Step by step instructions to begin a biotechnology organization .


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How to start a biotechnology company. January 20, 2005 UCLA. Why start a biotechnology company?. Technological innovation can create competitive advantage (when properly protected). What can we do better, smarter, faster, cheaper?
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How to begin a biotechnology organization January 20, 2005 UCLA

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Why begin a biotechnology organization? Mechanical development can make upper hand (when legitimately ensured). What would we be able to improve, more astute, speedier, less expensive? In the beginning of biotechnology, the potential was thought to be in medication advancement That protein-medications would have bring down danger predominant bioavailability high viability Technology Push or Market Pull?

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A brief history of biotechnology Recombinant DNA approachs initially imagined in late 70\'s and consistently refined Courts decide that DNA is patentable Scalable Flexible Enabling What would it be advisable for us to make?

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What is a biotechnology organization? By and large alludes to any organization utilizing recombinant DNA innovation AND Any little, new business seeking after medication disclosure

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What components are required? Showcase Niche or Need Entrepreneur Technology Capital

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Market specialty or need Most biotechnology organizations concentrate on pharmaceutical disclosure Why? Low volume, high esteem Relatively low plant, property and hardware prerequisites Other applications incorporate horticulture, modern

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What is a business person? Daring individuals Pursue opportunity without respect to the assets they as of now control Have a dream of progress View change as an open door View themselves as operators of progress Can flourish in the right environment

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Technology Licensing innovation Bayh-Dole Act Protecting innovation Private versus open possession Developing innovation

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Challenges to Technology Commercialization Recognition of potential Avoiding innovation push Focusing on market pull Regulatory obstacles Access to capital Management

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Technological advancement is not generally self-evident! "This "phone" has an excessive number of weaknesses to be truly considered as a method for correspondence. The gadget is intrinsically of no esteem to us." Western Union inner reminder, 1876. Different illustrations include: Steam motors Computers Internet Recombinant DNA

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What is Technology Push? A trailblazer sees a chance to benefit from an innovation that has practically no present market. A "entirely new" market is made, in light of the novel limits of the innovation. Clients don\'t know they require an item until it is there.

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Examples of Technology Push Xerox machines Polaroid cameras Transistors Fax machines Integrated electronic circuits Beta-max Laser circles FlavorSaver DVDix TPA? Camera telephones? iPods? Biotechnology? GMOs?

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What is Market Pull? Happens when existing firms look for better advances to diminish their expenses of generation or to make minor enhancements in the nature of their current items. The market "pulls" innovation into it. A need exists, and there is at present no innovation to address the issue.

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Examples of Market Pull VHS design GUI interfaces CD ROM Google? Apple\'s music store? Biotechnology? GMOs?

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Pharmaceutical item advancement R&D Screening In vitro portrayal In vivo pharmacology, ADME (Absorption, Distribution, Metabolism, Excretion) Preliminary toxicology Preclinical Process science (GMP) Toxicology (GLP) Clinical arrangement File IND (Investigative New Drug) Clinical Phase I, Phase II Phase III NDA (New Drug Application)

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Product improvement course of events $10-20M $10-20M $20-30M $30-60M 1:10,000 1:100 1:10 1:5 1-5 years 1-2 years 1year 1-2 yr 1-3+ yr R&D Preclinical P I P II P III

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Sources of Capital Revenue Banks SBIR\'s Angels Venture Capital The three F\'s

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What is Venture Capital? Unsecured value putting Money is put resources into return for stock Investment returns are produced when that stock can be sold at an altogether higher cost.

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Venture Capital Venture business people by and large: Finance new and quickly developing organizations; Purchase value securities; Assist in the improvement of new items or administrations; Add esteem to the organization through dynamic investment; Take higher dangers with the desire of higher prizes; Have a long haul introduction

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What is market capitalization? The aggregate number of shares issued by an organization X the cost per share = the market capitalization or estimation of an organization 8 offers X $2/share = $16

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The financing lifecycle of a biotech co. Seed Start-up or "First" round Second round Mezzanine round IPO Secondary offering

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Valuations increment with speculation [18.5M shares] ($20M) [13.5M shares] ($15M) [6M shares] "pre-cash" valuation = $111 ($5M) [1M shares] $1 $2 $4 $6

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Valuing organizations Traditional speculators utilize monetary parameters to esteem organizations. These include: Multiples of incomes Multiples of profit or "PE proportions" But biotechnology organizations don\'t have incomes or income for a long time or more! How are they esteemed?

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Seed arrange (<$1M) Write strategy for success Management, advertise, innovation, items License innovation Attract heavenly attendant financial specialists or specific firms The 3 F\'s

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Start-up or "First" round ($1-10M) Bring in expert speculators How is the organization esteemed? Pull in administration group Build-out office Begin item improvement

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Second Round ($10-30M) Typically still VC speculators Continue item advancement Provide "verification of rule" or other "approval"? What legitimizes a stage up in valuation?

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Mezzanine round ($25-50M) VC and "later stage" financial specialists Continue item advancement Provide "evidence of standard" or other "approval"? What legitimizes a stage up in valuation? In clinical trials?

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IPO round ($100M) Mutual assets and institutional financial specialists Complete clinical trials? Lead item advancement on extra hopefuls? What amount of hazard are these financial specialists being requested that take?

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What is a FIPCO? Completely Integrated Pharmaceutical Company Examples: Amgen, Genentech, Chiron, Biogen, Gilead, MedImmune Focus on exclusive medication disclosure High Risk High Return

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The FIPCO Hockey Stick R&D Phase I Phase II Phase II IND The NPV of disappointment in a solitary item organization is $0

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The Fundamental Flaw The conventional FIPCO plan of action requires an excessive amount of money from speculators forthright and loads an unbalanced hazard on later stage financial specialists.

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A Few Words on Biotech Business Models Platform Examples: HGS, Exelixis, Millennium, Ceres Sell stage to various clients while seeking after forward coordination Low Risk High Return Service Examples: Incyte, Aurora, Gene Logic, Lion Focus on giving high-esteem administrations to pharma Low Risk Low Return FIPCO Examples: Amgen Genentech, Chiron, Biogen Focus on exclusive, self-supported medication revelation High Risk High Return

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The Platform Hockey Stick or

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What makes biotech so costly? Long item improvement cycles Regulatory obstacles Technology advancement Are there option items/enterprises for which biotechnology is pertinent? Will there be new businesses in these territories?

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How to begin a biotechnology organization? Do everything all business visionaries need to do AND Manage item improvement hazard while; Attracting capital at alluring costs

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