The Most Essential Tips for Biotechs Seeking Investment

Music.

And a warm welcome to the latest edition of Conversations in Drug Development, brought to you by the team at Boyds. This podcast is for our fellow community of scientists and clinicians working in the wonderful world of cell and gene therapy and drug development. Thank you for tuning in and we hope you enjoy the conversation. Music. Hello and welcome to another installment of Conversations in Drug Development. My name is Harriet Edwards and I am your usual podcast host.

However, today I will be handing over the mic to two of my colleagues and I'm very excited to share with you this podcast special. We'll be discussing the challenges faced by many early stage and startup biotech companies when seeking funding.

So my colleagues Nick Myers, VP of Product Development and Neil Fish, VP of Business Development here at Boyd's both have a wealth of experience in this area and understand the challenges and pitfalls faced when seeking funding and critically how to overcome these. Both have helped many companies overcome the complexities of funding and investment and will share their knowledge today in this podcast. I really do hope you enjoy the episode and subscribe and like for more content coming soon.

Hello, my name's Nick Myers and I'm VP of Product Development and Program Management at Boyds. And today I'm joined by my colleague, Dr. Neil Fish, VP of Business Development. Hi, Nick. Hi, Nick. What we're going to do today is talk a little bit about how companies approach and be prepared for investment rounds. So without further ado on that topic, Neil, as a VP of Business Development and in your life actually as a part-time investor as well, what do you like to see in a pitch deck?

Well, I think the first thing, Nick, is to get the length right. I think if we talk about the venture capital community, they probably see 100 decks a week. So I think the first thing to say is it hasn't got to be too long. So when I joined Boyd's, one of the very first things I did was to get the pitch deck right. It's a maximum of 10 slides. And I pride myself in doing it in six minutes flat and getting the story straight.

I think it's important to be able to do that because if you can't explain it in less than six minutes, you probably don't understand it yourself and you've got pretty much no chance of convincing anybody else so it's got to be a good story and i think also you know the slide content is really important on the sort of you know the types of things you see in there and nick yeah one of the things i'd like to ask you is you know we see lots

of pitch decks ourselves and some of them have got you know hardly any science and some have got huge amounts of science in so as a product development specialist yourself what do you like to see.

Good point well i think that the slides can't be too technical or too scientific they have to contain the right amount of science for the audience and actually thinking about that the audience could be different because sometimes you're not just doing a 10-minute pitch presentation, you might have longer than that you could be in a conference situation where you've got 20 minutes or half an hour and you could be doing a behind closed

doors sort of pitch to investors in which you might have a variable length of time. However, going back to the technical content, you have to pitch that right. I think it's very easy for early stage companies to focus so much on the science. They don't cover off topics such as the unmet medical need. They lose sight of the fact or can lose sight of the fact that at the end of the day, they're going to develop a product. What disease or indications is that product going to treat?

What do they need to show in the clinic what's the mechanism of action you know how much efficacy do they have compared to competitor products all of these sorts of things have to come in so i think you need enough science to explain what the product does how it works how good it is but not too much that it's going to bamboozle investors because or switch them off and you see their eyes glaze over that's never a good No, agreed. So how about the presentation style? Yeah, it's a good one.

Sometimes the CEO is not actually the right person to get up on stage and give the presentation. I think the first thing to say is, I was at a meeting last week where there were some people who I know present very well who basically messed it up completely because they actually hadn't rehearsed it. That's the first thing to say. I would genuinely do it 10 times in front of a bathroom mirror before I go anywhere near anybody. I agree.

But sometimes, you know, maybe it's the CFO is the best presenter. It doesn't always have to be the CFO. The front person isn't necessarily the best presenter. And I know that kind of might require a little bit of swallowing pride.

But actually you've got to have somebody who's very good at telling the story very efficiently and i think i would just also just delve into a little bit more about you know again i've been at some pitch presentations in the last couple of weeks and i've been at a partnering meeting i've had people sit in front of me first of all without a deck at all you know i had one person waving his hand out pointing at the cloud but then i was supposed to sort of somehow from

my sort of telepathy they have to understand what he was talking about another guy waved his hands in front of me like it was like semaphore it doesn't take very much to have an ipad with a pdf of your presentation on it and give a really top class professional presentation but i think the key thing is to rehearse it and so you know the slides are almost incidental you need to know the story yeah i would agree i mean obviously we've discussed

there the situation where one person is presenting which could well be the case in a conference type scenario but.

