Speaker 1  0:00  
All right. Good afternoon and welcome to today's webinar, VC and T to term sheet for early stage Life Science startups presented by Autumn. My name is Sammy Spiegel, autumns professional development manager and I will be your staff host for today. All lines have been muted to ensure high quality audio and today's session is being recorded. If you have a question for our panelists, we encourage you to use the q&a feature on your zoom toolbar. You should also be able to upvote questions that have already been submitted if you see a question that is similar to yours to bump that higher up the list. If you have a technical question or a comment, please feel free to use the chat. Should you need closed captioning during today's session, the Zoom live transcript feature will be turned on and will be available on your toolbar in a moment. Before we begin, I would like to take a moment and thank our online autumns online professional development sponsor Marshall Gerstein IP, we appreciate your ongoing support. I now have the pleasure of introducing you to today's panel with our large group today I'll give a brief overview of each of our presenters and full bios are available online. Today's moderators Ian McClure, the associate vice president for research, innovation and economic impact for UK innovate at the University of Kentucky and our panel is comprised of Oren Herskowitz, SVP of applied innovation and industry partnerships for Columbia, as well as executive director for Columbia technology ventures, and an adjunct professor for Columbia's intellectual property for entrepreneurs course. Galio black men 5am Ventures Jen general counsel and Chief Compliance Officer, Dr. Blackmon joined 5am and 20 team from Abby, where she was on the legal r&d transactions team. Robin razor, Associate VP for translation and commercialization at Duke University who oversees all functions of tech transfer process. Rick Brandon, who's the Associate General Counsel for the University of Michigan Office of the Vice President, his practice at the University of Michigan focuses on patent technology transfer and research legal issues. And Karen, Mr. Gerlach, the Associate Vice Provost, leading the office of technology licensing at Stanford University. Welcome all, we are so excited to learn from you today. And I will now turn it over to you and to get us started.

Unknown Speaker  2:14  
Great.

Speaker 2  2:16  
Thanks, Sammy. And thanks to everyone here for for joining us for this conversation. This is a big group just heard that this is like the second largest webinar that Autumn has ever hosted. So obviously a topic of interest. And we're excited to begin, this won't be your typical webinar, not not a lot to sort of present, but certainly a topic to discuss. So we've got a lot of experts here to talk about the meaning of this project, this initiative. Why it came about where it is now? And what are we going, what are we doing with it now, to make good use of this on both sides, the university tech transfer side and the VC side, the investor side of this, you just heard introductions of our panelists. So we're gonna jump right in, we're going to start with just some some contextual understanding here, that's going to be provided by my friend or in her squits. Or in can you just talk through a little bit about why this initiative came about? And maybe lay the groundwork for the realization that something like this might be needed?

Speaker 3  3:23  
Sure. Happy to and, and thanks to autumn for making time for us. I know this is this is a topic that's come up a bunch. So Ian asked me to give a little bit of like, how do we get here? And why did we get here. And so I'll start off by saying, you know, at least at Columbia, our experience as a university that does like 25 to 30 startups a year. And that works with a lot of the really big VCs, like most of the firms that were in the group here, you know, our capital, and FIBA Yan, and Polaris, and Venrock, and Atlas and others, we've done deals with at some point or other, so consider a lot of them to be friends. And so even though when you have like a startup focused university, and a big VC and people who know each other, every time we had to actually go do a deal, it was like we it was like doing a reenactment of like a Civil War reenactment. It was crazy. It was like everybody, you know, puts on their armor and like, comes into the meeting and there's yelling and grandstanding and this delaying and the psychological warfare. And it was a mess and like it wastes time to waste money. It's totally no fun and can actually ruin these relationships you spend years building. But worst, especially in life sciences. You know, every one of these delays. If a deal takes nine months to negotiate, but could have taken three months to negotiate, then that's six months you don't get that back. Like that's six month delay in funding means a six month delay in getting the company going which is a six month delay and getting the clinical trials which is a six month delay and getting approval, and that's six months where patients aren't getting the drug they need possibly today a lot. So like this is really existentially important stuff. But at least fundamentally, when you're when Columbia is negotiating with 5am, but we all kind of know we're playing this game. So it's a waste of time and money. And it's no fun, but at least you'll get to where you want to get to, eventually. And we all kind of have seen the movie before. So we know what we know where we're going to end up. But what was much worse, at least in our experience, is when you're negotiating with smaller venture capitalists, or angel or seed investors who just don't do a lot of deep tech, or software VCs, who this is their first time negotiating with the university, or entrepreneurs who might have had one successful exit, but only one. So they just don't have enough sample size to know what the norms are. And in some ways, the worst is your faculty. Because like, even if you're not directly negotiating, it's your faculty. They're getting whispered to by the entrepreneurs and the VCs about how greedy or ignorant or stubborn the university is. And so you have faculty coming into, like, I can't believe we're asking for terms that are not market. And everybody knows that MIT or everybody knows that Stanford or everyone knows that Duke or Michigan, do it this way. And most of the time, it's not accurate. But it's incredibly frustrating. And again, can burn relationships or waste time. So the goal here was, for terms, basically, to try and gather the group together and essentially spoil the movie. Like we've all seen the movie, so let's just spoil it. So. So for terms that always end up in a narrow range. Anyway, let's just tell everyone what that range is. And the range, I don't mean necessarily economics, but it could be like a legal range. But they have every like royalties, there's only so many different ways to skin, the cat on net sales. Anti dilution largely looks the same, equity provisions largely look the same. So for terms that largely look the same, just boil the move and just publish something that is, like pretty reasonable, for terms that are hard, that are really complex and contentious.

