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University of Utah Launches 23 Startups in FY '09, Cementing Rep as Spinout Leader

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By Ben Butkus

The University of Utah said last week that it spun out 23 companies in fiscal year 2009, including 10 in the biomedical arena, and has launched 82 companies over the past four years — more than any other US school during that period except the Massachusetts Institute of Technology and the University of California system.

The university credits its spinout success to a reorganization of its tech-transfer functions four years ago along with a concerted effort by university administrators to change the philosophy behind technology commercialization at the school, an official said this week.

The university announced its spinout metrics last week in advance of releasing the school's overall tech-transfer metrics for fiscal year 2009, which ended June 30.

A university spokesperson also shared other top-line statistics for the year with BTW in advance of their publication. These included 179 intellectual property disclosures from university faculty, staff, or students, down from 195 disclosures in 2008; and 64 executed licenses, amendments, and options, on par with the 63 disclosed by the university in the previous year.

The university also tracks a statistic it calls "new inventors" in an attempt to assess the growth of an entrepreneurial culture at the school. The university counted 44 new inventors in 2009, compared with 51 in the prior year.

All of these statistics and more will be included in a report to be issued by the university in coming weeks, the spokesperson said, but for now the school is hoping to draw attention to its startup companies, which it said is significant due to its economic impact in the Salt Lake City region.

"The fact that the university is performing so well in a down economy illustrates the strength of the model being developed at the University of Utah," Brian Cummings, assistant vice president in charge of the Technology Commercialization Office, said in a statement.

"The success is due to an alignment of the stakeholders that are so actively involved in the commercialization process," Cummings added.

New University of Utah spinouts for FY 2009 include:

• BlackRock, which provides tools for neuroscience, neural engineering, and neuroprosthetics research and clinical use.

• Branching Tree, which develops drug-delivery products using injectable thermogels.

• Integratech, which is attempting to commercialize a new screening system to develop new HIV drugs.

• JSK Therapeutics, which is developing novel anti-cancer drugs using an approved compound to inhibit the growth of cancer cells.

• Marrek, which is developing novel algorithms for post-ablation monitoring and tracking of lesions.

• Nanomedic, developing technology for diagnosing and treating age-related diseases such as Alzheimer's, osteoporosis, and cancer.

• RNA Biosciences, developing diagnostic and personalized health clinical tests to improve the care of patients with liver disease.

• Sera Prognostics, created to commercialize a joint invention with Brigham Young University to establish a diagnostic platform for preeclampsia and pre-term birth.

• TheraRenal, developing anti-obesity compounds using novel nitrated fatty acids.

• TheraTarget, which was created to commercialize polymer-delivery technologies coupled with cancer therapeutics.

The other 13 spinouts include companies in the cleantech, energy, engineering, agriculture, and consumer products spaces.

Jack Britton, vice president of technology venture development at the university, told BTW this week that the percentage of biomedical spinouts year to year tends to follow that of invention disclosures and licensing deals at the university, in the 60 percent range.

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The 23 companies spun out in 2009 are one less than the 2008 started by the university in the previous year. The school launched 18 companies in 2007 and 17 in 2006.

According to recent year-over-year data from the Association of University Licensing Managers, the University of Utah has spun out more companies than any other school participating in the AUTM licensing activity survey except for MIT and the UC system, which spend about four times and 16 times as much on research, respectively, as does the University of Utah.

Recipe for Success

The spike in startup success coincides with a 2005 reorganization of the university's technology commercialization functions into a single entity called the Office of Technology Venture Development, headed by Britton, who was formerly dean of the university's business school.

Britton told BTW that when he took over as VP of TVD, the university had spun out just a handful of companies the prior year.

"The university president [Michael Young] was getting a lot of grief in the community about the economic development contributions of the university, which he had made part of his platform when he took over in 2004," Britton said. "We had a traditional structure where we had a tech-transfer office that reported to the vice president of research. I kind of characterize it as the [tech-transfer office] being a little bit of an annoyance, and not really mission central."

Britton said that the TVD office, which now encompasses the Technology Commercialization Office, reset its operations to "totally align with the university mission, or what we called total mission integration."

This included steps such as establishing entrepreneurial and commercialization education programs for students; budgeting about $1 million per year for modest proof-of-concept grants for faculty and students with commercially promising technologies; and focusing its efforts on launching companies around those technologies.

"As students have gotten engaged, that has brought on quite a few faculty members, as well," Britton said. "And as more faculty members become engaged, that will bring along entire academic departments. And we persuaded the university that some small investments could go a long way. The principal investigators, if you fund them, are really the best people to advance the technologies."

Britton said that TVD also changed the focus of its employees from generating licensing revenue to a more integrative approach that provided TVD staff with the flexibility to find creative solutions to moving promising technologies out, such as negotiating future royalties and equity stakes in startup companies.

"A common mistake in tech transfer is that offices are judged mostly on patent revenues to recoup patent expenses," Britton said. "If they're focused on that, it's a game that they really can't win. We can make a mistake licensing something to someone but we can't license it back."

Now, licensing managers can participate in deals from soup to nuts, Britton said. "They don't personally participate, but they can be part of the solution to move the company forward. They used to hate what they do, and now they love what they do," he said.

The dividends were immediate, as the university spun out 17 companies in fiscal year 2006; followed by 18 in 2007 and 24 in 2008.

"And the funny thing is, when we changed the nature of our technology assessment, our licensing revenue went up anyway," Britton said. "By focusing on it, we were being defeated. But by being more holistic, it actually went up.

For the most part, the University of Utah startups have remained local and in business, further underscoring TVD's importance as an economic engine for the state. According to Britton, just five of the 82 spinouts have gone out of business and eight have moved out of the immediate area.

All told, seventy of the 83 companies are currently in the state of Utah, and have raised approximately $156 million in combined capital; garnered some two dozen Small Business Innovation Research grants; and boast a cumulative payroll of about $30 million.

Other circumstances have led to the spinout success. For instance, Britton said that the companies have been "very fortunate" in winning so many SBIR grant,; and are equally lucky that Utah "is in many ways a distant suburb of the [San Francisco] Bay Area, which has invested a lot of angel and seed money" in University of Utah spinouts.

Britton admitted that he is often asked what it is that the university does differently to spawn so many startups. "I don't really know. We're kind of learning it as we go. Part of this is that you're working for the university, and are they proud of what you're doing? And we have become a really proud point for the university."

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