Tech commercialization at AZ universities: Bridges from bench to bedside

March 17, 2004

By hammersmith

Tradition has dictated that the ivory tower is a place for intellectual stimulation and development, separate from the corporate world where the market rules. The two worlds have been kept separate by the philosophical, political, and economic complexities inherent in any attempt to bring them together.

But all that is changing. Arizona policymakers, university leaders, and researchers have begun to see the opportunities presented by uniting the ivory tower with the corporate skyscraper. That unity comes through technology commercialization.

Technology commercialization, a.k.a. tech transfer, is the process of moving research from the lab to the marketplace. The result is high-tech businesses that generate revenue for the Arizona economy.

Patrick Jones, director of the University of Arizona’s Office of Technology Transfer, said tech transfer will only help the future of Arizona.

“The goal is to create high-tech businesses in the state,” he said. “A 20-person company that brings in $3 million is good. And having 40 companies that fit that profile is even better.” As part of the effort to create a high-tech business community, the universities have begun to reexamine how they approach technology commercialization.

Each university has the same mission: to stake a claim in a knowledge economy by creating high-tech businesses in the state with their roots in the university.

But in order to effectively stake that claim, the universities need the support of voters. In November a constitutional amendment will be on the ballot to allow the universities to take an equity position in businesses that spin out of university research.

Supporters of the initiative argue that the amendment is an important step to boosting Arizona’s economy because it will allow companies to get off the ground without initial costs, and it will allow the universities to reap the benefits of a profitable investment.

Tucson’s Tech Outpost

Eighteen miles south of the main campus, the 1,345-acre UA Science and Technology Park seems a remote place for a university outpost.

But Chief Operating Officer Bruce Wright has big plans to make the park a technological center in Tucson. “We’re trying to develop a high-tech business sector,” he says. “We’re trying to accelerate the number of startups in Tucson.”

The tech park, which was set up nine years ago by the UA, provides a physical infrastructure and performs economic analysis to take businesses through the various stages of development. With the tech park, Wright and UA officials hope to work with the business community by creating high-tech startup companies and tying growing companies to the support systems available.

Wright, who created his own startup company with two former UA professors a few years ago, understands the capacities necessary for getting a technology company off the ground.

“We’re looking to expand the park and broaden the capabilities part to meet the needs of startup companies and mid-term development,” Wright said.

As a result, the tech park supports companies that vary in growth and development, from large companies like Raytheon and IBM to small startup companies.

But to meet the needs of these sectors, the park must grow. Plans are currently underway to double its space, and it recently built infrastructure to help companies move from startup to middle level. Plans are also in the works for a new wet lab facility.

Improving the physical infrastructure at the park is only part of the approach. According to Wright, the mentality of those involved in tech transfer also needs to change.

With this in mind, Wright and his colleagues sat down last year to create the Arizona Center for Innovation, a business incubator with a new mode of thinking about how to build a high-tech business sector at the park.

Wright explains that in the past, a traditional mode of thinking kept everyone who was involved in tech transfer working in separate spheres. The idea was that researchers make a discovery, and somehow “magically walk in the door of the office of technology transfer .Then people magically walk into the business incubator and say, ‘I want to start up a business.'”

But that didn’t happen, Wright says. “There was a problem because no one talks to each other.”

Wright’s remedy to that problem forms the foundation for the Arizona Center for Innovation. It is a new way of thinking: a model that views the various tech-transfer activities—such as research, licensing, business plan development, and production and sales—as “overlapping entities,” with Arizona Center for Innovation acting as the circle that encompasses the activities and glues them all together.

In this way, the business incubator has been transformed into an innovation center that works with faculty to support them through the entire process.

The new “interventionist” model has only been around for a couple years, but Wright said the park has already seen success. Each year the park forms about six to seven new companies. In 2002, UA researchers disclosed 111 inventions and filed 79 patents.

Now Wright is waiting and hoping that voters will pass the amendment to expand the UA’s ability to support startup companies.

The ballot initiative is a key to economic success, he said.


Aggressive at ASU

Peter Slate arrived at Arizona State University less than one year ago and already he has taken the research sector of the university by storm.

Slate is the former director of Global Technology Outlicensing with Baxter International, Inc., an international biomedical company. Last year he arrived as the newly appointed chief executive officer of Arizona Technology Enterprises.

AzTE, a private arm of ASU that partners researchers and businesses in order to move inventions and discoveries to the market, has its offices in the Brickyard on Mill, in Tempe. Since July 1, AzTE has spun out three new companies, has executed a number of licensing deals and increased invention disclosures by over 40 percent.

Slate attributes his success to AzTE’s push for the university to take a more proactive and market-focused approach to technology commercialization. “We have a stronger focus to new company development than ever before,” he says.

As a not-for-profit subsidiary of the ASU Foundation, AzTE has a mission unique from the other commercialization programs. Similar to the UA and Northern Arizona University, AzTE seeks out research that could lead to startup companies that can market a product.

