Start-up Stories 1: Enhancing wellbeing with beautiful post breast-cancer lingerie

Creating beautiful post breast-cancer lingerie, with both support and style

Enhancing the wellbeing of women following breast cancer surgery.

Millie Lingerie

Sue Pringle, founder

Sitting in my office at BioCity, Nottingham, my attention is taken by Sue Pringle, as she passionately recounts her story from 2 years previous, of being reduced to tears in the fitting rooms of a major retailer, by disbelief, frustration and distress. Why?  Weeks before Sue had been discharged from hospital following breast cancer surgery,and her existing wardrobe was no longer suitable, given her changed breast shape and form, and the swelling and sensitive scar tissues that would remain for years to come. So the morning in question she'd bravely set out to restock her bras.

It occurred to me that this was no small undertaking, for someone who had endured so much, with months of pain and discomfort following breast surgery (she had been spared the chemo/radio therapy endured by many others), and now being given the all clear, boldly steps out to confront the reality of a changed body image and dented self-confidence.  Imagine the impact, when after hours of increasingly frustrated wandering, and many shops, she is finally confronted with the realisation that there are no bras available that supply both the specialist support & comfort required, and the style that helps rebuild her self-confidence, wellbeing and overall health!  Hence the tears as the reality of the situation struck!

”nobody seems to get it”,  

Sue recalls, as she blinks back a tear at the memory.

“It’s so frustrating when you really need to buy and you can’t find anything suitable!”

“I was so…well…. Angry, Nick”

There are post-surgical bras that work fine physically, as Sue went on to explain, but;

“I want to be able to stand in front of the mirror and

look like me, not Auntie Nora!”

So being the determined and dynamic lady that she is, Sue resolved to do something about it, by forming Millie Lingerie, and developing a specialist range of ‘beautiful post breast-cancer lingerie’.

That was almost a year ago, when I was interviewing Sue for entry into the Next Business Generation accelerator programme.  There started a roller-coaster ride, as founder and coach, in which we’ve learnt a great deal!  I’ve come to see post-surgical bras as a ‘soft medical device’ of considerable complexity, and to really appreciate the impact on self-confidence and wellbeing of stylish lingerie (or rather its lack!).  Sue has worked tirelessly, applying lean start-up approaches to confirm the need and develop a robust business model.  Interviewing and competitor testing, with many women in a similar position, and confirming that most feel like her, and have had similar experiences.  Seventy percent of over 100 women surveyed confirmed that they were indeed dissatisfied with current products, and a lot were keen to know when the new products would be available!

“You expect me to wear that”

Laura, (during a shopping trip to test existing products).

Today Millie has an initial design, and Sue is ready to start development of the first prototype. Next, will be “scaling up”, by creating the many different sizes that a single product range needs, and manufacturing process development.  Then finally first product launch.  To get there she of course needs funding, and for this next step to obtain that first prototype, is inviting the community of those touched by, or who care about, breast cancer, to contribute through a Kickstarter crowdfunding campaign.  The rewards include cloth bags and tee-shirts carrying Millie’s adopted, and amazingly appropriate, proverb (31:25);

“She is clothed in strength and dignity,

and laughs without fear of the future”

As Sue say’s,

“Imagine in time, thousands of women wearing gorgeous Millie bras, feeling more confident & comfortable about their clothed bodies, with a smile on their face.

That would be something, wouldn’t it?”

It’s been my pleasure and privilege to act as Sue’s coach on this journey so far, and I am confident that this great future will arrive.  I invite you to have a look at the Kickstarter campaign page, where Sue’s video explains far better than I, and contribute as you wish.  I have, and intend to stay around to help Sue navigate the business to success.

The campaign launches 28^th May, and you can pledge support in advance here.

Nick Pope

This post is part of an occasional series exploring the founders journeys of Lifescience based / Medical start-up companies.  Including participants / alumni of the Next Business Generation programme , Nottingham,UK.

Lessons for “Lean Start-up” / “Evidence based Entrepreneurs” in Lifesciences

Tightly define both your product/service offering

 and the customer’s problem that it solves

Imagen Biotech

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.

CrowdCure: Combining Philanthropy with Upside Potential

Is CrowdCure the answer to the tricky dilemma of true crowdfunding for biotech start-ups & drug discovery?   To find out I spoke with Charles Groome, founder of the soon to be launched CrowdCure.

