I’ve watched this happen enough times that I can now predict it from the pitch. A brilliant founder, a PI with a decade in the target biology, or a surgeon who has felt the exact clinical gap in their own hands, walks me through a genuinely good discovery. Then they show me the plan. Somewhere around slide nine there’s a target product profile (TPP), clean and confident, every field filled in. And when I ask where the numbers in that TPP came from, the honest answer is almost always the same: from them. From the team? From a few advisors who already agreed. The TPP is a mirror, not a map.

That’s the mistake I want to talk you out of. Not because customer research is a virtue, but because in this industry the cost of skipping it compounds in a specific and brutal way, and you don’t find out until the money to fix it is gone. Do the customer discovery upfront.

Now let me defend all of that. Ready to get into it?

Why this is worse in life sciences than anywhere else

In consumer or SaaS, a wrong read on the customer is somewhat recoverable. You ship, you watch behavior, you iterate weekly, you pivot before Series A. You are wrong on Tuesday and less wrong by Friday.

None of that is true for you, Mr. or Mrs. Founder in Life Sciences. Your feedback loop is measured in years and millions. By the time the market tells you your assumption was wrong, that the payer won’t cover it at that price, that the surgeon won’t change a workflow to save ninety seconds, that the ordering physician isn’t the one who feels the pain your test solves, you have already designed the trial around the wrong endpoint, or built the device around the wrong use environment, or written the whole regulatory strategy toward an indication no one will pay a premium for. The assumption didn’t just cost you. It got baked into a structure you now have to unbuild.

So the argument isn’t “talk to customers because it’s good practice.” It’s that the customer conversation is one of the only cheap experiments you have left. Almost everything else from here is expensive and slow. Voice of the customer, done before the TPP hardens, is a few dozen conversations and a few weeks. It is the highest-leverage spend in your whole plan, and it’s the one founders reflexively skip.

They skip it for reasons that feel like discipline, not negligence, which is exactly why it’s so hard to correct. Most of these founders are scientists or physicians, rewarded their whole careers for being right about mechanism. The customer question reads as lower-order, the soft stuff you bolt on once the real work is done. So it ranks below the science, and the early money runs out before it climbs the list. The funding norms bless this. At seed and Series A, no term sheet is gated on voice of the customer, so capital flows to the lab, where rigor is already rewarded and being right feels safe.

Then the clinician-founder’s trap, the one I see most: believing you already are the customer (or patient, provider and/or payer in the case of life sciences). A surgeon building a device knows the surgeon’s mind, maybe. But they’re the most capable, most motivated user in the market, an outlier, and they are not the payer, not procurement, not the hospital P&L. “I am a customer” quietly becomes “I understand the customers.” The advisory board finishes the job. Five eminent KOLs get excited; they say “this could change how we manage these patients,” and you walk out feeling validated. You weren’t. You were flattered by the least representative, least price-sensitive, most novelty-hungry people in the market. KOL enthusiasm is a real signal about scientific interest and close to worthless about adoption, and founders confuse the two constantly.

And the part nobody says out loud: some founders half-know. Voice of Customer (VoC) is slow, awkward, and ego-risky in a way the lab is not. The lab they control. The market is where a payer can tell them the thing they staked their raise on doesn’t clear the bar. The advisory board hands them the feeling of validation with none of that risk, so they take the cheap dopamine and skip the expensive question. That isn’t stupidity. It’s self-protection that gets very costly later, when being wrong is no longer cheap to fix.

“The customer” is a committee, and you’re only listening to one seat

Here is the single most expensive error, and it’s conceptual, not tactical. You keep saying “the customer” as if it’s a person. In life sciences, it is almost never a person. It’s a chain of people with different incentives, and the ones who love your product are frequently not the ones who decide whether it lives.

Think about who actually stands between your product and revenue. Think of the 3 P’s. The prescriber or the physician who orders. The patient who takes it or lives with it. The payer who decides whether it’s covered and at what tier. The provider institution whose P&L and workflow absorb it. The value-analysis committee that can quietly kill a device no clinician asked them to kill. The guideline bodies that decide whether you’re standard of care or an off-pathway curiosity. The referring physician upstream who controls whether the patient ever reaches the point where your product matters.

Failed launches almost always trace back to a founder who optimized for one seat and never talked to the others. The therapeutics founder who built a beautiful efficacy story and never modeled what the payer would demand, so the drug launches into a coverage fight it was never designed to win. The diagnostics founder whose test is elegant and reimbursed at a code that doesn’t cover the cost of running it, because no one asked how it gets paid for before locking the assay. The medtech founder who saved the surgeon ninety seconds but added cost to a bundled payment and a step to sterile processing, and learned too late that the person who says no isn’t the surgeon. The digital health founder whose engagement data is real and whose clinical need is real, who still has no buyer, because “patients would benefit” and “someone will pay a recurring fee” are different claims and only one of them was tested.

What good VoC actually looks like before the TPP exists

Early VoC is not market research. Market research quantifies a hypothesis you already believe; you survey two hundred physicians to size a number. That comes later. Pre-TPP VoC is qualitative, and its job is to find out which of your beliefs are load-bearing and which are wishes. You are not confirming the profile. You are trying to break it while breaking it is still free.

Practically, this is a few dozen conversations, deliberately spread across the committee rather than piled onto the seat you find most comfortable. Not twenty-five prescribers. Prescribers, yes, but also payers and medical directors, value-analysis people, nurses or techs who live in the workflow, and patients or caregivers where they hold real decision weight. The number matters less than the spread. Ten honest conversations across five stakeholder types will teach you more than fifty with your friends.

And they have to be run to disconfirm, which founders find hard, because you love your idea and you’re talking to people predisposed to be nice to you. Don’t ask “would this be useful?” Everyone says yes, and yes is worthless. Ask what they do today, step by step, for the patient your product is meant for. Ask what the current workaround costs them in time, money, risk, and reimbursement, because if it’s cheap and tolerable, you have no market no matter how much better you are. Ask what would have to be true for them to switch, and then to keep using it after the novelty wears off. Ask who else has to say yes. Ask what they’d compare it against, because their comparator is your real competitor, not the one on your slide. When someone gets enthusiastic, push harder rather than move on.

The signals you’re mining for are specific. How severe is the unmet need, really: a burning problem or a mild annoyance dressed up as one? Can you beat the current workaround on total cost, not just performance? Is there real willingness to switch, or polite interest that evaporates at the point of behavior change? Is there a reimbursement code, does it pay enough, or are you quietly inventing a new coverage category, which is a harder company than the one you think you’re building. Does adoption force someone to change how they already work, the tax that kills more good products than price ever does.

What this actually sounds like

Advice is easy to nod at and ignore. So here is what VoC produces when a founder does it, using a case I’ve watched play out in Alzheimer’s.

Picture an early-stage company with a blood-based test for early Alzheimer’s disease. The draft TPP, written before anyone left the building, read like this. Intended use: aid in the diagnosis of Alzheimer’s in patients with cognitive complaints. User: neurologist. Price: benchmarked to amyloid PET. Performance: sensitivity above all. Clean, confident, mostly wrong.

Then they did the work. Around thirty conversations across the committee. Here is what came back.

The community neurologist: “By the time these patients reach me, I already suspect Alzheimer’s. What I need is something the primary care doctor can run, so the right patients get to me sooner, and the worried-well don’t clog my clinic.” That one comment moved the intended user off neurology and turned the product into a triage tool, not a confirmatory one.

The primary care physician: “I’m not ordering a test when I don’t know what to do with a positive. Then what? Who do I refer to, and does anything change for the patient?” The unmet need wasn’t a diagnosis. It was an action pathway. Without one, the test never gets ordered, however good the assay.

The payer medical director: “Show me it cuts PET scans or specialist referrals. I don’t reimburse information that doesn’t change management.” That unhooked the price ceiling from PET’s sticker and tied it to the downstream cost the test could prove it removed.

The caregiver: “We spent two years and four doctors getting an answer. If this shortens that, I don’t care what you call it.” Time to diagnosis, not analytic performance, was the outcome that mattered to the person living it.

And a signal the science team had waved off: a false positive here doesn’t just trigger a confirmatory test. It tells a healthy person they’re developing Alzheimer’s. The harm is asymmetric, so the specificity target went up on purpose, even at a cost to sensitivity.

Five fields in that TPP changed. User: primary care, not neurology. Positioning: triage, not confirmation. Price: proven cost offset, not a PET benchmark. Minimum specificity: raised, for false-positive harm. Required evidence: changed management, not just accuracy. None of it was in the first draft. All of it would have surfaced anyway, later, in a launch that quietly missed, after the money was gone.

That is the whole point. Not a better research deck. A different, more defensible company.

The fields you’re not allowed to guess

Generalize that example and you get a rule. The TPP stops being a wish list and becomes an evidence document. Set from your science what your science settles: mechanism, core performance, the clinical claim you intend to prove. Everything else, founders assume, and shouldn’t.

Your price and the value story behind it belong to payers and budget holders, not to your model of what the science is worth. Your comparator is the one customers named, not the one that flatters you. Your minimum performance threshold, the point below which people stay polite and above which they switch, comes from the switching conversations, not from a round number. Your indication gets shaped by where the need was severe and the economics worked, usually narrower than where you started.

When founders do try, here’s how they still get it wrong

Some of you will do this, and do it badly, which can be worse than not doing it because now you have false confidence with a research gloss on it.

The most common failure is leading the witness: asking questions engineered to produce the answer you want, then recording the answer as evidence. The second is sampling only enthusiasts, going back to the same friendly KOLs and early adopters and generalizing from the most unrepresentative slice of the market to the whole. The third is treating your scientific advisory board as a customer panel. They are not your customers. They are brilliant, invested, and wrong about adoption for the same reasons you are. The fourth, the one that quietly ends companies, is skipping payers, because payer conversations are awkward and don’t hand you the validation that prescriber conversations do. In a lot of therapeutics and diagnostics, the payer is the customer that matters most, and the one founders avoid hardest. That is not a coincidence. It’s avoidance dressed up as sequencing.

None of this requires a consultant or a six-figure study. It requires three or four weeks and a genuine willingness to hear that the profile you love is wrong on a field that matters, while wrong is still cheap. The founders who do it don’t end up with a weaker plan. They end up with a narrower, sharper, more defensible one, and often a materially different product than the one they walked in certain about.

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Leave a comment

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

Problem selection is the highest-leverage decision a therapeutics company makes, and it’s usually made worse before the founder has the discipline to interrogate it, and while they’re still in love. You may be able to iterate your way out of a bad molecule. You cannot iterate your way out of a bad problem. Pick a disease with no tractable biology, no regulatory precedent, an undiagnosed population, and one plausible acquirer who isn’t buying, and no amount of execution saves you.

So treat the problem as a decision with dimensions, not a gut call you rationalize afterward. Here’s how I’d force the analysis.

Now let me defend all of that. Ready to get into it?

Scientific tractability

The question is not “is the biology interesting.” It’s “is this biology addressable with tools that exist, on a timeline my capital can survive?” Interesting and addressable are different axes, and founders conflate them pretty routinely.

The strongest signal of tractability is human genetic validation. When a loss-of-function or gain-of-function variant in a gene maps cleanly to a phenotype, nature has already run your proof-of-concept experiment in humans. PCSK9 is the canonical case where the genetics told you exactly what would happen if you knocked it down before anyone made an antibody. Programs anchored in human genetics fail in the clinic far less often than programs anchored in a mouse model and a hope.

The blind spot is assuming away delivery. A founder has a beautiful target and waves a hand at getting the payload to the tissue, across the blood-brain barrier, into cardiac muscle, past the liver tropism every systemic AAV shares. For CNS and non-hepatic indications, delivery is the program. If your thesis requires a delivery breakthrough that doesn’t yet exist, you don’t have a company; you have a research proposal.

The other blind spot is the graveyard nobody wants to name. Amyloid in Alzheimer’s absorbed billions and decades on a biology that turned out to be, at best, partially right and, at worst, a target that clears a biomarker without clearly changing cognition and the disease. If the field has tried your mechanism many times and failed, “we’ll do it better” is not a thesis. Explain what you know that the last ten teams didn’t.

Diagnostics that you should be able to answer:

Unmet medical need

“No approved therapy” is not the same as “unmet need,” and “approved therapies exist” is not the same as “need is met.” Founders get this backwards in both directions.

There are diseases with no approved drug that are mild, self-limiting, or manageable in which the unmet need is thin even though the shelf is empty. And there are diseases with a dozen approved drugs where patients still die on schedule: glioblastoma, metastatic pancreatic cancer, ALS. The label says “treatment available.” The real-world outcome says the need is nearly total. Severity times prevalence times the gap between standard of care and what patients actually need is the product you’re measuring, not the count of approved products.

Measure the standard of care honestly, which means measuring what it delivers in practice, not on its label. A drug approved on a statistically significant but clinically marginal endpoint is a weak incumbent even if it’s technically “approved.” Real-world adherence, real-world response rates, and real-world tolerability is your baseline, and it’s usually worse than the pivotal trial suggested.

The blind spot is the me-too dressed up as unmet need. A founder finds a crowded space, identifies a narrow subpopulation or a modest tolerability edge, and rebrands incremental improvement as an unmet-need story. Sometimes that’s a real business. But be honest with yourself about which one you’re building, because the financing, pricing, and competitive dynamics are completely different for “first meaningful therapy” versus “fourth entrant with a cleaner side-effect profile.” Investors don’t write checks (or rarely do) into incremental improvements.

Diagnostic:

Regulatory pathway

The regulatory pathway is not paperwork you deal with at the end. It determines your endpoint, your trial size, your timeline, and therefore your capital requirement. Two diseases with identical biology can differ by five years and two hundred million dollars purely on regulatory clarity.

What you want is precedent. A recently approved drug in your indication, or a closely adjacent one, tells you the endpoint FDA will accept, the trial design they blessed, and the effect size that cleared the bar. Oncology is comparatively legible here such as overall survival, progression-free survival, and objective response rate are well-worn, and there are established rules for when a surrogate supports accelerated approval. Neuropsychiatry is the opposite: endpoints are subjective rating scales, placebo response is enormous, and “clinically meaningful” is contested. A validated endpoint is one of the most valuable assets a program can inherit.

The blind spot is assuming the friendly path. Founders build financial models on accelerated approval as if it’s a checkbox. It isn’t. Accelerated approval requires a surrogate reasonably likely to predict benefit and a confirmatory trial you’re obligated to run, and the FDA’s tolerance shifted after the Aduhelm episode in Alzheimer’s, where an accelerated approval on amyloid reduction triggered a coverage fight with CMS and a lasting credibility cost. Sarepta’s eteplirsen cleared on a dystrophin surrogate over the objection of FDA’s own reviewers; that door is narrower now, not wider. Don’t model the best case as the base case.

Understand also that the designations founders chase such as orphan drug, breakthrough therapy, and RMAT, help at the margin but don’t change the physics of proving efficacy. They can shorten review and give you FDA face time. They do not lower the evidentiary bar for a real effect.

Diagnostic:

Patient population accessibility

You can be right about the biology, the need, and the pathway, and still die because you can’t find the patients. Enrollment is where beautiful theses meet operational reality.

The practical questions are: where are these patients diagnosed, who diagnoses them, who refers them, and how many trial-eligible ones actually exist. In rare disease, the world’s eligible population might be a few hundred people and you’re competing with two other sponsors for the same patients, at the same handful of centers of excellence, through the same advocacy foundations. Slow enrollment doesn’t just delay you; it burns your runway at full salary while nothing accrues.

The subtler trap is the underdiagnosed population. MASH (formerly NASH) has enormous prevalence, yet for years there was no non-invasive diagnostic that regulators trusted, so identifying and confirming patients required biopsy, a brutal enrollment tax. A disease can be common and still be operationally rare if the patients aren’t labeled. High prevalence on a slide means nothing if no referral pathway delivers diagnosed, eligible patients to a trial site.

Diagnostic:

Commercial structure

The economics have to support the science, and they have to support it through the specific machinery of how drugs get paid for, which founders routinely ignore until a banker forces the conversation.

Two forces dominate: who pays, and through what mechanism. An orphan indication can carry a price of hundreds of thousands to a few million dollars per patient per year precisely because the population is small and payers absorb it; that pricing is what makes ultra-rare economically rational despite the tiny population. A primary-care indication is the opposite world in which you’re fighting payers on formulary, coverage, and prior authorization at scale, as the GLP-1 obesity drugs have, where the clinical value is obvious, and the access battle is still brutal because the covered population is enormous.

Then there’s the mechanism nobody thinks is their problem until it is: buy-and-bill versus pharmacy benefit, one-time versus chronic dosing, whether value is captured by the manufacturer or leaks to a middleman. The one-time-cure pricing problem is real and unsolved . A curative gene therapy like the CRISPR-based sickle cell treatment priced north of two million dollars delivers a lifetime of value in a single administration, but payers budget annually and members switch plans, so nobody wants to pay upfront for a benefit that accrues over decades to someone else’s balance sheet.

And the cruelest commercial lesson: curing a disease can destroy your market. Gilead’s hepatitis C drugs cured patients at rates above ninety percent, representing a genuine medical triumph, but in doing so, shrank the treatable pool year over year, so revenue peaked and fell precisely because the drug worked. A durable business needs recurring revenue or a population that replenishes.

Diagnostic:

Competitive landscape

Counting competitors is the shallow version of this analysis. The real work is understanding the shape of competition and what winning even means in it.

Ask who can move faster than you with more money. A first-in-class lead is worth less than founders think if a large competitor can fast-follow with a better-tolerated or more convenient version and out-execute you on trials and commercialization. KRAS G12C was “undruggable” for decades, then two drugs arrived within roughly a year of each other, and the space went from empty to crowded almost overnight. Being first bought a narrow window, not a durable moat.

Watch the adjacent modalities, not just the direct ones. Your antibody against a target can be leapfrogged by a small molecule, an oral, a bispecific, or an entirely different mechanism that makes the target irrelevant. The checkpoint-inhibitor wave reshaped whole oncology subfields and stranded programs built on the prior standard. Competition doesn’t only come from people attacking your target; it comes from people making your target beside the point.

Define what winning looks like before you start, because “best-in-class” and “first-in-class” are different businesses with different economics. If the honest answer is “we’ll be the third-best drug in a crowded indication,” you need either a real differentiation thesis or a different problem.

Diagnostic:

Partnership universe

Every therapeutics company is financed and exited against a universe of potential partners and acquirers. If that universe is thin, you have a problem no science can fix because your investors are underwriting the exit, and a shallow buyer pool depresses valuation at every round.

