The state of Kansas gave more than $160,000 to help start Oread Inc., the Lawrence-based pharmaceutical company that recently fired half its employees, told others to prepare for a shutdown and then filed for bankruptcy protection.
State Rep. Doug Spangler, D-Kansas City, complained Wednesday that Kansas Technology Enterprise Corp.'s investment in Oread was a bad one and indicative of poor decision making by KTEC officials.
"We never get any return on our investment," Spangler said.
But Rich Bendis, president of KTEC, defended the money pumped into Oread.
"Oread, in every sense of the word, was a success for the state of Kansas," Bendis said.
The economy benefited for years from Oread's payroll and construction of several buildings at 15th Street and Wakarusa Drive in Lawrence, he said.
KTEC's grants were made to Oread Laboratories, an offshoot of research at Kansas University that later was acquired by David Kimbrell and served as his foundation for Oread Inc.
Under Kimbrell's leadership, Oread quickly grew into one of the world's largest contract-pharmaceutical companies, handling drug development from "molecule to market." At one point it had 835 employees nationwide including more than 300 in Lawrence and annual revenues of $83 million.
But by this year, after a series of aggressive acquisitions, Oread had piled up too much debt, company officials said. Oread and its affiliated operations filed for Chapter 11 bankruptcy protection Feb. 13.
In court filings, the company said it owed $48 million to its 20 largest creditors.
KTEC's grants to Oread totaling $160,829 were for research. They were matched with funds from Oread and were given between 1988 and 1992, Bendis said.
"They did with the monies what we expected them to do," Bendis said.
KTEC is a quasi-public agency that invests in high-tech companies. It is financed with proceeds from lottery sales.
Spangler said he wondered if the state would get any royalties from patents devised by Oread.
The answer is no, Bendis said, because prior to 1993, KTEC simply made grants. After that time, grants given to companies were to fetch a return on the investment.
Bendis denied that KTEC was making bad investments. Since it was established in 1987, KTEC investments have resulted in 12,000 jobs and $6.5 million in royalties and equity returns, he said.
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