Collaborating With Industry: The Rules of the Game

    The LWIC was pleased to present a workshop at Experimental Biology 2001 in Orlando, FL entitled “Collaborating With Industry: The Rules of the Game.”
    In an era characterized by increasing overlap between academic and commercially driven life science research, the process of establishing productive research collaborations between industry and academia has become more clearly defined and increasingly complex. As a result, the university investigator may expend considerable effort trying to reconcile the regulatory demands of both the University Technology Transfer Office and the corporate entity of interest. This workshop was designed to delineate the rules and processes of establishing a variety of successful collaborations and included presentations from representatives of both the University and Industry setting.
    The following presentations were made:
    “Life Science Research: What is Industry Looking For?” Joan Keiser, PhD. 
    “Initiating the Collaboration: From First Contact to Contract,” Robert Penhallow, PhD.
“Working With Your Technology Transfer Office: An Insider’s Perspective.” Mark Bloom, Esq.
    “Strategies for Successful University Collaborations: One Company’s Perspective,” Carol H. Stephens, PhD. 

Life Science Research: What is Industry Looking For?
    Joan A. Keiser, Executive Director of Cardiovascular Pharmacology, Pfizer Global Research and Development, Ann Arbor, MI
    To put into perspective the mission of life science research in the pharmaceutical industry, it is valuable to consider how we do our business. The pharmaceutical industry is an interdisciplinary endeavor. Our responsibility is to discover, develop, and commercialize safe and effective drugs. These words are purposefully selected. I cannot over-emphasize the interdisciplinary nature of our work. Scientists with diverse skills from bioinformatics to medicinal chemistry to physiology work together in teams to move a project from concept to compound and beyond. Along the way several individuals will participate in the effort; some in minor ways, others for large portions of their career. 
    The work we do can often be described as a dialogue between biologists and chemists that stems from the understanding of biological structure and function and is centered on biochemical or molecular mechanism of action. The participation of both biologists and chemists gives rise to the creation of novel chemical structures that are the commerce of the pharmaceutical industry. The value of a crystal structure of a protein cannot be overemphasized. The binding of a small molecule co-crystallized with a target protein provides the medicinal chemists with key structural information and provides the insights that can give rise to novel chemical structures.
    The language of drug discovery is peppered with terms that mark the evolution of a project. Drug companies maintain “libraries” of hundreds of thousands to millions of molecules (compounds) that are tested (screened) in relevant biological assays using high throughput formats. These high throughput formats might consist of 96 well enzymatic assays of 384 well cell-based assays, but, importantly, are readily executed with robotics. These assays of the chemical library will result in identification of chemical structures with biological activity referred to as “hits.” Medicinal chemists will then modify these molecules in an interactive fashion to improve in vitro potency, absorption, distribution, metabolism, and other pharmacology. The patent-ability of these molecules will be explored as well. This work results in chemical structures with improved biological properties that are referred to as leads. Lead molecules will then be further tested for chemical stability and large-scale chemical synthesis, safety in animals, pharmacokinetic (PK) and pharmacodynamic (PD) profiles in animals, and potency with projected clinical pharmacology in humans. The goal of this effort is to identify a drug candidate for further development. Drug candidates are initially tested for safety in healthy volunteers under the oversight of government authorities. These are called Phase I trials. In the US, the Food and Drug Administration (FDA) has this responsibility. If the compound has the desired pharmacokinetics and is safe, the pharmaceutical company will proceed to establish the efficacy of the compound in a disease setting (Phase II and III). A successful Phase III program culminates with a regulatory filing (in the US, a New Drug Application) to the FDA for approval to market the drug. 
    The process of drug discovery and development is expensive and time-consuming. To appreciate the scope of drug discovery at any major pharmaceutical company one has only to look at the attrition rates (see Table 1). Roughly 50% of the ideas discussed by discovery scientists never reach the stage of actual bench exploration. Discovery programs that initiate screening of the chemical library fail at the rate of roughly 19 out of 20. The attrition rate from drug candidacy through the approval to commercialize a new drug is roughly 13 of 14. 
