FOLLOW the MONEY, Part II
Recently we looked at some financial aspects of the boundary between Stanford University and Corcept Therapeutics. Dr. Alan Schatzberg, the chair of Stanford’s psychiatry department, received at least $510,000 from Corcept between 2000 and 2007. Senator Grassley asked why NIH received no disclosure from Stanford of Dr. Schatzberg’s realized gain from selling Corcept stock while he was Principal Investigator on a related NIH grant. The Senator also remarked on Stanford’s lowball estimate to him of Dr. Schatzberg’s equity in Corcept, currently between $5 million and $6 million.
Dr. Schatzberg is not the only academic to benefit from Corcept. Dr. Charles Nemeroff, a member of Corcept’s scientific advisory board, also did well. He exercised options to buy 60,000 shares on joining the board in 1998. Dr. Nemeroff diligently promoted Corcept’s drug. Following the style documented for Dr. Schatzberg, Dr. Nemeroff emphasized weak positive trends in the data while suppressing inconvenient negative analyses. In the fall of 2002, Dr. Nemeroff referred to the Stanford-NIH trials as “impressive studies indicating that ... (mifepristone)...is very effective in the treatment of psychotic depression.” The claims “impressive” and “very effective” are indefensible, and may even be fraudulent. Dr. Nemeroff’s exaggerated promotion occurred while the company prepared for its IPO, but he did not disclose his financial stake. Right after the 6-month SEC-mandated lockup period expired, Dr. Nemeroff sold 20,000 shares for $137,500. His cost was $6.60. Help me, what is the right term for this behavior?
A second member of the team who did well is Dr. Joseph Belanoff, Corcept’s co-founder and CEO. Like Dr. Schatzberg, he received around 3 million shares in 1998. Dr. Belanoff began selling as soon as the lock-up period ended. Between November 2004 and November 2006, Dr. Belanoff sold approximately 10,000 Corcept shares each month, realizing over $1 million. His cost for all those shares was around $80. An on-line financial service listed 6 additional quarterly sales, each of 30,000 shares, which netted over $900,000. Dr. Belanoff also received an ample corporate salary. His documented salary increased from $310,500 plus a 10% bonus in 2003 to $1,643,760 in salary ($411,008), bonus ($102,752), and stock options ($1,130,000) in 2007. Not bad, for someone with modest academic credentials.
Stanford University itself has a financial stake. Following a licensing fee of $47,000 that was paid to Stanford in 1999 along with 30,000 shares of stock, Corcept has been obligated to make non-refundable royalty payments of $50,000 a year. That adds up to $497,000 through 2008. Additional payments up to $250,000 are due to Stanford when certain drug development milestones are reached. Stanford has stated that it long ago divested itself of the Corcept stock. However, an on-line information service lists Stanford as a major shareholder as recently as 31 March 2008, with over 47,000 shares in the name of the Board of Trustees. In a second agreement, Stanford receives a $20,000 licensing fee, 1000 shares of Corcept stock, $10,000 a year in non-refundable royalties, and potential milestone payments of $350,000. All of this is in advance of any marketing of products by Corcept. So, Stanford is not exactly a disinterested administrator of the academic-corporate boundary between Dr. Schatzberg, NIH, and Corcept.
We should also note some unusual events involving Corcept stock movements. On 15 August 2005 Corcept stock received a research broker upgrade. Heavy selling followed the upgrade (volume was 613,000 shares, 31 standard deviations above the mean for the previous 10 trading days). For non-statistician readers, 3 standard deviations would tell us that the spike is almost certainly not consistent with the historical fluctuations in volume. So, a spike of 31 standard deviations means any such probability is astronomically small. The stock price moved up 34% from the previous day but quickly sank again. That same day, Dr. Schatzberg sold 15,597 shares for $109,179, at an intra-day high of $7 per share. The cost basis of those shares to him was $5.15.
On Friday 23 September 2005, heavy selling of Corcept stock occurred (871,700 shares). This volume was 35 standard deviations above the mean of the previous 10 trading days. On the following Monday, Corcept announced that a widely publicized study of mifepristone for Alzheimer disease was being halted prematurely for lack of progress. The company also announced slower than expected enrollment in a Phase III study of psychotic depression, for which they projected delayed announcement of results. Over the next month the stock price declined 16%.
These episodes of concentrated stock movement represent coincidences that remain to be explained. Was the August 2005 upgrade and selling spike in which Dr. Schatzberg participated a case of “pump and dump”? Was the September 2005 selling spike ahead of bad news a case of insider trading? Who did all that selling, and how did they know?
