From The Trenches

By Aimee Raleigh, Principal at Atlas Venture, as part of the From The Trenches feature of LifeSciVC.

I’m not a resolutions person but I’ve always loved the start of the year – there is something about turning the page on a new chapter that is refreshing. This year especially feels like a fresh start, after the weird year that was 2025. These past 12 months are probably best described as a constant sensation of vertigo… we thought biotech may benefit from a “pro-business” administration in January, then “Liberation Day” chaos ensued when it felt like the broader markets were headed for a recession, then from late summer to end of year we saw a brilliant recovery in public biotech stocks, driven by positive data flows, exuberant M&A, and improved macro tailwinds (e.g., rate cuts). While some macro threats to the ecosystem (most notably tariffs and onshoring demands) seem more benign than in Spring 2025, many others remain to be fully pressure-tested in 2026.

To add some levity to the start of the year, and ahead of next week’s JPM conference, I am sharing my top predictions for 2026. While I’m sure I could opine for days, I restricted these to a lucky number (13…😊). If I see you in SF next week, I welcome debate on what I got wrong!

Science & Innovation

• What can’t the incretins do?! GLP1s will show striking evidence in 1-2 indications beyond the cardiometabolic TA. I’ve written about it before, but the incretin class will likely be one of the most impactful medicines of the 21^st century. As nicely expounded in this recent Nature review, the breadth of indications now or soon to be addressed by GLP1s is staggering. Some of these indications (knee OA, for example) are intuitive – if one loses substantial weight, it makes sense that mechanical stress on the knees will decrease and therefore pain and function scores will improve (and by similar logic it’s also not surprising that retatrutide, in delivering substantially higher weight loss in knee OA patients vs. semaglutide, delivered larger improvements from baseline on these scales). But there are indications of potential relevance on the horizon that are not strictly cardiometabolic, and for which the CNS and anti-inflammatory impacts of GLP1s has potential to shine through. Looking at pipelines offers clues – Lilly’s novel GLP1/GIP agonist brenipatide, for example, is already in Phase 3 studies for alcohol use disorder (here, here) and a Phase 2 trial for smoking cessation as well as Phase 2 trials in bipolar disorder and asthma. Unlike in Alzheimer’s disease (where oral sema recently failed to impact clinical dementia rating scales), there is strong mechanistic evidence for GLP1s and impact on neurocircuitry and inflammation that may rationalize future efficacy in these new indications. I believe at least one of these novel indications will read out positively in 2026, suggesting a path to differentiated treatments for these patients and commercial growth opportunities for the broader incretin class.
• Large strides will be made in advancing therapies for precision kidney targeting. 2026 will see several key readouts for small molecules in genetically defined kidney diseases, spearheaded by Vertex but also including several biotechs. In a devastating set of indications broadly referred to as APOL1-mediated kidney disease (AMKD), Vertex’s inaxaplin (APOL1 inhibitor) is currently in an adaptive Phase 2/3 study set to read out an interim analysis later this year. Maze is also developing a small molecule APOL1 inhibitor MZE829, with topline data in 1H 2026 from their Phase 2 proof-of-concept study. If successful, these programs could be blockbusters in an important segment of kidney disease. In another genetically defined kidney disease, autosomal dominant polycystic kidney disease (ADPKD), Vertex is developing a small molecule corrector VX-407 for a subset of patients with certain PKD1 variants. While that proof-of-concept study may not read out until 2027, other progress is being made towards developing corrector chemistry for ADPKD, including from Renasant Bio.

Additionally, while earlier-stage, strides are being made in precision delivery of therapeutic payloads to the kidney. While some oligo therapeutics like farabursen (RGLS-8429) have historically relied on chemistry for preferential kidney delivery, for many payloads there is benefit in targeted delivery. Two companies in particular are pioneering novel kidney-selective delivery approaches – Judo Bio and Borealis Bio. While clinical readouts on these targeted oligo delivery strategies are unlikely as early as 2026, we will undoubtedly see progress made towards potent and selective kidney delivery this year.

