From discovery to commercial success: What Does It Take to Turn Research into Business?

At Danish universities, research-born discoveries are increasingly being transformed into spin-out companies but, according to a tech-transfer expert at Aarhus University, it didn’t happen overnight.

Written by Sebastian Kjær

In 2019, Draupnir Bio received an investment of 225 million DKK. AgroIntelli followed suit with 108 million DKK in 2020. And only this year, Muna Therapeutics managed to raise an impressive 450 million DKK.

Although their product differs—from drugs to prevent blood clots in the heart, self-propelled agricultural machinery and the treatment of neurodegenerative diseases—what these three companies have in common is that they have all spun out of research conducted at Aarhus University. The university therefore owns the patents on which these companies are based. Meanwhile, Draupnir Bio, AgroIntelli and Muna Therapeutics serve as excellent examples for how university research can evolve into viable commercial projects.

“The number of patents aren’t nearly as important to us as the amount of jobs created by the companies based on the research. That’s where we can see that we’re really making a difference, when our spin-out companies are able to employ hundreds of people,” says Morten Holmager, Business Development Manager at Aarhus University’s Tech Transfer Office.

Over the past decade, the Tech Transfer Office has helped to establish 31 spin-out companies based on intellectual property rights from Aarhus University. As of today, 21 of those companies are still active and employ approximately 200 people.

In it for the long haul

This is not just the case for Aarhus University; the number of spin-out companies from all Danish universities has been growing over the past 10 years, reaching a peak in 2019 and 2020, where Danish universities “spun out” a total of 27 patent-based companies.

What seems to have catalysed such growth is that universities are getting better at commercialising their patents. This is no small achievement, according to Holmager, because the process from patent registration to commercialisation is such a long one.

“It involves us, together with the researchers, building up a case for how their patent can become a spin-out company. We figure out the business model and we also devise a strategy for a possible sale of the company further down the line. For a typical life science company, there’s usually a pre-clinical phase and then a sale to a pharmaceutical company,” he says.

Aarhus University’s latest spin-out, iNotify, is one example of just how long the process from research to business can be. The main researcher has been researching reproduction for over 20 years and only four years ago discovered some molecules that have the potential to help women who don’t respond well to hormone therapy get pregnant.

However, before the project could go any further, there was a need to asertain whether the invention could be licensed directly by a pharmaceutical company. That required further clinical trials, so the project became a spin-out, which has taken four years to get on the right track.

New talents needed

But how do you assess whether a spin-out company is the right way to go or not? This is where the Tech Transfer Office comes into the picture.

“Researchers tend to be exceptional on the research side of things, but they soon find out that they lack some of the competencies needed to commercialise their work. Much of the process from research to business is actually about finding new talents for their team, such as a commercially-minded CEO,” Holmager explains, and continues:

“This can take several years, because it also requires a huge mental shift for the researchers involved. They might have spent the past 20 years conducting research and now, all of a sudden, they have to think commercially. So yes, it can take a while, but it tends to be sped up when we start introducing them to investors and they get feedback on how the product could work, and what it’s missing.”

Few make it so far

Aarhus’ Tech Transfer Office is responsible for the licensing and establishing of companies based on university patents. Every year, 70 potential inventions are evaluated, of which 50 go further in the process, ending up in 22 patent applications. Generally, this results in 14 licensing deals and 2-3 spin-out companies each year. Although this doesn’t sound like much compared to the usual startup turnover, the companies who do make it are often long-lasting ones, who are able to employ many people, but who would otherwise have had difficulty establishing themselves without the initial assistance.

“Most researchers don’t have experience in commercialising their results and that’s the whole point of our Tech Transfer Office. We’re here to assess what can be commercialised and then to help commercialise it. You could also see it as a kind of loop, where the research funded by the public delivers value back to society at large,” Holmager concludes.

Inventions and spin-outs at Danish universities

- Since 1991, universities have been required by law to report patentable invetions. The purpose is that research results produced with the support of public funding should be able to contribute to the corporate sector.

- As of 2012, the number of such inventions from Danish universities has been over 300 per year, and latest figures from 2020 show just under 350, which resulted in a total of 42 patents.

- Nationwide, the number of spin-out companies based on university patents is growing: in 2012, Danish universities produced a record number of 10 spin-outs; in 2018, this number more than doubled and in 2020, it reached a new record of 27 spin-outs.

Source: Universities Denmark https://dkuni.dk/wp-content/uploads/2021/09/noegletal-for-kommercialiseringsstatistikken-2020.pdf