|
If you
follow the trends in the local Southern California
seminar circuit you will notice a great deal of
momentum in the areas of Intellectual Property,
Corporate Governance, and Sources of Financing.
These three subjects form a common thread that spans
across both the traditional high-tech industry as
well as the biotechnology industries.
Within
the high-tech space, the subject of Intellectual
Property has evolved from a product based on an
awarded patent to something much broader and
positioned as the core offering of the company.
There are now hundreds of technology companies that
deliver an offering which has at the core, something
called Intellectual Property. This often takes the
form of software or a combination of tightly
integrated software and hardware which is
patentable, protected and is the heart of the
innovation.
Whereas
in the past it was rare to find a substantial
company formed solely from a patented technology, it
is now commonplace in the high-tech sector, be it an
algorithm or combination of elements that could
nearly be considered a system. Intellectual Property
has replaced the “whole product” concept of the ‘90s
that included a product ready for market and the
infrastructure to support it. Now there are
high-tech business models that define a company
solely based on its production of Intellectual
Property.
The
biotechnology community, by definition, is founded
on the principal of using living organisms to make
their medicines rather than the chemicals used by
pharmaceutical companies. In addition to very
complicated R&D efforts, this also requires very
complex manufacturing capabilities.
As in
high-tech, the biotech community can spin
Intellectual Property into a business. This process
was enabled through litigation that occurred in the
Supreme Court more than 20 years ago when it was
decided that anything made by the “hand of man” was
eligible for patenting.
Since
this decision, the biotechnology industry has
flourished and continues to grow. Strong
Intellectual Property protection is essential to the
success, and in some instances to the survival, of
the over 1200 biotechnology companies in this
country. For these companies, the patent system
serves to encourage development of new medicines and
diagnostics for treatment and monitoring of
intractable diseases, as well as agricultural and
environmental products to meet global needs.
For
them, the concept of Intellectual Property can be
the root compound or a database of compounds for a
drug that will be tested against a variety of
targets or it could be a methodology of compound
screening. This type of Intellectual Property (IP)
is purchased or sold within the biotech community
and can be the basis for formation of a biotech
start-up.
But much
of the IP would not be available within the biotech
community if it wasn’t for several government
programs (SBIR, CRADA) that provide access to
government research dollars, resources (i.e., NIH)
and labs (i.e., Battelle, universities) for the
biotech community. This combination allows the
biotechs to utilize government facilities, equipment
and researchers without losing access to the IP
yielded from the alliance. The biotech’s rights to
the IP are part of a government program (landmark
1980 Bayh-Dole Act) that provides the incentive for
cultivation of the biotech ecosystem and the basis
for many a biotech’s initial funding.
Once
established the biotech company must maintain R&D
momentum in order to keep a full pipeline of
compounds and be able secure additional funding.
Following the discovery phase of development the
compound may fail efficacy in its target indication.
The biotech may then seek out a new compound or new
IP to “in-license”. Also, in order to raise
additional monies to fund more research, a biotech
may “out-license” a compound to another biotech or
to one of the larger established pharmaceutical
companies that can afford to develop the compound
into a drug.
Just as
in the high-tech sector, Intellectual Property (IP)
protection is the key factor for economic growth and
advancement in biotechnology. Patents add value to
laboratory discoveries and in doing so provide
incentives for private sector investment into
biotechnology development.
Look for
“Biotech Meets High-tech Part II: Funding” in
our next issue. |
