A less sanguine picture is facing the TTO at the University of Minnesota, where recently hired director Jay Schrankler admits royalties from a blockbuster 1999 deal have hidden a failure to build on that success. The situation is will become more critical when the anti-AIDS drug Ziagen — which has brought in nearly $300 million in licensing dollars from GlaxoSmithKline — comes off patent in 2013. When those royalties disappear, so will 95% of the school’s tech transfer revenues, and Schrankler has taken on the challenge of filling that daunting gap. Using a baseball metaphor, “we are coming in at the bottom of the eighth,” said Schrankler, a former Honeywell executive. “We’ve got to work hard and fast to turn this around.” That may be easier said than done at a time when the state’s economy is slowing and its medical device sector is maturing. The school has high hopes for Orasi Medical, a recent university spinoff that’s developing technology to help quickly diagnose neurological diseases like Alzheimer’s. But compared with leading national universities and its regional peers, UM’s commercialization efforts lag significantly. From 1984 to 2004, the university spun off 101 companies but only three went public, according to a study conducted by MBA students at UM’s Carlson School of Management. That 3% success rate compared with 8% for public universities and 14% for “premier” universities like MIT and Stanford, the study says. That performance has generated some unflattering comments from local investors and gotten the attention of state lawmakers. “The U is one of the greatest assets the state has,” said Vance Opperman, president and chief executive of Key Investment Inc., a Minneapolis-based VC. “But there has not been as much [start-up activity] as I would like to see.” John Alexander, president of Twin Cities Angels, was more critical when he addressed the state’s House Committee on Biosciences and Emerging Technology recently. The school is more interested in protecting its intellectual property than collaborating with the business community, he said. “It is a pleasure working with MIT; the same can’t be said of Minnesota. I think that’s the widely held consensus of the business and venture capital community,” Alexander told legislators. He suggested the university’s near monopoly on high-tech research in the region is stifling innovation. But tech transfer officials note that it was torched in several technology developments — an early browser that predated Netscape’s Navigator and the artificial heart valves later commercialized by St. Jude Medical — that it failed to secure airtight IP protection for. Those disappointments have led to an inflexible negotiating stance that is turning off potential licensees, observers say. Racalling his own negotiation with the school, Dale Wahlstrom, a former Medtronic executive who is now chief executive of the BioBusiness Alliance of Minnesota, called the experience “a one-sided discussion. If they couldn’t get the optimal deal, they wouldn’t do anything.” Go to: Star Tribune

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