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US Credit Upheaval Hurts One California Stem-Cell Facility; Others Left Unscathed

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This article has been updated from a previous version to clarify the terms of the Broad Foundation's funding for UCLA and the number of stem cell faculty at the UCLA center.
Though approved for a $20.5 million grant from California’s stem-cell agency to start building a new 65,708-square-foot facility, a private research institution in the state is blaming the troubled US credit markets for its failure to raise the balance of capital it needs to develop the $41 million project.
 
The Buck Institute for Age Research in Novato, Calif., emerged last week as the first of the 12 major facility grant recipients named in May by the California Institute for Regenerative Medicine to disclose difficulty in financing its project.
 
On the other end of the spectrum, six California schools among the 12 CIRM grant recipients have begun constructing their facilities, while another three said they plan to do so by next spring, according to a review conducted by BRN last week. Two additional schools did not return e-mail messages or calls seeking project progress updates.
 
CIRM announced on May 7 that it would dole out $271 million to help 12 institutions build out their labs, a move that reflects up to half the cost of the 800,000 square feet of stem-cell facility projects.
 
In return for the money, the 12 agreed to speed their construction schedules to ensure their facilities would open within two years with researchers and equipment in place.
 
CIRM spokesman Don Gibbons told BRN on Oct. 3 it was too early for CIRM and its 29-member Independent Citizens Oversight Commission to assess whether the two-year deadline should be extended because of the credit squeeze.
 
“As you can imagine, the current situation in the financial market has given everyone reason to pause and recalibrate,” Buck Institute spokeswoman Kris Rebillot told BRN via e-mail. “We are still in discussion with partners regarding the financing and development of the building.”
 
As a result of the talks, she added, “we have no date set for groundbreaking.”
 
In June, Buck Institute President and COO James Kovach told BRN that the institute planned to break ground on the four-story building in September and complete it in July 2010 [BRN, June 2]. The project would be an addition to Buck’s existing 185,000-square-foot research facility.
 
In Buck’s application for grant funding from CIRM, a record made public by the agency online and available here, the institute assured the stem cell agency it could complete the project within two years: “The proposed project will be completed within two years of notice of grant award with beneficial occupancy of one floor of the proposed project within 20 months of issuance of a notice of grant award.
 
“The proposed facility is part of an approved and entitled master plan. The construction of the project can begin as soon as the local jurisdictions can complete plan checking and issue permits for construction,” Buck added.
 
In its application, Buck sought a grant of $25 million, saying an award that high “is likely to be a catalyst for development of” the final two buildings in its master plan, both of 60,000 square feet. That, in turn, would bring on-site enough researchers and others to justify construction of 128 units of affordable housing also planned by the institute, it told CIRM.
 
“To protect the confidential nature of ongoing discussions with potential participants and/or partners in the development of the entire master plan, we cannot divulge details of the interest the possible grant is generating in the entitlements for future construction associated with the lands owned by the Institute,” Buck wrote.
 
Last week, Rebillot said the institute had begun mulling options for raising capital, though he declined to elaborate. “We’re talking to CIRM. There’s no firm deadline, but I think everybody would like to have something resolved soon,” he said.
 

“As you can imagine, the current situation in the financial market has given everyone reason to pause and recalibrate.”

Rebillot contrasted Buck with the other institutions that received CIRM grants. While endowments have topped $17 billion at Stanford and $7 billion at the University of California system — which accounted for nine of the 12 stem-cell grant recipients — she said Buck’s endowment are much smaller.
 
She said this fiscal year, the institute received $6 million from the Buck Trust, which each year gives the institute a 15-percent share of the 5 percent of funds that the trust donates each year to four Marin County groups. Based on the percentages, the trust fund appears to be worth about $800 million, a figure reported last year by the magazine Pacific Sun. The trust itself has not disclosed its size.
 
Buck Trust donations account for up to 20 percent of the Buck Institute’s total annual budget. Half of its total revenues come from National Institutes of Health research grants, 14 percent comes from individual and foundation contributions; 8 percent comes from other grants; 6 percent from corporate-sponsored agreements and licensing deals; and 2 percent comes from interest and other income, Rebillot said.
 
“We’re not even 10 years old yet. So we’re much smaller and younger,” she said. “Our donor base is not as big. So we just have to come up with some other ways of financing the rest of the building.”
 
