Research outside the University environment

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Research outside the University environment
just

Dr Curtis Dobson Ai2 Ltd
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Options for taking technology to market

• University issues license direct to industry
• Start up a company, which pays University for IP
  (via a long term loan and equity position), and
  develops, markets and licenses the technology to
  third parties
• Depends on
• Nature of technology how well developed it is
• Market size, hurdles and competitors
• Career goals of inventor

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CONSUMER
License
License
My focus this morning
Spin Out Company
Spin Out Company
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How to start a Start Up
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Start Up Check List

• Intellectual Property which is
• Secret
• Novel
• Inventive
• Offers a potential solution to a problem for
  which there currently is no solution
• Problem is sufficiently widespread / serious
  that substantial income (gt 50m pa) could be made
  by providing a solution
• Many such problems can be tackled by same
  technology (technology platform)

i.e. patentable
Out-license
Start Up
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Start Up Check List Phase 1

• In phase 1 (approx 6-9 months) you should aim
  to raise sufficient funding to
• Incorporate company, devise financial
  procedures, open bank account, draw up Articles
  of Association, appoint directors
• Generate proof of principle data
• Where appropriate build a prototype
• Investigate the markets and aim to develop
  links with major companies operating in that area
• File provisional patent applications

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Start Up Check List Phase 2

• In phase 2 (18 months) you should aim to raise
  sufficient funding to
• Find premises
• Devise detailed business plan
• Maintain and expand patent portfolio
• Assemble world-class management team, and (if
  appropriate) scientific advisory board
• Carry out research and development work

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What to expect.
Ai2 incorp. (Apr 05)
Ai2 (Jul 05)
X
X
Dedicated Professional Management (Building Value)
Research Institution and Associated
Involvement (Reducing Risk)
Ai2 (Apr 06)
X
Timing Phase 1
Phase 2
Phase 3
Phase 4
Founders and Early Investors Exit Goal (5/7 yrs
from start) via eg. a trade sale, IPO
(6-9 months)
( 18 months)
( 12 months)
Volume sales and profits Independent business
premises. More financing (VCs, investment banks,
Private Equity Firms)
Proof of Principle Prototyping Patenting Incorpora
tion Shareholders agreement
Business Planning Forming Partnerships Finance
from Business Angels/ VCs / University
Challenge Consultancy Incubation Premises
Early Trading Financing from Business Angels,
consortia and funds. Board reconstruction
Service contracts
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Senior Management

• Chairman
• Chief Executive Officer (CEO)
• Board of Directors
• Chief Scientific / Technical Officer (CSO /
  CTO)
• Panel of Scientific Advisors
• Company Secretary

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How does the company keep operating until it is
profitable?

• Government / Charity Wellcome UTA, SBRI,
  FRAMEWORK 6 etc.
• Investment, including Venture Capital Funds
• Will provide funding in return for shares in
  the company
• Investment provided in rounds different VCs
  specialise in different levels of funding / risk
• Investment increases as company grows / nears
  market (e.g. 100-250k for seed funding,
  through to many tens of millions in some series C
  / Series D
• VCs initially salesmen

but ultimately buyers
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Why start a Start Up ?
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Benefits for the technology / research

• Access to venture capital investment
• Access to cutting-edge incubator laboratories
  (for a fee)
• All aspects of business development handled by
  small specialist team, rather than large
  generalist University IP department
• Longer term access to investment capital via
  stock market flotation
• Possibility of trade sale of company

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Benefits to industry / society

• Research areas which are too commercially focused
  for academia, though too risky / early stage for
  large companies to explore are not frozen
• Converts IP raw materials into a lower risk
  package which is attractive to larger companies
  
• Financial / economic creates jobs and clusters
  of small businesses in similar areas, along with
  jobs in support companies
• Attracts larger companies to a region

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Benefits for the researcher

• Academic research increasingly iterative.
  Start ups offer opportunity to carry out heavy
  lifting to put your idea into practice, and make
  a real difference
• New career possibilities - small spin out
  companies / IP law / business
• Maintain academic research programme, yet benefit
  from SME experience
• Better paid / better resourced
• Equity position, which can eventually prove
  highly valuable
• Networking
• Profile

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CAVEAT - dont do it if these issues worry you

