Scripps Research to End Stock Awards : Science: Although not illegal, critics saw a conflict if decision-makers owned stock in firms that used institute technology.
The Scripps Research Institute said it will discontinue a controversial stock awards program after government critics charged that it posed a potential conflict of interest in the licensing of Scripps’ government-sponsored research to private companies.
The stock controversy stems from Scripps’ practice of distributing to some employees a portion of stock it receives as payment for its technology.
Scripps, which specializes in basic biomolecular research, has an aggressive program of commercializing its technology, and stock is often included as part of the payment from private companies who license technology developed at the institute.
Scripps has distributed up to 10% of stock it receives to non-scientific employees, such as administrators and technicians. Scripps scientists typically receive separate royalty or stock compensation directly from the companies that buy the technology.
Critics led by U.S. Rep. Ron Wyden (D-Ore.) said the stock ownership presented a conflict of interest to Scripps decision-makers, who choose companies to market the institute’s technology.
In response to a Wyden request, the U.S. Health and Human Services Department investigated the Scripps stock awards and found nothing illegal. But, in a letter to Wyden, the agency said that it had recommended that Scripps discontinue the program.
The government looked specifically at shares of Sequel Therapeutics, a San Diego company that licenses Scripps biotechnology and whose stock was owned by three Scripps administrators.
In a telephone interview, Scripps President Richard A. Lerner said he will ask Scripps’ board to discontinue the stock awards.
“We thought this was a good way to reward the employees but if it causes any fuss it’s not worth it to us,” Lerner said. “So we will terminate the stock sharing plan. It’s not worth it to us to have even the appearance of a conflict.”
Lerner declined to identify the three Scripps employees who owned the Sequel shares but said he was not among them. One of the three has since returned the stock.
The controversy followed government criticism of Scripps over its dealings with another company.
Earlier this year, Scripps faced charges that it was helping a foreign firm develop technology from taxpayer-funded research when it signed a $300-million, 10-year deal giving Swiss pharmaceuticals giant Sandoz first rights to commercialize its technology.
Scripps has since agreed to renegotiate its agreement with Sandoz.
