Off-the-record with biotech leaders
Biotech outcomes are binary and milestone-gated, and the math on that doesn't really have a gradient: if you need $100M to reach your next meaningful readout, raising $50M doesn't buy you partial progress. It buys you nothing in particular.
That single structural fact ends up shaping a surprising amount of how biotech leaders behave externally, because if every interaction with the outside world is in some sense in service of clearing the next milestone, then over time almost every interaction with the outside world starts to look like marketing.
And the further consequence of that is that the industry ends up with very few rooms where honest information actually circulates, which makes it harder for biotech to learn from itself in the way that other industries can.
We’ve been thinking about this because of a pattern that's shown up at a series of small dinners we've been hosting over the last few months. We’ve been inviting five or six biotech leaders at a time to join us for a meal in places like New York, Boston, and San Diego, mostly amongst peers who don't know each other before the evening starts. The dinners aren't structured as anything in particular, and we deliberately don't record them or program around a topic. What's been striking is how quickly the tone shifts once one person in the conversation says something more candid than the public version of their company would normally allow.
Founders who, by every external measure, are doing extremely well will start describing what their last round actually looked like, how long it took to close, or the team changes they had to make in the weeks before the announcement. Leaders who present as fully composed and optimistic on panels will admit how much time they spent last year preparing for various less-than-ideal outcomes.
The easy read on all of this is that biotech leaders are unusually performative, or that the industry rewards spin more than it should, but we don't think that's quite right. The gap between the public version of biotech and the private one looks more like a structural consequence of how the industry is built.
The math doesn't have a gradient
In software, progress tends to compound: you can ship a smaller version of the product, get some customers, grow into the next round, and the company moves forward in pretty steady increments. The amount of money you raise scales roughly with the amount of progress you can actually make. There's a gradient there, which means there's some forgiveness in the system. You can raise less than you wanted and still be in a meaningfully better position six months later.
Biotech doesn't have that gradient, or has much less of one. The reason is that the events that matter – like a Phase 2 readout, an IND-enabling package, a clinical proof point, a successful partnership – are mostly binary, and they each have a minimum amount of capital required to reach them. That minimum amount doesn't shrink because the macro environment got worse.
That fact reshapes a surprising amount of what happens downstream. Once you accept that the next milestone determines whether the company survives, you also accept that almost every external interaction is in some sense in service of clearing it. Conferences are in service of it, fundraising obviously is, recruiting is, partnership conversations are, and even casual conversations end up filtered through it. Everyone in the room understands that perception affects the next raise, and the next raise determines whether the science gets finished.
The conditions of the last few years have made this sharper. When markets were good, investors had to move fast or risk missing the deal, and founders could raise on the strength of a narrative. When markets cooled off, the leverage flipped, and investors started writing terms that would have been pretty hard to imagine a few years earlier. In some cases this has gone as far as investors preferring to lock in a much larger raise up front at early-stage terms, tranched across two or three milestones, basically as insurance against the possibility that the goalposts will move between rounds and the company will get stuck mid-progress with no way forward. A seed-stage founder agreeing to series B economics isn't something you'd see in most other industries, and it tells you something about what biotech founders are actually optimizing for, which is rarely the optics of any individual round and almost always the question of whether the company can clear the next activation energy at all.
The optics tax
Once you internalize the milestone structure, the public/private gap switches from looking like vanity to looking like a fairly rational response to the incentives in front of founders. What this produces, as you accumulate it across companies and years, is an industry with very few rooms where honest information actually moves around.
That matters more than it sounds. Industries get better, in the long run, by exchanging real information about what failed, what turned out to be harder than expected, what looked promising in the lab and stopped looking promising in the clinic, what people thought was a solved problem and turned out not to be. When most of the information in circulation has been filtered through fundraising optics, the signal gets noticeably thinner, and companies dealing with the same operational problem start to assume they're the only ones dealing with it, because nobody around them is admitting to it publicly. Founders end up calibrating against a version of the industry that doesn't quite exist, which is a strange thing for an industry to do.
There are second-order effects of this too. A lot of what's come up at the dinners hasn't been about capital at all, but about asymmetries that founders don't feel they can talk about publicly because the counterparty is too important. Odd data-room requests during diligence with a large pharma partner, processes that mysteriously stall in ways that happen to increase pressure on the smaller company, ambiguities about where data actually sits and who has access to it after a sample leaves the building. None of this is the kind of thing a founder would raise on a panel, because the same large company is usually in the audience or one row of relationships away from it, and so the patterns stay inside individual heads and never get named across companies that are encountering very similar versions of them.
The relief of being understood
What has stood out about the dinners isn't that people complain when they get the chance (because they mostly don't). Rather, it's how much more useful the conversation gets once one person in the room describes the actual last six months instead of the marketed version, and how reliably the rest of the room then shifts in the same direction. The conversation stops being narrative against narrative and starts being about what people are actually trying to figure out.
Optimism is genuinely necessary in this industry, and we don't want to suggest otherwise. Nobody spends a decade building a therapeutic without believing that a hard version of something is possible, and that belief is part of what makes biotech work at all. But there's a real difference between optimism, which lets companies endure long periods of uncertainty without losing direction, and permanent performance, which slowly erodes the industry's ability to talk about uncertainty when it actually shows up. The first is a feature of how good biotech founders operate. The second is a tax the industry has been paying for a while now, mostly without naming it.
When we started hosting these dinners, we didn't fully expect how much biotech leaders seemed to want the format itself. What they seemed to want, more than anything, was a room where nobody had to perform certainty for a few hours. We’re excited to continue these formats. If you’d like to join a future dinner, message us.
Kaleidoscope is a software platform for Life Science teams to robustly orchestrate their R&D operations. With Kaleidoscope, teams can plan, monitor, and de-risk their programs with confidence, ensuring that they hit key milestones on time and on budget. By connecting teams, projects, decisions, and underlying data in one spot, Kaleidoscope enables R&D teams to significantly compress the time between critical decisions, in their path to market.