Managing the Spin Outs

Once they have the money

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USA UK Canada Australia Germany France

Income/company

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But Ken Snowden, Scottish Enterprise’s biotechnology director, said Scotland’s life sciences sector had enjoyed a 7.5% rise in jobs over the past year.

He said: "The industry has more than doubled over the past five years. There was a flattening of the curve last year. Companies are not growing as rapidly as they were, but they are growing more than the European average of a 10% decline."

Managing

The Spin-Out company

Startopoly

Startopoly

• how are the uni spin-outs progressing, what are the problems with the spin-outs, should the unis be taking a different approach to spin-outs/start-ups, how to manage the companies (Keith) once they have the money (again what are the common problems and how to prevent them)

Startopoly

• Getting a company started from University to Nasdaq….

• THE COMPANY VIEW

• Note.. Using the US rules and board…

Startopoly

• Getting started • Requires more than a

compound active on the enzyme/receptor of choice…

• There must be something to support the business as it starts and as it grows…

Startopoly

• Keeping focus.. • A university start up can

not guarantee the full-time commitment of the key people while on seed funding..

• Clear goals and milestones are essential

• Getting business development assistance can be crucial

Keeping Focus

• Need to find ways to keep support for nascent companies within the University system – sometimes this is not a natural synergy

• Need to find affordable location – remember competing with San Fransisco not Birmingham…

• Need International focus

Startopoly

• IP is great • but the costs rise as

time progresses, not necessarily best for a start up to be saddled with a huge portfolio…

Startopoly

• Grants can be wonderful..

• But there do seem to be more people employed as consultants to assist/assess than there is money in the system..

• Lets have a simple and fast way to support the business!

• One page per £25,000 in application….

Startopoly

• Once you start there is no stopping..

• Time is always in short supply before the next milestone…

• Make sure the next step is ready to go and does not have a six month lead time…

Startopoly

• Keeping up with the paperwork is essential!

Startopoly

• The first Round Proper

• Getting to the next round requires success and a big slice of luck

• While platform technology is still an ugly concept for some, it does help to pay the rent….

Cost of Capital

• Current models are not working

• Secondary investors are not prepared for reasonable valuations

• Primary investors are seeing too much dilution

• Alternative financing models are essential if the technology is going to be developed

Startopoly

• Service business is a good route to developing a cash flow and supporting internal development

• But if there is a larger goal it can be a distraction..

• Getting the balance right is a big issue

Startopoly

• A second round requires sights set on compounds/proteins which are heading to the clinic

• But are the big pharma companies starting to see the value in very high quality novel leads?

Startopoly

• Getting out on the road is essential

• Can’t spend the money until the well is dry and then seek another round, it is a continuous process of building the railroad

Startopoly

• Keeping Moving• Having a portfolio

approach of technologies or products or a mixture of technologies and products gives the best chance of intermediate deal making

Startopoly

• One shot products have a chance of failing which is high..

• Is the current trend towards “the clinic or bust” the right one for most start ups?

Startopoly

• Getting a product to phase 1 or at least something in vivo and toxicology so that results in man are not far away gives best chance of further funding by any route…

Startopoly

• Some things you don’t need to worry about….

Startopoly

• Being prepared for “windows of opportunity” is essential.. Moods change very quickly in the financial markets

Startopoly

• Sell a product in phase 2 or beyond and prepare for retirement!

• Do it twice and go for an IPO….