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Merck's share of deal: $95M

The drugmaker would shoulder more than half the cost of the Moffitt venture, documents say.

By Kris Hundley
Published January 29, 2007

Giant drugmaker Merck & Co. Inc. has pledged nearly $100-million, including $65-million in cash, to create a major cancer tumor research center in Tampa.

The pledge, disclosed in confidential documents obtained by the St. Petersburg Times, indicates Merck is willing to shoulder more than half the cost of establishing M2GEN, a for-profit subsidiary of Tampa’s H. Lee Moffitt Cancer Center and Research Center, a far bigger percentage than other recent biotech incentive packages in Florida.

Nevertheless, the arrangement remained in limbo Monday as both county and state officials continued to drag their feet on approving public funds that are critical to the deal.

The Merck/Moffitt partnership, which was announced last month, calls for  $15-million from the state’s Quick Action Closing Fund and $28-million in cash and land from Hillsborough County.

Merck has agreed to give Moffitt $5-million upfront and $13-million annually for the next five years. The world’s second largest drug company will also donate $30-million in in-kind services, profiling at least 30,000 tumors for M2GEN. In exchange, Merck will have exclusive access to the tumor database for drug discovery purposes.

Documents describing the deal say six biotech companies are exploring a move to the Tampa Bay area to work with M2GEN. In letters to Enterprise Florida, the state’s economic development agency, three of the companies said their participation could generate up to 140 new jobs.

M2GEN alone will be responsible for 165 positions, the documents say, putting the public investment at $263,000 per job. That is substantially lower than the cost to create jobs in other recent biotech deals.

The confidential analysis of M2GEN incentive package also mistakenly described the city of Tampa’s cash contribution to the deal, code-named Project Bold, as $5-million.

In fact, Tampa agreed to put $500,000 toward the Merck/Moffitt endeavor. Mark Huey, Tampa’s manager of economic development, said the city doesn’t have the resources to make a multimillion-dollar commitment to the project. Even a half-million-dollar lump sum payment is unusual.

“We’ve never done that before,” Huey said. “We’ve always done it based on performance or job creation or capital investment.”

Sen. Rudy Garcia, a Republican from Hialeah, brushed off the official overstatement of Tampa’s contribution, saying “What’s an extra zero?”

 As co-chairman of the joint legislative budget committee, Garcia single-handedly stalled approval of state funds for the deal last week, saying he had unanswered questions about how Florida would benefit.

“They’re asking Florida to come up with $15-million while we have other needs in other areas of the state,’’ he said.
Earlier in the month, Hillsborough County officials also raised concerns about their pledge and criticized the city’s contribution.

Commissioner Ken Hagan noted that the county recently committed to give the city nearly $7-million in tourist tax dollars to fix the Tampa Convention Center roof and air conditioning system.

Commissioner Mark Sharpe, a key supporter of the project, was optimistic that the city will ultimately come through.

“A plan that’s good for the taxpayers takes time,’’ he said. “The devil’s in the details.”

New reality for deals with big incentives

The fact that monkey-wrenches are suddenly being thrown into what was presented as a done deal reflects a new political reality in Tallahassee. Over his last three years in office, former Gov. Jeb Bush delivered several multimillion-dollar incentive packages to lure high-profile biotech institutes to Florida.

So powerful was Bush’s influence that not a single question was raised when the state budget committee signed off in August on nearly $180-million in incentives that were identified only by their code names.

The Merck/Moffitt partnership, which will give Moffitt an edge in the development of personalized cancer medicines, was touted by Bush as “a milestone day for Florida.” But now that Bush is out of office and his successor, Gov. Charlie Crist, is distracted by other concerns, county and state officials have suddenly become emboldened.

“I sense that the prior governor’s office thought no one should ask any questions (about these projects),’’ said Garcia, who joined the budget committee in January. “But quite frankly, that isn’t good enough for the people of Florida.’

’Second phase may be real stumbling block

Public officials may also be hedging on their contributions to Merck/Moffitt deal because the nationally renowned cancer institute has made it clear that a second and far more expensive project is in the works that would entail a substantial relocation and expansion of the Moffitt campus.

Hillsborough Commission Chairman Jim Norman said Moffitt representatives have told him not to support the M2GEN deal if he does not intend to support the second phase in which the dollar amounts are expected to be much greater.

“I’m not trying to kill their deal,” Norman said. “But I’m going to get whacked over the head by people who say 'You’ve committed this county and you don’t know what you’ve committed to?’ I can’t do that.”

Garcia had similar questions. “What if Phase 2 never materializes?’’ he said. “Is Phase 1 (Merck/Moffitt) a stand-alone project?”

A spokesman for Enterprise Florida said the agency is working on getting Garcia some answers before the next state budget committee meeting Feb. 22.

Moffitt officials declined to comment on expansion plans or delays in public approvals.

“It’s going to happen,’’ Moffitt spokeswoman Michelle Foley said. “Where and how fast is still being worked out.’’

Times staff writers Janet Zink and Bill Varian contributed to this story. Kris Hundley can be reached at hundley@sptimes.com or (727) 892-2996.

[Last modified January 29, 2007, 21:21:11]