Venture Capital News
Terms and Trends in University Patent License Agreements Released by Foley Hoag
Foley Hoag LLP announced Tuesday at BIO 2007 preliminary results of its survey, Terms and Trends in Patent License Agreements with Universities and Other Research Institutions. As a service to the life sciences industry, Foley Hoag surveyed biotechnology companies, universities and other research institutions to identify trends and gauge the "market" for specific terms in license agreements.
"Many biotechnology companies, especially start-ups, enter into license negotiations with universities and other research institutions and do not know what to expect. There is very little public data regarding terms from comparable deals. As longtime counselors to the biotechnology community, we wanted to fill that information gap and balance the playing field," said Jeffrey L. Quillen, a partner in the Life Sciences practice at Foley Hoag LLP. "Many research institutions are also supportive of this survey, as they welcome more rational negotiations of these increasingly important transactions."
Survey respondents expect to enter into more patent license agreements than they did in 2005 and 2006, with approximately 60% of respondents looking forward to an active 2007. About 38% of respondents expect the levels to remain at a healthy, steady rate. Almost none of the respondents expected less licensing activity in 2007.
More than 61% of the license agreements related to products in the earliest stages of clinical development. Recognizing the high risk of failure of early-stage products, these license agreements typically provide for relatively low up-front payments (a median of $50,000) and much higher payments upon achievement of clinical milestones (a median of $500,000 for FDA approval). Once a product is approved, the license agreement usually requires the biotechnology company to pay the research institution a percentage of its revenues from sales of that product (a median royalty rate of 2.25%). In approximately 15% of the license agreements surveyed, biotechnology companies, especially start-ups, issued stock to the research institution, typically in the range of 1 - 10%.
Survey results varied significantly based on the type of product to be developed, the stage of development at the time the license was signed, and the scope of the license.
When asked the most difficult parts of agreements to negotiate, oft-cited responses included milestone fee amounts, royalty rates, and indemnification and termination provisions.
The full survey also includes useful, detailed information on annual license maintenance fees, exclusivity, rights of research institutions to purchase stock of biotechnology companies and rights of biotechnology companies to access future inventions made by research institutions.
The information reflects survey responses received between mid-April 2007, and May 3, 2007. Foley Hoag will continue to collect survey responses through June 30, 2007. After that date, Foley Hoag will provide a written report of the survey results to all of the companies, universities and other institutions that participated in the survey.
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Cortex and the University of Alberta Complete Patent License Agreement
The Board of Directors of Cortex Pharmaceuticals, Inc. and TEC Edmonton on behalf of The Governors of the University of Alberta jointly announced that they have entered into an exclusive Patent License Agreement that could broaden the use of Cortex's AMPAKINE technology to prevent and treat opiate- and barbiturate-induced respiratory depression. University of Alberta Professor Dr. John J. Greer has demonstrated in both in vitro and in vivo animal models that selected AMPAKINE compounds can enhance respiratory drive and breathing rhythm at the level of the brainstem. While it has been reported that only 0.5%–1.2% of total adverse drug events caused by prescription medications are respiratory in nature, these account for 25%–30% of drug-induced deaths. Opiates and barbiturates are the primary drugs classes responsible for these effects. These events usually occur during the dose adjustment period or when different central nervous depressants are taken together without checking with a pharmacist or physician.
Under the terms of the agreement, the University will receive an undisclosed upfront payment, milestones, and royalties, and Dr. Greer will get multiple years of support to expand this research.
Dr. John J. Greer is a Professor in the Department of Physiology, Faculty of Medicine & Dentistry, at the University of Alberta and Scientist of the Alberta Heritage Foundation for Medical Research. He is affiliated with the University's Centre for Neuroscience, the Perinatal Research Centre and the Women and Children's Health Research Institute. His research is directed toward providing fundamental insights into the development of the neuromuscular control of respiration. Dr. Greer's study of the effects of AMPAKINE compounds on respiration was published in the Dec. 15, 2006 issue of the American Journal of Respiratory and Critical Care Medicine.
