PARTEQ Innovations PARTEQs mission Protect and commercialize intellectual

PARTEQ Innovations

PARTEQ’s mission • Protect and commercialize intellectual property generated by Queen’s • Enhance and foster linkages between the university research community and industry • Provide advice and assistance on matters relating to intellectual property (IP) matters

Organization Pres & CEO Admin Asst VP Intellectual Property Patent Asst VP Finance & Admin Manager Patent Agent Finance Analyst VP Commercial Development Manager Life Sciences Manager Chemistry & Materials Manager Director Communications Director Engineering & IT Manager EIR

The PARTEQ Model • • • Focus on protection and commercialization Customer driven – need to want our service Focus on value-added development of intellectual property Manage the process Capacity to take risk Innovate Close to industry Funded by operations – we cover costs and return ‘profit’ Now expanding reach to service other institutions Use new venture creation to facilitate investment • We have founded leading companies in different fields • We have funded early stage companies in different ways • We have provided service to our companies

An innovative approach • • First to incorporate internal patent group (1984) First to build and manage spin-off companies (1988) First to manage a captive venture fund (1999) First to develop mechanisms for employee incentives (2003) First to develop a Treasury Division (2006) First to create and manage a training fund for business students (2006) First to host and manage an NCE (2009) First to create a Property Holdings company

Queen’s-generated product: Levulan™ • Photodynamic therapy to treat various forms of skin conditions, cancers and other diseases • FDA approved, launched in 2000 for the treatment of actinic keratosis • Clinical studies underway for treatment of acne, nail fungus, warts and Barrett’s esophagus • Licensed to Dusa Pharmaceuticals • raised over $120 million to date • over $50 million sales to date

Queen’s-generated treatment: Taxol™ • Prescription medicine sold by BMS - used to treat ovarian, lung and breast cancer • Major breakthrough was a method of administration developed by a Queen’s researcher • Over a million patients treated • Sales > $14 billion

Why Do We Create Start-Ups? • Vehicle through which to add value • Allows you to raise $$ and provide return • Allows you to have more control over development program • Provides a means to attract government funding • Provides a means to take advantage of programs like business plan competitions • Allows you to recruit management and service support • Means to get return other than from licensed technology • Visible mechanism to drive economic development

What Are the Criteria for a Startup? • Elegant solution for a big problem = big market opportunity • Strong IP potential • Ability to raise $$ • Engaged and informed PI • Ability to attract strong management • Infrastructure to support

When Do You Use the Startup Tool? • When you have no other option

Nanometals Corporation • Process for depositing nanocrystalline metals • Could not find a licensee without proving applications for the technology • Development contracts and licenses through the company • Merged with Ontario Hydro - formed Integran Technologies Inc. in 1999 • Purchased by Mosaic Capital in 2003 • RBC’s Canadian Innovative Business of the Year in 2007

Masters 2008

When Do You Use the Startup Tool? • When you have no other option • When it is the best possible option

Neurochem Inc. (now Bellus Health) • • Elegant solution for large problem $$ plentiful Bundled technologies PIs were engaged 1994 - Initial capital $1 million @ $1 per share 1996 - Moved to Quebec 2000 – $36. 8 million IPO – largest in Canadian biotech sector • April 2004 – $36. 55 per share; market cap > $1 billion

VIVIMIND™ - A natural health product

Neurochem Inc. (Bellus Health)

When Do You Use the Startup Tool? • When you have no other option • When it is the best possible option • When PI insists on the option

Performance Plants Inc.

Performance Plants Inc. • • • Two PIs wanted more research $$ Search for IP Initial investment of $1. 5 million Cumulative investment $50 million One of leading plant genetics companies worldwide Equity play

The Microinverter • Miniaturized DC to AC voltage converter • Permits individual monitoring and control of each panel • Increases efficiency, system effectiveness and safety

The Microinverter Opportunity • 500% growth in sales of microinverters in 2010 • Forecasted to double on average every year to 2015 with revenue in 2015 of $1. 3 billion • Predicted that 45% of microinverters will be shipped in combination with a module by 2015 • Microinverters are HOT • Inverter companies • Enphase IPO • GE, Siemens, Sun. Edison

SPARQ is Different Hardware versus Intelligent Software SPARQ’s smarter ultra reliable Microinverter technology is built with long lasting hardware components driven by advanced software based algorithms. All competitive Microinverter technology companies utilize conventional hardware based topologies….

