the commercialisation process 1 st december 2010

The Commercialisation Process

1st December 2010

Dr. Samuel Neill Business Development Manager (Bioscience and Healthcare)


Agenda Overview of the Commercial Development Team Meet the team Identification of IP Evaluation process Commercialisation routes

Licensing Spin-out company formation

Summary

Overview of the Commercial Development Team

The Commercial Development Team (CDT) aims to protect and commercialise valuable research results (IP) arising from all schools and institutes within the University.

IP can be an extremely valuable asset and a substantial amount of income can be generated through its successful exploitation which can benefit the University, its employees and research sponsors.

Majority of bioscience/healthcare innovation still comes from academia.

In order to realise the true value of IP, it must be properly protected and managed. This service is provided by the Commercial Development Team.

http://www.ncl.ac.uk/business-directorate/contact/commercialization

Overview of the Commercial Development Team

New Concept Feasibility Productevaluation Product saleManufacture and

scale up

University Industry

Lower cost, higher risk technologies Higher cost, lower risk technologies

‘Understanding, development and funding gap’

Commercial Development

Team

“Bridging the gap between academia and the commercial world”

Meet the team

Dr. Samuel Neill – Senior Technology Transfer [email protected]

Alan Weddell – Intellectual Property Evaluation [email protected]

Northern Institute for Cancer ResearchDr. Phil Elstob - Business Development [email protected]

mailto:[email protected]



Identification of IP

Relatively small team.

Rely on academic base to proactively seek out the CDT if they feel they have a commercially interesting invention/opportunity.

Educational workshops (e.g. Science in a spin seminar series), coaching for commerce and annual Blueprint awards.

Evaluation process – Invention Record Questionnaire

1. Invention Record Questionnaire

Evaluation process – Invention Record Questionnaire

Completed by the ‘inventors’. Formal disclosure of the invention to the University. Asks very pertinent questions. Not to be confused with unnecessary bureaucracy!

IRQ becomes an ‘Opportunity’ which is owned by a member of the CDT Team.


Evaluation process – Preliminary Opportunity Assessment Form


2. Preliminary Opportunity

Assessment Form


Completed by member of the CDT. Engages with inventors. Thorough initial investigation.

Aims to conclude within one month of disclosure. Decision to proceed or not (Opportunities Review

Committee).



Assessment Form

What is the technology? What are the potential applications? Who funded the work/who owns the IP? Who are the inventors? Has the technology been disclosed? Most relevant publications/any publication issues What is the market potential? How close to market? What are competitive technologies? Who is active in this area?




Assessment Form

Patentability -

NoveltyNot disclosed prior to filing in any way (e.g. publications, internet and oral presentations, demonstrations, descriptions made without correct confidentiality agreements).

Inventive Step/Non-ObviousnessInvention must be ‘surprising’ and not an obvious development from (or routine modification to) what is already known in the prior art.

Application/UtilityInvention must have a use or application. Also your patent must have an ‘Enabling Disclosure’; meaning that relying solely on what is written in your patent someone skilled in the art must be able to repeat your work and generate the technology.

Evaluation process – Patent protection



Assessment Form

Evaluation process – Opportunity Evaluation and Options Report

3. Opportunity Evaluation and Options report



Assessment Form


Completed by member of the CDT. Engages with inventors and externals. Much more detailed due-diligence, market research, etc.

Aims to conclude within four months of disclosure. Decision to proceed or not (Opportunities Review

Committee).




Assessment Form

Detailed evaluation of science/technology. Opportunity in context of other related work. IPR position, patentability? Know-how? Detailed prior-art search. Freedom to operate. What is the commercial rationale? Economic drivers? What are the applications/products/services? What are the benefits (USPs)? Which companies/organisations would be interested? Analyse the competitive technologies, advantages/

disadvantages. Quantify market size, trends. Any regulatory hurdles? Other barriers to entry?





Assessment Form

1. University takes the decision to protect and commercialises the technology.

2. Technology needs further development/proof-of-concept.

3. University rejects opportunity outright – but technology is offered to the individual(s) to pursue.

4. University progresses the opportunity via other party (e.g. NHS Innovations).




Assessment Form

4. Commercialisation

Evaluation process – Possible outcomes

Commercialisation routes

18

Create a ‘spin-out’ company

- New technology platform- Range of products/services- Anticipated growth of technology

Considerations:

- Development of a business plan- Attract funding/investment- Management team- Routes to market and sales strategy- Growth of products/services- Exit strategy

License technology

- Single target/product- Novel manufacturing processes- Established/competitive market

Considerations:

- Exclusive/non-exclusive- Term of agreement- Geographic coverage- Recovery of patenting costs - Negotiate returns/milestones

Partner with industry

- Valuable technology but early - In need of further development- Technology exchange- Collaborative development

Considerations:

- Subsequent IP ownership- Access to equipment/expertise- Joint funding opportunities- Joint risk- Option to license later

Bioscience and Healthcare IP – possible routes to market

When is licensing appropriate?

IPR strong but narrow in potential application. Market dominated by a few large players and significant entry costs

for new players. Academic wants limited managerial involvement. Royalty streams guaranteed or non-exclusive. Good negotiation skills available and/or strong negotiation

position.

Licensing

Advantages of Licensing:

Rely on pharmaceutical and biotech companies to invest time, money and expertise to progress our technologies to market.

Potential for secure income flow with limited financial risk. Limited ongoing managerial involvement. No need for equity funding. Can build patent protection terms into licence agreement. No diversion to academic’s career. Builds closer links with industry.