    Thus, a company needs to muster a large number of discovery programs to guarantee a successful pipeline of products in the marketplace. The process can take up to 12-15 years and cost roughly $500-$700 million dollars. Patents last for 20 years. By the time many drugs reach the marketplace the window of profitability is small. However, many innovations in biology are changing the drug discovery process. The business opportunity in the pharmaceutical industry is promising for young scientists. Present day therapies are based on only 400-500 molecular targets. The human genome project may provide an estimated 10,000 novel targets. New technologies such as robotic ultra high throughput screening make it possible to test up to 500,000 compounds/day. Combinatorial chemistry efficiently produces millions of new chemical structures for testing. Evolving concepts of signaling pathways, in-silico biology, disease biomarkers, genetically engineered animal models, gene profiling, and miniaturization open new horizons to rapid validation of novel drug targets. The industry is avidly seeking new ideas, new assays, new screens and opportunities to interact with academic scientists to fulfill their mission.

    Like most other organizations today, pharmaceutical companies organize their drug discovery and development efforts around highly focused, self-managed, goal-oriented, multidisciplinary teams whose members work in parallel towards collectively agreed team goals and objectives. A project team configures a group of people around a defined piece of work for a defined span of time. Some will work exclusively on the project throughout its life cycle while others will contribute on as-needed basis at different stages of the project’s development. Effective project teams come together quickly and disband just as rapidly when the work is done.
    What does industry have to offer an academic scientist? To answer that question first let me say it is very important to dispel the myth that industrial scientists are “second class” or “out of touch.” The reality today is that some of the most innovative new scientific technologies reside in private industry. The job of drug discovery is so enormous that major pharmaceutical companies cannot afford not to invest in the best new technologies and often conduct the beta testing of equipment and ideas. The pharmaceutical industry has maintained core expertise in animal models of disease as a means of evaluating drug efficacy. Companies often mount multifaceted attacks at a complex problem to reduce risk and save time. So what does industry have to offer an academic scientist? The list is long but includes technologies, bioinformatics, and reagents—including small molecule pharmacological probes for exploring physiologic processes. An example of a pharmacologic probe would include compounds like PD 123319. PD 123319 is a selective angio-tensin AT2 receptor ligand. Although the molecule was deemed to be uninteresting as a drug candidate for a number of reasons, this compound remains the most requested compound ever from the Parke-Davis chemical library because of its value to the academic community as a reference agent. 
    What is industry looking for in a collaborator? Remember that the timely execution of projects is crucial in the industry. Industrial scientists are looking for highly specialized expertise, complex model systems that would be difficult to reproduce for single project, assay technologies and ideas. I urge each of you to consider if there is value for you in this arena. 

Initiating the Collaboration: From First Contact to Contract
    Robert Penhallow, PhD Manager, Technology Licensing, External Science & Technology, Bristol-Myers Squibb Pharmaceutical Research Institute, Princeton, NJ.
    The explosion of information and technological developments available to Biotechnology and Pharmaceutical companies as we enter the 21st century is dramatic, and challenges these entities to keep pace with this progress. Perhaps the most visible example of this explosion of information is evidenced by the completion of the human genome project. This information, once the raw sequence data is distilled into a useful set of validated drug target proteins, will change the face of drug discovery.
    No single organization could reasonably hope to capture and utilize the available information and technology utilizing internal resources. Collaborations and alliances are increasingly important mechanisms to leverage the expertise of outside parties and the flexibility to apply manpower on a particular project or program area without making a large commitment to internal infrastructure.
The goal of this discussion is to examine the early stages of establishing a technology collaboration. Most examples are between an industry entity involved in biomedical research and an academic institution, but are generally relevant to the early stages of interaction of any parties.
Marketing an Invention
    Once an investigator and technology transfer office believes that a technology is at a mature enough stage to benefit from collaboration, a description of the technology is developed and shared with potential corporate partners. The list of potential partners can be developed from information obtained from conventional sources including attending meetings and reading news articles, and refined by visiting the web pages of companies suspected to be working in a particular area. 
