Post on 17-Dec-2015
Office of Technology Development
Everything You Wanted to Know About Technology Transfer
(and then some)
Catherine Innes
Scott Forrest
UNC Office of Technology Development
Office of Technology Development
OTD’s Goal
OTD’s goal is to find the development path giving the best chance of product(s) based on the technology getting to the market
University-based technology is always interesting, but does no good unless it is successfully commercialized (products on the market!)
Discovery of technology is just a first step, development is often more costly, more risky and more involved than discovery—thus choosing the proper development route is extremely important
Office of Technology Development
What?Authorized managers of UNC’s intellectual property (IP)
“Cradle-to-grave” project management
Process disclosures made by UNC faculty
Decision -- file Intellectual Property?
Decision -- Collaborate? License? Startup?
• Negotiate the license
• B-plan, Fundraising, management searching
• Brokering interactions with potential partners
(pharma, service-for-equity, investors)
Goal:
Bring UNC technology to market
Office of Technology Development
Making Patent Decisions
• Inventions selected for investment have:– Solid technical merit
– No unmanageable obligations to others
– Strong patent protection available
– Good prospects of a commercial market and business opportunity
Office of Technology Development
Reasons Not to Patent
• Idea is not an invention
– Doesn’t qualify as eligible subject matter
– Publication created bar to patenting
• Idea is not fully developed
– Enablement issues
– Patent issuance unlikely
• Patent position is not commercially useful
– Narrow coverage
– Dominated by other patents
Office of Technology Development
Reasons Not to Patent
• No viable commercial market– No promising application– Small market for products
• No interested commercial investors– Return on investment not sufficient– Difficulties in making products
• UNC does not fully own the work – Inventors haven’t assigned rights– Commercial co-owner doesn’t want license
Office of Technology Development
Strategic Technology Transfer
• Commercialization Readiness Assessment
– Within 60 days of receipt of an ROI, OTD Project Managers evaluate the following:
• Stage of development of the technology
• Strength of available patent protection or ability to consolidate of copyrights
• Commercial opportunity
• Encumbrances
Office of Technology Development
Licensing is the primary vehicle for commercializing University-based technology
To understand licensing, we must understand:•What a license accomplishes•The role of a license’s different components•How the nature of our partner (startup, big public company) dictates some aspects of licensing
Technology Licensing Basics
Office of Technology Development
What does a license accomplish?A patent:Allows holder to exclude others from making, using, selling, importing/exporting the invention. Protects a product/process.
A Copyright:Allows holder to make/copy, distribute, display, perform, import/export the work. Protects the tangible expression of an idea.
A license:Exempts our partner—the “licensee”—from the right to exclude under a patent or permits them to make/copy, etc. under a copyright (can be called “covenant not to sue”).
Office of Technology Development
How do we end up at a license?
Idea from UNC inventor
Patentprotection
Marketing to companies
Company infringing
Negotiate major deal terms
Office of Technology Development
License structure: Summary
Preamble/Definitions: Framework
Grant: What we’re allowing licensee to do
Compensation: What we get for allowing them to do it
Diligence: Mechanism for ensuring they work hard
IP: Who controls the process
Legal: What happens if things go awry
Office of Technology Development
Differences in licenses:Licensing to an established company
Grant: Scope = ExclusiveField = Generally limited
Territory = VariesAbility to sublicense? =
YesCompensation: Upfront = Cash (much discussion)
Milestone payments = spread out Running royalty = Varies % of sublicensing = Fixed
Diligence: Mix of early and later-stage diligence milestones
Office of Technology Development
Differences in licenses:Licensing to a startup company
Grant: Scope = ExclusiveField = Varies
Territory = WorldwideAbility to sublicense? =
YesCompensation: Upfront = Equity
Milestone payments = Back-loaded Running royalty = Varies % of sublicensing = Tiered
Diligence: Heavy! May include fundraising milestones as well as early product development
Office of Technology Development
Differences in licenses:Licensing non-exclusively
Grant: Scope = Non-exclusiveField = Limited
Territory = VariesAbility to sublicense? = No
Compensation: Upfront = Cash (less than exclusive) Milestone payments = Varies (sometimes none)
Running royalty = Varies (sometimes none) % of sublicensing = n/a
Diligence: Light. Sometimes non-existent, since rights are not being “tied up.”
Office of Technology Development
Differences in licenses:Licensing tangible property (ie. mouse lines)
Grant: Scope = Non-exclusive
Field = Limited (frequently to internal R&D)
Territory = Worldwide
Ability to sublicense? = No
Compensation: Upfront = Cash Milestone payments = n/a
Running royalty = Varies (frequently none) % of sublicensing = n/a
Diligence: None typically required.
Office of Technology Development
Start a Company……or Partner with an Existing one?
This is a choice that has to be made for commercially attractive technologies
We will discuss:•Requirements/demands of each development route•Factors considered when deciding on a route
Office of Technology Development
Academia and startup companies
•Many large life science companies struggle to develop new commercial products; fill the gap by purchasing/partnering products developed by smaller players
•Passage of Bayh-Dole act in 1980 allowed academic institutions to patent their inventions; a source of innovation for small companies
•Resultant environment supported new companies, rewarded the investors that financed them and encouraged academics to think about how to translate their research
•About 2/3 of life science-based startups originate from academia
Office of Technology Development
Start a Company……or Partner with an Existing one?
Before we begin to consider what technology lends itself to each route, we must first understand what each route entails.
Office of Technology Development
Starting a Company vs. Partnering:Time Commitment
Starting a company requires lots of extra time and effort from both Inventor(s) and OTD (part of our job).
•Business must be incorporated and issue shares, find a suitable business model and craft a business plan, recruit management and/or board members, raise money.
