The Bonding of BioBuds

They meet at sleek East End eateries, and over bottles of Cabernet, discuss the inner workings of the Medicare reimbursal process. They dish on venture capital firms, real estate bargains, and how many stock options to give an incoming COO. Welcome to BioBuds.

What began as a loose confederacy of biotech entrepreneurs about seven years ago has evolved into a nexus of know-how, connections, and yes, mutual support for those trying to build out Pittsburgh’s burgeoning life sciences industry.

“I call it circle therapy for foolish entrepreneurs,” says Howison Schroeder, a BioBud and CEO of O’Hara-based NeuroKinetics, which makes detection and treatment tools for brain disorders.

Schroeder says the group can be a salve for what ails those in the demanding world of biotech startups. It’s hard out here for an entrepreneur, Schroeder says, what with the high risk and uncertainty of developing a product that works, makes money, and passes FDA approval.

“We all need some rah-rah. There’s a lot of people looking at us, waiting for us to fail. We need people looking at us who are waiting for us to succeed,” Schroeder says.

There are about 40 or so “members”, though the group has no official registry. Nor will you find an official schedule. BioBuds meet whenever a member sends out an email, inviting others to congregate in a bar, restaurant, or in many cases their office.

While they pick over food and drinks, the members exchange knowledge, compare notes, and air out their frustrations du jour. It can be a crucial source of information for CEOs who are just starting out, says Pete DeComo, founder and CEO of Renal Solutions, a Marshall-based company that makes in-home dialysis devises.

“Some people don’t know what an angel investor is. What’s convertible debt? When you’re just sitting around the table commiserating, to be able to ask questions in an unthreatening environment, is very valuable for a young entrepreneur,” he says.

DeComo says the connections he made through the group – with state economic development officials, venture capitalists and other key people -- helped his company get off the ground.

The roundtable feel can have therapeutic value, DeComo says.

“Maybe you’re not experienced at dealing with a board or investors. You can come to your peers and just ventilate, just let it out. It helps cool you down (to the point) where you can go back and deal with something more objectively,” DeComo says.

There’s only one bylaw, what members call ‘the Vegas rule’: What’s said in BioBuds, stays in BioBuds. It’s meant to promote honesty in the discussions, says Mary Del Brady, CEO of Strip-based RedPath Integrated Pathology, which makes molecular-based tools for diagnosing cancer

“We really want to be in a position where we’re not hyping each other,” Brady says. “With a glass of wine in hand, if someone asks how your day was and you had a bad day, you feel you can say so.”

Biobuds grew out of a peer group started by the Pittsburgh Technology Council around seven years ago. Gradually, the members began to meet on their own.

As time passed, the number of CEOs grew. The nature of the meetings also changed. In the beginning, most meetings revolved around the issue of attracting investors. Now, many of them are focused on product launches, Medicare reimbursal, and other issues of companies past their initial stages.

The BioBuds have also evolved in another way. Earlier this year, the members made their very first lobbying trip, to the state house in Harrisburg. They pitched legislators ideas about making the tax code more entrepreneur-friendly by allowing an R & D tax credit.

Krista Paternostro, acting president at the Pittsburgh Technology Council, said the group provides input to the Council that enables it to “provide meaningful value to the life sciences segment of our membership.”

Its members say the group has been an indispensable survival tool in the high-risk world of biotech.

“We all believe we have stronger and better companies because of what we all share,” Brady said. “We learn from each other, so we don’t all make the same mistakes.”

One example is recruiting. If RedPath is recruiting a key manager, Brady will share with any studies she comes across on executive compensation. The BioBuds also pass along names of good intellectual property lawyers, accountants, or other professional services they’ve found usesful.

“This is such a high-risk undertaking, anything you can do to moderate that risk is huge,” Schroeder says.

The group has also helped raise the profile of the region’s nascent biotech sector. When Promethean LifeSciences was trying to lure CEO Michael Mitchell from the West Coast to Pittsburgh, COO Christian Manders brought Mitchell to BioBuds as a kind of recruiting tool.

When people come from outside the region to Pittsburgh, Manders says, “they want to see there’s other stuff going on here in case our company failed.” Mitchell took the job, moved to Pittsburgh, and now is a member of BioBuds.

BioBud Raymond Vennare, co-founder and CEO of ThermalTherapeutic Systems, which is developing a chemotherapy delivery system, thinks BioBuds has given members a “collective credibility” with investors. “Investors want to know the right people are controlling this process—especially in biotech, which is very high-risk business with a very long timeline.”

Catherine Mott, managing partner of BlueTree Allied Angels, a North Hills investment firm, says she’s tapped the expertise of several of the group’s members when researching companies to invest in. (She’s already invested with two of them.)

Mott thinks the group helps its members work smarter when they are pitching their companies to investors.

“It’s a place where they can share war stories, what works, what didn’t work. Angel [investors] all have particular interests. They might have learned who to go to and who not to go to,” Mott says.

Most important, these BioBuds aren’t a jealous bunch. When one member succeeds, they feel like they all have.

“If Mary Del raises that money, we all benefit. We all get tagged with a slightly shinier patina,” Schroeder explains. “The fact that we support and talk about each other has added to the buzz, and buzz is important. It changes the tint of everything, and one day you look out and suddenly the sun’s out a little more often.”