Tech Transfer with Les Nichols, Director of the Office of Technology Commercialization at The University of Texas at Austin

Michael Scharf: Austin continues transforming into the next innovation powerhouse. In this podcast, we explore how central Texas is growing the people and companies, the industries, and infrastructure, the macro and micro trends that come together to create the future of Austin. I'm Michael Scharf advisor, and consultant to FinTech, cyber and environmental companies.

Jason Scharf: I'm Jason scharf, a biotech executive in early stages.

Michael Scharf: And this is Austin next,

Jason Scharf: A common plank and ecosystem development is having a strong research focus, university turning out discoveries and intellectual property that can then be spun out or licensed into the privacy. In Austin, we have one such university with UT Austin, but that movement of technology from academia to industry is not magic.

Tech transfer organization. Sit at the crux of this bridge, trying to balance the needs of the university with the needs of their startup and corporate partners. J we have on Les Nichols, director of the office of technology, commercialization, or OTC for UT Austin We talk about how this has done the challenges they face and the role this function plays in our innovation ecosystem.

In this role, Les leads a team of 25. Who are focused on creating value in technology developed by UT Austin researchers who facilitated the transfer inventions from academic research outside organizations for the benefit of society on a local national and global basis. He works closely with campus research administer.

To implement a strategic vision for technology transfer services that align with the university and industry research strategies. Les originally joined OTC as a licensing specialist and was later promoted to program director of physical sciences licensing capping at 23 year career experience and industry.

Mr. Nichols background includes senior level sales, variety of product and technologies to the semiconductor industry and university research market segments. He was a principal in his own consultancy, specializing in chemical plant. Design and optimization. And he was integral in the development startup with a new division of a large diversified energy company that developed the most cost-effective means of providing high purity chemistry to the largest semiconductor manufacturers.

Les welcome to the Austin next podcast.

Les Nichols: Thanks for having me, Jason.

Jason Scharf: So I want to start off with the basics here. What is the role of the office of technology commercialization?

Les Nichols: Yes, Jason, the office of technology commercialization is the entity responsible for managing the intellectual property owned by UT Austin.

So what does that mean? That means IP that's generated from the research lab. The faculty running those research labs, there are graduate students and post-docs that, that work with them and any IP that comes from utilizing the resources, basically the University of Texas at Austin. So all that intellectual property must be disclosed to our office.

And then we help the faculty manage that. We determine whether to file a patent or not. If it's patentable, we manage it. If it's software or copyrightable IP and, and with the focus of moving that technology into the commercial marketplace through licenses.

Jason Scharf: So how do you work with internal researchers, the developers, the IP versus the outside stakeholders, the ones who were interested in kind of that licensable products.

Les Nichols: Great question. We have staff that focus on building relationships across campus, and it's one of the challenges that we have right there. I don't know, two to 3000 now research faculty at UT Austin, you know, UT Austin is one of the preeminent research institutions in this country and really even the world.

Great. But our challenge is touching each one of those faculty members at new ones come all the time and, you know, folks retire, et cetera. So there's this. So we're constantly engaging with our faculty across all of the research areas on campus to build these relationships and Le let the faculty know that we are here to help them, you know, initial concerns of faculty have revolve around, well, I just came to the university so I could publish and train PhD candidates et cetera, become the preeminent researcher in.

Absolutely. We support that a thousand percent. Our focus is to understand if you've come up with something in your research that may be protectable IP, we will run our process behind the scenes without interfering with your publication, because we know you're here to publish and we want you to do that.

Okay. So it's, it's constantly working with them at the same time, simultaneous. We are working to build relationships with outside entities, companies, investor types, right? People across the spectrum who can help us with providing services or mentoring because at the end of the day, the goal is to move the technology into the marketplace.

We need relationships with entities that are able to commercialize what we've come up with because the university of Texas. Is not going to build any oil field equipment. Right. We need Halliburton or Schlumberger or baker Hughes to do that part under a license. Right.

Jason Scharf: So are you the group that tends to bring in the baker Hughes and the Halliburtons into it and say, Hey, we've got, here's like menu of interesting kind of companies or, or, or, sorry you know, intellectual property or is it tend to be that, you know, It hits your desk after, you know, the professor said, Hey, I've talked to XYZ and we kind of had this.

