As Provost Jere Morehead pushes for the hiring of new professors, efforts to reach research professors may prove pointless without a miracle influx of cash.

Income for the University of Georgia Research Foundation, which helps to provide funding for start-up packages given to new professors, is drying up to a fraction of last year’s total.

The organization — which draws funds from investments, research grants and licensing new technologies at the University — is facing a huge decrease in licensing revenue because the patent for Restasis eye drops expired in August. The patent pulled in millions of dollars, and the loss of revenue is causing a “new reality” for the organization’s finances.

“It’s a new reality, but not an unexpected one,” said David Lee, vice president for research and executive vice president of UGARF. “We knew it was coming, but it’s tough to find that next big thing that’ll be successful.”

Lee and top administrators are trying to decide how to prioritize the next research enterprises. Lee’s office — the Office of the Vice President for Research — uses UGARF money, along with help from the Georgia Research Alliance and the University’s general budget allocation, to provide funding for new professors. As all three sectors are continually hit by the economy, new possibilities for income — and professors — look bleak.

“We’re all waking up to a new reality together. I don’t know if there’s really a new source of income right now, so we have to prioritize,” Lee said. “We’ve cut the travel budget and internal grants. The president was able to help with discretionary funds last year, and we hope that might happen again.”

UGARF earned $30.5 million

in licensing income in 2009 — a $6 million increase from 2008 — and ranked third by the Association of University Technology Managers among all universities for the most licenses executed. With 125 agreements, it fell behind the University of Washington/Washington Research Foundation and the entire University of California System.

Though it produces a large number of licenses each year, most aren’t large enough to generate a huge profit for the University. Money-wise, the University falls to 17th among public and private universities for licensing income in comparison to the UCS with $97 million — more than three times what the University pulled in — and top-ranking New York University with $791 million.

The University’s licensing income rose for six years before this year’s predicted pitfall to $5.5 million without the Restasis boon. The solution? Find the next Restasis.

The trouble with Restasis

Although the popular eye drop drug has pulled in millions of dollars, the University’s involvement with Restasis has been anything but simple.

Pharmaceutical company Allergan bought the drug in the 1990s but negotiated a new deal with the University in 2003 without involving the inventor — Renee Kaswan, a former veterinary medicine professor. Kaswan, who sued the University over ownership of the patent, said the new deal lost more than $200 million in funds for the University.

“Allergan told the University it wasn’t worth very much, and the University didn’t do its due diligence,” she said. “With the unpopularity of the Dooley controversy and other problems, Michael Adams just wanted quick cash and rubber stamped it. I knew it was wrong, but they didn’t contact me for this ‘sweetheart deal.’”

Meanwhile, Allergan has raked in $1 billion from the drug’s explosion in the market.

Kaswan and University lawyers reached a $20.2 million settlement last month, finally bringing the lawsuit to a close. During the seven years of litigation, judges ruled in favor of the University but called the Allergan deal “unfair” and “sinister.” Kaswan spent $2 million in legal fees, and the University dished out $5 million for the case.

“When you have someone in power with no regard for morals and ethics, you have a loose cannon, two or three lawyers and hundreds of hours,” she said. “The problem is that the University turns it over to the lawyers and acts as though the ruthless behavior isn’t their fault. Faculty members are just hounded to death with legal expenses and delays.”

Kaswan thinks the settlement finally closed after she appealed to Adams’ son in Atlanta and former Georgia Gov. Roy Barnes to talk to Adams.

“I do believe that public pressure, especially with Dr. Adams’ search for a new position, put pressure on him to end it,” she said. “It’s all been very sly and underhanded. What really galls me is the use of people’s innate trust of the University institution to conceal extremely despicable behavior. It’s amazing it has gone on as long as it has, especially the pattern between Tolley and Adams. It’s almost like a little mafia.”

Ed Tolley, the University’s head lawyer on the case, said Monday that the University is glad to see a close to the case and thinks the settlement occurred because the University’s position was “continually sustained by the court.”

“Even an aggressive litigant will realize that. The Research Foundation wishes her the best and paid her inventor share and license fees of $20.2 million,” he said. “People need to understand the high cost of bringing pharmaceuticals to the market, the risk of failure and the wisdom at that time of taking present value payment.”