Speaker 4  7:05  
Explain them and give options. So there may

Speaker 3  7:09  
be different ways to do feature improvements, or sublicensing. And those are hard and complicated, but at least explain how they work and give options. And the goal is to try and reduce time, friction and money, get things into patients hands faster. Actually, somebody on LinkedIn commented, I love this, the one on LinkedIn commented, like, Thanks for this. Entrepreneurs, if you have to start somewhere, start here, which is which is important, I'll get to this. The data is what this those are the goals that we were trying to achieve the goals we weren't trying to achieve. Or this is not for all IP. Like this actually works pretty well we think in therapeutics, because all therapeutics deals kind of like every other therapeutics deal. Then platform versus single composition of matter, maybe but like by and large, they kind of look the same. They look a little bit similar and medical devices, and diagnostics. They don't look at all similar in photonics or cybersecurity or climate or advanced materials. So this doesn't work for that. We're going to try and do that next. But but not we're not there yet. This is also isn't a mandatory template. So like even the signatories are not committing will actually use this as our template. And actually, I think most signatories said they wouldn't even accept all the terms that are in here. Like Duke might say there's one or two they don't like but and so might MIT or Stanford, but we're saying this is a reasonable starting point. And we're also not trying to make this a new ceiling or a new floor. So there was some concern. I've heard from other universities that like, oh, great, now that no offense Scalia, now the vizier is going to take this as the ceiling and negotiate as down on all these points. That's not what this is for. Either sort of you take all the terms, you take none of the terms or if you can agree, like maybe there's a clause in here that helps you solve a problem you're having. But I think the sign of a good agreement is when both sides kind of don't like it. And I think that kind of is where we are here is like the university is like, I guess I can live with the sun balance. And the VCs are like, I guess I can kind of live with the sun balance. And so that's where we are. I'm gonna stop there.

Unknown Speaker  9:27  
Thanks. Yeah. Perfect.

Speaker 2  9:29  
I mean, that's so you have now built a bridge halfway to a lot of the things we want to treat today. I'm glad that you have sort of started at this. It's a starting point. It's a point of reasonable terms. It's not to be to be sort of all in or all out. Because those are all concepts that I want to get to today and everyone that's listening today, certainly his is attending here. To learn what do I do with this right? What do I take this how do I how do I use this? How do I make this something that hurts our process? Not that helps our process not hurts our process. So let's talk a little bit about what we've learned from this. Karen, I'll start with you. Was there anything that you or your team has learned through the process of building this for one, which I think has been enlightening for everyone involved? At some point, and then maybe as I get to each of you also, it'd be great if you just kind of talk a little bit about where you or your team in, in your sort of understanding and or adopting this, this tool?

Speaker 5  10:32  
Yeah, thanks. So first, I would say, in terms of the process of of developing this,

Unknown Speaker  10:43  
you know, we,

Speaker 5  10:43  
I think we realized, we have a lot of assumptions about, you know, what we always refer to as the other side, which I think is kind of a dangerous way to put it, because all VCs are not alike, all universities are not alike. But I think we often come into these things with these assumptions of, oh, you know, as a category, this group is just a pain to deal with, or they try to be difficult, or they're land grabbing. And and I will say the, the process was really pleasant and enlightening, because we went through the different categories and, and listened to each other, you know, what are your thoughts on this, and it really opened our eyes. And, you know, as an example, I'll bring up sublicensing, where some of the VCs were like, Oh, we just don't do that. We're never gonna do that. Why should we do that? Why should we pay you, you know, on top of the milestones that you asked for? And I remember I said, Well, okay, what if we have a platform technology, and the startup wants to have all fields of use. And our mandate is to get the technologies as fully developed as possible.

Unknown Speaker  12:02  
We could be licensing

Speaker 5  12:03  
that platform to several different parties and different fields. But we're going to, you know, license it to you in all fields. And so this is kind of the quid pro quo for doing that is now we want some sublicensing income. And I remember, there was just this, oh, oh, I never thought of it that way, coming from one of the venture capital investors. So I think it was, it was just so pleasant to have that open discussion. We're nothing. I mean, obviously, we were developing this, there was no specific project on the line. So no yelling like Gordon was alluding to, although I will say orange, the west coasters tend to be a little more chill and relaxed, I think. But I wish we could approach every negotiation like we approached the general process. So I guess in terms of what we've learned, first of all, not all deals are alike. Not all venture capitalists are like, not all universities are like, each company, and each university might have certain terms that they can or can't accept. So I will give you an example. There's a provision in the terms that suggests that the university should share publications print manuscripts, prior to publication with the startup so that a patent can be filed. And at Stanford, if there's already a startup, we're not, you know, I think the the term was developed for the purpose of a startup sponsoring research back at the University at Stanford that actually isn't allowed because of our conflict of interest policies. And it would be a breach of that COI policy for our faculty member to share those publications with their startup. So there are little quirks for each university and each VC. I mean, there's there were certain VCs that were like, Yeah, we're fine with sub licensing and others were like, you know, well, I don't know, we're still hesitate. So I think that's the biggest lesson. The other is, please look at the footnotes and the disclaimers and the introduction. Because I know there are some parties probably on both sides, who are coming to the other side and saying, Hey, you, you signed on to this, so you have to accept it. And if you actually read the, it's not even all fine print. The introduction, I'd say is a little bigger than fine. But there's a lot of leeway, accounting for differences in the different institutions. So we actually at Stanford, interestingly, just got the first startup that asked us to, you know, actually told us that that we had to accept the terms, but we're going to use it as you know, we can use that as a starting point. So we don't have a lot of experience beyond that. But I, I just wanted to give the experience of the process because I think it, it could be very educational for how we should approach every negotiation to listen to each other.

Speaker 2  15:31  
Yeah. Thanks. Thanks, Karen. Well, so before I get to, to the VC perspective of at least the process learning lessons learned Rick, or or Robin, anything to add to that lessons learned on your side, just about the process, as you've gotten through this. And maybe, you know, I think we're all still learning. Robin, anything anything to add to that?

Unknown Speaker  15:52  
Well, like Karen says, we've already had not the full term sheet where I think this is going to be incredibly useful. For those of us that are not on the coasts and in our local attorneys aren't always Cooley, Wilson Sonsini, and, you know, fill in the blank is a lot of the definitions and the structure. So what's happened is we've had we were in the middle of a negotiation when the term she came out. And so we ended up, they use a couple of definitions and said, Well, you already agreed to this. And so it, you know, and yes, and so I think what we're doing now, I know, what we're doing now is we're taking a look at a lot of the definitions and saying, you know, what, instead of us constantly redlining net sales, and Pat, you know, it's amazing how law firms can just and maybe it's a junior associate, the red lines, the same things all the time. Now, we're going to use these definitions. So what we're doing is moving a lot of those standard definitions from the term sheet into our into into a term sheet and trying to use those, I think that's going to help us a lot. But I agree with with Karen, you know, we've pushed back on No, we didn't, you know, look at the footnotes, look at the stuff in the front. But I do think there's a lot of things here that will be very useful going forward. But it's all early days, for most of us just trying to, you know, figure out how it works in our own templates and our term sheets, and then also training our staff, who almost always are used to a different, you know, different term sheets, different forms, and then working with our local law firms. And what this all means, yeah,

Speaker 2  17:33  
thanks for having me. I'm glad that you touched on sort of taking piece of this pieces of this and condensing it into a tool that works for you. That's where we are my my team. In fact, we've just started the conversation around, how do we take this and work it into something that works for us? And we'll, we'll come back to that. Rick, anything to add to that just from the University of Michigan side on where you are?

