entrepreneurship in an academic environment · nursing support process: assist ... and...

ENTREPRENEURSHIP IN AN ACADEMIC ENVIRONMENTNalaka Gooneratne, MD, MSCE, ABSMJune 12, 2018

Overview

Background Academic Resources/Limitations Financial Considerations Conflict of Interest Intrapreneurship

Sally and Pat and their nanoparticles

Co-inventors of patented radiation-absorbing nanoparticles.

Sally (tenured professor) and Pat (post-doc) Would like to spin-out their IP in a start-up that

would conduct Phase 1 clinical trials related to chemotherapy applications.

Innovation in Academia

Academic Investigation

Start-up Business

Intellectual Property

Overlapping Interests


Start-up Business


BA

DC

Moving from idea to final product

Effort Allocation

Prototype


Development Partner

Funding

Overview


PCI: Penn Center for Innovation

Technology Transfer Office + Incubator Bridge between Penn faculty and the business

community Technology Transfer Role

Plays a central role for filing intellectual property Also fulfills an arbitration role in case of disagreements

between co-inventors

PCI Ventures

PCI Incubator Programs develop a strategy around company formation Functions primarily as an incubator for start-up

companies UPSTART: 49% equity UPAdvisors: 8-12% equity

CHOP Resources

Office of Technology Transfer Office of Entrepreneurship and Innovation

Penn Medicine Center for Healthcare Innovation (PMCHI)

Partnership between UPHS and the Leonard Davis Institutes Center for Health Incentives and Behavioral Economics Director: David Asch. Co-directors: Kevin Volpp, Kevin

Mahoney. Chief Innovation Officer: Roy Rosin.

Penn Medicine Center for Healthcare Innovation (PMCHI)

Office of Clinical Research

Broad range of expertise FDA IND/IDE guidance Research budgets/contracts Research staff training Clinical Trial Management System

(PennCTMS)

Wharton Collaboration

Expertise in teaching/research Mack Center for Technological Innovation Snider Entrepreneurial Research Center

Funding/Advice Venture Initiation Program Wharton Small Business Development Center

Alumni network Graduate/undergraduate students

School of Law

Detkin Clinic IP clinic Entrepreneurship clinic Model: Teaches a small group in a seminar for 3rd years to provide

client experience. IP clinic: 9 different subject matter areas. Semester classneeds clients in Aug and Dec (before the

start of the semester)

School of Law: Resources

School of Engineering

Department of Bioengineering Penn HealthTech

Partnership between School of Medicine and School of Engineering

PRECISE Center Weiss Tech House

School of Veterinary Medicine

Animal testing core Faculty interested in IND enabling studies--could be

done under an enabling contract as a core service Currently 80% of their work is industry-related.

Thomas Schaer, VMD Director of Translational Research in Orthopedic

Surgery

Clinical and Translational Science Award

CTSA grant from the NIH Based in the Institute for Translational Medicine and

Therapeutics (ITMAT) Commercialization and Entrepreneurship in Translation

(CAET) Center for Human Phenomic Science (CHPS)

Can serve as a site to conduct research

CTSA: Major components

Support for clinical research Built on the infrastructure of the GCRC

Education Masters/Certificate in Translational Research programs Training grants for pre-doc/post-doc staff

Funds Approximately 55 million dollars Supports over 45 staff, assisting in over 200 research

studies at Penn and CHOP

CHPS Servicesthe 4 Ps

Plan: Study design support for the principal investigatorBiostatistical support

Place: Infrastructure for the research participant-research staff interaction In-patient/Out-patient roomsNursing support

Process: Assist with specimen processing and analysis

Pilots: Support pilot research via ITMAT grants

PresenterPresentation NotesAdd color and design

In-patient Rooms for Research

Located on 1 Dulles

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Gates Pavilion Entrance

Ravdin Main Entrance

Out-Patient SuitePresbyterian (1 Mutch)

PresenterPresentation NotesApproximately 100,000 sq feet of useable space.

