Preserving the Promise: 

Improving the Culture of Biotech Investment

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We’d like one hundred thousand dollars.

That is where the events leading to this book started, nine years ago. We didn’t know each other at the time, but had been introduced by a business devel-opment guy who knew one of us was a potential investor and the other had a biotech start-up that needed money.

The transaction never happened, for a variety of reasons: the ask was too high, one of us wanted to be involved in managing the company and the other just wanted a check, the technology didn’t have a target yet—and yes, we almost forgot, the stock market had experienced the worst crash since 1929 just the day before.

Fast-forward 4 years to a panel discussion called the Entrepreneur’s On Ramp, when we found ourselves together again at the speaker’s table. We’re both interested in medicine, and we think new product development should be in service to patients, with finance the byproduct rather than the primary driver. We were both frustrated with seeing lousy, worthless (except in a finan-cial sense) ideas get funded, and critical, transformative, life-saving ones get shelved for want of funding.

So we decided to write a book about it.

There are lots of books about “smart” investing. There are self-affirming autobiographies of people who have done really well providing capital for growing companies. And there are books about the arcane technical details of the deal. But no one has really deconstructed the early-stage, pre-venture capital commercialization process, to find out why so many good technologies can’t get the support they need to reach the clinic. Nor has there been a thorough examination of all the friction in the system: why it’s so difficult to get stuff out of the university, why entrepreneurs have to spend a huge amount of their time chasing the next round of funding instead of on development, why at any given time biotech is either the belle du jour or the scary witch everyone runs away from, why a toxic mix of macroeconomics and investor peccadillos determine whether you and I are going to get cured of cancer in 20 years, and why Angels have passively bought into the venture capital premise that if you throw enough stuff at the wall some of it will stick.

These are some of the difficult questions we’ve wrestled with and tried to answer with this book. We believe in the intrinsic value of innovation, particu-larly as it relates to healthcare, and our arguments proceed from that basis. Big dreams should have the opportunity to be realized. The process should be infused with as much adventure as pain. There are good reasons Angels invest in ultra-high-risk propositions like biotechnology, that transcend simple calcu-lations of return on investment. It all comes down to the idea that solving the mysteries of why our bodies malfunction is a worthwhile thing to do.

We’re sure some of our ideas will be challenged. Capable investors will point to past successes as evidence that the system works, and understate the influence of being in the right place at the right time. The few technology trans-fer offices that are enjoying the fruits of enormous payoffs will say that all is well in the world of moving technology from the lab to the clinic. Founders with billion dollar enterprises will explain how it’s just a matter of being unre-mittingly clever and capable. That’s all true, but to pluck a concept from the political world, these are really the one-percenters. Most investors in thera-peutics companies lose their shirts. Most technology transfer offices struggle with restrictive annual budgets and balky faculty, chasing upfront payments and counting the number of executed deals to prove their value to the university. Most founders end up disappointed after a grueling, painful experience, in a development and financing landscape that has come to be known as the Valley of Death because so many innovations die trying to cross it.

It doesn’t have to be this way. There are better ways to make decisions, to align interests, and to find common cause in the mutually compelling goals of making people better and making lots of money. The expression “doing well by doing good” comes to mind, and there’s a lot more to it than a rationalization for accumulating wealth. It’s really what this book reaches for. Is it the stars? Maybe, if you’re the one whose illness gets cured a couple of decades from now because something didn’t get shelved for the wrong reasons. More likely, it’s advancing the possibility of everyone in early-stage biotech development doing better, in an environment that’s more realistic, more satisfying, and financially and societally more productive. We understand it’s not possible to get there with grandiose prescriptions for doing the “right” thing. We’re all motivated by self-interest and more amenable to change when there’s something in it for us, and we’ve tried to explain what that something is.

So we’ve maintained the vision that prompted our book in the first place, but pulled and tugged and looked under the carpet to figure out why things aren’t working better than they are and to come up with realistic prescriptions for bet-ter outcomes—that also happen to be fulfilling for those involved. We invite you to share our journey over these pages, and present Preserving the Promise as a hopeful step in stimulating an important discussion.

Scott Fishman and Scott Dessain