Life Sciences Capital Markets: Preparing for Your 2026 IPO

The life sciences industry is poised for an upswing in initial public offering (IPO) activity in 2026, supported by a large IPO backlog, the strong performance of biotech market indices, and positive capital markets signals from recent IPOs and secondary offerings in the second half of 2025. In addition, the headwinds from 2025 often cited by the investment community, such as regulatory, economic, and interest rate uncertainty, have steadily abated over the last several months, inspiring investor confidence and an increased willingness to create new investment positions. In addition, the public life sciences M&A market was active in 2025, with over $150 billion in announced transactions, including the highly publicized $9.8 billion battle between Novo Nordisk and Pfizer Inc. for Metsera Inc., and many investors have been eager to redeploy such cash through the capital markets to maintain their biotech exposure.

With the table set, life sciences companies looking to access the capital markets should act swiftly to position themselves to take advantage of any upswing, as the timing of an IPO will be critical to the future performance of a newly listed public company.

Life sciences experts will discuss these considerations when Goodwin and KPMG cohost a symposium at the JP Morgan Healthcare Conference 2026 in San Francisco on January 14.

Signals for Market Reopening

While healthcare stocks bore the brunt of policy concerns, such as pharmaceutical tariffs, uncertainty at the U.S. Food and Drug Administration (FDA), and most-favored-nation drug pricing, the sector has largely rebounded throughout 2025, and in December 2025, the SPDR S&P Biotech exchange-traded fund (XBI) rose to its highest price since 2021. This rebound, together with declining interest rates and the looming threat of loss of patent protection among several Big Pharma blockbuster drugs, has contributed to a rise in M&A activity year-over-year. At the same time, the dissolution of underperforming biotechs has helped clear the field; there are approximately 21% fewer public biotechs today than there were in 2021.

In addition, both IPO and secondary market activity have increased, demonstrating investor appetite and genuine momentum. In 2025, while IPO activity remained muted after the first quarter of 2025, a majority of the companies that went public, including Ascentage Pharma Group International, Evommune Inc., LB Pharmaceuticals Inc., Sionna Therapeutics Inc., MapLight Therapeutics Inc., and Maze Therapeutics Inc., performed better than those that debuted between 2022 and 2024. Overall, 2025 reflected strong IPO performance across all sectors by both deal count and issuance, as well as aftermarket performance, with Medline Inc. raising $6.26 billion in the largest US IPO of 2025 and the biggest US stock debut in four years. The secondary market also trended favorably, particularly after Labor Day; follow-on discounts after such date averaged 6.9% compared to 9.5% prior to such date, and on December 9 alone, eight biotechs raised $3.2 billion in follow-on offerings, indicating strong institutional demand and willingness to deploy capital.

Overall, the market continues to focus on companies with robust data packages, particularly clinical-stage life sciences companies with medium-term inflection points, with the majority of successful IPOs and follow-ons occurring among companies showing clinical proof-of-concept or efficacy data. During 2025, life sciences companies in Phase 2 of clinical development or later represented 88% of all life sciences IPO issuers and 74% of all life sciences follow-on issuers.

Financial and strategic interest has been particularly strong for innovation in standard-of-care therapies and differentiation in the product pipeline, such as a distinct mechanism of action or competitive edge over existing or other emerging therapies. Recent therapeutic areas of interest include cardiometabolic, central nervous system, oncological, immunologic, and obesity/metabolic conditions. 

There has also been an evolution in traditional capital markets toward expansion into private equity and structured financing, including royalties, options, and minority interests to bridge the gap to commercialization. (Licensing deals similarly shifted toward later-stage programs and more de-risked assets, as highlighted by a three-year high in Phase 3 licensing deal value.) Supporting the market reopening are broader favorable conditions, including moderation in policy-related uncertainty around tariffs and drug pricing, a continued government focus on expediting products to market as evidenced by the plausible mechanism pathway, and the FDA commissioner’s National Priority Voucher program, as well as a strong macroeconomic environment characterized by lower and stabler interest rates. Against this backdrop, the FDA’s novel drug approval rates in 2025 through the Center for Drug Evaluation and Research and Center for Biologics Evaluation and Research was well within the range seen over the past five years, demonstrating a degree of regulatory consistency despite considerable internal agency challenges, significant turnover, and a prolonged government shutdown in the second half of 2025. In 2025, the FDA’s highest number of novel drug approvals was in oncology, and the acceleration of therapies for rare diseases to the market remains a stated priority for the FDA. The 2025 FDA approvals further highlight a shift toward precision medicines, durable formulations that reduce treatment burden, first-in-class mechanisms, and impact on public health.    

