According to the funding agreement that governs the relationship between Jax and Connecticut Innovations – Connecticut’s government-run venture capital firm, up to 10 University of Connecticut Health Center employees working at Jax’s Farmington lab will count toward the Maine nonprofit’s job-creation goal.
Jax will use the state funding to build the Jackson Laboratory for Genomic Medicine where it will begin a new line of research in personalized medicine. In conjunction with the lab subsidies, the state is also investing $864 million in a health center project called Bioscience Connecticut.
The UCHC employees also count toward the requirement that Jax pay its average employee at least 125 percent of the average Connecticut salary. The target is currently about $72,000.
Jax will also get credit for independent contractors and employees of “vendors, contractors, joint venture partners or licensees” who live in Connecticut and work at the Farmington lab.
Part-time employees count for partial credit. Employees must work for six months out of the year to be counted.
Over 20 years, the state will subsidize Jax by about $42,000 per job per year.
Included in the subsidy are $99 million in grants over the next decade. If the state fails to make the payments, Jax no longer has to meet its job creation requirements.
Connecticut will share in some of the revenues from research at the lab, but during the first decade Jax has the option to ask for some of the money back if amounts to a “windfall.”
At least 90 of the Jax employees will be “senior scientists,” or researchers with advanced degrees. Jax must also ensure at least 30 percent of its employees are senior scientists once employment exceeds 300.
Jax recently announced Dr. Yijun Ruan will be the Connecticut lab’s first researcher.
The lab has to give Connecticut residents preference when hiring, “except for professional scientific staff positions requiring a doctoral degree, postdoctoral training positions, and graduate student positions.”
“This policy means that when two candidates are otherwise equally qualified, Jax will give preference to the candidate who is a Connecticut resident,” the agreement says.
The lab also has to purchase from Connecticut vendors “to the extent it is cost-effective, schedule appropriate and scientifically sound.”
The state subsidy for Jax includes a $145 million facility loan and a $46.7 million furniture, fixtures and equipment loan, both at 1 percent deferred interest and forgivable after 10 years.
The funding agreement commits the state to providing $99 million in grants to Jax over the next decade. If the state fails to provide the grant at any time, all state loans to Jax are automatically forgiven.
The grant can be reduced if Jax fails to meet certain benchmarks.
Connecticut will share in proceeds from the lab’s intellectual property for 25 years. Each year, the state will get 10 percent of the first $3 million and half of revenue above $3 million.
Jax budgets for $1 million in royalties over its first 10 years of operation, which would entitle the state to $100,000. The application for funding does not include royalty projections beyond the first decade.
If Jax fails to meet certain benchmarks during its first 10 years of operation, the state can increase its share of the first $3 million in proceeds to 15 percent until Jax meets its goals.
If the royalties exceed the amount budgeted in the first decade, Jax has the option to ask for the state to return part of its share of the proceeds.
“If, during the first ten years of this Agreement, CI recognizes a windfall amount of money from the payment by Jax to CI of the Reinvestment Amount as computed pursuant to Section 12.2 hereof, upon a request from Jax, CI shall consider but shall not be obligated to remit a portion of such windfall amount to Jax,” the agreement says.
Connecticut Innovations has the right of first refusal to invest in projects that commercialize Jax intellectual property during the 25-year period.
After the loans are forgiven, if Jax decides to leave its Farmington facility, the state can purchase it at a discount. During the first year, the state gets a 75 percent discount. In the second year the state gets a 50 percent discount and then a 25 percent discount. In the fourth year, the state can buy the facility at fair value.
After 14 years, Jax can make a tidy profit on selling the facility since the state paid to build it.
If Jax falls short on job creation, but has created at least 225 jobs in 10 years, it can lease the Farmington facility for five years with an option for a five-year renewal.