The San Francisco Chronicle

SAN FRANCISCO, CA — A prominent member of the governing board for California’s stem cell agency may have violated state conflict-of-interest rules last summer when he tried to reverse a decision rejecting a grant proposal by a scientist who works for him at the Burnham Institute of Medical Research in La Jolla (San Diego County).

The miscue has prompted calls for Burnham Institute chief executive Dr. John Reed to resign from the Independent Citizens Oversight Committee, the board that governs the California Institute for Regenerative Medicine.

“If indeed Dr. Reed has violated the law, then I think he ought to consider resigning,” said Jeff Sheehy, a colleague of Reed’s on the oversight committee. Sheehy is a spokesman for the UCSF AIDS Research Institute, but serves on the governing board solely as a citizen representative for patients.

“We need to resolve this before questions are raised about the integrity of our processes,” he added.

On Aug. 2, Reed wrote a seven-page letter to Arlene Chiu, the California Institute for Regenerative Medicine‘s chief scientific officer, appealing the rejection of a $638,000 grant that would have gone to the Burnham Institute to pay for a project by an affiliated researcher.

Reed now acknowledges the intervention was a mistake. Under conflict-of-interest rules set for the state-funded agency, board members are prohibited from discussing funding requests from organizations they represent.

“It did not occur to me that conflict rules would prevent me from contacting staff to provide what I believed to be relevant information,” said Reed, in remarks released by the Burnham Institute on Wednesday.

Reed said he only intervened after the grant had been approved by a review committee. He was appealing the subsequent rejection by the staff of the stem cell agency, which ruled that the scientist who was to carry out the work technically was not employed by the Burnham Institute. Regulations require that grant recipients be full-time employees.

The Burnham scientist who was to have benefited, Dr. David Smotrich, is founder and president of La Jolla IVF, a clinic for treating infertility problems. The stem cell agency staff concluded that “Dr. Smotrich’s primary affiliation is with his own business.”

Reed said he did not understand that the conflict rules applied to the “post grant-review process,” but said he now does and hasn’t communicated with the agency on the matter since the letter was sent.

The Reed letter to Chiu was disclosed by the California Stem Cell Report, which obtained it through a public records act request. The online blog tracks the $3 billion taxpayer-funded program, which was approved by voters in 2004 to issue grants for stem cell research and facilities.

Reed sent the letter at the suggestion of Robert Klein, the chairman of the governing board on which Reed serves. In an interview with The Chronicle on Wednesday, Klein said his advice was an inadvertent error on his part.

“I told him to send them a letter to tell them what the correct facts were,” Klein said. “I clearly did that.”

Klein said that, in fact, Reed’s letter was never seen by the scientific team. “Our firewall worked,” he said. “The influence didn’t change anyone’s mind, because the letter wasn’t even considered.”

He said the current controversy would not have come up had he not suggested the letter be sent, or had someone other than Reed conveyed the concerns. “I’ve learned something,” Klein said.

The stem cell agency held its ground and rejected the grant.

Because the rules required that grant recipients be full-time employees of the institutes that receive the state money, the stem cell agency said it would be unfair to other candidates to bend the rules for Smotrich — despite the fact that his proposal was initially approved with the second-highest rating of all applicants.

Although Reed and Klein have acknowledged their errors, a leading consumer advocate has called for both of them to resign.

“I think it would be the best thing to have a clean slate. They both should go,” said John Simpson of the Foundation for Taxpayer and Consumer Rights, a Santa Monica group that has become a public watchdog over the state program.

Simpson has also filed a complaint with the California Fair Political Practices Commission, which is charged with enforcing rules regarding conflict of interest among state board members. “Every time you flout the law, you can’t just say, ‘Aw shucks,’ ” he said.

Although the commission cannot compel board members to resign, it can levy fines.

David Serrano Sewell, a deputy city attorney in San Francisco who serves as a patient advocate on the stem cell board, said he was upset with Reed’s action, but stopped short of calling for him to resign. “I can’t tell Dr. Reed what to do,” he said.

Nevertheless, he said that the board and the stem cell agency had worked tirelessly to develop a conflict-of-interest policy that would address problems that might arise in a board that includes leaders of research institutions likely to benefit from its grants.

“Patient advocates understand the rules,” he said. “I just wish John hadn’t done what he did.”
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E-mail Sabin Russell at [email protected]