The questions just keep coming.
Showing posts with label Corcept Therapeutics. Show all posts
Showing posts with label Corcept Therapeutics. Show all posts
Thursday, August 14, 2008
Friday, July 25, 2008
MANAGING CONFLICTS of INTEREST at STANFORD
MANAGING CONFLICTS OF INTEREST AT STANFORD
The case of Stanford University and Dr. Alan Schatzberg, chairman of Stanford’s department of psychiatry, continues to raise questions. You can see previous discussions here. The questions concern transparency at the academic-corporate boundary, reporting conflicts of interest to NIH, and Stanford’s “management” of a faculty member known to have a significant conflict. The conflict involves a company Dr. Schatzberg founded (Corcept Therapeutics), a drug called mifepristone that Corcept has in clinical trials for depression, and NIH-supported studies of the same drug at Stanford.
Stanford’s position is that Dr. Schatzberg “has not been involved in managing or conducting any human subjects research involving Mifepristone …” Dr. Schatzberg’s 2006 published disclaimer stated “…Dr Schatzberg played no direct role in the recruitment, assessment, or follow-up of subjects enrolled in this study. Dr Schatzberg was not directly involved in the analysis of data stemming from this research.” Stanford represented that this disclaimer applies also to earlier publications with Dr. Schatzberg as co-author.
This disclaimer is hardly credible, considering the responsibilities of NIH-funded Principal Investigators. I pointed out many of the inconsistencies before. Now there is new evidence that Dr. Schatzberg failed to maintain an arm’s-length relationship to the projects at Stanford.
In a 2008 review article, Dr. Schatzberg discussed the Stanford projects in ways that contradict the claim of an arm’s-length relationship. This article acknowledged Dr. Schatzberg’s NIH grant support at Stanford. Corcept Therapeutics was not acknowledged as a source of funding. The first concern is that, if Dr. Schatzberg’s relationship to the Stanford studies is as Stanford claimed, then he has no business publishing a NIH-supported review article that portrays his drug’s prospects in a favorable light. Hello! Is there a conflict of interest here? Review articles that assess a field and synthesize data form a crucial part of science that has to be off-limits to Dr. Schatzberg just as much as assessing patients in one of his clinical trials would be. His many favorable, even exaggerated, articles, reviews and commentaries since he founded Corcept should have come under this proscription. So much for Stanford’s “management” of the conflict. Dr. Schatzberg certainly had a role in managing the research supported by NIH at Stanford – he managed the climate of scientific opinion for his drug and he managed the tone of the NIH-supported publications from Stanford.
Second, Dr. Schatzberg made a claim of efficacy for his drug that differed from what was originally reported in an NIH-supported Stanford study. He claimed a 31% decrease of symptom ratings with a scale called the BPRS. The original report does not confirm that claim. From the published data tabulated in the report, the reduction of symptom severity was 20%. Readers can easily check that for themselves. So, in a current scientific review article Dr. Schatzberg deviated from the published record. He also inflated by half the efficacy estimate for his drug. Hello! Is there a conflict of interest here?
Third, this false claim indicates that Dr. Schatzberg performed and published his own reanalysis of the primary data from an NIH-funded Stanford study. He didn’t get the number 31% from the published article. Yet Stanford says he had no part in managing or conducting the research or in analyzing any data. So here we have an NIH-funded Principal Investigator, with a clear conflict of interest, who supposedly remains at arm’s length from the project, accessing the primary data files, running a new analysis himself, and publishing an exaggerated new efficacy result for his drug that does not match what he published previously as a co-author. That is inconsistent with Stanford’s defense of Dr. Schatzberg. Hello! Is there a conflict of interest here?
Fourth, in this review article Dr. Schatzberg presented the first data on mifepristone blood levels in a peer reviewed journal, along with an elaborate scientific argument for the importance of the blood level as a moderator of response. These blood level data came from Corcept’s clinical trials, but the target blood level stated by Dr. Schatzberg did not correspond to SEC filings and press releases from Corcept. The administrative issue here is how Stanford justifies the presentation and discussion of original scientific data by a Principal Investigator who is supposedly insulated from the scientific work of the project in order to avoid bias. Dr. Schatzberg’s discussion of the new data and his scientific arguments about blood levels form a crucial part of the scientific platform for his drug’s current prospects, and as such must be off limits, just as assessing patients in one of his clinical trials would be off limits under Stanford’s policy. Hello! Is there a conflict of interest here?
