Episode 25 | Launching and Growing a Biotech Startup - Part 1.

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Podcast Guest Speakers

William Bozza, Ph.D.

William Bozza, Ph.D. serves as a Program Director, managing a portfolio of oncology startups (SBIR & STTR awardees) to facilitate small businesses in technology commercialization for cancer diagnosis and treatment. Dr. Bozza is currently leading the center’s efforts on the Small Business Concept Award for early-stage high-risk/high-reward technologies that target rare and pediatric cancers.  He is also taking the lead on the program’s Peer Learning and Networking Webinar Series to help SBIR companies learn from peers and facilitate collaboration. 

Brittany Connors, P.M.P.

Brittany Connors, PMP, serves as the Director of Investor Relations at NCI SBIR. She has worked at NCI SBIR in various roles since 2013, playing a major role in the center’s Investor Initiatives program. She has maintained a vast network and works with more than 70 industry-leading investors and strategics each year to review the NCI SBIR portfolio and to select companies to attend and pitch at events like BIO.

Lu Alleruzzo, M.B.A.

Lu Alleruzzo, M.B.A. is a co-founder and the CEO of Immunophotonics. He received a bachelor’s degree in bioengineering and an MBA with a management emphasis from the University of Missouri–Columbia. He is presently an Entrepreneur in Residence for BioGenerator in addition to serving on the board for a commercial enterprise that generates $15M in annual revenue. Prior to employment at Cerner as well as HP and World Wide Technologies, Mr. Alleruzzo developed a surgical training device and conducted research at the Dalton Cardiovascular Research Center. 

David Anderson, Ph.D.

David Anderson, Ph.D. is the Chief Scientific Officer of Immunophotonics. He received his Ph.D. in Immunology and Microbiology at the University of Missouri-Columbia School of Medicine and completed a postdoctoral fellowship in Cellular and Molecular Immunology at the University of Colorado Anschutz Medical Campus. Dr. Anderson has held academic positions at the University of Colorado Health Sciences Center and The Scripps Research Institution. He has organized, chaired, and spoken at international conferences focused on discovery and development of novel anti-inflammatory/ immunomodulatory and cancer drugs. Dr. Anderson has refereed articles for peer-reviewed journals, has an outstanding record of scientific publications and presentations (35 peer-reviewed publications and over 50 presentations/abstracts), and has received several research awards and 10 patents for his innovative research. He built and managed innovative drug discovery and development companies acquired by Celgene Corporation, Cypress Bioscience, Roche, and Nalo Therapeutics (Samsara BioCapital). 

Programs Mentioned in This Episode

• Centennial Investors  
• St. Louis Arch Angels 
• BioGenerator  
• NCI STEP 
• FounderSuite  
• I-Corps at NIH  

Episode Transcript

BILLY BOZZA: I'm Billy Bozza, a Program Director at NCI SBIR and today's host. In this episode, you will receive insights on launching and growing a biotech startup from a therapeutics company funded through the NCI SBIR program. Immunophotonics CEO LU ALLERUZZO and CSO DAVID ANDERSON will share their perspectives on lessons learned that helped them secure more than $40 million in funding from various sources that are being used to advance the startup’s immuno-oncology innovation.

We're also joined by NCI SBIR Director of Investor Relations Brittany Connors who will help lead the discussion. Let's get started.

BRITTANY CONNORS: Great, everybody, thank you so much for joining us today. My name is Brittany Connors and I'm the Director of Investor Relations at NCI SBIR. I've had the pleasure of working with Lu in the past through our Investor Initiatives Program and I'm really looking forward to today's conversation.

LU ALLERUZZO: Great. Thank you, Brittany. Thank you, Billy. First, I just want to say I really appreciate everything you all do for our company and companies like Immunophotonics. I mean, the bottom line is, without the support of the NIH, NCI SBIR programs, we wouldn't be where we are today. So, just a heartfelt thank you not only for myself, but representing all those in the community. So, I think you're doing it every single day and trying to help us move our technologies forward.

