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Alicia Löffler
Extraordinary Faculty
First IPO
Alumni Success
Highest Licensing Revenues
GROUPON
Northwestern is at an Inflection Point
Invention is serendipitous
Innovation is not
“It is an organization-wide effort that requires infrastructure and discipline and impacts how Northwestern University behaves within & with the world around”
Inspire a culture of innovation that bridges research and its practical use
for public benefit.
Many Ways to Bridge the Gap Between Research and Practical Use
StudentsPublications
Seminars, conferences, etc.Faculty consulting
Industry sponsored researchIndustrial affiliate programs
Commercialization: Intellectual Property, licensing, start-up
START-UPLICENSE TO
CORPORATIONS
RESEARCH NEW PRODUCTS FOR THE PUBLIC
What Keeps Us Moving in the Morning?Treating millions of patients around the globe
with fibromyalgia, pain associated with diabetes shingles, and epilepsy
Initial patent 1989Licensed to Parke-Davis 1990
NIH
ABO- Early detection of colon (and other) cancers –
Will save millions of lives 2006
Developed in collaboration with industryNIH and NSF
Wildcat System - HIV testing in remote and resource-poor areas of the world - predicted
to save 4 million lives in Africa/yearDeveloped in collaboration with Industry
2006Bill and Melinda Gates Foundation
© Kellogg School of Management
Process of Innovation Fundamentally Changed in the Last Twenty Years
Government Academia Industry Innovations
Government
Acad
emia
IndustryInnovations
The structure of innovation and commercialization today is so interwoven that it is difficult to delineate
government, academic from commercial institutions
NIH
© Kellogg School of Management
The US Position in Innovation Fueled by Cornerstone Policies 1978-80
VC --Reagan’s Pension Funds
Patents - The Supreme Court's Diamond vs. Chakrabarty decision, allowed recombinant organisms
Bayh-Dole Act of 1984, helped move federally funded discoveries off the shelf and into private development.
Balance innovation incentives with access of innovation to the public
Bayh Dole Act
Allows: US Universities to have IP control of their inventions that resulted
from Federal Government Grants US Universities to grant exclusive licenses in the technologies to
private companies.
Restrictions: Universities must share proceeds with inventors. Reserves to the government a royalty-free non-exclusive license to
use the invention for government purposes. Bayh- Dole gives the government so-called "march-in rights" which
enable it to compel licensing of a federally funded invention if the patent owner has not commercialized the invention in a reasonable time or makes the product not accessible to the public
11199
1199
2199
3199
4199
5199
6199
7199
8199
9200
0200
1200
2200
3200
4200
5200
6200
7200
8200
9
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000 US Patent Activity from Academia
Total Patent Applications
New Patent Applications
Issued Patents
121991
19921993
19941995
19961997
19981999
20002001
20022003
20042005
20062007
20082009
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500 Licensing Income
Year
Lic
en
sin
g In
co
me
($
mill
ion
)
Total Income
Running RoyaltiesAll Other
Sale of Stock
13
1980-93
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 -
100
200
300
400
500
600
700
800
900 Start-Ups Formed
Year
Nu
mb
er
of
Sta
rt-U
ps
Fo
rme
d
University Start-Up Companies
7,251 start ups formed 1980-2009
279,000 jobs created since 1996
$187 billion added to U.S. GDP
72% located in same state as institutionEvery state except Alaska
12.3% from California institutions11.8% from Massachusetts institutions
363 by MIT349 by University of California System175 by University of Utah34 by Northwestern University
14
Process
Expanded Purpose of the Function: From Linear to Multidimensional
Transactional Business Development
Business/Financing
PlanStart-up
Auction, trade, bundle, etc
Angel and Investor Advisors
Chemical, Pharmaceutical, Medical Device, Diagnostic Company Advisors
Fa
cu
lty
Ou
tre
ac
h &
T
ran
sla
tio
n
Patentability PatentMarket and Licensing
DisclosureCommercialization
Plan
To Comprehensive, Open, and Pro-active
Faculty Outreach
Innovation Mentors Program
Commercialization Clinics
DISCLOSURE
Creates important documentation:
a record of the invention
identifies the inventor(s) involved
identifies who sponsored the work
lists public disclosures and publications
First to Invent vs. First to File (soon to change)
Disclosure: Back-office Considerations
Discuss with inventors Inventor provides technical expertise Inventor may also provide industry contacts
Contact industry experts
Consult with legal experts
Internal analysis
Cross check sponsored work
Report to government
Determine inventor’s “home”
Determine previous commitments made
Prior art Invention development status Intellectual property position Enforceability Commercial potential Licensing potential
Typical criteria
PATENT
Exclusive rights granted for a limited period of time in exchange for a disclosure of an invention.
Must be new, useful and non-obvious.
Required by investors and commercial developers to justify investmentsOnly currency for startupsPositions faculty for further fundingFacilitates exchange of knowledge, promote disclosure rather than secrecy Adds clarity to agreements and partnerships
Patent decisions are often driven by publication (usually too early)
Why Patent?
