Biotech IPO Market Slows in 2025 as Investors Grow More Selective

The biopharmaceutical industry experienced a significant slowdown in initial public offerings (IPOs) during 2025, with only eight companies completing public market debuts compared to 19 in 2024. This marked decrease reflects a more discerning investment landscape, as the sector continues to adjust following years of market correction post-pandemic.

Early Year Surge Followed by Extended Drought

The year began on an optimistic note, with five biotechs going public in rapid succession during January and early February. Maze Therapeutics led the charge, raising $140 million on January 31, followed closely by high-profile obesity player Metsera, which secured an impressive $316.2 million. Sionna Therapeutics, Ascentage Pharma, and Aardvark Therapeutics rounded out the early-year surge.

However, this initial momentum was not sustained. The industry then experienced a six-month drought without any IPO activity, a stark contrast to previous years' patterns. The dry spell was finally broken in August when LB Pharma successfully raised $285 million to advance its neuropsychiatric pipeline.

Investors Prioritize Late-Stage Assets and Proven Programs

Michael Rachlin, Senior Managing Director at FTI Consulting's Corporate Finance & Restructuring unit, noted that the slowdown makes sense given the more judicious spending habits of investors since the pandemic boom. "We are likely in/entering a more discerning IPO marketplace where drug innovators with proven, later-stage assets/programs will have the necessary support to go public," Rachlin explained.

This trend is evident in the companies that did manage to go public in 2025. LB Pharma, for instance, is advancing its antipsychotic drug candidate LB-102 into late-stage development for schizophrenia. Similarly, MapLight Therapeutics, which raised $296.3 million in October, is progressing its lead asset ML-007C-MA through Phase II trials for Alzheimer's disease psychosis and schizophrenia.

Obesity and Neuroscience Remain Hot Areas for Investment

Despite the overall slowdown, certain therapeutic areas continued to attract significant investor interest. Metsera's successful IPO and subsequent high-profile acquisition by Pfizer for $9.8 billion underscored the ongoing excitement surrounding obesity treatments. The company's long-acting GLP-1 injectable, MET-097, showed promising weight reduction results in early and mid-stage trials.

Neuroscience also remained a focus, with companies like LB Pharma and MapLight Therapeutics successfully going public to advance treatments for schizophrenia, Alzheimer's disease, and other neuropsychiatric conditions.

While the IPO market has tightened, industry experts remain cautiously optimistic about its future. As Rachlin pointed out, "The development and commercialization of novel and innovative drugs will continue to be a cornerstone of health and wellness, and a robust IPO market will continue to be an important factor for drug innovators to access capital and liquidity."