Are biotech startups that much different from academic startups? How do business investors know which ones to invest in? What do academics know about business?
It’s 2015, and biotech has been through a roller coaster boom since the early 1980s. Research has shown that modeling the biotech business / management practices after that of the tech industry seem like a great idea at first. However, there are some fundamental differences that don’t translate when trying to create successful products or services. Unfortunately, biology is not technology.
Computational programming and hardware engineering assumes some fundamental mathematics that can be tested and improved upon. Biology and medicine offers so many more variables that require more attention, resources, and isn’t very predictable.
Mother Nature has millions of years of evolutionary data to be analyzed. The risks are so much higher. The returns are measured in decades, not in quarters. This naturally doesn’t promote confidence in early investors. Clearly communicating the natural biology can ease an investor’s pen.
At first look, the tech world may seem like a great business comparison. If you look at a practice that has much more of a proven track record, you’ll see that the biomedical research community is a great representative. Biomedical research in academia has been around for centuries, and has drawn pure passion driven individuals from around the world. This pure emotional draw is what is needed in order to push through the limited resources, and the countless dead end discoveries. The practice revolves around the pure biology and humanitarian efforts. Therefore, the business should also revolve around these strategies.
So what can a biotech start up learn from these labs?
First and foremost, it’s not the stock options, or the financial compensations, that gets an academic lab going, it’s the PURE human curiosity. It begins with the people. I suggest bringing naturally curious people together with a unique set of skills that will add value and contribute to solving the puzzle.
Second, there needs to be autonomy. Publications are done in teams, but individual names are recognized for their INDIVIDUAL contributions. Recognition for everyone’s unique efforts toward a unified goal increases individual commitment. For this reason, continued publications and authorship of company discoveries should be encouraged.
Lastly, measure the projects completed, not the time committed. Many industries have been moving away from this model anyways. However, there are many who still adopt the industrial 40 hour work week standard. A talented research scientist will naturally dedicate nights and days in obsession in order to answer interesting question. Basing productivity to the time committed can distract from project goals. Get rid of the time clocks. Instead, ensure clear project end points.
To fully understand academia, follow the cash flow. Grant funding is primarily based on a research group’s ability to promote the biological relevance of their research. Therefore, financial markets will always follow the biology. Understanding the fundamental biological trends will place an effort toward a more predictable financial return. Investors and key decision makers should have broad stroke ideas on the biology and research trends.
Business investors do consult with academic investigators on the validity of the science. Unfortunately, all too often, academics aren’t consulted on the validity of the business of that science.
Take the example of some antidiabetic drugs. Insulin sensitizing drugs have a direct effect on fat regulating genes which invariable affects macrophage (a form of white blood cells) development (Tontonoz, et. al.). In return, these cells, which are trying to help alleviate excess cholesterol in the heart, indirectly become detrimental in the development of atherosclerosis. Diabetic patients who already have a high BMI and increase cholesterol take these drugs which can further increase heart disease and heart attacks. How much were researchers consulted on this business investment? Great losses potentially may have been avoided.
Academia’s natural curiosity for biological processes can contribute toward financial investments. It can help by directing efforts and resources toward real investible biomedical targets. Hence, it would do good for business investors to recruit and to train academic trainees in business development, or to create more cross collaborations. I suggest creating a business that encourages and nurtures true intellectual creativity in biomedical science. This will create a biotech R.O.I. (return on investment) that can be measured, not just quarterly, but in decades.
Do you know other academic strategies that can be applied toward business development and investments? Have you bee on both sides of business and academia? What are their differences, and similarities? Share with us.