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[Colin Miller]

Hello, you're tuned in to SNiPs, a reoccurring special segment from our ongoing series, Fractals: Life Science Conversations. Bracken is the professional services firm for life sciences and digital health organizations. Our intelligence ecosystem fulfils consulting, regulatory, marketing and analytics, an integrated and strategic approach.

[Lorenzo Pellegrini]

But here's a question for you, Colin. Suppose you're running a company, and you have, you know, some really interesting oncology assets, all preclinical, and you could raise $20 million to take some of these through an IND filing and so on.

But then, investor syndicate comes to you and say, no, no, no, you don't want to raise 20, you want to raise 200, and here's a 200. And of course you would take it, right? It's difficult to criticize, you know, the people that make decisions.

You know, I was in those shoes. If I could have raised $100 million, I would have. So, it's just that people need to remain very, very careful about how they go about deploying the capital and preserving value, creating value, and so on.

[Colin Miller]

Yes, no, I totally understand. And you can't shrink along. On the other hand, your asset go-no-go decisions have to be much crisper, I guess.

If you're going to hire more people, you're either going to run the current assets more rapidly, or you're going to have more of them in the pipeline, and you've got to make a faster go-no-go decision to preserve the capital to get the ones that are successful to the end game.

[Lorenzo Pellegrini]

Ah, now you bring up another interesting debate in the industry. Should diversification be taking place at the portfolio company level or throughout the entire portfolio? What value does it bring to the VC themselves?

The VCs are assembling our portfolio projects, right? If one of the portfolio companies brings on another product, another program, it doesn't really diversify the entire portfolio much. So, the VCs who think in terms of… that have crisp clarity of financing matters will say, don't do that.

We don't need you to do that. If your program has value, maybe we'll put into another portfolio company. And there are VCs that think that way.

Care Capital certainly was thinking that way. And I know a couple of others. But then all the soft issues come up, which is, can you really hire a great management team if all you have is one asset in your pipeline?

Maybe, I know of many cases where that was true, but maybe it's harder. Can you attract the necessary resources? Can you make a big splash when you make a press release?

So, there are all of those soft details that can be captured simply by dry financial considerations, about risk and risk distribution and so on. So, I started out with this idea, every company should only have one asset, and that we would diversify across the portfolio. And if the asset fails and the management team has done a good job, we'll find another asset for them down the road to manage.

No questions asked. But yeah. But now I'm definitely more in the middle.

Companies shouldn't have 23 gene therapy programs like some of the gene therapy companies had at the peak of the bubble. That makes zero sense. There is no word in which that makes sense.

But at the same time, companies can't just have one program. There has to be a little bit more because we are building companies. We're not just building diversification across our portfolio of projects.

[Colin Miller]

Fractals: SNiPs is brought to you by Bracken and available wherever you get your podcasts. Visit us at thebrackengroup.com or reach out directly on LinkedIn. We'll be delighted to speak with you.

I'm Colin Miller, wishing you sound business and good health. Thanks for listening.