Qiming Ventures Dialogue with Innovative Pharmaceutical Companies: From 0 to 1, from 1 to 100, how do innovative pharmaceutical companies grow?

From December 30 to 31, 2021, the Qiming Venture Capital CEO Cloud Summit was successfully held.

At the summit, Wang Yinxiang, founder, chairman and CEO of Jiacos, Xue Qun, founder, chairman and CEO of Beihai Kangcheng, Tang Yanmin, investment partner of Qiming Venture Capital, and Chen Kan, executive director of Qiming Venture Capital, conducted in-depth discussions and exchanges on the theme of "Innovative Pharmaceutical Enterprises: From 0 to 1, From 1 to 100", focusing on the challenges faced in the development and growth of innovative pharmaceutical enterprises, from the perspective of industry and investment.

From their sharing, we summarize the following points:

1. Stick to what you believe more. There are many temptations and challenges in the process of entrepreneurship and enterprise development, and adhering to the original intention is the premise of success.

2. Keep an eye on the core goals to get to the point. At different stages, the focus may vary slightly, but be sure to move towards the end point originally envisioned.

3. Teams are cohesive based on consensus and goals. Many friends may not go far in starting a business, but a team based on consensus and common goals must have cohesion and combat effectiveness.

4. Don't deliberately chase the outlet. The life science industry is not like the Internet industry, with the characteristics of exponential growth, do not blindly follow the trend, steady and steady, in order to go far.

The full transcript of the conversation is as follows.

From 0 to 1, rely on research and development, but also resist the temptation of the market

Chen Kan, executive director of Qiming Venture Capital: I would like to ask the two of you to combine their own experience and share some of the challenges encountered in the process of making the enterprise larger.

Wang Yinxiang, founder of Jiacosi: I left the postdoctoral station in 2003 and returned to China to found Beida Pharmaceutical, starting from 0, starting from 30 square meters of laboratory leasing. Then into the clinical stage, because there was no drug marketing authorization holder system (MAH) in China at that time, so all startups had to do their own production. In 2006 and 2007, In Clinical Phase II, we began to build our own facility (production facility). In 2010, when the product was approaching the third phase of the clinic, we decided to establish a marketing and sales team.

This is a process of learning by doing, and it is the process of transformation of enterprises from research and development to production to marketing and sales. For pharmaceutical companies, from 0 to 1 is relatively pure, mainly relying on research and development. From the process of 1 to 10, there is production, sales, etc., and there are very big differences in internal control such as management methods, incentive mechanisms, and assessment indicators.

Since its establishment in 2015, Jiacos is in the process of going from 0 to 1. In terms of internationalization, Chinese and foreign operating ideas are different, and the management of transnational personnel has brought us new challenges.

Xue Qun, founder of Beihai Kangcheng: As a 0-to-1 enterprise, I think the biggest challenge is not what you want to do, but what you don't do. Until the direction is clear, companies need to resist the temptation of the market.

It is often inaccurate to make decisions about tomorrow and the future according to today's environment, which requires us to have determination. And it is also very important to find a good investor, because it is not only a provider of funds, but also a like-minded counselor and support on the road of struggle.

Chen Kan, Executive Director of Qiming Venture Capital: As a partner of Qiming Venture Capital, can Amy share how you view these companies from the perspective of investors?

Tang Yanmin, investment partner of Qiming Venture Capital: I have been investing for nearly 20 years, and I have experienced a cycle of China's investment industry from scratch and from weak to strong. From an investment point of view, when we select projects, we have a portrait of the project, and several factors are very important.

The first is the team, and the proportion of founders is very large. The speed of the company's development is closely related to it.

From a personal perspective, entrepreneurs need to have a strong mindset. Entrepreneurship is difficult, from early scientific research to personnel formation, as well as the most difficult market-oriented problems, including the impact of changes in the entire national policy environment, require scientists and founders to have a tenacious will, to be able to firmly orient and move forward.

Secondly, the technology is advanced. Compared with other companies, Jiakesi has a first-mover advantage, entered the first-in-class (first-of-its-kind) project earlier, and focused on the development of allosteric inhibitors, achieving the top three in the world. This not only differentiates companies, but is also one of the prerequisites for entering into deals with multinational companies.

From "researcher" to "entrepreneur", understanding teamwork is the biggest challenge

Tang Yanmin, investment partner of Qiming Venture Capital: What is the biggest challenge in the process of changing the role from "researcher" to "entrepreneur", and the growth of the company from small to large?

Jiacos founder Wang Yinxiang: Team building and management are the biggest challenges. Research and development is difficult, but it is an area we are familiar with. Production and market sales are relatively unfamiliar to us. Fortunately, the overall environment in China is very good, such as production, we build ourselves on the one hand, and on the other hand, we partially entrust, so that there is a buffer zone. However, after stepping abroad, the recognition of enterprises overseas is low, the team recruitment is difficult, and sales are also facing very big challenges.

