Timing your Biotech Fundraise with your Company Milestones

Stephanie Wisner is an accomplished biotech operational leader with experience guiding startups through fundraising milestones. She currently leads finance and business at Centivax. Previously she helped develop commercialization strategies and secure capital for numerous Biotech startups, and spent time at ARCH Venture Partners. She is a Forbes 30 Under 30 honoree, the author of Building Backwards to Biotech, and teaches life science entrepreneurship as visiting faculty at Cornell University.

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Please note this is a lightly edited transcript that may contain errors.

Alina: Hi everyone. Thanks for joining. Hi, Stephanie. Hello. All right, we're gonna just wait a few more minutes as we, as people roll in. In the meantime a few are coming in. Maybe you can add in the chat who you are, what you're working on, what stage you're at. That would definitely provide more context for our conversation.

All right? So yeah. Welcome everyone. If you haven't been here before. I think we're gonna, max, do you wanna send out a quick note? Okay. Yeah. So if you're just joining, if you have a moment, just add in the chat who you are, what you are working on, and ideally you're staged, just so that we can make sure we tailor what we're talking about today to what you're most interested in.

Don't be shy, would love to hear. I would love to hear more about you. Hi Laura. Awesome Prese Biotech. Very nice to meet you. This is a special time. We particularly appreciate everyone joining. I know that it's almost the holiday season and sometimes that means people go into autopilot. So hopefully, yeah, hopefully this will be a fun little pre-holiday, pre-holiday special. And Scott, so nice to have you.

Scott was our speaker last month, and if you haven't checked out his talk on commercial development, you should definitely do it's on our website. It had lots of great insights hi Scott. All right. I think oh, hello Laura. Another pre-seed biotech startup in partner Health. Very cool. Hi. So I want to go ahead and kick off. I know we'll have people rolling in. But this is a really exciting, basically talk for us to be having before 2025. We personally know that a lot of people are gearing up for their fundraisers. We are still working to get people off the ground for January.

So yeah, I'll give you a little context about the series and what we're doing and then I'll hand it off to Stephanie, who we're really excited to have today. Just for context, if you haven't joined before this is use of funds. It's a monthly series that focuses on sector specific fundraising questions. So this particular season has been focused on biotech and life sciences, and we've been asking questions around traction, commercialization, risk mitigation, and more. We're run by the team at Weave and Pitch where we specialize in helping startups in the life sciences, health tech, climate and AI navigate their fundraising journey.

With that, I wanna turn to the subject of today's talk and introduce Stephanie. Stephanie Weisner is an accomplished biotech operational leader with experience guiding startups through fundraising milestones. She currently leads finance and business at Sensex, and previously she helped develop commercialization strategies and secure capital for many biotech startups, as well as spending time at Arch Venture Partners.

She's a Forbes 30 under 30 honoree, the author of a wonderful book called Building Backwards to Biotech. And she also teaches life science entrepreneurship as visiting faculty at Cornell. Today's conversation is really specifically focused on planning a biotech's biotech startups fundraise relative to their company milestones. And I will let Stephanie take it away. She has some wonderful material prepared. And Stephanie also feel free to add anything that I missed in your introduction.

Stephanie: Sure. Thank you for the, thank you for the intro. It's great to be here today. It looks like a lot of you guys are have science backgrounds, are thinking about starting biotech companies have already started biotech companies, or you're Scott with tons of biotech experience. So hopefully I say something useful for you, Scott. So thank you so much for being here today. To tell you a little bit more about my background and why you should listen to me. So originally I studied chemistry and chemical biology at Cornell University. I'm sure I hit a point that many of you hit, which is at some point you're like, what do I do with the STEM degree?

