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A lot of great science—and future cures—originates in a university. But while the majority of basic biological research is conducted in an academic setting, nearly all clinical trials are sponsored by industry. This is why an efficient tech transfer process is critical to bringing groundbreaking science to patients.
On October 17, a BIO Investor Forum session, Succeeding at Technology Transfer: Best Practices for Industry-Academia Collaboration, brought together industry, investors, and university tech transfer professionals to discuss how the players can reach tech transfer agreements more efficiently—and get more cures to patients.
All panelists agreed: relationships are key.
Negotiation 101
The first thing to understand is that there’s no uniformity in tech transfer negotiations, said Hernan Bazan, CEO and Co-Founder of South Rampart Pharma, which is developing non-opioid pain solutions.
The second thing, he continued, is that negotiations are all about relationships: “Think of it as a fluid relationship,” as cash and support needs evolve, he said.
All parties should keep in mind that “tech transfer is a break-even business,” said Matt Goldman, a practicing physician and Partner at J2 Ventures, which invests in biotech startups.
And as an investor, “you never want to be in a negotiation where you don’t have a walk-away provision,” continued Goldman.
Universities should listen to the researchers creating the science—and if there is something promising, “push on that,” said Kirsten Leute, Partner, University Relations at Osage University Partners, which invests in startups created out of university research. She spent 20 years in tech transfer, mostly at Stanford University.
“Do an option agreement if you don’t have the structure for a license negotiation,” added Leute. Licensing agreements are complex and require a lot of players like attorneys.
Watch: Stephanie Marrus of University of California San Francisco discusses how we can make technology transfer more successful.
Can we standardize terms and licenses?
Leute is part of a group working on a standardized term sheet and license for start-up companies, which can “help everyone come to an easier process of getting to a license.” But there’s a lot of disagreement among industry, investors, and tech transfer offices about whether that’s a good idea, and what those terms should look like.
“Not every tech transfer office wants to put standard terms out, because that puts them at a disadvantage,” noted moderator Stephanie Marrus, Managing Director of Entrepreneurship at the University of California San Francisco (UCSF).
A lot of universities have “express” or standard license terms for startup licenses, said Leute. “I have an issue with those because I don’t understand a one-size-fits-all because your technology is not like other technology.”
Furthermore: “Everyone wants to negotiate,” she continued. “Even if you say this is a no-negotiation license, everyone wants to negotiate—so what is it accomplishing at that point?”
Is tech transfer a ‘zero-sum game’?
Many first-time or early entrepreneurs begin with what Goldman calls an “antagonist perspective,” or thinking the company is dead on arrival if there’s no walk-away provision. But it’s important to keep in mind that tech transfer is a “zero-sum game,” he said.
“As soon as we remove the ‘live or die’ discussion, it becomes a more natural negotiation.”
“Not all negotiations are easy, not all negotiations are pleasant,” he continued. “If there’s something that’s truly a sticking point, the venture world can step in and negotiate effectively” to get to terms that are acceptable.
Although some universities just want the technology to exist, others want aggressive terms, especially as tech transfer can be a valuable source of income for chancellors. However, many university tech transfer offices fall somewhere in the middle, and “entrepreneurs have a tremendous amount of power in those discussions,” he said.
And working towards a collaborative approach is key, panelists agreed.
“It’s kind of like the Greek tragedy, where everybody feels the victim in the relationship,” said Douglas Crawford, Managing General Partner of Mission BioCapital, which provides early-stage capital to life science entrepreneurs. “No one has the power and we’re all struggling to kind of make it work”—and ensure great science doesn’t fall victim to what he calls “the silent graveyard” of projects that never become companies.
“If you start with a trainwreck, it doesn’t become anything but a trainwreck,” added Leute. “But if you start talking about your needs for an opportunity and then understanding the other party’s views,” you can get to a “balance of power” where critical needs are met.
“If you strike the balance well at the beginning, it helps everything move more smoothly.”
To build trust, get in the same room
A member of the audience asked how to build trust, especially among first-time entrepreneurs who may be negotiating their first deal or meeting an investor for the first time.
Bazan noted that this is why building relationships is key.
“Bring everyone into the same room and get them on the same page,” said Leute. After COVID, many aspects of the process moved to Zoom, but getting “everyone who is important to the conversation in the same room is important to the conversation and getting over these issues.”
Get to know the other principals in the deal and understand what motivates them, added Marrus. This can form the basis of the conversation, and eventually trust.
“It’s about expectation more than anything else,” said Goldman. Noting that he’s seen negotiations drag out to the point of where the tech is not as interesting or able to be patented, he said getting over those hurdles is critical to see the science get to the market.
