Touted seven years ago as a way to develop "breakthrough cures" for an array of life-threatening ailments, California's $3 billion taxpayer-financed stem cell agency still has no treatments on the market and is at a critical juncture that could determine how much longer it stays in operation.

The agency will dole out the last of its money in about five years and supporters are considering another ballot measure to raise up to $4 billion to keep it afloat. But while it has financed numerous studies and helped create a dozen major research facilities across the state, voters -- given the state's dire budgetary woes -- may not be as enthusiastic today as they were in 2004 when they approved Proposition 71 to create the agency, known as the California Institute for Regenerative Medicine.

"I think it's crazy," said John Simpson, of the Santa Monica-based group Consumer Watchdog. "The state's economy is in a far different position now. We're not even able to provide adequate funding for education."

In addition, the federal restrictions on stem-cell research -- which prompted passage of Prop. 71 -- have been lifted by President Obama. And despite winning praise for greatly advancing stem-cell science, the state institute appears years away from fulfilling its pledge to produce federally approved cures.

But the agency's chief advocate and former chairman, Robert Klein -- who didn't take a salary during his first few years on the board and who said he quit this summer in part to help raise money for another stem-cell proposition -- sounds determined to give it a try, perhaps in 2014.

Considering the institute's achievements so far, "it would be a huge failing in meeting our moral mandate" to let it die, he said. "We can't afford to break the momentum."

Because of ethical objections surrounding human embryonic stem cells, which are harvested from discarded 3- to 5-day-old embryos, then-President Bush in 2001 limited federal research of the cells. That spurred Klein, a developer whose mother had Alzheimer's disease and whose son suffered from juvenile diabetes, to launch Prop. 71, which he said he partly financed with $4.5 million of his own money.

Noting that many scientists believe the cells could be turned into treatments for everything from Alzheimer's to diabetes, the ballot measure -- which won 59 percent of the vote -- said the state institute would be "totally focused on finding medical cures" and "could save the life of someone you love."

Although lawsuits initially delayed the agency's ability to award its money, which was to be disseminated in annual increments of about $300 million over ten years, it has since allocated $1.3 billion. That has financed scores of studies involving embryonic stem cells as well as adult stem cells, which are obtained from various parts of the body.

It also helped create research facilities, including the 200,000-square-foot Lorry I. Lokey Stem Cell Research Building at Stanford, the agency's single biggest recipient. The agency gave $43.6 million for the $200 million structure, which Stanford calls the largest stem-cell facility in the nation.

To date, the institute has "delivered extraordinary results in a remarkably short period of time" and attracted more than 100 researchers to California, according to a November 2010 report by an international panel of scientists and other experts who are not associated with the institute. Nonetheless, the panel said the agency has had "limited success" getting businesses involved in making treatments and needs to do more to "deliver on its mission to develop innovative therapies."

So far, the institute has awarded $83.4 million to 15 businesses, including Menlo Park-based Geron, the first company to win federal approval to test a human embryonic stem-cell treatment on people. But in November, Geron returned its $25 million institute loan, when the company halted its stem-cell work to focus on cancer drugs.

Many businesses have been deterred from even trying to make stem-cell treatments because of how long it might take.

"It's a challenge," said Rodney Young, chief financial officer at Newark-based StemCells, which hopes early next year to obtain a $20 million institute grant to determine if a type of adult stem cell can slow the loss of cognitive function in Alzheimer's patients. "It's an expensive, uncertain and long process."

Jonathan Thomas, an investment banker and attorney who was selected in June to replace Klein as chairman, concedes the institute needs to work harder to assist companies like Young's.

"One of my priorities coming into the new position here is to work towards getting industry more involved," he said, adding that the agency also needs to better explain its work to the public, which "is footing the bill for this science."

Some critics have faulted the institute for awarding much of its money to entities affiliated with its board members and for being too generous toward its executives. Thomas is paid $400,008 a year — $250,000 of it comes out of donations -- and the agency's president, Alan Trounson, receives $490,008 -- amounts the agency defends as normal for research organizations.

Others contend Prop. 71 failed to make it clear how long it could take to develop treatments and oppose another ballot measure, saying the institute isn't needed now that federal stem-cell restrictions have been lifted.

Thomas said his board hasn't discussed whether to ask voters for more money. But the idea is supported by long-time board member, Jeff Sheehy, who suffers from AIDS and believes it would be tragic not to keep the agency operating.

Although coming up with cures "is proving very difficult," he acknowledged, "we have stimulated the most productive group of regenerative scientists in the world. We have to keep funding it."

Contact Steve Johnson at sjohnson@mercurynews.com or 408-920-5043

TOP Stem-cell agency recipients

These are the biggest single recipients of the $1.3 billion doled out so far by the state's stem-cell institute.
Stanford University -- $192,520,199
University of California, Los Angeles -- $148,833,908
University of California, San Francisco -- $114,819,892
University of California, San Diego -- $93,710,826
University of Southern California -- $72,041,503
Source: California Institute for Regenerative Medicine

TARGETING AILMENTS

Besides financing new research buildings, basic stem-cell studies and training programs for young scientists, the state's stem-cell agency has funneled $552 million to study specific maladies, with an eye toward eventually developing treatments for those problems. Here is the percentage of that money allocated so far for specific ailments:
Nervous system problems 29%
Cancer 22%
Blood/immune disorders 11%
Cardiovascular ailments 10%
Sensory organ disorders 9%
Bone/cartilage disorders 4%
Diabetes and other endocrine disorders 4%
Gastrointestinal and liver ailments 2%
Muscular disorders 2%
Reproductive disorders 1%
Multiple disorders 3%
Other disorders 3%