The Seven-Year Itch?

Sep 14, 2016 at 05:10 pm by Staff

LAKE NONA--It's a head scratcher. Leaders at Sanford Burnham Prebys Medical Discovery Institute at Lake Nona began closed-door meetings with University of Florida (UF) officials last November, around the same time the La Jolla, Calif.-based institute asked for $5.6 million in Florida's state budget during the 2016 legislative session that state lawmakers approved.

The news in May that Sanford Burnham wanted to split as early as June 30, revealing a detailed exit strategy with UF, caught almost everyone by surprise. The timing of the announcement came after the legislative session ended, and applied pressure to Gov. Rick Scott to rubber-stamp the deal and bypass legislative approval.

"They were advocating for more funding during session while they were negotiating ... and they need to explain," Florida Senate President Andy Gardiner (R-Orlando) told the Orlando Sentinel.

The Genesis

The 2006 incentive package gave Sanford Burnham nearly $400 million in state and local tax incentives to locate in Central Florida. Annual payments diminished from $30 million in 2011 to $1.5 million in 2016, according to the incentive agreement. When asked if the 2006 incentive package included penalties, Gardiner's office referred Orlando Medical News to Enterprise Florida officials, who could not be reached by press time. Sanford Burnham spokesperson Deborah Robison explained the "original agreement included annual benchmarks and deliverables that must be met in order to draw funds from the money set aside by the state. To draw these funds, our in-state presence would have been necessary."

Sanford Burnham officials explained they couldn't afford to remain long-term in Lake Nona, and that difficulty raising significant sums after the economic downturn in late 2008 and elongated recessionary conditions, combined with a year-over-year reduction in federal grants, have hindered their ability to efficiently run the institute. However, two months before Sanford Burnham opened in October 2009, the University of Central Florida's (UCF) $65 million College of Medicine opened in Lake Nona, with the inaugural class of 41 students on full scholarships from money raised in the medical community. Nemours raised $400 million for its Lake Nona children's hospital.

"We were in a situation where it was a huge startup scenario ... with a fair amount of fundraising activities going on at a time when the economy was hit very hard," Daniel Kelly, MD, professor and scientific director of Sanford Burnham told Research Florida.

Now, with at least $30 million in its coffers, plus a new $2.7 million National Institutes of Health (NIH) research grant announced last month, Sanford Burnham officials dispatched word the institute would only continue operations at Lake Nona until "a viable alternative arrangement is approved, or until the available funding resources are exhausted."

When asked if the fresh influx of money might impact the decision to stay put, Sanford Burnham officials dodged the question. Robison responded: "Sanford Burnham Prebys Medical Discovery Institute at Lake Nona and the University of Florida are discussing a proposal they believe would allow the university to build upon and grow the research enterprise established by SBP at the Medical City in Lake Nona. We believe the proposed transition will provide long-term stability to the medical research enterprise and is in the best interest of the state, and the future of medical research in Medical City and Florida."

The Proposal

Last year, when Sanford Burnham officials began quietly exploring ways to fix projected money woes, the idea to transfer operations to UF was hatched. It's unknown whether institute leaders approached other schools, such as UCF or Florida State University. Sanford Burnham officials declined to elaborate.

In the proposed deal sent to Gov. Scott in June, UF would inherit a generous package: the building, infrastructure, technology, researchers, research programs, pharmaceutical partnerships, and NIH funding. The plan also calls for UF to receive $30 million of the institute's leftover incentive funds to facilitate the transition through 2022, and another $3.7 million annually from the state as part of the move. In exchange, UF projects should add nearly 400 private-sector jobs and nearly $60 million in wages to the economy.

Without the deal, according to the proposal, there would be no benefit to the state.

It may seem at this prickly point that Sanford Burnham and UF hold the trump cards to maintaining economic stability in Orlando's medical city. If the transfer is blocked, the campus would revert to Orlando, Orange County and the Lake Nona Land Company. Orlando Mayor Buddy Dyer has encouraged Gov. Scott to approve the UF takeover of Sanford Burnham, saying that "enhancing the University of Florida's research capabilities in Lake Nona at the Medical City will ultimately be a good thing for Orlando."

To naysayers irked by the proposed deal, Robison pointed out that Sanford Burnham fulfilled its obligations to the state by helping boost Orlando's regional ranking for density of high-growth companies in the health industry, according to the 2016 Kauffman Foundation, a non-profit organization that ranks startup activity.

By attracting Takeda, Bristol-Meyers Squibb, Roche and other significant players, "SBP put Orlando on the national and international biomedical industry map," said Robison. She pointed to the world-class biomedical research enterprise Sanford Burnham built, which includes a high-tech facility, 12 technology cores, more than 25 principal investigators and associated labs that have generated 39 patent applications and 430 high-impact, peer-reviewed papers related to diabetes, obesity and metabolic diseases. The institute, she pointed out, served as a springboard for a spinoff company launched with Space Florida support to conduct research aboard the International Space Station. Sanford Burnham also increased the density and quality of biomedical science in Orlando's emerging life sciences cluster.

Because of the unknowns, not everyone at Sanford Burnham is onboard. Internal turmoil prompted some institute faculty members to send a letter to the board of trustees about a "real lack of transparency" and "pattern of dismissive behavior" centering on Sanford Burnham CEO Perry Nisen, MD, PhD, who joined the institute in mid-2014 according to the Orlando Sentinel. "We cannot endorse the leadership of CEO Nisen to advocate on our behalf," they wrote.

UF President Bernie Machen is among the trustees. He joined the board in early 2014, and has been involved with the institute since the days the state began wooing Sanford Burnham to Florida.

Kelly, who has been with Sanford Burnham for several years, said the board remains committed to the proposed transition to the University of Florida "as the best option to ensure future stability of the medical research enterprise that's been established at Medical City in Lake Nona."