Terns Pharma successfully shifted its focus after its GLP-1 obesity drug showed underwhelming results. By pivoting to its promising oncology asset for chronic myeloid leukemia, the company dramatically increased its value, culminating in a nearly $7 billion acquisition by Merck. This demonstrates the value of decisively abandoning struggling programs for high-potential ones.

Synnovation's deal structure allows it to sell a single oncology asset for a large return to VCs, while the core drug discovery team remains to advance the rest of the pipeline. This 'hive-off' model offers a compelling alternative to traditional M&A or IPO exits.

When a promising ALS drug failed Phase 2 trials, the company shut down. The drug's original founder, Dr. Ari Azhir, still believed in the science, repurchased the asset and all its data, and ultimately uncovered its true potential, leading to a new FDA application.

Contrary to seeking fully de-risked assets, pharmaceutical companies often prefer acquiring companies with some remaining clinical risk. This strategy allows them to leverage unique insights on early data to acquire assets at a better valuation, creating an opportunity for outsized returns before the value is obvious to others.

Paragon Therapeutics operates a venture creation factory. Instead of discovering new targets, it applies its core half-life extension technology to validated biologics to create improved "bio-better" versions. It then spins these assets out into disease-focused companies like Spire (IBD), de-risking development by focusing on engineering and execution rather than novel biology.

While large pharma companies invested heavily in RNAi and failed to produce candidates, Alnylam maintained a singular focus. They pushed their technology into human trials to learn and validate it, ultimately succeeding where better-funded competitors with a less focused, product-driven approach failed.

Terry Rosen saw an opportunity as big pharma culturally shifted from deep R&D towards an asset-management model. He founded Arcus to fill this gap, building a company focused on the small molecule drug discovery expertise that the industry was starting to abandon, creating a counter-cyclical advantage.

ProPhet was founded through Ion Labs, a venture studio created by AstraZeneca, Merck, Pfizer, and Teva. This model allows established pharmaceutical giants to identify acute internal challenges and recruit external talent to build dedicated startups aimed at solving them.

Venture capital is shifting towards creating new companies from multiple de-risked assets acquired from large pharma. Bain's $300M investment to build a company around five BMS assets, led by a proven CEO, exemplifies this strategy. It mirrors previous successes like SpringWorks and minimizes single-asset failure risk.