Biological Disaster

Zonagen Inc. took its name from Bonnie Dunbar's groundbreaking research into contraceptive vaccines. Then, when she wasn't looking, the company took her research.

While the Amnion deal illustrates how profitable the technology-transfer game can be, it's not always a good deal for the scientists. Dunbar and other Baylor researchers say those who agree to turn over their inventions for possible commercialization do so at their own risk.

John Langone, a biologist now working at the Food and Drug Administration, developed monoclonal antibodies that attack cancer caused by smoking. In the mid-1980s, he was approached by representatives of Oncos, Inc., a company that wanted to commercialize his technology. Even though BCM Technologies had been formed to handle the details of such proposals, Langone says the terms of the technology-transfer agreement with Oncos were never clear.

"It was an almost ad hoc kind of thing," Langone recalls. "There were not really any established policies with regard to who owned what or what kind of financial rewards or obligations there might be.

"I'll be extremely kind and say part of it was the fact they were just getting off the ground at the time, but instead of listening to the people who were very unhappy, they became very hard-nosed and just went about their business as they saw fit."

Langone says the financial arrangements that BCM Technologies negotiated on behalf of Baylor's scientists were "absolutely absurd." The school always seemed to receive a generous fee or royalty arrangement, he says, but the inventors who contributed the actual product or technology were often shortchanged.

"It seemed that the company would have to make a fortune before I got, like, pin money," he says. "I went into it thinking BCM Technologies was working in our best interest, but as time went by, it was apparent to me they were not. I thought Baylor would be working in our best interests, as well, but I don't believe that was so."

Langone's business relationship with Oncos collapsed when the company lost the cells needed to make the antibodies. Yet Langone, who wanted nothing to do with Oncos, was told he couldn't do business with any other company. Eventually, he says, Oncos went out of business and, though the cells were never found, "somebody else basically wound up with the rights to what we had done and we had no say in anything."

Another Baylor scientist, who did not want his name used for fear he'd lose his position, says he had to threaten a lawsuit to get back patents that BCM Technologies insisted were owned by the college. He says Baylor faculty are caught in a form of "intellectual slavery," in which scientists and researchers are expected to attract the grants that pay their salaries and fund their research, while the school skims 48 percent off the top of every grant for "overhead."

"Are these institutions really serving the public interest, or are they just trying to become big, well-heeled entities?" the scientist asks. "I no longer believe they are interested in science, only how much money it can bring in."

Steve Banks, president of the for-profit BCM Technologies, did not respond to repeated requests for an interview about Zonagen and technology transfer at Baylor. But the various attempts to commercialize Bonnie Dunbar's technology illustrate how the game of technology transfer is played at Baylor College of Medicine.

In 1984, American BioSystems, Inc., a subsidiary of 3M Corporation, approached Baylor with an offer to develop the contraceptive vaccine for use in household pets and cattle. A licensing agreement was struck between ABI and Baylor, but the partnership had problems right from the start: Equipment malfunctioned; blood samples were lost; study animals were mixed up. Dunbar remembers it as a "comedy of errors."

The matter turned serious, however, when, with the partnership falling apart, ABI tried to claim ownership of Dunbar's research. When ABI threatened to make a formal claim to the technology, Baylor sued. Fulbright & Jaworski handled the litigation for both Baylor and Dunbar, and reached a favorable settlement in 1988.

While that dispute played itself out, Phillips 66 came calling with a pitch to commercialize the zona pellucida technology. Dunbar even traveled to Phillips headquarters in Bartlesville, Oklahoma, but when she didn't hear back, she figured Phillips had dropped the proposal. In fact, Phillips was very much in the game.

According to documents Dunbar received during the discovery phase of her lawsuit, Baylor and Phillips were negotiating a joint venture agreement whereby the oil company would be given sole rights to develop and commercialize research of Baylor scientists. With Fulbright & Jaworski at the legal wheel, Baylor was even busy negotiating consulting agreements for its scientists -- without input from the scientists.

One such agreement was a draft of a five-year consulting contract between Dunbar and an entity called Analytics Ltd. Never executed, the agreement awarded quarterly royalty payments to Dunbar equal to 5 percent of net revenues the first year, and 2-1/2 percent thereafter. The rest of the contract contained the standard confidentiality and non-compete clauses, neither of which threatened Dunbar's ability to do research after the agreement expired.

The Baylor-Phillips partnership never happened, though, and in the summer of 1987, Martin Sutter, managing director of The Woodlands Venture Capital Company, came knocking with a proposal to commercialize Dunbar's technology. Sutter, Ross Perot, his daughter Nancy Perot Mulford and Triad Ventures, Ltd., a company owned by Lloyd Bentsen III, put up roughly $1 million in seed money. Sutter was named chairman of the new company, Zonagen, Inc., and began negotiating the transfer of Dunbar's technology with lawyers from Fulbright & Jaworski and Steve Banks of BCM Technologies.

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