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Multi-party auction used to create U of Arizona start-up culminates in $35M acquisition

By Jesse Schwartz
Published: December 6th, 2017

When you have a mature product and several potential buyers, a tech transfer office can find itself in the unusual position of dictating terms and waiting for the best offer. Tech Launch Arizona, the TTO at the University of Arizona, enjoyed that experience recently with the creation of what ultimately became a successful start-up company that was acquired in September.

The start-up, SinfoníaRx, since 2013 had been a wholly-owned subsidiary of Sinfonía HealthCare Corporation and was acquired by Tabula Rasa HealthCare, a public company that provides individualized, data-driven technology solutions to the healthcare industry. The start-up’s state-of-the-art software system proactively evaluates hundreds of millions of prescriptions and medical claims annually to identify opportunities to reduce the risk of adverse events and drug interactions, improve medication adherence, and look for opportunities to reduce the cost of care.

The original deal to create SinfoniaRx and license the medication management technology created at UA’s College of Pharmacy involved a unique auction approach that was designed to ensure alignment with the university’s goals and ensure a market rate for the technology. Kevin Boesen, PharmD, had developed the software underlying the company more than a decade ago and established the Medication Management Center at UA. Its goal was to work with doctors and other healthcare providers to reduce and prevent dangerous drug interactions among the many patients — particularly older patients — who take multiple prescription drugs. It’s a costly problem, and the center gained a following, using its own pharmacy students to help staff the program.

So when Boesen wanted to scale up, he already had a proven product and a customer base, giving UA’s commercialization arm, Tech Launch Arizona, plenty of leverage and plenty of interest. TLA — in its very first licensing deal for the university — took a “multiparty structured auction approach” to identify the best fit.

The asset was unlike most handled by the TTO, says David N. Allen, PhD, vice president of Tech Launch Arizona. “It was a software product that had been beta tested, in essence, and there was a customer paying for it. That usually happens later,” Allen says. “It was a mature asset, a much more mature asset than most of what you see in tech transfer.”

Allen notes that finding a licensee that could provide the right relationship was particularly important to the university. “The beta testing and first customer was done with pharmacy students who were the ones manning the desk and getting the warning about a drug interaction, and then they would convey that to the doctor,” Allen says. “So the university was providing a service and this became a very attractive aspect for students to come and study pharmacy here. The company was growing and many of them could get paying jobs and learn the profession as they go.”

Continuing that involvement with pharmacy students became one of the fundamental conditions for licensing the software, Allen says. That made the search for a licensee different than most efforts in which the license comes with no such conditions, he says.

The university ended up with three different suitors who could meet that condition, says Doug Hockstad, assistant vice president of technology transfer. From that point, Tech Launch Arizona asked them to provide their best terms for licensing the software instead of setting those terms itself, creating what amounts to a multi-party auction for the start-up.

A detailed article on the auction process appears in the November issue of Technology Transfer Tactics. To subscribe and access the complete article, as well as the publication’s rich 10-year archive of best practices and success strategies for TTOs, CLICK HERE.

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