Linden Rhoads

When biotech executive Michael Martino became CEO of a tiny Seattle startup called Arzeda in January, one of his first orders of business was negotiating with the University of Washington.

Arzeda, which uses computers to design new enzymes, emerged from the lab of a UW biochemist and had to secure licenses to that technology.

Martino started talking to UW in February and wrapped up licensing deals in May and June, a time frame he called “pretty responsive.” One of those licenses was critical to a potentially lucrative collaboration with chemicals giant DuPont to develop new agricultural seeds.

“A hiccup in one of those negotiations could have been a hiccup for our first license — and that license opens doors,” said Martino, who previously headed up Bothell-based Sonus Pharmaceuticals.

Arzeda’s positive experience with UW is one that Linden Rhoads, the vice provost of TechTransfer at the university, is eager to replicate.

Rhoads, a tech industry veteran, took the helm of UW’s technology transfer office a year ago, aiming to lower the program’s legendary bureaucratic hurdles and pump up its commercialization efforts.

UW TechTransfer protects, manages and licenses research coming out of the university. Together with the Washington Research Foundation, it oversees a portfolio of UW intellectual property that generated $47 million in revenue for the university in fiscal year 2008.

The TechTransfer program, however, has often been viewed as slow-moving and hostile to entrepreneurial activity. That’s something Rhoads, who cut her teeth at local startups ChiliSoft, Singingfish.com and AdRelevance, is trying to change.

One of the first — and most visible — changes Rhoads made was to bring in powerhouses from the local technology community. She hired Janis Machala, a well-known startup veteran, in October to, among other things, establish an “entrepreneurs in residence” program.

“Historically, we haven’t had anyone like her available to our university researchers,” said Rhoads of Machala. “She has a Rolodex that can reach the moon, and experience in developing pitches and building management teams.”

The entrepreneurs in residence are hired for six-month stints on a part-time basis to roam the halls of UW and give business guidance to researchers. The current lineup of six includes Tom Clement, former CEO of Pathway Medical Technologies; H. Perry Fell, chairman and former CEO of NanoString Technologies; and Alex St. John, founder and former CEO of WildTangent online game company.

Having entrepreneurs in-house has a broad benefit for the UW, according to Rhoads. While not all of their consultations result in new companies, they are sharing business expertise that may pay off for scientists further down the road.

“They have a mandate to leave every UW researcher with whom they meet having more insight into commercialization than they had before,” she said.

Seattle venture capitalist Robert Nelson, a co-founder and managing director of Arch Venture Partners, called Rhoads’ work at UW TechTransfer “nothing short of revolutionary.”

“She is pushing the envelope,” he said, “and also bringing in community leaders, entrepreneurs, and financial folks who had long ago disengaged from the university, or had never thought of engaging.”

Rhoads’ focus on startups, however, comes at a less than ideal time for launching new companies, with the economy in slowdown and traditional sources of early-stage funding — venture capital firms and angel investors — pulling back from the market.

UW TechTransfer has lately been trying to tap federal stimulus and other government funds, hiring a grant-writing consultant, Jeannette Griscavage Ennis, to help identify and apply for government money.

TechTransfer applied for a $2 million stimulus grant from the U.S. Commerce Department to provide early-stage funding to clean-technology startups that spin out of UW, Washington State University and the Pacific Northwest National Laboratory. The idea is that clean-tech startups will compete for the money, with the winners receiving matching funds from private investors.

The program also applied for a separate Commerce Department grant totaling $2.4 million over three years to support a technology accelerator for medical devices that would seek to translate UW research into spinouts and connect them with the local investment community.

Jim Severson, who previously served as head of the UW TechTransfer, said he’s heard “good things” about some the changes taking place at the program, but called Rhoads’ focus on startups “a challenging area.”

“It’s not clear to me how hard you can push that, given the current funding environment,” he said.

Severson, now a consultant, said he made several efforts during his tenure to build private investment funds to develop UW spinouts, but the projects hit “brick walls” with fundraising and never got off the ground.

He added that the head of UW TechTransfer has to manage multiple academic constituencies that don’t see eye to eye on the goals of commercialization.

“You’re up against inconsistent expectations from all across the university,” Severson said. “Each faculty member, each dean, each provost, each president has their own set of interests and priorities around commercialization.

“For some people it’s all about the money,” he said, “and for some, it’s how many new products got launched, how much new research came into university as a result of this activity.”

One big issue for UW TechTransfer is the looming expiration of a critical series of patents that bring in some 64 percent of the program’s revenue.

The so-called Hall patents, which emerged from the laboratory of UW genomes sciences and biology professor Benjamin Hall, are used to produce hepatitis B vaccine and pharmaceutical giant Merck’s human papilloma virus (HPV) vaccine, Gardasil. They generate a big royalty stream for UW, but are due to expire in 2014, which means UW TechTransfer is looking at a big drop-off in revenue in about five years.

Rhoads said a “combination of great strategy and serendipity will lead to the next hit” and said these tough economic times can make UW research a worthwhile investment.

“This is a time when investing in very, very early things is very attractive,” she said, “especially if they’re very defensible because of the intellectual property component.”

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