And so I started thinking, going to get a PhD sounds great. I love basic science. I love, understanding mechanisms and seeing potential to, to implement that, to treat new diseases. And so I thought the fit fastest way to figure out if I'd possibly wanna get a PhD was to go work in the lab. So that's what I did. I worked I was able to do research both at Cornell, university of Michigan and a little bit at Pfizer. I was able to publish a few times, so I really got a taste for research. And while I really loved delving into the novel science areas, I quickly realized that at least in academic research, a lot of times the things that you were working on didn't necessarily make it past the point of publication or getting a grant and actually reaching patients.

And I realized that's the part that I was really interested in. So I thought maybe I should go be a doctor. So I decided the fastest way to figure that out was to go be a medical scribe. So follow a doctor around, basically. So I followed an internal medicine doctor around and was hired as her medical scribes. So I kept all her patient notes, saw the patient interactions. What I realized from that was a couple of things. First of all, I realized that what the doctor could do for the patients we saw was severely limited by the medicines that already exist, which might seem like an obvious insight, but it was very kind of humbling to see that in real life.

Second, I realized that there are a lot of patients with diseases for which we didn't really have a great medical option, or at least not a complete option. And that could include things like late stage cancer. It could include neurodegenerative diseases, it could include rare diseases, and so on and so forth. And so what I came away with that with was this view of a two-sided problem. Around the one hand, patients desperately needed new medicines for diseases for which we had none. On the other hand, there were a lot of promising innovations sitting in labs, especially academic labs, that weren't necessarily being taken outta the labs and tested in a setting that could result in them reaching patients.

And this is, not everything, but I'm speaking in broad strokes. And so I realized that what I wanted to do was bridge those two areas. And ultimately I decided to get an MBA. I also had the chance to go to our Arch Venture partners, where I learned under some people who are much more experienced than I am and really see best practices in not only building companies, but in investing in companies. And as a side note, it's very helpful for you guys as entrepreneurs to understand how investors think about things because it will enable you to frame your story in a way that resonates with them. In early 2020, I had the opportunity to co-found a company called Centivax. We are a universal vaccine company.

Our first indication is a flu vaccine that you do not need to change year over year. To date, we've raised $20 million in non-dilutive capital from organizations such as the Bill and Melinda Gates Foundation, D-O-D-N-I-H, and others. We've also raised venture money, 20 million in venture and 6 million in angel money. And unofficially I've spent a long time in the last few months pitching to CS for the series A. So I have some experience on the entrepreneur side as well as hearing a lot of pitches back when I was at Arch. So today I wanted to talk to you a little bit about how to raise money and best practices around that.

As Alina mentioned, I wrote a book called Building Backwards to Biotech, which is a book for beginners such as yourselves Getting into the field, I wanted to empower more scientists to understand how translation worked through biotech. And I hope, if anything today I can convince you that entrepreneurship in the life sciences is a very powerful mechanism to bridge that two-sided problem I talked about before, where on the one hand, patients need new medicines and on the other there's a lot of promising innovation in labs that could potentially be commercialized and have a big impact. So the first stage of, starting a company and getting it off the ground is raising money. So as potentially unexciting as that is, we're going to delve into that today because it's a very important topic. So I have a couple slides and then I think Alina's gonna transition to a q and a session.

Can you guys see that? Thank you, Kim. Cool. So talk today is a little bit about how to raise money, and if any of you have read my book, some of these examples are straight out of that. So apologies for the repetition. So lesson one in raising money is that you want to raise to a value inflection point, and we'll talk in a little bit about what exactly that means. But for the minute, I wanna give you an example of what not to do and why this matters. So I had a client back in the day who wanted to raise 400 million very early in the company's life. They had very early preclinical concept data, not really much else. They wanted to raise 400 million because they were like markets are great.

We should raise for all three stages of clinical development. So as a conservative estimate, the company was valued probably around $1 million. This is what MBA such as myself decided to term a pre-money valuation. What this comes out to be is that the founders would be giving away 99.8% of the company if I chose to take this route. How did that work? This is math that's important to understand. But don't get too bogged down into the details right now. You can always look up this formula online. The point is that the percent of the company that the founders sell is the pre-money valuation over what is called again, MBAs are very creative.

