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Competitive Technologies Helps License MCG Neuro Small Molecules to Startup Percept

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Tech-transfer services firm Competitive Technologies said last week that it has brokered a licensing deal between client Medical College of Georgia Research Institute and startup Percept Biosciences related to small-molecule compounds for neuroprotection and cognitive enhancement in neurodegenerative disorders.
 
The compounds are one of six technologies owned in whole or in part by MCG that Competitive Technologies is shopping around as the school looks to bolster its limited marketing capabilities and increase its overall tech-transfer success, school officials said this week.
 
The deal was also a welcome win for Competitive Technologies, whose revenues have plummeted 70 percent over the past two years due to dwindling receipts from existing licensed technologies, the expiration of some patents covering licensed technologies, and fees related to various legal rows in which the company has been involved.
 
Under the agreement, Atlanta-based Percept Biosciences has obtained an exclusive worldwide license to a patented library of compounds that have demonstrated efficacy in established non-human primate models of cognition and attention for human health applications.
 
The small molecules, covered by US Patent No. 6,881,738, entitled “Analogs of choline for neuroprotection and cognitive enhancement in neurodegenerative disorders,” were primarily developed by Jerry Buccafusco, professor of pharmacology and director of MCG’s Alzheimer’s Research Center; MCG researcher Alvin Terry; and University of Georgia professor Warren Beach.
 
MCG and Competitive Technologies said they believe the technology can be developed into treatments for a wide variety of neurodegenerative disease, particularly Alzheimer’s disease; as well as comparatively mild cognitive impairment disorders, Parkinson’s disease, schizophrenia, and attention deficit hyperactivity disorder.
 
Percept, which last year spun out of ophthalmic product company Alimera Technologies, is in the very early stage and will use the MCG technologies to help build its portfolio of neurodegenerative disease drug candidates.
 
Officials from the company were unavailable for comment. However, in a statement, Daniel White, Percept’s president and CEO, said that the company “believes that the creation of this library of more than 50 compounds demonstrates progressiveness and further establishes scientifically recognized models of neuroprotection, cognition, and attention.
 
“Our team has the experience and background needed to bring this technology to market worldwide, fulfilling the substantial unmet medical need that currently exists,” White added.
 
Before the Competitive Technologies agreement, MCG tech-transfer arm MCGRI had completed an inter-institutional agreement with UGA that made MCGRI the lead institution on any licensing or commercialization activities related to the patent, Charles Nawrot, director of technology transfer at MCG, told BTW this week.
 
As such, Competitive Technologies, which is traded on the Amex exchange under the ticker symbol CTT, will pay MCGRI an undisclosed portion of the licensing fees and any future royalties obtained from Percept, which will in turn disburse the revenues to UGA and the individual inventors as determined by the IIA and MCGRI’s technology-commercialization policy.
 

“CTT does a pretty thorough job of evaluating and researching the technology. Once they’ve done that, we realize they’ve got some pretty good connections and contacts with companies, including some very large organizations.”

Specific financial details of the licensing deal have not been disclosed. However, according to Aris Despo, executive vice president of business development for CTT, his company does not charge clients for its marketing services upfront, electing instead to retain a portion of future profits once a technology is successfully licensed and commercialized.
 
“Our typical model is different from most of the other [tech-transfer services firms],” Despo said. “It’s based on success. We look at technologies with a little more criteria because we know that we’re investing our time and money to market a technology. We want to see it through, because we need to make money after a license is consummated.”
Despo added that the “major share” of all revenues is returned to the university, with CTT retaining a modest portion as payment for its services.
 
Nawrot told BTW that its relationship with CTT began about a year and a half ago when MCG realized that it had some technologies in house to which it was unable to devote appropriate marketing resources.
 
“We had some good technical resources at the time, and had some legal help,” Nawrot said. “But I think our marketing resources were on the weak side. You can only lean on people so much. There is one individual [at MCG] left [in technology marketing], and we’re going to try and beef that part of our organization up. But for the interim, CTT has kind of filled a gap for us.”
 
