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Mar 6, 2012

Tech Transfer Efforts Show Successes but Investment Challenges Loom

Collaborating with companies early on to derisk research is one solution.

Tech Transfer Efforts Show Successes but Investment Challenges Loom

Challenges may be eased by tapping internal institution funding, SBIR grants, or local investment funds. [© Orlando Florin Rosu - Fotolia.com]

  • Like every other U.S. state, Maryland has been scrambling to balance its budget and cut spending since the economy soured in 2008. Yet, the state is considering spending more to stoke technology transfer efforts by universities and other institutions, hoping to come out ahead in the long run with jobs and taxes generated by biopharma and other startups.

    Maryland Gov. Martin O’Malley has proposed a $6.25 million “Maryland Innovation Fund.” $5 million will be included in the budget for the 2013 state fiscal year, which starts July 1. Another $1.25 million will consist of $250,000 contributions by each of five schools: Johns Hopkins University; Morgan State University; University of Maryland, College Park; University of Maryland, Baltimore; and University of Maryland, Baltimore County.

    A close look at tech transfer numbers nationwide reveals some impressive results by a few institutions though not necessarily the windfall that state governments need, let alone the return on investment that investors want. Especially in the life sciences, income reported by institutions reflects R&D activity that has taken place as much as 10 or more years ago, several tech transfer professionals pointed out.

  • Top Tech Transfer Institutes

    In FY 2010, the most recent year for which the Association of University Technology Managers (AUTM) has published figures, City of Hope National Medical Center and its Beckman Research Institute led in terms of licensing income. It earned $202.3 million in 2010. Next were Northwestern with $179.8 million, NYU with $178.4 million, Columbia with $147.3 million, and Memorial Sloan-Kettering Cancer Center with about $139.4 million.

    City of Hope continues to benefit from patents awarded to immunologist Shmuel Cabilly in the 1980s for a recombinant antibody production technology developed with Genentech. It is applied in more than 20 drugs including Herceptin, Rituxan, and Raptiva. The patents expire in 2018.

    Life science discoveries commercialized by Northwestern include Lyrica, a drug for fibromyalgia, which is based on the chemical compound pregabalin that was first synthesized at the university. Lyrica is Pfizer’s second-best selling drug, with 2011 worldwide sales of $998 million, up 22% from 2010. Lyrica’s patent expires between October 2013 and October 2018.

    Northwestern won’t disclose what it generates from Lyrica, although The Wall Street Journal estimated “tens of millions of dollars” in 2007. That year, Northwestern generated $700 million cash by selling an undisclosed portion of its worldwide royalty interest in Lyrica to Royalty Pharma Finance Trust. Net proceeds went to the University’s endowment, though a portion went to the researchers responsible for pregabalin.

    More recently, Northwestern University startup AuraSense Therapeutics won $575,000 this January from the three-month old Invest Illinois Venture Fund, Pat Vaughan Tremmel, a Northwestern spokeswoman, told GEN. AuraSense is working to commercialize Spherical Nucleic Acid™ gene regulation treatments and chemotherapies in oncology, dermatology, neurology, and cardiovascular disorders.

    NYU benefited both from drugs based on older university technologies that have been brought to market in recent years, such as Remicade and Sutent, and from newer technologies that have led to licensing and new startup companies over the past two years, Abram Goldfinger, Executive Director, Industrial Liaison/Technology Transfer, NYU School of Medicine, told GEN. For example, Atreaon was spun out based on a peptide therapeutic for treating RA, psoriasis, and other inflammatory conditions discovered by CJ Liu, Ph.D. In October, the company won the first $8 million of a planned $20 million initial funding round.

    NYU’s Einar M. Sigurdsson, Ph.D., developed anti-tau antibodies that were licensed to Lundbeck. An miRNA technology for treating atherosclerosis developed by Kathryn J. Moore, Ph.D., was licensed to Regulus Therapeutics, while startup Benevir was created to commercialize an oncolytic virus developed by Ian J. Mohr, Ph.D.