Early Phase Clinical Trials Unit

Clinical Core Services

Clinical research space Telemetry beds

Research nursing16 full-time nursing staff trained in research nursing Full-time nurse practitioner Chemotherapy/ACLS trainedCan access Hickman/central lines/dialysis

cathetersAble to do frequent blood sampling (up to every

10 minutes) for pharmacokinetic studies, clamps, etc.


Clinical Core Services

Clinical research space Research nursing Study Design and Biostatistics (SDAB) Nutritional assessment core Behavioral neuroscience core (CHOP) mHealth Service Exercise Interventions Cardiovascular Phenotyping Investigational Drug Service (IDS)

Procurement/storage of study drugs Randomization of study subjects


Research Example

Test nanoparticle pharmacokinetic profileA Phase 1 study to assess PK properties in

preparation for a possible IND Plan:

Meet with CTRC biostatistician to plan basic elements of study (approx 10 hoursadditional time may require payment)

Protocol review by the joint IRB/CTRC Council as part of approval process

Research Example

Place: Provide a location where research

participants can come to have blood specimens collected by nursing staff

IDS can assist with randomizing subjects to different doses of the nanoparicles

Research Example

Pilot:Study could be funded by an ITMAT pilot

grant Up to 100,000 in some cases

Process: Staff at the CHPS can help aliquot blood

specimens for storage

Penns Institutional Limitations

Promotion process: patents vs manuscripts/grants Protected time for new technology development Purchasing supplies and equipment

May require working with non-approved vendors

Penns reputation within the business community as a challenging partner Slow contract approval process

Limited mentorship for academic entrepreneurs Limited support for later phases of development

Areas of Limited Support

Overview


Financial Return


Start-up Business


Publication currency

Equity (shares)Licensing Revenue (royalties)

Financial Considerations

Revenue disbursement from intellectual property is governed by Penns Patent policy

Average industry patent royalty rate of 7.0% on gross income from invention Based on Licensing Economics Review (2002) review of

458 license agreements Range extended from 0% to 50%

Wikipedia, Royalties, accessed Jan 2013. Taken from The Royalty Rate Journal of Intellectual Property, December 2002, p. 8.

Patent Royalty Rates: Pharmaceutical

The following are prevalent rates for gross sales within the United States pharmaceutical industry: a pending patent on a strong business plan, royalties of

the order of 1% issued patent, 1%+ to 2% the pharmaceutical with pre-clinical testing, 23% with clinical trials, 34% proven drug with US FDA approval, 57% drug with market share, 810%

Wikipedia, Royalties, accessed January, 2013. Adapted from http://www.cptech.org/ip/health/royalties/

Patent Royalty Rates (cont.)

For our calculations, we will assume the conservative average licensing rate of about 4%

Estimated Disbursement

Percentages from Patent Policy Actual Dollar amounts

Total License revenues $100,000

Unreimbursed PCI IP costs 10 $10,000

Adjusted PCI Revenue 90 $90,000

Inventor's share 30 27 $27,000

Inventor's research allocation 12.5 11 $11,250

University share 57.5 52 $51,750

PCI operating costs (estimated at 10%) 10 5 $5,175

Net PCI income 90 47 $46,575

Department share 40 19 $18,630

School share 40 19 $18,630

University share 20 9 $9,315

Yearly licensing revenue: $100,000 profit at 4% royalty rate-->$4,000

Chart1

4000400040004000

University

PCI

Research Fund

Inventors

1225

2000

250

525

Sheet1

UniversityPCIResearch FundInventorsUniversityCTTResearchInventors

4,0001,2252,000250525100,0004,0001,2252,000250525

1 million18,25310,2003,7257,8231,000,00040,00018,25310,2003,7257,823

10 million237,65012,00048,500101,85010,000,000400,000237,65012,00048,500101,850

100 million2,431,62530,000496,2501,042,125100,000,0004,000,0002,431,62530,000496,2501,042,125

To resize chart data range, drag lower right corner of range.

