Two longtime Dana-Farber Cancer Institute trustees have resigned, and the Boston-based institute will no longer permit board member investment in hospital startups after a recent Boston Globe investigation revealed that some trustees had opportunities for personal enrichment through investing in hospital-grounded startups.
While the role of trustee comes with the responsibility of hiring the CEO, organizing fundraisers as well as donating, it also provides direct access to top physicians and scientists. This contact may have positioned some trustees to profit, according to the investigation.
The newspaper's investigation revealed that at least nine trustees have leadership positions in venture capital and investment firms that hold shares in startups grounded in Dana-Farber research. One trustee, entrepreneur and venture capitalist, Marc Cohen, launched five startups grounded in Dana-Farber research between 2008 and 2021. For one of these startups, C4 Therapeutics, Mr. Cohen's shares had increased by approximately $85 million as of September. After the recent policy change, Mr. Cohen resigned from the board and pivoted to focusing on advising a Dana-Farber venture philanthropy fund instead.
Some support the practice of trustees investing in hospital startups, arguing that the individuals are making a financial gamble in support for the institute.
"When I invest in these companies I don't ask myself how much money I can make. I'm asking myself how much money I can lose? How much money can I lose to support this project?" Malcom Salter, a trustee of Dana-Farber and investor in C4 Therapeutics, told The Boston Globe. Mr. Salter also resigned this week after the policy change.
Dana-Farber is the only hospital the Globe contacted that explicitly supported trustees who invest in its startups. Cedars-Sinai Medical Center in Los Angeles and Memorial Sloan Kettering Cancer Center in New York City, on the other hand, prohibit trustees from investing in their companies. One unidentified trustee told The Boston Globe, "This has always been controversial. Trustees are not supposed to gain anything from being a trustee."
On Oct. 6, Dana-Farber board leaders wrote to the Globe announcing the change in its rules and rejecting any allegations that trustees put potential gains above their safeguarding duty to patients. Now, all trustees are barred from serving as board members, executives or investing in companies created to primarily license Dana-Farber technology.
"We continue to refine our approach to ensure that when someone with cancer walks through Dana-Farber's doors, they know they can trust that the entire organization is completely focused on helping them achieve their best possible outcome," wrote trustee Chair Josh Bekenstein and Vice Chair Richard Lubin.