New technology transfer program creates business spin-off

October 18, 1995

ANN ARBOR—Physicians may soon be able to use the healing power of DNA to mend broken bones and restore damaged tissue, thanks to a new company established by University of Michigan researchers and backed by $1 million in venture capital financing.

Matrigen Inc. is one of several spin-off companies to result from a new program that encourages U-M researchers to develop the commercial potential of their research, according to Robert L. Robb, director of the U-M Technology Management Office.

”Under this program, the University is actively pushing new technology into the marketplace—making new products available to the people who need them, creating new businesses and promoting economic development in the process,” Robb said. ”Our primary objectives are to actively facilitate new start-up companies and to create institutional support for the process at all University levels.”

With assistance from the U-M Technology Management Office, Matrigen was founded by three U-M faculty members—Steven A. Goldstein, professor of surgery in the Medical School and professor of mechanical engineering in the College of Engineering; Jeffrey F. Bonadio, assistant professor of pathology in the Medical School; and Robert J. Levy, professor of pediatrics and communicable diseases in the Medical School and professor of pharmaceutics in the College of Pharmacy.

”In essence, we are using DNA as a pharmaceutical drug,” Goldstein explained. ”By combining the DNA with a polymer delivery system, we create a sustained release tissue generating gel which can be injected directly into the fracture site. DNA enters cells in the fracture area stimulating them to produce proteins that lead to new bone formation.”

Matrigen’s start-up funding was provided by several venture capital firms—Enterprise Management Inc. of Ann Arbor; Falcon Technology Partners of Philadelphia; ARCH Venture Partners of Chicago and a corporate partner, Zimmer Inc. Some $40,000 for preliminary studies to test DNA’s effectiveness at stimulating bone growth in laboratory animals was provided to faculty researchers by the U-M’s Office of the Vice President for Research.

”With the launching of Matrigen, the University has taken an exciting step toward playing an enhanced role in the transfer of the results of our research activity to the larger society. This is a role that we are increasingly being called on to play,” said Homer A. Neal, U-M vice president for research. ”We believe Matrigen provides an excellent example of how well multiple missions of the University—in this case, research and service—can be integrated and complement one another. The faculty who have taken the lead on this are to be commended, as are the outstanding efforts of the U-M Technology Management Office.”

The leading orthopedic product company—Zimmer Inc. of Warsaw, Ind., a subsidiary of Bristol-Myers Squibb Company, will work with Matrigen on continued research, bone-related product development and testing by the Food and Drug Administration.

Under the U-M’s technology transfer model, the University may, at times, license technology to a start-up company in exchange for equity. ”The U-M gives up immediate short-term financial gain from royalties or licensing fees in order to provide more capital for product development,” Robb said.

”The University shares the risk by becoming a long- term partner with industry and private investors in the spin-off venture,” Robb explained. ”If the technology does well and the company succeeds, the University benefits along with everybody else.”

According to Robb, creating these new industry-university partnerships for new business start-ups requires a different approach to technology transfer than is commonly found at research universities. ”Success depends on a pro- active effort by individuals throughout the university,” he said.

Marketing representatives in the U-M’s Technology Management Office first identify promising research developments that fill a market need, according to Robb. ”Then we evaluate the technology from an outside investor’s perspective. If necessary, we can provide gap funding through the Office of the Vice President for Research to support preliminary studies that demonstrate the technology’s effectiveness, making it more attractive to industry or the investment community. Then we help create a ‘venture quality’ business plan to present to investors, along with a potential management team to run the new company.”

Facilitating a new business start-up is an enormous amount of work, but Robb maintains the results justify the extra effort. ”Studies show that small companies are 24 times more efficient at bringing new products to market than are larger companies, perhaps because everyone’s effort is more focused on just one particular product.”

Robb admits that the close working relationship with private companies required by the start-up venture model is far from ”business as usual” for an academic institution. ”In fulfilling its service mission through technology transfer, the U-M must balance its educational and research mission,” Robb said. He maintains that the model’s effectiveness at transferring technology, generating financial support for research, creating new businesses and promoting economic development will make it more common in the future.

Medical School

College of Engineering

College of Pharmacy

Office of the Vice President for Research