Episode 5 | How to start your own biotech company – Part 3. Discussion with Experts

To conclude the three-part series on “how to start your own biotech company,” NCI SBIR Program Director William Bozza convenes the four panelists from the previous two episodes to answer questions about their biotech entrepreneurship journeys.

Listen to this podcast to hear:

Steps to take when transitioning from academia to small business
Developing corporate structure and staff selection: when to hire contractors and balancing in-person and virtual collaborations
Benefits of non-diluted and investor funding at different stages of development
Pathways for raising funds

Episode Guests

Speaker	Bio
William Bozza, Ph.D. Program Director SBIR Development Center National Cancer Institute	William Bozza, Ph.D., serves as a Program Director, managing a portfolio of oncology startups (SBIR & STTR awardees) to facilitate small businesses in technology commercialization for cancer diagnosis and treatment. Dr. Bozza is currently leading the Center’s efforts on the Small Business Concept Award for early-stage high-risk/high-reward technologies that target rare and pediatric cancers. He is also taking the lead on the Program’s Peer Learning and Networking Webinar Series to help SBIR companies learn from peers and facilitate collaboration.
Joseph Peterson, Ph.D. Co-founder and CTO SymiBoSis	Joseph Peterson, Ph.D., is the co-founder and CTO of Symbiosis, a pre-market med tech company developing software medical devices for precision cancer care. His team is working to bring a tool for breast cancer treatment planning to the clinic. A recent graduate from the Illinois Chemistry Department, Dr. Peterson is interested in all things computing; however, he is most passionate for developing software to enable scientific discovery. Over the past 10 years, his research has ranged from investigating combustion and explosions, to analyzing the role of gene expression on cell phenotype. Along the way, he has contributed to numerous software projects including the Uintah Computational Framework, Lattice Microbes, pyLM, pyGRN, and ITEP just to name a few. His goal at SimBioSys, Inc. is not merely to develop enterprise technologies for cancer R&D but to create a culture of excellence and innovation that enables transformative discoveries in the treatment of cancer.
Craig Ramirez, Ph.D. Co-founder and CEO Tezcat Biosciences	Craig Ramirez, Ph.D., is a cancer cell biologist by training. He was previously a post-doctoral researcher in the Developmental Therapeutics Lab at UT Austin Dell Medical School. Dr. Ramirez obtained his doctorate in cancer cell biology at NYU School of Medicine under the leadership of Dr. Dafna Bar-Sagi, a world-renowned expert in pancreatic and Ras-driven cancers. During his time in the lab, he uncovered novel therapeutic targets and MOAs, several of which represent the backbone of Tezcat's technology platform. In addition to research, Dr. Ramirez has been engaged in various entrepreneurship and executive programs, including Entrepreneurship Lab (Bio and Health Tech NYC) and the Texas Medical Center Accelerator for Cancer Therapeutics, to further develop the core skill sets and relationships for successful biotech ventures.
Eric Broyles, JD CEO and Founder Nanocan Therapeutics	Eric Broyles, J.D., trained as a corporate attorney, has been a serial entrepreneur for over 15 years and has led breakthrough developments in pharma/healthcare. He is the Founder of ExpertConnect, which manages a global network of 150,000 subject matter experts including 60,000 healthcare/pharma experts who consult with many of the largest healthcare investors in the US. Broyles led the launch of a clinical trial and the first ever development of a transdermal patch with proven delivery of Vitamin D through the skin and Iron and Zinc through the skin with a top university in England who licensed one of Broyles' companies a proprietary formulation for this innovation.
Margaret Jackson, D.Phil. Founder and CEO BYOMass	Margaret Jackson, D.Phil., has worked in pharmaceutical and biotech R&D for more than 20 years, holding executive leadership roles at Pfizer, Napa Therapeutics, and Juvenescence. She specializes in identifying transformative drug discovery projects and translating them into high-value clinical drug development programs with an emphasis on translational efficacy, early safety de-risking, mechanistic biomarkers, target engagement biomarkers, and PK/PD modeling. Dr. Jackson has built and led multiple matrix preclinical and clinical development teams from hit identification to Phase 1/2 clinical studies. She has consistently delivered first-in-class and best-in-class programs, spanning small molecules and biologics for women’s health, diabetes, obesity, anorexia-cachexia, and fibrotic diseases.

Show Notes

Articles referenced in this episode:

Visit our website, sbir.cancer.gov, for the latest funding opportunities and commercialization resources to support your journey from lab to market.

Episode Transcript

To conclude the three-part series on starting a small business, NCI SBIR Program Director William Bozza convenes the four panelists from the previous episodes to answer questions about their biotech entrepreneurship journeys.

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BILLY: Hello and welcome to Innovation lab, your go to resource for all things biotech startups brought to you by the National Cancer Institutes Small Business Innovation Research, or SBIR Development Center. Our podcast hosts interviews with successful entrepreneurs and provides resources for small businesses looking to take their cutting edge cancer solutions from lab to market.

BILLY: I'm Billy Bozza, a program director at NCI SBIR and today's host. In the last two episodes, you heard from four of our companies about how they went about kick-starting their small businesses. Today, we are bringing the speakers together to answer some questions from researchers and to be entrepreneurs.

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BILLY: OK, so I don't want to take any more time. These are our panel speakers. I'm going to let each of you introduce yourselves, moving from left to right. If you could just mention your name, your company, role in the company, kind of, you know, quickly summarize how the company got started, and then I thought it would be fun to do like an icebreaker, talking about company culture and if you could each take about, you know, 2 to 3 minutes in time, so we have sufficient time for questions that'd be great.

MARGARET: Hi. I'm Dr. Margaret Jackson. I'm the founder and CEO of a company called Biomass. We are a preclinical stage company focused on the TGF beta super-family, developing therapeutics for cancer induced anorexic-cachexia. We have been successful in achieving a SBIR phase one and a phase one federal contract grant, which really helped get Biomass off its feet to generate proof of concept data to be able to seek further investment from investors.

So as per the icebreaker culture, you know, I have lived the world through academia. I have also had a fabulous 15 year career in large pharma for developing drugs and now I’m working in the smaller business biotech world. So the cultures are very, very different and being able to set up Biomass, we were able to set up our own culture.

In large pharma, while it's great to develop therapeutics, you're working with fabulous talent, a lot of resources and finance to move projects along. It's quite periodic, it also is slow in decision making. So in a smaller company, you're able to have a flatter structure, less bureaucracy. And you're able to make decision-making much more quicker and be more nimble.

And we're able to set up our own core values, which is on our web page, which is really to focus on scientific excellence, innovation, and people. And we also hold everyone accountable to get things done and at higher integrity. So thank you.

BILLY: Thanks, Margaret. Eric?

ERIC: Yeah. Hi, I'm Eric Broyles. I'm the CEO and founder of Nanocan Therapeutics Corporation. And Nanocan is a preclinical biotechnology company that is working to commercialize a patented immunotherapy delivery technology developed at Harvard's Dana Farber Cancer Institute. We’re the nanocancer global exclusive licensee for the technology.

As far as company culture, so I'm actually a lawyer by training, I practiced corporate law for 10 years before becoming an entrepreneur, and I've done healthcare deals for the past decade or so, and so definitely a big difference in culture from being a lawyer to being an entrepreneur and certainly being an entrepreneur in the healthcare and biotech space.

I would say our culture as a company is obviously innovation is very important to us and sort of patient centric. We always keep in mind who is the person that will benefit from our innovation? And that's the thing that drives us, each of us, every day as we roll out our technology.

BILLY: Great, Craig?

CRAIG: Hi, everyone. I'm Craig Ramirez. I'm one of the co-founders and the CEO of Tezcat Biosciences. We are developing a RAS cancer therapeutics platform with the lead asset identified. And this is all really based off of my work at NYU while I was getting my PhD, where I then created this company. We're still early stage. It's still myself and the other scientific co-founder with a lot of advisor advisors and consultants. So it's kind of hard to talk about company culture because it's really, you know, me and my scientific founder and our kids around us as work from home and you know, navigate the startup and early family life all at once.

But, you know, I think for us it's really just continual learning, I still feel like sometimes I'm that academic where I'm learning about accounting, I'm learning about the legal, you know, learning about how to scale the business. So it's been cool.

BILLY: Thanks, Craig. Joe?

JOE: Yeah, Billy, thanks for the invitation to speak today at the panel. I'm Joe Peterson. I'm one of the co-founders and Chief Technology Officer of Symbiosis. We're a med tech company based in Chicago, Illinois and developing precision medicine tools based on AI and biophysical simulations, primarily in early stage breast cancer, but across additional indications.

The company was founded five years ago, initially with support from an SBIR phase one grant. Since then, we've completed a second phase one and are working on a phase two grant from the NCI and have raised the Series A round of financing.

The company was founded on three principles. The first is scientific integrity, the second is honesty and innovation, and the third is to always keep the patient at heart. And so our goal in everything that we do here at the company is to push towards improving the lives of patients and that comes through our various different software medical devices that we're bringing to market.

BILLY: Great. Thanks Joe. Yeah, so I'm really happy with this panel. And we organized it in a way to have people that have started up companies from different places, right? Some spinning out directly from universities, other that have spent time in big pharma, and others that, you know, come from in Eric's case, a legal background, and was able to license the technology from a high-powered institution, so all different avenues. So feel free to go ahead and type your questions in.

I don't see any yet, I have a few banked ones to get us rolling. Now feel free to enter any questions at anytime. So I guess one way to get started is it's a daunting, it's a big commitment, right, starting with small business. So how do you know when is the right time to do this? And what were the key factors in your move and making that key move to starting up a small business? I'll leave that open to anyone who wants to jump in.

CRAIG: I guess I'll start. I just wanted a different type of challenge than what I was getting in academia. And after, you know, along with the other co-inventors at the university, you know, seeing the potential of what we've discovered, I wanted to see it through at least to a point that I could take it, and so that's when we started talking to the right people about starting a business and seeing, you know, how to get this done and just get into the driver's seat to move it forward.

