The biotech industry has always been an exciting space for investors. Startups working on cutting-edge drug development, gene therapy, and artificial intelligence-driven healthcare solutions have seen growing interest from venture capitalists and institutional investors. But in the past decade, biotech IPOs have gone through highs and lows.
1. The number of biotech IPOs in 2020: 100+
In 2020, over 100 biotech companies went public, making it one of the busiest years for IPOs in the industry. The boom was driven by a mix of factors, including strong investor enthusiasm, breakthroughs in biotechnology, and the rapid development of COVID-19 vaccines and treatments.
For biotech startups, this meant an open market where funding was readily available. Investors, on the other hand, were willing to back promising companies, even those that had yet to generate revenue.
If you’re looking to take your biotech company public, studying the companies that succeeded in 2020 can give you insights into how to structure your IPO for maximum appeal.
2. The total funds raised by biotech IPOs in 2020: $16 billion
Why the $16 Billion Milestone Matters for Biotech Companies
The biotech IPO boom of 2020 wasn’t just a number on a spreadsheet—it was a clear signal of investor confidence in the industry.
Raising $16 billion in a single year set a new benchmark, proving that even in the face of economic uncertainties, the demand for biotech innovation remained strong.
For businesses looking to go public, this massive capital influx provides critical insights into what drives investor interest, which sectors receive the most funding, and how to position a company for IPO success.
Lessons for Biotech Companies Eyeing an IPO
If you’re running a biotech firm and considering an IPO, the 2020 boom offers key takeaways that could define your success:
1. Data Drives Investment – Build a Strong Scientific Narrative
Investors don’t just look at your pipeline; they analyze the strength of your research, clinical trial results, and regulatory milestones. To attract funding, ensure you have compelling data that proves your innovation’s market potential.
2. Regulatory Strategy is as Important as Innovation
A promising drug or technology won’t get investor backing if regulatory hurdles aren’t well thought out. Companies that clearly outline their FDA (or equivalent) approval pathway are far more attractive to investors.
3. Think Beyond the IPO – Plan for Long-Term Growth
Many biotech IPOs fail to sustain their valuation post-listing. Ensure your company has a robust commercialization strategy, partnerships, and revenue projections that extend beyond the IPO event.
4. Leverage Strategic Investor Relationships
The best-funded biotech IPOs in 2020 had strong backing from venture capitalists and institutional investors well before going public. If you’re planning an IPO, start building those relationships early.
5. Consider Alternative IPO Structures
SPAC mergers were a big trend in 2020 and might continue to be a viable alternative to traditional IPOs. Understanding different routes to going public can help biotech firms choose the best strategy based on their growth stage and capital needs.
3. The number of biotech IPOs in 2021: 120+ (record high)
2021 was an even bigger year for biotech IPOs, with more than 120 companies going public. The pandemic-driven demand for biotech solutions, along with favorable market conditions, fueled this record-breaking trend.
This high level of activity showed that investors were eager to support biotech innovation. However, it also meant increased competition for funding. Companies preparing for an IPO should focus on differentiation—whether through unique drug pipelines, AI-driven discovery, or novel therapeutics.
4. The total funds raised by biotech IPOs in 2021: $20+ billion
The biotech sector hit a new peak in 2021, with IPOs raising over $20 billion. This unprecedented funding surge demonstrated the market’s confidence in biotech companies.
To maximize IPO success, companies should ensure their financials, clinical trial progress, and regulatory strategies are well-documented. Investors will be looking for a clear roadmap to commercialization and profitability.
5. Percentage of biotech IPOs in 2021 that were pre-revenue: ~80%
One of the most striking trends in 2021 was that nearly 80% of biotech IPOs were pre-revenue. Investors were willing to take risks on early-stage companies with promising technologies, even if they had not yet generated revenue.
For founders, this means it is possible to go public without immediate profitability, but a compelling scientific case and strong research pipeline are essential. Investors should focus on evaluating a company’s future growth potential rather than its current earnings.
6. Decline in biotech IPOs in 2022: ~50% drop from 2021
Understanding the Sudden Slowdown in Biotech IPOs
The biotech IPO market faced a sharp decline in 2022, with the number of new public offerings plummeting by nearly 50% compared to 2021. This wasn’t just a routine market fluctuation—it was a wake-up call for biotech companies and investors alike.
After a record-breaking 2020 and 2021, many expected the momentum to continue. Instead, the market shifted dramatically, catching many companies off guard.
Understanding why this happened and how biotech firms can navigate similar downturns in the future is crucial for those eyeing an IPO.
