RD402 - Virginia Biotechnology Research Partnership Authority Financial Statements - June 30, 2010


Executive Summary:
Authority Highlights

• In November 2009, the Authority entered into an agreement with Hanover County, the Town of Ashland, Dominion Resources and the Virginia Biosciences Development Center to manage the Dominion Resources GreenTech Incubator (DRGI). The DRGI will focus on attracting entrepreneurs and scientists starting companies in technologies related to alternative energy, clean technology and “green tech” jobs, and will replicate the successful business incubation and commercialization model that the Park has used over the past decade to incubate bioscience companies at the Research Park itself. This agreement is significant because it also brings Hanover County into a formal relationship with the Authority, completing an identified strategy in previously-adopted Strategic Plans of the Authority.

• In May 2010, the Authority received notice of a conditional grant award in the amount of $2,959,702 from the Virginia Tobacco Indemnification and Community Revitalization Commission for the creation of the Virginia Tobacco and Health Research Repository (VTHRR). The VTHRR will be a new Virginia non-profit, non-stock corporation formed to promote research into the health effects of smoking and tobacco use through a database and biological specimens collected over a three-year period by Philip Morris for research purposes. The Total Exposure Study, as the database is known, in one of the largest research studies on smokers and non-smokers undertaken in the U.S., and is intended to become the cornerstone of the VTHRR with the anticipated transfer of the study data and biosamples to the new entity, upon formation. The grant award is conditional and subject to raising matching funding from other sources.

• In November 2006, the Authority entered into a partnership called BioTech Eight, LLC. The BioTech Eight, LLC is a for-profit development entity that the BioTech Authority has approximately 40 percent equity interest in. The Authority contributed land and cash and entered into a management agreement for property management and leasing. The private sector partners arranged for construction and permanent funding of the project on the strength of their equity contributions and personal guarantees. The total cost of the project is expected to be approximately $22 million and the first tenants moved in during the 1st quarter of 2008. Before the end of the fiscal year, Health Diagnostic Laboratories, Inc. (HDL), a company founded in the Research Park in June 2009, committed to lease the entire second floor of Biotech 8, adding to their original lease of 8,300 sq. ft., bringing their total occupancy to over 36,500 square feet. HDL is the fastest-growing company in the Park’s history, reaching the 100-employee mark within the first 15 months of operations. This expansion brings Biotech 8 to approximately 98 percent total occupancy.

• Beginning in February 2010, the Boards of Directors of the Virginia Biotechnology Research Partnership and Authority and Corporation, initiated a discussion regarding the need to update the Park’s Strategic Plan, which was prepared and adopted before the global economic downturn which began in the late summer of 2008. Anticipated budget shortfalls at all levels of government, coupled with a significant contraction in both the residential and commercial real estate markets, and continued lack of capital and liquidity to finance new company formation and expansions has created a new environment for the Research Park and economic development initiatives in general. This process is expected to be a continuing and in-depth topic of discussion by the Boards and management over the course of future board meetings in the 2011 fiscal year.