Building Biotech Companies Flashcards
What are the key steps in transforming a biotech idea into a product?
Planning, funding, risk assessment, and business strategy are crucial for taking a biotech idea to market.
What defines a biotech founder?
A founder is someone with an innovative idea that solves a real problem and has market potential. Requires vision, determination, and resilience.
What are the essential components of a founder’s journey?
- A Great Idea (solves a problem).
- Funding (investment at various stages).
- A Plan (milestones, costs, resources).
- Team Building (scientists, business professionals).
- Investor Persuasion (strong pitch, financial projections).
What materials are essential for business growth?
Validation data, IP protection, a business plan, pitch materials, and a clear funding request (“The Ask”).
What are the essential components of a biotech business plan?
Financial Plan, Development Strategy, Regulatory Strategy, Milestones & Future Funding, Supporting Evidence (patents, studies).
What are key valuation methods for biotech firms?
- Discounted Cash Flow (DCF) & Net Present Value (NPV).
- Comparables (benchmarking competitors).
- Strategic Value (competitive edge).
- Exit Potential (IPO or acquisition probability).
What are the key stages of drug development?
- Discovery – Identifying compounds.
- Preclinical – Lab/animal testing.
- Clinical Trials – (Phase I, II, III).
- Regulatory Review & Approval – FDA/EMA.
- Market Launch – Sales & commercialization.
- Patent Expiry – Generic competition.
How do investors assess biotech risk?
Investors require strong proof of concept, milestone completion, and risk-adjusted valuation before funding.
What are the main business risks in biotech?
Strategic Risk (market position), Operational Risk (efficiency), Financial Risk (capital), Compliance Risk (regulatory), Reputational Risk (public trust), Technical Risk (safety & efficacy).
What percentage of drugs entering clinical trials succeed?
Only 7.9% of drugs pass clinical trials and get approved.
What is the estimated cost of developing a new drug?
Development costs range from $1 billion to $2.6 billion per drug.
What are the sources of early-stage funding?
Friends, Family, and Fools (3Fs), Angel Investors, and small private investments.
What are Series A & B funding rounds?
Venture Capital (VCs) & Private Equity (PE) provide funding based on proof of concept, IP protection, and market strategy.
What happens after Series B?
Investment banks, IPOs, and large-scale partnerships offer higher funding but require a clear exit strategy.
Why are milestones critical in biotech startups?
Risk reduction, investor confidence, industry recognition, and alignment with funding stages.
What do biotech investors look for?
High return potential, strong IP, clear exit strategies (M&A, IPO, licensing deals).
What are the pros and cons of early licensing?
Pros: Reduces risk, secures funding.
Cons: Lower valuation, loss of control, pharma shelving projects.
What are key negotiation principles?
- Focus on interests, not positions.
- Understand investor motivations.
- Separate people from the problem.
- Create options for mutual gain.
What key specialists should a founder recruit?
Finance (CFO), Business Development (marketing, sales), Legal (IP, compliance), R&D (scientists), Operations & Management.
How does a founder’s role change over time?
Early-stage: Technical expertise. Later-stage: Strategic leadership and management.
What are key value drivers in biotech startups?
✔ Develop a market-ready product.
✔ Meet milestones.
✔ Strong IP protection.
✔ Strategic relationships.
✔ Build a great management team.
What factors destroy biotech company value?
❌ Poor leadership.
❌ Failure to meet milestones.
❌ Weak investor relations.
❌ Lack of adaptability.
What are common exit strategies for biotech founders?
- Stay as CEO.
- Appoint a professional CEO.
- Sell the company.
- Transition to investing, academia, or retirement.
What are the most important lessons from building a biotech startup?
High-risk, high-reward industry, funding rounds are critical, risk management is essential, leadership and strategy determine success.
