Technology Transfer in the
USA
– Policy and Practice
Ashley J. Stevens, D. Phil (Oxon)
Director, Office of Technology Transfer
Lecturer, School of Management
Boston University
Policy
Policy
 Bayh-Dole Act of 1980
 But don’t overlook the extent and importance of IPA’s 1972 on
 Motivated by loss of US manufacturing competitiveness
 Gave Universities the right to claim title in inventions made with
federal funding
 Provided no funding
 Provided little guidance
 Share income with faculty
 Institutional share must be used for research and education
 Give preference for small businesses
 Make in America what you sell in America
 Give a non-exclusive license to US government
 And just in case, a March-in right
3
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Policy
 Bayh-Dole supplied no new funding
 No need for Congressional reauthorization
 No opportunity for Congressional meddling
 Normal tensions of monopolies
 The Patent System
 Exclusive Licenses
 Research Tools Guidelines
 Genetic Licensing Practices
 Biomarkers (GAIN Policies)
 No policy comparable to U.K. and Canada
4
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Practice
Practice Developed in the Trenches
 25 years of experience
 A lot of external help
 A number of high profile successes
 A number of high profile failures
 Now a lot of empirical research
6
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First Phase
 Is it about making money?
 A lot of people think it is
 Maybe including some University Presidents and Trustees
7
© 2006 Ashley J. Stevens. All Rights Reserved. Do not copy or modify
We’ve paid an enormous price
because of the perception that
it’s all about the money
We Have A Lot of Critics
And Then There Are Fans
“Possibly the most inspired piece of
legislation to be enacted in America over
the past half-century was the Bayh-Dole
act of 1980.”
“Innovation's Golden Goose”
The Economist
Dec 12th 2002
Issues and Concerns
Some of the questions being asked:
 Has commercialization changed the nature of academia?
 Have universities lost the public trust?
 Have royalties paid to universities raised drug prices?
 Should publicly funded inventions be exclusively licensed?
 Have universities become too aggressive in seeking value from
inventions?
13
Or is it just a “gut” issue?
"The big question is: What aspects of the current
American economy are essential to its current successes,
and what parts are coincidental, as irrelevant as driving on
the left is to the economic success of Singapore? Is it
critical that professors at elite Universities be free to start
companies and get rich? Are stock options essential? Are
huge gaps between rich and poor unavoidable? Are
weakened unions a precondition for New Economy
flexibility?"
"U.S. vs. Them -- American Economy Offers a Model Others Both Envy and
Fear"
David Wessel
WSJ January 18, 2001
14
It’s A Balancing Act – Have We Shown That The
Benefits Outweigh The Potential Risks?
What are
the
costs?
What are
the
benefits?
Has Commercialization Changed The Nature Of Academia?
 Have faculty changed in response to commercialization
opportunities?
 Has the nature of academic research been changed?
 Are they not such good members of the academic community?
 Are they less collegial with other scientists?
16
Participation In The Technology Commercialization Process
 Study of 3,342 science faculty at six universities over 17 years
Participation
%
Never disclose
64.2
Disclosed once
14.8
Disclosed twice
7.6
Disclosed three to five times
Disclosed eight or more times
11.4
2.0
Thursby and Thursby “Pros and Cons of Faculty Participation in Licensing”
Advances in the Study of Entrepreneurship, Innovation and Economic Growth”
16, 2005
17
Has The Nature Of Academic Research Been Changed?
 Publication rate doubled over course of study
 Disclosure rate went from 1% to 10% of faculty per year
 No change in “basic” vs. applied” balance of research, as
measured by journals published in
Thursby and Thursb, ibid
18
Faculty with Industrial Support
No. of
Publications
Teaching
Time
No. of
Service
Activities
No industrial
support
10.1
16.6
1.8
2.1
Industrial
support
14.6
16.0
2.3
4.2
1 – 33%
16.8
17.7
2.8
5.0
34-66%
16.4
19.3
2.2
5.3
67 – 100%
12.1
15.8
2.1
2.5
Variable
Blumenthal et al, “Participation of Life-Science Faculty in Research
Relationships with Industry, NEJM, 335, 1734-7, 1996
19
PublicationTrends
Score
Do Commercial Considerations Affect Academic Behavior?
