March 16, 2011

Innovation, intellectual property, commercialization, and entrepreneurship at Washington University in St. Louis Evan D. Kharasch, MD, PhD Vice Chancellor for Research Russell D. and Mary B. Shelden Professor of Anesthesiology Professor of Biochemistry and Molecular Biophysics

Innovation, intellectual property, commercialization and entrepreneurship at Washington University

Elements, issues, challenges, questions: Academic culture IP commercialization mission Resource: Office of Technology Management Funding (the Valley of Death) Opportunities

Innovation, intellectual property, commercialization and entrepreneurship at Washington University

Is there a role for academia in commercializable innovation and creating intellectual property? Is such activity compatible with the traditional (WUSTL) academic mission?

Transforming the research paradigm 1 Basic 2

Applied

Quadrant model of scientific research Consideration of use? Research inspired by Quest for fundamental understanding

Yes

No

Yes

Pure basic research (Bohr)

Use-inspired basic research (Pasteur)

No

Pure applied research (Edison)

3 Revised dynamic model of scientific research Improved understanding

Improved technology

Pure basic research

Purely applied research and development

Existing understanding

Use-inspired basic research

Existing technology

Innovation, intellectual property, commercialization and entrepreneurship Innovation:  Acquisition of new knowledge through leading-edge research  Application of new knowledge to create products and services  Introduction of products and services into the marketplace Primary ingredients of successful innovation: • Knowledge capital • Human capital • Innovation ecosystem

Innovation, intellectual property, commercialization and entrepreneurship

The great majority of newly created jobs are the indirect or direct result of advancements in science & technology; half or more of the growth in the GDP in recent decades has been attributable to progress in technological innovation

█ THE INFORMATION TECHNOLOGY & INNOVATION FOUNDATION

Where Do Innovations Come From? Transformations in the U.S. National Innovation System, 1970-2006 ……………………………………………………………………… BY FRED BLOCK AND MATTHEW R. KELLER | JULY 2008

R&D Magazine 100 best commercialized inventions R&D Magazine Top 100 Awards

90 80

>80%

Private (companies) Public & Mixed (Universities, federal labs, spinoffs) Foreign

>70%

70 60 50 40 30 20 10 0 1971 1975 1979 1982 1984 1988 1991 1995 1997 2002 2004 2006

Case study: Role of academic innovation in drug discovery Discovery origin of 252 drugs approved by US FDA 1998-2007

Nature Reviews Drug Discovery 2010;9:867-82

University Innovation Impact 

FY 2008: >600 new products from university technologies were introduced to the market



FY2008: university research helped create 1.6 new companies per day



University technology transfer creates $Billions of direct benefit to the US economy annually



University research helped create whole new industries, like biotechnology, where US enjoys a leadership role



2007: >555 startups based on university licenses created; 686 new products introduced to market

University intellectual property, commercialization and entrepreneurship Why?

Intellectual Property • Expeditious and wide dissemination of universitygenerated technology for the public good People • Successful startups may involve former or current university faculty-postdocs-students-staff, without licensing university IP (e.g. Stanford: CISCO, Sun Microsystems, Rambus, Yahoo!, VMWare) • Recruitment, retention, training

Why not? Its not about the money! Only 0.5% of license agreements generate more that $1M in royalty income (AUTM)

University intellectual property, commercialization and entrepreneurship Research has found little evidence that:  Commercially oriented faculty are less likely to publish (on the contrary, they are more prolific)  Commercial motives have shifted effort away from fundamental research and toward more applied research  Institutional or sponsor concerns to protect IP rights have resulted in more than modest delays in publication  Commercial involvement and IP activity have replaced scholarly output/quality as the principal criteria for academic employment and advancement

WUSTL Academic culture Traditional Knowledge Path

Innovation & Discovery

Bayh-Dole Act (1980)

Or vs



Applies to all federally funded research (NIH, NSF)



University responsibility: promote commercialization & public utilization of inventions created with federal funding



Universities to manage IP from federal grants, share revenue with inventors

And ?

