July 22, 2026

What Is a PIPE (Private Investment in Public Equity), How Are They Issued, and Who Can Invest in Them?

For public biotechs, financing options aren’t limited to the blunt instruments of a marketed follow-on or an ATM. One structure that comes up repeatedly – particularly in volatile markets or around data – is the Private Investment in Public Equity (PIPE).

PIPEs are often misunderstood. They are sometimes viewed as a “last resort” or a sign of distress. They can be – and there are examples of small-cap, failing biotechs agreeing to onerous PIPE terms, including perilous warrant coverage, with less than scrupulous investors – but those deals should not be allowed to stain what is otherwise a legitimate financing option.

In reality, PIPEs are simply a tool – one that, when used thoughtfully, can provide access to long-term capital with speed and certainty, when public markets are less receptive.

What is a PIPE?

A PIPE is a private placement of securities by a public company to a select group of investors, typically at a fixed price. The securities are issued privately but later registered for resale, allowing investors to freely trade those shares after the registration statement for their stock becomes effective.

In biotech, PIPEs are most commonly used by:

• Newly public biotechs who are not yet shelf-eligible (and perhaps do not have time to file another S-1).
• Companies that need capital quickly and with certainty (rather than testing the open market).
• Companies trading (in management’s view) below intrinsic value.

PIPEs can involve common stock, preferred stock, and warrants, and importantly can also occasionally be issued at a premium to market value (though most are issued at a discount).

How are PIPEs issued?

Typically, management – working with bankers – identifies a small group of institutional investors they believe are:

• Long-term oriented.
• Comfortable with the biotech’s risk profile.
• Able to move quickly.

These investors are brought “over the wall” and receive material non-public information (MNPI) under NDA, potentially including  updates on the company’s latest data, pipeline activity, and financing rationale.

Terms are then negotiated privately, rather than discovered through a public bookbuild.

Once agreed upon, the PIPE is announced publicly (alongside whatever MNPI is needed to cleanse those who were wall-crossed), funds are received, and the company (eventually) files a resale registration statement for the issued securities.

Who can invest in PIPEs?

PIPEs are offered under private placement exemptions, meaning participation is limited to accredited or qualified institutional buyers. This means that retail investors cannot participate directly and that most participants are institutional. Note: not all institutions can (by their own rules) participate in PIPEs.

Participants typically include:

• Dedicated healthcare hedge funds.
• Specialist biotech mutual funds.
• Occasionally, strategic or corporate investors.

Why do biotechs use PIPEs?

There are several reasons PIPEs are attractive to biotechs:

1. Speed and certainty. PIPEs can be executed in days or weeks, not months. There is no market window to “hope for.”
2. Reduced execution risk. The price is negotiated upfront. There is no risk of a failed bookbuild.
3. Flexibility of structure. Terms can be tailored – from straight equity to preferred shares and warrants.
4. Access during dislocation. In periods when biotech indexes are weak, PIPEs may be the only viable source of capital.
5. Confidential marketing. If terms are not reached, the biotech can walk away with the majority of the world unaware a financing effort even took place. 

Select PIPE transactions 2025-26:

Deal	Named Investors	Banks (in order of deal seniority)
Verastem $75M 04/25/25	RTW, BVF, Nantahala, Octagon, OrbiMed, Stonepine	Guggenheim, RBC, BTIG, Mizuho, B.Riley
SAB Biotherapeutics $175M 07/21/25	Sanofi, RA Capital, Commodore, Vivo, Blackstone, Spruce Street, Forge Life Science, Woodline, Sessa, T1D Fund, ATW	Leerink, UBS, Chardan, Oppenheimer
CAMP4 Therapeutics $100M 11/10/25	Coastlands, Janus Henderson, Balyasny, Vivo, 5AM, Adage, Trails Edge, SynGAP Research Fund	Leerink, Piper Sandler, Cantor Fitzgerald, Wedbush
Crescent Biopharma $185M 12/04/25	Forbion, Fairmount, Vestal Point Capital, BVF Partners, ADAR1, Balyasny, Venrock	Jefferies, TD Cowen, Guggenheim, Cantor Wedbush, Piper Sandler
ProMIS Neurosciences $175M 1/30/26	Janus Henderson, Ally Bridge, Deep Track, Great Point, Trails Edge, Wellington, Woodline	Guggenheim, Ceros, Leede
Adlai Nortye $140M 2/3/2026	Cormorant, Columbia Threadneedle, Balyasny, Point72, Squadron Capital, Casdin	Jefferies, Leerink, Lucid, H.C. Wainwright, Jones

Source: Company press releases.

Takeaways from the table above:

Size: PIPE sizes tend to be smaller than traditional follow-ons, likely because of the smaller pool of potential investors.

Investors: While PIPE investors include a host of household names, some obvious funds are missing either because they cannot hold unregistered stock, or they are unable to participate in a wall-cross that restricts their wider group’s ability to trade freely.

Banks: Based on the above and my personal experience, PIPE financings tend to be run by non-bulge bracket banks.