News and Events: Congressional

BEFORE THE UNITED STATES HOUSE OF REPRESENTATIVES

COMMITTEE ON ENERGY AND COMMERCE

SUBCOMMITTEE ON INVESTIGATIONS

STATEMENT OF PETER J. LEVINE

PRESIDENT, CORRELOGIC SYSTEMS, INC.

JUNE 22, 2004

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Mr. Chairman and Members of the Subcommittee:

My name is Peter J. Levine.  I am President of Correlogic Systems, Inc., a clinical proteomics company based in Bethesda, Maryland, that specializes in the development of tools and processes that can assist with the early detection of various cancers and other diseases.  The focus of Correlogic’s energies has been the development of a complete diagnostic system based in part on the use of pattern recognition for the early detection of cancer.  Our technologies have a wide range of applications that can be used in the creation of disease diagnostic systems, biomarker discovery, and new drug discovery processes.  We are also a clinical laboratory regulated under the Clinical Laboratory Improvement Amendments of 1988 and are currently working with the nation's two premier diagnostic laboratories, Laboratory Corporation of America and Quest Diagnostics, to provide an ovarian cancer testing service.

I wish I were testifying today just about the accomplishments of Correlogic and the results of our most recent research, because I believe we are at the brink of translating significant research progress into the ability to provide more accurate and earlier detection of certain diseases, such as stage one ovarian cancer, when the cancer is organ confined and most curable.   Quite frankly, we would not be at this critical and exciting juncture without the considerable talent and resources of the National Institutes of Health, the National Cancer Institute, the Food and Drug Administration, and the Public Health Service.  I hope my comments today will not be taken as a broad criticism of the life-saving mission of these agencies or as justification for lessening our financial commitment to them.  I also ask that my testimony not be misconstrued as a critique of the vast majority of men and women who work there. They have dedicated their professional lives, often at great personal sacrifice, to the advancement of medical science and the health of our nation.  Because of their work, hundreds of thousands of lives have been saved, and these agencies give hope to a brighter future for millions of others. 

I have been asked to testify about our company's experience collaborating with these agencies, including the benefits and dangers for private companies that enter into contractual relationships with federal health agencies and with federal employees who are permitted to be both public servants and private entrepreneurs.  Simply put, our experience has reflected both the promise and pitfalls of "being in business" with the National Cancer Institute and the Food and Drug Administration.   It is my hope, Mr. Chairman, that your inquiry into weaknesses in the National Institutes of Health's ethics policies in general, and what has happened to Correlogic in particular, will lead to a quick resolution of these problems, and our attention can be returned to what should be our collective objective - fighting cancer and saving lives.

Origin of Our Relationship with FDA and NCI

Correlogic’s relationship with FDA and NCI began in June of 1999 when I had brunch with Dr. Emanuel F. Petricoin, a senior research investigator at the FDA.  Our wives had been close personal friends for many years, and Dr. Petricoin and I had met through them.  During the meal, as was our custom, we caught up on professional events in our then very different worlds.  He described to me the challenges he and his colleagues were facing in their search for protein biomarkers for cancer, particularly the difficulty in finding a biomarker in the massive amounts of data that could be produced by the latest generation of protein separation technologies.  They were literally searching the proverbial haystack not for a needle but a single protein that might be indicative of the presence of a disease.

I had significant experience in the use of computer-generated data analysis and suggested using pattern discovery technology to search for patterns of proteins rather than individual proteins for use as a diagnostic.  I explained to Dr. Petricoin that I had been working with Dr. Ben Hitt (now the Chief Scientific Officer of Correlogic) on other applications of pattern discovery technology in non-medical fields. I suggested that if this type of technology could be developed and applied to cancer research, it might be able to detect patterns of proteins that were indicative of a disease state rather than individual protein biomarkers.  Rather than looking for the needle in the haystack of data, we would look at the configuration of the haystack.  Using my napkin as chalkboard, I sketched out the idea.