Charles is a Neuroscience graduate of UCL, who started his career trading pharmaceutical stocks at financial services firm Knight Capital, and then left to raise a $25 million venture capital fund to invest in early-stage biotech companies focused on longevity. Despite raising commitments for a third of this sum, he failed to secure sufficient funds overall. He also worked to raise seed capital for one of the companies he planned to eventually back, and so encountered most of the life science VCs on both sides of the Atlantic. His conclusion that VC risk and time profiles are inappropriate for drug discovery, is shared by many of us (e.g. see Funds & Fundability).  The success of Kickstarter et al drew his attention, indicating the success of the crowdfunding approach to specific projects, with its philanthropic nature and ability to pool small sums of money from large numbers of people.

He’s not alone in that of course, as many have considered this approach.  The issue is generally how to marry long timescales & high risk with investment to obtain a return.  CrowdCure’s solution is first to tap into philanthropy in the crowd, with the spice of a potential upside if a particular project is eventually successful.  And secondly, to recognise any success as early as possible, by sharing collaborative revenues, as well as acquisition proceeds.

How does it work?  CrowdCure establishes a “Special Purpose Vehicle” company for each project. 

As part of a “Research Financing Agreement” the SPV exclusively licenses Project IP from the Biotech Company seeking funding, and then sub-licenses it back to the Company, who continue to control asset development. All future Project revenue streams from licensing are transferred to the SPV. The SPV has two lines of shares; voting and non-voting. The voting shares are held in trust and the non-voting shares are distributed as “Research Income Rights”^TM (RIR) to the crowdfunders (via the online portal) and to the Biotech company. This is done in line with a third-party attained valuation.

CrowdCure Ltd receives a commission as a % of funds raised, and “Research Drivers LLP”, the SPV trustee shareholder and administration entity (which licenses the whole structure), receives a small % of any future SPV income pre-distribution. CrowdCure Ltd is an Appointed Representative of an FCA Authorised Firm.

If the biopharma asset develops to the point of commercial value, Big Pharma can either sub-license it from the SPV or acquire the SPV outright.

A SPV approach was used a lot in the early days of US biotech, and seems similar to recent approaches taken by Versant and Atlas Ventures (Fierce Biotech articles).  Charles is an advocate, pointing out the benefit for a biotech being able to raise separate funds for each of a portfolio of single projects, and subsequently selling on the projects when new skill sets are needed.  Whilst recognising that the crowd are more interested in backing Projects with a social cause (e.g. cure Alzheimer's) than investing in risky and obscurely named Biotech companies.  Becoming a “Cure Pioneer” recognises their contribution, and motivates along with the chance for upside.  The RIR approach seems to be novel though.

So what are they looking for?  Its early stage pharmaceutical opportunities, pre-clinical, with a validated/proven target being required, and hit discovery welcomed.  They will also check it out thoroughly, conducting VC’esque Due Diligence on the science & data, requiring a sound project plan & budget, and checking out the team & company background, IP etc.  It also has to fit with their portfolio, which will diversify, rarely addressing already invested areas.

CrowdCure sees itself as a global portal “Crowdfunding for Life”, acting as a “Branded Venture Broker”, enabling sophisticated investors, High Net Worths and “qualified investors” (anyone who can answer six questions on their site) to all contribute.  They are planning to be the first UK & USA operating portal.  Appropriate regulatory requirements are in place in UK, and nearing completion in USA.  With launch scheduled for late July, these are exciting times.

They have big plans – by year 5, to raise over £100m and progress at least one project into clinical trials. 

So for the Biotech, an alternative approach to get that early capital so elusive at present, and

for VCs, perhaps a source of future de-risked opportunities, risk-sharing or co-investment?

For the investor, this is high risk investing, and Charles is keen to stress that.  None the less, if you want to do some good in the world, and would appreciate a possible upside as well, this could be worth a look.  As Charles points out, you too can become a “Cure Pioneer”…….

NHS Open for Business ?

East Midlands AHSN

There will soon be a new "kid on the Block", with the aim of opening the NHS for business!

I thought readers may well be interested to hear of these new organisation that will make the NHS much more user friendly for business - be it research, trials, or marketing!

