A framework to take Canadian founders from lab to market with fewer headaches

The Building Biotech series explores how this country can become a global player in life sciences by streamlining the entrepreneurial path to commercialization.

Canada is a global leader in scientific R&D, thanks to the country’s dense network of universities, hospitals and other institutions. But translating that publicly funded research into products or services is a different story. Canadian innovators looking to turn their ideas into viable startups are hindered by fragmented rules around the ownership of intellectual property (IP), limited early-stage funding and a protracted tech transfer process. Only a fraction of patents at Canadian universities result in licensing agreements.

This is familiar territory for Kyle Briggs. An entrepreneur, academic and advocate, Briggs received a PhD in biophysics from the University of Ottawa, where he and three colleagues co-founded Northern Nanopore Instruments, a biotech company based on their research on solid-state nanopore technology — which they then sold. That experience of navigating the rocky path to commercialization — a labyrinth of protocols, rules and relationships — prompted Briggs to develop the Simple Agreement for Innovation Licensing framework (SAIL), a framework with a concrete goal: to clear bottlenecks and move ideas to market faster.

It’s fair to say Briggs spends much of his time contemplating Canada’s innovation challenges: He’s testified in the House of Commons about the impediments that prevent researchers from commercializing their discoveries, dissects the finer details of the tech ecosystem on his Substack and mentors aspiring founders as an entrepreneur in residence at the University of Ottawa. Here, Briggs breaks down what went into devising SAIL and how this framework addresses issues that are unique to the Canadian landscape.

What motivated you and your colleagues to develop SAIL?

Policy fragmentation is a big problem in Canadian innovation. Our universities all have different intellectual property policies. There’s no overarching federal level guidance on transfer outcomes. The process tends to take a long time and the licence that comes out is a bespoke thing that’s literally written from scratch.

How does SAIL address the challenges of licensing IP?

Think of SAIL as a plain-language contract that is well understood by everybody in the ecosystem — it’s an attempt to do for tech transfer what Y Combinator’s SAFE agreement did for angel investment. The intention is to reduce the time it takes to licence technology. It’s also meant to settle a debate about the extent to which universities can or should benefit from the commercialization process. Equity, royalties, upfront fees and milestone payments tend to become points of friction in the negotiation process, so SAIL tries to tie the university’s stake to the outcome of tech transfer and to  their contribution to help startups get things off the ground.

What was involved in the development of this framework?

There have been three versions so far. For our latest version, we hosted a round-table discussion at the University of Ottawa and invited innovators, university partners, investors, early-stage investors, tech transfer offices from universities, industry groups and government funding bodies. We spent a full day tearing version two to shreds and identifying where there were problems.

We’re still in the university pilot phase, so things are moving at the speed of university administration. What’ve been able to do so far is to get everybody in the tech transfer community to talk about this and engage with these issues. I’m hopeful that once the initial pilot goes through, there will be more that follow. It’s through widespread adoption that these things become more and more useful.

We often hear that Canada should just follow the lead of other regions when it comes to commercializing research — that we should adopt the model used in Boston, for instance. How have policy-makers dealt with these issues in other territories?

The United States passed the Bayh-Dole Act in 1980 as a way to reduce the kind of fragmentation Canada faces today. Prior to that, publicly funded research institutions in the U.S. didn’t have a path out of the lab. While the act didn’t prescribe institutional policy for tech transfers, it dictated target outcomes and said that institutions must attempt commercialization, and that they must favour small businesses as receptors of IP because there was ample evidence that startups are better at disrupting than incumbent firms. Together with the SBIR program, which bridged the “valley of death” funding gap, the Bayh-Dole Act has been working for the better part of 50 years now — The Economist reported that it  was single-handedly responsible for stopping America’s slide into industrial irrelevance. But you can’t just import an American policy into Canada. That model dictated tech transfer outcomes but said nothing about funding the process. They could get away with that because the U.S. had a risk-tolerant private capital pool ready to invest, which doesn’t apply here.

Aside from the fact that SAIL is expressly designed for the Canadian market, what are its other distinctive characteristics?

We’ve come up with many core principles. We don’t want a company to just put an idea on a shelf and nothing ever gets built with it — we want publicly funded research to be used to create socioeconomic benefits for Canada. We also believe that IP ownership should transfer from the research institution to the licensee when there is sufficient evidence to conclude that the licensee’s business is viable. There should be a pathway to ownership. Of course, universities can’t just give IP away, so SAIL is trying to balance this by building a prenegotiated triggering event, where once the startup has hit that milestone, they have the option to take ownership.

Given that we have a lack of early access to funding, every dollar available should be used to build value in the startup. Universities should avoid charging fees and royalties when early-stage companies are most vulnerable. We also believe the valuation of the startup should be deferred while the market is being established. The idea is that at the moment of tech transfer, these technologies are still speculative. Also, it’s important that a licence template should be understandable and usable by someone without legal training. We put a huge amount of effort into writing in plain language.

One can see why this framework would appeal to aspiring founders. Are there comparable elements to address the concerns of institutions?

Supporting high-risk commercialization activity should be rewarded with equity proportional to the costs incurred in doing so. Universities support companies by absorbing patent cost, waiving lab space rentals, providing access to equipment and more. They can add all that up and make it convertible debt, which later turns into equity proportional to the university’s contribution to that early-stage firm.

As someone who’s straddled the worlds of science and business, do you have any key takeaways that have informed your approach to SAIL?

I learned quickly that scientists and business people speak very different languages. As scientists, we’re trained not to write anything down until we’re sure we have solid evidence behind it. In a startup context, if you wait with that uncertainty, you miss the boat. You have to move when there’s still significant uncertainty, pick a direction and live with the ambiguity. To a scientist, what sounds like wild speculation is the story that needs to be told to a business crowd.

As a scientist, I often struggled to present that sort of moonshot, pie-in-the-sky vision. A big part of the value of entrepreneurship is becoming comfortable with discomfort. It never really goes away. You need to be comfortable with that. If you do, it becomes a positive thing and a driver for growth.

About this series

The Building Biotech series explores various barriers biotech startups face in commercializing their solutions in Canada. We conducted in-depth interviews with 50 experts nationwide, issued a national survey to 320 biotech companies (receiving responses from 33 firms), and held a roundtable discussion with 25 sector leaders. Find other articles in the series here.