Small and Medium Biotech Companies Still Growing in Uncertain Times
Small to mid-size biopharmaceutical companies are the lifeblood of the industry, and some of those businesses are adding new blood to their rosters, even in uncertain times.
A 2020 report by Biotechnology Innovation Organization (BIO) and TEConomy Partners estimates there were 1.87 million people employed in the bioscience industry as of 2018. Small to mid-size biopharmaceutical companies accounted for 71% of its employment and 99% of businesses in the field.
Despite a slew of layoffs in the life sciences industry over the past year, like high-interest rates, a possible recession, working during a pandemic and a record-low unemployment rate, young, small biotechnology companies are growing during these uncertain times.
BioSpace spoke with three CEOs: Alto Neuroscience’s Dr. Amit Etkin, M.D, Ph.D., who is also the company’s founder, Omega Therapeutics’ Mahesh Karande and Rain Therapeutics’ Avanish Vellanki about their employment growth and what factors go into hiring a successful job candidate.
Pioneering Help Wanted
In April, the U.S. Labor Department announced that jobless claims reached a 52-year low. For those biotech companies looking to hire, it’s an employee’s market.
Karande recently attended a meeting where it was mentioned that there are about 11 million overall open positions in the U.S., for which six million potential employees are qualified. He said that a big challenge in hiring is finding people who can move into new areas of biotechnology.
“When you work on something that is cutting edge and pioneering, you’re always going to have a challenge because it’s, by definition, something that hasn’t been done before,” Karande said.
“The challenge has always been finding people who are knowledgeable about their domain but flexible enough and not too rigid in their training,” Etkin added.
The pandemic has greatly reduced in-person job interviews, which means that a prospective job candidate doesn’t get to see firsthand a company’s environment and the employees themselves lose that experience.
“Once upon a time when people were in the office, you could really distinguish yourself, differentiate yourself from other companies just by the work experience, the things that you offered employees. Now, when there are team members all over the country and they're on a zoom screen, much of the company's uniqueness may get lost,” Vellanki said.
Biotech companies are finding that the best strategy to inform qualified job seekers about their open positions is the old-fashioned way.
“The vast majority of the recruiting comes through referrals,” Vellanki said. “All of our team members are accomplished professionals from prior companies. They have extensive networks and they are our biggest advocates.”
Karande concurred. “The best way to recruit people is really by word of mouth with people who are already there. That's a big thing that we do.”
Prioritizing the Intangibles
After a company connects with a potential employee, the business looks for intangibles that go beyond scientific knowledge.
“We hire for agility,” Karande shared. “Learning agility is in four pieces (mental agility, results agility, change agility and people agility), and if you hire people who are high on those four things, they can basically get anything done.”
Agility is also a must for Alto Neuroscience.
“We run our trials internally. We coordinate with sites. We don't use CROs (clinical research organizations) so we dramatically lower costs by doing that, but what that requires is people who can do a lot of different things, who are comfortable being proactive and moving around to different parts of the operation and plugging holes as they need to be plugged. That lowers costs substantially relative to industry standards,” Etkin said. “It does mean that it's harder to find those people because we're really looking for them with a more true startup mentality than just to fill a discrete role.”
Diversity is another key factor in hiring, but for small companies, that also means going beyond the traditional definitions for employment.
“It's not just the kind of obvious racial, ethnic, gender diversity, but its diversity of backgrounds and opinion. We've tried to create an environment where everybody's opinion is welcome, even the most junior person. That’s very important for us,” Etkin said. “I, as CEO, spend time with them and encourage them to speak up because they're at the frontline and they see some of the more important things to comment on. So, diversity comes in all forms, but it's particularly important to value the input coming from people. It's not just diversity, as you have in sort of checkbox form but diversity in how you live, the way you value yourself.”
Omega looks for problem solvers.
“When you get people of different orientations, and I'm talking about mental orientations, you get the best of the best in terms of being able to deploy everybody to solve the problems that you want. We bring in people and we want them to be exactly who they are, which is why we hired them in the first place,” Karande said.
