You’ll find the blog rather quiet between December 26, 2011, and January 3, 2012. Nature’s offices close for a few days during the holiday season, and many employees take additional time to visit family. I’m one of those. We’ll resume timely postings and publications in the New Year, tackling issues of global biotech entrepreneurship. In the meantime, peaceful thoughts to the Trade Secrets community, and beyond.
Hat tip to the source.
A major pillar of Lean Startups is their use of Minimum Viable Products (MVPs) to test the validity of a product within a marketplace. By definition, a MVP has the minimal number of features that is required to test a given market hypothesis. A MVP allows the originating startup to gather invaluable feedback from customers, which in turn accelerates the feedback cycles around every aspect of development. Put differently, the use of an MVP avoids spending extensive time and resources building a finished product before validating the product concept with customers. When used in the context of validated learning, MVPs are a valuable tool for identifying product-market fit.
MVPs have been discussed extensively elsewhere (see related links below), usually in the context of information technology (IT) companies. The success of the MVP model has been validated in the IT industry, and a common operating procedure for IT product deployment is now early launch followed by rapid product iteration. Software based products, and specifically consumer web products are amenable to such rapid development, as the engineering challenges are well-defined even when significant. In contrast to most software / web based products however, products rooted in the hard sciences like the biotechnology or bioengineering sectors (and yes we lump all sciences together where progress is “hard” to come by), have an appreciable level of technical risk in addition to the market risk that MVPs are designed to address. To successfully map the MVP model onto the hard sciences, such technical risks need to be considered in the context of the large upfront capital and time investments required to abrogate them.
Re-framing the MVP model to include mitigation around the technical risk as well as the market risk is both appropriate as well as imminently necessary. We believe that MVP concepts can and indeed should be applied to fundamental research driven industries like biotech. Having entrepreneurs in these fields use MVPs and validate learning will lead to more capital efficient commercialization of technologies. This will benefit the entrepreneurs, founders and employees, as well as the funding organizations involved, be they VCs, foundations or the government. Because of the different set of starting assumptions inherent to these industries mentioned, we suggest the following three steps to adapt MVP concepts to these industries.
Test product concepts to identify product/market fit.
MVPs are used to evaluate the product/market fit. This concept can and has to be rigorously applied to the hard sciences. Too often researchers have an “if we build it they will buy it [come]” mentality, only to later find the developed technology lacks commercial relevance. As such, the first requirement of developing a technology for commercialization is to identify markets you think can be impacted by the technology, and then use an MVP to test the validity of the product within these markets. In the context of research intensive products, testing market need before demonstrating technical feasibility may seem premature and one may receive pushback from the researchers involved. However, to turn a scientific project into a commercial success, one needs to investigate the fit with greatest prejudice, and do that across multiple markets. This means talking to the end users early on. As compared with months of technical R&D that might be misdirected at worst or undirected at best, gaining a detailed view of multiple potential product-market fit scenarios is a high return-on investment effort.
Due to the constraints placed on the commercialization by the time/capital-investment function, entrepreneurs need to pursue clever ways to test product concepts in the marketplace prior to achieving technical proof. One important test is to create the appropriate product profile and socialize this to potential customers within the field. For example, for therapeutics this will involve identifying key stakeholders for a given indication and present to them a product profile of the anticipated active drug, including how it will be administered, dosage regimes, interaction with other drugs that are co-administered and potential side effects, etc. For example, if you’re developing a cancer drug, it will be critical to speak with oncologists, cancer patients, survivors, and payors. Understanding how your therapeutic could be adopted in the context of the current treatment regime is critical and most often clinical decisions are made on factors other than what molecular target is being drugged. This effort will illuminate the opportunities and point to the key challenges that need answering at the earliest stages of technology development. A crucial mistake many startups make is failure to take the current process into account. Never just assume that if you can successfully develop a product the customer will change his use pattern to accommodate you.
Conduct MVP-focused research
Research is often perceived to be a necessarily meandering path. However, as the development effort moves toward the application of the technology in the marketplace, applied research has to be efficiently guided. This requires an R&D process be in place and a significant amount of discipline from everyone involved to ensure that experiments are designed from the bottom up to really answer the important questions about the MVP product. For anyone aiming to develop any successful product, rigorous focus and capital efficient behavior is needed. It’s challenging and very difficult to implement a culture of laser-focused research effort, but fundamentally, a small biotech startup or commercially focused research lab has no choice if it wants to develop a product in times where raising capital on promising research alone is not a winning pitch. It should be noted that if the goal is to develop strong IP based on novel and early-stage science the parameters are different and we will cover those aspects in a following post.