Yearly Revenue: 1 million at 4%

Chart1

40000400004000040000

University

PCI

Research Fund

Inventors

18252.5

10200

3725

7822.5

Sheet1


40,00018,25310,2003,7257,8231,000,00040,00018,25310,2003,7257,823

1 million18,25310,2003,7257,8231,000,00040,00018,25310,2003,7257,823

10 million237,65012,00048,500101,85010,000,000400,000237,65012,00048,500101,850

100 million2,431,62530,000496,2501,042,125100,000,0004,000,0002,431,62530,000496,2501,042,125



Chart1

200000200000200000200000

University

PCI

Research Fund

Inventors

115762.5

11000

23625

49612.5

Sheet1


200,000115,76311,00023,62549,6135,000,000200,000115,76311,00023,62549,613

18,25310,2003,7257,8231,000,00040,00018,25310,2003,7257,823

10 million237,65012,00048,500101,85010,000,000400,000237,65012,00048,500101,850

100 million2,431,62530,000496,2501,042,125100,000,0004,000,0002,431,62530,000496,2501,042,125

0000



Chart1

400000400000400000400000

University

PCI

Research Fund

Inventors

237650

12000

48500

101850

Sheet1


400,000237,65012,00048,500101,85010,000,000400,000237,65012,00048,500101,850

18,25310,2003,7257,8231,000,00040,00018,25310,2003,7257,823

10 million237,65012,00048,500101,85010,000,000400,000237,65012,00048,500101,850

100 million2,431,62530,000496,2501,042,125100,000,0004,000,0002,431,62530,000496,2501,042,125

0000



Chart1

4000000400000040000004000000

University

PCI

Research Fund

Inventors

2431625

30000

496250

1042125

Sheet1


4,000,0002,431,62530,000496,2501,042,125100,000,0004,000,0002,431,62530,000496,2501,042,125

1 million18,25310,2003,7257,8231,000,00040,00018,25310,2003,7257,823

10 million237,65012,00048,500101,85010,000,000400,000237,65012,00048,500101,850

100 million2,431,62530,000496,2501,042,125100,000,0004,000,0002,431,62530,000496,2501,042,125


Yearly Revenue: R01

Total revenue is directs (500k)+ indirects (310k)

Chart1

500000500000500000500000

University

PCI

Research Fund

PI+Co-I

310000

410000

90000

Sheet1

UniversityPCIResearch FundPI+Co-IUniversityCTTResearchInventors

500,000310,000410,00090,000100,000,0004,000,0002,431,62530,000496,2501,042,125

1 million18,25310,2003,7257,8231,000,00040,00018,25310,2003,7257,823

10 million237,65012,00048,500101,85010,000,000400,000237,65012,00048,500101,850

100 million2,431,62530,000496,2501,042,125100,000,0004,000,0002,431,62530,000496,2501,042,125


Workload (hours)

Assumes approximately a 20% success rate Up to 5

submissions for successful grant funding

Approx. 20% of patents lead to viable products

Chart1

R01 GrantR01 GrantR01 GrantR01 Grant

InventionInventionInventionInvention

Grant

Study

Licensing

Patent

1000

800

750

1000

375

250

Sheet1

GrantStudyLicensingPatent

R01 Grant1,000800

Invention7501,000375250


Start-up Business

The inventor may also decide to start a business to monetize their patent Very difficult to predict inventor revenue in this case

due to large variability across start-ups Generally first few years are sweat equity:

uncompensated Possibility of salary support once VC support obtained

(likely after year 2) Possibility of large payout once start-up venture is

bought out or goes public (rare, but may occur after year 5)

