TERMIS PAP: Session 5 — Investment and Funding in Tissue Engineering and Regenerative Medicine
The fifth webinar in the 2016/2017 TERMIS PAP series was given by Mr Matthew Durdy, MBA, Chief Business Officer, Cell and Gene Therapy Catapult, UK; and Dr Crystal Ruff, MBA, Business Development Consultant at 8653224 Canada Inc.
When you are trying to get someone to get interested in your company, the first things they need to know are not your business plan or the details of your science. The following five points is what you need to demonstrate to be convincing.
Point 1: Accessible Need — There is a clear need for your product that is easily understood and described.
Your product/service should aim to address a clearly and strongly expressed “need” in healthcare. Both the size (e.g. impact on patients’ life) and the quantity (e.g. how many patients are affected) of the need matters. However, offering a treatment both for common and rare diseases can be profitable and attractive for investment. In the case of rare diseases various incentives exist, such faster regulatory approval and possible monopoly rights, that can make your business more successful.
If you are offering a solution to a disease that could not be treated before, with patients, clinicians and healthcare providing organisations expressing that they have a clear unmet need there, your product will be shown great interest by the market, and it will have a good chance for success. If you can demonstrate this to your investors, your chance of investment will be good.
On the other hand, if you are planning on selling a product that provides only a marginal improvement in treatment quality, and provides it at the same price as the counterparts, your market may not express interest in it, and you may find it difficult to attract investment.
You should analyse the extent of the “need” you are targeting, while considering that in healthcare it is not only one person whose need/requirements you must consider: The requirements of patients, clinicians, healthcare providers and healthcare payers will all have to be met, and their needs may be very different.
Furthermore, keep in mind that it is not regulators (e.g. FDA, EMA) who will pay for your product in the end. Healthcare “payers” (e.g. the NHS in the UK) will be buying your therapy, and their needs may be much stricter than that of regulators, going beyond the efficacy and safety of your product.
Therefore, investigate who makes payment decisions regarding your therapy. It can very easily be that this is not just one person/organisation. Also consider that the situation is very different between UK/EU and the US/Canada.
Point 2: The Product — Ensure you have a product that clearly addresses that need.
What your product should be is not driven by the science or your invention! It is driven by the need that it is aiming to address. Therefore, a complete analysis of the “need” is necessary before you can figure out what your product is/should be.
Investors will want to see a clear link between the need you’re aiming to address, and the product you are offering.
Your product should not only work, but must be economically viable!
- If it is 10% better than the competitors, but twice as expensive, it will not be viable.
- If it is “cost-neutral”, but can save a patient from years of suffering from disability, the healthcare system will take up your product.
- Products may be more expansive, but at the same time generate overall health economic savings.The most attractive to healthcare payers is if you can demonstrate that your product can save a significant amount in healthcare cost per patient. Then you have a market!
You need to be able to make an economical case for your product. Is your proposition/product better than everyone else, and will it remain to be in 5 years’ time when it reaches market? Is it first of this kind of product to hit the market?
Analyse who the key players are in your target market, and what influences that market. What is your projected share of the market? What happens if your product only has a partial efficacy (e.g. only works in 50% of the cases)?
You should demonstrate to your investors a good idea of where you fit into the market, and a realistic expectation of what the outcomes are going to be.
Point 3: Defensibility — You should have a long-term advantage that you are able to exploit.
Explain what makes your product commercially exploitable and profitable in the long-term, and how long will you be able to take advantage of this. Follow-on products may be a part of this.
Patents, know-how, and intellectual property (IP) in general are very important, but are only one part of defensibility.
If your product is complex (logistics, quality control, etc.) it will be difficult for someone else to come and copy your business.
Point 4: The Team — You are able to deliver on what your proposition is.
How and who is going to do it? Is your team suitable to deliver your business plan? Demonstrate this! Explain that your teams fits together, and detail the breadth of their experience.
Venture capitalists often start with asking about the team and the management behind the product!
Look at it from their perspective: An investor does not know/cannot know whether a product will work and will be successful. However, they do know that a bad team will lead to failure, while a good team can turn around even a failing situation. Team and management are therefore of key importance.
It is very beneficial to have a team of clinicians, researchers, and business professionals. Start-ups with a team from diverse backgrounds tend to be more successful.
The scientific, manufacturing and marketing partnership that you may have are all part of the team.
Collaborations are beneficial, but it is best if they are diverse as well. Partners should bring different aspects to the collaboration, and should want to take away different things.
Point 5: The Plan — Understand the key elements of your plan.
What are you going to do with the resources you are asking from the investors? Investors do not want to step in to make sure the business comes to fruition because it turned out that your plan was inadequate.
A scientific development and clinical plan is not sufficient. In the TERM fields you will also have to be able explain how your manufacturing and business models will work. How will the reimbursement for your therapy work? How will it fit into the clinical system? These should all be thought through!
There is no one single good answer to these points. Business models are diverse. However, your plan must be consistent with the need that you are aiming to address.
Whatever you plan is, make sure you get paid in the end! You can’t continue to impact the world, without your company making a profit!
If you can answer these five points clearly and coherently you will grab the attention of any investor you wish to approach!
Some further tips:
Create a non-confidential slide package of your business idea/plan, and have it always ready when talking to (potential) investors!
When preparing your business proposition, you can use tools such as:
- Strategyzer Business Model Canvas — www.strategyzer.com
- @risk Risk Analysis Software — http://www.palisade.com/risk/
- TreeAge Analysis Software — https://www.treeage.com/
If you perform modelling of your business proposition, do not forget that modelling is a good indicator of performance, but is a bad predictor!
You can watch the webinar again at:
