Stretching your capital: thinking long, thinking parallel

In high-stakes, capital-constrained environments, it's easy to put your head down and focus on putting one foot in front of the other. When it comes to biotech strategy, however, it's essential to lift your head and think more long-term, earlier. In this blog, we explore how this approach can take your capital (and your company) further. If anything here resonates, please reach out!

The capital environment in biotech is tough. Founders have to grapple with a classic catch-22: they need money to demonstrate traction, but need meaningful traction to raise money. It’s enough to make anyone want to gather their team around a table and tell them to focus on just one thing: reaching the next milestone. As the thought process goes: "If we can survive long enough to hit the next milestone, we’re one step closer to going to market, one step closer to showing we have traction, and one step closer to raising more money".  

While it seems like the most logical approach, is it the most capital-efficient? Building a Biotech released a great podcast episode on this recently. A lot of founders will pick one avenue – say, pursuing FDA approval in the US – and they’ll take a really lockstep approach to it. They’ll throw everything they’ve got at each milestone, then shift focus on the next one, and repeat. It’s like wearing blinders. Sure, you might be making progress, but you’re looking down at your feet to take one step at a time. You’re not looking at the path ahead to see if there are any hurdles you might have to jump over, or to the left and right to see if there are any other paths that might get you to your end destination: getting your drug to people who need it, faster and more efficiently. 

The goal for biotech founders shouldn’t be to play a Mario Kart-style game of getting to one level and then regrouping to get through the following one. It should be to be efficient with limited capital; to make whatever money they have stretch as far as possible. This means planning into the future from the very beginning. What if you looked at all the data, all the avenues, and thought about how you could move quicker in the long-term? 

Let’s use an example from the podcast. Say you’ve decided your goal is to go-to-market in the US, so you throw all your efforts into getting through US trials. But have you looked at other regions? Canada might have excellent centers or a better patient population from your target disease, and the regulatory requirements are similar enough to make it an easy pivot. Or maybe the EU is a better fit because it has more applicable grants, especially if you’re in pediatrics. Some regions even offer very generous cash-back incentives on money spent there. By pausing to look at your patient population globally, the economic benefits of different regions, and what endpoints their regulatory bodies care about, you can develop parallel strategies that could help you move much faster with the capital you have. 

At first, this might seem counterintuitive. You might think you don’t have time to think about all of that ‘bigger picture stuff’, and that you’ll deal with it later on when it becomes an immediate priority. 

But here’s the thing: the cost of restarting is always high. 

If you know there’s something on the horizon you want to do eventually, lay the groundwork for it from day one. To continue with our example, if expanding into Europe is in your plan, try and work with a CRO who can provide global services from the beginning. Something that seems like an unnecessary complication could save you from a massive slowdown - and a lot of capital - from changing course at the 11th hour.

This extends beyond clinical strategy. Think about your team. Are you hiring to get through the next milestone, or are you building a team that can scale with your company and will have the relevant skills to help you navigate multiple milestones.

It’s the same with data. Are you continuously aligning your R&D with your commercial objectives and using that to inform what data you need to generate to meet certain endpoints? No one wants to be in the situation where they realize they don’t have the data they need right now because they were too focused on what data they needed for the milestone before. Without a clear line of sight from goal → data → experiment → milestone, you could be generating data you ultimately don’t need, exploring compounds that don’t make sense, and burning months of runway without moving any closer to going to market. 

Thinking comprehensively and strategically for the long-term is never a distraction from your day-to-day work. It’s one of the most important things you can do as a founder or a leader in the biotech space. It means planning into the future, being intentional with your goals, looking at all the data, and focusing your R&D efforts in a way that maximizes your chances of success over the course of many, many years – and minimizes your chances of funneling your capital towards dead-ends. In the end, biotech companies that float to the top aren’t necessarily the ones with the most money. They’re the ones who thought long-term, acted strategically, and made every dollar count.

If you want to chat more about anything we wrote, or you’re interested in finding a way to work together, let us know!