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LIFESCIENCELEADER.COM JANUARY 2015 38 biotech ACADEMIC/BUSINESS PARTNERSHIPS capital (i.e., several hundred thousand dollars) can pay large dividends. Neoantigenics essentially runs in virtual mode with no brick-and-mortar. The lab space is all at UVA or at third-party contract labs. Pollok has an office at UVA as part of his EIR role. "The com- pany executes its work either through the university or through third-party contractors," he explains. He also empha- sized the value in looking for unique science (i.e., not "me too" companies) and for partners who will be transparent and not "hold you at arm's length." WHAT WORKS AND WHAT DOES NOT Once Neoantigenics had its core team together, it was able to go from term sheet to signed license in four months because the university was realistic about the financial terms it was willing to accept. The university was looking for a pay- back from the investment in the intel- lectual property, but it wasn't looking to soak the new company. In fact, a lot of the up-front expenses were waived. The university didn't take a huge chunk of the company in terms of equity; it has a single-digit minority stake. According to Leary, requests for ridiculous royalty rates strongly limit an ability to partner with someone down the line because whoever acquires this technology would carry this royalty obligation to the university. Neoantigenics has a research agreement with UVA that enables Dr. Herr's lab to continue the science on which he's been working. UVA also stood to gain from the intellectual wherewithal of the entrepre- neur, acknowledging the need for conflict- of-interest management. According to Michael Straightiff, managing director, UVA Innovation, Pollok's appointment as EIR was to UVA proper rather than to Straightiff's 501(c)3 organization within UVA. One of the roadblocks to finding early funding was a lack of definition of what the drug candidate should be. The ones who were willing to step in initially were the local angel investors and state- supported funding agencies. Substantial support came from the Center of Innovative Technology (CIT), Virginia Biosciences Healthcare Research Corporation, and the Wallace H. Coulter Foundation. "A total of 60 percent of our seed funding has been nondilutive fund- ing," explains Leary (nondilutive capital is that which does not affect the owner- ship of the company). The initial crafting of the Pfizer deal was focused on the science first and the business second. When Neoantigenics presented to Pfizer initially, they were so interested in the science that they wanted to license the technology out- right. Ultimately, however, Neoantigenics decided that they could make the antibody scaffolds themselves. They would raise money, reach out to angel investors, and partner with the best technologies in the world. Using this support, they planned to subcontract research and partner with people with optimal drug payloads. The big partner, Pfizer, remained very interested in the target, and after the company decided to create a start-up, Pfizer decided it also wanted to offer seed funding to the company. Neoantigenics holds extremely valuable working group sessions with Pfizer during which they obtain technical advisement. The arrangement with Pfizer has provided significant in-kind value to Neoantigenics, helping them to raise a total of $2 million (including other funding sources). THE BALANCE: OPTIMIZING THE BUSINESS AND UNIVERSITY INTERESTS AND INTERRELATIONS Pollok emphasized the need for a balance in decision making between the company and university, and the need for separa- tion of responsibilities of corporate and university employees. The interrelation- ship can be synergistic, but checks and balances are important. For example, the entrepreneur should take primary responsibility for any fundraising that requires offering shares, whereas the principal investigator should handle the nondilutive funding that flows through the university. The entrepreneur also should create and manage the budgets in the company. If individuals at the uni- versity are left to R&D; without oversight, the company won't get what it needs. Similarly, the company should not be able to go off to do its own thing without some tie-in and critique from the university inventor, who should have oversight of any university staff who are working on the project. It is important to note that Ph.D. students and postdoctoral fellows are looking to get published for their work for Neoantigenics, which is encouraged by the company. But there has to be a balance between meeting the corporate develop- ment goals and the publication goals of the university trainees. An example might be a student wanting to find something novel by spending extra time on a specific project that the company hasn't directed. Neoantigenics doesn't want to discourage such research, but it also needs to manage what is contracted with UVA. Furthermore, there is an economic impe- tus for scholastic research to align with corporate goals as less money becomes available from NIH for the basic research. "To keep these labs doing their research, I think more of this money is going to come from industry," according to Leary. "Our relationship is with John Herr. He has the obligation with his students to publish and find novel science, but also to meet the goals of the industry research agree- ment that is funding his lab." Leary discussed one very important business optimization question about when to shift the emphasis over to the expertise of Big Pharma. Early on, Pfizer wanted to license the target outright. In that case, it would have set up a research agreement with UVA to get the basic science done. The research would have continued to be done at UVA until it The company executes its work either through the university or through third-party contractors. B R I A N P O L L O K , P H . D . CEO, Neoantigenics By C. Reuben FROM PUBLISH-OR-PERISH TO PRODUCT CREATION – PUTTING YOUR RESEARCH INTO ACTION