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  • Thomas Thurston

How the transition from preclinical research to clinical trials impacts biotech valuations

Updated: Jun 15, 2023

A recent study published in Drug Discovery Today by Thomas Thurston and Hubert Truebel found low odds of success for biotech startups that raise more than four funding rounds before starting their clinical trials.

syringe in vile


  1. Analysis of 233 biotech startups at various stages, and – separately – 238 biotech startups that were ultimately acquired or had and IPO.

  2. There was a significant average valuation increase (87%) for companies that moved from preclinical research to clinical trials after no more than four rounds of VC funding.

  3. Companies raising more than four preclinical funding rounds (i.e. a fifth, sixth, or seventh funding round) were, on average, 93% less likely to ever make it to their clinical trials, and

  4. companies raising more than four funding rounds experienced 96% less website traffic, and

  5. those companies were 92% less likely to be acquired or to have an initial public offering.

  6. Meanwhile, the number of patents held by a company was not observed as increasing or decreasing the likelihood of reaching clinical trials.

“observations in this study are preliminary and do not rise to the level of causality; however, they might tend to support the maxim that ‘good drugs declare themselves early’. In other words, a drug development effort that is unable to progress from preclinical research to clinical trials by its fourth funding round might be indicative of weaker probability-to-success, even if the company is successful in securing fifth, sixth, or later preclinical funding rounds from investors.”


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