WARF Accelerator Program

1. WARF Accelerator Program Wisconsin Alumni Research Foundation Richard Schifreen, Ph.D. rschifreen@warf.org warfaccelerator.org March 7, 2012

2. WARF Overview • Established in 1925 by Professor Harry Steenbock • First organization of its kind • A tax exempt, not-for-profit corporation • Independent world-class board comprised of UW alums • Over $1 billion of products are sold each year under license from WARF 1925 – Harry Steenbock Vitamin D by Irradiation “Consistently among top ten universities in intellectual property production”

3. WARF Today “WARF provides over $40 million annually to support research at UW-Madison” • WARF’s Mission is to support scientific research at the UW-Madison by: • Moving inventions arising from UW-Madison research to the marketplace, for the benefit of the UW-Madison, the inventor, and society as a whole • Investing licensing proceeds to fund further research at UW-Madison 1952 – Professor Karl Link Blood Anticoagulants

4. WARF as a TTO • WARF is an independent non-profit corporation that supports research at the UW-Madison • WARF serves as a resource for patenting and licensing UW IP • Proceeds are used to support UW research • Operating funds are buffered by the earnings on our endowment • UW-Madison faculty own their IP • Disclosure is mandatory for research funded by the U.S. Government • Disclosure is voluntary in all other cases • WARF may elect to accept or decline assignment • WARF provides inventors and their department with a share of all gross proceeds arising from their IP • Other UW offices manage sponsored research agreements and conflict-of-interest

5. “The Value of An Idea is in the Using of It” Thomas Alva Edison

6. Why Do We Need the Accelerator Program? Image by Arizona Department of Commerce

7. Developing a Program

8. Program Goal • What do we want to accomplish? • Develop technologies for licensing • Facilitate formation of startup companies • Other goals of the University, TTO, or participating organizations • Expectations for return? • Increase licensing deal flow • Obtain more favorable licensing terms • Obtain or increase equity in startup companies • Other goals of the University, TTO, or participating organizations • None (provide a service to the community) • IP Relationship • IP must be assigned to TTO • No requirement

9. Qualified Recipients • Organizations • University staff or other resources (University overhead??) • Outside vendors (contractors, consultants, legal, etc.) • Startup companies • Individuals • University faculty • University scientific staff • Post-docs • Graduate students • Undergraduate students

10. Available Funding • Budget • Source of funds • TTO budget • University budget • Outside organization support • Donations • Awards • Categories • Anticipated number of awards by category • Target and maximum award by category • New awards vs. follow-on project funding

11. Program Focus • Sponsoring institution • TTO • University • Other public organization • Other private organization • Orientation • Technology focus • Market focus • Early vs. later stage projects • Focused towards targeted recipients

12. Application Process • Prospective applicants • Open to all qualified applicants through the application process • Application by invitation only • Timeline • Fixed application dates and evaluation timeline • Rolling application periods determined by program management • Pre-screening • Program staff • Independent advisor • Follow-on project phases • Same as new project • Review of progress and follow-on phase goals, milestones, and budget • Cursory review by program staff

13. Program Management • Governance • Financial controls • Program document management • Advisory Board • “Hands-on” vs. advisory only (must be specifically defined) • Paid vs. volunteer • Number of members • Qualifications • Demographics (entrepreneur, university, investor, corporate, etc.) • Fund raising? • Staff • Reporting structure • Full-time • Part-time

14. Project Management • Goals, milestones, and budget • Investigator communications • Application • Evaluation • Funding • Program PR • Licensing and commercialization • Project reporting • Time, milestones, spend, or some combination • Oral interactions with program staff • Written reports • Follow-on project phases

15. WARF Accelerator Program History • Evolved from Strategic Technology Enhancement Program (STEP) • Initiated in 2005 • Focus exclusively on translational development of pharmaceutical technology • Most of the funding used for contract services and prototype development • Lead Discovery Initiative (LDI) helped to establish high-throughput screening capabilities at UW • Accelerator Program • Formed in 2009 • Broader technology and market focus • Supports laboratory research by UW investigators • Direct funding for outside vendors (contractors and consultants) to support the research project

16. Guiding Principles • We can increase the probability of successful commercialization but cannot eliminate the inherent risks associated with development of early stage technologies targeted to rapidly changing markets. • We can have the greatest impact though the combination of thoughtful selection, funding, expert guidance, and networked resources. We must optimize our approach for each project. • Each project is unique – the market will determine the best approach for commercialization. • An Accelerator Program award is an investment – not a gift. • Everyone involved with the program must be dedicated to successful commercialization of UW-Madison technology. • In this context, successful commercialization requires generating a financial return to WARF and other investors. • The Accelerator Program awards resources to UW-Madison investigators, not startup companies. • Startup companies may benefit indirectly

