAIRMAN KLEIN: ALL RIGHT. THANK YOU. CAN WE
THEN CALL THE ROLL, PLEASE, REMINDING US OF THE
CONFLICTS. DR. AZZIZ, YOU'D LIKE TO MAKE A COMMENT.

DR. AZZIZ: IT WOULD ALWAYS BE HELPFUL,
PARTICULARLY AS WE HAVE LONG DISCUSSIONS, TO RESTATE THE
MOTION BEFORE WE VOTE. I JUST WANT TO POINT THAT OUT. I
KNOW I'M THE FIRST IN LINE, AND I'M A LITTLE CONCERNED
THAT WE GO BACK AND FORTH, AND WE MAY BE TAKING THAT OUT
OF CONTEXT.

MS. PACHTER: LEGAL STAFF AGREES IN SPADES, DR.
AZZIZ, SO I'D BE HAPPY TO RESTATE THE MOTION. THE MOTION
MADE BY MEMBER GIBBONS AND SECONDED BY MEMBER LOVE IS TO
MOVE APPLICATION NO. 538 INTO TIER 1 TO FUND.

MS. KING: THE CONFLICTS ARE ALBERT BENNETT AND
SHERRY LANSING.

RICARDO AZZIZ.

DR. AZZIZ: AGAINST.

MS. KING: ROBERT BIRGENEAU.

DR. BIRGENEAU: NO.

MS. KING: FLOYD BLOOM.

DR. BLOOM: NO.

MS. KING: DAVID BRENNER.

DR. BRENNER: NO.

MS. KING: MARCY FEIT.

MS. FEIT: YES.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: YES.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: YES.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: NO.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: NO.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: GERALD LEVEY.

DR. LEVEY: NO.

MS. KING: TED LOVE.

DR. LOVE: YES.

MS. KING: ED PENHOET.

DR. PENHOET: ABSTAIN.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: NO.

MS. KING: JEFF SHEEHY.

MR. SHEEHY: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OSWALD STEWARD.

DR. STEWARD: YES.

MS. KING: JANET WRIGHT.

DR. WRIGHT: NO.

CHAIRMAN KLEIN: WE COULD DO A FILM ON THE
DRAMA HERE. ALL RIGHT. THERE'S A COMMENT AS WELL FROM
DR. PENHOET, THAT PERHAPS, IF IT'S TECHNICALLY POSSIBLE
WITHOUT OVERCOMPLICATING AN ALREADY COMPLICATED SITUATION, WE COULD ROTATE WHERE WE START ON THE ROLL
CALL, GIVING DR. AZZIZ A LITTLE BUFFER.

DR. AZZIZ: I'M PERFECTLY FINE. I JUST WANT TO
MAKE, FOR THE RECORD, WE SHOULD BE RESTATING THE MOTION
ANYWAY.

CHAIRMAN KLEIN: I AGREE TOTALLY.

DR. AZZIZ: ROBERT'S RULES OF ORDER IN GENERAL.
CHAIRMAN KLEIN: I AGREE TOTALLY. THANK YOU.
WHAT IS THE VOTE?

MR. HARRISON: THE MOTION PASSES WITH TEN YES
VOTES AND NINE NAYS.

CHAIRMAN KLEIN: OKAY. I WOULD HOPE THAT THEY
TAKE DR. LEVEY'S POINT ABOUT MENTORING VERY SERIOUSLY.
IT WOULD SUBSTANTIALLY IMPROVE OUTCOMES, AND IN FUTURE
APPLICATIONS HOPEFULLY WE CAN PROVIDE SOME DIRECTIVE
LANGUAGE THAT THEY CAN REACH OUT TO OTHER INSTITUTIONS,
AS DR. LEVEY HAS SUGGESTED, FOR MENTORING SUPPORT.

DR. POMEROY: I'D LIKE TO MAKE A MOTION THAT WE
CONSIDER 545 SINCE IT'S ALSO ABOUT ALZHEIMER'S AND WE'RE
ALL THINKING ABOUT ALZHEIMER'S, TO MOVE IT FROM TIER 2 TO
TIER 1.

DR. WRIGHT: SECOND.

CHAIRMAN KLEIN: THERE'S A MOTION AND A SECOND,
A MOTION BY DR. POMEROY, SECOND BY DR. WRIGHT. COMMENTS?
WOULD ANY MEMBER LIKE A PRECIS?

DR. POMEROY: YES.

MS. PACHTER: CAN I ANNOUNCE THE RECUSALS, MR.
CHAIR. THE RECUSALS ARE AZZIZ, LANSING, AND LEVEY.

CHAIRMAN KLEIN: OKAY. DR. OLSON.

DR. OLSON: THIS IS ALSO MINE. OKAY. SO
BASICALLY THE AIM OF THIS PROPOSAL IS TO UNDERSTAND IF
NEUROGENESIS IN ALZHEIMER'S DISEASE IS DYSFUNCTIONAL AND
LEADS TO A VULNERABLE ENVIRONMENT FOR LATER INCURRING
NEURODEGENERATION. THE APPLICANT ALSO PROPOSES TO
INVESTIGATE THE MECHANISMS THAT ARE ALTERED IN AD
NEUROPROGENITORS THAT WILL GENERATE DRUG TARGETS.

SO THE APPLICANT HYPOTHESIZES THERE'S A
RELATIONSHIP BETWEEN EARLY DEVELOPMENT AND LATE ONSET
NEURODEGENERATION WHICH INVOLVES NEURAL PROLIFERATION AND
CELL FATE DECISIONS. AND SO THE APPLICANT WILL USE MOUSE
MODELS OF ALZHEIMER'S DISEASE TO INVESTIGATE THE
INTEGRITY OF NEUROGENESIS IN EARLY AND LATE STAGES OF
DEVELOPMENT.

THE PI ACTUALLY HAS RATHER STRIKING PRELIMINARY
DATA FROM ONE MOUSE MODEL OF AD, IN FACT, WHERE THE
APPLICANT LOOKS AT NEUROPROGENITOR CELL PROLIFERATION AND
DIFFERENTIATION AND CONTROL IN THIS MODEL AT DIFFERENT
STAGES.

IN THE SECOND AIM THE APPLICANT HYPOTHESIZES
THAT THERE ARE SPECIFIC REGULATORY PATHWAYS ACTIVATED IN ADULT PROGENITORS IN RESPONSE TO AN ALZHEIMER'S
DISEASE-LIKE ENVIRONMENT AND THAT NEURODEGENERATIVE
PROCESSES AFFECT THESE REGULATORY PATHWAYS IN THE
PROGENITOR CELLS IN THE MICE.

SO WHAT THEY WILL DO -- LET'S SEE. THE
REVIEWER STATED THAT THEY WILL LOOK AT GENE EXPRESSION
FROM NEUROPROGENITORS FROM DIFFERENT STAGES OF LIFE.
GENES OF INTEREST WILL BE FURTHERED INVESTIGATED. THE
REVIEWERS WERE CONCERNED THIS IS -- WELL, YOU GET A LARGE
AMOUNT OF DATA FROM THIS THAT COULD BE DIFFICULT TO
ANALYZE; AND ALSO WHEN YOU DO GENE EXPRESSION ANALYSIS,
YOU DON'T SEE POST-TRANSCRIPTIONAL CHANGES. HOWEVER, THE
REVIEWERS DID NOTE THAT THE PI IS EXTREMELY EXPERIENCED
WITH THIS KIND OF MICROARRAY TRANSCRIPTIONAL ANALYSIS
TECHNOLOGY, THAT, IN FACT, THE PI'S MENTORS HAVE
CHARACTERIZED HIM/HER AS BEING, YOU KNOW, AN EXPERT AT
MICROARRAY AND INFORMATICS, BUT NOT JUST THAT. SO THIS
PERSON IS MORE THAN THIS. ONE REVIEWER REGARDED THIS AS
A POTENTIAL FISHING TRIP.

IN THE THIRD AIM, ADULT NEUROGENESIS IN
ALZHEIMER'S DISEASE MOUSE MODELS WILL BE ABLATED, SO
THEY'LL STOP THE NEUROGENESIS AND DETERMINE THE EFFECT AT
THE MOLECULAR, HISTOLOGICAL, AND BEHAVIORAL LEVEL, THUS
TESTING THE HYPOTHESIS THAT ADULT NEUROGENESIS ABLATION
FACILITATES THE DEVELOPMENT OF AD. SO ALL OF THESE ADDRESS THE HYPOTHESIS OF THE ENVIRONMENT AFFECTING THE
PATHOLOGY.

THE REVIEWERS REGARDED ALL OF THESE AS
INTERESTING EXPERIMENTS BECAUSE THEY HIGHLIGHT THE EFFECT
OF THE ENVIRONMENT ON -- THE ALZHEIMER'S ENVIRONMENT ON
NEUROGENESIS AND BECAUSE THEY FOCUS ON EARLY EMBRYONIC
EVENTS AS BEING IMPORTANT.

THERE WAS SOME CONCERN THAT THE APPLICANT
WASN'T REALLY KNOWLEDGEABLE ABOUT ALL THE WORK THAT WAS
GOING ON IN THE FIELD AS AT LEAST CERTAIN RELEVANT
PUBLICATIONS WERE NOT CITED. SO ONE REVIEWER ALSO
REMINDED THE PANEL THAT THE ALZHEIMER'S DISEASE MODELS
ARE, IN FACT, THERE ARE NO MICE MODELS OF ALZHEIMER'S
DISEASE. THESE ARE TRANSGENIC MICE THAT HAVE BEEN
CREATED BY PUTTING IN ESSENTIALLY GENES THAT HAVE BEEN
SHOWN TO BE ALZHEIMER'S LIKE.

OVERALL THE REVIEWERS DID FIND THE PROPOSAL
INTERESTING. IT WOULD GENERATE A HUGE AMOUNT OF DATA.
THE TECHNICAL EXPERTISE OF THE APPLICANT WAS
ACKNOWLEDGED. AT LEAST SOME OF THE REVIEWERS BELIEVE
THAT THIS EXPERTISE IN CONJUNCTION WITH THE PRELIMINARY
DATA SUGGESTS THE FEASIBILITY OF GETTING POTENTIALLY
USEFUL INFORMATION THAT COULD HAVE POTENTIAL FOR
TREATMENT.

THE PI WAS CHARACTERIZED AS AN INDUSTRIOUS PERSON WITH CREATIVE IDEAS. THE PI HAS AN EXCELLENT
BACKGROUND AND TRAINING TO CARRY OUT THE PROPOSAL, HAS A
LOT OF EXPERIENCE IN THE KINDS OF TECHNOLOGIES THAT ARE
CONTEMPLATED IN THIS PROPOSAL, AND HAS ACTUALLY WORKED IN
LABS TO UNDERSTAND THE GENETIC BASIS OF HUMAN COGNITIVE
SPECIALIZATIONS AND NEURODEGENERATIVE DISEASE, HAS
CURRENT ASSOCIATIONS WITH COLLABORATORS WHO WERE WELL
KNOWN FOR EXPERTISE IN NEUROLOGY AND NEURODEGENERATIVE
DISEASE.

THE COLLABORATORS THAT I JUST MENTIONED, IN
FACT, ARE VERY NEARBY AND WILL ENSURE ACCESS TO CORE
FACILITIES. BOTH OF THESE COLLABORATORS HAVE AGREED TO
SERVE AS MENTORS TO THE APPLICANT. THE REVIEWERS NOTED
THAT, ALTHOUGH THE APPLICANT DID NOT HAVE A HUGE NUMBER
OF PUBLICATIONS, THEY WERE OF GOOD QUALITY AND SOME IN
TOP TIER JOURNALS. AGAIN, THE PUBLICATIONS REAFFIRM THE
EXPERTISE OF THE APPLICANT IN THE TECHNOLOGIES UNDER
CONSIDERATION.

THE REVIEWERS WERE CONCERNED ABOUT THE
SCIENTIFIC ENVIRONMENT AT THE INSTITUTION WITH RESPECT TO
NEUROSCIENCE. THE INSTITUTION HAS STATED THAT THEY ARE
DEEPLY COMMITTED TO PROMOTING STEM CELL RESEARCH ON
CAMPUS, THAT THEY HAVE ESTABLISHED A SEED GRANT PROGRAM,
THERE'S AN ADVISORY COMMITTEE, THEY'RE ACTIVELY
RECRUITING YOUNG INVESTIGATORS, BUT THERE DON'T SEEM TO BE THAT MANY AT THIS INSTITUTION AT THIS POINT IN TIME.
SO THERE WAS SOME CONCERN ABOUT THE APPLICANT BEING
SOMEWHAT OF A LONE WOLF.

THERE WAS LITTLE MENTION OF GUIDANCE OF THE
CANDIDATE WITH RESPECT TO PREPARATION FOR TENURE, LIMITED
DETAILS ABOUT THE EXTENT OF SCHOLARLY PURSUIT AMONG THE
FACULTY. SO THERE WAS CONCERN ABOUT THE ENVIRONMENT AT
THE INSTITUTION.

THE STRENGTHS, HOWEVER, WERE, IN FACT, THE
RESEARCH PROPOSAL, THE FOCUS ON THE RESEARCH PROPOSAL.
AND THEY AGREED THAT THE APPLICANT WAS WELL TRAINED, AND
AS I SAY, CREATIVE AND INDUSTRIOUS, AND AN EXPERT IN THE
TECHNOLOGY.

THE MAIN WEAKNESSES WERE CONCERN ABOUT THE
INSTITUTIONAL ENVIRONMENT AND THE GUIDANCE FOR OBTAINING
TENURE. AND THERE WAS SOME CONCERN, AT LEAST AMONG ONE
REVIEWER, ABOUT HOW ACTUALLY GOOD THE BACKGROUND WAS IN
ALZHEIMER'S DISEASE PER SE AND THAT EVEN AMONG THE
COLLABORATORS, ALTHOUGH THEY WERE EXPERT IN
NEURODEGENERATIVE DISEASE AND NEUROLOGY, THEY DIDN'T
NECESSARILY HAVE AN ALZHEIMER'S DISEASE FOCUS.

CHAIRMAN KLEIN: OKAY. THANK YOU VERY MUCH.
QUESTIONS FROM THE COMMITTEE? QUESTIONS FROM THE PUBLIC?
CALL THE ROLL. OS STEWARD HAS A COMMENT BEFORE WE DO
THAT.