Or I, obviously, my, my guess is the answer is yes to all. And it depends but curious kind of how it kind of ends up working and where you see the balance.

Les Nichols: No, yeah, absolutely. Right. Jason, we, we see across that spectrum. So we are absolutely as I've, as I've said, focused on trying to build these relationships and understand the needs of companies because.

There there's a lot of value in being able to share with our research faculty. You know, if you could tweak that work that you're doing in your lab, a little bit company X company, Y would be really interesting. Right. We're not going to force you to do that, of course. But if you, if you care about commercializing, you might think about it.

And then also many of the faculty, especially in some of the, some of the fields, such as maybe pharmacy, petroleum engineering, mechanical engineering, chemical engineering civil architectural, some of these fields have very strong relationships, these faculty with outside industry. And so a lot of times they will bring us, I spoke to so-and-so.

And I'm ready to disclose this invention, right? You might want to give him a call after I do that. So it really is across the spectrum of how we engage. And at the same time, we have a, quite a strong group of corporate development team at the university of Texas at Austin, not related to our office at all, really their focus being philanthropic donations.

To the university that come from maybe a group of alumni that work at Exxon mobile or at shell. Right. But they also work with us to give us insight into, oh, I was talking to so-and-so at shell the other day and they brought up that they'd be interested in something like this. So we get, you know, hints and insight from our colleagues across the across key.

Jason Scharf: How does it kind of work in the scenario where you have these companies who are saying, we have this interesting problem. There's some alignment here. And as you said, you started with, you know, if you tweak your, your research, this commercialization, this company be interested, but what about the reverse where the, where the company saying help us solve this problem.

And obviously that becomes joint IP. How does that kind of work through your office?

Les Nichols: Well, let's talk about that for a second because our. We'll talk. I want to talk about it later because you, I think it's on the list of things we want to address is what's next. So I want to save that, right. I want to save that.

I don't want to, I don't want to blow my cover, but one of the offices that is engaged at UT is the office of industry engagement. What they focus on. That's a group of folks who work with companies that want to sponsor research at UT. So they've somehow got engaged with a faculty member. Through whatever means a lot of times they might read the latest you know, a nature article or publication in a, in a prestigious journal that, and then they follow up with the faculty member that way they engage with our industry engagement office, who structures sponsored research agreements.

Okay. So the company can provide a scope of work and work with the faculty member. Let's do this kind of work. The faculty member outlines how much that would cost to do how much, how long it would take, how many students they would put on it, et cetera. And then they negotiate an agreement to fund that work.

Now, always in that agreement, it addresses the potential, not the obligation, but the potential for intellectual property might, may come out of this. If it does, here's what's going to happen and it's laid out so that the company knows here's what's going to happen. And where you made that that comment about it's going to be joint IP while it may, and it may not be joint.

IP has to do with inventorship. If the company and their research people had some inventive contribution to what comes out, then yes, it would be joint. If all the inventive contribution came from our side, even though they fund. We own it.

Jason Scharf: Okay. So there might be a predetermined license agreement as the sponsored a thing, but not necessarily inventorship

Les Nichols: correct. All this is laid out in those sponsored research agreements. Everybody is good with that. We sign off, we proceed down the path. And from a licensing standpoint on the tech transfer side, something comes out of that agreement. It's it's part of our disclosure form. We see that we read through, we understand the ramifications.

We contact the company immediately. And it kind of helps us short circuit, our process of going out to seek and find a potential licensee.

Jason Scharf: So how do you balance the needs of the university with the needs of the groups taking this technology?

Les Nichols: Yeah, that's an awesome question because those things are frequently very, very different, right?

We need the technology that is, that is disclosed to us to be, to access the marketplace, to. The markets and humanity eventually, right. Companies, a thousand percent of the time are thinking of profitability. And that's not at all what we're thinking of. We're thinking of fundamental research, advancing science and being the leader in those technology areas that our faculty are focused.

