The adage 'biotech companies are bought, not sold' means an acquisition is typically not the result of a company actively seeking a buyer. As with Portola's sale to Alexion, it is often a fiduciary responsibility to consider an unsolicited offer, even if the internal plan is independent growth.
During market downturns, biotech companies lose the ability to raise capital simply when it's convenient. Financing becomes tied to specific events. The key is timing a fundraise immediately before or after the release of significant clinical data that de-risks the company and attracts new investors.
After the 2007-2013 biotech IPO drought, Portola Pharmaceuticals successfully went public by setting reasonable expectations. The goal wasn't a sky-high valuation but to gain liquidity and access to capital, recognizing the IPO is a starting line, not a finish line, for value creation.
Investors bet against new drug launches because the shift from a research-focused culture to a commercial one is seen as an 'unnatural transition.' Companies are graded harshly on early results, creating a predictable valuation dip that hedge funds exploit, as seen with Portola Pharmaceuticals.
Instead of a broad launch targeting primary care, Madrigal focused its specialty sales force on the 315,000 patients already diagnosed with moderate-to-severe MASH. This disciplined approach of targeting a specific, existing patient population allowed for efficient market penetration and rapid success.
A biotech transitioning from a small, 'fit-for-purpose' R&D team to a large commercial organization gets a rare chance to create a new culture. Madrigal treated its rapid growth from ~100 to over 500 people as an opportunity to establish fresh core values for the newly-formed enterprise.
Madrigal defied the typical 12-18 month pre-launch hiring window by bringing in a new CEO just seven months before approval. He leveraged his network to quickly assemble an experienced commercial team he had worked with before, enabling the company to build a sales force and launch in record time.