In 2025, biotech capital isn’t drying up; it’s just getting pickier.
Investors are chasing fast exits, market-ready platforms, and buzzy sectors like obesity, GLP-1s, and AI-enabled diagnostics. Meanwhile, some of the most urgent and innovative scientific efforts, like pediatric oncology and rare disease therapeutics, are being left behind.
Not because the science isn’t working, but because it doesn’t fit the current investment narrative.
That should concern all of us.
A Market Out of Sync with Medical Urgency
The disconnect between scientific progress and capital allocation is sharper than ever. We are witnessing a moment where therapeutic innovation is accelerating, but the capital that fuels it is slowing down, hedging its bets, or ignoring entire sectors that don’t promise immediate returns.
Pediatric oncology is perhaps the clearest example.
This is a space defined by life-or-death stakes. Where families exhaust every option. Where clinicians fight with limited tools and few approved options. And yet, it continues to operate on the periphery of biotech investment, underfunded, underprioritized, and underserved.
The numbers say it all:
Pediatric cancers account for 6-10% of all pediatric cancer diagnoses, yet are responsible for 15% of pediatric cancer deaths.
Relapse survival rates remain under 20%.
The innovation pipeline is sparse and fragmented, especially for solid tumors and high-risk hematologic malignancies.
This isn’t just an oversight. It’s a market failure.
The Therapeutic “Winter”... What’s Causing the Chill?
Early-stage therapeutic development, across the board, is facing what many are calling a therapeutic winter. Not due to a lack of ideas or scientific rigor, but because of the risk-averse climate shaping capital decisions.
Biotech investors haven’t pulled out. They’ve just moved upstream.
Here’s what’s behind the freeze:
Collapse of the Biotech IPO Window: The easy money of the 2020-2021 biotech boom came with a hangover. As valuations crumbled, newly public companies ended up trading 70% below their IPO price by the end of 2024. The IPO path, once a reliable exit, now looks like a dead end.
Shift in Venture Capital Strategy: VC firms, under pressure from LPs, are favoring late-stage “megarounds,” pouring capital into assets already nearing pivotal trials or M&A readiness. Early-stage “first check” backers have become rare, and fledgling startups are left bootstrapping or stalling.
Public Market Underperformance: While tech, green energy, and AI surged, the biotech index barely moved, up just 4% compared with the S&P 500’s 52% gain. That divergence has further cemented the perception of therapeutics as a high-risk, low-return sector.
Regulatory and Policy Uncertainty: FDA budget cuts, longer review timelines, and new post-market demands have made even late-stage approvals more complex. At the same time, U.S. drug pricing reforms have introduced revenue unpredictability, especially for therapies targeting Medicaid-heavy populations like pediatrics.
These pressures have converged to narrow investors' focus. Not away from biotech entirely but away from the kinds of long-horizon, high-impact programs that require patience, creativity, and vision.
And few areas have felt that shift more painfully than pediatric oncology.
Why Pediatric Oncology Is Uniquely Vulnerable
Even in the best of times, pediatric oncology has struggled to attract conventional capital. Not because the science isn’t compelling, but because the commercial playbook doesn’t apply.
Here’s why it’s such a hard sell for traditional investors:
Small Markets, Big Costs: Most pediatric cancers are rare, with some subtypes affecting fewer than 500 children per year in the U.S. alone. Developing a new therapy can cost $50-100 million before even reaching phase II, and the potential market often doesn’t justify the outlay through a traditional ROI lens.
Long Timelines: Pediatric trials face tighter ethical scrutiny, more limited trial site availability, and a higher bar for safety. That adds months (or years) to timelines, a dealbreaker for investors who need a return within a 3-5 year fund cycle.
Unclear Pricing and Reimbursement: Pediatric pricing lacks precedent. Medicaid variability, inconsistent payer coverage, and the absence of commercial benchmarks make it nearly impossible to model revenue with confidence.
These challenges don’t just make fundraising harder; they delay therapies for the kids who need them most.
What We Risk Losing
In pediatric oncology, we aren’t dealing with low scientific potential; we’re dealing with high stakes and high hurdles. Immunotherapies, engineered microbiome platforms, and tumor-agnostic approaches are making meaningful strides. The science is there.
What’s missing is the conviction.
And if we continue to let market dynamics dictate which diseases get solved, we’ll lose more than a decade’s worth of progress. We’ll lose lives, talent, and the opportunity to build therapeutic platforms that could reshape oncology as a whole.
What Comes Next
The answer isn’t to throw money blindly at unproven ideas. But it is to challenge the way we assess risk and recognize that some risks are worth taking.
In Part Two of this series, we’ll explore how pediatric oncology isn’t just a moral cause; it’s a smart investment. From regulatory incentives and clinical white space to platform innovation and ESG alignment, the strategic upside is real. For investors bold enough to look beyond the next quarter, this might just be biotech’s biggest untapped opportunity.
Sometimes, betting on the hardest problems is what changes everything.