Board meeting of the USTAR Governing Authority
11-30-2015 Meeting Minutes
GA Members: Greg Bell, Jennifer Hwu, Derek Miller, and Susan Opp. By Phone: Rich Lunsford and Ron Mika
Excused: Val Hale and Will West
USTAR Staff: Cheralyn Anderson, Justin Berry, Linda Carbrales, Mary Cardon, Lincoln Clark (Finance Manager), Ivy Estabrooke (Executive Director), Elenor Heyborne, Jared Goodspeed, Jillian Hunt, Peter Jay, Joe Kulsch, Scott Marland, Jinny McGavien, Donna Milakovic, Teresa McKnight, Koa Perlac, Andrew Sweeney, Shirlayne Quayle, and Thom Williams (Managing Director)
Others: Peter Asplund (Legislative Attorney), Andy Buffmire (UofU), Noelle Cockett (USU), Jeff Edwards (EDCUtah), Greg Jones (UofU), Kathy Kinsman (AG’s Office), Tom Parks (UofU),
Mr. Bell welcomed everyone to the meeting. He stated we have Rich Lunsford and Ron Mika on the phone.
Mr. Bell stated we need to look at themeeting minutes of September 3rd and he has read the extensive minutes and recommends the approval of them.
Mr. Miller moved to approve the September 3rd, 2015 meeting minutes. Ms. Opp seconded the motion. Mr. Bell called for a vote and the motion passed unanimously.
Dr. Estabrooke stated prior to having Thom on board the signature policy was put in place to require either the chair or the vice-chair to approve/sign any documents related to the Executive Director travel and personnel related requests. This is a vote to revoke this policy to allow Thom to do all the personnel and travel administrative work which is in standard practice in state policy and consistent with state policy.
Mr. Miller moved to approve revoking the signature policy. Ms. Opp seconded the motion. Mr. Bell called for a vote and the motion passed unanimously.
Dr. Estabrooke stated we have a number of budget modifications. The budget subcommittee met a couple of months ago and reviewed all of these budget requests. She will walk through the requests.She remained the Authority that the appropriation for the research line this year is approximately $18.5 million to date.Funding to Utah State has been approved for approximately $5.7 million. There was approximately $1.4 million of non-lapsing funds that was to buy down the remainder of startup costs at USU. Funding approved at the University of Utah to date for FY16 was approximately $11.1 million.
The first sets of requests are from the University of Utah. There were some small increases for John White, who is a PI, for $13,000. This will be funded from his startup package. This is a change in the health science center free clinical model cluster. Two candidates in the health sciences cluster have been recruited; their needs for their first year were estimated. We now have clearer numbers, which will not changethe overall startup package but what would be available in FY16. The UofU has requested that both requests for Center of Medical Innovation and Center for Engineering Innovation be made in January. We anticipate we will have the last round of requests for new fundingin January so we can look across the whole spectrum of funding that is available and the progress that has been made on projects to date.
The second sets of requests from the University of Utah are suggestions that actually came from the quarterly review of commercialization efforts at the UofU. Applied Biosensors and Solefire are spinout companies from the U with USTAR technology. Milestones were presented to the budget subcommittee and the commercialization subcommittee to accelerate these technology developments and increase the likelihood of success. The budget and commercialization subcommittees have reviewed these milestones. The two additional requests were $66,000 to Applied Biosensors and $125,000 to Solefire. The entrepreneurial post doc program is something that was initially proposed by the U in the regular budget process. $150,000 was approved initially for post docs who would work with potential technologies coming out of the U and try to accelerate the technologies leaving the lab. This was very successful, and an RFP went out to the community. There were seven proposals and funding for only two of them. This is a request for enough funding to go to the remaining five proposals. The subcommittee recommends all of these companies go through the lean canvas and at the next commercialization subcommittee meeting have those canvases presented to the committee to determine additional funding for those post docs. Mr. Jonesstated the U wouldlikely only ask for 3 of them. Part of the canvas process is making a go/no go decision. Some have decided not to go at this time. Dr. Estabrooke stated we would go through that process and ask for approval. They made reductions in requests from the U for startup packages after reconciling the end of year finances and some additional finances related to startups. This accounts for some overages.
Ms. Opp moved to approve the recommendations of the budget subcommittee on the University of Utah’s budget requests. Dr. Hwu seconded the motion. Mr. Bell called for a vote and the motion passed unanimously.