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Intel Capital Announces Six New Global Investments
Intel Capital, the venture capital arm of Intel Corporation, kicked off its eighth annual CEO Summit this week with the announcement of six investments totaling $31 million. The deals, all led by Intel Capital, include: China-based 51.com (social networking) and Phoenix Microelectronics (microelectronics); Aternity (application management software) and Ceedo (portable computing environment), both based in Israel; and from the United States, Jajah (Internet telephony solutions) and Tutor.com (education network).
This year's CEO Summit, held through Friday at the La Costa Resort & Spa in Carlsbad, Calif, is being attended by more than 400 executives -- an event record -- from Intel Capital portfolio companies and global 2,000 companies. The event includes keynote presentations, expert panel discussions and more than 500 matchmaking meetings between portfolio company CEOs and industry executives as part of the focus on learning and deal-making.
Details on the six new investments include:
51.com (China):Intel Capital led a Series B investment in 51.com, the largest social networking site in China with about 60 million registered accounts. The site is especially popular with 17- to 30-year-olds, growing by about 5 million accounts per month.
Aternity (Israel): Intel Capital led a Series B investment in Aternity Inc., a supplier of application management software for enterprise IT. The funds raised will be used to support market segment penetration and extend the company's product line. In parallel with the funding, a marketing cooperation agreement has been signed between Intel Corporation and Aternity, under which Aternity's unique application management solution will include support for Intel® vPro™ technology.
Ceedo (Israel): Intel Capital led a private financing round in Ceedo Technologies, Ltd., a consumer software company. Ceedo will use the capital to further establish its position as a leader in personal working environment software for consumer portable storage devices, and accelerate its growth into the corporate and business market segments. Ceedo's virtualization technology enables running Windows applications fromexternal physical or network drives without requiring installation on the host PC.
Jajah (United States): Intel Capital led a Series C investment round in Jajah, a global communications company. Funds from the full round of $15 million will be used to accelerate the development of next-generation communication solutions on a global scale. Jajah and Intel also entered into a business agreement that includes business and marketing components. Intel will provide Jajah access to its extensive community of product dealers, OEM customers and developers to further Jajah's reach into global development communities. Jajah technology allows users tomake free and low-cost calls by using their existing landline or mobile phone.
Phoenix Microelectronics (China): Intel Capital led a Series B round of financing in Phoenix Microelectronics, a fabless IC design house based in China. The company provides next-generation, high-capacity storage intelligent SIM card ICs for mobile terminal devices, allowing efficient management of subscribers by mobile operators and easy introduction and provisioning of value-added services.
Tutor.com (United States):Intel Capital led an expansion investment round of $13.5 million in Tutor.com, which develops and provides on-demand tutoring and homework services. Tutor.com will use the funding to expand its consumer presence with an aggressive marketing campaign and strategic relationships.
Intel Capital also hosts Intel Capital Technology Days (ITD), localized structured matchmaking events similar to CEO Summit. ITDs occur throughout the world and have recently debuted in Latin America and the Middle East.
Last year, Intel Capital hosted 53 ITDs around the globe with 435 appearances by its portfolio companies. So far this year, Intel Capital has hosted 33 ITDs with241 portfolio company appearances and companies such as Proctor and Gamble, Telefonica, Sprint, and Target participating.
In the first quarter of this year, Intel Capital invested $154 million in 43 deals worldwide, including 20 new deals. Approximately 74 percent of Intel Capital's invested dollars were in companies based outside the United States.
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Draper Fisher Jurvetson Launches Brazil-Based Affiliate
Draper Fisher Jurvetson ("DFJ"), a leading international high-technology venture capital firm, announced that they are opening a Brazil-based Affiliate in partnership with FIR Capital Partners, a pioneering early stage Brazilian venture capital firm.
This partnership is the newest addition to the DFJ Network. Over the past 16 years, DFJ has created a broad, collaborative network of venture capital partnerships. The DFJ Network is currently made up of more than 100 venture capital professionals, across 27 regions, with greater than 500 portfolio companies and over US$5 billion of capital under management. Recent DFJ Network successes include DivX, Skype, Mobile365 and Baidu.
The DFJ FIR Brazil Fund will enter the Brazilian market with an initial US$40 million fund, focused on funding extraordinary entrepreneurs with the vision to build leading global companies.
As part of the agreement the two firms will launch a US$100 million fund, DFJ FIR Brazil Fund II, targeting offshore investors, which will invest in innovative Brazilian companies in high-growth industries.
