Proposition 71 – 2020 Update – The California Stem Cell Research, Treatments, and Cures

Initiative of 2020
(For the People, for Patients and their Families – Funding Medical Science to Reduce Human
Suffering from Chronic Disease and to Enhance the Quality of Life)

My first introduction to the need for increased funding for stem cell research and therapy
development came when I served on the Juvenile Diabetes Research Foundation International
Board, which I joined after my youngest son was diagnosed with Type 1 Diabetes. In my role as
a dedicated patient advocate, for my son, as well as my mother, who was dying of Alzheimer’s, I
adopted the cause of stem cell research. I subsequently became the primary author of
Proposition 71, the Chairman of the 2004 campaign, and the Founding Chairman of the State
Funding Agency (The California Institute of Regenerative Medicine, CIRM) – as nominated by
the Governor, the Lt. Governor, the Treasurer, and the Controller, and elected by the Board.

My dedication is focused on empowering stem cell and genetic research and therapy
development, as well as other vital research opportunities, to serve the people of California by
reducing human suffering and enhancing their quality of life.

As additional background I have used to develop this Initiative, I have been privileged to serve
on the Board of Genome Canada, a public corporation funding genomic based research, created
by the government of Canada. At the request of the President of the University of California
system, I also served as the Co-Chair of the California-Canadian Cancer Stem Cell Consortium of
scientists. Additionally, I have served on the Board of the Ontario Institute for Cancer Research,
created at the direction of the Premier of Ontario, Canada.

Like so many others, I continue to be a student of this field, where continuous learning is
essential.

It is with these values, conviction and experience that I offer the following narrative on
Proposition 71 and the new Initiative that will be on the 2020 statewide ballot. The narrative is
structured in an outline format, roughly in the order necessary to respond to questions recently
raised, and which are too often a rehash of flawed opposition arguments posed against the
2004 Initiative.

Your thoughtful consideration is appreciated.

Extensive Outreach and Research is the Foundation for a Stem Cell Bond Initiative
It is fundamental that through extensive outreach to patient advocacy organizations, patients
and their families, and the public, that the needs and desires of the people of California, along
with their willingness to approve large scale funding, is understood as a foundation for any
statewide bond initiative. Polling and focus groups, meetings with the Executive Officers of the
State, and meetings with patient advocate organizations and individuals from throughout the

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state have been held to gauge the political will of the California public, and determine the
needs of patients and their families struggling with chronic disease, conditions, and injuries.

Equally important is understanding the needs and potential of the scientific community; and,
to this end, I have consulted with dozens of scientists who are preeminent experts in the field,
as well as a large number of research hospital and research institution leaders. I have also
analyzed the hugely successful record of the CIRM “Bridges” state college and city college
training program, in collaboration with the great university research laboratories, in increasing
the potential contributions from the diverse individuals of our society who have the capacity to
significantly participate in the intellectual leadership and workforce essential to reaching the
medical goals the Initiative serves, if provided an access to leading edge scientific training.

All of these considerations must be structured within the statutory and constitutional
constraints of California, with a focus on accountability, performance, reporting, oversight, the
highest ethical standards, and a disciplined urgency to validate progress and results.

Responding to Comments about Proposition 71 and the New Initiative

The overarching points in response to the recent questions raised are as follows:
Scientists and patient advocacy groups globally respect the California Institute for
Regenerative Medicine for its leadership. The programs and landmark successes of the
Proposition 71 funding in advancing 75 human trials (55 directly funded by the Agency
and 20 funded by companies based upon Agency funded discoveries), and in the
achievement of over 2,500 peer-reviewed, published, medical discoveries, would not
have occurred without a Governing Board that has:
1. A broad diversity of scientific and medical leaders;
2. Patient advocate representation across a breadth of chronic diseases,
conditions, and injury;
3. Accomplished medical business members – without any financial interest in
the stem cell therapy field – who have a proven record of driving therapy
development and/or medical technologies through to FDA approvals for
broad public access.