Avi Afzalpurkar, a technology-transfer associate at MCG responsible for the CTT-Percept deal, said that CTT offered some resources and services that are beyond the scope of many smaller tech-transfer offices.
 
“CTT does a pretty thorough job of evaluating and researching the technology,” Afzalpurkar said. “Once they’ve done that, we realize they’ve got some pretty good connections and contacts with companies, including some very large organizations. Depending upon where the technology might be a good fit, they try and pitch it to these companies.
 
“Another model that they sometimes adopt is to take the technology and bundle it with a few other similar technologies into a portfolio, which then becomes very attractive to some of these companies,” he added. “We are pretty pleased with how they have been taking some of our other technologies along the process.”
 
Nawrot said that the development of the seven-year-old tech-transfer office at MCG has paralleled growth in the school’s research funding.
 
“Until about six years ago, a lot of work here was collaborative work with UGA,” Nawrot said. “As our research unit grew, they put in a [tech-transfer] staff … to kind of bring this to a head at MCG, and it’s been on pretty steady growth in terms of invention disclosures and licensing ever since. We’re hoping that continues, and it kind of reflects the growth of our research budget.
 
“Of course, the last year or two, NIH [funding] has been kind of flat, but our invention disclosures still keep coming through,” Nawrot added.
 
According to the Association of University Technology Managers 2006 Licensing Activity Survey, MCGRI reported $74.7 million in research expenditures in 2006. It was able to translate this research into 11 licensing deals or options, 33 invention disclosures, two new patents, and approximately $223,000 in licensing income.
 
In comparison, the school reported $80 million in research expenditures in FY 2005, while logging 10 licensing deals or options, 79 invention disclosures, and $80,000 in licensing income, according to AUTM data.
 
Staying Competitive
 
The licensing deal with Percept was likely also sorely needed by CTT, which has seen a downturn in its business in recent years due to dwindling revenues from existing licensed technologies, expiring patents covering licensed technologies, and various legal fees.
According to its 2007 financial statement, CTT reported $4.2 million in revenues in FY 2007. By comparison, it recorded $5.2 million in 2006 and $14.2 million in 2005. Combined with a near doubling in expenses and taxes, the company’s net loss swelled to $8.9 million in FY 2007.
 
According to Despo, one of CTT’s most lucrative licensing deals in recent years was related to a homocysteine assay technology it marketed for clients Columbia University and the University of Colorado. That technology, which forms the basis of a diagnostic blood test used to determine homocysteine levels and a corresponding deficiency of folate or vitamin B12, has been licensed to multiple entities.
 
However, it has also been a double-edged sword for CTT because it has accounted for about 70 to 75 percent of the company’s total retained royalties each of the last three years, and CTT has been forced to burn cash on patent-infringement litigation against various entities related to the technology.
 
“We have a concentration of retained royalties derived from one technology,” the company stated in its FY 2007 financial report. “We are actively marketing our other technologies, and seeking new technologies to mitigate this concentration of revenues and provide a steadier future revenue stream.”
 
CTT is hoping that the portfolio of technologies it is licensing from MCG will help fulfill that goal. The company has not disclosed a list of specific technologies, but said in a statement that they include technologies such as green tea polyphenols for treating autoimmune disorders, a retinal drug-delivery system, and a transport system for endogenous opioid peptides for pain management. Despo said that CTT is in discussions with two undisclosed companies about licensing additional technologies from the MCG portfolio.
 
Despo also said that business has been challenging in recent years since universities have traditionally comprised the company’s main client roster, but the landscape of university tech-transfer has changed significantly.
 
“Many of the universities will keep the ‘A’ technologies,” Despo said. “Anything below that, they may have done some work with the ‘B’ and ‘C’ technologies, which is where we come in. We would love to get the ‘A’ technology, which we used to, but now that [universities] have their own technology offices, their model is, ‘Hey, why should we share?’”
 
Added Despo, “the only difference is that with the CTT model we have shown we can bring more value on the license than the universities usually can.”

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