It’s great to meet everyone else that's attending this. My name is Lu Alleruzzo. I'm a bio engineer with an MBA. I've had the pleasure of co-founding Immunophotonics in transitioning this academic asset through biotech validation into investigator-initiated trials and now we’re on sponsor driven programs and along with raising capital and forming strategic partnerships. It's been incredible. We still have a long way to go to make it all the way to patients in need, but we're going to keep moving forward. David?

DAVID ANDERSON: Hi, I’m David Anderson. I'm the Chief Scientific Officer at Immunophotonics. I’ve been there about 6 years. I oversee the preclinical research and the translational research into the clinic. I have a PhD in molecular biology and immunology. I've had over 40 years of drug discovery, drug development in target base personalized medicine. I've had experiences at big pharma such as J&J and Celgene Corporation. I've been an early member or cofounder of four biotech companies, all with successful exits. And the thing I'm most proud of is the teams I've been on or been leaders of have gotten 6 drugs approved by the FDA and two molecular diagnostics.

BILLY BOZZA: Fantastic. Well, I'm excited so I hope you all are too. So, we have a couple of slides, we can move to the next one, and these are just high-level different areas of the topics we plan to hit all on, you know, launching and growing your biotech start up and we have some questions. And I'm going to kick things off and start directing them to Lu and David. So, the first section here, company launch and maintaining runway. So, we all know how challenging and tough it is to start a company, especially a biotech company. So just some, you know, perspectives on how did you make that decision? How do you actually start the company?

LU ALLERUZZO: Sure. First, before we dive into the question, I just want to say today I'm going to try and focus on practical answers to your questions. There will be a few pie in the sky ones because it's part of the process, but I'll try and be just very practical because the bottom line is, you know, ideas can come from anywhere. But ultimately, when you're looking to form your company, you should be, instead of thinking about forming the company, you should be thinking about forming the right network and relationships to move your technology forward. So, for me it's a very fascinating story with just Immunophotonics where we have two seasoned academic scientists that have developed this technology, a business partner, Dr. Tomas Hode, who's a Swedish researcher who kind of spun out of academia and was saying, OK, how do I figure out this whole industry opportunity? And then myself, a recent graduate, was saying, OK, I really want to make an impact on the world, and I want to apply innovation to society, how do we make this happen?

And I think the first step in this process was identifying, you know, bringing talent to the table, diverse talent that has complementary skill sets to holistically think about how do we want to create this technology and what do we want this technology to do? And then laying out that first, call it, you know, 10 slides that are our foundation of everything you're going to do as a company and as an organization.

But it's fascinating, when you're developing these relationships, the most important component that I've found has been trust. So, you get to know these individuals intimately that can help you move your idea forward. And you shouldn't just be looking at the most experienced, you have to be practical. We’re nothing but practical. So, that means looking at your student network, looking at your peer network, looking at those that might not have the perfect bio to help you, but have the time, availability, interest, and passion, and ultimately aligning those within your organization to say OK, I have to move this in a stepwise fashion forward given tremendous limited resources, which we all have limited resources when we start. Now, is there someone out there that doesn't have limited resources? I want to meet you, and I'd love to work with you on a project. David, any thoughts on that?

DAVID ANDERSON:  I think some things you said, like most of the ideas that I've used to help start companies, came from an academic lab. So, establishing a close relationship with that lab is important because you're going to translate their science from what maybe a new molecular target or a tool compound that might be useful in treating a certain disease. You have to move that forward into the company and advance it to the clinic eventually. So, keeping a close relationship with the scientific founder, if you will, is important.

But as you already commented on, you need to build expertise within your team and that can be hard if you don't have a lot of funding. So, it can be a virtual type of situation where you hire people for different expertise as consultants or it could be building an internal team. But the key is that you need experienced experts in the areas for which they're responsible. I just want to emphasize that it’s so important to have the expertise, somebody that's been there and done that to help your team move forward.

LU ALLERUZZO: Yeah, it's a great, it's a great comment. One of the things that Immunophotonics did very early on is find mentors for key people in the company, regardless of their existing skill set. So, if I brought in, you know, a younger immunologist to start to manage certain aspects of the business, I wanted to find a counterpart they could advise and support and direct. And same with myself. I've been very, very fortunate to have incredible mentors, like our Chairman of the Board, Dr. Bobby Sandage. And investor and board member Dr. Jonathan Knowles, who was a prior board member for Genentech and Global head of R&D. And the two of them have different perspectives and can guide me along the way.

