Tuesday, April 7, 2009

4 Bits of Advice for a Biotech Start-Up

The biotech industry is not for the faint of heart -- especially in an early stage or start-up company. Time frames are long, costs are extraordinarily high and there is no guaranty of success. All of these risks are magnified in today's rarefied air of non-existent IPO markets and schizophrenic M&A exit opportunities.

Dow Jones recently hosted a webinar advising small biotech companies on how to navigate these treacherous waters. In his recent blog post on the WSJ Venture Dispatch, Jonathan Matsey mentions four nuggets of advice from this webinar and gives some good additional gloss. Below are summaries of the 4 points and some of my own thoughts -- please see Jonathan's original blog for his full color.

1. Think globally. It is often possible to generate revenues internationally long before the United States FDA has approved your drug/device. I have seen clients find additional revenues in the more traditional European markets as well as the emerging Asian markets.

2. Partner up -- but make sure you don't give away the keys to the car. Depending on the strength of your vision and the potential of your product, carefully consider the terms of your out licenses and any associated rights of first offer or first refusal you give to your partners. This is a tightrope that can be tricky to walk -- the immediate fix of revenues versus the long term potential of your product -- and negotiating a partnership with the big boys will require some thorough introspection.

3. Nurture your champions. Once you have a partnership with big pharma/big device/VCs make sure you develop and nurture internal champions that understand your research/product and are willing to go to bat for you. Keep them in the loop. If it makes sense, get them involved in your advisory board or even your actual board. Let them carry the ball for you by making them feel like part of your team -- that means they need to know the play call!

4. Get your name out there. The only way you will find partners and capital is for them to know who you are. In complex fields such as biotech, where sometimes even your own employees don't entirely understand what you do (other than the lead scientists and/or founders, of course), you have to self promote. Go to the important trade fairs. Present where possible. Have a presence at forums/symposiums. Get involved in your local bio group. No one can invest in you or partner with you if they don't know who you are.

Come to think of it -- these bits of advice are equally valid to any start-up company, no matter the sector.

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Dividends and Preferences by Hank Heyming is licensed under a Creative Commons Attribution 3.0 United States License.