Funding, Deals & Partnerships: BIOLOGICS & MEDICAL DEVICES; BioMed e-Series; Medicine and Life Sciences Scientific Journal – http://PharmaceuticalIntelligence.com
I would like to announce our special issue in the California Management Review on CrowdFunding (thank you to Olav Sorenson for co-editing and the Kauffman Foundation for support). We have a broad and practical set of articles that should appeal to practitioners and academics alike (please see this linkfor the special issue introduction by Olav and myself).
The landscape of CF can be quite confusing; Peter Younkin and Keyvan Kashkooli give us a mapping of the landscape by asking a simple question, namely, what problems does CF solve? Gary Dushnitsky and his co-authors provide a rich description of CF in Europe; they identify the surprising strength of national boundaries. Ethan Mollick and Alicia Robb provide us an easily understood synopsis of their research on the importance of CF for under-served entrepreneurs. Carina Thurridl and Bernadette Kamleitner help aspiring entrepreneurs understand how to bundle the optimal set of rewards to attract backers. Ajay Agrawal and co-authors describe a recent trend in CF, namely, the emergence of lead investors and syndicates. Finally, Valentina Assenova and Olav lead a round table discussion of industry leaders, including Jason Best, Mike Cagney, Douglas Ellenoff, Kate Karas, Jay Moon, Sherwood Neiss, and Ron Suber. Happy reading!
Podcast Review: Quiet Innovation Podcast on Obtaining $ for Your Startup
Reporter: Stephen J. Williams, Ph.D.
I wanted to highlight an interesting interview (What it Really Takes to Get Money for Your Startup) with David S. Rose, serial entrepreneur and Founder and CEO of Gust.com, which is a global collaboration platform for early stage angel investing, connecting hundreds of thousands of entrepreneurs and investors in over 75 countries. The interview with David and CFA John P. Gavin was broadcast on the podcast Quiet Innovation (from PodCast Addict @Podcast_Addict) from. I had tweeted it out on my Twitter account below (see the http link)
… but will include some notes from the podcast here. In addition you can link to the podcast directly using the links below:
David Rose discusses how there are hundreds of thousands of new ideas, some which are great some which are not… having an idea may be an initial step but for an investor to even consider your idea it is more important to have
EXECUTION
This is what David feels is critical to investors, such as himself, to decide whether your idea is investable. A startup needs to show they can accomplish their goal and show at least a rudimentary example of this, whether it is putting up a website or writing up a design blueprint for a new widget. He says starting a business today (either tech or manufacturing) requires a lot less capital than years ago (unless you are starting a biotech). He gives an example of internet startups he had founded in the 90’s versus today… in the 90’s you needed $2 million… today you can do it for $2,000. But the ability to show that you can EXECUTE this plan is CRITICAL.
David sites three aspects which are important to investors:
Integrity – Be humble about yourself. He says there are way too many people who claim ‘our idea is the best’ or ‘we do it better than anyone’ or ‘we are the first to have this idea’. As he says Jeff Bezos of Amazon was not the first to have the idea of selling books over the internet, he just EXECUTED the plan extremely well.
Passion- Investors need to see that you are ‘all in’ and committed. A specific example is angels asking how much money have you put into your idea (skin in the game)
Experience- David says there are TWO important types of experience in developing startups and both valid. The first is how many startups have you done and succeeded and the second is how many startups have failed. He says investors actually like if you have failed because they are learning experiences, just as valuable if not more than having startups always succeed. Investors need to know how you can deal with adversity. All three points goes back to execution.
David Rose gave some reading suggestions as well including
Eris Reese’s post The Lean Startup in his blog StartUpLessonsLearned – being frugal (gets back to what he said about not needed as much capital as you would think i.e. Don’t Burn Through the Cash) and also get metrics on your startup or idea (as long as you have the IP). He suggests taking out an ad to see what the interest is out there. You can measure the clicks from the ad and use that as a marketing tool to potential investors i.e. Getting Feedback
Some other posts on this site about Investing and Startups include:
Protecting Your Biotech IP and Market Strategy: Notes from Life Sciences Collaborative 2015 Meeting
Achievement Beyond Regulatory Approval – Design for Commercial Success
Stephen J. Williams, Ph.D.: Reporter
The Mid-Atlantic group Life Sciences Collaborative, a select group of industry veterans and executives from the pharmaceutical, biotechnology, and medical device sectors whose mission is to increase the success of emerging life sciences businesses in the Mid-Atlantic region through networking, education, training and mentorship, met Tuesday March 3, 2015 at the University of the Sciences in Philadelphia (USP) to discuss post-approval regulatory issues and concerns such as designing strong patent protection, developing strategies for insurance reimbursement, and securing financing for any stage of a business.
