SAN FRANCISCO — When voters overwhelmingly approved California's novel $3-billion stem cell initiative, they counted on a promise spelled out on the ballot: The state would earn back as much as $1.1 billion in royalties from scientific discoveries.
But those hypothetical profits are now looking increasingly dubious.
The California Institute for Regenerative Medicine last month proudly rolled out a groundbreaking plan to require universities and nonprofit research institutes that receive public grants to channel a 25% return back to the state on discoveries yielding more than $500,000 in revenues.
Stem cell initiative: An article in Thursday's California section said voters who approved the $3-billion stem cell initiative relied on ballot promises that the state could receive as much as $1.1 billion in royalties. That estimate did not appear on the ballot but in an analysis commissioned by backers of Proposition 71. The nonpartisan legislative analyst concluded that revenue from the measure was unknown.
But in recent weeks, the University of Wisconsin foundation that claims broad patent rights to all embryonic stem cell lines in the U.S. has vowed to demand payments from California. That could spur a bitter court fight, even as pending litigation has so far kept the state from issuing the voter-approved bonds.
"Theoretically, could they close down research activity in California? Yes," said Ed Penhoet, vice chairman of the institute's oversight committee.
A spokesman for the Wisconsin Alumni Research Foundation said talks with the institute are continuing. "We feel there should be a discussion about how the University of Wisconsin gets a benefit," Andrew Cohn said.
Meanwhile, representatives of private biotech companies made it clear to institute board members Wednesday that major companies with the ability to bring cures to market are unlikely to seek state money if too many strings are attached to those dollars.
"I don't think you're sitting in a position where all these companies will come on their knees to visit you," Brad Margus, chief executive of Mountain View, Calif.-based Perlegen Sciences Inc., warned the institute's intellectual property subcommittee.
He said that only second-rate companies would be interested. "You need to have first-draft picks, not companies who are desperate," he said.
Industry's key concerns, Genentech Executive Vice President Stephen Juelsgard told the committee, are that the state will dictate how much companies can charge for new treatments; maintain the right to patent technology, if companies fail to do so; and require companies to share developments they consider proprietary. Major companies "simply wouldn't engage," Juelsgard said. "It's not a risk worth taking."
