What are the secret ingredients for successful company growth within life sciences? What lessons can we learn from the journeys, progress, setbacks and challenges of other Nordic companies? What perspectives and advice can the region’s investors and business advisors provide?
The pandemic’s impact on life and businesses is slowly coming to an end, at least here in the Nordics. Reports have shown that our life science companies have managed quite well over these years, both when it comes to adapting to the challenges presented by the new virus, but also when it comes to continuing to bring innovations and progress to the Nordic life science industry.
Last year SwedenBIO showed in a survey that Swedish life science companies are even more confident about future growth compared to the pre-COVID era. There is also a trend, which Helena Strigård, Director General, SwedenBIO, highlighted in our previous issue, where companies are diversifying into combinational products or adding services to their portfolios as a source of income.
However, we are a small region, and compared to the US market, access to capital is smaller and company valuations are much lower. Many biotech companies do not have the financial strength to develop more than one product from their platform.
A broad internal pipeline
A Nordic company that has succeeded, not least in developing a broad internal pipeline, is BioInvent, based in Lund. The company, focusing on developing immuno-modulatory antibodies for cancer treatment, also saw significant growth last year. After a successful directed share issue of 962 million SEK in February 2021, the company was able to expand its clinical pipeline from two active programs to four programs. A fifth program was also CTA approved by the FDA this year. Between 2019 and the end of 2021, the company grew from 62 to 84 employees.
“One of the company’s success factors is that it has integrated research and discovery (target and antibodies), manufacturing and clinical development under one roof.”
Martin Welschof, CEO of BioInvent since 2018, says that one of the company’s success factors is that it has integrated research and discovery (target and antibodies), manufacturing and clinical development under one roof.
“This set-up gives us a distinct competitive advantage,” he says. “Another key feature is our technology platform, which has generated a risk diversified, broad, first-in-class candidate portfolio with multiple shots on goal. Thirdly, we are a leading international player when it comes to antibody biology and production. Put together, these three characteristics allow us to quickly identify and develop new drug candidates and contribute to the global immuno-oncology promise.”
The company has also established partnerships with several large pharmaceutical companies in order to benefit from complementary resources or expertise, and hence, maximize the value of the company’s research, preclinical and clinical assets.
“Currently, BioInvent hasn’t the internal capabilities to bring a product all the way to the market, which is why licensing partners are sought for the later stages of clinical development and subsequent commercialization,” Martin says. “Our current sweet spot is the discovery and development of targets and antibodies for cancer therapy. Depending on the future developments, the company might consider running smaller pivotal trials and do the commercialization for some selected niche indications.”
Founded in 1996, the company has of course faced challenges along the way and Martin Welschof gives us an example. “We encountered infusion-related reactions in our ongoing Phase I clinical trial with our lead compound BI-1206. Thanks to our integrated internal functions, it was quickly investigated by the preclinical team, setting up new experimental models etc., and a new dosing regime was in place in a very short period of time. This is illustrating our strong and integrated internal capabilities. A challenge from the early BioInvent days was the wide therapeutic spread (AIDS, cancer, cardiovascular disease). Now we have a more narrow focus within cancer, which provide several internal synergies.”
“You need cutting-edge science, a strong team and a strong international network for the right scientific, business development and financing opportunities.”
For a Nordic life science company to succeed and grow, Martin believes you need cutting-edge science, a strong team and a strong international network for the right scientific, business development and financing opportunities.
Mission: Becoming a global player in the biotech field
Tomi Kalpio, CEO and co-founder of Brinter, agrees with Martin that the right network is key to succeed and compete internationally.
“If you find the right partners, and you have a good product/idea and team, the sky is the limit!”
“You need to find the right collaboration partners who have the right networks for just your company. If you find the right partners, and you have a good product/idea and team, the sky is the limit! This is exactly what we are looking for at the moment, and also one of the reasons why we just founded a subsidiary in the US, which is the biggest market for our products globally at the moment,” he says.
Brinter, founded in and with its headquarters in Turku, is a 3D bioprinter technology company, providing automated and scalable out-of-the-box hardware for bioprinting applications, for example in personalized tumor models, chondral repair, and drug formulation.
A great interest in 3D design led Tomi to start a company. Together with a couple of like-minded colleagues he founded 3DTech in 2013, which started out having two business units; one that provided services including 3D designing, 3D scanning and 3D printing, and one that developed 3D printing technologies. In 2015 they were asked to join a project called “brain printing” and when that project started in 2016, this was the kick-off for their 3D bio-journey, describes Tomi.