Now, taking a big step back, it's been fascinating because we're talking about building a team, building -- having great experts, you know, all of that's very hard to do when you're first starting your company. So, I try and start very, very narrow and in terms of  a vision. So just, again, aligning what those 10 slides look like in terms of your path forward and getting everybody you're interacting with aligned with that vision, because as you build your team, you want to make sure everybody's on the same page. I know that's common sense, but important to say.

BILLY BOZZA: Perfect. So, I heard, you know, mentors, key expertise, building the right team. I also heard funding and resources, so let's talk on that angle a bit. So, you know, say we're just spinning out, what are some sources of early-stage funding? You know, how do you actually begin to start to finance and fund your company when you organize it?

LU ALLERUZZO: So, I'm gonna take a big step back in terms of what are you trying to achieve after you first start your company? And the goal is to move your asset forward, as David was saying, to the clinic. And obviously that requires capital like you're saying. But what I have found to be as valuable as capital are strategic relationships and partnerships in your network. So, it's not just your team, but it's really creating that story and going out and showcasing that story as aggressively as you can, not only to your network but expanding that network as quickly as possible.

Because I have found tremendous opportunity in terms of relationships with other academic institutions, relationships with clinicians, and of course relationships with those that can write checks. But I think the first step is creating that tight, cohesive story and we can get into the nuance of that, but then going out and expanding your network without exactly looking for funding, more focused on feedback to understand who values this, why they value it, and what is absolutely critical to validate your technology because without validating your technology in the eyes of those that are going to write checks, everything else you're doing is, I don’t want to say meaningless, don't get me wrong, that's the wrong way to state it, because it could have value, but it is not as focused as you need to be when you first start a biotech company.

And that means creating that network, expanding your network, getting the right people in it, sharing your message, and addressing their feedback as critically as you can, and what are the first projects you're going to conduct to validate what you are doing? Now, ultimately, there's a variety of sources that you can go to. Most people on the call will know that, and it ranges everywhere from of course, angel investors, which are kind of the standard. You know, small Angel groups like Centennial Investors was an early investor for us, there’s St. Louis Arch Angels, there's angel groups in the community, all the way up to incubators, which are a little bit more structured organization. So, Bio Generator has been a phenomenal partner for Immunophotonics as we move this forward and then ultra-high net worth institutional investors, venture fund.

But the first step, what I have found, is once you consolidate and understand the most valuable research that you can conduct to validate your technology, then you want to go out and start securing the capital to run those studies. And I will tell you, we still argue over what's the most valuable research on a day-to-day, day-to-day basis, that argument will never change, but it's a good argument, it's a constructive argument on how do we apply our finite resources as aggressively as we can.

Now, in terms of early resources, I don't even have to talk about the SBIR programs, they're phenomenal. There's really three different elements that I have found useful. One is of course the grant opportunities and that takes a very particular skillset to be successful. I'll tell you, Immunophotonics has submitted a number of unsuccessful applications and part of it has been learning what the process is and what the process is like to ensure that we can be as successful as possible. We've been very fortunate to receive some awards, but it has been through a methodical development process internally and learning how to do the submissions and how to write the applications as appropriately as possible.

There are groups out there that can help you and I highly encourage, you know, leveraging some of those resources to train you, but the second piece then in addition to SBIR funding and support is going after those angel groups. And don't be discouraged from having a poor presentation or a poor pitch, just keep it up and keep driving forward. Sorry, long answer, but very excited about that question.

DAVID ANDERSON: I would just add regarding SBIR grants, there is a recipe for how to write these. Fortunately, in some of the companies, we've written our own and been successful, sometimes we've written our own and not been successful. So, we have used grant writers that know the recipe, know how to put the information in the appropriate manner for getting the grants. But as far as fundraising, obviously this is a non-dilutive source of money that allows you to de-risk your program in certain ways, but also is viewed by the outside world as somewhat of a validation of what you're trying to do. Whether it's an investor group or another pharma company that might partner with you, they see it as a positive sign that you're doing something worthwhile. So, it is kind of a feather in your cap if you can get an SBIR grant.

