Research outside the University environment

MC2Dr Curtis Dobson – 11thApril 2006

Research outside the University environment

Dr Curtis DobsonAi2 Ltd

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1. University issues license direct to industry

2. Start up a company, which pays University for IP (via a long term loan and equity position), and develops, markets and licenses the technology to third parties

Depends on:

a. Nature of technology + how well developed it isb. Market size, hurdles and competitorsc. Career goals of inventor

Options for taking technology to market


UNIVERSITY

INDUSTRY

Spin Out Company

CONSUMER

License

License

Spin Out Company

My focus this morning


How to starta Start Up


Start Up Check List • Intellectual Property which is:

Secret Novel Inventive

Offers a potential solution to a problem for which there currently is no solution

Problem is sufficiently widespread / serious that substantial income (> $50m pa) could be made by providing a solution

Many such problems can be tackled by same technology (technology platform)

i.e. patentableOut-license

Start Up


Start Up Check List – Phase 1• In phase 1 (approx 6-9 months) you should aim to raise

sufficient funding to:

Incorporate company, devise financial procedures, open bank account, draw up Articles of Association, appoint directors

Generate proof of principle data

Where appropriate build a prototype

Investigate the markets and aim to develop links with major companies operating in that area

File provisional patent applications


Start Up Check List – Phase 2In phase 2 (18 months) you should aim to raise

sufficient funding to:

Find premises

Devise detailed business plan

Maintain and expand patent portfolio

Assemble world-class management team, and (if appropriate) scientific advisory board

Carry out research and development work


Timing Phase 1 Phase 2 Phase 3 Phase 4

(6-9 months) (+ 18 months) (+ 12 months)Founders and Early Investors Exit Goal (5/7 yrs from start) via eg. a trade sale, IPO

Research Institution and Associated Involvement

(Reducing Risk) Dedicated Professional Management

(Building Value)

Ai2 incorp. (Apr 05)

XX

Ai2 (Jul 05)

Proof of Principle

Prototyping

Patenting

Incorporation

Shareholders agreement

Business Planning

Forming Partnerships

Finance from Business Angels/ VCs / University Challenge

Consultancy

Incubation Premises

Early Trading

Financing from Business Angels, consortia and funds.

Board reconstruction

Service contracts

Volume sales and profits

Independent business premises.

More financing (VCs, investment banks, Private Equity Firms)

What to expect….

Ai2 (Apr 06)

X


Senior Management Chairman

Chief Executive Officer (CEO)

Board of Directors

Chief Scientific / Technical Officer (CSO / CTO)

Panel of Scientific Advisors

Company Secretary


How does the company keep operating until it is profitable?

Government / Charity: Wellcome UTA, SBRI, FRAMEWORK 6 etc.

Investment, including Venture Capital Funds

• Will provide funding in return for shares in the company

• Investment provided in rounds – different VCs specialise in different levels of funding / risk

• Investment increases as company grows / nears market (e.g. £100-250k for “seed” funding, through to many tens of millions in some series C / Series D

• VC’s initially salesmen… …but ultimately buyers


Why starta Start Up ?


Benefits for the technology / research:

1. Access to venture capital investment

2. Access to cutting-edge incubator laboratories (for a fee)

3. All aspects of business development handled by small specialist team, rather than large generalist University IP department

4. Longer term access to investment capital via stock market flotation

5. Possibility of trade sale of company


1. Research areas which are too commercially focused for academia, though too risky / early stage for large companies to explore are not “frozen”

2. Converts IP “raw materials” into a lower risk package which is attractive to larger companies

3. Financial / economic – creates jobs and clusters of small businesses in similar areas, along with jobs in support companies

4. Attracts larger companies to a region

Benefits to industry / society:


1. Academic research increasingly “iterative”. Start ups offer opportunity to carry out heavy lifting to put your idea into practice, and make a real difference

2. New career possibilities - small spin out companies / IP law / business

3. Maintain academic research programme, yet benefit from SME experience

4. Better paid / better resourced

5. Equity position, which can eventually prove highly valuable

6. Networking

7. Profile

Benefits for the researcher:


CAVEAT - don’t do it if these issues worry you:

• Less time for research, especially “blue sky” research

• Substantial time spent on administration, business plans, financial systems, legal documentation, fundraising etc etc.

