IU medical school’s push to launch startups bears fruit

The Indiana University School of Medicine has launched 12 companies in the past 18 months—a burst of startup activity the school has never seen before.

All the companies are small—often just a legal entity that exists so medical school researchers can apply for federal small-business grants.

But by pumping up its pace of company formations, the IU medical school is raising its chances of hitting on something that becomes a blazing commercial success.

Wilkes

It also helps address what’s been a key weak spot in Indiana’s life sciences business-development efforts—the ability to launch and capitalize successful companies.

“This is risky,” said Dr. David Wilkes, the executive associate dean for research affairs at the IU medical school. But, he added, “It’s getting to be what we do now.”

The 12 new companies in the past 18 months are as many new companies as the IU medical school had started in the previous four years. The companies are trying to develop new drugs, new medical devices and new diagnostic tests.

And the number of startups is more than half as many as the entire IU system launched in the previous four years.

As a system, IU ranks in the middle of the pack among Big Ten universities for its number of startups.

From 2007 through 2011, IU launched 24 companies—or 1.13 for every $100 million in research funding it pulled in. That ranked IU No. 5 among the 12 universities in the Big Ten, according to the most recent data from the Association of University Technology Managers.

Purdue University, based in West Lafayette, was No. 1 in the Big Ten, launching 1.76 companies for every $100 million in research funding—a ratio that was 56 percent higher than IU’s.

Trying to start new companies won’t solve all of IU’s challenges for commercializing research, but it’s a start, said Jack Pincus, president of Indianapolis-based BioStrat Consulting LLC, which advises life sciences companies.

Universities need to start a large number of companies to be successful, since most won’t succeed, said Pincus, who was IU’s vice president of technology transfer from 2003 to 2008.

He added, “You only see this in universities that are very well-funded. What happens there is, there’s a lot of activity, lots of companies are formed, most of them don’t make it, but a few do and are very successful.”

IU’s overall research funding in 2011 of $455 million ranked No. 8 in the Big Ten, just behind Purdue, which had research funding of $600 million.

Both schools’ funding was far exceeded by Big Ten heavyweights University of Michigan and the University of Wisconsin—not to mention the national champions of research, such as Stanford University, Harvard University, the University of Texas and the Massachusetts Institute of Technology.

But the difference in how well IU and Purdue turn those dollars into companies stems partly from the two schools’ differing missions. Turning research into practical technologies has always been part of Purdue’s mission as an agricultural and engineering school.

The mission across the IU system has been different, focused more on basic research that does not lead as directly to developing applied technologies or the companies that commercialize them.

In a 2010 survey conducted by MD-MBA students at IU, the idea of creating new companies received considerable negative feedback from the IU faculty.

“Entrepreneurship was akin to dirty money,” Wilkes said.

But the response was much different when the students did a second survey among just IU medical school faculty. They saw entrepreneurship as a way to turn their research into actual treatments for patients.

“I became an entrepreneur—sort of—because I want to see this available for patients,” said Dr. Irina Petrache, who co-founded Emphymab Biotech in 2012 to commercialize a drug that has shown the ability to reverse the effects of emphysema in mice.

The choke point among the nearly 240 researchers at the IU medical school was that they did not know how to form a company and how to operate it separately from their own labs.

Yoder

In response, Wilkes in 2011 appointed Dr. Merv Yoder to be associate dean for entrepreneurship. Yoder helped to found Indianapolis-based EndGenitor Technologies Inc., which is trying to use adult stem cells to develop regenerative therapies to treat chronic diseases.

Yoder wrote a 25-page manual, titled “Technology Commercialization: An Inventor’s Guide,” which he distributed to all the IU medical school faculty.

At the same time, the IU Research & Technology Corp. developed a new program called Spin Up, to help entrepreneurs patent their research before disclosing it, fill out the legal documents to form a company, and learn how to keep separate accounts and processes from their research enterprises. Two years ago, IU hired Joe Trebley from Purdue to lead the Spin Up program.

Spin Up has created nine of the 12 companies launched by the IU School of Medicine in the past 18 months.

“I call it the easier button,” said Trebley, who said IU borrowed the concept for Spin Up from the University of Pennsylvania. “It allows our faculty to do what they do best.”

Petrache, the co-founder of Emphymab, had nothing but praise for Trebley and Spin Up. They have even helped Emphymab hire a chief technology officer to further develop Emphymab’s experimental drug.

“I am not knowledgeable in terms of business, so it was a little bit scary,” said Petrache, sitting in her small office in one of the research buildings on the Indianapolis campus of the IU medical school.

Emphymab won a $166,000 Small Business Innovation & Research grant from the National Institutes of Health in August, which it used to test its drug in mice. Because not-for-profits are not eligible for SBIR grants, forming the company was crucial to obtaining that funding.

Yoder noted that, when he started EndGenitor in 2004, he had to raise $450,000 from investors before he got the company to a point that it could apply for SBIR grants from the government.

“So the help of SpinUp and IURTC was crucial,” Petrache said. This month, she applied for a second SBIR grant of more than $1 million, which Emphymab hopes to use to get its drug ready for human trials.•