by Craig Shimasaki
Ready for Takeoff?
        Developing a biotechnology product has been likened to building an airplane while it taxis down the runway.  You feverishly work to complete product development while the runway (your existing cash, your ability to raise capital and your time) is ever shortening.  
        Biotechnology product development, at some point, is constrained by time and limited capital. In addition to time and resource constraints, there are “unknown-unknowns”.  The unknown-unknowns are things that you did not know, that you did not know, that you did not know.  Because biotechnology is the melding of science and business, it creates a business of uncertainty. Biotechnology research begins with promising yet unproven science, although this promise provides the phenomenal opportunity for life-changing medicines.  However, because of this uncertainty, product development rarely proceeds in a straightforward manner.  This brings us to the first tenet of biotechnology product development – Always make allowances for product development pathway detours.

Product Development Detours
Unplanned but Anticipated Detours
        Product development pathway detours are scientific issues that must be overcome in order to return to the original product development pathway.  These scientific detours may include, an unplanned development of a new cell line to express a product in cell culture without Fetal Calf Serum (FBS) because there is not enough FBS commercially available to meet scale-up requirements—such as what occurred with Tissue Plasminogen Activator in the mid-1980s.  Other detours may include an unplanned need to resolve a false-positive problem in a biological assay that was used for selecting lead molecules, after learning these molecules did not work when moved into animal models.  These detours arise from the unknown-unknowns.  Things you did not know, that you did not know—until you got there.  The remedy is to make allowances for them because it is certain that all companies will encounter this phenomenon.

        Universally, proposed product development pathways presume everything will work smoothly as planned, rarely allotting any time for unanticipated work.  Of course, who wants to show a potential investor that they are not aware of all the problems when developing a product!  This type of poor planning is a grave mistake.  

        It is vital to make allowances for the unknown-unknowns, because at some point in development, cash and time become the two critical limitations of a biotechnology company.  Companies that do not make allowances for detours along the development pathway, quickly run out of capital and become drained of the ability to reach the next significant product development milestone.  

Company Valuation Spillover
        This problem becomes compounded since company valuation (the monetary value ascribed to the company) is tied to product development milestones.  For instance, a company with an IND (Initial New Drug) Application on Clinical Hold with the FDA has a different valuation than a similar company with an accepted IND that is beginning Phase I clinical trials.  These two companies have different valuations and differing abilities to raise capital to further their development work.

        That is not to say that INDs cannot be put on Clinical Hold and still be successful.  It simply means that if you only allocate time and capital to reach the IND filing point without allowances for detours, you may be forced to raise capital at a time when the company’s valuation is not reasonable, and depending on the financial market, it may be difficult for the company to raise capital—period.

The Take Away Tidbit
        So, be aware of, plan for, and make allowances for the unknown-unknowns during product development.  In doing this, you will provide your organization with the best chance for success in reaching its product development goals.

by Craig Shimasaki
        What is a Value Proposition?  It is NOT how the science or technology works.  Moreover, it is NOT the neat things the science or technology can do.  It is how your product fulfills the acute needs of the customer; it is the way your product solves a problem for its customers--the more acute the customer’s need, the greater the market will be for your product.  Believe it or not, there are great innovative product ideas that have no customers!  Take for instance the 8-track tape player, which is still an innovative idea--it provides the ability to select and play 8 different tracks with just the push of a button.  Today, these relics are merely collectors items because the “need” of today’s listeners is instant access to any song, virtually thousands, while on an airplane, jogging, or at work (vis-à-vis the iPod) with little or no encumbrances.  Listening to a mere 8 tracks of 1 recording artist only in your car or home while lugging bulky equipment and bulky tapes is not a solution to today’s music listener’s “problems”.  The science and technology of your product may be innovative, but how compelling is its solution to a problem?  Does your future product fulfill a real market need or is it irrelevant because it solves a problem that is not important to any group of future customers? 

The Takeaway Tidbit
        A Product's Value Proposition is One of the Most Critical Elements Any Entrepreneur Should Know!!
        Successful entrepreneurs clearly understand the market need for their product.  They have a compelling value proposition that attracts investors and assures that once the product reaches commercialization there will be customers wanting to buy it.  Make sure your product idea has a compelling value proposition and emphasize this in your business plan.  Entrepreneurs often become myopic and fall in love with their technology but fail to pay enough attention to their product market.  Remember, you are not selling science; you are selling an innovative product that uniquely meets a set of customer needs.  Yes, the technology and science are critical but without a market need for a product and a compelling value proposition, no enterprise will be successful.