Branding Emerging Bioscience Companies to Attract Investors

Sasha Strauss, Managing Director at Innovation Protocol, gave a very interesting presentation at the SoCalBio Investor Conference in Santa Monica. He argues that even start-ups need to consider a branding strategy right from the start. Given the limited capital, does it make sense for a start-up to spend money on branding? Would VCs interested in investing even care about a company's brand?

To be honest, branding usually does not come to mind when evaluating an investment opportunity. Management, business model, technology, etc. are probably more important. While I don't argue that branding is important, especially as a technology gets closer to market, if there are issues with any of the other criteria, branding becomes irrelevant.

Investing in People, Not Products

It's a cliche that "VCs invest in people first and foremost." VCs will argue that the an experienced management team knows what it takes to commercialize a technology. But does it make sense to invest in entrepreneurs with out a technology or product? Apparently, VCs think so.

Clovis Oncology raised $145 million earlier this year without a single product to commercialize. Clovis' management team consists of former executives from Pharmion, which was acquired by Celgene in 2008 for $2.9 billion. Clovis plans to acquire or license and develop oncology products. Investors include Domain Associates, New Enterprise Associates (NEA), Versant Ventures, Aberdare Ventures, Abingworth, Frazier Healthcare Ventures, and ProQuest Investments. ProjeX Therapeutics, which is backed by Sofinova, Ascalon, and Kineta are also pursuing similar acquisition/licensing models.

Given the risks and costs of developing drugs, investing in companies pursuing acquisition/licensing makes sense. Why invest in five separate companies with five seperate products and five management teams, when you can get a portfolio of products all managed by one, experienced management team. Investors still get a say in what products/technologies to license/acquire as long as they have board representation. It's simply much more efficient and cost-effective.

I think we'll start to see more and more companies like Clovis get funded in the future. It will be interesting to see how successful these companies become. Unfortunately, if this trend continues, the individual entrepreneur will have an even harder time raising capital.

Next-Gen Genome Sequencing Attracting Investors

Despite the financial conditions, companies developing next-generation genome sequencing technology have been able to raise significant amounts of money. In August, Complete Genomics raised $45 million while Pacific Biosciences raised $68 million. Don't forget that Pacific Biosciences just raised $120 million in 2008. Both companies are pursuing the "holy grail" of genome sequencing, being able to sequence an entire human genome for less than $5,000. Keep in mind that the first human genome (Human Genome Project) took 13 years and $3 billion to sequence. See the recent article in Forbes for more on Pacific Biosciences.

While some people argue that sequencing the entire genome is not necessary, especially since 90% of the genome contains "junk" DNA, for less than $5,000, it doesn't really matter. The initial customers for genome sequencing technology will likely be drug companies for use in clinical trials, but as costs decrease, consumers will eventually become the customer. Look at the success of companies like 23andMe.

A number of next-next-generation companies, pursuing complete genome sequencing for less than $1,000, are chasing the tails of Complete Genomics and Pacific Bioscienses. They include Halcyon Molecular, Genovoxx, Lucigen, Sequenom, Oxford Nanopore Technologies, ZS Genetics, Anvantome, and VisiGen.