CU Technology Transfer and SBIRs/STTRs

1. CU Technology Transfer and SBIRs/STTRs Presentation at the SBIR Bootcamp II October 6, 2003 David N. Allen Assoc. Vice President for Technology Transfer david.allen@cu.edu 303 7351688

2. The Presentation Today • Background on Technology Transfer at CU • Some Gating Issues for Determining CU Involvement – Whose Asset? • If proposed research relates to CU IP • If proposed research relates to Company IP • Administrative and contract processes • Conflict of Interest issues • Three cases for discussion • Questions?

3. CU Technology Transfer Office • Strategic plan completed in June 2002 • Aggressive first year goals were set • The strategic plan was well received by university and business communities • Annual report chronicles achievements • General achievement of goals • Well positioned for further improvement and growth • Appreciable accomplishments of portfolio companies

4. Technology Transfer Performance • MetricsFY01/02FY02/03Growth • Invention disclosures 121 124 2.5% • Licenses & options 24 33 38% • Patent applications 46 62 35% • Issued US patents 17 25 47% • Royalty revenue $2.2M $3.4M 54% • Start-up companies 3 6 100% • IP induced sponsored (not $5.5M NA • research counted) 15% growth targets for all metrics in 03/04, except start-ups which is projected at 9

5. Understanding the Culture of a Research University • CU ranks in top 10 among all institutions in federal R&D funding. This defines the research culture at CU. • Inventions seldom occur within a context of a well defined market problem. • Faculty optimize their research for publication and to secure further funding as determined by peer review – not commercial drivers. • Typically “raw technology” – incomplete, unrefined, and years from market.

6. Starting Points for Engaging CU • Basic questions asked early on • Who has initiated the proposal – CU investigator or company? • Is a CU investigator a Principal Investigator? • Does he/she have an interest in the company? • What is the purpose of the proposed research – to advance CU IP or company IP?

7. For CU Owned IP • If the IP is owned by CU, i.e. inventor is a CU employee, then this is a conventional license situation and subject to CU IP policy and likely subject to the Bayh-Dole Act. • Some characteristics of Bayh-Dole • Empowered by the Federal Government as condition of research funding, Bayh-Dole Act of 1980 (Public Law 96-517) • The Bayh-Dole Act allows CU to assert title to inventions and license the technology to industry

8. University IP Provisions, cont’d • Ownership of IP assigned to CU if: • employee of University • grant or contract obligation specifies CU ownership • substantial use of University resources • students exempted (except above or as part of CU IP) • must relate to individual’s research endeavors • conflict resolution process involving CU’s Principal Technology Transfer Officer and Committee on University Discoveries • Inventors and their labs receive 50% of royalty

9. What Does CU Want from a Licensee? • A true commitment to further develop and eventually commercialize the technology • An understanding of university values and constraints, e.g., publication and Bayh-Dole • A fair price, uncomplicated royalty terms and an opportunity to share in the upside • Ability to retrieve the IP if licensee doesn’t produce • Payment of patent costs and other terms standard to public university licenses

10. Licensing Terms • Exclusive versus nonexclusive rights • Field(s) of use – geographic, market • Economic terms – royalty, sublicense royalty, performance payments, annual fees and/or equity • Diligence terms – development and commercial • Rights to future and/or joint IP • Patent prosecution and control • Warranties, termination and dispute resolution • See www.cu.edu/techtransfer/campus/forms.html

11. How a Company Receives License Rights to CU IP • Terms can be agreed on at proposal stage or during review stage, up to award • Typically a time limited option to an exclusive license is granted to the company • Terms ranges or agree to agree on terms • We expect that any patent fees will be paid by company during this time • License becomes more complicated if a CU employee has an interest in the firm.

12. For Company Owned IP • What is the proposed research objective (discovery oriented or evaluative oriented) and how critical is CU to the objective? • Will any new or improvement IP be developed by CU employees or are significant CU technical resources being used? • The licensing reality for us – we want the company to succeed and there are many ways for the company to gain rights to CU IP, e.g. field of use or non-exclusive license or if more substantial, an exclusive license

13. Administrative and Contract Processes • CU investigator initiated STTRs routed through Campus Office of Contracts and Grants • Treated as sponsored research contracts • Facilities and Administrative costs depend on particular campus • Separate IP agreement negotiated by TTO • CU treated as a sub-contractor in SBIRs routed through OCG at PI’s campus • For example, Boulder campus See: www.colorado.edu/ocg/

14. Some Conflict of Interest (COI) Considerations • COI management is mandated by Feds if: • Compensation of PI exceeds $10K/year • Equity interest of PI exceeds $10K or • Ownership of PI interest exceeds 5% • University’s Obligations • Know who these PIs are • Assess the COI situation -- manage, reduce or eliminate the source of the conflict (management plan) • Educate and adjudicate

15. Potential COI Situations Potential for Conflicts Using SBIR & STTRs • Faculty time spent on commercial endeavors (departmental concern) • Research sponsorship by faculty–owned firms (OCG Concern) • Overreaching consulting arrangements (TTO Concern) • Students engaged in faculty-owned firms (departmental concern) • Use of University space or resources (departmental concern)

16. Addressing COI Issues • Disclosure – The first step • To whom? Department Chair, Grants Office, TTO, IRB, Campus Compliance Officer, University Counsel • CU groups get together and create a COI Management Plan – The second step • Not necessary for all “conflicts” • The role of the COI committee • The role of the signatories to the management plan

17. Case 1 • Company contracts w/ CU to provide (make through known approach) a compound to develop a high throughput screen company is developing under an SBIR. • SBIR to develop their IP, no rights by CU to their technology, no license to CU IP needed. • Our obligations and concerns met by • Full disclosure of IP, project, and commercial intent • Clarified company and CU IP ownership and no CU IP mingling

18. Case 2 • CU PI initiates a STTR to validate a novel delivery method for a known compound to treat a disease. • CU owns the novel use and delivery method IP. • CU PI wrote grant application, company submitted application. • Company received a limited term exclusive option to new, improved or joint IP created during grant project.

19. Case 3 • Entrepreneur approaches TTO and seeks to develop CU IP. Over a few months develops a good business plan. • Seeks SBIR for proof of concept. • Entrepreneur can serve as Co-PI employee of a company that would be started if SBIR awarded. • Due to quality of person and high motivation, CU agrees to address licensing issues if grant is awarded. Industry standard terms would apply.

20. Continuing TTO Growth Trajectory • Annual report specifies enhanced activities • Job #1 continues to be gaining confidence of faculty inventors • Maintaining academic values and enhancing entrepreneurship • Improving/streamlining operations • Identifying seasoned entrepreneurial management and seed capital for start-ups • Nov. 4th – 2nd Annual Technology Transfer awards event

21. Why Choose CU as a Partner? • World class research faculty and institutional reputation • World class research facilities • Colorado’s record of winning SBIR awards can be extended to STTRs • The CU TTO knows industry culture and needs and will balance that with university culture and needs • Give us a try!

22. Thanks for Your Attention • Questions? • Visit us at www.cu.edu/techtransfer