IP status – the partner’s view

Yael Weiss

Medical Director

MSD Israel

2

Rules of thumb

• Strong IP (not use patents, ability to expand and maintain IP)

• Novelty

• Ability to incubate and mature project in house because of “The later the better” concept: mandatory – proof of concept in vivo

• Partnership for collaboration and further/future development (depending on type of deal)

• Strategic fit (less relevant in case of VC’s)

3

Collaboration with Emerging Scientific Markets

Objectives

Identify ex-U.S. markets with high potential for I.P assets, entities and technologies in pharma-related R&D:

– NCEs: novel chemistry; known MOA (is highly preferred, but not essential); proof of concept; validated in vivo

– NBEs: proof of concept; validated in vivo– Platforms: HTS; assays; informatics; drug delivery; molecular

profiling

Source: MRL External Scientific Affairs - Strategy for Growth (Presentation by Dr. Lew Mandel)

4

Projects at MRL: Product Types

New Chemical Entity (NCE) – Small molecules:• Novel chemistry - single enantiomer with Mol. Wt. 200-800

• Product patent (vs. use) & worldwide

• Defined biochemical mechanism (potent & specific)

• Proof-of-concept in at least one animal model (oral activity, low dose)

• Favorable PK & few metabolites

• First- in-class or best-in-class is ideal

New Biological Entity (NBE) – Therapeutic proteins:• Characteristics (fully human, high binding affinity, low toxicity/immunogenicity)

• Patent (composition and use)

• Targets (ID, Cancer, Inflammation); or, where small molecules do not work

• Flexibility (antagonist or agonist, single chain, may be bispecific)

• Administration (IV or SC, minimal infusion reactions)

• Manufacture (ease of production, reasonable cost of manufacture)

Source: MRL External Scientific Affairs - Strategy for Growth (Presentation by Dr. Lew Mandel)

5

Collaboration with Emerging Scientific Markets

Factors Considered Include:• Research centers with strongest scientific disciplines• Publications and patents • Number of scientists engaged in academia and industry• Level of government support & R&D incentives• Local on-the-ground support

Potential Interactions Include:• Acquire new lab methodologies• Purchase sample collections• Establish basic research collaborations• Chemistry Outsourcing• Optimize an early lead compound• License-in a specific NCE or NBE

Source: MRL External Scientific Affairs - Strategy for Growth (Presentation by Dr. Lew Mandel)

6

Academic Environment: Knowledge Capital

Notes: * Leading magazines; Nature, Science, The Cell

Source: Monitor Report, PubMed/Medline Database, “Technology Profile Report, Patent Examining Technology Center Groups, 1630-1660, Biotechnology” US Patent & Trademark Office, 2001

Publications of Life Science Research in Leading Magazines* per 100, 000 Inhabitants (1999)

0.48

0.290.26

0.160.14

0

0.1

0.2

0.3

0.4

0.5

0.6

USA Israel UK Canada Germany

Nu

mb

er o

f P

ub

lica

tio

ns

US Patents Granted in Biotechnology by Origin of Inventor per 100, 000 Inhabitants (1999)

2.2

1.7

1.0

0.5 0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

USA Israel Canada UK Germany

Nu

mb

er o

f P

aten

ts

7

Academic Environment: Knowledge Capital

Total of 210 projects

. Source: Technology Transfer Companies web sites and company web sites

Applied Research Projects in the Academia & Hospitals Available for the Industry (2003)

86% of the projects are in the academia

14% of the projects are in the Hospitals

Yissum of the Hebrew University & Yeda of the Weizmann Institute hold almost 60% of all the available projects.

In the Biotechnology industry in Israel, especially in the therapeutics and bioinformatics segments, almost 50% of all the companies and projects are based on knowledge created in the academia and transferred to the industry. The rest of the industry is mostly based on independent ideas of local and newly immigrating scientists

Alternative sources of knowledge can be found mainly in the medium/big companies, where some knowledge is created in-house or in-licensed from foreign companies

Companies created by spin-offs are very few

31%

28%

10%

6%

5%

5%

1%

7%4% 3%

Yissum - Hebrew University

Yed- Weizmann Institute

BGN- Ben-Gurion University

Ramat- Tel -Aviv University

DimoTech /BioRap- Technion

Bar-Ilan University

Gavish- Migal Research Institute

Hadasit- Hadasa Hospital

Mor- Clalit Hospitals

Other Major Hospitals

8

Government Support: Many Different Initiatives

“Nofar” Pre-Seed Grant for applied Bio-Research in Academia

• Grant (without Royalties)

