How M&A Unlocked A Biotech Rebound In 2025— And What Comes Next?
Small and mid-cap biotech stocks entered 2025 like a compressed spring, and it finally snapped higher.
“Biotech was a coiled spring following several quarters of underperformance,” Dr. Terry Smith, Director of Life Sciences Research at Emerald Advisers, told Benzinga.
After years of capital flight, sentiment shifted rapidly as multiple headwinds eased at once: lower interest rates, a ramp-up in M&A, clearer visibility on tariff policy and drug pricing frameworks such as the Most Favored Nation (MFN) policy, strong late-stage clinical data, and a Food and Drug Administration (FDA) that has, so far, behaved more predictably than feared.
M&A Becomes A Safety Net
Of all the catalysts, M&A has emerged as the most powerful stabilizing force, according to industry experts and analysts.
According to JPMorgan data, small- and mid-cap companies accounted for 57% of biopharma acquisitions by deal count in Q3 2025. While median deal value fell to $303 million from $516 million in Q2, 33 deals worth $30.9 billion pushed 2025 M&A volume ahead of full-year 2024.
Johnathon Anderson, CEO of biotech firm Peptide Systems, said the wave of deals has fundamentally changed risk perception. “This M&A floor has de-risked the sector, allowing investors to chase growth in specific high-tech sub-sectors.”
Dr. Smith echoed that view, noting that frequent mid-sized acquisitions with strong premiums are healthier for small-cap investors than a handful of mega-deals.
Investor Focus Shifts Beyond GLP-1s
While GLP-1 obesity drugs dominated 2024 headlines, investor attention in 2025 rotated toward cancer and autoimmune disease treatments, including next-generation cell therapy, particularly in-vivo and non-viral CAR-T approaches.
Traditional CAR-T therapies remain expensive and operationally complex, requiring cell extraction, lab modification, and reinfusion. Newer in-vivo platforms aim to engineer immune cells directly inside the patient, lowering costs and improving scalability.
Roughly $6 billion in acquisitions have already occurred in this niche over the past six months, signaling strong big-pharma interest, Anderson noted.
Top Small And Mid-Cap Biotech Stocks To Watch
Based on Benzinga Pro data and analyst commentary, investors are watching several names as the sector heads into 2026:
- BridgeBio Pharma (NASDAQ:BBIO)
BridgeBio focuses on genetic and heart diseases. Its key heart drug is already generating meaningful sales, helping push Q3 2025 revenue above $120 million. Investors are encouraged by steady progress across its pipeline, though the company is still spending heavily to grow.
YTD: +171.38% | Upside: 12.37%
- Argenx (NASDAQ:ARGX)
Argenx is one of biotech’s commercial success stories, with over $1 billion in quarterly product sales. While it recently paused development in one eye disease program, analysts remain confident due to its broad immune-disease portfolio and strong cash generation.
YTD: +35.04% | Upside: 8.8%
- DBV Technologies (NASDAQ:DBVT)
DBV is developing a skin patch to help children safely build tolerance to peanut allergies. Late-stage trial results were strong, and the company plans to seek U.S. approval in early 2026. Revenue is still small, but the potential patient population is large.
YTD: +500% | Upside: 111.08%
- Viridian Therapeutics (NASDAQ:VRDN)
Viridian is targeting thyroid eye disease, a rare but serious autoimmune condition. Its lead treatment has shown lasting benefits in late-stage trials, and a U.S. launch is planned for 2026.
YTD: +63.36% | Upside: 27.58%
- Kyverna Therapeutics (NASDAQ:KYTX)
Kyverna is working on one-time immune "reset" treatments for autoimmune diseases like lupus. If successful, these therapies could replace years of chronic drug use. While the company remains unprofitable, strong trial signals and investor backing have driven major stock gains.
YTD: +142.09% | Upside: 267.11%
A Look Ahead Into 2026
“Looking ahead to 2026, we expect increased M&A and strategic partnerships as large pharma looks to replenish late-stage pipelines, particularly in immunology, rare disease, and neurology,” said Elena Meng, research analyst at Gabelli Funds.
“A lower interest-rate environment should also improve funding conditions, benefiting companies with credible regulatory paths and near-term catalysts.”
However, despite the optimism, risks persist.
Dr. Smith flagged FDA staff turnover as a potential long-term concern, warning that institutional knowledge loss could eventually slow approvals even though timelines have held so far.
Anderson also highlighted an "IPO air pocket" created by the 2023–2024 biotech downturn. With fewer IPO-ready companies, institutional capital is increasingly flowing into Private Investment in Public Equity (PIPE) deals, effectively turning public small-cap biotechs into late-stage venture investments.
READ NEXT:
Image via Shutterstock