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AQUIONICS*

AQUIONICS*. Preseted by Artip Rosrin Yazeed. Who the heck are they?. Bio-Tech Company * Developed exciting new technology to treat glaucoma* Has tested on animals NOW, needs to test it on HUMANS!*. TWO ISSUES. Protecting the value of the Intellectual Property*

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AQUIONICS*

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  1. AQUIONICS* Preseted by Artip Rosrin Yazeed

  2. Who the heck are they? • Bio-Tech Company * Developed exciting new technology to treat glaucoma* Has tested on animals NOW, needs to test it on HUMANS!*

  3. TWO ISSUES • Protecting the value of the Intellectual Property* • Developing related-products • Bringing the product to market with low-risk and low-cost -requires BOTH a lab and the production facility

  4. THREE ALTERNATIVES • Build own laboratory • Sub-contract a laboratory • License the technology

  5. 1. Build own laboratory First approach---- Construct a laboratory facility * Advantage: 1. sufficient for carrying out the manufacturing and testing procedures 2. It would be also available for clinical testing of related applications of the technology * Disadvantage: 1. High cost and high risks

  6. 2. Sub-contract a laboratory * Advantage: 1. Low cost * Disadvantage: 1.The risk of losing control of the technology is high

  7. 3. License the technology *Advantage: • Conducting both the human clinical testing and commercial manufacturing and marketing of the product. • An initial license fee of $ 2 million and a 5 percent royalty on future sales • The PV of royalties from licensing manufacturing and marking is $12 million * Disadvantage 1. The risk of jeopardizing the value of related products it could develop.

  8. BUILD OWN LAB This would allow for ALL the necessary manufacturing and testing procedures AND Allows for development of related product ($6M) for production facilities ($5M) PV cost for laboratory PV of CF= $20M Value of related products developed= $5M

  9. SUB-CONTRACT LAB This has a low cost BUT Risk losing control of the technology ($6M) for production facilities ($2M) PV cost for contract PV of CF= $20 M Value of related products developed= $ 2.5M

  10. LICENSE THE TECH LESS COST Allows for a $2M license fee AND a 5% royalty BUT, Jeopardize the value of related products it could develop PV of royalties= $12M Value of related products developed= $ 1M

  11. THREE SCENARIOS Best Scenario: WITH the opportunity to develop a related product 30% probability

  12. THREE SCENARIOS Normal Scenarios: Success BUT Related opportunities are not found = a zero value 40% probability

  13. THREE SCENARIOS Worst Scenario: FAILURE- Bad Product AND no related-product development 30% probability

  14. -(5 M + 6M) + 20M +5M=14M Scenario 1(30%) -(5 M + 6M) +20M=9M Scenario 2(40%) -(5 M + 6M) =-11M (Fail) Construct Scenario 3(30%) -(2 M + 6M) + 20M +2.5M=14.5M Scenario 1(30%) -(2 M + 6M) +20M =12M Scenario 2(40%) Sub-Contract -(2 M + 6M) =-8M (Fail) Scenario 3(30%) 2 M + 12M +1M=15M Scenario 1(30%) 2 M +12M=14M Scenario 2(40%) Licensing 2 M =2M (Fail) Scenario 3(30%)

  15. Weighted Expected NPV(1) [ (0.3 x 14) + (0.4 x 9) + ( 0.3 x {-11}) ]= 4.5M Weighted Expected NPV(2) [(0.3 X 14.5) + (0.4 x 12) + (0.3 x {-8}) ]= 6.75M Weighted Expected NPV(3) [ (0.3 x 15) + (0.4 x 14) + (0.3 x 2) ]= 10.7M

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