News that one of the wealthiest entrepreneurs in the United States is getting ready to provide $2-billion to set up endowments at more than a dozen universities has sent university leaders at some of the nations’ top research universities scrambling to make their case for a piece of the pie.
But now, as officials are learning more about the conditions attached to the money offered by the Alfred E. Mann Foundation for Biomedical Engineering, several universities are growing uneasy about the idea. Their fear: The agreements, to establish Alfred Mann Institutes at 12 to 15 universities — with endowments ranging from $100-million to $200-million each — in order to develop the commercial potential of biomedical research findings, may be as much a strategy to control patent rights as they are an act of philanthropy.
A few, including the Johns Hopkins University and, initially, Emory University and the Georgia Institute of Technology, have turned their backs on the money.
Those decisions, communicated delicately and in private, for fear of antagonizing or embarrassing a prominent philanthropist whom they might still hope to court as a future benefactor, have not been easy for the universities involved.
For many research institutions, the foundation’s broad approach, modeled after an institute established at the University of Southern California in 1998, is an appealing one, particularly as universities have begun investing in projects to more quickly translate their basic research into medical treatments, diagnostic tests, or other useful products.
What’s more, officials say the proposed Alfred Mann Institutes could help them deal with one of their greatest challenges to moving ideas to the marketplace: finding the money and expertise to develop a researcher’s early-stage idea to the point where it will attract a commercial licensee or investor looking to build a company around it.
Even so, the idea that has been attractive to many in its broad strokes is far less so as the finer details begin to emerge. Many universities also are now realizing that the money the foundation is offering is neither a gift — the funds would not go the colleges but would endow affiliated nonprofit entities — nor support for the kind of basic or applied research that typically is undertaken at a university.
At Johns Hopkins, the president, William R. Brody, made the never-publicized decision to forgo an endowment last fall partly because of concerns that the foundation was overreaching in its demands for rights to control and commercialize research developed by faculty members, according to sources inside and outside the university.
Around the same time, two other institutions, Emory and Georgia Tech, also decided not to pursue a joint affiliation, although the president of Emory, James W. Wagner, said last week that the foundation had recently “renewed” dormant discussions with the two institutions.
Mr. Wagner, in an e-mail message, said he was unfamiliar with details of the new talks and as such, “it would be improper for me to speculate” about them. He declined to discuss the concerns that had prompted the Georgia institutions to halt discussions over the arrangement earlier, but said “similar issues at least partly complicated discussions” between the foundation and Johns Hopkins and the Massachusetts Institute of Technology.
MIT officials said they had preliminary discussions with Mr. Mann six or seven years ago but they never went anywhere. A spokeswoman did not know why the talks stalled.
A Dicey Situation
Dr. Brody declined to comment to The Chronicle last week, and the university’s official position, according to its spokesman, Dennis O’Shea, is that Johns Hopkins “certainly would love to be the beneficiary of a gift from Mr. Mann.”
The university’s reluctance to discuss the situation notwithstanding, the Johns Hopkin’s decision is getting around.
A number of university administrators interviewed about their involvement with the planned Alfred Mann Institutes said they were aware of the Johns Hopkins stance and the sensitivity of it. Earlier in his career, Mr. Mann — a physicist-turned-businessman whose companies developed pacemakers, insulin pumps, and other medical innovations, making him a billionaire several times over — collaborated with Johns Hopkins on the development of a rechargeable pacemaker, and he has been quite public about his desire to establish an Alfred Mann Institute there.
Mr. Mann, now in his 80s, received an honorary degree from Johns Hopkins in 2001, and has suggested in several interviews that such an affiliation was in the works.
A potential affiliation with the foundation is raising alarms elsewhere as well. At the University of North Carolina at Chapel Hill and North Carolina State University, where a joint site is under consideration, a draft proposal sent by the foundation in February raises “very grave concerns” and “a huge number of issues,” said John G. Gilligan, vice chancellor for research and graduate studies at N.C. State.
Most notable, he said, is the breadth of the universities’ intellectual property that the foundation wants to control through the new institute, which would be a separate nonprofit corporation jointly controlled by the foundation and the universities.
The confidential agreement, a copy of which was obtained by The Chronicle from the University of North Carolina under a public-records request, calls for the universities to license to the institute “all university intellectual property for which the institute requests a license in the life sciences and biomedical areas,” excluding work already promised by the universities to other parties.
The universities and inventors would share royalties and other proceeds from commercialization with the institute and with the Alfred E. Mann Foundation for Biomedical Engineering. An entity identified as AMI Investments would manage the funds of this endowment and the others.
University officials said they were also uneasy with terms that could impose delays on publishing research results for institute-affiliated researchers, particularly graduate students. The two North Carolina institutions say they are still in discussions with the foundation, but Mr. Gilligan says he has strong doubts that the arrangement, as now structured, makes business sense for the university.
“Unless I see any value for a large number of our faculty, " he says, “why should we get involved with it?”
Tech Transfer ‘on Steroids’
A. Stephen Dahms, president and chief executive officer of the Mann biomedical foundation, calls the approach of the planned Alfred Mann Institutes at universities “technology transfer on steroids.”
Though he declined to discuss details of the arrangements, which he emphasized have not been finalized, he said the affiliations were designed to provide a fair return to all parties.
The concept of giving outside parties first rights to commercialize inventions is becoming an increasingly common practice in academe. But the Mann Foundation appears to be seeking far more than the narrow band of related rights that institutions typically offer to companies in return for their sponsorship of research.
