GROWINGYOUR
BIOPHARMATEN QUESTIONS YOU’RE LIKELY TO
FACE FROM INVESTORS—AND HOW
TO RESPOND TO THEM

• API

• BIOLOGICS• VIRAL VECTORSERVICES• EARLY & LATEPHASE DEVELOPMENT• CLINICAL
TRIAL SOLUTIONS• LOGISTICSSERVICES• COMMERCIAL

MANUFACTURING

1

Table of Contents

Introduction

3

Business Model and Strategy Questions
1. What’s your hypothesis?
2. What’s your business strategy?

45Team and Competition Questions
3. Who are your founders and management team?
4. What’s your competition?

6
7

Infrastructure and Partnership Questions
5. How much are you investing in infrastructure?
6. What’s your development and manufacturing strategy, and who are your partners?
7. Are you working with one CDMO or many?
8. How are you thinking about the data package you’ll be submitting to regulators?

8
9
10
11

Risk Mitigation and Problem-Solving Questions
9. What will you do when problems occur?
10. How are you positioning yourself for the next step in your program?

12
13

Conclusion

14

About Us

15

2

INTRODUCTION
There are many important considerations toaddress in building your new drug program.
Without a doubt, one of the most critical is funding
to get you to your next milestone. As you grapple
with funding issues, it can be useful to consider the
point of view of a potential investor.
Why? Because investors are betting on you to manage
development effectively and to move quickly. In assembling
this guide, we asked investment veterans and biopharma
executives what questions they ask (and have been asked)
when both parties sit down together. Answer these questions
well and your potential investors are that much more likely tosupport your company’s vision.
We’ve also included a few “red flags” that you should avoid.
Sometimes knowing what gives potential funders pause is justas important as knowing what they are likely to ask.

3

BUSINESS MODEL AND STRATEGY QUESTIONS
1. What’s your hypothesis?
Why are they asking this question?
To secure funding for your new or emerging pharma company,
it’s critical that you articulate your core idea. If you can describe
your company’s strategy succinctly, investors will be able to makea clearer call on whether your hypothesis has merit. You may only
have limited information at this point in your evolution, but you needto make your potential investors excited about investigating further.

Why is it relevant and important?
Investors are asking themselves two questions when they sit downwith you: Is this a scientific bet worth making, and is there a market
for it? The more specific you can be about your company’s core idea
and why it has a ready market, the more likely you are to find funders
that can get behind the idea.

What’s the best way to respond?
Be clear and concise. Write out a response and memorize it. If yourhypothesis is that a particular antibody works in such a way that it
may address a rare disease, for example, state this in as few words
as possible.

		
Red Flag: No elevator pitch
Pharma and biotech investors regularly attend conferences where
they hear pitches from dozens of aspiring companies in short, timed
presentations. These are often referred to as “speed dating” sessions.
If you are unable to articulate in one or two sentences why yourtreatment or technology is important and why it will matter, you will
inspire doubt rather than confidence. Most investors aren’t scientists,
so if you can’t simply and clearly articulate the benefits your company
will bring to the world, they are likely to pass. Best advice? Nail your
15-second elevator speech before you approach investors.

4

2. What’s your business strategy? Red Flag: Unrealistic timeline or budget
Why are they asking this question?
Venture capital and large pharma companies are accountable to theirinvestors and shareholders and need to know how quickly they can
see a return on their investment. They understand that most of theirinvestments may not pan out, so they want to “fail fast” and move tothe next promising company, if that’s appropriate. They also will tend to
fund one major milestone at a time for your company and want to knowhow you plan to get there.

Why is it relevant and important?
It’s critical for any investor to know what their risks are over a prescribedtime frame. If it will take $5 million to get to a yes/no answer basedon your hypothesis, your investor will want to know how your plan ofaction breaks out and how quickly you can achieve results.

Although they may not be scientists themselves, most investors employ
scientific experts and rely on consultants to provide them with counsel on
candidates they are considering for funding. Confidence is essential to making
a good impression, and investors realize that companies tend to present bestcase scenarios for timing, but too much confidence about when you will beready for the clinic can backfire.
Since you’re likely to be in the company of business experts, it’s best to stresswhat you know and admit what you don’t. Budgets to get you to clinic that
underestimate costs such as specialty ingredients, API formulation, viral vector
production or manufacturing redundancies may get you into hot water. In thesame way, spending too much up front on space, equipment and expensive
staff can raise warning flags.

