The items often involve technology licensing agreements or leases. This month, all items were approved unanimously and without discussion. They related to the following businesses and organizations: ImBio LLC, BHJ Tech Inc., Newline Builders, Arborlight LLC, Arbor Ultrasound Technologies LLC, HiperNap LLC, Inmatech Inc., the Institute for Social and Environmental Research Nepal, PsiKick Inc., and Lycera Inc.

By way of example, the Lycera disclosure is required because four people who have an ownership stake in the company – Gary Glick, Anthony Opipari, James Ferrara and David Canter – are also employed by the university. [.pdf of Lycera disclosure] Lycera is developing treatments for autoimmune diseases, and plans to buy a company called JBL Pharma, which licenses technology from UM. As part of the purchase, Lycera will hold an exclusive license for that technology, in exchange for royalty payments on sales and the reimbursement of patent costs. In addition, the university has the option of investing up to $2.5 million in this business, as part of the Michigan Investment in New Technology Startups program (MINTS) that regents authorized in December of 2011.

This report was filed from the Anderson Room at the Michigan Union on UM’s central campus in Ann Arbor, where the regents held their November meeting.

The items often involve technology licensing agreements, research agreements or leases. This month, companies involved are Avicenna Medical Systems Inc., Peacock Holdings, 3D Biomatrix LLC, Atterocor Inc., Brio Device LLC, Evigia Systems Inc., HistoSonics LLC, Michigan Aerospace Corp., Mozaic Solutions LLC, and Situmbra Inc.

This brief was filed from the Michigan Union’s Pendleton Room on UM’s Ann Arbor campus, where regents held their March meeting. A more detailed report will follow: [link]

The items often involve technology licensing agreements or leases. This month, the items related to the following businesses: Structured Microsystems LLC, H3D Inc., ImBio LLC, OncoMed Pharmaceuticals Inc., and OcuSciences Inc.

This brief was filed from the boardroom of the Fleming administration building on UM’s central campus, where the regents’ meeting is held. A more detailed report will follow: [link]

In addition to approval for the overall program, regents also approved guidelines for MINTS. Managed by UM’s investment office as well as the office of technology transfer, the program involves investing in start-up companies formed using UM technology. It’s estimated that over 10 years, the program will invest about $25 million from the university’s long-term portfolio. According to a staff memo, the investments would be part of the portfolio’s venture capital sub-portfolio. A limit of up to $500,000 would be made in any single round of financing.

This brief was filed from the boardroom of the Fleming administration building on the UM campus in Ann Arbor. A more detailed report will follow: [link]

The program was developed in partnership with UM’s office of technology transfer.

This brief was filed from the regents meeting in the boardroom of the Fleming administration building on UM’s Ann Arbor campus. A more detailed report will follow: [link]

Ann Marie Sastry, CEO and co-founder of Sakti3, at her company's booth at the Detroit auto show. (Photo by the writer.)

But Sastry and her company, Ann Arbor-based Sakti3, is far from “out in the cold.” They are in the auto business for the long haul and do not plan on being relegated to a basement booth forever. Eventually, if all goes well, her company’s battery technology will be powering the cars upstairs on the main show floor’s Electric Avenue.

What is it about the “Eureka moment” in her UM lab that prompted her to help found a company two years ago? What is it that turned the heads and opened the wallets of the Michigan Economic Development Corp. and cleantech venture capitalist Vinod Khosla, who chipped in $2 million out the gate? What exactly is her company’s battery technology?

Here’s her answer: “We’re interested in both materials and manufacturing technologies at Sakti3. So, we’re sort of looking at the intersection of those things.”

She pauses. She grins slightly, then says somewhat apologetically: “Sorry, I know that’s not good enough.”

This is Sastry’s polite way of saying that any further information is proprietary. She will only add that, “We are working on a manufacturing technology, and we think that’s one of the bottlenecks.”

It’s not surprising that she is guarded. The future of the auto industry is electric – at least, so says Michigan’s governor – and the future of electric plug-in vehicles depends on some big technological leaps in battery technology. If you think you have the secret sauce, you’re not going to tell everybody. Eventually, Sastry says, “We’ll all duke it out in the marketplace.”

