1. Universities and the Commercial World
October 2006

2. Technology Origins
Universities are a source of innovation
Place of discovery and disruptive thinking
Not constrained by market
Research excellence is the selective criteria
Research is largely government funded

3. Government Support
Primarily three government agencies
- National Institutes of Health ($15B)
- National Science Foundation ($5B)
- Department of Defense ($3B)
Substantial funding began in the late 1950’s
Focus on basic research
No coherent policy on intellectual property
General position was funding agency ownership

4. Bayh-Dole Act
Passed in 1980
Title to intellectual property with University
Obligation to actively promote the technology
Non-exclusive license to federal government
Share income with the inventor(s)

5. Where we are today- per year
16,871 Invention Disclosures
10,517 Patent Applications
4,783 Licenses/Options
27,322 Active License/Options
11,414 License/Options with revenue
$1.3 Billion in total license revenue
462 new companies based on University technology
Total of 4,543 new companies

6. Universities
Approximately 185 US Universities have technology transfer offices
Originally staffed by University administrators
Gradual increase in capability
Now generally staffed be people with business experience
Average of 5 professionals per office

7. Value Creation
Option fee
License fee
Cash
Equity
Milestone payments
Royalty payments
Equity liquidity event

8. A Caution
Computer/IT industry developed before Bayh-Dole
But this industry largely driven by rapid development cycles, copyrights, and trade secrets
Biotech and Medical Device in particular have long development cycles and need patent protection

9. Duke University
Founded in 1930
11,000 students
6,000 undergraduates
Professional Schools of Medicine, Nursing, Law, Engineering, Business
7,000 graduate students
Operating budget of ~$3 Billion
~30,000 employees
Research budget of ~$550 Million

10. Duke Approach
Centralized function around commercial interactions
Focus on relationships
Corporations are a source of licensing deals
Corporations are a source of research collaborations and support
Corporations represent the realization of the research effort

11. Corporate and Venture Development
Office of Licensing and Ventures
Licenses
Start-ups
Office of Corporate Research Collaborations
Sponsored Research Agreements
Material transfer Agreements
Clinical Site Agreements
Office of Corporate Programs
Vendor relationships
Innovative programs
International Initiatives
Singapore
China

12. Duke Output
22 new companies in the past 4 years
Companies have raised over $180 million
~$5 million in licensing revenues
$150,000,000 in commercial research support
Over 2,000 agreements per year with industry
Initiate ~800 new research efforts per year with industry

13. Some Guiding Principles

14. New Ventures from Universities
Technology
Good intellectual property position
Near term market potential
Reasonable development path
Management
Experienced
Either large or small company background
Ability to attract funding
Venture Capital
Willingness to invest in early stage
Ability to syndicate the deal
Patience

15. Research Partnerships
Advantage to Industry
Access to best talent
Access government funded resources
Ability to terminate
Advantage to University
Source of funds
Access to industry resources
Shortened path to commercialization

16. Myozyme- A Success Story at Duke
Pompe’s Disease- rare genetic disease, infants lack essential enzyme
Infantile form fatal within months
Duke scientists develop cell lines to produce enzymes
Partnership formed with small company to do initial clinical trials
Trials were successful and technology was licensed to Genzyme
Regulatory approval obtained in US and Europe this year
$ million market potential

17. Conclusion
Universities are major drivers of innovative industries
Integration into the economic mainstream has greatly improved
Industry-University research partnerships on the rise
Universities need to be aggressive in seeking these relationships