september 30, 2007

2007 BOARD OF DIRECTORS

CHRIS SULLIVAN, CHAIRMAN

DAVID J. GURY, VICE CHAIRMAN · ANDY CRAWFORD

DR. PAMELLA DANA · WILLIAM P. FOLEY · DR. EDWARD

GONZALEZ · RUBEN KING-SHAW, JR. · JAMES E. MCCOLLUM

DR. JOSEPH J. THOMAS · DR. DALE BRILL, EX-OFFICIO

JENNI GARRISON, PROJECT DIRECTOR

SCRIPPS FLORIDA FUNDING CORPORATION

FOURTH ANNUAL REPORT

FOR YEAR ENDED

SEPTEMBER 30, 2007

Scripps Florida Funding Corporation 1

Annual Report 2007

Scripps Florida Funding Corporation Fourth Annual Report For Year Ended September 30, 2007 INTRODUCTION Florida Statute 288.955 (the “Enabling Statute”) created Scripps Florida Funding

Corporation (“SFFC”) to facilitate the establishment and operation of a biomedical

research institution for the purposes of enhancing education and research and promoting

economic development and diversity. In addition, the Enabling Statute charged SFFC

with the obligation to assure the compliance by The Scripps Research Institute (“TSRI”)

with the Enabling Statute and the agreement between SFFC and TSRI (the “Operating

and Funding Agreement”). The Enabling Statute provides that SFFC shall prepare or

obtain certain reports, audits, and evaluations of TSRI’s compliance with the

performance expectations and disbursement conditions contained in the Enabling Statute.

As such, SFFC is submitting this SFFC Annual Report to the Governor, the President of

the Senate, and the Speaker of the House, as required by the Enabling Statute to be

submitted by December 1 of each year. This SFFC Annual Report addresses the

activities and outcomes of SFFC and Scripps Florida (“Scripps”) for the fiscal year ended

September 30, 2007 (“Fiscal 2007”). The Scripps Florida Annual Report addressed the

activities and outcomes of Scripps Florida for the year ended June 30, 2007, and SFFC

received the Scripps Florida Annual Report on August 28, 2007. The information in the

Scripps Florida Annual Report was informally updated for this SFFC Annual Report.

This SFFC Fourth Annual Report is presented in two parts: first, a summary that

highlights the substantial events that have occurred during the year ended September 30,

2007; and second, an itemized report that corresponds with the applicable sections of the

Enabling Statute.


Annual Report 2007

About the Scripps Florida Funding Corporation In November 2003, Governor Bush signed into law an historic piece of legislation that

laid the framework for The Scripps Research Institute to expand its world-renowned

scientific research and endeavors into Florida. The bill, passed by the Florida Legislature

during special session, provided a one-time investment of $310 million from federal

economic stimulus monies to create Scripps Florida and pay certain of its expenses for

the first seven years, specifically salaries and equipment purchases. In June 2006, The

Scripps Research Institute revised the Scripps Florida business plan and scheduled

investment from the State, which expanded their grant funding to ten years, or through

2014.

To oversee the investment and spending of the State’s investment in Scripps Florida, the

Florida Legislature created the Scripps Florida Funding Corporation, hereto referred to as

SFFC, a nonprofit entity comprised of a nine-member Board. The role of SFFC was

enunciated by Governor Bush:

“My vision for this board is that it manages the financial portion of our

partnership, but lets Scripps do what it does best – conduct biomedical research.”

This report serves to report on both the requirements and the aspirations as set forth by

the State in the Operating and Funding Agreement with Scripps.

About the Scripps Research Institute The Scripps Research Institute, headquartered in La Jolla, California, in 15 buildings on

22 acres overlooking the Pacific Ocean, is one of the world's largest independent, non-

profit biomedical research organizations. It stands at the forefront of basic biomedical

science that seeks to comprehend the most fundamental processes of life. Scripps

Research is internationally recognized for its research into immunology, molecular and

cellular biology, chemistry, neurosciences, autoimmune, cardiovascular, and infectious

diseases, and synthetic vaccine development. Established in its current configuration in

1961, it employs approximately 3,000 scientists, postdoctoral fellows, scientific and other

technicians, doctoral degree graduate students and administrative and technical support

personnel.

About Scripps Florida

Scripps Florida, a 364,000 square-foot, state-of-the-art biomedical research facility, is

under construction in the Town of Jupiter in Palm Beach County, Florida. Scripps

Florida now operates with approximately 220 scientists, technicians, and administrative

staff at two temporary laboratory facilities, together comprising 74,000 square feet, on

the Florida Atlantic University campus in Jupiter. Scripps Florida focuses on basic

biomedical science, drug discovery and technology development.


Annual Report 2007

Scripps Florida Funding Corporation Board of Directors

Of the nine-member Board of Directors, three Directors are appointed by each of the

Governor, House Speaker, and the Senate President. The terms of the directors initially

ranged from one to four years and expire on a staggered schedule

Governor Bush appointed Dr. Pamella Dana, of Destin, on January 1, 2007 for a term

ending on November 13, 2008. Dr. Dana previously served the Board of Directors as an

ex-officio member, while serving as the Governor’s Director of the Office of Tourism,

Trade and Economic Development (“OTTED”).

On September 19, 2007, Governor Charlie Crist named Dr. Dale Brill as the Director of

OTTED. Dr. Brill joined the Board of Directors at that time to serve in an ex-officio

capacity.

Other SFFC Board of Directors members who served during the fiscal year include: Mr.

Chris Sullivan, Chairman; Mr. David Gury, Vice-Chairman; Mr. F. Andy Crawford; Mr.

James McCollum; Dr. Edward Gonzalez; Mr. William Foley; Mr. Ruben King-Shaw, Jr.;

and Dr. Joseph Thomas.

SFFC Board of Directors and Committee Meetings

From October 1, 2006 through September 30, 2007, the SFFC Board of Directors

(“BOD”) held three meetings, one of which was in-person. At the November 28, 2006

Board of Director’s meeting, the Board unanimously elected Mr. Chris Sullivan as

Chairman and Mr. David Gury as Vice-Chairman. Their terms began in January 2007.

The previous Chair, Mr. Marshall Criser, Jr., resigned his Board position on November 2,

2006, and served until the Governor appointed his successor. On January 22, 2007 the

Board approved the 2007 SFFC budget and reorganized the committee structure of the

Board.

In-Person Board of Directors Meeting

On March 9, 2007, the members of the Scripps Florida Funding Corporation

Board met at the Jupiter campus of Florida Atlantic University, adjacent to the

Scripps Florida campus. This meeting involved the annual grant request and was

planned in conjunction of the dedication of the Scripps Florida campus. After an

Audit Committee meeting, the Board joined over 400 Scripps Florida employees

and guests at the permanent facility construction site. Dr. Richard Lerner thanked

the people and leaders of Palm Beach County and the State of Florida. Also

attending the dedication were Governor Crist, former Governor Bush and Mr.

Marshall Criser, who was recognized for his leadership during the first three years

of Scripps Florida’s development. After a luncheon, the Board reconvened at the

FAU facility to hold its meeting and the agenda included updates from the Audit

Committee and the 2007 annual grant request which was approved unanimously.


Annual Report 2007

Committee Meetings

The three Committees of the SFFC are the Investment Committee, the Audit

Committee and the Reports Committee. From October 1, 2006 through

September 30, 2007, the Investment Committee held two teleconference

meetings. The majority of the Investment Committee’s time dealt with the review

of the quarterly reports from the State Board of Administration (“SBA”), where

the balance of the State’s $310 million investment in Scripps Florida is held. Mr.

Michael Lombardi, the SBA’s Representative, participates in the Investment

Committee meetings and informs the Committee of the actions undertaken by the

SBA. During this fiscal year, the Audit Committee participated in three

teleconference meetings and one in-person meeting to review, accept, and discuss

the financial reports provided by TSRI and Scripps Florida, which include: the

quarterly unaudited financials for TSRI and Scripps Florida; the yearly Audit

reports for TSRI and Scripps Florida; and the yearly budget for Scripps Florida.

The Audit Committee also engages the auditor to conduct both the audit of SFFC

and the compliance audit of Scripps Florida and reviews, accepts, discusses and

approves the auditor’s reports, the SFFC budget and the SFFC tax return. The

Reports Committee received drafts of the third annual report over the course of

October and November 2006 in order to review the content of the annual report

before it was submitted to the full Board of Directors for final approval.

Scripps Florida Facilities

Scripps Florida continues to operate out of two temporary facilities adjacent to Florida

Atlantic University’s Honors campus in Jupiter, Florida. Together, the facilities provide

74,000 square feet of laboratory and work space. Scripps Florida’s external affairs and

development personnel remain in Scripps Florida’s downtown West Palm Beach office.

The permanent campus of Scripps Florida in the Town of Jupiter is 100 acres total and is

comprised of the following: 30 acres for Scripps Florida’s three permanent buildings,

totaling 340,000 square feet, on FAU’s Jupiter campus; and 70 acres for Phase II (Scripps

Florida expansion) across the street from FAU on the Briger property. Additionally, the

Briger owners agreed to restrict 100 acres for future research and development spin-off

use.

