26 Jul DeLuca speaks out on entrepreneurialism, tech transfer, and WARF
Interview with DeLuca offers tips for biotech entrepreneurs
MADISON – If you stand on your tiptoes and squint, you can almost read the framed documents hanging in the lobby of UW Madison’s new $35.6 million biochemistry building.
Patents numbered 3,565,924 and 3,697,559 were issued to Hector Floyd DeLuca and colleagues back in 1971 and 1972 for their work on derivatives of vitamin D3. “Those patents are responsible for the money that built this building,” DeLuca said. “This building was built probably because of the first couple of patents I assigned to WARF.”
DeLuca unofficially estimated that over the course of his career his patents have made the Wisconsin Alumni Research Foundation, or WARF, upwards of $150 million through licensing agreements with various corporations.
Compounds created in DeLuca’s labs have been used to cure rickets and are being tested for use in the treatment of diabetes and osteoporosis. A drug licensed to pharmaceutical giant Abbott Laboratories and marketed under the name Zemplar uses vitamin D to assist patients facing kidney dialysis and renal failure.
“It’s currently WARF’s best earner,” DeLuca said. Andy Cohn, WARF’s spokesman, was unable to confirm this statement, but he did say, “Zemplar is important to WARF.”
DeLuca is pleased with the service he has received from the foundation. “I file through WARF because I want the university to benefit from my inventions,” he said. “I couldn’t be here today without WARF.” Still, he expressed frustration with what he perceived as a gigantic logjam of great inventions that have not yet been commercialized. “WARF’s licensing success is light compared to what they have in the pipeline,” DeLuca said.
In DeLuca’s opinion, it is not enough to simply file a patent and hope someone else will build a company around it. He believes WARF needs help convincing industry to close a deal. “It’s very important that the inventor play a role” in the sales pitch, DeLuca said. “Industry will listen to a scientist.”
WARF’s spokesman agreed that researchers could play a valuable role in helping the university share their discoveries with industry. “We have found that our inventors provide the best information about the commercial landscape for their invention,” Cohn said. “Many inventors have contacts in industry that provide valuable contacts and crediblity for WARF’s licensing managers.”
When he isn’t chairing UW-Madison’s Department of Biochemistry, DeLuca serves as the president and chief operating executive of the biopharmaceutical startup company Deltanoid Pharmaceuticals. After raising venture capital financing from both Mason Wells and Venture Investors LLC, DeLuca went on to strike a deal with pharmaceutical company Pfizer Inc. According to the agreement, Pfizer is allowed to license, develop and commercialize certain vitamin D analogs developed by Deltanoid. If Deltanoid meets certain drug-development milestones, Pfizer will pay the startup up to $42.5 million.
DeLuca provided the following advice for academics that would like to become entrepreneurs:
· Be honest and straightforward about the invention. Do not exaggerate discoveries or over-hype their potential applications when speaking to representatives from industry. “Enthusiasm is one thing, but overselling is another,” DeLuca warns.
· Keep university funds and funds for the company very separate and clear.
· The biggest problem that new high-tech companies face is the problem of running out of money. “If you spend too much on window dressing, it’s going to fail,” DeLuca says.
· Knowing how crippling it is to run out of cash, DeLuca cautions would-be entrepreneurs against recruiting flashy executives who cost tons of money. Instead, he recommends doing only what is absolutely essential to get one’s technology into the hands of the public as soon as possible.
· Before going after professional venture capital (VC) dollars, DeLuca recommends getting as much angel investment money as possible.
· Entrepreneurs should think twice before accepting the first VC deal that comes down the pike. “You have to stay in control of the invention and the company,” DeLuca says.
· Finally, when considering taking money from venture capitalists, entrepreneurs should think about what the investment relationship will entail. “You better talk to those people personally and find out what their expectations are,” DeLuca says. “If their expectations are not in keeping with yours, go slow.”
Teresa Esser is a contributing columnist for the Wisconsin Technology Network and author of the book, The Venture Café. She can be reached at firstname.lastname@example.org.
The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.