Equity Allocation

Equity (ownership) allocated by privately-held shares UPSTART Model: 100,000 shares awarded in 1,000

share increments across all co-owners Additional shares added with new co-owners which dilute

existing owners

Friendly split: 49.5/50.5, or 33/32/32 model

Academic Roles in a Start-up

Co-Founder Penn discourages having a fiduciary role: C-suite,

Board of Directors Must be less than 50% co-owner (i.e.,

Start-up: IP considerations

Penns Patent Policy gives PCI the right to remove the inventor from the patent if the inventor is a co-founder with equity in a start-up (unlikely)

The inventors start-up may not necessarily be awarded the inventors patent by PCI (unlikely)

The license fees are set by PCI and may be prohibitive

Federal Small Business Funding: SBIR/STTR

Stimulate technological innovation; Meet federal research and development needs; Increase private sector commercialization of

innovations developed through federal R&D funding; and

Foster and encourage participation in innovation and entrepreneurship by socially and economically disadvantaged persons and women-owned small businesses.

Phase 1

Goal: Demonstrate Feasibility and Proof of Concept Aims generally include: 1) Focus group; 2) Prototype

development; 3) Small pilot (n=10/20, open-label)

Establish technical merit and commercial potential Max of 225,000 over 6 months (SBIR) or 12 months

(STTR) 6 page research plan

Phase 2

Goal: Research and Development Aims generally include 1) Additional technology

development and 2) Larger clinical trail (n>50, randomized)

Contingent upon a successful Phase 1 Generally 1 million over 2 years 12 page research plan + 12 page

commercialization plan

SBIR/STTR: Pros

No loss of equity No loss of control (except with company

partner/academic partner) Even if not funded, provides an opportunity to

further develop business model and consultants A type of federal grant (NIH, NSF or DoD) with

opportunity for University indirects Approximately double the funding rate of typical

NIH grants Projects funded tend to be practical/commercial

SBIR/STTR: Cons

Delays: Minimum of 1 year and up to 2 years to get funding

Paperwork: Multiple registrations Effort: NIH grants are 90-200 pages long

NIH grants typically require approximately 100-200 hours

Requires dedicated expertise Consultants available: $15-30k

Uncertain funding/review prospects Can apply to multiple VCs but there is only one NIH Inconsistent reviews

Academic Perspective: What is the right time for an SBIR/STTR?

SBIR STTR P1/Internal Pilot

Scientific conceptTeam expertiseSignificance or commercial potential

Foundation/R03/R21

Preliminary dataHypothesis driven with mechanism / model

R01/Program Project

Team with national recognized expertiseExtensive preliminary dataScientific innovation

Overview

Background Development Timeline Academic Resources/Limitations Financial Considerations Conflict of Interest Intrapreneurship

Understanding the terms

Significant Financial Interest (SFI) >5,000k in payments/equity from an Outside

organization Income from IP rights not assigned to Penn Any Clinical trial intellectual property, whether or not

assigned to Penn Any Fiduciary Role for an Outside organization

Financial Conflict of Interest (FCOI) An SFI that could influence design/conduct/reporting of

a study FCOI does not automatically mean research misconduct

What do I need to do?

University-wide systems: PHS-FITS: Federal reporting as part of grant

submissions. 5 min

FIDES: SFI disclosure site. 60+ min

What do I need to do?

School of Medicine system: Extramural Activities: Reports all consulting, sponsored

travel, etc. Part of our general faculty disclosure requirements for the University. 5 min. Requests date you discussed with your chair

There can be cross talk between the systems

FCOI and Exceeds

Thresholds

FCOI Possible

Review

Grant Submission SFI

Univ: PHS-FITS

FIDES

CISC: Management

Plan

SoM: Extramural

CISC Management Options

Public disclosure of financial conflicts of interest Disclosure of financial conflicts of interest directly to

participants Appointment of an independent monitor Modification of the research plan Change of personnel, responsibilities, or removal from

participation in all or a portion of the research Reduction or elimination of the financial interest (e.g., sale of

an equity interest) or Severance of relationships that create financial conflicts.

What does this mean for me?

