Response to the Request by the Office of Science and Technology Policy and the National Economic Council for Information regarding Commercialization of University Research

Originally submitted to NEC_General@who.eop.gov on April 26, 2010; modified April 2016.

(approx. 4 min. read)

This response addresses the question of how commercialization of promising technologies stemming from Federally funded research can be successfully promoted.  An initiative is proposed herein that is adapted from a model used by persons who command significant capital dedicated to commercialization of promising new technologies.  Biologists provide this response with experience in the commercialization of university research and experience working in global pharmaceutical companies.

Executive Summary

We need new products, new companies, new jobs, and more affordable and effective healthcare.  The underlying root of economic growth has been, continues to be, and will undoubtedly be technology (e.g., Google, the Honeycrisp apple, insulin, penicillin, CAT scan, MRI, ultrasound, pacemaker, seat belt, cochlear implants, laser cataract surgery, vaccines, Ziagen and so much more).  Thus, the most promising technologies need to be identified and brought to fruition in a timely manner to create quality products and jobs.  Federal funds are needed to bridge the “valley of death” that prevents promising technologies from being developed to a level that would interest investors and/or companies.

We propose a commercialization effort driven by multi-disciplinary teams of people, including people who understand the commercialization process.  Such commercialization teams could:

• Evaluate projects from all relevant perspectives (basic science, regulatory, intellectual property law, business, marketing, end-user, product development),
• Select projects for Federal funding that have the greatest potential to fulfill the most pressing needs in the timeliest manner,
• Launch selected projects towards efficient commercialization, and
• Continue to advise, manage, and be accountable for the projects throughout the commercialization process.

More details about the proposed initiative are provided below.

Justification

We believe that the U.S. has new technologies that can be harnessed to drive future economic growth in a sustainable manner.  Unfortunately, the “valley of death” has become even more onerous as investor fortitude has waned overall.  Investment has shifted to later-stage projects with decreased risk and shorter time to return on investment, which ultimately leads to fewer innovations and products in the “pipeline.”  In addition to impatience and nervousness, the current economic environment also seems to suffer from decreased availability of private funds for investment.  Further, significant investment of private capital is geared towards keeping existing companies and technologies going in efforts to preserve past investments, rather than investing in new companies, technologies, or improvements.

Federal funding is needed, therefore, to move promising technologies further down the development path before investors will be interested.

In FY08, the U.S. government invested an estimated $54.7 billion in research and $56.6 billion in development.  What is the return on this investment?  In the words of Benoit Godin, “…After 60 years of statistical work, we still measure the inputs…but very seldom the outputs and the impacts…The challenge lies…when it comes to measuring results that sometimes remain intangible, not to mention the fact that they often manifest themselves only in the very long term.”  Current evaluations of research funding organizations do not satisfy the needs of those who want to know the societal and economic impacts of research.  Nevertheless, it is clear from the current state of our economy that there is ample room for improvement in obtaining returns on the sizable annual investment of Federal funds in research and development.

Proposed Initiative

We propose a Federal Government initiative to form multi-disciplinary teams of professionals charged with and accountable for commercialization of Federally funded research.

Projects with foreseeable potential for commercialization and creation of domestic jobs should be solicited.  Particular areas of greatest need could also be highlighted.  Descriptions of projects submitted for review should ideally include business/commercialization plans complete with realistic estimates of costs and timelines.  The proposed initiative could include providing business/commercialization planning for promising innovations.  For example, a corps of recent college graduates could assist in this process.  Commercialization teams should determine how well commercialization plans align with patent, regulatory, product development, and market considerations, and should select projects for funding that have the greatest potential to fulfill the most pressing needs in the most timely manner.

Commercialization teams should be comprised of professionals who know how to commercialize technology, who have regulatory experience, who have product development expertise, who understand patent law, and who will be, or at least accurately represent, end users of the technology.  Of course, team members should also include inventors and academicians who understand the technology area.  Compositions of teams will differ as appropriate for different technology areas.  It would be valuable in and of itself to assemble such teams of individuals to sit down at the table together and evaluate projects from all of the relevant perspectives, even if the only deliverable was to provide advice to inventors and academicians.

Commercialization teams should be comprised of a mixture of entry level, mid-career, and experienced professionals.  It is important to balance experience levels because high-level experts with track records of success can offer a wealth of resources, while past patterns of success may be irrelevant under new conditions.  Having younger professionals at the table is also valuable to balance the tendency of older professionals to be more risk adverse.  Team members should be non-biased and free of any potential conflicts of interest.

The proposed commercialization initiative also offers ample opportunities for training.  For example, students could be included (e.g., as internship opportunities) as well as faculty who want to learn about commercialization (e.g., during sabbaticals).  Bringing together different perspectives (expertise, age, culture, etc.) can have a dramatic impact on the creativity and efficiency of the team.

The entire process should allow enough transparency for people to understand the decision-making processes and use them to guide other projects; however, enough latitude is also envisioned to protect intellectual property and competition from groups who have not made an intellectual or financial investment in the technology area.  We also recommend that commercialization teams continue to advise, manage, and be accountable for the projects they have selected for funding throughout the commercialization process.  This includes discontinuing projects that, for example, fail to meet milestones, turn out not to be feasible, or become otherwise de-prioritized relative to other opportunities.

The overall portfolio of commercialization projects should include a balance of higher and lower risk projects.  Higher risk projects should be innovative and/or have significant potential to create jobs and/or benefit society.

The virtual company model may be a highly advantageous business model, at least for some commercialization projects such as biotechnology projects.  In particular, a virtual company model can be highly efficient when activities are outsourced to experts rather than “reinventing the wheel” internally.

Evidence that the multi-disciplinary approach proposed herein works is that venture capitalists and angel investor groups use a similar approach wherein teams of professionals, covering a broad range of collective expertise, evaluate technologies for investment.

Metrics for Success

Metrics for success include creation of companies and quality jobs in the U.S. as well as generation of licensable intellectual property.  Metrics for success should also include positive health and social benefits.

Summary

We have no doubt that allocation of Federal funds to multi-disciplinary “commercialization teams” with a primary goal of commercializing the fruits of the labor, creativity, and genius of Americans will stimulate our economy in a significant and sustainable way.  In addition to realizing the full potential of Federally funded research, such efforts will help academicians to commercialize their inventions while also teaching them and students how to commercialize technologies.  Transparency and teaching will help all inventors and entrepreneurs to commercialize technology, which will further promote sustainable growth.  In addition, Federal funding towards commercialization will, in turn, stimulate private investment.

Thank you for your consideration.

Marie D. Kube, Ph.D. and Michael G. Klug, Ph.D.