UCSD doctor resigns amid questions about undisclosed Chinese businesses

A renowned UCSD eye doctor who is part of a Chinese recruitment program under FBI scrutiny has resigned amid inewsource’s questions about his foreign government affiliations and businesses.

inewsource has learned that Kang Zhang, the former chief of eye genetics at the UCSD Shiley Eye Institute, is a member of the Thousand Talents Program, which the FBI says incentivizes scientists to illegally take intellectual property developed at U.S. universities to China. The purpose, authorities say, is to advance the country’s “scientific, economic, and military development goals.”

Over the past few years U.S. intelligence agencies have grown increasingly concerned by foreign government efforts to influence and incentivize American researchers to take intellectual property abroad.

Authorities and universities across the country are beginning to crack down on academics they believe have participated in illicit or illegal actions.

Our reporting has also uncovered Zhang is the founder and primary shareholder of a publicly traded Chinese biotechnology company that specializes in the same work he performed at the University of California San Diego.

He has not disclosed this and his other Chinese pharmaceutical businesses to the U.S. government or UCSD on forms required by university policy and federal regulations. Our reporting has not uncovered any accusation that Zhang illegally took intellectual property abroad.

Zhang resigned from the university Thursday after inewsource posed questions to his attorney and UCSD about the doctor’s connections to the Thousand Talents Program and undisclosed Chinese businesses.

This portrait of Zhang exists within Chinese business filings, archived websites in Mandarin, real estate documents and divorce records.

Zhang’s attorney, Leo Cunningham, told inewsource in an email on Tuesday his client “was never asked to conceal his involvement with the Thousand Talents program; he never did conceal his involvement; there was nothing improper about his involvement; and he had no reason to conceal his involvement.”

Most if not all of Zhang’s companies “have been long known” to the university, Cunningham said, though he provided no evidence. He said in an email Friday that Zhang’s reasons for resigning “are between the doctor and the University.”

Dr. Ross McKinney, the chief scientific officer at the Association of American Medical Colleges, said Zhang’s lack of disclosures is troubling.

“Not telling it is lying, pure and simple, and is unconscionable,” said McKinney, adding “You have the exact paradigmatic case of what can and has gone wrong.”

After an inewsource investigation in April found Zhang put research participants in harm’s way for years, a UCSD spokeswoman said Zhang was “on leave” and the university was reviewing his activities.

UCSD officials have declined, despite repeated requests, to say whether they’ve known of Zhang’s business interests overseas. 

They also wouldn’t say whether they received a letter from the National Institutes of Health recommending an investigation into Zhang, who has brought in more than $15 million in NIH grants over his career – about $10 million of it during his 11 years at UCSD – for research on eye disease and genetics.

As of June, the NIH’s Office of Extramural Research had notified more than 60 universities and grantee institutions over concerns of undisclosed conflicts of interest and affiliations among researchers. The letters have prompted grant refunds, terminations, suspensions and FBI involvement.

“Those letters are sent out where we have concerns that there may be problems with noncompliance – noncompliance meaning that there was not proper disclosure of important information to us,” Michael Lauer, an NIH deputy director, told inewsource in June.

The NIH is the largest public funder of biomedical research in the world, investing around $39 billion annually. Lauer helps oversee its scientific integrity in research funding as well as grant compliance and public accountability. He said the agency has seen significant conflicts of interest where researchers who received NIH funding for their projects also have a financial stake in foreign companies developing the same technologies.

“In some cases, these are startup companies that they themselves founded,” Lauer said.

It is not illegal or uncommon for scientists to own businesses or be involved in talent recruitment programs. According to a recent study, nearly 1,000 government and private industry employees have taken Thousand Talents money. 

Cunningham said Zhang declined an offer to participate in the program full time and did not accept payment from the Chinese government.

inewsource has identified a dozen other members of the Thousand Talents Program at research institutions in San Diego but has not yet confirmed details about their activities.

