USA Trends and Developments Contributed by: David McIntosh, Matt Byron, Zoe Dettelbach, Paul Matheke and Toby Shao, Ropes & Gray
see an upward trend in median venture round sizes, while funding for companies focused on preclinical and Phase I assets lagged. The outlook for 2026 among industry observers is still positive, with venture capital funding expected to increase and for the recent trend of capital con- centrating into larger rounds for later-stage start-ups to continue. Commentators noted the first weeks of 2026 showed signs of increasing biopharma ven- ture activity. Furthermore, growing investor interest in the neurology space generated enthusiasm as a new source of capital. Notable neurology financings in 2025 included LB Pharma’s successful IPO, dis- cussed above, and MapLight Therapeutics’ USD372 million Series D raise . Commentators noted venture investors are expected to continue prioritising de- risked opportunities and validated pathways, though industry advisors express hope that biotechs focusing on early-stage novel science and pathways will see an increase in venture financing and deal activity gener- ally going forward. Deal-Making Trends in 2025 M&A activity centred on targeted, later-stage assets, with a slow start but strong second-half surge in 2025 While the outlook heading into 2025 was strongly opti- mistic, policy uncertainties caused M&A deal-making to lag in the first half of the year. In the second half of 2025, there was a marked uptick in the volume of bio- tech and specialty pharma M&A, with two consecu- tive USD30 billion activity months in September and October, which was atypical according to Stifel. Eight of the ten largest transactions of 2025 occurred in the second half of the year, with six of those taking place in the fourth quarter. Despite the absence of any deals over USD15 billion or horizontal mergers between larger pharmaceutical companies, biopharma M&A volume in 2025 was the third highest on record and the highest annual total since 2019. Commentators noted that this increase in M&A activ- ity appears to be driven by companies seeking to fill pipeline gaps with innovative, targeted, de-risked assets, particularly in rare disease, next-generation biologics, and oncology. Similar to venture investors, acquirers tended to target later-stage assets, rang-
ing from Phase II through commercialisation. Notable transactions included Johnson & Johnson’s acquisi- tion of Intra-Cellular Therapies for USD14.7 billion, Novartis’s acquisition of Avidity for USD11.4 billion, and Merck’s acquisition of Verona Pharma for USD11 billion. Deal activity was also shaped by Big Pharma’s inter- est in single-asset, “spin-out” transactions, including Lilly’s acquisition of the lead asset from Scorpion, Sanofi’s acquisition of assets from Dren Bio and AbbVie’s acquisition of a psychedelic programme from Gilgamesh Pharmaceuticals. While Big Pharma was still slow to acquire large platform biotechs with numerous expensive to develop programmes, these “spin-out” transactions allowed Big Pharma to acquire desired assets and programmes, without over-com- mitting. The acceleration of M&A towards the end of 2025 paints a more optimistic outlook for 2026. For exam- ple, Stifel and CNBC, among others, predicted that larger M&A deals may be likely in 2026 in light of global biopharmaceutical companies’ impending pat- ent cliffs and record levels of financial firepower. M&A activity in 2025 was tilted toward these asset-centric transactions to fill pipeline gaps, and many observ- ers have said they expect to see continued growth in 2026. Other factors commentators have cited in predicting continued M&A growth in 2026 are China’s biopharma sector’s growth and AI’s impact on R&D. Notably, Chinese biopharma accounted for five of the ten largest M&A deals in 2025. Although biopharma deal-making was relatively quiet in the lead up to the 2026 J.P. Morgan Healthcare Con- ference, this has not dulled optimism about industry momentum going forward, according to Pitchbook. A survey of biopharma industry professionals and exec- utives showed rising confidence for 2026, with 65% predicting the coming year would have more deals than 2025. Licensing soared in headline value in 2025, with steady upfronts and large volumes in various clinical areas The licensing market experienced a surge in deal vol- ume during 2025: this trend became apparent in the
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