Grants will shrink, life sciences leader predicts

Last fall, BioCrossroads named Leonard J. Betley—chairman of the Richard M. Fairbanks Foundation, the Regenstrief Foundation
and the Walther Cancer Foundation—its inaugural Life Sciences Champion of the Year.

An attorney for 36 years, Betley retired in 1996 from Ice Miller LLP. Since then, his efforts in the life sciences sector
include spearheading Fairbanks Foundation’s $10 million gift to create the Fairbanks Institute for Healthy Communities, leading
Regenstrief Foundation’s establishment of the Regenstrief Center for Healthcare Engineering at Purdue University, and overseeing
formation of the Walther Cancer Foundation.

IBJ recently caught up with Betley, 75, to get his thoughts on the latest life sciences developments and gauge the climate
for fund raising. The following is an edited transcript of the interview.

IBJ: Due to the recession, the governor wants to freeze funding for the Indiana Innovative Alliance—IU and Purdue’s life sciences
research collaboration—for a year or two. How badly will that hamper the state’s biotech prospects in the long term?

BETLEY: A short-term postponement will hurt, but it won’t be fatal. If it is a final policy decision by the state that they’re
not going to help fund this type of activity at all, I think it will be a significant problem.

IBJ: Has the stock market’s tumble dragged along major
health care and research grant makers such as the Fairbanks, Regenstrief and Walther Cancer Foundation? Does that undercut
your plans for gifts in 2009 and beyond?




BETLEY: We don’t have year-end figures on any of those foundations. But my best guess is that all of them will be down 25
[percent] to 30 percent. Most of them hit their peak in fall 2007 and have been down ever since. That doesn’t have an immediate
impact because, as foundations, they are required to distribute 5 percent of the trailing year’s average.

But [next year] it’s going to cut grants by 25 [percent] to 30 percent. It does decrease our willingness to take on some new
projects.

IBJ: How are you changing fund-raising strategies for the foundations you lead since so many potential donors have suffered
stiff losses in their own portfolios?

BETLEY: Well, none of these foundations are fund-raising organizations; they are private foundations with existing endowments
created by individuals some years ago. So we aren’t out trying to raise money. It certainly affects our grantees’ fund raising.

IBJ: Fairbanks has given more than $2.5 million to BioCrossroads alone. In 2007, it made total grants worth nearly $21 million.
What do you look for in a successful grant proposal?

BETLEY: Well, it varies because we are in the business of giving several kinds of grants. One type would be when we are trying
to support an existing service—for example, the medical clinics throughout the city. Most of them are funded by federal money
and philanthropy. In respect to those grants, what we look at is increasing the volume of what they’re handling, measuring
the quality of what they are doing-that kind of thing.

Now something like BioCrossroads, that’s entirely different. They’re trying to build something for the future; it’s not providing
an immediate service to the population right now.

With BioCrossroads, the Indiana Health Information Exchange, those types of things, we are looking for projects that can accomplish
one or more of three objectives—one of which is the actual delivery of health care. Not only the delivery of it, but the true
efficiency and quality of it.

Secondly, one of our long-term goals, and this relates to BioCrossroads and the Indiana Health Information Exchange, is that
we’re trying to build a unique research-friendly database. And we’re trying to do that because we think that that will improve
our health care.

If we can develop a very-high-quality research database here, we think this will help attract life-sciences-type activities.
Those are our long-term goals, but we have a long way to go.

IBJ: Regenstrief is a national leader in studying health patterns in large populations. Economic developers often say Indiana’s
high rates of smoking and obesity are drags on business development. What’s the single best thing we could do to improve the
health of Hoosiers?

BETLEY: Now that’s an open-ended question if I ever heard one. It’s clear that all the economic incentives in the health care
system are directed toward cure. Very little of the incentives are directed toward prevention, and that comes from the feds
right on down.

Somehow, we’ve got to twist the system around to generate more interest and research toward prevention for obesity and smoking,
but other things as well. A lot of things like preventive tests, colonoscopies. That’s a tough, tough thing to do.

IBJ: The Walther Cancer Foundation makes research grants to eliminate cancer. How many decades away are we from that Holy
Grail goal of the life sciences industry?

BETLEY: We’ll never eliminate cancer. The best we can do is to learn how to treat it. The progress we are going to be making
in the future is to convert cancer to a chronic disease like arthritis or diabetes or something, but you’re never going to
cure it. It’s in our genes and our environment.

IBJ: Local attorneys complain that investors and firms give their most prestigious legal work to expensive New York counsel.
Are you seeing signs that local attorneys are getting a bigger piece of the life sciences pie?

BETLEY: I think so, partly because most of the new life science activity involves very small operations, startups. And these
startups aren’t going to New York or Silicon Valley for their legal work. There are several law firms here in town that have
very-high-quality services like intellectual property, fund raising.

IBJ: BioCrossroads named you its first Life Sciences Champion of the Year, and obviously hopes others will follow in your
footsteps. Who was your own role model?

BETLEY: One would be Sam Regenstrief. Sam has been dead for 20 years, but I worked with him for 20 years prior to that. He
was very innovative, a systems-conscious person. His business success was based on his ability to make systems more efficient.
Very, very early on, before it became fashionable, he recognized that many of the problems of our health care system are in
fact systemic.

He was a very practical dreamer who funded the Regenstrief Foundation with the idea that somehow we can make health care more
efficient and of a higher quality through the use of systems.

IBJ: Any advice you might have for your successors?

BETLEY: Yes. It’s a long haul; keep at it.