BILLY BOZZA: Yeah. Thanks David. Thanks Lu. So collectively, we have about a four-phase program at SBIR. If you go through all of that, it's about $7,000,000 in funding, so, you know, sizeable early stage non-dilutive seed funding, definitely a great program as Lu and David mentioned, we have a lot of non-funding resources too that really help on the entrepreneurial development side and we also have help on application support, a new program we just launched about a month ago called Step.

LU ALLERUZZO: You know, I just want to add one more point, Billy, that I think is again practical and people should be aware of. Something that's been very useful for me is creating anchor points in communities because people are familiar with their local community and of course, do people have big, broad networks? Sure, the world's small, but they trust what they're comfortable with and what they're interacting and who they're interacting with on a pretty frequent basis. And so, what I have found that has been incredible is establishing an anchor point in a community and then leveraging that anchor point and building out from that community.

So, yes, you could focus on and say yeah, I want to get Boston, I want to get New York, I want to get, you know, top funding out of San Francisco, but to start in one of those locations or start even in the city, like I did, in St. Louis, you want to first start with a strong anchor point and then build your network out from that anchor point. And of course, SBIR award is a tremendously powerful way to get in with incubators and organizations that can help you with that anchor point.

BILLY BOZZA: Got it, yeah, makes a lot of sense. OK. So, let's say we've organized a company, we found some good team members, we've secured maybe an SBIR grant, maybe, you know, a small seed round of funding. What are -- you know, companies take a lot of, you know, costs and budgets. What’s a good way to kind of run lean? You know, what are some high company item costs that you have to pay attention to early on, so you don’t end up blowing all your funds before you kind of hit some of those key milestones that you've established?

LU ALLERUZZO: Well, you know we, David, we didn't chime in who's gonna answer the questions first, so feel free to interrupt at any time, but I'm happy to always jump in and provide thoughts. Go ahead, please.

DAVID ANDERSON:  Well, I could take the first stab at this. It may bleed over into some things we want to cover later as well. But to me, the most important thing to do when you're starting your company and trying to get the money to fund it is to really understand what your final product is. And there's a term target product profile. And you can even carry that to what's your label going to be for the drug that you want to develop and file with the FDA? If you start with that goal, those specific details of what your product is, what it does, what the dose is, what the toxicities are, who's going to be treated?

All of the things that you want in that final product and then you work backwards. What do I need to do to prove that or to claim that in my label, whether it's the tox profile, the efficacy profile, the dosing, biomarkers, all of the things that you want in your final product? So, then you take your funds, and you say, what's my development plan to get there? What's the most important thing I can do now to take those steps forward to getting that final product?

So, having a development plan that meets that target product profile is the way to set out and do the right experiments so that you're not doing something that's not worthwhile. I mean, if you don't know you have a compound that works in a specific indication for example, then you don't really have a potential product. So, it starts from what you're going to end up with and then you work backwards. What do you have to do to get that final product?

LU ALLERUZZO: Yeah, I think that's a great answer, David, with one slight twist to it. And that's as you build out that plan, you want to make sure that every stage that you are as a company that you're communicating with the partners that could write that next check, because unfortunately, especially in biotech, we all know it's capital intensive and so we need to make sure that what we're looking to achieve is something that someone else will write a check for as you reach those milestones and goals. And so ultimately, I have found that we've had to make some compromises, and I think everyone does, in terms of, OK, you know, this is the ideal path that we would go down from a development perspective, but I need to kind of pivot or twist or turn here or what I call micro pivots on an ongoing basis, because we went out, we interviewed 10 investors that represent kind of that next pool of investors and, you know, you level up different groups of investors at each of these milestone achievements and you understand what they're looking for in order to keep the company funded and keep growing your team and keep executing.

And so, I found that taking that feedback and layering it on top of your development plan has allowed you to understand the vision as aggressively and appropriately as possible. Because those are very, very hard decisions to make. And unfortunately, not everyone will agree, and most of the time, you know, you will never have unanimous agreement on those types of decisions. Because people in their own areas value things in a very, very different way, but it ultimately comes down to capital keeps these organizations moving forward and keeps your technology moving to the clinic.

