Inside a Biotech 'Strategic Alternatives' Process: Pardes Biosciences and the Leerink Partners Playbook

This one is different from most deal breakdowns. Instead of a single glossy banker deck, the richest source here is Pardes' Schedule 14D-9, the "Background of the Offer" section is a blow-by-blow, meeting-by-meeting narrative of exactly what Leerink Partners showed the Special Committee and when. All facts below are drawn from that filing and the related Schedule 13E-3 exhibit index (CIK 0001822711), both public on SEC EDGAR.

TL;DR

Company: Pardes Biosciences (Nasdaq: PRDS), a COVID antiviral biotech that went public via SPAC in Dec. 2021 with a $75M PIPE. Trigger: lead drug pomotrelvir missed its primary endpoint in Phase 2, announced April 3, 2023. Advisor: Leerink Partners LLC. Process run: 133 candidates screened, 9 solicited, 8 responded, 3 finalists, plus 3 competing cash/financial buyers. Outcome: acquired by Foresite Capital's MediPacific vehicle for $2.02–$2.19/share cash plus a contingent value right (CVR), closed October 2023.

The trigger: when "strategic alternatives" actually starts

Deck reference: Background of the Offer, March–April 2023

On March 31, 2023, Pardes' board got the topline data: pomotrelvir, its oral antiviral, missed the primary endpoint of its Phase 2 COVID trial. This is the single most common trigger for a "strategic alternatives review" in biotech, not bankruptcy, not activism, just a failed readout that leaves a company holding a pile of cash and no product. The board's first move, same meeting: suspend the program, do a reduction in force, and formally kick off a strategic review. Four days later, that intention became public via press release, telling the market, and every opportunistic acquirer, that the company was in play.

Once the pipeline is dead, a company's own cash balance becomes its most important asset. With no pipeline left to value, Pardes' entire worth was basically its net cash, which is why almost every number in this deal, from here forward, is really a negotiation over what fraction of Pardes' own bank account the buyer gets to keep.

The conflict hiding in plain sight

Deck reference: Background of the Offer, April 7–20, 2023

Four days after the announcement, Foresite Capital, already Pardes' largest shareholder at 27.24% and the fund whose founder, Dr. James Tananbaum, sat on Pardes' board, signaled interest in a "cash-out" tender offer for the rest of the company. This is a going-private-adjacent conflict: an insider wants to buy out the people who aren't insiders. The standard playbook: Dr. Tananbaum is walled off from all future strategic discussions, a Special Committee of independent, disinterested directors is formed, and the committee gets its own counsel (Fenwick & West) and its own banker (Leerink Partners).

Leerink itself had to clear a conflicts check before being hired, the filing discloses that certain Leerink executives held minor personal investments in Foresite-affiliated funds and that one had previously sat on Foresite-sponsored SPAC boards, including the one that took Pardes public. The Special Committee reviewed this, decided it wasn't disqualifying, and hired Leerink anyway, partly because of its deep familiarity with Pardes, a normal, if slightly ironic, feature of these processes: the banker who knows you best is often the one with the most historical ties to the people you're negotiating against.

The menu of options, where "raise more capital" actually shows up

Deck reference: April 13, 2023 board meeting

At the April 13 meeting, Leerink presented the board with a standard menu of strategic alternatives for a public biotech sitting on cash with no pipeline:

Notice what's not on this list as a standalone path: "raise a PIPE and keep going as-is." That's because Pardes had already suspended its only clinical program, there was nothing left to fund. Capital raises as a strategic alternative only make sense when a company still has something worth financing. Once the pipeline is dead, "raising capital" gets absorbed into the reverse-merger option instead, you're not raising money for Pardes, you're bringing in a private company that raises money alongside Pardes' cash shell.

Running the process: 133 names down to 3

Deck reference: May 3–26, 2023

This is the best part of the filing for understanding how these processes are actually executed, and it maps almost exactly onto the day-to-day work of a junior banking team. May 3: Special Committee approves a scoring framework for reverse-merger candidates, management team quality, size/track record of lead investors, therapeutic focus, clinical stage, whether there's a value-moving data readout within 18 months, valuation fit, and IPO-readiness. Leerink and Pardes management screen an initial list of 133 potential reverse-merger candidates, narrow to 9 targets for direct outreach. May 11: Leerink contacts all 9, requesting detailed proposals by May 23, valuation, cash position, proposed new financing, resulting ownership split, cash runway, and upcoming data catalysts. 8 of 9 respond, NDAs get signed with each (12-month standstills, no "don't-ask-don't-waive" traps, a shareholder-friendly detail). May 24–26: three finalists emerge, "Strategic Party A, B, and C."

This three-week sprint, screening 133 names, scoring them, drafting and sending 9 outreach packages, negotiating 8 NDAs, and building comparison tables of 8 competing term sheets, is close to 100% analyst/associate execution work.

The actual bids, this is where "capital raise" lives

Deck reference: May 26–31, 2023

Here are the three reverse-merger proposals, exactly as Leerink presented them to the committee.

Strategic Party A

Valued Pardes at $50M ($10M for the public listing plus $40M net cash). Valued itself at $257M (1.0x its last private round). Structure: a concurrent private financing of at least $110M, largely from its own existing investors, plus an option for Pardes shareholders to have up to $100M of their stock repurchased. Resulting ownership: Pardes holders 12.0% / Party A holders 61.6% / new PIPE investors 26.4%.

