Biotech public equity issuance has rebounded sharply in 2026, fueled by scientific progress, renewed investor demand, and a resurgence in mergers and acquisitions.

The sector has completed 21 initial public offerings in the US raising USD 7.85bn year to date, its strongest performance since 2021, according to Dealogic. Follow-on issuance has been even stronger, reaching 289 deals worth USD 33.35bn, second only to the record set in 2020. Convertible debt issuance, meanwhile, has hit an all-time high, with 38 transactions totaling USD 9.81bn. Overall, there have been 348 biotech deals worth USD 51.04bn.

New issuance is showing no signs of slowing down. Advisors say a growing number of biopharma companies are preparing to go public through the end of 2026 and into next year.

One of the drivers behind the IPO pipeline is that drug development did not stop when the capital markets largely closed to most issuers. “Even when IPO markets slow down or close, science continues to go,” said Charlie Kim, co-chair of Cooley’s global capital markets group.

Many companies that delayed IPO plans during the downturn have spent the intervening years generating additional clinical data, advancing programs through development, and building more mature businesses. As a result, Kim said, many potential issuers now approach investors with substantially more validation than they had when the market first deteriorated.

Demand from healthcare specialist funds and a growing segment of generalists has returned after several years of light activity, added Ryan Mitteness, a partner at Fenwick & West.

Successful IPOs that have traded well in the aftermarket are encouraging investors to participate in subsequent deals, creating a self-reinforcing cycle, he and other advisors said.

Clinical validation drives demand

Amanda Rose, also a partner at Fenwick & West, said the market reopening remains selective. Investors generally favor companies with clinical data, experienced management teams, clear regulatory pathways, and large addressable markets, she said. Preclinical companies remain largely shut out, while Phase 2, late Phase 2, and Phase 3 companies are best positioned, Rose said.

While Matthew Kennedy, a markets strategist at Renaissance Capital, agreed that later-stage assets typically have an edge, he pointed to Scribe Therapeutics, whose shares have performed well post-IPO even though its lead cholesterol drug candidate is still in Phase 1 trials.

Notably, Scribe’s IPO price in July was below its prior venture valuation. But its stock surged in its trading debut, quickly lifting its market value above that earlier mark. Scribe’s shares have remained elevated in the weeks following last month’s IPO, which Kennedy said underscores investors’ strong appetite for cardiovascular therapies.

More broadly, Rose and Mitteness said metabolic therapies are drawing strong investor interest.

A revival in biotech M&A has provided another catalyst for the IPO market.

Large pharmaceutical companies face looming patent expirations and need to replenish their pipelines, said Louis Lehot, a partner at Foley & Lardner. Once a drug demonstrates commercial potential, larger drugmakers can provide the sales and marketing infrastructure needed to scale the product and may ultimately acquire the developer, either before or after an IPO, he said.

Many pharmaceutical companies have acquired assets at what advisers described as attractive valuations following the sector’s downturn, allowing investors to realize returns on their capital.

The proceeds from those exits are now finding their way back into new offerings. “Once you have an exit, you have cash you need to put to work,” said Ilir Mujalovic, head of Cleary Gottlieb’s equity capital markets practice.

Mujalovic expects IPO activity to accelerate through 2026 across both small and large listings due to strong market performances that have boosted investor conviction and demand for new deals.

Strategic buyers loom large

Acquisition interest can also influence IPO planning. Some companies formally pursue IPO and M&A processes in parallel. Others view the IPO process as an opportunity to begin conversations with potential strategic buyers.

A significant number of the companies Cooley’s Kim advises involve M&A as part of the overall discussion.

“For a lot of these companies, they get harder to acquire and more expensive once they go public,” Kim said. That dynamic can create an incentive for pharmaceutical companies that are seriously interested in an asset to act before an IPO is ever completed, he said.

Public market valuations have indeed recovered from their trough.

Rose said many of this year’s biotech IPOs have achieved a 1.2x to 1.3x step-up from their latest private financing, compared with the discounts companies often accepted in previous years.

Traditional IPOs are not the only route available to biotech companies.

Reverse mergers and de-SPAC transactions remain alternatives, particularly for companies that can secure a large private investment in public equity (PIPE) financing and want to avoid the time and uncertainty associated with a conventional IPO, according to Kim.

Some existing public companies have experienced failed drug programs but retain substantial cash balances, creating potential vehicles for promising private biotech assets, he explained. There is also an ample supply of special purpose acquisition companies seeking targets.

The trade-off is that companies pursuing those alternatives can forgo some of the benefits of an IPO, including the extensive diligence process and analyst and investor education that accompany them.

Reverse mergers can also saddle companies with the liabilities and risks of an existing public company, making the choice of partners critical, Kim said.

Global opportunities

The sector’s recovery is unfolding against an increasingly global backdrop, creating new opportunities for biotech companies to access innovation, capital, and strategic partnerships beyond the US.

China is emerging as a major source of innovation and an important partner for US drug developers through licensing deals, clinical trials, and research collaborations, Kim said.

The Hong Kong Stock Exchange has also become a key listing venue for some biotech companies.

San Diego-based Axiom Biosciences, for example, is targeting a Hong Kong IPO in the second quarter of 2027 as the first step in a dual-listing strategy, CEO and founder Dr. Remo Moomiaie-Qajar told this news service in April.

As companies operate across multiple jurisdictions, decisions about where to go public increasingly depend on factors such as corporate structure, regulatory requirements, investor mix, and geopolitical considerations.

Kim described the biotech market as “borderless” for some companies, with certain issuers weighing the relative advantages of US and regional exchanges rather than defaulting to a single venue. Nonetheless, the US exchanges continue to offer a particularly strong ecosystem for capital raising, acquisitions, and long-term growth in the sector, he noted.

That competitive dynamic is likely to be tested in the coming months, as advisors say another wave of biotech companies is preparing to enter the US public markets after Labor Day.