With pomp and circumstance, state finalizes Jackson Lab deal

Farmington — Gov. Dannel P. Malloy marked his first anniversary in office today by finalizing the deal for the state to invest $291 million in a genetics research institute at the University of Connecticut Health Center.

The state’s partnership with The Jackson Laboratory, a world-renowned research center in Maine, is an attempt to ride the field of personalized medicine into a new economy.

“What we’re talking about is the creation of the next generation of jobs, investing in an industry that is already worth $298 billion a year and is growing at 11 percent per year,” Malloy said.

Malloy Jackson

Malloy hands ceremonial pen to Dr. Edison Liu, CEO of The Jackson Laboratory.

Trustees and directors of the University of Connecticut, the state’s Connecticut Innovations financing entity and the nonprofit Jackson Lab all signed off on documents implementing a deal that the General Assembly approved in October.

The state essentially is betting on Jackson Laboratory’s vision of using genetics to closely tailor medical treatment of diseases to each patient’s genetic makeup.

“If we are successful here in Connecticut, we can imagine a future where your doctor can scan your genome and, for example, that of your cancer and tailor a treatment that is personalized and unique,” said Dr. Edison Liu, the scientist who recently took over as chief executive officer of Jackson.

Liu addressed his audience as though they were future patients, casting his company’s research as something that could yield treatments for them and therapies that could block diseases in their children and grandchildren.

“Our grand vision is for personalized, individual and precise medical care for you and your family,” Liu said. “In the end, I know and am very confident, that we will make you all very proud.”

But behind the celebration today were weeks of negotiations to hedge against the possibility of failure.

The final agreements address some of the concerns raised by legislators in October about protecting the state’s interest in the new research facility should Jackson fall short of promised hiring goals or even fail.

As outlined in October, the state is making two investments: a $192 million forgivable loan to construct and outfit a 173,000-square-foot research facility on the UConn campus here, and a $99 million operating subsidy for 10 years.

Jackson formally commits in the final documents to establish at least 300 positions within 10 years, of which 90 will be senior scientists. Its average annual wage at the new facility must be 125 percent of the average wage in Connecticut.

The Malloy administration says the project eventually will help generate 6,800 permanent jobs.

Connecticut will share in any royalties from intellectual property developed by the new facility. It will get 10 percent of net royalties up to $3 million and 50 percent of above $3 million.

The intellectual property provision covers 25 years, said Catherine Smith, the commissioner of economic development.

“In the first 10 years we’re going to plow those back into the lab … unless there is a $3 million or greater royalty, then we’ll take our 50 percent,” Smith said. “The first 10 years, we want the lab to reinvest, to keep growing to do that next level of research.”

The research facility is to be built on state land on UConn’s Farmington campus that will be leased to Jackson for $1 a year, with Jackson being guaranteed ownership for $1 once it creates 600 jobs in Connecticut.

If Jackson defaults, it forfeits ownership of the facility and fixtures.

At the end of the 10 years, should Jackson leave Connecticut, the state has the right to buy the facility for four years at a steep discount, starting at 75 percent in year one, 50 percent in year two and 25 percent in year three.

“We basically have them locked in for 14 years,” Smith said.

UConn retains the right of first refusal should Jackson decide to sell.

Smith called the deal a combination of carrots and sticks.

Sen. Len Suzio, R-Meriden, one of the most vocal critics of Jackson Laboratory project, said that a summary of the final deal between the administration and the bioscience research firm offered him little reassurance.

“This still is structured, in my opinion, in a very amateurish way,” he said.

A direct guarantee of 300 jobs is too little for the state’s investment, he said.

“They could all be brilliant scientists or executives, it’s still only 300 jobs,” he said. “I don’t care what you call it, that’s a drop in the bucket.”

With the contracts executed, Malloy conducted a ceremonial bill signing of the Jackson Laboratory legislation in the atrium lobby of the academic entrance to the UConn Health Center.

It was the same spot last spring where Malloy and UConn officials announced an $864 million bioscience initiative to modernize the health center and improve its research facilities and staff, an investment that attracted Jackson.

The initiative was approved by the General Assembly within a month, with Malloy calling it an investment that would pay off in coming years, not realizing that it would attract Jackson Lab within months.

“Little did we know,” Malloy said.

The governor did not stint on superlatives in describing what the bioscience initiative and the new institute, JAX Genomic Medicine, could mean for UConn and the state’s economy.

“This is an important day in the history of Connecticut, because it marks the end of the past and the beginning of the future,” Malloy said.

The governor was surrounded by legislators and officials from Jackson and UConn, including the university’s new president, Susan Herbst. Looking down on the lobby were dozens of UConn Health Center employees, including some doctors in white coats.

In recent years, with an aging hospital and research facilities, the status of the health center was shaky. A prior modernization effort by Gov. M. Jodi Rell failed after the state was denied federal funding for a portion of the project.

Malloy took Rell’s project, enlarged it and got the legislature to approve the funding.

Malloy acknowledged the audience of state employees by smiling as he ended the ceremony. He looked toward the balcony and said, “I want all those people to get back to work.”

They applauded.

Keith M. Phaneuf contributed to this report.