Tech transfer is about more than revenue

Tech transfer

The commercialization companies of Israel's universities take the Central Bureau of Statistics to task for measuring their success in terms of money.

Institutions of higher learning are one of the most important sources of technological developments. Researchers spend a great deal of time attempting innovation and researching far reaching technologies. They have many years of experience in bringing innovative technologies to market that it would be difficult to develop in the private sector. In order to succeed in this, universities use technology transfer companies to encourage commercialization of these technologies and turn academic research into practical business operations.

Every year, the Central Bureau of Statistics publishes a survey of the technology transfer companies in Israel. According to this survey, the revenue of these companies, which are also  a source of income for academic institutions, has declined from a peak of NIS 1.9 billion in 2012 to NIS 1.36 billion in 2016, the most recent year surveyed. Other variables also found to be declining are the number of breakthroughs reported by researchers to their universities and colleges in the course of their research and the number of approved patents. The number of professional staff and the number of licensing agreements were also reviewed.

The tech transfer companies have now published an alternative report through the Israel Technology Transfer Organization (ITTN), a roof organization for Israel's tech transfer companies. ITTN members include companies from universities, hospitals, health funds, research institutes, and one academic college. This report, which considers a slightly different set of variables, purports to show that the members' activity is more effective than indicated by the Central Bureau of Statistics data. According to this report, the commercialization companies signed 329 licensing agreements with external companies in 2018, 23% more than in 2017. The report also shows that a six-year high of 74 startups were founded last year on the basis of commercialization processes, compared with 39 startups in 2017. On the other hand, reports of new discoveries fell from a record 1,328 in 2016 to 1,005 last year. The report lists the signing of 873 research financing agreements and 730 consultation agreements in 2018.

Yaron Daniely, president and CEO of Yissum, the technology transfer company of the Hebrew University of Jerusalem, and co-chairman of ITTN, told "Globes," "Revenue is a result of the transfer of knowledge 10 years ago, and the transfer of knowledge today will generate revenue 10 years from now." He said that same thing about the number of approved patents. According to Daniely, a patent approved this year was submitted for approval at least two years earlier. ITTN says that the correct measure is the number of patent requests, which rose from 604 in 2017 to 623 last year.

The variables examined in the ITTN report correspond to a change in the policy of applied research companies that has been starting to show results in recent years. In recent decades, academic institutions worldwide have been focusing on commercializing knowledge in order to generate revenue. According to various studies published in Israel and abroad, however, knowledge commercialization activity has failed to generate worthwhile revenue for institutions of higher learning, and has also failed to promote the "third goal" of institutions of higher learning - transferring academic knowledge to industry and society.

There are well-known cases of success, such as Mobileye, whose systems are based on image processing developed by the company founder Prof. Amnon Shashua in academic research. Another example is Copaxone, a drug for treatment of multiple sclerosis developed at the Weizmann Institute of Science that was responsible for a considerable proportion of Teva Pharmaceutical Industries' revenue. Nevertheless, a report by Samuel Neaman Institute for National Policy published in "Globes" proposed a change in policy to redefine the goals of the commercialization departments from financial purposes to purposes of disseminating knowledge for society and industry.

As early as 2011, the Ministry of Finance published a document of conclusions and recommendations designed to improve the process of transferring knowledge from academic institutions to industry, with an emphasis on the third goal - disseminating the information through greater openness in licensing agreements. This is to be accomplished by giving priority to transferring more knowledge, rather than generating more income. Some of the report's recommendations were adopted by the commercialization companies, but many other have not yet been implemented, or have been only partly implemented, including the founding of research institutes for specific fields, getting academic institutions to formally adopt the third goal, and the founding of broad application companies for all research institutions in Israel.

