When we think innovatively and act on that innovation, we are entrepreneurs.”
—Donna M. De Carolis, PhD, Founding Dean, Charles D. Close School of Entrepreneurship at Drexel University
Many IRs have those “eureka!” moments in which we wonder if we have finally found the solution to a problem that has long vexed us. The majority of those ideas, unfortunately, fall onto the back burner, due to lack of time, lack of knowledge on how best to proceed, cost or simply not knowing whether the idea has true commercial potential. Developing even the best of ideas, then, is an endeavor to not be undertaken lightly. So how does one determine whether an idea is worthy of the time and money required to develop it further?
An early understanding of a few key steps along the commercialization process is absolutely necessary to achieve future success. In this article, three experts in the area of life sciences development and entrepreneurship share their thoughts on how to get an idea off the ground and into the commercialization pipeline.
Project, product or company
Is your idea a research project that’s not ready for prime time, a stand-alone product that should be licensed to an existing company or the basis for the creation of a new company? It is critical to stop and answer this question before embarking on a journey that could end in failure if not properly addressed from the get-go.
First on the to-do list is a brutally honest evaluation:
1. Project: Do you have a working prototype? Do you have adequate data to prove clinical relevance? Will you get a higher valuation if you advance it further internally? Answers to these questions might suggest that your idea should continue as a research project for a while longer.
2. Product: Be realistic about the market size and commercial interest. Many products are more interesting as add-ons to a company’s existing offerings. Is your product only marginally better than current technologies? If so, a better strategy might be to out-license to a company that can improve on an existing product.
3. Company: Do you have a novel idea that potentially is a game-changer? Does your product solve a significant unmet medical need? These questions are just a sampling of critical matters to be considered if you’re going to take the leap of starting a new company.
Jacqueline R. Northcut, President and CEO, BioHouston CEO, Texas BioAlliance
AUTHOR’S NOTE: Along with evaluating the potential of your idea, it’s also important to confirm that it is protectable. As the idea is increasingly refined and value is created, protection of the idea is paramount. Strong intellectual property (IP) protects the time and efforts of the physician developer and investors, by preventing someone from swooping in after the hard work is done and developing a copycat product, which can lead to devaluation. Additionally, a well-developed IP portfolio can add value to a company as much as if not more than the product itself. Cognizance (or lack thereof) of IP issues and how to navigate them can position the idea advantageously or make it not investable.
An important aside: The U.S. Patent and Trademark Office (USPTO) has changed its filing policy from “First to Paper” to “First to File.” As such, submitting your idea for review by USPTO as soon as possible can save you significant headache further down the line.
Intellectual property (IP)
IP is the cornerstone of enabling eventual commercialization of your technology. Ultimately, it is the IP that is licensed or sold to a commercial entity. Within academic as well as some community medical centers, a formal policy exists requiring the disclosure of your technology to a technology transfer office within the institution. Following this disclosure process, a decision is made whether to file one or more patents and pursue steps to licensure with an industry partner. Often, the institution’s technology transfer office is overwhelmed with technology disclosures and has limited resources to evaluate their commercial potential and patentability, so many technologies are not pursued.
If the institution passes on the technology and decides not to pursue commercialization, the inventor may be able to pursue commercialization through a formal return to inventor (RTI) or similar agreement. The inventor is then free to file a patent, approach potential strategic partners from industry and seek licensure. This process can be extremely expensive and time-consuming; approximately 6 percent of patented medical devices reach the marketplace and spending $50,000–100,000 in patent filing fees, legal fees and freedom to operate searches is common. Some IP attorneys will consider contingency agreements, whereby the inventor pays patent filing fees but the attorney’s fees are paid upon licensure of the technology. Another alternative is to structure a licensing agreement on co-filing of patents with a commercial partner at their expense. All of these scenarios are contingent on the commercial viability of the technology, how crowded the IP space may be around the technology and the expected regulatory hurdles in obtaining FDA clearance.
Timothy Clark, MD, FSIR, Associate Professor of Clinical Radiology and Surgery, University of Pennsylvania Perelman School of Medicine
AUTHOR’S NOTE: Once commercial viability of the idea has been confirmed and it is likely protectable, funding its development is usually the next step. Many life science innovations require tens of millions of investment dollars prior to their first sale in the U.S. market. It is rare that the entire amount is self-funded, and teams generally go hat-in-hand to raise capital and create strategic alliances.
Funding
Physicians attempting to run the innovation gamut, especially for the first time, will run into a significant funding challenge. Generally, developing new medical technologies takes much more capital than physicians can self-finance. Early funding options include self-funding, friends and family, grants, incubators, and private or institutional angel investors.
In these places, you will find advice as well as like-minded entrepreneurs who will empathize with your challenges. Unfortunately, most medical innovations will require significant capital to navigate the later stages of product development and clinical trials. This usually means institutional venture capital. At any stage of the process, you need to be able to intelligently address the following topics. However, when talking to life science venture capitalists, these are the key points to bear in mind:
1. A clear pain point that you are addressing with your innovation. The greater the pain point, the better (read: larger commercial market).
2. An understanding of how your solution will fit into the market you are addressing—e.g., which physicians “own” the patent, who is actually going to be paying for the product, who stands to lose and who stands to gain, and who is the current and future competition. This should be distilled into a quality deck or PowerPoint presentation. A formal business plan, contrary to what they teach in business school, is usually not necessary.
3. The right team. This means people of the right background and integrity to be investable. This doesn’t necessarily mean a good CEO. It may be a good project manager. But someone has to be there to move the ball down the field each day, with a background that inspires and can be referenced.
Joe Cunningham, MD, Founder/Principal, Santé Ventures
AUTHOR’S NOTE: The innovation process is long, tedious and filled with many important decisions. A single misstep can scuttle even the best of ideas. However, there are resources that exist that might be of use to those in IR who are considering entering the entrepreneurship arena. Organizations like the Society of Physician Entrepreneurs (SoPE) and Health 2.0 are flourishing and universities and business schools are marketing entrepreneurship programs daily. The specialty itself is filled with people who have jumped into the innovation arena—look at your shelf inventory and the names on the packaging. Take advantage of these myriads of resources to help move your ideas from the proverbial napkin to the production line.