During litigation, Kaswan created the Web site IPAdvocate.org to help other professors with patent and technology commercialization questions. 

Working with the directors of AUTM, Kaswan is also drafting an inventor’s Bill of Rights that colleges and universities will be able to use when signing contracts.

“No one will say point blank that UGA made a mistake, but they all say they’ll never do this at their institution,” she said. “AUTM agreed it would be proper to codify how these interactions should be managed. It’s not just UGA — any university could run into the same problem. This should make the next wave of administrators more sensitive.”

Kaswan said she also spends her time talking to universities and technology transfer offices about legislation that could further complicate the patent process.

“It’s almost like a hose. Anywhere there could be a pinch point that stops the flow of products and information for public use,” she said. “This pending legislation could stop the flow earlier, and it would be impossible to get useful patents and the process would become the sport of kings — with only megacorporations able to afford and defend them.”

Although the inventor and the University have to be incentivized, Kaswan said she’s trying to help shift the focus from the money to the benefit of the invention.

“The real issue is we need medical innovations — more effective and less costly medicine — how to cure disease and pollute less and get from point A to point B more safely,” she said. “At the end of the day, the goal is to cure cancer and live better lives, and here we are tearing each other apart to make money.”

Finding the next big thing

As the Restasis era passes for UGARF, the University’s Technology Commercialization Office has started looking for what will become its next profitable patent.

“We’re always hoping something else will be a big hit,” Lee said. “It’s a rare event, unpredictable and wonderful while it lasts.”

Lee said the office is stepping up its outreach to faculty across campus like never before.

“Academicians often don’t appreciate the marketing of their research and often don’t realize that they’re sitting on a technology that could be marketed,” Lee said. “We’re trying to find a way to locate that next big hit.”

University researchers such as David Chu — a distinguished professor of pharmaceutical and biomedical sciences — are developing antiviral drugs for diseases such as HIV and Hepatitis B that could financially “dwarf what we’ve seen with Restasis,” Lee said.

“The president asked me just the other day how we can be sure it will be a hit,” Lee said. “To get a big hit, you’re talking about a medical drug because others don’t generate money that high.”

One of the technology commercialization specialists trying to find the answer is Sohail Malik, director of the TCO office.

“At the end of the day, the money we make goes back into the research,” Malik said. “That’s the wonderful part of this program — learning early about the new technologies, new drugs, new ideas in the sciences. Professors produce their creative ideas, and exciting challenges keep emerging.”

Malik discussed a few technologies in the next group up for commercialization — a shade-tolerant turf grass, alternative fuels and a poultry vaccine. TifSport, a Bermuda turf grass created by geneticist Wayne Hanna at the University’s Coastal Plains Experiment Station in Tifton, is being used on some of the soccer fields in South Africa for the 2010 World Cup.

“This turf grass is a big deal. People don’t appreciate how much politics go on behind the scenes,” Malik said. “Local grass was being used on the fields, and they weren’t open to using outside grass, but we were able to convince them. Our grass is on the Durban field for one of the semifinal games. The entire world will be watching.”

Despite the many possibilities on the market, it’s tough to find a huge success, especially with pharmaceutical drugs, Malik said. He estimated it takes about $1 billion to push a drug from discovery in a lab to clinical trials and finally to commercialization.

“Only major pharmaceutical companies can invest like this. Why invest that much unless you have some chance of success?” he said. “The government and University don’t invest money in trials. A company buys the technology to do more in human or animal elaborated trials. It’s a cycle partnership with the government, the University and the industry.”

Commercializing research is especially difficult as even major pharmaceutical companies are struggling.

“The economy is hurting everyone,” Malik said. “Companies used to invest at earlier stages of the technology, but the economic challenges have forced them to invest more carefully.”

With pharmaceutical companies losing income from major patents as well — Pfizer losing Lipitor in 2010 and Viagra in 2012 — everyone’s starting back at the ground level.

“The major pharmaceutical hits that you see only come once in awhile because they take awhile to develop,” Malik said. “We certainly have exciting technologies right now, but if they become the next Restasis and how long that will take is yet to be seen.”