 Why have you withheld post-publication information, data or
materials from a colleague?
Reason
%
Effort required to produce
80
Need to protect trainee’s ability to publish
64
Need to protect own ability to publish
53
Financial cost of providing materials
45
Honor requirements of an industrial sponsor
27
Protect patient confidentiality
23
Protect Commercial Value of the Results
21
Campbell et al, “Data Withholding in Academic Genetics”, JAMA, 287, 473-480,
2002
20
So, Do You Make Money from Technology Transfer?
Methodology
 AUTM Annual Survey has most of data needed to construct a
financial model of technology transfer:
 Gross and Net Income
 Gross and Net Patent Expenses
 Staffing levels
 Lacks:
 Salary levels
 Income distribution
22
© 2006 Ashley J. Stevens. All Rights Reserved. Do not copy or modify
Data Sources
Salaries:
 10 studies spanning 1988 – 2001
 Recapped by Fred Reinhart at 2002 AUTM Annual Meeting
 AUTM Salary Survey 2004
Income Distribution
 Request over techno-l
23
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Average Salaries Used
$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
Licensing FTE’s
Support FTE’s
$10,000
$0
1985
1990
1995
2000
24
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2005
2004 AUTM Salary Survey
N
Director
Assoc Director
Lic Associate
Lic Assist
Marketing Manager
Bus Manager
Patent Manager
Admin Assist
Dir Start Ups
Legal Counsel
128
89
244
58
27
62
50
170
16
26
Mean
$135,625
$99,666
$76,029
$51,199
$70,864
$54,104
$49,602
$36,229
$114,043
$115,555
Std. Dev.
$45,521
$30,420
$20,656
$13,631
$32,357
$19,286
$21,637
$8,100
$34,928
$35,319
25
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How Do You Look At Income?
Income is distributed:
 Inventors
Personal
 Inventors’ lab
Research
 Department
Research
 College
Research
 OTT/Research Foundation
Offset Expenses
 Institution
Offset Expenses
26
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Three Institutional Philosophies of Income
Total Income View
 Credit OTT with all income
Institutional Income View
 Credit OTT with all income except inventors’ personal distribution
Administrative Income View
 Credit OTT with only what is retained by institution to offset OTT
operating costs
27
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Data
 Did Survey of US Institutions Using Techno-l
 34.2% was distributed to inventors
 65.8% was retained for all purposes by the institution
 36.3% was retained by administration and available to offset OTT
operating expenses
28
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Financial Model
Financial Contribution
= Net Income – Operating Costs
Net Income
= (Gross Income – Income Paid to
Others) x Income View Factor
Operating Costs
= Salary Costs + Other Costs + Net
Patent Expenses
Salary Costs
= (Licensing FTE’s x Avg. Licensing
Salary + Other FTE’s x Avg. Other
Salary) x 1.25
Other Costs
= (Licensing FTE’s x Avg. Licensing
Salary + Other FTE’s x Avg. Other
Salary) x 0.15
Net Patent Expenses
= Legal Fee Expenditures – Legal Fee
Reimbursements
29
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Components of Cost
Cost Breakdown -- Salary & Other vs. Net Patent Costs
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
0%
31
Salary & Other costs
Net Patent Costs
© 2006 Ashley J. Stevens. All Rights Reserved. Do not copy or modify
Financial Contribution
Contribution Margin (Total Income View)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
19
19
92
0%
Contribution Margin
Operating Costs
Financial Contribution for all U.S. Universities (Total Income View)
$1,000
$900
$700
$600
$500
$400
$300
$200
$100
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
$0
19
92
($ million)
$800
Mean v. Median of Contributions for U.S. Institutions (Total Income View)
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
Median
Mean
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
19
92
$0
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
Total Income View
Administrative Income View
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
0%
19
92
% of Institutions with Positive Financial Contribution
Impact of How Income is Viewed
Institutional Income View
U.S. Universities and U.S. Hospitals/Research Institutes with