DR. STEWARD: YEAH. I DO HAVE A COMMENT
BECAUSE I'M GOING TO VOTE NO ON THIS, AND I WANTED TO
MAYBE SAY WHY. DESPITE THE GENERALLY POSITIVE COMMENTS
AND MY PREVIOUS QUESTION ABOUT PORTFOLIO ISSUES, THIS ONE
REALLY CONTRASTS WITH THE LAST ONE BECAUSE THE LAST ONE
IN A SENSE -- MAY I SAY THIS? MAY I COMPARE ON A
PORTFOLIO BASIS? THE LAST ONE IN A SENSE IS MUCH MORE IN
A TRACK, IF YOU WANT, THAT COULD BE A THERAPEUTIC; THAT
IS, WORKING ON THE IMMUNIZATION APPROACHES FOR
ALZHEIMER'S DISEASE. THIS ONE REALLY, IF YOU LOOK AT THE
DESCRIPTION, IT'S REALLY MORE FOCUSED ON NEUROGENESIS,
AND IT'S ALMOST AS IF, AND I MAY BE READING IN, THAT THIS
PERSON IS REALLY INTERESTED IN NEUROGENESIS IN MICE AND
JUST SORT OF TRANSPLANTING THIS INTO AN ALZHEIMER'S
DISEASE CONTEXT. I JUST WANTED TO SAY THAT TO INTRODUCE
WHY I WILL BE VOTING NO.

CHAIRMAN KLEIN: WHAT WAS THE STRENGTH OF THE
COLLABORATORS HERE?

DR. OLSON: THE COLLABORATORS -- LET ME VERIFY.
THEY WERE STRONG, I BELIEVE, IN NEUROLOGY AND
NEURODEGENERATIVE DISEASE. AT LEAST ONE REVIEWER DID NOT
CITE THAT THAT WAS A SPECIFIC STRENGTH IN ALZHEIMER'S
DISEASE PER SE.

CHAIRMAN KLEIN: THANK YOU. ADDITIONAL
QUESTIONS? CALL THE ROLL.

MS. PACHTER: I'LL RESTATE THE MOTION, MR.
CHAIR, AS REQUESTED. THE MOTION IS TO MOVE APPLICATION
NO. 545 TO TIER 1 TO FUND.

CHAIRMAN KLEIN: CONFLICTS ARE?

MS. PACHTER: CONFLICTS ARE AZZIZ, LANSING, AND
LEVEY.

CHAIRMAN KLEIN: DR. AZZIZ, YOU WON'T BE THE
FIRST.

DR. AZZIZ: NOT TODAY, NOT NOW.

MS. KING: ROBERT BIRGENEAU.

DR. BIRGENEAU: YES.

DR. BLOOM: NO.

MS. KING: DAVID BRENNER.

DR. BRENNER: NO.

MS. KING: ALBERT BENNETT.

DR. BENNETT: NO.

MS. KING: MARCY FEIT.

MS. FEIT: I'M CONFLICTED, BUT SINCE I WAKE UP
EVERY MORNING FEELING LIKE I ALREADY HAVE ALZHEIMER'S,
I'M GOING TO SAY YES.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: NO.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: YES.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: NO.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: NO.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: TED LOVE.

DR. LOVE: NO.

MS. KING: ED PENHOET.

DR. PENHOET: NO.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: NO.

MS. KING: JEFF SHEEHY.

MR. SHEEHY: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OSWALD STEWARD.

DR. STEWARD: NO.

MS. KING: JANET WRIGHT.

MR. HARRISON: THE MOTION FAILS WITH TEN NO VOTES, EIGHT YES VOTES.

CHAIRMAN KLEIN: THANK YOU. ANOTHER MOTION IS IN ORDER.

DR. PRIETO: I'D LIKE TO MAKE A MOTION TO MOVE APPLICATION 554-1 INTO TIER 1.

CHAIRMAN KLEIN: IS THERE A SECOND? WHAT ARE THE CONFLICTS, COUNSEL?

MS. PACHTER: FOR 554 --

CHAIRMAN KLEIN: BEFORE WE MAKE A SECOND, I WANT TO MAKE SURE WE KNOW WHO THE CONFLICT IS.

MS. PACHTER: 554, THE CONFLICTS ARE GOLDBERG, LANSING.

CHAIRMAN KLEIN: SO IS THERE A SECOND?

DR. POMEROY: I'LL SECOND IT.

CHAIRMAN KLEIN: DR. POMEROY. IF WE COULD ASK IF -- LET'S TRY TO HAVE A SHORTER SUMMARY, AND THEN LET'S SEE IF THE BOARD NEEDS ADDITIONAL INFORMATION ON THIS ONE IF WE COULD, PLEASE.

DR. OLSON: DR. SAMBRANO.

DR. SAMBRANO: THE TITLE OF THIS APPLICATION IS "ENHANCING SURVIVAL OF EMBRYONIC STEM CELL-DERIVED GRAFTS BY INDUCTION OF IMMUNOLOGICAL TOLERANCE." THE GOAL OF THIS APPLICATION IS TO REDUCE THE NEED FOR ANTIGEN-MATCHED EMBRYONIC STEM CELLS FOR THERAPEUTIC PURPOSES BY DEVELOPING STRATEGIES TO INDUCE TOLERANCE IN ENGRAFTED CELLS.

THE PI WILL USE A MOUSE MODEL FOR THIS AND MOUSE EMBRYONIC STEM CELLS, NOT HUMAN EMBRYONIC STEM CELLS. IT WILL TAKE UNDIFFERENTIATED MOUSE ES CELLS AND DIFFERENTIATE THEM INTO HEMATOPOETIC STEM CELLS THAT WILL BE INTRODUCED INTO A MOUSE TO INDUCE OR ATTEMPT TO INDUCE TOLERANCE IN THE BONE MARROW WITH THE LONG-TERM GOAL OF CURING DIABETES. AND DIABETES HERE IS BEING USED AS, AGAIN, A MODEL. THE APPLICATION HAS BROADER IMPLICATIONS IN ADDRESSING OTHER CELLS OR OTHER TISSUES THAT COULD BE ENGRAFTED THAT WOULD BE ALLEVIATED BY INDUCING TOLERANCE.

SO THE REVIEWERS FELT THAT THIS WAS A VERY WELL-WRITTEN APPLICATION FROM A YOUNG FACULTY MEMBER THAT ADDRESSES A VERY CENTRAL ISSUE IN THE UTILITY OF HUMAN EMBRYONIC STEM CELLS IN HUMAN THERAPY. HOWEVER, THEY THOUGHT THE RESEARCH PLAN AS A WHOLE WAS WELL-DESIGNED, THAT POTENTIAL PROBLEMS ARE ADDRESSED, AND THAT IT MAY YIELD USEFUL RESULTS WITHIN THE MOUSE MODEL. THE EXPERIMENTAL DESIGN APPEARS TO BE APPROPRIATE WITH PRELIMINARY DATA, ALTHOUGH THE DIFFICULTY OF DEVELOPING ONE OF THE STEM CELL LINES FOR USE IN THEIR THIRD SPECIFIC AIM, THE PANCREATIC STEM CELL LINES, WAS NOT DISCUSSED VERY MUCH AND WAS NOT EVALUATED IN THE APPLICATION.

THE TIMELINES FOR THE PROPOSAL SEEM REALISTIC ALTHOUGH THE INVESTIGATOR MIGHT CONSIDER THE POSSIBILITY OF JUST THE FIRST RESEARCH AIM TAKING A FULL TWO YEARS.

THE PI IS AN ASSISTANT PROFESSOR AT THE APPLICANT INSTITUTION, HAS A VERY ASPIRATIONAL CAREER PLAN WITH SUPPORT FROM LOCAL MENTORS WHO ARE DEEMED TO BE OF EXCELLENT QUALITY; HOWEVER, IT WAS ALSO NOTED THAT THERE ISN'T A CLEAR OR FORMAL MECHANISM BY WHICH THE MENTOR FEEDBACK WOULD BE ACHIEVED. THERE WAS ALSO VERY STRONG SUPPORT BY THE INSTITUTION IN TERMS OF THEIR COMMITMENT LETTER.

SO OVERALL REVIEWERS EXPRESSED RESERVATION THAT, ALTHOUGH THE APPLICANT HAS HAD VERY EXCELLENT TRAINING, HIS OR HER OVERALL ACCOMPLISHMENTS AND PUBLICATIONS HAVE NOT BEEN PARTICULARLY OUTSTANDING THUS FAR. AND THAT THERE ARE PROBLEMS WITH THE PROPOSAL, LARGELY THAT THE SUCCESS OF THE PROPOSAL HINGES ON THE SUCCESS OF THE FIRST AIM, AND THE EXPRESSED CONCERN THAT AS A RESULT THE PROJECT MAY NOT WORK.

THEY EXPRESSED ENTHUSIASM FOR THE YOUNG INVESTIGATOR AND AGREED THAT THIS IS A WELL-TRAINED SCIENTIST WITH ENORMOUS SUPPORT FROM THE INSTITUTION, HAS A COMMENDABLE CAREER DEVELOPMENT PLAN THAT INCLUDES BOTH RESEARCH AND TEACHING; HOWEVER, THE ENTHUSIASM FOR THE APPLICANT AND THE INSTITUTIONAL SUPPORT COULD NOT OVERCOME THE CONCERNS OF THE SCIENTIFIC PROPOSAL.

CHAIRMAN KLEIN: THANK YOU. COMMENTS FROM THE MEMBERS?

DR. STEWARD: QUESTION, SAME QUESTION AS BEFORE. PORTFOLIO? THIS IS, I WOULD SAY, REALLY A GRANT THAT'S RELATED TO DIABETES, ALTHOUGH IT DOESN'T REALLY SHOW UP IN THE TITLE. IS THERE SOME INDICATION OF OUR PORTFOLIO IN DIABETES-RELATED RESEARCH?

DR. OLSON: AMONG THE SEED AND COMPREHENSIVE, THERE IS ONE DIABETES APPLICATION THAT MET THE CRITERIA THAT WE HAD OF BEING DIABETES FOCUSED, YES.

DR. STEWARD: FOR EITHER THE COMPREHENSIVE OR THE SEEDS.

DR. OLSON: YES.

MS. GIBBONS: LOOKING AT THE REVIEW, IT APPEARS THAT SUCCESS IN THIS AREA WOULD HAVE APPLICATIONS TO A LOT OF THE DEGENERATIVE DISEASES. SO WHILE WE'RE LOOKING AT A PRIMARY TARGET OF DIABETES, I MEAN IT'S PARKINSON'S AND M.S. AND CANCER AND ALZHEIMER'S AND A WHOLE SPECTRUM.

DR. PRIETO: ALTHOUGH CERTAINLY THE FACT THAT THEY'RE USING DIABETES AS A MODEL CAUGHT MY EYE, I WAS STRUCK BY, ALTHOUGH THERE IS SOME RISK HERE, THE POTENTIAL APPLICATIONS, THE UPSIDE, IF YOU WILL, IS REALLY VERY STRONG. I THINK IT'S WORTHWHILE TO FUND.

CHAIRMAN KLEIN: ADDITIONAL COMMENTS? PUBLIC COMMENTS? CALL THE QUESTION. RESTATE THE QUESTION AND CALL THE QUESTION. PLEASE ASSUME THAT WHEN I ASK TO CALL THE QUESTION, YOU ARE GOING TO RESTATE THE QUESTION.

MS. PACHTER: THE MOTION IS TO MOVE APPLICATION NO. 554 TO TIER 1 FOR FUNDING. THE RECUSALS ARE GOLDBERG AND LANSING.

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: FOR.

MS. KING: ROBERT BIRGENEAU.

DR. BIRGENEAU: NO.

MS. KING: FLOYD BLOOM.

DR. BLOOM: YES.

MS. KING: DAVID BRENNER.

DR. BRENNER: YES.

MS. KING: ALBERT BENNETT.

DR. BENNETT: ABSTAIN.

MS. KING: MARCY FEIT.

MS. FEIT: YES.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: YES.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: YES.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: NO.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: GERALD LEVEY.

DR. LEVEY: YES.

MS. KING: TED LOVE.

DR. LOVE: YES.

MS. KING: ED PENHOET.

DR. PENHOET: NO.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JEFF SHEEHY.

MR. SHEEHY: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OSWALD STEWARD.

DR. STEWARD: YES.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: THAT MOTION CARRIES.

CHAIRMAN KLEIN: OKAY. ANY ADDITIONAL MOTIONS BY THE MEMBERS?

MR. SHEEHY: I JUST WANT TO MAKE THE POINT THAT WE ARE ACTUALLY AT OUR TARGET IN TERMS OF BASIC SCIENTISTS. WE'RE AT 15, WHICH WAS OUR RFA TARGET. JUST TO PUT THAT OUT.

MR. ROTH: MR. CHAIR, COULD WE SEE THE TOTAL IN TIER 1?

CHAIRMAN KLEIN: TIER 1 IS AT THE BOTTOM RIGHT IN GREEN IS 54 MILLION 376; IS THAT CORRECT, DR. OLSON?

DR. OLSON: IF SHE'S MOVED THE OTHER ONE. I JUST WANTED TO MAKE THE POINT AND BRING IT TO THE BOARD'S ATTENTION THAT OF ALL THE ONES THAT HAVE BEEN IN THE MIDDLE TIER, TIER 2, YOU HAVE DISCUSSED THEM ALL. AND I REALIZE THIS IS AN ALL EXCEPT ONE, WHICH IS 549, AND, YOU KNOW, IT'S OBVIOUSLY AT THE BOARD'S DISCRETION, BUT I WANT TO MAKE SURE THAT YOU ARE AWARE OF THE FACT THAT YOU HAVE DISCUSSED ALL APPLICATIONS EXCEPT THAT ONE.

CHAIRMAN KLEIN: ALL RIGHT. WHAT'S THE BOARD'S PLEASURE?

DR. AZZIZ: I MOVE THAT WE HEAR A PRECIS ABOUT 549.

CHAIRMAN KLEIN: CAN WE HAVE THE CONFLICTS, AND WE'LL LISTEN TO THIS WITHOUT A MOTION FOR THE MEMBERS TO DECIDE IF THEY WANT TO HAVE A MOTION.

MS. PACHTER: MR. CHAIR, COULD YOU REPEAT THE APPLICATION NUMBER?

CHAIRMAN KLEIN: 549.

MS. PACHTER: 549, THE RECUSALS ARE BENNETT, FEIT, LANSING, POMEROY, AND SHEEHY.

CHAIRMAN KLEIN: AND, DR. HARI, IF YOU WILL MAKE THIS SUFFICIENTLY DETAILED, BUT RELATIVELY SHORT SO WE CAN GET A CONCEPT DOWN AS TO WHETHER WE WANT TO MOVE FORWARD.

DR. HARI: THIS IS A STYLED APPLICATION WE'VE DISCUSSED A COUPLE OF TIMES TODAY WHERE THE PRINCIPAL INVESTIGATOR IS STRONGER THAN THE RESEARCH PLAN IN TERMS OF THE THREE LEGS OF THE STOOL. THE TITLE OF THIS APPLICATION IS "EPIGENETIC DETERMINANTS OF NORMAL AND TUMOR STEM CELL BIOLOGY AND THE BASIC STUDIES TO FIND THE DIFFERENCES BETWEEN THOSE TWO TYPES OF CELLS."

