Reg Kelly has an infectious smile that seems to be part childlike wonder and part wise guy. The fun, though, is in listening to Kelly talk. His words come in enthusiastic bursts, coated in a Scottish accent that makes everything he says seem just a tad more colorful. And what he says conveys just enough distaste for authority to give him what amounts to, in the bureaucratic world of academia, a bad-boy edge.

QB3 is one of four California Institutes for Science and Innovation established in 2000 by then-Governor Gray Davis. Headquartered at the Mission Bay campus of the University of California, San Francisco, QB3 extends across three University of California campuses—UCSF, the University of California, Berkeley, and the University of California, Santa Cruz. The state created the multidisciplinary institute to enlist the quantitative sciences such as physics, chemistry, engineering, and mathematics to tackle big questions of biology.

As the institute’s executive director, though, Kelly believes research breakthroughs aren’t enough. He notes that QB3’s mandate is not only to improve public health, but California’s economic well-being as well. Toward that end, QB3 has aggressively pursued relationships with industry. The landmark 10-year, $500-million agreement between British oil giant BP and UC to conduct biofuels research was led by representatives of QB3 at UC Berkeley, the home of cutting-edge work in synthetic biology, which is central to biofuels research.

In addition, QB3 has formed partnerships with U.S. conglomerate General Electric and Japanese imaging products maker Nikon that have brought state-of-the-art imaging equipment to the institute’s core facilities. And in the field of biotechnology, QB3 has negotiated university-wide research agreements with top firms like Genentech and Amgen. As this article went to press, QB3 was in final negotiations with one of the world’s largest pharmaceutical companies to create a program of ongoing joint research.

Such deals have brought controversy to the university. The sheer size of the BP transaction attracted criticism from some activists who claimed that commercial interests, not the spirit of free scientific inquiry, would shape Berkeley’s research agenda. Others worried about a provision that would enable a large group of BP employees on campus to conduct secret, or proprietary, research. “The kinds of involvements and entanglements with private industry that are routine now would have been scandalous a generation ago,” says Marcy Darnovsky, associate executive director of the Center for Genetics and Society, an Oakland, California-based public policy organization. “We really need to ask how the new commercial environment could be affecting the quality, the disinterestedness, and the public interest values we bring to decisions about research paths.”

But Kelly insists that commercial relationships are essential to QB3’s mission. He argues that taxpayers are supporting research not out of abstract curiosity, but because they hope it will have an impact on diseases that affect them or their loved ones, and will help create jobs. “The only way you can improve health is by drugs, diagnostics, and devices, and all of those things require you to interact with industry,” he says. “I have been getting some pushback from people saying this is not something we should be doing—we should not be trying to stimulate the economy through our research. We’re almost entirely funded by the National Institutes of Health, and that’s goal No. 3 of the NIH.”

Kelly is an unlikely evangelist for strengthening university/industry ties. In fact, he remembers blasting colleagues with scathing criticism for entering industry in his earlier days at UCSF. Recalling his views in those days, he describes himself as having been a “very left wing, standard San Francisco progressive.” “Those of us who go into science reject the concept of wanting to become rich,” he says. “We believe there’s a higher value and the higher value is to become an academic and try to gain knowledge for mankind. That doesn’t involve personally making money.” 

While his own financial ambitions haven’t changed—any outside fees he gets for speaking and consulting he says he turns over to QB3—his attitude about the relationship between academia and industry has. He credits the transformation to an epiphany that came in 1990 when Kelly went on a date with Rae Lyn Burke, who would become his third wife. The event they attended together was a Christmas party for Chiron, a biotech company co-founded by his former UCSF colleague Bill Rutter.

Several years earlier, Burke had joined Chiron as its sixth employee, advancing as the company grew to become its senior director of virology. What struck Kelly, he recalls, was how the party, which was held at the Academy of Sciences in San Francisco’s Golden Gate Park, included people from all walks of life and all ethnic groups. “I had this revelation that by creating Chiron, Bill Rutter had created 3,000 jobs. How many jobs had I created being an ivory tower academic?” he asked himself. “I started realizing this was not about wicked business. In fact, creating jobs for people is a worthy goal. That’s what industry did.”

Descended from a long line of herring fisherman, Kelly was raised in a working class family in Edinburgh, Scotland. He was born a Wallace, but became a Kelly when he was four after his father had died and he was given the surname of his stepfather. His mother scrubbed factory floors for a living. His stepfather worked as a window washer, and later became an auto mechanic.

But with the rise of the labor party after World War II, new government policies provided Kelly with a free education at the University of Edinburgh, where he earned a degree in physics. He pursued graduate studies at the California Institute of Technology, a place he says was skilled at “retreading” physicists to become biologists.

In 1969, he went to Harvard University for post-doctoral work under Nobel laureate Arthur Kornberg, who Kelly says ran his lab like a “marine boot camp.” Kelly performed important research in DNA replication there, but had a combative relationship with Kornberg that extended beyond science to their views on that era’s tumultuous political and social changes. Though Kelly was a rising star within molecular biology, their rocky relationship contributed to his decision to turn his attention to neuroscience. Kelly took an offer to join the faculty at UCSF and redirect his research efforts in the hopes of understanding the molecular basis of memory.

