Dr. Craig Kenesky, a patent attorney with the life science practice at WSGR in New York, delivers a presentation on "IP and the Biopharma Startup" at the October 29 iCAN-Global Entrepreneur's Breakfast Forum.

1. IP and the Biopharma Startup
Craig Kenesky, Ph.D.
Wilson Sonsini Goodrich & Rosati, PC
October 29, 2014

2. Company Life Cycle
Development
• IP Created
• Seed
Financing
needed
• Additional
leadership
Development
Startup
Need idea
and
leadership
Startup
Partnering
Capital influx to
support G2
product or clinical
trials
Commercializati
on
IPO / Merger
EXIT
IPO / Merger
Biopharma Company
Med Tech / Software Company

3. Establish an Identity
• Are you going to:
o discover new drugs?
o discover diagnostics?
o draft code?
• Will you:
o sell a product?
o sell the tools to make
products?
• Investors fear a company
who promises to do it all

4. IP in an Innovator Company
• IP provides most, or all, the value of a bio
start up
• Major investors examine your IP closely
• Poor IP can make an innovation
unattractive
• Patent or publish?
o You can do both if you take patent
steps first

5. IP – Initial Steps / Diligence
• First Generation Patents:
o Often licensed from a university
o Protect the key, novel
innovation
o What is the state of the art?
o When do they expire? (20 year
term)
• Third Party (Competitor) Patents:
o Can we license that too?
o Can we avoid competitor IP?
• Need a pitch deck and business
plan

6. University IP Licensing Terms
ECONOMIC
• Equity in Company
• Upfront Payment
• Royalty on Sales
• University Patent
Costs
• Milestone Payments
• Sublicensing
Revenue
NON-ECONOMIC
• Which, how many,
patents
• Field of use
• Territory
• Term
• Diligence
• Sublicensing
Restrictions

7. Know Your Regulatory
Exclusivity
United States
• New Chemical Entity 5 Years
• Combination Drugs with a NCE 5 Years
• New Formulation of Old Drug 3 Years
• New Use for Old Drug 3 Years
• Orphan Indication 7 Years
• Biosimilar (i.e., antibody) 12 Years
• Pediatric 6 Month Extension
Can often postpone generic entry by 2.5 Years
Europe
• Data Exclusivity 10 Years
• Market Exclusivity +1 Year
• Second Indication +1 Year

8. Later Generation Patents
• Can extend (double?) lifetime of portfolio
• Must provide protection beyond FDA
exclusivity
• Sometimes created / owned by the
company
o Especially important for university
spinouts
o Company should start generating its own
IP ASAP
o Protect improvements made by the
company
•

9. Know Your Competitor IP
• Search for competitor IP
• Identify Freedom to Operate risks
• Keep your IP and publications a step
ahead of competitors
• In-license competitor IP when
possible
• Know the weaknesses in competitor
IP
• Patent competitor products
aggressively

10. Financing Your Invention
ANGELS
• Invest at early stages
• Invest $100k to $2M
• Frequently seek quick
exit
• Tolerate
inexperienced
management team
• Tolerate early stage
IP uncertainty
VENTURE CAPITAL
• Invest at all stages
• Invest $Millions
• Seek IPO or acquisition
• Require/provide
experienced
management team
• Intolerant of IP
uncertainty

11. Financing Strategies
• Convertible Debt (up to $2M)
o Good for early investment
o Fast and simple to negotiate
o Postpones the need for valuation
o Frequently used by angels
• Stock ($Millions)
o Attractive to large investors
o Must agree on valuation of the company
o Normally used by venture funds
• Partnerships ($$ based on the project)
o Larger company finances research
o Possibility of shared ownership and
patent rights

12. BEST OF LUCK
IN YOUR
BIOPHARMA START UP