Tightly
define both your product/service offering
and the customer’s problem that it
solves
Rod Benson COO
(10/3/14)
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.
