PharmaJet, Inc. (http://www.pharmajet.com) offers jet injection technology to deliver vaccines and drugs through skin. The company offers PharmaJet, a needle-free system that delivers liquid medications at high speed creating a ‘liquid jet’ that penetrates the skin and delivers the medicine through the skin in less than 1/3 of a second. It serves individual patients, as well as public health needs internationally. The company is based in Golden, Colorado with operations in

With approximately 23 employees currently,  PharmaJet was founded in 2007 and is currently headquartered in Golden, Colorado with other offices in San Francisco and  Baltimore.

As a privately held medical device design company, PharmaJet has developed an FDA 510 (k) cleared needle free jet injection technology.  It can be used to inject any liquid medicine into the body (human and animal), for fixed dosages ranging from 0.1cc to 0.5cc, into intra-dermal, subcutaneous, and intra-muscular tissue depths.  It is most appropriate for vaccine delivery, which is a standard 0.5 cc dose for nearly all human vaccines.  Since starting its first scientific collaboration 22 months ago, active pre-clinical and clinical testing of PharmaJet’s device is underway in 9 countries, with 18 partners for more than 25 vaccines and therapeutic medicines.

Market Opportunity

History & Genesis

PharmaJet’s technology was developed to address a need for safe and clean delivery of liquid vaccines, without a needle, in view of the massive infection rates caused from within the healthcare system of hepatitis B, hepatitis C, and HIV (and an additional 17 other blood borne diseases) due to syringe needle reuse and needle stick injury during vaccination (estimated at 22 million injuries per year world-wide).   With the World Health Organization’s (WHO) guidelines in mind, the Founders created a needle-free injection technology that is simple, robust, and inexpensive.  Besides getting rid of needles, however, there are a host of other sustainable competitive advantages and attractive features making it a value added device that can improve the lives of people, reduce the cost of healthcare, all the while generating profitability for PharmaJet and its partners.

Product  Potential

PharmaJet’s features help address the developing world problem of re-use (as much as 40-70% in some countries) which contributes to growth in disease and epidemic.  Further, the intra-dermal application (0.1 – 0.2cc volume) may contribute to stretching vaccine supply (reduced dosage, but similar immune response to standard 0.5cc dosage) where there is shortage so that the health net can be spread among a larger population, ultimately benefiting their group welfare and economy.  At the same time, it is perfectly appropriate for the sophisticated healthcare market, and eliminates needle-stick injury which is prevalent everywhere.  As a technology platform, there are a variety of additional product extensions that allow it to be useful in other injection segments, user groups, and processes.

Initial Markets

• Human vaccine market: >1.75 billion needle-syringes being used annually for injection of vaccines, for children and adult populations.
• Animal vaccine market: Even larger by volume than the human vaccine market, PharmaJet’s device has been used successfully in a range of species (mice, rabbits, guinea pigs, dogs, cats, goats, sheep, horses, cattle), making it suitable for:
  • For pre-clinical research and antibody production
  • To keep companion animals from spreading disease to their owners (i.e. rabies), and;
  • To keep animals productive, so that populations do not starve (developing world), industries are not financially devastated (i.e. culling for foot & mouth disease), and producers maintain efficiency (i.e. dairy).

The Position

As PharmaJet, Inc. seeks to substantially expand it’s product user base, exposure and revenues in 2010, the PharmaJet Regional Business Development position plays a vital role in product introduction, demonstration and sales within several key market segments.  Leveraging their industry experience, this sales and business development leader will systematically identify and develop key new market opportunities and represent product sales to all public and private healthcare providers currently utilizing needle injection delivery of vaccines and select drugs to patients and the general public. Based upon a pre-defined region, such product introduction will use a team approach for product adoption and use support, in conjunction with PharmaJet Certified Trainers and Technical Support. This position will thus serve as the overall regional business manager of these services.  The role will be focused on integrating PharmaJet’s product capabilities into all relevant regional public health networks, private clinics, and hospitals, thereby participating in all key mass vaccination events at the city, county and regional levels.  Such efforts shall include attendance and representation at all relevant user’s groups and regional conferences of professional healthcare providers

Financial Backing

PharmaJet has raised a Series A and B equity financing from angels and strategic investors, and is well capitalized to enter their next phase of commercialization.

Compensation

Compensation is competitive with the position’s requirements.  In a performance-based environment, this will include base salary, incentive bonus structure based on both quantitative revenue goals and qualitative MBOs, and a potential stakeholder position in the company.

CEOs and executive leaders of innovation-stage companies often ask themselves what is the best approach to employee appreciation, productivity and retention.

