· Web viewWilliams: The word that a lot of statute language uses is a substantial presence and that could be a little subjective but this is what we have and I think we are on the

Board Meeting of the USTAR Governing Authority02-04-2016 Meeting Minutes

GA Members: Greg Bell, David Damschen, Rich Lunsford, Derek Miller, Susan Opp, Will West, and Val Hale

Excused: Jennifer Hwu and Richard Kendell

USTAR: Cherie Anderson, Justin Berry, Linda Cabrales, Mary Cardon, Lincoln Clark, Jared Goodspeed, Elenor Heyborne, Jillian Hunt, Peter Jay, Joe Kusluch, Scott Marland, Jinny Mcgavien, Teresa McKnight, Donna Milakovic, Koa Perlac, Shirlayne Quayle, Andrew Sweeney, Thom Williams

Other: Andy Buffmire (UofU), Noelle Cockett (USU), Corrine Garcia (UofU), Greg Jones (UofU), Chris Pieper (AG office),

Mr. Bell: Ladies and gentlemen thank you for coming today. We will start our meeting. We appreciate your attendance. The first order of business, Ivy Estabrooke is in another meeting she couldn’t get out of and will be here as the meeting progresses. We would like to welcome our governing board members. We should have Jennifer Hwu calling in soon.

Mr. Miller: If I hear something I’ll let you know.

Mr. Bell: Will you monitor that Derek. We have the minutes before us and I would like to take a motion on that.

Mr. Miller: Motion to accept.

Mr. Bell: We have a motion to accept the minutes of January 7th, discussion. All in favor aye?

USTAR GA Members: aye

Mr. Bell: Oppose, nay? The motion carries unanimously. Lets discuss, we will have our assistant director, Thom, talk us through the discussion of what makes a Utah based company.

Mr. Williams: Thank you, sir. This issue came up a couple weeks ago; I know we have probably tripped across it before. We have a company you will see later on in some of the financial slides that we’re going to show that we will vote on. A company that is based largely in Massachusetts but they have a little bit of a presence here. I know that the subcommittee, commercialization subcommittee, governs just a little bit and causes us to go back and review what our policies are more exactly, in regards to what constitutes a Utah based company and that would be eligible for USTAR funding. At the moment we have got this. I’m just going to say at this point, I think we want to make sure that we are leveraging whatever language the state currently has but I am not sure we captured all of it quite yet. We


are probably going to launder this a little bit more, present it to the subcommittee and finalize and vote on it.

Mr. Bell: Is “in-state entity” a statutory term?Mr. Williams: I’m not sure. But I would think that other programs that have requested funds from the state would have to have proof that they are in the state or coming to the state. So, we would like to explore this one a little bit more.

Mr. Lunsford: What if they have a satellite? You have a comparative company that has a component of…

Williams: The word that a lot of statute language uses is a substantial presence and that could be a little subjective but this is what we have and I think we are on the right path.

Bell: We have two examples.

Williams: Exactly, BD medical and another like that. I just want to make sure if there is some other language that addresses in-state residence or in-state presence that we are using. So that as a state agency or a state entity we are using the same thing and I’m not sure we have captured that quite yet. But I think this is where we are going to end up in regards to them having their primary place of business here in Utah, or after a certain period of time they agree that they are going to relocate to Utah or repay whatever funds were given. But we will make the language much more precise and present that.

Miller: I don’t imagine, Thom, a quick phone call to the division of corporations ought to get this settled pretty quick, because they have to deal with this on a legal basis everyday. I don’t know what the definition is that they use but I’m sure that they have got one. It doesn’t necessarily mean we can adopt the whole cloth. But it would certainly inform us.

Williams: We had this in the slide deck but I just wanted to make sure that we are running counter any other state agencies.

Bell: The other thing though is the question Rich phrases is very germane for instance, GOED gives allowances and credits to companies that are not literally Utah companies but are bringing a big presence here.

West: But those are not going to be the same things that we are generally thinking about. Their definition actually might be different than ours.

Williams: It could be different but our first step will be to walk down the hall to make sure.


Bell: But we may well be in a situation funding a research by a corporation who is not a Utah corporation in the legal sense but has a significant presence here whose research we want to incentivize. So I would appreciate further study on that.

Williams: The next several slides are financial adjustment slides that we are going to request that you vote on. So, I would ask Lincoln to walk us through some of these.

Clark: The budget subcommittee met about two weeks ago. So you are all aware that is Ron Mika, Rich Lunsford, and Susan Opp. We are going to go through some requests and modification to the current budget both for USU, the UofU, industry partnerships, and the TOIP program. As a reminder the total appropriation for the research line is 18.5 million and to date the funding approved to Utah State for fiscal year 16 is 7.7 million and we have that reminder that approximately 1.4 million in non-lapsing funds that have been set aside to bring down the start up. Reflecting the 6.4 million and the value for the year is 11.6 million.

