Meanwhile, 18 institutions with representatives on the board have received portions of $552 million in grants from the institute. (I am indebted to David Jensen of the California Stem Cell Report, one of the program's outstanding bird dogs, for this math.)
Such logrolling is perhaps inevitable, given that Proposition 71 restricted the board's membership to officers of California research institutions and biotech companies, along with advocates for research in 11 diseases supposedly subject to stem cell-driven cures.
Lacking any truly independent members, the board is dominated by Klein and devoid of "genuine debate," observes UC Berkeley Law professor Kenneth Taymor, who spent months studying the body. Indeed, reading transcripts of the board's sessions, one sometimes gets the impression that the only vigorous debate among the members involves which historical figure Klein more resembles, Albert Schweitzer or Mahatma Gandhi.
That brings us to the institute's 2009 strategic plan, which calls for floating $400 million in taxable state bonds, much of it earmarked for loans to the biotech industry to finance the development of specific therapies.
Is this the best way to spend the state's money? Klein says the great virtue of making loans is that, because the money gets repaid, it can be used over and over again. That's assuming that it does get repaid. Some of the loans, furthermore, will be non-recourse, meaning that if the product fails or can't get further funding before the loan is repaid, the debt will be written off.
The loans' target is the "valley of death," the phase of product development that follows publicly funded basic research and precedes clinical trials. Biotech firms traditionally have a hard time raising capital for this phase, because it's very costly and speculative, suggesting that Klein is counting unhatched chickens.
But he is ever optimistic: "The first major breakthrough will change the world," he told me.
Part of the reason for the move into product development is that the institute's chronic cash crunch -- an outgrowth of the state's financial crisis -- has forced it to scale back or delay some basic research grants. Without a new financial infusion, the institute says, it may run out of money in September.
But the shift away from basic research isn't universally welcomed in California's scientific community.