JOE: Yeah, sure. So I think I think it there's a couple of things that have to come together. Part of it is the technology space needs to be ready. The technology needs to be ready. You need to have conviction both in your team and others, and I'm constantly reminded of the 2000 tech boom and ultimate bust. If you think about it, there were companies like Uber, there were companies like Go Puff.

There were companies, much like many of those that are successful today, that weren't successful just due to sort of the timing and the availability of technology. I think this is especially important from a med tech setting where there's a huge push in digitization of assets within hospitals and healthcare settings that wouldn't have been possible to create solutions around in the past.

So, you know, in terms of AI and other solutions like those that we're developing, the timing I think is super critical. The other is the conviction of the people that that you're working with, those willing to come together and work hard and fail and learn along the way.

WEIX: Yeah, I'll piggyback on that. In terms of I really want to stress the sort of the conviction part and the commitment. So I've been in my business for three years and I've not taken any salary in three years time, right? And so and there are a lot of hard days in starting a business and a lot of bumps and bruises. And so having that commitment and then also having a team around you that's also committed. But prior to getting into the business, I think it's important for you to understand what's your investment thesis before you decide to just take on anything and do as much due diligence as possible.

Now, I have a little unfair advantage because in one of my businesses is an expert network and I'm sure you've all have probably heard from them. These are these firms that call you to ask you to talk to Wall Street about something. I happen to own one of the largest ones in the US and so I had the ability to tap into all the top key opinion leaders about the innovation that I was exploring.

But more importantly, the innovation that Harvard licensed to me fit within an investment thesis. I had started making investments around the whole concept of innovative delivery systems, right? And that's my sort of narrow focus. I have a patch technology company in Europe that is solely focused on delivering actually vitamins through patches, but there will be regulatory approved patches.

Another company, again, in the delivery space. So this innovation, which is about making immunotherapy more accessible, right now, it's delivered systemically, our technology allows for a seed to be implanted and have micro doses over a three-week period from a slow release of this technology. And so that fit within my thesis of finding a better way to make medicines and things available to the body through delivery.

So I'd really ask you to press yourself on why am I doing this? How does this fit within, you know, sort of my thinking about where the world's going to go? And I think that will be very important to you as you move forward.

BILLY: One follow up question is how much time did you spend upfront in the beginning kind of understanding the market potential for your product and kind of identifying any potential barriers to market entry? Because I know those are some critical things that peer review looks at for phase one SBIR, so I'd imagine that's something that you all pay some attention to as well.

CRAIG: I mean, for me it was part of my whole PhD, you know, in the academic setting, working with the, you know, the cancer centers and the clinicians. So it wasn't one of those things that I actually, you know, had to go out and start from scratch, it was kind of just an accumulation of all that work and then it was just, “Oh, there's this part of the application. OK, let's actually sit down and just put it on paper.” But that's a unique situation, coming from academia.

BILLY: Got it. Thanks, Craig.

MARGARET: I just also want to add that anyone that is being successful in achieving like an SBIR award, there's a fabulous opportunity to also apply through the NIH I-Core program, which helps you with commercialization and plans around your company, I was part of that. I'm not sure of any other panelists were, but it was a really excellent resource, a very intensive program over 8 weeks where you get to do market research by speaking to stakeholders, patients, caregivers, et cetera, about 100 stakeholders in a period of eight weeks and collecting that feedback and relaying back and really fine tuning your commercialization plan and any issues around market access. So I would strongly recommend as soon as you receive an SBIR award to apply for the NIH I-Core program.

BILLY: Yeah. Great, thanks, Margaret. Great plug. That's one of our high-powered non funding resources. It's a tremendous opportunity to refine your business model canvas and understanding. A bunch of questions coming in now, so now we'll probably jump around a bit. This one, I think kind of fits into this early stages of starting up your company. What advice do you have for putting together an advisory board for your company?

ERIC: Yeah, advisor boards are critical to early stage companies, and for me it was especially critical because, you know, the capital markets, they look at me, they say “Well, you're a lawyer, right? You've had some successes in healthcare space, nothing this technical.”

So for me it was very important to surround myself with key opinion leaders and I've done that. I have the former head of Tricare on my board, I have the Chair of the Credentialing Committee for the American Board of Radiologist, so he actually certifies every radiation oncologist in the US, he's on my board. And so I really wanted to pick people from top institutions, but then you also have to make sure that they are available to you, that they're not just the name to show up, but that they actually add value to you.

And I've been fortunate enough to have, again, top doctors from Cleveland Clinic, Memorial Sloan [unclear], former head of Tricare, and they're also very accessible. They take my calls, they're very active, they show up for our advisory board meetings, and they're willing to open their networks to help push the project forward.

JOE: Following on that coming from an academic background as well, you may not have the business acumen or as necessarily the skills or expertise to come to market. So in addition to KOLs, I think personal mentors are absolutely critical and ideally those KOLs are personal mentors to you as well. Coming from a scientific background and not a healthcare space, it's been really important at Symbiosis to recruit those who have both business acumen and clinical experience.

