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Legislature may grant UA ability to hold tech stocks

By Cyndy Cole
Arizona Daily Wildcat
Wednesday March 5, 2003

PHOENIX ÷ The UA could become a major stockholder in various technological and scientific corporations under proposals the House approved yesterday.

The proposed changes would make it easier for UA faculty to launch start-up companies and put their university research to use in the marketplace, the bills' supporters said.

The majority of state lawmakers have signed onto the proposals, which would head to voters for ratification next year. Democratic Gov. Janet Napolitano has said that passing this legislation is one of her top priorities for improving the state's economy.

As it stands now, professors and researchers work with the UA to get temporary patents for their ideas and inventions. Corporations pay the university to borrow some of these patents and use them to make new products.

The problem is that two professors who have a marketable idea or invention don't have the money up front that it takes to be able to start a company and also afford to buy the rights to use their patented research commercially, said Office of Technology Transfer Director Patrick Jones.

This proposal gives small start-up companies the option of paying the UA in stock instead of cash to use the research, and would mostly just apply to small companies, Jones said.

Last year seven professors started such companies through the Office of Technology Transfer, said Kristin Thompson, a senior program development specialist for the technology office.

But large corporations like Motorola, Intel, Boeing and Honeywell told lawmakers that they are also in favor of the proposal, which would allow them to negotiate to pay the public universities in stock options.

The corporations the UA holds stock in would not become public and would not be required to hold their meetings in public, even though they would be partially or wholly controlled by a public entity, according to the text of the legislation. Such closed meetings have been proposed, for example, for the companies founded on UA's biosciences research.

But for founder and professor Dave Harris, help in getting research converted into products and profits is too late.

Harris, a professor of microbiology and immunology who founded a company to store and distribute stem cells from umbilical cords a decade ago, said getting his research to market was an uphill battle.

The UA was scared of the legal implications when Harris started the Cord Blood Registry, based on his research at work, Harris said. The UA's policy of providing researchers with only temporary patents also frustrated Harris. Once patents expire and the information goes public, companies and researchers can't save it for their own use.

Harris moved the company he started out from under the UA in 1996. Later he founded another company based on similar research.

"We obviously did those in spite of the university instead of with the university," Harris said.

Now Cord Blood Registry is grossing about $20 million per year and employs 125 people in San Francisco and Tucson, Harris said. The other company, founded by Harris in December, is just getting started and has yet to make a profit.

Other UA-based businesses have made more.

The proposed legislation is a start, Harris said.

"If universities actually go into this where they can take equity, I think that would be a big step forward," he said.

Discussions in the House and Senate have centered on making universities, and other government agencies, profitable or self-sufficient.

"This is a move away from the old, liberal arts preparation-for-the-world education," said Rep. Andy Biggs, R-Mesa.


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