Bell: What does that mean in terms of this 6.4 and 11.6 so that leaves the 435.

Clark: Correct, That is unallocated.

Bell: So Utah State is not going to be seeking anymore funding. It’s just that we are offsetting the non-lapsing.

Clark: Here are the first sets of requests from the University of Utah. Looking at Masood, the budget subcommittee.

Bell: Is this the current year?

Clark: Correct, fiscal year 16. All of these requests and adjustments will be for fiscal year 16. He had additional requests of $10,000; the subcommittee recommended not to approve that along with the lean canvas cohorts of approximately $230k and the MRI imaging system of $1 million. The thought on some of those as we get to evaluating the progress to date versus the funding available, we will then reevaluate those items and a couple others that we will get to. I just want to pause and point out Pointspectrum. There is an interesting discussion on that; the commercialization level on that is subtractive and is worth noting until it has contributed money to that project but the budget subcommittee is going to revisit that at a later date.

Williams: So this was, to illustrate a little further, this is the company we were talking about earlier, about their presence in Utah. As Lincoln had mentioned, we like the technology, its something that I believe we want to fund but we want to run down the presence in Utah aspect of it. It’s the Pointspectrum.

Clark: Moving next to the translational Center for Cell sheet regeneration medicine. Again do not approve, we will reevaluate at a later date. Moving on to the Center of Medical Innovation, the subcommittee took the same position. Look at the second


set of requests for fiscal year 16 for University of Utah. The first item is the Center of Engineering Innovation, no approval there. The entrepreneurial post docs, the request was $50k and no approval. The nanofab equipment donation of $100k, do not approve. And for Saffarian, $7,000 dollar adjustment was largely clerical on our end. That is why that recommendation is put through to approve. And then the request that we received from the technology summit because it was indicated the amount could be reduced by 25k. The budget subcommittee recommended approving that reduction as well as reducing the approved amount to the TRAC team database of $187K. So when it is all said and done, the vote that the budget subcommittee is putting forth to the broader GA is to approve the University of Utah FY16 budget new requests and adjustments totaling a negative $241k. This concludes the University of Utah.

West: Is this just showing us the things that are not approved?

Opp: We looked at everything in the subcommittee and then we discussed it. And we are recommending to you to vote as the subcommittee voted.

Jones: I’m not sure I understand everything. The entrepreneurial post-docs… the request is actually to… So the budget approved on that is $512,000 early and we were asking permission to spend that approved money on post-docs. We weren’t asking for additional $50,000, we were actually asking to spend that money if the post-docs were ready. So, I’m not quite sure I understand that.

Clark: I view that as a misunderstanding.

Opp: That’s not what we discussed in the subcommittee. Either the request was lost in translation or maybe Ivy misunderstood. We took it as a new money request. I didn’t see the original request so I cant explain why it was not understood.

Jones: So I think where we sit on that request is they and their advisors will present to you guys and so that’s still available if you guys approve their presentations, is that correct?

Opp: Yes, we certainly did not revoke approved budgets.

Bell: So, these are not turn down, we are just saying we need more information and consideration.

Opp: I’d say in that specific example it was a misunderstanding and so, well, yes we need to see those briefings. Our intention was not to un-approve the line item in a sense. Can you go up a slide?

Jones: So on the lean canvas, the MRI system, we had actually knocked the MRI system down to $325,000 dollar request. Pointspectrum is fine.


Bell: How should we leave?

Jones: Massood’s fine.

Opp: So I think the issue is that we only have $431k left to allocate and in the face of all of these we told they were all uppers. I know that is not correct. The point is we don’t have the budget to be able to cover the uppers at this moment.

Jones: Actually, what we did is reduce CMI and CEI budgets over our original requests to make room for the Translation Sheet. The thing I need to clarify for people and I will talk to them when I get back to the U. So the Center of Medical Innovation and the Center of Engineering Innovation no funding in FY16 for them, is that right?

Opp: I believe that is correct at this moment.

Jones: At this moment, If I need to give them a way to get possible funding, what would I tell them?

Opp: Right and so there are two main issues. We only have 400 and some thousand dollars left to allocate at the current run rate. And so you would have to pick from those funds and then the request that would come in would have to be reviewed by the subcommittee and approved.

Bell: Didn’t we reduce this though? Isn’t there another net $200k?

Williams: I think we have seen the same requests multiple times.