Unknown Speaker  17:56  
Um, no, I

Unknown Speaker  17:57  
mean, I think in a later question, I can cut you can cover where we're at. But I think, you know, I think Kara covered really well, as far as what we learned and through the process of getting to where we are, yeah. Okay.

Speaker 2  18:07  
Excellent. All right, Dahlia. This would not be as important of a project, if we didn't have VC involvement, right bunch of universities getting together, we can come up with term sheets all day, all day. And, and promulgate those and say, Here it is. But the importance here, the the sort of the weight of this project is the fact that we had VCs like 5am Ventures, at the table working with us to develop this set of sort of reasonable positions. So from your side, from the VC side, what what what have you learned through this process? And what can we take away of sort of the importance of this to through the the VC lens,

Unknown Speaker  18:44  
so to speak? Yeah, thanks, again.

Unknown Speaker  18:48  
I think that Karen and Robin have have said, most of what I feel the same way. What was really eye opening to me, you know, normally I am negotiating on the other side of tech transfer offices. And in the same way that often universities think that the VCs are these big bed and of people. My opinion at the VC perception is that universities are inflexible and are just throwing terms out there. And, you know, they run according to a playbook and and aren't willing to deviate from that playbook. And then you have to go to the General Counsel's Office and there's just like a big kind of machine, whereas SVCs are nimble and quick, and we're kind of cutting edge and we're willing to find solutions. And what I really learned from this whole process, it was super humbling, you know, working with incredibly experienced, knowledgeable people. I mean, Oren Caron, right, Robin, have been in this industry for decades. There were other people from you know, amazing universities who have seen every single type of agreement and every single term And it was so it first of all, it was just incredibly humbling, very thoughtful group of people. And when we, when we initially started, it was, you know, we came, we came together. And what was evident was that we had a lot of differences. But very quickly, like in other opinions, you know, under terms, but very quickly, what I found was, as we started to trust each other, we came to much more commonality. And the terms that we we realized that we actually aren't that far apart from each other. And what was driving kind of the digging of heels in on either side, was really kind of well thought out concerns, both from the, from the, from the University side, and also from the VC side. And once we understood the reasons behind the issues, things kind of started problem started melting away. And so I think what I love about this group is that you guys, first of all, haven't had children 50 people sign up to this webinar. And it's really difficult to have, you know, we spent literally three years having five hour conversations on a monthly basis. And I know that you guys can't spend that time having those discussions with other VCs and VCs don't have the time. And what I'm hoping to gain by this group of people and these types of conversations that you'll recognize that actually, the people on both sides are pretty smart. And we both have legitimate reasons for you know why we come to certain terms. And, as already said, the recognition that we can get a middle place, which is completely reasonable for both sides. And it's not going to always look the same for every single VC or every single university. But there's, there's a way forward, which doesn't require us to spend nine months to a year negotiating a contract and get really expensive law firms involved. And so that's why kind of what was that was what was eye opening to me and what was exciting to me about this whole process?

Speaker 2  22:02  
Yeah, thanks, guys. That's, that's important to hear. I'm gonna stick with you for a minute because this sort of, and I think it's important to understand why this project is to this initiative is different than other sort of promulgation of of, you know, best practices in terms of things and something that Autumn does with our university to community a lot. And so for as an example, one thing that we discussed when we were preparing for this discussion was the fact that a large law firm, I think he said Wilson Sonsini is training their attorneys on this term sheet, to work with their clients on this as some of this as a starting point. This is a good set of best practices here to utilize. Can you just speak to that and the importance of, of something like that to the VC community? And then any other indicators that you're aware of that was sort of speak to why this this project is important to the VC side? Yeah. So

Unknown Speaker  22:56  
one aspect that we haven't spoken about was that in this process, it was not only a bunch of VCs and tech transfer officers who were speaking to each other. We also got two very big law firms in but actually three, so Wilson Sonsini, booty and Goodwin, and they were on all of the calls with us, right. And so, you know, as you know, as you guys well known, tech transfer offices typically don't use outside counsel for the negotiation of these agreements. But that but they use the VCs bring in their law firms. And so who you're really negotiating with, when you get down to the detailed terms are law firms. And so what is really powerful is that we have now got the most the most used law firms for the startups agreeing to this to this term sheet. But not only agreeing, Wilson Sonsini has now rolled out a series of education to the to the junior lawyers. And that is incredibly powerful because those lawyers are going to leave Wilson Sonsini, you know, all of these law firms have an up and out policy, and they're gonna go in house, they're gonna go to a bunch of different law firms. And so what we're doing is we're creating a standard in the industry, where there's a real understanding between the parties. And moving forward. You know, when you deal with any lawyer from Wilson Sonsini, they're going to know about this, and you're not going to start, like the whole conversation that we started three years ago, you're not going to start from scratch. It's all going to be kind of part of the lingo and part of the part of the US documents in our community. And so that's why I think it's really important that not only the Wilson Sonsini, and all the other big firms adopted and you know, we have a lot of buying power. And so I'm because of because we use law firms a lot. And I'm going to be pushing this really heavily with my outside counsel to make sure that they are also training their staff and I'm going to be finding out that their competitors are doing this so they better get on board too. And I think what was super helpful is if You guys also train your staff, because that's the only way we're going to get this used, kind of, and much more in circulation. Yeah,

Speaker 2  25:07  
yeah. Great. Thanks, guy. I appreciate that. So you've said something here that I'm going to use as a segue and come to Robin, you mentioned sort of, you know, sort of law firms are becoming, becoming aware of this because they can use it. And of course, there, the VC side is used to working with outside counsel more than we are in these scenarios, although, although we certainly will bring an outside counsel, especially if it's a large enough deal with VC. This is actually how it has recently come to us, our team was just talking at the University of Kentucky this morning, because we have actually already engaged in a negotiation where these terms have come up, and they're being used. And it was brought to the table by the outside counsel of the other side. And so certainly, there's an awareness out there. So, Robin, how can how are you at Duke right now thinking about avoiding misinterpretation of this Because certainly, as this becomes something that people are aware of, they might take a look at it and say, well, Duke has already agreed to all of this, right? And you mentioned that you're looking at, at at sort of pull standard definitions and working in other ways to try to make it work for you. Without in a way to sort of avoid those kinds of misinterpretations. What are you doing at Duke right now to make sure that this is a usable tool and the right starting point? Well, like

