SBIR Innovation Lab

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.

TRANSCRIPT

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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.

[music]

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 [email protected] 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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NCI SBIR-funded biotech innovators Joseph Peterson, CTO and Co-Founder of Nanocan Therapeutics, and Craig Ramirez, CEO and Co-Foudner of Tezcat Biosciences, share advice on the priority steps aspiring entrepreneurs should take when starting a small business.

TRANSCRIPT

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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, SBIR Development Center.

Our podcast host 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.

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In the last episode, you heard from two SBIR-funded therapeutic companies about how they started their small business. Today, you will hear from a therapeutics company and a device company about their journey going from lab to market.

Up first, we have a medical device developer Symbiosis who will share their journey going from academia to business and the resources they utilize when kick starting that path. Here's Joseph Peterson, the co-founder and Chief Technology Officer of Symbiosis.

JOE: Hi, I'm Joe Peterson, co-founder and CTO of Symbiosis, a pre-market med tech company developing software medical devices for precision cancer care. We're working to bring a tool for breast cancer treatment planning to the clinic. We've completed two phase one SBIR contracts and are working on a phase two contract now. I'm honored that the program organizers invited me to speak to you about our journey and my learnings.

Why did you decide to start a small business? Well, Symbiosis was founded to change the way we understand and treat cancer. We have the belief that comprehensive mechanistic bottoms up technology that accounts for biology, chemistry, and physics of cancer, paired with top down AI approaches, will be necessary to revolutionize cancer care.

It was this belief that spurred us to work to translate research from the lab out into the world. We aim to revolutionize cancer treatment by one, providing physicians with personalized navigation tools to better understand their patients and their cancers. Two, help patients make more informed decisions about the risks and benefits of treatments, ultimately to allow them to find the right balance of toxicity and likelihood of successive treatment. And three, to aid in the development of new life changing drugs so that patients live better, longer lives.

Most importantly for us, it was about improving patient outcomes and ultimately to help more patients experience and cure. How did you manage the transition from academia to small business and what would be your advice to those thinking about a similar change?

The transition is a continual learning process, personally, professionally, and as a company. I love this quote from Steve Blank, who is one of the creators of the Lean Startup Process. He says, "The startup is an organization formed to search for repeatable and scalable business model." What this means practically to a scientist like me is that you're constantly generating hypotheses and testing them with data: market data, customer data, scientific data, and technical data. And ultimately making some bets along the way about what could be a product and who your customer would be.

My advice to those thinking about a similar transition would be first to prepare to wear many hats and finding others who are similarly willing. The startup process is long, requires adaptation, and your company will be understaffed for a very long time. Second, to spend time identifying your strengths and weaknesses, identifying gaps and either self-educating or finding others to complement you is so important to your success.

Third, as a technical person, you may be inherently uncomfortable with networking. Spend the time doing it. When you find people you respect, ask them to be mentors or ask help. It's critical at your early stage in this process. And fourth and most importantly, talk to the customers and potential customers early and often. You may be building the coolest widget in the world, but if it doesn't fit a customer need, you won't have a business.

What are some helpful resources? Non-dilutive funding is a must. Pitch competitions are perhaps the best way to obtain non-dilutive funding. This might be a traditional pitch competition in a startup friendly ecosystem or a less traditional competition forum such as a startup weekend or a hackathon.

Grants and contracts, whether SBIR or other grant programs are great opportunities to prove out of technology prior to development and all the major federal agencies provide these, whether it be NIH, DOE, FDA, or the Department of Defense. Be cautious of the grant versus contract distinction early in the value proposition discovery phase however, as a contract will be attached to a relatively rigid set of milestones, while a grant may allow for more flexibility and the ability to pivot.

Translational research grants, such as those offered by NIH, are excellent options as well, and are generally open to both nonprofit and for profit institutions, however they come with some restrictions. They require a strong track record of research success. Requirements are high, but they can be overcome with great academic or clinical partners. And best of all, early customers could be a pharmaceutical company or a hospital that might pay for your services or other early stage companies.

There's no better way to validate your idea than to show that someone is willing to pay for it. In terms of entrepreneurial training, most large universities have some form of entrepreneurship course. As a tech focused academic, you might not be familiar with the courses offered by your business and engineering schools, but they almost certainly exist.

Most campuses these days also have startup communities that host networking events which are great opportunities to meet like-minded folks and share knowledge. Perhaps the best programs that I've seen are the innovation I-Cores, which is an immersive seven week experiential training program for scientists and engineers in the university focused on customer discovery.

These are also offered by most of the federal agencies and this program was a game changer for how Symbiosis thought about our own product. Finally, there are incubators and accelerators. Many large research institutions, research parks host startup incubators where free or cheap office space and entrepreneurial mentorship can be obtained.

