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Read Making a Killing

home / healthcare / in the media

The San Francisco Chronicle
Dec 18, 2004

by Carl T. Hall, Chronicle Science Writer

Prop. 71 financier debuts as chairman;

29-member board sworn in; biotech exec is vice chair
Robert N. Klein, a millionaire developer with no scientific credentials but a potent vision for the future of medicine, took the helm of California's $3 billion stem-cell venture Friday, officially launching one of the biggest science experiments in history.

As the driving force behind Proposition 71 in the Nov. 2 statewide election -- and a campaign donor to several state officials as well as helping fund the initiative drive -- Klein was always the clear favorite to direct the new California Institute for Regenerative Medicine.

State voters created the institute mainly to pursue stem-cell research involving early-stage human embryos -- experiments considered to be immoral by religious conservatives and that are largely ineligible for federal grants under rules adopted by the Bush administration.

Klein, 59, who lives in Portola Valley, is a lawyer who heads the Klein Financial Corp., a housing-finance concern in Palo Alto.

He was sworn in as California's first stem-cell czar at the debut meeting of a 29-member board created by Prop. 71 to direct the new institute's activities. Up to $350 million a year in state bonds are expected to finance the enterprise for the next decade, including grants to fund research and to construct facilities.

Ed Penhoet, co-founder of biotech giant Chiron Corp. and the current president of the Gordon and Betty Moore Foundation, was chosen from three nominees to serve as vice chairman of the institute's board, known as the Independent Citizens Oversight Committee.

Penhoet, a longtime University of California researcher, has a gold-plated resume in academia as well as the corporate world and was Klein's choice to be vice chair to add scientific heft to the command team.

Besides choosing their own leaders and being sworn in, committee members had no other business to conduct Friday. That was because state officials charged with setting up the committee, hewing to legal advice, moved to drastically curtail the meeting agenda when concerns were raised about violations of state open-government rules.

Even so, the committee's inaugural meeting stretched beyond two hours as Klein and his new colleagues took turns promising to do all they could to transform a speculative field of basic biology into a font of novel treatments -- while also looking out for the interests of taxpayers bankrolling the controversial enterprise.

Several speakers described stem-cell research as the next frontier of biomedicine, one that supporters believe may surpass recombinant DNA technology in lifesaving potential.

"This is a good day," Klein said as the meeting began, sounding one of the first of many declarations of history in the making.

A mostly appreciative audience of about 120 people turned out for the meeting, held in an auditorium at the UCSF Laurel Heights campus.

But critics, many of whom support unfettered research, have highlighted myriad problems with the Prop. 71 game plan, including such complexities as how to craft intellectual-property rights and ethical safeguards. And not everyone joined in Friday's frequent ovations.

Charles Halpern, a Berkeley public-interest lawyer, tried in vain to persuade the board to hold off on electing a chair and vice chair for the six-year terms stipulated in Prop. 71. He argued for interim leaders to allow time for a full-blown search.

Jesse Reynolds, staff member of a pro-choice group in Oakland called the Center for Genetics and Society, which opposed Prop. 71, called on the board to adopt "specific provisions for openness" to guide the new institute.

And a Los Angeles nonprofit, the Foundation for Taxpayer and Consumer Rights, issued a news release charging that the newly named stem-cell board was "rife with conflicts of interest."

Most of those conflicts came as little surprise. The group noted that Klein had been a major financial donor to some of the same elected officials who nominated him as chairman of the Prop. 71 effort.

He gave $52,400 to Lt. Gov. Cruz Bustamante, $27,695 to state Controller Steve Westly and $19,425 to Treasurer Phil Angelides, by the consumer group's accounting of campaign finance reports. Klein also gave nearly $2.8 million to the Prop. 71 campaign, which he co-chaired. However, he did not show up on the list of backers for Gov. Arnold Schwarzenegger, a Republican who also nominated Klein for his new role.

Klein has made no secret of his financial backing for Prop. 71 and Democratic campaigns, saying it's fueled not by personal ambition but rather by his commitment to spurring medical advances.

Much of his stated motivation is the fact that one of his sons, Jordan, was diagnosed with Type 1 diabetes, one of the chronic diseases in which stem cells might figure in a cure. The teenager stood quietly by his father's side during a brief press conference at the end of Friday's business meeting.

"I'm very happy," Jordan Klein said when asked to comment on the day's developments.

His father said one of his next moves would be to poll the other committee members in hopes of scheduling another meeting for late January -- presumably to take up the items canceled from Friday's agenda.
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E-mail Carl T. Hall at chall@sfchronicle.com

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