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9 University-Industry Relations THE BIRTHPLACE OF BIOTECHNOLOGY, and the source of much of its continuing inspiration, is academia. Researchers in university biomedical laboratories, funded largely by the federal govern- ment, developed almost all the basic techniques that have given rise to biotechnology. In turn, these researchers were among the first to recognize the commercial potential of the new techniques, and many of them were among the founders and first employees of the new biotechnology companies. All the firms involved in biotechnology remain vitally interested in the research being conducted in universities and other institutions. These companies view the universities as sources of new ideas and innovative techniques, as suppliers of trained employees and talented consultants, and even as customers for research equipment and other products. The extremely rapid pace of research in molecular biology puts a premium on staying at the forefront of the field. Companies realize that one of the best ways to do this is through exposure of their scientists to people working on basic research problems. Furthermore, such exposure can provide these companies with a window on the This chapter includes material from the presentation by David M. Kipnis at the symposium. 98
UNIVERSITY-INDUSTRY RELATIONS 99 technology while not necessarily requiring large investments in facil- ities and personnel. Less well known than the benefits to individual companies are the benefits to universities that derive from university-industry contacts. Exposure to problems and opportunities in industry creates new challenges for academic science and engineering, places undergraduate and graduate education in new perspectives, increases scientific com- munication and cooperation, and ties educational and research pro- grams of universities more closely to national and regional needs. Also, in a time of stagnating or declining federal outlays for scientific research, universities look to alliances with industry as a way to diversify and supplement their sources of funding. Industry is currently providing between $200 million and $300 million to universities for research and development of all kinds, and most major universities have set up special offices to seek and admin- ister these funds. However, this represents only about 3 to 4 percent of the universities' total funding for research and development (although uncategorized forms of support may raise that figure to 6 to 7 percent). All observers agree that industrial support of research in universities cannot and should not substantially replace federal support of univer- sity research. But, by the same token, industrial support of this research can have an effect above and beyond its relative size, espe- cially in its encouragement of the complex process of technology transfer between basic research and commercial application. Molecular biology is far from the first discipline in which university- industry relations have become a significant issue. Such alliances have been common for many years in agriculture, chemistry, physics, electrical engineering, medicine, and the defense-related industries. Thus, although the problems that arise in biotechnology may differ in scale or in subject matter, they do not differ in kind from problems that have arisen and have been successfully resolved in the past. Types of Agreements and Potential Problems The types of alliances that have sprung up between the biotechnol- ogy industry and universities are as varied as the institutions and individuals that engage in them. They exist on a wide range of scalesâ from the single investigator to consortia of companies and universi- tiesâand they tend to reflect the characteristics and concerns of the entities involved. On an individual level, consulting arrangements and extension services are a common form of interaction between universities and
100 BIOTECHNOLOGY industry. Most universities allow their faculty members to consult for industry and have established guidelines to govern these activities. On a larger scale, universities and industry may set up industrial associ- ates programs, in which a company pays a fee to a university in exchange for the right to participate in part of the university's research activities. This may entail attendance at seminars or classes, interac- tions with faculty and students, or the preview of publications. Universities may also sign a contract with a company to conduct research that the company will then use. Such contracts may affect a single researcher or an entire university department; they may call for basic, open-ended research or for more applied research directed toward a specific goal. Industries and universities can go even further and set up research foundations, university consortia, or industry cooperatives, all designed to establish more long-term or independent research institutions. Such institutions are often actively sought by state and local governments eager to encourage the establishment of high-technology industry within their areas. Finally, some universities have formed innovative, and often controversial, private corporations affiliated with the universities so that faculty can remain on campus while working on the commercial applications of their research. The specific concerns associated with university-industry relations depend largely on the type of alliance under consideration. But there are several generic categories of problems that have arisen in the pastâproblems that should be carefully thought out before any type of alliance is formed. The most fundamental of these problems involves the basic role of a university. In essence, a university's main objectives must be to educate its students, to generate new knowledge, and to preserve and disseminate existing knowledge. To take just one aspect of this charter, faculty members are expected to publish the results of their work in the open literature, and in science this requirement of publication fre- quently takes on a note of urgency. Yet industry often has a vested interest in keeping the results of its research secret, to protect infor- mation that might give it an advantage over a competitor. Thus, agreements whereby a university conducts research for a company must consider the university's responsibility to maintain the free flow of information. Another potential problem involves the granting of patent rights. A 1980 law gave universities the right to retain patents arising from research sponsored by federal funds, and some universities have used this provision to generate revenue (for instance, Stanford University has earned several million dollars from its patent on the basic process used in making recombinant plasmids). Generally, universities also