There are also many independent and large tech sponsored technology accelerators. Some examples of the former in the biotech space are Alchemists in the San Francisco QB3 out of the University of California system, Start X out of Stanford, Alpha Labs out of Pittsburgh, or Matter in Chicago. Examples of large tech sponsored biotech accelerators include Johnson and Johnson's J Labs, Illumina Accelerator, and GE Healthcare's Edison Accelerator.

Are there any technology specific considerations when starting a med tech small business? When considering technology that will ultimately impact a patient, a risk-benefit framework is helpful, in fact, it is prescribed by regulatory agencies like the FDA. Similarly, when thinking about your company, there are risks and benefits besides financial benefits which benefits you value will have to be part of your company mission and vision.

The risks, on the other hand, are more predictable. One of our investors laid out their four part model for how they assess risks in potential biotech, health tech, and med tech investments. First, there is scientific risk, is the science sound? Often we can be tricked by confirmation bias or confounding factors. Second, there's technical risk. Can we actually build a technology based on the science? Scaling up what works in the academic lab is often harder than you might expect.

Third, there's regulatory risk. What is the potential impact of your technology compared with the potential harm of malfunction or misuse? Are these aligned and will the regulatory agency come to agreement in a reasonable amount of time to bring your product to market?

Fourth, there's market risk, is the customer actually willing to pay? Scientific processes should be applied to market research, but as with all human decision making, small and fickle preferences are uncertainties. Not to mention that if you land in the space that is worthwhile, there will be competition. Coming up with strategies to mitigate these risks will be an essential part of your journey as a med tech small business.

Finally, what are some of the key challenges you faced and how did you overcome them? Clinical partnerships are difficult to form without prior relationships in either academic or clinical research. Clinical data is king for health, med, and biotech companies, and is absolutely critical both for the pre-market feasibility and the marketing studies that you'll be doing.

Forming those clinical partnerships are more important, though, for the KOLs, who help define your product value proposition and who will ultimately evangelize your technology as they are early adopters. Forming these relationships early on was a huge hurdle. Getting data into the company was a huge hurdle early on, but you have to have persistence and you have to be deliberate in who you go after and how you approach them and bring them on board.

Ultimately, clinical collaborations are things that should last the lifetime of your solution. Where there's initial excitement and then you're burning a huge amount of money for a very long time until you develop that scalable revenue. This includes hurdles along the way, such as regulatory uncertainties, left hand, right hand turns, bumps and clinical and feasibility experiences, and ultimately in adoption.

As with any disruptive technology, the adoption will take some time. There need to be those true believers early on who will jump on board and frankly, we've had some success in this by bringing excellent people and talking to people who are leaders in the field willing to adopt new technologies. But ultimately, the place everybody wants to go and we haven't gotten to yet is reimbursement.

And it will take a huge amount of clinical data, clinical evidence and lots of use to support, but ultimately that's the Holy Grail, that's what's going to make your technology scalable.

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BILLY: Our second speaker is Craig Ramirez, co-founder and CEO of an NCI SBIR funded biopharmaceutical company, Tezcat Biosciences.

CRAIG: Thank you, NCI and the planned Webinar series for asking me to be part of this program today. So when I started on my journey, I truly felt lost and I'm glad there are programs that are helping facilitate this transition from academia to startups.

So my name is Craig Ramirez and I'm a scientific founder and CEO of Tezcat Biosciences. We are a preclinical stage company developing RAS Cancer Therapeutics platform out of NYU and we have been fortunate enough to be the recipient of two STTR awards through the NCI, and I've been asked to provide my take on the first steps for starting a small business out of academia.

Why did I decide to start a small business? Well, I felt like I was in the right place at the right time. I was trained by a world expert in RAS cancers during my PhD. And during this time I discovered a way to harness my observations for potential therapeutic gain. And my thinking was that if this idea is to be pushed forward and given a chance, I will need to spearhead the company as a subject matter expert.

And as I began to think about how this would be done, I grew to appreciate aspects of industry that were not part of my day-to-day in academia. So with my scientific co-founder, Dr. Andy Hauser, we founded Tezcat Biosciences. The transition we took has been gradual. We looked at where we were in the development of our technology and where we needed to take it.

And to reduce personal risk in an already very risky industry, we maintained our positions at NYU while we built out the company. So we started to build a foundation through networking, exploring business models, and really going down rabbit holes of where our technology could potentially be applicable. And when we decided we were ready to explore the next step, we found a university mentor to begin the process of applying for an STTR.

And once we finally received our first award, after many submissions, I took on a full time position at Tezcat. And for those of you contemplating the same transition, three pieces of advice as you start off.

One, be your worst critic about the opportunity your technology addresses and why it should be developed. Number two, set milestones that will fill those gaps or address those concerns you've identified. And three, make sure you really believe in your technology and have the personal ability to execute on your plans.