The post money valuation, which is your dollars raised plus your pre-money valuation, that's your post money. Therefore, you go through all that math, you realize that your poor founders are left with only 0.2% of the company. So I wanna make a couple points. First of all. Dilution is not the enemy here. Any sort of growth that involves raising capital from venture capitalists is going to result in dilution. And dilution is, at least in biotech, a very normal part of growth. So while your percentage ownership does go down, the value of the shares increases the value, the size of the pie increases, even though the slice of your pie is smaller.

But if you do what these founders did in this example without building backwards, which is to say starting from your end goal of where you're trying to be, dilution can be too much. And this is an example of such a case. So we'll come back to this example in a second. So while the primary mission of any biotech startup is to develop a drug candidate through the steps of the FDA process, this is not possible without a well thought out financing plan. And such a finance plan needs to reflect the cost. The timing of this process, and in addition to the realities of what the investor marketplace looks like. So what does that mean? Allow me to explain. So biotech is a unique industry because unlike companies like SaaS companies or I don't know, I'm thinking of Uber or something like that, where your valuation is going to grow, at least correlated to revenue with a biotech company that's pre-revenue, which is going to basically be all biotech companies that are raising money or most of them that are in the stage that we're thinking about now.

Your value is tightly tied to what's called, your, or what's your stage of development, which is tied to inflection points? So what I want you to notice about this chart, this is data compiled by my co-founder and I, which shows the phase of 154 biotechs, many of which were his former clients at his previous company, and roughly where their valuation falls based on what stage in, in the clinic they're, and so you, what you can see, and again, this is log scale, so these jumps are bigger than they look visually. As you go from preclinical phase one to phase two, to phase three to approval, you're going up in value in a stepwise function. And that makes sense, right? Because as you're progressing through the development process, your risk of failure goes down and the data, at phase one, you're looking at safety mostly.

Phase two, safety and efficacy. Phase three, really big efficacy, some safety. You're getting more and more data validating that your new drug works. So risk goes down, value goes up. And so you can see that there's these sharp inflection points as you go through development, which again, is very different than most other industries. And the valuation is primarily based on where you are in a distinct stage of development. And one other thing I wanted to point out, you'll notice that the preclinical stage has the biggest spread. And this makes sense because preclinical could mean anything from you. Have you wrote one paper and like you have a very murky concept at best about what might work all the way to you're in GMP manufacturing, your IND submitted, you're about to start clinical trials.

So there's a very wide range in preclinical, so it makes sense that we'd see the most variants there. And anyway, so let's go back to my company example. So my client, if they had waited until after a phase one trial to raise the same 400 million, which you should note, we're just gonna pretend for the moment that's a made up number. It's likely, probably way too much to raise, at least for this stage of their company life. But just for the sake of consistency, we're gonna pretend it's valid. If they wait until after a phase one trial and they're evaluated at 300 million, suddenly you do that dilution math and the ownership is now 42.9% versus that 0.2% from before.

So what's the point here? The point is, by building backwards and using strategic financing, you can make sure the dilution makes sense in line with the business and that you're asking VCs and going out into the marketplace to raise money. That makes sense because it's also a matter of the VC is not gonna look at you particularly seriously if you say you would like to raise $400 million on a 1 million pre money. So it's important to understand this stuff. Great. Another point here is that there's a very high likelihood that this financing plan will evolve with time, and that's important. It should, but you should start at the end, which is approval, and think about how your financing will ideally look moving backwards from that and plan those out.

And you might have to shift and replan, but that's normal. Okay, great. So let's talk a little bit more about value inflection points. As you saw on that chart before, those value inflection points were very oriented around clinical. So phase one, phase two, phase three approval, you guys are all preclinical. So how do you think about value inflection points now? Great question. So generally speaking, good value inflection points adhere to three different rules. So one, they increase the value of the company that's having solid data to prove a concept. Two, they decrease the risk of failure. Those points one and two are pretty intricately tied, but increasing value and decreasing risk are the same married together, if you will. Three, they demonstrate the future potential of the technology. So an example of that is oh, we showed that modulating this one sort of target has positive effects on x, y, Z disease. What that could demonstrate is modulating other targets in this class of targets could also have, broader relevance, that sort of thing is really important to, to demonstrate as well.

