A Nature Post Mortem on the Scripps-USC deal and Faculty Rebellion

The journal Nature took a look this week at the vicissitudes at The Scripps Research Institute, including its now defunct, $600 million merger with USC as well as the Scripps faculty uprising.

The July 15 piece was written by Erika Check Hayden, who reported,

“Scripps faculty members…felt that the (USC) deal sold them short. In interviews, they noted Scripps’ coveted ocean-front location: La Jolla is one of the priciest zip codes in the United States. The $15-million annual payments over 40 years offered by USC would be the equivalent of a $250-million mortgage, they say. That would not even cover one year of the institute’s operating expenses, which were $400 million in 2013.

“’It didn’t make a lot of sense financially,’ (Scripps researcher Martin) Friedlander says  ‘You can’t ignore a $20-million deficit, but there are many other creative ways of addressing the financial shortfall. We certainly do not have our backs against the wall.’”

The nearly done deal with USC came about because of Scripps’ financial plight. The faculty took umbrage when they learned about it late in the game and called for the removal of President Michael Marletta. The deal then collapsed, and Scripps said it is going to look at unspecified alternatives.

Hayden has interviews with a number of folks, including both from within and without Scripps. She concluded,

“Marletta has said that he is seeking more donations for Scripps, but is disadvantaged by being a relatively recent arrival; he was chair of the chemistry department at the University of California, Berkeley, until 2010.

“’Philanthropy is about long-term relationships with your donors; it’s not something where you just turn the spigot and say, ‘OK, we’ll go out and raise a billion dollars’,’ says Salk president William Brody, who initiated his institute’s fund-raising campaign soon after arriving in 2009.

“Still, Brody and other observers say that Scripps should be able to find a way out of its current dilemma that does not involve dissolution or losing its independence.

“’If they can stick to their knitting and stay the course, they will be successful,’ Brody predicts.”

USC Dangling $600 Million Lure for Scripps

Fresh information is emerging on the USC-Scripps deal, including the loss of two scientists to the Los Angeles school. And from Florida is coming news that Scripps would receive $15 million a year for 40 years under the terms of some sort of merger. 

The departing Scripps scientists are biochemist Ray Stevens and biologist Peter Kuhn, according to a piece by Gary Robbins in the San Diego U-T.  The move, which does not appear to be directly connected to the deal, is being hailed on USC social media sites (See here and here.) 

Jeff Ostrowski of the Palm Beach Post wrote about the possible USC-Scripps deal, which has rankled some in Florida. The state houses a 624-employee branch of Scripps. He said that Scripps would receive $15 million a year for 40 years under the terms of the deal. Ostrowski continued,

 “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.’”

No further details of the possible arrangement were reported in the Florida newspaper.

Ostrowski, however, also wrote,

“When (former Gov. Jeb) 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.”

Nothing new has surfaced on the interest expressed by UC San Diego in Scripps, which is located nearby. USC is about 130 miles north of Scripps.

UC San Diego Says Alliance with Scripps is Not Out of the Question

The University of California at San Diego is emerging as a suitor for The Scripps Research Institute as its top faculty say a merger with USC would “destroy” much of the institute.

According to an article by Bradley Fikes and Gary Robbins of the San Diego U-T, the only major daily newspaper in the area, the chancellor of UC San Diego thinks an arrangement with Scripps is worth exploring.  

Both institutions are located near each other in the La Jolla area north of the City of San Diego proper. USC(the University of Southern California) is about 130 miles farther north in central Los Angeles. All three are biomedical research powerhouses.

Pradeep Khosla (left) and David Brenner, dean of the UC
 San Diego Medical School and a member of the state
 stem cell agency governing board. UCSD photo

Fikes and Robbins wrote,

“UC San Diego Chancellor Pradeep Khosla said in an interview: 'I would certainly listen' if the institute proposed a merger or some other alliance. 'I would talk to my colleagues, talk to my faculty, talk to my regents. ... There’s enough in there for me to say, ‘We need to talk a bit more.’”

His comments came as all of the active faculty chairs at Scripps delivered a note to the Scripps president and the board chairman declaring,

“We believe that the proposed path with USC would destroy much of what has been built and what we and others in the community value so much. We understand that institutions like Scripps face serious financial challenges and have to face up to that reality. Under the right terms, and being fully protective of the ‘TSRI Brand’ and culture, merger with USC or another institution could be an option for TSRI. From the information disseminated so far, the terms of the proposed merger with USC are not even close to what it would take to build faculty support.”

The note also said that the faculty was prepared "to make personal sacrifices to work for and maintain independence.”

The “information” mentioned in the faculty note is not yet available. 

Fikes and Robbins broke the story about a possible hookup between Scripps and USC. Scripps is wrestling with financial problems. Fikes reported today that Scripps' expansion into Florida is part of its economic travails. USC is better off financially and has its eyes on Scripps' prestigious researchers.

Stem cell research is no minor matter at all three institutions. UC San Diego has received $146 million from the state stem cell agency, USC $105 million and Scripps $45 million. All three have representatives on the agency's governing board. 

USC and Scripps: A Looming Scientific Hookup?

The University of Southern California (USC) and the Scripps Research Institute are engaged in talks that could involve a merger of their enterprises, a move apparently triggered by economic pressures and a desire for more scientific clout.

The institutions released a statement on the discussions today in the wake of the first report on the move, which was published on the San Diego U-T Web site yesterday. According to the Los Angeles Times this afternoon, the institutions did not specify their final goal or lay out a timetable.

A statement from both said that Scripps and USC are “discussing the possibility of a relationship that would enhance the missions of both institutions. TSRI(Scripps) and USC have a shared commitment to academic excellence that will result in meaningful breakthroughs to improve health and well-being.” 

Gary Robbins and Bradley Fikes broke the story late yesterday in the San Diego newspaper. They wrote that Scripps, which is based in La Jolla, Ca., has heavy reliance on federal research funding, which is stagnant and under great pressure. At the same time, USC, located roughly 130 miles north in Los Angeles, is eyeing the research capabilities of Scripps, which counts two Nobel Prize winners on its staff. 

Both enterprises have large stem cell research efforts. The California stem cell agency has given USC $105 million in 26 awards. Scripps has received $45 million in 19 awards. As expected in the early stages of such discussions, it is not clear how the two stem cell research efforts would be affected. 

Fikes at the U-T is blogging live about the latest reaction, comments and information on the talks.