publication date: Dec. 17, 2013


A grand jury in Travis County, Texas, indicted a former official of the Cancer Prevention and Research Institute of Texas for bypassing peer review in awarding an $11 million grant to a Dallas-based company.

Jerald Cobbs, the former CPRIT chief commercialization officer, was indicted on a felony charge of deceiving two of his CPRIT colleagues in 2010 by failing to disclose that the grant to Peloton Therapeutics Inc. was not subjected to review of either its science or its commercial potential.

The indictment was dated Dec. 3. Cobbs, 62, is charged with securing execution of a document by deception, a first degree felony punishable by imprisonment of five to 99 years and a $10,000 fine.

Cobbs was also a key player in awarding an $18 million grant to a Houston-area biotechnology incubator led by Lynda Chin, scientific director of the MD Anderson Cancer Center Institute for Applied Cancer Science and wife of the center’s president, Ronald DePinho (The Cancer Letter, May 25, 2012).

Cobbs sought to fund IACS as a biotech incubator, allowing to bypass scientific review of individual projects, but that award was never finalized and money didn’t change hands.

Overall, the cases of Peloton and MD Anderson are so fundamentally different that they provide an opportunity to distinguish lawful conduct from felonious in the uppermost business and political spheres in Texas:

• Both Peloton and the MD Anderson incubator seek to commercialize intellectual property that emerges from academia. The difference: Peloton is a classic spin-off company, while IACS is an effort to grow a drug company within an academic institution.

• Peloton didn’t seek special treatment by CPRIT. By contrast, DePinho, Chin, and top Texas politicians clearly sought to bypass scientific review—and engineered procedures for commercial review—to secure funds for the incubator built around IACS.

• The Peloton grant was, in fact, awarded. Efforts to award money to the MD Anderson incubator proposal were thwarted after CPRIT’s chief scientific officer, Alfred Gilman, turned whistleblower, triggering a massive scandal closely watched by everyone in cancer science.

The pivotal role Cobbs played in the coordinated effort to bypass scientific peer review and channel public funds to MD Anderson’s IACS also warrants a look back at the controversy that went public when Gilman, a Nobel laureate, brought attention to the unseemly backroom dealings and—ultimately—left CPRIT, slamming the door behind him.

Gilman’s departure was followed by investigations into multiple aspects of CPRIT’s activities by several law enforcement agencies, including the Travis County Public Integrity Unit.

Texas Attorney General Greg Abbott is conducting a separate investigation of CPRIT. Abbott, who sat on the CPRIT oversight committee, is also running for governor in 2014.

Announcing the Cobbs indictment, Travis County Assistant District Attorney Rob Drummond said the grand jury was asked to review the materials stemming from the MD Anderson IACS controversy and materials related to CTNeT, a now-defunct statewide network focused on cancer clinical trials. “The grand jury didn’t choose to issue indictments related to those matters,” Drummond said. Efforts to reach Cobbs were unsuccessful.

The public integrity unit also investigated the allegations of conflicts of interest and financial improprieties related to the CPRIT Foundation, and conflicts related to the business interests of members of CPRIT’s oversight committee. However, these matters were not presented to the grand jury, Drummond said. Investigators saw no fault on the part of Peloton.

“No charges were considered against anyone connected to Peloton,” Drummond said. “The evidence indicated that they were unaware that their grant award had bypassed the required review committees.”

The company received only a portion of the $11 million awarded by the state, and has since reapplied to receive the rest of the funds.

Peloton was founded by Steven McKnight, chairman of biochemistry at UT Southwestern, who holds the Distinguished Chair in Basic Biomedical Research and the Sam G. Winstead and F. Andrew Bell Distinguished Chair in Biochemistry.

McKnight’s work focuses on gene regulation based in part on his discovery of leucine zipper proteins. The company said the compounds it seeks to develop came from the high-throughput screening laboratory McKnight built at the UT Southwestern medical center over the past decade.

CPRIT’s grant to Peloton was accompanied by $18 million Series A financing from two venture funds, the Column Group and Remeditex Ventures.

Travis County prosecutors said their investigation is now over, and that they would seek no additional indictments.

The investigation was marred by partisan wrangling. This occurred because, for quite some time, Republicans in Texas complained that the public integrity unit is located in Travis County, a Democratic stronghold.

During this year’s legislative session, Gov. Rick Perry exercised a line-item veto to eliminate the $7.5 million in funds that the county’s public integrity unit was slated to receive over two years.

The governor vetoed the appropriation after the county’s district attorney, Rosemary Lehmberg, declined to resign as a consequence of a drunk driving arrest. However, on Dec. 12, a ruling by a Travis County judge allowed Lehmberg to keep her job.

