UCLA stepping up tech transfer efforts.

A private company that puts more than $500 million into research but returns only $7.4 million in revenues would be considered a dubious investment.

Fortunately for UCLA, universities get off the hook a little easier. But not much.

UCLA receives more research money than any other public university in the nation, but it has a dismal record of commercializing discoveries and inventions. Both critics and supporters cite several factors: cold feet, leadership turnover and a failure to aggressively market its faculty's findings.

"I would say there's a lot of potential there that hasn't been realized," said Mark Long, director of technology operations at Washington University in St. Louis. "You know there's got to be more technology there. Where is it?"

Grants and contracts valued at more than $460 million came into the West-wood campus during the 1998-99 school year to support research. While that ranked UCLA sixth among all U.S. schools, UCLA doesn't rank first in any category related to technology transfer. That includes invention disclosures, patent applications, licenses and options, gross license income, patents issued, and startup companies formed, as measured by the Association of University Technology Managers Inc.

In short, a lot of research goes out the back door as professors market their findings independent of the university. Still more languishes in laboratories. The result is a lost opportunity to turn leading edge research into thriving businesses -- the kind of turnarounds that have helped establish Silicon Valley, the Boston area and San Diego into major technology strongholds.

A successful tech transfer program pays off in other ways. Pride in the programs influences philanthropy from alumni, who give back to the institution and endow fellowships and otherwise contribute to the school.

Larry Gilbert, the widely lauded director of tech transfer at California Institute of Technology, puts the challenge in stark economic terms.

"We need it because of the prospect of generating new companies, new jobs and a higher standard of living," he said. "The underlying benefit is, hopefully, you'll be generating new products that create a benefit and jobs in the region to develop those products."

But at UCLA, "technology transfer is an inherently difficult business," said Emily Waldron, assistant director of the Office of Intellectual Property Administration, who in her eight years has gone through seven office directors and three vice chancellors of research. "People like to call it the pyramid of disappointment. At every sort of fork in the decision tree there's a place where things can go wrong."

Is relief near?

Some relief appears in sight with last year's hiring of Andrew Neighbour to be executive director of the school's Office of Research and Administration and Intellectual Property.

Neighbour took what he believes to be a major step to buttressing the program by combining the offices of research administration and office of intellectual property. This created a closer relationship between the folks collecting the money and those puffing it to use in university laboratories.

Next comes manpower. Before combining the offices, the intellectual property department had six employees. At one point, much of UCLA's tech transfer work was relegated to Oakland, where the University of California established a system-wide Office of Technology Transfer. UC started the office for schools that were unsuccessful in commercializing research.

Neighbour is now looking to increase to 15 the number of people working specifically on tech transfer functions, such as licensing and business development.

"The piece that's really missing is recruiting," he said. "We need to get people with the right skills to help the faculty identify opportunities and work with them."

Technology transfer is the movement of university discoveries and innovations to the commercial sector, mainly through patenting and licensing. In 1999, tech transfers from U.S. universities added more than $40 billion to the national economy and supported 270,000 jobs, according to the Association of University Technology Managers.

Growth Networks Inc. is an example of how technology developed on a college campus can spin into real world business applications.

Three professors at Washington University in St. Louis developed high-speed switching systems that moved data around computer net-works at faster speeds that were possible at the time (1997). They incorporated and sought funding in Missouri, San Francisco and Boston. Within a year, the company attracted venture capital and was acquired by Cisco Systems Inc. in 2000.

Those overseeing tech transfer programs stress the importance of being aggressive and shrewd in order to find success. To date, UCLA's tech transfer program has been the antithesis of aggressive. "We've been very conservative and waited for inventions to come to us," said Roberto Peccei, vice chancellor of research.

That's not going to get it done.

"It doesn't happen because I'm sitting behind a desk waiting for a faculty member to call up me up and say, 'I've got a great invention,"' said Caltech's Gilbert.

He wouldn't talk about the problems at UCLA, but stressed that the secret to successful tech transfer is developing good relations with the faculty - a laborious but necessary one-on-one process.

"It has to be personal. You have to create an environment where they trust you," Gilbert said. "Without trust there's no program. Things will go out the back door. Things will get published, but you'll never see that'

Longstanding us vs. them

Waldron said an institutionalized distrust will be the biggest obstacle for UCLA to overcome. She said that faculty have become resentful of the university because they feel they have not gotten the support they deserve. Others are upset that the university cannot return the research if the tech transfer process stalls for any reason. (Federal law prohibits the use of university funding or facilities to continue independent research.)

One researcher who has not had problems is Marcus Horwitz, a professor of medicine who boasts about 20 patents and two licensing deals for vaccines.

Horwitz said he had to deal with the tech transfer office in Oaldand when he joined the UCLA faculty in 1985. That was cumbersome, he said, but the maturing local office has been beneficial to his success with research.

