Last post we made brief intro on the uniqueness of developing a biotech business in a mostly tech flooded world where most metrics and KPIs generally used do not apply. Well, then, what should apply? How should we evaluate progress on of a biotech? Again, remember we are mostly focused here on the concept of therapeutics, biotherapeutics and advanced therapy medicinal products (ATMPs – mostly cell and gene therapies) but the framework could be cautiously extrapolated to related fields as well.

In a tech drive world, revenue is a very relevant metric as it speaks quite directly to the acceptance of the costumer to your product to the point of paying for it and recurrent revenue speaks to how loyal these costumers are to your solution. As you know, a biotech can’t sell until regulators approve its product. Therefore, generally speaking, approval by regulators serves as a proxy for a successful product meaning that if you can convince regulators that your product works, you will have a market to tap into (there are relevant considerations to be made here, but this will be for later posts). Now, the question becomes: how to get approval from regulators about the efficacy and safety of your product and how this relates to risk? Historically, this has been roughly divided in 4 stages (before approval), but I will add an extra one in the beginning to explain investors rationale from a startup perspective.

According to the handmade lines in figure 1 you will see the four stages, namely: preclinical, Clinical trials phase 1, phase 2, phase 3 and I will add the proof-of-concept (PoC) before the preclinical stage. Notice that as the stage of the product towards approval progresses in time the perceived risk diminishes (inverse correlation). This seems like a straight-forward model to evaluate risk and it is. Now we will share some insights on what to expect on each stage.

On the first stage (PoC) the company is laying out its foundations filling (or licensing) patents and building a strong case for its business. Scientifically, the company is running the most fundamental of its experiments to prove beyond reasonable doubt that its tech works and this very likely involve key animal experiments in the most translational model accepted in the literature. Likely the results would need to be published (after being file for patent when relevant) and this generates reliance to the general public and investors that you have a somewhat solid case for your business. Generally, the company is taking high risk capital (pre-seed/seed capital) and relying heavily on grants. Some cases the company is still inside universities, sharing a room with other companies somewhere or at incubators on stealth mode. Larger venture firms (like Arch Ventures, Flagship Pioneering, Atlas Ventures, etc) create their own companies internally at this stage and no one knows about them. It is harder to find investors at this point and negotiations need to be kept simple (SAFEs from Y Combinator are a good benchmark) because, in the end, there will be much more to come. Investment sizes vary immensely but I would say anything adding up to US$10MM could be considered a seed round and do not expect one single check but rather many small checks ~US$200-1M) until your point has been made clear. There are cases of large seed rounds (>US$10MM) but these are the exception, not the rule.

Next time, we will take a deeper look into the Preclinical stage and what to expect. Stick around! 🙂

In the last scientific post, we recapitulated a bit of the history behind the, arguably, the most successful and widespread stem cell treatment out there which is hematopoietic stem cell (HSCs) transplant (more commonly known as bone marrow transplant). In this treatment, the goal is to replenish the entire repertoire of blood cells in a patient. Today we will focus on another adult stem cell population that have gained much public attention and was initially described as a sub-set of the stem cells found in the bone marrow: the Mesenchymal Stromal Cells (MSCs).

Some technical background: it has been known for a while that HSCs are cells that grow in suspension in vitro, that is to say they don’t need any anchoring to grow, but rather they divide and multiply without being in contact with any surface. However, a Russian researcher called Alexander Friedstein in the 60s and 70s described a population of cells that, contrary to HSCs, appeared not to grow in suspension, but attached to the bottom of the plastic plates1. After a series of studies and further contributions by American scientist Arnold Caplan, the scientific community began hypothesizing if these cells could be the ones that give rise to all tissues derived from the so called “Mesenchyme” which would be blood, muscle, bone, blood vessels, etc2. After 1999, many groups started describing these cells in all sort of tissues of the body (bone marrow, adipose tissue, muscle, liver, brain, etc) and suspecting these MSCs would be endowed with regenerative capacity3.

Currently, the field has come to some sort of a consensus that these cells are not regenerative in nature except for a specific list of tissues (applications in bone, adipose, cartilage are the most common)4. Additionally, these cells have shown to be potent immune regulators and the majority and most promising clinical trials underway are focusing on diseases which would benefit from this characteristic such as Graft Versus Host Disease (GVHD), Crohn’s Disease and Rheumatoid Arthritis or to regenerate bone/cartilage tissues.

We hope in the future to see patients benefiting from this important development in the stem cell field.


  2. Caplan, A. I. Mesenchymal stem cells. Journal of orthopaedic research : official publication of the Orthopaedic Research Society 9, 641–50 (1991).
  3. Pittenger, M. F. et al. Multilineage potential of adult human mesenchymal stem cells. Science (New York, N.Y.) 284, 143–7 (1999).
  4. Bianco, P., Riminucci, M., Gronthos, S. & Robey, P. G. Bone marrow stromal stem cells: nature, biology, and potential applications. Stem cells (Dayton, Ohio) 19, 180–92 (2001).

#science #research #stemcells #celltherapy #cells #HSCT #bonemarrow #LizarScience


As a biotech company in a thriving entrepreneurial ecosystem, we often face the challenge to explain what our business model is and how our company will succeed. However, differently from tech or IT (Information Technology) companies, biotechs have different KPIs (Key Performance Indicators) that guide the development process of these companies. In these series of posts entitled LizarBusiness we will lay out some of the key aspects that govern a biotech development mostly focusing on the business side. We feel that sharing our insights about the matter could help others thinking about this topic and also serve as conversation starter for many scientists in the field thinking about starting company.

As a first piece, we will focus on what we mean by biotech. Surely the term could encompass a great variety of areas as biotechnology have the potential to address problems in agriculture, meat production, cosmetics, therapeutics/vaccines and diagnostics. Some of our comments could be applied for most, maybe all, of the aforementioned areas, but as a therapeutic company, we will focus on what we have had first-hand experience with.

Generally speaking, the therapeutic arena is a heavily regulated field. This is a good thing as the idea of regulation serves to protect leigh consumers from bogus claims from companies interested in selling therapies with no proof of efficacy and safety. However, this adds considerable challenges to companies aiming to develop new therapies since revenue is only possible after formal registration of the product under the authorities. The immediate consequence of this is that biotech companies require more time to go to market and more funding before they are profitable. We can also say that investors looking at classical KPIs such as MRR/ARR (monthly and annual recurring revenues), CAC (Costumer Acquisition Cost), LTV (LifeTime Value) do not make much sense. Instead, the company needs to focus on their development pipeline showing constant progress towards regulatory approval.

Notably, there are applications of biotechnology products that are more permissive to commercialization and require little, if any, regulatory approval (research use applications, for example). However, market sizes tend to be smaller, more fragmented, more crowded and with smaller margins, therefore impacting on return on investment.

Next post we will focus on what are the general stages of development and how they relate to the business of developing therapies! See you soon 🙂