THE FOCUS HERE IS ON N-MYC, AND N-MYC IS ONE MEMBER OF THE MYC GENE FAMILY. AND MANY OF YOU KNOW THAT C-MYC IS ONE OF THE FACTORS USED TO REPROGRAM HUMAN AND MOUSE EMBRYONIC STEM CELLS BACK TO PLURIPOTENCY.

I DO NOTE THAT RECENT STUDIES SHOW THAT N-MYC CAN REPLACE C-MYC, BUT THAT MYC ALL TOLD MAY NOT BE AN ABSOLUTE REQUIREMENT FOR THIS REPROGRAMMING. SO THE GOAL OF THIS STUDY REALLY IS TO LOOK AT THE EFFECTIVE N-MYC IN TUMOROGENESIS, NOTING THAT OVEREXPRESSION OF THIS FACTOR IN TRANSGENIC MICE CAUSES NEUROBLASTOMAS.

THE CLINICAL RELEVANCE IN THIS PARTICULAR APPLICATION IS REALLY BASED ON THIS UNDERSTANDING OF THE TUMOROGENIC POTENTIAL OF HUMAN EMBRYONIC STEM CELLS. AND WHAT I'LL DO IS JUST DESCRIBE THE APPLICANT BECAUSE THIS INVESTIGATOR IS VERY TALENTED AND HAS MADE MANY CONTRIBUTIONS TO THE FIELD AS SHOWN BY THE PUBLICATION RECORD WHERE THIS APPLICANT WAS A VERY SUCCESSFUL POSTDOCTORAL FELLOW.

ALL OF THE GRANTS THAT THIS INDIVIDUAL HAS AND AWARDS FROM SEVERAL AGENCIES ARE FOCUSED ON THE FUNCTION OF MYC IN NEUROPROGENITORS AND NERVOUS SYSTEM TUMORS. IN FACT, THE PRINCIPAL INVESTIGATOR PRESENTS A COMPREHENSIVE PLAN FOR FUTURE CAREER DEVELOPMENT.

IN TERMS OF THE THIRD LEG OF THE STOOL, THE INSTITUTION HAS PROVIDED A VERY STRONG LETTER DOCUMENTING INSTITUTIONAL COMMITMENT, AND ONE REVIEWER FELT THAT THIS IS THE BEST INSTITUTION FOR THIS TYPE OF STUDY THAT THE PRINCIPAL INVESTIGATOR PROPOSES. THE PI HAS ACCESS TO EXCELLENT SHARED RESOURCES, AND RESEARCH AT THIS INSTITUTION WAS CONSIDERED OUTSTANDING WITH A GROWING PROGRAM.

THE OVERALL CRITICISM OF THE PROPOSAL WAS, AGAIN, THAT THE APPLICATION WAS NOT AS STRONG AS IT COULD HAVE BEEN GIVEN THE STRENGTH OF THE PRINCIPAL INVESTIGATOR. AND MANY OF THE STUDIES WERE CONSIDERED THAT THEY TOOK A PURELY BASIC SCIENCE APPROACH TO TRYING TO UNDERSTAND THE ROLE OF N-MYC IN TUMOR CELL BIOLOGY.

CHAIRMAN KLEIN: ALL RIGHT. IS THERE A MOTION?

DR. BIRGENEAU: I MOVE THAT WE MOVE IT UP INTO THE FIRST TIER.

CHAIRMAN KLEIN: DR. BIRGENEAU HAS MADE A MOTION. IS THERE A SECOND?

DR. WRIGHT: SECOND.

CHAIRMAN KLEIN: SECOND, DR. WRIGHT. DISCUSSION?

DR. PRIETO: I NOTICE IN THE DISCUSSION THAT ONE REVIEWER FELT THAT, QUOTE, THE PROPOSAL IS NARROW IN ITS APPROACH AND NOT PARTICULARLY INNOVATIVE. THERE'S NOT ENOUGH BIOLOGY TO CONTEXTUALIZE RESULTS BECAUSE MYC IS INVOLVED IN MANY PROCESSES. AND GOING THROUGH THAT AND THE REST OF THIS, IT SEEMS TO ME WE WOULD ALMOST BE REWARDING THIS INVESTIGATOR FOR HAVING HAD A VERY GOOD CAREER UP TO THIS POINT RATHER THAN FOR DOING ANYTHING THAT'S PARTICULARLY STRONG OR APPLICABLE TO OUR MISSION AT CIRM.

CHAIRMAN KLEIN: AND IN TERMS OF THE STAFF, IS THIS SOMEONE WE'RE RECRUITING INTO THIS FIELD WITH A STRONG BACKGROUND CAREER, OR WHAT IS THE CONTEXT FOR EVALUATING THIS?

DR. HARI: THE INDIVIDUAL IS A VERY STRONG PRINCIPAL INVESTIGATOR HAVING PUBLISHED ON N-MYC. AND I THINK THE QUESTION HERE, PROBABLY THE OVERALL QUESTION OF THE PROPOSAL, IS REALLY TO DESCRIBE WHETHER OR NOT THE DEFECTS IN NEUROGENESIS THAT ARE SEEN WHEN N-MYC IS OVER OR UNDEREXPRESSED ARE A STEM CELL DEFECT PER SE. SO THE APPLICANT HAS QUITE A BIT OF EXPERIENCE IN STUDYING N-MYC, QUITE A BIT OF EXPERIENCE IN STUDYING THE EFFECTOR MOLECULE THAT HE OR SHE PROPOSES TO STUDY, AND QUITE A BIT OF EXPERIENCE IN THE TECHNOLOGIES THAT THEY PROPOSE. HOWEVER, THERE IS THE ONE QUESTION OF HOW RELEVANT IS N-MYC TO STEM CELL BIOLOGY, AND, AGAIN, I DO NOTE THE WORK OF MYC ITSELF IN TERMS OF REPROGRAMMING CELLS AND THE FACT THAT N-MYC APPEARS TO BE ABLE TO COMPENSATE FOR C-MYC IN THAT BIOLOGICAL ASPECT.

CHAIRMAN KLEIN: SO YOUR COMMENT IS THAT IT MAY BE VERY RELEVANT.

DR. HARI: IT COULD BE, AND I THINK THAT'S THE DECISION BEFORE YOU.

CHAIRMAN KLEIN: OKAY. THANK YOU. ADDITIONAL COMMENTS?

DR. MURPHY: MR. CHAIRMAN, I RECALL THE DISCUSSION OF THIS GRANT. AND AS YOU WELL KNOW, THERE'S SOLID EVIDENCE THAT SOME SOLID TUMORS ACTUALLY ARISE FROM STEM CELLS WITHIN THE TUMOR. SO THE IDEA OF LOOKING AT THE STEMNESS OF TUMOR CELLS IS A VERY CRITICAL ONE, AND THE EPIGENETIC CONTROL OF WHY A CELL COULD BE A TUMOR STEM CELL OR NOT A TUMOR STEM CELL IS VERY CRITICAL.

SO THE FEELING HERE THAT THIS IS A VERY STRONG SCIENTIST. IT'S A SCIENTIST WHO REALLY CARES ABOUT CANCER, BUT IS ALSO LOOKING AT THE ROLE OF STEM CELLS IN THOSE CANCERS. SO I THINK THAT WAS THE REASON THAT IT WAS ACTUALLY QUITE POSITIVELY REVIEWED, ALTHOUGH IT WAS NOT DIRECTLY A STEM CELL GRANT.

CHAIRMAN KLEIN: OKAY. THANK YOU. SO ANY ADDITIONAL COMMENTS? PUBLIC COMMENTS? COULD THE QUESTION BE RESTATED AND WE THEN HAVE A ROLL CALL.

MS. PACHTER: THE MOTION IS TO MOVE APPLICATION 549 TO TIER 1 FOR FUNDING.

MS. KING: CONFLICTS ARE BENNETT, FEIT, LANSING, POMEROY, AND SHEEHY.

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: AGAINST.

MS. KING: ROBERT BIRGENEAU.

DR. BIRGENEAU: YES.

MS. KING: FLOYD BLOOM.

DR. BLOOM: NO.

MS. KING: DAVID BRENNER.

DR. BRENNER: NO.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: NO.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: NO.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: YES.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: YES.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: GERALD LEVEY.

DR. LEVEY: NO.

MS. KING: TED LOVE.

DR. LOVE: NO.

MS. KING: ED PENHOET.

DR. PENHOET: YES.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: NO.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OSWALD STEWARD.

DR. STEWARD: NO.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: THAT MOTION FAILS NINE TO EIGHT.

CHAIRMAN KLEIN: OKAY. THANK YOU. AT THIS POINT I'D LIKE TO ASK IF THERE'S ANY OTHER MOTIONS TO MOVE ANYTHING OUT OF TIER 1 OR INTO TIER 1 OR OUT OF TIER 3 INTO TIER 1, ANY OTHER MOTIONS?

SEEING NO OTHER MOTIONS, COUNSEL, IS IT NOW APPROPRIATE TO HAVE A MOTION, AND HOPEFULLY A MOTION FROM SOMEONE WHO HAS NO CONFLICTS WHATSOEVER AND A SECOND FROM SOMEONE WHO HAS NO CONFLICTS WHATSOEVER, TO FUND ALL OF THOSE THAT ARE NOW IN TIER 1? AND ALL OF THOSE WHO WOULD THEN BE VOTING ON THIS WOULD BE VOTING FOR THOSE FOR WHICH THEY HAVE NO CONFLICT AND/OR FOR WHICH THEY ARE NOT ABSTAINING. IS THAT A CORRECT STATEMENT, COUNSEL?

MS. PACHTER: THAT IS A CORRECT STATEMENT

CHAIRMAN KLEIN: ALL RIGHT. WHO HAS A MOTION?

DR. PRIETO: SO MOVED.

DR. WRIGHT: SECOND.

CHAIRMAN KLEIN: SECOND, DR. WRIGHT. DISCUSSION? NO DISCUSSION.

MS. LEWIS: I'M SORRY. I JUST WANT TO MAKE A QUICK CLARIFICATION BECAUSE WE HAD A LITTLE TECHNICAL DIFFICULTY WITH THE COMMUTER PROGRAM, THAT THERE ARE 16 SCIENTISTS AND 6 PHYSICIAN SCIENTISTS IN TIER 1. THE SUBTOTAL OF 54.37 MILLION IS CORRECT, BUT THE NUMBERS, JUST WANT TO MAKE SURE YOU'RE AWARE OF THAT.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. PUBLIC COMMENT?

MR. KRIEGSTEIN: ARNOLD KRIEGSTEIN FROM UCSF. FIRST, I'D LIKE TO SAY THAT I APPLAUD THIS COMMITTEE'S GOAL, WHICH IS TO FUND GIFTED INVESTIGATORS AT EARLY STAGES IN THEIR CAREERS. BUT BEFORE VOTING ON THIS MOTION, I'D URGE YOU TO CONSIDER HOW THIS MOTION CAN GO FORWARD IN A WAY THAT WOULD NOT DISADVANTAGE THE OTHER GIFTED YOUNG FACULTY WITH INNOVATIVE, MERITORIOUS RESEARCH PROGRAMS, MANY OF WHICH HAVE BEEN RATED HIGHER BY THE SAME PEER REVIEWERS THAT EVALUATED THE GROUP YOU JUST DISCUSSED, BUT HAVE NOT YET HAD AN OPPORTUNITY TO BE CONSIDERED BECAUSE THEIR APPLICATIONS HAVE BEEN INVALIDATED.

CHAIRMAN KLEIN: THANK YOU. WE'VE HAD A DISCUSSION ON THAT TOPIC. WE CAN ADDRESS THAT TOPIC AFTER THIS VOTE. BUT ANY COMMENTS BY THE BOARD ARE APPROPRIATE AT THIS TIME IF THEY'D LIKE TO MAKE A COMMENT. SEEING NO ADDITIONAL COMMENTS, WE DEEPLY RESPECT THE PRESENTATION AND THE WORK, DR. KRIEGSTEIN.

CAN WE HAVE A ROLL CALL AT THIS TIME.

MS. PACHTER: I'M GOING TO RESTATE THE NUMBERS OF THE APPLICATIONS IN TIER 1 FOR THE RECORD.

CHAIRMAN KLEIN: YES.

MS. PACHTER: THIS IS A MOTION TO FUND ALL APPLICATIONS IN TIER 1 INCLUDING APPLICATIONS 577, 561, 579, 566, 584, 527, 575, 529, 532, 564, 525, 544, 530, 557, 562, 572, 550, 536, 540, 535, 538, AND 554.

CHAIRMAN KLEIN: OKAY. MOTION TO FUND ALL OF THOSE THAT HAVE BEEN -- WHOSE NUMBERS HAVE BEEN CITED BY COUNSEL.

MS. PACHTER: AND THE VOTE, WHEN YOU'RE ASKED TO RESPOND TO THE ROLL CALL, IF YOU'RE VOTING YES OR NO, PLEASE REPLY THAT YOU'RE VOTING YES OR NO EXCEPT AS TO THOSE APPLICATIONS AS TO WHICH YOU ARE RECUSED.

CHAIRMAN KLEIN: AND/OR ABSTAINING.

MS. PACHTER: AND/OR ABSTAINING. IF YOU'RE ABSTAINING, PLEASE LET US KNOW WHAT NUMBER APPLICATION YOU ARE ABSTAINING WITH RESPECT TO.

CHAIRMAN KLEIN: THANK YOU. CAN WE HAVE THE ROLL CALL.

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: ROBERT BIRGENEAU.

DR. BIRGENEAU: YES, EXCEPT FOR THOSE APPLICATIONS FOR WHICH I HAVE A CONFLICT.

MS. KING: FLOYD BLOOM.

DR. BLOOM: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: DAVID BRENNER.

DR. BRENNER: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: ALBERT BENNETT.

DR. BENNETT: YES, EXCEPT FOR THOSE APPLICATIONS FOR WHICH I HAVE A CONFLICT.

MS. KING: MARCY FEIT.

MS. FEIT: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: YES.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: SHERRY LANSING.

MS. LANSING: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: GERALD LEVEY.

DR. LEVEY: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: TED LOVE.

DR. LOVE: YES.

MS. KING: ED PENHOET.

DR. PENHOET: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JEFF SHEEHY.

MR. SHEEHY: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OSWALD STEWARD.

DR. STEWARD: YES, EXCEPT FOR THOSE APPLICATIONS WITH WHICH I HAVE A CONFLICT.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: THAT MOTION CARRIES.

CHAIRMAN KLEIN: THANK YOU. AT THIS POINT WE ARE GOING TO GET ADVICE FROM COUNSEL.

