---
title: "Fostering Life Science Innovation: Part 5 – Optimizing Early Product Development Decisions"
description: Explore how where the capital comes from to how it gets spent and how these choices cann affect everything down the line
---

[Blog](https://blog.victech.com)

# [Fostering Life Science Innovation: Part 5 – Optimizing Early Product Development Decisions](https://blog.victech.com/fostering-life-science-innovation-part-5-optimizing-early-product-development-decisions)

 Written by [Michael Artinger, PhD](https://blog.victech.com/author/michael-artinger-phd) | Oct 19, 2026, 4:24:10 PM

[The previous installment in this series](https://blog.victech.com/fostering-life-science-innovation-part-4-it-takes-a-village-federal-state-local-other-support) examined the many sources of public and philanthropic support that help early-stage technologies cross the Valley of Death. Here, we turn from where the capital comes from to how it gets spent. More specifically, we look at the product development decisions made in the first year or two of a company's life that determine whether it can execute five, eight, or ten years later. As in the earlier articles, I am writing through the lens of an investor who builds startups around university innovation. I will draw on two VIC Tech portfolio companies, a therapeutic and a medical device, to illustrate the concepts.

It is difficult to overstate how long these timelines are. For therapeutics, [a large industry analysis](https://www.bio.org/clinical-development-success-rates-and-contributing-factors-2011-2020) found that the average drug needed 10.5 years to move from Phase I to regulatory approval. The same study found that only about 7.9% of programs entering Phase I were ultimately approved, with the transition out of Phase II being the steepest drop at 28.9% (Figure 1). That clock does not include the years of discovery and preclinical work that come before the first human dose.

Figure 1: The therapeutic clock: clinical timelines and attrition

Medical devices generally move faster, although not as quickly as many first-time founders assume. A [Stanford survey](https://www.mddionline.com/regulatory-quality/how-much-does-a-510-k-device-cost-about-24-million) found that companies needed an average of 31 months from their first communication with the FDA to obtain 510(k) clearance, and 54 months for a PMA. The same survey put the average total cost of bringing a 510(k) product from concept to clearance at $31 million, compared with $94 million for a higher-risk PMA product (Figure 2).

Figure 2. Different clocks: typical time from first regulatory engagement to market 

What surprises many people is that the time it takes to reach the market and the time it takes to reach an exit are two very different things. [HSBC reported](https://www.goodwinlaw.com/en/insights/publications/2025/02/insights-practices-mdt-medtech-ma-vc-positive-momentum) that the typical time from first financing to exit for device companies rose to 11.9 years in 2024, more than twice the 2021 figure. Meanwhile, therapeutic acquirers have shown a renewed willingness to buy early. [HSBC also counted](https://www.hsbcinnovationbanking.com/us/en/resources/2026-1h-venture-healthcare-report) 19 venture-backed preclinical or Phase I acquisitions over the preceding 18 months, with a median upfront payment of $1 billion.

The two clocks run at different speeds, but the more important distinction is what the buyer is purchasing. A pharmaceutical acquirer is typically buying data and a future label. A device strategic more often wants a cleared product and, increasingly, evidence that customers will adopt it. In either case, the acquirer is evaluating decisions that were made years earlier, frequently by a very different team.

So which early decisions matter most? There are many candidates, but in our experience four of them resurface again and again in financing rounds and acquisition diligence (Table 1).

Table 1. Four early decisions and where they resurface

| **Early decision** | **When it is made** | **How investors see it** | **How acquirers see it** |
| --- | --- | --- | --- |
| **Lead indication and target product profile** | At company formation, before preclinical studies | Defines market size, comparables and the valuation story | Must fit a gap in a buyer's franchise; sets the label they would inherit |
| **Regulatory strategy** | Ahead of the first FDA meeting (INTERACT, Pre-Sub) | Turns open-ended risk into milestones investors can fund against | Signals timeline and defensibility; informs how much of the path remains |
| **IP position and license terms** | At licensing, before the first dollar of real spend | Freedom to operate and exclusivity are early diligence items | Sublicensing, assignment and stacked milestones shape deal economics |
| **Evidence and data quality** | With the first study that matters | Credible, reproducible data supports each step-up in value | Data must survive the buyer's diligence and, later, regulatory scrutiny |

Choosing the Lead Indication

Most platform technologies coming out of universities could plausibly address several diseases, and there is a natural temptation to pursue all of them. Resources rarely allow for this, and investors tend to discount a pipeline that is broad but shallow.

[Flourish Biologics](https://flourishbiologics.com/) is a good example of a company working through this tension. Originally formed as BiologicsMD, the company spent years developing its targeted fusion protein platform across hair loss, bone disorders and oncology, until alopecia emerged as the most compelling opportunity. That realization prompted its evolution into Flourish. Narrowing the focus reflected a recognition that a single, well-defined indication with a clear development path is worth more to investors, and ultimately to an acquirer, than several loosely connected ones.

Indication choice also shapes the regulatory road ahead. Alopecia areata, for instance, is an autoimmune form of hair loss with an established FDA pathway. Notably, [the same industry analysis](https://www.bio.org/clinical-development-success-rates-and-contributing-factors-2011-2020) found indication to be one of the strongest predictors of clinical success, along with modality and the use of biomarkers.

