USA Trends and Developments Contributed by: David McIntosh, Matt Byron, Zoe Dettelbach, Paul Matheke and Toby Shao, Ropes & Gray
The US life sciences industry experienced a turbu- lent but ultimately productive year in 2025. The public markets saw a volatile downward swing in the first half of 2025, but quickly regained footing and rebounded in the second half of the year. Venture investment remained tempered throughout the year, signalling continued discipline among investors. M&A largely tracked the upward trend of the public markets, with an initially muted start followed by a strong uptick in deal volume to close out 2025. Licensing deal volume rose strongly in 2025, with continuing prominence in Chinese in-licensing. This article explores these and other key trends of the life sciences sector in 2025 and offers insights into how they may shape what’s to come in 2026. Market Trends After a volatile bear market in the first half of the year, the public markets for the biotech industry surged in the second half of 2025. At the beginning of the year, industry watchers at Fierce Biotech predicted that the US biotech industry stock average, as measured by the S&P XBI, was poised for a rebound after a multi- year post-COVID slump. However, these hopes began to wane as the administration’s tariff concerns brought intense volatility to the sector, with the index bottom- ing out in April. The latter half of 2025, however, told a different story, with the index rebounding rapidly from the early 2025 troughs and helping to reset investors’ issuance expectations through the end of 2025 and even continuing into 2026. IPO activity remained dis- ciplined in 2025, with only USD1.6 billion raised from nine biopharma companies going public, compared to USD3.8 billion raised from 19 biopharma IPOs in 2024, and marking 2025 as the lowest year for IPO capital raised in the last five years. February kicked off 2025 with two of the most nota- ble IPOs of the year: Metsera and Sionna Thera- peutics. Metsera, a company that advanced a long- acting GLP-1 toward late-stage development, raised USD312.2 million; the company later became the tar- get of a subsequent high-profile bidding war between Pfizer and Novo Nordisk. Sionna debuted at USD191 million, funnelling the cash into a cystic fibrosis drug, SION-719, which reached a Phase II study in October 2025, and another cystic fibrosis drug, which con- ducted a Phase I trial in August last year. As the bear
market swung to recovery in the second half of the year, LB Pharma, a company specialising in neuropsy- chiatric drugs, raised USD285 million in an IPO while advancing its antipsychotic LB-102 toward Phase III for schizophrenia and another drug for bipolar disor- der. Follow-on issuances outpaced IPO volume in 2025, with USD56 billion of equity issued, showing strong investor demand for high-quality biotechs, according to analysts at Stifel. Although follow-on volume was relatively subdued in the first half of 2025, it surged in the second half of 2025. Based on this trend, Stifel analysts said they expect 2026 to usher in an increased volume of IPOs, with a focus on companies with strong proof-of-concept data. Endpoints News echoed this, saying the biopharma market might out- pace the broader consumer market based on early 2026 sentiment data. Venture equity deals were subdued in 2025 US biotech venture and biopharma venture equity deal volumes in 2025 were both down slightly from 2024 levels, but remained higher than 2023 levels, accord- ing to Stifel. However, average biotech venture deal size hit a record high in 2025, albeit only rising from USD66 million to USD67 million, with venture financ- ing concentrated into fewer but larger deals, favour- ing later-stage companies. In 2025, 80 venture rounds surpassed USD100 million, down from 104 in 2024, which signalled investor prioritisation of de-risked opportunities. Meanwhile, European biopharma ven- ture equity deal volume increased by approximately USD300 million from levels in 2024, and, despite see- ing a similar deal count to 2024, with average deal value reaching record highs, increased by 62.5% over 2024’s annual total by October of 2025. In Europe, early-stage rounds represented the largest share of this deal value and volume. With venture capital continuing to be restrained, J.P. Morgan noted that in 2025, value creation increasing- ly came from licensing upfront payments rather than venture rounds. This shift reflected continued investor preference for de-risked opportunities, which was fur- ther underscored by the growing dominance of later- stage round venture funding. Additionally, companies with assets in Phase II and later stages continued to
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