"Someone trying to measure technology transfers in monetary terms is placing an obstacle in the way of broad and deep transfers of knowledge between institutions of higher learning and industry," Daniely says. "The transfer is measured in terms of impact, such as how many licensing agreements were signed and how many companies were founded; the money is a byproduct. Israel is almost the only place in the world where commercialization companies are companies. Most of them are university units, and their income isn't measured like that of a company. This is an inherent conflict involving a mistake that should be avoided."

Despite Daniely's opinion, the Hebrew University's recovery program agreed last year also contains a clause stating that an effort will be made to maximize Yissum's revenue. This is not an absolute contradiction, but in such a case, revenue definitely plays an important role.

According to the report, the principal beneficiaries from discoveries at Israeli research institutions are Israeli companies: 76% of the licensing agreements in 2018 were granted to Israeli companies and 24% to international companies, a slightly lower proportion for Israeli companies than in 2017. Israeli companies were also partners in 74% of financed research and in 63% of the consultation agreements in 2018. The universities' tech transfer companies were more dominant in licensing agreements and in industry-financing research (nearly 80%), while companies of hospitals and research institutes were prominent in consultations agreements (80% of the agreements signed last year).

In sectors, 60% of the activity by commercialization companies is divided among inventions in pharma and biotechnology and inventions in medical technology. Others were in computer science which accounted for 18% of licensing agreements, reports of discoveries (13%), patents (15%), and startups (11%).

The challenge - Professional reinforcement

"The report highlights the tech transfer companies' diverse activities and the many efforts made by them to commercialize research products. Nearly 166 employees work in this area and over 600 new patents were submitted in 2018. This is an amazing investment," Gil Granot-Mayer, ITTN co-chairman and CEO of Yeda Research and Development, the tech transfer arm of the Weizmann Institute, told "Globes." "The leadership of Israeli academic institutions and hospitals in commercialization stands out in the results presented in the report in the number of new companies founded in 2018 around technologies developed at academic institutions, and in the number of agreements."

"Our challenges in the coming years are professional reinforcement of commercialization personnel and creating tools and new platforms to accelerate commercialization and increase the likelihood that it will succeed," Granot-Mayer adds. "In this context, a big effort is already being made by ITTN's members to improve and promote the institutions' technologies, so that they will match the needs of the market and will be able to advance to products in the market, with suitable investments in them."

Technological teams working in the commercialization companies are in touch with the researchers, and marketing and business development teams are in touch with the industry, and are trying to understand its needs. In addition, in recent years, commercialization companies have been initiating more and more projects aimed at helping new technologies break through the borders of research to the business world.

A report published by the Deloitte research company in July 2019 shows that in recent years, more and more commercialization companies and universities have been trying to encourage a transfer of knowledge between institutions of higher learning and industry in the long term. A public appeals program is designed to enable academic researchers to find ways of applying their research according to industry's needs. Entrepreneurship programs for researchers were designed to encourage independent entrepreneurial access among them, so that they would be able to turn their research into business. Investment funds were designed to provide initial capital for ventures by researchers in the early stages on a venture capital model, so that only some of them reach the market in the future.

None of these trends directly gives the commercialization companies income from knowledge transfers, but they encourage more cooperative ventures between industry and academic institutions and commercialization companies. "When complaints arise about dissatisfaction with knowledge transfer processes, they mostly concern licensing agreements that take years and the difficulty of conducting joint research with institutions of higher learning. If money is the main thing, every such deal takes a long time, is difficult, and is based on lengthy negotiations, bargaining, and attrition. That's the opposite of what we want to happen," Daniely adds.

Daniely notes that in the most recent ranking published by the World Economic Forum, Israel was rated third worldwide in the quality and scope of the connection between institutions of higher learning and industry as of 2018, compared with 33rd place 10 years ago. "In 2018, there were hundreds of licensing and financed research agreements. I think that these figures show that if you refrain from working with universities today, you're in a minority. Someone who tried in the past and failed is invited to try again."

Published by Globes, Israel business news - en.globes.co.il - on September 5, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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