Pivot or Shut Down? The Three Questions Biotech Leaders Ask
A biotech should pivot rather than shut down when it still has a credible hypothesis or asset, the cash to test it, and enough time and money to reach a realistic value inflection. If two of those three come back no, the honest answer is closure. That is the framework Pavel Khrimian, Co-founder and Chief Business Officer of Deka Biosciences, used on Open Door Salon, and he used it while leading his own company through a wind-down after a pharma collaboration collapsed at the diligence stage. David Esposito, President and CEO of ONL Therapeutics, has made the same call from the other side, having taken companies to exit and taken companies into bankruptcy. It is answerable on a specific day, by people who are exhausted, without a crystal ball.
What are the three questions?
Khrimian applies them in order. The first is whether there is still something to develop: a credible hypothesis, or an asset. The second and third are about resources.
"Do I have enough cash to test that hypothesis?"
"do I have enough time and money to build to a credible, realistic value inflection?"
The order matters. A company with a promising idea and no money to test it is not pivoting, it is hoping. A company with money and no credible hypothesis is spending. Only when the first three answers hold does a pivot describe something real.
What does it mean if the answers go sideways?
Two answers of no, or two that start sliding, and the company is closing rather than pivoting. Khrimian allows for the middle case explicitly, saying the parameters can go sideways rather than resolve, and that this is where things get fuzzy. A hypothesis that is still credible but weakening, against cash that is still present but shortening, is the harder call.
What separates a cheap pivot from an expensive one?
Whether the existing asset comes with you. Khrimian uses the cell-therapy market as the example the sector watched in real time. Companies that moved CD19 and CD20 programs out of oncology and into autoimmune disease were redirecting a molecule they already had, without new manufacturing work behind it. That pivot is not easy, but it is affordable.
Replacing a failed lead molecule and pushing a new one down the same path is a different order of problem. It needs new manufacturing, new data, and either money the company already holds or investors willing to fund a bridge. In a market where a company is judged on a single asset rather than a platform, the bar for attracting that capital is higher than it was a few years ago.
How does a company lose its options without deciding to?
Through ordinary prioritization, compounding across rounds. Esposito describes it as a structural drift rather than a decision.
"after a couple rounds of capital and the science is playing out, you eventually realize you've prioritized yourself into maybe one big swim lane."
Once a company is in that lane, waiting on a readout with no parallel program, the data makes the decision for it. He calls this the clear case. The genuinely hard ones are where the data is not optimal but is good enough to continue, and the market may or may not open. Those kill decisions are judgment, and he is candid that they never feel finished.
Can a company do everything right and still have to close?
Yes, and Khrimian says so while still inside the experience.
"You can do everything right. You still are not guaranteed the successful outcome that you want"
He is not being fatalistic. His point is that the controllable inputs, which are the team, the strategy, genuine consensus rather than a room full of agreement, and disciplined execution, do not add up to a guarantee. The variable that ends a company is frequently one nobody inside it could influence, whether that is a capital market, a regulatory shift, or a partner changing direction mid-diligence.
What should a company have done before it gets here?
Read the signals earlier. Both guests describe the decisive information arriving months in advance and arriving unlabeled, which is the subject of a separate discussion about the warning signs a biotech is running out of money. Esposito's version is that a leadership team needs the dexterity to interpret new data quickly, and that the companies he lost were slow rather than wrong.
Approaching capital before it is urgent is part of the same discipline. Founders who cannot raise a conventional round have more options than they did, including family offices now deploying directly into biotech, but those conversations go better with runway than without it.
What does the decision not resolve?
The obligations. Deciding to close settles the corporate question and opens an operational one, because a company winding down still has patients on therapy who have to stay on therapy, and a team that did nothing wrong. Khrimian is emphatic that conduct through that period is what survives the company.
"we didn't burn bridges along the way. It's an ecosystem. It's a small world."
Brands that want to reach the operators making these calls can work with Open Door Salon.
Drawn from the recorded, on-the-record conversation with David Esposito and Pavel Khrimian on Open Door Salon. Quotes are verbatim from the episode transcript.
This episode was made possible by Lab Thread.
Nobody went into science for the admin. Lab Thread is the integrated lab management platform that scientists actually enjoy; Built to fit the way you work, from first idea to final report. Everything connected. Nothing lost. Never in your way.
Visit labthread.com to learn more, or book a demo