Martin Kenney. Biotechnology: the University-Industrial Complex. Yale University Press: New Haven & London. 1986

James Watson and Frances Crick 1953 theory on the structure and operation of the DNA molecule was the key to the creation of biotechnology because it increased research into biochemical processes. (p.2)

Reduced discovery rates by petrochemical and pharmaceutical companies have caused the cost of their products to skyrocket. (p.3)

Economists are predicting the emergence of a new economy based on new information technologies that will centralize decision-making while decentralizing work sites. Biotechnology will be fundamental to the new economy and affect every production process using carbon-based materials. (p.3-4)

Venture capitalists are largely responsible for the restructuring of the economy through the selection of new areas of investment. (p.4)

Biotechnology startups are formed by the union of entrepreneurs and professors and are funded by venture capitalists. All commercial biotechnology is dependent on university research. (p.4)

Warren Weaver, the Director of the Rockefeller Foundation Biology Program, was largely responsible for biochemistry’s restructuring of medicine and the medical profession 1900-30 by funding biochemists through a series of project-grants. Molecular biology was created through the financial support of these project-grants and became a niche in prestigious universities. Many objected to Weaver’s project-grant system claiming that it allowed a foundation to control and direct university research. (p.11)

Vannevar Bush and James Conant were pioneers in the promotion of scientific research and the establishment of the influence of the scientific community through the creation of the Office of Scientific Research and Development (OSRD) and the National Science Foundation (NSF). The OSRD was created to advise the military on the application of science to the WWII war effort and the National Science Foundation was created to fund scientific research. The NSF acted as a self-governing community that was immune from the supervision of congress. (p.14)

The majority of the National Institute of Health’s research into molecular biology occurred under the auspice of the search for a cure to cancer. (p.17)

The 1971 debate that DNA was transferable initiated the public debate over the safety of changing the genetic information of material. (p.24)

In 1973 the transference of genetic material was made easy through the use of plasmids. This discovery, made by Stanley Cohen and Herbert Boyer, turned molecular biology into an industry (p.23)

In 1979 pharmaceutical and chemical companies entered into the debate over biogenetic regulation. Prior concerns about safety were reduced from discussion and the Senate held hearings on the role of the Government in facilitating the establishment of the biotechnology industry. (p.27)

Universities serve American society in 3 ways: they provide trained labor, they perform research and produce social knowledge, and they promote the ideologies that legitimate US economic and social systems through the social sciences. (p.29)

The Government enabled a close relationship between Universities and Industry by loosening rules regarding patents and passing legislation that rewarded Universities for working with industry. The 1980 tax reforms provided write-offs for industry funded University Research & Development and provided seed money for research consortiums of Universities and corporations. (p.33)

University and industry relationships fall into 2 categories: individual faculty work as consultants or proprietors of companies, or there is an institutional arrangement made with industry by university departments or the central administration. (p.34)

Some major issues that have arisen from the partnership of the university with the corporation are complaints of an outside influence shaping the university’s research agenda and appointment of faculty and the lack of public access to research conducted by Universities by owned by corporations through patents. (p.50)

In 1974 the Harvard Medical School (HMS) and Monsanto reached an agreement typical of university/corporate contracts. Monsanto donated $200,000 a yr to every research lab and contributed $12 million to the endowment to construct and equip facilities to support biological research in exchange for exclusive licenses to all inventions and discoveries made in those facilities. (p. 58)

In 1980 MIT and Exxon signed a 10yr $8 million research contract on combustion engineering. (p. 60)

In 1981 the 1^st major biotechnology research contract was signed between Hoechst and Mass General Hospital. The contract involved $70 million disbursed over 10 yrs and entitled Hoechst licensing rights to discoveries made but also to the work of researchers such as Howard Goodman. (p.61-3)

In 1981 Harvard Medical School signed a contract with duPont for $6 million over 5 yrs to fund the formation of a genetics department. (p.64)

UC Davis and Allied Chemicals signed a contract that funded the research of biochemist Ray Valentine. Ray Valentine went on to found the agricultural biotechnology firm Calgene, who sold 20% of its stock to Allied. (p.66)

The Research Corporation and the Wisconsin Aluminum Research Foundation (WARF) are 2 of the handful of organizations that secure and license patents from universities. The Research Corporation is a Foundation established in 1912 that arranges the licensing of inventions to corporations in exchange for royalties granted to Universities and inventors. (p.74)

University Patents was founded in 1974 and holds exclusive licensing rights to the discoveries of Universities including the University of Chicago and UPenn. In 1982 University Patents incorporated University Genetics (UGEN), a for profit company that secures industrial sponsors for inventions made in Universities and concentrates in biotechnology. (p.74-5)

In a survey conducted by the Carnegie Commission on Higher Ed. in 1961-2 74% of faculty reported an outside income from work as consultants to the Government, nonprofits, and corporations. (p.91)

University professors played a critical role in the growth of the biotech industry. Their participation was essential to the success of startup ventures. (p.90)

Genetic Systems, a biotech company, was formed in 1980 through a partnership of David Blech, a stockbroker, and Robert Nowinski, a former professor at the Fred Hutchinson Cancer Research Center. (p.97)

