Tightly define both your product/service offering
and the customer’s problem that it solves
Rod Benson COO
I spoke recently with Rod Benson of Imagen Biotech, which he founded in 2007, with the proposition of being a High Content Screening CRO for Pharma Industry. As you may recall, around this time HCS was the broadly seen as the new panacea for all the sector’s R&D ills, and many expected that it would fulfil the promise of restoring innovation and productivity to Big Pharma R&D (as had been thought for HTS previously!). So this seemed like a great idea.
Rod’s lesson for “Evidence Based Entrepreneurs” (lean start-up) is that a specific tight definition of the problem to be solved and solution to that problem (that you are offering), gives rise to clear and actionable interest, whereas broad multivariate offerings are deceptively well received (false positives), but give little real learning, and do not translate to sales.
Initial discussions with a number of Pharma’s, proposing a service offering based on a broad panel of many different assays within a HCS platform, gave lots of positive indications of interest. So a business plan was put together, a working bank overdraft of 50K obtained based on a letter of intent from AstraZeneca. Early on they obtained a grant, several small studies and two larger contracts which made the company look as if it was following a healthy start-up trajectory. This allowed them to write an upbeat business plan to raise 400K to upgrade their equipment. However, things started to “go off the rails” after this 400K investment in 2011. Sales leads failed to materialize and this continued to grow worse during 2012 resulting in a year on year decrease in turnover. Whilst some of this is likely due to the tough economic conditions and the patent cliff, Rod contends that although the broad service offering created early interest, it leads to a woolly sales message….
“What companies prefer to be told is how they can solve a specific problem [assuming this is so] and that you have a specific answer that will solve this for them”.
With a cash crisis looming at the end of 2012, they looked around to see what other opportunities where available with the now more developed technology base. Existing collaborative work, with The University of Manchester, showed good clear results in testing for cell death within glioblastoma stem cell cancer samples. And their own drug discovery program around phenotypic screening of natural product libraries was showing promise. After an initial aborted fundraising attempt and careful financial modelling of the personalized medicine idea, they concluded that development of a business around personalized chemotherapy had all the “upside” of a blockbuster drug but none of the downside of trying to get a new entity through first phase clinical trials. Armed with this they wrote a much more focussed plan based solely on personalized chemotherapy and Pivoted from a broad general service offering to a specific one focused on offering a chemosensitivity assay to the NHS and private hospital sector. With this and a new CEO, they were able to raise investment of ~£1M from a HNW syndicate, which in Rod’s words “happened only just in time”! Imagen Biotech is now developing this new service platform with a great deal of specific interest from potential customers.
Could this pivot have happened much earlier? Actually, not that much. Neither the screens themselves nor the enabling vision-hardware & software were sufficiently developed at the start, for this possibility to exit even perceptually.
His conclusion, to reiterate, is that a specific tight definition of the problem to be solved and solution to that problem (that you are offering), gives rise to clear and actionable interest, whereas broad multivariate offerings are deceptively well received (false positives), but give little real learning, and do not translate to sales.
Rod also observed that “Service businesses just don’t [normally] give enough uplift for VCs”.
This post is part of an occasional series exploring lessons for risk, time and cost reduction, and the application of Lean Start-up techniques and Evidence based Entrepreneurialism to Lifescience based start-up companies. Ideas that will be explored in the forthcoming The Science of Entrepreneurship event, and are practiced at Next Business Generation, Nottingham.