We’ve brought in people from various different clinics around the company. That will help you understand not only where you're going with your business, sort of fill that market research side of things, but also to build a group of people who believe and can help you through those pivots. You will experience pivots in your business and it's important to have those people who are on the ride with you through those.

MARGARET: I would also just like to add that, you know, while sometimes it's good visibly to have an advisory board and that's important also when you're starting to interact with investors, but I do want to emphasize what Joe said, you really need to surround yourself by people who really cover a lot of your weaknesses that you don't have. And that doesn't need to be an official board, right? I'm here in the Massachusetts area. We are, we are –

We have loads of companies here and any number of members of the various companies in this area will happily take a call or a coffee break and have a conversation. Also, so those are sort of informal settings, the other is to really expand your network and get involved in various programs. I participated in a life science company accelerator or incubator program for women in life sciences.

And that was another excellent avenue to be able to learn a little bit more about how you present, etcetera to investors, but they were also giving you an advisory group of experts who had lived and breathed this previously, and who could be mentors for you. So they weren't officially on a board, but they were real great supporters through that program and continue to be after the program.

So you really just need to surround yourself with people and get involved with expanding your network and trying to really get involved in as many various programs where people have had experiences in areas where you've had weaknesses.

BILLY: I have a question here and this is tied to, I guess, marketing outside of the US, if any of you had experience developing solutions and hopefully commercializing products outside of the US and internationally, what are some of the associated upsides or challenges? And before you answer that, I'll just give a quick reminder, for SBIR funds, all dollar and work must be spent within the US, but of course, outside of that, you have opportunities to go in other markets. Eric, I feel like you mentioned this already a bit.

ERIC: Yeah. So Nanocan, part of the agreement I had with the professor at Harvard Medical School, who invented this, he said, “Look, I want to make sure you get this technology to poor people around the world, right, because it makes immunotherapy accessible and really affordable.”

And so I made a commitment to him to do that, and I've taken it seriously. I've actually spent a month in Africa early last year meeting with various stakeholders from the regulatory authorities to universities that could be potential partners to extend our US based clinical trial, which we hope to start this year, and thankfully to NIH grant funding is very critical to that.

Our STTR funding is very critical to launching our phase one study in prostate cancer later this year. But with that said, I've spent again a fair amount of time in Africa and other countries in the Middle East, I'm talking to potential collaborators and there you just, again, your advisory board is helpful, your personal network, and then finding the right fit for your product in the market that you're approaching.

And I think you'll find openness, particularly in developing or low and moderate income countries, you'll find an openness to discuss. It takes some work and some effort and you probably, you know, I wouldn't get distracted with it. Meaning if your core focus is the US, do that. And so in our mind, our core focus is launching this in the US and then if the right opportunity opens, it presents itself, we'll extend the trial to a market in Africa and I think we have some opportunities to do that.

JOE: I can't speak directly to marketing overseas or expanding business overseas, but a few considerations that I am aware of are licensing technology from either governmental or academic institutions in the United States, there can often be some restrictions there in terms of manufacturing, as Billy mentioned, in terms of SBIR where those funds can be spent, so there are considerations there.

Additionally, just in the medical device space, there's significant changes in regulations around the world, especially in Europe and some of the other countries that are very quickly changing the way in vitro diagnostics and devices are considered by those regulatory bodies. So it's both an exciting and somewhat at an uncertain time in those areas. So be aware of some of those trends, book at some of those trends, and consider that in your overall business plan.

BILLY: So we have a couple of questions all related to funding, makes sense, it's a hot and important topic. One I think I can answer, it's about funding levels for stages of SBIR. For phase one, it's $400,000 and for phase two it's $2 million. Now, for the panelists there's a question on is there a strategy, is there a good timeline for applying to SBIRs looking at non diluted funding versus raising money through angels and venture firms? Do you do both in parallel? What's your experience and what's a good approach?

MARGARET: Maybe I'll chip in with this one, because, you know, I think you should all – the role of a CEO of a company is always to raise money, so you're doing everything in parallel. But I would strongly recommend, in setting up a small business, is to really go down the non dilutive funding route first. It's highly valuable for three reasons.

One, it's scientifically reviewed, so it gives you validity of the science, the work you're doing when you go out to an investor. So that speaks a lot, because many of the investors maybe don't have knowledge in the scientific area that you're working in. So that's a ticked box. Number two is it helps you create value in your company if you've received that grant, because you're moving your project along, hopefully to a value inflection point, which means you've created value in the company rather than just maybe an idea, which I think is good when you're going to speak with investors.

And then third, it doesn't take equity of your company as you're trying to develop that initial sort of proof of concept creating value in the company, early value, so really go down that route. And I personally started my -- applied for my SBIR and federal contract really with no real preliminary data, like a lot of what you require for a lot of like RO1 grants, if that's what you're used to, it was really going through with the idea. And that phase one was really to help you get that proof of concept, which –

So we really, I would say, go down the non diluted funding first, but in parallel, you always need to be bringing money into the company, so you do need to be speaking to angel investors and also see angel investors as well. I do want to put a plug in for my own learning experience, though is it's also important to understand the eligibility criteria of your company before going to speak to investors as well.

