IP – Underpinning Technology Transfer and Start-up Capital
Dr Jackie Maguire, Chief Executive of Coller IP, has over 25 years technology transfer, commercialisation and consultancy experience. She is a globally recognised IP Strategist and a founder of the International IP Strategists Association, INTIPSA.
In 2009 she was listed by Intellectual Asset Management magazine as one of the top 300 IP strategists worldwide - and in the top ten in the UK, and has been confirmed in this position every year since.
Introduction
The biopharmaceutical sector, like many others, has changed dramatically in recent years. New players have entered the market and the trend is now towards a distributed open business model where innovation is encouraged from outside. At the same time, skilled IP experts have left the major global organisations for new ventures. Some have set up small IP trading/ brokering companies which has facilitated a network for the commercialization of underutilized IP.
The main issue facing most companies in the sector is the need to find ways of bolstering profit margins in the light of the many pressures the industry faces, not least of which, for pharmaceutical companies, is the so-called ‘patent cliff.’ At the same time as IP teams are being downsized, pharma companies are looking to maximise every bit of value from their IP portfolios including using IP to help protect market share, to monetise it, through licensing and royalties, or by selling the IP portfolio to others to exploit.
Technology Transfer – The Rationale
Organisations are responding in various ways to these business pressures, including outsourcing and offshoring as well as by transferring technology, which can benefit biopharmaceutical companies in several ways as long as the IP aspects are correctly managed. As a result of the huge increase in costs of R&D, they may buy in technology from another pharma company, a hospital, university or perhaps a small biotech company. This may in part, be being driven by a lack of interest from public investment. This lessening of interest is one reason for new collaborative initiatives, such as the $200 million fund created by GlaxoSmithKline(GSK) and Johnson & Johnson with IndexVentures to invest in early-stage biotech companies or the formation of TransCelerate BioPharma by a number of biopharmaceutical companies to accelerate the development of new medicines.
There are some who claim that the current industry business model, despite recent changes, is economically unsustainable and that it is unable to act fast enough to put in place the innovative solutions and treatments demanded by international markets today.
Improvements in R&D productivity, and cost reduction are key, as is a focused drive to profit from emerging economies. Few organisations can meet these challenges alone, partly because of the enormous costs and because the risks involved are huge, given the fact that many potential products fail clinical trials.
Collaboration, Technology Transfer and Intellectual Property
Hand in hand with the increasing trend towards collaboration goes the need to identify partners carefully, either to work alongside or to transfer technology and assets to. Which organisations have the right technology to fit in with the future goals of another? When it comes to disposing of intangible assets, for universities or biotech companies the issue may be what might be saleable and to whom and the need to understand the steps they need to take to prepare their IP portfolios before they approach another organisation with a view to a technology transfer deal.
Many disciplines are usually involved in these deals, but underpinning all of it is the need for an appreciation of the IP assets. All the players involved need to understand the current and future potential value of their IP portfolios. It may also be worth discussing disposing of parts of the IP portfolio – either by selling or leasing - that no longer fit the business in order to focus on those that do. Those wanting to transfer technology also need to know how to fully protect and commercialize the IP in order to make it attractive and relevant to other organizations that may be interested in a technology transfer arrangement.
A first step is for the IP holder to conduct a thorough portfolio analysis to identify the opportunities, and this is often done by using an independent expert to review the patents.
IP landscaping techniques that use recognised databases and registers can construct a map of the intellectual property landscape of an organization’s core technology, secondary technologies, processes and know-how. As part of the process, competitor activity is identified that may influence the direction to take and a strategy can be developed. This may involve asserting and/or protecting an organisation’s assets and/or developing defence strategies. Considerations might be given to strengthening the existing IP, partnership or licensing options, as well as identifying the value of the intangible assets. A key outcome of the process is a decision on whether, and how, to assert and protect the underlying assets, or whether it might be better to sell or licence them to others.