Regulatory & Commercial

• 2026 will see the first (accelerated) approval of a blood-brain barrier (BBB) shuttle technology by the FDA. Denali’s DNL310 (tividenofusp alfa) leverages a transferrin receptor (TfR1) binding arm to transport an enzyme (iduronate 2-sulfatase) across the BBB and into the CNS for Hunter Syndrome. The PDUFA target action date for potential accelerated approval is April 2026, and I am optimistic about an approval even with all the noise coming out of *certain FDA leadership* on open-label studies. The Phase 1/2 data was recently published in NEJM, and while most of the data are not new, collectively it solidifies the impressive results in an underserved patient population. The performance, compared to marketed Elaprase, at this point is uncontested. While certain aspects of the TPP (frequent and long infusions, high levels of infusion reactions, some anemia, etc.) may be less than perfect, the program represents a huge step forward in treatment for Hunter Syndrome as well as for CNS delivery of large molecules. Whether or not DNL310 is successful in AA approval this Spring, there are a host of additional TfR1-based BBB crossing technologies in the pipeline, most notably additional programs from Denali, Roche’s trontinemab, and AbbVie’s ABBV-1758 (via Aliada acquisition).
• If you build it, will they come? We will see critical late-stage development traction around 2 additional indications previously written off by (most) Pharma and investors. As an industry, predicting future blockbuster markets is not our strong suit. Very few expected the Rezdiffra sales trajectory in MASH despite being the first effective drug approved in 4 decades in the indication. Before Madrigal started commercializing Rezdiffra, common bear refrains included “improvement in MASH resolution is modest rather than transformational,” the GLP1s will make MASH obsolete,” “payers will require biopsies – it will be a slow sales ramp,” “how will a biotech commercialize in MASH?”). And yet a year after launch it is on track for nearly $1B in sales, with high growth forecasted through 2031. 2025 saw a banner year in MASH acquisitions too, with 3 deals for FGF21 programs totaling >$10B in total deal value. So, clearly MASH is a compelling blockbuster indication, it just took an incredible sales ramp for a strong product in Rezdiffra to prove it.

As another example, until the recent enthusiasm for OX2R agonists in hypersomnias, the space was seen as challenging (“it’s a 10-year patient odyssey to get diagnosed – the addressable population is too small to matter,” “oxybates and stimulants are generic – switching hurdles are high.”). Even in an indication as “obvious” today as obesity, before 2021 it was widely frowned upon to be an investor in the indication, given common (but misplaced) refrains of limited and fragmented market, difficulty associated with primary care providers as a key callpoint, stigma against patients, and the like.

Is the (often ill-conceived) pushback a symptom of groupthink? Is it a cumulative lack of creativity? A fear of being non-consensus and wrong? We have all been crowding into the same small set of 30-40 “safe” indications with clear comparables and well-understood, precedented sales ramps. Future growth (especially of the scale required to offset LOE cliffs – more on that below) will need to come from new, large TAM indications where exponential growth is feasible.

Capital Markets

• 25-30 biotech companies will IPO this year. Compared to <10 IPOs in 2025, I expect there to be a substantial increase in companies going public, especially in the first 6 months of the year. The volume will still be measured compared to the highs of 2020-2021 (when there were 75-85 biotech IPOs annually), but will reflect a more favorable market dynamic.
• 2 biotech stocks will have +300% single-day stock swings following positive data. By my (and ChatGPT’s) count, only a few stocks had 300%+ single-day stock swings following positive data[1]: Abivax, ProKidney, and Capricor. Generally there are dozens of stocks that trade exceedingly well upon positive trial readouts, increasing by 50-100%+ following a readout. But for huge swings, investors need to be non-consensus and right. While +300% may be a higher bar in 2026 with markets overall in a healthier position than they were for much of 2025, I do think we will see at least a couple massive upswings.

