Life as a biotech entrepreneur is difficult and finding the right people is one of the, if not the, most important factors in making your company a success. Enlisting the right people is not limited to finding the perfect co-founder and start-up team members, but might also include recruiting a Scientific Advisory Board (SAB) to help your fledgling biotech start-up through the first few years and beyond.
Though SABs are not unique to biotech/biopharma companies, they are more common in our industry, which depends on planning, executing and interpreting the results of these experiments correctly. This high level of uncertainty requires rigorous analysis and a need for independent validation of the data along the entire discovery and development pipeline which is less important in other industries. Take, for example, software development: no discovery is necessary, and the main task is to automate processes that already exist. These include tax preparation or codifying new ideas, such as internet shopping or creation of social media networks.
As with employees, recruiting members for your Scientific Advisory Board who have the right combination of skills and personalities is challenging, and getting it right will make the difference between a SAB that idles in obscurity and one that is actively engaged in helping the executive team work through tough scientific and technical problems and decisions.
But the first question to ask and answer is whether you really need a SAB.
Do I Really Need and SAB?
Many biotech companies have SABs whose members are well-known and respected specialists in a scientific or clinical discipline relevant to the start-up. Depending on whom you ask, you will get feedback on the value of a SAB spanning the whole range from “extremely valuable” to “total waste of time and money.” Here is a list of pros and cons to keep in mind when considering adding a SAB.
- A high caliber SAB gives a young start-up external validation and can raise the profile of the company and awareness in the industry and among investors. A Nobel Prize Laureate as advisor gives immediate credibility.
- Experienced SAB members can provide perspective, insights, constructive criticism and suggest different approaches. Getting a fresh, outside perspective on the data also helps to avoid groupthink.
- Discussions with accomplished scientists can be fun and stimulating and help solve difficult technical/scientific challenges, especially if researchers and scientists, and not just the C-suite, have the chance to interact with the SAB members.
- Rockstar SAB members can look better on paper than in real life. If they are not actively involved with the company, demand too much attention, or push pet projects they might not be worth the time and money.
- A SAB of scientific “prima ballerinas” with strong divergent opinions can have a negative impact on R&D. If the experts don’t agree on how to achieve the goal best, employees and investors might lose confidence.
- SABs cost a lot of time and money to manage. SAB members of early start-ups are often compensated in equity. 25,000 – 50,000 shares per member are common, and that number will increase over time. More established companies typically pay between $5 and 15K per year and SAB member plus equity. Total equity for all SAB members can be up to 1%. Of the company. These resources might be better spent on a scientific consultant who advises on a specific issue.
In my experience that last point on the con list is the one to think about the hardest as it goes to the core of the question whether you really need a SAB, rather than how to find the right people to staff it. Expert advisors for anything from reimbursement strategies to clinical trial planning and regulatory filings are readily available for hire and might be more cost-effective than paying a SAB member both in cash and equity. On the other hand, a small group of actively involved and trusted scientific advisors who are committed for the long-run and have their incentives tied to the company’s success can bring a dedication to the role that advisors for hire might not have.
Lessons Learned about SABs
- If you decide to convene a SAB, here are some things I learned during my career:
Smaller is better, especially for a start-up. A large SAB can be too much of a distraction and expense. Three to five well-chosen and engaged members are better than eight or ten whose involvement is limited to attending a few meetings per year.
- Find people with a diverse set of skills, which would be useful in your core development process. Even if you are an immunology company, avoid the temptation to hire only immunologists as other experts in medicine, biology and chemistry could be very useful.
- Engage your SAB members on a regular basis outside of formal meetings. The most productive discussions can be one-on-one meetings that allow you to drill down into data sets and get the input of the SAB member most experienced with an issue.
- Make short-term commitments: your start-up is growing and evolving and your need for scientific guidance and advice will also. A two-year term with a renewal option gives you the flexibility to continue with a specific member or look for somebody who better meets your current needs.
- Help build a culture of collaboration at these meetings. By doing some due diligence on these members and their styles, you could keep “problem” members out. Engage your scientific team and CEO at these meetings and let them participate. Build an agenda before these meetings and get everyone’s input, rather than relying on the SAB members/chair to do so. If they are busy, you are unlikely to be their priority.
- Think about synergy, but keep conflicts of interest in mind. A local academic with a great reputation might be a source not just of sound advice, but also of talented graduates that you hire for your lab. Sponsoring research at the lab of your SAB member can create a conflict if the SAB members financial incentives associated with the success of your company impact their objectivity. On the other hand, they can really help you figure out some of the technical breakthroughs and execute key experiments in their labs. You might have to walk a fine line.
- Pursue the “rock stars” but do your diligence. Is the person already on ten other SABs and has a lot of committees, panels, or other commitments to attend to? Is it difficult to even schedule a phone interview with them? Get some feedback from other founders/CEOs of companies that list them as SAB members about the level of their involvement and the value they add. A big name might give you the wow-factor your small, unknown start-up is looking for, but a less famous and more focused person might give you feedback and suggestions that truly help to move your business forward.
In the end, assembling the perfect SAB is a bit like trying to square the circle: you want well-known and respected scientists in disciplines relevant to your start-up, who are committed to your company, willing to dedicate their time and not expecting a lot of cash. It can be done, but it won’t be easy, and it will take plenty of that scarcest resource of all: executive time and mind-share.