PRESENTATION TO THE
UNIVERSITY OF ALASKA
BOARD OF REGENTS
UAA RESEARCH COMMERCIALIZATION FRAMEWORK
June
2012
DR. HELENA S. WISNIEWSKI
VICE PROVOST FOR RESEARCH
DEAN OF THE GRADUATE SCHOOL
INTRODUCTION
• Critical to maintaining the US lead in innovation, the successful 21st
Century University will need to be a driving force behind new
technologies for new jobs and new hope for the future.
• To benefit the state and the community, UAA will commercialize
technology based on faculty and student research.
• UAA proposes a framework that will leverage the university’s
Intellectual Property ( IP) into commercial successes by:
• Monetizing its IP through licensing and startups.
• Ensuring that its startup companies provide a positive outcome for
Inventors, the University, Investors, and the greater community.
INNOVATION SUCCESS
BENEFITS OF TECHNOLOGY
COMMERCIALIZATION
• Revenue Generation.
•
$2.42 Billion from licensing of US University IP in 2010.
• Job creation.
•
In 2010 Jobs created from university IP was up 10% from 2009 .
• Attract and retain faculty and students.
• Keep graduates in the state.
•
University startup companies often hire graduates.
• Contribute to Economic Development.
•
498 of the startups formed in 2010 had their primary place of business in the licensing
institution’s home state – up 10%.
• Contribute to innovation.
• In 2010 there were: 20,642 disclosures; 12,281 new US patent applications, and
4,469 new US patents issued.
(*) This data is based on a 2010 AUTM survey of about183 universities.
SUCCESSFUL INVENTION AND
COMMERCIALIZATION REQUIRES
• An infrastructure that is agile, and responsive to business
opportunities.
• A process to easily transition emerging technologies based on faculty
research to applications to customers/ markets.
• A plan for commercializing Intellectual Property.
• Advances in Research that result in Disruptive Technology.
• Quality patent portfolio.
• Incentives for faculty and students.
PROPOSED INFRASTRUCTURE
NEWCO HOLDINGS
• NewCo Holdings, Inc., would be a wholly owned subsidiary of UAA.
• Its Purpose is to be flexible and responsive to business opportunities.
• It will provide a corporate interface between UAA and its enterprise
companies and other entities interested in licensing UAA IP.
• The functions are:
• To license UAA IP to the start-up companies and to other interested
parties.
• Receive equity shares for UAA in return for assignment of intellectual
property rights to start up companies.
• Provide dividends to UAA from this equity.
PROPOSED INFRASTRUCTURE
NEWCO HOLDINGS
• The NewCo Board of Directors will be chosen for their comprehensive
expertise in startup companies, IP and licensing, and senior executive
experience, and technology expertise aligned with the IP portfolio, to
provide proper guidance for UAA’s commercialization efforts.
• The independent Directors will be a mix of Corporate CEOs, Venture
Capital Firm Partners, technology experts, and investors in NewCo
Fund.
• They will provide direction on business issues and to assist the UAA
patent committee and the VPRGS on matters such as which
research is “commercializable” and whether to license the invention or
create a startup.
PROPOSED INFRASTRUCTURE
NEWCO FUND
• NewCo Fund – will be a private equity investment fund and
affiliated with New Co Holdings.
• The purpose of NewCo fund is to provide seed funding, to select
start-up companies in the current and future UAA portfolio.
• It may also consider select start-ups from the community that
assign IP to UAA or provide equity shares.
• Investors will include individuals, angel investor groups and
institutional investors. UAA will participate in the the fund through
NewCo Holdings.
• Investors will be provided a term sheet - the terms and conditions
for investment.
PROPOSED INFRASTRUCTURE
NEWCO FUND
• NewCo Fund will have a fund manager and and advisory board
experienced in managing funds.
• The fund manager will be supported by 2% of the raise, which is
a customary amount.
• The fund will have a first look at new UAA startups.
• Initial raise is for $10 to $15 million.
NEWCO HOLDINGS AND NEWCO
FUND
SOME CURRENT PROSPECTS FOR
NEWCO HOLDINGS AND NEWCO FUND
• 49th State Angel Fund – Anchorage, Alaska –
• Met with fund managers - Lucinda
Mahoney and Joe Morrison.
• VPRGS was speaker at their May 17 event.
• Expressed interest to invest in NewCo
Fund for $1.5M – application period May 17 until August 5.
•
• Landmark Ventures - leading global strategic
and financial advisory firm offering venture
investment – focus on technology companies.
Headquartered in New York City with offices in
Tel Aviv and San Francisco.