Opp: Yes, that does wind up adding $204,000 to the $430,000 or so that is left to allocate. I don’t really understand what happened before the subcommittee meeting. But everything we looked at in that subcommittee meeting had been pre-looked by Ivy and Thom. We didn’t look at project slides individually. That may be what I would recommend.

Bell: You’re making allocation decisions really.

West: Can I just ask a process question? Because one would look at this and think they are on two different planets, the two groups. Do you have no visibility as to what is remaining to be allocated when you make a recommendation?

Opp: He has full visibility.

Jones: Not what is left per say on an ongoing budget.

Opp: We talk about what’s left in the budget.


Jones: What we are pinning this off of is the original budget we put in and these were items that were still in consideration.

Opp: Right.Jones: And so we added items and reduced the items that were in consideration and so I don’t even need to know what’s left in allocation wise. That’s USTAR’s deal. I just need to be able to give.

Opp: I just think it helpful to understand.

West: It shows that you are disconnected. If you are presenting $2.4 million worth of recommendations and there is $400,000 to allocate the answer is mostly going to be no.

Opp: I think he knows that and the committee knows that also. So it’s not a lack of transparency.

Williams: Perhaps, we could ask you to prioritize. Would that be helpful? Perhaps I should ask the subcommittee would that be helpful?

Opp: I think there are two things that are true, right? If you are asking for allocation of budget that we have already approved in the fiscal year process that needs to be known. And I know you know that. Secondly, of the new requests, prioritization would be helpful although we look at each one and we look at the business case on a case-by-case basis. I do think it is important to understand that if there is $600,000 dollars left, your fair share of that would be roughly half.

Jones: Not $2.4 million.

Opp: Right and I think that goes to Will’s point. On the other hand if I were in your shoes I am not sure I would request anything less just because we don’t have money left. Because there could be fall out money. Each time we look at the budget there puts and takes. The goal is to appropriately allocate the funding the best way we know on a real time basis.

Bell: We are on cusp of next year.

West: If that’s the case then why didn’t you allocate $400,000 instead of negative $200,000?

Opp: Because each of these requests did not get to our floor of business case good at our meeting. And I think we are also.

Lunsford: We are trying to look at more milestone-based activity and phasing of approvals, and if you reach a certain point of activity that has been productive. We


are trying to have that accountability then make approvals. We felt like none of the requests fell in that category.

West: And do you feel like you don’t have a good understanding what that floor looks like?Jones: So, one comment. I did prioritize the list. On the CEI and the CMI they both presented and they don’t know what to do next to make a better business case. On those centers and the translational cell center neither of those three know what to give USTAR to better considered (for funding).

West: Maybe, they can’t?

Jones: Possibly.

Williams: That is a good point. Maybe, there isn’t one.

Jones: And that’s what I’m asking, Is the idea of, they probably wont have milestones because they have programs that they are asking for more support for a general program. So if that is indeed a stopping point for them, I can tell them “you are just not appropriate for USTAR.”

Bell: I think we need to send that message and they need a chance to talk to us. We could send you back and you can say. But it would be nice for such a unique large programmatic ask if we communicate closely with them. Then we say hey you’re not going to get in the country.

Jones: And they have presented.

Opp: I recommend that we wait and see if Ivy comes to give specific feed back from each one of these requests and why it was.

Jones: I’m not arguing dollar amount just resolution request.

Opp: I did not bring my notes from that subcommittee meeting and so I have to rely on her notes. And if she comes in the next ninety minutes we can answer your questions specifically.

Jones: And then we have, just to clarify, there are two different ways the budget gets spent. We ask approval on a line item and that approval is granted in the overall budget, and then when we spend it we ask for reimbursement. So we ask for approval essentially two times. So those post-docs are already in that approved budget. When are they granted post-doc approval to actually spend on? So we carved out some budget but we haven’t spent that budget because we are waiting on the high sign on that. That is the misunderstanding there.


Williams: That is item two on there and I think Greg you are probably correct on that. We are really approving money that has already been approved. I don’t know if there is any further resolution.

Bell: We don’t have criteria for releasing that money.

Opp: Normally, at least last year what we did is reviewed progress in the commercialization committee and then they presented.

Bell: In the post-doc category?

Opp: I don’t know about the post-doc category.

Jones: It didn’t exist last year.

Bell: I think that is rather unique.

Opp: Again, I am not trying to establish policy but my guess is that we would have them talk to us and show us their next steps to which we would agree or help them set up milestones.

Jones: What Ivy has requested is the post-doc and the mentor on the two cases we want to go ahead and spend on would come and present to the subcommittee. Which is great. But that step was just established.

Opp: I would agree with that.

