yet2.com Inc, 2009 Page 1

Food & Drink Innovation Network

Creating an Intrinsically Innovative Company

Emma Hughes

Managing Director, yet2.com Europe Ltd

yet2.com Inc, 2009 Page 2

yet2.com – open innovation, technology transfer and patent trading company.

10 years of experience in supporting companies develop their business through Technology Transfer and IP transactions.

Yet2.com bridges the gap between industry needs and sources of innovative technology. Trusted advisors and experts.

Global cross industry and relationship based network. Yet2.com offices in US (Boston), Europe (UK, Liverpool) & Asia (Japan, Tokyo)

Expert Hands on Professional Services & Proven Experience in :-

– Technology and Technology Needs Identification / Prioritization

– Technology Scouting, Acquisition & Open Innovation Strategy

– Technology Licensing

– Patent Trading

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Example Members

Advisory Board inc: AGFA, Avery Dennison, Bayer, DSM, DuPont, Philips, P&G, Takeda

Open Innovation - Internal & External ActivitiesChesborough - well known but what does it actually

mean for your company?

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Implementing an Innovative Culture: Getting Started

Define what innovation means for your company. Question perceptions of “open” innovation internally

• Various organization structures & funding, internal v external, central scouts v integrated within BU. Inherent tension

• Creating an intrinsically innovative culture needs to be strategic across all levels (top management, project and individual)

• Requires mid and long term innovation initiatives - Review IP strategy

• Requires committed finances and resources

• Look at internal, existing processes AND external scouting activities

Open Innovation Company Challenges

Trying to change company culture is an ongoing & common problem

The right resource and a budget is required– Reallocation of budget for external collaborations– Easier to spend internal resource than cash outside– Who evaluates?

IP issues –contamination, NDA’s

Lack of modern communication media – next generation has different view to openness (its not everything!)

Defining the real needs of the company – needs clarity– What solutions are internal, – When in the process do you look externally– How do you articulate the real problem

What tools and when!

Open Innovation Requirements

COMPANIES’ UNMET NEEDS

Missing feature / performance issue / legislation change

Improve an existing product

Improve price Reduce cost / identify

manufacturing efficiencies

Step function change in

performance

Monitor next generation

technology curves

Wholly unmet need Expand into new “white space”

External Technology Acquisition Program

External Innovation - building on existing capabilities & competencies within the company.

WFGM Practice:-

Identifying Needs/Articulating/Prioritizing

Tools, Sourcing & Marketing

Screening / Engaging/ Closing deals

Implementing / Integrating

Process Example- Techneed Identification

Guided Techneed discussion session – Involve R&D and Marketing/Business professionals.– In house OI or technology leaders eg Dupont or external consultants

Data Collection:– Need-Prioritizing Tool produces a collection of technology needs in template format,

create tangible inventory. – Build corporate innovation support network and illustrate potential of external tech

acquisition internally

Acquisition Option Recommendations:– Place technology needs into action-oriented groups through Triage process, using

proprietary methodology. – Understand what should be solved internally, sourced externally, needs partnering

Prioritization– Small-group ‘Triage’ to set priorities that will most impact key business drivers– Team consensus to BU leadership decision makers– Ensure strategic direction – what links to company competency and strategy,

understand business strategy

Considerations for Technology Needs

Financial Impact– Benefit of solving the need

– Size of affected revenue streams

Cost/Effort to Implement– Internal Capabilities available to

develop v implement

Urgency– Current Status of impacted

products

– Risks of not solving

External Development Factors– Known solutions

– Known IP Positions

– Uniqueness of solution(s)

Technology Needs Prioritized

BU2BU3

BU4BU5

BU1

0

5

10

15

20

25

30

35

40

45

50

0 10 20 30 40 50

Financial

Urg

ency

Need#1

Dispose

Best

Formed

Eliminate

ReplaceAlternative

Radiate

Improved

Natural

Dev

Eliminate

Replacement

PackagingNeed#16Need#24Need#33

Best(other)

Highest rated Needs for both Urgency and

Financial Impact, across 4

BUs.

‘Apples to apples’ comparison – enabling prioritizing across the company

Internal v External

New technology or existing solution in another area, start up business or established partner.

Research Tools

Patent mining, publications, company news, research papers etc

Internal Sourcing Tools

Customers, suppliers, business partners, lab networks, internal experts

External Sourcing Tools

Brokers, consultants, technical experts, online networks

Why use an innovation broker?

Unique insight in to cross industry open innovation best practices– How are other companies organising for Open Innovation– What is required internally before working externally– What skills & resources are required– What processes and tools are available (ID, prioritizing, articulating)

Experienced practitioners with diverse cultural and industrial sector collaboration experience– Network beyond your own– Real Market Knowledge of who has what– Deal experience – what works what doesn’t

How an innovation broker can help.

