December 31, 2025

How Much Capital is Typically Raised in a Biotech IPO, What’s The Average Biotech IPO Price, And Why Do Biotechs Sometimes Go Through Stock/Reverse Splits Before IPO?

With 2026 fast approaching, pundits are once again predicting the reopening of the biotech IPO market, following a lackluster 2025.

There are some good reasons to think they may be right: (1) we now appear to be entering a downward interest-rate cycle (which has historically coincided with biotech bull markets) and (2) Bloomberg reported in a December 29 article titled “Every Wall Street Analyst Now Predicts a Stock Rally in 2026” that all 21 analysts surveyed expect the S&P 500 to increase for a fourth straight year.

Of course, we’ve been here before (think January 2023 and January 2024), and numerous valid questions abound: (1) will inflation derail the declining interest-rate backdrop?; (2) with equity valuations outside of biotech already so rich (Tesla, the AI bubble, etc.), can they really continue to rise unless earnings pick up?; (3) with seemingly increasing layoffs being announced each day (with unemployment up to 4.6% in November 2025 from 4.0% in January 2025), will a flagging economy derail a further stock market rally?; (4) if reports suggesting that roughly 50% of U.S. retail spending is currently generated by the top 10% of earners, what happens if those top earners begin to feel the pinch?; and (5) will the actions of an increasingly unpredictable U.S. President hijack the economy (again)?

Also, when 21 of 21 forecasters are saying the same thing, is that real analysis or a cult driven by fear-of-missing-out?

Regardless of what you think is about to happen, we thought now would be a good time to remind people what a biotech IPO typically looks like, since most of us haven’t seen one in a while.

What does a biotech IPO typically look like?

Using the same methodology that we’ve used previously in this series, we examined IPOs from 2022-2024. During that period, there were a total of 71 biotech initial public offerings (IPOs), which collectively raised $8.4 billion in gross proceeds (source: FactSet).

These can be subdivided into 38 IPOs that each raised more than $50 million in gross proceeds (with banking syndicates comprising of bulge, mid-tier and boutique banks), and 33 IPOs that each raised less than $50 million in gross proceeds (with banking syndicates involving significantly smaller investment banks).

When analyzing the average share price for a biotech IPO, this subdivision is important.

IPOs raising >$50M from 2022–2024 (n=38)

	Range	Mean	Median
Price	$11.00–22.00	$15.99	$16.00
Gross Amount Raised	$79.4–621.0M	$212.0M	$194.5M

Source: FactSet

• From the above table, you can see that the typical biotech IPO comes to market at a price of $16 and raises around $200M.

IPOs raising <$50M from 2022–2024 (n=33)

	Range	Mean	Median
Price	$4.00–9.00	$5.00	$5.00
Gross Amount Raised	$2.5–40.6M	$10.8M	$7.5M

Source: FactSet

• Turning to the smaller biotech IPOs – those organized by non-blue-chip investment banks and often supported mainly by retail investors – they are typically priced at around $5.00 per share and raised around $10M.

Why do some biotechs undergo stock splits or reverse splits before IPO?

When biotechs come to the market, they are valued by investment banking personnel as part of the transaction process. This valuation is then worked backward into a prospective stock price range. The valuation is painstaking, involving comparisons to similar companies, and it must be calibrated carefully. If a biotech comes to market at too high a valuation, they are unlikely to raise the money they want. Conversely, if they are undervalued, existing shareholders will suffer unnecessary dilution.  

The key point is that the valuation is for the company as a whole (a prospective market capitalization). The prospective public company share price is the variable component in this equation, and private companies typically use stock splits or reverse splits to achieve the nominal share price desirable for an IPO (which as we’ve stated on average has been about $16.00).

Action	Description
Stock split	Increases the number of shares each shareholder owns, but not the overall value of their holding.
Reverse stock split	Decreases the number of shares each shareholder owns, but not the overall value of their holding.

Source: New Street Investor Relations

For the U.S. IPO market more generally, IPOs are typically priced in the low- to mid-double digits (meaning $15.00–$35.00 per share), with smaller companies or deals being priced at $5.00–$10.00.  Oddly, stocks priced at around $5.00 or less are thought of as “penny” stocks, even though they are not necessarily trading below a dollar.

There is no rule that says a biotech IPO should be priced around $16.00 (or that smaller biotechs must be priced at lower than that). It is simply an expectation on the part of buyers.

Two data points show just how arbitrary the above precedent is:

1. At the low end: Nasdaq has a minimum nominal stock price requirement of $1.00. Only when a stock falls below this level does Nasdaq require remedial action.
2. At the high end: Berkshire Hathaway Class A stock (which trades on the NYSE) is currently trading at $750,000 per share.

As such, any nominal stock price between these two extremes is technically permitted by the market —just don’t try and price your biotech IPO at $750,000 per share.