The Evolution of the OTC

A comprehensive approach to technology commercialization The Texas A&M University System

Workshop Outcome Goals

Develop mission oriented criteria for each institution technology commercialization program Define spin-off/new company creation models that work in the Portuguese context Develop an internal venture opportunity plan for a university technology from your institution

Workshop Methodology

Form teams around universities that have a technology that may be the basis of a spin off company.

• If you haven’t brought a technology, join with another team Develop strategic thinking and materials for your university

Work Groups

University groups • If you did not bring a technology, join with a university that did Technology briefing • What • Why • Connection • Next steps

The Nine Points – A Common Understanding

Universities should reserve the right to practice licensed inventions and to allow other non-profit and governmental organizations to do so Exclusive licenses should be structured in a manner that encourages technology development and use

The Nine Points

Strive to minimize the licensing of “future improvements” Universities should anticipate and help to manage technology transfer related conflicts of interest Ensure broad access to research tools

The Nine Points

Enforcement action should be carefully considered Be mindful of export regulations Be mindful of the implications of working with patent aggregators

The Nine Points

Consider including provisions that address unmet needs, such as those of neglected patient populations or geographic areas, giving particular attention to improved therapeutics, diagnostics and agricultural technologies for the developing world

A Common Understanding

The nine points help to guide university licensing They are common themes across universities They provide the guardrails for licensing They help to guide the activities of the technology transfer office Is a successful commercialization office all about the licensing function working well?

Why We Do What We Do

Translate discoveries into products • Connects to the service mission of the university • Payback to the taxpayers that support the university in better products • • Generate economic development Protect our commercial partner’s investments with intellectual property • May generate a cash return Enable the commercial partners to invest in the product • Sometimes is required to commercialize

Primary Concept

“The main motivation for a university to transfer technology is an extension of its basic mission – to teach, to generate and share new knowledge, and to be of service to society. And sometimes technology transfer generates significant income for the company partner and the university. By maintaining the core values of the university while working with the private and public sectors to enable development of products, those of us in the technology transfer profession help change the world.” Agree? Anything to add?

Other Impact Points

What is in the mission statement of every university • Research • • Education Public service/public good Can (should) technology commercialization impact all 3 parts of the mission statement?

Is this how you think about your mission?

What Is Your Mission?

How does your technology commercialization mission support the university mission?

How do you currently measure impact?

How should you measure impact if you want to impact the university mission?

Define Your Mission and Measurements

How do you want the university to define your mission?

How do you want to be measured?

Texas A&M System Overview

OTC Facts Evolving Demands The Three Paths to Commercialization • Direct Licensing • R&D Alliances • Start-Up Formation Partnership

The Office of Technology Commercialization

Since its founding, the OTC has: • Processed more than 2,400 inventions created by A&M System faculty and staff • Filed more than 2,700 patent applications • Completed more than 1,700 License Agreements and Material Transfer Agreements • Generated revenues exceeding $60 million related to intellectual property rights

The Office of Technology Commercialization

Revenues have gone to support: • More than $20 million in sponsored research • Retention of important faculty • Support for more than 800 faculty and staff inventors • Sharing arrangements with co-developers like USDA and other universities

The Office of Technology Commercialization

The OTC: • Became the youngest technology transfer office in the top 25 in North America in revenues • Is in the top ten in the number of license agreements producing income • Does two-thirds of its license agreements with small businesses • • Files a patent every other day Completes a license agreement once a week

Impact of License Revenues at Texas A&M System

$10 million in one year. • Successful?

Where does that money go?

• $1 million for patent expenses • • • $2.25 million to run OTC $3.375 million directly to inventors $3.375 million spread across System Members with a combined budget of $3 billion Is that impactful to Texas A&M System?