MS. PACHTER: EXCUSE ME, MR. CHAIR, FOR THE RECORD I THINK IT WILL BE IMPORTANT TO ENTERTAIN A MOTION NOT TO FUND ALL REMAINING APPLICATIONS THAT ARE NOT IN TIER 2 SO THAT YOU WILL HAVE ACTED ON EACH AND EVERY APPLICATION -- THAT ARE IN TIER 1.

CHAIRMAN KLEIN: THERE'S A QUESTION FROM DR. PENHOET. HE DOESN'T SEE 538 IN THE LIST. THERE IT IS. IT WAS IN THE LIST, AND IT WAS ONE OF THOSE YOU LISTED; IS THAT CORRECT?

MS. PACHTER: IT IS.

MS. PACHTER: IT IS.

CHAIRMAN KLEIN: WE CAN'T BE TOO CAREFUL HERE. SO THERE'S A MOTION IN ORDER NOT TO FUND THOSE THAT WE HAVE AT THIS POINT NOT ADDRESSED.

MS. PACHTER: ALL THOSE NOT IN TIER 1. MOTION WOULD BE NOT TO FUND.

CHAIRMAN KLEIN: IS THERE SOMEONE LIKE TO MAKE THAT MOTION?

DR. FRIEDMAN: SO MOVED.

CHAIRMAN KLEIN: HAS TO BE SOMEONE WITH NO CONFLICTS.

MR. ROTH: SO MOVED.

MS. GIBBONS: SECOND.

MS. PACHTER: SO THE MOTION IS BY ROTH AND THE SECOND IS BY GIBBONS.

CHAIRMAN KLEIN: YES. THANK YOU. OKAY. AGAIN, I'D LIKE TO ASK IS THERE ANY BOARD COMMENT? IS THERE PUBLIC COMMENT? THE SAME INSTRUCTION APPLIES.PLEASE INDICATE IF YOU ARE VOTING AS AN ABSTENTION AS TO WHICH APPLICATION IT'S AN ABSTENTION. THANK YOU. ROLL CALL.

MS. PACHTER: THE MOTION IS NOT TO FUND APPLICATIONS THAT ARE NOT IN TIER 1.

MS. KING: RICARDO AZZIZ.

DR. AZZIZ: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: ROBERT PRICE.

DR. PRICE: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: FLOYD BLOOM.

DR. BLOOM: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: DAVID BRENNER.

DR. BRENNER: YES, EXCEPT FOR THOSE WHICH I HAVE A CONFLICT.

MS. KING: ALBERT BENNETT.

DR. BENNETT: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: MARCY FEIT.

MS. FEIT: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: MICHAEL FRIEDMAN.

DR. FRIEDMAN: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: LEEZA GIBBONS.

MS. GIBBONS: YES.

MS. KING: MICHAEL GOLDBERG.

MR. GOLDBERG: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: FRANK MARKLAND.

DR. MARKLAND: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: BOB KLEIN.

CHAIRMAN KLEIN: YES.

MS. KING: SHERRY LANSING.

MS. LANSING: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: GERALD LEVEY.

DR. LEVEY: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: TED LOVE.

DR. LOVE: YES.

MS. KING: ED PENHOET.

DR. PENHOET: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: CLAIRE POMEROY.

DR. POMEROY: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: FRANCISCO PRIETO.

DR. PRIETO: YES.

MS. KING: DUANE ROTH.

MR. ROTH: YES.

MS. KING: JEFF SHEEHY.

MR. SHEEHY: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: JONATHAN SHESTACK.

MR. SHESTACK: YES.

MS. KING: OSWALD STEWARD.

DR. STEWARD: YES, EXCEPT FOR THOSE WITH WHICH I HAVE A CONFLICT.

MS. KING: JANET WRIGHT.

DR. WRIGHT: YES.

MS. KING: AND THAT MOTION CARRIES.

CHAIRMAN KLEIN: THANK YOU. IT IS IMPORTANT TO NOTE HERE THAT WE ALLOCATED 85 MILLION FOR THIS PROGRAM. WE ARE SIGNIFICANTLY SHORT ON THE M.D.'S THAT HAVE BEEN APPROVED FROM OUR ORIGINAL INTENDED GOAL. AND WE'VE ALSO DISCOVERED IN THIS PROCESS THAT THERE IS A GREAT DEAL OF RECOGNITION OF THE CRITICAL IMPORTANCE FOR BUILDING NEW FACULTY INFRASTRUCTURE.

VERY SPECIFICALLY, WE SET FORTH A GOAL OF BUILDING THAT AND DISTRIBUTING THAT THROUGHOUT THE WHOLE STATE, AND WE PUT A CAP OF FOUR POSITIONS PER INSTITUTION ON THIS SO WE COULD GET A DISTRIBUTION ACROSS THE LEADING INSTITUTIONS IN THE STATE AND THE DEVELOPED INSTITUTIONS WHERE THIS EXPERTISE WAS DEVELOPING.

IF I COULD HAVE A SENSE OF THE BOARD MEMBERS WHETHER THEY'D LIKE TO SEE THE STAFF BRING BACK FOR CONSIDERATION IN JANUARY A SUPPLEMENTAL OR ACTUALLY A NEW ROUND THAT WOULD LOOK TO FURTHER ACHIEVE THESE OBJECTIVES AND REACH SPECIFICALLY OUR OBJECTIVES WITH M.D.'S AS WELL AS POTENTIALLY CONSIDERING RECOMMENDATIONS FROM STAFF ON ADDING ADDITIONAL FUNDS THAT WERE NOT UTILIZED -- IN ADDITION TO THE FUNDS THAT WERE NOT UTILIZED AND THE DIFFERENCE BETWEEN THE 54 MILLION AND 85 MILLION.

CLEARLY HERE, AS I SAID, IN THE M.D. AREA, WE FOUND WE HAVE NOT ACHIEVED OUR OBJECTIVES IN TERMS OF THE BREADTH OF THIS PROGRAM. AND IN THE SCIENCE AREA I'LL POINT OUT THAT WE HAVE LEARNED A GREAT DEAL THROUGH THIS PROCESS, AND BUILDING THIS INFRASTRUCTURE IS A VERY IMPORTANT PART OF CREATING THE FACULTY WHO WILL BE THE LEADERS OF CALIFORNIA'S FUTURE IN THIS AREA AND OUR HOPE FOR BREAKTHROUGHS AND THE DEPTH OF YOUNG TALENT TO DEVELOP SOME OF THE BEST IDEAS OF OUR STATE.

SO IS THERE ANY BOARD COMMENTS ON WHETHER WE'D LIKE TO SEE A NEW RFA IN JANUARY?

DR. STEWARD: SO THIS IS A COMPLICATED ISSUE, AND I HAVE TO SAY NORMALLY I WOULD BE ROARINGLY ENTHUSIASTIC ABOUT IT, ESPECIALLY WITH THE POSSIBILITY OF BRINGING ADDITIONAL CLINICALLY TRAINED INDIVIDUALS IN. HOWEVER, I THINK WE NEED TO RECALL THE, I WOULD CALL IT, A TECHNICAL GLITCH THAT LED TO THE ELIMINATION OF INSTITUTIONS FROM THIS CURRENT ROUND. AND I THINK THAT TO CHANGE THE GROUND RULES DURING A RECOMPETITION WOULD BE UNFAIR. I WOULD RATHER SEE A RECOMPETITION ON THE SAME GROUND RULES, AND THEN GO BACK AT A LATER TIME TO TRY TO FILL IN THE PLACES THAT WE FAILED IN TERMS OF RECRUITING M.D.'S.

CHAIRMAN KLEIN: I'M NOT SUGGESTING THAT WE CHANGE THE GROUND RULES. IN FACT, I'M SUGGESTING THAT BY HAVING ADDITIONAL FUNDS PLUS THE LEFT-OVER FUNDS THAT WE CAN BUILD A STRONGER INFRASTRUCTURE ACROSS THE STATE EXCEPT I MADE A SUGGESTION THAT ON A CUMULATIVE BASIS THAT WE DO RECOGNIZE A CAP OF FOUR PER INSTITUTION AS A MAXIMUM BECAUSE WE DO HAVE A GOAL OF BUILDING INFRASTRUCTURE ACROSS THE WHOLE STATE. SO IT'S THE CUMULATIVE BASIS BETWEEN ROUND ONE AND TWO.

DR. MURPHY: MR. CHAIRMAN, I THINK IT'S IMPORTANT TO UNDERSTAND THE SENSE OF THE BOARD, BUT I ALSO THINK WE NEED TO BE CAREFUL ABOUT PROCESS. AND AS YOU WELL KNOW, THE PROCESS IS THAT STAFF COMES WITH A CONCEPT BACK TO THE BOARD, WE DEVELOP THAT CONCEPT, WE GO TO AN RFA, AND WE DO ALL OF THIS IN THE PROPER ORDER. SO I WOULD THINK IT WOULD BE AN ERROR FOR THE BOARD TO TAKE A POSITION HERE BEYOND PERHAPS EXPRESSING THEIR VIEWS ABOUT THE DIRECTIONS WE SHOULD GO IN.

AND WITH YOUR PERMISSION, WHAT I WOULD LIKE TO DO, HAVING HEARD YOUR POINT, IS COME BACK IN JANUARY WITH A STAFF CONCEPT ABOUT HOW WE COULD PERHAPS GO FORWARD WITH THE GUIDANCE THAT YOU ARE PROVIDING, BUT I THINK WE REALLY DO HAVE TO FOLLOW THE PROCEDURE IF THAT'S OKAY WITH YOU.

CHAIRMAN KLEIN: I APPRECIATE THAT DIRECTION, MR. PRESIDENT. SO SPECIFICALLY, YOU'RE SAYING THAT IF, RATHER THAN TRY AND GET DOWN TO THE DETAILS OF THIS, WE REALLY NEED TO HAVE A GENERAL EXPRESSION OF WHETHER WE WANT TO SEE ANOTHER ROUND TO FORWARD THE OBJECTIVES THAT WE HAVE SET OUT TO ACCOMPLISH WITH NEW FACULTY FOUNDATION ACROSS THE STATE.

DR. MURPHY: I THINK THAT'S EXACTLY RIGHT.

CHAIRMAN KLEIN: ANY ADDITIONAL BOARD COMMENTS ON WHETHER WE'D LIKE TO SEE A NEW ROUND TO FURTHER THESE OBJECTIVES?

DR. AZZIZ: FIRST, I WANT MAKE SURE THAT I CAN SPEAK ON THIS, COUNSEL? THERE'S NO CONFLICT.

DR. MURPHY: I THINK WE NEED TO BE CAREFUL BECAUSE IT IS NOT AGENDIZED, ALTHOUGH I THINK IT DOES RELATE TO THE PREVIOUS DISCUSSION.

DR. AZZIZ: SO FOLLOWING --

CHAIRMAN KLEIN: SO CAN I HAVE A CLARIFICATION FROM COUNSEL?

MS. PACHTER: IF THE ISSUE IS DISCUSSION OF THE PROCESS FOR CONSIDERING A FOLLOW-ON RFA, I THINK YOU CAN SPEAK TO THAT.

DR. AZZIZ: IN FACT, AND I APPRECIATE, RICHARD, WHAT YOU SAID. I THINK WE SHOULDN'T BE MANDATED BECAUSE THIS IS A COMPLEX ISSUE; HOWEVER, YOU MAY WANT TO GET A SENSE FROM THE BOARD AS TO WHAT. I MEAN CHAIRMAN KLEIN HAS ALREADY GIVEN HIS POINT OF VIEW, BUT I THINK YOU MAY WANT TO GET SORT OF A SENSE FROM THE REST OF THE BOARD.

MS. PACHTER: AS A LEGAL MATTER, I JUST WANT TO CAUTION THE BOARD THAT THIS -- IT SHOULD BE IN THE FORM OF A MOTION.

CHAIRMAN KLEIN: RIGHT. THIS IS NOT A MOTION. THESE ARE JUST IDEAS FROM INDIVIDUALS PURELY.

DR. AZZIZ: IT'S A FORM OF OPEN DISCUSSION, WHICH IS WHY. SO PERSONALLY I JUST WANTED FOR THE RECORD TO NOTE THAT I AM IN SUPPORT OF A SUPPLEMENTAL CALL FOR FACULTY GRANTS BECAUSE I BELIEVE THAT THESE ARE ACTUALLY SOME OF THE MORE FUNDAMENTAL GRANTS THAT WE WILL ACTUALLY BE FUNDING IN THE LONG RUN. THIS IS WHERE WE WILL CREATE THE GENERATION OF THE FUTURE. OTHERWISE EVERYTHING ELSE WE'RE DOING IS A MOMENT IN TIME, AND WE HAVEN'T CREATED THE LEGACY THAT WE SHOULD.

SO I JUST WANTED THAT FOR THE RECORD AS AN IMPRESSION, NO MOTION.

CHAIRMAN KLEIN: ADDITIONAL COMMENTS.

MR. GOLDBERG: I'D LIKE TO THANK DR. KRIEGSTEIN FOR HIS COMMENTS EARLIER, AND I SUPPORT DR. AZZIZ' COMMENTS.

CHAIRMAN KLEIN: ADDITIONAL COMMENTS FROM MY RIGHT?

DR. PRIETO: YES. I ALSO WOULD SUPPORT THIS IDEA, BUT I HAVE A QUESTION WHETHER THIS WOULD BE FORESEEN AS SOMETHING THAT MIGHT INCLUDE RESUBMISSION OF GRANTS THAT WERE DISQUALIFIED, OR IS THAT GOING TO BE A SEPARATE?

CHAIRMAN KLEIN: MY UNDERSTANDING, I'LL ASK FOR COUNSEL'S CLARIFICATION, IS THAT ON AN OPEN COMPETITION, ANY OF THESE INDIVIDUALS CAN RESUBMIT AS A NEW APPLICATION, THEY CAN MODIFY THEIR APPLICATION. THIS IS A NEW APPLICATION THAT WE'RE CONSIDERING.

MS. PACHTER: IT WILL BE A NEW APPLICATION IN RESPONSE TO A NEW RFA, DR. PRIETO, AND THE BOARD WILL HAVE TO ALLOCATE FUNDS SEPARATELY FOR IT.

DR. PRIETO: SO THAT ANY SCIENTIFIC REVIEW THAT'S PREVIOUSLY TAKEN PLACE WOULD HAVE TO BE REPEATED?

MS. PACHTER: THAT'S CORRECT.

CHAIRMAN KLEIN: IT'S A DE NOVO, CLEAN, UNRELATED REVIEW.

DR. BLOOM: AS A GENERAL MATTER, PHYSICIAN SCIENTISTS ARE AMONG THE RAREST BIRDS THAT WE HAVE IN OUR FIELD THESE DAYS. SO WHATEVER THIS GROUP COULD DO TO STIMULATE THAT IN THE AREA OF STEM CELL RESEARCH WOULD BE VASTLY APPRECIATED AND GOOD FOR ALL OF BIOMEDICAL SCIENCE.

