Mentor Masterclass – how to build a biotech company with Simon Kerry
Business expert Simon Kerry has built a number of early stage life science companies, including the successful University of Southampton spinout Karus Therapeutics.
In his Mentor Masterclass last week Simon shared his valuable experience of building a biotech company, addressing the challenges faced and how these were tackled.
Watch his full talk in the video panel above or read on for Natasha Nater’s blog from the event. This article’s quotes have been generated using the Synote University spinout transcription tool.
“I’m going to talk a little bit about the biotech industry and what makes a good biotech company,” Simon opened. “But I also want to focus on what makes a good entrepreneur in our industry.”
Simon has spent seven years of his life working outside the UK, in Sweden and Belgium, and 20 per cent of his life working at Karus. “That’s a huge proportion of my life and the good news is providing that I don’t go senile, I should be going for another 20 years in this industry,” he quipped.
He explained that in the biotech and pharma industries “things take a long time”. Simon joked, “You won’t take as long as I did because you will have the benefit of people like me who have taken too long and who you can learn lessons from.”
“What is a biotech company?” he asked. “It’s an innovative small to medium sized company, normally with no sales and no profits, that uses its unique biological insights, coupled to intellectual property, to create innovative therapeutics, diagnostics, medical devices and research tools. In reality, biotech companies are a cash hungry monster that grows slowly and needs constant feeding with increasing amounts of money until it’s consumed by an even larger and hungrier monster.”
Simon highlighted that a successful investor might look at this and ask ‘why a biotech company?’ “They must be a team of magicians,” he explained. Biotech companies are expected to produce successful drugs much more quickly and much more cheaply than the more experienced and cash rich pharmaceutical companies and they can do that whilst ignoring the failure rates of the pharma industry. “Failure rates in our industry are huge,” he added. “For every ten thousand molecules that are found in the lab, one gets to market. From every one that gets to market, only one in three is commercially successful, so the failure rates are huge.”
Most successful biotech companies should not try and behave like big pharmaceutical companies because, as Simon explained, “The bad news is big pharmaceutical companies are really good at what they do, they’ve got more money than you’ve got, and they’re more experienced.” He advised that there is a myth that because biotech companies are “small, responsive, young and funky” that they are also “efficient and super-slick”. Simon believes that this theory is incorrect and advised that there is no difference in the efficiency of either type of company, as biotech companies do more things whereas big pharmaceutical companies make fewer mistakes, so the net output is “very similar”.
“So what have you got to have as a biotech company?” Simon asked. He advises that you have to have something that pharma doesn’t have and that starts with “unique insights”, something that you know that somebody else doesn’t. This is usually around biology or clinical application, where the right people are needed with the right experience, skills and mind-sets. “You need to think about who you want as your employees, the people who are going to rally around you every day and who you want as advisors,” he explained.
The scarcity of resources in the biotech industry is not ideas but it’s money and people. “Timing is everything,” Simon stated.” From Simon’s experience if you come up with something that is a small improvement on “the big hot topic” at the right time then you would have a big win on your hands, advising that if the idea had been discovered five years ago, you would have been too far ahead of your time.
It turns out that CEOs and entrepreneurs are just ordinary people. “I used to think that all CEOs that I worked for had been sprinkled with magic dust and they had some kind of wisdom that I didn’t have,” he explained. “The first thing I learnt when I became a CEO was that this is not the case.” Simon believes that it’s not something which can be found in the genes, “entrepreneurs in our sector are made not born,” he stated.
Simon has found that the people who are successful in his industry come from a whole spectrum of society and that beyond a good understanding of science, “school and university aren’t so important, you don’t need these to succeed”. He advises that successful biotech entrepreneurs are usually those who are scientists first and foremost. “There aren’t many marketing people that make it as a biotech entrepreneur, there aren’t many finance people that make it as biotech entrepreneur, or many lawyers, but there are loads of scientists,” he said.
Karus Therapeutics is a 2005 University of Southampton spinout started by Paul Townsend, Graham Packham and Ganesan. When Simon joined the company as CEO in May 2006, the team had already spent half of their seed money and the first thing he advised was to throttle back on the spending. “We went to people who could do experiments for us and talked to them about getting them interested in what we were doing to ask them if they could do it for nothing,” he explained.
The spinout went on to hire Drummond Paris who had been CEO of Novartis Pharma UK with over 30 years global pharmaceutical experience. “He was a great mentor,” Simon explained. “He never once tried to tell me what to do or what not to do, which is great, and he never once reminded me of how successful he’d been. Rather than telling me not to do something, he let me go ahead until I almost made a mistake and then stopped me. Most importantly he helped me and Karus succeed, but he never took the credit for it.”
“Entrepreneurs should have a good understanding of what’s unique about their company, with a clear vision of how to make it successful,” he added. “You have to be pragmatic all the time. You can’t be single-minded with one idea and follow it through to conclusion. You have to build the right team, look after the cash like it’s your own and you have to do the best science you can afford.”
Simon describes his journey with Karus as a story of hope for cancer patients, with his driving force always being to help improve people’s lives. “With these drugs that are in the clinic now, people who are not responding to anything else, who previously were just going to get worse, their conditions are now improving and I’m delighted that I’ve been a part of that story,” he explained.
He ended his talk on an inspiring note. “When the science goes wrong, and it will because it always does, do it quickly and cheaply,” he said. “Get a good mentor and learn to be resilient through the tough times and be relentless in your pursuit of partners and investors. Keep an open mind and recognise luck when you see it.”
Listen to the full talk via the Future Worlds podcast, available here.
The Future Worlds Mentor Masterclass series will continue later this month. Keep checking the Engage section for new entries from this and other series that can help you and your business idea grow.