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A non-profit publication of the Office of the University Relations of Virginia Tech,
including The Conductor, a special section of the Spectrum printed 4 times a year

Developing IP's

By Susan Trulove

Spectrum Volume 20 Issue 17 - January 22, 1998

There is some distance between a patented property and a product that is ready to market.
Barbara Melera of Triad, a venture-capital company that operates in partnership with Virginia Tech and Johns Hopkins to bring researchers' creative work to the marketplace, explained the necessity and objective of "innovation-gap funding" during a conference on "The Role of Intellectual Properties in the University/Industry Partnerships" sponsored by Virginia Tech Intellectual Properties, Inc. (VTIP).
"Most university research is basic research," she said. "The objective of innovation-gap financing is to shorten the time it takes to commercialize a technology--the point at which a corporation is willing to pay cash to use a technology in a product or process or enhancement of a product or process. Gap financing is development financing," Melera said.
She was emphatic as she made the point that such financing is based on a product-development contract that requires "tangible deliverables."
"The project must be managed like a business--every dollar accounted for in specific ways, such as invoices and time sheets. The relationship is short-term, rarely more than two years."
Sources of such finding can be an SBIR, which requires a corporate partner, a corporation, or Triad, which typically provides a researcher with less than $125,000 to develop a prototype to interest a corporation.
Melera outlined the issues associated with innovation gap financing: It is short-term--less than a year, maybe less than a semester. "It is not meant to fit the academic year or employ a student." It is proprietary technology. "You usually cannot publish the results." Funding is small--under $500,000. Timing is critical. It is goal oriented. There can be no turnover. "There is no time for a student to leave halfway through a project." Development must be relevant. "It is not necessarily intellectually interesting, except in terms of producing cash. It must be work that will ultimately sell in a market place." Results are expected. "In research, failure can be as valuable as success. In innovation-gap funding, success is expected." Rewards are long-term, but can be huge. "Also, once you have a strong relationship with a corporation, funding can be more reliable than federal funding," Melera said.
"Corporations are looking for places to put development research. Few academics are willing because of the issues; so, if you are willing, a lot of corporations are looking for you."
She suggested university researchers market their abilities at industry trade shows. "Talk to people; don't just deliver papers." She also suggested mentioning work that is ready for gap financing on personal web pages, and sending e-mail to industry. "Sell yourselves and the technology you are developing."
Mike Martin, executive vice president of VTIP, said faculty members can relay the same information to Tom Caruso, industry program development coordinator in Sponsored Programs. "He will help you identify likely targets in industry."
Martin also reminded the university researchers, "You have scientific colleagues in industry. Introduce yourselves at trade shows to your industrial colleagues and to business representatives.
"An intellectual property is an opportunity, not a threat," Martin said. "It's a chance to establish a new set of relationships."
Jack DeForrest of Bristol Meyers Squibb agreed, "The best way to begin a partnership is to meet someone from the company at a scientific meeting. We both go to the same science meetings."
He said Bristol Meyers Squibb is expanding its discovery-and-development activities with other companies and talking to universities. Forms of interactions with universities include unrestricted grants of about $500,000 in each therapeutic area of interest to the company (cardiovascular, metabolic, oncology, infections, central nervous system, dermatology, immunology, respiratory diseases), collaborative research agreements, consulting, programmatic alliances, educational alliances (only with Yale and Princeton), and institutional alliances.
Bristol Meyers Squibb has begun a new program, called COMET for cooperative management and evaluation of targets. DeForrest said the researchers evaluate their own research programs for potential target activity. Does it meet Bristol Meyers Squibb criteria? If so, submit an application through the Technology Transfer Office and sign an agreement.
DeForrest explained the nature and process of pharmacology-industry research, which can take 10 to 16 years from discovery to market. Presently, the company screens 10,000 compounds daily and aims to screen 100,000 compounds per day.
Here are highlights of remarks by some of the other conference presenters:
Presenters from BTG talked about how that firm markets intellectual properties.
BTG is in the business of identifying promising technologies, protecting them through patenting, marketing them, and negotiating commercial agreements. They defend patents, monitor compliance, audit revenues, and share the revenues with the inventors. They have 250 technologies covered by 8,500 patents and patent applications. Their technologies include cephalosporin, pyrethrins, and MRI. Their top 12 products are expected to earn 2 billion pounds by 2013.
Richard Gill of BTG said, "There is no need to rush after one licensee with a technology." For example, the Factor IX gene was a "proven horse that licensees wanted to put their jockeys on." Thus, different companies licensed it to carry their different pharmaceutical compounds. "Pharmaceutical companies look for a threshold of $300 to $400 million, but if they already have the staff that can take a product to market, then the money can flow to the bottom line."
BTG presenters said a commercially viable technology is novel, offers strong intellectual-property rights, has a known market, meets an unmet need, and has a clear route to payoff. "Address a market need, look for the technology, then tell people about the technology--explain what it does. Market, market, market. Sell, sell, sell."
Representatives of Mezzullo and McCandlish discussed starting a business and the different kinds of businesses. Jeffrey Gallagher asked, "Why would a researcher want to start a business and license back their technology from VTIP?" He advised, "Be sure you have a business and not just a product. You have to be really motivated and believe you have better resources and can do a better job than VTIP of making connections and marketing.
"A business is a system, like a garden or a vehicle. You have to know the inputs and outputs and create a model that is commercially successful. There is a market threshold for every product. You have to move yours furthest along so it salable with the fewest resources."