Critics of the U.S. crackdown decry a new McCarthyism.

Michael Zigmond, an ethics expert and retired professor of neurology at the University of Pittsburgh School of Medicine, is one of them. Zigmond lectured at China’s Fudan University for more than 15 years, has many colleagues in the U.S. who came from China, and believes this is all a “misdirected concern” — a way of targeting China that will backfire.

Inevitably, he said, universities will lose students, researchers and funding, and patients will suffer.

“Certainly countries spy on each other, and the United States does its share of spying,” he said.

“But to suggest that biomedical science is a target area for this kind of thing, I think, is crazy. We all report our results in annual progress reports, at professional meetings, and in published papers. Stealing secrets is the last thing from our minds,” Zigmond said.

But the NIH and FBI have growing concerns.

In April, FBI Director Christopher Wray summarized the agency’s viewpoint to the Council on Foreign Relations, a nonpartisan think tank.

“More than ever, the adversaries’ targets are our nation’s assets — our information and ideas, our innovation, our research and development, our technology,” Wray said during his speech.

“And no country poses a broader, more severe intelligence collection threat than China,” he said.

Zhang’s life abroad

Kang Zhang was born near the start of China’s Cultural Revolution in 1963, a period when scientists and other intellectuals were condemned as capitalistic. Universities were shuttered, scientific training ceased and the brightest minds were sent to the countryside “to learn the value of political virtue.”

That revolution, according to the Chinese Communist Party, “was responsible for the most severe setback and the heaviest losses suffered by the Party, the state and the people since the founding of the People’s Republic.”

To reverse the damage, China sent scientists to train and study overseas starting in the 1980s. Many didn’t return, so the party created talent recruitment programs to bring them back through financial incentives. 

The most successful has been the Thousand Talents Program, which began in 2008. The goal was to return 2,000 high-quality academics to China over the next 10 years by offering competitive salaries, state-of-the-art facilities, honorary titles and a one-time payment of around $145,000.

It worked. Recruitment now exceeds 7,000 members.

McKinney – talking about the program and not about Zhang – said, “It appears that the Thousand Talents Program would hire faculty members for big blocks of time – six months was fairly typical – and tell the faculty member not to tell their host institution.” He added, “There’s very concrete evidence that, basically, the faculty were being instructed to lie – and did lie.”

Zhang was selected among the third batch of recruits in 2010, two years into his job at UCSD, where he was the founding director of the Institute for Genomic Medicine. After his recruitment, Chinese news releases and interviews involving Zhang often included his Thousand Talents affiliation.

Around that time, Zhang created a pharmaceutical research and development company called CalCyte Therapeutics. San Diego philanthropist Richard Hertzberg helped fund the company shortly after its formation and later became its president.

CalCyte applied for and received two NIH small-business grants worth nearly half a million dollars to develop treatments for age-related macular degeneration – the leading cause of vision loss for those 50 and older and a primary focus of Zhang’s work.

In 2010, Hertzberg helped fund a conference in translational medicine in Shenzhen, China, in collaboration with UCSD and Peking University. Zhang was among the event’s three chairmen, and UCSD Vice Chancellor for Health Sciences Dr. David Brenner was one of the honored chairmen.

“That was the world at its best – knowledgeable people in conversation trying to help all of mankind,” Hertzberg told inewsource, “and that conference never would have happened without Kang Zhang and his hard work.

“I hope that we have not seen the last of that kind of conference,” he said.

Though CalCyte contracted with UCSD for its research, Zhang didn’t mention the company in his conflict of interest disclosures with UCSD’s Shiley Eye Institute. In fact, Shiley never collected disclosures from Zhang despite university and federal requirements.

On Tuesday, before Zhang resigned, his lawyer told inewsource Zhang has discussed disclosure expectations “at length” with UCSD.

“His present understanding of those expectations is different from his prior understanding, and his disclosures would be different going forward,” Cunningham said. “However, even if he had disclosed the relationships you have identified, that should not have made any difference in the conduct of UCSD or the awarding of grants.”

