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Historical Development

COLUMBIA UNIVERSITY Technology Transfer- An Overview Dr. Michael Cleare Executive Director Science and Technology Ventures. Historical Development. 1754 Founded as King’s College under British Royal Charter, 5 th college in American Colonies

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Historical Development

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  1. COLUMBIA UNIVERSITYTechnology Transfer-An OverviewDr. Michael CleareExecutive DirectorScience and Technology Ventures

  2. HistoricalDevelopment 1754 Founded as King’s College under British Royal Charter, 5th college in American Colonies - Medical Faculty established, 1st in colonies 1784 Re-chartered as Columbia College 1864 School of Mines established, predecessor to School of Engineering and Applied Sciences 1881 School of Architecture established, 4th in U.S. 1889 Schools of Nursing, Architecture and Social Work, 1st in U.S.; Barnard College and Teachers College become affiliates; College of Physicians and Surgeons established 1896 Re-named Columbia University 1912 School of Journalism, 1st in U.S. 1928 Columbia-Presbyterian Medical Center created, 1st integrated medical research, education and clinical care facility in U.S. 1949 Lamont Geological Observatory established, now Lamont-Doherty Earth Observatory 1996 Columbia Earth Institute established

  3. Board of Trustees President Provost Senior Executive Vice President Academic VPs and Deans Executive VP for Research University Leadership • University-wide Strategic Initiatives • Innovation and Knowledge Transfer- (Science and Technology Ventures) • Administration • School and Departmental Initiatives • Research Institutes and Centers • Tenure Process • Pedagogy and Curriculum • Multidisciplinary Program Development • Research Institutes and Centers • Sponsored Research

  4. Key Mechanisms for Transferring Academic Knowledge to Industry • Faculty contacts and consulting • Published papers, talks at meetings, patents and applications • Columbia graduates • STV industry contacts • Deals- Licensing/Spin Outs • STV web site (www.stv.columbia.edu)

  5. Before Bayh- Dole • “Science - The Endless Frontier” (1945) • Expansion of federally funded research • investments since 1950s • Recognition of unrealized public benefit and • commercial potential from research results from • federally funded research (28,000 patents, < • 5% licensed)

  6. Bayh-Dole Act (Patent and Trademark Act of 1980) • Non-profits can obtain title to inventions made with federal funding (e.g. National Institute of Health grants) • Bayh-Dole places obligations on non-profits, including: • Disclose the existence of inventions • Seek patent protection for inventions • Diligent commercialization • Annual reports on commercialization efforts • Exclusive licensee must manufacture substantially in U.S. • Preference for small businesses as licensee • Share revenue with inventors • Net revenue used for educational and research mission

  7. Bayh- Dole Provisions • encourage collaboration with industry to • promote the utilization of inventions; • universities must file patents on • inventions they elect to own; • government retains non- exclusive • license and march- in rights.

  8. Bayh-Dole Act - Key ProgramRequirements • Disclosure to Agency • Election of Title • Within 2 years of disclosure • File Application • Designate U.S. Funding Source • Occasional Reporting • Inventor Shares

  9. SCIENCE & TECHNOLOGY VENTURES MISSION STATEMENT - Transfer inventions and innovative knowledge to outside organizations for the benefit of society on a local and global basis - Whenever appropriate this is to be carried out at going commercial rates so discretionary funds are brought into the university to improve educational and research activities and capabilities

  10. Science and Technology Ventures Principal Activities • Work with faculty members to identify and patent new inventions • Facilitate research collaborations between faculty members and industry • License inventions and technology developed in University laboratories • Established Companies • Start-ups • Provide support to licensees and start-ups • Incubator • Compliance with government regulations, reporting.

  11. UNIVERSITIES - A MODIFIED CORE MISSION THE NEW INTERFACE UNIVERSITY Academic Research (“Pushing back the Frontiers”) Teaching Scholarship (“Human Capital”) Interdisciplinary Initiatives Translational Res./Tech Transfer Economic Dev.(local, natl., global) Spin offs/jobs/GDP Focused short courses. Corporate/Government Rels Agencies, Alternative Funding Interactions with Society (“Reducing to Practice”)

  12. Columbia Intellectual Capital • Over $600 million in research support annually • 23,000 students (7,000 u/grads); 3-4000 Graduate Researchers • 3,000 faculty, plus 4,000 researchers, clinicians, part-time • 74 Nobel Prizes awarded (1906-2004) • World-class medical center • 500 patents • 250 Invention Reports reviewed annually • Many Inter-Institutional Relationships