DAVID ANDERSON: Another aspect, if I can add just another point is knowing kind of where the investment community is when you're out there trying to raise money, and that can be the VCs or pharma companies you might partner with, if they're not interested in a certain therapeutic area, there's no reason to propose your program in that area that they're not interested in. So, knowing the climate, whether they want drugs, late-stage drugs, early-stage drugs, or a platform of technology that helps discover new drugs, you need to understand that.

And even down to the therapeutic area, what indications? If it’s cancer, are they really into lung cancer or are they into other cancers? You need to understand really what they're investing in so that you don't go out and pitch your company to people that really aren't interested at all, you're just wasting your time. So, targeting and understanding who you're talking to is very important.

LU ALLERUZZO: It's funny you bring that up, David, because something that I predict is a question from people is they're going to say, all right, I did that, I talked to these investors. They said they wanted this, and I matched what they were looking for. And then I came back to them and boom, it changed. You know, and so, so for all those investors that are in the room, I don't mean this to represent you all, it’s just a challenge that us as entrepreneurs go through and I know everyone recognizes it, but I found that that's why it's so critical to build out your network as aggressively as you can, because you're not just updating those 10 people, you're updating 100.

 And you have a system in place that is a very practical system to maintain who you've communicated with, what you've communicated with them. And of course you haven't, you know, what we do is we have an automated system to provide updates. So, as we build those updated profiles, we're then passing those updates to the key stakeholders that we've identified, and we get those feedback, that feedback from them on a quarter to quarter or six month to six-month basis. So, I know it changes, but that's why you have to have a broad network and you're not putting all your eggs in one basket.

BILLY BOZZA: Yeah, I think that's great feedback. And yeah, we go on different conferences, and we interact with investors all the time and that's exactly right. The goal posts do move, so it's important to have good contacts and get that feedback continually.

BRITTANY CONNORS: I’ll just jump in here really quick. Oops, sorry to interrupt, Lu.

LU ALLERUZZO: Go ahead, Brittany.

BRITTANY CONNORS: I just wanted to ask if there's specific tools that you use that might be helpful for those on the line. How do you track these conversations? Are there certain tools for tracking even the steps in your development plan? How do you keep your team members abreast of what is going on when?

LU ALLERUZZO: Yeah, that's actually a great question because we've jumped around a little bit and that's been a mistake. I think at the onset you should pick a software profile or a software system that you want to use, and you just force yourself to start using that software system and anyone that comes into your company to be integrated under that. So, you know, just a general standpoint, you know, Microsoft has its own limitations, but it's been really, really good for us for project management and task list management and being able to assign tasks to different people and each other and hold each other accountable on a week-to-week basis.

And one step further in terms of managing investor relationships, Excel is fine as long as you're detailed with it, and you actually put the information in. I have found most people don't use it, so I've tried to find easier tools and one tool that has been valuable for us is a system called Founder Suite that just allows us to easily track and maintain interactions, but it also automatically takes your emails with those parties and puts them in and ties them to the different individuals. So, you have one source where you’re managing communication with those parties.

And then the third, third piece of software that I think is important is having an outreach system that makes it less burdensome, so you're not having to write, you know, 100 emails, but you're, you know, obviously if you want to set up a meeting, you want to communicate with these investors, you should be writing those emails, but once you've established a rapport and they want a cadence of communication or information, you should have a tool that allows you to share that information in an easy fashion.

BILLY BOZZA: Great. So, you know, first question and I think this will be important for kind of, you know, grounding this whole conversation. What are some critical areas of success for a biotech company? And obviously, you probably should be building your milestones around some of these, so if you can, you know, touch on some of those and how you organize that in your company, I think that would be really valuable for the listeners.

LU ALLERUZZO: Sure. David, always feel free to interrupt and share your thoughts because you have just -- we're very lucky to have a tremendous team and I really appreciate everything you do for us David. I value your input probably more than my own. But big picture perspective, to briefly answer your question, I mean, it's simple, a clear strategic plan that's been vetted, as David said, by experienced advisors with realistic timelines, that is the foundation to success thriving.