Unknown Speaker  26:32  
Karen mentioned there, you know, there certainly is language in the in the form that has a lot of caveats, what we're doing is taking it and turning it into sort of a Duke template, where we'll take as much as we can from it. And I think the important thing to note, and I know Oren sort of talked about this, I think down the road, the goal is, this doesn't have to be just for drug deals, or sounds like we're sorry, just for therapeutics or health sciences, this can be applied to multiple types of technologies, you just may have to work at a little bit. And also, it doesn't necessarily have to be just for venture backed. I mean, you know, let's face it, many of the people that are listening to this are doing deals with startups that don't have 5am behind them. Right, they may have an angel, they may not be an SBIR. And I think a lot of those definitions can be used across the board for many things. So it's more of the structure. So we're trying to turn it into something that is a little shorter for us. And then, but with with the idea that if if the counterpart wants to use other aspects of the longer version, okay, we'll put it in. But we'll start with kind of a smaller version of it. For this that's appropriate for the technology and its structure for the technology. And then if we need to, we'll add in other things, but I don't think right now we're going to start with the full, hey, you know, 15 page term sheet for every deal, I don't just don't think that's appropriate for us. So we're trying to turn it into something that will work, but But it's, it's kind of like a dictionary of things that you can pull in when you need to, and then hopefully not have to read line every single time, you know, certain definitions. So that's how so we're using it. But again, early days, so it'll be interesting to see, you know, how other folks use this. But I would prefer that we think of it as much broader than just therapeutics and just venture backed term sheet, because otherwise, a lot of us won't be able to use it very often.

Speaker 2  28:37  
Yeah. So I'm glad you made this last point, Robin, because I think, expansion. And this actually addresses a common question we just got in the q&a, which is really about kind of expanding this approach and this tool. So let's just talk about that really quick. Because on you brought up when we were discussing earlier about your team's intention to both adopt this, at least periodically, but also to look at how else can it expand? Can we expand? I mean, the purpose of this was around life sciences, therapeutics, like deals. But can we expand this to other other areas? What do you what do you think?

Speaker 3  29:13  
So I mean, I mentioned that a couple of different ways. I think there's, you can think of expansion in a variety of ways. So first of all, we would love to get more universities endorsing this. And more VCs endorses and Gallia. Sarah Reed from our capital, who has been phenomenal. Galya and Sarah have just been such great partners on this for the last three years, like really, really great. And it's actually that's saying something because Dahlia and I started off kind of like, initially, she will she will probably not deny that but but over the last three years, we've really come to see eye to eye on a lot of stuff. So one way is we'd love to see more universities and more VCs sign on with the understanding that what signing on means is you're not signing on saying we're going to use this in all of our deals. You're not even saying you're going to use it ever. What you're saying is, this is a reasonable starting place. And most of these if, if we had a situation where speed trumped deal terms, and you can get a deal done in a month instead of six to nine months, we didn't really seriously consider using this. So we'd love to get more adoption. Although it's also okay, if not, because the it's out there, and people can use it if they want to use it without endorsing it. And the other thing is, and Gaia, Sara and I were talking about this recently, we're going to be meeting every like six months or so with the whole group that put this together to evaluate whether there's any changes. So if people have suggestions, I know the VCs and maybe Gallia can touch on this, but I know VCs have been giving suggestions of like, okay, you almost got it right. But what about this? What about that? And so if the university say this was almost right, but would you consider it a tweak here or tweak there? We'd love to hear about that too.

Unknown Speaker  30:59  
But even to your point.

Speaker 3  31:02  
I think we all need a little bit of a breather. This is a lot of work over three years, and like no one's getting paid to do this, it just volunteer. But we do want like the next step is that Goodwin Cooley and Wilson Sonsini are putting together a license agreement version of this. So not just a term sheet, but a fully downloadable license agreement. And Robin, am I right that you've got students?

Unknown Speaker  31:25  
Well, yeah, we were trying to get some of some of our law students at Duke who are very interested in, you know, eventually doing entrepreneurial deals are trying to work with with them to help, I think all of us have licensed templates that we think of as living breathing documents that, you know, we're going to continue to update. So same thing here, we're going to try and take, as we develop our own term sheet based on this, we'll dump it into our template. You know, we'll see how that, but we're interested in seeing how this template goes. But yes, we're hoping that some of our great law students will be able to help the good one, folks are still working that out.

Speaker 3  32:01  
Great. And you know, and the goal, I think we're already starting conversations with some VCs in climate, actually. And you Michigan's got some great advanced materials and climate advanced materials, terms. So we'd love to like rinse and repeat and do this for climate. Because, again, it's again, it's like a tight enough field, I mean, you probably would need to maybe climate advanced materials were, or maybe just advanced materials. But it's got to be like tight enough that you're not, it doesn't try to sweep in like software for electrical grid management. But also a new chemical compounds is a component of a component of a component in the battery. But if you can find the next area, we'd love to rinse and repeat, but I need a coffee first. Or bargain,

Unknown Speaker  32:48  
I can never tell that you need a coffee.

