Building Biotech Companies Flashcards

1
Q

What are the key steps in transforming a biotech idea into a product?

A

Planning, funding, risk assessment, and business strategy are crucial for taking a biotech idea to market.

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2
Q

What defines a biotech founder?

A

A founder is someone with an innovative idea that solves a real problem and has market potential. Requires vision, determination, and resilience.

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3
Q

What are the essential components of a founder’s journey?

A
  1. A Great Idea (solves a problem). 2. Funding (investment at various stages). 3. A Plan (milestones, costs, resources). 4. Team Building (scientists, business professionals). 5. Investor Persuasion (strong pitch, financial projections).
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4
Q

What materials are essential for business growth?

A

Validation data, IP protection, a business plan, pitch materials, and a clear funding request (“The Ask”).

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5
Q

What are the essential components of a biotech business plan?

A

Financial Plan, Development Strategy, Regulatory Strategy, Milestones & Future Funding, Supporting Evidence (patents, studies).

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6
Q

What are key valuation methods for biotech firms?

A
  1. Discounted Cash Flow (DCF) & Net Present Value (NPV). 2. Comparables (benchmarking competitors). 3. Strategic Value (competitive edge). 4. Exit Potential (IPO or acquisition probability).
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7
Q

What are the key stages of drug development?

A
  1. Discovery – Identifying compounds. 2. Preclinical – Lab/animal testing. 3. Clinical Trials – (Phase I, II, III). 4. Regulatory Review & Approval – FDA/EMA. 5. Market Launch – Sales & commercialization. 6. Patent Expiry – Generic competition.
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8
Q

How do investors assess biotech risk?

A

Investors require strong proof of concept, milestone completion, and risk-adjusted valuation before funding.

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9
Q

What are the main business risks in biotech?

A

Strategic Risk (market position), Operational Risk (efficiency), Financial Risk (capital), Compliance Risk (regulatory), Reputational Risk (public trust), Technical Risk (safety & efficacy).

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10
Q

What percentage of drugs entering clinical trials succeed?

A

Only 7.9% of drugs pass clinical trials and get approved.

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11
Q

What is the estimated cost of developing a new drug?

A

Development costs range from $1 billion to $2.6 billion per drug.

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12
Q

What are the sources of early-stage funding?

A

Friends, Family, and Fools (3Fs), Angel Investors, and small private investments.

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13
Q

What are Series A & B funding rounds?

A

Venture Capital (VCs) & Private Equity (PE) provide funding based on proof of concept, IP protection, and market strategy.

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14
Q

What happens after Series B?

A

Investment banks, IPOs, and large-scale partnerships offer higher funding but require a clear exit strategy.

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15
Q

Why are milestones critical in biotech startups?

A

Risk reduction, investor confidence, industry recognition, and alignment with funding stages.

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16
Q

What do biotech investors look for?

A

High return potential, strong IP, clear exit strategies (M&A, IPO, licensing deals).

17
Q

What are the pros and cons of early licensing?

A

Pros: Reduces risk, secures funding. Cons: Lower valuation, loss of control, pharma shelving projects.

18
Q

What are key negotiation principles?

A
  1. Focus on interests, not positions. 2. Understand investor motivations. 3. Separate people from the problem. 4. Create options for mutual gain.
19
Q

What book is recommended for biotech negotiations?

A

Getting to Yes by Fisher & Ury (Harvard Negotiation Project).

20
Q

What key specialists should a founder recruit?

A

Finance (CFO), Business Development (marketing, sales), Legal (IP, compliance), R&D (scientists), Operations & Management.

21
Q

How does a founder’s role change over time?

A

Early-stage: Technical expertise. Later-stage: Strategic leadership and management.

22
Q

What are key value drivers in biotech startups?

A

✔ Develop a market-ready product. ✔ Meet milestones. ✔ Strong IP protection. ✔ Strategic relationships. ✔ Build a great management team.

23
Q

What factors destroy biotech company value?

A

❌ Poor leadership. ❌ Failure to meet milestones. ❌ Weak investor relations. ❌ Lack of adaptability.

24
Q

What are common exit strategies for biotech founders?

A
  1. Stay as CEO. 2. Appoint a professional CEO. 3. Sell the company. 4. Transition to investing, academia, or retirement.
25
Q

What are the most important lessons from building a biotech startup?

A

High-risk, high-reward industry, funding rounds are critical, risk management is essential, leadership and strategy determine success.