Socks designed by a vascular surgeon at University College London that improve circulation for hospital patients and professional soccer players make money for the university. A gene-therapy drug to treat a rare form of inherited blindness very likely will not. A 15-year research project that involves banking and analyzing blood-serum samples and health records of 200,000 women across the British Isles doesn’t generate a return now, but someday it probably will.
University College London Business, the institution’s technology-transfer company, plays a role in those and hundreds of other projects. And the mix of the financially profitable and socially relevant in its portfolio is no accident.
While many American universities are struggling to define and publicly articulate their goals for technology transfer—Profits for the institution? Promoting local economic development? Helping society?—UCL Business faces no such identity crisis.
A wholly owned for-profit company of the university, with revenue last year of about $21.7-million, UCL Business manages technology transfer and other elements of “knowledge transfer” for this world-renowned institution of 4,000-plus researchers with a balanced and well-defined mission.
It puts its proof-of-concept grants and licensing expertise behind university inventions and projects that have societal and economic benefits, like the blood-serum bank for a study of ovarian cancer and, eventually, other women’s diseases. It supports projects that match such research priorities as improving global health and building sustainable cities, like a consulting company called Space Syntax that helped to redesign Trafalgar Square. And it provides business guidance to other companies commercializing inventions that also can generate income, like those compression socks, which carry the “UCLB” logo on the package.
“We have to make money to survive,” says the managing director of UCL Business, Cengiz Tarhan, but profits are not the holy grail. “We’re not doing this because we’re making megabucks for the university.”
Lots of university tech-transfer operations say that sort of thing, and some in fact do live up to the words. UCL Business is among those for which it’s demonstrably more than lip service.
And with the role of academic tech transfer continuing to draw attention worldwide—just this fall, a report from the National Academy of Sciences warned universities in the United States to depend on tech transfer less for its profit potential than for its power to extend academic knowledge to help companies and society—the holistic path that UCL Business charts for itself makes it a noteworthy study.
Its approach is especially timely now. This fall the British government announced major cuts in higher education and other public spending. The plan appears to spare funds for university research and money that the government provides to support commercialization of research (although some criteria for grants under that program may be modified). But universities here face intense pressure to find additional streams of revenue, and the new climate will be a test for the resilience of the kind of balanced mission UCL Business has established.
Big-Pharma Deals
The vast reach of University College London, a sprawling, research-intensive institution of 22,000 students that occupies the heart of the city’s Bloomsbury neighborhood as well as laboratory complexes in northwest and east London, provides its tech-transfer company plenty to work with. Founded in 1826, it was London’s first university, the first in England open to students from all social backgrounds, and it counts Mohandas K. Gandhi and Alexander Graham Bell among its former students.
Known for its classical, domed Main Building (where, famously, an effigy of Jeremy Bentham sits in a display case in the lobby), University College London today boasts the largest biomedical enterprise outside of North America, thanks to mergers and alliances with several major hospitals. With research expenditures of about $565-million a year, it ranks among the four biggest research universities Britain and is comparable in research spending to institutions like the University of Arizona and the University of Illinois at Urbana-Champaign.
UCL Business, with a staff of more than 40, many of them Ph.D. scientists or experienced executives from industry, provides a broader range of services than does a typical American tech-transfer office.
At the Institute of Ophthalmology, for example, where stem-cell scientists are working on a treatment to prevent age-related macular degeneration as well as a gene-therapy drug for blindness, the research has attracted financing from some of the world’s biggest pharmaceutical companies. UCL Business not only helped negotiate those deals but also manages many of the arrangements, for a fee. It has used some of the funds it sets aside for “proof of concept” grants—which help advance early-stage inventions—to help pay the costs of developing a device to deliver the cells to patients.
As do many British universities—but few, if any, in the United States—UCL Business also handles contracts and other administrative matters for faculty members who do outside consulting and use its services. That earns the company a considerable amount of money—nearly 40 percent of its income in 2009—even though relatively few faculty members are involved. Mr. Tarhan is looking to increase those numbers.
