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Recession's Effect on Institutes Noted in FY 2008 AUTM Survey

By Alex Philippidis

NEW YORK (GenomeWeb News) – The annual US licensing survey of the Association of University Technology Managers, released this week, showed several research institutes joining the consensus of university and hospital respondents in filing for more patents and disclosing more inventions during the year ending June 30, 2008.

However, it also showed that they also had started up fewer companies, won fewer patents, and signed fewer licensing and option agreements than they did before the recession.

Worse for the research institutes, license income for many of them fell in Fiscal Year 2008 even as most recorded overall cumulative adjusted gross income gains between the 2006 and 2008 fiscal years, compared with FY 2004-06, the results also showed.

According to the survey results, which were taken from 191 universities and research institutes that answered the survey, nearly all research centers raised their cumulative total research expenditures during FY 2008 compared with two years earlier.

A few institutions, though, reduced research spending during that period. The Salk Institute for Biological Studies, for example, spent $78.2 million in FY '08, down 1 percent from $79.3 million in FY '06. However, all of the institutions spent more on research between 2006 and 2008 than between 2004 and 2006.

Among all institutions surveyed, the number of patents issued fell 9 percent, from 3,622 in FY 2007 to 3,280 in FY 2008. Those patents protected the 648 new products introduced to the market in FY '08, also down 9 percent from 686 in FY '07. And the number of licenses and options signed dipped to 5,039 in FY 2008 from 5,109 in FY 2006.

Ashley Stevens, president-elect of AUTM, told GenomeWeb Daily News the patent dip seen in the survey reflected a decline in the approval rate of US patent applications by AUTM survey participants recorded by the association, from 3,622 patents approved in FY 2007, to 3,280 in FY 2008. Among factors for this decline, Stevens said was the prospect of a change in patent law, and the US Supreme Court's decision in KSR v. Teleflex, which eased the legal path to invalidating patents by broadening how the Federal Circuit can interpret "obviousness."

Patent approvals have yo-yoed since the decade-long high of 3,933 in FY 2003, the survey found.

AUTM's figures showed a drop in combined number of licenses and options signed by research centers and universities during FY 2008 — to 5,039, down 1 percent from 5,109 a year earlier. But while the number of executed licenses dropped about 5 percent, from 4,354 to 4,144, the number of options executed rose year to year by 30 percent, from 755 in FY 2007 to 988 in FY '08.

That reflects a shift by jittery startups toward options, which are generally cheaper and require less of their holders than licenses, according to Stevens.

"We've all been struggling with the economy, with the reluctance of venture capitalists to start new companies. When times are tough, when people are cutting their own research budgets, it's sort of difficult to get them to take on a new technology and make the significant commitment to develop it themselves," said Stevens, who also serves as special assistant to the vice president for research technology development and senior research associate at the Institute for Technology Entrepreneurship and Commercialization at Boston University's School of Management.

Sanford-Burnham and the Hutch

Despite the overall drop recorded by AUTM, the Burnham Institute for Medical Research — renamed the Sanford-Burnham Medical Research Institute last month following a $50 million donation by philanthropist T. Denny Sanford — executed 19 licenses and options in FY '08, up one from FY 2006. The institute's number of cumulative active licenses jumped from 69 to 94.

Sanford-Burnham spokesman Josh Baxt told GWDN the increased license/option activity reflected the start of now-ongoing commercialization efforts by the institute.

"As part of our ongoing efforts to expand business development, we began doing more outreach to corporations. For example, we created a better inventory of our reagent portfolio and marketed it more aggressively," Baxt said.

He cited the recent hiring of two executives as examples of the institute's commitment to accelerating its drug commercialization effort. Paul Laikind has joined Sanford-Burnham as senior vice president of business development and chief business officer, while Michael R. Jackson joined as vice president of drug discovery and development.

And the Conrad Prebys Center for Chemical Genomics — renamed last year following a $10 million donation by the San Diego real estate developer and philanthropist — "improves our chance of discovering intellectual property that could be commercialized," Baxt added.

According to AUTM, Burnham disclosed 41 inventions in FY '08, down from 45 in FY '06. Its number of cumulative invention disclosures between FY 2006-08 fell to 136 from 157 in FY 2004-06. Overall, all organizations responding to the survey disclosed 20,115 inventions in FY 2008, up from 19,827 in FY 2007 and 18,874 in FY 2006.

Burnham's number of new patents issued in FY '08 was halved to seven from 14 in FY '06, though its number of new patent applications doubled from 19 in FY '06 to 38 in FY '08.

"Doubling the new filings is a result of both growth of the institute and commitment by the institute to capture more of our discoveries as inventions. There was also regulatory change in patent law [which would limit certain types of filings] that caused us to file a large number of patent applications early," Baxt said.

Burnham's cumulative adjusted gross income between the 2006 and 2008 fiscal years fell about 10 percent, from almost $2.9 million to $2.5 million. The institute's license income dipped slightly, from $943,000 in FY '06 to $932,000 in FY '08.

"This is a cyclical environment: some agreements drop off and others come on," said Baxt. "Though 2007 was a down year, revenue came back up in 2008. A lot depends on the type of deals and what types of milestone payments are being made."

Among research centers joining Burnham in stepping up its license activity was the Wistar Institute, which went from 23 licenses and options executed in FY 2006 to 25 in FY '08. Cumulative active license numbers for Wistar rose to 115 in FY '08 from 104 two years earlier.

Research institutes recorded either the same or less startup formation in FY 2008, despite the overall rise in newly-launched companies formed by all survey participants, which rose to 595 from 555. The number of startups by all respondents crept up in FY 2008, to 3,388 from the previous year's 3,381.

Since most university fiscal years end June 30, and many teaching hospitals end theirs on Sept. 30, "I would say we're not seeing the full impact of the economic downturn in this period yet," said Stevens.

The Fred Hutchinson Cancer Research Center, for example, executed 19 licenses and options in FY 2008, compared with 31 two years earlier. However, the Hutch's number of cumulative active licenses increased 45 percent between FY 2006 and two years later, from 118 to 171.

Also seeing gains well into double digits at the Hutchinson center was the number of cumulative invention disclosures, which ballooned 36 percent from 105 in 2004-06 to 143 in 2006-2008. But the 40 inventions disclosed during FY 2008 by the Hutch were well below the 57 racked up in FY 2006.

The Hutch also bucked the trend of fewer patents issued, doubling that number from three in FY '06 to six two years later. The center applied for 19 patents in FY '08, three more than in FY '06.

License income at the Hutchinson center rose to more than $4.5 million in FY 2008, up from $3.4 million in FY 2006. Cumulative adjusted gross income from licenses rose from $7.5 million in 2004-06 to about $10.7 million in 2006-08.

A tech transfer executive was unavailable last week to discuss the results with GWDN.