Consider technology transfer programs at CWRU and you could get dizzy from contemplating the recent history of spinning wheels and revolving doors. Fortunately, similar to their students, universities can learn and grow. Case in point: President Edward Hundert, Provost James Wagner, and other key leaders have nurtured CWRU’s technology transfer program from a virtually nonexistent effort into an ambitious, aggressive endeavor. Overcoming a decade of earnest but unsuccessful attempts, the University is building a bustling bridge between academic research and entrepreneurial commerce in Northeast Ohio and beyond.
Technology transfer typically entails identifying research with commercial potential originating in CWRU’s labs and licensing it to companies. In other cases, that research is used to launch new commercial ventures. As the 2002 annual report of CWRU’s Technology Transfer Office points out, effective technology transfer programs furnish a vital enhancement to the “University’s research mission by engaging industry in [CWRU’s] research in a meaningful way, and also by serving as another tool for the University to recruit top research talent.” These industry partnerships also create internship and co-op opportunities for students, as well as translating research results into products that help society. The University can also reap financial benefits from licensing its technologies–money typically reinvested to fund further research endeavors.
Image is Everything
If success breeds success, then Interventional Imaging, Inc., should spawn a whole host of technology transfer victories. Also known as “I-cubed,” the recently incorporated venture has developed technology that will permit minimally invasive discovery and monitoring of fat deposits–also termed vulnerable or unstable plaque, which forms in the blood vessels–that can rupture suddenly and cause heart attacks or strokes.
The brainchild of Jonathan Lewin and Jeffrey Duerk, both professors of radiology at CWRU, this device won the University’s first Case-Weatherhead Business Launch Competition, biosciences division, in December 2002. The new device is a tiny catheter that can be attached to a magnetic resonance imaging machine, then inserted into the blood vessels to search for plaque, using MRI technology to detect any fat deposits within the vessels or the arterial walls of the heart. The two scientists will use the prize of $40,000 to help launch the company. Because Drs. Lewin and Duerk (GRS ’87, biomedical engineering) have extensive experience developing other medical technology, they fully intended to commercialize this new device from the moment they began developing it three years ago.
“We have about five patents in process, plus another thirty invention disclosures, so we’ve worked with the Technology Transfer Office for many years,” Dr. Lewin says. “But the new group has put in a tremendous effort in helping us develop this technology and move this company forward.”
Dr. Duerk adds that the tech transfer office has also aggressively pursued opportunities for sponsored research agreements or strategic investments from companies interested in the technology. “They have taken a critical look at the best ways for us as investigators to get this technology into the marketplace and make it useful,” he says. “They also assisted us with assessing whether there was a viable product to be made, and helped us get some state funding to hire people to do the assessment.”
The two co-founders of I-cubed are now in the process of recruiting a management team and acquiring venture capital. Dr. Duerk says they hope to capitalize on their sponsored research agreement with Siemens Medical Systems, which shares in the patenting process costs for their various medical device innovations.
“We’re very excited,” Dr. Duerk concludes, “because the potential market for this imaging technology is huge.”
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CWRU had struggled, however, to generate technology transfer opportunities, despite its considerable research capabilities. Part of the problem was a lack of a sustained effort to promote this function. Between 1996 and 2001, three different people held the position overseeing technology transfer. While their reasons for leaving were varied, their common challenge was a lack of resources.
“It’s very difficult to get any traction in technology transfer, unless you have several years [at the institution] under your belt, working with the same people, sometimes even working on the same deals,” explains Casey Porto, who joined CWRU in February 2002 as associate vice-president for technology transfer. “So no matter how good someone is, if they’re not there for a long time, they never get that traction, which is what the records at the University reflected.”
In 2000, James Wagner–who, as dean of the
Case School of Engineering, had established tech transfer as one of his priorities–was named the University’s provost. (Provost Wagner also served as interim president, from April 2001 until August 2002, when he was appointed provost and University vice-president in President Hundert’s administration.) Provost Wagner’s experience enabled the University to adopt a different approach to finding a new vice-president for research and technology management. This time, the institution would move away from the traditional preference for an academician or technician and seek a business-oriented tech transfer professional.
Provost Wagner also sent representatives to talk with high-profile tech transfer offices–at Massachusetts Institute of Technology and Stanford, Carnegie Mellon, and Columbia Universities–to learn how they operated their programs. The predominant approach incorporated a consolidated research and technology operation under the leadership of a business-oriented individual.
