“A lot of biotech companies die because they run out of runway. And they might have been successful if they had another six or 12 months.”
Baruch Harris, Chief Operating Officer at Pretzel Therapeutics, has spent over two decades navigating the business side of life sciences, from consulting and big pharma to early-stage biotech. With a PhD in biochemistry and deep experience in business development, investor relations, and corporate strategy, he has been key in guiding Pretzel from seed stage through a $72.5 million Series A and subsequent Series B financing.
In this episode of the PharmaSource podcast, Baruch shares the strategic decisions and creative financing structures that have kept Pretzel advancing its first-in-class mitochondrial biology pipeline, including a lead program currently wrapping up Phase 1 for rare mitochondrial depletion syndrome and an early-stage obesity asset. From spinout strategies to non-dilutive funding and the company’s recent acquisition of Rome Therapeutics, his insights offer a practical roadmap for biotech leaders navigating today’s capital-constrained environment.
What Separates Survivors from the Biotech Graveyard
Cast your mind back to 2019–2021. The biotech party was in full swing; capital was flowing, valuations were climbing, and it seemed like almost anyone with a promising molecule could get funded. As Baruch puts it, “it was a bit like a wild party that went on for years.” The problem, of course, is that every party ends.
“We’ve woken up to a screaming hangover, the house is a mess, and we don’t know who’s sleeping on the couch.” The bear market that followed has been challenging. Companies with promising science have shut down programs, laid off talented teams, and abandoned therapies that might have reached patients given a little more runway.
So what separates the ones still standing? According to Baruch, survival comes down to three interconnected factors: a strong investor syndicate, disciplined portfolio management, and a relentless focus on the lead asset.
“In a bear market, investors are more conservative. People want product stories. People want less risk at an attractive valuation. So the more your lead program looks like a medicine, the better it is for continuing to get the capital you need.”
Pretzel has maintained momentum by making hard calls on its portfolio, freezing some high-quality science to protect capital for the programs most likely to attract continued investor support. Keeping fixed costs low has been equally important in stretching runway between financing events.
Creative Financing: Beyond the VC Round
When traditional venture funding contracts, Baruch argues that biotech leaders need to expand their financing toolkit. He outlines several strategies that have worked in the current environment.
- Strategic Acquisitions for Balance Sheet Strength
Pretzel’s recent acquisition of Rome Therapeutics is a case study in opportunistic deal-making. Rome had capital on its balance sheet and early-stage science, but no clear path forward. By acquiring Rome using stock, rather than cash, Pretzel added funds to its balance sheet without a dilutive VC round, and inherited interesting early-stage biology in the bargain.
“It’s a little bit like an equity financing without having to do a VC round. We also acquired some really interesting early-stage science, and we will follow up on that and see where it takes us.”
- Spinouts: Unlocking Hidden Portfolio Value
When a biotech’s pipeline spans multiple therapeutic areas, the market often applies a “conglomerate discount,” assigning 90% of value to the lead asset and marginalizing everything else. Spinning out non-core assets into independent companies can unlock that hidden value, attract a different investor base, and allow the parent company to remain as a beneficiary through retained equity and licensing economics.
“Having focused individual entities where investors can make their bets can be very helpful for getting investment capital.” Spinouts allow each asset to find its natural home and its natural backers.
- Non-Dilutive Funding: Grants, Foundations, and Government Programs
Baruch highlights the continued importance of non-dilutive capital sources — government grants (NIH, DARPA, BARDA, SBIR), disease-focused private foundations, and patient advocacy organizations willing to fund research and clinical trials. Pretzel has secured funding from Parkinson’s UK, a reminder that foundations motivated by patient outcomes can be significant financial partners for companies tackling rare or underserved diseases.
“In many cases, biotechs can obtain millions, or even tens of millions, in funding to do a clinical trial. There are a lot of organizations that really want to see new medicines for patients and are willing to put money behind that.”
Maintaining Investor Confidence Through the Bear Market
For Baruch, investor relations is not primarily about communication; it is about execution.
“A lot of it’s about communication, but it’s even more about just continuing to show data, scientific progress, things moving forward. Doing what we said we were going to do. Executing. That’s important.”
With its lead asset PX 578 now wrapping up Phase 1 in mitochondrial DNA depletion syndrome, Pretzel is demonstrating that clinical-stage progression, not just platform potential, is what sustains investor confidence in a tight market.
Portfolio Prioritization: Where to Spend the Money
When asked how biotech leaders should decide where to accelerate spend and where to pause, Baruch advocates for a rigorous program-by-program return-on-investment analysis focused not just on scientific interest, but on what investors and partners will actually fund.
“The critical exercise is to go program by program and ask: what will it take to get to the next value creation point? How much will it cost, and how much time will it take to generate data that drives the value of this program up five or ten times? And will that get us to the point where we can partner it — or where someone is willing to invest?”
This disciplined approach sometimes means stopping work on promising science. Not everyone on the team will agree with those decisions, Baruch acknowledges. But protecting capital for the programs most likely to reach patients and attract the next funding round is what ultimately determines survival.
Manufacturing and Vendor Partnerships: Value Over Cost
Pretzel operates with a lean team of 35 full-time employees, using a hybrid outsourcing model across most functions, synthetic chemistry, CMC, scale-up, preclinical studies, and clinical supply. The company’s research group in Sweden serves as a mitochondrial biology center of excellence, while everything else is handled through a carefully curated network of external partners.
When selecting vendors, Baruch is clear that cost is a secondary consideration. Quality, reliability, accountability, and IP protection come first. He describes a situation in which Pretzel declined to sign a contract with a vendor during final negotiations after learning independently that the vendor was facing a significant regulatory issue that they had not disclosed.
“Transparency, communication, trust — those things are really important to us. We want to feel that we’re in a partnership, not just a one-off transactional relationship.”
On pricing, Baruch is pragmatic: getting the data right, on time, and on the first attempt is worth more than a discounted rate. In biotech, every month of delay has a tangible cost when capital is burning, and the next funding milestone is on the horizon.
Focus Your Capital, Buy More Time
Baruch’s advices to focus capital on what gives you the most return, so you can buy more time.
“Time is money. Money is time. Focus your capital on things that give you the most bang for your buck so you can buy more time for yourself. A lot of biotech companies die because they run out of runway — and they might have been successful if they had another six or twelve months.”
Despite the challenging environment, Baruch is cautiously optimistic. M&A activity remains robust, fundamentals are improving, and IPO windows are starting to reopen. For companies that have managed their portfolios prudently and kept their lead programs advancing, the spring thaw may be closer than it appears.
