To Be – or Not To Be, a Virtual Biotech?

23/05/2016 - 5 minutes

Many new biotechs start off as virtual companies. But at each stage of development, you always end up asking whether you should stay virtual or build your own in-house wet labs. What are the pros and cons of being virtual? And is there a more pragmatic “semi-virtual” approach?

Pros and Cons of being Virtual

Biotechs are high risk, so investors insist you remain frugal. Low fixed costs keep you nimble and flexible, utilising your capital efficiently. If much of your annual burn is fixed, you will struggle to adapt in the face of the many scientific and commercial uncertainties.

Some venture investors like Atlas and Medicxi (the former Index Life Sciences) favour fully-virtual asset-centric companies set up to develop just one asset, with fixed costs well below 20% of their burn rate.

For example, since its founding, the biotech XO1 (Hatfield, UK) operated virtually, working on a single anti-thrombin antibody until it was acquired by Janssen in March 2015.

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