Positive Financial Contribution (Total Income View)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
U.S. Universities
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
19
92
0%
U.S. Hospitals/Research Institutes
37
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Determinants of Positive Financial Contribution
Positive Financial Contribution vs. Total Research Expenditures
(U.S. Universities, Total Income View, 2004)
100%
N=9
N=4
N=3
$500-750
$750-1000
>$1000
90%
N=34
80%
70%
60%
N=41
50%
40%
N=25
30%
N=25
20%
10%
0%
<$50
$50-100
$100-250
$250-500
Total Research Expenditures ($ millions)
Positive Financial Contribution vs. OTT Staffing
(U.S. Universities, Total Income View, 2004)
N=14
100%
N=10
90%
80%
N=12
70%
60%
N=17
50%
N=24
40%
30%
20%
10%
0%
1 to 4
5 to 9
10 to 14
OTT Total Staffing (FTE's)
15 to 19
20+
Positive Financial Contribution vs. Age of OTT
(U.S. Universities, Total Income View, 2004)
N=4
N=1
N=3
100%
90%
N = 16
80%
70%
N = 59
60%
50%
N = 52
N=5
40%
30%
20%
10%
0%
5
0
0
0
0
0
94
96
97
98
99
00
1
1
1
1
1
2
e
o
o
o
o
o
pr
5t
1t
1t
1t
1t
4
6
7
8
9
19
19
19
19
19
1o
0
20
n
Conclusions
1. While a few institutions have had “big hits” and made a lot
of money, most work hard to break even
2. Whether an institution makes money depends on whether:
a. Its research enterprise is big enough
b. Its OTT has been established long enough
c. Its OTT is adequately staffed.
4. Does not answer the age old conundrum:
5. But clearly, it can’t be about the money.
42
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So, Why Do Technology Transfer
If It May Cost, Not Make, Money?
The Major Impact Is External
 If a technology transfer officer negotiates a 5% royalty or a 5%
equity stake at IPO, they’re doing a god job
 But that means 95% of the economic impact is external to the
University
 As we’ve shown above, at the institutional level, this isn’t going to
make a lot of money and will probably have many years of
significant investment.
44
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Don’t Take This the Wrong Way
 We’re not going to give things away
 Quite the opposite -- we negotiate hard to make sure that if the
technology is successful, then we share equitably in the outcome
 But money isn’t the driver
 So if it’s not money, what is it?
45
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I think many people are often confused about why we are
interested in technology commercialization, in nurturing
start up companies, and in facilitating more patents and
license agreements.
It is not about the promise of future revenues that might be
generated from this activity.
You heard me correctly. It is not about the money.
Of course, revenue generation serves as an incentive. But
first and foremost, technology transfer must serve our core
mission: sharing ideas and innovations in the service of
society’s well-being.
In fact, at Michigan we expect to re-invest institutional gains
back into technology transfer efforts. Revenue generation
is NOT the ultimate goal. It is simply the means by which we
can increase the transfer of new knowledge into the
business sector.”
Dr. Mary Sue Coleman, President, University of Michigan
AUTM Annual Meeting 2005
Phoenix, AZ
So, Have A Lot Of Ideas And
Innovations Been Shared In The
Service Of Society’s Well-being?
Impact
 Economic impact of $40 – 50 billion
 250,000 – 300,000 jobs
 Based on royalty income to US universities, research institutes and
hospitals of $1.31 billion
 $250 million industrial research support linked to license or option
(9% of total)
 4,081 companies formed since 1980
 84% in home state of institution
 63% still operational
 Probably as many again “know-how” based
 2,547 products launched since 1998
48
Start-Ups Formed
1,200
Number Formed
1,000
800
600
400
200
0
3
4
5
6
7
8
9
0
1
2
3
4
- 9 199 1 99 19 9 19 9 199 199 200 2 00 2 00 20 0 20 0
80
9
1
49
Consider Drugs
 1920 – 50’s
 Toronto
Insulin
 Wisconsin
Vitamin D, Warfarin
 Oxford, USDA, MIT
Penicillin
 Rutgers
Streptomycin, Neomycin
 Sydney Farber
Aminopterin, Methotrexate
 1960’s
 5-FU had erected a Chinese wall between academic and industrial
research
 1968 study sowed no drug to which the Government owned title
had EVER become available to the public
 1970’s
 1 university-discovered drug commercialized - Silver sulfadiazine
 Since 1980?
