New biotech issuers have doubled in size over the past decade.
Last year, the average biotech IPO went public at a market cap of $644 million, compared to $318 million a decade earlier, for deals raising at least $20 million. The average wasn’t skewed by a few large names, either: Two-thirds of last year’s biotech IPOs listed at a market cap of at least $500 million, compared to 15% in 2014.
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That trend has continued in 2025. To date, this year’s four biotech IPOs have averaged an initial market cap of $964 million, including three valued at $500+ million. In each year since 2020, the proportion of biotechs worth $500+ million at IPO has been greater than any year prior to 2020. This is despite the fact that biotechs have underperformed over the past few years.
The biotech build-up
Following the 2012 JOBS Act, biotechs have become a key component of the modern IPO market. The industry made up more than a quarter of all new listings over the past decade.
By the mid-2010’s, biotech outperformance led to a jump in new listings and a steady increase in IPO valuations. Crossover investors like RA Capital, Coatue Management, Fidelity, and Wellington supported higher pre-IPO valuations. Moderna (2018) and Genmab (2019) achieved record-breaking multi-billion-dollar market caps for clinical-stage biotechs. The sector then exploded during the COVID bubble, driven by industry gains and pandemic tailwinds. In 2020, over 70% of biotechs went public at valuations of $500 million or more, up from 34% in 2019.
While the tech sector has seen its own explosion in startup valuations, that is largely a result of companies staying private longer and scaling revenues, neither of which are true in the biotech space. The age and stage of biotech IPOs has not changed dramatically over the past decade or so, and instead, listing valuations have risen gradually as a result of therapeutic advancements, ample private funding, and stock outperformance (though, again, not lately).
The biotech sell-off
Newly-listed biotechs plummeted in 2022 alongside other early-stage companies, but remained active in public markets, while tech startups stayed on the sidelines. Drug development requires significant capital, and even biotechs with a long list of VC backers can’t stay private indefinitely. Compared to tech unicorns, biotechs appear more willing to go public at a down-round, as we’ve seen in several recent IPOs. For their part, IPO investors have shown a willingness to evaluate biotechs on a case-by-case basis and buy in on the right story, rather than shun the entire industry amid a sea of red returns.
Recent IPO Metsera (MTSR), for example, pitched a peptide-based drug for obesity and listed at a market cap of nearly $2 billion, before popping 47% on its first day. It remains near that level.
Biotech listings have shown resilience during past market meltdowns, but the latest sell-off over the past six months will likely weigh on issuance and result in more down-rounds. For now, however, the average market cap at IPO for biotechs remains well above where it was a decade ago.