    A non-confidential summary of the invention or technology should be composed for use in marketing the invention to potential partners. The non-confidential summary that is disclosed to companies for review should be concise, but should capture the attention of a company, and contain enough information for the company to make a reasonable assessment of the technology. The summary should contain a concise description of the technology, as well as an assessment of the potential applications of the technology and a mention of the distinctive characteristics of the technology outlining how it is superior to similar technologies. A copy of publications describing the technology would be useful to those wishing to research the scientific background more completely, as well as a list of pending publications. The patent status of the technology is usually important to the company and should be included in the summary. Finally, a mention of the preferred method of interaction might be useful.
The Confidentiality Agreement
    If, after the initial review of the non-confidential information related to an invention or technology, the potential licensee retains interest in pursuing a license or collaboration, the next step is frequently to execute a confidentiality agreement. These documents are commonly referred to as a Confidential Disclosure Agreement (CDA), a Non-Disclosure Agreement (NDA) or a Secrecy Agreement. The purpose is to protect and contractually limit exposure of confidential information that is disclosed to the reviewing party in the course of evaluation. The CDA may be in a letter format or a more formal style agreement. The CDA may be “one way,” where only one party is disclosing information, or a mutual or “two way” agreement, where both parties are disclosing and receiving information. Either the disclosing or receiving party may generate the document. 
The first section of the CDA generally concerns itself with identifying the Parties, and in defining confidential information, and the subject matter to be disclosed. Confidential information can be defined, for example, as all written, visual, oral and electronic information that might be disclosed. To prove what was actually furnished, a stipulation is frequently made that written information must be marked or designated as confidential at the time of disclosure. Verbal disclosure can be summarized in writing, marked as confidential and submitted as confidential disclosure within some defined time frame. The subject matter is simply a description of the invention or technology, e.g. “protein X expressed in cardiac cells, pertaining to University Docket #12345.”
    The scope, purpose and limitations of use of the disclosure should also be defined. If the intended purpose of the information is to evaluate possible interest in acquiring rights to an invention, this should be stated. Further, the disclosure could be limited strictly to this evaluation role.
The CDA will also contain a number of exceptions that could disqualify information from confidential status. In simple terms, the common exceptions to holding information in confidential status include: 1) the information being in the public domain at the time of disclosure, 2) the information becoming part of the public domain after disclosure, 3) the information was already in the receiving party’s possession at the time of disclosure, 4) the information is received by the receiving party legally and without restriction from a third party, or 5) the information is independently developed by the receiving party without use or access to the confidential information.
    A number of additional provisions may be included in the confidentiality agreement. Some parties will request that all written materials, documents and other things made available for the purpose of the CDA be returned. In this case the receiving party is entitled to retain one copy of the material to determine its obligation under the agreement. Other sections may pertain to further rights and obligations, the former indicating that there is no implied license. This makes it clear that by signing the CDA that there are no obligations beyond providing confidential information. No further obligation means that there is no obligation to negotiate or enter in a licensing agreement.
Types of Agreements
    There are several common types of “technology transfer” mechanisms available to the academic researcher. These include consulting, sponsored research, materials transfer, licenses and participation in consortia. When entering into negotiations for one of these agreements, it is usually preferable to address the non-financial issues first. Defining the scope of research and the non-financial terms first will help to assign the value of the agreement. These non-financial issues include confidentiality concerns, publication rights, ownership of data, performance of research and rights to improvements, as well as the more legal concerns of indemnification and warranty. Once these terms have been negotiated it is appropriate to address, as applicable, dollar amounts assigned to license fees, IP costs and research funding. 
The goal of the agreement negotiation for both parties is a win-win situation. The first step should be to determine what the other party needs and wants to achieve from the collaboration or deal, and try to accommodate these needs. In many instances money is not the key, and creativity in deal structure can help to get both parties what they need.