So here’s a “heads up” on the forthcoming launch of one - the East Midlands AHSN.

EMAHSN’s vision is “The transformation of patient access, experience and outcomes...through innovation and enterprise working” (www.emahsn.ac.uk provides a general overview). Working with Industry, and facilitating such, is central to their approach.  They aim to be a one stop shop for industry interaction with the NHS in EM, for all purposes: be that adoption of new products, user testing / product development, clinical trials, or clinical research; or indeed assisting NHS derived innovations to be commercialised and the promotion of clinical needs  to industry to expedite the development of new interventions.  The organisation will become ‘live’ April 2013.

A specialist industry support unit will facilitate the one-stop-shop for industry, assisted by a web-portal, and a small seed funding activity will help new innovative ideas get started.  A series of events to highlight the NHS’ clinical “Priority Needs” and enabling networking between industry and clinicians is being planned, and regular Networking events will follow, as will attendance at Biotech/Pharma/MedTech sector events.

personally, I'm proud to be involvement as the Commercial Adviser for this industry facing component, and as such I would be delighted to provide more information on request ? 

Nick

nickpope@biospring.co.uk

Funding for Innovative Drug Discovery: UK 2012

Networked Pharma – Finance (NWkRx F8)

 Networked Pharma’s Workshop

Funds and Fundability, 28^th June 2012

Executive Summary

Networked Pharma’s “Funds and Fundability” workshop examined the evolving funding ecosystem (equity, collaboration & grant) and the future role of open innovation (OI) for early stage drug discovery.

Key opinion leaders were joined by 60 participants from diverse stakeholder backgrounds, for presentations and facilitated discussions (report available on request).  Workshop website.

Key Findings

A.  Investor consensus surprisingly positive for biotech/pharma sector.

o There are hidden / ‘below the radar’ fundraisings occurring,

o Although the old investment model is dead in UK, and the public markets closed, there is now a new model of a single large investment sufficient to go all the way to achieve an exit by trade sale.

o Funds are emerging with “Patient” Capital (i.e. they are prepared to wait long enough for value creation to occur).  However, more are needed.

B.   UK is good at producing lean companies with 1 or 2 products that are sold-off too soon for early exit and financial return:

“You Brits are very good a creating ‘Veal’ ready for slaughter”

Participant quoting a USA colleague                           

Rather than being prepared to wait and build a self-sufficient multi-product company and so realise the full potential value. 

“We need the fodder to build ‘Beef’”     Serial biotech entrepreneur

More Patient capital is needed for this and probably the public markets.

“Are we prepared to be patient?”   VC

Sector needs

1.      A new / “better” way to capture information on fundraisings.  Many current investments are “under the radar” as different types of investor are now involved, and there is no need for publicity. This will enable us all to know what is actually happening and to recognise successes.

2.      A better way to recognise our UK pharma/biotech company successes, and new measures to assist with this (not just financial).

3.      Support for entrepreneurs to decide which of the funding sources to approach: i.e. Fill the information gap between funders (of all types including government/research bodies) and those looking for funding

1. Which of the three “silos” of equity investor’s to approach, and who to contact therein? The three silos rarely interact: 1. VC/CVC, 2. Angels/regional funds, & 3. Public-listed funds.
2. Which grant funding and other non-equity sources are applicable to given types/stages of projects/companies, and who to contact?

4.      More equity funds that straddle the three silos.

5.      The creation of some biotech/pharma Sector Champions (“Beef”) in UK, and more investors prepared to be “patient” (prepared to wait 10+ years to develop full value and achieve such champions).

6.      Engagement of the public markets with biotech.

7.      More specific information and better information sources on OI & Crowdsourcing within Drug discovery, and where entrepreneurs can go for advice.

8.      Support for entrepreneurs to establish effective collaborative relationships, utilising open innovation /crowdsourcing, collaborative projects and (open) networks.

Action

NetworkedPharma is now establishing collaborative networks to address the above, and welcomes approaches from those interested in the possibility of working together for the good of the sector.  As a not-for-profit organisation we are also interested in discussions with potential patrons / sponsors / supporters.                       

Our next workshop on Open Innovation& Crowd Sourcing will be in April 2013.

BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma Partnership; Building Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in mid 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:

Twitter @NWkPharma,      #NWkRx

The Changing Nature of investing in early Pharma / Biotech: Poll Result

Networked Pharma – Finance (NWkRx F7)

I ran the Linked In Poll below as a prelude to Thursday's Funds & Fundability workshop in London http://www.networkedpharma.com/funding,:

According to those that responded Open Innovation and Crowd-funding will have greatest impact on drug discovery,more than even Corporate VC investment, and perhaps most interesting VCs where seen as the least significant!

I await with anticipation the outcomes form the workshop itself! 

NB there will be some register on the day places available http://www.networkedpharma.com/funding

BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma Partnership; Building Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:

Twitter @NWkPharma,      #NWkRx

Future View of VC investing in early Pharma / Biotech: The CVC Perspective

Networked Pharma – Finance (NWkRx F6)

 I recently spoke with one of the more active Corporate VCs (CVC) regarding the existence 

of the funding gap in early pharma discovery, the reasons for it, and what the future holds.

There is a funding gap in early drug discovery - but not an insurmountable one!

Previously the investment model in Europe for general VCs assumed funding to a proof of principle and then floatation on a public market or trade sale to Pharma company.  However as the public markets do not understand biotech (nor do generalist VCs) share prices are highly volatile and single poor trial results are catastrophic for share prices.  Hence appetite for biotechs became poor in early 2000’s, and so VCs could see no exit that way.  Also Big Pharma have stringent requirements for in licensing and often VCs were not able (insufficient funds) or unwilling (required cost of capital by their investors necessitates shorter timescales) to continue funding sufficiently to achieve the proof needed by Pharma.

Part of the problem was “naive money” ie from general VC’s inexperienced in the sector.  There is now a gap in early funding as the general VCs have pulled out of the sector, although some still have portfolio company legacies.

Being a “Biotech VC is completely different from other VCs, including Tech.”

So what of the specialist funds?  There are (in the interviewees view) a small group of “tier one” specialist biotech VCs that are, or will be, active:

·       VC:

Abbingworth, Imperial Innovations, Index, MVM, Phase4ventures (ex.Nomura), Sofinova, SVLS (Shroders).

·      Corporate VC (CVC) – those that are wholly or largely independent from Pharma HQ influence:

Lundbeck, Novartis, Novo, Pfizer, SR One.

These generally have longer timescales and larger pots of money for investment.  However at present most of the Biotech VC have either run out of money, or are at 5yr+ stage of 10 year fund and so have to keep funds for follow-on investment.  So few are investing (e.g. Sofinova & SVLS who both have ~7 years left on their funds, and Imperial with its longer term approach).  The rest are actively fundraising early stage funds.  Hence the gap is [at least in part] temporary, awaiting fundraisings. The CVCs are actively investing and moving to earlier stage opportunities.

Another issue has been that companies spin-out too soon, with small investment from small funds, Angels etc and then have to find more money to develop further.  The incumbent investors have insufficient funds and as the technology is still not sufficiently demonstrated, so

1.      Larger VCs are not interested or only so with terms which dilute the existing shareholders so much that they will not agree,

2.      Pharma is not yet interested in licensing, or a very poor set of terms is achieved, and/or

3.      Company has to switch to a much lower-value service model to survive.

None of which is a desirable situation for anyone.

The CVC would prefer companies to be incubated longer in universities “until they are really ready”, perhaps with a £50-100k “investment” from a CVC to enable some critical proof of concept work (with a gentlemen’s agreement for first chance to discuss next steps assuming success), and then spin out with major investment by party(ies) with deep enough pockets to see it through to exit (trade sale).

So what are they looking to invest in?   Something really new, which may be a service business, but more likely a game changing innovation that has potential to satisfy unmet medical need, is likely a new mode of action, and most certainly is not only approvable but also reimbursable!  The latter needs a step change in clinical outcomes.  So no longer improvements on existing drugs e.g. new delivery methods or me-toos, as Big Pharma will do this themselves.  Regarding reprofiling: there is still a short window of opportunity, but eventually Big Pharma will be doing this. 