In October 2006, site preparation for the permanent facility began. Underground utilities

were brought to the site in November and December. Foundations were poured in

February of 2007 and vertical construction began shortly thereafter. By the end of

August, the shell construction for all three buildings was complete. The construction

team is currently on schedule to complete the permanent facilities in the fourth quarter of

2008, possibly ahead of schedule because a hurricane buffer built into the schedule was

not needed.


Annual Report 2007

Architectural rendering of Scripps Florida permanent campus

Below, aerial photos of Scripps Florida site, dated December 26, 2006; July 26, 2007;

and October 24, 2007.


Annual Report 2007


Annual Report 2007

Scripps Florida Employees

As of September 30, 2007, Scripps Florida employed 223 people. The new employees at

Scripps Florida include several scientists and other personnel with notable resumes, as

described below.

In July 2007, internationally recognized chemist Roy A. Periana, Ph.D., joined Scripps Florida as a professor of chemistry. “Professor Periana's expertise will add substantial value to our ongoing efforts in

developing more efficient synthetic methodologies in chemistry," said Scripps Research

President Richard A. Lerner, M.D., himself a chemist. "His research will enhance our

ability to make new medicines to benefit human health. In addition, it will allow Scripps

Florida to move in a timely manner into the critical areas of energy and alternative fuels,

a stated interest of the Governor Charlie Crist and the people of Florida. We expect

strong and enthusiastic support for this important research from both philanthropic and

government organizations."

Professor Periana is a graduate of the University of Michigan and obtained his Ph.D.

from the University of California, Berkeley, working with Professor Robert Bergman.

His background ranges from co-founder of Catalytica Advanced Technologies in the

Silicon Valley to, most recently, professor of chemistry at the University of Southern

California and its Loker Hydrocarbon Research Institute.

He is a world leader in the chemistry of the carbon-hydrogen (CH) bond and coordination

catalysis, a field in which he was one of the 20th century's original investigators.

Professor Periana has a strong publication record highlighted by three publications in

Science, and substantial funding from both industrial and government sources.

In addition to research on the CH bond, Dr. Periana's focus will be on the five small

molecules that provide the bulk of energy and materials on Earth: methane (CH4),

oxygen (O2), nitrogen (N2), water (H2O) and carbon dioxide (CO2).

Will Melton was named Vice President of Development for Scripps Florida in early 2007. Prior to arriving at Scripps Florida, Mr. Melton spent five years as Vice President for

Institutional Advancement at the Rhode Island School of Design, preceded by eight years

as Vice President for External Affairs at Middleburg College. He also served for seven

years at Yale University as director of Development for the Yale School of Medicine and

the Yale-New Haven Hospital.

A graduate of the University of Virginia, Mr. Melton has served on the Boards of

Northfield Mount Herman School, the New Haven Symphony Orchestra and the Urban

League of Greater New Haven.


Annual Report 2007

Dr. Philippe Bois joined the Scripps Florida Department of Cancer Biology as an Assistant Professor in May 2007. Dr. Bois is taking a genetic approach, together with knock-out and knock-in technology,

to address fundamental questions about the origin, as well as the regulation and resolution

pathways, at recombination hotspots in the human genome. Dr. Bois studied at the

University of Paris 7, where he earned his bachelor’s, master’s and doctoral degrees.

In July 2007, Tina Izard, Ph.D., accepted the position of Associate Professor in the Scripps Florida Department of Cancer Biology Dr. Izard is studying the structural dynamics of signaling mediators of adhesion

junctions. Dr. Tina Izard is a graduate of the University of Basel in Switzerland and

received her Ph.D. at the University of Melbourne in 1994.

Scripps Florida Achievements for Fiscal Year 2007

In addition to progress on the permanent facility and the addition of remarkable talent

from across the country, Scripps Florida made several science and funding strides. From

October 1, 2006 through September 30, 2007, 13 patent applications were filed, naming a

Scripps Florida scientist as an inventor or co-inventor. Since inception, Scripps Florida

has been awarded 41 research grants totaling $30.7 million from sources other than

SFFC, including the National Institutes of Health (“NIH”).

Some significant achievements this past year include:

Xcovery, Spin-off Company is Established

Scripps Florida’s first private drug-discovery start-up, Xcovery of West Palm

Beach, was announced in May 2007. The company was named one of the most

promising biotech companies by Fierce Biotech, a news publication that monitors

the industry. The company develops new therapeutic products addressing

indications in oncology and inflammation. Xcovery was financed by BioCatalyst

International, a venture capital firm with offices in West Palm Beach headed by

Sheridan Snyder, a former founder of Genzyme, Upstate Biotechnology and

Biotage. Scripps Florida scientist Dr. Chris Liang invented the technology at

Scripps Florida. He will continue to be actively involved in development of the

small molecule drug candidates upon which the technology is based.

Scripps’ Kellogg School of Science and Technology Graduates First Student

Scripps Florida has established a Ph.D. program as part of Scripps’ Kellogg

School of Science and Technology. There were nine graduate students enrolled in

the program during the 2006-07 academic year. The Florida branch of the

Scripps’ Kellogg school reached a milestone this year with the graduation of

Porino Va, the first graduate of the Florida program. Mr. Va completed his Ph.D.

degree in May 2007.


Annual Report 2007

The establishment of graduate education at

Scripps Florida was a key goal for the graduate

program and for Scripps Florida. In 2005, several

students (including Mr. Va) transferred to Scripps

Florida from the University of Michigan with

William Roush, professor and associate dean for

Florida graduate studies. In 2006, the Kellogg

School accepted its first new student to the

Florida campus and in the fall of 2007, two new

students began their graduate studies in Florida.

"I feel very fortunate to have the honor of being Professor Roush's first Scripps

Florida Ph.D. graduate," Mr. Va said in the days leading up to graduation. "The

facilities and the science being conducted at Scripps Florida are truly world-class.

It is really exciting to be a part of the genesis of a new research institution and I

am certain that a few years from now, Scripps Florida will be even more

recognizable for its novel discoveries in science."

After graduation, Mr. Va will go on to postdoctoral studies in the laboratory of

Scripps Research Professor Dale Boger.

The Scripps Research Institute Enters Major Collaboration with Pfizer

In March 2007, the Scripps Research Institute announced that it had entered into a

five-year research collaboration with Pfizer Global Research and Development to

advance scientific knowledge of uncured diseases and novel ways to treat them,

making full use of emerging technologies and resident talent from both

organizations. Under the terms of the agreement, Pfizer will pay Scripps

Research $100 million over a five-year period, during which scientists from Pfizer

and the Institute will work together to identify and perform specific projects of

mutual interest. Approximately 10% of awarded funds will be provided to

Scripps Florida. During fiscal 2007, approximately $3 million from the Pfizer

grant was directed to Scripps Florida.

Scripps and Pfizer will jointly study and evaluate therapeutic approaches for

diseases such as cancer, diabetes, and mental illnesses. They will develop new

tests to rapidly validate these new therapies for potential development as possible

novel treatment options that can gain regulatory approval for use in patients.

Pfizer will pay Scripps both milestone payments and royalties on therapeutic

compounds created through the collaboration. In addition, Pfizer will have the

first right to license many discoveries made at Scripps Research during the

agreement.

Scripps Florida Forms Molecular Therapeutics Department

In anticipation of Scripps Florida's continued expansion, The Scripps Research

Institute created a new academic department in 2007, the Department of

Molecular Therapeutics.


Annual Report 2007

"We will recruit faculty to the Department of Molecular Therapeutics capable of

utilizing the advanced drug discovery technology at Scripps Florida," said Patrick

Griffin, the new department's chair. "Our goal is to discover new chemical probes

that have immediate therapeutic implications."

Associate Professor Phil LoGrasso and his group were among those joining

Griffin and his team as the department's first members. The department now

numbers 15 faculty, senior scientists, staff scientists, and research associates.

Scripps Florida Collaborations During the year ended September 30, 2007, Scripps Florida maintained its collaborative

relationships with three Florida-based institutions – the Jupiter Medical Center, Dyadic

and IBM – and began a new partnership with another Florida university. Scripps Florida

executed a formal agreement with Nova Southeastern University, bringing its total

number of Joint Cooperation Agreements (“JCAs”) to six. JCAs streamline the scientific

collaboration process by including such provisions to make it easier to collaborate on

filing patents and to share revenues from commercialized innovations. Additionally,

Scripps scientists participated in 13 formal scientific meeting with colleagues at Florida

colleges and universities. See Appendix D, “Scripps Florida Outreach Activities” for a

detailed listing of these Collaborations and Scientific Meetings.

Update on Scripps Florida’s “Access to Technologies” Program

In 2007, Dr. Smith at the Burnham Institute for Medical Research and Dr. Teplitski at the

University of Florida began using the “Access to Technologies” program at Scripps

Florida. Launched in 2006, the program continues to invite scientists from Florida

universities and other academic research institutions to use state-of-the-art screening

technologies at Scripps Florida's facilities in Jupiter for qualifying projects. Access to

Scripps Florida's High Throughput Screening (“HTS”) operation, similar to that used

widely by the pharmaceutical industry, speeds up the process of discovering new drugs to

treat a variety of human illnesses. The technology, which is one of five in the country, is

primarily for users within the State of Florida, however, Scripps Florida scientists

collaborate with researchers at universities and institutes across the country.

