Taking a Job with an Emerging Biotech Presents Potential Life Changing Rewards
Joining an emerging life science company could be the best risk you ever take.
But it’s not for the faint of heart: young companies by their very nature are rife with ambiguity, undefined roles, shifting goals, and developing processes; this is what makes them innovative, exciting, and, of course, high risk.
Leaving the comforts of a big company with a calcified infrastructure, laser-focused job roles, well-established SOPs, deeper pockets, and excellent job security for the scramble and chaos of a younger company isn’t for everyone.
However, for those just starting a life science career or with a few years of experience, taking the leap into uncertainty and joining an emerging biotech could be the best move you ever make.
What to Consider Before Taking the Leap
When it comes to life science startups and younger, pre-IPO companies, taking a smart, calculated risk is the best you can hope for. There are many factors to consider, including:
- The science behind the startup and the quality of its pipeline
- The potential size of the market and competition within the same indications
- Recent funding
- The leadership team’s reputation and track record
- The company’s network of investors and partners
- The compensation package, which is often has a lower annual salary offset by lower-priced stock options that have the potential to yield life-altering returns
For those in the early stages of their life science career, joining a bioscience startup could be a no-brainer—there’s likely a lot less personal risk than an older, seasoned executive. For the less experienced, stock options are not the only potential windfall. Startup and emerging company cultures will likely furnish development opportunities to less-experienced workers not readily available to them in larger, established biotechs or big pharma organizations.
For those that take the leap and assume the risk, hopping on the IPO train at the right time can deliver the ride of a lifetime.
The Best Time to Take the Pre-IPO Jump
As a general rule, the earlier you join, the higher the risk and the more substantial the upside.
This rule applies to both less experienced job seekers and more seasoned executives. As one of a company’s top ten hires, compensation generally aligns with risk levels; to attract and secure talent, startups and emerging companies will incentivize risk-taking by offsetting generally lower annual salaries by allocating equity in the organization.
Since a pre-IPO company has no actual market value, it will issue new hires options as part of their compensation package at the current valuation, which could be just a few dollars for a younger biotech. The earlier one joins the company, the lower this initial option value will likely be. Larger option tranches are possible, too, particularly if a company is attempting to attract the necessary talent to join the venture.
The bet here is that the company eventually has a successful IPO that hits the target price per share and continues to grow in share value and market capitalization.
Young life science professionals, mainly if they are part of a company’s initial hiring phase, can generate real wealth with this equity. There are caveats, of course; first, the likelihood that the emerging biotech that hires you makes it to the IPO stage and then thrives post-IPO is small. Thus, the high level of risk.
Second, even if this dream scenario arises, a young professional that was an early hire can’t sell their shares whenever they want. Options must vest, and there are a host of Security and Exchange Commission (SEC) regulations around stock sales for publicly-traded companies. In most cases, a young professional or even a mid-level manager won’t be privy to material information that would trigger an insider trading investigation. That is to say, a non-executive, non-leadership team member has more freedom to sell but still needs to be sensitive to the law as well as the negative internal perception that could be created by selling shares too soon.
Cashing out stock options and making life-changing money is possible but highly unlikely. However, this possibility is not the be-all and end-all when it comes to the benefits of joining a startup or emerging life science company.
Other Important Career Benefits for Riding the Pre-IPO Rollercoaster
The benefits of joining a young company that successfully goes public go beyond the financials. Yes, the financial benefits can be a game-changer, but the professional development value is also essential to consider.
- Making valuable contributions to building the company is an invaluable resume builder that will set one up nicely for the next great opportunity.
- Experiencing the rollercoaster ride will force you to learn new skills under pressure and accelerate your personal and professional development.
- Building a company requires growing and leveraging a network, regardless of its position; again, this network will grow exponentially in a short window of time.
- Learning to perform well while navigating ambiguity and the unexpected in a high pressure, high stakes environment is a highly sought after trait.
- Suppose the IPO is a success within a three to five-year window from the point of hire. In that case, this could generate experience equivalent to that gained from a decade of working within a larger, well-established life science company.
In summary, working at a startup or younger bioscience company is challenging, but the professional and personal development upside is invaluable. When it’s time to go on the job hunt again, there’s no doubt this kind of experience will have high value to recruiters and potential employers alike.
2021 Might Be a Great Year Take the Pre-IPO Leap
Despite a raging global pandemic, the biopharma industry saw a record number of companies go public in 2020. U.S. biopharma companies also raised $6.4B in venture capital (VC) in Q2 2020 alone, which was the largest quarter in the industry’s history (Forbes via Pitchbook). After the initial industry shock of February and March, IPOs and venture capital fundraising caught fire.
There is no doubt that some life science companies held back filing IPOs because of pandemic uncertainties. However, once the vaccine rollout improves and COVID-19 metrics decrease, the IPO floodgates will likely open for companies that chose a wait-and-see approach. As the uncertainty and pandemic risks start to fade, VC firms sitting on cash will likely continue to break investment records in 2021.
Early indications seem to suggest the IPO environment in the U.S. and within the BioHealth Capital Region (BHCR) will remain hot in 2021. Approximately ten U.S. biopharma companies completed their S-1 filings for an IPO and one organization, Cambridge, Massachusetts’ Cullinan Oncology, raised $249.9M with an IPO in early January. And this is just one month into 2021.
The BioHealth Capital Region (BHCR) has already seen a few companies submit their S-1 filings signaling to the Security and Exchange Commission (SEC) that they intend to go IPO in 2021. Gaithersburg’s Neximmune and Sensei Biotherapeutics both filed their S-1s in January 2021. Other companies like Immunomic Therapeutics of Rockville, Maryland, have shared publicly they would like to IPO and seem to be edging closer to this reality.
There has probably never been a time in the history of the BHCR with so many promising emerging life science companies. And where there is risk, there’s great reward.
Don’t overlook the many opportunities afforded by joining a young, emerging biotech. It could be the best decision of your life.
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