So if you have a single investor with over 50% of your company, you are no longer eligible as a company for SBIR grants. So make sure you use that in your negotiations with investors.

BILLY: Thanks Margaret. Others, I'm sure others have other situations or strategies, or is that pretty much aligned with your experience?

ERIC: I think Margaret hit the nail on the head. I mean it, the answer is D, all of the above, it's just D. First of all, it's very tough raising funds, right, for business. You gotta be -- you're going to hear a lot of no’s, you're going to have hear a lot more no’s than you will yes. And so you really have to -- the non dilutive approach is very important, as Margaret said, it's a great signaling and sort of validation point.

And then again, the lack of dilution, but you need to be out talking to every potential investment resource, whether it's angel networks or friends and family, private equity, venture capital, whoever you can talk, soft dollars from states and cities, sometimes there may be soft dollars available to help your innovation, that's also non dilutive funding. But you got to do all of the above.

JOE: To Eric’s point there, starting those relationships early, even if perhaps your technology is not ready or your business plan isn't ready, showing people where you're at and showing that progress, maybe if you do receive an SBIR and you're delivering towards that progress, that's something that you can you can take out and build that confidence, not just sort of the scientific validity, but say, “Hey, we're meeting our milestones as we go along through this process” and that builds that confidence and the credibility with those investors, who may not initially be interested but may come back around in the future, whether that's angel or venture capitalists.

BILLY: Thanks Joe. This question kind of relates to what we were just talking about, seeing as you progressed towards phase three. I'm not sure if that's, you know, clinical or SBIR phase, but I guess as you move down into later stage development is kind of funds that you raise, is that tethered to giving up equity? They mentioned here credit, I'm not entirely sure what that means, but maybe I guess they're asking options for raising funds and then giving a portion of the company versus giving you know dollars back. Eric, you mentioned soft dollars, someone can speak to that a bit.

ERIC: Yeah. I mean, you really have to be thoughtful as you build out your capital stack, right, and think about -- but as your -- Look, my goal was I want to take as little capital as possible and so having non dilutive capital is a good source of that, but I want to take as little capital as possible so I can hit a valuation inflection point, right?

And so for us, it's about launching our phase one trial, right? After you get phase one, and I'm talking in the clinic, now not clinical FDA, IND phase one clinical trials, that'll be a valuation inflection point. So we'll be able to go out and raise additional funds at a higher valuation, which generally means lower dilution, but you're going to –

You should just plan on taking dilution and the earlier you are, the more you're going to be diluted because you have less to really show. And by the way, you'll find in the biotech space, and this is actually a little source of frustration for me, there's kind of a set template. People want your company to be in it.

They want you to be between kind of $10 million and kind of $15 million. And they want to buy 15 to 20% of the company and almost doesn't -- I hate to say it -- it almost doesn't matter what your technology is or how, you know, that's just kind of the market, if you will, for early stage healthcare and biotech investing. They're going to look at evaluation, at that number. So if you have a $10 million valuation, somebody puts in $2 million, they're going to take 20% of your company.

And the question you should ask yourself is how far can this $2 million take me? Can this $2 million help me to drive the value of my company up to $40 million, $50 million, or more?

MARGARET: And I would just say that that first, for that early investment, that's probably the most expensive part of the investment in any company. So be very thoughtful. So try and get as much non dilutive first, if you can.

CRAIG: And there are non, you know, to Eric's point about kind of the template, there are also less traditional milestones that might be specific to your technology as well. And then this goes to, you know, reaching out to potential investors or potential partners kind of learning about, they're not necessarily the end user or customer, but they sort of are because they might be participating next round or in a partnership.

So figure out what their pain points are with your technology and then think, OK, with this grant or with this, you know, fund raised, can we address those pain points which will then allow us to either partner or, you know, raise the next round?

So I agree with Eric, there are these, you know, set, almost set templates, but then some sometimes there are these little -- there is some wiggle room depending on who you're talking to.

JOE: Beyond that, I think, as Eric mentioned there are sort of these templates. It's more important to find investors who are going to back you, who are going to be partners along the way, and the right fit for your company necessarily, compared to you know -- as Margaret mentioned, you know, it is expensive to get money early on.

So really important to find the people who are gonna work through it with you to understand the pivots that you're going to take to work with you on milestones and say, hey, you know, maybe, you know, maybe there isn't just one milestone for a company which is a regulatory milestone or a clinical milestone, but to build out a sort of a road map and work with you on that as you're thinking about your future funding strategy.

BILLY: Great, awesome discussion. So I see a bunch of SBIR related questions and if we have a chance, I'll answer those, but if not, when we wrap up, I'm going to share some slides with some program contact information and the best way to is just reach out to a program director myself or someone else on the team and we can answer that. I really want to spend the time mostly, you know, focusing on how to start a small business.