Map it concretely. Which companies have a strategic reason to want this asset for their pipeline, a franchise to defend, or a hole to fill? Are they actively doing deals in this space right now, or did they exit it two years ago? A space with one logical acquirer is a monopsony, and monopsony is a terrible negotiating position; they can wait you out. A space with none is worse.

The blind spot is building something so novel or so niche that the natural-partner list has one name on it, or zero. Novelty is a scientific virtue and a financing liability at the extremes. The best problems sit where the biology is differentiated, but the strategic logic is legible to several credible partners who are visibly deploying capital.

Diagnostic:

Bringing it together

These dimensions are not independent, and the interactions are where judgment lives.

Tractable biology with broken economics is a common trap. It is an elegant program for an ultra-rare condition with no reimbursement precedent, where you can build the drug and never build the business. Enormous unmet need with intractable biology is the ALS and pancreatic-cancer story: the need pulls founders in, and the biology sends them home. A pristine regulatory path in a crowded indication means you can get approved and still lose commercially. Rarely does a single problem score high on all seven; the discipline is knowing which trade-offs you’re accepting on purpose.

Weight the dimensions to your actual situation. A lean team with limited capital should bias hard toward regulatory precedent, tractable and genetically validated biology, a findable patient population, orphan-style economics, and a deep partner universe. You cannot afford to be a pioneer on more than one axis at once. A well-capitalized team with a genuine platform can take more scientific risk, because they have the runway to retire it and the shots on goal to survive a miss. Your time horizon matters too: an asset-focused company needs a clean path to a single approval, while a platform company is really betting that the first problem is winnable enough to prove the engine.

The meta-point:

A self-assessment you can run this week

Take your current problem and force the answers. Score each dimension one to five, but don’t average them since averages hide the constraint that kills you.

On scientific tractability: what is the human evidence the target matters, and what is your named kill experiment? On unmet need: in one sentence a skeptical clinician would accept, how much better off is a patient if you succeed? On regulatory pathway: name three approved comparators and their pivotal endpoints, and state your own registrational endpoint and its precedent. On patient accessibility: how are patients diagnosed, what fraction carry the diagnosis, and how many eligible ones can you actually enroll against the competition for them? On commercial structure: who pays, through what mechanism, at what precedent-setting price, and does peak revenue justify the capital? On competitive landscape: who can beat you and what specifically is your moat? On partnership universe: five named acquirers, each with a recent deal that rhymes.

Now do the honest part. Circle your lowest score. That’s your binding constraint. If it’s a one or a two, your entire company is a bet that you can move that number, and every dollar and month should be aimed there first. If you can’t move it cheaply and early, you may be in love with a solution to the wrong problem.

The founders who build things that matter aren’t the ones with the cleverest molecules. They’re the ones who chose a problem where the biology was addressable, the need was real, the path was legible, the patients were findable, the economics closed, the competition was survivable, and someone credible wanted to own it and who knew, before they raised, exactly which of those was most likely to be false.

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Leave a comment

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

That framing costs founders more than many other early mistakes. Modality is not the downstream consequence of your science. It is the upstream decision that determines the shape of the business such as how much capital you need and from whom, how long until someone can tell whether you’re right, who regulates you and on what precedent, what you have to build with your own hands versus buy, what you can patent, whether you can ever sell a product yourself, and which pharma / life sciences companies will eventually want to own you. Get the molecule right and the modality-for-the-context wrong, and you can spend five years and a hundred million dollars building something that no investor wants to fund at the next round, and no acquirer knows how to buy.

I want to make the case plainly: modality is the single decision that most tightly couples the science to the business. Then I’ll give you a diligence checklist specific enough to actually answer.

Sound good? Let’s get into it.

Financing: modality picks your investors before you pitch them

VC is not modality-agnostic, no matter what a partner tells you over coffee. Capital pools organize around modality because the risk, timeline, and capital-intensity profiles are genuinely different, and the funds that understand one profile are often structurally wrong for another.

An oral small-molecule oncology company can reach a first meaningful clinical signal such as a Phase 1 dose-escalation with early efficacy hints on a relatively contained budget and a relatively conventional financing path. A seed and a Series A in the tens of millions can plausibly carry you to a readout that repositions the company. That profile fits a large universe of generalist biotech VCs and, later, crossover funds that want a clean clinical catalyst before an IPO.

A CAR-T or gene therapy company is a different animal all together, especially financially. You are building manufacturing before you have a product, your first-in-human data comes later and costs more to generate, and the capital required to reach a value-inflecting readout is materially higher, often multiples of the small-molecule case. That narrows your investor set to funds that underwrite platform and manufacturing risk, that have the reserves to follow their money through larger, later rounds, and that measure time-to-value in a way that tolerates a longer, lumpier curve. Approximately, the all-in cost to a first convincing cell-therapy readout can run several times that of a small-molecule equivalent. The exact numbers move with indication and year; the ratio is the point.

The failure mode is subtle. A founder raises a small-molecule-sized seed round from small-molecule-minded investors, then discovers the modality demands gene-therapy-sized capital. Now you’re under-capitalized for your own biology, your existing investors can’t or won’t fund the gap, and you’re marketing a raise to a room that was never going to write that check.

Regulatory pathway: different divisions, different precedent, different burden

Modality determines who at FDA reviews you and what they’ve seen before. Small molecules run through CDER; most biologics, cell and gene therapies run through CBER, which carries its own review culture, its own expectations, and a far thinner shelf of precedent for any given approach. “Thinner precedent” is not a minor administrative detail. It means more of your regulatory strategy is negotiated rather than inherited, more of your trial design is first-principles, and more of your timeline risk sits in interactions you can’t fully predict.

Accelerated pathways cut differently by modality too. A single-arm trial with a durable response endpoint can be a legitimate accelerated-approval strategy for certain cell therapies in refractory cancers precisely because the biology and the population support it. That same design is a much harder sell for a chronic small-molecule indication with available therapy. Meanwhile, the CMC burden scales dramatically with modality complexity. For a small molecule, CMC is real work but well-trodden. For a cell or gene therapy, CMC is often the critical path: your product is a process, comparability after any manufacturing change is a genuine scientific question, and the agency will hold you to it.

Where the risk actually sits

Every program has a dominant risk, and modality tells you where it lives.

In small molecules, the hardest questions are usually target and chemistry: is the target real, and can you get a molecule with the right potency, selectivity, and drug-like properties to engage it safely? In antibodies, target biology and developability dominate; the platform for making the antibody is comparatively mature. In cell and gene therapy, the target biology may be well understood. The risk migrates to delivery, manufacturing, durability, and safety. RNA therapeutics are the cleanest illustration of this migration. The chemistry of making an oligonucleotide or an mRNA is tractable; the field’s central problem for years was delivery, i.e., getting the molecule into the right cell type intact and at a tolerable dose. Lipid nanoparticles and conjugate chemistries reshaped what was fundable in RNA precisely because they moved the delivery risk from “unsolved” to “engineerable.”

Manufacturing and CMC: the moat or the millstone

For an oral small molecule, you will almost certainly use a CDMO, capital expenditure is modest, and scale-up is a known problem with known vendors. Manufacturing is rarely your differentiation and rarely your bottleneck.

For cell and gene therapy, manufacturing is frequently the whole game. Deciding whether to build in-house capacity or lean on a CDMO is a defining strategic choice with large capital and control implications. Building capacity is expensive and slow and ties up money you might rather spend on the clinic but process is product in these modalities, and a manufacturing capability that reliably makes a consistent, potent, scalable product can be the most defensible thing the company owns.

The same capability, half-built, becomes the liability that stalls your trials and scares your acquirers. Sophistication cuts both ways. The question is not “in-house or outsourced” in the abstract; it’s whether your specific modality makes manufacturing a source of durable advantage worth owning, or a commodity better rented.

IP: what you can actually defend

Composition-of-matter claims (a patent on the molecule itself) are the strongest, cleanest protection in the business, and small molecules and antibodies generally support them well. That clarity is a real strategic asset: acquirers understand it, and it maps to clean exclusivity.

Platform and process claims are a different bargain. A cell-therapy or RNA-delivery company often builds its defensibility around a platform such as a delivery system, an engineering approach, or a manufacturing process, rather than a single composition. Platform IP can be broader and more valuable when it works, because it throws off many products. It can also be harder to enforce and easier to design around, and process claims in particular are notoriously difficult to police because you can’t always see inside a competitor’s plant.

Commercialization: can you plausibly sell this yourself?

Ask early whether your company can commercialize alone, because the honest answer often reshapes the whole strategy. An oral drug for a large chronic population needs a large primary-care-facing sales organization, realistically a job for a big commercial partner, which points you toward a licensing or acquisition exit. A cell therapy for a refractory cancer is delivered at a limited number of specialized centers, to a small, concentrated patient population, at very high per-patient prices. A focused company can plausibly stand up that kind of commercial footprint itself, which changes both the exit logic and the valuation.

Site of care, distribution complexity, patient population size, and pricing model all fall out of modality. An in-vivo one-time gene therapy and a daily oral pill are not two versions of the same commercial problem. They are different businesses with different cost structures, different payer conversations, and different answers to “do we need a partner to reach patients.”

The acquirer landscape: who eventually buys you

Every founder should build with a clear-eyed view of who the strategic acquirers are in their modality, because pharma buys by modality and by stage, and the patterns are real.

Large pharma has spent heavily to build or buy positions in antibody-drug conjugates, in radiopharmaceuticals, in cell and gene therapy, and in RNA, often paying up for platforms and de-risked assets rather than early science. Deal structure follows modality and stage. A de-risked clinical asset tends to be bought outright or licensed with a large upfront and milestones. An earlier-stage platform is more often partnered with an upfront plus development and commercial milestones plus royalties, sometimes with the option to acquire later.

Talent: you are hiring the modality, not the idea

The team a small-molecule company needs and the team a cell-therapy company needs overlap far less than founders expect. A small-molecule company is weighted toward medicinal chemistry, DMPK, and translational biology. A cell or gene therapy company lives or dies on process development, analytical development, and manufacturing leadership, often before it has a single patient dosed. Hiring a brilliant clinical and discovery team while under-hiring process and CMC leadership is one of the most common and most expensive organizational mistakes in the high-complexity modalities.

A founder’s diligence checklist

Work through these before you commit. They’re written to be answerable.

Biology and target

• What is the dominant risk in this program and does my chosen modality reduce that specific risk or add to it?

• Is the target’s biology best engaged by this modality, or am I choosing the modality I know how to make rather than the one the target demands?

• What would falsify my core hypothesis, and which modality lets me run that experiment soonest and cheapest?

Modality–disease fit

• Does the disease’s population size, severity, and standard of care support this modality’s cost and delivery model?

• Does the indication support an accelerated or single-arm path in this modality, or am I signing up for a large, long, randomized trial?

Capital and investors

• What is the minimum capital required to reach the first value-inflecting clinical readout in this modality, and does that number match the round sizes investors in this space actually lead?

• Which specific funds have led rounds in this modality at my stage in the last few years, and does my capital plan fit how they reserve and follow?

• How many financing rounds and how many years to that first inflection, and can my likely syndicate carry the whole distance?

Regulatory and clinical

• Which FDA / Regulatory division reviews this modality, and how much usable precedent exists for my specific approach?

• What is the CMC burden on my critical path, and have I resourced it as a gating risk rather than an afterthought?

• What comparability exposure do I take on if I change my manufacturing process mid-development?

Manufacturing

• Is manufacturing a potential source of durable advantage in this modality, or a commodity I should rent from a CDMO?

• If I build in-house, what capex and timeline does that add before first-in-human, and can I fund it without starving the clinic?

• Who are the credible CDMOs for this modality, what is their capacity and lead time, and what happens to my program if they slip?

IP and competition

• Can I get composition-of-matter protection, or is my defensibility a platform or process story and how enforceable is that in practice?

• Who else is working this modality against adjacent targets, and how much of my value can a patent actually fence off?

Team

• What are the three roles this modality makes mission-critical, and have I hired or scoped them, especially in process and CMC?

• Am I building the org chart the modality demands, or the one that mirrors my own scientific background?

Exit

• Which specific pharma or life sciences companies are active buyers in this modality, at what stage do they transact, and what deal structures dominate outright, upfront-plus-milestones, or platform partnership?

• Does my capital plan carry me to the stage at which those buyers actually pay, or does it strand me one readout short?

• Can this company plausibly commercialize alone, and if not, is the partner-or-sell path I’m implicitly choosing the one my modality and cap table actually support?

The bottom line for founders

The molecule or approach is the beginning of the conversation, not the end of it. The modality you choose sets the capital you’ll need, the investors who can fund it, the regulator who’ll judge it, the factory you’ll build or rent, the patent you can defend, the patients you can reach, and the acquirer who’ll eventually want it. Choose it as deliberately as you chose your target. The founders who struggle most are rarely the ones whose science was wrong. They’re the ones whose modality was right for the biology and wrong for the business they could actually build.

Decide that on purpose, at the start, when it’s still cheap to change your mind.

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Leave a comment

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

On a Monday morning, in a conference room you will never see, a partner you have met twice will present your company to a room full of people trained to kill it. Whether your raise survives that meeting was mostly decided the week before, by what you put in your champion’s hands.

This is the back half of the venture funnel, and it behaves differently from the front. At the top of the funnel you are being filtered. Ilya Strebulaev’s research at Stanford puts numbers on how hard: a healthcare VC funds about 1 in 78 companies reviewed, and roughly 70% die at the initial screen. But from partner review onward, the work changes character. You are no longer trying to be noticed. You are supplying ammunition to people who will argue about you in your absence, and then, if you have run the process correctly, choosing among them.

Let’s get into it and allow me to make the case!

The Monday meeting, and the collapse that follows

Say your first meeting went well. Coffee or a Zoom, maybe no slides, informal only on the surface. The entire time, Strebulaev warns, you were being evaluated against thousands of teams and against the investor’s pattern of what success looks like. The investor was deciding one thing: whether to escalate.

Because the next stage is where the funnel collapses hardest. Only about 10 of the original 100 survive partner review, roughly a third of those who got a meeting. This is the Monday partner meeting, built around a concise investment memo and often a live presentation to the whole partnership. And bringing a deal to partners is not a decision the sponsoring investor takes lightly, because their own reputation inside the firm rides on it. Nobody wants to be the partner who wasted everyone’s Monday on a weak deal.

That last sentence is the key that unlocks this stage, and it is doubly true in life sciences. The partner who champions you has to defend your science in front of colleagues, some of whom have run drug-development programs and will probe trial design, enrollment assumptions, CMC readiness, regulatory strategy, and IP with the specific skepticism of people who have been burned before.

Your job between the meeting and the Monday is to arm your champion. Founders who understand that they are equipping an advocate, not delivering a pitch, are the ones who survive. Anticipate the objections that will come up in that room and hand your sponsor the answers before they need them: the freedom-to-operate analysis, the KOL who will take a diligence call, the comparator data that explains your indication choice, the manufacturability read that shows you have thought past the science and toward a product.

Strebulaev’s framing is exactly right and worth memorizing: at this stage you are helping prep a memo someone else will write about you, to people you may never meet.

Diligence, where biotech and software stop resembling each other

For every five deals that enter due diligence, Strebulaev finds, fewer than two come out the other side with a term sheet. In software, diligence is customer calls, cohort retention, a code review, a look at the financials. In life sciences, “comprehensive” means something else entirely, and it is where the two worlds fully part.

Therapeutics diligence lives on the strength of the biology and the credibility of the plan to test it. Investors and their advisors will pressure-test target validation and mechanism, the translatability of the animal models, the quality and reproducibility of the preclinical package, the composition-of-matter IP and patent term, the regulatory pathway including whether you have a shot at orphan or breakthrough or accelerated routes, the CMC and manufacturability of the modality, and above all the clinical trial design: the endpoint, the powering, the comparator, and whether the trial can actually enroll. They are underwriting a 7-to-12-year path to exit with a binary readout somewhere in the middle, not an ARR curve that compounds.

Medical devices shift the weight toward regulatory classification, whether you are looking at a 510(k), a De Novo, or a full PMA, and toward the reimbursement question that kills more devices than the FDA does. Diagnostics live and die on analytical and clinical validation, the LDT-versus-IVD regulatory posture, and again reimbursement, the CPT and PLA coding and coverage path that determines whether a great test ever gets paid for. Tools companies come closest to the software model, judged on commercial traction and pull, which is often why they clear diligence fastest.

The founders who make it through are not the ones with flawless data. Nobody has flawless data at this stage. They are the ones who built the data room before it was asked for, who know exactly which of their assumptions are load-bearing and have a defensible answer for each, and who present risk candidly with a plan to retire it rather than papering over it. Every artifact you have prepared, the freedom-to-operate opinion, the KOL reference list with people who actually pick up the phone, the regulatory rationale written down and ideally informed by real FDA interaction, is time handed back to an investor who has fewer than two of five reasons to say yes. Time is the thing the entire funnel exists to ration.

The term sheet is a handoff, and the leverage flips

Here is the fact that should reorganize how you run your entire raise. It takes 1.7 term sheets, on average, to produce one investment. The ratio is 1.5 at the early stage and 2.3 at the late stage, because later-stage companies are more visible, offer less proprietary access, and attract more competing offers. Roughly four in ten offered term sheets are declined or lost.

The reason that number exceeds one at all is that the term sheet is a handoff, not a finish line. Up to that moment, you were convincing the investor. The instant the term sheet lands, you decide, and the leverage is yours.

The operational instruction hiding in “1.7” is that a single term sheet is a fragile outcome, and you should be engineering for more than one. That means running an actual process, not a sequential trudge through investors one at a time. Sequence your outreach so that your top targets reach diligence in the same window, because term sheets that arrive together are the only ones that create real competitive tension. In the dense, gossip-rich life sciences world, this is delicate, since your investors likely know each other and may want to syndicate, but that same density is what lets a real multi-party process move fast when a company looks hot. The goal is not to manufacture fake urgency, which experienced biotech investors smell instantly and punish. The goal is to have your milestones and your data land such that more than one credible fund reaches conviction close enough together that you are choosing, not begging.

Then there is the preemptive term sheet, and Strebulaev’s read on it is among the most valuable signals a founder will ever receive. Occasionally an investor offers a term sheet before formal diligence, specifically to lock up the deal. These offers are exclusive: sign, and you are obliged to negotiate in good faith and not shop the round. The trade-off is real. A bird in the hand, one workable signed term sheet, beats the mere prospect of several. But generating multiple term sheets improves your terms and, in life sciences especially, improves your odds of landing an investor who actually fits the decade you are about to spend together. What a preemptive offer tells you, unmistakably, is that a sophisticated investor believes you are about to be hot. That is information you paid nothing for. Ask why they are preempting. The answer tells you what they see that the market is about to see.

