Flap may have cost mil­lions

Of­fi­cial kept CPRIT from pos­si­ble roy­al­ties, spokesman charges.

Austin American-Statesman - - FRONT PAGE - By Lay­lan Copelin lcopelin@states­man.com

In­fight­ing at the state’s can­cer-fight­ing agency might have cost Texas mil­lions of dol­lars and has the agency’s foun­da­tion di­rec­tor sug­gest­ing changes in law to po­lice po­ten­tial con­flicts be­tween the foun­da­tion’s donors and the agency’s grant re­cip­i­ents.

The Can­cer Preven­tion and Re­search In­sti­tute of Texas — bet­ter known as CPRIT — could have shared in roy­al­ties that phar­ma­ceu­ti­cal gi­ant Glax­oSmithK­line of­fered the MD An­der­son Can­cer Cen­ter if the state agency had fi­nanced a Hous­ton-based busi­ness in­cu­ba­tor that in­cluded a can­cer cen­ter, the agency con­firmed Tues­day.

The Glax­oSmithK­line in­vest­ment could be worth as much as $335 mil­lion to the Hous­ton can­cer cen­ter over the life of the part­ner­ship, ac­cord­ing to a MD An­der­son news re­lease, if the cen­ter’s re­search on anti- bod­ies makes it to mar­ket.

Bill Miller, a spokesman for Jimmy Man­sour, chair­man of the agency’s over­sight com­mit­tee, blamed Al­fred Gil­man, who re­signed this year as CPRIT’s chief sci­ence of­fi­cer be­cause the in­cu­ba­tor grant was not re­viewed by his com­mit­tee of sci­en­tists. The grant

got ap­proval from the agency’s com­mer­cial­iza­tion di­vi­sion, but Gil­man ig­nited a firestorm with his al­le­ga­tions of in­ter­fer­ence from the over­sight com­mit­tee.

“Dr. Gil­man’s over­re­ac­tion cost CPRIT mil­lions,” Miller said. “It’s a sad day for CPRIT and those as­so­ci­ated with fight­ing can­cer.”

Gil­man did not re­spond to an email or calls seek­ing com­ment.

Miller’s com­ments are the first salvo in what is ex­pected to be a fight in the Leg­is­la­ture over the di­rec­tion of the state agency, whether to fo­cus on ba­sic re­search or in­vest more in com­pa­nies that com­mer­cial­ize re­search into prod­ucts. The tiny agency, with a cou­ple dozen staffers, has $300 mil­lion a year to spend on fight­ing can­cer and is the na­tion’s sec­ond-largest source of can­cer re­search money.

Against a back­drop of in­ves­ti­ga­tions and a state au­dit, the agency and its foun­da­tion are try­ing to re­store cred­i­bil­ity with state law­mak­ers af­ter it was re­cently dis­closed that the agency two years ago awarded an $11 mil­lion grant to Pelo­ton Ther­a­peu­tics, a Dal­las startup, with no re­view.

On Tues­day, Jen­nifer Stevens, ex­ec­u­tive di­rec­tor of the CPRIT Foun­da­tion, wrote to state Sen. Jane Nel­son and Rep. Jim Kef­fer, the au­thors of the leg­is­la­tion cre­at­ing the agency and its foun­da­tion, to urge changes in state law to pro­tect against con­flicts of in­ter­est be­tween the foun­da­tion and the agency’s re­view for grants.

The Leg­is­la­ture has pro­hib­ited donors to the foun­da­tion from re­ceiv­ing grants, but Stevens wrote that it is a “chal­lenge” to en­force be­cause the foun­da­tion staff learns the iden­ti­ties of the grant re­cip­i­ents only af­ter the agency makes the awards.

On the other hand, the foun­da­tion also has de­clined to re­lease the names of all of its donors, cit­ing their right to pri­vacy. That pol­icy leaves the pub­lic un­able to de­ter­mine whether foun­da­tion donors are get­ting grants.

In her let­ter, Stevens wrote that “to my knowl­edge, no CPRIT grantee is also a donor to the Foun­da­tion.” For the first time, Stevens also ac­knowl­edged some do­na­tions have been re­turned.

