From Chris Conner's Substack:

When it comes to biotech innovation, data and logic should drive decision-making, but sometimes stories take the wheel.

This week, I spoke to Julien Willard, a board advisor and strategist for biopharma leaders. He had written a post on LinkedIn about how biologics may be favored over small molecules when logic suggests otherwise.

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Despite perceptions, small molecules still make up 73% of all FDA approvals from 2009 to 2023. They’re faster and cheaper to develop with median costs around $2.1 billion vs. $3 billion for biologics and easier to manufacture and scale. Yet, they’re increasingly overlooked.

Why? Three systemic distortions drive this imbalance:

1. Regulatory bias. The Inflation Reduction Act grants 13 years of market exclusivity for biologics but only 9 years for small molecules — the so-called “pill penalty.”
2. Narrative premium. Investors are captivated by stories that sound futuristic. Saying “we’re reprogramming immune cells to fight cancer” sounds far more thrilling than “we designed a molecule that blocks a kinase.”
3. Flawed valuation models. Risk-adjusted NPV calculations rely heavily on peak sales assumptions and exclusivity duration, favoring high-priced biologics even when they serve smaller populations.

The result is a market that systemically favors expensive therapies and leaves affordable innovation underfunded.

Julien’s critique is a call for narrative accountability. He’s seen investor rooms go silent not when presented with data, but when shown the story of an 8-year-old patient whose tumor vanished. Emotion drives attention. “We’ve created an industry where the best storytellers get funded, not necessarily the best science.”

This bias ties to a deeper cognitive flaw, biotech’s “narcissism of outliers.” Every founder believes they’ll beat the odds. Despite historical data showing 60% of Phase I drugs fail, CEOs say, “Ours is different.” Investors, too, often prefer that hero narrative because it promises 100× returns.‍

So how do we rebalance the equation?

Julien points to portfolio biotechs, including firms like BridgeBio that apply modern portfolio theory to drug development. Instead of betting on a single compound, they fund multiple related programs. Ten projects with 20% success odds each yield a 90% chance of at least one success, diversifying to reduce risk. This requires different incentives: rewarding teams for portfolio success instead of single-asset hype. “Right now,” Julien says, “we’re training biotech CEOs to optimize for the biggest headline, not the best outcome.”

I feel like this shift also runs against America’s “blockbuster mindset.”

As Julien notes from his European perspective, U.S. business culture celebrates the lone hero, not the collective success. That mentality seeps into funding, regulation, and storytelling alike.

We shifted gears to antibiotics, a perfect example of market failure that will require cooperation for success. Developing them makes no financial sense: they’re used sparingly to avoid resistance, and priced cheaply against generics. Yet antibiotic resistance is a national security threat. Programs like BARDA and CARB-X aim to fix this through “decoupled incentives”: guaranteed government purchases and funding for early-stage platforms. Julien sees this as a template for fixing other market failures, from rare diseases to mental health.

Could AI restore the balance? Julien argues that the best use of AI in drug development is reducing bias and noise in decision-making.

Today’s biotech investing, he says, is “embarrassingly primitive”. Billion-dollar bets are made off 30-page decks and gut instinct. AI could process far more variables- molecular data, patient subsets, regulatory shifts to make more rational decisions.

But we’re using it wrong: optimizing existing systems instead of reimagining them. Real innovation will come when AI enables adaptive trials that learn and evolve in real time to detect human bias rather than amplify it.

I have some thoughts on how storytelling can still win: Let’s amplify the narrative that there is a better way to do things that could actually deliver better results for everyone:

• Lower risk for investors through diversified portfolios
• More accessible treatments for patients
• Better alignment between scientific progress and public health needs.