Stem Cell Agency Outlines Steps To Prevent “Potential Conflict of Interest” With Ex-President

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Two days after the ex-president of California’s stem cell agency became a board director at a company that is receiving funding from the agency, the agency said Wednesday it is taking steps to “mitigate a potential conflict of interest.”

Earlier this week, StemCells Inc. in Newark said that Dr. Alan Trounson would join its board of directors and receive cash and stock in the company. Trounson stepped down this spring from leading the California Institute for Regenerative Medicine, which is distributing $3 billion in taxpayer money to stem cell research projects around the state with the intent of developing therapies for debilitating conditions.

Trounson had led the agency since 2007, and during his tenure, the agency awarded a $19 million forgivable loan to StemCells to work on potential therapies for Alzheimer’s disease. The agency has also given $280 million to date to Stanford University, where Dr. Irving Weissman, one of StemCells’ founders, works.

Critics said Trounson’s appointment, so soon after he left the agency, raised potential ethical issues. C. Randal Mills, president and CEO of the stem cell agency, acknowledged the criticism in a statement sent to The Chronicle Wednesday: “We understand that the appointment of CIRM’s former president to the board of directors of a CIRM loan recipient creates a risk of a conflict of interest.”

Trounson’s appointment is legal, Mills noted. But state law prohibits Trounson from communicating with the agency’s board members and workers on behalf of StemCells “for the purposes of influencing any administrative action, including the award or revocation of a grant or loan, involving Stem Cells, Inc. for one year following the termination of his employment with CIRM,” Mills said.

Trounson is also prohibited from helping StemCells respond to “a Request for Applications in which Dr. Trounson was involved as a CIRM employee or assisting StemCells Inc. with its existing loan,” Mills wrote.

Mills said the agency has sent Trounson and the board chairman of StemCells a letter reminding them of these legal limitations.

The agency has also told agency board members and employees to not communicate with Trounson regarding Stem Cells, Inc., Mills said.

“Finally,” Mills said, “in the interests of transparency and good governance we will be conducting a full review of all CIRM activities relating to Stem Cells Inc.”

John Simpson, an advocate who follows the stem cell agency for the Santa Monica nonprofit Consumer Watchdog, applauded Mills’ words.

“It’s refreshing to see that CIRM President Randy Mills clearly understands the ethical pitfalls of his predecessor Alan Trounson serving on StemCells Inc.’s board.  His warning to Trounson and the chairman of  StemCells Inc. is right on target,” Simpson said in an e-mail. “His positive steps help mitigate the ethical risks raised by Trounson’s actions.”

Simpson says Trounson should have waited at least two years before joining the company’s board, and should now step down.

“It’s a pity that Trounson and StemCells Inc. simply don’t get it,” Simpson said. “A full review of CIRM activities relating to StemCells Inc.,  as Mills pledged, is absolutely essential and the results must be made public as soon as available.”

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