Meanwhile, the state's universities seem to be developing momentum in both conducting research and commercializing it: A survey of 12 Florida schools indicates the number of invention disclosures rose 84% between 2000 and 2005; the number of agreements executed to startup companies has bumped along from 13 in 2000 to 31 in 2004 and 22 in 2005. The number of licenses and options is up.
So was attendance at the 3rd Annual Florida Tech Transfer Conference in Sarasota (Florida Trend was a co-sponsor), which brought together university researchers, tech transfer managers and representatives from private companies, law firms and venture capital organizations involved in commercializing research technology. The conference put a spotlight on some of the remarkable technology coming out of labs all around Florida. But it also highlighted how important it is becoming for universities to have a strong business infrastructure and a business-oriented approach that's on a par with their commitment to scientific research.
A participant at the conference, Peter Manso, a pharmaceutical/biotech patent attorney with Edwards Angell Palmer and Dodge law firm in the Fort Lauderdale office, told an interesting story. Recently, a pharmaceutical company was considering a deal with a professor at a prestigious Midwestern university who held a handful of promising drug-related patents. A deal would have meant millions for the professor and, of course, millions for his university. The research reflected in the patents had commercial promise, but the pharmaceutical company elected to pass -- the patents had been drawn so narrowly that it would have wasted its investment if it had bought the rights.
"Anyone could have easily designed around" the patents and commercialized the professor's research without infringement liability, Manso explains. "You didn't need to pay the university or the professor to use the professor's science as disclosed in the patents." Both the pharmaceutical company and the professor ended up disappointed -- with nothing.
Manso gives the university and professor an "A" for issuing a handful of patents, but an "F" when it came to commercializing them, because the patents, not the research, failed the test of third-party scrutiny.
His point is that good science alone doesn't guarantee commercial success. The stakes in the research game -- particularly in pharmaceutical-related research -- are enormous. It takes about $850 million, for example, to get a proposed drug through the FDA's approval process. The government incentivizes the innovators who create new drugs with promises of exclusive rights to sell the drug, but it also incentivizes generic drug companies to attack the patents held by the innovators within five years after a new drug is approved or three years after a new use for an old drug is allowed.
The result, aside from work for attorneys like Manso, is the need for "patent portfolios" that reflect not just the kernel of unique scientific research, but also create a web of barriers that protects market exclusivity by patenting a host of other factors -- the rates at which the drug is absorbed by the body and disintegrates, how it's administered, or how it's used in combinations with other drugs, for example. Nobody makes an $850-million bet on a new drug unless he's sure it's well-enough protected from a patent standpoint that he'll get his money back and a lot more.
The rules of the game have implications for Florida's schools. For one, the quality of a university's attorneys in drafting patents -- and its overall administrative savvy -- will have as much to do with a school's biotech success as its scientists. Equally important, the state's Board of Governors mustn't limit schools' ability to do deals by hamstringing them with one-size-fits-all policies governing tech transfer. Likewise, the schools must understand the nature of the biotech-pharmaceutical business, which is often a swing-for-the-fences affair that clashes culturally with the traditional button-down university approach. Colleges that focus on generating big numbers of paper patents may make their professors and boards of trustees happy but aren't likely to be as financially successful as schools that invest heavily, in terms of administrative and financial support, on the research with the most commercial potential.
As the head of a leading investment bank told participants at a Scripps conference last fall, a nice, safe 75% stake in a drug or bio-company that generates $70 million a year is a non-starter for most venture capitalists. They're looking to have a 90%-plus stake in a drug or an enterprise that will generate billions. Schools that don't learn how to accept little slices of big deals involving their most promising research may find they end up with bigger percentages -- of nothing.
This bit of perspective doesn't detract from the encouraging data coming out of the state's research sector. Florida still ranks disproportionately low among the states in research funding and output, but the entrepreneurial spirit that will help close the gap seems to be growing. It's a long-term game, and to win, the state's research sector will have to be as good at business as it's becoming at science.