Key Reasons Behind the Biotech IPO Decline
Several factors contributed to the biotech IPO slowdown in 2022:
1. Market Volatility and Economic Uncertainty
By 2022, inflation concerns, rising interest rates, and global economic instability made investors cautious. Unlike the previous years when biotech was seen as a safe bet, 2022 saw a shift toward more predictable, lower-risk investments.
2. End of the Pandemic-Driven Biotech Boom
The urgency around COVID-19 vaccines and treatments that had fueled biotech funding in 2020 and 2021 began to wane. Investors moved away from pandemic-driven biotech plays and started looking for companies with sustainable long-term pipelines.
3. Tougher Regulatory Scrutiny
The FDA became more selective in approving biotech drugs, leading to delays and increased uncertainty. Investors, who once poured money into companies with promising but early-stage research, became more hesitant unless clear regulatory pathways were established.
4. Post-IPO Performance Concerns
Many biotech companies that went public in 2020 and 2021 struggled to maintain their stock prices. Investors took note, leading to skepticism about whether new biotech IPOs could deliver strong post-listing returns.
5. Shift in Venture Capital and Institutional Investment Strategies
With public markets cooling, venture capital firms and institutional investors shifted their focus from IPOs to private funding rounds, preferring to invest in biotech firms earlier in their development cycle rather than supporting risky public offerings.
7. Number of biotech IPOs in 2022: 40-50
8. Total biotech IPO funding in 2022: $6-$7 billion
Total funding raised through biotech IPOs in 2022 dropped significantly to around $6-$7 billion.
For biotech firms, this highlights the importance of securing private funding before going public. Companies should consider alternative funding options such as venture capital, grants, and strategic partnerships.
9. Average first-day return for biotech IPOs in 2021: 30-40%
In 2021, biotech IPOs saw impressive first-day returns, often surging 30-40% on the day of listing.
This excitement reflected strong investor demand but also set high expectations for new entrants. Companies looking to list should ensure they have compelling IPO marketing strategies to attract initial investor interest.
10. Average first-day return for biotech IPOs in 2022: Below 10%
In 2022, first-day returns for biotech IPOs fell dramatically, averaging below 10%.
For investors, this meant reduced short-term gains, while companies had to adjust their pricing strategies. Those planning IPOs should focus on long-term value creation rather than relying on short-term trading momentum.
11. Percentage of biotech IPOs priced below range in 2022: ~60%
Around 60% of biotech IPOs in 2022 were priced below their initial range, indicating weaker investor demand.
Startups must be prepared to adjust their valuation expectations based on market conditions. A well-timed IPO in a bullish market can make a significant difference in fundraising success.
12. Decline in NASDAQ Biotech Index in 2022: ~20% drop
The NASDAQ Biotech Index dropped nearly 20% in 2022, reflecting broader market challenges for the industry.
For investors, this signaled caution, while for biotech firms, it highlighted the importance of financial resilience. Maintaining a strong balance sheet and reducing reliance on IPO funding can be crucial during downturns.
13. Expected biotech IPO count in 2023: 30-50
What the 2023 Biotech IPO Landscape Means for Companies
With an estimated 30 to 50 biotech IPOs in 2023, the industry is entering a period of measured optimism. This number reflects a stabilization after the sharp downturn in 2022 while signaling that investors remain selective.
For biotech companies considering an IPO, 2023 presents both opportunities and challenges—knowing how to navigate them is crucial.
Understanding the forces shaping the IPO landscape will help biotech executives and investors make better decisions about timing, strategy, and positioning.
14. Total biotech IPO funds raised in 2023: Below $5 billion
What the Drop in Biotech IPO Funding Means for the Industry
In 2023, biotech IPOs raised less than $5 billion—marking a significant decline from previous years. For many, this signals a tough investment climate. But for biotech companies planning to go public, it’s more than just a number—it’s a wake-up call to rethink IPO strategies.
A lower total fundraising amount doesn’t mean investors have lost interest in biotech. Instead, it highlights a shift in how capital is being deployed. Investors are becoming more selective, favoring companies with strong clinical pipelines, clear regulatory pathways, and a realistic path to profitability.
Why Biotech IPO Funding Declined in 2023
Several factors contributed to the drop in total funds raised by biotech IPOs:
1. Tighter Market Conditions and Investor Caution
Rising interest rates, inflation concerns, and global economic uncertainty led to a shift in investor behavior. Unlike previous years when capital flowed freely into biotech IPOs, 2023 saw a more cautious approach, with investors prioritizing established companies over early-stage ventures.
2. Selective IPO Market—Fewer Deals, Lower Valuations
While biotech IPOs still occurred, they were fewer in number, and the average deal size was smaller. Investors were unwilling to back high-risk IPOs, favoring companies with solid late-stage clinical data and clear commercialization plans.