Grants and Awards

To date, Scripps Florida researchers and scientists have been awarded over $30 million in

grants from sources other than the State of Florida. A few notable grants from this past

year include:

The Arthritis Foundation awarded a grant to Scripps Florida scientist Dr. Patrick

Griffin for research in rheumatoid arthritis.


Annual Report 2007

Office Depot awarded a grant to Doctors Pletcher, Busby, Conkright and

Wahlestedt to study Glyoxylase1 phosphorylation signaling in Autism, gene

regulation in DREB mutants, to identify FMR4 protein product and to identify the

differential protein expression during neuron development.

The Education and Outreach program for middle and high school students, led by

Deborah Leach-Scampavia, was awarded a grant from the William R. Kenan, Jr. Charitable Trust.

The Scripps Exhibit at the South Florida Science Museum received support in a

grant from Workforce Alliance, Inc.

Scripps Florida Workforce Recruitment Scripps Florida has extended workforce recruitment efforts to Florida’s higher education

institutions throughout the state. In fiscal 2007, Scripps Florida attended 15 institution

career fairs and expositions, in an effort to recruit employees from Florida colleges and

universities. Additionally, Scripps Florida recognizes the need to increase the number of

employees from backgrounds which are underrepresented in the sciences. To that end,

Scripps has been a regular participant in career fair activities at Florida A&M University,

as well as other historically black colleges and universities. In 2007, Scripps participated

in five career fairs at these colleges and universities and as a result of that effort, a recent

graduate of Florida A&M University is now an employee of Scripps Florida. See

Appendix D, “Scripps Florida Outreach Activities” for a detailed listing of the Workforce

Recruitment efforts.

Scripps Florida Educational Outreach

Scripps Florida continued to develop and grow its educational outreach programs by

seeding its programs further into the education community in Palm Beach County. Here

are a few of the outreach activities conducted by Scripps Florida in fiscal 2007.

Working with BioFlorida, the state’s bio-industry association,

Scripps Florida helped sponsor the 2006 and 2007 statewide

Bioscience Education and Career Expositions. The Expo is a

week-long event designed to develop interest and educational

opportunities in bioscience across Florida. Scripps Florida helped

develop a CD and DVD which was sent to every high school in

the State of Florida for use during the statewide Expo.

The Scripps Summer Intern Research Program gives rising

high school junior and senior students and their teachers an in-

depth exposure to scientific research. Interns work under direct

supervision of a Scripps scientist for six weeks, on projects that

emphasize the scientific process, research planning, bench experience, experimental

design, and data analysis.


Annual Report 2007

The intern program has been a successful and expanding Scripps Florida Education

Outreach component. The program graduated nine students and three high school

teachers in July 2007, an increase of three students from the prior year. Mentors for the

summer program include researchers from Genomics, Proteomics, Infectology, Cancer

Biology, Medicinal Chemistry, Synthetic Chemistry, Bioinformatics, and High

Throughput Screening (Robotics) Laboratories.

An added benefit enjoyed by participants in the intern program is the establishment of

ongoing relationships with Scripps Florida staff. Correspondence has been maintained

with the high school student and science teacher graduates, including letters of

recommendation for college applications and the provision of Bioscience resource

material for teacher classroom curriculum. In 2007, an unexpected and welcome bonus

has been the opportunity to offer part-time lab assistant positions in the Proteomics,

Cancer Biology and HTS laboratories to three student intern graduates.

The Scripps Florida-South Florida Science Museum Exhibit is in development to help

foster an understanding in the general public of the basic ties that exist between

biomedical research and human health. Toward that end, Scripps Florida has partnered

with the South Florida Science Museum in West Palm Beach to develop a permanent

exhibit. The theme of the exhibit “2000 – The Bioscience Century – 2100”, illustrates

how bioscience, as physical science did last century, is shaping our lives and our future.

The purpose of the exhibit is to educate and inform the museum visitor on the nature of

bioscience and its impact on career opportunities. The exhibit will be composed of video

stations and Plexiglas displays representing the “four pillars of science”; Biology,

Chemistry, Physics and Math. Each pillar will have a hands-on, interactive science

activity appealing to a broad range of visitors, a definition of the science, and examples

of its application in the field of bioscience. There will be three interactive video displays

in the exhibit; Biotechnology, Careers in Science, and Cell Biology. The exhibit is

projected for completion in the winter of 2007.

Scripps donated supplies and equipment to the museum for staff to offer the Science

Saturday course at the museum and Scripps is developing four follow-up lessons to the

Introduction to Science class in chemistry, physics, biology and math.

Scripps Florida continues its education outreach efforts by offering the Introduction to Science program to elementary and middle schools; inviting sophomore and junior high

school students to participate in the Science Saturday course; and offering opportunities

for Undergraduate Internships with Scripps Florida. See Appendix D, “Scripps Florida

Outreach Activities” for a detailed listing of the Educational Outreach efforts, and a

listing of the Student and Teacher interns for summer 2007.

The Scripps Florida Science Seminars


Annual Report 2007

The Scripps Florida Science Seminars – the Collaborative Speaker Series and the

“Frontiers in Science” seminars - focus on topics within the broad fields of biomedical

science, advanced technologies applied to biomedical research and drug discovery. The

Collaborative Speaker sessions are open to interested professionals within the Scripps

Florida and Florida scientific communities, while the “Frontiers in Science” seminars are

open to the public. Seminars are typically held every month and over a dozen seminars

were held during fiscal 2007. See Appendix D, “Scripps Florida Outreach Activities” for

a detailed listing of the Seminar Series.

Scripps Florida Business and Community Outreach Scripps Florida continued to connect with many business and community organizations

during fiscal 2007 by participating in meetings facilitated by local business and

government agencies, such as the Palm Beach County Business Development Board,

regional Chambers of Commerce and the World Trade Center in West Palm Beach.

Additionally, Scripps Florida showcased its state-of-the-art facility by providing tours of

the Scripps Florida laboratories to visitors with both a business and scientific interest.

Scripps Florida participated and spearheaded over 120 business and community outreach

activities in fiscal 2007. See Appendix D, “Scripps Florida Outreach Activities” for a

detailed listing of the Business, Science and Community Outreach efforts.

Developing the Biotech Cluster Update on the 2006 Innovation Incentive Fund

The Innovation Incentive Fund enables Florida to attract world-class research and

development opportunities and/or innovative business projects that support the growth of

high-technology innovation clusters and high-wage jobs in Florida. Funding is matched

by investment of the local community. In last year’s Innovation Incentive Fund and as

mentioned in the 2006 SFFC annual report, the Torrey Pines Institute for Molecular

Science and the Burnham Institute received funding to expand operations to Florida.

Most recently, SRI International secured grants from the Fund. All three were approved

for funding in November 2006 and each recipient received its first grant in early 2007.

Burnham Institute for Medical Research

Site: Lake Nona, Orlando

Temporary Facilities: 14,000 square feet at the Florida Blood Center

Permanent Facilities: 175,000 square feet on 50 acres at the Lake Nona site in Orlando

Jobs in FL: 303 Average salary: $70,005 Money from State: $155.272 million

Local community partners that matched state funds: Orange County, City of

Orlando, University of Florida, University of Central Florida, Lake Nona Land Company,

LLC; also arranged for access to human tissue samples generated by Florida Hospital and

Orlando Regional Hospital


Annual Report 2007

Required Equipment Investment: $61 million

The Burnham Institute for Medical Research broke ground on its 175,000 square foot

permanent facility, located outside Orlando, Florida on Lake Nona, in October 2007.

Burnham’s goal is to build a 250-300 person operation over the next 7-10 years, staffed

primarily through recruiting new scientists. Funding for the expansion is supported by the

State of Florida, City of Orlando, Orange County, the Tavistock Group and generous

philanthropic support.

The Florida operation will focus on cancer, infectious/inflammatory diseases and

neurosciences/aging, supported by technology cores in pharmacology, in vitro and in

vivo toxicology, medicinal chemistry, chemical compound library screening and in vivo

imaging. Burnham also plans to launch an additional research program in diabetes and

obesity in Florida. The Burnham Institute for Medical Research features a technological

infrastructure that complements the work of the Institute in San Diego, so the integrated

organization will drive scientific discoveries more rapidly toward clinical proof of

concept.

Torrey Pines Institute for Molecular Science

Site: Port St. Lucie

Temporary Facilities: 15,000 square feet at the FAU/ Harbor Branch Oceanographic

Institute

Permanent Facilities: 107,000 square feet on 20 acres at the Tradition Community,

Port St. Lucie

Jobs in FL: 189 Average salary: $62,321

Money from State: $32 million ($24.728 million from Innovation Fund, $7.272 million

from Quick Action Closing Fund)

Local community partners that matched state funds ($71.5 m): City of Port St. Lucie,

St. Lucie County, Florida Atlantic University, Tradition Development, LLC.

