The Evolution of the OTC

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The Evolution of the OTC

• A comprehensive approach to technology
  commercialization

The Texas AM University System
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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

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Workshop Methodology

• Form teams around universities that have a
  technology that may be the basis of a spin-off
  company.
• If you havent brought a technology, join with
  another team
• Develop strategic thinking and materials for your
  university

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Work Groups

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

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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

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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

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The Nine Points

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

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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

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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?

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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
• May generate a cash return
• Generate economic development
• Protect our commercial partners investments with
  intellectual property
• Enable the commercial partners to invest in the
  product
• Sometimes is required to commercialize

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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?

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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?

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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?

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Define Your Mission and Measurements

• How do you want the university to define your
  mission?
• How do you want to be measured?

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Texas AM System Overview

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

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The Office of Technology Commercialization

• Since its founding, the OTC has
• Processed more than 2,400 inventions created by
  AM 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

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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

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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

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Impact of License Revenues at Texas AM 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 AM System?

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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

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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

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Evolving Demands

• OTCs strength has been direct licensing
• This is one of three basic activities that any
  technology commercialization office must be
  proficient in
• As Texas AM 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

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Scope of OTC Services

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

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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

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Technology Evaluation Matrix
Low Licensing Risk High Licensing Risk
High Reward High Value-Added (Prioritize) Cost Drivers (Make a few smart picks where risk can be reduced close the rest.)
Low Reward Low Value-Added (Maintain low risk, increase reward if possible) Non Value-Added (Waive/Release to Inventors)
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Market Research Reports Help to Manage Risk
Low Licensing Risk High Licensing Risk
High Reward Meet Technical Milestones Cost Drivers
Low Reward Trade Value for Risk Reduction Waive/Release
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Industrial RD 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

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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
  states 254 counties
• In 2008 the AM System
• educated 106,000 students in degree programs
• 22,888 degrees awarded
• More than 1 in 5 students enrolled in a
  public university in Texas is attending an AM
  System institution
• Agencies trained hundreds of thousands more
  students through practical extension programs

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Single Point of Contact

• The need is clear, but how?
• The System was the only organization which
  spanned the Members
• OTCs business focus made it a natural fit for
  the job
• Referred clients to appropriate
  Members/laboratories
• Worked across silos
• Recognized synergies between industrial clients
  and multiple Members
• Initially organized under Business Development in
  OTC

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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

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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

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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

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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

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Operational Model
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State and Federal RD 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

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State and Federal RD Alliances

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

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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

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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

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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 AM or
  with partners
• Be born big with international presence from the
  beginning

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The Pursuit of Regional Knowledge-based
CompetitivenessVISION

• 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

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An Example of The Pursuit of Regional
Knowledge-based Competitiveness

• Memorandum of Understanding (MOU) between
  Wallonia Export and Investment on one side and
  Texas AM System on the other.
• Wallonia is a partner of Texas AM 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.

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Creating a Joint Enterprise

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

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The Model

• Start with two locations

Wallonia
Texas
Co-Identify
Co-Protect
Co-Invest
Co-Locate
Co-Market
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The Model

• Spread the wealth

EU
US
China
Middle East
Latin Am
Co-Identify
Co-Protect
Co-Invest
Co-Locate
Co-Market
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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

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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

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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

49
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

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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

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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

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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.

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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 AM 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.

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Spinouts

• Spinout companies are a tool, not the only tool.
• Example scenarios
• Belsim
• Global BioDiagnostic
• Lisam

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Our goal is not only to discoverknowledge, but
to apply it, Chairman Bill Jones Board of
Regents
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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?