The Scripps Research Institute would receive $15 million a year for 40 years under a contentious proposal to make the lab part of the University of Southern California, several people familiar with the negotiations said.
Scripps announced last week that it was discussing an “alliance” with USC, but the nonprofit institute has been tight-lipped about financial details.
No one with knowledge of the talks would discuss the negotiations publicly, but critics of the arrangement grumble privately that the offer undervalues Scripps, which operates labs in San Diego and Jupiter.
While the sum of $600 million sounds large, applying even a rock-bottom interest rate of 2.2 percent to the 40-year payment schedule reduces the present value of the deal to $250 million.
Scripps reported net assets of $728 million — including investments worth $459 million and land, buildings and equipment valued at $372 million — as of Sept. 30, 2012. The gap between Scripps’ fortune and USC’s $15 million-a-year offer led one critic to dismiss the deal as “a joke.”
Scripps declined to elaborate on the financial terms.
“Any agreement with USC would be a large and complex deal,” Scripps said in a statement. “We are not at a point in the discussions where we can talk about details.”
The success of Scripps Florida is crucial both to the state’s big bet on biotech and to the presidential aspirations of former Gov. Jeb Bush. In the largest economic development incentive in state history, Bush in 2003 offered Scripps $310 million in state money to open a campus in Florida. Palm Beach County sweetened the pot with an additional $269 million in incentives.
Critics of the USC deal say Scripps Chief Executive Michael Marletta has given far too little information about the transaction, a gripe echoed by Palm Beach County Mayor Priscilla Taylor. She said Monday that she was “shocked” to read of the proposal last week in The Palm Beach Post. She said Scripps should have let county officials know about the transaction.
“We probably should have been one of the first to know,” Taylor said. “It’s time for them to update us on what’s going on.’’
Meanwhile, scientists at Scripps oppose the transaction. In an email last week to Marletta, 10 department chairmen and a dean said the deal “would destroy much of what has been built” at the nonprofit research institute.
But one former Scripps scientist said the deal doesn’t necessarily sound like a bad idea. Claes Wahlestedt, a neuroscientist who’s now at the University of Miami, said USC could provide a “safety net” as Scripps vies for a shrinking pot of cash from the National Institutes of Health.
“It’s a difficult model to be an institute dependent on NIH funding,” Wahlestedt said.
Wahlestedt was responsible for one of only two private spinoff companies to come from Scripps Florida so far. The pace of private-sector job creation spurred by Scripps Florida has failed to live up to Bush’s lofty promises.
When Bush announced The Scripps Research Institute’s expansion to Palm Beach County in October 2003, he touted an economic impact study that said the investment in Scripps would spawn 6,500 spinoff jobs and create as many as 50,000 high-paying jobs statewide in 15 years.
Scripps Florida had 634 employees as of March, and private-sector biotech jobs have yet to appear. The lab’s arrival sparked a $1.5 billion spree of public subsidies for research labs from Miami to St. Petersburg. The goal was to turn around Florida’s notoriously low-wage economy, but the state continues to lag in most measures of biotech prowess.
Staff writer Joe Capozzi contributed to this story.