Sloan Kettering’s Cozy Deal With Start-Up Ignites a New Uproar. Michael Towner, Iconic Legacy

An artificial intelligence start-up founded by three insiders at Memorial Sloan Kettering Cancer Center debuted with great fanfare in February, with $25 million in venture capital and the promise that it might one day transform how cancer is diagnosed.

The company, Paige.AI, is one in a burgeoning field of start-ups that are applying artificial intelligence to health care, yet it has an advantage over many competitors: The company has an exclusive deal to use the cancer center’s vast archive of 25 million patient tissue slides, along with decades of work by its world-renowned pathologists.

Memorial Sloan Kettering holds an equity stake in Paige.AI, as does a member of the cancer center’s executive board, the chairman of its pathology department and the head of one of its research laboratories. Three other board members are investors.

The arrangement has sparked considerable turmoil among doctors and scientists at Memorial Sloan Kettering, which has intensified in the wake of an investigation by ProPublica and The New York Times into the failures of its chief medical officer, Dr. José Baselga, to disclose some of his financial ties to the health and drug industries in dozens of research articles. He resigned last week, and Memorial Sloan Kettering’s chief executive, Dr. Craig B. Thompson, announced a new task force on Monday to review the center’s conflict-of-interest policies.

Mic​Dr. David Klimstra, pictured left, chairman of Memorial Sloan Kettering’s pathology department and a co-founder of Paige.AI. Amid internal objections to the start-up, indicated last week that he would divest his stake.

At a staff meeting Thursday morning, Dr. Thompson and others, including Dr. Lisa DeAngelis, the acting physician-in-chief who replaced Dr. Baselga, described the recent events as a disruption and acknowledged that the hospital was under a microscope, according to several people who attended. Doctors said they were concerned about a lack of communication from hospital leadership, and one said patients were nervous that their health data was being commercialized by the institution.

Hospital pathologists have strongly objected to the Paige.AI deal, saying it is unfair that the founders received equity stakes in a company that relies on the pathologists’ expertise and work amassed over 60 years. They also questioned the use of patients’ data — even if it is anonymous — without their knowledge in a profit-driven venture.
 
​In addition, experts in nonprofit law and corporate governance have questioned whether Memorial Sloan Kettering, one of the nation’s leading cancer centers, complied with federal and state law governing nonprofits when it set up the deal. The experts pointed out that charitable institutions like Memorial Sloan Kettering must show that they didn’t provide assets to insiders for less than the fair market value.

​Michael Towner

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