Selling science to potential investors and partners
Start-ups and biotechs often need the support of outside investors to take their innovations to the next level. So what are the considerations when preparing a presentation for these important stakeholders?
The model of pharmaceutical development has shifted rapidly, from discovery and development by in-house, heavyweight R&D departments, to today’s world where big pharma buys assets or companies, or partners with smaller start-ups – often in specialist, orphan or new therapy areas – pairing focused scientific expertise with development and commercial knowhow.
So, how does a start-up land that deal and realise the reward for years of high-risk effort?
Aside from the obvious challenges of discovery and early development of assets, and no small amount of good luck in picking a winner, such companies face the financial challenges of gaining adequate investment to fund each stage of research and development, and of securing an eventual deal to partner with, or sell their asset to, big pharma. Therefore a significant amount of time and effort is invested in trying to interest investors and potential partners.
On the flip side, investors in start-ups have a significant stake in the success of an asset. They have their own views on how the asset should be developed, shaped by varying levels of knowledge and often non-specialist understanding of the science, medicine and global healthcare systems. These investors need to have confidence in the recommendations and development decisions taken by those spending the money they have invested.
Similarly, pharma business development executives know what they are looking for. They have lived through the commercial realities of success and failure with brands; the challenges of creating differentiation, demonstrating value and changing clinical behaviour.
“Stakeholders need to hear a simple, compelling story; a succinct delivery of the science alongside an objective view of unmet need and realistic financial potential”
Both of these stakeholders need to hear a simple, compelling story; a succinct delivery of the science alongside an objective view of unmet need and realistic financial potential. This can be difficult to do when working with assets that are yet to pass proof of concept. Start-ups and biotechs rightly have passion and excitement for their asset, fuelled by scientific excellence and years of personal commitment. However, it is essential to back this enthusiasm with commercial facts and figures.
While a strong foundation of scientific expertise and data exists, typically, start-ups do not have capacity for large-scale market landscaping studies. However, the good news is that while these will be required at some point in the future, much can be gleaned from available data and conversations with the right clinical and payer experts to form credible hypotheses on which to base commercial models.
Developing the commercial argument
Analysis needs to go beyond the headlines of morbidity, mortality and $n billion costs of a disease, and broad approximations of potential market share and pricing. A commercial argument needs to answer five simple, yet broad, questions:
• What are the clinical and economic burdens of the disease?
• Where are the unmet needs?
• What is the market potential for addressing that unmet need?
• How does the asset bring value to patients, clinicians and payers to provide health and economic gains?
• What will it take to succeed in achieving access and uptake?
Depending on the disease area, much can be found in literature and from clinical and payer experts in key markets to form strong hypotheses that can be validated with a wider audience if necessary. The analysis provides answers and carefully considered assumptions relating to the key questions that lie beneath the headlines:
• What is the size of the market at a macro level?
• What are the relevant types of patient and what are the needs of different stakeholders in managing them?
• How are patients managed today – and how is this likely to have changed by the time the asset comes to market?
• What are the potential scenarios of that future view of the world?
• How will the competitive environment evolve? Genericisation of current standards? What is in development to provide innovation to set new standards?
• Where will the unmet need be in, typically, 10 years?
• How will value be judged in the disease area in the future?
• What are the treatment situations where the asset could play a part, and which of those are the most attractive opportunities?
• What are the drivers and barriers that shape these opportunities?
• Most importantly, where can the asset win by meeting needs better than what is/ will be available, through differentiation and/or changing the treatment paradigm?
• What analogues are there that might provide a benchmark for confidence in assumptions?
• What will be needed to differentiate clinically?
• What will it take to demonstrate the asset’s value in the future market so that people will pay for it?
• What will it take to effect change in market behaviour to drive uptake once the asset reaches the market?
Pulling the analysis together and presenting it in a couple of simple models is the most effective way to help investors quickly grasp the commercial opportunity of the asset, with the detail available if needed, to back up any statements made. These models should demonstrate a range of potential financial opportunities, depending on different assumptions on how the market may evolve, and how the asset may perform.
“If too much information is included, the key points that support the commercial argument may be lost”
Finally, careful selection of the most critical scientific information from all the available data, papers and slides is needed to support the enthusiastic scientific presentation. If too much information is included, the key points that support the commercial argument may be lost.
Packaging the passion carrying the scientific concept with a straightforward, but robust, commercial opportunity assessment enables start-ups to deliver powerful presentations, which will help them secure the investment and eventual partnership or sale of their asset that they desire.
About the author:
Steve Mather is director, European operations, at Cello Health Consulting (formerly The MSI Consultancy). For further information contact firstname.lastname@example.org or visit www.cellohealthconsulting.com
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