Technology Transfer: From Academia

That kind of unabashedly capitalistic tough talk would have been practically unheard-of coming from a university professor in eras gone by – when academics were supposed to be in research for purely academic reasons.

David Cole, who heads the Center for Automotive Research in Ann Arbor, remembers the ’70s, when it seemed like a dirty little secret for an academic to commercialize a technology he or she developed. In some cases, Cole says, it’s about academic purity. In other cases, it’s jealousy. “Some people work on technologies that can be commercialized, others do not.”

Sastry says the technology developed in her lab could have gone a number of ways, but in the end she chose automotive battery development rather than pure academics.

“When the founders looked at some results we had, some technology we were looking at, they thought, ‘OK we could absolutely write more papers on this subject and go down that road and try to really focus on this as an academic exercise or we could really go down another road, which is to take what we have and see if we can build it in the steps required for commercialization.’ Both things are difficult. They’re just different.”

Sastry is fortunate enough to work in an academic culture where commercialization is not only no longer frowned upon, but actively encouraged – especially by UM President Mary Sue Coleman.

“The culture has totally turned around,” Sastry says, and not just at UM but in academia broadly.

“There is this space between what we do in our laboratories and getting into commercialization that we have to address,” Sastry says, speaking of a disconnect between the basic research done at universities and their transitions into tangible benefits for consumers. “And we have to help address it. It can’t be all just (marketplace) pull. There has to be some (academic) push.”

Sastry credits Coleman for pushing this cultural turnaround at UM. “Our president has been very specific. She believes that we need to enable tech transfer, and has funded more offices and centers to do that.”

But, she says, no matter how much help a company gets, it’s tough out there.

“It’s a high degree of luck, there’s a high degree of naïveté, there’s a high degree of optimism,” Sastry says, of founding a company.

“In our case, we want to put batteries in cars, so we have a lot to learn about cars.”

The university did not push her in the direction of automotive, she says. The University of Michigan has to rely on the “passion and vision of researchers” to determine where things are going to go. The university, as a whole, starts up very diverse types of companies, from nanotech to biotech to energy and materials.

Cole says that most technologies emerging from blue-sky research can go in multiple directions.

Technology Transfer: What Direction?

“I don’t think Sakti3 would see themselves as … a battery manufacturer,” Cole says. For that to happen, it takes extra push – a combination of public and private funding, in Sakti3′s case – to transition from idea to an actual company that makes things. And Sakti3 is still early stage.

“You see, the one thing that is true with intellectual property is that it’s actually fairly inexpensive,” Cole says. “It’s when you go to commercialize it, put in manufacturing capabilities, that it becomes a different story.”

To help move the “story” along in 2008, the MEDC designated Sakti3 as a Michigan Center of Energy Excellence and awarded the firm $3 million to accelerate its efforts to move to a prototype and to partner with the University of Michigan. This was added to an initial $2 million in financing from Khosla Ventures, led by Silicon Valley venture capitalist Vinod Khosla. Khosla has his hands in many alternative energy and automotive enterprises, including Fisker Automotive.

“We were really lucky to engage with Khosla Ventures almost as soon as we decided to do a company,” Sastry says. “There’s a real similarity in approach there, which is great.

“Working with KV is incredible because they really know what they’re doing. They really know a lot about building businesses. We think we know something about building batteries, so that’s really good,” Sastry laughs.

It’s a marriage that works out because there is only so much a bunch of academics can do. You need expert venture capitalists to take it to the next level. “In terms of the mechanics of a business, how to raise funds, how you price real estate, these are things that venture capitalists know a lot about,” she says.

Technology Transfer: Timing

So, when will Sakti3′s materials, or manufacturing technology, or process, or combination of all of them – she is still vague on that “proprietary” stuff – actually see the marketplace?

“We’re a few years off yet,” she says.

Five years? 10 years?

“A few years off,” she repeats.

Then Sastry decides to be somewhat more charitable with her information.