In a behind closed doors presentation to investors it is actually possible to break that up and have different people present so it can be useful to have the chief medical officer or the chief scientific officer present certain pieces of information which aligns with their expertise and actually just going back briefly to the content i think one of the other things i've seen is that investors want to know what the use of the proceeds are going to be of the fundraise how are you going to spend

this money and also the timeline line, what are the milestones. And what are the inflection points where an investor can see a return on investment and maybe exit. This is a key area which is often missing, I think, from pitches that I sometimes see.

Yeah, I agree with you entirely, Nick. And to come back to the earlier point you were making about how much science, you can always leave a much longer deck behind afterwards, which has got that information in, to help the investors really get into the nitty-gritty, which you just can't do in a 10-minute pitch.

And actually, talking about the teams then and how one gets the right team together, obviously we must bear in mind that some of these early stage companies especially companies have just spun out of academia the founders may or may not be again the right people to do the pitches and if at this point they haven't hired internal staff they may not have some options but it is actually possible to bring in consultants especially in the behind the doors

type of pitches to investors to take those people out on the road to help them give the pitch which perfectly legitimate because what you're just doing is communicating your scientific ideas and how you propose to develop the product. So I think that's... And I agree, Nick. And sometimes you get a double whammy that maybe some of these experienced people you're using are very well known to the investment community and are trusted by them.

And that can be another sort of big help going forwards. Yeah. Okay. Lovely.

Let's move on now to talk about another stage of the process, which is the data room. So most investors want to go and to look at the data themselves and see what you've got. Data rooms can vary quite a lot in the way they're set up. Do you have any thoughts on what you do and don't like to see? Yeah, well, you and I have been into hundreds of data rooms.

And I think the first point, and it's so important, is to make it simple and make it so clearly organized that the person and going in can find the information they want. Because if you hide things or accidentally hide things, it looks like you've got something to hide. And it kind of can raise suspicions that may be completely unfounded.

But a really simple, well-designed data room is absolutely core to making the investor happy and comfortable with what you're trying to do and part of building trust. It's a really important part. It's amazing, actually, that sometimes they really are just a big dump of documents.

And it's amazing people don't spend the time just ordering those in a logical way, you know, manufacturing, analytical, non-clinical, clinical, regulatory, etc. It's so easy to do, but makes people's lives a lot easier. I would also include in the timelines as well, you know, whether it's a formal Gantt chart in Microsoft Projects, at least some information on the timelines, which have probably been showed in schematic form in the pitch,

but perhaps with a bit more detail in the data room. and that will trigger questions. But I think it's very important as well to show the credibility that you've actually thought about the timetable rather than just plucking it out of the air. It's got to be based on reality. Yeah, I think another important part of the data room is what I call a Q&A log. And that could be a simple Excel type folder. You have the question, you have the answer and it's there.

And it's very helpful to investors that they don't keep asking the same question. And helping them also sort of build up the picture as they read this Q&A log of what the story is about the product. Absolutely. What about market research, if you like?

Or I'm guessing for me that really means thinking about the competitors, the external environment. What do you think people should do before they embark on investment in turn? Yeah, it's a really good question, Nick. I think it's quite sad that when I look around sort of the investment world and what people are pitching, almost half of what we see is for diseases that are already very well treated.

And it's part of reflection, I think, of the R&D community perhaps not really understanding what's going on in the commercial world. The things they think are great ideas, actually, they might already be products for. So I think it's really important to sort of really try and understand what is the product you're trying to develop? And is there actually a need for it in the marketplace? place because there are very many diseases i mean lots of cardiovascular diseases cholesterol.

Which are really well treated with cheap generic products already there's almost no business case for developing these types of products whereas rare diseases obviously cancer are areas where you can really you know there are real still real needs i agree with you i mean for me this is about credibility as well many academic researchers and small companies tend to do their work almost in a vacuum, I give points for people who've clearly looked at the wider picture and they've

seen what products are approved, what the standard of care is in hospitals now, and what products are in the process of being developed. And that actually leads on to the laboratory work they're doing as well.