Required Construction/Equipment Investment: $35 million

The Torrey Pines Institute for Molecular Studies ("TPIMS") is a bicoastal biomedical

institution, with over 100 people working at its La Jolla, California base. TPIMS-FL is

currently located in temporary laboratories and offices in the FAU / Harbor Branch

facility in Fort Pierce. TPIMS employs four principal investigators, five laboratory

technicians and four non-scientific personnel - two administrative assistants, a facilities

manager and a public affairs director - and anticipates over 200 employees in the next ten

years.

The scientists at the Torrey Pines Institute research new chemical methods for drug

discovery, seek to understand neuropathways to address pain modification, and use

computational chemistry to better understand interactions with receptors. The Institute's

scientific outreach seminars have resulted in signed material transfer agreements with

Florida Atlantic University, the University of Florida and the USDA in Fort Pierce.


Annual Report 2007

In addition to its research on drug discovery, TPIMS-FL enjoys participating in

community and educational outreach. Discussions with the School Board of St. Lucie

County are underway and an intern program is planned for summer 2008. TPIMS-FL

will be permanently housed in a 107,000 square foot green-certified facility in the Florida

Center for Innovation at Tradition in Port St. Lucie. This facility opens in December

2008 and Florida will become the Institute's headquarters in summer 2009.

SRI International

Site: St. Petersburg Temporary Facilities: at University of South Florida

Permanent Facilities: 30,000 to 35,000 square feet on the eastern edge of the Port of St.

Petersburg within the Bayboro area, a designated state Enterprise Zone, leased to SRI-

STP by the City of Petersburg. Phase II calls for an additional facility of 70,000

square feet.

Jobs in FL: 160 Average salary: $72,500 Money from State: $20 million

Local community partners that matched state funds: City of St. Petersburg, Pinellas

County, University of South Florida’s College of Marine Science and its Center for

Ocean Technology (COT), FSTED grant funds

Required Equipment Investment: $2 million

On November 30, 2006, SRI International, one of the world's leading independent

research and technology development organizations, announced it had selected St.

Petersburg, Florida as the site for a new marine technology research facility. Silicon

Valley-based SRI International is one of the world's leading independent research and

technology development organizations. In addition to conducting contract research and

development, SRI licenses its technologies, forms strategic partnerships and creates spin-

off companies. In October 2007, SRI International announced that it had licensed its first

Florida-based technology.

The new facility will be called SRI-St. Petersburg and aims to accelerate research and

development of technologies related to ocean science, the maritime industry and port

security. SRI's expansion into Florida is in collaboration with the University of South

Florida's College of Marine Science and its Center for Ocean Technology and is

supported by the City of St. Petersburg, Pinellas County and the State.

Florida’s Innovation Economy Legislation During 2007, Governor Crist and the Florida Legislature funded the following legislation

to enhance Florida’s biotechnology industry. This legislation, enacted in the spring 2007

legislative session, accelerates the growth of Florida’s Innovation Economy by

developing the biotechnology cluster and capitalizing on the success of Scripps Florida.

Governor Crist signed the following legislation:

• $250 million continued funding for the Florida Innovation Incentive Fund.

Consistent with the 2006 legislation, the local community will match the state


Annual Report 2007

investment. The Innovation Incentive Fund legislation included proviso language

for $80 million to be directed to the Institute for Human Genomics.

• $45 million continued funding for the Quick Action Closing Fund, enabling the

state to offer a cash incentive to companies considering Florida as the location for

their business. This fund helps Florida compete with other states and nations to

bring high-wage, professional jobs to Florida.

• $31 million in funding to create the Florida Capital Formation Act, which requires

Enterprise Florida, Inc., to facilitate the creation of the Florida Opportunity Fund.

The Opportunity Fund will increase availability of seed capital and early stage

venture equity capital for emerging companies in Florida which are creating new

businesses and jobs.

• $100 million (a $70 million increase in funding) for the Centers of Excellence

Program to recreate and enhance the Centers of Excellence program, allowing

state universities and their research partners to leverage public and private dollars

to establish research and commercialization centers that support emerging

technologies. The collaboration between industry and academia will help drive

inventions and innovations from the lab to the marketplace.

• $44.6 million to Florida Atlantic University to acquire the Harbor Branch

Oceanographic Institute as a research institute of the University.

Institute for Human Genomics

The University of Miami Miller School of Medicine established the Institute for Human

Genomics in January 2007 and it will receive $80 million in funding from the 2007

Innovation Incentive Fund. The Institute will explore the genetic influences on human

health and apply this knowledge to the practice of medicine through improved

diagnostics, treatments, and medications, thus translating the unprecedented scientific

advance of the “Human Genome Project” into information that can benefit patients

directly. The Institute is committed to collaborative pan-institutional initiatives, ensuring

that resources, skills, and ideas forthcoming from novel genetic and genomic approaches

will be made available to the entire medical community.

Expanding the Biotech Industry in Palm Beach County The Max Planck Society In September 2007, the Max Planck Society announced plans to expand its operation to

Palm Beach County and the Palm Beach County Commission voted to authorize the

negotiations to fund a grant agreement for approximately $87 million. The Max Planck

Society is a world-renowned basic biomedical research institute, based in Germany,

which employs approximately 23,400 people worldwide. The Society performs basic

research in the interest of the general public in the natural sciences, life sciences, social

sciences and the humanities. In particular, the Max Planck Society takes up new and

innovative research areas that universities are not in a position to accommodate or deal

with adequately. The Society has an innovative track record, which includes a

technology transfer arm that focuses on commercializing discoveries through spin-off


Annual Report 2007

businesses. Since 1990 the organization has successfully spun-off 76 companies. The

organization also has produced 16 Nobel Prize winners since 1948.

The Society’s plans for its Florida operations call for:

• A scientific focus on bio-imaging using the most advanced techniques for

visualization of microscopic molecular processes to achieve a deeper

understanding of the structure, dynamics and function of molecules and tissues in

order to tackle challenging problems in biology, bioengineering and medicine.

• An emphasis on translating discoveries from a molecular level to a patient-

oriented application.

• A substantial complimentary, collaborative relationship with Scripps Florida.

• Strong links to Florida Atlantic University to enhance its bioscience programs.

• Full engagement in the county’s K through 12 education system, with outreach to

all sectors of society.

FAU has offered six acres to Max Planck at its Jupiter campus in close proximity to

Scripps Florida. The Max Planck Society is currently in negotiation with Palm Beach

County and is awaiting approval of its request for a $93 million grant from the 2007

Innovation Incentive Fund. Alexandria Innovation Center Alexandria Real Estate Equities, the largest developer of lab space in the United States,

recently completed renovation of a 46,000 square feet building for incubator space

adjacent to the growing biotech cluster in Jupiter, Florida. The Alexandria Innovation

Center is a first-class scientific property, with wet lab suites and shared support services.

Interlocal Agreement In March 2006, five municipalities entered into an Interlocal Agreement with Palm Beach

County to protect the 8 million square feet of land surrounding Scripps Florida for the

growth of the biotech cluster. The municipalities - Palm Beach Gardens, Jupiter,

Mangonia Park, Lake Park and Riviera Beach – were required to initiate comprehensive

plan amendments creating Bioscience Research Protection Overlays in their

comprehensive plans to identify lands within the Overlay and protect these lands from

commercial or residential development. To date:

• Palm Beach County, the City of Palm Beach Gardens and the Town of Jupiter

have amended their Comprehensive Plans to incorporate the Bioscience Overlay.

• The Town of Mangonia Park, Town of Lake Park and City of Riviera Beach are

transmitting amendment packages to the Florida Department of Community

Affairs and should be completed by August 2008.

Additionally, the Agreement provided for the formation of an Advisory Board to make

recommendations regarding amendments to comprehensive uses on properties within the

municipal Overlays. However, since most of the municipalities have not adopted the

Overlay plan, the Advisory Board has no authority to consider matters brought before the

Board in those municipalities.


Annual Report 2007

BioFlorida 2007 This year, BioFlorida celebrated the 10

th Anniversary of its bioscience conference. As in

previous years, Scripps Florida participated in the annual event. Dr. Richard Lerner

participated in the plenary panel session while scientists presented in scientific breakout

sessions. Nearly 500 attendees from every sector of the life sciences industry attended

this conference.

BIO 2007 In May 2007, Enterprise Florida, Inc., in partnership with several county economic

development corporations and Florida universities, participated in BIO 2007, the world’s

largest biotechnology conference. Scripps Florida again participated as a sponsor and

demonstrator at the Florida Pavilion, aside numerous other representatives from Florida.

This year’s conference was held in Boston and drew a record attendance of nearly 23,000

attendees from 64 different countries.

Conclusion Scripps Florida Funding Corporation is pleased to report another successful year of

operations for Scripps Florida. Scripps Florida continues to advance its scientific

discoveries, secure grants and awards from outside sources, collaborate with Florida

universities and colleges, and interact with businesses and the community through its

outreach activities – all well ahead of its contractual requirements.


