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6/4/2015
THE ROLE OF THE UNIVERSITY IN CREATING PORTFOLIO VALUE
Mark A. Cochran, PhDExecutive DirectorJohns Hopkins Medicine
• Tech transfer landscape– Why, What, How– JHU Example– How has it evolved over the years– How has the relationship between industry and universities evolved?
• The Innovation Ecosystem– The new deal
• Intellectual Property Basics• The Players• Options to Product Development• Deal examples• Terms and their negotiation• Common pitfalls to commercialization• Striking the balance• Role of incubators at Universities• BD experience and career options 2
Topics
What is technology transfer?Technology transfer is the process of transferring scientific findings from one organization to another for the purpose of further development and commercialization. The process typically includes:• Identifying new technologies• Protecting technologies through patents and copyrights• Forming development and commercialization strategies such as
marketing and licensing to existing private sector companies or creating new startup companies based on the technology
Academic and research institutions engage in technology transfer for a variety of reasons, such as:• Compliance with federal regulations• Recognition for discoveries made at the institution• Attraction and retention of talented faculty• Local economic development• Attraction of corporate research support• Licensing revenue to support further research and
education
Reasons for University Technology Transfer
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Intellectual Property Policy• Bayh-Dole Act of 1980• IP Policy of the University defines split with inventor• Tech Transfer provides service of filing patents and
licensing technology• As a faculty member, inventions belong to the university,
but the process is a win-win-win for the faculty member, the university, and mankind
153 new FDA-approved drugs were discovered by public-sector research institutes in the last 40 years 93 small molecules, 36 biologicals, 15 vaccines, 8 in vivo
diagnostic materials and 1 OTC Represents 9.3% of all FDA approvals Includes 6 over $500M per year in US sales
Taxol®, Epogen®, Procrit®, Remicade, Lyrica and Neupogen® Several key technologies however were never
protected Milstein and Kohler generation of monoclonal anitbodies
via hybridoma technology
UNIVERSITY TECHNOLOGY: TRACK RECORD
Technology Transfer FY14 Results
*From JHTV FY2014 Annual report
Money raised to date by JHU startups* through grants, follow on funding and exits
*Data from 184 JHU related startups (not strictly licensed technology). Data source: Pitchbook
Grant FundingAwarded
Venture CapitalRaised
Exits(IPO, Acquisition)
MII, Coulter, SBIR, I-Corps, other
Amplimmune sold to MedImmune in 2013 for $225M plus milestones
Cardioxyl ~$60M Potenza ~$60M Kala $45M
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The Johns Hopkins Technology Ventures mission is to maximize the impact of JHU’s excellence in research by facilitating the translation and commercialization of discoveries into accessible technologies, products, and services for the benefit of society.
Mission StatementJohns Hopkins Technology Ventures: ventures.jhu.edu
Source: MARS Innovation
TECHNOLOGY TRANSFER PROCESS
01/01/01
File ProvI
01/01/02
File USIFile PCTI
06/01/02
USI PublishPCTI Publish
06/01/03
Nat’l Stage PCT1
File Prov2 File US2File PCT2
US2 PublishPCT2 Publish
06/01/04
Nat’l Stage PCT2
INTELLECTUAL PROPERTY BASICS
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Why is an innovation ecosystem important to the University?
Bring products to the world Competitiveness and retention
• Students and Faculty
Additional funding streams to the university Promotes regional economic development
Why is the University important to industrial economy, and how has it evolved?
• University are primary sources of innovation• Represent a critical mass of knowledge and research in
fundamental areas• Research paradigm: idea, publish, test, refined idea, publish,
test, repeat– Development is not a skill set at universities
• Industry is very good at development, manufacturing, marketing – it is not very good at innovation
• Partnerships have evolved to support an innovation ecosystem – thus bringing together those who are best at what they do.
