Research With A Commercial Edge

NORTH CAROLINA'S Research Triangle Institute International (RTI) was born out of frustration almost 50 years ago.

Determined to do something about the exodus of ambitious students and scientists from the area around Raleigh, Durham, and Chapel Hill, academic leaders, businesspeople, and local politicians helped set aside a large tract of land for research-related activities. Called Research Triangle Park, it was in a desolate spot in the middle of the three communities. In 1958, three local academic powerhouses, Duke University; the University of North Carolina, Chapel Hill; and North Carolina State University, worked to set up RTI as one of the first residents of the park.

A half-century later, Research Triangle Park is chock-full of biotechnology, pharmaceutical, communications, electronics, and other research-related businesses. The three once-isolated cities are now part of a thriving metropolitan center. And although young people come and go in the area, many come and remain.

Some come to work at the not-for-profit RTI, which today has more than 2,600 employees, including 162 chemists and chemical engineers. What started as a tiny group seeking research contracts from the U.S. government is today a much larger enterprise whose annual national surveys of drug abuse are widely followed and whose research endeavors led to the discovery of the anticancer compounds paclitaxel, now marketed by Bristol-Myers Squibb as Taxol, and campothecin.

RTI conducts statistical research and surveys on U.S. economic and social policy issues. It advises governments outside the U.S. on these issues as well as on health and environmental matters. And RTI has a strong and growing technology component, accounting for more than $100 million in annual revenue. It develops new drugs, conducts research on biofuels, takes on pollution-abatement challenges, and seeks answers to electronics and communications problems.

But one thing in particular that RTI's leader, Victoria Franchetti Haynes, would like to change is the institute's work with the business community. About 85% of RTI revenues now come from government sources, and most of that is from U.S. government agencies. About 15% of revenue is derived from commercial clients. Haynes would like to see that level increase to 25% in the next five years.

A chemist with a Ph.D. from Boston University, Haynes, 59, came to RTI in 1999 from BF Goodrich, where she was vice president of the advanced technology group and chief technical officer. As president and chief executive officer of RTI, she wants RTI to be less dependent on government contracts and to operate more like a business.

She has hired managers to bring more business sense to an enterprise with an academic slant. During her tenure, RTI has acquired private businesses to bolster its commercial appeal and Haynes expects that RTI will make more acquisitions in the future. She is also eager to open new outposts outside the U.S.

"As a nonprofit organization, we pay no dividends," Haynes explains. "But we need to run ourselves like a business to manage our clients, budget, and staff. And we need to make money to invest in our future and to grow." After subtracting expenses from revenues, RTI had more than $20 million in funds remaining last year to invest in that growth.

SOME OF those funds paid for a new science and engineering building. Opened late last year, the 28,000-sq-ft facility provides lab and office space and should help RTI attract more contracts from commercial clients interested in the institute's advanced technology efforts, Haynes says.

Haynes is also investing some of the surplus in acquisitions meant to provide the institute "with a fast way to gain expertise," she says. "We have a budget for acquisitions to further our mission," which is to "improve the human condition by turning knowledge into practice."

Since Haynes came to RTI, it has acquired both technology and social research entities. Among the tech acquisitions was Midwest Research Institute's North Carolina-based environmental unit. The 2002 deal added 20 people and bolstered RTI's expertise in environmental emissions standards.

In 2005, RTI acquired three research divisions of MCNC Research & Development Institute in a deal worth nearly $5 million over four years. The transaction added 61 researchers already at work in Research Triangle Park and provided new expertise in areas including display technologies, optical networks, and sensors.

Acquisitions have also helped RTI build a health solutions unit that primarily serves pharmaceutical firms by studying drugs that are already on the market. The unit helped Biogen Idec and Elan bring the multiple sclerosis treatment Tysabri back on the market after it was withdrawn in 2005. An RTI study showed patients were willing to take the risk of contracting a rare brain infection associated with the monoclonal antibody in their bid for relief from their condition. The Food & Drug Administration allowed Tysabri back on the market in 2006.

To bolster the health solutions unit, in 2006, RTI added Integrated Safety Solutions, a privately held firm with six employees. Earlier this year, it bought Palmer D'Angelo Consulting, a Canadian pharmaceutical pricing and reimbursement consulting company.

"We've invested $5 million in health solutions and have gotten it back over and over," Haynes says. "Other companies have offered to buy the health solutions unit from us," she says. She is not eager to sell it, however, preferring instead that it help RTI diversify its revenue sources.

Other expansion opportunities for RTI are overseas. The institute has offices in Dubai, United Arab Emirates, and from there it supports environmental engineering work in the region and health, education, and local governance projects in Iraq, Pakistan, and Indonesia. Last year, RTI won a contract to develop scientific and regulatory standards for a new biotechnology research park in Dubai.

"We opened the office in the U.A.E. as a business investment," Haynes says. "We expect that the Middle East will be a growth area for science and technology. It is a dynamic area despite the conflict issues. The U.A.E. is already a great trade center." RTI also is looking at opening an office in India to focus on energy and health research, she says.