More important, this approach included removing another stumbling block to recruiting the ideal person: the lack of resources. Previously, several strong candidates had lost interest when they realized that coming to CWRU would not open up a long, successful career path to them. Another exceptional candidate in an earlier search, Mark Coticchia, who was being wooed by an executive recruiter, felt the same way. He thought highly of CWRU. He even offered to provide advice. But after having established the tech transfer office at Carnegie Mellon (where he helped launch the Internet company Lycos), between 1992 and 2000, and then moving into the venture capital industry, he didn’t want to be set up to fail by joining an underfunded, understaffed department.
Once Provost Wagner and the trustees addressed his objections, however, and he had a chance to visit the campus and tour Cleveland, Mr. Coticchia accepted the job, arriving at CWRU in October 2001.
Support Structure
“The most successful programs have the support of the trustees and the senior administration, or else they don’t work,” Mr. Coticchia says. “That’s one of several reasons why I decided to come to CWRU, because tech transfer finally had that kind of high-level visibility and support to make it happen.”
If the trustees and the University’s other commercialization proponents weren’t excited enough about the new era in tech transfer, things got even more exciting when Edward Hundert took over as president in August 2002.
A greater, higher-profile supporter of these efforts would be difficult to find. “This whole issue of technology transfer–turning the human capital represented by the talent and energy of our faculty into new and growing companies–is obviously another major area of focus for all research universities,” he says. “Case Western Reserve has made a major commitment in this area that is already starting to pay off, with new invention disclosures by faculty up by thirty percent in 2002 and income from commercialization up by fifty percent–with the University plowing all of its revenue from this source back into seed funds for further new opportunities.”
Mr. Coticchia and his new team have generated results through their reinvigoration of the University’s tech transfer functions. His first step was to consolidate three separate functions, at the engineering school, the medical school, and University Technology Inc. (a CWRU subsidiary), into one office.
Next, he hired Casey Porto, with whom he had built the program at Carnegie Mellon, to run the daily operations. Ms. Porto assumed responsibility for hiring the rest of the team, which currently consists of three professionals in life sciences and one in physical sciences; ending the use of consultants, hired as a temporary measure to keep the office running; assembling a budget for the office along with new polices and practices; and installing a new database. The office, she says, is moving toward a complement of five life sciences managers and two physical science managers—a ratio reflective of the research mix at CWRU.
Her two primary goals were to stabilize the department and get its immense caseload under control, as well as establish its credibility with researchers. “When I got here, there were more than five hundred cases in the database, and they were mostly marked ‘open,’ which they should not have been,” Ms. Porto reveals. “We’re still going through and weeding out the ones that should be closed. So at any one time, each staff member is working on several brand new cases, several where they are talking to licensees about doing a license deal, one potential new company, and another twenty or thirty that they’re trying to close out.”
Step by Step
The technology transfer process operates in several phases. First is the evaluation phase, during which the staff of the Technology Transfer Office strives to make a “pursue-not pursue” decision within 120 days of receiving an invention disclosure from a University researcher. This decision determines whether the office will try to license it to a company or assist with the formation of a new company. “We can only focus our energies on the ideas that have the biggest potential in the marketplace,” says Casey Porto, associate vice-president for technology transfer. “So something might be a wonderful idea, very protectable, with a well-defined market, but if it is a small market, it would fall from our list.”
Should the office decide not to pursue an invention, Ms. Porto explains, they offer to release it to the inventor, if they are permitted to do so as dictated by the funding requirements of the original research. For inventors who do want the invention released to them, the office helps them through the steps required by the federal government, if there was any government funding, to perform the release, and inventors are then free to pursue commercialization on their own.
Second is the licensing stage. During this stage, tech transfer staff obtain patents to protect those inventions or intellectual property that receive a “pursue” designation. They also attempt to find licensees for the invention. According to Ms. Porto, that phase can take several years to complete, especially if the invention is ahead of the marketplace. “You recognize that it’s leading edge, but the market has not yet developed,” she says. “So you protect it, and sometimes you have to wait several years for the market to develop. It would help to have a crystal ball.”
