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LIFESCIENCELEADER.COM THE CMO LEADERSHIP AWARDS 2015 18 ROUNDTABLE leaders that stage we do not want to take any chances. We have to make sure the com- pany is fully funded to do a thorough enough trial to get the results they need to sell the company. What is the due diligence process that takes place from the first meeting until the time a check is issued? ACHAR: It can run the whole spectrum. On one hand the due diligence process can involve a basic business overview. On the other hand it can include a review of financials and even visits to various facilities. For example, I once had a group of investors that I took to India for two weeks. I took them to the R&D; facili- ties, the clinical trial sites, and even the sites of our manufacturing partners. The investors wanted to have confirmation that the due diligence of the investment has been properly addressed AYNECHI: I always tell people to create a data room so that all important docu- ments can be housed in one location. You often have to deal with multiple people across multiple locations with differing degrees of expertise. Having all those documents organized and in one central location greatly simplifies the process. You also want to make sure you have your entire team available for meet- ings. Not just the CEO, but your CMO, your CSO, and other key members of the management team. They all need to be available for multiple meetings, not just the first one. If everything is well orga- nized and well presented, we can do investments in as short as six weeks. JUDICE: With a preclinical asset you are asking investors to take a big leap of faith. Being organized and having your presentation reflect a level of scientific rigor is critical. Keep in mind the aver- age VC shop will see thousands of unso- licited business plans every year and will accept maybe 50 or 100 meetings. If you're in a meeting with them, you've already cleared a high bar and want to make the most of it. I recommend going in and explaining what you're doing and why it's different/ better than what the five closest com- petitors are doing. You've got to get through all of that in the first 5 minutes, because after that you will start to lose them. If you notice everyone looking at their iPhones, you are probably not doing well. J. SHAH: For preclinical stage products it is important to know how quickly you can get to a go/no-go decision. You can spend a lot of time in preclinical doing early stage work that will not get any specific answers to help you decide in which direction to go. The sooner you can get to that decision point, the stron- ger your case will be. M. SHAH: It is absolutely critical that you have a clear understanding of the competitive landscape for existing prod- ucts with the same indication as the product you are developing. You have to know the landscape well and have key opinion leaders you are working with that have bought into your theory. If we call a key opinion leader and they say they tried this concept and it doesn't work, the project is dead in the water. Having someone for us to call on will make your life much easier. Today many different types of funding are available. How do you identify what will be the best source of funding for a given company? ACHAR: It all depends. I have always felt the best kind of capital comes from the early believers and key opinion lead- ers. The early investors are the most crucial part in development. They create the first wave and get other potential investors excited. AYNECHI: There are certainly founda- tions whose sole purpose is to advance science in a certain area, and it's great to get that kind of money. Companies really need to think about the diligent use of that early stage capital and how to leverage it the best way they can. I would be less concerned about how you raised a million dollars than I would be with what you actually did with it. We like to think we are advancing science, but at the end of the day these projects still have to make financial sense. But having said that, we don't really look at money as a qualifier. Just because you were able to attract investment from a foundation does not mean that we should be funding the exercise. I would also caution companies against taking investor money that's too small and too early. That money can become very expensive for you at some level. If there are too many small shareholders, that can make it difficult for us to invest in a company. PAPANEK: I have seen some capitaliza- tion tables come over with 150 names on them. I would worry that some of those people are not qualified investors and that at some point we will have to figure out how to get their capital out of the company. This is why you should think hard about whose money you are taking because it can lead to some very awk- ward conversations, and we don't want to put people in those situations. I would still recommend looking at all funding options that are available. I have looked at the Michael J. Fox Foundation and other organizations that have written some sizable checks. But at the same time I don't evaluate a company better or worse if it has money from a foundation. JUDICE: If you're an entrepreneur, any money is good, especially if you're seeking pre-institutional funding. We have gotten money from the NIH and from small SBIR (small business innovation research) grants, for example. It is truly non-diluted, and it doesn't distract us. There is paperwork that has to be com- pleted, and I have heard people complain about that. But is there anyone else out there willing to give you free money and not make you fill out forms? If it's good money, then you take it. M. SHAH: If you received money from a foundation, that says a lot to me because it is aware of other studies going on for that indication and still made the decision to invest in your idea. That will give you credibility. Today, many of those groups are grow- ing and now have access to a lot more money. At one time they used to give away free grants. Now they are becom- ing more sophisticated and will ask for their money back in some form. FINDING INVESTORS AND CAPITAL TO MATCH YOUR GOALS By E. Miseta