M&A

• 2026 will continue the M&A streak, with >25 deals over $1B in value. 2025 was a banner year for M&A, especially larger deals – 32 acquisitions topped $1B in total value, and 8 of these topped $5B. Drivers of this increased activity included lower perceived FTC risk under the new administration as well as pressure to fill future revenue gaps driven by loss of exclusivity (LOE). But when are pipelines satiated? For how long will patent cliffs continue to drive inorganic growth? To get a sense for just how much 2025 M&A chipped away at threatened revenue due to LOE, I evaluated M&A spend (focused on acquisitions of >$100M and not including other BD like licensing deals) compared to projected Pharma revenue loss over the 5-year time period 2026-2030. As shown in Figure 1 attached at the bottom, some Pharma with imminent and substantial revenue loss are spending aggressively to fill pipelines. Merck, for example, targeted both commercial products (via Verona) as well as late-stage pipelines (via Cidara) to fill the gap largely driven by upcoming Keytruda biosimilar entry. Others (like Pfizer) focused on competitive acquisitions of potential blockbusters in large hot categories (e.g., Metsera). Several Pharma spent materially, not necessarily to fill near-term revenue gaps but rather those anticipated in the 2030s (e.g., JNJ, Sanofi, Novartis). Finally, some Pharmas with imminent LOE threats did not spend much in 2025, likely both a function of cash (and debt) capacity as well as lack of true pipeline synergies in potential acquisition targets. Perhaps some of these Pharma become more aggressive buyers in 2026?
• We will see another 2 bidding wars this year. The Pfizer / Novo bidding war for Metsera and then subsequent Alkermes / Lundbeck bidding war for Avadel at their best can be described as rationally competitive and at their worst, unhinged. In both cases the first bidder ultimately won the deal, albeit at a higher price (to the benefit of target’s shareholders). As Pharmas acquire to rapidly compete in emerging hot spaces (see above re: new market commercial builds), we are likely to see at least a couple more bidding wars. I’ll grab the popcorn…

Macro

• China will soon transition into an innovation economy. Most of the competition coming out of China in 2025 was of the me-better variety, but we are starting to see more innovative first-in-class approaches. I’ve been surprised by the protectionist sentiment in response to China’s rise – it seems to me the one way to assure China’s dominance is to become isolationist here in the U.S. and attempt to restrict global collaboration. I hope the case study of China – a country-wide focus on implementing massive step-changes in efficiency across scientific, manufacturing, and regulatory verticals – can be an inspiration to other nations rather than something we fear. Collectively, my wish is that 2026 brings less unproductive grand-standing and quibbling over overseas competition and more collaborative action to improve our own innovation ecosystems locally.
• We will be able to meaningfully quantify FDA dysfunction in 2026 – we will start to see more systemic delays in drug approvals and trial initiations. “Nothing changes instantaneously: in a gradually heating bathtub you’d be boiled to death before you knew it.” – Margaret Atwood

I hate to say it, but I predict we start to see cracks in the regulatory system in 2026, including more frequent and impactful delays in PDUFA dates and IND feedback (latter of which will be harder to track), as well as more instances of senior leaders over-riding their teams on critical decisions. What’s happening at the FDA right now is extremely concerning – 90% of senior leaders in place a year ago are no longer at the agency (source), and it’s likely that 25-35% of the agency’s rank and file has turned over (both voluntary and involuntary). I commend those still at the FDA who are getting work done and maintaining critical review timelines. But I have to ask – how long can we expect top performers to last in what appears to be an increasingly toxic workplace that doesn’t seem to place universal value on scientific evidence-based decision-making? I certainly hope my fears are over-stated, but I don’t think we can continue to assume the status quo will hold. What happens if we lose a critical amount of competent team members and it takes 2-5 years to rebuild? Can we afford that kind of hit to our drug development productivity?

What can we do as an industry? (1) Continue to be vigilant – track delays and U-turn decisions by the agency. (2) Call your representatives – it may not feel like much of an impact but it matters, especially with midterms coming up. (3) Applaud agency actions where they are science-based and innovative (e.g., those that promote increased transparency in decision-making or those that offer potential to rationally streamline path to approval for critical medicines). There is high potential for a productive path forward, but we as an industry need to speak up when decisions are likely to cause undue harm to patients and our biotech economy.