Now, unfortunately, because we're in biotech, you have to layer that on every key functional area in the business: so, intellectual property, regulatory, CMC, pre-clinical, clinical strategy. Every single area has to be built out with its own strategic plan, and you have to be moving through that strategic plan in a timely manner, and you have to vet that plan with people that have been there and done that.

DAVID ANDERSON: Yeah, I think one of the most critical things for being successful in a startup is having experienced people, whether they're virtual, and there's a lot of experienced people out there that like to work as a consultant, but you need that team that has all the area expertise all the way from your pre-clinical models, your toxicology, PK PD, and CMC is a huge area where expertise is so important, because that's your drug and there's a lot of regulatory guidelines that fit in that bucket.

And then the other thing is the overall regulatory expertise. Somebody that's actually filed INDs that understand how the FDA works, what an IND package looks like. If you don't have experience there, it's just a really uphill battle. So, I can't emphasize that enough, expertise in the areas that are required to get a product approved by the FDA, whether it's device or a drug. And part of that is there are guidelines. And so, knowing those guidelines and following them. It makes it easier, but you really have to understand the guidelines.

The most important thing overall, besides having the expert people, is let the science guide the process. You set up experiments to answer, use those answers to build and move forward. And one of the things, I'll just use cancer as an example since that's the area I've worked in a lot. If you have a cancer drug and it works by a specific mechanism, you need to prove that so you de-risk the overall drug candidate that it has efficacy, it has good PK, some, you know, early tox, you don't have to have a full blown tox.

But you really don't have to do 10 different cancer models. The FDA really only requires one or two, depending on what your claims are. Again, that's why it's important to understand what the FDA wants. And sometimes you may spend a lot of money doing things that are redundant or not necessarily required. That's why it's important to really understand that regulatory requirement before you just plow ahead doing a lot of studies that may not be required.

LU ALLERUZZO: Yeah, that's great. And one of the things that I found to be very valuable for the team at Immunophotonics is to take ego out of the equation and that is, that can be challenging at times, but you need to be able to sit with a group and have very broad, very open conversations and discussions and arguments, however you see fit, to ultimately get to the best conclusion. And you know, don't just be attached to your baby because it's your baby, but exactly as David said, take the information and make those micro pivots to move your technology forward, because obviously you've discovered something, but we all know that, you know, where it ends up might not be where you originally started and that's a pretty natural process with science.

The last thing I would add to that is making sure you have a market fit. So, if your technology is not practical and doesn’t fit practically, and you're going to go and try and change this kind of [unclear] in medicine, that is not an easy thing to do. So that is going to be an uphill long-term battle and that's fine, but you have to make sure your team's aligned for that 10, 15, 20-year journey, not a 5-year journey that's ultimately going to lead to changing standard of care. Those things just don't happen quickly.

DAVID ANDERSON: Yeah. And in relationship to that, I mean falling in love with what your product is, you need to understand the competitive landscape. You may think you've got the best thing in the world, but there's a lot of people doing a lot of good science that you may not know about. So, you need to really spread out and do a lot of competitive intelligence. Understand what your product is compared to others that might be competitors to hopefully be able to say yes, there are competitors, but we're better and here's why.

Because the pharma companies, the investors, they see thousands of opportunities and, you know, they turn away thousands of opportunities. So, you have to have something that's really top notch, that it is fitting an unmet need, that it does compete with either existing products or it's going to be better than the next products down the line. So, you really have to understand that environment. If you're just, you put on blinders and you're just focused on what you're doing, you don't understand the landscape of what's going on in that therapeutic area, then you're going to meet a lot of closed doors because people will just check you off because you're really not saying why you're better or what the competition is and how you can improve on that.

BILLY BOZZA: Yeah, that's awesome. I want to circle back to something David said because it really resonated with me. So, before joining NCI, I was at FDA for eight years and, you know, things go on clinical hold for safety, especially if we’re talking a first in human phase one clinical trial, it’s not efficacy, you know that's later for commercialization. You know, so I think it's it really is, you need to have those folks in your network, in your group, or leverage the right, you mentioned this too, David, CDMO or CROs. Any tips for how to vet, how to make sure you're selecting the right CDMOs, CROS, the right consultants? Any tips on that?

