University puts stock in home-grown research

Equity holdings of the University of British Columbia in research-based enterprises -- most of which were created from UBC research -- reached $6.9 million as of March 31, 1997.

The university holds equity in 28 knowledge-based companies, 27 of which were created from UBC research. This latest market value represents a 17 per cent increase from the same time in 1996 when the university carried shares in 23 spin-off companies.

"Forming new high technology companies is a natural progression of UBC's research activities that brings direct economic and social benefits to the region," said Bernard Bressler, UBC's vice-president, Research.

"These ventures maximize the value of UBC's research program, and represent an important stream of revenue in the form of related research contracts, royalties and equity that in turn supports ongoing research."

UBC began negotiating equity options in 1988 for two reasons: to support start-ups by reducing the cash burden and financial inflexibility imposed by royalty payments, and to enable the university to capture growing capital values in companies whose revenues are not typically realized for seven to 12 years from inception.

Ventures West President Michael Brown said UBC's willingness to accept an equity position in lieu of royalties is a significant development for new knowledge-based companies in the province.

"Combined with increased access to early stage funding available through the venture capital community, this improves the potential for success for these otherwise risky enterprises," said Brown, whose company is one of three fund managers overseeing a $25-million fund supporting early stage development of new technologies in Western Canada. "We hope that UBC's movement in this area will inspire other Canadian universities to follow suit."

Establishing a new venture includes formalizing the rights to commercialize the underlying UBC technology through a license agreement. Such rights are granted to a company in exchange for equity and/or royalty participation for both the inventors and the university.

UBC acquires all shares under these agreements, and maintains a sell-only position. Liquidation of holdings is based on company event milestones and share prices, with sell decisions exercised only after full public disclosure of any company developments. Shares held by inventors are not managed by the university.

Of the 28 companies in UBC's equity portfolio, 26 are located in British Columbia; 19 are private companies and nine are public; 16 companies or 57 per cent are in the life sciences sector, nine companies or 32 per cent are in the physical sciences sector, and three companies or 11 per cent are in the information technology sector. The 19 private companies account for $4.7 million of the portfolio's total market value, with the nine public companies representing the remaining $2.2 million.

Companies in which UBC holds shares include Inex Pharmaceutical Corp., Forbes Medi-Tech Inc., ID Biomedical Corporation, IGT Pharma Inc., Micrologix Biotechnology Inc., Pacific Asia Technologies Inc., Westport Research, Inc., Aurora Instruments Ltd., Glucogenics Pharmaceuticals Inc., GMW SpeakerTape Corporation, Ingenix Biomedical Inc., Kinetek Pharmaceuticals Inc., NeuroVir Inc., Synapse Technologies Inc. and TerraGen Diversity Inc.

UBC technology transfer activities are managed by the University-Industry Liaison Office (UILO). Since 1984 the UILO has licensed over 220 UBC inventions, has actively participated in the creation of 72 spin-off companies, and has established a database of over 450 value-added UBC technologies ready for licensing, joint research and development, and investment.