The second quarter was another rollercoaster period for biopharma, opening with “Liberation Day” and closing amid mounting macro and geopolitical uncertainty. While the sector continues to lag broader healthcare, investor sentiment showed early signs of stabilization. The XBI and NBI posted mid-single-digit gains, trimming YTD losses to ~9% and ~2.6%, respectively.
Financing activity remains constrained with total capital raised across privates and publics down 53% YoY. April marked a low for activity and Q2 marked the first quarter since the Great Financial Crisis without a single IPO. As the IPO window remains unclear, “crossover” activity also thinned with only seven deals announced and average size dipping below $100 million for the first time since Q4 2020. Follow-ons and structured financings (PIPEs/RDs) were hit hardest with only 28 deals announced, the lowest since Q1 2022, as activity remained concentrated around key clinical and regulatory milestones.
Reverse merger activity also stalled as many cash-rich shells increasingly pursue shareholder returns via take-privates or capital distributions following strategic reviews. On the BD front, M&A activity shifted back to public targets with Blueprint/Sanofi, Springworks/Merck KgAA, and Verve/Lilly each topping $1 billion in upfronts, demonstrating that buyers are still willing to pay for innovation and derisked pipelines.
Our midyear investor survey shows a measured but constructive outlook for the remainder of 2025, with focus firmly on mid-/late-stage clinical names and a watchful eye on interest rates and MFN implementation.
William Blair’s biopharma team shares additional perspectives on what lies ahead for the sector.
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