In 2005 OTC Defined Commercialization Broadly

Licensing alone has minimal impact on the mission of the university • Education • • Research Public Service/Public good University commercialization must be broader than licensing • Industry-university partnerships are key to commercialization success

Office of Technology Commercialization

OTC is a matchmaker between System members and commercial partners • Single point of contact for partners • OTC works across silos OTC defines commercialization broadly • Licensing • • • New venture creation Increased research flow Assist with new research infrastructure

Evolving Demands

OTC’s strength has been direct licensing This is one of three basic activities that any technology commercialization office must be proficient in As Texas A&M becomes more sophisticated, the OTC is challenged to improve in other areas The future of the OTC lies in improving our abilities in the other two sectors of activity

Scope of OTC Services

Direct Licensing Research and Development Alliances • Industry • State/Federal Start-Up Formation

Improving Direct Licensing

Triage and Assessment • Preliminary Reports • Interview Reports Communication of Commercialization Plan • • Intellectual Property Strategy Marketing Strategy Disciplined selection of opportunities Follow-through Transparency

Technology Evaluation Matrix

Low Licensing Risk High Licensing Risk

High Value Added (Prioritize) Cost Drivers (Make a few smart picks where risk can be reduced; close the rest.) Low Value Added (Maintain low risk, increase reward if possible) Non Value Added (Waive/Release to Inventors)

Market Research Reports Help to Manage Risk

Low Licensing Risk High Licensing Risk

Meet Technical Milestones Cost Drivers Trade Value for Risk Reduction Waive/Release

Industrial R&D Alliances

Finding corporate partners to bring technology development forward In the past, reliance on faculty to initiate these Currently, members of licensing staff dedicate time to pursuit of industry alliances

UNIVERSITIES HEALTH SCIENCES AGENCIES

Scope of System Capabilities

• 11 Universities and the Health Science Center • Campuses in Texas and the Persian Gulf state of Qatar 7 state agencies 27,000 faculty and staff Performed $637 million in externally funded research Physical and Program presence in all of the state’s 254 counties In 2008 the A&M System • • educated 106,000 students in degree programs o 22,888 degrees awarded * * More than 1 in 5 students enrolled in a public university in Texas is attending an A&M System institution Agencies trained hundreds of thousands more students through practical extension programs

Single Point of Contact

The need is clear, but how?

The System was the only organization which spanned the Members • OTC’s business focus made it a natural fit for the job o o o Referred clients to appropriate Members/laboratories Worked across silos Recognized synergies between industrial clients and multiple Members Initially organized under Business Development in OTC

OTC and Business Development

(Philosophy of working with the Marketplace)

Understanding commercial needs and demands can uncover collaboration opportunities and potential funding • Offer need-driven research opportunities to the researchers Collaboration opportunities are an outcome of researchers gaining an understanding of commercialization Long-term commercial partnerships lead to research funding opportunities

Start Small - Build Upon Success

Bio-energy efforts were greatly assisted by OTC Worked closely with AgriLife Research and AgriLife researchers • Led to millions of dollars in sponsored research • Enabled AgriLife to pay for dedicated Corporate Relations staff • Has led to many more deals in AgriLife with large industrial partners

Model is Evolving

Moving towards a distributed Corporate Relations model • Multiple offices/people in each of the major Member organizations Created a new Associate Vice-Chancellor for Economic Development • Coordinates efforts and helps to create bridges between organizations

Corporate Relations Benchmarks

University of Wisconsin, Madison Office of Corporate Relations, Wisconsin Alumni Research Foundation, Research Park, WiSys Purdue University Office of Engagement, Office of Technology Commercialization, Research Park, PURE Database University of Michigan Academic and Corporate Relations Center

Operational Model

State and Federal R&D Alliances

Finding state and federal sponsors to bring technology development forward These alliances may include industry partners as well In the past, reliance on faculty to initiate these Currently, senior staff dedicate time to pursuit of these alliances

State and Federal R&D Alliances

Guy Diedrich • Vice Chancellor for Federal Relations and Commercialization Mark M. Ellison • Associate Vice Chancellor for Economic Development Dennis Beal • Director, Industry Alliances

Get Involved Early

Build a team of Trusted Technology Advisors for our two customer bases: • University researchers • industry/investment partners Long-term commercial partnerships can lead to research opportunities Collaboration opportunities are an outcome of researchers gaining an understanding of commercialization

Start-Up Formation

Creating companies • to allow us to move disruptive technologies forward • to allow us to get a greater return on new technologies In the past, reliance on entrepreneurial faculty to initiate these Currently, have a dedicated team that focuses on formation of start-ups

