SPENCER MICHELS, NewsHour Correspondent: It was a coup when Japanese stem cell researcher Shinya Yamanaka agreed to work at the Gladstone Institutes in San Francisco. Yamanaka is considered one of the world's top scientific pioneers.
He is one of almost 50 stem cell researchers who have been recruited recently to work in California labs. They're taking part in a new gold rush, sparked by the passage in 2004 of a $3 billion state bond issue to finance stem cell research, far more than any place else.
GEORGE W. BUSH, President of the United States: I have made this decision with great care.
SPENCER MICHELS: The state money was meant to get around President Bush's 2001 restrictions on federal funding of research that severely limited the embryonic stem cell lines that could be used.
STEVE WESTLY (D), Former California State Controller: The eyes of the world are on California today.
SPENCER MICHELS: The state agency set up to disperse the funds was sued, tying up the money for two years, but it is finally starting to flow. Even with the lawsuit, the research never stopped, fueled by loans and donations. But it's even more intense now, says Dr. Irving Weissman, the head of Stanford's Stem Cell Institute.
DR. IRVING WEISSMAN, Stanford School of Medicine: It's exploding, because now the best and the brightest young people are starting to believe they have a chance to be here in the United States and do this research. So the loan money that came a year ago and started the training of those young people allowed us to develop the facilities, allowed people like my lab and other labs to start getting into this field, because we could do it without the restrictions of the federal government.
SPENCER MICHELS: Embryonic stem cells are human cells that are capable of becoming specialized cells, like liver or brain. They hold great promise of curing disease and of providing insights into how cells work. Their use is considered by many researchers a revolution in medicine.
But getting cells from discarded human embryos that are only a few days old and small as a grain of sand has provoked moral objections, since the embryos die. Yamanaka's breakthrough that made him a hot recruit was to find a way to program the skin cells of adult mice to act like embryonic stem cells, or ES cells.
He came to California so he could use embryonic cells to prove his findings. That's something he couldn't do in Japan. He intends to see if the results with mice can work with humans.
DR. SHINYA YAMANAKA, Gladstone Institutes: Human cells are different from mouse cells in many aspects. I would predict that it is more difficult to make ES cells from human skin cells than from mouse skin cells, but we don't know yet.
SPENCER MICHELS: If Yamanaka can eventually apply his technique to humans and not have to use stem cells taken from human embryos to fight disease, the ethical debate about embryonic stem cells could dissipate. Gladstone's Deepak Srivastava says the work itself is groundbreaking.
DR. DEEPAK SRIVASTAVA, Gladstone Institutes: It's an understatement to say that this work has transformed the landscape of the stem cell field, and it's already fueling a rush to begin to translate these findings into future human therapies.
SPENCER MICHELS: Srivastava is a pediatric cardiologist who is using stem cell research to study common congenital heart abnormalities. He was recruited to California two years ago from Texas, where legislators are divided as to whether the state should support such research.
DR. DEEPAK SRIVASTAVA: I think it's safe to say that the future that we've all been talking about, the future is now. We're just at that stage now where the field has reached a tipping point.
SPENCER MICHELS: Recruiting is taking place at major institutions throughout California that are working on a variety of diseases. At Stanford, Irv Weissman was instrumental in persuading cancer researcher Michael Clarke to leave his job at the University of Michigan and head for California. Michigan is one of six states where embryonic stem cell research is banned.
DR. MICHAEL CLARKE, Stanford Cancer Center: I think Stanford in particular, and California in general, I think is a much richer environment for doing science. In California, it's not only did we want to get things done, but how do we facilitate getting them done? And then let's do it.
One of the people who came to my lab with me from Michigan is a pediatrician who's interested in pediatric cancer. And because of legal restrictions, he couldn't really do the work he needed to do to understand these early childhood cancers.
SPENCER MICHELS: The gold rush has meant good salaries and research perks for scientists willing to make the move. Neurologist Arnold Kriegstein has been recruiting for the University of California, San Francisco's, program in developmental and stem cell biology, which he directs.
DR. ARNOLD KRIEGSTEIN, University of California, San Francisco: It's expensive to recruit especially the very best stem cell biologists, so we need start-up packages which include, of course, money for the first few years to get them off their feet, to get them up and started. We need space and laboratory facilities for them to work in. We need to protect them from too many teaching responsibilities. We have to put together this recruitment package.