Reducing the Board Size Means A Loss of Critical Insight

Each of these elements of the Board brings vital knowledge and exposure to scientific and
clinical research, problem solving, and patient needs. With that in mind I urge you to consider
the following three questions:
1. Would the Board members have broadly understood the needs of Parkinson’s patients,
without Joan Samuelson, the patient advocate Board representative for years of this
disease area, before the disease progression made it impossible for her to perform her
duties up to her expectations?

2. Would the challenges and potential for Alzheimer’s advances have been as well
understood without Board member Dr. Leon Thal, both a patient advocate and a global
leader in Alzheimer’s research?

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 3. Would the Board and the staff have coalesced around a multi-day symposium with
national experts on Autism, without Board member Jon Shestack’s leadership and
experience, as a devoted father of an Autistic child and founder of Cure Autism Now?

Reducing the Board Size Would Mean A Loss of Expertise

A small number of those reading the new Initiative have suggested reducing the number of
members serving on the Board, potentially to the extent of 7 to 11 members. There is little
question that a large Board can be more challenging than a small Board in some respects; but,
who would they eliminate, and at what cost to the mission?

1. Should the scientific Board members from the Salk Institute, or the University of
California, San Diego, or the Sanford Burnham Institute, be eliminated?

2. Who would believe that the Board members from the University of California, Irvine do
not have valuable scientific insights to deliver?

3. What about the cancer insights from the Board member from the City of Hope? Is that
position to be eliminated?

4. Which doctors, physician scientists, scientists from UC Berkeley, UC Davis, UC San

Francisco, UCSC, Stanford, UCLA, USC, Cedars Sinai, appointed by executive
constitutional officers of the State of California, do not benefit CIRM’s mission? Do these
these distinguished individuals not contribute to the scientific and technical knowledge
necessary to execute the leading edge scientific and medical decisions that are essential
to the mission?

The contributions of scientific and medical knowledge from the scientists, physician
scientists, and Deans of Medical Schools, drawn from these world class institutions, are vital
to defining the scientific programs, the research and human trial priorities, and the ethical
and transparency standards. In addition, they are a fundamental contributor in driving the
performance of the mission, in collaboration with the patient advocate Board members, the
members from the life science companies, and the remarkable scientific staff of the Agency.

Transparent Layers of Protection Against Conflicts of Interest

Proposition 71 and the new Initiative provide multiple layers of protection against conflicts of
interest in the Board’s decision making.

First, patient advocates, scientific, medical, and life science business Board members, must
follow the CIRM Board’s extensive conflict of interest standards which in some instances are
more restrictive than those of the National Institutes of Health --- a fact noted in audits by the
State of California Controller’s Office.

Second, no individual funding proposal can even come to the Governing Board without a
recommendation from the independent Peer Review Grants Working Group. This group

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creates a barrier, protecting against conflicts, with no scientific member of the rating panel
permitted to a) work or reside in California; b) have mentored the grant applicant they are
judging, within the last three years; c) have published with the grant applicant within three
years; or, d) have any direct or indirect financial relationship with the grant applicant they are
evaluating. (To see the full extent of these regulations please refer to Title 17, Division 4,
Section 100000 through 100004 of the California Code of Regulations.)

The record of recusals, to avoid even an appearance of conflict, on the peer review panels, or at
the Board, provide a strong demonstration of the discipline and conservatism of the process
used to analyze each individual grant request.

Third, as an additional conservative protection to avoid the appearance of self-interest, the

Board members from research universities and institutes, cannot participate in the discussion
of, or vote on, an individual grant for a scientist or physician scientist, at any institution or
company, in California.

Fourth, members of the Governing Board are subject to a rigorous and pro-active conflict
review before each meeting at which funding applications are considered, and unless the
applicant identifies himself or herself during public comment, the review of applications is blind
as to the identity of the applicant institution and investigators.

Compelling Reasons to Expand the Board in New Initiative

The public must approve the new Initiative, at the ballot box. To honor the trust of the public,
one must listen, and have foresight as to the developing needs of the public and the Agency, if
the optimal performance, for the public, is to be achievable.

