Biotech is venture's other major industry, and it works almost nothing like software. Value comes from binary scientific and regulatory events (a Phase 2 readout, an FDA decision). Revenue usually arrives after the venture investors have exited. The usual buyer is a large pharmaceutical company that needs to refill a pipeline facing patent expiries. The best biotech investors are scientists and drug developers as much as financiers. They build companies around a specific asset or platform, underwrite clinical probability and commercial value with rNPV, and plan the exit years before the data arrive. This section covers the operating model, the numbers, the venture-creation model, landmark cases, and the 2021–2025 boom, bust and partial recovery.
What the study covers
- 1Overview: how biotech venture differs
- 2Mechanics
- 3Key numbers
- 4The 2020–2025 cycle
- 5Landmark deals and cases
- 6Pitfalls
- 7How an expert thinks about it
- 8Glossary
Technical exhibits
Worked examples, checklists and case studies included with this study.
Rnpv and Venture Returns Worked Example
rNPV of a single asset at base-rate and differentiated probabilities; value step-up on Phase 2 data; Series A/B returns from a pharma acquisition with a CVR. All computed by script
Biotech Diligence Checklist
Science, clinical, regulatory, CMC, IP, commercial and financing diligence
Venture Creation and Financing Structures
Flagship/Third Rock/ARCH-style company creation, tranched rounds, asset-centric companies, China-sourced NewCos, royalty and structured financings