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Stem cell panel facing allegations of conflict

by Terri SomersSan Diego Union-Tribune
April 7th, 2005

Conflict-of-interest allegations already are flying against the committee overseeing California's $3 billion stem cell initiative even though the group isn't close to giving out a dime.

The Center for Genetics and Society, an advocacy group, said yesterday that seven of the committee's 29 members have "significant business connections with companies connected with stem cell research."

The center said committee members should be free of ties to the biotechnology industry to erase the specter of possible conflict. Leaders of the stem cell effort said that would be overkill.

"The center wants to remove any possibility for the occasion of conflict and not just the conflict itself, which is unreasonable," said the committee's vice chairman, Dr. Edward Penhoet, a former biotech executive. "It could disqualify people who are competent to make wise decisions about how this is all done."

To meet the center's proposed requirements, Penhoet and other committee members would have to divest themselves of stock acquired over long careers and appointments to the companies' boards.

In addition to Penhoet, the members who allegedly have conflicts include the chief executive of a San Diego biotechnology company and the head of the Burnham Institute in La Jolla.

"The proposed policy says that whenever there is a conflict, or the potential for one, the committee member is to recuse himself or herself," said Marcy Darnovsky, the center's associate executive director. "Our concern is that there really is no way of ensuring that takes place. It's another one of these 'trust us to do the right thing' situations."

The oversight committee plans to discuss conflict-of-interest policies for itself and the staff of the California Institute for Regenerative Medicine, which it will govern, at a meeting today in Los Angeles. The policies follow the state conflict-of-interest law by which all elected and appointed officials must abide, Penhoet said.

The state's Political Reform Act requires public officials to file financial disclosure forms that are open to public scrutiny and to recuse themselves from participating in any action that could result in a personal gain.

Oversight committee spokeswoman Fiona Hutton questioned why the Center for Genetics and Society wasn't working to change that law rather than obstructing the work of the committee.

The committee's conflict-of-interest policies also appear to be similar to policies used by nonprofit organizations that award millions of dollars of research grants annually, including the Juvenile Diabetes Research Foundation and the Cystic Fibrosis Foundation.

But those foundations are supported by donors, who choose to give money, Darnovsky said. If the donors have a concern about conflicts of interest, they can look into the policies and choose to withhold their funds if they are not satisfied, she said.

The state's stem cell initiative, known as Proposition 71, is funded with taxpayer dollars. Under the initiative, researchers and biotechnology executives were required to be among the people appointed to the oversight committee by the state's constitutional officers.

"At a national level, concerns have recently deepened about conflicts of interest within public agencies responsible for various aspects of biomedical research and regulatory oversight," the center said in a report, referring to controversy involving the National Institutes of Health.

"Unfortunately, last November's Proposition 71 . . . built conflicts of interest into the structure of the new (California) agency," the report said.

Robert Klein, an author of Proposition 71 and chairman of the oversight committee, has said the idea behind the alleged built-in conflicts was that biotechnology executives understand what it takes to get a discovery out of the lab and through the commercial process.

Penhoet was nominated for his post by Gov. Arnold Schwarzenegger because of his biotechnology background. Penhoet is co-founder of the Bay Area biotechnology company Chiron and also served as dean of the University of California Berkeley's School of Public Health.

The center points out that Penhoet is still a member of Chiron's board of directors and that "several years ago the company participated in stem cell research." It says another conflict for Penhoet can be found in his ties to Renovis. That South San Francisco company, which Penhoet founded, has a licensing agreement with the drug company AstraZeneca, "which uses stem cells in their research programs," the center said.

Penhoet, who now works as president of the nonprofit Gordon and Betty Moore Foundation, said he agreed that "it is not appropriate as vice chair of the committee to hold stock in a stem cell company." But he said he doesn't think Chiron qualifies as a "stem cell company."

He also said Zymogenetics, another company to which he is linked, is not a stem cell company. It is based in Seattle, making it ineligible for the initiative's grants.

Penhoet said the committee is expected to discuss today just what constitutes a stem cell company and how much of a company's budget must be vested in the technology to be considered one.

"I will be happy to conform to what the group decides as a whole," he said.

He called the center's linking him to AstraZeneca through Renovis very weak. Renovis is not based in California and therefore not eligible for money from the stem cell initiative. Additionally, Penhoet said, Renovis' collaboration with AstraZeneca, a foreign company, involves a treatment for strokes that has nothing to do with stem cells.

Among the other committee members identified as having personal ties to stem cell research is Tina Nova, the chief executive of San Diego-based Genoptix. The center says Genoptix "develops lasers applicable in stem cell isolation."

Nova said that's wrong.

The laser referred to by the center was developed by Genoptix, but Nova said the technology has since been sold to another company. And its use in stem cells was only a possibility, she said.

"Genoptix is involved in clinical diagnostics 100 percent now. It is not a stem cell company," Nova said. "There is no conflict of interest. I would not have taken the position."

Oversight committee member Dr. John Reed, head of the Burnham Institute, could not be reached yesterday to address what the center says are his ties to commercial stem cell research.

Penhoet said committee members should not be expected to divest all ties to biotechnology companies that are not involved in stem cell research based on concerns that these companies may someday be involved in the science or may benefit from basic science that comes out of Proposition 71.

He noted that he and other committee members are working without compensation.

"I'm spending an enormous amount of time and effort purely in the public interest," he said. "I'm not willing to sacrifice the entire rest of my life, which has been in the biotech world, because it doesn't make any sense."

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