What Big Pharma ultimately want to acquire is the game changing new drug, and so that is what the VCs want to invest in.  This will be high value, with a high hurdle rate, necessitating large investment.  The VC has to consider all risk, not just the technological (R&D) risk that is mainly considered- including ability to exit, and shareholder dynamics risk (sufficient funds, dilution etc).  Hence there will be fewer investments, of great amounts, with funds being more focussed. 

Imperial, MVM and SR One are all speaking at Networked Pharma’s Funds & Fundability workshop on June 28^th in London http://www.networkedpharma.com/funding, and will share the panel discussion with serial entrepreneurs Andy Richards and Julian Gilbert.

BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma Partnership; Building Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:

Twitter @NWkPharma,      #NWkRx

Open Innovation in early Pharma: #2

Networked Pharma – Finance (NWkRx F5)

I recently spoke with Harry Wilson of Innocentive’s UK office about Open Innovation & Crowdsourcing in Pharma discovery.

Innocentive originally spun out from Lilly, and their UK office was obtained by acquiring Omnicomplete (itself a spinout of LBS).  They operate as a platform where “seekers” can post their R&D “Challenges”, and solvers post their responses. The seeker often stays anonymous and the responses are held confidentially. Solvers are selected on a basis of submitted plans, with the financial reward only being paid out if solvers meet the pre-defined criteria. In this way, seekers only pay for results, not research time.

Most of their work so far has been pharmaceutical, although they are now diversifying.  Seekers are companies, charities, and other organisation. 

There are three levels of challenge available to a seeker (with increasing price for the service), Brainstorm (self-service using their platform), Premium (which involves their experts) and a Grand Challenge which is “transformative” in the world and is phased with intermediate challenges. The latter involves therapy area experts, and is typified by the recently successfully completed $1m Prize4Life which sought to identify a biomarker for ALS (needed to reduce timescale and costs of clinical trials).  See their case study blog.

Recent developments are;

• Combining Crowsourcing with Crowdfunding, via the peer-to-peer philanthropy marketplace GlobalGiving, and the Rockefeller Foundation, to crowdsource solutions to problems facing vulnerable communities. Blog.
• Discussing with VCs the possibility of combining activities in “Prize Venturing”

Although neither of these are specifically pharmaceutical, they are interesting as new approaches worth considering.

Siobhan Gibney Gomis, Senior Director of Operations Grand Challenges, and Deputy Head of EMEA, InnoCentive, will be attending the Networked Pharma Funds & Fundability workshop on 28^th June in London http://www.networkedpharma.com/funding.

BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma Partnership; Building Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:

Twitter @NWkPharma,      #NWkRx

Open Innovation in early Pharma: #1

Networked Pharma – Finance (NWkRx F4)

I recently spoke with Jordi Rafols of Innoget, regarding open innovation and the Innoget platform. We began by Jordi  distinguished OI from crowdsourcing as follows:

Crowdsourcing:

• Operates on a shared responses basis, with no confidentiality nor contractual agreements. Individuals post responses to a request and all can see all responses.
• Good for ideas generation, consumer insights, marketing innovation.

Open innovation:

• Operates on confidential response basis. Does not pool responses.

Innoget’s website http://www.innoget.com/ acts as a portal for open innovation, where technology requests or technology offerings can be posted, anonymously if desired, and responses are then made via the website.

Jordi will elaborate further on this approach and its application to pharma discovery during Networked Pharma’s Networked Pharma Funds & Fundability workshop at Holiday Inn, Regents Park, London, on 28^th June.

The workshop will examine who is funding, what they are funding and what makes a fundable investment, as well as the rise of open innovation & crowdsourcing. Jordi will be joined by speakers from biotech, VC, CVC, Pharma, CROs, BBSRC, the Wellcome Trust, TSB/KTN and others. For more information and to register see www.networkedpharma.com/funding.

BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma Partnership; Building Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:

Twitter @NWkPharma,      #NWkRx

The Changing Nature of investing in early Pharma / Biotech: Serial Entrepreneurs' Perspective

Networked Pharma – Finance (NWkRx F3)

I spoke with Andy Richards earlier today (15^th June 2012) regarding the perceived funding gap for drug discovery.

Andy’s view is that although there is a gap, it is not as large as generally perceived.  There is much more money available, people interested in investing, and [equity] funding going on, than is generally thought.  It’s just that it is coming from alternative (non-VC) sources which are not recorded in the generally used statistics, such as High Net Worth individuals, CVCs, sovereign wealth funds and pension funds.

