Biotech crossover rounds could top $4.22 billion across about 28 rounds this year, PitchBook forecasts.
Months before the current biotech IPO boom, public investors began a more confident trek back into the sector, signaling the coming wave of public debuts. These investors, which help a biotech prep for a run at the public markets via a crossover round, had been biding their time after the market bottomed out post-COVID.
Crossover fundraisings, typically the last fundraising round before a biotech goes public, spiked around the fourth quarter of 2025, Maha Katabi, general partner at Sofinnova Investments, told BioSpace. While these raises never dropped off as precipitously as IPOs, the recent uptick began happening as M&A returned to the sector.
PitchBook forecast that crossover rounds will top $4.22 billion across about 28 rounds if the 2026 trend holds, putting this year above 2025 in terms of both deal number and total value. There have been 20 IPOs this year to date, according to data collected by BioSpace, as compared to eight in 2025.
“We’re still seeing elevated activity for these crossover investors in 2026. That indicates that they’re anticipating that the IPO window will stay open,” PitchBook Senior Analyst Ben Zercher told BioSpace in an interview.
According to Katabi and Zercher, these crossover investors never actually went anywhere when the biotech IPO markets bottomed out after 2021. They simply changed their expectations of the journey from crossover to IPO. This gave companies a chance to await the right moment to enter the public markets, serving as a lesson for any biotechs currently doing the same.
Prying open the window
Before a company ever rings the bell at the Nasdaq—if they should be so lucky as to be invited—months of executive work have gone into the moment. And that does not include the years that went into the development of any drugs the biotech has in the pipeline.
When the pandemic brought record capital onto the biotech scene in 2020 and 2021, investors were hungry to buy in. Many companies with little clinical data went public, and many failed to deliver. This caused the IPO window to snap shut for the next few years. Crossover investors had a choice to make: invest elsewhere or invest anyway and wait.
While crossover funding did spike in 2020 and 2021, data from PitchBook shows that crossovers normalized and have more or less been steady since 2022, even as IPOs plummeted well below pre-pandemic levels. That suggests that many investors opted to stay in the sector, according to Zercher.
“There have been a couple of these crossover rounds that have had longer lags than what we saw during the pandemic, where it was pretty bread and butter. A couple months after, you were able to price and get out,” Zercher said.
Typically, the time from crossover to IPO is about five to six months, Katabi added. Really well-prepared companies—with strong syndicates and active, supportive investors—can compress that timeline to three or four.
“It all depends on the readiness of the company,” Katabi explained. “The limiting factor is having your financials in order.”
Obesity-focused Kailera Therapeutics is an example of a typical crossover flip, Zercher said. The company executed a $600 million series B in October 2025, taking on public investors, and then pulled off a record-breaking $625 million IPO about six months later. That timeline lines up squarely with the crossover uptick Katabi began to see late last year.
Kailera was already running a Phase 3 trial when the IPO was executed. That’s a pretty compelling case for an investor on the roadshow, meetings conducted in the leadup to an IPO where executives present the company to prospective investors.
And then there’s the other side, where investors had to wait longer despite buying into companies that emerged with a bang years earlier. Zercher said that some crossover investors have waited a full year to 15 months before the IPO.
“You could see that the strategy kind of went sideways,” Zercher said. “The ones that come to mind for me are like Generate:Biomedicines or Eikon [Therapeutics], where they had crossover investors enter their cap table a couple years earlier, and then for whatever reason, weren’t able to go public. The window shut.”
Generate and Eikon are both AI-focused drug hunters that now belong to the IPO class of 2026. These companies are earlier in the clinic than Kailera, with Generate planning to use the funds raised from the IPO for the Phase 3 test of an anti-TSLP antibody called GB-0895 in severe asthma.
Eikon in particular is interesting, Zercher pointed out, because the company’s $381 million IPO was technically a down round. Eikon had previously raised $517 million in a series B.
What both companies have in common is that they launched with significant fanfare and their IPOs weren’t necessarily a surprise—they were just delayed.
“It makes sense when you think about the window being closed,” Zercher explained. “Once those top companies saw that the window was back open, they were able to execute quickly.”
Other ways to roll
Sometimes a crossover doesn’t ever lead to an IPO, and that is becoming more acceptable to investors. Katabi has seen a rise in companies instead seeking the relative security of exit options like a reverse merger, which achieves the same end result of pushing a company onto the public markets but without the guessing game of the roadshow. Alternatively, a biotech can be acquired, giving those investors a more final exit.
“In certain years, the crossover financings all lead to an IPO,” Katabi said. “What I’m seeing recently is, there are actually multiple iterations of what you could do once you raise a crossover fund.”
A recent example is Vega Therapeutics, a Sofinnova portfolio company that was sold to Incyte for up to $2 billion in June. Katabi remembers Sofinnova investing in a traditional venture capital round via the company’s parent, Star Therapeutics, in 2023. At that time, the lead asset, VGA039, for the bleeding disorder von Willebrand disease, had yet to enter the clinic. Once the drug began generating clinical data, Sofinnova realized they had an asset that could provide a unique solution in a rare indication with little competition. Executives had also developed a path with regulators through Phase 3.
“It became ripe for a crossover because you need to think about the pace of catalysts,” Katabi said. Public investors want a bit more certainty with concrete milestones to look for in the first year or two post-IPO. “You need to think about what’s going to keep public market interest significant, and you want IPO buyers to essentially hold the stock until the next meaningful clinical catalyst.”
With such catalysts lined up, Vega could have gone public. Instead, it spun out of Star with VGA039 and was acquired by Incyte.
Regardless of the ultimate destination, the crossover is a key time for management teams to start thinking about staffing the C-suite with the right people, particularly a CFO with exit experience. Sofinnova will often lend Executive Advisor Troy Ignelzi to companies to serve in the role as the company preps for an IPO. He is currently CFO at the firm’s portfolio company Rapport Therapeutics, which closed an IPO in 2024.
While some crossover investors prefer to contribute money and sit back, Sofinnova is often very involved in these processes behind the scenes. Sofinnova will “do the heavy lifting,” Katabi said, taking a board seat and pulling together a larger syndicate of investors.
Indeed, crossovers tend to have massive lists of individual investors, sometimes up to 20 different groups. But the pool of crossover investors has changed over the years, Katabi said. It used to be public institutional investors that had a chunk of their portfolios earmarked for some riskier, illiquid bets. Examples of typical public market investors that Sofinnova may work with include Fidelity Investments and Janus Henderson Investors. They would use the crossover as a “foothold” and then dive in more at the IPO stage.
Now, the scene has shifted, with sovereign wealth funds, larger institutional investors and corporate investors—like Big Pharma investment arms—getting involved. Katabi said that pharma companies like Sanofi or Eli Lilly frequently participate in IPOs via their venture arms, too.
For now, the outlook for crossovers is sunny. Given the cyclical nature of biotech, successful IPOs tend to beget more IPOs.
“There’s obviously ups and downs for all of these companies that are now in the public market, but we’re generally seeing sustained stock prices and good clinical readouts,” Zercher said.
This is in part due to the more disciplined nature of this latest crop of biotech IPOs—as compared to what Zercher calls the “frothy” pace during the pandemic.
Katabi agreed. “What I really like in this crop of crossover IPOs is there’s been a focus on quality,” she said. “If you are more mature and closer to a catalyst, if the catalyst works out, obviously you’re going to see that value reflected in the stock. So I think we’re more likely to be in a pretty good IPO basket.”
