Building Biotech Businesses - Lesson 2: Founding a Biotech Startup

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Please make sure you download the workbook for this masterclass before beginning the lessons.
Immerse yourself in the wisdom of accomplished entrepreneurs who have conquered global markets out of Switzerland. The first masterclass, Building Biotech Businesses, is useful for anyone in biotech or life sciences, for students and entrepreneurs already active in these fields, and anyone with an interest in building a successful biotech company. The host of this masterclass is Ulf Grawunder, a highly successful biotech entrepreneur.
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Lesson 2: Founding a Biotech Startup
“A U.S.-based investor said, ‘I’m not investing in a person who hasn’t failed a company at least once.’ He also said, ‘If you fail three times, that’s a little bit too much.’”
Ulf’s first two companies had different founding stories. In his doctoral research during the mid-nineties, Ulf researched B cells and monoclonal antibodies, then an overlooked field in biotech, but today the most successful class of biological drugs. In his research, he thought about how to use B cells from a mouse in tissue culture to create human antibodies by genetic engineering. This was the starting point for 4-Antibody (founded in 2004) that eventually produced a dozen therapeutic antibody candidates. U.S.-based Agenus acquired 4-Antibody in 2014 and commercialized its drug candidates.
When Ulf founded his second company NBE-Therapeutics in 2012, he knew there was a need for more efficient antibody-drug conjugates (ADCs) in cancer treatment. The two commercial molecules Kadcyla and Adcetris came to market 2011 and 2012 and were the first ADCs that seemed to work in patients, however, they were not very precise. NBE-Therapeutics introduced enzymatic coupling between the toxin and the molecule with the sortase enzyme, producing superior drug candidates. They called their technology SMAC-Technology, short for Sortase-Mediated Antibody Conjugation.
The patent application was the starting point for founding NBE-Therapeutics that enabled Ulf to raise seed capital. The company applied for Swiss science grants and had collaborations with the University of Basel and the ETH Institute. These academic partners provided the infrastructure for the proof of concept in the early days, so NBE-Therapeutics didn’t have to build its own right from the start.
Even though the path of Ulf’s two first companies looks relatively smooth in hindsight, both companies were a rollercoaster ride. They had phases where nothing seemed to work, and the founders feared for their reputation. However, the stigma of failing shouldn’t hold founders back. Especially in the United States, investors have a more relaxed attitude towards failures. Whenever Ulf had his back against the wall, he came up with ideas that saved the day that he wouldn’t otherwise have tapped into.
Ulf founded his first and second company with two co-founders whom he knew from earlier in his career. He recommends to bring up the issue of splitting equity in the startup as soon as possible. Even though co-founders might be friends, he believes it is unrealistic that a split of 1/3,1/3, 1/3 will work out in the long run. Ulf likens the co-founder dynamic to being in a band, where there is one lead singer, and the other responsibilities must be agreed on before playing music. The company should be started before going out to investors, so the question of equity and responsibilities is clear.
Highlights of this lesson:
- Don’t fear failure, learn from mistakes.
- Difficult situations often lead to unexpected solutions.
- Ideally found your company with people with complementary skills who you know. Found the company before going out to investors.
- Split equity according to efforts and commitment. This is an early conversation you need to have. It is also the first test among co-founders.
- Take advantage of startups programs in Switzerland that are offered for academic founders.
- Consider collaborations with academic research groups.
- Lead your team with optimism, transparency and honesty. Where there is a challenge, there is a solution.
Ask yourself:
- What is your attitude toward failure?
- Have you had an open discussion about responsibilities in your company among co-founders? Does the commitment of co-founders reflect the equity split?
- Have you considered applying for grants at Innosuisse, Venture Kick, the Gebert-Rüf Foundation, and others?
- Have you considered collaborations with academic research groups?
- Are you planning for a potential worst-case scenario in your startup?
- How would you navigate and motivate your team in such a scenario?
This masterclass is made possible with the support of the Gebert-Rüf Stiftung.
Concept and production: 8GR8 Films | Manuel Stagars 2024.