Biosimilar trial failed? Investors get their money back: a new insurance model redefines clinical trial financing
Published on 10 October 2025
Generics and Biosimilars Initiative Journal (GaBI Journal). 2025;14(2)
Abstract: |
Introduction
Developing biosimilars has always involved a complex calculus of risk, capital, and time. Now, a newly launched insurance-backed financing model could dramatically change the game—especially for small and mid-sized developers navigating costly clinical trials.
A new clinical trial insurance product—launched by Medical and Commercial International (MCI) under the Lloyd’s of London framework and underwritten by GATC Health—introduces an innovative approach to risk management in biosimilar development. If a trial fails to meet safety or efficacy endpoints, the policy reimburses the developer for the full cost of the trial. By protecting against downside risk, this insurance mechanism opens the door to more favourable financing structures than conventional equity or venture debt, offering a compelling alternative for sponsors and investors alike.
Turning clinical risk into a financeable asset
Traditionally, biotech developers have had limited capital options: venture equity—dilutive and valuation-sensitive—or venture debt—expensive and risky in the event of trial failure. This insurance product offers a third path: capital structured as secured debt backed by a trial insurance policy, where the policy functions as collateral for the lender. If the trial fails, the insurer—backed by the strength and credibility of Lloyd’s—reimburses the loan.
This novel model not only reduces risk exposure for investors but also improves access to capital for developers hesitant to take on debt due to bankruptcy concerns. For successful trials, it also preserves equity value by minimizing early-stage dilution—allowing developers to raise capital at higher valuations post-trial.
How it works: AI-driven underwriting meets biosimilar predictability
The key innovation lies in the AI-powered underwriting platform developed by GATC Health, which enables precise risk modelling through proprietary molecular data analytics. This platform evaluates a drug candidate’s biological profile to predict clinical trial success, offering a level of foresight that was previously unattainable using traditional methods.
Historically, the odds have been stacked against drug developers: more than 90% of drug candidates fail to reach the US Food and Drug Administration (FDA) approval, with the majority failing during clinical trials due to efficacy or safety shortcomings. This high attrition rate has made clinical development inherently risky—and funding it prohibitively expensive, especially for early-stage companies.
GATC Health’s platform is a game changer. In validation studies, it has demonstrated 86% sensitivity and 91% specificity in predicting clinical trial outcomes. This means it can accurately identify not only the therapies likely to succeed, but also those that are more likely to fail—enabling insurers to selectively underwrite only the most promising trials.
For the first time, AI-driven validation enables insurers to quantify clinical risk with confidence, making it possible to backstop biosimilar trials with insurance coverage. As a result, premiums remain commercially viable, while developers gain access to a powerful new financing mechanism that reduces their capital costs.
This new layer of predictive intelligence is especially impactful in the biosimilar space, where therapeutic targets are based on already-approved reference biologicals. Because molecular similarity and pharmacodynamic profiles are well-defined, the AI system can leverage existing biological data to further refine risk assessment—making biosimilar trials particularly well-suited for this type of coverage.
Ultimately, this represents a breakthrough not just in underwriting, but in how the industry can think about financing innovation. By transforming clinical trial risk from an unpredictable liability into a quantifiable and insurable asset, GATC Health and MCI have enabled a new class of financial products that were previously impossible—creating a virtuous cycle of better risk management, better financing, and faster progress for drug developers and patients alike.
A new financing paradigm for a growing sector
The implications of this model are significant. For developers, it offers a way to fund trials without giving up equity upfront or bearing full downside risk. For lenders and insurers, it opens access to a new class of predictable, modellable clinical risk. And for the biosimilars industry—which operates on thinner margins and predictable regulatory pathways—it provides a much-needed financing solution that aligns with its risk-reward profile.
Moreover, the use of AI accelerates underwriting and financing timelines, enabling faster trial initiation and speed to market—a critical advantage in competitive biosimilar launches.
Bottom line: innovation that enables innovation
As biosimilar development expands globally, innovative financing models like clinical trial insurance could prove transformative. By shifting trial risk from developers to insurers, the model not only de-risks investment but also fosters greater innovation by making clinical trials more financially accessible.
In the long run, this kind of financial innovation may be just as critical as scientific breakthroughs – helping to bring more affordable, high-quality therapies to patients worldwide.
Funding sources
This paper was funded by GATC Health Corp
Competing interests: TJP is an advisor to GATC Health. DG declares no conflicts of interest. JS and RG are employees of GATC Health.
Provenance and peer review: Not commissioned; externally peer reviewed.
Authors
Tomas J Philipson1, PhD
Dhruva Gupta2, MD
Jacob Shia1, MBA
Rahul Gupta1, MD, MPH, MBA, FACP
1GATC Health
Suite 660, 2030 Main Street
Irvine CA 92614
USA
2Clinical Fellow and Physician Resident
Harvard Medical School
25 Shattuck Street
Boston, MA 02115
USA
|
Author for correspondence: Jacob Shia, GATC Health Corp, Suite 660, 2030 Main Street, Irvine CA 92614, USA |
Disclosure of Conflict of Interest Statement is available upon request.
Copyright © 2025 Pro Pharma Communications International
Permission granted to reproduce for personal and non-commercial use only. All other reproduction, copy or reprinting of all or part of any ‘Content’ found on this website is strictly prohibited without the prior consent of the publisher. Contact the publisher to obtain permission before redistributing.
