Penn State Research Spin Off Generates Grad Student Support

May 12, 2000

University Park, Pa. --- Penn State recently placed close to a half million dollars in a fellowship endowment fund for graduate students in the chemical engineering department, thanks to the commercialization of faculty research.

Dr. Eva J. Pell, vice president for research and dean of the graduate school, says, "People sometimes think of technology transfer and the development of intellectual property as something that only benefits faculty members. In fact, more often than not, success at commercialization leads to greater opportunities for our students as well."

The funds for the new fellowships came from the sale of stock that Penn State received in a license agreement with a new company started-up by Dr. David Edwards, former associate professor of chemical engineering.

Dr. J. Larry Duda, professor and head of the department of chemical engineering, says, "The money represents the Engineering College’s share of the proceeds from the sale of stock as well as the share that would normally come back to the department. When we told Dean David Wormley what we had decided to do with the money, he gave us the College’s share, too."

The technology, developed by Edwards with a Penn State/Massachusetts Institute of Technology-led international team, is a new type of dry aerosol mist to deliver medication. In tests, the specially designed, large, light, whiffle ball-like mist particles remain longer in the lungs and are tolerated better than the alternatives.

After the University patented and Edwards published his work, he went to Boston, where he had been an MIT post doc, to start his own company. Penn State took stock in the company, AIR Inc., as partial payment for licensing a bundle of rights to the technology.

Dr. Thomas J. Monahan, director of Penn State’s Intellectual Property Office, says, "It’s often helpful to entrepreneurs for the University to take stock as payment rather than cash. The company can then focus cash resources on developing the technology."

Alkermes Inc. eventually acquired Edwards’s company and the stock held by Penn State in AIR was converted to publicly traded stock in Alkermes. When Penn State sold the Alkermes stock, the proceeds were distributed in the usual 40-40-20 split among the Penn State Research Foundation (PSRF), the College/Department, and the inventor. Edwards, however, waived the right to his 20 percent share which was shared with the College of Engineering and PSRF. PSRF, a non-profit foundation, will use its share to fund patent and intellectual property administrative activities.

Monahan says Edwards’s story illustrates the value of protecting intellectual property. He explains, "Because Penn State took a patent position in Edwards’s technology, that motivated venture capitalists to invest in it. Intellectual property has to be protected to be commercialized."

In 1998, according to the AUTM report, the PSU Intellectual Property Office filed 190 invention disclosures, the first step in the patenting process, ranking Penn State second in Pennsylvania, third in the Big Ten and sixth among all U.S. universities.

However, Duda thinks the total number of patents and the $3 million in income they produced in 1999 could be higher based on Penn State’s total research expenditures of $393.4 million. A distinguished researcher who is about to step down after 17 years as department head, he says, "Most people from my generation don’t think about patenting their work — and when we do, we think investors will beat a path to our door. None of my patents, for example, make money. Once you get the patent, you are just starting. You need to do development and you need to do marketing."

"Younger faculty members, like Edwards, seem to be more attracted to doing this; although increasing numbers of people of all ages from throughout the University are trying it as the University puts in place new programs and options to assist them," Duda adds.

Dr. Gary Weber, assistant vice president for research and director of technology transfer, says it’s important to remember that Penn State encourages and supports research because it’s part of its land-grant mission, because it helps the people of the Commonwealth and because research returns value for the tax dollars invested in the University.

He adds, "Unless we protect and develop the intellectual property created here so that it can be used by the community-at-large, it won’t reach its full potential to make people’s lives better."

**bah**

Contacts:

Barbara Hale (814) 865-9481 (o)/ (814) 238-0997 (h)

Vicki Fong (814) 865-9481 (o)/ (814) 238-1221 (h)