By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL
Peter Young began planning his presentation for this year’s BIO International Convention for many months before he submitted his session proposal back in October 2014. Young, an executive-in-residence with AM Pappas & Associates, was hoping to serve as a 2015 BIO change agents while also creating a session which included a number of academics. His upcoming session (Inventing Your Own Hub: Evolving Institutional Models for Translational Medicine, June 16, 3:30 PM – 4:45 PM, Room 105AB) includes the chief innovation officer from the University of Miami, as well as the director of early translational research from the University of California, San Francisco. A 35-year veteran of the biopharmaceutical industry, Young has seen his share of missteps by academics aspiring to become entrepreneurs and has some advice on partnering with VCs.
Life Science Leader (LSL): What are some of the areas often overlooked by academics turned entrepreneurs?
Peter Young (PY): Assuming it’s a venture-stage company that’s ready to move into more active development, I think the main areas are all going to be under the development umbrella where the academic lacks prior experience. This is typically a mix of the preclinical work that needs to be completed for an IND (investigational new drug application), so you can take it to the clinic. A key element that tends to be neglected by an academic scientist is the pharmaceutical development, or the physical product development, what used to be called CMC (chemistry, manufacturing, and controls) of the product. There’s a significant regulatory perspective that understands how the candidate technology is going to be viewed, and the criteria that is going to have to be satisfied to move forward in a regulatory environment with the FDA. Then there’s a clinical piece, which is, for a novel invention, typically going to have to involve a deep understanding of the disease or medical use in question. One of the big questions — and critical steps — is how to demonstrate the utility of the product in a clinical research setting, where you can design tractable clinical studies that can produce viable data in a viable time frame. A general underlying principle in the life science arena is: the answer you get is a function of the question you ask. If you didn’t ask the question the right way, you yield an answer that is unhelpful, and sometimes you wasted the time and resources to do the study. That’s as critical for answering a clinical question as it is for analytical methods and lab assays.
LSL: What are your top tips for inventors and VCs on how to go about partnering?
PY: Chemistry matters. You need to be asking, ‘Can I work with these people? Can I get a sense of how they handled it with other portfolio companies when things got tough, when there were problems?’ I think you should inform yourself about the background parameters for the investments they’re making. Are they making it early in their fund’s life cycle? Are they late? The chances are that you’re hoping the VC you’re talking to can lead or colead your raise, or help anchor and build your book. Usually, if you’re looking for VC money, you’re knocking on quite a few doors, and the question also becomes how the investment syndicate is going to come together. Is the individual VC that you’re talking to a firm that socializes well and keeps good company in terms of other syndicate members that they can not only collaborate with, but perhaps also attract? The quality of the syndicate, in many respects, is as important as the quality of the individual VC. They reflect one another. If you’re starting a company, you really need the guidance of experienced development and regulatory people. In some cases, the message is: ‘You’re the inventor, but honestly, you’re not the right profile to be the CEO.’ You may have started this company, and it may be your technology, but you’re not the right person to be the CEO because your experience doesn’t extend across the downstream competencies that will drive your progress. Oftentimes, it’s therefore a function of the management talent that needs to be brought in. And is the inventor receptive to that? Frequently, that issue leads to you questioning if they have a good sense of the development plan. It’s common that they may be headed in the right general direction, but that their grasp of the underlying nuances and challenges in the future development plan is inadequate. For example, they may have minimized the issues they’ll have around an economic manufacturing process or one that can be transposed into a regulatory setting. It’s not uncommon, when you have something like a platform orientation, for the fund-raising company to say, ‘We’d like to apply this to some really huge, unmet medical need,’ but one for which the burden of future development is very high. For example, late-stage clinical trials in a field like obesity, where there is still very high risk. There might be a narrower, more-focused indication using the same technology where you could hook the platform to that targets the technology more cost effectively and allows you to get it into the clinic, build value, and create some add-on value for the larger indications and target needs they’re interested in.
LSL: What misconception gets in the way of working toward a mutual benefit outcome?
PY: “One common misconception is that the venture firm’s shared value perspective on its investment is unjustified. There’s a tendency for the inventor to think the VCs are just meddling and micromanaging and view them as an intrusion. ‘Just give me the money, get out of my way, and let me do what I need to do!’ But, we are seeing an increasing concentration of life sciences venture capital in relatively few firms in the biotech hubs around the country. Those firms are in a position to be very selective when it comes to picking the technologies they want. They have become successful because they are very smart, knowledgeable, and disciplined. If you want them to pick your technology or your company, you have to embrace the possibility that what they’re bringing to the table is an ability to help you identify the forward path your technology needs to take and help you stay on that path.
Watch for part four of this four-part series of interviews with Young — “What Biopharma Trends Should Pharma Execs Be Paying Attention To?”