1. When Good Start Ups Go Bad: Worst-Case Scenario Management Strategies Live Webinar November 15, 2012

2. Your Expert Faculty Jack Brittain Pierre Lassonde Presidential Chair in Entrepreneurship, David Eccles School of Business, University of Utah Troy D’ambrosio Director, Pierre Lassonde Entrepreneur Center, David Eccles School of Business, University of Utah Kevin Lei Director, Faculty & Startup Services, Emory University Dr. Russell Medford Co-founder, President and CEO, Salutria Pharmaceuticals, LLC

3. Welcome Total Access Pass attendees Technology Transfer Tactics Distance Learning Total Access Pass allows you to customize a distance learning program for your staff and faculty at a steeply discounted price with 4 convenient formats. You can get details on our website at www.technologytransfertactics.com and click on Tech Transfer University on the left sidebar. www.technologytransfertactics.com

4. Program Agenda Managing researcher relationships in failed start-ups Challenges facing management team Clinical trial and technology validation failures: How they can cripple the company or present an opportunity When IP valuation comes back lower than expected Overcoming patent ownership and infringement challenges Capital efficiency and other economic factors Establishing key milestones and criteria for continuing support When and how to pull the plug Question and answer session

5. Managing researcher relationships University technologies tend to be under developed, require significant inventor collaboration Even if the researcher is part of the company, you want a research contract with clear deliverables Typically a failure point before outside investors are involved; biggest loss is entrepreneurs time and energy, which is valuable

6. Managing researcher relationships Business founder vs. scientific founder ▫Set right expectations ▫They’ve got to love each other Faculty founder as startup CEO or chairman ▫Not the norm but can lead to success stories ▫Be aware of commitment and sacrifice ▫Point of separating the roles of faculty founder and CEO/chairman

7. Understanding the Market Most common early launch failure is not understanding the market ▫Is your product a me-too or first in class? ▫Can you give it away? If not, problem ▫Who is the buyer? Do buyers have the money to buy? Designing for engineers versus for users What is the buy cycle, e.g., universities take years to buy and only buy at certain times of year

8. Challenges facing management team Divergent interests with an assumption of alignment Trust issues and micro management Management and the Board Leadership setbacks ▫Health issues ▫Family conflicts that compromise ownership Managing negative media and publicity ▫Sometimes there is unanticipated failure

9. Managing clinical trial and technology validation failures How they can cripple the company ▫Outside validation of scientific results important ▫The drug may not hit the target ▫A single first-in-human case may not be representative ▫Biggest issue is funds management ▫Out of money is out of business How they can present an opportunity ▫Research always has the potential for discovery, e.g., Viagra ▫Need to have a high level of capital efficiency, especially early, to be able to take advantage of opportunity ▫Definitely luck involved

10. IP valuation challenges Problem over and over is delays due to valuation differences that kill momentum Timing of funding is important, and delays over valuation can absolutely kill timing Speed is part of the time value of money for a startup

11. Patent ownership and infringement challenges Having a patent is not necessarily a “defensible strategy” ▫Patent suits without merit can kill a company ▫Another area where capital efficiency and a contingency funding plan is the difference between death and success Examples of how to overcome ▫May need a white knight ▫Take your competitor’s patents seriously even they seem not to be credible ▫License may have to be an option

12. Economic factors that can prove disastrous Capital efficiency ▫Many issues that are failure points hinge on this ▫Reason to subcontract as much as possible in early development phases Failure to understand economics of distribution can take out a company ▫Who in the supply chain makes the money? Succeeding to failure: working capital ▫Financing options are not options Macro- economics

13. Financing Issues Overly aggressive early valuations can lead to cram downs later ▫May hamper ability to finance ▫Need to have a plan for rounds of financing and take care of partners, including management ▫Avoid VC unfriendly capital structure if seed round led by angel investors Financing is equal to a relative loss of control (that’s not necessarily a bad thing!) ▫Liquidation value can exceed stock value ▫Keeping value in front of investors ▫Reality is investors may have different agenda

14. Establishing key milestones and criteria for continuing support A disciplined, strategic focus is a key requirement for company financing success ▫Get off critical path, scope creep ▫First things first: make the first sale An army marches on its stomach: management is the last paid, i.e., its not a job

15. “Know when to hold ‘em and when to fold ‘em” When ▫Know your value proposition: if you are not generating value or don’t have a viable plan to generate value, then it’s time to pull the plug ▫This may well be long before investor money is gone ▫Not losing all the investor money can be a good thing; return your calls ▫University does not have deep pockets How ▫Taking care of your fiduciary responsibilities to investors and employees ▫What keeps you in the game?

16. QUESTIONS? Utilize the public chat at the bottom left of your screen to submit your question. The panel will address them in the order they are received. Thank You!