Trump's Cuts to Scientific Research, California's Multibillion-Dollar Research Agency and the Role It Could Play

Will CIRM help with stem cell and genetic research programs?

Can a tiny enterprise located in what once was known as “The Industrial City” bounce off the “catastrophic” research cuts by the Trump Administration, save perhaps hundreds if not thousands of jobs and boost the search for cures for afflictions that turn children into vegetative husks and kill others with cancer and other terrible afflictions?

Maybe, maybe not.

Why has that question come up? The Trump Administration has slashed national funding for scientific research by $4 billion beginning today, including reductions in awards that have already been made.

In California, that could mean an estimated billions in losses to institutions that have received awards from the National Institutes of Health (NIH), the nation’s biggest source of research dollars.

By one back-of-the-envelope calculation, the University of California campuses could lose $405 million this year. Stanford could lose as much as $160 million, according to STAT this morning. One longtime biotech executive, who asked to remain anonymous, told the California Stem Cell Report this past weekend that smaller institutions heavily dependent on NIH funding could be wiped out.

What’s involved is a Friday night directive from the NIH ordering cuts on overhead for research grants from an average of 27 percent nationally on awards to 15 percent beginning today. The NIH describes the overhead expenses as indirect costs, which they negotiate with individual institutions.

They include such things as keeping the lights on, rent, janitorial services, salaries and support from other departments such as personnel. The indirect rates on the University of California campuses range 52 percent to 55 percent. Some rates run as high as 70 percent or more.

The deep cuts left the research world agog this weekend as researchers and the media wrestled with their implications, including folks at a host of California research institutions. Not to be left out were the directors of the state’s stem cell and gene therapy agency. It uses the NIH rates when it makes its awards, which now total $4 billion.

The big difference is that the agency, officially known as the California Institute for Regenerative Medicine (CIRM), operates outside of the control of the federal government and is financed by the state.

What that means is scientists funded solely by CIRM are secure while their federally supported colleagues down the hall are scrambling this morning for new resources and probably thinking about applying for CIRM funding.

CIRM is a relatively small organization despite its multibillion-dollar research portfolio. It counts only about 70 employees at its headquarters in South San Francisco, whose old motto, The Industrial City, is emblazoned nostalgically in huge, white concrete letters on a hillside. In reality, however, the motto has been replaced by another -- Birthplace of Biotechnology.

While tiny, CIRM has funded nearly 1,500 projects in the stem cell and gene therapy space since it was created in 2004 by a direct democracy tool -- the ballot initiative. It has another $4 billion left to spend but only on scientists and research in the Golden State.

So how could CIRM step into this financial mess? The ballot measure provides CIRM with as much as $540 million a year that flows uninterrupted without tinkering by lawmakers or the governor, who cannot fiddle with it without clearing a very high political hurdle, a super, super-majority vote of both houses of the legislature plus the governor’s signature.

And since CIRM is solely state-funded, the crowd in Washington can do little to interfere with it.

The barriers were created by the chief author of the CIRM ballot measure, Robert Klein, a Palo Alto real estate developer who also became the first chair of the agency. His argument was that successful research to cure such things as cancer and diabetes needed consistent, reliable, long-term funding that was free of political meddling.

Today’s ruckus in Washington supports Klein’s point. His measure was spawned by the Bush Administration’s restrictions on federal spending for human embryonic stem cell research.

In California, CIRM has an opportunity to partially counter the Trump cuts, something its board members have talked about over the last couple of months, but with few specifics. CIRM is certain to see an increase in the number of applications over Trump’s remaining term because its awards cover the applicant’s institution's indirect costs at the level the federal government provided last week. The NIH is now much stingier.

Beyond that, a host of other actions could be taken:

CIRM could increase its total amount of awards this fiscal year well beyond the $426 million that it has budgeted. CIRM had $281 million on hand as of November.

CIRM could ask Gov. Gavin Newsom to declare an emergency, much as he did during Covid, and override the $540 million annual cap on how much CIRM can receive from state bond funding, its only source of cash. The agency is entitled to $4 billion more in bond funds but only at the $540 million annual rate. A state of emergency could also allow CIRM to avoid a legal cap on the number of employees, which probably would be necessary depending on the increase in applications.

Legal challenges could arise, but such a move likely would be favored by Newsom, who is a strong supporter of CIRM and once vowed to be California’s health care governor. He is also widely considered as a possible Democratic presidential nominee in 2028. Being portrayed as a man who helped to save lives, fight cancer and heart disease, and relieve children’s suffering from horrible afflictions can only help Newsom’s political aspirations.

The 17,000-word law that controls CIRM also provided it with its own “emergency” clause. The governing board can vote to approve funding “vital research” opportunities. It used that clause a few years ago to begin funding gene therapy research. The board itself determines what is a vital research opportunity.

Rising to stave off some of the effects of draconian cuts would benefit CIRM, which has a “lack-of-image” problem. It is virtually unknown to the public that holds the key to its survival -- more cash. After it hands out its remaining $4 billion, there is no more. CIRM will need to ask voters to replenish its coffers.

But voters are restive. In 2020, they narrowly voted, 51 percent to 49 percent, to refinance CIRM with $5.5 billion on top of the $3 billion it was given at its 2004 birth. CIRM has failed to fulfill the expectations of voters who were led to believe that revolutionary cures were just around the corner. Embryonic stem cell research was its raison d’etre. However, CIRM has yet to help finance a human embryonic stem cell therapy that is available to the general public.

CIRM needs a win that will resonate with the public. With an increase in applications, it would have more opportunities to jump aboard a late-stage project that had a good chance of being commercialized in relatively short order.

What does CIRM think about all this? The agency was mum this weekend when asked, but it is a good bet that it was the order of the day this morning.

In 2004, the day after Golden State voters created their stem cell agency, the New York Times carried a story about the election that was headlined “California to the Rescue.” Some of CIRM’s supporters say it may be time to rise again.

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Here are links to some of the stories this morning dealing with the indirect costs research crisis.

Here’s how big a hit some universities may take.

Indirect Costs at NIH . . . (A look at the legality of the cuts, authored by Stuart Buck of the The Good Science Project.)

DOGE vs. the NIH: Say goodbye to the greatest engine of biomedical research ever created (This article has links to a wide variety of news stories.)