Explore adjacent marketplaces for your technology
Last but certainly not least, early-stage research can and does create technologies that can have many applications – many startups are founded on the premise of a platform technology (technology push). This is often referred to as the “hammer looking for a nail” syndrome, and in many cases the most interesting nails are outside of the entrepreneurs domain of expertise. There are many examples of adjacent markets where products met their ultimate success. For instance, discovery of a drug target that impacted unexpected indications (e.g. Viagra was originally a cardiac drug), applied physics developments used in biotech applications (e.g. Pacific Biosciences optical waveguide technology used in sequencing), genetic engineering used in many industrial biology applications (eg. Genencor’s industrial enzyme production), and bioinformatics analysis technologies generally applied to the big data industry (eg. GNS’ foray into financial and systems analysis).
In summary, using an MVP based on a product profile enables the entrepreneur to be able to nimbly test product concepts in adjacent markets and generate invaluable feedback for further iterations of the MVP and final product. Additional posts will dig deeper into MVPs for different types of biotechnologies.
Here are some links to related content:
Four Steps to the Epiphany, by Steve Blank.
James Taylor & Michael Koeris. Originally posted on Biotech Start.
When recombinant DNA technology started early in the ’70s, it was the unknown in front of all us. And the unknown always scares people. The majority worried about experiments performed with viruses as vectors to modify the genome of humans. There was an expectation then that one day we could do what is now called gene therapy. The Asilomar Conference on Recombinant DNA was organized in San Diego to deal with concerns, and immediately a moratorium was established for over a year, until the NIH delivered rules for using this new technology.
I followed all this closely, since I was a PhD student at UC-Davis, and brought to Brazil the NIH rules, as most other countries did. Europeans, to a certain extent, took advantage of this historical moment. Marc Montagu and Jeff Schell built the scientific basis for genetic engineering in plants. Genetically modified plants took longer, however, to develop.
First success came through Luiz Herrera Estrella, who produced in 1982 a tobacco genetically modified to grow in the presence of an antibiotic. In this decade, there were a few examples of plants genetically modified: tobacco resistant to insects using Bt (a toxin found in Bacillus thuringiensis). So one can say that plant genetic engineering is in fact less than 30 years old.
The first commercial release of a RR soybean came in 1992. So, commercially it will be 20 years next year. During this 20 years, the technology grew and was adopted worldwide by 13 million farmers, big and small. In 2011, more than 150 million Ha of genetically modified plants will be cultivated. Yet this is only about 10% of the total arable land on the planet. If we add all the area cultivated with GM plants since the early ’90s, it would be today more than 1 billion Ha.
During these 20 years, not one accident has occurred due to the use of plants genetically modified. Not one relevant environmental impact, not one relevant impact to the health of humans or animals. Viruses as a vector for gene therapy claimed the life of one patient in Pennsylvania. All together, genetic engineering compared to other technologies has proved safe precisely because there was competent control of the technology, from the very beginning. So why do some continuously fight against GM plants, as seen in Brazil and Europe mostly? The reasons are political.
GM plants are being led by large corporations like Monsanto. Those who fear that these large corporations will control the agriculture worldwide react against GM plants because they see these products as an instrument of large corporations. In addition, agriculture in Europe cannot compete with our agriculture in Brazil or in Argentina, a situation made worse by Brazil and Argentina ranking second and third for GM plants, behind the US.
But one cannot conceive of agricultural growth without GM plants. It’s the only strategic way to deal with climatic changes already in progress. I’ve said previously that most GM plants cultivated in the world are confined to few species: soybean, corn, cotton and canola. Little or nothing for the staple crops such as cassava, (cassava rich in protein is already developed), sweet potato sorghum or pearl millet. So what is there for the Sub Sahara countries ? A lot, yet not built, except for the Golden rice of Potrikus.
People do not see this technology as a way to reduce poverty or hunger. The perception most people have about genetically engineered plants is that they do more bad than good. To change this perception, we have to demonstrate that the technology can also solve important social problems. In Brazil, we’re expressing in goat milk Lysozime and Lactoferrin, to reduce diarrhea that causes deaths in the Semi-Arid area of Brazil and in some Countries in the Sub Sahara. We are doing this in partnership with Elizabeth Maga and James Murray from UC-Davis, teaming up with Marcelo and Luciana Bertolini from UNIFOR – a private University in Fortaleza, the capital of the State of Ceará in Northeast Brazil.
Francisco Aragão at the CENARGEN in EMBRAPA engineered beans ( Phaseolus vulgaris ) resistant to golden mosaic using RNA interference. Controlling this virus is otherwise impossible for small farmers, yet NGOs were against it in Brazil. Beans are a staple crop, not a commodity, and provide food for the small farmer. This GM bean was not developed by “multinationals.” EMBRAPA is a Brazilian institution. Yet still, NGOs were against it. This is how far we are from the correct perception of GM plants. Plenty of people defend the sole use of “organicos.” Unfortunately, that will never feed the world’s 7 billion people.