The best source of information to make this determination, Ms. Porto adds, is the inventors themselves, who as researchers work on ideas or projects that are several years ahead of market readiness–otherwise, it wouldn’t be research. “We don’t ‘know,’ but we are making an educated guess,” says Ms. Porto. “We usually err on the side of caution, and protect [i.e., invest in] more inventions than will ever make it to market.”
The third phase entails maintaining any licensing agreements that have been executed. The office collects money from licensees and makes sure they comply with their contracts. The tech transfer office then distributes the royalty money, with half going to the inventors and half to the University, which typically reinvests it back into research and technology transfer functions.
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In December, the new Technology Transfer Office proved its effectiveness when it rescued an existing license that had been languishing in obscurity for several years and converted it into a profitable deal. Developed in the late ’90s by four Case Western Reserve researchers–primarily two
physics professors, Charles Rosenblatt and Rolfe Petschek–the invention was an enhancement to liquid crystal display technology that had been created in conjunction with, then licensed to, a leading US research-and-development organization.
Because of difficulties in the product’s market, the company had not done much with the license, according to Nick Frollini, director of engineering and physical sciences for the office. “No one thought we would see any revenue from that license again,” he says. “But when the company approached us about it, we were able to negotiate a revised licensing deal in less than thirty days, which brought in a significant, one-time cash payment to the University. We’ve also developed a solid, ongoing relationship with the company on some other jointly owned inventions.”
This example illustrates Mr. Coticchia’s preferred approach to tech transfer, which he says differs from that of most universities. While they might typically stress intellectual property protection or technical merit, he emphasizes identifying market potential and taking advantage of great business opportunities to get research commercialized.
“We look at all of the research results, then select and concentrate on winners,” he says. “Our people take a very proactive approach to new product development and new company formation to make things happen.”
One of Mr. Coticchia’s counterparts, Louis Berneman, managing director of the Center for Technology Transfer at the University of Pennsylvania, believes CWRU hired the right person with the right philosophy. “Mark represents the new wave of technology transfer professionals,” he says. “Rather than administrators, these people have a background in law, technology, or business, but they are essentially business development people who know how to grow opportunities, and he’s hired people who come from that same ilk.”
Business to Business
Mr. Coticchia is proud of what his team has achieved by applying good business discipline, procedures, and policies to the operation. “We’re running tech transfer like a business, where we look at it like a profit-and-loss operation,” he explains. “I’m confident that, three years from now, we’ll be break-even in terms of the University’s investment–and maybe even better than that.”
Ms. Porto explains that the University has made a long-term commitment to fund the office until is it able to pay for itself. For now, CWRU underwrites all operational costs. University policy allows the office to retain twenty-five percent of its net income. “This means that we must generate approximately four times the revenue that it costs to run the office before we will break even,” she says.
According to Mr. Coticchia, the tech transfer office has eleven licensing deals in the pipeline and three potential startups. One of those startups, Interventional Imaging, Inc., won the University’s first Case-Weatherhead Business Launch Competition, biosciences division, in December 2002. (See “Image Is Everything.”) The plan for tech transfer, he says, is to execute between ten and twenty license agreements per year and launch anywhere from two to four startups per year, using the
Case Technology Ventures (CTV) fund. Mr. Coticchia’s office led the creation of this fund to provide an internal source of capital for pre-seed-stage companies based on University intellectual property, which will help take them to the point where they can receive first-round financing outside CWRU.
What It Means
Case: When a CWRU faculty member or researcher submits an invention disclosure to the Technology Transfer Office, it becomes an individual case that first is evaluated and then receives either “pursue” or “not pursue” status.
Intellectual property: Essentially, any product of the human intellect that is new, unique, and has some value in the marketplace and might be legally protected by patents, copyrights, or trademarks. This category includes inventions, chemical formulas, business methods, industrial processes, computer program processes, unique names, coined expressions, and literary creations.
Invention disclosure: When a University faculty or staff member creates a new invention, he or she notifies the Technology Transfer Office via a disclosure form. The office then assigns one of its professionals to make a decision on whether to pursue this invention for licensing or start-up opportunities.
License agreement: The contract between the University and the company that wants to use the intellectual property or invention.
Licensee: The company that obtains the right to make, use, have made, or sell the intellectual property or invention that was created at CWRU.