The first step we took to protect our IP was to disclose what we were working on to NYU's Tech Transfer Office and with their advice, we worked on further developing our data package to support claims that we want to make in our provisional patent application in the future. And importantly, as I say we, I mean the inventors of the technology as university employees.

And once these applications were filed with the USPTO, Tezcat negotiated and executed a license agreement with NYU for exclusive worldwide rights to the technology. And we were fortunate to have help from a law firm for negotiations, but I would be happy to discuss other resources that may be available.

And as Tezcat, we have continued to pursue additional patent applications to broaden the protection of our technology and approach. So two challenges that we have faced include building a robust development plan and understanding key experiments or milestones. So for the development plan, we're not necessarily taught about toxicology, manufacturing, regulatory, or clinical trial design during our academic training, you know, depending on what track you're on.

But thanks to our time in the Texas Medical Center Accelerator for Cancer Therapeutics, we have developed a development plan that will help us get to the next stages. The second obstacle was understanding the most value building experiments in the eyes of potential stakeholders. And so once again, coming from the academic training, we know how to carry out experiments in our field, however, those key experiments that we need to prioritize or address were not always obvious to us.

So thankfully, you know, we listened. We had to, you know, be humble and listen to others. And we always asked potential investors, pharma partners, or other stakeholders what data they wanted to see in order to feel more comfortable with our approach, and this has greatly helped with setting our development milestones, our story, and utilization of funds, which in the early stages can be limited.

And I'll just briefly highlight some resources that I have found helpful over the years, but I welcome any other suggestions or questions. So these resources include city networking events, which can be found through university groups or city and state life science resources. University classes and events have also been a useful place to meet other like-minded people and, you know, really explore ideas and resources that they have been utilizing.

And some universities even have venture groups which can be useful when testing your vision for the startup. Make sure to keep up to date with what is happening in industry through blogs, articles, or newsletters like Fierce Pharma or Fierce Biotech. Also cities, states, and even VCs have incubator or accelerator programs with various offerings.

We participated in Entrepreneurship Lab NYC very early on and then more recently we finished our time at the Texas Medical Center Accelerator for Cancer Therapeutics program. And I would say in terms of resources, just don't be afraid to ask for help. This may not be something you are used to from the academic culture sometimes, but if you don't ask, you will not receive. So I look forward to participating in the future panel discussion and really answering any questions you may have. So thank you.

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BILLY: 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.

[music]

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 [email protected] 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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NCI-funded biotech innovators Eric Broyles, CEO and Founder of Nanocan Therapeutics, and Margaret Jackson, CEO and Foudner of BYOMass, share advice on the priority steps aspiring entrepreneurs should take when starting a small business.j

TRANSCRIPT

[music]

BILLY: Hello and welcome to Innovation lab, your go to resource for all things biotech startups, brought to you by the National Cancer Institute Small Business Innovation Research, or SBIR Development Center.

BILLY: Our podcast host interviews with successful entrepreneurs and provides resources for small businesses looking to take their cutting-edge cancer solutions from lab to market. I'm Billy Bozza, a program director at NCI SBIR and today's host.

[music]

In this episode, you will hear from two therapeutic companies funded by the NCI SBIR program about starting a business and how they kick started their journey going from lab to market. The first company, Nanocan will share their vision, licensing journey, and the various considerations that went into forming their cancer therapeutic startup.

Then we will hear from Biomass and how this company went about building a business team, established a corporate structure, and found resources for managing their business. Now, without any further ado, here's Eric Broyles, founder and CEO of Nanocan.

ERIC: Hello, my name is Eric Broyles, and I am the founder and CEO of Nanocan Therapeutics Corporation, which is a company that Harvard's Dana Farber Cancer Institute has spun out a patented technology that we believe will be revolutionary in cancer care.

Our company is at the preclinical stage, which means we have not done in human clinical trials yet, that is our next phase that we're going to move into over the next 6 to 9 months. We will use a proprietary nanoparticle drone delivery mechanism that actually can intratumorally deliver immunotherapy for certain solid cancers, cancer tumors. And then we have a formulation that works on brain and lung, that is a liquid formulation of this technology.

So I want to talk about why I started a company to undertake this endeavor. And one of the most important things to me is vision. What is the vision that you have? And I met a professor at Harvard Medical School who had invented this technology and just hearing his thoughts about how he developed the technology, what his hopes were for the technologies placed in the marketplace, really inspired me, and I was inspired by again his creativity, his genius, really with making this invention.

And so I really formulated my own vision for how I wanted to take -- where I wanted to take this product. And I was encouraged and inspired that that I would have an opportunity to lead and develop a commercialization of a technology that can save lives.

As an entrepreneur, you have the ability to be creative. You have the ability to make a positive impact on society, and you also have the ability to achieve financial rewards. I want to talk about the steps we took to secure the IP rights to the invention.