DAVID ANDERSON: Well, my tip would be try to get references on the individual or the company to find out how well they serviced another client, that's number one. And also do your own interviews. Ask questions that you know you want to have answered, see how they may fit within your operating system, but I think you want to really vet them and get a feeling, yes, they've done what we need them to do for us.

LU ALLERUZZO: Yeah. Yeah, well two things, I think there's two levels of partners. You know, there's the level of partners where they’re service providers and they're checking the box and they want to, you know, be paid and compensated for their work, which is valuable. Then there's the level that you leverage them and their network and their, you know, you want them to represent a little bit about your technology and say, “Yeah, I developed this clinical program and I'm very confident in the path that we're going down.”

That's obviously the ideal scenario that I think you want to target with any of your consultants and partners is one, they're willing on day one to be a part of that, even if they're not familiar with it yet, they can't stand behind it yet, but they are willing to do it. And second is you want to make sure that they're developing something and, in a way, you start to bring in outsiders to test them on what they've done and what they're doing.

So, for example, we'll bring in some of those parties to present to the board or to present to broader committees to provide and present how they perceive our technology, and we challenge them on questions and ultimately try and get to the best path forward together. And I've been personally, you know, burned by asking consultants to talk about our technology. So, make sure you really build a close relationship and you understand what they, how they perceive it before leveraging their communication in any regulatory communication, investor communication, etcetera.

And then the second piece I would add is in addition to those references, I think it's really important that you speak to senior people and the people that are going to be doing the work day-to-day and you understand, you know, their global perspective and their long-term perspective of partnering with a biotech because you want people, again, that are practical if nothing else. So, they understand you don't have all the resources, they're willing to go above and beyond in the beginning, and you'll figure it out and you'll make it up in the end. And those types of partners are absolutely invaluable at early stages.

BILLY BOZZA: Yeah, great, that's invaluable feedback. I really, really believe in all that. You know, we did a little bit of strategic planning. Maybe y'all can just kind of define what you think that is in one or two sentences. And then maybe if you could share one or two use cases on your experience in doing like a strategic pivot where, you know, you've used your long term continued vision and you've kind of deviated from the plan, and that's really affected company decision making and growth. I think that would be, you know, really helpful.

LU ALLERUZZO: Absolutely. So strategic planning. It’s funny, that's a very fluid process in itself. And I'm sure you all see that in SBIR applications, you have someone come in and say they're going to do this, and the next time with the application it goes in a completely different direction. And that's OK, I think that's the first thing we all need to acknowledge is making those pivots and those changes is absolutely critical and valuable for your organization, and we all do it. And that's critical to your success. The challenge is bringing everybody along with that journey.

So, you have to make sure that as you're making those strategic changes, you're bringing everybody that you told the story to along with those changes and that's not an easy thing to do. So, the way we do it at Immunophotonics is we have quarterly meetings with advisors, we have quarterly board meetings to go over our strategic plans and what's changing and why and justifying it. And obviously the board decides on our key strategies going forward. But ultimately, I would say on a week-to-week and month-to-month basis, it's absolutely critical to maintain your expected milestones and your path against those milestones. And then when you make pivots, you readjust those very quickly so everybody on the team starts moving in the right direction without delaying one month, two month, three months.

And so, I can tell you some examples from Immunophotonics that have not been easy. We originally started the company developing our own tumor destruction technique. You know, we didn't even talk about what Immunophotonics does, so I'll just take a step. The one sentence version is we're developing a drug to keep cancer from coming back, and essentially 50% of all cancer patients will have all of their tumors eliminated using various tumor destruction techniques, whether it's heat, radiation, cold, and the patient is tumor free or those destruction techniques are used with curative intents, you destroy all of the tumors inside the body.