What’s the best way to respond?
Expect to provide details about not just your current strategy but also
your strategy over the next three to five years—including your strategy
for an exit scenario. Investors find it helpful to hear strategy in bite-size
pieces so they can get excited about a stepwise investment.
For example, you may plan to take an asset, move it to the clinic andsell it to a pharma company or other acquiring entity based on how it
works in progressively larger human populations. On the other hand,
you may plan to build a sustainable, integrated biopharma company
and move to an IPO. Or you may plan to partner with a large pharma
for a commercial launch. All three directions are legitimate—the point is
to make sure that you clearly articulate your envisioned future.

5

TEAM AND COMPETITION QUESTIONS
3. Who are your founders andmanagement team?

Red Flag: Too much ego

Why are they asking this question?
Although most investors will have researched this topic in advance,
they will want to hear in your own words about your track record, how
successful the members of your leadership have been in their careersand how they are executing in your new company. It’s unlikely thatyou’re a public company with a board of directors at this stage, butinvestors still want to understand who your key opinion leaders (KOLs)
are: Who is guiding you on your journey? How will they help you stayon course if your program has issues, or if it succeeds? Investors arealso looking for consistency in what they hear. A lead investor from alarge pharmaceutical company was once quoted as saying, “When
you’re interviewing, ask the same question of everyone. You want tomake sure you’re getting the same answer.”

Why is it relevant and important?
It’s essential that your investors believe you have the right teamin place, including operational expertise, insightful scientificminds, entrepreneurial business leadership and, increasingly, CMC
know-how. Depending on the investor’s funding model, they may
also want to determine your openness to working with them to pull
together a more complete team, often complementing your existingscientific expertise with business acumen. This may include a CEO
suggested by the investor or VC firm.

As a successful academic researcher, you may have an MD-PhD and have
served as principal investigator of a prestigious lab. You may have discovereda molecule and formed your own company. You may have headed up an
entire therapeutic area at a large pharma company. In short, you may beaccustomed to being seen as the smartest person in the room. A confident
ego can inspire funders to see and share your vision, but an arrogant ego
does not sit well with many venture funders, especially if you haven’t beenback on the bench in 15 years.
Investors are looking for scrappy entrepreneurs who know how to get things
done and ideally have a track record of doing so. On the other hand, investors
will turn a wary eye on start-ups that claim they can do everything themselveswith little help from outside partners. New generations of biotech VC firms
focus more on a collaborative, hand-in-hand company development andcreation process. Reputable firms also are committed to helping you succeed
because your therapy or medicine could save lives. Arrogance does not mix
well with these settings. A good strategy is to focus on humility.

An investor would much prefer to hear, “I don’tknow the answer to that, but I know it’s important,and here’s how I’m thinking about it.”What’s the best way to respond?
Stress the successes you and your team members have had in thepast, because funders believe that success breeds more success.
Also remember to point out the strength of your network, both scientificand financial. It increases an investor’s comfort level to know that they
won’t be the sole party who might have to invest more money down
the line because you haven’t secured other investors.

6

4. What’s your competition?
Why are they asking this question?
Every funder wants reassurance that you’re not simply copying anidea that’s already in the market. And even if many competitors areworking in your area, funders want to know what your advantage
is in meeting these competitive headwinds. For example: What are thekey differentiators about your product—durability, efficacy, dosing
or something else? Why will your program be clinically meaningful inways that others aren’t?

Why is it relevant and important?
If ten companies have the same hypothesis and approach to a problem,
it will dilute the value of your company if your competitors are further
along. Investors want to make educated decisions.

What’s the best way to respond?
Before you ask for funding, conduct the most thorough competitive
audit you can. If someone is pursuing your hypothesis already, beprepared to describe what’s unique about your approach. Take thetime to conduct your due diligence and be prepared to defend yourunique qualities, be they therapeutic modality, use (and redundant
supply) of raw materials, CMC requirements, scale-up process oranything else that presents your company as a sound scientific andbusiness investment.

