Universities across Canada are devoting more resources to commercializing the discoveries of their researchers, and the effort is beginning to pay off.
In fiscal year 2005, the latest year for which data are available, Canadian campuses filed a record number of new patent applications, up 20 per cent from the previous year.
The number of new inventions "disclosed" to post-secondary technology-transfer offices was up 8.9 per cent.
These increases are harbingers of more technology licensing agreements and startup companies emerging from the so-called Ivory Tower.
They're a rebound from the early 2000s, when, following the Internet and bio-tech busts, venture capitalists shunned startups based on those technologies.
"Technology transfer hasn't recovered to the level of 1998-99, but that was abnormally high," says Angus Livingstone, managing director of the university-industry liaison office (UILO) at University of British Columbia.
"Universities have a new mode of technology transfer. We're doing additional development work on campus, keeping technologies in-house longer. At the same time, we're doing smaller things with smaller potential value, but getting them out faster. We're not just going for the home runs."
The University of Toronto (U of T), with 19 technology-transfer managers, leads Canadian universities in staff promoting commercialization.
And it has plenty to commercialize. It led in cumulative invention disclosures (2003-05) with 526. U of T has 96 active spinoff companies, with more than 3,500 employees and more than $820 million in annual revenue.
One of the U of T's most hyped spinoffs is Biox Inc., of Oakville. David Boocock, a chemical engineering professor, developed a low-cost method to recycle waste fats and oils into biodiesel fuel. (Biodiesel fuel is more ecologically friendly than petroleum diesel fuels.)
The Innovations Group and Madison Ventures Ltd. created Biox Inc. in September 2000 to develop commercial-scale production plants. Biox has operated a pilot plant since 2001 and will open a commercial-scale facility soon.
"The Innovations (Group) helped me sort out the good investors from the bad ones and has been extremely skilled every step of the way," says Boocock, now Biox's director of process chemistry. "Without them, the company wouldn't have gotten off the ground."
Cyril Gibbons, a business-development director for the Innovations Group, notes: "We maintain a network of established investors in technology - angel investors, early-stage and seed-capital investors as well as later-stage venture capitalists.
"So we identified a suite of investors who were interested in early-stage, high-risk investment. We looked at their capabilities and track record, and we chose Madison Ventures Ltd. (now Monteco Holdings Ltd.)" The university and Boocock each initially held a 12.5-per-cent equity stake - since diluted as new investors came aboard. Gibbons is impressed that Biox has attracted $70 million of funding in only seven years in business. "It often takes 10 years or more for a spinoff company to develop its product to the point that investors see real potential."
At the University of British Columbia (UBC), the almost $16 million in licensing income earned in 2005 was the highest of any Canadian campus.
UBC had 68 new patent applications, the second-highest total among Canadian universities. Still, it wants to do more company spinoffs and licensing deals, says UILO's Livingstone.
Since September 2004, its New Ventures Program has played host to the first full-time entrepreneur-in-residence at a Canadian university.
The role includes mentoring potential entrepreneurs, sitting on the boards of university-originated startups and facilitating access to angel investors.
The program likely will be expanded this fall to include an "idea fund," giving grants of $25,000 to $50,000 to selected projects, and a seed fund that will invest $50,000 to $200,000 in other projects.
"We're hoping to expand the program to make it university-wide, so that we can meet the full range of needs for getting products developed," says Livingstone.
One of UBC's pet projects has been Autostitch, the first fully automatic 2-D image-stitching software. It selects multiple pictures from an ordinary digital camera and stitches them together to form a panorama of up to 360 degrees.
A breakthrough for photography, virtual reality and visualization applications, Autostitch emerged from two years of research by Matthew Brown, a then-PhD student in computer science, and David Lowe, his supervising professor. It was patented in 2004.
UILO recognized that the software's code would be difficult to market without further refinement, so it provided funding to help Lowe and Brown convert the research code into industry-standard code. UILO also filed the patent applications and handled the marketing and licensing of the software.
It has concluded deals with a dozen non-exclusive licensees, generating roughly $200,000 to date in royalties for UBC.
