periodic musings about topics of importance to the biopharmaceutical industry

June 10, 2025 – To the Point, Installment Two

To the Point is a multi-part series that provides the insightful wisdom of BJC Capital Managing Director, Michael Nowak, an industry veteran with extensive venture capital and hedge fund experience.

Today’s Topic: What are the two most important slides in your VC pitch?

Are you struggling to tell your story to potential investors?  Too much to tell in too few slides, or you’re trying to power away with 30 slides in 15 minutes… only to be thrown off track after 5 minutes by VCs pulling you one way or another? Let me clue you in on the two most important slides in your deck (oh, and by the way, they are really just one!).  The two slides are:

• A slide detailing what differentiates you; and
• A slide which provides the competitive landscape.

Yes, these two slides are related.  They are, in fact, two sides of the same coin. 

First, your differentiation slide is the one that highlights your technical innovation, why it is unique and different from everything else out there and why that is an advantage, be it higher efficacy, efficient delivery or lower dosage and toxicity. To be sure, the bar is very high these days.  So called “me too” drugs and platforms are very difficult to finance for a good reason. The majority of the market share for a new product or therapy goes to the first one or two market entrants unless there is a significant increase in quality of the product or lowering of its cost, and, clearly, it is better to have both.

This technical differentiation must be supported by your intellectual property, or IP, either granted or filed, with sufficient breadth and scope to provide solid coverage of the immediate competitive space in immediate proximity.  And it must be truly a significant innovation. Incremental advances are not interesting to investors because they do not appreciably move the needle for patients, which is going to be required for widespread adoption and reimbursement. So don’t expect financing, even with a stellar team, if the science or technology underlying your innovation is not truly exciting and offer the very real potential to change the patient journey.

The second slide details your competitive landscape, which assumes your innovation actually works, defined by its success in the clinic.  How does your technical innovation translate into a long term sustainable competitive advantage in the marketplace?  In the tech world investors look for a 10x advantage in quality, cost and time to market. In the life sciences, investors are looking for evidence of significant human efficacy in the clinical data, hopefully accompanied by a reduction in toxicity or adverse side effects (which translates into enhanced QoL, or Quality of Life).  How that stacks up against the current standard of care, other modalities of treatment, other ways to administer therapies, etc. all must be considered by an investor to know how sustainable your competitive advantage may be.

Now, of course, in early-stage ventures it is the promise of that advantage, and it being well received by a market large enough to drive a compelling exit valuation, that will drive an investment decision.  Data, as much as one can have, not only about your innovation and potential efficacy but also your competition, and any other proof your claims “might” be true, are critical to that decision.  That is where the quality of your team, health economic benefits and reimbursement analyses, choosing the right indication and market focus, your financial model including use of proceeds and investment needed to achieve a successful exit, etc., CMC and PD/AD, and clinical strategies all matter.

But none of that will matter if your differentiation or competitive positioning aren’t strong enough!  So be sure to focus on those.

June 1, 2025 – To the Point, Installment One

Today’s Topic: How much should I raise, and why?

Despite a difficult and uncertain market, many biotech entrepreneurs are continuing to pursue opportunities to translate exciting scientific breakthroughs into meaningful therapies. How much should they target for an initial raise? Is seed or even pre-seed financing enough? Is raising a de minimis amount the right strategy in a tough market? 

Emphatically the answer is No. Beyond some initial capital to form the company and pay for the startup staff, the technology (platform or therapy) should be developed enough either in the academic or industrial setting to give you sufficient POC (proof of concept) to be able to raise a “real” investment round, which in this era means sufficient funds to demonstrate human efficacy and exit. Part of the reason for this, beyond the current market, is the restructuring of the VC and innovation industry, what has become a devolution from the industry that previously existed (more on this in future notes).

The greatest risk for an investor today is not you, not the market, but financing risk – and for this risk to be removed the whole syndicate necessary to bring your therapy, platform, and/or company to an exit must be there at the start. For this reason, we are witnessing the advent of the mega-deal, punctuated by Series A rounds of $100 M to multi-$100 M. These are not your parent’s Series A rounds of 30 years ago!  Of course, the financings will be structured into tranches and there will be plenty of exit ramps for investors if the translation begins to fail (so your financing risk continues to exist – welcome to the startup world!) but your investors can sleep at night.

Moreover, this risk averse or “risk-off” mentality and attitude is shared by Big Pharma and others in the ecosystem, which is why the trend of having pharma strategic partnerships before your financing has emerged.  While Pharma may also not be interested in financing risk, they need to embrace scientific and clinical risk to fill their pipelines, something financial investors do not.  The upshot is your investment round will likely need to have both pharma partners and financial investors involved to have a credible chance of closing.

Last point, it is easier to raise larger dollar amounts, and from higher quality investors with relevant industry experience, than smaller seed capital – as long as your therapy or platform is truly differentiated and innovative. The math for every investor is dollars out over money in, and larger funds need to put more money to work for an investment to be worth their time.  They need to understand the total cost required to get to exit, as well as the time, and ultimately that will set their appetite for the investment opportunity. As such, your targeted raise must be the amount needed to get to a meaningful valuation inflection point, which today often means an exit. Getting half-way there (as was done in the venture capital world of days gone by) is not viable in this new world order.

March 31, 2025

Our capital markets update for the first quarter of 2025, which contains our analysis and perspectives on the ongoing trends impacting the sector, is now available. Should you have interest in receiving a copy of the materials, please reach out to us with your information through our Contact page.