Mr. Gilligan said the demands in the agreement may even exceed those of two notorious academic affiliations, the Scripps Research Institute’s 1993 deal with the Sandoz Pharmaceutical Corporation and the University of California at Berkeley’s 1998 deal with an arm of the company then known as Novartis.
Both of those arrangements brought scrutiny and questions from public-interest groups and reproof from critics who contended the institutions had compromised their academic integrity to satisfy sponsors.
Universities can and do give preferential rights to research sponsors to commercialize work they have financed, Mr. Gilligan said, but “it always has to be proportionate” to what sponsors are putting into the deal.
Many other universities are carefully watching how the North Carolina institutions respond, because the dealings could set a precedent for other American institutions. The two are believed to be among the first to have received a full-fledged proposal from the foundation. Mr. Dahms has said that the agreements at the other dozen or so institutions will be similar to one another but different from the older affiliation at Southern Cal. He declined to elaborate.
The foundation’s only other announced deal for an Alfred Mann Institute is one planned for the Technion-Israel Institute of Technology, but that arrangement, first announced in 2004, is not yet final.
A Pledge Left Pending
At the time of the Southern Cal gift in 1998, Mr. Mann announced plans to give a similar amount of money to the University of California at Los Angeles. But despite years of discussions the two parties could never come to terms.
Mr. Mann has characterized the problem as an impasse over intellectual property, but according to a former UCLA official involved in the discussion, the bigger problem came from other demands from Mr. Mann, including a condition that would have allowed his foundation to withdraw its money if the university did not raise matching funds for its institute.
Roberto D. Paccei, vice chancellor for research at UCLA, declined to discuss the situation. Mr. Dahms said, “UCLA has not been able to complete the process.”
Mr. Dahms, a professor of chemistry at San Diego State University for more than 30 years and more recently executive director of the California State University System’s biotechnology research program, joined the Mann Foundation as its full-time leader in January. He said his organization was now looking beyond UCLA.
The foundation has considered dozens of institutions, he said, and “we’ve now invited 16 universities to the dance.” He declined to identify them.
Stealth Operation
At a conference in Orlando this month, Mr. Dahms told technology-transfer officers that the foundation expected to announce its latest affiliation, involving two institutions, on April 1, and another “very large one” on April 25. Last week he indicated that one of those may now be delayed until summer.
He said a “a super-secret stealth selection committee” made up of experts in science and business had already undertaken six site visits. Three more visits will be completed by the end of the year. He said the foundation planned to visit as many as 50 institutions in the next six years and ultimately award endowments to about one-third of them. Mr. Mann makes the final selections, he said.
The University of Washington and Purdue University are among the institutions that have had site visits, officials there confirm. The University of Minnesota-Twin Cities is preparing for its visit in April. Foundation officials have also had at least initial talks with Case Western Reserve University, the University of Arizona, and the University of Michigan at Ann Arbor.
Lee Huntsman, president emeritus at Washington and coordinator of the site visit there about a year ago, said his university and others had not received much information from the foundation on how the institute would work. “That’s one of the big voids,” he said.
The secrecy is unusual for a foundation, said Mr. Huntsman. But in this era of “‘venture philanthropy,” where benefactors often link their gifts to specific goals, such idiosyncrasy is hardly unheard of.
“There aren’t many foundations playing in this space, either,” Mr. Huntsman notes.
One foundation that is also financing university-based efforts to “translate” biomedical research into usable products is the Wallace H. Coulter Foundation, in Miami. In September it awarded grants of up to $2.5-million over five years to nine universities to help them pay for the premarket research and development that could make biomedical-engineering inventions at universities more attractive and valuable to companies. The grant money goes to academic departments within the institutions. The Coulter Foundation did not seek or receive any commercial rights in exchange for its money.
Farther Down the Pipeline
According to Mr. Dahms, Mr. Mann was too busy with his other business interests to speak about the new institutes with The Chronicle.
Mr. Dahms said Mr. Mann’s goals were simple. He believes traditional modes of university technology transfer “are broken and not working” and wants “to foster a new model at some elite universities.”
Typically, said Mr. Dahms, universities license early-stage inventions to small companies and then the inventions “languish” there.
Because the Alfred Mann Institutes would stand outside the university and be well financed, they could shepherd inventions much farther along the development cycle than a university typically does. With that, he said, inventions would have more value for companies because they would be closer to commercial status.
The model for this approach, although not the financial structure, can be found at Southern Cal, where an Alfred Mann Institute has been operating for about four years. Mr. Mann financed it with a $110-million gift. Within the last few years, he supplemented that with an additional $50-million.
C.L. Max Nikias, the university’s provost, said the money is part of the university endowment, although all proceeds from it support the institute.
Working with the institute is voluntary, and about a dozen professors have chosen to take their ideas to it. He said the university, the institute, the foundation for biomedical research, and inventors share in any proceeds from inventions, but he declined to provide details. The institute has yet to turn an invention into a commercial product, but its associate director, Mac C. Chapman, said it was close to doing so with two projects.
Nothing in the Southern California affiliation agreement prevents the Alfred Mann Institute from licensing its inventions to companies affiliated with Mr. Mann, although Mr. Nikias noted that any such arrangement would have to be approved by the institute’s board. He said no such deals had occurred.
The agreement at North Carolina also contains no language preventing Mr. Mann or his businesses from ultimately licensing an invention. Mr. Dahms did not reply to questions about whether the standard institute agreement would specifically bar such activity. He said Mr. Mann’s other businesses, which these days include another foundation devoted to medical research, the Alfred Mann Foundation; a biotechnology company called MannKind; and a company developing implantable devices to improve vision called Second Sight, keep him busy enough.
http://chronicle.com Section: Money & Management Volume 52, Issue 28, Page A1
