UM Regents Amend Operating Agreement

An operating agreement for the Michigan Advanced Development and Manufacturing Center (MADMC) was amended by the University of Michigan board of regents at its Sept. 20, 2012 meeting. According to a staff memo, the change aims to ”provide potential MADMC leadership candidates with the level of management independence and operational flexibility needed to effectively direct a manufacturing start-up enterprise.” The memo states that MADMC is pursuing “contractual opportunities that would utilize the assets at NCRC.” The NCRC is the North Campus Research Complex, which the university bought from Pfizer in 2009.

MADMC has been a low-profile venture, and hasn’t been explicitly discussed by the regents. Formed in March of 2012, it was created by UM to seek a U.S. Dept. of Defense contract to develop pharmaceutical manufacturing at the former Pfizer site. At its June 21, 2012 meeting, regents approved the Michigan Health Corp. annual business plan, which included a brief mention of the MADMC. The plan referred to the MADMC and its parent organization, the Michigan Health Ventures (MHV), as new ventures to apply for a potential contract with the U.S. Dept. of Defense.

A budget provided in the plan shows a projected $3.028 million loss for the project in fiscal year 2012, with another projected loss of $120,000 in FY 2013. A note accompanying the budget item states: “The FY13 MADMC Budget reflects the cost of closing MADMC because no DoD contract has been awarded at this time. If the contract is awarded to MADMC, MADMC could generate a favorable margin of $250,000 per month.” The plan also stated that there were preliminary signs indicating the DOD contract would not be awarded to the MADMC. The plan indicates that “a separate business plan for MADMC will be presented to the regents when more definitive information regarding the DoD contract is available.”

The item on the regents’ Sept. 20 agenda did not include a business plan for MADMC. Rather, it referred to a proposed amendment to the entity’s operating agreement – a document that was not included in the meeting’s board packet of materials. According to a staff memo, the amendment would “permit a board of managers (which shall consist of up to seven voting managers, the majority of whom shall have relevant business experience, particularly in biotechnology enterprises at the start-up or established company level, with the requirement that at least one manager be an employee of the Regents) to: elect MADMC’s chief executive officer, chief financial officer and chief operating officer without the necessity of MHV approval …” [.pdf of staff memo]

This brief was filed from the Michigan Union’s Anderson Room on the Ann Arbor campus, where regents held their September meeting.