IP Strategies, Humanitarian Contract Clauses &

Business Models to Address Unmet Needs

July 31, 2010Open Society Symposium

Carol Mimura, Ph.D.Assistant Vice Chancellor, IPIRAUniversity of California, Berkeleyhttp://ipira.berkeley.edu

University Mission and Social CompactTeaching, Research, Dissemination of Information, Public service

University of California’s (UC’s) economic impact is huge:

7% of all R&D activity in CA takes place at UC campuses* 1.3% of the growth in CA Gross St. Product* is due to productivity gains

resulting from the research activities of the University of CA >$5B in federal funding (10 campuses) 4 invention disclosures per calendar day

As a research university we have a duty to ensure that basic research that has a practical application is

transmitted and deployed to benefit society

*2003 data from California’s Future: It Starts Here (2004) IBF consulting group

Tremendous Needs, Tremendous DisparitiesJP greatest life exp. 81 World population of 6.5 Billion Botswana lowest 35 ~1B in wealthiest World life expectancy: 65 2.4B live in low income

countriesItaly 20% age 65+*, In Haiti 4%* 3.1B in middle income

*Population Reference Bureau

Socially Responsible Licensing Program, SRLP

IP management strategy Special attention to DC unmet needs

-Neglected disease conditions-Neglected populations

Contract clauses: access & affordabilityGood stewardship of IP rights

9 Points to Consider in University Licensing

Point 9: “Consider inclusion of provisions in contracts that address unmet needs, such as those of neglected

patient populations or geographic areas, giving particular attention to improved therapeutics, diagnostics, and agricultural technologies for the developing world”

Aspirational: working out clauses, seeking solutions, experimenting

SRLP Examples at BerkeleyDiagnostics - portable, hand-held

• Dengue (Sustainable Sciences Institute) • HIV (P-o-C early) (Silicon Biodevices )

Therapeutics• Malaria ACTs, (iOWH, Amyris Biotechnologies, sanofi-aventis)• anti-viral (Samoa)• TB (CA biotechnology company)• oncology (pharma)

Vaccines• STD (pharma)

SRLP Examples at Berkeley - continuedAgricultural Biotechnology

• Plant disease resistance (Two Blades)pesticide-free crops• Super sorghum (Africa Harvest)

Public Health • sanitation, water purity (Aquaya Inst.)

Consumer Electronics & information

technology (Nokia)

University Research Results are Far from Being a Commercial Product

Commercial investment by others is required to bring basic research results to the point of practical application

Development

Discovery

Translation

Deployment

Technology transfer: the road to commercializatonof university IP is typically a series of separate steps

Often involving multiple parties

>10 years, >$1B

The Translational Research Gap is Both Wide and Deep

Bench to bedside

Licensees invest enormous sums in risky R&D, manufacturing, regulatory approvals

For profit market, For profit licensees

Bottom line: IP licensing gives industry an incentive to invest

Bench to clinic

Health Innovation Requires Many Actors, Many Inputs

Low Cost Artemisinin Combination Therapy$42.6M Bill & Melinda Gates Foundation

3-way collaboration agreement + 2 license agreements

$8M to Berkeley

BASIC RESEARCH

$12M to Amyris

BiotechnologiesAPPLIED

RESEARCH

MFG, REGULATORY,

DISTRIBUTION

$22.6M to iOWH

Pharma (sanofi-

aventis)

3- way research

Collaboration

Agreement

License #1 Berkeley to

Amyris. Developed world.

All FOUs. No profit for

malaria drug. Profit for flavors &

fragrances

License #2 Berkeley to iOWH.

Malaria FOU. Developing World.

Sell drug at cost

The Fundamental Problem

For neglected disease, neglected populationsTension, balance • profit motive, market forces(incl. price elast., related supply & demand) • societal needs that are not market drivenSRLP “access & afford” • Price -market economy factor

• Contracts - non-market economy needs

Commercial Incentives

Social Welfare

Finding the Exquisite Balance

IP licensing is but one aspect

SRLP challenge

Retain commercial incentives

Outside of “market economy” countries

Commercial Incentives

Social Welfare

AccessAffordability

ProfitShareholders

“Bento Box” Solution Humanitarian clauses + IP Strategies + Business Models

Contract Levers IP strategy

A

B

C

Business Model

1

2

3

X

Y

Z

Contract Lever IP Strategy Business Model Parties (govt, univ, industry) status (licensee, sub, collaborator)

Nonassert ion Dua l co mm ercia lizat ion

Licensed territory Patent/no p atent and whe re

For -, no n- prof it ent ity

Human itar ian Fie ld-of-use

Open license PDP, co llaborat ion, Timing, co-dev, co-mkt

Exclus ive, co-, no n-exclus ive

Open so urce Fund ing , se lf, so urces OP M

Roya lty-free in DW Roya lty bear ing, non- Roy. shar ing , -non

Research C omm ons Alliance, sponsorsh ip

Pr ice restr ictions -targ et -tiere d (conv ers ion opt ion)

Patent Poo l

Incent ives Timing (PRV) End user go vt, ind ivid, HMOs

Human itar ian re servat ion of rights

Monet ize Corpora te re spons ibility

Mandat ory sub licens ing Soc ia l impact Monet ary ROI Non-monetary ROI

Ownersh ip So le, joint Shor t te rm, long ter m ROI

No particular order, no associations horizontally

Permutations, Combinations (mix, match to create incentives, alignment)

