Thursday, January 3, 2013

CPRIT and Commercialization

By Keith McDowell

The creation in 2007 of the Cancer Prevention and Research Institute of Texas by the voters of Texas was truly a historic event in our nation’s continuing war on cancer. Better known by its acronym of CPRIT, the institute promised to turn Texas into the epicenter of a world-class cancer research program that spanned the spectrum from basic research to clinical trials to clinical practice backed by innovative new commercial products and a thriving bio-medical industry driven by start-up companies. And like my many colleagues in the business of university research and technology commercialization, I was excited at the prospect of becoming a participant in such an important endeavor.

But then, as it always does, reality intruded. As the planning began and the practical details of CPRIT emerged and sorted themselves out during 2009 and 2010, concerns mounted as to what CPRIT was actually all about. Two areas in particular drew the most attention from members of the university community: the CPRIT commercialization plan and the performance of the CPRIT management. Sadly, as most often happens in such cases, these concerns were never sufficiently aired and were buried under the desire to “don’t make waves” and to “drink from the Kool-Aid” as it was being offered up. The second slogan in particular is a favorite among Texas powerbrokers who want to influence how people think and behave.

To understand the first concern and many of the present troubles at CPRIT – including the resignation of its top management and many of its external proposal reviewers, it is essential to place that concern about technology commercialization into the broader context of Texas politics including the history of the Texas Emerging Technology Fund (TETF). Let’s face it! Texas powerbrokers want a piece of the action. They want a return on their investment in Texas politicians. And that means a direct pipeline to state funding for their personal projects and, in some cases, a direct pipeline to controlling how university research is commercialized. What drives these people is the desire to push aside a fair and transparent process and to build in backdoors for them to skim funds into their own pockets, one way or another.  Does anyone remember Introgen Therapeutics or Convergen? It’s call cronyism.

But it’s more than simple greed, the desire to make a fast buck, or the entrepreneurial spirit – which in and of itself is generally good for business and global competition. In Texas, that spirit of capitalism is overlaid by a widely-held belief that Texas universities are not very good at technology commercialization and by a fundamental distrust fanned by the Texas Public Policy Foundation of Texas public universities, their faculties, and their administrators. It’s the Texas two-step where one puts forward a bogeyman in order to accomplish the real goal of setting up a system ripe for the picking.

Let’s be clear about this! The UT System routinely scores in the top ten and often the top five every year against other university powerhouses in all the principal metrics used to measure technology commercialization. I know. I produced such reports. Furthermore, Texas universities have been and continue to be world leaders in every phase of the research discovery to commercial product enterprise.

And that brings us to the second concern: the performance of CPRIT management under the umbrella of “politics as usual” in Texas. Some have postulated that the current troubles at CPRIT grew out of the rapid buildup and roll out of the program as well as a vague definition of commercialization and its role at CPRIT. While both are true, they don’t tell the real or the whole story. Here are some of the facts as I know them.

·      Technology commercialization experts from Texas universities met with CPRIT management and board members explaining to them how the Bayh-Dole Act and the large, complex, commercialization system actually worked. Documents were provided. They didn’t listen. Instead they devised different definitions and rules of engagement that forced universities to create a separate processing track for CPRIT grants, thereby needlessly increasing the workload at universities.

·      On numerous occasions, CPRIT management was encouraged to meet with the California stem cell initiative – a similar, large-scale, state-funded grants program known as the California Institute for Regenerative Medicine (CIRM) – and profit from their ramp-up mistakes. CPRIT management appeared not to listen.

·      CPRIT demanded a cradle-to-grave IT accounting system that would track progress from grant through discovery to patent to licensing deal to commercial product or start-up company. That’s a worthy data management system that all would like to have available, but such an IT system doesn’t exist. CPRIT didn’t listen when informed of that fact.

·      CPRIT demanded in its grant contracts that “discoveries” be immediately filed at CPRIT along with a market plan. So when does a “discovery” become a discovery, not to mention the rights of the inventor or the rights provided by Bayh-Dole when research is co-funded by the federal government as it often is? And does one really know from the outset how a discovery will ultimately become commercialized? It’s a game that changes with the time of day. CPRIT didn’t listen to this death by a thousand reporting slices.

