Spin outs will help region to rebalance job losses

Alan Aubrey, chief executive of IP Group, said university spin-outs can create a vital source of new private-sector employment as public-sector spending cuts begin to bite.

Earlier this month, York-based medical technology company Tissue Regenix announced its intention to float on the Alternative Investment Market via the reverse takeover of Oxeco. It will be the sixth plc to be spun out of the University of Leeds in

recent years.

"Everyone in the regional economy is concerned about the swathes of spending cuts," said Mr Aubrey. "(They are asking) is the nation too dependent on public-sector jobs and how is it going to fare when the cuts hit big style later this year."

The public-sector share of employment is just over 30 per cent in Yorkshire, compared with 28 per cent for the UK.

Mr Aubrey said university spin-outs can help shift the region's employment bias away from the public sector and create hubs of private-sector expertise.

IP Group's partnership deal with the University of Leeds gives it access to all the intellectual property generated by the university, allowing it to grow fledgling companies all the way to stock market flotation.

"Leeds is one of the pioneers in this area," said Mr Aubrey. "In a quiet, industrious way, the university has managed to achieve six IPOs in five years – more than any other university.

"In some of these northern regions and outlying regions, one of the things they have got is world-class universities. These universities can be engines for growth."

Leeds's track record of commercialising its research traces its roots back to the 1970s, when Filtronic was formed by Professor David Rhodes. The semiconductor company went on to become the UK's most successful university spin-out, and in its heyday was a global business with operations in four continents.

Tissue Regenix, backed by IP Group, was formed in 2006 by University of Leeds Professors John Fisher and Eileen Ingham. Its dCELL technology removes cells from human and animal tissue, allowing it to be reused to replace worn out or diseased body parts.

"Tissue Regenix's academics are renowned on a world scale and they have a can-do attitude," said Mr Aubrey.

"They have quality research which is a pre-cursor. They have a track record of co-operation with industry."

Professor Fisher is a global expert in total replacement joints, artificial heart valves and soft-tissue biomechanics. Also director of the Biomaterials and Tissue Engineering Centre of Industrial Collaboration and director of Leeds' Institute of Medical and Biological Engineering, he is a co-inventor of 10 patents, six of which have been successfully licensed.

The company's science is based on the principle of giving people 50 active years after the age of 50 – likely to prove increasingly popular with an aging population.

Tissue Regenix will join Leeds spin-outs including diagnostics specialist Avacta and transport software firm Tracsis on the Aim market.

Tracsis was spun out of the University of Leeds's School of Computing, and has been snapping up bolt-on companies as it bids to become an "end-to-end" service provider in the transport sector.

"The key is to get behind the ones that have good traction," said Mr Aubrey. "Tissue Regenix could be huge. The basic concept is amazing. It's effectively off-the-shelf regrowing body parts."

Brian McCaul, director of exploitation and commercialisation at the University of Leeds, said that after a tough period where the markets were effectively closed to investing in higher-risk spin-outs, Tissue Regenix's flotation may suggest a turning point.

"This is the first time that these sorts of listings are on the horizon again," said Mr McCaul. "While the market has been constricted, Leeds has diligently been building a pipeline of the next companies to come through.

"These are the tip of the iceberg. There are some exciting businesses that have not reached that stage that are now coming through as well."

IP Group also has access to all of the University of York's research, and also to a proportion of research generated from smaller rival Fusion IP's relationship with the University of Sheffield.

Tissue Regenix recently moved to York Science Park's Biocentre, where it joins a host of other high-tech companies, including Avacta.

Mr Aubrey said: "It would be wrong to say that this is substitute for public sector jobs but the question is, 'Is this the start of a healthy rebalancing and can Yorkshire create the critical mass and clustering that's happened in several other areas?'

"The more of these that you get, you start to build up expertise in legal and corporate finance."

However, university research budgets are likely to come under pressure from spending cuts. The new coalition government recently suspended the 25m University Enterprise Capital Fund, which was to provide early-stage funding for promising university inventions.

"We could get a double whammy in terms of the resources we have to spend," said Mr McCaul. "What it will do is make us think more cleverly about how we do things."

Developments in pipeline of growth

The University of Leeds's pipeline of growth opportunities include:

Encos, incorporated in 2007, ultimately aims to replace concrete as a structural material in all applications with a fully sustainable product made from 100 per cent recycled and waste materials.

The private company's technology was developed jointly by Dr John Forth, from the School of Civil Engineering at Leeds, and Dr Salah Zoorob, from the University of Nottingham.

Xeros is developing an alternative to traditional

water-based domestic

laundry systems as well as solvent-based commercial garment cleaning.

The Leeds spin-out has created a washing machine that uses only one cup of water for each cycle – less than two per cent of the water and energy of a conventional washing machine.

The technology works by using thousands of plastic

chips to absorb and remove dirt.