Traditionally, life sciences companies have operated as single entities with a single focus, appointing internal team members as CEOs, fundraisers, and business experts on top of their medical expertise. While some companies have found success this way, early trial research can be a risky investment with only 1 in 20 pre-clinical stage biotechs making it to the public. Imagine a model that can mitigate the risk by bringing the right experts to the table. This new model is making waves and changing the landscape for how life sciences companies can commercialize their innovations to the community. The portfolio model presents a new way to diversify investment opportunities as well as the skills brought in to help work towards the success of a biotech company. .
Financially, the numbers back this up with select portfolio companies raising $6 billion in capital over the past 6 years! But this new model offers much, much more than diversified funding. The portfolio model also brings in experienced early-stage managers that aid in operations often directly within the biotech, providing an array of expertise in areas such as fundraising, investments, running clinical trials, human resources, administration, marketing, communications to name a few.
This “expert team of doers,” as we like to call our network at KASTx bring in diversified experience dedicated to filling the gaps where our portfolio companies need them most. For example, portfolio managers have larger networks of investors they can pull from privately and can act as due diligence buffers for investors who may not be familiar with the biotech or life sciences world. Other experts can offer specialized medical expertise that researchers may need to take the next steps in treatment development. This way researchers don’t have to take on all of the roles in business development on top of their own work, and can instead focus on what they’re passionate about while being supported by a team enthusiastic to be a part of an impactful new venture. This makes this model not only appealing to investors, but to the teams that make up the portfolio companies too.
Another big factor in the growth of our model in biotech is the opportunity for treatment development with more abstract biotech focuses. For example, two of our portfolio companies are focusing on patient data collection and optimizing the clinical trial process rather than being focused on a specific treatment. These types of ventures can leverage a model like ours to be a part of an ecosystem of users to help with clinical development. Further, each portfolio company can now share resources across organizations. Rather than hiring a full-time resource that can be difficult to afford for early-stage businesses, portfolio companies can split a full-time resource. This helps each portfolio company access talent they may not have been able to afford otherwise.
The portfolio model also provides a way for researchers to maintain independence from pharmaceutical companies, which creates a new pool of independent drug developers outside of big pharma. As this article from McKinsey & Company states, “Portfolio models—with their access to leading talent from discovery to launch, shared services, and subsidiary-level focus on individual assets—may be able to shepherd a program all the way to commercialization without a pharma-company partner.” That said, portfolio management teams can also help early phase treatment developers get to a later stage of development, where a pharmaceutical company can come in and provide the proper tools and expertise for late-stage development to get the treatment into the hands of patients.
So how is this disrupting the biotech investment landscape? The portfolio model presents unique opportunities for investors and researchers in developing leading edge research with a stable, experienced team behind them. For investors, this means more stability in their investment due to the experts at hand, diversified investment opportunities in the world of biotech, and the opportunity to get involved with a team they trust in an area they may have not considered before.
At KASTx, we recognize the importance of highlighting our diverse team of experts. They’re the foundation of who we are, and are integral to the success of our ventures. As McKinsey & Company states, “The portfolio model has emerged as an innovative solution to biotech financing and operations—and a way for a strong central team to maximize its impact.”
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