Right. So how do you match that up? It's it's true. But it's possible. As long as we ensure that the other party, both, both sides, our faculty, as well as the company side, understand that this is the way it works. We care about certain things. They care about different things. There is a point where we overlap and that's where we want to focus.

And let's put this deal together for the benefit of both of them. Right where we never intend to gouge any company with excessive license fees and massive royalties, because that goes against what the company's needs are. Our focus is getting the technology into the marketplace. So we need to structure our deals to enable the company to do that.

Right. So we really try to focus on let's be transparent. Let's be open. You guys, let us know what your challenges are, company. And we will try to structure a deal to help you meet those challenges, because we want you to succeed. Cause like I said before, the university is not going to make this product, not going to provide the service.

We need you to do it.

Jason Scharf: So the needs of the company vary based on size and maturity. So does a deal with say Apple or Pfizer look different than a small startup

Les Nichols: Absolutely. Yes, it does deals with large companies. Again, where the technology that is generated out of our research is almost always very early developmental stage.

It's rarely at the stage of even a prototype, let alone ready to go to market. Therefore, what, whenever the licensee company, large company started up coming with. They need to invest time, energy, money in developing this early stage technology into something that the market will procure profitably. And so, yes, a large company has different resources that they can bring and timing around that than a startup company.

And so we have to structure our agreements according to that.

Jason Scharf: So, what do you do in this scenario? You got a hot piece of technology or new research, and you've got multiple different kinds of suitors coming in, all saying, you know, this would be great. We'd love to license. How do you approach this situation?

Les Nichols: Yeah. Good, good question. You know, it's going to be different of course, based on the technology. But a lot of times, some of the ways that we approached it, just, just as example is if it makes sense to do. And, and a lot of times it, it very well does different interested parties are focused on different end use market opportunities.

So it enables us in those cases to license with a field of use exclusivity, we can take the same technology license company X in this field of use exclusively. Nobody else will have the rights to practice this except for you. And that. Company, Y that other field of use exclusively, nobody else will have the right to practice in that field except for you company.

Y okay. So we can do that too, to create as much value as possible for both the licensee entities, as well as for us, other other ways to do it is to the license non-exclusive way to multiple parties so that everybody basically has the same opportunity to move the technology forward. And we take a little piece of everybody.

 Success basically.

Jason Scharf: So gonna put you on the spot a little bit here, so let's assume the scenario is there's not this nice middle ground, either field of use differentiation or non-exclusive. How does the wishes of the researcher fit into all this

Les Nichols: in every scenario and every deal that we do, we, we want to keep the researchers in informed.

However, we always try to tell. Sometimes it works better than other times. We always try to tell them that it's inevitable during our negotiations were with the licensee company, that they are going to try to go around us and use you against us. So be aware because we are. We are office. We're just trying to get the deal done and at the highest value for the university.

And the way that this university operates is that the inventors split any revenue, 50 50 with us. And so the value goes to them. The value is theirs. It's not ours, it's theirs, we're working for them. And so if you allow the company to manipulate you and try to pressure us in a way. You know, it's better for you to just say that the negotiations of the terms go are done by the OTC.

Not by me. If you have a technical question, I'll answer it for you, but otherwise leave me out of it. You know? So, like I say, it's a, it's a constant in a process of education. It works better with some than others, but it that's the way we try to you get those deals done. And, and when, when that, when the PR faculty do help us in that.

Jason Scharf: Some I am going to give you a chance to kind of stand up for you. You know, tech transfer offices in general, there's a lot of negative reputations for university tech transfer offices, both because of speed and bureaucracy. How is it that you are evolving to kind of meet these needs?

Les Nichols: Great question. And this is, this is what I wanted to bring up now, our OTC for the last year.

And Has now report reports now under a new associate vice president for research, the AVP of innovation and economic impact. And as that entity, it not only includes OTC, but it also this office of industry engagement, as I've said, does the sponsor research agreements with companies is Dunder under her as is the Austin technology incubator, which is the UT owned entity.

Helps incubate early stage companies as, as a piece of the the Texas innovation center, which is a a group on campus. A hundred percent focused on helping faculty who say they want to do startup figuring out what that really means and introduce them to potential mentors and service productivity, et cetera.