Annual Report 2007

Scripps Florida Funding Corporation Fourth Annual Report

Itemized Report for the Year Ended September 30, 2007 INTRODUCTION

Florida Statute 288.955, referred to as the Enabling Statute, sets forth certain information

that is required to be included in the SFFC Annual Report. The information that follows

has been organized to correspond to the sections of the Enabling Statute that address

information to be included in the SFFC Annual Report. As not every section of the

Enabling Statute relates to the SFFC Annual Report, only the sections of the Enabling

Statute that apply are referenced herein. For convenience, the text of the Enabling Statue

that describes the information to be set forth in the SFFC Annual Report is set forth next

to each Enabling Statute section reference.


Annual Report 2007

Scripps Florida Funding Corporation Fourth Annual Report

Itemized Report for the Year Ended September 30, 2007 Florida Statute 288.955 Subsection (14) ANNUAL REPORT

By December 1 of each year, the corporation shall prepare a report of the activities and outcomes under this section for the preceding fiscal year. The report, at a minimum, must include:

Subsection (14) (a) A description of the activities of the corporation in managing

and enforcing the contract with the grantee.

Scripps Florida Funding Corporation Board of Directors Meetings Please note the Scripps Florida Funding Corporation web site:

http://www.flgov.com/scripps

Purpose: To oversee the disbursement of the State’s funds invested in Scripps Florida,

the Florida Legislature created the Scripps Florida Funding Corporation, hereto referred

to as SFFC, a nonprofit entity governed by a nine-member Board of Directors, and one

ex-officio member.

Membership: Of the nine-member Board of Directors, three Directors were appointed by

each of the Governor, the House Speaker, and the Senate President. Governor Bush’s

appointees are: Mr. David Gury, former President and CEO of Nabi Pharmaceuticals, of

Boca Raton; Mr. Andy Crawford, Chairman of Advanced Disposal Systems, of

Jacksonville, and Dr. Pamella Dana, Senior Strategic Advisor for Institute for Human &

Machine Cognition, of Destin who was appointed January 1, 2007 for a term ending on

November 13, 2008. Speaker Byrd’s appointees are: Mr. Ruben Jose King-Shaw, Jr.,

Chairman & CEO, Mansa Equity Partners, Inc., of Carlisle, Massachusetts; Dr. Joseph

Thomas, dentist, of Vero Beach; and Mr. Chris Sullivan, Chairman of Outback

Steakhouse, Inc. of Tampa. President King’s appointees are: Mr. Jim McCollum, former

Regional Director for Bell South, now retired, of Jacksonville; and Mr. Bill Foley, CEO

of Fidelity National Financial, of Jacksonville. President Lee, President King’s

successor, appointed Dr. Edward Gonzalez, dentist, of Valrico. Dr. Dale Brill, Director

of the Governor’s Office of Tourism, Trade, and Economic Development (“OTTED”), is

an ex-officio member.

Meetings and activities: From October 1, 2006 through September 30, 2007, the SFFC

Board of Directors (“BOD”) held two teleconference meetings and one in-person

meeting. On November 28, 2006, the Board elected a new chairman and vice-chair,

approved the revised Scripps Florida Business Plan and approved the SFFC Third Annual


Annual Report 2007

Report, authorizing the transmission of the report to the Governor, Speaker of the House

and the President of the Senate on December 1, 2006. Representatives from the offices

which contributed to the Annual Report were also on the call. At the January 22, 2007

meeting, Chairman Sullivan reorganized the committee structure of the SFFC BOD and

the BOD agreed to the insurance for the Board and to the 2007 SFFC Budget. On March

9, 2007, the BOD held its annual grant request meeting at the Jupiter campus of Florida

Atlantic University, adjacent to the Scripps Florida campus. This meeting involved the

annual grant request and was held in conjunction with the dedication of the Scripps

Florida campus. The SFFC Board was joined by representatives from TSRI – Mr. Tom

Northrup, Ms. Donna Weston, Ms. Carol Licko - and Scripps Florida – Mr. Harry Orf.

After an Audit Committee meeting, the Board attended the dedication ceremony with

Governor Crist, former Governor Bush and other dignitaries, and witnessed by 400

Scripps Florida employees and guests. The Board reconvened at the FAU facility to hold

its BOD meeting. The agenda included an update from the Audit Committee and the

annual grant request. In order to prepare the Board for the annual grant request, Ms.

Deutsch, SFFC counsel, reviewed the six requirements that Scripps had to meet for the

grant request. Those requirements are: the grant request form, receipt of TSRI and

Scripps Florida annual financial statements, the scientific report, the update to the annual

Report, the legal opinion and the satisfaction of disbursement conditions. She stated that

all items were properly received and the only exception to that was the employee issue

addressed in the compliance report, which Mr. Crawford explained had been discussed in

the Audit Committee meeting and found not to be material. After discussion, the 2006

annual grant request was approved unanimously.

SFFC Committee Meetings

Investment Committee

Purpose: The Investment Committee receives and reviews quarterly investment reports

from the State Board of Administration (SBA) to ensure that SFFC’s investments are

consistent with the objectives established in the Trust Agreement and that SFFC is able to

make the disbursements anticipated in the Operating and Funding Agreement between

SFFC and TSRI.

Membership: Mr. Bill Foley is the Chairman of the Investment Committee and Dr. Ed

Gonzalez and Mr. Jim McCollum are Committee Members. Mr. Michael Lombardi from

the SBA participates in the Committee meetings.

Meetings and activities: The Investment Committee held four meetings at which they

primarily reviewed the quarterly reports from the SBA. At the October 4, 2006 meeting,

the Investment Committee reviewed the June 30, 2006 reports from the SBA and

accepted the revised disbursement schedule, with Mr. Lombardi and Ms. Misselhorn

presenting the new schedule for the quarterly disbursements due to the revisions in the

Scripps Florida Business Plan. Ms. Misselhorn explained that Scripps had reviewed and

agreed to this new schedule and the Committee agreed to adopt the new disbursement

schedule, pending final approval of the revised Business Plan. At the June 21, 2007


Annual Report 2007

meeting, Mr. Lombardi reviewed the December 31, 2006 and March 31, 2007 SBA

reports for the Investment Committee and Committee Chairman Crawford remarked that

these were ‘very good reports and the investment schedule was well structured.’ The

Committee agreed that two meetings per year would be sufficient to continue to monitor

the investment accounts.

Audit Committee

Purpose: The Audit Committee reviews financial information and monitors the financial

condition of TSRI and Scripps Florida. The Audit Committee also provides oversight for

the annual audit of SFFC and compliance monitoring of TSRI and Scripps Florida with

the terms of the Operating and Funding Agreement. The Audit Committee provides

direction on the scope of the audit engagements and reviews any finding or

recommendations related to the audits. The Audit Committee, in turn, reports its

recommendations on the reports to the full Board.

The Scripps Florida Funding Corporation receives and the Audit Committee reviews the

following reports from TSRI and Scripps Florida:

• TSRI and Scripps Florida unaudited quarterly financial statements

• TSRI and Scripps Florida audited annual financial reports

• TSRI and Scripps Florida annual budgets

• Scripps Florida Annual Report

• Scripps Florida Annual Scientific Report

There are three types of annual audit reports that are received and reviewed by the Audit

Committee as follows:

1. Scripps Florida and TSRI provide three annual audit reports to SFFC:

a) Audited financial statements of TSRI, including the operations of Scripps

Florida.

b) Audited financial statements of Scripps Florida as a separate division,

including a report on internal control and compliance in accordance with

Government Auditing Standards.

c) A Federal Single Audit of TSRI in accordance with OMB Circular A-133.

The audits are prepared by Deloitte and Touche (“D&T”), the independent

auditors for TSRI. SFFC’s independent auditor has been granted access to the

D&T workpapers in order to assess the application of generally accepted

accounting principles and the significant assumptions made by TSRI

management in the preparation of its financial statements.

2. SFFC receives two annual audit reports completed by an independent auditor

contracted by the SFFC:

a) Audited financial statements of SFFC, including a report on internal

controls and compliance in accordance with Government Auditing

Standards.

b) A Federal Single Audit of SFFC in accordance with OMB Circular A-133.


Annual Report 2007

3. A contractual monitoring and compliance audit of the Operating and Funding

Agreement between TSRI and SFFC (“contractual monitoring and compliance

audit”) to address the Monitoring Checklist (Exhibit A-1 to the Funding and

Program Agreement between OTTED and SFFC). The contractual monitoring

and compliance audit is completed by an independent auditor contracted by the

SFFC who verifies many of the items covered in this Annual Report, including,

but not limited to:

a) the number of jobs created

b) the average salaries and their consistency with the approved Business Plan

c) designation of a person to assist in collaborative efforts with OTTED and

compliance with OTTED’s requests for cooperation

d) purchase of equipment is consistent with the approved budget

e) achievement of collaborative efforts with Florida universities

The independent auditor contracted by the SFFC also prepares the annual not-for-profit

organization tax return (Form 990) for SFFC, which is reviewed by the Audit Committee

prior to submission to the Internal Revenue Service.

Membership: Mr. Andy Crawford is the Chairman of the Audit Committee and Dr.