Also such investment is being used to grow assets/products for selling off, rather than to build big companies (a point also made by Julian Gilbert in a recent discussion). Consequently there is little infrastructure building or PR activities undertaken, and so such companies and investment deals are much less visible than in previous times!

Both Andy and Julian will elaborate on their perspectives during the Networked Pharma Funds & Fundability workshop at Holiday Inn, Regents Park, London, on 28^th June.

The workshop will examine who is funding, what they are funding and what makes a fundable investment, as well as the rise of open innovation & crowdsourcing. Andy & Julian will be joined by speakers from VC and CVC, Pharma, CROs, BBSRC, the Wellcome Trust, TSB/KTN and others. For more information and to register see www.networkedpharma.com/funding.

BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma Partnership; Building Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:

Twitter @NWkPharma,      #NWkR
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Future View of VC investing in early Pharma / Biotech: Imperial Innovations

Networked Pharma – Finance (NWkRx F2)

I recently spoke with Nigel Pitchford,  Managing Director of Healthcare, for Imperial Innovations (www.imperialinnovations.co.uk), one of a new breed of early stage Biotech VC investors, regarding the future funding model and open innovation for Pharma innovation / Biotech start-ups.  Before joining Imperial in 2011, Nigel was a traditional venture capitalist in the biotech space, at 3i Cambridge and latterly DFJ Esprit.

Below is a summary of our discussion.  The take-home messages are;

• Early stage funding model for biotech’s needs to change
• “Patient Capital” (as in prepared to wait) is necessary for successful “biotech” investment.
• Tax incentives for investors and more translational funding are required.
• A new approach to translational project funding in universities is needed, that avoids excessive overheads or the need to spin-out.
• Open innovation is generally a good idea, and would be greatly facilitated by a new form of marketing exclusivity for first exploiters of products arising from such initiatives.

Funding models

Nigel agreed that the early funding model [for biotechs] needs to change. Without access to public markets VCs are left with the dilemma of funding biotech companies for longer and with ever increasing amounts of capital, hopefully towards a trade sale exit. This continued funding model is directly at odds with what most of their Limited Partners want to see – creating a problem for VCs themselves when it comes to both fundraising, and then later in deploying that capital.  

There is a fundamental mismatch, of both timescales and quantity of money needed, between the needs of early stage biotech’s to discover and develop drugs and so build a company to a reasonable business/valuation; and the requirements of  the VC’s Limited Partners. Hence once new companies were established, insufficient funds were available for follow-on funding rounds (resulting in dilution or fire-sales) and exit was required too soon, so that decent companies with good critical mass could not be built and “the buyers got a good deal”! 

One reason why Nigel joined Imperial Innovations, is it is an evergreen fund with

“Patient Capital” (i.e. willing to wait)

They invest off of their own balance sheet, and have investors that are patient (willing to wait), so that sufficient time is available to develop the drugs, and sufficient funds available for later funding rounds, allowing a solid company to be grown, and “with size comes value”.

Similarly, the Major Pharma Corporate VCs (“CVC”), who are funded by corporate parents, and invest with alignment with their strategic imperatives, have both

“Patient & Plentiful Capital”

And so are more open to funding early stage innovation.

Regarding future funding of early stage innovation, Nigel made several observations;

• Further tax incentives for early-stage investors would assist with bringing vital start-up capital to fledgling biotech companies.
• More translational funding is required for the gap between the scientific discovery and sufficient proof of concept for either spin-out or licensing to take place.  Previously there has been tendency to spin-out too soon, but trend is now to keep in-house (university etc) longer, which is good thing.
• However, if VC or CVC wants to fund some translational or earlier work, it costs more than twice what a research council would pay, because of FEC (full economic costing) and/or start-up costs for spin-out including legal fees etc.  [This is nonsensical, given the risk profile and dearth of risk capital, as money is wasted that could have been used for another opportunity].  A new approach to project funding with a sensible [equitable] costing structure is needed.

Open Innovation

Nigel believes open innovation to be a good idea, not competitive to VCs, and that the sharing of failures would be very beneficial - e.g. avoiding a company repeating another’s mistake (with a drug etc) [or showing up a profiling opportunity].

