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This story was corrected on July 17, 2009. An explanation of the story is at the end of the story.

Much of Maryland's biotech community is taking a "wait-and-see attitude" before deciding if the breakup of the University of Maryland Biotechnology Institute helps in the long run.

"I'm sure it was a very thoughtful decision on the part of the regents," said Richard A. Zakour, executive director of MdBio, the bioscience division of the Tech Council of Maryland. "It's hard to say how it's going to work out. In some ways it makes a lot of sense, but in some ways UMBI has had a good track record."

One week ago, the University System of Maryland's Board of Regents said it was essentially dismantling UMBI as a single institute.

"No strong scientific or organizational justification emerged for keeping UMBI intact, either as a free-standing institution or within another institution," the board announced in approving the recommendations of an ad hoc committee charged in February with investigating UMBI's effectiveness.

UMBI was established in 1985, and is the only University System of Maryland institution with a legislative mandate to drive economic development, according to its annual report. Its research areas include biotechnology applications to human health, marine environments, agriculture and protein engineering-structural biology, with a focus on technology-transfer and commercialization efforts.

UMBI has four centers: the Center for Advanced Research in Biotechnology in Rockville; the Center for Biosystems Research in College Park; and the Center of Marine Biotechnology and the Medical Biotechnology Center, both in Baltimore. UMBI also includes the Institute of Fluorescence in Baltimore.

The institute has an operating budget of $63.7 million, with 85 faculty members and 59 graduate students involved in its operations.

MdBio has worked closely on projects with the educational branch of UMBI and just this week hosted a golf tournament with the institute as a fundraiser for the foundations of both organizations, Zakour said.

Maryland took a bold step in setting up UMBI and its restructuring is not any kind of admission of failure, he said. Rather, the regents are just taking a look at priorities and efficiencies.

"It's going to be a wait-and-see attitude," Zakour said. "There are some really good people at the institute."

‘Intractable problems'

The committee's report cited organizational flaws in UMBI.

Its organization "as a geographically dispersed, free-standing entity has created intractable problems," the panel said. "As a result, while UMBI has attracted talented researchers and developed impressive, state-of-the art laboratory facilities, it has not produced the level of translational research and technology transfer for which it was created.

"Specifically, the institution has been fundamentally impaired by: the lack of scale of UMBI programs; isolation among UMBI's research centers and between the research centers and the [university system's] other research institutions, frustrating the conduct of collaborative research; the absence of a critical mass of graduate and undergraduate students; [and] the inability to focus UMBI's scientific talent on the kind of translational research that yields technology transfer and economic development consistent with UMBI's mission."

The regents approved the committee's recommendations that UMBI's various research centers instead be aligned with their respective university campuses.

Jennie Hunter-Cevera, who has been UMBI president for almost a decade, previously announced her resignation to join a research institute in North Carolina. Her last day is Tuesday.

In announcing the changes at a regents meeting in Frostburg June 19, Chancellor William E. Kirwan said he plans to appoint an acting successor to Hunter-Cevera to guide UMBI during the restructuring process. He said the reorganization "will take some time," according to Anne Moultrie, a spokeswoman for the university system.

The interim appointment will be made "soon," Moultrie said.

William M. Gust, managing general partner at venture capital firm Anthem Managing Partners in Baltimore and a member of UMBI's Board of Visitors, said he thought the regents have done a good job with the reorganization.

Hunter-Cevera's departure was the appropriate time for the move, he said.

"Whether UMBI has been a good investment for the state's taxpayers is in the eye of the beholder," Gust said, adding that in addition to considering how many companies have resulted from the institute's research, other factors should be considered.

"That's not the only matrix that should be used," he said. "How many patents were prosecuted? How many licenses were done?"

By those criteria, UMBI has done a good job, Gust said. But the institute's commercialization efforts might benefit from a coordinated USM-wide effort that combined the efficiency of size and the inclusion of non-academicians with appropriate business experience in the decision process.

Questions over favoritism

The university system has considered restructuring UMBI before, once after a controversy over its management.

An internal audit in 2004 dismissed allegations against Hunter-Cevera that she showed favoritism by hiring a friend, J. Kay Noel, as a consultant who was paid nearly $600,000 over four years, and that certain UMBI employees were fired for filing complaints. Hunter-Cevera has said the layoffs were related to a tight budget, but those who were laid off complained that that wouldn't explain why Noel was paid so much.

In a separate audit, George E. Dieter Jr., a former University of Maryland engineering dean, critiqued UMBI's tech-transfer practices. He recommended a "more flexible approach," more staff, a better-defined policy for dealing with intellectual property and a new Council of Technology Transfer Office for working with other university system campuses.

Those audits prompted the regents to scrutinize UMBI in 2005 to see if it should continue as a separate institute that doesn't generate tuition. The evaluation group, which included Hunter-Cevera, concluded that UMBI had sufficient indirect cost recovery from research grants and revenues from other sources to continue operations.

Two years later, UMBI, according to university system information, reported a substantial increase in external research funding. UMBI saw a 17 percent jump in total funding awards in 2006 to $26.7 million, with corporate funding rising 29 percent to $1.1 million.

Correction: This story was altered to more correctly reflect the comments of Gust regarding UMBI and the number of companies that have resulted from its research and what kind of oversight the institute's commercialization efforts should have.