Over the years Bruckner has worked with many development-stage companies. While many mistakes get repeated from company to company, we think three varied examples are of interest to highlight.

1) Misunderstanding the actual role of clinical KOLs

Clinical key opinion leaders (KOLs) play a key role in helping development-stage life sciences companies determine appropriate clinical targets and clinical protocols.  But most companies make the mistake of giving KOLs carte blanche to determine the clinical pathway for their therapeutic, and then accept the recommendations/guidance as a truism.  KOLs have an important perspective for sure, and anything they say needs to be thoughtfully considered.  But while it might seem self-serving for strategy consultants like Bruckner to say this, the fact is KOLs actually have a relatively narrow perspective and lots of blind spots.  They are not thinking strategically about your therapeutic, they are not considering all the moving parts, and they never bring in a payer or commercial perspective.  Many are not even well versed in regulatory policy.  Their recommendations often reflect their own practices and patients, often at prestigious tertiary care centers.   Some will give advice that is focused more in the direction of their particular personal concerns and perspectives (like the last really sick patient they saw who might be helped by an experimental therapy) without necessarily going beyond that.  Worse, quite a few KOLs basically give the same guidance (often without a lot of updating) to every company they consult with—and usually KOLs are working with more companies than just yours.  One KOL even joked to me, “It’s work I do while sitting on the toilet in the morning.”  Guidance from KOLs is essential.  It is not, however, to be taken as absolute.

“We’re selling the company before FDA approval, and it won’t be our problem.”

(Would you care to guess how many dozen times someone has told us this and suffered the consequences?)

2) Achieving far less lucrative exits by neglecting to incorporate long-term needs into the development plan

Development stage companies have two basic functions: raising money and running trials.  So it’s no surprise that many stick primarily to satisfying the needs of regulators. This is a critical mistake.  Ignoring other stakeholders as trials are designed diminishes asset value, leaves opportunities undiscovered and risks unaddressed, and ultimately results in lower assessed value by future exit partners.

I recently had a phone chat with a CEO of a company developing a particularly promising therapeutic.  The early-stage data has been spectacular, the treatment could significantly elevate the standard of care, and the prospects for FDA approval are hopeful.  I asked the CEO to describe how they were approaching concepts outside of a strictly regulatory silo such as building a value proposition, payer needs, and early commercialization.  He replied bluntly, “We’re not, and I’m not concerned about it.  We’re selling the company before FDA approval, and it won’t be our problem.”  (Would you care to guess how many dozen times someone has told us this and suffered the consequences?)  I tried to explain to the CEO why this was a mistake, namely because by not building the drug robustly with a broader view, he was actually diminishing the value of the asset and what a potential acquirer would pay.  He said, “Even if I concede the point and we’ll get 30 or 40% less, so what? We still win!”  When I hear something like this—and this was hardly the first time—I always wonder what the investors would think if they knew the CEO’s candid thoughts.  They would be especially upset if they knew that folding other stakeholder needs into the program could be done judiciously without adding appreciable cost and time. The truth is this kind of short-sighted thinking leaves large amounts of money on the table.  I know from personal experience that business development executives in big pharma love companies like this, because it gives them an easy opportunity to justify a lower price in a transaction while at the same time getting the CEO to agree why it’s reasonable.

3) Spending excessively and in the wrong areas

Can we tell you the number of times we’ve visited promising development-stage companies at their offices, and left with our heads shaking about how wastefully they spend precious resources?  It would be too easy to pick on one particular company that comes to mind, but I guess I will.  They were building out their massive office and lab space with a super hip high-end interior design, despite only having one early Phase II asset.  They needed the big space to accommodate their exploding staff.  We had to tiptoe our way through their entranceway because the tilers were laying the many 1” tiles that when finished 2 weeks later would emerge as the company logo on the floor next to soaring art pieces.  What did that disaster cost, and why on earth did the CEO think any of this was a good idea?

Companies make spending mistakes in many different flavors. Some are way overstaffed with headcount numbers that are shocking, bringing capabilities in-house that would be far more economical to outsource (there go those self-serving consultants again!) or that were simply not needed or redundant.  Worse still, many of these folks come from bloated bureaucracies and are not suited to the nimble and creative needs of a young company, and for them, the solution to filling in these artificial shortcomings is often to hire even more people.  Other companies  go overboard with real estate and locate at pricey addresses simply because it’s the cool place to be seen rather than where they can get their needs met at 20% of the cost. Many also rent far more space than they need (but will “grow into” one day).

Friends, the more money you spend, the more you need to raise, the greater the dilution, the less ROI for your investors and yourselves.  Let’s face it – wasteful spending in development-stage biotech companies is an epidemic.  It shouldn’t be.  Maybe COVID has tempered some of the office space euphoria, but more likely on the other side of the pandemic it will continue to be an issue for many development-stage companies.