25 TAC §703.17

The Cancer Prevention and Research Institute of Texas ("CPRIT" or "the Institute") proposes amending 25 TAC §703.17, relating to revenue sharing terms and the Institute's option to take equity ownership in a grant recipient.

Background and Justification

Texas Health and Safety Code §102.256 requires CPRIT to include terms in every grant contract that allow the state to benefit financially from the results of CPRIT-funded grant projects. One option authorized by the statute is through the state taking equity in the grantee. Issues related to equity ownership may affect certain standard grantee reporting requirements, such as the schedule for the grantee to certify and verify its matching funds obligation. The proposed change requires CPRIT to specify in the award contract any changes from standard reporting requirements and associated consequences for failing to timely report.

Fiscal Note

Kristen Pauling Doyle, Deputy Executive Officer and General Counsel for CPRIT, has determined that for the first five-year period the rule change is in effect, there will be no foreseeable implications relating to costs or revenues for state or local government due to enforcing or administering the rules.

Public Benefit and Costs

Ms. Doyle has determined that for each year of the first five years the rule change is in effect the public benefit anticipated due to enforcing the rule will be clarifying grantee reporting obligations and consequences.

Small Business, Micro-Business, and Rural Communities Impact Analysis

Ms. Doyle has determined that the rule change will not affect small businesses, micro businesses, or rural communities.

Government Growth Impact Statement

The Institute, in accordance with 34 TAC §11.1, has determined that during the first five years that the proposed rule change will be in effect:

(1) the proposed rule change will not create or eliminate a government program;

(2) implementation of the proposed rule change will not affect the number of employee positions;

(3) implementation of the proposed rule change will not require an increase or decrease in future legislative appropriations;

(4) the proposed rule change will not affect fees paid to the agency;

(5) the proposed rule change will not create new rule;

(6) the proposed rule change will not expand existing rule;

(7) the proposed rule change will not change the number of individuals subject to the rule; and

(8) The rule change is unlikely to have an impact on the state's economy. Although the change is likely to have neutral impact on the state's economy, the Institute lacks enough data to predict the impact with certainty.

Submit written comments on the proposed rule change to Ms. Kristen Pauling Doyle, General Counsel, Cancer Prevention and Research Institute of Texas, P.O. Box 12097, Austin, Texas 78711, no later than April 4, 2022. The Institute asks parties filing comments to indicate whether they support the rule revision proposed by the Institute and, if the party requests a change, to provide specific text for the proposed change. Parties may submit comments electronically to kdoyle@cprit.texas.gov or by facsimile transmission to (512) 475-2563.

Statutory Authority

The Institute proposes the rule change under the authority of the Texas Health and Safety Code Annotated, §102.108, which provides the Institute with broad rule-making authority to administer the chapter. Ms. Doyle has reviewed the proposed amendment and certifies the proposal to be within the Institute's authority to adopt.

There is no other statute, article, or code affected by these rules.

§703.17.Revenue Sharing Standards.

(a) The Institute shall share in the financial benefit received by the Grant Recipient resulting from the patents, royalties, assignments, sales, conveyances, licenses and/or other benefits associated with the Project Results, including interest or proceeds resulting from securities and equity ownership. Such payment may include royalties, income, milestone payments, or other financial interest in an existing company or other entity.

(b) The Institute's election as to form of payment and the calculation of such payment shall be specified in the Grant Contract.

(c) Unless otherwise provided by the Grant Contract between the Institute and the Grant Recipient, payments to the Institute required by this section shall be made no less than annually pursuant to a schedule set forth in the Grant Contract and shall be accompanied by an appropriate financial statement supporting the calculation of the payment.

(d) Nothing herein shall affect or otherwise impair the application of federal laws for projects receiving some portion of funding from the U.S. Government.

(e) Unless the Grant Contract specifically states otherwise, the obligation to share revenues with the Institute is continuous so long as the product resulting from the Institute supported project enjoys government exclusivity.

(f) If the Institute elects to take equity ownership in a Grant Recipient, the Grant Contract shall specify:

(1) Any additional requirements associated with the equity ownership, including a specified schedule for the Grant Recipient to certify and verify the Grant Recipient's Matching Funds obligation.

(2) The Grant Contract shall also specify the Institute's recourse in the event that the Grant Recipient fails to fulfill reporting requirement deadlines.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on February 18, 2022.


Heidi McConnell

Chief Operating Officer

Cancer Prevention and Research Institute of Texas

Earliest possible date of adoption: April 3, 2022

For further information, please call: (512) 305-8487