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Industry Snippets: Biotech Success Stories: Achieving Value From Your Company - Trailblazer Webinar Series
We listened into the webinar and compiled some notes below.
Arthur M. Krieg, MD - Chief Executive Officer - Checkmate Pharmaceuticals
Kiran Reddy, MD, MBA - Venture Partner - Clarus
Randy Milby - Chief Executive Officer - Hillstream BioPharm
When do you start strategizing investors?
- When starting the company. Must decide at the beginning which structure you would like… very difficult to change down the line. Did an LLC structure - can let you spin off program to differentiate partners while keeping core programs.
- Must choose which investors to choose… some can’t invest in LLC companies…etc
Setting up as a virtual company?
- Taking an advantage of incubators when beginning a company helps make things simpler if setting up a virtual company.
When companies have not thought through monetization strategy
- Must understand what is the 3-5 year financing plan and a value creation plan… most companies think forward only 1-2 years. Investors like to think past that. Entrepreneurs don’t think through who they are meeting with well enough and which investors they should be meeting with
- Should think through the investment community
In-licensing and out-licensing used as a form for monetization
- in-license helps take a drug and work with what you have or “Bolt on” and take it through clinical trials
- Out-licensing can be done to support the financing of the company to support other products in the company. can also be done for expertise of another company to take the product and bring it further. Mistake that has happened is "selling the company before selling the company”… means out licensing the products but you’ve done too many while expecting royalties down the line… however this causes less value in the company
- Out-licensing is more common on biotech side… need to look fully at what value you are giving up and making sure it is a non-core product. problem is that you may expect another company to take the product further, but it ends up on the shelf and nothing happens. (can do a contract where if nothing happens to a drug you Out-licensing you get it back). can be good to do multiple out license to multiple companies. For big pharma, out license tends not to happen much because the products tend to sit on the shelf. What tends to be successful is someone at the large pharma would take the product off the shelf and develop the asset.
Acquisition - finding the right potential candidate, due diligence, pitching the right way, finding the right valuation...
- Have a broad approach at engaging partners
- “Data has to sing” - product data needs to be good to influence the valuation.
- Caution against spending too much time with lower level BD people… engage with a high level company. “You can spin your wheels” on BD groups of companies and then when you get tot he person who decides to invest and that person may not have any interest in doing anything… you lose a lot of time
Single asset company - worth pursuing Out-licensing or an outright sale?
- If a single asset company, must be careful about partnering with a single asset company. "Finding the right partnerships in china may be a good geography to consider"
- Don’t send out a bunch of plans to VC’s without a plan. The VC’s need to speak with someone they know from the company… relationships
- Great time to go public because valuations are high
- Being public a lot more work for the CEO and management… don’t underestimate
- A lot of preparation to go into an IPO
- Need good news flow leading up to the IPO
- Should do a good mezzanine round 6 months before with good investors
- Need to be strategic with the data leading up to the IPO
- Downsides - cannot hide when you’re a public company… every hiccup creates a spotlight on you
- Virtual companies - create issues of people turning in their work on time… creates a less built team. if doing a virtual company, make sure you have a great team with high level of responsibility
- Raise more money than you think you need… don’t worry about dilution and get as much as you can from investors