Because you wanna, big, big exciting future for the VCs to invest in. Couple examples of things that could be value inflection points early on. So right here, show the potential of a potential target or pathway to treat a disease. So this could be very early on you might have written your paper on, how a target could be relevant in a disease and now you're raising money to show. To prove that if you actually modulate this target in, different animal models, you're actually seeing animal models of disease, you're actually seeing an effect on the disease itself. And maybe you're doing this in a more statistically significant way or so on and so forth.

Or this is much later down, down the road. This is typically towards the end of your preclinical dataset once you have your final clinical candidate. But obtaining a clean toxicology study is another really important value inflection point because you know it's increasing the value because it's showing that you have data around potential safety, decreasing risk because you're decreasing the risk of a safety issue and the potential of the application. Great. We could probably hopefully use this in humans 'cause it looks good in animals. So these are just a couple of examples. And you can modify these to be relevant. Two, whatever it is you guys are working on. So with that, I think those are my general slides and I'd be happy to answer some questions now, Alina.

Alina:That's a really helpful kind of approach to thinking about value inflection points and great examples. I wanna, we're gonna do q and a with the audience, so definitely start thinking about all of your questions, but I'm gonna ask you just a few follow ups. I am curious, have you, just in terms of examples, seen any kind of pitfalls when it comes to aligning financial plans with a scientific roadmap and what did that look like? How did that misalignment get corrected, et cetera?

Stephanie:Yeah. So in addition to the example I already talked about where raising too much capital can at times not make sense. To be really specific founders can send a message of not thinking about value inflection points when they're raising for VCs by being very unfocused in their budget. So what you want to communicate to a VC in your budget, and I'll give you an example in a second, but just to start high level what you want to communicate in your budget is, here is the value we're gonna get you, here's the data we're gonna give you for the money you're putting in. Which by the way, is a very different mindset in academia where you're not always thinking about how money translates to de-risking or increasing, scientific certainty around something.

And a big pitfall is creating a budget where it's not very focused and you're all over the map. So to be more specific, I've seen a budget before where, this person's raising a Series A, it's for 10 different assets all across the board, cancer antibody therapies, small molecules, and a budget That proposes raising for a little bit of everything, sort of advancing that lead asset towards the key value inflection point, which is, what we talked about before. And so that budget was never funded, unsurprisingly. And so that's an example of how if you don't have this value inflection point in mind, the VCs will not tell you that's why they're not investing. And it might not be the only reason, but it will make you come across as a little naive.

So your budget needs to reflect a a clear story and be in line with a very obvious value inflection point for the VC.

Alina: That's super helpful. I just wanna follow up because, it sounds a lot like these value inflection points are very focused on. The internal dynamics of the company and, the three kind of categories of what makes a value inflection point when someone is evaluating their own company milestones. But I'm curious in terms of timing, when someone is going out to raise, to what extent do they also need to be paying attention to either market conditions or milestones that competitors have reached at the, at any particular time?

Stephanie: Sure. Yeah. I mean, let's start with the competitors first. You should have a map of your competitors. So for example, for us, we are constantly looking at the latest data that's published by competitors. We have this cute little slide where we have the names of all the competitors, all the different types with fluid's. Really interesting. We have a very unique approach. But historically going after universal flu there've only been like four or five approaches. And so you can basically classify all the competitors into one of those five approaches. So we have this cute chart where it classifies the competitors into one of the five approaches. It shows where they are in development.