CHAIRMAN KLEIN: ADDITIONAL COMMENTS?

MR. ROTH: I WOULD LIKE TO SPEAK IN SUPPORT, AND NOT ONLY THAT, BUT ENCOURAGE THAT WE GO AS QUICKLY AS WE CAN AND JUDICIOUSLY AS WE CAN.

CHAIRMAN KLEIN: ADDITIONAL COMMENTS? WITH THAT, MARCY FEIT AND THEN WE'LL COME BACK TO DR. STEWARD.

MS. FEIT: I JUST WANT TO MAKE SURE THAT WHATEVER PROCESS WE DO COME FORWARD IN THE FUTURE, THAT THERE IS GREAT CONSIDERATION FOR THOSE GRANTS THAT COULD NOT BE ADDRESSED TODAY, THAT THE PROCESS DOES ADDRESS THAT THEY CAN REAPPLY.

CHAIRMAN KLEIN: MARCY, WE CAN ALLOW THEM LEGALLY AN OPTION -- A CLEAN OPTION TO COMPETE, BUT WE CANNOT GIVE THEM SPECIAL CONSIDERATION.

DR. STEWARD: MY POINT IS A VERY TECHNICAL ONE, AND I'M SURE YOU GUYS ARE MORE AHEAD OF THIS THAN I AM, BUT JUST THE POINT OF THE ELIGIBILITY, YEARS IN GRADE.SO IT MIGHT BE THAT SOME OF THE PEOPLE WHO WERE TECHNICALLY EXCLUDED THIS ROUND MIGHT FALL OFF THE ELIGIBILITY CURVE. JUST TO SORT OF THINK ABOUT THAT AS WHATEVER YOU'RE PUTTING FORWARD AS A NEW RFA.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. ALL RIGHT. ANY PUBLIC COMMENT?

MR. SIMPSON: JOHN SIMPSON FOR THE FOUNDATION FOR TAXPAYERS AND CONSUMER RIGHTS. THE PROCESS IS TREMENDOUSLY IMPORTANT, AND I THINK SOME VERY FINE RESEARCHERS WERE UNFORTUNATELY VICTIM OF THAT THIS TIME AROUND. AND SO I WOULD ADVOCATE THAT ALL DUE SPEED BE GIVEN TO A NEW ROUND HERE THAT WOULD INCLUDE NEW APPLICATIONS. I THINK IT'S ABSOLUTELY ESSENTIAL THAT THAT BE DONE. BUT I ALSO THINK THAT IT'S ABSOLUTELY ESSENTIAL THAT YOU, AS DR. MURPHY JUST SAID, GET PROCESS IN ORDER AND MAKE SURE IT GOES WELL.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. ALL RIGHT. SO COUNSEL AND STAFF, WILL WE BE ADJOURNING TO AN EXECUTIVE SESSION? AND, COUNSEL, WOULD YOU PLEASE READ THE PREAMBLE FOR THE JUSTIFICATION FOR THAT EXECUTIVE SESSION?

MS. PACHTER: WE'RE MOVING INTO EXECUTIVE SESSION FOR A DISCUSSION OF PERSONNEL PURSUANT TO GOVERNMENT CODE SECTION 11126(A) AND HEALTH AND SAFETY CODE SECTION 125290.30(D)(3)(D).

MR. SIMPSON: CAN I ASK A QUESTION ABOUT THAT? THAT WOULD NOT INCLUDE ANY DISCUSSION OF ACTIONS BY BOARD MEMBERS OR CONFLICTS OF INTEREST OR ANYTHING LIKE THAT AS THOSE WOULD NOT BE PERSONNEL MATTERS, CORRECT?

CHAIRMAN KLEIN: NO. WE'RE JUST DEALING WITH PERSONNEL.

MR. SIMPSON: JUST PERSONNEL NEW HIRES, THAT KIND OF THING?

CHAIRMAN KLEIN: THAT'S CORRECT. OKAY. AND WE ARE ADJOURNING INTO THIS ROOM?

MS. PACHTER: YES.

CHAIRMAN KLEIN: AND SO WE'RE ADJOURNING INTO THIS ROOM. IF THE PUBLIC WILL PLEASE GIVE US THE CHANCE TO HAVE THIS PERSONNEL SESSION. AND IF THEY WOULD TAKE THIS TIME TO GET THEIR LUNCH BECAUSE I BELIEVE WE WILL BE EATING LUNCH DURING THIS TIME. AND, DR. MURPHY, WHAT'S YOUR ESTIMATE OF TIME HERE?

DR. MURPHY: I WOULD SAY WE COULD PROBABLY GET EVERYTHING DONE WITHIN 20 MINUTES.

CHAIRMAN KLEIN: WELL, GIVEN THAT THE BOARD EATS MORE SLOWLY, MAYBE WE SHOULD GIVE THEM 20 MINUTES TO LISTEN AND 20 MINUTES TO EAT.

DR. MURPHY: WE MIGHT WANT TO THINK ABOUT A WORKING LUNCH, MR. CHAIRMAN. IS THAT WHAT WE'RE CONSIDERING?

CHAIRMAN KLEIN: YES. SO A COMPROMISE, 30 MINUTES, BUT BE PREPARED IF WE'RE MORE EXPEDITIOUS THAN THAT.

(A RECESS WAS TAKEN.)

CHAIRMAN KLEIN: AS WE INVITE THE PUBLIC BACK INTO THIS SESSION, WE HAVE SOME REALLY IMPORTANT ITEMS AND WE NEED TO MOVE VERY EFFECTIVELY. OKAY. AS ITEM NO. 13, COULD COUNSEL PLEASE CITE THE RESULTS OF THE ITEM DESIGNATED TO BE BROUGHT FROM THE EXECUTIVE SESSION TO THE PUBLIC SESSION.

MR. HARRISON: IT WOULD PROBABLY BE APPROPRIATE FOR DR. MURPHY TO MAKE THE ANNOUNCEMENT.

CHAIRMAN KLEIN: DR. MURPHY, WOULD YOU LIKE TO MAKE THE ANNOUNCEMENT RELATED TO ITEM 13 AS TO PRESIDENT'S COMPENSATION?

MR. HARRISON: I'M SORRY. I THOUGHT WE WERE FIRST GOING TO THE CLOSED SESSION AND ACTION, PUBLIC REPORT FROM THE CLOSED SESSION.

CHAIRMAN KLEIN: YOU ARE CORRECT. IN TERMS OF THE CLOSED SESSION, DO WE HAVE ONE ITEM OR TWO ITEMS?

MR. HARRISON: ONE.

CHAIRMAN KLEIN: ONE ITEM. DR. MURPHY.

DR. MURPHY: YES, MR. CHAIRMAN, I WANT TO THANK THE BOARD FOR APPROVING THE APPOINTMENT OF DON GIBBONS AS THE NEW CHIEF COMMUNICATION OFFICER OF CIRM. DON IS CURRENTLY THE ASSOCIATE DEAN FOR PUBLIC AFFAIRS AT HARVARD MEDICAL SCHOOL. HE HAS A LONG HISTORY IN THE PUBLICATION INDUSTRY, AT STANFORD UNIVERSITY, AND FOR THE PAST NUMBER OF YEARS AT HARVARD MEDICAL. AND WITH YOUR APPROVAL OF HIS APPOINTMENT, DON IS EXPECTED TO BE AT CIRM BY MID-FEBRUARY.

MR. CHAIRMAN, I THINK JAMES WILL TALK ABOUT THE FINANCIAL ARRANGEMENTS THAT WE HAVE ESTABLISHED WITH HIM.

CHAIRMAN KLEIN: THANK YOU.

MR. HARRISON: THE TERMS OF DON GIBBONS' APPOINTMENT WOULD BE AS FOLLOWS: HIS SALARY IS ACTUALLY CONTINGENT UPON ACTION THAT THE BOARD'S GOING TO HOPEFULLY BE TAKING A COUPLE OF AGENDA ITEMS DOWN. IF THE BOARD APPROVES A RELOCATION ALLOWANCE POLICY, THEN MR. GIBBONS' SALARY WILL BE $190,000. IF THE BOARD DOES NOT APPROVE THAT POLICY, HIS SALARY WILL BE $195,000.

THE RELOCATION ALLOWANCE THAT WE HAVE PROPOSED WOULD BE $15,000, WHICH IS 7.8 PERCENT OF HIS ANNUAL COMPENSATION, AND IT WOULD BE PAYABLE AT THE END OF THE THIRD PAY PERIOD FOLLOWING HIS START DATE.

THOSE ARE THE TERMS OF HIS APPOINTMENT, AND WE WOULD ASK THAT THE BOARD, BY A MOTION, APPROVE THE COMPENSATION PACKAGE I'VE JUST DESCRIBED.

CHAIRMAN KLEIN: IS THERE A MOTION FOR APPROVAL?

DR. LEVEY: SO MOVED.

DR. LOVE: SECOND.

CHAIRMAN KLEIN: DR. LEVEY, SECOND BY DR. LOVE. BOARD COMMENTS? PUBLIC COMMENTS? SEEING NONE, ALL IN FAVOR? OPPOSED? MOTION PASSES.

CAN WE PROCEED TO THEN ITEM 13.

MR. HARRISON: YES. ANOTHER ITEM THAT IS A CARRY-OVER FROM THE BOARD'S LAST MEETING RELATES TO DR. TROUNSON'S APPOINTMENT. THERE WAS ONE ITEM WHICH WAS PART OF HIS COMPENSATION FOR WHICH WE NEEDED TO DO SOME DUE DILIGENCE AND CONSULT WITH OTHER STATE OFFICIALS. WE HAVE DONE SO AND ARE NOW READY TO PROPOSE THAT THE BOARD APPROVE AN ADDITIONAL COMPENSATION TERM FOR DR. TROUNSON.

THIS WOULD BE A PAYMENT OF UP TO 12 MONTHS BASE SALARY IF DR. TROUNSON WERE TERMINATED WITHOUT CAUSE BY THE BOARD DURING THE FIRST 36 MONTHS OF HIS EMPLOYMENT. THE PACKAGE COULD NOT EXCEED 12 MONTHS BASE SALARY, AND IT WOULD DEPEND UPON HOW LONG DR. TROUNSON HAD SERVED. FOR EXAMPLE, IF HE WERE TERMINATED AFTER 12 MONTHS, HE WOULD BE ENTITLED TO ONLY 12 MONTHS' COMPENSATION. IF, HOWEVER, HE WERE TERMINATED AFTER 30 MONTHS, HE'D ONLY BE ENTITLED TO SIX MONTHS' SALARY.

CHAIRMAN KLEIN: YOU ARE TALKING ABOUT IF HE WERE HERE FOR 12, HE WOULD GET ANOTHER 12 MONTHS' SEVERANCE?

MR. HARRISON: CORRECT.

CHAIRMAN KLEIN: BUT IF HE'S TERMINATED IN THE 30TH MONTH, HE WOULD GET ANOTHER SIX MONTHS' SEVERANCE.

MR. HARRISON: CORRECT.

CHAIRMAN KLEIN: ANY QUESTIONS BY THE BOARD? IS THERE A MOTION?

MR. ROTH: MOTION TO APPROVE.

CHAIRMAN KLEIN: SECOND?

DR. FRIEDMAN: SECOND.

CHAIRMAN KLEIN: SECOND, DR. FRIEDMAN. COMMENTS? PUBLIC COMMENT? ALL IN FAVOR? OPPOSED?

NO. 14, RELOCATION ALLOWANCE.

MR. HARRISON: THIS IS A POLICY THAT WE BROUGHT TO THE GOVERNANCE SUBCOMMITTEE FOR CONSIDERATION. THIS IS A POLICY THAT WOULD AUTHORIZE THE PRESIDENT OF CIRM TO, IN HIS RECRUITMENT OF CANDIDATES FROM OUT OF STATE, OFFER CANDIDATES A RELOCATION ALLOWANCE TO HELP THEM ADJUST TO THE COST OF LIVING DIFFERENCES IN CALIFORNIA.

THE POLICY THAT'S BEFORE YOU IS MODELED VERY CLOSELY ON THE UNIVERSITY OF CALIFORNIA RELOCATION POLICY. AND AS YOU KNOW, THE ICOC HAS THE POWER UNDER PROPOSITION 71 TO SET THE COMPENSATION OF CIRM EMPLOYEES WITHIN THE RANGE OF COMPENSATION FOR INDIVIDUALS IN SIMILAR POSITIONS AT THE INSTITUTIONS FROM WHICH MEMBERS OF THIS BOARD ARE APPOINTED.

THE ESSENTIAL TERMS OF THE RELOCATION ALLOWANCE POLICY ARE AS FOLLOWS: ONLY THOSE EMPLOYEES WHO ARE RECRUITED FROM OUT OF THE STATE OF CALIFORNIA TO POSITIONS IN SALARY LEVEL 6 THROUGH 10 WOULD BE ELIGIBLE. THE TOTAL RELOCATION ALLOWANCE WOULD BE CAPPED AT 25 PERCENT OF THE EMPLOYEE'S BASE SALARY, BUT NOT TO EXCEED $75,000. IF THE RELOCATION ALLOWANCE WAS 10 PERCENT OR LESS OF THE EMPLOYEE'S ANNUALIZED BASE SALARY AND NO MORE THAN $25,000, IT WOULD BE PAYABLE AT THE END OF THE THIRD PAY PERIOD AFTER THE EMPLOYEE'S START DATE IN A LUMP-SUM PAYMENT. IF IT'S OVER 10 PERCENT, THEN IT WOULD BE PAYABLE OVER A FOUR-YEAR PERIOD, 40 PERCENT AT THE END OF THE FIRST YEAR, 30 PERCENT AT THE END OF THE SECOND YEAR, 20 PERCENT AT THE END OF THE THIRD YEAR, AND 10 PERCENT AT THE END OF THE FOURTH YEAR.

IMPORTANTLY, IF AN EMPLOYEE FAILED TO COMPLETE HIS OR HER FIRST FULL YEAR OF EMPLOYMENT AT CIRM AFTER HAVING RECEIVED A RELOCATION ALLOWANCE, THE EMPLOYEE WOULD BE REQUIRED TO REPAY IT TO CIRM IN FULL. AND FINALLY, FOR PURPOSES OF THE PRESIDENT'S APPROVAL AUTHORITY AND FOR THE APPROVAL AUTHORITY OF THE GOVERNANCE SUBCOMMITTEE, THE RELOCATION ALLOWANCE WOULD BE INCLUDED WITHIN THE INDIVIDUAL'S BASE SALARY. AND ALSO SIGNIFICANTLY, THE POLICY WOULD REQUIRE THAT RELOCATION ALLOWANCES BE REPORTED PUBLICLY TO THE BOARD IF BOARD ACTION IS NOT REQUIRED AT THE ICOC MEETING NEXT FOLLOWING THE APPOINTMENT OF THE EMPLOYEE, SO WE ENSURE THAT THERE'S FULL DISCLOSURE TO THE BOARD AND FULL DISCLOSURE TO THE PUBLIC.