Unknown Speaker  32:52  
So I think that's an

Speaker 2  32:55  
important point, right? Because we're we're talking about what are how else can we use this, we're getting excited about this thing. And I keep bringing us back to the importance of it's an important Best Practices tool, because we also had the VCs involved in it. And so that's why you've seen the national nbca has, has published this, and sort of, you know, endorsed its adoption, and use this guidance. That's important to us, in the in the university to community. And so really, one of the important things to consider is, you know, we're all going to dive into this with our licensing teams and talk about what's term, what terms do we like, what definitions do we like? Or not? Like? How do we distill this down into something we can use? And then we have to think about how do we actually use it? Like, what, where in the process? Do we market this thing? Where do we insert it into the process? And really, that comes down to sort of messaging and marketing. So Rick, I wanted to bring this to you, at the University of Michigan, how you're thinking about actually messaging this? Because So currently, this is a publicly available tool, right? So anyone can go find it? And are we thinking about if we create distilled versions, like the Michigan version and the dupe version, or whatever works for us, is that something you would hang on your website? And let people come find it? Or would you message around it or utilize it differently? Well, I

Unknown Speaker  34:21  
mean, I think that the more people use it, the more likely Chet GBT is going to pick it up and get it out there so that our jobs cannot be replaced. And we can get the break that Oren is talking about. So but but I mean, I think actually, honestly, I think what is what is what it's going to mean to each university and to each VC is going to be different and it's going to be different at different times. And the way the way at least i and we've looked at it is that we just the goal is to just to get it out there to be something more like more in the summertime than it is sitting here right now. Because right now it's just sort of just out there. And, you know, a lot of the answers that we've we've heard today already do the different questions and suggestions about how people might use it, you know, like, it's, you know, might be a language library or it might be used, like Robin said, when they when they update the Duke template, or you know what anybody else who's doing a template training, when they're doing training, you know, I think law firms we've done here, we use it every week, or every two weeks or whatever, in our licensing staff meeting, we pull out a provision and we use it, we throw it out there and, and discuss it. And we also, we could might consider using it when we have, we won't want to use it as a reference point for what might possibly be market in some instances, and we're not necessarily banking on it being like the Bible for what is market because nobody is has said that, you know that it isn't necessarily that but it's something that might be some evidence, we might also use it in a negotiation. No, you know, as we've already said, there's been lots of disclaimers about it, not necessarily being agreed to by everybody, but it might be something that, you know, somebody might want to look to, you know, in a particular negotiation to see whether they're being whether I'm being reasonable and something that I'm putting forward. Um, so while you know, we're, we're calling it a term sheet, you might, you might use it, as you know, my put it out there and start using it as it is, but you're probably more likely right now, when in February started using bits and pieces, but we hope it'll get picked up more and more mazing obviously, you know, it's probably more of a more more lengthy than what most of us are used to using at least I know that we are at Michigan, and I think I've heard the same thing from Robin lab where she's used to as a term sheet, especially since everything Robin knows she's known for me. And so, you know, we're probably more likely to to distill it down before we use it, use it as a term sheet per se. So um, you know, we'd like to be able to say that we've been part of this and like to see how it is how it grows.

Unknown Speaker  37:12  
Yeah. And I think so.

Speaker 2  37:14  
And there's the power of, of each individually, every team, every university working on how to incorporate this into their own process. That's the problem with right now. And I'm sure many attendees that are on here, are kind of going through the same issue, which is right now, it's just kind of out there. Right. And there's not clear guidance from you each university yet on, you know, is this something you adopt? Is this something you endorse? Is this something you use? And so, for example, at the University of Kentucky, there's already sort of an early visceral reaction only because it was brought into a licensed negotiation by the other side, it was pointed to and they said, We will let you obviously use this, you know, and we haven't yet digested sort of our standard definitions, like Robin said, and our things that we like things that we don't like, and we're all in this process right now. And I think we intend to, to work up something so that it does become a useful tool. But that's the issue right now is just, it's just out there with some excitement. And I think there's also probably just some early negative reaction, because we haven't yet, you know, really digested how best to incorporate it, rather than just something to add to that. Yeah.

Unknown Speaker  38:25  
And I can't remember it remind me what there's a couple of professional associations in addition to autumn. I mean, I could envision down the road, a workshop of training and what's it AIP? Sorry, POA?

Unknown Speaker  38:37  
No. I

Unknown Speaker  38:38  
mean, yeah, I

Unknown Speaker  38:39  
mean, I think there's certainly opportunities for taking this training, discussing, you know, and like Oren says, it's going to be a living document. I think we will, after a year, a lot of us will have a lot more experience with it, that I'm on both sides, that we can, you know, come together and talk about I think that's really where we would like to go.

Unknown Speaker  39:06  
Here. Yeah. If I

Speaker 5  39:07  
could also add, something that we haven't brought up yet, is that, you know, often from the university perspective, often our research is sponsored by can be Foundation's other nonprofits. Sometimes Sometimes it's a for profit, but we're probably not doing the startup in that case. But a lot of these research sponsors have, we've already signed on to certain terms, for example, data sharing terms or something like that in the research sponsorship that then have to, you know, flow into our term sheets. And so that's something to think about, like that's one reason why a university might have to customize the term sheet. On the flip side, I also think This term sheet could be very educational for a lot of the nonprofits that are working with us. So they can also understand how universities and investors work together generally, at least, I mean, in this case, it's, you know, it's they're kind of therapeutics focused, and at least Life Sciences focused. So I think that's another aspect that we haven't discussed yet, but should be thinking about as well. Yeah.

Speaker 3  40:29  
Yeah, I'll note two ways that we've been using it that I think might be useful. I think RK asked about smaller universities, I actually think this was kind of designed for smaller universities in the side, but we can talk about that in the q&a. But one way that all universities can use this, I think, and where we've used it most so far, is actually with our faculty. And our entrepreneurs, because they're the ones who've just never done this before. And yet, their brother in law or cousin, someone's whispering in their ear, saying, you're gonna get screwed by the universities, or just make sure you don't pay royalties. That's crazy. And like, being able to send this and be like, Look, we're not going to necessarily use this, but you should know, you know, but take a look at it. And I think the cheese two goals, one

Speaker 4  41:12  
for everybody. It even if you lose the deal,

Speaker 3  41:17  
even if the deal doesn't happen, you can say like that what we're asking for isn't crazy. Like we know what we're doing, you can trust us. And if it's good enough for Polaris, and 5am, and RA, capital of Venrock, and Atlas and omega and everyone else and good winning Cooley and Wilson Seanie. Like we're not nuts, the deal may not get done, but it's not because your tech transfer office is incompetent. So that's one thing. The other thing and just sort of a shameless plug for being an endorser. If being an endorser means you're sort of part of this process. And we've found that our faculty and our university leadership, and the entrepreneurs we're working with are kind of impressed that like, wow, we're, we're in a, we're in something that also has MIT and Stanford in it. Like, that's kind of cool. And like, look at these receipts, it's kind of cool that you're there. So like, it, it's a little bit of a validation for the

Unknown Speaker  42:16  
plug dimness of the

Speaker 3  42:17  
office, which I think a lot of these negotiations are kind of soft skills and psychological skills and like any negotiation, and I think that it's helpful.