We track all the data when it comes out. You should absolutely do that because investors will ask you, and the more you have it already pre-prepared on the slide, the better it'll come across. That's number one. The answer to the other part as far as timing, I don't have the perfect answer to this, but I can give you, I can share with you some observations from, the only couple of economic changes I've seen in the industry. So one mistake, for example, a lot of biotechs made in 2020. In 2021, where the market was booming, was raising at too high of evaluation because they could get a high valuation back then. And so the results of that is a lot of those companies have struggled to raise again because the market now just can't tolerate such a high valuation.

And to be a little bit more specific and explain what I mean by that. You want to raise at each time you raise, you want to raise at what's called a step up, which is to say, your valuation for your series A might be here, your series B, you're gonna want to be here, series C heres, and so forth and so on. And I'm, don't think anything about the distances there that was arbitrary. The point is you wanted to go up. So a lot of companies raise an A in 2020 or 2021 at crazy high valuations, like a hundred mil, a hundred million dollar pre monies for a preclinical company. And the market now just won't tolerate that.

So to try and raise a b going off of that valuation and matching it to stage, it just doesn't work. And so a lot of those companies have had to take down rounds, which is when you take a valuation that's lower than before and that's bad. You don't wanna do that. Your previous investors don't want that. You as a company don't want that. What's my point? My point is that make sure that whatever valuation you're taking is in at least the range of reasonable as far as stage in both markets. Or make sure that you've raised enough on that valuation to make it to a significant enough value inflection point that you can raise at a step up that will make sense in, multiple different market conditions. That it's not so astronomically high that the only way you could raise would be if the economy was still really great. And then on the other hand another thing that happened for us when the economy was good when we were raising was we were getting encouraged to raise like multiple hundreds of millions to bring several of our preclinical products clinical.

So raising for two products instead of just one. That is not the case right now. The market is not good. It's a down economy. And so now the market's kind of shifted to wanting us to focus on our minimum exciting milestone, if you will, which is phase one human data. So the point is you want to focus in a down economy on your minimum exciting milestone while not being undercapitalized, but you are likely taking a bit more dilution than normal and the valuations are a bit depressed. So those are just things to consider in both markets because you want to think about what does the decision I'm making today imply for if the economy turns.

Alina: Super helpful. And I'm sure it's sometimes a little bit difficult to under, I mean, do you fi think that it's difficult to understand if you're in 2020 that the market isn't going to stay that way? Or do you think there's a good amount of kind of indicators that people can look at when they're navigating specific market conditions?

Stephanie: I think just as a rule, we know that the market never stays up or down forever. So you never know exactly when it's gonna turn. I've heard people try and predict it for the last few years. You don't really know it's gotten a little bit better, it's still not great. So the point is you should just assume that at some point it will change and it could change rather quickly. And I think in Covid times it was pretty clear that was a hype due to the current moment. And so I think it was very. Clear that would not last super long. So anyway, just something to think about.

Alina: Yeah. I'd love to have Max. He's have a question for Stephanie. And anyone else, if you have any questions, feel free to post them in the chat and then we'll go ahead and call on you one at a time.

Audience Member 2: Hey guys here or go ahead. Other Max, which Max?

Alina: Max, Ian. Okay,

Audience Member 2: I'll go. Max me here. I work at a drug delivery startup and we're looking to raise a Series A in the first half of next year. And I've been hearing a lot of conflicting advice on like perfecting the pitch and having it ready to go. And you only get one shot with a, with an investor versus don't be a perfectionist and get the word out there. And so I was wondering if you have any advice about walking that line and finding that balance?

Stephanie: Yeah, both of those things are true. So I think thinking about it in terms of balance is the right way to do it. Honestly, the advice I'm about to give you is partially learn from doing the wrong thing at points. But I would say you want to have kind of a minimally good standard. Like it's definitely true that it's never gonna be perfect. Your pitch deck is honestly gonna evolve every time you pitch, and it should if you're doing pitching, right?