The meeting was divided into three panel discussions and keynote speech:
Panel 1: Design for Market Protection– Intellectual Property Strategy Planning
Panel 2: Design for Market Success– Commercial Strategy Planning
Panel 3: Design for Investment– Financing Each Stage
Keynote Speaker: Robert Radie, President & CEO Egalet Corporation
Below are Notes from each PANEL Discussion:
For more information about the Life Sciences Collaborative SEE
Panel 1: Design for Market Protection; Intellectual Property Strategy Planning
Take-home Message: Developing a very strong Intellectual Property (IP) portfolio and strategy for a startup is CRITICALLY IMPORTANT for its long-term success. Potential investors, partners, and acquirers will focus on the strength of a startup’s IP so important to take advantage of the legal services available. Do your DUE DIGILENCE.
Panelists:
John F. Ritter, J.D.., MBA; Director Office Tech. Licensing Princeton University
Panel Moderator: Dipanjan “DJ” Nag, PhD, MBA, CLP, RTTP; President CEO IP Shaktl, LLC
Notes:
Dr. Nag:
Sometimes IP can be a double edged sword; e.g. Herbert Boyer with Paul Berg and Stanley Cohen credited with developing recombinant technology but they did not keep the IP strict and opened the door for a biotech revolution (see nice review from Chemical Heritage Foundation).
Naked patent licenses are most profitable when try to sell IP
John Ritter: Mr. Ritter gave Princeton University’s perspective on developing and promoting a university-based IP portfolio.
30-40% of Princeton’s IP portfolio is related to life sciences
Universities will prefer to seek provisional patent status as a quicker process and allows for publication
Princeton will work closely with investigators to walk them through process – Very Important to have support system in place INCLUDING helping investigators and early startups establish a STRONG startup MANAGEMENT TEAM, and making important introductions to and DEVELOPING RELATIONSHIOPS with investors, angels
Good to cast a wide net when looking at early development partners like pharma
Good example of university which takes active role in developing startups is University of Pennsylvania’s Penn UPstart program.
Last 2 years many universities filing patents for startups as a micro-entity
Comment from attendee: Universities are not using enough of their endowments for purpose of startups. Princeton only using $500,00 for accelerator program.
Cozette McAvoy: Mrs. McAvoy talked about monetizing your IP from an industry perspective
Industry now is looking at “indirect monetization” of their and others IP portfolio. Indirect monetization refers to unlocking the “indirect value” of intellectual property; for example research tools, processes, which may or may not be related to a tangible product.
Good to make a contractual bundle of IP – “days of the $million check is gone”
Big companies like big pharma looks to PR (press relation) buzz surrounding new technology, products SO IMPORTANT FOR STARTUP TO FOCUS ON YOUR PR
Ryan O’Donnell: talked about how life science IP has changed especially due to America Invests Act
Need to develop a GLOBAL IP strategy so whether drug or device can market in multiple countries
Diagnostics and genes not patentable now – Major shift in patent strategy
Companies like Unified Patents can protect you against the patent trolls – if patent threatened by patent troll (patent assertion entity) will file a petition with the USPTO (US Patent Office) requesting institution of inter partes review (IPR); this may cost $40,000 BUT WELL WORTH the money –BE PROACTIVE about your patents and IP
Panel 2: Design for Market Success; Commercial Strategy Planning
Take-home Message: Commercial strategy development is defined market facing data, reimbursement strategies and commercial planning that inform labeling requirements, clinical study designs, healthcare economic outcomes and pricing targets. Clarity from payers is extremely important to develop any market strategy. Develop this strategy early and seek advice from payers.