  13. R&D expenditures at U.S. universities FY 1992-02 $31.7Bn AUTM Licensing Survey: FY 2002

  14. Industry-sponsored R&D expenditures U.S. universities and colleges, FY92-02

  15. FEDERAL FUNDS $400 M TECHNOLOGY TRANSFER FLOW CHART EXTERNAL MARKETING INPUT GOVERNMENT AGENCIES INVENTION REVIEWS COMMERCIALIZATION IP MINING IDENTI- FICATION STRATEGY, TACTICS LICENSE V START UP . PRIORITIZATION TECHNICO/MARKETING INVENTION BRIEFS (2-3 WEEKS) REPORTS STV OUTSIDE COUNSEL/CONSULTANTS MORE DATA SHELVE MORE DATA SPECIALIST TECHNICAL INPUT IP PORTFOLIO PATENTS COPY RIGHT STATE/ INDUSTRIAL OTHERS $210 M STV LICENSE/ SPINOUT OTHER/ PARTNERSHIPS ADANDON REPORT GOVERNMENT AGENCIES. ETC. DEALS FOREIGNS CIPS $$ SUCCESS 60 - 70% BACK TO CU

  16. STV Discovery and Commercialization in FY04 Research Expenditure- Federal, State, Industry, and University $610MM in Research Expenditure Faculty Member or Graduate Student Has a New Invention 240 Inventions Reported STV Decides to File A Patent 130 New US Patents Filed $10 MM/yrInvestment (legal costs) License to Existing Companies License to Start-ups 60 Licenses Executed 9 Start-up/Small Companies Formed Market $109 MM of Income Generated 6 Start-ups Funded

  17. US University Technology Transfer Productivity $2.4M/per disclosure 123,230 Disclosures $267 B Research 42% 57,641 Patent Applications 21% Assessment 48% 61% FY 01 22% 26,000 Issued Patents 26,000 Active Agreements products Commercialization 3.5% 17% 4,320Start-Ups platforms AUTM Licensing Surveys FY91- FY02

  18. 250 inventions annually 150 active license agreements 100 active research agreements Organizational Structure & Outputs Executive Director, S&T Ventures New Ventures Strategic Partnerships Economic Development Patent Management Health Sciences Arts & Sciences / Engineering 60+ startups created • Patent pools, research: • Karolinska • ITRI • -Imperial etc. Regional TBED strategies, state/local sponsors 500+ patents under management

  19. Advantages of Working with Universities • Major source of new technologies • Basic and pioneering research • Leverage many existing academic - industry ties • Ongoing relationship allows easy monitoring of opportunities • Technology Transfer offices offer one stop shopping • Research agreements, License Agreement, Research/License options • Flexible deal making plus competitive research costs • We strive to make integration easier across the board - Many T.T. directors with industry experience

  20. Columbia Inventions Submitted to STV 248 236 207 208 189 182 151 155

  21. Life Sciences Invention Reports by Department 120

  22. STV Completed Agreements 149 148 148 84 113 90 93

  23. Patent Applications Filed

  24. STV Patent Applications and Agreements Sustained Strong Levels Over Time Patent Applications Filed • 375 patents applications were filed in FY04 • Slight decline in recent years reflects effort to control patent costs Agreements Completed • Significant growth since 2000 reflects increased outreach to faculty and the market

  25. The Virtuous Cycle NEW KNOWLEDGE TRANSFERRED OUT OF UNIVERSITY FOR BENEFIT OF SOCIETY PRIME ACTIVITY- BASIC RESEARCH STATE $ UNIVERSITY TECHNOLOGY TRANSLATIONAL FEDERAL (RETURN ON FEDERAL INVESTMENT) FUNDING $ IP/KNOW HOW INDUSTRIAL $ LICENSE INCOME/ RESEARCH AGREEMENTS CORPORATE RELATIONSHIPS COMMERCIALIZATION LICENSED OUT AT GOING RATE TO ESTABLISHED COMPANIES & START UPS DISCRETIONARY FUNDS FOR EDUCATIONAL/ RESEARCH INITIATIVES INCOME TO UNIVERSITY $$ GRADUATES PRODUCTS/PROCESSES PROFITS-TAXES GDP ETC. JOBS EXPORTS RETURN ON FEDERAL INVESTMENT

  26. Selected Products Benefiting from Columbia Inventions SIPquest* * Chalfie’s GFP* * Arrow Catheter (Modak) CHO cell line (Chasin), not patented (1980 PNAS) Blackberry 7100 T (Im)*

  27. Successful Licenses Co-Transformation (Axel et al.)- Process of inserting a gene into a eukaryotic cell (usually CHO cell line developed by Dr. Larry Chasin) to cause the cell to reliably produce large amounts of a therapeutic protein licensed to 20 companies Xalatan (Bito)- Prostaglandin-based drug for treating Glaucoma licensed to Pharmacia (now Pfizer) Antibody Technology (Joint with Stanford - Morrison et al) licensed to Centocor (Johnson & Johnson) Digital Compression Technology (Anastassiou) Founding member of MPEG LA, Patent Licensing Pool Partnership