Office of Technology Management (OTM)

Mission

To promote the public utilization of University innovations created by faculty and employees through the formation and management of commercial partnerships

OTM Service Focus 

Triage all WUSTL invention disclosures; file patents or return IP to inventors



Management of WU patent portfolio



Licensing of patented and unpatented IP



Revenue distribution to WU and inventors



Material Transfer Management (MTAs)



Industry Sponsored Research (non-clinical)



Education and Training

IP

Washington University Commercialization Pathway

IP enrichment to enable or improve invention: •Patentability •Claims •Attract commercial partner •License potential •Value

Innovation & Discovery Invention Disclosure (OTM)

Patentability & Market Assessment

Patent Application

Marketing

Office Actions

Licensing

Patent Issues

Commercialization

IP return to inventor

Existing company Startup •Strong market potential •Business plan •Investment capital •Business management

University intellectual property, commercialization and entrepreneurship WUSTL intellectual property evaluation: Depth

IMPACT

$ Breadth/scope

WUSTL IP license revenue sharing:

WUSTL-OTM Statistics Invention Disclosures US/PCT Patents Filed License Agreements MTAs Industry-Sponsored Research Agreements

FY2007 FY2008 FY2009 FY2010 101 98 125 104 75 94 106 76 45 42 44 41 804 725 879 779 60 72 53 41

Start-up Companies Formed 5 4 Revenue $12.1M $17.0M Patent Costs $2.1M $2.3M

2 $7.9M $2.2M

2 $6.4M $2.0M

OTM Financials Data in $000’s

FY08

10,391 1,619 843 12,853

15,715 1,300 1,430 18,445

6,301 1,619 1,572 9,492

5,029 1,324 2,022 8,375

37,436 5,862 5,867 49,166

Expense: PI Distribution (3,797) (6,532 School Distribution (5,034) (7,433) (466) (759) 3rd Party Distribution/Other Patent Expense (2,114) (2,273) Office Expense (incl salaries) (1,442) (1,449) Total (12,853) (18,445)

(2,279) (2,879) (300) (2,207) (1,827) (9,492)

(2,163) (2,242) (159) (2,064) (1,747) (8,374)

(14,772) (17,587) (1,683) (8,658) (6,466) (49,166)

Funding: Royalties & Fees Patent Expense Recovery CFU Total

FY09

FY10

Cumulative FY07-FY10

FY07

WUSTL IP Commercialization Success 

  



Total revenue received by WU over 15 yrs is $113M:  School share = $53M  PI share = $49M  OTM share = $7M  Other 3rd Parties = $4M 14 PIs have generated > $1.0M revenue Dr. Jack Ladenson’s (WUSM) IP has generated >$50M Ladenson chosen as inaugural recipient (2010) of WUSTL Chancellor’s Award for Innovation and Entrepreneurship Faculty start-ups – 13 in four (4) years

Recent Start-up Companies Neurolutions

Eyelten

LipoSpectrum MEDROS

CardioWise

NanoMed

CardiaLen Toward pain-free defibrillation™

BioClassifier MicroPhotoAcoustics

OTM Process Product Commercialization

Invention Disclosure Submission Invention Assessment

(Revenue Distribution)

Faculty generates submission to OTM Patent Application

Development of Products Licensing of Patents

IP marketing by OTM BDD

Patentability & marketability analysis by OTM BDD

Provisional application Regular application US and/or foreign

WUSTL IP-OTM Benchmark Analysis

Purpose: Evaluate WU research funding, faculty innovation, invention disclosures, & licensing outcome compared to 20 top peer institutions

WUSTL IP-OTM Benchmark Analysis Research Faculty Business function

Licensing Income

WUSTL performance relative to 20 top peers • Ranks higher than most in sponsored research Funding (total $, NIH $) • Ranks low in invention disclosures (total #, Inputs #/project, #/funding) • Ranks low among its peers in size of licensing staff (total # & relative to funding) • Ranks average in size of disclosures portfolio Process per staff, and licenses executed • Ranks high in # licenses executed per staff • Ranks low in licensing income (total $ & Outcome relative to funding)

WUSTL IP-OTM Benchmark Analysis  Invention disclosures are the rate-limiting step  Disclosure process depends on faculty initiative  WUSTL disclosures rate low  Invention disclosures come from a very small number of PIs (235 different PIs FY07-10)  WUSTL OTM is staffed for and delivering on current mission

