Monthly Vibe Bio Newsletter - May 2023
Every Cure for Every Community - Understanding Inflection Point Financing in Biotech 📈
Welcome to ’s Monthly Newsletter! Stay up-to-date with our latest company updates and insights into the ever-evolving biotech funding landscape.
In our April newsletter, we shared examples of how traditional banking systems and, in turn, the venture capital markets are experiencing an economic correction. Although there are optimistic investors out there, it’s clear that biotech funding has slowed down since 2021.
This market deceleration is motivating biotech startups to seek alternative funding opportunities and encouraging companies to thoughtfully take steps to de-risk their platform/assets/products.
Biotech Fundraising Problem: Navigating Inflection Points
In this month’s newsletter, we aim to describe a fundraising problem many biotech startups are facing, particularly in today’s uncertain economic environment.
Broadly speaking, the problem is lack of funding as they approach a critical value inflection point. Many drug development programs have the potential to effectively treat and cure diseases.
Unfortunately, unforeseen circumstances can cause research to be discontinued because of a lack of funding at these meaningful research milestones.
Let’s dive in.
What is an Inflection Point?
Inflection points in biotech are milestones tied to scientific, clinical, or business achievements that increase the company’s valuation, ideally unlocking a subsequent round of financing. Biotech startups and investors are all too familiar with the concept of value inflection points which steer their fundraising decisions.
Inflection points occur at all funding rounds including pre-seed, seed, Series A and beyond.
Why are Inflection Points important?
There are decisions that need to be made that can either shut down programs or significantly boost it's resourcing. Scientists may be waiting for lab results and funders won’t inject more capital until they see convincing data to supporting the company’s research.
These periods of time are typically shrouded with uncertainty. 😕
What are Examples of Inflection Points?
Every biotech is driving towards a value inflection point.
So what are some examples of 'inflection points' in drug development?
Proof of Concept - demonstrating the desired pharmacodynamic effect, either in vitro or in vivo.
Choosing a lead asset to advance into pre-IND studies.
Choosing a clinical candidate (a.k.a. development candidate). Since preclinical models translate infrequently to humans, it’s common to optimize a molecule for desirable drug-like properties, such as bioavailability, pharmacokinetics, etc.
IND enabling toxicology studies that show the safety of your compound to support a proposed clinical study.
Any clinical milestone completed successfully - Phase I/II/III or any positive results leading to FDA approval.
Inflection points are assessed considering the value they generate, the extent to which they mitigate company risk, and the overall potential they offer.
We’d love to see some additional examples of biotech inflection points - leave a comment with your feedback!
When is the Best Time to Raise Funds?
Raising funds during inflection points is crucial for both founders and investors in the biotech industry. However, fundraising in biotech does present a sort of catch-22.
Founders aim to secure funding prior to an inflection point to ensure they have sufficient capital, if their pivotal experiment fails. This allows them to regroup and make another attempt.
On the other hand, investors prefer to fund after an inflection point when there is a lower risk involved. From the biotech’s perspective, raising after a positive inflection point may also boost the company’s valuation leading to more money for your company to continue its research.
Raising before inflection points:
gives biotechs greater certainty they’ll hit the inflection point because they’ll have the resources to support their pivotal experiment(s)
parallelize your drug programs instead of serialize them
solidify your company operations in advance
may lead to a lower company valuation
Raising after inflection points:
increases the likelihood of receiving funding, especially if you’ve significantly de-risked your target/asset/platform/model
offers a potentially greater valuation
In her book, Building Backwards to Biotech, Stephanie A. Wisner, effectively describes value infection points as a way to minimize company dilution while creating value1.
Excerpt from Wisner’s book:
The way to minimize dilution while still building value is to fundraise in tranches that correlate with value inflection points. Fundraising in tranches means that instead of raising your money all at once, you instead raise the minimum sufficient (of often, slightly greater than the minimum sufficient) amount of money you need to push your company to the next value inflection point.
This is because, every time you raise money, you give away a portion of your company in equity. The less money you have to raise and the higher the Pre-Money valuation of the company, the less equity you need to give away. Thus, if you can choose to time a raise for a given amount of money to occur when the valuation is higher, you are giving away less of the company to raise the same amount of money. Therefore, it is advantageous to time fundraising rounds to coincide with when the company reaches its next value inflection point.