Bell: Trust me on this deal, because of the history and misunderstanding between USTAR and the U I would ask that we not approve this today and I’m not saying anything about the subcommittee’s work except thank you very much for distilling the issues. But I do not think we want to send the representative from the U with the message that anything has been turned down.

Opp: I agree with you.

Jones: I don’t think not approving these requests will damage our relationships. I am understanding and what I need to do with Ivy is set up the CEI and the CMI for one last go around presentations to see if we can come up with milestones that would be fundable. I get the post-docs and mentors need to present. And that is fine. We are slowly getting to how to resolve these things and the U is fine with working through these. You know if that means $600,000 is left because these items aren’t going to be in there. That is fine and leave the $600,000 with you.

Bell: I just don’t want to set off an international crisis.

Jones: I don’t think we are hitting red buttons yet.


Williams: My apologizes, Greg I was stuck in DC during this particular subcommittee meeting.

Jones: No apologies necessary to me. This is just working through the details on how these things work. Opp: I think unfortunately during that meeting it was our impression they were new requests and had to come out of the unallocated budget. And that was the tone of the entire subcommittee meeting. And if that is incorrect, and it sounds like it was, we need to look at that again.

Jones: I think it is part correct and part incorrect.

Opp: As far as the hardware requests I believe we are taking the tact that that is not in our charter. Now, at least for MRI, large capital equipment. That doesn’t mean you couldn’t request that at the fiscal year meeting. But I think when we have hundreds of thousands left, it is very difficult for us to spend the remaining of our budget on a piece of capital at this time.

Jones: I totally understand that. Where that request came from during the confluence USTAR said to those professors, “Hey, let us know what we can do to support your program.” And they said, “We need this new magnet, can you support that?” So that request goes to you guys.

Opp: That’s completely fair.

Jones: You are completely free to turn that down. I understand where that doesn’t fit into milestones.

Bell: We invited the discussion.

Jones: Absolutely, and you discussed it.

Opp: I think if we were talking about allocating full budget. You know $16 – $18 million, I think capital is something we can talk about. When we are talking about $400k remaining budget for the next five months, it’s hard to spend that on a piece of capital.

Jones: And that’s where this got a little so-so. At the first of our budget presentations you had mentioned, Rich, you had mentioned “Hey Greg, prioritize these for us.” Right, so as we went and I saw summits were not working and said ok summits not going to spend out lets take $25,000 and put that towards this request. So I was trying to give some prioritization. But it’s a pretty messy process right now. So we are getting there.


Williams: On slide two of two here the one item we need to take a closer look at is the entrepreneurial post-docs issue in terms of them coming back with a little bit more resolution on where they are.

Jones: I think you can assume that’s a request and say do not approve. Then we will have to present as a new request next time and you can approve or not approve.

Bell: And the Center of Engineering and what was the other center Greg?

Jones: Center of Medical Innovation. So there are two centers.

Bell: So there is two: translational and Center of Medical Innovation. This was not a no.

Jones: We just need to give them room to present and we welcome these are budget numbers and you have got my prioritization. But if you feel the prioritization doesn’t line up with what USTAR wants to do… Partial amounts are, you know, absolutely kosher in my eyes.

Opp: Yeah, that’s fair.

Bell: Thanks for your understanding and thanks to the committee for the work. I think that’s University of Utah. Is there anything else from Utah State?

Clark: Here are the FY16 budget new request adjustments for Utah State. The first line item is the USTAR/MEP outreach project, which is a project to assess the high bay facilities capacity to function. To what has been discussed previously, this was not necessarily a new request, this is an authorization for an expenditure for an already approved amount for the commercialization line within the Utah State budget. It does not increase or decrease the overall. It’s just an approval of this project and that is the FY16 request of $41,000 approximately. The other item for Utah State is for Seth Lyman. When the original budget was set for Utah State, approximately $179k was included in that pending a market assessment and the budget subcommittee evaluating that. After evaluating that market assessment, the budget subcommittee recommends we approve not funding that. So that would reduce the FY16 overall Utah State University budget by $179k.

Bell: Did Utah State recommend this?

Noelle Cockett: Yes, I’m totally familiar with this. You know the original commercialization budget line total $376k we outlined a request to hire two full-time ongoing commercialization people. We haven’t actually been able to secure those people and in the mean time this manufacturing extension program individual Steve Reid, through conversations we realized he is very well suited to help us with the high bay facilitation development. Since we have unused unallocated money in our approved budget, we would like to shift part of that commercialization budget


to use for this individual. And then the other we actually had two projects Seth Lyman and also a project from Foster Agblevor and both of those were pending on a market analysis. The market analysis has been completed for both and as I am hearing, your subcommittee has reviewed those and declined to approve Seth Lyman’s.