SuccessRates
0 5 10 15
Grants / Foundations
Process Development
Formulation / Stability
Metabolism
Toxicology
APPROVAL
DrugSourcing
ScreeningLeadIdentified
Pre-ClinicalIND/CTCWorkup
FileCTCIND
Phase I Phase IIClinical
FileNDAPLA
PostFilingActivity
PatentProcess
Discovery ScreeningPre-ClinicalDevelopment
Clinical Development
Approval & Marketing
5/4,000compounds testedgo into humans
70% 33% 27% 20% INDS approved
% of INDS that go to next Phase
Years
RiskHigh Low
Venture Capital / Private Equity
Finance
Phase III
Drug Development Value Chain TECH TRANSFER: THE PLAYERS AND THEIR ROLES
University Looking to monetize discoveries to finance more of same
Commercialization Network Consolidated grouping of universities providing critical mass
The Professor In love with their science, looking for recognition, respect, fame, fortune
The Financier Looking for the deal with room for at least 10X return
The Biotech Executive Charged to build value, answers to BOD, investors
The Pharma Company Accessing innovation to build pipeline
Foundation Motivated to advance discoveries to meet medical needs
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COMMON GOALS, DIFFERING PERSPECTIVES
TECH TRANSFER: THE LANDSCAPE TODAY
More deals subsequently sublicensed Consolidation of tech transfer groups into networks Greater pressure on universities to make tech transfer
a profit center Universities taking greater share of revenue More uni:pharma licensing and under evolving
conditions New model emerging to participate in innovation rather than just mining it
Source: Hofmann et al. 13
GLOBAL PERSPECTIVE
Source: Hofmann et al.
GLOBAL PERSPECTIVE
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KEY TERMS IN TECHNOLOGY LICENSES
Pre-commercial payments: Upfront fee Research payments License maintenance fees Clinical milestone payments Sublicense revenue sharing
Post-commercial payments: Royalties
Minimum annual royalty Sublicense revenue sharing
LICENSING TEMPLATES
Many universities offer draft examples of agreements C4 example on-line
Some agreements pre-negotiated by universities and venture groups are available Carolina Express License Agreement
10% of sublicensing revenue; 20% of royalty revenue Published licenses can be obtained on EDGAR
for publicly traded companies Analyses sometimes available for key licenses through
Recap.com
Implemented July 2014 Vetted with local law firms who advise startups 9 JHU startups year to date (FY15) Express license has required substantially less time for
negotiation, reducing the time to close a deal on average from four months to less than two weeks
Services: Express License for Faculty Startups
DEAL EXAMPLES
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The New Deal
• No so new – but much better for all players
VALUE CREATION: UNI-BIOTECH-PHARMA
Source: Deloitte Recap LLC
NEW MODEL AT UCSF
Partner Date Asset Value ($M)
Bayer 01/2011 Research collaborations and official opening of Bayer’s U.S. Innovation Center in Mission Bay
--
Sanofi-Aventis 01/2011 Funding of research in pharmacological science for multiple therapeutic areas and oncology partnership to accelerate research through POC for UCSF's Program for Breakthrough Biomedical Research (PBBR)
--
Sanofi-Aventis 01/2011 Oncology research through clinical proof of concept --
Pfizer 11/2010 Global Centers for Therapeutic Innovation collaboration $85
Takeda 09/2009 Sponsored research collaboration for antibody discovery and development --
Pfizer 06/2008 Broad focus research collaboration & drug discovery $9.5
Sigma-Aldrich 06/2008 Monoclonal Antibodies for cancer, stem cell and autoimmune research --
Celera Diagnostics, Celera Corporation
11/2002 Identify novel genetic markers for breast cancer --
Daiichi Pharmaceutical 11/1992 Atherosclerosis research $20
Source: Deloitte Recap LLC
MORE NEW MODEL DEALS
University Partner Date Asset Value ($M)
Stanford sanofi-aventis 04/2011 Research collaboration with Stanford University Bio-X to focus on early-stage scientific research
--
Yale Gilead 03/2011 Cancer research collaboration with option to license resulting discoveries
$40
Columbia University sanofi-aventis 03/2011 Evaluation of osteocalcin osteoblast-secreted peptide for diabetes management
--
Harvard UCB 02/2011 $6M in funding to support antibody research projects $6
Baylor Research Institute
Roche 12/2010 Collaboration to develop programs emerging from the human immunology research
--
Harvard sanofi-aventis 10/2010 Translational biomedical research collaboration for multiple therapeutic areas
--
Washington University Pfizer 05/2010 New indications discovery for existing Pfizer pharmaceutical candidates
$22
MIT sanofi-aventis 05/2010 sanofi-aventis Biomedical Innovation Program --
University of Pennsylvania
AstraZeneca 03/2010 Alzheimer's disease drug discovery collaboration --
University of Virginia AstraZeneca 12/2009 Research collaboration to develop treatments for cardiovascular disease
--