		Red Flag: “We have no competition”
Some innovators feel that their innovation is novel or a one-of-a-kindsolution. Unless this therapy is a gene therapy and there is no other
innovator working on this specific indication, there is competition.

7

INFRASTRUCTURE AND PARTNERSHIP QUESTIONS
5. How much are you investing
in infrastructure?

Red Flag: Too much focus on efficiency, not enough on innovation

Why are they asking this question?
Much of what you need to do in drug discovery research can now
be outsourced, so if you plan to purchase a significant amount ofequipment or hire large numbers of scientific staff to answer yourbusiness’s core go/no-go question, that strategy is likely to bechallenged by an investor.

Striving for higher efficiencies and eliminating costs in areas such asengineering probably have utility in large, mature organizations, but do nottend to drive value in new and emerging biotechs. If you come out of a largeorganization with a cost-saving culture and make claims about driving
efficiency in a start-up, it will sound upside-down to investors. No one wants
to be the VP of CMC who has to approach their board and say, “I thought
I was going to save $500,000, but now the program is six months behind.”

Why is it relevant and important?
Investors are looking for new and emerging companies to run lean,
without the infrastructure baggage of legacy organizations that may
have spawned or inspired them. Just as the CRO industry grew up
to complement—and in many cases replace—pharma companies’
conducting their own trials, the CDMO industry offers a morefinancially and scientifically favorable model for new and emerging
drug development and manufacturing. If you are making in-houseinfrastructure a priority beyond a base level of internal infrastructureand expertise to evaluate data and track progress, you may need tomake a very strong case for the value this will deliver.
And don’t forget: With a reputable CDMO, your team will act as anextension of your company, not as a “set it and forget it” capability thatyou never see.

What’s the best way to respond?
Be honest and make a strong case for why you must maintain in-house
control over certain elements of your discovery and development
program. If you think you can take risk off the table by having an
integrated CDMO as part of your strategy, consider this approach.

8

6. What’s your development andmanufacturing strategy,
and who are your partners?
Why are they asking this question?
Especially in high-complexity areas like cell and gene therapy,
funders will want to understand your strategy in clinical development
based on the high cash burn rate and the supply chain capacity
you’ll need in order to produce a reliable supply of product. CMC
skills are increasingly important as well, because most investors
understand that excellent clinical data on its own is not sufficient toscale manufacturing of your product and get it approved by regulatory
agencies. Characterizing and understanding your process and productquality are essential.

What’s the best way to respond?
Do the math. If you’ll need 15,000 square feet of manufacturing capacity tomake enough of your product to realize its revenue potential, make sure thatyou’ve checked your numbers. Investors want you to demonstrate that you
understand your supply chain requirements, regardless of how you plan toaddress them: internal build, outsourcing or a hybrid strategy.
Choose your CDMO partners carefully based on a set of key factors affecting
performance outcomes. Be ready to share with investors why you’ve madeyour decisions, based on:•

Track record- Has the company taken a product and commercialized it?

•

Quality processes- Is there any risk associated with choosing this company?
- Might it have inspection issues based on past programs?
- Has it previously had FDA actions?
- How has it performed in pre-license inspections?

Investors know that most small companies have neither the size nor
the resources to develop and manufacture their own drugs, so theyalso need to know what your outsourcing strategy is. Large-moleculedrugs are more difficult and expensive to manufacture than small, so
having a strong manufacturing relationship with a respected CDMO
that brings a strong track record can make a difference with funders.
It stands to reason that investors will be more likely to approve of
CDMOs with which they’ve had positive relationships in the past.

•

Reputation- Is it a recognized company or relatively unknown?

Why is it relevant and important?

Red Flag: Overclaiming or “getting out over your skis”

Funders want to know that you will be following a proven path to
a commercially realized product. New and emerging companies
need credible, high-quality partners that will not only perform
development and manufacturing work, but also help interpret theresults of pathology reports and DMPK studies. Good partners also
anticipate the downstream impacts from upstream development andmanufacturing decisions and can help you present your data package
to regulatory bodies like the FDA as they want to see it.

