Jonathan Lai, Ph.D., professor of biochemistry at Einstein, engineers peptides, proteins, and antibodies into novel therapies and vaccines. In 2016, he helped develop the first antibodies that can potently neutralize the two deadliest ebolavirus strains. Most recently, he has published findings on a promising antibody therapy for infection by Chikungunya virus, a globally emerging mosquito-borne infection for which no vaccines or treatments yet exist. But he’s the first to admit that the business of science is not one of his strengths.

Jonathan R. Lai, Ph.D.Faculty ProfileResearch Profile

“I’d say my business acumen is south of mediocre and my legal acumen is worse,” he says. “So it’s good to have a team to help relieve me of the business and legal details so that I can focus on the science.”

That team is Einstein’s Office of Biotechnology and Business Development (OBBD). For Dr. Lai and other basic researchers, the OBBD helps push their discoveries further along the drug-development pipeline.

Basic scientists at Einstein and elsewhere depend heavily on research support from the National Institutes of Health (NIH). But NIH funding usually ends when research moves beyond animal model studies. At that point, scientists and their institutions typically license patented discoveries to biotech or pharmaceutical companies and hope those companies will develop them into drugs. But two federal small-business funding programs that have been around for decades have become increasingly  popular among basic science researchers with an entrepreneurial bent.

Introducing the Small Business Model

The two programs—the Small Business Innovation Research (SBIR) program and the Small Business Technology Transfer (STTR) program—help scientists hold on longer to their discoveries. Both programs provide funds to small businesses for early-stage research and development (R&D); the small business can be a start-up formed by Einstein scientists around their inventions or discoveries that have become Einstein intellectual property (IP).

Funding for the SBIR and STTR programs comes from the R&D budgets of the Department of Health and Human Services, the Department of Defense, and numerous other agencies. In 2018, these agencies allocated funds totaling nearly $3 billion to the two programs.

“It’s a long journey from the bench to the proverbial bedside,” says Janis Paradiso, M.B.A., C.L.P., director of Einstein’s OBBD. “Mechanisms such as SBIR and STTR, which provide funding to further develop technologies that don’t require diluting or surrendering ownership of the business, are certainly helpful.”

Ms. Paradiso notes that her office still devotes a majority of its time to the task of negotiating with biotech companies and investment groups that want to license Einstein’s patents. But increasingly, she says, Einstein scientists are asking her office about forming their own companies around an invention or discovery they’ve made at the College of Medicine and have become Einstein’s IP.

When researchers decide they want to form their own start-up company and pursue an SBIR or STTR, the OBBD (usually in conjunction with the scientist’s lawyer) draws up the necessary legal framework for how the new start-up company can gain rights to what has become Einstein IP.

Central to this framework is a limited two-year license (“faculty-initiated start-up option”), giving faculty entrepreneurs time to establish their new business and to serve as its chief executive officer (CEO). This framework and temporary C-level role of Einstein faculty has been previously blessed by Einstein’s Conflict of Interest Committee. By the end of that two-year period, the researcher is expected to have recruited a business partner to take the lead in negotiating the definitive license agreements with Einstein and securing substantial funding, which can include receiving an SBIR or STTR award.

SBIR vs. STTR

SBIR and STTR are both federally funded programs supporting innovative R&D that has the potential to yield beneficial products, processes, or services. In both programs, the first step is to create and register a small business, since all funds must be applied through and received by that business. But there are important differences:

In the SBIR program, the startup business is responsible for performing the R&D work, but can also subcontract a small percentage of the work to research institutions or other third parties. The SBIR’s PI must be primarily employed by the business and spend more than half of his or her time working there.

The researcher should step down as CEO once the intellectual property is licensed but can stay on as chair of the company’s advisory board. For those willing and able to temporarily step away from their academic work, an SBIR can be an appealing option, particularly since there are usually more funds available within the SBIR program than within the STTR program.

The somewhat different STTR program facilitates technology transfer from research institutions such as Einstein to small businesses. In this program, the start-up receives the funding but must collaborate with a single partnering research institution. At least 40% of the R&D must be done at the business and at least 30% at the research institution. Many researchers can arrange to continue working on their discoveries, although it is not required. The PI need not be employed by the business but often maintains a relationship with it, such as serving as a scientific consultant.

