Nice article from @sheridan_kate of @statnews on the weird intricacies of biopharma valuations. I also think we've been in an environment where clinical stage co's are often valued lower than hot platform co's that are two plus years from the clinic. 1/9 https://www.statnews.com/2020/09/14/biotech-startup-valuation-private/

Some of this is the promise of new drug modalities & approaches; some is momentum & a separation of the world into the "haves" & "have nots". Perhaps the latest escalation has something to do with more generalist capital entering the space & wanting validation from the pack? 2/9

There's no denying that many preclinical companies are valued at 5x or 10x what they would have been a decade ago. But there's an argument to be made that many of the platform co's of today represent fundamental advances vs. the type of preclinical co's we had a decade ago. 3/9

But another ramification of momentum and "piling on" is massive rounds being raised since 1) the valuations are attractive & 2) the appetite from investors is there. There are dark sides to this, of course: mega-rounds can reduce discipline in choosing targets and the drug... 4/9

...dev't process itself. They usually mean expanding the pipeline / pushing forward multiple programs simultaneously, & this isn't necessarily optimal for the industry when played out across so many co's. Should a downturn occur, many co's will be sitting on a valuation... 5/9

...that suddenly feels too high; & while valuations are negotiable, sometimes new investors just pass & keep looking. Down rounds aren't a lot of fun for anyone. And to the extent that big rounds usually mean more programs moving forward, management teams are stretched more. 6/9

Of course, a benefit of raising a huge round is that ostensibly management gets to rest for a while and just focus on operational progress. Doesn't always work out that way. Gotta keep going with the momentum, which means moving quickly to crossover round / IPO. It's nice... 7/9

...to see the capital flowing into the industry, & the recognition of the extraordinary science and advances. We are truly at a unique time in drug development. But sometimes buoyant investor interest can carry complexities, & of course we all wonder when the music will stop. 8/9

When it does, and capital gets more scarce again, the same things as always will have mattered: novel science; picking the right targets and indications where there's high unmet need; smart, efficient drug development; strong IP protections; and great management. 9/9