Today, he laughs about this decision, saying it was far too early to dive into molecular neuroscience because the tools necessary to explore the essential problems didn’t yet exist. At UCSF, though, Kelly performed foundational research on proteins in brain synapses. He rose through the administrative ranks, and by 2000, was executive vice chancellor of research at UCSF. At the time, the university was in the process of opening a second campus in San Francisco’s Mission Bay, an industrial wasteland of abandoned rail lines and warehouses soon to be transformed into a research, clinical, and corporate biomedical complex.

It was a prestigious position, but Kelly was miserable. His job was not to develop ambitious projects, but rather to see to it that superstar researchers relocating to the new campus were kept happy, while also making sure the university adhered to regulations, processed animal testing paperwork, and complied with institutional review board requirements. Rather than fade into retirement, he wanted to do something dramatic. By 2004, he decided to resign and sail the world.

Christopher Thomas Scott, who served as an assistant vice chancellor at UCSF, says the happiest he’s seen Kelly is when he’s at the helm of his boat with the sails full of wind. “QB3 is kind of his boat and he’s having a great time with it because he can take it where he wants,” says Scott, now director of Stanford University’s Program on Stem Cells in Society. “That’s different than being the No. 2 person where you are in charge of thousands of other people’s boats. It’s the difference between being the harbor master and the captain.”

At QB3, Kelly and his team have been building an entire ecosystem designed to link disparate researchers on QB3’s three campuses, provide sources of funding for translational research, fuel entrepreneurship, and carry discoveries from the lab to the marketplace. The first piece of that came with the establishment of “knowledge brokers,” who now exist at each of QB3’s facilities. Their role is to interview faculty to learn about their research interests, as well as their interest in working with industry, and to serve as a point of contact for potential industrial partners in search of specific expertise within the university.

“This kind of atmosphere didn’t exist at UCSF,” says Marc Schuman, clinical director for QB3. “It’s been extremely frustrating before now. There hasn’t been an administrative unit or any kind of unit that has had this philosophy. If a company was interested in doing this kind of thing, where would they go? They could go to the chairman of a clinical department, or a basic department, and often that doesn’t work out.”

“Reg was very clear at the outset how important this was to him, to QB3, and the mission of QB3,” says Sean Johnston, senior vice president and general counsel for Genentech, who negotiated the agreement on behalf of the company. “It really was a much broader vision, which was to bring together scientists within the state, who are doing great things, and let them do more. Out of that will come great benefits for the state and the citizens of the state. Whatever financial returns there might be at the end of the day through royalties or otherwise would be icing on the cake.”

The belief at QB3, though, is that it is not enough to work with established companies. Fostering startup formation is also an important role. In part, this reflects a belief that most things coming out of the university are too risky or too early-stage to be appealing to existing businesses, and that a small entrepreneurial venture may be better able to nurture an early-stage invention.

 “The university is very concerned about managing its risk and its reputation,” says Doug Crawford, director of industrial relations for QB3. “It’s created a lot of officers and offices to mitigate the university’s risk, but they have not invested in officers whose job it is to capitalize on opportunities.”

QB3 has been assembling a toolkit to help foster entrepreneurship among the faculty. It provides seminars, networking opportunities, and guidance from mentors such as venture capitalist Brook Byers. The institute has also assembled a clinical advisory board to help researchers determine the practical applications of an invention, and what value it might have for doctors or patients. Should a researcher hope to commercialize a discovery, QB3 has sought to provide new sources of funding, and even incubator space for fledgling companies. Such activities reflect how much the environment has changed since UCSF’s Herb Boyer joined with the venture capitalist Bob Swanson to launch Genentech.

Through QB3, Kelly has been leading a cultural change at UC, and at the same time, trying to institutionalize that change. Perhaps the most far-reaching project that will emerge from QB3 is one that within the institution is being dubbed the “95 Theses,” a nod to Martin Luther’s treatise that sparked the Protestant Reformation. This effort, led by QB3’s Crawford and Lee Benton, senior counsel at Cooley GodwardKornish, involves interviews with industry and academic participants to identify obstacles to successful collaboration. The goal is to draft a comprehensive proposal to overhaul outdated regulations and practices that have given UC a reputation as being unduly bureaucratic and difficult to work with.

Rather than address individual problems one at a time, the plan is to identify a core set of issues and resolve them at once. This ranges from outdated rules written for an era when concerns about university-industry alliances focused on mining and not biotechnology, to an institutional reward system that discourages entrepreneurial risk-taking.

“If anything goes wrong at UC, it ends up in the headlines of the San Francisco Chronicle,” says Cooley’s Benton. “Over time, UC’s become very risk averse. Reg doesn’t think that way at all. Reg has goals in terms of industry cooperation. He is very sensible to think through what’s needed to get something done that’s a win-win situation for both, and do it on that basis.”

“What we are doing here is a way of making sure California keeps funding its university, and, at the larger level, that the federal government keeps funding research,” he says. “Unless we make it really clear that we are committed to trying to extract a societal benefit from all these tax dollars, they will disappear.”