Science for export
Although every major university or institute would like to be located in a biotech hub and keep its discoveries close to home, only a few true hubs exist. For everyone else, the question is whether their research goes elsewhere to be commercialized. In the long run, the answer is usually yes. Much of the technology that is licensed to existing companies goes elsewhere. And although some institutions may form startups close to home, these often end up leaving once they need venture funding.
The lack of nearby corporate infrastructure also has more subtle effects on translational work at universities not located near major hubs. For example, researchers may not realize the commercial potential of their own work. As a result, many technology licensing officers at these institutions spend time training researchers to recognize the translational potential of their work, as well as ferreting out interesting discoveries within their own institutions, instead of devoting their resources to finding the best way to market those discoveries to VCs or potential partners.
Moreover, a common theme is voiced by universities in today's cash-constrained environment: licensing deals are harder to come by, as biotech and pharma companies are more reluctant to take on discovery-stage and preclinical projects.
The result is a greater emphasis on university spinouts, a situation in which institutions embedded in biotech hubs again have an advantage due to the concentration of management, financial, legal and technical skills.
"When times are tight and companies don't want to take on new commitments, it pushes you towards more startups. If you can't find a licensee, make one," said Ashley Stevens, executive director of the Office of Technology Transfer at Boston University and president-elect of The Association of University Technology Managers (AUTM).
The experience of the Massachusetts Institute of Technology-one of the universities most successful at commercializing technology-contrasts with the experience of institutions in five other regions: Chicago, Atlanta, Oxford in the U.K., France and Germany.
MIT: setting the bar high
MIT does about 100 deals per year, of which about 35-40% are in the life sciences, according to Lita Nelsen, director of the university's technology licensing department. Of the 100 deals, about 20 are startups, which translates to about 7 or 8 new biotech or device companies per year.
The remaining 80 deals include a small number of licenses to large companies and a large number of follow-on licenses, such as an improved version of a technology that has already been partnered with industry.
Only about 25% of MIT deals go outside the region.
"We end up doing the vast majority of our licenses and spinouts in the eastern half of Massachusetts," noted Nelsen.
This is possible because there is ample venture money and plenty of companies in New England. Since the start of 2005, the region's biotech companies have raised a total of $851.2 million in announced series A financings, as tracked by BioCentury.
There have been 54 such deals, for an average round of $15.8 million. That compares with the overall average of$15 million for A rounds globally in the same time period. The global figure excludes a pair of outlier A rounds-a $300 million financing by Ikaria Holdings Inc. and a $170 million financing by Xanodyne Pharmaceuticals Inc. Including those deals, the global average is $16.2 million.
However, even New England has not been immune to the economic downturn. There have only been two series A rounds in the region since March this year, and neither broke the $10 million mark.