Patents: Back-office Considerations
Licensing associates manage the process Technology and commercial expertise Responsible for invention from cradle to license Very resource intensive (money/skills/time)
Patent costs Typically $25,000 to $35,000 over life of U.S. patent
USPTO (US Patent and Trademark Office) fees Patent attorney/agent costs Higher patent costs for foreign coverage PCT (Patent Cooperation Treaty) application preserves
foreign rights while delaying costs
COMMERCIALIZATION PLAN
Plan to determine best path to bring the technology to society
License to operational company
License to startup
Commercialization Plan
Discuss with inventors Inventor may also provide industry
contacts Inventor’s preference (startup or license?)
Contact industry experts
Consult with investors
Match Faculty with entrepreneurs
Develop Marketing Plans
(with Kellogg students)
Market and “promote” technologies
Technical Risk Market Risk Financial Risk Regulatory Risk Management Capabilties Licensing potential
Typical criteria
LICENSE
An agreement where the owner of intellectual property gives permission to allow another party to act under all or some of the owner’s rights to further develop the technology
Complex agreements, covering decades Different inventions, different strategies Many ways to negotiate, approach to terms. Emotional Licenses NEVER die. They accumulate through decades. Re-
negotiations are the norm. About 200 active licenses
Licensing: Back Office Considerations
LicensorNorthwestern
UniversityLicensee
Development Organization
IP Rights
Northwestern’s Distribution Policy
Net Royalties = Cash Royalties
minus 20% for legal and administrative expenses
20
30
105
35inventor's research
inventor
Department
School or Center
Central
Facts
The People
PARTNERS AND ADVISORS
12 investor advisors from VC firms in the country Two external early stage VC firms
4 ADMINISTRATORS
Finance Databases Government compliance
2 BUSINESS DEVELOPMENT MANAGERS
Commercial and Start-up experience Work with licensing managers and inventors to determine commercialization path
7 LICENSING MANAGERS
Strong technical background, PhDs Conduct due diligence Manage invention from cradle to license Manage outside counsel Market technologies
30-35 STUDENTS
Vital Signs 2010
200 inventions/year, 75% biomedical
58 issued patents
6 start-ups (5 biomedical)
Licensing revenues of $180 million
222 active licenses
Northwestern University Licensing Revenues are the Highest in the Nation
Followed by Columbia, MIT, Rochester, Stanford and Harvard
Northwestern University Licensing Revenues have been ranked the Highest in the Nation(last survey released Dec. 2010)
2005 2006 2007 2008 2009 20100
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
800,000,000
900,000,000
Northwestern University Royalty Revenues
Invention Disclosures per SchoolSix month report
July thru December 2010
28%
52%
20%
Total 103 inventions
Feinberg School of Medicine
McCormick School of Engineering
Weinberg College of Arts and Sciences
Invention Disclosures by Department Six month report
July thru December 2010McCormick
29%
16%
2%
24%
2%
22%
5%Biomedical Engineering
Chemical and Biological Engineering
Civil and Environmental Engineering
Electrical Engineering and Computer Science
Industrial Engineering and Man-agement Sciences
Materials Science and Engineering
Mechanical Engineering
Invention Disclosures by Department Six month report
July thru December 2010Weinberg College of Arts and Sciences
95%
5%
Chemistry
Neurobiology and Physiology
Invention Disclosures by Department Six Month Report
July thru December 2010Feinberg School of Medicine
7%
24%
3%
14%
3%7%
3%
7%
14%
17%Cell and Molecular Biology
Medicine
Microbiology/Immunology
Neurology
Obstetrics and Gynecology
Physical Medicine and Rehabili-tation
Physiology
Radiology
Surgery
Urology
Start-ups by School
MEAS WCAS FSM0
5
10
15
20
25
Potential profit is not a driver to bring research to the market: It is a numbers game.
Research Patents License ProfitsDisclosure
$1 – 3BResearch Funding
1000 disclosures 1 -2 licenseswill generate $1M
1 IPO
500 patents 150 licenses15 start-ups
Such long time lines make it almost impossible to pick winners
15 – 20 Years
Evolving Towards a Translational Culture
Role Modeling
Celebrate Role ModelsFACULTY
Catalyze ChangeSTUDENTS
Flawless, Efficient, Supportive Infrastructure
and PoliciesADMINISTRATION
Description Programs Identify serial inventors Celebrate success. Make “heroes” out of entrepreneurs
Annual Award Articles in internal & external publications
Use students as agents of changeLeverage students talents to “walk the halls” and help with commercialization
NUvention ProgramI2C (Innovation to Commercialization)Internship Program
Programs to educate and empower faculty in commercializationConnect faculty with outside knowledge
Commercialization ClinicsFaculty Lunches and SeminarsCIM Mentorship Program
Efficient, lean, holistic, process Developmental Therapeutics Program Implement Knowledge systemsProcess Engineering Language for Promotion & Tenure Decisions
Develop Know-HowFACULTY, STUDENTS.
ADMINISTRATORS
THANK YOU…..
Good luck!!