Initially I had to meet with Harvard University to share my vision and market approach for their intellectual property. And I'm trained as an attorney and so I understand intellectual property, but it's also very important in that step, after you share your vision and get buy in from them, you should engage good IP counsel, intellectual property counsel.

Following that, you will eventually get a term sheet for your technology, again, this assumes you have not invented the technology yourself. You'll get a term sheet. We got a term sheet and then you will get a draft license agreement. It's important for your license agreement, certain key terms, what's the scope of the license? What's the term? How long will you have the right? Is it exclusive or not? What's the geographical limitations? How much do you have to pay in royalties and are there other payments that you need? And then what are the milestones you have to achieve to maintain your rights to the IP?

Those are all key questions. Again, good IP counsel will be able to -- will know these things and be able to guide you through those topics. What are the right types of corporate structure that you should consider? Well, they're your usual suspects in which are going to be C corporations, limited liability corps, S corps. These all have their pros and cons. Most institutional investors of venture Capital fund or private equity fund, they're used to seeing a C corporation structure.

There's some investors that may want to see an LLC structure, an LLC provide you certain tax benefits. You could write off your losses, particularly during your pre-revenue stage, and you're just spending money. And then there's an S-Corp structure, you should seek good accounting advice and good legal advice to help you figure out which of these structures works best for your company.

And then you should also talk to other entrepreneurs about why they chose the structure that they did. It may depend on the industry, your timing of getting in and out of the business. Those are all important considerations that the right guidance will help you to figure out.

And then thinking about financial tools and funding sources, I would encourage you actually to be open to all types of funding source. Non-dilutive grant funding that like NIH provides or NCI is very important, it's a very good source of funding, but you should be aware that it does take a lot of time to prepare the applications. There may be a gap between when you submit the application and when you get notice of award funding. And it requires that you really pay attention to details and follow very specific instructions, and have very thoughtful responses because it's a competitive process, but it's definitely worthwhile, and I'd encourage you to consider it.

And then obviously there's raising private capital and the private capital, it could be venture capital, it could be a family office. Check your university and see if there's an angel network or check your local community to see if there's an angel investing group. There's several of these groups across the country that may be a good fit and you have what you call friends and family and you'll have to figure out which of these sources of capital works best for you.

And then there'll be key terms, again, you should get good legal counsel, they'll help you sort of work you through these issues. But you should also, again the importance of your vision is critical because you're going to get a lot of no's and it can be discouraging to you at times, but keeping that vision in the why you decided to be an entrepreneur in front of you will help you to sort of work through those no's and the challenges that you might encounter and will encounter.

How have I put my team together for Nanocan? So for me as the founder, the sort of two important considerations were number one, what am I doing? And then number two, who am I doing it with? I wanted to have a really a cohesive team and really pick people that I enjoyed working with. It doesn't mean we all have to be alike, in fact, you shouldn't all be alike, you need to be able to challenge each other.

But you should really share, have alignment on vision, which I think is important and share certain common values, particularly having visions about where the company is going and I was fortunate to be able to build a team that shares my vision and has -- And then look at the expertise that they bring in figuring out the gaps in your own expertise.

You should have a law firm prepare your employment agreements or consulting agreements. You'll have to figure out how you're going to compensate your team. If you have some seed funding, you may be able to pay them, but typically early stage companies, it's heavy on incentives and really light on cash compensation.

And then you also want to assemble a board of advisors who can help, you know, open doors, they have expertise, they have their networks, and that can just give you good guidance and direction, which would be very important. I have Dr. Nguyen who's actually a professor at Harvard and also, a researcher at Dana Farber and he's part-time with us but adds great value for our business.

We have another colleague who runs our clinical trial, we have another person on our team who's good at international projects, and that's important, that's an important part of our vision, expanding our technology internationally. And then you need good financial advice and we actually have an in-house CFO with extensive experience, starting his career at Merrill Lynch and working on a number of high finance projects.

And then our advisory board, it actually includes the inventor, it includes oncologists from the top institutions in our country that were excited about our technology, and they make themselves available and you should really be respectful of their time, but really also leverage their expertise in the network. It can be very important and save you a lot of time and headache being a good steward of your relationship with your board of advisors.

So what were some of the key challenges we faced and how we overcame them? In any drug development project you're going to hit snags, so be prepared for that. Make sure you have access to the right expertise, which is why it's very important for you to have a good team and a good board of advisors. Our company had challenges securing a human grade immunotherapy for our inhuman trials, but through our network we were able to overcome that challenge.

We also had challenges finding the right CDMO partner and again leveraging our board of advisors, our team, we were able to find the right partner. I'd also encourage you to consider attending conferences like CPHI which has a broad range of players in the pharma and biotech industry who can be helpful to companies.

I thank you for your time. I wish you the best as you bring your technology to market and really appreciate this opportunity to share with you.