We published in the December issue of Nature Biotechnology a news analysis detailing some of the funding models being used by today’s life science investors. Some are looking to expand syndicates, ensuring that funding is there for follow-on rounds. One is sometimes providing huge A rounds by itself. And though many favor an “asset-based” approach, the R&D platform engine is not as dead as might be thought.
We’ve removed the article from behind our pay firewall, and you can read it here for the next month. It should be informative to the Trade Secrets audience.
When the news flow supports it, we run a map of sorts in the pages of Nature Biotechnology, rounding up biotech-related items from around the world. This one we published in the December issue, now live on our website. If you’re a subscriber, you can see it here. If not, I’ve pasted it below.
Ever since Prospect Ventures handed back $150M of committed money to its limited partners, there has been plenty written on the lack of venture capital funding for the life sciences.
However, a deeper dive provides a better picture. Bruce Booth has done the diving, and he wrote a blog post about it.
His findings are similar to what we found when digging up research for a news analysis, scheduled for publication in the December issue of Nature Biotechnology. That piece looks at new funding models for today’s startups, and I’ll get it removed from behind our firewall and post a link on the blog next week, after embargo lifts. Until then, you can read Bruce Booth’s piece here.
The Central European Institute of Technology (CEITEC) is establishing an R&D infrastructure project that eventually will cost $300 million in Brno within the next three years. The money for the European centre of scientific excellence comes from the Operational Programme Research and Development for innovation of the European Structural funds. The institute, which will interconnect life sciences and technical fields, will be used by up to 600 scientists and by over 1,200 students, and also by Czech and foreign companies. It will also help the existing basic and applied research in the entire Czech Republic to achieve top levels.
This multi-field CEITEC is the first scientific centre in the Czech Republic to integrate research and development in the fields of life sciences, advanced materials and technologies on such a large scale. The research is divided into seven programmes: nanotechnology and microtechnology, advanced materials, structural biology, genomics and proteomics of plant systems, molecular medicine, brain and mind research and molecular veterinary medicine.
The following entities are participating in setting up this centre: Masaryk University, Brno University of Technology, Mendel University in Brno, University of Veterinary and Pharmaceutical Sciences in Brno, Institute of Physics of Materials of the Academy of Sciences of the Czech Republic and Veterinary Research Institute.
The Rector of Masaryk University, Petr Fiala, says that “CEITEC is being built around successful research teams from the participating institutes,” and is “creating unique conditions for their further development and bringing a significant increase in their research possibilities.”
The new R&D infrastructure will be 25,000 m2 and located on the University Campus of Masaryk University in Brno-Bohunice and in the Brno University of Technology Campus, “Pod Palackého vrchem.” Research will focus, for instance, on the production of a subdermal chip, which will measure a patient’s life functions and inform the doctor about them from a distance. Also, the production of biosensors, which will be able to discover an earlier stage of an illness, or modify surfaces for a faster adhesion of disturbed nerve fibres, or produce “SMART materials” built into planes, which will be capable of reporting defects.
Investment into the future for the whole region
The new instruments and facilities will be also used by scientists and companies from all of the Czech Republic and abroad. Pharmaceutical and engineering companies are already making enquiries in research, education of experts and the renting of facilities. The uniqueness of the centre, apart from the integration into the international research network, is based on the system of management stemming from the experience of significant world research institutions. The internal language will be English, and Tomáš Hruda, the executive director of CEITEC, says, “We are already occupying research teams and key managerial positions by recognized foreign experts. We have already started cooperation with the most significant global institutes.” He adds that there has been interest from world experts to work in CEITEC, and successful Czech scientists now will have a place to come back to from abroad.
Two old pals, once classmates at Minami-Oei Primary School in Osaka city of Japan, never would have dreamt that they will jointly work to develop a commercially successful disinfectant six decades later. One of them, Sunao Kubota, became a physician and professor of General Surgery in St. Marianna University School of Medicine, and the second, Nobuyuki Yamaji, became an electro physicist with Kyoto University.
Yamaji was working on the implications of electric shock or lightning on plants and mammalian tissues, and Kubota was busy with his surgical work, trying to find a solution for his skin-allergy to alcohol. It was a casual meet-up in their native town a decade ago when they got to know each other’s work, with Yamaji describing to Kubota how plants and mammalian tissues secrete a unique layer of fluid after getting hit by lightning or electric current. Yamaji wasn’t sure of the significance of that layer of fluid, but as an electro physicist, he was thinking that the tissues might produce the secretions to neutralize the effects of the electric current. However, Kubota went back to his office and started analyzing of the ingredients of the secretion.