The takeaway: the champion kit and the process rules

Two work products, both built before you need them.

The “champion kit”, delivered to your sponsor before their Monday meeting:

1. The freedom-to-operate analysis, done, not promised.

2. Two or three KOLs who will take a diligence call, named, briefed, and willing, because in a world of binary outcomes the credibility of your validators is part of your asset.

3. The comparator data behind your indication choice, so your champion can defend why this indication first without calling you.

4. The manufacturability and CMC read, showing you have thought past the science toward a product.

5. The pre-written answers to the three hardest objections you would raise against your own company. Your champion will hear them all. Decide whether they hear them armed.

The process rules, set before your first outreach:

1. Sequence for simultaneity. Stagger your outreach so top targets enter diligence in the same window. Term sheets that arrive months apart are not leverage, they are separate negotiations.

2. Match the investor to the decade, not the round. A dedicated life sciences fund whose current thesis and stage fit, not a generalist chasing the biotech window, and not a fund whose last three checks tell you your deal is off-thesis.

3. Plan for 1.5 to 2.3 term sheets, because that is what the data says a real raise requires, and build your milestone timing to make it possible.

4. If a preemptive term sheet arrives, treat it as information before you treat it as an offer. Ask why. Then decide with the whole map in view.

How you earn the first meeting is covered in the earlier installments of this series: the five load-bearing facts that survive a thirty-second screen, and the access map that gets them read. This piece is about what happens after, and the discipline is the same one that runs through the entire funnel. Life sciences venture rations the scarcest thing the investor has, which is time and conviction. The founders who win make it cheap for an investor to reach yes and expensive to say no.

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory, and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

Certain venture firms like Flagship Pioneering build companies inside its own walls. Third Rock Ventures incubates. Neither firm is likely waiting at the top of a funnel the way software VCs wait, sifting inbound for the occasional gem.

That is a structural fact worth internalizing before you plan a raise: a meaningful share of the best-funded therapeutics companies were not sourced from outside deal flow at all. They were originated inside the fund. If your mental model is “I will get into their inbound funnel and compete on merit,” you have already misjudged how some of these firms actually generate deals. I say this based on what I have witnessed with these top-tier firms.

So before we talk about pitching anyone, we need to talk about how deals actually arrive. Because in life sciences, the sourcing terrain is smaller, denser, and more mappable than founders assume, and every feature of it can be worked.

Let’s get into it and allow me to make the case!

The numbers on how deals arrive

Ilya Strebulaev’s research at Stanford, which found that a healthcare VC reviews about 78 companies for every one funded, is emphatic that sourcing is where many VCs believe their real edge lives. I agree. A typical active early-stage firm sees roughly 1,000 opportunities a year. More than 60% of deals are not proprietary, and roughly 60% arrive through professional networks or through proactive outbound that still terminates in a warm introduction. Even the “outbound” channel, where an associate builds a thesis, maps every company in a narrow vertical, and cuts the list to a dozen, ends in a network intro to each one.

Life sciences intensifies every part of this. The investor universe is smaller, more specialized, and far more relationship-dense. In therapeutics, the serious early-stage capital concentrates in a set of dedicated firms whose names any operator can recite: Flagship Pioneering, Third Rock Ventures, ARCH Venture Partners, Atlas Venture, Versant, RA Capital, OrbiMed, Sofinnova, 5AM, and a handful of others, plus the crossover and generalist money that comes and goes with the public window.

Map the syndicate, then work backward

The density of this world cuts both ways. The same small number of people show up at the same conferences, sit on the same scientific advisory boards, and co-invest in the same syndicates. Strebulaev’s SelfScore example makes the mechanism vivid: an investor puts in a real check, then introduces the company to a second investor they have syndicated with before, who brings in a third. Each introduction is backed by money, which is what makes it credible.

In life sciences, those syndicate chains are shorter and more legible than in tech. If you can map who co-invests with whom, you can work backward to the one warm introducer whose vouch actually moves the investor you want.

And the best warm intro in this world is rarely another founder. It is a respected scientific voice. A well-known KOL in your indication, a translational investigator whose lab the investor already trusts, a former CSO the fund has backed before, an ex-portfolio-company CEO. Strebulaev’s rule that it is the quality of the warm intro that matters is sharper in biotech than anywhere, because the intro is not just opening a door. It is a first, informal piece of scientific diligence. When a KOL the investor respects says your mechanism is real and your team can execute, they have done the investor a favor that is expensive to replicate.

That is the intro to chase.

The cold pitch works, if you earn it

Now the part of Strebulaev’s research that founders most need to hear and least believe. About one in ten deals starts with a cold call.

Investors will tell you cold outreach does not work, and then Strebulaev’s team tested it. They sent short cold emails to angels and VCs, from fictitious founders, with deliberately imperfect fits on geography and industry, plenty of them surely lost to spam. Nearly 10% of investors responded with interest to at least one email. The per-pitch rate was lower, over 4%, but that still amounted to nearly 3,500 interested replies. And the distribution is the real lesson: of the 50 pitches used, the strongest five drew a 13% response rate overall and 17% from VCs specifically.

One in six (17%) venture capitalists responded to a cold pitch from a stranger, when the pitch was good enough.

Translate that for life sciences and you get a rule with a sharp edge. Your cold email has to carry the load a demo carries in software, because the investor cannot fall back on “let me just try the product.” The cold pitch that works in biotech is almost never “I have a promising platform.” It is “we have generated the following piece of data that de-risks the following mechanism in the following indication, our IP is composition-of-matter filed, and we are raising to reach the following milestone.” A single unambiguous data point, the kind an investor can evaluate without a meeting, is your version of the up-and-to-the-right chart.

Founders without a network are not locked out of biotech venture. They are locked out unless the pitch is good enough to survive a scientific reader’s cheap filter cold, and most cold pitches are not, which is exactly why the ones that clear the bar get one-in-six response rates.

The quieter door: ask for advice, eighteen months early

There is a second door, and it is the one I push first-time founders toward. Strebulaev quotes the investor Scott Sandell: “if you ask for money, VCs give advice; if you ask for advice, VCs give money.” In life sciences, where value-inflection milestones are visible years in advance, this is not a cute aphorism. It is a fundraising strategy with a calendar attached.

Go to the investors you want eighteen months before you need them, when you are not raising, and ask their read on your indication strategy or your regulatory path. You get real input, you get remembered, and when you do raise, you are not a cold email. The best day to start that relationship, as Strebulaev’s co-teacher Brian Jacobs tells his students about building any network, was yesterday.

Scouts, and the one partner who matters

Founders always ask whether it is worth meeting the junior person at a big fund. Strebulaev’s answer is yes, because associates and principals function as deal scouts. They cannot write a check, but they can carry you to the partner who can. His caution matters just as much: incentives drive behavior, and a junior investor’s incentives are tangled up with their own reputation and standing with senior partners, not purely with returns. So help them. Give a scout the clean, shareable version of your story that makes them look good when they walk it upstairs. In life sciences, the scout is often scientifically trained, sometimes an MD or a PhD, and a substantive technical conversation with them is not a consolation prize. It is a genuine evaluation and a genuine ally in the making.

Underneath all of it is the fact Strebulaev names plainly: the fund invests, but your long-term relationship is with one partner. In biotech, that partner will very likely take a board seat and sit across from you through years of clinical risk. Figuring out which partner in the firm owns your space, and whether you would actually want them in the room when a trial reads out ambiguously, is not diligence you do after the term sheet. It is diligence you do before you pick who to chase.

The takeaway: build the access map before you build the deck

Four moves, in order, starting now:

1. Map the syndicate. List the 15 to 20 funds whose thesis and stage actually fit you. For each, identify the partner who owns your space, then trace their last several deals to see who they co-invest with. The map tells you which single introduction unlocks multiple funds.

2. Identify one scientific introducer per target. Not the most famous name you know. The KOL, investigator, or former portfolio executive that specific investor already trusts. One credible scientific vouch outweighs five founder intros.

3. Start the advice conversations eighteen months out. Two or three investors from your map, approached with a real question about indication strategy or regulatory path, no ask attached. Put it on the calendar like a milestone, because it is one.

4. Reserve cold outreach for targets with no path, and only fire when armed. A cold email without a single unambiguous de-risking data point is a spam filter’s problem. With one, you are in the population that gets one-in-six response rates.

What that email must contain, fact by fact, is the subject of the first installment in this series. What happens after an investor bites, when your deal has to survive a Monday partner meeting and a diligence process that does not resemble software’s, is the third.

The sourcing terrain in life sciences is small enough to map. So map it. Merit gets you through the funnel, but the map gets you into it.

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Leave a comment

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory, and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

A healthcare venture capitalist reviews about 78 startups for every one they fund. That number comes from Ilya Strebulaev’s research at Stanford, and it is a piece of arithmetic a biotech founder should hold in their head before they raise. The all-industry average is 101 companies per deal. For IT investors, it climbs to roughly 150. For early-stage investors, about 120. Healthcare sits at 78, and Strebulaev is direct about why: healthcare is harder to evaluate, and there is a smaller universe of healthcare founders to begin with.

Read that the wrong way and you feel encouraged. Seventy-eight is better odds than 150, so a therapeutics founder faces a shorter line than a SaaS founder. That is not how the machine works. The funnel is narrower in life sciences not because the filter is gentler but because the thing being filtered is more expensive to assess and rarer to find. A generalist can size up a seed-stage software company from a demo and a growth chart in an afternoon. Nobody sizes up a preclinical oncology asset in an afternoon. The 78 is smaller because each of those 78 costs the investor more to look at. Same brutal ratio, different physics.

Let’s get into it.

I have watched founders with strong science die at the top of this funnel, and almost none of them died because the science was bad. They died because they misread the machine. So let me show you the machine’s first and cheapest gear, because that is where seven of every ten companies are eliminated.

The funnel is a time-allocation machine

Start with the single most useful idea in Strebulaev’s research: the funnel is a time-allocation machine, not a quality-detection machine.

That distinction should reorganize how you prepare. VCs report spending about 15 hours a week sourcing and screening deals, second only to the 18 hours they spend helping the companies they already own shares in. Every stage of screening costs the investor dramatically more time than the stage before it. So the cheapest filter has to do the heaviest lifting. That is why roughly 70% of opportunities die at initial screening, usually within minutes, no deeper than page 5 of the deck, often without a meeting at all.

Sit with the implication. The screen that kills most companies is not a considered judgment about your science. It is a triage decision about the investor’s calendar. The investor is not asking “is this good?” They are asking “is this worth hours?” Those are different questions, and founders who prepare for the first one keep failing the second.

That is not cynicism. It is arithmetic.

What the cheap filter scans for in life sciences

For a software deal, the cheap filters are traction and team. Is the line going up and to the right, and have these people done it before? For a life sciences deal, the cheap filters are different, and if you do not know what they are, you will trip one without realizing it.

In the first minutes, an experienced biotech investor is scanning for a small set of high-signal facts. Is the mechanism of action clear and plausible? Is the indication one where the clinical and regulatory path is legible? Is there a defensible IP position, or is this a me-too with a method-of-use patent and freedom-to-operate problems? Is the ask matched to a real value-inflection milestone? Get any of those wrong in your first paragraph and you are in the 70% screen failure group, and you never find out why.

A tools or diagnostics founder should lead with something closer to a commercial signal, because for tools the investor is often underwriting something that looks more like recurring revenue than a binary readout. Know which business the investor thinks you are in before you decide what goes first.

The fundable increment of risk

There is a deeper discipline underneath the screen, and it separates the funded few long before diligence starts. I call it selecting a fundable increment of risk.

The founders who clear the screen can answer, in one sentence, what the next tranche of capital buys in terms of de-risking, denominated in a specific value-inflection milestone rather than a runway of months. “Eighteen months of runway” is an operating statement. “Through the IND and six months of Phase 1 safety data” is an investment thesis. The screen can tell the difference in seconds.

The same discipline applies to indication choice. The 1% have chosen an indication and a lead asset for fundability, not just for medical impact, picking the path where the clinical and regulatory story is legible and the first readout is both meaningful and affordable. That choice is visible on page one of a deck. So is its absence.

None of this is a substitute for the science. The best science is table stakes, and plenty of excellent science dies in the 78. This is the packaging that lets good science survive a filter built to reject 77 of 78 companies as economically as possible.

The takeaway: the five load-bearing facts

The email or first page that reaches a life sciences investor has to survive thirty seconds, and in those thirty seconds it has to answer the questions that specific investor uses as their cheap filters. Not the story of your science. The load-bearing facts:

1. Modality and mechanism. What it is and how it works, in plain declarative language.

2. Indication, and why that indication first. The fundability logic, not just the unmet need.

3. The single hardest piece of de-risking data you have generated. One unambiguous data point an investor can evaluate without a meeting.

4. The IP posture in one line. Composition-of-matter filed beats a paragraph of hedging.

5. What the round buys. Denominated in the next value-inflection milestone, not months of runway.

Before your next investor email goes out, run this test: hand your first page to an investor-scientifically trained reader who has never seen your company, give them thirty seconds, and ask them to recite the five facts back. If they cannot, the investor you intend to target will not likely either, and the investor will not tell you.

The point is not to compress your life’s work into a paragraph. The point is to hand the investor the exact facts they were going to look for anyway, so their cheap filter comes back “escalate” instead of “pass.”

Surviving the screen assumes your email reaches the right reader in the first place. That is a sourcing problem, and in life sciences the sourcing terrain is stranger than most founders realize, including the fact that some of the best firms do not read inbound at all. That is the second installment.

For now, do one thing. Rewrite page one until the five facts survive thirty seconds. The funnel does not read page fourteen.

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort.

Leave a comment

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory, and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

I did neither. I asked her how much cash she had in the bank, whether her spouse knew she was thinking about this, and what she thought the business and product would actually be in eight years. She didn’t have clean answers to any of the three, which is normal, and which is exactly why I’m writing this.

Most of what gets written for aspiring biotech founders is either a pep talk or a term-sheet glossary. You don’t need either. You know the science. You’ve probably read a hundred pitch decks. What you haven’t done is sit with the honest cost of the thing you’re contemplating before you sign the incorporation papers, and it becomes very real. So let’s do that. This is the audit I wish more advisors like myself walk others through before they quit their $250,000 salaried position.

Ready to get into it?

First, the money question nobody wants to say out loud

How long can you personally go without a paycheck?

Not the company. You. If the honest answer is “three months,” you are not ready, and no amount of enthusiasm changes that. Founding a biotech is a slow-motion act of financial exposure, and the first casualty is your own income.

Here’s the uncomfortable shape of it. Before you raise anything, you are burning your own savings, and you’re doing it while working harder than you have in your life. After a pre-seed or seed round, most scientific founders I know pay themselves somewhere between nothing and roughly $60K for the first twelve to eighteen months. I’ve seen founders take zero for a year because every dollar of a $1.5M pre-seed that goes to salary is a dollar that isn’t buying antibodies or paying the CRO. Post-Series A, when you’ve raised real money and have a board watching your burn, founder-CEO comp tends to land in a range that’s still well below what you’d make as a VP at an established company. You will watch people you trained pass you in take-home pay for years. If that thought makes you flinch, sit with the flinch. It’s telling you something real.

Now layer your obligations on top. A mortgage doesn’t pause because you’re pre-revenue. Neither does a kid’s tuition, an aging parent, student debt from a PhD and an MD, or the simple fact that in the US your health insurance is often tied to the job you’re about to quit. I am not going to tell you a family is a reason not to do this. I’ve watched parents of three build extraordinary companies. But I will tell you that your obligations set your true risk tolerance, and you should calculate it coldly rather than pretend it away. Founders who lie to themselves about their runway make panicked decisions eighteen months in, and panicked decisions are how you take a bad term sheet or hire the wrong person or pivot for the wrong reason.

The clean version of the question: if this company pays you nothing for two years and then fails, are you and the people who depend on you going to be okay? If yes, keep reading. If no, keep reading anyway, but read it as a plan for later.

Why biotech is not software, and why that changes everything

I need to be blunt here because a lot of first-time founders come in with instincts borrowed from tech, and those instincts will hurt them.

In software, a couple of engineers and a laptop can get to something a user touches in a few months. Capital mostly buys speed. In biotech, capital buys permission to find out whether biology agrees with you, and nature takes its time and doesn’t negotiate. Your milestones are physical events. A construct has to express. An animal study has to read out. A batch has to be made under conditions a regulator will accept. Each of those eats months and real money, and you cannot compress them by working weekends.

So the capital requirements are a different order of magnitude, and they’re front-loaded against uncertainty. A realistic path to a Series A in therapeutics usually means you’ve raised somewhere in the low single-digit millions across pre-seed and seed, spent most of it generating a package of in vivo data that de-risks your core thesis, and only then earned the right to ask for the $15M to $50M+ that a proper Series A represents. That seed money doesn’t get you to a drug. It gets you to the next data point that determines whether anyone will fund the drug. You are, functionally, in the business of buying down risk one expensive experiment at a time.

Before any of that, there’s the burn nobody budgets for. Incorporation and the early legal work. A patent strategy, which in biotech is not optional and is not cheap; provisional filings are manageable, but the real cost arrives as you convert and prosecute across jurisdictions, and it compounds. Lab space or CRO deposits. The first freezer. Insurance. You can easily spend real money before you’ve raised a dollar, and that money is almost always yours or comes from friends and family, which means it carries emotional weight as well as financial weight.

Where the first check actually comes from

Your first outside money will most likely come from one of a few places, and each wants something different from you.

University tech transfer is where it starts if your invention came out of an academic lab, and you need to make peace with that conversation early. The university likely owns the IP you’re building on. The license terms you negotiate with them will follow the company for its entire life, and I have watched otherwise beautiful companies get strangled by a greedy or clumsy license signed by a founder who was too eager to just get going. Get help with that conversation. It is one of the highest-leverage negotiations you will ever do, and you’ll do it when you know the least.

Accelerators and incubators, some of them backed by the big venture firms, will give you a small check, lab space, and a network in exchange for equity and your time. For a scientist with no business network, that trade is often worth it, because the network is the actual product. Seed funds and specialist biotech angels write the early checks that get you to your first real data; they expect you to be coachable, honest about risk, and clear about the single experiment that matters most. And there’s non-dilutive money, which deserves its own paragraph.