"Once you do one (patent) it becomes more obvious what you need to do," Horwitz said. "I do take the initiative, though, so maybe that's why I'm successful."

Gilbert said any university can evaluate its tech transfer program, but it takes ingenuity and commitment to fix it. "It's easy to find fault and it's easy to say they should do better, but that doesn't buy very much' Gilbert said. "One needs to figure out how to take advantage of what's there."

Revenue coming back into a school is not always the best indicator of success, since the value of individual patents and licenses can vary wildly.

The University of Florida gets more than $6 million annually in royalties for the formula for Gatorade. Neighbour said Columbia University gets $100 million each year from the patent on a single biopharmaceutical technology and Stanford is pulling in between $30 million' and $50 million for licenses on gene-splicing technology developed there. UCLA's $7.4 million is mainly from the nicotine patch and the Guglielmi Detachable Coil system for the treatment of intracranial aneurysms.

A better measure would be the number of inventions developed each year, Neighbour suggested. That number, too, is soft because each university counts "inventions" differently. UCLA recorded 144 invention disclosures in fiscal year 1999, the most recent year for which data is available.

"We should be higher," Neighbour said. "We just know there are faculty who decided it wasn't worth their while to mess with it."

Moving forward

More is involved than just the research grants and contracts that come into UCLA every year. Neighbour has been reaching out to the community of technology- and research-oriented businesses and venture capitalists in a effort to build the necessary relationships and infrastructure to support the tech transfer program.

Lee Bailey, a venture partner at Rustic Canyon Ventures, said he has met with Neighbour to discuss a seed fund that would encourage and support start up companies through the Office of Intellectual Property. While it's likely to be too early-stage a fund for Rustic Canyon's liking, Bailey said he endorses the effort.

"The fund is an interesting way to try to interest the investment community in development at UCLA," Bailey said. "I don't know how successful it'll be but it's worth a try."

Top of the Heap

UCLA's research funding ranks among the top six in the nation.

                       Total                        Total U.S.
                     Sponsored         Invention      Patent
                      Research        Disclosures  Applications
Institution         Expenditures (*)   Received       Filed

Johns Hopkins          $1,010             250          256
Unversity

Massachusetts          725.6              381          341
Institute of Tech.

University of          499.7              158          147
Michigan

University of          479.6              226          114
Washington

University of           477               244          151
Pennsylvania

UCLA                   460.2              154           99

                                Gross         Licenses
                    Licenses   License        & Options    U.S.
                    & Options   Income        Yielding    Patents
Institution         Executed   Received (*)  Lic. Income  Issued

Johns Hopkins          106      $10.3            137        111
Unversity

Massachusetts           95       16.1            346        154
Institute of Tech.

University of           42        3.5             90         56
Michigan

University of          115       27.9            185         36
Washington

University of           57          3             55         82
Pennsylvania

UCLA                    14        7.4            n/a         47


                    Start-Up
                    Companies
Institution          Formed

Johns Hopkins           7
Unversity

Massachusetts          17
Institute of Tech.

University of           2
Michigan

University of          n/a
Washington

University of           6
Pennsylvania

UCLA                    3

Note - Data for fiscal 1999, ended June 1999.

(*)In millions

n/a - not available

Source: Association of University Technology Managers Inc., UCLA

RELATED ARTICLE: Technology Transfer: How it Works

Conor Dougherty

1. A faculty member invents something, be it a new drug ready for the commercial market or a new technology that has the potential for eventual development.

2. The inventor, typically a professor, contacts the university's department of research and intellectual property.

3. Before filing for a patent, the university contacts companies it feels might be interested in licensing the technology by way of offering a general description, effectively shopping the idea without disclosing its confidential aspects.

4. Should the university decide the invention is patentable, and has commercial value, it contacts a patent law firm to write the patent application, which costs anywhere from $5,000 to $10,000.

5. The university estimates the technology's market value and decides whether to license the technology to an established company, or in the case of so-called emerging technologies, form a new company.

6. The university negotiates a licensing deal, typically asking for a percentage of sales (anywhere from a fraction of a percent to 15 percent) in addition to maintenance fees. The deal structure is dependent on the technology and emphasizes getting the product to market at a reasonable pace.

7. If a new company is formed, the inventor does most of the legwork, from drafting a business plan to securing financing, before asking the university for the rights to the new invention. Many universities are expanding their role in starting companies, from putting together a management team to securing capital and finding facilities.

8. In the case of a new company, the university typically takes an equity stake, thus insuring it will enjoy the long-term benefits even if the original patent is not successful in the marketplace.

9. If the company goes out of business, or an established company is unable to fulfill the terms of the licensing agreement, the university takes back the license and begins shopping it around again.