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Turning research into products
Technology transfer
provides boost to business, revenue for universities
Editor’s
note: This is the second in a two-part series on the
effects of university research on economic development.
Part 1: Boosting
university research expected to pay off in economic
development, Feb. 2005 issue
by
Chris Dovi
Virginia Business
March
2005
Dr.
John Herr is certain that SpermCheck Fertility will
be a godsend for countless couples struggling to have
children. The home fertility test Herr spent more than
15 years developing will confirm or eliminate a husband’s
sperm count as reason for his wife’s difficulty
in becoming pregnant.
The test, which resembles a common home pregnancy test,
could be available over-the-counter as early as this
fall. It works by determining high or low sperm counts
using a biomarker discovered by Herr nearly 26 years
ago that is unique to sperm cells. A biomarker is a
distinctive characteristic that allows a cell of a particular
origin or type to be identified or isolated. “The
product addresses a very large market,” says Herr,
who is CEO with ContraVac, the Charlottesville-based
biotech startup he helped found. “Forty percent
of infertility is due to the male, and this will assign
the responsibility early in the process. This is really
a woman’s health-care product.”
The birth of his company owes greatly to the efforts
of the University of Virginia Patent Foundation. “The
U.Va. Patent Foundation has taken a very positive attitude,”
says Herr, who is also director of the Center for Research
in Contraceptive and Reproductive Health at the university.
He says that the foundation was instrumental in pursuing
the patents on the biomarker.
The work of the Patent Foundation benefits more than
just the inventors. University professors’ discoveries
are the intellectual property of their universities.
U.Va.’s foundation — as with similar foundations
at Virginia’s other research universities —
is quickly becoming an important revenue stream for
the school. Patents that are licensed provide potential
profit for researchers and the university.
Without those patents, Herr’s company “probably
wouldn’t be a viable business because there would
be too much competition.” Having those patents
allowed ContraVac to secure angel funds; money from
high-risk investors that is often integral to the early
financing of high-cost — and potentially high-payoff
— technology-based startup companies.
This summer, ContraVac expects to receive FDA approval
for three over-the-counter versions of the first-of-its-kind
test. The most basic consumer version, aimed at couples
trying by themselves to eliminate potential fertility
issues before resorting to expensive medical testing,
likely will retail for about $25.
After years in the lab, and nearly as many years courting
investors and trying to convince others of the viability
of his product, Herr is tantalizingly close to realizing
a dream that has become common among university researchers
— and increasingly vital to the universities that
fund them — market success.
Herr’s situation — even if the final happy
ending remains a future goal — warms the heart
of Robert S. MacWright, executive director of the U.Va.
Patent Foundation. “It is not unusual today for
a university professor to believe that they are the
ones who understand the technology the best, and they
want to create a company to bring the product to market,”
MacWright says.
In fiscal 2002, 569 new products entered the marketplace
that relied on university patented research. Royalties
to universities — in Virginia and other states
— in 2002 were more than $1 billion, according
to MacWright. “They’re significant numbers.”
And while the majority of those licensed patents come
from universities outside of Virginia — California,
North Carolina and other states with more fully developed
research university funding — the commonwealth’s
piece of the pie is growing, according to MacWright.
His office last year (ending in June 2004) handled 151
invention disclosures and completed 55 license option
agreements with companies.
Virginia Tech boasts similar numbers, with more than
130 disclosures and 34 licenses in 2003, according to
one presentation given by university representatives.
MacWright credits federal legislation, specifically
the Bayh-Dole Act of 1980, as helping transform technology
transfer at research universities from a cottage industry
to a billion-dollar opportunity. The legislation streamlined
the process of tech transfer, he says.
Before Bayh-Dole, government-sponsored research at universities
belonged to the government. That research was published
in a book, MacWright says, that was “about as
enjoyable to read as the NYC phone book,” and
was often simply forgotten by U.S. companies that could
have benefited.
As a result there weren’t a lot of university-developed
inventions reaching the marketplace — at least
not many that provided much direct economic benefit
to the institutions or states where they were developed.
“Japan was reading the book,” says MacWright.
“They were reading scientific literature and developing
products and selling them back to America.”
Bayh-Dole has served to correct a lot of this hemorrhaging
of technology. “It’s been touted as one
of the most successful pieces of legislation in American
history because of its impact,” MacWright says.
“In recent years many universities have begun
to recognize the value technology transfer can have
on local economic development.”
But technology transfer doesn’t happen without
technology, says Peter Blake, Virginia’s deputy
secretary of education. And there is no technology without
investment and commitment by localities and by the state
to ensuring that state schools have the dollars they
need to attract researchers likely to develop marketable
ideas. “You put smart, innovative people together
and things happen,” he says.
