Archive for Tuesday, January 5, 2016

Bioscience Authority not fully severing ties to state, officials now say

Kansas Bioscience Authority logo

Kansas Bioscience Authority logo

January 5, 2016

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— The new president and CEO of the Kansas Bioscience Authority said this week that the agency does not intend to fully separate its ties with the state. But in the wake of significant funding cuts from the state, it does plan to rely more heavily on private-sector support to perform many of its functions.

"What’s happening is, KBA is working to transfer as much of its original mission as it can to the private sector. We’re not privatizing the entity," said Kevin Lockett, who recently took over as president and CEO of the state-established entity.

Late Thursday, Dec. 31, KBA issued a statement via email with the heading, "Kansas Bioscience Authority to Go Private in 2016."

It said KBA's board of directors had voted unanimously two weeks earlier "to shift the organization’s mission to the private market in 2016, allowing portfolio companies to partner with experienced investors in the private sector, retaining Kansas bioscience jobs and paving the way for the continued growth of the sector in Kansas."

In that same statement, the agency announced that Duane Cantrell was stepping down as president and CEO of the organization and that Lockett had been named as his replacement.

After the statement was released, KBA officials were not available to respond to questions from reporters.

KBA was established by the Legislature in 2004 as a kind of venture capital firm that would make investments and loans to startup bioscience companies and to make grants to state universities to conduct bioscience research.

But in recent years, tensions have arisen between KBA and the Kansas Legislature, with some lawmakers questioning how the agency has been managed, how it has invested its funds, and whether it's even appropriate for the state to be involved in the venture capital business.

Last year, lawmakers slashed KBA's annual appropriation to just $13 million for each of the next two years, with $6 million of that reserved for grants to universities. KBA had been expecting to receive $35 million this year, and $75 million in fiscal year 2017.

Kenny Wilk, a former Republican lawmaker from Lansing who was one of the original architects of the Bioscience Authority, said it was always assumed that it would eventually transition to a private-sector entity.

"It was always the vision that the KBA would either, one, go away because it had fulfilled its mission, or two, that it would move toward some sort of privatization model," said Wilk, who now serves on the KBA board of directors.

"How we have arrived where we're at today probably was not the most desirable way to get there," he added, "but it's where we're at. Personally I would have liked to have seen the state stick with the full commitment that we originally passed. That didn't happen. So we're moving toward the privatization plan with the full intent of trying to leverage and keep the progress that we've made, and continue to make more progress in the bioscience sector for the state."

According to its most recent financial audit, the net asset value of KBA's portfolio was $82.8 million at the end of fiscal year 2015, down nearly 14 percent from its 2013 value of $96.2 million.

Comments

James MacMurray 7 months, 4 weeks ago

Looks like someone got a nice payout to leave? Kind of disgusting to offer silver parachutes to public employees whose primary skill set was doling out taxpayer money.....

"Additionally, subsequent to June 30, 2015, the Authority executed a plan to scale down staffing to the level required to maintain the existing portfolio of investments. Costs of $1,077,926 associated with this plan have been paid in 2016. Similar agreements have been executed with the remaining personnel."

Note 2 on page 20 http://www.kansasbioauthority.org/sites/default/files/Kansas%20Bioscience%20Authority%20-%202015%20Financial%20Statements.pdf

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