So now we have the question for understanding the need for commercial potential profitability, but how do you balance that if you want to develop an open source or open tools or accessibility for communities that are going to struggle with the price point for technology? I think some of you have some experience in this, so any advice there?

ERIC: Yeah, I mean, your investors -- ultimately look as a CEO of a for profit company your obligation is to give a return to your shareholders and investors, right? That's your number one, right, like obligation and focus. And it's important again to have values in the company, like all my investors know that I'd love to eradicate the words, “There's nothing we can do to cancer patients,” right, which I heard my doctors tell my dad when he got lung cancer right before he died. “There's nothing we can do.”

So, like, that's a focus, and they're like, that's great. Eric, we believe in that, but you got to be profitable, too. And if you're -- Actually, if you're profitable, you're probably eradicating those words. Right? So the profitability lines up with the values.

In terms of how you think about, there are certain legal things you need to be considered of in terms of, like there's certain programs you may involve that where you can't price your product differently, right, depending on -- or you have to give the lowest price point if you’re -- So you need to really be thoughtful about how you set up products in communities that may not have access, whether that's domestically or abroad, you need to be really thoughtful and see what limitations you might be putting on your main product.

But for me, it's about proving that our technology works, if it works, then it's going to be disruptive and it'll drive a lot of value to the company and it'll give us flexibility to do some of the things that are core to our vision of helping low and moderate income persons in those markets to access the technology.

BILLY: Thanks, Eric. So here's a good question. What advice and recommendations do you have for helping start a company as lean as possible? Craig, maybe you want to take a shot at this one, you mentioned [crosstalk] --

CRAIG: Yeah, just utilize any resources as much as possible. And I think I mentioned this in my little video is really don't be afraid to ask because if you don't ask, you'll never get, and that's what my dad has always, you know, told me. Yes, you will hear no’s, but then, hey, you're on to the next one and hopefully you'll learn from that no.

Yeah, you know, I don't want to necessarily say it because then, you know, luck will have it that I'll no longer benefit from this, but I usually play the mentee card. You know, I'm just still in my mind, a young kid coming from academia, right? Like, I have a lot to learn, so I always ask for help and people often times have just been so willing and gracious with their time and, you know, what they've learned over the years.

So, I mean, I've played into that and that's helped me a lot, I'm very grateful for it. Hopefully I can still so use that after saying it on this webinar. But yeah, I think the biggest thing is just you just need to be willing to put yourself out there and ask for help.

BILLY: Piggybacking off that, how helpful in your experience and others too, maybe Joe, has the university been in, you know, helping you make the next steps transitioning from academia to small business?

CRAIG: Depends who you talk to within the university. You know, some are more set in the academic way, some really want to see more of a, you know, tech transfer, right, like the Tech Transfer Office. Once again, you have to really put yourself out there and kind of ask for that help.

Unofficial mentors I think are really what helped me get to the even the point of SBIR award. Yeah, and once again, it was just utilizing the resources that were available and they're not always advertised. So that's really where asking comes in handy.

BILLY: Is it worthwhile tapping into, you know, say, like the business department, the business schools, and maybe entrepreneurial classes there? Have either of you found that helpful or anyone on the panel?

JOE: Yeah, absolutely. I think, you know, in terms of the business school, there are often entrepreneurial courses that you can take that can be short courses, they could be long form courses. There's no, there's no -- Nothing better than actually jumping in and doing it. But often universities have many different things that you can take advantage of: pitch competitions, meet ups, incubators, tech transfer offices, as Craig was talking about.

There's oftentimes an ecosystem around good universities because that's just what happens when you innovate. So as to Craig's point, they may not be well advertised, so getting out there and networking and learning about those resources is huge.

I'd also say don't forget the federal resources. You know, NCI beyond just the funding has a huge number of initiatives like plan, like the investor initiative, like I-Cores that you can rely on. The Small Business Association has many different courses. And then within large communities like Chicago there are accelerators or incubators that can be rather unique in the way they provide support.

The general approach tends to be taking some equity in the company, but there are different models out there for that type of support. So, you know, there's a lot of opportunities out there, there's a lot of options, there's a lot of resources, and you know part of it – The hardest part is oftentimes finding those.

BILLY: Great, thanks Joe.

MARGARET: I think one other thing, just to add, that one of the biggest sort of costs in a startup company is full-time employees. You know, we heard from George, like, sorry from Eric about, you know, not taking a salary, like having a full-time employee in your company requires having that salary and you have obligations to that individual or people in your company.

So as a startup company, I think be very -- to be capital efficient, be very thoughtful, do you really need to have a full-time employee for the activities that you require? Yes, you want the right talent at the right time, but that could be done through consultancy and done through, you know, CROs or various other groups that will charge per hour or through like a retainer, but that you're not really having to have the full obligation of a full-time employee and plus benefits etc, as you get the company up and going into a growth phase.

BILLY: Great. Thanks, Margaret. There's two questions here. I think they're getting at the same thing. It's kind of balancing SBIR funding versus investor funding and in this one specific example, investor funding happened first and I think that's OK, right? So maybe this looks like you've already established your proof of concept and now you can think about coming in with either a fast track or direct to phase two application and really driving commercialization of your technology forward.

