Perspective from a Multinational

lifesciences@workExpert Class – Intellectual Property & Licensing

Ruth Donners

Venture Development Manager

May 25, 2018

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Short Introduction to DSM

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Mission

Our purpose is to create brighter lives for people today and

generations to come

We connect our unique competences in Life Sciences and Materials

Sciences to create solutions that nourish, protect and improve

performance

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Royal DSM at a glance – a company with a purpose

• Sales ~€8.6bn (9% growth in 2017)

• EBITDA €1,445m (15% growth in

2017)

• ROCE 12.3% (up 190bbps)

• Global company with 65% of sales

outside Europe

• Highly engaged workforce: ~25,000

employees

• Intrinsically innovative company: 21%

sales from innovation

• ~ 45% sales from high-growth

economies

• Strategy well aligned with the

Sustainable Development Goals

Animal Nutrition

& Health

Human Nutrition & Health

Food Specialties & Personal Care

Materials

(2017 numbers)

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DSM has become a truly global company

Africa:

73 employees

North America

> 3,000Europe

> 9,000Asia

> 6,000

RoW

> 250

Latin America

> 2,000

~60% employees

outside Europe(2017)

(37% - 2006*)

Global workforce (FTE)

~25,000 employees incl. JVs/Associates

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DSM has become a truly global company

Net sales by destination (%)

Japan

India

China

W-Europe

Eastern Europe

Rest of Asia

Latin America

North America

Rest of the World

65%sales

outside Europe (2017)

(48% - 2006*)

22%

12%

13%

2%

3%

10%

3%

28%

7%

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Active in Health, Nutrition and Materials

• Leading supplier of nutritional ingredients (including vitamins, carotenoids, omegas,

food/feed enzymes, cultures, yeasts, nutraceuticals) for the feed, food and personal

care industries

• Leading supplier of sustainable high performance materials for the automotive, electrical

& electronics and building & construction industries

• Recognized as top innovator active in biomedical materials, advanced biofuels, bio-based

chemicals and advanced solar systems

Health Nutrition Materials

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DSM offers products & solutions to a wide range of end-markets

14%

6%

10%

4%

32%

5%

7%

6%

10%

6%

Food & Beverages

Electrical & Electronics

Automotive

Building & Construction

OtherEarly lifenutrition

Dietary Supplements

Animal Feed

Personal Care

(Food) Packaging

Dairy

RTE meals

Soups / Sauces / Spreads

Wine-Beer-Fruit drinks

Materials

Nutrition

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Innovation at DSM

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DSM transformed in an intrinsically innovative company

* As reported in 2006 Annual Report / 2006 Triple P report (not restated)

21% (2017)

Innovation Sales

(2% - 2006*)

All @ Higher Gross Margins

New Materials &

Biotech/Food Lab

Top Quartile

Innovation

Benchmark

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DSM organized for new growth platforms & accelerating

innovation

Page 10

BiomedicalBio-based Products

& Services

Advanced Solar Business incubator

Excellence in Innovation Venturing

IP & Licensing Science & Technology

DSM Innovation Center

New Business Development Enablers / Accelerators

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Innovation at DSMWhy do we need Open Innovation?

DSM

99.9996% of world population outside DSM!

Networks needed!

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Intellectual asset management is essential for OI

Fuzzy

start

Well

define

d goal

Interaction

/ Synthesis

Intellectual Asset Management

Licensing

In Venturing

Spin in

Joint

Business

Developments

Acquisitions

Licensing

Out

Spin out/off

Divestments

R&D services

Market Scouting / Business Intelligence

Competence Development, Technology Intelligence

Open innovation has become a competitive necessity!

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Type of partnerships depend on complexity

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Partnering discussions – guiding questions

•What is the strategic logic for this deal?

•What is the most appropriate transaction vehicle for the deal?

Strategy and business opportunity

•What do we need from a partner?

•Is this the right partner?

Partner selection and due diligence

•Which overall deal structure meets out requirements, is feasible and financially attractive?

•What are the detailed deal terms that we need to agree on?

Deal options generations

•What negotiation strategy and tactics should we adopt?

•What are the final deal terms?

Detailed negotiations and strategic choices

•How do we operationalize the partnership?Launch planning and

implementation

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Action time

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What to do and don’t do in collaborations

Do’s• Set goals

• Invest in creativity

• Engage your targets

• Equalize the playing field

• Take charge of IP

• Catch synergy

Don’ts• Think of “Mine”

• Keep culture set in stone

• “Let it happen”

• Get GREEDY

• Delay starting to collaborate

• Double up

Collaborate to win, don’t compete to prevent loosing out.