Funding for an SBIR or STTR program usually comes in two phases:

• Phase 1
  Six-month feasibility study, funded by a grant of up to $252,131 (as of November 2018).
• Phase 2
  After a successful phase 1,  the researcher can apply for phase 2 support: an award of up to $1.6 million to cover two years of research.

Start-ups in Action

Dr. Lai is one of several Einstein researchers using either the SBIR or STTR programs to move their discoveries toward the marketplace. The programs support his efforts to develop vaccines and treatments against deadly ebolaviruses.

Not all SBIRs have to be initiated by the researcher. In Dr. Lai’s case, a small biotechnology company, Celdara Medical of Lebanon, New Hampshire, approached him about pursuing SBIR funding around his discovery. Celdara is licensing the antibodies that Dr. Lai’s group invented against a strain of ebolavirus. Studies are now being done in nonhuman primates. His STTR, conducted with Integrated BioTherapeutics of Rockville, Maryland, is developing therapies against several other ebolavirus strains. In the latter case, Dr. Lai is working on a discovery made at another institution, but he is the research institution partner with whom the small business collaborates.

“The infectious disease field is pretty dependent on grants, and basic research grants from the NIH are still our meat and potatoes,” he says. “But SBIRs and STTRs are definitely helpful.”

Dr. Lai’s SBIR with Celdara has turned into such a positive experience that he may launch a new start-up, with his M.D./Ph.D. student, around his Chinkungunya discoveries. “I learned a lot in the last few years about start-ups—mostly how much more I needed to learn if I wanted to launch one,” says Dr. Lai.

The OBBD helped steer Dr. Lai toward other resources, including the Bio & Health Tech Entrepreneurship Lab NYC (eLabNYC for short). The six-month training and mentoring program for aspiring entrepreneurs provides extensive support to scientists interested in forming new biotech and health tech ventures. eLabNYC features a mini-MBA, expert coaching, pitch prep, and access to entrepreneurs, investors, and mentors.

“The eLabNYC program was immensely helpful,” Dr. Lai says. “I feel much more equipped to ask the right questions, even if I don’t have the answers.”

Another beneficiary of both the SBIR and STTR programs is David J. Sharp, Ph.D., a professor in the department of physiology & biophysics who studies the role of microtubules in cells.

Dr. Sharp’s research focuses on fidgetin-like 2 (FL2), a microtubule regulatory enzyme that puts the brakes on skin cells as they migrate toward wounds to heal them. Reasoning that reducing FL2 levels might enable healing cells to reach their destination faster, he and his team have developed small interfering RNA molecules (siRNAs) that specifically inhibit the genes that code for FL2 and have achieved promising results in speeding wound healing and for other purposes as well.

David J. Sharp, Ph.D.Faculty ProfileResearch Profile

Dr. Sharp is currently involved with one SBIR and two STTRs. The SBIR, for which he founded a company called MicroCures, is developing new ways to heal wounds faster. Einstein’s OBBD negotiated the licensing arrangement with the company. MicroCures has completed Phase 1 of its SBIR and recently received $1.5 million in Phase 2 funding to formulate his wound-healing drug with a Good Manufacturing Practice-designated manufacturer and to carry out toxicology testing on those formulations.

Dr. Sharp’s two STTRs are  collaborations in which MicroCures is subcontracting research to Einstein. One STTR project aims to find  therapies to heal corneal wounds; the goal of the second STTR is  to enhance cavernous nerve regeneration. Damage to the cavernous nerve is a frequent side effect of prostate surgery, resulting in erectile dysfunction.

Mechanisms such as SBIR and STTR, which provide funding to further develop technologies that don’t require diluting or surrendering ownership of the business, are certainly helpful.

Janis Paradiso, M.B.A., C.L.P.

Dr. Sharp says that creating a new company was a “long slog” but that he values the SBIR for giving him the opportunity to carry out his research. One critical step, he believes, was finding the right partners.

“Scientists should never assume that they know business,” he says. “So when other researchers ask me about the SBIR and STTR programs, I always advise them to bring people on board who have business acumen, who have built a company and kept it afloat. I thought I knew nothing when I started—and I knew less than that.”