October 1, 2025

Does a Biotech Need a Bulge-Bracket Bank to IPO?

Three weeks ago, we defined “Bulge,” “Mid-Tier” and “Boutique” investments banks, based on biotech and pharma IPOs from 2022-24 raising more than $50m in gross proceeds (n=38).

This week we aim to answer a different question that private company CFOs inevitably grapple with: Does my biotech need a bulge bracket bank to IPO?

Remind me who the bulges are again?

From our previous blog, we count four bulge bracket banks when it comes to U.S. biotech IPOs: J.P. Morgan, Goldman Sachs, Morgan Stanley, and Bank of America (formerly Bank of America Merrill Lynch or BAML).

These four institutions are household names – all of them are among the U.S.’s top ten largest banks by assets (according to the Federal Financial Institutions Examination Council) – and each of them possess the investment banking personnel, salespeople, equity analysts, prestige and experience to get a biotech IPO done.

So, what are the drawbacks of using a bulge bracket bank?

They are expensive: Normally, biotech IPOs come to market with four investment banks (though, per the table below, you can see the range for 2022-24 was three to six).

Syndicate Composition	Number of 2022-24 IPOs
3 Banks	3
4 Banks	28
5 Banks	4
6 Banks	3

Source: FactSet

From the next table, you can see that on average a bulge bracket bank absorbs a disproportionate amount of syndicate economics (the 7% of gross proceeds paid to banks for successfully executing a biotech’s IPO). The amount varies from bulge to bulge, but in the period under consideration, it was always over one third.

Bulge Bracket Bank	Average (mean) Economics in 2022-24 IPOs (%)
J.P. Morgan	38.29
Goldman Sachs	36.94
Morgan Stanley	36.40
Bank of America	34.96

Source: FactSet

Thus, including a bulge bracket leaves proportionately less economics to pay other banks, and arguably reduces the size of your banking syndicate by one or even two banks.

They only lead: A bulge bracket will not “sit to the right of” a mid-tier bank. They will sometimes co-lead a deal, but usually only when the other co-lead is another bulge bracket. Importantly, including a bulge bracket bank in your IPO syndicate means they will be running the show. You may prefer bankers at a smaller member of your IPO syndicate, but they will be sidelined by the bankers from the bulge bracket bank. Thus, if your top left bank is a bulge, there is reduced scope for a more consensually run syndicate including multiple bookrunners.

They are seldom described as being “good value”: Though an IPO’s success should likely be determined by deal-related metrics (Did you raise the money you wanted? Was the Green Shoe exercised? Did the stock trade up post-IPO?), biotechs should consider that the cash they hand over to their IPO syndicate pays for a whole lot more than just deal execution.

Specifically, those fees pay for future research coverage, future healthcare investor conference invitations, and an informal advisory relationship with traders (who provide color on movements in your stock) and bankers (who will pitch new financing ideas to you, supply you with 13F reports, and/or provide insightful, timely and useful market updates). And it’s generally for this post-IPO service that bulge brackets are seen as providing relatively less value than mid-tier or boutique banks.

The logic goes as follows – bulge bracket banks make huge sums of money giving M&A advice and raising money for Big Pharma (who need their reputations and global distribution networks for their deals). As such, their ongoing research and banking efforts are more targeted to this lucrative and stable form of income, rather than the secondary financing market for smaller biotechs.

Put simply, their research analysts would rather write about Pfizer, and their bankers would rather pitch Johnson & Johnson.

What’s the clinching argument?

At the end of the day, picking a bulge bracket bank for your IPO is the equivalent of hiring McKinsey as your consultant or hiring a Big Four accounting firm for your audit. It’s the risk-free, board-friendly choice that’s not going to raise eyebrows.

Ego may also play more than a small role in the matter.

Or maybe biotechs (one could argue rightly) care more about execution than the ongoing service they received afterwards?

Either way, from the table below you can see that 84% of all biotechs that listed on either Nasdaq or the NYSE from 2022-24 and raised $50m+ in gross proceeds, chose at least one bulge bracket to be in their syndicate.

A small minority 16% (6/38) chose not to utilize a bulge bracket bank during their IPO.

Banks that led biotech IPOs 2022-24 raising $50m+ in gross proceeds (n=38)

Bank	Biotech IPOs Led	Biotech IPOs Co-led
J.P. Morgan	11	1
Morgan Stanley	8	4
Goldman Sachs	5	3
Jefferies	5	0
Bank of America	4	1
Leerink	0	1
TD Cowen	0	1

Source: FactSet

Note that the deals allocated in the table above total 44 and not 38. This is because there were 33 deals with one lead bank, 4 that had two lead banks (AN2 Therapeutics, BioAge Labs, Contineum Therapeutics, and Fractyl Health), and 1 that had three lead banks (Prime Medicine).

• To reiterate, 84% (32/38) of biotech and pharma IPOs in the period considered used at least one bulge bracket bank.
• The exceptions were five sole-led deals brought by Jefferies (as “top left”) (Acrivon, Alto Neuroscience, Apogee, Artiva, and Structure Therapeutics), and AN2 Therapeutics’ IPO, which was co-led by Leerink and TD Cowen.
• 8% (3/38) of biotech and pharma IPOs from 2022-24 used two bulge bracket banks, while 3% (1/38) used three.

Conclusion

While the data above doesn’t speak to causality – i.e. just because the biotechs in our analysis chose to use a bulge bracket bank for their IPO doesn’t mean that their deals would have failed had they not done so – it speaks to what most CEOs and CFOs thought was the best option for their respective companies.

Thus, not picking a bulge bracket bank for your IPO would include you in a small minority of biotech IPOs.

Can it be done? Absolutely – we can point to deals led by Jefferies, Leerink and Cowen as proof. But by choosing the road less traveled, you will likely need to explain your rationale to your board and/or others.