Luca Benatti, one of Italian biotech’s most notable entrepreneurs, outlines some of the key challenges of starting a biotech company in Europe, highlights how these barriers can be overcome, and gives some of the key lessons he has learned in his entrepreneurial journey.
Benatti currently serves as CEO and board member at EryDel, which is developing a platform based on the concept of using a patient’s red blood cells to deliver drugs. Previously the founder and CEO of Newron Pharmaceuticals, which was able to commercialise a Parkinson’s disease treatment, Benatti also sits on the board of Intercept Pharmaceuticals, a US-based company listed on the NASDAQ, specialising in liver disease, is a member of the strategic advisory board at Zambon and is the founder of Italian Angels for Biotech, an association aimed at growing early-stage start-ups in the Italian biotech and life science sector.
On being a bioentrepreneur in Italy and Europe…
“There is commonality between the Italian environment and other European markets, however, Italy is less developed than other countries in the region such as the UK, Germany, and France.
“The major factor that separates the US from Europe is the cultural approach to investment. US investors do not judge entrepreneurs for past failed companies or ideas, whereas their European counterparts sometimes do. All business plans are considered independently and the market is bullish, with a lot of trust and money.
Companies in the US have the capability to raise more money in their venture rounds. As a result, these companies have greater flexibility [than those in Europe] and the opportunity to change their business plans without needing to raise additional funds every time
“Companies in the US have the capability to raise more money in their venture rounds. As a result, these companies have greater flexibility and the opportunity to change their business plans without needing to raise additional funds every time.
“The environment in Europe is more restrictive and selective. Specifically, there is a tendency to distrust entrepreneurs that have failed in the past. This does not take into account the complexity and high-risk nature of the sector with few projects reaching the market. Consequently, this perception from the financial market offers European companies in the industry less capital than those in the US market.
“Therefore, there is a dramatic effect on European businesses transitioning into US companies in the long run as they move to list on the NASDAQ due to the trust in the business, the number of investors, and the large amount of capital.”
Italy’s scientific fundamentals and barriers to translational science…
“The Lombardy region and the Milan area are home to top research centres such as the San Raffaele Hospital and the European Institute of Oncology. These institutions are able to successfully compete with other key research hubs such as Cambridge or the Max Planck Institutes for European grants. Additionally, the quality of the publications and research in Italy stands out compared to many other European countries.
“The gap affecting Italy is the reduced capability to transform science into business. The fragmented transfer office system is not helping scientists access the resources needed to shape their business plans and attract investors.
The lack of early access to capital reduces the capability to transform businesses
“Additionally, the lack of early access to capital reduces the capability to transform businesses. This is one of the reasons along with other entrepreneurs I founded the Italian Angels for Biotech; there was a significant need to both increase Italian start-ups’ access to angel funding and share experience with them so that they could grow to a sufficient size to attract venture capital.
“Likewise, there is limited access to experienced managers and entrepreneurs in Europe, which reduces the potential of these start-ups to grow. Although managers from Big Pharma companies possess an attitude and mentality to be excellent managers in structured organizations, they are frequently less effective in early-stage companies.”
Lessons learned along the way…
“There is a lot to learn. I have made many mistakes, but these mistakes are crucial for success as they have allowed me to approach issues differently the next time I am faced with them. This applies in different instances from scientific, to regulatory, or commercial matters. Having gone through the biotech development process multiple times and having made mistakes allows me to better advise new ventures and steer them in the right direction.”