Let me zoom out for a second. If you're doing pitching every time you talk to a vc, you should be noticing, oh my gosh, are they always asking us a question about, I don't know, formulation? I'm just making that up. If they're asking that question every single time, then we're obviously not addressing it well enough in the pitch. So you should be adding a slide at that point to, for on formulation to the pitch. If that's like something that keeps coming up, if they keep asking like, why are you doing a monkey study when what you should really be doing is like X, y, Z, then and that's a repeated thing, then you should be incorporating that too.

So just as a rule, you pitch deck should evolve and especially if you're like getting more data or you're, you will just naturally hone how to tell the story more and better the more you do it. And at a certain point you'll be like, oh, all of the VCs ask the same kind of list of questions and do, you can be more and more prepared in your appendix and your pitch deck for kind of the inevitable list of questions. So I'll start with that. I will say it is harmful not to have a serious budget in pitch deck when you go out. How I'd recommend doing that is working with people like. I'm too busy for this right now, but like someone like me, or someone who's a friend, who's a venture capitalist or a consultant, it's well worth the money to go back and forth with someone who knows what they're talking about.

Or if you're at a university, sometimes they have those sorts of resources to just make sure your minimum deck is not like totally out of the spectrum of normal. It could also be a friend who's raised money, doesn't need to be like a expensive endeavor. But you wanna make sure your pitch check isn't completely out of scope. Like the person I mentioned before who had a really unfocused pitch deck with like tons of different assets was raising for all of them. That's a red flag that you caught. It's okay if you're not starting with the most beautiful pitch deck ever. You want it to look professional and clean, but our version of professional and clean continues to level up as we iterate the deck more and more.

And, we've recently for a seed round we didn't do this, but now we will send slides to someone who does slide design after we make them so they'll beautify them and whatnot. So all that to say, just make sure the bare bones are in there. The story, the budget makes sense. The basic data you're showing is presented in a clear way. As long as all of that is there and it looks reasonable, then you can continue to like, iterate and add things. But I would really make sure, I would caution you against going out to fundraise without a like minimum deck that like, looks like a serious VC deck.

Alina: Awesome. Yeah. And and I think, that's something that we also work with, we work with different experts on all the time in terms of making sure that life sciences and biotech decks actually get to the benchmarks that people are expecting, have all of the pieces in place. So we're always happy to provide any feedback or advice as well. But with that, I wanted to turn, unless other people have questions, I noticed that someone here is also, coming from a spin out. And so I wanted to, we have a, an interesting, I guess, question that might be relevant to you, which is for PhD students who are maybe considering spin outs, what are some of the key early decisions that can make or break the company? And, any examples would be great.

Stephanie: Sure. So there is a lot. Actually I think I might even have a slide in this deck. Gimme one second. Oh, here we go. Okay. So we skipped over lesson two for the sake of time, but lesson three financing dies before it begins. And so these are the things when you're doing a spin out that honestly your company might die before it even gets started because these are just things you can know upfront will discourage investors.

I'm not saying these are like, absolute, I'm painting in broad strokes. So the first thing is end market size and market landscape. If you are solving like a, orphan disease is like in a slightly different category 'cause there's some economic incentives built in by policy. So with the exception of that's a different conversation. If you're solving a very niche indication or an indication for which there are already tons of stuff out there I'm gonna talk, I'm like PD L one, PD l pd, L one antibodies don't go into that space right now. We already know that space is super saturated. There's a good solution out there.

There's every sort of iteration of follow on that you could possibly imagine before you even set out to do that, you should probably. Not start that as a company. If it's like kind of an added or incrementally better technology, you're gonna wanna probably just sell the IP directly to Merck or whatever. So the biggest question is is your indication fundable? Another example of this is I'm not saying there's not a need there, there absolutely is, but the realities of the marketplace are that. Antibiotic resistant or sorry, an antibiotics for drug resistant bacteria are basically impossible to get funded.