However, IPR ownership is of course key.  Or rather, it’s the ability to exploit exclusively that is necessary (to get ROI).  Traditionally this is via ownership of IPR, but increasingly there are now mechanisms for marketing exclusivity other than IPR ownership - namely Patent term extension and orphan drug legislations which provide for marketing exclusivity.  Nigel’s suggestion is for the government to introduce a form of market exclusivity for products / services arising from open innovation [where IP ownership is complex or unclear, or IPR absent] – perhaps a form of first to exploit protection.

BioSpring Ltd is a member of Networked Pharma Partnership, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

Networked Pharma Partnership; Building Innovative Networks in Drug Discovery & Development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

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Twitter @NWkPharma,      #NWkRx

Future View of VC investing in Pharma / Biotech Innovation: MVM Life Science Partners LLP

Networked Pharma – Finance (NWkRx F1)

I recently spoke with Hugo Harrod, partner of MVM Life Science Partners LLP (www.mvmlifescience.com), one of the established biotech VC investors, about the current state of investing into and sourcing innovation / novel drugs within the Pharma / Biotech sector.

Below is a summary of our discussion.  The take-home messages are;

• Future demand side (market) fundamentals for therapies are strong.
• Successful VCs need to invest in non-traditional approaches to drive returns. These will encompass personalised medicines, novel biologics, medical devices, healthcare IT and creatively de-risked pharma programmes.
• Replicating big pharma drug discovery is a difficult model for venture capital.
• There is a shrinking pool of traditional venture capital but limited funding is also available from other sources. Some of these sources are less focused on financial return but VCs bring the discipline to grow value.

Future view for Pharma /Biotech Sector?

In general, the future for the industry is positive because of the need to innovate to improve the efficiency of healthcare;

• Shrinking healthcare resources in the West will force adoption of innovative cost-saving technologies (eg Cheetah Medical’s fluid management technology and Accuvein’s vein location device).
• The rise of the emerging markets is particularly relevant to biotech. This is because people throughout the world are increasingly suffering from Western diseases and demand the same products. These products are protected by global (and widely upheld) IP rights. Suddenly biotech is looking at markets of 3bn people versus 600m in the traditional USA + Europe+ Japan Pharma geographic reach.  

What is the future of VC Investment in biotech?

The old model of funding novel targets from discovery through to clinical proof of principle (PoP, phase 2a) has driven mixed returns for VCs. In retrospect this is not surprising given the success rate in drug development over the last few years. In part this is because the easier to treat diseases have now been addressed and there is generic competition, so that we are left with more challenging indications e.g. cancer, Alzheimer’s.

So what is the future for VCs that address this sector?  The sector will be slimmed down, with survivors adapted to survive; looking at non-traditional creative approaches in which pharma is less strong (eg BioVex’s oncolytic viruses). We are going to see innovation come from some unlikely sources. For example, medical device based approaches are appearing in previous bastions of pharmaceutical therapy such as renal denervation in hypertension and deep brain stimulation in Parkinson’s. 

Innovation / discovery Funding in the Future

The supply of venture capital is shrinking, and Big Pharma is downsizing, outsourcing innovation, and reducing discovery funding. 

So, where is all this drug innovation and the funding for it going to come from?

Some of the slack will be picked up by non-traditional ventures investors, such as corporate VCs and disease-focused charities. Governments have had a poor track record of stimulating discovery but they could do a better job through tax incentives and other tools that incentivize investors.

What is clear is that product demand in emerging markets and cost-cutting imperatives in established ones will create terrific opportunities for new technology. Those VCs that survive will thrive in the new world order.

                                                                                                 

Networked Pharma; Building Innovative Networks in Drug Discovery & Development

BioSpring Ltd is a member of Networked Pharma, a not for profit organisation dedicated to assisting development of a new paradigm for drug discover & development

A series of workshops are being run during 2012, leading to an international congress in early 2013, which will bring together all stake-holders (Corporate Pharmas, SMEs, CROs, Universities, VCs, CVCs, Research Councils, Charities, Regulators & Government bodies etc.) to formulate the new business model(s) for the future success of the industry.

Follow us:

Twitter @NWkPharma,      #NWkRx