Sowing the seeds of new business

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By Bill Shepard

For nearly 40 years, the University of Wisconsin-Madison's Industrial and Economic Development Research (I&EDR) program has enabled the university's researchers to bring their ideas to the marketplace and support Wisconsin businesses with beneficial applied research.

And in some cases, it has allowed UW-Madison researchers to start businesses of their own.

Just ask Marcin Filutowicz, professor of bacteriology.

About five years ago, Filutowicz had reached a crossroads. He had made tremendous strides in his pioneering research on combating antibiotic-resistant strains of bacteria. Filutowicz was convinced that his work was commercially viable and that one day it could curb the growing epidemic of multidrug-resistant strains of bacteria. Yet he faced a considerable challenge.

To develop his ideas for application in the marketplace, further research, also known as "proof of principle experimentation," was required.

"But I didn't have any financial support for proof of principle experiments," explains Filutowicz, adding that he couldn't rely on the usual sources of funding for this type of research.

Traditional federal funding support was off limits, because his proof of principle research was "too applied." Also, his findings at this stage were too basic to attract private sector investment.

ENTER I&EDR

"The I&EDR program gave us the critical funding needed to conduct research that demonstrated the practical application of our ideas," Filutowicz says. "Without this funding, we would not have been able to move forward."

The I&EDR-funded research provided the necessary foundation for Filutowicz to obtain a grant from UW-Madison's Robert Draper Technology Innovation Fund (TIF). The TIF program is specifically geared toward supporting additional research necessary to help faculty obtain patents for their technologies or license their technologies through the Wisconsin Alumni Research Foundation (WARF). In this case, a TIF grant enabled Filutowicz to file for a patent through WARF for his work.

After that, Filutowicz took the next big step, partnering with Richard Burgess, a professor of oncology at the UW Medical School, to form ConjuGon Inc., a Madison-based biotechnology company that is building on Filutowicz's existing work.

"By providing fundamental funding to support innovative research, this program helps spur new business, and is another example of how the state and the university work together," says Burgess.

BRIDGING A CRITICAL GAP

Jane Sherwood, manager of the I&EDR program, points out that the program helps researchers bridge a critical funding gap, enabling them to transfer their technology from the laboratory to the marketplace.

"For many UW faculty and staff, the I&EDR program serves as a valuable key—and in some cases the only key—that enables them to unlock the door to bringing these concepts to the market," Sherwood says.

Citing the common "Catch-22" situation experienced by Filutowicz and other researchers who are stymied by restrictions on obtaining federal and private sector funding, Sherwood adds, "In most cases, these researchers would not have been able to find this kind of funding anywhere else."

In fact, I&EDR funding frequently is the first step on the road to patenting ideas that fuel new businesses and enhance existing ones. I&EDR-funded projects that yield promising technologies often lead UW researchers to apply for TIF grants, which support the additional research needed to bring their concepts to the patent and licensing stage. These technologies can be patented and licensed to existing businesses or spun off to form new companies.

A 40-YEAR-OLD PROGRAM

In existence since 1965, the state-funded I&EDR program funds proposals that focus on research that is technologically innovative, of relevance and interest to a broad economic sector, and offers a high likelihood of benefiting industrial and economic development in the near term.

How does the program operate? Following is a synopsis:

• The program issues a call for proposals each fall.
• A review committee comprised of UW-Madison technology transfer staff assesses the commercial potential of grant applications.
• The technical or scientific merit of each proposal is evaluated by a review committee of faculty members.
• Applicants must be UW-Madison faculty members or academic staff who apply for a maximum of $35,000 in I&EDR seed funding for up to 12 months of work. Awards usually are in the $25,000-$30,000 range.
• Approximately $600,000 is available annually for research grants, subject to the availability of funding.

Allen Dines, assistant director of the UW-Madison Office of Corporate Relations (OCR), has served as a long-standing member of the committee that assesses the commercial merit of grant applications. He notes that the I&EDR program has played a vital role in supporting the Office of Corporate Relations' New Business Start-Up Initiative, a nine-point program to help create, support and sustain new startup companies from the university. Given the Office of Corporate Relations' strong ties to Wisconsin's business community, Dines and other OCR staffers have helped broker partnerships between UW researchers and state businesses, which sometimes have resulted in I&EDR-funded projects.

"The I&EDR program is a prime example of what can be harnessed on this campus to build stronger ties with Wisconsin businesses and spur economic development, while adding value and meaning to academic research," Dines states.

THE NUMBERS ARE THERE

When you look at the numbers, the I&EDR program has proven its value in a variety of other ways as well.

According to one study covering a 10-year period of the program, for every dollar of I&EDR funding, $5.6 of additional federal money have been generated.

So far, the I&EDR program has funded more than 960 projects, many of which have resulted in new products, inventions and businesses spurring economic growth, investment and job creation in Wisconsin.

And in some cases, the impact of I&EDR-funded projects extends beyond Wisconsin's borders.

ANOTHER SUCCESS STORY

Such is the case of Nutra-Park Inc., a Middleton-based company that has roots in the I&EDR-funded research of Jiwan Palta, professor of horticulture. More than 15 years ago, Palta made a remarkable scientific discovery: LPE, a common lipid found in plant cell membranes, could be used to accelerate the uniform ripening of vegetables, fruits and other plants while simultaneously extending their shelf-life.

"Although the technology was sound in commercial potential, it was not fully developed," Palta recalls. "Since our discovery was challenging scientific dogma, we couldn't get funds from normal scientific agencies to do this, but we could use I&EDR funds to develop the research further. And look where we are today."

Palta's groundbreaking research led to patents and the formation of Nutra-Park Inc., which offers biotechnologies — known specifically as "natural bioregulators" — that increase profitability for growers, processors, distributors and retailers of natural products in the U.S., Latin America and Europe.

ESTABLISHED COMPANIES BENEFIT, TOO

Besides spin-offs such as Nutra-Park and ConjuGon, established companies such as USFilter also have gained from research supported by I&EDR grants.

For years, USFilter's Envirex Products division in Waukesha, Wis., has been installing its ORBAL® brand biological wastewater treatment system for municipalities and industries. In contrast to other companies' systems, the ORBAL® process offers a significant advantage: It removes nutrients — such as nitrogen and phosphorus, which pose environmental problems — using up to 30 percent less energy than competing systems.

Yet existing "textbook" theories could not explain why the ORBAL® process was so effective, causing potential customers to be skeptical about purchasing the technology.

"There was no scientific validation supporting the ORBAL® treatment system's efficacy, partially because existing textbook theories oversimplified the facts," says Dan Noguera, a professor of civil and environmental engineering. With I&EDR funding, Noguera conducted research that unveiled the complex biological processes underlying the ORBAL® process.

"Dan's research illuminated what previously was unknown and will provide a basis for updating the next generation of textbooks with his findings, some of which have been facilitated by new biological research tools unavailable until recent years," says Peter Petit, director of research and development at USFilter's Envirex Products division. "We expect that this will help us expand our markets by showing that there are sound scientific principles explaining the ORBAL® system's effectiveness. Leveraging funding money from the I&EDR program has had a wonderful impact — it has helped make our research funds and initiatives go even farther. It is a good example of a Wisconsin state program helping Wisconsin-based employees compete in the marketplace."

* ORBAL® is a registered trademark of U.S. Filter Corp.

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