Commercialization of Publicly Funded R&D:

Mechanisms and Approaches within U.S. Agencies & S&T Organizations Abroad

Carlos E. GutierrezChief Strategy OfficerLarta Institute

June 2011

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Our Mission

To vastly improve the transition of scientific and technological

breakthroughs from the lab to the marketplace, and to help

government-funded entrepreneurs/innovators create

self-sustainable enterprises

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US and Global Clients/Partners

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About Larta• Founded 1993 as a public –private

partnership• Non-profit, private corporation • Innovation policy advice for both national

and regional economies around the world to build strong ecosystems

• Design and execution of programs (for US and Global Partners) to accelerate the market readiness of early stage enterprises:– Commercialization from emerging R&D-based

enterprises• Commercialization Assistance Programs

(CAPs)– University technology transfer

• Technology Transfer Programs (TTPs)• Foster strategic relationships with capital

providers and industry partners

Background

Core Services

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SBIR• Started in 1982• All 11 agencies participate• 2.5 % of agency R&D budget• Currently $2 Billion• $14 Billion Awarded via 50,000

grants since Inception

The US Experience - The SBIR & STTR Programs

Funding to Support R&D Activities

STTR• Started in 1992• The largest 5 agencies

participate • DOD, DOE, NIH, NASA & NSF

• 0.3 % of agency R&D budget• Currently $100 Million• Small business must have

partnership with non-profit research institution • university or research center

• 531 Publicly traded companies• Qualcomm, Millenium, Amgen, JDS

Uniphase etc.• 1,200 M&A deals to date• 552 current VC-funded companies

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A Three-Phase Program• Grants $100K – $300K• 6 – 12 months• Support exploration of

technical merit or feasibility

• Grants from $500K - $3M• 12 to 24 Months• Refinement of technology

• No more government grants

• Private funding• Exit: sales, IPO, licensing,

etc.

Phase I: Start up Phase

Phase III: Commercialization

Phase II: Expand idea, find commercial outlets

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Challenge: • Agencies realized that they only provided support to

one piece of the equation (R&D work), but had no instrument to facilitate the market readiness/awareness/connections for innovations headed by a PI (principal investigator) with a scientific/research background.

Solution:• Agencies contract with external partner

organizations to design and implement Commercialization Assistance Programs (CAPs) for their grantees.

The US Experience - The SBIR & STTR Programs

Mechanism to support commercialization of publicly-funded R&D

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Objective of Larta CAPs

Larta mentors emerging companies, and connects them to the right people, capital and resources.

Prepare tech-based enterprises to cross the Valley of Death

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Provide SBIR/STTR grantees with focused assistance to refine their business models, accelerate the

commercialization of their IP, and foster connections with

investors/partners

Commercialization Assistance Programs (CAPs)— A Virtual Model

Larta designs and manages CAPs for 5 of the largest SBIR/STTR programs of the federal agencies: NIH, USDA, NSF, TATRC (US Army) and DOE

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Larta U.S. CAPsNational Institutes of Health

• 80+ SBIR Phase II companies each year• Medical devices, pharmaceuticals, diagnostics, healthcare IT, biotech, etc.• 18 months of tracking after the program

National Science Foundation• 250+ SBIR/STTR Phase I companies each year• Industrial technology, cleantech, energy, advanced

materials/nanotechnology, electronics/IT, chemical-based technologies, etc.

US Department of Agriculture• 40+ SBIR Phase II companies each year • Food and nutrition, precision agriculture, animal health, plant science,

biofuels, etc.US Army - TATRC

• 25 SBIR Phase II companies each year • Healthcare IT, Mobile Health, robotics, simulation software, etc.

US Department of Energy• 125 SBIR Phase II grant applications reviewed each year, with

recommendations provided for funding grants• Energy efficiency, renewable energy, wind, solar, green materials,

sensors, generation, etc.

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Anatomy of a CAP: NIH-CAP Case Study

• Funded by NIH, developed and managed by Larta Institute to assist SBIR Phase II NIH awardees with commercialization. Since 2004.

