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COUNCIL State of the University

The November 3 Council meeting was primarily devoted to the annual State of the University presentations. Below are Interim Provost Peter Conn's remarks, along with the portions of his report presented  by Carton Rogers and Leslie Hudson. Last week's issue contained President Amy Gutmann's report, including presentations by Omar Blaik, Craig Carnaroli and Medha Narvekar.

Les Hudson

When I reported to the Council on the 24th of March, I gave an overview of what were largely hopeful initiatives that would be coming during this year. I am pleased to report to you that we've made substantial progress across the whole front of what I talked about at that stage. 

Technology Transfer

I'll update the Council this evening first of all on the Patent Policy. You have had the opportunity of reading the new Patent Policy that was published in Almanac last month. Then, I will provide an update on Corporate R&D relationships, which we've had very significant progress on. Finally, I will speak about the Keystone Innovation Zone, which was formally passed by the Ben Franklin Technology Development Authority of the Commonwealth on the 23rd of September. 

Commercialization Process

The first update's range of activities covers Penn's Technology Transfer Office, which has just issued its annual report. All of the details and statistics are highlighted in that report. You will see also the progress, of the leading edge indicators in terms of research expenditure, technology disclosures, and patent applications. 

Patent Policy revision that I referred to earlier has two major changes that are of note—the first is that there has been a very progressive move enabling faculty to collaborate with external companies.  For example, for software engineers, patents and the whole of that basis for the monopolistic exploitation of intellectual property really does not apply and indeed it can be quite inhibitory. So, we've gone toward an exemption policy, which can be granted by the dean of the school and it will be looked upon as something that will be very helpful, under of those sorts of circumstances for the engineering schools. The other area of revision that you will see in the new Patent Policy is a different distribution of the net revenue that the University earns from its commercialization activities. The University's support is the keystone of the ability for us to engage in commercialization activities through the Center for Technology Transfer.  In addition, there has been an adjustment upwards of the amount of revenue which will be retained by the office, such that any future expansion will be based upon the ability of the office to grow and respond to its own performance.

The Good-to-Great initiative, as you might imagine, is the first step. It will be Good to Great, Great to Excellent, Excellent—then obviously—to Eminent. Looking at performance in this area, there are two major drivers of commercialization success. The first is revenue generated from a diverse series of licenses or commercial relationships, which give base revenue. Then there's the so-called blockbuster or home run by which a university will suddenly gain massive revenue. For example, Columbia is often up in the range of $100 million per annum. The way in which one manages for these sorts of eventualities is really quite different. We've started an initiative to undertake the analysis of our commercialization drivers so that we can move Penn into a situation where it can take advantage of the excellent progress that's been made by the faculty in doubling our research grant income over the last eight years. As you know, we're consistently among the top four U.S. universities in that regard.

And then, an increase in terms of partnerships both with the trustees and overseers, in putting together a new board of trustees and overseers for the Office of Strategic Initiatives, to make certain we gather the best advice in any of the initiatives we actually take forward in the commercialization scene and are able to make sure those initiatives are conducted in a way that's appropriate with the mission and the core scholarship of the University. In other words, it supports our mission but it certainly must never drive our mission.

The Center for Technology Transfer Executive Committee was also something which was enshrined in the new Patent Policy. This is a faculty committee with oversight on the performance and the whole process of technology transfer. And then finally, two new work teams have come together. The School of Medicine has been very helpful in pioneering this area. They also are our major school for producing patents and disclosures. The work team is led by Arthur Rubenstein, to engage how to get more faculty participation in our decision-making around commercialization.

Corporate R&D Relationships

The second area I'd like to touch upon is Corporate R&D relationships. Originally we had but the relationship with GlaxoSmithKline. This year, we've added in a new relationship with Pfizer Animal Health. We have a truly unique veterinary school in the sense that it has only a referral caseload. We don't have a primary practice, such that the quality of the animal diseases that our veterinary school sees truly puts it in a position that it is of great value to external collaborators. For example, in this case, Pfizer has a very large animal health business. I think Pfizer will just be the first in this new opportunity of collaborating with what is now a center for veterinary clinical investigation in the veterinary school.

New Basis for R & D Relationships

IBM is an enterprise-wide relationship which went live on Penn Marketplace on the first of November. If you look at the prices, the discounts that are being offered are extremely aggressive. The T-42 configuration, which is the mid-weight, mid-range configuration recommended by the University ISC group, is probably $500 below the best web price you could actually get. Do it honestly though, and do it spec-for-spec. If you look at the value of what is being offered under those circumstances for something on the order of $2,100 you're getting a machine which from any other web supplier is actually on the order of $2,800 for that laptop.

And finally, Johnson and Johnson is to help with our primary research, it's not a commercialization. It's actually to form a new fund, which will be operated through the Office of Research and led by Dr. Perry Molinoff.

University City KIZ

The University City Keystone Innovation Zone—so called because it is a partnership of the University City Science Center, Drexel University, and BioAdvance—is one of the state funds formed from the tobacco settlement money for supporting research and healthcare ventures, and finally, Penn. It was approved by the Commonwealth at the end of September. The KIZ is comprised of two projects. The first is alignment —basically bringing better alignment in purpose between the considerable resources we have in Southeast Pennsylvania for economic development and job creation. Secondly is the formation of a convergence center, the idea being to bring a physical building at a natural crossroads in the city, whereby new businesses, entrepreneurs, venture capitalists, as well as technology transfer offices will come together, and so increase the critical mass of what is possible.

Univ. City KIZ map

The reason why this is important, and we have seen this model in other universities, is that it provides a new basis for R&D relationships, where these companies, who are highly geared to an R&D base, sit proximate to the University precincts. This is the first stage where Angel Investment and Pioneer Start-up Companies start setting up close to a university. This is the stage which Penn is at today. The next stage is where the attractiveness of the intellectual capital in that area brings in Venture and Investment Capital, very quickly followed by service providers, lawyers, people who write business plans, accountants, but also the creation of Investment Grade Companies. These are the future Genentechs, the future Amgens, and the future Biogens. Finally, the climax vegetation of this ecosystem is seen when the large corporations start coming in.

If you went up to Boston ten years ago, it would have felt like the surroundings of the University of Pennsylvania. If you go there today, you will see that the whole of this, what they call, Fertile Crescent, is now in place. About ten days ago, I visited the Pfizer laboratories up there, and it was very interesting to see the robotics course of Boston University actually being taught by Pfizer—something which is very unusual for those sorts of corporations, but clearly a wonderful opportunity to understand operational robotics in a working laboratory.

This is the GeoStat Satellite image of the University City KIZ (see slide below). Basically you see Market Street going all the way down to 30th St. Station and then down toward the old Convention Center. The importance of this, is that any company, which is less than eight years old, setting up in this Keystone Innovation Zone will not only attract a priority position in the state's program for economic development, it will also get tax credits. Eight-year old companies normally don't pay taxes. The important thing here is that those tax credits are actually tradable. And so, in fact, a young company can generate a different source of cash.

Thank you for your attention.



  Almanac, Vol. 51, No. 12, November 16, 2004


November 16, 2004
Volume 51 Number 12


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