We’ve all heard the stories around the lengths some venture capital-backed companies go in their efforts to service the needs of their employees.  What started as the water cooler and drip coffee pot, fast-growth companies have super-sized, continuing to up the employee pampering ante–  installing company-paid cappuccino machines and Kurig coffee makers with what appears to be an endless supply and variety of coffees and teas.  Keeping well-stocked office kitchen pantries with either favored junk food, healthy snack choices, or both.  Catering lunch, breakfast, dinner, sometimes all three meals plus a midnight snack that rivals food options found on luxe cruise liners.  Car valet services, onsite dry-cleaning pick-up/drop off, massages, yoga, concierge services, onsite daycare/nanny service, bring-your-pet-to-work options.  And on and on and on, the calories and comfort food arms race continues its grim march toward caffeine OD and adult-onset diabetes.

However, there’s a moral and dilemma CEOs often face when trying to strike the right balance of perks and austerity.

The argument for pampering:  In the new knowledge-worker driven economy, there is often precious little machinery or automation.  So every time an employee walks out the door to Starbucks, Dunkin’ Donuts, the sandwich shop, or the drycleaner, the corporate engine slows down a notch.  Therefore, the logic emerges that if you can remove all interruptions for employees, you’ll get far more in productivity out of them than junk food and pampering you put in to them.

The argument against:   It’s expensive.  It creates a sense of entitlement in employees.  It creates a false sense of prosperity in a company that may be pre-revenue and in need of several more rounds of funding before it can stand on it’s own two financial legs.

Some might say that economic recessions pound the potential for excess back to square one.   OK, so perks have slowed down a bit after each economic set-back in the last decade, starting with the Internet bubble bursting and post-Y2K malaise, the aftermath of 9/11 on the U.S. economy and, most recently, the banking sector melt-down.  However, after each setback it seems a new “floor” gets set that’s just a bit tonier than the last one.

So how do CEOs handle this arms race in employee perks you ask?

Below are a few lessons learned and secrets shared by a number of CEOs who know a bit about the word “value” in serving up employee perks-

Perks Case Study A: Intra-office “micropreneurship.” The secret of the concession license

One venture-backed CEO wanted to offer some of the perks, but not all when it came to stocking the pantry.    So, rather than facing an all-or-nothing approach, the CEO decided that a business principle was in play that could be exploited in a win-win-win fashion–  what the company had as an asset was the equivalent of a monopoly.  He reasoned that employees were a captive audience.  If the CEO offered the “vendor concession” contract to an aspiring employee who wanted to make a few bucks, the company would offer exclusive stocking/inventory rights to that employee to stock the pantry.  However, in trade, the employee had to agree to offer below-market pricing on food and beverages, and also manage the “SKU requests” that the employees would log from time to time regarding food selection and preferences.  His formula in a nutshell looked like this:

-          win for employees-as the got a below market food and beverage offering, the equivalent of a “company subsidized” pantry offering

-          win for the “intra-preneur”-who was given the food concession to run, and could make a few extra bucks running the business

-          win for the company-the company didn’t have to provide all the food gratis, nor had the headache of fielding all the requests from employees

Perks Case Study B:  Serving dinner not as an entitlement, but only to the truly meritorious

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One of the questions we as executive recruiters often get asked  is the trade-off between experience and aptitude.   Both sides of the equation are prone to asking it, clients and executive candidates alike.  Sometimes this teeter-totter is referred to as “domain expert versus best athlete.”

What do they mean when they ask?  There’s actually a lot of nuance in the question-when are skills and experience most important to success in the role versus pure talent and aptitude?

• •    Just because a CEO is moving from one industry to another, does s/he lose his ability to successfully lead?
• •    If a VP Sales has been successful at one stage of company growth, can s/he take that same sales toolbox and be successful in another stage company, say either emerging-stage or mature-stage?
• •    Can a VP Engineering be equally effective managing in large companies and small?
• •    Do companies look for the same types of leadership in good economic cycles as well as bad?
• •    How does an executive’s move out of their wheelhouse of skills and experience impact their compensation and/or level in a new industry and company?

These questions are only a few of the factors that impact the answer.    The following discussion is aimed at trying to lend some clarity and context to question.

