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The Commercialisation Process 1 st December 2010

The Commercialisation Process 1 st December 2010. Dr. Samuel Neill Business Development Manager (Bioscience and Healthcare). The Commercialisation Process . Agenda Overview of the Commercial Development Team Meet the team Identification of IP Evaluation process Commercialisation routes

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The Commercialisation Process 1 st December 2010

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  1. The Commercialisation Process1st December 2010 Dr. Samuel Neill Business Development Manager (Bioscience and Healthcare)

  2. The Commercialisation Process Agenda • Overview of the Commercial Development Team • Meet the team • Identification of IP • Evaluation process • Commercialisation routes • Licensing • Spin-out company formation • Summary

  3. 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.

  4. Overview of the Commercial Development Team “Bridging the gap between academia and the commercial world” University Industry New Concept Feasibility Commercial Development Team Product evaluation Manufacture and scale up Product sale Lower cost, higher risk technologies Higher cost, lower risk technologies ‘Understanding, development and funding gap’

  5. Meet the team Dr. Samuel Neill – Senior Technology Transfer Manager sam.neill@newcastle.ac.uk Alan Weddell – Intellectual Property Evaluation Officer alan.weddell@newcastle.ac.uk Northern Institute for Cancer Research Dr. Phil Elstob - Business Development Manager phil.elstob@newcastle.ac.uk

  6. 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.

  7. Evaluation process – Invention Record Questionnaire 1. Invention Record Questionnaire

  8. Evaluation process – Invention Record Questionnaire 1. 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.

  9. Evaluation process – Preliminary Opportunity Assessment Form 1. Invention Record Questionnaire 2. Preliminary Opportunity Assessment Form

  10. Evaluation process – 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). 1. Invention Record Questionnaire 2. Preliminary Opportunity Assessment Form

  11. Evaluation process – Preliminary Opportunity 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? 1. Invention Record Questionnaire 2. Preliminary Opportunity Assessment Form

  12. Evaluation process – Patent protection Patentability - • Novelty Not disclosed prior to filing in any way (e.g. publications, internet and oral presentations, demonstrations, descriptions made without correct confidentiality agreements). • Inventive Step/Non-Obviousness Invention must be ‘surprising’ and not an obvious development from (or routine modification to) what is already known in the prior art. • Application/Utility Invention 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. 1. Invention Record Questionnaire 2. Preliminary Opportunity Assessment Form

  13. Evaluation process – Opportunity Evaluation and Options Report 1. Invention Record Questionnaire 2. Preliminary Opportunity Assessment Form 3. Opportunity Evaluation and Options report

  14. Evaluation process – Opportunity Evaluation and Options Report • 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). 1. Invention Record Questionnaire 2. Preliminary Opportunity Assessment Form 3. Opportunity Evaluation and Options report

  15. Evaluation process – Opportunity Evaluation and Options Report • 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? 1. Invention Record Questionnaire 2. Preliminary Opportunity Assessment Form 3. Opportunity Evaluation and Options report

  16. Evaluation process – Possible outcomes • University takes the decision to protect and commercialises the technology. • Technology needs further development/proof-of-concept. • University rejects opportunity outright – but technology is offered to the individual(s) to pursue. • University progresses the opportunity via other party (e.g. NHS Innovations). 1. Invention Record Questionnaire 2. Preliminary Opportunity Assessment Form 3. Opportunity Evaluation and Options report 4. Commercialisation

  17. Commercialisation routes Bioscience and Healthcare IP – possible routes to market • 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 18

  18. Licensing 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.

  19. 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. Lower risk Lower reward Limited managerial involvement

  20. 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.

  21. Licensing Examples of recent licensing deals

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

  23. 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.

  24. Spin-out company formation 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

  25. Spin-out company formation 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.

  26. Spin-out company formation Major issue with spin-out company formation – ‘management team’ Cannot attract expert management Cannot attract funding 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) Catch 22

  27. Spin-out company formation 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

  28. Spin-out company formation Proposal to University’s Equity Committee • Equity Proposal – mini-business plan • Equity split negotiation • Starting point 50/50 • Flexible • Takes into account contribution • Incorporation • Business Opportunity • Background • IP Position • Business Model • Market • Management Team • Financial Plan • Risks and Contingencies • Exit Strategy • Appendices

  29. Spin-out company formation 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!

  30. Spin-out company formation Examples of recent spin-out (and soon to be spun-out) companies

  31. Summary The Commercialisation Process • 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.

  32. 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/)

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