University Contracts: License, Research, Collaboration Agreements, Foundation Awards

Development,Translation

Deployment, Commercialization

Discovery, Innovation

University SRLPs only ONE part of a multi-part solution

Diminishing Role

University Contracts

Development,Translation

Deployment, Commercialization

Discovery, Innovation

•Public health & global health organizations• Health infrastructure

in Developing Countries (DCs)

• DC manufacturing, trade relationships

• Public policy & international policy

• International law & treaties

• Poverty, sanitation, environment

Downstream solutions by others are necessary

Diminishing Role

University is one contributor among many

Government

IndustryFoundations

Academia,ResearchInstitutes

InternationalRelief Agencies

NGOs

InternationalFinancial Institutions

Int’l HealthOrganizations

LESSONS LEARNED:One Size Does Not Fit All

Must preserve incentives

Must preserve Options• Filing outside of US, JP, EPO, CA, AU

- in-country presence- long term view

• Not obtaining IP rights- commons can destroy traits- invent around

• Compulsory licensing - last resort

No dismantling of the system, just adjustments

SRLP: Patterns, Models Traditional, linear (handoff)

A B

University Corporate Licensee

Federal funding

Discovery

VALU

E

IP rightslicensing

R&Dregulatory

deployment

SRLP: Patterns, Models• Traditional, linear handoff• Push me - Pull you

A B

University Corporate Licensee

Federal funding

Discovery, IP rights, licensing, R&D, clinical, regulatory, commercialization

Traditional, Linear License

• Value Proposition• Poor, Push Me - Pull You• No profit incentive DCs

• Royalty free in EDCs- Provide at cost or free• Royalty bearing • Third party challenge• Enforcement

A B

University Corporate Licensee

Federal funding Expensive R&DRegulatory risks

Discovery R&D Clinical Regulatory Deploy$1B and 12+ years

Reward

Risk

Hand-Off

License + Research Collaboration: Partnering• Non linear• Overlapping & loopbacks• Value Proposition better• Compressed timeline• Shared funding • Gap funding• Shared tools, expertise, data• Lower risk, more mature• Feedback: adjustments

– Scale -up considerations– Proprietary components

A B

University Corporate Licensee

Shared fundingTools, data

Expensive R&DRegulatory risks

Discovery, Translation, Commercialization

R:R balance better. Both parties perform in parallel, not just in sequence, innovation acceleration, extend Univ. role further into value chainGoal alignment: translational research, improvements

RewardRisk

Partnering: PDPs Play a Central RoleProduct Development Partnerships (PDPs) nonprofits, funded by foundations, othersPartner up & down the value chain & leverage mutual resources, capabilities, Operate in crucial, middle area; Add value, decrease risk, increase uptake under SRL

termsA to C unlikely (too risky); B to C likely (nonprofits have de-risked)

Research

VALU

E

IP rightslicensing

R&DClinical

regulatorydeployment

A C

Discovery Development Translation

B Commer. uptakeSpecial terms

Multiple Licensees: NonProfit, ForProfit & Hybrid

Still no profit incentive DCs for both • Value proposition good • Different incentivesFor-profit• Profit goal• Dual commercialization plan• Dual market (short term, nonprofit)• Corporate Social Responsibility• Bootstrap philanthropyNon-profit: • Funding from Charitable orgs• Shared grants• Charitable aims as goal for NP• Partnering Ultimate Goal: DERISK for FOR PROFITsublicensee

A

B

University

Licensee is NonProfitLT is Dev Countries FOU is humanitarian

Expensive R&DRegulatory risksLong term prospects

C

Licensee is ForProfitLT Developed worldFOU is market driven(+humanitarian)

Reward Risk

For Each Scenario Align Goals,Incentives for Each Participant

Must be able to answerWhat’s in it for Me? (“WIIFM”)

For each party to:Invest in rare, neglected, tropical diseaseSell, distribute at costInvest in DC manufacturingImprove DC health delivery systemsPrepare next generation of SR global citizens

A+B+C(A+B)+DA+CB+C(C+D) A laterJoint VentureStrategic AlliancePPP, PDP Acquisition

“WIIFM” for Industry• More than ever before!• FDA priority review voucher ($50M - $300M)*• Assistance in navigating drug regulatory systems in NG-

endemic countries • In-country market presence (will scale, create customers)• Social ROI - goodwill• Employee retention, satisfaction• Partnering opportunities (pipelines from PDPs and PPPs)

*Food, Drug and Cosmetic Act section 524, 21 U.S.C. Section 360n (2008)

WIIFM: Universities, Research InstitutesFulfill social mission, achieve societal impact, global scaleAlign moral imperative to help with University mission

– Teaching, research, public service– TT and IP management for public benefit– Prepare the next generation

Diversify funding sources - government, foundations, FPs, NPs, PDPs

- traverse valley of deathCollaborations, involvement further into the translational

research space (accelerate innovation)Influence public policy, research paradigms address grand

challenges & industry-university relationsReputational gains, gifts, goodwill, donations

WIIFM for Government• Global linkages• G. Health linked to poverty• Obama Global Health Initiative• U.N. Millennium Development

Goals• Global economic development

goals inextricably linked to global: health, food security, energy risks, the environmental, political stability

• Investments create markets, wealth, goodwill

Resources:

Socially Responsible Licensing at Berkeley

Humanitarian Use Clauses in Contracts

http://ipira.berkeley.edu then “Socially Responsible IP management”