Stanford's licensing and equity practices with biotechnology companies
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Stanford’s licensing and equity practices with biotechnology companies Kirsten Leute Date received (in revised form): 28th April, 2005
Abstract
Keywords: technology transfer, start-up, biotechnology, equity
Stanford University’s Office of Technology Licensing (OTL) has a long history of licensing technologies to biotechnology start-up companies. This paper presents (1) examples of how the OTL works with biotechnology start-ups to negotiate licence agreements for Stanfordowned intellectual property, taking into account a new company’s scarce financial resources and needs but their large intellectual property appetite; and (2) an analysis of the rate of success of biotechnology companies emerging from Stanford based on information obtained from the equity records at Stanford’s OTL. OTL started taking equity more often in start-up companies in the mid-1990s and generally takes equity as part of most exclusive licences to early-stage companies.
INTRODUCTION
Kirsten Leute Office of Technology Licensing, Stanford University, 1705 El Camino Real, Palo Alto, CA 94306-1106, USA Tel: +1 650 723 4374 Fax: +1 650 725 7295 E-mail: [email protected]
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Stanford’s Office of Technology Licensing (OTL) was founded 36 years ago and has been working with start-ups just about as long. Situated in Silicon Valley, Stanford is surrounded by large existing companies, venture capital firms, experienced executives and a host of fledgling companies, all striving to become the next Hewlett Packard, Genentech or Intel. Add innovative scientists and enthusiastic entrepreneurs from Stanford to the mix, and the possibilities for creating ground-breaking products grow even larger. Two early examples of Stanfordassociated biotechnology start-ups are Systemix and T Cell Sciences. In the past few years, Stanford-associated start-ups included Kai Pharmaceuticals, Bayhill Therapeutics and Cellerant. How the start-ups are first established runs the gamut – from eager doctoral students to well-connected professors to local businesspeople looking for the next great idea. Stanford takes a fairly hands-off approach on its start-ups, which it is able to do in part because of the plethora of local resources available to the new
companies. If the founders need introductions to venture capitalists, OTL can provide these connections, but does not go much further in helping the company other than providing a good licence agreement for the technology on which they want to base the company. OTL understands that start-ups have many other entities to account to in their growth and development process. OTL also has constituents to consider, including inventors, administrators and the US Government, and the licence agreement includes provisions for policies and general practices that address and/or benefit these constituents. OTL’s relationship with the company is key for all parties to succeed, and OTL’s practices and policies enable it to be fairly flexible, although Stanford’s goals of research and education are primary factors. These goals may also be enha
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