Implementing a strategy and process (review best practice)

Gathering & understanding of what you need - external perspective & tools

Articulating that need to the outside world - confidential description

Marketing to a broad network –networks beyond your own

Scouting & evaluating external solutions – key questions

Increasing speed to engagement - existing relationships

Understanding expectations and differences across diverse companies

Flexible & entrepreneurial deal facilitators – understands nuances

Technology Need – Retain anonymity

Why use other networks & brokers?

YOUR NETWORK:

-Suppliers

-Select university relationships

-Conferences/trade shows

-Industry journals

OTHER NETWORKs:

-Regional and subject expertise beyond comfort zone

-Geographically broad

-Solutions from other industries

-Direct access to a large population of SMEs

-Broad reach to universities/research institutions

-Connect through private equity

-Network of affiliated brokers

Quality & Diversity of the networks that is important. A constant stream of good ideas relies on forming great external connections

Key value add of Innovation BrokersConnectivity

Deep reach into corporate technical staffs – not just size of network but diversity and relationships

Access to key gatekeepers (tech transfer & tech acquisition)

Relationships with venture capital and SMEs

Confidentiality

Opportunity screening and initial discussions

Protect client name and application

Expertise

Support best practice and upfront preparation

Evaluation and communication methods

Market and buy-side knowledge

Business formation and commercialization skills

External perspective

Unbiased evaluation and critical thinking

Understand nuances between different types organisations

Flexible in what a deal looks like

Company Best Practices – intrinsically innovative

Look at defensive use of Open Innovation – don’t get to end of a project and find you’re already in competition with someone else

Change IP strategy to support open innovation

Peer reviews – integrate alumni of the company

Not just about looking outside – develop existing suppliers and educate sourcing resource

Implement a process to identify and review (WFGM)

Incorporate internal and externally sourced technology within projects – reward both

Use new innovative and varied communication media to engage all the organisation

Thank – you

For further details please contact: ehughes@yet2.com

0151 705 3540

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Appendix

Yet2.com….Experts in Bringing all the Pieces Together

Technology/IP

Global Market

Knowledge

CapitalPeople

& Experience

Yet2.com

yet2.com Inc, 2009 Page 22

yet2.com links Ganeden BioTech to DSM

Ganeden BioTech

Developer of a highly efficacious probiotic (microbial digestional aid), which is sold through retail drug stores and supermarkets and can be incorporated into foods and beverages

DSM

Holds leading positions in the Nutrition sector, particularly the markets for ingredients for human and animal nutrition and health and personal care

PurposeMay enable many new probiotic applications in both food and feed that DSM wants to follow closely as an area of potential future business

Deal SizeDSM joined a private equity partner in a $12 million financing round

Date November 2007

HIGHLIGHTS SINCE TRANSACTION

• Ganeden products were featured on Oprah Winfrey’s syndicated radio program in November (as a result of an introduction from rede4).

• DSM evaluating possible future partnering with Ganeden for the development of specific applications

HIGHLIGHTS SINCE TRANSACTION

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ElectroPetroleum (EPI) developed a technology to extract heavy oil. 2/3 of the world’s oil supplies are heavy oil, so this technology has broad implications. The technology uses 1,000 watts of DC electricity to heat the oil and ‘cold crack’ it. The technology competes favorably with steam and an AC technology. Field tests showed a 10 times improvement in oil output per well at a cost of $4 per barrel.

October 2007 - EPI retained yet2.com to find partners and capital.

July 2008 - Yet2.com got 3 term sheets for investment and closed a $10 million round from DFJ Element. Yet2.com also sourced the first customer, Deloro, who gave EPI 10% of a 63 million barrel field.

Yet2.com links ElectroPetroleum to Customers and Raises $10 Million

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IP-based Spin-out: NaturNorth auction

NaturNorthSubsidiary of Potlatch – maker of IP-protected bioactive birch bark-derived materials for pharma, ag, cosmetics, paints. Derived from birch bark

BuyerSmall Pharma company in clinical trials for a new formulation with a NaturNorth derivative as a key ingredient

PurposeCouldn’t afford to switch/re-qualify supplier in the midst of Phase III trials, and greatly strengthened their monopoly through acquisition of 30-patent portfolio

Deal SizeWinning auction bid was [7-figures], with several other bidders lined up ot buy non-critical patent families for [6-7 figures]

Date February 2008

R1

R2

R3

R4

And, a Library of ~1000 DerivativesOuter bark +

unique chemistries yield pure Betulin

yet2.com Inc, 2009 Page 25

January 11, 2006 – Axela Biosensors has completed a significant exclusive in-licensing agreement with Kimberly-Clark. The agreement includes exclusive rights to approximately 150 world-wide patents and applications, as well as transfer of significant immunodiagnostics assay technology. As part of the agreement, K-C will be acquiring an equity interest in Axela. “These technologies are are a significant contribution towards our execution of product offerings in the diagnostic market, including our Diffractive Optics Technology (DOT™) products planned for product launch in 2006” said Rocky Ganske, CEO, Axela Biosensors.

Yet2.com links Axela Biosensors Inc. and Kimberly-Clark on biosensors deal

August 2006: Axela launches new real-time analytical device (8 months from deal).