(Editor's note: This is part two of a two-part feature about the campus's significant shift in attitudes about the commercialization of research. The first half of this story is available online at www-dateline. ucdavis.edu. Last week's segment focused on how former faculty member Ray Valentine helped found the ag biotech firm Calgene in the early 1980s and resistance he faced in that endeavor. Today's article continues with what has since occurred.)
While the beginnings of change go back to the 1980s, faculty and administrators involved with spin-off companies say the pace of change is now accelerating.
"The campus is supportive in ways that were unimaginable 10 years ago," said Leo Chalupa, professor of ophthalmology and neurobiology and chair of the section of neurobiology, physiology and behavior. He is launching a company called Immunotox.
"Especially in the last year, I've felt a real change," said organic chemistry professor Jacquelyn Gervay-Hague, co-founder of SialoGen Therapeutics in Davis.
Despite shifts in attitude since the Bayh-Dole Act, land-grant universities such as UC Davis have tended to be conservative in approaching commercialization, said Lynne Chronister, associate vice chancellor for research administration in the Office of Research. But a recent survey of 114 science and engineering faculty conducted by that office found that almost three-quarters had filed patents, were thinking of patenting an invention or expected to do so in the next two years.
There's been an evolution of views at funding agencies, too. In 2003, National Institutes of Health director Elias Zerhouni released a "roadmap" for the future at the NIH. One of the three themes of the plan is getting basic research discoveries into clinical use.
Today, the university aims to supply a continuum of services to support such faculty entrepreneurship, Chronister said, from the initial steps of preparing and filing patents through finding partners and investors, to setting up companies and taking them through the initial rounds of funding.
Until 1999, campus inventors had to file patents through UC's Office of Technology Transfer in Oakland. That responsibility has since been shifted back to campus with the establishment of the UC Davis Technology Transfer Center headed by Larry Fox. The center helps faculty do what's needed to protect their inventions and license them to existing or new companies.
Also in 1999, the campus launched UC Davis Connect to raise awareness among faculty of the possibilities of commercially developing their work. Connect provides networks for advice, mentoring and education to help them achieve that aim. Salquist, the former CEO of Calgene, now chairs the board of directors of the program.
The campus also plans to provide space for start-up companies in a new 38-acre research park to be built along Old Davis Road. It will accommodate other companies, public agencies and nonprofit organizations that want research ties with the university and is expected to welcome its first tenants in 2005.
And in the Graduate School of Management, the annual "Big Bang!" business plan competition run by M.B.A. students and supported by local businesses and venture capitalists provides budding entrepreneurs with resources for mentoring, advice, financing and education, as well as a $10,000 first prize.
New ventures
The founders of SialoGen Therapeutics -- Gervay-Hague; Frederic Troy, a professor in the UC Davis medical school; Sandra Reynoso, an M.B.A. student at UC Davis who also has a Ph.D. from the university; and Brian Rogers, adjunct professor in the Graduate School of Management -- won the 2003 Big Bang! competition with a plan for a company based on the chemistry of cancer.
"I initially thought of it as an exercise, but it really opened up opportunities for us," Gervay-Hague said of the Big Bang competition. "If it wasn't for that, there would be no SialoGen."
Invasive tumor cells coat themselves in a sugar-like chain molecule called polysialic acid. This seems to help them spread around the body. Polysialic acid is also found on normal cells in developing embryos, but disappears in adults except on a few specialized nerve cells in the brain. Troy's laboratory studies how cells make polysialic acid and has found ways to detect the process -- a flag for cancer. Gervay-Hague has developed compounds that can block the process and that could have potential as anti-cancer drugs.
SialoGen's founders are now looking for seed funding and have rented lab space in north Davis.
Chalupa is starting his company, Immunotox Inc., with a former graduate student from his lab, Emine Gunhan-Agar, to commercialize an invention he describes as "permanent botox."
The researchers have patented methods to permanently remove selected motor neurons, nerves that control muscles. The method could be used to treat neuromuscular disorders, such as spasms, tics and urological problems currently managed with botulinum toxin (botox) injections. Botox treatment is expensive because the injections need to be repeated every few months when the effects wear off.
"It's a potential billion-dollar market," Chalupa said.
Bruce Hammock, professor of entomology and an expert in toxicology, is also starting his first company, Arête Therapeutics, to commercialize products for treating high blood pressure and inflammatory diseases. Hammock's UC Davis laboratory has invented a way to take a snapshot of a key biochemical pathway and use that information to find new drug targets. It's a hot area for pharmaceutical companies. "We have a small window where we are way ahead of big pharma," said Hammock, who, like Chalupa and Gervay-Hague, is new to the commercialization business.
"My job for the last 30 years has been the generation of knowledge, but it's disappointing to me when it sits on the shelf," he said.
"We can have an absolutely major effect on human health."
