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Even as California's stem cell institute hands out a heartening new round of research grants this week, ethical lapses at the agency show that other items of business are seriously overdue.

One is a blast of public light trained on its grant approval process. That will come as state Controller John Chiang begins an audit of how the California Institute for Regenerative Medicine is spending money and avoiding -- or not avoiding -- conflicts of interest. The other will come up next year, when the three-year moratorium on legislative changes to the stem cell initiative ends. Finally, the Legislature will have the power to amend some of the problems written into Proposition 71 that work against its lofty goal of providing $3 billion for stem cell research.

The need for these and other changes became apparent in recent months when John Reed, president of the Burnham Institute for Medical Research in La Jolla and a member of the stem cell agency's governing board, wrote an appeal to the agency staff asking it to reconsider a rejected application from a researcher...