Joint Affiliation Board and Byrd Advocacy Board October 20, 2008

1. Joint Affiliation Board and Byrd Advocacy Board October 20, 2008

2. Discussion Outline • CEO Report • Key Messages • Summary of Accomplishments to Date • Developments Since September 12, 2008 • Financial Management • Organization Structure • Blueprint for Strategic Action • Calendar Outlook

3. CEO Report

4. Key Messages Past Present Future • No Longer a Topic • Brief Update • Today’s Focus • As of Today • The Transition Team has made significant progress • A personnel reduction action has reduced the spending rate by ~ $2 mm per year • The budget for FY 2009 has been analyzed and is in process of being recast • A new Organization Structure is being implemented • Priorities are to preserve: • Mission, vision and values • State-wide initiative/collaboration • Research, Clinical and Educational & Community Outreach objectives

5. Summary of Significant Accomplishments to Date Research Clinical Financial Mgmt. • Asset Maps: Byrd, USF, USF Health • “Town Hall” for Scientists • Byrd Investigators USF COM Faculty • Four COM Investigators Co-Locating to Byrd; Two have already co-located • New Recruitment • Grad Student Support • Vivarium Renovation • Vivarium Facility Manager • Lab and Space Plan • Planning Three New Cores • Recruiting Chief Scientific Officer and Chief Clinical Officer • Developed Plans for Competitive Renewal of ADRC • Established Alzheimer Disease Comprehensive Clinical Center (ADC3) • Plan for Multi-Disciplinary Team Care for AD • Cooperative structure forged for Byrd, Suncoast and USF MDC • Maintain and Adequately Support State-wide Consortium • Control of Financial Assets • Review of “Internal Controls” • Grant Management Accounting Analysis • Bank Account Review • Cash and Cash Management Review • Review of Policies, Procedures, Accountability • Expense Reduction • Recast Budget Administration Development • Centralized Coordination of Affiliation Activity • Developed “Tactical Plan” • Right-sized Byrd Staffing • Byrd Staff USF Personnel • Financial Support for Byrd Facilities • Facility/Space Plan • Info Services Support • Organization Structure • Assessed Existing Program, Staffing, Results • Development Plan Strategic • Plan for Unique Comprehensive Basic, Translational and Clinical Research Enterprise • “Blueprint for Strategic Action”

6. Financial Management Summary of Expense Reduction Action September 24, 2008 By the Numbers Context for Expense Reduction • Primary goal: preserve the scientific and clinical missions • Situation demanded prompt action; preserved insurance coverage by acting in September • Personnel action conducted by USF HR senior professionals • Started with 71 people, including temps • 50 will continue (mostly scientists and clinicians) • 38 offered USF positions • 12 part of MDC and ADRC initiatives (under consideration) • 2 resignations • 19 were released • 8 temporary personnel • 11 Admin/Support overhead • FY 2009 Impact: ~ $1.5 mm • Annualized Financial Impact: ~ $2 mm This action was necessary… but not sufficient.

7. Financial Management Original Budget Draft Recast Budget • Beginning Cash Balance: $17.8mm • Net Loss from Operations: ($6.6mm) • Some budget assumptions and obligations were not implemented at the time the budget was adopted, eg: • Personnel reductions ($1.5mm) • Academic Grants ($1.1mm) • The impact of required revisions results in an estimated Net Loss from Operations of approximately ($9-$10mm) • Net Loss from Operations: ($8 - $9mm) • The recast budget recognizes savings from administrative personnel reductions, planned investments in Core Labs, some infrastructure enhancements, and the like. • Some budget assumptions are not yet finalized, eg: New sources of revenue, enhanced Development Plan, and the financial impact of Addenda to Affiliation Agreement. Scenario Likely Outcome Run out of cash within 30 to 36 months 1. Original Budget Run out of cash within 20 to 26 months 2. Original Budget w/ Revisions 3. Original Budget w/ Revisions and Recent Personnel Cuts Run out of cash within 26 to 32 months Run out of cash within 22 to 28 months 4. Draft Recast Budget 5. If Able to Secure Recurring POM Funds Run out of cash within 27 to 33 months 6. If Able to Secure Recurring POM, Additional State Funding, and Advocacy Board Assistance Financially self-sufficient operation

8. Financial Management Observations and Implications • Current financial performance not sustainable – will deplete cash (assuming current state unchanged, eg State funding, new grants, new revenue, etc.) • Top Priority: Increase Revenue, including new sources of revenue, additional funding from State, NIH, other Federal sources, venture capital, and private foundations • Personnel reduction was necessary, but not sufficient. Need additional approaches to manage expenses, eg State funding for Plant, Operations & Maintenance (POM) • Budget recast is necessary. Need to consider other factors, eg increase in facility utility costs, financial implications of USF Agreements, etc., especially if we want to pursue an “investment strategy” in anticipation of successful ability to increase revenue. • The Blueprint for Strategic Action is intended to set the course to guide the Byrd Center out of this situation.