UNIVERSITY-INDUSTRY RELATIONS 101 retain the patent rights on research supported by industry. But the nature of the licenses transferring property rights from universities to companies, especially their exclusivity and royalty provisions, can generate controversy. Problems may also arise with researchers con- ducting patentable work who are involved both with a university and with a private company. Such situations are representative of other conflicts of interest that may result from university-industry alliances. For instance, a faculty member's involvement with a private company may affect his or her relationships with students and other faculty. Industrial support for academic research may also reorient that research away from the scientific interest inherent in a project and toward more commercial considerations. In the early 1980s, when a number of university-industry agree- ments were being established in the life sciences, these and other questions were extensively discussed in several national forums. More recently, the discussion has been shifting to the local level as univer- sities and companies have gained experience with the first wave of agreements. The concerns, too, have been changing, as the institutions involved have resolved the most obvious difficulties. The questions now coming to the fore have a more individualized cast. How effective have past arrangements been in meeting the needs of each institution? Has the administration of these alliances suffered from any obvious flaws? How have these arrangements been affecting the responsibilities and characteristics of each institution? Should the federal government or state governments take additional steps to encourage the formation of university-industry agreements? Such questions are best answered in the context of specific instances of university-industry cooperation. Among the most notable of these instances has been the program set up in St. Louis by Monsanto and Washington University. The Monsanto-Washington University Agreement The negotiations between Monsanto and Washington University to establish a cooperative research program were in progress at the height of public interest in university-industry relations. As a result, according to David M. Kipnis of the Washington University School of Medicine, the agreement can be seen as a sort of test of "whether a partnership between two very different institutions is possible, and whether the separate though overlapping interests of both can be furthered without compromising the principles and values of each." Both institutions brought definite goals to the negotiations.
102 BIOTECHNOLOGY Monsanto was interested in developing new products and in strength- ening another St. Louis institution with which it has had many associations. The university was interested in extending its long-term commitment to basic biomedical research and in benefiting the St. Louis economy and community. Both viewed their geographic proxim- ity as a significant advantage, since it would facilitate exchange and communication. The university recognized from the beginning, according to Kipnis, that its foremost asset was its nationally known scientists. Thus, the first requirement of any association was that it preserve the scientific strength and reputation of the university. "It was clear that any significant sacrifice of scientific integrity and independence for short- term financial gain might very well result in serious long-term conse- quences," says Kipnis. "Another way to put it is simply that Washing- ton University did not want to lose the very qualities that made it an attractive partner for Monsanto in the first place." In setting up the agreement, the university was concerned about many of the generic issues that have surrounded university-industry relations. "Would the university be perceived as potentially diverting scientists from their primary areas of concern in traditional academic environments?" asks Kipnis. "Would the agreement influence graduate education by focusing on potential commercial ventures? Would the issues of secrecy and confidentiality thwart or interfere with the free interchange of scientific information, which is absolutely fundamental for scientific progress? Would a few academic stars become further enriched at the expense of other members of the faculty, both in terms of time and resources?" An important aspect of the negotiations, according to Kipnis, was that Monsanto's management fully under- stood and accepted these concerns. The negotiations went on for about a year. The first few months were spent developing guidelines for the program to address the concerns of the university and to ensure that the venture would be profitable for the company. A retreat was then held in which scientists and managers from the university and the company discussed the state of the art, the future of the field, and their own goals and ambitions. Washington University then submitted a proposal to Monsanto. "It was mutually decided that the program would focus on one defined area of biological science, broad enough in scope to take advantage of all of the perceived opportunities that many of us wished to pursue, focus- ing on a university strength and an area where we wished to broaden our own research, and perceived as an exciting area for industry,"
