Licensing: Another Channel to Commercialize IP

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Sometimes commercializing university intellectual property takes the form of establishing startup companies. While startup creation and support should be encouraged, there are other -- and, depending on the situation, better -- channels to bring university faculty and staff inventions to market. Licensing agreements between university technology transfer offices and already existing companies are one such channel.

I understand the value of creating new companies, especially to commercialize platform technologies or high-tech intellectual property. These efforts can lead to a more diversified economy, job growth and additional tax revenues, and new ways to improve the lives of people around the world.

Licensing intellectual property to existing companies can be difficult for technology transfer offices: finding the right partner can be a challenge. However, if such partner is found, it can be a better commercialization option than creating a startup from scratch.

First, startup leaders often -- not always, but often -- are the university staff or faculty member who created the invention. Their expertise in their academic discipline is unquestioned, and there have been successful startups launched by university researchers in the sectors of education, life science, medical devices, engineering, agriculture, energy and IT. Their expertise in the business of running a company, however, might not be as well-developed. Successfully navigating the startup world requires a different type of knowledge and disposition than in academia. For example, the management team of a startup is often primarily tasked with raising funds to further develop the intellectual property. 

Another reason licensing can be a better option is that established companies likely already have resources to invest. They often have dedicated budgets and personnel for research and development, testing (including clinical trials), marketing, advertising, production, and sales. Very few startups are well-funded or can raise capital quickly for these tasks.

An example that highlights the strengths of licensing to already existing companies is burosumab. This drug, discovered by Dr. Michael Econs and Kenneth E. White of the Indiana University School of Medicine, treats a condition that otherwise leads to the development of rickets in children. They disclosed the invention to IU technology transfer officials in 1999, who applied for intellectual property protection and licensed it to Tokyo-based Kyowa Hakko Kirin Co. in 2002. Years later, after multiple clinical trials to prove it treated the condition and wasn't toxic, after sublicensing agreements with a California-based pharmaceutical company, and after approvals by the U.S. Food and Drug Administration and the European Medicines Agency in 2018, burosumab is now available for use in the North American and European markets.

The process from invention to product in this instance may be an extreme example, but it's clear to me that licensing burosumab was the correct commercialization option rather than creating a startup. The time, effort and costs were a heavy investment even for an international pharmaceutical company. They may have caused a startup to fail, in which case a life-altering treatment for people around the world would not have reached the marketplace.

Our philosophy at the IU Innovation and Commercialization Office is simple: pursue the best option that gives the invention the best chance to reach the market. Clearly, startups can be key contributors to economic development in the state, and they can strengthen a university's reputation as an engine of innovation. IU, Purdue and Notre Dame all have dedicated organizations and personnel to encourage startup formation and growth. But there are just as many positive outcomes when the IU Innovation and Commercialization Office, Purdue Office of Technology Commercialization, and University of Notre Dame create licensing agreements with established companies, including those in the state of Indiana, that have the resources to bring inventions to the market.

David Wilhite is director of the Indiana University Innovation and Commercialization Office.