Panelists:
David Blaszczak; Founder, Precipio Health Strategies
Terri Bernacchi, PharmD, MBA; Founder & President Cambria Health Advisory Professionals
Paul Firuta; President US Commercial Operations, NPS Pharma
Panel Moderator: Matt Cabrey; Executive Director, Select Greater Philadelphia
Notes:
David Blaszczak:
Commercial payers are bundling payment: most important to get clarity from these payers
Payers are using clinical trials to alter marketing (labeling) so IMPORTANT to BUILD LABEL in early clinical trial phases (phase I or II)
When in early phases of small company best now to team or partner with a Medicare or PBM (pharmacy benefit manager) and payers to help develop and spot tier1 and tier 2 companies in their area
Terri Bernacchi:
Building relationship with the payer is very important but firms like hers will also look to patients and advocacy groups to see how they respond to a given therapy and decrease the price risk by bundling
Value-based contracting with manufacturers can save patient and payer $$
As most PBMs formularies are 80% generics goal is how to make money off of generics
Patent extension would have greatest impact on price, value
Paul Firuta:
NPS Pharma developing a pharmacy benefit program for orphan diseases
How you pay depends on mix of Medicare, private payers now
Most important change which could affect price is change in compliance regulations
Panel 3: Design for Investment; Financing Each Stage
Take-home Message: VC is a personal relationship so spend time making those relationships. Do your preparation on your value and your market. Look to non-VC avenues: they are out there.
Panelists:
Ting Pau Oei; Managing Director, Easton Capital (NYC)
Manya Deehr; CEO & Founder, Pediva Therapeutics
Sanjoy Dutta, PhD; Assistant VP, Translational Devel. & Intl. Res., Juvenile Diabetes Research Foundation
In 2000 his experience finding 1st capital was what are your assets; now has changed to value
Notes:
Ting Pau Oei:
Your very 1st capital is all about VALUE– so plan where you add value
Venture Capital is a PERSONAL RELATIONSHIP
1) you need the management team, 2) be able to communicate effectively (Powerpoint, elevator pitch, business plan) and #1 and #2 will get you important 2nd Venture Capital meeting; VC’s don’t decide anything in 1st meeting
VC’s don’t normally do a good job of premarket valuation or premarket due diligence but know post market valuation well
Best advice: show some phase 2 milestones and VC will knock on your door
Manya Deehr:
Investment is more niche oriented so find your niche investors
Define your product first and then match the investors
Biggest failure she has experienced: companies that go out too early looking for capital
Dr. Dutta: funding from a non-profit patient advocacy group perspective
Your First Capital: find alliances which can help you get out of “valley of death”
Develop a targeted product and patient treatment profile
Non-profit groups ask three questions:
1) what is the value to patients (non-profits want to partner)
2) what is your timeline (we can wait longer than VC; for example Cystic Fibrosis Foundation waited long time but got great returns for their patients with Kalydeco™)
3) when can we see return
Long-term market projections are the knowledge gaps that startups have (the landscape) and startups don’t have all the competitive intelligence
Have a plan B every step of the way
Other posts on this site related to Philadelphia Biotech, Startup Funding, Payer Issues, and Intellectual Property Issues include:
The meeting, as described by meeting organizer and Steering Committee member of Mid Atlantic Bio Angels Lorraine Marchand, as a “benevolent sharktank”, where presenters get open and honest feedback from experienced venture capitalists on how to improve their pitch and business. The meeting here in Philadelphia was well attended with” over 70 attendants compareable to the 130 we get in New york”, according to MABA Founder Yaniv Sneor.
A few key points were discussed to improve the presenters future pitches to VC.
Define your technology/product, its purpose, how it fills an unmet need, and how you are unique.
Timelines and Milestones VERY IMPORTANT to have specific dates on when and what you will accomplish.
If your EXIT Strategy involves OUT-LICENSING, it is important to keep this in mind when framing your patent
VC’s want to see a STRONG MANAGEMENT TEAM, preferably a CEO from big pharma if you need to deal with them later
if PITCH sounds too much like a science project VC’s would NOT be interested. Show also the BUSINESS not just science
know the REGULATORY RISK – talk with the FDA
if market is small, son’t fret, show PROOF OF CONCEPT then show how relates to other markets
show your TANGIBLE ASSETS in your pitch – if you use a new equipment show it,
Other posts related to this meeting are included below
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