Sector, regional economy stand to gain key ally as Harvard makes gesture to loosen its strained ties with industry

Mark Ptashne and Tom Maniatis began more than two decades
ago to research the mysteries of life’s genetic code, splicing strands of DNA,
isolating genes, and growing proteins in bacterial and mammalian cells.

By Naomi Aoki, Globe Staff,

The molecular biologists at Harvard University were emerging stars at the dawn of a
new era of biology, and they had an idea for a company that would make drugs based
on these scientific advances.

They turned to Harvard for help. The university lined up venture capitalists and helped
recruit a group of bright, young scientists in return for a small stake in the company.
But when other faculty members learned of the plan, they were outraged.

Before the furor was over, the issue had grabbed national headlines, the faculty had
voted against taking equity in the company, and Harvard’s then-president declared that
such a relationship ”could confuse the university’s central pursuit of knowledge and
learning by introducing into the very heart of the academic enterprise a new and
powerful motive – the search for commercial utility and financial gain.”

The year was 1980, and it crystallized Harvard’s wary relationship with industry at a
time when its counterparts down the street at the Massachusetts Institute of
Technology had been shuttling between Cambridge and the high-tech corridor on
Route 128 for decades.

While Harvard researchers remained cloistered in their labs, MIT engineers and
computer scientists had been fueling the region’s high-tech boom, an industry that
despite ups and downs has grown to employ nearly 325,000 people in Massachusetts
and rank as one of the state’s most important economic drivers.

The evolution was natural. The high-tech boom played to MIT’s strengths in applied
science, rather than Harvard’s in basic research and liberal arts. But as the state
economists and policy makers look to biotech as its next economic engine, they are
counting on Harvard to work alongside industry as never before.

”There’s nothing more important to the economy of Massachusetts than the efficient
transfer of technology out of universities,” said Peter Feinstein, a founding partner at
BioVentures Investors LLC, a Worcester venture capital group. ”It’s the primary driver of
the local economy. The computer industry and the biotech industry were both based
on technology transfer. And Harvard has always had a lukewarm relationship with
technology transfer.”

Harvard and its various institutions receive $895 million a year in federal medical
research funding – more than half the amount received in Massachusetts. It boasts an
enviable roster of Nobel laureates and world-renowned researchers in the medical and
life sciences. But its relationships with industry, critics say, has remained strained.

New president Lawrence H. Summers, the former US treasury secretary and a noted
economist, promises to change that impression. In late November, in a speech to
several hundred physicians, nurses, and administrators at Beth Israel Deaconess
Medical Center, Summers spoke of ”the once-in-human-history opportunity for
progress in the life sciences,” the university’s vast potential to contribute to that
progress, and its ”obligation to the broader community” to do so.

In a region that is already ranked second in the nation in biotechnology, Summers’
remarks were in one sense unremarkable. But to the biotech community, they
signaled a symbolically important shift. Never before had a Harvard president sent
such a stark message about the university’s obligation to move promising discoveries
into the commercial sector where they might one day benefit patients, and its
obligation to help foster the region’s economic development.

”The university’s role as a scientific catalyst is critical,” Summers said. ”We need, as
science evolves, to continue to think about how we make sure that our research finds
maximum application with maximum rapidity. And that means while always remaining
true to our fundamental values – the advancement of knowledge and allowing
knowledge to find application – we have to think creatively and flexibly about how to
work with the private sector, how to support entrepreneurship, and how to make sure
research moves from the bench to the bedside.”

When Ptashne and Maniatis went ahead with plans to found their company, Genetics
Institute, it was one of only three biotech firms in the Boston area. The company grew
quickly, however, as did the industry. From a start-up with 50 people, it expanded to
800 employees by 1992, the year it launched its first drug to treat the blood disorder
hemophilia and a year after it had been acquired by the corporate giant Wyeth. By
then, the state’s biotech industry numbered 88 companies and nearly 8,000

Today, even as the economy attempts to recover from the recent recession, the
biotech industry continues to grow. Genetics Institute, now known as Wyeth Research
and Wyeth Biopharma, employs 2,400 people in Massachusetts and plans to hire
another 400 this year. The state now boasts 250 biotech companies that employ
28,000 people – a cluster rivaled only by San Francisco’s Bay Area. Few question the
promise of the industry to improve human health.

But whether biotechnology will ever become as great an economic driver as the state’s
high-tech industry remains an open question. More than 20 years into the industry, it
is still only a tenth of the size of the state’s high-tech industry. It takes an average of
10 to 15 years to develop a drug. A relatively small number of companies have
products on the market.