In this context, three categories of new members have been added to the Board, for the
following reasons:

1. Geographic Representation: The Inland Empire is an important and substantial

population center in California; its population is greater than 25 U.S. states. The
University of California, Riverside School of Medicine was established in 2008 and began
enrolling students in 2013. For representation of the Riverside/San Bernardino metro
area, there is an opportunity to have the Dean of the Medical School and/or another
Chancellor’s appointment, to represent this area, as a permanent appointment,
treating the University of California, Riverside’s appointment with the same status as
every other University of California campus with a medical school. This would provide
the vast Inland Empire a real permanent, sustained opportunity to participate in this
critical mission. UC Riverside currently has a discretionary executive branch category
appointment, that could be utilized for another university, leaving this region without
permanent representation.

Similarly, the University of California, San Francisco, UCSF, has a satellite campus in the
Fresno/Clovis area that operates alongside and participates in that region’s major

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 hospitals. Again, a Chancellor’s appointment for this area would provide sustained
representation for this vast Central Valley. A patient advocate from this region is
currently on the Board; but, there is no assurance that a subsequent patient advocate
appointment will be made from this region, when and if the current patient advocate
retires from the Board.

2. Mental Health: When analyzing the wide spectrum of patients with chronic diseases,
conditions, and/or injuries, mental health burdens are widely prevalent among these
patients. Mental health burdens complicate and/or negatively impact their compliance
with therapy regimes and/or their qualification for human trials or innovative therapies.
There have been strongly supported suggestions to add two mental health
representatives to the Board because of the pervasiveness of this overlapping medical
complication that frustrates treatment and/or recovery of many chronically ill patients.
The breadth and range of mental health conditions from Schizophrenia to depression,
justifies the allocation of two appointments dedicated to addressing these needs.

3. Nurses: To anyone who examines the therapy discovery, development, and delivery
system, the critical contributions by members of the nursing profession to therapy
delivery and treatment are clear and compelling.

Leaders from the Alpha Clinics and physician scientists have stressed the value of
insights, in the organization and operations of human trials and the delivery of
innovative therapies through centers of excellence, which would be available to the
Board, if two appointments were dedicated to nurses. The appointments would be 1)
for one nurse with experience in clinical trial management and 2) one additional
appointment dedicated to a nurse with experience in stem cell or genetic therapy
delivery.
a. Every other key participant in the discovery, development, and delivery of
human trials and new therapies is currently represented on the Board, through
scientists, physicians, patient advocates, and life science company members with
proven therapy development experience.

b. It is important to understand operational requirements and funding needs for all

human trials; and, to create the competitive criteria for Alpha Clinics or
Community Care Centers of Excellence, these specialized nurses could fill a
potential experience or knowledge gap on the Board.

Additional Board Members are Justified

During the 7.5 intense years that I spent, as Chairman, with the incredibly talented scientific
staff and my colleagues on the Board, it was apparent that the busy lives of the highly
credentialed and distinguished Board members kept almost all of them from volunteering for
more than one Working Group assignment, despite their extraordinary dedication.

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The addition of the Accessibility and Affordability Working Group, will predictably require
extensive time commitments by the Board members serving on that Working Group.
Therefore, the addition of several members to the Board promises to be extremely helpful to
facilitate recruiting the Board members necessary for the frequent meetings to advance the
causes of Access and Affordability.

The National Academies of Sciences Best Practices are Discretionary

Counsel has provided assurance that the original wording in the 2020 Initiative, as to any
adoption of National Academy of Sciences standards for ethics or conflicts, was discretionary
for the Board, despite an assertion that this interpretation of the intent was not correct.
Notwithstanding that assurance, there will be posted on the Americans for Cures website, and
distributed to CIRM, revised language that specifically states that the adoption of any part of
the National Academy standards would be discretionary for the Board. The requirements for
open meetings to change any standards has not been modified. It remains in full force and
effect.