In 2012, with CalCyte’s grant-funded work complete, Zhang founded the publicly traded Guangzhou Kangrui Biological Pharmaceutical Technology Co. in China – KangRui Bio for short – with a $1.5 million investment.

Today, KangRui Bio provides its customers with “research in ophthalmology and genetics, including limbal stem cell therapy, new drug development for ophthalmology, research and development of kits for genetic testing related to ophthalmology, and related technology transfer, service and reagent sales.” 

According to KangRui’s website, which was taken offline but archived, Zhang is the driving force behind the enterprise, honored by the Chinese minister of health as “the elite of our nation.“

KangRui Bio’s 2017 semiannual report declared $11.7 million in assets, with Zhang owning 50% of the company’s shares.

Zhang’s lawyer said the doctor’s involvement in KangRui was publicly disclosed – in Mandarin business filings.

Hertzberg told inewsource, “I have funded Dr. Zhang’s research work at UCSD for nearly a decade. I believe that as a doctor and genetic scientist, his research objective was always to advance science in the pursuit of knowledge to cure macular degeneration and other afflictions.”

However, he added, “Prior to receiving your information, I had no knowledge of Dr. Zhang’s involvement in any Chinese corporation.”

A national snapshot

Since last year, scientists at Texas’ MD Anderson Cancer Center, Atlanta’s Emory University, New Mexico’s Los Alamos National Laboratory and the National Oceanic and Atmospheric Administration have resigned, been fired and even arrested as part of the federal investigation into foreign influence in science. 

“There have been other occasions, but I’m not in a position to share that with you,” said Lauer, adding that the NIH has referred criminal concerns to the FBI and other federal agencies. An important point, he said, is that authorities are focusing on conduct and not ethnicities.

To that point, the U.S. Department of Energy in June banned employees from participating in foreign talent recruitment programs involving China, Iran, North Korea and Russia due to national security interests.

The turmoil has prompted China to remove the names of Thousand Talents affiliates from government and institutional websites and warn officials against mentioning the program by name. 

As investigations ramp up, those involved must balance due diligence against inciting xenophobia toward the more than 1.4 million international scholars across U.S. college campuses – the vast majority of whom the FBI says pose no threat and have significantly advanced their fields.

“The whole thing is an incredible shame,” McKinney said. “We have had really good collaborations, and this is a poisoning of the trust that will make that harder, in spite of the value that institutions and people have gotten from those collaborations.”

McKinney came to the Association of American Medical Colleges in 2016 from Duke University, which suffered its own high-profile case of alleged intellectual property theft involving a former Chinese student years ago. 

In retrospect, McKinney said he saw signs he didn’t recognize as a pattern during his time at Duke – faculty with “extended engagements overseas,” which may have been completely innocent but left him to “ponder and wonder.”

His association’s membership now includes more than 600 medical schools and centers, major teaching hospitals and Veterans Affairs systems. The association is teaching its members to be alert to systemic efforts to recruit or influence their faculty.

“I don’t think they closed their eyes because they didn’t want to know. I don’t think that they actually looked,” McKinney said.

He added that only after universities began investigating their own researchers did they discover “the NIH and the FBI are not exaggerating – there really is systematic dishonesty.”

Cross continents

Zhang was continuing his eye studies on human subjects at UCSD during KangRui Bio’s formation, though his work proved problematic time and again.

A university institutional review board, which is supposed to protect human research subjects, suspended enrollment in all 11 of Zhang’s studies in 2012 after receiving an anonymous complaint that he had committed multiple ethical, compliance and integrity violations in a study that enrolled more than 16,000 participants. 

The investigation that followed found “extensive and pervasive” problems with Zhang’s work, but the UCSD review board allowed him to resume his research. Then, in 2016, the board again suspended enrollment in his studies for “significant regulatory and study noncompliance” after Zhang received a visit from the U.S. Food and Drug Administration. 