Following the brunch, I talked through the idea with Dr. Hitt.  He refined the concept and developed a powerful algorithm to test the theory that so-called "Hidden Patterns” of proteins, also known as proteomic patterns, could be analyzed to detect the early stages of a disease.  Through 1999 and into the spring of 2000, Dr. Petricoin, Dr. Hitt and I tested the “Hidden Patterns” theory and in the spring of 2000, we used the basic pattern recognition algorithm that Dr. Hitt had invented. Specifically, we applied the pattern recognition technology, and hidden patterns concept to the blood from prostate cancer patients. We were able to accurately perform a diagnostic assessment based on protein patterns in the blood.  At this time we were collaborating informally with Dr. Petricoin.

Encouraged, we immediately began work on applying our approach to ovarian cancer and outlining its application to other diseases.  Dr. Hitt and I, along with another associate, Marc Giattini, founded Correlogic Systems in May 2000 to further develop this technology.  Dr. Petricoin filed a Public Health Service Employee Invention Report, naming himself, Dr. Hitt, and me as co-inventors.  Among other things, he cited our June 1999 brunch as the date on which the invention was conceived.

Formalization of Our Relationship with NCI and FDA

Things progressed rapidly after the formation of our company.  Correlogic entered into a Material Transfer Agreement with the FDA to facilitate the continuation of research. The company filed a provisional patent application on the core algorithm invented by Dr. Hitt.  After a period of time, Dr. Hitt, Mr. Giattini, and I were able to supplement our personal funding of the company with additional monies from private investors.  Correlogic filed several additional provisional patent applications on our hidden patterns testing process, naming Dr. Hitt, myself and Dr. Petricoin as co-inventors.  We began negotiations with the Public Health Service on an exclusive license agreement for our testing process, as claimed in these latter patent applications.

By July 2001, we finalized our patent filings. Correlogic bore all the expenses of these filings, as it continues to do today. By the time the non-provisional patent was filed, Dr. Petricoin had brought in his colleague and mentor, Dr. Lance Liotta, who was the Director of the Laboratory of Pathology at the National Cancer Institute.   Along with the original three of us, Dr. Liotta was added as a co-inventor on the non-provisional filing of our “Hidden Patterns” patent application.

In February 2002, the peer-reviewed medical journal, The Lancet, published the results of the study the four of us (and others) had authored, which demonstrated that our testing process could detect ovarian cancer, including stage one ovarian cancer, from a single drop of blood.  The actual computational analysis for the Lancet study was performed by Dr. Hitt alone, based upon raw laboratory data provided by Dr. Petricoin and Dr. Liotta. Because of the significance of our findings, the report was filed on the journal's website a week in advance of publication.  The publication generated overwhelming interest in the media as well as the scientific community, due to the novel nature of our process, the compelling results and, from the patient's perspective, the simplicity of a blood test. 

Congress was interested as well.  A few months later the House of Representatives passed a resolution, introduced by Rep. Steve Israel and Rep. Rosa DeLauro, and co-sponsored by 147 members of the House, encouraging the government to support proteomic pattern research for ovarian cancer.

In April 2002, we entered into a Cooperative Research and Development Agreement (CRADA) with the NCI and the FDA to "utilize Correlogic's proprietary software technology to continue their joint research to identify patterns of protein expression indicative of specific disease states."  We also signed an exclusive, worldwide licensing agreement with the Public Health Service to move our protein pattern testing process, the intellectual property rights of which were jointly held by Correlogic and the government, from the research labs into the hands of health care providers as soon as possible. The agreement contained explicit milestones and deadlines for the commercialization of our testing process.

In October 2002, the Journal of the National Cancer Institute published a study we performed with our federal partners on the use of our technology in the early detection of prostate cancer.  In accordance with the clear purpose of and the deadlines included in the exclusive PHS license agreement to Correlogic, we entered into agreements with Quest Diagnostics and LabCorp, the nation's two premier clinical diagnostic labs, to make our potentially lifesaving ovarian cancer test available to women across North America.  We also expanded our staff and retained experts in clinical and laboratory diagnostics.

