OMPI, Aprli 2005Athelas SA Copyright STARTUPS, IP AND ALL THAT SORT OF THINGS IP issues as seen from the limited perspective of a startup company active in the field of drug discovery and development

To provide a solution to the raising problem of multi- drugs bacterial resistance by identifying and developing first-in-class anti-bacterial molecules with novel modes of action. ATHELAS’ MISSION

UNMET MEDICAL NEEDS  Dramatic increase in bacterial resistance to antibiotics  >200 antibiotics marketed, but only 5 bacterial mechanisms targeted, because all discovery performed in vitro  Over the last 23 years, only 2 new chemical class of antibiotics Urgent need for new approaches to fight bacterial diseases OPPORTUNITY

IN THE PIPELINE Validation + Assay Develop. Lead Generation Lead Optimization PRECLINICAL Late Preclinical Phase III Phase I Hit Validation CLINICAL Phase II Targets Gram negative Small molecules Natural compounds Gram negative Small molecules Natural compounds Lead ATH18534 BUSINESS MODEL Backup ATH10081 Hits Validated hits Gram positive Natural compounds Small molecules Natural compounds Small molecules Gram negative Target-Based Drug Discovery Target-Based Drug Discovery

 Patents are vital assets for a high-tech startup seeking financing BUT: IP ISSUES FOR A STARTUP  No in-house resources to deal with IP properly  Lack of general knowledge about common procedures  Difficult to identify the right(s) expert(s)/consultant(s)  Hard to justify the initial large expenses resulting from IP redaction, filing etc.  Jungle of national regulations  No resources to proactively protect IP

 Likely origin of the patent(s): Universities  Principal interlocutor for patent rights transfer: tech transfer offices  Main issues: 1.Exclusive licensing vs transfer of property 2.Costs for the startup and consequences for the future ONE IMPORTANT ISSUE

 Why ownership is better than exclusivity for a startup? 1. Represents a negotiable asset -for the company -for investors 2. Management of IP simpler, in particular in case of litigation  Why Universities don’t want to sell their patents? 1.Tech transfer offices get recognition for building a strong patent portfolio with projected large returns from royalties 2.Fear that patents may not fully be exploited by startups 3.Fear to loose everything if company fails ONE IMPORTANT ISSUE (bis)

 Tech transfer offices should accept to transfer the ownership to a startup/spinoff providing that TCO: 1.May get equity if local policies allow for 2.Negotiate realistic royalties with transferable rights to subsequent owner in case the startup fails  This is favorable to both Universities and startups because: 1.Startups obtain valuable assets to attract investors and get control over its IP portfolio (out-licensing, litigations) 2.University cannot afford to pay national patent filing and subsequent fees, but can hope to get ROI if the patent is recovered by another player. 3.University can have a better negotiation position towards the startup. Warning: upfront fees will kill the project. REMEDIES

OTHER IMPORTANT ISSUES  How to get the “right people” onboard from the start to take care of IP issues? 1.In-depth knowledge of company’s business 2.Fluent with national and international IP issues 3.Be able to communicate and explain 4.Be available and affordable…  How to compromise between excellence and costs?  How to factor in since the beginning possible litigation consequences?  How to keep track of all new rulings which may influence outcome of IP or possible litigation?  …..

 IP management constitutes one of the most critical topics for a startup’s success  Litigation is the most fearful perspective a startup can be confronted with in the IP field Hence: Any means to avoid or damper sterile and killing litigation costs, in particular for small companies are most welcome! CONCLUSIONS

THANK YOU! Jean-Pierre Paccaud, PhD, C.E.O. Athelas SA 18, ch. des Aulx 1228 Plan-les-Ouates SWITZERLAND OMPI, Aprli 2005Athelas SA Copyright