As Oxford's latest spin-off seals a deal to exploit asthma research, Kam Patel looks at what business incubation units can do Asthma researchers at Oxford University have entered a deal with pharmaceuticals firm Oxagen that should commercialise their ground-breaking work in the next few years.

The deal gives Oxagen, an Oxford spin-off formed in 1997, an exclusive worldwide licence to develop products and services based on patented intellectual property that has emerged from work by the university's asthma genetics group. The group, led by Bill Cookson, is based at the university's Wellcome Trust Centre for Human Genetics. It also receives some support from the National Asthma Campaign. The collaborators hope the deal will lead to products that tap into an estimated Pounds 6 billion worldwide market for asthma treatments.

At a London conference on business incubation last week, Tim Cook, managing director of Isis Innovation, Oxford's commercial arm, said the agreement between the university and Oxagen was another "classic example" of the strong links that are maintained between spin-offs and universities. "Incubation and clustering are hugely complex processes. The unique thing universities offer to their development, which the asthma deal exemplifies, is the continuous production of intellectual property by academic researchers."

Asthma affects 10 per cent of the world's population, and it is becoming increasingly prevalent. The disease has genetic and environmental factors associated with it: it runs strongly in families and is exacerbated by allergens that include house dust, mites, animals and grass or tree pollens.

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Professor Cookson's group has been attacking asthma's genetic component to develop possible routes for treatment. Researchers at the group have amassed an extensive collection of DNA samples from asthma families for study. As part of the new deal, Oxagen will have full access to this material.

Dr Cook declined to reveal details of the financial gain Professor Cookson and his group can expect, but he pointed to Oxford's "very generous" structure for remunerating academics whose work is commercialised as a baseline. For products that generate a total net revenue of up to Pounds 43,000, academics receive 63 per cent of licence fees and royalties. This cut falls to 31.5 per cent for product revenues of Pounds 43,000-Pounds 430,000 and 15.75 per cent for revenues of Pounds 430,000-Pounds 4.3 million. Across all bands, Isis receives 30 per cent of licence fees and royalties to cover management and marketing costs. The remainder is reinvested in other projects. If net revenues exceed Pounds 4.3 million, the distribution of the excess is subject to negotiation.

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Dr Cook said that despite big strides made in recent years to strengthen university-industry links, more effort is still needed. "Researchers like to research, that is why they are so good at it. They are usually uninformed about industry and view it with suspicion. At the same time, though, industrialists often do not understand university culture and they are suspicious about academics. Industry tends to forget that researchers are not driven by money and that means conventional industrial logic cannot be applied in an academic setting - it is often counterproductive."

On a more positive note, Dr Cook said Oxfordshire was well placed to address the "cultural divide" between industry and academia thanks in large measure to the region's eight established incubators. These include commercial ventures such as Milton Park and Oxford Science Park, as well as the university's incubator at Yarnton. "We are not short of incubators to go to when we want to locate new spin-offs at the moment, but the more the better. Hopefully, new ones will be launched over the coming years."

But a soon-to-be-published study for UK Business Incubation, an independent body set up by the government to promote the growth of new firms, points out that Oxfordshire is in an enviable position relative to many other parts of the country. A key finding of the study is that "existing incubator facilities in the UK are insufficient in number and quality to realise the potential and success of incubators in other countries". The density of incubator space in the UK is "far behind" that in the US, it warns.

There are 80 incubators set up by universities and the private sector in the UK, and 20 more are planned. The report says, however: "Many universities and research organisations have no or very limited access to incubator facilities. Some sectors such as information and communications technology, electro-engineering and design have very few specialist incubators."

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The study, carried out by Paul Hannon, academic director of Leicestershire Centre for Enterprise, calls for more public-private funding to be made available to create many more incubators. It warns that up to now "emphasis in the UK on incubators has been piecemeal - a coherent strategy is now needed with a focus on areas/sectors where they can have most impact".

The study also highlights the high level of support that will be required if the UK does go on to develop a much bigger incubator network. It says incubators will increasingly need access to means of identifying and absorbing good practice from elsewhere and monitoring and assessing outputs and performance. "In particular, mechanisms for benchmarking and accreditation may be appropriate," it says.