And the reason is because that end market size is so small because physicians are really not able to prescribe new antibiotic biotics first. So the market size is not everyone who could use it. It's everyone who will be prescribed it, which is quite small. So VCs don't like to fund those sorts of companies. Again, you can know that before you even start. You don't have to start that company to figure that out. Second, if you don't have a path to exit, as in there's only one possible acquirer, don't start that company. Start a company where you have at least four or five. Ideally, all of the pharma companies might want it.

Obviously not all the pharma companies cover every indication, but you get my point. Financing. We already talked about this. Creating value in the company and your minimum data package to be like exciting. I'm gonna skip over that a little bit 'cause I think this is less important for a spin out. But your path to competitive IP position, this is really important. In academia, no VC will fund you and no big pharma company will acquire you, which is what VCs care about. If your IP is not strong, they will both do an independent audit of your ip, especially a pharma company because they have in-house people to do this stuff.

And this is especially important when you're doing an academic spin out because you guys know the most about your science, but the tech transfer office is the one filing those patents. Tech transfer office doesn't know all the claims it could possibly add on to get the strongest possible patent you need to work very closely with your tech transfer office to make sure that you're not just checking the box with your patent, but you're actually getting something with really broad claims. And that requires a significant amount of work and understanding of the science and the tech. Your tech transfer office person is working on tons of things and so if you don't work closely with them, you're not gonna get a very strong patent. So that's number one. Number two, and this is very strange for most scientists in academia, so you listen carefully and try not to be horrified.

What I'm about to say. This is just how the system works. I'm not commenting whether or not I like it. It is just the case that you cannot patent something if you've already put it in the public domain. And so if before filing a patent on something, if you go to a conference and you talk about it on Twitter. It's in the public domain now. You can't patent it. So before, if you intend to patent something before you go to your conference, before you publish, before you go on Twitter, I'm not telling you not to do any of those things, but if you would like to get a patent, don't do that before you filed something.

So that's a really important point. And sometimes academics don't realize how fragile that line is. So those would be a list of things that come to mind. Although there are more, oh, actually here's another one. That's another fail before you start thing. You don't need like a fully built out team, like from day one. But with that said, I think academia is quite the bubble. And so a lot of teams that start around companies are like, we're a great team because I have so and so famous pi. And then I have this other person who's also an academic and then I have me, who's a PhD student. We're all academics. Look at us, we're great.

You are great. That's awesome. Yeah. I applaud that. However, a VC or anyone with market experience is going to look at that and think to themselves, Hey, we actually need someone who's in this company and shaping the science who has industry experience. So what stage that is, can differ, but one of our huge assets and kind of change the game for our company. We tell all the VCs we're raising to go into the clinic, but we didn't have a very experienced vaccinologist chief medical officer designing the clinical trial or asking some of those preclinical questions that are relevant for the clinical trial. And so we recruited this awesome guy from j and j.

He actually. Has developed 14 approved vaccines, including Gardasil, the Covid, J and j Shot, and so on, so on and so forth. He's been a huge asset. Gives us a lot of credibility because it's not just an academic who researches creating a vaccine, it's someone who has actually done it. Those are the sorts of people that I would say by and large in painting with broad strokes. Academic people tend to underestimate how important they are because they're the experts in like the field, like the area of whatever you're doing. But they're not the experts in bringing whatever their, research is to the actual market. So it's really important to have people who have that experience involved.

Even if initially they're just like advisors or something, but X Pfizer people, X, J and J people, so on and so forth. If you're thinking about, if you're working in an area that has like very known difficult CMC, so for example example for recombinant proteins and whatnot, it's very complicated. It's helpful to hire someone even early on or give them a little bit of equity so you can put them on your slide as this person's advising me. And they can also help you de-risk your idea and you won't waste as much time. Thinking about that translational element, because the facts are, and this isn't true of everyone, but by and large, a lot of PIs don't actually have experience with developing their science all the way to the market. Some of them do and that's great, but a lot of them don't. So it's really important to get that expertise. Amazing.