This current example undercuts the assertions by Stanford and Dr. Schatzberg that his conflicts of interest have been “managed” by the University. Dr. Schatzberg may not have assessed any patients in Stanford’s trials of mifepristone, but he has had the lead role in responding to scientific critiques, where he clearly was the manager. He also has had the lead role in selling the mifepristone story to the scientific community and in shaping the tone of the NIH-supported Stanford publications that Corcept relied on to raise capital. Hello! Is there a conflict of interest here? How does Stanford justify these academic-commercial boundary violations, and why does NIH not act on the known conflicts of interest? That was Senator Grassley’s question to Dr. Zerhouni today.
The case of Stanford University and Dr. Alan Schatzberg, chairman of Stanford’s department of psychiatry, continues to raise questions. You can see previous discussions here. The questions concern transparency at the academic-corporate boundary, reporting conflicts of interest to NIH, and Stanford’s “management” of a faculty member known to have a significant conflict. The conflict involves a company Dr. Schatzberg founded (Corcept Therapeutics), a drug called mifepristone that Corcept has in clinical trials for depression, and NIH-supported studies of the same drug at Stanford.
Stanford’s position is that Dr. Schatzberg “has not been involved in managing or conducting any human subjects research involving Mifepristone …” Dr. Schatzberg’s 2006 published disclaimer stated “…Dr Schatzberg played no direct role in the recruitment, assessment, or follow-up of subjects enrolled in this study. Dr Schatzberg was not directly involved in the analysis of data stemming from this research.” Stanford represented that this disclaimer applies also to earlier publications with Dr. Schatzberg as co-author.
This disclaimer is hardly credible, considering the responsibilities of NIH-funded Principal Investigators. I pointed out many of the inconsistencies before. Now there is new evidence that Dr. Schatzberg failed to maintain an arm’s-length relationship to the projects at Stanford.
In a 2008 review article, Dr. Schatzberg discussed the Stanford projects in ways that contradict the claim of an arm’s-length relationship. This article acknowledged Dr. Schatzberg’s NIH grant support at Stanford. Corcept Therapeutics was not acknowledged as a source of funding. The first concern is that, if Dr. Schatzberg’s relationship to the Stanford studies is as Stanford claimed, then he has no business publishing a NIH-supported review article that portrays his drug’s prospects in a favorable light. Hello! Is there a conflict of interest here? Review articles that assess a field and synthesize data form a crucial part of science that has to be off-limits to Dr. Schatzberg just as much as assessing patients in one of his clinical trials would be. His many favorable, even exaggerated, articles, reviews and commentaries since he founded Corcept should have come under this proscription. So much for Stanford’s “management” of the conflict. Dr. Schatzberg certainly had a role in managing the research supported by NIH at Stanford – he managed the climate of scientific opinion for his drug and he managed the tone of the NIH-supported publications from Stanford.
Second, Dr. Schatzberg made a claim of efficacy for his drug that differed from what was originally reported in an NIH-supported Stanford study. He claimed a 31% decrease of symptom ratings with a scale called the BPRS. The original report does not confirm that claim. From the published data tabulated in the report, the reduction of symptom severity was 20%. Readers can easily check that for themselves. So, in a current scientific review article Dr. Schatzberg deviated from the published record. He also inflated by half the efficacy estimate for his drug. Hello! Is there a conflict of interest here?
Third, this false claim indicates that Dr. Schatzberg performed and published his own reanalysis of the primary data from an NIH-funded Stanford study. He didn’t get the number 31% from the published article. Yet Stanford says he had no part in managing or conducting the research or in analyzing any data. So here we have an NIH-funded Principal Investigator, with a clear conflict of interest, who supposedly remains at arm’s length from the project, accessing the primary data files, running a new analysis himself, and publishing an exaggerated new efficacy result for his drug that does not match what he published previously as a co-author. That is inconsistent with Stanford’s defense of Dr. Schatzberg. Hello! Is there a conflict of interest here?
Fourth, in this review article Dr. Schatzberg presented the first data on mifepristone blood levels in a peer reviewed journal, along with an elaborate scientific argument for the importance of the blood level as a moderator of response. These blood level data came from Corcept’s clinical trials, but the target blood level stated by Dr. Schatzberg did not correspond to SEC filings and press releases from Corcept. The administrative issue here is how Stanford justifies the presentation and discussion of original scientific data by a Principal Investigator who is supposedly insulated from the scientific work of the project in order to avoid bias. Dr. Schatzberg’s discussion of the new data and his scientific arguments about blood levels form a crucial part of the scientific platform for his drug’s current prospects, and as such must be off limits, just as assessing patients in one of his clinical trials would be off limits under Stanford’s policy. Hello! Is there a conflict of interest here?
