After hitting a decade-low in 2025, the US biotech sector is flashing buy signals again.
Analysts and investors are forecasting a robust rebound in 2026, driven by a stabilizing policy environment, lower interest rates, and a backlog of mature private companies ready to test the public markets.
📉 THE 2025 BOTTOM:
- IPO Drought: Only 10 biotechs went public in 2025 (down from a record 93 in 2021).
- Capital Raised: IPO proceeds totaled just $1.6 billion, a fraction of the $16 billion raised during the 2021 peak.
🌤️ THE 2026 OUTLOOK:
- Regulatory Relief: While uncertainty lingers, the market believes the “worst-case scenarios” regarding Trump administration policy shifts (funding cuts/FDA changes) are off the table.
- Momentum: The SPDR S&P Biotech ETF (XBI) ended 2025 up 33%, signaling that sentiment turned positive in the second half of the year.
🎯 WHAT INVESTORS WANT: The “IPO-for-all” mania of 2021 is gone. The new market demands data.
- The Sweet Spot: Investors are exclusively targeting Mid-to-Late Stage assets where “proof of concept” is established.
- Hot Sectors: Capital is flowing into Obesity, Oncology, Precision Medicine, and Respiratory Diseases.
🗣️ KEY QUOTE: “While some uncertainty still exists, the worst case scenarios have largely been taken off the table and that gives investors more comfort in taking steps into the water.” — Andrew Fein, Managing Director of Equity Research at H.C. Wainwright.
💡 ANALYST TAKEAWAY: The “Risk-On” switch has been flipped, but it comes with a filter. The 2026 rebound will be defined by quality, not quantity. We are likely to see a flurry of secondary offerings first, paving the way for IPOs from clinical-stage companies with clear Phase 2 data. Pre-clinical platforms may still find the public door shut.
👇 Biotech VCs: Are you advising your portfolio companies to prep for a Q2 IPO, or wait for the post-election dust to fully settle?