“To be very honest, it depends on a lot of things,” Sastry says. “Depends on how fast we run, depends on the dollars that come in, it depends on how successful and, sometimes, how lucky you are in doing the technology. So, there are a lot of variables. You know, starting a business is very risky.”

It also helps that Sakti3 has a development agreement with GM and – with her university hat on – she runs a development center called ABCD (Advanced Battery Coalition for Drivetrains) to help the automaker develop next-generation batteries.

Sakti3 currently employs fewer than 20 people in Ann Arbor, but Sastry expects that number to grow. And it will grow in Ann Arbor.

But what if, say, a Boston-based company eventually wants to buy the business, she is asked.

“It’s a fair question,” Sastry replies. “I mean, what we decided to do is to start a company to advance our technology to get it into vehicles. And so, where we’re at as an entity five or 10 years from now, I hope that we’re kicking out a lot of batteries that are going into really good cars. There’s a lot of steps between now and then.”

So, at this stage of the company’s development, Sakti3′s goals match those of the University of Michigan to commercialize its basic technology and the goals of the state of Michigan to make the state a center for next-generation automotive battery technology and manufacturing.

“The thing that’s nice about our situation is that the government of the region that’s most important to us – where our customers live – is also strongly supportive of what we’re doing,” Sastry says. “How often does that happen?”

Veteran journalist Howard Lovy has focused his writing the last several years on science, technology and business. He was news editor at Small Times, a magazine focusing on nanotechnology and microsystems, when it first launched in Ann Arbor in 2001. His freelance work has appeared in Wired News, Salon.com, X-OLOGY Magazine and The Michigan Messenger. His current research focus includes the future of the auto industry.

Maria Thompson, general manager of the advanced research and government solutions group for A123Systems in Ann Arbor. She was one of several panelists from the local business community at Monday's UM economic development forum.

More than 250 people from academia, business, government and nonprofits packed the auditorium Monday afternoon at the Partnership for an Innovation Economy forum, hosted by the University of Michigan at its newly renovated art museum.

Throughout the two-hour event, The Chronicle learned, among other things: 1) which former Pfizer executive is a rugby referee, 2) which local power couples have relied on each other for advice, 3) who hosts one of the best holiday parties in Ann Arbor.

Of course, there was also much talk of UM’s role in economic development.

Steve Forrest, UM’s vice president for research, kicked off the forum by saying how deeply committed the university is to economic development. The event was a follow-up to a similar session they held about 18 months ago, he said, bringing together people in the community and within UM to talk about ways to partner. One of the results of those conversations is the launch of UM’s Innovation Economy website, he said. The idea is to provide a portal into all of the many university resources and programs that businesses can tap.

Forrest outlined trends in the Great Lakes economy – like the fact that manufacturing is no longer an economic driver. The region has to “get out of the mindset of denial,” he said, acknowledge that traditional manufacturing will never return, and transform quickly into a knowledge economy. Opportunities abound, he said, particularly in advanced auto manufacturing, green energy, health care and drug discovery.

UM is poised to take advantage of those opportunities, with its research expenditures pushing $1 billion this year, he said. “We have the resources. We have the talent.” What they don’t have, he added, is stable support from the state. Michigan lags all other states in its funding for higher education, and the university foresees that trend continuing. [UM president Mary Sue Coleman, along with leaders from other state universities, will be making their case for increased funding on Friday in testimony before the Senate Appropriations Subcommittee on Higher Education. The session, which is open to the public, begins at 10 a.m. in the Michigan League's Vandenberg Room, 911 N. University Ave., Ann Arbor.]

The solution to these challenges requires that all sectors of the economy – academics, industry, government and nonprofits – work together, Forrest said. He said they must use their regional strengths to compete on a global, not local, stage. He quoted Coleman, who in a 2006 speech to the National Press Club said that the university must “partner or perish.”

Forrest mentioned several efforts already underway: the Michigan Initiative for Innovation and Entrepreneurship, a consortium of the state’s public universities; UM’s own push to make entrepreneurship and working with industry a cultural value in their academic community; and the UM Business Engagement Center, designed to facilitate relationships between UM and industry.