Unknown Speaker  42:26  
Yeah,

Speaker 2  42:28  
well, as Oren, I know, you know, and in others, I've spent a good part of my career, trying to create transaction efficiencies around around licensing rights or any tool, I think, where you can bring a lot of people together to create some network effects. That in the end goal is just to reduce transaction costs. However, we can, can do that, if it's time, if it's, you know, effort, if it's, you know, we, you know, get to sleep a little better at night, those kinds of things, anything that reduces transaction costs in an otherwise very clandestine one v one, bilateral, adversarial, worlds, right? is a good thing. And now we just have to figure out how actually create those transaction efficiencies around this. So let me We started in on one use case, which would be or a difference in use case, which would be large university, I've heard, you know, here we have Columbia, and Stanford, and Duke and Michigan, I represent a university that has half the research of all of you. And so, you know, compared to all of you, we are a small university, but certainly there are much smaller universities here listening in, those are going to be different use cases, or I'm very interested to hear you say that you think this is actually intended, or maybe best used by or for smaller universities. But I think that, so that's a use case that that we can get into because there are some things that we've already pointed out. My team has, for example, that is in this term sheet that was fairly new to us, to be honest. And we do very, we do fewer deals with later stage assets with VCs at the table than any of you for sure. And in fact, that one thing we talked about, with Robert, we're much more used to doing a deal with earlier stage, Angel type investors at the table. These are normally very untrained investors when it comes to life sciences, drug development work, right. And my hope is that this can be a tool that is educational, right, not as if it's something that needs to be even utilized at that stage of the development. But the fact that we can point to it and say, here's what's because we've been a part of this, here's what we think, are not what we think here's what a number of VCs and universities have said is a reasonable starting position. And we hope to get there later. And so the deal we can put together now should set ourselves up for some of that and we You can kind of engage that now go yeah, see your Yeah, I

Unknown Speaker  45:03  
mean, I'd like to say something about that, I think that's spot on. What happened? I mean, when you guys, it's the smaller universities start negotiating with a really small kind of nascent company, the goal is for that company to grow into something of value. And so at some point down the line, you're going to have to deal either with a VC or with someone mentioned here, you know, corporate, a corporate VC, or Big Pharma. And what is invariably going to happen when you get to that stage, when we do diligence on a company, we're going to do diligence on the license, Big Pharma is going to do diligence on the license. And we're going to say, Okay, before we invest, we need this and this changed. And so that process in and of itself, can kill deals and does kill deals. And so what you're doing by using a template like this, which has been vetted by, you know, VCs, and to some extent, pharma, and I'll get into that a bit in a second, you're essentially assuring their company that the next step in the process, when they're really on the cusp of success is not delayed by long term long term negotiations, which which will, which could end up killing the deal. And so that's why I think this is actually very well suited to small universities, because it sets the company up for success down the line. Just to talk about corporate VCs, so corporate VCs, typically are, you know, big pharma VCs. And what they do is they leverage their licensing group, when they're reviewing contracts. And so you're not essentially in a, you're not negotiating with a VC so to speak, you're actually negotiating with Big Pharma at that point when you talk about the license. And so what's really helpful is that, well, we are, I'll be absolutely honest, we haven't had a ton of input from big pharma because we anticipated so much friction with the VCs and the tech transfer office, initially, we thought let's hold off on Big Pharma because we think that their terms are much more aggressive than VCs. And so we didn't include them totally in the in the negotiation process. But as aren alluded to earlier, I have been receiving input both from VCs and the and the reactions are also not always positive, as you got, you know, in the same way that they're not always positive from the, from the University side. But I've also been receiving feedback from big pharma, you know, VCs, and we're planning to incorporate one person from from big pharma into the group so that we can get more iterative feedback. But generally, by and large, because of you know, we and VCs are used to negotiating with Big Pharma down the line, and certainly wasn't the Sidney Cooley and Goodwin have. That's the that's the kind of bread and butter clients, we have received that input from those from those law firms. And so we've tried to tailor this term sheet so that it would be acceptable to Big Pharma down the line.

Unknown Speaker  48:03  
Can I add something just really quickly, a lot of us are seeing this is really important, I think, more and more companies are going to get acquired, right? And they're going to get acquired by these bigger companies. And those of us who go through this all the time, there's nothing worse than having to renegotiate the license, and all this kind of stuff. And I think this is incredibly important. If your initial licenses is well done, so to speak, that helps you down the road as well. And it saves another set of time. And yelling and screaming scored refers to because of course your startups gonna want the acquisition you may or may not. So I think that's really a good point to think about this longer term for those kinds of events.

Speaker 3  48:48  
Yeah, actually, I talked about this a lot that like I don't know if we've ever had a license to a startup that hasn't been renegotiated two or three times unless they die, which is not enough. Like, it's like the the second best. The second worst scenario is a renegotiation. The first worst scenario is not getting to the point where it gets renegotiated. But otherwise, it's pretty much a certainty, it's gonna get renegotiated. But if you start with something that's reasonable and defensible, and there's a logic for why you ended up where you are, then at least maybe you can trade one thing for another, or you can explain to your provost while you're not going to give up the royalty rate just because someone says you should like because it's reasonable. And we got here for a reason. And so that's that kind of, you know, in the end, we're all going to renegotiate, we all want to sort of succeed. We want the drugs to get into patients hands, like that's what we're here for. We're not here to try and maximize the value. But we don't want to be suckers either. And I think this helps get us in a position where if we have to trade something, we'll trade something to get the deal done, but we're not just going to, you know, give up.

Speaker 2  49:56  
Really good point. And I think so we've just touched on the sort of thinking send you an array of we should we should anticipate later stages, we should anticipate renegotiation happens often on these. And so if a use case that is going to be maybe the most prevalent, which would be the earlier stage investors, right? You can this can be an educational tool because you, you have to get to a VC type deal if this thing is really going to get through the regulatory process anyway. But what about the stage after that guy? Yeah. You mentioned we were talking about interest from the PE community, even like royalty, pharma, and the royalty buyout community, those are the exit strategies after the VC deal. And so is is there interest there? And are they keeping an eye on this, too? Yeah.

