March 17 (Bloomberg) -- California's stem cell agency awarded 29 research grants totaling $74.6 million to California non-profit institutions and universities, making the state the world's largest source of funds for embryonic stem-cell research.

The two largest recipients of the awards yesterday were the University of California-San Francisco plus an affiliate, with eight grants totaling $20.5 million, and Stanford University, with six grants for $15.2 million. A Los Angeles-based unit of CHA Biotech Co. in Seoul also received funding from California.

The grant recipients are focusing on research into embryonic stem cells, which are among the first cells created after conception. The California agency decided to award most of the money for research into those cells because U.S. President George W. Bush, citing ethical concerns, has banned federal funding for studying all but a few embryonic cell lines.

``As of today, California is the largest and most stable source of funding for human embryonic stem cell research in the world,'' said Robert Klein, the president of the California Institute for Regenerative Medicine's governing board, in an e- mailed statement yesterday.

Other institutions receiving research grants include the University of California campuses at San Diego, Irvine, Los Angeles and Davis; the Burnham Institute for Medical Research, the Salk Institute for Biological Studies, and Children's Hospital of Los Angeles. The CHA Biotech affiliate in Los Angeles is called the CHA Regenerative Medicine Institute.

Seoul Connection

CHA RMI was awarded a grant of $2.6 million. Along with its sister organization, CHA Stem Cell Institute in Seoul, it's a non-profit unit of CHA Biotech. The Los Angeles unit proposes to use its grant to create stem cell lines using a process known as therapeutic cloning, or somatic cell nuclear transfer.

The CHA RMI researchers will attempt to create cloned human embryos with the cellular attributes of Lou Gehrig's disease, an incurable neurological disorder. They will try to do this by combining human egg cells whose nucleus has been removed with DNA provided by adults with the disease. The scientists will then isolate and extract stem cells from the embryos.

``We feel a great responsibility for this project and we will pursue our research with utmost efforts,'' Chung Hyung Min, a professor and the director of the project at CHA Stem Cell Institute, said in a telephone interview from Seoul. ``It won't be an easy project, but we're striving so that our efforts can contribute to curing Lou Gehrig's disease and many other diseases such as Parkinson's disease.''

CHA Biotech

CHA Biotech is a for-profit entity set up to coordinate the work of academic researchers and hospital physicians centered on stem cell, gene therapy and regenerative medicine technology, according to its Web site. It's part of CHA Health Systems, also called the CHA Medical Group, which owns or is affiliated with several universities, hospitals and research institutes in Korea and the U.S.

Disgraced South Korean researcher Hwang Woo-Suk, formerly a professor at Seoul National University, announced in 2005 that he had successfully cloned human embryos. His claims were proven false when investigators weren't able to find the stem cells Hwang claimed to have made.

The disclosures dashed hopes that Hwang's work would advance treatments for diabetes and Parkinson's disease, and the South Korean government barred him from doing more stem-cell research.

Funding Restrictions

Arnold Kriegstein, director of the Institute for Regeneration Medicine at UC-San Francisco, said he was ``very gratified'' by the grants. He also noted that they will create a new set of problems as well.

The university receives extensive funding from the National Institutes of Health, and under policies imposed by President Bush, no federal funding can be used to support research on new human embryonic stem cell lines. The university spent several million dollars last year to gut and rebuild a lab space with private funds, tearing down structures that had originally been built with NIH funds.

While the 1,100-square foot ``NIH-free'' space provides enough room for three researchers to work with embryonic cells, there are now 15 or 16 university researchers working with the cells. The school will identify satellite labs off-campus that can be used and assigning auditors to assure that there is no mingling of funds between NIH- and CIRM-supported activities.

``This puts a big burden on us for accounting and administration,'' Kriegstein said in a phone interview.

The grants will be funded with a $150 million loan approved by Governor Arnold Schwarzenegger to help the agency operate while its ability to issue state bonds remains blocked by a lawsuit filed by groups opposed to embryonic stem-cell research.

Legal Challenges

The institute was created by Proposition 71, an initiative approved by 59 percent of California voters in November 2004. After its passage, anti-abortion groups sued, arguing that the agency wasn't under direct state control and its membership rules violated conflict-of-interest laws.

In April 2006, a Superior Court judge ruled that the agency was legal and could function, a decision that was upheld in a state appeals court ruling announced Feb. 26. The groups that filed suit may file a final appeal to the state Supreme Court in the next month.

Embryonic stem cells are among the first cells created after conception. Because they can turn into any other cell type, scientists hope they may one day be used to help replace damaged or missing material in the brain, heart and immune system. Scientists agree those uses remain years away.

``With these new grants, California is continuing on the path of turning the hope and promise of stem cell research into the reality of therapies and cures for millions of Californians and people across the globe,'' said Fabian Nunez, speaker of the California State Assembly, in a Los Angeles press conference yesterday.

The grants announced yesterday in California will extend over four years and were all made to senior researchers. They're in addition to $44.8 million in grants awarded last month to junior scientists.

To contact the reporter on this story: Rob Waters in San Francisco at rwaters5@bloomberg.net.

Last Updated: March 16, 2007 22:33 EDT