Jason Scharf: So our audience can can go back. We had Van and Ashley on a previous episode. (Academic Innovation Support Structures with Van Truskett and Ashley Jennings | Austin Next (austinnextpodcast.com) )

Les Nichols: Oh yeah. Yeah. Refer to the previous episode with Van and Ashley two dynamo women who are doing a terrific bang up job. So we are, we were part of that, of that entity as well. So now as such. Innovation economic impact group is now re forming itself to where we are structuring to focus on trying to create a set-up.

More mirrors. The way companies are set up, we're going to have an intake IP focused group that focuses on the disclosures coming in and the patent analysis, patentability analysis. We're going to have a business development team that focuses on the outreach to external. Just like many companies have business development teams and we're going to have a contracting team that focuses on the back end.

What's the licensee is identified in the patent is all in process that will structure the deals and that industry. Group we'll, we'll be part of that contracting team as well, because as we just talked about many, all of the sponsored research agreements have in some connection, some connection to the potential for IP to come out of that.

So all of that structure, that new structure is what we're putting in place. As we speak to better address. Companies and potential licensees because you're exactly right. There is a historic bad connotation. And I really don't want to get on a soap box about this, but I've been here since 2009. And so I've worked with many companies on many things and almost every time, almost every time I'm going to say the end of the day.

The company is amazed with how seamless it was and how it really went against what they really thought it was going to be at first. And now these are companies that have worked with us before. And so it's like, well, okay, just spread the word, man. That's all I have to say is spread the word because it's not getting out there is, it continues to be this historic and maybe in the past, back in the seventies, eighties, nineties, Maybe it was that way because yeah.

A university is a bureaucracy. Yes, it is. But so is Dell. So is Intel, right? Every there's bureaucracy everywhere. So let's just make this happen. Well, you'll get yourself on the list of those tech transfer offices that are really high. And that of course makes it easier for you to do the deals. I want to give you a better, more of a chance to shine a little bit.

Michael Scharf: I want to drill down on a couple of things. When I've worked with tech transfer offices in the past, one of the key issues that they have at the front of the process is looking at the researcher's disclosures and attempting to make a decision as to which ones to invest in because you can't patent all of them.

You can't even patent half of them. How do you guys look at this and attempt to make a decision as to this is really commercializable. We're going to go for it right now. This is a gray area and that's sorry guys. It's just not going to happen.

Les Nichols: Yeah. Thanks Michael. Yeah, exactly right. That is one of the biggest challenges that are all of us in all tech transfer offices have is what are we investing?

And so we, it, there are two, there are two sides of this question to two questions. They answer one patentability. That's usually a pretty easy question to answer because we can, we can do some research pretty quickly on some databases that are available to everybody to understand nobody's published on this or patented anything like this that we can see.

Right. We can't see everything. So we make that decision. It looks patentable novel. The most important question is who in the marketplace is. Right. So again, if it came out of sponsored research, that helps, right. The company is already involved. If the faculty wants to form a startup around it and we can talk to them and with Ashley and Van's help and others get them focused on who's going to run the company.

What are you going to need to do by when? Oh, blah, blah, blah. What kind of, what's your, how are you going to address this market need? What is the marketing? If you can get around some of these issues, then we will support that company and license. First first and last structure and option to the company so that they have locked up the technology.

We can't license it out from under them to give them some time to build their business plan and to get some initial funding before they have to execute the full on license. So we'll do that to support that. But then the, most of the, most of the deals we're, we're searching for a potential company in the east.

Right. So that is, I think the focus of your question, how do you do that? Right. Relationships, people, we know people we can be introduced to in markets that we, that appear to be potential. Right. And so it's a lot of a trial error and just touching base with people, bouncing ideas off of people, and a tiny bit.

Of imagination, why every technology is early stage that's bad because in one way, because it needs a lot of investment time, energy, whatever. It's good in another way, there's many right answers for how this is going to be a product someday. Not just one, there's probably many different ways. This could form up to be valuable product.

So we have to put some thought into, Hey, how could this. Actually be made into something cool that people would buy and let's go talk to those companies. Yeah.

