Proposition 14: With Just Handful of Cures, California Stem Cell Agency's Fate Is In Hands of Voters

Evangelina Padilla-Vaccaro now cured of 'bubble baby' disease, playing in a public park sometime in the mid 2010s. The bubble around her is for fun, not to keep her separated from others.

A Yes vote authorizes the state to sell $5.5 billion in general obligation bonds primarily for stem cell research and the development of new medical treatments in California. A No vote would mean the state's stem cell research agency will probably shut down by 2023. 

In the ramp-up to the 2004 election, a California TV viewer may have come across the popular actor Michael J. Fox urging her to vote Yes on a state proposition. His voice slurred faintly by Parkinson’s disease, he still sounded wry, boyish and familiar.

“My most important role lately is as an advocate for patients and for finding new cures for diseases,” said Fox, eyes level with the camera. “California’s Stem Cell Research Initiative 71 will support research to find cures for diseases that affect millions of people, including cancer, diabetes, Alzheimer's and Parkinson's.”

Within that 30-second spot, Fox, diagnosed at age 29 with a neurodegenerative disorder that typically does not strike until after 60, used the word "cures" three times.

Proposition 71, which passed with 59% of the vote, authorized the sale of $3 billion in bonds to create an agency that funded stem cell research. The successful campaign grew out of a time, in the early 2000s, when the promise of stem cell and regenerative medicine excited both scientists and the public.

Whether the project has lived up to that promise is a matter of opinion. How voters view the record of the agency may go a long way in their decision whether or not to replenish the fund, which is fast running out of money, with an additional $5.5 billion to be raised with new bonds authorized by Proposition 14, now on the ballot.

President Bush – A ‘Demon’ to Attack

Scientists since the1800s have known about stem cells, which are not yet dedicated to any particular anatomical function and have the potential to become nerve cells, blood cells, skin cells or any other type. They are found in blastocysts, which are human embryos four to five days after fertilization, and in a few areas, such as bone marrow and gonads, in adults.

In the late 1990s, researchers developed ways to steer the development of these cells, and the possibilities for improving medicine seemed endless. If malfunctioning cells were at the root of a particular disease, could new healthy cells tailored to the job fix what was wrong? Scientists and many members of the public were eager to find out.

Anti-abortion groups, however, a key constituency of President George W. Bush, opposed the research, and in 2001 he limited federal funding to a few existing lines of embryonic stem cells, severely curtailing research.

Some in the state of California wanted to get around Bush’s restrictions, and Proposition 71 was born.

"(T)hey had this demon they could attack in the campaign — the Bush administration," said David Jensen, author of "California's Great Stem Cell Experiment," who also writes the blog California Stem Cell Report. "They could say, 'This is a great opportunity, and the only way we're going to get it done is to do it here in California.'"

The measure created the California Institute for Regenerative Medicine. The stem cell research agency is unique in the U.S.

"No other state has done this kind of level of funding and focus on this kind of thing,” said Jensen. “It's a really cutting-edge area of science."

A Few Successes

The pace of innovation has been slower than many hoped. As it turned out, grand discoveries were not around the corner, and to date there is no widespread stem cell treatment approved for the public. To date, CIRM has funded more than 64 trials directly and aided in 31 more. Not all have or will result in treatments.

But despite the lack of a marquee cure like one for Alzheimer’s or Parkinson’s, the agency has seen some notable triumphs.

"Probably one of the most spectacular successes they have certainly so far," said Jensen, "is clinical trials that have saved the lives of what they say are 40 children."

Those children were born with severe combined immunodeficiency (SCID), commonly known as "bubble baby syndrome," a rare, generally fatal condition in which a child is born without a working immune system. An FDA-approved gene therapy that grew out of CIRM-funded research can now cure the disease by taking a patient’s own blood stem cells and modifying them to correct the SCID mutation. The altered cells generate new, healthy blood cells and repair the immune system.

The FDA has also approved two drugs for rare blood cancers that were developed with CIRM funds.

Sandra Dillon, a graphic designer in San Diego, credits one of the drugs with saving her life. She was diagnosed when she was just 28, in 2006. Her doctors told her they would try to manage her symptoms, but that she was going to get progressively sicker.

"Even just the idea of a cure or getting better wasn't even on the table back then," said Dillon, who is featured in ads for the Yes on 14 campaign.

"I remember just praying and begging into the universe, please, someone just look at my disease, please someone help, who is going to look at this thing.”