UNIVERSITY-INDUSTRY RELATIONS 103 says Kipnis. "Therefore, the theme of the program was estab- lished as proteins and peptides regulating cell-cell communication and function." A legal document of about 50 pages was prepared, signed, and distributed to newspapers and to Congress as a public document. It called for a five-year agreement that is renewable every three years. It is an agreement only between the two institutions, with no one investigator being singled out for special treatment. "By being pre- vented from benefiting as individuals from any commercial results of their effort, the faculty will not be tempted to turn away from its academic commitments and priorities," says Kipnis. "A full-time fac- ulty ought to spend its full time in its academic pursuits. If one wishes to engage in commercial pursuits, then one has to do that full time also." Funds from the program go directly to the medical school. They are then allocated by an advisory committee composed of five scientists and managers from Monsanto and five scientists and administrators from the university. It was decided during the negotiations to keep the funds from Monsanto at less than 10 percent of the medical school's research budget. The total budget of the Washington University School of Medicine is currently about $100 million per year, of which about $55 million comes from NIH, making the school one of the top three or four research centers in the country in terms of NIH funding. Thus the initial agreement involved a total grant of about $6 million per year, and the agreement has subsequently been expanded to reach $8.5 million to $9 million by 1987. The entire faculty is eligible to participate in the program. Members are asked to submit letters of intent with a brief description of the research they propose to do. Out of 40 to 50 letters received annually, the advisory committee has been approving somewhere between six and nine projects, depending on the funds available. The projects have received grants of between $40,000 and $500,000 and have extended for periods ranging from a year and a half to three years. Currently, 38 investigators are being funded, spread across the entire hierarchy of the faculty, in a total of 21 different research projects. Twelve of the medical school's 19 departments have investigators receiving funds from the program. Two kinds of research projects are being funded: exploratory and specialty. "Exploratory projects deal with fundamental research on basic scientific questions, with a focus on proteins or peptides," ex- plains Kipnis. "Examples of this kind of research are studies of
104 BIOTECHNOLOGY Researchers at Washington University work on specific projects funded through a cooperative agreement between the university and Monsanto. In developing the agreement, both institutions had to deal with many of the concerns that have marked university-industry relations. glycosylation mechanisms, the regulation of gene expression, the biology of receptors, et cetera." Specialty projects focus on "specific proteins and peptides that modulate cellular function and in which is seen the possibility of commercial utility in terms of technologies or products. Examples of research that are well known are atrial peptides, research on mediators of immune reactions, the structure function of proteins regulating coagulation or thrombolysis, or the protein prod- ucts influencing oncogene function." In addition to the oversight of the advisory committee, the agree- ment calls for external peer review on a regular basis. Every three years an independent group of internationally recognized scientists will be brought to Washington University and asked to review the quality of the research and the impact of the program on the university and company. The first of these reviews was held in October 1985.
UNIVERSITY-INDUSTRY RELATIONS 105 According to the agreement, any patents that originate from the program will reside with the university, with Monsanto agreeing to provide legal support in applying for patents. In turn, the university investigators have agreed to keep confidential any information given to them by Monsanto that is corporate property. Corporate scientists have likewise agreed to maintain the confidentiality of any material from the university until it is published or presented in public. There is a 30-day delay during which abstracts and papers can be reviewed by patent attorneys for any material that may be patentable. "But our recent experience has been that this has not, in essence, hindered publication," says Kipnis. Similarly, any royalties deriving from the program will be returned to the medical school, to be divided among the medical school and the department and laboratory that conducted the royalty-generating research, just as the school now handles profes- sional fees. The agreement took effect in September 1982, and according to Kipnis, "the success of the program has exceeded our expectations. The interaction of scientific groups of high quality has gone on without the need to force it. It has been a natural evolution of true scientific curiosity. . . . We have had, in essence, no complaints, even by those whose grants have been disapproved." The university has garnered a number of benefits from the program, Kipnis points out. The availability of funds has allowed the university to move rapidly into areas of interest, often more quickly than would be possible through the cumbersome and time-consuming process of receiving federal grants. "It has allowed us a certain degree of flexi- bility," he says, "where investigators coming up with unique observa- tions or unique findings can come to the committee and ask for supplemental funds or, indeed, during the year, for the initiation of new projects." The program has also allowed young investigators to do innovative work that they would probably be unable to do through conventional channels. "Availability of funds has allowed us a certain entrepreneurial spirit, not in terms of commercial gains, but in terms of scientific enthusiasm," remarks Kipnis. "That has been very help- ful." The two institutions have even established a monthly seminar program, given at alternate locations, and an annual retreat on a subject of mutual scientific interest. In general, concludes Kipnis, "we are extremely pleased and opti- mistic on the basis of our initial findings, and we believe it is a desirable experiment and one that may open up new possibilities for both society at large as well as for industries and universities."
106 BIOTECHNOLOGY Additional Readings Wil Lepkowski. 1984. "University/Industry Research Ties Still Viewed with Concern." Chemical and Engineering News (June 25):7-11. National Science Board. 1982. University-Industry Research Relationships: Myths, Realities and Potentials. Washington, D.C.: National Science Foundation. Robert D. Varrin and Diane S. Kukich. 1985. "Guidelines for Industry-Sponsored Research at Universities." Science 227(January 25):385-388.