CHAIRMAN KLEIN: THANK YOU. BOARD COMMENT? IS THERE A MOTION TO SUPPORT?

DR. WRIGHT: I MOVE APPROVAL.

CHAIRMAN KLEIN: DR. WRIGHT.

DR. AZZIZ: SECOND.

CHAIRMAN KLEIN: SECOND FROM -- WHO IS THAT DOWN THERE AT THE END? DR. AZZIZ. I THOUGHT IT WAS DOWN THERE. DR. AZZIZ, I CAN SEE YOU CLEARLY. OUR LEAD BATTER.

SO ADDITIONAL COMMENTS FROM THE BOARD? PUBLIC COMMENT? SEEING NONE, CALL THE QUESTION. ALL IN FAVOR? OPPOSED?

WE HAVE JUST A FEW MINUTES HERE BEFORE WE LOSE OUR QUORUM. SO WE HAVE SOME CRITICAL SCIENTIFIC PEER REVIEW SESSIONS COMING UP HERE AND A NEED TO RECRUIT FOR NEW SCIENTIFIC PEER REVIEW WITH SOME LEAD TIME. I'M ACTUALLY GOING TO DO NO. 17. DR. SAMBRANO, IF YOU COULD DO -- COUNSEL, THEY CAN DO 17 A AND B SEPARATELY OR TOGETHER?

MS. PACHTER: SEPARATELY.

CHAIRMAN KLEIN: SEPARATELY. GIL, 17 A FIRST,AND THEN WE'LL HAVE A PAUSE FOR A MOTION. JUST GIVE US THE BOTTOM LINE BECAUSE I THINK WE ALL HAVE SEEN THE BIOSKETCHES OF THE INDIVIDUALS.

DR. SAMBRANO: SO WE ARE BRINGING FOR YOUR CONSIDERATION NOMINEES FOR ALTERNATE GRANTS WORKING GROUP MEMBERS, AS YOU MENTIONED, BOTH TO EXPAND THE BREADTH OF SCIENTIFIC EXPERTISE FOR REVIEW OF GRANT APPLICATIONS AND FACILITATE THE ANTICIPATED INCREASE IN THE NUMBER OF REVIEWS THAT ARE GOING TO BE CONDUCTED ON AN ANNUAL BASIS.

SO THE NOMINEES FOR ALTERNATE GRANTS WORKING GROUP MEMBERS ARE DR. FREDA DIANE MILLER, DR. STEPHEN LEWIS MINGER, DR. PAUL J. SIMMONS, DR. STEPHEN C. STROM, DR. MEGAN SYKES, DR. VIVIANE TABAR, AND DR. SAMUEL WEISS. ALL OF THESE HAVE A BRIEF BIO SHOWN IN YOUR BOOKS IN TAB 17 A.

AS ALTERNATE GRANTS WORKING GROUP MEMBERS, THESE INDIVIDUALS MAY BE CALLED UPON TO PARTICIPATE IN A GRANTS WORKING GROUP MEETING AS AN AD HOC REVIEWER OR ASKED TO BECOME A REGULAR MEMBER OF THE WORKING GROUP TO REPLACE, AS NECESSARY, AND THEY MUST, OF COURSE, ALL ABIDE BY THE SAME CONFLICT OF INTEREST AND FINANCIAL DISCLOSURE POLICY AS REGULAR WORKING GROUP MEMBERS.

SO WE REQUEST YOUR APPROVAL AND APPOINTMENT OF THESE NOMINEES AS ALTERNATE MEMBERS OF THE GRANTS WORKING GROUP.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. IS THERE A MOTION TO MOVE TO APPROVE THESE ALTERNATES?

DR. LEVEY: SO MOVED.

CHAIRMAN KLEIN: MOVED BY DR. LEVEY. SECOND?

MS. GIBBONS: SECOND.

CHAIRMAN KLEIN: SECOND BY LEEZA GIBBONS. DISCUSSION?

DR. POMEROY: THESE ALL LOOK LIKE VERY IMPRESSIVE PEOPLE AND I'M GOING TO SUPPORT THEM, BUT I'D LIKE TO ASK IF WE COULD GET A SUMMARY ABOUT THE DIVERSITY OF THE GROUP OF REVIEWERS THAT WE'VE ASSEMBLED TO DATE AT A FUTURE MEETING.

CHAIRMAN KLEIN: POINT WELL TAKEN. PUBLIC COMMENT? SEEING NONE, ALL IN FAVOR? OPPOSED?

17 B, IF YOU WOULD ADDRESS THE KEY POINTS.

DR. SAMBRANO: SO THE SECOND ITEM FOR CONSIDERATION IS THE HONORARIUM PROVIDED TO GRANTS WORKING GROUP MEMBERS WHO PARTICIPATE IN THE REVIEW OF GRANT APPLICATIONS.

AS YOU KNOW, THE PEER REVIEW OF GRANT APPLICATIONS IS AN ESSENTIAL FUNCTION OF THE INSTITUTE AND AN INVALUABLE SERVICE PROVIDED BY THE WORKING GROUP MEMBERS.

THERE ARE TWO PARTS TO THIS. THE FIRST, WE WOULD REQUEST THAT THE CURRENT HONORARIUM OF $500 PER DAY OF SERVICE AT A REVIEW MEETING, WHICH IS USUALLY TWO DAYS, SO ANY GIVEN REVIEWER USUALLY RECEIVES A THOUSAND FOR A SINGLE REVIEW MEETING, BE CHANGED TO AN HONORARIUM OF $2,000 FOR THE EVALUATION OF GRANT APPLICATIONS FOR AN RFA, SO ALTOGETHER REGARDLESS OF THE NUMBER OF DAYS INVOLVED. AND THIS IS TO COVER THEIR EXTENSIVE PREPARATION TIME IN REVIEWING GRANTS AT THEIR HOME INSTITUTION TO WHICH THEY OFTEN SPEND AT LEAST A WEEK'S TIME AND THIS IS FULL TIME.

FOR MEETINGS THAT ARE NOT REVIEW MEETINGS, SUCH AS TELECONFERENCES, THE LEVEL WOULD REMAIN AT $500 PER MEETING.

THE SECOND PART OF THIS IS ALSO TO ADDRESS AN HONORARIUM FOR SPECIALISTS. CURRENTLY THEY ARE RECEIVING $400 FOR THEIR SERVICE AS PREVIOUSLY APPROVED BY THE BOARD. WHAT WE'D LIKE TO SUGGEST, THAT BECAUSE SPECIALISTS OFTEN REVIEW FROM AS LITTLE AS TWO APPLICATIONS TO AS MANY AS TEN, THAT WE HAVE AN HONORARIUM THAT IS ADJUSTABLE AND COMMENSURATE WITH THE NUMBER OF APPLICATIONS REVIEWED. SO WE PROPOSE THAT EACH SPECIALIST RECEIVE A BASE AMOUNT OF $400 AND AN ADDITIONAL 100 FOR EACH APPLICATION HE OR SHE EVALUATES. AND THIS IS ALL DESCRIBED IN YOUR TAB 17 B.

DR. LEVEY: I CERTAINLY WOULD SUPPORT ANY OF THESE INCREASES. I THINK WE'VE DISCUSSED THIS BEFORE. YOU CAN'T PAY THESE INDIVIDUALS ENOUGH. WE'RE VERY DEMANDING, IT'S VERY BUSY, WE NEED THE QUALITY. IF YOU WANTED TO EVEN GO HIGHER, I THINK THE SENSE OF THE BOARD WOULD PROBABLY EVEN AGREE TO GO HIGHER THAN THIS. IT STILL ISN'T OUT OF LINE WITH WHAT OTHER ORGANIZATIONS PAY THEIR REVIEWERS.

DR. MURPHY: JERRY, IF I CAN SPEAK FOR GIL, I THINK WE THINK THAT THIS IS A SIGNIFICANT INCREASE, BUT WE ALSO THINK IT'S AN APPROPRIATE INCREASE, AND IT'S WITHIN THE RANGE OF OTHER ORGANIZATIONS THAT WE WANT TO COMPETE WITH. I THINK GOING HIGHER IS NOT NECESSARY AT THIS POINT. THANK YOU, THOUGH.

CHAIRMAN KLEIN: ALL RIGHT. ANY ADDITIONAL COMMENTS FROM THE BOARD?

DR. AZZIZ: I JUST WANTED TO MAKE A MOTION, PLEASE.

CHAIRMAN KLEIN: OKAY.

DR. AZZIZ: MOTION TO APPROVE THE RECOMMENDATION FOR A CHANGE IN HONORARIUM.

DR. LEVEY: SECOND.

CHAIRMAN KLEIN: SECOND FROM DR. LEVEY. ADDITIONAL COMMENTS FROM THE BOARD? COMMENTS FROM THE PUBLIC?

MR. SIMPSON: JOHN SIMPSON, FOUNDATION FOR TAXPAYER AND CONSUMER RIGHTS. I REGRET THAT WE DID NOT HEAR THAT THE MEETING HAD COME BACK TO ORDER. THERE WAS NO MENTION MADE OUT THERE BEFORE, SO WE MISSED THE REPORT OF THE EXECUTIVE SESSION, A NUMBER OF US. PERHAPS WE CAN CATCH UP ON THAT LATER. BUT I WOULD ASK THAT WHEN YOU SEND US OUT OF THE ROOM, SOMEONE SHOULD COME OUT AND PLEASE TELL US YOU MAY NOW COME BACK IN.

CHAIRMAN KLEIN: THEY DID. I GUESS THEY DIDN'T FIND YOU, BUT WE WILL MAKE SURE THAT WE WILL BE MORE THOROUGH ABOUT THAT.

MR. SIMPSON: ON THIS THING, I DEFINITELY SUPPORT THIS. I THINK YOU NEED TO PAY FOR QUALITY, AND I DON'T WANT TO APPEAR CHEAP, AND I THINK THAT THIS IS CERTAINLY A TIME WHEN THESE SORTS OF HONORARIA ARE IN THE TAXPAYERS' INTEREST, AND I DEFINITELY THINK YOU SHOULD DO IT.

CHAIRMAN KLEIN: THANK YOU VERY MUCH. CALL THE QUESTION. ALL IN FAVOR? OPPOSED?

WE'RE GOING TO MOVE ON TO ITEM 19 VERY QUICKLY. THIS IS THE CONSIDERATION OF AMENDMENTS TO THE INTERNAL GOVERNANCE POLICY IN ORDER TO BRING IT INTO -- AND A REVIEW OF THE CIRM ORGANIZATIONAL CHART DEVELOPED BY DR. MURPHY AND DR. TROUNSON. AND, DR. MURPHY, I BELIEVE I CALL ON YOU, AND THEN SHERRY LANSING BECAUSE IT'S GONE TO GOVERNANCE COMMITTEE. IF WE COULD BE SUMMARY IN THAT.

DR. MURPHY: MR. CHAIRMAN, I DON'T THINK WE CAN ACT ON THE INTERNAL GOVERNANCE POLICY TO ADAPT IT BECAUSE WE DID NOT -- IT WAS NOT PUT ON THE AGENDA TEN DAYS AGO.

MR. HARRISON: THERE WAS SOME CONFUSION. IN FACT, THE ITEM HAS BEEN ON THE AGENDA. IT WAS NOT ON THE GOVERNANCE SUBCOMMITTEE -- INTERNAL GOVERNANCE POLICY WAS NOT ON THE GOVERNANCE SUBCOMMITTEE'S AGENDA. IT WAS ON THE ICOC'S AGENDA. THE GOVERNANCE SUBCOMMITTEE CONSIDERED THE ORGANIZATIONAL CHART, RECOMMENDED ITS APPROVAL. THE INTERNAL GOVERNANCE POLICY CHANGES WERE MADE TO RECONCILE THE INTERNAL GOVERNANCE POLICY WITH THE CHANGES TO THE ORGANIZATIONAL CHART.

CHAIRMAN KLEIN: SO QUESTION FOR YOU. WE CAN ADDRESS THE ORGANIZATIONAL CHART AND FOLLOW.

MR. HARRISON: YOU CAN ADDRESS BOTH OF THEM IF YOU CHOOSE TO DO SO.

MS. LANSING: YOU DON'T REQUIRE RECOMMENDATION OF THE GOVERNANCE COMMITTEE. THE GOVERNANCE COMMITTEE MET. DR. MURPHY WENT THROUGH THE CHART. THE GOVERNANCE COMMITTEE RECOMMENDS THE CHART. THE VERBAL IS CONFIRMATION OF THE NEW CHART, AS I UNDERSTAND IT, AND NOTHING ELSE BUT THAT. AM I CORRECT?

DR. MURPHY: THAT'S RIGHT.

MS. LANSING: MAYBE WE CAN TAKE A MINUTE AND EVERYONE READ IT, AND WE CAN BRING IT BEFORE THE FULL BOARD. I WANT TO STATE AGAIN, FROM WHAT I UNDERSTAND, SO I'M SURE I GET IT, THE GOVERNANCE COMMITTEE RECOMMENDS THE CHART. THE CHART IS A VERBAL CODIFICATION -- THE ATTACHED THING IS A VERBAL CODIFICATION OF THE CHART. THERE'S NOTHING ELSE IN IT.

CHAIRMAN KLEIN: THAT'S RIGHT.

DR. MURPHY: THAT'S RIGHT. THE MODIFICATIONS PUT INTO THE INTERNAL GOVERNANCE STATEMENT REFLECT THE CHANGES THAT ARE NOW IN THE ORGANIZATIONAL CHART. AND I GUESS THE QUESTION I WANT TO BE ABSOLUTELY CERTAIN OF, IT HAS BEEN ON THE AGENDA?

MR. HARRISON: IT HAS BEEN.

DR. MURPHY: THANK YOU.

MR. CHAIRMAN, IF YOU JUST LOOK AT --

MS. LANSING: WAIT.

CHAIRMAN KLEIN: WE'RE GOING TO PROCEED WITH THE STAFF AND THEN WE'LL GO TO PUBLIC COMMENT.

MS. LANSING: THANK YOU.

DR. MURPHY: IF YOU JUST LOOK AT THE ORGANIZATIONAL CHART, THE KEY ISSUES HERE ARE THE FACT THAT THERE WILL NOW BE TWO KEY SENIOR PEOPLE UNDER DR. TROUNSON, CSO POSITION AND THE COO POSITION.

THE CSO WILL BE RESPONSIBLE FOR THE SCIENTIFIC ASPECTS OF THE INSTITUTE. THE COO WILL BE RESPONSIBLE FOR THE ADMINISTRATIVE ASPECTS AND WILL HAVE A ROLE IN THE SCIENCE AS WELL IN TERMS OF ESPECIALLY CLINICAL GRANTS, PERHAPS BASIC SCIENCE GRANTS AS WELL.

