DR JEFF SKINNER AND DR EDERYN WILLIAMS

TUESDAY 19 NOVEMBER 2002

  587. Good afternoon and welcome, gentlemen. Would it be right to say that there is pressure on university departments to commercialise research. Is this Government bearing down on academic institutions which are supposed to be almost like medieval monasteries, not interested in anything other than blue skies research, development of the soul? Where does this come from, this change in emphasis?

  (Dr Skinner) At the level of the academic I do not think there is pressure to commercialise anything at all. We would retain for the academics always the right to publish; it is for the academics to build up their own portfolios of activities some of which is commercial or interaction with the commercial organisations, some of which might be involvement in a spin out company. At UCL we would see ourselves as enabling and perhaps a little bit of encouraging when educating to the possibilities, but I do not see pressure at the academic level. (Dr Williams) I entirely concur. The pressure in the universities, so to speak, has been to set up technology transfer offices which are there to help those academics who actually have something exploitable and wish to push it forward.

  588. When you are saying you set up these offices, what does that involve in the sense of what are the qualifications that people require to be in a technology transfer office, or is it one of these places where people can get moved sideways into?
  (Dr Skinner) Not any more.
  (Dr Williams) I did a PhD after first degree, worked as a university research assistant for a few years, then went off and worked in British Telecom for 13 years in the enterprises end in a managerial capacity. I came back to the university sector combining academic and business expertise, and found universities funny places just as anyone else coming into them does, and tried to work around the system in order to achieve the objectives.
  (Dr Skinner) The type of people we bring in now are certainly not from other activities within the university, except some very junior people who we are training up. But the people at any sort of senior level have been in industry and will hopefully have some other type of qualification—MBA's are becoming more common now—but also have a firm background in technology, in the area they are attempting to exploit, preferably a PhD.
  (Dr Williams) We hate to think of ourselves being described as bureaucrats.

  589. What about the other side of it. Within universities there is this pressure on getting research evaluation placings, and the need therefore to keep research as research rather than getting the academics engaged in business. Do you see that as a conflict within the institution?
  (Dr Williams) I have not noticed a lot of conflict because it is high quality research that leads to break-through innovations of the sort we can exploit. The last thing we want is university departments that are acting at the same level as a commercial company's R&D department, doing highly applied work, because that is not going to generate the kind of exploitable innovation we can really do the best job with.

  590. But if you do not have too many people and they have been doing the research, is there a tendency to say that you have to hold on to them as researchers rather than encouraging them to go on to work within the spin out companies?
  (Dr Williams) It is a transfer process and we often try to encourage the key researcher not to move into the company, to gain his rewards as a shareholder or as beneficiary in the licence, and not pretend to be a managing director. A quote from the Caltech Office of Technology Transfer was "why take world class professors and turn them into mediocre businessmen". Of course we do not.
  (Dr Skinner) Except on one occasion—which was an exceptional occasion when the guy came from industry in the first place anyway—in not one of the spin outs that we have heard has the academic gone with the company. Nobody wants them there. We do not want there neither do the company want them there. We want them at the interface.

  Sir Robert Smit

  591. What sort of proportion of the commercialisation has been biotech related?
  (Dr Williams) About 40% in mine.
  (Dr Skinner) Yours is a special case. When you have a medical school as we have it is likely to be about 80%.

  592. We were discussing—you probably heard us—with Dr Winter his experience in relation to the licensing of discovery as distinct from spinning it out into a company and there were different reasons for taking those two routes. There may be other models—collaborative partnerships that are not strictly comprised by those two models—and could you run us through what are the pros and cons of the respective models?
  (Dr Skinner) I see it as a grayscale; I always have done, I have always advocated that. The question is not whether to spin out or not to spin out. The questions is: do you need to add value to this to take it one step further before anybody is going to recognise its potential and, to an extent, be prepared to pay a reasonable sum of money (which is the other side of valuing the technology). We have had technologies where we have tried to license and have failed to license. And so we have said that we have to do more with this technology before we can license it. The only way we can do more with this technology, to bring it up to the point where people are going to take hold of it and want it from the industry side, is to do more work on it. We cannot get any more money from the Research Councils because they judge it to be too commercial now, so we have to get money from somewhere else. As soon as you start getting money from somewhere else—be it an angel, be it a SMART award, be it a venture capitalist—you are almost forced into having a commercial vehicle for that, because you have to divide up who is going to get what out of it.

  593. I am slightly confused because the point at which you then create the commercial vehicle—impliedly from what you were previously saying—is the point at which you, in a sense, detach it from the inventor and the academic discovery. But surely the whole point is to continue it?
  (Dr Skinner) No, quite the opposite. Often when we do licensing deals that is when it gets detached because the company takes it into the company and into their research programme. But if you form a spin out company then that actually is a better mechanism for incentivising and also involving the original academics whose research labs it came out of in the first place. It is quite the opposite. It is a great way for motivating the academics to play a part—and a further part—in the commercial development of the invention.