50
Approved Drugs Discovered at Academic Institutions
Drug
NCE's
Abelcet
Adenocard
Allegra
AmBisome
Avicine
Calcibind
Carboplatin
Cisplatin
Decapeptyl
Elmiron
Emtriva
Epicel
Epivir
Exosurf
Gliadel
Habitrol
Integra
Leustatin
Panretin
Periostat
Prozac
Indication
Systemic fungal infections
Cardioprotectant
Allergies
Anti-fungal liposome
Cancer
Hypercalciuria
Cancer
Cancer
Prostate cancer
Bladder pain from interstitial cystitis
AIDS
Transplantable skin for burn
AIDS
Premature birth respiratory distress
Brain cancer
Smoking cessation patch
Transplantable skin for burn
Hairy cell leukemia
Kaposi's sarcoma
Periodontal disease
Premenstrual dysphoric disorder
Discoverer
M.D. Anderson
U. of Virginia
Georgetown
U. of California
Ohio State
U. of Texas Southwestern
Michigan State
Michigan State
Tulane
U. of California
Emory
Harvard
Emory
U. of California
MIT
U. of California, LA
MIT
Brigham Young/Scripps
Salk Institute/BCM
SUNY
MIT
Marketer
The Liposome Company
King/Fujisawa
Aventis
Fujisawa
AVI Biopharma/SuperGen
Generic
Bristol-Myers Squib
Bristol-Myers Squib
Ipsen
Ortho McNeill
Gilead Pharmaceuticals
Genzyme Tissue Repair
Glaxo
Glaxo
MGI Pharma/Guilford
Novartis
J&J
J&J
Ligand
Collagenex
Eli Lilly
Approved Drugs Discovered at Academic Institutions
Drug
NCE's
Restasis
Silvadene
Thalomid
Therasphere
Thiola
Trusopt
Urocit-K
Visudyne
Zerit
Ziagen
Indication
Dry eye
Burns
ENL
Hepatocellular carcinoma
Cystinuria
Glaucoma
Calcium renal stones
Macular degeneration
AIDS
AIDS
Discoverer
U. of Georgia
Columbia College of
Rockefeller; Children's
U. of Missouri
U. of Texas Southwestern
U. of Florida
U. of Texas Southwestern
U. of British Columbia/Mass
Yale
U. of Minnesota
Marketer
Allergan
Marion Labs
Celgene
MDS Nordion
Mission Pharmacal
Merck
Mission Pharmacal
Novartis
Bristol-Myers Squib
Glaxo
Approved Drugs Discovered at Academic Institutions
Drug
Biologicals
Amevive
BeneFIX
Bexxar
Botox
Cytogam
Embrel
Fuseon
Insulin
Leukine
Neupogen
Nutropin
ONTAK
Remicade
Respigam
RheoPro
Somavert
Indication
Psoriasis
Haemophilia B
Non Hodgkins lymphoma
Rhinorrhea
Cytomegalovirus
Rheumatoid arthritis
AIDS
Diabetes
Neutropenia
Neutropenia
Short stature
Cutaneous T cell lymphoma
Rheumatoid arthritis, Crohn's
Respiratory syncytial virus
Unstable angina
Acromegaly
Discoverer
U. of Michigan/DanaU. of Washington, Oxford
U. of Michigan
Mt. Sinai
U. of Massachusetts
MGH
Duke University
U. of California, SF
Various
Sloan Kettering
U. of California, SF
Harvard
New York U.
