Going to Market; Universities Try to Turn Tech into Dollars

Biochemist Michael F. Summers is just the type of hidden jewel the University of Maryland, Baltimore County wants to introduce to high-technology corporate America.

By:
Robert J Terry
Baltimore Business Journal

Summers is doing important work determining the three-dimensional structure of the virus that causes AIDS. And Stephen Auvil, director of UMBC’s Office of Technology Development, is constantly on the lookout for technology that can be "transferred," research that can be commercialized with the help of investors, strategic partners or both.

Auvil helped find a pharmaceutical company interested in partnering with Summers to look for compounds that might be turned into drugs. It’s early, but with a lot of hard work and some luck — with patents secured, funding garnered, regulatory hurdles cleared — UMBC could be the launching pad for a successful technology company, possibly reaping millions in licensing fees.

These kinds of technology transfer wins are difficult to achieve. But a new influx of leaders in state government and at Maryland’s research institutions is directing new energy toward the effort, determined to spin out these success stories and match the pace of other regions that are home to premier university and federal government research and development laboratories.

The problem: They’re doing it at a time when fiscal woes are crippling budgets, leaving precious little in the way of new resources to best do the job. And Maryland has a rich endowment of these R&D institutions to mine.

The state’s universities, federal labs and private companies attract $8.5 billion annually in federal research funding, outpacing every other state on a per capita basis. The University System of Maryland’s research institutions conducted nearly $600 million in research in fiscal 2001.

Yet, Maryland’s publicly funded campuses need more help assessing the commercial potential of promising research and filing patents to keep pace with their competitors, according to a recent study. And experts agree early-stage capital remains the missing piece to the state’s tech transfer puzzle.

Other pieces are falling into place. Johns Hopkins University, which pulls in more than $1 billion in federal research and development funding, second only to the nine-campus University of California system, launched two new offices in January. One will license technology developed in the university’s eight schools, and the other will help build companies around cutting-edge research.

There has long been a need for better interaction between Hopkins and the business community, according to players from both camps. Nora Zeitz, special provost and head of JHU’s Enterprise Development Office, promises to aggressively seek out the kinds of partnerships that will lead to spin-out companies, not just licensing agreements. She points to the Massachusetts Institute of Technology’s equity stake in Web architecture company Akamai Technologies, forged in the mid-1990s, as an example of the kind of deals she hopes to broker.

George Pappas, an attorney with the Baltimore law firm Venable, Baetjer and Howard and head of a new high-tech development commission appointed by Republican Gov. Robert Ehrlich, said tech transfer will figure prominently in his group’s deliberations over the next few months. The "combined clout" of Hopkins and the University of Maryland should be enough to make the region a tech hotbed on par with Silicon Valley and the Route 128 corridor in Boston, he said.

Aris Melissaratos, Maryland’s economic development chief, has made technology transfer a cornerstone of his efforts to broaden the state’s technology base, talking strategy with Ehrlich as well as "talking about it in every corner of the state."

"Every where I’ve been … I’ve heard the phrase ‘technology transfer,’" said Christopher C. Foster, Melissaratos’ choice to be Maryland’s technology coordinator. "What’s the future of Maryland? What do we really have to offer? Intellectual capital."

"The more of it we can capture and commercialize the more we can grow our entrepreneurial pipeline," Melissaratos added.

But the Maryland Technology Development Corp., which administers tech transfer funding programs, is facing cuts to a budget that already lags behind competing programs in Virginia and Pennsylvania.

Virginia budgets about $10 million for its Center for Innovative Technology, its primary tech commercialization arm. Pennsylvania’s Ben Franklin Technology Partners, that state’s tech development clearinghouse, runs four regional centers with about $26 million. Tedco’s budget is slated to shrink from $6 million to $5 million in the next fiscal year.

That’s a "rather silly" level of investment for an organization expected to yield high-impact results from such a complex undertaking, according to Frank Adams, managing general partner of Grotech Capital Group in Timonium and a frequent state advisor on high-tech development.

Tedco oversees a $1.5 million fund for seed grants to startups, as well as a $500,000 fund providing grants to researchers interested in commercializing their work. Combined, the programs "fill critical gaps in the innovation process" from patenting to business development, according to Phillip Singerman, Tedco’s executive director.

But while other states are committing tobacco settlement and bond money to ambitious technology transfer programs and seed capital funds, "Maryland is trying to do it on the cheap," Singerman added.

A Tedco analysis of state tech transfer data shows that Maryland’s publicly funded universities trail other institutions in commercializing their research. Even as research and development funding at University System of Maryland campuses has increased from $377 million in fiscal 1999 to $590 million in fiscal 2001, the campuses trail the national average by 30 percent in key indicators such as invention disclosures, patent filings and licensing income.

"That’s not because there’s less science," Singerman said. "It’s an artifact of the trivial investment universities are making in their tech transfer offices."

Zeitz said available funding for university researchers to commercialize their work is a missing piece. "The universities are going to have to dig deeper into their pockets and do it for themselves," she said.

Hopkins, a private university, is still working out those details, according to Zeitz, a former venture capitalist with the Abell Foundation’s $30 million fund, who is in the process of pulling together a staff. Tedco will soon begin sharing some of the costs — filing patent applications, retaining lawyers to negotiate agreements — with tech transfer offices at state universities in an effort to bring the system’s performance up to the national average.

Auvil said he would welcome the help. Under his direction, UMBC’s technology development office has doubled its licensing revenue since 1999 to $80,000. His office evaluated 25 invention disclosures last year, filed 12 patent applications, had four patents issued and negotiated five licensing agreements. From 1998 to 2000, the school was signing one licensing agreement annually.

UMBC researchers are getting more entrepreneurial, interested in exposing their work beyond academia. How Maryland responds could determine whether the state reaps the rewards, as well.