BILLY: What a great journey. Up next we have Margaret Jackson, founder and CEO of Biomass.

MARGARET: Welcome to NCI SBIR Peer Learning and Networking, first steps for starting small business. I am Dr. Margaret Jackson, founder and CEO of Biomass. We are a preclinical stage precision medicine company, focused on developing novel therapeutics for cancer anorexia-cachexia.

Biomass, as an early startup, was able to accelerate based on receiving both SBIR and federal contract phase one funding. So why did I decide to start a small business? I decided to start Biomass for three key reasons. First, passion, I'm incredibly passionate about finding a cure for cancer induced anorexia-cachexia.

I know the patient. My father passed away over 30 years ago with his debilitating disease, and yet fast forward 30 years, there is still no approved treatment. We can do so much more and we need to do it so much better. Second, expertise, I have over 20 years of drug discovery and drug development expertise in developing novel therapeutics and taking programs from early concept right through to early stage clinical trials. It's a wonderful thing when you can combine your passion and your career together to develop something truly important for patients.

And thirdly, culture. To develop a novel therapeutic, you can do it at large pharma or as a startup, both the pros and cons. At large pharma, there's fabulous resources, fabulous talent, but there's hierarchy, bureaucracy, slow decision-making. In a startup, you have a flatter structure, meaning being able to be more nimble, enable rapid decision making, build closer-knit teams, and faster execution of your programs.

At Biomass, we have developed our own culture. Scientific excellence, innovation, and people are at the core of our culture. We have a very high bar as we are developing drugs to survive and develop that first cure for cancer induced anorexia-cachexia. There is clear accountability to get things done with high integrity.

So guidance to anyone considering a startup. I would suggest don't be afraid to fail. Be afraid to not try. So how did we assemble our business team and what were some of the important considerations? As an early startup, it's really important to have the right people with the right talent at the right time to do the right job that helps you grow your business.

But as an early startup company, quite often you're cash constrained, often referred to as bootstrapping. And it's really important for you to consider how best to deploy your capital. Quite often for the business team, you do not need them in full time in the organization, but they are required at specific times for specific functions.

So the first question to ask is, do you need individuals as a full-time employee within the organization or can you use resources externally that can be more capital efficient? An example would be there isn't a need for chief finance officer for an early stage company, but it's essential to have an accountant, because you as a full-time employee can bring money into the organization, can receive the invoices, but you do need somebody externally who's able to pay those bills.

In addition, you need someone who's going to be able to do your monthly accounts and also your annual taxes, but that could be done as a monthly retainer or can be done at an hourly rate. Likewise, it's important to have business development expertise, but not required full-time. It's essential for thinking about in licensing or out licensing at certain periods of time, and also for setting up your templates for consultancy agreements, confidentiality agreements, and master service agreements.

Again, not required full time. IP is king for a company and therefore it's really essential to have an IP attorney which can be external to actually support your IP strategy, at times when needed. And finally, it's essential to have outside counsel. You don't need to have a chief legal officer internally in your organization, but you certainly do need an experienced life science outside counsel who can actually help you demystify term sheets from investors or any other additional contracts that may come from any other organization.

So the guidance at this stage of an early stage company when forming a business team is to consider resources outside your organization to support the organization, which can be done at a monthly rate or at an hourly rate.

What are the considerations for determining the right type of entity for starting your new company? There are essentially seven classes of business structures, and it can be overwhelming, but essentially the business structure you choose influences everything from day-to-day operations to taxes and how much of your personal assets are at risk.

In life sciences, limited liability companies, LLCS or corporations, C-Corp are the most common. LLCs can be a good choice for medium to high risk businesses, owners with significant personal assets they want to be protected, and owners who want to pay a lower tax rate than they would with a corporation.

Corporations offer the strongest protection to the owners from personal liability, but the cost to form a corporation is higher. Corporations also pay income tax on their profits and again when dividends are paid to shareholders on their personal tax returns. Corporations have a completely independent life separate from its shareholders, and if a shareholder leaves a company or sells his or her shares, the C-Corp can continue doing business relatively unstirred.

Corporations have an advantage when it comes to raising capital because they can raise funds through the sale of stock, which can also be a benefit and attract employees. Corporations can be a good choice for medium to high risk businesses, those who need to raise money, and businesses that plan to go public or eventually be sold. So guidance, really speak to outside counsel about what works best for your business vision.

Are there any technology specific considerations when starting a therapeutic small business? Yes, we live in a virtual world where technology is critical for communication, documentation, and archiving. It really is important to make sure that operations are in place. So for accounting, an example would be QuickBooks, which is great to be able to provide purchase orders to vendors for drug discovery, drug development work, helps you track your invoices against statements of work, helps you track expenses.