Well yeah so have they got any comparative data either in vitro or even better in vivo in large animals about how their new product compares against standard of care or similar products in development this is key yeah information and i'll give an example from last week in a partnering meeting there was a fantastic pitch i went to from a sort of young youngish opportunity a young company and i did a little bit of research afterwards there were 10 other

ways of treating what they're trying to develop their product for and this product was going to probably cost ten thousand pounds of treatment but i didn't see a need for it and certainly not at ten thousand pounds so absolutely okay let's uh switch to a different topic now so we've talked about the pitches we've talked about data rules how about the corporate website what are the big do's and don'ts about yeah that's a very interesting one from my perspective there

is almost no excuse in this modern age to have like a one-page website unless you are genuinely still constructing it you'd be amazed how many sort of websites that even scroll down what appears like many feet on one page i think anybody can produce a nice professional multi-page website very easily these days i just don't think there's any excuse for that not being done really professionally because that's almost the first thing an

investor is going to see it's a big sort of tick in the box of credibility.

One of the very next things I always look at is the news section. Because that usually tells me if the company is still alive or not. You know, if you have got no news articles on there for two years, probably means the company's gone bust, honestly. And that might not be the case. But it's really important if you've got a website, you've then got to look after it and make sure it's up to date. You know, and make sure all the personnel are correct, the story's straight.

But I think really in this modern day and age, the engines around to produce really professional websites relatively cheaply, it's all there.

And it's it's so important to get that right i agree i think some information on the team is also critical you want the obviously the team in the company at the time you want some information on the board who their scientific advisory board is and also their consultants i mean it's not you wouldn't expect people to divulge necessarily on their website which cro's and cdmo's they're working with but those sorts of questions will come out during the due diligence when

the investors as you're really asking you because that's all part of the credibility yeah and i think it's sometimes you'd see websites which just look a bit strange as we were talking about data rooms and you look at i mean you just get the gut feel there's there's something not quite right here absolutely and it's usually sort of there are private companies let's say with very strong founders who've got their own views and it kind of just looks a bit odd and out

of kilter with maybe what a conventional website would look like that's right i mean you know one could level the the accusation that all websites are becoming to look quite similar you've got the who we are meet the team etc and you've got the pipeline side but there's a reason for that it's credibility when you don't match up to those expectations or if it looks things look a bit odd that's probably because they are a bit odd yeah

yeah great so moving on to another topic how do you match your fundraising activities.

To the right investors because there are lots of different types of investors? Yeah, that's a very good question, Nick, because if you just sort of do a blanket approach to all venture capitalists in Europe or United States, you're going to get a lot of rejection. I think the good news is most VCs on their websites are actually fairly clear about what they're interested in, be it devices, therapeutic products.

AI is very hot at the moment. I would say a large number of VCs are very much into AI at the moment. So I think you You just have to do the homework of basically looking at the websites, what are the venture capitalists interested in, and really don't bother sending an AI proposal to someone who's only interested in devices because your book was certainly going to get rejected.

Yeah. I've got a question, actually, you may be able to answer, about seed rounds versus series A. Yeah. Is this really just about the size of the raise or where you are in development? What determines how many seed rounds you will go for before you go for a Series A, right? Yeah, I mean, that's a good question, Nick. There is the classic sort of pre-seed almost, and then the seed, and then Series A, B, C, D, and that probably goes on further than that.

It's usually a reflection of the amount of money being raised and the type of investor that's coming in. Because again, some venture capitalists will only specialize in seed.

Some do series a and b and probably would follow on to c and d but actually they might the next rounds might be so big that they can't follow on into those rounds but yes seed seed investment is quite interesting because it can be sort of vcs that specialize in that that sort of type of smaller raise or it could be like high net worth individuals specialists in the area who really understand the company and it could also be the management themselves of the company but yeah seed Seed can be,

it's not so much the amount. I have literally seen a seed round of $100 million last week. So seed rounds can be very big. But the seed investors are the people who are making that first move. In Europe, the seed is probably going to be probably less than £10 million. But in the States, I think it can almost be whatever it needs to be. Whoever wants to pile in, if you've got a hot area, it could be a very large amount of money.

