By Stephen Paylor on September 29, 2017
As an investor relatively new to biotech, I found this book to be very helpful. It is the only book that clearly explains the pitfalls that are unique to biotech investment: high technical complexity, high risk, a long timeline to return on investment (ROI), the extreme technical complexity and how to overcome them.
Ultimately, I'd like to invest in something that can make life better for patients, but it is hard to predict which companies will be successful. A lot depends on the management and the quality of the science, but the book also explains the dominant power held by angel investors and the academic institutions that own and license the technology patents.
Dessain and Fishman are the first to use Porter's Five Forces analysis to explain the dysfunction in the system and how to make better biotech investments.
This book is unique in the way it defines the Translation Gap in biotechnology: (1) Universities don't make what companies need. (2) Good innovation is not always a good investment. (3) Technology transfer wastes money and innovation. It then explains how each of these Gaps works against biotech investors and gives examples of how some biotech innovators are making changes for the better. This is a must-read book for any biotech angel investor.
By DocG on May 2, 2017
Dessain and Fishman have written a much needed and honest account of the challenges early stage biotechnology companies face when seeking funding. Developing high impact new drugs is difficult from many points of view. This book analyzes the challenges biotech entrepreneurs face in getting the first few dollars to move the science "from the bench" into clinical trials.
Preserving the Promise is written by two experienced professionals - one is a doctor, professor, and biotech company founder, and the other is a successful businessman who is an early stage angel investor. Together they look a the different issues that need to be navigated in order to fund a company.
The book looks at the biotech "valley of death" which is time young companies are most likely to run out of money. It starts when the patent for a new drug is written and runs until NDA filing for a new drug approval. The translation gap exists for several reasons that the authors understand and have experienced. Universities don't make what companies need; good innovation is not always good investment; and technology transfer activities are often wasteful.
The risks that early researchers face are explored. These are that results in animals may not translate to humans. Some of forces the authors explore are contradictory incentives for academic researchers as opposed to investors, University researchers have incentives to work on scientific platforms may not directly result in drugs.
Furthermore, conventional mechanisms for funding companies are often incompatible with scientific discovery. Massive investment of time and money to develop scientific platform is not compatible to develop new drugs efficiently. Funding for early companies is extremely small, compared to potential for success, especially for the ground-breaking science the is required to create high potential drugs for large populations. As a business primer for science entrepreneurs, the authors discuss VC trends, such as the decline in company valuation, less syndication, less focus on science versus market modeling, and more hands-on business building.
Why should we care? Large scale development has effectively been outsourced away from big pharmaceutical companies to small, innovative biotechs. If early stage funding mechanisms are not working effectively, then every citizen should be concerned about the health of our pipeline of future medicinal products.
September 24, 2017
Dessain’s and Fishman’s “Preserving the Promise – Improving the Culture of Biotech Investment” is easy to read and understand and ideally suited for anyone considering to participate in this game as well as those that are involved already. They teach valuable lessons that may well make the difference between failure and success. The book is priced very reasonably and therefore an excellent investment in itself. The stories are drawn from first-hand experiences and are naturally told from an American perspective but they resonate well with this reader’s European view.
This is not surprising, as first, the US biotech ecosystem is a role model for other geographical areas, and second, humans often behave the same everywhere on this planet. And third, in today’s world, like it or not, we have to obey certain laws of money. Biotech holds great promises, but Biotech is also expensive, lengthy and risky, and the latter two make it even more expensive. Compared to other industries there often are no well-defined objective criteria to judge a proposed product and this is further blurred by unknowns and high attrition rates lurking in the clinical development program. To wait means to let an opportunity pass. And at the end of the day it also means that an undressed medical need cannot be served, i.e. that an ill patient will not get better and possibly even die. Clearly, modern societies are in dire need of biotech’s health products and therefore “Improving the Culture of Biotech Investment” is more than simply calling out to investors to invest more money.
Preserving the Promise also looks at the roles of the Public Sector (Technology Transfer Offices) and Scientists (Inventors) and provide helpful insight into the different mechanisms, forces and sometimes lunacies at play.
Bridging the Valley of Death is critical for a biotech innovation to eventually make it into a real world product. Although not explicitly stated one can conclude that Dessain’s and Fishman’s own promise is that by improving the Culture of Biotech will lead to a reduction of attrition and an improvement of the Culture of Biotech Investment. Because what everybody involved wants in the end is to make this world a better place by translating Biotech’s promises in a socially and economically sustainable way.