THE INVESTMENT COLUMN: Back Utek Corporation as the Technology Transfer Leader Winner
The London stock market is carving itself a niche as a first- choice fund-raising centre for 'technology transfer' companies, outfits which exist to help universities and academics, companies and inventors to commercialise their innovations.
After a flurry of floats this year, there is a cluster of about 10 of these companies, ranging from the quite old (BTG was formed from the Government's old National Enterprise Board and floated in 1995) to the brand new (Amphion, which listed last week, was formed in May 2003, although it is managed by two veteran venture capitalists).
And the cluster also encompasses a wide range of business models, not all of which " frankly " look long-term winners.
The theory is that academic institutions have a poor record of exploiting intellectual property, and there is a commercial opportunity in helping them do so by licensing their technology or by creating companies with them. The technology transfer company's investors " who would never be want to invest directly in such risky ventures " get access to a diverse range of new inventions. It's a numbers game, they say. Sooner or later, one of the technologies will turn out to be a blockbuster.
Except that there is little evidence that the numbers stack up. The longer a technology transfer company has been around, the worse its track record appears to be. BTG and Generics, who both employ dozens of scientists to turn patents into products, have had to shovel more cash than expected into their early-stage ventures. Generics needed a rescue rights issue last year. And BTG has the industry's most cautionary tale: a non-surgical varicose veins treatment, Varisolve, which it licensed from a pioneering doctor in Spain, is taking more than five years longer than expected to get into trials in the US.
There is a price for this sort of company, of course. …