Working with Your Technology Transfer Office: An Insider’s Perspective
    Mark Bloom, Esq., Manager of Technology Licensing and Sponsored Programs and Chief Patent Counsel, The Cleveland Clinic Foundation, Cleveland, OH.
Genesis of Non-Profit Organization (NPO)/University Technology Transfer Activities
    Prior to 1968, NPO’s/Universities, on a case-by-case basis, had to petition the specific federal agency that funded the development of the technology in question to obtain the ability to commercially market that technology; however the ownership of the technology remained with the federal government. From 1968 to 1980, several NPOs/Universi-ties signed agency-specific agreements that allowed for the uniform treatment of commercialization efforts for technologies funded by those specific agencies; however, as before, the ownership of the technology remained with the federal government. Finally, in 1981, with the passage of the Bayh-Dole Act, NPOs/Universities were able to own outright all technologies that they developed with federal monies. The Bayh-Dole Act was a watershed event in the explosive growth of NPO/Uni-versity technology transfer activities that has continued to the present day.
Most Important Academic Technology Transfer Issues
    Of the myriad technology transfer issues addressed by NPO/University technology transfer professionals when working with industrial partners, there are four of particular importance, namely: 1) Ensuring that their researchers have the freedom to publish the results of their research. 2) Ensuring that their researchers are given proper attribution regarding future technology developments associated with their original research efforts. 3) Ensuring that the role of their NPO/University in the development of a technology is recognized in an equitable manner. 4) Ensuring that their NPO/University shares equitably in the revenue generated from the commercialization of their technologies.
Biggest Academic Technology Transfer Perils
    The conduct of technology transfer activities is not without risk to NPOs/Universities. Examples of such risks include an industry partner: 1) Placing unreasonable restrictions on a researcher’s right to publish research results, i.e., seriously impinging upon or outright preventing the exercise of academic freedom; however, short publication delay for patentability or confidentiality review is usually an acceptable compromise. 2) Requiring some level of control over researcher-based publications resulting from sponsored research efforts, e.g., editorial or publication pre-approval. 3) Demanding a perpetual, worldwide, royalty-free license (with the right to sublicense) to all inventions, discoveries, ideas, etc., developed using sponsored research dollars. In many circumstances, such a royalty term is viewed as demeaning and inequitable and often slows or prohibits sponsored research contract negotiation.
Licensee Due Diligence
    Potential licensees of a NPO/Univer-sity-developed technology will conduct a due diligence review of not only the technical nature of the technology, but also the commercial and other legal rights that they might receive via a license agreement. Such important due diligence issues that will be investigated by an industry partner include: 1) Has the NPO/University filed patent applications in all of the relevant markets for the technology? The filing of domestic and foreign patent applications is very expensive and such filing costs are a serious budget issue at many NPOs/Universities. 2) Have the NPO/University inventor(s)’ published their ideas prior to the filing of appropriate patent applications? If yes, how long ago? This inquiry is important because most countries, with the exception of the US, have an “absolute” novelty requirement, i.e., no patent protection is available if a publication or other public disclosure precedes a patent application filing. 3) Has a patent validity analysis been conducted to determine whether the patents that have been applied for by the NPO/University are likely to issue? 4) Is the technology properly the subject of patent protection, or are there other forms of intellectual property protection that would be more appropriate, e.g., copyrights or trademarks? 5) Have all of the inventor(s) assigned all of their respective rights to the technology to their institutions? If there are inventor(s) from different institutions, then an Inter-Institutional Agreement (IIA) between institutions will be required to address issues such as technology co-ownership and control of licensing activities. 6) Does the project require access to materials or information not covered by the technology license, e.g., biological materials or software? 7) Will the licensee exploit the technology in combination with other technologies, and how will that affect the distribution of royalties? 8) Besides a traditional consulting arrangement or institutional royalty-sharing policies, there may be other financial incentives a licensee can offer an inventor or their institution, e.g., equity or stock options. Note that fixed or annual fees/equity/stock options are a better choice for personal compensation than variable payments, i.e., payments tied to some specific outcome; and, recognition of conflict-of-interest or -commitment issues are of paramount importance.
