Are universities the nation’s scientific powerhouse or little more than costly ivory towers?

American universities are supposed to be becoming the nation’s scientific powerhouse, turning innovative research into the applied science that will drive new products and wealth creation. Well that’s the theory, anyway.

In reality an examination of New Drug Applications filed with the Federal Drug Agency reveals that just 5% of applications were supported by patents that originated in universities. The other 95% were backed by patents protecting the work of scientists employed by companies.

There are success stories to be sure and universities can hit the mother load when they happen to strike it lucky.

Emory is one such university. Emtricitabine is a compound used in the anti-HIV drugs, Emtriva and Truvada. Emtricitabine was discovered by scientists at Emory University. The compound was licensed in 1996 to Triangle Pharmaceuticals, an Emory University start-up company. In 2002, shortly after it had filed an NDA for emtricitabine to the FDA, Triangle Pharmaceuticals was acquired by Gilead Sciences. Emtricitabine received its first approval in the USA and Europe as an HIV drug in 2003. In 2005 Gilead Sciences and Royalty Pharma bought Emory’s interest in the compound for $525 million.

Overall between 1991 and 2006 Emory earned $720 million in revenue from its commercialised research. By 2006 Emory had 16 licensed therapeutic products already in the marketplace and 38 licensed products in various stages of drug discovery, clinical development or regulatory approval and had established 37 companies around the university’s technology, leading to seven publicly traded companies and seven companies marketing products.

Emory’s achievement in turning research into revenue streams is unusual to say the least. Stanford University and the University of California earned just over $200 million in royalties for Boyer and Cohen’s patent for DNA splicing by the time of its expiry in 1997. In 2002 the last year for which we have figures, Harvard University, received a total of just $20 million licensing revenue across all industrial, scientific and technological research areas. These licensing revenues accounted for less than 4% of Harvard’s total research spending of more than $520 billion in the same year. The licensing revenues came from over 550 outstanding licenses so each license generated just over $35,000 a year. In 2002 Harvard was involved in 59 patent applications, granted 89 licenses and options and was involved in 8 startups so it seems likely that a large chunk of the $20 million was swallowed up in legal and administrative costs. Other top universities do little better.

So what is going on here? It may be that university scientists focus on the type of research that gets published in Nature and Science and generates citations rather than research that companies want to license. It could be that the huge spend by the American government in universities skews research away from research that can be turned into products. It may be that universities are not very good at identifying commercialisable research and selling that research to companies. It could be that companies are not very good at recognising promising research in the academic laboratory. Or it may just be that companies prefer to deal with other companies operating on the same profit and loss driven mind-set as themselves.

Churning out scientists who found companies, invent new products and make fortunes is one thing. Keeping a stake in that innovation-driven wealth creation is an altogether more difficult challenge.

Whatever is the case universities have some way to go before they become the nation’s scientific engine of growth.

Exubera shows the importance of having an exit strategy

Pfizer has announced that it will drop Exubera, its poorly selling inhaled insulin developed in partnership with Nektar Therapeutics. Unfortunately a tough business orientated decision was turned into something akin to an alliance manager’s worst nightmare. It seems that something went badly wrong in the communication between the partners with Nektar Therapeutics claiming that it only learned about the decision from Pfizer’s press release.

This led Morgan Stanley analyst Jami Rubin to write in a research note that she was surprised at how Pfizer delivered the news to Nektar: “Such tactics can’t be good for your ‘partner of choice’ reputation.” Other analysts, bloggers and journalists have followed Ms Rubin’s line.

So why the breakdown in communications? Pfizer’s explanation, again communicated in a press release, was that it had withheld the news from Nektar because the announcement contained material financial information related to Pfizer’s quarterly earnings. On the face of it this explanation for the lack of communication seems a bit odd. Pfizer has dozens of alliances that are financially material and the company must be making decisions about those alliances on a daily basis. Effective communication is at the very heart of managing alliances and we would hope that they have a well-developed communication strategy with partners that balances the need to keep partners in the loop with the three month reporting cycle.

Of course it is quite possible that an executive somewhere within Pfizer made a decision about managing the exit and that there was nothing that the alliance management team could do about it except watch with horror. Or it may be that the relationship between Pfizer and Nektar had broken down to such an extent that there was no communication between the parties. It happens.

Whatever facts lie behind the breakdown in communication the events do show the importance of having a well thought out exit strategy and a strategy for handling the situation where the relationship breaks down to such an extent that the parties start trading accusations in public. For instance, which journalists and bloggers do you focus on and who handles the interviews? How are other partners to be handled? Whichever way the exit and disaster strategies are formulated communicating with partners by press release is not a good strategy.