Marc Palazzo, an out­side spokesman for the foun­da­tion, said a hand­ful of small do­na­tions were re­turned “out of an abun­dance of cau­tion” to univer­sity re­gents whose in­sti­tu­tions re­ceived grants and, in one case, a doc­tor who was em­ployed by a grant re­cip­i­ent. The do­na­tions ranged from $500 to $2,500.

In her let­ter, Stevens sug­gested that the Leg­is­la­ture should re­quire the donors’ list and a slate of grant ap­pli­cants to be re­viewed by ei­ther the agency’s com­pli­ance of­fi­cer, the at­tor­ney gen­eral or state au­di­tor.

Stevens also ad­dressed that the In­ter­nal Rev­enue Ser­vice ex­empted the foun­da­tion, at its re­quest, from fil­ing forms called 990s that would pro­vide more de­tails about its fundrais­ing and ex­penses. The IRS ex­empted the foun­da­tion be­cause its only pur­pose was to sup­port a state agency, pri­mar­ily sup­ple­ment­ing the salaries of agency ex­ec­u­tives.

Stevens said that prac­tice was in place when she was hired as ex­ec­u­tive di­rec­tor in the sum­mer of 2009. She ac­knowl­edged that fil­ing 990s is stan­dard prac­tice for al­most all other non­prof­its, adding that the foun­da­tion’s ac­tiv­i­ties were be­ing lim­ited by the ex­cep­tion.

She said the foun­da­tion’s board, which was ini­tially dom­i­nated by mem­bers of the agency’s over­sight com­mit­tee, ex­panded the board and agreed to be­gin fil­ing 990s by the end of this year. She said the foun­da­tion acted this year — “ahead of re­cent me­dia at­ten­tion” — be­cause it would al­low the foun­da­tion to col­lab­o­rate with other can­cer-fight­ing or­ga­ni­za­tions as well as be­come more in­volved in eco­nomic devel­op­ment.

The foun­da­tion’s new ini­tia­tive, “Lead­Texas,” would al­low the foun­da­tion to “raise aware­ness and re­cruit new jobs to our state,” Stevens wrote.

She said Gov. Rick Perry’s eco­nomic team — as well as re­gional eco­nomic devel­op­ment lead­ers and ad­vo­cacy groups — have re­acted pos­i­tively to the ini­tia­tive.

Cathy Bon­ner, a former aide to the late Gov. Ann Richards, who started the cam­paign for a state­funded can­cer re­search ef­fort, has been crit­i­cal of the can­cer agency.

“The leg­is­la­tion was

spokesman for Jimmy Man­sour, chair­man of the agency’s over­sight com­mit­tee never in­tended to give money to pri­vate com­pa­nies and in­di­vid­u­als so they could de­velop prod­ucts to make money in the can­cer mar­ket­place,” Bon­ner said. “CPRIT has lost its fo­cus on sav­ing lives and has be­come a pri­vate play­ground to make cer­tain peo­ple rich.”

In 2007, Texas voted to sell $3 bil­lion in bonds to fi­nance a 10-year ef­fort to find cures for can­cer. The Leg­is­la­ture in­cluded com­mer­cial­iza­tion of re­search and the cre­ation of jobs in the en­abling leg­is­la­tion, but the bulk of the money so far has gone to­ward re­search.

“There will al­ways be an in­ter­nal fight over how much goes to med­i­cal re­search and how much goes to com­mer­cial­iza­tion,” Kef­fer said. “The Leg­is­la­ture will al­ways lean to com­mer­cial­iza­tion be­cause it gives us re­sults to hang our hat on.”

As for the Hous­ton-based in­cu­ba­tor, the state could have an­other chance.

The can­cer agency with­drew the $18 mil­lion grant af­ter Gil­man’s res­ig­na­tion high­lighted the lack of a sci­en­tific re­view of the ap­pli­ca­tion. But Scott Merville, an MD An­der­son spokesman, said the can­cer cen­ter would hope to reap­ply should the can­cer agency re­sume fi­nanc­ing busi­ness in­cu­ba­tors.

Kef­fer blamed the can­cer agency’s prob­lems on “slop­pi­ness.”

“I don’t think there is any­thing sin­is­ter or un­der­handed,” Kef­fer said. “It’s not go­ing to Joe Can­cer Shop. It’s go­ing to Rice (Univer­sity) and MD An­der­son.”

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