Beyond equity: building value in UK biotechs

UK biotechs are staying private for longer as investors demand clinically de-risked assets, differentiated science, capital discipline and credible funding pathways. Equity remains essential for attracting scarce talent, but it creates most value when supported by strong leadership, culture, organisation design and people practices.

Why equity plans need to evolve

Biotech value is often created around a few major inflection points. These include clinical progress, regulatory milestones, funding rounds, and partnering or licensing events.

The development journey can take more than ten years. Conventional vesting and exercise periods may end before meaningful value is realised.

Plans must account for longer private ownership, dilution, option-pool refreshes and several possible exit outcomes.

Choosing the right equity mix

EMI options are usually the starting point for qualifying UK companies. They offer flexibility and participation in future upside without buying shares upfront.

CSOP options can support a broader workforce where EMI is unavailable or its limits have been reached.

Non-tax-advantaged options may suit overseas employees, consultants, advisers and non-executive directors.

Growth shares can reward future value above a defined hurdle while protecting value already created.

Restricted shares, founder shares and phantom equity may also have a role. The strongest solution is often a combination rather than one plan.

Equity must support the next value inflection point

As the company develops, the roles and capabilities needed to succeed will change.

A pre-clinical business has different demands from a company entering Phase II or preparing for commercialisation.

Awards should focus on the people who can most influence the next value inflection point.

This is more effective than treating equity as a generic retention tool.

Four conditions that turn incentives into value

Equity creates more value when it sits within a wider Growth Advantage system.

• Leadership: The team has the capability, resilience and decision-making speed required for the next stage of growth.
• Scalable culture: The company preserves urgency, ownership and innovation as it introduces greater structure.
• Focused organisation design: Decision rights, governance, critical roles and ways of working support fast, high-quality execution.
• Deliberate people practices: Performance, succession, workforce planning and capability development reinforce the strategy and equity plan.

A practical starting point

A brief diagnostic can test both the equity plan and the company’s wider readiness to scale.

It should identify where incentives support strategy and where they may be misaligned.

It should also expose leadership, operating-model or people-practice issues that could slow execution.

The output should be a short list of practical actions: what to sharpen, simplify, redesign or stop.

This is not a large transformation programme. It is a focused review of whether equity and organisation support the next stage of value creation.

What should boards and leadership teams do next?

Review the equity strategy, certainly before the next funding round, clinical or partnering milestone. Is it fit for purpose? What other changes need to be made in the organisation to create the conditions for scale?

If you are curious and want to explore how MM&K could assist your Board contact Rob Miller (robert.miller@mm-k.com ).

Back to News