​Alis Biosciences: Unlocking $30bn in Trapped Biotech Capital​

MY ANALYSIS: A creative deployment of distressed capital with private equity DNA

Since the euphoric biotech rally of the COVID era, sentiment in the sector has sharply reversed. The SPDR S&P Biotech ETF (XBI) remains more than 50% below its 2021 peak. Once-exuberant capital inflows into high-risk, early-stage drug developers have dried up, leaving hundreds of listed biotechs with collapsing share prices and no realistic path forward. More than 28% of these companies now trade at or below their cash reserves, creating a massive disconnect between market value and underlying assets.

Enter Alis Biosciences, a new fund spearheaded by ex-banker Nick Johnston and Annalisa Jenkins, former Head of R&D at Merck. Their fund plans to acquire distressed, cash-rich biotech firms—those with market caps between $5 million and $100 million and cash balances of up to $400 million. Many of these firms raised capital during the pandemic but have since failed early-stage clinical trials, leaving them illiquid and effectively stranded.

The strategy is as elegant as it is opportunistic: Alis will offer to buy companies at 90% of their market capitalisation, immediately returning excess cash to shareholders and retaining valuable IP. This gives investors a rapid exit alternative—faster and more efficient than bankruptcy—while leaving Alis with the option to monetise or revive shelved drug candidates.

This approach borrows heavily from private equity (PE) principles:

• Distressed asset acquisition

• Cash repatriation

• Strategic IP aggregation

• Optionality-driven upside

Unlike traditional PE, however, Alis is targeting publicly listed micro-caps, creating a liquid, scaleable vehicle for institutions like Fidelity or Wellington to diversify their exposure across early-stage biotech without underwriting single-drug binary risk.

From an investment perspective, this is a compelling solution to a capital misallocation problem. It facilitates:

• Shareholder value recovery in structurally broken equities

• Efficient capital reallocation within the life sciences ecosystem

• Consolidation of fragmented IP for renewed development potential

Johnston’s framing of the problem — “too much cash in the wrong place” — is spot on. Many biotech management teams have persisted with unproven science, buoyed by cash reserves rather than commercial viability. In some cases, Alis could even serve a cleansing function, returning market discipline to an overextended sector.

A forward-looking model for innovation and capital discipline

If successful, this fund could act as a blueprint for other sectors suffering from post-bubble dislocation — not unlike what we’ve seen in SPACs, EVs, or early-stage tech. It is an excellent example of how structured capital can be deployed not just for return, but for efficiency and innovation recycling.

As someone interested in private equity and investment banking, I find this particularly fascinating. It illustrates how financial structuring, sector insight, and timing can combine to unlock asymmetric returns — especially in distressed, inefficient corners of the market.

Key Takeaways:

• $30bn+ in cash trapped on listed biotech balance sheets

• 280+ listed development-stage biotechs with poor liquidity

• Target companies: $5mn–$100mn market caps, $10mn–$400mn in cash

• Buyout price: 90% of market cap, followed by immediate cash return

• S&P XBI biotech index: still -50% from its Feb 2021 peak

• Potential backing from institutional investors