“During this project we started to develop our own concept. Before our first commercial bioprinter version was launched in 2019 we had also been involved in many different kind of projects, such as kidney printing, food printing and drug printing,” he says.
In 2020, the two business units started to grow in different directions, and it was difficult to keep the focus. The co-founders decided to partially split the company into two, and at the end of 2020 Brinter became an independent company.
Challenges along Brinter’s journey so far have for example been finding passionate colleagues who share the same vision, explains Tomi, but today he feels that they have a good and versatile team. “In the beginning, lack of resources was of course also a big challenge. But luckily the world of 3D was also our entrepreneurs’ work and happy place, so the long working days did not feel that bad at all.”
Brinter has received business development support from the ProHealth Growth programme at Turku Business Region, and Tomi says that the programme is especially useful right now. “There are a lot of topics that we need to figure out one way or another during our journey towards becoming a global player,” he says.
“Mentors, venture capitalists, medium and large companies, and other experts are involved.”
Turku Business Region offers services for startups-to-be established and companies of all sizes. The national ProHealth Growth programme offers accepted companies a tailored service based on the companies’ needs, including all relevant commercialization steps and necessary workshops. “Mentors, venture capitalists, medium and large companies, and other experts are involved,” describes Hanna Halme, Growth Advisor, Life Science at Turku Business Region.
According to Hanna, key factors behind a successful life science company growth are a good scalable international business concept, a multidisciplinary team of experts, a strong network of advisors and clients, financing contacts and other partners. She adds that Finland would benefit from a better funding scheme for startups.
“Being a Finnish company means having a great education system and fantastic nature nearby, the latter being mandatory in order to keep the balance in today’s hectic world.”
“Disadvantages of being located in Finland are that the local markets are quite small for any product in our field and the distance is quite far to the biggest markets outside Finland,” says Tomi. “However, being a Finnish company means having a great education system and fantastic nature nearby, the latter being mandatory in order to keep the balance in today’s hectic world. The cities are also not too big and the people are in general quite happy.”
The big challenge – access to capital
The biggest challenge for Nordic life science startups and companies is access to capital, according to Stephan Christgau, PhD, one of the founding partners at Eir Ventures, a life sciences venture capital fund located in Sweden and Denmark.
“There are very few professional life science investors in the Nordics. It’s really only a handful. Institutional investors here in the Nordics are maybe less aware of the opportunities in life science,” he says. “In other regions, particular in the US, generalist investors are more open to the sector, they see it as a natural thing to allocate some of their funds to venture investments and also venture in life science. If you look at the European investment fund, they probably invested in close to all venture funds here in Europe and life science is one of the best performing sectors. They have achieved a 14.5% return per year over a ten-year period on average. So even though the Nordics obviously is a wealthy region with a lot of funds, very little of those funds are allocated to the professional life science investors in the area,” he says.
So which is the best way to go when it comes to financing?
“A good entrepreneur will work on many things, and fortunately there are private investors. Professional investors don’t need to be Nordic, so a Nordic company can easily approach other investors from Europe and even the US. In Scandinavia there are also more than 20 incubators where some sort of funding is available. There are also funding possibilities from various national government grant agencies and the EU,” says Stephan.
Network and make time for long term strategy
Another important key factor when growing a company is finding the right competence. Stephan Christgau advises companies to make sure to hire someone that is complementary and brings other competences, other viewpoints and backgrounds to the small team. However, management-capable people with expertise are hard to come by. “Build a network and engage with the people in your network, find out who they know. Take part in industry conferences and events, reach out in that way,” advises Stephan.
“Build a network and engage with the people in your network, find out who they know. Take part in industry conferences and events, reach out in that way.”
Having a network is also key when establishing partnerships and collaborations. A small biotech engaging with a big pharma could take many shapes and forms. This could be research collaboration, option agreements, outright licenses or sale of the entire company.
“Be mindful of what the consequences are when you engage with a big pharma partner so that the pharma partner doesn’t get all the upside, i.e., all the rights to the products and so on,” says Stephan. “Think about the situations where the big pharma partner may change their priorities or internal strategy and terminate an agreement. Try to anticipate such scenarios and seek to keep options open.”
If you are a first time entrepreneur, try to seek advice and guidance from other people and be aware of what you do know and what you don’t know, and then think through the strategy, continues Stephan.