ASU tries to work with businesses in the communities to open their doors to professor’s research, sending its marketable products to the Tempe and Phoenix community. In order the accelerate the pace at which ASU commercializes technology, AzTE has set up the AzTE Technology Venture Clinic where law, business, engineering, and liberal arts students obtain class credit for working on technology venturing transactions.

AzTE also recently set up the ASU Innovation Fund, a technology seed fund, in partnership with ASU and ASU Research Park, to further prepare faculty-developed technologies for commercialization.

“As we start to build critical mass in our spin-out activities, we have the space to help nurture these companies through incubation,” says Slate.%pagebreak%

The AzTE mission serves faculty and staff only, says Rob Melnick, the ASU associate vice-president for economic affairs.

While AzTE focuses on faculty and staff, an important part of its strategy involves reaching out to the business community to help move technology to market. Slate said he meets regularly with other companies, such as venture capital firms and design and development firms, in order to establish a partnering network for commercializing research.

In order for AzTE to be successful, it is crucial for faculty to be proactive in partnering-up with businesses and trying to move their discoveries to the marketplace.

“We spend a lot of time and effort in getting involved in faculty initiatives as early as possible,” says Melnick. In November, 2003, the university created Technopolis to better educate the business community outside ASU.

Technopolis’ mission is to “educate, coach, and network technology and life science entrepreneurs.”

Technopolis is still fairly new, but has already found interest among businesspeople in its efforts to serve as an educational training program for small startup companies. According to Melnick, over 80 people are enrolled in or have completed the four different courses. “It has a great deal of potential for growth,” he says.

Technopolis has become the second part of a two-pronged approach at ASU. Officials with AzTE are reaching into the university to extract inventions to send to the market. Officials with Technopolis are reaching out to the business community to train people who want to take a chance in the marketplace.

Investments such as AzTE and Technopolis and the possibilities that could arise with the passing of the ballot initiative, hold a lot of promise for the future of Arizona, Slate said. “There have been some exciting investments made to create the next generation of cutting edge technology.”


Incubating the incubator

With over18,000 students, NAU is the smallest of the three universities, but it is not about to be left behind as its partners to the south kick their commercialization programs into gear. In order to stay ahead of the game, Carl Fox, the vice provost of research, has negotiated an agreement with AzTE to run and manage NAU’s technology commercialization portfolio. Fox says that the number of invention disclosures at NAU does not currently justify expenditures to build a large infrastructure similar to AzTE.

Instead, NAU works through AzTE. Faculty and staff disclose their inventions to Fox’s office, which does an internal review. If the invention seems marketable, the research is sent down to AzTE.

With its emphasis on proactively forming partnerships in the market, AzTE fills an important role in marketing and commercializing the products of NAU research.

“You have to go out there and sell the stuff,” he says. Although Fox does not have the infrastructure to market the products spun off of faculty research, his office is working to build an infrastructure to incubate businesses that grow out of faculty research or that come to campus from outside the community.

Plans are underway to construct a 70,000-square-foot applied research and development facility that would house research space, a laboratory to highlight NAU’s environmental research, and an environmental outreach center.

Most importantly for the tech transfer effort, the facility would house the Northern Arizona Technology and Business Incubator, a Flagstaff-based nonprofit organization that provides startup businesses with technical support.

The incubator will be NAU’s version of a tech park and a smaller-scale AzTE, helping to launch startup companies in the Flagstaff community.

“We want to grow companies out of the university,” Fox said.

Fox said he is also looking beyond startups formed by NAU faculty in order to bring businesses to NAU. NAU would form strategic partnerships with businesses. If faculty members want to commercialize their research, the faculty and business infrastructure would be available on campus to help move the research to the marketplace.

“We put the incubator in the incubator,” Fox said.

Fox has been generating enthusiasm for tech transfer among professors on campus, and he said he hopes to see that excitement spread across the state.


Where the voters come in

Just as Fox, Wright, and Slate share a mission to create high-tech businesses, they also agree on something else: They hope voters in the fall vote to approve the constitutional amendment that will allow universities to take a stake in startup companies spun off university research.

Right now, startup companies have to pay the universities a licensing fee in order to receive support, a fee that Wright says comes at a time businesses can least afford to spend the money.

By allowing universities to take an equity position, startups do not have to fork over the little cash they have just to get started.

“That’s easier on a company because it’s not real money, it’s promised money,” Wright said.

Although such an investment involves risk-taking because no one knows whether a company will succeed in the market, Fox said it is an investment worth making.

“It gives us a lot more flexibility,” he says. “That’s what it’s all about, and it’s highly beneficial to the state and local economy.”

Hopefully, voters will see the value of potential tech transfer organizations that accelerate the speed at which the technology is extracted from the university and brought to the private sector, Slate said.

“Whether we hit a home run out of the park is not the issue, but whether what we have created is of significant value,” he said. “This is something worth focusing on.