Bench2Bedside:
How do you view the market as we approach 2026?

Michael Brinkman, Managing Director, Jefferies:
We have an unusually strong backdrop coming into the New Year, and I think there are two reasons for this. First, we’re seeing strong company maturation in the public markets. If you look back to around January 2020, there might have been 500 to 800 public companies, and we added 160 or more through 2021; so there were a lot of companies at the time. Many of them were early stage, pre-clinical and/or pre-proof of concept. We could expect to see a high failure rate from this cohort. Looking back, we’re not surprised at what happened between then and now. And for those companies still alive today, they are 5 or 6 years older which means they now have a dramatically higher probability of success. Today, with these mature companies, we can expect a reasonable shot of positive news on just about every card flip.

The second reason, we’ve seen an uptick in the number of biotechs being acquired; this is looking at biotech deals (as opposed to pharma megamergers) where we’ve seen an uptick in both the number of deals and the average dollar amount. This has created a bolus of cash returned to shareholders, and these shareholders are looking to redeploy their money as soon as they can. This in turn is driving strong activity in the biotech offering market.

B2B:
What’s the reason for the increase in acquisitions?

Brinkman:
The rate limiting step has never been demand for acquisitions. The limiter has always been the supply of companies ready to be bought; there are a lot more good, late stage companies to buy today.

B2B:
What are some other factors playing into an increase in acquisitions?

Brinkman:
Patent cliffs by 2030 may be an insurmountable challenge for pharma, so they have become aggressive to an unprecedented level. Past patent cliffs have been more limited to individual companies, but now the entire industry is facing patent cliffs, so there is furious competition to plug those gaps. This is also resulting in more aggressive buying of companies at earlier stages.

B2B:
How does this contrast for smaller and private companies who continue to see the current market as a challenge?

Brinkman:
There is indeed a clear contrast for the “have nots”, the earlier stage and private companies. For them, the availability of money has shrunk. It’s clearly a great time to be a later stage public biotech but a very tough period for earlier stage companies.

B2B:
What else is on the mind of investors going into 2026?

Brinkman:
For investors, we’ve seen a once in a lifetime chance to do concurrent offerings where companies simultaneously announce the financing and data, but I think the number of these deals is likely to go down as market behavior has returned to normal. That season is coming to an end, but now we may see a shift towards a crossover season whereby, if an investor puts money into a late-stage private company, you can assume they will be public soon. And with this, I think we could see a robust IPO market in 2026. But there is always an existential risk for IPOs – overly aggressive pricing. Hopefully, banks and VCs can moderate this. I think we’re in a strong market already, but many companies are still waiting to see evidence of it before ramping up their IPO prep and spending.

And on the strategic side, we’re seeing tremendous interest from larger spec pharma companies (not just big pharma), many of which are trading at all-time highs, to go out and build their companies. We will also see the large pharmas continue their hunt to replace revenues that will be lost to patent cliffs by 2030.

B2B:
Do you have any thoughts on Jefferies’ London Healthcare Conference?

Brinkman:
We’ve really been enjoying the success of our conference, and it seems that everyone loves being in London at that time of year. We’ve honestly been shocked by the enthusiasm for the conference, and we look forward to building on the positive momentum.