OTM Recent Initiatives

Faculty

Grad Students/ Post-Docs

WU Staff

• FastTrac course for technology-based entrepreneurs (started 2005, taught by SBA personnel, 47 faculty grads) • Intermediate Commercialization FastTrac (started Nov 2010) • Technology Commercialization Seminars (started 2009) • BioGenerator collaboration/technology translation and start-ups • Bear Cub IP/technology commercialization seed fund • Technology Transfer Workshops (started 2009) • Internship program (started 2010) • ICTS/CTSA Business Development Core • OTM Trainee Program (6 mo postgrad training, started 2007) • IAP Fellow Program (NSF grant with Skandalaris Center, started 2008) • Internal OTM speaker series (started 2009)

Challenges: IP commercialization - Valley of death WUSTL basic research; proof of concept

Translational $$$

•Patentable IP •Commercialization •Licensing

•Investment capital •Business plan •Entrepreneurs •Business mgmt •Resources •Contacts •Knowledge

www.oicr.on.ca

Academic Technology Commercialization Grant Funded Research Activities •Target Discovery •Pathway Studies •Basic Validation

Translational Awards

Seed Funding

Venture Funding

($0.01 – $0.1M)

($0.1 – $1M)

($0.5 – $100M)

Examples •Bus Office Grants •Pharma Venture •SBIR Phase 0

Examples •Angel Investors •Early VC •SBIR Phase I

Examples •Venture Funding •Strategic Partner •SBIR Phase II

Basic Research Translational Research WUSTL Bear Cub

i6 Project

Biogenerator Venture Capital

Exit and/or Return on Investment Examples •Acquisition •Public Offering •Revenue-Based

Bear Cub Program Translational/proof-of-concept funding for WU faculty/researchers Grants for 1 year; up to $75,000 each

Over 75 proposals submitted

Program started in 2008; 4 rounds completed

20 grants awarded

Total funding to date - $834,000

Bear Cub Fund Awards - 2011 PI Bradley Ford Molecular Microbiology David Haslam Pediatrics Enrique Izaguirre Radiation Oncology Kelle Moley OB-Gyn Daniel Moran Biomedical Engineering

Project Mannoside anti-virulence compounds vs. antibiotic resistant E coli in a mouse model of bladder infection Treatment for Clostridium difficile-associated intestinal disease Real-time imaging dosimeter Use of IUDs treated with non-hormonal compounds as a new paradigm for contraception Radial nanofibers for hernia repair

St. Louis Bioscience Regional Innovation Cluster

 Economic development & high tech job creation  Program Lead: BioGenerator, with WUSTL, SLU, UMSL, STL County Economic Council, STL City Development Corp  Goal: Targeted pre-company translational research, company creation, first funding  $2 million over 2 years (2 rounds, $1M each)  Candidates: bioscience, in or relocate to STL, early stage technology, existing company not required (will help create)  Funding: Up to $250K in milestone-based tranches  Round 1 applications accepted until March 31, 2011

WUSTL Innovation Ecosystem

Innovate VMS

INDUSTRY

TH E COALITI O N F O R P LA N T A N D L I F E S C I E N C E S

Innovation, intellectual property, commercialization and entrepreneurship at Washington University Traditional Knowledge Path

Innovation & Discovery

WUSTL I & E cultural expansion Knowledge & Entrepreneurship Path Innovation & Discovery

IP create & protect Commercialization

Innovation and Entrepreneurship at Washington University Mark S. Wrighton Chancellor and Professor of Chemistry

http://research.wustl.edu

Chancellor’s charge to the VCR:

An expanded commitment to innovation & entrepreneurship

 Recommend improvements in WU programs, policies and procedures to strengthen the environment for innovation and entrepreneurship  Recommend enhancements to technology transfer efforts  Expand the professional team in OTM, to enable more proactive understanding of how WU research results can be developed and commercialized  Consider a larger commitment to OTM, to support more proactive efforts to identify research programs with potential for commercial development

Chancellor’s charge to the VCR:

An expanded commitment to innovation & entrepreneurship

 Expand investment in the Bear Cub Fund to support research that has commercial potential  Seek additional research funds to support exploration of highly innovative ideas, to meet compelling needs not addressed by federal funding  Work with other academic leaders, National Research Advisory Council, and our community to identify new ways to build our culture of innovation and entrepreneurship

Innovation, intellectual property, commercialization and entrepreneurship at Washington University

Opportunities:  Academic culture  IP commercialization mission  Office of Technology Management  Funding

Entrepreneur Speakers

Randall Bateman, MD Assistant Professor of Neurology

Gregory Lanza, MD, PhD, FACC Professor of Medicine (Cardiovascular Division) and Biomedical Engineering