How to Build a Biotech Unicorn in the EU
Transitioning a biological discovery from bench to business is difficult enough for a well-conceived and researched technology or product in a traditional biotech hub. But what about companies seeking to develop a novel product outside of the United States, where experienced tech transfer advice, seasoned management and knowledgeable investors all come at a premium?
Ingmar Hoerr founded CureVac in 2000 together with colleagues in Tubingen, Germany. They built up a company that is now as a German unicorn and one of the global leaders in the research and development of mRNA-based drugs. You can read this article in Grow with Tech magazine.
As a young and inexperienced CEO in Tübingen, Germany, I learned many hard lessons as I built a startup based on my doctoral thesis that turned into CureVac – a European biotechnology company now valued at more than a billion dollars.
When I started my PhD in the mid-1990s, I was convinced that RNA could be a platform upon which a multitude of therapeutics could be developed, from prophylactic vaccines to immunotherapies. I was driven to make this vision a reality. However, as a scientist in academia with limited business experience, I knew there would be hurdles to overcome. What I did not realize at the time was how high or how many of these hurdles there would be.
Like many scientists-turned-CEOs, I thought building a biotech required three simple steps:
- Identify a groundbreaking scientific discovery.
- Build a pipeline of products and execute a clinical trial program.
- Raise financing for the company on the basis of its groundbreaking science.
Upon completing my doctoral studies, my colleagues and I approached the Federal Institute for Vaccines and Biomedicines in Germany and informed them we would like to begin clinical testing with our mRNA products. Not so fast, said the regulators. We learned from our interactions with them that we needed to provide a data package and a clinical development strategy, and that good manufacturing practices (GMP) were required to even begin phase I testing. The obstacles seemed insurmountable to us. We were left wondering how we could make progress with the technology while securing the funding and resources needed to turn this project into a fully-functioning company.
My colleagues and I – all without formal business experience – convened and mapped out plans on overcoming the various barriers to clinical testing. Hunkered down in the university lab, we modified the immune response of our mRNA construct and tested various formulations that became the basis of a patent-protected technology. We learned to prepare RNA with astonishing efficiency without RNase contamination and how to develop a specific purification process that led to one of our first production patents. However, each success in the lab reminded us that step 3 in building a biotech company, securing financing, was becoming more and more urgent.
Attracting investors is perhaps the most challenging aspect of being a biotech founder. When we approached many venture capital companies, we realized we had a difficult undertaking ahead of us. We had difficulties convincing investors solely on the basis of our preclinical data. And while CureVac was not a technology company in the traditional sense, we were lumped into the category of ‘high risk, unproven’ businesses and rejected by every investor we approached.
At long last, we found our first investor in 2003. The fund was Leonardo Ventures (Mannheim, Germany), a small venture capital boutique that was prepared to invest a little money so we could at least move from the university into the nearby Tübingen technology park. In 2006, we were lucky to connect with Dietmar Hopp, the founder of European software giant SAP, who turned out to be the perfect partner for CureVac because he could see what typical biotech investors could not: to Hopp, mRNA represented the computer code for the human body, and agreed to invest the first €35 ($38 at the time) million in 2006.
In January 2009, we successfully inoculated our first patient with our proprietary formulation. After many years of trial and error, repeatedly networking ourselves and drawing upon the criticisms and advice of multiple experts, we were finally realizing our vision of transitioning from an academic concept to a viable biotech business. However, as clarifying as this moment was for the stability of CureVac, it presented new challenges for what was required to manage the constant change within the company as it grew. Tough decisions had to be made, sometimes involving the removal of key personnel, when the collision of cultures and perspectives inhibited the growth of the company. We eventually came to the realization that the same scientific discipline we adhered to in the laboratory needed to be applied to the management of our company, and continue to do so at CureVac today.
Five Keys to Flight
From this long process of building a company, I’ve come up with five major tips that can help European innovative technologies get off the ground outside of a biotech hub.
First, at least for CureVac, incubating inside the university is a boost. This will allow you to grow in surroundings that are familiar, while giving you access to a network and infrastructure that you’ll only realize you need after you’ve begun your work. However, be careful not to hand over too many rights to the university.
Second, when we founded CureVac, we assumed that having a disruptive technology like mRNA would make finding investors easier. The opposite was true; disruption can be a distraction to more cautious investors. Therefore, you need to identify open-minded personalities who have a broad perspective on business and innovation. The best way to start this process is to build your own network from scratch. Get to know as many relevant people as possible, and talk to them plainly without overselling. Be patient and focus on developing a growth strategy that differentiates your company from others.
Third, investors are risk takers, but they take calculated risks. This dichotomy can make it a challenge to convince investors to gamble on emerging companies, especially ones that lack the geographic or industry pedigree. If you are a trailblazer in your field, as CureVac was in mRNA therapeutics, consider non-dilutive public funding programs. These programs are usually easier to access and will help you produce the meaningful data that can help secure investors. Valid preclinical data, and ideally broad patents, are essential.
Fourth, an adage in biotech, and in all company formation, is to hire the best people you can. When building a company, you will never have enough resources. Be prepared to reinvent yourself several times as you grow; changes to the management team should be encouraged, not avoided. Once you reach a critical mass and validated technology, it is easier to find experts. One way to do this is by opening sites in hub cities. In our case, we opened a site in Frankfurt to gain clinical experts and a site in Boston to find business development specialists.
Finally, if you intend to remain CEO after launch, you will need to change as your company grows. You might need training in management or leadership. Being a CEO primarily means delegating operative topics; founders that are not able to do this will fail. Remember, as much blood and sweat as you put into your company, the company is more than you.
What lies behind the success of a young company? “Determinants of success. Global research on personality traits of startup CEOs” - first edition of a project supported by the infoShare Foundation has started 03.01.2019
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