Title: Financial Conflict of Interest Policy for Federal Grants and Contracts

Purpose: External sponsorship of research can result in the development of complex

relationships between researchers and the external sponsors who support specific
programs. To assure that our research is conducted with the highest integrity and in
response to regulations issued by the Public Health Service (PHS) and National Science
Foundation (NSF) Rules on Objectivity in Research (Federal Register 42 CFR Part 50
subpart F July 11, 1995; revised regulation 2011), Innovative BioTherapies (IBT) has
developed this policy on Financial Conflict of Interest (FCOI). The intent of this policy
is to promote objectivity in research, to identify and eliminate or manage any possible
threat to the integrity of the research conducted by IBT and to satisfy current Federal
rules for disclosure.

Scope: This policy and associated procedures are immediately applicable to all

sponsored program activity at Innovative BioTherapies carried out by Company
employees, consultants, students, trainees or other agents of the Company. These
procedures will be followed whenever IBT or its employees submit a request for funding
from any external agency, whether it is the PHS, the NSF or another Federal agency.

Policy Statement: Prior to the submission of a research proposal to any federal

agency, all Investigators who plan to participate in, or direct a sponsored research
project must disclose to IBT any significant financial interest which they or members
of their immediate family have in any commercial enterprises that will, in any way,
participate in the sponsored program or that potentially may be affected by the
performance or completion of the sponsored program. Disclosure is accomplished
through the completion of a “Financial Conflict of Interest Disclosure Form” (attachment
A) which is subject to review by the FCOI oversight Committee (FCOIC) of IBT.
Disclosure forms will be completed prior to the submission of a research proposal or at
least annually, and within 30 days of discovering or acquiring a new significant financial
interest (SFI). All FCOI disclosure forms will be reviewed by the FCOIC to determine the
existence of potential for any financial conflicts of interest. In addition, all contracts for
sub recipient awards will include a requirement that the sub recipient has a FCOI policy
and that the sub recipient will report any FCOI to IBT.

Definitions - For purposes of this policy statement the following definitions are


A. Institution: Institution refers to any domestic or foreign, public or private, entity or
organization (excluding a federal agency) that is the direct or primary recipient of NIH
grants or funds or that submits an application/proposal for a research grant.

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B. Investigator - Includes the principal investigator and all staff members who will have
responsibility for the design and conduct of the research as well as any individuals
associated with the reporting of results.

C. Immediate Family - refers to Investigators spouse and dependent children or other
adults who qualify as dependents under the Internal Revenue Code definitions.

D. FCOI Committee (FCOIC) - A committee, comprised of the Chief Operating Officer,
the Controller and the Director of Business Operations, that reviews all Financial Conflict
of Interest Disclosure Forms to identify conflicts of interest as defined below. The
committee will meet on a quarterly basis and when new FCOI Disclosure Forms are
completed by IBT staff or received from a subcontractor.

E. Financial Conflict of Interest – A Financial conflict of interest exists when the
Institution’s FCOIC reasonably determines that a Significant Financial Interest (defined
below) could directly and significantly affect the design, conduct or reporting of NIH-
funded research.

F. Significant Financial Interest is defined by the regulations as:
1. A financial interest consisting of one or more of the following interests of the
investigator (and those of the investigator’s spouse and dependent children) that
reasonable appears to be related to the Investigators institutional responsibilities:
(i) With regard to any publically traded entity a significant financial interest
exists if the value of any remuneration received from the entity in the twelve months
preceding the disclosure and the value of any equity interest in the entity as of the date
of disclosure, when aggregated exceeds $5,000. For the purposes of this definition,
remuneration includes salary and any payment for services not otherwise identified as
salary(e.g. consulting fees, honoraria, paid authorship); equity interest in stock, stock
options or other ownership interest, as determined through reference to public prices
and other reasonable measures of fair market value;
(ii) With regard to any non-publicly traded entity, a significant financial interest
exists if the value of any remunerations from the entity in the twelve months preceding
the disclosure, when aggregated, exceeds $5,000, or when the Investigator (or the
Investigator’s spouse or dependent children) holds any equity interests (e.g. stock, stock
options, or other ownership interest) or
(iii) Intellectual property rights and interests (e.g. patents, copyrights), upon
receipt of income related to such rights and interests)

2. Investigators also must disclose the occurrence of any reimbursed or sponsored
travel (i.e., that which is paid on behalf of the Investigator and not reimbursed to the
Investigator so that the exact monetary value may not be readily available) related to
their institutional responsibilities; provided, however, that this disclosure requirement
does not apply to travel that is reimbursed or sponsored by a federal , state or local
government agency, an institution of higher education as defined at 20 U.S.C. 1001(a),
an academic teaching hospital, medical center, or research institute that is affiliated with
an Institution of higher education. The Institution’s FCOI policy will specify the details
of this disclosure, which will include, at a minimum, the purpose of the trip, the identity
of the sponsor/organizer, the destination, and the duration. In accordance with the
Institution’s FCOI policy, the institutional official(s) will determine if further information is

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needed, including a determination or disclosure of monetary value, in order to determine
whether the travel constitutes a FCOI with the PHS-funded research.

