U.S. biotech IPOs outpace broader market slowdown, but returns remain risky

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Biotech IPOs outpace market slowdown

Highlights

Biotech IPOs have surged with 26 listings on U.S. exchanges in 2026, more than double the 2025 total and the highest since 2021.
A CNBC review found only 16% of 2020 biotech IPOs produced positive returns while 44% lost at least 90%; an equally weighted portfolio is down over 25%.
iShares Biotechnology ETF is up 35% in 2026 after a 28% rise in 2025, with sector exposure in names like IQVIA, Danaher, and Veeva Systems offering diversification benefits.

Biotech listings gain speed in a hesitant IPO market

As reported by CNBC, biotechnology is standing apart from a sluggish 2026 IPO market, with 26 companies debuting on U.S. exchanges this year, more than double the 2025 total and the highest annual count since 2021.

Since the start of August alone, 16 companies have gone public in U.S. markets, including 11 biotech groups. At least four more offerings are in the pipeline, pointing to continued momentum even as companies in sectors such as data centers, consumer technology, insurance and nuclear energy pull filings, delay launches or face valuation pressure.

The activity is being supported by stronger merger and acquisition interest from large pharmaceutical companies, investor enthusiasm around areas such as GLP-1 drugs, and company-specific catalysts including trial results and disease-targeted developments. Biotech issuers also benefit from a faster listing process than many other sectors, because deal sizes are often smaller and investor bases more specialized.

History points to selective opportunities and heavy downside

Strong issuance does not necessarily translate into strong shareholder returns. A CNBC review of 75 biotech companies that went public in U.S. markets in 2020 found that only 16% have produced positive returns, while 44% have dropped 90% or more; an equally weighted investment across the group would be down more than 25% as of Friday.

That record highlights how difficult stock selection remains in the sector. Among the stronger outcomes, Revolution Medicines has delivered roughly 1,000% returns as of Friday after raising about $273 million in its February 2020 IPO, helped by later funding, a Royalty Pharma commitment and FDA approval in August for pancreatic cancer drug Rasonque.

Other outcomes are far weaker. LeonaBio, formerly Athira Pharmaceuticals, is down 97% from its IPO after management turmoil, clinical setbacks and a later strategic pivot, while Codiak Biosciences filed for bankruptcy protection in March 2023 less than three years after going public, wiping out equity investors.

For investors seeking exposure with less single-drug risk, service and infrastructure providers to the biotech industry may offer another route. The iShares Biotechnology ETF is up 35% in 2026 after a 28% gain in 2025, and CNBC cited names such as IQVIA, Danaher and Veeva Systems as potential ways to benefit from broader sector growth rather than the binary outcome of one clinical program.

Renaissance expects biotech issuance to remain steady through the end of the year and into 2027 if market conditions hold. Even so, investors considering new offerings still need to assess a lead product's clinical stage, pipeline breadth, target market, unmet medical need, management experience and the time required to bring a medicine to market.

In our earlier coverage of the Philippine Social Security System (SSS) equity portfolio performance, we explained how the state pension fund defended its strategy by separating unrealized “paper” losses from realized gains and dividend income. SSS said it has generated P204 billion in realized gains and dividends since 1968 and emphasized a long-term, diversified approach focused on fundamentally strong, income-producing holdings despite periodic market drawdowns.

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