Hybertech, a biotech company, was formed in 1978 by Brook Byers, a senior partner at Kleiner, Perkins, Caulfield and Byers, and Ivor Roston and Norman Birndorf, professors from UC San Diego. In 1980 UC San Diego invested in Hybertech. (p.97)

Paul Berg formed DNAX, a biotech company purchased by Schering-Plough for $29 million. (p.100)

Moshe Alah, a venture capitalist, founded the biotech companies Cetus and Biogen. (p.103)

Venture Capitalists and established biotech companies recruit scientists by offering equity in companies. This offer ties professors to the success of the company. (p.101)

Carl Djerassi, an organic chemistry professor at Stanford, was president of Zoecon, founder of Syntax, and director of Cetus. (p.110)

The majority of lab work done in molecular biology is performed by postdoc and graduate students leaving them vulnerable to exploitation. (p.117)

The investments of venture capitalists are formalized by partnerships with large corporations. In 1987 venture capitalists invested $6.7 billion in biotechnology making it the most lucrative area of ‘high technology’. (p.133)

The goal of venture capitalists is to make an investment over 5-7 yrs that will provide a 500-1,000% capital gain when company stock is offered publicly. (p.142)

Registration rights to sell a portion of stock publicly are included in most financing agreements with venture capitalists. Registration rights allow the venture capitalist to determine their costs venture and the possibility of capital gain. (p.142)

There are 2 stages in financing biotech startups: seed money and research money. (p.146)

The Biotech’s corporate structure is determined by the university professor. Many companies establish a Scientific Advisory Board (SAB) to establish a close link between the company’s board of directors and the university’s directors of research. Professors join SAB’s in exchange for research funds. (p.149-151)

The R&D Limited Partnership (RDLP) was invented by a Wall Street lawyer to fund clinical trials or production scale-ups. The start-up is contracted by outside partners to perform tasks needed to bring the product to market and the partners, in return, receive tax-breaks, royalties, and discounts on stock. The RDLP is the last step for a biotech start-up’s product going to market. (p.164-6)

6 months-1yr before selling the 1^st product the biotech start-up adds a sales and management division largely organized and recruited by the start-up’s Multinational Corporate investor. (p.167)

The majority of biotech products that 1^st emerged were agricultural products because they were not subject to the health and safety standards required for human products. (p. 167)

The chemical industry is the largest industrial consumer of energy and has the highest cost dependency on energy for profits. (p.192)

The most fearful occurrence for a stockholder is an unforeseen liability. (p.193)

In 1977 Eli Lilly and Upjohn became involved in the research guidelines for rDNA to insure that proprietary information was protected. (p.197)

In 1983 every large chemical and pharmaceutical company made multi-million dollar investments in biotech firms. These investments were directed towards either developing an in-house research capacity or establishing a connection to an outside R&D institute, purchasing equity in a biotech startup, or contracting universities to do research to secure licenses for the start-up. (p.199)

MNC usually purchase enough equity to have representative on the start-up’s board of directors. (p. 207)

Martin Marietta, 39% of whose shares were owned by Allied, purchased 25 million in equity in 3 biotech start-ups with the goal of creating a cooperative research program between the 3 companies. Marietta purchased 21% of Molecular Genetics, 10% of Chiron, and 20% of Native Plants. (p.209)

Monsanto based the future of its company in biotech investments. The venture capital firm Innoven, jointly owned by Emmerson Electric, invested in Genentech in 1977 and Genex 1978-1979. Monsanto contracted Genetech to produce the bovine growth hormone. In 1980 Monsanto bought 12.5% of Biogen and 30% of Collagen. (p. 213)

The animal production industry was the 1^st to receive new production techniques from biotechnology. It transformed bovine reproduction through the creation of a technique that caused super-ovulation in cows and made the production of twins and quintuplets possible. New vaccines allowed cattle to be raised in less sanitary conditions with greater population densities and the feed produced by biotechnology cut costs. (p.220)

Plant biotechnology has the most marketing potential of all agricultural products. Investors are excited about biogenetically engineered plants whose DNA has been changed to make plant growth respond to inputs like fertilizer and pesticides. Seeds will be the most profitable product but microorganisms and plant diagnostic kits to identify diseases are suspected of being high grosser. (p.221)

The 1982 Winrock International Conference called for an end to the public funding system of US agricultural production processes and actively promoted the development of strengthened relations between the public and private sector in funding research. (p.230-4)

There are 2 classes of biological and chemical patents: product patents and process patents. (p.254)

The court decision in Diamond v. Chakrabarty allowed microorganism to be patented, which paved the way for plant varieties to be patented. Ananda Chakarty was granted a patent on a microorganism that could metabolize crude oil by the US Court of Customs and Patent Appeal (CCPA). The CCPA decision stated that things constructed out of DNA are manufactured and are therefore patentable because there is no legal distinction between dead or alive.

UC Stanford has ownership of the Boyer-Cohen patents for the basic processes rDNA, which gives UC Stanford ownership of the core technique in the biotech industry. (p.258)