The prudent thing to do is to work backwards from your next inflection point and focus on reaching specific planned milestones. Biotech companies actively pursue financing rounds during these inflection points because it presents the optimal opportunity for achieving substantial growth and attracting potential investors. By capitalizing on inflection points, companies maximize their chances of success and create an environment that entices investment and facilitates transformative advancements in the industry.
What if your company is struggling to reach that next inflection point?
Biotech leaders sometimes have to make incredibly difficult decisions during these times of inflection. In many cases, the company is forced to diverge from its original financial projections causing a strain on the company’s overall health.
🤒 In some cases, there may even be groups of patients awaiting positive data from the company. Fighting to keep a drug program alive can be a challenging battle that may impact many families.
Biotech executives are tasked with determining the answers to the following tough questions:
What are our options if budgeting restraints force the company to halt one of the two or three drugs in the pipeline?
How can we afford to continue our research after the regulatory & VC feedback results in unexpected/unbudgeted work?
What accelerated path can we take to cost-effectively increase the value of the company, reduce our perceived risk, and expand our potential?
Enter Inflection Point Financing (IPF)
Vibe Bio’s strategy supports biotechs through Inflection Point Financing (IPF).
Utilizing our extensive network of industry experts, Vibe Bio expeditiously assesses high-potential drug programs, unlocking capital through a deferred payment arrangement.
IPF:
✅ is a commitment between a biotech company and Vibe Bio
✅ can cover external expenses (i.e. CRO, equipment, etc.)
✅ has an extended repayment period
✅ offers a deferred repayment (Buy now, Pay later) until your company’s next influx of capital
✅ offers additional support beyond financing - pitch deck development, experiment design, CRO contracting support, warm introductions to Vibe Bio’s VC network.
✅ is non-dilutive (avoids direct equity in your company)
❌ is not a loan or venture debt
❌ has no covenants
IPF enables biotech companies to dedicate more time on science and less time fundraising, marking a shift in the biotech fundraising paradigm and prevents potentially groundbreaking research from being abandoned.
💰 If you are seeking novel and rapid financing strategies to drive you towards your next inflection point, Vibe Bio would like to speak with you. Let’s explore opportunities together.
🫶Vibe Bio Community - Guest Article 🖺
At Vibe Bio, we’re proud of our active members who strive to educate the community and help the next generation build better solutions.
Check out our most recent guest article collaboration with Arun Kejariwal on creating a Target Product Profile (TPP). Developing an effective TPP is an essential early step for any biotech or pharma organization. Read the full article below. 👇👇👇
Scratching the Surface of Target Product Profile (TPP)
Note: This article was written in collaboration with Arun Kejariwal, a Vibe Bio community member and pharmaceutical industry veteran. We hope you find this explainer article useful and valuable. Share your feedback in the comments section. Target Product Profile: A Blueprint for Developing Successful Products
🙏Thank you🙏
If your interested in collaborating with our team, email us.
VibeCast Updates 🎙️
On VibeCast, our Industry Engagement Manager and show host Ray Dogum, interviews Vibe Bio community experts who come from diverse backgrounds and career paths. However, one commonality that all VibeCast guests have is a passion to improve society by encouraging research and educating others by sharing their own experiences.
Collectively we have the skills. We have the technology. We have the passion. We now need the community catalyst to bring it all together. That’s Vibe.
In addition to our YouTube channel, you can listen to episodes on:
We are always looking for interesting and knowledgeable people to interview on our show. If you know of a community member who would be a great guest, please let us know. You can suggest a guest by sending us an email, leaving a Substack comment below, or reaching out via social media.
Check out the latest episodes 8-11 below.
JennyCo on Owning Your Health Data in Web3 & Sharing with Researchers | Vibecast Episode 8
Jenny Diggles is an entrepreneur that enjoys building businesses that empower others. Driven by curiosity, Jenny has enjoyed variety in her business pursuits. She has built businesses in digital advertising, “Web 2” technology, mobile gaming, health and wellness, regulated industries and blockchain.
Dr. Michael Nova has a Background in Computer Science, Medicine, and Genetics. He is founder of numerous companies and the inventor of many genetic testing assays and mobile AI applications including drug-discovery company Discovery Partners Inc. Dr Nova has 32 issued patents in the subject areas of Artificial Intelligence, Genetics, Wireless Peer-to-Peer Decentralized Data, and other technologies.