You know, it's also a good thing, right, if you have buying power from investors that says that whatever technology you're trying to development, you've got some tracks and you've got some interest. That's the ultimate goal for this, for our program is for us to de-risk your technology, put you in a place where you can go out and raise external funds and really, you know, market your technology. So if you've already done some of this, you know, I don't think -- that's definitely not a deal killer at all.

MARGARET: I think if you're applying for, you know, non dilutive funding, if you had a potential investor maybe hasn't committed yet, it does help to have maybe a letter of support that, you know, if you were going forward for this non dilutive funding opportunity that you would down the line have a potential investor and I certainly -- I did that when I applied, I don’t think that hurts.

If you're going for non dilutive funding, investors love that because it's non diluted, it's non diluted to them too, so having the opportunity is a win-win for you as the founder and also for the investor. But I did stress, just be really careful, if you're taking an investor money to make -- and then applying for thinking about applying for SBIR, you do need to be eligible as a company to have -- make sure that you don't have a single investor with over 50% of the company.

BILLY: Yeah, great point. Thanks, Margaret.

JOE: And to add, there's the focus element that's incredibly important to, you know, one thing companies with technologies or technology platforms like to do is try to run after too many things, so making sure that that funding and what you're trying to do with it is aligned with that path to market, I think is something you should you should think critically about, especially in terms of SBIR contracts, you know, versus sort of the grant mechanisms where there may be more specificity in the former than the latter. Great opportunities, though.

BILLY: Joe, I think I have one for you, so since you're speaking, I'll go ahead and phrase it, for entities delivering IT technologies or leveraging them, do you recommend having software engineers in house or contracting or another approach for that?

JOE: Yeah, that's a great question. I think to Margaret's point earlier, you really need to think about the trade-offs between full-time employees, especially if maybe your runway is minimal. Where I draw the line there is in the distinction between, is this a skill set that is going to be necessary and critical for the regulatory approval process?

If you're developing med tech devices, that will be regulated, I think it's absolutely critical to build those skill sets in-house and have those skill sets in-house to be able to run the documentation play for regulatory clearance or approval. If you're thinking more of a digital health, or if you're thinking more ancillary product features outside of maybe a device function then think more about outsourcing.

All that said, initial prototype, I think it's very reasonable to try to outsource that. We did some of that very early on, use consultancies to sort of stand up our software architecture and then hire people to come in and sort of flesh it out. So I think all options are on the table, but think really, really hard about the decisions between the two.

BILLY: Thanks, Joe. This is piggybacking off of that and this is open for all panelists, and I think they mentioned collaborators, but I think we can distinguish collaborators versus maybe contractors CROs, CMOs. How important is developing face time, you know, with these collaborators or contractors and is there an estimate of how much face time in person versus virtual, now that we're in mostly a virtual setting? Any comments there?

It's a tough one. It's probably going to depend on, you know, specifically who the collaborator is, how much percentage of time they have in the project, or exactly what they're doing. But I think it makes sense to me and I'd like to hear from you all, if you need to have some of this one-on-one interaction, right? If you're leveraging a well established CRO or CMO, you know they have the ability to manufacture your therapeutic to perform, if we're talking therapeutics toxicology studies. But do you need to – How much do you need to keep on top of that to make sure things are operating in a correct manner?

ERIC: I would suggest you be very aggressive with that. So for us, so we have a CDMO that we work with and we have at a minimum a weekly meeting with them to review where they are with our product development and then over overseeing the CDMO, I hired a separate CMC expert, a guy who ran a division for Pfizer manufacturing.

I hired him separately just to be a consultant looking over their shoulder and we talk to him almost every day, right. And so we're very -- and so our engagement -- And physically he helped us to pick our CDMO, so he and I probably took five trips across the country to do like many FDA audits of CDMO sites or CMO sites. And so he's a trusted advisor that is very active with the company and is on multiple calls and emails with some of my full-time employees every week.

Now, for some of our CRO work. So we're doing, for example, our last IND enabling study in a large animal with our technology, that's a trusted CRO that even Johnson & Johnson, Merck uses, so I'm not looking over their shoulders, they've done a million. Of these type of studies, and so it's less interaction with the CRO for our last study.

But on the manufacturing, very, very hands on. But it will depend on where are you, what are you trying to accomplish, and you'll have to make the call on that. But for us, with this kind of innovative product that you know people are like, wow, will this thing work? We spend a lot of time on the actual manufacturing of it because it's only been made in an academic lab up at Dana Farber, transferring that to a GMP facility is a different, different ball game altogether.

BILLY: Yeah, great point, Craig, Eric, sorry. Craig, did you want to add something? Did I cut you off?

CRAIG: Oh no, I was just going to say thanks for the pat on the shoulder. No, I mean, we've been completely virtual this entire time and I think kind of to Eric's point is it depends on your technology as well and who you're using. You know, if they've created this, it's no problem to use them, right, have your check-ins, but really they are the experts in that.