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Approximately $250 million worth of federal, state, and foundation research grant monies flow into CWRU annually. Optimally, Mr. Coticchia says, for every $100 million of research, a robust technology transfer office can expect fifty invention disclosures, five license agreements, and one spinoff company per year. While he thinks his team can achieve and eventually improve upon that ratio, he knows people in the University and region need to keep realistic expectations and give his office the time necessary to build an effective, ongoing department. In tech transfer, he adds, it usually takes between three and five years to start to achieve success. He measures success by the number of deals in which products go to market or companies get funded, as well as when money comes back to the University in the form of royalties.
Success will depend heavily on the office’s ability to build on the University’s core research strengths by putting additional efforts into cultivating several major science initiatives. They include fuel cells, microelectromechanical systems (MEMS), biomedical imaging technology, advanced materials, cancer genomic research, neuroscience, and molecular biology.
On the fuel cell side, one of the University’s first successful deals occurred when it licensed a membrane–a key component of fuel cells–to three global companies. Robert Savinell, dean of the Case School of Engineering, and Morton Litt, professor of macromolecular science and engineering, developed this unique membrane. All three of the companies are working to apply the new membrane in their bids to bring this advanced power system–which holds the promise of powering everything from our houses to our cars to our videocameras–to the marketplace. Additionally, the University, which will receive royalties from these licenses, recently announced the founding of the Case Advanced Power Institute (CAPI), which is already achieving recognition as a world leader in pioneering these technologies.
During 2002, the Technology Transfer Office licensed CWRU’s renowned Statistical Analysis for Genetic Epidemiology (SAGE) software. This innovative software package contains a suite of programs for use in genetic analysis of family and pedigree data that help researchers understand the links between family history and genetics. It was developed in the lab of Robert Elston, a professor of epidemiology and biostatistics, within the NIH-funded Human Genetic Analysis Resource project. Over the past decade, hundreds of researchers have used the software. Statistical Solutions, an Ireland-based software company and emerging leader in advanced statistical analysis programs, has licensed the software for exclusive distribution. CWRU signed a multiyear agreement with the firm that will increase the global distribution and use of this powerful software tool.
Perhaps the most important license ever to come out of CWRU, according to Ms. Porto, is an invention that bears an obscure-sounding moniker: Bovine Growth Hormone (BGH) polyadenylation (PolyA) signal. In the 1980s, CWRU researchers Fritz Rottman, Rick Woychik, and Edward Goodwin, in conjunction with researchers from a major pharmaceutical company, discovered this hormone signal. The signal is sometimes called an amplifier, because it increases the amount of a desired product, such as a protein, that is made by a genetically modified cell. Believing it to be insignificant, the researchers decided not to patent it. Fortunately, the pharmaceutical company did patent BGH PolyA signal; it later generously transferred the patent back to CWRU.
During the mid-’90s, CWRU licensed the technology to a biotechnology company, which used it in creating one of the most widely used drugs for the successful treatment of non-Hodgkin’s lymphoma. Sales of the drug total more than $1 billion annually. As in all cases, the University receives the royalties and distributes half the income to the inventors. In addition to its remarkable impact on the lives of people with cancer, this invention represents a significant financial contributor to the formation of CWRU’s new technology transfer operations.
A Well-Oiled Machine
On the research side of his operation, Mr. Coticchia says his goals include raising the tallies on his “big science scorecard,” which tracks the research dollars coming into CWRU. Doing so, he says, involves a more long-term process. Taking a region-wide perspective, he believes that roughly five to ten years are required before a billion dollars worth of research is happening at CWRU and its fellow institutions. Getting there will necessitate recruiting some “star researchers,” he says, who lean toward commercialization. The life cycle of inventing, developing, and commercializing bioscience products and processes is protracted, because of all of the approvals involved, so it takes longer for those to hit the market than, say, information technology-related research.
“One of the things that we can do to significantly contribute to regional economic development is increase our research base,” Mr. Coticchia says. “That’s not just CWRU, but the Cleveland Clinic, University Hospitals, NASA Glenn Research Center, and so on. Because more research means more research results that can be commercialized, which means more researchers are working on interesting things that could potentially create commercial opportunities.”
