At least once a week I get drawn into a discussion about how virtual a medtech company can be – from its early stages right through to regulatory approval and even market launch. So, this post explores a few opportunities and myths about being virtual.
We can think of it as a continuum that runs from fully virtual to “fully loaded”. Most likely your company will be more towards the virtual end at start-up (think 2 guys and a business plan or a piece of smart technology) through to offices, labs and employees as you get closer to market.
One of the best examples I often refer to when looking at just how effective virtual can be is from one of our biotech cousins – Ferrokin Biosciences. The company is based in San Francisco and focused on treating patients with congenital anemias. Specifically it is addressing an orphan indication – that of iron overload that occurs from the repeated, necessary blood transfusions these patients need to stay alive.
The Founder and CEO, Dr Hugh Young Reinhoff Jr., has experience as a physician, entrepreneur and as a VC. Ferrokin was 7 employees working out of their homes, with around 60 vendors and contractors who do much of the drug development work.
It was founded in 2007 and raised a total of $27 million VC financing. In March 2012, Ferrokin was sold to Shire for up to $325 million ($100 million cash upfront, up to $225 million in milestones). The lead drug is in phase II clinical trials. Wow, that’s a result. And all done while remaining virtual.
The most obvious benefit for remaining virtual so long is one of cost savings. You don’t have to invest in offices, lab, equipment and a range of other corporate G&A expense. Other significant benefits for small, focused project teams include being responsive and nimble.
But what DO you need to make it work so well? Here are 6 traits that could make or break your going virtual:
- The Team – Dr Reinhoff, as a physician, entrepreneur and VC has been around the block a few times. Whether directly or through trusted contacts, he knows good people on both the drug development/ clinical side and the investment side. This would have been invaluable in putting an ace team together for Ferrokin. It’s likely that this also meant many of the necessary working relationships (employees, contractors and investors) were already tried and tested.
- Experience – by having been involved in multiple ventures and clinical programs before, Dr Reinhoff would have had a highly developed knowledge of the process – the “how to” go about drug development for an orphan indication.
- Project Management – This ties in implicitly with Team and Experience. It’s particularly important within a virtual team – the core team that are part of the company (i.e. employees) should decide stop/go decisions and coordinate and run the overall process. The responsibility ends with you, not your contractors.
- Niche Focus – as mentioned earlier, Ferrokin was pursuing orphan indications; these are super-niche focused therapeutic areas targeting small patient numbers (so unlikely to have big pharma competition), and where the disease is severe and existing treatments are inadequate.
- Cluster Effect? While the company is virtual, having the CEO and company being based in the world’s biggest biotech cluster has to be a positive. You can imagine the additional and local expert resources available, from local major investors, vendors and contractors, and being at the epicenter of biotech activity where everyone passes through (how easy would that make getting meetings you need?).
- Face Time – From direct and personal experience, I can say that even within a virtual or semi-virtual environment, you need physical face-time with your team members. Whether they are employees, contractors or investors. Remote working is great, liberating and powerful. But we’re still people at the end of the day. And human contact within your focused project team makes all the difference.
Although this post describes a biotech example (Ferrokin has become a bit of a poster-child in virtual), the above traits are just as relevant to any tech venture, including medtech.
In summary, virtual teams can be extraordinarily effective – enabling a faster, more nimble working environment and significant cost reductions. But you have to know how to use them. So, before you commit your venture to this approach, see how many of the above list you can check?
This post is be Raman Minhas.
- On Ferrokin – Is Pharma’s Perfect Storm Biotechs Biggest Opportunity?
- Niche Focus – The 2 most important things for medtech entrepreneurs