Vanderbilt University Johnson & Johnson 01/2009 Schizophrenia drug discovery collaboration $110
Source: Deloitte Recap LLC
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Recent Activities (Academic-Pharma Partnerships)
AstraZeneca and Karolinska Institute opening a $100MM translational research center
Takeda launched a $20MM Tri-Institutional Therapeutics Discovery Institute with Sloan, Rockefeller, and Cornell Medical
Sanofi and UCSF entered into a $3.1MM agreement to share expertise in diabetes research and identify drug targets that could lead to new therapies for diabetes
GSK convened several institutes to The Oncology Clinical and Translational Consortium (OCTC) to focus on clinical trials and translational research. This brings together Memorial Sloan-Kettering Cancer center, Netherlands Cancer Institute, Princess Margaret Cancer Center, University of Texas MD Anderson Cancer center, and Vall d’Hebron Institute of Oncology to develop oncology therapeutics from early stage discovery through clinical trial stage
ONE EXAMPLE OF NEW MODEL STRATEGIES
Sanofi R&D and investment strategy No new corporate R&D centers
Considered resource-intensive and unproductive Establish integrated discovery efforts at the world’s best
research institutes (Stanford, Harvard, MIT) Co-invest with venture and PE firms
Start-ups and subsequent financings Ramp up collaborations and acquisitions
Commercialization process:Best if transparent, accessible, and easy
Disclosure process Technology dev. and funding Technology licensing Startup creation and support
Technology accessibility Technology bundling Efficient, responsive, and collaborative
service
Achieved through one front door, concierge service, and new technological support
(New software deployments: Inteum, Salesforce)
Internal Partners External Partners
R&D Service Company Structure:
Services Provider / Incubator
Access to innovation pipeline & early research services
Option for growth by acquisition
BioPharma
Venture Firm Access to translational capabilities Exit strategy via build to buy BioPharma
partnership model
Access to cash and late stage translational capabilities
2
3Venture Incubator
PHARMA
1
32
1
Inception4
*= Exclusive relationship within Indication Area around a specific novel target and pathway
Milestone PaymentsTranslational Research
R&D of Rx agents by Indication
Equity $$Strategic build to buy play
“ Discovery Incubator” backed by Versant
Benefit to Participants*
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Paradigms for successful business models centered around translation
CURRENT Paradigm: Gladstone NOVEL Paradigm: CALIBR
Key Players: Philanthropy and Grants Academic Medical Center: UCSF Industry: Takeda, Bristol‐Myers Squibb, H.
Lundbeck AVS
TA focus: Cardiovascular, Infectious diseases,
Neurology
Valuation History: 1971: Created in with trust valued at
$8MM 1979: Gained financial sustainability with
surplus to fund institutes Today: Annual revenues of $70MM, with a
total valuation of ~$160MM (grew 20‐fold since inception)
Key Players: Academic Scientists Industry: Merck Venture: 5AM
Business Model: Merck provides funding of up to $90MM
over 7 years Merck maintains option to obtain exclusive
commercial license Calibr can seek alternative funds for projects
not licensed with Merck; both share in license revenues
Independent Board of Directors, headed by 5AM founder to oversee activities
Proposals (from scientific community) reviewed by scientific advisory board
TERMS AND THEIR NEGOTIATION
Do your homework and know what the value is for all players, and any sub-licensor How much could uni, professor, network etc. make?
Sublicensing Revenues Share of any payment to licensor by sub-licensee
Must be fair to each party leaving room for profit for investor (15-20% is go-to range)
Must never reach through (no set pass-through royalty) Agreement should include requirement for licensor to provide
licensee with complete copies of any downstream alliance the leverages the licensed technology
Should exclude payments for R&D Beware of university overhead charges
COMMERCIAL EVALUATION OF CANDIDATE PROJECTS
Price (M)
Dosage (g/day)
COGS (DM/kg)
Penetration rate (years)
-1500 -1000 -500 0 500 1000 1500 2000 2500 3000 3500
500 5000
3000
2000
1500
2.0 1.5 1.0
2500
5 46
NPV (DM millions)
Base Case = 791Source: Bayer AG
COMMON PITFALLS TO UNIVERSITY LICENSING
Poorly vetted patent applications Prior art; little diligence
Buy-back provisions In the case of not-best-efforts
Sublicensing terms that reach through taking more than is available, fundable or worthwhile All parties need to keep in mind the whole value chain
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STRIKING A BALANCE
For the university – big number, back-end loaded against milestones; indemnification; audit rights
For the investor – reasonable sub-licensing terms; royalties on first license revenues
For the inventor – R&D support; consultancy retainer For pharma/biotech – broad license with payments for
