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July 20, 2009
2-4:30 p.m.
Board of Directors: Overland Park
MINUTES
Kansas Bioscience Authority
Board of Directors
Annual Meeting
Monday, July 20, 2009
2:00 p.m.
Sheraton Overland Park Hotel
Overland Park, Kansas
Call to Order: A quorum being present, a meeting of the Board of Directors of the Kansas Bioscience Authority was called to order by Chairwoman Sandra Lawrence at the Sheraton Overland Park Hotel, Overland Park, Kansas, at 2:29 p.m. Other Directors present included Governor John Carlin, Dr. Ray Smilor, Angela Kreps, Bill Sanford (by phone), Reggie Robinson (by phone), and Bill Thornton. Advisory Committee members present included Barbara Atkinson, Chancellor, Kansas University; Don Beggs, President, Wichita State University; and Kirk Schulz, President, Kansas State University. Others attending the meeting from KBA staff were Tom Thornton, Jan Katterhenry, Chad Bettes, Mary Cummings, Lindsay Holwick, Brad Kemp, Terry Osborn, Cary Nourie, Nancy Ruf, Ruth Saale, David Vranicar, and Marsh LoScalzo. Jeff Ellis, legal counsel from Lathrop & Gage, was also in attendance, as were several members of the public.
Approval of Minutes: Chairwoman Lawrence asked for a motion to approve the minutes of the Board meetings for June 25-26, 2009. Upon motion by Dr. Smilor and seconded by Governor Carlin, the minutes were unanimously approved as presented.
Nominating Committee Report: Chairwoman Lawrence then asked for a report of the Nominating Committee. Governor Carlin referred the Board to Tab 3 of the previously distributed Board booklet listing the recommended slate of officers for the Authority for the ensuing fiscal year. The following individuals were nominated for the positions listed:
Chairman Governor John Carlin
Vice Chairman Dr. Ray Smilor
Secretary/Treasurer Ed McKechnie
MOTION: Ms. Kreps moved that the slate of officers be approved as presented. Ms. Lawrence seconded the motion, which was unanimously approved.
Chairwoman Lawrence's Comments: Outgoing Chairwoman Lawrence thanked the Board for the opportunity to serve as Chair. She commented that since the Authority was formed in 2004, it has made remarkable progress. With the hiring of Mr. Thornton, the Authority has instituted structure and discipline in its operations and has succeeded enormously in the pursuit of its mission. Ms. Lawrence commended the Board and the committee chairs for the success their efforts have brought to the Authority, and she wished Governor Carlin well as the new Chair of the Authority.
Officer Succession: Governor Carlin then assumed the Chair. He thanked Ms. Lawrence for her service as Chairwoman and noted that other comments would be made at the reception scheduled for stakeholders that evening. Mr. Sanford thanked Ms. Lawrence for her service and noted that much of the credit for the success of the Authority was due to her excellent leadership. Ms. Kreps also thanked Chairwoman Lawrence for her service and thanked Mr. Sanford as well for his services as Vice Chair and his leadership of Heartland BioVentures. Dr. Smilor thanked both Ms. Lawrence and Mr. Sanford for encouraging the good spirit and diversity of thinking among Board members during Board meetings.
Advisory Board Members: Chairman Carlin welcomed President Beggs of Wichita State University, President Schulz of Kansas State University, and Chancellor Atkinson of Kansas University as advisory members to the Board and welcomed them to the meeting. He noted that, as leaders of the major research institutions in the state, their participation with the KBA enhances the communication among those institutions in furtherance of the KBA's mission.
Rules Governing Committee Process: Chairman Carlin noted that it was the responsibility of the Board to establish the rules governing the procedures for meetings of committees of the Board pursuant to Section 6.6 of the Authority's Bylaws. In light of discussions during strategic planning meetings, Chairman Carlin suggested that the Board authorize the two Directors appointed by the Kansas Board of Regents to have voting rights on committees of the Board even though they serve ex officio without vote on the Board itself.
MOTION: Dr. Smilor moved that the ex officio members of the Board appointed by the Kansas Board of Regents be granted authority to vote at all meetings of committees of the Board upon which they serve. Ms. Lawrence seconded the motion, which passed unanimously.
Committee Reports: Chairman Carlin announced that he would appoint members of the Board to committees at tomorrow's Board meeting. In the interim, he asked for reports of all Board committees and referred the Board to Tab 6 of the Board booklet for the materials related to those reports.
Audit Committee: Ms. Kreps reported that the financial auditor engaged to complete the 2009 audit of the financial statements of the Authority would commence their audit on August 24, 2009.
