Biotechs are benefitting from the AI tech frenzy and inflation, but validated pipelines and careful planning are still key to the recent record-setting IPOs, experts say.
Kailera Therapeutics’ $625 million biotech IPO record did not stand for long, as Parabilis stole the crown on Wednesday with a $670 million Nasdaq debut. These new records have generated much excitement across biotech and pharma, but experts say we shouldn’t get too used to them.
“These transactions are getting completed. It’s a really big change from the environment just a year ago, or two years ago, where you basically couldn’t give biotech new issues away,” said Les Funtleyer, healthcare portfolio manager at family office E Squared.
Now, there’s an overall market frenzy thanks to massive AI IPOs from Open AI and Anthropic. That’s trickling into biotech stocks to some extent, according to Funtleyer, but “these are paling in comparison with the AI games.” Peptide-maker Parabilis emerged with an enterprise value of $2.65 billion, according to S&P Capital IQ. Anthropic, on the other hand, broke records with a nearly $1 trillion valuation in May.
Nevertheless, Parabilis and Kailera’s debuts were biotech big, which suggests a huge appetite for biotech IPOs. In fact, Funtleyer says there’s a backlog of private biotechs at E Squared that are waiting to go public.
“I take all of this as a very positive sign,” Funtleyer said. He does not think that the IPO scene is going to heat up to the red-hot inferno that characterized the post 2021-period when many biotechs went public without validated data—only to disappoint investors or even go bankrupt. But he does see how biotech market watchers could think that the market could become over-saturated given the “recency bias” of the past few large IPOs.
“Your natural inclination is to almost think, oh my goodness, is this the end of the world? But there’s no indication that that is the case at the moment,” he said. “It’s actually when people get too comfortable, too complacent, that’s when you kind of think that something bad is going to happen. . . . In my judgment, the market hasn’t gotten complacent yet.”
The higher raises are really company specific, Funtleyer insisted. Larger IPOs going forward will be on a case-by-case basis, just as Kailera and Parabilis have been.
George Thampy, a biotech IPO and investor relations advisor, wrote on LinkedIn that Parabilis in particular has a star team of executives and researchers—including CEO Mathai Mammen and scientist Greg Verdine—driving the raise.
The company also went into the IPO with $800 million raised across private rounds. Once all is tallied from the underwriters and a $75 million concurrent private placement from partner Regeneron, the Parabilis IPO is likely to hit $845 million, according to Thampy.
Thampy also pointed to the fact that Parabilis raised 25% more than the midpoint estimate—the industry standard for initial IPO pricing—landing on the Nasdaq at $20. This “tells me that there was a torrent of new demand after the public flip, and that the order book was significantly more oversubscribed,” Thampy wrote.
The same kind of excitement seemed to usher Kailera through the IPO roadshow, according to Chief Commercial Officer Jamie Coleman. She told BioSpace last week that the company visited hundreds of investors, which underscored the interest in the obesity biotech’s pipeline. The company was touting a late-stage pipeline loaded with assets in the obesity space that was already partly derisked with data from China.
Kailera’s final tally after underwriters’ options hit $718.8 million, according to PitchBook data.
Both Parabilis and Kailera likely also benefitted from inflation, as everything is getting more expensive, Funtleyer noted.
But there were also fundamental differences between the two IPO leaders, Pitchbook Senior Analyst Ben Zercher said. “Unlike Kailera, which formed in 2024 and quickly stockpiled private capital before going public, Parabilis took a longer and far less linear road,” he told BioSpace in an email.
Parabilis began in 2017 as FogPharma, riding out what Zercher called “the post-pandemic biotech winter” before rebranding as Parabilis. The company then enjoyed a successful 2025 thanks to lead asset zolucatetide, which is being tested in several cancers including a Phase 2 program for desmoid tumors. Parabilis was able to prep for the IPO with a crossover round of $305 million in January, plus a lucrative partnership with Regeneron. Then zolucatetide received fast track and orphan drug status in March, which provided solid footing for the IPO.
Both companies’ advanced pipelines are key to the valuation and records, according to Funtleyer. He does not expect to see preclinical biotechs generating raises in the $600 million range anytime soon.
“If you start to see preclinical companies coming public with multi-billion dollar valuations, I think that’s when you start to look at the panic button—but there’s no indication that that’s the case now,” Funtleyer said.
There could be market disruptions due to macro factors, but for now the excitement is refreshing, according to Funtleyer.
On Thursday, Kardigan priced a more reserved IPO, seeking to raise $373.3 million with a valuation of $1.4 billion. One of BioSpace’s NextGen honorees, the company just announced proof-of-concept Phase 2 data in March, showing “clinically meaningful” changes in blood pressure for tonlamarsen.
“With the biotech window reopened, the volume of IPOs reflects a backlog of quality companies that kept building through the biotech funding downturn rather than a wave of hype,” Zercher said. “Where the pandemic-era class sold preclinical optionality, Parabilis and the 2026 cohort are being priced on de-risked clinical programs with clear regulatory paths.”
The newly public biotechs will now have to maintain that excitement and keep their share prices up, which could encourage other companies to go out. Thampy predicted that Parabilis would spike when the stock began trading on Tuesday because of the demand prior to the public flip. Sure enough, the shares were worth $31.60 at close—a 58% increase from the opening price.
Other companies have been less fortunate. Kailera’s shares have fallen 24% since debuting on April 17. Funtleyer wants to see how Parabilis trades over the next month as a guide for companies waiting in the wings.
“Biotech is coming back to life, which is great, but ultimately it really comes down to the individual issues,” Funtleyer said. “At a certain point, the company’s got to stand on its own.”
