CIRM Commits to Taxable Bonds in Upcoming $400M Private Placement
The California Institute for Regenerative Medicine will sell $400 million in taxable, rather than tax-exempt, bonds to private investors — half this fiscal year, and half next — in order to raise the funds it needs to fund its commitments beyond this fall, the chairman of the stem cell agency's governing board said last week.
Speaking at the March 12 meeting of the Independent Citizens' Oversight Committee, Chairman Robert Klein said the state would not necessarily fare worse financially as a result — even though taxable bonds command higher interest rates the state must pay out than tax-exempt bonds — because the projected interest rate of 5 percent to 5.5 percent is still expected to be attractive to potential buyers, from individuals supportive of CIRM's mission to institutional investors already exempt from taxation.
Klein said that the bonds could be repackaged in a few years, removing CIRM's tax exempt projects and reissuing bonds for those projects separately.
Private placement bonds will not be used for paying down a $250 million loan CIRM drew down last spring: "We wanted the new funds we raise to go to new program commitments, and to our cash flow for this period," Klein said.
Klein said CIRM had worked out "all but one term of the term sheet" for the private bond sale following talks with officials from the state Treasurer's office, headed by Bill Lockyer.
"We are in the process of working with entities on initial informational packages to proceed with this private placement," Klein added.
Answering a question from John Simpson, stem cell project director for the nonprofit CIRM watcher Consumer Watchdog of Santa Monica, Calif., Klein said ICOC would disclose the cost of the private placement at its next meeting in April.
By issuing taxable bonds, Klein added, CIRM will save time it would otherwise spend waiting for California to clear the roughly $7 billion backlog of bonds approved but unable to be issued for existing state programs, and save itself from anticipated legal challenges [BRN, Feb. 23] : "And we get the benefit of being in a market that's vastly larger than the tax-exempt market."
CIRM's decision to pursue taxable private bond financing prompted the ICOC to approve funding 11 Bridges to Stem Cell Research Awards totaling $17.5 million for community and state colleges — awards authorized for approval at the board's Jan. 30 meeting. At the time, the board held off on funding pending word on its ability to undertake a private placement.
Programs funded by Bridges grants will provide comprehensive lecture and laboratory courses, facilitate internship placement, and advise and mentor students on research progress and career opportunities. Graduates of these programs are expected to have the expertise needed to staff stem cell research laboratories in California industry and academic employers.
“The Bridges grants are critically important to the future of regenerative medicine in California. Without personnel trained to carry out this research the field won’t move as quickly as we would like. Funding Bridges grants now will give those schools time to establish their programs for the 2009-2010 academic year,” Alan Trounson, president of CIRM, said in a statement.
But the ICOC continued to defer funding for the $41 million second phase of Research Training Program grants tentatively approved at the board's last meeting. Many of those programs have funding that has carried over from 2008, giving CIRM time to evaluate the program, the agency said.
[ pagebreak ]
Alabama’s Huntsville/Madison Chamber Adds Biotech Funding to its Agenda for State Action
The Huntsville (Ala.)/Madison County Chamber of Commerce has included more funding for biotechnology efforts on its agenda for action by Alabama state lawmakers — an agenda that chamber members sought to bring to fruition through a recent two-day trip to the state capital of Montgomery, the Huntsville Times reported.
About 95 chamber members made the Montgomery trip — the first year it was longer than two days: "We felt we needed to spend more time there" in order to be more effective in communicating with officials, Mike Ward, the chamber's vice president, government affairs, told the newspaper.
The trip’s purpose was to brief state lawmakers and others on the chamber’s agenda — a wish list that includes continued state support for biotech research at the HudsonAlpha Institute and the surrounding 150-acre Cummings Research Park Biotech Campus. The chamber said it encouraged the state to help form partnerships between the institute and other higher learning, and also called for a $2 million worker training effort geared to biotech and other high-tech jobs.
The two-day trip included a chamber-organized reception, to which the entire Alabama Legislature and each member of Gov. Bob Riley's Cabinet were invited. Delegation members included Huntsville Mayor Tommy Battle, Madison Mayor Paul Finley and members of the Huntsville and Madison city councils and Madison County Commission.
The delegation’s message remains constant, however: "The message we've consistently sent to Montgomery is that our region is experiencing significant growth and we need the state's continued help to successfully accommodate that growth," Ward added.
Life-Sci Executives from Germany’s Hessen State to Talk Biomanufacturing at Cambridge, Mass., Panel Talk
The German State of Hessen on March 24 will host a breakfast and speaker-panel on "Challenges & Innovative Solutions for Quality Biomanufacturing in Europe", 7:45 am - 9:30 am, at Le Meridien Cambridge (Mass.) – part of the state’s effort to promote itself to US investors as a biotech hub.
Theo Dingermann, Hessen's biotech spokesperson and a professor at Frankfurt University's Institute for Pharmaceutical Biology, will moderate the discussion from a panel to include Brian Jarvis, US director for BIT Analytical Instruments; Jens Oliver Funk, a senior vice president with Merck Serono Research, and global head of TA oncology for EMD Serono; and Norbert Klein, head of the technical operations franchise for meningitis ACWY, pediatric, and specialty vaccines with Novartis Vaccines and Diagnostics.
Hessen has Germany’s largest biomanufacturing cluster concentrated in Frankfurt, Darmstadt and Wiesbaden, as well as in Marburg and Giessen. The cluster is home to operations of numerous medical device and pharma giants, including Merck Serono, Sanofi Aventis, Novartis, and Pfizer.