U. of Massachusetts
SUNY
Ohio University
Marketer
Biogen
Wyeth
Corixa
Allergan
MedImmune
Amgen
Roche
Eli Lilly
Schering AG
Amgen
Genentech
Ligand
J&J/Centocor
MedImmune
J&J/Centocor
Pfizer
Approved Drugs Discovered at Academic Institutions
Drug
Indication
Discoverer
Marketer
Vaccines
FluMist
Rotateq
LYMErix
Hepatitis B
Hepatitis B
HibTITER
Influenza vaccine
Rotavirus Vaccine
Lyme disease vaccine
Hepatitis
Hepatitis
Bacterial meningitis vaccine
U. of Michigan
MedImmune
Wistar and The Children's Hospital
Merck of Philadelphia
Yale
Glaxo
U. of California, SF, U. of
Merck
Fox Chase Cancer Center Merck
U. of Rochester
Wyeth
OTC Drugs
Caltrate Colon
Citracal
HMB/BPepcid Complete
Renova
Colon cancer prevention
Osteoporosis
Exercise adjuvant
Heartburn treatment
Skin wrinkles, brownspots
Dartmouth
U. of Texas Southwestern
Iowa State/Vanderbilt
Brigham & Women's
U. of Pennsylvania
Wyeth
Mission Pharmacal
Metabolic Technologies,
J&J Merck Consumer
J&J
Drug Production Technologies
Technology
Use
Source
Cohen-Boyer
All recombinant proteins
Stanford/U of CA
Cabilly
Chimerized/Humanized antibodies
Co-expression of antibody chains
City of Hope
Axel
Production of proteins in
mammalian cells
Columbia
Holton
Semi-synthetic taxol process
Florida State
The Internet
CERN
University of Illinois Urbana-Champaign
University of Illinois Urbana-Champaign
(Stanford)
Carnegie-Mellon
MIT
Stanford
56
So, Where Is Technology Transfer Today?
Phase III – Integrating with Educational Mission
 Hiring of Robert A. Brown as President pivotal
 Former Provost of MIT
 Vision of using commercialization activities to provide
educational opportunities for students
 I am transitioning to joint academic and administrative
appointments
 Intellectual property is an increasingly important part of science
and technology careers
 4th year Engineering students do an industrial project
 4 business classes as part of it
 OTT’s are the primary repository of expertise on campus
58
Technology Commercialization Course
 Monday nights – 3 hours
 Graduate Level
 Offered through Entrepreneurial Management Institute
 Interdisciplinary
 SMG
 LAW
 Science, Medicine and Engineering
59
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Technology Commercialization Course
 Professors
 I give ~2/3rd of lectures
 Other Boston University Professors
 Boston University entrepreneurs
 Practitioners
 Corporate and intellectual property attorneys
 Venture capitalist
 Investment banker
 Corporate executives
60
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Technology Commercialization Course
 Three assignments
 First Look Technology Assessment
 Elevator Pitch
 First Look Venture Assessment
 Interdisciplinary team-based
 Sources of Technology
 Current BU cases
 Students can bring their own technologies
 Optional Extra Credit
 Read and review a book on a technology commercialization
case study
61
© 2006 Ashley J. Stevens. All Rights Reserved. Do not copy or modify
Technology Commercialization Course
 Curriculum
 Assessment methodology and tools
 Intellectual property
 Licensing
 Entrepreneurship
 Valuation methodologies and tools
 Sources of technology
 Business plans – Elevator Pitch
 Financing
 Partnering with companies
 Entrepreneurial resources
 Entrepreneurial finance
62
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Technology Commercialization Course
 Case Studies
 HBS case Studies
 BU case Studies
 Startup.com
63
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Is A New Academic Discipline Emerging?
 BU’s School of Management starting to evole
Entrepreneurial Management Institute

Institute for Technology Entrepreneurship and Commercialization
 Recruiting late career practitioners as professors
 A professional school is emerging:
Teach
Research
Practice
 Northeastern University has founded a School of
Technological Entrepreneurship
64
So Why Should Scientists Become Involved in Commercialization?
 Part of the social mission of disseminating the results of
their research
 Validation of that research
 Can make an impact on society
 Can bring additional resources into their research enterprise
 Industrial research funding
 Access to industrial technical facilities you don’t have
 Help prepare their students for a career in industry
 Exposure to a whole new world
 Challenging and frustrating
…………and yes, they may just make some money
65
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“If we pull this off, we’ll eat like kings.”