You're able to do a payroll and also provides reports such as your balance sheet and profit and loss. Payments can be also done both nationally and internationally using Bill.com. It is really important when working with external vendors or consultants or even with employees internally, that DISA and reporting is archived and easily accessible. Examples of being able to archive and share would be using Box or SharePoint.

In addition, it's important to have a dear room that's available for diligence with external investors. Examples would include dearrooms.com and also SharePoint. This means that you're able to give restricted access to individuals to confidential information that is clearly marked as confidential.

For data managed for high throughput screening data, regular screening data, biological data, chemical structures, antibodies, sequences, et cetera, it is important it's all in one central repository. And an example where this can be easily accessed, visualized, and interrogated is using software like CDD, Collaborative Drug Discovery, which also has the benefit of having access to an electronic lab notebook where your study protocols can also be uploaded.

And finally, as you're working with investors and trying to keep on top of the CAP table, it is important to make sure that you're able to access that and make sure there are no mistakes and a great software is Carta.

So the guidance for any startup company is to make sure that you have the proper operations software in place, do not store confidential important information fragmented and in people's inboxes. They need to be correctly archived and accessible and be able to visualize.

So what kind of financial tools and resources would I recommend to an early life science company? I cannot stress enough how important it is to go after non-dilutive funding. It is important for three reasons. One, it means that your research has been peer reviewed, it's scientifically validated, which is really important when talking to external investors.

Number two, it means you receive money, you get your company off the ground, you advance your research, and you create value in your company. And third, mid range you get money and not at the expense of taking equity of your company. There are multiple types of non-dilutive funding. There are the Small Business Innovation Research Awards, the National Science Foundation, Department of Defense, federal contracts, Bill and Melinda Gate Foundations, in addition to multiple grant opportunities that may be present on websites, all of areas that you're investing in.

There are multiple resources to help you apply for these grants, if this is your first time. There are books that are available online from Amazon which actually walk you through step-by-step how to apply and submit these grants. But most important to be aware of is you need to give yourself about eight weeks prior to submitting any grants to ensure that you actually have risk completed all your registrations.

You need an employer identification number. A Small Business Association registration, registration with ERA comments, SAM.gov, Grants.gov. And there are companies out there who have actually experienced writing grants and are now consultants to help the next generation apply for grants such as EGC and Free Mind.

The other opportunity to receive money is through dilute of funding. This is where you receive money from angel investors or from venture capitalists for seed funding or Series A investment. That'll be the first time you experience a term sheet which can be overwhelming, and there's a great resource called Venture Deals by Feld and Mendelson that you can purchase online, which actually take you through step by step the pros and the cons, all of each of the descriptions on the term sheet, of the economic terms, the controlling terms, the permissions, and the restrictions.

In addition, there are local networks to help you demystify term sheets. An example in Boston is the Capital Network. They also help you understand a cap table. There is also multiple incubators or accelerators that you could join that actually help you to understand how to get your first investment and how to meet investors. An example for women founders is Springboard Enterprises supporting life sciences and digital health.

And also really important to build your network of other CEOs or C-Suite executives who have lived and breathed this. So the guidance for applying for funding and the resources at your fingertips is to really build your network of individuals who have had the experience of doing this and have been successful in achieving funding.

What do I know now that I wish I had known first when setting up a small business? Well, setting up a startup company for the first time is a very steep learning curve, but a very rewarding experience. It is important to surround yourself with really great people, great talent that will help you as an individual grow, but also help the company grow.

It's very exciting to get your first non-dilutive funding and it's very exciting to get your first investor, but you should be very mindful of how the deals or the term sheets of an investor equity financing actually affects your eligibility to apply for an SBIR grant.

So if you have a single investor with over 50% of the company, you as a company are no longer eligible to apply for an SBIR grant until you have further investors who come to the table. So it's very important as part of the investor negotiations to ensure that you are still eligible to apply for non-diluted SBIR funding.

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BILLY: There you have it. Special thanks to Nanocan and Biomass for speaking with us today. 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.

This was Billy Bozza from NCIS 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 [email protected] 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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END OF FILE

RefleXion Co-Founder and Chief Technology Officer Samuel Mazin, PhD, shares his journey from postdoc to startup and the NCI SBIR support that helped develop a biology-guided radiotherapy that provides treatment for metastatic cancer patients with limited options. https://sbir.cancer.gov/portfolio/success-stories/reflexion

SBIR DEVELOPMENT CENTER SBIR Innovation Lab Podcast: https://sbir.cancer.gov/about/innovation-lab-podcast SBIR Development Center: https://sbir.cancer.gov/

LEARN MORE FROM THE NATIONAL CANCER INSTITUTE Online: https://www.cancer.gov By Phone: 1-800-4-CANCER (1-800-422-6237)

U.S. Department of Health and Human Services National Institutes of Health National Cancer Institute

National Cancer Institute's Small Business Innovation Research (SBIR) Development Center Director Michael Weingarten and Program Director Monique Pond introduce the Innovation Lab podcast series and provide insight into the benefits the program can provide biotech innovators with no strings attached.

