The Law of Unintended Consequences -Emory University understands tech transfer….$540 million makes a noise when it lands in your bank account.

Twenty-five years ago a law known as Bayh-Dole spawned the biotech industry. It made lots of university scientists fabulously rich. It was also supposed to usher in a new era of innovation. So why are medical miracles in such short supply?

Even in the mute efficiency of international wire transfers, $540 million makes a noise when it lands in your bank account. To Kent Alexander, that sound was a thud—and in this case "not one single thud, but a lot of different thuds." All afternoon on July 21, 2005, Alexander, who is Emory University’s general counsel, president Jim Wagner, and other senior members of the school’s administration were receiving e-mailed reports from the finance de- partment: "121 million just hit!" And then, 50 minutes later, "183 million just hit!" Half an hour after that, an even richer stash arrived. Thud. "It was an out-of-body experience," says Alexander, 46. "By any definition, it’s a huge deal. As one of our trustees was saying, ‘It doesn’t get any bigger than this on Wall Street.’ "

The deal in question had closed only days earlier, when a pair of biotech companies, Gilead Sciences of Foster City, Calif., and Royalty Pharma of New York City, outbid several other parties for Emory’s roughly 20% stake in the powerful anti-retroviral drug Emtriva, which is used to treat HIV. The drug was developed more than 15 years ago by three of the university’s scientists, working on federal research grants, but received FDA approval only in July 2003. Now, however, Emtriva (a modest seller in its own right) was being married to another antiviral in a single pill. The combination drug, called Truvada, was expected to have a worldwide market of nearly $1 billion in 2006. Emtriva was becoming a blockbuster. Citigroup set up the auction and hammered out the terms with bankers from Lazard. A white-shoe law firm, Covington & Burling, calculated the drug’s projected royalty streams through the year 2021, when the patent life was scheduled to end.

By Clifton Leaf

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