·      And here is my favorite CPRIT demand: they required CPRIT approval for all terms and conditions of a license agreement made by a grantee institution, including changes made during the process of deal making. They guaranteed a five-day turnaround every time a change was made. Talk about killing a deal! And yes, they didn’t listen!

So let me be clear once again. There were and continue to be plenty of quality research administrators and technology commercialization experts in Texas who could have helped CPRIT get up and running in the beginning and who could help out today. But someone has to listen!

To be fair to the management at CPRIT, they had a tough job, especially as regards commercialization. As I was told several times behind closed doors and to paraphrase: “We have to satisfy the commercialization leadership on the CPRIT board.” That same leadership in Texas often pushes for “one-stop shopping” from a single, central, state agency that would manage all licensing of research discoveries from Texas public universities. They have also pushed for rapid deal-making by using a “one-size-fits-all” licensing contract. I promise you that both of these strategies are a prescription for sure disaster. Deal-making is a contact sport between people who want different things and there is no such instrument as a single deal structure that will satisfy both the biotechnology and IT sectors. Only a fool who knows nothing about technology commercialization would push for such measures as the sole means for operating the Texas technology commercialization enterprise.

CPRIT is too important to the future of Texas to be dismantled or reborn by the Legislature as yet another variant of its former self or the TETF. In that regard, I have a number of recommendations to make.

1.     The Texas Legislature should make sure that a cross-section of research administrators and technology commercialization experts from Texas universities are heard from and listened to.
2.     The Texas Legislature should call upon the management of CIRM and officials at the National Cancer Institute for their expertise and a formal review of CPRIT.
3.     Everyone must recognize that the expertise and criteria needed to review research grants versus commercialization grants are different, although the review process in both cases must be transparent. That factor must be built into any CPRIT processes and not be understood as part and parcel of the old saw about “researchers versus entrepreneurs.”
4.     CPRIT and the Texas Legislature must come to terms with what they mean by “commercialization” at CPRIT. 
5.     I strongly recommend that CPRIT funds not be used to invest in start-up companies, but if such is the case, then a rigorous program for conflict of interest must be in place to separate cronyism from legitimate investment in a company. Quite frankly, that will be hard to do given the “atmospherics” related to commercialization by powerbrokers in Texas. Furthermore, we already have the TETF to invest in start-ups!
6.     I strongly recommend that CPRIT create a “proof of concept” program similar to the former Texas Ignition Fund (TIF) at UT System as its principal commercialization vehicle. With an investment of $2 million in 45 grants, TIF helped to create 33 startup companies as of 2010. CPRIT should follow the NSF model and use such funding as a supplemental grant to fund the transformation of a research discovery into a viable “commercial concept.” Such funding is almost never available but is a proven method for greatly accelerating and enhancing technology commercialization.
7.     CPRIT should get out of the business of being an Office of Technology Commercialization and leave it to its grantee institutions to perform that function. Given the ridiculously low overhead funding (cost recovery) associated with CPRIT grants, I would encourage the Texas Legislature and CPRIT to include overhead funding in its grants specifically targeted for commercialization activities at its grantee institutions. It’s much better to build up infrastructure for the long term at grantee institutions than to run a poor substitute at CPRIT.
8.     CPRIT contracts and contract language should conform to both common and best practices as used in federal grant administration including application of the Bayh-Dole Act and appropriate flow-down language.
9.     With respect to CPRIT funding of incubators or business accelerators, I have mixed feelings. I probably would not fund such activities generically since they amount to economic development as opposed to commercialization, but would use again some form of supplemental funding tied to a specific research grant or else I would increase the overhead dollars to grantee institutions with an explicit provision that the funds be used for such commercialization purposes. In any case, if such funding becomes the norm, then CPRIT and the Texas Legislature should lay out a clear rationale for funding incubators and a pathway for all worthy incubator applicants to apply for such funding.  

The CPRIT story is not over but I’ve had my say, even though it pains me to dredge up what should be forgotten history. Hopefully others will speak out against the silliness that often pervades the technology commercialization discussion in Texas. Certainly, Laylan Copelin and other reporters at the Austin American-Statesman and competing newspapers will continue to follow the leads and inform us as to the future of CPRIT. I believe that that story will ultimately be a bright one filled with major developments in the war on cancer. 

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