The future of a tuberculosis vaccine and research into other neglected diseases is in limbo after a Seattle institute abruptly laid off about one-third of its researchers, citing a financial crisis.
The sudden staff cutbacks late last month at the Infectious Disease Research Institute has baffled many of the scientists — who were also working on a vaccine for leprosy and research into tropical diseases.
The layoffs on the day before Thanksgiving also put in jeopardy federal grants for the scientists’ work. This fall, the National Institutes of Health awarded a contract of up to $45 million to the nonprofit and other collaborating institutions to study the body’s immune response to tuberculosis over several years.
Developing an effective vaccine against tuberculosis, the world’s deadliest infectious disease, has been elusive for decades. The only existing vaccine is decades old and is not effective in preventing the most common form of tuberculosis infection, in the lungs. A new vaccine from GlaxoSmithKline has proved promising in early clinical trials, but public health experts said there was a need for a healthy pipeline of additional vaccines to fight the disease, which kills about 1.5 million a year.
The 26-year-old Seattle research institute has often struggled financially. It has scrambled to close a gap between research grants from federal and private sources and its overhead costs, and has operated at a loss for years. The founder, Steven G. Reed, stepped down earlier this year from his role as chief executive after years of turmoil in which executives and board members resigned over their dissatisfaction with his leadership.
Dr. Reed has defended his work, and is now rushing to raise money to resuscitate the organization.
In an interview, the institute’s acting chief executive, Dr. Corey Casper, said he inherited the crisis when he took the job in February. He said he had tried for months to save the programs, and had kept senior scientists abreast of the nonprofit’s status. Thirty-three of the institute’s 108 employees, who are mainly researchers, were let go.
“These were not easy decisions, but they were decisions that had to be made for the continued existence of the organization,” Dr. Casper said.
Research into drugs and vaccines is notoriously risky, and biotechs often shut down when a clinical trial fails or investors do not materialize. But scientists and other experts in public health said the sudden end to the programs was unusual.
“I find it bizarre,” said Dr. Mario C. Raviglione, a global health expert at the University of Milan who led the World Health Organization’s global tuberculosis program from 2003 to 2017. “I’ve never heard about something like this.”
Dr. Mel Spigelman, president and chief executive of the nonprofit TB Alliance, described the landscape for tuberculosis research as “precarious.” He said that organizations face an annual shortfall of about $1.5 billion to finance new drugs, tests and vaccines for the disease, a bacterial infection that mainly attacks the lungs and can lie dormant for years. “New investments are urgently needed to build on the progress we’ve seen to date.”
The potential success of the institute’s TB vaccine is unknown. Early-stage clinical trials have begun, and others are planned in a number of countries.
Dr. Emily Erbelding, the director of the division of the N.I.H. that oversees the Seattle institute’s tuberculosis contract, said that her office had been in “near daily” communication to sort out how the research could continue, and that it would depend on what happens to the institute in the next few weeks.
Several researchers are trying to relocate their work to new institutions. The scientists said they had not been told whether the institute, which owns the rights to the vaccines and other experimental products, would allow them to continue their work.
“We’re a little bit in the dark right now as to how we are going to do this,” said Tanya Parish, who oversaw the institute’s research into new treatments for tuberculosis. Her research staff was laid off in November, and she said she has been told her own job will end later this month. “It sets us back at least six months,” she said. “We have a lot of ongoing work that’s been disrupted, and some work will have to be redone.”
Dr. Casper said that the institute was also speaking to research institutions to relocate the work, and was also looking to license technology like the vaccines to ensure the research could continue elsewhere. “We’ve made it very, very transparent to all of our investigators in our departmental programs that we want to do everything we can to enable their work,” he said.
Since its founding in 1993, the research institute has positioned itself as a nonprofit that operates like a biotech company, with a mission to bring new products to market for neglected diseases like tuberculosis, leprosy and leishmaniasis, a parasitic disease found mainly in the tropics. Early in the institute’s history, Dr. Reed and Rhea Coler, the head of the tuberculosis vaccine program, played a role in the development of the GlaxoSmithKline vaccine. The institute also focuses on developing adjuvants, which are used in some vaccines to stimulate the body’s immune response.
But like many nonprofits, it has struggled to stay afloat. With revenues of $23.6 million in 2017, it operated at a loss of about $4 million in 2017 and 2016, according to Internal Revenue Service filings. In 2018, its filings showed, it operated at a smaller loss — about $47,000.
Former executives and board members at the institute pinned much of the blame on Dr. Reed, whom they described as a passionate scientist but expressed concerns about his financial stewardship and potential conflicts of interest, including ties to for-profit companies to which the institute had licensed some of its technology.
In the spring of 2018, the institute’s chief financial officer, general counsel, board chairman and two of its other board members resigned.
“One of the concerns was that nobody really seemed to understand how the money was coming in and how it was being spent,” said R. Douglas Bradley, the general counsel who stepped down. He said he did not see evidence that Dr. Reed misused funds. “There was a moment where it was just clear that his behaviors were not going to change.”
Dr. Reed said he never did anything improper and acknowledged that keeping the organization going had “been a challenge for many years, but we’ve always met the challenges.”
Staff members also pointed to the board’s decision to award Dr. Casper a new contract, a copy of which was provided to The New York Times. It shows that the board offered Dr. Casper a four-year deal at an annual salary of $405,000. The contract also included a $20,000 bonus for this year.
Dr. Casper said he was deferring the raise from his current pay of $365,000 and would not get a bonus this year. In defending the increase, however, he said: “It’s very challenging to find someone who’d be willing to take the risk.”
Dr. Reed received about $318,000 in 2018 for 32 hours a week, according to the institute’s I.R.S. filings.
Some researchers questioned the reasons for ending their programs since grants covered their expenses and some administrative costs. Malcolm Duthie, a senior scientist who was told his job would end later this month, was developing a leprosy vaccine financed through grants coordinated by the American Leprosy Missions. “We have funded programs,” he said. “And we’ve been given very short notice, which basically handcuffs us in terms of being able to take these programs somewhere else.”
Dr. Casper said the grants did not cover all the overhead costs.
If the institute survives, it will focus on three main areas — its adjuvants, its manufacturing facility and a technology known as RNA vaccines that are also being pursued by for-profit companies, Dr. Casper said.
The institute’s board and leadership are vetting potential buyers or investors. Kari Stoever, who was on the board from 2016 to 2018, said she stepped down because the board did not act quickly enough to change the institute’s leadership, including Dr. Reed. The institute had trouble staying competitive.
Financing tuberculosis vaccines had shrunk in recent years to better coordinate different funding groups, said Ms. Stoever, who has worked for several public health nonprofits.
Of the TB vaccine’s future, she said: “Somebody will take it if the science is good. They’re not going to let an innovation like a new TB vaccine disappear off the planet.”
Sheelagh McNeill contributed reporting.