  • Research Spending and Invention Disclosures

    Not all the top institutions in licensing income are toppers in research spending, though each spent more in 2010 than 2009. The biggest spender in FY 2010 was the University of California (UC) system, which is made up of 10 campuses. It racked up $5.2 billion in research expenditures. UC spent twice as much as the number-two institution in research spending, the 15-institution University of Texas (UT) system, which finished FY ’10 at $2.4 billion. Next on the list of top research spenders were Johns Hopkins University (JHU) and its Applied Physics Laboratory at $2.5 billion; MIT at $1.4 billion; and University of Michigan at $1.1 billion.

    Compare that to the research spending figures for the top five income earners: City of Hope at $265.81 million, Northwestern at $491.63 million, NYU at $365.94 million, Columbia at $662.05 million, and Memorial Sloan Kettering at $421.41 million. While these institutes made top dollar through licensing deals, each spent less than half the fifth largest spender.

    On the flip side, except for the biggest spender, UC, which placed sixth among income earners with $104.3 million, the others didn’t do quite as well. UT made $53.8 million, JHU made $13.63 million, MIT made $78 million, and University of Michigan made $39.82 million.

    UC also led the top five institutions in another key tech transfer measure, number of invention disclosures, with 1,565 in FY ’10. UT placed second again in this category with 713, while California Institute of Technology had 573, MIT had 521, and Johns Hopkins had 489. In comparison, the top earners—City of Hope, Northwestern, NYU, Columbia, and Memorial Sloan Kettering—disclosed 52, 165, 134, 333, and 60, respectively.

  • Keys to Success

    Johns Hopkins’ invention disclosures more than doubled from about 200 just five years ago. The School of Medicine generated 86% of those disclosures. Johns Hopkins attributes its success to changes in the university’s tech transfer effort. “We generated additional support so we could expand the office and get the right number of people in here and the right kind of people in here,” Wesley D. Blakeslee, executive director of the Johns Hopkins Technology Transfer Office, told GEN.

    “We put in really good data management systems, so where we used to distribute information once a year, sporadically, now all of our distributions are made quarterly, and they’re usually completed by the end of the first month following the close of the quarter.”

    Johns Hopkins also re-fashioned its tech transfer office along business lines: “We understand that our business is customer service to our faculty members inside and customer service to our licensing partners outside,” Blakeslee added. “If we do a good job with that, then we’ll have success.”

    UT also made some changes to its tech transfer operations that resulted in the successes seen with Reata, a company that was spun out in 2002. The firm has already collected $950 million from Abbott in licensing deals for its antioxidant inflammation modulators.

    “We hired a UT alum entrepreneur [CEO Warren Huff] who had started a venture and was successful and wanted to come back to Texas,” Bryan Allinson, UT’s executive director for technology commercialization, told GEN. “Over about three to four years, he interacted very closely with the angel community within Texas and was able to raise about $200 million in investment funding into the company.”

    Looking at the last fiscal year, Northwestern reported a 6.4% year-over-year increase in licensing income to $191.3 million, while NYU’s licensing income came in at $142.1 million, 20% lower, reflecting a one-time payment made in 2010 without which the university would have finished 2011 with a roughly 7% gain. Columbia said FY 2011 figures had yet to be finalized; Sloan-Kettering could not furnish a 2011 figure or confirm the published 2010 figure, citing an internal audit, while City of Hope did not answer GEN requests for information.

    The income ups and downs of top-level tech transfer reflects an increasingly challenging environment for commercializing life science technologies, said Orin Herskowitz, executive director of Columbia Technology Ventures and the university’s vp for intellectual property & technology transfer.

    “Both venture investors and pharma companies are naturally wary of the long timeframes and significant investments required to bring new biopharma products to market and therefore are looking for products with as much validation as possible,” Herskowitz told GEN.

    Herskowitz said Columbia has addressed these challenges in several ways: “Providing small internal grants to validate or develop prototypes for particularly promising technologies; leveraging SBIR grants or local programs like the NYC Investment Fund’s Bioaccelerate Awards; and collaborating with pharma companies via ongoing sponsored research to derisk inventions of interest. Meanwhile, we have continued to see significant growth in other areas that leverage a blend of engineering and biomedical approaches, such as healthcare IT, medical devices, robotic surgery, etc.,” Herskowitz added.

    Success may be harder to replicate in coming years as academic budgets get scaled back and U.S. startups scramble to secure capital. Additionally, they then must navigate both regulatory hurdles and increased competition from overseas startups in countries with less red tape and more money to spend on developing drugs.


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