New alliance with PARTEQ bolsters U of T's commercialization capacity

By Vincent Wright

Canada's top research university is adding considerable muscle to its commercialization arm courtesy of a new strategic alliance with one of the country's most successful technology transfer/business development organizations. The alliance – unveiled at the second annual conference of the Alliance for Commercialization of Canadian Technology (ACCT) earlier this month – involves the Univ of Toronto's Innovations @ UofT (IUT) and PARTEQ Innovations, the commercialization agent for Queen's Univ.

"This arrangement is a win-win situation for both parties," remarks PARTEQ president and CEO John Molloy. With a sponsored research base that's more than four times larger than that of Queen's, Molloy says U of T addresses PARTEQ's need for greater discovery flow and tech transfer opportunities. U of T, he adds, will benefit from access to a wider pool of experienced commercialization professionals.

"It's virtually impossible for any single technology transfer office to maintain the commercialization expertise needed to cover the whole spectrum of research. By sharing technical expertise, intellectual property management and business development resources, both PARTEQ and IUT will be better positioned to meet that challenge."

For IUT, the arrangement with PARTEQ represents the organization's first working partnership outside of the greater Toronto area, according to IUT executive director Dr Tim McTiernan. IUT has been active locally, having forged commercialization relationships with groups like Bio-Discovery Toronto and MaRS Discovery District.

"Our new partnership with PARTEQ is really driven by the changing research environment itself, where multi-disciplinary and cross-institutional collaboration and cooperation is becoming far more prevalent" says McTiernan. "And if more research is cross-institutional, then it only makes sense that we form stronger cross-institutional linkages at the commercialization level."

Molloy concurs, noting the recent wave of new networking organizations that have emerged locally, provincially, regionally and nationally.

"The current phase in this whole technology transfer business is to find ways of breaking down the barriers to collaboration. Our arrangement with IUT shows that we can get over the jealous guarding of custody of the commercialization – a major obstacle to collaboration."

While the two organizations share a common mission – ushering discoveries to market as quickly and as effectively as possible – they are quite different from one another in terms of their modus operandi and relationships to the host universities.

The recently formed IUT combines the functions of the former U of T Innovations Foundation and the university's contract research/IP management group. Unlike the Innovations Foundation, which maintained some independence from the university, IUT is more tightly coupled to U of T and resides within the office of the VP research.

PARTEQ, by contrast, has been around for almost 20 years and operates at arm's length. Queen's Univ maintains a measure of control through appointments to and representation on its board of directors.

The PARTEQ commercialization model has certainly proven itself worthy. Since its inception in 1987, it has founded and incubated roughly 20 spin-off companies, supported another 20 enterprises through technology licensing, and has returned more than $24 million to the Queen's Univ community.

"We build companies," Molloy told delegates at the ACCT event. "We do not simply provide support to researchers that want to start a company. We will take the initiative and form the company, bundle the IP, prepare the business plan, find the money, and provide early-stage management support."

PARTEQ used that approach to form Neurochem Inc, which is developing a revolutionary therapy for Alzheimer's disease. Having already raised over $325 million from private investors and public equity markets, Neurochem is on track to become one of Canada's most successful biotech firms, while promising handsome returns to PARTEQ and Queen's in the years ahead.

Molloy says PARTEQ has enjoyed success because it's determined to be as innovative and enterprising as the university spin-offs in its portfolio. "To be innovative and enterprising, you have to be as flexible as possible and willing to take risks," he says.

One of PARTEQ's more risky moves, says Molloy, was its decision to save a cash-strapped plant genetics company, Performance Plants Inc. The company was on the verge of severing its staff when PARTEQ stepped in to finance the payroll for 14 consecutive payrolls. The company recovered and recently closed a $9 million financing.

Although it's a not-for-profit, PARTEQ behaves a lot like a commercial business. Through a mechanism called PARTEQ Incentive Equity Trust, it offers its employees the equivalent of performance-based stock options. In effect, PARTEQ staff gets a small piece of the action as an incentive to make their spin-offs more successful.

"The incentive equity trust is truly unique in Canada, and possibly throughout the world. It's an excellent way to reward effort and to maintain the utmost motivation among my staff."

Having emerged as the largest and most successful university technology commercialization agency in Ontario, PARTEQ will have a chance to apply its experience with Canada's largest research university. There appears to be little doubt that U of T can use the help, given its relatively weak performance on technology commercialization.

One measure of that weakness is the fact that IUT currently showcases only three active investments as successful spin-off stories (see table). By comparison, PARTEQ, working with a much smaller university, lists seven active spin-off companies. Molloy acknowledges that there's room to improve U of T's record in this area.

"Given the level of research at the University of Toronto relative to the amount of commercialization activity, one has to assume that there are a lot of discoveries that aren't being realized. By collaborating with us, IUT will learn new ways of doing things and we're confident that will accelerate the pace of commercialization at Canada's largest university."

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