I was thrilled.  We were taking an idea that I had first sketched on a napkin and turning it into, in the words of the National Institute of Health's Office of Technology Transfer, "a high-throughput diagnostic apparatus that will apparently be capable of detecting ovarian cancer in its earliest stages."  We had obtained funding and assembled all of the corporate resources and expertise that we needed to advance the science and technology.  Once the ovarian cancer testing device had been developed, we could do the same for other cancers and other diseases.

In April 2003, NCI announced in a press release, and later in a presentation at the American Association of Cancer Researchers annual meeting, that our testing process had enabled NCI, FDA, and Correlogic scientists to improve upon the initial results published in The Lancet for the detection of ovarian cancer.  Later that year, Correlogic entered into an agreement with Advion Biosciences to use one of their technologies as a component of our ovarian cancer detection test. 

This year, we began the process of finalizing the validation of OvaCheck^™, our ovarian cancer test service.  We are continuing our work with the National Cancer Institutes' Laboratory of Tumor Immunology and Biology and Walter Reed Army Hospital and the Windber Institute on the application of our diagnostic testing system to the development of a breast cancer test.

All of these developments are based significantly on our initial work with the government, and our exclusive licensing agreement. Our success has hinged in no small part on our ability to combine our expertise with that of key government scientists.  We seemed to be a good example of the promise of government-private sector cooperative programs under the Federal Technology Transfer Act of 1986.  In fact, I was invited by the National Cancer Institute to participate in a panel discussion on how a small company could work with the government to address a critical public health problem. 

Awareness of Potential Conflicts of Interest and Related Issues

On the outside, things could not have appeared better, but internally as we would discover, there were real problems.  Only now, under the light shed by this Subcommittee, and with the full perspective of hindsight can we understand some of the obstacles that we had come to view as an inherent part of the public-private partnership.

Back in 2002, a few months after the Lancet study, I was told that despite our exclusive licensing agreement and ongoing negotiations to expand our CRADA to include clinical testing for ovarian cancer, the National Cancer Institute had decided to “sponsor” an independent clinical trial on the hidden patterns technology, the very technology that was the essence of the patents we had jointly filed with Dr. Petricoin and Dr. Liotta.  I was told that the Lancet study had pushed our testing technology to the forefront and that NCI wanted to move forward as quickly as possible in order to get our test into the hands of doctors and patients.  We certainly agreed with the overall objective and, for that reason, had entered into our original collaboration with NCI consistent with the goals of the Federal Technology Transfer Act of 1986.  However, rather than continuing along the path with Correlogic, NCI had unilaterally decided to give a contract to Science Applications International Corporation (SAIC), with which it has a long-standing contractual relationship, to set up a new laboratory to carry out these clinical trials, and Dr. Gordon Whiteley was hired to head this project, beginning with the development of a business plan.  I was told not to worry, that Correlogic's existing contractual agreements ensured that we would be an integral part of these trials and that our brand new license agreement would protect our IP and commercialization rights.

Obviously, I was concerned at what was presented to me as a fait accompli.  The Institute's decision impacted not only on our ability to meet required deadlines in our exclusive government licensing agreement, but also on the terms and conditions associated with our negotiations with two national clinical labs, LabCorp and Quest Diagnostics, as contemplated by the licensing agreement.  When I raised these concerns with both Dr. Liotta and Dr. Petricoin, I was told not to be “paranoid”, and that NCI's unilateral decision was really in Correlogic's best interests. Frankly, I also was concerned – and remain concerned to this date – about the particular components that NCI had unilaterally chosen for the detection system and also about which entity would take the lead and responsibility for seeking regulatory approval following successful completion of the clinical trial.

To resolve the myriad problems associated with NCI's decision, on August 15, 2002,   I met with representatives from the Offices of Technology Transfer (and Development) for NCI, FDA and NIH.  Leading the negotiations for the government was Dr. Liotta. Also participating was Dr. Svetlana Shtrom, who had been responsible for negotiating our original CRADA.  We reached an agreement on how to proceed with joint clinical trials and our ongoing research CRADA, which was memorialized in a letter dated September 12, 2003, sent to me by Karen Maurey, then Deputy Director of the NCI's Office of Technology Transfer.  In late August, NIH affirmed in writing that our work under this new agreement would be accepted as compliance with the government's deadlines in our original licensing agreement.  We began drafting documents to implement the agreement.