Grants are not free money, but they’re close

SBIR and STTR grants, foundation money tied to a specific disease, translational funds inside universities: this is capital you don’t give equity for, and in a capital-intensive field that is enormously valuable. I push almost every early founder to take non-dilutive funding seriously, because a well-timed grant can fund a whole data package without costing you a point of ownership.

The tradeoff is real, though. Grants are slow. They’re written on the government’s or a foundation’s timeline, not yours, and the reporting burden is not trivial. They can also pull your science toward what’s fundable rather than what’s commercially decisive, and those are not always the same experiment. Used well, non-dilutive money extends your runway and strengthens your hand with investors. Used as a crutch, it turns you into a grant-writing shop that never becomes a company. Know which one you’re doing.

Now the harder audit: is this a company or an experiment?

This is the question I care about most, and it’s the one scientists get wrong most often.

A discovery is a fact about the world. A company is a thesis about a product. They are not the same thing, and the gap between them is where most founder dreams quietly die. “We found that inhibiting this target does something interesting in a model” is a paper in a journal. “We can make a molecule that hits this target, that we can manufacture, that gets to the right tissue, that helps a specific patient more than what they have today, and that someone will pay for” is the beginning of a company. Every clause in that second sentence is a place you can fail, and none of them are the part you find intellectually exciting.

Be honest about whether your science is load-bearing enough to hold a decade of that. A lot of beautiful biology makes a terrible company because there’s no path from the finding to a product a patient uses. That’s not a failure of the science. It’s a failure of fit, and it’s better to learn it now than after you’ve spent four years and other people’s money finding out.

Founder-market fit, and the cofounder you actually need

Investors bet on people before they bet on data, especially at the seed. So ask yourself, without flattery, whether you are the person who can raise this money and recruit the people to execute. Do you have the domain depth to be believed? The network to get the meetings? The credibility that makes a great chemist take a pay cut to join you? If the honest answer is that you’re brilliant at the bench but nobody outside your subfield has heard of you and you don’t know a single investor, that’s not disqualifying, but it tells you what your first job is: closing those gaps, often by finding a cofounder who has what you don’t.

On cofounders, one strong opinion. The scientist-plus-operator pairing is common for a reason, but the label matters less than whether you’ve actually stress-tested the relationship before you’re legally married to it. Don’t cofound a company with someone you’ve only had exciting whiteboard sessions with. Work on something hard and boring together first. Disagree in front of each other. See how they behave when money is tight and a decision is genuinely 51/49. Talk about equity split, roles, and what happens if one of you wants out, and talk about it when it’s awkward rather than after it’s a lawsuit. The cofounder breakup is one of the most common ways early biotechs die, and almost all of them were predictable if anyone had run the test.

The identity shift you’re not budgeting for

Here’s the part that surprises people, and it always fascinates me. The hardest cost of founding wasn’t financial. It was who they had to become.

You are a scientist. Being a scientist is probably central to how you understand yourself. The moment you become CEO, you start doing less and less of it. You will not be at the bench. You will watch other people run your experiments, sometimes worse than you would have, and you will have to let them, because your job is now the whole company and not the assay. You’ll publish on the company’s timeline, which sometimes means not publishing at all, or watching a competitor put out the paper you could have written. For a lot of scientists, that particular loss is genuinely painful, and it’s worth grieving honestly rather than pretending you won’t miss it.

And you’ll start doing things you may have quietly looked down on. Selling, constantly, to investors and recruits and partners and your own team on the bad days. Hiring, which is hard, and firing, which is harder and which you will do badly the first time and carry with you. Managing a board, which means managing people who can fire you. Sitting in a room deciding whether to lay off people you recruited because a study read out ambiguously. If the version of you that wants to found a company is really the version that wants to keep doing brilliant science with more resources, I’d gently suggest that a great job at a well-funded company might give you more of what you actually want, and I mean that as a serious alternative, not a consolation prize.

The uncertainty tax on your life and the people in it

Ten years. Multiple pivots. No guaranteed exit. That’s the honest time horizon, and you will live inside sustained uncertainty for most of it. Data will break your heart on a random Tuesday. You’ll go months where you can’t tell your partner whether the thing is working, because you don’t know.

That uncertainty doesn’t stay at the office. It comes home. It sits at dinner. It shows up in how present you are with your kids and how patient you are with your partner, and I have watched founders win and lose their companies while quietly losing their marriages, and I don’t think anyone told them that was on the table. Protect your mental health like it’s a company asset, because it is the one that everything else depends on. Build the relationships that let you be honest about how scared you are. Have people you can fall apart in front of. The founders who last are not the ones who feel no fear. They’re the ones who built a life sturdy enough to hold it.

If it touches a patient, the regulator is your co-founder too

One more reality if your product goes into a human. The FDA, or your regulator of choice, is effectively a permanent stakeholder in your company from day one, whether you’ve talked to them yet or not. Clinical development is long, expensive, and unforgiving of shortcuts, and the decisions you make early, about your manufacturing, your data, your first indication, echo for years. You don’t need to be a regulatory expert at incorporation. You do need to internalize that “the science works” and “we’re allowed to give this to people and get paid for it” are separated by an enormous, costly, and non-optional distance.

What does success even mean to you?

I’ll close where I think you should actually start.

What are you trying to build? Not what sounds good on a panel. What do you honestly want at the end of this? A durable business that you run and that supports a good life. An acquisition in five to seven years and a nice outcome. A public company with your name on it. A therapy that reaches a patient who has nothing today, regardless of what it does for your net worth. These are all legitimate, and they lead to genuinely different companies, different investors, different sacrifices, and different definitions of the day you get to feel proud.

The founders I’ve watched do this well were clear-eyed about that answer before they started, and they let it steer everything. The ones who struggled most were chasing a vague sense that founding was the prestigious next move, or running from a job they’d outgrown, or trying to prove something to a former mentor. Those are the reasons that don’t survive year three.

So here’s my actual advice. If you’ve read all of this and the money math works, the science is a company and not just an experiment, you have or can find the right partner, and you know what you’re building and why, then stop asking for permission and go do the hard, wonderful thing. The field needs people with strong conviction, who see clearly and jump anyway.

But if some part of you exhaled with relief at a reason not to, listen to that part. It’s not weakness. It might be the most useful data you’ll get all year.

Leave a comment

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

As I have written before, he is in a memory care unit in Western New York, in a home for men who served. Most days now, when I fly in and sit down beside him, he does not know my name. Some days he does. You learn not to plan around which one you will get.

I did not set out to write about him on my recently celebrated birthday. But a birthday is a place you stand and count. You add up the years behind you. You guess at the ones ahead. For most of my life, the gap between his age and mine felt like a long road. This year it feels like a hallway. Why is that?

Alzheimer’s does not arrive. It seeps.

This year, the losses are reaching his body. He falls out of bed now, more often each month. He cannot always get himself to the bathroom in time, and cannot always manage once he does. The man who could take an engine apart by feel and rebuild it in a weekend needs help with the plainest business of being a body. The disease starts with the mind, because the mind is the part that frightens us most. Then it comes for the rest. There is no dignity and it will not eventually ask you to hand over on his behalf.

No one hands you the title. You do not graduate from son to caregiver. You get drafted, mid-sentence, and you keep the old job while you learn the new one. I run what I can from three thousand miles away, in Cardiff, CA, by phone, by “committee of brothers”, by the small administration of a life I used to simply share. Love becomes logistics. It is still love. At two in the morning, it does not feel like it.

There are mercies. They are cruel in how briefly they last. A while back he surfaced, all the way up, for maybe two minutes. He looked straight at me and said, “What are you doing here from California?” He knew me. He knew where I live. He knew I had come a long way to sit beside him. Then the tide went back out and took him with it, and I was a stranger again, holding a stranger’s hand.

You would think those moments are the gift. They are the hardest part. They prove he is still in there, behind the brain fog, and that the disease is winning anyway.

The recognition comes and goes. One thing has not gone. He still finds the songs, especially Elvis tunes. The names have left him and the faces are leaving, but put on the right music and the words arrive whole, out of some room the disease has not walked into yet. The man empties and the melody stays. I have stopped believing the self is kept where we were told it is. You can lose your own name and still know every word of something you loved at twenty. Whatever that part is, it is the part of my father I am already missing, while he is still alive to hum it.

Here is what a birthday does to a man in my position. It makes you do the arithmetic you have been avoiding.

My father was 62 once. He was whole. Still fixing things, still himself, still years from anyone saying the word out loud.

Here is the part I know from my work in the life sciences industry, and wish I did not at times. The disease does not begin when the memory does. It begins about twenty years earlier. Alzheimer’s disease begins long before patients develop recognizable cognitive symptoms (“prodromal period”). Mounting evidence has shown that the biological changes underlying the disease, particularly amyloid accumulation followed by tau pathology, can precede clinical impairment by decades. The plaques and tangles start their slow accumulation while a man is still balancing his checkbook and rebuilding his engine, two decades before the first name slips. Which means the man my father was at 62, the one who seemed permanent to a family that needed him to be, was most likely already ill, yet cognitively normal. He had no way to know it. Neither did we.

I am 62 now. I spend my working life in neurodegeneration, close to this science and closer to the people fighting it, which means I understand exactly how little I get to know. If something were coming for me, it would already be underway. There would be nothing to see. I do not know what is quiet in me. No one knows that about themselves, at any age.

That is the thought I do not say out loud. I am saying it here, once, because it was my birthday and I am done pretending the grief is only for him. Yet I am proud to feel healthy.

I am not writing this to be talked out of it. My father is leaving by inches and no essay calls him back. I am writing it because when you turn 62, and your father is disappearing at 84, you stop believing you are watching something happen to him. You are looking at the front of a line. You are possibly standing in it.

So on my birthday weekend, I let my kids and wife sing to me. I made a wish and did not say it openly. And on the next open weekend that I have, I will fly the five hours east to Western NY, pull the chair to the bed, take his hand, and tell him who I am.

He will not likely remember that I came.

I will. For as long as I am the one who can.

This is my therapy.

It’s very therapeutic to write about and share my journey. Thanks for listening.

If you enjoyed this article and would like to support more deep, valuable, and thought-provoking content, you can buy me a coffee ☕

Your support is more than a tip.

It helps me keep writing and continue producing meaningful work without being driven by algorithms.

Every cup of coffee helps fuel the next article worth reading.

Buy me a coffee

This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Subscribe now

Leave a comment

Gompers, Gornall, Kaplan, and Strebulaev surveyed 885 institutional venture capitalists at 681 firms between late 2015 and early 2016. The headline traveled fast and has been repeated in pitch rooms ever since: across the full sample, 95% of firms called the management team an important selection factor, and 47% called it the single most important one. The team beat the market, beat the product, beat the technology. The jockey won.

Except in the sector I advise on: healthcare and life sciences. In this article, I set out to make the case in 2026 that the horse and jockey are both important.

The 2016 Paper, In Brief

The study covers eight decisions VCs make: sourcing deals, selecting investments, setting valuation, structuring terms, adding value after the check clears, exiting, organizing the firm, and managing limited partners. It is the venture analog to Graham and Harvey’s canonical survey of CFOs and the same authors’ companion survey of private equity.

Three caveats before you cite it. It is a 2016 working paper, never peer-reviewed to my knowledge, and the survey predates the 2020 to 2023 biotech boom and bust entirely. The sample skews elite: Chicago, Harvard, and Stanford MBAs, Kauffman Fellows, and 76% of the top 50 firms by deal count. The authors concede this tilts the findings toward more successful investors. And the healthcare subsample is only 88 firms, so every health-specific number below carries wider error bars than the headline figures. Treat the direction as signal and the decimals as directional.

With that established, the value creation verdict is clean. VCs were asked to rank what drives their returns: deal flow, deal selection, or post-investment value-add. Deal selection won, ranked most important by 49%. Value-add followed at 27%. Deal flow trailed at 23%. Picking the right company matters more than sourcing it or fixing it later. Hold that thought. It reframes everything a founder does before the raise.

The Life Sciences Divergence

Here is the two-move that every biotech and medtech founder needs to internalize.

The naive claim: VCs bet the jockey, so build a superstar team, and the money follows. The hard mechanism that dismantles it: in healthcare, the horse wins. Healthcare was the only subsample in the entire 2016 study that did not overwhelmingly rank the team as most important. Product edged it out, 34% to 32%. When these same investors diagnosed their failures, technology (36%) outranked team (34%) as the top culprit. Nowhere else in the survey does the science outrank the people. I am curious if VCs in 2026 feel differently.

This is not a rounding artifact. It runs through the whole dataset.

The team bar is domain expertise, not charisma. When health VCs named the most important quality in a management team, industry experience led at 77%, the highest single reading for any quality in any subsample. Passion, the currency of consumer and IT pitches, scored just 42% in health and was explicitly ranked as substantially less important. Your regulatory scars and your clinical track record are the asset. Your enthusiasm is table stakes.

The funnel is narrower and the diligence is deeper. A healthcare VC considers roughly 100 companies for every one it funds. An IT VC considers 151. Fewer shots, more scrutiny per shot. The average health deal takes 98 days to close against 59 for IT, consumes 120 hours of diligence, and runs more reference calls. The domain expertise and regulatory knowledge that make the sector hard to enter also make it slow to underwrite. Healthcare deals carry participation rights 67% of the time versus 41% in IT, and a 2x-or-greater liquidation preference 27% of the time versus 12% in IT. Healthcare VCs were the least flexible in the study on board control, scoring it their single most guarded term. The paper reads these as protections against the internal risks that define drug and device development: project selection, technical execution, the binary readout. The investor is pricing the possibility that the science simply does not work.

Healthcare VCs syndicate and specialize. Healthcare firms syndicate 79% of rounds against 65% overall, leaning on risk-sharing and complementary expertise. They are also the most likely to staff venture partners, the medical faculty, and clinical operators who de-risk the science part-time. One credible lead brings the syndicate.

And the exits reward the winners differently. Healthcare firms reported a 23% IPO rate against 13% for IT. The public market remains a live exit for a de-risked asset in this sector in a way it no longer is for most software.

Key Takeaways

From this 2016 study, the horse carries you in life sciences. The data, the asset, the mechanism of action, the regulatory path: these do the persuading. A brilliant team wrapped around thin data will not clear a healthcare VC’s bar, because that investor has watched technology, more than people, sink the losers.

Selection is the whole game. With 49% of VCs naming deal selection as their top value driver and 78 companies screened per healthcare investment, the contest is won or lost the moment you enter the funnel, before you ever negotiate terms.

Investor-friendly terms are structural, not adversarial. Participation, liquidation preferences, and board control are how this asset class prices binary scientific risk. Spending negotiating capital fighting them is a waste.

The 2016 Verdict

The proverb is right almost everywhere. In life sciences it is inverted. Build the team, yes, but understand that in this sector the capital is underwriting the molecule first and the founder second. The investor across the table has screened 100 companies to get to you and has watched the technology, more than the people, bury the ones that failed.

De-risk the horse for the race.

What Changed Since 2016

Here is where the 2016 survey misleads by design, and where I part company with it in 2026.

Ask a VC to rank the team against the product, and the truth is already gone. The instrument forces a choice the deal never presents. In a living company, the jockey and the horse are one system, and in life sciences they often ride in the same body: the founding scientist who is also the CEO carries the mechanism and the management credibility at once. Rank them apart and you manufacture a rivalry that does not exist on the ground.

The paper half-concedes this in its own reconciliation. It admits that VC value-add sometimes means installing the right team and improving the business model, which means selection, team, and asset were never cleanly separable to begin with. The 2016 framing split what the 2026 deal fuses. Horse and jockey are co-dependent. Both must fire. A de-risked asset with a weak team stalls at the board table. A strong team with thin data does not clear today’s evidence bar. Equal importance is the honest headline.

Then comes the fine print, and it is asymmetric.

Co-dependent does not mean interchangeable at the margin, and investors act on the difference. The tell is replaceability. Baker and Gompers found that only about one-third of VC-backed companies still have a founder as CEO at IPO.

Investors swap jockeys as a matter of routine. They cannot swap a failed mechanism of action.

The NewCo and platform-creation model that now dominates early-stage biotech makes the asymmetry structural: back the asset first, then build the management around it. Both inputs are necessary. Only one is fungible. The seat the syndicate is most willing, and most able, to fill is the one behind the reins.

That distinction carries a clean instruction. For building the company, treat them as equals, because a venture that neglects either one dies. For sequencing a scarce dollar before the raise, strengthen the horse, because that is the seat the investor cannot backfill for you.

Key Takeaways for 2026

Horse and jockey win together, and they fail differently. Both must fire: a de-risked asset with a weak team stalls, and a strong team with thin data will not clear a healthcare VC’s evidence bar. But the asset is the harder constraint, because investors swap CEOs routinely and cannot swap a failed mechanism of action.

Deal selection is the whole game. With 49% of VCs naming selection as their top value driver, and 100 companies screened per health investment, the contest is won or lost at the moment you enter the funnel, before you ever negotiate a term.

Leave a comment

References

Gompers, P., Gornall, W., Kaplan, S. N., and Strebulaev, I. A. (2016). “How Do Venture Capitalists Make Decisions?” NBER Working Paper No. 22587. All figures drawn directly from the paper’s tables. The study was fielded November 2015 to March 2016 and has not been peer-reviewed; the healthcare subsample comprises 88 firms.

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory, and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

Notes is a new space on Substack for us to share links, short posts, and more. I plan to use it for things that don’t fit in the Cardiff Insights newsletter, like deal flow, work-in-progress or quick questions.

Go to Notes

How to join

Head to substack.com/notes or find the “Notes” tab in the Substack app. As a subscriber to Cardiff Insights, you’ll automatically see my notes. Feel free to like, reply, or share them around!

You can also share notes of your own. I hope this becomes a space where every reader of Cardiff Insights can share thoughts, ideas, and interesting quotes from the things we're hearing about or reading on Substack, LinkedIn, and beyond.

Looking forward to seeing you there!

Go to Notes

Except in 2026, that’s not how it works anymore. And the gap between the founders who understand that and the ones still running the 2021 playbook is the difference between a clean Series B and a down round dressed up as a “strategic recapitalization.”

Let me be direct about where I land, because you can feel the both-sides version of this essay coming and I’m not going to write it. In today’s market, you should build like an asset company and earn the right to call yourself a platform later. Platform is not a fundraising strategy. It’s a conclusion the market draws after you’ve already shipped a molecule that works. Sell it as a premise and you buy yourself a harder proof burden, a longer runway you have to finance through the worst possible dilution environment, and a narrative that the people writing checks have specifically been trained to discount.

That’s the thesis. Now let me show you the mechanics, because the mechanics are the whole argument.