3. Post-IPO Performance Concerns
Many biotech IPOs from 2020-2022 struggled post-listing, with share prices plummeting after initial excitement wore off. This made investors wary of backing new biotech IPOs unless they had a clear path to long-term value creation.
4. Alternative Funding Sources Gaining Popularity
With IPO markets cooling, many biotech firms turned to alternative funding options, such as private equity, venture capital, and strategic partnerships. This reduced the urgency for companies to go public, further lowering the total IPO funds raised.
15. Percentage of biotech IPOs that underperformed the market post-listing (2020-2023): ~70%
An estimated 70% of biotech IPOs from 2020 to 2023 underperformed post-listing, highlighting the risks in the sector.
Investors should be cautious and focus on companies with strong fundamentals rather than following hype. Due diligence, including pipeline analysis and regulatory approvals, is key to making informed investment decisions.
16. The largest biotech IPO in 2020: Legend Biotech (~$423 million)
Legend Biotech stood out as the biggest biotech IPO of 2020, raising approximately $423 million. The company, focused on cell therapy for cancer treatment, generated significant investor interest due to its innovative CAR-T technology.
For biotech startups, the key takeaway is that having a strong, well-differentiated product with clear clinical trial progress can significantly boost IPO success.
Investors should look for companies with breakthrough technologies in high-demand areas like oncology, gene therapy, and AI-driven drug discovery.
17. The largest biotech IPO in 2021: Recursion Pharmaceuticals (~$500 million)
In 2021, Recursion Pharmaceuticals led the biotech IPO market, raising around $500 million. The company’s AI-driven drug discovery platform attracted both traditional biotech investors and tech-focused funds.
This highlights a crucial trend: investors are increasingly interested in biotech firms that leverage AI and automation to accelerate drug development. Startups should consider integrating AI-driven solutions into their R&D pipeline to enhance efficiency and attract investor attention.
18. The average market cap of biotech IPOs in 2020-2021: $1-2 billion
During the biotech boom of 2020 and 2021, the average market capitalization of newly listed biotech firms ranged from $1 billion to $2 billion.
A key factor in achieving a strong market cap is a well-structured IPO process, backed by a strong investor relations strategy. Companies should work closely with experienced advisors to optimize their IPO pricing, roadshow presentations, and post-listing investor communications.
19. The number of SPAC deals in biotech (2020-2022): Over 50
Between 2020 and 2022, over 50 biotech companies went public via Special Purpose Acquisition Companies (SPACs). While SPACs offered a faster route to the public markets, many of these companies later struggled with valuation and investor confidence.
For biotech startups, the lesson is clear: while SPACs can be a viable alternative to traditional IPOs, they require careful financial planning and post-listing execution. Investors should be cautious about SPAC-backed biotech firms that lack a clear commercialization strategy.
20. Percentage of SPAC biotech deals that failed to meet projections: ~75%
Why Did So Many SPAC Biotech Deals Fall Short?
The SPAC (Special Purpose Acquisition Company) boom promised biotech companies a fast-track route to the public markets. For many, it seemed like an ideal solution—avoiding the traditional IPO process while securing significant capital.
Yet, reality told a different story. Roughly 75% of biotech companies that went public via SPAC mergers failed to meet their financial and operational projections. Stock prices plummeted, investor confidence waned, and many SPAC-backed biotech firms struggled to stay afloat.
Understanding why this happened is critical for biotech companies considering alternative paths to public funding.
Key Reasons Why SPAC Biotech Deals Underperformed
1. Overly Optimistic Revenue and Market Projections
Many biotech firms went public through SPACs with ambitious financial forecasts—often based on unproven technology or early-stage clinical data.
Unlike traditional IPOs, which require extensive due diligence and underwriter scrutiny, SPACs often allowed companies to make aggressive future revenue projections that didn’t materialize.
2. Lack of Sufficient Late-Stage Clinical Data
Investors are willing to bet on biotech firms with strong clinical trial results and a clear regulatory pathway. However, many SPAC-backed biotech companies went public at too early a stage, with little to no clinical data supporting their claims.
As a result, when trials took longer than expected or failed, stock prices collapsed.
3. Market Volatility and Poor Post-SPAC Performance
Unlike traditional IPOs, which often involve structured price stabilization mechanisms, SPAC-backed companies had less institutional support post-listing. As a result, many SPAC biotech stocks became highly volatile, with retail investors driving price swings and institutional investors staying away.
4. Dilution and Poor Capital Structure
SPAC deals often involve complex financial structures, including high dilution for existing shareholders. Many biotech firms underestimated how SPAC-related dilution would impact long-term share value, leaving them in a weaker financial position post-merger.