Task Force Clarification Replaces Proposed Scientific Advisory Board

For clarity of purpose, the new Initiative provision that addressed a potential advisory Board,
selected by the President and the Chair, has been revised and relabeled as a “task force”
authorizing selection, for specialized objectives. The membership of any task force has been
restricted to California residents. These task forces will not have any function in evaluating
grants, which must all be reviewed and evaluated by the independent Peer Review Grants
Working Group, as clearly required by the Initiative.

The Objectives and Importance of the Accessibility and Affordability Working Group
Informative comments on the Accessibility and Affordability Working Group have been
received. Consequently, those sections have been modified to make it clear that the focus of
this Working Group is to: a) work with designated experts on achieving early public and private
insurance coverage for therapies derived from CIRM-funded research and; b) to assist patients
and their caregivers with access and affordability issues for CIRM-funded FDA human trials and
FDA approved innovative therapies.

I encourage everyone to read the language in Sec. 7, 125920.75, which also provides more
description of the expertise and experience qualifications of the Working Group members,
recruited outside of the CIRM Board representatives, on this Working Group.

California Constitution Prohibits Holding Equity Stakes in Companies

The California Constitution bans the State of California’s agencies from owning stock or equity
in companies. The California Constitution directs that the State’s operating agencies cannot be
in the business of taking equity investment risks in California companies, reserving that area to
business investors. Nevertheless, while noting the constitutional language, critics of this
restriction have proposed possibly working around this constraint. The intent of the critics is to
invent a system for the Agency to hold equity in biotech companies; this proposed finesse
would invite new litigation.

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Additionally, a suggestion has been made to create a large-scale manufacturing capacity,
beyond the needs of academic research centers, as a part of the Initiative. It has also been
proposed that a California non-profit generics manufacturing company be created, potentially
from funds from this Initiative, to reduce the cost of production of new therapeutics. Prior state
constitutional litigation has shown, that this provision would violate the prohibition in article II,
section 12, of the California Constitution against naming a private organization in a ballot
measure to carry out a function, in addition to raising other opportunities for opposition
litigation that could substantially delay funding of the bonds that are proposed to be authorized
by the 2020 Initiative.

Equity Stakes and Large-Scale Manufacturing Proposals Invite Litigation

Without commenting on the separate, individual value of any of these ideas that have been
floated, trying to include them in the 2020 Initiative would invite extensive litigation on
constitutional and statutory grounds.

We’ve already been down this time consuming and costly road. I say this having spent 2.5 years
of my life, while serving as Chairman of CIRM, working to defeat constitutional and statutory
litigation by interests who were fundamentally opposed to stem cell research. As many will
recall, this litigation kept the Agency from issuing its bonds and funding science, until June of
2007, when in collaboration with the Attorney General, and Agency counsel, we were able to
prevail in the California Supreme Court.

It took defeating one federal lawsuit and three state lawsuits to free up the bond funding for
the critically needed medical research and therapy development to fight the terrible diseases
that have caused such suffering for my family, and nearly every family in California. Patients
and their families should not have to suffer more delays because of ill-conceived agendas that
obviously do not fit into the new Initiative, with a scope that has already been court validated.

It’s important to emphasize that the provisions of the new Initiative are designed to fit within
the court validated scope.

Board Retains Discretion Regarding Alpha Clinic Scope of Service and Proposed Community
Care Centers of Excellence
The Alpha Clinics provide an expert center for accelerating human clinical trials and reducing
the cost of those trials. In addition to CIRM-funded trials, the Alpha Clinics have proven their
success to such a high degree that they have attracted dozens of other human trials. This
success, in turn, has advanced a broader frontier of human stem cell and genetic therapies of
potentially greater benefit, than just the highly valuable CIRM-funded research therapies alone.

