Synergy IB Partner, a corporate finance investment firm, and Korea Drug Development Fund (KDDF) shared their know-hows on starting a successful bio-industry startup at the 2017 Bio Future Forum Thursday.
“To start a bio-industry there are four important factors to consider,” said Lee Jong-hyun 이종현, a Synergy IB partner official. “They are -- where the drug pipeline and the funds come from as well as who runs the company and how.”
When discussing the company’s technology for investment, it is crucial to lay out an exit plan for the investors, Lee noted.
“Many startups applying for investment have pride in its technology,” Lee said. “However, what investors want to know is when their investment will bear fruit.”
Exit strategies can include outsourcing technologies, MMA signing with large pharmaceutical companies or open an IPO after proper clinical trials, Lee added.
|Speakers and experts held a discussion on starting a successful bio-industry startup at the 2017 Bio Future Forum Thursday.|
Mook Hyun-sang 묵현상, CEO of KDDF 범부처신약개발사업단, made a presentation about effectively utilizing government and private investment for bio startups.
“It is unlikely that the government investment in R&D will increase,” said Mook. “To maximize the reach to the existing funds, the government should tackle the areas that the private investor will not or cannot approach.”
Such investment includes investment into high risk, rare disease, long-term and large-scale researches, Mook noted
“For startup companies, it is important to follow science that aligns with the global trend to make the company more desirable,” Mook said. “The goal of a startup is to make money. Therefore, researching fields that have not associated with global trends will likely lead to failure.”
However, Mook stressed that Korea bio startups are struggling to obtain private investment, which has led most companies to rely on limited governmental grants to gain necessary funds.
“Private investment is not active in Korea for a couple of reasons,” Mook said. “Mainly there is a lack of exit strategy as Korea relies heavily on IPO as an exit strategy, which normally takes an average of eight years.”
However, relying only on government grants is not a sustainable model and a joint venture that combines technology, cash and management are needed to support bio startups in the long-term, he pointed out.
“Government grants and support should go through joint ventures, which can increase reliability on the startups,” Mook said. “The government should also act as a ‘cheerleader’ in supporting private funds for bio startups.”
During the panel discussion, Lee Sung-joo 이승주, CEO of Orum Therapeutics 오름테라퓨틱, shared five points in establishing a successful bio startup.
Lee’s company is known for attracting a 9 billion won ($8 million) investment in the company’s technology used to develop anticancer drugs and intractable disease treatments.
“The most common mistake of bio startups is that they start too soon with nothing concrete to go on,” said Lee.
The five criteria include having a pipeline, ensuring that there is more than one pipeline and securing their platform, submitting patents and dissertations related to the pipeline, attracting investors through such patents and theses, and having at least animal clinical test results.
Lee Jung-gyu 이정규, CEO of Bridge Biotherapeutics 브릿지바이오, also agreed on distancing bio startups and venture companies from government projects.
“The company timeline in development is bound to get tangled if the company takes in a governmental project,” Lee said. “Companies tend to rely on governmental projects because they cannot bring in people, which slow down the development process.”
Therefore, it is essential to have a “bio-entrepreneur,” who knows how to combine research, patent and the commercial success of a product into a single business, Lee added.
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