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Intellectual Property in collaborations

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IP Ownership vs. Use Rights

• A lot of people focus on IP ownership rights… but it’s the use rights that matter in

practice.

• Think broader than patents

– Registration data

– Market related data – eg. outcome of customer trials

• Before starting a collaboration, getting a license, think of which access you will need

in the commercialization stage and try to arrange basic principles for

commercialization in the development or license agreement

• In collaboration agreements including governmental funding (eg H2020) sometimes

certain aspects are obligatory, others are negotiable.

START WITH THE END IN MIND!

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Role of intellectual property in collaborations

• IP as currency in collaborative innovation

• For joint developments foreseeing future commercialization the following topics

are to be addressed:

– Background IP• Ownership: preferably stays where it is

• Use Rights: preferably restricted to alliances goal

• Scope: might change in course of the collaboration

– Foreground IP• Inventorship: arranged by law. In case of another party owning than inventing,

proper assignment needs to be arranged.

• Ownership: preferably at one party -> note that if you do not arrange foreground

ownership explicitly it will generally follow inventorship.

• Use Rights: preferably arranged via licensing clauses, using field definitions to ensure

to reach the alliances goal.

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Licensing

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Action time: what can be licensed?

Trademarks, Service Marks

Trade dress©opyrights and related rights

Mask work

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IP valuation – 3 methods

• Cost– Avoidance of development (de-risk)– Replacement – Reproduction– Used when work-around easy

• Market– Supply and demand– Comparable transactions– Most used and misused

• Income– Future cash flow generated from use of IP– Discount factor– NPV– Most defendable

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State of development influences value

(source: Global Biopharmaceutical Royalty

Rates & Deal Terms Survey, LES, 2012)

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Finding the Delta: what’s the business case?

Step 1

Case Valuation Finding Delta

Step 2

The ‘Share’ Yours and

Mine

Step 3

Validate, Validate, Validate

Step 4

Build to Assertions;MSS, LAS, BATNA*

ACase

BCase

Negotiate

Delta is not ‘Yours’…. but ‘Yours & Mine’..

yours mine% ?%

*Maximum Supportable Solution

Least Acceptable Solution

Best Alternative to Negotiated Agreement

(Roger Fisher & William Ury)

“Gotta

have the

goods”

Delta

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Examples of start-up related activities in DSM

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DSM Venturing

DSM´s competence center for external (VC) participations

aimed at boosting innovation & growth

Window to the worldExplore new emerging markets, technologies and products in order to enhance DSM´s

product portfolio, technology toolbox and business model(s)

Strategic valueAdd value internally and externally through facilitating strategic co-operations with

start-ups

Financial returnCreate value by investing in and divesting start-up companies

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When does DSM Venturing invest?

High

LowLow

High

EmergingTechnology Proof of principle Commercialization Expansion

Time

Venture Capital

Public/PE

Grants

"Angels" Sa

le

s

Inve

stm

en

t &

Ris

k

Financing

gap

Risk

Investment

amounts

Sales

DSM Venturing

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Provexis example

WHY

• DNP Growth strategy - Cardiovascular

Health&Wellness portfolio

• Complimentary to existing products

• Short cutting in-house development process

WHAT

• Fruitflow is a tomato extract reducing platelet

aggregation

• Approved EFSA health claim, GRAS and novel food

• Exclusive global license for DSM to sell the

product

HOW

• Equity investment used to finalize development &

manufacturing

Fruitflow®

Health ingredient from

Venturing Investment

PARTNERSHIP / VENTURING

INVESTMENT

LAUNCH PROGRAM:

STARTUP ACCELERATION*

VALIDATION PROJECT*

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Innovation partnering conferences

• We organize yearly innovation partnering conferences.

• The 2017 ‘Connecting Bright Innovations’ Innovation Partnering Conference, took

place in Delft.

• A total of eight promising start-ups were invited to pitch at the event, which

focused on new and innovative products and biotechnologies for food, health and

(bio)tech applications.

• A panel of expert venturing and innovation specialists evaluated the pitches with a

view to their suitability for further financing and partnering opportunities. Follow

up actions have resulted in new activities with selected start-ups.

• This was set up in collaboration with the nutritional capital network.

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