Starting A Biotech Company Ken Bost, Ph.D. UNCC Belk Professor of Biology Chief Scientific Officer, SoyMeds, Inc.

1. Starting A Biotech CompanyKen Bost, Ph.D. UNCC Belk Professor of BiologyChief Scientific Officer, SoyMeds, Inc.

2. Is a good idea enough?

3. Transgenic soybean seeds as a protein expression system1 Kenneth L. Bost Kenneth J. Piller UNC-Charlotte & SoyMeds, Inc. • 1Bost KL, Piller KJ. Protein Expression Systems: Why Soybean Seeds? • In: Sudaric A, ed. Soybean-Molecular Aspects of Breeding: InTech; 2011, pp. 3-18. • http://www.intechopen.com/articles/show/title/protein-expression-systems-why-soybean-seeds-

4. Expressing Proteins in Transgenic Soybean Seeds Harvest transgenic seeds containing proteins Formulate seeds into therapies or purify the protein Synthesize genes to express proteins Regenerate transgenic soybean plants which express proteins Splice genes into soybean host DNA

5. Recombinant Protein Production using Mammalian Cell Culture:Transformation & Selection Wurm, Nat. Biotech. 22:1394, 2004

6. Recombinant Protein Production using Transgenic Soybean Seeds:Transformation & Selection Gene transfer Screen& Harvest T1 lines T2 lines Select Harvest Screen Harvest T1 seeds T3 seeds T0 lines Minimum 18 months

7. Why Soybean Seeds? • 40 % protein in each seed • Millions of doses per greenhouse acre (containment, cost) • No cold chain with long term storage capability • Purification of protein not necessarily required (safety) • Ease of purification from seeds when required (cost, speed) • Separation of production & purification in manufacturing • Oral delivery (safety, needleless) • Cost (less than 0.001 cents per dose)

8. Transgenic Soybean Seeds:Which proteins to target? Large proteins difficult to express (e.g. Thyroglobulin) Proteins needed in large quantity to be effective (e.g. tolerogens) Proteins coming off patent (e.g. erythropoietin) Proteins rarely needed (e.g. bioterrorism vaccines) Proteins used in routine diagnostic assays Proteins which are currently being isolated from tissues Proteins for use in third world (e.g. no cold chain) Cheap proteins for agricultural or environmental use

9. Formulating Soybean-derived Oral Tolerogen

10. Recombinant Protein Manufacturing The Process is the Product !

11. Starting A Biotech Company • WHAT? • WHY? • WHO? • WHEN? • WHERE? • HOW?

12. The WHAT: Is a good idea enough? Amgen Values “First, Be Science Based: Our success depends on superior scientific innovation, integrity, and continuous improvement in all aspects of business through the application of the scientific method.” Binder, Science Lessons, 2008

13. The WHY: Why Start a Biotech Company? “Businessmen and financiers will tell you the correct answer is: To Make Money……..” “The challenge arises when you realize that one of those tangents is worth pursuing for a longer, straighter direction than the others, and you realize that your university, medical center, or foundation can only take you so far……” “In the world of biotechnology entrepreneurship, you have got to be able to convince yourself and others that there is a pot of gold at the end of this particular rainbow.” Biotechnology Entrepreneurship by Michael Salgaller, Logos Press, 2010

14. Expressing Proteins in Transgenic Soybean Seeds Why did we start SoyMeds? Harvest transgenic seeds containing proteins Formulate seeds into therapies or purify the protein Synthesize genes to express proteins Regenerate transgenic soybean plants which express proteins Splice genes into soybean host DNA

15. The WHO: Your Role in a Biotech Start-up • Stay at present position • part-time with company • Go full time in company • CEO, CSO, etc. • License technology to another company • Serve on Board of Directors • Serve on Board of Scientific Advisors • Consultant

16. The WHEN & WHERE: When and where did you have your idea? • When you had your great idea, where were you employed? • Ownership often lies with your employer, including universities and companies. • So…if have an idea for starting a biotech company, you may already have a partner. owns my brain !!!