MOTION: Ms. Kreps moved that the Charter of the Audit Committee, as contained in the Board booklet at Tab 6, which was last adopted July 15, 2008, be reapproved as the Charter of the Audit Committee. Ms. Lawrence seconded the motion and it was unanimously approved.
Executive Committee: Ms. Lawrence stated that there was no report from the Executive Committee.
MOTION: Ms. Lawrence moved that the Charter of the Executive Committee, appearing in Tab 6 of the Board booklet, which was last adopted June 5, 2008, be reapproved as the Charter of the Executive Committee. Ms. Kreps seconded the motion and it was unanimously approved.
Governance Committee: In the absence of Chairman McKechnie, Dr. Smilor stated that there was no report of the Governance Committee.
MOTION: Dr. Smilor moved that the Charter of the Governance and Organization Committee, appearing in Tab 6 of the Board booklet, which was last adopted January 9, 2007, be reapproved as the Charter of the Governance and Organization Committee. Ms. Kreps seconded the motion and it was unanimously approved.
Investment Committee: Dr. Smilor referred the Board to the minutes of the Investment Committee for its meeting of June 25, 2009, which appears at Tab 6 of the Board booklet, which minutes have been approved by the Committee at its meeting this date and are submitted as the latest report of the Committee's activities.
MOTION: Dr. Smilor moved that the Charter of the Investment Committee, as presented at Tab 6 of the Board booklet, which was last adopted July 15, 2008, be reapproved as the Charter of the Investment Committee. The motion was seconded by Ms. Lawrence and passed unanimously.
Nominating Committee: Governor Carlin referred the Board to the minutes of the Nominating Committee appearing at Tab 6 of the Board booklet as the latest report of the Nominating Committee.
MOTION: Ms. Kreps moved that the Charter of the Nominating Committee, as presented at Tab 6 of the Board booklet, which was last adopted October 12, 2006, be approved as the Charter of the Nominating Committee. Dr. Smilor seconded the motion and it passed unanimously.
Chairman Carlin asked for any updated committee reports.
Investment Committee Report: Dr. Smilor reported that the Investment Committee met just prior to the Board meeting. The Investment Committee evaluated a proposal for an Eminent Scholar and approved the expenditure of $10,000 so that staff could investigate the application with outside consultants and report back to the Board regarding consideration of the funding of the Eminent Scholar. Dr. Smilor also indicated that the Committee had heard proposals from potential investment firms working with Heartland BioVentures. The staff had been asked to continue its work on investigating potential investment firms and work with the Committee in the development of proposals.
Ms. Kreps reiterated a disclosure that she had made at the Investment Committee indicating that she had introduced some of those involved as possible investors to the KBA staff and Heartland BioVentures. She had not participated in detailed discussion with those venture capital funding groups and had no investment with them. The Committee had indicated that there was no conflict of interest noted.
Governance Committee Report: Mr. Ellis reported that the Governance Committee had asked that he review the Authority's compliance program and make recommendations regarding any proposed enhancements to that program at the Board's next regularly scheduled meeting in November. That review process will proceed through the August-October timeframe.
Change in Agenda: Governor Carlin noted that he was moving some of the agenda items scheduled for the second day of the meeting to today's meeting so that the second day could be devoted entirely to a review of the Annual Operating Plan. He asked that the President's Report and financial report be given.
President's Report: Mr. Thornton thanked Chairwoman Lawrence and Vice Chair Sanford for their strong leadership of the KBA and congratulated Governor Carlin on his election as Chair. He then directed the members of the Board to Tab 5 under the second-day agenda of the Board booklet. He noted that the staff was continuing to develop data surrounding outcomes achieved by the KBA through its activities and will report more thoroughly on those outcomes at the next Board meeting. He noted that the Investment Committee had begun a process of interviewing potential venture capital and investor groups that might support the KBA's interest in developing investment funds to support bioscience companies in Kansas. He stated that the KBA had approved four Centers of Innovation around different research clusters, which was proving to be an effective mechanism for Kansas to develop bioscience markets and create jobs. He indicated that the KBA had signed agreements with two of those Centers of Innovation this morning.
Mr. Thornton reported that the frivolous lawsuit filed by the State of Texas challenging the selection of Kansas for the NBAF to be located on the K-State campus had been dismissed for lack of ripeness. The case was dismissed without prejudice and Texas may refile. He also noted that Senator Brownback and Senator Roberts had done an excellent job in guiding the NBAF funding through the US Senate and have succeeded in securing full funding authority from the Senate.
