University of Minnesota ramps up effort to commercialize drugs

The University of Minnesota is no Pfizer or Merck. But that doesn’t mean it shouldn’t act more like Big Pharma.

The school has begun an ambitious effort to convert its considerable drug research into actual products. The idea is to better coordinate drug discovery projects among programs like the Masonic Cancer Center, medical school and College of Pharmacy and provide expert advice and money to technologies that can eventually be licensed or spun out into startups.

“There are absolutely [university invented] drug candidates that are commercializable,” said Jay Schrankler, director of the Office for Technology Commercialization (OTC). “We need to start a big [initiative] so we have more opportunity to get drugs to the market.”

The university plans to fly in experts to instruct faculty on the basics of drug commercialization — most importantly producing the right early stage experimental data that will help validate technology and attract investors.

For example, many researchers just “drop drugs in a [petri] dish” without realizing they need to perform animal studies, the first crucial step in commercialization, Schrankler said.

Another problem: finding the $5 million to $10 million a year the school needs to fund these Phase 1 safety studies.

To that end, the school will spend $1 million a year on the studies. In addition, the University of Minnesota Foundation, the school’s philanthropic arm, is planning to raise a $50 million fund to back commercialization of university technologies, including drug therapies.

The school has a decidedly mixed record on drug commercialization. The school scored a big hit with the anti-AIDS drug Ziagen, which has generated about $300 million in royalties since 1999. However, the financial success of Ziagen, whose American patents expire in 2013, is a fluke because of court rulings covering its patent protection, Schrankler said.

In 2008, the university spun out VitalMedix Inc., a startup developing a drug designed to keep patients suffering from catastrophic blood loss alive long enough to reach a hospital. But the company eventually filed for Chapter 11 bankruptcy because it could not raise enough money. The technology has since been returned to the university, which is trying to win a Department of Defense grant to develop it.

Over the past several years though, the university has made a concerted effort to recruit drug industry experts to its payroll.

Reggie Bowerman, a former MGI Pharma executive, recently joined OTC as head of the newly formed Life Science Business Unit, a group responsible for advising researchers on how to develop market-viable diagnostics, biologics, drugs and medical devices, and pitching that technology to outside companies and investors.

But the school’s most prized recent hire may be Gunda Georg. Three years ago, the university hired away Georg from the University of Kansas where she ran a National Institutes of Health-funded collaboration to develop experimental drugs to fight cancer.

She also launched ProQuest, a drug startup eventually purchased by Guildford Pharmaceuticals that was in turn acquired by MGI Pharma. ProQuest created Lusedra, an anesthetic now available on the market.

University officials says the school will benefit from Georg’s expertise in commercializing drugs. She founded and directs the Institute for Therapeutics Discovery & Development at the College of Pharmacy. Georg says the school is currently negotiating a deal with pharma companies to license two promising therapies she helped create, including Minnelide, a modified version of a natural Chinese compound that can shrink cancerous tumors.

“The U has made much progress in this [drug] area with additions such as Gunda Georg and her group,” said Barbara Nelsen, a biotechnology consultant and managing director of a $10 million early stage fund run jointly by Affinity Capital in Minneapolis and Triathlon Medical Ventures in Cincinnati.

Dr. Doug Yee, director of the Masonic Cancer Center, says he hopes the university’s initiative will inject both an entrepreneurial spirit and industry expertise into a research-dominated culture.

“I know there are a lot of [cancer-related problems] that can be addressed by our drug targets,” Dr. Yee said. “But the biggest problem is convincing [outside] people they’re valid.”

Commercialization “has not been a mindset” at the center, he said.

For example, Dr. Yee recalls working on antibody-based cancer therapy 20 years ago, but the technology never went anywhere, partly because it was well ahead of its time. Today, three or four pharma companies are researching this area.

“If I had the resources, we might have moved this project forward,”  Dr. Yee said.