Should California invest $5.5 billion more into promising stem cell research?

Sixteen years ago, voters were promised that $3 billion of bonds for embryonic stem-cell research would deliver cures for diseases such as diabetes, , Parkinson’s and heart disease.

Instead, we’ve gotten cures or potential treatments for a very different and unexpected set of afflictions, such as a deadly immune disorder, spinal cord injury, a type of cancer and a form of blindness.

The moral of the story — as Californians decide whether to continue support by approving Proposition 14’s nearly doubled research budget of $5.5 billion — is this: Science marches to its own beat and on its own clock, awe-inspiring but oblivious to political pledges.

“We got things, but not necessarily what we expected,” said Hank Greely, director of Stanford’s Center for Law and the Biosciences. “It’s saving lives, but not in the way most people thought.”

Without Proposition 71, the ambitious 2004 ballot measure that first paid for the stem-cell research, 8-year-old Evangelina Vacarro of Corona might be in a casket, rather than skateboarding, horseback riding and playing in the dirt with her pet terrier Daisy.

The engaging hazel-eyed child was born with a rare disease that left her unable to fight off infections. In a clinical trial funded by the state initiative, scientists corrected the deadly genetic flaw that disabled her immune system and restored her to health.

Jake Javier, a biomedical engineering student at Cal Poly, might be unable to live independently. Paralyzed in a diving accident, the 22-year-old gained some function in his arms and hands after the introduction of specialized neural cells in a clinical trial funded by Proposition 71.

“It completely changed the trajectory of my life,” said Javier, of San Ramon.

Sandra Dillon, a San Diego graphic designer diagnosed at age 28 with a rare form of blood cancer called myelofibrosis, is now in remission after treatment with an FDA-approved drug that was identified through Prop. 71 funding. No longer hospitalized, she’s backpacking and surfing.

Before injection with stem cells to combat progressive blindness caused by retinitis pigmentosa, Rosie Barrero of Los Angeles could only see shadows. Now she can discern the time on her cell phone, the colors of kitchen cups and the faces of her family.

In addition to these and more than 60 other clinical trials, the California Institute for Regenerative Medicine (CIRM) created under Proposition 71 has led to about 3,000 peer-reviewed research papers and 974 patents or patent applications.

It has helped bankroll 12 elegant research facilities, donating $43 million to Stanford for the Lorry I. Lokey Stem Cell Research Building, $20 million to the Buck Institute’s Regenerative Medicine Research Center in Novato, $20 million to UC Berkeley’s Li Ka Shing Center and $35 million to UCSF’s Regeneration Medicine Building. It funded five stem cell-focused clinics at hospitals to accelerate the delivery of therapies.

It has generated $293.6 million in direct income and taxes on corporate profits and sales of equipment and supplies, according to an estimate by research professors Dan Wei and Adam Rose of the University of Southern California.

And it has vaulted California to a leadership role in the nation’s stem-cell science.

“CIRM has supported some really superb research and researchers and built a powerful infrastructure,” said Robert Cook-Deegan of the School for the Future of Innovation in Society at Arizona State University. “In a field where there aren’t as many other sources of funding, that’s almost certainly, in the long run, a good thing.”

This is stunning progress for an effort that faced bleak prospects after then-President George W. Bush’s federal funding restrictions on embryo research. 

Still, it falls far short of Proposition 71’s breathless rhetoric from the 2004 campaign.

“Stem Cell Research: Breakthrough cures for diseases that affect millions of people,” asserted the campaign literature. In a 30-second commercial, actor Michael J. Fox, diagnosed with Parkinson’s disease, urged voters to “please support the effort to find cures, to save the life of someone you love.” Other A-list celebrities, as well as more than 20 Nobel Prize-winning scientists, also promoted it.

“Prop 71 will help reduce skyrocketing health care costs,” the campaign promised.

The measure was tied up by litigation and the effort got off to a late start. Now, one-third of the way through the bond’s 35-year payback period, it’s nowhere near yielding the $2.2 to $4.4 billion in projected state revenues or $1.1 billion in royalty revenues. To date, only $517,989 in royalties has been paid to the state general fund.

And with only two products FDA-approved and no therapies yet in widespread use, there’s so far no evidence that Proposition 71 has delivered the anticipated $3.4 to $6.9 billion state health care savings and $9.2 to $18.4 billion in savings for other payers.

