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Pivot

March 21, 2012

While it is March, I’m talking “pivot” in the business jargon sense.  And yes, every time I hear someone say pivot, I think of Ross.  A true KOL.

This post may meander a little bit, but bear with me.  Or bail!

A January 20 tweet from Bruce Booth I liked; “A biotech CEO’s job is to create a surplus of options: BD, non-dilutive $, new investors, structures. Optionality creates leverage & value.”  I’m going to take the liberty of equating the ability to pivot to having options.  Triple threat position, to continue a basketball theme–dribble, pass or shoot.  Options.

An early stage company needs options.  It may have to pivot several times.  We’ve had to do that with several of our companies.  Soon, perhaps, I’ll be able to share a case study, if you will.  Positive or negative outcome.

That’s kind of my micro story.  Individual companies need options so that they can change as necessary.

Macro story–strategies to commercialize university technology.  You need options there, too, and sometimes you have to pivot.  As you build your ecosystem (Yes!).

I hearken back to previous posts Best Practice(s) = Hustle and What would all you hooligans, punk rockers, castaways, hardcore Utes like to hear?*.

In 1997, a Visioning Task Force of community leaders produced the Visioning Report (also known as the Boyle Report), a 12-year agenda for making the Louisville area a special, top-performing urban region.  One of the economic development niches identified by the Visioning Task Force was “biomedical research and healthcare-related services.”  Long story short, life sciences, broadly defined, became a community economic development focus.  Along with logistics.  So that’s part of the reason why we’re here doing what we do.

A metric?  Jobs in Louisville.  Maybe we need to pivot away from that metric.  At least in the life sciences.

Why?  Well, I think Louisville is at a disadvantage in growing life science companies.  Yes, because of constrained capital resources.  But also because there’s a dearth of experienced people.

And then I look at data.  Where are deals getting funded?

According to this PWC NVCA data (thanks BIOIndustryAnalysis)–Investments by Industry / Q4 2011–biotechnology deals are getting done in the Bay Area, New England, San Diego. 

And this data from OnBioVC, 2011 Total Financings Per State; CA and MA lead the way.  Note KY is not listed.

Does this suggest an option for startup life science companies emerging from Louisville is to not be emerging from Louisville?  In other words, should the pivot be towards getting “companies” in the hands of experienced life science operators in Boston or San Francisco?  Or Seattle?  We’d fail a “jobs created in Louisville” metric.  However, we might see a higher rate of successful commercialization of IP.  We can always say, “Hey, that company is based on stuff from UofL.”  Success will help us build a “brand,” so to speak.  And it can still create financial returns to the University and community.  But it’s a matter of being where the chances of success are maximized.  Again, not only from a capital perspective, but also in terms of talent pool.  That’s a different perspective.  A pivot. 

And it might not apply to all deals.  Some things we might pull off.  Although I think it’s definitely something to consider for therapeutic plays. 

I liked this post today by Michele Ollier; The “Asset Centric” investing model: focus beats diversification in early stage R&D.  “We don’t suggest that its never right to build a company, with all the necessary infrastructure. But we see a tendency in the industry to build infrastructure way too early.”  I’ve seen that happen here.

Can we as a community do an “asset centric” model?  I’d argue we sort of do that now out of sheer capital contraint.  A company is thinly funded from milestone to milestone.  Problems arise, then, when there are problems.  And there are almost always problems.  Advanced Cancer Therapeutics, LLC here in town is sort of “asset centric.”  By design in their case.

Maybe there’s a hybrid.  Form a lean, basically virtual company, fund it “locally” to some defined milestone (that’s derived from conversations with both industry and VCs) and then–if we hit the milestone–send it Shipping Up to BostonThat requires some pre-selling or, even better, some strategic relationships (I see you PureTech Ventures and others!).

So, to summarize, we might have to decide that Louisville isn’t going to be the next life sciences hub and supplant Boston.  We can’t compete (face it, it’s like a 16 seed up against a 1).  We just have to be unique.  We might “lose” some companies to the coasts, and that has to be OK.  But we make sure people know that the IP/concept came from UofL and/or Louisville.  So then deals 7, 8, 9 or whatever might be able to get funded and grow here–once we create some wins and returns*.  There could be an opportunity in the future to build a company with all the infrastructure.  And jobs.

I guess what I’m saying is we need options.  We might have to pivot.

(* I’m not suggesting we haven’t had wins.  Nor am I suggesting that there are not life science companies in Louisville today well on their way to success.  I’m just sayin’.  Trying to make a point.)

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One Comment
  1. 18 May Scott Kirsner ‏@ScottKirsner
    You can’t be a serious player in drug discovery & development without having a presence in BOS/Camb. – Biogen’s Steve Holtzman #cvforum12

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