US-listed biotechnology and pharmaceutical company share sales are staging a late-year revival, as mergers and acquisitions in the industry boost valuations and stoke additional demand.
With more than $4.2 billion raised last week alone, sales of new and existing stock in publicly traded drug developers have jumped to $13.7 billion in the fourth quarter. That’s already the biggest quarterly haul since the first three months of 2021, according to data compiled by Bloomberg. The surge came even though there haven’t been any deals above $1 billion in the sector so far this quarter.
For bankers focused on the sector, this is welcome relief from a brutal year. High interest rates, and regulatory and political uncertainty around drug approvals and pricing, largely closed off the equity tap both for cash-hungry biotechs that are already listed or would like to go public.
More recently, given the M&A in the biotech industry, investors have been keen to participate in equity sales on expectations that the companies they’re buying into will be soon be acquired. Such activity is also setting the stage for a significant jump in IPOs in 2026, with biotech companies going public set to benefit from higher valuations across the industry.
“The health-care sector bottomed during the summer and has since inflected higher,” said Sumit Mukherjee, the head of equity capital markets, market intelligence, at JPMorgan Chase & Co. “Sentiment has improved, M&A has picked up and those dollars need to be redeployed back into new opportunities.”
Pfizer Inc.’s acquisition of obesity drug developer Metsera Inc. — completed last month after a fierce bidding war — marked a turning point for the industry. Metsera itself only went public in late January. The buyout price versus what it went public at crystallized a rapid-fire gain of more than 260% for IPO investors and made it this year’s most lucrative US IPO over $50 million.
The biotech M&A pick-up kept going with Merck & Co. agreeing last month to buy late-stage flu antiviral developer Cidara Therapeutics Inc. for $9.2 billion. Among other large deals, Novartis AG revealed in October it would pay $12 billion for Avidity Biosciences Inc., the Swiss drugmaker’s biggest acquisition in more than a decade.
Further evidence of the optimism surrounding the arena is the S&P Biotechnology Select Industry Index, which has surged nearly 23% so far in the fourth quarter compared to the S&P 500’s 1.9% gain over the period.
Familiar Playbook
Recently, a run of positive trial data has given many biotechs the confidence to ask investors for more money. More than 100 biotechs and other drug companies tapped investors for equity this quarter, the data showed.
The biggest equity offerings of the quarter came in rapid succession last week as Terns Pharmaceuticals Inc. raised $747.5 million, Kymera Therapeutics Inc. $692.3 million and Structure Therapeutics Inc. $647.5 million. In each case, the companies increased the size of the offerings after undertaking marketing and right after releasing trial data that propelled their shares higher.
That’s a familiar playbook for a sector that relies heavily on trial news flow to keep investors putting in new money and avoid running out of cash.
In Terns’ case, the cancer specialist used the American Society of Hematology conference just days earlier to release possible early trial data on its drug to treat a relatively rare form of leukemia. That sent its stock up 37% on Dec. 8 before it pushed ahead with the stock sale a day later.
Late Monday, three biotechs including oncology specialist Immunome Inc. revealed plans to sell more than $600 million of stock between them, likely pushing the fourth quarter tally of biotech stock issuance well above $14 billion once these offerings are completed.
Given the recent M&A in the biotech industry, 2026 will be a much busier year for IPOs in the arena, said Jim Cooney, Bank of America Corp.’s head of Americas ECM. So far this quarter, only two drug developers of note have gone public: MapLight Therapeutics Inc. and Evommune Inc. This year is set to end having priced only eight $50 million-plus biotech IPOs, the smallest annual total in more than a decade.
“Health-care issuance in general is expected to be constructive next year,” Cooney said. “For next year, 25 biotech IPOs is the floor based on what we see today and could well exceed 35.”
A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
Read more articles by Anthony Hughes