Mr. Thornton reported that the Board had approved a budget of $600,000 to support attainment of the goals of the Cancer-Fighting Cures project. The funding was contingent upon the achievement of various milestones including the development of an infrastructure, the recruitment of scholars, and the achievement of NCI designation. Mr. Thornton noted that to add focus to this effort, the KBA had hired Brad Kemp, recently with the Kansas Coalition for Life-Saving Cures where he was Executive Director, and introduced him to the Board as the KBA's project director. In that role, he will oversee the KBA's collaboration with KU and its medical center's cancer research programs. Mr. Kemp indicated that the $600,000 allocation from the Board would be budgeted more precisely and presented to the Board for approval at a future Board meeting. He also indicated that it was his desire to build on already existing strengths of the state, bringing to focus the unique tools offered by the KBA to help achieve Cancer-Fighting Cures as an ongoing program for the state that will be successful in leveraging federal research funding to expand cancer-fighting care and treatment.
Mr. Thornton next introduced David Vranicar, who had recently been hired to head Heartland BioVentures and focus the KBA's commercialization programs and initiatives. Mr. Thornton noted that Mr. Vranicar had a background in early-stage company development and worked with the founders of Birch Telecom to develop that company. He had previously worked with Dr. Jensen in developing the business plan for the KU cancer effort.
Mr. Thornton reported that staff was making great strides to align the operational side of the Authority with the investment side. He asked Ms. Katterhenry to make an introduction. Ms. Katterhenry introduced Nancy Ruf, who had been recently hired as contract administrator for KBA. Ms. Ruf had previously served as a contract administrator for MRI for several years. She will be responsible for developing and writing the contracts which are approved by the Investment Committee and the Board and will monitor milestone achievements of organizations to which grants are made to assure outcomes desired by the Board are met.
Ms. Katterhenry also reported that Ryan White, a CPA by training, who will begin work at the KBA next week as an analyst to monitor outcomes of KBA investments. He will be responsible for maintaining the database for projected and actual outcomes measurement and develop the system for reporting outcomes and returns on KBA investments.
Dr. Smilor congratulated Mr. Thornton and Ms. Katterhenry on their efforts to fill out the organization and secure qualified people for key staff positions.
Mr. Thornton reported on activities of the Kansas Legislature noting that state government had to institute another round of cuts in order to meet budget requirements. He reported that the KBA had been spared from such cuts. Ms. Kreps noted that KTEC had suffered cuts from the Legislature and expressed concern that the KBA monitor that situation carefully to assure that meaningful KTEC missions are maintained. Mr. Thornton noted that strategy sessions were ongoing at KTEC and that he was monitoring that process.
Financial Report: Ms. Katterhenry reported that total cash, cash equivalents, and investments totaled $87,601,474 at year end and that accounts receivable in the amount of $9,300,000 were still expected. She indicated that the Authority had paid to date $177,038,604 of total committed funds of $226,618,174. For the last fiscal year, the KBA made 67 percent of its planned commitments, with the shortfall being due to lower than expected commitments to Eminent Scholars and Rising Stars. Operating expenses totaled $3.1 million compared to the planned budget of $3.5 million. To date, the KBA has received $115,380,627, or 20 percent of the total transfers, of $581,800,000 authorized from the State of Kansas; $466,419,373 is yet to be received. A total of $347,954,147 of the remaining transfers from the State of Kansas remain available for commitment representing 59.81 percent of the authorized transfers.
Ms. Katterhenry reported that the net investment return on each dollar of milestone payments invested is $5.41. Ms. Kreps noted that the $5.41 return on investment appears to be an excellent return. Mr. Thornton stated that the benchmark comparing Kansas to other states is $3.60 for each dollar investment. He noted that it is planned that approximately $76,000,000 will be expended this next fiscal year, but that it is likely some of those commitments will be carried over to FY 2011.
Future Meeting Dates: Chairman Carlin referred the Board to Day 1, Tab 9, of the Board materials for future meeting dates. Ms. Kreps noted that the May date needs to be changed if it is to be coordinated with the Bio Conference to be held next year in Chicago. The Bio Conference will be held May 3-4, 2010. Ms. Lawrence observed that the strategic planning time spent this year by the Board was extremely helpful to the Board process and encouraged that the strategic planning process be worked into the schedule for 2010. Dr. Smilor asked that the staff continue to review methods of demonstrating outcomes from KBA activity. He also noted that the financial report was extremely helpful, clean, and transparent. He complimented staff for the excellent organization of the meeting.
Adjournment: Dr. Smilor moved that the meeting be adjourned. The motion was seconded by Ms. Lawrence and unanimously approved. The meeting adjourned at 3:28 p.m.
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