By Tom Henderson
Small Times Senior Writer
ALBUQUERQUE, N.M. — A fledgling biotech company getting ready to spin off from the Sandia National Laboratories has an ambitious goal: “We want to be the Intel of gas-phase sensors,” said Al Sylwester, chief operating officer of MicroChemLab.
Sylwester and four other scientists on leave from Sandia have invested their own money to develop commercial health-care and environmental applications for MEMS sensors that collect and analyze minute quantities of gases.
The company is already a success story of sorts, despite having no product to sell, no building, no venture capital and no additional employees.
 |
| MicroChemLab’s microfabrication produces a chemical analysis module small enough to be connected to existing including PDAs and pocket computers. |
Today, it’s a story repeated often at Sandia and other national labs thanks to two laws passed by Congress since 1980 allowing weapons-based technology from the national labs to be transferred into such peaceful applications as drug detection, medical delivery and environmental sensing.
For government researchers, there’s the motivation to see their research through to a real-life product. And, of course, successful applications can earn both researchers and the government labs significant financial rewards.
For the government, commercial development shifts the costly step of developing and testing working products to the private sector. That frees the government labs to focus on cutting-edge research. And, in theory, it will give the government a reliable source of tested small-tech products to buy for military and other applications.
“If we don’t take immature technologies and transfer them out, there is no way to test it to see if it can be used in our primary weapons program,” said David Goldheim, director of corporate business development and partnerships at Sandia. “The only way a MEMS device is going to be used if it’s totally tested and characterized.”
Has this happened yet with MEMS devices?
“Not yet,” said Goldheim. “But it’ll happen. It’s just too new.
“This is an exciting landscape. It wasn’t so long ago we had no idea we could do all this tech transfer, make it happen. We’re now at the point where we can take better products to the marketplace and improve U.S. competitiveness.”
Sandia recently entered into an agreement with a variety of private and public entities for the development of a 219-acre Sandia Science and Technology Park just off the grounds at Kirtland to attract high-tech firms to Albuquerque and to incubate Sandia spinoffs.
The leave program also has become a valuable recruiting tool, said David Williams, director of microsystems science, technology and components at Sandia.
“When I lay out that value proposition to a new Ph.D., I’ve got the best value proposition in the country,” he said. “It keeps my pipeline moving. I now manage a talent supply chain. I’ve hired 14 people this year, and their average grade point was 3.8. And they came from the top 25 schools.”
Other government labs are seeing similar benefits.
“It very much helps us to recruit,” said Gary Spanner, manager of economic development at Pacific Northwest National Laboratory in Washington state. So far, 50 of his employees have taken advantage, and have been a major reason behind the 55 new tech firms in the area, including Innovatek and MesoSystems Technology, two small-tech biotechs that spun out from PNNL in 1997.
TWO PIECES OF LEGISLATION
Technology transfer from the national labs has been enabled by two federal acts. First, the Baye-Dole Act of 1980 allows government and academic researchers whose work has been funded by federal agencies to share in the ownership of their work and to file patents in their own names.
The theory is that, by giving researchers an economic incentive beyond their paycheck, an entrepreneurial spirit might take hold and lead to spin-offs and job creation.
The second is the National Competitiveness Technology Transfer Act of 1989, which allows the national labs to enter into a variety of agreements with the private sector.
These have included exclusive and non-exclusive licenses, where companies pay a fee to use patented technology; user fees, where companies pay labs to use their facilities or to have government scientists do work on a project basis; and CRADAs, corporate research and development agreements where companies pay to take basic research and to help develop it.
The act has been augmented by the establishment of the National Technology Transfer Center (NTTC) in Wheeling, W. Va., established by Congress in 1989 to provide the private sector with access to federal research and development money.
The center is staffed with tech-transfer experts and technical experts in a variety of areas and helps links companies via a toll-free telephone number (800-678-6882) and Web site. According to NTTC figures, companies can use the center to get information about $70 billion worth of research and 100,000 researchers at more than 700 federal labs and universities.
Employees at the national labs are encouraged to become entrepreneurs through a leave program that allows them to join the private sector for two years, extendable to three, with the guarantee of a job at the lab if things don’t work out. They are also able to retain their government employee benefits at cost.
SUCCESS STORIES
Technology Ventures Corp., a company founded in 1993 by Martin Marietta to help Sandia transfer its technology, has helped create 40 businesses in the Albuquerque area during the last seven years, with some $295 million in funding and the creation of 3,125 jobs. In addition, it has helped lure nine venture-capital companies to an area that previously had none.
Twenty-five of those companies are spinoffs by Sandia employees.
The total economic benefit to Sandia from licenses, CRADAs and pay-for-work projects was about $70 million in 2000, said Goldheim, and is expected to increase in coming years. “It’s a good growth curve,” he said.
At the other end of the revenue stream is the Pacific Northwest National Laboratory.
In 1999, that figure was $613,000, but Spanner said job creation tells a more complete story in a region hit hard by the announcement last November by Secretary of Energy Bill Richardson that the Hanford Nuclear Reactor would be shut down. It accounted for 7,000 of the 140,000 jobs in the tri-cities of Richland, Pasco and Kenewick.
According to his figures, PNNL technology is imbedded at 90 area firms, accounting for up to 1,500 new jobs. Five hundred of those jobs have been at PNNL’s 50 startups. In 2000, PNNL’s programs created, recruited or expanded 10 companies.
Karena McKinley is director of Lawrence Livermore’s Industrial Partnerships and Commercialization Office. She said that revenues from royalties, licensing agreements and the like generate up to $50 million a year in revenue. Livermore technology has created several dozen companies, she said, employing more than 2,000 people in northern California and having combined sales of $250 million annually.
Spin-offs have been a relatively minor part of the equation, averaging about three a year, but she sees that increasing in coming years. One recent example in small tech is Rolltronics, whose technology puts transistors on flexible plastic films — with potentially major benefits in weight reduction, improved ruggedness and lower power needs. It was the subject of an article in the March issue of The Economist.
Livermore has had two major successes in its licensing program.
Cytomation of Colorado licensed Livermore technology for high-speed sorting of cells back in 1993. The technology has applications in drug discovery, stem-cell research and combating HIV. It was named to Inc. Magazine’s list of 500 fastest growing private companies in 2000, growing from $2 million in revenues to $20 million and from 18 employees to 120.
In 1997, Cepheid, a California biotech, licensed Livermore technology for microfabricating chemical reaction chambers for its microfluidic products. Last June, it raised $46 million in an initial public offering.
McKinley said licensing revenues at Livermore will continue to increase. “The program is growing. We’re just getting to the point where we have a fairly mature program and procedures in place.”
Government defense labs, by nature secretive, took a few years to recognize the advantages of commercial spinoffs, Sandia’s Williams said.
“It took us eight years to decide the Cold War was really over. So this has only been an active process for three years.”
null
CONTACT THE AUTHOR:
Tom Henderson at [email protected] or call 734-994-1106, ext. 233.