Relying upon these agreements by the government, we pushed forward.  NIH approved our entering a contractual relationship with LabCorp and Quest Diagnostics to commercialize our testing technology and turn it into a diagnostic device.  We continued our research and preparation for the clinical trials, sharing our work product and future commercialization plans with FDA, NCI, and NCI's contractor, Science Applications International Corporation.  In fact, Drs. Petricoin and Liotta began participating in our conference calls with our commercial clinical lab partners, LabCorp and Quest Diagnostics.

2002 came to an end and there was still no progress, even though supposedly we were simply turning the government's September letter into the necessary CRADA amendments and new clinical trial CRADA. I was troubled, given NCI’s persistent pattern of not communicating or explaining its intentions with regard to my company, that despite countless drafts and revisions, we were unable to finalize the necessary amendments to our research CRADA and to a new, clinical trial CRADA.  What should have taken a couple of weeks at the longest was now stretching out over months. Every time we got close, NCI’s positions would change, and the agency's requirements and expectations would be amended.  Correlogic agreed to virtually everything NCI proposed but there was always something else. The goal posts kept shifting, but I couldn’t find out what was really going on.  And every step along the negotiation path required the approval of Drs. Liotta and Petricoin.

On April 18, 2003, my fears were realized.  Kevin Brand, a straightforward and competent employee in NCI's Office of Technology Transfer, called me and said, "I've got some bad news."  He proceeded to tell me that NCI had decided to "go it alone" on the clinical trial. 

Not only was NCI reversing the position it had agreed to the previous year, it was placing Correlogic in an untenable position with regard to our contracts with our commercial clinical lab partners and our ability to satisfy the government's own contractual deadlines.  When I contacted Dr. Petricoin, he told me I was overreacting, that the September letter made clear the rights Correlogic had to seek regulatory agency approval following the clinical trials.  I wrote a detailed email to NCI’s Technology Transfer Office, copying Dr. Liotta and Dr. Petricoin, explaining my shock at this new development.

A few days later, Kevin Brand sent me an email proposing that rather than entering into the clinical trial CRADA, which we had been negotiating for nearly a year, NCI would agree to only a memorandum of understanding (MOU) that would be appended to our research CRADA.  The MOU expressed some general and specific provisions and would have provided Correlogic with limited ability to participate in designing the clinical trial, developing the underlying analytical systems and seeking approval for a marketable diagnostic product.

Once again, just like the summer of 2002, we had no real choice but to acquiesce to NCI’s evolving position.  The NCI had reversed itself, and we could either accept their latest offer or terminate our relationship with the government.  I kept asking myself, what was really going on?  None of this made sense.  Why was this so complicated?  Why were there so many delays?  After all, Correlogic had complied with every requirement of the prior agreements.

Despite all of the negotiations, two key points were still unresolved.  Who would make the critical decision regarding the selection of the components of the diagnostic system that would be the core of our testing service?  And, how were we supposed to reconcile, on the one hand, NCI’s apparent interests in developing their own testing service through the work being done by their contractor, Science Applications International Corporation, with, on the other hand, the contemplated collaborative clinical trial reflecting benchmarks associated with the patent rights granted to Correlogic under our licensing agreement? 

In late June and early July of 2003, I first learned of one possible explanation for the confusion and delay.  Unbeknownst to me or anyone at Correlogic, Dr. Liotta and Dr. Petricoin had been working as consultants for Biospect, a direct competitor of my company.  And, as I learned only much later, through the Subcommittee’s May 18 hearing, they had already been doing so for seven months.  Also affiliated with Biospect was Dr. Rick Klausner, whom Dr. Liotta and Dr. Petricoin had briefed about the Correlogic-NCI-FDA relationship when he was the director of the National Cancer Institute.  Joining these three at Biospect was Dr. Svetlana Shtrom, the NCI technology transfer specialist who had worked on our original CRADA.

