I work in an academic lab and we think that we have a good potential Cell Therapy. We want to start a small company to explore further, but would like some advice on how to interact with the University. Any thoughts?

Answer

Deciding when and if to “spin-out” a company from an academic lab largely depends on the ability to secure the intellectual property (IP) rights from the academic institution, the ability to finance the new entity, and the ability to properly manage the new entity in order to drive the technology forward towards commercialization.

The first consideration for establishing a new entity should be the ability to “spin-out” the IP from the university into a new entity. These discussions should take place with the university’s technology transfer office. The tech transfer offices of universities are responsible for out-licensing IP from academic labs and are charged with generating licensing revenue for the university. Thus, this is a good place to start your conversations with your host institution.

The second consideration when establishing a new spin-out, and arguably the most important and often overlooked, is financing. Clearly, without the proper financing even spinning out the IP will not be feasible. Beyond securing the necessary financing to secure the IP rights, it is critical to have the necessary funds to advance the technology as well as pay salaries and any overhead expenses (many spin-outs are virtual companies and have a low cost structure with minimal overhead).

The third key consideration is management. How much time does the academic team plan to devote to the spin-out? Will an experienced management team be hired to drive development and commercialization? Having a quality management team in place is often a critical component of securing financing from the private sector.

Other factors to consider when interacting with the university to consider is will the spin-out require access to university facilities and equipment, will the university want to retain any of the IP either for research or for certain commercial applications, and will the university want equity ownership in the new entity. I would recommend starting your conversations with the tech transfer office as each university is slightly different and the tech transfer office should be able to provide their details regarding their standard policies and help you think through the various options.