Mr. Coticchia has already been instrumental in establishing collaborative partnerships with other research and educational institutions. He’s been intricately involved in President Hundert’s plan to polish the Holy Grail of North Coast research synergies by formally connecting the “Big Three”: CWRU, University Hospitals of Cleveland, and the Cleveland Clinic Foundation. He helped hammer out the intellectual property agreement between CWRU and UH. And he has helped develop close ties with the Clinic. The two tech transfer offices meet for lunch brainstorming sessions, and Mr. Coticchia and Ms. Porto confer with Christopher Coburn, the Clinic’s top tech transfer administrator, on common commercialization issues. “I expect to see CWRU rise through the ranks of universities in the licensing and spin off of companies based on their technology,” says Mr. Coburn. “There’s no reason that CWRU can’t be a national leader.”
Despite many early advances, however, several challenges remain, starting with continuing efforts to acquaint faculty with the services the tech transfer office offers, as well as gradually building trust and open communications. “Over the years, a lot of the faculty had become disenfranchised, because when things don’t happen, you either do it on your own or give up,” observes Eric Cottington, associate vice-president for research. “So Casey’s had to overcome that perception, as well.”
While his goal is to build a world-class organization that cranks out licensing and new company formation opportunities, Mr. Coticchia knows his team’s efforts will be only as successful as the regional infrastructure’s ability to absorb and grow these innovations. “We need to educate the business community–as well as financing and professional services organizations–as to how to engage us,” he says. “We’re giving the push, but they need to pull these ideas into the commercial arena.”
A top priority is increasing early-stage venture capital available for startups and creating more fertile ground for entrepreneurs so that they stay in the region. James Ireland, managing director of
Early Stage Partners, in Cleveland, which provides venture financing to young companies, agrees that the region needs to increase access to venture capital, and he is excited about the University’s augmented tech transfer and commercialization efforts. “We are hopeful that, over time, CWRU will spin off a number of interesting companies that could potentially be funded in part by us,” he says.
Mr. Coticchia has also formed partnerships with key economic development-oriented organizations, such as
BioEnterprise Corp., which can furnish another critical need: business management talent necessary to drive a new opportunity forward. BioEnterprise works alongside the CWRU tech transfer team to support their spin-off companies. “We will help shape business plans, establish first management teams, provide space, and help secure financing,” says Matt Jennings, president of BioEnterprise, an organization that assists biomedical and biotech companies spun off from Cleveland’s major research institutions. Partially funded by CWRU, one of its founding partners, BioEnterprise operates an incubator facility in CWRU’s University West Building. “In addition to helping with needed financing, we also assist with physical infrastructure to keep operating cost down,” Mr. Jennings continues. “We look forward to helping CWRU spin off more companies in the near future.”
Still another priority for Mr. Coticchia is expansion of his office’s visibility and development of new relationships with regional industry. During April, in an effort to mitigate years of poor communications with industry, Eric Cottington led the first-ever Research ShowCASE, a one-day event highlighting all of CWRU’s technologies. It was open to local industries and the public. “Nearly ninety percent of our support comes from federal, state, and other sources, and less than ten percent comes from industry sources,” Dr. Cottington explains. “One of the goals of Research ShowCASE is to establish stronger ties with industry, so that we can increase our industrial sponsorship.”
Ultimately, Mr. Coticchia predicts a lot of heavy lifting before his team will start to achieve significant results. But he foresees the day when CWRU and Northeast Ohio will be better positioned to take advantage of opportunities to make the region a flourishing center of research, technology transfer, and commercialization.
“We need to have successes, celebrate those successes, and make sure we communicate those successes. Then we’ll start to attract some talent and capital and so forth,” Mr. Coticchia concludes. “There’s just a natural evolution that takes place, so you need to have patience, and we need to have everyone’s support and encouragement.”
A key figure behind the rise of the new technology transfer team, Joseph Keithley, agrees. A CWRU board member since 1992, Mr. Keithley is chairman, president, and CEO of Keithley Instruments in Solon, Ohio. “Do we have a long way to go? Oh, yes, maybe twenty-five years before we get payoff on this initiative. We need to be patient,” says the man whom both Mr. Coticchia and Provost Wagner credit with pushing for more effective technology transfer at CWRU. He sees a much shorter timeline–two to three years–for the University to hit peak effectiveness in managing tech transfer. Invoking an engineering metaphor, he says, “Then the whole University will be a flywheel zone associated with commercializing technology, with the region benefiting from it.”
For more info on the Technology Transfer Office, visit techtransfer.cwru.edu on the Web.
Christopher Johnston is a Cleveland-area writer who writes often about business. His last story for CWRU Magazine was “The Best Possible World,” in the summer 2002 issue.