UCL Business also enjoys support from the government’s Higher Education Innovation Fund, via the university—a financing source that some American tech-transfer offices envy. “That’s £900,000 more than what any American university gets from the federal government” for tech transfer, says Ashley J. Stevens, a veteran technology-transfer leader at Boston University who is president of the Association of University Technology Managers.
The British government’s financial backing of tech-transfer operations—what Mr. Stevens calls “a consistent national policy” of support he wishes the United States would adopt—and its other revenue-making opportunities, make it difficult to compare UCL Business with an American counterpart in financial terms.
In Britain, UCL Business is neither the largest nor the most active academic commercialization venture. According to recent reports, Imperial College London identifies the most inventions and generates the most revenue, while the University of Oxford leads in the number of licenses signed annually. Although UCL Business is a for-profit company, it is also less commercially focused than, say, Imperial, where tech transfer is run by a company called Imperial Innovations, whose shares are traded on the London Stock Exchange.
‘A Social Responsibility’
Ian Jacobs and Usha Menon are gynecologists and cancer researchers who oversee the blood-serum bank and database at the university’s Institute for Women’s Health. For them, UCL Business helped make possible a strategy that could turn what began as a major study of cancer into a long-lasting trove for scientists and pharmaceutical companies looking for links between DNA contained in the serum samples and a range of diseases that women contract as they age.
It’s an “amazing resource,” says Dr. Jacobs. “We have a social responsibility to maximize” its use.
The institute began collecting, testing, and storing the serum samples in 1995. Some 50,000 women in the study continue to provide blood each year. In the institute’s laboratory, just steps away from a busy city street, the samples arrive daily from places like Belfast and Nottingham. Technicians process and inject the blood into toothpick-thin straws for storage in liquid-nitrogen-cooled tanks, labeling each one with an identifying code. The identifier allows researchers to match the samples against the patients’ health records, which the institute is also receiving.
Government grants worth about $40-million cover most of the costs of this elaborate operation and analysis, but not the cost of continuing the database once the research grant ends, or of the tracking information that isn’t part of the cancer study but could make the serum bank and database more valuable to researchers and companies in the future. The university and UCL Business are covering those expenses.
The serum bank does not lend itself to the traditional approach of most tech-transfer offices, because it’s not a discrete, licensable invention. Still, Dr. Jacobs saw it as valuable to commercial partners. UCL Business’s proof-of-concept funds helped pay for some of the early legwork for the institute’s business plan. The first deal, with a major diagnostics company that would pay royalties for rights to use the database, is expected to be announced any day now. “It’s a new model for commercializing science,” says Dr. Jacobs.
The researchers say their goal is to share proceeds with many centers and researchers that have contributed to the serum bank and to generate income to keep it going. “We don’t want the bank to die because we can’t afford to keep it,” says Dr. Jacobs.
Promising Ventures
Any payday for UCL Business from the serum bank and database is likely to be far in the future. For now, says Mr. Tarhan, whose work with that research project began back when he ran a then-separate tech-transfer company for the university’s medical school, UCL Business is satisfied with the project’s potential to produce “a lot of publications and a lot of public good.”
To be sure, UCL Business, which was formed in 2006 from a merger of the medical-school operation with the university’s, has had its share of windfalls. In 2008 it made about $16-million on the sale of a spinoff company, Stanmore Implants Worldwide, which develops prostheses that can be attached directly to the bones of amputees. And a compound based on work by medical-school researchers that began in the 1980s underlies a drug called Simulect, which over the past 12 years has been used by more than 100,000 transplant patients and brought millions of dollars in licensing revenue to UCL Business and its predecessors.
UCL Business returns most of its profits to the university but keeps some profit—about $2.5-million in 2009—for future investments, proof-of-concept grants, and other expenses. The proof-of-concept grants are vital pieces of UCL Business’s strategy; it awards a few each month, typically in amounts ranging from about $15,000 to $80,000 each.
The compression-socks enterprise and an unrelated spinoff company called Endomagnetics are two of its ventures that are more financially promising.
Endomagnetics has developed a nanotechnology product that could allow doctors to replace the use of radioactive dye with a tiny injectable magnetic particle to track whether cancer cells have entered the lymphatic system. The tracing procedure can be part of the protocol for surgeries to remove breast cancers, melanomas, and other cancers. But the company’s CEO, Eric Mayes, says only about 20 percent of the hospitals in Europe and half in the United States have the necessary equipment and nuclear-medicine expertise to carry out the procedure.