By 2010, Dillon was extremely ill. She connected with a doctor at UC San Diego who received early-stage funding from CIRM and told her she could take part in clinical trials.

"For the first time, there was this moment of, 'Oh, my gosh! There are researchers doing something. And it could help me and I can get access to it.' It was amazing."

The drug received FDA approval in 2019, and today Dillon’s cancer has retreated to the point where she can live a normal life.

"I love that I am not tethered to a hospital anymore. I can go out on long backpacking trips and hiking and surfing," she said. "I am a completely different person with this drug. And I have a whole future ahead of me."

The original funding raised by Proposition 71 is running out. Proposition 14 would authorize the sale of a new bond to refill the agency piggy bank. Gov. Gavin Newsom, the UC Board of Regents, and scores of patient advocacy groups also support the measure.

Many newspaper editorial boards, however, oppose the proposition, including the San Francisco Chronicle, Mercury News and Los Angeles Times.

Right now the state still owes about $1 billion toward the debt created by Proposition 71. If Proposition 14 passes, the yearly price tag to pay off the new bond would be about $260 million per year for about 30 years.

One of the selling points of the original proposition was the potential for the state to earn big money in royalties from the treatments it helped develop, says Jeff Sheehy, an HIV patient advocate and the only CIRM board member to oppose Proposition 14.

"The promises were made that this would pay for itself. We would be able to pay back the bonds with the … money we would get from royalties, etc., etc.”

That has not worked out as envisioned: CIRM estimates it has received less than $500,000 in royalties. Early this year, Forty Seven, a company whose therapies were heavily funded by CIRM, sold to Gilead for $4.9 billion. While millions went to various researchers, neither CIRM nor the state of California received anything.

“One of the flaws in the original measure is that we [the agency] cannot hold stock in the products that we develop," says Sheehy. "And that's because the California Constitution says that the state of California cannot, as a government entity, hold equity.”

Proposition 14 makes it impossible for the state to use profits from its investment on, say, schools or other funding priorities. Instead, any royalties earned must be fed back into programs to make CIRM-funded treatments more affordable.

"What it does is it basically takes all of our returns that we get from this and gives it back to the pharmaceutical and biotech companies," said Sheehy. "It becomes just a blatant giveaway to these companies when we should be requiring access and requiring fair pricing."

Sheehy says he supports medical research, but doesn't like the state going into more debt to pay for it. The greater the state's obligations in bond money, which has to be paid back with interest, the less there is in the general fund, and Sheehy says the state has more pressing needs than stem cell research — things like housing, education and transportation.

"The biggest and perhaps the most compelling reason why I feel so strongly that this is not a good idea is that we simply cannot afford it,” he said. "If we think this is so important," asks Sheehy, "why don't we just don't pay for [this research] out of the general fund? It would be cheaper.”

Opponents of Proposition 14 also point to longstanding complaints of conflicts of interest among the agency board. Most of the $3 billion distributed by the agency has gone to institutions with connections to board members. Critics say the structural conflicts of interest between the board and agency are not addressed in the new measure. Proposition 14 would balloon an already huge board of 29 members to 35.

Funding needs for stem cell research also are not as acute as they were back in 2004. The federal National Institutes of Health now funds some basic stem cell research, spending about $2 billion a year, with $321 million of that going toward human embryonic stem cell research. The Trump administration has not reinstated the ban, but has added lengthy paperwork and review requirements. And private ventures, like nonprofits started by tech billionaires, are pouring more money into biotech.

The problem with assuming that, says Melissa King, executive director of Americans for Cures, the stem cell advocacy group behind the “Yes on 14” campaign, is that CIRM fills a neglected funding need.

“The NIH does not fund clinical trials at nearly the rate that CIRM can and has been,” King said.

She says that's important because of what she calls the "Valley of Death," where promising early-stage research frequently fails to translate into promising treatments that can be tested in clinical-stage research.  (What works well in a test tube often does not work well in an organism.) This weeding-out process is costly but necessary. And it’s where CIRM focused a lot of its effort.

“The first- and maybe even second-phase clinical trials, it’s very difficult to get those funded,” King said. “It is too much of a risk for business to take on on its own. Venture [capital] isn’t going there. Angel [funding] isn’t going there.”

What voters have to ask themselves, says writer Jensen, is whether stem cell funding is "a high priority for the state of California? Different people make different judgments about that."

CIRM supporters say if Prop. 14 doesn't pass, critical research will stall. Others say federal and private funding will step in and fill the gap.

Absent new funding, the institute expects it will wind down operations leading to a complete sundown in 2023.

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