legislative watchdog in Utah has launched an investigation of a controversial donation to the state’s flagship public university from biotech billionaire Dr. Patrick Soon-Shiong.
The probe, requested by the Utah House speaker, comes at a tumultuous time for the University of Utah. Soon-Shiong’s donation, which ended up boosting his business interests while advancing medical research at the university, has raised eyebrows in the broader research community.
Meanwhile, the CEO of the university health system, Dr. Vivian Lee, resigned last week. She had been facing sharp questions about the deal with Soon-Shiong, whom she had publicly hailed as a generous visionary, and about a separate power struggle involving the director of a university cancer center.
The legislative investigation is still in the preliminary stages, involving document reviews and interviews; there is no timetable for completion. It could lead to a full-fledged audit and public report.
“We’ll interview quite a number of people and determine particulars on the contract and the donation itself and how it was handled and what was agreed to,” John Schaff, the state’s legislative auditor general, told STAT.
Schaff has a mandate to examine any donations to the University of Utah, but the probe appears to have been prompted by reports in STAT and, later, in Politico and other media, about Soon-Shiong’s donation in particular.
Michael Sitrick, a public relations agent who specializes in crisis management and who has advised the company for years, said that neither Soon-Shiong nor NantHealth has heard from the Utah auditor as part of the probe. He also said that they “welcome the investigation, as they are confident that it will validate what they have been saying all along: the relationships with the University of Utah were and are proper.”
University spokeswoman Julie Kiefer said the university is “working closely” with representatives from the auditor’s office.
In 2014, Soon-Shiong gave $12 million to support medical research at the University of Utah. The contract was worded in such a way that the university concluded it had no option but to send $10 million of that money back to one of Soon Shiong’s companies, NantHealth, to conduct the genetic analysis that would propel the research.
STAT’s subsequent review of internal emails and documents showed that NantHealth executives and university officials saw the arrangement through a transactional lens aimed partly at boosting Soon-Shiong’s commercial interests.
Since the publication of STAT’s first investigative report on the deal in March, the deal has made waves for both Soon-Shiong and the university. NantHealth’s stock price has plummeted. At least three investors have filed lawsuits alleging violations of securities laws.
And a high-profile donor to the University of Utah, the philanthropist Jon Huntsman Sr., raised questions about the deal in interviews with the Deseret News and the Salt Lake Tribune, suggesting that the controversy was a distraction from the health system’s core mission of treating patients.
House Speaker Greg Hughes, the Utah Republican who requested the legislative probe, expressed concern about Soon-Shiong getting commercial benefit from his donations in an interview last week with local media. “We are concerned about what we are hearing up there,” he said, according to UtahPolicy.com. He did not return calls from STAT.
Soon-Shiong’s spokeswoman, Jen Hodson, has said that NantHealth did the genetic analysis for the university at a loss and did not benefit from the deal. But NantHealth has previously said publicly — in a press release aimed at investors — that the partnership with the University of Utah would “enable the development” of a new commercial product.
STAT has also reviewed an email from a NantHealth vice president who wrote that the deal with the University of Utah — which gave the company access to genetic and health data on hundreds of patients — “will help us with our product.” The company’s chief commercial officer responded to that email by saying that assessment “is correct.”
NantHealth has lost tens of millions of dollars in recent quarters and has been struggling to find customers for a genetic sequencing tool that it’s marketing as a cancer diagnostic. The company recently reported a $184 million loss for 2016.
The probe comes at a moment of upheaval for the university.
The turmoil began last month when the CEO of the university’s mostly autonomous cancer center, Mary Beckerle, was abruptly fired. The decision prompted protests and harsh criticism from the powerful Huntsman family, which has given millions to the university, before being reversed last week.
Just three days after Lee’s resignation, the university’s president, David Pershing, earlier this week announced his own plans to step down. He said his decision was not prompted by the cancer center flap and that his successor would choose Lee’s replacement.
The dispute seems to stem from an intricate power struggle over the cancer center’s finances and personnel, the Deseret News reported.
Schaff said that his office’s probe is not currently covering the cancer center flap but could expand to include it if the evidence leads down that path. He wouldn’t comment on whom his staff is interviewing.