I had also learned that prior to being hired to set up NCI's clinical lab to conduct the hidden pattern tests, Dr. Gordon Whiteley had been an employee of a business run by Dr. Lance Liotta, a company called Immunomatrix.

So, while our negotiations over finalizing our clinical trial CRADA were slowly going nowhere, Dr. Liotta and Dr. Petricoin had become consultants to our competitor, Biospect, and Dr. Shtrom had become an employee.  During our endless discussions with Dr. Liotta and Dr. Petricoin about Correlogic's research and plans for clinical trials, I now realized, I would have had no way of knowing, for example, whether I had been talking to Dr. Liotta, the NCI employee, or Dr. Liotta, the Biospect consultant, or Dr. Liotta, an owner of Immunomatrix, or Dr. Liotta, the employer or former employer of Dr. Whiteley.  And, these are just the relationships that I know about.

I first learned about Biospect in May of 2003 in a conversation, followed by an email, with a biotech industry executive, who described the company as "your new competition," rather than from my government research partners.  Since Dr. Petricoin, Dr. Liotta and I routinely discussed our collective “competition”, I forwarded that email about Biospect to both Dr. Liotta and Dr. Petricoin, but they never responded. And they certainly didn't bother telling me they had been working for the company since December 2002.  Included in the email I forwarded to Drs. Liotta and Petricoin were excerpts from Biospect’s website.  The website language was so close to our own, that even to a casual reader, it would suggest that this was a company engaged in very much the same activities as Correlogic. 

A few weeks later, I began hearing more from industry contacts about Biospect being a competitor, but now I was hearing that Drs. Petricoin and Liotta were affiliated with Biospect.  In early July of 2003, I reached Dr. Petricoin by phone and raised the issue directly.  I told Dr. Petricoin that I was appalled, and that people in the industry were talking about a conflict of interest.  Dr. Petricoin promised to share my concerns with his ethics officer.

By this time - having watched NCI drag out our negotiations for nearly a year for no apparent reason, unilaterally tossing aside existing contractual agreements, and tolerating what appeared on its face to be a serious conflict of interest - I felt I had no choice but to ask one of our advisors to raise the conflicts issue with Dr. Barker.  We were already in the process of attempting to meet with her to discuss all of the other NIH-Correlogic issues.

 I raised my concerns about what was happening to my company with Dr. Barker and other Public Health Service officials in a meeting in September 2003.  While I recognized that Dr. Liotta and Dr. Petricoin would probably not appreciate what I was doing, I believed strongly that my company was entitled to an objective assessment and oversight by NCI officials who were in a better position to act in an impartial manner.  The meeting was relatively short,but was courteous and offered a promise of appropriate guidance from senior NCI management.  I expressed concerns about actions that appeared to be undermining our exclusive license agreement and Dr. Barker indicated she would take all my concerns under advisement.  The issue of potential conflicts of interest per se was not discussed as it appeared that NCI had taken the matter under review.

In October 2003, I received a packet from the National Cancer Institute, proposing, effectively, that we simply abandon all critical rights in our research CRADA that had been negotiated over the preceding year, eliminate all of the terms contained in the September 2002 letter of agreement, and enter into a very narrowly defined clinical trial CRADA.  We were expected to agree to language that directly contravened specific provisions in prior written agreements with the government, including, specifically, our exclusive license agreement.   Notably, it also once again left Correlogic out of the loop with regard to determining the components of the diagnostic testing system.

The Recent Subcommittee Hearings

All of us at Correlogic were disappointed, and surprised, at the testimony given to this subcommittee by Dr. Liotta and Dr. Petricoin.  Their arguments for why no conflict of interest ever existed depend on minimizing Correlogic through three themes.  First, they claim that Correlogic was “just” a “software” company, attempting to draw a distinction between the scope of Correlogic’s business activities and those of Biospect.  In fact, the National Cancer Institute's own documents rebut this assertion.  For example, the National Institutes of Health's Office of Technology Transfer described what we were seeking to create as a "diagnostic apparatus."  In various correspondence between NCI, Correlogic, Dr. Petricoin, and Dr. Liotta, the term most commonly used to describe the system we were building was "a device."  There were many, many meetings devoted to detailed discussions of Correlogic’s focus on the development of a diagnostic testing system.   In fact, the issue of the selection and assembly of all of the components of a diagnostic testing system was, and is, at the very heart of the two year–long clinical trial CRADA negotiations.  This is also the kind of information that companies consider to be among their most closely-held proprietary matters.

