Rutgers Research Turns A Profit

NJBIZ, Dec 3, 2007 by Gaudio, Thomas

NEW BRUNSWICK

New approach to licensing technology has yielded more revenues for the school

FOR THE FIRST TIME since the technology transfer office at Rutgers University was founded 18 years ago, the division turned a profit on its patent licensing revenues, according to numbers released to NJBIZ last week by Rutgers' Office of Corporate Liaison and Technology Transfer, or 0 GUT.

The New Brunswick-based office helps identify, patent and commercialize technologies in the early stages of research that OCLTT considers promising.

The office shares annual patent licensing revenues-$8.8 million for the year ended June 30, 2007, and $5.5 million for the prior-year period-with the school in Rutgers where the technology was founded and the technology's inventor.

OCLTT earned a profit of $216,355 on revenues of $1.5 million for the year ended June 30,2007. That compares with a loss of $1.4 million on revenues of $1.1 million for the prior-year period. Rutgers does not calculate profit on the total revenues.

The increasing royalty income represents a shift in how the public research university is pursuing licensing deals with companies, says Michael Pazzani, who over sees the OCLTT. "We have started working more with larger companies," he says. "We're also trying to make it much easier to do licensing by removing roadblocks."

Some of the income, which is generated when Rutgers licenses patents protecting technology discovered at the school, is funneled into the school's sizeable and diverse research efforts. The money is miniscule compared with the $309.6 million in research funds from various sources, including the federal government and nonprofit foundations that the university brought in for fiscal 2007.

Patented Rutgers research has been licensed by a variety of companies such as drink maker Ocean Spray and TyRx Pharma of Monmouth Junction, a tiny medical-device maker that earlier this year struck a deal to license certain technologies and know-how to C.R. Bard Inc. of Murray Hill. The OCLTT also sets up contracts with companies like software and information technology giant IBM Corp., which is funding research and development of open-source software in Rutgers' computer science department.

Universities engaging in technology transfer should work with companies of all types and sizes to hedge against "market turmoil," but many larger firms don't deal in early-stage research outside their walls, says Patrick Jones, president of the Association of University Technology Managers, an Illinois group representing individuals in the technology transfer field. "Someone like Johnson & Johnson might not acquire technology in its raw state but will make acquisitions of companies that are developing technology licensed from universities," he says.

Schools that only bank on startup companies may see few-and-far-between returns, he says. For instance, diagnostics maker Ventana Medical Systems Inc., founded at the University of Arizona, where Jones heads up the school's technology transfer office, now "employs 600 people. But it's taken 20 years," he says. Swiss drug maker Roche, which has its U.S. headquarters in Nutley, is considering acquiring Ventana for more than $3 billion, he says.

Pazzani says while the OCLTT still licenses technology to startup companies and helps launch such ventures, the office is seeking to strike more deals with larger businesses because they have distribution, marketing and sales channels in place that can get "products to market faster" and thus return royalty income to the school quicker.

The OCLTT is also striving to put licensing deals together in one month as opposed to one year. "Part of it is looking for a reason to say yes," Pazzani says. "One reason universities are often conservative is because they're worried about liability. They're looking for the optimal deal. But sometimes you can negotiate too hard and too long."

Rutgers' deal with Ocean Spray has been more than optimal, says Chris Phillips, a spokesman for the Massachusetts company. Ocean Spray, a cooperative of cranberry and grapefruit farmers in the United States and Canada that makes drinks and snacks, has a long history with the land-grant school, which is at the "root of the cranberry industry," he says.

Rutgers' center for blueberry and cranberry research-part of the state's agricultural experiment station-has created a new cranberry called "Crimson Queen" licensed by Ocean Spray farmers that yields more barrels of the fruit per acre than other varieties, says Phillips. "There's always a need and desire to find a better-producing berry," he says.

The university also does other types of cranberry research such as studies of its health properties, says Phillips. Pazzani adds that Crimson Queen is "not very profitable yet" for Rutgers, but predicts that will change.

John Ritter, director of technology licensing at Princeton University, says "there's way too much focus on revenue numbers" when it comes to technology transfer. "We're here to try to assist in the transfer [to the market] of science and technology being developed here so the public can benefit. If there's revenues generated, that's gravy."