2003 Health Sciences Center Research Days Remarks

President Scott S. Cowen
Tulane University
April 25, 2003

I want to use this time today to revisit the address I made two years ago at the Health Sciences Center Research Day and update you on what progress has been made since that talk. In that discussion, I outlined my vision for technology transfer at Tulane. To put this in the context of what we are here to celebrate today, this is a ceremony during which research activities are recognized and honored. Technology transfer is but one of the possible outcomes of a successful research program.

In April of 2001, I told you Tulane has a responsibility to the community, the state, and the region to promote the economic growth of our area. I articulated my belief that Tulane can create a new climate for the creation of technology-driven businesses that will diversify the region’s economic base, create new opportunities for our students, and produce synergies with other existing industries. I expressed my desire to offer options to faculty who prefer a more entrepreneurial, hands-on approach to developing their innovations rather than pursuing licensing agreements alone. Today, I want to tell you where we are and how we are achieving those goals.

Last July, the university invited a panel of experts from four universities across the United States --universities known for their success in spinning out companies based on university technology. These individuals all lead highly successful technology transfer programs at their institutions. They included the directors of the offices at Stanford, University of Pennsylvania, Georgia Institute of Technology, and the University of Michigan, all of whom spent two days on our campus assessing our current program and meeting with faculty and administrators. We not only received an excellent report card on what we had accomplished to date and on the productivity of our technology transfer program, but we learned several important things.

First, they confirmed that Tulane’s plan to connect the University to the creation of economic growth opportunities is becoming a preferred national model and is gaining momentum across the country. There is a documented link between economic growth and higher education. The presence of a research university has a robust effect on attracting business to a community, on the quality of life, and on the overall desirability of a region. Institutions of higher education must become catalysts to engage and promote the communities in which they reside. In every high growth area in the United States, you will find a research university. Tulane is serving this valuable role in New Orleans and the region.

We also learned our colleagues are observing greater interest on the part of their faculty in creating companies around their inventions. This too is our experience at Tulane. Since my talk two years ago, several faculty at the Health Sciences Center have expressed interest in establishing companies and licensing their technology from the University to form the basis of that company. Although this is a difficult time in which to secure venture funding, we are, nonetheless, in discussions as these faculty develop business plans, begin efforts to create a company and seek capital. I am pleased to say my address had exactly the effect I hoped and faculty are now expressing interest in taking on a more entrepreneurial role in the commercialization process.

Our visitors further validated another Tulane experience -- candidates for faculty positions factor in the type of technology program an institution has in making career decisions. Candidates often request interviews with the technology transfer office during the recruiting process to assess the level of assistance available.

The faculty we recruit at Tulane are highly sought after and have multiple choices. They are interested in the incentives and rewards the University can provide. It is not unusual for a candidate to review our intellectual property policy. I believe we stack up very well -- our policy is generous in terms of financial incentives to the faculty. Faculty also want to understand how our tech transfer program operates and what successes we have had in commercialization of intellectual property. Again, we rank very favorably. We can point with pride to a number of commercialized products, three of which are drugs. In terms of income generation, we ranked 12th among private schools and 21st among all universities in licensing income in the most recent statistics available for U.S. universities.

I also had extensive discussions with our visitors on how university models for new venture creation vary. To some degree, the variances depend on the local resources available in a particular region to build businesses and assist entrepreneurs. For example, Stanford is in a region that is incredibly rich in entrepreneurial resources. There the networks for entrepreneurs are well established; investment capital needed to seed new companies is available, and the region is home to numerous technology-based companies. There is already a culture of innovation and consequently, Stanford is in the unique and fortunate position not to have to create the climate itself. Nor do they have to provide “hands-on” involvement in spinning out companies since the market forces operate to do just that. Stanford has adopted what I would call a “hands off approach” because they can rely almost exclusively on the local resources to provide the business capability.

Contrast this with the University of Michigan at Ann Arbor. Ann Arbor is not the Silicon Valley. Our Michigan colleague noted they decided to actively manage business development as the best way to advance commercialization within the state of Michigan. As a public institution, University of Michigan depends on significant funding from the state legislature and, of course, makes every effort to demonstrate it is an economic asset to its constituents. Therefore, Michigan has devoted extensive university resources in furtherance of a strategy by which it will create companies from its technologies. Michigan’s approach, in contrast to Stanford’s is much more “hands on”. While this is laudable, it requires an enormous outlay of university resources. Given Tulane’s size and intellectual property portfolio, this would not be the pathway I would initially choose for Tulane.

Let me lay out the direction in which we are moving. Having learned from the experiences of others, we have developed a model to address Tulane’s needs. We will “actively facilitate” business development through outside affiliations and will, to the greatest extent possible, rely on outside resources. The University will provide proactive guidance, but will leverage non- university assets whenever possible. We will actively build networks and partnerships and capitalize on available resources in the community. Where those resources do not currently exist, we will advocate for their creation. Let me reflect on how we will do this and what we have already accomplished.

First, a search is underway for an Associate VP for Technology and Business Development of Technology Development who will lead this effort. You will note the new focus on business development to better reflect this expanded role. Recognizing both the increase in our technology disclosure rate and the fact that creation of faculty driven companies will require significantly more staff time than out-licensing to an existing company, I am committed to providing the resources necessary to move us in this direction. The consultants noted Tulane had impressive success for such a lean staff, but cautioned in order to keep pace with the innovations arising from our labs and the number of invention disclosures we are currently receiving, we would need to add at least one additional Licensing Associate. After a national search, that individual is now on board.

