Volume 29 - Number 16 - Thursday, May 8, 1997

Labour technology firm has difficult birth

by Janice Hamilton
Dr. Emily Hamilton with LMS colleagues Salim Ramji (left) and James Turner


It was jubilant handshakes and champagne all round when LMS Labour Management Systems Ltd., a company that evolved from a McGill-based research project, announced in March that it had secured $3.1 million in investment.

The journey from an idea in someone's head to the laboratory to the boardroom can be difficult, as project creator Dr. Emily Hamilton discovered firsthand.

Without help from Martinex R&D Inc., a company that assists McGill scientists who want to commercialize their ideas, she might not have made it.

"Martinex was really helpful to us," says Hamilton. "It has expertise in the real business world, it helped put together the package, and it has good contacts in the business community."

University professors who think that brilliant ideas and long lists of publications will easily attract business investors are kidding themselves, says Martinex president Ervin Spinner. "It's not peer reviews; it's people who say, how can I make money on your invention? It's a different reality."

This story goes back to 1991 when Martinex, a research and development company, took advantage of a short-lived provincial tax shelter. On its behalf, a brokerage firm raised $90 million in a public stock issue. Martinex distributed that money in two phases to 35 innovative research projects at McGill, including Hamilton's.

"Now we're working very hard to commercialize some of the technologies emanating from that original investment," Spinner explains. "We are also here to help any scientist at McGill, regardless of whether they were part of the original project."

He keeps in touch with the Office of Technology Transfer, where McGill employees must register their inventions, to find out what is happening on campus.

McGill scientists who want to take their inventions to the marketplace can approach Martinex for either preliminary advice on what is involved, or active assistance in launching a company. Its consulting services are free. In the last few years, Martinex has helped McGill-based scientists to commercialize a number of projects, ranging from dental implants to new drugs.

Spinner, who graduated from McGill in engineering in 1962, says that most of his business experience has been in the development of technology. "Big companies need to do that within their organizations. It's called intrapreneurship. But I got tired of big; I wanted to work with little start-ups."

He emphasizes that not every great scientific discovery is the seed of a business. "We look more intensely at things that have the makings of a business start-up. It has to be a technology which is a breakthrough or unique, preferably patented or patentable. It has to be developed to the point that it can be turned into a commercial venture within a couple of years. And the market also has to be there, because you can't attract investors if you can't ensure a return."

President Ervin Spinner

How Martinex works

Martinex has four part-time employees. Spinner, a business consultant and the former vice-president of a large high-tech company, helps with the overall business perspective. Another employee has a background in biotechnology. An accountant and a lawyer complete the team.

With its off-campus location, and rule that no one from the University can sit on the board or be active in Martinex, the company maintains an arm's-length relationship with McGill.

However, the long-term mission of Martinex is to make money for the cash-strapped University, which holds a 35% equity in all companies that arise out of research by its employees. Martinex acts as the custodian of that equity.

Although some of these companies are bound to fail, Spinner explains, others will eventually become successful and issue public shares. At that point, Martinex stands to make a profit.

This money will go into a trust fund and, depending on how much is available, Martinex's trustees will then be in a position to give some money to McGill to support research. "The University is eagerly awaiting our becoming wealthy," Spinner says, adding that in the process of making money for the University, the scientist-entrepreneurs will also benefit financially.

In the meantime, Martinex raises money for research at McGill by creating and managing small tax shelters. Soon it may also have facilities--small off-campus offices and labs--to rent to McGill scientists for their infant businesses.

Another consideration is how committed the scientist is to commercializing his or her project. "Some scientists play at the game," says Spinner. "We can only help people who are deeply serious about doing this--and even then it takes a year or more."

For some, the commitment involves resigning or taking a leave of absence from teaching and academic research duties. Others give one work day a week to business affairs. Some act as consultants to their companies, and hire a professional manager to run the office.

So far, Martinex has equity in eight business start-ups, primarily in the fields of biotechnology and medicine. The most recent involves a service, rather than an invention: the Montreal Neurological Institute has set up a company that provides a drug-testing service to pharmaceutical companies.

According to Spinner, "Most of the good things coming out of McGill are in medicine and a lot of the hot stuff in technology development now is related to the health sciences."

Martinex helps to package an academic idea into a business plan, helps recruit people--especially management staff--needed to launch the business, and helps to look for investment funds.

"The venture fund people trust us," says Spinner. "They know we're not going to waste their time with third-rate projects."

Fortunately, he continues, there are venture funds, such as RRSP and labour funds, in Montreal and in Canada that are prepared to invest in start-ups. Five years ago these funds practically didn't exist.

Martinex also does a lot of hand-holding, says Spinner, adding that some of the companies it has helped launch are running well on their own already, while others require more nurturing. Many businesses can get off the ground in a year, but Hamilton's project involved four years of meetings, business plan rewrites and personnel difficulties.

An associate professor of obstetrics and gynecology, Hamilton is concerned about the number of babies delivered unnecessarily by Caesarean operations in North America. She received a $3 million grant from Martinex in 1992 to design a computer system that monitors the progress of the mother and baby during childbirth.

The team developed software and an easy-to-use touch-screen computer system. The computer collects data from the fetal monitor that keeps track of the mother's contractions and the baby's heart rate during labour, as well as other information about the case. This labour management system is unique in that, besides displaying the data, it is designed to interpret information and give the physician an assessment of how the baby is faring and how labour is progressing.

Hamilton emphasizes this is a decision-support tool to assist medical staff, and that robots are not about to deliver babies. "The goal is a technology that will help reduce the number of unnecessary Caesareans performed because of slow progress in labour, and also reduce the number of babies born with damage because they were deprived of oxygen during birth," she explains.

In 1993 Hamilton and her colleagues tested a prototype of the system at the Jewish General Hospital. Then the Martinex grant money ran out. The development team disbanded and Hamilton went back to teaching and clinical work full-time.

But she was convinced that her system could really make a difference to women in labour, so she went back to Martinex. With its help, she got a $100,000 investment from an American hospital equipment company to bridge the gap and cover start-up expenses.

Finally, this spring, LMS landed $3.1 million from four investors: BioCapital, Working Ventures Canadian Fund, Innovatech du Grand Montréal and the Business Development Bank of Canada.

Now, Hamilton and her staff--including members of the software development team and marketing strategists--have settled into a spacious office suite in N.D.G., where they are continuing to develop and test the product.

Hamilton resigned her position as director of obstetrics at the Royal Victoria Hospital and devotes about 80% of her working time to the company, and the remaining 20% to teaching and clinical duties. She expects to have the first version of the product available to hospitals in the U.S. and Canada at the end of this year, and to add a more complex component of the software in 1998.

"There was a very long learning curve for myself and others," Hamilton admits. "I was totally ignorant of what the language (of business) was, what the benchmarks were, and what sort of team you needed to have. I was naive and trusting and ignorant. I didn't know what was expected, and that can be dangerous for a professor."

She adds, "There are aspects of launching a business I don't like, and am not even interested in, but I know this process is critical if the labour management system is to become a reality."

Hamilton's advice to other academics who want to enter the business world? "Go to a group like Martinex--people with real business skills and connections to high-tech industries.Otherwise, one could spend an inordinate amount of time with a wonderful idea not presented to the right people, or in the right fashion."

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