And diversity begets more diversity.
“It feeds on itself when team members see a diverse workforce and when candidates come in to interview. It does present a certain picture that we value that everyone is comfortable, that it’s an accepting work environment, and that helps attract more diverse candidates,” Vellanki noted.
Culture is Key in Recruitment
Whether it’s recruiting new employees or retaining the ones they already have, all three CEOs feel strongly about their company’s culture, mission and values being key to having satisfied workers.
“The cultural fit, our philosophy at the company, if we can get that right in terms of new hiring, everything else is probably fixable. If we don't get the culture right, even if they're remarkably accomplished professionals, it may not work out,” Vellanki said. “The primary objective for all of our interviewers, for any role, is focusing on the key pillars of our culture.”
Karande explained his company’s value system.
“It's literally ambition and humility,” he said. “You have to have the highest level of ambition. If you're on a pioneering journey to do well, that means a high-performance culture. But a high-performance culture can create stars, and people [like that] are really bad at their values and behaviors. So, we have juxtaposed that with ambitious yet humble, where you have to have the humility that you cannot work alone, that you have to be able to work with people and you have to earn the right to be there. You earn the right to put these medicines in patients.”
Alto, Omega and Rain have been successful in finding the right type of employee to fit their needs.
Los Altos, CA-based Alto, a clinical-stage company taking a precision approach to psychiatric drug development, has expanded its personnel by 53% during the last 6 months to a total of 46 employees. Cambridge, MA-based Omega, which is harnessing the power of epigenetics for precision genomic control, has expanded its workforce by 37% to 101 people this year. And Newark, CA-located Rain, a late-stage biotech company developing targeted cancer therapies, has grown by over 40% to 64 employees over that same time period.
A Predictable Stock Market Could be Beneficial
A lot of money and time is on the line when it comes to developing a new drug. Several studies have put the financial commitment to R&D, getting regulatory approval, manufacturing and getting a product to the consumer from several hundred million to over $2.5 billion with the process averaging 12 years. The cost of not being successful can mean a company’s extinction.
Still, the financial rewards are only growing. The global biotechnology market in 2020 was worth about $752.8 billion according to a study by Vision Research Reports. By 2030, that number is expected to skyrocket to $3.44 trillion.
Navigating the current and future economic situation is a key challenge to a company’s survival and hiring practices.
“Being more watchful in new hiring is very important and the name of the game today in biotech is your cash runway. Our cash runway is to the first half of 2024,” Vellanki said.
“We've never overhired,” Etkin shared. “We save operating costs with respect to running studies and doing the data analysis by being cost-efficient from the very beginning. I honestly don't understand what the justification is in pharma, and certain biotechs, in spending so much per patient and actually getting so little data science done on it.”
Financial solvency for these three small biopharma companies will ensure growth and the ability to hire more employees. So how are they preparing for a possible recession?
“If there is a recession, but the stock market becomes more predictable, that's probably a better investment scenario for small and medium biotech companies than the current climate where there's a huge amount of uncertainty and there's nothing settled in the market. Recessions are an opportunity often for some consolidation, [and] it may be easier to hire people. So there actually may be a net positive for us, as long as the markets themselves are settled,” Etkin said.
“Looking at the stock price and what the capital markets have done to the value of all companies, it's been decimating to biotech,” Vellanki said. “For companies like us that were successful in raising money before this economic downturn happened, we have the luxury of being able to ignore the stock price to a degree and we can deploy the capital we have to build value for our shareholders and for the programs.”
Karande is, likewise, unconcerned.
“I don't worry about the stock market. Not in my control. I worry about things that are in my control, which are execution, meeting our commitments, making sure that whatever we have committed to our investors and the street as a public company, we deliver. The other thing we can control is our costs. We are not too worried about it [economy/possible recession] because we are well-capitalized. We are not in the market to raise money right now. We are happy to ride this out,” he said. “There's going be a time of reckoning. That's going to happen. I would like to believe that we are in the group that has strong fundamentals and not the group that is fly by night.”
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