MINUTES

Kansas Bioscience Authority
Investment Committee

December 12, 2008
1:30 – 3:30 PM

Call to Order: A quorum being present, the meeting was called to order at 1:30 p.m. by Chairman Dr. Smilor. Additional Directors participating were Angela Kreps, Sandra Lawrence, Ed McKechnie and Bill Sanford. The KBA staff in attendance was Tom Thornton, Janice Katterhenry, Jim Mitchell, Chuck Willis, Pam Fellin, and Marsh LoScalzo. Representing legal counsel was Doug Anning of the Polsinelli law firm. Additional guests were Matt McClorey of LRTC, and Carey Novak and Jeff Reene with Kansas University.

Review of Minutes Dr. Smilor addressed the minutes of the previous meeting of the Investment Committee Meeting and asked whether there were any changes. Dr. Smilor noted a few minor changes. Mr. McKechnie made a motion to approve the minutes of the November 6, 2008 committee meeting, Ms. Lawrence seconded the motion. The motion passed unanimously.

Dr. Smilor amended the Agenda to first discuss BioTarget and Vasogenix and then go into executive session. Upon Return to Open Session the discussion would cover the Facilities Policy.

BioTarget: Dr. Mitchell gave an overview of the company and their proposal. BioTarget was formed to commercialize an advanced innovation in biomaterial encapsulation technology, which can be used to significantly improve the sensitivity, functionality, efficiency, and cost of in vitro diagnostic testing, provide a flexible and controllable system for targeted in vivo imaging contrast agents and provide an improvement in delivery of traditional small molecules as well as biologicals.

They have requested a total of $3,277.208 in funding from the KBA in the form of Expansion and Attraction ($1,227,208) and through the R&D Voucher program ($2,000,000 over two years). Expansion and Attraction funds are to be used to support new hires in Kansas, lease of incubator space and purchase of equipment to allow conduct of experiments related to their company plans.

The KBA staff recommended investing $1MM over a six-year period to support the relocation of BioTarget to Kansas and investing $2MM over two years in support of the R&D Voucher request.

After thorough discussion, the committee decided to review this proposal again at the January Investment meeting with additional information to be provided by the staff.

VasoGenix Pharmaceutical: They have requested an additional investment of $400,000 in funding through the KBA Matching Fund to support the pre-clinical efforts of VGX. It is further recommended that the $400,000 be provided in three individual convertible notes, contingent upon VGX securing matching funds of equivalent amounts from a third party and acceptability of the terms of the agreements by the KBA.

A motion was made by Mr. Sanford to recommend to the board the matching of funds to VasoGenix. Ms. Lawrence seconded the motion. The motion passed unanimously.

Executive Session: Dr. Smilor made a motion to go into executive session to review, consider and discuss potential investment information of a proprietary nature. Mr. Sanford seconded, and the motion passed unanimously. Mr. Anning commented that he would be providing attorney privileged advice.

WHEREAS, the Investment Committee of the Kansas Bioscience Authority (the “Authority”) in this meeting of December 12 and records related to the financial condition and financial operations of the Authority and how such financial information and records relate to the business and operational strategies of the Authority; (ii) operational information and records related to the marketing and operations of the Authority and how such information and records relate to the marketing, business, and operational strategies of the Authority; and (iii) matters with counsel for the Authority that would be subject to the attorney-client privilege; and

WHEREAS, pursuant to Kansas law, in particular the Kansas Bioscience Authority Act, as codified in K.S.A. §74-99b01 to §74-99b89 and elsewhere (the “Act”), the Authority may discuss and consider the following in executive session when, in the opinion of the Board, disclosure of such would be harmful to the competitive position of the Authority: (i) plans that could affect the value of property, real or personal, owned or desirable for ownership by the Authority; (ii) the condition, acquisition, use, or disposition of real or personal property, and (iii) contracts for bioscience research, bioscience product manufacturing or commercialization, construction and renovation of bioscience facilities, and marketing or operational strategies; and

WHEREAS, pursuant to the Act, records of the Authority shall not be subject to the provisions of the Kansas Open Records Act, when in the opinion of the Board, the disclosure of the information in the records would be harmful to the competitive position of the Authority, provided those records include, but are not limited to (i) proprietary information gathered by or in the possession of the Authority from third parties pursuant to a promise of confidentiality; (ii) contract cost estimates prepared for confidential use in awarding contracts for research development, construction, renovation, commercialization, or the purchase of goods or services; or (iii) data, records, or information of a proprietary nature produced or collected by or for the Authority, its employees, officers, or members of the board; financial statements not publicly available that may be filed with the Authority from third parties; the identity, accounts, or account

status of any customer of the Authority; consulting or other reports paid for by the Authority to assist the Authority in connection with its strategic planning and goals; and the determination of marketing and operational strategies; and

RESOLVED, it is the opinion of the Board that the disclosure of such items would be harmful to the competitive position of the Authority, and therefore the Board declares that its review, consideration, and discussion of such financial and operational information and records at this Committee meeting shall occur in executive session; and

FURTHER RESOLVED, it is the opinion of the Board that the disclosure of such records and information would be harmful to the competitive position of the Authority, and therefore, such records and information to be reviewed at this Committee meeting shall not be subject to the provisions of the Kansas Open Records Act; and

FURTHER RESOLVED, Dr. Smilor stated that the committee would enter Executive Session at 1:47 pm. for 30 minutes concluding at 2:07 p.m. (CDT) pursuant to the resolution, not to exceed one hour; and

FURTHER RESOLVED, that the following persons shall remain and participate in the executive session of the Committee inasmuch as their involvement is important to the Committee’s review, consideration, and discussion: Directors, Dr. Mitchell, Tom Thornton, Jan Katterhenry, Chuck Willis and Doug Anning.

Return to Open Session:

Mr.Sanford made a motion to return to open session at 2:06 pm. The motion was seconded by Ms. Kreps and was passed unanimously.

Ms. Lawrence made a motion to recommend to the board the two Phase II matching fund requests to Edenspace. Ms. Kreps seconded. Motion passed unanimously. Dr. Mitchell will follow up with Edenspace regarding the funding of these proposals.

Facilities Related Investment: Dr. Mitchell commented that the KBA staff was looking for guidance from the committee with respect to facilities investments. He gave an overview of the four categories of facilities that the KBA staff has considered in the determination of a recommendation for facilities investments. These are 1) facilities which are or will be owned and operated by academic institutions, 2) incubators including office and/or laboratories, 3) facilities related to Kansas Bioscience Innovation Centers and 4) facilities directly associated with expansion of in-state companies or attraction of companies currently residing out of the state.

After thorough committee discussion the investment committee concluded that a policy is not necessary regarding facilities investments and each investment, in all categories, would be considered on a case by case basis.

Adjournment: There being no further business a motion was made by Mr. McKechnie to adjourn. The motion was seconded by Mr. Kreps and passed unanimously. The meeting adjourned at 2:24 p.m.