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Biotech companies spend plenty of time worrying about clinical trials, regulatory approvals and whether they've got enough cash to reach the next milestone. Fair enough too. But there's another number worth keeping an eye on, and it's probably not getting much attention around the board table: the 10-year government bond yield.

Australia's 10-year bond yield is sitting at around 5.3%, up more than one percentage point over the past year. Some forecasts suggest yields could ease, but not everyone is convinced. Recent market analysis has pointed to the possibility of yields heading towards 7%.

Now, that doesn't mean we'll get there. But it does suggest that anyone banking on a quick return to cheap capital might want to think again.

So why does this matter for biotech?

When investors can earn more than 5% from Australian government bonds, the returns they expect from higher-risk investments naturally come under pressure.

And…

Something interesting is happening around the edges of biotech. While most of the attention goes to new drugs, clinical readouts and the next capital raise, private equity is increasingly putting serious money into the businesses that sit underneath all of that. Nucleus Network is reportedly heading towards a sale at around the $1 billion mark, while other CRO and clinical research businesses across Australia and New Zealand are also attracting plenty of interest. These businesses are not trying to discover the next blockbuster drug. They are providing the infrastructure that helps someone else get there.

There is a broader message in that. If private equity (and Life Science heavy weights like EQT and Bain no less) are prepared to invest heavily in clinical trial capacity, CROs and related infrastructure, it is also a pretty strong vote of confidence in where the industry is heading. You do not normally invest in…

The latest CGT changes for innovative businesses are a significant improvement on the original proposal.

A 15-year qualifying window, a three-year minimum holding period and removal of the $10 million lifetime cap are all sensible moves — particularly for industries such as biotech, where value creation rarely fits neatly into a five or ten-year timetable.

But there is still a fundamental issue.

A tax concession designed to encourage investment is only valuable if investors can rely on it.

If an investor qualifies when they put their capital at risk, should they really lose that treatment years later because the company’s activities change, its qualifying status is subsequently lost, or an ongoing compliance requirement is not met?

That is not just a tax issue. It goes directly to how investors price risk.

Consumer-facing health tech and digital health businesses face a different challenge to traditional drug development.

In biotech, the development pathway is often relatively clear: prove the science, progress through clinical development, achieve regulatory milestones and keep funding the business until value is created.

Digital health can be less linear. You may have a working product much earlier, but still need to prove that people will use it, clinicians will trust it, customers will pay for it, and the economics work at scale.

That means the conversation is not just about funding development. It is also about adoption, pricing, customer acquisition, evidence, reimbursement, partnerships and deciding where to put the next dollar.

A useful question for the group is: how do you turn a good health idea into something that people will actually use, pay for and keep using — without running out of money along the way?

1. How much runway is actually enough?

Twelve months of cash doesn’t always mean twelve months of runway.

Clinical timelines slip. Experiments need repeating. Manufacturing takes longer than expected. Regulators ask another question. And the next raise nearly always takes longer than everyone hopes.

For most biotechs, I’d be much more comfortable seeing 18–24 months of cash, particularly if there is an important clinical, regulatory or manufacturing milestone ahead.

The important question isn’t just:

“When do we run out of cash?”

Five things worth talking about if you’re building a biotech and approaching the “valley of death”:

1. How much runway is actually enough?

   Is 12 months really 12 months when trials slip, milestones move and the next raise takes longer than expected?

   
   

2. When do you start raising again?

   If you’ve just closed Series A, when should Series B conversations really begin — and what needs to be true before you go back to investors?

   
   

3. Where should you spend the next dollar?

   
   

Welcome to our group Chaos to Clarity - Finance discussion group! A space for us to connect and share with each other.

From cash runway and fundraising to forecasting, systems, governance and scaling the finance function — a practical forum for comparing notes, sharing experiences and tackling the financial challenges that come with building a biotech.

Real stories are important, so post anonymously if you like!

A group for founders, clinicians, researchers, and ecosystem partners building consumer-facing health tech and digital health products/services.

Welcome to our group Consumer health tech! A space for us to connect and share with each other. Start by posting your thoughts, sharing media, or creating a poll.