Michael Scharf: Let's talk about some of your successes. Tell me the biggest innovations that you've seen since you joined UT 13, 14 years ago.

Les Nichols: Okay. Couple of, couple of deals. There was a process out of the pharmacy school that was designing. To an extrusion process that created a crush proof coding or a pharmaceutical pills, right? So that may, that was licensed out to a big pharma company and created several million dollars of revenue over multiple years before those patents expire.

If you go into the Walgreens or the Costco pharmacy or CVS, you can buy the freestyle Libra, continuous glucose monitor patch. That technology came from UTI. Patents are also expired. Now our patents are, there is a company on the NASDAQ right now called TFF P TFF pharma. That company came from UT Austin pharmacy school.

Again, a process for creating inhalable dry powder formulations of drugs that need to be delivered directly to the lungs because the challenges. Typical drugs that you inject or take buy a pill or whatever, have to go through the bloodstream. And therefore there are side effects, et cetera, before you get the working drug to the lung.

So this bypass is a lot of that, right? And that interestingly, that company IPO in October of 2019 it was a startup company formed here, IPO in October, 2019, and a few months later, COVID. Which affects the lungs that price went. Wait, that's always nice to see when that happens. You know, timing's good.

No, there's no, all these things. And then one other one that is active right now, LTL, Zachary, but another one is Jason McClellan, of course you may know hands name of Molecular biologist to has a primary role in being the first to characterize the spike protein of SARS cov two. And so we have a little stake in every Pfizer BioEnTech vaccine that is injected into a human.

Michael Scharf: I think if I would've known, I would've selected one instead of the other. Help us help out the local economy here.

Les Nichols: Yeah. Yeah.

Michael Scharf: So we've talked about a couple of things coming out of the pharma area. You mentioned before a number of issues in terms of petroleum engineering and mechanical engineering and the, like, what are the research areas at UT.

That contribute the most, whether it's to disclosures, to formalize, to protect that IP or to specific licenses. And is that, is that changing over the last decade or so?

Les Nichols: Yes. First of all, the, the main, the main category the primary source of our invention disclosures comes from the Cockrell school of engineering.

As you might guess. We have, you know, the number one petroleum engineering school in the country. And so you can imagine back in 20 11, 20 10, 11, the oil prices were in the a hundred dollars per barrel for a while, not like this blip we see now, but because of other demand factors growing. Back then we had a lot of sponsored research from energy companies coming into the departments.

We had a lot of disclosures coming out of that research. We had a lot of exciting license opportunities that we were executing on back then in that petroleum area. Another strong area of course, is material science and the mechanical engineering department. Under John Goodenough who was the Nobel prize winner of 2019 or his battery work.

So he, his work continues with the gentleman Rob Manthiram and professor who came here with Goodenough as his post-doc now has his own. Lab, of course, and has a lot of research in the battery area. So we have a lot of activity there, especially with Tesla coming into town now and their interests.

That's only going to enhance, I think our battery work, other areas we're very strong in robotics. We're very strong in artificial intelligence and different computer science areas here at UT. As well as, as we've touched on the far from a business just teams to make winners more often than other areas.

But again, the focus is not that big when those are gonna come where they're not, as we had the example of TFP, right. Who would have known that a severe global pandemic focused on the lungs would occur. Right after they IPO, you know, there's no way to plan on stuff like that. So what you do is what we do is we just want to get as much technology out there as possible, as efficient and effective way as we possibly can to give the technology a shot.

That's our goal. We want to give as many shots on goal as possible, and let's see what hits.

Michael Scharf: Perfect. Let's flip the lens a little bit. When you look at who your licensees. What do you see? Are you looking at large corporations or startups? Are you looking at Austin based companies, Texas or all over the world?

Les Nichols: Yeah, I did a little bit of digging into that and the numbers shake out. Interestingly is over the last 10 years, 414, roughly licenses and options that we've executed. 29% of those have been to startup companies. Okay. So 71% to going concern companies. Right. And then as far as geographic location, a third of those 33% were in the state of Texas, right.

