Alan Trounson, until very recently president of the California Institute for Regenerative Medicine (CIRM), has accepted a position on the board of StemCells, Inc. (opens in new tab), a company that has had $19,399,504 (opens in new tab) in grants from CIRM. If the clinical trials that CIRM is partly funding pay off, he could make a bundle on stock options (details of his compensation are not available). David Jensen, of the California Stem Cell Report (opens in new tab), brought this to light, and much more.
That looks bad, but there is much more. Jensen's dogged reporting over the last two years established that the $19m "forgivable loan (opens in new tab)" was only approved after controversial lobbying by former CIRM chair Robert Klein that resulted in the main board overruling (opens in new tab) the recommendation of their scientific advisers.
Financially, the $19m is the least of it. Irving Weissmann, the cofounder (and still an active board member) of StemCells, Inc., has had four grants from CIRM totaling $35,420,939 (opens in new tab). Weissman was an active pitchman for Proposition 71, which set up CIRM, appearing in TV ads that mentioned his work at Stanford (he directs (opens in new tab) the Institute of Stem Cell Biology and Regenerative Medicine) but not his entrepreneurial efforts.
But $55m is far from the end of the money involved. Stanford University has had more awards for more money than any other institution: 80 grants totaling $280,768,314 (opens in new tab). UCLA is second, at $215m, and no other institution has received close to that amount. One anonymous researcher emailed (opens in new tab) Jensen:
Are they really more than twice as good as UCSF ($132,650,363), and three times better than USC ($104,858,348) and UC Irvine ($98,591,836)?
Let's be blunt: This looks like a pay-off. Technically, what Trounson and Weissman and StemCells, Inc., just did may not be illegal. But it's shameless.
Trounson is well aware of conflicts of interest, which have swirled around CIRM before. Indeed, he has in the past recused (opens in new tab) himself from discussions of grant applications from StemCells, Inc., and Jensen has documented other scandals (opens in new tab). All of which were thoroughly predictable. They were baked into the structure of the agency. The potential for conflicts of interest was one of the main critiques of Proposition 71, as shown in this September 2004 Nature (opens in new tab) report:
Critics slate ethical leeway in California stem-cell proposal
Which quoted one of the proposition's authors saying that any such charges were baseless:
"We want to avoid even the appearance of a conflict," says Weissman.
Yup, same guy. Just a month later he was refusing to comment (opens in new tab) on reports that his stock options in — yup — StemCells, Inc. could benefit from passage of the proposition. Richard Hayes, then Executive Director of CGS, put the problem tactfully to Science (opens in new tab):
We're concerned that Prop 71 gives interested parties enormous power over a huge sum of public funds and restricts public accountability.
We were right. (The full 2004 CGS analysis is here (opens in new tab).)
Trounson, who made $490,008 (opens in new tab) a year as President of CIRM, quit his job to return to Australia (opens in new tab) and spend more time with his family; the StemCells, Inc., press release confirms that he is returning to Melbourne (opens in new tab). Nevertheless, his "unique combination of leadership experiences make him a very valuable addition to our board at this transformational time for our Company." Doing what?
Of course, Trounson was also aware that CIRM has been approaching a critical turning point, as articles in both Nature (opens in new tab) and the San Francisco Chronicle (opens in new tab) (which featured StemCells, Inc.) pointed out last week. This kind of revolving-door appointment can only hurt the agency, not to mention Trounson's personal reputation.
The Chronicle (opens in new tab) ran another story when this news broke, confirming that Trounson will receive cash and stock. It also quoted John Simpson, of Consumer Watchdog, who wrote in an email:
"A reasonable 'cooling-off period' — say two years — would have been appropriate before Trounson joined the board of a private company enjoying CIRM's largess. I can only hope Trounson sees his error and steps down from StemCells Inc.'s board."
CIRM should take a long look at its practices and procedures, which have never served the agency well — and especially should consider its obligations to the public, who fund it. There can be practical difficulties in balancing expertise and objectivity; the best scientists in any field do tend to know each other well. All the more reason to be especially careful. This kind of obviously problematic conflict of interest can and should easily be avoided.
