Yale research spawned the same number of companies in the last fiscal year as in previous years, despite the economic downturn.
On a global scale, the recession has forced many investors to spend less money on science research companies and expensive endeavors, such as developing new medicines. But Yale’s Office of Cooperative Research, which both licenses products and spins-off research into viable companies to encourage economic development in New Haven, did not suffer a dip in revenue from old companies, Jon Soderstrom, the office’s managing director, said. Yale officials, including Provost Peter Salovey, said the Office of Cooperative Research has recently created promising companies.
Bill Wiesler, the office’s director of new ventures, said that during the last fiscal year, the office started five companies from science research, which is consistent with its average of four to five companies per year.
The Yale office was not affected much by the economic downturn because most research deals are longer term and can take up to a decade to complete, University President Richard Levin said. Wiesler added that more people are interested in starting companies nowadays because there are fewer available jobs in the industry.
“Economic difficulties actually do stimulate people to be entrepreneurial,” Wiesler said.
Founded in 1982, the Office of Cooperative Research generates between $10 to 20 million in revenue each year, Soderstrom said. Although exact figures for this year are unavailable, he said the generated revenue falls in this range and next year, the revenue generated may even go up as more products come to the market.
But Wiesler said investors are providing less money to these companies because they are much more cautious in terms of the risk they are willing to take on.
“We’re concerned about what it takes to get new companies launched,” he said. “Hurdles are much higher than they have been in the past.”
Despite the economic downturn, the companies started by the Yale office — including Shire, which creates pediatric ADHD medication, and Proteolix, which researches cancer treatment — are generating what Levin calls a “steady, but not large, stream of revenue,” which are divided up and given to the office and researchers, he said.
In an interview last Monday, Soderstrom cited Rib-X Pharmaceuticals and Kolltan as recent Yale successes.
Rib-X Pharmaceuticals, which was co-founded by Nobel Prize winner Thomas Steitz, raised over $120 million to start clinical studies of various antibiotics, according to its Web site.
“Conducting clinical studies in patients is a very expensive undertaking,” Weisler said. “New medicine requires an enormous amount of capital from investors.”
Soderstrom said certain Rib-X drugs — such as delafloxacin, which treats complicated skin infections — are financially lucrative.
Meanwhile, Kolltan Pharmaceuticals, which was founded in 2007, raised over $40 million in Series A financing, the first round of financing undergone for a new business venture. Soderstrom said.
Soderstrom said he is glad that investors are still willing to provide funding for Yale spin-offs, despite the economic downtown. Still, the process of choosing which companies to support is not an easy one.
“We don’t have a crystal ball,” Wiesler said, “We don’t which companies are going to be successful.”
Typically, Wiesler said, the office presents many ideas to investors but they only support a handful of the suggestions.
On its Web site, the Office of Cooperative Research lists six new companies currently in development.