Researcher Due Diligence    
    There are several key proactive steps that NPO/University researchers can take to ensure that their involvement in the technology transfer “process” is positive and rewarding: 1) Becoming familiar with their institution’s technology transfer-associated policies and procedures, e.g., patent, copyright, and trademark policies; conflict-of-interest or -commitment policies; equity/royalty distribution policies; sponsored re-search policies; IRB/MRB (human subjects) and animal care and use policies; clinical trial policies; and invention disclosure and processing procedures. 2) Learning more about confidential disclosure agreements or non-disclosure agreements (CDAs or NDAs) and material transfer agreements (MTAs). Researchers should not be afraid to use them in the appropriate circumstances. 3) Contacting their technology transfer office before publicly disclosing their potential cure for cancer! It is important to realize that a public disclosure broadly means either a non-confidential communication be-tween two non-associated parties or information that is made accessible to the general public by any means. 4) Actively assisting their technology transfer office in protecting their and their institution’s interests. For example, not signing contracts that affect or involve intellectual property terms without the proper legal review. 5) Anticipating that their technology transfer office will always want “everything in writing.” 6) Giving their technology transfer office sufficient time to react to their needs. 7) Allowing their technology transfer office to conduct negotiations on their behalf.
Final Thoughts
    For-profit companies view NPOs/Universities as a rich source for cutting-edge technologies. As a result, these companies will be exploring all means of NPO/University technology transfer, e.g., licenses, options, sponsored re-search, start-ups, SBIR & STTR grant programs, etc. It is vitally important to the success of an NPO/University’s technology transfer activities for their researchers to know their NPO/Univer-sity’s technology-associated policies and procedures. Finally, all NPO/Uni-versity researchers are strongly encouraged to be a proactive participant in their institution’s technology transfer activities!

Strategies for Successful University Collaborations: One Company’s Perspective
Carol H. Stephens, PhD, Alliance Manager, Eli Lilly and Company, Indianapolis, IN
    Since the 1920s when Eli Lilly and Company joined with Fred Banting and Charles Best at the University of Toronto to make the first insulin for treating diabetes, alliances between Lilly and academia have resulted in critical breakthroughs for patients around the world. Collaborations with industry provide funding for academic research, and when the research results in leads for new drugs, the pharmaceutical company has the organization and experience to take a molecule through development, clinical trials, and regulatory approval so that patients have access to new therapies. In collaborations with industry, academia brings breakthrough research and insights into disease biology and therapy.
In the 80 years since the University of Toronto alliance, Lilly has been involved with hundreds of collaborations and continues to see academia as a key partner in developing new approaches to unmet medical needs. Today Lilly has over 140 collaborations in research and development, many of which are with universities in the US and abroad. They range in size from a few thousand dollars to fund experiments to a $10 million five year agreement involving multiple laboratories at a major university and at Lilly. Most of the non-university alliances are with smaller research companies, including biotechs, and several are with large pharmaceutical companies for the purpose of late stage clinical development and co-marketing of new therapies. Lilly often selects alliances in its key areas of research—neuroscience, endocrine, oncology, infectious disease, bone, inflammation, and nuclear receptors—but also looks for promising science in areas outside of those research groups.
    Given the importance of alliances to Lilly, the company for the past 18 months has engaged in a significant effort to ensure that alliances have the support, processes, and leadership to reach their potential, so that all partnerships achieve their goals. This effort has resulted in revised methods for bringing in alliances, a new alliance management organization, tools and feedback methods for continuing improvement, and training for greater understanding of the ingredients of successful collaborations. These efforts have yielded significant results for many Lilly-university collaborations.
