BLG News Fall 2002

FAQs Regarding the Licensing of Products, Devices, Therapeutics and Therapeutic Targets

Our last newsletter covered internal research use licenses for research tools, such as mouse models and cell lines, to be used by the licensee for internal R and D purposes. This issue discusses the licensing of products, devices, therapeutics and therapeutic targets.

Products: are technology with research applications that will be sold as reagents for research use only. They are typically sold by a reagent company and may include clones, cell lines or antibodies.
Devices: are technology with medical applications or are items that have a research use.
Therapeutics: are compounds, biomolecules, antibodies or proteins that can be used directly or in combination with other technology as a therapeutic.
Therapeutic targets: are genes for receptors or enzymes that can be used by a company to identify a therapeutic, targeting a gene of interest. In both therapeutics and therapeutic targets, substantial R and D usually needs to be invested by the company to bring the licensed technology to a point where it can be marketed and sold, or used to develop a drug or therapy.

1- How does a product license differ from other types of license agreements?
Product licenses can be co-exclusive or semi-exclusive in which the number of licensees is limited to a maximum of two or three. Companies that sell antibodies and other research tools usually have a broad range of products and a large customer base in the research market, and therefore can tolerate a limited level of competition from others.

Device, therapeutic, or therapeutic target licenses, however, tend to be exclusive. This is usually necessary in order to justify the significant amount of R and D costs to bring a product to market. The licensee has to be reasonably certain that it will be able to recoup its costs. By exclusively licensing the technology, the licensee is able to block others from using and generating revenue from a product.

2- What exactly is licensed?
Products: The specific technology, i.e. the hybridoma or cell line, is licensed to the reagent company. The company, in turn, will list the product in its marketing materials and catalogs and sell it for research use. If the technology is patented, the right to "operate" under the patent is also licensed. However, a product sold in the research market may not require a patent in order to be commercialized. Therefore it may be licensed without a patent.
Devices: The design of the device, along with any patent rights (which may include the design and use of the device), is licensed to a device company which will then market it to distributors and/or directly to physicians.
Therapeutics and therapeutic targets: The patent rights, including the use of the therapeutic or target in a method to treat or cure, are typically licensed. In addition to the patent rights, materials associated with the therapeutic or target (cell lines, animal models, etc.) may also be licensed.

In all cases, these licenses allow the licensee to use the technology and patent rights (if applicable) for development and sale of a product, whether it is a drug or device for therapeutic applications or a product to be used for the research or medical markets.

3- What is a "Field"?
The "Field" is the area of use granted to a licensee to exploit the technology. Some technologies can be used for multiple purposes; for example, a drug that can be used to treat obesity and diabetes. In these cases, the Field may be divided into indications. A target may be used to generate different products; i.e., small molecule or biomolecule. In those cases, the Field may be divided by product or therapy. Defining the Field in a license can be a way of expanding the number of licenses for a particular technology without jeopardizing a licensee's ability to commercialize it.

4- If my invention is licensed exclusively to a company, can I still use it? Can my colleagues at other schools still use it?
Baylor retains the rights for its employees to use the invention for non-commercial research, patient care and educational purposes in license agreements. Colleagues at other institutions can use the invention, but any transfer of materials must be done with a Material Transfer Agreement (MTA). MTAs are handled by the Office of Research (713-798-6970) and can be downloaded from the model contracts web page at http://research.bcm.tmc.edu/Proposal_Prep/proposal_prep.html. An MTA allows other academics to use the materials for their non-commercial research, but it restricts commercial use and further transfer. This protects Baylor and Baylor's commercial licensees from other companies exploiting Baylor technology without obtaining a license.

5- How are the fees split under the Baylor Intellectual Property Policy?
All license fees are split according to the following formula:

Income from license:	100%
BLG Fee:	15%
Patent costs, if any:	Deducted from Income, if not directly reimbursed by licensee.
NET INCOME:
Contributors:	50% Distributed as per the percentages listed on the disclosure form.
Department:	25% One or more departments represented by the Contributors.
BCM General Fund:	25%

