ORLANDO — A three-year-old approach to technology transfer at the Mayo Clinic has boosted the number of faculty invention disclosures, increased the chances of spinout company survival, and necessitated the hiring of additional tech-transfer personnel, according to clinic officials.
However, despite anecdotal evidence that the strategy is working, it is too early to tell if the strategy will provide a financial return, officials from the clinic’s Office of Intellectual Property said at the Licensing Executives Society annual meeting, held here this week.
In a workshop session at the meeting, Tim Argo, technology licensing manager, and Andrew Danielsen, technology development manager in the Mayo OIP, shared with attendees some details of Mayo’s recently augmented tech-transfer efforts.
In an effort to “add value” to its physicians’ biomedical innovations to make them more attractive targets for commercial development, the Mayo Clinic OIP three years ago established several business-development initiatives, including a more proactive effort to interact with Mayo physicians; internal loan and grant programs to support early-stage technology development; vetting inventions through small groups of dedicated entrepreneurial faculty members; and outsourcing development work to local and regional contract research groups.
The Mayo Clinic’s decision to revamp its tech-transfer efforts was not necessarily a result of shortcomings in the program, which has been in existence since 1986, Argo told BTW. In fact, according to OIP officials, over the past 10 years, on average 49 percent of its inventions have been commercialized, according to data provided to the OIP. By most metrics that is a relatively high rate for any academic or non-profit research institute.
If there has been one shortcoming of Mayo’s tech-transfer program, it is that it has never developed a “homerun” technology that could drive massive royalty returns. “We are still looking for that big hit,” Argo said.
Like many universities and research institutes, the clinic, which is the first and largest integrated, non-profit group medical practice in the world, wanted to implement a strategy that would at once increase the amount of innovations from its physicians and sharpen its focus on its strongest areas of expertise, which include cardiology, gastroenterology, and imaging.
Argo said that “in the good old days” of tech transfer at the clinic, the process would adhere to a traditional paradigm: filing an invention disclosure, having a licensing manager suggest the commercial potential of that disclosure, filing patents, searching for a partner, licensing, and then repeating the process.
“We knew that there had to be an easier way,” Argo said. “We knew that we had specialties that had been very strong for us. And we saw that one group in particular, [gastroenterology], wasn’t producing as many disclosures as we would have liked.”
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“We are still looking for that big hit.” |
So in 2005, the OIP put in place several aspects of what it considered to be way to make “a greater commitment to practicing innovation” and to increase the value of its technologies. The first step in this process was hiring Danielsen as a “patent liaison.”
Modeled after a similar technology-licensing position that had worked well for nearby pharmaceutical company 3M, the liaison was to have a strong technical and scientific background, would interact heavily with Mayo physicians, and would perform patentability and freedom-to-operate searches. The liaison also worked closely with Argo, the licensing manager, and with internal counsel, but would generally remain at arm’s length from the legal and financial duties of those employees.
This initiative alone caused a significant spike in invention disclosures to the office, Argo and Danielsen said, so the next step was to increase the focus on specific areas of expertise within the clinic. To that end, Danielsen’s role morphed into another new position: a technology-development officer that would work very closely with entrepreneurial Mayo physicians to brainstorm invention ideas, help vet technologies, and take a very active role in further developing them to a licensable stage.
“This helps make patents more robust by fostering heavy interaction with the inventor-physician,” Argo said. “Who better than the inventors” to add to the value of an existing technology by helping further develop it, he added.
Realizing that Mayo, like most research institutes, tended to adhere to what Argo calls the “80-20 rule” — that is, 20 percent of the faculty are responsible for 80 percent of the innovation at an institution — the OIP identified small, select groups of entrepreneurial physicians in certain target areas to work closely with Danielsen in the technology-vetting process. The university has thus far identified and worked with such individuals primarily in the areas of cardiology and gastroenterology.
According to Danielsen, the voluntary involvement of these physician-entrepreneurs is a main driver of the Mayo’s strategy: “they really need to be on board,” he said. “You can’t make a physician do animal proof-of-concept work for a technology if they don’t want to.”