Strategic Party B

Valued Pardes at $140M (cash only) and itself at $402–434M (1.5–1.62x last round). Ownership split: Pardes 24.4–25.8% / Party B 74.2–75.6%. No concurrent financing initially, later added a return-of-capital sweetener (excess cash above $100M paid back to Pardes shareholders).

Strategic Party C

Valued Pardes at $155M ($15M listing value plus $140M cash) and itself at $310M (1.0x last round). Ownership split: Pardes 33.3% / Party C 66.7%. The only bidder to request exclusivity, which the committee refused, instructing Leerink to tell them no.

This is exactly the "capital raise" analysis most junior bankers picture: Party A's structure is functionally a $110M PIPE bolted onto a reverse merger, with Leerink modeling the resulting cap table across every combination of financing size, exchange ratio, and shareholder cash-back. Reverse mergers into cash-rich failed biotechs became a common 2023 pattern precisely because it let private companies "go public" and raise a financing round in a single transaction, using the shell's own bank account as part of the check.

The cash bidders show up, and win

Deck reference: May 26 – July 16, 2023

In parallel, the committee had Leerink solicit three financial buyers interested in a straight cash-out: Foresite, "Financial Buyer A," and "Financial Buyer B." May 30: Financial Buyer A bids $135M aggregate cash plus a CVR for 80% of any future proceeds from Pardes' shelved drug assets, assuming ≥$150M net cash at closing. After confirming actual net cash was $141M, this became $2.07/share. Buyer A requested 30 days of exclusivity (with 10-day extensions) to finish diligence. Leerink used the existence of this bid as leverage, informing Foresite on June 1 that a competing cash offer existed, without disclosing terms, "to incentivize Foresite to put forward a compelling proposal."

That pressure tactic worked exactly as intended: the process ultimately produced Foresite's winning $2.02–$2.19/share plus CVR structure, signed July 16, 2023.

What an IB analyst and associate actually do on a deal like this

Pardes' filing is unusually good for illustrating this because the narrative describes the outputs of exactly this kind of work, meeting by meeting.

Analyst (1st–3rd year, most junior)

Builds and maintains the "universe" spreadsheet, in this case, the list of 133 reverse-merger candidates, with therapeutic area, cash position, last-round valuation, and clinical stage pulled from CapIQ/PitchBook and public filings. Drafts the comparison grid used in the May 24 and May 26 committee meetings: valuation, ownership split, cash runway, catalysts, side by side for all 8 respondents. Builds the actual financial model: pro forma cap tables under different financing sizes and exchange ratios, this is what produces numbers like "12.0% / 61.6% / 26.4%." Formats the board deck itself, the April 13 "menu of alternatives" slide, valuation waterfalls, sensitivity tables. Handles the mechanical grind: NDA tracking, data room population, diligence request lists, scheduling management presentations for the 3 finalists.

Associate (post-MBA or promoted analyst, 1st–4th year)

Owns the financial model's logic and assumptions, not just its formatting, decides how net cash, wind-down costs, and legacy liabilities should be treated across scenarios. Runs point on NDA and confidentiality-agreement negotiation with the 8 counterparties' bankers/lawyers. Drafts the outreach materials sent to the 9 candidates on May 11, and the process letter setting the May 23 deadline. First-line review of every inbound proposal before it goes to the VP/MD, flags inconsistencies (e.g. checking that Financial Buyer A's $135M actually reconciled to its stated 90%-of-net-cash assumption). Often the one physically in the room fielding follow-up questions from bidders' teams between committee meetings.

VP and Managing Director

The VP owns the relationship with the Special Committee day-to-day, on the phone between meetings, translating "the committee wants more detail on Party B's cash-back mechanic" into a concrete workstream, and structures the actual negotiation strategy, e.g. the decision to use Financial Buyer A's bid as leverage against Foresite without revealing terms is a VP/MD-level tactical call, executed through the associate. The Managing Director is present at the pivotal board/committee meetings, owns the client relationship and the conflicts disclosure conversation, ultimately signs the fairness opinion that goes into the 14D-9's Annex 2, and makes the judgment calls on when to walk away from an exclusivity request (Party C) or when a bid is genuinely competitive enough to use as leverage.

The unglamorous truth: the vast majority of hours on a process like this, the 133-name screen, the NDA paperwork, the 8-way comparison grid, the pro forma cap table sensitivities, are analyst and associate work product, even though the board only ever sees the MD present it. A "banker's deck" is really the tip of a much larger iceberg of spreadsheet and diligence work that never gets filed with the SEC.

Where to actually read the underlying decks

The raw Leerink slide decks referenced throughout the narrative above are filed as exhibits to Pardes' Schedule 13E-3, though several are partially redacted under a confidential-treatment request: (c)(2) Materials Prepared for the Board of Directors, July 16, 2023 (the final recommendation deck); (c)(3) Strategic Process Update, June 12, 2023; (c)(4) Discussion Materials, April 13, 2023 (the "menu of alternatives" presentation); (c)(5)–(c)(9) Discussion Materials dated May 2023 through June 11, 2023 (the candidate-comparison decks referenced above). The full narrative source, more informative than the redacted decks themselves, is Pardes' Schedule 14D-9 on SEC EDGAR.