Unknown Speaker  50:38  
So that was this was something which was another one of these really positive, unintended consequences of this process. And I did not anticipate this at all. But speaking to a JP Morgan, I met with many of our outside counsel, and one of our outside counsel Goodwin said that she had been approached by PE firms and also by royalty pharma, with what you know, about this term sheet, and they had a lot of interest in it. Because in the same way, you know, that the big pharma are renegotiating these licenses, when they come in and acquire a company or acquire majority stake in the company with the intention of them kind of running the company as management, they have to deal firsthand with these licenses. And so for them, they are certain, and actually, it was quite interesting, because the terms that they were asking for, were not crazy, they were just kind of slight tweaks on what we had. But for them, those were really significant terms. And to make sure that, you know, down the line, you're opening up your exit strategies, it's a really easy fix, to have those terms and right at the start. And so that's also something that, you know, as Oren said, we're going to be iterating on this, on this term sheet, we're going to be iterating on the agreement. And we're going to be taking into account all of these different communities who have an interest in getting this term sheet to a place where they can really run with this company and, and provide a lot of exit opportunities.

Speaker 2  52:02  
That's a really, really important point that I think all the university Tito's listening here needs to think about, which is, you know, yeah, often we operate in our own bubble at our own transaction point, which is very early in the process. But the VCs that have been a part of this 5am Ventures and others, you want terms that will entice the interest of those right, the PE ease that eventually are your exit strategy. Ultimately, a lot of our exit strategies is the VC deal. I mean, we do the early stage deal hoping we can get VC interest. And we would want terms that VC is interested in. So there's a continuum here, right of interest. And I think that's where a tool like this can be really powerful, because it can set us up for keeping and maintaining the incentives to be interested all the way through the process. And

Unknown Speaker  52:45  
I mean, you have to remember that we see we see 1000s of deals every year 5am invests in five new deals a year. And so it's really easy for us to say no. And if you want to make sure that your company has the best prospects of success, you just got to eliminate all the barriers. And this is just one extra barrier to eliminate, because the barriers are so many so high to get a company funded.

Unknown Speaker  53:12  
So yeah, yeah.

Speaker 2  53:15  
Quickly, because well, so we have a couple of questions. I want to get to Orrin, you mentioned earlier, the license. And I want to I want to make sure we sort of addressed this. Before getting to a couple of q&a questions. Can you just quickly mention again, where we are in the license and how that differentiates from the tool that's been published?

Speaker 3  53:31  
Yeah. So the term sheet, I mean, the term sheet is like a thoroughly negotiated term sheet in the sense that we tried to, and this was Gallienne Sarah's idea, which is great, which is to make the term sheet have as fully as fully fleshed out legal language as possible. So at least in theory, you could just pick and choose the terms and the term sheet and plug them into a license agreement. But it's not a license agreement. And so it's easy for Colombia or Duke or Stanford, or, you know, Michigan to work with this, because we've got a staff of attorneys on hand, who can just take this and plug it in. But if you're a smaller university, one man TT and one person to do, or an entrepreneur, this doesn't, it's helpful, but it's not perfect, because you can't just like download something, say like, fill in a couple of blanks, sign it and be done. And so that's the goal for what happens next. And Gallia. Any update on when we think this is going to be ready, the license agreement?

Unknown Speaker  54:24  
Well, we keep pushing. It's a voluntary, it's a voluntary kind of job. And so we are planning to have the first iteration out in the next couple of weeks for our internal review. I think at the end of the summer, we're probably we were looking to hopefully have some sort of agreement that we can put out to the community. But this is a long process. And so I don't want to make any promises. In case we have a lot of input from different people.

Unknown Speaker  54:51  
Right so Dahlia says April 1, awesome.

Speaker 2  54:56  
So as a as a first question I want to address to actually questions we've received so far. from me and George, both of which I'm not sure can be answered yet one of which one is focused on what time efficiencies have we realized if any yet in using this tool? And then the second one is what's been the experience with pharma and biotech, I'm not sure that we are late enough in the game here with using this that either those can be realized, right?

Unknown Speaker  55:22  
Anybody I mean, I don't think we can talk about numbers for like efficiency of process, I will say that an n of one in acid on a venture capital GC venture capital call every quarter. And one of our members who actually is from a corporate VC said that this term sheet was incredibly useful in negotiating with one of the big, big universities, because it just got them to a version of one of the terms as Robin was saying, using that term as as kind of a template language. And so they didn't even have to go through the whole typical discussion that they went through. So I think people are adopting it and using it in various ways. And I think that's exactly what we were hoping for.

Speaker 2  56:05  
Thanks. That's, that's really helpful guy. And next question here really focuses on in Guy Yeah, I don't want to put you on the spot. But certainly, that's what many people attending this hope that we can do is, is ask you. So what do you think in your side was sort of any kind of a compromise, if any, on the VC side, that, you know, there's perception that there might be some terms here that would be that would be perceived as concessions. On the university side, I know that my team has looked at this. And I don't know if they think it's concessions, but things that we just hadn't done before or seen before. Doesn't mean that we're like, we know everything. And we we do everything. But on the VC side guy. Yeah. Has there been any discussion on the VC side of Whoa, that's, that's a little lighter than we usually would agree to anything.

Unknown Speaker  56:50  
You'll note that the number of people endorsing it on the VC side is much smaller than the number of people endorsing on the tech and the tech transfer side. And I was actually shocked at how I mean, people were had really strong reactions to this term sheet. So just so you guys know, it's not only on your side, and I've been pushing it, so to help you get your terms. But basically, equity is the biggest thing, like VCs hate giving out equity, and they don't think they should for every single deal. And so people have literally said, I will not endorse this because we do not get we do not give equity for every deal. And I'm refused to put my name out there, because now every single tiny University is going to be coming to me and telling me that they need to get equity. And so that's the by far the biggest issue is the equity. And so anticipate objections from from the VC side, because that yeah, that's the one point I would, I would say immediately is equity. Good. There's others. But equity is the biggest one.

