Photo courtesy of ChemGenex Therapeutics
Dennis Brown left an assistant professorship at Harvard's Joint Center for Radiation in 1988 to start Matrix Pharmaceuticals. When that company sold, Brown's inner entrepreneur led him to create ChemGenex in 1999. The company works with small-molecule therapies and has two in Phase I and II clinical trials for cancer. "The first company did what it set out to do," Brown says. "Many people got significant training and went on to start their own companies."
Photo courtesy of Postimees/Scanpix Blatics
Neurobiologist Kalev Kask left AGY Therapeutics in 2001 to create EGeen, a pharmacogenetics company based in the United States and Estonia. As yet, Kask has no clear product line, but the cancer entrepreneur expects that his 25-year exclusive license for all information gleaned from the Estonian Genome Project will produce important drug therapies based on genomics and proteomics data. "The...
SHOW 'EM THE MONEY
Government funding and grants are a drop in a deep bucket compared to what is needed to start a biotech company. For the serious cash most entrepreneurs go to venture capital companies. A network exists; accessing it requires starting with a commercially viable idea, selling it with a solid business plan, performing experiments, and doing a proof of concept. And it doesn't hurt to know a few people in a biotech haven, like the San Francisco Bay area. Even Europeans, such as Kalev Kask, founder and CEO of EGeen, sometimes head to the Golden State for venture capital money. "The money is in the United States and the San Francisco Bay area, which has the largest pool of venture capitalists in the world," he says. "There are a lot of venture capitalists in Europe, but generally they are more conservative than the cowboys in California."
FINDING A MENTOR
Successful research scientists almost always have a mentor. It's the same in business: The best place for learning the ropes is at the feet of someone who made it. "There is a lot of territory that is not in a book," says Dennis Brown, who founded Matrix Pharmaceuticals. "You need to find people with the kinds of interests you have who have done this before, who are currently doing it but only a year or two ahead of you. The environment is [that of] rapidly changing issues, so it's important not to be the kind of independent person who thinks [you] can do it all yourself without help."
BUILD A FLEXIBLE BUSINESS PLAN
Kenneth Carter, president and CEO of Avalon Pharmaceuticals, says business people told him that his first business plan was "a very good NIH proposal." With a little help Carter eventually nailed down a good business plan. The single most important element of a good business plan is how you tell the story, says Dan W. Den-ney Jr., who founded Genitope. "When writing a grant you are telling the story on a technical level to a sophisticated audience," he says. "In business there is an element of teaching what you do. The audience is far less sophisticated, so in some ways it's like ... going to high school and teaching what you do. You are doing the same thing with investors and at the same time trying to get a certain amount of greed going."
A good plan also needs built-in flexibility. "When the venture capitalist came in and said, 'We want to invest but not in what you have now,' we said, fine, tell us what you see," Carter says. "Read the market. If you are ignoring what the market is telling you, you're dead."
INCUBATORS HAVE SPACE
Generally speaking, it's easy to find lab space. If you have surplus funds, you can renovate space in a building or sublease a structure. If you don't have a lot of money, there are plenty of state-sponsored biotech incubator spaces available. Most incubators come with some equipment. If one doesn't, venture capital companies know where to look for good deals on used equipment. Otherwise, lease. "In a biotech company, equipment overhead is intimidating," says Carter, whose company used space provided by Maryland's incubator program. The incubator supplied the large equipment that a new company can't afford to have in the beginning. Kask says finding lab space in Estonia was quite easy. "The space is a lot less expensive, so even if you have to renovate something it doesn't come at a cost. It's a free market, so just say what you want and there are five different firms jumping to get your order."
Hiring people is an art. Learning what to look for and how to read between the lines of a resume takes time. Even if you hire consultants to help, you are going to make mistakes. Augustine Cheung, founder of Celsion Corporation, says it took 10 to 15 years to find the right management team. But once it was in place, he thanked himself for the extra time. "Within three years, this team went from concept to reality," Cheung says. For his part, Denney was astonished at the difference between resume and reality. "A lot of people come in with great resumes and you go, wow. And then you get them in and they don't know their stuff," he says. "The learning curve of hiring people is one of the steeper ones I had."