This current example undercuts the assertions by Stanford and Dr. Schatzberg that his conflicts of interest have been “managed” by the University. Dr. Schatzberg may not have assessed any patients in Stanford’s trials of mifepristone, but he has had the lead role in responding to scientific critiques, where he clearly was the manager. He also has had the lead role in selling the mifepristone story to the scientific community and in shaping the tone of the NIH-supported Stanford publications that Corcept relied on to raise capital. Hello! Is there a conflict of interest here? How does Stanford justify these academic-commercial boundary violations, and why does NIH not act on the known conflicts of interest? That was Senator Grassley’s question to Dr. Zerhouni today.
Sunday, July 20, 2008
SCHATZBERG DISCLOSURE
SCHATZBERG DISCLOSURES
Questions continue to buzz about Dr. Alan Schatzberg’s and Stanford’s claims that he complied with the university’s disclosure requirements. Dr. Schatzberg is chair of Stanford’s department of psychiatry and the founder of a company called Corcept Therapeutics. I have commented previously on the University’s (mis)management of Dr. Schatzberg’s conflict of interest vis a vis Corcept and his NIH funding.
The two most informative documents released by Stanford University are dated 23 May 2008 and 25 June 2008. The first is an amended response to Senator Charles Grassley. The second is a public statement concerning Sen. Grassley’s investigation of Dr. Schatzberg through the Senate Finance Committee.. The complete texts are available on-line here: http://ucomm.stanford.edu/news/052308conflict_of_interest.pdf (1)
and here http://ucomm.stanford.edu/news/062508conflict_of_interest.pdf (2)
Additional perspective is to be found in an article in the Stanford Daily here:
http://www.stanforddaily.com/article/2008/7/10/senatorTargetsSchatzbergForConflictOfInterest (3)
Stanford’s policy requires that
This explanation is laughable. Since when does a University rely on SEC filings and online financial reporting services to learn about the transactions and financial conflicts of its faculty members in order to discharge its fiduciary duty to disclose these transactions to NIH?
Even worse, the American Psychiatric Association has parroted Stanford’s assertion that Dr. Schatzberg made the required disclosures. In an interview with the New York Times, Dr. Nada L. Stotland, president of the psychiatric association, said the group had studied Mr. Grassley’s letter and Stanford’s response and agreed with Stanford. Dr. Schatzberg will take over as president of the association as planned, she said. The association and the University here are being disingenuous – treating an ethical issue as a technical legalism. But even on legally technical grounds their case fails. Is that the standard that Stanford and the APA wish to state for the record?
Once again, it is time for Stanford to get real about the boundary between commerce and academia. And, in view of the unjustified promotion of their commercial interest by Dr. Schatzberg and his corporate associates through academic outlets, it is time for the American Psychiatric Association to grasp the nettle and to reconsider Dr. Schatzberg’s fitness to serve as president in 2009.
Questions continue to buzz about Dr. Alan Schatzberg’s and Stanford’s claims that he complied with the university’s disclosure requirements. Dr. Schatzberg is chair of Stanford’s department of psychiatry and the founder of a company called Corcept Therapeutics. I have commented previously on the University’s (mis)management of Dr. Schatzberg’s conflict of interest vis a vis Corcept and his NIH funding.
The two most informative documents released by Stanford University are dated 23 May 2008 and 25 June 2008. The first is an amended response to Senator Charles Grassley. The second is a public statement concerning Sen. Grassley’s investigation of Dr. Schatzberg through the Senate Finance Committee.. The complete texts are available on-line here: http://ucomm.stanford.edu/news/052308conflict_of_interest.pdf (1)
and here http://ucomm.stanford.edu/news/062508conflict_of_interest.pdf (2)
Additional perspective is to be found in an article in the Stanford Daily here:
http://www.stanforddaily.com/article/2008/7/10/senatorTargetsSchatzbergForConflictOfInterest (3)
Stanford’s policy requires that
“Disclosure of potential conflicts of interest at the time of any transaction,Likewise, the Stanford Daily reported that
such as when the faculty member receives a research grant or gift or has
intellectual property licensed, is a critical component of our conflict of
interest policy. Transactional disclosures of conflicts of interest are required
when submitting a grant, negotiating a contract, during licensing activities,
submitting protocols for human subjects research or animal research, entering
into material transfer agreements or collaboration agreements, receiving gifts
or entering into procurement activities. … Our standard for a significant
financial interest is whether the faculty member has received $10,000 or more in
income, holds $10,000 or more in equity in equity for publicly traded companies
or has any equity if the company is privately held. This ad hoc disclosure is
used to mitigate, manage or remove such specific conflicts, and, for all
research funded by NIH, as a basis for reporting to NIH. All such conflicts are
also reported in the annual disclosure, and thus are also part of the University
information on conflict of interest (emphases added) (1).