With the majority of those being in the Austin Metro type of area, some of those startups would be lumped into that, into that group. So a little bit, yeah, kind of interesting.

Michael Scharf: It makes it it's interesting. In, in the work that I've done around startups, one of the criteria has always been large research institution in that same area.

What's changed in my perspective, over the last 6, 8, 9 years is that a lot of this IP is being developed outside research universities. Do you see that trend making an impact on UT Austin and your office?

Les Nichols: We haven't seen any impact yet. I do see what you're talking about though. I see a lot of companies, certainly companies that come to Austin, right?

Since such as growth corridor hub now, and many of those companies are technology focused technology based. And what they do is they, they instead of You know, they do some, they do some collaboration with our researchers on, in the standard mode of like funding research in the lab, but they also try more and more to engage with faculty members in their own shop, you know, consult with our folks, have our folks consult with them and try to, I guess, pull from the value of, of, of a research university.

By being so close and we want to support those entities because there's so much community value, state of Texas value, global national and global value to these companies being successful. So we want to, we want to do what we can to support their efforts. But at the same time, we have to be cognizant of the fact that our faculty, our faculty, because they didn't want to go Indiana.

Right. They made a decision at some point, it's it? You know, you can, you can leave whenever you want. We're we're a right to work state, right. So you can leave whenever you want and go, go and work for Google or apple, but they don't want to, they want to be faculty because they want to do research. Right.

And, and, and at the companies they're focused on profit. You need any research that you do better have a pay out within a decent time. So, so this is why they want to be faculty members. So I'm looking forward to actually working closer with companies, because I think this is going to be happening because we see more and more of how companies want to try to engage faculty on their own terms.

And it's like, well, let's, let's think about this. How can we do this the right way? Because we, we want you to be successful. But we have a university to run here and this faculty member wants to do, wants to do fundamental stuff.

Jason Scharf: So Austin is growing like crazy.

All these people are moving here. I'll be curious to see if we talk to you in a couple of years, what that, you know, Texas portion of the licenses looks like I would be, wouldn't be shocked to see it grow.

UT continues to grow. I mean, you back, you said you had two to 3000. Research faculty, I thought was a huge number and just shocking in the best possible way. What are the biggest challenges that we're facing,

Les Nichols: well, gosh, you know, infrastructure, infrastructure, but what does that mean? There are a lot of technical opportunities that some of the challenges like infrastructure, for instance, vide.

And so I think those challenges are ready to be addressed and people all across the spectrum. Companies to just regular folks to elected officials are prepared to start addressing these things. Well, I think it's kind of a cool opportunity for technologists to be thinking about how do we provide the answers or the obvious infrastructure challenges that we all face.

One of the things that we're doing right now with this zoom call, you know, before COVID. We had Skype and we rarely used it. And now this is a no brainer because the technology has stepped up. There are multiple right, multiple providers of this type of technology that makes it easy and quick and simple to use.

So this is an example, I think of how we're going to address our challenges. Is there, there are some, there are many, but this is what makes the world go around. We can't just be stagnant.

Jason Scharf: I'm going to flip the question then. And you know, it's the same question we like to ask everybody as we, as we end this what's next Austin,

Les Nichols: what's next from tech transfer perspective, as I've said, restructuring our organization to really mate, up more closely with the way industry functions.

With the idea that doing so will enable us to be more nimble, quicker, responding and and get deals done faster and more seamlessly to try to address this historic perspective that exists with tech transfer now, Austin and the community locally and statewide, and even nationally, we'll start. I think fall into line to see how this actually works.

I have this vision that the word is going to start to get out and with the help of people like you and your awesome podcast, this is enabling us to get that word out. That all I am. It was give us a try. You will be amazed if you have an idea that you want to help a company, a form, or grow around some technology or you work for a company that might be interested in some area of UTS research, give us a call.

And I guarantee you, you will be amazed by how enjoyable it will be to get a deal done. Through us.

Jason Scharf: I love it. Les Nichols, director of office technology commercialization at UT Austin. Thanks for joining.

Les Nichols: I appreciate you guys having me. Thank you all.

Jason Scharf: So what's next Austin. We're glad you've joined us on this journey.

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