Also during the process, a number of issues will be examined, These include the future commercialisation strategy; how clear the understanding is of the company’s competitive position and how robust it is; whether there is value residing in an underutilised IP portfolio that could be liquidated in order to raise cash; the strength of the IP of a company that another organisation may be contemplating investing in; the best research areas to focus future investment on in order to maximise opportunities for commercial exploitation; areas where there may be the best opportunities for commercial exploitation; what licensing opportunities might exist for the patent portfolio; and which organisations it might be appropriate to collaborate with that may have closely aligned or complementary IP.
Naturally the results of the examination will be different for every company, but the approach to each is always underpinned by proven tools and methodologies. It is critical to understand the context and challenges of the work and to carry out IP market research to allow the production of relevant results.
An example of a company which benefited from IP landscaping is The National Physical Laboratory (NPL), one of the UK’s leading public sector research establishments. NPL has a programme to develop its research and Intellectual Property (IP) . NPL had identified many different activities that might offer commercialisation opportunities, each of which was at a different point in the exploitation process. For some developments, including those for life science applications, there was a need to develop a better understanding of the associated IP landscape, both to inform the direction of the research and to develop a clearer understanding of NPL’s competitive position. Coller IP undertook an IP landscape analysis on behalf of NPL in order to understand better the position of its novel diagnostic imaging technology relative to existing or potential competitors, while at the same time identifying possible opportunities for IP protection, collaborative development and licensing, and further development of ideas or technologies.
As a result, NPL obtained a more informed insight both into the opportunities for further development and commercialisation of its intangible assets and also the organisations that are active in the field and were previously unknown to them and was able to plan its strategy for the technology that formed the basis of this analysis and potential business relationships it wanted to develop.
Protecting and Commercialising IP
Although many organisations see collaboration, including transferring technology, as a way forward, it is not without its risks, including the question of ownership of IP arising, as well as risks to the IP through contracts that just aren’t secure enough, as well as the possibility of intentional and deliberate IP theft. Contracts need to be watertight, and the drawing up of one that concerns IP arrangements needs to be managed carefully.
IP and Finance
Another aspect of IP that can be useful to those involved in a technology transfer deal, or a spin-out or start-up, for example, is using IP to raise finance. Together with the acceptance that there are valid and objective evaluation methods that can be properly applied to determine the value of intellectual property, has come the increasing acceptance of IP as a tradeable asset.
Unfortunately banks are still sometimes reluctant to lend against IP, even if there is a credible understanding of how the IP is likely to translate into future profits. Lending partly – or even wholly – using IP assets as collateral is a relatively recent phenomenon. In order to use IP assets as collateral to obtain finance, organisations need to be able to prove they have a cash value which is lasting, and have a realisable market value. All this depends on a properly established valuation.
An option for raising finance, especially for firms with limited resources, is to sell IP rights to a company pension trust fund and buy them back under a long- term leasing arrangement This also ensures that even if the business runs into hard times, the IP remains secure within the pension trust fund.
Even where IP is not being used specifically to raise finance, an understanding of the monetary value of the intangible assets – which of course includes so-called ‘know-how’ as well as branding, skills, policies and processes- needs to underpin any merger, acquisition or investment scenario.
With the vast proportion of the value of most organisations now residing in intangible assets, the value created by intangible assets is a serious issue to consider. If done correctly and with attention to the many issues involved, using technology transfer and IP strategically can help organisations face the pressures of change, by creating a business model appropriate for the remainder of this decade and beyond.
This interview was taken from our August edition of Drugs & Dealers magazine. To read more great articles, like the above, from The Crick Institute, Imperial Innovations, Edinburgh BioQuarter, UCL Business, Isis Innovation, Cancer Research Technology, The Wellcome Trust, J&J Innovation, BBSRC, Marks & Clerk, GSK, Apposite Capital and Silicon Valley Bank Download it for free and become a Biotech and Money subscriber.
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