•Inventor will drive project development in a startup company•Investors will be betting on Jockey as well as horse
Office of Technology Development
Starting a Company vs. Partnering:Near-Term Financial Return
Starting a company requires both OTD and inventor to sacrifice short-term license fees (usually OK with OTD)
•All $ invested in a startup is spent on essential costs (IP, development)•No/low cash reserves
Office of Technology Development
Start a Company……or Partner with an Existing one?
Now that expectations are set, we can evaluate which development route is more appropriate
Office of Technology Development
A startup is a good choice when……the technology base is broad
Multiple product opportunities!-A must for investors-More shots on goal = better chance of getting a product onto the market
Examples:-Novel drug vs. Novel drug + methods of finding more (new assays, etc)-Polymer chemistry with a wide range of applications
Office of Technology Development
A startup is a good choice when……the technology is “disruptive”
Cutting edge: Sometimes established companies are slower to accept—reduces chances that companies will put adequate resources into the technology and increases development time. Result = decreased chance of product reaching the market
Contrarian: Acceptance also difficult. Often times, this type of technology is a new approach to an old problem that companies have given up on.
Office of Technology Development
“Know-how” is generally unpublished, unpatented technical information that conveys a significant advantage (research technique, manufacturing process)
Know-how is more difficult to transfer to an established company and evolves rapidly
If there is substantial value in the Know-how (cannot be easily engineered), a startup may make more sense
A startup is a good choice when……lots of “know-how” is involved
Office of Technology Development
Recent UNC startup (Endocrinology) with a focus on treatments for the vascular complications of diabetes
• Broad technology base—have a lead therapy, two novel screens for finding more and a broad base of IP
• Disruptive technology—initial focus is a “discarded” pharma target
• Valuable Know-how—trade secret toxicity assays to differentiate Vascular’s approach from competition
A startup is a good choice when…Example: Vascular Pharmaceuticals
Office of Technology Development
• Value of UNC technology is enhanced by existing technology
• Capitalizes on company Know-how, established manufacturing, distribution, R&D infrastructure.
Result = increased chance of product reaching the market
• Often, UNC technology will be “dominated” by existing IP. Then, partnering isn’t the better choice, it’s the only choice.
Partnering a good choice when……one has an improvement on existing technology
Office of Technology Development
• Complimentary R&D efforts
• Established expertise in area
• Large amounts of early R&D required in an area that investors shy away from
--development financed via product sales/cash on hand vs. via money raised from investors expecting a fixed return amount/timeline
Partnering is a good choice when……a company is well-positioned to develop the technology
Office of Technology Development
Novel class of drugs discovered by Lineberger research group
• An improvement—more specific versions of existing drugs
• Company was well-positioned—Development partner performed chemistry that enhanced the drugs, had established means for assaying them and Know-how related to approaches that have failed
Partnering is a good choice when…Example: immuoproteasome inhibitors
Office of Technology Development
Summary:Goal = find commercialization route most likely to
result in products on the market
• Startup: Partner:• Broad IP Narrow/dominated IP• Disruptive Improvement• UNC Know-how Company well-positioned
• Lots of time/effort Less effort• Low initial $ return Typically some $ upfront
Office of Technology Development
What do I get out of it?
• Universities are required to share at least 15% of income with inventors
• UNC policy mandates 40% of the income is shared with the inventor (among highest in the country)
-- 40% to inventor’s department, 20% to OTD
Office of Technology Development
Licensing expectations: University as Licensor
Need to understand motivations of the TTO:
•Bayh-Dole requirements•University priorities•Time constraints•Realities of investment climate•Return on investment
Office of Technology Development
Licensing expectations: University as Licensor
Bayh-Dole act requirements
Bayh-Dole act (1980) allowed institutions to patent discoveries made with federal $--but caveats attached to licensing those patents:
1. Preference for US companies; small business over large
2. No assignment of rights (license instead)3. Grant non-exclusive rights to US Gov’t4. US manufacturing requirements (flexible)5. Distribution of $ to inventors (UNC 40%)6. Actively promote commercialization of inventions
(diligence, non-exclusivity)
Office of Technology Development
Licensing expectations: University as Licensor
University priorities
Many schools seek to use technology licensing, in part, as a tool to:•Retain best faculty•Increase research sponsorship•Promote regional economic development•Generate publicity (smaller schools)•Benefit society
Office of Technology Development
Licensing expectations: University as Licensor
Time constraints
•Many TTOs are very busy (OTD has): -200+ cases per Project Manager -4 “interference” proceedings with USPTO -10 to 20 ongoing negotiations at a time•Result: -Most of us can size up a potential license deal quickly (have your s**t together) -Most of us would rather close on a reasonable deal that is less that what we were after then haggle forever
Office of Technology Development
Licensing expectations: University as Licensor
Reality of Investment Community
•Most larger TTOs will have reasonable idea of what terms will be acceptable / unacceptable to institutional investors
•Deals too slanted to the TTO (inexperienced company negotiator) will have to be re-negotiated later (time constraints!) or will prevent investment and company viability
•Deals too slanted away from the TTO leaves us without “skin in the game,” which can worry investors (not always…)
Office of Technology Development
Managing conflicts of interest• Conflicts of interest refer to outside
activities that may:
1. Interfere with an employee’s duty to carry out primary UNC duties
2. Involve inappropriate use of UNC resources
3. Misuse the name of UNC
4. Claim UNC responsibility for conduct/outcome of such activities
*All of the above are not permitted*
Office of Technology Development
If managed properly, UNC faculty may, with appropriate oversight:
1. Accept sponsored research $ from a company in which they have equity
2. Serve as an officer in a company in which they have equity and which is based on UNC technology
3. Consult for a company in which they have equity
*Many institutions prohibit these activities (eg. Stanford)*
Conflicts of interest - Permitted activities