• A broader recession could threaten the biotech recovery. 2025 witnessed exuberant markets even despite broader macro tailwinds. I won’t attempt to take a stance on whether or not we are in an AI-driven tech bubble, but it’s hard to imagine we will go much longer without some type of reset (and not just a short-lived March 2020 or April 2025 flavor of reset). While I am certainly not rooting for a broader recession, if / when one does occur, it will likely impact markets broadly. We are now just starting to see generalists tiptoe back into the sector – perhaps biotech will be viewed as a haven if tech hits a bumpy patch. More likely though, we may see another period of leaner times including both company and investor attrition. While not obvious in the moment, every cycle (bull or bear) has an end, and there are always opportunities even in the downward slope.

Early-stage biotech VC and company creation

How does all the above translate to the small but mighty portion of the VC universe that is early-stage biotech (and specifically company creation VC)?

• The top 25% of private, early-stage deals will be competitive and finance at valuation premiums. Select high-quality, high-conviction deals are hot again, even at earlier stage (late preclinical to early, pre-PoC clinical). Investors shouldn’t assume they can hang around the hoop and wait for a round to come together. For the top tier of deals in 2026, syndication is likely to be competitive and rapid.
• Seed and Series A companies formed in 2025-2026 will stay stealthy for much longer. Given macro pressures (especially the speed at which “fast follower” approaches are emerging), I expect up to ~35% of new companies formed in 2025-2026 to remain in stealth for much longer than was historically common (3-12 mos.). Some companies may never officially publicly “launch” if exited via acquisition over the next few years. Don’t let the veneer of a quiet news stream from early-stage biotech VCs phase you – many firms have been extraordinarily active recently, but are not publicizing newcos in order to maintain competitive advantage for non-obvious theses.

Closing Thoughts

If 2025 taught us anything, it’s that the highs are exuberantly high and the lows are devastatingly low, but either sentiment is transient. Turbulence always leads to pockets of opportunity, and some of the most successful biotechs have been built in the challenging of times. It’s difficult when in the moment (of a bubble or a meltdown) to keep a level head, but I’m hoping for more measured decision-making in the new year. The one prediction I know to be true is that I will be wrong more often than right – look forward to checking in at the end of 2026 to reflect on just how badly I misread the vibes for 2026 😊

Footnote [1]: Only includes biotechs that were up ≥300% at close (vs. intra-day) and those with market cap >$100M at time of news release

Comment

By Jason Campagna, biotech executive, as part of the From The Trenches feature of LifeSciVC

I recently joined Inventiva Pharma, a late-stage company developing a therapeutic for metabolic disease and MASH, a field that is both scientifically complex and once again visible. It is an interesting moment to return to late-stage work after several years in early-stage biotech. Early-stage life is oriented toward possibility and invention. Late-stage life is oriented toward consequence and delivery, and that difference becomes apparent almost immediately.

In earlier essays I described the capability stack, the collection of technologies and tools beneath a therapeutic, and the organizational stack, the system that must carry those tools into practice. The widening space between them is new. The capability stack is compounding faster than the organizational stack can absorb. They no longer move together. Their separation is where the hard problems live, where time reverses its logic and each day brings less room to explore and more urgency to decide. When I describe these as hard problems, I mean something specific. Early-stage development is demanding, but its demands are exploratory as much as procedural: documenting biology, mapping uncertainty, designing early trials, understanding exposure, and building an initial picture of behavior. The work is structured around learning. The system expects uncertainty and tolerates failure because its purpose is knowledge accumulation. Even setbacks add information.