  28. Products from Columbia Technology TPA Degrading blood clots EPO Stimulate red blood cell production Herceptin Breast cancer Factor VIII/IX Clotting factors for hemophiliacs Pulmozyme Cystic fibrosis DVD’s Digital compression (MPEG 2) LCD Screens Sequential Lateral Solidification LED’s White/blue light emitting diodes

  29. Commercialization of Academic Research Plays a Major Role in the Economy • Funding for university research exceeded $30 billion in 2000 • Gross license income in 2000 totaled $1.26 billion from over 9,059 licenses • Estimated $40bn of US economic activity attributed to results of academic licensing, supporting 270,000 jobs • Since 1980, 3,400 new companies were formed based on licenses from academic institutions • Sales of products-417 in 1999- raised $5bn in taxes • NIH report estimates 15x return on funding (2000) • NSF 1998, AUTM 1999,2000. ($mm) Bayh-Dole Act 1980

  30. US University Technology Transfer Trends* • License income of $1.25 billion to US universities (CU share >10%) Median income for the twenty largest research universities was $7MM (Avg=$17MM). • New Licenses: 3,739 new licenses executed (up 15%), • 32% of licenses with large companies (>500 FTEs), 450 new companies launched • Active licenses: 26,000 licenses active (up 14%), 22% with product sales *Data from AUTM 2002 survey

  31. University Policy- Distribution of License Revenues GROSS INCOME1-$125,000> $ 125,000 STV EXPENSES/ DEVELOPMENT FUND 20.0% 20.0% NET INCOMEUp to$100,000>$100,000 INVENTOR 40.0% 20.0% INVENTOR’S RESEARCH 20.0% * 20.0% * UNIVERSITY 20.0% 26.67% DEPARTMENT - 6.67% * SCHOOL - 6.67% * * CAP APPLIES

  32. Criteria for Licensing to Start-ups • Higher potential ROI than licensing opportunity • Broad basis for multiple products • Ideally a disruptive technology likely to be adopted in near term • Development work and proof of principle required to attract licensees • Best (often only) route to exploitation • Faculty member must have requisite contacts, drive and abilities • Must meet current investor criteria • Business model, quality management interest, alignment of interests, large market size • Low risk of negative public relations relating to technology and stakeholders

  33. STV Approach to Spinouts • Low up front money, patent costs reimbursed • License fee phased in line with milestones and/or funding rounds • Case by case balance of equity & royalties, strategic decision based on business and the IP’s likely productization • STV support before and after first round of Funding • Columbia portfolio company status

  34. Best Practices for Adding and Retaining Value in Spinouts • Help on business plan-staff experience/business school • Make introductions to potential mgmt (VC Network) • Introduce faculty members to each other, eg. molecular biologists to chemists • Introduction to venture community-extensive networks • Lower up front fees in exchange for equity • Bundle IP with complementary inventions at other universities, both domestic and international • Add experts to SAB, take a board observer seat, lend world class expertise- “the halo effect” • Pay patent costs, stretch dates of reimbursement • Facilitate turnarounds

  35. New Ventures Revenues* 66 Companies to Date 50 Current Companies 9 Companies Formed in FY 04 12 Public** • 15 Portco Licenses Producing Royalties & Fees • 5 Investing in Research • MPEG as percentage of total income declined 33% over last two years, showing increased breadth • NV portfolio now accounts for 10% of STV income • Need significant growth in portco royalties in ‘05 and ’06 to continue overall upward trend $12.5MM $7.1M $10.6M $10.7M * MPEG Revenues decreased from 78% in ’02, to 67% in ’03, to 45% in ‘04 ** 7 still trade, 4 acquired, 1 went under

  36. Summary on University Startups • Universities help to launch startups when they are realistic businesses • Startups should provide fair value for the technology and reward risks by university • Equity is only part of the deal value, not the driver • Companies need to recognize the complexity in university policies • Both sides need to be creative and flexible, and have fun throughout the negotiation • Outstanding management at the earliest stages makes all the difference • Even failed startups can benefit Columbia

  37. Value of STV’s Portfolio of New Ventures has Increased Over Time • Since its inception, STV has been involved in 66 start-ups, in many cases taking an equity stake • 50 companies still active • 15 currently produce income through royalties, equity payments and milestone fees • 5 are investing in sponsored research at Columbia University • 2004 was an extremely positive year for creating shareholder exits • 7 companies acquired, went public or announced exit events, for a total of $8 million (estimate) in income to Columbia over FY04 and FY05 • Compared to 5 such events over past 19 years • Latest valuation for STV’s private equity is $40 million

