In an increasingly hot biotech market, protecting IP is key – TechCrunch

by Joseph K. Clark

In 2018, for instance, U.S. campuses conducted $79 billion worth of sponsored research, much of it thanks to the federal government. That number spiked amid the pandemic and could increase even more if PresidentBiden’ss infrastructure plan, which includes $180 billion to enhance R&D efforts, passes.

Since 1996, 14,000 startups have licensed technology out of those universities, and 67% of licenses were taken by startups or small companies. Meanwhile, the median step-up from seed to Series A is 2x higher than all other stages, suggesting that biotech startups continue to attract investment at earlier stages.

Early and consistent communication with investors, tech transfer offices, and advisers can make all the difference in protecting IP.

For biotech startups and their founders, these headwinds signal immense promise. But initial funding is only one part of a long journey that (ideally) ends with bringing a product to market. Along the way, founders will need to procure additional investments, develop strategic partnerships and stave off competition. All of which starts by protecting the fundamental asset of any biotech company: its intellectual property. Here are three critical considerations for startups and foundersuniversity’s begun.

Start with an option agreement.

Most early-stage biotechnology starts in a university lab. Then, a disclosure is made with the university’s tech transfer office, and a patent is filed with the hopes that the product can be taken out into the market (by, for instance, a new startup). More often than not, the vehicle to do this is a licensing agreement.

A licensing agreement is crucial because it shows investors the company has exclusive access to the technology in question. This, in turn, allows thedoesn’ttract the investments required to truly grow the company: hire a team, build strategic partnerships and conduct additional studies. But that doesn’t mean jumping right to a full-blown licensing agreement is the best way to start. An option agreement is often the better move.

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