I interviewed Malcom Young, CEO, e-therapeutics and asked him his secret to success in raising capital for his biotech. Here’s the gist.
Learn to present your upside potential and manage your downside risk
‘What I think is this,’ Malcolm said. ‘If you put yourselves in the minds of investors, what they like about biotech is the colossal upside potential. What they don’t like is the propensity of these things to bomb and to lose their shirt.’
‘I think the proposition for biotech’s to investors is best when it’s mindful of their need for upside potential and also downside risk. In our case we do that by having products that look pretty exciting and also a platform that produced those things that can produce more.
So, how do you get the proposition to investors right?
Clearly it’s important to focus on the upside potential and the USP’s of your product. But, I think what’s also clear from Malcolm’s experience is to be able to demonstrate you can manage the downside risk.
There are of course lots of factors – for example, many experts don’t have the discovery platform that Malcolm has at e-therapeutics, they are just development only and in those cases, if the assets all blow up it’s game over.
Nonetheless, every biotech looking for investment can ensure they have a strategy to mitigate downside risk – and this needs to be clearly articulated in their pitch to investors.