Williams: We haven’t done Foster’s yet. His is the Ulpine project… He has been on sabbatical ad been unreachable. As soon as we can obtain him we will complete the market analysis.

Clark: We have made progress. I think we are about two weeks away from that assessment being finalized.

Cockett: I just want to commend the approach of having the market analysis done to assess whether it does fit USTAR and whether it does have a marketable product etc. I’m sure it is a disappointment to Seth Lyman but that is the way it goes.

Bell: Why don’t we vote on Utah State? I’ll take a motion to approve the adjustment in the Utah State budget.

Lunsford: So moved.

Bell: Rich, discussion. All in favor, say aye?

GA Members: Aye

Bell: Opposed no? The motion carries unanimously. Thank you. Industry partnership.

Clark: Do we maybe want to do two separate votes or do you think we captured everything?

Bell: We captured everything. Put the slide into the minutes.

Clark: Here is a quick summary of the market analysis of Seth Lyman. I will leave that to everyone to read at your own leisure. Moving on to industry partnership FY16 budget requests. This came in and was reviewed by the budget subcommittee and the recommendation was to approve it. It’s worth noting back in September this particular project was awarded $15k through the energy research triangle. It’s already shown a track record to be able to deliver on milestones. Which is encouraging.

Bell: Has the committee reviewed it?

Clark: Yes


Bell: This is your recommendation (to approve the industry partnership request), do I have a motion?

Opp: So moved

Bell: Discussion? All in favor Aye?GA Members: Aye

Bell: Opposed no? Motion carries unanimously. Did Jennifer come online?

Jillian Hunt: She actually will not be joining us.

Bell: Alright, TOIP?

Clark: This will be the last finance issue to vote on and this is to reallocate the TOIP budget. The current allocation, $560k, is between the go-to market program and the industry/university partnership. We just propose that it be reallocated to the TAP program.

Williams: We have released the TAP program.

Bell: No acronyms.

Williams: The Technology Acceleration Program has been announced. We already have approximately 30 letters of intent. We will close out any final applications in March and we will down select. Then present it to the GA subcommittee and then present it to the broader GA and hopefully approve everything by March 15th.

Bell: Our budget shows go-to-market and Industry partnerships for that amount and administration is recommending that we take money from those line items and put it into the TAP program, and has the budget subcommittee reviewed those and do they recommend it. Down select means?

Williams: Narrow down and ensure that proposals are meeting required metrics.

Bell: Are there any contrary opinions? What else on this Lincoln?

Clark: Its been covered by Thom. The only other thing worth mentioning would be the implementation process of the program. But we have gone through that as far as down select and subcommittee review then bringing it forward to the general GA.

Bell: I feel like part of the military industrial complex because of the down select.

Williams: We did something, we down selected.

Bell: Ok, we have our recommendation from the subcommittee. Can I have a motion?


West: Can I ask something? The only question I have is whether or not this is just a pure grant or there is some other or more investment kind of process?

Williams: That is a good question there is a lot of criteria. One of the criteria that would make a package look attractive is matching funds. West: From USTAR’s prospective is it just a pure grant?

Williams: It is just a grant program.

Bell: What’s the largest expected amount we would grant?

Williams: There is no limit. $575k if someone came in with something outstanding.

Bell: How many applications?

Williams: We have 30 letters of intent. We do not have to fund of course all of them. And we are expecting more.

Bell: so the likelihood of these would be 50 to 75 thousand.

Williams: We have been getting pinged to identify range of which a proposal would look attractive. We have been resisting that saying that you have got to sharpen your pencil and propose what you think you are going to need to achieve these milestones and we will consider your packet in that manner. As long as the technology readiness levels we are looking at and the sectors of technologies that we want to invest further in from a state perspective.

Bell: The committee that grants these is able to apply conditioners and the smart guys are going to propose some milestones. Or propose some phase funding but it is not necessary.

Williams: No, it’s not necessary. And between now and July there is really only time there for realistically one milestone because we are going to need to be getting into 2017.

Bell: So this money needs to be spent by the end of June. Any other questions?

Miller: Does the money have to be allocated by USTAR or actually spent by the recipients?

Bell: I think it has to be dispersed by us.

Williams: We have some time.

Miller: I wouldn’t want to send the wrong message and motivation.


Williams: We are not trying to burn a pile of money.

West: Meaning you are trying to make good decisions where it goes. But you are trying to spend the money and it will not come back. I’m glad it’s a grant and there would be complications. Because you are not trying to just burn through the money the decision will look a lot like an investment decision.

Bell: They could come back with $199,000 unallocated if they weren’t worth projects.