My personal experience is that the leader of the marketing and sales team is very important, because the leader of the marketing and sales can bring a team over and help the company get on the road quickly.

Tang Yanmin, investment partner of Qiming Venture Capital: Coming out of the big pharma and returning to China to create a small Biotech, what do you think is the most uncomfortable point? And how do you solve these problems?

Xue Qun, founder of Beihai Kangcheng: This question is very good, in fact, we have many cases to analyze. From Jianzan to Beihai Kangcheng, I have formed a team in China in the past four years. When I returned to China in 2004, Jianzan was not well known in China, and rare diseases were even less well known. The difficulty of absorbing these excellent management teams in multinational companies into an obscure Jianzan is self-evident, so I have always believed that building a team is the most important housekeeping skill of founders.

At that time, I thought it was more difficult to find a good entry point. In response to this problem, the way we solve it is to find the indications, reverse the deduction from the indications, first ask the problem and then find a solution, starting from the disease.

In the process of doing Beihai Kangcheng, we have been creating an ecology and promoting the development of various policies. For example, during the drafting of the China Drug Administration Law, we participated in the drafting of some rare diseases, and I also participated in the drafting of the clinical guidelines for rare diseases of the Drug Evaluation Center (CDE) of the State Drug Administration. This is a very meaningful new attempt for us, which is almost impossible in the United States.

Wang Yinxiang, founder of Jiacos: The real test comes from the heart, and you can't be 100% sure of your choice when creating a company.

When we first started a business to make innovative drugs, even some well-known companies in the industry had not yet started to act, which made us waver and felt that there was no hope. But fortunately, we didn't give up.

When We founded Jiacos, we had the courage to shout the slogan of being the world's top three, but we actually hesitated in our hearts. Later, we choose the project or look for first-in-class (the world's first innovative drug) without wavering. In 2022, we have a number of projects that will enter the clinical stage, and about half of them will be in the top three in the world in the IND stage.

Advice for innovative drug entrepreneurs: Be sure to do what you believe in more

Chen Kan, Executive Director of Qiming Venture Capital: The two are senior entrepreneurs, Amy is a very experienced founder, can you give some advice to those Biotech or Biotech founders who are still struggling from 0 to 1 from the perspective of your people.

Wang Yinxiang, founder of Jiacos: For founders, do what they are familiar with. Interlaced like mountains, opportunistic entrepreneurship is dangerous. You think you see an opportunity, but you're not an expert in that, and that's dangerous.

Xue Qun, founder of Beihai Kangcheng: First, we should be cautious about capital in the financing process. The influx of hot money is accompanied by all kinds of temptations. The goals pursued by non-professional funds are often different from those of founders, and if they are not handled well, they will cause great trouble.

Second, when the biomedical team reaches different stages of development of the enterprise, there will be large fluctuation adjustments, and the founders must have psychological expectations. Good friends come to start a business, not necessarily everyone can go through the whole process together. If you want to accommodate the familiar feeling, without adjusting the iteration in time, it will become a bottleneck in the development of the enterprise.

The last point is to be sure to do what you believe in more. Do what you believe, without which it is difficult to stick to.

Tang Yanmin, investment partner of Qiming Venture Capital: I would like to share it from the perspective of an investor. It turns out that there are both IT and BT (biotechnology) in the fund, and we often compare the two teams. Explosively speaking, IT will often run out of hundreds of billions of companies in a year or two, but BT will not suddenly explode to such a large scale.

At the same time, from the results, although BT companies do not have so many cases of overnight wealth, the proportion of their failures is also much lower than that of IT. This shows a problem, many companies have a tortuous development process, but as long as you insist on it a little, like the two said, do what you believe, cross this hurdle, there will be a new world behind. Seventy or eighty percent of Biotech companies are likely to happen, and that's something I especially want to share with entrepreneurs.

The second, as the two of you just said, is to do the field you are familiar with. Don't switch tracks back and forth in the middle, don't blindly follow the trend. Everyone pursues the so-called new technology, but they know little about the new technology, and often see what kind of projects are abroad, and there is a copycat version in China. This kind of thing that follows the venture capital, the quality is a big discount.

Another point is that policy is very important. The external environment is a very complex and ever-changing process. I suggest that when your life is relatively good, don't take the valuation too tightly, try to make your food as sufficient as possible, and think of danger in peace.

Finally, we need to look far ahead and arrange funds rationally. Even companies that are already listed have to look a few years back. If our business capabilities are not enough to make the company break even and cycle in a virtuous circle, then our fundraising will always be the most important issue facing the CEO.