The University of Kentucky trustees on Tuesday voted to give up to $5.5 million to Coldstream Laboratories for working capital, operations and the development of new products.
Coldstream Laboratories is a specialty maker of drug products and a provider of drug product research that is wholly owned by the university. It is located at UK's Coldstream Research Park on Newtown Pike. The park has been touted as a potential pharmaceutical and high-tech park since the late 1980s, but it has failed to grow as initially planned.
The vote was unanimous, but the proposal did not have an easy ride, with several trustees saying that little information had been provided on the need for such funds or what Coldstream Laboratories' long-term business plan is.
Funding for Coldstream Laboratories comes from money generated by health-care services at UK, according to Sergio Melgar, a senior vice president of UK Healthcare and member of Coldstream Labs' board of directors. The money is not from taxpayer funds or general university funds, he said.
UK's health divisions have spent $26.8 million on Coldstream Laboratories, including the forgiveness of $1.46 million in UK equipment lease agreements.
Also on Coldstream Laboratories' board of directors are UK's provost Kumble Subbaswamy, UK's vice president of commercialization and economic development Leonard Heller and two members from outside the university.
Larry Kranking, chief executive officer of Coldstream Laboratories, said the lab has successfully worked through a cash crunch and now has a business model focusing on high-margin products — such as making drugs coming off patent — in addition to research and development.
Kranking said Coldstream Labs should break even in 2011.
Trustees Oliver Keith Gannon, CEO and principal owner of Boneal Incorporated in Menifee County, and faculty trustee Joe Peek both said the proposal lacked specific information about Coldstream's financial state, which made them uneasy.
Trustee Jo Hern Curris, an attorney, asked Kranking if he anticipated returning to the board to ask for additional money.
"Right now, the answer is, I have no intention of coming back," Kranking said.