IPO Readiness — Early Preparation Is Critical

A typical life sciences IPO takes four to six months to execute after the initial organizational meeting, subject to a number of key factors that more often than not delay an IPO rather than accelerate it. Often these delays are extended due to a lack of viable future execution windows, which can be challenging for a company seeking to provide liquidity to existing investors while managing its runway to execute on its clinical initiatives.

While certain factors that can cause delay are outside of a company’s control, such as market conditions, there are a number of factors that are directly within its control and, if managed, can help maximize its chances of a successful IPO. The following are critical action items a company should consider when preparing for an IPO:

Prepare Financial Statements

IPOs require a company to present at least two years of audited generally accepted accounting principles financial statements and, depending on timing, interim unaudited financial statements in its registration statement. Further, in certain special circumstances, such as a recent acquisition or disposition, additional financial statements and pro forma financial information may be required. Determining what financial information is required early in the process is essential to meeting timing objectives for an IPO, as the preparation of IPO-ready financials can take several months, and they will be heavily scrutinized by a company’s auditors. Further, U.S. Securities and Exchange Commission (SEC) comments on a company’s financial presentation can be challenging to address, leading to potentially significant delays in refiling a registration statement and impacting the overall IPO timeline. Companies considering an IPO are well advised to begin financial statement preparation early, which may include augmenting accounting functions through additional hires and consultant engagements.

Shape Your Pipeline

For a public company, investors will be heavily focused on its pipeline of clinical and preclinical programs and candidates. In particular, they will be focused on the breadth of the pipeline, the stage of development for each pipeline program, factors in place expediting or limiting the cost of product development (e.g., orphan, fast track, and breakthrough therapy designation), the timeline of upcoming milestones, critical data and other “inflection points,” and development costs. Positioning a pipeline for future success requires a careful balancing act among all of these factors. For instance, investors like to see multiple “shots on goal” in a pipeline but may be deterred if the pipeline appears too broad and unfocused. Further, if data on a key trial will be available shortly after an IPO, investors may prefer to wait for additional data before investing. Conversely, if it appears that the company will not have any inflection points for a significant amount of time after the IPO, investors may be discouraged from participating. Therefore, it is critical for a company to manage its pipeline and development plans early in a way that maximizes investor interest, de-risks development plans, and ensures multiple valuation-tipping inflection points. Increasingly, companies are pursuing first-in-human clinical trials abroad in jurisdictions like Australia, Canada, or the United Kingdom, to name a few, where initial clinic entry may be possible using expedited regulatory mechanisms for certain types of product candidates.

Start the Board Search

Establishing a board that consists of members with a deliberate mix of skills and experiences to help the company succeed in the future, while meeting regulatory requirements, can be a challenging and time-consuming task. Understanding the practical needs of the company as well as the SEC and listing exchange requirements is essential to recruiting the right members of a public company’s board. An effective board should include members with critical skills and experiences tailored to the short- and medium-term needs of the company (e.g., accounting, scientific, risk management, governance, and finance experience). Moreover, public companies are required to have a majority independent board, a financial expert, and fully independent committees, subject to limited exceptions. It is never too early to start analyzing the board’s composition and effectiveness, and waiting too late can put pressure on a board to appoint members that may be suboptimal for public life.

Remember Your Existing Investors

The support of a company’s key investors is vital to ensure the company’s long-term success. In addition to the mechanical needs from these investors (including lock-up agreements, consents, and waivers), companies must be able to demonstrate that the current investors are willing to further invest in the company, including by participating in the IPO. In recent years, underwriters have been reluctant to market an IPO unless existing investors indicate they will support the IPO through additional investments. While there are limitations on what can be discussed with investors throughout the IPO process, companies must ensure they can gain the support of existing stakeholders to maximize the chances of a successful IPO.

