Judgement Call

5 October 2005

Gareth Roberts, CEO of Novathera, believes entrepreneurs should trust their own judgement. He certainly trusts his own - his first job as CEO was to refocus the company's entire business model.

Gareth Roberts is CEO of Novathera, a spinout from Imperial College London specialising in tissue regeneration and biomaterials. The company, which is just closing its first funding round, also leads a £3m UK government-funded initiative looking at the mass production of specialist stem cells for research. 

After leaving SmithKline Beecham you were involved in four successful biotech start-ups before Novathera. How difficult is it to get a biotech off the ground?

It is a challenging area. In particular, the whole area of stem cell biology was becoming a no-no for investors because of ethical problems, so it has been challenging persuading them to invest. Many were still reeling from having their fingers burnt and were painfully aware how far the gap could be [from the efforts of some start-ups] to world-class science.

What I bring to the table is packaging the Intellectual Property (IP) and moulding it into a commercially attractive proposition. So [it's about] asking how far you can go with an idea and whether it's possible to fund it.

What made you choose Novathera?

[Co-founding scientist] Dame Julie Polak was my PhD supervisor and we kept bumping into each other at conferences, so I knew it was being set up. I just thought it was an interesting and challenging idea. The company had a pile of IP and a pipeline agreement with Imperial. So there's a lot of background science, some of which is already in the company and the rest of which is flowing into it. The research is grant-funded and as things crop up and are turned into reasonably-formed ideas, we have the option to license them and add them to our existing IP.

And our guess is you've had first hand experience of the classic tension between the 'pure' intentions of the academics and the commercial interests of the company?

Obviously in a company with founding scientists, the reason they are there is they're great scientists. But they're now involved in a company that's developing products to go on sale. It's sometimes difficult [for them] not to follow up interesting bits of science for their own sake - so there can be a tension there.

We fund short projects if there's a commercial interest, and we leave other bits if it's interesting science but not for us. Part of the skill in managing a company like Novathera is being able to do that with good judgement.

You performed a fairly dramatic U-turn to come up with a new business model at the beginning of the year. What didn't you like - and what's your new thinking?

My first job as CEO was to reshape and refocus our efforts. The initial idea for the company began in 2003, but over the next year it got bogged down and my aim was to take it forward over the next 12-18 months.

In some respects, what had been proposed and planned was a typical bio-tech model. It was focused on delivering product. That doesn't always go down well with investors because it can cost tens of millions of pounds and people are unwilling to take that level of risk.

So we decided to take a step back. There's a lot of IP in the biomaterials and cell processes. So we repositioned ourselves as a supplier to the product manufacturers. Business development is now about looking for applications and we've got some interested partners already. It's about tuning into the business opportunities out there, having ideas about how they could be harnessed and then looking for partners.

Your first partner is in dermatology, using your technology to add molecules to the bioglass that's absorbed into the body in wound care. But how can you put numbers on what revenues you might expect from what's essentially a technology looking for a number of different applications?

Initially, it's difficult to predict any sort of revenue stream. But once you've got your first deal, you can begin to put numbers around it and say: 'If we get several other significant deals, then it will look like this.'

The hurdle that's gone up for a lot of universities is asking whether an idea is likely to work in the way they've predicted. If you're at too early a stage, it can be difficult to get funding for an idea that isn't proven.

So what's the greatest risk to a company like this - and the best piece of advice for people starting out?

There are lots of experts out there and the biggest danger is thinking you know something when you don't - that can lead to huge lost commercial opportunities. You can't afford to do everything in a start-up, so it helps to know areas that could cause problems further down the line.

The most important piece of advice I could give is to learn to back your own judgement. Things going wrong are easier to bear if you've made the decision in the first place. If you've been railroaded into it by investors, it's much harder to take.