• VPRGS - serves on their advisory board for
Life Sciences
• A partner from the firm willing to serve on
the Board of Directors of NewCo Holdings
• Interested in investing in NewCo Fund,
about $1M .
New Venture Partners - commercializes
innovations through spin-out ventures from
large global corporations. Headquartered
in New Jersey with offices in Silicon
Valley and the UK.
• A Managing Partner of the firm
willing to serve on the NewCo
Board of Directors.
• Potential investor in the fund about
$1M.
• Total potential funding to date:
$3.5M.
•
•
HSARPA – Interested in funding startups. Viewed NewCo Fund as good way
to do so. Under discussion.
In discussions with CEOs of GCI and
Greatbatch, Inc. to serve on the Board.
STRATEGY FOR FUTURE INVESTMENT &
JOINT VENTURE PROSPECTS
• Pursue investment funding from a mix of:
• Venture funds – start with list of 20 firms that VPRGS has worked
with previously on East and West coast.
• Corporations - aligned with areas of UAA technology. Start with:
• Medical devices – Greatbatch, Stryker, Johnson & Johnson,
Medtronic.
• Sensors – Lockheed Martin, L3, Telcordia.
• Potential future drug therapy – Johnson & Johnson
• Government:
• HSARPA – follow up regarding their start-up strategy.
• SBIRs, STTRs
• NOTE: many of these can also serve for licensing of IP.
OFTEN ENCOUNTERED ROADBLOCKS
• Deal flow.
• Raising funds.
• Finding experienced business people to work with the
inventors.
• And the following questions.
• Is the IP commercializable?
• Pursue a license or do a start-up?
OFTEN ENCOUNTERED ROADBLOCKS
AND RESOLUTION
Roadblock
1. Deal flow.
Resolution
1. Quality UAA patent portfolio.
Increase UAA IP annually.
Possible inclusion of IP from other
sources.
2.Raising Funds.
2. NewCo Fund – seed money for
start-ups.
3. Finding experienced business people
to work with inventors.
3. The Board of Directors of NewCo
and the Office of the VPRGS and
UAA administration has this expertise.
Their network of colleagues and
associates provides an additional source.
4. And the following questions.
• Is the IP commercializable?
• License or do a start-up?
4. Chart 1 provides commonly used
guidelines for this purpose.
ENSURING UAA IP
FOR DEAL FLOW
• Increase # invention disclosures by 10% starting in FY 14 (use 2012 as baseline).
• 10 to 13 in FY 13
• 15 in FY 14
• 16 in FY 15
• Increase Number of Provisional Patents to about 8 per year.
• Increase number of patent submissions to at least 7 per year.
• License IP – 2 to 3 new licenses each year.
• Goal to achieve and maintain 50% of IP portfolio licensed.
• Create start-up companies:
• At least one by end of FY13.
• 2 in FY 14.
• 3 in FY 15.
COMPARISON TO NATIONWIDE
UNIVERSITY SURVEY
AUTM 2010 SURVEY
40
30
Number of
Institutions
20
10
0
Number of Invention Disclosures
COMPARISON TO NATIONWIDE
UNIVERSITY SURVEY
AUTM 2010 SURVEY
Number of
Institutions
50
40
30
20
10
0
Number of Patent Applications
COMPARISON TO NATIONWIDE
UNIVERSITY SURVEY
AUTM 2010 SURVEY
100
90
80
Number of 70
Institutions 60
50
40
30
20
10
0
0-2
3-4
5-6
7-8
Number of Start-Ups
9-10
>10
INTERNAL PROCESS
FOR IP AND INVENTION
Produce Revenue
Protect Invention
Faculty and Students
Achieve Exit Strategy
Research
Invention Disclosure
Provisional Patent or
Patent Filing
Develop Business Strategies
Acquire Investors
Establish Fund
Identify Technology Ready
for Commercialization
Develop Prototypes
License
Launch Start Up
Based on Technologies
Existing Companies
LICENSE OR START-UP?
CHART 1
•
•
•
•
•
LICENSE
Technology represents an
incremental improvement to
existing technology used by
established companies.
Crowded field, potential
infringement risk.
Customer loyalties exist towards
particular companies.
Well-established distribution
channels have been created by
existing companies.
Regulatory approvals – such as FDA
approvals needed – for example, high
cost clinical trials.
• UAA example - license spinal rod
bender; student success model.
•
•
•
•
•
•
•
•
•
•
Start-UP
Technology is usually disruptive.
Platform technology.
Broad range of applications for
technology.
Potential to mitigate risk (exit
strategy).
