Licenses worth a billion

Demonstrating the economic power of academic research, particularly in the life sciences, US and Canadian universities, teaching hospitals, and research institutions generated nearly $1.1 billion in royalties and fees from discoveries licensed to commercial companies in FY 2001. US universities alone took in more than $827 million from 7,715 licenses. They also received 3,179 new patents and spun-off 402 companies, according to the latest survey from the Association of University Technology Managers (AUTM).Columbia University led the pack at $129.9 million, with the vast majority coming from pharmaceutical patents. Indeed, most of the $511 million amassed by the top-10 grossing US universities was derived from life sciences-related discoveries. Across the board, the 143 US universities responding to the survey averaged $5.8 million each in licensing revenue. The University of Sherbrooke was Canada's top-grossing institution, with nearly US$10.6 million in royalties. McGill University and its hospital and research centers took in US $6.4 million followed by the University of British Columbia at US$5.5 million.European universities, which have only recently started to license their discoveries to businesses, lag far behind in revenues. The University of Cambridge, which has one of the most developed tech transfer departments, made only $2.7 million in royalties last year.Overall licensing revenue in the US and Canada fell in 2001 due to an unusual situation the previous year. In FY 2000 total revenue was $1.26 billion, with the nine-campus University of California (UC) system in first place, reporting revenues of $251.5 million. But $200 million of that was a one-time payment from Genentech to settle a longstanding patent infringement lawsuit brought by the university over genetically-engineered human growth hormone. In the new survey, UC dropped to third place with $66.7 million in revenues, following Columbia and Massachusetts Institute of Technology (MIT). Winnings from major lawsuits "don't come very often and they're pretty painful," said Alan Bennett, executive director of UC's Office of Research Administration. The absence of UC's $200 million settlement dropped the top-10 schools' average revenue by $20 million, from $71 million in FY 2000 to $51.1 million in FY 2001. About three-fourths of UC's royalties are from life-sciences and medical devices, Bennett said. The single largest license is for a Hepatitis B vaccine ($24 million) followed by a medical device to treat inter-cranial aneurysms ($6 million). This device, called the Guglielmi Detachable Coil, was developed at UCLA and licensed to Boston Scientific/Target. It is in use at more than 1,000 facilities worldwide and more than 85,000 patients have received the treatment.MIT, with $74 million in revenue, was in second-place "somewhat anomalously," said Technology Licensing Office Director Lita Nelson. Some $40-50 million of the total was obtained from the initial public offerings (IPOs) of two MIT spin-off companies: Praecis Pharmaceuticals, a biotech company developing therapies for prostate cancer and Alzheimer's disease, and Akamai Technologies, an Internet services company. "It was in the era of irrational exuberance, at a time when IPO valuations were very high," Nelson said.John Fraser, director of technology transfer at Florida State University (FSU), said his school's fourth-place standing at $62.1 million was almost entirely due to royalties from Bristol-Myers Squibb for exclusive use of a patented process to manufacture the anticancer drug Taxol. "For us this is a major blockbuster. It's just enormous," Fraser said. "It swamps anything else we've done."Fifth-place Stanford University generated $38.8 million in royalties, with about 47% of the proceeds coming from School of Medicine discoveries, said Katharine Ku, director of the Office of Technology Licensing. Royalties from the seminal Cohen-Boyer patents (named after Stanford biologist Stanley N. Cohen and UC biologist Herbert W. Boyer, they broadly covered the basics of recombinant DNA technology) have been dropping for the two schools after the patents expired in 1997. Loss of Cohen-Boyer represents a drop of about $12 million annually to each school.Technology licensing from federally-funded university research is encouraged under the Bayh-Dole Act of 1980, which allowed universities and non-profit research institutes to retain title to innovations developed with federal funds. For most universities, the primary objective is not to make money but to transfer research results into practical products. If a university tech transfer office breaks even with expenses, it is considered to be doing well.From this perspective, IPOs, mega-million dollar lawsuit settlements, and blockbuster drug patents are anomalies. Licensing "is not primarily a financial game," MIT's Nelson said. "We're in it to get the technology developed and to make a little money on the side."

Licenses worth a billion

Survey finds life science patents raking in hefty profits for some academic institutions

May 26, 2003

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