Technology Transfer from University Research to the Commercial World

Tim Cook

BA (Physics) 1969, D Phil (Cryogenics), 1972

HNC Mechanical Engineering, Diploma in Accounting & Finance

Managing Director Technology-based companies (1983 – 90) 7 years

Oxford Analytical Instruments

Microsystem Design Limited

Micrelec plc

Private Investor (1990 – 97) 7 years

Founding Managing Director Oxford Semiconductor

Founding Managing Director Oxford Asymmetry

University Technology Transfer (1997 – 2007) 10 years Managing Director Isis Innovation, Oxford University (1997-07)

Visiting Professor in Science Entrepreneurship, Oxford University (2006-09)

Advisor Cambridge Enterprise Board (2006 – date)

Commercialisation Panel - Oxford Brookes (2011 - date)

Non Executive Director 2007 – date 7 years Isis Innovation (1997 – 2014)

Lombard Medical Technology (2007 – 2011)

Oxford Gene Technology (2007 - )

Tim Cook

Industry

Investment

Academia

Programme

Introduction & Message 5

The Oxford University Model 9

Technology Transfer Tactics 6

Spinout Companies 5

Culture Change 6

What is a University?

A great University is defined by great academics • Great researchers

• Great thinkers

• Great teachers

Not • Great administrators

• Great technology transferors

• Or even great leaders

Although list two helps recruit and retain list one

What is a University for?

Principle products - teaching and research • There are few alternative sources of either of these

Valuable by-product - commercial opportunities • There are many sources of inventions to commercialise

It is an error to design a production plant to maximise the output of the by-product • If this is detrimental to the quality of the principle products

Tech transfer comes at the end of the research • Of course the value then extracted must be maximised but not

at the expense of the prime mission

Ignoring this will turn some great universities into “not-great” contract research companies

Speaker’s message

Technology transfer is stimulating communication between two very different cultures (Academia & Business)

The two cultures will not in general spontaneously understand each other • But there has always been the occasional multi linguist!

Therefore intermediaries are required • at least to start with

It only works if the intermediaries have a real understanding of both cultures

There is not a single recipe that always works • But there are some underlying principles

The Challenge – Different Cultures

Researcher Self directed

Next step defined by yesterday’s results

Free exchange of ideas

Commerce Driven by external needs

Clear goals with shareholder commitments

Commercial confidentiality

So we can expect it will be challenging to build a mutually trusting relationship

“Academics never deliver” “Industry is out to cheat us”

Orthogonal Value Sets

Academic axis

€ ->Research

2 Dimensional Intermediary

Research -> Products

Commercial axis

Licence

THE OXFORD MODEL AN EXAMPLE FROM AN OLD UNIVERSITY

Oxford University

Teaching and Research • Oxford University has spent centuries optimising methodologies

• for Teaching (since 1188)

• & Scientific Research (since 1700s)

Commercialisation of results • Direct spending on commercialisation is relatively recent

• Isis Innovation (Oxford University’s Technology Transfer Co) established in 1988

So this is a relatively new activity in a well-established University

Oxford Model - Key Ingredients

Rich portfolio of wholly-owned Intellectual Property Rights • Strong, world-class research base

• Diverse research sponsorship (700 different funders)

Clear intellectual property (IP) policy • Led from the top and widely supported

Investment in research support & tech transfer • 150 staff in Research Services and Isis Innovation

Clear internal demarcation of responsibility

Effective internal & external communications

Intellectual Property Policy - October 2000

University claims ownership of all employees’ and students’ IP rights resulting from University research activities

The university assists those researchers who wish to commercialise their research • by patenting, licences, spinout companies & consultancy

Researchers personally share the benefits • Royalty shares from licences

• Equity in spinout companies

• Income from personal consultancy

Isis Innovation

A company (established 1988) owned by the University

To help researchers commercialise their research results

Current Activities

Year to March 2014

Patenting 92

Licensing of intellectual property 105

Consulting and service contracts 398

Formation of new companies 8

Royalty Sharing on Licence Deals

>Isis Innovation pays all patent costs

>£3.1 (€3.8) million in the year to March 2014

>Isis recovers patent costs from royalties

>Isis retains 30% of royalties

>The net revenue is transferred to the University & distributed:

17.5% 21% 31.5% to £720k (€880k) 30%

0 10% 60% to £72k (€88k)

Department Funds

University General Fund

Researchers Personally

Total net revenue

Isis Innovation

30%

26.25% 28% 15.75% over £720k (€880k) 30%

Equity Sharing in Spinout Companies

Equity shared between:

• Academic(s) - Not only names on the patent

• University

• Investors

• Managers

Academic and University generally get similar amounts

Investors get what they negotiate for

Manager(s) share 5-15% depending

Note: Everyone on the list has an effective veto

So Tech Transferor’s task is to help them all agree

Academic Consultancy

Academics can consult for up to 30 days per year

The University must approve the contract

Isis Innovation provides an optional service to • Find opportunities

• Negotiate consultancy rates

• Manage the administration

If researchers choose to use it Isis charges 7½%

Results Year to March 2014

Isis Innovation has 90 staff

Received £3.1m (€3.8m) from University to spend on patents

Returned £6.8m (€8.3m) to the University

Created 8 spinout companies

Invested in 92 patent applications

Helped researchers win £19m (€23m) of translational funding

Growth for years ending March 2000 to 2014

Source: Isis Innovation Annual Report

TECH TRANSFER TACTICS

Isis Philosophy

Isis supports researchers who wish to transfer technology • It is vital that Isis helps researchers see that commercial engagement

can enhance their academic work

• by providing additional resources (both physical and intellectual)

The researcher’s interest is key to successful Tech Transfer

Tech transferor’s most critical asset is researcher confidence

Isis generates researcher enthusiasm by • Internal marketing

• University IP policy & rewards to researchers

• Recognition – Senior University staff are commercially active

And commercially active staff achieve senior positions!

• Employing high quality staff in TTO experienced in research and industry

Internal University Marketing

Set up a lighthouse to attract researchers

Tech transfer office spends a lot of time and effort on promotion directed inside the university • Mailshots, newsletters, magazine articles, www, lectures, handouts,

IP training, local radio, local TV, local newspapers, national media etc.

Tech transfer staff attend department seminars, college lunches, etc. • In other words they live in the same world as researchers

I believe the sociology of this is the most critical factor

Managing in a Company, “Managing” in a University

In a company the workers are employed by the manager • The worker’s role is to perform their part of the plan

• This is essential if the business plan is to be delivered

In a pop group the manager is employed by the performers • The manager’s function is to take care of everything so the performers

can perform

I believe the “management” of academic superstars will be much more effective if the second model is adopted • This message is particularly important to technology transferors!

• Be the “Researchers’ Friend” not the “IP Police”

Oxford Innovation Society – Attracting Business

Established in 1990 to foster University/business links

Since 1990 over 90 companies have joined

Companies pay an annual fee of £6,800 for membership

Membership Benefits

Ready access to the academics and University

Advance notification of all marketed patent applications

Invitations to thrice-yearly meetings and dinners

Customised research presentations and seminars

Regular newsletters and portfolios

Innovation Society - highly structured networking

Tea & coffee reception

Academic presentation

Sponsor presentation

Champagne reception

Dinner in College

After dinner drinks

Begbroke Science & Business Park

Spinout

Companies

Innovation Centres

Dept. of Materials

SPINOUT COMPANIES

An additional challenge

If we are talking about spinouts rather than consultancy or licensing there is a third axis

In addition to academia and industry there are investors

Investors are not the same as industrialists

The disparate parties involved in a spin-out

If it’s not working

get out

If it’s not working

fix it

If it’s not working find a workaround

Evaluate

Invest

Monitor

Coordinated plan

Coherent activity

Route is undefined at the start

Lots of concurrent activities

One company One major interest

Outsider Insider Insider

Investor Industrial Manager Academic

The third axis

Academic axis

€ ->Research

€ -> €€€

Investor axis

2 Dimensional Intermediary

3 Dimensional Intermediary

Spin-out

Research -> Products

Commercial axis

Licence

Different activities need different skills

Skills required Research Relationship

building Driving

management

Main reward Research results Technology

transfer Wealth

Main motivation Research activity Technology

transfer Carried interest

Protagonists Researchers Technology

transferors

Active

shareholders

Clean IPR Spinout

Company Growing

Company

Conclusions

Spinouts involve more than one value system

This is a challenge for managers and advisors

Significant benefits can be won by understanding this

Failing to understand it may prove fatal

CULTURE CHANGE

Culture Change

All three must proceed together but the University must lead the change because….

1. The ideas are in the University • If University provides TT resource, change will happen faster

Oxford University pre-Isis 1 spin-out every 4 years, post-Isis 4 per year

2. If the University doesn’t lead, the University may not receive its share of the benefits

Entrepreneurial culture of

researchers

University technology transfer

resource

Local professional environment

Executive (policies)

Other academics

Gene pool Commercially

active scientists

The University

Tech transfer

office

Students Brokers

Itinerant Managers Consultants

University is a “sub-culture” in a “barter economy”

Investors Lawyers

Head hunters

PR agent

Real estate

Leasing Banks

Accountants

Specialist suppliers

Other start-ups

Management of a University – or your relationship with one

1. Walk along with the elephant • In whichever direction it chooses to go • Until it gets used to you

2. Start to pull gently on your rubber band 3. If you pull too hard or too suddenly

• You will break your rubber band and • Have no further influence over the elephant

University

You

Like leading an elephant with a thin rubber band

But

The caption says “OK I’ve got him, now hit him with the rock”

Don’t think you will ever have complete control over academics!

Cartoon by Stoney, Ravette Publishing +44 1403 711443 Tony Lopez (Copyright)

Conclusions

Opportunities exist in Universities for: • Economic development

• Personal wealth creation

To realise these benefits needs competent intermediaries

We have begun to understand the process

Thank you

tim.cook12@btinternet.com

www.isis-innovation.com

www.brookes.ac.uk/research

Painting by Jeremy Sutton, San Francisco Airport, 2004