Numerous publications exist offering guidance on how to bring together the right mix of management teams needed in a start-up company, but few of these have addressed the strategies unique to the cell and gene therapy industry.
In this blog, Maria Shutova, Senior Commercialisation of Research and Investment Manager, and Sam Goldsmith, Head of Commercialisation of Research and Investment at the Cell and Gene Therapy Catapult, highlight considerations for establishing the most effective team to support the development of a successful cell or gene therapy company. This is the second in a series of blogs to help academic leaders identify and focus on key considerations when seeking investment to commercialise their advanced therapy concepts.
Read the first blog on how to de-risk your ATMP asset to attract investment here
Stage 1: Academia to Seed Investment
The Chief Scientific Officer (CSO)
It is often the case in early cell or gene therapy company formation that a principal investigator (PI) associated with a university will possess comprehensive know-how around the technology along with the key patents. Although they may not intend to fully depart from academia in the near term, their valuable scientific insight often makes the academic PI well placed to take a CSO role. This is especially true in the first stages of company formation as they will have a strong vested interest in building the technology. Nonetheless, it is important
to ascertain whether the academic PI is ready to sacrifice the sufficient time and effort needed to make the new company a success.
The Chief Executive Officer (CEO)
The ease with which a new company (NewCo) is formed and the terms of the initial pre-Seed and Seed funding round are often judged to be indicators of future success. A NewCo can help to facilitate these early steps through the appointment of key individuals such as a CEO who can bring valuable contracting, accounting, and charismatic leadership skills to push the company forward. One way that the university from which the NewCo is being spun-out can secure a CEO is through engagement with a consultant who can develop a commercial strategy and attract investors. This person should have the skill set to undertake the primary operational responsibilities and can be reimbursed either through cash or equity, however, it is unlikely they will take a long-term role in the company.
Another option is to rely on investors who believe in the technology and can help with finding a CEO within their network. Companies lacking a CEO pose additional risks, and to offset them investors may demand greater equity stakes and increased control over the NewCo. In certain cases, there may be a postdoctoral researcher who is familiar with the technology and has the desire to transition from academia to industry. Depending on their skillset and ambition, such a person can be considered for a number of roles from Technical Lead to CEO, provided they have support from a strong advisory board.
The Chair and advisory board
A valuable tactic also employed by early companies is the recruitment of a chairperson who can support the CEO and CSO in the early guidance of the company. The Chair should be chosen for their relevant experience in the advanced therapy field and be able to provide support in different strategic areas, often acting as a mentor for the CEO or CSO.
Advisory boards also play an important role in the company development process and should support the immediate needs and ambitions of the company as it grows. For early companies the advisory board should comprise individuals that can provide valuable insights and strategic connections to the key areas the company is seeking to grow and de-risk. For a cell or gene therapy NewCo these areas will include pre-clinical development, manufacturing and clinical. Advisory board members are often paid in equity so do not affect the cash flow of the early company and can serve as a vital way to de-risk the overall technology and meet investors’ needs regarding guidance and strategy.
Tip: Establishing a strong board is a good way to build the companies know-how, experience, and reputation without diverting cashflow away from scientific programmes.
Red flags at this stage:
- A lack of experience among founders in launching new companies
- A single investor monopolising the formation and direction of the company
- A projected rate of growth inappropriate to the NewCo’s technical maturity
Stage 2: Seed to Series A Investment
The Chief Operations Officer (COO)
The transition from Seed towards Series A investment is a testament to a NewCo's traction and the managerial team’s ability to steer its trajectory towards commercial viability. This stage is characterised by the need to demonstrate consistent growth in data production and the efficient use of Seed capital. During this period the size of the team will need to increase to meet the growing needs and complexities of the company. As areas of the business such as manufacturing, pre-clinical and regulatory continue to grow, hiring a COO to oversee these multiple development pillars is a valuable move to help ensure the focus on reaching key milestones is maintained, and can allow the CEO to prioritise fundraising and business development.
The Chief Medical Officer (CMO)
Meeting the milestones set during the Seed stage are critical to justify Series A investment. It is also a time when the company must refine its operational model and expand the team with personnel who can drive clinical development of the first program alongside the widening pipeline. Recruiting a CMO to lead on the clinical trial strategy can fulfil this need and a CMO can de-risk the company from a clinical perspective and potentially bring a large patient network with them. At this stage it is important that the CSO and CMO find mutually agreeable role scopes to prevent unnecessary overlap or disagreement.
Tip: Regulatory and manufacturing expertise can be outsourced to consultants or individuals with the necessary experience can be brought into the advisory board.
Red flags at this stage:
- The absence of legal advice and a robust IP strategy
- The lack of clear definition between the roles in the growing team
Stage 3: Investment Round A+
Building out and building up
Post-Series A, the NewCo enters a phase of scaling operations and accelerated growth, and focus will typically shift towards clinical readiness and working with investor expectations on the speed of growth. The management team will evolve as the company grows, often bringing in experienced executives to handle the increased complexity of the business. It is not uncommon at this stage for early CEOs and CSOs who’s skillsets revolve around company creation and start-ups to be replaced by individuals with experience in growth stage companies. This expansion period also involves building out the infrastructure to support larger teams and more sophisticated operations, and strategic partnerships may be pursued to complement organic growth.
New roles will emerge as the diversity of operations increases, such as a Head of Manufacturing to oversee the development and scaling of the technology platform and manufacturing processes, Regulatory Affairs and Clinical Development Directors leading corresponding teams, and Business Development Managers who can identify and pursue strategic partnerships to continue growing the business.
Tip: Partnerships and collaborations can help with access to expertise and supports the development and de-risking of technology.
Red flags at this stage:
- External collaborations need to be carefully managed to avoid a loss of focus from the company’s core priorities
- Attempting to grow the whole pipeline at the same speed frequently leads to an unbalanced budget and missed milestones
Bringing together the strongest team for the strongest spinout
It is crucial to understand that having the right management team in place is as important as the robustness of the technology. Even groundbreaking technologies can fail due to mismanagement, and investors must award the same level of attention to building the most effective team to run the company as they do in developing the most effective technology.
Having the right team at the early formation stage will set a company on a strong trajectory and accelerate the route to market, and it is an essential consideration for university technology transfer offices and academics looking to successfully spinout.