Joesph Thomas and Dr. Pamella Dana are Committee Members. Other participants in the

Audit Committee meetings include representatives from TSRI’s auditors, Deloitte and

Touche, SFFC’s auditor, Mr. Scott Porter from Caler, Donten, Levine, Druker, Porter &

Veil, PA, and TSRI’s Chief Financial Officer, Ms. Donna Weston.

Meetings and activities: From October 1, 2006 through September 30, 2007, the Audit

Committee participated in four meetings to review, amend, discuss and approve several

financial reports provided by TSRI, and the auditing and compliance matters of SFFC.

At the October 10, 2006 meeting, the Audit Committee accepted the Scripps Florida 2007

Budget and reviewed the June 30, 2006 unaudited financial statements of TSRI and

Scripps Florida. At the February 2, 2007 meeting, Mr. Porter reviewed the SFFC Tax

Form 990 and the revised terms of the engagement letter for the compliance audit with

the committee. At the March 9, 2007 meeting, Ms. Weston provided an overview of the

TSRI and Scripps Florida Deloitte and Touche audit reports for the year ended September

30, 2006 and the December 31, 2006 unaudited financials. Since Mr. Porter was still

reviewing the workpapers, the Committee agreed to suggest to the Board that the

approval of the grant would be contingent upon the complete review of these workpapers,

with approval from the Chairman and legal counsel as well. At this meeting, the annual

compliance report of how Scripps Florida is meeting the performance expectations was

reviewed and accepted for presentation to the full BOD, with discussion about a

discrepancy which the Audit Committee found to be not material. Also, Mr. Porter

presented the SFFC complete single audit draft. At the June 25, 2007 meeting,

Committee Chair Crawford followed up on business from the previous meeting, stating

that Mr. Porter completed his review of the work papers and found everything to be in

order. He also finalized the compliance report and the Committee accepted it. Ms.

Weston explained the supplemental schedule provided for the September 30, 2006 and


Annual Report 2007

December 31, 2006 unaudited financials, and then presented information to the

Committee on the March 31, 2007 unaudited financials from TSRI and Scripps Florida.

Reports Committee

Purpose: The predominant purpose of the Reports Committee is to review and approve

the Annual Report before it is reviewed and approved by the SFFC Board of Directors.

Membership: Chairman Sullivan is the acting Chair of the Reports Committee. Mr.

King-Shaw and Mr. Gury are Committee Members.

Meetings and Activities: The Reports Committee received drafts of the annual report

over the course of October and November 2006 in order to review the content of the

annual report before it was submitted to the full Board of Directors.


Annual Report 2007

Subsection (14) (b) An accounting of the amount of funds disbursed during the preceding fiscal year to the grantee. Disbursement Date Principal Interest TOTAL December 15, 2006 $ 2,910,000.00 $ 261,385.39 $ 3,171,385.39 March 15, 2007 $ 8,939,750.00 $ 697,270.23 $ 9,637,020.23 June 15, 2007 $ 8,939,750.00 $ 991,969.39 $ 9,931,719.39 September 17, 2007 $ 8,939,750.00 $ 1,093,541.15 $10,033,291.15

TOTAL $29,729,250.00 $3,044,166.16 $32,773,416.16 This disbursement schedule became effective in November 2006 when the SFFC

accepted the revised business plan of Scripps Florida.

Subsection (14) (c) An accounting of the expenditures by the grantee during the

fiscal year of funds disbursed under this section. Report of SFFC Grant Disbursements from October 1, 2006 to September 30, 2007

Category Amount

Salaries & Benefits $9,674,131

Supplies $5,642,651

Scientific Equipment $2,742,332

External Affairs & Other Program Support $986,660

Project Commencement, Facilities,

Administration and Capital Expenditures

$9,492,140

Total $28,537,914

This schedule reflects cash expenditures charged to the grant from the State of Florida

from October 1, 2006 through September 30, 2007. The expense categories set forth

above reflect those used by Scripps to report grant activity to grantors. This schedule

excludes: unpaid commitments; unspent grant funds received of $35,258,500 (including

interest income); and expenditures funded by other sources.

Subsection (14)(d) Information on the number and salary level of jobs created by the grantee, including the number and salary level of jobs created for residents of this state.

Report of Scripps Florida Employees Count

Position Employee Count

As of September 30, 2007 Year 4 Target Faculty 20 > 15

Scientific Staff *

165 > 124

Administration **

38 > 30

Current Total 223 Job Creations Target 225


Annual Report 2007

* Scientific Staff includes non-tenure track scientists, research associates, lab technicians,

Scripps paid graduate students and interns.

**

Administration includes all other support personnel.

The job creations target number is to be measured on December 31, 2007, the end of the

fourth employee hire year. SFFC may allow a downward deviation of 25% as

satisfaction of the job creation deliverable. Scripps Florida management anticipates that

the target head count will be met by December 31, 2007.

Scripps Florida hired 73 employees between October 1, 2006 and September 30, 2007.

Of those new hires, 29 were Florida residents and 27 were Palm Beach County residents.

Category Required Salary Range (as stated in

Business Plan)

Hired in fiscal 2007

Current Salary Range

Professors $138,000 to $330,000 + 2 $142,917 +

Associate Professors $84,000 to $177,000 1 $86,923 to $223,288

Assistant Professors $72,000 to $129,000 1 $74,963 to $132,371

Research Faculty $72,000 to $265,000 2 $80,000 to $270,000

Staff Scientists $54,000 to $113,000 4 $56,326 to $116,397

Research Associates/

Science Support

$34,000 to $55,000 48 $37,000 + *

Administration $48,600 **

15 $50,544

TOTAL 73

* Research Associates Only

** Represents the average expected salary for this employee category, rather than the

range that would result in combining all Administrative position salaries. The various job

classifications and range of salaries is broad. In this instance, an expected average salary,

rather than a range, is a better representation.

The base salary of all persons employed in a particular category falls within the range for

that category. These ranges are increased each year to reflect the change in the CPI for

that annual period. Certain employees of Scripps Florida may receive additional

compensation for assuming administrative responsibilities beyond their scientific duties.

For example, a faculty member who also serves as an Associate Dean of the Graduate

School will receive additional compensation for that service. The ranges set forth above

do not incorporate such additional compensation.


Annual Report 2007

Category Required Salary Range (as stated in

Business Plan)

Hired in fiscal 2007

Actual Salary in fiscal 2007

Florida Residents

Palm Beach Co. Residents

Professors $138,000 to $330,000 + 2 $208,000 to $265,000 0 0

Associate Professors $84,000 to $177,000 1 $160,014

0 0

Assistant Professors $72,000 to $129,000 1 $95,722 0 0

Research Faculty $72,000 to $265,000 2 $81,162 to $84,178 0 0

Staff Scientists $54,000 to $113,000 4 $55,016 to $72,010 0 0

Research Associates/

Science Support

$34,000 to $55,000 48 $35,984 to $78,000 * 16 15

Administration $48,600 **

15 $50,544 13 12

TOTAL 73 29 27

* This is a combination of full-time, regular research associates and various science

support positions. The minimum Research Associate annualized salary is $37,000.

** Represents the average expected salary for this employee category, rather than the

range that would result in combining all Administrative position salaries.

Subsection (14) (e) Information on the amount and nature of economic activity generated through the activities of the grantee.

See Appendix A, “The Economic Impact of Scripps Florida on Florida’s Economy,”

prepared by Enterprise Florida for SFFC in November 2007.

Subsection (14) (f) An assessment of factors affecting the progress toward achieving the projected biotech industry cluster associated with the grantee’s operations, as projected by economists on behalf of the Executive Office of the Governor.

See Appendix B, “An Assessment of Factors Affecting the Progress Toward Achieving

the Projected Biotech Industry Cluster,” prepared through information provided by Palm

Beach County’s Business Development Board, Workforce Alliance, BioFlorida and

Enterprise Florida, Inc.

Subsection (14) (g) A compliance and financial audit of the accounts and records of the corporation at the end of the preceding fiscal year conducted by an independent certified public accountant in accordance with the rules of the Auditor General.

See Appendix C, The “Audited Financial Statements and Supplementary Financial

Information” for SFFC for the period ended September 30, 2007.


Annual Report 2007

Subsection (14) (h) A description of the status of performance expectations under subsection (9) and the disbursement conditions under subsection (10).

Subsection (9) PERFORMANCE EXPECTATIONS

Subsection (9) (a) The number and dollar value of research grants obtained from

the Federal Government or sources other than this state. Since the establishment of Scripps Florida, faculty and staff have been awarded 41

research grants from sources other than SFFC. The total value of those grants is

$30,720,790. Nine (9) of the 41 grants were awarded between October 1, 2006 and

September 30, 2007. The total value of those nine awards is about $7,550,893.

Subsection (9) (b) The percentage of total research dollars received by TSRI from sources other than this state which is used to conduct research activities by the grantee in this state.

For fiscal 2007, the percent of research funding from sources other than SFFC is 20.2%

and these amounts were used for this purpose.

Subsection (9) (c) The number or value of patents obtained by the grantee.