Having confidence and conviction in settled science is good. Conveying thesame level of confidence in areas where you’re out of your depth is not.
For example, if you haven’t really built out your CMC strategy, you’re better off
acknowledging it than trying to talk your way through it. If you start to claimthat “We’re really going to think out of the box on CMC and do this differently”
or “Yes, we can make the product; don’t worry about that,” expect some raised
eyebrows. VC investors don’t expect a molecular biologist to have all theanswers. The important thing is to be capable of engaging with other people
who do have this expertise.

Think about the best way to convey that you’re focused on the most efficient
path to the next milestone, but that you’re also looking to make key foundational
investments that will set you up for success faster in the next phase. This is adifficult balance to strike, so work out the response with your team and yourpartners before pitching to an investor.

9

7. Are you working with one
CDMO or many?
Why are they asking this question?
Every investor wants to future-proof their investment as muchas possible. If your company has contracts with multiple CMOs
or CDMOs for drug substance, drug product, clinical trial andother services, it’s likely that each new team will be restartingat each step.

Red Flag: Scattered focus
Investors would prefer that you stay focused on science and development
rather than acting as program manager for multiple CDMO relationships.
Partnering with multiple CDMOs potentially adds risks and delays as well.
If your attention appears spread across too many outsourced partners, expect
to be asked why you haven’t considered a larger, integrated partner that canhandle program oversight on your behalf.

Why is it relevant and important?
Investors would prefer that you remain focused on reaching the next
milestone rather than on educating new vendors and managing multiple
relationships, especially if new and existing vendors compete witheach other.

What’s the best way to respond?
Keep in mind that as a new and emerging biopharma, you have to
move fast with a limited amount of budget and resources to get tofirst-in-human trials followed by proof of concept. If you currently
have multiple partners working on your program, this can be seen
as adding risk to your program, so put together a strong argument
for why this isn’t the case. You might also consider collecting
proposals from larger, integrated CDMOs with which you’ll spend lesstime negotiating terms, overseeing day-to-day details or transferring
processes between partners.

10

8. How are you thinking about
the data package you’ll be
submitting to regulators?
Why are they asking this question?
Although it may seem to be a downstream consideration, manycell and gene therapy start-ups are surprised by how quickly
their Phase I results lead to requests from the FDA to submit for
accelerated designations. With the FDA predicting that it will beapproving 10 to 20 cell and gene therapy products a year by 2025,1
it’s important to think about the regulatory submission earlier.

Why is it relevant and important?
A strong, high-quality data package is key to a fast, successful
regulatory submission. When you work with a single integrated CDMO,
information and learnings are shared across the teams focused onyour program. If your asset is split among multiple CMOs or CDMOs,
investors may have to invest time and money in helping to pull thedata package together. Investors do not consider this a good use of
their precious resources.

What’s the best way to respond?
Before you pitch to an investor, talk to some experts about what
the best route to a clean, integrated data package will be for you.
If working with a single integrated CDMO is part of the solution,
incorporate this into your planning process.

11

RISK MITIGATION AND PROBLEM-SOLVING QUESTIONS
9. What will you do whenproblems occur?
Why are they asking this question?
Investors are unlikely to ask you about responding to highly specificproblems if you are pre-IND. With a question like this, the investors arelikely trying to determine how you think about approaching a problem
or creating a Plan B, both of which are important considerations
to establish confidence. Given the current global pandemic, newconsiderations also arise. For example, if you can’t visit your CDMO
in Europe due to travel restrictions, how will you ensure that quality
stays high enough?

Why is it relevant and important?
Problems and challenges are part of the nature of the biopharma
business, so investors want to get inside your thought process.
From their perspective, they also want to avoid getting pulled in
to contribute more money (and even more important, more time)to get your program across the finish line.