Process for Acquiring New Alliances
    Lilly’s method for adding new alliances is now divided into three stages. The Research Acquisition department initially locates and then evaluates new opportunities. At Lilly’s US corporate center, a department of PhDs and associates spend full time looking for and reviewing new scientific approaches with the potential to become alliances. In addition, several Research Acquisition employees work out of Europe and Japan to do the same for many of the opportunities in their countries. The areas of greatest interest for Lilly are new drug targets, target validation, synthesis or purification of potentially therapeutic molecules, analysis of targets and molecules, and the interface between targets and molecules, often called screening. The Research Acquisition group evaluates approximately 1,000 potential alliances per year. University personnel or departments with an alliance proposal should submit it through the Lilly web site at http://www.lilly.com under the alliances tab.
    The second stage, managed by Corporate Business Development, negotiates terms and contracts, and the third part, implementation of the alliance, involves a new organization for Lilly, the Office of Alliance Management (OAM). OAM’s job is to ensure the success of its alliances not just for Lilly, but for its partners as well. An alliance manager from OAM is assigned to each alliance to act as an ombudsman so that the needs of all parties are considered and addressed continuously. From the scientific area at Lilly, each alliance has an alliance champion, usually a senior executive, who is responsible for the overall support and oversight of the alliance. In addition, an alliance leader, usually a scientific expert or project manager with an intimate knowledge of the therapeutic area, is responsible for the week to week leadership of the alliance and communication with the partner.
Training
    As any university knows, education should be the foundation of any new program with the intent to succeed, and Lilly has recently developed and taught a new set of courses for everyone involved in alliances. The first course covers research on the factors affecting alliance success and failure as well as the Lilly alliance management process. The second course focuses on application, using case studies, Lilly’s alliance management tools, and learnings from past and current alliances. Experienced alliance managers teach the courses. All Lilly employees who work with partners are required to take the classes, and to date over 450 people have completed them.
Organizational and Feedback Tools
    In the last 18 months, OAM has developed processes, guides, and surveys to help each alliance reach its potential. For example, in the initial start up phase, there are tools to help each alliance team gain consensus on the strategic intent of the alliance and identify, align and best use the capabilities of both partners. In addition, Lilly developed two tools to assess the ongoing health of each alliance. A web-based survey available in several languages and administered annually focuses on what the research indicates are critical success factors in partnerships, including compatibility of values, goals, clarity of roles, leadership, communication, trust and fairness, and flexibility. For smaller alliances with fewer than ten members at each partner organization in which a large scale survey would not be statistically meaningful, Lilly developed a focus group feedback guide and protocol which allows the alliance manager to probe these same factors. Alliance teams uses feedback provided by these tools to identify and implement plans for improvement.
Results
    The feedback and measurement tools in particular have made a significant difference in many alliances, which are experiencing improvement in communication, coordination and ultimately in scientific outcomes. For example, Lilly and a leading medical school jointly decided to add two alliance leaders, radically revise the process of data management, and institute monthly face to face meetings of key people to coordinate efforts. The results include a 96% reduction in the time needed for data management and an 18,000% increase in productivity of output. The medical school met its alliance goal for the year in two months, allowing the partners to significantly increase the scope of the collaboration.
    Overall, Lilly has found that this combination of a new organization, required training, and new tools for organization and feedback work together to ensure that partners’ needs and desires are heard and addressed from the initial discussions to the ongoing relationship. Recently, these efforts have earned Lilly the Quality Award for alliance management programs from the Association of Strategic Alliance Professionals, as well as recognition by PricewaterhouseCoopers-surveyed pharmaceutical companies as one of the top-ranked strategic alliance partners. And Lilly was noted as one of the top two pharmaceutical partners in the most recent issue of Forbes magazine. Alliances with universities continue to be critical collaborations for Lilly as they to help us all meet our goal of breakthrough understanding and treatment of major medical needs.

[Table of Contents] [A Matter of Opinion] [Careers] [APS News] [Section News] [Chapter News] [Education] [Membership] [ APS Committee Reports] [Experimental Biology 2002] [Physiology and EB 2001] [Public Affairs] [Sustaining Associates] [Book Reviews] [Positions Available] [People & Places] [News From Senior Physiologists ] [Announcements] [APS Membership Application] [Scientific Meetings and Congresses]