9. ADRC Network Organization Structure Conceptual Perspective Statewide Grants Guiding Principles • Leverage USF & USF Health capabilities • Organization structures are evolutionary and will change with growth of Byrd • Maintain the Byrd identity • Focus on “mission critical” functions • Minimize “cost to manage”

10. Organization Structure Functional Responsibility Chart Byrd Advocacy Board USF Board of Trustees Joint Affiliation Board CEO Business Services Clinical Research • Financial Management • Information Services • Facilities/Space Management & Maintenance • External Affairs / Development • Patient Care • Community Outreach • Education • Compliance • Basic, Translational & Clinical Research • Vivarium • Compliance • Intellectual Property • Grants Management

11. Byrd Organizational Responsibility Chart

12. Blueprint for Strategic Action

13. Headline News – October 20, 2013 Entrepreneurial Practice of Medicine: Byrd Center an Innovative Role Model Clinical Trial Success: The Cure for Alzheimer’s Soon? NIH Funds Breakthrough Research at Byrd Center Governor’s Salute: “The Byrd Center is a Model of Excellence for State, University and Private Sector Collaboration”

14. History of the Future – How Did We Do It? Four Keys to Our Success Steadfast Focus and Investment on Byrd’s Ultimate Mission: Find a Cure! Unique Entrepreneurial Interdisciplinary Program Model Balanced Financial Model Organized, Leveraged & Mined Statewide Talent

15. Johnnie B. Byrd, Sr. Alzheimer’s Center and Research Institute and the University of South Florida Blueprint for Strategic Action 2008 – 2013 Global Powerhouse for Everything Alzheimer’s State-of-the-Art Basic & Translational Research Integrated Clinical Research & Clinical Care • $20mm in NIH Funding • Renowned ADRC • Integrated, Inter-Disciplinary, Multi-Institutional Program • People, Place, Services, Infrastructure • Comprehensive & Multi-Disciplinary Clinical Evaluation & Management • Clinical Trials • Physician-Scientist & Physician Collaboration Meet Statewide Needs for Citizen Awareness, Education & Outreach Integration: “Synergy Works!” Creative Capitalization & Financial Model • ADRC Mandate • Memory Disorder Clinics • General Public Awareness for Patients, Care Givers and Learners • Literacy: Diversity Outreach • National Role Model • Credible, On-Going, Diverse Revenue Base • “Best ROI Example” for State Funding • Magnet for Alzheimer’s Fund Raising • Venture Capital • Most Unique in the World Under One Roof • Leverage/Mine Statewide Resources, Capabilities • Broad Neurosciences Agenda • National Role Model

16. The “Horizon Map” Milestones Horizon 1: First Year Horizon 2: 2 to 3 Years Horizon 3: 3 to 5 Years • Recruit Chief Scientific or Clinical Officer • Appoint ADRC Administrator • Vivarium Fully Functional • NIH Grant Funding • Vivarium Expansion • New Faculty Recruitment • Expansion of Lab Space on Floors 5 and 6 • Top Quartile NIH Grant Funding • Many Patents – Need New Floor for Incubator State-of-the-Art Basic & Translational Research • AD Comprehensive Clinical Center: Byrd, Suncoast, USF • Recruit Chief Clinical Officer • International Program Development • State, Regional & National Prominence • Global Prominence Integrated Clinical Research & Clinical Care • Create Plan for Expansive Education Program • Launch Enhanced Program • Recognized by State as Best Education & Outreach Program Content • Global Role Model for Education & Outreach Meet Statewide Needs for Citizen Awareness, Education & Outreach • Integrate with Full Breadth & Depth of USF Capabilities • Leverage Statewide Resources • Recognized by State as Best Model for Multi-Institutional Integration • Become a model program for basic, translational research and clinical care integration Integration: “Synergy Works!” • Stabilize Operating Expense • Renew ADRC • Seek State Funding • Fund Raising Strategy • Active Byrd Advocacy Board • State Funding Renewed • Clinical Research Revenue • Clinical Care Revenue • Venture Capital Revenue • Fund Raising Revenue • Financially Self-Sufficient • Byrd viewed as “Best ROI Example” for State Funding Creative Capitalization & Financial Model 16

17. Calendar Outlook

18. Calendar Outlook October November December January • Budget Analysis • Revenue Planning for Extramural Funding • Redesign Board Roles • Proposed Statutory Revision • External Advisory Committee of Florida ADRC • Area Legislative Delegation • Area Legislative Delegation • Scientific Event and Legislative Reception • CSO Recruitment • New Faculty Recruitment • Synergy Social Hour • Suncoast Event • Memory Screening Clinics Proposed Board Meetings Dates Times • January 16, 2009 • April 17, 2009 • July 17, 2009 • October 16, 2009 • Joint Affiliation Board: 10am – 12 noon • Byrd Advocacy Board: 12:30 – 2:30pm

19. Summary and Discussion Scenario Likely Outcome Run out of cash within 30 to 36 months 1. Original Budget Run out of cash within 20 to 26 months 2. Original Budget w/ Revisions 3. Original Budget w/ Revisions and Recent Personnel Cuts Run out of cash within 26 to 32 months Run out of cash within 22 to 28 months 4. Draft Recast Budget 5. If Able to Secure Recurring POM Funds Run out of cash within 27 to 33 months 6. If Able to Secure Recurring POM, Additional State Funding, and Advocacy Board Assistance Financially self-sufficient operation • Conclusions • Current financial performance is not sustainable • Top priority: Additional funding – Advocacy Board Assistance Critical • Personnel reduction was necessary, but not sufficient • Budget recast is necessary – especially if pursue an “investment strategy” • Blueprint for Strategic Action provides our roadmap