Let’s get into it.

The tradeoff isn’t platform versus asset. It’s who pays, and when.

Everyone frames this as a strategy question. It’s actually a financing question wearing a strategy costume.

A single-asset company is a bet with a clock. You pick the indication, you drive to the value-inflecting readout, and somewhere around Phase 2 proof-of-concept a pharma acquirer or a public market decides what you’re worth. The narrative is clean because it has to be: one molecule, one mechanism, one binary you’re all pointing at. When it works, the value inflection is violent and legible. When it fails, there’s nowhere to hide, and everyone knew that going in.

A platform company is a bet on repeatability. The promise is that the first asset is almost beside the point, because the machine that made it will make the second, third, and tenth more cheaply and more predictably than a one-off ever could. That’s a genuinely more valuable thing to own if it’s true. The problem is the word “if.” Repeatability is expensive to prove, and you don’t get to prove it in one experiment. You prove it by putting multiple programs through the same engine and showing the outputs weren’t luck. That costs years and hundreds of millions of dollars, and for most of that time you’re asking investors to pay today for evidence that arrives much later.

So the real question underneath “platform or asset” is: how long are you asking the capital markets to suspend disbelief, and are they in the mood to do it right now? Right now in 2026, they are not.

The financial reckoning

Start with burn, because burn is destiny. An asset company can run lean and pointed: a focused team, a tight preclinical package, one pivotal-ish readout that reprices everything. A platform company has to fund the engine and the programs at the same time. You’re carrying data generation, a discovery org, and multiple assets deep enough to validate the claim, all before any single one of them has told you whether the thesis holds. Higher structural burn, lower capital efficiency per unit of de-risking, and a longer stretch of your existence spent pre-inflection.

That burn profile drives the dilution math, and the dilution math is where platform dreams quietly die. More capital over more rounds and more years means more shares issued, and the sequencing matters enormously. If your platform’s proof point lands after your Series B instead of before it, you raise that B on promise rather than data, at a promise-grade price, and the founding team’s ownership gets ground down round over round. The asset company that hits proof-of-concept before its next raise flips that entirely and reprices up. Same science, wildly different cap tables, because of when the evidence showed up relative to when you needed the money.

Then there’s the thing platform founders always lead with: optionality. Multiple shots on goal, a pipeline you spin out of one core capability, the second and third asset that costs a fraction of the first. That optionality is real, and it is worth real money. But optionality only has value if you can afford to hold it, and holding it costs runway. In a market flush with cheap capital, optionality is an asset and buyers pay a premium for it. In a disciplined market, unproven optionality reads as unfocus, and unfocus reads as burn without a catalyst. The focus premium and the optionality premium trade places depending on the cost of capital, and in 2026 the cost of capital has decisively handed the crown back to focus.

The exit math closes the case, and this is the part founders underweight the most. Look at how large-cap pharma actually buys. They are underwriting de-risked, clinical-stage assets they can plug into a commercial machine, and they are paying up for exactly that. The megadeals of the last cycle clustered around late-stage, Phase 2-through-commercial assets, not around platforms sold on their theoretical output. Novartis paid roughly $11.4 billion for Avidity, J&J roughly $14.7 billion for Intra-Cellular, Merck around $11 billion for Verona (per Ropes & Gray’s read of the 2025 tape). Those are asset stories with clean mechanisms and visible commercial paths. When pharma does buy a platform, they usually pay for the lead asset and treat the engine as a call option they got for free. Underwrite your exit to a platform multiple in this environment and you are pricing in a buyer who has mostly stopped showing up.

The part that isn’t on the spreadsheet

Before you commit, ask the least comfortable question in the building: does the founding science actually support a platform claim, or do you just want it to?

This is where most platform decisions go wrong, and it goes wrong for a very human reason. “Platform” is more prestigious, raises more money, and feels like a bigger swing, so smart founders talk themselves into it on the strength of one clever result. But a real platform is repeatability, and one result is not repeatability. If your core insight generates a fundamentally new kind of molecule but you’ve only aimed it at one target, you have an asset with an interesting origin story. That’s fine. It might even be a great asset. It is not yet a platform, and claiming otherwise just moves your proof burden somewhere you can’t reach it with the money you have.

The org design follows from that honesty. A platform company is a different animal to build. You’re hiring a discovery and data engine as core infrastructure, not as service functions bolted onto a lead program, and you’re recruiting people who want to build systems, not just win one trial. That’s a heavier, more expensive, harder-to-manage organization, and if the science can’t carry it you’ve built a cost structure your data will never justify. IP cuts the same way. A platform lives or dies on breadth and defensibility, on composition-of-matter and method claims wide enough that the engine itself is protected rather than just the first thing it produced. If your patent estate really only fences off one molecule, the market will value you as one molecule regardless of the deck.

Regulatory complexity deserves a mention too, because it compounds. A single asset has one regulatory path you can actually resource and de-risk. A platform implicitly promises many, across possibly different modalities and divisions, and every one of them is its own conversation with the agency. And then there’s you. The single-asset path rewards a CEO who can concentrate an organization on one number and drive relentlessly toward it. The platform path rewards someone who can hold ambiguity for years, keep a story coherent while the proof stays diffuse, and raise capital repeatedly on conviction. Those are different people. Be honest about which one you are, because the model you pick is a bet on your own temperament as much as your science.

What actually changed for 2026

None of this would land the same way in 2021, and that’s the point. The platform premium of the last bubble has been repriced, hard, and the reset stuck.

The funding environment tells the story in numbers. Through the first half of 2026, venture-backed biotechs raised roughly $9.1 billion across about 68 companies, the strongest first half since early 2022, per BioPharma Dive’s read of EY data. Sounds like a boom. Look closer. Around three-quarters of that money came through megarounds over $100 million, and roughly two-thirds of the rounds went to companies already dosing humans. The capital is real, and it is flowing almost entirely to de-risked, later-stage, asset-centric stories. Meanwhile EY’s analysts note that seed and first-round formation capital is meaningfully scarcer than it was five years ago. The market didn’t get more generous. It got more selective, and it selected against exactly the profile a young platform presents: early, capital-hungry, and promising.

The IPO window confirms it. It genuinely reopened in 2026, after a brutal stretch, and bankers at BIO were openly calling it open. But read what’s getting out. By late June, most of the year’s venture-backed biotech IPOs had priced with proceeds at or above $250 million, and the ones aftermarket investors rewarded were asset-centric companies with Phase 2 or later data and, frequently, veteran management who’d done it before. The line I’d underline for every founder: unlike 2020 and 2021, public investors are no longer paying for platform promises absent clinical data. The window is open for proof. It is not open for potential.

Two structural forces sit underneath all of this. One is pricing. IRA-driven negotiation and the broader pricing environment have compressed the back-end economics of individual drugs, which sounds like it should hurt asset plays. In practice it has made pharma even more insistent on assets they can see working, because a de-risked, differentiated drug is the thing that still clears the higher bar. It raised the quality threshold, not the appetite for platforms. The other force is AI, and AI is quietly detonating what “platform” even means.

For fifteen years, “platform” was the premium word. Now every serious drug-discovery company has a computational engine, so the engine stops being a differentiator and becomes table stakes. The market noticed. Capital in AI-native discovery is flowing hardest to companies trying to own the full stack: proprietary data generation, foundation models, generative chemistry, automated labs, and a real path to their own clinical assets. The enormous raises are real: Isomorphic Labs pulled in a round reported around $2.1 billion, and names like Xaira launched with a billion-plus. But notice what the smart money is actually underwriting. The thesis that’s taken hold is that no single technical layer is a moat anymore, and the only durable moat is clinical data. The AI companies being valued as more than infrastructure are the ones generating their own assets and pushing them into humans. In other words, the market has stopped paying a platform premium for the platform. It’s paying for the asset the platform produces.

How the people with the checkbook actually read it

Know your audience, because platform and asset land differently depending on who’s across the table.

Specialist biotech VCs can underwrite a platform. It’s their job, they have the scientific depth to judge whether the repeatability claim is real, and a handful still build companies around genuine platform theses because they can hold the position through the proof cycle. But even they have tightened. Crossover and generalist investors, the ones you need for the pre-IPO round and the aftermarket, are a different beast entirely. They largely do not want to underwrite platform repeatability, because they can’t diligence it as easily and they got burned doing exactly that last cycle. They want a lead asset, a catalyst calendar, and a comp table. Give a crossover a platform story and you’ve handed them the one thing they’ve been trained to discount.

Boards apply their own pressure, and it changes with stage. Early on, a board will happily let you carry the platform narrative because it’s cheap and it’s aspirational and it makes the next raise sound bigger. As you approach a real financing or an exit, that same board will push you, sometimes abruptly, to name the lead asset and concentrate the story, because they know what the buyers and the bankers actually pay for. The bankers, for their part, will always narrow you. When it’s time to sell or go public, your banker’s instinct is to find the sharpest asset in your portfolio and build the book around it, with the platform relegated to the upside slide nobody underwrites. If your whole company only makes sense as a platform, you have just made yourself very hard to take out.

And the skepticism runs both ways, which is worth saying so you don’t overcorrect into pure single-asset thinking. Sophisticated buyers know that a company with genuinely repeatable science and one asset is underpriced if the market is only paying for the asset. That’s the arbitrage, and it’s real. But it is their arbitrage to capture, not yours to be paid for in advance. They will take the platform as free optionality on top of an asset they wanted anyway. They will not pay you a premium today for a repeatability you haven’t demonstrated.

What most founders get wrong

Here’s the whole thing in one line: they treat “platform” as a story you tell to raise more money, when in 2026 it’s a reward the market grants after you’ve already proven you can make a drug.

The move that actually works right now is the one that feels like it leaves money on the table. Build the platform if the science is truly there, but finance it, staff it, message it, and structure it around a lead asset you can drive to a value-inflecting readout on a fundable timeline. Let the platform be the upside the market isn’t paying for yet, the thing your acquirer discovers they got for free after they’ve already decided they want your molecule. Prove the asset, and the platform revalues itself. Lead with the platform, and you’ll spend the next three years financing an abstraction through the least forgiving capital market in a decade.

Focus is not the consolation prize in this market. It’s the whole edge. The founders who win the platform argument in 2026 are the ones who stop trying to win it, ship the asset, and let the repeatability speak for itself once there’s something real to repeat.

Share

Leave a comment

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

Good questions, all of them. Frequently, I watch founders choosing among firms without ever asking the one underneath. Does the asset class of venture fit the company at all? After all, venture capital financing is not for everyone.

Let’s get into the discussion in greater detail, shall we?

That question belongs before the pitch circuit, not after. By the time a term sheet is on the table, you have already given half a year to the process. Deciding early is not caution. It is a prerequisite. It is the difference between six to nine months raising the right money and six to nine months learning that you pitched the wrong kind of investor for the company you actually have.

In three decades on the other side of that table, the first mistake I watch founders make is this. They think a venture firm is a person judging whether their company is good. It is not. Venture is a portfolio machine with a size, a clock, and a promise made to other people called LPs. Take a $200 million fund. It charges its investors about $4 million (2%) a year and keeps roughly 20% of the profits. Classic 80-20-2 model. For the partners, that ten-year commitment only pays if the fund returns something like 3x the capital it took in. Call it $600 million gross. That is not an ambition. It is the job. LPs were promised that target return at minimum.

And the returns do not come from the average company. They come from the outliers, i.e., home runs. In a portfolio of twenty-five to thirty names, most return less than the money in, a few return their capital, and one or two return the whole fund by themselves. We call this Power Law. So the partner across from you is not asking whether you will succeed. They are asking whether, if everything breaks right, this one company can return the entire fund.

The ownership math follows. To return a $200 million fund from one position, a firm owning 20% needs you to exit for a billion dollars. So they push on ownership at entry, usually 15% to 25%, and hold back capital to defend that stake in later financing rounds. That reserve often runs to half the fund or more, which is why a firm can be enthusiastic in year one and quiet in year three. The follow-on was always earmarked for whoever is winning, and by then they know whether that is you.

This is where the founder’s worry about control actually lives. Ownership is not only economics. A lead taking 20% usually takes a board seat, and the consent rights that come with it, and a syndicate multiplies the voices at your table. The clean, vanilla cap table you walked in with is exactly what you are spending. Spend it deliberately.

Put it together and the consequence is honest. Venture capital fits companies that can plausibly build to a very large outcome, and only those. If yours could be durable and profitable and worth two or three hundred million dollars someday, that is a triumph. It is also a poor match for a fund that needs billion-dollar winners. Taking venture money into a company that tops out at a good outcome is not a windfall. It surfaces later as pressure to grow into a shape you never should have taken.

If venture is not the fit, the alternatives are real.

Angels are worth more for their operating experience than their capital. One who has actually run a clinical program beats one writing a bigger check.

Family offices are the class founders underrate. The best bring patient capital with no ten-year clock forcing an exit, and often real scientific conviction. The trade-off is variance. They differ enormously in speed, sophistication, and appetite for follow-on, so diligence the office as hard as you would a fund.

Non-dilutive and grant funding, from SBIR to disease foundations, is slow and restricted and worth chasing anyway. In biotech, a grant that funds a value-inflecting experiment is the cheapest capital you will ever raise.

Strategic and corporate investors can be long-term partners with domain insight you cannot buy. They also carry a real conflict of interest. Useful, with your eyes open and your governance tight.

Whichever door you choose, hold one discipline. Do not raise against a runway number dictated by the calendar. Raise against your next value-inflecting milestone. “Eighteen months of runway” tells an investor nothing about what you will be worth when the money runs out. “Enough to reach the Phase 2 readout” tells them everything. Size the round to carry you past the next event that resets your valuation, with margin for the science running long. It sorts out investors who can help you hit the milestone from those who will only fund you toward it, and it keeps you out of the worst position in this business, which is out of money and out of milestones, raising a down round because you financed to a date instead of a result.

One more thing, because it explains most of what confuses founders in the boardroom. Your investor answers to their own investors, the LPs, every quarter, marking positions up and down. A push for a large, cleanly priced round is partly your growth and partly a mark-up the firm can report. Eagerness for a fast follow-on can mean you are winning, or that the fund needs to deploy reserves before its window shuts. Pressure to sell can track the fund’s clock more than your readiness. None of it is bad faith. It is the machine. But you negotiate better when you can tell what serves your company better from what serves the reporting cycle.

So run your diligence back the other way, and start with suitability, because most of it is knowable before the first meeting. Does the venture firm actually invest in your area of biology or target disease, or would you be their first bet in it? Do they write your check size? Do they bring a strong syndicate that will fill this round and defend the next, or leave you to assemble the rest? Are they built for your stage, seed and Series A, or a growth fund reaching down? A venture firm can be excellent and still be wrong for you.

Then press on the one number that drives the rest, the fund’s target ownership on this series. It sets how much they must buy, which sets the valuation they can live with, which sets your dilution and the board rights attached. A fund that needs 20% of a $10 million round is buying a very different slice of your company, and your governance, than one that takes 8% and syndicates the rest. Ask it out loud, then do the arithmetic on your ownership, valuation, cap table, and board before you fall for the brand.

Then the fund’s own mechanics. What vintage is the fund, and how much dry powder is left? What is the reserve policy? Where would you sit in its life? How concentrated is it in your sector, and does that make you a priority or a hedge? And the question that tells you the most. How does the firm behave when a company is neither a clear winner nor a clear failure? Everyone supports a rocket. Everyone cuts a corpse. What a firm does with the company in the middle is who it actually is.

“Venture capital is not good money or bad money. It is a particular kind of money, built for a particular kind of outcome, run by people whose obligations have nothing to do with you and everything to do with how they treat you.”

Leave a comment

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Subscribe now

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

In life sciences, that mistake takes years to surface and a decade to undo. Your Phase 1 readout is three years out. Your first real value-inflection point might be five. By the time the wrong money shows itself, you’ve already re-priced your cap table, spooked your syndicate, and handed control to people who measure your company on a clock that has nothing to do with biology.

Most founders learn this too late.

Let’s get into it!

Angel Investors

The right angel is worth ten times their check.

A $50,000 angel who ran regulatory at a mid-cap pharma, sat across the table from an FDA review division, or closed three partnering deals is buying you a shortcut through the exact terrain that kills early companies. They de-risk your IND. They make the intro to the Series A fund investors that actually knows your indication.

The wrong angel made their money in real estate or a SaaS exit and thinks a 505(b)(2) is a highway.

They wired $50,000 and now they want a board seat, weekly calls, and revenue by next quarter. They panic when there’s no product on the shelf in eighteen months, because they’ve never held an asset whose entire value sits behind a data readout three years out. Worse, a sloppy party round of a dozen small angels with information rights and side letters becomes the mess that makes a real Series A fund walk.

Pick angels for what they’ve shepherded, not what they can wire.

Value in this business is created at milestones. Hire capital that understands milestones.

Venture Capital

Dedicated life sciences VC is not generalist VC. It expects the decade. It expects the burn. It has held assets through failed Phase 2 readouts and knows the math cold.

The danger is not that VCs need big returns. The danger is that your company type may not produce the shape of return their fund is built on.

100x return. Map it honestly.

If you’re building therapeutics, VC is often exactly right. A novel drug is a binary bet with a blockbuster ceiling and an M&A-or-IPO exit. That’s the payoff curve VC is priced for. They’ll syndicate tens of millions across rounds, push you hard toward the Phase 2 proof-of-concept that sets your valuation, then partner, sell, or take you public. If your asset is a swing at the fences, take the fuel.

If you’re building tools or diagnostics, read the term sheet twice.

A diagnostics or research-tools company can generate real revenue and compound steadily. Founders love that. A classic VC fund, in my opinion, cannot use it. A clean $80 million diagnostics exit does nothing for a $500 million fund that needs its winners to return the whole vehicle. So they push your capital-efficient business to chase a bigger platform story, raise more than it needs, and burn toward a valuation the market won’t underwrite. The down round follows. You didn’t fail. You were mis-financed.

Then there’s the preference stack.

VC dollars carry liquidation preferences. Stack a 1x participating preference across four or five biotech rounds over a decade, add a down round or two, and the founders and common holders can walk away from a “successful” sale with almost nothing. The company sold. You didn’t get paid.

Take venture money only when the outcome you’re building matches the outcome they’re pricing.

Private Equity

It cares about cash flow, EBITDA, leverage, and the exit window.

So PE almost never touches early drug discovery. There’s no cash flow to lever, only burn and binary risk. PE lives one layer down, in the infrastructure and services that sell to drug developers: CROs, CDMOs, specialty pharma with marketed products, lab and clinical-site networks.

