(CORRECTED: See below.)

These should be the best of times for California’s $3 billion stem-cell program. Lawsuits that barred the institute from spending its vast sums have been dismissed, serious money has started to flow to scientists, and a $227 million capital-spending project that will build new laboratories across the state is gearing up.

For all its successes, however, the stem-cell organization — formally known as the California Institute for Regenerative Medicine — can’t seem to keep its top officials on board. First, there was the abrupt resignation of the institute’s first president, Zach Hall, who departed CIRM at the end of April, months earlier than his original plan, amid internal tensions over that capital-spending project. By mid-summer, the stem-cell body had made little progress finding a replacement and instead tapped Richard Murphy, the recently retired head of the Salk Institute and a former member of the stem-cell institute’s powerful oversight committee, to take the reins on a temporary basis (PDF link).

Then came the news last week that the institute’s top scientific official, Arlene Chiu, is also leaving unexpectedly. Chiu, who joined CIRM with great fanfare in mid-2005, ended up shouldering additional responsibility when Hall left. Last week, she said simply that she would be returning to her home in Los Angeles to “pursue new professional directions” — a statement that carries more than a whiff of burnout. (At least she’s not leaving to spend more time with her family.) Chiu doesn’t leave until October, and will remain a consultant to the institute after that.

CIRM spokesman Dale Carlson says these and other recent staff departures noted by David Jensen over at the California Stem Cell Report were all for individual reasons, that they’re unrelated to one another and that “[t]he timing is coincidental and nothing more should be read into them.” Maybe that’s true, and absent calling them all up, there’s really no way to know for sure, although CIRM certainly has an incentive to put out the message that all is well.

That said, it seems safe to say that the stem-cell agency is probably one of the most grueling places to work in all of biomedicine. Structurally, CIRM is a Rube Goldberg-inspired contraption in which a panel of 26 appointed academic luminaries, business types and patient advocates oversees a professional staff of no more than 50. The powerful oversight committee chairman, Robert Klein II, essentially runs the show, which undoubtedly complicates the job of finding a prominent biologist — not usually the shyest and most self-effacing people around — willing to give up their laboratory in order to butt heads with Klein over the institute’s management and direction.

What’s more, CIRM itself was deliberately designed to function on a shoestring. That hard cap of 50 staffers was initially intended to reassure California voters that the agency wouldn’t waste taxpayer money on a hiring binge, and in that sense, it’s clearly worked. On the other hand, add the fact that the agency hasn’t even come close to filling all 50 positions to the string of departures, and it begins to look a lot like the institute is paying the price by burning through its human resources at an accelerated rate. (See also this related comment from Christopher Thomas Scott of Stanford’s Stem Cells in Society program over on Dave Jensen’s blog.)

This is certainly one way to run an organization, and it’s probably helped the stem-cell organization avoid criticism of how it’s managing taxpayer funds. (It also would have been unseemly to staff up too much when the agency was living primarily off of charitable donations, as it was before the courts dismissed the lawsuits.) On the other hand, there are other risks to running so lean. Last spring, CIRM approved a $2.6 million grant to a Los Angeles outfit called the CHA Regenerative Medicine Institute, a nonprofit subsidiary of a for-profit South Korean company, and one whose founding president appeared to be embroiled in plagiarism allegations. The resulting mini-scandal appears to have since fizzled out, particularly once the plagiarism allegations were retracted, but it’s an early cautionary tale for CIRM, which surely doesn’t want to face future scandals that could have been prevented with a bit of additional staff oversight.

Read More:
* On CIRM and stem cells, see this item on whether the U.S. “brain drain” is reversing or not, and this item on whether Big Pharma is tiptoeing into embryonic stem-cell investments (with a followup here).
* For other biotech-related pieces, check out this item on Koronis and its unique anti-HIV strategy, these looks at recent baby steps toward “personalized medicine,” a take on the ridiculously large IPO envisioned by Talecris Biotherapeutics, and two items on startups that aim to pioneer the dawning age of “personal genetics.”
* On more general medical subjects, see my admittedly opinionated takes on healthcare reform, evidence-based medicine, the nascent push for electronic health records and Andy Grove’s quixotic healthcare-reform crusade.

CORRECTION: This item originally stated that CIRM “handed out” a $2.6 million grant to the CHA Regenerative Medicine Institute. That grant is still in administrative review, so I’ve corrected the wording.

VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Discover our Briefings.