3. The term significant financial interest does not include the following types of
financial interests: salaries, royalties or other remuneration paid by the institution to
the Investigator if the Investigator is currently employed or otherwise appointed by
the Institution, including intellectual property rights assigned to the Institution and
agreements to share in royalties related to such rights; any ownership interest in
the Institution held by the investigator, if the Institution is a commercial or for profit
organization; income from investment vehicles, such as mutual funds and retirements
accounts, as long as the Investigator does not directly control the investment decisions
made in these vehicles; income from seminars, lectures or teaching engagements
sponsored by a federal , state or local government agency an Institution of higher
education as defined at 20 U.S.C. 1001(a), an academic teaching hospital, a medical
center, research institute that is affiliated with an Institution of higher education; or
income from service on advisory committees or review panels for a federal, state or local
government agency an Institution of higher education as defined at 20 U.S.C. 1001(a),
an academic teaching hospital, a medical center, or a research institute that is affiliated
with an Institution of higher education.

Roles and Responsibilities:

Institutions’ Responsibilities - The institution is responsible for complying with the
regulation by developing, communicating and enforcing a written FCOI policy and for the
• Collecting financial disclosures of participating investigators significant financial
interests 1) that would reasonable appear to be affected by the research for
which the NIH funding is sought and 2) in entities whose financial interests
would reasonable appear to be affected by the research
• Determining which disclosures are FCOI
• Managing, reducing or eliminating these FCOI
• Reporting any FCOI to the NIH
• Ensuring investigator training

Investigator Responsibilities: Through implementation of the FCOI regulation by the
institution, a participating Investigator is responsible for complying with the institutions
policies and procedures and for disclosing the required information to the institution.


1. Whenever a request for funding (grant request) is submitted to the NIH the
FCOIC will ensure that all associated investigators have completed a Financial
Conflict of Interest Disclosure Form (“disclosure forms”).
2. Financial Conflict of Interest Disclosure Forms will be completed upon hire; within
30 days of discovery of a change in significant financial interest and at least
3. For each new grant submitted, the committee will identify the subcontractors and
confirm that they have FCOI assurance in their agreements. If language is not in
the Master Agreement an Agreement Addendum will be completed adding the
appropriate language. If new subcontractors are added the FCOIC will ensure
FCOI language is included in the contract. When new grants are submitted a list

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of participants and subcontractors will be kept in the FCOI binder.
4. The FCOIC will review all “disclosure forms” and evaluate whether they contain
any conflict of significant financial interest.
5. If no conflict of significant financial interest is found the “disclosure forms” will be
filed in the FCOI binder. For negative finding no further review is required.
6. If a Financial Conflict of Interest is identified it will be evaluated by the FCOIC
who will work with the principal investigator or researcher to prepare a resolution
plan that will reduce, minimize or eliminate the conflict of interest. The resolution
plan must be approved by the FCOIC before any expenditure’s are incurred
against the federal grant.
7. If the FCOIC is unable to satisfactorily manage a financial conflict of interest the
FCOIC will notify the appropriate official at the funding agency as required by
agency regulations.
8. In the event circumstances change regarding a significant financial interest of an
investigator engaged in a sponsored project, the investigator must notify IBT’s
FCOIC as soon as the change becomes known and a revised disclosure form
must be completed. The revised form will undergo the same review process
as the original form. The new disclosure must be completed within 30 days of
9. IBT will maintain the confidentiality of the disclosure statements except as
required by federal law or agency award terms. In no case will a disclosure
statement be released to a federal agency without prior notification to the
affected individual.

Federal Compliance and Record Retention:

1. Upon hire and on an annual basis, all IBT employees shall be provided with a
copy of this policy and be required to complete and sign the disclosure form -
Attachment A. All completed forms as well as all other conflict information shall
be provided to and reviewed by the FCOIC.
2. All completed forms shall be retained for a period of not less than 3 years after
date of submission of the final expenditures report.
3. Violations:
a. If the FCOIC has reasonable cause to believe a member has failed
to disclose actual or possible conflicts of interest, he/she shall inform
the member of the basis for such belief and afford the member and
opportunity to explain the alleged failure to disclose.
b. If, after hearing the members’ response and after making further
investigation as warranted by the circumstances, the FCOIC determines
the member has failed to disclose an actual or possible conflict of
interest, the Committee will report the failure to the COO who shall
take appropriate disciplinary and corrective action up to and including
4. Training on the Financial Conflict of Interest Regulations and IBT policy will be
a. Upon hire
b. When the IBT policy is changed such that it affects the requirements of
the investigator

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c. If an investigator is not in compliance with the policy
d. No less than every 4 years