TRANSCRIPT:

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MONIQUE: Hello and welcome to Innovation Lab, your go to resource for all things biotech startups, brought to you by the National Cancer Institute's 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. I'm Monique Pond, a program director and team leader at the NCI SBIR and today's host.

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The Small Business Innovation Research is a congressionally mandated funding program designed to propel technological innovation across the United States. Here at the National Cancer Institute, the SBIR Development Center is the institute's engine of innovation and the hub of small business funding. Today, as we kick off our first podcast series, I would like to introduce our program and walk you through some of the topics that we plan to cover in our upcoming series.

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For our very first episode, I've invited one of our co-hosts and the Director of the NCI SBIR Development Center, Michael Weingarten. Hello, Michael.

MICHAEL: Hi Monique, how are you?

MONIQUE: Doing well today, thanks for joining us. Appreciate your time.

MICHAEL: Yeah. Happy to be a part of this and really excited that we're launching our own podcast.

MONIQUE: Great. So Michael, you started the SBIR Development Center back in 2006. Can you tell me how that came about?

MICHAEL: I was actually hired back in 2005 by the director then, Dr. John Niederhuber. And Dr. Niederhuber was really interested in taking a new look at how we could manage the SBIR program at the NCI. He was interested in bringing a strategic focus to this program. So he came to me and he asked me to come up with a range of different ideas for how we can improve the program overall and improve the impact of this program.

So we took a fresh look at the SBIR program and I came back with a set of recommendations, really that were based on looking at some of the best practices from across the government and some of the top agencies running SBIR programs, as well as just some ideas that we came up ourselves with. And probably the most important recommendation that we had was that we actually set up a center at the NCI, that we could run this program where individuals could actually spend 100% of their time just with small businesses and just managing SBIR's.

For the program and for our companies to be successful, we really did need program directors working at the NCI who had industry experience as well as some prior track record and experience with the commercialization of technologies. But we need people spending 100% of their time working with companies and guiding them and advising them, and that's what we're able to do with the SBIR program now that we've set up a center.

We have a team of about 22 people now and we're able to offer just a range of resources and assistance to companies who really need our help.

MONIQUE: So, Michael, tell me, what does the typical small business coming into the program look like?

MICHAEL: Well, when companies first apply for NCI SBIR funding, they're usually startups and fairly small. So I would say the typical company that approaches us first for funding maybe has two or three people when they first get started. A lot of times they're a spin out from a university or a recent startup and they don't have a lot of experience in working with the NIH.

So typically, you know, they're -- We like to spend a lot of time with companies really educating them about how the NCI SBIR program works, what our different funding opportunities are, really how NCI can really help play a role in growing their company.

MONIQUE: Great. And why should a small business be interested in applying for NCI SBIR funding?

MICHAEL: Well, SBIR funding can be a really good deal for a small business and for a number of reasons. First off, we don't take any sort of intellectual property position in the company. All the IP that's developed under a grant or a contract through an SBIR is owned by the small business. We also don't take any sort of equity position in the company. All of our funds come to the company either through a grant or through a contract. So all the stock continues to be owned by the startup itself.

MONIQUE: So NCI is sort of playing the role of an early-stage venture capitalist, but without taking any IP or equity stake in the company. Would you say that's fair?

MICHAEL: Yeah, that's a good way to describe it. Because we're the government, we're actually able to take on more risks than probably a private investor would. So we typically will invest in these companies at an earlier stage of development than most investors would and we can help the company get the key data that they're going to need in order to be successful over the longer term because we're willing to take on a little bit more risk than a private investor would. So yeah, I kind of think of the NCI SBIR program as being kind of a seed fund for startups in the cancer space.

MONIQUE: Early-stage seed fun, I like it. All right, so after a company goes through the NCI SBIR funding program, do you find that many companies are ready to, you know, commercialize their product, launch their technology or do some also go into the venture capital world for follow on funding?

MICHAEL: That's a great question. So typically because of the large costs involved in life sciences, in terms of taking something from the lab all the way to the marketplace, at some point, most of these companies are going to need to be able to go out and raise some private capital. That private capital can come from angel investors, it could come from partnerships with a large pharmaceutical or medical device company, or it could come from raising funds for the venture capital world.

But NCI SBIR funding could be a really key component to get many of these companies through preclinical development and actually into clinical trials. So we can really help a company move their technology along to make them attractive to private investors in the future.

MONIQUE: How would a cancer researcher enter and journey through the NCI SBIR program?

