Even when capital flows freely, biotechs benefit from efficiency

Biotech funding momentum is building: Jefferies reports that January 2026's VC total is up 69% over the 2025 monthly average, a strong start to the year. As capital returns, it's tempting to expand quickly — even before growth is justified by data — but greater capital requires greater discipline on the part of leadership.

Through strategy and efficiency, biotechs can extend funding runways. But what does that take, practically speaking? We asked our expert panel of Clinical Trialblazers: Geeta Vemuri, managing partner and founder of Agent Capital; Antti Vuolanto, CEO of Herantis Pharma Plc; and Balazs Felcsuti, partner at Health Advances.

Pursuing the most advantageous indication

Vemuri, whose venture capital firm has more than $200 million in assets under management, noted that the previous funding boom prioritized platform expansion. This time around, investors are more interested in product development and are keen for biotechs to reach the clinical stage as quickly as possible.
As biotech leaders choose which products and indications to move forward with, Felcsuti urges them to consider five key questions:

• For the selected indication, is the mechanism of action likely to succeed?
• Does the product have strong commercial potential?
• Will the likely regulatory pathway be relatively unhindered?  
• Are timelines and costs reasonable?
• Is the product well within the biotech’s core capabilities?

For any product or indication, there will be tradeoffs, as no single option will be optimal across all considerations. With input from investors and other stakeholders, however, biotechs can take informed risks that will help them reach their next value inflection milestone and raise additional capital for continued development work.

Progress over optionality

By using this five-question framework, a biotech can — and should — narrow its focus to only one or two indications, said Felcsuti. In the interest of obtaining as much data as possible, biotechs often design complex trials. While basket trials and similar models give developers more options with their product, the research process is slower and more costly. Holding closely to the development path that offers the greatest chance of success helps biotechs boost their valuations. “Being able to demonstrate progress is more important than demonstrating success on multiple fronts,” Felcsuti said.

At Herantis, which develops therapies for Parkinson’s disease, Vuolanto’s team considered combining a single ascending dose study with a multiple ascending dose study of a new chemical entity. Because the team was interested in demonstrating not only safety but brain penetration, however, they opted for the simpler design, knowing that data on brain penetration in healthy volunteers would dictate Herantis’s next move. “Now we have an extremely strong phase 1 data set,” said Vuolanto, noting that the data led to greater understanding of patient biomarkers. That biomarker data, he said, wouldn’t exist if dosing studies had been combined.

Efficiency through outsourcing

At Herantis, Vuolanto leads a lean team and outsources laboratory and operational work. This allows internal experts to focus on core capabilities while making Herantis more agile and keeping fixed cost low. “We’ve had very good feedback from our own investors that our model has been really transparent and easily understandable,” he said.

Vemuri praised this approach, noting that she’s seen its value particularly in the immuno-oncology space, in which some companies are shifting to focus primarily on immunology but are hampered by oncology-specific infrastructures. She’s also seen companies spend on complex manufacturing setups before they know if their products will reach that stage of development. “Minimize expenditure as long as possible,” she said. “Challenge spending decisions and validate them continually.”

Discipline is strategy

Biotech leaders know how to be efficient with capital when the funding runway is shrinking. But disciplined spending isn’t just a crisis response — it’s a smart strategy for maximizing investment and testing choices. Regardless of the capital available to them, biotechs should focus on essential tasks that will demonstrate value. “Find that thing that takes you to the next answer in the drug development process,” said Vemuri.  “Act like a blue-collar CEO. Even if you have lots of cash available, you're working for the investors and for the patients. It’s all about the patients, and demonstrating patient value has never been more important.”

Felcsuti agreed. When biotech CEOs worry about dips in funding or regulatory turbulence, he reminds them that funders will always be willing to invest in innovation. “I just tell my clients: you're in the right industry,” he said. “We're doing great things for patients. Don’t forget that.”

More from our experts

For practical advice on extending your biotech’s funding runway, watch our experts in conversation in our one-hour panel discussion. You can also hear more from them on the Clinical Trialblazers podcast. In past episodes, we’ve talked with Vemuri about how to make your biotech appealing to investors and with Vuolanto on the importance of taking risks and building trust, both with colleagues and investors.

What does capital efficiency look like for your biotech? The Parexel Biotech team can help you navigate funding decisions and clarify your development priorities. Get in touch to continue the conversation.
 

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