DR. TROUNSON WANTS A TRIUMVIRATE AT THE TOP OF THE ORGANIZATION WITH HIMSELF, THE CSO, AND THE COO. SO THIS WILL BE THE CRITICAL MASS OF EXPERTISE THAT HE FEELS HE CAN CONTRIBUTE TO AND ALSO THAT HE WILL BENEFIT FROM.

YOU WILL ALSO SEE ON THE RIGHT-HAND SIDE OF THE CHART IS THE OFFICE OF THE CHAIR, WHICH IS REPORTING TO THE CHAIR AND TO THE VICE CHAIR. THE ARRANGEMENTS THAT CHAIRMAN KLEIN AND I NOW HAVE IS THAT CHAIRMAN KLEIN WILL BE RESPONSIBLE FOR THE PEOPLE WORKING IN HIS PART OF THE ORGANIZATION SUBJECT TO -- AND THROUGH CHAIRMAN KLEIN THEY WILL REPORT TO THE PRESIDENT. SO ON THE DAILY OPERATIONS OF THE INSTITUTE, THEY WILL REPORT TO CHAIRMAN KLEIN, BUT FOR ADMINISTRATIVE AND SALARY MATTERS, ETC., THEY WILL -- THE RESPONSIBILITY WILL PASS THROUGH CHAIRMAN KLEIN TO THE PRESIDENT.

YOU CAN SEE ON THE RIGHT-HAND SIDE THAT THERE IS A NEW POSITION OF DIRECTOR OF FINANCE, LEGAL, AND GOVERNMENTAL AFFAIRS, WHICH WILL ACTUALLY BE MORE OF A CHIEF OF STAFF POSITION FOR THE CHAIRMAN'S OFFICE.

MR. CHAIRMAN, I ASK THAT THE BOARD APPROVE THIS CHART IN ITS CURRENT FORM; BUT, AS I MENTIONED BEFORE, I THINK DR. TROUNSON WILL NEED TO ADJUST THE CHART DEPENDING UPON THE PEOPLE WHO HE BRINGS IN AND DEPENDING UPON THE SPECIFIC REFINEMENTS THAT HE WANTS TO PUT INTO THE PLAN ONCE HE ARRIVES.

CHAIRMAN KLEIN: THANK YOU. BOARD COMMENT? PUBLIC COMMENT?

MR. SIMPSON: JOHN SIMPSON, FOUNDATION FOR TAXPAYER AND CONSUMER RIGHTS. I ATTENDED THE GOVERNANCE COMMITTEE MEETING, AND I CONFESS I HAVE A SLIGHTLY DIFFERENT RECOLLECTION OF WHAT TRANSPIRED THERE, WHICH IS TO SAY I BELIEVE I UNDERSTOOD YOU TO SAY THAT THIS CHART WAS VOTED ON AND PASSED BY THE COMMITTEE. I DON'T BELIEVE -- I BELIEVE IT WAS JUST PRESENTED AS AN INFORMATIONAL BASIS.

CHAIRMAN KLEIN: I THINK IT IS INFORMATIONAL. IT'S NOT A REQUIRED ITEM TO BE PASSED THROUGH.

MR. SIMPSON: I JUST WANTED TO CLARIFY THAT THERE WAS NOT A RECOMMENDATION. IT WAS PRESENTED AND DISCUSSED, BUT I DON'T BELIEVE IT WAS A FORMAL RECOMMENDATION.

MS. LANSING: YOU'RE ABSOLUTELY RIGHT. I STAND CORRECTED.

CHAIRMAN KLEIN: THERE WAS A STRONG CONSENSUS OF THE PEOPLE THERE, BUT THERE WAS NOT A FORMAL VOTE.

MR. SIMPSON: THE OTHER THING ABOUT THIS, I HAVE TROUBLE UNDERSTANDING EXACTLY WHAT THE ROLE OF THE DIRECTOR OF FINANCE, LEGAL, AND GOVERNMENTAL AFFAIRS IS.AND I THINK AT THE TIME THERE WAS SOME EXPLANATION THAT THIS WOULD PERHAPS HAVE TO DO WITH FINANCING AND SOME OF THE BOND ISSUES AND SOME OF THOSE KINDS OF THINGS. AND I WENT HOME AND THOUGHT MORE AND MORE AND MORE ABOUT THAT, AND I DON'T QUITE UNDERSTAND THE ROLE FOR THAT PERSON BECAUSE IT'S THE TREASURER OF THE STATE OF CALIFORNIA WHO SELLS ALL YOUR BONDS.

SO I THINK WHAT YOU BASICALLY DO IS JUST MAKE A PHONE CALL TO THE TREASURER AND SAY IT'S TIME TO SELL SOME BONDS. I'M VERY CURIOUS ABOUT THE JOB DESCRIPTION.

CHAIRMAN KLEIN: I'M HAPPY TO HAVE A CONVERSATION WITH YOU, MR. SIMPSON. IN TERMS OF THE TAX-EXEMPT OPINIONS AND HOW THEY RELATE TO OUR STRUCTURING OF OUR BOND PROGRAM AND HOW WE PHASE OUR BOND PROGRAM IS EXTRAORDINARILY COMPLICATED. I'M HAPPY TO HAVE THAT CONVERSATION WITH YOU ALONG WITH ISSUES RELATED TO THE VETTING OF THE POTENTIAL FOR A LOAN PROGRAM FOR THIS AGENCY.

BUT AS TO THIS ISSUE, WE NOW HAVE HAD PUBLIC COMMENT AND BOARD COMMENT. I WOULD LIKE TO KNOW IF WE COULD PROCEED TO A VOTE. COUNSEL?

MR. HARRISON: I DON'T BELIEVE THERE'S A MOTION PENDING.

DR. LEVEY: SO MOVED.

CHAIRMAN KLEIN: SO MOVED BY DR. LEVEY.

MS. FEIT: SECOND.

CHAIRMAN KLEIN: SECOND BY MARCY FEIT. CALL THE QUESTION. ALL IN FAVOR? OPPOSED? THANK YOU.

WE NEED TO GO NOW TO, IF WE CAN EXPEDITIOUSLY, TO ITEMS WE'VE PREVIOUSLY DISCUSSED IN MANY DIFFERENT CONTEXTS. AND I'D ASK DR. PENHOET TO LEAD THESE. THEY'RE IMPORTANT BECAUSE WE'RE TRYING TO OPEN UP OUR PROGRAMS TO FOR-PROFIT ENTITIES. WE'VE HAD A NUMBER OF PUBLIC HEARINGS ON THIS ALREADY, A LOT OF PUBLIC INPUT, AND WE WILL FIRST GO TO ITEM 16 AND THEN TO ITEM 15. LET ME MAKE IT DR. PENHOET'S CHOICE.

DR. PENHOET: WELL, WE'LL START WITH THE SLIDE THAT'S ON THE BOARD, WHICH IS WE SEEK YOUR APPROVAL TODAY TO FINALIZE THE INTELLECTUAL PROPERTY POLICY FOR FOR-PROFIT ORGANIZATIONS. WE HAVE -- JUST TO REMIND YOU, WE'VE HAD MANY PUBLIC MEETINGS IN THE PAST, AS BOB JUST ARTICULATED TO YOU. BASED ON THOSE MANY PUBLIC MEETINGS, WE DEVELOPED A POLICY FOR THE NONPROFITS WHICH WAS APPROVED IN 2007.

WE HAVE SINCE THEN BEEN WORKING ON THE POLICY FOR FOR-PROFIT ORGANIZATIONS. WE HAVE HELD A NUMBER OF HEARINGS. WE APPROVED A POLICY NOW A YEAR AGO IN DECEMBER OF 2006. WE HAVE DRAFT REGULATIONS. WE'VE GONE THROUGH VARIOUS COMMENT PERIODS. WE'VE HAD INTERESTED PERSONS MEETING IN SACRAMENTO WITH LEGISLATORS AND A NUMBER OF PRIVATE MEETINGS WITH LEGISLATORS, ETC. WE'VE HAD THREE ADDITIONAL COMMENT PERIODS SINCE THAT TIME, AND WE'RE SEEKING YOUR APPROVAL TO MOVE FORWARD TO SEEK OAL APPROVAL IN FEBRUARY OF '08. AND AS BOB SAID, THE INTENTION HERE TO GET THESE THINGS APPROVED WITH THE RELATED CHANGES IN THE GAP SO THAT WE CAN BEGIN TO MAKE GRANTS TO FOR-PROFIT ORGANIZATIONS.

JUST BRIEFLY, THE ELEMENTS OF SHARING ARE VIRTUALLY THE SAME FOR THE FOR-PROFIT AND THE NOT-FOR-PROFIT, THAT WHEN DATA ARE PUBLISHED IN SCHOLARLY PUBLICATIONS, PUBLICATION-RELATED BIOMEDICAL MATERIALS MUST BE SHARED. REVENUES FROM SUCCESSFUL CIRM-FUNDED PROJECTS MUST ESSENTIALLY CONFORM TO A NUMBER OF POLICIES WHICH WE HAVE DISCUSSED BEFORE IN EITHER OF TWO CATEGORIES. IN THE CASE OF THE NOT-FOR-PROFITS, THESE THINGS REFER ONLY TO RIGHTS WHICH ARE LICENSED BY THE NONPROFITS TO COMMERCIAL ENTITIES AND THE ATTENDANT SHARING OF THOSE REVENUES AND THE OBLIGATIONS THAT MUST BE PASSED ON TO THE FOR-PROFIT ENTITIES THAT TAKE THE LICENSE.

IN ADDITION TO THAT, FOR COMMERCIAL ENTITIES, WE HAVE TO DEAL WITH THE WHOLE ISSUE OF COMMERCIAL PRODUCTS THAT STEM DIRECTLY FROM CIRM-FUNDED PROJECTS.

SO ONE OF THE MOST CONTENTIOUS ASPECTS OF ALL THIS HAS BEEN THE ACCESS POLICY. I'M PLEASED TO TELL YOU TODAY THERE IS NO ONE WHO LIKES THIS POLICY. WE HAVE PEOPLE ON BOTH ENDS OF THE SPECTRUM STILL HOTLY DEBATING WHETHER WE SHOULD MOVE MORE TOWARDS MORE ACCESS OR MORE TOWARDS LESS ACCESS. I THINK WE HAVE A REASONABLE GROUND IN THE MIDDLE HERE, WHICH HAS BEEN CONFIRMED BY OUR IP POLICY TASK FORCE.

WHAT THE POLICY IN GENERAL SAYS, AND THIS IS VIRTUALLY THE SAME FOR BOTH THE NOT-FOR-PROFITS AND THE FOR-PROFITS, IS THAT LICENSEES MUST PROVIDE ACCESS TO UNINSURED CALIFORNIANS, THAT LICENSEES HAVE TO PROVIDE COMMERCIAL PRODUCTS AT A DISCOUNT TO CALIFORNIANS WHOSE THERAPIES ARE PAID FOR WITH PUBLIC FUNDS. WE DO HAVE THE CLARIFYING WORDING CHANGE THAT WE WANT TO INTRODUCE, BUT IT DOESN'T CHANGE THE OVERALL PROGRAM HERE. SO WE WILL NOT TAKE YOU THROUGH THE EXACT WORDING. WE CALLED FOR THOSE DISCOUNTED PRODUCTS TO BE AVAILABLE AT THE PRICES DEFINED BY CALRX. CALRX MAY NEVER BE FUNDED, SO THERE ARE THREE DETERMINANTS UNDERNEATH CALRX THAT DEFINE THE CALRX PRICES. WE'RE JUST GOING TO PUT IN THE DOCUMENT THAT IN THE CASE CALRX IS NOT FUNDED, WE'LL RELY ON THE THREE UNDERLYING MEASUREMENTS OF COST THAT SHOULD HAVE BEEN THE COMPONENTS THAT DEFINE THE CALRX COST.

THE FOR-PROFIT RESEARCHERS WHO DEVELOP PRODUCTS MUST ALSO PROVIDE THE ABOVE. IT'S THE SAME IN BOTH CASES. AND, OF COURSE, WE HAVE THE DISCOUNT PRICING THROUGH CALRX OR ITS SUCCESSOR, AS I JUST DESCRIBED. AND THEN WE DID DECIDE EARLY ON THAT ANY OF THESE ACCESS REQUIREMENTS WOULD BE TRIGGERED AS A CONSEQUENCE OF THE FIRST DOLLAR APPLIED TO A CIRM PROJECT.

THERE ARE TEETH IN THESE PROVISIONS. THERE ARE MARCH-IN RIGHTS TO ENSURE THAT THESE THINGS ARE APPLIED TO ENSURE PRACTICAL APPLICATION OF CIRM-FUNDED INVENTIONS. THIS IS ESSENTIALLY THE SAME AS NIH. IF SOMEBODY SITS ON A DISCOVERY AND DOESN'T BRING IT TO THE PUBLIC, THEN THE STATE CAN MARCH IN TO SEE THAT THAT HAPPENS. SECOND IS CONTROVERSIAL, BUT WE MUST HAVE SOME TEETH IN THE ACCESS PLAN. SO IT IS THERE TO ENFORCE COMPLIANCE WITH THE ACCESS PLAN. IT'S THERE TO ENFORCE PUBLIC USE REQUIREMENTS OF THE DISCOUNT PROVISIONS. AND FINALLY, IN THE HIGHLY UNLIKELY CASE, ALLEVIATE SOME PUBLIC HEALTH EMERGENCY NEED.

IF WE GO TO THE NEXT SLIDE, THIS SUMMARIZES THE DIFFERENCE BETWEEN THE NEEDS BETWEEN THE NONPROFITS AND THE FOR-PROFIT ORGANIZATIONS. I THINK, AS WE SAID BEFORE, IN THE CASE OF NONPROFITS, THEIR ONLY WAY TO COMMERCIALIZE TECHNOLOGY IS TO LICENSE IT TO A THIRD PARTY COMMERCIAL ORGANIZATION BECAUSE THEY THEMSELVES DO NOT COMMERCIALIZE PRODUCTS. IN THE CASE OF THE FOR-PROFITS, THEY HAVE A CHOICE TO EITHER LICENSE THEIR TECHNOLOGY OR DEVELOP IT THEMSELVES THROUGH THE STEPS THAT ARE INDICATED HERE IN THE LEFT-HAND SIDE OF THE SLIDE.

SO WE HAVE DIFFERENT POLICY NEEDS, PROPORTIONALITY ISSUES, THE FACT THAT THERE ARE MULTIPLE REVENUE TYPES, THERE ARE EXISTING PATENTS, THERE ARE SHARING OF REAGENTS, ETC.