Licensing

Lower risk Lower reward Limited managerial involvement

Licensing

Disadvantages of Licensing:

Income flow reliant on the licensee (need guaranteed amounts, particularly if exclusive deal).

Licensee needs to be carefully selected. License negotiations can be protracted. We typically gain only a minor share of any revenue (e.g. royalty of

around 5% of net sales). Limited control of commercialisation.

Licensing

Examples of recent licensing deals

Technology Licensee Financial highlights

Enzyme Company A

7% of net sales plus $38,000 upfront feeMinimum royalties of $100,000 (1st year), $120,000 (2nd year), $150,00 (3rd year and

thereafter)50% patent fees

30 monoclonal antibodies Company B20% of net sales

Increasing minimum royalties for 25 years£57,000 in the 1st year to £76,000 in 5th year

Antibodies and research tools

Reagent suppliers via Cancer Research

Technology

70% of all revenues to Newcastle, 30% to CRT

£0 - £5,000 £5,001 - £205,000 £205,001 - £1,000,000

Inventor(s) 100% 50%* 40%

Institute - 25% 20%

University - 25% 40%

* The University will also recover, as a first charge in this band, any costs directly incurred in exploitation (e.g. Patent Agent’s fees)

Licensing

Revenue sharing

Royalties received from license deals are distributed according to the University’s IP policy

http://www.ncl.ac.uk/business-directorate/policies/consultancy/policy_statement_on_intellectual_property_b.pdf

http://www.ncl.ac.uk/business-directorate/policies/consultancy/policy_statement_on_intellectual_property_b.pdf

Spin-out company formation

When is a spin-out company appropriate?

IPR less strong but wide potential applications/markets. Market entry costs not prohibitive. Committed and entrepreneurial academic/inventor. Academic provides or has access to first class management

resources. Team has access to equity funding. USPs and economic drivers are sufficient to overcome market

inertia. Significant growth potential exists – sustainable company. Know-how significant or sufficient funds available to protect future

IPR.


Advantages of spin-out company formation:

Control own destiny. Serious IP assets into the company . Retention of all IPR including know-how and expertise. Can take the majority of profit share. Greater satisfaction and involvement. A life-changing experience. Academic/inventor must decide on what role they want.

Higher risk Higher reward Greater managerial involvement


Disadvantages of spin-out company formation:

Greater financial risk. Formation of strong management team critical. Equity funding required. Difficult to fund high development cost businesses (e.g. Biotech

technologies). Sole responsibility for patent protection and costs. Potential diversion to academics/inventor’s career. Conflict with School/Institute.

Catch 22

First class operational management is difficult to

find, attract and retain

Funding of £250K-£1M is desirable yet hard to find (falls between seed and

VC levels)


Cannot attract fundingCannot attract expert management

Major issue with spin-out company formation – ‘management team’


Ideal management team:

Chief Executive Officer (CEO) / Managing Director Technical Director (usual best position for the academic/inventor) Financial Manager Sales and Marketing Director Non-executive board

Team is likely to change over the course of company life.

Management incentives could include: Salary Equity Milestone rewards Combination

Proposal to University’s Equity Committee

Equity Proposal – mini-business plan

Equity split negotiation Starting point 50/50 Flexible Takes into account contribution

Incorporation

1. Business Opportunity2. Background3. IP Position4. Business Model5. Market6. Management Team7. Financial Plan8. Risks and

Contingencies9. Exit Strategy10. Appendices



Business plan – working document to guide the day-day running of the company, future/strategic goals and means of attract funding.

Executive summary – to the point. Consider the audience (internal/external). Show solid evidence of market (size, drivers and growth). Know your competitors. Be honest. Be realistic – include projections and valuation. Take ownership of financial projections. Have an exit strategy that shows a reasonable return. Remember that investors are looking to make a healthy return on

their investment – pure and simple!


Company name Products/services Status

E-therapeutics Ltd Systems biology drug discovery company that uses computers to predict the effects of intervention on proteins in cells

Trading for 8 years and floated on AIM (ETX)

Orla Protein Technologies Ltd Recombinant proteins immobilisation technology utilising self-assembly scaffolds to give defined protein orientation whilst retaining their native state Trading for 7 years

Alcyomics LtdUnique human skin based assay called ‘DermatestTM for assessing the

potential allergic, hypersensitivity and/or inflammatory response reactions of new drugs

Trading for 2 years

NuGene Ltd Service based company offering rapid DNA and RNA based assays for the detection of genetic abnormalities of clinical significance Recently incorporated

NewImaging Ltd Production of premium quality iodonium precursors for use in positron emission tomography (PET) imaging platforms Recently incorporated

Demuris Ltd Development of novel bacterial cell wall screening assays to elucidate new antibacterial compounds

Recently incorporated

Examples of recent spin-out (and soon to be spun-out) companies

Summary


Critical not to disclose invention – remember pursue patent protection first and then publish.

Evaluation, protection and commercialisation requires academic/inventors cooperation and input.

It is the CDTs primary aim to exploit new technologies using the most suitable commercialisation strategy to ensure the best return for all parties.

Commercialisation process is non-linear. No two opportunities are the same.

Thank you very much

Any Questions?

Useful links: CDT (http://www.ncl.ac.uk/business-directorate/) UKIPO (http://www.ipo.gov.uk/home.htm) Bio-entrepreneur (http://www.nature.com/bioent/index.html) Venture Navigator (http://www.venturenavigator.co.uk/)

the commercialisation process 1 st december 2010

Documents

cdt team

commercial worldmeet

market potential

true value of ip

universityindustrylower

potential applications

valuable asset

formal disclosure