Public-private partnerships for drug development: An emerging trend or special cases?

On November 5th 2007 the pharmaceutical company GlaxoSmithKline (GSK) announced that it had formed a five year alliance with the Texan based non-profit research institution MD Anderson Cancer Center to discover and develop new therapeutic, diagnostic and imaging products for cancer. According to the company the objective of the partnership is to get scientists from both organisations working together early in the discovery and development process to reduce delays in drug approval process.

This strategy diverges from the more typical approach of pharmaceutical companies who typically start to work with clinical centers like the MD Anderson Center only once they have obtained approval of investigational new drugs (IND) from the U.S. Food and Drug Administration. GSK’s alliance with the MD Anderson Cancer Center involves getting each institution’s scientists working together early in the process to monitor progress in research and development and to select biomarkers and imaging techniques in advance of an IND approval so that clinical trials can be launched with immediate effect when given the go ahead by the FDA. Given the fact that time is often one of the most expensive factors in clinical trials, this could provide a useful means cutting down on the costs of clinical development and help flag problems early on.

The alliance with MD Anderson Cancer Center is part of a trend for GSK which has entered a number of public/private partnerships in recent years. In 2000 the company entered a partnership to develop a malaria vaccine for children with the Malaria Vaccine Initiative (MVI), an organisation started by the Bill & Melinda Gates Foundation in 1999. By 2004 clinical trials were showing promising results for a malaria vaccine candidate produced from the partnership. In 2003 GSK began marketing Lapdap, a drug directed towards the most life-threatening malaria parasite, which had been developed through a public/private partnership begun in 1993 between GSK, the Tropical Disease Research Programme of the World Health Organization, the UK Government’s Department for International Development, the University of Liverpool, the Liverpool School of Tropical Medicine.

In 2005 GSK entered another public/private partnership with the International AIDS Vaccine Initiative (IAVI) to develop an AIDS vaccine. The aim of the collaboration was to support early research and development of a new technology developed at the University of Pennsylvania exclusively licensed to GSK which uses non-infectious vaccine vectors to stimulate specific immune responses directed against HIV. Under the terms of the alliance GSK and IAVI researchers were to form a joint research and development team and IAVI was to contribute technical expertise and funding.

GSK’s partnerships with public organisations are not unique. In 2005 the pharmaceutical company Bayer Healthcare entered an alliance with the non-profit organisation Global Alliance for TB Drug Development to study the potential of Bayer’s antibiotic, moxifloxacin, to reduce the standard 6-month treatment of tuberculosis to 2-3 months. In 2004 the swiss based pharmaceutical company Novartis entered an alliance with the Broad Institute of MIT and Harvard and the Lund University to form the Diabetes Genetics Initiative with the aim of deciphering the genetic causes of type 2 diabetes. In February 2007 the partnership released on the web the data of the genome-wide analysis of genes associated with type 2 diabetes and other related metabolic disorders.

With patents expiring, product pipelines drying up, spiraling development and clinical costs and a hostile press, public/private partnerships offer an attractive strategy for pharmaceutical companies to improve their image and reduce costs. Public/private partnerships are unlikely to improve a company’s profit revenues in the short-term, however, because they are more likely to occur where the public has a vested interest in a specific disease which affects the poor. For public institutions they offer an important means of co-ownership and lowering the cost of medicines.

Yahoo! leads Amazon, Google and eBay, in patents at least

Despite all the noise made by Amazon’s one click patent, Yahoo!, with 707 patents and applications filed, has pursued a far more aggressive patenting strategy than Amazon, eBay or Google. These figures include patents subsequently acquired by the major companies through acquisitions.

Google’s intellectual property estate includes sixteen facial recognition patents assigned to it as a result of the acquisition of Neven Vision Inc and nine patents acquired in late 2005 from the Disney-owned Infoseek Corporation.

The largest external portfolios acquired by Google were a group of 26 patents and applications acquired from Dmarc Broadcasting Inc, a developer of digital audio systems and related services for radio broadcasters acquired by Google in 2006, and thirty patents acquired as the result of the purchase of Adscape Media Inc from The Wall Street Journal. Adscape sold software that integrates ad placement in games.

Curiously, Jeffrey Bezos, Amazon’s founder is listed as the sole or a joint investor on 17 of Amazon’s 121 patents. Google’s founders Sergey Brin and Larry Page, by comparison are listed as inventors on six and two respectively of Google’s 536 patents.