If you run a profitable life sciences tools, CRO or CDMO, PE will find you.

They’ll roll you into a platform, load the balance sheet with debt, standardize your operations, cut whatever doesn’t serve the multiple, and flip you to a larger buyer in three to five years. If you want liquidity, that can be the cleanest exit you’ll ever get.

But debt service in a capital-intensive services business comes straight out of the capacity and quality investment that made clients trust you. Scientific reputation erodes quietly under a cost-cutting mandate. And if there’s a proprietary program buried inside your services business that needs five more years, PE’s clock runs out first. It gets cut to make the numbers.

Perfect if you want out. Corrosive if you wanted to build something that outlives the hold period.

Strategic Investor

This is the most life-sciences-specific trap on the list, and the most expensive.

A pharma corporate venture arm loves your asset. The money is patient, the validation is real, and the term sheet is loaded with rights that quietly mortgage your future.

Watch the rights, not the check.

A right of first refusal or first negotiation means the strategic gets first look at your asset. Sounds harmless. It isn’t. Every other acquirer now knows they’d be a stalking horse for a bidder holding inside position, so they discount their offers or don’t show up at all. Biotech M&A premiums are built on competitive tension. A broad ROFR strangles the auction before you run it, and the premium disappears with it.

Information rights and a board observer put a portfolio-adjacent competitor inside your pipeline, your data, and your BD conversations.

Field and standstill restrictions can dictate which indications you pursue, which geographies you develop, and which partnering deal you’re allowed to sign, if it conflicts with their strategy.

They rarely need to steal your IP. They learn your approach, sit on their stake, and leave you unable to run a clean process for years.

Strategic capital can be a genuine accelerant. The corporate arms of the majors have made careers and companies. But price what you’re giving up. Cap the information rights. Refuse the broad ROFR. Observer seat at most, never a vote. If the terms lock up your exit, the validation isn’t worth the handcuffs.

Don’t be the founder who learns too late

Wrong money compounds faster than no money.

The founder who bootstrapped her biomarker diagnostics company two extra years, grinding through CLIA validation and payer reimbursement on her own dime? She still owns it. She controls the exit and the timing.

The founder who took predatory Series A terms on a preclinical asset, participating preferences and milestone triggers he never fully modeled? He’s an employee with equity now, washed down through two rounds he didn’t control.

The founder who sold to private equity before her lead program matured? She watches the new owners cut it to protect the EBITDA number, the science she spent a decade on erased to hit a multiple.

The founder who took strategic money from a competitor-adjacent pharma? He’s in golden handcuffs, ROFR-locked, unable to run the auction that would have paid him what the company is worth.

Bad ones create friction you’ll fight for the company's life.

Know the difference before you sign.

Your cap table, your control, and the ten years in front of you depend on it.

Derisk. Demonstrate. Get funded.

Share

Leave a comment

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

So I have attempted to correct it. I’ve spent a career at the seam between the laboratory and the ledger, and I have never made time to write from it. That changed this year.

The thing I keep coming back to is how rarely anyone actually stands where I stand. Universities mint brilliant scientists who can’t read a term sheet. Business schools mint sharp investors who can’t read a survival curve. Very few people have spent real time in both, and fewer still have sat with a clinician explaining what a six-week survival benefit means to a family, then walked into a room and watched that same benefit argued down to a discount rate. Those are not two conversations. They are the same molecule, priced twice, by people who mostly don’t speak each other’s language.

That translation is the work. I’ve started calling it dual fluency, because that’s what it is. It is the ability to hear a mechanism and a valuation in the same sentence. It’s also where most of the mispricing happens.

I’ve watched brilliant science get starved because the team couldn’t tell its story in the terms a crossover fund needed to hear. I’ve watched capital pile into a mechanism that any bench scientist could have told you was three years from meaning anything. Good molecules get orphaned. Weak ones get funded on a slide and a narrative. The gap between what is true in the biology and what is believed in the market is enormous, and it is where careers, companies, and sometimes patients are won or lost. I have spent thirty years living in that gap. I have opinions about it that I’d like to stop keeping to myself.

What took me so long is not mysterious. The work was always more urgent than the writing. There is always another deal, another readout, another board that needs an answer by Monday. Reflection loses to the next thing on the list, every single time, until one day you notice the years have added up and the lessons are still only in your head. I don’t want to be the person whose best thinking dies with him. That’s the honest inflection point. Not a crisis. Just arithmetic.

Here is the terrain I’ll cover. How science becomes value, and why the conversion is so often botched in both directions. What separates a management team that can raise money from one that deserves to. Why the best scientists and the best investors keep talking past each other, and what it costs when they do. How leadership actually holds up under the specific pressure of a clinical failure, a hostile market, a board that’s lost its nerve. I’ll write for the founder trying to price a raise, the investor trying to read a pipeline, the clinician who’s never heard the capital side spoken plainly, and the younger person trying to learn how any of this fits together. I wish someone had drawn me that map earlier. I intended to draw it now.

I’ll write with candor, because hedging is how people avoid being wrong out loud, and I’d rather be occasionally wrong than reliably useless and without delivering value. I’ll tell you when I’m certain and when I’m guessing. I’ll name what I’ve seen fail, including the deals I got wrong.

The first proof of all this is a book. It’s called Dual Fluency, it lands later this year, and it’s the manual I wish someone had handed me thirty years ago: how to speak the language of capital, and how to make your science investable. The book is the start, not the finish. I intend to keep writing long after it’s on the shelf through Cardiff Insights. We’ll see if there’s another book in the works after I see how the first one performs.

The lessons were never going to matter while they stayed in my head. So I’m getting them out. The next one won’t take me thirty years.

Leave a comment

Dual Fluency is my forthcoming book. The book positions itself as a practical manual for closing the deals that turn discoveries into medicines, written by someone who’s “lived on both sides long enough to write the manual.” The intended readers are scientists and investors who need to understand how the other side thinks especially life sciences CEOs navigating fundraising and dealmaking and trying to change the paradigm for patients and those impacted by disease.

On timing: the book is set to launch later in 2026.

dual-fluency.com

A deck that clears that bar works as a story. It moves an investor from curiosity to conviction, one slide at a time. Each slide answers the question the last one raised, and by the end the investor has argued themselves into the meeting you want.

Nearly all the pitch advice in circulation comes from generalist advisors, or from people who built their reputation in SaaS and tech. For those companies it is good advice, and it has been copied into almost every template a founder can download.

Working with early-stage life sciences CEOs, I have yet to see one that does this well for our sector: a narrative pathway that lands high conviction and carries an investor all the way to investability. That is the gap this template is built to fill.

The SaaS version does not transfer, and the reason is structural. A company at seed or Series A here rarely has revenue, and what will make or break it is not on a SaaS scorecard. Specialist investors underwrite different risks: scientific, clinical, regulatory, and IP. The milestones that unlock your next round are data readouts and regulatory clearances, not ARR.

So this template keeps the narrative arc that works and rebuilds every slide around what life sciences investors actually evaluate, in the order they evaluate it. Treat it as a structure for your argument, not a form to fill in. The slides are where you show conviction and prove it is earned.

Let’s get into it!

Start with the problem

Open with the unmet medical need. Say who suffers, how badly, and why today’s standard of care falls short. Numbers help: prevalence, mortality, cost, the gap a current therapy leaves. Vague “large market” language reads as a founder who has not spent enough time with patients or physicians.

Then give your biological or clinical insight, the non-obvious truth your company is built on. A specific target, a mechanism others dismissed, a patient subgroup that responds. Investors fund insight, not enthusiasm. If a generalist could have written it, it is not sharp enough.

Close the hook with why you are connected to the indication and why now. The best answer points to something that changed. A new modality reached the clinic, a biomarker made the right patients findable, a regulatory pathway opened. Why now tells the investor the window is real and that you are early to it, not late.

Build conviction with proof

This is the long middle. Its job is to de-risk the story in order.

Start with your scientific approach and mechanism. Explain how your modality acts on the target in language a smart non-specialist can follow. Then show evidence: preclinical, in vivo, or human data that the effect is real and reproducible. Strong evidence slides show the result, name the model, and stay honest about what has not been tested.

Size the opportunity with indication and market. Ground it in an addressable patient population and real pricing precedent, and name the beachhead indication you win first. A focused first indication beats a total-market number.

Now position yourself. The competitive and modality landscape slide maps the other assets chasing this disease and states plainly why yours differentiates. Follow it with IP and freedom to operate: composition-of-matter and method claims, patent runway, and a clean FTO read. In this sector IP is the moat, and a weak IP slide can end a diligence process on its own.

Show the path with regulatory strategy. Name the agency, the likely pathway, precedent approvals, and how you will design the pivotal work. Pair it with your development plan and value-inflection milestones, the sequence of readouts that steps valuation upward. Add manufacturing and CMC, because a therapy you cannot make at quality and scale is a therapy that stalls.

Then the team and the business and scientific advisors. Founder-science fit matters more than logos. Investors want people who have moved an asset through development before, and advisors who lend credibility rather than names on a slide.

Finish with a clear ask

Close with precision. State the capital ask, how much and in what structure. Tie use of funds to the next value-inflection milestone, not to headcount or a calendar. The strongest version says exactly what the money buys: this round takes us to selection of a development candidate, IND, to first-in-human topline, to a Phase 2 readout, or to a 510(k) or CE mark. That single sentence is what an investor repeats to their partnership when you are not in the room.

End with a clear next step: a data room, a diligence call, a partner introduction, a lead-investor conversation. Make it obvious and easy to say yes to.

Why this differs from the SaaS or Tech version

The arc is the same because human attention is the same. The proof is different because the risk is different. A SaaS deck earns belief with traction and retention. A life sciences deck earns belief with the build of a business with a mechanism, data, IP, and a credible regulatory path to a milestone that resets the company’s value. Drop in SaaS metrics and specialist investors stop reading.

No template makes a company fundable. What this one does is remove the friction between your conviction and the investor’s judgment. Bring conviction, back it with evidence you can defend under diligence, and be candid about what is still unproven. Investors fund founders who know exactly which risk they are retiring next, and what it will take.

Derisk. Demonstrate conviction and investability. Get funded.

Share

Leave a comment

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Disclosure

CEO360 runs a 12-month journey of four 90-day sprints built to make CEOs investable, not an accelerator and not a pitch program.

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

Let me start with the part nobody in a pitch meeting wants to say out loud: the “will China catch up” debate is over. It ended sometime in 2025. The only questions left are what kind of dependency the West is building, who profits from it, and whether Washington can regulate its way back to an advantage it has already, in large part, ceded.

But “overtaking” is the wrong word, and getting the word right is the whole game. China is not beating the West at being a finished pharmaceutical industry. It is winning, decisively, at one specific and increasingly valuable link in the value chain: originating and rapidly de-risking novel molecules. That is a different claim, and the strategic response depends entirely on which claim you believe.

Here’s my thesis, up front, so you know the road I’m taking you down:

Now let me defend all of that. Ready to get into it?

Is China genuinely overtaking the West? Follow the money and the molecules.

The cleanest signal in any market is where the buyers put their cash. And in 2025, global pharma’s buyers voted for China with both hands.

Chinese biotechs generated roughly $135.7 billion in license-out (”out-licensing”) transaction value in 2025, nearly triple the ~$51.9 billion in 2024, according to data reported by Jefferies and echoed across trade coverage. Widen the lens and the trajectory is almost vertical: China cross-border out-licensing value ran near $13.9 billion in 2021, meaning 2025 represents close to a tenfold increase in four years. The deal count tells the same story. There were roughly 186 cross-border out-licensing deals in 2025, up from 65 in 2021 (figures per DealForma-style trackers cited in early-2026 reporting; treat the exact totals as directional, since different databases count deals differently).

That flow is not a rounding error in global pharma. By a credible independent read reported through Nature Reviews Drug Discovery, roughly 31% of the innovative pipeline assets that big pharma in-licensed in 2024 came from China, measured by count. GlobalData put the figure near 28% for 2024 by its own deal database. Jefferies estimated China at roughly 32% of global out-licensing deal value in Q1 2025, up from ~21% in 2023–24. Whichever number you prefer, the honest summary is the same: roughly one in three molecules big pharma is now buying from the outside world originates in China. Four years ago that share was in the high single digits.

I want to flag a contested claim here, because candor matters more than a clean narrative. You will see figures floating around that China represents “~90% of global ADC licensing” or “~50% of bispecific deals.” Be careful. The 90% figure traces back to a single China-licensing advisory firm’s proprietary tracker with no disclosed methodology, and it does not survive scrutiny. The defensible version is narrower but still striking:

And note who actually leads global ADC licensing by value, well that’s still Japan’s Daiichi Sankyo. So: China dominates the next-generation modality pipeline, but “90% of all ADC deals” is marketing, not data.

This is where I have high confidence:

• Molecule origination has flipped. In the first half of 2025, an estimated 46% of new drug molecules entering human trials worldwide originated in Chinese companies. China’s share of the global innovative-drug pipeline reached roughly 30.5% by 2025, versus ~33% for the U.S., a gap of about two and a half points, down from a thirteen-point gap (23% vs. 36%) in 2023.

• First-in-class is no longer a Western monopoly. Chinese first-in-class candidates entering the clinic rose from 9 in 2015 to about 120 in 2024, giving China an estimated ~24% of the global first-in-class pipeline and second place globally. One analysis counted 639 Chinese first-in-class candidates since 2022, a 360% jump versus the prior period, several times the growth rate of the U.S., EU, or Japan.

• Speed is the real weapon. Chinese developers move from discovery to clinic in roughly 12–20 months versus 24–26 globally, enroll trials 2–3x faster, and run at 30–40% lower cost. China registered over 7,100 clinical trials in 2024 versus roughly 6,000 in the U.S., and since 2021 has launched nearly twice as many first-in-human trials for next-generation antibodies as the U.S. and Europe combined. In 2025, more new drugs made their first-in-world launch in China than anywhere else, the first time China outpaced the U.S. on that metric.

The single most important object lesson is ivonescimab, Akeso’s PD-1/VEGF bispecific, licensed to Summit Therapeutics out of China back in December 2022. In the HARMONi-2 Phase 3 trial (China-only, published in The Lancet in 2024), it beat Merck’s Keytruda, the best-selling drug in the industry’s history, on progression-free survival in first-line PD-L1-positive lung cancer. A Chinese-originated molecule outperformed the crown jewel of Western oncology, head-to-head. Every large-cap immuno-oncology player noticed, and the checkbooks came out. Merck licensed a PD-1/VEGF bispecific (LM-299) from Shanghai’s LaNova in November 2024 for $588 million upfront and up to ~$3.3 billion total. Pfizer paid 3SBio a record $1.25 billion upfront (up to ~$6 billion) in May 2025 for the same molecular class. Bristol Myers Squibb committed $1.5 billion upfront plus $2 billion in guaranteed payments to co-develop BioNTech's BNT327, itself a Chinese-originated asset BioNTech had acquired by buying Biotheus. Four of the world's largest oncology franchises, all chasing a bispecific class that a Chinese company defined.

That is what “overtaking” actually looks like in practice. Not a press release. A market structure.

Risk or opportunity? Both but not for the same people.

This is where I push back on the lazy framing. “Is China a risk or an opportunity for the West?” assumes “the West” is one actor. It isn’t. The rise of Chinese assets is simultaneously the best thing to happen to Big Pharma’s pipeline in a decade and an extinction-level pressure on a specific slice of Western biotech. You have to name winners and losers, or you’re not saying anything.

The clear winners: large-cap Western pharma acting as licensors. The pharma giants staring down the 2028–2030 patent cliff, Merck losing Keytruda exclusivity chief among them, need pipeline, fast, and cheaper than their own labs can deliver it. China is the answer. The most active in-licensors of Chinese assets have been Roche, AstraZeneca, Bristol Myers Squibb, Merck, and Pfizer; AstraZeneca alone signed at least four China licensing deals in 2025, trailing only Roche. AstraZeneca's obesity/metabolic pact with CSPC in early 2026 ran up to $18.5 billion in headline value with ~$1.2 billion upfront. GSK and Hengrui struck a deal worth up to roughly $12 billion for up to twelve programs (~$500 million upfront, and note, that headline is for a portfolio, not the single COPD asset the press sometimes implies). For these companies, Chinese innovation isn't a threat. It's arbitrage: buy validated, fast-moving science at a fraction of what it costs to originate in Boston or Basel, and monetize it through a commercial machine China can't yet replicate.

I’ll add a caveat: the 2025 vintage of hot takes got it wrong. It used to be true that Chinese assets came at a steep discount. Jefferies pegged upfronts at 60–70% smaller and total deal sizes 40–50% cheaper than Western peers in H1 2025. That window is closing. By 2026, average upfronts on China deals had climbed sharply; one dataset shows a ~230% rise from ~$52 million in 2022 to ~$172 million in 2026 year-to-date, and analysts at Evaluate and Cantor now openly say China is “no longer the bargain basement.” The capital-efficiency thesis is still real, but the premium is compressing quarter by quarter. If you’re a corp-dev team, the cheap-China trade is a 2023–2025 phenomenon you partly missed.

The clear losers: Western early-stage biotechs and the venture capital behind them. This is the part that should worry anyone underwriting a Series A in Cambridge, the Bay Area, or San Diego. If a large pharma can license a Chinese bispecific or ADC that is faster, cheaper, and already showing clean human data, the fast-follower Western startup pitching the same target is simply uncompetitive on cost and timeline. Summit’s own experience cuts both ways here. It won by licensing the Chinese asset, not by originating its own. The threatened cohort is the Western “me-too plus 10%” biotech whose entire value proposition just got undercut by a Shanghai lab that got to the clinic eighteen months sooner. Their VCs, in turn, face a repricing of what early-stage Western innovation is actually worth in a world where the marginal molecule comes from Chengdu.

The genuine risk to the West writ large is not innovation; it’s dependency and pricing. If one-third to one-half of the industry’s future pipeline is China-originated, the West’s pharmaceutical future rests on a supply chain concentrated in a strategic rival. That is a national-security argument, and it’s the engine behind the BIOSECURE push folded into the FY2026 National Defense Authorization Act as Section 851 rather than passing as a standalone law. Worth noting precisely: the current text no longer explicitly names the five companies (WuXi AppTec, WuXi Biologics, BGI, MGI, Complete Genomics) that earlier versions targeted; instead it builds a designation process, with BGI and MGI already on the Pentagon’s 1260H list and WuXi AppTec reportedly slated to join. And crucially, BIOSECURE targets manufacturing and CRO services and federal procurement, not the licensing of molecules. It makes it harder to have WuXi make your drug. It does nothing essentially to stop Pfizer from licensing a 3SBio bispecific. That distinction is everything, and most commentary blurs it.