IF YOU GO TO THE NEXT SLIDE, THIS SUMMARIZES THE KEY ELEMENTS OF THE TWO PROGRAMS. IN THE CASE OF NONPROFITS, WHEN THEY LICENSE THEIR TECHNOLOGY, THEY MUST SHARE 25 PERCENT OF THEIR REVENUES IN EXCESS OF PAYMENTS TO INVENTORS. THEY MUST HAVE AN ACCESS PLAN. THEY MUST SHARE BIOMEDICAL MATERIALS. AND, AS I SAID, WE DON'T ANTICIPATE ANY SELF-DEVELOPMENT HERE. IN THE CASE OF THE FOR-PROFIT ENTITIES, IF THEY LICENSE, THE SAME TERMS APPLY. EXACTLY THE SAME TERMS. HOWEVER, IF THEY DEVELOP THEMSELVES, THEN THE STATE WILL GET A RETURN AT THE TIME REVENUES ARE GENERATED WHICH WILL BE CAPPED AT THREE TIMES THE AWARD AMOUNT.

THIS WAS A VERY IMPORTANT ISSUE FOR US GOING FORWARD. THE INDUSTRY WANTED TO KNOW WHAT THEIR LIABILITY WOULD BE IN TERMS OF THEIR FINANCIAL PAYMENTS GOING FORWARD.

AND THEN WE ALSO DEVELOPED A SERIES OF SO-CALLED BLOCKBUSTER PAYMENTS WHICH WOULD INCREASE THE RETURN TO THE STATE IN THE CASE THESE BECAME VERY SUCCESSFUL PRODUCTS. SO IT'S A THREE-TIERED PAYMENT SYSTEM. ANOTHER 3 X WHEN REVENUES REACH $250 MILLION PER YEAR, AN ADDITIONAL 3 X WHEN THEY REACH $500 MILLION A YEAR. SO IN SUM, A $500 MILLION A YEAR BLOCKBUSTER PRODUCT WOULD RETURN NINE TIMES THE INVESTMENT TO THE STATE. AND FINALLY, FOR EVERYTHING IN EXCESS OF $500 MILLION AND IF THERE WAS A PATENT INVOLVED, THERE WOULD BE A ROYALTY, UNCAPPED ROYALTY, OF 1 PERCENT ON ALL SALES ABOVE $500 MILLION.

NEXT SLIDE SIMPLY SHOWS ANOTHER PICTURE OF ESSENTIALLY THE SAME THING AS WE TALKED ABOUT BEFORE. THE OTHER TRIGGER FOR THE ROYALTY PAYMENT IS THAT THE CIRM WOULD HAVE HAD TO INVEST MORE THAN $5 MILLION IN THE PROJECT AND A PATENT WOULD HAVE HAD TO EMERGE FOR US TO GO DOWN THE RIGHT-HAND SIDE OF THIS, AS INDICATED HERE. SO THAT'S THE FINAL SLIDE.

WE DO SUGGEST -- DUANE ROTH HAS HAD A NUMBER OF CONVERSATIONS WITH INDUSTRY REPRESENTATIVES, AS HAVE OTHERS. WE DO SUGGEST ONE CHANGE IN THE LANGUAGE REGARDING THE ACCESS POLICY, WHICH IS WE WANTED TO ENSURE THAT THE MANUFACTURERS WERE NOT LIABLE FOR ALL THE OTHER COSTS OF THE THERAPY. THAT IS, THEY WERE ONLY LIABLE IN THE ACCESS PLAN FOR ACTUALLY DELIVERING THEIR PRODUCT TO AN END USER, AND NOT FOR ALL THE OTHER ATTENDANT COSTS AROUND THE USE OF THAT PRODUCT.

SO WE SAID -- OUR CURRENT DOCUMENT SAYS IF THEY WOULD SUPPLY THE MATERIAL, AND I THINK THE CLARIFYING CHANGE THAT DUANE SUGGESTED IS THAT THEY PROVIDE ACCESS TO THE MATERIAL ACCORDING TO THE ACCESS PLAN. SO THE MATERIAL MAY NOT BE FREE, BUT IT WOULD BE CONSISTENT WITH THE ACCESS PLAN.

I THINK WITH A SIMPLE WORDING CHANGE AND WITH THE ADDITION OF THE FALLBACK POSITION TO CALRX TO DESCRIBE THE UNDERLYING ECONOMIC COMPONENTS OF THAT, WE SEEK YOUR APPROVAL FOR THIS POLICY GOING FORWARD.

MR. TOCHER: AND THERE'S ONE MORE CHANGE, ACTUALLY NOT SO MUCH CHANGES. ONE IS A NOTE THAT IN ADOPTING THIS SECTION 100408, WHICH IS ON PAGE 17, LINE 2, YOU WOULD BE ADOPTING THAT WITH THE REMOVAL OF THE WORD "OPTION." THAT'S AN ARTIFACT. THAT'S SUBDIVISION G FROM THE OAL COMMENT PROCESS. AND THE INSERTION OF THE WORD "ITS" ON SECTION 100408, PAGE 17, LINE 2. AND I'M SORRY. THE REMOVAL OF THE OPTION LANGUAGE IS ON 404(G).

CHAIRMAN KLEIN: ALL RIGHT. WITH THAT, IS THERE A MOTION FROM THE BOARD TO SUPPORT THE MOTION REQUESTED BY THE IP TASK FORCE WITH THE INCORPORATION OF THE ALTERNATIVE CRITERIA FOR THE RX LANGUAGE, IN ADDITION THE MODIFICATIONS SUGGESTED BY DUANE ROTH, AND THE ITEMS BROUGHT TO OUR ATTENTION BY SCOTT TOCHER RELATED TO THE OAL COMMENT PERIOD? IS THERE A MOTION?

DR. PENHOET: NO SUBSTANTIVE CHANGES ASSOCIATED WITH HIS COMMENTS. THEY'RE DRAFTING CHANGES.

DR. PRICE: SO MOVED.

CHAIRMAN KLEIN: DR. PRICE IS MOVING. SECOND?

DR. STEWARD: SECOND.

CHAIRMAN KLEIN: DR. STEWARD. IS THERE A PUBLIC COMMENT? WE HAVE ONLY A COUPLE MINUTES, SO UNLESS IT'S CRITICAL, LET'S NOT HEAR IT NOW. WE CAN HEAR IT DURING PUBLIC SESSION UNLESS IT'S A CRITICAL COMMENT.

MR. SIMPSON: VERY QUICKLY, IS THE BOARD AWARE OF THE LETTER THAT'S BEEN SENT TO YOU FROM THE SENATE AND ASSEMBLY HEALTH COMMITTEE QUESTIONING THE IP POLICY? APPARENTLY IT WAS RELEASED THIS MORNING.

DR. PENHOET: I HAVE RECEIVED THE LETTER. IT WAS DIRECTED TO ME. I HAVE NOT SHARED IT WITH THE ENTIRE BOARD. I'D BE HAPPY TO DO THAT.

CHAIRMAN KLEIN: WE HAVE THE OPPORTUNITY AS WE GO FORWARD TO CONTINUE TO DO MODIFICATIONS IN THIS POLICY. SO WE HAVE HAD COMMUNICATIONS OVER A PERIOD OF TWO YEARS. THIS IS A LATE COMMUNICATION. AND IN ORDER TO OPEN THE FOR-PROFIT ROUNDS, WE HAVE TO AT LEAST ADOPT THIS AT THIS POINT. COMMENTS?

MS. GILL: HI. MY NAME IS TERESA GILL. I'M HERE REPRESENTING INVITROGEN CORPORATION FROM SAN DIEGO, AND I'LL BE VERY BRIEF AND ONLY HIGHLIGHT THE ONE OR TWO ITEMS I THINK ARE IMPORTANT.

THE FIRST IS THAT, AS WAS SHOWN THIS MORNING WITH ALL THE ISSUES AROUND THE ETHICS POLICY, IT'S IMPORTANT THAT ANY POLICY ADOPTED BY THIS BOARD BE OPEN FOR REVIEW ON SOME KIND OF A DEFINITE TIMEFRAME. A DOCUMENT THAT'S OPEN-ENDED, PUTTING IT IN PLACE FOREVER I THINK IS OF CONCERN BECAUSE WE DO HAVE REMAINING CONCERNS, AND ONE OF THEM IS QUITE IMPORTANT. RIGHT NOW WE'RE LEFT WITH AN INEQUITABLE ACCESS TO CIRM FUNDS UNDER THE PUBLISHED BIOMEDICAL MATERIALS SECTION.

RIGHT NOW THIS LANGUAGE THAT EXISTS IN THERE, WHICH REQUIRES WITH PRIOR APPROVAL FROM CIRM A GRANTEE'S OBLIGATIONS UNDER THE REGULATION MAY CEASE WHEN THE MATERIALS ARE MADE BROADLY AVAILABLE. WE HAVE BEEN STATING ALL ALONG THAT THIS IS A TROUBLESOME PIECE OF LANGUAGE, AND THERE HAVE BEEN SOME ATTEMPTS TO CORRECT IT, BUT WE STRONGLY BELIEVE THAT MORE COMPANIES WILL TEAM WITH CIRM AND ADVANCE CIRM'S GOALS OF DEVELOPING IMPORTANT BIOMEDICAL MATERIALS AND PUBLISHING RESULTS IF A DECISION ABOUT WHETHER OR NOT TO EXEMPT A GRANTEE FROM THE FREE SHARING REQUIREMENT OF THIS SECTION CAN BE MADE UP FRONT AND IS NOT OPEN TO THE DISCRETION OF WHATEVER OCCURS DOWN THE LINE.

IT'S GOING TO BE VERY DIFFICULT AS A PUBLIC CORPORATION TO PARTNER IF WE DO NOT KNOW WHETHER OR NOT WE WILL HAVE THAT OBLIGATION -- WE'LL BE RELEASED OF THAT OBLIGATION ONCE WE COMMERCIALIZE THE PRODUCT.

CHAIRMAN KLEIN: THANK YOU. THANK YOU VERY MUCH. AND AS TO YOUR COMMENT, WE'RE ALWAYS GOING TO BE RESPONSIVE IF THINGS ARE NOT WORKING WELL TO COMING BACK AND LOOKING AT THESE POLICIES. SO THANK YOU VERY MUCH.

BOARD COMMENTS? SEEING NO BOARD COMMENTS, NO ADDITIONAL PUBLIC COMMENT, LIKE TO TAKE A VOICE VOTE. ALL IN FAVOR? OPPOSED?

WE HAVE ONE OTHER ITEM WE NEED, MARCY. SINCE WE'VE JUST GONE THROUGH AN IP POLICY, THIS RELATES TO THE GRANT ADMINISTRATION POLICY THAT RELATES. KUMAR.

DR. HARI: MEMBERS OF THE BOARD, THANK YOU. WE SEEK YOUR APPROVAL TODAY OF AN INTERIM GRANTS ADMINISTRATION POLICY FOR FOR-PROFIT ORGANIZATIONS. RECALL THAT THE GRANTS ADMINISTRATION POLICY SPECIFIED THE TERMS AND CONDITIONS THAT GOVERN THE SELECTION, FUNDING, MONITORING, AND TERMINATION OF CIRM GRANTS. APPROVAL OF THIS POLICY IS CRITICAL IN ALLOWING FOR-PROFIT ENTITIES TO COMPETE FOR CIRM GRANTING FUNDING, AND THIS INCLUDES THE TWO RECENTLY POSTED RFA'S FOR DISEASE TEAM PLANNING AWARDS AND NEW CELL LINES AWARDS THAT DR. MURPHY MENTIONED IN HIS PRESIDENT'S REPORT THIS MORNING.

NOTE THAT OTHER MECHANISMS OF FUNDING, THE FINAL BULLET ON THIS SLIDE BEFORE YOU, INCLUDING LOANS AND CONTRACTS, WILL BE GOVERNED UNDER SEPARATE TERMS AND CONDITIONS.

THE APPROACH WE HAVE TAKEN IN DEVELOPING THIS POLICY IS TO ESSENTIALLY PIGGYBACK OFF THE GRANTS ADMINISTRATION POLICY FOR ACADEMIC AND NONPROFIT ORGANIZATIONS. AND WE RECOMMEND SEVERAL POLICY PROVISIONS THAT ARE SPECIFIC TO ACCOMMODATING FOR-PROFIT ORGANIZATIONS IN THIS INTERIM POLICY. AND THOSE PROVISIONS WILL EITHER SUPERSEDE OR BE IN ADDITION TO POLICIES IN THE NONPROFIT GRANTS ADMINISTRATION POLICY.

THE SPECIFIC LANGUAGE FOR THESE PROVISIONS IS BEHIND TAB 16 IN YOUR BOOKS. AND JUST TO NOTE, WE ALSO CROSS-REFERENCED THE IP AND REVENUE SHARING REQUIREMENTS THAT YOU HAVE JUST APPROVED.

THERE HAVE BEEN SEVERAL OPPORTUNITIES FOR PUBLIC FEEDBACK FROM BOTH INDUSTRY AS WELL AS THE PUBLIC. THIS INCLUDES TWO INTERESTED PERSONS MEETINGS AND A PRESENTATION TO OUR GRANTS REVIEW WORKING GROUP. WE RECEIVED VERY VALUABLE FEEDBACK ON CRAFTING THESE POLICIES, AND WE NOTE THAT MEETING PARTICIPANTS WOULD LIKE ADDITIONAL CLARIFICATION ON DEFINITIONS SUCH AS GOODS AND SERVICES, RESEARCH, CALIFORNIA SUPPLIER, AND NET REVENUE, AND ON SPECIFIC APPROVAL PROCEDURES THAT CIRM COULD FURTHER CLARIFY, AND AN OVERARCHING POLICY THAT WOULD APPLY TO BOTH NONPROFITS AND FOR-PROFITS.

CHAIRMAN KLEIN: KUMAR, LET ME ASK YOU. SINCE THIS IS AN INTERIM POLICY WHICH UNDER THE OAL POLICY THERE WOULD BE MULTIPLE PUBLIC COMMENTS AND INPUT, COULD I ASK DR. PENHOET AND ASK YOU, SINCE ALL OF THIS HAS BEEN PUBLISHED, COMMENTED ON MULTIPLE TIMES, ARE WE IN A POSITION WITH ALL THE PUBLIC COMMENT WE RECEIVED TO DATE TO ACT ON THIS ITEM?

DR. HARI: I BELIEVE THAT WE ARE, BUT I LEAVE THAT TO THE BOARD'S DISCRETION.

CHAIRMAN KLEIN: IF THERE'S ANY SPECIFIC TECHNICAL ISSUE A BOARD MEMBER WOULD LIKE TO BRING UP, I WOULD LIKE TO ASK THAT BOARD MEMBER TO BRING IT UP. IF THERE'S ANY TECHNICAL ISSUE HERE FOR THE PUBLIC THAT THEY'D LIKE TO BRING UP, I'D LIKE THEM TO BRING IT UP.

MS. FOGEL: YES, THANK YOU. I