17. Assisting Startups • WARF supports other UW-Madison associated programs that assist startup companies. • WARF may accept equity in lieu of cash payments for licenses to selected startup companies. • WARF may make cash investments in return for equity in selected startup companies. • Total of over $20 million invested in more than 40 startups

18. WARF Accelerator Program Overview • Strategic objective is to improve commercialization prospects for UW IP through: • More effective engagement with UW faculty and administration • Improved selection of IP assets as targets for WARF licensing/$ resources • Selective funding to reach value inflection points in high potential projects • Delivery of critical business and industry expertise as an ongoing resource • The Accelerator Program supports projects that will be commercialized through licensing to established companies or through formation of startups • Three primary resources fuel WARF’s Accelerator Program • Catalysts • UW principal investigators • WARF personnel • Accelerator can also access other UW, state, and private resources • Initial four-year budget of $4.8 million for investigator awards and program expenses

19. Market Focus Areas • Accelerator Program model requires market focus to succeed • Critical mass of IP assets/UW research capability in a particular market area • Catalyst expertise in that same market area • Attractive long-term business opportunities in that same market area • Four market focus areas have been identified with WARF licensing managers as coordinators • Biopharmaceuticals • Medical Devices • Computer Science and IT • CleanTech • Meetings • Program and all MFA meeting once each year • Each MFA meets at least one other time each year • Teleconferences and email circulation of proposals as needed • Full-time program management and administrative support

20. The Catalysts • Proven leaders in businesses and finance • 31 individuals with varied backgrounds including company, investment, and university • One third are UW-Madison alumni • Several are members of the WARF Board of Trustees • Provide targeted expertise in their respective market focus areas • Help assess IP for commercial potential • Advise regarding ongoing program management • Assist investigators in formulating and executing commercialization strategies • Connect WARF personnel and UW PI’s with others who can help advance commercialization

21. The Accelerator Process Follow-on Phases

22. Application • Investigators are invited to apply by WARF licensing managers • Requirements • Investigator disclosure of IP to WARF • Must fit into one of the market focus areas • Potential for top tier royalty revenues over the life of the patent • Funding needs must fit $10,000 – $100,000 per project phase • Investigator must be committed to commercialization and open to collaboration with WARF staff and Catalysts • Submit budget and development plan • Focus on commercialization, especially for follow-up project phases • Notification and approval of other stakeholders • Investigator must be qualified as a “principal investigator” • Approval of department • Approval of school or college

23. Evaluation • WARF licensing manager provides guidance • Fine tuning of proposal • Preparation of required documents and presentation materials • Catalyst evaluation • New project proposals may receive a “pre-review” by selected Catalysts • All project proposals are reviewed by the Catalyst panel for the market focus area, additional Catalysts may be invited • Catalysts consider technical merit, commercial potential, and the requested budget • Recommend whether to fund the project, may suggest revisions and provide detailed comments to the investigator • Final decision made by WARF staff and management with multi-level approval • Projects may be funded in phases with each subsequent phase requiring re-evaluation and approval based on achievement of technical and commercialization milestones • Phases typically run for 6-12 months

24. Funding Decision • WARF decision based on Catalyst recommendation • Expense categories eligible for funding • Scientific staff (grad students, post docs, technicians) • Supplies • Consultants • Contractors • Expense categories that are discouraged and only approved in special circumstances • Capital equipment • Travel • PI salary • Other considerations • WARF support to the PI is transferred directly to their UW research account • WARF may directly fund consultants and contractors • PI’s must adhere to all UW rules and policies • By agreement, WARF does not pay UW overhead

25. Project Implementation • WARF and the investigator agree on projects goals, milestones, and timing • Projects are often divided into phases • Investigators maintain close contact with the WARF licensing manager and provide periodic written progress reports • AP “Pipeline” newsletter published three times per year • Not all projects involve laboratory research • Regulatory consultations • Market research and planning • Paper evaluation of target therapeutic compounds • Contracted prototype construction or compound synthesis • Projects are re-evaluated upon completion of each phase

26. Licensing • WARF licensing manager works closely with investigators to determine and implement the commercialization strategy • WARF gives preference to the wishes of the investigator, especially around startup formation • Coordination with other UW offices regarding sponsored research, conflict of interest, and other potential issues • WARF will leverage Catalyst and other contacts to facilitate commercialization • Growing relationships with local VC and angel groups • Growing interest and support for startup formation • State of Wisconsin • UW affiliated programs • Local governments and organizations

27. Accelerator Program Summary • Current AP has been operating for almost three years • Funded 26 projects with awards of over $3 million • Recruited 31 Catalysts • Full-time and part-time AP staff that leverage WARF and UW resources • Three startups founded to commercialize AP technologies • One licensing opportunity pending to an early stage company founded by AP investigators • One licensing opportunity pending to a Fortune 100 company that is a market leader in applications for the AP technology • Positive “early stage indicators” such as grants and awards that are predictive of further success

28. Discussion