Start Up Biotech

Biotech start-up makes critical pivot to achieve success!

This sales build-out success story is an example of how dramatic our interventions can be, as our sales turnaround was the critical factor in the company's very survival. Sales revenue grew from $50,000 in its first year (prior to our engagement) to $500,000 in the year during and immediately following our engagement. By following our recommendations, the company was able to sharply improve its sales performance- so much so that it secured its mezzanine funding from the University of Maryland as a result of its growth trajectory.

The company's lab test won fast-track approval by the FDA, so it seemed to make sense to target the laboratories that would perform the test. Unfortunately, they completely missed the bigger health care picture that held the secret to their success. No one within the company understood the health care delivery process or the payer reimbursement model that would ultimately determine adoption of the new test. Our analysis uncovered that the lab test (designed to help transplant patients and others with compromised immune systems) could only be provided to a patient during the course of treatment if a transplant surgeon ordered the test. In other words, lab managers couldn't order the test! The decision-maker in the buying decision was the transplant surgeon, not the lab manager.

With fast-track approval from the FDA, the company expected relatively easy adoption of the ImmunKnow lab test. But we identified that the sales presentation itself was hindering early adoption because the positioning of the product focused on what the test "could do" versus what it actually does! A seemingly minor use of wording actually became a major sales impediment - it gave the erroneous impression that the test was still in development and not ready for prime time! We re-wrote the sales pitch, retrained the sales team, and edited sales collateral material to focus on what the test was able to do in present tense.

To complicate matters, the transplant surgeons could not order the test unless the insurance plans agreed to cover the service. However, almost every transplant team operated under existing, all-inclusive, per case agreements between the hospital and the insurer that stipulated which lab tests would be covered. Since ImmunKnow had just been FDA approved, it was not included in the financial reimbursement mechanisms already in place. Again, until we illuminated all the aspects of the buying decision-making process, sales were deadlocked.

Although they employed numerous laboratory and biotech experts, their scientific expertise did not mean they understood the environment in which the test was performed. The test required that laboratories buy expensive equipment (nearly $50,000 back in 2001) in order to run the test. The company did not account adequately for this budgetary obstacle, nor did they understand that labs wouldn't buy the special equipment without a minimum volume of ordering from the physicians. Once we helped the company understand the equipment purchase was getting in the way of a "yes," they designed a process to circumvent the obstacle.

We helped our client understand the unique requirements for members of a start-up company sales team and determined that the VP of Sales (who had been quite successful at DuPont) was terribly mismatched for the demands of an innovative start-up company. Her experience was narrowly based in selling to lab managers, not transplant surgeons at the top of the medical food chain. The sales reps too, were mismatched. Their sales experience was limited to selling to laboratory managers. They were completely ill-equipped to sell a completely novel diagnostic tool to a physician, let alone a transplant surgeon. We directed a complete overhaul of the sales team personnel and helped to hire salespeople with extensive experience selling to surgeons.

Using the precision of our 200% Company Audit, we conducted an immersion and discovery focusing on the 4P's: People, Product, Process and Prospects. The audit revealed that each aspect of the Company's 4 P's (growth platform) had significant gaps and deficits, impeding the company's ability to grow and succeed. While the product itself (a "first-in-class" lab test to measure the effectiveness of the immune system) was effective, the CEO and investors misunderstood the market in which they were operating and lacked the right sales team to drive new sales. Even though the CEO was a PhD immunologist, and her leadership team was comprised of laboratory and research professionals, they lacked the sales expertise to ignite the Company's sales engine. Our insight into the health care delivery system and our expertise at navigating the sales process enabled them to make the critical pivot to achieve success.