West: Or more likely they will have millions of dollars worth of worthy projects.

Williams: We will draw the line at the extent of our budget and that’s the number of projects we will fund for 2016.

West: We do not need to get into it here if everyone is comfortable if there is a good review process. But it is hard to make those kinds of decisions well. And this is what investors do all of the time. Is there a good process for that?

Williams: We will be putting together panels to review. Technical and business experts to take a look at all of these packages and rate them.

Miller: Ultimately, that is a recommendation of this board.

Val Hale: I might mention this is similar to what we go through with the TCIP program, which is very similar. We put together panels and we had something like 150 applicants this year. And I will tell you there is nothing that generates more controversy than the TCIP program. That generates more controversy because people put in their applications and if they don’t get it they contact their legislator, they want to know why, so just be prepared for that. You’ll get that for those who aren’t rewarded.

West: How good is that program at making good bets? It would be interesting to do a post mortem and say here is what we did fund and here is what we didn’t fund and how did they do?

Hale: We are trying to get some of that data. There is a little bit but I don’t think we have had good data going back. That is a good question.

Bell: Will SRI measure this?

Williams: They will. This is part of their recommendations. This is what they call in their vernacular “new ventures program.”

Bell: …Their survey tool next year.


Williams: In the contract that we are going to have with all these companies will be the requirement to collect, that the company will provide all the data required to be able to populate the metrics that are required by the legislature. So that is the goal going forward to capture all of these things so we can measure the effectiveness later on.

Hale: TCIP this year just concluded a month ago. We awarded two and half million dollars. There were 168 applicants and we awarded 25 companies. There were a lot of people who were angry they didn’t get the award.

West: That is a much better hit rate than a venture fund would have. They would fund one percent of what they saw.

Bell: So two and a half million dollars among 25 companies puts an average grant about 100 grand.

Hale: 100 grand is as high as we go, I believe.

Miller: Can I ask another question? Thom you had addressed this but I want to make sure I understand you answer correctly. I think what I heard you say is that the matching fund will be one consideration but not a requirement.

Williams: That is exactly correct.

Bell: Anything else? Then I call for a motion to approve this reallocation of our TOIP budget.

Lunsford: So moved.

Bell: All in favor,Aye?

Miller: Before I do have a point of discussion. I just wanted to state my own personal bias that easy money flows to bad projects. I hope we don’t make this easy money and have a thorough process that ensures it’s not easy money.

West: I second that comment.

Miller: And we are part of that.

Bell: Easy money flows to bad projects. I will remember that.

Williams: Selection is one thing and probably the easiest thing. The more difficult effort is going to be the management of these efforts. Which has probably been the weak point in a lot of programs that I have seen.


West: What does that mean?

Williams: Insuring milestones are met and the technology. It’s not going to be a program with the check written and then we will see you in the next fiscal year with your next application. There will be a requirement with milestones both business and technical. It may be something different than people will be accustomed to. It will be in the contract each company will sign directly with USTAR.

Bell: Any other discussion? All in favor Aye?

GA Members: Aye

Bell: Opposed no? The motion carries unanimously, thank you. I’m losing my voice I apologize. Legislative and statute update.

Williams: Greg, you sat through many more of these than I have. So I think we are at the point where… Ivy testified last week. I think it went pretty well.

Bell: Noelle was there and we appreciate her.

Williams: I think after you spoke there was no question. Thanks for that. Will maybe we can get you to attend one of these sessions at some point.

West: One of these legislative sessions.

Bell: He’s done the Fund of Funds, so he is a veteran.

Williams: So you still have some scars and recovery. Perhaps, we can enlist your support in some of these where appropriate. We are waiting for Senator Milner to release her bill. Which I thought was going to be put out either today or the day before. Koa or Joe?

Koa Perlac: They are still drafting.

Bell: I will say that there has been a task force designated from the University of Utah, Utah State, Senator Milner and colleagues Representative Wilson, and Ivy has been in some and I have joined her when invited. It has been a very robust conversation. Clearly, USTAR is moving in a different direction. We have said that we want to preserve the opportunity for what I call legacy USTAR commitments as we have done at both universities to entice good researchers from across the United States to join our universities, but that probably wont be the norm and therefore we are moving to, as SRI pointed out, a lot of technology initiatives have gone to smaller time limited grants as opposed to salary supplements. So I think we will see a broader group of researchers apply and I think we will see more time limited


projects and hopefully we will see very applied research, stuff that really needs some accelerant. I don’t know how this will work. It will be interesting to see.