• 90% up to $ 100 K over 1 year

“Incubator” Pre-Seed Grant & Infrastructure for Start-ups

• Grant with Royalties reimburse

• 85% up to $ 300 K over 2 year

“Tenufa” Pre-Seed Grant for Entrepreneurs

• Grant (without Royalties)

• 85% up to $ 50 K

Academia

Industry

“Magneton” Technology Transfer from Academia to Industry

• Grant (without Royalties)

• 66% up to $ 0.5 M over 2 Years

“Magnet” Consortium for Developing Platform Technologies

• Grant (without Royalties)

• 66% over 3 years

“Haznek” Seed Fund for Start-ups

• Convertible Bonds …………………..with option to investor

• 50% up to $ 1 M over 2 Years

“Bio-Incubator” Seed Grant & Infrastructure for Biotech Start-ups

• Convertible Bonds

• 75% up to $ 1.35 M over 3 year

“Bi-National” & “International” Funds for industrial collaboration

• Grant with Royalties reimburse

• 50% up to ~ $ 0.9 M (BIRD-F)

Support for R&D based Companies

• Grant with Royalties reimburse

• 20-50%

Support for Long Term R&D Big-Companies (with manufacturing)

• Grant (without Royalties)

• 50% up to $ 15 M

Incentive for Approved Factory (in regular & preferred location)

• Grants with Royalties reimburse

• Tax exemptions

Pre

-See

dS

eed

Mat

ure

“Privatized-Incubator” Grant & Infrastructure for Start-ups• Convertible Bonds

• 85% up to $ 500 K over 2 Years

Source: Ministry of Industry & Trade (www.moit.gov.il)

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How are we perceived?

Upside Downside

(well recognized) (areas for improvement)

General Entrepreneurial Culture difference

Innovative Distance

Basic research High quality Mostly very early stage

Governmental funding IP (?)

Clinical trials Very high quality Costs increasing

Marketing Receptive to innovation Small and limited market

IP and data protection issues

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Projects at MRL: Therapeutic Areas

Top Priority includes:• Obesity• Alzheimer’s disease• Cancer• BiologicsHigh Interest:• Neurological Disorders: anxiety, cognition, depression, schizophrenia, Parkinson's

diseases• Metabolic Diseases: type II diabetes• Infectious Diseases: anti-bacterial, anti-fungal, anti-viral & vaccines• Cardiovascular Diseases: atherosclerosis, hypertension, atrial arrhythmia• Respiratory Diseases: asthma, chronic bronchitis & COPD• Immunological and Inflammatory Diseases: autoimmune diseases, chronic pain,

osteoarthritis & rheumatoid arthritis• Ophthalmology• OsteoporosisOpportunistic:• GastroenterologyAlso:• Imaging techniques to follow response to therapy, animal models of disease, platform

technologies

Source: MRL External Scientific Affairs - Strategy for Growth (Presentation by Dr. Lew Mandel), phone conversation with GW

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Backups

12

Merck Research Laboratories: Facts & Figures

• Merck Research Laboratories (MRL) is the R&D division of Merck operating at multi-locations world wide, with nearly 10,000 employees.

• Merck had a research budget of $3.2 Billon in 2003.

• The accomplishments include:– Over 1000 scientific papers published each year

– About 250 new patent applications filed each year

– 16 new drug applications (NDA) approved in past 7 years

• Actively pursue of external relationships to complement internal research

Source: MRL External Scientific Affairs - Strategy for Growth (Presentation by Dr. Lew Mandel)

13

Merck Research Laboratories: Strategy

• Select major medical targets

• Select the right target by understanding the mechanism to improve existing therapies Focus on the new chemical entity (NCE)

• Shorten length of R&D at the research & pre-clinical development

• Discriminate between projects as they progress through development, with a rapid proof-of-concept tested clinically

• Establish the best scientific program in the area by either internal research, external collaborations, or both

• Partner & collaborate with top R&D organizations, to support future growth, by a wide range of relationships: from licensing through joint ventures

Source: MRL External Scientific Affairs - Strategy for Growth (Presentation by Dr. Lew Mandel)

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The deterioration in Israel’s IP regime 1998 - 2005

• 1998 – Amendment to the patent law to allow experiments on patent protected products.

• 2000 – Israel does not adopt data exclusivity despite its commitment under TRIPs

• 2004 – Government proposes a marketing exclusivity bill which falls far short of international standards.

• 2005 – The Government proposes to amend the patent law and considerably shorten the patent extension period.