The University of Minnesota and University Enterprise Laboratories are close to a deal that will create a medical device incubator at the UEL facility in St. Paul, Minn., according to sources and documents obtained by MedCity News.
The 1,600-square-foot space, tentatively called MDC Launch Pad, will house early-stage companies created by graduates of the university’s one-year Medical Device Center Innovation Fellowship Program.
“This dedicated space will allow the fledgling business concepts the opportunity to migrate from the University setting out into the commercial space, while still enjoying the advantages of being clustered in a highly supportive environment,” according to a draft UEL document.
Labyrinth, a start-up focused on sinusitis, and ForSquare, which is creating an implantable device to treat pulmonary hypertension, will be the first companies to inhabit Launch Pad, said Marie Johnson, director of the fellowship program.
Launch Pad will go a long way to boost UEL’s visibility in the Twin Cities by establishing a formal, direct and highly visible relationship with the university. UEL is still negotiating with the university to use the Medical Devices Center name. If that falls through, UEL will simply name the facility UEL Launch Pad.
First launched in 2004, the $20 million UEL facility, located at an old Target distribution center, was supposed to be the beginning of a bioscience corridor along University Ave. in St. Paul.
As its name suggests, UEL’s original mission was to house companies spun out of the university. But the start-ups failed to emerged, mostly because the university’s technology transfer office was a mess at the time. Also, a planned bus line connecting the school’s main campus to UEL fizzled out.
UEL already is planning to invest $20 million to add 40,000 square feet of lab and office space on 3.5 acres of land next to the facility.
According to the documents, the UEL will defer rent until the start-ups are able to raise money from investors. If that happens, UEL would either receive the rent or equity in the companies. However, the deferred rent is unsecured, meaning UEL will receive nothing if the companies fail.
“The economics of the MDC Launch Pad are structured as to not put an undue burden on these early stage businesses and yet provide a mechanism for the UEL to recoup most of its costs,” the documents say. “In some cases, the businesses will be unsuccessful, in which case the UEL will simply be out the money owed to them.”
The start-ups will occupy Launch Pad for 12 to 18 months, and then move to some other UEL space or another location.
“The primary purpose for the tenants to be in the space is to Launch! by finalizing their business plans, make improvements to their products, build out their operating team, establish partnerships, form a board of directors and raise their initial rounds of financing,” according to the documents.