The Dual Track is Working for Biotech Companies at Every Stage
Pharma is putting its money where its mouth is, but the dual track isn’t just about IPOs
Evidence that all biotech companies pursue the “dual track” of investor-driven capital expansion and M&A at any time in their corporate evolution continues to grow. As Managing Partner Matt Lane discussed earlier this week with James Waldron from Fierce Biotech, M&A activity in biotech has been moving at a historic pace in the first quarter of 2026. Since the turn of the year there have been a dozen $1 billion + deals struck, which for context, is as many as occurred in any year from 2017-22 and more than double the annualized pace of 2023-25. Included in this transaction count are both public companies who had recently accessed the public markets to fortify their balance sheets and at least 2 private companies that were thought to be actively contemplating an IPO prior to their acquisition.
While some of the reasons for this uptick in activity are well known, what we think may have kicked the process into overdrive is that Pharma wants to get ahead of a strengthening public biotech market that is increasingly receptive to higher priced IPOs and large secondary offerings. When companies are able to raise public capital successfully, the take-out prices for acquisition targets go higher by increasing the amount of capital that is willing to finance development stage biotech. The era of the deeply discounted noncompetitive "take it or leave it” bid may finally be behind us.
The current market dynamics are a good reminder of how critical it is for all biotechs to consider both the strategic and investor audiences when contemplating external communication and outreach efforts. By focusing on the needs of investors alone, you can miss opportunities to attract the interest of potential strategic partners who are actively seeking to grow via M&A but often have priorities that are quite distinct from the market. Here are some ideas to ensure your communications strategy and content works in both the strategic and investor contexts.
Think “big picture”. Strategics have a more holistic view of the industry and significantly longer time horizons than most investors. Take a step back and make sure your messaging and content includes landscape context and opportunities for long-term value creation.
Lean-in on innovation. The advantage of smaller, more agile biotech players is their ability to innovate. Be clear around your specific areas of expertise and areas of investment, and the potential benefits and outcomes of your approach including areas like speed, increased probability of success or capital efficiency. Intellectual property and technical capabilities are important assets to showcase
Highlight optionality. When communicating your strategy demonstrate flexibility to build your company and achieve your corporate goals multiple ways. Convey momentum and willingness to adapt to multiple business scenarios, not depend on a single path.
Understand your theoretical ROI. To meet their requirements for a return, acquirors are ultimately buying future revenue and associated cash flow streams. For pre-commercial companies it is important you do the work to understand your target patient populations and end-markets, so that you are able to highlight the commercial potential of your asset or pipeline – even at an early stage.
Understand their motivation. Understand the pain points and areas of focus for your most likely potential partners and position your assets or company as their solution. Make sure to provide updates on areas they care about, which may overlap or differ from what investors prioritize.
Stay committed to both paths of the dual track process. Companies that succeed in the dual process do so because the do more than just feign interest in remaining independent. They raise capital, establish syndicates and file the necessary regulatory documents. It’s a paradox that happens to be true. To get bought, you can’t really be for sale.
There is an old saying on Wall St that people sell stocks for many reasons, but they buy for only one, they see higher prices coming. Recent activity strongly suggests this is how Pharma currently views biotech. To maximize the chances of getting their attention while they are looking to buy make sure your communications, including investor facing communications, always consider how to make points around value, competitive differentiation and future commercial opportunity visible and compelling.