Refresh our Director and Officer Compensation Program

Public companies are required to disclose all elements of compensation for its directors and certain of its highest paid officers (including the CEO) at the time of the IPO and beyond. Stockholders are particularly interested in whether officers are being compensated fairly and in a manner that promotes the retention and longevity of a company’s talent (including directors), while simultaneously avoiding overly generous compensation packages that misalign with market norms. Designing a compensation program amenable to stockholders may require new employment agreements with certain key employees and the adoption of equity award plans, bonus plans, and a director compensation policy, all of which must be described in the IPO prospectus. As a result, companies preparing to go public should consider engaging a compensation consultant early to design a program that promotes these aims and is benchmarked against similarly situated companies.

Consult Contractual Counterparties (They May Have a Say Too)

Public companies are required to publicly file their material contracts, which often include licenses, manufacturing and supply agreements, and other critical agreements with commercially sensitive terms. Frequently, these agreements require the consent of a counterparty before disclosing their terms. As such, it is important to analyze these agreements early to determine which agreements are material and, therefore, must be filed and which counterparty consents will be needed in advance of filing. Further, the SEC allows the redaction of certain commercially sensitive terms, so companies and their contractual counterparties should also agree in advance on what terms will be redacted. Even if a company is planning to initially confidentially submit its registration statement to the SEC, it should complete this consent process before the confidential submission, because that submission will eventually be made public at the time of the registration statement’s first public filing. 

Timing Is Everything

While our life sciences clients operate in the realm of exact science, choosing the right window to execute an IPO is anything but an exact science. Optimizing the timing of an IPO can be the difference between starting life as a public company with positive momentum and tripping out of the gate or failing completely. Therefore, understanding the levers to optimize timing is imperative. 

As a gating item for consideration, life sciences companies should avoid trying to launch an IPO too early. Since the 2021 IPO boom, preclinical IPOs have seen little volume and success, with public investors concerned about the lack of clinical data and the number of failed product candidates early in the clinic. Although there have been successful clinical IPOs for Phase 1 companies since 2021, in the last several years, investors have increasingly turned their focus to companies in Phase 2 or companies preparing for Phase 3 as these companies have ample data and palatable horizons to commercialization. This dynamic may change, but, for now, companies without clinical data will likely face an uphill battle to raise capital. It will be important to watch how this trend unfolds as the IPO market opens in 2026 and beyond.

As previously discussed, carefully structuring the product pipeline can enable companies to answer those difficult investor questions regarding timing, upcoming milestones, and inflection points and ensure a steady stream of news flow after the IPO. To complement a well-managed pipeline, companies should consider marketing their IPOs based on recent positive clinical data or regulatory developments. Demonstrating positive recent data and clinical trial execution capabilities can generate investor excitement and instill confidence in investors that the management teams can design and execute future clinical trials. This can be further bolstered by taking advantage of large investment or scientific conferences (but companies should consult their lawyers to avoid gun-jumping mistakes).

Finally, it is important to be patient and nimble when deciding the proper timing for launching IPOs. As we have seen many times over the last five years, the markets are fickle and can change from bullish to bearish rapidly. Further, while regulatory and macroeconomic conditions seem to be relatively stable, it is not a guaranteed long-term trend. Companies and boards should remain in lockstep with their lead IPO underwriters as they navigate key timing questions. The underwriters will have their pulse on the market, including the pipeline of potential IPOs, and understand the headwinds or tailwinds that will be faced throughout the process (including if the market is oversaturated). But as already noted, the markets can change rapidly, so planning for updated financial statements and other disclosures could position companies to be ready to take advantage of new open windows very quickly. Key to this is having an engaged and responsive team of partners to marshal and coordinate workstreams in an IPO process, while also being nimble to seize opportunities and navigate any headwinds that arise.

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As the life sciences industry transitions to 2026, the market for IPOs appears cautiously optimistic, with a number of key signals indicating a potentially strong first half of 2026. Companies that proactively prepare for the shift in market activity will be best positioned to successfully raise capital in the IPO markets and begin their lives as public companies with positive momentum. Goodwin is available to guide your company through each step of the IPO process and beyond. Please contact any of this insight’s authors for more information.