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Kite Pharma is just one of several biotechnology companies controlled by Belldegrun and other UCLA-connected investors. For example, also on the board of Kite Pharma is Steven Ruchefsky, a New York hedge fund manager. Ruchefsky is also an investor in Arno Therapeutics, a biotech company located in New Jersey that develops drugs based on exclusive licensing agreements with Ohio State University and the University of Pittsburgh. Mendelson also is an investor in Arno Therapeutics, as is Belldegrun. Belldegrun was, in fact, one of the largest shareholders in Arno Therapeutics as of December 2012, holding 1.3 million shares, according to a registration statement filed with the SEC. Much of Belldegrun's stock in Arno was held in an offshore trust administered by the Leumi Overseas Trust Corporation on the Island of Jersey, a jurisdiction off the northern coast of France that the Organization for Economic Cooperation and Development has described as a tax haven.
Another investor in Arno is David Tanen, a venture capitalist who runs Two River, a merchant bank that focuses on life sciences companies. Belldegrun is the chairman and a partner of the bank.
CTI Molecular Imaging, another company with roots in UCLA's Medical School and Department of Molecular and Medical Pharmacology, was provided research services by UCLA professors Michael Phelps and James Heath. As part of three separate agreements in 1994, 2000, and 2001, UCLA granted CTI exclusive rights to any inventions generated by university staff and gave the company an interest in any revenues generated from technologies that might be licensed to third parties. Phelps and Heath also were directors of CTI. Doumani was an investor in the company. The Siemens corporation bought CTI for $1 billion in 2005.
Today, professors Phelps and Heath, who both hold appointments in UCLA's Department of Molecular and Medical Pharmacology, run a private business advisory group called Momentum Biosciences. Doumani is on the board of directors of Momentum, as is Michael Shockro, a lawyer and colleague of Mendelson at the Latham Watkins law firm. Like Doumani, Shockro also holds a faculty appointment in UCLA's Department of Pharmacology to teach courses in the "business of science."
The web of companies and investors linking Belldegrun, Mendelson, Doumani and other proponents of the Newco model of tech transfer is complex, but it all swirls around biotech products being developed from inventions licensed largely from universities. Belldegrun's role in numerous biotech companies with links to UCLA and beyond is perhaps why his name was mentioned numerous times, in tones of admiration and awe, by several of the regents during their May meeting as they excitedly discussed Newco.
Some of the regents would like to institute a powerful business entity like Newco at UC Berkeley. Regent Richard Blum, the husband of US Senator Dianne Feinstein, called Berkeley's tech transfer office "an absolute disaster" at the last regents meeting. To back this up, Blum related a story about an invention developed by a faculty member affiliated with the Blum Center for Developing Economies, an institute he created through a large private gift to the university.
"We went to the center [Berkeley's tech transfer office] to license this thing, and they said, 'Well we don't want to license it, we don't want to put the money up to get the patents, and we don't think it's worth it.' I said, 'Okay, that's fine, I'll put up the money, and not for me personally, I'll put up the money for the [Blum] center to get it.'"
According to Blum, Berkeley's tech transfer office staff bungled the invention's transfer to private industry and the faculty inventor was excluded from further participation. "Next thing I know is this group takes this project, doesn't tell us what they're doing with it, licenses this to somebody, and won't even tell us who they licensed to develop the product."
A basic web search shows, however, that Blum got much of this story wrong. The invention in question, a hardware and app combination that turns a smartphone into a mobile microscope called the Cellscope, has, in fact, been commercialized, and the inventor, Daniel Fletcher, a professor of bioengineering at UC Berkeley and a faculty scientist at Lawrence Berkeley National Laboratory, is still very involved in the project.
Berkeley, furthermore, consistently ranks among the top universities in terms of the number of inventions it generates. Many of those inventions generate no revenue for the campus, but they are used by industry, governments, and nonprofits to solve problems and develop new products, and a small number of inventions earn millions each year, qualifying the campus' tech transfer activities as the opposite of a disaster.
Tech transfer offices at the different UC campuses are currently able to do all the things that Newco will be able do at UCLA, from inking complex licensing agreements and industry research partnerships to investing equity in startups. The only difference is they aren't taking orders directly from a board of businesspeople and investors.
For example, according to Berkeley's Office of Intellectual Property and Industry Research Alliances, the school can take equity stakes of up to 10 percent in a company licensing its inventions. Berkeley has created about 150 companies specifically to commercialize technologies developed on the campus, and the school has equity stakes in roughly 30 of these. Berkeley has also created the largest industry research alliances in the nation, including the much-criticized deal with BP that many say was a corporate raid on the school's intellectual property. But even staffers at Berkeley are wary of the degree of privatization and industry dominance that Newco seems to represent.
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