How to make your spin-off journey a success?  

Setting up and developing an innovation through an academic spin-off company can be a rollercoaster, especially when you are not experienced in setting up a business. In this blog, we identify three phases spin-off companies go through, and seven early hurdles that need to be  overcome to set you up for success.

How do you make sure that you reach the end without going completely off-track? In this blog, based on interviews with spin-off founders, CEOs and TTO employees, we identified three phases spin-off companies go through, and seven early hurdles that need to be overcome to set you up for success. But first, it is important to understand that every company follows its own path, has an individual and unique roadmap and that failure is not uncommon (due to e.g., unexpected biological side-effects or difficulties in clinical translation).

The three identified phases

We identified three non-linear phases related to business readiness and matched those to the technology readiness levels (TRLs), see also the figure below (not fully exhaustive).

Phase 1 is the research phase and relates to TRL1-3/4 (fundamental research to preclinical experiments). This is a very essential phase before the spin-off is established and aims to gather strong and thorough scientific data, perfecting the innovation. This is also the when the Technology Transfer Office (TTO) is contacted, the patent is filed, a team is set-up, the market is validated (see quote below from spin-off interviewee), and the first business model is drafted. When a spin-off reaches all the milestones discussed later in this blog, the company can be established resulting it to move to phase 2.

‘But again, it may be great science and it might be good for a publication, but it might not be good for the market and so creating companies around technologies that probably don’t have a market future, is not a good idea.’

In phase 2, the company is further built and developed, and the technology is advanced from TRL 3/4 towards TRL6/7 (scale-up, GMP manufacturing, from preclinical to phase I/II clinical studies). In this phase it is very important to build the team’s expertise, acquire enough funding, create a thorough business plan, an investor pitch, de-risk where possible and create early market traction (e.g., contracts, collaborative agreements). Due to very high costs and risks, most biotech companies need support from a pharmaceutical/biotech partner to commercialise their product, in case of good (pre-)clinical results:

‘It’s very unlikely that it will be able to bring the drugs by itself in the market.’

Phase 3 is reached when the spin-off moves towards commercialisation/ into an acquisition or partnership and in this phase the product is developed from TRL 6 towards TRL 9 (towards phase III clinical studies, market authorization, market launch and post-market surveillance).

Have you reached all of the milestones before establishing a spin-off company?

We have already briefly mentioned the seven milestones we have identified that need to be reached to successfully start a spin-off. These are:

• IP is protected by a patent and licensed to the spin-off.
• Clear deal terms are in place with the TTO, and communication is transparent.
• There is a committed team covering both – scientific and business expertise (see also previous blog6 .)
•  Initial funding is secured, and a financing strategy is in place.
• There is sufficient market potential for the innovation.
• At least TRL3 – Proof of Concept is reached and possible scaling-up and manufacturing under e.g., GMP conditions is validated.
• There is a validated business case and de-risking strategy.

Get in touch!

Do you need support in additional market validation or are you struggling to overcome the identified hurdles? We, at ttopstart, are here to guide you and to co-develop a personalized roadmap towards commercialisation. Get in touch with us by filling out the form below!