SPENCER MICHELS: UC-San Francisco, or UCSF, has plans for a new $109 million stem cell building. Stanford built this special stem cell research facility partly as a recruiting tool. The labs, like this one at UCSF, are particularly expensive because all the equipment has to be duplicated, one set paid for without any federal money -- and which therefore can be used to experiment with embryonic stem cells -- and another to work only with the few lines of cells that were approved by the federal government.
Kriegstein showed us duplicate high-tech microscopes.
DR. ARNOLD KRIEGSTEIN: They can cost half-a-million dollars or more, and we have two of them in this room. We have to be very careful that we don't mingle NIH and non-NIH-sponsored activities.
SPENCER MICHELS: Kriegstein specializes in stem cells for cancer research. He says his aim is to find the parent or cancer stem cells that are seeding tumors, the so-called mother cells, so that drugs can be targeted at those cells.
He was responsible for recruiting researcher Holger Willenbring, originally from Germany, to San Francisco, partly by promising him enough mice.
What did they do? Did they ply you with presents, or did they just make it nice, or how did they recruit?
HOLGER WILLENBRING, University of California, San Francisco: Well, first of all, they tried to get a sense if you really can provide what they're looking for, like the lab space, for example, or how many mice you're going to be able to have and...
SPENCER MICHELS: How many?
HOLGER WILLENBRING: Well, we have quite a bit of mice. And what kind of start-up funds you will have to buy equipment and things and to hire people and get started.
SPENCER MICHELS: As a pediatric resident, Willenbring had seen children die of liver disease. And as a result, he went into stem cell research.
HOLGER WILLENBRING: Among the children I took care of, the ones with genetically or inborn inherited liver diseases really had the poorest outcomes, because the treatment options were so limited. And, as you know, donor organs are very sparse, and the alternative therapies are, unfortunately, not available.
SPENCER MICHELS: Willenbring succeeded in using adult stem cell therapy to treat mice with liver disease. At UCSF, he now wants to use embryonic stem cells, which he hopes will transform into new liver cells to correct disease and prevent death.
Such practical applications could have a big pay-off. UCSF transplant surgeon Dr. Nancy Ascher says stem cells could be an alternative to some transplants: 100,000 people a year need organ transplants, but only 7,000 to 8,000 are done.
DR. NANCY ASCHER, University of California, San Francisco: The idea of repopulating a liver, for example, with new cells, a damaged liver that's not failed but damaged, is very exciting. The notion of repopulating a heart that might have damaged cells from a heart attack is a very exciting possibility.
SPENCER MICHELS: Although UCSF got Willenbring from Oregon and Stanford got Clarke from Michigan, there is also competition within California. Christopher Scott directs Stanford's Program on Stem Cells in Society.
CHRISTOPHER SCOTT, Stanford University: Well, for example, the University of California, San Francisco, is just down the road from us at Stanford. And we were very lucky to get one of their top embryonic stem cell researchers to come here to Stanford.
SPENCER MICHELS: Is it a polite competition, or is it getting a little bit cutthroat?
CHRISTOPHER SCOTT: So far it's been polite. We'll see. I think, when you have as much money as California does, it's going to be really interesting to see how the top labs are arm-wrestling over the young scientists.
SPENCER MICHELS: Some of those young scientists are just out of college. Laura Elias was recruited as a graduate student by the UCSF lab.
LAURA ELIAS, Graduate Student: When you discover something new, there's nothing quite like that kind of excitement, where you really think you're seeing something that nobody has seen before and nobody has described before. And that can be very exciting.
SPENCER MICHELS: Elias was the lead author of a study on the migration of brain cells that recently made the cover of the prestigious journal Nature. If researchers can identify what molecule is allowing brain cells to migrate, they may be able to stop the migration of brain cancers.
For all the money being poured into research and the enthusiasm, there are also cautionary notes.
DR. IRVING WEISSMAN: I think we're on the edge of the next revolution in biomedical science, but we need to make sure that we're not over-hyping it and we're not fooling ourselves. So far, in the animal models of these studies, it's working, and it's working great. We have to approach American medicine though and say, "Here's a whole new way of thinking about it. Are you ready for it?"
SPENCER MICHELS: Besides California, a half-dozen other states currently fund embryonic stem cell research, but California scientists expect to maintain the large lead they've built up, even if a new president lifts the federal restrictions on funding such work.
JUDY WOODRUFF: You can send your own questions about stem cells to researcher Irving Weissman by going to our Web site at PBS.org.