What’s the best way to respond?
Think in advance about different categories of problems your program
might face and how you’d work to mitigate them. For example, you
might consider building in manufacturing redundancy if manufacturing
falls on the critical path for your R&D program. You might also consider
a manufacturing partner that has a proven ability to identify the root
cause of manufacturing process deviations and a broad network thatcan be called on to get you back on track. When the question comes,
it’s ideal to be able to say, “The CDMO we want to work withis the best fit for our product. It has the ability to expand capacity.
It can leverage a broad network. We can leverage its resources here for
distribution. It has strong regulatory experience. And given all this, our
CDMO can help us manage any problem that may arise.”1210. How are you positioning
yourself for the next stepin your program?
Why are they asking this question?
Drug development presents many options for a young biopharmacompany, including the partners you’ve chosen and the decisions they
may lead you to make. For example, what is the development route
you’ll choose for your API, if you are pursuing a small-molecule drug?

Why is it relevant and important?
Investors want to know that you’ve taken off the table every risk thatyou can control for today. In the API example above, you may choose
purity over yield in your formulation instead of fully characterizing
your molecule and investigating formulation and solubility. This canbe a shortsighted decision in terms of next steps if it compromises
downstream bioavailability and increases cost. If your CDMO combines
drug substance and drug product capabilities under the same roof,
however, this is much less likely to happen.

What’s the best way to respond?
Make sure that you have explored the downstream implications ofyour development decisions as well as the foresight of your potential
partners. Investors will be impressed that you have thought throughthese issues before you sit down together.

13

CONCLUSION
Obviously, there is a lot to think about when it
comes to making a case to investors. Get theanswers to the basic questions before you pitch,and you’ll have a greater chance of succeeding:•What is my concept?

•

What could it be good for?

•How much will it cost to get to an answer?

•

How can I make developing and manufacturing my drug as
fast and successful as possible?

Also ensure that you are working with a CDMO partner that has the rightskills and experience, gives you the right level of attention and project
management, integrates as many steps of development and manufacturing
as possible, is clear about how you’ll work together, and can help you thinkstrategically about commercial supply.

Funding Flavors
Seed money:
Friends and family money to get your idea off the ground
Series A:
VC funding to launch your company, ideally to get you to the discovery
finish line and into the clinic
Series B:
VC funding to move your programs through clinical testing for safety,
efficacy and large-scale patient efficacy
Mezzanine funding:An additional level of VC funding to make up for a budget shortfall or
to fund extra necessary research to reach your goal
IPO:
Public funding to bring your company to the world of investors at large

Some investors will be more willing to give you a higher valuation and provide
more capital if you can show you’ve thought seriously about manufacturingissues. Once you have, you’ll be a lot closer to the funding and positive
patient impact you envision.

“When you’re interviewing, ask the samequestion to everyone. You want to make sure
you’re getting the same answer.”— Lead investor, large pharmaceutical company

1

FDA, “Statement from FDA Commissioner Scott Gottlieb, M.D. and Peter Marks, M.D., Ph.D., Director of the Center for Biologics Evaluation and Research on new policies toadvance development of safe and effective cell and gene therapies,” White Oak, MD, January 15, 2019.

14

ABOUT US
With unwavering commitment to service, scienceand process engineering, Thermo Fisher Scientific is
powered by people with an exceptional commitment
to quality, deeply instilled ethics of personal
responsibility and unrivaled expertise.
Thermo Fisher Scientific provides industry-leading pharma services solutions
for drug development, clinical trial logistics and commercial manufacturing tocustomers through our Patheon brand. With more than 55 locations aroundthe world, we provide integrated, end-to-end capabilities across all phasesof development, including API, biologics, viral vectors, cGMP plasmids,
formulation, clinical trials solutions, logistics services, and commercial
manufacturing and packaging. We give pharma and biotech companies ofall sizes instant access to a global network of facilities and technical experts
across the Americas, Europe, Asia and Australia.
Our global leadership is built on a reputation for scientific and technicalexcellence. We offer integrated drug development and clinical services tailoredto fit your drug development journey through our Quick to Care™ program.
As a leading pharma services provider, we deliver unrivaled quality, reliability
and compliance. Together with our customers, we’re rapidly turning
pharmaceutical possibilities into realities.

15

+1 919 226 3200 • pharmaservices@thermofisher.com • www.thermofisher.com/patheon© 2021 Thermo Fisher Scientific Inc. All rights reserved.
Published 03/21