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News reports say that chair of new state agency was aware of the billion-dollar problem during the campaign

Robert Klein, chair of the new California stem cell research agency and of the initiative campaign that created it, withheld critical information from California voters during the campaign, the San Francisco Chronicle reports today. According to the front-page account, Klein knew that ensuring royalties to the state from research funded by last November's $3-billion Proposition 71 was questionable because of its tax implications. Yet he and the campaign continued to promise voters that the state could receive up to $1.1 billion in royalties without incurring a federal tax burden.

"Klein had a moral obligation to tell Californians the truth," said Jesse Reynolds of the Center for Genetics and Society, a public interest advocacy group. "If this report is accurate, Klein misled voters to the tune of one billion dollars. Such reckless behavior threatens to undermine public confidence in California's innovative program, and casts doubt on the appropriateness of the California stem cell institute as a national model."

How any profits from research funded by CIRM are allocated, and how affordable access to any treatments is ensured, are rapidly becoming the most urgent issues in the implementation of Proposition 71. Because these questions will be determined by the kind of intellectual property arrangements that the stem cell institute makes with its grantees, they are on the table now.

Many elected officials in California endorsed the proposition last year. Reynolds said, "The high-profile office holders who endorsed the stem cell initiative need to say what they're going to do to make sure that Californians reap the benefits of their investment."

Reynolds is scheduled to testify on Monday, October 31st at a hearing of a joint committee of the California Senate and Assembly on these issues in San Francisco.

"Tax law casts doubt on stem cell royalties: State may not reap billions promised to voters last fall," by Bernadette Tansey in today's San Francisco Chronicle is available at http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/10/25/MNGTFFDK8J1.DTL

"The Joint Informational Hearing on Implementation of Proposition 71: Options for Handling Intellectual Property Associated with Stem Cell Research" will be held Monday, October 31, 2005, 9:30 a.m. - 2 p.m., at the Hiram Johnson State Building, Milton Marks Conference Center, Auditorium, 455 Golden Gate Avenue, San Francisco

Contact:

Marcy Darnovsky
1-510-625-0819 x305

Parita Shah
510-625-0819 x312