  38. STV Portfolio Companies Public Transactions in 2004 • Seven portfolio companies • went public or announced • their acquisition by a • publicly traded company in • 2004 • 12 out of STV’s 50 • companies created exits for • Shareholders • Columbia income from • these transactions will be • ~$8MM * Skinetics Biosciences Sirna Therapeutics (Nasdaq: RNAI) acquired Skinetics $2MM+milestones Topical hair removal December 2004 * announced acquisition Smarts $260MM Storage management December 2004 acquired Aton $150MM+ milestones Treatment of cancer March 2004 FactSet Research Systems(NYSE-FDS) acquired Call Street Inc. $7MM Wall street notes on conference calls May 2004 Cotherix Inc $30MM (NASDAQ:CTRX) Treatments for Pulmonary disease November 2004 Memory Pharmaceuticals $35MM (NASDAQ:CTRX) Treatments for CNS disease April 2004 Nephros Inc $12.6MM (AMEX:NEP) Treatments for end stage renal disease September2004

  39. Executed Agreements with New Portfolio Companies 10 9 9 7 5 5 4

  40. Columbia Contributes to Success of Startup STARTUP GROWTH STV ACTIVITIES License IP - balance equity and royalties Add experts to SAB, grad students STV board observer IP bundling with other institutions Ongoing basic research Business plan Seed funding- proof of principle Introductions to investors, mgmt. SBIR proposals STV-led turnarounds Invest in patent, evaluate commercial opportunities Collaborate with other faculty/industry Inventor makes Discovery Government, company sponsors Applied research SBIR, angels, seed VC Prototypes, models “proof of concept” Early stage VC Product development SOURCE OFFUNDS: USE OF FUNDS: Government grants Basic research

  41. Lessons Learned from Startups • Carefully evaluated balance of royalties, fees and equity maximizes return • In some cases Columbia should agree to equity split with scientific founder before company’s inception. • Launch startup when there is a realistic business plan • Startups should provide fair value and reward risks undertaken by university • Outstanding management at the earliest stages is vital

  42. Startup Policies • No sponsored research allowed from company if faculty member holds equity • No management role for faculty, most act as Chief Scientific Advisor one day per week • Sell equity as soon as possible post-IPO • STV takes board observer seats in exceptional cases

  43. COMMON UNIVERSITY TECHNOLOGY TRANSFER ISSUES • Effect on traditional university role. • Return on federal investment: Scientific, cash, equity, societal • Conflicts of interest situations - rules & management • General availability of technologies - e.g. research tools/targets. • Deal structure - Going commercial rate? - Back v front loading - Start ups; equity, royalties, license fees, research - Small v large companies. • Timeliness/Responsiveness: internal & external • Global Issues - Provisions for poor countries - Patent status/enforceability

  44. What is Next in Technology Transfer? • Technology gap funding increasingly common as Universities seek to maximize returns • Industry university partnerships • Humanitarian considerations • Increasing number of high quality startups • Proof of concept gap funding enabling more and better opportunities • Young tenured faculty more interested in startups

  45. Innovation Gap Funding Private Funding VALUE Proof of Concept Funding Gap Public R&D Funding Product Development and Marketing Technology Value Captured Validation Feasibility Basic Research/ Discovery Technology Development Columbia Gap Fund Funding Sources Gov’t and Company Grants SBIR, angels, seed VC TIME STV Pre-Seed Fund Early stage VC STV Licenses Technology

  46. Models to Bridge the Proof of Concept Gap at Universities • Government funded seed funds - University Challenge Seed Fund - UK, STTR program - US • Philanthropy funded interdisciplinary drug discovery centers - Broad Institute - MIT /Harvard • Venture-backed specialty investment companies /incubators- Synecor - Duke, Frazier Health Care, Guidant, GE Medical, Delphi and Deutsche Bank • University Seed Funds- There are over 60 universities with some kind of seed funding available, ranging from granting small amounts of money to advance research projects, to venture capital funds, with endowment capital, that invest exclusively in university spinouts.

  47. Summary • Effective University Technology Transfer Needs: • Clear Title (e.g. Bayh Dole) • University’s Commitment • Office with Critical Mass, Appropriate Experience • Supply of Excellent Research • This can provide: • Value to Society and Economy • Discretionary Funds to University • Retention/Recruitment Incentive

  48. Academic Partnerships – STV Partnerships • Develop collaboration with other academic research centers around the world - joint research, licensing and start-ups • Many new inventions are complex and research is multi-center- genomics, proteomics and new digital technologies • Collaboration brings together more knowledge and skills to make major new developments, allowing for more rapid development and greater success • Encourages earlier collaboration of commercial partners • University collaborators include: Stanford, Cold Spring Harbor, Oxford, Pasteur, McGill, Karolinska, ITRI

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