The next step was to put financial mechanisms in place to help the OIP and faculty entrepreneurs help move their technologies to a more licensable state which, in the case of medical devices, usually involved building prototypes; or, in the case of pharmaceuticals or biomarkers, involves completing pre-clinical animal testing and often time initiating Phase I clinical trials.
To that end, the Mayo also in 2005 put in place two commercialization-financing programs: the “innovation loan program” and the “discovery translation fund.”
The ILP is funded with 5 percent of overall royalty income Mayo receives from out-licensed technologies, and doles out interest-free loans to provide seed funding to promising technologies. The clinic intends to recover the loan through future royalties, assuming the technology goes on to be commercialized. The loans are capped at $200,000.
The DTF, which was started using $8 million of a $15 million philanthropic gift to the clinic in 2005, offers loan amounts — between $300,000 and $500,000 — to move it to or through the clinical trial stage, but it also has more stringent requirements, and is intended for technologies on the brink of commercialization.
These awards are made twice a year to applicants whose technologies are reviewed by a group of about 20 physicians and OIP staff members, with the ultimate decision made by the Mayo Clinic president and chief financial officer, Danielsen said.
According to Danielsen, this award program now receives around 70 or so applications each round, which are whittled down to just a few in each cycle. To date, Mayo has made 25 awards — some to support the same technology — which has resulted in eight startup companies, a success rate that Danielsen said most VCs would consider good.
The last piece of the puzzle has been for the OIP to tap into regional networks of pharmaceutical researchers and engineers to whom to outsource the work needed to move innovations down the development pipeline.
According to Argo and Danielsen, there are pockets of individuals with the appropriate expertise both in the Midwest near Mayo’s main Rochester, Minn., campus; and near its satellite Scottsdale, Ariz., location. These scientists often times are former employees of larger pharmaceutical or engineering firms in the region, and can be hired for a much lower rate than large CROs.
Now that all the pieces of its new strategy have had a chance to gel, Mayo and the OIP will wait to see if it will pay dividends. Argo and Danielsen said that the new approach has already bred a tangible culture of entrepreneurship that may not have been present previously at the clinic.
In addition, they presented several case studies to the LES audience that they said exemplify the early success of the program. For instance, the group of cardiology physician-entrepreneurs, along with Danielsen, invented and developed a device that could make occluding an atrial appendage much easier than current techniques.
In order to complete a prototype and proof-of-concept studies for the device, the group secured both an ILP and DTF award for undisclosed amounts, and tapped into a couple of groups of local engineers for prototype development. The device has now been licensed and is being developed by a company called Aegis Medical Innovations in Vancouver, BC, and is in safety studies with first clinical studies planned for early 2009, Danielsen said.
Similarly, the OIP has moved an anti-cancer biologic to Phase I clinical trials with the help of three separate DTF awards and a group of researchers in Arizona that had been laid off by a large pharmaceutical corporation; and, with the help of an ILP loan, is currently preparing a 300-patient clinical study for a urine biomarker for preeclampsia.
But the clinic is investing large sums of money in technologies that may or may not provide a financial return to the school.
When asked by an audience member what percentage of the ILP loans typically get paid back to Mayo through recovery of royalties, Danielsen admitted that the OIP doesn’t yet know because it is too early in the process and nothing evolving from the new strategy has reached market. “We do expect a somewhat high failure rate, like a VC,” he said.
In fact, the clinic has yet to see revenues from any of the technologies that were vetted through the new process. “We’re not sure yet,” Danielsen said. “We’ve only been doing it for three years. We are currently gauging success by whether we have progressed a technology to the company stage. Whether or not we get profits, we’ll see.”
But Argo said he likes the OIP’s chances, telling BTW that the companies that have thus far started up around some of the technologies backed by the new program have a greater chance for success than they would have without the help.
As an example, he cited a cardiac-pacing device invented by one of Mayo’s physicians. “We talked with a couple of companies about it who told us, ‘It’s a nice idea, but we don’t even know if this will work,’” Argo said. “But we were able to build a prototype, prove that it worked, and found out that it had other utilities” besides its original intended purpose. That technology will likely form the basis of a startup company by next year, Argo said.