Ankit Aggarwal is Executive Director, Healthcare IB, at J.P. Morgan.
In biotechnology, timing is everything. Whether advancing a novel therapy or scaling a platform, companies often reach a pivotal point: go public or sell. Increasingly, biotech executives are choosing both—at least initially—by running a dual-track process.
A dual-track strategy involves preparing for an initial public offering while simultaneously exploring a potential sale. It’s a way to preserve optionality, create competitive tension and ultimately select the outcome that delivers the best risk-adjusted return for stakeholders. The logic is clear: A credible IPO path helps benchmark stand-alone value, while parallel M&A discussions test strategic interest. When managed effectively, each track informs and strengthens the other.
I’ve seen this approach gain momentum as capital markets remain volatile and acquirers become more selective. IPOs offer long-term capital and independence but require navigating investor sentiment, valuation sensitivity and aftermarket risk. M&A can deliver faster liquidity and reduce execution risk, especially when acquirers place high value on clinical differentiation or platform capabilities. Dual track allows boards to evaluate both paths simultaneously and make a more informed decision.
When Is Dual Track Most Effective?
Dual track requires strong fundamentals and disciplined execution. It tends to be most effective when the company has:
• Meaningful clinical or commercial progress, such as pivotal data or platform traction
• Inbound interest from strategic buyers based on pipeline or platform synergy
• A management team and board aligned on multiple potential outcomes
• Infrastructure in place to manage two concurrent, intensive processes
Getting Started
Execution begins with alignment. The board must agree on valuation thresholds, governance considerations and trade-offs between control and certainty. The company must be clear about its long-term strategy: Is the goal to build an independent public company or to realize value through strategic combination?
From there, process orchestration becomes critical. The company must manage two timelines: an IPO process governed by SEC filings, investor meetings and pricing and an M&A process defined by diligence and negotiation.
Companies must coordinate legal, financial and operational workstreams across both tracks. They need to craft investor and buyer-facing messaging tailored to different audiences. At the same time, they also must manage disclosures and confidentiality to avoid market leaks or mixed signals.
Effective information control is a differentiator. Buyers may walk if they sense they’re being used to drive IPO valuation. Investors may lose confidence if rumors of a sale create uncertainty around the growth narrative. A centralized deal team—often with support from investment bankers and legal counsel—can help preserve process integrity.
Understanding how each audience evaluates value is also key. Public investors often focus on balance sheet strength, pipeline breadth and near-term catalysts. Strategic acquirers may prioritize integration potential or access to a therapeutic area. A strong dual-track strategy translates the company’s story across both perspectives.
Choosing Which Path To Take
Eventually, the company must decide which track to take. Several factors shape that decision:
• Valuation Dynamics: Does the IPO market fairly value long-term potential? Is an acquirer offering a premium that reflects strategic rationale?
• Execution Risk: Are there concerns around market conditions or investor appetite?
• Strategic Vision: Does the company prefer independence or believe it can achieve greater impact as part of a larger organization?
Some companies file an S-1 and ultimately sell before pricing. Others complete the IPO and revisit strategic interest later, often from a stronger valuation base. The key is credibility; both paths must be real, not just a bluff.
Well-managed dual-track processes can lead to successful biotech outcomes. Companies that prepare thoughtfully and execute with discipline may be more likely to secure premium takeouts or go public on strong terms—with either outcome reinforcing their long-term value.
For biotech companies, where innovation is capital-intensive and outcomes are often binary, optionality is a strategic asset. The dual-track process, when used with focus and flexibility, enables leadership to maximize value while preserving control over the company’s future.
Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
Read the full article here