Late-stage development is different, and returning to it makes that difference clear. What once felt open now feels bounded by commitments already made. Systems that once made the work seem effortless now reveal their limits. Late-stage development rewards precision and continuity. The cadence is set not by what teams hope to discover but by what must hold to bring a therapy to patients. Much of what matters is quiet and rarely noticed until it is tested. Early-stage environments can absorb iteration. Late-stage environments tolerate very little of it. The problems become hard because at some point you must assume you understand enough biology to scale. The phase 3 program must work because the phase 2 signal held. The safety profile must remain stable because the aggregate data suggest it will. Entire medical affairs and commercial plans begin on foundations that feel familiar, but organizational sediment can obscure how fragile those foundations are. Commitments expand. Timelines narrow. Consequences sharpen. Planning shifts from kilograms for trials to tons for global supply. The questions shift from whether the biology is plausible to whether the system can withstand the scrutiny of regulators, health systems, and payers across regions. Scientific uncertainty becomes operational and financial.

That is the point at which the work becomes hard in the way I mean it. You are no longer learning. You are committing.

In my earlier essay on biotech’s strategic infrastructure moment, I argued that value was no longer defined solely by the molecule but by the system that surrounded it. The geopolitical shifts of the past several years made this easier to see. Supply chain fragility, manufacturing sovereignty, and emerging federal infrastructure programs placed deployment on equal footing with discovery. Early-stage groups responded by building new layers. The capability stack thickened. What I did not fully appreciate then, but feel now, is how slowly the organizational stack adapts in late-stage life. Processes harden for reasons that are legitimate — regulatory expectations, patient safety, data integrity, commercial rigor — but those same reasons create friction when new capability tries to enter the system. A better tool does not immediately translate to a better outcome. Late-stage systems must absorb the cost of change before they benefit from it.

It is easy to dismiss this as conservatism, but I believe that much of it is structural. A later-stage organization is shaped by commitments already made. It holds inspection timelines, quality milestones, reimbursement strategies, evidence plans, and global sequencing decisions that cannot be rewritten because a new capability has appeared. The early-stage instinct is to improve the toolset. The late-stage reality is that improvement is only valuable if the system can tolerate the change.

What is new is the velocity gap. Early-stage teams build with assumptions about how the system will respond downstream — rapid CMC transitions, flexible manufacturing, resilient supply chains, and trial infrastructure that can pivot as needed. These assumptions rarely survive into late stage. What remains is obligation. And obligation without context is where systems fail. Late-stage organizations confront regulatory shifts, payer expectations, regional constraints, and timelines that compress rather than flex. Stated differently, early stage imagines what could be. Late-stage bears what must hold.

This difference in accountability resonates with me in ways that have been unexpectedly sharp and even a little painful. Before biotech I spent years in academic anesthesia and then in private practice as part of a twenty-eight-physician group responsible for the daily execution of care. The rhythm was precise and unyielding. Cases had to run on time. Surgeons needed to return to their offices to see patients. Every encounter carried both clinical and financial implications. At the same time, I served as the chief medical quality officer for the hospital system, responsible for moving the institution toward evidence-based practice, pay-for-performance expectations, and reimbursement tied to outcomes. The challenges in that environment mirror the challenges here: systems that depend on routine, coordination, and consequence.

But there is a critical difference. In medicine the work continues regardless of how difficult the day or week has been. Operating rooms open again. More patients arrive. The system stretches because the clinical imperative demands it. Late-stage drug development carries a different form of consequence. A difficult day or week may begin with the same type of event — a safety signal or a quality issue — but the effects do not dissipate in the same way. In clinical care the system resets. In drug development the event can redefine the program, and in late-stage work it often does, because the timeline does not forgive. That difference helped me see more clearly why the gap between the capability stack and the organizational stack matters so much now.

I have found that the most useful models for this work come from fields where timing, clarity, and consequence converge. As I wrote previously, special operations and medicine operate this way, and their principles translate more directly than anything I have seen in management literature. Business theory often reaches similar conclusions, but from a greater distance. In practice the rule is simple: authority should move to the person with the clearest context. It is a functional requirement. The statistician inside the data flow of an ongoing study. The pharmacovigilance lead who senses a pattern before it appears in the signaling data. The regional medical lead who understands why a label phrase will block access in one country and not another. On many days those are the people who should lead the decision. This only works when the organization has done the slow work of building shared context.

This is where the stack disconnect becomes an organizational problem rather than a technical one.