Mr. Jones questioned how the funding for the post docs should be handled. For instance, if the funding was to be approved and we start them in February, that really means they won’t be in a position to be fundeduntil June. If we want to carry them forward into that next academic year because they’re doing well,we wouldn’t spend more of their salary. How would we want to account for these matters at the end of year and to carry that motion forward? Dr. Estabrooke stated because we get appropriations on an annual basis, we would have to do it as a part of the budget process. At that time, those post docs would present what they had accomplished and what the milestones were and then that would have to be part of the FY17 budget process. It is lapsing money so it depends on whether we are appropriated the money.
Dr. Estabrooke stated a couple of the Utah State’srequests here are simply shifting salary and benefits to operating expenses: an additional $10,000 of operating expenses for Regan Zane under his electric vehicle grant to provide some more program management support. Furthermore, we didn’t approve the majority of Randy Lewis’s requested budget in the fall process.It was contingent upon looking into a number of issues. We have spent a lot of time with Randy and brought in the people from the Manufacturing Extension Program to look at the facility. We are working with them on how we can commercialize the facility and make it useful for more than just the Spidersilk lab. We are working with Randy on identifying what the products are in the near term that could be moved forward. Even though this is a large dollar value we are looking at what this year’s outcomes are going to beand what each piece of funding is being used for and making sure we are not duplicating efforts or double counting. Each piece of funding is really moving the producttowards commercialization. Mr. Bell asked about the status of the Lanza study. Dr. Estabrooke stated we have the first round of results on the Lanza study and they are fabulous. The increase in proteins that Lanza was able to do is much higher than what was being produced. There is new plasma that looks like it will allow for a much larger production. We are moving into the second phase of the Lanza study and should expect results the first of January. This also supports keeping the research moving. We did identify a number of products that do not need a mass production of the spidersilk. There will be a consultant coming in to do a business case analysis of what needs to be done to produce the small volumes and what the return on investment will be. Mr. Bell asked if this was from the FY16 budget. Dr. Estabrooke stated we did not approve anything except the Lanza study for Randy’s group because we wanted to dig into these details to make sure we were funding something with a clear path.
Dr. Estabrooke stated the next item is the High Bay Facility. There was an additional facility built with a high lease fee. Because the lease was so high in the original FY16 request, we asked for an independent assessment of the market value. It came in much lower,so the budget subcommittee recommends paying the lease at the market rate along with the utilities and equipment. Finally, when USU’s main budget was approved there was a request for $700k for mini grants. It was funded at $500k. There was a call put out for proposals from all faculties at USU for these small grants that would allow seed funding and a little experimentation to see if they can move the project to the next level. There were 15 proposals put in and the committee at USU looked at all of the proposals and recommends funding 7 of them. The cost of funding all seven is $620k. The subcommittee and Dr. Estabrooke have reviewed them. They recommend funding for all of them. There would be a total for seven mini grants with the maximum grantbeing $100k.
Dr. Cockett stated it took a little time to get the grants program going. Knowing these were to be funded from lapsing funds, we then said the grants needed to be finished by June 30th of 2016. They are really looking at six to seven months of work and had to trim back their original proposal. Mike Glauser who is the director of the Jeff Clark Entrepreneurial Center at USU, brought in several students to work with the PI’s to do some sort of revision and include some type of market analysis in the proposal. There is a big range of products; it goes from very basic research that may move into some type of biomedical compound all the way to a licensing project for pesticides. We focused a lot on milestones and benchmarks.
Dr. Hwu moved to approve the Utah State budget requests. Ms. Opp seconded the motion. Mr. Bell called for a vote and the motion passed unanimously.
Dr. Estabrooke next discussed there the above matching fund approvals and emphasized that these matching funds and are not requests for new funding. We are asking for a vote for funding that has already been committed to these researchers as a match to federal funding grant. Dr. Cockett stated we do not want to match more dollars than what has actually been received through USTAR. We are accounting for how these people are leveraging the USTAR funds.
Mr. Miller moved to approve the matching funds for the Utah State professors. Ms. Opp seconded the motion. Mr. Bell called for a vote and the vote passed unanimously.
Dr. Estabrooke stated everyone on the Governing Authority is familiar with the life science cluster. These three clusters are at the health science center and were approved by the Governing Authority in June of 2013 for a planned $10 million investment over five years. This manner of giving out funding is the new model of supporting startups and recruitments, but it is a five-year commitment of funds and not a long-term commitment of salary tails. The challenge with academic recruiting is that it is not instantaneous and can take many cycles to make the right hire. There are still 3 more faculty members anticipated to be hired and funded by part of this $10 million. The challenge we are running into now is this was to be a $10 million dollar investment over five years, which would run out in FY18. Because of the time delay in hiring, the U is asking for permission and acknowledgement that this funding will stretch beyond the five years. They are asking to extend the time period that the money will be available for startups. Mr. Jones stated it is to prolong the time period in which we’re allowed to spend the $10 million. We have five of eight positions committed and one planned for the fall with two in the spring. Dr. Estabrooke stated the Governing Authority approved these three cluster areas as specific areas back in 2013 and it is filling those slots. Sigala will be a great addition and there was another candidate that ended up taking a place at another school.
