Strategic Positioning Matters

“Art is not what you see, but what you make others see.”

—Edgar Degas

In the world of innovation, disruption is a term that is often used liberally. But what does it truly mean to disrupt? In essence, disruption signifies a profound shift — a change that significantly reshapes an existing market or industry, or perhaps even creates a new one. However, not all disruption is created equal. It’s essential to understand that disruption occurs in varying degrees. Some innovations refine and enhance, while others redefine and recreate. The distinction is critical. It influences everything from investment decisions to competitive strategies. To truly appreciate the depth and breadth of disruption, one must understand its different degrees.

Here we will explore the varying degrees of disruption, borrowing concepts from the world of biotech — best in class, first in class, first in modality — and extrapolating them to a broader context. We will then touch upon a rare, yet profound form of disruption, one that transcends modality to create entirely new categories. These degrees of disruption will offer a lens through which we can view and appreciate the magnitude of change that leading-edge innovation brings about, not just in biotech, but across all fields of science.

We’ll discuss them in depth a bit later, but for now you just need to know that the terms “first in class,” “best in class,” and “first in modality” are used to describe different types of therapeutic drugs. Here’s what each of them means:

• Best in Class: This refers to a drug that is considered the most effective or has the best safety profile among all drugs in the same class (i.e., drugs that target the same pathway or mechanism). While a best-in-class drug isn’t necessarily the first of its kind, it generally offers some advantages over the first-in-class drug, such as improved efficacy, fewer side effects, or more convenient dosing.

• First in Class: This refers to the first drug that targets a specific biological pathway or mechanism. Such a drug is often the first to demonstrate that modulating a new target or pathway can have therapeutic effects. Once a first-in-class drug is approved, it opens the door for other drugs that target the same pathway or mechanism.

• First in Modality: This refers to the first therapeutic developed using a new technology or approach. For example, the first RNA interference drug or the first gene therapy would be considered first in modality. This term is less commonly used than “first in class” or “best in class,” but it’s used to highlight groundbreaking innovations in drug development.

This exploration is not merely academic; it carries practical implications. For entrepreneurs, understanding these degrees of disruption can shape their innovation strategies and articulate their value proposition. For investors, it offers a framework to assess potential co-investors in the future, expected return, and expected time to liquidity event in an investment.

As we navigate this journey of understanding the degrees of disruption, remember that these are not rigid classifications but more of a spectrum. Innovations may blur the lines, embodying aspects of multiple degrees at once. This fluidity is part of what makes the realm of disruption so exciting and so unpredictable. The only constant in this world of disruption is change itself.

Best in Class

“Best in class” is the first stage on the ladder of disruption. This term refers to solutions or products that significantly enhance or improve upon an existing approach or technology. The distinguishing feature here is that these innovations operate within an established framework or modality. They don’t redefine the game; instead, they play it better. In the realm of biotech, best-in-class disruptions might involve a new drug that leverages established methodologies but achieves superior results. For instance, it might treat a particular disease more effectively, reduce side effects, or offer a more favorable administration regimen. In essence, it takes the familiar and makes it better.

I must mention here that the intersection of best-in-class innovations and personalization is a potent concept in the field of precision medicine. It represents the advancement of solutions that not only leverage superior science and technology, but also cater to the unique needs of specific patient groups.

This approach transcends the “one-drug-fits-all” methodology and moves toward tailored treatments, thereby delivering greater efficacy and impact. By refining best-in-class solutions to fit specific genetic profiles or patient demographics, we can magnify the potential of these innovations, further enhancing healthcare outcomes.

Of course, “best-in-class” disruption is a concept that can apply across industries and sectors as well. In the realm of software, a best- in-class innovation might take the form of a tool that performs familiar functions but does so more efficiently, more intuitively, or more powerfully. So, “better” is the keyword when we talk about best-in-class innovations.

These disruptions don’t rewrite the rules; they follow them more effectively. They present a significant step forward, but within the boundaries of an existing paradigm. However, as we ascend the ladder of disruption, we’ll see that some innovations don’t just play the game better — they change the game entirely.

First in Class

As we climb the disruption ladder, we reach the “first-in-class” level. This tier involves innovations that aren’t just better — they’re pioneering. First in class refers to products or solutions that initiate an entirely new class of technologies or products. They don’t just improve upon the old — they break new ground.

In the biotech world, a first-in-class disruption might involve a novel class of drug that treats a disease in a way that has never been done before. For example, monoclonal antibodies for autoimmune diseases represented a first-in-class breakthrough when they first emerged. These biological drugs harnessed the body’s own immune system to fight these diseases in a way that no other treatments had done before, fundamentally transforming the landscape of therapeutic strategies in that field. In this particular example, they were not new because they had been used before in oncology.

Regulatory hurdles arise largely due to the novel and often disruptive nature of first-in-class innovations. Existing laws and regulations might not fully anticipate or account for the implications of these new technologies, resulting in potential regulatory gray areas.

Here, it is imperative for companies to maintain an ongoing dialogue with relevant regulatory authorities throughout the development and deployment process. Involving regulatory experts early on, conducting pre-submission consultations, and obtaining clarity on the required evidence for approval can facilitate a smoother regulatory journey.

Also, ethical challenges are intrinsically linked to the breakthrough nature of first-in-class innovations. Novel technologies can profoundly impact societies and individuals, raising questions around privacy, consent, security, equity, and more.

Being “first in class” comes with both substantial opportunities and significant challenges. On the one hand, being a pioneer allows you to shape the market, establish the standards, and enjoy a period of limited competition. On the other hand, it also involves the challenge of trailblazing, convincing consumers or users to adopt a novel product or technology, and establishing a new market where none existed before. It also can give you a better liquidity event in terms of valuation.

Lastly, pricing for first-in-class products can be challenging. Since there’s no direct competition or comparable product in the market, setting a price that accurately reflects the value of the innovation while also being acceptable to consumers, insurers, and other stakeholders can be tricky.

Excerpted from Fast Forward Thinking: 40 Rules for Entrepreneurs and Investors in Medicine, Science, and Biotech by Luis Pareras, MD, PhD.