Robert Z Stodilka, PhD

1
Working with the Private Sector A Canadian
Perspective
Robert Z Stodilka, PhD
Imaging Program, Lawson Health Research
Institute Dept of Diagnostic Imaging, St
Josephs Health Care Dept of Diagnostic Radiology
and Nuclear Medicine, Schulich School of
Medicine, University of Western Ontario
2
Acknowledgements
3
Outline

• Shifting demographics in Canada
• Government response
• Survival of the Research Institute Models for
  revenue generation

4
Shifting demographics
Source Statistics Canada

• Cost of covering retirement benefit will grow.
  Capacity to cover these benefits will shrink.

5
Government Response

• Required more profit per worker
• Strategy transform Canadas economy from
  Resource-based to Knowledge-based1
• Encourage education (create more Highly Qualified
  Personal)
• Encourage translation of research into product
  (profit)
• Government strategy reflected by granting
  agencies
• Example CIHR2 (Jan 2007)
• Operating Grants 16.4 success rate
• Industry-Partnered Grants 55.5 success rate

1 Source Human Resources Development Canada 2
Source Canadian Institutes for Health Research
6
Research Institute

• Size 500 scientists, 52M research funding
• Multi-disciplinary
• Surgery, Vascular disease, Transplantation,
  Womens Health, Cancer, Imaging, Aging
• Hospital-based
• Access hospital equipment and patient population
• Animal models
• Develop expertise in veterinary procedures
• Traditional funding
• Government research grants

7
Funding Model 1

• Spin-off Corporation Fralex Therapeutics Inc
• Treatment of pain using pulsed magnetic fields
• Patented by Lawson scientists 1996
• Fralex created 1998, spun-off to investors 2005
• 10MM IPO 2007 ? raise money for FDA trial
• Revenue for Lawson
• Industry partner (666k to date for
  contract-based salaries)
• Enhances chances for successful government
  funding with private-sector investment. Inventors
  and institute lose IP and royalties
• Contract research testing technology in pilot
  trials (7k to date)
• project owned by Fralex, not investigators
• Success of model depends on
• Finding venture capitalists and business
  management team.
• Effetive negotiation (not an institutional
  strength)
• Training for students IP and translational
  research (53k / year)

8
Funding Model 2

• Licensing of Intellectual Property X-ray CT
  perfusion
• Improves detection of stroke
• Patented by Lawson scientist 2005
• Software licensed exclusively to GE Healthcare
• Current installs 3500
• Revenue for Lawson
• Royalty stream from software sales (2M /year,
  8M to date)
• IP owned by scientist, not GE
• Royalty stream funds additional projects
• Human studies Expanding utility of software
  (other diseases)
• World-wide software installations promote
• Collaboration with inventor, Profile of the
  Institute
• Success depends upon
• Partnering with large corporation, Effective
  negotiation

9
Funding Model 3

• In-house Veterinary Imaging Thames Valley
  Veterinary Services Inc, established 1996
• Use of hospital medical imaging equipment during
  night
• MRI for pets, thyroid ablation for cats

• Revenue for Lawson
• Fee-for-service (1M to date)
• Revenue stream supports technician and student
  salaries, to augment government salary grants
  (bridge funding)
• Success depends upon
• Partnership with large hospital (politics) and
  veterinary specialists
• Willingness of pet-owners to pay
• Opportunities to train veterinarians, RD
  opportunities

10
Funding Model 4

• Contract research utilizing institute equipment
  and expertise to deliver a product for a client
  (since 2005)
• Hydro Quebec, Electricite du France, Department
  of National Defence
• Revenue for Lawson 5M to date
• Product is owned by the client. Scientists
  publish after 60 days.
• Revenue directly supports scientist salaries
  (difficult to obtain from government grants, and
  is difficult to match)
• Success depends upon
• Institution possessing rare resources or unique
  talents
• Close industrial contacts (who you know)
• Opportunities for student employment after
  training

11
Funding Model 5

• Pharmaceutical manufacturing and sales
• PET radiopharmaceuticals, cancer diagnosis.
• Manufactured by Institute, Purchased by
  hospitals.
• Revenue for institute
• Sales pay staff, facilities (1M anticipated)
• Opportunities contract research (drug companies)
• Extra radiopharmaceuticals ? research
• Improves chances of government funding
• Success depend upon
• Ability to obtain government licenses
• Government reimbursement for radiopharmaceutical

12
Conclusions

• Government push towards more profitability
• Translational research, advanced training
• Grant success improved with profitable business
  model that includes training and placing students
• Successful research institutes
• Rely less on government and university funding
• Capture opportunities for commercialization
• Take research and business risks (internal
  venture)
• Encourage scientists to seek non-traditional
  revenue