Ms. Opp moved to approve the extension of time to use the budget 10 million for the Health Science clusters. Dr. Hwu seconded the motion. Mr. Bell called for a vote and the motion passed unanimously.
Dr. Estabrooke introduced Lincoln Clark who is going to discuss the new fees for FY17. Mr. Clark stated this is more procedural and information for our public hearing process. We are looking at fees for Small Business Innovation Research, Small Business Technology Transfer, and Technology Outreach Innovation Program. The fee structure we have for these is one where we are looking to recapture the cost of the speaker, space rental, and refreshments. They range from $10 to $225. Several of these fees already exist and we are looking to add two more dollar amounts at $10 and $75.
Similar with our Technology Outreach Innovation Program we are proposing a fee for a membership in our co-working and incubator space. This is to recapture the cost of office space, private or as come, open lab space, tools and equipment. The fees range from $45 a day to $300 a month. We also want to allow the flexibility for seminar/workshop fees to offset the cost of the speaker, space, and refreshments. And would like to open it up to the general public.
Mr. Clark stated back in October we submitted an I6 grant through the department of commerce and we are expecting to hear back from them in January 2016 before our incubator being created in the Northern region. With the Air Force technology transfer pilot we put in a white paper at the end of October. We received word back from them last week that they requested a technical and cost proposal to go after these funds. Dr. Estabrooke stated this is a new program through with in the Air Force. It is out of the Air Force Research lab. They are looking for a third-party that will help with technology transition both accelerating innovation into the Air Force as well as pulling some of the research and IP that goes on with in the Air Force research labs and pushing it out into the community. In a lot of ways it’s that nexus where we are trying to sit of commercializing technology. This is the first time they have had a solicitation like this for this type of program. It was unclear exactly what they are looking for and we had good discussions. We are in a good position to benefit the state and support the Air Force mission as well as with our partners at Hill.
Dr. Estabrooke welcomed and introduced Jennifer Ozawa and Daniel from SRI. They were the leads on the assessment study, recommendations, and some numbers that will go into the prospectus that is being drafted. They have come out here to brief members of the Governing Authority as well as some of our stakeholders.
Ms. Ozawa stated her and Dan as well as their SRI team has been working on this project for the past 8-9 months. Like you, we have been thinking about where USTAR can add the most value given its technology based economic development mission and the unique role it plays in Utah’s innovation system. This is exactly the type of assignment SRI was created to do. As a non-profit research institute based in the heart of the Silicon Valley we think about how to transition the technologies born of our contract research to get them into the market place on a daily basis. On average we spin out five to six companies a year and you may be familiar with technologies we have developed like SIRI for Apple and Grab it for Nike. Our center for science technology and economic development based in Washington DC focuses on applying these same market driven principles to macro level challenges for policy makers. Specifically, how do you think about supporting innovation at the systems level for state or for region? How do you identify gaps and how do you address it?
Utah launched its premiere economic based technology development initiative in 2007 intending to catalyze more technology commercialization and to strengthen the states’ overall capacity to support innovation. Long-term goals included increasing the number of technology startups, increasing high paying jobs in these technology companies, and long-term economic diversification of the state’s industrial base. The 2013 legislative audit brought to light a major misalignment between expectations about USTAR’s private sector impacts and its actual performance to date. SRI was hired by USTAR to provide and independent review of its programs and benchmark USTAR against similar programs in other states. We hope that our analysis and recommendations that she presented for you today will serve to identify gaps in the innovation system that USTAR is positioned to address, to suggest programs that have worked well in other states with the same objectives, and to provide impact projections validated by the performance of similar programs in other states so they are realistic and measurable.
Our first task was to assess strengths and weaknesses in Utah’s innovation system. Looking at Utah we analyzed a variety of data on both academic and business research and development, on venture capital investment, and on creation of new business trends. We also conducted interviews with over 50 stakeholders, as well as many of you, but also CEO’s of technology startups, investors, incubator directors, and so on. In Utah, idea generation is a clear strength. And we all know that successful innovation systems nearly always have strong research universities at its core as well as strong corporate research driven organizations and often government laboratories as well. Utah universities rank in the top quartile nationally in terms of university R&D performance normalized by the size of the states economy. Business R&D is about average, however not a competitive strength. Utah has a lot of large companies located here but many of them are not doing their R&D here, depending on the technology sector you are talking about.