• Bar on presentation / publication until patents filed

• Need to prioritise applications which are closest to market

• Less job security (relative to tenured academic role at least)


How does it compare with traditional industrial research:

• More time for academic research

• Administrative procedures may be less cumbersome

• Technologies may be riskier, and more cutting edge

• Closer ties to Universities

• Culture more akin to academia

• Organisations leaner and more fleet of foot – higher productivity


Ai2 Ltd – a case study


• Colleagues find that a human gene (APOE) determines the outcome of a broad range of viral infections • My discovery of a region of the protein (apoE) coded for by the gene with antiviral activity against herpesviruses and HIV

My Intellectual Property


Lead for antiviral / anti-HIV therapeutics ?


HIV

Lipoproteins resemble virus particles, and occupy the same cell biological niche

Human Serum Lipoprotein

Lipoproteins and virusesevolutionary convergence?


• 1.6 million individuals infected with HIV in US, Western Europe and Japan

• 14,000 new cases per day globally

• Market for anti-HIV chemotherapy $5.1b in 2002, and growing

• HIV strains are becoming resistant to current therapies

Need for new anti-HIV medicines


HIV Replication Cycle

nucleusvirus

virus

virus virus

HUMANCELL

virus virus

virus

attachment

fusion

replicationreconstruction

HUMAN CELL DESTROYED

1 / 21 / 233virus

virus

virus

5 ?5 ?44

Existing Therapeutic Targets (1 to 4)


• Genetics Innovation Network (University of Manchester / Liverpool) - £40k

• New peptides

• Other human protein regions with similar activity ?

GIN – unique early stage funding – NW England.


• Discovery of second apolipoprotein region with activity

• Invention of two families of compounds relating to both original and new protein region, with distinct activity profiles

• Activity against all strains of HIV tested, via novel mechanism

Outcome of GIN programme (late 2003)


Broad anti-HIV activity of new compounds


• Many peptides from non-mammalian sources / non-natural sequences have antibacterial activity

• Features similar to our human apoE peptides

• Commercially more likely to succeed quickly:

• No need for peptide to enter body

• Medical devices in particular probe to infection – often biocompatible, but without capacity to fight infection

Antibacterial activity?


Coating to Prevent Medical Device Related Infection

Materials treated with (fluorescent) peptide,

and thoroughly washed

Untreated Treated


UntreatedUntreated TreatedTreated

Peptide-treated medical device materials resistant to Pseudomonas infection


Discovery of specific regions of human proteins rich in anti-infective activity

Proven platform technology to provide novel and safe anti-infective coatings and therapeutics

Unique opportunity to target unmet needs in high-growth and high-value markets,

with several opportunities for early revenue generation


Ai2 aims to become a significant player in the large and growing anti-infectives market

Core Business is identification of unmet anti-infective needs in the healthcare market, and application of Ai2’s proven platform technology to address those needs

Current Focus on unmet biocompatibility and infection needs at the interface between biology and polymer surfaces (catheters, IV-equipment and related medical devices). Clear early revenue opportunities identified and currently being pursued

Management Team of international calibre, includes former senior executives from blue chip medical device and pharmaceutical companies in UK and US

Awards Most exciting biotechnology company in NW England

Overview


North West Biotechnology North West Biotechnology Project of the Year 2004 Project of the Year 2004

North West North West Biotechnology Start up Biotechnology Start up of the Year 2005of the Year 2005


Product Pipeline – Key Product Product Pipeline – Key Product AreasAreas

Novel Therapeutics

Long termLarge Market

Novel prophylactics

Building on antibacterial coating

technology

Medical Device coatings

Partners in place

Higher Risk Lower risk


• Continued need to secure investment until company reaches profitability– Expense of patent costs– Company increasingly must “pay its way”. Lab and office space, payroll, legal expenses– Variability in investment climate

• Risk of competitor technologies emerging

• Technical hurdles, particularly for long term therapeutic applications

Challenges


• University of Manchester – generous IP policy

• UMIP – unique resource– Packaged IP– Wide networks– Dedicated business development personnel

• MTF venture capital fund – Tough criteria– Solid investment experience, as we negotiate with VC’s completely outside the University

• Currently signs of improved investment climate

Opportunities


Research outside the University environment

Dr Curtis DobsonAi2 Ltd

Just

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Research outside the University environment