Continuing concerns
Entrepreneurial faculty such as Gervay-Hague, Hammock and Chalupa are now working through some of the issues around managing both a commercial enterprise and a university research lab. The kinds of objections that dogged Calgene still remain. Some feel that any collaboration with industry gives the appearance of a conflict of interest and a lack of commitment to students; that work done with public support should remain in the public domain and not be patented; that universities should stick to basic rather than applied research. There's also a fear that commercial partners might influence the direction of university research or block results from being published.
Questions about how students are affected and about how faculty divide their roles between campus and corporation still come up, said Kit Lam, a professor in the UC Davis School of Medicine. Lam started his own company, Selectide, while he was a professor at the University of Arizona. Selectide was later acquired by Aventis Pharmaceuticals.
"There's a culture of worrying about this here -- that faculty won't fulfill their research and teaching commitments," Lam said. Professors starting companies need "do's and don'ts" -- guidelines to help them avoid these pitfalls, he added. He has worked with the Office of Research to prepare such a guide.
Some faculty take the view that anything developed at a university should be kept in the public domain and not patented. But that might actually hinder development of inventions that ultimately benefit the public, Gervay-Hague said, as investors are less interested in supporting start-up companies whose technology is available to competitors.
Intellectual property from inventions developed on campus belongs to the university, and companies have to pay appropriate fees and royalties to use it. UC Davis earned $16.5 million in fiscal year 2001-02 from this source. At the same time, investors are attracted by start-up companies that have their own intellectual property as a source of potential revenue. On the other hand, moving work too easily from campus to company could give the appearance that university resources are subsidizing a for-profit business.
"You need a clear understanding between all entities and investors," Gervay-Hague said.
The distinction between "basic" and "applied" research is an important sticking point for many university faculty. Some institutions have to do blue-sky, purely curiosity-driven research, and public universities are the obvious place for that, said Emanuel Epstein, professor emeritus of plant nutrition. "Time and again it has been exactly that sort of research that has eventually paid off in a big way." But there is nothing to stop universities from pursuing both very basic research and research with a clearer route to commercialization, he added.
Those who have been involved with starting technology companies find no contradiction between pursuing basic research and for-profit activities. "You can do good research and still have ideas with commercial utility," Salquist said. "They are not mutually exclusive."
To address these and other issues, campus policies and procedures need to be reviewed and strengthened in line with federal regulations, Chronister said.
"We have to be careful that the tail doesn't wag the dog -- profit doesn't become the driving force -- and we have to be very careful about conflicts of interest," Chalupa said, "but I think that can be done."
While the climate at UC Davis is improving, Salquist believes it's still too early to forecast fine weather. Regionally, the Sacramento/Yolo region is in the shadow of the thriving entrepreneurial culture of the Bay Area, where Stanford University and UC San Francisco have seeded start-ups in electronics, information technology and biotechnology.
The work ahead
Raising early rounds of funding is harder than ever in the current economy, with investors looking hard at how likely they are to make their money back. Venture capitalists are usually looking for at least a tenfold return on their investment, knowing that many new companies will fail.
"Venture capitalists are conservative. They want to know, how successful was the last deal here?" Salquist said. "There's no track record of start-ups from UC Davis, and they don't like that."
Salquist points to UC San Diego as an example of a campus that has successfully developed an entrepreneurial culture. UCSD flourished because it had great research, visionary leadership and a big early success with Hybritech, a medical biotechnology company founded in 1978, Salquist said. That early success spawned imitators and attracted investors to the area.
Salquist noted that so far Calgene is the only public company spun off from UC Davis. He says he wants to see at least three successful spin-off companies get started with exciting technology and make it through several rounds of funding. That would have a big effect on the opportunities for other businesses, he said.
One of those companies could be West Sacramento-based Lipomics Technologies. Salquist is a director of the company, started in 2000 by two UC Davis graduate students, Steven Watkins, Ph.D. '98, and Jeremy Ching, '96, M.S. '99, who had the idea of applying their knowledge about profiling complex mixtures of fats and oils.
Although Lipomics does not license any intellectual property from UC Davis, it is widely seen as a UC Davis spin-off, and a number of faculty members, including Bruce German, who supervised Watkins' and Ching's graduate work, sit on the scientific advisory board. The company turned a profit in the fourth quarter of 2003, Salquist said.
"We're late to the game, but we can learn from the models that are already out there," Chronister said.
"What we have is land and an incredible technology base. If we think big, this region can be the next Research Triangle," she said, referring to the North Carolina research park that draws on the University of North Carolina and Duke University.
As for Valentine, he retired from UC Davis in 1991 but still has a lab bench at Calgene's Fifth Street site, where he is studying essential oils found in both seaweeds and the mammalian brain and where, he says, "I have the luxury of thinking without interruption." •