The institute still hopes to build the stem-cell facility, which is designed to house up to 25 faculty members, including 12 new principal investigators, along with a cell banking facility, a cafeteria, and fitness center. When completed, the building will rise on the institute’s Novato, Calif., campus and be Buck’s second research facility. Buck’s project is the only one of the dozen CIRM-funded facilities not being developed by an academic institution.
 
CIRM designated Buck’s project at the highest of three research importance categories developed by the state stem-cell agency, a so-called “CIRM Center of Excellence.” The institute found a ready-to-develop site within its campus, thereby shortening the construction process and lowering its cost.
 
“[Buck] had their master plan. They had their future expansion fully entitled, and that’s very key to the project, because of the two-year timeframe. All of these projects have to be completed in two years” said Greg Muth, laboratory architect with Perkins+Will, a national firm with offices in San Francisco, and the architectural firm that designed Buck’s stem cell facility.
 
Muth discussed Buck’s CIRM project late last month as one of three panelists who participated in a panel discussion called “Lessons Learned About Laboratory Costs from the CIRM Stem Cell Facility Grant Proposals” held during the day-long GeneAcres conference in South San Francisco.
 
As of Oct. 6, three California academic centers have either begun building or are in the pre-construction phase of their own stem-cell facilities: Stanford University; USC; and UC’s San Francisco, Los Angeles, Davis, and Irvine campuses.
 
UC Irvine became the latest school to start work on a stem-cell facility when it launched its effort Oct. 6 to build its $66.6 million Sue and Bill Gross Stem Cell Research Center.
 
At 100,636 square feet, the new facility will be 10 times the size of the 10,000-square-foot current core stem-cell laboratory, at UC Irvine, school spokeswoman Jennifer Fitzenberger told BRN via e-mail. UC Irvine plans to break ground on the facility Oct. 24, she said.
 
UC Irvine also demonstrates one complication for the schools as they translate their stem-cell facility plans into bricks and mortar: rapid escalation of construction costs. Since CIRM approved its grants in May, the agency and UCI have seen those costs grow about 10 percent over the $60.5 million projection the school furnished to the stem-cell agency.
 
New Life for Older Building
 
At the Health System campus of UC Davis in Sacramento, school administrators joined ICOC Chairman Robert Klein, state Senate President pro Tempore-elect Darrell Steinberg (D-Sacramento), and patient advocates in a Sept. 26 groundbreaking ceremony for its $62 million, 92,000-square-foot UC Davis Institute for Regenerative Cures.
 
The new facility will occupy most of a 109,000-square-foot building dating back more than a half-century to when the health system campus was the site of the California State Fairgrounds. When the fairgrounds moved out in the late 1960s, and UC Davis took over the 140-acre site, the school used the building as a bulk-mailing site and a warehouse before renovating 17,000 square feet for its Clinical and Translational Science Center, which opened in 2006 through a $24.8 million NIH clinical and translational science award.
 
The new stem-cell facility would occupy the remainder of the old fairgrounds building.
 
“We ran all new mechanical [infrastructure] in there from our power plant, and new water and new electrical and new communications systems to update the site. The facility itself required specialized plumbing and electrical supplies, and we’ve done that over more than a year,” UC Davis spokesman Charles Casey told BRN.
 
“That was one of the things that impressed CIRM: We had the shell, and we’re building within that shell. We’re going to actually have labs up and running within the coming year. We’ll have lab folks working in there next fall,” Casey said.
 
Casey said the facility will benefit UC Davis by allowing it to consolidate separate locations now in use by the more than 100 scientists and researchers who now carry out stem cell research at the school’s Davis and Sacramento campuses.
 
Another highlight of the stem-cell building will be a 5,500-square-foot good manufacturing practice facility, as well as numerous labs, conference rooms, and support spaces.
 
UC Davis received $20.1 million from CIRM, which was “a huge step forward, and it gave us the ability to leverage other funds” for programmatic research, Casey said. The school also committed itself in return to raising $41.7 million on its own and through donors, though Casey could not say how much of that has been raised.
 
At UC San Francisco, project manager David Bendet told BRN his school broke ground in early September on its $119 million, 74,832-square-foot facility, to be located on the school’s Parnassus campus. The building will consist of four split-level floors with terraced grass roofs and solar orientation, with open labs that flow into each other, and office/interaction areas on the pedestrian circulation routes between the labs.
 
