After years of suffering from a bear market and more than 14 months of geopolitical turmoil shaking the macroenvironment, biotech appears to be moving on.
Emboldened by Kailera Therapeutics’ record-setting IPO and a string of other upsized offerings, the biotech sector is showing renewed confidence that the public markets are officially open again.
“The tide is turning,” Craig Hilts, partner at global law firm Sidley Austin, told BioSpace.
The shift has been a long time coming. Years of declining investor interest on the back of the COVID-19 pandemic effectively shut the IPO window after a surge of companies went public in 2020 and 2021. “Companies went public and saw stock prices drop and saw themselves in a worse position,” Hilts said.
Then in 2025, biotech struggled further as high interest rates, tariffs, regulatory uncertainty, federal funding changes and other pressures weighed on the market. Alongside a new year, new pressures emerged, with the start of 2026 marred by a war in the Middle East that has driven inflation and market volatility.
At a certain point, companies have no choice but to forge through the uncertainty, Hilts said. That point appears to be now.
Aktis Oncology closed the first biotech IPO of 2026 with $318 million, kicking off a quarter that saw 10 companies take the public plunge, up from the eight the prior quarter and nine IPOs in the first quarter of 2025.
A slew of biotech IPOs were recorded in April, led by obesity startup Kailera Therapeutics’ record-breaking $625 million debut—the largest biotech IPO ever.
“I think the momentum is more durable, and I think that was best shown in Kailera’s record-setting IPO,” PitchBook’s senior biopharma analyst Ben Zercher told BioSpace.
A wave of biotechs, including Avalyn Pharma, Hemab Therapeutics and Seaport Therapeutics, have followed in short order. Notably, all of these biotechs closed upsized offers and broke the mold of the companies debuting publicly in past quarters: all are earlier than Phase 3 development.
These mid-stage companies going public are a great sign, according to Hilts, who noted that the biotech market specifically has been “surprisingly resilient” over the last month.
“My gut is that people have kind of accepted that they can’t predict macroeconomic conditions this week or next week or next month or later this year,” he said. “They’re not waiting for macroeconomic stability, because there’s no certainty that you’re going to get that.”
How the M&A surge impacts IPOs
The uptick in IPO activity comes amid a surge in biopharma mergers and acquisitions, sending overall biotech exits on an upward trajectory. According to Q1 2026 data from PitchBook, the industry recorded 19 exits for a value of $13.3 billion—the highest exit value reported since the final quarter of 2021.
The corresponding rise in both M&A and IPOs is not a coincidence, Hilts said. “[M&A is] having a big effect on investors’ willingness to invest in IPOs,” he explained. “The type of companies that have been going public are kind of the type of companies that could be M&A candidates”—e.g., companies that are running or launching late-stage trials.
Thus, if IPO investors believe that the recently public biotechs are likely to be acquired in the next 12 months, they may be looking to get an M&A premium out of it, Hilts said. “So, I think that the M&A has really been the leading driver in the IPO market.”
But the dramatic surge in M&A activity may also elicit the opposite response too, Michael Pilo, capital markets partner at Baker McKenzie, told BioSpace in mid-April.
“A dramatic surge in high value biotech M&A activity by large pharmaceutical companies in February and March of 2026 has companies that are currently on an IPO track reconsidering their options and delaying their IPOs, especially given the current turbulence in the equity markets,” Pilo said.
Of course, companies are likely considering all options on the table, noted Sidley’s Hilts. “Most companies that are thinking about an IPO are also talking to their bankers about potential acquisitions.” He added that having an IPO process in the background for companies contemplating acquisition—also known as a dual track process—provides an alternative and negotiating tool for M&A dealings.
“Having a few IPOs that have traded successfully, I think companies have some confidence that they can get into the public markets, get a valuation increase and be able to get a better M&A deal,” Hilts said.
The unpredictability of IPO pricing
The promising green shoots of recent upsized IPOs beg the question—are biotechs pricing their offerings correctly?
Last week, Boston-based Seaport Therapeutics announced an upsized $255 million IPO, surpassing its expected range of $183.5 million to $211.4 million—the latter assuming underwriters exercised their 30-day option to purchase an additional 1.77 million shares. Originally planning on selling 11.8 million shares, the novel antidepressant developer ended up with nearly 14.16 million shares sold.
Other recent examples include Avalyn’s late-April IPO that raised $300 million, more than $100 million over expectations, and Odyssey Therapeutics’ $279 million offering, an increase from the initial estimate of $236.6 million.
Such large jumps may lead one to believe that the offerings were mispriced or that the biotech undervalued itself. That interpretation, however, is misguided, Hilts said. Rather, he added, the nature of the IPO business is simply unpredictable.
Biotech leaders themselves may be surprised when the stock price surges post-listing, “but usually those IPO price pop[s] aren’t available to them at the time of pricing,” Hilts said.
Consider an IPO priced at $18 per share that doubles to trade at $36 the next day, he continued. That may lead to the assumption that the IPO should have been priced that high—but that’s a tough sell for the company to make during the road show. “Usually, when you get through actually pricing, $36 price is not really ever available.”
“Some of the major investors put hard limits on their price,” Hilts explained.
Companies then must make a choice: push past that limit and risk losing their investor or remain under the cap to preserve relationships. The decision is simple for biotechs.
“They’re really looking to get high-quality, long-term investors,” Hilts said. “You really risk an IPO falling apart if you get too aggressive with the price and start losing orders. While sometimes it does seem conservative, it ends up just being the right practical and tactical choice.”
Ultimately, biotech execs are less concerned about the price per share than securing sufficient capital to advance pipelines.
“They really want to make sure they have enough money to get past certain milestones,” Hilts said. “Because they think that the real value that they’re going to create is when they have successful clinical trials.”