New market with high demand.
Clearly defined need.
Can overcome barriers to entry.
Short time to market.
Large market with significant
growth.
Significant profit margins.
• UAA example, potential start up –
ultra life long sensors.
GUIDELINES FOR STARTUPS
• Once it is decided to launch a start up, the following criteria or
rules are useful in their creation:
• Rule 1:
• Rule 2:
• Rule 3:
•
•
•
•
•
•
•
Rule 4:
Rule 5:
Rule 6:
Rule 7:
Rule 8:
Rule 9:
Rule 10:
Know What Business You Are In.
Understand Who/What Your Competition Is.
Know if Your Product Fulfills a Critical Need - Or is it
a ‘nice to have’.
Understand Who You Are Selling To.
Have A Good Business Plan.
Strong Management Team.
Flexibility – do not be tied to your technical concept.
Protect your intellectual property.
Have an Exit Strategy.
If you cannot walk away from the deal, it is not a good
deal.
FOSTERING A CLIMATE OF
INNOVATION INCENTIVES
Incentives:
• Innovate Awards – established in December 2011 – internal seed
money for research and invention.
• Since January 2012 already achieving successes – invention
disclosures; Scholar in Residence; received external funding from
NIH.
• Patent Wall of Fame - established in December 2011
• First inductees December 2011.
• Other incentives-$500 patent filing; $1,000 for patent awarded.
COST OF IP
• Cost of IP to the university
• Provisional Patents - $2,000 to $5,000
• Patent - $15,000 to $25,000
• Maintenance costs after patent is issued
• So if UAA has
• 8 provisional patents a year @ $3,000 = $24,000
• 7 patent filings @ $15,000 = $105,000
Approximate Total annual costs for patents: $129,000.
Plus maintenance fees, once issued.
EXAMPLES OF POTENTIAL ROI
• From the sale of a startup
• 250% return, after 5 years, possible based on proceeds from the
sale, and net after direct costs (attorney fees, patent costs,
royalties back to faculty). (*)
• Another metric used by AUTM and others is ROI on research
investment
• Based on total research expenditures and revenue from
licensing and startup sales.
• Can receive as much as 18%.
(*) Actual example from sale of Plasmasol – a Stevens startup – to Stryker.
EXAMPLE OF LICENSE REVENUE –
EMORY NIVERSITY
EXAMPLES OF POTENTIAL LICENSE
REVENUE EMORY UNIVERSITY
• Emory’s spike in 2005 was the result of a one time license from Gilead Sciences Inc.
for their drug invention for HIV/AIDS.
• The story illustrates research to invention to startup to acquisition.
• It started with a drug developed by professors in its chemistry department in
collaboration with professors in the pediatrics department at Emory.
• The drug invention, emtricitabine, was licensed to a startup – Triangle
Pharmaceuticals – in 1996, which was co-founded by two of the inventors, who were
professors at Emory. The drug received approval from the FDA in July of 2003. It
was acquired by Gilead in 2003.
• Quote from Professor Liotta, one of the inventors and co-founder of Triangle
summarizes the university’s role nicely: “Federal funding from NIH together with
institutional support for the technology transfer process from Emory University
allowed the professors to carry out critical early stage research, and transfer those
discoveries into the startup company Triangle.”
NEAR-TERM LICENSING
• Student Success Model
• License agreements with Beta Universities have been
initiated.
• Starting to receive signed agreements.
• Patent pending.
• Ergonomic Rod Bender for Spinal Surgery
• Licensing deal under discussion with L5 Partners.
• Interest from Greatbatch, and will pursue additional
medical device companies – Stryker, Medtronic.
• Patent pending.
• Multiple Factor Authentication Using Gaze Tracking and
Iris Scanning
• US patent # 7,986,816
POTENTIAL NEAR TERM
START-UP CANDIDATES
• Ultra long lifespan wireless sensor device for remote
monitoring, asset management, surveillance and
security.
• Eye gazing for learning tools
• Currently being used in UAA’s Music Department
to assess skills. Next application reading.
• Wireless Head Impact Mouthguard combined with
sensing additional biological indicators.
SUMMARY
THIS PRESENTATION HAS PROVIDED
• An overview of a proposed framework for commercialization that is
responsive to business opportunities.
• A process and plan to transition emerging technologies based on faculty
research to customers/ markets.
• Candidates at UAA for near term licensing and near term startups.
• These candidates can contribute to providing a revenue stream for the
university, retain students after graduation, attract faculty and students, and
contribute to economic development.
• They can also have an impact on solving problems of importance to the community,
the state and the nation.