Cockett: I had the opportunity to work with Senator Milner, Ivy and others on this rewrite and I am very pleased with the direction that it is going. Particularly in three different areas. The first is Ivy was able to present at her last legislative hearing the Bayh Dole Act prevents funding agencies from receiving revenue from IP. And so that restricts USTAR from receiving IP from USTAR funded research at the various institutions.

Bell: Which was a founding premise of USTAR. But it was illegal.

Cockett: Yes and so that has been removed. The second thing that Ivy has mentioned several times, the metrics that the U and USU that were required by that statute in the past to provide has been very difficult for us to collect. Primarily once our IP is transferred to a company we’ve been asked to collect information that companies are reluctant to provide us: number of jobs, salaries, follow up on investment, expansion, etc. When you look back and you see the holes in what the audit has found and what has been reported, you can see how this has created a lot of problems. The metrics that are now in there for the research institutions to collect is very doable. In fact, those are the same metrics that we always collect on a faculty member regardless of how they are funded each year through our annual performance review. So it will be very easy for us to provide that information on a regular basis as needed. We appreciate that. The third Jason Perry worked with Ivy to strengthen the language of upholding prior commitments so that also I think turned out well. So I hope the U is satisfied with that.

Jones: Yeah, I think we are close.

Bell: You know Greg, I think just given the misunderstanding I think it would really do well not only if we have this conceptual agreement but if we could really nail down specifically what the university thinks those amounts are and commit us and commit you.

Jones: Yeah, I think we have traded that dollar amount over the past two months quite a lot.

Bell: Even if we could have a little memorandum signed by me approved by USTAR and signed by the president or even Ruth. Just so there is zero question.

Jones: I am assuming that is the outcome of these negotiations that the dollar amount will remain.

Bell: Were talking 30,000 foot policy if we could have specific agreements.

Jones: I don’t think we have finished the job unless we have dollar amounts.


Bell: No one gets hurt, right?

Jones: Agreed.

Bell: Because that is the number one priority for the president of each university just does not want to put that money at risk and we agree. That has been our commitment. The tie up has been it just can’t be a forever thing. There has to be some kind of performance condition and the difficulty has been well who makes that and what is it. USTAR will post something unilateral and the concept we have hit upon is it has to be a bilateral agreement. It has to be a mutual agreement. So if USTAR says no we are cancelling this and the U says no we disagree, then we keep talking until we followed a Chinese option of why. If you and I are partners and I decide I want to buy versus if you don’t like my offer then you can buy me at my offer. That is kind of what we have here is two parties and it has got to be mutual. I think that is good.

Jones: I think we are close and we have talked over the last week about what leverage points are actually sitting there and each group is trying to maintain and letting those leverage points go. So they can be a good faith partner based association. I think that is the hardest part of this whole thing.

Bell: If we have the history of it documented and then we have the policy agreed on then life is going to be great.

Jones: I think the numbers, Corinne can correct me if I am wrong, the numbers are pretty stable at this point.

Bell: Alright, wonderful.

West: I know that it’s more complicated than we can probably address here but I am left sort of wondering if the program has really transformed because the found premise sharing in IP returns is no longer on the table. I am left to sort of wonder where the ROI is going to come from.

Opp: Didn’t you say the opposite of that? When we started this program getting IP financial stream was against the law and the new legislation will make it.

Bell: It was contrary to federal law. Federal law prevents a funding granting agency from taking an interest in the IP.

Opp: Then his question stands.

West: Is it because it’s a grant? Well maybe that doesn’t matter. I am still interested where the ROI is going to come from.


Bell: It’s a great question.

Cockett: I think that’s why the portfolio that USTAR is working on is being broadened so the ROI is not going to be dollars that come into USTAR. That was part of old metrics was that these companies were going to return.

West: I get that I am wondering what the new return is. Williams: I think it is going to be more tax revenue and job creation basis.

West: Licenses that get sold outside the state to non-Utah based corporations will represent zero.

Cockett: It’s not dependent on just USU and the U anymore to carry USTAR. Things like the TOIP...

Williams: Things that are in the statute and the ability for us to invest any efforts or promising effort our institutions of higher learning are conducting. We are working more broadly with entrepreneurs and industry within the state.

