Biotech Industry Insight - Green Shoots, Same High Bar
Why optimism is returning, but only disciplined stories are getting funded?
Why optimism is returning, but only disciplined stories are getting funded?
As we head into the end of the year, a distinct air of optimism has returned to biotech. The XBI is hitting multi-year highs, and the existential dread of the spring feels more distant. Pharma still needs assets, the FDA is still approving drugs, and scientific progress continues. The industry will survive — in a form most of us recognize.
Despite the improved sentiment, the fundamentals remain challenging. Many of the hallmarks of the last five years persist: companies trading below cash, dwindling balances, and investor concentration in fewer “good” stocks. A few figures from the banks underline the point:
57% of publicly traded biotechs have a market cap at or below $250 million.
60% have less than two years of cash.
43% of capital in leading life sciences portfolios is concentrated in just five positions.
These numbers aren’t new — but they frame the central question: how does a company get into the investable circle when capital is finite? Investors are speaking clearly. Not every program deserves funding just because it’s furthest along. What’s investable is what is most valuable, not what is most advanced.
The path to credibility isn’t complicated, but it does require discipline. Management teams should:
Ruthlessly self-assess. Your lead program isn’t always your most valuable one.
Prioritize focus. Get one program over the goal line instead of spreading resources across three stuck at the 20-yard line.
Listen to investors. They are telling you what they view as investable - don’t ignore the feedback.
Align budget and development plans frequently. Adjust before you’re forced to.
Spend less and survive longer. It’s blunt, but survival is a strategy in a tight market.
We’ve worked with biotech management teams through some of the toughest decisions a company can face. In several cases, Phase 3 programs were scrapped in favor of earlier-stage assets. Those pivots weren’t easy — but they were followed by successful financings because investors could see a clearer, more credible path forward.
Credibility comes from aligning clinical strategy with financial reality. Investors reward hard choices when they see discipline and pragmatism, not wishful thinking. In this market, the companies that act decisively are the ones still raising capital.
By matching development priorities with financial plans, management teams can demonstrate a realistic path to returns that resonates with today’s investors. Those who do will keep existing shareholders on board — and will be first in line when new capital starts moving again.
At Milestone Advisors, we help biotech and life sciences companies sharpen their investor relations strategy — with clarity, discipline, and credibility. In a market where only the most investable stories get funded, that edge makes all the difference.
Oct 17, 2025