By Rachel BarronFor-profit companies just got a glimpse of what it will take to get a cut of the $3 billion California voters have allocated to bulking up stem cell research. On Thursday afternoon, the committee charged with overseeing how the money will be spent gave the green light to a proposal outlining how grants will be awarded to commercial research businesses.

voters have allocated to bulking up stem cell research. On Thursday afternoon, the committee charged with overseeing how the money will be spent gave the green light to a proposal outlining how grants will be awarded to commercial research businesses.

The draft now makes its way to the next phase, a public review and comment period, and hopefully final approval in 2007.

But despite not having that golden seal of final approval, the decision made by the committee opens a much coveted door for commercial entities. As of today, “they can now formally apply for our grants,” said Mary Maxom, deputy vice chair for committee.

But before companies start rushing the California Institute for Regenerative Medicine, or CIRM, the state agency charged with disseminating the heap of state money, they need to wait for the agency to put out a request for applications.

And just because CIRM accepts the applications, the agency still hasn’t decided whether it will actually dole out the grants before the plan of action has been formally approved.

So while companies debate whether to apply for the grants, they might want to evaluate the revenue sharing part of the proposal first.

Nothing for Free

For companies that manage to successfully commercialize a product from CIRM-funded research a return will be expected.

For example, when a company pulls in revenues in excess of $500,000, the company will have to pay the state of California three times the amount granted to the company.

California

Non-profits aren’t saddled with the same expectations, as they aren’t expected to bring potential treatments to market.

“We believe that nonprofits are in the business of creating knowledge, and for-profits are in the business of creating products,” Ms. Maxom said.

But both will be required to pay up should they profit from a licensing deal.

And similar to non-profits, for-profits will have to pay a percentage of money made from licensing deals. For example, when a for-profit rakes in over $500,000 in revenues from a licensing deal with CIRM funded technology, the company will have to pay 17 percent of the deal’s revenues to the state.

Obviously, the plan works to support stem cell research as well as provide financial returns to the state for its investment.

In the fall of 2004, California voters said “yes” to Proposition 71 which meant issuing $3 billion of general obligation bonds to fund stem cell in the state. The move created the largest state fund for the research in the country.

California

But there are additional catches to accepting CIRM’s grant money.

For example, at least as it stands now, for-profit recipients will be required to make stem cell therapies accessible to California residents, and provide discounted prices to publicly-funded health care plans.

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And among the more interesting stipulations, should the therapy find itself in short supply, California residents will be given preference in receiving the treatment.

California