Accelerating Innovation: Commercialization of DOTLab™ System

Jason Lye Kimberly-Clark Worldwide

Rocky Ganske Axela Biosensors, Inc

Yet2.com Executive Briefing VIII November 6th, 2006

Outline

•  Company Profiles

•  The Match

•  Potential Synergies

•  Deal or No Deal

•  Success of the Transaction

•  Why it Worked

•  Value of the Deal - Short Term

- Long Terms

Axela Biosensors

•  Privately held

•  Canadian company

•  Venture backed

•  < 50 employees

•  Size unknown

•  Business to Business focus

Company Profile:

The Start-Up

Kimberly-Clark Corporation

•  Publicly traded

•  Global Enterprise

•  > 130 years old

•  57,000 employees

•  Over $15.9 BN in sales

•  Recognized Consumer and B2B Brands

Company Profile:

The Fortune 200 Company

Axela Biosensors Technology Approach

•  New diagnostic tool – IP from

University of Toronto

•  Enabling technology: Diffraction Based Biosensor Technology

•  Milestones set for Commercial

Launch of DOTLab™ System -- a quicker, more accurate and cost effective device

Axela DOTLab™ System

Kimberly-Clark Corporation Technology Approach

•  New Corporate Vision for Health, Hygiene and Well Being

•  Business Strategies and Technology Platforms re-aligned

•  Change of strategy for use of Diffraction Based Biosensor Technology now made this technology available for license

Diffraction Based Biosensors

“The Match”

The Synergy

One Technology Two Different Approaches

+

K-C Strength in Signal Amplification, Manufacturing, using transmission detection

Axela Strength in Instrument and consumable design using

TIR detection

Physics of Diffracted

Light }

+ = Stronger Outcomes and Products

Protein Binding

+ +

Axela & K-C Collaboration

“The synergistic combination of K-C’s technology with Axela’s technology allowed a commercial product launch within 8 months.”

•  DOTLab™ System – launched at August 2006 Drug Discovery Conference.

•  K-C technology used to produce the consumable optical chip.

•  Analytical device useful for real time monitoring of protein binding-a powerful tool.

Value Captured from the Deal

!  Acceleration of development

!  Cost avoidance – decreased time to market

!  More robust and scaleable manufacturing process

!  Corporate Support: Investment by a recognized Health and Hygiene Global Company

!  Strong relationship established – potential for future collaborations

Value Captured from the Deal . . . For both Companies . . .

!  Acceleration of development

!  Cost avoidance – decreased use of research dollars

!  Faster entrance into market with a new product

!  More robust manufacturing process available using in-licensed IP

!  Corporate Support: Investment by a recognized Health and Hygiene Global Company

!  Strong relationship established – potential for future collaborations

•  Underutilized Kimberly-Clark technology supported to commercialization

•  K-C accepted equity position in a start-up company

•  Demonstrates ability to generate value from K-C intellectual property

•  Technology improvements licensed back to Kimberly-Clark

•  Strong relationship established with an emerging diagnostics company

Why was the transaction successful? Thomas Friedman : In a ‘Flat World’,

“…the small shall act big.”

Axela thought big and acted quickly to take advantage of the opportunity to use K-C technology to reach farther, faster.

“ and the big shall act small.”

Kimberly-Clark acted nimbly, was decisive and ready to transfer their knowledge – enabling Axela – their customers -- to seize the opportunity.

“In the flat world, the best companies are the best collaborators”

What Worked?

1.  Open with each others objectives: "  Defined value in licensing "  Disclosed what development was needed "  Established priorities and sensitivities on both sides -- early

2.  Obtained early buy-in at Executive levels.

3.  Compilation of pertinent know-how documents in data room "  Key personnel together early and often for due diligence "  Due diligence outcome goals pre-defined "  Honest, candid, open, and professional

4.  Detailed term sheet (30 pages) negotiated early in the process.

5.  Timelines established for short, medium and longer term technology incorporation plans.

6.  The timely and efficient match by yet2.com

Commercial Impact of Open Innovation

With “Open Innovation”, K-C improved Axela’s:

1.  Speed to market

With a product that is being used to generate new drugs, new diagnostics protocols, and enabling groundbreaking research.

2.  Financial management

Six months to one year research and development dollars saved.

3. Partnerships and Press

Found a new potential partner for future collaboration.

Commercial Impact of Open Innovation

The “Open Innovation” business model improved K-C’s:

1.  Returns on Investment in Technology

The future growth of Axela Biosensors will help fund future research and development of Kimberly-Clark technology.

2.  Research Community Motivation and Validation

Technology that was once diligently pursued lives on outside of the corporation, and is being commercialized by a partner.

3. Partnerships and Press

yet2.com identified a technology market need and made a connection that benefits all parties and accelerates diagnostics market expansion.

Reagent Manufacturers

Immunoassay Developers

Life Science Research

Clinical Research

Custom Assay

Clinical Reference

Labs

POC 510k, PMA

Biotherapeutic Manufacturers

Commercial Impact of this Collaboration . . . . . Looking Forward

Antibody Characterization & Assay Development Bio-Marker Detection

Reagent characterization

Clinical Use in Diagnostic

Tests

“The commercialized technology bridges the gap between bio-marker discovery and the clinical use of bio-markers in translational medicine.”

Accelerating Innovation

Through Collaboration

Accelerating Innovation: Commercialization of DOTLab™ System

Jason Lye Kimberly-Clark Worldwide

Rocky Ganske Axela Biosensors, Inc

Yet2.com Executive Briefing VIII November 6th, 2006

Thank You.