17. Expressing Proteins in Transgenic Soybean Seeds Conflict of Interest: UNCC & SoyMeds ? Harvest transgenic seeds containing proteins Formulate seeds into therapies or purify the protein Synthesize genes to express proteins Regenerate transgenic soybean plants which express proteins Splice genes into soybean host DNA

18. The HOW: Business before Science “Scientists have a reputation for failing to appreciate the difference between a science, a technology, a product, and a company...” “To be true entrepreneurs, scientists must learn to put business ahead of science when developing a commercialization strategy.” Kolchinsky, The Entrepreneur’s Guide to a Biotech Startup

19. Starting A Biotech Company: "the first month" • Do you have what it takes? • Management? • Who will be your first employee? • Incorporating the company • Issue Stock? • Agreements? • Board of Directors

20. Do you have what it takes? What makes a biotech start-up entrepreneur?"creating an economic organization under conditions of risk""a person that understands marketing, financial, business, tech & science" • Confidence • Perseverance • Able to wear multiple hats • Stand tall in the face of criticism, yet be humble • Decisiveness • Able to advertise yourself and product • Be able to leave your “comfort zone”; Adaptability • Be able to manage risk at many levels • Be a problem solver and negotiator at many levels • Good Communication skills (Listening skills) • Evaluate the advice you receive

21. Do you have what it takes? What makes a biotech start-up entrepreneur?"creating an economic organization under conditions of risk""a person that understands marketing, financial, business, tech & science"

22. Expressing Proteins in Transgenic Soybean Seeds Do the “two Kens” have what it takes to be entrepreneurs? Harvest transgenic seeds containing proteins Formulate seeds into therapies or purify the protein Synthesize genes to express proteins Regenerate transgenic soybean plants which express proteins Splice genes into soybean host DNA

23. Self-tests for being an Entrepreneur I don't like being told what to do by people who are less capable than I am. I like challenging myself. I like to win. I like being my own boss. I always look for new and better ways to do things. I like to question conventional wisdom. I like to get people together in order to get things done. People get excited by my ideas. I am rarely satisfied or complacent. I can't sit still. I can usually work my way out of a difficult situation. I would rather fail at my own thing than succeed at someone else's. Whenever there is a problem, I am ready to jump right in. I think old dogs can learn — even invent — new tricks. Members of my family run their own businesses. I have friends who run their own businesses. I worked after school and during vacations when I was growing up. I get an adrenaline rush from selling things. I am exhilarated by achieving results. (Traits not on the list: I like to take risks. I want to get rich. )

24. Do you have what it takes?

25. Company Management: Possible Biotech Management Positions • CEO: Chief Executive Officer • Final authority; reports to board • COO: Chief Operating Officer • Operations • CFO: Chief Financial Officer • Finance • CMO: Chief Marketing Officer • Marketing, Sales, Business Development • CTO: Chief Technical Officer • Often in engineering • Chief Scientific Officer • Often in biotech

26. Company Management: Possible Biotech Management Positions • Must haves: • CEO or COO • to head company • CSO or CTO • to direct science or technology • Board of Directors • Necessary haves: • Financial or Business person • part-time or full time (CFO) • Scientific Advisory Board • (at some point) • Nobel, Teaching a Lean Start-up, 2010

27. Who will be your first employeee? Find a good Attroney (s)“The first hire” • Corporate Law • Business law practice specializing in start-up biotech, taxes • Patent Law • Intellectual property (IP), patent filings, patent litigation • Securities Law • Raising capital, complying with security laws • Regulatory Law • e.g. FDA-knowledgeable attorney

28. Who will be your second employee? Find a good accountant (s)“The second hire” • Government Specialist • Government does accounting in their own way • Angel, VC Specialist • May be suggested by your investors

29. Expressing Proteins in Transgenic Soybean Seeds SoyMeds Corporate Structure ? Harvest transgenic seeds containing proteins Formulate seeds into therapies or purify the protein Synthesize genes to express proteins Regenerate transgenic soybean plants which express proteins Splice genes into soybean host DNA

30. Incorporating the Company(in Delware!) • C-Corporation (C-corp) • Most biotech’s will end up this way because VC funding will require it, but don’t necessarily need to start this way • Exit strategies require C-corp • Taxed on profits and taxed on dividends • S-Corporation (S-corp) • No income tax at the entity level • Limited Liability Corporation (LLC) • No income tax at the entity level

31. Other initial tasks • Issue stock immediately • Common stock, Preferred stock, Founders stock, etc. • Agreements • Founder’s agreement • Non-disclosure agreement • Invention assignment agreement • Non-compete agreement • Employment agreement • Directors & Officers Insurance • Establish a Board of Directors • Set up a Scientific Advisory Board (at some point) • Set up a Clinical Advisory Board (at some point)

32. Starting A Biotech Company: "the first month" • Do you have what it takes? • Management? • Who will be your first employee? • Incorporating the company • Issue Stock? • Agreements? • Board of Directors Congratulations!! You have a “Virtual Company!!”

