Biotech Entrepreneurs' Biggest Mistakes
This article was originally published in Start Up
Executive Summary
The most common mistakes made by biotech entrepreneurs in raising money and in managing venture-backed companies are: 1) Raising large amounts of pre-venture angel financing at increasingly high valuations before seeking venture funding; 2) Using a placement agent to raise an initial round of venture funding and/or investing time and money in fancy/lengthy presentation materials; 3) Raising more money than needed; 4) Choosing a venture fund based on valuation; 5) Racing to do a significant corporate partnering deal before the first round of venture financing; 6) Failing to be honest with investors and manage their expectations; 7) Deferring difficult personnel decisions; 8) betting on the timing of a clinical milestone, corporate partnering deal, or IPO; 9) relying on patent filings as an enduring corporate asset; and 10) failing to leave enough runway for the next financing.
You may also be interested in...
VCs' Most Common Mistakes
Our VC correspondent details the 10 most common mistakes his colleagues make in investing in biotech--from investing in dataless hypothesis to firing management too soon (or too late).
Why Clinical Trials Fail Unexpectedly
Is there an explanation for the recent spate of biotech Phase II and Phase III clinical trial failures? It's almost impossible to give general reasons for specific clinical failures. Several hypotheses, borrowed from the tenets of behavioral finance, however, may help explain some recent, unanticipated later-stage setbacks. They may also support other studies that suggest that small biotech companies fail more often in clinical development than their larger biotech and pharma brethren.
Why Investors Adopt Orphans
Venture-backed biotech companies are increasingly seeking to commercialize drugs that qualify for orphan drug protection from the FDA; is this business model a good idea?