I also recognize creating companies could require a longer in-house incubation period. We may need to fund patent costs for a slightly longer period to implement this new model. If one is licensing technology to an existing company, the marketing efforts begin as soon as the patent is filed. In working with start up companies, however, a longer lead time is needed to identify and secure funding, so the patenting costs may have to be borne by the University for a longer period, creating greater expense.

Turning to the outside community, here is how we plan to leverage resources. As most of you are aware, we have created several important partnerships with the State of Louisiana and the LSU Health Sciences Center. These partnerships are in the areas of gene therapy, cancer, and neuro-biotechnology.
These partnerships are just getting underway, but they represent examples of how we can leverage our strengths with others to obtain funding not normally available to us.

Another accomplishment of which I am very proud is the creation of a new wet lab incubator to be housed in the Wirth Building on Canal Street, across from the Tidewater Building. In my past life as Dean of the Weatherhead School at Case Western Reserve University, I ran a successful incubator. We did this through the business school and it became a learning laboratory for our students. It was also a resource to an economic revival that was underway in the city of Cleveland. Louisiana has no similar facility devoted to life sciences. The University of New Orleans has a successful research park, but it is devoted primarily to information technology and defense contractors.

Several of us recognized that to create a life science industry in Louisiana, there had to be a facility in which to incubate new companies. Bill Jenkins, Chancellor of the LSU system, and I visited the Governor’s Office and laid out a vision to create a series of wet lab incubators across the state. We proposed three incubators be funded across the State, one in Shreveport, one in Baton Rouge and one in New Orleans that would enable the formation of life science or biotechnology companies. I don’t have to tell the group assembled here that Tulane does not have the excess capacity in its laboratories to offer leased space to the businesses we hope to start.

We are at capacity as a result of our increasing research productivity in the past five years. The BioInnovation Center, which is what the new wet lab incubator will be called, will provide conveniently located quarters to fledgling companies. This is a critical piece of the necessary infrastructure and I am pleased to say it is scheduled to be completed by June of 2004. This again is a visible example of how we can to move toward our goals by relying on outside resources.

We have also been engaged in numerous community activities designed to raise awareness and support of this effort. Tulane co-chaired a MetroVision initiative for the life sciences. MetroVision is the economic development arm of the regional Chamber of Commerce. This culminated in a report of what is needed locally to implementthis strategy using the research universities in our area as the foundation for a new industry in the life sciences. Additionally, we have been active on the Louisiana Economic Development Council’s Task Force on Science and Technology which works to promote the State’s economic development plan, Vision 2020. Also, we are in preliminary discussions with a newly formed not-for-profit organization, the Idea Village, to see if they can provide assistance to Tulane entrepreneurs. This entity was formed to create new business starts and foster entrepreneurship by mentoring would be entrepreneurs and accelerating their ideas. We think it makes sense to coordinate, rather than duplicate these efforts. Also, several Tulane faculty and staff have been instrumental in forming the first “network” for entrepreneurs in the life sciences. BioTech Connect, as it is called, is a grass roots effort to connect like minded individuals to each other and to the outside services and resources they will need. Tulane has taken a leadership role in the initial planning and the first two events that have been hosted.

A final piece of our strategy will be to develop networks of venture capital. Life science innovations are costly to commercialize and require a longer time frame from discovery to product. This is an area where there is still much to do. Through the Wall Bequest Fund, a small grant was funded at Tulane to create gap funding for promising technologies. This fund can be used to demonstrate proof of concept or build a prototype to demonstrate that a technology, although early in stage, indeed has promise. This is a significant step for Tulane and provides a mechanism by which technologies can be advanced in house. This money is not intended to fund seed research, it is devoted entirely toward better assessing a technology and thus reducing the risk a company would take in considering one of our technologies.

We clearly need access to outside capital, however. Unfortunately, the present economic times in which we find ourselves are not as favorable as they once were. The end of the dot com boom created a slightly cooled environment for the funding of new ventures. Money is still out there, but we will have to find creative ways to attract it to this region. I have engaged in preliminary conversations about creating a small venture fund at Tulane or in conjunction with other local universities as a way of providing seed capital to these companies. I look forward to reporting back to you on this at a later date when we have better measured the demand and feasibility.

We are also implementing policy changes that will support our goals. Tulane has had an intellectual property policy since 1985, however, we have never had a formal policy on equity. One is currently under development. In addition, one unfortunate by-product of university success in tech transfer is an unfavorable public perception fueled by a few high profile cases that universities have skewed their research objectivity in the interest of financial gain. These sentiments are particularly evident in the area of human clinical research. We want to ensure that faculty and the university are protected against perceptions of financial conflicts of interest in the work that we want to pursue. For this reason, we are developing a revised conflict of interest policy that will take into account the more recent federal guidance and the recommendations that have come out of the American Association of Medical Colleges and the Association of American Universities.

These developments represent significant progress. Yet, more progress is needed. We will continue our efforts to assist faculty who desire to create businesses to exploit their scientific endeavors. Tulane can and will be a leader among U.S. universities in tech transfer and business development.

As we continue to build an even stronger research base, we will continue to build on our past successes, while at the same time fostering an entrepreneurial culture among researchers and in the University.

Thank you.

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