Having evolved from that context and with little experience of the realities of drug development, many early-stage biotechs
greatly underestimate the difficulty, the amount of time, and the costs of moving an idea from the pure research laboratory
to a marketable product. At the same time, they often greatly overestimate the value of their idea—seeing it as potentially
the most important development in its therapeutic area in decades—and they underestimate the long and arduous path to product
approval. As a result, they may simply proceed on the unexamined assumption that full commercialization of the company's product
or products is their goal, failing to recognize that successful business strategies usually require highly conscious choices.
Because capital is king in the very early stages of a company, it often seems unnecessary to think too deeply about ultimate
strategy anyway. In fact, the earlier the stage of the company, the more likely it is that investors are making the decisions
through active participation of the board of directors. And because financial angels and Series-A investors usually have very
short investment horizons, most of those decisions will be based on an early exit strategy, not on longer-term prospects.
But investors—especially after the Series-A round—also can have their judgment clouded. Tantalized by possibilities of the
greatest possible return on the investment, they, too, may defer making a final decision on the course the company should
take. Conversely, unduly alarmed by early setbacks in research or development, they may make decisions that should in fact
be deferred—and prematurely deciding the company's future can sometimes be as detrimental as putting off such decisions.
How do you know when it's time to decide? What information is necessary to make serious additional investments in the company
and its ideas? There is no hard and fast rule, but there are a number of factors that point to the window of opportunity.
First, there is the subjective feeling that comes after you have survived the early rounds of funding, when, as a decision-maker,
you realize that you no longer have to think almost exclusively about capital. You've made it into subsequent rounds of funding
with investors who may have longer investment horizons and your product is showing real promise.
Second, there are some objective milestones that you should have achieved. These include:
- a platform technology or drug candidate with good prospects of success;
- well-established and defendable intellectual property coverage;
- comprehensive characterization of the product, including stability;
- thorough and positive preclinical and toxicology results;
- a robust, reproducible, and cost-effective production process;
- indications of the product's manufacturability;
- reasonable assurance that the product is innovative;
- a positive assessment of the reimbursement landscape for the projected therapy; and
- early and encouraging meetings with the FDA.
Third, regardless of which strategy is chosen, many companies wish to reach the point of having Phase 1 and Phase 2 clinical
trial data to support claims of clinical safety and efficacy, respectively. If so, the company will need to be prepared to:
- compile the appropriate documentation to support investigational new drug (IND) filings;
- effectively interact with the FDA;
- decide what to do internally versus contract out;
- produce clinical trial materials;
- design and execute clinical trials; and
- be prepared to address consequences and show comparability as required.