That 2016 inspection found major problems with Zhang’s study, including enrolling ineligible subjects, missing drug records and jeopardizing subject safety and welfare. One of Zhang’s research subjects complained to UCSD that the doctor poked a hole in her eye during an injection because he was in a rush to catch a flight to China.

The FDA inspector noted that Zhang told her it was a bad time to conduct the inspection because it was “interfering with his vacation plans to China.” 

UCSD stopped Zhang from serving as the lead scientist on human research in April 2017 but still allowed him to continue to apply for federal grants, publish in medical journals and train students until being suspended in April and resigning in July.

In the years between KangRui Bio’s formation and his 2017 reprimand, Zhang was establishing subsidiaries and additional companies in the U.S., China and the Cayman Islands:

• YouHealth Biotech was registered to Zhang’s La Jolla home in April 2015. Lianghong Zheng is the company’s CEO, chief financial officer and secretary. Zheng is a researcher at China’s Peking University, an executive at KangRui, and a co-author and patent holder with Zhang. YouHealth Biotech holds multiple patents with the University of California Board of Regents.
• YouHealth EyeTech is a wholly owned KangRui subsidiary created in February 2016. The company signed a $5 million deal soon after with Acucela, a U.S. clinical stage ophthalmology company that specializes in identifying and developing drugs to treat eye disease. Zhang has worked as a consultant for Acucela and sits on its advisory board.
• YouHealth AI formed in January 2018, registered to Zhang’s Del Mar home address. Its CEO is Yongtai Hou, chairman of the Shanghai Haohai Biotechnology Co. In a paper Zhang authored for the journal Cell, YouHealth AI was listed as having participated in the work. However, Zhang did not disclose his affiliation with the company even though his co-authors on the same article did.
• YouHealth Oncotech holds a patent with the UC Board of Regents for a method and system for determining cancer status, with Zhang as an inventor. It was formed in June 2016, but as a Cayman Island company its officers’ names are not public. A company with a similar name, YouHealth Ocutech, was registered in 2016 in Delaware, which also allows officers’ names to be kept private.

Mandarin searches through Google — along with China’s patent, university and government websites — show Zhang is involved in more biopharmaceutical companies abroad. Among them are Guangzhou Huibairui Biomedical Technology Co. and Guangzhou Youze Biological Pharmaceutical Technology Co.

inewsource could find no record Zhang disclosed these business interests in any UCSD document. 

Philanthropist Hertzberg and his wife have provided major funding to UCSD for more than a decade and will continue to do so, he said.

“We believe that UCSD and institutions like it are the best bet we all have for making positive impacts on the big issues confronting mankind and the environment.”

But he said he and his wife “expect and rely upon UCSD to do its best to ensure that the programs are carried out ethically and in compliance with laws and regulations.”

More than a quarter of KangRui Bio’s shares are owned by Zhang’s wife, Rui Hou. She is KangRui’s general manager and a former teacher. She also works as the director or general manager of several other Zhang companies.

All told, the two and their affiliated corporations hold numerous patents across more than a dozen countries for stem cell cultivation, cancer diagnosis and aging modulation. 

“Dr. Zhang’s China patents were known to UCSD, had no commercial value, were not based on research that was the subject of an NIH grant, and neither they, nor anything else he did, constituted a transfer of intellectual property to China,” said Cunningham, the doctor’s attorney.

Zhang’s companies were involved and cited in research that led to at least 12 articles he published in scientific journals, including Nature, Cell and Proceedings of the National Academy of Sciences. 

Zhang did not disclose his relationship with these companies, nor did he declare any conflicts of interest, in any of those publications.

inewsource intern Lauren J. Mapp contributed to this report.

Correction: July 7, 2019
This story has been updated to correct that it was the National Institutes of Health’s Office of Extramural Research that notified more than 60 universities and grantee institutions over concerns of undisclosed conflicts of interest and affiliations among researchers.