Since its inception, 63 patent applications have been filed by Scripps Florida. Thirteen

(13) patent applications naming a Scripps Florida scientist as an inventor or co-inventor

were filed between October 1, 2006 and September 30, 2007. All of the applications are

under review by the U.S. Patent and Trademark Office. Since none of the applications

have issued as a patent, there is no value yet assigned to these applications.

Subsection (9) (d) The number or value of licensing agreements executed by the grantee.

Eight patent applications were licensed during fiscal 2007. No value has been assigned

to those licenses and no revenue has been generated from the licenses. The licensing

agreement defines when and how revenues will arrive. Those financial terms are

confidential due to the unpredictability of the industry.

Subsection (9) (e) The extent to which research conducted by the grantee results in commercial applications.

Because of the early stage of the technology being developed at Scripps Florida and the

time delay attendant to further development, no commercial applications and revenue

have emerged to date.


Annual Report 2007

Subsection (9)(f) The number of collaborative agreements reached and maintained with colleges and universities in this state and with research institutions in this state, including agreements that foster participation in research opportunities by public and private colleges and universities and research institutions in this state with significant minority populations, including historically black colleges and universities.

The Scripps Research Institute has developed a template, the Joint Cooperation

Agreement (“JCA”), to encourage and support research collaborations with Florida

institutions. Provisions are included to make it easier to collaborate on filing patents for

jointly developed technologies and to share revenues from commercialized innovations.

By executing these agreements in advance, it streamlines the scientific collaboration

process between Florida organizations and Scripps Florida as they work together on

biomedical research. To date, six Florida institutions have executed this formal

agreement with TSRI: University of Florida; Florida Atlantic University; University of

Central Florida; University of Miami; Florida State University; and Nova Southeastern

University.

The JCA with Nova Southeastern University was executed during fiscal 2007.

Currently, there are 32 scientific collaborative relationships between Scripps Florida

scientists and their colleagues at colleges and universities within the State of Florida. See

Appendix D, “Scripps Florida Outreach Activities” for a detailed listing of these

Collaborations.

Subsection (9) (g) The number of collaborative partnerships established and maintained with businesses in this state.

Scripps Florida has established collaborative relationships with three Florida based

businesses. No new formal collaborative relationships were established in fiscal 2007.

The existing relationships with The Jupiter Medical Center, Dyadic International, Inc.,

and IBM are ongoing. Until publication or filing of a patent application, disclosure of the

results or nature of the collaborative agreement is forbidden because public disclosure

can potentially destroy the patentability.

The Jupiter Medical Center

The Jupiter Medical Center agreed to analyze select specimens for Dr. Layton Harris

Smith, Director of Pharmacology at Scripps Florida’s Department of Drug Discovery to

further his biomedical research.

Dyadic International, Inc.

In March 2006, a collaborative effort between scientists at Scripps Florida and Dyadic

International, Inc. (AMEX: DIL), a Jupiter-based biotechnology company, was

established to provide a complete annotation of the genome of Dyadic's proprietary

fungal organism, Chrysosporium lucknowense ("C1"). The knowledge gained from this


Annual Report 2007

effort is expected to facilitate further development of the C1 Host Technology as a robust

platform for the discovery, development and production of various materials for medical

and industrial applications.

IBM

An ongoing initiative established in February 2006, Project Checkmate is the

collaboration of TSRI and IBM to conduct advanced research on pandemic viruses

leveraging the industry-leading talent and technology from both organizations. This

initiative capitalizes on TSRI’s world-class research in the areas of biochemical modeling

and drug discovery and IBM's expertise in computational biology bio-patterning and

supercomputing. The joint research team exploits the use of IBM's Blue Gene

supercomputer, the world's fastest supercomputer technology, and have access to a state-

of-the-art biomedical research facility, Scripps Florida.


Annual Report 2007

Subsection (9) (h) The total amount of funding received by the grantee from sources other than the State of Florida.

Since inception, Scripps Florida has been awarded 41 grants totaling approximately $30.7

million from state and federal agencies including the NIH, foundations, pharmaceutical

companies and other grantors. During fiscal 2007, Scripps Florida received the following

grants:

GRANT AWARDS ($30,720,790 since inception) $ 7,550,893

OTHER REVENUE SOURCES * $ 9,291,151

CONTRIBUTIONS AT NET PRESENT VALUE ** $ 692,183

PALM BEACH COUNTY ($84,905,632 since inception) *** $ 59,215,156

TOTAL $ 76,749,383

* OTHER REVENUE SOURCES:

Palm Beach County – use of land and T-2 (no cash) $ 1,208,957

Investment Income on Florida funds 5,054,635

Pfizer 3,027,559

Total $ 9,291,151

** CONTRIBUTIONS ORIGINALLY REPORTED AS OF JUNE 30, 2007

Contributions above 692,183

Net Change ($ 447,817)

The decline results from the write-off of a pledge that is contingent on the

completion of construction at the permanent site. Similar to other revenue

related to the construction of the permanent site, this pledge will be

recognized as income, when occupancy appears certain, most likely during

the fiscal year ended September 30, 2008.

Contributions include gifts not dedicated to a specific type of research;

grants typically have a dedicated area of research or are awarded to a

specific scientist.

*** COUNTY FUNDS EXPENDED TO DATE BY FISCAL YEAR

2004 $ 1,713,494

2005 11,419,527

2006 12,557,455

2007 59,215,156

Total $ 84,905,632


Annual Report 2007

YEAR-TO-YEAR COMPARISON OF NON-SFFC FUNDING TO SCRIPPS FLORIDA

Grant Funds Awarded Since Inception Grant Funds Expended

2005 $ 12,058,237 * 2005 $ 2,549,086

2006 $ 6,533,283 2006 $ 3,007,000

2007 $ 12,129,270 2007 $ 7,550,893

Total Grants Awarded $ 30,720,790 Total Awards Expended $ 13,106,979

* The higher amount of grants awarded in 2005 are a result of hiring several scientists

who brought grant support with them and the existing awards were included in the 2005

number. The decline in 2006 is due to the fact that Scripps did not hire as many people

with existing grants, although some of the younger faculty members were successful in

obtaining their first grants. The 2007 grants awarded amount is more robust than

expected because it includes more than $4 million in funding from the Pfizer agreement.

These awards are disbursed over as many as five years, so many of the scientists will not

seek new funding for some time. Scripps anticipates that the amount of grants awarded

in 2008 will be in the range of about $10 million to $12 million.

Subsection (9) (i) The number or value of spin-off businesses created in this state as a result of commercialization of the research of the grantee.

In May 2007, Scripps Florida’s announced its first private drug-discovery start-up,

Xcovery. Based in West Palm Beach, the company develops new therapeutic products

addressing indications in oncology and inflammation. Scripps Florida scientist, Dr. Chris

Liang, invented the technology at Scripps Florida.

Subsection (9) (j) The number or value of businesses recruited to this state by the grantee.

Scripps and the State of Florida have engaged in discussions with several companies who

desire to establish a presence in Florida. Earlier this year, the Burnham Institute for

Medical Research, the Torrey Pines Institute for Molecular Studies and SRI International

received funding from the Innovation Incentive Fund and are actively expanding their

operations in Florida. In September 2007, the Max Plank Society announced its intentions

to establish a branch in Palm Beach County. It is negotiating contracts with the State

and local governments and will seek $190 million in grants from the Innovation Incentive

Fund, with matching local funds. Additionally, the cluster is organically growing with

numerous smaller, science-based companies and spin-off businesses which are

establishing operations in the developing biotech cluster area.

Subsection (9)(k) The establishment and implementation of policies to promote supplier diversity using the guidelines developed by the Office of Supplier Diversity under s. 287.09451 and to comply with


Annual Report 2007

the ordinances, enacted by the County and which are applicable to this biomedical research institution and campus located in this state.

It is the policy of Scripps Florida to offer diverse businesses an opportunity to compete

on an equal basis with all other vendors. The Scripps Florida policy defines a diverse

business as a Minority Business Enterprise, Woman Business Enterprise, Small Business

Enterprise, or Veteran Business Enterprise. Scripps Florida searches for qualified

vendors, beginning in Palm Beach County and expanding out to the State of Florida and

beyond. In an effort to provide local businesses with valuable information about

upcoming opportunities at Scripps Florida, a collaborative Scripps Florida/ FAU vendor

show was hosted on the FAU John D. McArthur Campus on October 25, 2006. Over 300

local business owners met with key decision makers from Scripps Florida to discuss

potential business partnerships and supplier qualifications.

In addition to the Scripps Florida/ FAU vendor show, Scripps Florida participated in

numerous supplier shows throughout Florida to identify diverse businesses that can

provide goods and services to Scripps Florida. Participation in these shows has resulted

in partnerships with local companies that provide furniture, pipette calibrations,

refrigeration services, temporary staffing, building maintenance services, printer supplies

and more.

Subsection (9) (l) The designation by the grantee of a representative to coordinate with the Office of Supplier Diversity.

Mr. Audric Dodds is the designated Scripps Florida representative who coordinates with

the Office of Supplier Diversity. Mr. Dodds currently sits on the board of directors of the

Women’s Business Development Center and was appointed by the State of Florida Office

of Supplier Diversity to the State of Florida Small Business Advisory Committee.

