INTERVIEW: Taking care of business

Research institutes looking at ways to commercialise their intellectual property could do worse than examine the model used by Melbourne's Austin Research Institute.

"I think it's a good working model for a lot of biotech R&D," says Prof Mark Hogarth, acting director of the institute and a non-executive director of Prima BioMed, the company with the rights to commercial development of the institute's IP.

The relationship between the institute and Prima has resulted so far in four spin-off companies, Arthron, Cancer Vac, PanVax and OncoMab. Prima looks after the commercial side of things, but much of the R&D continues to be done in the institute's labs, using the expertise of the staff and students there.

The institute itself has been around since 1991, and has become well established as a biomedical research centre specialising in immunology and cancer research. It has affiliations with its host campus, the Austin and Repatriation Medical Centre, as well as with the University of Melbourne and Victoria University. The 100 or so researchers at the institute work on a variety of projects including cancer vaccines, organ transplantation, allergy and inflammation, and infectious diseases.

Hogarth, who gives the credit for the institute's IP-savvy culture to retiring director Prof Ian McKenzie, says that over the last 20 years, a vast portfolio of more than 130 patents in 26 patent families has been amassed.

"It's important for institutes to have a plan to translate basic science into something useful," he says.

In order to do this, a number of years ago the institute took on a patent attorney and set up Ilexus as a technology transfer company to look after the IP. According to Hogarth this had the twin benefits of managing the patent portfolio as well as educating the staff and students at the Institute about patent protection of research innovations.

"That was a very good thing to have done. If you're serious about IP you need to do this," says Hogarth.

As a result, the Austin now has a nice pipeline of IP that feeds Prima. The relationship is structured so that Prima is the company that handles all of the investment side of things, while the four spin-offs hold the relevant licences to the institute's technology. And of course, the institute holds equity in Prima, meaning that eventual revenues from products that are on-licensed or reach the market will flow back to the company.

But the path to Prima was not easy, says Hogarth. Initially the institute decided to set up a pooled development fund and float Arthron on the market. But the "tech wreck" of 2000-01 had a negative impact on the biotechnology sector as well as IT, and the idea never came to fruition.

"We learned a lot, but failed due to the market," explains Hogarth. But the investment of time and effort by the Institute did not go astray, as it brought them to the attention of the investment community, and Peregrine Corporation was interested enough in them to set up Prima as the commercialisation vehicle for the institute's IP.

"You could say the phoenix rose from the ashes," Hogarth says. While Ilexus still functions as a technology transfer company, most of the IP has gone over to Prima, and former Ilexus CEO Marcus Clark is now CEO of Prima.

The institute has also set up XenoTrans, a spin-off devoted to the development of engineered pig organs suitable for transplantation into humans. This company has been set up independently of the Prima umbrella.

As to the institute's scientists performing commercially-focused research, Hogarth sees no conflict in this. After all, he says, many of the experiments performed for the purposes of product development would have been done for basic scientific reasons anyway.

"That's the thing these days, good research protects your IP," he explains. And the benefits to the staff and students include the exposure to commercial culture and a sense that the research they are involved in has a real chance of helping people. In addition, they don't see the fruits of their labours sold off to foreign companies for little gain by the institute.

"One thing about the IP that comes out of here is that it's all fundamentally home grown. It all comes out of the institute's activities and all the concepts were developed here," says Hogarth proudly.