“the University said in its letter to Grassley that it holds a “zero-dollarThe sale of Corcept Therapeutics stock by Dr. Schatzberg in 2005 was not reported to the University. (1) Dr. Schatzberg’s attempted sales of stock in 2002 and 2004 in connection with Corcept’s planned stock IPOs also were not reported to the University. (1) Proceeds of the 2005 sale to Dr. Schatzberg were over $109,000. Projected proceeds of the failed attempts to sell stock during the IPOs were $7-11 million. In terms of the policy described above, these must be considered “transactions” and “income” and “financial gains.” Stanford did not document compliance by Dr. Schatzberg with University policy. The stock sale is not mentioned in Dr. Schatzberg’s 2005 disclosure to the University. (1) Indeed, Stanford prevaricated on this issue by stating “…information about his stock ownership and stock sales was publicly disclosed through SEC filings and is available online through financial reporting services.” (2)
threshold for disclosure.” This requires that faculty members divulge any and
all financial gains made through outside interactions that could have bearing on
what they are doing on campus.” (3)
This explanation is laughable. Since when does a University rely on SEC filings and online financial reporting services to learn about the transactions and financial conflicts of its faculty members in order to discharge its fiduciary duty to disclose these transactions to NIH?
Even worse, the American Psychiatric Association has parroted Stanford’s assertion that Dr. Schatzberg made the required disclosures. In an interview with the New York Times, Dr. Nada L. Stotland, president of the psychiatric association, said the group had studied Mr. Grassley’s letter and Stanford’s response and agreed with Stanford. Dr. Schatzberg will take over as president of the association as planned, she said. The association and the University here are being disingenuous – treating an ethical issue as a technical legalism. But even on legally technical grounds their case fails. Is that the standard that Stanford and the APA wish to state for the record?
Once again, it is time for Stanford to get real about the boundary between commerce and academia. And, in view of the unjustified promotion of their commercial interest by Dr. Schatzberg and his corporate associates through academic outlets, it is time for the American Psychiatric Association to grasp the nettle and to reconsider Dr. Schatzberg’s fitness to serve as president in 2009.
Monday, July 14, 2008
SCHATZBERG, STANFORD and the AMERICAN PSYCHIATRIC ASSOCIATION
14 July 2008
SCHATZBERG, STANFORD and the AMERICAN PSYCHIATRIC ASSOCIATION
The chairman of psychiatry at Stanford University, Dr. Alan Schatzberg, is still in the news for his problems at the boundary of commerce and academia. The New York Times reported that Dr. Schatzberg believes constraints on researchers trying to develop drugs “will mean less opportunities to help patients with severe illnesses.” Just as patriotism is the last refuge of the scoundrel, so patient welfare is the last refuge of the dodgy medical entrepreneur.
What exactly does Dr. Schatzberg mean by “constraints”? Does he object to transparency as a “constraint”? Would he feel “constrained” by the need to disclose his stock sales to his academic institution? The Stanford Daily commented recently that Stanford policy “requires that faculty members divulge any and all financial gains made through outside interactions that could have bearing on what they are doing on campus.” One reason for this requirement is so that the institution can disclose these financial dealings to NIH, which funds Dr. Schatzberg’s academic work that dovetails with his corporation’s research. It is difficult to reconcile Dr. Schatzberg’s protestations of compliance with the non-reporting of his stock sale valued at over $100,000 (not to mention his efforts to sell stock valued at $7-11 million).
Would Dr. Schatzberg and his corporate associates feel “constrained” by the requirement to disclose their competing financial interests when touting the company’s drug in scientific journals, textbooks, educational media, and press interviews? The record is clear that they have repeatedly failed to do so.
Would Dr. Schatzberg and his corporate associates feel “constrained” by the canons of science that frown on exaggerated claims and hyperbole in the service of their business enterprise? The record is clear that they have repeatedly overstated the evidence for their drug’s prospects. These exaggerated claims were touted by the corporation when raising capital.
