New Ventures and

Conflicts of Interest

Jim Bratton, AVP Economic Development

Launching a University Start-up• Exciting New Challenges• Financial Independence• Translates University Innovation• Create Lasting Impact by Improving

Lives• Recognition and Distinction to

Inventor and University• Contribute to Economic

Development

Personal Experience

• 15 years as a Venture Capitalist

• Invested $62MM in 25 University Start-ups

• Results:• 17 successful exits/ 8 (miserable) failures• 26% IRR to investors• Deep Emotional Scars

Four Types of Risk

• Technical Risk•Market Risk• Capital Risk•Management Risk

Business Model Canvas/ Lean Launch

FDA Pathway: Assess Clinical Need1

• Unbiased Analysis through exhaustive interviews with clinicians and disease advocacy groups (and literature review)

• Data and analysis will establish• Clinical Need

• Suitability of Approach

• Feasibility of Clinical Development

• Goal: Develop a Target Product Profile (TPP)• List of attributes of minimum acceptable criteria

• General set of goals

• Set/ guide “go/ no-go” decisions

• Identify areas outside internal expertise

1 Adapted from A Practical Guide to Drug Development in America

FDA Pathway: Create a Target Product Profile

• Clinical indication and medical need• Route and frequency of administration• Current and future competition• Cost of intended therapy• Intellectual Property position and strategy• Advantages over current solutions• Other:

• Clinical development path• Regulatory pathway• Metabolic and safety profiles

FDA Pathway: Start with the end in mind

• Understand why patients and providers will use our product.• What clinical problem are we solving?• What specific unmet, medical need will our product address?• How will patients a/o Health Systems be better off with our product?• Are there known risks for our solution or molecular target?• Will the risk-benefit ratio be acceptable?• Will delivery and dosing be acceptable to patients and providers?• Will Payers (Ins., Medicare/caid,…) pay for our solution?

Resources

Why am I incorporating?

1. I have evidence that my company will make more money than it spends.

2. I am ready to ship or sell something to a third party.

3. I will incur (potential) liabilities for this commercial purpose.

4. I am incorporating only to seek research funding.

So What Now?

• Seek Outside Professional Help• Legal• Accounting• Operational

Decisions to be made before incorporating:

• What form of corporation?• S-Corp; C-Corp; Sole Proprietorship; LLC.

• Who are the owners? In what proportion?• Are they Friends? Family?

• How will we pay ourselves?• How much time will it really take and at

what cost?• Where is the office?

• Physical presence; Digital presence.• Do you have Freedom to Operate?

• Get a license to your technology

So What Now?

• Seek Outside Professional Help• Legal• Accounting• Operational

• Initiate a COI Plan with your Department Chair

Conflicts of Interest

• Situations in which financial or other personal considerations may compromise an Employee's professional judgment in carrying out his/her University responsibilities that include but are not limited to teaching, research, service, contract administration, and purchasing 1.

• Conflicts include2 :• The existence of an actual conflict of interest;• The potential for a conflict of interest to occur; or,• The appearance of a conflict of interest.

• Conflicts of:• Confidentiality• Oversight• Loyalty• Duty• Time

1https://apps.hr.ou.edu/FacultyHandbook/Default.aspx#5.10

2Ibid.

How to Manage a ConflictDisclose the Conflict• College• Provost• OTD/ VPR• Company Board

Create a Management Plan• With the University• With the Company

Review/ Update• At least Annually• If circumstances

change• Evaluate Effectiveness

Drafting a COI Management Plan

• This is not a form• It is a Plan created by you and the Party with whom you have the conflict:

• At OU: Department and College leadership• At Your Company: Board of Directors/ Shareholders

• Spells out the conflicts• Identify mechanisms for managing them• Review and update the plan at least annually and if circumstances change

Summary

Should I Launch?• If your business model is to

write grants-- NO.• If your business model is to:• Make more money than you

spend;• Commercialize a technology;• And, you are about to incur

liability or risk;• -- YES. Get Professional Help.

Solutions to Conflicts:• If you think it is a conflict…• ...it probably is a conflict.• Disclose it.• Manage it.

Thank YouQuestions/ Discussion