Initial CIRM funding created fewer California jobs than expected: 27,208 jobs per year, according to the USC report, rather than the estimated 47,000 jobs per year.

There have been clinical challenges. A cure for diabetes has been tougher than expected: A promising approach has lagged because the body’s immune system rejects the pouch that holds implanted, insulin-producing cells. A leukemia cure, seemingly around the corner, has been stymied because blood-forming stem cells are stubbornly reluctant to multiply.

“If it all worked, it wouldn’t be research,” said Stanford’s Greely. “Politics has a corrupting influence on everything — it pushes toward exaggeration.”

There have also been business failures. More than $5 million was invested in a promising brain cancer treatment called ICT-107, but efforts were abandoned when company ImmunoCellular Therapeutics ran out of money. Another $3 million was for naught when company Neostem couldn’t find funding and swapped CEOs, dropping its melanoma treatment CLBS20.

Even some home runs, such as Gilead’s recent $4.9 billion deal for the CIRM-supported immuno-oncology biotech Forty Seven, offer taxpayers relatively little payoff. While CIRM expects royalties from Gilead’s future cancer cure, it didn’t benefit from an explosive jump in share prices because the state Constitution bars state agencies from holding stock in private companies.

“I think the big downside of CIRM has been the overpromising of how fast things would happen and the form that the ‘return’ would take,” said Cook-Deegan. “The commercial potential may be real in the long run…but it was oversold with shorter time horizons than are actually practical.”

Proposition 14 will cost far more: $7.8 billion — $5.5 billion in principal and $2.3 billion in interest by the time the bonds are repaid.  The total cost of Proposition 71 is $3.54 billion, or more than $4 billion when adjusted for inflation. The increase is necessary due to the soaring cost of clinical trials, said Robert Klein, the author of both measures

As voters consider whether to support the new proposition, it’s unfair to measure it against the prior proposition’s current trajectory, because medicine reaps its greatest rewards many years after the initial investment, said Klein. It takes 12 to 15 years, on average, to go from discovery to therapy.

“It would be similar to judging the Apollo 11 mission when the capsule was a little past a third of the way to the moon and find it coming up short because not one of the three astronauts had set foot on the lunar surface,” said Klein.

But critics say Proposition 14 commits California to spending money it does not have. It adds future debt, while education, health care and housing are underfunded.

“While I think CIRM has done good work, and I support stem-cell research, the state is facing a huge budget deficit,” said Jeff Sheehy, a CIRM board member. “And the new measure fails to ensure that the state gets a return on its investment. Instead, it is a giveaway to pharma and biotech.”

There’s no longer a compelling rationale for California to support the research because the federal ban has been lifted, with NIH spending about $300 million a year on embryonic stem-cell research, he said.

If the new proposition is rejected by voters, CIRM will begin closing its doors this winter — and ongoing research may crash, said Dr. Larry Goldstein, director of the UC San Diego Stem Cell Program.

“If these trials get killed because of lack of funding, there is no guarantee that we will get them back up and running again, even if they look really promising,” Goldstein said. “It will be hard to find financing for them.”

Proposition 71 launched the beginning of embryonic stem-cell research — and Proposition 14, despite the steep price tag, should continue that momentum, say proponents.

“There is no dollar amount you can put on having a healthy child,” said Alysia Vaccaro, Evangelina’s mother. “There is no price for that.”


Prop 71, by the numbers:

  • 66 clinical trials: illnesses of the blood, 12; bone, 2; diabetes, 4; heart, 3; HIV, 3; kidney, 6; neurologic, including spinal cord injury, 6; eye, 6; COVID-19, 3; blood cancers, 11; solid cancers, 10.
  • Products in clinical trials, by status: Phase 1 (safety and dosage), 22; Phase 1/2 (safety and efficacy), 22; Phase 2 (efficacy, under 100 people), 8; Phase 3 (efficacy and comparison to standard-of-care, over 100 people), 5.
  • $2.74 billion awarded directly to research, facilities and training. Of that, $478 million spent on 12 research facilities, clinics, cell banks and labs.
  • 14% of funds were awarded to for-profit organizations while 86% awarded to non-profit organizations
  • $210 million for administration. Of that, 50% spent on salaries, 15% on benefits and 35% on operating expenses.
  • “Leveraged” funds from nonstate sources in co-funded grants: $10.9 billion.
  • Royalty payments: $517,989
  • 974 patent applications or issuances

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