Wired Magazine

LOS ANGELES, CA — The California Institute for Regenerative Medicine revealed at a meeting here Wednesday the names of 10 research groups disqualified from receiving stem cell grants because of conflict-of-interest accusations.

At a meeting at the UCLA campus, CIRM officials said the disqualified organizations, the names of which had previously been withheld, include the University of California campuses in San Francisco, Los Angeles and San Diego, as well as the University of Southern California and the Burnham Institute in San Diego.

The 10 research groups were disqualified because officials at the research institutions applying for multimillion-dollar grants also hold positions at CIRM. The officials, including the deans of medical schools, wrote letters to CIRM to support awarding grants to researchers at their own institutions.

“I would be happier if we had more transparency,” said CIRM director Jeff Sheehy, who is communications director for UC San Francisco. Sheehy said the charges are a “really serious matter” that should not be downplayed.

The ethics controversy has attracted international attention because of the global prominence of California’s unprecedented research program. The effort was triggered by President Bush‘s restrictions on use of federal funds for human-embryonic stem cell research and is now the largest source of such research funding in the world. In California, some newspapers are editorializing for an overhaul in the structure of CIRM, whose board of directors is riddled with built-in conflicts of interest. Seventeen of the 29 directors have links to institutions that could stand to benefit from an upcoming $260 million round of lab-construction grants.

The agency approved $54 million in grants to 22 California researchers Wednesday. The awards range up to $3 million spanning five years. The grants are aimed at supporting relatively young stem cell researchers at a critical stage in their careers.

Part of the conflict-of-interest problem may be confusion with the applications process, which called on supporting letters from top officials, but may have not specifically pointed out that some officials were banned from lobbying their institutions’ applicants.

The stem cell agency’s interim chief downplayed the controversy.

“These were innocent, inadvertent mistakes,” said interim CIRM President Richard Murphy at the meeting. “Let us not be deterred. The problems pale in comparison to our achievements.”

The University of California defended its deans’ actions in a letter to CIRM, contending they did nothing improper. Burnham Institute officials have also said they did not believe their letter was a conflict at the time it was written. USC has not addressed the issue publicly.

On Wednesday, directors struggled with how to treat the 10 disqualified applicants fairly, but only eight directors were allowed by CIRM‘s counsel to participate in the discussion, because the rest had conflicts of interest.

At the UCLA meeting, CIRM officials assured the agency’s directors that the institute remains on the right track despite the ethics flap.

“We need to keep our critics in perspective,” said Murphy at the meeting.

CIRM chairman Robert Klein, an attorney and multimillionaire real estate investment banker, said that the 3-year-old agency is still young but had made an “extraordinary effort,” handing out $260 million in research grants (.pdf) so far.

The grants were awarded just two days after California’s Fair Political Practices Commission launched a probe into the actions of CIRM director John Reed, president of Burnham. The inquiry is investigating possible lobbying of the agency in violation of its conflict-of-interest policies.

Critics of CIRM, including John M. Simpson, stem cell project director for the Foundation of Taxpayer and Consumer Rights of Santa Monica, California, have called for the resignation of both Klein and Reed. Reed has temporarily recused himself from CIRM activities during the state investigation.

Simpson said in a news release that Klein has never understood that CIRM is a state agency. “CIRM is not a private club or foundation and cannot be run as if it were,” he said.

CIRM President Richard Murphy said he would present a proposal to directors in January for a new round of grants for which the rejected applicants could compete. Other losers in the Wednesday round could also compete again. The total amount available is expected to exceed the $31 million not spent in the latest round.