Check out #VCTwitter and you might assume that startups are all about young teams of software engineers cranking out innovative solutions every month, cold-calling Fortune 500 CEOs every week, and landing customers every day. It seems like a grueling but thrilling pace, assuming you can find some time to sleep. Or eat.
But this post is about a very different ecosystem: biotechnology. Sales cycles in the biopharma world look nothing like software sales; it might be years before you have any kind of asset worth selling or licensing. And there are multiple legal and regulatory requirements a medical product has to clear before it hits the market. You can’t simply cut corners with hype and marketing — it’s not hard to find examples of those who tried.
At Lactiga we are repurposing the global supply of unused breastmilk into a novel therapeutic to protect immunocompromised patients from infections including COVID-19. And we’ve won awards, secured 3 patents, and even received major press coverage in The Globe and Mail and Toronto Star — but we’ve never created typical startup spreadsheets for LTV, CAC, or MRR. So how do you summarize our forms of traction into a compelling investment narrative? Let’s get into it.
But first, I want to share that we’ve been satisfied DocSend customers for over 6 months now. Originally we thought this would just be a way to minimize repetition in the investor due diligence process. But as you’ll see, we’ve now used DocSend for so much more than that.
While we’re on the topic of investors, I notice that young founders get nervous about using a service that “forces” investors to enter their email before accessing content — a founder might be told to “just send a PDF” and assume they are obligated to comply. But the moment you hit Send, your PDF is out in the ether and you won’t have any visibility on it. Instead of doing that, trust that serious investors will value your time and shouldn’t have any issue providing their email to review your materials. Don’t just take my word for it: the fine folks at Hustle Fund have made a similar point in their many excellent fundraising webinars.
What’s in our DocSend data room?
Before opening the door to our own room, let’s define why a data room is a must for biotech companies well before fundraising. It’s relatively easy to form a scientific team to develop a research concept with no business case and it’s just as easy for MBAs to write up a business case with no scientific or medical expertise. Any investor knows that neither of these categories is likely to succeed. To rise above the noise you’ll have to show your sophistication in the many categories associated with approved medical products. Regulatory approval, translational datasets, patents, GMP manufacturing, and market access are just a few of the domains you’ll be expected to navigate. Another way to show sophistication is to present your materials simply and logically. Here’s where the ease of organizing and tracking assets in our DocSend data room really saved time and created value. It also added a layer of polish: the introductory page was branded with our logo, tagline, and banner pic — very slick.
Six strategic sections to our data room
What follows is a rough breakdown of our confidential data room that will be familiar to life sciences / biotech ventures:
Regulatory Agency Feedback. We engaged the U.S. FDA in the summer of 2020 through the Coronavirus Treatment Acceleration Program to introduce our early plans for developing a COVID-specific therapeutic. We received helpful feedback which we made available in the data room. This is an easy way to show that our development roadmap is built to get our product to the market — you need to work with regulators, not around them.
Competitive Moat (Unique Assets). Because we’re the first-ever company to repurpose the global supply of unused breastmilk into a therapeutic, we commissioned an Opinion Memorandum from a top-tier law firm to clarify that our milk repurposing strategy would be acceptable from a regulatory perspective. We also had the additional challenge of proving that milk banks would agree to be a part of our manufacturing workflow, and we met this challenge by securing Letters of Support in 3 countries. Both the Memorandum and the Letters of Support were flagged as threshold deliverables to close our lead investor, so this section has been extremely important for Lactiga.
Patents. In the biotech world, patents are a critical component of defensibility. Whether a company intends to market its products / services or license them out to more established pharmaceutical firms, patents provide the protection and leverage the company needs to continue along its development roadmap. While it’s easy to file a patent, it is orders of magnitude more challenging to have that patent issued. The process may include Patent Examiner rejections, written appeals, phone interviews, Requests for Continued Examination, and more. Navigating these multiple challenges has earned us issued patents in the US, Canada, and Japan. Including all of these filings, correspondences with patent offices, and patent issuance notifications in our data room demonstrates the depth, progress, and long-term mindset of our intellectual property strategy.
Media Presence / Thought Leadership. Lactiga is a science-driven company. While it is important to remain grounded in objective research, we also want to build credibility with the broader public so they can share our excitement about what our work will mean to patients. I’ve had a blast sharing Lactiga’s vision on podcast episodes focused on disruptive technology and biotech entrepreneurship, and Lactiga’s work has been featured in The Globe and Mail and Toronto Star (Canada’s highest-circulation newspaper) and has won awards from the NIH, the Canada India Foundation, YSpace Demo Day, and more. This recognition can help answer that key investor question, “Do other people believe in this company?”
Research Partners. At Lactiga we chose to remain lean and virtual. This means we don’t have our own lab space, equipment, or technical staff. Instead, we partner with highly capable research collaborators who already have the resources and expertise to conduct our preliminary studies. Of course, a small biotech company needs to understand the technology transfer process to make sure that ownership of intellectual property and commercialization rights are well defined. By including our tech transfer agreements in the data room we demonstrate our ability to protect our interests, secure collaborative non-dilutive grants, and execute institutional contracts with financial implications.
Targeted Sections. An important part of our company journey has been describing what we’ve done (research and patents) as well as where we’re going (scale-up manufacturing, drug formulation, market access, and impact to patients). Depending on the audience we add targeted sections within our data room like Social Impact, Technical Findings, Patient Foundation Support, and Supply Chain. Creating these customized data rooms through DocSend has been quick and easy.
Since we can’t iterate product and marketing the way software companies do, this is how we’ve made the data work for us. Biotechnology is a long-term commitment for both founders and investors, so the data room should convince visitors that the company has a sound and sustainable vision. Our subsequent rounds of financing will have much deeper data room requirements, so there’s really no time like the present to make good habits in data organization. We hear all the time from partners and patients that they believe in our vision, and this is the motivational fuel that sustains us. If you’re working on biotechnology solutions I’ll bet you feel the same. I hope this post helps you capture your vision and share it with your community.