They aren’t too big to fail, Forrest concluded. “We live in times of scary opportunities. They’re ours to miss.”

University Panel

Marvin Parnes, UM associate vice president for research and executive director of research administration, moderated the first of two panels, a group of five UM administrators whose work related to partnerships with industry. Daryl Weinert, executive director of UM’s Business Engagement Center, described BEC’s role as being advocates for the relationship between companies and academics. Within the past fiscal year, nearly 200 companies have come to the university for the first time seeking partnerships, he said – there’s pent-up demand, ranging from entrepreneurs in their garage to Fortune 500 companies. It can be difficult to work with small companies, he said, so they’ve been experimenting with different programs. Those include internships and career fairs focused on small businesses, as well as a small company innovation program, which gives financial incentives to small businesses to collaborate with UM on research projects.

Ken Nisbet, left, executive director of UM's Office of Technology Transfer, next to Steve Kunkel, senior associate dean for research at UM's Medical School.

Marian Krzyzowski, director of UM’s Institute for Research on Labor, Employment, and the Economy, talked about two programs at the institute: the Community Economic Adjustment Program (CEAP), and a program that provides customized business assistance to Michigan firms. Ypsilanti is one of the areas getting help from CEAP, which is participating in the Eastern Leaders Group project to revitalize that part of Washtenaw County.

Elaine Brock, senior associate director for UM’s Division of Research Development and Administration, said the university is trying to improve industry’s access to faculty. “We know that’s a concern,” she said. “It’s a big place, with way too many doors.”

Ken Nisbet, executive director of the Office of Technology Transfer, said the most effective forms of tech transfer are students. “I encourage you – go off and hire a student today,” he quipped. He ticked through the performance of the office: in fiscal 2008, they processed more than 300 invention disclosures, 91 licenses and other agreements with industry, 13 startup companies using UM technology, and they brought in more than $25 million in revenues from royalties and equity sales. They work with partners like Ann Arbor SPARK, MichBio, various chambers of commerce, Detroit Renaissance and others, he said. “We’re all in this together – we’re all committed to making Michigan a better place.”

The final speaker for this panel was Steve Kunkel, senior associate dean for research at UM’s Medical School. He praised the university’s decision to “plunk $108 million on the table” to buy the Pfizer research campus on Ann Arbor’s north side, and said they were in the due diligence stage, hoping to close the deal in mid-June. [That was roughly the same timeframe given earlier this year at a UM town hall meeting about the site.] Kunkel said they were figuring out how to use the space, trying to come up with a revolutionary way to conduct research. A committee is focused on innovation, he said, which might include moving the College of Engineering’s Center for Entrepreneurship to the site, and possibly setting up a business incubator there. Later in the forum, he said they hoped to make 3,000 new hires in the next 10 years at the site, and to bring in international partners. It’s “an opportunity not to do the same old thing,” he said.

Stephen Rapundalo, left, an Ann Arbor City Council member and president of MichBio, talks with state Rep. Ed Clemente before the start of Monday's forum. Clemente, who represents the 14th District, chairs the House New Economy Committee.

Business Panel

Rich Sheridan – CEO of Menlo Innovations, which throws one of the best holiday parties in Ann Arbor, Parnes told the audience – moderated the second panel. The four panelists gave perspectives from outside the university: Ed Krause, external alliances manager for Ford Motor Co.;  Maria Thompson, general manager of the advanced research and government solutions group for A123Systems in Ann Arbor; Mike Finney, CEO of Ann Arbor SPARK; and Ed Clemente, state representative for the 14th District and chair of the House New Economy Committee.

Krause, a Saline resident, said that the Ford/UM Innovation Alliance, launched in 2006, started out as a primarily technical endeavor but has expanded dramatically. Even though they don’t bring in the kind of research funding that the federal government does, he said they’ve always been treated like a partner of equal value.

There are some ways to improve, Krause noted: 1) industry experience should play a greater role in the hiring and tenuring of faculty, 2) industry research should have a higher value in the tenure process, and 3) administrators should encourage faculty to take sabbaticals in industry.