I mean, obviously, we have just seen in the UK, really, hopefully now the the green shoots of a return of investment after a little bit of a downturn in 23 does investment really go through cycles fashion cycles almost as to what people are looking for it certainly does in therapeutic areas or technologies so no surprise if i was to say to you that ai is the hot area at the moment and ai has been used you know throughout drug discovery It's also

been used in clinical development and within various sort of medical device applications. You know, there's all sorts of ways AI has been using for diagnostics and devices. That will pass. It was interesting, I was talking to a VC last week and he said that nobody at the moment is interested in glioma, in a particular form of brain cancer. Because basically, everybody's already invested in that area, and they're waiting to see how these investments play out.

Because if the multiple VCs that have invested are successful, then there's no real investment case going forward. But if they all fail, then they'll be interested in glioma again. So yeah, these things do go in cycles. I mean, at the moment, also obesity is very hot.

You know, we've seen the huge success of Lily and Novo, and a lot of people are now putting a lot of money into obesity because now now seems to be a way forward to develop sort of new medicines that are really meaningful you know with meaningful weight loss yeah i suppose they do as well thinking about my own past career you know in the neurodegenerative diseases when people working in alzheimer's and doing things like anti-amyloid plaque therapies when the first

few clinical candidates didn't really produce the results people anticipated, there was then a dearth of investment away from those areas. And similarly in neuro disease and ALS. When things are going well, people want to come in up to a point. Then when lots of people are in, it's as you say, wait to see what comes out of that. But yes, if there are clinical failures, then people move away from those areas.

So it makes sense that they do go in cycles really. Yeah, I mean, there are some very tough diseases. Pancreatic cancer is one of them that by the time you see symptoms, the cancer is usually well advanced. But, you know, somebody will do something sometime where all of a sudden that changes and then we see a real sort of shift and then that'll be an attractive investment area. Just picking up what you said about AI, I mean, ultimately, AI is a tool.

It's a tool probably mainly in drug discovery. It has its uses in development, but essentially it's a tool, but it might get people excited. Does that really hold up very long? I mean, at the end of the day, you're still developing products, and you want to see the preclinical efficacy data, you want to see the tox data, and then you want to see the proof of the pudding in the clinic.

Yeah well we're both old enough to remember the the competensorial chemistry boom of the 90s if you remember what that was like where all of a sudden everybody was doing it you know even if they didn't really understand what they were doing there was a lot of money poured into that and probably only about 10 percent of what was invested turned out to be something meaningful which you know to be fair is widely used in the pharma and biotech industry

but probably not in the way that people believed it was going to be at the time and this is what happens isn't it we We go through this boom and then sort of that it just sort of settles out. You've you kind of the first wave goes and the second wave. OK, so this is how we're going to use it. And it's no good for that. You know, that's probably the way every technology goes, isn't it? To some extent.

And then there'll be a third and fourth way. It's sort of narrowed down and it becomes almost like everyday life. You don't even know it's there anymore. That's right.

OK, well, that's been a really interesting chat. I think I'll try and summarize what we've talked about today, which is really think about your pitch deck and who you're pitching to put the right amount of science in don't have hundreds and hundreds of slides on highly technical data which doesn't really get to the point really think about your unmet medical need and communicate what the product is going to do who's it going to be used by think about the competitive

environment what you need to do to bring the product to market or to actually bring it to the next stage and think about the inflection points and the timeline of the development make sure that's credible. I think we've talked about the importance of having a really well-structured, easy-to-use data room and a professional-looking, really well-thought-out website that attracts people to the site.

Do your market research, as I've said, look at the competitive environment, see who's out there and think about who may want to invest in this product and actually talk to people, sound out people about who the right investors may be to approach.

So i think we've got some good topics there and you know it is really important sometimes you only get one shot on goal here so you really need to think about your whole investment strategy and all the materials that go around that before you embark on it's not something to undertake rightly or in hay style i suggest yeah i agree nick so before we close out neil any more top tips perhaps your biggest top tip don't give up i think it's as simple as that yeah you have to be resilient

that's you really do in this industry yeah thank you very much thank you thank you for. Music. Listening to conversations in drug development the podcast series brought to you by the team of boys don't forget to follow us on the usual podcast platforms or visit our website to ensure you don't miss out on any of our future episodes. Music.