“When you are a one-man army, it’s very easy to be completely in the day-to-day operations, the details and experiments, and you don’t allocate enough time to think strategically. You have to be able to do that once in a while. Where are we actually going? What are the goals? What are the critical things to do to reach those goals? Maybe I’m spending my time on things that are completely not critical. The ability to see long term goals is very important, that differentiates the accomplished entrepreneurs from the ones who struggle a bit more.”
Also, spend time making a good plan, not a 100 pages business plan, but a plan on how you see the development of your company and your strategic goals, how that ties into the operational plan you have.
“A typical mistake is that people cut corners. If you don’t have the money, don’t do it by half. Do what you can. If you don’t it can come back to haunt you.”
“Very often I see companies with half-baked plans and they sort of do not really align strategy with planning, these become individual activities. Sometimes it’s not possible to fund everything straight away, then it’s important to have a long term plan and prioritize,” says Stephan. “A typical mistake is that people cut corners. If you don’t have the money, don’t do it by half. Do what you can. If you don’t it can come back to haunt you.”
When should you plan exit-strategies?
“For all investors, we invest ultimately for financial return. It’s sort of an integral part of this and it’s always time to think about the exit. So even if you are an early stage university spin-out, have an idea about this. What are the relevant benchmarks you can provide to illustrate that there is a return potential. Be aware that all investors, especially professional investors, are very focused on this,” says Stephan.
Innovations will always be in demand
The Nordics have quite a good track record in bringing molecular tools companies to global market, often through partnerships. One such example is the acquisition of Cartana by the US-based 10x Genomics for the price of 425 million SEK in 2020, only three years after its founding. Cartana, sprung out of professor Mats Nilsson’s work at SciLifeLab, Stockholm University, had developed an in situ sequencing technology that maps the brain based on tissue analysis and image data with a resolution all the way down to the single cell level.
“The area of use is to look at tissue sections, for example from tumors and see exactly where in the tumor certain genes are active. The gene activity comprises a signature for which type of cell it is. In that way, you can see, for example if immune cells, which can fight the tumor, are active. This is seen visually, in a microscope,” explains Mårten Winge, former CEO of Cartana. “Analysis of the tumor’s closest surroundings (the tumor micro environment) is a highly interesting research area in order to increase the understanding of which mechanisms cancer drugs should affect. Using the technology you are able to perform these analyses with a unique precision and on basically any kind of tissue sample.”
At 10x Genomics, the technology is highly prioritized, and great resources are invested. The company aims to make Stockholm a hub for their European presence, which has led to extended responsibility for the staff. Extensive further development projects are in full swing that involve the Cartana team, plus additional staff that has been hired, says Mårten.
Besides the technology, he also points out that Cartana’s commercial organization had made a good deal of progress. Sales were increasing strongly and several of the large pharma companies were among the customers, with recurring orders. A key factor was also a very talented team.
“The timing was also good, there is a large demand for this type of in situ analysis,” adds Mårten.
When it comes to finding partnerships and perhaps also opportunities for getting acquired, he advises companies to be open and to encourage dialogue early on, even with big companies.
“You should of course make sure that you do not reveal sensitive or confidential information. However, acquiring companies are rarely out to eliminate a competitor, firstly they want to tie up technology and individuals. So you should assume that early discussions are the beginning of a long-term relationship, rather than a shortcut to quick returns. If you have a truly innovative technology you will probably get well rewarded. The buyer does not want to take over a disappointed founder, it is not good for the return of the investment,” he says.
“Smaller companies that are being sold generate incomes that can be reinvested in new innovative companies. A serial-entrepreneurial business environment is not necessarily a bad option.”
Innovations will always be in demand and the big companies are dependent on smaller rapidly moving companies for that, continues Mårten. “Smaller companies that are being sold generate incomes that can be reinvested in new innovative companies. A serial-entrepreneurial business environment is not necessarily a bad option.”
Today Mårten Winge is the CEO of Strike Pharma, sprung out of an immunotherapeutic cancer vaccine delivery-platform, developed at SciLifeLab. The company just finished a financing round of 45 million SEK, and is now planning to develop the technology platform into clinical products for individualized cancer treatment.
“Again, we have an outstanding competent team behind the company. It is a privilege to be involved!”
“We will eventually seek partnerships in order to take advantage of the platform’s full potential, something that we cannot explore entirely on our own. It looks incredibly promising, although there are many things that have to fall into place before there is a product on the market. Again, we have an outstanding competent team behind the company. It is a privilege to be involved!” says Mårten.
Text by Malin Otmani and Pia Andrea
Featured illustration: iStock