Bell: I think there are four main goals. Number one is to induce good research among existing scholars in colleges and universities in smaller amounts, shorter times, and smaller bites. The second one is and this is somewhat intangible but I am gaining an appreciation of this, the second one is to build research capacity post-docs, programmatic infrastructure if you will, the people the programs and the centers that are concentrating on subject matter that is important in Utah. The third one is SRI where they see the new normal going is the brokering by initiative like us of corporate research. They do not know what can further their research. We become an introducer, influencer, and connector to say there is a guy at University of Utah Nanofab who has specialized in inflammable cloth medical products. And if we can help some corporation make that connection. That is an extremely important one. The fourth one is continuing the legacy of USTAR of financing our existing researchers and possibly additional researchers. While USTAR was initially cast in a return of money, it was who gets the IP and what happens when you get to 10 million bucks return and then how do you divide the 15 etc. That has been changed. Will makes a great point, it’s not based in cash return anymore and it’s more tangible, it’s a debatable policy issue. That’s where the Milner bill is going. The other part of the Milner bill is absolutely necessary because this new audit and I’m glad you weren’t around when I read it. Essentially we are being dinged and when the press picks this up and I can’t blame the press because they are just reading from the audit. But essentially we are being dinged for not measuring on metrics or on having metrics that the auditor thinks are important. Because of what Noelle explained, we are not able to follow up and the more frustrating thing is even when we are able to get the information, unless the auditor believes that he or some third party are able to verify that information, even if we have certified information the auditor doesn’t accept it because it can’t be verified. So the milestones and metrics, whatever the measuring device is in the statute will be based on a third party


verification and wont be subject to auditor criticism and most of it will be done by third party survey work. Where we don’t have the right to proprietary information or as Noelle explained by agreement the companies we do. Because we found that University of Utah has a $500 million research budget and we give them $11 million each year. While $11 million is a huge investment on the state’s standpoint mixes in with a lot of other stuff and it’s very difficult administratively to follow up on that.

West: I thought the audit was incredibly benign. Their job is to point out problems whether they exist or not. This is why I will never work on the hill. I don’t really have a political bone in my body. These guys aren’t there to provide a perfectly evenhanded review of what is happening. I think they say there is improvement in the program and I think that is high praise from legislative auditors. I reacted differently when I read it. I know there is a difficult history between USTAR, press, and auditors. I personally thought it was pretty benign.

Bell: It’s ok. We are where we are. They have been very cooperative and they are doing their job. I think we are in a good place.

Jones: Will, not to back track but I wanted to mention one of the ROI pieces is really hard to get across to the legislature and is largely passed by, is these researchers that Utah State and the University of Utah have recruited is the grant money they have brought in has been absolutely significant. And has added tens of millions of dollars to the economy per year. And that is an ROI piece that is largely neglected by auditors and legislators and agencies. It is unfortunate because there has been a significant up take in research.

West: I believe that ought to deserve a spotlight. But why isn’t it front and center? I believe that and it makes sense to me. It is also now just a quarter of the program.

Jones: It is also an ROI that will keep going on as long as those researchers. The research dollars these researchers that Utah State and the University of Utah have recruited are really significant dollars.

Bell: bringing in federal and other grant funding.

Jones: Federal and corporate. Remember the University of Utah does about $90 million in corporate sponsor research. There is a ton of corporate and there is a lot of corporate in the USTAR professors also. It’s not just federal, majority federal, and these are actually expenditure dollars. They have been expended not on subcontracts out of state but we will pull it down to expenditures here in Utah and it is significant dollars. And it largely goes unnoticed.

Bell: The other thing I wonder is that we shouldn’t lose sight of is I have always thought that USTAR is incentivizing research in our cluster areas. How are we aligning that with our six clusters?


Williams: Truth be told, I’m not sure what the health of the cluster-based system is. Although there are a couple of clusters that are more active than others, the advanced materials part of it and the life sciences piece of it. The others of USTAR interest are not active enough for us to realize they exist.

Bell: I would like to hear from Ivy the answer of that question. Because I thought we were running that prism that we are targeting something within those six acceleration clusters.

Jones: Your Technology Accelerator Program is aligning with it, the IT cluster, the life sciences cluster, and the advanced materials cluster, the three most active clusters. The material aligns with the aerospace and those are really the most active clusters in these spaces.

Mary Cardon: The energy, robotics and the internet of things not IT.

Williams: If those align with those clusters some are more active.

Bell: I want to make sure our new grants aren’t random.

Williams: Those are exactly what the new Technology Acceleration Program is focused on.

Bell: I see all our regionals nodding in enthusiastically. Anything else on that item? And we are reporting again tomorrow. We are going through the audit.

Williams: 8:35 is our start time. And we will continue to put out updates on the statute during the legislative session.

Bell: We have the audit release.

Williams: One of the significant things I noticed the discussion points from the auditor was the agreements between USTAR and the universities. Getting those negotiated. We can’t go another year without getting those completed.

Bell: Anything else? We will take a motion to adjourn.

Opp: So moved.

Bell: All in favor, Aye?

GA members: Aye

Bell: We are adjourned.

Documents

· Web viewWilliams: The word that a lot of statute language uses is a substantial presence and that could be a little subjective but this is what we have and I think we are on the