Stem Cell Researchers Enjoy California Cash

SAN FRANCISCO – A 21st-century gold rush is on in California after the voters approved $3 billion for human embryonic stem cell research (search).

At least one out-of-state biotech company is already making plans to move to California. Stem cell start-up businesses are expected to emerge. And universities are hoping to recruit some of the field's brightest minds to take part in the biggest state-run research project in U.S. history.

The voters' 59 percent approval of the bond measure on Election Day represents a resounding rejection of Bush administration policy, which prevents more federal funding on the research.

Proponents and critics alike expect the new agency created under the ballot measure, the California Institute for Regenerative Medicine (search), to serve as a state version of the National Institutes of Health.

But myriad questions remain to be resolved as election night euphoria gives way to the hard work of creating an agency that can dole out $300 million a year in grants for 10 years.

No one is sure when the first dollar will be allocated or where the agency will be located, though biotechnology booster groups from San Diego to the San Francisco Bay Area are working on their sales pitches.

University of California officials said the measure will help them attract top stem cell researchers to the state and encourage talented undergraduates to enter the field.

"California will be the epicenter of stem cell research in the future," said Dr. Edward Holmes, medical school dean at UC-San Diego. "Many people were reticent to move into this field, but this will attract some of the best and brightest young minds."

Worcester, Mass.-based Advanced Cell Technology (search), said it will soon open a California laboratory so it can apply for grants. Its chief executive has already moved to the San Francisco Bay area, and the company is trying to line up financing from California investors.

"It's a very favorable environment, and this could serve as a wake-up call for the rest of the country," said Dr. Robert Lanza, Advanced Cell's research chief.

Lanza also said he has been approached by California venture capitalists and other investors to launch a stem cell start-up company. He said he declined the offer.

Proposition 71 (search) foes worry that long before any useful therapies are discovered, most of the benefits will go to venture capitalists and others with ties to the biotechnology industry, who contributed $28 million to get the measure approved.

"Many questions remain unanswered about conflicts of interest among the scientist-entrepreneurs promoting Proposition 71, about the high cost of any treatments that are eventually developed, and about health risks to women from whom eggs for research cloning will be obtained," said Marcy Darnovsky of the Center for Genetics and Society in Oakland, which opposed the measure.

The newly created institute can employ no more than 50 people and will be managed by a 29-member board to be appointed over the next 40 days. The board will name the agency's chairman and a vice chairman, key appointments that could devolve into political fighting.

Gov. Arnold Schwarzenegger, a Republican who broke ranks with his own party to endorse the measure, gets to appoint five people to the board. Other appointments will be made by UC's five medical schools, the lieutenant governor, the treasurer, the controller and the leaders of the Assembly and Senate.

Schwarzenegger's office said it was premature to speculate about any of his appointments.

On Friday, state Controller Steve Westly made Stanford University medical school dean Phil Pizzo the board's first appointee.

Robert Klein II, a Palo Alto real estate developer who contributed $3 million to the cause and served as the campaign's chairman, has said he may lobby to lead the stem cell board. He is a major Democratic donor and has made large contributions to the lieutenant governor, treasurer and controller. Klein's son has diabetes.

Once the board is in place, it will appoint two key committees -- one responsible for doling out research grants, the other for funding laboratory construction.