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Texas Cancer Agency Resuscitated, But Fate of Pending Grants Unknown

Xconomy Texas — 

Texas state leaders have approved legislation that would revive and reform the embattled Cancer Prevention and Research Institute of Texas, but have left one question unanswered: What about the companies with pending grant applications?

CPRIT (pronounced “sip-rit”), was created by a 2007 amendment to the Texas state constitution with the mission of funding cancer research and prevention efforts in the state. With $3 billion to dole out over 10 years, CPRIT is the nation’s second-largest supporter of cancer research, behind the National Cancer Institute.

Last December, following allegations of conflicts of interest and that grants were improperly awarded, a moratorium was placed on the institute’s activities. A Texas State Auditor’s report the following month detailed some significant issues, including questionable or inappropriate activity in three grants totaling $56.2 million.

One of those grants was a $25.2 million research grant awarded to the Statewide Clinical Trials Network of Texas, also known as CTNeT. The auditor’s office found, among other things, that CPRIT’s executive director, chief scientific officer, and a member of its commercialization review council were members of CTNeT’s board of directors, creating a potential conflict of interest.

“CPRIT’s lack of controls for ensuring there are not any business and professional relationships between its peer reviewers and grantees impairs CPRIT’s ability to assure the public that its award decisions are not improperly influenced,” the auditor’s report stated.

As the Texas Legislature met this spring to discuss ways to reform the institute, CPRIT’s top three officials resigned, and the Travis County District Attorney’s office began a criminal investigation into activities at CPRIT.

Now, Texas Gov. Rick Perry is considering legislation that could pave the way for CPRIT to resume its operations. But the fate of the companies that were in the middle of the grant-application process when the institute’s activities were halted is still unclear.

“With the new leadership coming in, they will have their hands full with getting it running again, and with the [new] grant cycle coming up, I fear we would fall through the cracks,” said Walter Klemp (pictured), founder and CEO of Moleculin, a Houston company that is researching a drug to fight a deadly skin cancer, cutaneous T-cell lymphoma. “There has been no provision, from what I can tell, for essentially salvaging the hard work and money that was appropriately spent for the limbo companies. My wish list is, don’t forget the people who spent years counting on this process.”

Klemp’s company applied in March 2012 for $5 million in grant funding, which he plans to match with $2.5 million in private money, to fund the first two phases of a clinical trial. Moleculin was included in a group of 10 that was selected from 30 applicants to go to the due diligence review, which was then completed in Moleculin’s favor, he says.

“We were literally weeks away from final board approval when the freeze was put into place,” Klemp added. “We were told, ‘We’ll get back to you.’ That was in January. From there, things essentially went dark and we have had to put the project on indefinite hold.”

Wayne Roberts, CPRIT’s interim executive director, said he hopes to be able to provide guidance to companies awaiting grant decisions soon. “We are going to be prioritizing these people that are in this position so that they can either move forward or start making other plans,” he said.

His preference, he added, would be that the companies be able to resume their places in the application process. But, first, the governor must lift the moratorium on CPRIT’s operations. Lucy Nashed, a Perry spokeswoman, said he has not yet decided when to allow CPRIT to resume giving out funding. “He wants them to get back to work as soon as possible,” she said.

The bill is now on Perry’s desk, and his office says he will support it. The legislation includes provisions such as setting up a five-person panel that has final say on which applications are brought before the CPRIT board, prohibiting donors from receiving grants, and prohibiting the institute’s employees and board members from serving on the board of an applicant company. The bill also allocates $595 million in funding for basic research, cancer prevention, and commercialization projects over the next two years.

Klemp at Moleculin said he supports efforts to reform the institute, and he hopes that the changes can allow CPRIT to return quickly to its primary mission: funding science that can help save lives.

“We have no connection whatsoever to any reviewers or administrators,” he says. “We’re completely conflict-free … How do we get this system back up?”

Roberts said that before CPRIT can resume reviewing grant applications, old or new, it must take care of a number of administrative functions in compliance with the new regulations and get moving on a number of key hires, including finding a permanent executive director, a chief commercialization officer, and scientists to serve as peer reviewers.

In the meantime, the scientists and entrepreneurs are trying to balance waiting for CPRIT with staying active enough to ensure their research doesn’t get stale. “An early-stage pharmaceutical tech company like ours is like fresh fruit on the shelf,” said Jon Northrup, CEO at Beta Cat Pharmaceuticals in Gaithersburg, Maryland. “If it doesn’t move forward, it spoils.”

Northrup’s company is seeking $15 million in grant funds to carry out work to create a drug that targets cancer stem cells. “The cancer stem cells are the main reasons that cancer is able to survive chemotherapy and come back more resistant, eventually killing the patient,” Northrup said.

Beta Cat presented before the institute’s review committee in December, just days before the moratorium was announced. Northrup said he’d be willing to consider starting over in the process but would need guidance from CPRIT soon. If he can get CPRIT funding, he said, he would move his company to Texas.

In fact, attracting innovative young companies to Texas and helping them bring new cancer treatments to market was a key reason for CPRIT’s formation. Since its 2007 inception, CPRIT has awarded more than $835 million in a total of 498 grants, including 13 commercialization grants worth$98 million.

A healthy and active CPRIT is key, said David Schubert, executive director of the Houston Area Translational Research Consortium, because venture capital firms are unlikely to support early-stage life sciences companies like Beta Cat and Moleculin as they attempt to transfer their laboratory ideas into clinical trials and eventual commercialization.

The consortium, known as HATRC, had won a $20 million grant from CPRIT in March 2012 for a new pre-commercialization center at Rice University’s BioScience Research Collaborative, which was designed to bring new technologies and therapies to market to prevent, treat, and cure cancer.

But the grant approval was rescinded in May 2012. In its report this past January, the state auditor said that the grant had been given without scientific, due diligence, or intellectual property reviews.

Schubert had joined HATRC in May 2012, two months after the grant had been awarded to the organization. He declined to comment on the grant, but in a separate conversation he said he believes CPRIT represents a unique opportunity to fight the “war” on cancer.

“We shouldn’t let the mistakes of a few tarnish the whole reason why we got into the war in the first place,” he said.