Would Dr. Schatzberg feel “constrained” by the societal expectation to refrain from gaming the entrepreneurial reward system? He appeared to believe he was entitled to cash out $7-11 million of other people’s money before actually producing anything of redeeming social value.
If this is what Dr. Schatzberg means by “constraints” then his fitness for the office of president of the American Psychiatric Association needs to be reconsidered.
SCHATZBERG, STANFORD and the AMERICAN PSYCHIATRIC ASSOCIATION
The chairman of psychiatry at Stanford University, Dr. Alan Schatzberg, is still in the news for his problems at the boundary of commerce and academia. The New York Times reported that Dr. Schatzberg believes constraints on researchers trying to develop drugs “will mean less opportunities to help patients with severe illnesses.” Just as patriotism is the last refuge of the scoundrel, so patient welfare is the last refuge of the dodgy medical entrepreneur.
What exactly does Dr. Schatzberg mean by “constraints”? Does he object to transparency as a “constraint”? Would he feel “constrained” by the need to disclose his stock sales to his academic institution? The Stanford Daily commented recently that Stanford policy “requires that faculty members divulge any and all financial gains made through outside interactions that could have bearing on what they are doing on campus.” One reason for this requirement is so that the institution can disclose these financial dealings to NIH, which funds Dr. Schatzberg’s academic work that dovetails with his corporation’s research. It is difficult to reconcile Dr. Schatzberg’s protestations of compliance with the non-reporting of his stock sale valued at over $100,000 (not to mention his efforts to sell stock valued at $7-11 million).
Would Dr. Schatzberg and his corporate associates feel “constrained” by the requirement to disclose their competing financial interests when touting the company’s drug in scientific journals, textbooks, educational media, and press interviews? The record is clear that they have repeatedly failed to do so.
Would Dr. Schatzberg and his corporate associates feel “constrained” by the canons of science that frown on exaggerated claims and hyperbole in the service of their business enterprise? The record is clear that they have repeatedly overstated the evidence for their drug’s prospects. These exaggerated claims were touted by the corporation when raising capital.
Would Dr. Schatzberg feel “constrained” by the societal expectation to refrain from gaming the entrepreneurial reward system? He appeared to believe he was entitled to cash out $7-11 million of other people’s money before actually producing anything of redeeming social value.
If this is what Dr. Schatzberg means by “constraints” then his fitness for the office of president of the American Psychiatric Association needs to be reconsidered.
Sunday, June 29, 2008
STANFORD, SCHATZBERG and CORCEPT THERAPEUTICS: RECOGNIZING and MANAGING CONFLICTS
STANFORD, SCHATZBERG and CORCEPT THERAPEUTICS: RECOGNIZING and MANAGING CONFLICTS
The case of Stanford University and Dr. Alan Schatzberg, chairman of Stanford’s department of psychiatry, has been in the news for a week. Senator Grassley raised concerns about conflicts of interest, reporting of same, and Stanford’s policies. In play are a company called Corcept Therapeutics that Dr. Schatzberg founded, and a drug called Mifepristone or RU 486 that is in clinical trials for a severe form of depression. Interest in this case is especially high because Dr. Schatzberg is the president-elect of the American Psychiatric Association. Daniel Carlat, Clin Psych, and University Diaries have had cogent commentaries on the wider implications of this breaking issue.
The University issued a statement in response to Sen. Grassley. This statement asserted that Dr. Schatzberg has fully complied with the University’s rigorous conflict of interest policy and that Dr. Schatzberg “has not been involved in managing or conducting any human subjects research involving Mifepristone, a pharmaceutical that Corcept licenses for the treatment of psychotic major depression.”
Stanford’s account of Dr. Schatzberg’s arm’s-length role in Stanford’s NIH-supported studies of RU 486 (mifepristone) for depression is questionable, if not disingenuous. Dr. Schatzberg’s patent application filing for use of RU 486 in depression occurred in 1997, and he founded the corporation Corcept Therapeutics in 1998. He was a member of the board of directors from 1998 to 2007. He has chaired the corporation’s scientific advisory board since 1998.
There is reason to believe that Dr. Schatzberg had a key role in Stanford’s clinical trials of Corcept’s drug reported in 2001, 2002, and 2006. He was a co-author on all three publications, and there was no disclaimer about his role until 2006. This disclaimer is hardly credible. As Principal Investigator on the NIH grants, Dr. Schatzberg was expected to supervise the junior faculty and research staff at Stanford who recruited, assessed, and treated patients in the studies of RU 486. He was responsible for the choice of outcome measures, about which questions have been raised. He was responsible for the quality of the reported data analyses, which were, frankly, inexpert, when they were provided at all. Above all, he was responsible for the tone of the NIH-supported Stanford publications that claimed Corcept’s drug is effective.
