Why Clinical Phases Are Critical
Swiss biotech companies received record funding recently. Investors put CHF 2 billion into this sector in 2023. This amount is a 50% increase from the year before. However, picking the right company is difficult.
Most business sectors follow a steady path. A software company creates a product and fixes it quickly based on user feedback. Biotech is different. These companies must prove their drugs are safe and effective before they can sell anything.
Statistics show that only 10% to 14% of drugs that start clinical trials eventually get approval. If a drug fails, the investment often loses all its value. This all-or-nothing outcome creates high risk. Identifying which phase a company is in helps you judge that risk. A company in Phase III is much safer than one in Phase I.
The Four Phases of Clinical Trials
- Phase I (Safety Only): The first test for humans. Doctors give the drug to a small group of people. The goal is to prove the drug is safe and find the right dose. This phase takes one to two years. Success here only means the drug is not toxic. It does not prove the drug cures the disease.
- Phase II (Proof of Concept): This phase tests if the drug actually works. It involves patients who have the disease. These trials cost more and last one to three years. Success here is a huge milestone. For example, Swiss biotech EsoCap recently reported good Phase II results for a throat condition called eosinophilic esophagitis. This success lowered the risk for their investors.
- Phase III (Confirmation): The largest and most expensive step. It tests the drug on hundreds or thousands of patients to confirm it works safely at scale. Swiss company CUTISS is currently running Phase III trials for severe burns. They raised CHF 56 million in September 2025 to fund this work. Their total funding is over CHF 125 million.
- Phase IV (After Approval): After the drug hits the market. Researchers keep watching for long-term side effects. Positive results here can help the company sell the drug to more people.
Understanding Success Rates
The math of biotech investing is tough. A Phase I investment has a nearly 90% chance of failure eventually. The risk drops as the company passes each phase.
Phase II success is the most important filter. If a drug works in patients, it has a much better chance of reaching the market. Phase III success makes approval very likely, though not guaranteed.
Specific diseases have different odds. Cancer drugs have high approval rates if they reach the final submission stage. Between 2009 and 2018, regulators approved 96% of the cancer treatments that made it to the final review.
Key Swiss Regulations
Swissmedic is the agency that approves drugs in Switzerland. Investors should know three key facts about how they work:
- Global Data Acceptance: Swissmedic accepts results from trials run in other countries. Companies can test drugs in the US or EU and use that data for Swiss approval. This approach saves time and money.
- Fast Process: The scientific review at Swissmedic takes about 194 days. This speed is competitive with agencies in Europe and the US. In July 2025, Swissmedic started a new pilot program to check trials even faster.
- Reliance Pathway: If the US or EU approves a drug first, Swissmedic can use a shorter process to approve it in Switzerland. This helps Swiss companies enter their home market easily after winning abroad.
What Growth-Stage Means in Biotech/Medtech
Growth-stage companies have passed the early hurdles. They are usually in Phase II or Phase III. They have proved their technology is safe and likely works. Now they need money to finish large trials.
These companies raise large amounts of money. Alentis Therapeutics raised USD 105 million in April 2023 for its liver and lung treatments. Memo Therapeutics also finished Phase II trials recently.
Investing at this stage is safer than investing in early startups. The timeline to a profit is shorter, often just three to five years. About 44% of all biotech deals happen at this late stage because big investors prefer the lower risk.
How to Evaluate a Biotech/Medtech Company
You can check specific signs of success for each phase:
- Phase I Checks: Look for the maximum safe dose. If the safe dose is too low to treat the disease effectively, the drug will fail later. Avoid companies with unexplained safety delays.
- Phase II Checks: Diverse data is key. Did the company meet its main goal? Swiss biotech Nouscom showed positive data for its cancer vaccine recently. This good news proved their method works in difficult cases.
- Phase III Checks: Confirm the company has enough patients enrolled. Check if they agreed on the goals with regulators beforehand. Competition is also a risk here. If another company finishes first, the market might disappear.
Building a Balanced Portfolio
Investing in biotech is risky. A single company might fail completely. Experts suggest owning shares in 10 to 12 different biotech companies to be safe. Spreading bets across different types of diseases also helps.
Smart investors go further by mixing biotech with other types of assets. You should not put all your money into life sciences. Combining these investments with steady options makes your portfolio stronger.
CapiWell supports this strategy by offering a wide range of investment types. CapiWell allows Swiss investors to balance high-potential biotech bets with more stable assets like real estate and SME loans. This multi-asset approach helps you manage the risks of clinical trials while still aiming for growth.
