Many private biotechs simultaneously explore an IPO and an acquisition, a process known as "dual tracking." While this drives up valuations for VCs, it raises a critical concern for public market investors: they may only be getting access to companies that large pharma has already evaluated and passed on acquiring privately.

An improving IPO market doesn't cannibalize M&A activity but rather provides private companies with a dual-track option. Barclays advises clients to evaluate both public market and M&A paths simultaneously, treating them as complementary strategies for value creation, not mutually exclusive choices.

Biotech firms are increasingly using reverse mergers paired with substantial PIPE financings ($200M+) as an alternative path to the public markets. This "IPO-esque" strategy offers speed and efficiency but may trade off the broader investor exposure gained through a traditional, lengthy roadshow process.

While traditional IPOs are recovering, a significant number of biotechs are opting for reverse mergers. These are no longer last-resort deals but sophisticated transactions involving nine-figure PIPE financing, effectively combining a large crossover round with a public listing.

Biotech companies are increasingly favoring reverse mergers over traditional IPOs. The process allows for confidential diligence with select funds, is faster, and sidesteps market volatility like election uncertainty. The previous stigma is fading as the quality of investor syndicates remains high.

Remix Therapeutics is going public by merging with an existing public company, Passage Bio, and raising a concurrent $100M financing. This reverse merger strategy provides a faster and potentially less volatile route to the stock exchange compared to a traditional IPO, allowing them to quickly capitalize on positive clinical momentum.

Astute biotech leaders leverage the tension between public financing and strategic pharma partnerships. When public markets are down, pursue pharma deals as a better source of capital. Conversely, use the threat of a public offering to negotiate more favorable terms in pharma deals, treating them as interchangeable capital sources.

Once viewed negatively as a "breach of birth," reverse mergers are now a credible and efficient path to the public markets for biotech companies. They can compress timelines and save money, rivaling traditional IPOs in legitimacy.

Previously, biotechs could raise smaller rounds expecting a near-term IPO. With the IPO window shut, investors now prefer larger, milestone-based (tranched) financings to ensure companies are funded through significant clinical readouts and market uncertainty.