5. Regulatory and Commercialization Challenges
A biotech company’s success depends heavily on regulatory approvals and market adoption. Many SPAC-backed biotech firms did not have a well-defined regulatory strategy or clear commercialization roadmap, leading to investor skepticism and declining stock performance.
21. The biotech IPO market decline from peak (2021-2023): ~60% fewer listings
After the peak of 2021, biotech IPOs declined by about 60% in the following two years.
For startups planning to go public, this underscores the importance of timing. When market conditions are unfavorable, it may be better to delay an IPO and focus on private funding until investor confidence rebounds.
22. Estimated biotech IPO recovery timeline: 2025-2026
Analysts predict that the biotech IPO market will begin recovering between 2025 and 2026, driven by renewed interest in AI-driven drug discovery, precision medicine, and gene editing technologies.
For companies aiming to go public in the next few years, now is the time to strengthen clinical pipelines, secure strong partnerships, and build financial resilience. Investors should track key industry developments to identify promising companies preparing for IPOs.
23. Projected biotech IPOs in 2025: 50+ (if market conditions improve)
If market conditions stabilize, more than 50 biotech firms could go public in 2025.
For startups, securing funding and strategic collaborations in the pre-IPO stage will be critical. Investors should monitor industry reports, regulatory approvals, and M&A activity to gauge which biotech companies are best positioned for a successful IPO.
24. Venture capital biotech investment in 2021: $40+ billion
Venture capital (VC) funding for biotech companies surpassed $40 billion in 2021, marking a record-high year for early-stage investments.
For biotech startups, this highlights the importance of building strong relationships with VC firms before considering an IPO. Investors should look at which biotech companies have strong VC backing, as this often signals long-term growth potential.
25. Venture capital biotech investment in 2023: Below $25 billion
In 2023, VC funding for biotech startups dropped below $25 billion, reflecting investor caution amid economic uncertainty.
For biotech companies, this means tougher competition for funding. Companies need to demonstrate clear clinical milestones and strong management teams to attract investment. Investors should focus on startups with resilient business models and realistic commercialization plans.
26. Percentage of biotech IPOs focused on oncology (2020-2023): ~40%
Nearly 40% of biotech IPOs from 2020 to 2023 were focused on oncology, reflecting strong market demand for cancer treatments.
For biotech firms developing cancer therapies, the key to attracting investors lies in differentiation. Unique drug mechanisms, strong clinical trial data, and partnerships with established pharmaceutical companies can improve IPO success.
27. Percentage of biotech IPOs with AI-driven drug discovery focus (2023): ~15%
By 2023, approximately 15% of biotech IPOs were focused on AI-driven drug discovery.
This trend suggests that investors are increasingly interested in companies that use machine learning and big data to speed up drug development. Startups should consider integrating AI into their research pipelines to enhance efficiency and appeal to tech-savvy investors.
28. Percentage of biotech IPOs in 2022-2023 that had to cut valuations pre-IPO: ~50%
Around half of biotech companies that went public in 2022-2023 had to lower their valuations before listing.
For startups, this underscores the importance of setting realistic IPO pricing. Overvaluation can lead to post-IPO declines, hurting long-term investor confidence. Companies should work closely with financial advisors to determine fair valuations based on market conditions.
29. Projected biotech IPOs in 2030: 60-100 (dependent on innovation cycles)
Looking ahead to 2030, projections suggest that 60-100 biotech companies could go public, depending on advancements in gene editing, personalized medicine, and AI-driven healthcare.
For biotech firms, staying ahead of innovation cycles will be critical. Companies that invest in next-generation technologies and secure regulatory approvals will have the best chances of IPO success.
Investors should focus on emerging trends in synthetic biology, CRISPR-based therapies, and longevity research.
30. Anticipated major biotech IPO trends in 2025-2030: AI-driven drug development, gene therapy, precision medicine
Between 2025 and 2030, biotech IPOs are expected to be driven by advances in AI-driven drug discovery, gene therapy, and precision medicine.
For biotech companies, investing in these areas can significantly boost investor interest and long-term growth potential. Startups should prioritize partnerships with AI and biotech firms to leverage cutting-edge research and improve drug development timelines.
Investors should watch for companies leading in these sectors, as they are likely to drive the next wave of biotech IPOs.
wrapping it up
The biotech IPO market has experienced dramatic shifts between 2020 and 2030, moving from a historic boom to a challenging downturn and an expected recovery in the coming years.
The early 2020s saw record-breaking IPO activity, driven by investor enthusiasm, breakthrough innovations, and urgent healthcare needs. However, rising interest rates, economic uncertainty, and market corrections led to a sharp decline in biotech IPOs by 2022-2023.