• Designed to help small life science and healthcare companies to develop their commercial “profile” and transition their SBIR-funded technologies into the marketplace

• Competitive process: 80 companies selected from among 250+ eligible ventures

• The company’s “decision maker”/CEO is encouraged to participate in the CAP as the CAP-Leader

• Sponsored (financed) by NIH. • 10 month program (virtual and face-to-face). • Combination of:

• Intense 1:1 mentoring by Larta Principal Advisor• Feedback Sessions with external 3rd party experts (investors, industry, IP

strategists, regulatory specialists, etc.) – Boston, DC, Los Angeles• Strategic Introductions through Larta Industry Advisory Boards (IAB)

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Larta Industry Advisory Boards (IAB)

Chemical/Materials/ Cleantech

Ashland Corp.BASF

BoeingChisso Corp.

Dow Chemical Co.Honda Strategic

VenturingProcter & GambleSekisui Integrated

ResearchSEMPRA Energy

Sharp CorporationTexas Instruments

Schlumberger3M

Electronics/IT/ Software

Boeing

Honda Strategic Venturing

Philips Healthcare

Sharp Corporation

TechNavi, LLC

Texas Instruments

Schlumberger

Motorola

Life Science

AbbottAllerganBayer

BD VenturesBiogen IDECBoehringer IngelheimGenentechGenzyme

Johnson & JohnsonLife Technologies

MedtronicMerck

Novo NordiskPfizer

Philips Health careRCT Bioventures

Siemens VenturesTakeda

Agriculture

Finistere Ventures (Chair)BASF

Bayer Crop ScienceCargillADM

Dow AgrosciencesMonsantoNelson Gibson

(formerly with John Deere)Nestle

Novus InternationalPioneer Hi-Bred

Syngenta

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NIH-CAP Case StudyDeliverables

• The development of a Market-Driven Presentation. The presentation will convey the company’s value proposition and will embody and address the critical components of a market entry strategy: technology, Intellectual property, markets and market need (problem), management, manufacturing/business model and adoption issues, and strategic alliances.

• A 2-3-page Commercialization Strategy Report (CSR) document which includes a Barriers to Commercialization document, a Competitive Matrix, and a Commercialization Roadmap or schedule of budgetary and operating milestones. The Commercialization Strategy Report will summarize recommendations and next steps that will help the company meet the commercialization objectives that were outlined earlier.  

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NIH-CAP 2010Companies by Industry Sectors

Biotechnology; 107; 16%

Diagnostics; 86; 13%

Healthcare IT; 90; 14%

Medical Device; 176; 27%

Pharmaceuticals; 68; 10%

Other*; 124; 19%

Total

Biotechnology Diagnostics Healthcare IT Medical Device Pharmaceuticals Other*

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Metrics: NIH-CAP Case Study• Mentored over 600 NIH-

funded companies• $397 million raised by

companies attributable to Larta impact*

• 10 acquisitions (8 companies, 2 technologies)

• 302 deals made• 500+ initial proposals &

term sheets created• 1,800 CDAs signed• 3,600 meetings with

investors & partners arranged

NIH-CAP: 2004-Current

Additional Partnership & Deal-Related Activity

* http://grants.nih.gov/grants/funding/cap/success_data_NIH_CAP.pdf

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Larta - Global Bridge Initiatives

• Defined: CAPs designed for innovation agencies/S&T organizations around the world

• Aligned with innovation policy objectives and integrated with key stakeholders (universities/research institutes, industry, economic development agencies)

• Focused on internationalization of early stage R&D-based ventures and developing linkages to U.S. partners

• Strong component of technology transfer for benefit of the regional partner– Supports sustainability– Builds local capacity for regions to manage their own

commercialization efforts– Linkage to Larta Institute as a ongoing U.S.-based partner

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Carlos E. GutierrezChief Strategy Officercgutierrez@larta.org

606 S. Olive Street, Suite 650Los Angeles, CA 90014

ph: 213.538.1453fx: 213.622.6230www.larta.org