The questions to ask early are straightforward, even if the answers are not. Is the unmet need well documented, as discussed in Part 2 \[[Fostering Life Science Innovation: Part 2 – Inventing with the End in Mind](https://blog.victech.com/fostering-life-science-innovation-part-2-inventing-with-the-end-in-mind)\]? Is there regulatory precedent? Does the indication fit the portfolios of the companies most likely to acquire or partner the asset? Would success in the first indication open the door to others?

Engaging Regulators Early

The second decision is when, and how, to engage the FDA. Founders sometimes delay this conversation until they feel they have enough data to impress, which in my view gets it backwards. Early engagement is inexpensive relative to what it can save, and it converts a vague regulatory risk into a defined plan that investors can underwrite. Flourish secured an FDA INTERACT meeting that confirmed its development approach, which is precisely the type of milestone that lowers perceived risk for the next investor. On the device side, [Restara Medical](https://restaramed.com/) built an FDA Pre-Submission meeting into the twelve-month development plan funded by its seed financing, alongside a bench-validated prototype and partnerships with hospital systems for early clinical feasibility studies.

For devices in particular, the choice of pathway also has valuation consequences. A 510(k) is faster and less expensive, but it rests on substantial equivalence to an existing product. [A recent review of 2025 exit data](https://www.morganlewis.com/pubs/2026/04/strategic-ip-considerations-for-the-medtech-market-rebound-after-record-investment-and-ma-in-2025) found that high-value, pre-commercial device exits were dominated by products on the PMA and De Novo pathways rather than 510(k) clearances. This suggests that acquirers place a premium on the defensibility a novel pathway can signal. This is not to say that a company should seek the more demanding pathway for its own sake, only that the choice should be made deliberately and early.

Protecting the Asset

We covered licensing in some detail in Part 3 \[[Fostering Life Science Innovation: Part 3 – Moving University Inventions Forward](https://blog.victech.com/fostering-life-science-innovation-part-3-moving-university-inventions-forward)\]. It bears repeating, however, that the license terms negotiated in a company's first months will be scrutinized by every future investor and acquirer. Is the license exclusive, and in which fields? Can it be sublicensed, or assigned in the event of an acquisition? How do milestone payments and royalties stack up against other licenses that may be needed? Is there freedom to operate around the product as envisioned, and not just the underlying invention?

A license that seemed reasonable at formation can become an obstacle once an acquirer models the total royalty burden across the life of the product. The patent estate matters as well. Flourish's platform is supported by 19 granted and filed patents, which gives investors and prospective partners a clearer picture of the protection surrounding the lead program.

Generating the Right Evidence

The final decision is perhaps the least obvious. It involves deciding early what evidence the eventual buyer will need, and then designing studies and systems to produce it.

For therapeutics, this includes selecting endpoints that regulators will accept and that support a meaningful label. It also means generating preclinical data with the rigor and documentation needed to withstand diligence.

For devices, the buyer is often a strategic that will have to sell the product to hospitals, so clinical data alone may not be enough. Restara is instructive here. Its platform is designed to generate a Verified Offload Record, an objective and audit-ready record demonstrating that therapeutic tissue offloading has occurred, which supports hospitals' quality improvement, regulatory compliance and risk reduction efforts. Building that capability into the product from the start is far easier than retrofitting it later. The same can be said for quality systems and design controls, which are painful to reconstruct after the fact.

*Sidenote*: The most frequently cited data on device development costs and timelines, including the Stanford survey referenced above, is now more than fifteen years old. Given how much the regulatory and financing landscape has changed since then, I would welcome an updated and comprehensive analysis. The most useful version would follow companies from formation through exit and connect their early development choices to their eventual outcomes.

How do these decisions translate into fundraising? Each one, made well, becomes a value-inflection point that can be communicated to the next investor: a focused indication with a documented need, a regulatory plan acknowledged by the FDA, a clean and transferable license, and data that holds up to scrutiny. Made poorly or deferred, each becomes a question that stalls a round or reduces a valuation.

The same logic applies to how early capital is structured. As discussed in [Part 4](https://blog.victech.com/fostering-life-science-innovation-part-4-it-takes-a-village-federal-state-local-other-support), non-dilutive funding can be enormously helpful. Grant scopes can be rigid, however, so it is worth confirming that the terms will not limit a future pivot or complicate an acquisition. Similarly, keeping the capitalization table clean and the burn rate modest in the early years preserves room for the larger rounds that later-stage development will inevitably require.

I would be remiss if I did not mention how we approach this at VIC Tech. Because we form companies from the outset rather than investing after the fact, our team works through these four decisions during diligence and company formation, often before the first permanent hire is made. The goal is to spend early capital de-risking the licensed asset in ways that the next investor and the eventual acquirer will recognize. Just as important is avoiding decisions that quietly close off options years down the road.

In summary, life science companies are built over timeframes that outlast most early teams, boards and even funding cycles. The decisions that matter most at exit are rarely made at exit. Instead, they are made in the first year or two, frequently with incomplete information. The most useful thing a young company can do is ask early what a future investor and acquirer will need to see, and then structure its indication choice, regulatory strategy, IP position and evidence generation around the answer. Doing so can shorten the path to market while preserving the flexibility to pivot when the science, or the market, requires it.

\---

**About VIC Tech:** We are a life science-focused Venture Studio, creating portfolio companies based on best-in-class innovation sourced from universities, national labs and institutes around the world. Our team provides the operational expertise during the initial start-up phase, ensuring maximal impact while mitigating burn, allowing as much funding as possible to be allocated towards de-risking the licensed asset.

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