Haynes played a role 10 years ago, while at Goodrich, in the development of the chemical industry's Vision 2020, an outline of what the industry needed to do to remain competitive in the future. She still has her eye on the future. Among the areas of expertise and technology she hopes to bolster to make RTI a more attractive partner are biomarkers, genomics, molecular epidemiology, and biofuels.

Although the imperative to develop new technology is strong at RTI, Haynes points out that the institute isn't solely focused on technology. "Technology is only part of the solution. Social, behavioral, economic, health, and environmental impacts often have to be considered, too."

RTI takes a multidisciplinary approach to many problems. "Even a technical solution has social ramifications," Haynes says. For example, cell phones have transformed society with rapid communications, but they also have led to many car wrecks. "We can do the hard science, but we can also leverage our expertise in the behavioral sciences to measure the behavioral impact of science. That is what makes us unique."

THE TECHNOLOGY MAVENS on RTI's staff understand the institute's multidisciplinary approach, but their primary charge is to advance technology and, along with it, business opportunities for the institute.

Among the people brought into RTI for their business expertise is Satinder K. Sethi, executive vice president of the science and engineering group. Formerly vice president of pharmaceutical development for the North American unit of what is now GlaxoSmithKline, Sethi joined RTI in 2003. He oversees more than $100 million per year in client-backed research into areas including new drugs, biofuels, electronics, sensors, and emissions reduction. "Making money helps track the validity of our research effort," Sethi points out.

"We manage our intellectual property so we can ultimately commercialize it," he adds. But RTI doesn't want to become a manufacturer. So in cases where RTI develops proprietary technology, it licenses the know-how or spins off businesses. Government agencies that contract with RTI's science and engineering unit, such as the Defense Advanced Research Projects Agency, the National Institutes of Health, and the Department of Energy, "are very clear," Sethi says. "They want things moved to the marketplace."

Longtime researchers at the institute confirm the greater emphasis on commercialization in recent years. F. Ivy Carroll, director of organic and medicinal chemistry, joined RTI in 1960. Until recently, RTI would concentrate its efforts on identifying new compounds, but would leave the development to others. Carroll says his biggest success at RTI was the identification of iometopane, an imaging agent that tracks the neurotransmitter dopamine for early diagnosis of Parkinson's disease. RTI licensed the technology to Guilford Pharmaceuticals, now part of MGI Pharma.

More recently, Carroll and his colleagues identified potential treatments for cocaine abuse, and this time RTI itself is taking the compounds into clinical development. "We haven't put compounds into clinical trials before. That is new for us," Carroll says. "We recently hired a chief medical officer to do it." The first drug is an indirect dopamine agonist, called RTI-336, to treat cocaine addition. The second is a kappa opioid receptor antagonist, named JDTic, that treats cocaine addiction relapse.

David Myers, vice president of engineering and technology and a chemical engineer who joined RTI from W.R. Grace, notes that RTI has successfully spun off two firms. Ziptronix was spun off in October 2000 to develop a process, called wafer bonding, for combining semiconductors. A second firm, Nextreme, spun off in 2005, is developing thermoelectric modules capable of cooling microprocessors or generating power from waste heat. The modules are made of nanostructured superlattices. Two other spin-offs are in the works, Myers says.

Myers, who reports to Sethi, is responsible for technology research, an area that has revenues of $23 million, 13% of which originates with commercial partners. Among the notable projects under his watch are biomass gasification efforts, carbon sequestration technologies, and a method to remove sulfur from syngas produced from coal.

Eastman Chemical is RTI's business partner for the syngas treatment. According to Raghubir Gupta, senior director for RTI's Center for Energy Technology, Eastman and DOE have so far put $25 million behind this clean-coal project. Other energy-related work includes hydrogen purification and storage efforts with government entities such as DOE and industry partners including Air Liquide and Praxair.

In the work involving Air Liquide, scientists from RTI and the University of Texas, Austin, developed a family of rubbery copolymer membranes that remove carbon dioxide and hydrogen sulfide from hydrogen streams more efficiently than existing methods. DOE and the National Science Foundation are providing support for much of this research.

Myers says his unit has also received funding from the National Aeronautics & Space Administration to develop a miniature mass spectrometer that he calls "mass spec in a coffee cup." RTI has designed a carbon nanotube electron source that ionizes gas molecules in the device. The detector would consist of an array of microfabricated cuplike structures that collect the ion current.

NASA envisions using such a device in future missions to Mars to help search for water and facilitate isotope-dating of material. The devices could also be used in systems for detecting chemical warfare agents and other toxic compounds in the environment, as well as for medical diagnostics.

With these and other research efforts over the years, RTI has taken a region's one-time frustration and turned it into an advantage. RTI is now an institution with strong academic roots able to act on government imperatives and ready to commercialize social and scientific advances for the greater good.