Creating Technology-Based Commercialization Alliances Gene Slowinski 908 234-2344 gene@strategicalliance.com

Hollywood Model of Innovation Patent Prosecution Implementing the “Want, Find, Get, Manage” Model® High risk, high reward deal structure

The majority of food-related IP is external to Kraft* 97.8% 2.2% * From 1990-2004. Food Related means patents coded with International Patent Classification A21/A22/A23 or US Classification 426. US, Europe and PCT. Presentation by Dr. Steve Goers, CoDev 2008, Phoenix, AZ

Billions of IQ points Linked to centuries of experience Driven to creativity by passion Yet isolated from my organization

The Customer Does Not Care About the Source of Innovation

Hollywood Model of Innovation Patent Prosecution Implementing the “Want, Find, Get, Manage” Model® High risk, high reward deal structure

Understand the patent landscape in your area of business interest Understand the patent landscape in your area of business interest. File patents to maximize your value in the landscape. File in all relevant geographies. In-license patents to create a “Bundle”. Characteristics of the right Patent attorney 20+ years as a patent attorney graduate degree in the technical area of interest works as hard to understand the business as the technology writes claims that are enforceable Red team review

Hollywood Model of Innovation Patent Prosecution Implementing the “Want, Find, Get, Manage” Model® High risk, high reward deal structure

Want Find Get Manage Transformational Growth: The “WFGM” Model Industry is accessing the world for innovation The “WFGM” Model Manage What tools, metrics and management techniques will we use to implement the relationship? Want What external resources do we need to succeed in our mission? Find What mechanisms will we use to find these resources? Get What processes will we use to plan, structure and negotiate an agreement to access the resources?

How Do You Get Found Patents Publications Conference presentations Social Networking (LinkedIn) Advisory board (retired execs from your industry) Trade associations (network with long-time members) Key to success: Network with networked people in your business area of interest.

First Contact 3 Pronged Approach Business Unit Head Chief Technology Officer or BU R&D Head Business Development or Licensing Critical First Sentence = “This document contains non-proprietary information concerning Company X’s technology.

Alliance Framework®

Want Find Get Manage Transformational Growth: The “WFGM” Model Industry is accessing the world for innovation The “WFGM” Model Manage What tools, metrics and management techniques will we use to implement the relationship? Want What external resources do we need to succeed in our mission? Find What mechanisms will we use to find these resources? Get What processes will we use to plan, structure and negotiate an agreement to access the resources?

The Alliance Framework® A rigorous process and document for planning and negotiating an alliance. Goal is to develop a high quality deal quickly or, to understand that a deal is not possible ... quickly. Adaptable, not a cookie cutter Can be used at any stage of alliance formation Accelerates implementation because implementers are part of the Planning and Negotiating Team. Works best when both firms use the process. Requires internal commitment from all key internal stakeholders (anyone with a budgetable resource).

Alliance Framework Elements Typical Elements: Objectives (ours, theirs) Roles (ours, theirs) Overall resources Boundaries Market model Strategic exclusivity Intersections with the potential alliance Business plan summary Detailed objectives and detailed resources Financial pie-split Intellectual property Working process and governance Term and termination Alliance structure

Innovation Portfolio – Tools for Risk Mitigation and Value Creation Stan Lech Vice President, Global Innovation R&D GSK Consumer Healthcare & Gene Slowinski Rutgers University

GSK Consumer Healthcare Over $6 Billion of sales in 120 countries R&D budget of $200 million+ Uniquely headquartered in both U.S. and U.K. 3rd largest OTC consumer healthcare company and 3rd largest oral care company More than 30 leading brands, 5 with sales in excess of $300 million

GSK 2007 Collaborative Innovation Results New Innovative Products, Market Models ~400 Finds against 45 clearly defined Wants 50 technologies still under review by category team’s Closed 12 early stage technology agreements 6 additional agreements under negotiation

+13% +14% Jan 2007 Feb What Happened? £m 3100 3000 2900 2800 +9% +6% Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec +3% +2% +4% +5% +6% 2004 2005 2006 2800 2900 3000 3100 £m +9% Jan 2007 Feb

Hollywood Model of Innovation Patent Prosecution Implementing the “Want, Find, Get, Manage” Model® High risk, high reward deal structure

Phase Model Specifically designed for early stage R&D relationships Particularly when the potential value is high but uncertain

Definitions: Market facing partner – firm that interacts with the ultimate customer (e.g., Lilly, P&G, Kraft) Technology source – firm that has the primary role for developing (or leading the co-development) of the technology (that’s you)

Technical potential is high, but uncertain Three Phase Structure Phase 1 - Evaluation Standstill agreement with payment (usually 6 months) Phase 2 - Development Milestone 1 Milestone 2 Milestone N Milestones often follow the firm’s stage gate process Market facing partner earns exclusivity by making a development launch payment and subsequent milestone payments Market facing partner can terminate at any milestone by not making the milestone payment Technology source cannot terminate Consequences of termination Technology source receives exclusive rights to the foreground Market facing partner grants background rights needed to practice the foreground ? Technology source is free to work with the market facing partner’s competitors Technology source may earn a termination fee to compensate for the opportunity cost of working with the market facing partner Phase 3 – Commercial launch Launch payment Royalties and other payments designed to meet the agreed upon NPV split

Questions?