Second, they seem to imply that the hidden patterns technology we helped pioneer for the early detection of cancer was something related to what they had been working on for years.  While it is true that Dr. Petricoin and Dr. Liotta had been working on trying to diagnose cancer for years, our approach to cancer diagnostics was something new. In fact, their own actions undermine their argument.  If their assertion were true, why did Dr. Petricoin file a Public Health Service Employee Invention Report which clearly states that something novel had been invented?  Why did Drs. Petricoin and Liotta work with us on filing patents in our collective names?  Why did they continue to publish with us results trumpeting our novel approach?

Third, they diminish Correlogic’s role in the development of the technology on the basis that we lack all the resources and laboratories available to the government or large companies.  No one at my company is suffering under any delusions in this regard.   However, we had an idea that may radically change the way physicians test for cancers and dramatically improve a patient’s chance for early detection and treatment.  Using our unique abilities, our staff and advisors, as well as the specific talents of government specialists and the capabilities of well-established industry players, such as Quest Diagnostics, LabCorp, Charles River Proteomics and Advion Biosciences, we are on the brink of bringing a new testing device to market.  We are hoping to follow in the footsteps of the many innovative small companies that have made a substantial contribution to the public health.  Facilitating this journey is the very purpose behind the Federal Technology Transfer Act -- allowing different entities in the public and private sector to pool their abilities in order to advance medical science.

Mr. Chairman, I hope my testimony today will shed some light on the need for reform of the consulting and outside activities approval process at the Public Health Service.  As the experience of Correlogic demonstrates, the government’s current ethics, licensing and CRADA processes allow for an inappropriate muddle of intellectual property, licensing, and commercialization rights of government agencies, private individuals, corporations, and public employees acting as private sector entrepreneurs.

It is impossible in such a Kafkaesque morass to have any hope of impartiality or basic protection of contractual rights such as patent license agreements and CRADA.  It is simply wrong for a single federal employee, whose salary is paid by taxpayers, to sit in judgment, or influence the outcome of contracts affecting legal rights and obligations when he or she may have private, pecuniary interests.  It is also wrong for one component of an agency to undermine contractual rights granted by the parent agency.  It isn't tolerated anywhere else in government.  It should not be permitted at the National Cancer Institute.

Mr. Chairman, I believe the experience of Correlogic is the exception not the rule.  I remain convinced that the vast majority of employees at FDA, NCI and NIH are upstanding and dedicated public servants who would never put themselves into the kind of ethical quagmire we have experienced.   Moreover, I believe, more than ever, that every American has a vested interest in the success of the kind of cooperative relationships that led to our original contract with the Public Health Service, and I hope that whatever changes the agencies and the Subcommittee feel are warranted do not undermine this critical activity.

I hope the larger ethical issues can be addressed quickly, just as I hope the specific problems facing Correlogic can be resolved expeditiously.   I hope, despite my appearance today, that Correlogic will be allowed to finish the work called for in the various agreements we have signed with the NIH and National Cancer Institute and the Food and Drug Administration.  I hope that the NIH will honor its license agreements.  And, I hope that Correlogic will not be victimized a second time by being shunned by the NIH when we seek future research collaborations.

All we ask for is a level playing field, where a contract signed on one day cannot be discarded the next, at the whim of public employees who may have their own private, business agendas.  The small private investors who have funded Correlogic, and hundreds of other small biotech companies deserve better. The men and women in our public health service deserve better.  And, most importantly, the millions of Americans whose lives could be saved by the earlier and more accurate detection of cancer deserve better.

I would be happy to answer any questions you may have.