Biopharma companies appear to be more willing to go public after a long drought. Just this week, GLP-1 developer Kailera Therapeutics and proteomics company Alamar Biosciences launched IPO roadshows at valuations of $1.9 billion and 1.1 billion, respectively.

According to investors, the real driver behind this resurgence is the M&A market. “It’s been a torrid pace linked to the patent cliff,” says Nimish Shah, partner at Venrock Healthcare Capital Partners. Large pharmaceutical companies anticipate that many of their most profitable drugs will fall off patent in the coming years, and they are taking aggressive acquisitive strategies to backfill their pipelines.

Late-stage biotech companies often explore going public while fielding acquisition offers, according to Jessica Owens, co-founder of biotech investor Initiate Ventures. So a boom in M&A activity can raise IPO interest from companies and investors. This is especially true for larger pre-IPO companies, as reflected in 2026’s IPO pipeline so far. More biopharma companies have already gone public at valuations of over $500 million than in all of 2025. Nineteen biopharma M&A deals of $1 billion or more were announced between Jan. 1 and April 7 of this year, according to a Stifel report.

In a recent report, Jefferies analysts noted that they “like the breadth of Big Pharma’s appetite, which includes four $5 billion-plus deals (in the first quarter), as well as smaller $1 billion to $2 billion tuck-ins,” adding that “in theory, more large M&A activity could allow investors to put more money to work, driving secondary/IPO offerings higher.”

Across the board, valuations of venture-backed biopharma companies have been ticking up, particularly among venture growth and clinically proven names. In 2025, median pre-money valuations for venture growth companies jumped from $65 million to $247 million, according to PitchBook’s Q4 2025 Biopharma VC Trends report.

Large M&A transactions, like Merck’s MRK acquisition of Terns Pharmaceuticals for $6.7 billion and Eli Lilly LLY paying $6.3 billion upfront for Centessa Pharmaceuticals (both announced last month), have a capital-recycling effect, as investors can redeploy in the ecosystem. So, despite macroeconomic headwinds, an IPO looks more favorable for companies that are scientifically and operationally ready than it did a year ago. “There is this threshold of quality [for an IPO],” says Owens.

The Russell 2000 Biotech Index, whose concentration of growth names makes it popular among biotech investors, is up 9.7% from January and is performing better than the S&P 500. But success has been unevenly distributed. A few notable names, like Enliven Therapeutics and VeraDermics, have had a spectacular run over the past few months. “CEOs have to find what’s the best comp for them,” Shah says. “Indexes might be flat, but there are a lot of companies that are up 50%-100%.”

But most of the newly listed biotech companies are underperforming industry benchmarks. Of the six that have gone public since January, four are trading down from their offer prices—a sobering reality check for peer companies. Moreover, what hasn’t changed is that preclinical biopharma companies are still nowhere near going public the way they did during the 2020-21 IPO boom. “Back then, you’d maybe get a couple patients’ worth of data,” said Shah. “Here, now, you’re seeing private companies with 50 patients’ worth.”

The heyday of 2020-21 still feels distant for biotech investors, who, despite signs of hope, still face FDA and supply chain uncertainty across their portfolios. “We’re still seeing a really selective reopening,” says Owens. “The market still feels very vulnerable.”