Guidance - Research Funding

There is a strong presumption against accepting research funding in the form of grants, sub-contracts, or gifts, from a start-up** in which the employee proposing the research has an equity interest or a Board seat (or other financial interest), if the research is to be done in the individual’s research group, or the employee's students or post-doctoral fellows or associates would participate in the funded research projects. Rigorous restrictions also apply to human subject research and non-human subjects research that involves testing, when the employee has a related financial interest. The presumption is applied as follows:

 

Human Subject Research: Where the proposed research involves human subjects, the presumption against permitting a related start-up** to sponsor the research is particularly strong. Any financial or equity interest in the start-up** company will almost always preclude the financially interested employee from conducting human subjects research sponsored by the start-up**. The presumption may be overcome only in rare and compelling circumstances and where the Health Science Center, including its Institutional Review Board, are satisfied that effective controls to mitigate any possible effects of the conflict can and will be implemented. Such circumstances might include, for example, that the employee is uniquely qualified to perform the experimental procedure. In such circumstances, it may be appropriate for the employee should divest him or herself of the equity interest, or place the equity in a blind trust for an appropriate period of time.

 

Research Not Involving Human Subjects: When a start-up** proposes to sponsor research to be conducted by an employee who holds equity or a Board seat in the company, and which involves neither human subjects nor validation testing, the presumption may be rebutted if appropriate controls are in place (see below), and a condition such as one of the following is met:

1. the research is of a fundamental or basic nature, the research is not directly related to the financial success of the start-up**; and the employee’s relationship with the company is otherwise limited (i.e., does not involve multiple additional entanglements such as consulting agreements and scientific advisory board membership); so that the likelihood of any distortion of the research endeavor is minimal; or,
2. the employees’s equity interests in a venture are so diluted that his or her control or influence over the firm's decisions and the possible benefit from Health Science Center-based activity are negligible, and the employee's relationship with the company is otherwise limited (see above); or
3. the research is essential to maintain the continuity of a research effort related to the licensed intellectual property during a short interval of time (normally under six months), while the research activity is being established in the start-up**; and during this period it is subject to oversight of non-interested peers appointed by the Vice President for Research; or
4. any other circumstance identified by the Conflict of Interest Committee as relevant to a particular condition.

 

Except in extraordinary circumstances, the presumption may not be rebutted when the research in question has as its objective the testing of an invention in which the employee has a financial interest in a start-up**, or a Health Science Center invention that is licensed to a start-up** in which he or she has an equity interest. For purposes of this proviso, "testing" is intended to describe doing research designed to validate to the public or perform a similar function regarding an invention created at the Health Science Center and licensed to a start-up** company. (The same restrictions would generally apply to testing undertaken for a publicly held company holding a license from the Health Science Center.)

 

Controls: In each case in which the research will be permitted to proceed despite the presumption against such research, the Health Science Center shall ensure, in addition to measures adopted by the cognizant Institutional Review Board, the following:

1. the research agreement contains no restrictions on publication other than normal delays for review of confidential information or potential patentability;
2. at the project inception, all individuals working on the research project are provided a written notice from the employee that the research is being sponsored by a venture in which the employee has an ownership interest or fiduciary relationship;
3. before the research be allowed to proceed, the empoloyee provides the Vice President for Research or designee a written description of the proposed research and an assurance of his or her compliance with the restrictions set forth above; and thereafter, provides the Vice President for Research written reports on the progress of the research, listing related peer-reviewed publications and grants, no less frequently than annually; and
4. all other management measures deemed appropriate by the Health Science Center and as required by the cognizant Institutional Review Board are in place. Examples of such measures are requirement of a data safety monitoring board, in the case of human subject research; an oversight committee to review data, publications and other issues; disclosure requirements in publications; and commitment of equity to a blind trust for a period of time.

 

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** A relatively newly formed, privately held, for profit company that is generally based on intellectual property developed at the Health Science Center.

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