If there were any doubt that Dr. Schatzberg’s hands were all over these Stanford studies, one only has to see the record of his leading role in responding to scientific critiques of their design, execution, analysis, and interpretation. He was clearly the manager.
Moreover, the record is clear that Corcept relied on the NIH-supported Stanford publications for positive claims to enable the corporation to raise capital (well over $100 million by now, with nothing to show for it). Corcept’s own Phase III clinical trials have been uniformly negative. For this strategy to succeed, the Stanford trials had to be portrayed as positive. As Paul Jacobs detailed in the San Jose Mercury News in 2006, using independent statistical experts, Dr. Schatzberg and his Stanford/Corcept colleagues made seriously exaggerated claims for the drug’s efficacy in their 2001 and 2002 publications. These exaggerated claims have been assiduously repeated by Dr. Schatzberg, by Stanford faculty members answerable to him, and by academic members of Corcept’s scientific advisory board in many scientific journals and textbooks. All these testimonials are compromised. The effect of these repeated, unjustified, claims is to raise the profile of the corporation and of the drug. It amounts to public relations and branding through academic outlets. Roy Poses on this site has dissected the scientific credibility of claims for the utility of RU 486 in depression.
Far from being removed from the scientific debate about Corcept’s drug, Dr. Schatzberg has had the leading role in “selling” the story to the scientific community, in “defending the brand” against scientific criticisms, and in providing his corporation a plausible story line to attract new capital. It was Dr. Schatzberg who talked about how the drug “may be the equivalent of shock treatments in a pill” in a 2002 Stanford press release. There is no clear boundary between Dr. Schatzberg’s NIH-supported academic roles and his service to the corporation he founded. As for not being involved in the management of the Stanford projects, Dr. Schatzberg acknowledged to Paul Jacobs of the San Jose Mercury News “that he has considerable influence over the junior faculty members doing the studies. As chairman of psychiatry, he helps set their salaries and can affect their career advancement. And he continues as a co-author of the resulting papers.”
I have already commented on Dr. Schatzberg’s efforts to sell large parcels of Corcept stock during the company’s IPO attempts. Had these efforts been successful, Dr. Schatzberg would have benefited by $7-11 million, while still retaining over 2 million shares of Corcept stock. This aspect of the issue troubles many people. In our capitalist system, considered so necessary for developing innovative drugs, nobody complains when an entrepreneur makes a fortune inventing a useful product. Dr. Schatzberg’s apparent intent, however, was to reach for the reward before contributing any product of redeeming social value. The prospects of RU 486 succeeding as a useful treatment of psychotic depression are close to zero. People view such behavior as gaming the system. Moreover, under Stanford’s existing rules, these projected stock sales might never have been reported.
Are these significant conflicts of interest? Yes. Have they “influence(d) the conduct of medical research” at Stanford (quoting now from Stanford’s June 24 statement)? Yes. Dr. Schatzberg’s NIH grants dovetail with the efforts of his corporation, and the corporation used data from the NIH-grant-supported projects for commercial promotion. Had the corporation not existed, these particular grants likely would not have been initiated or would have had different scientific emphases. Has Dr. Schatzberg’s research “been compromised by his financial stake”? Yes. His academic publications on depression and RU 486 are compromised by exaggerated and self-serving claims for his corporation’s drug. Senator Grassley is right: it is time for Stanford to get real about corporate-academic boundaries.
The case of Stanford University and Dr. Alan Schatzberg, chairman of Stanford’s department of psychiatry, has been in the news for a week. Senator Grassley raised concerns about conflicts of interest, reporting of same, and Stanford’s policies. In play are a company called Corcept Therapeutics that Dr. Schatzberg founded, and a drug called Mifepristone or RU 486 that is in clinical trials for a severe form of depression. Interest in this case is especially high because Dr. Schatzberg is the president-elect of the American Psychiatric Association. Daniel Carlat, Clin Psych, and University Diaries have had cogent commentaries on the wider implications of this breaking issue.
The University issued a statement in response to Sen. Grassley. This statement asserted that Dr. Schatzberg has fully complied with the University’s rigorous conflict of interest policy and that Dr. Schatzberg “has not been involved in managing or conducting any human subjects research involving Mifepristone, a pharmaceutical that Corcept licenses for the treatment of psychotic major depression.”
