The Commercialisation Process
1st December 2010
Dr. Samuel Neill
Business Development Manager (Bioscience and Healthcare)
The Commercialisation Process
Agenda
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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
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The Commercial Development Team (CDT) aims to protect and
commercialise valuable research results (IP) arising from all schools and
institutes within the University.
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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.
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Majority of bioscience/healthcare innovation still comes from academia.
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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.
Overview of the
Commercial Development Team
“Bridging the gap between academia and the commercial world”
University
New Concept
Industry
Feasibility
Commercial
Development
Team
Lower cost, higher risk technologies
Product
evaluation
Manufacture and
scale up
Higher cost, lower risk technologies
‘Understanding, development and funding gap’
Product sale
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
Identification of IP
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Relatively small team.
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Rely on academic base to proactively seek out the CDT if they feel they
have a commercially interesting invention/opportunity.
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Educational workshops (e.g. Science in a spin seminar series), coaching
for commerce and annual Blueprint awards.
Evaluation process –
Invention Record Questionnaire
Evaluation process –
Invention Record Questionnaire
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Completed by the ‘inventors’.
Formal disclosure of the invention to the University.
Asks very pertinent questions.
Not to be confused with unnecessary bureaucracy!
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IRQ becomes an ‘Opportunity’ which is owned by a
member of the CDT Team.
Evaluation process –
Preliminary Opportunity Assessment Form
Evaluation process –
Preliminary Opportunity Assessment Form
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Completed by member of the CDT.
Engages with inventors.
Thorough initial investigation.
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Aims to conclude within one month of disclosure.
Decision to proceed or not (Opportunities Review
Committee).
Evaluation process –
Preliminary Opportunity Assessment Form
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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?
Evaluation process – Patent protection
Patentability -
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Novelty
Not disclosed prior to filing in any way (e.g. publications,
internet and oral presentations, demonstrations, descriptions
made without correct confidentiality agreements).
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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.
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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.
Evaluation process –
Opportunity Evaluation and Options Report
Evaluation process –
Opportunity Evaluation and Options Report
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Completed by member of the CDT.
Engages with inventors and externals.
Much more detailed due-diligence, market research, etc.
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Aims to conclude within four months of disclosure.
Decision to proceed or not (Opportunities Review
Committee).
Evaluation process –
Opportunity Evaluation and Options Report
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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?
Evaluation process – Possible outcomes
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).
Commercialisation routes
Bioscience and Healthcare IP – possible routes to market
Partner with industry
License technology
Create a ‘spin-out’ company
- Valuable technology but early
- In need of further development
- Technology exchange
- Collaborative development
- Single target/product
- Novel manufacturing processes
- Established/competitive market
- New technology platform
- Range of products/services
- Anticipated growth of technology
Considerations:
Considerations:
Considerations:
- Subsequent IP ownership
- Access to equipment/expertise
- Joint funding opportunities
- Joint risk
- Option to license later
- Exclusive/non-exclusive
- Term of agreement
- Geographic coverage
- Recovery of patenting costs
- Negotiate returns/milestones
- Development of a business plan
- Attract funding/investment
- Management team
- Routes to market and sales strategy
- Growth of products/services
- Exit strategy
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.
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
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
Company A
7% of net sales plus $38,000 upfront fee
Minimum royalties of $100,000 (1st year),
$120,000 (2nd year), $150,00 (3rd year and
thereafter)
50% patent fees
30 monoclonal antibodies
Company B
20% 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
Enzyme
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
£0 - £5,000
£5,001 - £205,000
£205,001 - £1,000,000
100%
50%*
40%
Institute
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25%
20%
University
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25%
40%
Inventor(s)
* The University will also recover, as a first charge in this band, any costs directly incurred in exploitation
(e.g. Patent Agent’s fees)
Spin-out company formation
When is a spin-out company appropriate?
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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.
Spin-out company formation
Advantages of spin-out company formation:
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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
Spin-out company formation
Disadvantages of spin-out company formation:
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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.
Spin-out company formation
Major issue with spin-out company formation – ‘management team’
Cannot attract expert
management
First class operational
management is difficult to
find, attract and retain
Cannot attract funding
Catch 22
Funding of £250K-£1M is
desirable yet hard to find
(falls between seed and
VC levels)
Spin-out company formation
Ideal management team:
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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
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
1.
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8.
Business Opportunity
Background
IP Position
Business Model
Market
Management Team
Financial Plan
Risks and
Contingencies
9. Exit Strategy
10. Appendices
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.
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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!
Spin-out company formation
Examples of recent spin-out (and soon to be spun-out) companies
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 Ltd
Unique 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
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.
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/)