The 2020-2021 biotech "bubble" pushed very early-stage companies into public markets prematurely. The subsequent correction, though painful, has been a healthy reset. It has forced the sector back toward a more suitable, long-duration private funding model where companies can mature before facing public market pressures.

After years of focusing on de-risked late-stage products, the M&A market is showing a renewed appetite for risk. Recent large deals for early-stage and platform companies signal a return to an era where buyers gamble on foundational science.

The most dangerous venture stage is the "breakout" middle ground ($500M-$2B valuations). This segment is flooded with capital, leading firms to write large checks into companies that may not have durable product-market fit. This creates a high risk of capital loss, as companies are capitalized as if they are already proven winners.

Renowned gene therapy pioneer Jim Wilson was forced to spin out ultra-rare disease programs into a new company after his initial venture failed to attract VC funding. This demonstrates that even elite scientific leadership cannot overcome investor disinterest in this segment without powerful, predictable government incentives like transferable priority review vouchers.

Responding to Wall Street pressure to de-risk, large pharmaceutical firms cut internal early-stage research. This led to an exodus of talent and the rise of contract research organizations (CROs), creating an infrastructure that, like cloud computing for tech, lowered the barrier for new biotech startups.

In a capital-constrained market, positive clinical data can trigger a stock drop for biotechs with insufficient cash. The scientific success highlights an immediate need for a highly dilutive capital raise, which investors price in instantly. Having over two years of cash is now critical to realizing value.

A massive disconnect exists where scientific breakthroughs are accelerating, yet the biotech market is in a downturn, with many companies trading below cash. This paradox highlights structural and economic failures within the industry, rather than a lack of scientific progress. The core question is why the business is collapsing while the technology is exploding.

Venture capital for US seed and Series A cell and gene therapy companies has collapsed from a historical high of 17-21% of deals to only 7% this year. The sharp decline is driven by a confluence of factors including patient deaths, persistent manufacturing challenges, and growing regulatory uncertainty.

The path for biotech entrepreneurs is a long slog requiring immense conviction. Success ("liftoff") isn't just a clinical trial result, but achieving self-sustaining profitability and growth. This high bar means founders may need to persevere through years of market indifference and financing challenges.