Academic inventions in medicine, plant genetics, and alternative energy helped to spur the creation of a record 549 new university spinoff companies in the 2008 fiscal year, while generating more than $2.4-billion in licensing revenue for 156 institutions and their inventors, according to a survey released on Monday.
The institutions also executed 4,438 licenses granting rights to companies and others to use the inventions for new products, according to the annual survey, the latest available, by the Association of University Technology Managers. And they applied for more than 10,800 patents.
Four universities reported licensing revenue of more than $100-million each—an amount greater than the entire research expenditures for nearly a third of the institutions taking part in the survey (see table). Only 29 institutions reported income in excess of $10-million, one more than in the two previous years. Forty-two institutions earned between $1-million and $5-million, a reminder that despite all the hype about technology-transfer windfalls, commercialization of inventions is still a significant moneymaker for only a relatively small number of colleges and universities.
The survey does not indicate the institutions’ expenses for personnel, for the legal fees for patenting, or for other technology-transfer costs that may never be reimbursed by a licensee.
More Spinoffs, Fewer Patents
The number of new spinoffs reported in 2008 topped the 500 reported in 2007 by 155 institutions, while the number of licenses executed was only about 3 percent higher than in the previous year.
The 156 universities reporting data in 2008 were issued 2,884 patents, a decline of more than 10 percent from the number of patents issued to institutions in the previous year. It can take years between the time a patent application is filed and the patent is issued.
(The same institutions don’t respond to the survey each year, so year-to-year comparisons can indicate trends but are not precise. A total of 161 colleges and universities took part in the survey for 2008, but four insisted on anonymity; their data are not published by the association and are not contained in the accompanying table showing the institutions’ licensing revenues, numbers of spinoff companies formed, and other technology-transfer information. The association’s survey also includes data from 30 hospitals and other research organizations, but its report on the survey, the “FY 2008 AUTM U.S. Licensing Activity Survey,” does not provide cumulative data or analysis of university participants. Most major research universities participated, but one of the most active in technology transfer, Yale University, either didn’t or was among those insisting on anonymity.)
Northwestern University led the pack in licensing revenues with more than $824-million. Nearly all of that came from a deal it struck in December 2007 when it received $700-million for selling investors a portion of its rights to future royalties on the blockbuster pain drug Lyrica, as well as from royalties it continues to earn from the maker of that drug. (A year earlier, New York University led the chart thanks to a similar deal involving an invention used in the drug Remicade; in 2008, it was fourth in revenues with $104-million.)
The 10-campus University of California system was second, with revenues of more than $146-million. Officials there said that amount, too, was inflated by anomalous circumstances: About $42-million of the increase over the $97.5-million it collected in 2007 came from settlements of two patent-infringement lawsuits. One of those was a $30.4-million payment the university received from Microsoft Corporation when the software company resolved its litigation with Eolas Technologies Inc. and UC over software used in its Web browser.
Columbia University, which ranked third in revenues with $134-million, said licenses on 10 to 15 inventions accounted for the majority of its income. “Most of the revenues industrywide come from the life sciences, and we were no different,” said Orin Herskowitz, vice president for intellectual property and technology transfer.
Although Columbia has reaped hundreds of millions in the past from a single set of patents widely used by biotechnology and pharmaceutical companies, Mr. Herskowitz said the university’s philosophy is to “move as many things out of the lab as possible and see what sticks.”
For a portion of the period covered by the survey and the subsequent months since June 2008, the economy certainly hasn’t helped technology transfer.
“The recession put a lot of deals of hold,” said Mr. Herskowitz, echoing the sentiments of officials elsewhere. Not only did credit tighten and venture capitalists become more averse to risking investments in new companies, but layoffs and reorganizations at many of the companies that are universities’ licensing partners were also disruptive to the deal-making process.
Furthermore, he noted, the inventions coming out of universities are often early stage, and so it’s understandable that in an uncertain economy, companies would be hesitant to invest in products that could take eight to 12 years to be developed.
Technology-transfer statistics for the 2009 fiscal year are likely to reflect this slowdown, but Mr. Herskowitz said there are already signs that the anxieties are waning. “We seem to be in comfortable water again,” he said.
Easier Licensing
The number of new spinoff companies created despite the economy was a surprise. What was not a surprise was that universities that specialize in clean energy and alternative fuels saw a notable benefit. The University of Texas at Austin was one of them. Its revenues from licensing topped $11.6-million, nearly double the amount it collected the previous year, and it formed 10 new spinoffs, versus three a year earlier.
Rick Friedman, associate director of licensing, said one of the keys was having research strengths in areas “with real commercial relevance.” For example, one of its new spinoff companies, ActaCell, attracted $6-million in venture-capital investment and is developing lithium-ion batteries based on a university invention. Getting financing is still tough, said Mr. Friedman, but it’s easier finding partners for spinoffs and technologies based on developments “where people expect real global shifts in how things are done.”
The University of Texas has also taken pains to make it easier for companies to license inventions and for its own professors and researchers to form spinoffs based on their ideas.
That’s also what’s fueled a rise in spinoffs at the Johns Hopkins University, which created a record (for that institution) of 12 spinoff companies in 2008, including one called Amplimmune, which is developing biologics drugs that train the immune system to kill cancers.
Wesley D. Blakeslee, executive director of the office of technology transfer since the fall of 2006, said spurring spinoff companies is part of a new concerted strategy for the university, which had been slower than most of its peers in pursuing that strategy.
As part of that effort, Johns Hopkins has since begun inviting in venture capitalists and other potential investors to meet regularly with researchers. Although the economy has made it harder for spinoff companies to raise money, Mr. Blakeslee said, Johns Hopkins is beginning to turn the tide. “I think we’re getting into the game now,” he said.