6- What license fees do companies typically pay for such licenses?
The dollar amount of the license fees varies tremendously according to several factors. The type of license granted and the stage of the technology determine the types of fees that will be negotiated for a license. Typical fee types include:

upfront fee paid upon license execution
annual maintenance fee paid on each anniversary of the license agreement
royalties which are paid in connection with product sales
minimum royalties which are paid to demonstrate diligence by the licensee in pursuing a product. These typically start at a defined time after the license is executed and end when royalties reach a certain dollar amount
milestones based upon product development events; such as initiation of clinical trials, filing IND, first commercial sale, product launch or product specification

7- What if the invention was made with the use of SRA funding or with an MTA?
If you have used materials obtained with an MTA or have used SRA funding in your invention, this must be disclosed when you disclose your invention to our office. These contracts often put limitations on how, or even if, we can commercialize the invention. For MTAs, we may need to notify and work with the donor entity for commercialization. Although the Office of Research will attempt to minimize encumbering any of Baylor's inventions, in some cases, the entity that sent the material may demand rights to anything invented with that material. In the case of SRA funding, typically the sponsoring company has an internal use license in exchange for the funding but cannot use the invention commercially. The SRA usually grants the company a right of first review of any inventions generated with the funding. This means that they must be notified of any inventions that arise with the funding in advance of any marketing activities. They would also have the first opportunity to negotiate a license. In some cases, the company demands more extensive ownership of inventions. It is best to review these documents thoroughly and ask questions regarding clauses about which you are unsure. The Office of Research also executes SRAs. These documents can also be found on the Office of Research web page at http://intranet.bcm.tmc.edu/index.cfm?tmp=research/oor/hdr/pro_index.

8- If my invention has been licensed, can I still publish?
We do not hold up publishing of important research findings for licensing or patenting. We understand that the key mission of the Baylor scientists is to increase the body of scientific knowledge through publication. If patent protection is needed for licensing, we strive to take the necessary steps for patent protection of your invention as quickly as possible. The earlier we learn of your invention, the better our chances of filing a useful patent application in a timely manner. It is generally preferable to review inventions and file necessary patents before publication. However, once the patent has been filed, publication is encouraged, as it usually verifies the science behind the patent and supports the patent application during prosecution. If the invention is going to be licensed as an unpatented trade secret or material, we also encourage publication. Publication brings attention to the materials, which may encourage others in the field to use them as well. Many journals publish on the web prior to the print version. This electronic publication serves as a public disclosure and can cause loss of any non-US patent rights. Most journals publish on the web a day before the print version, but some publish up to 6 weeks prior to print. If you know your manuscript is slated for early publication, we'd like to know about it as soon as possible.

For additional information on the licensing of products, devices, therapeutics and therapeutic targets, please call BLG at 713-798-6821.

Recent License Deals

ATP-Binding Transporter Gene (ABCR). Baylor College of Medicine executed a non-exclusive license agreement with Active Pass Pharmaceuticals, Inc. in December 2001 for rights to the ABCA4 gene, also known as ABCR, discovered by Drs. James R. Lupski and Richard A. Lewis. Regulation of ABCA4 activity is thought to be an important strategy for the treatment of macular degenerations such as Age-related Macular Degeneration (AMD) and Stargardt's Disease. A U.S. patent has been allowed and other U.S. and foreign patents are pending. The field of the license is any therapeutic indication other than gene therapy. Active Pass paid an upfront license fee, and is responsible for an annual maintenance fee, milestone fees, and a percentage of net sales, as well as certain developmental milestones.

Novel Tissue Ablation Technology - Methods and Devices. Baylor College of Medicine exclusively licensed a novel tissue ablation technology in November 2001 to DePuy Acromed, a subsidiary of Johnson and Johnson. Developed by Michael H. Heggeness, M.D., Ph.D. in the Baylor Department of Orthopedic Surgery, this approach has the potential to dramatically improve the way pain in managed in the spine. U.S. and foreign patents are pending. The license includes an upfront fee, annual maintenance fees, milestone fees, a royalty percentage of net sales, and an option to expand the field of the license.

Who Do I Call?

If you have a question about ideas you feel might have commercial value, or if a company has expressed interest in licensing your research findings, call BLG at 713-798-6821, or visit our website at research.bcm.tmc.edu/OTA.

If you have a question on start-up companies, call BCM Technologies at 713-795-0105 or visit their website at bcmtechnologies.com.

If you have a question on material transfer agreements, sponsored research agreements or confidential disclosure agreements, call the Office of Research at 713-798-6970 or visit their website at http://intranet.bcm.tmc.edu/index.cfm?tmp=research/oor/index.