At the University of Calgary, University Technologies International's (UTI) tech-transfer office ranked third among Canadian campuses in invention disclosures and in licensing income ($3.4 million in 2005). UTI serves both U of C researchers and select off-campus inventors.
UTI has hired nine tech-transfer personnel over the past year to staff IGNITE, its new "engine" for company creation around early-stage technologies.
"It has all the resources we never had before," says UTI president Paul Cataford. "We now can do the boring administrative stuff for the researcher - keeping the books, doing the income-tax filing, the funding applications."
IGNITE will have 12 to 15 companies under development at any time, spinning off two or three annually.
It maintains a pool of three executives-in-residence who will be appointed CEOs of the startups. The inspiration for the company incubator was UTI' s experience creating a biotech company called SemiBioSys Genetics Inc.
Maurice Moloney, a professor of plant sciences, approached UTI with the concept of using oilseed plants to grow industrial proteins in a way that makes them easy to extract and purify.
UTI recruited Dow AgroSciences Canada as a strategic partner and SemiBioSys was formed in 1994.
"UTI worked with me to get the patent portfolio in place and aggressively protected, and in getting the whole IP foundation of the company nailed down. It helped us a lot in negotiating the original strategic partnership with Dow," says Maloney, who became SemBioSys's chief scientific officer, SemBioSys is trying to commercialize protein-based pharmaceutical and non-pharma products. A key project is developing insulin from genetically engineered safflower to serve the expanding diabetes market.
"SemiBioSys will be a significant revenue generator for us," predicts Cataford. UTI holds a "less than 10 per cent" equity stake in the publicly traded company.
The University of Saskatchewan ranked sixth in invention disclosures in 2005, earning slightly more than $1 million in licensing income. U of S has vowed to triple its tech commercializations between 1999 and 2010.
In order to do so, the industry liaison office is boosting its professional tech-transfer staff to nine, up from four in 2005. It has also started a Forge Ahead Fund to support three to five early-stage technologies a year.
"Early-stage inventions often have no proof-of-principle or working prototype, which makes them risky for industry," says managing director Doug Gill. "We want to remove that risk by enabling U of S researchers to do more development work on their inventions."
Predictably, U of S has licensed the formula for hundreds of different plants to farmers and seed providers.
Equally apt for a Prairie province, U of S helped develop a sensor that detects when curlers slide past the hog-line in delivering a rock. (Previously, referees signalled such violations, often causing heated disputes.)
The Eye on the Hog electronic detection system originated with electrical engineering professor Eric Salt and four students working on a design project.
The industry liaison office provided some funding to the students, but it took the expertise of an existing company - Startco Engineering Ltd. and its $250,000 investment - to perfect it.
Eye on the Hog was used at the Turin Winter Olympics and is a fixture of the Brier and other Canadian curling championships. Neither Salt nor his students now have any role in the technology, but the students and the U of S earn licensing income.
The University of Waterloo was a standout among startups in the 1990s, when UW accounted for 20 per cent of all spinoffs, and early 2000s. But since the tech bubble burst, its spinoffs declined to only one in 2005.
Alone among North American universities, UW allows researchers who commercialize a discovery on their own to keep 100 per cent of the proceeds.
If, however, researchers do turn to the university's intellectual property management group (IPMG), they must give UW 50 per cent of the revenues from any licensing deal.
The policy has lured plenty of entrepreneurial profs to UW, especially in its engineering, computer science and earth sciences departments.
However, UW wants to make the use of IPMG more appealing. It now will take less than 50 per cent of the proceeds if a researcher goes through the IPMG. (The exact percentage will vary, depending on how much work and expense IPMG incurs.)
Tom Corr, who recently joined UW as associate vice-president of research, wants IPMG to become pro-active in identifying commercialization prospects. He is adding two tech-transfer managers to the existing three.
"I want us to do more 'walking the halls,' engaging with researchers at an earlier stage and establishing relationships with them," says Corr. "So when it's time to do the commercialization, it's just a natural extension of their dealings with us to want us to do it for them."
(Sheldon Gordon can be reached at gordon@businessedge.ca)