Cobbs Played Supporting Role in Incubator Project

Cobbs joined CPRIT in 2009, and resigned amid growing scandal in late-2012 (The Cancer Letter, Nov. 30, 2012).

He processed the Peloton application before the controversy over the MD Anderson grant started to develop. At the time, the Peloton application received no public attention.

Though it’s not publicly known whether any political heavyweights attempted to step in on Peloton’s behalf, presumably a political intercession of that sort would have been turned up by Travis county prosecutors and disclosed as part of the Cobbs indictment.

Top-tier scientists familiar with Peloton say that the company would have easily cleared peer review as either a business or a scientific enterprise. In fact, two venture funds had committed funds to the company.

While the Peloton review process remains outside public view, it’s clear that in the processing of the MD Anderson incubator grant, Cobbs was working under close supervision.

Internal CPRIT emails obtained by The Cancer Letter show that Texas financier and political donor Charles Tate played a key role in devising the proposal and moving it through the system, and that Cobbs was merely a functionary who followed directives from above (The Cancer Letter, Sept. 28, 2012).

The stakes were high: CPRIT was dispensing $300 million a year in state funds for cancer causes, and nearly all of that money went through a rigorous peer review system Gilman had engineered.

Under Gilman’s stewardship, CPRIT didn’t promise the cures. Rather, it promised well-run study sections that funded good science. Meanwhile, MD Anderson’s DePinho has said that he would like to use a portion of CPRIT funds for his $3 billion “Moon Shots Program” to eventually eradicate eight cancers (The Cancer Letter, Sept. 7, Sept. 21, 2012).

Some politicians in the state apparently similarly envisioned other methods for apportioning these funds.

In 2011, Tate, who was a member of the CPRIT oversight committee, proposed changing the agency’s bylaws to exempt biotechnology incubators from scientific peer review.

Such incubators are used to move products toward commercialization, usually at off-campus facilities.

Indeed, review of all of the small projects that go through incubators would be cumbersome, and the incubators needed to move quickly and flexibly with their decisions. The scientific quality of their operations could be judged after a few years of experience.

However, internal documents show that Tate spearheaded a plan to fund IACS as an incubator, attaching it to a non-controversial $2 million incubator at Rice University, which was expected to get funding.

IACS is, in effect, a drug company that operates within MD Anderson. The idea behind the institute is to be able to move rapidly to start—and discontinue—projects.

In one of CPRIT emails, Chin said that the decision to combine the proposals was made on Dec. 1, 2011, at a meeting with Tate.

Emails show that Cobbs was the official who received the six-and-a-half-page proposal from IACS. The proposal, which sought $18 million, was sent to Cobbs as an attachment to an email from an official at MD Anderson.

The proposal violated two standard procedures: (1) it was never reviewed by the MD Anderson provost, and (2) it went directly to Cobbs, bypassing the CPRIT portal, which must be used for submission of applications.

In early March 2012, Cobbs asked Gilman to look over the IACS proposal.

Gilman said that the document lacked scientific content: there were no targets mentioned, no molecules, no diseases, and no intellectual property. There was nothing to review.

Gilman said he had heard of that proposal before. It should be submitted as a large, multi-investigator grant, accompanied by sufficient detail. Cobbs concurred, telling Gilman that the Chin proposal would go nowhere, at least until the problems are resolved. Documents show that, unbeknownst to Gilman, Tate was working on a plan to combine Chin’s so-called “incubator” with the genuine incubator proposed by Rice. The two proposals would be combined and sped through to oversight committee for approval.

On March 14, 2012, in an email to Cobbs, CPRIT Executive Director Bill Gimson stated that Tate had warned him about considering the Rice proposal first, to be followed by the MD Anderson proposal: “Jerry: Charles just called me—he is concerned about timing and bifurcated approach of the Rice/IACS Incubator. Let’s talk tomorrow early. Bill.”

CPRIT emails related to the MD Anderson affair portray Cobbs as a dutiful functionary who follows orders, who makes sure that the grant to the incubator goes through all the hurdles to final approval.

Review procedures are devised and cleared rapidly.

As he tried to deliver $18 million to Chin, Cobbs sent out a colorful email:

“As a cautionary note, nothing is a done deal until it’s in the ‘hip-pocket-national bank’ but taking an optimistic view of tomorrow’s Board meeting, I would like your input on the announcement.”

This request is remarkable because it shows high-level CPRIT and MD Anderson officials focusing on chiseling out the language of the press announcement of the Chin incubator before it goes to the CPRIT board for final approval.

Ultimately, Gilman took the only course of action open to him: he resigned, bringing press attention to the scandal that would otherwise have gone unnoticed (The Cancer Letter, Oct. 19, 2012).

Surely, had the IACS operation gone unnoticed, CPRIT’s puzzling failure to review the Peloton application would have remained under wraps as well.

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