Eureka! One morning Yamaji got a call from Kubota saying that the significance of the secretion might be to prevent the entry of pathogens through the dehiscence made by the exit or entry of the electricity. For the next 10 years, Yamaji and Kubota worked to isolate the ingredients of the secretion, one of which was a form of citric acid, an ingredient of several food additives.
As their novel molecule could kill pathogens, Kubota didn’t have to depend on alcohol-based hand disinfectants when entering the ICU, and beyond that they have now made a multipurpose, alcohol-free product that can not only cleanse the hands, but also disinfect clinics, isolation units, operating rooms, etc. When they found out that their product could effectively destroy the influenza viruses (including the avian flu strain H5NI), they convinced the Japan Railways to spray their product inside the coaches of the trains during flu seasons. Today, a Japanese multinational company is selling their product with a brand name “Clinister” all over the world.
Kubota, a retired professor of general surgery, and Yamaji, a retired scientist, have become partners in a new business, which possesses the IP rights of their inventions. They have outsourced the manufacturing of their product to a pharma partner, and the exporting is done by a trading company. They have joined with companies in Asia for packing their products, and now are looking forward to a worldwide blast.
As I was reading the story on synthetic biology of Ham Smith and Clyde Hutchinson, I was reminded of Kubota and Yamaji.
I decided to give the title “Electric Biology” to this post about two septuagenarians who found a solution in biology from an original research on electric shock and lightning.
Though their association is from childhood, what has opened this new product to the world was their open-ness to discuss with each other their professional issues, even though they work in separate specialties.
Out-of-the box ideas and solutions are possible only when you share your problems with people out of your specialty; when you do so, solutions will pour in.
Entrepreneurial life sciences companies have set their sights on overseas markets and have formed international partnerships to gain access to distribution channels and insight on product specifications, registration, and user preferences. I estimate that this “global health” market place is between $250-300 billion in annual sales, using a 2009 pharmaceutical sales forecast that put 14% of the total of $820 billion resulting from the emerging economies of China, Brazil, India, South Korea, Mexico, Turkey, and Russia (2009 Forecast), and so about 17% ($147 billion) occurred in the rest of world including those countries with few resources in health care. Applying the same ratio to a world diagnostics market of $44 billion, I add another $14 billion, giving a approximate non-US/EU/Japan global health pharma/diagnostics products market of $276 billion.
For these entrepreneurial companies, the number of partnerships between companies in the US, Canada, and Europe (aka “the global north”) and in the developing world (aka “the south”) is substantial. In 2009, researchers at the McLaughlin-Rotman Centre for Global Health of Canada reported on a survey of 500 biotech companies based in north and found more than half had active collaborations with companies in the developing world. To get an idea of the type of collaborations, the same authors interviewed Canadian biotech companies (of which 25% had non-US/Europe, international collaborations) and found collaborations primarily for, in descending order: product development (R&D and clinical trials), contract research or manufacturing, and product distribution. The authors also noted that the collaborations were bi-directional, with knowledge and capital flowing both ways, and were self-initiated; government and international group involvement was absent or limited.
So how may more north-south company collaborations be facilitated? Currently, the major international biotech trade group is the Biotechnology Industry Organization (BIO) which has only a few members from the global south, due to several possible reasons, but probably not the cost of membership which is a few thousand dollars for small companies. For the past several years, BIO’s annual meeting has attracted international attendees, about one-third of the 15,000, hosted 30 national exhibitors, and organized a track on Global Innovations and Markets. The best opportunity for deal-making or at least introductions is the conference’s Business Forum, through which person-to-person business development meetings are scheduled with other BIO attendees. But, of course, this confab is only once a year.
Obviously, in the Facebook age, there is the potential for international connectivity and subsequent deal-making afforded by now almost-ubiquitous internet access. A web-based “International Biobusiness Association” sounds like a good idea, but I haven’t found one. In the vaccine space, there is the Developing World Vaccine Manufacturers Network (DWVMN), which is such a trade group and may be a model. Given my involvement in business mentoring and coaching, I think there is a place for an online matching service for companies seeking access to expertise and connections that may lead to collaborations and have commented and proposed several models in my global health business blog. The challenge, of course, that that deal-making is a physical contact sport, so using electrons to build the required inter-personal relations is just the start. For entrepreneurs who are looking for business in Africa, there is the networking site with a meet-up function, Venture Capital for Africa. Here in Boston we have a great website for promoting elbow-rubbing and information-sharing called Greenhorn Connect. I wonder if the founders of either are interested in franchising internationally?