Will the FDA impede China enough to keep the West competitive? No. It’s a speed bump, and China is already routing around it.

This is the question I get asked most, usually hopefully, by people who want the regulator to be the cavalry. I have to disappoint them.

The FDA’s leverage is real but narrow, and it rests almost entirely on one issue: China-only, single-country data. The agency’s position, reinforced repeatedly, is that a pivotal package drawn from an exclusively Chinese patient population may not be generalizable to U.S. patients, on grounds of both genetics and differences in medical practice and standard of care. The precedents are unambiguous. In February 2022, an FDA advisory committee voted 14–1 against Eli Lilly and Innovent’s sintilimab on exactly this basis. The agency rejected Hutchmed’s surufatinib and Junshi/Coherus’s sugemalimab in the same posture (toripalimab’s initial rejection was on manufacturing/inspection grounds, a different and more fixable problem). Even ivonescimab, the Keytruda-beater, hit the wall: the FDA has signaled a demonstrated overall-survival benefit is “necessary” for a U.S. filing, and ivonescimab’s global HARMONi trial showed a 21% reduction in death risk that did not reach statistical significance. Summit’s U.S. timeline is, as a result, uncertain. Roughly 25 Chinese oncology applications are reportedly under heightened FDA scrutiny over data-generalizability concerns.

So the moat exists. Here’s why it won’t hold.

1. The “data integrity” fear is largely outdated. The stereotype of fraud-riddled Chinese trials is a decade stale. A peer-reviewed 2025 analysis in the Journal of Evidence-Based Medicine found that FDA good-clinical-practice inspections of China-based trials improved dramatically: in 2009–2015, 9% drew the agency’s worst rating; in 2016–2022, zero did, and 88% received the best “No Action Indicated” rating. Suspected data fabrication in Chinese applications fell from 12% (2015–2017) to 0.6% (2022). (Caveat, per my own rules: this rests on a small sample of ~49 FDA site inspections, so don’t over-read the precision.) The point stands; quality is no longer the credible objection it was in 2016.

2. Chinese biotechs are already engineering around the single-country problem and the West’s own pharma is helping them do it. Three routes, all live: Global multiregional trials. The FDA is now openly steering Chinese developers toward multi-country trials that include underrepresented regions. Chinese sponsors are complying because their Western licensing partners insist on it. When Pfizer, Merck, or BMS licenses a Chinese asset, the global registrational trial gets run to FDA specification, by the Western partner, across Western and emerging-market sites. The China-only defect gets cured by the deal itself.

3. Western partnership as data-laundering, in the neutral sense. Once a molecule is licensed to or co-developed with a Western sponsor, it enters the U.S. as that sponsor’s program, developed under FDA’s preferred design from the start. The molecule is Chinese; the development program is not.

4. The NewCo structure, the most elegant workaround of all. A Chinese company (Hengrui is the archetype) spins its asset into a newly formed, Western-domiciled biotech, backed by Western VCs (Bain, Atlas, RTW and peers), taking equity instead of just cash. Hengrui’s GLP-1/GIP obesity assets went into a NewCo, Hercules, rebranded Kailera Therapeutics, for $110 million upfront and a ~19.9% stake. Kailera then raised a $400M Series A, a $600M Series B, and IPO’d on Nasdaq in April 2026, raising $625 million, with the stock up ~63% on day one. On paper, Kailera is an American company running global trials. Underneath, it’s a Hengrui molecule. The NewCo model doesn’t evade the FDA; it satisfies the FDA by construction, while giving Chinese originators equity upside in the Western capital markets.

There is a harder-edged political effort worth watching: in May 2026, the House Appropriations Committee attached report language seeking to bar the FDA from accepting clinical data generated in China, Russia, Iran, and North Korea for IND applications. If that ever becomes binding law, it would be a genuine escalation, a categorical wall, not a case-by-case judgment. But be precise about its status: it is report language, not enacted statute. It has no legal force today. Law firms are already advising clients to hedge by shifting trials to the EU and Australia and supplementing INDs with non-China data, which tells you the sophisticated money treats it as a manageable risk to route around, not a barrier that stops the flow.

So is FDA posture a durable moat for the West, or a speed bump? My assessment: a speed bump that raises the cost and timeline of bringing a Chinese-originated asset to the U.S. by a year or two, and kills the occasional China-only shortcut. It is not a structural barrier to Chinese competitiveness, because the entire ecosystem (Western pharma buyers, Western VCs, Chinese originators, and even the FDA’s own multiregional guidance) is actively converting Chinese molecules into globally developed, FDA-compliant programs. You cannot build a durable moat when your own industry’s business model is a bridge across it.

The bottom line for the West

Put the three answers together and the strategic picture resolves.

China is not “overtaking” the West so much as specializing; it has become the highest-velocity, lowest-cost originator of novel molecules on earth, and the data now backs that without much room for argument. For Western pharma, this is a windfall: cheaper (for now), faster pipeline than they could ever build in-house, and they hold the two assets China still lacks at scale, global commercial infrastructure and the world’s deepest capital markets. For Western early-stage biotech and its investors, it is a slow-motion competitive crisis that will force a repricing of what Western origination is worth. And the FDA, for all the hope pinned on it, is regulating the seams of a system its own domestic champions are busy sewing together.

The risk that actually deserves attention isn’t inventive decline. It’s dependency. If the West’s role narrows to financing, validating, and commercializing molecules that are increasingly invented elsewhere, then its competitive advantage becomes contingent on the free flow of assets across a border that geopolitics is actively trying to close. BIOSECURE and the appropriations riders are the first tremors of that collision. The uncomfortable truth is that the same globalized deal machine making Big Pharma rich this year is deepening a strategic reliance that Washington increasingly regards as a vulnerability.

My advice to clients hasn’t changed in eighteen months, and this reader’s question to me doesn’t change it now: stop asking whether China will win the origination race. It largely has. Start asking whether your business is positioned as an owner of the integration layer or a casualty of the origination layer. The West doesn’t need to out-invent China to stay competitive. It needs to decide, deliberately and soon, whether being the world’s best place to finance, prove, and sell drugs is a moat it intends to defend, or one it’s quietly letting silt up while it enjoys the licensing revenue.

I know which side of that I’d underwrite.

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Leave a comment

Reference Sources and Notes

Figures below are drawn from analyst and trade reporting between roughly mid-2024 and mid-2026. Deal databases (Jefferies, Stifel, GlobalData, DealForma, Evaluate) count and value deals differently, so treat aggregate totals as directional, not precise.

• Merck–LaNova (LM-299, PD-1/VEGF bispecific, $588M upfront / up to ~$3.29B), Merck press release, BusinessWire, Nov 14, 2024.

• Ivonescimab HARMONi-2 head-to-head vs. Keytruda — The Lancet, 2024 (PIIS0140-6736(24)02722-3); Akeso–Summit original license, akesobio.com, Dec 6, 2022; single-country/OS caveat and Summit filing uncertainty, BioSpace, 2025.

• China ~32% of global out-licensing deal value in Q1 2025 (up from ~21% in 2023–24) — Jefferies, via Fierce Biotech and GeneOnline, 2025.

• China ~31% of big pharma in-licensed pipeline assets in 2024 (by count) — Stifel, via Nature Reviews Drug Discovery (nature.com/articles/d41573-025-00068-0); ~28% figure — GlobalData, via Pharmaceutical Technology, 2024–25.

• “No longer the bargain basement” / rising upfronts — Evaluate (Mark Lansdell) and Cantor Fitzgerald (Li Watsek), via Fierce Biotech and BioSpace, 2026.

• Modality-share figures (bispecific/ADC/CAR pipeline shares) — 2026 datasets cited in trade coverage; the disputed “~90% of global ADC licensing” figure traces to a single advisory-firm tracker and is not corroborated by primary data (GlobalData; Daiichi Sankyo remains the leading global ADC licensor) — flagged as unreliable.

• China clinical-trial quality/GCP inspection improvement — Chen et al., “Quality of Drug Clinical Trials in China,” Journal of Evidence-Based Medicine, Nov 7, 2025 (PMC12750488); small-sample caveat noted.

• FDA single-country-data precedents — sintilimab ODAC 14–1, Feb 2022; surufatinib/sugemalimab rejections; toripalimab CRL on manufacturing grounds — contemporaneous FDA/trade reporting.

• FDA multiregional-trial preference and ~25 oncology applications under scrutiny — 2025–26 trade reporting.

• BIOSECURE in FY2026 NDAA (Section 851), named-company change, phased implementation — Dec 2025 reporting/analysis.

• House Appropriations report language on China/Russia/Iran/NK trial data — May 2026; noted as report language, not enacted law.

• NewCo/Kailera (Hengrui GLP-1/GIP; $110M upfront, ~19.9% stake; $400M Series A, $600M Series B, $625M Nasdaq IPO, +63% day one, April 2026) — 2024–2026 reporting.

• GSK–Hengrui (up to ~$12B, up to 12 programs, ~$500M upfront) — GSK press release and BioWorld; AstraZeneca–CSPC obesity (up to $18.5B) — early-2026 reporting; note the separate AZ–CSPC ~$5.3B deal is an AI oral-small-molecule collaboration, not an ADC deal, contrary to some secondary press.

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

In the first quarter of 2026, J.P. Morgan’s biopharma report counted roughly 50 seed and Series A investments worth about $2.3 billion. That is down from about 60 deals and $3.7 billion in Q1 2025, and it puts first-time financings on pace for their weakest year since before the pandemic. Now look at the other end. Cooley partner Mike Nelson, quoted in BioSpace, pegged later-stage rounds at about $4.5 billion across 51 deals in that same quarter, one of the strongest Q1 showings in years. Same sector. Opposite trajectories.

That is the barbell, and it tells you everything about how investors are behaving. They are not spraying capital across a portfolio and hoping the sector carries them. They are concentrating behind assets they believe will win, and they are willing to pay up to be in the ones they like. The uncomfortable truth for a first-time founder: the bar to get funded early has rarely been higher, even as headline venture totals look healthy.

This is a candid read on two things: what investors will and will not fund right now, and the bar you have to clear at seed and Series A. Numbers here are directional and drawn from public trackers current as of mid-2026. Verify comps against your own stage and therapeutic area before you anchor a negotiation to any of them.

Let’s get into it!

The investor outlook, and what actually changed since 2021

Start with rates and exits, because they set the mood for everything downstream. The zero-rate era that inflated valuations in 2020 and 2021 is gone, and it is not coming back on the timeline most founders wish it would. When capital is no longer free, investors underwrite to a return that has to clear a higher hurdle, and that discipline flows straight into how they price your seed.

The exit picture is genuinely better than it was, which is the part founders miss. By BioSpace’s tally, 18 biotechs went public in the first half of 2026, compared with 8 in all of 2025. The IPO window is open. It is just open for a specific kind of company. Almost every biotech that priced this year had a drug in mid- or late-stage testing, had already raised large private rounds, and worked in a hot area like immunology or oncology. No preclinical company has gone public since 2024. The window rewards de-risking, not ambition.

M&A tells the same story with bigger numbers. Large-cap buyers struck about 32 takeovers in Q1 2026, the same count as a year earlier, but the upfront value jumped to roughly $40.9 billion from $28.7 billion. Merck agreed to pay $6.7 billion for Terns, Lilly put $6.3 billion upfront on Centessa. Buyers are paying premiums, and they are paying them for late-stage, de-risked programs. The message to a Series A investor sitting across from you is simple: the exit is real, but it lives years away, and it wants proof.

Then there is Washington, which has become a genuine variable in the underwriting rather than background noise. Marty Makary resigned as FDA commissioner on May 12, 2026. His departure set off a cascade. Kyle Diamantas, a lawyer who ran the food division, stepped in as acting commissioner. Three of the agency’s most consequential drug and biologics posts are now filled by people in acting roles, each carrying a 210-day statutory clock, which all but guarantees more turnover ahead. The drug center has churned through five or six directors since January 2025. RBC’s Brian Abrahams made the point that matters for early-stage investors: long development timelines need long-term regulatory visibility, and constant turnover makes that harder to price. When John Maraganore, the former Alnylam CEO now investing, called the recent FDA “nothing short of chaotic,” he was describing a risk that shows up directly in your discount rate.

It is not all friction. Several Makary-era reforms have survived the turnover, at least for now. The Commissioner’s National Priority Voucher can compress certain reviews from months to weeks. The “plausible mechanism” pathway gives bespoke therapies a route that might not otherwise exist. A push toward approving on a single pivotal trial rather than two could cut real time and cost out of development. Investors like the direction. They do not yet trust the durability, because the people who championed these reforms keep leaving.

Two more forces are reshaping what gets funded. The first is China. Chinese-origin assets crossed 50 percent of global biopharma business-development activity for the first time in early 2026, with 53 outbound licensing deals in Q1 alone carrying more than $60 billion in headline value. Roughly 30 percent of the world’s novel drug candidates now come from Chinese-headquartered companies, and China’s regulatory reforms cut first-in-human approval timelines from around 500 days to under 90. That is a structural shift, not a blip. For a Western founder, it changes the competitive question an investor asks: is there a Chinese asset in your indication that a pharma buyer can license faster and cheaper than they can buy you? Sometimes the honest answer is yes, and you need to know that before the investor does.

The second is BIOSECURE. The act became law on December 18, 2025, as Section 851 of the FY2026 NDAA. Read the fine print, because most founders misread it. It restricts federal agencies from contracting with designated “biotechnology companies of concern.” It does not ban private licensing deals with Chinese biotechs, and the two WuXi entities are not currently on the list. What it does do is put a spotlight on manufacturing exposure. With an estimated 79 percent of biopharma relying on Chinese CDMOs, a single-asset biotech whose contract manufacturer gets designated could face 12 to 18 months of tech transfer, comparability work, and cost. Investors are now asking about your supply chain in first meetings. If your entire process sits with one CDMO of concern, that is a diligence problem you created before you walked in.

What investors are actually looking for

The bar comes down to one standard, and every strong early-stage raise is built on it: milestone-to-cash. The capital you raise has to buy a specific, value-inflecting result before the money runs out, with margin to spare. Not “progress.” A named milestone that repositions the company for a materially higher next round.

Concretely, that means a seed should get you to a defensible lead candidate with real in vivo proof of concept, or through IND-enabling work. A Series A should carry you into the clinic and, ideally, to a Phase 1 readout or an early Phase 2 signal that a partner or a crossover investor will pay for. If your raise gets you three-quarters of the way to that milestone, you have not designed a round. You have designed a bridge to a down round.

Everything else investors evaluate is in service of underwriting that milestone.

Team comes first, and in life sciences it is specific. Investors back scientific founders who can be honest about what their data does not yet show, paired with operators who have taken a program from bench toward the clinic before. A brilliant academic with no drug-development scar tissue is a coachable risk, not a fundable one, unless a credentialed operator sits beside them.

Science and mechanism have to survive a hostile read. The best investors bring in a KOL to try to break your biology in the first month. If your thesis rests on a mechanism a competent skeptic can dismantle in twenty minutes, you will not clear diligence.

IP has to be real and yours. Composition-of-matter coverage, freedom to operate, and a clean chain of title from the university. Weak or contested IP kills more early deals than weak data, because it is binary.

Indication choice is where founders get sentimental and investors get cold. Pick an indication with a defined patient population, a tractable trial, a plausible regulatory path, and a real buyer at the end. Rare and orphan settings remain attractive precisely because they compress the milestone-to-cash distance. A broad, crowded indication with a 500-patient Phase 2 and three Chinese fast-followers is not a fundable first program, however big the eventual market.

Capital efficiency is a live filter now in a way it was not in 2021. Investors want to see that you can reach the value inflection on the capital you are raising, not on a heroic assumption about the next round. Show the burn. Show the runway. Show the milestone landing with cash still on the balance sheet.

What separates the founders who close

In this market, the round does not go to the best science in the room. It goes to the founder who has internalized what the money is for and can translate it to investors.

The closers share a short list of traits. They picked an indication where the milestone-to-cash distance is short and the buyer is real. They designed a raise that reaches a genuine value inflection with cash to spare, not a bridge dressed up as a round. They know their risks cold and say them out loud. They named their competition, including the Chinese-origin asset they would rather not mention. They can be honest about what the data does not yet show without losing conviction in what it does.

The founders who do not close usually have good science and a story that only works if everything goes right. In a zero-rate market, that founder got funded on ambition. That market is gone. The one that replaced it backs winners, and it decides who the winners are by watching which founders already think the way the money thinks. Be that founder before you send the first email, not after the first pass.

Derisk. Demonstrate. Get funded.

Share

Leave a comment

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Sources & Notes

Market figures cited here are drawn from public reporting current as of mid-2026, including J.P. Morgan’s Q1 2026 biopharma report, BioSpace, BioPharma Dive, Fierce Biotech, and law-firm analyses of the BIOSECURE Act. Regulatory conditions at the FDA are in active flux and may have shifted since publication.

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

We told ourselves we were going back to clean up and renovate. Fix the place. Clear the remaining junk. Haul what was left back out to our respective homes. That was the version you write on a calendar. The real reason was quieter in my opinion. We wanted to stand inside the house that made us, while our father is still around and here to have made it, and put our hands on the same wood and the same tools he did.

This is a follow-up to “What He Left in My Hands.” Enjoy the read! It’s part of my ongoing therapy.

Four Days, Four Sets of Hands

We gave it four days this time. Four brothers, one house, no working crew but us.

The days belonged to the work. We pulled down walls that had stood since we were boys. We took apart the old shed board by board. We tore out landscaping our father planted before some of us could walk.

We did not only take things down. We painted the porch deck back to life. We got the old AC unit running again just in time for the sweltering heat in Western New York. We boxed up what no longer held value to us and gave it to others who might find some.

The days and nights belonged to each other. Beer, pizza, chicken wings, and beef on weck. All “Buffalo staples”. Stories we have told a hundred times and told again because telling them is the point. Four grown men in a partially-gutted house, laughing at things only the four of us would find funny.

We all have hired contractors during our careers. We have watched crews do in a day what would take us a week. None of that was the assignment here. The assignment was to do it ourselves, with our own hands, because that is the only inheritance our father ever actually cared about.

The Toolbox

We went through his tools. And there are a plethora.

Every wrench, every socket, every worn handle told us where we came from. These were not showpieces. They were used. They rebuilt a 1957 Chevrolet Bel Air from the axle up, in a driveway, on weekends, with four boys handing them over one at a time. He does not remember that car with great clarity as much as he used to. The tools do.What He Left in My Hands.

