Complete 2012 forensic audit documents - Kansas Bioscience ...

associated with EnalaPed, who has received funding from KBA, and is the President of Beckloff
Associates, a CRO who provides services to some companies that receive funding from KBA.
BKD interviewed Dr. Tom Krol, Dr. Terry Osborn and Michael Beckloff concerning these
allegations. The history of Dr. Osborn’s involvement with KCAS and KCAS’ participation in
the Kansas City Region CRO Initiative (please refer to the National Drug Development
Accelerator section of this report for further information regarding the Kansas City Region CRO
Initiative) is as follows. In 2009, AAIPharma notified KCAS management that KCAS was going
to be put up for sale. Management wanted to keep the business in town, so they proposed a
buyout and approached KBA for partial funding. Dr. Osborn took the opportunity before the
Investment Committee, but the committee declined as they considered KCAS to be a bioscience
“service” company. However, Dr. Osborn was supportive of KCAS’ services and operations and
accepted a position on KCAS’s BOD under the management consulting function of HBV in
December 2009.
Drs. Krol and Osborn jointly managed the Kansas City Region CRO Initiative on KBA’s behalf.
Other organizations involved in the Kansas City Region CRO Initiative working group included
KansasBio, KCALSI, KCADC and Beckloff Associates. Beckloff Associates was included in
the working group as representatives of the CRO industry to ensure that the service providers
had access to input and clarification from industry participants, therefore, providing legitimacy to
the study from the CRO industry’s perspective. KCAS was added to the working group after
Osborn became CEO of that organization. The first Phase of that initiative was to identify CRO
resources in the Kansas and Kansas City region and Simon Management Group was hired to
perform the study. Simon Management Group was paid $45,000 for the study and PharmaCircle
was paid $20,000 for a database used in the study. Neither contract required an RFP under
KBA’s purchasing policy. KBA provided the funding for those contracts. That study was
released in June 2011, after Dr. Osborn joined KCAS.
KBA did issue an RFP with regard to the Kansas City Region CRO Initiative and subsequently
hired Tufts University to conduct a study comparing the area CRO/CSPs to 14 other CRO/CSP
concentrations. The resulting study will be used as a piece of a marketing initiative to grow
CRO/CSPs in this region. The contract with Tufts is anticipated to approximate $200,000 when
completed.
Dr. Osborn indicated that he is an officer and director of KCAS, but has no ownership interest.
Furthermore, Michael Beckloff has no association with KCAS. His involvement with the
initiative is through his employer, Beckloff Associates. Furthermore, Dr. Osborn indicated that
KCAS has received no payment from KBA in relation to the initiative and, in fact, has received
no funding of any sort from KBA. A review of KBA’s QuickBooks accounting software
indicated that KBA had made no payments to KCAS. Therefore, BKD finds the allegations to be
false.
ADDITIONAL ALLEGATIONS
The Commerce Committee meetings regarding KBA’s operations have resulted in a number of
questions and allegations and have resulted in additional testimony by members of KBA’s BOD
and management, and the submission of documentation for review. BKD is recounting specific
issues raised and allegations made and providing responsive information based on our research
of publicly available information, interviews we conducted and information provided by KBA.
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