CSIRO’s IP revenues on the up

CSIRO has reported sharp rise in intellectual property revenues 2003-04 financial year, to $22 million -- a 60 per cent increase on its 2003-03 figure of $13.75 million.

Federal Science Minister Senator Peter McGauran has congratulated the national research agency for reaching the $22 million revenue target it set last year, and said it was projecting further growth in IP revenues this year.

CSIRO’s total external revenue grew by 7.6 per cent to $320 million in 2003-04, just short of its budgeted target of $322 million.

CSIRO’s Director, Commercialisation, Mr Nigel Poole, says income from running royalties for the year had generally been flat – improved revenues from some licensees had been offset by reductions in others, particularly in the agriscience sector.

Poole said the two main factors in this year’s improved figure were value captured from new spinout companies – the largest was PolyNovo Biomaterials, a 50:50 joint venture with Perth-based company Xceed Biotechnology.

Polynovo was established to commercialise novel, biocompatible and biodegradable polymers developed by CSIRO Materials Science for bone, blood-vessel and wound repair.

Poole said the capitalisation of PolyNovo represented a booked value to CSIRO of $5 million.

The other contributor to the 2003-04 result was the release of value as CSIRO sold off its equity in previously established companies – the largest of these came from its sell-off of two-thirds of its shareholding in Adelaide growth factor specialist GroPep Limited (ASX:GRO).

“This probably gives rise to the question of whether we’re selling off the silverware, but our portfolio is still worth more than last year,” Poole said.

He said these corporate ‘crops in the ground’ were source of running royalties, but at strategic intervals, CSIRO harvested its equity.

“It’s a self-generating process,” he said. “We never exit suddenly, and we reinvest the proceeds in new spin-offs. Our strategy is to build all three components to generate a growing stream of IP revenue.

“We’re expecting a year-on-year increase. Our strategic plan calls for an increase to around $29 million in 2004-05.”

Poole said IP revenue was still small relative to CSIRO’s total annual turnover of around $900 million - $560 from its Budget appropriation, and $320 from external earnings.

However, at 2.5 per cent, it was now in the same zone as the OECD average of 2 to 3 per cent figure for IP revenue, relative to total turnover, for comparable government-funded research agencies, institutes and research universities.

Poole said of the six companies spun out by CSIRO during 2003-04, only one had emerged from CSIRO’s involvement in the Commonwealth Cooperative Research Centre scheme -- VacTX, from the CRC for Vaccine Technology. The other five were solely scions of CSIRO.

Poole said that after several adverse experiences with commercial spin-offs or licensing deals made at divisional level in the recent past, all equity origination was now centralised in CSIRO’s commercialisation group.

Asked about the investment climate for new spinoffs in Australia, Pool said that while the window for larger floats was now very small, if not completely closed, investors still had a healthy appetite for smaller spinoffs and startups.