Tertiary institutions are increasingly pursuing commercial partnerships – but at what price?
The Bio21 Institute is a $140 million research and development facility nestled in the heart of Melbourne, specialising in medical, agricultural and environmental biotechnology. Its collection of buildings range from state-of-the art glass monoliths to somewhat dilapidated 1960s and ’70s structures and a few classical stone facades.
I meet the institute’s director, Professor Michael Parker, outside his spacious office; he is an Oxford University-educated chemist and professor in biochemistry and pharmacology at the University of Melbourne. He guides me through the labyrinthine facilities, pointing out the various machines which allow scientists to visualise biological molecules, and instruments that measure the interactions of drugs with proteins.
The equipment is impressive – its value exceeding $50 million, with many individual machines costing more than $1 million. Most biotech startups could only dream of access to such facilities — yet a lucky few are allowed to use it, provided they meet Parker’s criteria.
“Since I took over as director in 2017, I’ve had more than 40 requests from startups to reside here,” he says. “The criteria (for acceptance) focuses on how much a company is likely to contribute to Bio21 and the university, as well as how they complement existing tenants.”
There are currently about eight health and science-based startups residing at the institute. All have access to Bio21’s facilities at a seriously discounted rate.
Parker introduces me to Glenn Gilbert, managing director of Rhythm Biosciences, a listed startup developing a blood test for bowel cancer. Gilbert tells me that he and his team of 10 decided on Bio21 following an extensive search for lab facilities.
“If we hadn’t found this space, we would have had to allocate huge resources to finding a suitable location and setting it up – it would have hugely impacted what we’re doing. In an industry like ours, time is of the essence,” he says.
This facility represents an emerging trend in the tertiary sector: universities are leasing largely taxpayer-funded lab facilities to private companies, labs which were once exclusively used by public researchers. It raises an ethical question: how much of our science should be for sale?
Successive Australian governments have encouraged these university-industry partnerships for well over two decades by offering generous linkage grants, distributed through bodies such as the Australian Research Council and CSIRO. Looking at the history of university and industry partnerships in Australia, Grant Harman has written that while the practice isn’t new, “until recently such links tended to be comparatively small in scale and limited to relatively few academics”.
However, back in the 1980s a number of government reports “identified industry-researcher links as a particular problem needing urgent attention”, highlighting the lack of effective interaction between high-technology enterprises and universities.
Since then, governments have emphasised the importance of commercialising Australian research. Most recently, former Prime Minister Scott Morrison stated that “universities need to shift incentives towards high-value commercial opportunities, to industry needs and national priorities. We want to see universities create incentives for researchers to collaborate with industry to drive investment, co-investment, and product development.”
Despite this focus, there is no single model that covers industry-university partnerships, and universities are free to experiment as they see fit. It is this flexibility that appeals to shrewd startups who are looking outside traditional avenues to secure access to sophisticated and costly equipment.
Phil Hayes St Clair, who co-founded Drop Bio Health, a digital company focused on measuring and tracking chronic inflammation, first realised the potential of working out of a university laboratory when he walked past vacant labs at the University of New South Wales (UNSW) at the beginning of the COVID pandemic.
“I started asking questions to see if it was possible to get access to these facilities – as far as I knew, UNSW didn’t have such arrangements in place,” he says. By August 2020, Drop Bio and UNSW had signed a pilot agreement allowing the startup access to some of the best labs in the country at a significant discount.
Researching and manufacturing drugs is big business, and the initial costs can be astronomical. Small companies who can ill-afford to splash their cash around are seeking solutions such as those now provided by some Australian universities, making it possible to accelerate their plans, says Hayes St Clair.
He estimates it would cost his company up to a million dollars to set up a lab from scratch. “You have to find a building, rent a corner of it, and fit it out,” he says – and that expense doesn’t include maintenance and restocking of necessary lab items.
“Another option is to rent labs from another private company, but when I enquired they gave a hard no: it was too hard to fit into their existing systems,” he recalls. So when a third option presented itself, Hayes St Clair took it and ran.
“The arrangement has come with so many benefits we didn’t expect: we get a major discount on the consumables (lab items) we order through the university; we have access to the grads and PhDs, one of whom we are in the process of hiring; and when trying to raise capital or prove our credibility, we have the brand of UNSW behind us,” he says.
UNSW has also agreed that Drop Bio will own all of its intellectual property (IP), something that isn’t common. “Most universities stipulate that the uni has the rights to some or all knowledge developed on its premises,” Hayes St Clair says.
Similar arrangements also exist at the University of Wollongong, University of Sydney and University of Technology Sydney (UTS).
Dr Andrew Groth is business development manager of the UTS Science faculty. He says his facility is unique in the Southern Hemisphere in what it offers and how it is configured, and the fact that it is a public institution available to anyone in academia, research or private industry for biopharmaceutical manufacturing.
“Australian startups who are developing a biologically based drug at the moment need to go to India or the US to scale up, unless they have access to our labs,” he says. “Our environment lets startups use their own processes and people to produce clinical scale protein pharmaceuticals for toxicology studies, animal studies and up to Phase 1 human trials”.
There is no set pricing model: companies can negotiate with UTS about staffing (whether they bring their own or use the university’s), how many days a week they want to use the lab for, and for how long. The use of the full facility for a day costs up to $4,000, but for smaller companies the fees can fall below $3,000.
There are six companies of various sizes working out of the facility, and Groth sees developing partnerships with industry as an integral part of its future. Considering that UTS invested $11.5 million in the facility (with a further $750,000 coming from the NSW government), getting as much mileage out of its facilities is a long-term goal.
However, it’s not the rent that provides the greatest value to universities. “The co-location itself doesn’t provide a significant new revenue stream — really, it just covers our costs,” says UNSW’s Marcel Dinger, who oversaw the pilot agreement with Drop Bio. What it does do, however, is allow universities to apply for bigger grants and funding opportunities as well as lay claim (or at least, get a look-in) on any big technologies and findings that come out of these private companies.
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Despite the potential, some remain wary. President of the National Tertiary Education Union Dr Alison Barnes says it’s a concern when universities become reliant on revenue from private companies.
“It is inherently risky, and in the case it suddenly dries up, as international student revenue did during the pandemic, university management looks to slash costs – and it is usually in the form of academic and professional jobs,” she says. “Universities perform an essential public good and need to receive adequate public funding. They shouldn’t need to look to private companies to boost their bottom line.”
Dr Barnes says that the push towards research commercialisation has incentivised commercial partnerships, which may interfere with the core business of universities: researching and teaching.
“Researchers and teachers need to have priority access to university facilities and resources, and shouldn’t have to take a back seat because university management prefers high-profit arrangements to line their coffers,” she says. “It’s a slippery slope on what is the continued slide by universities into for-profit entities – publicly funded but constantly looking to pump up their surpluses.”
Caroline Zielinski is a freelance journalist based in Melbourne. She writes on health, science, social affairs and all issues related to women