33. Starting A Biotech Company:Congratulations!! You have a “Virtual Company!!” Our first meeting will come to order! Do I hear a motion to increase our salaries? "How do you become a REAL company?"

34. Starting A Biotech Company: "How do you become a REAL company" • What do you have to sell?What is the product? • Is there IP protection? (Freedom to Operate) • Is there a market? • Is there a Business Model for generating profit? • Does management have the skills to implement the business plan? • How to finance?

35. Starting A Biotech Company:1) What do you have to sell? • Pharmaceuticals • Small molecule drugs • Biologics • Gene Therapy • Diagnostics • Analyte Specific Reagents • Kits, Assays, & Tests • Devices & Instruments • Bioinformatics • Genomics & Proteomics • Personalized Medicine • Laboratory Services

36. Expressing Proteins in Transgenic Soybean Seeds What does SoyMeds have to sell ? Harvest transgenic seeds containing proteins Formulate seeds into therapies or purify the protein Synthesize genes to express proteins Regenerate transgenic soybean plants which express proteins Splice genes into soybean host DNA

37. Starting a Biotech Company:2)Is there IP (Intellectual Property) protection?The cumulative know-how to making a product • Patents • 20 years from date of filing • Trade Secrets • known by only certain individuals • Trademarks • Identifies and distinguishes the product of one party from another

38. Starting A Biotech Company:2) Is there IP protection? • Novelty • New • Not previously disclosed • No prior art • Non-obviousness • Not obvious to someone skilled in the art • Utility • Has some useful purpose • Enablement • Some proof that it works

39. Who will be your first employeee? Find a good Attroney (s) • Corporate Law • Business law practice specializing in start-up biotech, taxes • Patent Law • Intellectual property (IP), patent filings, patent litigation • Securities Law • Raising capital, complying with security laws • Regulatory Law • e.g. FDA-knowledgeable attorney

40. Prior Art (Novelty) • Are there prior patents which describe (mention) part of your invention? • Are their publications that describe part of your invention? • Did you disclose any aspect of your invention in a manuscript, grant application, talk , poster session, etc. before filing your patent application?

41. Types of Patents? • Regular (Non-provisional) • Submission of all required information supporting the novelty, etc. • First office action: non-final rejection of the patent • Provisional • Remains pending for 12 months, then regular patent must be filed • Protection one year earlier; 20 years starts with regular patent filing • Have 12 more months to provide additional data • Cheaper to file than regular patent • International • Protection of product outside home country filing • Patent Cooperation Treaty (PCT) filing, then file with individual countries

42. U.S. Patent Office

43. Patent Searches: A good place to start • Search Issued Patents • Search Patent Applications Websites: USPTO patent search Google patent search Free Patents Online

44. 2) Is there IP (Intellectual Property) protection?

45. Starting a Biotech Company:2) Is there IP (Intellectual Property) protection? • Non-obviousness • cannot be a logical extension of others’ work that someone “skilled in the art” would deem obvious. • Enablement • some proof that it works • data • precisely described method • prototype

46. The WHEN & WHERE: When and where did you have your idea? • When you had your great idea, where were you employed? • Ownership often lies with your employer, including universities and companies. • So…if have an idea for starting a biotech company, you may already have a partner. owns my brain !!!

47. Starting A Biotech Company:2) Is there IP protection? Freedom to Operate? • Freedom to operate (FTO) opinion costs can be quite high ($$$ tens of thousands ) • In addition to Patents, such an analysis demonstrates there are no unforeseen risks or prior art. • Are you willing to defend your patents?

48. Starting A Biotech Company:2) Is there IP protection? • Novelty • Non-obviousness • Utility • Enablement • “New Patenting Rules” • America Invents Act 2011 • “First to File” versus “First to Invent” • Method for determining priority of patent apps

49. Expressing Proteins in Transgenic Soybean Seeds SoyMeds patenting experiences ! Harvest transgenic seeds containing proteins Formulate seeds into therapies or purify the protein Synthesize genes to express proteins Regenerate transgenic soybean plants which express proteins Splice genes into soybean host DNA

50. Starting A Biotech CompanyKen Bost, Ph.D. UNCC Belk Professor of BiologyChief Scientific Officer, SoyMeds, Inc. QUESTIONS ? BREAK!