Commercialization Challenges by Stages

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Commercialization Challenges by Stages

• November 7, 2008
• Rick Richmond
• CEO, SiMPore
• Entrepreneur-in-Residence, High Tech Rochester
• and former CEO, STS Biopolymers

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Commercialization Challenges by Stages

• From Start-Up to Success
• Two Case Studies
• Retrospective STS Biopolymers Starting from a
  market need
• Prospective SiMPore Starting from a new
  university technology

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Commercialization Challenges

• Two case studies contrasting
• market need in search of a technology and
• university technology in search of a market
• Greater challenge commercializing university
  technologies
• Based on scientific, engineering or medical
  research rather than market need
• Gap (sometimes a chasm) between technology and
  marketable product

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Challenge Product Creation
• Market need Medical guidewire coating slipperier
  than Teflon
• Challenge Develop IP - Protect with patent
  applications
• License solution to customer that identified the
  problem license narrowly defined to allow
  company to license to others

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Challenge Break into the Market
• Hire great people
• Publish and present at industry meetings attended
  by product developers
• Develop leads, make direct calls
• Begin sales cycle

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Challenge Maximize Value
• Sell coatings under license to new customers
• narrow licenses specific devices, specific
  geographies
• upfront minimum royalties (share in
  customers rewards)
• non-exclusive exclusive for big to compensate
  for lost opportunities to license to their
  competitors

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Challenge Grow with New Products
• Competition entering slippery coating market
• Sales and profit growth slowing
• Develop new medical coating IP
• Drug eluting coatings
• Echogenic coatings
• Microarray coatings

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Challenge Grow with New Products
• Self-finance from profits
• This stage could have been faster if we were
  willing to raise funds from outside investors

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Challenge Grow by Acquisition
• Dutch medical device coating company
• Complementary products, processes, management
  style
• Finance from cash and borrowing
• Challenge Integrating similar but different
  cultures

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Challenge Recover from 2001 Downturn
• Revenue dropped by one-third
• 12 employees laid off
• By end of 2002 sales were back to prior levels
  and growing again
• Return to aggressive development and selling
  reinvest as much of free cash as possible

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Challenge Position for Sale
• Inquiries by VCs and potential acquirers
• Hire an investment bank experienced in medical
  field and focused on small to mid-sized deals
• Solicit angel investments for cash reserve
  instead of scaling back profit reinvestment

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Challenge Position for Sale
• Turn over management to management team
• Prepare offering and due diligence materials
• Negotiate deal terms with
• Buyers
• Partners and investors
• Close the deal

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Commercialization Challenges Case Study STS
Biopolymers A Retrospective Look

• Lessons Learned
• Solve a market need
• People promote, reward, communicate, delegate
• Focus resources for greatest impact
• Cash flow it really is king, manage it well
• Outlicense for rapid, broad market access
• Choose an investment bank that knows your market

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• New technology Nanoporous ultrathin silicon
  membranes many potential applications

Conventional polymer filter
SiMPore silicon filter
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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Is There a Market?
• Market opportunity assessment to select first
  product some potential applications
• Air purifiers Biosensors
• Water filtration Microfluidics
• Hemodialysis Protein separation
• Drug/vaccine production Cell co-culture
• Microelectronic processing TEM windows

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Is There a Market?
• Focus bioresearch market, non-regulated
  products, objective - rapid market entry
• TEM windows
• SepCon protein separator/concentrators
• Cell culture substrates

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Build a Foundation
• Initial funding Founders, family, friends
• License from UR
• Exclusive, all fields
• Royalties and ownership to UR
• Develop/License additional IP - Protect with
  patent applications

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Build Production
• Move from lab to production
• Repeatable, reliable, high yield production of
  quality product
• Establish efficient QA/QC

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Introduce Products, Position for
  Growth
• Raise funds angel round 1.25 million
• Redo market opportunity assessment market
  research in greater detail
• Strengthen IP position
• Hire people who know the markets and applications

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Break into the Market
• People form a strong founding team Hire great
  people
• Publish and present at industry meetings attended
  by product developers
• Develop leads, make direct calls
• Begin sales cycle

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Accelerate Growth
• Self-finance and/or raise additional funds
• Hire more marketing, selling, development,
  production, licensing, IP expertise for selected
  markets and applications
• Develop/acquire needed IP
• Sublicense
• Introduce new products

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Accelerate Growth Licensing
• Sublicense to companies that need nanomembranes
  for their non-bioresearch products
• Selectively, narrowly sublicense

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Accelerate Growth New Products
• Develop and introduce additional non-regulated
  products
• Begin development of regulated products
• Begin preparing for regulated product approvals

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Commercialization Challenges Case Study SiMPore
A Prospective Look

• Challenge Position for Sale
• Challenge Sell to Maximize Shareholder Value