The past two years have been a sobering period for the biotechnology industry. After the record-breaking highs of 2020 and 2021, the market has shifted dramatically. Investor sentiment has cooled, initial public offering (IPO) windows remain narrow, and early-stage fundraising has become markedly more difficult. In this new landscape, survival often depends not on who raised the most capital, but on who adapts fastest and operates most strategically.

At Confidence Pharmaceutical Research, we work closely with companies navigating this reality — particularly those at the early clinical stages, where every dollar must translate into progress. While many stories in the market reflect challenge or contraction, a growing number of biotechnology teams are finding ways to move forward despite financial constraints. This blog explores the funding environment of 2024–2025 and examines the strategies helping companies weather the storm.

Biotech Funding Is Down — and Capital Efficiency Is In

Following an unprecedented wave of funding during the pandemic, the biotechnology sector has undergone a sharp correction. According to PitchBook’s Q1 2024 Biotech Report, global biotechnology venture funding dropped 45% in 2023 compared to 2021, with that trend continuing into 2024.¹ United States IPO activity has also slowed significantly, with only 17 biotechnology IPOs completed in 2023 — down from 89 in 2021.²

This contraction has led to increased investor scrutiny, particularly for early-stage companies without near-term clinical data. Venture capital (VC) firms are now placing greater emphasis on platform differentiation, management credibility, and clear capital deployment strategies.

As a result, even companies with strong scientific foundations are experiencing longer fundraising timelines and greater difficulty closing syndicates.³

What the Survivors Are Doing Differently

While some biotechnology companies have paused programs or restructured entirely, others are adapting with renewed discipline. Below are several common strategies among companies that continue to make progress in a capital-constrained environment.

1. Prioritizing Lead Assets and Clinical Milestones

Companies are increasingly concentrating on single-asset development or narrowing their focus to the program most likely to achieve value-driving data. For example, Neumora Therapeutics has publicly emphasized its lead candidate in major depressive disorder (MDD), while deprioritizing other programs to preserve runway and focus resources.⁴

This approach enables tighter clinical trial planning and allows companies to align operations with clear, data-driven milestones that support future financing rounds.

2. Embracing Lean, Variable-Cost Operational Models

Rather than building large internal teams, many companies are adopting lean operating models by outsourcing to contract research organizations (CROs), functional service providers (FSPs), and independent consultants. This reduces overhead and enables greater budget control.

A Deloitte 2023 biotech outlook report notes that “capital-constrained companies are relying more on lean clinical operations supported by expert partners” to initiate trials and reach key inflection points.⁵

Flexible outsourcing enables sponsors to scale support based on development phase and funding availability — an approach that is increasingly vital in today’s climate.

3. Pursuing Non-Dilutive Funding Opportunities

With equity capital harder to raise, companies are exploring non-dilutive funding sources including:

• Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants from the National Institutes of Health (NIH) and U.S. Department of Defense
• Disease foundation partnerships (e.g., Cystic Fibrosis Foundation, JDRF)
• European Union Horizon Europe funding for translational research
• Academic co-development frameworks

According to the Biotechnology Innovation Organization (BIO) 2024 Start-Up Survey, 38% of seed-stage companies indicated that non-dilutive funding would be a primary strategy for the coming year.⁶

4D Molecular Therapeutics, for example, strategically utilized early grant funding and foundation partnerships to advance its gene therapy platform before entering the public markets.⁷

4. Forming Strategic Partnerships and Option Deals

Biotechnology companies with promising platforms or assets are increasingly entering into option-based partnerships with larger pharmaceutical firms. These deals often include:

• Upfront capital in exchange for exclusive development or commercialization rights
• Shared clinical trial execution
• Co-development or licensing terms tied to specific milestones

Nimbus Therapeutics is a notable example, having successfully spun out and sold assets to larger partners while retaining control over its core platform.⁸ These deals provide a way for emerging biotechs to advance programs without bearing full financial risk — a key advantage in a risk-averse funding climate.

The Harsh Reality: Most Biotechs Are Feeling the Pressure

Despite examples of adaptability, the overall funding climate remains challenging. According to Endpoints News, over 100 biotechnology companies experienced layoffs, restructuring, or program shutdowns in 2023.⁹ That trend has continued into 2025, with multiple companies disclosing pipeline reductions or delays directly linked to financial limitations.

From a clinical operations perspective, this often translates into:

• Sites placed on hold during activation
• Delayed first patient in (FPI) milestones
• Disbanded study teams
• Payment deferrals to vendors or consultants

In such cases, operational agility and trusted partnerships become essential. Service providers must be willing to adapt scope, adjust timelines, and work collaboratively as sponsors navigate uncertain funding horizons.

Confidence’s Role: Helping Sponsors Do More with Less

At Confidence Pharmaceutical Research, we recognize that funding constraints affect every layer of a trial — from protocol development and feasibility to enrollment and data delivery. That’s why our operating model is designed to support lean, capital-efficient sponsors without sacrificing quality or precision.

Here’s how we help:

• Conducting early feasibility assessments to reduce unnecessary startup costs and identify high-risk sites
• Offering modular service models, allowing sponsors to outsource only what they need, when they need it
• Leveraging regional site strategies to lower cost-per-patient without compromising quality
• Aligning deliverables with clinical and investor milestones, ensuring operational progress supports financial planning

In an environment where capital efficiency is paramount, our team acts not just as a CRO, but as a strategic partner invested in helping each sponsor advance with purpose.

Conclusion: Strategic Execution in a Scarce Funding Environment

The current funding landscape is challenging — but not insurmountable. The biotechnology companies moving forward in 2024 and 2025 are those that combine focused development strategies, capital discipline, and trusted partnerships.

They are narrowing their programs, forming smarter collaborations, and treating every trial decision as a strategic investment. At Confidence Pharmaceutical Research, we’re proud to work alongside these companies — ensuring that operational execution keeps pace with scientific ambition, even when funding is tight.

Whether you’re rethinking your trial footprint, exploring non-dilutive capital, or planning your next milestone raise, our team is here to help turn constraint into momentum.

References

1. PitchBook. (2024). Q1 2024 Biotech Report. [https://pitchbook.com]
2. EY. (2024). Beyond Borders: Biotechnology Industry Report. [https://www.ey.com]
3. Jefferies. (2024). Global Biotech Strategy Outlook 2024. [https://jefferies.com]
4. Neumora Therapeutics. (2024). Corporate Update. [https://www.neumoratx.com]
5. Deloitte. (2023). Biotech Outlook: Lean Models and Partnering. [https://www2.deloitte.com]
6. BIO. (2024). Start-Up Survey: Challenges and Outlook. [https://www.bio.org]
7. 4D Molecular Therapeutics. (2022). Investor Presentation. [https://4dmoleculartherapeutics.com]
8. Nimbus Therapeutics. (2023). Business Model Overview. [https://www.nimbustx.com]
9. Endpoints News. (2023). Biotech Layoff Tracker. [https://endpts.com]