Blake has been at the forefront of a state effort to
improve funding to state universities. The goal, he
explains, is to make Virginia and its research universities
the go-to place for emerging technology.
University research, he says, has long been identified
as an economic development issue, but only now is it
getting the attention it deserves through greater funding
and through better planning.
At the Virginia Tech Corporate Research Center, jobs
can already be counted that are the result of technology
investment and its transfer to industry uses. With 121
business tenants and more than 1,800 employees, the
center expects to gain new tenants at a rate of 20 a
year and a private company failure rate of less than
3 percent yearly.
The center, says Director Joe Meredith, was a direct
response to “pressure from the governor’s
office. They wanted to know, ‘What are you doing
for economic development?’”
The center has been a resounding success, adds Meredith,
pointing to its business and job creation record. Better
still, the center is for-profit and self sustaining.
“One of our objectives is obviously to be financially
successful,” he says. “The other objective
is to increase the amount of research at Tech, increase
the number of startups coming out of Tech and support
regional development.”
Other local economies also are benefiting from new jobs
created by the sort of technology research the governor
has in mind, says Mark Licata, an associate professor
at Virginia Commonwealth University’s School of
Engineering. He is also president of Bio-Track, a startup
company based at VCU’s Virginia Biotechnology
Research Park.
He calls his teaching “more of a hobby”
that he uses to benefit his collaboration with others
in the academic community where he does his research.
That research partnership led to Licata’s creation
of a one-handed tourniquet — one that can be applied
with one hand — for use by soldiers in remote
battlefields.
The invention, created using feedback from U.S. Special
Forces personnel, allows wounded soldiers to improve
their own chances of survival by slowing blood loss
from arm and leg wounds. Such wounds are responsible
for an estimated 10 percent of battlefield deaths.
“I like working with VCU — they’re
very open and willing to talk potential collaboration,”
Licata says, citing his partner, Dr. Kevin Ward, a VCU
School of Medicine professor who assisted in his tourniquet
research. “VCU recognizes that there’s more
benefit to the citizens of Virginia if [a VCU-owned
patent] gets licensed by a local company rather than
by a company that’s located in Timbukthree.”
Licata calls that recognition “just common sense”
because “it’s a better deal for the state.
… You create jobs in the state — which is
what you really want to do. You have to be careful about
licensing your technology to companies in other states
because you just get the cash and not the job growth.”
Technology research parks like the one Licata calls
home are a tool common at many research universities.
Old Dominion University, for example, is building a
four-story 60,000-square-foot research building, the
initial structure of a three-building research park.
Half of the building’s space will be used by ODU,
while the remaining space will be leased to companies
that want to collaborate on research projects at the
university or hire ODU graduates. The consulting firm
Kaufman and Canoles projects that, once the resarch
park is completed, it will directly or indirectly help
create more than 1,000 jobs and add $25 million to the
local economy.
Many research parks are operated using a business incubator
model that encourages new companies to grow and then
pushes them out of the nest to succeed on their own.
Others, like Tech’s Corporate Research Park, are
designed to be permanent homes to the businesses they
foster.
Whether incubator or permanent home, these centers provide
startup companies with business essentials that might
otherwise not be among the talents of a typical university
research scientist.
Knowing the importance of a business plan, an early
supply of cash and a mentoring relationship with successful
businesspeople aren’t necessarily things that
come instinctively to college professors, says Jim Flowers,
director of Virginia Tech’s KnowledgeWorks program.
His program’s 45,000-square-foot facility opened
this month. “There’s nothing in business
that’s rocket science,” Flowers says, noting
that the expertise of many researchers is science, not
business.
Robert Porter, program development manager at Virginia
Tech, notes that Tech’s incubator efforts are
broad and varied. They include Tech’s involvement
in the Institute for Advanced Learning and Research
in Danville, an effort to position that region as a
desirable location for companies spawned by university
research.
Smaller endeavors are equally important, says Bio-Track’s
Licata. He believes that even the creation of a few
jobs through technology transfer is a step in the right
direction. “We’re not looking for a home
run, what we’re looking for is a lot of base hits,”
says Licata, who envisions a day when Richmond’s
cigarette manufacturing infrastructure might be used
to make Virginia a powerhouse in the manufacture of
medical devices.
Meanwhile, his much smaller-scale tourniquet idea is
likely to be a pretty solid base hit, since he has been
careful to partner with a local firm to manufacture
his product. “This particular invention, if we
create five jobs that would be great – 10 would
be better,” Licata says. “You’ve got
to start small.”
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