Monday, January 18, 1993
What's driving spate of spin-offs
By Karen Bernstein
Even though biotechnology companies are themselves young, they frequently spawn new companies. With three new ones announced in the past week - Apoptosis Technology Inc. by ImmunoGen Inc., CollOptics Inc. by Collagen Corp., and Vaxcel Inc. by CytRx Corp. - BioCentury asked several managers what goes into the strategic decision to start a company versus keeping a project in-house.
The key themes that emerged were increased upside for the parties involved in the new company and reduced costs for the parent company. More specifically, forming a new company makes it possible to provide a new team with equity incentives, coupled with the ability to provide an outside partner with sufficient equity or reward potential. And it permits funds to be raised for the project without diluting shareholders of the parent company while getting the project off the parent company's balance sheet.
Apoptosis' technology for the regulation of programmed cell death comes from Dana-Farber Cancer Institute, while ImmunoGen (IMGN) will contribute funding, experience in taking products from the bench into the clinic, and management. IMGN will own 70 percent of Apoptosis, which will target cancer, viral diseases, inflammation, autoimmune disorders, transplant rejection and neurodegenerative disorders.