Five expert tips on biotech startup strategy and scale up

When wanting to transition into biotech startup, it’s important to consider your strategy to succeed. Biotech companies need to address an unmet medical/technological need in the market. Without careful evaluation of market potential, there is a risk of failure. 

1. Could you share with us your experience as a biotech entrepreneur?

As an immunologist, I have always been fascinated by the cross-talks among different biological systems and how abnormalities in these interactions could result in disease development. After finishing my PhD at Stanford University in 2013, I was very inspired by the pioneering neuroimmunology works of two of my mentors, Drs. Lawrence Steinman and Ben Barres, and decided to build a novel drug discovery program for CNS diseases, with the support of Dr. Edgar Engleman at the Department of Pathology at Stanford University.

Starting out as a basic science program, my research led to the discovery of various novel immunological targets for neurological diseases. Furthermore, I was able to identify and develop first and best-in-class immunotherapeutics for some of these indications, which have the potential to cause a paradigm shift in neuroscience drug discovery. These R&D efforts were initially supported by funding from Stanford University for basic research as well as drug development. Subsequently, the program was able to gather additional financial support from early-stage biotech investors and private research foundations.

These early pivotal resources allowed my exciting neuroimmunology research program to secure intellectual property protection with the support of Stanford University’s Office of Technology and Licensing, recruit additional scientific talents to perform critical efficacy/PK-PD/toxicology analyses of our lead therapeutics, and eventually be spun out of Stanford into a biotech startup named Tranquis Therapeutics in 2016. As far as I know, Tranquis is the first biotech company that focuses on targeting microglia for the treatment of neurological disorders. We successfully raised $30M series A in 2020 to expand our microglia-centric research platform and accelerate the clinical development of our lead program in ALS.

2. Given your experience as a founder who has transitioned an academic program into biotech startup, could you please share with us your thoughts on scaling up?

I would say that it entirely depends on the need of the enterprise and the allowable resources.

There is that usual dichotomy of options:

  • Staying virtual and outsourcing the work to CROs, vs.
  • Building an actual laboratory to conduct in-house research.

For instance, if the company heavily relies on a few key R&D functions, it would be advantageous to build in-house capabilities to have more flexibility with regard to the workflow and increase intellectual property protection. Alternatively, if a particular R&D process represents a one-time need, utilising an experienced CRO would save time and resources on hiring personnel and acquiring costly equipment. Lastly, there is a third “hybrid” option that various segments of an R&D process are outsourced to CROs while segments which could be performed more expediently, reliably, and inexpensively in-house will be retained within the company.

In this regard, the recent years have witnessed the emergence of computational biotech companies, where the conceptualisation of the research is performed by in-house data scientists and most of the actual wet lab work is outsourced to CROs. In the context of my research program at Tranquis, given my background in target discovery/validation and the novelty of our preclinical research programs, almost all of the wet lab work was performed in-house. Additionally, we employed various industry and academic CROs to assist with various aspects of drug candidate engineering, optimisation, formulation, ADME/PK and toxicology analyses.

3. What would you consider the most important factors for a successful biotech startup strategy?

In my experience, the most important factors for a successful biotech enterprise would include market potential, people, technology, and funding.

  • Like any businesses, a biotech company needs to be able to address an unmet medical/technological need in the market. This would include illnesses with no cures/suboptimal treatments or technological platforms that provide superior advantage over current methodology. Coming from academia, I have seen a lot of conceptually elegant works that eventually fail to translate into the clinics due to the lack of careful evaluation of market potential (untranslatable science and/or small market demands). Alternatively, there are examples of companies trying to create “artificial” demands, which is more difficult than filling existing needs.
  • Secondly, sourcing and retaining talent is of course important in any businesses.
  • Thirdly, the technology must be robust and legally well protected. If a startup cannot protect its intellectual assets, it will not be able to deter competitors. Therefore, it is not only important to consider the novelty/commercial viability of the technology but also its legal protection status (i.e., how well is the technology patented? The terms/length of the patents, etc.).
  • Last but not least, attracting and sustaining funding to ensure various developmental steps of the enterprise could be smoothly executed is also a very important factor.

4. Could you elaborate further on the people factor?

The people factor plays a crucial role in determining whether the enterprise will head for success or failure. For example, there are scientists who are exceptional at benchwork and laboratory operations but turn out to be clueless in business environment. On the other hand, there are great business managers that could operate a biotech enterprise as smoothly as they would do with any other companies but have little to none- scientific knowledge. The trick is how to integrate people with different expertise and professional backgrounds into one company and ensure that they work well together. In the ideal situation, finding a scientist with extensive business operation background would be extremely desirable. Furthermore, hiring (and retaining) the right talent at the right time is very important.

For instance, when the company is at early R&D stage, bench scientists are critical for the company to grow. When the enterprise is more mature, a well-seasoned management team with good understanding of science would play an important role in defining the right development strategy for the company. A well-versed legal team is also crucial to secure the right patent application strategy and ensure that the company’s technology is well protected. Besides these “people” factors, assembling a well-recognised scientific advisor board to provide expert guidance for scientific development of the company is also essential.

5. What would be considered the most attractive area in biotech in the coming years?

It would be difficult to pinpoint a single area that attracts all attention of scientists/ investors in the coming years. Currently, the hot areas are:

  • Immune-oncology
  • Bio-printing
  • AI-driven drug discovery, and
  • Wearable medical devices

Given the average lag of 7-10 years for translation from academia to industry as well the current developments in our society (increasing prevalence of mental illnesses, aging-related problems, infectious disease threats/biological war-fares), I suspect that neuroscience and medtechs that aim at disease prevention/rapid diagnosis will be a growing area of interest.