Important to think strategically when deciding when to file IP or create SFI. Ramifications for: Research funding Research activities Presentations/publications

Choices, choices

1. Partner with an existing company2. Create a new start-up company in which they own equity3. Create a new start-up company; the start-up licenses the IP from Penn (which owns the IP Sally and Pat invented).4. Step back and continue sponsored research work with their nanoparticle IP

Overview


Intrapreneurship vs Entrepreneurship

Characteristic Intrapreneurship Entrepreneurship

Partners Internal Externaloutside entitiesTimeline Rapid Generally slowerCOI Variable; rarely FCOI Complex; often FCOIIP Provisional/ Disclosure FormalizedScope Workflow, clinical,

research, commercialization

Research, commercialization

Risk Generally low Generally high

Academic Career Ramifications of Intrapreneurship

Utility in terms of CV/promotion depends upon track Tenure track: Minimal utility CE/AC/HS: Potential utility

Tends to be reflected in terms of: Research grants: Intrapreneurship collaborations can blossom

into research partnerships (tenure/CE) Clinical initiatives: Helping to establish a new clinical center CQI initiatives: May become abstracts/papers Can also be useful for Maintenance of Certification (MOP)

requirements

Personal empowerment

Innovation Centers

School/University/Health System Existing Innovation Centers Engagement with established Innovation Center

programs as a consultant/advisor

Establishing your own Innovation Center within your Division/Department Opportunity to create a unique niche for yourself value-add that may get your proximate chair to

advocate more strongly for your retention and career advancement

Ex: Sleep Innovation Program in the Division of Sleep Medicine

Conclusion

Several resources available at Penn Proof of concept prototype, patent

Key areas where limited support available Design prototypes, licensing, funding

Important to accurately consider financial ramifications, COI and timeline

Intrapreneurship is an underappreciated opportunity that can facilitate later external entrepreneurship

Entrepreneurship in an Academic EnvironmentOverviewSally and Pat and their nanoparticlesInnovation in AcademiaOverlapping InterestsMoving from idea to final productEffort AllocationPrototypeIntellectual PropertyDevelopment PartnerFundingOverviewSlide Number 13PCI: Penn Center for InnovationPCI VenturesCHOP ResourcesPenn Medicine Center for Healthcare Innovation (PMCHI)Penn Medicine Center for Healthcare Innovation (PMCHI)Office of Clinical ResearchWharton CollaborationSchool of LawSchool of Law: ResourcesSchool of EngineeringSchool of Veterinary MedicineClinical and Translational Science AwardCTSA: Major componentsSlide Number 27Slide Number 28CHPS Servicesthe 4 PsIn-patient Rooms for ResearchOut-Patient SuitePresbyterian (1 Mutch)Early Phase Clinical Trials Unit Clinical Core Services Clinical Core ServicesSlide Number 35Slide Number 36Research Example Research Example Research Example Slide Number 40Penns Institutional Limitations Areas of Limited SupportOverviewFinancial ReturnFinancial ConsiderationsPatent Royalty Rates: PharmaceuticalPatent Royalty Rates (cont.)Estimated DisbursementYearly licensing revenue: $100,000 profit at 4% royalty rate-->$4,000Yearly Revenue: 1 million at 4%Yearly Revenue: 5 million at 4%Yearly Revenue: 10 million at 4%Yearly Revenue: 100 million at 4%Yearly Revenue: R01Workload (hours)Start-up BusinessEquity AllocationAcademic Roles in a Start-upStart-up: IP considerationsFederal Small Business Funding: SBIR/STTRPhase 1Phase 2SBIR/STTR: ProsSBIR/STTR: ConsAcademic Perspective: What is the right time for an SBIR/STTR?OverviewUnderstanding the termsWhat do I need to do?What do I need to do?Slide Number 70CISC Management OptionsWhat does this mean for me?Choices, choicesOverviewIntrapreneurship vs EntrepreneurshipAcademic Career Ramifications of IntrapreneurshipInnovation CentersConclusion

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