UCSF expects to move into the new building, designed by New York architect Rafael Viñoly, by the end of October or early November 2010.
 
“We started concrete demolition [the week of Sept. 8],” Bendet said, referring to the footings and foundations of older buildings that stood on the site until they were razed two years ago. Though the buildings contained a basic research center and a vivarium, both were about a half-century-old and too costly to renovate and restore for modern scientists.
 
“We’re going to start our drilling and foundations probably within the next couple of weeks. We’ve ordered the steel,” Bendet said.
 
Bendet, who joined Muth as a panelist at the GeneAcres discussion on CIRM projects, said UCSF “plans to grow its stem cell research corps to 25 researchers by the time the building opens in 2010, and between five and eight additional principal investigators once the building opens.
 
“We think it will transform the Parnassus campus and help the recruitment of new PIs over the next two years,” Bendet added.
 
UCSF won $34.9 million from CIRM and agreed to raise another $59.7 million from institutional and donor funds, said Bendet. The school’s fundraising effort for the building was jumpstarted in 2006, when Ray and Dagmar Dolby donated $16 million.
 
Fundraising was just one challenge for the UCSF project. Another, according to Bendet, was transforming the steeply sloped project site into a place suitable for the new building.
 
“Some of the contractors that were looking at the site were initially concerned. But we figured out a fairly creative way to address it. Rather than digging into the site with giant 40-50 foot tall retaining walls and a basement, we actually raised the building up on a base-isolated structure, and started to create a seismic structural design, which did ultimately add to the overall costs of the facility,” Bendet said.
 
“The site constraints did drive up our project costs” for the building, projected at $94.5 million in UCSF’s application to CIRM, Bendet added.
 
USC on Sept. 3 broke ground on its $80 million Eli and Edythe Broad CIRM Center for Regenerative Medicine and Stem Cell Research. The building is named for the husband-and-wife benefactors who established a Los Angeles-based national philanthropy focused on advancing entrepreneurship for the public good in education, science, and the arts. The Broads donated $25 million toward the project in 2006.
 
The 80,000-square-foot center is one of three anchors envisioned in a “research triangle” within the Health Sciences campus, along with the Zilkha Neurogenetic Institute and the Harlyne J. Norris Cancer Research Tower.
 
USC received $26.97 million from CIRM toward the facility. Klein and CIRM president Alan Trounson joined Los Angeles Mayor Antonio Villaraigosa in breaking ground on the Broad CIRM center. In return for the CIRM grant, USC committed itself to raising $55.6 million in institutional and donor funds. How much of that money has been raised could not be learned at deadline; a USC representative did not return messages from BRN.
 
USC was the first of three stem-cell facilities partially funded by the Broads. At UCLA, construction is nearly half-completed on the $42.8 million, 21,000-square-foot UCLA CIRM Institute, under the direction and management of UCLA Broad Stem Cell Research Center Director Owen Witte. UCLA received $20 million last year from the Broads — funding specifically restricted from being used for construction of the building itself, though part of the money was among several funding sources for equipment being used in the facility.

UCLA received a $19.9 million CIRM grant toward construction, and has agreed to raise $22.8 million on its own. 
 

UCLA, which currently has around 150 stem cell researchers on staff, said it plans to double its new stem cell faculty to 12 members by the time the facility opens. The facility will feature 15 stem-cell laboratories and access to six core facilities including advanced mouse genetics and microfluidics.
 
“We are now 40-percent complete. Occupancy will occur May 2010,” UCLA Broad Stem Cell Research Center spokeswoman Kim Irwin told BRN last week via e-mail.
 
Close to breaking ground is Stanford, which has begun excavating the site of its planned $200 million, 130,000-square-foot stem-cell building on the south side of the university’s medical school. The work is in advance of a grand opening planned for Oct. 27, said Christopher Vaughan, a spokesman for the Stanford Institutes of Medicine.
 
The four-story stem-cell building, to be called Stanford Institutes of Medicine 1, will include a microfluidics facility, allowing researchers to narrow their analysis to a few hundred cells, rather than the millions typically needed.
 
Stanford’s new building is designed to house, under one roof, some 25 faculty members working with adult, embryonic, cancer and reprogrammed stem cells. The faculty members — 12 of them current, the rest to arrive by the time the facility opens — are now scattered between several on-campus buildings and an off-campus satellite lab.
 
