A typical start-up biotech CEO can probably be found in his or her office repeating two words over and over again. “Conserve cash.” “Conserve cash.” “Conserve cash.”
Raising, and slowly spending money is priority number one of any early-stage biotech company. And for good reason. Various estimates peg the cost of getting a drug from discovery through the clinical trial process at anywhere from $800 million – $2 billion. Those numbers don’t even begin to account for the cost of marketing the product once it is generally available, training a sales force and ramping up manufacturing. Bottom line: producing a drug is exorbitantly expensive, particularly in the world of biotech.
With this concern at the forefront, most biotechs spend a considerable amount of resources figuring out how to slow the burning of money. The plan is to create as much of a cash runway as possible and rarely does that runway include spending money on PR. Most biotechs prefer to operate in stealth mode until they have proved their compound is effective and have hit certain milestones in the clinical trial process. A biotech CEO simply is not willing to spend money on PR or social media when the drug is still years away from being available to the general public.
But should that always be the script? Is there a case to be made for investing in PR long before the drug becomes publicly available? Or is that simply pouring gasoline on what is intended to be a slow burn of cash?
Ask Christoph Westphal, CEO of Sirtris Pharmaceuticals. I recently attended a symposium put together by the folks over at XConomy and Westphal gave the keynote speech at the event. His presentation was essentially a case study of how Sirtris rose to prominence and was able to have a successful IPO and eventually be acquired by GlaxoSmithKline for $720 million.
I was surprised to hear Westphal declare to a room full of people that PR was an integral part of Sirtris’ early strategy. That’s right: this was an early-stage biotech that bucked the stealth mode operating procedure and came out publicly discussing its drug compound. Westphal’s contention was that while cash was still king, investing in PR was integral to that end. It was a risky bet in a world where few CEOs were willing to let go of their precious cash for PR.
The results speak for themselves. When Sirtris looked for financing, the VC folks already knew the company—it was like skipping right to the second meeting. In addition, the PR strategy led to interviews with Barbra Walters, a spot on 60 minutes and a Fortune cover article. Admittedly, not every PR program is going to generate the types of results that Sirtris’ program garnered. It’s not realistic. The good news is that it doesn’t have to generate those types of results to be successful. A targeted approach to PR and social media that lands you coverage in the medical journals and publications that will be seen your potential investors can be just as lucrative in the long run.
Sirtris’ PR program unquestionably enticed investors but also built up a public awareness that will serve the company well once it goes to market. Investing in PR early helped spur a successful IPO and a very attractive acquisition price. Doesn’t really seem like throwing gas on the burning pile of cash now does it? Maybe it’s time we rethink the validity of staying in stealth mode.
