Managing Milestones for University Startups February 25th, 2014 Thomas Lipkin, Ph.D. Assistant Director of Entrepreneurship and New Ventures UCLA Office of Intellectual Property & Industry Sponsored Research

Outline Overview of OIP-ISR Building a Strong Foundation Setting Startup Milestones Leveraging the Ecosystem

Overview of oip-isr

The Office of Intellectual Property & Industry Sponsored Research Business Development Licensing

OIP-ISR Metrics

Building a Strong foundation

Recognizing a Startup Opportunity 1. Is there market pull or is this just cool technology? What problem in the existing market are you trying to solve? Does your technology provide a solution in an overwhelmingly better way? 2. Is the technology well-differentiated from what the big players are doing? Will your IP position block the big guys, and conversely, can you access outside IP needed to bring this to market? 4. Are you close enough to a major value-adding milestone? SBIR/grants—will they get you to venture fundability? VC—will the round get you to a significant valuation step-up? 5. Does the potential financial upside warrant the risk? Technology risk—feasibility, scalability, safety, efficacy Market risk—demand, pricing, reimbursement, regulatory Competitive risk—time to market, better technologies IP risk—will the patents issue, scope of patent claims, freedom to operate, etc.

Level-Setting with Faculty Startups Family support? Department support? Is the PI tenured? What is the PI’s motivation? What will be PI’s level of engagement? Will PI be receptive to constructive feedback? Will a graduate student or postdoc leave to join the company?

Roadmap for Faculty Protect intellectual property (though TTO) Consult Conflict of Interest Office/ University SOPs Write 1-page executive summary of opportunity Conduct extensive market analysis and due diligence Seek feedback from KOLs, academics, regulatory experts, industry execs, investors, and advisors Network to find CEO/ groom postdoc or grad student Construct pitch deck to articulate the vision Incorporate the company Secure rights to intellectual property (LOI or Option)

Company Leadership Entrepreneur-led: An outside entrepreneur starts the company, fundraises, etc. Advantage—business-savvy person is involved from the outset Challenge—requires active involvement of the university inventors at investor presentations and initial team-building to access their knowledge Investor-led: A VC or angel investor seeds the company and recruits the team Advantage—direct access to capital and a deep rolodex Challenge—alignment of investor’s interests and the university inventors Inventor-led: One or more of the academic researchers starts the company Advantage—university inventors know the technology better than anyone Challenge—requires a new business mindset on the part of the inventors

Setting Startup Milestones

Milestone Guidelines Set realistic milestones – you will be judged against them Ensure milestones are measurable and actionable Document milestones and articulate them to the team Be able to describe circumstances surrounding unmet milestones Always cite past achievements when communicating with investors

Milestones Across Development Source: UC Davis Center for Entrepreneurship

Sample Life Sciences Milestones Concept Pre-Seed Early Seed Stage Mid Seed Stage Later Seed Stage Early Stage Company Development Stage Research Opportunity Investigation Feasibility Proof Development Market Introduction Growth Milestones Invention and discovery Pre-molecule; promising early results Molecule selected and working in cell lines Molecule optimized for cell lines; moving into animal Pre-clin trials (efficacy, tox, PK); IND application/ approval Entering Phase I trials Time to achieve milestones 1-10 years 1-3 months 3-6 months 6-9 months 9-15 months 12-18 months Funding $1-10M $25-75k $500k-$1M $1-4M Avg. Valuation --- <$750k $1-2M $2-3M $3-5M $5-7M The Start-Up Company Map, Albers et al. 2008

Sample Physical Sciences Milestones Concept Pre-Seed Early Seed Stage Mid Seed Stage Later Seed Stage Early Stage Company Development Stage Research Opportunity Investigation Feasibility Proof Development Market Introduction Growth Milestones Invention and discovery Pre-prototype (science complete; engineering continues) Lab prototype; feasibility demonstrate in lab Lab prototype; feasibility demonstrate in alpha tests Lab prototype; beta tests complete; validating manufact. Commercial grade prototype; first production runs Time to achieve milestones 1-10 years 1-3 months 3-6 months 6-9 months 9-15 months 12-18 months Funding $1-10M $25-75k $250-750k $1-4M Avg. Valuation --- <$750k $1-2M $2-3M $3-5M $5-7M The Start-Up Company Map, Albers et al. 2008

Capital Milestone Considerations Industry comparables Commodity chemicals vs. therapeutics Margins vary by sector Stage of development of the technology Phase I drug vs. preclinical lead compound Stage of IP Issued patent vs. provisional application Patent lifetime

Development/ Regulatory FDA, Payer, Provider, Industry Discussions Months 1-6 Months 6-12 12-18 18-24 Year 2-4 Years 4-6 Beta Device Commercial Device Manufacturing Device Development Software Additions/ Corrections Prototype Design Design Review Scientific Development/ Regulatory Strategy IRB Proof of Concept Studies Pivotal Study Launch 510K FDA, Payer, Provider, Industry Discussions Reimbursement Seed ($500k-1M) Funding Series A ($5-9M) Series B $10-15M Today

Leveraging the Ecosystem

New Ventures Team Facilitate Startup Creation Facilitate Goals Activities Facilitate Startup Creation Source opportunities from faculty Diligence startup potential Source entrepreneurs Connect to “Startup in a Box” services (vendors) Facilitate Startup Funding Market to angels / VCs Host SBIR / STTR workshops Identify and help prepare for business plan / pitch competitions Coordinate potential seed fund efforts Facilitate Startup Success Connect with talent / mentors Organize Entrepreneur in Residence (EIR) program Provide pitch coaching services Connect with core facilities and UCLA assets that could add value

Startup in a Box Legal Services Bank Accounts SBIR Workshop Mentors Partnering with 6 startup-focused law firms Bank Accounts Partnering with 2 entrepreneurial banks SBIR Workshop Partnering with QB3 Mentors Recruited ~30 from multiple disciplines Pitch Coaching Hosting workshops throughout the year

Startup in a Box Timeline File Provisional Application 12 months File US and/or PCT U.S. only PCT National/Regional phase Patent Issues Decision to file 30 months Not under prosecution Awaiting examination/ Active prosecution Startup in a Box

OIP-ISR Entrepreneurs-in-Residence Program: Startup Guidance for UCLA Faculty and Grad Student Entrepreneurs 25+ yrs Pharma & Biotech Regulatory Affairs Debra Gessner, M.Sc. John Gillespie, MBA 30+ yrs Investing & Corp. Mgmt Sandra Itkoff, MBA 25+ yrs in Clean Tech Investment & Corp. Mgmt Kevin Stark, Ph.D. 20+ yrs in Biotech Corp. Mgmt & R&D oip.ucla.edu/EIR

Encouraging New Company Formation Provide Entrepreneurship Seminars Discuss structure of Company Explain Term Sheets Provide Introductions to Investors and Entrepreneurs Explain University Policies and Conflict of Interest Management Sponsored Research or Collaboration Agreements Consulting Agreement/ Scientific Advisory Committee Establish Incubators or Accelerator Programs Develop Mentorship programs Establish Entrepreneur in Residence Programs

Contact: thomas.lipkin@research.ucla.edu