Times Square Capital mitigates biotech risk by investing after a company's first drug receives FDA approval. The investment thesis then focuses on the more predictable execution and market expansion risk (e.g., scaling sales, new indications) rather than the binary, high-stakes outcome of initial clinical trials.

Despite sound science, many recent drug launches are failing. The root cause is not the data but an underinvestment in market conditioning. Cautious investors and tighter budgets mean companies are starting their educational and scientific storytelling efforts too late, failing to prepare the market adequately.

While pioneering antisense oligonucleotide (ASO) therapies, Ionis faced immense scientific and financial hurdles with no guarantee of success. Competitors like Gilead abandoned the field, but Ionis persevered through decades of uncertainty, ultimately proving the viability of the new drug modality.

The old assumption that small biotechs struggle with commercialization ("short the launch") is fading. Acquirers now target companies like Verona and Intracellular that have already built successful sales operations. This de-risks the acquisition by proving the drug's market viability before the deal, signaling a maturation of the biotech sector.

CEO Brett Monia pivoted Ionis from a pure R&D partnership model to a fully integrated biotech. He argued that relying on partners stalled promising drugs and suppressed the company's valuation, necessitating the development of in-house commercial capabilities.

Even with strong initial sales, Soleno's stock was punished due to a growing investor fear of the 'launch plateau.' Citing examples like Skyclaris, the market is now skeptical that a few good quarters can be sustained, discounting strong early performance and demanding proof of long-term growth trajectory before rewarding a stock.

An analysis revealed that buying a portfolio of biotech firms with poor data in 2022 would have yielded better returns than buying those with great data. This counterintuitive finding highlights the market's tendency to over-punish initial failures and undervalue the potential of strategic pivots.

A primary driver of recent pharma launch failures is underinvestment in pre-launch market conditioning. Cautious investors and tighter budgets mean companies have fewer resources to tell their scientific story effectively before launch. This delayed and underfunded approach has a dramatic negative impact on commercial success.

Confident in its Phase 3 data for a large indication, Ionis took the calculated risk of hiring its sales force months before anticipated FDA approval. This allowed the team to be fully trained and ready to execute the launch immediately, maximizing momentum from day one.