Presentation by Dr. Andreas O. Tobler September 1, 2011 Tento projekt je spolufinancován Evropským sociálním fondem a státním rozpočtem České republiky

 What is Venture Capital and why should I consider it  Nuts and Bolts of a Business Plan  What is my Company worth  How do I find an Investor  Business Strategy versus Product Strategy

What are the Options to develop and commercialize my Product?

Outright sale of drug candidate/medical device, including IP (Deed of Assignment) Advantage: Upfront cash; no further development work; no marketing costs; elimination of risk Disadvantage: Ceases to own the technology; no future revenue stream, limits total return Deed of Assignment is a Technology Transfer

Develop/Commercialize drug candidate/medical device yourself Advantage: Future revenue stream; potential high total return; build product portfolio and viable company. Disadvantage: high risk; high cash need; risk associated with development & commercialization; competition

Partner/JV to Develop/Commercialize drug candidate/medical device Advantage: Risk limitation; future revenue stream; potential total return; build product portfolio and viable company; strength of partner/reduced risk of competition. Disadvantage: Risk remains; cash need remains; risk associated with development & commercialization; general issues with a partner, i.e. decision making etc. Partner/JV can be a partial or full technology transfer

License drug candidate/medical device Advantage: Risk limitation; future (reduced) revenue stream; upfront, milestone payments, royalties; potential total return; build product portfolio and viable company; strength of partner/distribution channels; reduced risk of competition. Disadvantage: Risk remains; some cash need remains; risk associated with development; reliability/capability of Licensee; general issues with a partner, i.e. decision making etc. License is a full or partial technology transfer!

What are the major similarities/differences between drugs and medical devices?

Similarities: For human use, IP, target audience: doctors, nurses, hospitals. Differences: Development time; time to commercialization; capital needs; regulatory pathway; sales channels; partners

How do you create value with your product?

 Build platform (compounds with possible multiple applications or “multi-purpose” compounds) from which more than one product can be developed/commercialized (e.g. one compound may address several cancer indications);  Divide market into different channels (e.g. drug and cosmetic applications);  Use geographical areas to create incremental revenues;  Build pipeline to become multi-product company.

LARGE Partner Advantages/Look for:  Market clout and reach  Capital & human resources  May be able to cover many geographical markets  “Deterrent” to competition Disadvantages/Try to avoid:  Often slow moving  May use leverage

SMALL Partner Advantages/Look for:  You may have more leverage/more balanced relationship  Capital & human resources  May have more clout/experience in certain or specialized markets Disadvantages/Try to avoid:  Capital & human capabilities  Experience, reach  More exposed to competition

 Field of Use  Exclusivity  Payment Terms  Master Files  Term of License

Field of Use The “Field of Use” provision limits the licensee’s rights in the licensed technology to specified applications: Consider a Compound that might have potential preventive, diagnostic or therapeutic uses for several disease indications in both humans and animals. It is in the interest of the licensor to give the licensee a field of use that permits the licensee to effectively exploit the Compound in its desired field of use, but not to deprive the licensor of the opportunity to exploit the other potential uses.

Exclusivity Due to the prohibitive cost of, and long odds against, developing a pharmaceutical product, non-exclusive licenses of Compounds with therapeutic potential are rare because a licensee would not undertake the development without the benefit of the legal monopoly created by an exclusive license Non-exclusive licensing is generally confined to “peripheral inventions”, such as drug delivery systems or discovery methods.

Payment Terms The economic terms of a license are business matters, i.e. they are up to you to negotiate and accept or decline. Some or all of the following are common in pharmaceutical/medical device license agreements:  a license or upfront signing fee;  annual or other periodic fees;  milestone payments;  percentage royalties, which may include minimum annual amounts, may be capped;  and the expenses of the patent prosecution program.

Milestone Fees - Drugs Milestone Fees are usually triggered by the typical development benchmarks for a pharmaceutical product, the achievement of which validate the value of the compound or material. Typical milestones are:  Identification of a lead candidate for development  Filing of IND or equivalent  Completion of Phase I clinical trials  Completion of Phase II clinical trials  Completion of Phase III clinical trials  Filing of NDA or equivalent  Approval of NDA or equivalent

Milestone Fees - Drugs  Be realistic in your assumptions on how much time you will need to complete each milestone;  Do not commit to any time for work completion outside of your control (e.g. regulatory approvals, work to be completed by licensee etc.)

Master Files/Records The Drug Master File is the collection of information and data that results from the development process for a potential pharmaceutical product, such as toxicology studies and clinical trial results. The Device Master Record (DMR) is the term used in the Quality System (QS) regulation for all of the routine documentation required to manufacture devices that will consistently meet company requirements. Section 820.3(j) of the QS regulation defines device master record as a compilation of records containing the procedures and specifications for a finished device.

Term of License Term of license determines for how long you license the product (drug compound or medical device) to the licensee. Usually limited to the life of the respective IP, but can be shorter or longer

Patent issues (New inventions & related patents? Improvements? Ownership? Filings? Costs? Defending IP?); Manufacturing and Supply Agreements (for drug compounds & medical devices; licensor, licensee, third party?) Documentation (Who is responsible for what? Expectations? Costs?

Hire an experienced technology licensing attorney! Tento projekt je spolufinancován Evropským sociálním fondem a státním rozpočtem České republiky Projekt OP VK - CZ.1.07/2.3.00/