That is the thing about a man who works with his hands. He teaches you before you know you are being taught. You think you are just holding the flashlight. Years later your own hands know what to do, and you cannot say when they learned it. His memory is going. Ours came back this week through a toolbox.

The Shed

Not every teardown hurt. Some of it was mercy.

The old wooden shed in the back yard had been rotting for years. The wood came apart in wet handfuls. Rats had moved into what once held his ladders and his cans of paint. Breaking it down was the best therapy of the four days. We swung and pried and hauled, and something in each of us loosened with every board that let go. Some structures you take down and grieve. This one you take down and breathe. It had outlived its use. Taking it to the ground was how four brothers said the same thing without saying it. Time for a new chapter.

What You Take Apart to Keep

The shed was easy. What our father built to last was harder.

There is a strange grief in undoing the work of the man who taught you to work. I felt it pulling out the landscaping he planted. I felt it taking down the last wall. Some part of me wanted to leave the house exactly as he built it, frozen, a museum to a man who is still alive but no longer fully here. That instinct is wrong. A house he built to be lived in does not honor him by standing still. It honors him by being made ready for whoever comes next. So we took it apart to keep it. We removed to preserve. Every wall we opened, we closed better than we found it.

Then we pulled up the carpet.

Under the old rugs, room after room, we found the original wood floors. Hardwood our father installed before it was ever covered over. Scuffed, darkened, hidden for 4 or 5 decades, and still solid underneath. Everything else in that house we judged by whether it should stay or go. The floor made the decision for us. We are sanding it back, sealing it, letting it show again. The good thing was under there the whole time. It only needed the covering pulled off to be seen.

My Old Room

The first night, and throughout the four days, I slept in my childhood bedroom. The first time in more than 40 years.

I am a grown man. I close transactions for a living. I have spent thirty years learning to keep my composure in rooms where composure is the whole job. And I lay down in that small room, in that house, and felt something I have not felt in a long time. Not nostalgia. Something steadier than that. Comfort. Quiet. Respite. A need to recharge. The specific comfort of a place that knew you before you were anyone, and welcomed you back with no questions.

I fell asleep faster than I have in months. Perhaps partly due to exhaustion from swinging a sledgehammer.

The Standard Outlives the Memory

Our father never lectured us. He lived a standard and let us watch and learn. Suit up. Show up. Be accountable. Keep your word. Do the work yourself.

He cannot recite that standard now. He may not recall the house, or the shed, or the boys who handed him wrenches. It does not matter. This week, four of those boys stood in his house and lived every word of it. We showed up. We kept the promise we made to each other and to him. We did the work ourselves.

A day off

On Sunday, we went to see him.

Our work on the house was done on this day. The real reason for the trip was waiting in a memory care facility. I sat by his bed while he slept on early Sunday morning. I did not need him to wake. I wanted to be in the room.

He woke. He looked at me. He said:

”What are you doing here from California?”

He knew me. He knew where I live. He knew I had traveled a long way to sit beside him. For a few minutes the fog lifted, and my father was all the way in the room. It did not last. It never does. But it happened. He still remembers me.

His mind is letting go of the house, one room at a time. This week his sons put it back, one wall at a time.

The mind forgets. The hands remember. On that one day off, for a few minutes, so did he. Thanks for listening.

Kalshi launched 13 biotech contracts in partnership with the AI intelligence firm AppliedXL. You can now buy a contract on whether the FDA approves a specific Pharma medicine, and watch the price move as a live probability. Seventy-two cents means the market thinks 72%. The catalyst that used to live inside a bank’s private model now trades in the open.

I have priced drug assets in valuation exercises for over thirty years. I have written in these pages about the FDA-capital market nexus, about clinical equipoise, about the machinery that decides which molecules get money and which get buried. So let me be direct about what happened yesterday.

This is a genuinely new instrument. It is also the single most dangerous idea to enter drug-asset valuation in a decade. Both of those are true, and the reason they are both true is the same reason.

Let’s get into it.

What Kalshi actually built

Strip the novelty and the mechanism is clean. Public equities force you to buy the whole company at once: management, cash, pipeline, macro, all of it. You can be dead right about a readout and still watch the stock fall on a guidance cut in a different division. For a large-cap, one Phase 3 result is a rounding error on the share price. There has never been a way to take a pure position on that one result.

Now there is. A Kalshi contract isolates the binary event. It prices the science on its own terms. For anyone who builds probability-of-success estimates into a valuation, that is not a repackaged option. That is a new column in the model.

Kalshi built two guardrails in on purpose, and they are smarter than the critics give them credit for. First, late-stage only: Phase 3 trials at established companies, full approvals, no early-phase exploratory endpoints, and no conditional decisions. Late-stage primary endpoints are registered publicly, often pre-agreed with the FDA, so resolution is not a judgment call. Second, contracts list only after a trial finishes enrolling, because a visible price could bend physician referral and patient recruitment. They also require employment verification and resolve every contract against a named public document: the ClinicalTrials.gov primary endpoint, the approval letter, the advisory committee vote.

Hold those guardrails in your head. Every argument that follows is really an argument about whether they hold.

The Equipoise Paradox

Here is the objection that should keep you up at night, and it is not the insider-trading one. It came from Jonathan Kimmelman, whose research has shown that trial outcomes are genuinely hard to predict. His logic is a blade.

Clinical equipoise is the ethical ground on which we run a trial at all. It means the answer is honestly unknown. That uncertainty is what justifies randomizing a patient to one arm or the other. If it is truly unknown, a prediction market should produce noise. It should be a coin flip dressed up as a probability.

So run the two moves. The naive claim: an accurate market is a good market. The hard mechanism: an accurate market on a Phase 3 readout implies the uncertainty was never genuine, which means information was leaking, or the trial should not have been run the way it was. In this one domain, a market that works is not a triumph. It is a confession. If Kalshi’s biopharma contracts turn out to be sharp predictors, they are not solving an information problem. They are exposing one.

That is the paradox no press release addresses. The better these markets get, the worse the news about our research environment.

The incentive to break the thing you are betting on

A politics contract does not decide an election. A sports contract does not throw the game, not legally. A drug contract is different in kind, and the difference is the whole risk.

Researchers told STAT the obvious: financial incentives can push people with influence over a study to alter or delay decisions, and shift focus from finding accurate medical evidence toward moving a market. Think about who holds material nonpublic information on a Phase 3. CRO coordinators. Statisticians. Data-safety monitoring board members. Regulatory reviewers. Site staff who see the dropout curve before anyone else. That population is large, sophisticated, and now financially motivated in a way it has never been.

Kalshi’s answer is employment verification. I want to be fair to it: that catches the employee betting under their own name. It does not catch the spouse, the college roommate, the account two degrees removed. And Kalshi’s own record tells you the scale of the problem. This February the company disclosed it had investigated roughly 200 potential insider-trading incidents and still had more than a dozen open cases, one involving an editor tied to MrBeast. Those were bets on sports and reality television. Now point that same enforcement apparatus at the most information-asymmetric industry in the economy and ask whether verification is a wall or a speed bump.

Three more cracks, named plainly

Conformity kills the interesting molecule. Kimmelman’s second worry: liquid markets form around legible targets. The crowded mechanism, the obvious indication, the second-in-class asset everyone already models. The first-in-class program with no comparator gets no market and no signal. If capital drifts toward the visible probability, the machine rewards the obvious and starves the novel. That is the opposite of what venture is supposed to do.

Thin books lie. A market-implied 72% is only meaningful with depth behind it. Pilot contracts on single readouts will be thin. A handful of motivated traders can walk an implied probability wherever they want, and then that number gets quoted in a deck as if it were considered consensus. False authority is worse than no authority.

The data plumbing is leakier than the pitch. AppliedXL’s own disclosure undercuts the clean-resolution story: in April 2026 the FDA reported that 29.6% of studies highly likely to face mandatory reporting had submitted no results to ClinicalTrials.gov. You cannot resolve a contract cleanly against a public record that is a third empty. And Kalshi, not AppliedXL, is the sole and final adjudicator of every dispute that gap creates.

The verdict for the people who price this stuff

I do not plan to put a Kalshi implied probability into a fairness opinion, a board deck, or a valuation memo yet. The liquidity is unproven, the insider exposure is structural rather than incidental, and the regulatory posture is a blank page. Kalshi’s own CEO has backed legislation to ban prediction-market insider trading and said the company wants to work with regulators to get the boundaries right, which is a polite way of admitting the rules do not exist.

But do not dismiss it either. A liquid, honest contract on a specific PDUFA date or Phase 3 readout would be the cleanest catalyst signal biopharma has ever had public access to, and a real cross-check against an internal probability-of-success number that too often reflects internal politics more than science. The operative words are liquid and honest. Neither is guaranteed at pilot scale.

Watch three things. Whether any regulator, CFTC or FDA, says a word. Whether these contracts attract enough volume to mean anything. And whether the first insider-trading case inside a biopharma market surfaces.

That last one is not an if. It is a when. Do your diligence.

Share

Leave a comment

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.

In the first half of this year, biopharma companies raised more from public offerings than the entire sector managed across all of 2025. J.P. Morgan and DealForma counted roughly $1.8 billion in Q1 alone, clearing the full prior-year total in weeks. Kailera Therapeutics priced a $625 million debut and took the all-time biotech IPO record off Moderna. Parabilis Medicines went out near $670 million in June. By late June, fourteen biotechs had priced for about $5 billion in proceeds. Read the headlines and the drought looks over.

Read the cap tables and you see something narrower. Of the year’s first thirteen newly public companies, eleven raised at least $250 million, and all but one carried Phase 2 or later data. No preclinical company has gone public since 2024. Veradermics, built around a single hair-loss drug, is the best performer of the class, up roughly 600 percent from issue. Eikon Therapeutics and Generate:Biomedicines, the platform names, priced below their last private valuations and trade below their offering price. PitchBook’s Ben Zercher called it a bifurcated reopening. A J.P. Morgan banker put it more bluntly to BioPharma Dive: this is not a market that entertains the promise of a platform.

So the verdict for founders is simple, and it is not the one the headlines imply. From what I am seeing, 2026 does not fund science. It funds resolved risk.

Let’s get into it!

The Framework Still Holds. The Market Moved the Bar.

In the companion piece to this one that I wrote recently, “Your Science Is Not the Problem. Your Unremoved Risk Is.,” I argued that investors fund the disappearance of doubt, retired layer by layer across the 10 Layers of Venture Risk. That framework still holds. Financeability is what the market does with it.

The 10 Layers tell you which risks exist. 2026 tells you which ones a check now requires retired before it clears. In 2021, a generalist would buy a platform on narrative, and a Series A could close on preclinical proof of concept. In 2026, the median Series A runs $50 to $80 million and demands IND-ready data, sometimes a Phase 1 already dosing. The data bar moved up a full development stage.

Look at where it pooled. The top ten private rounds of 2025 brought in nearly $4 billion between them. Over the trailing year, OrbiMed appears in 18 disclosed rounds, RA Capital in 15, Forbion in 10. Therapeutics discovery platforms captured about 78 percent of disclosed venture capital, yet the dollars cluster in fewer, deeper bets. The structure of the market is haves and have-nots, and the dividing line is not the quality of the biology. It is how much uncertainty you have already taken off the table.

The Anatomy of a Financeable Biotech

Here is the operative test in this market. You are financeable when your current investor can name your next buyer and name the event that hands you to them. Call it the next-buyer test. Everything below feeds it.

A team that has retired risk before.

Founder Risk is Layer 1 for a reason. The repeat operator who has carried an asset through an IND, a readout, or a sale is underwriting a known quantity. The first-time founder with brilliant biology is underwriting a hope. Syndicates price the difference, and in 2026 they price it harder.

An indication with a buyer, not just a patient.

Indication selection is a financing decision wearing a lab coat. Obesity is the clearest case: biopharma committed up to $22 billion in obesity and diabetes licensing in Q1 alone, and Kailera built a record IPO on China-licensed GLP-1 assets. Immunology, oncology, and select neuro programs draw capital. Rare disease, post-2025, draws caution, because the regulatory path got less legible. Pick the indication the market is buying, or be honest that you are swimming upstream.

A derisked asset with a near-term inflection.

The asset-versus-platform divide is the defining structural fact of 2026. A single clinical asset with a dated readout is legible. A platform promising many shots on goal, with no lead program proving the engine works, is optionality the market will not pay for right now. Veradermics, one drug, outran every platform in its IPO class. That is the lesson, stated in stock price.

A capital plan with the inflection inside the runway.

Money buys you to a value-creating event or it buys you nothing. The financeable plan maps each dollar to a specific point where the next investor pays more: a readout, a partnership, an FDA interaction that resolves rather than opens questions. The unfinanceable plan funds activity and hopes the value shows up.

Exit visibility.

This is the engine under the whole window. Life sciences M&A hit roughly $240 billion in 2025 by EY’s Firepower count, up 81 percent year over year, with average deal size doubling to $2.1 billion. The driver is a $200 billion-plus patent cliff and cash-rich pharma hunting late-stage assets: Novartis bought Avidity for about $12 billion, J&J took Intra-Cellular for $14.6 billion, and Merck, Lilly, and Gilead have all been buying. That M&A cash recycles back into the IPOs and the venture rounds. If a strategic acquirer can see why they would want you in three years, your private investors can see why they should fund you now.

Syndicate construction.

Series B rounds in biotech almost always carry two to four co-leads; the sole-lead round at scale is rare. Build the syndicate that can fund your next round, not only this one. A cap table stacked with investors who lack the reserves or the appetite to follow on is a financing risk disguised as a closed round.

Why Good Science Still Gets a “No”

Promising programs miss capital for reasons that have nothing to do with the data.

They over-index on mechanism. A pitch that spends twenty minutes on pathways and two on the clinical and commercial path leaves the room impressed and unconvinced. They target the wrong investor for the stage: a preclinical platform pitched to a crossover fund is a “structural no” that the founder mistakes for a quality judgment. They set an inflection outside the runway, which guarantees the company is back in the market before it has the data that would reprice it. They build a platform with no anchor asset, asking the market to pay for breadth before it has seen depth. And they choose an indication with elegant biology and no buyer.

Each of these is a sequencing failure, not a science failure. That distinction is the whole game.

Structure to Stay Financeable Through the Next Inflection

Raise to a data point, not to a calendar. Every round should purchase a value inflection that lets the next investor pay a higher price. If a round does not buy a repricing event, it buys dilution.

Build the runway with margin, because 2026 punishes the company that runs out a quarter short of its readout. Replimune is the cautionary tale: after a surprise rejection, its cash extended only into early 2027, leaving it one decision away from needing a new financing plan to survive. Model the readout, then add a cushion for the readout slipping, because it will.

Use the tools the market is using. Insider-led extensions and tranched rounds bridge a company to its inflection without a punitive down round. Crossover rounds, increasingly oversubscribed for strong pre-IPO names, are the prerequisite for a public listing, not an afterthought. And dual-track. Cooley’s bankers note that many companies now run an IPO process and an M&A process in parallel at once. Optionality at the exit, discipline at the asset.

The Variable You Cannot Model

One risk sits outside every founder’s control, and it has repriced the sector. The FDA.

Commissioner Marty Makary resigned in May. Roughly 90 percent of the agency’s senior leaders from a year ago are gone. CDER has cycled through six leaders since January 2025. UniQure lost about a third of its market value in a single session on regulatory commentary, and somewhere between 37 and 41 percent of applications now draw a first-cycle complete response letter. This is the one layer you cannot retire with data, because the rule changes after you have run the experiment.

I have argued in BioSpace that regulatory unpredictability is the most addressable driver of biotech’s capital-markets problem, because it attacks valuation from both sides at once: it lowers the probability of approval and raises the discount rate investors demand. A clinical-stage company that models at $20 a share on a 12 percent cost of capital can model at $14 on 15 percent, with no change in the underlying science. The 2026 window is a keyhole, not a door, and the keyhole stays narrow until the agency gives investors a backdrop they can underwrite.

What you can do is refuse to build a financing plan that needs a brave FDA. Pick indications and trial designs that minimize regulatory variance. Resolve every question the agency will let you resolve before you raise against it. Treat regulatory derisking as a financing milestone, because that is exactly what the market now treats it as.

What To Do Before Your Next Raise

The financeable company in 2026 is not the one with the best science in the room. It is the one whose next data point a named buyer is already waiting for.

So run the test before you run the process. Name your next investor. Name the event that hands you to them. Name the date it lands. Then count whether your runway reaches that date with margin to spare. If you cannot answer all four, you do not have a financing problem yet. You have a sequencing problem, and capital will not solve it.

Fix the sequence first. Derisk to the inflection. Fund to the buyer. Everything else is a story, and 2026 has stopped paying for stories.

Derisk. Demonstrate. Get funded.

Share

Leave a comment

Thanks for reading Cardiff Insights! This post is currently public, so feel free to share it. If you’ve been a free subscriber for a while now and you value what we have to say, I hope you’ll consider becoming a paid subscriber to Cardiff Insights. We provide 100% of the content for free because we all know that not everyone can afford to pay. If you value what we have to say and you have the means, a paid subscription goes a long way to sustaining this effort. All you need to do is click here:

Sources & Notes

J.P. Morgan / DealForma and BioPharma Dive (2026 IPO proceeds, deal counts, median raise, platform vs. asset performance); BioBucks (2026 IPO tracker, Parabilis, Kailera); Vision Life Sciences and PitchBook (2025 venture deployment, Series A size and data bar); New Market Pitch (repeat-investor concentration, platform share of capital); EY Firepower and BioSpace (2025 M&A value, average deal size, patent cliff, named transactions); BioPharma Dive (FDA leadership turnover, CRL rates, Replimune and UniQure); D. Crean, BioSpace, “The Hidden Cost of FDA Unpredictability” (cost-of-capital framing). Figures current as of late June 2026

Disclosure

Cardiff Advisory LLC is an M&A investment banking, strategic advisory and valuation firm focused on the Life Sciences and Healthcare sectors. This article is provided for informational purposes only and does not constitute an offer, invitation, or recommendation to buy, sell, subscribe for or issue any securities.

The principals of Cardiff Advisory LLC are registered representatives of BA Securities, LLC Member FINRA SIPC, located at Four Tower Bridge, 200 Barr Harbor Drive, Suite 400 W. Conshohocken, PA 19428. Cardiff Advisory LLC and BA Securities, LLC are unaffiliated entities. All investment banking services and securities are offered through BA Securities, LLC, Member FINRA SIPC.

© 2026 Cardiff Advisory LLC.