Early-stage capabilities often promise acceleration, and early-stage teams expect downstream systems to absorb advances with the same agility. Assumptions accumulate quietly: manufacturing can pivot without penalty; quality systems can absorb new data flows; regulatory pathways will accommodate new methods; medical affairs will translate emerging complexity into something clinicians can use. Each assumption is reasonable on its own. Together they form an implicit model of a system that can stretch indefinitely. Late-stage organizations do not have that latitude. They carry the accumulated commitments of the program. They cannot accept acceleration as a free parameter. Every gain in speed demands assurance that the system will remain stable under inspection, reproducible in manufacturing, defensible to regulators, and credible to payers. This requires a clear articulation of where the system can stretch and where it cannot. Without that framework, claims of acceleration become noise.

The real work shows up in decisions that cannot be abstracted away. When to file an NDA and how much data is enough. Whether to dual-source drug substance or accept the risk of a single supplier. How far to extend long-term safety exposure, not only as a scientific or ethical matter but as a regulatory and reimbursement requirement. These are not theoretical tradeoffs. They commit an organization to a specific course of action. They determine whether a therapeutic can reach patients and whether the company can return value to the long line of inventors, operators, and investors who have already committed time and capital. They define what the system must now sustain.

So what to do about it.

The gap will not close by asking late-stage teams to behave like early-stage groups or by assuming new capability will carry itself into practice. Most of the work lies in creating deliberate connections between the two stacks so expectations and constraints are visible at the same time. One answer is to create explicit handshakes between the stacks. Someone has to translate a capability into operational terms and surface its consequences early. A small integration group working beside a pivotal program can remove months of delay by capturing the cost of adoption before it becomes a crisis. When implications are visible early, much of the cynicism that accompanies late change begins to recede. This is also where familiar business vocabulary tends to surface — change management, alignment frameworks, integration models. The labels are secondary. The function is what matters: make consequences visible early enough that the system can absorb them without destabilizing itself.

Narrative is another form of handshake. Early-stage groups speak the language of capability and potential. Late-stage groups speak the language of credibility and durability. If a capability cannot be expressed in late-stage terms, it is not ready. It remains aspiration rather than practice. A common example is a pharmacovigilance vendor promising faster triage or improved signal detection. In early-stage settings that may sound sufficient. In late-stage settings it is not. The questions become concrete: Can they meet inspection standards across regions. Can they maintain validated audit trails. Can their system remain consistent across thousands of cases when a label is under review. Can safety leadership explain the basis of a signal if part of the logic is automated. If those translations do not exist, the capability is not ready.

Medical Affairs often becomes the definitive handshake here. Their work is sometimes reduced to perjoratives — messaging, unprompted recognition, field alignment — but those are partial descriptions of a much harder job. They set the external frame: how clinicians, thought leaders, healthcare systems, and payers will understand the therapy, what evidence will matter, and where the claims must hold. If the narrative remains rooted in capability and potential, the organization will fail at the point of consequence because none of the external stakeholders operate in that register. Medical Affairs must translate innovation into a story that is scientifically coherent, clinically relevant, and durable under challenge. When the capability stack outruns the organizational stack, this becomes defining work.

It is easy to treat the gap I’m describing as a failure of intent and to assign blame to policy shifts, risk committees, or cultures shaped by different tempos. Each plays a role, but the gap, as I stated above, is structural. Late-stage constraints exist because obligations are real. Patients, regulators, and payers are not theoretical. The system carries commitments that cannot be undone simply because a new capability has appeared or because acceleration seems desirable.

The challenge is to help the organization absorb new capability without destabilizing itself. That is not a matter of speed. It is a matter of design, and the work does not resolve neatly. Early stage opens into possibility while late stage narrows into consequence, and the space between them now carries most of the real difficulty. These problems are not solved by accelerating one side or restraining the other. They are solved by making the system explicit: where it can stretch, where it cannot, and what each decision will displace downstream. Organizations that learn to operate with this level of clarity will carry programs across the gap. Those that do not will continue to mistake speed for progress. The space between the stacks is no longer a transition. It is the operating environment for modern late-stage biotech.

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