Stanford’s account of Dr. Schatzberg’s arm’s-length role in Stanford’s NIH-supported studies of RU 486 (mifepristone) for depression is questionable, if not disingenuous. Dr. Schatzberg’s patent application filing for use of RU 486 in depression occurred in 1997, and he founded the corporation Corcept Therapeutics in 1998. He was a member of the board of directors from 1998 to 2007. He has chaired the corporation’s scientific advisory board since 1998.
There is reason to believe that Dr. Schatzberg had a key role in Stanford’s clinical trials of Corcept’s drug reported in 2001, 2002, and 2006. He was a co-author on all three publications, and there was no disclaimer about his role until 2006. This disclaimer is hardly credible. As Principal Investigator on the NIH grants, Dr. Schatzberg was expected to supervise the junior faculty and research staff at Stanford who recruited, assessed, and treated patients in the studies of RU 486. He was responsible for the choice of outcome measures, about which questions have been raised. He was responsible for the quality of the reported data analyses, which were, frankly, inexpert, when they were provided at all. Above all, he was responsible for the tone of the NIH-supported Stanford publications that claimed Corcept’s drug is effective.
If there were any doubt that Dr. Schatzberg’s hands were all over these Stanford studies, one only has to see the record of his leading role in responding to scientific critiques of their design, execution, analysis, and interpretation. He was clearly the manager.
Moreover, the record is clear that Corcept relied on the NIH-supported Stanford publications for positive claims to enable the corporation to raise capital (well over $100 million by now, with nothing to show for it). Corcept’s own Phase III clinical trials have been uniformly negative. For this strategy to succeed, the Stanford trials had to be portrayed as positive. As Paul Jacobs detailed in the San Jose Mercury News in 2006, using independent statistical experts, Dr. Schatzberg and his Stanford/Corcept colleagues made seriously exaggerated claims for the drug’s efficacy in their 2001 and 2002 publications. These exaggerated claims have been assiduously repeated by Dr. Schatzberg, by Stanford faculty members answerable to him, and by academic members of Corcept’s scientific advisory board in many scientific journals and textbooks. All these testimonials are compromised. The effect of these repeated, unjustified, claims is to raise the profile of the corporation and of the drug. It amounts to public relations and branding through academic outlets. Roy Poses on this site has dissected the scientific credibility of claims for the utility of RU 486 in depression.
Far from being removed from the scientific debate about Corcept’s drug, Dr. Schatzberg has had the leading role in “selling” the story to the scientific community, in “defending the brand” against scientific criticisms, and in providing his corporation a plausible story line to attract new capital. It was Dr. Schatzberg who talked about how the drug “may be the equivalent of shock treatments in a pill” in a 2002 Stanford press release. There is no clear boundary between Dr. Schatzberg’s NIH-supported academic roles and his service to the corporation he founded. As for not being involved in the management of the Stanford projects, Dr. Schatzberg acknowledged to Paul Jacobs of the San Jose Mercury News “that he has considerable influence over the junior faculty members doing the studies. As chairman of psychiatry, he helps set their salaries and can affect their career advancement. And he continues as a co-author of the resulting papers.”
I have already commented on Dr. Schatzberg’s efforts to sell large parcels of Corcept stock during the company’s IPO attempts. Had these efforts been successful, Dr. Schatzberg would have benefited by $7-11 million, while still retaining over 2 million shares of Corcept stock. This aspect of the issue troubles many people. In our capitalist system, considered so necessary for developing innovative drugs, nobody complains when an entrepreneur makes a fortune inventing a useful product. Dr. Schatzberg’s apparent intent, however, was to reach for the reward before contributing any product of redeeming social value. The prospects of RU 486 succeeding as a useful treatment of psychotic depression are close to zero. People view such behavior as gaming the system. Moreover, under Stanford’s existing rules, these projected stock sales might never have been reported.
Are these significant conflicts of interest? Yes. Have they “influence(d) the conduct of medical research” at Stanford (quoting now from Stanford’s June 24 statement)? Yes. Dr. Schatzberg’s NIH grants dovetail with the efforts of his corporation, and the corporation used data from the NIH-grant-supported projects for commercial promotion. Had the corporation not existed, these particular grants likely would not have been initiated or would have had different scientific emphases. Has Dr. Schatzberg’s research “been compromised by his financial stake”? Yes. His academic publications on depression and RU 486 are compromised by exaggerated and self-serving claims for his corporation’s drug. Senator Grassley is right: it is time for Stanford to get real about corporate-academic boundaries.
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