The biotech market was increasingly active in 2024, despite substantial volatility that was fueled — in large part — by interest-rate and policy uncertainty. Investors provided a significant amount of capital to high-quality companies through follow-on financings, reverse mergers, and IPO offerings (which increased throughout the year, though performance remains mixed).
Companies with derisked clinical assets seem to be drawing the lion’s share of interest from private and public investors, as well as pharma M&A. Looking forward, we are cautious on near-term IPO activity for companies with meaningful clinical-stage risk given market uncertainty. Such uncertainty, however, may incent a more active M&A environment driven by pharma interest, possible Federal Trade Commission (FTC) reforms, and the increasing attractiveness of private companies as acquisition targets. In our view, the long-term outlook remains positive as innovation continues, driven by the confluence of technological and scientific advancements that are generating record numbers of approved drugs. The high levels of activity we see in early-stage investments suggests this is likely to accelerate, and that drug development progress (Figure 1) is poised to produce an increasing pipeline of investment opportunity.
In this short outlook, we dive into the three key trends we believe will be of greater importance in 2025 and beyond.