TRANSITIONING TO PHASE II AND PHASE III

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TRANSITIONING TO PHASE II AND
PHASE III

• Dr. Eric R. Craine
• Western Research Company, Inc
• Tucson, Arizona

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Introduction

• For smaller companies or SBIR start-ups
• Early planning Pre-Phase I issues
• Phase I goals
• Pre-Phase II issues
• Phase II goals
• Phase III options and trade-offs

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SBIR Phases

• Phases represent a continuum of effort
• Phases are not necessarily serial
• Do a business plan sketch before writing
  the Phase I proposal

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Pre-Phase I Issues Part I

• Are you really dealing with an SBIR
  project ?
• Is the proposed technology patentable ?
• Is it already patented ??
• Is the proposed technology marketable ?
• How large is the market ?
• What are the market barriers ?

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Pre-Phase I Issues Part II

• What are the experimental questions ?
• How can you carry the program out ?
• What is your Phase II plan ? Phase III ?
• What will you do between Phases ?
• How will you fund it ?
• Who do you need to help youand how do you
  attract them ?

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Pre-Phase I Issues Part III

• Define relations with collaborators.
• Contractually bind collaborators.
• Understand university liabilities
  make sure they understand your position !
• Enlist the help of NIH.
• financial structures in place..

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Pre-Phase I Issues Part IV

• Think hard about the go/no go decision

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Phase I Goals

• proof-of-principlenot sufficient for the
  business end !
• Working prototype (s!)
• Secured collaborations.
• Plan for proceeding.

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Pre-Phase II Issues

• Patent filing ?
• Trade names ?
• Publicationweb sites ?
• Continued research.

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Phase II Goals

• Address technological issues.
• Arrive at a manufacturable product.
• Develop the business plan.
• Pre-market the product.
• Make the Phase III connections early.
• Regulatory issues.
• Assets inventory .

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Phase III Options...

• Sell
• License
• Partner
• Develop
• ?????

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Phase III Options...

• First round
• private placement
• contracts
• corporate

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Phase III Options...

• Second round
• corporate
• venture
• pre-IPO
• IPO

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..and Tradeoffs

• Know where you want to be.
• Understand what you have to give up.
• Protect yourself.

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Finally...

• There is no such thing as planning too early..