Alina: I wanna, we have only five minutes left and we still wanna do a quick wrap up, but I do wanna slot in a quick question from Katya if we can just 'cause I think it's a great one. If you can just go ahead Katya and ask this, ask your question.

Audience Member 1: Hi. Yeah. My question is, could you talk a little bit about how you identify the right pre-money valuation discount caps? So what could be a good strategy in biotech to get these? Sure.

Stephanie: I'll start with again, a high level and then we'll go into some more practical. The reality is all of that stuff is very wiggly. It's not hard science, it's not calculus. It's not you crunch some numbers and it's an objective thing. No, finance is very like, hand wavy, especially for use to like hardcore life science. With that said I would say there's a couple ways to have an objective at least angling in on something.

And the biggest way is to get competitive term sheets. If the market gives you a term sheet and says you are priced at 50 million, then you're priced at 50 million because someone's willing to pay for you to be 50 million. Okay? So if you have a term sheet like that, then if bob over here comes in with a term sheet and says, you're worth 20. You can say, sorry Bob, we're worth 50 and we don't need to take your money because we have this other offer. So when you're raising, your goal should generally be to get three competitive term sheets, and that is a big psychological dance. It's very difficult. It's especially difficult in this economy because getting even one term sheet is hard term.

But in general, in an ideal world, the best way to do it is to get several competitive term sheets. Okay, so that's 0.1 because then you can, objectively say the market has said we're price at this. The way to do it when you don't have that is to is to look at comps and so there's lots of databases or I guess you can just really wade through Google and PubMed and what else, whatever else. But you want to try and compare yourself to something. So an example of how I did this when we were raising last and I was able to successfully negotiate up. Negotiate up the valuation. Using this method was to say, Hey, here's a list of financings that have closed in the last couple quarters.

They're, vaccine companies, they're, series A, they're about the same size as us, like here's roughly like what those companies were worth on a pre-money basis. Then I eliminated all the companies that had raised less money than us. So there's like different methods to doing that. And I think there, there's databases you can pay for. One of them's called Cortellis. I haven't actually used it. I've just heard good things that you can see similar assets and what they were priced at in different stages of development. And you can clearly see what sort of like data they have, even preclinical data which is good. And then you can make a very like cogent argument about that.

I will say though, the number one thing you can do is the competitive term G, but that is really tough to do in this market. The other thing you could possibly do, is you can, get a syndicate of investors that all agree that a certain pre-money is, fair. But until it's like real in an assigned term sheet that's hard to enforce. So I hope that helps.

Alina: Thank you so much. I know that we have very little time for wrap up and so I, this has been an incredible and information packed session with lots of great examples, Stephanie. So thank you so much for joining. I'll let you wrap up as well, but before we do, I just wanna wish everyone a happy holiday season and a happy new year.

We will be back next year. However, if you either have attended previous sessions or even if this is your first session, we'd love your feedback on what you wanna see and what would be most helpful next year. So in the chat we've shared a quick link with a survey that will really help us as we plan more sessions that are tailored to what you see as your upcoming needs. I'm sorry if we didn't get to all of the questions, but we will definitely try to follow up with them once we end. And I'll give Stephanie, I'll give you the floor for the last minute, just so you can sign off as well.

Stephanie: Sure. It looks like there's some other good questions. They're all great. You can feel free to send me an email with your questions and I'll try and get to that. I'll type it in the chat really quick. I'm a very slow emailer. Not on my like, work email. However, I will get to you eventually. So feel free to shoot me questions. It's been great to speak with you all. I wish you the best of luck. This is an important field. It's exciting, make a big impact, but it's hard work. So best of luck to all of us.

Alina: Thank you so much. And thank you so much, Stephanie. This has been wonderful. We will definitely be following up with you all with also the recording and all of the materials from today's session. But yeah, what a good end to 2024 and hopefully beginning to thinking about your raises in 2025. Thank you. Thanks everyone.