Gwendolyn Wu
5 min read
This story was originally published on BioPharma Dive. To receive daily news and insights, subscribe to our free daily BioPharma Dive newsletter.
Biotechnology industry watchers were hopeful at the start of 2025. Venture funding appeared to be rebounding after a lengthy slump, and a smattering of new stock offerings and company acquisitions brewed optimism that the public markets might be similarly warming up to young drugmakers.
But the positivity quickly dissipated. Trump administration policies gutted scientific research funding and raised questions about U.S. drug prices. Large layoffs and upheaval at public health agencies created regulatory turmoil that added risk to what’s already, by its nature, a risky sector to invest in.
The results were laid out in a June report from David Windley and Tucker Remmers, two analysts at the investment bank Jefferies. According to that report, funding in public biotech companies — be it from initial public offerings, follow-on stock offerings, or “PIPE” deals — plummeted in May. The “political and economic uncertainties” have "cast a cloud over biotech investment,” they wrote.
“Since product development cycles can range 12-15 years in this industry, biotechs (and their boards and investors) want clarity on FDA regulation, drug pricing, and funding before committing to large, [long-term] investments,” Windley and Remmers wrote.
Investors and industry insiders interviewed by BioPharma Dive say that the public slowdown is trickling down to startups that have already been under intense pressure during a prolonged pullback. Companies and investors are struggling to align on valuations, making funding rounds more difficult to close than in prior years. The uphill battle in the public markets is further delaying IPO plans, too.
"People are waiting to see what happens, and it's extended that winter," said Tim Scott, the president of Biocom California, an industry trade group.
To date, only seven biotech companies have priced IPOs in 2025, and no large offerings have occurred since mid-February. No biotechs have publicly disclosed IPO ambitions in several months either, and one of the last to do so, Odyssey Therapeutics, pulled its offering in May. In a letter to the Securities and Exchange Commission, CEO Gary Glick wrote that it was “not in the best interests of the company” to go public at that time.
One reason IPOs have ground to a halt, experts say, is that the public markets aren’t rewarding drug startups as predictably as they once were. Typically, drug companies can expect their value to climb after delivering positive clinical results. But “even companies with good data aren’t seeing a lot of movement in the public markets,” said Jonathan Norris, a managing director at HSBC Innovation Banking.
