Reeling Texas cancer agency OK'd faulty $11M award

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Associated Press

Posted on November 30, 2012 at 11:32 AM

AUSTIN, Texas (AP) — Leaders of Texas' embattled $3 billion cancer-fighting effort approved an $11 million grant to a biomedical company even though the proposal wasn't reviewed, according to an internal audit that deepens the troubles of a state agency that has been denounced in recent months by some of the world's top scientists.

The discovery was uncovered during an internal review of the Cancer Prevention and Research Institute of Texas, and its grant to Peloton Therapeutics Inc. in 2010 was among the first it handed out. The Dallas-based company's commercialization award remains one of agency's largest taxpayer-funded grants to date.

The Associated Press on Thursday first reported the audit's findings, which were later announced by the agency.

Tim Kutzkey, Peloton's acting chief executive officer, declined comment and referred questions to CPRIT. In a statement, the agency said the company was unaware that "CPRIT processes had not been followed."

The cancer institute is home to the nation's second largest pot of cancer-research money, behind only the National Institutes of Health, and has awarded nearly $700 million. But it has come under intensifying scrutiny as several scientists, including two Nobel laureates, resigned in protest claiming the agency was charting a new politically driven path that put commercial interests before science.

CPRIT said the internal review did not uncover problems with any other commercialization awards.

The Peloton revelation is the latest blow to CPRIT, which launched in 2009 to widespread acclaim among scientists and cancer survivors but has spent the past year unraveling. Dozens of scientists have resigned from the agency's peer review panels en masse in recent weeks, some of whom criticized the fund for "hucksterism" and "suspicion of favoritism" on their way out the door.

Pelton's application would have been presented to the agency's oversight committee by Jerry Cobbs, the agency's chief commercialization officer. Cobbs announced his resignation this month, and his last day was set for Friday.

Members of the oversight committee are appointed by Gov. Rick Perry and other state elected leaders. The panel has the final say on whether an award is funded, but under agency rules, all applications must be reviewed by an outside panel of peer reviewers who evaluate the scientific and commercial merits of the proposal.

The agency's statement did not explain how Pelton's application made it through the process without anyone noticing that a review never took place. It only said that Cobbs "improperly included" the proposal in a slate of other recommendations to the oversight committee in 2010.

Attempts by the AP to reach Cobbs were not immediately successful Thursday evening.

Bill Gimson, the executive director of CPRIT who vowed that his reeling agency would recover from the growing onslaught of criticism at its annual conference in October, said in response to the audit's findings that the agency must have the state's trust.

"We proactively initiated this comprehensive review in the effort to be transparent and ensure good stewardship," Gimson said.

Peloton's funding has been halted and the company's application is undergoing a second review, the agency said.

According to Peloton's most recent annual report to the CPRIT, which was obtained by AP, the company has attracted $18 million in outside investments since it was founded in 2010 by Steven McKnight, chairman of the biochemistry department at the University of Texas Southwestern Medical Center.

"Peloton Therapeutics aims to become a leading oncology company through the discovery and development of superior therapeutics, delivering extraordinary value to its employees, investors, and ultimately, cancer patients," according to the company's application summary.

CPRIT — started behind a push led by cancer survivor Lance Armstrong and Perry — spent most of its first five years basking in praise and industry awe of the unprecedented amount of taxpayer dollars committed to a state-run, cancer-fighting effort. But those plaudits abruptly gave way to rebukes starting in May, and the fissures came from within.

Dr. Alfred Gilman, the agency's chief scientific officer and a Nobel laureate, announced his resignation following a $20 million award that never received a full scientific review. The money was for a so-called incubator project at M.D. Anderson Cancer Center in Houston, one of the country's top research institutes.

Gilman accused the agency's oversight board of ramrodding the project through the application process, despite the proposal being just six pages long. Gimson has said the type of proposal didn't require a full scientific review under agency rules but has since conceded missteps in how that award was handled.

In wake of the Peloton findings, CPRIT announced it would institute new rules that require independent third parties to make sure grant review policies are followed. The agency said it will install a compliance certification process that will accompany every recommended proposal given to the oversight committee.

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Follow Paul J. Weber on Twitter: www.twitter.com/pauljweber

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