Subsection (9) (m) The establishment and implementation of a program to conduct workforce recruitment activities at public and private colleges and universities and community colleges in this state which request the participation of the grantee.

Ms. Hollie Alkema, Scripps Florida’s Human Resource Analyst and Recruiter,

participated in 13 Career Fair and Expositions at institutions throughout the state during

fiscal 2007. See Appendix D, “Scripps Florida Outreach Activities” for a detailed listing

of the Workforce Recruitment efforts.

Subsection (10) DISBURSEMENT CONDITIONS

Subsection (10)(a) Demonstrate creation of jobs and report on the average salaries paid.

See reply to Subsection (14) (d).


Annual Report 2007

Subsection (10)(b) Beginning 18 months after the grantee’s occupancy of its permanent facility, the grantee shall annually obtain $100,000 of non-state funding for each full-time equivalent tenured-track faculty member employed at the Florida facility.

Not applicable until occupancy of the permanent facility.

Subsection (10) (c) No later than 3 years after the grantee’s occupancy of its

permanent facility, the grantee shall apply to the relevant accrediting agency for accreditation of its Florida graduate program.

Scripps is not expected to occupy its permanent facility until early 2009.

Subsection (10) (d) The grantee shall purchase equipment for its Florida facility as scheduled in its contract with the corporation.

Approximately $2,742,332 of equipment – acquired with State grant funds – was

purchased between October 1, 2006 and September 30, 2007. Additionally, $259,617 of

equipment was purchased with non-State funds for the twelve months ending September

30, 2007. The revised Schedule 4.4 (c) indicates that an estimated $1 million was

scheduled for Year 4 equipment purchases.

Subsection (10)(e) No later than 18 months after occupying its permanent facility, the grantee shall establish a program for qualified graduate students from Florida universities permitting them access to the facility for doctoral, thesis-related research.

Although Scripps is not scheduled to commence operations in its permanent facility until

early 2009, Scripps Florida had nine graduate students enrolled in its Kellogg School of

Science and Technology for the 2006-2007 school year. In May 2007, the first Ph.D.

student graduated. Two additional graduate students began the program in August 2007.

The Scripps Florida graduate admissions committee reviews all applications submitted by

Florida residents, or students from Florida colleges and universities, who submit

applications to TSRI’s La Jolla campus, but who did not specifically apply to Scripps

Florida. Several offers have been made to qualified individuals from this pool in each of

the past two years. Currently, there is one Florida graduate in the Ph.D. program, four

Florida undergraduates in research internships, and ten Florida post doctoral fellows

(research associates) at the Scripps Florida facility. As the faculty ranks at Scripps

Florida grow over the next several years, additional efforts will be made to recruit highly

qualified Florida students to the Scripps Florida Ph. D. program

Subsection (10) (f) No later than 18 months after occupancy of the permanent

facility, the grantee shall establish a summer internship for high school students.


Annual Report 2007

In the summer of 2007, nine Palm Beach County students participated in the Scripps

Florida’s High School Summer Internship Program, an increase from seven students a

year ago. The internship exposes students to a variety of contemporary issues in basic

biomedical research, providing hands-on laboratory experience, thus motivating and

preparing students for continuing education in the sciences. Internships were awarded on

a competitive basis to students beginning their junior or senior years in a Palm Beach

County high school in the fall 2007. Students applied through an online form and

applicants with a minimum grade point average of 3.0 who were at least 16 years of age

submitted letters of recommendations, transcripts, resumes and other ancillary material.

Special emphasis was placed on identifying and recruiting students who are

underrepresented in the sciences. Students were given a gross compensation of $8.00 per

hour for the six-week summer program. The internship program began in the summer of

2005. See Appendix D, “Scripps Florida Outreach Activities” for a detailed listing of

Student Interns for summer 2007.

Subsection (10) (g) No later than 3 years after occupancy of the permanent facility, the grantee shall establish a research program for middle and high school teachers.

In the summer of 2007, three Palm Beach County teachers participated in the Summer

Research Program for Middle and High School Teachers at Scripps Florida. The

program commenced in the summer of 2005. The research program exposes teachers to

current laboratory techniques and procedures, provides information on a variety of

contemporary issues in basic biomedical research, creates ties and linkages to working

scientists who can assist them in curriculum development and creates opportunities for

teachers to share information and knowledge with their peers. The program emphasizes

the scientific process, research planning, bench experience, experimental design, data

analysis and interaction with laboratory personnel. As an adjunct to their day-to-day

responsibilities, participants are required to attend specially-designed seminars

throughout the course of the summer. For the summer 2007 program, the application

procedure was similar to the high school summer internship program and teachers were

given a gross compensation of $20.00 per hour for the six-week summer program. See

Appendix D, “Scripps Florida Outreach Activities” for a detailed listing of the Teacher

Interns for summer 2007.

Subsection (10) (h) No later than 18 months after occupancy of the permanent

facility, the grantee shall establish a program for adjunct professors.

Many of the current Scripps Florida faculty have received adjunct faculty appointments

with the University of Florida, University of Miami and/ or Florida Atlantic University.

Such adjunct appointments are intended to provide a mechanism for graduate students

enrolled in Florida research universities to collaborate with, to be co-mentored by, and to

perform research in the laboratories of a Scripps Florida faculty member. One FAU

student is currently working with a Scripps Faculty member according to this plan.


Annual Report 2007

A mechanism has been established for faculty members at Florida institutions who have

established collaborative research programs with Scripps Florida faculty to be appointed

to an Adjunct Professor position. The process is initiated by a Scripps Florida faculty

member who submits a nomination to his/her department chair. If the chair concurs, the

chair submits the nomination to the Office of the President for review and approval. One

such adjunct appointment—Dr. Greg Fields of Florida Atlantic University—has already

been established.

Subsection (10) (i) No later than 6 months after commissioning it high throughput

technology, the grantee shall establish a program to allow open access for qualified science projects.

In 2007, Dr. Smith at the Burnham Institute for Medical Research and Dr. Teplitski at the

University of Florida began using the “Access to Technologies” program at Scripps

Florida. Launched in 2006, the program continues to invite scientists from Florida

universities and other academic research institutions to use state-of-the-art screening

technologies at Scripps Florida's facilities in Jupiter for qualifying projects. Access to

Scripps Florida's High Throughput Screening (“HTS”) operation, similar to that used

widely by the pharmaceutical industry, speeds up the process of discovering new drugs to

treat a variety of human illnesses. The technology, which is one of five in the country, is

primarily for users within the State of Florida, however, Scripps Florida scientists

collaborate with researchers at universities and institutes across the country.

Subsection (10) (j) Beginning June 2004, the grantee shall commence collaborative

efforts with Florida public and private colleges and universities, and shall continue cooperative collaboration through the term of the agreement.

See the reply to Subsection (9) (f). Subsection (10) (k) Beginning 18 months after the grantee occupies the permanent

facility, the grantee shall establish an annual seminar series featuring a review of the science work done by the grantee and its collaborators at the Florida facility.

Scripps Florida continues to host two seminar series, which were established during fiscal

year 2005. The Scripps Florida Collaborative Seminar Series is a monthly series of

lectures featuring prominent Florida-based speakers from the academic, biotechnology or

pharmaceutical community. The series serves as a major foundation for creating

knowledge and technology-sharing opportunities, team building and collaborations

among biomedical researchers at Scripps Florida and other Florida research and academic

institutions and companies. The Collaborative Seminar presentations focus on topics

within the broad fields of biomedical science, advanced technologies applied to

biomedical research and drug discovery. The sessions are open to interested professionals

within the Scripps Florida and Florida scientific communities. The public lecture series,


Annual Report 2007

“Frontiers in Science”, also presents information within the broad fields of biomedical

science. See Appendix D, “Scripps Florida Outreach Activities” for a detailed listing of

the Seminar Series.

Subsection (10) (l) Beginning June 2004, the grantee shall commence

collaboration efforts with the Office of Tourism, Trade, and Economic Development by complying with reasonable requests for cooperation in economic development efforts in the biomed/biotech industry. No later than July 2004, the grantee shall designate a person who shall be charged with assisting in these collaborative efforts.

Scripps Florida has designated Mr. Douglas Bingham as their designee to assist OTTED

regarding collaborative economic development efforts between Scripps and OTTED.

Scripps has worked, directly and indirectly, with OTTED to foster biotechnology

economic development growth in Florida.

In fiscal 2007, Scripps Florida hosted various groups of dignitaries for familiarization

tours, in conjunction with the World Trade Center in West Palm Beach and other

economic development groups. Scripps Florida showcased its state-of-the-are facility to

representative from the World Trade Center in Germany in September 2007; to the

Minister of Health for the Republic of Ghana in July 2007; and to Consuls of the

Netherlands in March 2007.

Scripps Florida continued to connect with many business and community organizations

during fiscal 2007 by participating in meetings facilitated by local business and

government agencies, such as the Palm Beach County Business Development Board and

Chambers of Commerce. See Appendix D, “Scripps Florida Outreach Activities” for a

detailed listing of the Business, Science and Community Outreach activities by Scripps

Florida.

september 30, 2007

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