Economists say a strong biotech industry benefits the state in many ways. It provides
high-paying jobs in a high-growth sector that can even out the volatility of other
industries, including high tech. Precisely because the product cycles are long,
companies make long-term investments, which help them weather economic

”We’re now uncertain about the profits of the high-tech boom,” said Alan
Clayton-Matthews, an economist at the University of Massachusetts at Boston.
”They’ve been cycling since the 1970s, but the medical sciences are fairly certain to
grow. The population is aging, and the demand for medical services expands with age.”

Whether the state captures the true economic promise of the industry, however, will
probably rest on its ability to keep manufacturing within its borders.

In 1984, at the apex of the technology boom, the state had 261,000 high-tech
manufacturing jobs at computer assembly plants for companies like Digital Equipment
Corp. and Data General Corp. Genzyme Corp. has built its manufacturing plant in
Allston; Wyeth BioPharma recently invested millions to expand its Andover plant. But
few other companies have reached the manufacturing stage, and some that have either
license the manufacturing to out-of-state pharmaceutical firms or locate their plants

”How much employment can go up really depends on the extent to which New
England captures the manufacturing component,” said Henri Termeer, Genzyme’s
chief executive. ”If it does, the industry here will be very, very large.”

But science will always remain at the heart of the biotech enterprise. Massachusetts’
high-tech leadership was lost to Silicon Valley because the ”miracle” rested in the
hands of just a few players who failed to adapt and innovate. Summers believes the
lessons to be learned from the high-tech failure are to pursue a variety of approaches
and foster competition.

”When I’ve emphasized the number of different institutions involved, the large number of
projects underway, that’s because in a world where no one can see the future, it is
best to be creating an enabling environment that will allow the best ideas and the most
able people to flourish,” he said.

Summers is adamant that the integrity of the academic pursuit – the advancement of
knowledge through teaching and research – is paramount. He believes, however, that
relationships with industry when structured appropriately can further that pursuit rather
than hinder it. It can further the university’s aim to serve its community – by advancing
human health and economic strength.

The more ideas that are generated within the university and the more ideas that are
moved out into the commercial sector, the better the chance that industry and
competition will thrive and the better the chance that biotechnology will fulfill its
promise of transforming the future of health care.

”What is important scientifically, what is central to the university’s mission of
developing new knowledge and helping it find application, can also make a great
contribution to economic development and to the region’s economic strength,”
Summers said. ”Intellectual activities at universities can support commercial activities,
and in turn the creation of a hot spot in a certain sector can strengthen the university
in the region.”

The challenge ahead of Summers is not to be underestimated, however. Numerous
institutions fall under the Harvard umbrella. Each has its own technology transfer
office, its own academic or clinical emphasis, and its own culture. By contrast, MIT is
a relatively simple place.

”Harvard has a long history of being a confusing and difficult place,” said Edward
Roberts, chairman of MIT’s entrepreneurship center. ”It was hostile toward industry at
the beginning, and it can take generations to change a culture.”

Maniatis stayed on as a professor at Harvard while serving as a scientific adviser and
board member to Genetics Institute. The scorn among many of his colleagues was
palpable, he said, creating an atmosphere that did not encourage others to participate
in industry.

”Biology was viewed as an endeavor that was not commercial,” he said. ”It was a pure
science, and people took pride in that fact. It became a source of pride and identity,
and there was a stigma attached to leaving academic research for biotechnology.”

The stigma has largely disappeared, Maniatis said. Harvard hospitals and the medical
school have been increasingly active in recent years in moving technologies into the
commercial sector. The directors of the various tech transfer offices have tried to
create a more unified system – sharing basic policies and procedures for crafting
agreements, posting biomedical discoveries on a single Web site, and meeting
regularly to foster cooperation.

The university is considering a science campus as one of two scenarios for its 100
acres of undeveloped space in Allston. And although planning is in the early stages,
among the ideas is the creation of lab space to allow Harvard researchers to work
alongside industry scientists to advance basic research closer to patient care.

Despite its efforts, Harvard still lags MIT. In 2000, Harvard ranked 71st among 142
universities in forming new companies while MIT topped the list, according to data from
the Association of University Technology Managers. Harvard ranked 18th in revenue
generated from licenses (MIT ranked sixth), and 15th in new patents issued (MIT
ranked second).

”What Larry Summers recognizes is that Harvard has one of the most powerful
research engines in the world,” said Marc Goldberg, a partner in BioVenture Investors.
”He’s setting the stage for Harvard to live up to its fullest potential. If it does, it will
cement the region as the world leader in biotechnology. I’m part of the cheering
section. But it’s one thing to talk about it, and another to implement it.”

Naomi Aoki can be reached at [email protected].

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