To Start A Spinoff Biz, Look To Utah

When it comes to creating new start-ups from academic research, only MIT compares to the University of Utah -- despite the fact that MIT's research budget is five times larger. Now officials from colleges around the country are flocking to Salt Lake City to learn how the school turns inventions into jobs, and profits.

For insight into how the University of Utah blazed the trail to business spinoffs, consider a day back in 1984, when Utah research professor Ted Stanley was having a coffee. As he tells it, Stanley looked at a bowl of sugar cubes nearby and had an idea: What about putting drugs in the sugar cubes?

Before you get the wrong idea, Stanley was taking a break from his experiments on how to safely immobilize monkeys. He specializes in anesthesiology and pain.

It turned out that the monkeys loved the sugar cubes Stanley gave them. The process was safe and easy, he says, adding "there was no stress, they didn't yell, you know."

So Stanley started thinking about his human patients. Soon, he and his colleagues had developed the fentanyl lollipop. It quickly alleviates pain in patients with severe cancer. The University of Utah's business school told him he should start a company.

"I didn't know did-squat about any of that," Stanley says, "I'm a doctor, you know."

But the school steered him to business people, academic partners and patent lawyers. And the anesthetic lollipop became a multimillion-dollar product -- the university's first blockbuster invention.

Since then, the University of Utah has become a leader in commercializing scientific breakthroughs. So far this year, officials from more than 80 universities have paid a visit to find out the school's secret.

That secret begins with a history of fostering inventions that goes back decades. For instance, in 1984, the school touted itself as the site of the first artificial heart implant.

The university's entrepreneurial culture drew innovators in medicine, engineering and, later, computer graphics. Medicinal chemist Glenn Prestwich went there from Stony Brook in New York. Describing the school's environment, Prestwich says, "It's a cultural difference; it's a focus on the entrepreneurial process as a scholarly activity."

Prestwich was also struck by the school's collaborative spirit, which he believes leads to more inventions. And there was something else, he says: a deeper focus on the end-users of research, both physicians and their patients.

"Without that focus, research is just kind of playing," Prestwich says. "The challenge is getting from the research, the technology, to a product. And that's what the [university] has become good at."

Utah created 20 spinoff companies in 2008 alone -- the same as MIT . But MIT has five times the research budget Utah has.

Jack Brittain, Utah's vice president of venture technology development, says that on average, it takes 100 million federal research dollars to get a spinoff company.

In contrast, he says, "We were doing one company for every $15 million."

To get there, the university has created an even more sophisticated operation than it had in the 1980s.

Back then, the business school simply steered professors to contacts. Now, it has a team of entrepreneurial faculty advisers. They're trusted peers -- high-level scientists -- who know a lot about starting companies.

Prestwich is on that team; he says that asking many academics to turn their idea into a company is like getting a cat to jump into water.

He says the academics are trained to talk to lawyers and to potential investors -- "and you have to tell them why your product, your company in the health sciences, is worth them, their company, putting half a million dollars into."

The school can also help inventors secure venture capital, says Brittain. "Talking to people around the nation, they've kind of had this feeling that capital has dried up in the current recession," he says. "We're having just the opposite experience."

In fact, the University of Utah has scooped up more than $270 million in the past five years -- 90 percent of it from out of state.

Some of that money will be plowed into a special fund for researchers to build prototypes of their inventions -- a luxury most colleges don't have. If the idea doesn't work, it's back to the lab.

But if it does, it's off to the patent office, and eventually, into the public's hands.