Each quarter, Locust Walk’s deal team compiles key statistics and trends on strategic transactions and financings. Our 2025 Q1 Report applies the latest data to analyze the current landscape in life sciences deals. 

Biopharma public market conditions deteriorated in Q1 2025, as seen by XBI erosion and suppressed secondary offerings, while QoQ M&A activity surged by 50% to $25B. 

Despite a rally in Jan’25, macroeconomic factors such as decreasing consumer sentiment and tariffs, as well as biotech-specific factors such as HHS layoffs and FDA leadership departures, erased gains and led to the XBI closing at its lowest price since December 2023. 

• The divergence of the XBI (equal-weighted) and NBI (market cap-weighted) emphasizes that mid- and small-cap biotechnology companies were hit hardest by the decline in the public equity markets. 

Q1 2025 saw public capital markets weaken considerably—with follow-on financings hitting their lowest levels since 2023 and a 30% quarter-over-quarter rise in companies trading below cash—highlighting increased market uncertainty and depressed valuations. 

• The successful pricing of 5 biotech IPOs in the first half of the quarter shows public investor appetite for mature companies, however, the volume of IPOs fell well short of analyst predictions of up to 15 IPOs with the window closing as the XBI declined. 

• The continued relevance of SPACs with concurrent, material PIPEs allows companies to creatively access public equities, with 1 company going public through this vehicle and 1 other company announcing their intention in Q1 2025. 

Venture activity was relatively flat in Q1 2025, with QoQ total deal value decreasing 6% and deal volume decreasing 5%, with investors signaling their continued preference for de-risked assets that need access to capital to achieve their next value-inflection point. 

• Notably, Phase 3 financings contributed 24% of the total deal value, significantly higher than the previous 3 year high of 11%, reflecting a strategic pivot toward deals that support commercialization amid a challenging IPO environment. 

M&A saw a sharp uptick, with $25B in M&A deal value representing the best quarter since Q4 2023 and a 100% increase to the 2024 quarterly average. 

• 95% of total M&A deal value was for Ph2+ companies, driven by J&J’s $15B Intra-Cellular acquisition (commercial stage), emphasizing large pharma’s preference for acquisitions that can contribute near-term topline growth. 

• The closed IPO window over the past few years has led late-stage companies to remain private, allowing private sellers and large pharma buyers to creatively structure acquisitions that look closer to licensing deals, such as Novartis’ acquisition of Anthos for $925M upfront / $2.15B of milestones. 

Global licensing volume and average deal value in Q1 2025 dropped by roughly 50% from previous levels, with aggregate deal value declining even more sharply, indicating a reversion to Q1’24-Q3’24 levels after a brief rebound in Q4’24. 

• Oncology, representing 55% of licensing volume, returned as the preferred therapeutic area for licensing deals after dropping to 40% during FY2024. 

Despite the decline, the industry has strong fundamentals, and the pace of innovation is only accelerating as AI-enabled tools increase productivity throughout the value-chain, with the expectation that this will be reflected in market conditions once macroeconomic and FDA policies stabilize. 

We invite you to read our report and welcome the opportunity to discuss its contents with you.