Dow Jones Newswires

Article 1 of 2
U Of Texas Takes Start-Up Equity For Technology License
By Bob Sechler
 
05/18/2000
Dow Jones News Service
(Copyright (c) 2000, Dow Jones & Company, Inc.)

 

(This repeats a story originally published late Wednesday.)

   

AUSTIN, Texas -(Dow Jones)- The University of Texas at Austin will take an equity stake in Florida-based start-up Labnetics Inc. in exchange for a licensing agreement for technology developed by its researchers.

University officials said the deal marks the first time the university has agreed to be compensated solely through equity for technology developed at the Austin campus. In the past, compensation has come primarily from royalties.

"In this case ... we're sharing the risk with the company," said Juan Sanchez, vice president for research at UT Austin . "If the company is successful, we benefit."

Sanchez declined to reveal the terms of the agreement, except to say it stipulates that UT's ownership stake won't be diluted below 5%.

Labnetics is being launched by XL Vision Inc., a business incubator in Sebastian, Fla. Investment firm Safeguard Scientifics Inc. (SFE) owns 43% of XL Vision . Venture capital firm TL Ventures, which has a substantial presence in Austin, also owns a stake in XL Vision .

The new company intends to commercialize medical diagnostic technology developed by UT researchers. It will open a research facility in Austin.

UT and XL Vision representatives say their technology allows relatively inexpensive, on-site diagnostics for many medical conditions without running samples through laboratories. Labnetics plans to target markets for human and animal diagnostics.

Mike Otworth of XL Vision , who is acting as interim Labnetics chief executive, said the company's first commercial product for animal diagnostics should be available in late 2001. Products for human use likely won't be launched until 2002, pending regulatory approval, he said.

Otworth declined to reveal a precise timetable for an initial public offering of Labnetics shares, except to say XL Vision 's goal for all of the companies it launches is an IPO within three years. Among others, XL Vision launched Emerge Interactive Inc. (EMRG) and ChromaVision Medical Systems Inc. (CVSN).

UT's Sanchez said school officials agreed to the equity deal with XL Vision because they like its credentials and business plan for Labnetics, and because they think the time is right to commercialize the medical diagnostic technology.

UT has received equity in "a handful" of other companies in exchange for technology developed at the Austin campus, Sanchez said, but the stakes have been very small because compensation in those deals came mostly through royalties.

"We'll see how it works out," Sanchez said of the Labnetics deal. He said it could be a model for future equity deals involving UT-developed technology.

   - Bob Sechler; Dow Jones Newswires; 512-236-9637