MICHAEL: Well, probably the best thing they could do is go up to our website initially and that's at sbir.cancer.gov. That's a great starting point [unclear] learn more about the program. We have information on our funding opportunities there, applicant resources, our awardee resources. We also have information about any upcoming events that we're doing. Just as an example, in addition to podcasts like this one, we also put on webinars frequently throughout the year where potential applicants can listen in and learn more about different funding opportunities that we're offering.

So go up on our website initially, read up a little bit about the program, and then if you're interested in funding, we also encourage you to try to set up a meeting with one of our program directors and you can e-mail us through the website just to set up a short conversation so we can learn more about your company, whether you're a good fit for the SBIR program.

MONIQUE: So, Michael, what would you say make small businesses successful in obtaining SBIR funding from the NCI?

MICHAEL: I would say a couple of things. First, start early in your planning. We have three different receipt dates throughout the fiscal year. So you do have a lot of opportunities to apply, but give yourself enough time to write a strong application. And probably the first step in that whole process should be connecting with the program director at the NCI SBIR program, that way you can talk about your idea and you can get some feedback on whether we think that's a good fit for the types of projects that we trying to fund under the program.

It's also a really good opportunity for you to review your specific aims on the project, that's probably the most important aspect to your application. And one of the things that we offer every applicant is the opportunity to go over your specific aims with a program director in our program and then we'll give you some real direct feedback and some suggestions on different things that you might not be thinking about.

Once you've done that, I think that really does set you up well to write an application. If you have not applied to the NCI SBIR program before or you haven't received an SBIR from the NIH as a whole before, you could also participate in our Applicant Assistance Program. It's a really helpful program for new applicants that we offer and essentially it's an opportunity for you to get access to a coach who can guide you through the whole application process.

So if you're interested in learning a little bit more about our applicant assistance program, that's a resource that you can learn a little bit more on our website, again at sbir.cancer.gov, but that those are really kind of good starting places.

MONIQUE: Our three receipt dates for NCIS SBIR are January, April, and September. So for those listening, definitely contact a program director at least a month ahead of those times, I would say, and that way you know you'll be able to meet with somebody and have a good, you know, robust conversation about your specific aims, as well as answer any questions that a company or someone on the team might have about the application. So, Michael, what other resources does the program provide outside of funding?

MICHAEL: The way I like to think about our program at NCI is funding is obviously necessary for these small companies, but it's not sufficient for them to be successful. So we try to offer a range of other resources to our companies, all based on our meetings and conversations with companies that are in our portfolio and really understanding what kind of needs that they have. So we've actually launched a range of different resource programs that we offer and I can mention just a couple right now.

When a company first enters the program, they're actually eligible to participate in a program that we call I-Core or Innovation Core. And I-Core is actually an entrepreneurial training program, the best way I like to describe it is it really teaches a small business that's new to the program how to build a business model around the technology that they're developing.

We find that I-Core really helps set up our companies quite well to take the next step as they're continuing to develop their technology and then to apply for the next stage of funding, which would be phase two project under our program. We also run a program called our Investor Initiatives Program. We've been running that for about 15 years, right now and over that timeframe, we've developed relationships with most of the large investors in private capital that invest in cancer technologies, whether those be drugs, devices, diagnostics or digital health technologies.

And because we're the NCI, we can help open doors for small businesses that we're funding so that they can start conversations with investors who might be interested in funding their companies. And we have a panel of about 80 different investors that once a year will actually review our portfolio and help us identify the most promising companies that we're funding in the portfolio.

And then they actually will grade and rank companies and help us identify companies, that we will then provide funding for, to go and present their company and their technology to private investors at some of the largest investor events around the country. And so our goal through our Investor Initiatives Program is to really help our companies make introductions for them to investors who could then hopefully -- we'll consider investing in them also.

MONIQUE: Thanks Michael for the description of the funding, as well as all these additional non-funding resources that sound like they can really help the company get going, who might be starting out or early on in technology development. So I appreciate you taking time to speak with us today.

MICHAEL: Happy to, thanks for the opportunity.

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MONIQUE: Don't forget to check out our website, SBIR.cancer.gov for the latest funding opportunities and commercialization resources to support your journey from lab to market.

This was Monique Pond 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 [email protected] 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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TRANSCRIPT

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MONIQUE: Is your biotech startup developing a cutting edge cancer technology? We can help bring it to market. Innovation Lab, a podcast from the National Cancer Institute's Small Business Innovation Research Development Center, SBIR, has all the resources you need on your journey from IP to IPO including: interviews with successful entrepreneurs, SBIR program resources, funding opportunities, commercialization tips, and more.

I'm Monique Pond, an NCI SBIR team leader and program director, and I'll be one of three hosts for this podcast along with the Director of the NCI SBIR Development Center Michael Weingarten and another Program Director from this center Billy Bosa.

Ready to get started? Subscribe and tune in for helpful information for taking your biotechnology from lab to patient.

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