The business of growing capital from brain power has landed a University of Calgary-owned corporation near the top of a just-released national survey measuring success in licensing academic discoveries.
It’s the latest recognition for University Technologies International Inc., and for president Oleh Hnatiuk, it’s a reaffirmation that early-stage venture capital and technology marketing works just as well on campus as it does in the boardrooms downtown.
The annual survey, released last week, was conducted by the Association of University Technology Managers (AUTM), a non-profit association of more than 2,400 technology managers and business executives who manage intellectual property in the U.S., Canada and abroad.
It shows 20 Canadian research institutions helped form 50 new Canadian companies last year, based on academic discovery.
UTI ranked third in the race to license new technologies, behind the University of Sherbrooke and the University of Alberta, by signing more than 50 licenses last year to develop university-grown discoveries.
“This is a business that has its ups and downs . . . but the overall fact is there’s money to be made and we’re consistently strong and we’re pleased with the numbers,” says Hnatiuk. “We use the survey as a benchmark for what we do.”
Unlike other venture capital firms who are more likely to invest in promising businesses with experienced management teams, UTI specializes in spotting lucrative opportunities under the eyepiece of a laboratory microscope or in the latest research bench “Eureka!”
They match the researcher’s technology with potential licensees, developers or manufacturers, or help build and nurture a new company by providing a variety of services including intellectual property protection and sales management expertise, Web-site development and license negotiation.
High-profile clients in the technology and life sciences areas have included Wi-LAN, Cell-Loc, SemBioSys and Synsorb, all well-known Calgary companies.
“People come to us with something in a test tube, and say: ‘Look what I’ve got. Can you do something with it?’ ” says Hnatiuk. “First of all, we have to figure out what it is, and who is going to care 10 years from now when it hits the marketplace.”
UTI works in potentially rich territory. According to the AUTM survey, more than 700 new academic discoveries were disclosed in 1999, and the commercialization of the research resulted in more than $1.6 billion in economic activity in Canada.
Last year, the 11-year-old UTI reeled in more than $1.8 million in gross revenues from the licenses.
One of the up and coming businesses currently under UTI’s wing is Perm Inc., an on-campus research and development company which uses nuclear magnetic resonance spectroscopy for measuring bitumen content in ore samples from Alberta’s tar sands.
Company president Apostolos Kantzas, 41, is a teaching professor in the department of Chemical and Petroleum Engineering. He and partners Kevin Allsopp and Dan Marentette started Perm Inc. five years ago after leaving Nova Chemicals, and have turned to UTI for assistance as they move through the patent process.
“UTI is our intellectual property guard dog,” says Kantzas.
He believes UTI is well-placed to assess new research emerging from the U of C. “The other thing that UTI is trying to do now is to find funding venues for inventors. That’s one thing we are all very anxious to see materializing for obvious reasons.”
Geoff Moon, a manager in the engineering and science sector for UTI, says Kantzas is in a unique situation. “He’s on campus, but running a business,” he notes. “It’s a good fit for us . . . very high-tech and very novel.”
U of C scientists also know that the benefits of their research will flow back to the university in the form of licensing royalties, fellowships and donations.
Earlier this year, the 11-year-old UTI announced it’s first-ever major cash donation of $900,000 to the university to celebrate a successful fiscal year.
“There is no doubt that UTI had to bootstrap its own activity and one way it has been able to do that is by licensing technologies to larger companies,” says Hnatiuk.
“That’s a realistic way to get technologies into the marketplace, but what we’re trying to do now is bring more of a balance between company creation — where we’re more involved in starting companies in the local marketplace — as opposed to just licensing the technologies.
“Historically, we have not done that as aggressively as other universities have. We’re trying to rectify that situation.”
Examples of other UTI-managed technologies currently available for licensing include:
* a natural topical lotion for pain, inflammation and itch; * a gene-encoding protein with tumour-suppressing characteristics; * A method for reclamation of soil contaminated by oil and petroleum products.
Last year, 113 applications, or research “disclosures” flooded into UTI, up from 77 the year before. About half of all disclosures eventually result in licensing agreements. The UTI team is also is helping a growing number of companies involved in off-campus research.
A typical start-up commercialization project for UTI can range up from less than $50,000 up to $250,000. UTI acts as an agent on behalf of both the inventor and the U of C., and arranges the business deals on their behalf.
Despite the recent hiccups in tech stock valuations, most investors realize the sector is here to stay, says Hnatiuk. “We don’t get too concerned about it, because the business that we’re in is a long-term business. We don’t live and die by quarterly results.”
Bridging the gap between research at an academic level and the commercialization of the research remains the main challenge. Their biggest competition, Hnatiuk says, are the people who decide it’s not worth the effort to bring their discoveries to the commercial marketplace.
But UTI officials also realize it takes money to remain a competitive player in bringing early-stage technology to market, and are now moving towards setting up a venture capital fund to accelerate the process.
They’re in the process of approaching “sophisticated” investors who are prepared to invest more than $150,000 in the new UTI vencap venture, with a goal of raising between $5 million and $10 million by this spring.
“It allows us to have more capital to take these ideas and early-stage technologies and develop them that much further, so that other people interested in investing in companies already can take it to the next stage,” says Hnatiuk.
UTI doesn’t have a monopoly on research coming out of the University of Calgary, but for many scholars and scientists based there, it’s the only game in town.
“Because it’s perceived to be a very specialized and perhaps risky field, there are very few other people that practice in this area,” says Hnatiuk.
In many ways, linking discoveries from the U of C or off-campus research-based firms to practical applications in the marketplace “should be much riskier,” he admits.
“Yet when I look at UTI’s track record, it’s amazingly good. Virtually every company that we’ve been involved with from the university is still around, or may have been acquired by another company. We’ve been very fortunate.”
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