Despite so much political and economic uncertainty, the UK life sciences start-up sector continues to thrive. New technologies and world leading companies are developing in the UK, taking advantage of the supportive funding environment. We spoke to Robert Haigh, Founder of listed company Kalvista and Executive Chairman of UKI2S’ Ikarovec, to hear his insights on creating and running a biopharma start-up in the UK.
Key priorities when starting out in the pharmaceutical sector
Robert explained that once a robust scientific rationale for the therapeutic approach is established, attention should turn to a detailed clinical development plan (CDP). Defining the product’s CDP early is fundamental – developing a clear idea of the drug profile, and determining the discovery studies needed to support progression through a successful phase 3 trial or at least to proof of concept (PoC). Mapping out the target product profile (TPP) is also essential in helping a start-up define the studies needed to get the drug safely through to PoC. Funding such a programme is vital and considering the risk/reward is key in making an investment case. Company founders must calculate the net present value (NPV) of a potential drug taking into account the costs required to take the company from start-up to exit as well as the risk of failure according to the established metrics.
“Lots of assumptions, but all of this can be integrated into an investment case from which a pitch deck can be extracted ready to present to investors, with scenarios planned and risks mitigated.”
Building the right team
Once the business case is established, the next consideration is attracting the right team, particularly at the senior level, as this will be key in gaining the trust and support of investors.
“A start-up’s first hires will heavily depend on the founding management team, who is already in place, and the company’s aims and objectives, assessed on a case by case basis”, says Robert Haigh. “Most important is to secure team members who not only fill gaps in expertise and skills, but also bring diverse personalities to the team”.
“Luckily, in the UK we are blessed with a large talent pool which continues to grow with the creation and development of more biotech companies.” Says Haigh. “However, it also means that attracting and retaining talent can be challenging with many companies competing for the same people”.
In Robert’s experience it is vital to remember that, although a strong board can help enormously, it does not replace the need for good executive managers. The management team should have the necessary skills and experience to ensure the company meets its objectives, while the board directors should support management teams, and also hold them accountable for achieving corporate objectives.
“A strong board will support good decision-making but not make the decisions themselves. It will have a wide network on which to call should management need extra support and have vast credibility with the investors so if there are wrinkles on the road, the investors are reassured knowing that the Board is experienced.” Says Haigh.
Fundraising & Investment
“Doing your homework is key: only target VCs in your particular space who offer the magnitude of funding you require”. It also helps to have a credible team behind you when approaching investors and to leverage your network to secure an introduction rather than cold calling.
“Today the investment landscape has become much broader and more sophisticated; one can find investors willing to put their money into seeding a start-up right through to companies going to market – some will back little more than an idea on a piece of paper in an area they consider to be hot – it is a case of having the right story, the right team and the drive and ambition to succeed.” Says Robert.
Pitfalls and opportunities
A common pitfall to avoid, explains Robert, is underestimating the time and capital necessary to take a promising drug through to a value inflection point. Try and look far enough in advance and take into consideration every possible scenario, then add in extra for contingency!
Another consideration is IP; “Many founders don’t fully understand what can or should be patented and only realise their mistake when another company files patents that effectively block their progress.” Carrying out full freedom to operate process is essential.
Grants are opportunities no start-up should miss, offering significant non-dilutive financing. Innovate the UK, in particular, has regular grant calls covering many areas in the life sciences and, in Robert’s experience, some investors may look favourably on companies that have obtained grants.
When asked for his three ‘top tips’ for a company starting out, Robert argued that each case is so unique there can be no universal recommendation. However, three points he feels every start-up should keep in mind are as follows:
- Get the right expertise, from people who know your space, as early as possible.
- Network as much as you can. Talk to those who have done it before, get their input, then leverage this network to get introductions – don’t cold call, use the resource you have.
- Take investor encouragement with a pinch of salt, and conduct discussions with several investors in parallel rather than putting your eggs in one basket. This is hard work, but necessary.
Science has always been a key focus for the UK and will be prioritised further still post-Brexit. The prime minister Boris Johnson says he wants “science and technology to fuel a “vibrant” post-Brexit economy” – our thriving start-up ecosystem will be key to this.
About Robert Haigh
Robert’s experience in the pharmaceutical sector, particularly as an entrepreneur, makes him uniquely qualified to offer a perspective on this topic. Following his early career as drug discovery and development scientist in Germany, he returned to the UK to join Ferring Pharmaceuticals, eventually becoming CEO of the UK R&D site and spinning out Ferring’s small molecule assets into a new company – Vantia – and raising £24 million in Series A funding. From this point on, Robert pursued a career as a biotech entrepreneur and proceeded to spin out one of Vantia’s discovery programmes to create KalVista Pharmaceuticals, eventually attracting a $750m deal with Merck for the company. He is now non-executive director for the microbiome company Chain Biotechnology and Executive Chairman of the gene therapy company Ikarovec, as well as acting as biotech start-up consultant for two Sheffield University spin outs.