Maria Thompson said the university is a lot easier for businesses to navigate now than it was when she and her husband, Levi Thompson – a UM chemical engineering professor – started their business in the early 1990s. But it’s always been a place of great resources, she said. Thompson said their business – formerly T/J Technologies, which is now a division of A123Systems – used interns from UM’s Zell-Lurie Institute for Entrepreneurial Studies to help write business plans, and other students to work on market research.

Thompson also said people in Ann Arbor have been willing to support each other – she and Levi have consulted with other couples who’ve started businesses together, like Heidi and Chuck Jacobus of Cybernet Systems, and in turn they’ve done the same for younger entrepreneurs like Michelle and Aaron Crumm of Adaptive Materials. She encouraged people attending on Monday to stay for the reception that followed the forum, saying it was important to take advantage of these kinds of networking opportunities.

Mike Finney, CEO of Ann Arbor SPARK.

Mike Finney, CEO of the economic development agency Ann Arbor SPARK, recalled one of his own ties to UM – president Mary Sue Coleman had called him when he was being recruited for this job, he said. It worked.

Finney said SPARK is really a regional marketing organization, trying to sell the Ann Arbor area to businesses who might want to locate here. He said that two-thirds of the projects they’ve worked on to bring businesses to this area have had very direct connections to UM. He’s able to pick up the phone and call people at UM, who’ll help provide connections to these businesses through faculty, staff or alumni. His peers doing economic development in other regions don’t have that kind of access, he said.

Referring to a comment by Daryl Weinert earlier in the forum, Finney said that when the university gets 200 businesses calling the Business Engagement Center, he salivates – that’s 200 prospects that Ann Arbor SPARK doesn’t have to find. He said one way for UM to improve would be for the university to reach out to his counterparts throughout the state, and play an even greater role in the resurgence of the state’s economy.

The final panelist to speak was Ed Clemente, a state representative from the 14th District, which includes part of Wayne County. Clemente told of his own recent Pfizer connection – he’d been playing rugby last weekend at Riverside Park in Ann Arbor and ran into David Canter, former head of the local Pfizer campus and now director of healthcare research at UM’s William Davidson Institute, who is a rugby referee.

Clemente, who chairs the House New Economy Committee, said that everyone’s looking for a silver bullet to fix the state’s economy, but in reality, incremental growth is the way that change will occur. The state needs to create an environment conducive to innovation, he said, noting that Michigan is going to be great again, “it’s just going to be very different.”

After the presentation, panelists took questions from the audience. Here’s a sampling:

• What other kinds of coordination should UM be doing? Maria Thompson said having one-stop shopping is important, because entrepreneurs are so busy dealing with their business that they need to get information efficiently. Ed Krause of Ford suggested having a more coordinated approach to partner with industry and go after federal stimulus funding.
• What new approaches is UM taking to manage intellectual property? What’s being done to address the high cost of working with the university? What can be done to create more urgency on UM projects? Elaine Brock said it’s important to recognize that the university is a university, not industry. That said, “we are listening” to concerns, she said. As for cost, she said that the university operates on a cost-reimbursement model, but they don’t make a profit. Ed Krause advised businesses not to hire the university for contract engineering, but that when your business wants to try something new, UM brings the kind of equipment and expertise that you can’t find elsewhere. Ken Nisbet said UM has seen a sea-change in responsiveness to industry, but they can always be better. “We’re really trying.”
• How can we overcome the lack of strategic planning in Lansing? Saying that he didn’t really have a good answer, Ed Clemente suggested that individuals need to press state legislators on both sides of the aisle to make changes. Legislators will listen, he said, as long as you don’t yell. He said it doesn’t help to simply talk to Ann Arbor legislators – you need to reach out to other lawmakers, too.

As the forum wrapped up, Forrest said he’d taken notes about some of the suggestions that had been offered about ways that UM can improve its relationship with the business community. “We’ll keep doing this,” he said. “We are very dedicated to doing this.”

The forum included more than an hour of networking in the UM Museum of Art lobby. Consider this The Chronicle's version of "Where's Waldo," where Waldo in this case is city councilmember Christopher Taylor.