value-creating milestones; option for further IP (ROFR) In all cases – diligence in advancing program with grant-
back provisions; trust; transparency
Role of incubators at Universities• Need an infrastructure to support the university‐based entrepreneur
• Need to create an innovation ecosystem– Fully inform and develop innovators for the world of business
– What is a PRODUCT?– How to capture, profile, develop a business plan– Access to finance, investors, partners
JHU as an anchor of a larger regional economic development plan
These initiatives are connected to our anchor institution efforts Goal is for companies to start and stay in Baltimore Studies show that anchor institutions can play a central role in
promoting organic through entrepreneurship activities as a bridge between intellectual talent and the market
Each high tech job yields 5 additional jobs in local economy Public-Private-Philanthropic collaboration can yield remarkable
benefits Federal, state and local policies can support efforts We can look at other regions such as San Diego, Pittsburgh, St. Louis as
models
Space
Funding
Services
Office SpaceLab Space
Design Studio
MentorshipCorporate PartnershipsEntrepreneur Training
Core FacilitiesPre-Seed GrantsInvestment Fund
Three areas of focusInnovation Committee
Recommendations
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14 participants for 2015, launched in January MIRs work with students, faculty, and JHTV staff and bring
deep domain expertise to help accelerate the path of promising JHU technologies and startups
MIRs are encouraged to develop close ties with our inventors, entrepreneurs, and technology licensing team in order to help JHU further develop these technologies
Areas of expertise include:• Personalized Medicine, Life Science Tools & Services,
Oncology Development, Genomics, Computational Discovery, Software, Medical Device, Engineering, Angel/Venture Investment, General Business
Services: Mentors in Residence
70 participants from Johns Hopkins East Baltimore Schools• 47% Graduate students and residents• 42% Faculty• 11% Post docs
32 departments represented 23 start-ups were formed Plan to have all-campus bootcamp in 2015
Services: 2014 JHU Entrepreneurship Bootcamp
I-Corps 2014 (JHU joined DC-node in June 2014)• 8 JHU went through Regional I-Corps cohorts (representing
SOM and WSE)• 1 JHU company went through the National NIH I-Corps;
received $50k award Both programs provide real world, hands-on training on how
to successfully incorporate innovations into successful products.
Benefit: Helps teams make a go/no-go decision by validating their technology's market potential and identifying a solid product-market fit and building a viable business model.
Funding/Services: I-Corps Program for Startup Training FastForward Innovations: our home for start-ups
• Provides affordable, turnkey space for start up companies and venture concepts who wish to locate near JHU campuses
• Provides resources to entrepreneurs that will augment their experience including networking events, access to subject matter experts, business analysis support, educational programming, and introductions to funding sources
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3 dedicated ‘site miners’ who serve as industry mentors to faculty with a focus on commercial relevance of the invention
57 Awards to date; average grant size ~$100k Funded projects/companies representing SOM, WSE,
JHSPH, Peabody including many joint SOM/WSE collaborations
9 funded projects are now Maryland based startups Total JHU funding for PIs and companies FY 13-15 ~
$5.6M
Funding: Maryland Innovation Initiative- a TEDCO (State of Maryland) Program
9 companies in 2014 cycle• 5 of the 9 companies had a JHU affiliation• 4 of the 9 companies (3 JHU affiliated) have term sheets for
>$500k seed round or committed revenues 6 companies 2015 cycle kicked off January 2015 2015 partners: JHU, BHI/EAGB, UMB, Abell, DBED
Funding/Services: DreamIt Health
RELATED DOCUMENTS University of Virginia Patent Foundation. Operating Manual.
http://uvapf.org/operatingmanual
Ashley J. Stevens et al. The Role of Public-Sector Research in the Discovery of Drugs and Vaccines. NEJM: 364;6 February 10, 2011. http://www.nejm.org/
"IP Licensing in 2011: Five Best Practices for Life Sciences Companies”. http://www.datasite.com/
Mark Edwards et al. 2003. “Value Creation And Sharing Among Universities, Biotechnology And Pharma”. Nature Biotechnology 21:535-541. http://www.signalsmag.com/signalsmag.nsf/0/C233187B7556141E88256D8700658BE9/$file/Value_Creation0603.pdf
Carolina Express License Agreement and Users Guide: http://otd.unc.edu/starting_a_company.php#CaroExLic
Hofmann et al. Benchmarking Technology Transfer Metrics from Different Countries. http://www.autm.net/AM/Template.cfm?Section=Licensing_Surveys_Affilated_Organizations&Template=/CM/ContentDisplay.cfm&ContentID=2152
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