But Will It Sell? Commercializing UT Technology

Universities often set the stage for a new generation of ideas, science, and innovation. Yet if the knowledge and technology that are created on campus never see the outside world,they can hardly change it. Although technology transfer offices deal with cutting-edge technology and science, they often focus more on process and less on result. A faculty researcher files a disclosure of a significant finding, the office evaluates the technology, a patent is filed, and with any luck, an entrepreneur or company comes along to license it, providing the university with royalties.

Richard Miller, who arrived last September from Stanford University as the new chief commercialization officer at UT’s Office of Technology Commercialization, has built a new engine for tech transfer. A physician, medical scientist, and successful entrepreneur, Miller has worked with UT since licensing technology from the chemistry department to start a pharmaceutical company in 1991. His efforts are rooted in his belief that the university needs to play a premium role in creating jobs and providing leadership while simultaneously honoring its academic mission.

“It’s not just about being excellent at academic tech transfer,” Miller says. “We have a more important mission. We have to create jobs, companies, businesses, technology, and leadership, and it’s going to have to start coming out of our universities. We have to figure out ways to start doing that. It’s not going to happen by sitting around and waiting for other people to do it.”

Three of Miller’s own four startups have gone public, so his goal has been to put that experience to use by creating companies based on UT technology.

“I’m not waiting for people to come in here and start companies,” he says. “I’m going to do it myself. But you have to have the raw materials.”

On his first day at UT, Miller focused on getting to know his staff and the technology placed under the care of OTC by reading faculty disclosures and patents. He found a technology transfer office focused mostly on process, and patents that horrified him.

Strong intellectual property is one of the most essential components of a successful university startup. “It is the single most important thing in a high-tech startup,” Miller says. “If you don’t do that well, you might as well forget it.”

Because advances in areas like biotechnology, engineering, and computer science are so complex, it can take many years, millions of dollars, and patience for the original idea to reach the marketplace, which is why ironclad IP is so important.

As a fellow at Stanford in the early ’80s, Miller helped create IDEC (now Biogen Idec), a company whose technology used monoclonal antibodies to treat cancer. The company’s original idea was finally approved by the Food & Drug Administration in 1997, Miller says, and eventually entered the marketplace as Rituxan, which is used to treat Hodgkin’s lymphoma. Because of the span of time from idea to market, strong IP was critical.

As soon as he arrived at UT, Miller immediately began spending the time and necessary money to file fewer but stronger patents, all to protect the intellectual property that can be the foundation of successful companies.

By design, patent filings at UT are down this year by 50 percent, Miller says. But the patents that are being filed are more robust.

Patents are an investment. And although Miller has reduced OTC’s legal expenses, the office spends more on each patent it files—an average of $10,000 to $15,000, compared to $1,500 before Miller took charge.

Miller’s patent and business strategy requires engaging research faculty in the process. Emphasizing the importance of strong IP in turn pushes faculty members to produce stronger science.

“The patent system was created to stimulate the arts and sciences,” Miller says. “It’s all about improving quality.”

Over the years, Gary Pope, a petroleum and geosystems engineering professor, has worked with OTC, routinely submitting his disclosures and filing patents. IP created in his lab has even been licensed from the University and produced royalties. But before Miller arrived, Pope had never been involved in starting a company. He is now part of one of three university companies Miller helped create this year.

Pope describes the difference between the old OTC and Miller’s OTC as a “sea change.”

“There have been very significant changes,” he says. “Much more interaction, much more initiative, and more discussions about how to handle IP.”

Miller describes his biggest challenge as bureaucracy, as a disease that stifles innovation and creativity and breeds laziness and complacency. He has given it the medical nickname bureaucritis.

“It can be treated, but it is contagious,” Miller jokes. “In late stages it is incurable. But in early stages, it is curable by intensive counseling, interesting culture, and incentives.”

True to his prescribed cure, Miller recently received approval from UT president Bill Powers to establish cash bonuses for his licensing associates at OTC as a monetary incentive. Miller has also seen his staff motivated by the potential to be hired by a university startup, and he has worked hard to create an environment that inspires a new mindset.

“I often find myself telling people, ‘I don’t want you to tell me we can’t do that. I want you to come back here and tell me how we are going to do it.’”

In 2010, UT received approximately $640 million in research funding, second only to MIT in research institutions that do not have a medical school. Licensing revenue for this year was $25.6 million, compared to about $14 million last year. Miller estimates the increase should rank UT in the top 20 schools for licensing revenue. Placing higher in the rankings further establishes the University as a top technology institution, Miller says, which in turn attracts quality faculty, students, and companies. It enriches the ecosystem.

Yet rankings and revenue may not be the best metric. The number of companies started with university technology that have received significant, high-quality funding is more telling of a university’s impact and technology commercialization success, Miller says.

To increase the number of well-funded companies founded on UT technology, Miller is working to strengthen the entire Austin commercialization ecosystem. He has attracted a California real estate developer who is building wet-lab incubation space for startups two blocks north of campus. Miller opened an OTC office in Silicon Valley to connect University entrepreneurs with the abundance of investors on the West Coast. And he is working with a recruiting firm to bring in management talent for startup companies.

Miller’s model for tech transfer seems to be working. He has three UT companies in formative stages that he has worked with since their founding. True to OTC’s new 360-degree approach to technology commercialization, the office has helped these companies create business plans, recruit employees, and raise capital.

His immediate goal is to get the three companies (whose names cannot be released yet) securely launched with millions of dollars in the bank and hard at work in adequate facilities. That should happen in the next six months.

Money is a constant worry for Miller. Not making money, but raising enough investment capital for university startups. Building an engine is important, after all, but giving that engine the fuel to run afterward is equally vital.

“The biggest reason companies fail is inadequate funding,” Miller says. “Companies with a lack of funding can’t recruit, lack facilities, don’t have the money to file good patents, and are always in money-raising mode—preventing them from working on the development of a quality product, which in turn causes desperation and poor decisions.

“There is a saying,” he adds. “Never raise money when you need money.”

Reflecting on the past year, the highlight for Miller was a meeting in Menlo Park, Calif., with one of his three new companies and potential venture capitalists. They walked away genuinely excited, he says, about the technology coming out of UT.

Although he was unsuccessful in his attempt this year, Miller still holds out hope that UT will become the first university to take a role in financing startup companies with institutional funds, or perhaps an alumni investment fund to support University research and companies.

Such a fund might be similar to the recently established Horizon Fund that will be used to invest in ideas and research breakthroughs developed at institutions in the UT System. Awards from the $10 million fund will provide venture capital to commercialize University technology.

The technology he is pushing out into the world, Miller believes, has the potential to change it. “What I am interested in doing,” he says, “is the really highly technical stuff that has the potential to be revolutionary in a particular area and changes the way we do things—treat a patient with a disease, transform the way we use a cell phone, or explore for oil.”



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