Transcript What is Venture Capital and why should I consider it?

Presentation by
Dr. Andreas O. Tobler
September 1, 2011
Tento projekt je spolufinancován Evropským sociálním fondem a státním rozpočtem České republiky
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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?
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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:
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Market clout and reach
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Capital & human resources
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May be able to cover many geographical markets
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“Deterrent” to competition
Disadvantages/Try to avoid:
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Often slow moving
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May use leverage
SMALL Partner
Advantages/Look for:
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You may have more leverage/more balanced
relationship
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Capital & human resources
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May have more clout/experience in certain or
specialized markets
Disadvantages/Try to avoid:
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Capital & human capabilities
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Experience, reach
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More exposed to competition
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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:
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a license or upfront signing fee;
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annual or other periodic fees;
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milestone payments;
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percentage royalties, which may include minimum
annual amounts, may be capped;
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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!
Projekt OP VK - CZ.1.07/2.3.00/09.0035
Tento projekt je spolufinancován Evropským sociálním fondem a státním rozpočtem České republiky