The CIRM website shows over 90 human trials that have been or are currently being held at
Alpha Clinics; this total significantly surpasses the total of CIRM trials at those clinics, because
the outstanding reputations of these Alpha Clinics for excellence, has made these sites a
preferred FDA approved human trial locations. Similarly, when the Board, before receiving

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recommendations for funding from the independent Peer Review Grants Working Group (based
upon historically very high standards for FDA approved human trial locations), decides to
implement the Community Care Centers of Excellence, it will predictably also include multiple
criteria for funding. Those criteria can require these sites, within their capacity constraints for
excellence, to handle human trials beyond those arising from CIRM-funded research. This
decision is within the Board’s discretion; and, it may be deferred until the Board is comfortable
with the expert quality of therapy delivery at any funded site.

It has been suggested, by Alpha Clinic leaders, that the medical staffing of any proposed
Community Care Center of Excellence, incorporate as an element of the Community Care
Center of Excellence proposal, that they partner with an Alpha Clinic, for training rotations for
the Community Care Center of Excellence participating medical personnel. This would
accelerate the process of training the highly specialized medical staff and it would enhance
their ability to achieve and maintain the highest standards for quality and exceptional medical
outcomes.

Previous, independent Peer Review Grants Working Group evaluations of Alpha Clinics have
rated more academic medical centers as qualified to be Alpha Clinics, than funding was
available to commit. These previous recommendations to the Board established that there is an
opportunity to diversify and expand the Alpha Clinic network, which has been so highly
successful in advancing human trials for new therapies, including two therapies for deadly
cancers that now have received final approval from the FDA for the availability of the therapies
to the public.

With this known potential, all at the discretion of the Board, the new Initiative authorizes an
increase in this very successful program, IF the Board believes a) the quality is available, b) the
timing is right, and c) a new independent, Peer Review Grants Working Group recommendation
to fund is presented to the Board.

Scientists and Physicians, Within the Current Strict Ethical Controls, Should Determine the
Best Cell Type for Deriving Treatments for Every Patient
California continues to be a sanctuary for scientists and physicians dedicated to following
scientific experiments and FDA approved human trials to determine the best cell type for
deriving therapies for each patient. The federal government remains a threat to scientists and
physicians investigating the best cell sources for developing therapies for patients. Just within
the last nine months there have been new restrictions imposed by the federal government,
based upon ideological grounds.

The International Society for Stem Cell Research, representing over 4,000 researchers from over
60 countries, has warned about abandoning a commitment, subject to stringent ethical
standards, to pursue all cell types for the benefit of the patient and science. They specifically
describe the potential consequences of damaging the advancement of medical research and
the serious impacts on human trials.

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To maintain that iPS cells are currently the best solution for every disease ignores decades of
work utilizing cells derived from human embryonic stem cells for treating chronic diseases and
injuries.

The use of embryonic stem cells has, through Proposition 71, led to FDA approved human trials
in California, with the potential for final FDA approval for general patient use, within the next
few years for diseases such as paralysis, Age-Related Macular Degeneration (blindness), and
Type 1 Diabetes and insulin dependent Type 2 Diabetes. While we cannot forecast which of
these therapies will ultimately succeed, among the 75 human trials and the 2,500 published
medical discoveries resulting, in whole or in part, from the Agency’s funding, there are
numerous potential therapies dependent on cell types beyond iPS cells.

To abandon this extraordinary work, among many other examples of therapies derived from
other cell types, and to default to iPS cells as the only cellular therapy source needed, is to
surrender a critical range of cellular therapy candidates. The patients, their families, the patient
advocacy groups, the scientists, the physicians, and the people of California deserve better. iPS
cell technology is very valuable, but it is not the exclusive answer for the foreseeable future for
every disease.

The New Initiative Outreach and Input Continues Through Saturday, November 16 th
After two years in this process of collecting input and ideas from a wide range of sources, new
ideas, refinements, and clarifications to the new Initiative continue to be analyzed and
considered. It is essential to close out the consideration of new points on November 16 th, in
order to orderly process and incorporate ideas into the Initiative text by November 18 th, the
State deadline for submitting amendments to the purposed Initiative. Any new suggestions and
comments should be submitted to castemcell2020@gmail.com.

Please understand that the text presented above represents summary clarifications of new
Initiative sections. For a full understanding of each section, please read the full text of the
updated draft of the Initiative, which can be found at americansforcures.org.