Bildnachweis: Science2Capital.
Every early-stage life sciences asset is heading towards the most regulated industry in the world. The process used to evaluate these assets, however, is rarely held to any comparable standard. Applying pharmaceutical quality thinking to due diligence itself makes assessments validated, reproducible, and comparable.
When a new drug fails at the approval stage, it is usually not a matter of biology. 74% of the rejection letters the FDA made public in 2025 cited quality or manufacturing deficiencies: the companies could not prove they could reliably produce what they intended to sell. Regulatory approval is often the first time an asset faces the full commercial standards of the market. Yet the gaps such a test exposes are baked in years earlier, and no clinical gate in between catches them because every stage checks only what the next step needs. Detected early or late, the result is the same: no approval, no return. The difference is what an investor paid to find out.
Expert opinion is the lowest tier of evidence
How are such risks assessed? Usually by experts: specialised funds keep that knowledge in-house, most other investors as- semble it: a clinical opinion leader here, a regulatory advisor there. Each input may be excellent, but inputs do not integrate themselves. Evidence-based medicine ranks expert opinion as the lowest tier of evidence – not because experts are wrong, but because individual judgement is not a system: not reproducible, not comparable across deals, and blind at the intersections of the disciplines that ultimately decide whether any projected upside is real.
The target industry already has the answer
Pharmaceutical companies solved this long ago for their own programmes. Quality risk management identifies risks systemat- ically, translates them into requirements, and demands evidence against each, living by the good old GMP saying: if it wasn’t documented, it wasn’t done. Applying this method to a deal creates a risk-based gap analysis of the growing biotech company: the development stage defines what must already be in place, and the public regulatory record of comparable assets, such as rejection letters and inspection findings, defines where to look hardest. As useful as pharma’s quality standards are, they also tend to get complicated and slow things down. To keep the process lean, gates are useful: each step, from public data to data room to site visit, ends with the same decision, stop or go deeper.
Every gap gets a price tag or becomes a red flag
Every early-stage asset is a construction site, so gaps are expected. What matters is the risk behind each one. An investment committee wants to know: is the risk sufficiently addressed? If not, can it be fixed and at what cost? A gap that can be closed becomes a remediation, defined work with a cost range and a timeline; one that cannot becomes a red flag. The result is what individual expert inputs cannot produce: a comprehensive view of the asset, its risks in context, understandable without deep expertise in every discipline.
The reward for informed risk acceptance
In the last 18 months, 19 biopharma companies in the US and Europe were acquired before reaching mid-stage clinical trials, at a median upfront of USD 1 billion, typically a multiple of their last valuation. Those returns go to whoever can make an informed decision that early. There is no ultimate de-risking in venture capital. The point of an evaluation is to know which risks an investor is accepting, and at what price.
About the author:
Anna Nussrainer is co-founder of Science2Capital. She brings years of pharmaceutical quality risk management into the evaluation and development practices of early-stage life sciences assets.