The problem is that a large number of those patients have tumor recurrence because they're circulating immune cells. So, we invented a drug that you inject alongside those tumor destruction techniques to trigger a whole-body tumor specific immune response using that dead tumor debris that contains the blueprint for cancer. And so, you inject our drug, it binds to that blueprint, activates antigen presenting cells, leading to the processing of the cancer's blueprint and the reprogramming of tumor specific T cells.

And we originally started developing our own tumor destruction technique and the drug, and ultimately, this was not an easy thing. We were investing capital. We're going through a 510K thought process alongside a combination product with our drug, but taking in feedback from, again, the end user and I didn't specify that earlier, but that product market fit. And we went out to the clinicians that are going to be performing these tumor destructions and injecting our drug, and they said “Why the heck are you developing your own tumor destruction technique? It doesn't make sense.”

So, we had to go back and start a lot of our non- clinical research over and say OK, is it really this tumor destruction technique that makes a difference or can we enhance the techniques that are being used every single day in the clinic? That was a two-year multimillion dollar, I don't want to say mistake, but reset for the company that ultimately, I believe has made us tremendously successful because we've been able to discover that our technology does in fact augment multiple types of tumor destruction techniques, so, we're somewhat tumor destruction agnostic, but that was a huge pivot.

I mean, imagine the investors. They hear all of a sudden, we're dropping these devices. We're no longer going down that regulatory strategy. We've got investors inside the company that are saying, you know, well, we were device investors, what happened? And bringing everybody along, going back to that original statement is so critical when you make these micro pivots.

Unfortunately, I have so many examples of this. And a funny one that I'll use is just terminology. So, especially everybody in this room should pause, and when they're sharing their story in those 10 slides, they should watch the emotional reaction to the various key phrases that you believe you've created and you say that's why you stand out, and those key phrases will either have a very positive response or very confused and perplexed response. And you should absolutely take that feedback into account.

So, we changed simple terminology with our technology going from this in situ autologous cancer vaccine that we call them C-VAX that everybody said OK, well, principally we get it, but why are you doing it that way? To this interventional immuno-oncology approach where we're simply augmenting everyday tumor destruction treatments, and it's been a complete transformation in those moments in the presentation when you bring up your technology and what you're doing. So, I think paying attention to that micro terminology makes a big difference as well. It doesn't have to be huge pivots. It can be little things that you're doing day in and day out based on that feedback.

BILLY BOZZA: Yeah, perfect. Awesome.

DAVID ANDERSON:  One of my experiences, I was in a startup company where we were focused on epigenetic signatures as they relate to certain cancers. And we did all of the training and validation using the signature from disease versus non-disease. And bottom line, it didn't work, it didn't predict, but we had spent a lot of time understanding the disease, the mechanism, some of the targets, what we were looking at. So, that plus the fact that diagnostics don't make a lot of money. And we were at the period where that whole change in how much diagnostics could generate; we decided to go into target-based therapies.

Using the same diseases we had a lot of knowledge in, people with expertise in, so we made a complete pivot from diagnostics to therapeutics and the company was able to raise funds and eventually get drugs into the clinic and we were bought by a bigger company that overall, the investment was successful.

BILLY BOZZA: Yeah. So, we're hearing a lot of importance of both investor and customer discovery, and we have programs like that also at NIH, the ICORE Program is a great program. I think it's an 8-week customer discovery program where companies can refine their value propositions, and they have to go out and conduct 100 different interviews with stakeholders. And all phase one awardees are eligible to apply them. We give some funds to take part in the program to go out and travel, to do some of those interviews. So, if you're a phase one company, it may be something to strongly consider.

Thanks to Lu and David for the great discussion. Be sure to tune into the next episode for part 2 of this series on launching and growing a biotech startup. As always, don't forget to check our website SBIR.cancer.gov with the latest funding opportunities and commercialization resources to support your journey from lab to market.

This was Billy Bozza from NCI SBIR. Please join us again for the next installment of NCI SBIR Innovation Lab and subscribe today wherever you listen. If you have questions about cancer or comments about this podcast, e-mail us at nciinfo@nih.gov or call us at 800-422-6237, and please be sure to mention Innovation Lab in your query.

We are a production of the US Department of Health and Human Services, National Institutes of Health, National Cancer Institute. Thanks for listening.