Speaker 2  57:43  
And I'm so glad that you spoke up and said that guy, because certainly I think it's it's very easy, right for the university to cite to read this see something new and say, Well, we're just making concessions here. But it's important to remember that this was something that is that is published with VCs name on it, and saying that these are reasonable terms to them. Also, um, you know,

Unknown Speaker  58:04  
to reiterate what Orrin said, even if they endorsed it doesn't mean that they're going to accept all those terms. Yeah,

Speaker 2  58:11  
it goes that goes both ways. Good. Any other questions from the, from the audience? Put them in the q&a? We've just got a couple more minutes here. From the group, let me ask just sort of an open ended question. What's your plan from here, or I've heard you made mention, for example, that you've talked to your team about sort of a required periodic adoption of this, like, you must adopt this kind of maybe once a year or something like that. It's slightly

Speaker 3  58:38  
different. We basically we're still experimenting. So we've, we've been sending it out a lot. Like, you know, as I mentioned, to our faculty and entrepreneurs to smaller VC saying, Look, read this first, then let's talk, let's not yell at each other, and then send this Yeah, so we're just sending it out proactively a lot of the time, take a look at this little talk, because I actually don't, I didn't see a lot of stuff in here that I would consider to be a concession on our part, like, this is a pretty weak for our senses, like little things here and there. But by and large, like if we can get equity with anti dilution, and get royalties in a reasonable range and get a net sales definition we're comfortable with. And even better, like, not have to beat each other on the heads on sublicensing and future improvements, and get know how royalties, like that's pretty good. Like, that's, it's not perfect. It might not be the best deal we do all year, but it's pretty good. So what we're telling our team is, um, try it. I'm asking all of our licenses and offers to try using this as the starting point once this year, and we'll see what happens. Good Robert habitude.

Unknown Speaker  59:49  
I think we should also not forget that the financial terms are not in there. I mean, there's no numbers in here. So I mean, sometimes I even as I'm listening to Just like people, that there's still a lot of negotiation to be done even with this term sheet, right. So I think it's it, we have to step back. Apologies to my Carolina friends. It is not an express license. So I think we need to remember that. And then I, again, I actually think it's funny, because we have not, we're still working on our own Duke version. I'm not planning on showing it to faculty yet, but I will be showing it to the law firms that we work with that are not Wilson, you know, that I think will help us and I don't know gallium, maybe this is a discussion more for the law firms. How do we incentivize them to use this when their junior associate needs to Bill ours to redline every single definition of net sales and patent, you know, when we really don't want to do that? I think there's that kind of interesting issue of how do we get more adapted from

Unknown Speaker  1:00:59  
by the maybe,

Unknown Speaker  1:01:01  
should I say the smaller law firms? Yeah,

Unknown Speaker  1:01:03  
I think if they're smart, they'll recognize that they're bringing value to their clients. But that's, you know, if you've got the right law firm, they should be bringing you value. So go somewhere else that was not doing?

Speaker 2  1:01:17  
Well, we've had a couple of comments come in. From David goalie from Bill Lawson, that the term that the this tool has already come in handy, which is fantastic to hear. So people are using it, not necessarily just adopting it wholesale, but using it, seeing it as good guidance. Good, reasonable starting point, Patrick had no this will be our last question here. Patrick had a question about if this is a reasonable starting point, how do we how do we sort of work to not appear unreasonable by saying we only you know, I don't want to adopt the whole thing, or something like that, which really gets to the messaging around this. But I guess I'll start by saying every deal is different. Not every deal is the same. And so there are very good reasons and some deals to look at. And to dilution a little differently and to look at, you know, royalty stacking a little differently, especially as it's combined with something like combination products. So I think that's, you know, every every deal is different. And that's a very reasonable stance that I think most people could probably agree on.

Speaker 3  1:02:21  
I also think that I think that there's also a bit of a distinction between the unit, like a public university has different pressures than a private university, which has different pressures than a hospital system. And so, like, this might be a reasonable deal for sort of a for a public university that has a lot of pressure to build local ecosystems, and help train entrepreneurs and build a workforce and all that stuff. There might be private university to say, I know, this is well and good, and we agree with most of it. But frankly, you know, this term we care deeply about, like, we're gonna get our 20 years, 20 years from first commercial sale for know how terms and that's just what we do. And that's what the term is, or we might have, like Ian said, like, there's been some times when we've had a two or three VCs who are all competing to get a license, and like, I'm not using this deal in that situation. You know, that's like, all turns her off. So if you're, you know, if you're a hospital system, you may not suffer the same kind of pressures, we have to like, keep faculty happy and keep the provost happy, and like, hospitals are different. And they might just say, like, look, by we'll start here, but this, we're not, we're not doing that part. That's just not, which is not what we do. And talk to our CEO, if you don't want to believe us, and and people will use it differently.

Speaker 4  1:03:37  
Think everyone looks at it as a framework, then then it will work. It's a framework.

Speaker 2  1:03:47  
Yep. Agree. Any last comments, Rick or Robin?

Unknown Speaker  1:03:50  
I think in that situation, you will, you will probably or in most of those situations, situations, you'll have an actual reason why that term won't work. And if there's one thing that we learned here is that if you have a real, real adult discussion that you can work past it, you can work past your you know your disagreement. You can explain why that won't work. Yep.

Speaker 2  1:04:14  
All right. Gallia, will give you the last word here, any any final comments from your side, and the VC community to leave with this, this group, a very large group of 200 plus University to people.

Unknown Speaker  1:04:27  
I just want to say thank you so much to everyone in the tech transfer community for the engagement and the education that I've received over the last three years. It's been incredibly enlightening for me. And I just hope that we can bring our communities together so that we get drugs into patients quicker, which is our ultimate goal.

Speaker 2  1:04:46  
That's right. Great. Thank you. Thanks to everyone for for joining us. And thanks for your questions. If you have additional questions, send them to that. The email that Sammy posted in the in the chat. That'd be a good place to go with additional interest to get involved, or additional questions that could be answered. Yeah,

Speaker 1  1:05:06  
absolutely. Thank you all so much. And Oren, Robin Galya, Rick and Karen, thank you for sharing your expertise and the story behind this important project attendees. Thank you so much for joining today, for asking such good questions and for sharing even your beginning success stories in the chat. It's really inspiring to see this being put to work. As a reminder, a recording of the webinar will be available in the autumn Learning Center within about a week of the this live session. We will also have links to resources provided there. I know we don't have slide handouts, but you'll be able to link I've added that email address that was also in the chat in the Learning Center. So all of your resources can be found there. And a certificate of attendance can be downloaded if you do need one. And please complete the webinar evaluation that'll open automatically when we close out of the session always helps us with planning for future content and making sure that we're getting you what you need. So with that, I will say thank you all so much for joining us. I hope everyone has a great rest of the day and week and we hope to see you soon

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