SPI USA, Inc. 4,5/4,5 CM Introducing a Way of Thinking About the Process of Partnering Asking the right questions By Elia Cossis Your Partner for Innovation SPI USA, Inc Research Park Drive, Suite 325 Baltimore, MD Phone:

Introducing a Way of Thinking About the Process of Partnering Partnerships  Partnership building needs to be among the core competencies of any company that wants to grow  There are 11 basic steps for navigating the twists and turns of partnering These steps are not in lockstep

Introducing a Way of Thinking About the Process of Partnering Step 1: Ask: What Do I want? Step 1: Ask: What Do I Want?  Is it to:  Leverage intellectual property?  Bring strategic, operational and financial benefits?  Enhance access to technologies?  Reducing investment exposure?  Increase R&D funding?  Commercializing products or technologies?

Introducing a Way of Thinking About the Process of Partnering Step 2: Don’t Forget Your Strategic Plan  Once the basic questions are asked in step 1, the temptation will be to move straight to researching potential partners. But several steps must come first  First review your strategic plan and analyze how partnering fits into it  What are the goals and plans you have set for your company?  Will partnering advance them?  Are there elements of a potential deal that under the strategic plan are non- negotiable?  Are they realistic?  In some cases, simply contemplating a possible partnership will lead companies to reconsider their basic business strategies

Introducing a Way of Thinking About the Process of Partnering Step 2: Don’t Forget Your Strategic Plan [cont.]  Once you’ve figured out how a partnership fits with your strategic plan, the next objective should be to develop a partnering strategy  A well planned and executed strategy will include a thorough assessment of the commercialization potential of the partnership and development of the available strategic positioning options Remember: The important goal isn’t to make a partnership. The important goal is to advance the business.

Introducing a Way of Thinking About the Process of Partnering Step 3: Develop and IP Management Strategy  In most cases, the core of a partnership is allowing another company to have some level of access to your intellectual property (IP)  It will be essential to have a system in place to monitor the use of IP and track licensing, royalties, and collaboration projects  The best time to develop an IP management strategy and the necessary infrastructure is at the beginning of the partnership process

Introducing a Way of Thinking About the Process of Partnering Step 4: Assess the Commercialization Potential  Once a plan is developed to manage the portfolio of IP, the commercialization potential of the IP must be determined  You must evaluate internal and external factors. For example:  External factors include: Market need Market size Market competitors  Internal factors include: Development potential Allocation of resources Probability of success estimates based on historical programs

Introducing a Way of Thinking About the Process of Partnering Step 5: Evaluate Your Portfolio  Once the commercial value of a particular asset/program/IP is understood, its position relative to the broader IP portfolio should be evaluated  Understanding the strategic position within the portfolio will help to prioritize individual programs objectively, and best utilize partnering/licensing resources in a constrained environment  Strategic positioning options should be ranked, and relative strengths, weaknesses, opportunities and threats assigned to each asset/program/IP

Introducing a Way of Thinking About the Process of Partnering Step 6: Gather and Analyze Data  Once the IP positioning is complete, careful data-gathering and analysis should occur, in order to understand the financial, strategic and operation value to a potential partner  Key things to look at are: Customer adoption Target pricing SWOT analysis Anticipated revenue Profitability and Net Present Value under various partnership models Assessment of the impact on the potential partner’s financials

Introducing a Way of Thinking About the Process of Partnering Step 7: Identify and Prioritize Key Partners  Once the IP is positioned and analyzed, valued potential partners should be identified and prioritized  The first round of research usually turns up a large pool of potential candidates. After a more structured screening and selection process a large number of the initial companies identified are a loose fit  Factors that go into screening include critical factors such as: Past experience commercializing and marketing products Particular areas of technology Past level of commitment to other alliances and/or partnerships Financial records

Introducing a Way of Thinking About the Process of Partnering Step 7: Identify and Prioritize Key Partners [cont.]  Next, a contact strategy should be created  This involves creating a communications and marketing plan to effectively approach key contacts at the companies  Factors including corporate culture, introductory position, and approach should be considered before initiating contact with potential partners

Introducing a Way of Thinking About the Process of Partnering Step 8: Develop Presentation Collateral  Presentation collateral is a key component of the partnering process that serves to introduce both the partnering opportunity and the organization  A non-confidential business development brief is typically created to introduce the partnering opportunity, product/technology, and organization soliciting the business partnership  PowerPoint presentations called “Pitch Books” are typically prepared to present the product/technology, the partners involved, the rationale for the partnership and terms of agreement

Introducing a Way of Thinking About the Process of Partnering Step 9: Assess Commercial Interest and Attractiveness  With the marketing tools prepared, the next step is to initiate initial contact with the identified partners  Initial contact can be made via phone, , mail, or through in-person appointments  In the initial presentation, the pitch book is presented, whereby the value proposition and alignment of intellectual property with commercial potential is made  Both parties then evaluate the attractiveness and feasibility of the partnership  Evaluate a preliminary go/no go decision

Introducing a Way of Thinking About the Process of Partnering Step 10: Finalize the Partnership Model  The first steps involve a period of in-depth valuation. At this stage, preliminary forecasts of financial returns from the commercialization partnership are prepared  Forecast valuation analyses of the technology or product are finalized, and a period of active due diligence is initiated  Provided the due diligence process moves to a partnership stage, final arrangements are made to finalize details and establish a partnership

Introducing a Way of Thinking About the Process of Partnering Step 11: Understanding Partnering Option Step 11: Understand Partnering Options  There are several types of partnership options. They include: 1.Collaborative Marketing 2.Licensing Agreement 3.Collaborative Development 4.Minority Investment 5.Joint Venture 6.Merger/Acquisition

Introducing a Way of Thinking About the Process of Partnering Step 11: Understanding Partnering Option [cont.]

Introducing a Way of Thinking About the Process of Partnering Review Review: 1.Ask: What do I want? 2.Don’t forget your strategic plan 3.Develop and IP management strategy 4.Assess the commercialization potential 5.Evaluate your portfolio 6.Gather and analyze data 7.Identify and prioritize key partners 8.Develop presentation materials 9.Assess commercial interest and attractiveness 10.Finalize the partnership model 11.Understand partnership options

Introducing a Way of Thinking About the Process of Partnering Reference Biopartnerships magazine. October 2005 issue. Pages 18-23

Introducing a Way of Thinking About the Process of Partnering USA Inc Research Park Dr., Suite 325 Baltimore, MD Tel: Fax: SPI USA Contact Information California USA – Irvine 2102 Business Center Drive, Suite 220E Irvine, CA Tel: Fax: Baltimore