  594. So the decision about which route to take is essentially, as was the case with Dr Winter, about the relative maturity and developed nature of the technology?
  (Dr Skinner) I think that if we had good licensees around who would take technologies in the state they come naturally out of universities, then I certainly would say: Do a licensing deal to a good partner who is going to take it forward. Put the right incentives in there to make sure they do not just drop it but they do actually do something with it, and then move on to the next one.
  (Dr Williams) Can I make an additional point which is that if you sign a licence you are tending to find a large company who can take it forward, particularly as they have to invest in R&D. They are highly unlikely to be anywhere in the region, indeed they will not usually be in the UK. Most of our licensees are actually overseas, certainly the recent ones which we have signed in the States. Spin off companies are extremely local and will often stay on the campus, in the region, and if it perchance grows rather than being acquired and moved somewhere else, then it continues to be of benefit to the region. So we get quite a significantly greater interest at all levels: business links, regional development agencies, even the DTI. We are encourage to do spin offs because it is more obvious that the benefit is staying in the economy.

  595. I would like to ask a couple of questions about IP. Both Dr Winter and, to some extent, yourselves have indicated that if research starts off in a university you will not necessarily know where it is going to lead at the start, and this journey you embark on is not one necessarily laid out at the start. In relation to that, how do you put a value on the research that you think you may want to commercialise later? Do you think that academic institutions end up over-valuing IP?
  (Dr Williams) It is a negotiating process. You see what the other party is prepared to pay and you negotiate in order to do a deal. I do not think we get precious about our intellectual property. We were discussing this in the corridor outside. We negotiate but on the basis of trying to do a deal. I cannot think of an instance where we have said: You are not offering enough, I am not going to give it to you. We may try to find alternative licensees, but at some point we would say: Fine, if that is the best offer we will take it.
  (Dr Skinner) Quite right. We have never lost a deal, ever, through saying: No, you cannot have it because you are not paying enough.
  (Dr Williams) That is partly because we feel our mission is to get it out there.
  (Dr Skinner) And partly because there is huge pressure from the academics, if I may say so, for us to get it out there.

  596. What about the other way round? You say you have not felt blocked from commercialising for asking too much money. What about the other way round? Is there a danger that academic institutions could end up not getting the co-operation and support outside to do extra research through that problem?
  (Dr Skinner) You mean through the money that can pay for that extra research?
  (Dr Williams) It is not going to make a difference. They talk about the US as a very well developed licensing environment, and yet they are getting an extra three or 4% on top of their research income by licensing. It does not make a big difference to the economy of the university, the money that we pull in. It is very much more our strategy to be acting in a way such that the research is well used. The money we get in supports our own operation, the technology transfer office. It does not make a big difference to the university as a whole.

  597. Do you think you have had value for money?
  (Dr Williams) From where, sorry?

  598. From the licensees.
  (Dr Williams) I suspect in many cases we will have licensed out things for either a lot too much or a lot too little because it is almost impossible to value at the early stage. I think quite a lot of licensees who do licensing for universities are disappointed because they get to the next development stage and it does not work and they have wasted their money. On the other hand, occasionally it will turn out to be hugely better than anyone anticipated and we will be kicking ourselves for not having done a better deal. It is impossible to value. You can value a house, but you cannot value a piece of IP or a patent. We just negotiate, do a reasonable deal and get on to the next one.
  (Dr Skinner) I do not think I have ever felt badly done by by any of our licensees. You do a deal and move on, on the information available at the time and on the power of the parties available at the time.

  599. If we could look at incentives, what do you think the incentives are that exist for scientists or institutions to commercialise their work? If you go north of the border to Scotland I understand there are some different sorts of incentive schemes there. Are there any appeals from that experience for south of the border?
  (Dr Williams) There is more money in the proof of concept fund and so forth. I think it is partly culture. I think universities doing technology transfer successfully for a few years will have got a few academics very happy because they are generally poorly paid and something like £50,000 let alone £100,000 is a lot of money and that is the sort of money we are likely to be able to deliver to some of them. They start to spread the message that this is worth doing, not to change their lives but when they see some good opportunity they should come to us. Over five or 10 years a good technology transfer office will generate a culture within the university that encourages the academics. None of them are there to be truly rich; they would not be in universities in the first place. But they do appreciate it when we can do a deal that generates that kind of money for them.
  (Dr Skinner) They are more driven by a sense of equity, I think. If X is getting something out of it, then we want something out of it. But it is very rarely the driving force at the very outset; the driving force is very much more: I have this technology and I want to get it out there and this is the mechanism I am going to work with—the tech transfer office—to get it out there.
  (Dr Williams) But on your other point, as far as the institution is concerned, it is highly unlikely that we are going to do deals which will generate huge amounts of money for the institution. It is very much more done by the institution in terms of its standing, its reputation and the messages it gets from the government as to the relative importance of this activity. The days when it was just a little money making activity—which is how I would describe it in the early 90's—are definitely past. Most of the leading universities now are doing it because it is expected as part of their mission and because they see it as enhancing their reputation and reinforcing their status as a leading research institution. It is not for the financial return.