What Does the Market Want? • A microinverter that matches 25 -year reliability of the PV module • Lightweight, small-size smart microinverter with ability for cost reduction • Module integration without junction box and mechanical support • Smart grid compatible

Issues • • Product development within lab BOM control Manufacturing cost Unexpected delays in UL certification – what can go wrong, will go wrong – forgot to list • Keeping talented people motivated • Discrete units or development of future product • Where is the money? 25

Current Situation • BOM now under control • POs - problem is manf • Cost reduction program • Enphase big head start in cost reduction • When does diff advantage become advantage? • When to launch AC Module? • Crowded market problems • How to finance?

Laser Depth Dynamics • Technology using in line coherent imaging to detect, in real time, the depth of penetration of a laser • Patent protection filed • PARTEQ and OCE POP $$, Atherton Award • Ph. D student inventor – thesis submitted • PARTEQ EIR engaged • Martin Walmsley Award • Company incorporated, founder $, IRAP, sales 27

Virtual Mode • • • Need to maximize value before or so you can raise money Need to manage development Keep overheads down as much as possible Keep internal and use POP Incorporate to bring in money and/or resources Use IRAP, equity and debentures to get resources to add value • Incorporate to get SR&EDs and finance them 28

BKIN Technologies • • • PARTEQ provides IP management PARTEQ provides financial management PARTEQ provides communication management PARTEQ funds CEO as ½ time (debt) PARTEQ provided initial line of credit to start and now guarantees a $250 K line of credit + corporate credit cards • Development work done at Queen’s under contract (reduced OH) 29

Why and When Did We Incorporate? • We wanted IRAP • We were selling units and wanted profit directed to development • We wanted SR&EDs • We were commercial and needed separation from lab • Instituted proper governance when we accepted funds from venture fund 30

When Do You Use the Startup Tool? • • • When you have no other option When it is the best possible option When PI insists on the option When the market gives you the option When that is your important metric When you have a proven management team

When Do You Not Use the Startup Tool? • When the PI relationship is unpredictable • When you cannot raise enough $$ to hit the next value inflection point • When you need more short-term revenue than the startup option will support • When you have something that is clearly incremental

What Are the Criteria for a Successful Startup? • Elegant solution for a big problem = big market opportunity • Strong IP potential • Ability to raise $$ • Engaged and informed PI • Ability to attract strong management • Infrastructure to support • Staying power • Persistence • Capacity for risk • Flexibility • Good timing and luck

Can university startups deliver real impact? The Top 10: 1. ACELP – Université de Sherbrooke 2. Taxol – Queen’s University 3. Lamivudine – University of Alberta 4. Open Text – University of Waterloo 5. Quantum Canola – University of Alberta 6. Visudyne – University of British Columbia 7. Drug-eluting stents – University of British Columbia 8. Wi-LAN – University of Calgary 9. Web. CT – University of British Columbia 10. Cystic Fibrosis gene – Hospital for Sick Children

Have we made an impact? • 47 spin-off companies • Approx $1. 2 billion raised by spin-offs to develop technologies • More than 800 jobs created • Return of $30 million to Queen’s and its inventors • New products and services improving the life of many people • Trained entrepreneurial management talent

PARTEQ Innovations

Green. Centre Canada • Physical infrastructure for development of green chemistry discoveries • Industry led – governance and disclosure screening • Pull from national discovery base • Management agreement with PARTEQ • Budget of approx $8 million per year • 27 people • First Spinoff SSI Ø New model of university technology transfer Ø New model of university/industry interaction