Let’s take a look at the hour-glass graph below to lay down some of these factors against our “expert or athlete” question:

1)     Level of management: The first factor is where an employee sits in the organizational chart.   In general, skills and experience are most critical at the “waist” of the hour-glass graph-mid-to-upper level management, starting at manager, through director- and VP-level.  At the top and bottom of the hour-glass, aptitude often ends up as the greater emphasis in “hireability.”  This may be fairly intuitive for many.

a.     Entry-level: When you first get out of school, employers often hire for a combination of attitude and intelligence and look for those who exhibit room to grow or “headroom.”   In fact, at entry-level, skills and experience for those roles are often a liability.  Employers may feel someone is overqualified, or a “flight risk” if that employee finds another better-paying and/or higher level position at another company.

b.     CEO-level: When you achieve P&L/CEO status, employers often will place more emphasis on the track record a CEO has in leading a company versus a tenured career history in a specific industry area.  Can a CEO move from rust-belt manufacturer to biotech?  Likely not.  However, there isn’t the same granularity of fit applied at the CEO-level as at the middle-management layer.  If a CEO has been broadly successful in in a number of software companies, it often becomes less important what type of software, or what industry vertical that software was developed for.  Certainly some screening is applied to industry, with some of the below more general industry characteristics takingi precedence-

i.      Experience in selling to similar customer base, B2B vs. B2C or government

ii.      Experience raising equity capital from venture capital or private equity

iii.      Experience creating exits for investors that have generated good returns for those investors

iv.      Experience taking a company from one industry into other industries, popularly referred to as “crossing the chasm”

c.     Mid-to-upper management:   Mid and upper management are where skills and experience over mere aptitude are often most sought after by employers.  Those who are hiring at this level will often even emphasize industry skills and experience above managerial experience, giving the edge to a candidate with industry-relevant background and a lesser degree of leadership experience, assuming that management is a learned skill and can be taught or picked up on the job.  Is this right?  That’s not the focus of our discussion here.  Rather, our goal here is to describe corporate hiring  norms from our observations.

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Periodically, we make an effort to pull together executive compensation trends and analysis focusing on venture capital backed companies in the United States.  The last executive compensation report we put out was in September 2009 (see prior blog post http://www.bostonsearchgroup.com/blog/ceo-compensation-analysis-west-east-founder/), and focused on C-level compensation, with a further contrasting of founder versus non-founder CEO compensation, both West Coast and East Coast.

This report is similarly focuses on West Coast and East Coast differences in executive compensation, however this time looking at the VP level across the functional organizational structure.  For purposes of this report, only companies who broadly fit the definition of “information technology” were used in the analysis, not including biotech, medical device/medical technology, or cleantech.

The titles looked at include the following–

Vice President Business Development

Vice President Engineering

Vice President  Marketing

Vice President Sales

Vice President Sales & Marketing

VP Software Development

VP Product Management

Note that below we’ve only included the analysis of the executive compensation data, in other words the deltas. If you’d like more detail and the information on which we based the analysis, please email damador@bsgtv.com with your name, title, company and business email address, and we can provide you with the baseline full report.

Do keep in mind that this is only one set of data. To draw the best comparables, it’s important to do all three data-grabs listed above. Also, this is a “blended” sample set of multiple venture-backed industry sub-sectors in the information technology category. Some industry sub-segments may pay more or less than others with further parsing.

West Coast Early vs. Later-stage Venture Capital-backed Companies

Cash compensation is almost always higher in later stage companies, and this is reflected in all 3 quartiles of data analyzed.  For West Coast venture-backed companies, the differences are $15,000 to $50,000 in most roles, with an average different of about $25,000.  The only exception is for the VP Sales/Sales Marketing role, where cash was significantly higher in later stage companies for these roles, ranging between $75,000 to more than $125,000 in the top quartile companies.

Conversely, equity is almost always higher in early-stage companies to offset the lower salaries referred to above.  For these West Coast companies, regardless of quartile, earlier-stage companies received on average ¼% to ½% more equity, with the biggest jump in VP Sales/Marketing, and lowest in the VP Engineering function.

East Coast, Early vs. Later-stage

East Coast compensation tells a different story from their West Coast counterparts.  Although cash compensation was similarly lower in early versus later-stage companies, East Coast executives of venture-backed companies didn’t see the “make-up” effect in equity.  In fact, equity appears lower in many of the quartiles compared, by as much as ½% comparing East Coast early versus East Coast later-stage.

East Coast vs. West Coast, Early-stage

Cash compensation, East versus West, shows that West Coast executives of early-stage companies more often than not earn more in base .  West Coast Engineering is $10,000-20,000 more in base, VP Marketing is up West over East by $10,000 to $50,000. VP Sales/Sales & Marketing is actually the one notably lower cash category where East Coasters are better off than West in the higher quartiles (but not the lowest).  As noted above, West Coast early-stage executives are compensated more favorably when it comes to equity than their East Coast brethren virtually across the board.

East Coast vs. West Coast, later-stage Venture Capital-backed Companies

As for cash compensation for later-stage companies East vs. West, a similar pattern existed being mostly lower than their West Coast counterparts, than its West Coast peers.  However, when looking at equity stakes in later stage companies East vs. West, the East Coast did better, often by ¼% to as much as ½%.

BSG Team Ventures Partner Mark Newhall: