By Mordechai Applebaum
In the past two years less Israeli biomed companies have terminated their activity. This is true both in absolute numbers and relative to the number of companies established (see Fig. 1). What can we do to give our company better odds to remain active and not join the unfortunate statistic of closed companies?
Of course, everything starts with a good viable idea, one that is well founded on good science and that meets a medical need in a manner that is advantageous over current solutions. While this factor is a sine qua non factor, it is not sufficient, on its own, to guarantee success. The biomed market is a very complex and tightly regulated market and many other factors must gel to bring a company to success (however that company chooses to define success).
JLM-BioCity recognized that many startups tend to focus mainly on their science. The excitement overshadows the other crucial aspects, which are overlooked, such as legal issues, IP planning and forethought in constructing the experimental design. They defer dealing with these “para-science” aspects of the business or consider it important at a later stage. However, taking these aspects into account and dealing with them at early stages will mold the structure of the company and direct its activities in an efficient and relatively smooth manner. Unnecessary and wasteful future adjustments can be avoided with foresight.
Having recognized this potentially calamitous behavior, JLM-BioCity organized an event entitled “Ingredients for Making a Successful Bio Startup”. In this event, JLM-BioCity invited a number of speakers from various bio-related fields to discuss these other aspects – a scientist who established a successful company, a biostatistician, an IP lawyer and a commercial and corporate law advocate, all with extensive expertise in the “ins and outs” of the biomed industry.
The Seven Ingredients:
Advocate Jeffery Rashba, of Ephraim Abramson & Co Law Offices, enumerated seven ingredients: Luck, IP, Team, Timing, Marker, Advisors and Geography. Let me briefly expand on these aspects (and without holding Adv. Rashba responsible for my understanding).
1. Luck – Luck (however one may choose to define this slippery concept) pervades all our actions in life. So much so, that Aristotle writes that our happiness is also dependent on luck and we must minimize the influence of luck on our happiness. By diligently attending the other factors we increase the prospect of our company’s success.
2. IP (Intellectual Property) – Patent attorney Jeremy Ben-David of JMB Davis Ben-David expanded on the importance of having an IP plan. It is of course important to protect your IP, but more importantly it will be increasingly difficult to raise funding from a VC (venture capital) fund without the assurance that their investment is properly protected. The patent must cover the future product you are developing, it must be filed to the authorities of the geographical market you are targeting and it must be ratified not only submitted among many other points that will push you to seek out a good patent lawyer from the start. Freedom to Operate (FTO) is a phase that will arrive a long time after the patents will be filed and approved. Yet it is these patents that will define the limits of the FTO phase. Therefore, a good IP lawyer is important from the early stages.
3. Team – This is one of the most crucial aspects. It is the people who will turn an idea into reality and therefore this aspect is of the utmost importance. The crux of the issue is to build a team that complement each other and not replicates of each other. There needs to be a good, healthy work environment and a sense of support and security from the team members.
4. Timing – Two different ideas are folded into this ingredient. (1) Development of a biomed product takes a lot of times. Years. You must have the patience and perseverance to endure the roller-coaster ride and believe in the product to bring it to its final destination. (2) Since the process is so long, to the best of your ability, aim that the product will meet not a current medical need but one that will be relevant a few years from now.
5. Market – Define your target market and know it. Not only its needs, but the regulations its authority imposes. If I develop a product in country A under the regulations of country A but am aiming to sell in country B, I may have the product but the regulations may prevent me from bringing it into their market. The same is true regarding the needs. One country’s needs are not necessarily the needs of another country. Plan this in advance and save yourself trouble later.
6. Advisors – Get expert advisors on your board that know the material and the field. Besides their valuable insights, they also give your company credibility and confidence for investors. It will help you raise funds and increase your chances to avoid pitfalls or to overcome them when challenged by them.
7. Geography – As mentioned in IP and Market, Geography plays a role in the success chances of a company. Be creative. It might be better to aim at a smaller market with easier penetrance, have your product amass clinical data or patient experience, and then move to a larger, more difficult market.
All in all, it is important to understand that the science is not the be all and the end all. Early planning of the surrounding ingredients plays a predominant role in determining the chances of success.