OTC and Start-up Creation

(Establishing New Business Entities)

Identify opportunities with start-up potential for equity investment Assist with market research, business planning and partnering (Commercialization Services) Partnering with early stage capital funds, investors, and strategic partners • Focus on the relationship and be demand driven Provide incubation possibilities at Texas A&M or with partners • Be born big with international presence from the beginning

The Pursuit of Regional Knowledge-based Competitiveness VISION

Build global companies from start-up by leveraging a network of networks built by technology commercialisation partners around the world • Technology networks • VC / High Net Worth Individual networks • • Industry networks Management networks

An Example of The Pursuit of Regional Knowledge-based Competitiveness

Memorandum of Understanding (MOU) between Wallonia Export and Investment on one side and

Texas A&M System

on the other.

 Wallonia is a partner of Texas A&M in the European Union for the commercialisation of their technologies.  AWEX is the contact point in Belgium for the realisation of the MOU at all Universities, Incubators, and Competitiveness Clusters .

 The MOU is based on reciprocity.

Creating a Joint Enterprise

Co-Identify Co-Protect Co-Invest Co-Locate Co-Market

The Model

Start with two locations Wallonia Co-Identify Co-Protect Co-Invest Co-Locate Co-Market Texas

The Model

Spread the wealth Co-Identify Co-Protect Co-Invest Co-Locate Co-Market EU US China Middle EastLatin Am

Results of Defining Commercialization Broadly

 $170 million in new revenue since 2006 ◦ ◦ ◦ State – industry – university research institutes State - industry – university partnerships to attract star researchers Industry – university multi-year research programs  Direct impact on the mission ◦ Education, research, public good

Keys to Success

 Top administrator support for commercialization  Key staff are from industry and speak the language of business  Commercialization becomes part of the project design  Industry partners know their ultimate goal is important to the university as well  ◦ ◦ Thinking beyond licensing to other possible business support Development funding New venture creation

Get Involved Early

Build a team of Trusted Technology Advisors for our two customer bases: • University researchers • industry/investment partners Long-term commercial partnerships can lead to research opportunities Collaboration opportunities are an outcome of researchers gaining an understanding of commercialization

Start-Up Formation

Creating companies • to allow us to move disruptive technologies forward • to allow us to get a greater return on new technologies In the past, reliance on entrepreneurial faculty to initiate these Currently, have a dedicated team that focuses on formation of start-ups

TAMUS Approach

Inventor led spin-out vs. university led spin out • Small equity stake vs large equity stake • • No investment vs cash investment No university business involvement vs university board seats • • Part time professor CEO vs full time CEO Small university upside vs large university upside

What Are Spin-Out Opportunities?

Goldilocks technologies • Not developed enough to attract licensees • Developed enough to attract angels Next steps usually involve further research at the university Value add step is relatively inexpensive Large market – fundable, exit strategy

Example Spin-Out

MacuClear • MacuCLEAR completed a Series A private placement totaling $1.5M to complete preclinical studies and attain the IND for activation of human clinical trials. In March 2009, MacuCLEAR also received follow-on investment of $1.7M from the Texas Emerging Technology Fund to complete Phase Ib human trials.

Example Spin-Out

Salient • Salient launched a CASAD Phase Ib human clinical trial at MD Anderson Cancer Center in Feb 2009, and trial results are expected in Q1 2010. Salient has raised $1.5M in convertible debt to support Phase Ib clinical trials and to fund ongoing testing at Texas A&M University identifying additional follow-on applications for CASAD. Salient has also been identified as a finalist to receive a $2.1M award from the Texas Emerging Technology Fund to support Phase II/III trials and follow-on applications.

Spinouts

Spinout companies are a tool, not the only tool.

Example scenarios • Belsim • Global BioDiagnostic • Lisam

“Our goal is not only to discover knowledge, but to apply it,” Chairman Bill Jones Board of Regents

What Tools Can Be Applied In Your Model?

Portfolio management?

Involvement in developing industrial relationships/research programs?

Involvement in strategic research initiatives?

Economic development mission?

University led startups?

International startup partnerships?