Quentin Pankhurst, a professor of physics who heads a prestigious research lab at the Royal Institution of Great Britain, invented the product. He is also a co-founder of Endomagnetics, which is testing the surgical device in clinical trials. UCL Business has provided the company with about $475,000 to help it develop a prototype precise enough to track the particle without also picking up readings from all the other magnetic objects in an operating room. In exchange for that investment the tech-transfer company owns about 23 percent of the spinoff.
In a tiny office adjacent to his physics laboratory, Mr. Pankhurst demonstrates the unremarkable-looking tabletop device, placing a probe next to metal coins as numbers on a meter flash higher and higher. Mr. Mayes says it has the potential for annual revenue in the billions of dollars.
The socks were the brainchild of Stephen G.E. Barker and a surgical colleague, who more than 10 years ago designed a below-the-knee sock with graduated compression to be given to hospital patients to help them avoid blood clots. UCL Business sells the socks to hospitals through a spinoff company called Saphena Medical (saphena is Latin for vein), and to athletes and general consumers through a spinoff company called Evexar Medical. UCL Business clears nearly $400,000 a year on sales of the hospital version (sales of the athletic line are too new for tallies), income that it shares with the university and the inventor.
For the socks, UCL Business also put up something besides money: They are the first products to carry the university and UCL Business logos. Although “UCL” (for the medical version) and “UCLB” (for the others) hardly have the cachet of the Nike swoosh, Dr. Barker says the logos do help sales.
Intangible Values
But it is in UCL Business’s involvement with projects that don’t necessarily make money—or won’t for a long while—that the company is most distinctive.
Tropical Storm Risk, a noncommercial project spun off from a UCL Business company called EuroTempest, is an example. Created by meteorologists and finance experts, EuroTempest sells data and weather forecasts. Tropical Storm Risk uses some of the same complex models to predict the severity of storms in six tropical areas around the world.
Both were established by UCL Business, which provides them office space in a bare-walled upper-story room a few doors from the Fitzroy Square townhouse that was once home to Virginia Woolf and George Bernard Shaw. EuroTempest generates about $600,000 in annual revenues, mostly from insurance companies. Mr. Tarhan calls it “an interesting concept” but doubts it will ever produce a lot of money. “We support it because there’s a benefit” in having it, he says.
Part of that benefit is its connection to Tropical Storm Risk, a free service, with 17,000 subscribers—including officials of relief agencies in places like Bangladesh, who have used the service to warn local communities of impending floods.
Even as it spends money on projects with no obvious commercial potential, UCL Business often realizes intangible value. It owns about a quarter of Space Syntax, the 17-year-old planning firm that developed the more pedestrian-friendly design of Trafalgar Square. Besides the recommendation that led to the installation of a grand staircase, making the square a more attractive public space—and not just for tourists determined to get close to Nelson’s Column—the company has worked on high-profile urban-planning projects throughout London, as well as in Jeddah, Saudi Arabia, and Seville, Spain.
For UCL Business, “it’s great PR because of the space we operate in,” says Alan Penn, a founder of the company and a professor of architectural and urban computing.
Mr. Penn and a few others work at Space Syntax and teach at the university. As an academic, he treasures that dual role as “a wonderful way of getting at research problems and data sets” in challenging real-world situations. As a businessman, though, he recognizes that it might be keeping the firm from maximizing its financial value. “Our company doesn’t really make them much money,” he allows.
This year one of Space Syntax’s partners has taken a leave to explore new business strategies, a gratifying development for UCL Business.
But as welcome as a more profitable Space Syntax would be, particularly now as economic pressures on the university heat up, Mr. Tarhan says he doesn’t want to lose UCL Business’s focus on its broader goals.
“This business is not about ‘profitability’ in the accounting sense. It is about our impact on the work of the university and the much broader impact we help to make on the economy and society, too,” he says, sounding a note that might seem at odds for a business—but perhaps just right for many nonprofit tech-transfer operations in America. “We’re not playing the numbers game.”