And for us, when it comes to our collaborators, because whoever asked that question, you specifically asked about collaborators, once again, it depends where or who you're using. So for us, it's the lab that I came from. So, you know, my old thesis advisor, Doctor Barzaga [phonetic], probably doesn't want me in her lab anymore. Right? She's had enough of me.

But no, I mean we can plan experiments by text with the post-doc who's working on it. It's just a different age now that that we're working in. So I think it depends on technology, it depends on who's doing the work, and how comfortable you are with those people.

JOE: Something in the device space, when you're building something for a user, as we are, nothing beats on the ground observation. A user may tell you they have a desire or need for a particular feature, but they may not necessarily understand all the inefficiencies with their clinical workflow. There's nothing that beats being on the ground with them, observing how they work, and how that affects their day-to-day.

Not to say, not to trust them, but, you know, trust, trust, but verify. I think the other thing to that is there's something that you, you know, especially collaborators on the clinical side, that you aren't necessarily going to get from a purely virtual meeting. There's the relationship side of things that can be very, very beneficial to work out in person. So I think there is a lot of value to in person interaction.

BILLY: Thanks Joe. I have two questions. I really want to try to squeeze in here. So maybe Craig, if you can just answer this one and then I have a wrap up question. There was a comment that you licensed your tech from your university and then you filed new patents, maybe this is additional patents to extend your coverage, was this still related to the initial technology, once you set up your licensing agreement? Yeah, can you just comment on that kind of, how you license your technology from the university patents and any additional role the university played kind of there after that?

CRAIG: Yeah, it was unique, you know, or interesting, you know, to license back technology that you were the inventor on. But it was pretty straightforward for us with NYU. I have heard horror stories with some universities. So we were, you know -- It was a good experience for us. But then after that, we decided to file -- They were new patents to broaden protection that was out of the scope of the NYU license.

So we did that all on our own. We're basically taking what we learned from the patent process while at the university and then you know helping -- that helped us guide with our external counsel as Tezcat.

BILLY: OK, great. Now a wrap up question here and then I just have two quick slides to show after this is knowing all that you know now, if you can go back, what is one thing that you know now that you wish you knew when starting up your company that would make things maybe simpler or easier? There has to be items I'm sure.

MARGARET: I raised it a few times through this call is that really you want to make sure you leave the door open to be able to apply for a non dilutive funding. So you know, as you're in parallel trying to get investor funding, make sure that you are still going to be eligible for non dilutive funding because there are criteria that you need to be aware of. And the other is, I would say in addition to that, you need to be extremely organized.

We've talked a lot here about communication, it was the last question about going out to zeros or collaborators, but it's so important that the communication, it's two ways coming back, and when you're going to investors, they want to know what studies you've done, you don't want things sitting in your e-mail. You want to make sure that you are putting a little bit of extra money into getting those, you know, official study reports with your statistics and everything, getting them archived away, having electronic notebooks, so everything is being tracked real time and is it is accessible and well organized for an investor who wants to go into a potential data room. So I would just do a plug for there needs to be operational excellence as well.

BILLY: That's great. That actually ties into our last planned webinar series, “Implementing a Quality Management System.”

MARGARET: There you go.

BILLY: So if there's any interest in that, you can go on the planned web page and check some of our curated webinar topics and there's a lot of good info on that as well.

ERIC: And I would just say don't make assumptions. Please, please, please ask. I wish I would have asked more questions, particularly taking technology from an academic setting into a GMP, don't make assumptions. If they say, “Oh yeah, the technology does A, B, and C.” Even if you invented it, you need to get a perspective of somebody who has to commercialize that technology because they're gonna be a lot of gaps from an academic setting from a product inside of an academic setting to getting it FDA approved, and so don't make any assumptions, ask the questions.

BILLY: Thanks, Eric. Great advice. So I just wanted to spend some time, there was a lot of program questions that I just didn't have time to answer. These are questions that are easily answerable by myself and anyone else on the SBIR team. If you go on our web page, this is all of our PDs you can match your technology with, you know, specific technology expertise and set up a call, get some more information about the program, and the applicability of your technology.

Someone mentioned how will the audience be aware of future upcoming planned webinar topics? So there's a link on our plan web page that gets regularly updated with new information when new video content becomes available, so you can bookmark that. Also, we advertise LinkedIn, Twitter. Our e-mail blasts, our different sections within NIH, so chances are if you heard about this one, hopefully the same mechanism will happen for the next couple of sessions.

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BILLY: Thanks again to our panel of entrepreneurs for sharing their insights and inspiring stories. As always, don't forget to check our website, sbir.cancer.gov for the latest funding opportunities and commercialization resources to support your journey from lab to market.

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This was Billy Bozza from NCI SBIR. Please join us again for the next installment of NCI SBIR Innovation Lab and subscribe today wherever you listen.

If you have questions about cancer or comments about this podcast, email us at NCIinfo@nih.gov or call us at 800-422-6237. And please be sure to mention Innovation Lab in your query. We are a production of the U.S. Department of Health and Human Services, National Institutes of Health, National Cancer Institute. Thanks for listening.

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