“As far as the number of everybody — scientists, students, and fellows — we’re looking at about 350 people in the building,” Vaughan said.
 
Also in the new facility will be about 60 benches reserved for collaborating scientists from Stanford or neighboring institutions. Those visiting scholars will be mentored by two faculty members, a basic scientist and a clinical researcher. The building is being constructed using a $43.58 million grant the university’s School of Medicine received from CIRM — the largest of its 12 stem-cell facility grants.
 
Stanford has also promised to raise $156.4 million of the project cost through donor donations and institutional funds, but would not disclose how much of that has been raised to date. On Oct. 6, Stanford announced a $75 million donation toward the facility from Lorry Lokey, the founder of the press release wire service Business Wire.
 
Stanford is one of three schools planning to hold formal groundbreaking ceremonies for new stem-cell facilities.
 
San Diego’s newly-renamed Sanford Consortium for Regenerative Medicine plans to break ground early next year on a new $115.2 million, 23,740-square-foot stem cell research venue.
 
We hope to begin construction during the first quarter of 2009,” Louis Coffman, the consortium’s interim director, told BRN last week via e-mail.
 
Completion is set for the summer of 2010.
 
Coffman said lab space in the new four-story facility will accommodate 300 scientists, but won’t be large enough to accommodate all stem cell research in the consortium’s four component institutions. In addition, the institutions have some equipment too large to be moved safely into the new building.

“This is really going to be the hub for the four institutions, but there still will be the spokes of the four,” consortium spokesman Ian Stone said. “The scientists who do occupy the new building can then go and work in colleagues’ labs at any of the four institutions. And those colleagues could come to work at the consortium itself.”

Created in 2005, the consortium combines UC San Diego in a research effort with three institutions — the Burnham Institute for Medical Research, the Salk Institute for Biological Studies, and the Scripps Research Institute. The consortium received $43 million from CIRM, and agreed to raise another $72.2 million in institutional and donor funds. 
 

The San Diego consortium took a key step toward raising the latter funding on Sept. 16, when it accepted a $30 million donation from Sioux Falls, SD, philanthropist T. Denny Sanford — $10 million up front, then $2 million over each of the next 10 years. In return for accepting the money, the consortium agreed to rename itself [BRN, Sept. 22].
 
The project’s price tag include the $15 million cost of land to be leased back from UCSD under a long-term lease.
 
Also planning to break ground on a stem cell building in January is UC Merced, which plans to construct a $7.5 million, 5,420-square-foot Stem Cell Instrumentation Foundry focused on the development of stem cell technologies at the university's outpost on the former Castle Air Force Base.
 
“There are currently eight faculty members planning to use the facility. Maria Pallavicini [UC Merced’s Dean of Natural Sciences] tells me that number will grow to about 20,” Ana Shaw, a spokeswoman for the school, told BRN via e-mail last week.
 
UC Merced was awarded $4.36 million from CIRM, and will raise another $3.1 million on its own for the facility; Shaw could not say how much has been raised to date. It will include two clean rooms, specialized spaces for cell imaging and culture work, and support and office space.
 
UC Santa Barbara is in the planning process for its $6.35 million renovation of 10,337 square feet on parts of three floors in the seven-story Biological Sciences 2 building. The project received $3.2 million from CIRM.

“Currently we have about 25 faculty that are engaged in stem cell projects, with 1-2 individuals per lab. Renovation will create space for 3 new Endowed Chair positions, with capacity for 50 new stem cell researchers at the bench,” Dennis Clegg, professor and chair of the school’s Department of Molecular, Cellular and Developmental Biology, told BRN via e-mail.

“We are adhering to the original proposed schedule, which calls for construction to begin next spring,” Clegg added. “We have raised over $3M in support of the Stem Cell Center, but this is not earmarked for construction. Additional fundraising is underway that will include the construction project.”

CIRM has also awarded $7.2 million toward the $12.9 million facility to be built on the fourth floor of a planned Biomedical Sciences Building at UC Santa Cruz; and $20.18 million to UC Berkeley, toward the $78 million construction of two floors of stem cell research labs and shared equipment in the planned Li Ka Shing Center for Biomedical and Health Sciences. The Berkeley building, slated for completion in 2010, has benefited from a $40 million lead gift from Hong Kong philanthropist and entrepreneur Li Ka-Shing.
Representatives for UC Berkeley and UC Santa Cruz did not respond to BRN messages.