(Bloomberg) — The biotechnology sector is stealing the US IPO market thunder from artificial intelligence-related listings, delivering standout returns as bankers line up a steady stream of summer debuts.
US initial public offerings of biotech and pharmaceutical companies this year have produced a weighted average return of 55%, according to data compiled by Bloomberg. That stands in stark contrast with the 4.4% weighted average loss for the broader US IPO market, excluding blank-check companies and other financial vehicles, the data show.
Bolstered by that success, at least six biotechs, led by CRISPR-based genetic medicines developer Scribe Therapeutics Inc., have filed for IPOs this month that could price later in July and the first half of August before activity shuts down completely for the summer.
“This is the healthiest biotech IPO market we have had in a long time,” said Jack Bannister, senior managing director in equity capital markets at investment bank Leerink Partners.
It was supposed to be the year of AI and aerospace and defense listings, topped by SpaceX’s record-setting IPO. Instead, shares of the 10 companies behind 2026’s biggest US deals have slumped a weighted average of 6.3% as concern grows over whether the AI rally is overextended.
Drivers of biotech and pharma’s outperformance include a 13% gain in the Nasdaq Biotechnology Index this year, a more stable regulatory backdrop, notable trial data breakthroughs and acquisitions by big pharma companies.
A trio of $10 billion or bigger buyouts were announced in the past month, including Abbvie Inc.’s purchase of Apogee Therapeutics Inc., GSK Plc’s deal for Nuvalent Inc. and Vertex Pharmaceuticals Inc.’s purchase of Crinetics Pharmaceuticals Inc. The transactions have boosted valuations and left investors’ coffers brimming with spare cash that they can put straight back into the IPO market.
“Right now, you have some of the largest fund families in the world that are reallocating and pushing more capital into healthcare and the returns in the small and mid-cap market has proven to investors there is a lot of upside,” said Seth Rubin, Stifel Financial Corp.’s global head of ECM.
The sector’s IPO count so far in 2026 already exceeds last year’s tally of just eight listings, the data shows, though this is a relatively measured improvement considering more than 200 biotechs went public in the hot but unsustainable market during the Covid pandemic in 2020 and 2021.
“I don’t think the market has got ahead of itself, and it’s been reasonably well calibrated,” Rubin said.
There are signs of exuberance. Proceeds raised from biotech IPOs this year have topped $5 billion or three times last year, the data show, and this includes the biggest-ever biotech listing, rare cancer specialist Parabilis Medicines Inc.’s $770.6 million offering last month.
Pattern hair loss drug company Veradermics Inc. is up over 500% since its February debut, making its the best performing US IPO from any sector this year, while the second best, blood disorders-focused Hemab Therapeutics Holdings Inc., has more than doubled since its IPO in May.
One legitimate worry is whether the sector can continue to separate itself from broader market concerns about higher-for-longer interest rates, especially as rising rates have hurt biotechs in the past.
“Rate hikes could become a headwind because they affect the way people value biotech companies, but at the moment the sector is trading independent of that and counter to the AI trade,” Leerink’s Bannister said.
“You have to park your money somewhere and relative to other opportunities right now biotech feels like it’s not just a safe place, but a place that has real upside.”
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