Tuesday, November 1, 2016

Sanford Burnham denies breach of contract after state asks it for $77.6 million refund

Posted By on Tue, Nov 1, 2016 at 4:18 PM

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Florida may have prematurely demanded a $77.6 million refund from one of the taxpayer-backed biotech operations that a decade ago was supposed to help spark a research revolution in the state, an attorney for the struggling institute argued in a letter released Tuesday.

On Friday, the Florida Department of Economic Opportunity, noting Sanford Burnham Prebys Medical Discovery Institute has "assumed the posture it will leave Florida," declared the institute in default on parts of a 2006 deal and said it should return half the $155.3 million awarded a decade ago, along with equipment purchased with tax dollars.

"Be assured that the state of Florida will thoroughly investigate and prosecute all available claims against Sanford Burnham," wrote Karl Blischke, director of the Department of Economic Opportunity's Division of Strategic Business Development.

But Knox Bell, senior counsel for Sanford Burnham, rejected the notion that the non-profit institute has breached the 20-year agreement. Bell, in a letter signed Monday but released publicly Tuesday, questioned the state's stance and requests, asking Blischke for information on who said the institute planned to cease its Florida operations.

"I suspect that whatever might have been said was somehow misunderstood from what was intended," Bell wrote.

The letter isn't a formal response from Sanford Burnham, which will come later, Bell wrote.

In the letter, Bell acknowledged that a deal for the University of Florida to take over the Sanford Burnham operations at Orlando's Lake Nona has fallen through after 10 months of talks. But Bell wrote that no decision has been made about the future of that facility.

"SBP (Sanford Burnham Prebys) will have discussions with all of the stakeholders to explore possible plans and alternatives," Bell wrote. "If DEO (the Department of Economic Opportunity) or the governor's office has any helpful suggestions, SBP will welcome hearing them. In the meantime, it is business as usual for the SBP Lake Nona operations and facility."

Sanford Burnham agreed to meet targets for hiring and spending when it was offered more than $300 million in state and local incentives to open a facility in Orlando.

In June, the institute said it had reached about 78 percent of the 303 jobs that were supposed to be created within 10 years and had made $61 million in required equipment purchases.

The incentive money was part of approximately $1.3 billion spent a decade ago by state and local governments to grow biotech research in Florida, an effort that hasn't materialized as envisioned.

In the response, Bell said Sanford Burnham has used "reasonable best efforts" to create the 303 jobs, but that the jobs number was a target not an "obligation."

Bell also questioned a request from the state to return equipment purchased with the 2006 money.

"I do not find any provision in the agreement that calls for such return," Bell wrote.

In June, responding to questions from the governor's office, the institute said "SBP (Sanford Burnham Prebys) will continue operations at Lake Nona until a viable alternative arrangement is approved, or until the available funding resources are exhausted."

The institute, which includes the Orlando facility and a research facility in La Jolla, Calif., has cited a slowdown in research funding as a cause of the research organization's financial situation.

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