Gina Zanik on Undiagnosed Day (April 29) and the Challenges Faced by Patients | VibeCast Episode 9
Gina Zanik (Szajnuk) started her career in the entertainment industry. She worked in Hollywood for over ten years. She supported movie directors, producers, actors, literary agents and executives. She entered the world of the NBA and NFL and served as Director of Client Services and Executive Assistant to the CEO at Priority Sports & Entertainment in Chicago. She now serves as the Co-founder and Executive Director for the Rare and Undiagnosed Network (RUN), a 501c3 nonprofit organization in Salt Lake City formed in 2014. Her three children, each of whom live with a chronic, invisible, and undiagnosed rare disease, continue to inspire, and motivate her to empower patients and their families with genomic information and community through advocacy, networking, and support. In 2016, RUN started the international Undiagnosed Rare Disease Day (Undiagnosed Day) awareness campaign on April 29th. She serves as a Patient Advocacy Advisor on RARE-X. Gina continuously works to build a network of rare advocates, geneticists, researchers, specialists, and volunteers who can come together under one platform. She is a public speaker and published writer. She is married to Justin Zanik, the NBA Utah Jazz General Manager. Gina has brought awareness to the public about the importance of undiagnosed and rare diseases through RUN’s NBA Initiative since 2015.
Wendy Charles, PhD on leveraging Real World Data for Healthcare Research | VibeCast Episode 10
Wendy Charles, PhD has been involved in clinical trials from every perspective for 30 years, with a strong background in operations and regulatory compliance. She currently serves as Chief Scientific Officer for BurstIQ, a digital health transformation company specializing in blockchain and AI. She is also an adjunct faculty member at the University of Colorado, Denver and at the University of Denver where she teaches Health Information Technology. Dr. Charles currently serves on the European Union Blockchain Observatory and Forum Expert Panel, HIMSS Blockchain Task Force, Government Blockchain Association healthcare group, and IEEE Blockchain working groups. She is also involved as an assistant editor and reviewer for academic journals. Dr. Charles obtained her Ph.D. in Clinical Science with a specialty in Health Information Technology from the University of Colorado, Anschutz Medical Campus. She is certified as an IRB Professional, Clinical Research Professional, and Blockchain Professional.
Coya Therapeutics on Exploring Advancements in ALS and Alzheimer's Therapies | Vibecast Episode 11
Howard Berman, PhD currently serves as Chairman and CEO of Coya Therapeutics. He has over 18 years of entrepreneurial and industry experience working at the interplay of science and business. His experience offers him a unique combination of business acumen and scientific credibility with the ability to assess, quantify, and bridge both disciplines.Howard gained corporate experience with increasing responsibilities and positions as a Medical Science Liaison at AbbVie where he spent 7.5 years launching Venetoclax in CLL and later, supporting numerous solid tumor assets.
Daniel Barvin, MBA serves as VP, Operations and Patient Advocacy at Coya Therapeutics since 2021. Prior to joining Coya, Daniel spent his time as an advocate fighting for awareness and the rights of Presymptomatic Familial ALS patients. He started the first ever Familial ALS focused team through his work at I AM ALS. During this time, Daniel interacted with presymptomatic patients, researchers, pharma executives, and advocacy organizations. In addition, Daniel has held operations and design positions at Morgan Stanley, Dril-Quip and GE.
Upcoming Events
We also want to draw your attention to a few upcoming events where you can meet with members of the Vibe Bio team.
Bio-IT World Expo - May 16-18, 2023 Boston, MA
SynBio Beta - May 22-25, 2023 - Oakland, CA
May 22, 2-5pm - DeSci Workshop
May 25, 10pm - Panel on DeSci Revolution: Can Blockchain and DAOs Unite Bioeconomy Infrastructure?
May 25, 12:15pm - Panel on Inflection Point Financing: Bridging Capital, Tools, & People to Accelerate R&D
EGNYTE Life Sciences Summit (Virtual) - June 15
Community Feedback
We encourage you to explore our Discord server and learn more about our mission to accelerate the development of new treatments and cures through inflection point financing. You can also follow us on social media to stay up-to-date with the latest news and updates from our community.
Tell us what else you’d like to see in future editions of the newsletter. We’d love to hear from you!
Sincerely,
The Vibe Bio Community Team
#EveryCureforEveryCommunity
Wisner, S. A. (2021). Building backwards to biotech: The power of entrepreneurship to drive cutting-edge science to market. Harvard Business Review Press.