• Less time for research, especially blue sky
  research
• Substantial time spent on administration,
  business plans, financial systems, legal
  documentation, fundraising etc etc.
• Bar on presentation / publication until patents
  filed
• Need to prioritise applications which are
  closest to market
• Less job security (relative to tenured academic
  role at least)

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How does it compare with traditional industrial
research

• More time for academic research
• Administrative procedures may be less
  cumbersome
• Technologies may be riskier, and more cutting
  edge
• Closer ties to Universities
• Culture more akin to academia
• Organisations leaner and more fleet of foot
  higher productivity

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Ai2 Ltd a case study
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My Intellectual Property

• Colleagues find that a human gene (APOE)
  determines the outcome of a broad range of viral
  infections
• My discovery of a region of the protein (apoE)
  coded for by the gene with antiviral activity
  against herpesviruses and HIV

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Lead for antiviral / anti-HIV therapeutics ?
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HIV
Lipoproteins and virusesevolutionary convergence?
Human Serum Lipoprotein

• Lipoproteins resemble virus particles, and occupy
  the same cell biological niche

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Need for new anti-HIV medicines

• 1.6 million individuals infected with HIV in US,
  Western Europe and Japan
• 14,000 new cases per day globally
• Market for anti-HIV chemotherapy 5.1b in 2002,
  and growing
• HIV strains are becoming resistant to current
  therapies

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attachment
HIV Replication Cycle
4
fusion
5 ?
HUMAN CELL
Existing Therapeutic Targets (1 to 4)
nucleus
1 / 2
3
replication
virus
reconstruction
virus
virus
HUMAN CELL DESTROYED
virus
virus
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GIN unique early stage funding NW England.

• Genetics Innovation Network (University of
  Manchester / Liverpool) - 40k
• New peptides
• Other human protein regions with similar activity
  ?

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Outcome of GIN programme (late 2003)

• Discovery of second apolipoprotein region with
  activity
• Invention of two families of compounds relating
  to both original and new protein region, with
  distinct activity profiles
• Activity against all strains of HIV tested, via
  novel mechanism

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Broad anti-HIV activity of new compounds
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Antibacterial activity?

• Many peptides from non-mammalian sources /
  non-natural sequences have antibacterial activity
• Features similar to our human apoE peptides
• Commercially more likely to succeed quickly
• No need for peptide to enter body
• Medical devices in particular probe to
  infection often biocompatible, but without
  capacity to fight infection

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Coating to Prevent Medical Device Related
Infection
Untreated Treated
Materials treated with (fluorescent) peptide, and
thoroughly washed
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Peptide-treated medical device materials
resistant to Pseudomonas infection
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Overview

• Ai2 aims to become a significant player in the
  large and growing anti-infectives market
• Core Business is identification of unmet
  anti-infective needs in the healthcare market,
  and application of Ai2s proven platform
  technology to address those needs
• Current Focus on unmet biocompatibility and
  infection needs at the interface between biology
  and polymer surfaces (catheters, IV-equipment and
  related medical devices). Clear early revenue
  opportunities identified and currently being
  pursued
• Management Team of international calibre,
  includes former senior executives from blue chip
  medical device and pharmaceutical companies in UK
  and US
• Awards Most exciting biotechnology company in NW
  England

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North West Biotechnology Project of the Year 2004
North West Biotechnology Start up of the Year 2005
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Product Pipeline Key Product Areas
Medical Device coatings Partners in place
Novel Therapeutics Long term Large Market
Novel prophylactics Building on antibacterial
coating technology
Higher Risk
Lower risk
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Challenges

• Continued need to secure investment until
  company reaches profitability
• Expense of patent costs
• Company increasingly must pay its way. Lab
  and office space, payroll, legal expenses
• Variability in investment climate
• Risk of competitor technologies emerging
• Technical hurdles, particularly for long term
  therapeutic applications

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Opportunities

• University of Manchester generous IP policy
• UMIP unique resource
• Packaged IP
• Wide networks
• Dedicated business development personnel
• MTF venture capital fund
• Tough criteria
• Solid investment experience, as we negotiate
  with VCs completely outside the University
• Currently signs of improved investment climate

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Research outside the University environment
Just

Dr Curtis Dobson Ai2 Ltd